Medicare Program: Request for Public Comments on Implementation of the Medicare+Choice Program, and Notice of Timeframes for Submission of Applications for Contracts

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration

42 CFR Chapter IV

[HCFA-1014-NC]

RIN 0938-AI45

Medicare Program: Request for Public Comments on Implementation

of the Medicare+Choice Program, and Notice of Timeframes for Submission

of Applications for Contracts

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

ACTION: Notice of intent to regulate; solicitation of comments.

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

SUMMARY: The Balanced Budget Act of 1997 (BBA) establishes a new

Medicare+Choice program. Under this program, eligible individuals may

elect to receive Medicare benefits through enrollment in one of an

array of private health plans that contract with us.

The BBA directs the Secretary to publish by June 1, 1998,

regulations establishing standards for the Medicare+Choice program. We

have already received comments and inquiries from the public on a

number of issues associated with the Medicare+Choice program. This

document solicits further public comments on issues related to

implementation of the Medicare+Choice program. We intend to consider

these comments as we develop an interim

[[Page 2921]]

final rule to implement the Medicare+Choice program.

This document also includes preliminary information regarding

application procedures for organizations that intend to contract with

us to participate in the Medicare+Choice program.

This document also informs the public of a meeting to discuss the

Medicare+Choice program.

DATES: We request that comments be submitted on or before February 19,

1998.

ADDRESSES: Mail written comments (1 original and 3 copies) to the

following address: Health Care Financing Administration, Department of

Health and Human Services, Attention: HCFA-1014-NC, P.O. Box 26688,

Baltimore, MD 21207.

If you prefer, you may deliver your written comments (1 original

and 3 copies) to one of the following addresses:

Room 309-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW.,

Washington, DC 20201, or

Room C5-09-26, 7500 Security Boulevard, Baltimore, MD 21244-1850

Comments may also be submitted electronically to the following e-

mail address: hcfa1014nc.hcfa.gov. E-mail comments must include the

full name and address of the sender and must be submitted to the

referenced address in order to be considered. All comments must be

incorporated in the e-mail message because we may not be able to access

attachments. Because of staffing and resource limitations, we cannot

accept comments by facsimile (FAX) transmission. In commenting, please

refer to file code HCFA-1014-NC. Comments received timely will be

available for public inspection as they are received, generally

beginning approximately 3 weeks after publication of a document, in

Room 309-G of the Department's offices at 200 Independence Avenue, SW.,

Washington, DC, on Monday through Friday of each week from 8:30 a.m. to

5 p.m. (phone: (202) 690-7890).

FOR FURTHER INFORMATION CONTACT: Medicare+Choice Regulation Team, (410)

786-7660.

SUPPLEMENTARY INFORMATION:

I. Background

A. General

Medicare historically has consisted of two primary parts: Hospital

insurance, also known as ``Part A,'' and supplementary medical

insurance, also known as ``Part B.'' Part A is generally provided

automatically to persons age 65 and over who are entitled to social

security or railroad retirement board benefits. Similarly, individuals

who have received either of these benefits based on their disability,

for a period of at least 24 months, are also entitled to Part A

benefits. Health care services covered under Part A include: inpatient

hospital care, skilled nursing facility care, home health agency care,

and hospice care.

Part B benefits are available to almost all resident citizens age

65 and over; certain aliens age 65 or over; and disabled beneficiaries

who are entitled to Part A. Part B coverage is optional and requires

payment of a monthly premium. Part B covers physician services (in both

hospital and nonhospital settings) and services furnished by certain

nonphysician practitioners. It also covers certain other services,

including: clinical laboratory tests, durable medical equipment, most

supplies, diagnostic tests, ambulance services, prescription drugs that

cannot be self-administered, certain self-administered anticancer

drugs, some other therapy services, certain other health services, and

blood not supplied by Part A.

B. The Balanced Budget Act of 1997

Subsequent to its initial enactment in 1965, the Medicare program

has been subject to numerous legislative and administrative changes.

However, one of the most significant changes results from the August 5,

1997 enactment of the Balanced Budget Act of 1997 (BBA), Public Law

105-33. Section 4001 of the BBA adds a new Part C to the Medicare

program, by establishing sections 1851 through 1859 of the Social

Security Act. The new Part C is known as ``Medicare+Choice.'' Section

4002 of the BBA establishes transitional rules for the current Medicare

health maintenance organization (HMO) program; and section 4006

establishes special rules for Medicare+Choice medical savings accounts.

Prior to the BBA, Medicare beneficiaries could choose between receiving

their Medicare benefits on a fee-for service basis or enrolling in an

HMO with a Medicare contract. In the latter case, the beneficiary

selects a specific HMO or competitive medical plan (CMP) within a

service area for Medicare-covered health care services. This selected

plan coordinates all of the Medicare-covered health care services for

the beneficiary and receives a per-person payment from Medicare that is

predetermined. Under the new Medicare+Choice program, the

beneficiaries' options have been expanded to include provider-sponsored

organizations (PSOs), preferred provider organizations (PPOs), private

fee-for-service plans, and, for those who qualify, religious fraternal

benefit society plans. In addition, up to 390,000 beneficiaries

nationwide (and prior to the year 2003) may elect a new Medical Savings

Account (MSA) option. A Medicare+Choice MSA is a tax-exempt trust

created to pay the qualified medical expenses of the account holder. A

beneficiary who elects the MSA option will receive a catastrophic

health care policy paid by Medicare. Any difference between the MSA

plan insurance premium and the amount that Medicare would have paid if

the beneficiary had elected Medicare+Choice coverage under any of the

other options will be deposited into the beneficiary's MSA.

Under Medicare+Choice, plans with which we contract must have

quality programs that stress outcomes, create utilization protocols,

assess consumer satisfaction, and monitor high-risk and high-volume

services. In addition, all plans, other than non-network MSAs and

certain private fee-for-service plans, must provide for external

review. Each Medicare+Choice plan must provide Medicare members all

benefits (other than hospice care) that are available under Parts A and

B. In the case of an MSA plan, however, these benefits are not provided

until after a catastrophic deductible amount has been satisfied.

The law sets forth provisions relating to the following topics:

Eligibility, election, and enrollment.

Benefits and beneficiary protections.

Organizational relationships with participating providers.

Payments to Medicare+Choice organizations.

Premiums.

Organizational and financial requirements for

Medicare+Choice organizations.

Establishment of standards.

Contract requirements.

Additional information about the Medicare+Choice program is

available on our Internet site (http://www.hcfa.gov).

C. Issues and Questions To Be Resolved

As stated earlier, we are required to publish regulations

implementing the Medicare+Choice program by June 1, 1998. The statute

provides that these regulations may be issued as an interim final rule.

We intend to use this mechanism and will formally request comments on

our policies at that time.

We have already received comments and inquiries from the public on

a number of issues associated with the

[[Page 2922]]

Medicare+Choice program. However, to ensure that we receive the full

range of public opinion, we are using this notice as a vehicle to

request public suggestions on specific policy issues that are detailed

in the following sections. In addition, at this time, we encourage the

public to comment on any other relevant Medicare+Choice program policy

areas, with the exception of comments on Federal solvency standards for

PSOs. (A discussion of PSO solvency standard policy decisions and

implementation issues and a request for public comment were contained

in a notice published on September 23, 1997 (62 FR 49649).) We will

consider public comments that are received timely as we develop the

interim final rule, but we will not otherwise issue a separate set of

responses to those comments. We request that commenters provide a brief

summary of any detailed comments. Also, commenters should, whenever

possible, identify the relevant section or subsection of the BBA or of

the Social Security Act. Note that in the following sections, citations

to the law are to sections of the Social Security Act as established by

the BBA.

1. Information for Informed Choice

One of the objectives of the Medicare+Choice program is to expand

Medicare beneficiaries' options for health care. In order to ensure

that beneficiaries have the appropriate information necessary to choose

from the various Medicare+Choice options, section 1851(d) of the Act

requires that we collect and disseminate information on the coverage

options available. For example, the statute requires that, prior to

each open season, we provide a notice to Medicare-eligible individuals

that includes a list of the Medicare+Choice plans, a comparison of plan

options that includes information on benefits and premiums, a general

description of the benefits under the original Medicare fee-for-service

program, and other general information. The statute also requires, at

1851(e)(3)(D), that, during November 1998, we provide for an

educational and publicity campaign to inform Medicare+Choice eligible

individuals about the availability of Medicare+Choice plans and the

Medicare fee-for-service option. The statute further requires that we

maintain a toll-free number for inquiries regarding Medicare+Choice

options and an Internet site providing information on Medicare+Choice

options. As we begin the information collection process, and analyze

how best to provide information to beneficiaries, we ask that

interested parties respond to the following questions:

What are the most effective ways to communicate

Medicare+Choice information to beneficiaries, individuals, advocates,

ombudsmen, providers, and other groups that have need of and will use

this information?

How can we reduce confusion for beneficiaries who also

receive health care information from other sources, for example, from

employers who offer retiree coverage or Federal purchasers such as the

Federal Employees Health Benefit Plan, the Department of Defense, and

sellers of health care insurance products?

How can the information programs best recognize the

special needs of certain populations, such as beneficiaries with

disabilities?

2. Enrollment/Disenrollment Process

Under section 1851(e) of the Act, we are charged with establishing

a process, including the format and procedures, through which

Medicare+Choice elections are made. According to section 1851(e), a

beneficiary's enrollment in a Medicare+Choice option is initially made

at the time the individual becomes entitled to Part A and enrolled in

Part B. Beneficiaries may change their Medicare+Choice plan election

during continuous open enrollment periods through the year 2001. After

2001, beneficiaries are locked in to their Medicare+Choice election for

defined time periods, except for special election periods under certain

circumstances. The process must permit a beneficiary to make enrollment

and disenrollment elections by filing a form with the Medicare+Choice

organization. The statute also permits, at section 1851(g), that a

Medicare+Choice organization may terminate an individual's election

with respect to a Medicare+Choice plan that it offers if (1) required

premiums are not paid on a timely basis, (2) the individual has engaged

in disruptive behavior, or (3) the plan is terminated with respect to

all individuals residing in the area in which the individual resides.

We request comments related to the election and enrollment procedures

in general, and the Medicare+Choice organization's ability to disenroll

a beneficiary. For example--

Should our standards be specific with regard to each of

the factors; for example, timeframes for timely payment of premiums or

a definition for ``disruptive''? Should we require a mechanism for

appealing termination of a beneficiary's enrollment ``for cause''?

3. Medicare+Choice Enrollment Demonstrations

Section 4018 of the BBA requires that we conduct a 3-year

demonstration project to evaluate the use of a third-party contractor

to conduct the Medicare+Choice plan enrollment and disenrollment

functions. We are soliciting comments on how this demonstration could

be designed. For example--

What constitutes an enrollment or disenrollment

``function''? Is it distributing applications, collecting applications,

processing applications, providing benefits counseling, ascertaining

reasons for disenrollment, or other activities?

What functions should the contractor perform?

What exactly are the tasks involved in enrollment/

disenrollment?

What would be the most desirable/efficacious processes for

enrollment/disenrollment from the perspective of the beneficiaries and

plans?

What is a demonstration ``area''?

Should all Medicare+Choice plans in the demonstration area

be involved in the demonstration? If not, which ones should be exempt?

What requirements under Medicare Part C, if any, is the

Secretary likely to have to waive in order for the demonstration to

work?

Should a single, standard form be used for enrollment?

What standards should be used to monitor the performance

of the contractor, given that enrollment in Medicare+Choice plans is

voluntary and that disenrollment may be due to various causes? Should

any of these standards be tied to contractor payment?

What would constitute ``substantial compliance'' with the

performance standards?

What criteria should we use to select the third-party

contractor?

4. Post-Stabilization Coverage

Section 1852(d)(2) of the Act authorizes us to develop policies to

ensure coordination of care and appropriate payment between

Medicare+Choice organizations and out-of-plan providers after the

beneficiary's medical condition is determined to be stable. We are

particularly interested in comments about the following issues:

Should we specify which provider is responsible for

developing a plan of care to appropriately maintain the beneficiary's

health, or should this be negotiated between the emergency providers

and the plan providers?

Should we establish a requirement that the Medicare+Choice

plan respond

[[Page 2923]]

to an emergency service provider's request for approval/authorization

within a certain period of time? If so, what should that time period

be?

Should we require that Medicare+Choice plans make

available a central contact for emergency providers to call for

authorization and medical history data?

Finally, with regard to post-stabilization benefits and

coverage, our primary objective is to ensure that Medicare enrollees

are held harmless in payment disputes between the Medicare+Choice plans

and the non-network service provider. What are the most appropriate

standards to accomplish this goal?

5. Grievances, Organization Determinations and Reconsiderations

Appropriate and meaningful appeals and grievance procedures for the

resolution of individual enrollee complaints about their health care

are among the most important beneficiary protections in the

Medicare+Choice program. Section 1852(g) requires that all

Medicare+Choice organizations have procedures for making determinations

regarding whether an enrollee is entitled to receive specific health

services. The organization must provide for reconsideration of adverse

coverage determinations at the request of the enrollee within a time

period specified by us, but not later than 60 days after the date of

the receipt of the request for reconsideration. However, the

Medicare+Choice organization must have in place procedures for

expedited reconsiderations under certain circumstances.

We are soliciting comments with regard to these protections. For

example--

Should guidelines for a grievance process be established?

What is an appropriate timeframe for a reconsideration of

a nonexpedited determination?

Should plans be able to subcontract organization

determinations and reconsiderations to subcontractors?

Should Medicare+Choice plans be required to continue

coverage during the reconsideration process?

Should reductions in care be subject to the

reconsideration process?

6. Provider Rights in Medicare+Choice Plans

Section 1852(b)(2) provides that a Medicare+Choice organization may

not discriminate with respect to participation, reimbursement, or

indemnification as to any provider that is acting within the scope of

the provider's license or certification under applicable State law,

solely on the basis of the license or certification. The statute

provides, however, that this prohibition is not to be construed to

prohibit a plan from including providers only to the extent necessary

to meet the needs of the plan's enrollees or from establishing any

measure designed to maintain quality and control costs consistent with

the responsibilities of the plan.

In addition, provider rights set forth in section 1852(j) include

the right of health care professionals to advise Medicare beneficiaries

of possible medical procedures, treatments, or care, regardless of

whether benefits for the treatment or care are provided under the plan.

Section 1852(j) also establishes certain provider protections,

including the physician's right to written notice of a Medicare+Choice

plan's decision to exclude him or her from participation in the plan

and provides that a process for appealing such a decision be

established. We would like to obtain general comments about the scope

of the various provider protection requirements. In addition, we would

like comments regarding the following:

What procedures should Medicare+Choice plans be required

to put in place to ensure that providers are notified of adverse

participation decisions?

In a case where multiple types of providers or

practitioners can provide a specific service, how should we interpret

the anti-discrimination provision at section 1852(b)?

7. Encounter Data Collection

The payment standards and methodology contained in the new Part C

anticipate an eventual transition from a payment based on Medicare fee-

for-service utilization and cost, to a payment adjusted for the

individual medical conditions of the enrolled population--a process

known as risk adjustment. In response to the requirement that inpatient

hospital encounter data be collected from health plans for services on

or after July 1, 1997, we have developed instructions concerning

collection of inpatient hospital encounter data for hospitals, plans,

and contractors. Many questions, however, remain about non-inpatient

encounter data. For example--

What information systems issues do organizations face when

asked to submit non-inpatient hospital encounter data?

What are appropriate transmission mechanisms for

collection of non-inpatient hospital encounter data? Should they vary

by type of plan, by size of plan, or by type of data collected?

What issues do organizations face relating to the

transmission of non-inpatient hospital encounter data, especially

regarding the frequency and the methodology of transmission? Under what

circumstances and for what purposes are such data currently being

generated? How could we coordinate our data collection efforts with

ongoing activities?

In addition to a January 28, 1998 general meeting (discussed in

section II. of this notice), we are considering holding a public

meeting specifically regarding the collection of hospital encounter

data that will be used for the implementation of risk adjustment for

payment of health plans. Individuals and organizations interested in

attending such a meeting should write to Cynthia Tudor, HCFA Center for

Health Plans and Providers, Room C3-15-06, 7500 Security Blvd.,

Baltimore, MD 21244, or by Internet at ``C[email protected]'' (please

specify ``Encounter Data Meeting'' in the Subject line).

8. Private Fee-for-Service Plans

One of the new Medicare+Choice health care options for

beneficiaries is the ``private fee-for-service (PFFS)'' plan. These

plans are defined at 1859(b)(2). Private fee-for-service plans must

meet most of the same requirements as other Medicare+Choice plans and

will be capitated on a full risk basis in exchange for providing

enrollees with the full package of Medicare benefits. Unlike

coordinated care Medicare+Choice plan options however, PFFS plans are

expressly prohibited from placing the provider at financial risk or

from varying payment based on utilization experience. PFFS plans must

pay all service providers (regardless of contracting status) on a fee-

for-service basis. We request public comments expressing opinions on

the most effective implementation of the unique PFFS plan program

requirements, including, but not limited to the following topics:

Section 1852(j) states that a provider furnishing covered services

to PFFS plan enrollees must be treated as if the provider had a direct

contract with the PFFS if, before furnishing the services, the provider

is informed of or given a reasonable opportunity to obtain information

about the terms and conditions of payment for these services. We are

soliciting comments on appropriate standards to determine when a

provider has an implied contract under section 1852(j). For example--

What notification requirements, if any, must be met by the

PFFS plan or

[[Page 2924]]

the provider in order to establish a de facto contracting arrangement?

With regard to ``fee-for-service payment'' as specified in the

statute--

Could the definition of these payments include bundled

provider fees, or global fees?

What should be the enrollee's responsibility for payment

of claims?

As with other Medicare+Choice options, should providers in

PFFS plans be prohibited from billing beneficiaries in most cases?

PFFS plans must meet substantially different requirements than

other Medicare+Choice plans with regard to utilization review

requirements and enrollee premiums. We are interested in the public's

perception of the most effective ways to implement statutory

requirements that apply certain utilization review standards to these

entities. For example--

How should utilization protocols based on standards of

medical practice be defined?

Should PFFS plans that use utilization review to determine

medical necessity be required to include limitation on liability as a

mechanism to protect PFFS plan enrollees against liability for full

payment when they did not know or have reason to know that the PFFS

would deny the services as being not medically necessary?

How can these entities be able to comply with the access

standards in section 1852? That is, to what extent are Medicare+Choice

program access requirements met by establishment of a health service

delivery network?

9. Medical Savings Accounts

As part of the Medicare+Choice program implementation, we are

establishing procedures for a maximum of 390,000 beneficiaries to

enroll under an MSA option in accordance with section 1851. Under the

MSA option, a beneficiary's Medicare capitated payment rate will be

used to purchase a MSA high deductible health insurance plan meeting

certain standards. An MSA plan must pay for at least all Medicare-

covered items and services after the enrollee meets the annual

deductible, which for 1999 cannot exceed $6,000. The difference between

the individual's capitated payment rate and the insurance premium will

be placed in an MSA designated by the enrollee. These funds can then be

used by the individual to meet medical expenses under the insurance

deductible, they can be allowed to accrue from year to year, or they

can be withdrawn for nonmedical expenses subject to applicable tax and

penalty rules.

We are requesting input from the public regarding the appropriate

standards for MSA insurers and account managers. For example--

What types of information should potential MSA insurers be

required to submit to us as part of the application process?

What other standards and requirements should approved MSA

entities meet for monitoring and evaluation purposes?

10. Other Issues

We are also interested in receiving responses to the following

questions:

A Medicare+Choice contract may include more than one plan.

We view this as permitting an entity to offer more than one

Medicare+Choice product (for example, an HMO and an PPO) as well as

allowing a national contract. How can these contracts be structured to

facilitate the application and approval process, including the need for

multiple State licenses?

What standards for out-of-area dialysis should apply?

How should accrediting bodies be treated for purposes of

deeming that a plan meets standards for internal quality review,

external quality review, and confidentiality of records?

Under what circumstances should we waive independent

external review for plans with an excellent record of quality and other

performance?

How should State agreements to monitor and enforce

Medicare+Choice requirements be structured?

What procedures or requirements for a hearing for the

organization prior to termination of its contract should we establish?

How should Medicaid-only plans be treated for

Medicare+Choice purposes? For example, how should we define ``licensed

under State law as a risk-bearing entity eligible to offer health

insurance or health benefits coverage in [a] State'' (section

1855(a)(1))?

II. Timelines and Procedures for Participation in the

Medicare+Choice Program

The following discussion applies to Medicare+Choice applications

and to Medicare risk contract applications submitted in calendar year

1998 for contracts with an effective date of on or before January 1,

1999. We will discuss application requirements for subsequent

contracting periods in subsequent HCFA policy notices.

It should also be noted that we will submit, as required, the three

applications and related information collection requirements, that is,

the adjusted community rate (ACR) proposal and the Medicare+Choice and

PSO applications, referenced in this notice to the Office of Management

and Budget (OMB) for emergency Paperwork Reduction Act (PRA) approval,

prior to implementation. A Federal Register notice will be published

soliciting public comment on each of the proposed information

collections submitted for emergency PRA approval. Although the notices

will allow the public only an abbreviated public comment period, the

maximum approval period of an emergency approval is 6 months. Once, we

have obtained the required OMB approval, we will resubmit the approved

information collections to OMB for reapproval under the routine PRA

approval process. As part of the routine process, we will publish two

consecutive Federal Register notices, soliciting public comment for a

total of 90 days, on the reapproval of the collections.

We plan to apply the following procedures to organizations that

submit applications for new risk contracts under section 1876. In

accordance with the BBA, we may not enter into any new risk contracts

under section 1876 after publication of the interim final rule.

Therefore, all applications for risk contracts under section 1876 that

are not approved prior to the publication of the interim final rule

(regardless of when submitted) will automatically be reviewed under the

Medicare+Choice contracting standards, and organizations will need to

submit a supplemental application as discussed below.

Adjusted Community Rate Proposals

Section 1854(a) requires that Medicare+Choice organizations submit

ACR proposals for Medicare+Choice plans by May 1st of the calendar year

prior to the benefit year in question. This statutory requirement does

not apply, however, to entities that have not yet been certified as

Medicare+Choice organizations under the interim final rule to be

published by June 1. The June 1 regulation will establish ACR deadlines

that apply when the statutory May 1 deadline does not apply. In 1999

and thereafter, organizations that apply for new contracts will be

required to submit their ACR proposals by May 1st. Risk contractors

that have contracts in effect prior to May 1, 1998 should submit ACRs

by May 1, 1998 in order to ensure timely processing.

Applicants for risk contracts whose applications are not approved

before the publication of the interim final rule will be reviewed as

applicants for Medicare+Choice contracts. Because we

[[Page 2925]]

will publish payment rates for 1999 on March 1, 1998, these applicants

must resubmit their ACR proposals to cover the proposed contract

period. The contract period must cover all of calendar year 1999 and

may include a period of time involving 1998. However, persons are not

required to comply with the information collection requirements

associated with the ACR proposal until OMB, PRA emergency approval has

been obtained.

Application Process for Medicare+Choice Plans

We encourage organizations that wish to participate in the

Medicare+Choice program to submit their applications as soon as

possible and no later than August 1, 1998. Although our goal is to

process applications in a timely manner, we cannot guarantee that

complete applications submitted by August 1, 1998 will be approved for

an effective date of January 1, 1999; let alone for those applications

submitted after August 1. We may experience delays in processing

applications, as current resources are reassigned to respond to the

requirements of the Medicare+Choice program.

This section applies to State-licensed organizations. The

procedures for PSOs that seek Federal waiver of the State licensure

requirement are discussed in a subsequent section. Upon receipt of a

State-licensed candidate's application for a Medicare+Choice contract,

we will immediately review the application to determine whether the

responses and documentation are complete. If we identify incomplete

responses, we will allow only 60 days for the applicant to submit the

necessary information. We will consider an application that, for any

reason, is not complete after the 60-day period to be nonresponsive,

and we will return it to the applicant. Once we determine that an

application is complete, we will initiate an extensive review of the

data, including a site visit for most plans. We will provide applicants

a 15-day time period in which to provide any information required as a

result of the site visit.

Note that an approved organization must be ready to enroll and

serve beneficiaries on the first day that the contract becomes

effective. To ensure that new applicants are approved in time for the

contract to be implemented by January 1, 1999, we plan to establish a

two-step process whereby new contractors may submit a core application

at any time prior to publication of the final interim rule and then

submit a supplemental application after the interim final rule is

published. The core application will be similar to the current

application for a risk contract. At present, we expect that it will

contain the following information:

Medicare+Choice option (HMO, State-licensed PSO, MSA,

etc.).

General information: description of plan, brief history,

banking information, board of directors, management staff, geographic

region, and other pertinent data for the Medicare product.

Organization and contract information: type of legal

entity, State authority to operate, organizational charts, and

management contracts.

Health services delivery network: detailed description of

delivery system, Medicare subscriber agreements, evidence of coverage,

membership information, and quality assurance systems.

Financial information: certified audits, financial

projections, and all information necessary to demonstrate a fiscally-

sound operation.

Marketing information: marketing plans, projections, and

enrollment assumptions.

Any additional information to support the Medicare+Choice

application.

The core application package will be available on our Internet web

site (http://www.hcfa.gov) on or about February 1, 1998. Additional

information regarding the core application process can be obtained by

writing to us at--HPPAG, Field Liaison Staff, Health Care Financing

Administration, Center for Health Plans and Providers, Health Plan

Purchasing and Administration Group, 7500 Security Blvd., 03-18-13

South Building, Baltimore, MD 21244-1850. Alternatively, you may call

the Health Plan Purchasing and Administration Group (HPPAG) at 410-786-

7623.

ACR instructions will also be available beginning February 1, 1998

on the Internet or from the above address. However, persons are not

required to comply with the information collection requirements

associated with the core Medicare+Choice application and ACR proposal

until OMB, PRA emergency approval has been obtained.

Supplemental Medicare+Choice Application Process

Our plans are that Medicare+Choice applicants that submit a core

application must complete the application process by submitting a

supplemental application. The supplemental application will cover

provisions that are specific to the Medicare+Choice program as

specified by the interim final rule, including the fiscal solvency

standards for PSOs, which are scheduled to be published on April 1,

1998. The supplemental application will also solicit plan specific

information relevant to each of the different types of Medicare+Choice

program options (for example, PSO, PFFS, MSA). The supplemental

applications will be available beginning June 1, 1998, when the interim

final rule is published. The application will be available from our

Internet web site or from HPPAG at the above address. Persons are not

required to comply with the information collection requirements

associated with the Medicare+Choice supplemental application until OMB,

PRA emergency approval has been obtained.

Federal Waiver of State Licensure Requirement for PSOs

Consistent with current policy, only applications that have

obtained State licenses will be approved for Medicare+Choice contracts.

The only exception to this requirement are PSOs, which are allowed to

request waivers of the State licensure requirement as specified by BBA.

In accordance with section 1855(a)(2), PSO applicants may request

waivers of the State licensure requirement under any of the following

circumstances:

The State failed to act on a timely basis, that is, within

90 days of its receipt of a substantially complete application.

The denial of the application was based on discriminatory

treatment. The ground for approval of such a waiver on the basis of

discriminatory treatment is that the State has denied a licensing

application and (1) the standards or review process imposed by the

State as a condition of approval of the license imposes any material

requirements, procedures, or standards (other than solvency

requirements) to such organizations that are not generally applicable

to other entities engaged in a substantially similar business, or (2)

the State requires the organization, as a condition of licensure, to

offer any product or plan other than a Medicare+Choice plan.

The denial was based on application of solvency

requirements. With respect to waiver applications filed on or after the

date of publication of solvency standards under section 1856(a), the

ground for approval of the waiver application on this basis is that the

State denied the licensing application based (in whole or in part) on

the organization's failure to meet applicable solvency requirements and

(1) the requirements are not the same as the solvency standards

established under section 1856(a), or (2) the State has imposed a

condition of approval of the license documentation or

[[Page 2926]]

information requirements relating to solvency or other material

requirements, procedures, or standards relating to solvency that are

different from the requirements, procedures, and standards applied by

us under section 1856(d)(2).

Once a prospective Medicare+Choice contractor submits documentation

that one or more of the above conditions has been met, we have 60 days

to grant or deny the waiver application. A separate application for

PSOs seeking a waiver from State licensure will be available on or

about February 15, 1998, on our Internet web site or from HPPAG at the

address given above. This application will include the waiver forms as

well as the contract application and all definitions. In addition,

solvency standards for PSOs seeking a waiver will be available on April

1, 1998. PSOs requesting a waiver that submitted an application prior

to April 1 will be required to submit a supplemental application

showing how they meet the solvency standards. However, persons are not

required to comply with the information collection requirements

associated with the PSO application until OMB, PRA emergency approval

has been obtained.

In accordance with the provisions of Executive Order 12866, this

notice was reviewed by the Office of Management and Budget.

Information Campaign

To assist Medicare beneficiaries' decision-making process relative

to new Medicare+Choice health care options, we will incorporate

information on newly-approved plans into our plan comparison database.

This database will contain information on all existing and new plans,

except for MSAs. Plan comparison information will be posted on the

Internet and will be updated at least quarterly. Thus, newly-approved

plans will be entered into the plan comparison database at the next

update cycle.

February 4, 1998 Public Meeting

In addition to seeking written comments from the public, we will

hold a public meeting on Wednesday, February 4, 1998 from 9 a.m. to 3

p.m. in our auditorium at 7500 Security Boulevard, Baltimore, Maryland.

The purpose of this meeting will be to discuss issues and concerns from

plans, providers, beneficiaries, and other interested parties on the

requirements and implementation of the Medicare+Choice program. The

agenda for this meeting will be posted on our Internet web site.

Further information can be obtained from Rondalyn Kane at (202) 690-

7874.

(Secs. 1851 through 1857, 1859, 1876, and 1877 of the Social

Security Act (Secs. 4001, 4002, and 4006 of Pub.L. 105-33, 42 U.S.C.

1395l and 1395mm))

Dated: December 23, 1997.

Nancy-Ann Min DeParle,

Adminstrator, Health Care Financing Administration.

[FR Doc. 98-1381 Filed 1-16-98; 8:45 am]

BILLING CODE 4120-01-P