[Federal Register Volume 59, Number 35 (Tuesday, February 22, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-3609]
[[Page Unknown]]
[Federal Register: February 22, 1994]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Health Care Financing Administration
42 CFR Part 417
[BPD-732-P]
RIN 0938-AF76
Medicare Program; Health Maintenance Organization and Competitive
Medical Plan National Coverage Decisions
AGENCY: Health Care Financing Administration (HCFA), HHS.
ACTION: Proposed rule.
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SUMMARY: This proposed rule would affect health maintenance
organizations (HMOs) and competitive medical plans (CMPs) that contract
with HCFA to furnish health care services to Medicare beneficiaries and
to receive payment on a risk basis. These HMOs and CMPs would no longer
be required to absorb the expense of furnishing a new or additional
benefit if all the following conditions apply:
The benefit was established by a national coverage decision (NCD);
The cost of furnishing the service would be significant and was not
taken into account in calculating the per capita rate to be paid by
HCFA during the current calendar year;
The NCD was not published until on or after the date of the
announcement of the current calendar year's per capita rate of payment.
This rule is necessary to implement section 4204(c) of the Omnibus
Budget Reconciliation Act of 1990, commonly referred to as ``OBRA
'90,'' which is effective for calendar years beginning on or after
January 1, 1991.
The purpose of the amendment is to encourage HMOs and CMPs to
contract on a risk basis by ensuring that the actual scope of services
covered under the contract would not change significantly during the
year.
DATES: Comments will be considered if we receive them at the
appropriate address, as provided below, no later than 5 p.m. on April
25, 1994.
ADDRESSES: Mail written comments (1 original and 3 copies) to the
following address: Health Care Financing Administration, Department of
Health and Human Services, Attention: BPD-732-P, P.O. Box 26688,
Baltimore, MD 21207.
If you prefer, you may deliver your written comments to one of the
following addresses:
Room 309-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW.,
Washington, DC 20201, or
Room 132, East High Rise Building, 6325 Security Boulevard, Baltimore,
MD 21207.
Due to staffing and resource limitations, we cannot accept comments
by facsimile (FAX) transmission. In commenting, please refer to file
code BPD-732-P. Comments received timely will be available for public
inspection as they are received, generally beginning approximately 3
weeks after publication of a document, in room 309-G of the
Department's offices at 200 Independence Avenue, SW., Washington, DC,
on Monday through Friday of each week from 8:30 a.m. to 5 p.m. (phone:
(202) 690-7890).
FOR FURTHER INFORMATION CONTACT: Joanne Sinsheimer, (410) 966-4620.
SUPPLEMENTARY INFORMATION:
I. Background
A. National Coverage Decisions
The intention of the Congress, at the time the Medicare law was
enacted in 1965, was that Medicare would provide health insurance to
protect the elderly (and later, the disabled) from the substantial
costs of acute health care services, principally hospital care. The law
was designed generally to cover services ordinarily furnished by
hospitals, skilled nursing facilities (SNFs), and physicians licensed
to practice medicine. The Congress understood that questions as to
coverage of specific services would invariably arise and would require
a specific decision by those administering the program. Thus, it vested
in the Secretary the authority to make those decisions (section
1862(a)(1)(A) of the Act). Section 1862(a)(1)(A) of the Act authorizes
Medicare payment for items or services that are determined to be
reasonable and necessary for the diagnosis or treatment of illness or
injury or to improve the functioning of a malformed body member. While
the Congress provided for the coverage of services such as inpatient
hospital care and physicians' services, coverage for these services is
prohibited unless they are ``reasonable'' and ``necessary.''
We have interpreted section 1862(a)(1)(A) of the Act to exclude
from Medicare coverage those medical and health care services that are
not demonstrated to be safe and effective. Medicare contractors (that
is, fiscal intermediaries, carriers, and Utilization and Quality
Control Peer Review Organizations (PROs)) are charged with the
responsibility of ensuring that payments are made only for services
that are covered under Medicare Part A or Part B. Therefore, in
adjudicating a Medicare claim or conducting utilization and quality
review, they must determine whether a service that has been furnished
to a Medicare beneficiary is included in the scope of Medicare benefits
and, if it is, whether it is ``reasonable'' and ``necessary'' for the
particular medical condition of this particular patient.
The term ``national coverage decision'' (NCD) refers to a coverage
decision that we make and issue as national policy under section
1862(a)(1)(A) of the Act. We have issued over 200 NCDs on specific
services. We publish NCDs in the Medicare Coverage Issues Manual (HCFA-
Pub. 6), and in other HCFA program manuals or as notices or HCFA
Rulings in the Federal Register. Under section 1871(a)(2) of the Act,
NCDs are exempt from the general requirement that no rule, requirement,
or other statement of policy that establishes or changes a substantive
legal standard governing the scope of benefits, the payment for
services, or the eligibility of individuals, entities, or organizations
to furnish or receive benefits under title XVIII will take effect
unless it is promulgated by the Secretary through regulations.
B. HMOs and CMPs
HMOs and CMPs enter into contracts with HCFA to furnish Medicare
covered services to Medicare beneficiaries who enroll in them in
accordance with section 1876 of the Act. The contracts provide for
payment to the HMOs and CMPs on either a risk or a reasonable cost
basis. The provisions in this proposed rule apply only to HMOs and CMPs
that contract on a risk basis.
Risk HMOs and CMPs are paid a predetermined, per capita rate for
each enrolled Medicare beneficiary. Under section 1876(a)(1)(A) of the
Act, we annually determine and announce by September 7 for the
following calendar year, a per capita rate of payment for each class of
Medicare beneficiaries enrolled in a risk HMO or CMP. The per capita
rate is set at 95 percent of the adjusted average per capita cost
(AAPCC). (The AAPCC is an actuarial estimate that we make in advance of
an HMO's or CMP's contract period and that represents an estimate of
what the average per capita cost would be to the Medicare program for
each class of Medicare enrollees if the enrollees had received covered
services in the same geographic area or a similar area, from sources
other than the HMO or CMP.)
We define the classes on the basis of county of residence (State of
residence, for end-stage renal disease beneficiaries), age, sex,
disability, institutional status, and welfare status. Within each
class, we establish two rates, one for beneficiaries entitled to
Medicare Part A and Part B, and one for those entitled only to Medicare
Part B.
C. Statutory Provisions
Under section 1876(c)(2)(A) of the Act, an HMO or CMP is required
to furnish to Medicare enrollees the Medicare covered services to which
they are entitled, but only to the extent that those services are
available to beneficiaries who reside in the geographic area served by
the HMO or CMP but are not enrolled in the organization. The only
exceptions to this general rule are: (1) That risk contracting HMOs and
CMPs are not required to provide hospice care services, or to assume
financial responsibility for inpatient care furnished to an enrollee
who, on the effective date of enrollment, was an inpatient in a
hospital paid under the prospective payment system; and (2) risk
contractors are not required to enroll Medicare beneficiaries who have
end-stage renal disease (whether aged, disabled, or entitled to
Medicare solely because of having end-stage renal disease).
In summary, before enactment of the Omnibus Budget Reconciliation
Act of 1990 (OBRA '90), under sections 1876(c)(2)(A), 1876(a)(6),
1876(a)(1)(D), and 1876(a)(3) of the Act, respectively--
Risk HMOs and CMPs were responsible for furnishing NCD
services of significant cost even though that cost had not been taken
into account in determining the per capita rate that HCFA paid the HMO
or CMP during that year;
Payment for services furnished to Medicare enrollees of a
risk HMO or CMP could be made only to the HMO or CMP, and only in the
form of advance monthly per capita payments; and
Those per capita payments were made instead of the amounts
that would have been made on a fee-for-service basis.
II. Changes Made by OBRA '90
Section 4204(c)(1) of OBRA '90 added section 1876(c)(2)(B) of the
Act, applicable to contract periods beginning on or after January 1,
1991. Under section 1876(c)(2)(B), if HCFA projects that the cost of
furnishing the NCD service will be significant, and the cost of the
service was not taken into account in calculating the most recently
announced per capita payment rates, then, unless otherwise required by
law--
The risk HMO or CMP is not required to furnish the new or
expanded benefit established by the NCD until the first contract year
that begins after the next payment rate announcement (that takes into
account the cost of the NCD service); and
If the risk HMO or CMP does furnish the new or expanded
benefit during the current contract period, the prohibition of section
1876(a)(3) does not apply, and HCFA's intermediary or carrier would pay
the risk HMO or CMP for the NCD service (under the usual Medicare
payment rules and methods) in addition to the monthly capitation
payment. (Usual Medicare payment methods require that payment for
services furnished by a participating provider such as a hospital be
made only to the provider.)
Section 4204(c) of OBRA '90 also amended section 1876(a)(6) of the
Act (the general prohibition against paying any entity other than the
risk HMO or CMP for services furnished to a Medicare enrollee) by
providing an exception for NCD services in section 1876(c)(2)(B)(ii) of
the Act. Under that exception, if a Medicare enrollee chooses to obtain
an NCD service from a source other than the risk HMO or CMP, HCFA may
make payment under the usual Medicare payment methods and rules to the
beneficiary, or to the qualified provider, physician, or supplier, as
appropriate.
III. Provisions of the Proposed Rule
To implement the provisions of section 4204(c) of OBRA '90, we
propose to make the following revisions to 42 CFR part 417 (``Health
Maintenance Organizations, Competitive Medical Plans, and Health Care
Prepayment Plans''). We also plan to make various technical changes.
A. Definitions
In Sec. 417.401 we would add definitions of ``National coverage
decision'' and ``significant cost.''
National coverage decision (NCD) means--a statement of national
policy regarding the Medicare coverage status of a service that we make
under section 1862(a)(1) of the Act and publish in the Federal Register
as a notice or HCFA Ruling, issue as a manual instruction, or announce
by other formal notice. The term does not include coverage changes
mandated by statute.
Significant cost, as it relates to a particular NCD, means either
of the following:
(1) The average cost of furnishing a single service exceeds a cost
threshold that--
(i) For calendar years 1991 and 1992, is $100,000; and
(ii) For 1993 and subsequent calendar years, is the preceding
year's dollar threshold, adjusted to reflect the increase or decrease
in the United States per capita cost (USPCC) for the preceding year.
(2) The cost of all of the services furnished nationwide as a
result of the particular NCD represents at least 0.1 percent of the
USPCC multiplied by the total number of Medicare beneficiaries
nationwide for the applicable calendar year.
(We would actuarially determine the significant cost of an NCD and
include that information in the formal notice of the decison). In
section IV, below, we discuss our reasoning for proposing these
thresholds for significant cost.
B. Range of Services Furnished by HMOs and CMPs
In Sec. 417.414 Qualifying condition: Range of services, we would
redesignate paragraph (b)(4), concerning selection of practitioners, as
paragraph (b)(3) of Sec. 417.416 (which deals with furnishing of
services and is thus a more appropriate location than ``Range of
services''), and add to Sec. 417.414 a new paragraph (b)(4) to specify
that a risk HMO or CMP is not required to furnish an NCD service until
the contract year beginning after the next per capita rate announcement
if all of the following conditions apply:
HCFA has determined and announced that the NCD service
meets the definition of ``significant cost.''
The cost of that service was not included in the
determination of the per capita rate of payment that HCFA pays the HMO
or CMP.
The NCD that established coverage of the service was
issued on or after the date of the announcement of the per capita rate
of payment for that contract year.
Starting with the beginning of the next contract year, the HMO or
CMP would be responsible for furnishing or paying for the NCD service.
We considered that these proposed revisions could have an adverse
effect on the ability of the risk HMO or CMP to manage the enrollee's
health care, but believe the changes are required by the wording of the
statute.
C. Deductible and Coinsurance Amounts
We would amend Sec. 417.452, which deals with Medicare enrollees'
liability for Medicare deductible and coinsurance amounts--
To clarify that the HMO or CMP may reduce these charges
under the ``additional benefits'' provision in Sec. 417.440(b)(4)(i);
and
To provide exemption from deductibles for ``significant
cost'' NCD services that the risk HMO or CMP is not required to
furnish, regardless of whether the service is furnished by the HMO or
CMP or obtained by the enrollee from another source.
We considered also waiving coinsurance for these services because
we believe that beneficiaries enroll in an HMO or CMP, in part, to
protect themselves from significant unanticipated costs. (In HMOs and
CMPs, the actuarial equivalent of deductible and coinsurance amounts is
spread among all enrollees and enrollees know in advance what the
charge will be for particular services.) We believe that imposition of
such costs for enrollees who need a significant cost NCD service could
discourage beneficiaries from enrolling or remaining enrolled in an HMO
or CMP.
We would prefer to encourage beneficiaries to enroll and remain
enrolled in Medicare risk contracting HMOs and CMPs, by relieving
beneficiaries' liability for coinsurance amount. However, we believe
the law requires that beneficiaries be liable for coinsurance amounts
because, unlike deductibles, these amounts are attributable to
particular services received. We are especially interested in comments
on this issue, including other legal interpretations of beneficiary
liability for coinsurance amounts.
D. Payment for NCD Services
We would remove current Sec. 417.586 because it provides an option
(electing to have Medicare intermediaries process and pay hospital and
nursing facility bills for services furnished to Medicare enrollees of
a risk HMO or CMP) that was repealed by section 4012(b) of the Omnibus
Budget Reconciliation Act of 1987 (OBRA '87).
We would add a new Sec. 417.586 (Special rules: Payment for
significant cost national coverage decision (NCD) services). Under this
new section, for significant cost NCD services whose cost was not
included in calculating the per capita payment rate for a risk HMO or
CMP, payment would be made under the usual Medicare payment rules and
methods. Usual Medicare payment methods require that payments for
services furnished by a participating provider, for example, a
hospital, be made only to that provider. The carrier may make payment
for Part B services of physicians and other suppliers such as other
practitioners and entities that are not providers, under usual carrier
procedures, directly to any of the following:
The beneficiary who obtained the service from a qualified
source other than the risk HMO or CMP.
The qualified provider, physician, or supplier that
furnished the service.
The risk HMO or CMP that chose to furnish the service even
though not required to do so.
We would specify, in Sec. 417.586(c), that HCFA does not make an
additional payment for a significant cost NCD service furnished by the
HMO or CMP (even though it is excepted during the current calendar
year) if the HMO or CMP furnishes the NCD service as an optional or
required supplemental service under Sec. 417.440(b)(2), or as an
additional benefit under Sec. 417.592. The reason for the exclusion is
that the costs of both of these types of services are already provided
for under the contract, and the statute specifies that the NCD ``shall
not apply'' to the contract. Optional or required supplemental services
are paid for by the enrollees. The HMO or CMP may provide ``additional
benefits'' as one way to compensate the beneficiary if the per capita
payments it receives from HCFA are higher than the HMO's or CMP's
adjusted community rate (ACR), which is what the HMO or CMP would
charge its non-Medicare enrollees for a package of benefits limited to
Medicare-covered services. We note that, if the NCD services are
already provided under the contract as additional benefits or
supplemental services, the beneficiary would not be required to pay any
additional Medicare coinsurance due to the NCD.
E. Other Clarifying Changes
1. Throughout the affected sections, we would use the more precise
term ``HMO'' or ``CMP'' in preference to the generic term
``organization''.
2. In Sec. 417.440, we would amend paragraph (a) to update a cross-
reference, and paragraph (b)(1) to break down a too-long sentence.
IV. Significant Cost
For 1991 and 1992, we propose that the cost of an NCD service be
considered ``significant'' if the average cost of furnishing that
service exceeds $100,000 or represents a change of at least 0.1 percent
in the United States per capita cost (USPCC) determined for the nation
as a whole. The USPCC is defined in Sec. 417.582 as the average per
capita cost, including intermediary or carrier administrative costs,
incurred by Medicare, as determined on an accrual basis, for services
furnished to Medicare beneficiaries nationwide during the most recent
period for which HCFA has complete data. AAPCCs derived from the USPCC
are the basis for Medicare payments to HMOs and CMPs. We also propose
that beginning with calendar year 1993 the preceding year's threshold
be adjusted to reflect any increase or decrease in the USPCC. The
purpose of the annual adjustment is to keep pace with inflation. The
average annual increase or decrease in the USPCC represents the change
in the average per capita cost of furnishing services to Medicare
beneficiaries.
We would actuarially determine the average cost of an individual
NCD service and include it at the time the NCD is issued in manuals,
published in the Federal Register, or announced by other formal notice.
The $100,000 threshold is proposed because it approximates the 1991
Medicare Part A cost of a liver transplant, a recent and important
national coverage decision that was included in the adjusted average
per capita cost (AAPCC) for 1991. The AAPCC is defined in Sec. 417.401
as an actuarial estimate made by HCFA in advance of an organization's
contract period that represents what the average per capita cost to the
Medicare program would be for each class (that is, Medicare beneficiary
designated by age, sex, disability, institutional, and welfare status)
of the organization's Medicare enrollees if they had received covered
services other than through the organization in the same geographic
area or in a similar area. We are especially interested in receiving
public comments concerning the thresholds we are proposing.
A 0.1 percent annual change in the 1993 USPCC would represent an
annual increase of approximately $4.30 or about $156 million in
additional annual outlays for the Medicare program as a whole. We
believe these figures represent the minimum threshold of significant
financial outlay for the average risk contracting HMO or CMP that has a
mean enrollment of nearly 15,800 Medicare beneficiaries and an average
monthly payment from Medicare of approximately $339 per Medicare
beneficiary or $5.37 million. We also believe it would protect small
organizations from unanticipated financial outlays sufficiently to
induce their continued participation in the Medicare program under
section 1876 of the Act.
The section that follows describes the NCDs announced in calendar
years 1991 and 1992. During that period, HCFA announced the addition of
six new services and the removal of one service. By combining Medicare
payment data for physician services with facility costs data, we were
able to estimate the relative costs associated with providing these
services. The coverage of liver transplantation for adults was
estimated to cost over $100,000 per procedure, which meets the
threshold to be considered ``of significant cost'' under this proposed
rule. Adult liver transplantation is covered for specific conditions
when performed in a facility approved by HCFA as meeting certain
institutional coverage criteria.
The remaining services were estimated to have average costs that
are well below the $100,000 threshold. These services are described
below.
Extracorporeal Immunoadsorption (ECI)
This procedure, which uses Protein A columns, is covered only for
the treatment of patients with Idiopathic Thrombocytopenia Purpura
(ITP) failing other treatments.
Implantation of Automatic Defibrillators
Patient selection criteria were changed to remove requirements that
patients had to have inducible tachyrhythmia before implantation or
that this technology be used as a treatment of last resort. Although
additional patients may be covered, we believe that the savings in
diagnostic costs offset additional costs.
Percutaneous Transluminal Angioplasty (PTA)
This procedure is used in the treatment of obstructive lesions of
arteriovenous dialysis fistulas.
Laparoscopic Cholecystectomy
This surgical procedure is covered for the removal of the gall
bladder.
Apheresis (Therapeutic Pheresis)
This autologous medical procedure is covered for specific
conditions. Medicare coverage criteria have been updated to include
coverage for procedures performed in a hospital setting (inpatient or
outpatient) or in a nonhospital setting if the patient is under the
care of a physician and a physician is also present to direct and
supervise the nonphysician services.
Extracranial-intracranial (EC-IC) Arterial Bypass
In 1991 this surgical procedure was removed from the list of
Medicare covered procedures.
The only ``significant cost'' NCD service among those listed above
is the liver transplant for adults. That NCD was published in the
Federal Register as a final notice on April 12, 1991, at 56 FR 15006.
The decision to cover liver transplants for adults was based on our
determination that liver transplants are medically reasonable and
necessary services if furnished to adult patients with certain
conditions and if furnished by participating facilities that meet
specific criteria including patient selection criteria. Under certain
circumstances, coverage of these liver transplants could be effective
as early as March 8, 1990, which was the publication date of the
proposed notice in the Federal Register. However, Medicare payment for
liver transplants for beneficiaries enrolled in risk HMOs and CMPs was
not included in the per capita rates of payment until January 1991.
Consequently, risk HMOs and CMPs were forced to absorb any liver
transplant costs (approximately $100,000 per transplant) from March 8,
1990, through December 31, 1990.
Items and services necessary to diagnose a condition for which the
recommended therapy is a noncovered service, and most services
furnished as followup care to the noncovered service, are not
considered part of that service and are not included in the payment for
that service. Medicare already covers certain diagnostic services,
which may lead to a recommendation that a beneficiary receive therapy
that is not covered. In addition, Medicare covers certain medically
necessary services that relate to follow-up care to a noncovered
service. For example, for patients who received liver transplants
before March 8, 1990, outpatient diagnostic services preceding the
transplant procedure were covered, as was medically necessary follow-up
care after discharge from the hospital for the noncovered transplant
procedure.
The hospitalization for the transplant procedure would not have
been covered, nor would other services received directly related to the
noncovered procedure, such as the surgeon's fee for the transplant
surgery itself. We consider services that would not have been covered
as part of the NCD occurrence. An occurrence includes the actual
provision of a discrete item or service that is the subject of an NCD.
Any item or service that is already covered, such as diagnostic
services followed by a noncovered therapy, as discussed above, would
not be considered as part of the NCD service and thus would not be
eligible for payment outside the HMO's or CMP's monthly rate. An item
or service that would not have been covered if furnished as part of a
noncovered procedure, such as the surgeon's fee for a noncovered liver
transplant, would qualify for payment outside the HMO's or CMP's
monthly rate, even though it is not itself the subject of the NCD.
Section 1861(s)(2)(J) of the Act provides for coverage of
prescription drugs used in immunosuppressive therapy for 1 year
following a transplant, only if the organ transplant procedure is a
covered service. Therefore, if future NCDs provide for coverage of
transplantation of organs other than the presently covered kidney,
liver, and heart, and are announced after publication of AAPCC rates
for the contract period, immunosuppressive therapy following those
organ transplants would also qualify for payment outside the HMO's or
CMP's monthly rates.
V. Collection of Information Requirements
This rule contains no information collection requirements subject
to review by the Office of Management and Budget under the Paperwork
Reduction Act of 1980 (44 U.S.C. 3501 et seq.).
VI. Response to Comments
Because of the large number of items of correspondence we normally
receive on a proposed rule, we are not able to acknowledge or respond
to them individually. However, we will consider all comments that we
receive by the date and time specified in the ``Dates'' section of this
preamble, and if we proceed with the final rule, we will respond to the
comments in the preamble to the final rule.
VII. Regulatory Impact Statement
A. Introduction
This proposed rule would affect those HMOs and CMPs (90 as of
January 1993) that contract with HCFA to furnish health care services
to Medicare enrollees that are paid on a risk basis. Four demonstration
projects are also subject to the risk contract rules. As of January
1993, there were 21,908 Medicare enrollees in the four demonstration
projects. As a result of the OBRA '90 amendments discussed under
section II of this preamble, for NCD services that the risk HMO or CMP
is not required to furnish (because the cost of furnishing the service
is significant and was not taken into account in determining the per
capita rate that HCFA pays the HMO or CMP), additional payments may be
made as explained in section III.D. of the preamble.
It is clear that these additional payments constitute additional
program expenditures. However, estimation of the amount is difficult
because we cannot accurately predict--
How many of the services added or expanded through NCDs in
any year will be of ``significant cost''; and
How many of the Medicare enrollees of risk HMOs and CMPs
(approximately 1.5 million as of January 1993) will need a
``significant cost'' NCD service.
We do know that only six NCD services were added by HCFA during
1991 and 1992, and that only one of those six services (liver
transplants for adults) would have met a ``significant cost'' criterion
(average cost in excess of $100,000). We do not anticipate a
significant increase in the number of liver transplants performed on
Medicare beneficiaries because livers for transplantation purposes are
not readily available. We believe this surgery will continue to be
performed relatively infrequently.
In accordance with the provisions of Executive Order 12866, this
proposed rule was reviewed by the Office of Management and Budget.
B. Regulatory Flexibility Analysis
We generally prepare a regulatory flexibility analysis that is
consistent with the Regulatory Flexibility Act (RFA, 5 U.S.C. 601
through 612) unless the Secretary certifies that a proposed rule would
not have a significant economic impact on a substantial number of small
entities. For purposes of the RFA, all HMOs and CMPs that have entered
into risk contracts with HCFA are considered to be small entities.
In addition, section 1102(b) of the Act requires the Secretary to
prepare a regulatory impact analysis if a proposed rule would have a
significant impact on the operations of a substantial number of small
rural hospitals. This analysis must conform to the provisions of
section 603 of the RFA. For purposes of section 1102(b) of the Act, we
define a small rural hospital as a hospital that is located outside of
a Metropolitan Statistical Area and has fewer than 50 beds.
As noted earlier in this preamble, we believe that, by ensuring
that the cost of furnishing required Medicare services would not
increase substantially during a contract period, the new rules might
encourage HMOs and CMPs to contract on a risk basis. We anticipate an
increase in the number of risk-contracting organizations, but recognize
that this proposed rule would not constitute a significant economic
impact on a substantial number of HMOs and CMPs. These rules would not
affect the operations of small rural hospitals.
We are not preparing analyses under either the RFA or section
1102(b) of the Act because we have determined, and the Secretary
certifies, that this proposed rule would not result in a significant
economic impact on a substantial number of small entities or a
significant impact on the operations of a substantial number of small
rural hospitals.
List of Subjects in 42 CFR Part 417
Administrative practice and procedure, Grant programs--health,
Health care, Health facilities, Health insurance, Health maintenance
organizations (HMO), Loan programs--health, Medicare, Reporting and
recordkeeping requirements.
42 CFR part 417 would be amended as set forth below:
PART 417--HEALTH MAINTENANCE ORGANIZATIONS, COMPETITIVE MEDICAL
PLANS, AND HEALTH CARE PREPAYMENT PLANS
1. The authority citation continues to read as follows:
Authority: Secs. 1102, 1833(a)(1)(A), 1861(s)(2)(H), 1866(a),
1871, 1874, and 1876 of the Social Security Act (42 U.S.C. 1302,
1395l(a)(1)(A), 1395x(s)(2)(H), 1395cc(a), 1395hh, 1395kk, and
1395mm); sec. 114(c) of Pub. L. 97-248 (42 U.S.C. 1395mm note); 31
U.S.C. 9701; and secs. 215 and 1301 through 1318 of the Public
Health Service Act (42 U.S.C. 216 and 300e through 300e-17), unless
otherwise noted.
2. In Sec. 417.401, the introductory text is republished, and the
following definitions are added in alphabetical order:
Sec. 417.401 Definitions.
As used in this subpart, and in subparts K through R of this part,
unless the context indicates otherwise--
* * * * *
National coverage decision (NCD) means a national policy statement
regarding the coverage status of a specified service, that HCFA makes
under section 1862(a)(1) of the Act, publishes in the Federal Register
as a notice or HCFA Ruling, or announces by other formal notice. (The
term does not include coverage changes mandated by statute.)
Significant cost, as it relates to a particular NCD, means either
of the following:
(1) The average cost of furnishing a single service exceeds a cost
threshold that--
(i) For calendar years 1991 and 1992, is $100,000; and
(ii) For 1993 and subsequent calendar years, is the preceding
year's dollar threshold, adjusted to reflect the increase or decrease
in the United States per capita cost (USPCC) for the preceding year.
(2) The cost of all of the services furnished nationwide as a
result of the particular NCD represents at least 0.1 percent of the
USPCC multiplied by the total number of Medicare beneficiaries
nationwide for the applicable calendar year.
* * * * *
3. In Sec. 417.414, the section heading and paragraphs (a) and (b)
are revised to read as follows:
Sec. 417.414 Qualifying condition: Range of services furnished by an
HMO or CMP.
(a) Condition. The HMO or CMP must demonstrate that it is capable
of delivering to Medicare enrollees the range of services required in
accordance with this section.
(b) Standard: Range of services--(1) Basic requirement. Except as
specified in paragraphs (b)(3) and (b)(4) of this section, an HMO or
CMP must furnish to its Medicare enrollees (directly or through
arrangements with others) all Medicare services to which those
enrollees are entitled, to the extent that those services are available
to Medicare beneficiaries who reside in the HMO's or CMP's geographic
area but are not enrolled in the HMO or CMP.
(2) Availability. The services are considered available if either
of the following criteria is met:
(i) The sources are located within the geographic area of the HMO
or CMP.
(ii) It is common practice to refer patients to sources outside
that geographic area.
(3) Exception and requirement for hospice care. An HMO or CMP is
not required to furnish hospice care as described under part 418 of
this chapter. However, HMOs and CMPs must inform their Medicare
enrollees concerning the availability of hospice care if either of the
following criteria is met:
(i) A hospice that participates in Medicare is located within the
geographic area of the HMO or CMP.
(ii) It is common practice to refer patients to hospices outside
that geographic area.
(4) Exception for national coverage decision (NCD) services: Risk
HMOs and CMPs. A risk HMO or CMP is not required to furnish or pay for
an NCD service until the contract year beginning after the next per
capita rate announcement if all of the following conditions are met:
(i) HCFA has determined and announced that the NCD service meets
the definition of ``significant cost'' in Sec. 417.401.
(ii) The cost of that service was not included in the determination
of the per capita rate of payment that HCFA pays the HMO or CMP.
(iii) The NCD that established coverage of the service was issued
on or after the date of the announcement of the per capita rate of
payment for that contract year.
(5) Examples. The following examples apply to NCD services of
significant cost and show how the NCD announcement date (which
determines whether the cost of that service is taken into account in
calculating the per capita rate of payment) in turn determines when the
HMO or CMP becomes responsible for furnishing or paying for the NCD
service.
Example A: An NCD is announced on September 1, 1993, effective
on the date of announcement. Because this NCD was announced before
September 7, 1993, the announcement date of the per capita rate of
payment for calendar year 1994, a risk HMO or CMP is responsible for
furnishing or paying for the NCD service beginning with calendar
year 1994.
Example B: An NCD is announced on December 1, 1993, effective on
date of announcement. Because this NCD was announced after September
7, 1993, the announcement date of the per capita rate of payment for
calendar year 1994, the risk HMO or CMP is not responsible for
furnishing or paying for the NCD service until the beginning of
calendar year 1995.
* * * * *
4. In Sec. 417.416, a new paragraph (b)(3) is added to read as
follows:
Sec. 417.416 Qualifying condition: Furnishing of services.
* * * * *
(b) * * *
(3) If more than one type of practitioner is qualified to furnish a
particular service, the organization may select the type of
practitioner to be used.
* * * * *
5. In Sec. 417.440, the section heading and paragraphs (a) and
(b)(1) are revised to read as follows:
Sec. 417.440 Entitlement to health care services from an HMO or CMP.
(a) Basic rules. (1) Subject to the conditions and limitations set
forth in this part, a Medicare enrollee of an HMO or CMP is entitled to
receive health care services directly from, or through arrangements
made by, the HMO or CMP, as specified in this section and
Sec. Sec. 417.442 and 417.444.
(2) A Medicare enrollee is also entitled to receive timely and
reasonable payment directly (or have payment made on his or her behalf)
for services he or she obtained from a provider or supplier outside the
HMO or CMP if those services meet either of the following conditions:
(i) They are emergency services or urgently needed unforeseen
services as defined in Sec. 417.401.
(ii) They are services denied by the HMO or CMP and found (upon
appeal under subpart Q of this part) to be services the enrollee was
entitled to have furnished by the HMO or CMP.
(b) Scope of services. (1) Part A and Part B services. Except as
specified in paragraphs (c) through (e) of this section, a Medicare
enrollee is entitled to receive from the HMO or CMP all the Medicare-
covered services that are available to individuals residing in the
HMO's or CMP's geographic area, as follows:
(i) Medicare Part A and Part B services if the enrollee is entitled
to benefits under both programs.
(ii) Medicare Part B services if the enrollee is entitled only
under that program.
* * * * *
6. In Sec. 417.452, paragraph (a) is revised to read as follows:
Sec. 417.452 Liability of Medicare enrollees.
(a) Deductibles and coinsurance--(1) General rules.
(i) A Medicare enrollee of an HMO or CMP is responsible for HMO or
CMP charges that represent applicable Medicare deductible and
coinsurance amounts.
(ii) The amounts that the HMO or CMP charges its Medicare enrollees
under paragraph (a)(1)(i) of this section may not exceed, on the
average, the actuarial value of the deductibles and coinsurance for
which the Medicare enrollees would be responsible if they were not
enrolled in an HMO or CMP.
(2) Special rules: Medicare enrollees of risk HMOs and CMPs. (i) If
a risk HMO or CMP reduces the deductible and coinsurance charges in
accordance with the ``additional benefits'' option provided in
Sec. 417.440(b)(4)(i), the enrollee pays less than would otherwise be
required under paragraph (a)(1) of this section.
(ii) A Medicare enrollee of a risk HMO or CMP is not responsible
for deductibles applicable to national coverage decision (NCD) services
that the HMO or CMP is not required to furnish because they are
excepted under Sec. 417.414(b)(4). The exemption applies regardless of
whether the HMO or CMP furnishes the services or the enrollee obtains
them from other sources.
(3) Type of charge and source of payment. (i) The deductible and
coinsurance charges imposed by an HMO or CMP may be in the form of
premiums, membership fees, or per-unit or similar charges.
(ii) The deductible and coinsurance charges may be paid by the
enrollee or on his or her behalf by another individual, organization,
or entity.
* * * * *
7. Section 417.586 is revised to read as follows:
Sec. 417.586 Special rules: Payment for significant cost national
coverage decision (NCD) services.
(a) Applicability. This section applies to NCD services that a risk
HMO or CMP is not required to furnish because they are excepted under
Sec. 417.414(b)(4).
(b) Method of payment. If a Medicare enrollee of a risk HMO or CMP
receives an NCD service specified in paragraph (a) of this section,
payment for that service--
(1) Is in addition to the per capita payments to the HMO or CMP;
and
(2) Is made by the fiscal intermediary or carrier under the usual
Medicare rules and methods set forth in part 405; part 410, subpart E;
part 412, 413, or 415, as appropriate; and subject to the requirements
of part 424 of this chapter.
(c) Exceptions. HCFA does not make additional payments under
paragraph (b) of this section if the HMO or CMP--
(1) Is obligated to furnish the NCD service as an ``additional
benefit'' under Sec. 417.592; or
(2) Furnishes the NCD service as an optional or required
supplemental service paid for by the Medicare enrollee under
Sec. 417.440 (b)(2) or (b)(3).
(Catalog of Federal Domestic Assistance Program No. 93.773,
Medicare--Hospital Insurance; and Program No. 93.774, Medicare--
Supplementary Medical Insurance Program)
Dated: July 28, 1993.
Bruce C. Vladeck,
Administrator, Health Care Financing Administration.
Dated: November 3, 1993.
Donna E. Shalala,
Secretary.
[FR Doc. 94-3609 Filed 2-18-94; 8:45 am]
BILLING CODE 4120-01-P