[Federal Register Volume 63, Number 43 (Thursday, March 5, 1998)]
[Notices]
[Pages 10921-10927]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-5234]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration
[HCFA-1103-GN]


Medicare Program; HCFA Market Research for Providers and Other 
Partners

AGENCY: Health Care Financing Administration (HCFA), HHS.

ACTION: General notice with comment period.

-----------------------------------------------------------------------

SUMMARY: This notice seeks public comments on information needs of 
Medicare risk contract health maintenance organizations (HMOs) and 
competitive medical plans (CMPs) and communication strategies that 
could improve the effectiveness and efficiency of the risk contract 
program. Under section 4002 of the Balanced Budget Act of 1997, and 
with the implementation of the Medicare+Choice program, all HMOs and 
CMPs will contract with HFCA under requirements of the Medicare+Choice 
program. The information sought in this notice will facilitate future 
changes in the contracting program, as well as improve information 
needs and communication strategies under the current risk program. 
Respondents should prioritize issues raised in the preliminary research 
and identify any additional areas of information needs and best 
communication strategies.
    This initiative is one component of our overall effort to develop a 
comprehensive communication strategy with Medicare providers and HMOs/
CMPs and to develop innovative approaches that will assist all program 
participants to obtain and use information in the most accessible and 
effective manner. Preliminary research on the information needs of 
Medicare risk contract HMOs and CMPs and effective communication 
strategies has identified a number of areas in which we could provide 
additional information and potential strategies for communicating that 
information effectively.

DATES: Written comments will be considered if we receive them at the 
appropriate address, as provided below, no later than 5 p.m. on May 4, 
1998.

ADDRESSES: Mail written comments (one original and three copies) to the 
following address: Health Care Financing Administration, Department of 
Health and Human Services, Attention: HCFA-1103-GN, P.O. Box 26676, 
Baltimore, MD 21207.
    If you prefer, you may deliver your written comments (one original 
and three copies) to one of the following addresses:

Room 309-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW, 
Washington, DC 20201, or
Room C5-09-26, 7500 Security Boulevard, Baltimore, MD 21244-1850.

    Because of staffing and resource limitations, we cannot accept 
comments by facsimile (FAX) transmission. In commenting, please refer 
to file code HCFA-1103-GN. 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).
    Comments may also be submitted electronically to the following e-
mail address: [email protected]. E-mail comments must include the 
full name and address of the sender and must be submitted to the 
referenced address in order to be considered. All comments must be 
incorporated in the e-mail message because we may not be able to access 
attachments. Electronically submitted comments will also be available 
for public inspection at the Independence Avenue address above.

FOR FURTHER INFORMATION CONTACT: Sherry Terrell (410) 786-6601.

SUPPLEMENTARY INFORMATION:

I. Background

    Section 1876 of the Social Security Act (the Act) authorizes 
Medicare payment to health maintenance organizations (HMOs) and 
competitive medical plans (CMPs) that contract with HCFA to furnish 
covered services to Medicare beneficiaries. For purposes of

[[Page 10922]]

this notice the term HMO includes both CMPs and HMOs. To apply for and 
be approved to operate as a Medicare risk contractor, HMOs must be 
licensed in the State in which they operate and have at least 5,000 
commercial members. Most HMOs that have applied for Medicare contracts 
have at least several years of experience managing commercial 
enrollments and existing operational systems in place. Even for HMOs 
with many years of experience, however, applying for a Medicare risk 
contract may require substantial investments of staff time and 
significant costs. Our requirements for participation, the extent of 
our oversight of risk contracts, and ongoing interaction between the 
HMO and HCFA are generally much greater than HMOs experience in 
obtaining and maintaining State licensure and in serving commercial 
clients.
    Because of these different requirements, information and 
communication processes between the HMO and HCFA are an important 
component of the Medicare risk contracting program. HMOs that are 
applying for Medicare risk contracts need information and guidance in 
understanding our requirements in order to ensure that their 
operational systems and approach to Medicare contracting meets those 
requirements. Once approved and operational, risk contract HMOs have 
ongoing needs for information and communication with us in order to 
operate successfully and to remain in compliance with our standards.
    Our information comes from a number of different sources, including 
Peer Review Organizations (PROs) and other contractors, who are 
responsible for specific operational functions.
    HMOs are responsible for obtaining, understanding, and integrating 
into their operations the information available from all these sources 
and for seeking clarification of specific aspects of the risk contract 
process, when necessary. Table 1 summarizes the major areas of 
responsibility for providing information and ongoing communication with 
risk contract HMOs for each of these information sources.

                   Table 1.--HCFA Information Sources                   
------------------------------------------------------------------------
            Source                     Information responsibility       
------------------------------------------------------------------------
HCFA Central Office..........  Legal, regulatory, and financial issues. 
                               Payment Process.                         
                               Accretion/Deletion Process.              
                               Application.                             
                               Site Visit.                              
HCFA Regional Office.........  Operational requirements/review.         
                               Review marketing materials and other     
                                beneficiary communications.             
                               Monitoring site visits and follow-up     
                                retroactive enrollments.                
Peer Review Organizations....  Communications on cooperative quality    
                                improvement projects.                   
                               Investigation and follow-up of           
                                beneficiary complaints and non-coverage 
                                notices.                                
Other Contractors              Coverage decisions (for example, local   
 Intermediaries and Carriers.   carriers medical review policies).      
                               Payment rates for out-of-area services.  
CHDR.........................  Health dispute resolution.               
NCQA.........................  Receive HEDIS.                 
ACR Review...................  Review completeness ACR submission.      
------------------------------------------------------------------------

II. The Application Process

    Undertaking a Medicare risk contract requires that HMOs address a 
number of issues that are different from their commercial enrollment 
and service delivery processes. The differences between the experience 
of HMOs in operating a commercial HMO based on employer contracts and 
the requirements for a Medicare risk contract makes it likely that an 
HMO beginning the Medicare risk application process will obtain 
assistance from some source that has prior experience in Medicare risk 
contracting. For HMOs that are part of a national chain that has other 
Medicare risk contracts, that experience may come from a group in the 
corporate office of the chain. Other HMOs may hire an individual with 
prior Medicare risk contract experience to lead the application and 
implementation processes. Many HMOs hire consulting firms with Medicare 
risk contract experience to guide them through the process of applying 
and to assist in preparation of the application.
    If requested, we will provide information to clarify requirements. 
Establishing the correct lines of communication early in the process is 
essential to the HMO's ability to develop a successful Medicare 
application.

A. Ongoing Operations

    Once we have approved the application submitted by the HMO, 
implementation and ongoing operations of the Medicare risk plan 
requires continuing interaction and information exchange between the 
HMO and HCFA. We have specific responsibilities with respect to 
communication with the HMO. We delegate some of our responsibilities 
for quality assurance to PROs that work directly with the HMOs. We also 
use contractors to handle some functions; for example, we contract for 
Adjusted Community Rating (ACR) review services and this contractor 
deals directly with each HMO to obtain information and clarify 
submissions before completing a preliminary review and forwarding the 
ACR submissions to us for approval. In addition, HMOs require 
information from intermediaries and carriers to coordinate coverage 
decisions and to pay out-of-area providers. HMOs also must work with 
the Center for Health Dispute Resolution (CHDR) on reconsideration.
    The operational Medicare risk HMO maintains close communication 
with us on an ongoing or periodic basis for the following functions and 
requirements:
     Marketing Materials and Plans. The HMO must obtain advance 
approval of any materials that will be used to market to, or 
communicate with, Medicare beneficiaries.
     Enrollment and Disenrollment. The HMO submits monthly 
lists of new enrollees and disenrolled members to our data system 
either directly or through a contractor (for example, CompuServe) that 
we use to determine payment. Discrepancies require resolution that 
involve interaction between the HMO and HCFA.
     Quality Assurance. The HMO must provide information to 
HCFA Central and Regional Offices and may

[[Page 10923]]

participate in quality assurance and quality improvement initiatives 
that we have developed with the designated PRO in its area. Beginning 
in 1997, HMOs must provide HEDIS data to us, through our 
contractor, the National Committee for Quality Assurance (NCQA); and 
participate in the Consumers Assessments of Health Plans Study (CAHPS) 
survey of Medicare beneficiaries. Working with the HMO staff, the PRO 
also follows up with HMO member complaints, grievances, and appeals. We 
can also request corrective action plans for quality related issues and 
monitor compliance.
     Financial. Annually, the HMO must prepare financial 
projections and analyses to support the benefit package and premiums 
that will be offered to Medicare beneficiaries. We currently use a 
contractor to initiate the ACR review process and to work with the HMOs 
to clarify components of the HMO's submission. Our final review and 
approval process may involve further requests for information and 
clarification.
     New Regulations and Changes in Regulations. We develop new 
regulations based on legislation and make revisions in existing 
regulations. In some cases, the HMOs are asked to provide information 
necessary for the development of new regulations and to provide data, 
information, or comments on these regulations while in the 
developmental stage. The final regulation is then published in the 
Federal Register. If necessary, we may provide clarification and 
elaboration of the intent and operational implications of the new 
regulation.
     Ongoing Monitoring and Reporting. Medicare HMOs are 
responsible for regular reporting to us. Site visits to each HMO are 
conducted bi-annually by our staff. The site visits are comprehensive 
in nature and normally include review of every operational area of the 
HMO. Following the site visit, we notify the HMO of any areas in which 
deficiencies were identified and ask it to prepare a corrective action 
plan. We will provide direction to other entities with which the HMOs 
communicate.

B. Preliminary Research

    In discussions with several Medicare risk contract HMOs, PROs, and 
others, we have identified a preliminary list of information needs that 
are not currently being fully met. These information items are 
summarized in Table 2 for HMOs in the application process and in Table 
3 for operational Medicare risk contract HMOs.

    Table 2.--Additional Information That Would be Useful During the    
                           Application Period                           
------------------------------------------------------------------------
                                                                        
------------------------------------------------------------------------
A. Basic information on         HCFA manuals;                   
 Medicare and operational       Operational Policy Letters      
 information on risk            (OPLs);                                 
 contracting, including--       Transmittal Letters;            
                                Guidelines and regulations, such
                                as National Marketing Guidelines, and   
                                Physician Incentive Plan regulations.   
                                Organizational structure of     
                                HCFA.                                   
                                Informing applicants of the     
                                duration of the application review      
                                process and providing a contact person  
                                for the review.                         
                                Informing applicants when there 
                                is a delay in the process, and of the   
                                reason for the delay.                   
B. Sources of information,      Published documents, with a     
 including:                     brief description of contents, and      
                                instructions on how to obtain them and; 
                                Names of contacts, by           
                                operational area, with e-mail addresses 
                                and telephone numbers.                  
C. Information and data,        Medicare utilization statistics,
 including:                     by geographic area;                     
                                Information on studies conducted
                                by, or supported by, HCFA on managed    
                                care quality, outcomes, utilization     
                                patterns, special population needs, and 
                                ``best practices'';                     
                                Results of quality of care      
                                studies and outcomes surveys, by area of
                                country and type of facility;           
                                Quality measurement by hospital 
                                and skilled nursing facility (SNF), to  
                                assist in recruiting quality facilities 
                                for the provider networks;              
                                Regulations affecting HMOs,     
                                hospitals, physicians, and other        
                                providers;                              
                                Listings of Diagnosis-Related   
                                Group (DRG)-exempt facilities; and,     
                                Physician fee schedules and DRG 
                                payment rates for hospitals.            
------------------------------------------------------------------------


  Table 3.--Information Wanted/Needed by Medicare Risk Contractor HMOs  
------------------------------------------------------------------------
                                                                        
------------------------------------------------------------------------
A. Upon Contract Award:                                                 
    Operational Information..   Provide a basic package of      
                                materials (interviewees suggested that  
                                this occur during the application       
                                process).                               
                                Provide written advice on key   
                                set-up issues, such as expected         
                                interactions with PROs, CHDR, local     
                                carriers and intermediaries;            
                                availability of use of MCCOY,           
                                CompuServe, and/or Litton; systems and  
                                reporting requirements and the format in
                                which they must be provided.            
B. Operational Information:                                             
    1. Carrier and              Provide clearer examples of what
     Intermediary.              services and procedures are covered, as 
                                determined by local carriers and fiscal 
                                intermediaries, especially for          
                                controversial medical areas.            
                                Provide appropriate local       
                                prevailing physician Medicare fee       
                                schedules to determine reimbursement of 
                                out-of-area care.                       
    2. Accretion and Deletion   Provide a complete and accurate 
     Process.                   listing of codes used in reports, such  
                                as Reply Listings and Exception Detail; 
                                include accurate and current            
                                institutional status code on Special    
                                Reply.                                  
                                Label cumulative 6-month report 
                                with start and end dates and disseminate
                                the anticipated release schedule.       
                                Enable Litton/CompuServe to     
                                provide corrected information with the  
                                list of errors. Presently, HMOs have to 
                                look up the information although Litton/
                                CompuServe have the information         
                                available.                              
                                Develop industry standards and  
                                methodology for calculation of voluntary
                                disenrollment rates.                    
                                Summarize changes made in       
                                manuals given to plans on an annual     
                                basis.                                  
    3. Marketing.............   Inform HMOs on a regular basis  
                                on the status of marketing materials in 
                                the review process.                     

[[Page 10924]]

                                                                        
    4. ACR Process...........   Provide detailed information on 
                                the ACR review process, including       
                                delineation of rationale for steps and  
                                the detail behind each step.            
                                Provide the methodology for how 
                                study factors are derived.              
                                Provide a description of how    
                                capitation rates are developed and      
                                calculated.                             
                                Proved explicit instructions up-
                                front on the information HMOs must      
                                submit, including the information       
                                requirements of reviewers.              
                                Provide explicit directions for 
                                how ACR information should be formatted 
                                (for example, using LOTUS-DOS).         
                                Provide acceptable and          
                                unacceptable data sources and           
                                methodologies.                          
                                Publish alternative             
                                ``recommended'' studies.                
                                Provide guidelines for Medicare 
                                risk point of service premium           
                                calculations.                           
                                Provide national demographic    
                                cost factors for utilization in the APR.
                                Inform HMOs on a regular basis  
                                of the status of ACR submissions in the 
                                review process.                         
    5. Quality Improvement      Release benchmark data (for     
     (QI).                      example, congestive heart failure and   
                                percentage of Medicare beneficiaries on 
                                ACE inhibitors) and access measures (for
                                example, sentinel events, such as       
                                inpatient admission that should not     
                                occur if quality ambulatory care is     
                                provided).                              
                                Provide, under the              
                                HEDIS 3.0 (Health Plan        
                                Employer Data and Information Set),     
                                information to HMOs.                    
                                Develop clearer standards and   
                                reviewer guidelines for Quality         
                                Improvement studies.                    
                                Disseminate CHDR and Beneficiary
                                Information Tracking System (BITS)      
                                reports to all plans.                   
    6. Other.................   Provide information on our      
                                organizational structure and key        
                                contacts, by operational area, with e-  
                                mail addresses and telephone numbers.   
                                Provide information on          
                                conferences where staff are scheduled to
                                discuss specific issues.                
                                Provide information about       
                                activities and new initiatives such as  
                                the Reengineering Application and       
                                Monitoring (RAM) initiative on an on-   
                                going basis.                            
                                Inform HMOs when staff will be  
                                out of the office, and identify a back- 
                                up person in his or her absence.        
                                Provide guidelines for          
                                coordination of dual eligibles and how  
                                best to serve the special needs         
                                populations.                            
                                Disseminate to HMOs any         
                                information disseminated to other       
                                participants in Medicare risk program,  
                                for example, hospitals, physicians,     
                                beneficiaries.                          
------------------------------------------------------------------------

    A number of information process issues have also been identified in 
these limited preliminary discussions. Process issues relate to 
timeliness and completeness of information that we provide to Medicare 
risk contract HMOs and to consistency of the information provided. A 
summary of process issues raised in these preliminary discussions is 
provided in Table 4.

 Table 4.--Information Process Issues and Suggestions Raised by HMOs and
                           Other Interviewees                           
------------------------------------------------------------------------
                                                                        
------------------------------------------------------------------------
A. Updated and Revised HCFA                                             
 Materials:                                                             
                                Revised, updated, and indexed   
                                HMO/CMP Manual.                         
                                Revise applications to          
                                explicitly state requirements.          
                                Establish clean copies of       
                                background materials; update as         
                                necessary; and tab.                     
B. Improve Timeliness of                                                
 Communications Relative to                                             
 HMO Operational                                                        
 Requirements:                                                          
    1. Accretion and Deletion   Improve timeliness and accuracy 
     Issues.                    of information and data exchanged       
                                between Social Security Administration, 
                                HCFA, and authorized vendors.           
                                Improve timeliness, accuracy,   
                                and exchange of data used to determine  
                                specific categories of beneficiaries.   
                                Review Reply Listing and        
                                Exception Detail codes for accuracy,    
                                currency, and completeness prior to     
                                disseminating.                          
                                Change timing of Reply Listing  
                                to be 1 week earlier.                   
                                Disseminate DRG tape timely.    
                                Communicate changes affecting   
                                Medicare claims process timely;         
                                summarize changes in one place.         
    2. Payment Issues........   Inform HMOs as soon as an       
                                overpayment or underpayment is          
                                discovered or suspected.                
    3. Dissemination of         Disseminate OPLs as we release  
     Operational Policy         or receive them.                        
     Letters (OPLs).                                                    
    4. Timeliness of            Allow sufficient time for HMOs  
     Communications and         to implement changes in operational     
     Responses.                 procedures and information systems when 
                                issuing policies, regulations, and/or   
                                guidelines.                             
                                Strive to have structure in     
                                place prior to implementation of        
                                polices, regulations, and/or guidelines.
                                Provide information to HMOs, at 
                                regular intervals, as new approaches are
                                being developed.                        
                                Schedule the Annual Renewal     
                                Process earlier in the year.            
    5. HMOs' Ability to Reach   Provide to HMOs a list of staff 
     HCFA Staff.                who have specific responsibility for    
                                specific HMO related functions and      
                                issues.                                 
                                Establish standards for         
                                timeliness of response.                 
                                Increase the number of staff or 
                                streamline communication process and    
                                information transmittal mechanisms to   
                                improve timeliness of response.         
    6. Bi-Annual Review......   Allow sufficient time for HMOs  
                                to implement corrective action plan, to 
                                demonstrate change, prior to re-        
                                auditing.                               
C. Consistency and                                                      
 Coordination:                                                          
                                Assign to the HMO a specific    
                                contact person to coordinate all        
                                activities and to provide clarification 
                                to questions and problems.              
                                Assign specific staff to resolve
                                inquiries and problems related to their 
                                specific topic areas.                   

[[Page 10925]]

                                                                        
                                Identify a ``point'' person to  
                                answer questions about the status of the
                                development of new, and the updating of 
                                existing, policies or regulations.      
D. Simplifying Information                                              
 Processes and Requirements:                                            
    1. Designating HMO-         Allow HMOs to designate an HMO- 
     specific and Corporate     specific and corporate liaison.         
     Medicare Liaisons.         Carbon copy designated Medicare 
                                liaison on all communications.          
    2. Streamline Application   Streamline application process  
     Process.                   to be ``less paper bound'' and more real-
                                time activity.                          
                                Designate appropriate           
                                ``boilerplate'' sections of the         
                                application.                            
    3. Real-Time, On-Line       Strive to make Medicare         
     Medicare Beneficiary       beneficiary eligibility a real-time, on-
     Eligibility.               line activity.                          
                                Allow HMOs to maintain system   
                                logs for documentation.                 
    4. Streamline Marketing     Institute a national ``use and  
     Approval Process.          file'' policy.                          
E. Coordination with                                                    
 Contractors:                                                           
                                Provide sufficient training to  
                                our contractors and reviewers who       
                                perform functions, such as the ACR      
                                review, PRO review, and on-site quality 
                                monitoring before allowing such agents  
                                to perform these functions.             
                                Improve communication between   
                                HCFA, the PROs, and CHDR; clarify       
                                respective roles of HCFA, PROs, CHDR,   
                                and HMOs.                               
------------------------------------------------------------------------

    In addition, a number of potential ways that we could communicate 
information to Medicare risk contract HMOs has been identified. It is 
likely that the most effective communication strategies may be 
different for Medicare risk HMOs with different characteristics and 
that we may want to develop multiple communication strategies to ensure 
that information is provided appropriately to all Medicare HMOs. Table 
5 describes communication strategies that we have identified during 
preliminary discussions with program participants.

               Table 5.--Summary of Major Recommendations               
------------------------------------------------------------------------
                                                                        
------------------------------------------------------------------------
A. Communication Strategy:                                              
    1. Written Materials.....   Written materials should be     
                                clear and complete; changes made to     
                                updated policies, regulations, and      
                                manuals should be explicit.             
                                Materials should be organized to
                                ensure that all written materials on a  
                                specific topic are available in one     
                                place and/or are cross-referenced with  
                                other related materials.                
                                One contact point should be     
                                designated for HMOs to identify and     
                                request all written materials that are  
                                available. This could be on the HCFA    
                                Website, with a dedicated e-mail address
                                or an 800 number specifically for       
                                ordering written materials.             
                                We should move towards providing
                                timely written responses to outstanding 
                                inquiries and issues currently answered 
                                verbally. Currently, HMOs find the need 
                                to maintain extensive documentation of  
                                verbal communications. The use of e-mail
                                would facilitate this.                  
                                Currently, HMOs believe that    
                                they are not well informed of the status
                                of our various activities (not all HMOs 
                                are members of the American Association 
                                of Healthcare Plans (AAHP) or have      
                                access to outside counsel or government 
                                affairs programs in Washington, D.C.)   
                                and it is easy to lose track of the     
                                initiatives over time because of        
                                sporadic communications.                
                                We should create and disseminate
                                a newsletter which could provide timely 
                                and concise information on our          
                                activities, such as initiatives,        
                                demonstrations, and pilot programs, as  
                                well as the status of regulatory        
                                developments, that may offer HMOs       
                                opportunities to participate or may     
                                affect their operations.                
                               --Most HMOs would be willing to pay to   
                                receive a newsletter that provided them 
                                with information and understanding of   
                                our initiatives and regulations.        
    2. Verbal Communication,    HMOs would like one person      
     by Telephone and In-       assigned to serve as their contact      
     Person.                    person for the coordination of all      
                                activities and for seeking clarification
                                to questions.                           
                                We should update our voice mail 
                                to indicate absences, and designate an  
                                appropriate back-up person with the     
                                authority to answer questions.          
                                We should set up a telephone    
                                hotline that HMOs could access to       
                                receive clarification and consistent    
                                answers to specific regulatory or       
                                operational issues.                     
                                We should develop a fax-on-     
                                demand service to provide up-to-date    
                                information on hot topics, as the Agency
                                for Health Care Policy and Research and 
                                provider associations have done.        
    3. E-mail and Electronic    Many HMOs would prefer e-mail   
     Data Transfers.            communication to verbal communications. 
                                E-mail would facilitate transmittal of  
                                questions and responses that are        
                                currently being handled by telephone and
                                would produce written documentation of  
                                the issue discussed and guidance        
                                received.                               
                                HMOs would like us to make      
                                beneficiary eligibility a real-time, on-
                                line activity that would improve the    
                                timeliness and accuracy of our data and 
                                enable Medicare beneficiaries to be     
                                enrolled sooner. They would like to be  
                                able to show a log for documentation    
                                rather than paper copies in a file.     
                                We should move towards accepting
                                the electronic file transfer of draft   
                                marketing materials. This procedure     
                                would permit us to make changes directly
                                in the document, and return them to the 
                                HMOs in a timely manner, and produce    
                                documentation of comments and approval. 
                                HMOs support our collection of  
                                ACRs on-line, noting this was a pilot   
                                project in 1996 that will be mandatory  
                                in 1997. However, not all plans received
                                the relevant documentation or received  
                                it after their ACRs had been submitted. 
                                Some HMOs attempting the electronic     
                                submission were unsuccessful in doing   
                                so, because of the system freezing or   
                                designated passwords not working. HMOs  
                                believe strongly that, before making a  
                                new procedure mandatory, we should first
                                test the system to ensure it works and  
                                then disseminate the information in a   
                                timely manner prior to implementation.  
                                Implement a mechanism(s) for    
                                systematically tracking various HMO     
                                materials in review. Most useful to be  
                                able to track are:                      

[[Page 10926]]

                                                                        
                                   Applications and Service Area        
                                Expansions; Review of Marketing         
                                Materials; and ACR filings.             
    4. HCFA Website..........  HMOs would like to see us expand the     
                                amount of information available through 
                                the HCFA Website, and develop a process 
                                for posting information on a more       
                                routine and timely basis (within 1 to 2 
                                weeks of release). Increased posting of 
                                materials on the HCFA Website would     
                                reduce our burden in copying and mailing
                                requested materials. Materials that the 
                                HMOs would like made available through  
                                the website are--                       
                                OPLs--the complete catalog of   
                                OPLs be made available on the Internet; 
                                at a minimum, HMOs would like a         
                                comprehensive index of available OPLs by
                                subject area;                           
                                General information about HCFA, 
                                including conferences where staff will  
                                be speaking and a directory of staff by 
                                responsibility for specific areas and   
                                issues, with telephone numbers and e-   
                                mail addresses;                         
                                Routine HCFA reports; and       
                                relevant statistics and data. Specific  
                                examples of reports and data cited      
                                include--                               
                               --Medicare/Medicaid Sanction reports,    
                                which some plans currently receive in   
                                hard copy once a year;                  
                               --CHDR and BITS reports, and analysis of 
                                disenrollment patterns;                 
                               --OSCAR-3 reports, which contain         
                                information that HMOs find helpful and  
                                an added value in credentialing SNFs for
                                inclusion in provider network;          
                               --List of participating providers;       
                               --Local fee schedules and DRGs; and      
                               --Messages sent through MCCOY, our       
                                Managed Care Option Information on-line 
                                data base system, because data          
                                processors are not the appropriate staff
                                to receive these.                       
                               --Some HMOs indicated that they would be 
                                willing to pay a fee to access reports  
                                on-line through a password system.      
    5. CD-ROMs...............   CD-ROMs of HCFA manuals should  
                                be updated to be compatible with the    
                                Windows program rather than just DOS. We
                                should consider selecting a standard    
                                word processing program in which to     
                                publish reports and data. Currently,    
                                HMOs are dealing with unformatted, and  
                                sometimes unusable, ASCII files.        
                                OPLs should also be made        
                                available on a CD-ROM.                  
B. Conferences and Training:                                            
                               Given the emergence of new Medicare risk 
                                contractors and the use of consultants, 
                                some HMOs believe we should offer the   
                                following courses and seminars to       
                                current and potential risk contractors: 
                                A basic course on Medicare and  
                                the risk contracting program for        
                                inexperienced organizations that are    
                                considering applying for a contract.    
                                An Application Preparation      
                                seminar explaining the various sections 
                                of the application (such as, enrollment 
                                and disenrollment, grievances and       
                                appeals, coverage issues, and marketing 
                                materials) and addressing frequently    
                                asked questions. This presentation would
                                allow us to more efficiently deliver    
                                information that is repeated to many of 
                                the HMOs during various points of the   
                                application process.                    
                                A course for risk contractors   
                                discussing the operational and          
                                regulatory aspects of risk contracting. 
                               --We should require that potential       
                                applicants attend a seminar series prior
                                to being able to submit an application. 
                                Forums with plans and advocacy  
                                groups on new regulations or new        
                                interpretations of regulations, or new  
                                policies such as HEDIS/CAHPS, 
                                enrollment and payment, and physician   
                                incentive plan regulations are very     
                                helpful to HMOs.                        
                               --HMOs would like us to continue offering
                                such seminars and, to the extent        
                                possible, expand their use.             
                               --The seminars should be offered in a    
                                timely manner to consider the           
                                operational impacts on HMOs.            
                                Periodic Meetings. The HMOs     
                                would like us to conduct meetings on a  
                                regular basis, such as quarterly, that  
                                bring together risk Medicare contractors
                                to discuss issues affecting all HMOs and
                                to conduct question and answer sessions.
                                These sessions would allow us to be     
                                aware of issues and concerns to HMOs, as
                                well as HMOs to be aware of our         
                                perspective.                            
                                Also, our staff who deal        
                                directly with Medicare risk contractors 
                                would benefit from a structured training
                                program that would enable them to       
                                understand Medicare risk contracting    
                                rules and regulations and HMO           
                                operations, including monitoring of     
                                compliance.                             
                               --Structured training could include      
                                direct observation of plan operations to
                                witness the sophistication of some      
                                operational aspects.                    
                               --We may also want to consider having our
                                reviewers attend the NCQA ``Building    
                                Blocks'' sessions, as well as having at 
                                least one representative from each      
                                Regional Office attend AAHP's annual    
                                Medicare/Medicaid conference that       
                                highlights industry-wide concerns.      
------------------------------------------------------------------------

III. Discussion

    Under section 4002 of the Balanced Budget Act of 1997 (BBA) (Pub. 
L. 105-33), and with the implementation of the Medicare+Choice program, 
all HMOs and CMPs will contract with us under requirements of the 
Medicare+Choice program. Our preliminary discussions of information 
needs, information process, and communication strategies have produced 
a significant number of issues that will be considered in the 
development of our Medicare risk contract HMO communication strategy. 
Although the preliminary research was conducted before the BBA, the 
results are applicable to the Medicare+Choice program. However, since 
only a relatively small number of HMOs and other organizations have 
participated in

[[Page 10927]]

this preliminary process, we are seeking additional comments and 
suggestions on these issues. Respondents should prioritize issues 
raised in the preliminary research and identify additional areas of 
information needs and communication strategies. In addition, it would 
be useful to obtain comments on those issues that would be most likely 
to improve the effectiveness and efficiency of the Medicare risk 
contract program in order to establish priorities and develop a program 
to implement the communication strategy. This notice seeks comments and 
suggestions related to these issues, that we may use to develop and 
refine communications with Medicare risk contract HMOs.

IV. Regulatory Impact Statement

    We have examined the impacts of this notice as required by 
Executive Order 12866 and the Regulatory Flexibility Act (Public Law 
96-354). Executive Order 12866 directs agencies to assess all costs and 
benefits of available regulatory alternatives and, when regulation is 
necessary, to select regulatory approaches that maximize net benefits 
(including potential economic, environmental, public health and safety 
effects; distributive impacts; and equity). The Regulatory Flexibility 
Act (RFA) requires agencies to analyze options for regulatory relief 
for small businesses. Most HMOs are small entities, either by nonprofit 
status or by having revenues of $5 million or less annually. For 
purposes of the RFA, HMOs are considered small entities.
    Section 1102(b) of the Social Security Act requires us to prepare a 
regulatory impact analysis for any rule that may have a significant 
impact on the operations of a substantial number of small rural 
hospitals. Such an 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 a 
metropolitan Statistical Area and has fewer than 50 beds.
    Preliminary research on the information needs of Medicare risk 
contract HMOs and effective communication strategies has identified a 
number of areas in which we could provide additional information to 
HMOs and has identified potential strategies for communicating that 
information more effectively. The purpose of this notice is to seek 
public comments on the information needs of Medicare risk contract HMOs 
and communication strategies that could improve the effectiveness and 
efficiency of the risk contract program. For these reasons, we are not 
preparing an analysis for either the RFA or section 1102(b) of the Act 
because we have determined, and we certify, that this notice would not 
have a significant impact on a substantial number of small entities or 
a significant impact on the operations of a substantial number of small 
rural hospitals.
    In accordance with the provisions of Executive Order 12866, this 
notice was not reviewed by the Office of Management and Budget.

V. Response to Comments

    Because of the large number of items of correspondence we normally 
receive on Federal Register documents published for comment, we are not 
able to acknowledge or respond to them individually. We will consider 
all comments we receive by the date and the time specified in the DATES 
section of this preamble, and, if we proceed with a subsequent 
document, we will respond to the comments in that document.

(Catalog of Federal Domestic Assistance Program No. 93.773, 
Medicare--Hospital Insurance Program)

    Dated: November 26, 1997.
Nancy-Ann Min DeParle,
Administrator, Health Care Financing Administration.
[FR Doc. 98-5234 Filed 3-4-98; 8:45 am]
BILLING CODE 4120-01-P