Medicare Program; Medicare+Choice Program
Federal RegisterJun 29, 2000
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Health Care Financing Administration
42 CFR Parts 417 and 422
[HCFA-1030-FC]
RIN 0938-AI29
Medicare Program; Medicare+Choice Program
AGENCY:
Health Care Financing Administration (HCFA), HHS.
ACTION:
Final rule with comment period.
SUMMARY:
This final rule with comment period responds to comments on the June 26, 1998 interim final rule that implemented the Medicare+Choice (M+C) program and makes revisions to those regulations where warranted. We also are making revisions to the regulations that are necessary to reflect the changes to the M+C program resulting from the Balanced Budget Refinement Act of 1999 (BBRA). Revisions to the regulations reflecting changes in the law made by the BBRA are subject to public comment. Issues discussed in this rule include eligibility, election, and enrollment policies; marketing requirements; access requirements; service area and benefit policy; quality improvement standards; payment rates, risk adjustment methodology, and encounter data submission; provider participation rules; beneficiary appeals and grievances; contractual requirements; and preemption of State law by Federal law.
This final rule also addresses comments on the interim final rule published on December 2, 1997, which implemented user fees for section 1876 risk contractors for 1998, and formed the basis for the M+C user fee provisions in the June 26, 1998 interim final rule, and the provider-sponsored organization (PSO) interim final rule published April 14, 1998.
DATES:
Effective date:
This final rule is effective July 31, 2000.
Comment period:
Comments on provisions reflecting provisions of the Balanced Budget Refinement Act of 1999 will be considered if received at the appropriate address, as provided below, no later than August 28, 2000. We will not consider comments concerning regulatory provisions that remain unchanged or that are revised in this final rule based on previous public comment.
ADDRESSES:
Mail written comments (one original and three copies) to the following address ONLY: Health Care Financing Administration, Department of Health and Human Services, Attention: HCFA-1030-FC, P.O. Box 8013, Baltimore, MD 21244-8013.
Since comments must be received by the date specified above, please allow sufficient time for mailed comments to be received timely in the event of delivery delays.
If you prefer, you may deliver by courier, your written comments (one original and three copies) to one of the following addresses: Room 443-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW, Washington, DC 20201; or C5-14-03, Central Building, 7500 Security Boulevard, Baltimore, MD 21244-1850.
Comments mailed to the two above addresses may be delayed and received too late to be considered. Because of staffing and resource limitations, we cannot accept comments by facsimile (FAX) transmission. In commenting, please refer to file code HCFA-1030-FC.
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 443-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 comments that relate to information collection requirements, see section IV of the
SUPPLEMENTARY INFORMATION.
FOR FURTHER INFORMATION CONTACT:
Marty Abeln (410) 786-1032 (for issues related to user fees, service area, point-of-service option, PSOs, and intermediate sanctions).
Wendy Burger (410) 786-1566 and Lynn Orlosky (410) 786-5930 (for issues related to eligibility, elections, and enrollment).
Carol Barnes (410) 786-5496 (for issues related to continuation areas and marketing).
Anne Manley (410) 786-1096 (for issues related to emergency and urgently needed services, provider participation rules, and Federal preemption).
Eileen Zerhusen (410) 786-7803 (for issues related to post-stabilization care).
Tony Hausner (410) 786-1093 (for issues related to access, discrimination, and physician incentive rules).
Amy Chapper (410) 786-0367 (for issues related to information disclosure and confidentiality).
Brian Agnew (410) 786-5964 (for issues related to quality assurance and accreditation).
Al D'Alberto (410) 786-1100 (for issues related to payments, premiums, and ACRs).
James Hart (410) 786-4474 (for issues related to risk adjustment and encounter data).
Chris Eisenberg (410) 786-5509 (for issues related to contracts and contract appeals).
Michele Edmondson (410) 786-6478 (for issues related to beneficiary appeals).
Anita Heygster (410) 786-4486 (for issues related to M+C private fee-for-service plans).
Cindy Mason (410) 786-6680 (for issues related to M+C MSA plans).
SUPPLEMENTARY INFORMATION:
For the convenience of the reader, we are providing a complete outline of this final rule, including a topical listing of the major areas raised by the comments, along with numerical regulatory citations.
I. Background
A. Balanced Budget Act of 1997
B. Overview of M+C Regulations
1. Interim Final Rule
2. Correction Notice
3. February 17, 1999 Final Rule
C. M+C Provisions of the Balanced Budget Refinement Act of 1999
II. Analysis of and Responses to Public Comments
A. Overview
1. Comments on June 26, 1998 Interim Final Rule
2. Issues in February 17, 1999 Final Rule
3. Organization of this Final Rule
4. General Comments and Subpart A Issues
a. Administrative Procedure Act Issues
b. Types of M+C Plans (§ 422.4)
c. Application Requirements and Procedures (§§ 422.6 and 422.8)
d. User Fees (§ 422.10)
B. Eligibility, Election and Enrollment (Subpart B)
1. Eligibility to Elect an M+C Plan (§ 422.50)
2. Continuation of Enrollment (§ 422.54)
3. Election Process (§ 422.60)
4. Enrollment Capacity (§ 422.60(b))
5. Election of Coverage Under an M+C Plan (§ 422.62)
6. Information about the M+C Program (§ 422.64)
7. Coordination of Enrollment and Disenrollment Through M+C Organizations (§ 422.66)
8. Effective Dates of Coverage and Change of Coverage (§ 422.68)
9. Disenrollment by the M+C Organization (§ 422.74)
10. Approval of Marketing Materials and Election Forms (§ 422.80)
C. Benefits and Beneficiary Protections (Subpart C)
1. Introduction
2. Emergency, Urgently Needed, and Post-Stabilization Care Services (§§ 422.2, 422.100, 422.112, and new § 422.113)
a. Definitions
b. Enforcement of Emergency Requirements
c. Access to Emergency and Urgently Needed Services
d. Post-Stabilization Care Services
3. Service Area Requirements (§§ 422.2, 422.100)
4. Benefits (§§ 422.2, 422.100, 422.101, 422.106)
5. Special Rules for Screening Mammography, Influenza Vaccine, and Pneumococcal Vaccine (§ 422.100(h))
6. Special Rules for Point-of-Service (POS) Option (§ 422.105)
7. Medicare Secondary Payer (MSP) Procedures (§ 422.108)
8. National Coverage Determinations (§ 422.109)
9. Discrimination Against Beneficiaries Prohibited (§ 422.110)
10. Disclosure Requirements (§ 422.111)
11. General Access Requirements (§ 422.112)
a. Introduction
b. Provider Network (§ 422.112(a)(1))
c. Primary Care Providers (PCP) Panels (§ 422.112(a)(2))
d. Specialty Care (§ 422.112(a)(3))
e. Serious Medical Conditions (§ 422.112(a)(4))
f. Written Standards (§ 422.112(a)(7))
g. Cultural Considerations (§ 422.112(a)(9))
12. Confidentiality and Accuracy of Enrollee Records (§ 422.118)
13. Information on Advance Directives (§ 422.128)
D. Quality Assurance (Subpart D)
1. Overview
2. Quality Assessment and Performance Improvement Requirements (§ 422.152)
3. External Review (§ 422.154)
4. Deemed Compliance Based on Accreditation (§ 422.156)
5. Accreditation Organizations (§ 422.157)
6. Procedures for Approval of Accreditation as a Basis for Deeming Compliance (§ 422.158)
E. Relationships With Providers (Subpart E)
1. Provider Participation Procedures (§§ 422.202(a), and 422.204(c))
2. Consultation Requirements (§ 422.202(b))
3. Treatment of Subcontracted Networks (§ 422.202(c))
4. Provider Antidiscrimination (§§ 422.100(j), 422.204(b), and new § 422.205)
5. Provider Credentialing (§ 422.204(a))
6. Prohibition on Interference with Health Care Professionals' Communication with Enrollees (§ 422.206)
7. Physician Incentive Plans (§§ 422.208 and 422.210)
8. Special Rules for Services Furnished by Noncontract Providers (§ 422.214)
9. Exclusion of Services Furnished Under a Private Contract (§ 422.220)
10. M+C Plans and the Physician Referral Prohibition
F. Payments to M+C Organizations (Subpart F)
1. General Provisions (§ 422.250)
2. Risk Adjustment and Encounter Data (§ 422.256 through § 422.258)
3. Special Rules for Hospice Care (§ 422.266)
G. Premiums and Cost-Sharing (Subpart G)
1. General Provisions (§ 422.300)
2. Rules Governing Premiums and Cost-Sharing (§ 422.304)
3. Submission Requirements of the Proposed Premiums and Related Information (§ 422.306)
4. Limits on Premiums and Cost-Sharing Amounts (§ 422.308)
5. Incorrect Collections of Premiums and Cost-Sharing Amounts (§ 422.309)
6. ACR Approval Process (§ 422.310)
7. Requirement for Additional Benefits (§ 422.312)
H. Provider-Sponsored Organizations (Subpart H)
I. Organization Compliance With State Law and Preemption by Federal Law (Subpart I)
1. State Licensure and Scope of Licensure (§ 422.400)
2. Federal Preemption of State Law (§ 422.402)
a. General Preemption (§ 422.402(a))
b. Specific Preemption (§ 422.402(b))
3. Prohibition on State Premium Taxes (§ 422.404)
4. Medigap
J. (Subpart J—Reserved)
K. Contracts with M+C Organizations (Subpart K)
1. Definitions (§ 422.500)
2. National Contracting (§ 422.501)
3. Compliance Plan (§ 422.501(b)(3)(vi))
4. Access to Facilities and Records (§ 422.502(e))
5. Disclosure of Information (§ 422.502(f)(2)(v))
6. Beneficiary Financial Protection (§ 422.502(g))
7. Requirements of Other Laws and Regulations (§ 422.502(h))
8. Contracting/Subcontracting Issues (§ 422.502(i))
9. Certification of Data that Determine Payment/Certification of Accuracy of ACR (§ 422.502(l))
10. Effective Date and Term of Contract (§ 422.504)
11. Nonrenewal of M+C Contracts (§ 422.506)
12. Provider Prior Notification and Disclosure (§§ 422.506(a), 422.508, 422.510(b), and 422.512)
13. Mutual Termination of a Contract (§ 422.508)
14. Termination of Contract by HCFA (§ 422.510)
15. Minimum Enrollment Requirements (§ 422.514)
16. Reporting Requirements (§ 422.516)
17. Prompt Payment by M+C Organization (§ 422.520)
L. Effect of Change of Ownership or Leasing of Facilities During Term of Contract (Subpart L)
M. Grievances, Organization Determinations, and Appeals (Subpart M)
1. Background and General Provisions (§§ 422.560, 422.561, and 422.562)
2. Grievance Procedures (§ 422.564)
3. Organization Determinations (§§ 422.566 through 422.576)
4. Reconsiderations by an M+C Organization or Independent Review Entity (§§ 422.578 through 422.616)
5. Effectuation of a Reconsidered Determination (§ 422.618)
6. Notification of Noncoverage in Inpatient Hospital Settings (§§ 422.620 and 422.622)
Subpart M—Comments and Responses
7. Definitions and General Provisions
8. Grievances
9. Organization Determinations
10. Written Notice
11. Time Frames
12. Expedited Organization/Reconsidered Determinations
13. Authorized Representatives
14. Other Appeal Rights
15. Inpatient Hospital Notice of Discharge
16. Other Comments
N. Medicare Contract Appeals (Subpart N)
O. Intermediate Sanctions (Subpart O)
P. Medicare+Choice MSA Plans
1. Background
2. General Provisions (Subpart A)
3. Eligibility, Election and Enrollment Rules (Subpart B)
a. Eligibility and Enrollment (§ 422.56)
b. Election (§ 422.62)
4. Benefits (Subpart C)
a. Basic Benefits Under an M+C MSA Plan (§ 422.102)
b. Supplemental Benefits (§§ 422.102 and 422.103)
5. Quality Assurance (Subpart D)
6. Relationships with Providers (Subpart E)
7. Payments Under MSA Plans (Subpart F)
8. Premiums (Subpart G)
9. Other M+C Requirements
10. Responses to Comments
Q. M+C Private Fee-for-Service Plans
1. Background and General Comments (§ 422.4(a)(3))
2. Beneficiary Issues
3. Provider Payment Issues
4. Noncontracting Provider
5. Quality Assurance (§§ 422.152 and 422.154)
6. Access to Services (§ 422.214)
7. Physician Incentive Plans (§§ 422.208)
8. Special Rules for M+C Private Fee-for-Service Plans (§ 422.216)
9. Deemed Contracting Providers
III. Provisions of this Final Rule (Changes to the M+C Regulations)
IV. Collection of Information Requirements—Paperwork Reduction Act
V. Regulatory Impact Statement
VI. Other Required Information
A. Federalism Summary Impact Statement
B. Waiver of Notice of Proposed Rulemaking
C. Response to Comments
I. Background
A. Balanced Budget Act of 1997
Section 4001 of the Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33), enacted August 5, 1997, added sections 1851 through 1859 to the Social Security Act (the Act) to establish a new Part C of the Medicare program, known as the “Medicare+Choice (M+C) Program.” (The previous Part C of the statute, which included provisions in section 1876 of the Act governing existing Medicare health maintenance
organization (HMO) contracts, was redesignated as Part D.) Under section 1851(a)(1) of the Act, every individual entitled to Medicare Part A and enrolled under Part B, except for individuals with end-stage renal disease, may elect to receive benefits through either the existing Medicare fee-for-service program (“Original Medicare”) or a Part C M+C plan, if one is offered where he or she lives.
As its name implies, the primary goal of the M+C program is to provide Medicare beneficiaries with a wider range of health plan choices through which to obtain their Medicare benefits. The M+C statute authorizes a variety of private health plan options for beneficiaries, including both the traditional managed care plans (such as those offered by HMOs) that traditionally have been offered under section 1876 of the Act, and new options that were not previously authorized. Specifically, section 1851(a)(2) of the Act describes three types of M+C plans authorized under Part C:
• M+C coordinated care plans, including HMO plans (with or without point of service options), provider-sponsored organization (PSO) plans, and preferred provider organization (PPO) plans.
• M+C medical savings account (MSA) plans (that is, combinations of a high-deductible M+C health insurance plan and a contribution to an M+C MSA).
• M+C private fee-for-service plans.
An entity contracting with us to offer any of the above plans to Medicare beneficiaries is called an “M+C organization.”
In addition to expanding the types of health plans that can be offered to Medicare beneficiaries, the M+C program introduces several other fundamental changes to the managed care component of the Medicare program. These changes include:
• Establishment of an expanded array of quality assurance standards and other consumer protection requirements;
• Introduction of an annual coordinated enrollment period, in conjunction with the distribution by us of uniform, comprehensive information about M+C plans that is needed to promote informed choices by beneficiaries;
• Revisions in the way we calculate payment rates to M+C organizations that will narrow the range of payment variation across the country and increase incentives for organizations to offer M+C plans in diverse geographic areas; and
• Establishment of requirements concerning provider participation procedures.
B. Overview of M+C Regulations
1. Interim Final Rule
On June 26, 1998, we published in the
Federal Register
a comprehensive interim final rule (63 FR 34968) to implement the provisions of section 4001 of the BBA that established the M+C program. That interim final rule set forth the new M+C regulations in 42 CFR Part 422—Medicare+Choice Program. The major subjects covered in each subpart of part 422 are as follows:
• Subpart A—Definitions, including definitions of types of plans, application process, and user fees.
• Subpart B—Requirements concerning beneficiary eligibility, election, enrollment and disenrollment procedures, and plan information and marketing materials.
• Subpart C—Requirements concerning benefits, point of service options, access to services (including rules on enrollee assessments and notification upon termination of specialists), and others.
• Subpart D—Quality assurance standards, external review, and deeming of accredited organizations.
• Subpart E—Provider participation rules and the prohibition against interference with health care professionals' advice to enrollees.
• Subpart F—Payment methodology for M+C organizations, risk adjustment, and encounter data requirements.
• Subpart G—Requirements concerning premiums, cost-sharing, and determination of adjusted community rate.
• Subpart H—Requirements concerning PSOs.
• Subpart I—Organization compliance with State law and preemption by Federal law.
• Subpart K—Contract requirements.
• Subpart L—Change of ownership rules.
• Subpart M—Beneficiary grievances, organization determinations, and appeals.
• Subpart N—Contractor appeals of nonrenewals or terminations of contracts.
• Subpart O—Procedures for imposing intermediate sanctions.
2. Correction Notice
On October 1, 1998, we issued a correction notice in the
Federal Register
(63 FR 52610) to correct technical errors that appeared in the interim final rule. All references in this document to regulation text are to the corrected text unless otherwise noted.
3. February 17, 1999 Final Rule
Additionally, on February 17, 1999, we published a final rule in the
Federal Register
(64 FR 7968) that set forth limited changes to the M+C regulations published in the June 26, 1998 interim final rule. It specifically addressed only a limited number of issues raised by commenters on the June 26, 1998 interim final rule. We indicated in the preamble to the February 17, 1999 final rule that we intended to address all other issues raised by commenters on the M+C interim final rule in a comprehensive M+C final rule to be published at a later date. The types of comments we addressed in the February final rule are discussed in more detail in section II.A.2.
C. M+C Provisions of the Balanced Budget Refinement Act of 1999
On November 29, 1999, as we were completing the development of this final rule, the Balanced Budget Refinement Act of 1999 (Pub. L. 106-113) (BBRA) was enacted. The BBRA includes a number of provisions that affect the M+C program, and these provisions have necessitated a number of corresponding changes so that the changes in the law made by the BBRA are reflected in the text of the M+C regulations. For the most part, the statutory changes are self-explanatory, and have already taken effect. As noted above, we are accepting public comment on conforming changes to the M+C regulations made as a result of the BBRA provisions. We are revising the regulations to reflect the provisions of the BBRA as follows:
1. Changes in M+C Enrollment Rules (Section 501 of the BBRA)
a. Enrollment in Alternative M+C Plans and Medigap Coverage After Involuntary Terminations
Section 1851(e)(4) of the Act establishes special election periods during which M+C-eligible individuals may disenroll from an M+C plan or elect another M+C plan, including a special election period when an M+C organization or we have terminated a plan or the organization has otherwise discontinued providing the plan in the area in which the individual resides. Section 501(a)(1) of the BBRA revised section 1851(e)(4) to specify that this special election period now becomes available either upon termination or discontinuation or when the organization “has notified the individual of an impending termination or discontinuation of such a plan.” We have revised § 422.62(b)(1) to reflect this earlier opportunity for an affected
enrollee to elect an alternative M+C plan or return to original Medicare. We note that section 501(b) of the BBRA set forth conforming amendments to section 1882(s)(3) of the Act (concerning beneficiary rights to guaranteed issue of a Medicare supplemental policy, that is, a Medigap policy) to allow an individual guaranteed issue rights to a Medigap policy within 63 days of an organization's notification of an impending termination or service area reduction.
b. Open Enrollment for Institutionalized Individuals (Section 501(b))
Section 1851(e) of the Act establishes the time frames, or election periods, for making or changing elections. Section 501(b) of the BBRA amended section 1851(e)(2) of the Act by adding a new subparagraph (D), which provides for continuous open enrollment for institutionalized individuals after 2001. Thus, on or after January 1, 2002 (which represents the first day when limitations are placed on an M+C-eligible individual's enrollment and disenrollment opportunities), M+C-eligible individuals who are institutionalized, as defined by HCFA, may continue to change from original Medicare to an M+C plan, from an M+C plan to original Medicare, or from one M+C plan to another. We have added § 422.62(a)(6) to reflect this provision, with conforming changes at § 422.62(a)(4)(i) and § 422.62(a)(5)(i). We intend to provide guidance on the meaning of the term “institutionalized” in due time to permit orderly implementation of this change before it takes effect in 2002.
c. Continued Enrollment for Certain M+C Enrollees
Section 1851(b)(1) of the Act establishes the residence requirements for eligibility to elect an M+C plan. Section 501(c) of the BBRA amended section 1851(b)(1) of the Act by adding a new subparagraph (C) to allow an individual to choose to continue enrollment in an M+C plan offered by the organization if (1) the M+C organization eliminates the M+C plan in the service area in which the individual resides and, (2) no other M+C plan is offered in the service area at the time of the elimination of the M+C plan in the service area and, (3) the M+C organization chooses to allow the option to continue enrollment in an M+C plan offered by the organization. If the individual chooses to retain his or her enrollment in the M+C plan, the M+C organization may require that he or she agree to obtain the full range of basic benefits (excluding emergency and urgently needed care) through facilities designated by the organization within the plan's HCFA-approved service area. In the case of home health services, since this is a basic benefit that by its nature involves receipt of services in the home, while the provider of the home health services may be located in the service area, actual services would have to be offered in the beneficiary's home. We have reflected this provision in § 422.74(b)(3), with a conforming change made in § 422.66(e)(2).
2. Change in Effective Date of Elections (Section 502 of the BBRA)
Section 1851(f) of the Act establishes the effective dates for elections and changes to elections made during the various enrollment periods. Prior to enactment of the BBRA, section 1851(f)(2) stated that an election made during an open enrollment period was effective the first day of the following calendar month. Section of the 502 BBRA amended section 1851(f)(2) of the Act to state that an election made during an open enrollment period is effective the first day of the following calendar month, except that if the election or change in election is made after the 10th day of the calendar month, the election is effective the first day of the second calendar month following the date the election or change in election is made. We have revised § 422.68(c) to reflect this provision.
3. Extension of Reasonable Cost Contracts (Section 503 of the BBRA)
Section 503 of the BBRA amended section 1876(h)(5)(B) of the Act to permit the extension or renewal of Medicare cost contracts for an additional 2 years, that is, through December 31, 2004. We are revising § 417.402(b) to effect this change.
4. Phase-In of New Risk Adjustment Methodology (Section 511 of the BBRA)
Consistent with section 1853(a) of the Act, § 422.256 of the M+C regulations provides that M+C capitation payments are adjusted for age, gender, institutional status, and other appropriate factors, including health status, beginning January 1, 2000. In the January 15, 1999, Advance Notice of Methodological Changes for the CY 2000 M+C Payment Rates, we announced the risk adjustment methodology to implement this requirement. One element of the risk adjustment methodology we developed was a transition period during which M+C payments would be based on a blend of payment amounts under the previous system of demographic adjustments and payment amounts based on principal inpatient hospital diagnoses (the PIP-DCG risk adjustment methodology). Under a blend, payment amounts for each enrollee are separately determined using the demographic and risk methodologies, respectively. Those payment amounts are then blended according to the percentages for the transition year. On January 15, 1999, we announced the following transition schedule:
Year
Demographic method
(percent)
Risk method
(percent)
CY 2000
90
10
CY 2001
70
30
CY 2002
45
55
CY 2003
20
80
CY 2004
100
(Using encounter data from multiple sites of care.)
Section 511(a) of the BBRA revised the original transition schedule for 2000 and 2001 to provide that the blend percentages will be:
Year
Demographic method
(percent)
Risk method
(percent)
CY 2000
90
10
CY 2001
90
10
CY 2002
at least 80
no more than 20
This provision does not require any changes in the existing M+C regulations, but we have described it here for the convenience of the reader.
5. Encouraging Offering of M+C Plans in Areas Without Plans (Section 512 of the BBRA)
Section 512 of the BBRA amended section 1853 of the Act by adding a new paragraph (i) to provide for “new entry bonus” payments to encourage M+C organizations to offer plans in payment areas (generally, counties) that currently do not have M+C plans serving the area. Under this provision, which we are incorporating into regulations under § 422.250(g), the amount of the monthly payment otherwise made to an M+C organization that offers the first M+C plan in a previously unserved county will be increased by 5 percent for the first 12 months that the plan is offered and by 3 percent for the second 12 months. These bonus payments will be available only for plans that are first offered during the 2-year period beginning January 1, 2000, and only in counties where no M+C plan has been offered, or where any plan offered was no longer offered as of January 1, 2000.
New section 1853(i)(3) specifies that if more than one M+C organization first
offers a plan in an uncovered area on the same date, the new entry bonus applies to the payments of both organizations. The BBRA does not expressly address situations in which an M+C organization or organizations begin offering more than one M+C plan simultaneously. Since the bonus is offered to the
organization
that first offers an M+C plan in an area, or to all
organizations
that do so on the same date, we interpret this to mean that the bonus would apply to all plans offered by a bonus-eligible organization on the same date. Thus, when an M+C organization offers two M+C plans simultaneously in a previously unserved county, the organization will receive the bonus payment for both plans. Similarly, if two or more M+C organizations first offer two M+C plans on the same date, each M+C organization will receive the bonus payments for each of its plans. Consistent with section 1853(i)(3) of the Act, the bonus payments are not available to M+C organizations offering a plan in a county that is already partially served by another plan, even if the new plan includes a portion of the payment area not previously covered by an existing plan. As we have stated in OPL 2000.117, a plan is considered to be offered when the sponsoring M+C organization has a contract in effect to serve beneficiaries in the previously unserved area and the plan is open for enrollment.
6. Modification of 5-Year Re-Entry Rule for Contract Terminations (Section 513 of the BBRA)
Section 513(a) of the BBRA amended section 1857(c)(4) of the Act to reduce from 5 to 2 years the period during which an M+C organization that has terminated its M+C contract at the organization's request is barred from re-entering into an M+C contract (absent our finding of special circumstances warranting an exception). Section 513(b)(1) further amended section 1857(c)(4) to provide for a new exception to this general exclusion period if, during the 6-month period after an M+C organization notified us of its intention to terminate an M+C contract, a legislative or regulatory change was adopted that resulted in increased Medicare payment amounts for the given payment area. In addition, section 513(b)(2) of the BBRA expressly states that the creation of the new exception does not affect our existing authority to grant an exception to this rule where “circumstances which warrant special consideration,” including in the circumstances identified in OPL #103 (OPL 99.103). OPL 99.103 states that we will grant an exception, for example, when an organization proposes to offer a different M+C plan type than it had previously offered, or an organization is proposing to introduce an M+C plan (1) in a geographic area currently served by two or fewer M+C plans, or (2) in an area other than that from which the organization had previously withdrawn when it ended its earlier contract with the Medicare program. We have incorporated the BBRA's revisions to section 1857(c)(4) of the Act into § 422.501(b)(5).
7. Flexibility to Tailor Benefits under M+C Plans (Section 515 of the BBRA)
Section 515 of the BBRA amended section 1854 of the Act to permit M+C organizations to elect to apply the premium and benefit provisions of section 1854 of the Act uniformly to separate segments of a service area, provided that the segments are composed of one or more M+C payment areas. This change, which is effective for contract years beginning on or after January 1, 2001, is largely consistent with our existing administrative policy, under which an M+C organization may offer multiple M+C plans, each with its own HCFA-approved service area, but must offer uniform benefits and premiums within each plan. For a full discussion of the implications of this change, and the conforming changes to the M+C regulations, we refer the reader to section II.C.3 of this preamble.
8. Delay in Deadline for Submission of Adjusted Community Rates (Section 516 of the BBRA)
Section 516 of the BBRA amended section 1854(a)(1) of the Act to delay the annual deadline for submission of adjusted community rate (ACR) proposals and information about enrollment capacity from May 1 to July 1. The statute provides that this change was effective for information submitted by M+C organizations in 1999 for benefits in calendar year 2000, and we are making changes to §§ 422.60(b)(1), 422.300(b)(2), and 422.306(a)(1) to reflect the new law.
9. Reduction in Adjustment in National Per Capita M+C Growth Percentage for 2002 (Section 517 of the BBRA)
An important element in the methodology used to calculate M+C payment rates involves the determination by the Secretary under section 1853(c)(6) of the Act of a “national per capita M+C growth percentage.” Each year, when determining M+C capitation rates, as explained in detail in the June 1998 interim final rule (63 FR 35004), this national growth percentage is applied to the area-specific component of the blended rate and to the minimum amount, also referred to as the “floor”. The national per capita growth percentage is HCFA's estimate of the per capita rate of growth in expenditures. Section 1853(c)(6)(B) of the Act provided that in years from 1998 through 2002, the national per capita M+C growth percentage would be reduced, by 0.8 percentage points in 1998 and 0.5 percentage points in 1999 through 2002. Section 517 of the BBRA amended section 1853(c)(6)(B)(v) of the Act to change the adjustment for 2002 from 0.5 percentage point reduction to a reduction of 0.3 percentage points, and we are revising § 422.254(b)(2) to reflect this change.
10. Deeming of M+C Organizations to Meet Requirements (Section 518 of the BBRA)
Section 518 of the BBRA amended section 1852(e)(4) of the Act to set forth several changes related to (1) the process by which an M+C organization can be deemed, based on an accreditation organization's findings, to meet M+C requirements and (2) the standards for which such deeming is permissible. Revised section 1852(e)(4) now includes the following among requirements that must be deemed met if an accreditation body applies and enforces standards at least as stringent as those in this part: those requirements derived from section 1852(b) (concerning antidiscrimination), section 1852(d) (concerning access to services), section 1852(i) (concerning information on advance directives), and section 1852(j) (concerning provider participation rules), in addition to the requirements under section 1852(e)(1) and (2) concerning an M+C organization's quality assurance program and under 1852(h) concerning the confidentiality and accuracy of enrollee records. We are revising § 422.156(b) to add these requirements. In addition, new section 1852(e)(4) specifies that the Secretary must make a determination within 210 days on a private accrediting organization's application to act as an accrediting organization for M+C requirements. This provision in effect mandates the same approval time frame that applies to original Medicare accreditation under section 1865(b) of the Act, and we are incorporating this requirement into § 422.158(e).
11. Quality Assurance Requirements for PPO Plans (Section 520 of the BBRA)
Section 520 of the BBRA amended section 1852(e)(2) of the Act to change the quality assurance requirements for PPO plans, effective for contract years beginning on or after January 1, 2000. In the past, PPO plans had been treated under the M+C statute and regulations in the same manner as all other M+C coordinated care plans. New section 1852(e)(2)(D) establishes that, for purposes of the M+C quality assurance requirements, a PPO plan is an M+C plan that (1) has a network of providers that have agreed to a contractually specified reimbursement for covered benefits with the organization offering the plan; (2) provides for reimbursement for all covered benefits regardless of whether such benefits are provided within such network of providers; and (3) is offered by an organization that is not licensed or organized under State law as a health maintenance organization. We are incorporating this definition into the M+C regulations at § 422.4. The quality assurance requirements that now will apply for PPO plans are identical to the existing requirements for non-network M+C MSA plans and M+C private fee-for-service plans. Thus, as set forth under revised § 422.152, M+C organizations are no longer required to conduct performance improvement projects relative to their PPO plans, or to have their PPO plans meet minimum performance levels. M+C organizations offering PPO plans must still report on standard measures, however, and continue to comply with the quality assessment and performance improvement requirements that apply to all plans, such as those relating to health information and program review. See section II.E of this preamble for further detail on the quality assurance requirements for various types of plans.
12. User Fee for M+C Organizations Based on Number of Enrolled Beneficiaries (Section 522 of the BBRA)
Under section 1857(e)(2) of the Act, the Secretary is directed to collect “user fees” from M+C organizations in order to pay for the costs associated with the enrollment and information distribution activities required for the M+C program under section 1851 of the Act and for the health insurance counseling and assistance programs under section 4360 of the Omnibus Budget Reconciliation Act of 1990 (Pub. L. 103-66). Before enactment of the BBRA, the aggregate amount to be collected from all M+C organizations was the lesser of (1) the estimated costs to be incurred by the Secretary in carrying out the applicable information dissemination activities or (2) an amount contingent upon the enactment of appropriations. An individual M+C organization's user fee was equal to its pro rata share of the aggregate amount of fees to be collected from all M+C organizations. Section 522 of the BBRA amended section 1857(e)(2) of the Act to provide that the aggregate amount of user fees to be collected from M+C organizations to carry out the required beneficiary education activities will be based on the lesser of the estimated costs of information dissemination or, for 2001 and thereafter, the “M+C portion” of $100 million, with the M+C portion representing the Secretary's estimate of the ratio of the average number of M+C enrollees for a fiscal year to the average total number of Medicare beneficiaries for the fiscal year. We are revising § 422.10 to reflect the new statutory provisions. Consistent with section 522(b) of the BBRA, these changes are effective for user fees charged on or after January 1, 2001, and the Secretary may not increase the user fees for the 3-month period beginning October 2000, above those in effect during the previous 9 months. While we will comply with this latter limitation, we are not including it in regulations text, just as Congress did not include it in the text of section 1857(e).
13. Clarification Regarding Operation of M+C Plans by Religious Fraternal Benefit Societies (Section 523 of the BBRA)
Section 523 of the BBRA amended section 1859(e)(2) of the Act to clarify that a religious fraternal benefit (RFB) society may offer any type of M+C plan, not just an M+C coordinated care plan. We are revising the definition of an RFB plan in § 422.2 to reflect this change.
14. Rules Regarding Physician Referrals for M+C Program (Section 524 of the BBRA)
Section 524 of the BBRA amended section 1877(b)(3) of the Act to specify that certain Medicare rules establishing prohibitions on physician referrals do not apply for purposes of M+C organizations offering M+C coordinated care plans, although they do apply for purposes of M+C MSA plans and private fee-for-service plans. As discussed in section II.E.10 of this preamble, this policy was incorporated into § 411.355(c)(5) of the Medicare regulations through our June 26, 1998 interim final rule.
II. Analysis of and Responses to Public Comments
A. Overview
1. Comments on June 26, 1998 Interim Final Rule
We received 87 items of correspondence containing hundreds of specific comments on the June 26, 1998 interim final rule. Commenters included managed care organizations and other industry representatives, representatives of physicians and other health care professionals, beneficiary advocacy groups, representatives of hospitals and other providers, insurance companies, States, accrediting and peer review organizations, members of the Congress, and others. Consistent with the scope of the June 26, 1998 rule, most of the comments addressed multiple issues, often in great detail. Listed below are the five areas of the regulation that generated the most concern:
• Access issues, including requirements concerning coordination of care, initial assessments of enrollees' health care needs, timely pre-approval of post-stabilization services, and notification responsibilities when an organization terminates its relationship with a specialist.
• Quality improvement standards.
• Payment rates and service area policy.
• Provider participation rules.
• Beneficiary appeals and grievances.
Among the other issues that generated substantial numbers of comments were:
• Eligibility, election, and enrollment policies.
• Marketing restrictions.
• Risk adjustment methodology and encounter data submission.
• Contractual requirements.
• Preemption of State law by Federal law.
• Deadline for ACR submissions and capacity waivers.
2. Issues in February 17, 1999 Final Rule
In the February 17, 1999 final rule, we attempted to address those issues raised by public commenters where we were convinced that changes were needed and could quickly develop policies necessary to implement the changes. We also included policy clarifications for certain areas in which the material in the interim final rule had been misinterpreted. Also, to the extent possible, we addressed time-sensitive issues, such as those that needed to be resolved before publication of this comprehensive M+C final rule or those that could affect plans or beneficiaries in areas where Medicare risk contractors
initially chose not to participate in the M+C program. Some of the specific issues we addressed related to provider participation procedures, beneficiary enrollment options, and several access-related issues, including initial care assessment requirements, notification requirements when specialists are terminated from an M+C plan, and coordination of care requirements.
3. Organization of Final Rule With Comment Period
In this comprehensive M+C final rule with comment period, we address all comments received on the interim final rule that were not addressed in the February 17, 1999 final rule. (As noted above, we are also incorporating changes necessitated by the BBRA, subject to public comment.) For the most part, we will address issues according to the numerical order of the related regulation sections. However, many of the comments raise interrelated issues that involve multiple sections of the regulations. In these cases, we generally address all comments on these issues together, whenever the first relevant section of the regulations arises. Also, we note that all comments on the definitions set forth in § 422.2 are addressed in the context of the requirements with which the applicable definitions are associated.
4. General Comments and Subpart A Issues
a. Administrative Procedure Act Issues
We received two comments on various aspects of the M+C rulemaking process, as discussed below.
Comment:
A commenter contended that the June 26, 1998 interim final rule did not conform to requirements in the Administrative Procedure Act (APA). First, the commenter alleged that HCFA did not engage in “reasoned decision making” because in certain instances cited by the commenter, the preamble contained “no discussion of * * * factual predicates, no discussion of alternatives that were evaluated and rejected, and no cost-benefit analysis.” The commenter specifically cited requirements for a compliance plan and certifications by executives in connection with this contention. Second, the commenter contended that the regulations should have been subjected to prior notice and comment. The commenter argued that the authority in section 1856(b)(1) to issue interim final regulations only applied to existing standards under section 1876, and that failure to publish the rule by June 1 constituted “a failure to satisfy a condition precedent for issuance of an interim final rule without notice and comment.” Finally, the commenter argued that the rule impermissibly provided for compliance with our instructions, contending that this was an attempt to require compliance with instructions that should themselves be subjected to notice and comment.
Another commenter commended us on our success in issuing comprehensive regulations for a complex new program in a short period of time.
Response:
The interim final rule includes an extensive preamble that explains the basis and purpose of the regulations, and meets the cited requirements of the APA. We believe that this preamble more than satisfies the requirements in the law for explaining the reasoning behind the decisions we made in the interim final rule. In some cases when we actively considered alternative approaches and rejected them, we included discussion of this in the interim final rule preamble. For example, in the discussion of grievance procedures (63 FR 35022-35023), we indicated that “we considered” including detailed requirements for M+C organization grievance procedures in the interim final rule, and “we considered requiring certain time frames for addressing grievances.” Our reasons for not doing so in that rule were also set out in detail.
We do not believe that the APA—or certain court decisions cited by the commenter—require us to discuss in the preamble every possible alternative that might have been considered to the approaches taken in the rule, but only to explain our reasons for the choices we made. To the extent we have received specific comments advocating alternative approaches, we explain in this final rule why we have not adopted these suggestions, where this is the case.
With respect to the specific requirement that M+C organizations have a plan in place for ensuring compliance with applicable State and Federal laws, we indicated in the preamble that we believe that such a plan was part of the administrative and managerial capabilities that should be in place to carry out the contract and
comply with
obligations under the contract. Many organizations agree with this conclusion, and had compliance plans in place before this requirement was adopted. We believe that this is an important component of proper management, like an accountable board of directors. We explained in the preamble that we were establishing this requirement as an M+C standard under our authority in section 1856(b)(1) to establish M+C standards by regulation.
As to the requirement for certifications as to the accuracy of data, we clearly explained in the preamble that we believed that since payments to M+C organizations are based on such data, the submission of the data is part of a “claim” for payment in the amount dictated by the data in question. We further explained that a certification of the accuracy of this information will help ensure accurate data submissions, and assist us and the DHHS Office of Inspector General in anti-fraud activities. We believe this is a clear and logical explanation of reasoned decision making in imposing this requirement.
We disagree with the commenter's contention that we were required to provide prior notice and comment before publishing final regulations. Section 1856(a)(1) gives the Secretary the authority to promulgate regulations establishing the standards that will apply under the M+C program, and that the Secretary is authorized to “promulgate regulations that
take effect
on an interim basis, after notice and
pending opportunity for public comment
.” (Emphasis added.) The commenter suggests that this authority only applies to requirements that are based on existing section 1876 standards. This is incorrect, and is contradicted by other BBA provisions citing this rulemaking authority. The reference to section 1876 merely provides that, “consistent with the requirements of this part” (meaning only to the extent that the BBA does not provide or authorize alternative approaches), “standards established under this subsection shall be
based on
standards established under section 1876
to carry out analogous provisions
of such section.” section 1856(b)(2). This provision thus only applies to the extent we determine that doing so would be “consistent with” the new Part C provisions, and only with respect to those provisions in Part C that are “analogous” to a section 1876 standard. Even in this case, the new standards need only be “based on” the 1876 standards, not necessarily identical to such standards.
The commenter's interpretation that section 1856(b)(1) of the Act applies only to the repromulgation of existing 1876 standards is also contradicted by other references in the BBA to this rulemaking authority. For example, section 1876(k)(2), added by section 4002 of the BBA, provides for rules dealing with “grandfathered” Part B only enrollees. Since Part B only enrollees were permitted under section 1876, there were no section 1876 standards addressing the treatment of “grandfathered” enrollees. Yet, section
1876(k)(2) provides that such enrollees may “continue [grandfathered] enrollment in * * * accordance with
regulations described in section 1856(b)(1)
.” Section 1876(k)(2). This makes clear that the rulemaking authority in section 1856(b)(1) is broader than the commenter contends.
The commenter's contention that we cannot avail ourselves of the interim final rule authority because the rule was not published by June 1, 1998, is illogical. If the Congress authorized interim final regulations because it wanted the rules to be in place by June 1, it would not wish regulations that have already missed this deadline to be delayed further by notice and comment rulemaking. Indeed, the fact that rules were not published by June 1 made the desirability and necessity of issuance in interim final form with an opportunity for public comment all the
more
urgent.
Finally, with respect to our instructions, we intend only to issue instructions that implement or interpret substantive provisions included in these regulations. To the extent the commenter believes that subsequent instructions are issued that should have been subjected to notice and comment, it can make this argument at that time. The fact that we require compliance with guidance we issue to implement these rules is fully consistent with the APA.
b. Types of M+C Plans (§ 422.4)
i. M+C Coordinated Care Plans (§ 422.4(a)(1))
A coordinated care plan is a plan that includes a network of providers that are under contract or arrangement with the M+C organization to deliver the benefit package approved by us. The network is approved by us to ensure that all applicable requirements are met, including access and availability, service area, and quality. Coordinated care plans may include mechanisms to control utilization, such as referrals from a gatekeeper for an enrollee to receive services within the plan, and financial arrangements that offer incentives to providers to furnish high quality and cost-effective care. Coordinated care plans include plans offered by HMOs, PSOs, and PPOs, as well as other types of network plans (except network MSA plans). We received no comments on our definition of coordinated care plan.
ii. Religious and Fraternal Benefit Society Plan
One specific type of M+C plan authorized by the BBA is a religious and fraternal benefit society plan (RFB plan), which is defined in section 1859(e) of the Act. An RFB plan is a new plan that may be offered under the M+C program. In § 422.2, an RFB society is defined as an organization that (1) is described in section 501(c)(8) of the Internal Revenue Code of 1986 and is exempt from taxation under section 501(a) of that Act and (2) is affiliated with, carries out the tenets of, and shares a religious bond with, a church or convention or association of churches or an affiliated group of churches. As noted above, an RFB plan was defined in the BBA as a coordinated care plan that is offered by an RFB society. We received two comments regarding RFB plans.
Comment:
Two commenters noted that the definition of religious and fraternal benefit (RFB) society found in § 422.2 of the regulations would be clearer if the word “benefit” were added to the beginning of this definition.
Response:
We agree that the word “benefit” was inadvertently omitted and have added the word “benefit” after the words “religious and fraternal” in that section.
Comment:
One commenter asked whether RFB society plans are limited to being a coordinated care plan, or whether an RFB society could also offer a private fee-for-service plan or an MSA plan. A related question asked by the commenter is whether RFB plans can include a point of service (POS) option.
Response:
As noted above, under the BBA, a RFB society could only offer a coordinated care plan as a RFB plan. Section 523 of the BBRA, however, amended section 1859(e)(2) of the Act to provide that an RFB society may offer any type of M+C plan. An RFB plan that operates as an M+C coordinated care plan may include a POS option, as could any other M+C coordinated care plan.
iii. M+C MSA Plans (§ 422.4(a)(2))
The comments received regarding M+C MSA plans are discussed in section III of this preamble. iv. Multiple Plans (§ 422.4(b))
In the interim final rule, we specified that under its contract, an M+C organization may offer multiple plans, regardless of type, provided that the M+C organization is licensed or approved under State law to provide those types of plans (or, in the case of a PSO offering a coordinated care plan, has received from us a waiver of the State licensing requirement).
Comment:
Noting that an M+C organization can offer multiple plans under a single contract with us, a commenter asked how multiple plans would work, and whether each would be required to have a separate health services delivery system. The commenter stated that in order to reduce the administrative cost of multiple plans, we should maximize assessment of compliance with Medicare requirements at the M+C organization level and minimize compliance assessment at the individual plan level.
Response:
An M+C organization may offer multiple M+C plans under a single contract with us. Each M+C plan must have its own HCFA-approved service area, and a separate ACR submission that also must be approved by us. For coordinated care and network MSA plans, we will verify that each plan has a health care provider network under contract that meets M+C standards for access and availability to health care services for beneficiaries who enroll in the given plan. Although we will attempt to achieve all appropriate monitoring efficiencies when contractual elements are identical across plans, we have a responsibility to ensure compliance at the plan level when requirements are plan-specific, such as those noted above.
c. Application Requirements and Procedures (§§ 422.6 and 422.8)
These sections set forth application requirements for entities that seek a contract as an M+C organization offering an M+C plan. One of the new requirements we set forth in the interim final rule was that organizations wishing to contract with us must submit documentation of their appropriate State licensure, or submit documentation of State certification that the entity is, in fact, able to offer health insurance or health benefits coverage meeting State fiscal solvency standards and is authorized to accept prepaid capitation for providing, arranging, or paying for comprehensive health care services. We further specified that entities meeting the definition of a PSO can be exempted from this requirement if they meet conditions for a waiver, which can be granted by us in accordance with subpart H of part 422. Section 422.8 of the interim final rule describes the application requirements for entities seeking to contract with us to offer M+C plans, as well as our application evaluation procedures.
Comment:
One commenter suggested that our use of terms referring to entities that qualify for M+C contracts (M+C organization) and applicants for such contracts are inconsistent and confusing. For instance, at §§ 422.8(a)(3), 422.8(e), and 422.8(g), we use the term “entity” to refer to an organization applying to become an M+C organization, while at §§ 422.8(d)
and (f) we use the term “M+C organization.”
Response:
Clearly, we should not refer to an organization that has not obtained approval from us to become a contractor under the M+C program as an “M+C organization.” Accordingly, we have revised § 422.8 to uniformly refer to organizations that apply to become M+C organizations as “contract applicants.” This is consistent with our use of this term elsewhere in this final rule.
We likewise agree with the comment that organizations that have received approval to operate as an M+C organization should uniformly be called an “M+C organization.” Accordingly, we have revised applicable subsections of § 422.8 to uniformly use the term “M+C organization” to refer to an existing contractor under the Medicare+Choice program.
d. User Fees (§ 422.10)
This section implements section 1857(e)(2) of the Act, as revised by section 522 of the BBRA. Section 1857(e)(2) requires that M+C organizations share in costs associated with beneficiary enrollment in M+C plans, including the costs of providing information and counseling on plan choices. It sets forth the maximum amount of the aggregate “user fees” that can be collected from M+C organizations as well as the procedures that we follow to assess and collect these amounts from M+C organizations.
In the June 26, 1998 interim final rule, we referred to interim final regulations published on December 2, 1997, which implemented section 1857(e)(2) for risk contractors under section 1876. (Under section 1876(k)(4)(D), the obligation under section 1857(e)(2) applied to section 1876 contractors in 1998.) These December 1997 interim final regulations set forth a methodology for determining an individual organization's “pro rata share” of the beneficiary costs to be assessed (62 FR 63669). We also explained in the June 26, 1998 interim final rule that we were simply adopting at § 422.10, for purposes of the M+C program, the user fee provisions previously set forth in § 417.472(h) of the December 1997 interim final rule. As we indicated in the June 26, 1998 interim final rule, we are addressing the comments received on the substance of the December 1997 interim final rule in this comprehensive M+C final rule. (Since there are no remaining section 1876 risk contractors, § 417.472(h) itself no longer has any applicability.)
As described above, section 522 of the BBRA subsequently amended the user fee provisions set forth in section 1857(e)(2) of the Act, effective for user fees charged on or after January 1, 2001. Revised section 1857(e)(2) now establishes that beginning in the year 2001 the maximum amount of aggregate user fees that we may collect during a fiscal year from M+C organizations will be determined by the percentage of Medicare enrollees in M+C plans. Specifically, we will calculate: the annual average number of Medicare beneficiaries enrolled in M+C plans during a fiscal year divided by the average number of individuals entitled to benefits under part A, and enrolled under part B, during the fiscal year. This ratio will be multiplied by $100,000,000 to determine the maximum aggregate user fees we may collect from all M+C organizations in a given fiscal year. (Under section 1857(e)(2), we collect the lesser of (1) the actual costs of carrying out the required information dissemination activities or (2) the maximum aggregate amount permitted under the Act.)
We received five letters of comment regarding the interim final rule of December 2, 1997, which established the assessment method under which all M+C organizations are assessed the same fixed percentage of their total monthly Medicare payments, in order to collect the M+C user fee. Two commenters supported the user fee assessment methodology selected by us and considered that it was equitable both to organizations and beneficiaries; three commenters opposed the methodology. We also received six letters commenting on the same methodology in response to the interim final M+C regulation of June 26, 1998. Again, three commenters argued that the user fee was unfair to M+C organizations since it resulted in these organizations funding an information campaign for all Medicare beneficiaries, not just those enrolled in M+C organizations. These latter concerns are now moot in light of the BBRA amendments limiting M+C user fees to the percentage of information dissemination costs representing the percentage of total Medicare beneficiaries that are M+C enrollees. Comments that remain relevant are discussed below.
Comment:
A commenter expressed concern about the costs of the education campaign implemented by us and how the funds collected from M+C organizations would be spent. The commenter asked that we make available detailed information on the budget, resource allocation, and past and projected expenditures for the beneficiary information campaign, in order to justify the user fee funding levels. The commenter also expressed concern that we should not collect more in user fees than entitled by law. Specifically, the commenter noted that at § 422.10(d), we are only entitled to collect the lesser of the estimated costs necessary to implement educational activities in that fiscal year or the appropriated amount. The commenter also stated that the reduction in M+C payments due to the assessment of the user fee will deter new organizations from entering the M+C program.
Response:
Although not required under the statute or the BBA, we provide an annual report to the Congress that includes an assessment of the implementation of the M+C program. This report also provides budgetary information on the expenditures of the fees we have collected to fund the M+C information campaign. As stated in revised § 422.10(d)(2), beginning in fiscal year 2001, we will collect in a fiscal year the lesser of either the amount needed to implement the required information dissemination and other activities, or the amount equal to the M+C portion of $100 million. The fees collected from any one organization would represent a very small percentage of the total annual Medicare payments to that organization, and we do not believe that they would deter an organization from entering the M+C program.
Comment:
A commenter argued that the assessment method adopted by us, under which a percentage of the monthly payment to an M+C organization is assessed, is unfair because it results in organizations in high capitation payment areas paying more (in total dollars) than organizations in lower payment areas. The commenter expressed the view that it is unfair to charge an organization in New York more than an organization in Nebraska.
Response:
In selecting an assessment methodology, we sought an approach that is as financially equitable as possible regardless of an M+C organization's size or geographical location. We also wanted a methodology that would not present a barrier to participation for smaller and new M+C organizations. We adopted the percentage of payment approach because it bases each organization's assessment on the total Medicare dollars flowing to that particular organization. Thus, the fee each organization pays is directly proportional to the total dollars the organization receives from the Medicare program. M+C organizations that receive larger payments (based on monthly enrollment and payment levels) will pay more in total dollars
than M+C organizations with less Medicare money coming in.
Comment:
A commenter stated that the assessment of a user fee should be directly related to the costs of providing services. Since no evidence has been presented that the costs of a national mail campaign are higher in one county than another, the user fee should be even across all counties.
Response:
While the fees collected from M+C organizations will be used primarily to fund a national information campaign designed to reach all Medicare beneficiaries, some funds will go to local efforts, where, as noted above, costs do vary. In any event, this assessment is not an organization-specific “user fee” such as those imposed under the user fee statute. The assessments are not based on specific costs associated with an individual M+C organization, but on a share of aggregate costs. Specifically, the statute provides for each M+C organization to pay its pro rata share “as determined by the Secretary” of the “aggregate amount” spent on the specified costs. Thus, data on actual costs associated with an individual organization are not relevant. Rather, we consider the fee as an assessment to be levied in a manner that, to the extent possible, equitably balances the financial impact on all organizations.
Comment:
A commenter stated that we should not use the user fee assessment as a way to equalize Medicare managed care payments in different areas of the country. Noting that the Congress has provided for a minimum update in high payment areas, the commenter contended that we will be violating the spirit of the law by taking more from organizations offering M+C plans in these areas.
Response:
No consideration was given to using the user fee assessment methodology as a tool to adjust the level of Medicare payment to M+C organizations in different parts of the country. In fact, since the percentage impact on all M+C Medicare payments is equal (a fixed percentage of total payment), this is the one approach that maintains the relative payment levels of all organizations.
Comment:
Another commenter asserted that the user fee assessment method we selected—with fees based on percentage of an organization's M+C payment—has the effect of penalizing those M+C plan enrollees who reside in counties with higher payment rates. The commenter wrote that enrollees in high payment rate areas will pay much more for their existing benefits.
Response:
In terms of total dollars, it is true that M+C organizations in high payment areas will pay more on a per member basis than organizations in lower payment areas. However, as previously noted, the assessment percentage is the same for all organizations. A method that does not take into account the total dollars flowing to each plan would be regressive and unfair, because it would have a disproportionately high financial impact on organizations (and their members) located in mid to lower payment areas and those with low enrollment.
Comment:
One commenter recommended that all M+C organizations pay a minimum user fee amount and then, on top of that minimum amount, organizations should also pay a flat monthly amount for each member. The commenter stated that this approach would ensure that the user fee is reasonably related to the benefit that the organization will receive from the M+C program.
Response:
We considered the approach suggested by the commenter but rejected it because, unless the flat fee were set at a very low level, it would present an entry barrier for organizations with relatively low enrollment levels. We also rejected a flat per member monthly assessment because it does not adjust for the geographic variation in our monthly capitation payments to M+C organizations.
B. Eligibility, Election, and Enrollment
1. Eligibility to Elect an M+C Plan (§ 422.50)
Section 1851(a) of the Act sets forth the criteria for an individual to be eligible to elect an M+C plan. Consistent with the statute, § 422.50 specifies that an individual is eligible to elect an M+C plan if he or she:
• Is entitled to Medicare under Part A and enrolled in Part B (except that an individual entitled only to Part B and who was enrolled in an HMO or Competitive Medical Plan (CMP) with a risk contract under part 417 on December 31, 1998 may continue to be enrolled in the M+C organization as an M+C plan enrollee);
• Has not been medically determined to have end-stage renal disease, except that an individual who develops end-stage renal disease while enrolled in an M+C plan or other health plan offered by an M+C organization may continue to be enrolled in the M+C plan, or if enrolled in another health plan, may enroll in an M+C plan offered by the organization, if the individual is otherwise eligible to enroll in the M+C plan;
• Resides in the service area of the plan, except that an individual who resides in a continuation area of an M+C plan while enrolled in a health plan offered by the M+C organization may continue to be enrolled with the M+C organization as an M+C plan enrollee under the terms that apply to enrollees in the continuation area;
• Completes and signs an election form and gives information required for enrollment; and
• Agrees to abide by the rules of the M+C organization after they are disclosed to him or her in connection with the election process.
We specified in the interim final rule that an M+C-eligible individual may not be enrolled in more than one M+C plan at any given time. Comments on the M+C eligibility rules are discussed below.
Comment:
Several commenters objected to the omission from the regulations of any provision permitting individuals to remain enrolled with an organization upon becoming Medicare eligible if they were enrolled with the organization as a commercial enrollee, but live outside the Medicare service area. In particular, commenters recommended that beneficiaries residing outside of an M+C plan's service area be allowed to remain enrolled with the M+C organization offering the M+C plan as an M+C plan enrollee upon becoming eligible for Medicare, even if they live outside the M+C service area. Commenters noted that the previous regulations in Part 417 that applied to section 1876 risk contracts allowed an individual enrolled with an organization as a commercial enrollee to remain enrolled with the organization as a Medicare enrollee upon becoming eligible for Medicare even if the individual did not live in the Medicare service area. Several commenters asserted that the continuation area option provided for in the BBA (discussed in further detail below) was not an adequate replacement for the previous option; they believe that prohibiting out-of-area members from voluntarily remaining enrolled in M+C plans unduly restricts the options available to beneficiaries and causes unnecessary disruptions in care. One commenter noted that section 1851(b)(1)(A) of the Act gives us the discretion to make an exception to the requirement that the individual reside in the M+C plan's geographic area.
Response:
The last commenter is correct that section 1851(b)(1)(A) states that, “
Except as the Secretary may otherwise provide
(emphasis added), an individual is eligible to elect an M+C plan offered by the M+C organization
only if the plan serves the geographic area in which the individual resides.” In accordance with the statute, existing § 422.250(a) generally limits eligibility to elect an M+C plan to individuals living in the plan's service area. The only discretion exercised by the Secretary in the M+C regulations was to permit individuals the option of continuing enrollment in the plan if they move out of the service area and into a plan's “continuation area” (which can be established pursuant to section 1851(b)(1)(B) of the statute and § 422.254 of the M+C regulations, as discussed in detail below.)
Based on the comments we received on the interim final rule, however, as well as the reluctance of M+C organizations to establish formal continuation areas, we have become convinced that the regulations should be amended to provide for additional choices for beneficiaries. Thus, we are amending § 422.50 (with conforming changes to §§ 422.66(d)(1) and 422.74(b)(2) and (b)(4)) to permit M+C organizations to offer a “seamless conversion” option to individuals who, upon becoming entitled to Medicare, live outside of an M+C plan's service area but are already enrolled in a commercial health plan offered by the same organization. If an M+C organization chooses to offer this option, it must offer the option to all individuals who were enrolled in a commercial health plan offered by the organization at the time they become Medicare-eligible. We do not believe it is appropriate to limit the availability of this option only to beneficiaries who had previously been enrolled in employer group health care plans, but instead are providing that both individual and employer group members of commercial health plans may elect to remain enrolled with their organization under an M+C plan under an expanded “seamless conversion” option. Similarly, we note that this expanded eligibility requirement is not limited to situations in which an enrollee becomes eligible for Medicare by virtue of age (referred to in the past as “age in” enrollees), but will apply to all newly eligible Medicare beneficiaries, including the ESRD and disabled population. (As noted above, we previously determined, in the interim final rule, that people with ESRD who are enrolled with an organization before becoming Medicare eligible may remain enrolled with the organization as an M+C plan enrollee.) We note that organizations that wish to offer this option must meet the M+C access standards under § 422.112, and must furnish the same benefits to these enrollees as to enrollees who reside in the plan service area. Such enrollees should be made aware by the M+C organization of the extent to which they will need to travel into the plan service area to obtain service.
Comment
: One commenter pointed out that State-authorized managed long term care plans may identify a chronically ill target population to be served, while the M+C regulations at § 422.50 do not allow an M+C plan to discriminate within an approved service area among those who are eligible to enroll in M+C plans. The regulations also do not provide for plans to enroll special populations. The commenter asked whether these provisions are waivable to permit plans authorized as managed long-term care plans under State law to participate in the M+C program.
Response
: There is no authority in the statute to “waive” the requirement that M+C organizations accept all M+C-eligible individuals in the service area who wish to enroll. However, we have approved demonstration projects under independent demonstration authority that involve managed care entities that restrict Medicare enrollment to long-term care populations. Long-term care plans may be able to participate in Medicare under such a demonstration.
Comment
: One commenter asked for clarification regarding whether individuals who are enrolled only in Medicare Part B or who have ESRD, and were grandfathered into M+C plans as of January 1, 1999, can move from plan to plan in the same M+C organization or to another organization. The commenter supported allowing the individual to move between plans and organizations. Another commenter suggested that we allow an individual enrolled only in Medicare Part B who retained his or her enrollment in an M+C plan as of January 1, 1999, to enroll in another M+C organization for a period of time after disenrolling from an M+C plan. In addition, the commenter suggested that individuals enrolled only in Medicare Part B should be able to enroll in an M+C plan at any time until 2002.
Response
: We agree that grandfathered Part B-only individuals and individuals with ESRD should be allowed to move between plans within an M+C organization, and have specified that this is permissible in OPL 99.084, issued on February 26, 1999. With respect to beneficiaries with ESRD, this policy is based on section 1851(a)(3)(B) of the Act, which we interpret as permitting an existing enrollee who develops ESRD while enrolled with an organization to remain enrolled with that organization. This is an exception to the general rule that an individual medically determined to have ESRD is not eligible to enroll in an M+C plan. However, we do not have statutory authority to permit a beneficiary with ESRD to enroll in a plan offered by a different M+C organization. Similarly, under section 1851(a)(3) of the Act, Part B-only enrollees generally are ineligible to enroll in an M+C plan. Section 1876(k)(2) of the Act, however, permitted a Part B-only beneficiary enrolled with an organization under a section 1876 risk contract on December 31, 1998, to continue enrollment in that organization if the organization has entered into an M+C contract effective January 1, 1999. Again, we have no statutory authority to expand upon this exception by permitting that individual to enroll with a different M+C organization from the one in which he or she was enrolled on December 31, 1998, under a section 1876 risk contract.
Comment
: One commenter stated that individuals enrolled only in Medicare Part B who disenroll from M+C should be permitted to immediately enroll in Medicare Part A, and the surcharge for late enrollment should be eliminated.
Response:
Provisions affording such beneficiaries these protections have been in place for some time. The Omnibus Reconciliation Act of 1990 established the Transfer Enrollment Period (TEP) during which individuals who have Part B only and whose coverage in a Medicare managed care plan is terminated for any reason may immediately enroll in Premium Part A. This provision is found at section 1818(c)(7) of the Social Security Act, and § 406.21(f) of our regulations, which also provide for relief from the premium surcharge for late enrollment. Under the TEP provisions, individuals may enroll in Premium Part A during any month in which they are still enrolled in the managed care plan or during the 8-month period following the last month of coverage under the plan. Under certain circumstances enrollment may occur up to 3 months in advance. If the individual enrolls in Premium Part A while still enrolled in the managed care plan or during the first full month when not so enrolled, Part A coverage is effective with the month of enrollment or, at the individual's option, the first day of any of the following 3 months. If enrollment occurs during the 7 remaining months of the TEP, Part A coverage is effective the month after the month of enrollment.
Comment:
One commenter suggested that the regulation be revised to permit individuals with ESRD who have been
enrolled in a commercial plan or a Medicare Cost HMO offered by the M+C organization to enroll in an M+C plan of that organization.
Response:
Existing § 422.50(a)(2) provides this protection, stating that an individual who develops ESRD while enrolled in an M+C plan, or in a health plan offered by the M+C organization offering an M+C plan in the area in which the individual resides, may continue to be enrolled in an M+C organization as an M+C plan enrollee. Also, consistent with section 1851(a)(3)(B) of the Act, we have specified in OPL99.084 that individuals with ESRD may move among plans within an M+C organization. (We note that under this final rule, the individual may remain enrolled even if he or she does not live in the service area if new § 422.50(a)(3)(ii) applies.) For purposes of § 422.50(a)(2), “a health plan offered by the M+C organization” includes any commercial health plan and any cost contract held by that organization. In the case of an individual who develops ESRD while enrolled in a commercial plan offered by a cost contractor, the section 1876 rules similarly allow such an individual to remain enrolled with that organization under its cost contract after becoming eligible for Medicare.
Comment:
One commenter believes that we are interpreting the phrase “entitled to benefits under Part A and enrolled in Part B” incorrectly.
Response:
Our interpretation of this phrase is explained in detail in the interim final rule (63 FR 34979), and we would refer the commenter to that detailed explanation. To briefly reiterate our reasoning, we believe that the Congress intended that a newly eligible individual be given the opportunity to be enrolled in an M+C plan only after he or she is actually entitled to receive benefits under Part A and Part B. This view is supported by language in section 1851(e)(1) of the Act, which refers to “the time an individual first becomes entitled to benefits under Part A and enrolled under Part B,” and provides for the Secretary to specify an initial coverage election period under which such an individual may elect coverage under an M+C plan “effective as of the first date on which the individual may
receive
such [Part A and Part B] coverage” (emphasis added). While an individual technically may have “enrolled” in Part B once an application has been completed, such an individual's right actually to “receive” coverage of services under Part B may not occur for a period of months. (See 63 FR 34979.) Since M+C organizations are paid in part from Part B trust funds, we do not believe it would be appropriate for an individual to be enrolled in an M+C plan before he or she is entitled to “receive” Part B trust fund payments. We therefore have interpreted “enrolled in Part B” to mean entitled to receive Part B coverage. Consistent with section 1856(b)(2) of the Act (which provides for use of section 1876 standards to carry out analogous M+C provisions), this interpretation follows our longstanding interpretation of identical language in section 1876(d) of the Act.
2. Continuation of Enrollment (§ 422.54)
Section 1851(b)(1)(B) of the Act permits M+C organizations to offer enrollees the option of continued enrollment in an M+C plan when enrollees leave the plan's service area to reside elsewhere (that is, in the “continuation” area) on a permanent basis. M+C organizations that choose to offer a continuation of enrollment option must explain the option in marketing materials, and make it available to all enrollees in the service area of the plan. Enrollees may choose to exercise the option of continued enrollment when they move out of the plan's service area, or they may choose to disenroll.
An M+C organization must obtain our approval of the continuation area and related marketing materials, and meet the access requirements under section 1851(b)(1)(B) of the Act, before it may offer a continuation of enrollment option to Medicare beneficiaries.
The payment rate for the M+C organization is based on the rate and adjustment factors that correspond to the beneficiary's permanent residence. Under section 1851(b)(1)(B) of the Act, the M+C organization must, at a minimum, provide or arrange for the provision of Medicare-covered benefits under section 1852(a)(1)(A) of the Act in the continuation area. This does not include any additional benefits the organization is required to provide to noncontinuation area members under section 1852(a)(1)(B) of the Act.
Section 1851(b)(1)(B) of the Act requires that “reasonable access” be provided in the continuation area, and that enrollees be subject to “reasonable cost sharing.” In the interim final rule, we required that M+C organizations satisfy the access requirements in § 422.112, and provide services either through written agreements with providers or by making payments that satisfy the requirements in § 422.100(b)(2).
We are defining “reasonable cost sharing” in the continuation area as limited to the cost-sharing amounts required in the M+C plan's service area (in which the enrollee no longer resides).
The interim final rule also provides that appeals and grievances of enrollees in the continuation area must be handled in the same timely fashion as for other enrollees. The ultimate responsibility for the handling of appeals and grievances is with the organization that is receiving payment from us.
We received 11 comments requesting further guidance regarding the continuation of enrollment option. Generally, commenters endorsed the continuation of enrollment concept and urged us to define continuation areas broadly in order to enhance coverage options for enrollees.
Comment
: One commenter asked whether the beneficiary may choose the continuation area option verbally or in writing.
Response:
Our current policy, as outlined in OPL 99.100 (which was published August 9, 1999), requires that the beneficiary choose the continuation area in writing, so that there is documentation of this choice. We further believe that in the absence of an affirmative choice to remain enrolled in an M+C plan under the different terms that apply to continuation enrollees, a move out of an M+C service area should be treated as a decision to disenroll from the M+C plan. We accordingly have amended § 422.54(c)(2) to provide that a beneficiary's choice to continue enrollment in a continuation area must be made in a manner specified by us, and that in the absence of such a choice, the beneficiary will be considered to have chosen to disenroll from the M+C plan if he or she moves out of its service area.
Comment:
Commenters recommended that the benefits in the continuation area should reflect the level of reimbursement the M+C organization receives, and thus should include any additional benefits.
Response:
As the commenters point out, the existing continuation of enrollment regulations at § 422.54(d) require, at a minimum, that M+C plans provide Medicare-covered services in the continuation area. We recognize that this permits M+C plans to offer less generous benefits in the continuation area while still receiving the full Medicare payment. Section 1851(b)(1)(B) of the Act provides that individuals exercising the continuation of enrollment option have access to the “full range of basic benefits” described in section 1852(a)(1)(A) of the Act. However, section 1852(a)(1)(A) of the Act refers only to those benefits available under Parts A and B, and not
to additional benefits, which are described in section 1852(a)(1)(B) of the Act. Thus, although we agree that it would be preferable that M+C organizations be required to provide additional benefits to continuation area enrollees, the statute does not support this requirement. Therefore, we are considering a legislative proposal that would correct this inequity.
Comment:
Several commenters inquired about the process for applying to us for a continuation area.
Response:
We are adding a continuation area chapter to the M+C application for new M+C organization applicants. A separate application form will be available for current M+C contractors who wish to apply for a continuation area. Further guidance regarding the application process will be available in a forthcoming OPL.
Comment:
One commenter asked whether a member must use only Medicare-certified facilities in the continuation area.
Response:
The pertinent requirements in § 422.204(a)(3) apply equally to services furnished in a continuation area. Under § 422.204(a)(3), benefits must be provided through, or payments must be made to, providers that meet applicable title XVIII requirements. Further, a hospital, nursing home, home health agency, or other “provider of services” as defined in section 1861(u) of the Act, must have a provider agreement with us in place. (See section II.E of this preamble for further details on this requirement.) We believe these requirements help to assure the quality of care that is provided to beneficiaries.
Comment:
Another commenter suggested that we allow M+C organizations a 1-year transition period to establish continuation areas and implement any continuation area requirements.
Response:
We believe the regulations provide organizations with sufficient opportunity to implement continuation area requirements. M+C organizations are not required to establish a continuation area for their enrollees. Thus, an M+C organization may choose not to offer a continuation area until it is ready to implement the requirements outlined in § 422.54.
Comment:
One commenter questioned whether State licensing regulations may supersede the potential advantages or enrollment flexibility of the continuation area.
Response:
We believe the commenter is questioning how State licensing requirements will affect an M+C organization's ability to establish or offer the continuation of enrollment option. Section 422.400(a) states that an M+C organization must be licensed under State law, or otherwise authorized to operate under State law, as a risk-bearing entity eligible to offer health insurance or health benefits coverage. Therefore, an M+C organization may establish a continuation area only in a State in which it is licensed under State law or otherwise authorized to operate. The individual States have the authority to determine whether they are going to require licensure or, for example, permit the M+C organization to use the licensure of an affiliate if it wishes to establish an out-of-State continuation area. Although we are not aware of State laws that unduly restrict the establishment of continuation areas, we would refer the reader to section II.I of this preamble for a detailed discussion of situations in which State laws are preempted by M+C laws and regulations.
Comment:
Some commenters contended that we interpreted section 1851(b)(1)(B) of the Act too restrictively. For example, commenters objected to the requirement in § 422.54 that an M+C plan's service area must be geographically distinct from its continuation area. Commenters also questioned whether enrollees who move to continuation areas in counties adjacent to the M+C plan's service area may continue to receive services in the M+C plan's service area.
Response:
A continuation area, as defined at § 422.54(a), is an additional area outside the service area in which the M+C organization furnishes or arranges for furnishing services to its enrollees. The regulation does not prohibit continuation areas adjacent to the M+C plan's service area, as the commenter appears to believe. Further, we agree that enrollees residing in a continuation area adjacent to the M+C plan's service area may receive services in the M+C plan's service area, as long as the access and service requirements of § 422.112 are met.
Comment:
One commenter suggested that we allow enrollees to obtain services in the continuation area, even if they are not living in the continuation area permanently.
Response:
The continuation area is intended for those enrollees who reside permanently outside of the service area (and permanently inside the continuation area) and want to remain enrolled in the plan. We do not have the authority to direct M+C plans to offer enrollees, temporarily residing in the continuation area, benefits in excess of the urgent/emergent care required by the statute and those benefits voluntarily offered by an M+C plan in its traveler/visitor policy.
Comment:
One commenter requested clarification regarding whether the continuation of enrollment option is intended to replace current travel programs. The commenter also inquired whether an enrollee would remain enrolled for the first 12 months with coverage only for emergency and urgently needed care, and then convert to a continuation of enrollment option.
Response:
The continuation of enrollment option is not designed to replace current travel programs. In general, the purpose of traveler/visitor programs is to allow enrollees the opportunity to continue obtaining health care services while traveling outside the service area of the M+C plan in which they are enrolled. In contrast, the continuation of enrollment option is intended to permit enrollees to remain enrolled with an M+C plan if they move permanently outside of the plan's service area. If the enrollee moves permanently into an area other than a continuation area, the member must be disenrolled as soon as the M+C organization is aware of the move and the enrollee has been notified. If an enrollee moves permanently into a geographic area designated as a continuation area, and chooses to remain a member of the M+C plan as a continuation of enrollment member, the enrollee must receive, at a minimum, Medicare-covered services. If an enrollee moves temporarily into the continuation area, or any area outside the service area, the M+C plan must provide coverage for emergency and urgently needed care. With respect to the question of whether an enrollee would remain enrolled for the “first 12 months” after a move, before converting to a continuation enrollment option, an individual can be a continuation enrollee as soon as he or she moves permanently to the continuation area. There is no waiting period.
3. Election Process (§ 422.60)
The general rule for acceptance of enrollees is that, except for the limitations on enrollment in an M+C MSA plan (§ 422.62(d)(1)), and for cases in which a plan has reached its enrollment capacity, each M+C organization must accept without restriction eligible individuals who elect an M+C plan during initial coverage election periods, annual election periods, and special election periods specified in §§ 422.62(a)(1), (a)(2), and (b).
Additionally, M+C organizations must accept elections during the open enrollment periods specified in
§§ 422.62(a)(3), (a)(4), (a)(5), and new (a)(6) if their M+C plans are open to new enrollees.
We stated in the interim final rule that the election form must comply with our instructions regarding content and format and have been approved by us as described in § 422.80. The form must be completed and signed by the M+C eligible individual (or the individual who will soon become entitled to Medicare benefits) and include authorization for disclosure and exchange of necessary information between the DHHS and its designees and the M+C organization. Persons who assist beneficiaries in completing forms must sign the form and indicate their relationship to the beneficiary.
We further stated that the M+C organization must file and retain election forms for the period specified in our instructions. An election in an M+C plan is considered to have been made on the date the election form is received by the M+C organization. Also, the M+C organization must have an effective system for receiving, controlling, and processing election forms that requires that each election form is dated as of the day it is received and election forms are processed in chronological order, by date of receipt. Additionally, the M+C organization must give the beneficiary prompt written notice of acceptance or denial in a format specified by us. We also provided that a notice of acceptance, in a format specified by us, informs the beneficiary of the date on which enrollment will be effective under § 422.68; and if the M+C plan is enrolled to capacity, explains the procedures that will be followed when vacancies occur. Also, a notice of denial explains the reasons for denial in a format specified by us. Within 30 days from receipt of the election form (or from the date a vacancy occurs for an individual who was accepted for future enrollment), the M+C organization transmits the information necessary for us to add the beneficiary to our records as an enrollee of the M+C organization.
Comment:
Several commenters had concerns with allowing M+C organization representatives to assist individuals in completing any part of the election forms. One commenter believes that the common practice should be the beneficiary completing and signing his or her own form. Another commenter believes M+C organizations should be allowed to assist beneficiaries in completing the election forms only in limited circumstances, such as if the enrollee is disabled and needs assistance, and that organizations abusing this process should be subjected to meaningful penalties. One commenter suggested that when assistance is provided to a beneficiary in completing the election form, a reason for the assistance also be documented on the form, especially if an M+C organization agent completes the form. In contrast, two commenters supported a provision that permits individuals to assist a Medicare beneficiary in completing an election form.
Response:
As discussed in the preamble of the interim final rule (63 FR 34984), section 1851(h)(4)(B) of the Act indicates that the “fair marketing standards” may include a prohibition against an M+C organization (or agent of such an organization) completing any portion of any election form used to carry out elections on behalf of any individual. However, we have decided at this time not to prohibit an M+C organization (or agent of such an organization) from assisting beneficiaries in completing the election form. We recognize that we must provide accommodations for persons with disabilities and for situations in which such a prohibition could represent a potential physical burden to beneficiaries. We believe requiring the signature of the individual who assisted the beneficiary in completing the form and an indication of his or her relationship to the beneficiary is a fair compromise.
We agree that the M+C organization should be allowed to assist beneficiaries in completing the election form only under limited circumstances. For this reason, representatives should be assisting the beneficiary in completing the election forms only when assistance is needed, such as for a person who is disabled, illiterate, or otherwise impaired by age or health. In fact, in some circumstances assistance may be required to comply with civil rights requirements, for example, to ensure that individuals with disabilities or limited English proficiency have an equal opportunity to participate. Any M+C organization that unduly influences beneficiaries through this assistance should be identified by our monitoring procedures and subject to sanctions as specified in § 422.750.
We believe requiring the signature and identifying their relationship to the individual who is enrolling in the M+C plan is a sufficient beneficiary protection. It provides adequate information to monitor a beneficiary's understanding that the form is for enrollment. The reason why an individual needs assistance should not be included on the enrollment form because it could undermine a Medicare beneficiary's right to privacy by disclosing health related information without his or her consent.
Comment:
One commenter asked how enrollment and disenrollment requirements under Medicare compare to Medicaid rules, which the commenter erroneously believes allow the enrollee to enroll and disenroll at any time.
Response:
Dually eligible individuals, that is, those individuals who are entitled to Medicare as well as Medicaid, have the same freedom of choice under Medicare as those who are entitled to Medicare only. M+C election provisions under section 1851(e) of the Act and § 422.62 of our regulations apply to all M+C-eligible individuals, and prior to 2002, permit Medicare enrollees to disenroll at any time. Under Medicaid rules, in contrast, managed care organizations (MCOs) are permitted to preclude Medicaid enrollees from disenrolling without cause for up to a year. MCOs are required only to permit disenrollment without cause in the first 90 days of enrollment, and annually thereafter. See section 1932(a)(4) of the Act.
Comment:
One commenter requested clarification on when M+C organizations are required to be open for enrollment. In particular, the commenter expressed confusion over the meaning of the term “open enrollment period.”
Response:
We recognize the potential for confusion associated with the use of the term “open enrollment period.” In accordance with section 1851(e)(6)(A) of the statute, § 422.60(a)(1) specifies that M+C organizations must be “open for enrollment” (that is, must accept enrollments) during annual, initial coverage, or special election periods unless they have reached enrollment capacity. However, under section 1851(e)(6)(B) of the Act, an M+C organization may accept elections at
such other
times as the organization provides. These latter time periods, during which an M+C organization has the discretion to decide whether to be “open” for enrollment are frequently referred to as “open enrollment” periods. We note that, if an M+C organization chooses to be open to new enrollees during all or a portion of these discretionary “open enrollment” periods, it must be open for all M+C-eligible individuals.
Comment:
One commenter found § 422.60(a)(2), which states that M+C organizations must accept elections during open enrollment periods if their plans are open to new enrollees, to be confusing and detrimental to newly eligible individuals. The commenter believes that new Medicare eligibles
should not be limited to these time frames.
Response:
The new enrollees being referred to in § 422.60(a)(2) are individuals newly electing the M+C plan and not individuals newly eligible for Medicare. Individuals newly eligible to Medicare are given a different “open enrollment” period under which they may elect or change M+C plans. In particular, §§ 422.62(a)(4)(ii) and 422.62(a)(5)(ii) allow newly eligible individuals to make an election beginning the month the individual is entitled to Medicare Parts A and B and ending on the last day of the sixth month of entitlement (in 2002) or the third month of entitlement (in 2003 and thereafter) or on December 31, whichever is earlier. Therefore, we do not believe a regulatory change is necessary.
Comment:
One commenter asked if we would be modifying our enrollment transmission schedule to account for the 30-day period in which the M+C organization must transmit the enrollment information as stated in § 422.60(e)(6).
Response:
Based on this comment, we are amending § 422.60(e)(6) to state that “upon receipt of the election form (or from the date a vacancy occurs for an individual who has been accepted for enrollment), the M+C organization transmits the information, within time frames specified by us, necessary for us to add the beneficiary to our records as an enrollee of the M+C organization.” We are also revising § 422.60(f)(3) to state that “upon receipt of the election form from the employer, the M+C organization must submit the enrollment within time frames specified by HCFA.” These changes will allow us the flexibility to vary the time frames in the future, should technological or policy changes warrant it.
Comment:
One commenter asked that we clarify and provide guidance as to when an election is considered to have been made.
Response:
Section 1851(f)(2) of the Act, as revised by section 502 of the BBRA, states that the effective date of coverage during continuous open enrollment periods is the first day of the first calendar month following the date on which the “election is made,” except that if the election or change of election is made after the 10th day of a calendar month, the election or change of election takes effect on the first day of the second calendar month following the date on which the election or change is made. As noted in the preamble of the interim rule, it was necessary to define when an election is made in order to establish the effective date of coverage and to establish the date of our liability for payment. Therefore, the regulations at § 422.60(d) state that an election is considered to have been made on the date it is received by the M+C organization.
4. Enrollment Capacity (§ 422.60(b))
Sections 422.60(b) and 422.306(a) of the original M+C regulations required M+C organizations to submit information on the enrollment capacity of plans they offer by May 1 of each year. As noted in section I.C.8 of this preamble, section 516 of the BBRA amended section 1854(a)(1) of the Act to move the annual deadline for submission of ACR proposals and enrollment capacity data (if any) from May 1 to July 1, effective in 1999. If a plan reaches its HCFA-approved capacity limit, the M+C organization offering the plan generally is not obligated to accept new enrollees.
Comment:
One commenter requested that we change the date that M+C organizations must notify us of the need for a capacity limit from May 1 to a date later in the year in order to allow the M+C organizations more time to analyze the previous year's capacity and better determine the need for a capacity waiver.
Response:
While we had no discretion under the BBA to make the change in question, as just noted, Congress has done so. We have revised §§ 422.60(b)(1) and 422.306(a)(1) to reflect this BBRA change.
Comment:
A commenter asked that we clarify our language on capacity limits within a service area. The commenter also asked what would happen if there are too many patients and too few providers.
Response:
Section 422.60(b) allows an M+C organization to limit enrollment in the M+C plans it offers during any enrollment period, subject to our approval. If an M+C organization elects to establish a capacity limit for an M+C plan, the request normally must be submitted to us at the time the Adjusted Community Rate Proposal (ACRP) is submitted (except as provided in new § 422.60(b)(3)), as discussed below. This submission should take into account the number of providers, and how many patients they can serve. The situation described by the commenter, in which “there are too many patients and too few providers” generally should not occur if capacity is limited to the number submitted by the M+C organization on July 1.
As the commenter suggested, however, we recognize that under certain circumstances, there may be a legitimate need for an M+C organization to request a capacity limit or a revision of a capacity limit for an M+C plan during the contract year. The circumstances under which a capacity limit will be approved after the ACRP date would likely occur when a portion of a provider network that furnishes services under an M+C plan becomes unavailable during the course of a contract year. We have provided for HCFA to consider enrollment capacity requests outside of the ACR process under new § 422.60(b)(3), which permits consideration of such requests only if the health and safety of beneficiaries is at risk, such as if the provider network is no longer available to serve enrollees in all or a portion of the service area. The requirements for a midyear capacity limit request are also described in OPL99.095.
5. Election of Coverage Under an M+C Plan (§ 422.62)
All M+C plans must be open to M+C-eligible enrollees residing in the service area served by the plan during initial coverage election periods, annual election periods, and special election periods, unless such enrollment in the plan is limited based upon a limit on enrollment capacity.
The initial coverage election period is the period during which a newly M+C-eligible individual may make an initial election. This period begins 3 months prior to the month the individual is first entitled to both Part A and Part B and ends the last day of the month preceding the month of entitlement. An election made during this period is effective when entitlement to Part A and Part B coverage begins.
The month of November is the annual election period for the following calendar year. During the annual election period, an individual eligible to enroll in an M+C plan may change his or her election from an M+C plan to original Medicare or to a different M+C plan, or from original Medicare to an M+C plan. This election is effective on January 1.
Special election periods are periods during which enrollment must be made open to certain beneficiaries, for various reasons specified in the statute, or by us. We specify the effective date of elections made during special election periods.
M+C plans may be open to new enrollees at other times of the year (that is, during open enrollment periods) at the discretion of the M+C organization offering the plan.
From 1998 through 2001, the number of elections or changes that an M+C-eligible individual may make is not limited (except for M+C MSA plans).
Subject to the M+C plan being open to enrollees as provided under § 422.60(a)(2), an individual eligible to elect an M+C plan may change his or her election from an M+C plan to original Medicare or to a different M+C plan, or from original Medicare to an M+C plan any number of times. In 2002, an individual who is eligible to elect an M+C plan in 2002 generally may elect an M+C plan or change his or her election from an M+C plan to original Medicare or to a different M+C plan only once during the first 6 months of that year. For 2003 and subsequent years, an individual who is eligible to elect an M+C plan generally may elect or change his or her election from an M+C plan to original Medicare or to a different M+C plan, or from original Medicare to an M+C plan only once during the first 3 months of the year. (Note that consistent with section 501(b) of the BBRA, the restrictions that begin in 2002 do not apply to institutionalized individuals.) Even after the above limitations on changes in elections are in place, if certain circumstances exist, an individual may discontinue the election of an M+C plan offered by an M+C organization and change his or her election to original Medicare or to a different M+C plan. These circumstances include:
• When the individual is no longer eligible to be enrolled in a certain plan due to a change of residence,
• When HCFA terminates the organization's contract for the plan, or the organization terminates the plan or discontinues offering the plan in the service or continuation area in which the individual resides,
• When the M+C organization has violated a material provision of its contract or materially misrepresented the plan's provisions in marketing the plan to the individual, or
• When the individual meets such other exceptional conditions as we may provide.
Comment:
Several commenters expressed concern because the new M+C election periods do not coincide with the time frames under which M+C eligible individuals elect health benefit options through their employer group health plans. The commenters believe these individuals should not be subject to the M+C election periods. One commenter pointed out that employer groups will experience considerable disruption in their yearly enrollment process, and, as a result, may have to stop offering their retirees wrap-around coverage to M+C plans, or they will have to modify their entire enrollment process.
Response:
Section 422.62(b) states that we may grant special election periods for individuals who meet exceptional conditions. We have determined that the dilemma addressed by the commenters presents an “exceptional condition” that justifies the establishment of a special election period for M+C-eligible individuals who are members of an employer group plan that has open enrollment at a time other than the month of November. This is because such an individual could only change one part of his or her coverage at a time, which effectively would lock the beneficiary into his or her existing plan. As set forth in OPL 99.100, such M+C-eligible individuals may choose to elect an M+C plan offered by their employer during their employer group's open season, which constitutes a special election period for these individuals, as well as during the other election periods established under section 1851(e) of the Act.
Comment:
Several commenters were opposed to the establishment of “lock-in” requirements beginning in 2002. They believe it will eliminate competition created in an environment where managed care plans compete continuously for enrollments. Several commenters also wanted to know who will be responsible for keeping track of the number of elections made by an individual once lock-in takes effect in 2002. They noted that beneficiaries and M+C organizations may not be aware of the number of elections an individual has made during a particular election period. One commenter recommended that we develop a mechanism that will allow exceptions to the limit of one change under §§ 422.62(a)(4) and (5).
Response:
Sections 1851(e)(2)(B) and (C) of the Act limit an individual's election to one change during the open enrollment periods in the first 6 months of 2002 and the first 3 months of subsequent years. This “lock-in” requirement represents a gradual transition from the current system, under which a beneficiary may make any number of elections during the continuous open enrollment periods outlined in section 1851(e)(2)(A) of the Act to a restrictive system of annual “lock-in.” We do not have the authority to modify this requirement, or to provide for any exceptions to this limit. We are aware of the need for us to maintain a history of the number of times an individual has made an election during a specific election period. Such information will be necessary in order to determine whether an individual is eligible to elect an M+C plan at a given time.
Comment:
One commenter believes that limiting the open enrollment and disenrollment opportunities defined in §§ 422.62(a)(4) and (5) to one election per period should not apply to plan changes within the same M+C organization.
Response:
Section 1851(a)(1) of the Act requires that an M+C-eligible individual “elect” to receive benefits through the original Medicare fee-for-service program or through enrollment in an M+C “plan.” That is, enrollment in an M+C “plan” constitutes an election under Part C. Section 1851(e) of the Act further limits the “election” of an M+C “plan” or of original Medicare to one change during open enrollment periods in the first 6 months of 2002 and the first 3 months of subsequent years. Therefore the law does not permit us to allow M+C-eligible individuals to move from plan to plan without considering it an election, even if the change in plans occurs among plans offered by the same M+C organization.
Comment:
One commenter requested further clarification of enrollment and disenrollment periods, while another asked whether a beneficiary who defaults to original Medicare has the option to elect an M+C plan.
Response:
An individual who defaults to original Medicare may elect another M+C plan during any election period during which the plan is accepting new enrollments. As discussed in detail above, section 1851(e) of the Act and § 422.62 of the M+C regulations describe the election periods in which individuals can enroll in and disenroll from an M+C plan. M+C-eligible individuals may make or change an election during an initial coverage election period, an annual election period, a special election period, or an “open enrollment” period. The initial coverage election period is the 3-month period prior to the month an individual becomes entitled to Medicare Part A and Part B. The annual election period is November of every year. Special election periods are also allowed when M+C-eligible individuals experience certain circumstances that warrant the need to make a change in election. These include our termination of the M+C plan contract or M+C organization termination or discontinuance of the M+C plan in the service or continuation area in which the individual resides, a change in place of residence to a place outside of the M+C plan's service or continuation area, demonstration by the individual that the M+C organization substantially violated a material provision of its contract or materially misrepresented the M+C plan's provisions in marketing materials, or
other exceptional conditions as provided by us. In addition, § 422.62(c) also provides for a special election period for individuals age 65. Beginning in 2002 individuals age 65 who elect an M+C plan during the initial enrollment period may disenroll from the M+C plan and elect coverage under original Medicare within 12 months of their enrollment in an M+C plan.
Through 2001, open enrollment periods are continuous, that is, every month through 2001. Beginning in 2002, the open enrollment periods are the first 6 months of the year, or the first 6 months of Medicare Part A and Part B entitlement (or December 31, 2002, whichever is earlier). In 2003 and in subsequent years, the open enrollment periods are the first 3 months of the year, or the first 3 months of Medicare Part A and Part B entitlement (or December 31, 2003, whichever is earlier). Again, open enrollment periods remain continuous for institutionalized individuals during and after 2002.
The election rules for M+C MSA plans (see § 422.62(d)) include some exceptions to the election periods described above. M+C-eligible individuals may only enroll in an MSA plan during an initial coverage election period or an annual election period. They may not make an election of an MSA plan during open enrollment periods or special election periods. M+C-eligible individuals may only disenroll from an MSA plan during annual election periods and special election periods, excluding special election periods for individuals age 65. In addition, if an individual elects an M+C MSA plan for the first time during the annual November election period, he/she may revoke that election by December 15 of that same year.
Comment:
One commenter supported the special election period for individuals age 65 as outlined at § 422.62(c), and requested that the provision also apply to newly eligible individuals with disabilities.
Response:
Section 422.62(c) implements the last sentence in section 1851(e)(4) of the Act, which applies only to individuals who enroll in an M+C plan upon turning 65. Congress chose to provide this opportunity to individuals who become eligible based on age, but did not provide for such a benefit in the case of individuals who become eligible based on disability or ESRD status. We thus cannot apply section 1851(e)(4) of the Act to individuals who are not 65, since they do not meet an explicit condition set forth in the statute.
Comment:
One commenter noted that § 422.62(b)(3) allows an individual a special election period if the M+C organization violates a material provision of its contract with the individual. However, it does not allow the M+C organization an opportunity to comment on the enrollee's assertion that the contract was violated. The commenter stated that we should be sensitive to the severity of this issue and should establish a timely and fair review process. Two other commenters stated that we should develop reasonable, consistent guidelines for establishing special election periods for exceptional conditions, as provided at § 422.62(b)(4).
Response:
Section 1851(e)(4) of the Act gives us the authority to develop guidelines to establish special election periods for exceptional conditions and to establish the procedures for granting a special election period for contract violations that specify when individuals are entitled to disenroll from an M+C plan after disenrollment rights become limited in 2002. This authority provides us with the discretion and the time to develop beneficiary protection requirements that will be sensitive to the issues identified by the commenters. As we gradually transition from the current system of totally free movement to a restrictive system of annual “lock-in,” we have every intention of developing reasonable and consistent guidelines as the need for these guidelines in the year 2002 approaches.
Comment:
One commenter requested that we clarify at § 422.62(a)(2)(ii) that eligible beneficiaries may elect to enroll in managed care demonstrations, section 1876 cost plans, and health care prepayment plans during the annual election period.
Response:
The annual election period is an election period for M+C organizations operating under section 1851 of the Act. Health care prepayment plans, section 1876 cost plans, and some managed care demonstrations do not fall under section 1851 of the Act. Therefore, we do not have the authority to require these plans and demonstrations to be open for enrollment during an annual election period. Although such plans and demonstrations have the option of being open for enrollment to eligible individuals during that same time frame, this regulation only addresses requirements under section 1851 of the Act.
6. Information About the M+C Program (§ 422.64)
a. Overview
Section 422.64 contains requirements related to information about M+C plans. Paragraph (a) applies to M+C organizations, and requires that organizations annually provide to us, using a prescribed format and terminology, the information we need to carry out our annual information campaign for all Medicare beneficiaries. However, the remaining paragraphs of existing § 422.64 essentially reflect statutory provisions governing our information distribution activities.
Comment:
Several commenters expressed confusion about whether we or M+C organizations were responsible for various information distribution requirements specified under § 422.64.
Response:
We recognize the commenter's concerns and believe that the best means to avoid introducing confusion in this regard is to eliminate from the regulations the portions of § 422.64 that serve solely to delineate our responsibilities. Deleting these provisions from the Code of Federal Regulations in no way affects our information distribution responsibilities that had been reflected in these provisions, since these are set forth in the statute in sections 1851(d)(1) through (d)(4) of the Act. Also, we note that § 422.111 continues to list the information that M+C organizations are responsible for disseminating to their plan enrollees.
Comment:
Two commenters were concerned that the many changes introduced by the M+C program to the plan enrollment and disenrollment process (for example, changes to the effective date, annual open enrollment, lock-in requirements) would lead to beneficiary confusion and disruption of the program, and stressed the need for improved communication with beneficiaries.
Response:
We agree that the many changes necessary for the implementation of the M+C program will require that we carry out substantial educational efforts for beneficiaries and the health industry. We are strongly committed to keeping beneficiaries informed and educated about their choices, and have undertaken many efforts to accomplish this task. For example, we have created a toll-free line for M+C information (1-800-MEDICARE), developed the Medicare & You handbook, and have carried out special educational and publicity campaigns to inform M+C-eligible individuals about the availability of plans offered in different areas and about the election process. In 1999, we began conducting a nationally coordinated educational and publicity campaign about M+C plans and the election process that occurs every November. We also provide information
via our Internet website (www.Medicare.gov), which is a Medicare beneficiary-centered consumer website designed to provide a broad array of information on program benefits and health promotion. These are just a few of the many efforts we have begun to disseminate information to beneficiaries and prospective beneficiaries on their coverage options under the M+C program, and we believe that they should alleviate the potential confusion associated with the M+C program.
b. Access
Comment:
A commenter recommended that § 422.64 specifically require notification and disclosure of Medicare's screening Pap smear benefit and of the ability of beneficiaries to directly access specialists to obtain this preventive service.
Response:
The 2000 Medicare & You handbook includes a description of the new preventive benefits. With respect to direct access to a specialist who would perform a pap smear, § 422.112(a)(3) guarantees female M+C enrollees “direct access to a women's health specialist within the network for women's routine and preventive health care services,” which would include Pap smears (see section II.C of this preamble for further details on this issue.)
c. Performance Measures
Comment:
Several commenters expressed concerns about the validity, reliability, and comparability of information to be provided by us to Medicare beneficiaries, particularly through Medicare Compare, our Internet-based database of comparative information on M+C plans. The commenters want us to ensure that the information presented to beneficiaries is objective, accurate, and complete. They also emphasize the importance of recognizing the audience for particular types of information.
Response:
Medicare Compare is our electronic database of health plan comparison information. The database is designed to educate beneficiaries and others about their health care options so they can make informed health care choices. The information for this database is compiled by us with cooperation from M+C organizations. The Medicare Compare database is also updated regularly to reflect changes in cost and benefits. We are continuing to implement enhancements to ensure that the data submitted by M+C organizations are valid and reliable. Medicare also collects quality-of-care information known as Health Plan Employer Data and Information Set (HEDIS) from M+C organizations and we carefully check it for accuracy. This information should help beneficiaries compare the quality of health care that an M+C organization delivers by explaining how well the organization keeps enrollees healthy or treats them when they are sick. Medicare's Consumer Assessment of Health Plans Study (CAHPS), developed in collaboration with the Agency for Healthcare Research and Quality, is an initiative to collect and report information on beneficiaries' experience in receiving care through M+C organizations. We have also worked closely with the industry and researchers in order to provide the most accurate information for the Medicare & You 2000 handbook.
d. Continuation and Improvements
Comment:
Commenters were concerned about the amount of information provided to Medicare beneficiaries by us. They recommend that the information specified in § 422.64 be included in the general information brochures and contain the customer service telephone numbers for each M+C organization. They also suggested that we need to differentiate between information provided to beneficiaries in written form, and that available to interested persons via the Internet. Written comparative information, which is to be available to all beneficiaries at specified intervals, should be easy to understand and focused in content.
Response:
We provide access to information from a variety of sources. Beneficiaries, M+C organizations, providers, family members, and others can receive up-to-date information about the Medicare health plans available in their area, Medicare health benefits, fraud and abuse, nursing homes, appeals and grievances, patient rights, etc., at the following locations:
• Internet at www.Medicare.gov. Local libraries or senior centers may be able to help the person find the information on their computers.
• Medicare Choices Help line at 1-800-MEDICAR(E) and TTY for the speech and hearing impaired at 1-877-486-2048.
• State Health Insurance Assistance Program (SHIP) in the beneficiary's area.
• Local outreach events.
Comment:
Several commenters encouraged us to evaluate all aspects of the information campaign in order to determine the most effective approach for reaching beneficiaries.
Response:
We aim for timely distribution of all of our materials. We are legislatively mandated to mail specified information on the M+C program and individual M+C plans to beneficiaries at least 15 days prior to the annual election period. We are evaluating the impact of this timing on beneficiary decision making. Our ongoing evaluation of National Medicare Education Program (NMEP) includes assessment of telephone referrals, including toll-free line and State Health Insurance Assistance Programs (SHIPs), which are entities jointly funded by us and by the States to provide information and counseling to Medicare beneficiaries. The toll-free line has been operational nationally since March 15, 1999.
e. Beneficiary Input
Comment:
Several commenters noted that in developing any educational materials or activities, it is important to ensure that the information is meaningful to beneficiaries. These commenters believe that we need to convey information to beneficiaries in an organized, straightforward manner to assure as complete an understanding as possible. For example, the commenters suggest that materials should be reviewed to determine whether they will provide needed information or simply raise more questions among beneficiaries, or whether beneficiaries will understand that they do not need to make any changes. The commenters specifically recommended that we conduct focus groups to gauge beneficiary responses to the Medicare & You handbook, and would like us to revisit our future plans and communications.
Response:
We have performed extensive evaluation of the Medicare & You handbook, including focus-testing the Medicare & You 1999, and customer-testing of the Medicare & You 2000. We also used the results of the NMEP evaluation, survey of beneficiaries, expert review, plain language review, and comments submitted to us by mail and the Internet. The results received from all of these sources were used in the development of the Medicare & You 2000 handbook. We will continue evaluating our efforts to improve beneficiary communication.
Comment:
Two commenters offered suggestions on the public input approach outlined in the preamble of our June 26, 1998 interim final rule. (In that preamble, we discussed in detail the process of obtaining public input about data collection and dissemination of selected data. We addressed only those data elements that would be disseminated as part of Medicare Compare or as part of any beneficiary
information campaign efforts.) One commenter suggested ensuring that physicians are involved in determining data specifications for M+C organizations, and the other looked forward to seeing our strategy for public input.
Response:
As discussed in the interim final rule, we recognize the importance of obtaining public input on data needed by beneficiaries to make health plan choices. We also agree that we need to ensure physician input, particularly in areas such as quality of care. Our strategy for obtaining public input into the process, which is well under way and wide ranging, includes the following:
• Obtaining public input through currently established communication activities (for example, committees, consultation avenues, public meetings, training seminars). Limited resources and time demands do not permit the establishment of separate or overlapping processes with those already established and working (such as industry council meetings). It may not always be possible to hold public meetings to invite interested individuals to comment and provide input on the process of determining data specifications.
• Obtaining public input through normal data collection clearance channels when we are the lead for the data collection activity. The OMB clearance process is a very effective and efficient way to obtain broad public comment on the content and format specifications for data collection (for example, the Plan Benefit Package). However, it may not always be possible to publish a notice or a summary of public processes regarding data elements to be collected.
• Obtaining public input through collaborative efforts with private industry, health care providers, researchers, and other interested parties. This approach allows the Federal government to be a partner with other experts (private and public) in the field of managed care and thereby not duplicate already successful and useful collaborative efforts (such as HEDIS).
Thus, our strategy strongly supports the use of efficient and effective methods of public input into the determination of information and specifications for beneficiary information campaign material. We also recognize the need to collaborate with organizations and individuals involved in the development of quality and performance measurements that support beneficiaries' increased understanding of managed care.
7. Coordination of Enrollment and Disenrollment Through M+C Organizations (§ 422.66)
An individual who wishes to elect an M+C plan offered by an M+C organization may make or change his or her election during the election periods specified in § 422.62 by filing the appropriate election form with the organization or through other mechanisms as determined by us.
Additionally, an individual who wishes to disenroll from an M+C plan may change his or her election during the election periods specified in § 422.62 by either electing a different M+C plan by filing the appropriate election form with the M+C organization or through other mechanisms as determined by us. Individuals may also disenroll by submitting a signed and dated request for disenrollment to the M+C organization in the form and manner prescribed by us or by filing the appropriate disenrollment form through other mechanisms as determined by us.
Under existing § 422.66(d)(1), an M+C plan offered by an M+C organization must accept any individual (residing in the service area or continuation area of the M+C plan) who is enrolled in a health plan offered by the M+C organization (regardless of whether the individual has end-stage renal disease—see §§ 422.50(a)(2) and (a)(3)) during the month immediately preceding the month in which he or she is entitled to both Part A and Part B. This is generally known as a “conversion” of enrollment for the enrollee (from commercial status to M+C enrollee status).
Subject to our approval, under § 422.66(d)(2), an M+C organization may set aside a reasonable number of vacancies in order to accommodate conversions. Any set aside vacancies that are not filled within a reasonable time must be made available to other M+C-eligible individuals.
If the individual enrolled in a health plan offered by an M+C organization chooses to remain enrolled with the organization as an M+C enrollee, the individual must complete and sign an election form as described in § 422.60(c)(1). In that case, the individual's conversion to an M+C enrollee is effective the month in which he or she is entitled to both Part A and Part B. The M+C organization may disenroll an individual who is converting from its commercial plan to M+C status only under the conditions specified in § 422.74. The M+C organization must transmit the information necessary for us to add the individual to our records as specified in § 422.60(e)(6).
An individual who has made an election under this section is considered to have continued to have made that election until the individual changes the election under this section or the elected M+C plan is discontinued or no longer serves the service area in which the individual resides, and the organization does not offer, or the individual does not elect, the option of continuing enrollment, as provided in § 422.54, whichever occurs first.
Comment:
Several commenters stated that they support procedures that would permit seamless continuation of coverage, under which an individual would be deemed to have elected an M+C plan at the time of the individual's initial coverage election period if they are enrolled in a commercial health plan that is offered by the same M+C organization. Several specific recommendations were made. One commenter recommended that we require M+C organizations to prospectively provide the necessary information that would allow us to default individuals into the M+C plan. One commenter recommended that M+C organizations notify individuals in their commercial plans who are about to become Medicare eligible that they are being enrolled in the M+C plan, and to transmit the necessary information to us. Another commenter suggested that we alert individuals through the mailing of the initial enrollment package. Two commenters were concerned about deeming an individual to have elected an M+C plan if the M+C organization offers more than one M+C plan from which he/she could receive benefits. One commenter suggested that if we decide to deem an individual to have elected an M+C plan, the organization should be required to provide the individual with a description of Medigap guaranteed issues and age rating policies. One commenter supported procedures that would permit seamless continuation of coverage, but expressed concerns about deeming an individual enrolled in an M+C plan if Medicare is a secondary payer.
Response:
Although we have addressed an individual's right to choose to remain enrolled with an organization as an M+C enrollee upon becoming Medicare eligible (as discussed above), a default process through which an individual would be deemed by us to have elected a specific M+C plan would require that we identify M+C-eligible individuals, as well as their relevant health plan information before the individual's initial coverage election period. At
present we do not have access to information on the health plans in which specific individuals are enrolled, because such plans are private health plans, and do not have established linkages with our systems, nor is there a mechanism in our Medicare managed care data system to capture such information. While some M+C organizations may want to share this information with us, others may not. It should also be noted that enrollment in an M+C plan is contingent upon the individual's entitlement to Medicare Part A and Part B. Individuals that have not previously filed for Social Security and/or Medicare benefits will not have an entitlement record, nor will they receive an initial enrollment package from Medicare. Frequently, individuals in commercial plans who are about to “age in” to Medicare are still employed, and have not yet filed for Social Security or Medicare benefits. Individuals who have filed for benefits will receive general information on Medicare and comparative information on M+C plans available in their service area. They will have the opportunity to enroll in the M+C plan 3 months prior to their entitlement to Medicare Part A and Part B.
The expansion of the managed care provisions under the BBA has presented an extraordinary challenge to us and to the Medicare managed care data system that supports our information system business requirements. We anticipate that in the future, we will develop strategies to incorporate information collection activities in our managed care systems that will allow this kind of mechanism to be put in place. As we develop strategies that will incorporate additional information collection activities under our authority under section 1851(c)(2) of the Act, we will consider procedures necessary to identify in which plan a beneficiary wants to enroll if the M+C organization offers more than one M+C plan and also whether Medicare Secondary Payer rules apply. Until that time, and in accordance with § 422.66(d), an M+C plan offered by an M+C organization must accept enrollments from any eligible individual residing in the service area or continuation area of the M+C plan, who is enrolled in a commercial health plan offered by that same M+C organization during the month immediately preceding the month in which he/she is entitled to Medicare Part A and Part B.
Comment:
Two commenters were opposed to the requirement in § 422.66(b)(3)(i) that disenrollment transactions be submitted within 15 days of receipt. Commenters pointed out that we do not process disenrollments every 15 days and suggested the requirement be modified to coincide with the 30-day requirement for enrollment transactions outlined at § 422.60(d)(6).
Response:
Our intent when establishing this requirement was to ensure that a beneficiary's choice to disenroll would be handled as expeditiously as possible. We are in the process of implementing a system that will be capable of processing these transactions more than once a month. However, we recognize that until the systems are modified, the requirement may not allow a sufficient amount of time to process a disenrollment action. Therefore, we have modified the regulations at § 422.66(b)(3)(i) to state that the time frame to submit disenrollment transactions will be “specified by HCFA,” and have made a conforming change at § 422.66(f)(2). This will give us the flexibility to make changes as system enhancements are developed in the future. For the time being, we are specifying that disenrollment transactions be submitted within the same time frame as enrollment transactions.
Comment:
Several commenters asked that we provide additional clarification in § 422.66(b)(5)(i) with respect to when an enrollment is not legally valid. Two of the commenters stated that we should clarify whether a lack of understanding would be included in the definition of a “legally valid enrollment,” and whether it would result in a retroactive disenrollment. One commenter stated that we should clarify that an enrollment is not legally valid if it is determined at a later date that the individual did not meet eligibility requirements at the time of enrollment.
Response:
There are a number of circumstances that would result in an enrollment not being considered “legally valid,” and we agree that the lack of understanding of plan rules (such as the “lock-in”) and ineligibility would be among these circumstances. However, a determination that an individual did not understand the terms of enrollment must be made on an individual basis. The criteria used in establishing evidence that an individual did not understand the terms of enrollment could include the following: continuing Medigap insurance coverage after receipt of the confirmation of enrollment letter from the M+C organization; an enrollment form signed by the member in situations where a legal representative should be signing for the member; enrolling in a supplemental insurance program immediately after enrolling in the M+C plan; or receiving nonemergency or nonurgent services out-of-plan immediately after the effective date of coverage under the plan. OPL 99.100 sets forth specific guidelines to assist M+C organizations when making determinations about lack of understanding and incorrect eligibility determinations.
Comment:
One commenter asked for clarification of our process for approving retroactive disenrollments (either voluntary or involuntary) and the subsequent effective dates.
Response:
Section 422.66(b)(5) describes retroactive disenrollments, which are disenrollments with a retroactive effective date in cases in which we determine that there was never a legally valid enrollment, or in which a valid request for disenrollment was properly made but not processed or acted upon. In cases of involuntary disenrollments, such as disenrollment for disruptive behavior or failure to pay premiums, the disenrollment actions are prospective and would not be retroactive. In cases in which we find that an enrollment was not legally valid, the disenrollment results in cancellation of the enrollment as of the effective date of the enrollment. Therefore, the effective dates for these retroactive disenrollments are based upon the effective dates for elections, as provided under § 422.68. If the election subsequently found to be invalid was made during the annual election period in November, the effective date would be the first day of the following calendar year. If the election was made during an open enrollment period, the election would be effective the first day of the first calendar month following the month in which the election is made (or for elections made after the 10th day of a month, the first day of the 2nd calendar month following the date of the election). Effective dates for elections made during a special election period vary, dependent on the situation, and guidelines concerning these effective dates are provided in instructions to the M+C organizations. Elections made during special election periods for individuals age 65 would be effective the first day of the first calendar month following the month in which the election is made.
Comment:
Section 422.66(d) states that an M+C organization must accept any eligible individual who is enrolled in a health plan offered by “an” M+C organization. One commenter stated that this section needs to clearly state that the M+C organization must accept any individual who is enrolled in a health plan offered by “the” M+C organization
offering the other plan in which the individual is enrolled.
Response:
We agree that the use of the term “an” could imply that the requirement applies to any organization, such that all M+C organizations must accept all eligible individuals enrolled in any commercial health plan offered by any M+C organization. In fact, our intent is for the requirement to apply to a specific M+C organization, namely the organization that offers both the commercial health plan in which the individual is enrolled and the M+C plan in which the individual will be enrolling. Therefore, we are revising § 422.66(d)(1) to specify that a plan offered by an M+C organization must accept any eligible individual who is enrolled in a health plan offered by “the M+C organization.”
Comment:
One commenter believes there is a conflict between paragraphs (3) and (5) in § 422.66(d). The commenter reads § 422.66(d)(3) to provide that the individual will convert to the M+C plan unless he disenrolls, while § 422.66(d)(5) provides that the individual must fill out an election form in order to convert.
Response:
We do not agree that there is a conflict between the two sections of the regulation, but recognize that some clarification is desirable to prevent confusion. We are revising § 422.66(d)(3) of the regulation to refer to the individual affirmatively choosing to remain enrolled with the organization as an M+C enrollee, and to state that conversion is effective the month of entitlement to both Medicare Part A and Part B “in accordance with the requirements in section § 422.66(d)(5).” We also have deleted a reference in § 422.66(e)(2) to an individual being “deemed” to have made an election, since this reference is inconsistent with the requirement in § 422.66(d)(5) that an election form be completed and signed. These revisions will clarify that while we have established the effective date of coverage under § 422.66(d)(3), the coverage may begin only if the individual completes and signs an election form, as required at § 422.66(d)(5).
Comment:
One commenter believes that § 422.66(e)(2) (which states that an individual is considered to have continued an election in an M+C plan until the M+C plan is discontinued or no longer services the area in which the individual resides, and the organization does not offer or the individual does not elect the option of continuing enrollment) may be interpreted to absolve the M+C organization of any obligations when the person leaves the service area and has not selected a new health plan or original Medicare. The commenter suggested that the regulations should make clear that an individual who leaves his or her M+C plan service area is entitled to a special election period, as is the case when the M+C plan ceases to serve the service area.
Response:
If an M+C plan enrollee leaves the plan's service area, but has not informed the M+C organization offering the plan of a permanent move, the M+C organization does have continued obligations to cover emergency and urgent services that must be covered out of area. Once the M+C organization is made aware of such a permanent move, the organization is obligated under § 422.74(b)(2)(i) to disenroll the individual unless he or she has moved to a continuation area and requests to continue enrollment as a continuation area enrollee. With respect to the commenter's concern about a special election period being provided under these circumstances, § 422.62(b)(2) clearly provides an M+C plan enrollee who moves out of his or her M+C plan service area with the same right to a special election period that the enrollee gets under § 422.62(b)(1), cited by the commenter, in the case of an M+C plan termination.
Comment:
One commenter was concerned about ensuring that all enrollees under a section 1876 risk contract—without regard to residence—be deemed to be enrollees of an M+C plan offered by the section 1876 contractor on January 1, 1999.
Response:
We agree, and note that the interim final rule preamble states that we have interpreted the statute to allow an individual to transition from the section 1876 plan to an M+C plan “without regard to location of residence” (63 FR 34977). Our intent was to ensure that no individual enrolled in a section 1876 plan on December 31, 1998, would be adversely affected by the BBA changes, but instead would be able to maintain an established relationship with a Medicare contracting organization. Therefore, we clarified in the interim final rule that all individuals enrolled in a section 1876 plan on December 31, 1998 could convert to the corresponding M+C plan on January 1, 1999. We further clarified this “grandfathering policy” in OPL 99.084, dated February 26, 1999, which states that an individual who was enrolled in a section 1876 risk plan effective December 1, 1998 or earlier and remained with the risk plan on December 31, 1998, automatically continued to be enrolled in the M+C organization on January 1, 1999.
Comment:
One commenter suggested that we include in the regulations text our operational policy recognizing State laws that govern who may sign election forms for beneficiaries. The commenter also believes we should clearly incorporate recognition of the State law, including health care consent laws.
Response:
In general, and as previously discussed in the preamble of the June 26, 1998 interim final rule, we believe that the M+C-eligible individuals should personally complete and sign any election form or disenrollment request (referenced at § 422.66(b)) whenever possible. We also recognize that there may be times that an individual is unable to sign for himself or herself. Laws governing who may sign a health insurance application vary from State to State. Therefore, while the regulations provide for the beneficiary to sign an election form, we defer to State laws (for example, laws governing the exercise of a power of attorney) on who may sign on behalf of a beneficiary where a beneficiary signature is required. We do not believe it is necessary to make provision for this in the regulations text, because where State law permits another individual to sign for a beneficiary with respect to health care decisions, this authority would extend to cases in which the beneficiary's signature is required under Medicare regulations.
Comment:
Section 422.66(d)(1) states that an M+C plan offered by an M+C organization must accept any eligible individual who is enrolled in a health plan offered by an M+C organization during the month immediately preceding the month in which the individual is entitled to Medicare Part A and Part B. One commenter asked us to clarify whether the use of the term “health plan” refers only to fully insured products, or whether the term would include self-funded members.
Response:
The term “health plan” in § 422.66(d)(1) refers to any commercial health plan that the M+C organization offers. This may include fully insured products, self-funded products, and indemnity products.
8. Effective Dates of Coverage and Change of Coverage (§ 422.68)
An election made during an initial coverage election period as described in § 422.62(a)(1) is effective as of the first day of the month of entitlement to both Part A and Part B. Also, for an election or change of election made during an annual election period as described in § 422.62(a)(2), coverage is effective as of the first day of the following calendar year. For an election or change of election made during the open
enrollment periods described in § 422.62(a)(3) through (a)(6), coverage is effective as of the first day of the first calendar month following the month in which the election is made (except that if the election or change of election is made after the 10th day of a calendar month, the election takes effect on the first day of the second calendar month after the date of the election.)
For an election or change of election made during a special election period as described in § 422.62(b), we determine the effective date of coverage, to the extent practicable, in a manner consistent with protecting the continuity of health benefits coverage. For an election of coverage under original Medicare made during a special election period for an individual age 65 as described in § 422.62(c), coverage is effective as of the first day of the first calendar month following the month in which the election is made.
Comment:
Several commenters objected to the effective date in the interim final rule for elections made during open enrollment periods, which was the first day of the month after the month the election is received. The commenters believe this effective date did not allow enough time to process the enrollment. They believed that this deadline would result in increased retroactive transactions and would be burdensome on M+C organizations. Commenters also expressed significant concerns over liability and access to services if Medicare entitlement is not verified expeditiously. Commenters also noted the need for us to make system changes to accommodate the new effective date requirements, and to clarify how we intend to implement the requirements with respect to M+C organization submission of data. The commenters recommended the effective dates be as they were under section 1876 of the Act which, under § 417.450(a)(2), may not be earlier than the first month after, nor later than the third month after, the month in which we receive the information necessary to include the beneficiary as a Medicare enrollee of the HMO or CMP in our records.
Response:
Section 1851(f) of the Act supersedes all prior section 1876 requirements and specifically delineates the effective dates for elections made in the M+C program. Consistent with the changes to section 1851(f) of the Act made by section 502 of the BBRA, we are revising § 422.68(c) to provide that coverage is effective either on the first day of the calendar month after the date of an election or change of election or, for elections or changes of election made after the 10th day of a calendar month, on the first day of the second calendar month after the date of the election or change of election. In addition, based on our authority to establish requirements that can reduce the potential for retroactive transactions, we have developed guidelines for M+C organizations that include requirements for M+C organization verification of Medicare entitlement before submission of enrollment data (see OPL 99.100). The verification policy should minimize the potential for retroactive enrollment situations. Additionally, the new effective dates outlined in section 1851(f) of the Act have resulted in the need to clarify a number of operational issues. While the expansion of managed care provisions under the BBA has presented an extraordinary challenge to us, we have successfully implemented the necessary systems requirements to support this change in effective dates. Additionally, we have issued other guidelines to M+C organizations (OPL 98.074, our November 17, 1999 Systems Informational Letter, and OPL 2000.113) that outline how to identify the correct effective date and process the enrollments through our systems.
Comment:
Several commenters were concerned that the new effective date requirements will not allow the M+C organization to receive our confirmation of the enrollment before the effective date, which could in turn increase beneficiary confusion.
Response:
Section 1851(f) of the Act clearly outlines the effective dates of enrollment in M+C plans. If an eligible individual has elected an M+C plan, the M+C organization must cover the individual beginning on the effective date of coverage, even if the organization has not yet received final confirmation from us. An M+C organization can take several actions to reduce the chance of beneficiary confusion, including verifying Medicare entitlement before submission of enrollment data to us. This should increase the likelihood that we will confirm the individual's enrollment.
Comment:
One commenter stated that original Medicare should pay M+C organizations for services furnished to individuals for whom retroactive disenrollments were processed.
Response:
If a retroactive disenrollment is processed for a beneficiary, the M+C organization in which the beneficiary was enrolled can always bill for Medicare covered services rendered to the beneficiary.
Comment:
One commenter stated that the effective date of coverage for individuals who enroll during an open enrollment period (the first day of the first calendar month following the month the election is made) is too rigid, and that delayed effective dates should be permitted.
Response:
Again, section 501(b) of the BBRA provided for some relief in this regard by changing the effective dates for elections or changes in election made after the 10th day of a month. We also note that we have the authority under section 1851(f)(4) of the Act to establish effective dates for individuals who meet the condition for special election periods. We have provided for prospective effective dates for individuals electing benefits through their employer group health plans, and published this guidance on April 20, 1999 in OPL 99.087. We provided additional guidance on the effective dates of coverage for other special election periods authorized under § 422.62(b) in OPLs 99.098 and 99.100.
Comment:
Two commenters questioned how M+C organizations will be expected to handle multiple transactions, given the new effective date requirements.
Response:
As stated at § 422.50(b), an individual may not be enrolled in more than one M+C plan at any given time. Nevertheless, there are times when an individual will try to elect more than one plan for the same effective date, and it is not always clear with which plan the individual truly intends to be enrolled. On August 9, 1999, we issued OPL 99.100, which includes guidelines on what actions an M+C organization must take in the event of a multiple transaction in order to determine with which M+C plan the beneficiary should be enrolled.
Comment:
One commenter stated that we should establish performance standards that take into account difficulties that we and M+C organizations will have in meeting effective date requirements.
Response:
We recognize that section 1851 of the Act has resulted in significant changes to the Medicare program and that M+C organizations need time to prepare for the changes. We have provided additional guidance on implementation of M+C entitlement, eligibility, and elections to M+C organizations through various OPLs (98.072, 98.073, 99.083, 99.084, 99.087, 99.098, 99.100, 99.104, 99.105, 99.109, and 2000.113) and a November 17, 1998 Systems Informational Letter. These letters outline how to identify the correct effective date, how to process enrollments with the new effective dates, how to transition from section 1876 to M+C enrollment and disenrollment rules, and when grandfathered memb
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