Medicare Program; Contract Year 2027 and Certain Contract Year 2026 Policy and Technical Changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, and Medicare Cost Plan Program

Individuals who are dually eligible for both Medicare and Medicaid typically face significant challenges in navigating the two programs, which include separate or overlapping benefits and administrative processes. Fragmentation between the two programs can result in a lack of coordination for care delivery, potentially resulting in unnecessary, duplicative, or missed services. One method for overcoming this challenge is through integrated care, which provides dually eligible individuals with the full array of Medicaid and Medicare benefits for which they are eligible through a single delivery system, thereby improving quality of care, beneficiary satisfaction, care coordination, and reducing administrative burden.

Integrated care options are increasingly available for dually eligible individuals, which include a variety of integrated D-SNPs. Integrated D-SNPs can provide greater integration of Medicare and Medicaid services and experiences than enrollees would otherwise receive in other MA plans or Original Medicare, particularly when an individual is enrolled in both a D-SNP and Medicaid managed care organization (MCO) offered by the same organization. When referring to integrated D-SNPs, we are referring to: applicable integrated plans (AIPs), which include fully integrated dual eligible special needs plans (FIDE SNPs), many highly integrated dual eligible special needs plans (HIDE SNPs), and a small subset of coordination-only D-SNPs. These D- SNP types meet higher standards of integration, quality, and performance benchmarks, and for AIPs, exclusively aligned enrollment (when enrollment in a parent organization's D-SNP is limited to individuals with aligned enrollment), which we believe is a critical part of improving experiences and outcomes for dually eligible individuals. These D-SNP types more meaningfully integrate Medicare and Medicaid services and administrative processes (such as unified appeals and grievances) than coordination-only D-SNPs that are not also AIPs.

While enrollment in integrated care options continues to grow, there are instances in which enrollees may face disruptions in coverage in integrated care plans. These disruptions can result from numerous factors, including market forces that impact the availability of integrated D-SNPs and State re-procurements of affiliated Medicaid MCOs. Such disruptions can result in enrollees being enrolled with two separate health plan organizations for their Medicaid and Medicare benefits, thereby losing the benefits of integration achieved when the same health plan organization offers both benefit packages. In an effort to protect the continuity of integrated care for dually eligible individuals, in the April 2018 final rule (83 FR 16502), we finalized a limited expansion of our regulatory authority to initiate passive enrollment for certain dually eligible individuals in instances where integrated care coverage would otherwise be disrupted.

Section 1851(c)(1) of the Act authorizes us to develop mechanisms for enrollees to elect MA enrollment, and in the April 2018 final rule (83 FR 16502), we amended the regulation at Sec. 422.60(g) by adding Sec. 422.60(g)(1)(iii) and (g)(2) to allow passive enrollment for full-benefit dually eligible enrollees from a non-renewing integrated D-SNP into another comparable plan. A beneficiary who is offered a passive enrollment is deemed to have elected enrollment in the designated plan if he or she does not elect to receive Medicare coverage in another way.

In the April 2018 final rule, we finalized language authorizing CMS to passively enroll certain dually eligible individuals currently enrolled in an integrated D-SNP into another integrated D-SNP, after consulting with the State Medicaid agency that contracts with the D- SNP, when CMS determines that the passive enrollment will promote continuity of care and integrated care under Sec. 422.60(g)(1)(iii). We also finalized, under Sec. 422.60(g)(2), requirements an MA plan would have to meet to qualify to receive passive enrollments under paragraph (g)(1)(iii). However, in multiple situations where we have attempted to implement these requirements, we have encountered difficulty with receiving integrated D-SNPs meeting the requirement in Sec. 422.60(g)(2)(ii) that they have provider networks and facility networks that are substantially similar to those of the relinquishing integrated D-SNP. In our attempts to utilize passive enrollment, we found that while prospective receiving integrated D-SNPs had Medicare provider and facility networks that met the MA network adequacy criteria at Sec. 422.116, these networks weren't substantially similar to the provider and facility networks in the relinquishing integrated D-SNPs.

We acknowledge that the substantially similar provider and facility networks requirement that is used to assess receiving integrated D-SNPs is undefined in regulation. On August 1, 2018, we published a Health Plan Management System (HPMS) memo (hereafter referred to as August 2018 HPMS memo) that provided technical guidance on how we would assess for substantially similar networks.\107\ Even with the additional operational guidance, a network comparison between the relinquishing and receiving plans did not result in networks that we could consider substantially similar. As such, we have not been able to implement passive enrollment as outlined in Sec. 422.60(g).

\107\ CMS, HPMS Memorandum titled “Guidance on the Process for Implementing Passive Enrollment Flexibilities to Protect Continuity of Integrated Care for Dual Eligible Beneficiaries”, August 2018. Retrieved from: https://www.cms.gov/research-statistics-data-and-systems/computer-data-and-systems/hpms/hpms-memos-archive-weekly-items/syshpms-memo-2018-week1-aug-1-3.

We continue to find value in the concept of allowing passive enrollment for full-benefit dually eligible enrollees from a non- renewing or terminating integrated D-SNP to another comparable integrated D-SNP, and we continue to hear from States interested in using this provision. In order to operationalize this function, in the Contract Year 2027 proposed rule, we proposed to amend Sec. 422.60(g)(2)(ii) to remove the requirement that the receiving integrated D-SNPs have substantially similar networks to the relinquishing integrated D-SNPs and, instead, require receiving integrated D-SNPs to provide continuity of care for all incoming enrollees for a minimum of 120 days. Specifically, we proposed to replace the current language in Sec. 422.60(g)(2)(ii) with the requirement that a receiving integrated D-SNP provide continuity of care for all incoming enrollees that complies with Sec. 422.112(b)(8)(i)(B), except that the minimum transition period would be 120 days. We noted that this proposed requirement would not affect a receiving integrated D-SNP's requirement to meet network adequacy standards per Sec. 422.116, or potential compliance actions that may result from a failure to meet those requirements. We also proposed to amend Sec. 422.60(g)(2)(vi) to specify that an integrated D-SNP receiving passive enrollment must have the care coordinator staffing capacity to

receive dually eligible enrollees through passive enrollment. We expect this coordinator staffing capacity to be sufficient to conduct required enrollee onboarding activities such as health risk assessments (HRAs) and care plans and meet ongoing D-SNP care coordination requirements, including those outlined at Sec. 422.107(c). Lastly, in an effort to use consistent and accurate language throughout our processes and documentation, we proposed to amend Sec. 422.60(g)(2)(i) to instead describe the MA plans that can receive passive enrollment as plans that operate as an applicable integrated plan (AIP) as described at Sec. 422.561.

We proposed to amend Sec. 422.60(g)(2)(ii) to require that the plan receiving passive enrollment provide continuity of care to all incoming enrollees for 120 days because we believe that this length of time for continuity of care would address the issue that we attempted to address at 83 FR 16504 in the April 2018 final rule, namely that the provider network comparability analysis would minimize the number of enrollees whose provider relationships are disrupted as a result of passive enrollment and encourage retention following enrollees' transition to a new integrated D-SNP, while creating an approach that can be more feasibly implemented than the current substantially similar network requirement.

We specifically tied the proposed amendment in Sec. 422.60(g)(2)(ii) to Sec. 422.112(b)(8)(i)(B), which currently requires MA coordinated care plans to provide a minimum 90-day transition period for basic benefits when an enrollee currently undergoing treatment switches to a new MA plan. This provision requires that for a minimum of 90 days, when an enrollee switches to a new MA coordinated care plan, any active course of treatment must not be subject to any prior authorization requirements. A more detailed discussion of this proposal is available at 90 FR 54971 of the proposed rule.

We believe that the requirements captured in Sec. 422.112(b)(8)(i)(B) are consistent with the intention behind passive enrollment at Sec. 422.60(g), and as such, we proposed to apply the requirements at Sec. 422.112(b)(8) to Sec. 422.60(g)(2)(ii), except that continuity of care would be applicable for 120 days as opposed to 90 days, as is currently required at Sec. 422.112(b)(8). This proposal was an attempt to balance the current 90-day requirement applicable to all coordinated care plans with the intention behind the current regulation at Sec. 422.60(g) to minimize the number of enrollees whose provider relationships are disrupted as a result of passive enrollment.

Additionally, we would like to note that in our proposed revision of Sec. 422.60(g)(2)(ii), we also proposed to remove the language that requires the receiving plan to have substantially similar Medicare and Medicaid-covered benefits as the relinquishing integrated D-SNP. Integration levels are defined both in statute and in regulation at Sec. Sec. 422.2 and 422.107(d), and Medicare Part A, B, and D benefits and Medicaid benefits do not tend to differ across D-SNPs with the same integration level within a State. As such, we do not believe that a specific assessment for substantially similar coverage of Medicare and Medicaid covered benefits is required. In such a situation where passive enrollment is implemented, we believe that an assessment of level of integration between the relinquishing and receiving integrated D-SNPs would suffice.

Our continued goal with passive enrollment is to ensure that the integrated D-SNPs receiving passive enrollments provide high-quality care, coverage and administration of benefits. Passive enrollments benefit a plan by providing an enrollee and associated payments without the plan having to successfully market to the enrollee. Thus, we continue to believe that it is important that these enrollments are limited to plans that have demonstrated commitment to quality and are able to provide longer continuity of care to minimize service disruption for receiving dually eligible enrollees, who have complex and unique care needs. We did not propose any other changes to Sec. 422.60(g) or the process; receiving plans would still be held to all other standards set forth at Sec. 422.60(g)(2). Similarly, we did not propose changes to the current regulation at Sec. 422.60(g)(4) regarding beneficiary notification requirements. Further, passively enrolled enrollees would still have the opportunity to opt out of the receiving plan, and Sec. 422.60(g)(5), which describes an enrollee's access to the special election period at Sec. 423.38(c)(10), would still be in effect.

We welcomed comments on the changes we proposed at Sec. 422.60(g)(2)(i) and (ii). Similarly, we solicited comment on our proposed revision to Sec. 422.60(g)(2)(vi) which would require that an integrated D-SNP receiving passive enrollment have the care coordinator staffing capacity to receive dually eligible enrollees through passive enrollment. Our proposal did not define a minimum staffing capacity threshold in order to give integrated D-SNPs flexibility in implementing this proposed change. We invited comment on the feasibility of this proposed requirement and requested suggestions for potential refinement.

We received the following comments on this proposal and respond to them:

Comment: Many commenters, including MedPAC and MACPAC, generally supported the proposal to remove the requirement for the receiving D- SNP and the relinquishing D-SNP to have substantially similar networks and instead replace it with a period of continuity of care of 120 days as well as the requirement that the receiving D-SNP have care coordinator staffing capacity to receive dually eligible enrollees through passive enrollment. The commenters noted that these changes would allow for the passive enrollment option to be more readily used and facilitate continued enrollment in an integrated plan for eligible beneficiaries. Some commenters also noted that the proposed changes to passive enrollment would safeguard integrated coverage for dually eligible individuals and would allow passive enrollment to function as intended without imposing unrealistic alignment standards on States with complex delivery systems. A few commenters mentioned the effect of market changes and State re-procurement decisions on the landscape of integrated care and noted that passive enrollment between a non- renewing integrated D-SNP and a comparable D-SNP can help increase enrollment and retention in integrated D-SNPs.

Response: We appreciate the comments and support for the proposed changes to the passive enrollment process. We agree with the commenters that these changes will help streamline the passive enrollment process and help retain enrollment in integrated D-SNPs.

Comment: Some commenters opposed our proposal based on their assertion that CMS's proposal to remove the requirement for substantially similar networks due to not being able to implement such a requirement is an indication that passive enrollment should not be used, and that a slightly extended period for continuity of care does not make up for a future inability to see chosen providers. These commenters further reasoned that allowing passive enrollment could lead to override of an individual's plan enrollment decision, and that the noticing provided to enrollees alerting them that they are being passively enrolled in a new D-SNP with the option to opt out is not enough. A commenter also opined that there is no research to provide evidence that D-SNPs provide improvement in care

coordination for dually eligible enrollees.

Response: We acknowledge the commenters' perspectives on the proposal. We would like to reiterate that passive enrollment is an opportunity for enrollees in an integrated D-SNP to transition to another integrated D-SNP when their original plan is non-renewing or terminating. As we stated in preamble to the proposed rule (90 FR 54971) and as set forth in Sec. 422.60(g)(1)(iii) and described in the April 2018 final rule, and in the August 2018 HPMS memo \108\ that provided further technical assistance to D-SNPs on passive enrollment, such a transition would only occur after consulting with the State Medicaid agency that contracts with the D-SNP and when CMS determines that the passive enrollment will promote continuity of care and integrated care. Under the notice requirements at Sec. 422.60(g)(4), enrollees who are passively enrolled will receive a first notice from the integrated D-SNP receiving enrollment at least 60 days before the first day of enrollment in the receiving D-SNP, and a second notice at least 30 days before the first day of enrollment in the receiving D- SNP. Each of these notices will alert enrollees that they have the opportunity to opt out of the enrollment into the receiving integrated D-SNP. In the Contact Year 2027 proposed rule, we did not propose amendments to Sec. 422.60(g)(5), which describes an enrollee's access to the special enrollment period (SEP) at Sec. 423.38(c)(10). We stated that Sec. 422.60(g)(5) would still be in effect. As such, this SEP would also be accessible to enrollees who are interested in switching their coverage (90 FR 54972). Enrollees in D-SNPs also have access to the one-time-per month SEP for dually eligible individuals and other LIS eligible individuals to elect Original Medicare and a standalone PDP and the integrated care SEP which allows full-benefit dually eligible individuals to elect an integrated D-SNP on a monthly basis. We believe that the passive enrollment mechanism, coupled with ample opportunity for an enrollee to switch coverage, does not amount to override of enrollee decision making.

Further, since the inception of the passive enrollment process at Sec. 422.60(g)(1)(iii), CMS's decision to implement passive enrollment has been discretionary, not mandatory, and subject to a deliberative process. As we noted in the August 2018 HPMS memo, in order to implement D-SNP passive enrollment under Sec. 422.60(g)(1)(iii), CMS must consult with the applicable State, CMS must determine that passive enrollment will promote integrated care and continuity of care, and the receiving integrated D-SNP must meet certain requirements. Though our proposal will amend some of the requirements, we did not intend to, nor do we believe that we proposed an amendment to the passive enrollment process that will, dilute our goal to promote integration and continuity of care. We continue to believe that integrated D-SNPs can provide greater integration of Medicare and Medicaid services and experiences than enrollees would otherwise receive in other MA plans or Original Medicare, particularly when an individual is enrolled in both a D-SNP and Medicaid managed care organization (MCO) offered by the same organization.

Although research has not yet uniformly shown an advantage for dually eligible individuals enrolling in D-SNPs with Medicare and Medicaid integration, preliminary evidence suggests that dually eligible individuals enrolled in integrated plans, on average, experience, reduced emergency department and inpatient hospital admissions, fewer long-term nursing facility stays, greater use of patient care, and slightly better experience and clinical outcomes than those in non-integrated plans.\109\ In their March 2024 Report to Congress, MedPAC highlighted a HEDIS measure to exemplify care coordination. MedPAC's review of HEDIS data on follow-up after emergency department visits for people with multiple high risk chronic conditions showed that coordination-only D-SNPs, HIDE SNPs and FIDE SNPs performed better than other MA plans for enrollees ages 65 years and older and HIDE SNPs and FIDE SNPs performed better than other MA plans for enrollees ages 18-64 years.\110\

\109\ Roberts ET, Duggan C, Stein R, Jonnadula S, Johnston KJ, Figueroa JF. Quality, spending, utilization, and outcomes among dual-eligible Medicare-Medicaid beneficiaries in integrated care programs: a systematic review. JAMA Health Forum. July 2024. Available from: https://jamanetwork.com/journals/jama-health-forum/fullarticle/2821202; Feng Z, Wang J, Gadaska A, Knowles M, Haber S, Ingber M, Grouverman, V. Comparing Outcomes for Dual Eligible Beneficiaries in Integrated Care: Final Report, September 2021. Available from: https://aspe.hhs.gov/sites/default/files/documents/9739cab65ad0221a66ebe45463d10d37/dual-eligible-beneficiaries-integrated-care.pdf; and https://www.macpac.gov/wp-content/uploads/2019/07/Evaluations-of-Integrated-Care-Models-for-Dually-Eligible-Beneficiaries-Key-Findings-and-Research-Gaps.pdf; and MACPAC Evaluations of Integrated Care Models for Dually Eligible Beneficiaries: Key Findings and Research Gaps, August 2020. Available from: https://www.macpac.gov/wp-content/uploads/2019/07/Evaluations-of-Integrated-Care-Models-for-Dually-Eligible-Beneficiaries-Key-Findings-and-Research-Gaps.pdf.

\110\ MedPAC. Report to Congress: Medicare Payment Policy, Chapter 14, March 2024. Retrieved from: https://www.medpac.gov/wp-content/uploads/2024/03/Mar24_Ch14_MedPAC_Report_To_Congress_SEC.pdf.

Comment: We received many comments supporting our proposal to amend Sec. 422.60(g)(2)(ii) to require that the D-SNP receiving passive enrollment provide continuity of care to all incoming enrollees for 120 days, with some commenters noting that the proposed amendment would reduce the risk of disrupting patient-provider relationships and help ensure that enrollees continue to receive essential medications and treatments during their plan transition.

Response: We thank commenters for their support.

Comment: We received some comments opposing our proposal to amend Sec. 422.60(g)(2)(ii) to require that the D-SNP receiving passive enrollment provide continuity of care to all incoming enrollees for 120 days. The commenters cited State requirements, and that 120 days would be operationally difficult to achieve. Some of these commenters suggested changing the 120-day proposed requirement to a requirement of 90-to-120 day transition period, suggesting that a period of 90 to 120 days would enable receiving D-SNPs to work with transitioning enrollees without an across-the-board minimum exposure for non-contracted and potentially unmanaged care. A commenter opined that an additional 30- day requirement of continuity of care beyond the currently required 90 days per Sec. 422.112(b)(8)(i)(B) could result in unaccounted for cost trends for the receiving D-SNP. Some commenters requested that CMS further define expectations related to continuity of care and provide clear guidance on how D-SNPs should operationalize continuity requirements, especially in States with multiple Medicaid product types to help ensure that passive enrollment policies advance integration goals without causing confusion or disruption for beneficiaries. For example, one commenter questioned whether, during the continuity of care period, D-SNPs receiving passive enrollment would be required to enter into single case agreements with providers unwilling to join their network.

Commenters further requested that CMS remind all MA plans of their obligations regarding continuity of care under this policy and take enforcement action when MA plans fail to comply. Finally, some commenters suggested that CMS consider strengthening the continuity of care policy by mandating a requirement for the relinquishing D-SNP to provide timely exchange of

clinical and care management information to the receiving D-SNP, including current treatment plans, authorizations, medications, etc.

Response: We welcome these perspectives. We remind commenters that our proposal relates to passive enrollment under a narrow set of circumstances when a State has a non-renewing or terminating integrated D-SNP with full-benefit dually eligible enrollees and seeks to transition these enrollees to another comparable integrated D-SNP with the goal of maintaining integrated coverage. Furthermore, we would like to make the distinction that our proposed amendment to the passive enrollment process at Sec. 422.60(g)(2) is specific to D-SNPs and would not affect enrollees in other types of MA plans, including I- SNPs. We understand that under the Financial Alignment Initiative (FAI), full-benefit dually eligible individuals in some States were able to be passively enrolled into Medicare-Medicaid Plans (MMPs) from different types of plans. That authority was specific to MMPs under the FAI and is separate from the existing D-SNP passive enrollment regulation at Sec. 422.60(g)(2), which we proposed to amend. Section 422.60(g)(2) only applies to integrated D-SNPs where the D-SNP is non- renewing or terminating and the State affirms its interest in transitioning these enrollees to another comparable integrated D-SNP with the goal of maintaining integrated coverage.

Given that the integrated D-SNP is terminating or non-renewing, there is no opportunity for an enrollee to remain in that D-SNP. We defer to D-SNPs receiving passive enrollees on approaches to contract with providers during the continuity of care period, but a single case agreement would be one such option. We appreciate the commenters' perspectives on potential unforeseen cost trends associated with the proposed 120-day continuity of care requirement. In the August 2018 HPMS memo, we stated that the applicable MA plan must meet certain requirements related to, among other things, coverage, cost, and operational capacity, and agree to receive passive enrollments. If a potential receiving D-SNP does not believe it is able to meet these requirements, it is under no obligation to accept passive enrollment if presented the option.

As stated earlier in this section, enrollees subject to passive enrollment would receive notices 60 days and 30 days in advance of the effective date of enrollment in the receiving integrated D-SNP, providing notice of their ability to opt out of the passive enrollment and choose different coverage. Further, as we discussed earlier in this preamble and in the preamble to the Contract Year 2027 proposed rule, we did not propose amendments to Sec. 422.60(g)(5), which describes an enrollee's access to the SEP at Sec. 423.38(c)(10). As such, this SEP would also be accessible to enrollees who are interested in switching their coverage (90 FR 54972). Enrollees in integrated D-SNPs also have access to the one-time-per month SEP for dually eligible individuals and other LIS eligible individuals to elect Original Medicare and a standalone PDP and the integrated care SEP, which allows full-benefit dually eligible individuals to elect an integrated D-SNP on a monthly basis. An individual passively enrolled has ample opportunities to make a different election should they choose not to enroll or remain enrolled in the receiving integrated D-SNP. Any integrated D-SNP that agrees to accept passively enrolled full-benefit dually eligible individuals will be required to comply with the continuity of care requirements.

Finally, we appreciate the comment regarding mandating a requirement to provide timely exchange of clinical and care management information. Such a requirement does not currently exist and was not proposed in the Contract Year 2027 proposed rule, but we note that Sec. 422.119 requires an MA plan to implement and maintain a standards-based application programming interface (API) that--with enrollee approval and direction--allows third party applications to retrieve certain information as specified in Sec. 422.119(b). Additionally, in some instances, State Medicaid agency contracts (SMACs) may require an exchange of information as well. While we are not finalizing any additional requirements under this rule, we may take this comment into consideration in future rulemaking.

Comment: Some commenters suggested that CMS extend the proposed continuity of care provisions beyond 120 days for residents of nursing facilities and assisted living communities, or other high-need groups.

Response: While we appreciate the request for lengthening the proposed continuity of care requirement to beyond 120 days, we believe increasing the existing 90-day continuity of care requirement to 120 days allows D-SNPs receiving passive enrollment sufficient time to maintain an existing course of treatment and educate providers outside of their networks about joining the D-SNP provider network.

Comment: We received some comments that supported our proposal to remove the requirement that receiving integrated D-SNPs meet the requirement in current Sec. 422.60(g)(2)(ii) to have provider networks and facility networks that are substantially similar to those of the relinquishing integrated D-SNP. Some commenters noted that removing the substantially similar network requirement would remove the imposition of unrealistic alignment standards on complex delivery systems, and that this change represents a practical, beneficiary-centered way to maintain continuity of enrollment in integrated care when the D-SNP landscape changes within a State, minimizing disruptions and preserving the benefits of aligned Medicare-Medicaid coverage and care coordination.

Response: We thank the commenters for their support of this proposed revision. We agree that the proposed changes to Sec. 422.60(g)(2)(ii) will allow D-SNPs to use passive enrollment as intended and safeguard integrated coverage for full-benefit dually eligible individuals when their existing D-SNP terminates or does not renew, and CMS determines, after consulting the State Medicaid agency, that passive enrollment will promote integrated care and continuity of care.

Comment: Similarly, we received some comments that opposed our proposal to remove the requirement that receiving integrated D-SNPs have provider and facility networks that are substantially similar to those of the relinquishing integrated D-SNP. A few commenters encouraged CMS to consider how passive enrollment may cause enrollees to lose access to their existing provider networks, asserting that the value of passive enrollments does not outweigh the value of beneficiary access to the facility network they chose, and that enrollee choice should be maximized during any passive enrollment. Another commenter expressed how this provision may affect a State, noting that a State may have focused on aligning the Medicaid and Medicare provider networks in a way that ensures dually eligible enrollees have continued access to services as they transition from Medicaid into Medicare and that the provider networks are fully available to the populations.

Response: We appreciate the commenters' perspectives on this issue. Our intention in proposing changes to the D-SNP passive enrollment process is to provide a process by which full-benefit dually eligible enrollees are able to maintain access to integrated care. As passive enrollment would only be used in situations where an enrollee's

integrated D-SNP is terminating or non-renewing, and considering the required opt out language and the SEPs that were discussed previously in this section, we believe that those enrollees who wish to select their enrollment based on specific providers or facilities will still be able to do so.

We note that more States are including provisions in their SMACs that address alignment of Medicaid and Medicare provider networks between a Medicaid MCO and its affiliated D-SNP. This alignment of provider networks is distinct from the existing substantially similar network language that we proposed to remove at Sec. 422.60 and replace with an extended continuity of care period. The substantially similar network requirement sought to compare networks between different MA organizations offering integrated D-SNPs whereas the alignment the commenter referenced is specific to the provider network between affiliated entities. As such, we do not believe that the change in the D-SNP passive enrollment provision will have any impact on how States are assessing the alignment of Medicaid and Medicare provider networks.

Comment: We received some comments in support of our proposal to require that an integrated D-SNP receiving passive enrollment have the care coordinator staffing capacity to receive dually eligible enrollees through passive enrollment. Some commenters noted that effective care coordination is essential and that flexibility in staffing models allows D-SNPs to tailor care coordination approaches to the unique needs of dually eligible enrollees, State-specific integration requirements, and existing Medicaid managed long-term services and supports (LTSS) delivery systems, while still ensuring that D-SNPs are appropriately resourced to support new enrollees. Commenters noted that integrated D-SNPs receiving passive enrollment would need adequate notice of the impending passive enrollment in order to meet any staffing update requirements and recommended that CMS provide notice of at least 90 days to the receiving D-SNP prior to the passive enrollment effective date, which would allow sufficient time to increase care coordinator staff levels. Other commenters requested that CMS provide additional information on how it would measure and evaluate adequate care coordination capacity under the proposed requirement.

Response: We appreciate the commenters' support of this proposal. We agree that if a D-SNP were to receive passive enrollment, it should be appropriately resourced to support new enrollees and to tailor care coordination approaches to the unique needs. As noted earlier in this preamble and outlined in the August 2018 HPMS memo, CMS's decision to allow passive enrollment for D-SNPs under Sec. 422.60(g)(1)(iii) is intended to be a deliberative process done in consultation with the respective State. We decline the suggestion for CMS to provide a 90-day notice to potential receiving D-SNPs because we do not find it necessary. Potential receiving D-SNPs will be in communication with CMS and the State to determine if the receiving D-SNP meets the regulatory criteria, has the capacity, and agrees to take on the additional enrollment. We do not intend to establish specific standards for care coordination, but we do highlight the necessity of care coordination when transitioning new enrollees who may or may not have high level of need.

Comment: A few commenters opposed our proposal to require that an integrated D-SNP receiving passive enrollment have the care coordinator staffing capacity to receive dually eligible enrollees through passive enrollment. These commenters noted that there are already care coordination requirements outlined at Sec. 422.107(c) and the potential for additional care coordination requirements that State Medicaid agencies include as part of their SMAC arrangement or establish as an expectation in their policy guides. Another commenter suggested that CMS refrain from issuing policies that dictate care coordination staffing ratios. Commenters further requested that CMS clarify the definition of “care coordinator staff.”

Response: We appreciate the thoughtfulness of the commenters' responses to this proposed provision. We note that our proposal did not define a minimum staffing capacity threshold to give integrated D-SNPs flexibility in implementing this proposed change, and we are not intending to prescribe a specific standard or ratio at this time. Further, as the commenters noted, there are already care coordination requirements outlined at Sec. 422.107(c). It was not our intention to amend how care coordination requirements are implemented by D-SNPs as required per Sec. 422.107(c), including how many staff would be enough to fit the needs of the D-SNP's beneficiaries. We did not propose nor are we finalizing any additional language in this regard.

Comment: A few commenters specifically objected to our overall proposal to amend the passive enrollment regulation at Sec. 422.60(g) based on their understanding of how it would affect enrollment in institutional special needs plans (I-SNPs) or enrollees that reside in nursing facilities and assisted living communities. The commenters noted that passively enrolling these enrollees into D-SNPs without comparable networks would undermine these investments and disadvantage I-SNPs that have demonstrated strong performance in serving high-need populations. Commenters also suggested that CMS use tags on enrollment processes as an exclusion criterion for passive enrollment. Commenters advised that if applied, then the enrollment flag or facility site of care should be used to ensure that beneficiaries residing in nursing facilities or assisted living communities are only passively enrolled into plans that can maintain continuity of care within their current care setting. In addition, some commenters recommended that CMS simplify opt-out processes and allow beneficiaries who have opted out of passive enrollment to remain in their chosen plan without having to re-opt-out annually.

Response: We thank the commenters for their perspectives and appreciate the consideration paid to vulnerable populations. As we discussed previously in this preamble, we would like to make the distinction that our proposed amendment to the passive enrollment process at Sec. 422.60(g)(2) is specific to D-SNPs and would not affect enrollees in other types of MA plans, including I-SNPs. We understand that under the FAI, full-benefit dually eligible individuals in some States could be passively enrolled into MMPs from different types of plans. That authority was specific to MMPs under the FAI and is separate from what we proposed in the Contract Year 2027 proposed rule, which only applies to integrated D-SNPs where the D-SNP is non- renewing or terminating and the State affirms its interest in transitioning these enrollees to another comparable integrated D-SNP with the goal of maintaining integrated coverage. Under Sec. 422.60(g), CMS implements D-SNP passive enrollment only after consulting with the State Medicaid agency that contracts with the D- SNP, and requires the MA organization receiving passive enrollment to provide two notices of opt-out opportunities to enrollees at least 30 and 60 days prior to the enrollment effective date. Under our proposed amendment to Sec. 422.60(g)(2), the MA organization must also provide continuity of care with a minimum

transition period of 120 days. We do not believe an opt-out flag is needed since we expect any passive enrollment under Sec. 422.60(g)(1)(iii) would be a one-time occurrence in response to an integrated D-SNP non-renewing or terminating. Individuals passively enrolled have multiple opportunities to switch their enrollment to align with their preferred provider or facility, if they so choose, as detailed earlier in this section.

Comment: Some commenters suggested ideas for involving the State Medicaid agency in passive enrollment. Some of these commenters recommended that CMS clarify the flexibilities available to State Medicaid agencies when permitting passive enrollment, including opportunities for the States to establish higher standards for D-SNPs to participate in passive enrollment. Other commenters advised CMS to amend the proposal to allow passive enrollment if State-specific requirements for continuity and transitions of care, detailed in SMACs, are met. The commenters further suggested that CMS defer to States for individual beneficiary assignments, as States are in the best position to understand which D-SNP provides the least disruptive transition option for its members. Some of the commenters recommended that CMS establish clear criteria for integration, such as aligned enrollment, robust Medicaid contracts, coordinated care management, and shared data systems. The commenters believed that passive enrollment should be permitted when the State Medicaid agency confirms that the receiving D- SNP maintains or improves integration compared to alternatives. Commenters also encouraged CMS to collaborate closely with States to ensure enrollees are informed of any enrollment changes due to the passive enrollment process and have meaningful opportunities to select their preferred plan, such as through State-based actions to waive any Medicaid managed care lock-in policies and issuing notices that outline the remaining integrated D-SNP options.

Response: We appreciate these suggestions. As we mentioned earlier in this preamble, since the inception of the passive enrollment process at Sec. 422.60(g)(1)(iii), CMS's decision to implement passive enrollment has been discretionary, not mandatory, and subject to a deliberative process. We expect the circumstances for passive enrollment under Sec. 422.60(g)(1)(iii) to generally occur when a State selects a new Medicaid MCO that has an affiliated D-SNP. When the State selects a new Medicaid MCO, an existing Medicaid MCO with an affiliated D-SNP may not be selected. In this circumstance, the State may want to passively enroll full-benefit dually eligible individuals from the relinquishing D-SNP into the receiving D-SNP. As we noted in the August 2018 HPMS memo that provided further technical assistance to D-SNPs on passive enrollment, in order to implement D-SNP passive enrollment under Sec. 422.60(g)(1)(iii), CMS must consult with the applicable State, CMS must determine that passive enrollment will promote integrated care and continuity of care, and the receiving integrated D-SNP must meet certain requirements. In light of these requirements and our own longstanding practice, we have every intention of working with States to ensure that passive enrollment is in line with State goals and promotes integrated care. To this end, we note that the proposed amendment at Sec. 422.60(g)(2) does not preclude a State from including in their SMAC additional criteria for passive enrollment from an integrated D-SNP that meets the criteria at Sec. 422.60(g)(2). The additional SMAC criteria could include some of the suggestions advanced by the commenters. Further, a State could include such criteria in its request for proposal that is used to select Medicaid MCOs.

Comment: We received several comments suggesting that we include specific information regarding provider or facility types that would be included in the proposed continuity of care requirement. These comments included setting specific requirements for physical therapists, occupational therapists, speech language pathologists, facility-based rehabilitation, home health and hospice providers. A commenter suggested that passive enrollment should emphasize flexibility to allow States and U.S. Territories, particularly those facing ongoing provider shortages in key service areas, such as behavioral health, long-term services and supports, or specialty care, to better protect continuity of care and avoid passive enrollment into plans with weaker or less adequate networks. A commenter suggested CMS clarify that, for therapy, continuity of care includes continuity of the therapeutic relationship, providers, and locations subject to medical necessity and consistent with the plan of care. Other commenters suggested that CMS implement stronger requirements around wait-times for new appointments and/or provider availability. The commenter further suggested that CMS could require any D-SNPs receiving passive enrollment to conduct a provider disruption analysis and share it with the State Medicaid agency prior to passive enrollment. Other commenters requested that CMS require D- SNPs to make reasonable efforts to contract with providers with which they have entered into continuity of care arrangements, to improve the provider network.

Response: We appreciate these commenters' perspectives. We note that the continuity of care period included in the proposed amendment to Sec. 422.60(g)(2)(ii) would require any integrated D-SNP receiving passive enrollment to provide continuity of care consistent with Sec. 422.112(b)(8)(i)(B) for a minimum of 120 days. Section 422.112(b)(8)(i)(B) applies to any active course(s) of treatment when an enrollee has enrolled in an MA plan after starting a course of treatment, even if the service is furnished by an out-of-network provider. Under our proposal, the integrated D-SNP receiving passive enrollment must not disrupt or require reauthorization for an active course of treatment for new plan enrollees for a period of at least 120 days. To that end, any integrated D-SNP receiving passive enrollment should not impose new administrative hurdles (e.g., new evaluations solely for coverage purposes) that functionally delay care transitions and undermine continuity of care. We emphasize that enrollees who are passively enrolled from a non-renewing or terminating integrated D-SNP into a comparable integrated D-SNP may opt out of the passive enrollment or choose other coverage via an SEP. We believe that the specific suggestions for establishing additional provider network and continuity of care requirements are out of scope for this rulemaking and we are not making any changes to the final rule related to those suggestions.

Comment: A few commenters suggested that CMS establish additional opportunities around when a dually eligible individual who is passively enrolled into a D-SNP can enroll in another plan, and that CMS establish processes to monitor functional outcomes for these dually eligible enrollees. These comments included suggestions for CMS to allow movement from integrated plans to Original Medicare, rather than only to another integrated D-SNP, or to create additional SEPs to allow enrollment in MA. A commenter specifically requested that CMS clarify in regulation that the exemption at Sec. 422.60(g)(3)(ii) applies to individuals who have affirmatively selected a standalone prescription drug plan. Other commenters emphasized the continued

importance of enrollees having sufficient notification about upcoming passive enrollments, the opportunity to make active plan selections during the passive enrollment process and through any applicable SEP.

Response: We agree with the commenters' perspectives about the importance of advance notification to enrollees during the D-SNP passive enrollment process as well as the opportunities to make other coverage selections. As articulated earlier in this section, D-SNP passive enrollment under Sec. 422.60(g)(1)(iii) is only implemented after CMS consults with the State Medicaid agency that contracts with the D-SNP, and requires the MA organization receiving passive enrollment to provide enrollees with two separate notices, at least 30 and 60 days prior to the enrollment effective date, of the opportunity to opt out. If a passively enrolled full-benefit dually eligible individual wanted to make a change after the effective date of enrollment into the receiving integrated D-SNP, they could do so through the one-time-per month SEP for dually eligible individuals and other LIS eligible individuals to elect Original Medicare and a standalone PDP or the integrated care SEP which allows full-benefit dually eligible individuals to elect an integrated D-SNP on a monthly basis. Further, as we discussed earlier in this preamble and in the preamble to the Contract Year 2027 proposed rule, we did not propose amendments to Sec. 422.60(g)(5), which describes an enrollee's access to the SEP at Sec. 423.38(c)(10). As such, this SEP would also be accessible to enrollees who are interested in switching their coverage (90 FR 54972).

Comment: We received several comments offering support for our proposal that receiving D-SNPs operate as applicable integrated plans. Other suggestions included establishing a definition for “new integrated plan” and allowing all D-SNPs that meet strong integration standards, not just AIPs, to be eligible for passive enrollment, arguing that non-AIP D-SNPs can still provide significantly better coordination of Medicare and Medicaid services than other MA plans or Medicare FFS. Commenters also recommend that CMS clarify how the level of integration would be assessed if provider network adequacy and benefits are no longer criteria for passive enrollment and suggested adding to the proposed requirement that the receiving D-SNP must offer a substantially similar service array. A commenter recommended that CMS consider distributing enrollment among remaining qualified D-SNPs when a D-SNP exits the market.

Response: We proposed to amend Sec. 422.60(g)(2)(i) to describe the integrated D-SNPs that can receive passive enrollment as plans that operate as an AIP as described at Sec. 422.561 in an effort to use consistent and accurate language throughout our processes and documentation. We proposed this change since, as stated in the Contract Year 2027 proposed rule (90 FR 54970) and earlier in this section, AIPs meet higher standards of integration, quality, and performance benchmarks than non-AIPs, and have exclusively aligned enrollment (when enrollment in a parent organization's D-SNP is limited to individuals with aligned enrollment), which we believe is a critical part of improving experiences and outcomes for dually eligible individuals. These D-SNP types more meaningfully integrate Medicare and Medicaid services and administrative processes (such as unified appeals and grievances) than HIDE SNPs that are not AIPs or coordination-only D- SNPs that are not also AIPs. Under our proposal, any integrated D-SNPs that meet the requirements in proposed Sec. 422.60(g)(2) could receive passive enrollment from the non-renewing or terminating D-SNP. Additionally, in the August 2018 HPMS memo that provided further technical assistance to D-SNPs on passive enrollment, we did not state that only one plan may be selected to receive enrollees through passive enrollment. As we work with the State through the process, it could be possible for multiple integrated D-SNPs to receive passive enrollment.

Further, as we discussed in the Contract Year 2027 proposed rule, since integration levels are defined both in statute at section 1859(f)(8)(D) of the Act and in regulation at Sec. Sec. 422.2 and 422.107(d), and Medicare Part A, B, and D benefits and Medicaid benefits do not tend to differ across D-SNPs with the same integration level within a State, we do not believe that a specific assessment for substantially similar coverage of Medicare and Medicaid covered benefits or service array is required. In such a situation where passive enrollment is implemented, we believe that an assessment of level of integration between the relinquishing and receiving integrated D-SNPs would suffice (90 FR 54972). For example, if a HIDE SNP that is an AIP is non-renewing in the upcoming plan year, if the State agrees to a passive enrollment process, the receiving D-SNP would most likely also be a HIDE SNP that is an AIP. In the same State, the array of benefits offered by HIDE SNPs that are AIPs would most likely not be meaningfully different.

Comment: We received a few comments that were outside of the scope of this proposal. Commenters suggested that CMS should require D-SNPs serving beneficiaries with serious mental illness to include licensed mental health professionals--whether mental health counselors, marriage and family therapists, clinical social workers, or other qualified behavioral health specialists--directly in care coordination teams or ensure immediate access to behavioral health consultation for care managers. Some commenters suggested using Medicaid managed care contracts to require Medicaid managed care plans to offer HIDE SNPs. Other commenters requested more information about default enrollment. The commenters opined that there is very little public data about default enrollment including total numbers of individuals default enrolled and whether default enrollment opt-out notices follow language and disability preferences of the enrollee. Commenters request data to understand whether default enrollment is working for people and truly reflecting their preferences.

Response: We thank the commenters for their input. While we consider the comments outside the scope of this rulemaking, we take the opportunity to point commenters to information we made available regarding default enrollment. We provide data on the number of D-SNPs approved to participate in default enrollment under Sec. 422.66(c)(2) and the annual number of individuals default enrolled https://www.cms.gov/medicare/enrollment-renewal/managed-care-eligibility-enrollment.

After considering the comments we received and for the reasons outlined in the proposed rule and our responses to comments, we are finalizing the proposed amendments to Sec. 422.60(g)(2) without modification.

C. Continuity in Enrollment for Full-Benefit Dually Eligible Individuals in a D-SNP and Medicaid Fee-for-Service (Sec. Sec. 422.107 and 422.514)

The Contract Year 2025 Medicare Advantage and Part D final rule, which appeared in the Federal Register on April 23, 2024 (hereafter referred to as the April 2024 final rule; 89 FR 30448), included several provisions to simplify options for dually eligible individuals and promote greater alignment of D-SNPs and Medicaid MCOs. We explained at 89 FR 30675 that, despite progress, there remain a significant number of enrollees who receive Medicare services through one managed

care entity and Medicaid services through a different entity (misaligned enrollment), rather than from one organization delivering both Medicare and Medicaid services (aligned enrollment). As expressed in the April 2019 final rule (84 FR 15699 through 15730), we continue to believe that aligned enrollment, and especially exclusively aligned enrollment, is a critical part of improving the experiences and outcomes of dually eligible individuals.

In the April 2024 final rule, we finalized a package of provisions at Sec. Sec. 422.503(b)(8), 422.504(a)(20), and 422.514(h) that require that, beginning in contract year 2027, where an MA organization offers a D-SNP and the MA organization, its parent organization, or any entity that shares a parent organization with the MA organization also contracts with a State as a Medicaid MCO that enrolls full-benefit dual eligible individuals in the same service areas (even if there is only partial overlap of the service areas), the MA organization: (a) may only offer, or have a parent organization or share a parent organization with another MA organization that offers, one D-SNP for full-benefit dual eligible individuals, except as otherwise provided in Sec. 422.514(h)(3); and (b) must limit new enrollment in the D-SNP to individuals enrolled in, or in the process of enrolling in, the Medicaid MCO. Per Sec. 422.514(h)(2), beginning in contract year 2030, such D-SNPs must only enroll (or continue to enroll) individuals enrolled in (or in the process of enrolling in) the affiliated Medicaid MCO, except that such D-SNPs may continue to implement deemed continued eligibility requirements as described in Sec. 422.52(d). To minimize enrollment disruption associated with achieving compliance, in the April 2024 final rule, we finalized a provision at Sec. 422.530(c)(4)(iii) that would provide a new crosswalk exception to allow one or more MA organizations that share a parent organization and offer D-SNPs subject to the new limits to crosswalk enrollees (within the same parent organization and among consistent plan types) when the MA organization chooses to non-renew or consolidate its current D-SNPs to comply with the new rules at Sec. Sec. 422.504(a)(20) and 422.514(h).

In addition, in the April 2024 final rule, we codified at Sec. 422.514(h)(3) two exceptions to the requirements at Sec. 422.514(h)(1) and (2) for instances where (a) the State Medicaid agency contract (SMAC) with the MA organization differentiates enrollment into D-SNPs by age group or to align enrollment in the D-SNP with the eligibility or benefit design used in the State's Medicaid managed care program and (b) the MA organization, its parent organization, or an entity that shares a parent organization with the MA organization offers both HMO D-SNPs and PPO D-SNPs. To promote integrated care through aligned Medicare and Medicaid products, at Sec. 422.514(h)(3)(ii) we finalized that the MA organization, its parent organization, or another MA organization that shares a parent organization with the MA organization may only accept new enrollment in one D-SNP for full-benefit dually eligible individuals in the same service area as an affiliated Medicaid MCO, and such new enrollment is limited to the full-benefit dually eligible individuals who are enrolled (or are enrolling) in the Medicaid MCO.

As articulated in the April 2024 final rule (89 FR 30680), overall, these changes would have several benefits. These include boosting the percentage of D-SNP enrollees in aligned enrollment, and--over time-- exclusively aligned enrollment, increasing access to the comprehensive coordination of care, unified appeal processes across Medicare and Medicaid, continuation of Medicare services during an appeal, and integrated materials that come with enrollment in one or more of the various types of integrated D-SNPs; prompting MA organizations to consolidate PBPs down to a single PBP for full-benefit dually eligible individuals that is aligned with their Medicaid MCO that fully or partially overlaps with the D-SNP service area; removing some incentives for agents and brokers to target dually eligible individuals; lessening assistance needed from advocates and SHIP counselors to correct enrollment issues; and simplifying provider billing and lowering the risk of inappropriate billing.

In response to our proposals in the November 2023 proposed rule, a number of commenters suggested that the enrollment limitations could create barriers to care for dually eligible individuals in States where they are not required to be in or are explicitly carved out from Medicaid managed care (89 FR 30689 through 30690). For example, in New York, only dually eligible individuals with significant long-term care needs are required to enroll in Medicaid managed care, with the majority of dually eligible individuals remaining in Medicaid fee-for- service (FFS). These commenters noted that D-SNPs that also contract with States as Medicaid MCOs can currently enroll individuals into their D-SNP that are enrolled in Medicaid FFS but, under the requirements finalized in the April 2024 final rule, those D-SNPs would not be able to enroll these individuals beginning in 2027 and would be required to disenroll them as of 2030. Commenters indicated that these individuals are better served in D-SNPs where they receive coordination of their Medicare and Medicaid FFS services. The commenters offered several suggestions for how CMS could address these concerns: (a) limiting the proposal to States that require mandatory enrollment for dually eligible individuals, including those who do not receive long- term care services, (b) implementing a limited exception process for States that would allow MA organizations with an affiliated Medicaid MCO to offer at least one D-SNP PBP that is not exclusively aligned and that can enroll dually eligible individuals who maintain Medicaid FFS coverage and (c) phasing in the proposal over time.

In the April 2024 final rule, we did not adopt any of the suggestions put forth by commenters. At 89 FR 30690, we outlined potential drawbacks to limiting the Sec. 422.514(h) provisions to only States that require mandatory Medicaid managed care enrollment for dually eligible individuals. These drawbacks included narrowing the number of States in which these policies would apply, thus reducing the extent to which we would achieve the benefits. It would also raise potential complexity in States where certain subpopulations of dually eligible individuals are mandatorily enrolled, but others are not. We further stated that allowing each MA organization with an affiliated Medicaid MCO to offer at least one D-SNP that is not exclusively aligned with its affiliated Medicaid MCO for the purpose of enrolling dually eligible individuals who are enrolled in Medicaid FFS would similarly reduce the extent to which we would achieve the benefits described in the proposed rule, create additional operational complexity for States and CMS to administer and monitor, and would likely be more complicated to explain from a beneficiary communications and messaging perspective compared to the proposal that we finalized in the April 2024 final rule. Finally, we stated our belief that the phase-in of the policy would provide ample time for transition; the finalized requirement limits new enrollment to individuals enrolled in both a D-SNP and affiliated Medicaid MCO offered under the same

parent organization starting in 2027 and then disenrolling those enrollees who do not have aligned enrollment in the D-SNP's affiliated Medicaid MCO in 2030. MA organizations would have two bid cycles and contract years (2025 and 2026) during which D-SNPs with affiliated Medicaid MCOs may prepare for the first phase of enrollment limitations.

Since we codified the package of provisions in the April 2024 final rule, we have continued to receive feedback from stakeholders on some challenges in implementing these provisions in States without mandatory Medicaid managed care for the dual eligible population. For example, New York does not require mandatory Medicaid managed care for its Integrated Benefits for Dually Eligible Enrollees (IB-Duals) program. Participating HIDE SNPs may enroll full-benefit dually eligible individuals who are enrolled in Medicaid FFS or an unaffiliated Medicaid MCO. These HIDE SNPs do not have aligned enrollment. Without any change, in 2030, these HIDE SNPs would need to disenroll any enrollees who do not have aligned enrollment in the HIDE SNP's affiliated Medicaid MCO. In other words, beginning in 2027, these HIDE SNPs could no longer enroll any new dually eligible individuals who are enrolled in Medicaid FFS or an unaligned Medicaid MCO, and, in CY 2030, these HIDE SNPs would need to disenroll Medicaid FFS enrollees and any individuals enrolled in an unaligned Medicaid MCO.

In States that do not require mandatory Medicaid managed care for all of their full-benefit dually eligible individuals, we are also concerned about the Sec. 422.514(h) requirements potentially disadvantaging MA organizations offering coordination-only D-SNPs and HIDE SNPs that both enroll full-benefit dually eligible individuals in the same service areas. The requirements at Sec. 422.514(h) do not apply to MA organizations in a State that only offers coordination-only D-SNPs if these MA organizations, their parent organizations, or any entity that shares a parent organization with the MA organization does not also contract with the State as a Medicaid MCO that enrolls full- benefit dually eligible individuals. However, the Sec. 422.514(h) requirements do apply to a State's HIDE SNPs if the MA organization also contracts with the State as a Medicaid MCO that enrolls full- benefit dually eligible individuals. In the Contract Year 2027 proposed rule, we provided a specific example in Pennsylvania to describe how Sec. 422.514(h) requirements would potentially be disadvantaging to MA organizations offering coordination-only D-SNPs and HIDE SNPs that both enroll full-benefit dually eligible individuals in the same service areas. Please refer to 90 FR 54974 for the full discussion, and to our response to comments later on in this preamble which provide a correction to this example.

In 2027, in a State that does not mandate Medicaid managed care, those MA organizations offering a HIDE SNP with unaligned enrollment will no longer be permitted to enroll unaligned full-benefit dually eligible individuals into the HIDE SNP or allow full-benefit dually eligible individuals to enroll in the coordination-only D-SNP, unlike those MA organizations that only offer coordination-only D-SNPs in the State and do not contract with the State as a Medicaid MCO. In 2030, MA organizations with unaligned HIDE SNPs would need to disenroll any unaligned full-benefit dually eligible individuals from their HIDE SNP. In a State that does not mandate Medicaid managed care, we believe that our regulation as-is at Sec. 422.514(h) could create an incentive for MA organizations to terminate their HIDE SNP and transition dually eligible enrollees to the coordination-only D-SNP, which could continue to enroll full-benefit dually eligible individuals regardless of whether an enrollee receives their Medicaid coverage through Medicaid FFS or an unaligned Medicaid managed care plan, allowing such a plan to maintain maximum enrollment. For these reasons, we believe that the application of Sec. 422.514(h) to the MA organizations with unaligned HIDE SNPs and coordination-only D-SNPs puts them at a disadvantage in comparison to those MA organizations with only coordination-only D- SNPs, since full-benefit dually eligible individuals are able to, and do, remain in Medicaid FFS in States without mandatory Medicaid managed care. This is an unintended consequence of Sec. 422.514(h), inconsistent with our goals to promote integrated care. While our goal is to have full-benefit dually eligible individuals enrolled in integrated D-SNPs, we do not want to inadvertently prevent integrated D-SNPs from continuing to enroll full-benefit dually eligible individuals who are enrolled in Medicaid FFS.

In the Contract Year 2027 proposed rule, we proposed to amend Sec. Sec. 422.107(d)(1) and 422.514(h) to allow D-SNPs that serve full-benefit dually eligible individuals in a HIDE SNP or coordination- only D-SNP to continue enrollment of full-benefit dually eligible individuals in a D-SNP in the same service area where those individuals are enrolled in Medicaid FFS. In the Contract Year 2027 proposed rule at 90 FR 54974, we explained that these proposed changes would address the challenges of MA organizations complying with the requirements at Sec. 422.514(h) in States where there is no mandatory Medicaid managed care program and avoid the need for MA organizations in those States to cease enrolling full-benefit dually eligible individuals who are in Medicaid FFS starting in 2027 and start disenrolling those members in 2030 as currently required under Sec. 422.514(h).

We proposed to amend SMAC requirements at Sec. 422.107(d)(1) through adding a new (i). For any SMACs that allow coordination-only D- SNPs (as established under Sec. 422.107(d)(1)) to enroll full-benefit dually eligible individuals, proposed paragraph (i) would require the SMAC to stipulate that such full-benefit dually eligible beneficiaries cannot be enrolled in a Medicaid MCO that is owned and controlled by an entity other than the MA organization, its parent organization, or an entity that shares a parent organization with the MA organization. In other words, the proposed amendment to Sec. 422.107(d)(1) would permit coordination-only D-SNPs that enroll full-benefit dually eligible individuals to enroll full-benefit dually eligible individuals who are enrolled in Medicaid FFS.

At Sec. 422.514(h)(3), we proposed to add new (iii) and (iv). For any SMACs that permit full-benefit dually eligible individuals to enroll in (a) a coordination-only D-SNP per the proposed amendment at Sec. 422.107(d)(1)(i) or (b) a HIDE SNP with a majority of individuals enrolled in Medicaid FFS, the new paragraph proposed at Sec. 422.514(h)(3)(iii) would allow the MA organization, its parent organization, or an entity that shares a parent organization with the MA organization to offer one or more additional D-SNPs for full-benefit dually eligible individuals in the same service area. We explained that our belief was that limiting the proposed exception at Sec. 422.514(h)(3) to HIDE SNPs with a majority of enrollees in Medicaid FFS would prevent application of this exception to HIDE SNPs with a minority of Medicaid FFS enrollees and a majority of Medicaid managed care enrollees whose Medicaid MCO is unaligned with the HIDE SNP. HIDE SNPs with a majority of enrollees in unaligned Medicaid MCOs would have less incentive to achieve aligned membership and detract from the intended goals of Sec. 422.514(h). We

proposed adding a new (iv) at Sec. 422.514(h)(3) that would require MA organizations with D-SNPs subject to Sec. 422.514(h)(3)(iii) to comply with care coordination responsibilities at Sec. 422.562(a)(5). Per Sec. 422.562(a)(5)(i), D-SNPs must offer to assist an enrollee in that D-SNP with obtaining Medicaid-covered services and resolving grievances, including requesting authorization of Medicaid services, as applicable, and navigating Medicaid appeals and grievances in connection with the enrollee's own Medicaid coverage, regardless of whether such coverage is in Medicaid FFS or a Medicaid managed care plan, such as a Medicaid MCO, prepaid inpatient health plan (PIHP), or prepaid ambulatory health plan (PAHP) as defined in Sec. 438.2. If the enrollee accepts the offer of assistance, the plan must provide the assistance. Examples of such assistance are outlined at Sec. 422.562(a)(5)(i)(A). We considered amending Sec. 422.562(a)(5)(i)(A) to require MA organizations with D-SNPs subject to proposed Sec. 422.514(h)(3)(iii) to report to CMS on the proactive outreach they provide to Medicaid FFS enrollees, the type of assistance they offered to these enrollees, and whether these enrollees received the relevant Medicaid services. We did not propose to require MA organizations with D-SNPs subject to proposed Sec. 422.514(h)(3)(iii) to report their efforts to meet Sec. 422.562(a)(5)(i) to CMS since such reporting would add burden for MA organizations and we may be able to leverage existing oversight mechanisms, such as models of care (MOCs), CMS program audits, monthly calls between MA organizations and CMS account managers, and existing State Medicaid FFS reporting to CMS instead of adding new plan reporting requirements. We solicited comments on whether we should amend Sec. 422.562(a)(5)(i)(A) to require MA organizations with D-SNPs to report on their activities for assisting Medicaid FFS enrollees in obtaining Medicaid covered services instead of or in addition to the existing oversight mechanisms outlined.

In the Contract Year 2027 proposed rule, we stated our position that these proposals at Sec. Sec. 422.107(d)(1)(i) and 422.514(h)(3) would benefit MA organizations operating multiple D-SNPs that enroll full-benefit dually eligible individuals in States without mandatory Medicaid managed care. The intent of our proposed changes was to remove the disadvantage some MA organizations that offer HIDE SNPs will encounter starting (a) in 2027, when they would need to stop enrolling full-benefit dually eligible individuals into HIDE SNPs that enroll Medicaid FFS enrollees and (b) in 2030, when they would need to disenroll full-benefit dually eligible individuals from HIDE SNPs that enroll Medicaid FFS enrollees. Similarly, our proposed changes were intended to address the disadvantage MA organizations that offer HIDE SNPs and coordination-only D-SNPs will encounter starting (a) in 2027, when they would need to stop enrolling full-benefit dually eligible individuals into coordination-only D-SNPs and (b) in 2030, when they would need to disenroll full-benefit dually eligible individuals from coordination-only D-SNPs that enroll Medicaid FFS enrollees. We explained in the Contract Year 2027 proposed rule that we do not believe these changes would detract from the goal of the provisions we codified in the April 2024 final rule, which was to increase the percentage of D-SNP enrollees in aligned enrollment, and--over time-- exclusively aligned enrollment. When Medicaid FFS is available and HIDE SNPs can enroll individuals who are in Medicaid FFS, exclusively aligned enrollment cannot be achieved.

In the April 2024 final rule, we received comments concerning the applicability of the enrollment limitation policies at Sec. 422.514(h) on unique Medicaid managed care programs. Among others, commenters raised specific questions about the applicability of this rule to D- SNPs in Puerto Rico (89 FR 30697). We responded to these comments and noted that MA organizations that offer multiple D-SNPs participating in the Platino program in Puerto Rico would be required to only offer one D-SNP starting in 2027 for full-benefit dually eligible individuals in a service area where an MA organization, its parent organizations, or an entity that shares a parent organization with the MA organization also offers an affiliated Medicaid MCO unless those D-SNPs meet the exception finalized at Sec. 422.514(h)(3).

Currently, Puerto Rico is the only U.S. Territory that offers D- SNPs. We note that the U.S. Territories, including Puerto Rico, are unique, as the Medicaid program in the U.S. Territories differs from Medicaid programs operating in the States and the District of Columbia in several notable ways. The Medicare Savings Programs (MSPs), as defined at section 1144(c)(7) of the Act and 42 CFR 435.4, are Medicaid eligibility groups through which Medicaid assists low-income Medicare beneficiaries with their Part A and/or Part B premiums, and for many enrollees, cost-sharing. The MSPs are mandatory Medicaid eligibility groups for the 50 States and the District of Columbia, but optional for the U.S. Territories per section 1905(p)(4)(A) of the Act. Currently, no U.S. Territory has adopted the MSPs. Additionally, per section 1860D-14(a)(3)(F) of the Act and 42 CFR 423.907(a)(1), low-income Part D eligible individuals who reside in the U.S. Territories are ineligible for the Part D low-income subsidy, which provides cost- sharing and premium assistance to low-income Part D-eligible in the 50 States and the District of Columbia in accordance with section 1860D-14 of the Act and 42 CFR part 423 subpart P. While traditional funding sources for Medicare premiums are unavailable in the U.S. Territories, D-SNPs have the discretion to apply their MA rebate toward the Part B premium amount. (For CY 2026, we note that D-SNPs in Puerto Rico differentiate their plan benefit packages by level of Part B premium reduction amount and supplemental benefits.) Additionally, premiums for Part D are covered by the Enhanced Allotment Plan (section 1935(e) of the Act), a specific source of funding for prescription drugs for the U.S. Territories.

Upon further consideration and given the unique landscape in the U.S. Territories, including Puerto Rico, we proposed an exception at Sec. 422.514(h)(3)(v). The proposed exception would exempt MA organizations operating in U.S. Territories that have not adopted MSP from the requirements at Sec. 422.514(h)(1)(i) that otherwise would require--beginning in contract year 2027--the MA organization to only offer, or have a parent organization or share a parent organization with another MA organization that offers, one D-SNP for full-benefit dual eligible individuals.

We acknowledged in the Contract Year 2027 proposed rule that this proposal is a change from what we previously stated in response to comments in the April 2024 final rule. We also acknowledged that upon further consideration and review, we may, in future rulemaking, reconsider this proposed exception at Sec. 422.514(h)(3)(v). These proposed changes target MA organizations in States with voluntary Medicaid managed care enrollment and seek to level the playing field in the marketplace for impacted D-SNPs. The proposed change at Sec. 422.514(h)(3)(v) is intended to acknowledge the uniqueness of D-SNP landscapes in the U.S. Territories.

We solicited comments on all aspects of our proposal, including whether the advantages of the proposed changes would excessively detract from the original goal of the provisions codified in the April 2024 final rule. For example, we stated that we were interested in stakeholders' perspectives on the value of non-AIP HIDE SNPs with a majority of Medicaid FFS enrollees and whether we should establish an exception for them at proposed Sec. 422.514(h)(3)(iii) at all or limit that exception to a shorter period of time, such as 2027 through 2029. While in the Contract Year 2027 proposed rule we identified a few States that we expected would benefit from our proposals, we invited commenters to identify other States that could benefit or be negatively impacted. As outlined earlier in this section, we also solicited comments on whether we should amend Sec. 422.562(a)(5)(i)(A) to require MA organizations with D-SNPs subject to proposed Sec. 422.514(h)(3)(iii) to report on their activities to assist Medicaid FFS enrollees with obtaining Medicaid covered services. Further, we solicited comment on the likely effectiveness of our proposed regulation in balancing the roles of D-SNPs in the U.S. Territories to fill the gaps of MSP and Part D LIS while also providing robust Medicare benefits to dually eligible individuals. We also stated our interest in perspectives on how limiting D-SNPs in the U.S. Territories would affect enrollees and the consumer choice in U.S. Territories.

We received the following comments on this proposal and respond to them below:

Comment: Many commenters, including MACPAC, expressed their support for our proposal to amend Sec. Sec. 422.107(d)(1) and 422.514(h) to allow D-SNPs that serve full-benefit dually eligible individuals in a HIDE SNP or coordination-only D-SNP to continue enrollment of full- benefit dually eligible individuals in a D-SNP in the same service area where those individuals are enrolled in Medicaid FFS. Commenters opined that this proposal accommodates diversity in State Medicaid managed care requirements while preserving opportunities for integrated care for all dually eligible individuals. Commenters expressed that while significant integration cannot be achieved for dually eligible enrollees in Medicaid FFS, D-SNPs might still provide helpful support to Medicaid FFS enrollees, including in obtaining Medicaid-covered services and navigating Medicaid appeals and grievances processes. MACPAC explained that the proposal recognized CMS's efforts to accommodate States' varying managed care landscapes and the challenges States and plans face as they work toward greater integration of Medicare and Medicaid benefits.

Response: We thank the commenters for their support for this proposal. As we stated in the Contract Year 2027 proposed rule, our intention in proposing this exception was to address the challenges of MA organizations complying with the requirements at Sec. 422.514(h) in States where there is no mandatory Medicaid managed care program and avoid the need for MA organizations in those States to cease enrolling full-benefit dually eligible individuals who are in Medicaid FFS starting in 2027 and disenroll unaligned members in 2030 as currently required under Sec. 422.514(h). We appreciate the commenters' confirmation of our understanding that the varied Medicaid managed care landscapes necessitate an exception for when Medicaid FFS is available and exclusively aligned enrollment cannot be achieved.

Comment: Some commenters objected to the proposal to amend Sec. Sec. 422.107(d)(1) and 422.514(h). These commenters expressed their belief that this proposal would reduce the scope of or limit enrollment in coordination-only D-SNPs or that this proposed language could result in a D-SNP having more than one health plan under the same MA organization operating in the same service area with different networks, offering different benefits, and requiring different premiums, causing market confusion for dually eligible individuals.

Response: We thank the commenters for their attention to this proposal, and we appreciate the opportunity to clarify aspects of what we proposed. We would like to reiterate that the intention of this proposal is to address the challenges that some MA organizations may have in complying with the requirements at Sec. 422.514(h) in States where there is no mandatory Medicaid managed care program for all full- benefit dually eligible enrollees. As our stated goal has been to promote integrated care, the purpose of the proposal put forth in the Contract Year 2027 proposed rule is to avoid the need for MA organizations in States without mandatory Medicaid managed care to cease enrolling full-benefit dually eligible individuals who are in Medicaid FFS starting in 2027 and disenroll those members in 2030 as would be required under existing Sec. 422.514(h). Further, under our proposal at Sec. 422.514(h)(3), for any SMACs that permit full-benefit dually eligible individuals to enroll in (a) a coordination-only D-SNP per proposed amendment at Sec. 422.107(d)(1)(i) or (b) a HIDE SNP with a majority of individuals enrolled in Medicaid FFS, the new paragraph proposed at Sec. 422.514(h)(3)(iii) would allow the MA organization, its parent organization, or an entity that shares a parent organization with the MA organization to offer one or more additional D-SNPs for full-benefit dually eligible individuals in the same service area. Also, the proposed amendment to Sec. 422.107(d)(1) would permit coordination-only D-SNPs that are affected by the requirements at Sec. 422.514(h) to enroll full-benefit dually eligible individuals who are enrolled in Medicaid FFS. We respectfully disagree with the commenters' assumptions that the proposed rule would limit coordination-only D-SNPs in any way. In fact, we believe that this policy would have positive implications for coordination-only D-SNPs that are affected by the current Sec. 422.514(h) language. We also emphasize that the requirements at Sec. 422.514(h) do not apply to MA organizations in a State that only permits plans to offer coordination-only D-SNPs if these MA organizations, their parent organizations, or any entity that shares a parent organization with the MA organization does not also contract with the State as a Medicaid MCO that enrolls full-benefit dually eligible individuals.

Comment: We received a few comments from States and advocates on how the proposed provisions would affect populations that are excluded from mandatory Medicaid managed care enrollment, or who have the choice to enroll in Medicaid managed care, in a particular State. Commenters were supportive of the proposal to allow these populations to enroll, or continue to be enrolled, in a D-SNP affected by requirements of Sec. 422.514(h), but noted that the “majority of” threshold proposed at Sec. 422.514(h)(3)(iii) may not have the intended impact for beneficiaries in States where carve-outs are for a small population, and would be unable to meet the “majority of” threshold.

Response: We appreciate the responses from commenters illuminating how some States carve certain populations out of mandatory Medicaid managed care. Our intention in proposing this provision was to remove the disadvantage that MA organizations that offer coordination-only D- SNPs with an affiliated Medicaid managed care plan and HIDE SNPs could encounter starting (a) in 2027, when they would need to stop enrolling full-benefit dually eligible

individuals into the D-SNP that enrolls Medicaid FFS enrollees and (b) in 2030, when they would need to disenroll full-benefit dually eligible individuals from the D-SNP that enrolls Medicaid FFS enrollees. We agree that the inclusion of “majority of” in the proposed language at Sec. 422.514(h)(3)(iii) could cause HIDE SNPs in States with small populations of full-benefit dually eligible individuals carved out of mandatory Medicaid managed care to not qualify for the proposed exception. For example, States that have carved-out individuals with intellectual and development disabilities from mandatory Medicaid managed care may have a coordination-only D-SNP or HIDE SNP enrolling the carved-out population. Because the carved-out population is relatively small, the HIDE SNP would not likely meet the proposed “majority of” requirement, and these D-SNPs would need to cease enrolling these full-benefit dually eligible individuals who are in Medicaid FFS starting in 2027 and disenroll those members in 2030, as currently required under Sec. 422.514(h). In light of these concerns, we are modifying the language proposed in Sec. 422.514(h)(3)(iii) that would require a “majority of” HIDE SNP enrollees to be full-benefit dually individuals enrolled in Medicaid FFS in order to qualify for the proposed exception. We provide more detail on this proposed modification below.

Comment: We received many comments on our proposed amendment to Sec. 422.514(h)(3), which would add new paragraph (iii) stipulating in part that the MA organization, its parent organization, or an entity that shares a parent organization with the MA organization that has a HIDE SNP with a majority of individuals enrolled in Medicaid FFS, would be able to offer one or more additional D-SNPs for full-benefit dually eligible individuals in the same service area. Commenters expressed their belief that the proposed exception at Sec. 422.514(h)(3)(iii) extends beyond the stated intent in the preamble and may create confusion for States and health plans, since the proposed amendment did not include corresponding limitations or qualifiers.

Some commenters requested clarification on the use of the term “majority,” while other commenters suggested removing the “majority” threshold altogether. Commenters who suggested its removal stated that such a requirement could create operational challenges for D-SNPs whose enrollment fluctuates near the threshold or it could create unintended incentives for D-SNPs to avoid transitioning eligible members into integrated D-SNPs. Other commenters suggested that we revise the “majority” threshold requirement to avoid impeding aligned enrollment efforts if States transition their Medicaid FFS enrollees to Medicaid managed care.

Response: We thank the commenters for their thoughtful opinions and questions. As we explained in the Contract Year 2027 proposed rule, our intention with the proposed language at Sec. Sec. 422.514(h)(3)(iii) and 422.107(d)(1)(i) was to address the challenges of MA organizations complying with the requirements at Sec. 422.514(h) in States where there is no mandatory Medicaid managed care program for full-benefit dually eligible individuals and avoid the need for MA organizations in those States to cease enrolling full-benefit dually eligible individuals who are in Medicaid FFS starting in 2027 and disenroll those members in 2030 as currently required under Sec. 422.514(h) (90 FR 54974). We proposed that this exception would apply where enrollment of full-benefit dually eligible individuals represents a majority of the HIDE SNP's enrollees, to avoid the proposed exception applying to HIDE SNPs with only small proportion of enrollees in Medicaid FFS.

Upon consideration of the numerous comments received on the impact of the proposed “majority” threshold for HIDE SNPs and to clarify the scope of the proposal, we are modifying some of the language at Sec. 422.107(d)(1)(i) and finalizing as proposed other portions of Sec. 422.107(d)(1)(i). First, we are finalizing as proposed the language at Sec. 422.107(d)(1)(i) providing that in order to trigger the stipulation requirement described in Sec. 422.107(d)(1)(i), the SMAC must include language allowing enrollment of full-benefit dually eligible individuals into the D-SNP. Second, we are finalizing as proposed the language at Sec. 422.107(d)(1)(i) that the SMAC must stipulate that such full-benefit dually eligible individual cannot be enrolled in a Medicaid MCO that is owned and controlled by an entity other than the MA organization, its parent organization, or an entity that shares a parent organization with the MA organization. Third, based on comments we received, we are modifying the proposed language at Sec. 422.107(d)(1)(i) to specify that such an exception is available to a HIDE SNP as well as a coordination-only D-SNP that operates in a State where the State Medicaid agency does not mandate enrollment in Medicaid managed care for all full-benefit dually eligible individuals. We believe that this language appropriately addresses D-SNPs that are subject to Sec. 422.514(h) requirements and operate in a State with voluntary Medicaid managed care and addresses the concerns expressed by commenters on this proposal.

In response to numerous comments we received and to more effectively achieve the intent of the proposal, we are modifying some of the language at Sec. 422.514(h)(3)(iii) and finalizing as proposed other portions of Sec. 422.514(h)(3)(iii). We are finalizing as proposed that the MA organization, its parent organization, or an entity that shares a parent organization with the MA organization subject to this new exception may offer one or more additional D-SNPs for full-benefit dually eligible individuals who are enrolled in Medicaid FFS. We are modifying the provision by removing the threshold requirement that the majority of HIDE SNP enrollees must be enrolled in Medicaid FFS in order to qualify for the new exception. We are replacing the majority threshold with language specifying that (1) if the MA organization subject to Sec. 422.514(h)(1) holds a State Medicaid agency contract with a State that does not mandate enrollment in Medicaid managed care for all full-benefit dually eligible individuals and (2) if the State Medicaid agency contract allows enrollment of full-benefit dually eligible individuals who are enrolled in Medicaid FFS, the MA organization may enroll, in a coordination-only D-SNP or HIDE SNP, full-benefit dually eligible individuals who are enrolled in Medicaid FFS. This modification will remove the proposed majority threshold that raised concerns for the commenters, while ensuring that the exception is only available to the extent a D-SNP operates in a State that does not require mandatory Medicaid managed care for all of its dually eligible enrollees and is allowed, via the State Medicaid agency contract, to enroll Medicaid FFS enrollees. This change is consistent with our intent, as stated in the proposed rule, to allow HIDE SNPs and coordination-only D-SNPs to continue enrollment of dually eligible individuals in a D-SNP in service areas where those individuals are enrolled in Medicaid FFS (90 FR 54974). As we stated in the proposed rule, we did not want to inadvertently prevent integrated D-SNPs from continuing to enroll full-benefit dually eligible individuals who are enrolled in Medicaid FFS. Additionally, in response to public comments seeking clarification on which enrollees D-SNPs subject to this exception may enroll, we are adding language stating that (3) D-SNPs may not enroll full-benefit dually eligible individuals who are enrolled in

a Medicaid MCO that is owned and controlled by an entity other than the MA organization, its parent organization, or an entity that shares a parent organization with the MA organization. This language mirrors the language we are finalizing at Sec. 422.107(d)(1).

We are making these modifications in light of concerns raised by many commenters that the “majority of” threshold was ambiguous and difficult to achieve. Having considered these comments in light of the intent of the exception as described in the proposed rule, we have determined that the modified language for Sec. 422.514(h)(3)(iii) would more effectively result in the desired outcome, as it would allow enrollment of smaller populations that States exclude from Medicaid managed care enrollment, or who have a choice to enroll in Medicaid managed care. Commenters noted that such enrollees may only represent a minority of coordination-only D-SNP or HIDE SNP enrollees and thus tying the new exception to a “majority of” enrollees in Medicaid FFS would exclude such full-benefit dually eligible individuals from enrolling into a HIDE SNP as set forth in State policy. As stated in the proposed rule, our goal is to avoid the need for MA organizations in those States to cease enrolling full-benefit dually eligible individuals who are in Medicaid FFS starting in 2027 and avoid the need to disenroll those members in 2030 as currently required under Sec. 422.514(h) in States that do not mandate enrollment in Medicaid managed care. (90 FR 54974) Furthermore, the requirements set forth in the SMAC will ensure that only coordination-only D-SNPs and HIDE SNPs with Medicaid FFS enrollment operating in States that do not mandate Medicaid managed care for all full-benefit dually eligible individuals and are approved by the State would have the option to use the exception finalized at 422.514(h)(3)(iii) for Medicaid FFS enrollees. Moreover, consistent with CMS's stated intent to allow D-SNPs to continue enrolling Medicaid FFS enrollees, the exception would not allow for the enrollment of individuals enrolled in unaligned Medicaid managed care. Thus, we do not believe it is necessary to limit the exception to HIDE SNPs that have a majority of its enrollees in Medicaid FFS.

Taken together, the modifications that we are finalizing at Sec. Sec. 422.107(d)(1)(i) and 422.514(h)(3)(iii) more effectively alleviate the concerns documented in the Contract Year 2027 proposed rule with regard to Sec. 422.514(h) requirements potentially disadvantaging MA organizations offering coordination-only D-SNPs and HIDE SNPs that enroll full-benefit dually eligible individuals in the same service areas where those individuals are enrolled in Medicaid FFS (90 FR 54974). Based on the numerous comments we received, we would like to reiterate that this exception is only applicable to 1) D-SNPs that are subject to the requirements of Sec. 422.514(h) and that 2) operate in a State that does not mandate that all full-benefit dually eligible individuals enroll in Medicaid managed care.

Comment: Other commenters questioned our inclusion, in the Contract Year 2027 proposed rule, of Pennsylvania as an example of a State that does not mandate Medicaid managed care for full-benefit dually eligible individuals. Commenters clarified that although the State does not have 100-percent mandated Medicaid managed care, most Medicaid beneficiaries are enrolled in mandated managed care, and very few Medicaid beneficiaries are in FFS. Those enrolled in Medicaid FFS are limited to individuals under a particular Medicaid waiver authority, enrolled in PACE, or residents of State hospitals and intermediate care facilities.

Response: We thank the commenters for their clarification of Pennsylvania's landscape. As discussed earlier in this section, we are modifying the scope of the provisions to apply to coordination-only D- SNPs and HIDE SNPs that are subject to the requirements of Sec. 422.514(h) and that operate in a State that does not mandate enrollment in Medicaid managed care for all full-benefit dually eligible individuals. As finalized, the exception at Sec. 422.514(h)(3)(iv) would allow MA organizations that offer both a coordination-only D-SNP and HIDE SNP in Pennsylvania to continue to enroll full-benefit dually eligible individuals that are in Medicaid FFS should the State allow such enrollment in the SMAC.

Comment: We received other comments seeking clarification on the intended impact of this proposal. Some commenters sought clarification on what was proposed in the Contract Year 2027 proposed rule, including whether CMS intends for the proposed language at Sec. 422.514(h)(3)(iii) to allow enrollment of full-benefit dually eligible individuals in Medicaid FFS to also include full-benefit dually eligible individuals who are enrolled in a Medicaid MCO through a parent company that differs from the coordination-only D-SNP or HIDE SNP.

Response: We appreciate the opportunity to clarify what types of enrollees would be eligible for enrollment under this exception. As we discussed earlier in this preamble, if the State Medicaid agency contract allows enrollment of full-benefit dually eligible individuals who are enrolled in Medicaid FFS, the MA organization may enroll, in a coordination-only D-SNP or HIDE SNP, full-benefit dually eligible individuals who are enrolled in Medicaid FFS. Additionally, we are also finalizing language at Sec. 422.107(d)(1)(i) and adding similar language at Sec. 422.514(h)(3)(iii) stating that D-SNPs may not enroll full-benefit dually eligible individuals who are enrolled in a Medicaid MCO that is owned and controlled by an entity other than the MA organization, its parent organization, or an entity that shares a parent organization with the MA organization. We further note that this language would allow eligible D-SNPs to enroll new Medicaid FFS enrollees and continue enrollment for any current enrollees who also have Medicaid FFS.

Comment: We received a few comments seeking clarification or making recommendations about whether this proposed exception at Sec. 422.514(h)(3)(iii) would be a permanent exception. Commenters questioned whether the proposed flexibilities end in 2030 and suggested that this proposal be a time-limited transition mechanism, rather than a permanent policy solution.

Response: While we appreciate the commenters' interest in making the proposed exception at Sec. 422.514(h)(3)(iii) a time-limited transition mechanism, our proposal was to make this exception permanent. We appreciate the consideration that commenters paid to evolving landscapes in States and how this may affect future enrollment. As we discussed previously in this preamble, coordination- only D-SNPs and HIDE SNPs subject to Sec. 422.514(h)(3)(iii) will be allowed to retain full-benefit dually eligible enrollees in Medicaid FFS and newly enroll full-benefit dually eligible enrollees in Medicaid FFS to the extent that such enrollment is allowed via the State Medicaid agency contract per Sec. 422.107(c)(2) and the contract is with a State that does not mandate Medicaid managed care for all full- benefit dually eligible individuals. States retain the option to stipulate enrollment and eligibility requirements in their State Medicaid agency contracts. Nothing in this final rule precludes a State from adding requirements to their State Medicaid agency contracts through Sec. 422.107(c) that would prohibit or

place a time limit on the enrollment of full-benefit dually eligible individuals enrolled in Medicaid FFS by the D-SNP.

Comment: We received several comments in response to our proposal to add specific language at Sec. 422.514(h)(3)(iv) regarding the proposed requirement that MA organizations with D-SNPs subject to paragraph (h)(3)(iii) must comply with responsibilities at existing Sec. 422.562(a)(5). Also, commenters responded to our request for comment on whether to amend Sec. 422.562(a)(5)(i)(A) to require MA organizations with D-SNPs to report on their activities for assisting Medicaid FFS enrollees in obtaining Medicaid covered services instead of or in addition to the existing oversight mechanisms outlined in Sec. 422.562(a)(5). A few commenters requested that we provide more specificity regarding potential reporting requirements. Many other commenters were opposed to the suggestion of additional reporting requirements, with a commenter stating that there could be confusion among plans as to what is required, given that Sec. 422.562(a)(5)(i)(A) is currently applicable to all D-SNPs. A commenter objected to our proposal to add language at Sec. 422.514(h)(3)(iv), stating their belief that such an action would require CMS to pursue Congressional action to redefine these Medicaid FFS coordination-only D-SNPs and HIDE SNPs separate from D-SNPs in statute.

Response: We thank the commenters for their consideration of the proposed regulation text at Sec. 422.514(h)(3)(iv) and the request for comment considering potential reporting requirements for obligations proposed in Sec. 422.514(h)(3)(iv). Our intention in proposing to add text at Sec. 422.514(h)(3)(iv) stating that MA organizations with D- SNPs subject to proposed Sec. 422.514(h)(3)(iii) must comply with responsibilities at Sec. 422.562(a)(5) was to underscore the obligation that D-SNPs have to assist an enrollee in their plan with obtaining Medicaid covered services and resolving grievances, including requesting authorization of Medicaid services, as applicable, and navigating Medicaid appeals and grievances in connection with the enrollee's own Medicaid coverage. This obligation applies to all D-SNPs and their enrollees regardless of enrollment in Medicaid managed care or Medicaid FFS. Upon further review, we agree with commenters that adding a reference to Sec. 422.562(a)(5) at Sec. 422.514(h)(3)(iv) would be redundant since all D-SNPs are subject to the existing requirements at Sec. 422.562(a)(5), so we are not finalizing our proposal to add that language in Sec. 422.514(h)(3)(iv). We further appreciate the comments received in response to our request for comment on whether to amend Sec. 422.562(a)(5)(i)(A) to require MA organizations with D-SNPs to report on their activities for assisting Medicaid FFS enrollees in obtaining Medicaid covered services instead of or in addition to the existing oversight mechanisms outlined in Sec. 422.562(a)(5). We are not taking any action on this comment solicitation in this rulemaking, but we may consider exploring opportunities for potential future rulemaking on this topic.

Finally, we appreciate the viewpoint that the proposed regulatory amendment may be perceived as defining coordination-only D-SNPs and HIDE SNPs with Medicaid FFS enrollees as a separate type of D-SNP. However, we do not believe this to be the case. Through this proposal, we are providing an exception for coordination-only D-SNPs and HIDE SNPs that are subject to the requirements of Sec. 422.514(h) and that operate in a State that does not mandate all full-benefit dually eligible individuals to enroll in Medicaid managed care. We are neither proposing nor finalizing another category of integration. As such, we respectfully disagree with commenters that Congressional action would be needed.

Comment: We received many other comments seeking clarification on the intended impact of this proposal. Some commenters sought clarification on how this proposed policy would be operationalized, if finalized. Commenters sought clarification on who is eligible to enroll in a D-SNP under this proposed exception, including how individuals enrolled in prepaid inpatient health plans (PIHPs) and prepaid ambulatory health plans (PAHPs) would be factored in. Other commenters sought information on how these proposed changes would affect how many PBPs a MA organization could have, whether plans would be allowed to consolidate existing coordination-only D-SNP PBPs into their HIDE-SNP PBPs in their Medicaid MCO service areas, whether plans would be required to create new coordination-only D-SNPs or MA organization contracts or use existing coordination-only D-SNPs and MA organization contracts to take advantage of the proposed exception in addition to whether MA organizations could expand their coordination-only D-SNPs into areas outside of their Medicaid MCO service area. We also received questions regarding crosswalking enrollees between coordination-only D- SNPs and HIDE SNPs, and how proposed changes would affect segmented PBPs. Commenters expressed concern that the proposed language could be read to impose an overall limit on enrollment of individuals in coordination-only D-SNPs and non-affiliated Medicaid MCOs, including those in non-overlapping service areas.

Response: We appreciate the questions raised by the commenters. We would like to reiterate that in the April 2024 final rule, we finalized a package of provisions at Sec. Sec. 422.503(b)(8), 422.504(a)(20), and 422.514(h) that require that, beginning in contract year 2027, where an MA organization offers a D-SNP and the MA organization, its parent organization, or any entity that shares a parent organization with the MA organization also contracts with a State as a Medicaid MCO that enrolls full-benefit dually eligible individuals in the same service areas (even if there is only partial overlap of the service areas), the MA organization: (a) may only offer, or have a parent organization or share a parent organization with another MA organization that offers, one D-SNP for full-benefit dual eligible individuals, except as otherwise provided in Sec. 422.514(h)(3); and (b) must limit new enrollment in the D-SNP to individuals enrolled in, or in the process of enrolling in, the Medicaid MCO. If a D-SNP, or the D-SNP's parent organization, does not contract with the State as a Medicaid MCO, then the D-SNP would not be affected by the provisions in Sec. 422.514(h) and would be able to enroll anyone eligible for their plan per the provisions at Sec. 422.107(c)(2). To the extent that a State does not require enrollment of all full-benefit dually eligible individuals into Medicaid managed care and to the extent that enrollment of full-benefit dually eligible enrollees in Medicaid FFS is allowed via the State Medicaid agency contract per Sec. 422.107(c)(2), the MA organization would be permitted to have coordination-only D-SNPs or HIDE SNPs that enroll or continue to enroll such individuals who are in Medicaid FFS. We therefore disagree with concern that the proposed language could be read to impose an overall limit on enrollment of individuals in coordination-only D-SNPs and non-affiliated Medicaid MCOs, including those in non-overlapping service areas.

We appreciate commenters' concern regarding the application of this proposed exception. We note that we will respond to some of the more detailed operational questions in an updated version of the Frequently Asked Questions (FAQs) and

Enrollment Scenarios for Sec. 422.514(h).\111\ However, we appreciate the opportunity to offer some clarification in terms of scope. In response to comments in the April 2024 final rule, we noted that we believed that applying the provisions at Sec. 422.514(h) to D-SNPs where there is an affiliated PIHP or PAHP could create incentives that are disruptive yet do not significantly further the goals of our proposals. As a result, we did not extend the enrollment limitation policies in Sec. 422.514(h)(1) and (2) beyond Medicaid MCOs or beyond D-SNPs that enroll full-benefit dually eligible individuals, meaning that an MA organization offering a D-SNP in the same area where it, its parent organization, or an entity (or entities) that share a parent organization with the MA organization contracts with the State only as a PIHP or PAHP, would not be subject to the enrollment limitations at Sec. Sec. 422.503(b)(8), 422.504(a)(20), or 422.514(h). Following the reasoning from the April 2024 final rule, D-SNPs with an affiliated PIHP or PAHP not subject to Sec. 422.514(h) would have no need to take advantage of the proposed exception at Sec. 422.514(h)(3)(iii).

\111\ Frequently Asked Questions (FAQs) and Enrollment Scenarios for Sec. 422.514(h). Found at: https://www.cms.gov/files/document/cy2025madsnpsfaqs.pdf.

We would also like to take this opportunity to note that if the exception we are finalizing at Sec. 422.514(h)(3)(iii) is applicable to a D-SNP, the State in the State Medicaid agency contract should, through existing requirements at Sec. 422.107(c)(2), specify if there must be a separate PBP for enrollees who are enrolled in Medicaid FFS.

Comment: A few commenters recommended that CMS provide technical assistance to States and urged CMS to produce enrollee-facing materials for individuals to understand their D-SNP enrollment choices.

Response: We thank the commenters for their suggestion. We intend to continue to provide technical assistance on all aspects of D-SNP policy, including implementation of Sec. 422.514(h), to interested States. We will update CMS-produced enrollee-facing materials with appropriate information reflecting the exceptions to Sec. 422.514(h) finalized in this rule.

Comment: Numerous commenters supported the proposed exception at Sec. 422.514(h)(3)(v), which would exempt MA organizations operating in U.S. Territories that have not adopted MSP from the requirements at Sec. 422.514(h)(1)(i). Some commenters noted that this proposed exception recognized the unique Medicare and Medicaid landscapes in the U.S. Territories, including them not having adopted MSP and using their MA rebate to reduce Part B premiums and provide supplemental benefits. Several commenters mentioned that the proposed exception would maintain beneficiary choice, minimize beneficiary disruption, preserve operational flexibility in the Puerto Rico D-SNP market, in particular. A few of these commenters suggested that CMS consider other standards to trigger the exception to Sec. 422.514(h)(1)(i), allowing the proposed exception to still apply should Puerto Rico adopt MSP in the future. A commenter offered the example of CMS applying the proposed exception in regions where state or local law requires D-SNPs to be fully integrated.

Response: We appreciate these perspectives and agree that the unique landscape in the U.S. Territories, including Puerto Rico, necessitates the proposed exception from the requirements at Sec. 422.514(h)(1)(i). Without the proposed exception, beginning in contract year 2027, the MA organizations offering D-SNPs to full-benefit dually eligible individuals in the U.S. Territories that have not adopted MSP could only offer, or have a parent organization or share a parent organization with another MA organization that offers, one D-SNP for full-benefit dual eligible individuals. We believe that triggering the proposed exception to Sec. 422.514(h)(1)(i) based on participation in MSP is appropriate since should a U.S. Territory, such as Puerto Rico, adopt MSPs there would be less need for D-SNPs to differentiate their plan benefit packages by level of Part B premium reduction amount and supplemental benefits. We are not persuaded to change the requirements for the proposed exception. We clarify that for purposes of this exception, U.S. Territory means any Territory of the United States, including the Commonwealth of Puerto Rico, the Virgin Islands of the United States, Guam, the Commonwealth of the Northern Mariana Islands, and American Samoa.

Comment: A commenter opposed the exception proposed in Sec. 422.514(h)(3)(v), explaining that MA organizations that do not adopt MSP may have higher premiums and cost sharing, making care less affordable for dually eligible individuals. The commenter further stated that allowing MA organizations to offer multiple D-SNPs in the same service area could cause market confusion and lead to less robust plan benefit packages, forcing individuals to choose between the benefits they need in different plans based on affordability rather than one plan that offers all services needed.

Response: Given the unique landscape of the U.S. Territories with no adoption of MSPs, we believe more flexibility is needed to differentiate D-SNP plan benefit packages. We believe the benefits of additional differentiation by level of Part B premium reduction and supplemental benefits outweigh the additional plan benefit packages full-benefit dually eligible individuals would need to review. We will continue to monitor the D-SNP market in the U.S. Territories and consider future rulemaking, as needed.

Comment: Additionally, we received several comments that were out of scope of this proposal, including suggestions on how to support the success of D-SNPs in rural and remote areas, enrollment periods, arguments against exclusively aligned enrollment, upcoding and truncating services, requiring States to align enrollment timelines during the transition to integrated enrollment, and incorporating Federal quality reporting. We received a suggestion that the Medicaid FFS model should be required to coordinate care, but that the State remain responsible for coverage and reimbursement.

Response: We thank the commenters for their questions and concerns and appreciate the breadth of engagement. We appreciate the recommendations; however, these comments are outside the scope of this rulemaking. We will consider exploring opportunities for potential future rulemaking to address some of these issues.

After considering the comments we received and for the reasons outlined above and our responses to comments, we are finalizing our proposal with a few modifications. First, we are finalizing proposed language at Sec. 422.107(d)(1)(i) with modifications to specify that such an exception is available to a HIDE SNP as well as a coordination- only D-SNP that operates in a State where the State Medicaid agency does not mandate enrollment in Medicaid managed care for all full- benefit dually eligible individuals. Second, we are finalizing portions of the language at Sec. 422.514(h)(3)(iii) as proposed; this exception would allow an eligible MA organization, its parent organization, or an entity that shares a parent organization with the MA organization to offer one or more additional D-SNPs for full-benefit dually eligible individuals who are enrolled in Medicaid fee-for-service. We

are also finalizing other modifications: we are removing the language referring to a “majority of” enrollees and replacing it with language specifying that (1) if the MA organization subject to Sec. 422.514(h)(1) holds a State Medicaid agency contract with a State that does not mandate enrollment in Medicaid managed care for all full- benefit dually eligible individuals and (2) if the State Medicaid agency contract allows enrollment of full-benefit dually eligible individuals who are enrolled in Medicaid FFS, the MA organization may enroll in a HIDE SNP or coordination-only D-SNP, full-benefit dually eligible individuals who are enrolled in Medicaid FFS. We are also adding language stating that (3) D-SNPs may not enroll full-benefit dually eligible individuals who are enrolled in a Medicaid managed care organization that is owned and controlled by an entity other than the MA organization, its parent organization, or an entity that shares a parent organization with the MA organization. Third, we are not finalizing the proposed language at 422.514(h)(3)(iv). Fourth, we are finalizing our exception to Sec. 422.514(h)(3)(v) as proposed, which will be located at Sec. 422.514(h)(3)(iv).