[Title 42 CFR U]
[Code of Federal Regulations (annual edition) - October 1, 2007 Edition]
[Title 42 - PUBLIC HEALTH]
[Chapter IV - CENTERS FOR MEDICARE]
[Subchapter A - GENERAL PROVISIONS]
[Part 417 - HEALTH MAINTENANCE ORGANIZATIONS, COMPETITIVE MEDICAL PLANS, AND HEALTH CARE PREPAYMENT PLANS]
[Subpart U - Health Care Prepayment Plans]
[From the U.S. Government Printing Office]
42PUBLIC HEALTH32007-10-012007-10-01falseHealth Care Prepayment PlansUSubpart UPUBLIC HEALTHCENTERS FOR MEDICAREGENERAL PROVISIONSHEALTH MAINTENANCE ORGANIZATIONS, COMPETITIVE MEDICAL PLANS, AND HEALTH CARE PREPAYMENT PLANS
Subpart U_Health Care Prepayment Plans
Source: 50 FR 1375, Jan. 10, 1985, unless otherwise noted.
Sec. 417.800 Payment to HCPPs: Definitions and basic rules.
(a) Definitions. As used in this subpart, unless the context
indicates otherwise--
Covered Part B services means physicians' services, diagnostic X-ray
tests, laboratory, other diagnostic tests, and any additional medical
and other health services, that the HCPP furnishes to its Medicare
enrollees.
Health care prepayment plan (HCPP) means an organization that meets
the following conditions:
(1) Effective January 1, 1999, (or on the effective date of the HCPP
agreement in the case of a 1998 applicant) either--
(A) Is union or employer sponsored; or
(B) Does not provide, or arrange for the provision of, any inpatient
hospital services.
(2) Is responsible for the organization, financing, and delivery of
covered Part B services to a defined population on a prepayment basis.
(3) Meets the conditions specified in paragraph (b) of this section.
(4) Elects to be reimbursed on a reasonable cost basis.
[[Page 187]]
Medicare enrollee means a beneficiary under Part B of Medicare who
has been identified on CMS records as an enrollee of the HCPP. Reporting
period means the period specified by CMS for which an HCPP must report
its costs and utilization.
(b) Qualifying conditions. (1) Except as provided in paragraph
(b)(2) of this section, an organization wishing to participate as an
HCPP must--
(i) Enter into a written agreement with CMS as specified in Sec.
417.801;
(ii) Furnish physicians' services through its employees or under a
formal arrangement with a medical group, independent practice
association or individual physicians; and
(iii) Furnish covered Part B services to its Medicare enrollees
through institutions, entities, and persons that have qualified under
the applicable requirements of title XVIII of the Social Security Act
and section 353 of the PHS Act.
(2) An organization that, as of January 31, 1983, was being
reimbursed on a reasonable cost basis under section 1833(a)(1)(A) of the
Act, and that would not otherwise meet the conditions specified in
paragraph (b)(1) of this section, may receive reimbursement on a
reasonable cost basis as an HCPP, provided it files an agreement with
CMS as required by Sec. 417.801.
(c) Payment of reasonable cost. (1) Except as otherwise provided in
this subpart, CMS pays an HCPP on the basis of the reasonable cost it
incurs, as specified in subpart O of this part, for the covered Part B
services furnished to its Medicare enrollees.
(2) Payment for Part B services: Basic rules. (i) Cost basis
payment. Except as provided in paragraph (d) of this section, CMS pays
an HCPP on the basis of the reasonable costs it incurs, as specified in
subpart O of this part, for the covered Part B services furnished to its
Medicare enrollees.
(ii) Deductions. In determining the amount due an HCPP for covered
Part B services furnished to its Medicare enrollees, CMS deducts, from
the reasonable cost actually incurred by the HCPP, the following:
(A) The actuarial value of the Part B deductible.
(B) An amount equal to 20 percent of the cost incurred for any
service that is subject to the Medicare coinsurance.
(d) Covered services not reimbursed to an HCPP. (1) Services
reimbursed under Part A are not reimbursable to an HCPP. CMS makes
payment for these services directly to the hospital, or other provider
of services, on a reasonable cost basis through the provider's Medicare
fiscal intermediary (for more details, see parts 412 and 413 of this
chapter).
(2) Covered Part B services furnished by a provider of services to
an HCPP's Medicare enrollees are not payable to the HCPP. CMS makes
payment for these services to the provider on behalf of the Medicare
enrollee through the provider's Medicare fiscal intermediary. This
requirement does not affect Medicare payment to the HCPP for physicians'
services furnished to its Medicare enrollees for which the physicians
are compensated by the HCPP.
(e) Payment for services to nonenrollees. CMS makes payment to an
HCPP for covered Part B services furnished by the HCPP to a Medicare
beneficiary who is not enrolled in the HCPP if the beneficiary assigns
his rights to payment in accordance with Sec. 424.55 of this chapter.
Payment is made on a reasonable charge basis through the HCPP's Medicare
carrier.
[50 FR 1346, Jan. 10, 1985, as amended at 51 FR 34833, Sept. 30, 1986;
53 FR 6648, Mar. 2, 1988; 57 FR 7135, Feb. 28, 1992; 58 FR 38081, July
15, 1993; 60 FR 34888, July 5, 1995; 63 FR 35067, June 26, 1998; 63 FR
52611, Oct. 1, 1998]
Sec. 417.801 Agreements between CMS and health care prepayment plans.
(a) General requirement. (1) In order to participate and receive
payment under the Medicare program as an HCPP as defined in Sec.
417.800, an organization must enter into a written agreement with CMS.
(2) An existing group practice prepayment plan (GPPP) that continues
as an HCPP under this subpart U must have entered into a written
agreement with CMS within 60 days of January 31, 1983.
(b) Terms. The agreement must provide that the HCPP agrees to--
[[Page 188]]
(1) Maintain compliance with the requirements for participation and
reimbursement on a reasonable cost basis of HCPPs as specified in Sec.
417.800;
(2) Not charge the Medicare enrollee or any other person for items
or services for which that enrollee is entitled to have payment made
under the provisions of this part, except for any deductible or
coinsurance amounts for which the enrollee is liable;
(3) Refund, as promptly as possible, any money incorrectly collected
as charges or premiums, or in any other way from Medicare enrollees in
the HCPP in accordance with the requirements specified in Sec. 417.456;
(4) Not impose any limitations on the acceptance of Medicare
enrollees or beneficiaries for care and treatment that it does not
impose on all other individuals;
(5) Meet the advance directives requirements specified in Sec.
417.436(d) of this part;
(6) Establish administrative review procedures in accordance with
Sec. Sec. 417.830 through 417.840 for Medicare enrollees who are
dissatisfied with denied services or claims; and
(7) Consider any additional requirements that CMS finds necessary or
desirable for efficient and effective program administration.
(c) Duration of agreement. Except for the term of the initial
agreement, the agreement is for a term of one year and may be renewed
annually by mutual consent. The term of the initial agreement is set by
CMS.
(d) Termination or nonrenewal of agreement by CMS. (1) CMS may
terminate or not renew an agreement if it determines that--
(i) The HCPP no longer meets the requirements for participation and
reimbursement as an HCPP as specified in Sec. 417.800;
(ii) The HCPP is not in substantial compliance with the provisions
of the agreement, applicable CMS regulations, or applicable provisions
of the Medicare law; or
(iii) The HCPP undergoes a change in ownership as specified in
subpart M of this part.
(2) CMS will give notice of termination or nonrenewal to the HCPP at
least 90 days before the effective date stated in the notice.
(e) Termination or nonrenewal of agreement by HCPP. (1) If an HCPP
does not wish to renew its agreement at the end of the term, it must
give written notice to CMS at least 90 days before the end of the term
of the agreement. If an HCPP wishes to terminate its agreement before
the end of the term, it must file a written notice with CMS stating the
intended effective date of termination.
(2) CMS may approve the termination date proposed by the HCPP, or
set a different date no later than 6 months after that date. CMS makes
this decision based on a finding that termination on a specific date
would not--
(i) Unduly disrupt the furnishing of services to the community
serviced by the HCPP; or
(ii) Otherwise interfere with the efficient administration of the
Medicare program.
[50 FR 1375, Jan. 10, 1985, as amended at 57 FR 8202, Mar. 6, 1992; 58
FR 38081, July 15, 1993; 59 FR 49843, Sept. 30, 1994; 59 FR 59943, Nov.
21, 1994]
Sec. 417.802 Allowable costs.
(a) General rule. The costs that are considered allowable for HCPP
reimbursement are the same as those for reasonable cost HMOs and CMPs
specified in subpart O of this part, except those in Sec. Sec. 417.531,
417.532 (a)(3) and (c) through (g), 417.536 (l) and (m), 417.546,
417.548, and 417.550(b)(2).
(b) Physicians' services and other Part B supplier services
furnished under arrangements--(1) Principle. The amount paid by an HCPP
for physicians' services and other Part B supplier services furnished
under arrangements is an allowable cost to the extent it is reasonable.
(2) Application: Payment on other than a fee-for-service basis. If
the HCPP pays for physicians' services and other Part B supplier
services on other than a fee-for-service basis--
(i) Except as specified in paragraph (b)(2)(ii) of this section, the
costs incurred by the HCPP may be considered reasonable if they--
(A) Do not exceed those that a prudent and cost-conscious buyer
would incur to purchase those services; and
[[Page 189]]
(B) Are comparable to costs incurred for similar services furnished
by similar physicians and other suppliers in the same or a similar
locality.
(ii)(A) If a physician group to whom the HCPP makes payment
compensates its physicians on a fee-for-service basis, the HCPP's
payment to the group may not exceed the reasonable charges for those
services, as defined in subpart E of part 405 of this chapter.
(B) Payment in excess of the limits specified in paragraph
(b)(2)(ii)(A) of this section is allowable if the group has procedures
under which members of the group accept effective incentives, such as
risk-sharing, designed to avoid unnecessary or unduly costly utilization
of health services. In such cases, the amount paid by the HCPP is
considered reasonable if it meets the conditions specified in paragraph
(b)(2)(i) of this section.
(3) Application: Payment on a fee-for-service basis. If the HCPP
pays for physicians' services and other Part B supplier services on a
fee-for-service basis--
(i) Except as specified in paragraph (b)(3)(ii) of this section, the
costs incurred by the HCPP are considered reasonable if they do not
exceed--
(A) The reasonable charges for those services, as defined in subpart
E of part 405 of this chapter; and
(B) The amount that CMS would pay for those services if they were
furnished to beneficiaries who are not enrolled in the HCPP and who
receive the services from sources other than providers of services or
other entities that are reimbursed on a reasonable cost basis.
(ii) Payment to a physician group organized on an individual-
practice basis is not subject to the paragraph (b)(3)(i) of this section
if the group pays its physicians on a fee-for-service basis and has
procedures under which the members of the group accept effective
incentives, such as risk-sharing, designed to avoid unnecessary or
unduly costly utilization of health services. In these cases, the amount
paid by an HCPP is considered reasonable if it meets the conditions
specified in paragraph (b)(2)(i) of this section.
[50 FR 1375, Jan. 10, 1985, as amended at 58 FR 38081, July 15, 1993]
Sec. 417.804 Cost apportionment.
(a) The HCPP follows the cost apportionment principles specified in
Sec. Sec. 417.552 through 417.566, except for provisions on provider
costs and provisions on departmental apportionment.
(b) The HCPP may use a method for reporting costs that is approved
by CMS. CMS bases its approval on a finding that the method--
(1) Results in an accurate and equitable allocation of allowable
costs; and
(2) Is justifiable from an administrative and cost efficiency
standpoint.
Sec. 417.806 Financial records, statistical data, and cost finding.
(a) The principles specified in Sec. 417.568 apply to HCPPs, except
those in paragraph (c) of that section.
(b) The HCPP may use a method for reporting costs that is approved
by CMS. CMS bases its approval on a finding that the method--
(1) Results in an accurate and equitable allocation of allowable
costs; and
(2) Is justifiable from an administrative and cost efficiency
standpoint.
(c) An HCPP must permit the Department and the Comptroller General
to audit or inspect any books and records of the HCPP and of any related
organization that pertain to the determination of amounts payable for
covered Part B services furnished its Medicare enrollees. For purposes
of this requirement, the principles specified in Sec. 417.486 apply to
HCPPs.
[50 FR 1375, Jan. 10, 1985, as amended at 58 FR 38081, July 15, 1993]
Sec. 417.808 Interim per capita payments.
The HCPP follows the principles specified in Sec. Sec. 417.570 and
417.572 on interim per capita payments, except for the following:
(a) When applying these principles to HCPPs, the term ``reporting
period'' should be used instead of the term ``contract period''
contained in that section.
(b) An HCPP must submit to CMS an annual operating budget and
enrollment forecast, in the form and detail specified by CMS, at least
60 days before the beginning of each reporting period. A reporting
period must be 12 consecutive months, except that the
[[Page 190]]
HCPP's initial reporting period for participating in Medicare may be as
short as 6 months or as long as 18 months.
(c) An HCPP must submit to CMS an interim cost report and enrollment
data applicable to the first 6-month period of the HCPP's reporting
period in the form and detail specified by CMS. The interim cost report
must be submitted not later than 45 days after the close of the first 6-
month period of the HCPP's reporting period.
(d) In lieu of an interim payment based on the actual monthly
enrollment in an HCPP, CMS and the HCPP may agree to a uniform monthly
interim reimbursement rate for a reporting period. This interim rate is
based on the HCPP's budget and enrollment forecast, if CMS is satisfied
that the rate is consistent with efficiency and economy, and will not
result in excessive adjustment at the end of the reporting period.
Sec. 417.810 Final settlement.
(a) General requirement. CMS and an HCPP must make a final
settlement, and payment of amounts due either to the HCPP or to CMS,
following the submission and review of the HCPP's annual cost report and
the supporting documents specified in paragraph (b) of this section.
(b) Annual cost report as basis for final settlement--(1) Form and
due date. An HCPP must submit to CMS a cost report and supporting
documents in the form and detail specified by CMS, no later than 120
days following the close of a reporting period.
(2) Contents. The report must include--
(i) The HCPP's per capita incurred costs of providing covered Part B
services to its Medicare enrollees during the reporting period,
including any costs incurred by another organization related to the HCPP
by common ownership or control;
(ii) The HCPP's methods of apportioning costs among its Medicare
enrollees, enrollees who are not Medicare beneficiaries, and other
nonenrollees, including Medicare beneficiaries receiving health care
services on a fee-for-service or other basis; and
(iii) Information on enrollment and other data as specified by CMS.
(3) Extension of time to submit cost report. CMS may grant an HCPP
an extension of time to submit a cost report for good cause shown.
(4) Failure to report required financial information. If an HCPP
does not submit the required cost report and supporting documents within
the time specified in paragraph (b)(1) of this section, and has not
requested and received an extension of time for good cause shown, CMS
may--
(i) Regard the failure to report this information as evidence of
likely overpayment and reduce or suspend interim payments to the HCPP;
and
(ii) Determine that amounts previously paid are overpayments, and
make appropriate recovery.
(c) Determination of final settlement. Following the HCPP's
submission of the reports specified in paragraph (b) of this section in
acceptable form, CMS makes a determination of the total reimbursement
due the HCPP for the reporting period and the difference, if any,
between this amount and the total interim payments made to the HCPP. CMS
sends to the HCPP a notice of the amount of reimbursement by the
Medicare program. This notice--
(1) Explains CMS's determination of total reimbursement due the HCPP
for the reporting period; and
(2) Informs the HCPP of its right to have the determination reviewed
at a hearing as provided in part 405, subpart R of this chapter.
(d) Payment of amounts due. (1) Within 30 days of CMS's
determination, CMS or the HCPP, as appropriate, will make payment of any
difference between the total amount due and the total interim payments
made to the HCPP by CMS.
(2) If the HCPP does not pay CMS within 30 days of CMS's
determination of any amounts the HCPP owes CMS, CMS may offset further
payments to the HCPP to recover, or to aid in the recovery of, any
overpayment identified in its determination.
(3) Any offset of payments CMS makes under paragraph (d)(2) of this
section will remain in effect even if the HCPP has requested a hearing
on the determination under the provisions of part 405, subpart R of this
chapter.
(e) Tentative settlement. (1) If a final settlement cannot be made
within 90
[[Page 191]]
days after the HCPP submits the report specified in paragraph (b) of
this section, CMS will make an interim settlement by estimating the
amount payable to the HCPP.
(2) CMS or the HCPP will make payment within 30 days of CMS's
determination under the tentative settlement of any estimated amounts
due.
(3) The tentative settlement is subject to adjustment at the time of
a final settlement.
[50 FR 1375, Jan. 10, 1985, as amended at 58 FR 38081, July 15, 1993]
Sec. 417.830 Scope of regulations on beneficiary appeals.
Sections 417.832 through 417.840 establish procedures for the
presentation and resolution of organization determinations,
reconsiderations, hearings, Departmental Appeals Board review, court
reviews, and finality of decisions that are applicable to Medicare
enrollees of an HCPP.
[59 FR 59943, Nov. 21, 1994, as amended at 61 FR 32348, June 24, 1996]
Sec. 417.832 Applicability of requirements and procedures.
(a) The administrative review rights and procedures specified in
Sec. Sec. 417.834 through 417.840 pertain to disputes involving an
organization determination, as defined in Sec. 417.838, with which the
enrollee is dissatisfied.
(b) Physicians and other individuals who furnish items or services
under arrangements with an HCPP have no right of administrative review
under Sec. Sec. 417.834 through 417.840.
(c) The provisions of part 405 dealing with the representation of
parties apply to organization determinations and appeals.
(d) The provisions of part 405 dealing with administrative law judge
hearings, Medicare Appeals Council review, and judicial review are
applicable, unless otherwise provided.
[59 FR 59943, Nov. 21, 1994, as amended at 70 FR 4713, Jan. 28, 2005]
Sec. 417.834 Responsibility for establishing administrative review procedures.
The HCPP is responsible for establishing and maintaining the
administrative review procedures that are specified in Sec. Sec.
417.830 through 417.840.
[59 FR 59943, Nov. 21, 1994]
Sec. 417.836 Written description of administrative review procedures.
Each HCPP is responsible for ensuring that all Medicare enrollees
are informed in writing of the administrative review procedures that are
available to them.
[59 FR 59943, Nov. 21, 1994]
Sec. 417.838 Organization determinations.
(a) Actions that are organization determinations. For purposes of
Sec. Sec. 417.830 through 417.840, an organization determination is a
refusal to furnish or arrange for services, or reimburse the party for
services provided to the beneficiary, on the grounds that the services
are not covered by Medicare.
(b) Actions that are not organization determinations. The following
are not organization determinations for purposes of Sec. Sec. 417.830
through 417.840:
(1) A determination regarding services that were furnished by the
HCPP, either directly or under arrangement, for which the enrollee has
no further obligation for payment.
(2) A determination regarding services that are not covered under
the HCPP's agreement with CMS.
[59 FR 59943, Nov. 21, 1994]
Sec. 417.840 Administrative review procedures.
The HCPP must apply Sec. 422.568 through Sec. 422.619 of this
chapter to organization determinations that affect its Medicare
enrollees, and to reconsiderations, hearings, Medicare Appeals Council
review, and judicial review of those organization determinations.
[70 FR 4713, Jan. 28, 2005]