On May 22 of this year, the Centers for Medicare & Medicaid Services (CMS) informed the industry via memo they will exercise its enforcement discretion and adopt a temporary policy of relaxed enforcement with the prohibition on mid-year benefit enhancements, such as expanded or additional benefits, or more generous cost-sharing, as the enhancements are provided in connection with the COVID-19 outbreak. These enhancements must be beneficial to enrollees and provided uniformly to all similarly situated enrollees. They will do this until is determined that the exercise of this discretion is no longer necessary in conjunction with the COVID-19 outbreak.
What is a mid-year benefit enhancement? Back in the old days, these were permissible changes to a plan benefit. An excerpt from revision 87 of the Medicare Managed Care Manual Chapter 4, dated June 8, 2007 reads:
As a result of the public health emergency, many Medicare Advantage Organizations (MAOs) have made the decision to enhance benefits through the end of the year. You see this communicated on plan websites, taking the form of enhanced benefits or waived cost-sharing. However, these permissible activities may only be provided in connection with the COVID-19 outbreak. As it stands now, the current public health emergency has been extended a second time, set to expire on October 23, or earlier if terminated by Secretary Azar.
Mid-year benefit enhancements prior to their prohibition were typically put into effect for the remainder of a contract year. So, the question is if the public health emergency is not renewed after October, will the agency still exercise enforcement discretion relative to a mid-year benefit enhancement put into place through the end of this contract year? Or, will the expectation be that MAOs reconfigure their systems to return back to their original benefit design?
I recently posed this question during CMS office hours. Mr. Demetrios Kouzoukas, Principal Deputy Administrator of CMS and Director of the Center for Medicare, acknowledged this is a question that has been received in the past and the agency is working to develop a response. Without additional commitment or clarity, MAOs should prepare to flip the switch back as the permissible activities are currently only permissible while the public health emergency is in place. Keep your eyes open for additional guidance released by the agency.