Medicare Program; HCFA Market Research for Providers and Other Partners

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration

[HCFA-1103-GN]

Medicare Program; HCFA Market Research for Providers and Other

Partners

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

ACTION: General notice with comment period.

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

SUMMARY: This notice seeks public comments on information needs of

Medicare risk contract health maintenance organizations (HMOs) and

competitive medical plans (CMPs) and communication strategies that

could improve the effectiveness and efficiency of the risk contract

program. Under section 4002 of the Balanced Budget Act of 1997, and

with the implementation of the Medicare+Choice program, all HMOs and

CMPs will contract with HFCA under requirements of the Medicare+Choice

program. The information sought in this notice will facilitate future

changes in the contracting program, as well as improve information

needs and communication strategies under the current risk program.

Respondents should prioritize issues raised in the preliminary research

and identify any additional areas of information needs and best

communication strategies.

This initiative is one component of our overall effort to develop a

comprehensive communication strategy with Medicare providers and HMOs/

CMPs and to develop innovative approaches that will assist all program

participants to obtain and use information in the most accessible and

effective manner. Preliminary research on the information needs of

Medicare risk contract HMOs and CMPs and effective communication

strategies has identified a number of areas in which we could provide

additional information and potential strategies for communicating that

information effectively.

DATES: Written comments will be considered if we receive them at the

appropriate address, as provided below, no later than 5 p.m. on May 4,

1998.

ADDRESSES: Mail written comments (one original and three copies) to the

following address: Health Care Financing Administration, Department of

Health and Human Services, Attention: HCFA-1103-GN, P.O. Box 26676,

Baltimore, MD 21207.

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

and three copies) to one of the following addresses:

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

Washington, DC 20201, or

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

Because of staffing and resource limitations, we cannot accept

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

to file code HCFA-1103-GN. Comments received timely will be available

for public inspection as they are received, generally beginning

approximately 3 weeks after publication of a document, in Room 309-G of

the Department's offices at 200 Independence Avenue, SW., Washington,

DC, on Monday through Friday of each week from 8:30 a.m. to 5 p.m.

(phone: (202) 690-7890).

Comments may also be submitted electronically to the following e-

mail address: [email protected] E-mail comments must include the

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

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

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

attachments. Electronically submitted comments will also be available

for public inspection at the Independence Avenue address above.

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

SUPPLEMENTARY INFORMATION:

I. Background

Section 1876 of the Social Security Act (the Act) authorizes

Medicare payment to health maintenance organizations (HMOs) and

competitive medical plans (CMPs) that contract with HCFA to furnish

covered services to Medicare beneficiaries. For purposes of

[[Page 10922]]

this notice the term HMO includes both CMPs and HMOs. To apply for and

be approved to operate as a Medicare risk contractor, HMOs must be

licensed in the State in which they operate and have at least 5,000

commercial members. Most HMOs that have applied for Medicare contracts

have at least several years of experience managing commercial

enrollments and existing operational systems in place. Even for HMOs

with many years of experience, however, applying for a Medicare risk

contract may require substantial investments of staff time and

significant costs. Our requirements for participation, the extent of

our oversight of risk contracts, and ongoing interaction between the

HMO and HCFA are generally much greater than HMOs experience in

obtaining and maintaining State licensure and in serving commercial

clients.

Because of these different requirements, information and

communication processes between the HMO and HCFA are an important

component of the Medicare risk contracting program. HMOs that are

applying for Medicare risk contracts need information and guidance in

understanding our requirements in order to ensure that their

operational systems and approach to Medicare contracting meets those

requirements. Once approved and operational, risk contract HMOs have

ongoing needs for information and communication with us in order to

operate successfully and to remain in compliance with our standards.

Our information comes from a number of different sources, including

Peer Review Organizations (PROs) and other contractors, who are

responsible for specific operational functions.

HMOs are responsible for obtaining, understanding, and integrating

into their operations the information available from all these sources

and for seeking clarification of specific aspects of the risk contract

process, when necessary. Table 1 summarizes the major areas of

responsibility for providing information and ongoing communication with

risk contract HMOs for each of these information sources.

Table 1.--HCFA Information Sources

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

Source Information responsibility

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

HCFA Central Office.......... Legal, regulatory, and financial issues.

Payment Process.

Accretion/Deletion Process.

Application.

Site Visit.

HCFA Regional Office......... Operational requirements/review.

Review marketing materials and other

beneficiary communications.

Monitoring site visits and follow-up

retroactive enrollments.

Peer Review Organizations.... Communications on cooperative quality

improvement projects.

Investigation and follow-up of

beneficiary complaints and non-coverage

notices.

Other Contractors Coverage decisions (for example, local

Intermediaries and Carriers. carriers medical review policies).

Payment rates for out-of-area services.

CHDR......................... Health dispute resolution.

NCQA......................... Receive HEDIS.

ACR Review................... Review completeness ACR submission.

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

II. The Application Process

Undertaking a Medicare risk contract requires that HMOs address a

number of issues that are different from their commercial enrollment

and service delivery processes. The differences between the experience

of HMOs in operating a commercial HMO based on employer contracts and

the requirements for a Medicare risk contract makes it likely that an

HMO beginning the Medicare risk application process will obtain

assistance from some source that has prior experience in Medicare risk

contracting. For HMOs that are part of a national chain that has other

Medicare risk contracts, that experience may come from a group in the

corporate office of the chain. Other HMOs may hire an individual with

prior Medicare risk contract experience to lead the application and

implementation processes. Many HMOs hire consulting firms with Medicare

risk contract experience to guide them through the process of applying

and to assist in preparation of the application.

If requested, we will provide information to clarify requirements.

Establishing the correct lines of communication early in the process is

essential to the HMO's ability to develop a successful Medicare

application.

A. Ongoing Operations

Once we have approved the application submitted by the HMO,

implementation and ongoing operations of the Medicare risk plan

requires continuing interaction and information exchange between the

HMO and HCFA. We have specific responsibilities with respect to

communication with the HMO. We delegate some of our responsibilities

for quality assurance to PROs that work directly with the HMOs. We also

use contractors to handle some functions; for example, we contract for

Adjusted Community Rating (ACR) review services and this contractor

deals directly with each HMO to obtain information and clarify

submissions before completing a preliminary review and forwarding the

ACR submissions to us for approval. In addition, HMOs require

information from intermediaries and carriers to coordinate coverage

decisions and to pay out-of-area providers. HMOs also must work with

the Center for Health Dispute Resolution (CHDR) on reconsideration.

The operational Medicare risk HMO maintains close communication

with us on an ongoing or periodic basis for the following functions and

requirements:

Marketing Materials and Plans. The HMO must obtain advance

approval of any materials that will be used to market to, or

communicate with, Medicare beneficiaries.

Enrollment and Disenrollment. The HMO submits monthly

lists of new enrollees and disenrolled members to our data system

either directly or through a contractor (for example, CompuServe) that

we use to determine payment. Discrepancies require resolution that

involve interaction between the HMO and HCFA.

Quality Assurance. The HMO must provide information to

HCFA Central and Regional Offices and may

[[Page 10923]]

participate in quality assurance and quality improvement initiatives

that we have developed with the designated PRO in its area. Beginning

in 1997, HMOs must provide HEDIS data to us, through our

contractor, the National Committee for Quality Assurance (NCQA); and

participate in the Consumers Assessments of Health Plans Study (CAHPS)

survey of Medicare beneficiaries. Working with the HMO staff, the PRO

also follows up with HMO member complaints, grievances, and appeals. We

can also request corrective action plans for quality related issues and

monitor compliance.

Financial. Annually, the HMO must prepare financial

projections and analyses to support the benefit package and premiums

that will be offered to Medicare beneficiaries. We currently use a

contractor to initiate the ACR review process and to work with the HMOs

to clarify components of the HMO's submission. Our final review and

approval process may involve further requests for information and

clarification.

New Regulations and Changes in Regulations. We develop new

regulations based on legislation and make revisions in existing

regulations. In some cases, the HMOs are asked to provide information

necessary for the development of new regulations and to provide data,

information, or comments on these regulations while in the

developmental stage. The final regulation is then published in the

Federal Register. If necessary, we may provide clarification and

elaboration of the intent and operational implications of the new

regulation.

Ongoing Monitoring and Reporting. Medicare HMOs are

responsible for regular reporting to us. Site visits to each HMO are

conducted bi-annually by our staff. The site visits are comprehensive

in nature and normally include review of every operational area of the

HMO. Following the site visit, we notify the HMO of any areas in which

deficiencies were identified and ask it to prepare a corrective action

plan. We will provide direction to other entities with which the HMOs

communicate.

B. Preliminary Research

In discussions with several Medicare risk contract HMOs, PROs, and

others, we have identified a preliminary list of information needs that

are not currently being fully met. These information items are

summarized in Table 2 for HMOs in the application process and in Table

3 for operational Medicare risk contract HMOs.

Table 2.--Additional Information That Would be Useful During the

Application Period

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

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

A. Basic information on HCFA manuals;

Medicare and operational Operational Policy Letters

information on risk (OPLs);

contracting, including-- Transmittal Letters;

Guidelines and regulations, such

as National Marketing Guidelines, and

Physician Incentive Plan regulations.

Organizational structure of

HCFA.

Informing applicants of the

duration of the application review

process and providing a contact person

for the review.

Informing applicants when there

is a delay in the process, and of the

reason for the delay.

B. Sources of information, Published documents, with a

including: brief description of contents, and

instructions on how to obtain them and;

Names of contacts, by

operational area, with e-mail addresses

and telephone numbers.

C. Information and data, Medicare utilization statistics,

including: by geographic area;

Information on studies conducted

by, or supported by, HCFA on managed

care quality, outcomes, utilization

patterns, special population needs, and

``best practices'';

Results of quality of care

studies and outcomes surveys, by area of

country and type of facility;

Quality measurement by hospital

and skilled nursing facility (SNF), to

assist in recruiting quality facilities

for the provider networks;

Regulations affecting HMOs,

hospitals, physicians, and other

providers;

Listings of Diagnosis-Related

Group (DRG)-exempt facilities; and,

Physician fee schedules and DRG

payment rates for hospitals.

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

Table 3.--Information Wanted/Needed by Medicare Risk Contractor HMOs

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

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

A. Upon Contract Award:

Operational Information.. Provide a basic package of

materials (interviewees suggested that

this occur during the application

process).

Provide written advice on key

set-up issues, such as expected

interactions with PROs, CHDR, local

carriers and intermediaries;

availability of use of MCCOY,

CompuServe, and/or Litton; systems and

reporting requirements and the format in

which they must be provided.

B. Operational Information:

1. Carrier and Provide clearer examples of what

Intermediary. services and procedures are covered, as

determined by local carriers and fiscal

intermediaries, especially for

controversial medical areas.

Provide appropriate local

prevailing physician Medicare fee

schedules to determine reimbursement of

out-of-area care.

2. Accretion and Deletion Provide a complete and accurate

Process. listing of codes used in reports, such

as Reply Listings and Exception Detail;

include accurate and current

institutional status code on Special

Reply.

Label cumulative 6-month report

with start and end dates and disseminate

the anticipated release schedule.

Enable Litton/CompuServe to

provide corrected information with the

list of errors. Presently, HMOs have to

look up the information although Litton/

CompuServe have the information

available.

Develop industry standards and

methodology for calculation of voluntary

disenrollment rates.

Summarize changes made in

manuals given to plans on an annual

basis.

3. Marketing............. Inform HMOs on a regular basis

on the status of marketing materials in

the review process.

[[Page 10924]]

4. ACR Process........... Provide detailed information on

the ACR review process, including

delineation of rationale for steps and

the detail behind each step.

Provide the methodology for how

study factors are derived.

Provide a description of how

capitation rates are developed and

calculated.

Proved explicit instructions up-

front on the information HMOs must

submit, including the information

requirements of reviewers.

Provide explicit directions for

how ACR information should be formatted

(for example, using LOTUS-DOS).

Provide acceptable and

unacceptable data sources and

methodologies.

Publish alternative

``recommended'' studies.

Provide guidelines for Medicare

risk point of service premium

calculations.

Provide national demographic

cost factors for utilization in the APR.

Inform HMOs on a regular basis

of the status of ACR submissions in the

review process.

5. Quality Improvement Release benchmark data (for

(QI). example, congestive heart failure and

percentage of Medicare beneficiaries on

ACE inhibitors) and access measures (for

example, sentinel events, such as

inpatient admission that should not

occur if quality ambulatory care is

provided).

Provide, under the

HEDIS 3.0 (Health Plan

Employer Data and Information Set),

information to HMOs.

Develop clearer standards and

reviewer guidelines for Quality

Improvement studies.

Disseminate CHDR and Beneficiary

Information Tracking System (BITS)

reports to all plans.

6. Other................. Provide information on our

organizational structure and key

contacts, by operational area, with e-

mail addresses and telephone numbers.

Provide information on

conferences where staff are scheduled to

discuss specific issues.

Provide information about

activities and new initiatives such as

the Reengineering Application and

Monitoring (RAM) initiative on an on-

going basis.

Inform HMOs when staff will be

out of the office, and identify a back-

up person in his or her absence.

Provide guidelines for

coordination of dual eligibles and how

best to serve the special needs

populations.

Disseminate to HMOs any

information disseminated to other

participants in Medicare risk program,

for example, hospitals, physicians,

beneficiaries.

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

A number of information process issues have also been identified in

these limited preliminary discussions. Process issues relate to

timeliness and completeness of information that we provide to Medicare

risk contract HMOs and to consistency of the information provided. A

summary of process issues raised in these preliminary discussions is

provided in Table 4.

Table 4.--Information Process Issues and Suggestions Raised by HMOs and

Other Interviewees

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

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

A. Updated and Revised HCFA

Materials:

Revised, updated, and indexed

HMO/CMP Manual.

Revise applications to

explicitly state requirements.

Establish clean copies of

background materials; update as

necessary; and tab.

B. Improve Timeliness of

Communications Relative to

HMO Operational

Requirements:

1. Accretion and Deletion Improve timeliness and accuracy

Issues. of information and data exchanged

between Social Security Administration,

HCFA, and authorized vendors.

Improve timeliness, accuracy,

and exchange of data used to determine

specific categories of beneficiaries.

Review Reply Listing and

Exception Detail codes for accuracy,

currency, and completeness prior to

disseminating.

Change timing of Reply Listing

to be 1 week earlier.

Disseminate DRG tape timely.

Communicate changes affecting

Medicare claims process timely;

summarize changes in one place.

2. Payment Issues........ Inform HMOs as soon as an

overpayment or underpayment is

discovered or suspected.

3. Dissemination of Disseminate OPLs as we release

Operational Policy or receive them.

Letters (OPLs).

4. Timeliness of Allow sufficient time for HMOs

Communications and to implement changes in operational

Responses. procedures and information systems when

issuing policies, regulations, and/or

guidelines.

Strive to have structure in

place prior to implementation of

polices, regulations, and/or guidelines.

Provide information to HMOs, at

regular intervals, as new approaches are

being developed.

Schedule the Annual Renewal

Process earlier in the year.

5. HMOs' Ability to Reach Provide to HMOs a list of staff

HCFA Staff. who have specific responsibility for

specific HMO related functions and

issues.

Establish standards for

timeliness of response.

Increase the number of staff or

streamline communication process and

information transmittal mechanisms to

improve timeliness of response.

6. Bi-Annual Review...... Allow sufficient time for HMOs

to implement corrective action plan, to

demonstrate change, prior to re-

auditing.

C. Consistency and

Coordination:

Assign to the HMO a specific

contact person to coordinate all

activities and to provide clarification

to questions and problems.

Assign specific staff to resolve

inquiries and problems related to their

specific topic areas.

[[Page 10925]]

Identify a ``point'' person to

answer questions about the status of the

development of new, and the updating of

existing, policies or regulations.

D. Simplifying Information

Processes and Requirements:

1. Designating HMO- Allow HMOs to designate an HMO-

specific and Corporate specific and corporate liaison.

Medicare Liaisons. Carbon copy designated Medicare

liaison on all communications.

2. Streamline Application Streamline application process

Process. to be ``less paper bound'' and more real-

time activity.

Designate appropriate

``boilerplate'' sections of the

application.

3. Real-Time, On-Line Strive to make Medicare

Medicare Beneficiary beneficiary eligibility a real-time, on-

Eligibility. line activity.

Allow HMOs to maintain system

logs for documentation.

4. Streamline Marketing Institute a national ``use and

Approval Process. file'' policy.

E. Coordination with

Contractors:

Provide sufficient training to

our contractors and reviewers who

perform functions, such as the ACR

review, PRO review, and on-site quality

monitoring before allowing such agents

to perform these functions.

Improve communication between

HCFA, the PROs, and CHDR; clarify

respective roles of HCFA, PROs, CHDR,

and HMOs.

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

In addition, a number of potential ways that we could communicate

information to Medicare risk contract HMOs has been identified. It is

likely that the most effective communication strategies may be

different for Medicare risk HMOs with different characteristics and

that we may want to develop multiple communication strategies to ensure

that information is provided appropriately to all Medicare HMOs. Table

5 describes communication strategies that we have identified during

preliminary discussions with program participants.

Table 5.--Summary of Major Recommendations

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

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

A. Communication Strategy:

1. Written Materials..... Written materials should be

clear and complete; changes made to

updated policies, regulations, and

manuals should be explicit.

Materials should be organized to

ensure that all written materials on a

specific topic are available in one

place and/or are cross-referenced with

other related materials.

One contact point should be

designated for HMOs to identify and

request all written materials that are

available. This could be on the HCFA

Website, with a dedicated e-mail address

or an 800 number specifically for

ordering written materials.

We should move towards providing

timely written responses to outstanding

inquiries and issues currently answered

verbally. Currently, HMOs find the need

to maintain extensive documentation of

verbal communications. The use of e-mail

would facilitate this.

Currently, HMOs believe that

they are not well informed of the status

of our various activities (not all HMOs

are members of the American Association

of Healthcare Plans (AAHP) or have

access to outside counsel or government

affairs programs in Washington, D.C.)

and it is easy to lose track of the

initiatives over time because of

sporadic communications.

We should create and disseminate

a newsletter which could provide timely

and concise information on our

activities, such as initiatives,

demonstrations, and pilot programs, as

well as the status of regulatory

developments, that may offer HMOs

opportunities to participate or may

affect their operations.

--Most HMOs would be willing to pay to

receive a newsletter that provided them

with information and understanding of

our initiatives and regulations.

2. Verbal Communication, HMOs would like one person

by Telephone and In- assigned to serve as their contact

Person. person for the coordination of all

activities and for seeking clarification

to questions.

We should update our voice mail

to indicate absences, and designate an

appropriate back-up person with the

authority to answer questions.

We should set up a telephone

hotline that HMOs could access to

receive clarification and consistent

answers to specific regulatory or

operational issues.

We should develop a fax-on-

demand service to provide up-to-date

information on hot topics, as the Agency

for Health Care Policy and Research and

provider associations have done.

3. E-mail and Electronic Many HMOs would prefer e-mail

Data Transfers. communication to verbal communications.

E-mail would facilitate transmittal of

questions and responses that are

currently being handled by telephone and

would produce written documentation of

the issue discussed and guidance

received.

HMOs would like us to make

beneficiary eligibility a real-time, on-

line activity that would improve the

timeliness and accuracy of our data and

enable Medicare beneficiaries to be

enrolled sooner. They would like to be

able to show a log for documentation

rather than paper copies in a file.

We should move towards accepting

the electronic file transfer of draft

marketing materials. This procedure

would permit us to make changes directly

in the document, and return them to the

HMOs in a timely manner, and produce

documentation of comments and approval.

HMOs support our collection of

ACRs on-line, noting this was a pilot

project in 1996 that will be mandatory

in 1997. However, not all plans received

the relevant documentation or received

it after their ACRs had been submitted.

Some HMOs attempting the electronic

submission were unsuccessful in doing

so, because of the system freezing or

designated passwords not working. HMOs

believe strongly that, before making a

new procedure mandatory, we should first

test the system to ensure it works and

then disseminate the information in a

timely manner prior to implementation.

Implement a mechanism(s) for

systematically tracking various HMO

materials in review. Most useful to be

able to track are:

[[Page 10926]]

Applications and Service Area

Expansions; Review of Marketing

Materials; and ACR filings.

4. HCFA Website.......... HMOs would like to see us expand the

amount of information available through

the HCFA Website, and develop a process

for posting information on a more

routine and timely basis (within 1 to 2

weeks of release). Increased posting of

materials on the HCFA Website would

reduce our burden in copying and mailing

requested materials. Materials that the

HMOs would like made available through

the website are--

OPLs--the complete catalog of

OPLs be made available on the Internet;

at a minimum, HMOs would like a

comprehensive index of available OPLs by

subject area;

General information about HCFA,

including conferences where staff will

be speaking and a directory of staff by

responsibility for specific areas and

issues, with telephone numbers and e-

mail addresses;

Routine HCFA reports; and

relevant statistics and data. Specific

examples of reports and data cited

include--

--Medicare/Medicaid Sanction reports,

which some plans currently receive in

hard copy once a year;

--CHDR and BITS reports, and analysis of

disenrollment patterns;

--OSCAR-3 reports, which contain

information that HMOs find helpful and

an added value in credentialing SNFs for

inclusion in provider network;

--List of participating providers;

--Local fee schedules and DRGs; and

--Messages sent through MCCOY, our

Managed Care Option Information on-line

data base system, because data

processors are not the appropriate staff

to receive these.

--Some HMOs indicated that they would be

willing to pay a fee to access reports

on-line through a password system.

5. CD-ROMs............... CD-ROMs of HCFA manuals should

be updated to be compatible with the

Windows program rather than just DOS. We

should consider selecting a standard

word processing program in which to

publish reports and data. Currently,

HMOs are dealing with unformatted, and

sometimes unusable, ASCII files.

OPLs should also be made

available on a CD-ROM.

B. Conferences and Training:

Given the emergence of new Medicare risk

contractors and the use of consultants,

some HMOs believe we should offer the

following courses and seminars to

current and potential risk contractors:

A basic course on Medicare and

the risk contracting program for

inexperienced organizations that are

considering applying for a contract.

An Application Preparation

seminar explaining the various sections

of the application (such as, enrollment

and disenrollment, grievances and

appeals, coverage issues, and marketing

materials) and addressing frequently

asked questions. This presentation would

allow us to more efficiently deliver

information that is repeated to many of

the HMOs during various points of the

application process.

A course for risk contractors

discussing the operational and

regulatory aspects of risk contracting.

--We should require that potential

applicants attend a seminar series prior

to being able to submit an application.

Forums with plans and advocacy

groups on new regulations or new

interpretations of regulations, or new

policies such as HEDIS/CAHPS,

enrollment and payment, and physician

incentive plan regulations are very

helpful to HMOs.

--HMOs would like us to continue offering

such seminars and, to the extent

possible, expand their use.

--The seminars should be offered in a

timely manner to consider the

operational impacts on HMOs.

Periodic Meetings. The HMOs

would like us to conduct meetings on a

regular basis, such as quarterly, that

bring together risk Medicare contractors

to discuss issues affecting all HMOs and

to conduct question and answer sessions.

These sessions would allow us to be

aware of issues and concerns to HMOs, as

well as HMOs to be aware of our

perspective.

Also, our staff who deal

directly with Medicare risk contractors

would benefit from a structured training

program that would enable them to

understand Medicare risk contracting

rules and regulations and HMO

operations, including monitoring of

compliance.

--Structured training could include

direct observation of plan operations to

witness the sophistication of some

operational aspects.

--We may also want to consider having our

reviewers attend the NCQA ``Building

Blocks'' sessions, as well as having at

least one representative from each

Regional Office attend AAHP's annual

Medicare/Medicaid conference that

highlights industry-wide concerns.

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

III. Discussion

Under section 4002 of the Balanced Budget Act of 1997 (BBA) (Pub.

L. 105-33), and with the implementation of the Medicare+Choice program,

all HMOs and CMPs will contract with us under requirements of the

Medicare+Choice program. Our preliminary discussions of information

needs, information process, and communication strategies have produced

a significant number of issues that will be considered in the

development of our Medicare risk contract HMO communication strategy.

Although the preliminary research was conducted before the BBA, the

results are applicable to the Medicare+Choice program. However, since

only a relatively small number of HMOs and other organizations have

participated in

[[Page 10927]]

this preliminary process, we are seeking additional comments and

suggestions on these issues. Respondents should prioritize issues

raised in the preliminary research and identify additional areas of

information needs and communication strategies. In addition, it would

be useful to obtain comments on those issues that would be most likely

to improve the effectiveness and efficiency of the Medicare risk

contract program in order to establish priorities and develop a program

to implement the communication strategy. This notice seeks comments and

suggestions related to these issues, that we may use to develop and

refine communications with Medicare risk contract HMOs.

IV. Regulatory Impact Statement

We have examined the impacts of this notice as required by

Executive Order 12866 and the Regulatory Flexibility Act (Public Law

96-354). Executive Order 12866 directs agencies to assess all costs and

benefits of available regulatory alternatives and, when regulation is

necessary, to select regulatory approaches that maximize net benefits

(including potential economic, environmental, public health and safety

effects; distributive impacts; and equity). The Regulatory Flexibility

Act (RFA) requires agencies to analyze options for regulatory relief

for small businesses. Most HMOs are small entities, either by nonprofit

status or by having revenues of $5 million or less annually. For

purposes of the RFA, HMOs are considered small entities.

Section 1102(b) of the Social Security Act requires us to prepare a

regulatory impact analysis for any rule that may have a significant

impact on the operations of a substantial number of small rural

hospitals. Such an analysis must conform to the provisions of section

603 of the RFA. For purposes of section 1102(b) of the Act, we define a

small rural hospital as a hospital that is located outside a

metropolitan Statistical Area and has fewer than 50 beds.

Preliminary research on the information needs of Medicare risk

contract HMOs and effective communication strategies has identified a

number of areas in which we could provide additional information to

HMOs and has identified potential strategies for communicating that

information more effectively. The purpose of this notice is to seek

public comments on the information needs of Medicare risk contract HMOs

and communication strategies that could improve the effectiveness and

efficiency of the risk contract program. For these reasons, we are not

preparing an analysis for either the RFA or section 1102(b) of the Act

because we have determined, and we certify, that this notice would not

have a significant impact on a substantial number of small entities or

a significant impact on the operations of a substantial number of small

rural hospitals.

In accordance with the provisions of Executive Order 12866, this

notice was not reviewed by the Office of Management and Budget.

V. Response to Comments

Because of the large number of items of correspondence we normally

receive on Federal Register documents published for comment, we are not

able to acknowledge or respond to them individually. We will consider

all comments we receive by the date and the time specified in the DATES

section of this preamble, and, if we proceed with a subsequent

document, we will respond to the comments in that document.

(Catalog of Federal Domestic Assistance Program No. 93.773,

Medicare--Hospital Insurance Program)

Dated: November 26, 1997.

Nancy-Ann Min DeParle,

Administrator, Health Care Financing Administration.

[FR Doc. 98-5234 Filed 3-4-98; 8:45 am]

BILLING CODE 4120-01-P