Why the Proposed Medicare Advantage Plan and Part D Rule Is Favorable for the Nursing Home Space

The federal government’s Medicare Advantage and Part D proposed rule offers nursing home operators several favorable updates, including those related to the appeals process for terminating SNF services as well as alleviating burdens posed by choice and multiple plans for dual eligible residents.

The Centers for Medicare & Medicaid Services (CMS) has been working on some of these initiatives for quite some time. Program changes may be implemented between 2025 and 2030. The Medicare Advantage and Part D rule is usually finalized at the beginning of April each year, according to Fred Bentley, managing director for ATI Advisory’s post-acute and long-term care and senior living practice.

One of these changes is CMS’s bid to alter the appeals process, said Bentley. Specifically, updates to the right of termination during the appeals process for non-hospital services would fast track appeals under the proposed rule. Moreover, the appeals process will be out of the managed care plan’s hands and under the purview of the quality improvement organization (QIO), he said. This is closer to the process for Medicare Fee-for-Service (FFS) beneficiaries.


Other big changes affecting the SNF world include reducing “choice overload” for dual eligible beneficiaries, or those that qualify for both Medicare and Medicaid coverage, which is a large cohort of the nursing home population.

Also, changes to behavioral health services in MA plans and use of generic biologic drugs – the cheaper “biosimilars” – among Part D plans are expected to have tangential effects in the nursing home space.

“It’s building out CMS’s set of expectations and new requirements around utilization management, which, if you’re an operator, you know it’s just an endless set of headaches,” Bentley said. This is an “encouraging development” even though it doesn’t get rid of utilization management among MA plans altogether, he said.


A facility might undergo an appeals process if Medicare doesn’t pay for an item or service which has already been received, or is now required for a beneficiary.

CMS is adding some “teeth and clarity” to the appeals process, Bentley added, saying that the lack of has been a gripe of nursing home leaders.

The federal agency also plans to address how health equity fits into the mix.

Simplified choice for D-SNP beneficiaries

Overall, the proposed rule has a heavy focus on beneficiary protections and program transparency. It also addresses dual-eligible special needs plans (D-SNPs) and the role MA plays in better serving such beneficiaries.

CMS said in the proposed rule that it is continuing to advance Medicare-Medicaid integration while reducing complexity, confusion and choice overload. Dual eligible individuals in some Medicaid managed care markets would have simplified choice in MA plans.

“[The proposed rule] streamlines and arguably reduces the number of D-SNPs and plans overall that nursing homes have to deal with. That makes your life easier as an operator,” said Bentley. “If there’s going to be a more coherent and smaller subset of these plans who you’re contracting with, that’s a positive development.”

Bentley said this means a consolidation of sorts is coming for MA plans that offer D-SNPs.

D-SNPs and their parent Medicare Advantage Organization (MAOs) would face consolidation and new financial considerations in plan design. And, states would be better informed on dual eligible individuals’ experiences through rule changes.

CMS is also expanding requirements around marketing and notifications to beneficiaries of unused supplemental benefits as part of the proposed rule, and beneficiaries would have access to more information about benefits.

MA plans would also have increased responsibility for proving that special supplemental benefits for the chronically ill (SSBCI) maintain or improve beneficiary health or overall function.

Behavioral health changes for MAOs, “biosimilars”

There’s a new requirement around behavioral health specialists having to do with network adequacy standards, Bentley said, which will be beneficial to SNF operators. The new standard could improve access for Medicare beneficiaries.

On the MAO end, plans would need to evolve their provider and facility networks to accommodate more behavioral health patients. Currently, it’s hard to find MAOs that provide behavioral health coverage and if they do, they’re limiting access or providing what Bentley calls a “phantom benefit.” In other words, an MAO can offer behavioral health in an MA plan but there may not be any behavioral health providers in a patient’s market.

“There’s a really massive problem right now in just about every hospital … particularly large hospitals. They can’t move patients out quickly. There are patients languishing in hospitals, and a lot of those patients are individuals with very significant behavioral health challenges,” said Bentley.

Many of these behavioral health patients are on Medicaid, he said. While many states offer such services, it’s still difficult for hospitals to place them in nursing homes, or really anywhere along the post-acute care continuum.

Facility-based institutional special needs plans (I-SNPs), on the other hand, may have fewer network adequacy barriers thanks to an exemption request included in the MA and Part D proposed rule, Bentley said.

Another aspect of the proposed rule which may affect nursing homes is CMS’s effort to streamline the ability of Part D plans to substitute biosimilars for biologic drugs, which translates to more affordable access to certain medications for nursing home residents that are in Part D for Medicare.

Manufactures of biologics may lead to higher rebates for Part D plans. Biologics are medicines made from living organisms, and biosimilars are “highly similar” to an FDA-approved biologic with minor differences due to being manufactured using living organisms.

The proposed rule makes it easier for Part D plans to switch mid-year, if one biosimilar is cheaper or more readily available than its FDA-approved biologic counterpart.

‘[The rule] puts a finger on the scale towards biosimilar adoption or rapid biosimilar adoption,” said Anna Kaltenboek, director of ATI’s prescription drug reimbursement practice. “This is going to affect the Part D group where the formulary decisions are not made by the nursing facility but actually by the health plan.”

Down the line, Kaltenboek hopes Medicare Part A will adopt something similar for medication coverage, opting for biosimilars as a lower cost option in the nursing home.

“If a patient is on Humira, and there is a lower cost option available that is similar to Humira, it would behoove the skilled nursing facility to get the cheaper version in order to save money,” said Kaltenboek. “While the Part D rule doesn’t necessarily apply in the Part A setting, my hope is that, even without that, that facilities can start to adopt lower cost options to treat patients during their stays.”