Response to Comment Document - 60day

CMS Response to Public Comments Received for CMS-10142
The Centers for Medicare and Medicaid Services (CMS) received comments from one Public
Health student and one Medicare Advantage Organization related to CMS-10142. This is the
reconciliation of the comments.
Comment:
The commenter recommends that CMS require MA/PD plans to report: (1) How bid pricing
assumptions affect beneficiary cost sharing (2) The percentage of rebate savings passed directly
to enrollees, and (3) Transparency on negotiated vs. list prices at the point of sale.
Response: CMS appreciates the comments regarding transparency in bidding assumptions. (1)
Plans are required to submit bids that are actuarially equivalent to or better than the defined
standard benefit. However, bid pricing reflects prospective assumptions that may differ from
actual experience, and variations in realized utilization or costs can affect beneficiary cost
sharing over the contract year. (2) Rebates (also known as Direct and Indirect Remuneration or
DIR) are factored into both the bidding and reconciliation phases of Medicare Advantage (MA)
and Part D plans. Plans estimate expected rebates and other price concessions when submitting
their annual bids. These projected rebates reduce the estimated drug costs, which lowers the bid
amount and ultimately affects beneficiary premiums and government payments. Plans must
project manufacturer rebates, pharmacy price concessions, and other forms of DIR. After the
plan year, actual rebates received are compared to the projected amounts in the bid. The Payment
Reconciliation System (PRS) performs this reconciliation by comparing prospective payment
information to actual costs. If actual rebates differ significantly from projections, this affects the
final settlement between CMS and the plan sponsor. (3) Part D payments are not based on
manufacturers’ list prices, but rather on plans’ negotiated prices and actual net costs. As a result,
reporting list prices at the point of sale would not provide meaningful information for
understanding Part D payment amounts or beneficiary cost sharing.
Comment:
The commenter recommends that CMS require: (1) MA/Part D plans to reimburse pharmacies at
or above NADAC, plus a reasonable dispensing fee (2) Public reporting of pharmacy network
adequacy, including urban/rural disparities, and (3) Disclosure of PBM payment practices to
CMS for oversight.
Response:
This comment is out of scope for CMS-10142 which addresses the Bid Pricing Tools and Bid
Instructions.
Comment:
The commenter recommends that CMS: (1) require plans to document clinical and economic
justification when a high-cost brand is placed above a lower-cost equivalent (2) Audit formulary
decisions for rebate-driven distortions, and (3) Increase reporting around biosimilar uptake and
barriers to use.

Response:
This comment is out of scope for CMS-10142 which addresses the Bid Pricing Tools and Bid
Instructions.
Comment:
The commenter provided feedback about a proposal made on the November Actuarial User
Group Call to update MA Instructions Appendix B Item 23a, 23b and 23c. The plan sponsor
supports the proposed update to Item 23a and 23b but has concerns about the details proposed for
Item 23c. The sponsor is specifically concerned because they do not currently have the
information requested in the proposed form for the projection period, and they believe that
developing this information in the proposed form may result in the potential for circularity and
cascading recalculation risk, and that developing the information which varies by plan design is
burdensome.
Response:
CMS appreciates the comments on the update to MA Instructions Appendix B Item 23 which
was proposed during the November Actuarial User Group call. Due to feedback received, we
updated the language for MA Appendix B Item 23 in the 30-day PRA. The main changes are
summarized below:
• Item 23.1a (Provider Capitation Arrangements) and Item 23.2a (Provider Risk-Sharing
Arrangements) must include a description of each arrangement as stated during the
November Actuarial User Group call. However, arrangements similar in design may be
grouped in the description.
• Item 23.1b (Provider Capitation Arrangements) and 23.2b (Provider Risk-Sharing
Arrangements) must include a description and numerical demonstration of the
methodology used to allocate payments to service categories as stated during the
November Actuarial User Group call. However, the description and numerical
demonstration are only needed for each separate methodology, not for each arrangement.
• Item 23.2c (Provider Risk-Sharing Arrangements) must include a description and
numerical demonstration of the methodology used to allocate payments across each
associated BPT as stated during the November Actuarial User Group call. However, the
description and numerical demonstration are only needed for each separate methodology,
not for each arrangement.
Comment:
The commenter has concerns about CMS’s proposal, beginning in calendar year (CY)
2028, to require risk-sharing payments to be allocated based on the specific types of services
a provider directly furnishes. More generally, the commenter is concerned that increasingly
prescriptive reporting requirements may limit plans’ ability to apply reasonable, actuarially
sound assumptions that align with their business models, data structures, and pricing processes.
The commenter notes that when multiple methodologies can produce reasonable and auditable
results, flexibility is important.

Response:
This comment is in reference to a draft proposal that was made on the November Actuarial User
Group call. This draft proposal was not included in the 60-Day Federal Register posting
of CMS-10142 and therefore this comment is out of scope. However, CMS appreciates the
comments on the CY2028 risk-sharing service category allocation proposal and we intend to
address this feedback when drafting the CY2028 Instructions.