A recent Centers for Medicare & Medicaid Services (CMS) proposed rule1 (the Proposed Rule) would mark the end of a heavily criticized and frequently revised compliance program training requirement currently imposed on Medicare Advantage Organizations (MAOs), Medicare Part D Drug Plan Sponsors (Part D Sponsors), and their first-tier, downstream and related entities (FDRs). Given that this training requirement has impacted such disparate FDRs as pharmacies, pharmacy benefit managers, hospitals, labs, and physician practice groups (among others), this change could offer widespread relief.

Among many other changes, the Proposed Rule eliminates the requirement that MAOs and Part D Sponsors ensure that their FDRs complete training as part of the MAOs’ and Part D Sponsors’ compliance program requirements. CMS defines FDRs to include all persons or entities that contract, directly or through one or more intermediaries, to provide health care or administrative services under a Medicare Advantage or Part D plan.2 Under the Proposed Rule, the current regulation would be amended to simply require that each MAO and Part D Sponsor establish and implement effective training and education for its own compliance officer and organization employees; the chief executive; and other senior administrators, managers and governing body members.3 CMS estimates that this change could reduce the overall compliance training burden by millions of hours annually.

Notwithstanding Ongoing Revisions by CMS, FDR Training Requirements Considered Burdensome by Industry

CMS has struggled over the past 10 years to implement requirements for FDRs to receive compliance and fraud, waste and abuse (FWA) training, and for MAOs and Part D Sponsors to verify and attest to CMS that such training has been performed. In 2007, CMS revised the Medicare Advantage and Part D regulations to require that MAOs and Part D Sponsors ensure their compliance programs include effective training and education for FDRs.4

CMS received immediate response from industry that the requirements were burdensome. The agency acknowledged in a 2009 proposed rule that the regulatory language resulted in duplicative training to FDRs when FDRs had multiple contracts with MAOs and Part D Sponsors, and each plan was required to ensure such training was complete and that FWA training was redundant in instances where Medicare providers had already certified to understanding FWA issues via the Medicare enrollment process.5 Consequently, in 2010, CMS revised the regulations to remove the requirements for those providers that had enrolled as suppliers or providers in Medicare to complete FWA training – although CMS continued to require that such FDRs nevertheless require separate compliance training.6 Notwithstanding this FWA exception, confusion remained as to whether a provider or certain employees were exempt from FWA training, which led to some MAOs and Part D Sponsors requiring such training regardless.7

During and following the 2010 rulemaking, provider/pharmacy FDRs, which generally provide services to Medicare enrollees under a large number of Medicare Advantage and/or Part D Sponsors, continually expressed to CMS their concerns that the training requirements remained duplicative and would pose a significant administrative and financial burden on the provider and plan communities.8 In an effort to alleviate continued industry questions and complaints regarding satisfying the training requirements, CMS, in May 2014, further amended its regulations9 to specify that, effective January 1, 2016, MAOs and Part D Sponsors must require all of their FDRs to take CMS-created training and “accept the certificate of completion of the CMS training as satisfaction of this requirement.” MAOs and Part D Sponsors were “prohibited from developing and implementing their own training or providing supplemental training materials to fulfill this requirement.”10

CMS developed its web-based compliance training through the Medicare Learning Network (MLN) to ensure the FWA and compliance training requirements were met, as well as to reduce the largely duplicative training required of FDRs by the multiple organizations with whom they contract.11 CMS created two MLN training modules – one for general compliance training and the other for FWA training.12

Despite the implementation of these uniform training requirements, however, CMS continued to receive questions and complaints regarding exactly which FDR employees (and which employees of their respective subcontractors who may also constitute FDRs) were required to take the training. On February 10, 2016, CMS issued a memorandum indefinitely suspending CMS’ enforcement of the requirement that MAOs and Part D Sponsors obtain certifications from FDRs confirming completion of the required trainings.13 In the memorandum, CMS explained that in “order to prevent unnecessary burden on FDRs, [MAOs and Part D Sponsors] should work with their FDRs and specify which positions within an FDR must complete the training.” CMS further explained that “there will be certain FDRs where not every employee needs to take the training based on their duties.”14

Proposed Rule Eliminates Requirement That FDRs Complete CMS Training

The Proposed Rule would rewind the clock to pre-2007 by eliminating the requirement that FDRs complete CMS’ general compliance and FWA training requirements.15 Notwithstanding the removal of the FDR training requirements, MAOs and Part D Plan Sponsors must still contractually require their FDRs to comply with all applicable federal laws, regulations and CMS instructions pursuant to 42 C.F.R. sections 422.504(b)(4)(vi) and 423.504(b)(4)(vi), as well as sections 422.504(i) and 423.505(i); and MAOs and Part D Plan Sponsors are still ultimately held responsible by CMS for any failures of their FDRs to comply with Medicare program requirements.

In the Proposed Rule, CMS references hospitals as one sector of the health industry that has been particularly vocal about the burden the current training requirement has placed on the hospital and its staff, although many other types of health care entities have been impacted by the training requirement.16 While CMS acknowledges in the Proposed Rule that it has no way to determine exactly how many FDRs there are, or exactly how many staff would be expected to take the training under the current requirements, it estimates that the burden reduction by removing the training requirement for FDRs will likely equate to an astonishing 6 million to 8 million hours each year (each of the CMS training modules is estimated to require one hour to complete).17

CMS asserts that eliminating the training requirements would not hinder overall compliance because MAOs and Part D Plan Sponsors must still monitor FDRs and implement corrective actions when mistakes are found, which CMS believes is being done adequately.18 The revision within the Proposed Rule, however, appears to alleviate a tremendous strain for plans and FDRs alike.

CMS will accept comments on the Proposed Rule through January 16, 2018.