[Federal Register: January 19, 2001 (Volume 66, Number 13)]
[Rules and Regulations]
[Page 6227-6276]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr19ja01-28]
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Part VIII
Department of Health and Human Services
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Health Care Financing Administration
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42 CFR Part 400, et al.
Medicaid Program; Medicaid Managed Care; Final Rule
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Health Care Financing Administration
42 CFR Part 400, 430, 431,434, 435, 438, 440, and 447
[HCFA-2001-FC]
RIN 0938-AI70
Medicaid Program; Medicaid Managed Care
AGENCY: Health Care Financing Administration (HCFA), HHS.
ACTION: Final rule with comment period.
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SUMMARY: This final rule with comment period amends the Medicaid
regulations to implement provisions of the Balanced Budget Act of 1997
(BBA) that allow the States greater flexibility by permitting them to
amend their State plan to require certain categories of Medicaid
beneficiaries to enroll in managed care entities without obtaining
waivers if beneficiary choice is provided; establish new beneficiary
protections in areas such as quality assurance, grievance rights, and
coverage of emergency services; eliminate certain requirements viewed
by State agencies as impediments to the growth of managed care
programs, such as the enrollment composition requirement, the right to
disenroll without cause at any time, and the prohibition against
enrollee cost-sharing. In addition, this final rule expands on
regulatory beneficiary protections provided to enrollees of prepaid
health plans (PHPs) by requiring that PHPs comply with specified BBA
requirements that would not otherwise apply to PHPs.
DATES: Effective Date: These regulations are effective on April 19,
2001. Provisions that must be implemented thorough contracts with
managed care organizations, prepaid health plans, health insuring
organizations, or enrollment brokers are effective with respect to
contracts that are up for renewal or renegotiation on or after April
19, 2001, but no longer than April 19, 2002.
Comment Date: We will consider comments on the upper payment limits
in Sec. 438.(c) if we receive them at the appropriate address, as
provided below, no later than 5 p.m. on March 20, 2001.
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-2001-FC, P.O. Box 8010,
Baltimore, MD 21244-8010 .
To ensure that mailed comments are received in time for us to
consider them, please allow for possible delays in delivering them.
If you prefer, you may deliver your written comments (1 original
and 3 copies) to one of the following addresses: Room 443-G, Hubert H.
Humphrey Building, 200 Independence Avenue, SW., Washington, DC 20201,
or Room C5-16-03, 7500 Security Boulevard, Baltimore, MD 21244-8010.
Comments mailed to the above addresses may be delayed and received
too late for us to consider them.
Because of staff and resource limitations, we cannot accept
comments by facsimile (FAX) transmission. In commenting, please refer
to file code HCFA-2001-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 office at 200 Independence Avenue, SW., Washington,
DC, on Monday through Friday of each week from 8:30 to 5 p.m. (phone:
(202) 690-7890).
FOR FURTHER INFORMATION CONTACT:
Subparts A and B--Bruce Johnson: (410) 786-0615
Subpart C--Tim Roe: (410) 786-6647
Subpart D--Ann Page: (410) 786-0083
Subpart F--Tim Roe: (410) 786-2006
Subpart H--Tim Roe: (410) 786-2006
Subpart I--Tim Roe: (410) 786-2006
Subpart J--Bruce Johnson: (410) 786-0615
SUPPLEMENTARY INFORMATION:
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I. Background
Title XIX of the Social Security Act (the Act) established the
Medicaid program, under which matching Federal funds are provided to
State agencies to pay for coverage of health care services to low-
income pregnant women, families and aged, blind, and disabled
individuals. The Medicaid program is administered by States according
to Federal statutory and regulatory requirements, under the aegis of a
``State plan'' that must be approved by the Health Care Financing
Administration (HCFA). At the program' s inception, most health
coverage under the Medicaid program was provided by reimbursing health
care providers on a fee-for-service basis for services furnished to
Medicaid beneficiaries. (Note: The term ``beneficiaries'' is used
throughout the preamble to refer to individuals eligible for and
receiving Medicaid benefits. The term ``recipients'' is used in the
text of the regulation and is synonymous with ``beneficiary'').
Increasingly, however, State agencies have provided Medicaid
coverage through managed care contracts, under which a managed care
organization (MCO) or other similar entity is paid a fixed monthly
capitation payment for each beneficiary enrolled with the entity for
health coverage. Enrolled beneficiaries are required to receive the
majority of health care services through the managed care entity. In
most States, enrollment in these managed care arrangements is currently
mandatory for at least certain categories of beneficiaries. Prior to
the enactment of the Balanced Budget Act of 1997 (BBA), State agencies
were required to obtain a waiver of a statutory ``freedom of choice
requirement'' in order to operate these mandatory managed care
programs. No such waiver was required for arrangements involving
voluntary enrollment in managed care.
The Balanced Budget Act of 1997
Chapter One of the Medicaid provisions (Subtitle H) of the BBA
significantly strengthens Medicaid managed care programs by modifying
prior law to: (1) reflect the more widespread use of managed care by
State agencies to serve Medicaid beneficiaries; (2) build on the
increased expertise acquired by HCFA and the State agencies in the
administration of managed care programs; (3) incorporate the knowledge
that has been learned from Medicaid, Medicare and private sector
managed care programs and their oversight organizations; and (4)
provide a framework that will allow HCFA and
[[Page 6229]]
State agencies to continue to incorporate further advances in the
oversight of managed care, particularly as it pertains to the
protection of beneficiaries and the quality of care delivered to
Medicaid enrollees. This final rule with comment period implements most
of the provisions of that chapter (that is, sections 4701 through
4710). It addresses BBA provisions that reduce the need for State
agencies to obtain waivers to implement certain managed care programs;
eliminate enrollment composition requirements for managed care
contracts; increase beneficiary protections for enrollees in Medicaid
managed care entities; improve quality assurance; establish solvency
standards; protect against fraud and abuse; permit a period of
guaranteed eligibility for Medicaid beneficiaries; and improve certain
administrative features of State managed care programs. It also
strengthens existing regulatory requirements that apply to prepaid
health plans (PHPs) by applying to PHPs certain requirements that the
BBA imposes on MCOs.
Several principles guided the development of the final rule. First,
the rule was developed with a clear emphasis on consumer protections.
We have addressed the issues identified by advocates regarding the
rights of Medicaid beneficiaries, particularly vulnerable populations,
and how they can be protected as State agencies increasingly replace
fee-for-service Medicaid delivery systems with managed care programs.
In doing so, we have been guided by the Consumers Bill of Rights and
Responsibilities (CBRR) issued in November 1997 by the President's
Advisory Commission on Consumer Protection and Quality in the Health
Care Industry. A Presidential directive ordered the Medicaid program to
comply, to the extent permitted by law, with the recommendations in the
CBRR. As a result, when writing this regulation, we incorporated the
CBRR recommendations whenever authorized by law.
Second, we attempted to provide State agencies with sufficient
flexibility to continue to be innovative in the development and
improvement of their State Medicaid managed care programs. We
recognized that uniform, national standards were not always appropriate
in all instances and tried to identify areas where States needed
flexibility to develop their own standards, unless an overriding
beneficiary interest needed to be taken into account. The regulations
were also written to support State agencies in their role as ``health
care purchasers,'' in addition to their role as ``health care
regulators.'' State agencies, like group purchasers in the private
sector, are continuing to seek better value for their health care
dollars, when ``value'' means the best possible combination of both
quality and price. Relevant subparts of this final rule attempt to
provide State agencies with the tools needed to become better
purchasers.
Third, wherever we determined it was appropriate to develop
Medicaid regulatory language that is parallel to the language used in
the final Medicare+Choice (M+C) regulations published on June 9, 2000
(65 FR 40170), we did so. The latter M+C final rule implements Medicare
managed care provisions in the BBA, many of which are similar to the
Medicaid provisions implemented in this final rule.
Fourth, with respect to the quality-related provisions, we opted to
take a more conservative approach and not impose greater regulatory
burden without a strong evidence base.
Finally, the BBA directed the Secretary of the Department of Health
and Human Services to:
conduct a study concerning the safeguards (if any) that may be
needed to ensure that the health care needs of individuals with
special health care needs and chronic conditions who are enrolled
with Medicaid managed care organizations are adequately met.
(Section 4705(c)(2) of the Balanced Budget Act of 1997.)
In response to this charge from the Congress, during October 1998 to
August 1999, HCFA conducted a study of existing research, data, and
other information in a variety of areas related to the needs of special
populations. HCFA has already taken steps to address many of these
recommendations through revisions to the 1915(b) waiver process and
provision of technical assistance and training activities to States.
HCFA's responses in this final rule with comment period to comments on
the proposed rule pertaining to safeguards for populations with special
health care needs have been informed by our analysis of information
gathered for the report to Congress. The final rule reflects revisions
in response to comments based on this analysis.
This final rule with comment period creates a new part 438 in title
42 of the Code of Federal Regulations. All new managed care regulations
created under the authority of the BBA, other sections of existing
Medicaid regulations pertaining to managed care, and appropriate cross
references appear in the new part 438. By creating this new part, we
are attempting to help users of the regulations to better comprehend
the overall regulatory framework for Medicaid managed care. More
detailed discussions of the content of each of the subparts of this
final rule are found at the beginning of the section of the preamble
discussing each subpart.
Statutory Basis
Section 4701 of the BBA creates section 1932 of the Act, changes
terminology in title XIX of the Act (most significantly, the BBA uses
the term ``managed care organization'' to refer to entities previously
labeled ``health maintenance organizations''), and amends section
1903(m) of the Act to require that contracts under that section and
contracting MCOs comply with applicable requirements in new section
1932. Among other things, section 1932 of the Act permits State
agencies to require most groups of Medicaid beneficiaries to enroll in
managed care arrangements without waiver authority under sections
1915(b) or 1115 of the Act. Under the law prior to the BBA, a State
agency was required to request Federal waiver authority under section
1915(b) or pursuant to a demonstration authority under section 1115 in
order to restrict beneficiaries' Medicaid coverage to managed care
arrangements. Section 1932 of the Act also defines the term ``managed
care entity'' (MCE) to include MCOs and primary care case managers
meeting a new definition in section 1905(t) of the Act; establishes new
requirements for managed care enrollment and choice of coverage; and
requires MCOs, primary care case managers (PCCMs), and State agencies
to provide specified information to enrollees and potential enrollees.
Section 4702 of the BBA amends section 1905 of the Act to permit
State agencies to provide primary care case management services without
waiver authority. Instead, primary care case management services may be
made available under a State's Medicaid plan as an optional service.
Section 4703 of the BBA eliminates a former statutory requirement
that no more than 75 percent of the enrollees in an MCO be Medicaid or
Medicare beneficiaries.
Section 4704 of the BBA creates section 1932(b) of the Act to add
increased protections for those enrolled in managed care arrangements.
These include, among others, the application of a ``prudent
layperson's'' standard to determine whether emergency room use by a
beneficiary was appropriate and must be covered; criteria for showing
adequate capacity and services; grievance procedures; and protections
for enrollees against liability for payment of an organization's or
provider's debts in the case of insolvency.
[[Page 6230]]
Section 4705 of the BBA creates section 1932(c) of the Act, which
requires State agencies to develop and implement quality assessment and
improvement strategies for their managed care arrangements and to
provide for external, independent review of managed care activities.
Section 4706 of the BBA provides that, with limited exceptions, an
MCO must meet the same solvency standards set by State agencies for
private HMOs or be licensed or certified by the State as a risk-bearing
entity.
Section 4707 of the BBA creates section 1932(d) of the Act to add
protections against fraud and abuse, such as restrictions on marketing
and sanctions for noncompliance.
Section 4708 of the BBA adds a number of provisions to improve the
administration of managed care arrangements. These include, among
others, provisions raising the threshold value of managed care
contracts that require the Secretary's prior approval, and permitting
the same copayments in MCOs as apply to fee-for-service arrangements.
Section 4709 of the BBA allows State agencies the option to provide
6 months of guaranteed eligibility for all individuals enrolled in an
MCE.
Section 4710 of the BBA specifies the effective dates for all the
provisions identified in sections 4701 through 4709.
Proposed Rule
On September 29, 1998, we published a proposed rule setting forth
proposed regulations implementing the above statutory provisions, as
well as proposing to strengthen regulatory PHP requirements by
incorporating by regulation requirements that would otherwise apply
only to MCOs. (63 FR 52022) A summary of the specific provisions of the
proposed regulations upon which we received public comments is set
forth at the beginning of the discussion below of the comments we
received. For a fuller discussion of our basis and purpose for the
approach taken in the September 29, 1998 proposed rule, see the
preamble to that document, at 63 FR 52022 through 52074.
We received 305 comments on the September 29, 1998 proposed rule.
The comments were extensive and generally pertained to all the sections
contained in the proposed rule. We carefully reviewed all of the
comments and revisited the policies contained in the proposed rule that
related to the comments.
II. Analysis of and Response to Public Comments on the Proposed
Rule
A. General Provisions of the Proposed Rule (Subpart A)
1. Basis and Scope (Proposed Sec. 438.1)
Section 438.1 of the proposed regulation set forth the basis and
scope of part 438 including the fact that regulations in this part
implement authority in sections 1902(a)(4), 1903(m), 1905(t), and 1932
of the Act. Proposed Sec. 438.1 also briefly described these statutory
provisions.
2. Definitions (Proposed Secs. 438.2, 430.5)
Section 438.2 of the proposed rule included definitions of terms
that would apply for purposes of proposed part 438. The proposed
definitions and relevant comments and our responses are provided below.
As used in this part--
Authorized representative means an individual authorized by an
enrollee to act on his or her behalf in any dealings with an MCE or the
State. The rules for appointment of representatives set forth in 20 CFR
part 404, subpart R apply unless otherwise provided in this subpart.
Managed care entity (MCE) means--
(1) A Medicaid managed care organization (MCO) that has a
comprehensive risk contract under section 1903(m) of the Act; or
(2) A primary care case manager.
Managed care organization (MCO) means--
(1) A Federally qualified HMO that meets the advance directives
requirements of subpart I of part 489 of this chapter; or
(2) Any public or private entity that meets the advance directives
requirements and is determined to also meet the following conditions:
(i) Is organized primarily for the purpose of providing health care
services.
(ii) Makes the services it provides to its Medicaid enrollees as
accessible (in terms of timeliness, amount, duration, and scope) as
those services are to other Medicaid recipients within the area served
by the entity.
(iii) Meets the solvency standards of Sec. 438.116.
Prepaid health plan (PHP) means an entity that provides medical
services to enrolled recipients under contract with the State agency,
and on the basis of prepaid capitation fees, but does not have a
comprehensive risk contract.
Primary care means all health care services and laboratory services
customarily provided by or through a general practitioner, family
physician, internal medicine physician, obstetrician/gynecologist, or
pediatrician, in accordance with State licensure and certification laws
and regulations.
Primary care case management means a system under which a primary
care case manager contracts with the State to furnish case management
services (which include the location, coordination and monitoring of
primary health care services) to Medicaid recipients.
Primary care case manager means a physician, a physician group
practice, an entity that employs or arranges with physicians to furnish
primary care case management services or, at State option, one of the
following:
(1) A physician assistant.
(2) A nurse practitioner.
(3) A certified nurse-midwife.
Provider means--
(1) Any individual who is engaged in the delivery of health care
services in a State and is licensed or certified by the State to carry
out that activity in the State; and
(2) Any entity that is engaged in the delivery of health care
services in a State and is licensed or certified by the State to
deliver those services if licensing or certification is required by
State law or regulation.
We also received comments on definitions of ``comprehensive risk
contract'' in Sec. 430.5, which defines a ``Comprehensive risk
contract'' as a contract that covers comprehensive services, that is,
inpatient hospital services and any of the following services, or any
three or more of the following services: (1) outpatient hospital
services; (2) rural health clinic services; (3) FQHC services; (4)
other laboratory and X-ray services; (5) nursing facility (NF)
services; (6) early and periodic screening, diagnostic, and treatment
(EPSDT) services; (7) family planning services; (8) physician services;
and (9) home health services. We have moved this definition, along with
the following other managed care-related definitions, from part 430 to
Sec. 438.2. In addition, we have clarified the definition of health
insuring organization so that it does not appear to require that the
health insuring organization's (HIO's) providers be capitated.
Capitation payment means a payment the State agency makes
periodically to a contractor on behalf of each recipient enrolled under
a contract for the provision of medical services under the State plan.
The State agency makes the payment regardless of whether the particular
recipient receives services during the period covered by the payment.
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Federally qualified HMO means an HMO that HCFA has determined to be
a qualified HMO under section 1310(d) of the PHS Act.
Health insuring organization means an entity that, in exchange for
capitation payments, covers services for recipients--
(1) Through payments to, or arrangements with, providers;
(2) Under a risk contract.
Nonrisk contract means a contract under which the contractor--
(1) Is not at financial risk for changes in utilization or for
costs incurred under the contract that do not exceed the upper payment
limits specified in Sec. 447.362 of this chapter; and
(2) May be reimbursed by the State at the end of the contract
period on the basis of the incurred costs, subject to the specified
limits.
Comments on Definitions
Comment: Several commenters believe that we should delete the
reference to 20 CFR part 404, subpart R in the definition of authorized
representative. The commenters believe that these rules, which
generally govern representative payees for Social Security programs,
have little, if any, relevance to the Medicaid program and that these
requirements would limit assistance to beneficiaries in the Medicaid
managed care enrollment process. They indicated that current rules
recognize that beneficiaries may require assistance in a variety of
circumstances and provide that applicants and recipients may obtain
that assistance from a variety of sources. For example, commenters
pointed out that in formal proceedings such as fair hearings, Medicaid
beneficiaries enjoy the right to ``represent themselves, use legal
counsel, a relative, friend or other spokesman.'' (Sec. 431.206.) If
the applicant is incompetent or incapacitated, anyone acting
responsibly for the applicant can make application on the applicant's
behalf (Sec. 435.907). People with disabilities who are incompetent or
incapacitated can currently be represented by anyone acting responsibly
on their behalf. Commenters indicated that State law is available and
is used to step in when a person cannot make medical decisions on his
or her behalf.
Response: We concur with the commenters and have deleted the
reference to 20 CFR part 404. We have also deleted the reference to
``authorized,'' using only the term ``representative'' to allow for a
broad range of representatives, consistent with existing policies and
practices. The definition, which has been moved to Sec. 430.5, now
reads ``Representative has the meaning given the term by each State
consistent with its laws, regulations, and policies.''
We agree with the commenters that the appropriateness of a
representative depends on the significance of the activity for which he
or she is acting as representative, so that States should have the
flexibility to determine who may represent the beneficiary in various
activities. The State may establish various criteria depending upon the
situation (for example, disenrollment requests, choice of health plans,
receiving notices, filing grievance and appeals (including requests for
expedited review, being included as a party to the appeal and the State
fair hearing, receiving marketing materials, being provided opportunity
to review records, etc.) In determining who may represent
beneficiaries, we anticipate that States will provide special
consideration for individuals with cognitive impairments, who are
unable to appoint their own representatives but who may be especially
vulnerable and require assistance in accessing the protections offered
in these regulations.
Comment: One commenter found the definition of PHP to be too vague.
Specifically, the commenter was not aware of what was meant by
``comprehensive'' and that it was confusing to use the words
``capitation'' and ``fee'' to describe a capitation payment. The
commenter recommended that we not use the word ``fee'' in conjunction
with capitation and that we define ``comprehensive.''
Another commenter believes the proposed regulations should include
a new definition of a prepaid health plan (PHP) to include primary care
case managers that are paid on a capitated basis for primary care
services only. A commenter recommended that any entity meeting the
definition of primary care case manager in section 1905(t) of the Act
should be treated the same, whether capitated or paid on a fee-for-
service (FFS) basis under State plan payment rates.
Response: Normally, we use the phrase ``capitation payment'' or
``capitation rate'' to describe the capitation method of payment rather
than use ``capitation fee.'' As such, we agree with the commenter that
the word ``fee,'' which is associated with ``fee-for-service'' payment,
does not fit well with the word ``capitation.'' We therefore are
revising the definition of PHP by replacing the word ``fee'' with the
word ``payment'' after ``capitation.''
With respect to the commenter's request that ``comprehensive'' be
defined, the September 29, 1998 proposed regulations contained a
definition of ``comprehensive risk contract'' that would apply for
purposes of the definition of PHP. In the September 29, 1998 proposed
rule, it was proposed that this definition be included in Sec. 430.5.
Since the commenter apparently did not see this definition, and was not
aware that it pertains only to part 438, we are moving the definition
of ``comprehensive risk contract'' from Sec. 430.5 to Sec. 438.2.
We disagree that a primary care case manager paid on a capitation
basis should be treated the same as one paid on a fee-for-service basis
based on State plan payment rates. The definition of primary care case
manager in section 1905(t)(2) of the Act does not preclude payment on a
capitation basis. Thus, an entity that meets this definition is subject
to the rules and requirements that apply to a primary care case
manager, whether the entity is paid on a fee-for-service basis, a risk
capitation basis, or some other basis. To the extent that a primary
care case manager is paid on a capitation basis for providing less than
a comprehensive array of services, it would also meet the definition of
a PHP and be subject to the requirements in Sec. 438.8. In this case,
the primary care case manager would be both a PHP and a PCCM. When the
MCO rules that apply to PHPs are stricter than the rules that apply to
all primary care case managers, a primary care case manager paid on a
capitation basis would have to follow the MCO rules by virtue of its
status as a PHP.
Comment: One commenter noted that the proposed definition of
primary care refers to service customarily furnished by various types
of physicians but does not mention nurse midwives, nurse practitioners,
and physician assistants. The commenter asked us to define primary care
to describe the functions of a primary care provider to allow inclusion
of those classes of providers who are permitted under State law to
practice as primary care providers. A second commenter requested that
nurse practitioners and certified nurse midwives be expressly
referenced in the definition of primary care.
A few commenters asked us to specifically include Federally
qualified health centers (FQHCs) and rural health centers (RHCs) within
the definition of primary care case manager, which the commenters
appear to believe would be necessary in order for FQHCs and RHCs to
have the option of serving as a primary care case manager (and as a
result be eligible for automatic reenrollment). One commenter noted
that the rule failed to identify obstetricians and gynecologists (Ob-
[[Page 6232]]
Gyns) as primary care case managers and recommended their inclusion in
that definition of primary care case manager.
One commenter urged that the definitions of primary care and
primary care case manager include licensure or certification imposed by
tribal governments in the case of individuals, groups, or entities that
deliver health care services on a reservation. This commenter believes
that this would be needed in order for some Tribes to implement tribal
MCOs or PCCMs. A second commenter also noted that the definition of
primary care case manager assumed State licensure and noted that the
concept of tribal sovereignty generally precludes State licensing and
certification of tribally operated programs. In order to implement an
Indian Health Services (IHS) or tribally operated MCE, this commenter
asked that language be added exempting tribes and the IHS from State
license or certification requirements.
Finally, one commenter requested that the definitions of primary
care and primary care case manager be more clear in order to
distinguish between a PCCM system and a capitated program. The
commenter urged that the language make clear that States have the
option of offering a PCCM option as a form of noncapitated managed
care. This commenter urged HCFA to require the PCCM option as an
element of mandatory managed care at least for people with severe
disabilities.
Response: Our definitions of primary care and primary care case
manager mirror the statutory language in section 1905(t) of the Act. We
believe that the Congress intended to limit the kinds of health care
and laboratory services considered to be primary care to those
``customarily provided'' by the providers listed in the statute (and in
the September 29, 1998 proposed rule). Contrary to the apparent belief
of the first commenter discussed above, we believe this approach does
focus on the ``functions'' performed, not on who is performing these
functions. If the definition had been intended to limit primary care to
services actually furnished by the physicians referenced, it would have
said services ``provided by'' these providers, not services that are
``customarily provided by'' these providers. We thus believe the intent
of the definition of primary care is to specify the health care and
laboratory services considered to be ``primary care.'' This means that
under the proposed rule, the types of practitioners mentioned by the
commenters could provide ``primary care services'' if they are
``provided in accordance with State licensure and certification laws
and regulations.''
The definition of primary care case manager specifies those
practitioners who may provide primary care case management services
(for example, locating, coordinating and monitoring health care), which
may also include the provision of ``primary care'' if permitted under
State law. Nurse practitioners, certified nurse midwives, and physician
assistants are included in that definition at State option. Ob-Gyns are
already included in the term ``physicians'' as individuals who the
statute specifies may be primary care case managers, and a separate
mention is not necessary (particularly since Ob-Gyns are specifically
mentioned in the definition of primary care. In addition, the
definition of primary care case manager allows for ``an entity
employing or having other arrangements with physicians to . . .'' serve
as a primary care case manager. This would include both RHC and FQHCs,
which thus similarly do not need to be mentioned by name. This policy
is consistent with what we have allowed under the section 1915(b) of
the Act waiver authority.
From the comments received, it is clear that there was confusion
between the definition for ``primary care case manager'' and that for
``provider.'' There is also confusion over the term PCCM, which has
been used both to identify a managed care system established by the
State and type of provider who participates in that system. We are
using PCCM to mean ``primary care case manager''--a specific term used
to describe those providers who qualify to provide primary care case
management services. Conversely, the term ``provider'' is a general
term we use in this rule to identify health care professionals who meet
the definition; this includes but is not limited to primary care case
managers.
The definition of ``provider'' as published in our September 29,
1998 proposed rule, mirrors the definition of provider published in the
June 29, 2000 M+C regulation. However, to further clarify the
definition and to be consistent with the definition of ``physician''
used in section 1861(r)(1) of the Act, we are revising the definition
of ``provider'' (which we are moving to Sec. 400.203 in this final
rule) to be ``any individual or entity that is engaged in the delivery
of health care services in a State and is legally authorized by the
State to engage in that activity in the State.'' We have substituted
the words ``licensed or certified'' with ``legally authorized.'' The
revised definition allows States, at their option, to include licensure
or certification requirements imposed by Tribal governments. It also
provides States the flexibility to determine what State requirements
any provider must meet (for example, licensure and certification
requirements) in order to provide services under managed care
arrangements.
In response to the comments about the provision of primary care by
providers certified by Tribes, we believe that a change to the
definition of primary care incorporating the above language used in the
definition of provider would permit states to allow Tribal-certified
providers to furnish primary care as primary care case managers.
Accordingly, in response to these comments, in the definition of
``primary care,'' we are changing ``in accordance with State licensure
and certification laws and regulations'' to ``to the extent the
provision of these services is legally authorized in the State in which
they are provided.'' As in the case of our definition of ``provider,''
we believe that this change is consistent with the Congress' intent
that States have the discretion to regulate and authorize these
services, while permitting the State flexibility in the approach it
uses to do so. We disagree with the commenters that the definition of
``primary care case manager'' necessarily assumes certification by the
State and therefore believe that no changes to this definition are
necessary in order for States to permit Tribe-certified providers to
serve as primary care case managers.
The primary care and primary care case management definitions do
not address the type of payment provided for these services. As stated
previously, the definitions related to primary care case manager
services generally mirror section 1905(t) of the Act, which does not
address payment for these services. These services are usually
reimbursed on a fee-for-service (FFS) basis. However, some States do
contract with providers or entities on a capitated basis for primary
care services. Our definition allows for this practice to continue.
States now have more flexibility to offer Medicaid beneficiaries
access to primary care case management services; section 1915(b) of the
Act and section 1115 of the Act waiver authority are no longer the only
options for States. Section 4702 of the BBA not only provides the
definition of primary care case management services in section 1905(t)
of the Act (along with definitions of ``primary care case manager,''
``primary care case management contract'' and ``primary care'') and
sets forth the contracting
[[Page 6233]]
requirements for providing these services, it also allows States to add
primary care case management services as an optional State plan
service. Moreover, section 4701 of the BBA allows States to enroll
specified beneficiaries into a PCCM program under a mandatory managed
care program without the need to obtain a waiver authority. The BBA
does not, however, require States to have PCCM as an option when
implementing mandatory managed care programs. As specified in
Sec. 438.52 of the September 29, 1998 proposed rule, the final rule
continues to require States to provide a choice of at least two MCOs,
PHPs, or PCCMs to beneficiaries required to enroll in a managed care
program; but States can choose whether to offer a PCCM program or
simply offer a choice of two or more MCOs.
Comment: One commenter believes the definition of ``comprehensive
risk contract'' (now in Sec. 438.2) should include language that makes
explicit HCFA's longstanding interpretation that contracts covering
specialty care only, such as behavior health contracts, are not
comprehensive risk contracts. The commenter suggested that we include
this clarification in the definition of comprehensive risk contract. In
addition, the commenter suggested that MCO and MCE be defined in
Sec. 430.5 because the terms are used several times throughout the
Medicaid regulations set forth in subchapter C before they are fully
defined in Sec. 438.2.
Response: We do not believe it is necessary to include language
expressly reflecting our longstanding position that the provision of
only a limited package of inpatient services related to behavioral
health problems (or other similarly narrow area) does not constitute
the coverage of ``inpatient services'' as used in the introductory
clause in section 1903(m)(2)(A) of the Act, and in the definition of
``comprehensive risk contract'' that implements this statutory
language. Under this interpretation, the reference to ``inpatient''
services is to coverage of the full range of these services, not a
narrow subset. There does not appear to be any confusion regarding this
interpretation, and we do not believe that any change in regulations
text is justified.
We agree with the commenter that the terms MCO and MCE are used in
part 430 before they are defined in Sec. 438.2. Therefore, we are
moving all of the relevant managed care definitions from Sec. 430.5 to
Sec. 438.2, which will place all managed care definitions in one
section. This will also eliminate duplicate definitions (such as PHP)
in both sections.
Comment: One commenter believes that ``partial'' risk arrangements
(for example, withhold or bonus arrangements that involve risk without
traditional capitation) are not addressed in the definitions of nonrisk
contract, PHP, and risk contract. This commenter also found that these
arrangements are omitted in the reference in the parenthetical in
proposed Sec. 438.50(a) to ``whether fee-for-service or capitation''
payment will be used. The commenter recommended that to allow for
States to adopt partial risk-sharing arrangements, the regulations
should specify the regulatory requirements that apply if the State
chooses to enter into partial risk arrangements.
Response: To the extent a partial risk arrangement puts an entity
at ``financial risk for changes in utilization,'' it would not qualify
as a ``nonrisk contract'' under our definition. It would, however, fall
within the definition of ``risk contract'' since the entity would
``assume risk for the costs of services'' and could incur losses if the
costs exceed payment. In other words, when funds are put at risk, the
contract is a risk contract that would be subject to MCO requirements
if it were comprehensive. We agree with the commenter, however, that a
partial risk contract that is less than comprehensive and does not
involve prepaid capitation, arguably would not technically fall within
the existing definition of PHP. This could create an unintended
loophole. We therefore are revising the definition of PHP to include
these payment arrangements by adding the phrase ``or on other payment
arrangements that do not employ State plan payment rates.'' This
language would continue to exempt entities paid on a fee-for-service
basis based on State plan payment rates from the PHP (and thus MCO)
requirements, even if they were paid a ``case management fee'' as a
primary care case manager. In this latter situation, there is no
financial incentive to deny services.
We also agree with the commenter that the parenthetical in proposed
Sec. 438.50(a) (which has been moved to Sec. 438.50(b) as part of a
reorganization of that section) excludes partial risk payment
arrangements that do not involve capitation. We therefore are adding a
``for example'' at the beginning of the parenthetical to indicate that
these are just examples of what might be specified.
Comment: One commenter suggested that we add the sentence, ``An
entity must be found to meet the definition of an MCO to enter into
Medicaid's comprehensive risk contract'' under the definition of MCO.
Other commenters were concerned that the requirement that an MCO is
``organized primarily for the purposes of providing health care
services'' could be read to preclude from participation a legal entity
that is not necessarily organized primarily to provide health care,
such as a county government.
Another commenter noted that although it appears clear from the
discussion of the purpose of the definitions in this section and the
provisions of Sec. 438.8 that the definition of an MCO is not intended
to include PHPs, it would be clearer if this was explicitly stated. The
commenter suggested that we include in our definition of an MCO, a
statement that specifies PHPs are not considered MCOs. The commenter
also suggested that we add language to the definition of PHP to address
the potential for risk arrangements with PHPs other than capitation by
adding the phrase ``or other risk arrangements'' after the words
``prepaid capitation fees'' because some waivers do not make capitation
payments. Another commenter requested that we clarify if MCE includes
PCCM programs.
One commenter thought that we interchangeably used the terms MCO
and MCE, and used MCE when PCCM was intended, and therefore suggested
that we further define the term MCE. The commenter recommended changing
MCE to PCCM when appropriate and also revising text to indicate the
conditions under which regulations apply to both MCOs and MCEs.
Response: We believe that it would be inaccurate to add the
sentence ``an entity must be found to meet the definition of an MCO to
enter into Medicaid's comprehensive risk contract'' because certain
statutory exemptions allow for other entities to enter into these
contracts. We also believe that Sec. 438.6(a) makes clear the entities
with which a State agency may enter into a comprehensive risk contract,
and makes clear that this includes an MCO. We agree that a county is
not organized ``primarily'' for the purpose of providing health care
services and that counties should be permitted to contract as MCOs if
all of the requirements in sections 1903(m) and 1932 of the Act are
otherwise satisfied. In our proposed definition of MCO, we retained the
requirement that the entity be organized ``primarily for the purpose''
of providing health care services from our pre-BBA definition of HMO.
Since this requirement is not included in the statutory definition of
MCO in section 1903(m)(1)(A) of the Act
[[Page 6234]]
and could potentially provide an impediment to the availability of
county-sponsored managed care arrangements, we are deleting this
requirement in response to this comment.
While we do not agree with the commenter's suggestion that it be
specified in the definition of MCO that PHPs are excluded, we agree
that it would not be clear from the current definition of MCO that an
entity that otherwise meets the definition would be excluded if it does
not have a comprehensive risk contract. While the definition of MCE
refers to an MCO that has a comprehensive risk contract under section
1903(m) of the Act, the MCO definition itself does not include this
restriction. Since the regulations use ``MCO requirements'' as a
shorthand for requirements that apply to comprehensive risk
contractors, we agree that it would be a good idea to include this
concept in the definition of MCO. Because an entity is required to meet
the definition of MCO as a condition for qualifying for a comprehensive
risk contract, we are revising the definition of MCO to provide that it
is an entity ``that has, or is seeking to qualify for, a comprehensive
risk contract under this part.'' With this qualification, it should be
clear that a PHP would not be included since a PHP is by definition an
entity that ``does not have a comprehensive risk contract.'' With
respect to the commenter's suggestion that ``or other risk
arrangements'' be added to the definition of PHP after ``prepaid
capitation basis,'' we believe that the commenter's concern has been
addressed by the revision we have made in response to the previous
comment. The alternative arrangements to capitation suggested by the
commenter would be included in the phrase ``other payment arrangements
that do not employ State plan payment rates.'' The reason we did not
adopt the commenter's specific suggestion of ``other risk
arrangements'' is that this would imply that the reference to ``prepaid
capitation basis'' was exclusively a risk arrangement, when in fact
there have been nonrisk PHPs. (In these cases, capitation payments have
been subject to a cost-reconciliation process.) Our alternative
approach continues to accommodate nonrisk contracts as PHPs.
With respect to comments on the use of the terms MCO, MCE and PCCM,
we do not believe that the terms are used interchangeably in the
September 29, 1998 proposed rule, but we understand that the
application of these terms to various provisions of the regulation has
caused confusion. There is a significant difference between an MCO and
MCE. An MCE is either an MCO with a risk comprehensive contract or a
primary care case manager. The terms MCO and MCE are used in the
statute and in the rule to identify when different requirements apply.
However, in the interest of clarity, we are changing the
regulations text to indicate when regulations apply to MCOs, PCCMs, or
both. We are also deleting the definition of MCE since the term will no
longer be necessary as a result of this change.
3. Contract Requirements (Proposed Sec. 438.6)
Proposed Sec. 438.6 set forth rules governing contracts with MCOs,
PHPs, or PCCMs. Paragraph (a) of proposed Sec. 438.6 set forth the
entities with which a State may enter into a comprehensive risk
contract. Paragraph (b) provided that the actuarial basis for
capitation payments must be specified in the contract and that the
capitation payments could not exceed the upper payment limit in
Sec. 447.361. Paragraph (c) contained requirements regarding
enrollment, that enrollments be accepted in the order of application up
to capacity limits, that enrollment be voluntary unless specified
exceptions apply, and that beneficiaries not be discriminated against
based on health status. Paragraph (d) provided that MCEs can cover
services for enrollees not covered for nonenrolled individuals.
Paragraph (e) required that contracts must meet the requirements in
Sec. 438.6. Paragraph (f) required that risk contracts provide the
State and HHS access to financial records of MCEs. Paragraph (g)
required compliance with physician incentive plan requirements in
Secs. 422.208 and 422.210. Paragraph (h) required compliance with
advance directive requirements. Paragraph (i) provided that with
certain exceptions, HIOs are subject to MCO requirements. Paragraph (j)
set forth the new rules in section 1905(t) (3) of the Act that apply to
contracts with primary care case managers.
Computation of Capitation Payments (Proposed Secs. 438.6(b), 438.64)
The September 29, 1998 proposed rule proposed that two provisions
addressing capitation rates be moved from part 434 to the new part 438
but proposed to retain the existing requirements governing capitation
payments, which are incorporated in a new proposed Secs. 438.6(b) and
438.64. Proposed Sec. 438.6(b) required that contracts specify the
actuarial basis for capitation and that ``the capitation payments and
any other payments provided for in the contract do not exceed the
payment limits set forth in Sec. 447.361.'' Proposed Sec. 438.64
reflected the requirement in section 1903(m)(2)(A)(iii) of the Act that
rates be computed on an ``actuarially sound basis.''
Comment: A large number of comments from States, provider
associations, and advocates objected to the requirement in proposed
Sec. 438.6(b)(2) that capitation payments and other payments to the
provider cannot exceed the upper payment limit (UPL) set forth at
Sec. 447.361. The commenters stated that many States no longer have a
fee-for-service base to use in computing the UPL and that it was no
longer a valid measure of costs, since it did not recognize or include:
(1) additional costs resulting from new regulatory requirements in the
September 29, 1998 proposed rule; (2) the costs of required expanded or
mandated benefits; (3) overall administrative costs of MCOs; (4) MCO
start-up costs; or the decline in MCO profits (in commercial, Medicare,
and Medicaid plans). Several commenters indicated that this requirement
potentially contradicted the requirement in Sec. 438.64 that rates be
computed on an actuarially sound basis since rates that are truly
actuarially sound could in some cases exceed the UPL. Commenters
recommended that HCFA revise or eliminate the UPL requirement and
replace it with new rules on rate setting.
Two commenters stated that there were no good arguments for
changing the current UPL provisions.
Response: We agree with the commenters that problems are presented
by our decision in the September 29, 1998 proposed rule to retain the
current UPL requirement in proposed Sec. 438.6(b)(2). We acknowledge
that many States no longer have fee-for-service base year data recent
enough to use as a reasonable comparison to the costs of a current
capitated managed care system. We therefore are accepting the
recommendations of the commenters and are in this final rule deleting
Sec. 447.361 and revising Sec. 438.6 by creating a new Sec. 438.6(c),
Payments under risk contracts, which (1) does not include a UPL; (2)
requires actuarial certification of capitation rates; (3) specifies
data elements that must be included in the methodology used to set
capitation rates; (4) requires States to consider the costs for
individuals with chronic illness, disability, ongoing health care needs
or catastrophic claims in developing rates; (5) requires States to
provide explanations of risk sharing
[[Page 6235]]
or incentive methodologies; and (6) imposes special rules, including a
limitation on the amount that can be paid under FFP in some of these
arrangements. While these changes are being included in this final rule
in response to comments on the September 29, 1998 proposed rule,
because they involve a new approach to regulating capitation payments,
we are providing for a 60-day comment period limited to our decision to
replace the existing UPL with new Sec. 438.6(c).
In making these changes, we are moving from a review that compares
capitation rates in risk contracts to the historical fee-for-service
cost of the services under contract for an actuarially equivalent
nonenrolled population to a review of the utilization and cost
assumptions and methodology used by the State to set the actual
capitation rates. We believe that this change will result in a more
appropriate review of capitation rates by examining how the rates have
been established rather than how they compare to an increasingly
difficult to establish fee-for-service equivalent.
This change does not affect the rules governing UPLs for other
types of providers or services including the currently applicable
provisions in Sec. 447.272, Sec. 447.304, Sec. 447.321 or those in a
proposed rule on payments to hospitals, nursing facilities,
intermediate care facilities for the mentally retarded, and clinics
published on October 10, 2000 (65 FR 60151). Nor will this change
affect the UPL for nonrisk contracts in Sec. 447.362, which remains in
effect.
While comments are solicited on all aspects of this change, we are
specifically requesting comments and suggestions on the provisions in
Sec. 438.6(c) and Sec. 438.814 that impose special rules on contracts
with incentive arrangements or risk-sharing mechanisms. As set forth
above, FFP is only available for risk contracts to the extent that
payments are determined on an actuarially sound basis. ``Under these
provisions, we have determined that where total payments exceed 105
percent of the capitation payments paid under the contract, these
payments are no longer actuarially sound. Thus, no FFP would be
available for payments resulting from risk corridors or incentive
arrangements for amounts that exceed 105 percent of the capitation
payments made under the contract. If the risk corridor or incentive
arrangement does not apply to all enrollees or services under the
contract, the 105 percent limit is based only on that portion of total
capitation payments for the enrollees or services covered by the
arrangement.'' States could make payments under these arrangements with
their own funds but would be precluded from claiming FFP for these
payments.
This limitation protects the Federal government against potentially
unlimited exposure under risk corridor or bonus arrangements. This is
particularly important since the ``cost-effectiveness'' requirement in
section 1915(b) of the Act and the ``budget neutrality'' standard
imposed under section 1115(a) of the Act demonstrations generally do
not contain an outright limit on the Federal share of expenditures
under the contract. And, neither of these limits apply to voluntary
managed care contracts under section 1915(a) of the Act or contracts
for mandatory enrollment under section 1932(a)(1)(A) of the Act using
State plan authority.
Without any upper limit on the amount that can be paid in incentive
arrangements or risk-sharing mechanisms, the potential exists for
inefficiency or inappropriate actions by the contractor to maximize
funding, resulting in rates that bear no relationship to those
certified by actuaries and which thus are no longer ``actuarially
sound.'' We have provided for the limitations in Secs. 438.6(c)(5)(ii)
and 438.814 as a workable alternative to the current UPL, which meets
the following criteria: (1) it provides a clear, consistent rule that
can be applied to all risk contracts, regardless of the authority under
which the contract operates (waiver or otherwise); (2) it should not
discourage the use of any of these arrangements; (3) it explicitly
conditions Federal matching funds on the imposition of these limits
under any of these arrangements to prevent any potential abuses; and
(4) it can be easily administered.
Although not part of this final rule, we also are revising the
policies governing cost effectiveness for section 1915(b) of the Act
waiver programs. The current regulations at Sec. 431.55, which require
waiver programs to be cost-effective and efficient and require States
to document this cost-effectiveness of their waiver programs, will
remain unchanged. However, HCFA is modifying the process by which
States document this cost-effectiveness through re-issuance of State
Medicaid Manual provisions and revision of the section 1915(b) of the
Act Medicaid waiver applications. The revised waiver cost-effectiveness
test will apply to all section 1915(b) of the Act waivers, regardless
of the payment system (for example, FFS, capitation) in the State's
waiver program.
Comment: Several commenters stated that the current UPL limit does
not recognize the cost of providing care to particularly vulnerable
populations and that States should be required to use risk-adjusted
capitation rates for homeless and other populations with special health
care needs. Some of these commenters added that HCFA should encourage
States to reimburse MCOs their actual costs for these populations until
sufficient data is developed to apply the risk adjustors.
Response: HCFA encourages States to develop capitation rates that
are as accurate as possible in predicting the costs of any population
enrolled in managed care. To this end, most States already use rates
that are risk-adjusted for demographic factors such as age, gender,
locality, and adjusted for category of eligibility, all of which will
now be required under Sec. 438.6(c)(3)(iii). Only a few States use
diagnosis-based risk adjustors, which under Sec. 438.6(c)(3)(iii)(E) of
this final rule would be optional. We are not mandating the use of risk
adjustment as suggested by the commenter because risk adjustors (both
health status and demographic risk adjustors) can only be used when the
population falling into any one category is both readily identifiable
and large enough to be a statistically valid-sized group. When States
have the capability to identify and separate the costs of any
individuals with chronic illness, disability, or extensive ongoing
health care needs, we would encourage the State to take this into
account in its rate-setting methodology. Because the ability to apply
these methodologies will vary from State to State, we are not willing
to impose this requirement.
However, we are requiring States to utilize risk adjustment, risk
sharing, or other mechanisms or assumptions to account for the cost of
services for individuals with chronic illness, disability, ongoing
health care needs, or catastrophic claims when setting the capitation
rate. Other identifiable factors, which may have impact on the expected
health care costs of an individual, may also be used in setting more
accurate capitation rates.
Further, we believe that moving from the UPL requirement to an
enhanced documentation of the assumptions and methodology used to
develop capitation rates will result in rates that are determined on a
more reasonable and predictable basis specific to the population
enrolled than the UPL requirement's comparison to fee-for-service
costs.
Current regulations provide authority for States to contract with
MCOs on a
[[Page 6236]]
nonrisk basis. This type of contract reduces the contractor's risk for
changes in enrollee utilization of services under the contract. This
provision permits payment to the contractor based on the contractor's
costs, subject to the nonrisk upper payment limit in Sec. 447.362
(which is based on FFS costs of the services actually provided, plus an
adjustment for administrative costs). However, currently there are very
few States with nonrisk contacts. Given our new model of rate review,
and the requirement in Sec. 438.6(c)(3)(iv) that ``individuals with
chronic illness, disability, ongoing health care needs or catastrophic
claims'' be taken into account, we do not believe it is necessary or
appropriate to encourage the greater use of nonrisk contracts as
suggested by the commenters.
Comment: Several commenters contended that States' rate-setting
processes can be inconsistent, arbitrary, and secretive, and
recommended that HCFA require a public process in which States would
have to disclose the actuarial information and assumptions in the rate
setting process. One commenter wanted HCFA assurance that it would
continue to review capitation rates in contracts.
Response: We do not believe that requiring a public process in
State rate setting would be conducive to more effective rate setting by
States. There are currently 19 States that use some form of competitive
bidding and 35 States that use a negotiation process to set rates
(including some that use a combination of these methods). Imposing a
public participation process outside of the requirements for
competitive procurement, or in the midst of negotiations between the
State and potential contractors, would not be helpful to these
processes. We believe that these methods for establishing payment rates
differ significantly from FFS under which States establish fee
schedules for Medicaid provider payments, such as with institutional
payments when a public process is required. Further, we believe that
the new rate-setting process set forth at Sec. 438.6(c) will help to
make all parties aware of the elements required and assumptions that
must be taken into account in establishing capitation rates.
Comment: Several commenters stated that HCFA should define
``actuarially sound.''
Response: In discussions with actuaries, we have found that there
is no universally accepted definition of the term actuarially sound. In
the past, we have intended this provision to mean a reflection of past
costs and prediction of the future costs of specific services for a
specific population based upon concepts of predictability and
reasonableness. In Sec. 438.6(c)(1)(i), we have defined the term
actuarially sound capitation rates. We have used this term in order to
reflect that the emphasis in our review of rates is on the State's
assumptions and process used in determining capitation rates, rather
than payment amounts. These are defined as rates that are certified by
an actuary, developed in accordance with generally accepted actuarial
principles and practices, and appropriate for the population and
services covered under the contract. The American Academy of Actuaries
defines generally accepted actuarial principles and practices as:
* * * those derived from the professional actuarial literature
from their common use by actuaries. Actuarial principles and
practices are generally accepted when they are consistent with
practices described in the actuarial standards of practice adopted
by the actuarial Standards Board and to the degrees that they are
established by precedent or common usage. (From Section 2, Second
Exposure Draft, Proposed Actuarial Standard of Practice, Utilization
of Generally Accepted Actuarial Principle and Practices, American
Academy of Actuaries.)
The required certification by the State's actuary should include
the actuary's determination of the range of soundness for the proposed
rates (or specific rate cells). This would be helpful in resolving any
disputes that could arise over the soundness of the rates and would
supplement the required documentation of the elements and process used
to set the capitation rates.
We believe that our definition of actuarially sound capitation
rates and new rate setting review requirements provide HCFA's
interpretation of actuarial soundness as set forth in section
1903(m)(2)(A)(iii) of the Act.
Comment: One commenter wanted HCFA to apply the actuarial soundness
requirement to MCO payments to providers.
Response: We do not have the authority to impose these requirements
on rates paid by MCOs to their subcontractors. The only instances in
which the statute provides authority to regulate payments by MCOs to
subcontractors are the physician incentive plan requirements imposed
under section 1903(m)(2)(A)(x) of the Act, and the requirement in
section 1903(m)(2)(A)(ix) of the Act that payments by MCOs to FQHCs and
RHCs be no less than rates paid to similar subcontractors providing a
similar range of services.
Comment: Several commenters stated that HCFA should develop an
administrative process for the resolution of rate issues between MCOs
and States when potential contractors do not believe that their payment
rates are sufficient .
Response: We do not believe it would be appropriate for us to
mandate a specific administrative review process for MCO disputes with
States over payment rates. It is a State's decision whether to utilize
a managed care delivery system in its Medicaid program, and part of
that decision may be based upon the rates it believes it can afford to
offer prospective MCOs or PHPs. If the rates are not high enough to
obtain a sufficient number of contractors, the State must make a
decision whether to raise its rates or discontinue its managed care
program. HCFA has no authority to require a state to continue or begin
a managed care program. We note, however, that under the new procedures
in Sec. 438.6(c), HCFA will be reviewing rates for actuarial soundness,
so this review provides certain protections to MCOs as to the adequacy
of payment rates and should at least in part address the commenters'
concerns.
Comment: HCFA should offer technical assistance to States in
setting capitation rates.
Response: Section 1903(k) of the Act specifically authorizes us to
provide this assistance at no cost to the State, and we have done so in
the past. Currently, however, most States have elected to contract with
actuarial firms for this assistance.
Comment: One commenter was concerned that language in the September
29, 1998 proposed rule implied that HCFA would no longer review
capitation rates and wanted HCFA assurance that it would continue to
review capitation rates in contracts.
Response: HCFA will continue to review rates established between
states and MCOs or PHPs. In fact, new Sec. 438.6(c) applies these rate-
setting requirements to all risk contracts, and we have created a new
Sec. 438.6(a) that provides that the HCFA Regional Office must review
and approve all MCO and PHP contracts.
Prohibition of Enrollment Discrimination (Proposed Sec. 438.6(c))
Proposed Sec. 438.6(c) (recodified as Sec. 438.6(d) in this final
rule) established rules for enrollment and set forth prohibitions
against discrimination in the enrollment process. Specifically,
proposed Sec. 438.6(c) required that enrollees be accepted in the order
in which they applied up to specified capacity limits, provided that
with specified exceptions enrollment must be
[[Page 6237]]
voluntary, and prohibited discrimination based on health status.
Comment: Several commenters noted that the September 29, 1998
proposed rule appropriately prohibits health plans from ``cherry
picking,'' which is the concept of discriminating against persons who
may have high health care needs. However, they noted that the
requirement only applies during open enrollment. The commenters believe
that the requirement should not apply only to ``official'' open
enrollment periods, since enrollment can occur at any time during the
year as individuals become Medicaid-eligible. The commenters suggested
that we revise the September 29, 1998 proposed rule to include the
following: ``MCE contracts must provide that MCEs will not discriminate
on the basis of race, color, or national origin. In addition, the MCE
must not use any policy or practice that has the effect of
discriminating on the basis of race, color, or national origin.'' This
is required under Title VI of the Civil Rights Act and implementing
regulations.
Response: We agree with the commenter that there is no reason for
limiting the requirement that the MCE accept individuals for enrollment
in the order in which they apply only to open enrollment periods.
Therefore, we are revising Sec. 438.6(d)(1) to specify that ``The MCO,
PHP, or PCCM accepts individuals eligible for enrollment in the order
in which they apply without restriction (unless authorized by the
Regional Administrator) up to the limits set under contract.''
We also agree that MCOs, PHPs, or PCCMs should not discriminate
based on health status, race, color, or national origin and that MCO
contracts should contain assurances of compliance with Title VI of the
Civil Rights Act and other applicable civil rights and other Federal
and State statutes. Thus, we are revising Sec. 438.6(d)(4) to include
this provision.
Comment: A commenter noted that the September 29, 1998 proposed
rule provides that the contract must prohibit MCEs from discriminating
in its enrollment process based on health status or need for health
care. The commenter further noted that its State controls the
enrollment process and requires the MCO to accept individuals who
choose or are assigned the MCO. Thus, the MCO is incapable of
discrimination. The commenter suggested that we require that States
comply with this requirement without necessarily requiring language in
MCO contracts.
Response: Section 438.6(d) implements sections 1903(m)(2)(A)(v) and
1905(t)(3)(D) of the Act, which prohibit discrimination on the basis of
health status by an MCO or PCCM, not the State. We believe that this is
because the Congress presumed that the State would engage in no such
discrimination, since it would have no incentive to do so. Indeed, in
the case of an MCO, PHP, or PCCM paid on a risk basis, it would be in
the State's financial interests for beneficiaries with higher health
care costs to be enrolled. To the extent a State does not permit an MCO
to make enrollment decisions, this would ensure compliance with section
1903(m)(2)(A)(v) of the Act and Sec. 438.6(d). We believe that
requiring this provision in the contracts is the best approach to
ensure that all MCOs, PHPs, and PCCMs consistently comply with this
requirement.
Comment: One commenter contended that requiring MCOs, PHPs, and
PCCMs to accept individuals eligible for enrollment in the order in
which they apply without restriction contradicts the requirement in
Sec. 438.50(f)(2) that MCOs, PHPs, and PCCMs seek to preserve the
established relationship that an individual has with his or her primary
care provider.
Response: We do not believe that the enrollment requirement under
Sec. 438.6(d)(1) contradicts the continuity of patient and physician
relationships, since it affects only the effective date of enrollments
and not the extent to which provider relationships can be maintained
once enrollment is effective. We also note that the requirement in
Sec. 438.6(d)(1) refers to individuals who ``apply'' for enrollment,
while Sec. 438.50(f)(2) applies in the context of ``default''
enrollments under a State plan mandatory enrollment program.
Additional Services Under MCO Contracts (Proposed Sec. 438.6(d))
Proposed Sec. 438.6(d) (recodified in this final rule at
Sec. 438.6(e)) provided that an MCE is permitted to cover services for
enrollees that are not covered under the State plan for beneficiaries
not enrolled.
Comment: One commenter noted that the discussion of the purpose of
proposed Sec. 438.6(d) in the preamble identifies the provision as
applicable to MCO contracts, but the text of the September 29, 1998
proposed rule references MCE and not MCO. The commenter suggested that
we change the reference from MCE to MCO. The commenter believes that
this change would also have the effect of applying this provision to
PHPs, which the commenter thought was appropriate.
Response: The commenter was correct that the text of the preamble
to the September 29, 1998 proposed rule identifies this provision as
applicable to MCOs and that the text of the section references MCEs.
Typically, only an MCO (which by definition is paid on a risk basis) or
a primary care case manager paid on a risk basis (which would make it a
PHP) would offer additional services not covered under the State plan
for nonenrollees. This is because these entities would typically use
``savings'' (a portion of the risk payment not needed to cover State
plan services) to cover the additional services in question. This is
why the preamble to the September 29, 1998 proposed rule spoke only of
MCOs (which, as the commenter pointed out, would extend to PHPs as
well). However, this provision of the regulations is based on the fact
that under a voluntary enrollment situation, section 1915(a) of the Act
permits contracts with an organization ``which has agreed to provide
care and services in addition to those offered under the State plan''
only to individuals ``who elect to obtain such care and services from
such organization.'' Under section 1915(a) of the Act, States are
deemed to be in compliance with statewideness and comparability
requirements in this situation. There is nothing in section 1915(a) of
the Act that limits this result to an MCO (or to MCOs and PHPs) or even
requires the organization offering additional services to those who
choose to enroll to be paid on a risk basis. In the case of mandatory
enrollment under section 1932(a) of the Act, an exemption from
Statewideness and comparability requirements permitting additional
services for enrollees is similarly provided without regard to whether
the entity is an MCO or a primary care case manager. Finally, there is
nothing in section 1915(b) or section 1115(a) of the Act that would
limit the applicability of the waivers of Statewideness and
comparability provided for thereunder to MCOs and PHPs. For these
reasons, even though it is unlikely that a nonrisk PHP or PCCM would
offer additional services, we are clarifying the reference in what is
now Sec. 438.6(e) to apply to MCOs, PHPs, and PCCMs.
Comment: While several commenters recognized that the language in
proposed Sec. 438.6(d) exists in the current regulation, they believe
that the current regulation has been subject to varied interpretation
over the years. The commenters suggested that we clarify whether or not
these additional services are included in the base used to determine
the upper payment limit (UPL). In other words, if the MCO provides
additional services, the commenters believe we should clarify whether
or not the State is free to
[[Page 6238]]
increase the capitation rates to reflect the costs of those services,
even if the costs did not occur in FFS.
Response: Under the former UPL requirement, the costs of additional
services would not have been included in the FFS base in computing the
UPL. However, as indicated above, we are eliminating the UPL
requirement and substituting a requirement that rates be actuarially
sound, certified by an actuary to this effect, and developed in
accordance with generally accepted actuarial principles upon the
projected cost of services contained in the State plan. Section
438.6(c)(4) requires States to base their capitation rates only upon
the costs of services covered under the State plan. Thus, even in the
absence of the UPL requirement, capitation rates may not reflect the
cost of these additional services.
Comment: One commenter wanted us to clarify what additional
services could be offered under proposed Sec. 438.6(d) and whether
these services would be eligible for FFP.
Response: The additional services that can be offered may be
optional services described in section 1905 of the Act or any other
medically related services, that are not covered under the State plan.
However, as noted in the previous response, the provision of the
additional services authorized here is not to be recognized in the
capitation rate paid to an MCO or in the FFP available to the State.
Comment: One commenter disagreed with the position that these
additional services should not be subject to the statewideness and
comparability requirements. This commenter believes that waiving these
requirements could potentially lead to discrimination on the basis of
health status or disability.
Response: Additional services have been provided by HMOs and PHPs
under Sec. 434.20(d) for many years prior to the enactment of the BBA,
and we do not believe that this has led to enrollment discrimination.
Further, the prohibition on enrollment discrimination in Sec. 438.6(d)
requires that MCOs, PHPs, or PCCMs accept individuals in the order in
which they apply without restrictions, which will protect enrollees
from discrimination on the basis of health status or disability.
Compliance With Contracting Rules (Proposed Sec. 438.6(e))
Proposed Sec. 438.6(e) (recodified in this final rule at
Sec. 438.6(f)) required contracts with MCOs and primary care case
managers to comply with the requirements in Sec. 438.6.
While we received no comments on this provision, the comment
discussed above suggesting that the discrimination provision include
language requiring compliance with civil rights laws has prompted us to
include a general provision that contracts comply with all applicable
State and Federal laws in what is now Sec. 438.6(f). This provision
merely recognizes obligations that already exist as a matter of law,
and does not impose any new obligations or alter any existing ones. It
essentially is a statement that HCFA expects contractors to comply with
the law. The revised text now reads as follows:
(f) Compliance with applicable statutes and contracting rules.
All contracts under this subpart must--
(1) Comply with all applicable State and Federal laws; and
(2) Meet all the requirements of this section.
Inspection and Audit of Records (Proposed Sec. 438.6(f))
Proposed Sec. 438.6(f) (codified in this final rule at
Sec. 438.6(g)) required risk contracts to include provisions allowing
State and Federal inspection and audit of MCE and MCE subcontractors'
financial records. We received no comments on this provision.
Physician Incentive Plan (Proposed Sec. 438.6(g))
Proposed Sec. 438.6(g) (codified in this final rule at
Sec. 438.6(h)) required that contracts provide for compliance with the
rules governing physician incentive plans that apply to Medicare+Choice
organization contracts. These rules require that stop loss protection
be provided when a physician incentive plan puts a physician at
``substantial financial risk'' (defined in the June 29, 2000
Medicare+Choice regulations) for the costs of services he or she does
not provide.
Comment: One commenter supported requiring Medicaid MCOs and
nonexempt HIOs to comply with Physician Incentive Plan requirements.
Response: The requirement is maintained as set forth in the
September 29, 1998 proposed rule.
Advance Directives (Proposed Sec. 438.6(h))
Proposed Sec. 438.6(h) (recodified in this final rule at
Sec. 438.6(i)) required that MCOs comply with the advance directive
requirements in subpart I of part 489, provide oral and written
information on advance directives, and reflect changes in State law
within 90 days.
Comment: One commenter supported requiring MCOs and nonexempt HIOs
to comply with advance directive requirements. Several commenters noted
that the current advance directive requirement in Sec. 434.28 does not
include a requirement to provide adult enrollees with oral information
on advance directives. They added that this requirement was not
included in the BBA and that written information should suffice. They
suggested that we revise proposed Sec. 438.6(h)(2) to eliminate the
requirement for oral information, which would permit MCOs to respond
orally only to answer questions that arise. Another commenter
recommended deleting the entire requirement as excessive and
unwarranted, except upon request by enrollees. Another commenter noted
that MCE Member Handbooks address advance directives but not in the
detail now required and will require possible revisions and reissuance
by MCEs.
Response: The commenter is correct that Secs. 434.28 and 489.100 do
not require MCOs to provide adult enrollees with oral information on
advance directives policies. Section 434.28 notes that the requirement
in Sec. 489.100 includes provisions to inform and distribute written
information to adult individuals concerning policies on advance
directives. However, Sec. 489.102 does not specify that individuals
must be informed orally but describes the requirement to provide
written information. Therefore, we agree with the commenters that oral
information is not required, and we have revised the advanced directive
requirement now codified at Sec. 438.6(i)(2) to eliminate the
requirement to provide oral information. Because section 1903(m)(1)(A)
of the Act requires MCOs to provide information on advance directives
to enrollees, we do not have the authority to delete the entire
requirement. Since the advance directive policies did not change before
the September 29, 1998 proposed regulation, we do not believe Member
Handbooks would need revisions, unless they did not comply with
Sec. 434.28 before the September 29, 1998 proposed regulation.
Comment: Although proposed Sec. 438.6(h)(2) provided that an MCO
must include a description of applicable State law and proposed
Sec. 438.6(h)(3) specified that the information must reflect changes in
the State law as soon as possible but no later than 90 days after the
effective date of the change, several commenters believe that it was
too administratively burdensome for MCOs to comply with these
requirements and recommended that we remove them from the regulation.
Response: This provision is required by section 1903(m)(1)(A) of
the Act, which extends the advance directives requirements of section
1902(w) of the
[[Page 6239]]
Act to MCOs. As a statutory requirement, we do not have the authority
to remove this requirement from the regulations.
Nonexempt Health Insuring Organizations (Proposed Sec. 438.6(i))
Proposed Sec. 438.6(i) (recodified in this final rule at
Sec. 438.6(j)) clarifies that HIOs that began operating on or after
January 1, 1986, and are not exempted by statute, are subject to MCO
requirements and may not enter into a comprehensive risk contract if
they do not meet the definition of MCO. We received no comments on this
provision.
Primary Care Case Management Contracts (Proposed Sec. 438.6(j))
Proposed Sec. 438.6(j) (recodified in this final rule at
Sec. 438.6(k)) implemented the requirements in section 1905(t)(3) of
the Act that apply to ``primary care case management contracts.''
Specifically, proposed Sec. 438.6(j) required that these contracts (1)
provide for reasonable and adequate hours of operation, including 24-
hour availability of information, referral, and treatment for emergency
medical conditions; (2) restrict enrollment to recipients who reside
sufficiently near one of the manager's delivery sites to reach that
site within a reasonable time using available and affordable modes of
transportation; (3) provide for arrangements with, or referrals to,
sufficient numbers of physicians and other practitioners to ensure that
services under the contract can be furnished to enrollees promptly and
without compromise to quality of care; (4) prohibit discrimination in
enrollment, disenrollment, and reenrollment based on the recipient's
health status and need for health care services; and (5) provide that
enrollees have the right to terminate enrollment.
Comment: One commenter contended that the primary care case manager
contract standards in proposed Sec. 438.6(j) were minimal at best. The
commenter asked that patients have rights of access, coverage,
information, and disclosure that are as strong as those that apply to
MCOs and PHPs.
Another commenter noted the importance of the primary care case
manager contract provision to rural beneficiaries because they are more
likely to live greater distances from primary care case manager
delivery sites. This commenter asked that we define ``sufficiently''
and ``reasonable'' as used in proposed Sec. 436.8(j)(2) (``sufficiently
near . . . to reach . . . within a reasonable time'') and
``sufficient'' in proposed Sec. 436.8(j)(3) (``sufficient number of
physicians or other practitioners''). This commenter asked us to adopt
a ``lesser of 30 minutes rules'' for rural areas with a defined
exception for frontier areas approved by HCFA.
Another commenter believes that in the case of direct contracts
with primary care providers, our regulations should take into account
that these providers may have small group practices and not impose
requirements on these providers that are more appropriate for large
organizations. The commenter suggested that there should be a way to
distinguish the small group provider from the larger group provider and
that we should place fewer requirements on primary care case managers.
Specifically, this commenter cited requirements such as specific
driving or travel distance or 24-hour availability to services as not
practicable for small providers and not always important to
beneficiaries willing to travel long distances to be with a doctor they
trust. The commenter also contended that recipients who have ongoing
satisfactory relationships with personal doctors should be allowed to
maintain those relationships and that most of the requirements for MCOs
are not appropriate for medical group or individual doctors. The
commenter believes that there have not been serious problems of quality
and access with PCCM programs; and that the management component has
proven cost efficient. The commenter is concerned that managed care has
already driven out many small health care providers and that HCFA
should ensure that further regulation does not drive out more small
providers (who are essential to people with disabilities).
Response: As noted above, the contract requirements for primary
care case managers in proposed Sec. 438.6(j) largely mirror the
language set forth in section 1905(t)(3) of the Act, which was added by
section 4702 of the BBA. The BBA is clear in setting forth which
contracting requirements should be placed on PCCMs, which should be
placed on MCOs, and which apply to all MCOs and PCCMs. As we discussed
in the preamble to the September 29, 1998 proposed rule at 63 FR 52026,
PCCM contracts must include those requirements set forth in section
1905(t)(3) of the Act as well as any requirements in section 1932 of
the Act that apply to MCEs. For example, a PCCM must meet the
information requirements set forth in Sec. 438.10 that apply to it. We
also have applied access, coverage, and information requirements to
primary care case managers when applicable. When the BBA specifies that
requirements apply to MCOs, these requirements are not applicable to
primary care contracts as long as the services are reimbursed on a fee-
for-service basis based on State plan payment rates. (To the extent
that a primary care case manager meets the definition of a PHP,
however, it would also be subject, by regulation, to specified MCO
requirements.)
The requirement in proposed Sec. 438.6(j)(1) that primary care case
manager contracts ensure 24-hour availability of information, referral,
and treatment for emergency medical conditions simply reflects the
requirement in section 1905(t)(3)(A) of the Act, and therefore cannot
be revised. We note, however, that providers have flexibility as to how
they meet this requirement. For example, providers can have an employee
or an answering service or machine that immediately pages an on-call
medical professional. This requirement is essential to allowing
referrals to be made for nonemergency services, or information to be
given about accessing services, or medical problems to be handled
during nonoffice hours.
The requirement in proposed Sec. 438.6(j)(2) that beneficiaries be
able to access care within a reasonable time using affordable modes of
transportation similarly reflects statutory language in section
1905(t)(3)(B) of the Act that cannot be changed. Again, however, States
have the flexibility to determine their own standards to allow for
differences based on the needs of the beneficiaries, provider
availability, and the geographic uniqueness of the State. HCFA
anticipates that State agencies will take responsibility for ensuring
that these standards are met. One example, as noted in the preamble of
the September 29, 1998 proposed rule, is the 30-minute travel time
standard. Many States have adopted this standard and apply it to urban
areas. Other State agencies have established 10-mile to 30-mile travel
distance depending on the area. HCFA encourages States to develop their
PCCM programs so that an enrollee residing in the services areas should
not have to travel an unreasonable distance beyond what is customary
under FFS arrangements. Due to enrollee-specific needs, types of
providers needed to meet enrollee needs, availability of public
transportation, etc. HCFA is not proposing a set of standards for each
PCCM program.
We encourage States to, and States often do, make exceptions for
beneficiaries who request to travel further than the time and distance
standards set by the State. We also encourage States, to the extent
practical,
[[Page 6240]]
to allow beneficiaries who have ongoing successful relationships with
providers to maintain those relationships. However, section 1905(t)(3)
of the Act does not require this in the case of PCCM contracts.
Section 1905(t)(3) of the Act does not distinguish between small
group providers and large group providers and applies its requirements
to all primary care case manager contracts. We, therefore, do not have
the authority to exempt smaller providers from requirements in section
1905(t)(3) of the Act that are reflected in what is now Sec. 438.6(k),
which therefore will remain as written in the September 29, 1998
proposed rule.
4. Provisions That Apply to PHPs (Proposed 438.8)
Proposed Sec. 438.8 provided that specified requirements that apply
to MCOs and MCO contracts apply to PHPs and PHP contracts.
Specifically, under proposed paragraph (a), the requirements in
proposed Sec. 438.6 would apply with the exception of those that
pertain to physician incentive plans, advance directives, and HIOs.
Proposed paragraphs (b), (c), and (d) incorporated, respectively, the
information requirements in proposed Sec. 438.10, the provider
discrimination requirement in proposed Sec. 438.12, and the enrollee
protections in proposed subpart C of part 438. Proposed paragraph (e)
incorporated the quality assurance requirements in proposed subpart E
of part 438 to the extent they are applicable to services furnished by
the PHP. Proposed paragraph (f) incorporated the requirements in
proposed subpart F of part 438 except for proposed Sec. 438.424(b). And
proposed paragraph (g) incorporated the enrollment and disenrollment
requirements in paragraphs (e) through (h) of proposed Sec. 438.56 and
the conflict of interest safeguards in proposed Sec. 438.58.
Physician Incentive/Advance Directives
Comment: Several commenters are concerned that HCFA has not
included provisions relating to physician incentive plans and advance
directives in its regulations of PHPs. These commenters believe that
these two provisions are of vital importance to people with
disabilities and chronic illnesses. They believe that to the extent
that PHPs perform the same responsibilities as MCOs, they should be
subject to the standards comparable to those applied to MCOs.
Some commenters focused on physician incentive plan requirements,
agreeing with the above commenters that they should apply when PHPs
transfer substantial financial risk to physicians or physician groups.
If a State elects to carve out behavioral health, these commenters
believe that the same financial arrangement between a PHP and that
medical group should be subject to the physician incentive
requirements.
The commenters believe that physician incentive plan requirements
provide some measure of protection for beneficiaries who might
otherwise be under-treated or not treated at all because they have
expensive or on-going care needs. They noted that people with chronic
and disabling medical or psychiatric disabilities are at high risk for
receiving inadequate care because of the high costs often associated
with meeting their needs. Moreover, some of the most noted media
coverage of treatment cut backs and cut offs has occurred in behavioral
health managed care settings when financial incentives are almost
always an issue.
These commenters also suggested that enrollees of PHPs should have
the same opportunities to execute advance directives prior to the need
for this hospitalization, as should enrollees of behavioral health PHPs
that cover and provide stabilization and other types of short-term,
acute psychiatric interventions in nonhospital settings when
psychiatric advance directives might be warranted. Our September 29,
1998 proposed regulations seem to undermine this movement and would
likely make acceptance of advance directives by PHPs more difficult.
They strongly urged HCFA to make the consumer protections regarding
physician incentive plans and advance directives applicable to PHPs.
Another commenter noted that HCFA should give State agencies the
discretion to apply advance directives requirements to PHPs. Depending
on the nature of the services provided by the PHP, State agencies may
believe that it is appropriate for the PHPs to meet the advance
directive requirement.
Response: We agree with the commenter that PHPs should provide
their enrollees with an opportunity to execute an advance directive to
the extent that the PHP performs similar responsibilities as an MCO.
So, for example, it may be appropriate for those PHPs that furnish
institutional services to provide the opportunity for advance
directive. However, there are many PHPs that do not furnish
institutional services. Further there are some PHPs that furnish
nonclinical services only, such as transportation services. We believe
these types of PHPs should not be subject to the advance directive
provisions. As a result, we are changing Sec. 438.8(a) to read ``(b)
The requirement of Sec. 438.6(h) except for--(1) PHPs that contract for
nonclinical services, such as transportation services; and (2) when a
State believed it is not appropriate for PHPs to meet the advance
directive requirement, such as PHPs that only provide dental
coverage.''
With respect to physician incentive plan requirements, we also
agree that these provisions represent significant beneficiary
protections that should be extended to enrollees in PHPs that transfer
substantial financial risk to physicians or physician groups. We have
modified Sec. 438.8(a) to reflect this change.
Comment: One commenter recommended that this section be carefully
reviewed to ensure that it is clear about the requirements applicable
to PHPs. The commenter apparently believes that requirements only apply
to PHPs when the term MCO is used in the sections referenced in
paragraphs (a) through (g). In a number of these sections, the
commenter concluded from this belief that this would exempt PHPs from
provisions that the commenter believes should apply. The commenter also
believes that Sec. 438.8 does not include references to sections that
the commenter believes should be applicable. For example, Sec. 438.802
is not included, although the commenter believes that paragraphs (a)
and (c) should apply. The commenter suggested HCFA re-evaluate the use
of this mechanism to identify PHP requirements and consider adding
specific references to PHPs in each applicable section.
Response: Section 438.802, which discusses the conditions under
which FFP is available to MCOs, is based on section 1903(m) of the Act,
which does not apply to PHPs. This provision thus does not provide
authority to disallow FFP in payments to PHPs. In order to avoid any
confusion as to which provisions apply to PHPs, we have added specific
references to PHPs in each applicable section. We are also keeping
Sec. 438.8, which identifies most of those provisions that apply to
PHPs.
Inapplicability of Sanctions Provisions to PHPs
Comment: One commenter noted that the list of MCO provisions that
apply to PHPs omitted the sanctions under subpart I. It is unclear
whether this sanction authority applies to PHPs through other
regulatory provisions. If not, the commenter recommended that HCFA
amend the September 29, 1998
[[Page 6241]]
proposed rules to apply the subpart I sanction authority to PHPs.
Response: The proposed PHP regulations are based on the authority
under section 1902(a)(4) of the Act to provide for methods of
administration that are ``found by the Secretary to be necessary for .
. . proper and efficient administration.'' While we believe this
provides authority to establish requirements that apply to PHPs, we do
not believe that would provide authority to promulgate regulations that
would authorize a State to impose civil money penalties or other
sanctions that are provided for by the Congress only in the case of
MCOs. However, States may cover PHP under their own State sanction
laws, and we encourage States to do so whenever they believe it is
necessary.
PHPs Regulated as MCOs
Comment: Several commenters were pleased that we, relying on our
authority under section 1902(a)(4) of the Act, decided to require by
regulation that PHPs comply with regulations implementing many consumer
protections which the Congress applied to MCOs in the BBA. One
commenter believes that it would be a terrible irony for those with
these specialized and significant health care needs to be relegated to
having fewer rights than other Medicaid recipients. These commenters
believe that PHP enrollees should be entitled to the same protections
as MCO enrollees since PHPs perform the same responsibilities as MCOs
and have similar financial incentives through risk contracts with
States.
Several other commenters, however, believe that the BBA did not
give the statutory authority in effect to extend statutory MCO
requirements by regulation to PHPs. They were concerned that this would
be a strong deterrent for some plans and providers who may want to
participate but would see meeting the requirements of BBA as too
burdensome. The commenters noted that it may be difficult for
behavioral health PHPs and dental health PHPs to meet some of the BBA
regulatory requirements. These commenters believed that this would
create an undue administrative burden on both the State agency and
capitated behavioral health providers. The commenters requested that
HCFA carefully consider the administrative costs associated with the
application of the MCO requirements to risk-bearing providers that
provide limited Medicaid services. Particular areas of concern for PHPs
included meeting some of the licensing and certification requirements,
information requirements, and State plan and contract requirements.
Other commenters noted that the enrollment and disenrollment
requirements are simply not suitable for capitated behavioral health
providers. They believe that this requirement would result in higher
cost and less choice because of the negative impact it will have on
subcontractors' participation. One commenter suggested that PHPs should
not be covered by provisions of the September 29, 1998 proposed rule.
Response: The BBA and the legislative history of the Medicaid
managed care provisions in the BBA are silent on the question of how
PHPs are to be treated. The BBA did not change the fact that managed
care entities regulated as PHPs are only subject to regulatory
requirements that we may publish. We agree with the commenter that the
BBA does not itself provide us with authority to regulate PHPs, and we
are not relying on the BBA as authority for these regulations. Rather,
as noted above, we are relying on our authority under section
1902(a)(4) of the Act to establish requirements found by the Secretary
to be ``necessary'' for ``proper and efficient administration.'' This
has been the basis of PHP regulations from the beginning. The existing
PHP regulations in part 434 similarly extended to PHPs by regulation
requirements in section 1903(m) of the Act that otherwise only applied
to comprehensive risk contractors. For example, under Sec. 434.26(a),
both PHPs and HMOs were required to limit their Medicare and Medicaid
enrollment to 75 percent of total enrollment. It is true that under
Sec. 434.26(b)(4), this requirement could be waived for ``good cause''
in the case of PHPs. Nonetheless, there is longstanding precedent for
applying selected requirements in section 1903(m) of the Act by
regulation to PHPs. Other longstanding PHP requirements imposed by
regulation under the authority in section 1902(a)(4) of the Act include
requirements in Sec. 434.27 related to termination of enrollment (for
example, a prohibition on termination because of an adverse change in
an enrollee's health status), the choice of health professional
requirement in Sec. 434.29, requirements in Sec. 434.30 related to
emergency medical services, the requirement under Sec. 434.32 that the
contract provide for a State-approved grievance procedure, the
requirement in Sec. 434.34 that the contract provide for an internal
quality assurance system meeting specified standards, and the marketing
requirements in Sec. 434.36. We are extending similar requirements in
the State responsibilities contained in subpart B of this regulation to
PHPs.
All of these requirements were imposed through the same notice and
comment rulemaking process being used in this final rule. The only
difference between existing requirements and the requirements imposed
under this final rule is a matter of degree, not the nature of the
requirements in question. We have determined that the BBA contains
important beneficiary protections that should be extended by regulation
to most PHPs.
It should be noted that not all MCO requirements are being imposed
on PHPs and that some PHPs are not required to meet certain specified
requirements. For example, as just noted above, we have declined to
require that the provisions for sanctions in subpart I be applied to
PHPs. Also, some PHPs do not provide the complete set of inpatient
hospital services as this term is used in section 1903(m)(2)(A) of the
Act, and the exception to the State solvency standards requirement in
Sec. 438.116(c)(1) would apply.
Solvency Standards (Proposed Sec. 438.8(d))
Among the beneficiary protections in proposed subpart C that are
applied to PHPs under proposed Sec. 438.8(d) are solvency standards in
proposed Sec. 438.116. We received several comments on this
requirement.
Comment: Several commenters noted that some PHPs would have
problems meeting these solvency requirements because not all PHPs,
particularly those providing behavioral health services, would fall
under one of the exemptions in proposed Sec. 438.116(c). One of the
commenters believes it was unclear what a State would have to do to
certify a PHP for solvency. The commenter noted that States often use
different methodologies than those used for MCOs to determine the
solvency standards for PHPs and suggested that States be given more
flexibility in this area to set their own PHP solvency standards.
Another commenter noted that the solvency requirement is totally
inappropriate to PHPs, especially when they serve as subcontractors to
an MCO.
Response: Section 438.116(b) requires an MCO, and by operation of
Sec. 438.8(d), a PHP, to meet the solvency standards established by the
State for private HMOs or to be licensed or certified by the State as a
risk-bearing entity. However, Sec. 438.116(c) provides for several
possible exceptions to the State solvency standards requirement. If the
PHP does not provide the complete set of inpatient hospital services
under
[[Page 6242]]
section 1903(m)(2)(A) of the Act, the exception to the State solvency
standards requirement in Sec. 438.116(c)(1) would apply. Therefore, the
exception in Sec. 438.116(c) would normally apply to behavioral health
type PHPs. Even though a PHP may be exempt from the solvency standards
in Sec. 438.116(b), it still must meet the basic requirements in
Sec. 438.116(a), which requires each PHP to provide assurances
satisfactory to the State showing that it has adequate provisions
against the risk of insolvency to ensure that its Medicaid enrollees
will not be liable for the MCO's debts if it becomes insolvent.
5. Information Requirements (Proposed Secs. 438.10 and 438.318)
Proposed Sec. 438.10 set forth requirements that apply to States,
MCEs or enrollment brokers concerning the provision of information to
enrollees and potential enrollees. Paragraph (a) set forth the basic
rule that these entities must comply with applicable requirements.
Paragraph (b) set forth requirements relating to language and oral
interpretation services. Paragraph (c) set forth requirements regarding
the format of materials. Paragraph (d) specified to whom information
must be provided and when it must be provided. Paragraph (e) specified
the information that must be provided, including information on the
amount duration and scope of benefits, procedures for obtaining
services, names and locations of providers (and which are accepting new
patients), any restrictions on freedom of choice, the extent to which
out of network providers can be used and after-hours and emergency
coverage are provided, policies on referrals for specialty care, cost
sharing, the rights and responsibilities of enrollees, and information
on complaints, grievances and fair hearings. Paragraph (f) specifies
additional information that must be made available upon request.
Paragraph (g) required that services not provided under the contract be
identified. Paragraph (h) specified information that primary care case
managers are required to provide. And paragraph (i) set forth
additional information requirements that apply in the case of a
mandatory enrollment program under the authority in section
1932(a)(1)(A) of the Act. Proposed Sec. 438.318 (recodified at
Sec. 438.218 in this final rule) required that, as a part of the
State's ``quality strategy,'' the requirements in proposed Sec. 438.10
must be satisfied, and that contracts must specify that certain
information specified in Sec. 438.318(b)(2) be provided.
Comment: Many commenters remarked that proposed Sec. 438.318,
``Enrollee information,'' is redundant with Sec. 438.10 because both
require elements of information that a State, MCE, MCO, or PCCM must
provide to enrollees and potential enrollees. Commenters recommended
combining these sections with a clear distinction between who must
provide information. In addition, several commenters also believed that
there should be no distinction between mandatory managed care and
nonmandatory managed care with respect to information requirements and
that requirements should be applicable to both. Further, commenters
believe that the regulation exacerbated a problem that exists to some
extent in the statute since some requirements apply to MCOs, some to
MCEs, and some to States.
Response: Proposed Secs. 438.10 and 438.318 have been combined in
response to the commenters' concerns; however, the requirements remain
essentially the same, since these requirements reflect statutory
requirements set forth in section 1932(a)(5) of the Act. Specifically,
as the distinction is made in statute, the requirements distinguish
between the information that must be provided by MCOs, PHPs, and
primary care case managers. There is a further distinction in the
statute for mandatory managed care systems under section 1932 of the
Act. In specifying in the proposed regulations who had to provide
information, States were afforded the maximum flexibility possible
since some States have prohibitions regarding distribution of
information by MCOs, while some States require MCOs or enrollment
brokers to distribute information. Although the specific requirements
are now part of Sec. 438.10, in the quality requirements now codified
in subpart D, Sec. 438.218 requires that Sec. 438.10 constitute part of
the State's quality strategy.
Comment: A commenter indicated that the term ``potential enrollee''
needed to be defined because it was unclear if it meant eligible for
Medicaid or eligible for enrollment in a managed care plan.
Response: The term ``potential enrollee'' in this section refers to
an individual that has been found eligible for Medicaid and is either
required to, or permitted to, join an MCO, PHP, or PCCM. We believe
this is clarified with the revised format; therefore, we will not be
adding a definition to the regulations text.
Comment: Commenters indicated that the language and format
requirements should also apply to member newsletters, health risk
appraisal surveys, and health education and preventive care
information.
Response: Section 438.10(a)(4) (codified at Sec. 438.10(a)(2) in
the September 29, 1998 proposed rule) expressly provides that the
provisions of paragraphs (b) (language) and (c) (format) apply to all
information furnished to enrollees and potential enrollees, such as
enrollment notices, informational, and instructional materials and the
information specified within the section. HCFA believes that this
addresses the commenter's concerns, since the language and format
provisions apply to all information furnished to enrollees and
potential enrollees, and not just those specified in the Sec. 438.10
itself.
Comment: Many commenters wanted HCFA to require in the regulation
that all information and instructional materials (including charts and
upon request information) be designated public records and be available
to the public.
Response: Assuming that the material the commenters referenced is
general information and not specific to an enrollee or potential
enrollee, we believe that the information specified in Sec. 438.10 is
generally publicly available and therefore may be obtained from the
State by following State procedures if the State is in possession of
the information. If we are in possession of the information, the
information can also be obtained from us under the Freedom of
Information Act. We note that States may have procedures to follow for
obtaining information.
Comment: A commenter recommended that HCFA encourage States to
develop other mediums of notification about managed care options such
as public service announcements on radio or TV, posting information on
the Internet, and billboards.
Response: While we are not mandating how a State makes individuals
aware of their health benefit options, Sec. 438.10 requires that States
undertake the activities necessary to fully educate and inform
enrollees and potential enrollees about their health care options and
how to access benefits.
Comment: Commenters believe that all information provided to
enrollees by the State, MCE, or enrollment broker should be developed
in consultation with consumers and stakeholder groups.
Response: Although we encourage States to work with consumer and
stakeholder groups in the development of material, we do not believe it
is necessary to mandate this as part of Secs. 438.10 or 438.218.
However, many of the elements listed within Sec. 438.10 would be
considered marketing material
[[Page 6243]]
and would therefore have to be reviewed in accordance with the
marketing standards at Sec. 438.104, which require consultation with
the Medical Care Advisory Committee (MCAC) established under
Sec. 431.12 or a similar entity. The MCAC's or similar entity's
membership is required by regulation to include consumer membership.
Further, under Sec. 438.218, information standards are part of the
overall quality strategy at Sec. 438.304, which includes requirements
regarding consumer involvement.
Language Requirements (Proposed Sec. 438.10(b)
Comment: Several commenters found the requirement to make
information available in the languages that predominate throughout the
State to be problematic; however, commenters offered differing opinions
on what they wanted to see in the regulation. Many supported our
decision not to include a specific percentage threshold for a language
to be considered prevalent in a geographic area but remained concerned
that the preamble language referenced a 5 percent figure and that
HCFA's Medicaid Managed Care Marketing Guidelines include a 10 percent
figure. One commenter suggested that it was too costly for MCOs to meet
the costs of printing and distributing materials in other languages at
the 5 percent threshold. Another commenter believes that the
requirements for language and format were overly prescriptive in light
of the absence of any evidence that information is not being given to
enrollees in an understandable format. Commenters pointed out that
these additional administrative costs are funded out of the same dollar
that supports the delivery of care.
In contrast, we also heard from many commenters who understood the
need for balance between State flexibility and beneficiary protections
but believe that HCFA favored State flexibility too much. Commenters
stated that only offering guidance in this area was insufficient. They
contended that States should be afforded flexibility in developing
methods to provide linguistically and culturally competent services but
not in determining whether there is a need for these services in a
particular State or service area. Commenters requested that the
regulation itself include specifics like those discussed in the
preamble. Numerous commenters recommended using a prevalent language
threshold as a numerical value rather than a percentage. Several
commenters recommended that HCFA adopt the standard employed in
California, which calls for translation of written material when there
are 3,000 Medicaid beneficiaries in an MCO's service area who have
limited English proficiency, or 1,000 such Medicaid beneficiaries
residing in one zip code, or 1,500 such beneficiaries in two adjacent
zip codes. Some commenters noted that even if an individual was not a
member of a prevalent language group, he or she had to have access to
information.
Response: We believe that the language and format requirements are
essential elements for ensuring that enrollees and potential enrollees
receive the information necessary to make an informed choice and access
benefits. While we believe they are essential elements, we also
continues to believe that the best methodology for determining the
prevalent language spoken by a population in a geographic area may
differ from State to State and therefore we will not be modifying the
regulation to mandate a specific methodology. Further, as we are
leaving this methodology for States to determine, the 5 percent rate
provided in the preamble should be viewed only as an example and not as
a standard. The 10 percent figure in the ``Medicaid Managed Care
Marketing Guidelines,'' which also contain suggested guidelines and not
mandates, may also be acceptable if it meets the needs of the State. We
note, however, that a number of commenters believe that a numeric
threshold rather than a percentage was more appropriate because of
variations in population density. The commenters believe that
percentage thresholds would result in empirically low threshold numbers
in low density population areas and unacceptably high threshold numbers
in high density populations. We find merit in this argument, which we
believe further supports our decision to permit the State to determine
the best methodology for its situation. We do note the commenters'
suggestions as another example for making this determination. We also
note that the HHS Office of Civil Rights (OCR) has issued policy
guidance on meeting the language needs of recipients of public funds.
(See ``Policy Guidance on the Prohibition Against National Origin
Discrimination as it Affects Persons with Limited English
Proficiency,'' 65 FR 52762, August 30, 2000.) This guidance gives
further examples and guidance on meeting individuals' language needs.
Lastly, we agree with the commenter that oral interpretation services
must be available free of charge to each potential enrollee and
enrollee even if he or she is not a member of a prevalent language
group.
Comment: A commenter noted that the oral interpretation
requirements in proposed Sec. 438.10(b) apply to MCEs and interpreted
this to mean that it would not apply to PHPs. The commenter apparently
interpreted Sec. 438.8 to incorporate only requirements for which MCOs
are mentioned by name. Under this interpretation of Sec. 438.8,
requirements that apply to MCEs (such as the language requirements in
Sec. 438.10(b)) would not be incorporated for PHPs. The commenter
believes that the language requirements in Sec. 438.10(b) should apply
to PHPs.
Response: As noted above, Sec. 438.8 subjects PHPs and PHP
contracts to the requirements in paragraphs (a) through (g) that apply
to MCOs and MCO contracts. Therefore, since the requirements in
Sec. 438.10 are specified in Sec. 438.8(b), these requirements apply to
PHPs.
Comment: In addition to requiring that States develop a methodology
for determining the prevalence of beneficiaries needing language
assistance, some commenters wanted HCFA to recommend a methodology for
States to use in determining the prevalence of disabilities in the
enrollee population.
Response: While we understand that it may be useful to know the
percentage of individuals that may have a disability, we note that the
State and MCOs and PHPs must meet the needs of all potential enrollees
and enrollees and are specifically required under the Americans with
Disabilities Act to accommodate the special needs of disabled
individuals. We also note that there is a requirement in
Sec. 438.206(d) (codified in Sec. 438.306(d) in the September 29, 1998
proposed rule) that States ensure that MCOs maintain a network that is
sufficient to provide adequate access, taking into consideration the
anticipated enrollment, with ``attention to pregnant women, children,
persons with complex and serious medical conditions and persons with
special health care needs,'' as well as ``the expected utilization of
services, considering enrollee characteristics and health care needs.''
We therefore do not believe that an additional requirement is
warranted; however, the State is free to implement such a requirement.
Comment: A commenter recommended that in addition to making oral
interpretation services available, HCFA should mandate States to
require professional training of interpreters, appropriate
accreditation, and appropriate confidential
[[Page 6244]]
interpretation services. In addition, the commenter recommended the
elimination of family members as translators because of confidentiality
issues and sufficient reimbursement for translation services, as well
as interpretation services. A commenter further indicated that the
State should adjust the capitation rate to reflect reimbursement of
interpretation services if the MCO is expected to provide the services.
Response: We believe that it is appropriate and necessary to
require that interpretation and translation services be available for
all potential enrollees and enrollees and have added this requirement
to the regulations text. We also believe that the States should be
afforded the flexibility to determine how these translation services
are provided and paid for (except that beneficiaries cannot be charged
for these services). The Office of Civil Rights has issued policy
guidance on the training and use of translators, which may be helpful
to States in determining how to meet this requirement.
Format Requirements (Proposed Sec. 438.10(c)(2))
Comment: A commenter noted that proposed Sec. 438.10(c)(2) required
that informational material take into consideration people with special
needs such as the visually impaired or those with limited reading
proficiency. The commenter suggested adding language that specifically
states that material in alternative formats will be provided to an
enrollee only upon request.
Response: While we do not expect a State and MCO, PHP, or PCCM to
provide information in alternative formats to all potential enrollees
and enrollees, regardless of whether or not they have a special need,
we do expect the State and MCO, PHP, or PCCM to provide the information
when requested and to fully inform potential enrollees and enrollees
about the availability of the information. We have modified
Sec. 438.10(c) to provide in Sec. 438.10(c)(1)(ii) that information
only need be ``available'' in alternative formats that take into
account enrollees with special needs and to make clear in revised
Sec. 438.10(c)(2) that enrollees will be informed ``on how to obtain
information in the appropriate format.''
Comment: Several commenters were pleased with language in the
preamble to the September 29, 1998 proposed rule discussing what
constitutes accessible information for people with disabilities and/or
limited reading proficiency but believe that this language should be
placed in the regulations text. For example, these commenters favored
including references in the regulations to 14-point type, a fourth or
fifth grade reading level, and the use of focus groups to test
cognitive understanding. One commenter suggested that a failure to do
so would be a violation of the Americans With Disabilities Act.
Response: Because there is not one commonly accepted standard for
providing formats for beneficiaries with special needs, and in light of
variances in enrolled population across States, we believe that a State
is in the best position to determine the best formats for information.
Allowing States to determine the format for information is consistent
with the Americans With Disabilities Act, because States have a
requirement under Sec. 438.10(c)(1)(i) to present the information in
easily understood language and format, and under Sec. 438.6(c)(1)(ii)
to take into consideration the special needs of enrollees. Therefore,
States are required to meet the information needs of all enrollees;
however, we are allowing the States flexibility in determining how they
will meet these needs. Additionally, States are required to comply with
the Americans with Disabilities Act without regard to the provisions of
this regulation
Comment: A commenter objected that the prescriptive nature of the
preamble language requiring information to be written at a fourth or
fifth grade level could be problematic when providing information on
the amount, duration, and scope of benefits.
Response: We do not agree that the preamble language is too
prescriptive. While we have recommended that information be provided at
a fourth or fifth grade level, the regulation currently affords the
flexibility for States to set their own reading level standards, based
on the needs of their population.
Comment: Commenters recommended that the requirement in proposed
Sec. 438.10(c)(2) that special needs of the visually impaired be taken
into account also be applied to persons with hearing impairments and
persons with cognitive impairments.
Response: Section 438.10(c)(1)(ii) of this final rule requires that
materials take ``into consideration the special needs of those who, for
example, are visually impaired or who have limited reading
proficiency.'' (Emphasis added.) Thus, this list is not intended to be
exhaustive, and the special needs listed are just two examples.
Individuals with hearing impairments and cognitive impairments would
also be considered individuals with special needs that must be
considered in material development. We do not believe that it would be
possible to have an exhaustive list of special needs as the enrolled
populations and needs of enrollees vary by State. In addition, the
individuals with special needs vary depending on the circumstance for
providing information. For example, an individual with a hearing
impairment would not need custom material for mailings but would for
educational presentations. We do expect a State and an MCO, PHP, or
PCCM to take into consideration the needs of all potential enrollees
and enrollees in their State and MCO, respectively.
Comment: A commenter indicated that communications to homeless
persons regarding Medicaid Managed Care benefits must take into account
a high level of transience, illiteracy, and cognitive impairment in
this group.
Response: As stated above, the requirement to take into
consideration special needs of individuals applies to all individuals
with special needs including people who are homeless.
Comment: Commenters indicated that the regulation should recognize
that effective communication may not only require accessible formats
but also requires the need for staff training in the managed care plan,
health care provider's office, and the Medicaid agency to effectively
interact with persons with disabilities, including hearing impairments
and cognitive learning problems. Commenters further indicated that to
be effective, face-to-face interactions may be required.
Response: We agree with the commenter that effective communication
may require more than printed material and have revised the language at
Sec. 438.10(c)(1)(ii) to also require that material is provided in an
``appropriate manner' that takes into consideration the special needs
of individuals. We have also added a requirement in Sec. 438.10(c)(5)
that the State and MCO have mechanisms in place to assist potential
enrollees and enrollees with understanding the managed care program and
their benefits.
Comment: A commenter believes that the regulations lack the detail
needed to assure that States and MCE's understand their obligation to
ensure culturally and linguistically appropriate benefits for Medicaid
beneficiaries at all levels of the health care delivery system.
Response: We do not agree with the commenter because there are
various sections of the regulation that address cultural issues and
impose obligations on States to take these issues into account,
including the requirements in Sec. 438.10 discussed in this section and
requirements in Sec. 438.206 (codified at Sec. 438.306 in the September
29, 1998
[[Page 6245]]
proposed rule) discussed below. While we have not provided detailed
``specifications'' in all cases as to how States fulfill these
obligations, since we believe States should be provided some
flexibility in this area, States will be responsible for accomplishing
the commenter's desired results, regardless of what methods they use to
achieve them.
We have required that oral interpretation services and translation
be provided free of charge to beneficiaries and that information on
primary care providers include languages spoken.
Comment: Some commenters advocated that all information should be
reviewed and approved by the State if not distributed by the State.
Response: Many of the elements listed in Sec. 438.10 are considered
marketing material and must therefore be reviewed in accordance with
the marketing standards at Sec. 438.104. Paragraph (b)(2) of
Sec. 438.104 specifies that each MCO, PHP, or PCCM contract must
provide that the entity does not distribute any marketing materials
without first obtaining State approval. Further, those that might not
be considered marketing materials, such as appointment notices, etc.
still must meet the information standards in Sec. 438.10, including
understandability.
When Information Must Be Provided (Proposed Sec. 410(d) and (f)).
Comment: Several commenters sought clarification of when complete
benefit information was required to be provided to beneficiaries. One
commenter recommended that the ``once a year'' requirement of
Sec. 438.10(d)(2) be changed to ``at least once a year'' to make it
clear that this information need not be provided at a specific
anniversary time but rather may be included with other information in
the normal course of business during the year.
Response: We agree with the commenter that greater flexibility is
needed, and we therefore have provided in a recodified
Sec. 438.10(e)(1)(ii) that after the initial provision of information
to new enrollees, any significant change in this information must be
provided 30 days prior to the effective date of the change. We have
also added a requirement in a new Sec. 438.10(f)(4) that all of the
information that is ``provided'' pursuant to new paragraphs (d) and (e)
(proposed Sec. 438.10(e)) also be available ``upon request'' at any
time.
Comment: One commenter expressed concern that the proposed
requirement for primary care case managers to provide additional
information ``before'' or ``during'' enrollment is confusing as
``before'' or ``during'' can refer to two separate time frames. The
commenter recommended that the primary care case manager, or State on
behalf of the primary care case manager, be required to provide
information ``on'' enrollment.
Response: We agree with the commenter that further clarification is
necessary. The regulation has been modified to reflect the same time
frames as those required of MCOs, or the State on behalf of the MCO.
Comment: A commenter believes that in addition to annual
notification, there should be notification ``as soon as changes occur''
in any of the provisions listed in proposed Sec. 438.10(e) (now in
Secs. 438.10(d)(2) and (e)(2)).
Response: We agree with the commenter that enrollees should be
notified if there is a significant change within the program and have
modified the regulations in response to this comment. In the new
Sec. 438.10(e)(1)(ii), we are requiring that when there is a
significant change (as defined by the State) in the information
provided under Sec. 438.10(e)(2), a revised version of the information
in paragraph (e)(2) must be provided at least 30 days prior to the
effective date of the change. We believe the State is best suited to
define what is considered to be a significant change.
Comment: Commenters wanted us to further define when the MCO (or
the State) must provide information to enrollees. One commenter
suggested that the provision be modified to state that the information
should be given within ``a reasonable time after the MCO receives the
notice of the recipient's enrollment or the effective date of the
enrollment, whichever is later.'' Another commenter suggested 7 days
after enrollment.
Response: The regulation requires that the information be provided
within a ``reasonable time after it receives, from the State or the
enrollment broker, notice of the recipient's enrollment.'' We believe
that the State is in the best position to define this specific time
requirement for providing information.
Comment: Commenters indicated that the dissemination of information
is very costly. Additionally, commenters believe that the States were
in the best position to provide comparative information. The preference
of these commenters was that the State agency assume the administrative
responsibility for providing information.
Response: We believe we have provided States with significant
flexibility, given the detailed statutory requirements in section
1932(a)(5) of the Act. We agree with the commenter that States should
assume responsibility, within the constraints of the requirements in
section 1932(a)(5) of the Act, and specifically that States should have
the flexibility to decide whether they or MCOs provide comparative
information.
Comment: A commenter suggested that the regulations should require
States to have a mechanism for notifying their enrollees of their right
to request and obtain basic information.
Response: Section 438.10(e)(1)(i) requires that States ensure that
enrollees are provided the information at least once a year, rather
than just be notified as in the proposed rule.
Comment: A commenter recommended that MCOs provide information
directly to enrolled adolescents.
Response: While it is probable that adolescents would receive
information directly when enrollment is not linked by family unit, in
the case of a family unit we believe that sending one copy of
information to each household is sufficient and would constitute
providing the information to all ``enrollees'' in that household,
provided alternative formats are not necessary for special need
reasons. The cost of requiring MCOs to mail directly to multiple family
members could be prohibitive. However, this regulation does not
prohibit States from imposing this requirement.
Comment: A commenter urged that HCFA ensure that individuals not
have to go great lengths to obtain information and that a general
request for information should trigger the provision of full
information.
Response: We agree with the commenter. Section 438.10(f) includes a
requirement that all elements of information be available ``upon
request.'' We expect that States and MCOs will not make the process of
obtaining information difficult and will provide comprehensive
information if any information is requested, since it is in the best
interest of all parties that the individuals be as knowledgeable as
possible about their health care options, rights, and responsibilities.
Required Information (Proposed Sec. 438.10(e))
Comment: Some commenters argued that proposed Secs. 438.10 and
438.318 would impose information requirements upon States or their
contracted representatives that go far beyond what is required in
statute. Specifically, these commenters pointed out that the statute
requires that information on the identity and location of health care
providers need only be provided ``upon the request'' of enrollees or
potential enrollees, rather than that it be
[[Page 6246]]
``provided'' as specified in proposed Sec. 438.10(e)(3). However, there
were also a number of commenters who applauded HCFA for requiring that
information be ``provided'' and suggested that the provision of
additional information on the nature of managed care arrangements would
also be appropriate.
Response: Section 1932(a)(5) of the Act spells out information that
must be available to all enrollees and potential enrollees. The
statute, however, only requires that this information be available
``upon request.'' We believe that the information listed is so basic
and fundamental to an enrollee's ability to access services and
exercise rights that it is ``necessary for * * * proper and efficient
operation'' for this information to be in the hands of all enrollees.
For example, an enrollee needs to know about the network of providers
in order to access care and about appeal rights to exercise these
rights. Therefore, pursuant to our authority under section 1902(a)(4)
of the Act to specify what is ``necessary for * * * proper and
efficient operation,'' we have required that information such as the
names, locations, and telephone numbers of the MCO's network of
providers be provided to beneficiaries. We have developed these
requirements in keeping with what we believe to be the Congress'
general intent that potential enrollees and actual enrollees have this
important information. Also, in response to the latter comments that
specifically called for information to be given to enrollees on a
variety of characteristic features of managed care (for example, prior
authorization of services and provider networks), we have added a new
type of required information to include ``Description of basic features
of managed care'' and ``MCO responsibilities for coordination of
enrollee care.'' We have also required the States and MCOs to have in-
place mechanisms to assist potential enrollees and enrollees in
understanding the managed care system and their benefits. In the BBA-
mandated report to the Congress on safeguards for individuals with
special health care needs who are enrolled in Medicaid managed care, we
noted the extensive evidence that exists on Medicaid, Medicare, and
commercial MCO enrollees that demonstrates their lack of knowledge of
the characteristic features of managed care and the implications of
their enrollment in an MCO. Similarly, evidence exists that there is
widespread confusion about MCO responsibilities for care coordination.
The nature of comments received support these additional requirements.
Comment: Commenters believe that the elements of information that
the MCO (or State) must provide are often elements that are currently
included in the member handbook that is supplied by the MCO or by an
enrollment broker. A commenter expressed concern that too much
information could be overwhelming, causing people to ignore all of it.
Response: We agree with the commenter that the information that
must be provided under the September 29, 1998 proposed regulation
generally is already provided to enrollees as a common practice. To the
extent this is the case, these existing practices could satisfy the
requirements in Sec. 438.10(e) with respect to enrollees. It is not our
intent that this information be duplicative of what is currently
provided. Section 438.10 allows States to continue their current
practice of including information as part of an enrollee handbook or
requiring that the MCO or (in the case of potential enrollees) that an
enrollment broker provide the information. Therefore, HCFA does not
believe that the regulation is duplicative or burdensome. We have
modified the regulation to specify in Sec. 438.10(d)(1) that the
``State, or its contracted representative'' may provide the information
in Sec. 438.10(d)(2) to potential enrollees. Because this information
is generally currently provided, we also do not believe that the
requirements in Sec. 438.10 would result in ``information overload.''
Comment: Commenters suggested that information on service
authorization requirements and provision of transportation to services
should be included as elements of the basic information about
procedures for obtaining benefits.
Response: Section 438.10(e)(2)(iii) expressly requires that
information containing the procedures for obtaining benefits be
provided, including any authorization requirements. This should include
information on transportation to the extent this is necessary to obtain
benefits.
Provider Directories/Provider Information (Proposed Sec. 438.10(e)(3).
Comment: Some commenters believe that information on specialists
should only be provided upon request due to the volume of information.
These commenters supported this recommendation. They believe that if
enrollees are provided with information on specialists, the enrollees
may believe that they do not need a referral for speciality care. These
commenters believe that this information should only be provided upon
request and that it is best provided with the assistance by someone
over the phone that has access to timely data. In contrast, we received
a number of comments from individuals applauding us for requiring that
information on specialists be included in the information, citing that
a significant number of Medicaid beneficiaries have special needs and
are more reliant on the specialists than the primary care physicians.
Response: Although we acknowledge that including information on
specialists adds to the volume of information and further complicates
the process of keeping information current, we do believe that a
significant number of enrollees rely on this information and therefore
continue to believe that, at a minimum, information on provider
networks should include information on primary care physicians,
specialists, and hospitals, as stated in the preamble to the September
29, 1998 proposed rule. To clarify this point, we have included this
preamble reference to specialists in the regulations text at
Sec. 438.10(e)(3)(iv).
Comment: A commenter recommended that homeless enrollees receive
information about which providers in the network in which they are
enrolled have demonstrated competency in meeting their complex health
and social needs. Similarly, commenters indicated that information
should be available about (1) the ability of providers to treat
adolescents and individuals with HIV; (2) the providers' language
proficiency; and (3) the accessibility of providers for individuals
with disabilities. One commenter suggested that this be required as
part of the additional information on education and board certification
status of health professionals.
Response: We believe that this type of information should be
maintained by the State, MCO, PHP, or PCCM, or enrollment broker (as
appropriate) and be available upon request in order to assist
individuals when they have a question about a particular service,
provider, or location. We have added a requirement in new
Sec. 438.10(f)(3) to specify that enrollees, and potential enrollees,
are able to obtain any other information on requirements for accessing
services or other factors necessary (such as physical accessibility)
that may be needed to effectively access benefits.
Comment: Many commenters expressed the view that the requirement to
include identification of those network providers who are not accepting
new patients is difficult to keep timely and may be out of date by
[[Page 6247]]
the time it is printed. In contrast, we also received comments from
individuals indicating that this information is critical if a
beneficiary is expected to make an informed choice.
Response: We acknowledge that this information is time sensitive;
however, it is our belief that beneficiaries need this information to
make an informed selection. Therefore, we encourage States and their
contractors to highlight to potential enrollees and enrollees that it
is important to verify through a phone call, or other means, that the
information is still current. We also expect that States and their
contractors will provide updates to provider directories within a
reasonable time frame, although the exact time is left to the State to
determine.
Comment: Several commenters strongly recommended that HCFA require,
and not simply suggest, that information on ancillary care provider
options be provided. Additionally, commenters wanted information
provided on Federal or State community health centers, dialysis
centers, and mental health and substance abuse treatment centers (in
addition to primary care physicians, specialists, and hospitals).
Response: As the enrolled population, and therefore the health
needs of the enrollees, varies from State to State, we believe that the
State is in the best position to determine what information needs to be
included on ancillary care providers (including those listed by the
commenters) in order to meet the needs of their respective
beneficiaries. We do expect that this information will be available in
all cases and that enrollees and potential enrollees will be notified
about availability of additional information upon request.
Comment: A commenter recommended that the requirement for ``name
and location'' of network providers be expanded to require the State to
provide the name of the clinic or facility, as well as that of the
provider, because many patients relate to the clinic and not the
provider's name.
Response: While we acknowledge the commenter's point that an
individual may be more familiar with a clinic name than a provider
name, this is not always the case. We believe that the State or the
MCO, PHP, or PCCM is in the best position to know the level of detail
regarding site identification that should be included in the
information a potential enrollee and enrollee receives.
Comment: A commenter stated that information regarding the
education and board certification (and recertification) status of the
health care professionals staffing the emergency departments in the
enrollee's geographic region should also be provided. They further
believe that this additional information should be provided, and not
simply made available upon request, because of the need for quick
decisions in emergency situations.
Response: Since emergency room physicians are considered health
care professionals, in a situation in which there is a direct
contractual relationship with emergency room physicians, they would be
included in the provision at Sec. 438.10(f)(2) that requires
information be provided that includes the education and board
certification and recertification of health professionals. While it is
our belief that some beneficiaries may be interested in receiving these
elements, and should be able to obtain them, they are not elements of
information that every beneficiary typically uses in selecting a
provider. In most cases, in an emergency situation in which time is of
the essence, an enrollee would not be ``shopping'' for the best
emergency room doctor but would go to the nearest emergency room.
Therefore, while the information must be available ``upon request,'' we
have not changed the regulation to require that this information be
``provided.'' Further, we note that if there are not direct contractual
relationships with the emergency room physicians, as often is the case,
there would be no way for an MCO or State to know this information, and
therefore the enrollee or potential enrollee could not obtain the
information from the MCO or State.
Comment: A commenter was concerned that HCFA was silent on how
frequently the provider directory needs to be updated. The commenter
recommended that we convey that the intent is not to mandate that the
printed directory be updated more often than periodically, although the
commenter expressed that we should expect that current information be
available through the MCO and through other sources.
Response: We agree with the commenter's clarification regarding the
frequency of printing provider directories, but do not believe that a
regulation change is necessary. Specifically, we expect the provider
directories to be updated periodically, as defined by the State, but
also expect that current information always be available to the
enrollee or potential enrollee through the State, MCO, PHP, or PCCM, or
State contracted representative.
Comment: Several commenters strongly urged HCFA not to permit the
use of ``subnetworks'' by MCOs. They believe it would be unfair to
consumers to join an MCO and then discover that they could not access
all providers because they had been assigned to a subnetwork. In
addition, commenters recommended that HCFA require that plans clearly
indicate if a network listing does not include all clinics and
providers located at the facility.
Response: While we are not in a position to dictate permissible
contracting entities for MCOs, we do require under
Sec. 438.10(e)(2)(iii) that if there are restrictions within a network,
the beneficiary be informed of these restrictions as part of the
information that they receive.
Information on Benefits
Comment: A commenter recommended that information also should be
provided on which populations are excluded from eligibility to enroll,
are subject to mandatory enrollment, or may enroll voluntarily.
Commenters specifically cited the Native American population.
Response: We revised the regulations to include a requirement in
Sec. 438.10(d)(2)(i)(B)(vi) that requires State to provide information
on which enrollees are excluded from eligibility to enroll, are subject
to mandatory enrollment, or may enroll voluntarily.
Comment: Several commenters recommended that information be made
available on drug formularies.
Response: As a requirement of Sec. 438.10(e)(2)(i), information
must be provided to enrollees on the benefits offered, and the amount,
duration, and scope of benefits available under the contract, with
``sufficient detail to ensure that enrollees understand the benefits to
which they are entitled, including pharmaceuticals, and mental health
and substance abuse benefits.'' (Emphasis added.) In addition, there is
now a requirement in Sec. 438.10(f)(3) specifying that enrollees and
potential enrollees can request other information on requirements for
accessing services to which they are entitled under the contract.
Therefore, although we support the commenter's goals, we believe that
this is sufficiently addressed in the regulation.
Comment: A commenter recommended that this section should clearly
define all Federally mandated ``benefits'' and ``services'' to which
Medicaid enrolles are entitled, including nurse-midwifery services,
consistent with section 1905(a)(17) of the Act. The commenter and
others recommended the use of both ``benefits'' and ``services'' to
convey the full range available under the State Plan.
[[Page 6248]]
Response: The terms ``benefits'' and ``services'' are synonymous.
Section 1932(a)(5) of the Act uses the terms ``benefits'' in the
information section, and therefore ``benefits'' is the word we have
used throughout this section of the regulations. The terminology may be
different in other sections if the statute used the word ``services''
with a different meaning in mind; however, the words are
interchangeable.
Comment: A commenter recommended that information be provided on
those benefits that are carved out of the program entirely, as well as
those that overlap (for example, mental health benefits and
prescription coverage).
Response: Information must be provided on all covered and
noncovered benefits for each MCO and PHP. While States may determine
that this additional information is necessary, it is our belief that it
is the duty of the State, MCOs, PHPs, and providers to coordinate
programs and not that of the enrollees.
Comment: Several commenters urged that proposed Sec. 438.10(e) be
amended to specifically require that the MCO's basic information list
include the availability and scope of EPSDT benefits and family
planning benefits. Another commenter stated that the information to
enrollees should clearly state that the amount, duration, and scope of
benefits provided to children under EPSDT are not limited.
Response: Section 438.10(e)(2)(i) requires that information be
provided on the benefits offered and the amount, duration, and scope of
benefits available under the contract. Section 438.10(e)(xii) requires
that information be provided on the benefits that are not available
through the contract but are covered as part of the State plan.
Finally, Sec. 438.10(e)(2)(vi) requires that information be provided on
the extent to which an enrollee may obtain benefits from out-of-network
providers. The preamble specifically cites family planning benefits
(when appropriate) as an example. HCFA believes that EPSDT benefits are
also benefits that fall within the purview of this requirement.
Therefore, sufficient information on EPSDT and family planning benefits
will be provided.
Comment: Many commenters believe that while providing information
on benefits, as well as those carved out, seemed reasonable, the
requirement to include information on the amount, duration, and scope
was problematic and too voluminous to provide.
Response: We expect that States and MCOs, PHPs, or PCCMs would use
general terms and groupings for benefits that have no limitations;
however, additional information would be expected if there was a
limitation in a particular service. We believe that individuals need
sufficient detail to ensure that they receive the benefits that they
are entitled to receive and therefore have not modified the regulation
as suggested by the commenters.
Grievance Information (Proposed Sec. 438.10(e)(11)
Comment: Proposed 438.10(e)(10) (recodified at
Sec. 438.10(e)(2)(xi)) required that enrollees and potential enrollees
be provided information about any appeal rights made available to
providers. Commenters suggested that we remove that requirement because
it is not directly relevant to enrollees.
Response: This regulation reflects the requirement under section
1932(a)(5)(B)(iii) of the Act, ``Grievance and appeal procedures,''
which refers to information on procedures available to an enrollee and
a health care provider seeking to challenge or appeal a failure to
cover a service.
Primary Care Case Manager Requirements (Proposed Sec. 438.10(h))
Comment: Some commenters contended that primary care case managers
generally are provided a minimum case management fee that would not
cover the cost of providing the information required under proposed
Sec. 438.10(h) (recodified as Sec. 438.10(g)). A commenter suggested
that the enrollment broker would be in a better position to provide
this information. Another commenter believes that the State should be
able to decide who provides the information required under proposed
Sec. 438.10(h).
Response: Under Sec. 438.10(g), the State is afforded the
flexibility of determining whether the State, contracted
representative, or primary care case manager is to provide the
information. However, if an enrollee requests information about the
grievance procedure from the primary care case manager, he or she
should be able to obtain it without having to contact the State. As
this information must be available only ``upon request,'' we do not
believe that it will be overly burdensome for the primary care case
manager to provide the information.
Comment: Some commenters were concerned that a primary care case
manager's duty to inform consumers about their grievance rights ``upon
request'' may be perceived as supplanting the obligation of MCOs and
States to provide written notice of an adverse decision, regardless of
whether it is requested. They supported the requirement that case
managers be aware of the procedures for filing a grievance and be
required to provide information upon request but wanted a statement
included that this did not replace the requirement to provide
notification for adverse decisions.
Response: The requirements in Sec. 438.10(g) are information
requirements, analogous to the information requirements for MCOs under
Sec. 438.10(e)(x), and have no effect on the notice and appeal
requirements in subpart F of part 438. We therefore do not believe any
revisions to the regulations are warranted in response to this comment.
Comment: Certain commenters were displeased that there was no
requirement that MCOs provide information about their quality assurance
program to enrollees and potential enrollees in the Medicaid program.
They believe the regulation should include, as information provided
``upon request,'' information of the type provided under
Sec. 422.111(c)(2), (4) and (5) of the June 29, 2000 Medicare+Choice
regulations. Specifically, commenters believe that Medicaid
beneficiaries should also have access to the following information that
is provided to Medicare+Choice enrollees under those regulations:
information on utilization control procures; information on the
financial condition of the MCO; and a summary of physician compensation
arrangements. They also recommended that States require MCOs to provide
treatment protocol information to beneficiaries upon request and
provide information on HEDIS indicators; results of plan quality
studies; external reviews; compliance audits; and summarized complaint
and grievance data.
Response: We agree with the commenters that the cited information
would be useful to beneficiaries and have revised Sec. 438.10(f) to
require that MCOs provide the same information, upon request, that
Medicare+Choice organizations are required to provide under
Sec. 422.111(c)(2), (4), and (5). With respect to the additional
information requested regarding HEDIS indicators and the results of
quality studies and external reviews, the results of external reviews
under section 1932(c)(2) of the Act will be made available to enrollees
and potential enrollees, as required under section 1932(c)(2)(A)(iv) of
the Act. Given the lack of experience in analyzing HEDIS indicators or
quality results, we are not requiring the disclosure of this
information to enrollees at this time but would consider doing so at a
future date after
[[Page 6249]]
we have more experience concerning the reliability and usefulness of
these data.
Comment: Some commenters supported the requirement in proposed
Sec. 438.10(i)(2)(iv) (recodified in this final rule at
Sec. 438.10(h)(3)(iv)) that information on disenrollments be provided
in the case of mandatory enrollment programs under section 1932(a) of
the Act; however, many believe these reports would not be meaningful
unless they specified the various types of disenrollment, such as
voluntary disenrollments, emergency disenrollments, and involuntary
disenrollments that occur, for example, due to the loss of Medicaid
eligibility as these latter categories of disenrollments are outside of
the MCO's control. In the absence of this level of specificity,
commenters stated that the data were not useful and could be
misleading.
Response: We recognize that disenrollment rates can mean different
things, depending on what is included in the rate. For this reason,
Sec. 438.10(h)(3)(iv) refers to disenrollment rates ``as defined by the
State.'' At a minimum, by requiring the State to define ``disenrollment
rates,'' there will be uniform comparison of disenrollments among MCOs,
PHPs, or PCCMs. We encourage States to consider the concerns noted by
commenters when defining disenrollment rates.
Comment: Commenters observed that providing comparative information
in chart form as required under proposed Sec. 438.10(i)(1)(ii)
(recodified at Sec. 438.10(h)(1)(ii)) is relatively new and if done
inappropriately could be misleading. These commenters stressed that to
be effective, the presentation of comparative information needs to take
into account the characteristics of each MCE as compared to others, as
well as the relative size of the MCE, which may make sampling too small
for validity.
Response: The actual design and format of the comparison chart
required under Sec. 438.10(h)(1)(ii) in the case of mandatory
enrollment programs under section 1932(a) of the Act is left to the
State to design. We suggest that States note the concerns listed.
Comment: A commenter sought clarification on how a comparative
chart-like form is to be used for the proposed information if the MCE
is a primary care case manager under a PCCM program.
Response: The comparative chart-like format specified in
Sec. 438.10(h)(1)(ii) is expressly required under section 1932(a)(5)(C)
of the Act in the case of a mandatory enrollment program under section
1932(a)(1) of the Act. Section 1932(a)(5)(C) of the Act expressly
refers to comparing ``managed care entities [MCEs] that are (or will
be) available and information (presented in a comparative, chart-like
form) relating to'' specified areas. The statute thus requires the use
of these comparative charts in the case of MCOs, PHPs, or PCCMs,
whether they be MCOs or primary care case managers. We believe that
this is possible, though we would not expect information on primary
care case managers to necessarily look similar to that used for
comparing MCOs. For example, the chart could list only those primary
care case managers that were different in regard to benefits covered
and cost sharing imposed. Additionally, Sec. 438.10(h)(3)(ii) requires
that quality indicators be provided to the extent available.
6. Provider Discrimination (Proposed Sec. 438.12)
Proposed Sec. 438.12 would implement the prohibition on provider
discrimination in section 1932(b)(7) of the Act. The intent of these
requirements is to ensure that an MCO does not discriminate against
providers, with respect to participation, reimbursement, or
indemnification, solely on the basis of their licensure or
certification. The requirements do not prohibit an MCO from including
providers only to the extent necessary to meet their needs. Further,
the requirements do not preclude an MCO from establishing different
payment rates for different specialties and do not preclude an MCO from
establishing measures designed to maintain the quality of services and
control costs, consistent with its responsibilities.
Comment: We received several comments requesting that we clarify
our September 29, 1998 preamble language in which we indicate that we
did not interpret section 1932(b)(7) of the Act to be an ``any willing
provider'' provision. Several commenters specifically recommended that
we reference this statement in our final rule, while others recommended
that we reiterate this statement in the preamble to the final rule. One
commenter suggested that we reconsider this provision so as to require
all willing providers to be included in an MCO's network.
Response: As we stated in the preamble to the September 29, 1998
proposed rule, we believe it is clear that section 1932(b)(7) of the
Act does not require that MCOs contract with all licensed providers
willing to undertake the provision of services to the MCO's enrollees.
To the contrary, section 1932(b)(7) of the Act expressly provides that
it ``shall not be construed'' to prohibit an organization from
``including providers only to the extent necessary to meet the needs of
. . . enrollees.'' It also makes clear that restrictions based on
maintaining quality or controlling costs are permissible. We believe
that the requirements contained in this section of the regulation were
intended only to ensure that providers are selected in a fair and
reasonable manner and not discriminated against solely because of their
license or certification. Thus, we indicated in the September 29, 1998
proposed rule, and we reiterate here, that this section does not
require MCOs to contract with ``any willing provider.'' We do not
believe it is necessary or appropriate to amend the regulations to
expressly reflect this fact, since by its own terms, Sec. 438.12 does
not require contracting with all willing providers.
Comment: One commenter requested that we clarify how a State will
determine compliance with this provider discrimination provision.
Response: We expect each State agency to develop its own mechanism
to ensure that MCOs contract with providers in a fair and reasonable
manner. Our regulation provides States sufficient flexibility to
determine which mechanism works best for them. We plan to work with
States to provide additional guidance on this issue in the future.
Comment: One commenter recommended that the final rule include
written notice and appeals procedures for providers participating in an
MCO. The commenter suggested that the process for a written notice and
appeals procedure should be based, in part, on the interim final
Medicare+Choice regulation.
Response: While the Medicare+Choice regulations do require, in the
last sentence in Sec. 422.205(a), that Medicare+Choice organizations
provide written notice to providers or groups of providers stating the
reasons why they were not accepted as part of the organization's
provider network, there is no provision for a right to ``appeal'' such
a decision. Under Secs. 422.202(a) and 422.204(c), providers have
appeal rights only once they have been accepted as a member of the
Medicare+Choice organization's provider network. We similarly are not
providing for any right to an appeal in this final rule, though States
are free to do so. We agree with the commenter, however, that it would
be helpful in enforcing the anti-discrimination requirement in section
1932(b)(7) of the Act if MCOs were required to provide written notice
to providers seeking to contract with them of the reasons why
[[Page 6250]]
the providers were not included in the MCO's network. We therefore have
revised Sec. 448.12(a) to include the same written notice requirement
that applies to Medicare+Choice organizations under Sec. 422.205(a).
Comment: Several commenters suggested that additional protections
be added to the regulation to further ensure nondiscrimination of
providers. The commenters recommended that the regulation expressly
prohibit nondiscrimination of providers who serve limited English-
proficient populations, high-risk populations, and persons with HIV and
AIDS. One commenter stressed the importance of culturally competent
providers and recommended that we add a provision to require physicians
to be added to an MCO's network because of the ``value'' they would add
in terms of cultural competence.
Response: The statutory provision implemented in Sec. 438.12(a)(1)
and (b), section 1932(b)(7) of the Act, addresses only discrimination
that is based solely on licensure and not the other types of
discrimination addressed by the commenters. However, Sec. 438.12(a)(2)
incorporates requirements elsewhere in part 438 that we believe, along
with other provisions in part 438, address the commenters' concerns.
Specifically, Sec. 438.12(a)(2) requires that providers be selected in
accordance with the requirements in Sec. 438.214 of subpart D. Section
438.214(c) in turn requires States to ensure that MCOs use provider
selection and retention criteria that ``do not discriminate against
particular providers, including those who serve high risk populations
or specialize in conditions that require costly treatment.'' We believe
that this prohibits the types of discrimination referenced by the
commenters. In addition, we refer the commenters to Sec. 438.206(e)(4),
which requires MCOs to provide services in a culturally competent
manner, including at least complying with the language requirements of
Sec. 438.10(b).
Comment: One commenter believes that there was a contradiction
between proposed Sec. 438.12 and proposed Sec. 438.306 (recodified at
Sec. 438.206 in this final rule) and that clarification was needed in
order to comply with the requirements of section 1932(b)(7) of the Act,
as the commenter interpreted them. Specifically, the commenter referred
to the preamble discussion of proposed Sec. 438.306 in which we stated
that if more than one type of provider is qualified to furnish a
particular item or service, the State agency should ensure that the
MCO's access standards define which providers are to be used and ensure
that those standards are consistent with State laws.
Response: Section 438.12 speaks to discrimination by MCOs against
providers of services solely on the basis of licensure. In contrast,
Sec. 438.206 requires States to establish standards to ensure the
availability of services by MCOs. Although the preamble to proposed
Sec. 438.306 referred to ``types''of providers to be used, it specifies
that the MCO's standards for inclusion of providers must be consistent
with State law. We do not believe that Sec. 438.206 could reasonably be
read as inconsistent with Sec. 438.12 (that is, to permit an MCO to
discriminate against providers solely based on licensure or
certification). Section 1932(b)(7) of the Act makes clear that MCOs may
limit the number of providers with which they contract based on need or
to control costs. If more than one type of provider can provide a State
plan service, and an MCO already contracts with one such type of
provider, we believe that it could under section 1932(b)(7) of the Act
and Sec. 438.12 decline to contract with the other type of provider
based on cost-effectiveness considerations, unless there is a State
plan service that only that type of provider can furnish. For example,
if the State plan includes ``nurse-midwife'' services under section
1905(a)(17) of the Act or certified pediatric nurse practitioner/
certified family nurse practitioner services under section 1905(a)(21)
of the Act, these services can, by definition, only be provided by the
type of provider in question.
Comment: One commenter expressed concern regarding a Medicare
Operational Policy Letter, indicating that it could be used as a basis
for denying chiropractic services to a Medicaid beneficiary.
Response: First, we note that Medicare Operational Policy Letters
do not establish Medicaid policy and are not a valid basis for denying
services to Medicaid beneficiaries that would otherwise be covered in
accordance with a Medicaid State Plan. The Medicare Operational Policy
Letter in question also would not have any applicability even by
analogy, because of differences between the way chiropractic services
are treated under Medicare and Medicaid. Under Medicare, ``chiropractor
services'' are not listed as a specific covered service or benefit.
Rather, under section 1832(a)(2)(B) of the Act, beneficiaries with
Medicare Part B are entitled to coverage of ``medical and other health
services,'' which in turn is defined in section 1861(s) of the Act as
including ``physicians services.'' While there thus is a right to
coverage of ``physician's services,'' there is no specific coverage
category for the services of a chiropractor. Instead, under the
definition of physician in section 1861(r) of the Act, a chiropractor
can be considered a physician for purposes of being eligible to provide
Medicare covered physician services but only to the extent the
chiropractor is performing a manual manipulation of the spine to
correct a subluxation. This manual manipulation thus can be reimbursed
by Medicare as a physicians' service whether it is performed by a
chiropractor or any other physician, such as an orthopedist, who
performs this manual manipulation.
In Medicaid, in contrast, section 1905(a)(6) of the Act permits
States the option of covering medical or remedial care ``furnished by
licensed practitioners within the scope of their practice as defined by
State law.'' To the extent a State has decided under section 1905(a)(6)
of the Act to cover chiropractor services under its State plan, this
covered service by definition could only be provided by a chiropractor.
Comment: We received several comments questioning the statutory
basis for Sec. 438.12(b)(2), which permits the MCO to pay different
amounts for different specialties. Several commenters suggested that a
provider performing the same service should be paid the same amount,
regardless of the provider's specialty. They recommended that we remove
paragraph (b)(2) or revise it to prohibit MCOs from paying lesser
amounts for the same service when provided by different types of
practitioners. Other commenters stated that paragraph (b)(2) had the
practical effect of requiring MCOs to pay all specialists within the
same specialty the same amount. These commenters suggested that HCFA
clarify this provision, with one commenter recommending that we amend
paragraph (b)(2) to not permit the MCO to use different reimbursement
amounts for different specialties or for the same specialty.
Response: We disagree that the statute does not allow an MCO from
establishing different reimbursement amounts for different specialties.
Section 1932(b)(7) of the Act states that an MCO ``may establish
measures designed to maintain quality and control costs consistent with
the responsibilities of the organization.'' We believe that paying
different amounts to individuals with different specialties can clearly
be dictated as a ``measure[ ] * * * to control costs.'' This is because
we believe that, in order to attract
[[Page 6251]]
highly qualified providers of all types, and to attract an adequate
number of certain categories of specialists, MCOs may need to pay a
higher amount than they would need to pay to attract other types of
providers. It would not be cost-effective if the MCO was then required
to pay this higher amount to other providers who would be willing based
on market rates to join the network for a lower amount. Also, as a
quality measure, MCOs should be free to pay providers with more
training and experience a higher rate of reimbursement for the services
they perform. Moreover, we do not want to preclude MCOs from using
incentive payments to reward providers for demonstrating quality
improvement or from attracting experienced providers to its network.
For the reasons stated above, we agree with commenters that
paragraph Sec. 438.12(b)(2) should be clarified to also permit
different reimbursement amounts for the same specialty. Accordingly, we
have amended the final regulation at Sec. 438.12(b)(2) to state clearly
that an MCO may use different reimbursement amounts for different
specialties or for the same specialty.
B. State Responsibilities (Subpart B)
Proposed subpart B set forth the State option to implement
mandatory managed care through a State plan amendment, as well as State
responsibilities in connection with managed care, such as ensuring
choice and continuity of care, enforcing conflict of interest standards
and limits on payment, monitoring, and education.
1. State Plan Requirements: General Rule (Proposed Secs. 438.50 and
438.56(b), (c), and (d))
Proposed Secs. 438.50 and 438.56, implemented section 1932(a)(1)
and (2) of the Act, which permits mandatory enrollment of Medicaid
beneficiaries in MCOs or PCCMs on the basis of a State plan amendment,
without a waiver under section 1915(b) or 1115 of the Act. Under these
regulations, a State agency can require most Medicaid beneficiaries to
enroll in MCOs or PCCMs without being out of compliance with provisions
in section 1902 of the Act on statewideness, comparability, or freedom
of choice. Paragraph (b) and (c) set forth the requirements for these
programs and the assurances that States must provide. Proposed
Sec. 438.56(b) identified limitations on populations that could be
mandatorily enrolled. Paragraphs (c) and (d) set forth requirements for
enrollment priority and default assignment under these programs.
Comment: One commenter requested that we clarify that Sec. 438.50
does not apply to 1915(b) and 1115 waiver programs since States can
mandate enrollment in MCOs and PCCMs under theses waiver authorities
without amending their State plan.
Response: We agree with the commenter and we have amended the final
rule with comment period to expressly provide that programs operating
under section 1915(b) or 1115 the waivers are exempt from the
requirements of this section.
Comment: A few commenters expressed the concern that the Federal
requirements permit certain SPAs to be effective as early as the first
day of the quarter in which the SPA was submitted to us and recommended
that we eliminate the retroactive approval of these SPAs. Two
commenters erroneously believed that the State risk loss of federal
money if the SPA is disapproved, apparently confusing this State plan
process with the process of approving contracts under section 1903(m)
of the Act. These commenters also expressed a concern that
beneficiaries may be permanently adversely affected in the event they
are harmed during the retroactive period. One commenter remarked that
the State could begin enrolling beneficiaries into a mandatory managed
care system that does not guarantee access to reproductive health
services prior to the submission of the SPA. Another commenter
emphasized that the short timeframes in implementing managed care have
caused problems for the consumers and providers in the past, and
guidelines from us are needed in areas of payment, enrollment, network
adequacy and continuity of care, etc.
Response: We do not believe that the rules governing effective
dates for SPAs which mandate enrollment in managed care should differ
from the rules that apply to any other amendments to a State's plan. By
allowing States to implement a SPA effective the first day of the
quarter in which they submit the SPA to us for approval, Sec. 438.50 is
consistent with the other SPA effective date provisions in Secs. 430.20
and 447.26. The retroactive effective date is only applicable in the
case of an approvable SPA. During the retroactive period, the increased
beneficiary protections such as grievance procedures, quality
assurance, and disenrollment are applicable. Also, before the State may
actually enroll beneficiaries into MCOs under this authority, all
contracts between the State and the MCO must be approvable and in place
and all statutory and regulatory requirements must be satisfied.
Comment: Two commenters indicated that the pre-print form is not
sufficiently descriptive. They recommended that the form require the
States to provide more detail on family planning, prenatal care, labor
and delivery and other reproductive health services. In addition, they
would like the States to specify the type of entities with which the
State will contract in order to assure access to reproductive health
services, supplies and procedures.
Response: We are in the early stages of developing this section of
the State plan preprint for amendments under Sec. 438.50, and will take
these comments into consideration when designing that form. However,
some States have already implemented approved programs under
Sec. 438.50 utilizing existing guidance issued in a December 17, 1997
letter to all State Medicaid Directors. We believe that the commenter's
specific concerns are addressed in Sec. 438.50(b), which requires
States to specify the types of entities with which they will contract
under a mandatory managed care program, in combination with
Sec. 438.206(c), which requires that contracts with the MCO specify the
services that the entity is required to provide, and that States make
arrangements to cover all Medicaid services available under the State
plan, including any that may not be in the MCO contract.
Comment: One commenter stated that while States can assure that
contracts between MCOs and themselves meet all requirements of the Act,
a commitment that all MCOs and PCCMs will be in compliance at all times
is unrealistic. This commenter recommended that the preferable language
would be that the State/local district will take appropriate action
against an MCO or PCCM whenever it is determined that one of these
entities is not in compliance with the contract.
Response: We agree that a State cannot assure in advance that an
MCO or PCCM will always be in compliance with all requirements, and
that all we can ask is that the State take appropriate action if it is
determined that one of these entities is out of compliance. Subpart I
below discusses intermediate sanctions and civil money penalties that
can be imposed when MCOs or PCCMs are out of compliance, and subpart J
discusses the fact that FFP can be denied in contracts with MCOs that
are substantially out of compliance. Proposed Sec. 438.50(b)(4),
however, refers to the State being in compliance with requirements in
this part relating to MCOs and PCCMs.
Comment: We received one comment stating that the current
regulations allow
[[Page 6252]]
our Regional Offices (ROs) to approve SPAs based on policy statements
and precedents previously approved by the Administrator. Only
disapproval of an amendment must come from the Administrator's office.
Currently there are no policy statements or precedents from the
Administrator's office to provide guidance to ensure uniform decision
making by the ROs. This commenter recommended that approval of the
managed care plan amendments should be the responsibility of our
Administrator with assistance from the Regional Office until
comprehensive guidelines have been developed and disseminated to the
Regional Office.
Response: Section 430.15(b) gives our delegated authority to
approve the State plan and plan amendments. The consults with our
Central Office during the review process to ensure that the SPA meets
the requirements of all relevant Federal statutes and regulations as
stated in Sec. 430.14. All reviewers in our Central and Regional
Offices reference the same tools when reviewing a State plan amendment,
including State Medicaid Director letters implementing the managed care
provisions in the BBA of 1997 provisions. The delegations of authority
are clear on the review of State plan amendments, and the collaboration
between the our RO and central office is a long established process.
Consequently, we are not making any changes in the approval authority
for these SPAs.
State Plan Assurances (Proposed Sec. 438.50(b) and (c))
Comment: A number of commenters felt that the regulation should
require the States to publicize any plan amendment for mandatory
managed care, and to solicit public involvement in all levels of
development before the amendment is approved and implemented. Suggested
methods for informing and involving the public included:
Public hearings and comment periods;
Involving the State Medical Care Advisory Committee in
reviewing amendments and contracts.
Using our website to notify the public of the submission
and approval of State plan amendments.
Publishing a Federal Register notice when States first
submit an amendment.
Requiring that the MCO and PCCM contracts, as well as
bids, be designated public record and be available to the public.
Response: We agree with the commenters, and we have amended the
final rule with comment period at Sec. 438.50(b)(4) to require state
plans to specify: ``The process the State uses to involve the public in
both design and initial implementation of the program, and the methods
it uses to ensure ongoing public involvement once the State plan has
been implemented.'' This language is consistent with the public notice
requirements of the State Children's Health Insurance Program.
Comment: One commenter recommended that we establish specific
procedures to closely monitor, track and evaluate these State plans.
Response: We acknowledge this concern, and assure the commenter
that we will continue to monitor, track, and evaluate State plans via
review of provider contracts, site visits, and reporting requirements
such as for external quality reviews. Amending the state plan to
implement a program of mandatory managed care may eliminate the need
for a State to apply for waiver renewals every two years, but does not
eliminate the State's obligation to guarantee access to services and
provide quality care to its beneficiaries, nor does it eliminate
necessary monitoring and evaluation of these programs by us.
Comment: One commenter recommended that State plans and contracts
with MCOs provide that the choice of primary care providers for
children must include pediatricians, and ensure access to pediatric
services. The commenter also recommended a pediatric definition of
medical necessity. Other recommendations included that the contracts
should ensure that information and training is provided to recipients,
physicians and other providers, local agencies and human health
services agencies regarding various aspects of the managed care
programs. This commenter requested that we require States to describe
their plans for conducting performance evaluations.
Response: For reasons discussed in more detail in section II. D.
below, in a response to comments on proposed Sec. 438.306 (now codified
at Sec. 438.206), with some exceptions (such as a women's health
specialist), we generally do not believe it is necessary or appropriate
to require that MCOs contract with specific categories of providers.
However, also as discussed in that section, we are requiring in
Sec. 438.206(d) that in establishing an MCO's provider network, it must
consider the anticipated enrollment, with ``particular attention to * *
* children,'' and ``[t]he numbers and types (in terms of training and
experience) of providers required to furnish the contracted services.''
We believe that these requirements address the commenter's concern
about participation of pediatricians. With respect to the
recommendation for a ``pediatric definition of medical necessity,''
also as discussed below in section II. D, we are requiring in
Sec. 438.210(a)(4)(ii)(B) that an MCO's definition of ``medical
necessity'' address the extent to which it is responsible for covering
services related to the ability to achieve age-appropriate growth and
development, which is obviously ``pediatric-related.'' We have not
required a separate definition. We believe that the commenter's
suggestion concerning information requirements has been addressed in
Sec. 438.10(d) and (e). Finally, with respect to the issue of
``performance evaluations,'' as discussed in section II. D. below,
Sec. 438.240(c)(i) requires that MCOs and PHPs measure performance,
while Sec. 438.240(c) requires performance improvement projects.
Limitations on enrollment (Proposed Sec. 438.56(b))
Comment: One commenter correctly noted that if a State wished to
use the State plan option, yet wished to mandate managed care
enrollment for elements of the Medicaid population exempted under that
option, the State must still request a waiver to include the exempt
populations, thereby negating the benefits of the State plan option.
Another commenter complained of the continued administrative time,
expense and confusion in the current waiver renewal process. This
commenter also expressed the view that if the BBA is designed to allow
greater flexibility for State administration, then greater allowance
should be given to the State plan option rather than the waiver.
Response: The proposed rule implements section 1932(a), of the Act
as enacted by the Congress. While it provides States with an
alternative to the 1915(b) of the Act waiver process with respect to
individuals not exempted, we acknowledge that the State plan amendment
is not applicable to all situations, and that the State will need to
submit a 1915(b) of the Act waiver to enroll exempted population into
mandatory managed care programs. We have no discretion to change, this
however, because the Congress was clear in exempting these populations.
Comment: One commenter noted that nothing in the BBA prohibits
States from exempting populations other than those specified in the Act
for mandatory enrollment in managed care, and recommended that language
be added to the regulations to indicate that the State may exempt other
populations. Another
[[Page 6253]]
commented that the regulation only lists categories of persons who may
not be enrolled in managed care under the State plan managed care
option. The commenter suggested that this rule should also allow States
using the waiver option to exempt categories from mandatory managed
care.
Response: We do not agree that it is necessary to add language to
the regulation indicating that States may exempt other populations.
Section 1932(a)(2), of the Act identifies those populations which must
be exempted from mandatory enrollment under this provision. States have
had and continue to have the discretion to exempt other populations
from mandatory enrollment in managed care.
Comment: Several commenters expressed concern that beneficiaries
might not be identified or notified of their exemption from mandatory
enrollment, and run the risk of being defaulted into MCOs or PCCMs.
They recommended that the State provide a mechanism to ensure that
exempt populations are not enrolled into MCOs or PCCMs, and that State
be required to permit exempt individuals to self-identify.
Response: Section 438.10(d)(2)(B) of the final rule with comment
period has been modified to require that potential enrollees be
informed of populations which are exempt from mandatory enrollment in
any such program. We agree that self-identification would be an
effective tool for individuals who fall into an exempt category, but
are not identified as such by the State. Once identified, the State
would be obligated to exempt such individual from mandatory enrollment,
and to disenroll he or she immediately, if they had been enrolled by
default.
Comment: We received comments concerning the applicability of the
limitations in section 1932(a)(4) of the Act on the right to disenroll
without cause to exempted populations. One commenter urged that the
``12 months lock-in'' provided for under section 1932(a)(4) of the Act
should be restricted to individuals whose enrollment in managed care
was mandated. Two commenters suggested that the 12 months lock-in
should not be allowed for exempted groups unless a State can
demonstrate in a waiver that the population's access to services will
not be diminished due to enrollment in an MCO or PCCM.
Response: If an exempted individual voluntarily enrolls in an MCO
or PCCM, the same lock-in and disenrollment provisions in section
1932(a)(4) of the Act apply, including the ability to disenroll without
cause during the first 90 days of enrollment. This is because section
1903(m)(2)(A)(vi) of the Act incorporates section 1932(a)(4) of the Act
in the case of MCOs, while section 1905(3)(E) of the Act incorporates
section 1932(a)(4) of the Act in the case of PCCMs. With respect to the
last recommendation concerning demonstration of access to services,
MCOs must meet the requirements for access and availability of services
as specified in Secs. 438.206 and 438.207 of the final rule with
comment period, while a PCCM contract must meet the requirements for
access and services under Sec. 438.6(k).
Comment: Some commenters agreed with the exempted groups as
outlined in the proposed rule and recommended that we maintain this
provision. Specifically, two commenters agreed that foster care
children should be exempted as foster care children move frequently and
they may need to change providers for geographic reasons. These
commenters also noted that if the child has a disability and moves
often because of foster care, it may be important to maintain a single
provider to prevent frequent disruption of complex care. Another
comment indicated that children under 19 years of age who are eligible
for SSI and eligible for dental coverage under EPSDT should not be
subject to mandatory enrollment in managed care.
Others felt certain populations should not be excluded from managed
care programs, with one commenter recommending legislative action to
revise the rules to delete all impediments to enabling managed care
programs for the broadest possible populations. The commenters cited
positive experiences with exempted populations in mandatory managed
care programs and felt that the special needs can best be addressed and
coordinated through a network of providers. The commenters' experience
has shown that Medicaid clients believe the service is better and the
more complicated the care, the more there is a need for managed care.
Two commenters expressed the concern that by limiting managed care for
certain populations, the message conveyed is that managed care does not
work for these populations. They continued to say that many States have
been very successful in operating managed care for these exempted
populations and it has been shown to be a strong factor in assuring
access to primary and preventive care and other needed medical
services. One commenter stated that they have taken steps to ensure
that MCOs identify and serve children with special health care needs
appropriately, including the implementation of broad, functional
definitions of Disability and Special Health Care Needs. This commenter
partnered closely with the advocate community to develop appropriate
standards for this population. They felt that we were incorrect to
assume that managed care will not work for these populations.
Response: Section 1932(a)(2) of the Act identifies those groups
exempted from mandatory enrollment under this provision. We do not have
the authority to add groups or delete groups from this list. The
statute does not prevent voluntary enrollment if a voluntary contract
exists and an individual believes that his or her needs will be best
met with an MCO or PCCM. If a State desires to enroll any of these
exempted populations into a managed care program, it may do so by
offering voluntary enrollment as an alternative to unrestricted fee-
for-service, or it may mandate enrollment through section 1915(b) of
the Act or 1115 of the Act waiver authority.
Comment: We received many comments requesting that additional
populations be exempt from mandatory managed care because of the
complexity of the beneficiaries' medical needs. Commenters recommended
that the additional exempted groups should include--
Children with HIV, but who have not developed AIDS;
Patients awaiting transplants and organ transplant recipients;
Patients suffering from cancer;
Patients suffering from arthritis, osteoporosis, chronic and
debilitating musculoskeletal conditions;
Children and adults with mental retardation;
Patients with severe and persistent mental illness (SPMI), brain
disorders;
Adults with disabilities;
Homeless persons; and
People for whom English is not their primary language or people
residing in areas where provider awareness of cultural diversity is
limited.
Several commenters suggested that the language in
Sec. 438.56(b)(3)(v) (redesignated as Sec. 438.50(d)(3)(v)) narrowly
defines children with special needs in Title V programs who are
exempted from enrollment. These commenters recommended that this
section should be amended to cover all children eligible for Title V
special needs as defined by the State's Title V agency. Commenters
proposed definitions for foster care or ``otherwise in an out-of-home
placement.'' A few commenters recommended the adoption of the Maternal
and Child Health
[[Page 6254]]
Bureau's definition of children with special health care needs.
A couple of commenters recommended voluntary enrollment for dual
eligibles and for adults with disabilities. One commenter recommended
that individuals who have significant, chronic disabilities should have
the option to voluntarily enroll and not be subject to any State being
eligible to obtain such a waiver from HCFA.
Response: As indicated above, in section 1932(a)(2), of the Act the
Congress specified the groups that are exempt from mandatory managed
care enrollment through the State plan provision. We do not have the
statutory authority to exclude any other populations. Because of
variations in States regarding the identification of individuals
receiving services through a family-oriented, community based,
coordinated care system receiving grant funds under Section
501(a)(1)(D) of Title V, of the Act the December 17, 1997 SMD letter
offered guidance to States about developing more detailed operational
definitions of this group. The State also has the option to define this
group in terms of their special health care needs and to develop a
process whereby individuals who are not identified through the initial
exemption process could request exemption based on special needs as
defined in the State plan.
Although we considered using the Maternal and Child Health Bureau's
definition of children with special health care needs, we believe that
the identification of this specific group by either program
participation or accepted State definition more closely reflects the
statutory language while being more administratively feasible.
Enrollment by Default (Proposed Sec. 438.56(d)
Proposed section 438.56(d) set forth the requirements relating to
default enrollment of beneficiaries in SPA programs who do not make a
choice from among the available MCOs or PCCMs. (Note: As indicated
above, this section is being moved to Sec. 438.50 in the final rule
with comment period because it applies only to SPA programs.) This
provision required that the default enrollment process preserve
existing relationships between beneficiaries and health care providers,
and relationships with providers that have traditionally served
Medicaid beneficiaries. If this is not possible, States are required to
distribute the beneficiaries equitably among the available MCOs or
PCCMs qualified to serve them.
Comment: A number of commenters pointed out that the proposed rule
did not address what constituted an acceptable level of default
enrollments. The commenters urge us to encourage States to keep the
rate of default enrollments as low as possible, and to use the comment/
response section of the final rule with comment period to discuss the
successful practices of States like New Jersey and Rhode Island to keep
default enrollments low. The commenters urged us to require States to
collect and report uniform data on default enrollments (some commenters
suggested that the data be broken down by geographic area). Most
commenters identified 25 percent as the threshold at which further
action should be taken, although one commenter suggested that default
enrollments be halted in cases where the default rate goes above 10
percent. The commenters had various suggestions as to what should
happen in cases where the rate of default enrollments exceeded the
threshold--some said default enrollments should be halted, some said we
should review the State's processes, and some said the State should
develop and implement corrective actions in their outreach and
enrollment processes.
Response: Although the BBA did not specify an acceptable level of
default enrollments, we agree that this can be an important measure of
the extent to which beneficiaries make informed decisions about
enrollment. We agree that States should endeavor to keep default rates
low, and the enrollment and information provisions of the regulation
are designed to help States achieve a high rate of enrollee choice.
Default enrollment rates vary widely because States have greatly
different levels of experience with managed care, and because of
measurement variation. Although we have decided not to mandate a single
acceptable level of default enrollments in the final rule with comment
period we will continue to monitor default enrollments in Medicaid
managed care programs.
Comment: A number of commenters pointed out that the proposed rule
did not specify the time allowed for beneficiaries to choose an MCO or
PCCM before default enrollment takes place. The commenters suggested a
number of minimum timeframes--20, 30, or 60 days. One commenter also
suggested that States be required to offer a longer time period for
persons with serious and persistent mental illness.
Response: Section 1932(a)(4)(D)(i) of the Act, as established by
the BBA, refers to ``the enrollment period specified by the State.''
Therefore, we believe the Congress intended for each State to be able
to set its own enrollment period, depending upon its population and its
own experience with managed care. To date, States have demonstrated
that a wide variety of time periods can be effective, depending upon
their own populations and outreach and educational programs. For
example, one State with a low default enrollment rate only allows
enrollees 10 days to choose a plan. We have decided not to specify a
minimum time period in the final rule with comment period.
Comment: We received one comment urging that default enrollments be
prohibited. A number of other commenters indicated that some
limitations should be placed upon a State's ability to make default
enrollments. A number of limitations were suggested. One commenter said
default enrollments should be prohibited in cases of persons with
disabilities. Another indicated that the enrollment period should be
suspended if the beneficiaries had requested information and not
received it, or had requested a face-to-face meeting that could not be
scheduled during the enrollment period. Also, this commenter said if
the recipient or his guardian could not be reached through no fault of
their own, there should be no default enrollment. One commenter said
States should be required to assign beneficiaries to a PCCM instead of
default enrolling them into an MCO.
Response: The Congress spoke clearly on which groups should be
exempt from mandatory enrollment in SPA programs, and these groups are
similarly not subject to default enrollments pursuant to section
1932(a)(4)(D) of the Act. For those individuals who are not exempt, the
statute requires a default enrollment process for MCOs and PCCMs
generally, not just primary care case managers. Specifically, section
1932(a)(4)(D) of the Act provides that under a mandatory program under
section 1932(a)(1) of the Act, ``the State shall establish a default
enrollment process * * * under which any * * * individual who does not
enroll with a managed care entity during the enrollment period. * * *
'' In granting States the discretion to specify the time period for
making an enrollment, we believe that the statute gives States the
flexibility to provide for extensions of this time period, or other
accommodations when warranted by the needs of the population, so long
as they are applied in a uniform manner. We recommend that States grant
extensions and other accommodations when they consider it to be
appropriate.
Comment: One commenter pointed out that many persons with
disabilities, who may be subject to mandatory
[[Page 6255]]
enrollment, have a representative payee. The commenter recommended that
we require States to notify representative payees when default
enrollments are made.
Response: We agree with the commenter that there may be situations
when it would be appropriate for the State to notify someone other than
(or, at State option, in addition to) the enrollee. However, we believe
the final rule with comment period should provide for notification of a
broader scope of enrollee representatives than representative payees.
In response, we have added language to the final rule with comment
period adding references to an enrollee or his or her ``authorized
representative.'' This would cover situations including, but not
limited to, a representative payee situation. (We have added this
language to Sec. 438.56.)
Comment: One commenter said the final rule with comment period
should address how enrollees are assigned to PCPs once they have been
default enrolled in an MCO, and recommended that we require that MCOs
consider geographic, cultural, and linguistic accessibility when
assigning enrollees to a PCP.
Response: In requiring States to preserve existing provider-
recipient relationships in the default enrollment process, the Congress
clearly intended there to be as little disruption as possible in the
provision of medical care. We encourage States to monitor this process
and to require that MCOs, to the extent possible, make PCP assignments
that promote recipient access to care. Additionally, we believe that
the access requirements for MCOs contained in Sec. 438.206 will assist
in this regard. We do not believe, however, that it is necessary to
insert an additional regulatory requirement.
Comment: We received a large number of comments on the default
enrollment methodology. One commenter expressed general support for the
enrollment by default provisions. A handful of commenters indicated
that they thought we had placed too many requirements in the default
enrollment section. The bulk of the commenters, however, encouraged us
to place additional requirements on States in developing their default
enrollment procedures. The commenters who disagreed with our proposed
regulations believed either that States should not have to take
relationships with existing providers into account, or that the default
enrollment procedures should not favor traditional providers. Two
commenters felt that favoring traditional providers may discourage
participation in managed care programs by commercial MCOs. The
commenters who want us to place additional requirements on States
disagree with the concept of equitable distribution if it means States
are not permitted or required to take additional factors into
consideration. Commenters suggested that the rule should require States
to take the following factors into account when default enrolling
beneficiaries: Geographic accessibility, especially for rural
residents; cultural and linguistic competency; experience with special
needs populations; physical accessibility; and capacity to provide
special care and services appropriate to the needs of the individual.
Commenters said persons who are homeless, persons with HIV, and
individuals with special health care needs or developmental
disabilities should only be assigned to MCOs or PCCMs with demonstrated
competency serving them. In addition, commenters said that we should
not allow States to favor MCOs or PHPs in their default enrollment
methodologies just because they are the lowest cost Entity, and that no
default enrollments should be made to plans that do not offer the full
scope of basic health care services, including family planning
services. Commenters said States should be allowed to consider such
factors as success rates in completing EPSDT screens, price, quality,
and customer satisfaction in their default enrollment methodology.
Response: The statute clearly indicates that States must take
existing relationships into account, ``or relationships with providers
that have traditionally served beneficiaries under this title.''
Section 1932(a)(4)(D)(ii)(II) of the Act goes on to specify that if
maintaining such relationships is not possible, States must arrange for
``the equitable distribution of such individuals among qualified
managed care entities available to enroll such individuals, consistent
with the enrollment capacities of the entities. (Emphasis added)'' We
believe that in using the term ``qualified,'' the Congress intended to
permit States to consider such factors as experience with special needs
populations. Additionally, for rural residents or beneficiaries with
needs for special cultural or linguistic competencies, States may
consider MCOs or PCCMs that are equipped to serve them as more
qualified. Also, the statute does not define the term ``enrollment
capacity.'' We believe States have flexibility to determine that
cultural and linguistic competency and other similar factors are
related to MCOs'or PCCMs' capacity to serve certain individuals,
depending upon their needs. We believe the language as proposed gives
States sufficient flexibility to consider these factors, therefore, we
have not added new requirements to the final rule with comment period.
Comment: Commenters were divided on the subject of whether members
of the same family should be default enrolled to the same plan. Four
commenters indicated that family members should be default enrolled in
the same MCO or PCCM. One commenter in this group said family members
``in general'' should be enrolled in the same MCO or PCCM; presumably
this indicates there may be circumstances in which family members could
be enrolled in different MCOs or PCCMs. Four commenters said there may
be circumstances in which family members could be better served by
different MCOs or PCCMs. Other commenters raised the same question with
regard to whether family members could choose to enroll in different
MCOs or PCCMs, as opposed to being defaulted into them.
Response: The statute is silent on whether the default enrollment
rules should require family members to be enrolled together. Because
State enrollment and eligibility systems may not permit family members
to be divided up, we do not recommend placing any requirements on this
subject in the final rule with comment period. If States have the
capacity to allow family members to choose different MCOs, they should
be permitted to do so. Likewise, we assume States will want to default
enroll families to the same MCO, and we believe they should be
permitted to do so as well. This same policy applies to the question of
whether States wish to permit individual family members to choose to
enroll in different MCOs or PCCMs.
Comment: A number of commenters discussed our definition of
existing relationships between enrollees and providers in the context
of making default enrollments. Opinion was divided on the extent to
which States should be required to consider existing relationships
between beneficiaries and providers. The proposed rule defined an
existing relationship as ``one in which the provider was the main
source of Medicaid services for the recipient during the previous
year'' and goes on to say that States may establish this through fee-
for-service or managed care records, or by contacting the recipient.
Several commenters specified that this provision would be difficult to
operationalize or even ``unworkable.'' One indicated that if the
recipient's previous experience with Medicaid was
[[Page 6256]]
in a fee-for-service system where it was difficult to find
participating providers, the existing relationship may not have been an
ideal one. However, a number of commenters said the language in the
proposed rule did not go far enough. The majority of these commenters
indicated that we should require States to examine previous records,
and that the look-back period should be 3 years instead of 1 year. One
commenter also said States should be required to examine payment
records pertaining to services from ancillary providers such as DME
suppliers and home health agencies as well. Some commenters also said
MCOs should be subject to similar requirements in making enrollee
assignments to PCPs.
Response: Because section 1932(a)(4)(D)(ii)(I) of the Act refers to
considering existing relationships, we do not have statutory authority
to exempt States from this requirement. We do, however, have the
authority to define how States meet the requirement. We believe that
the regulation gives States the flexibility to determine existing
relationships in whatever way makes sense in the context of their
program. Therefore, we have decided not to include additional
requirements in the final rule with comment period.
Comment: We received a large number of comments urging us to
present a more comprehensive definition of traditional providers than
the one included in the preamble and proposed rule. The text defined a
traditional provider as a provider who has ``experience in serving the
general Medicaid population.'' Many commenters pointed to what they
felt was confusing language in the preamble: ``Under Sec. 438.56(d)(4)
we would define `traditional providers' to be any provider who has been
the main source of care for a beneficiary within the last year, and has
expertise and experience in dealing with the Medicaid population.''
Commenters felt this definition either unnecessarily confused existing
relationships with traditional providers, or indicated that any
provider who had been the main source of care for any recipient could
be considered a traditional provider. Two commenters said States should
be permitted to develop their own definitions of traditional providers.
However, most commenters favored a HCFA definition that would be much
more specific than the definition included in the proposed rule.
Examples of what commenters said that we should include in the
definition are: A certain percentage of Medicaid and uninsured
utilization (either a set percentage or a percentage at least equal to
the statewide mean); a significant number of years spent serving
Medicaid patients; DSH hospitals; public hospitals; FQHCs; CHCs; and
Health Care for the Homeless projects.
Response: Although default enrollments may be made to MCOs and not
necessarily to individual providers, the statutory language refers
specifically to providers. Section 1932(a)(4)(D)(ii)(I) of the Act
requires that the default enrollment process take into consideration
maintaining ``relationships with providers that have traditionally
served beneficiaries under this Title.'' Clarification can be found in
the BBA Conference Report, which states that the default enrollment
process ``must provide for enrollment with an MCO that maintains
existing provider-individual relationships or has contracted with
providers that have traditionally served Medicaid [beneficiaries]''
(emphasis added). Therefore, we believe the Congress intended for
States to favor MCOs and PCCMs that contract with traditional providers
in their default enrollment process. However, because the statute does
not define traditional provider, we have the flexibility to either
write a definition or allow States to develop their own. Because of the
volume and variety of comments, we decided to allow States to develop
their own definitions that could include, but not be limited to, DSH
hospitals, public hospitals, FQHCs, CHCs, and Healthcare for the
Homeless projects.
2. Choice of MCOs, PHPs, or PCCMs (Proposed Sec. 438.52)
Proposed Sec. 438.52 implemented the requirement in section
1932(a)(3) that States must permit an individual to choose from at
least two MCOs or PCCMs, including the exceptions to this requirement
in a case in which a State elects the option under section
1932(a)(3)(B) to offer a single MCO in a ``rural area,'' and the
exception in section 1932(a)(3)(C) permitting a State to offer a single
HIO in certain counties.
General Rule
Section 438.52(b) of the proposed rule required that States allow
beneficiaries to choose from at least two MCOs or PCCMs.
Comment: We received comments expressing general support for the
requirement for choice. One commenter, however, said that merely
offering choice may not provide sufficient beneficiary protection, and
we should consider alternative ways to provide consumers with
accountability and responsiveness.
Response: The requirement for choice of MCO or PCCM appears in the
statute, and is consistent with our longstanding policy of generally
requiring at least two options in a mandatory managed care program.
However, choice is only one piece of an overall strategy to ensure that
beneficiaries receive quality services. This regulation implements new
requirements for quality, access and availability, and beneficiary
protection. We believe these requirements address the concern voiced by
the commenter.
Comment: We received a number of comments disagreeing with our
decision to apply the requirement for choice to PHPs. The commenters
indicated that in the case of behavioral health carve-outs and certain
long term care programs, it is not appropriate to require choice.
Commenters indicated that the requirement for choice in carve-outs
increases administrative costs because the State would be required to
solicit business from two MCOs which would utilize the same limited set
of providers. One commenter believed that in the case of PHPs, States
should be allowed to request waiver authority to limit choice to one
PHP, so long as that PHP offers beneficiaries a choice of providers.
The commenter stated that we should clarify this in the final rule. The
commenter also believed that PHPs should be chosen through a
competitive process except when the State has decided to utilize a
local governmental organization as a sole source provider. One
commenter recommended that Sec. 438.8 be amended to state that the
provisions of subpart B apply to PHPs.
Response: Under this final rule with comment period, outside the
context of a demonstration project or waiver program, we believe it is
appropriate to give enrollees a choice of PHPs, along with the right to
disenroll that is provided under section 1932(a)(4) to MCO and PCCM
enrollees. As in the case of other PHP requirements, we have based this
rule on the authority in section 1902(a)(4) of the Act to provide for
methods of administration determined to be necessary for proper and
efficient operation of the Medicaid program. Regulations based on
provisions in section 1902, however, may be waived by the Secretary
under section 1915(b) of the Act or as part of a demonstration project
under section 1115 of the Act. Nothing in this regulation changes this
waiver authority. Thus, we agree with the commenter that States should
be allowed to request a waiver to permit a State to limit enrollees to
a single PHP if the enrollees have a choice of providers within the
PHP. With respect
[[Page 6257]]
to the comment on competitive procurement, Sec. 434.6(a)(1) requires
that in the case of all Medicaid contracts, States comply with
competitive procurement requirements in 45 CFR, part 74. Under these
requirements, States are required to engage in competitive procurement
``to the maximum extent practical.'' Thus, we agree with the commenter
that PHPs should be chosen through a competitive process. We do not
agree, however, that the State necessarily should be exempted from this
requirement when it contracts with a government entity. While part 74
at one time exempted such cases from competitive procurement
requirements, there is no longer such an across the board exemption.
HCFA has, however, exercised discretion it has under part 74 on a case-
by-case basis to permit government entities to contract as PHPs without
a competitive procurement.
Finally, in response to the last comment, in the final rule with
comment period, we have amended Sec. 438.8 to specify that all subpart
B provisions except Sec. 438.50 apply to PHPs, because we agree with
the commenter that the reference should be made more explicit.
Comment: One commenter said we should clarify our preamble language
pertaining to PCCMs. This commenter said it appeared that States could
satisfy the requirement for choice with a single PCCM. This commenter
said that was contrary to the intent of the BBA, and pointed out that
the only exception to the requirement to choice is for rural areas and
certain HIOs.
Response: The commenter has confused a PCCM, which we clarify in
this final rule with comment period refers to a ``primary care case
manager'' as defined in section 1905(t)(2), with a primary care case
management ``system,'' under which beneficiaries have the option of
enrolling with one of two or more PCCMs. We recognize that our use of
two terms in proposed Sec. 438.2 that would fit with the acronym
``PCCM'' may have caused this confusion. The term ``primary care case
management'' refers to ``a system under which a primary care case
manager contracts with the State,'' while the term ``Primary care case
manager'' is defined as the contracting individual or entity. As
discussed in section II. A. above, we have clarified in Secs. 400.203
and 438.2 of this final rule with comment period that PCCM refers to a
primary care case manager. We agree with the commenter that unless the
rural area exception in section 1932(a)(3)(B) applies, a State cannot
satisfy the choice requirement through the use of a single PCCM. It
can, however, do so through a primary care case management system,
under which a beneficiary has a choice of two or more PCCMs. We have
clarified Sec. 438.52(b) to emphasize this distinction.
Comment: We received a comment recommending that the final rule
specify that all beneficiaries must have a choice between two MCOs or
PCCM providers that are qualified and experienced in HIV/AIDS care.
Response: We agree that for persons with special needs, including
those with HIV/AIDS, being able to choose from MCOs or PCCM providers
qualified to meet their needs is essential. Section 438.206 of this
final rule with comment period requires States to develop standards for
access to care, including attention to special needs populations. The
section requires all MCOs to assure that they have the adequate
capacity and appropriate services to meet the needs of the expected
enrollment. This includes being able to serve any special needs
populations that could potentially be enrolled in the MCO. We also
require MCOs to consider the experience needed by network providers to
serve the expected needs of their enrollees. Lastly, we expect States
to aggressively monitor such indicators as grievances, appeals, fair
hearing requests, and disenrollment requests as indicators that persons
with special needs are not being adequately served.
Comment: One commenter recommended that where there is choice
between two MCOs, at least one MCO must offer the full scope of
services, including family planning services.
Response: Unlike the case of the Medicare program, the Congress
chose not to require that MCOs agree to contract to provide particular
services. The text for a comprehensive contract in section
1903(m)(2)(A) makes clear that the MCO and the State have the
discretion to decide which Medicaid services will be covered under the
MCO's contract. Also, in the case of family planning services, under
section 1902(a)(23), an MCO is not permitted to restrict an enrollee to
using the MCO's network providers for family planning services. This
creates an incentive for MCOs to exclude family planning services from
their contracts, since they have no control over when and where such
services are obtained. Whether for this reason, or for reasons of
conscience, some MCOs are likely to not agree to cover family planning
services under their contracts.
However, Sec. 438.10(d) and (e) of this final rule with comment
period, enrollees and potential enrollees must be informed of
``benefits that are available under the State plan but are not covered
under the contract, including how and where the enrollee may obtain
those benefits, any cost sharing, and how transportation is provided,''
and in the case of enrollees ``the extent to which, and how, enrollees
may obtain benefits, including family planning services, from out-of-
network providers.'' We believe that these provisions ensure that
enrollees have information on the availability of, and access to,
required family planning services, regardless of whether these services
are included in their MCO's contract.
Comment: We received a few comments recommending that each MCO
offer each beneficiary a choice between at least two providers who are
geographically, culturally, and linguistically accessible.
Response: This final rule with comment period contains requirements
addressing geographic, cultural, and linguistic accessibility. Section
438.206, contains a requirement that MCOs maintain a network of
providers sufficient in number, mix, and geographic distribution to
meet the needs of the anticipated number of enrollees. Section
438.206(d)(1)(v) specifically requires that MCOs consider the
geographic location of beneficiaries in developing their provider
networks. Section 438.206(e)(2) requires that MCOs deliver services in
a culturally competent manner, and Sec. 438.10 requires that States and
MCOs, PHPs and PCCMs make information available in languages in use in
the enrollment area. MCOs, PHPs, and PCCMs are also required to provide
translation services under Sec. 438.10.
Definition of Rural Area
For the purpose of applying the exception for ``rural areas'' in
1932(a)(3)(B) to the choice requirement in section 1932(3)(A), the
notice of proposed rulemaking proposed three definitions of a ``rural
area.'' The choices included (1) any area outside an ``urban area'' as
defined in Sec. 412.62(f)(1)(ii), the definition found at
Sec. 491.5(c), or an alternative State or HCFA definition. After
considering all comments, in this final rule with comment period we
define a rural area as any area other than an ``urban area'' as the
latter is defined in Sec. 412.62(f)(1)(ii) of the HCFA rules.
Comment: There was no clear consensus among commenters. A few
commenters said our proposed provision was overly broad, and
recommended that HCFA make clear in the final rule with comment period
that the rural exception would be very
[[Page 6258]]
narrowly construed. Others said there should be no State or HCFA
definition apart from the two Medicare definitions. One commenter said
we should keep the choice of three definitions, but if we are required
to choose only one, we should use the definition found at Part 412 of
this chapter. Other commenters said they agree with our prohibition
against designating an entire State as a rural area, but one commenter
said in some cases it may be appropriate to designate an entire State
as a rural area. One commenter said we should choose a single
definition of rural, but indicated no preference as to which definition
we chose.
We also received a number of recommendations of alternative
definitions or criteria. One commenter said any area with at least two
qualified bidders should not be considered rural. One commenter said we
should allow any medically under served area to be considered rural,
and one commenter recommended that we use the Office of Management and
Budget definition of non-metropolitan counties as a proxy for rural
areas. One commenter recommended that we clarify that any area that is
part of a Metropolitan Statistical Area could not be considered rural
under a State or HCFA definition.
Response: We have considered all of the comments and decided to
accept the commenter's suggestion that a single definition be adopted,
as well as the suggestion by the commenter that if a single definition
is adopted, we adopt the first definition incorporating the definition
of ``urban area'' in part 412.
Exception for Rural Area Residents
Proposed Sec. 438.52(c), outlined the rural exception to the
requirement for choice. Under the proposed rule, in a ``rural area'' as
defined in Sec. 438.52(a), a State may limit beneficiaries to one MCO
provided the beneficiary--
Can choose from at least two physicians or two case
managers; and
Can obtain services from any other provider under any of
the following circumstances:
(1) The service or type of provider the enrollee needs is not
available within the MCO network.
(2) The provider is not part of the network, but has an existing
relationship with the enrollee.
(3) The only plan or provider available to the enrollee does not,
because of moral or religious objections, provide the services sought
by the enrollee.
(4) The State determines that other circumstances warrant out-of-
network treatment.
In the final rule with comment period, in response to comments
discussed below, Sec. 438.52(b)(2)(ii)(D) also provides that enrollees
may also go outside the network for services if he or she needs related
services (for example, a cesarean section and a tubal ligation) to be
performed at the same time; not all of the related services are
available within the network; and the enrollee's primary care provider
or another provider determines that receiving the services separately
would subject the enrollee to unnecessary risk. Also in response to
comments, we have revised the provision permitting a beneficiary to go
out of plan to a provider with ``an existing relationship with an
enrollee'' to be limited to cases in which the provider is the ``main
source of a service.''
Comment: We received a few comments on the overall issue of whether
a rural exception should exist. One commenter agreed with the rural
exception, while other commenters disagreed. One of these commenters
said that in cases where there is only one MCO, States should be
required to offer higher capitation rates in order to entice more MCOs
to join the market. Other commenters said that in rural areas, States
should be required to offer a PCCM option if they cannot get two MCOs
to bid. One of these commenters also said States should ensure that
primary care providers in rural areas should receive high enough
capitation rates to cover their costs.
Response: The rural exception is provided by statute as a State
option, and we thus have no authority to deny States this option by
either requiring a second managed care entity (a PCCM) or mandating
that payment be increased enough to attract a second MCO.
Comment: A few commenters said they do not believe HCFA should
allow plans that do not offer family planning services to serve as the
single MCO in a rural area. One commenter pointed out that if the only
plan available does not offer family planning services, and a pregnant
enrollee desires a cesarean section and a tubal ligation, the enrollee
would be required to have her cesarean section through the MCO and
would then have to go out of network for the tubal ligation, thus
having a separate surgical procedure that would subject her to undue
risk. Other commenters said the final rule with comment period should
specify that when rural enrollees go out of plan for a service that is
not offered by the MCO, they should also be able to get ``related
services'' out of network. The commenters said this would assist
pregnant women who desire a tubal ligation simultaneously with a
cesarean section delivery.
Response: As discussed above, the statute allows MCOs to decide
which services they choose to agree to cover under their contracts.
However, in the case of a single MCO in a rural area, these decisions
could affect the health of a Medicaid beneficiary in the manner
suggested by the commenter. Thus, as noted above, in response to these
comments, we have provided in Sec. 438.52(b)(2)(ii)(D) that enrollees
may also go outside the network for services if he or she needs related
services (for example, a cesarean section and a tubal ligation) to be
performed at the same time; not all of the related services are
available within the network; and the enrollee's primary care provider
or another provider determines that receiving the services separately
would subject the enrollee to unnecessary risk.
Comment: A number of commenters recommended that we add language to
Sec. 438.52(b) requiring that rural enrollees have a choice between two
physicians or case managers. One commenter said we should require that
the two physicians or case managers are ``qualified to provide the
beneficiary with appropriate and necessary health care services
consistent with the beneficiary's initial assessment and treatment
plan.'' One commenter said that in the case of enrollees with HIV, they
should have a choice between two PCPs who are qualified and experienced
in providing HIV/AIDS care. One commenter said the PCPs should be
within 30 minutes or 30 miles from the beneficiary, except in frontier
areas. Another commenter said there should also be a requirement for
choice between two specialists or the ability to continue existing
provider relationships out of network, and the final commenter said if
the choice is between two PCCM case managers, they should be affiliated
with separate practices if possible. Another commenter said rural
beneficiaries in general do not have enough protection. This commenter
suggested that we add a new subsection to the final rule with comment
period cross-referencing all other exemptions and requirements, such as
geographic accessibility, language and cultural competency, etc.
Response: The comments listed above all pertain in some way to
accessibility to qualified and experienced providers. As stated above,
this regulation contains extensive requirements designed to ensure
beneficiary access to services, and these requirements pertain to rural
as well as non-rural managed care providers. The relevant requirements
can be found in Sec. 438.6 (Contracting
[[Page 6259]]
requirements), Sec. 438.10 (Information requirements), Sec. 438.110
(Assurance of adequate capacity and services), and Sec. 438.206
(Availability of services). Also, under Sec. 438.52(b)(2) (rural
beneficiaries have the ability to continue existing provider
relationships under this regulation. In light of the above protections,
discussed in detail elsewhere in this preamble, we do not agree that it
is necessary to add additional language to Sec. 438.52 in response to
these comments.
Comment: One commenter suggested that we delete Sec. 438.52(b)(2),
which lists the reasons rural beneficiaries may go out of network. This
commenter believes these provisions go beyond our statutory authority
and are in some cases redundant because if a certain service is not
available within the network, the MCO would be contractually obligated
to pay for it anyway.
Response: We disagree with the commenter. Section 1932(a)(3)(B)(ii)
of the Act, provides that rural beneficiaries can be limited to one
MCO, if the MCO ``permits the individual to obtain such assistance from
any other provider in appropriate circumstances (as established by the
State under regulations from the Secretary).'' The Congress clearly
intended for rural beneficiaries to access out-of-network services in
appropriate circumstances, and clearly granted HCFA the discretion to
define those circumstances in regulations. Section 438.52(b)(2) of the
final rule with comment period extends these rights in a manner that
recognizes both State flexibility and the importance of protecting
enrollees.
Comment: We received one comment suggesting that the final rule
include an additional reason beneficiaries can access out of network
services. This commenter said the State should be required to let
beneficiaries go out of network if treatment or services have been
reduced or eliminated within a geographic area covered by the MCO.
Response: As discussed in section II. D. below, Sec. 438.206(d)(5)
allows beneficiaries to seek out-of-network treatment if the type of
service or provider needed is not available within the network. We
believe this language responds to the situation outlined by the
commenter.
Comment: Another commenter suggested that we add a new subsection
to the final rule outlining an additional reason beneficiaries can go
out of network. This commenter suggested allowing beneficiaries to go
out of network because ``The only plan or provider available to the
enrollee is not able, because of prior court-ordered (involuntary)
receipt of services from that provider, to develop a therapeutic
relationship with the enrollee for the provision of mental health
services.''
Response: We agree that in cases where the only available provider
had previously treated the enrollee against his or her will, it would
be difficult to establish a therapeutic relationship. We have decided
not to add the suggested language to the final rule with comment
period, however, because we believe the scenario outlined by the
commenter would be covered by the existing language, particularly the
section indicating that rural enrollees can go out of network in
``other circumstances.''
Comment: One commenter stated we should add clarifying language to
this section indicating that when rural enrollees go out of network for
services under the circumstances outlined in the regulation, they do
not incur any additional cost.
Response: Section 438.106, Liability for payment, already covers
these circumstances. Section 438.106(c) specifies that MCOs cannot hold
Medicaid enrollees liable for ``payments for services furnished under a
contract, referral, or other arrangement, to the extent that those
payments are in excess of the amount that the enrollee would owe if the
MCO provided the services directly.'' We believe enrollees in rural
exception areas going out of network in the circumstances outlined in
this chapter are protected by this provision. Therefore, we do not
believe it is necessary to include the suggested language in
Sec. 438.52(b)(2). However, if a beneficiary chooses to go out of
network for reasons other than those outlined in the rural provisions,
the beneficiary would be liable for payment for the service.
Comment: We received a few comments recommending that the
provisions allowing beneficiaries to go out of network be rewritten to
specifically address the needs of rural enrollees with disabilities who
have multiple medical needs. The commenters are concerned that
enrollees be able to preserve existing relationships with DME
suppliers. In addition, one commenter said enrollees should be able to
go out of network if the only provider available does not have
experience with the individual's disability, a provider cannot meet the
needs of an enrollee (for example, an enrollee needs a home health aide
in the morning but the only agency in the network only has aides
available mid-day), or the enrollee has had ``previous problems'' with
the provider. In addition, this commenter said the rural exception
should make clear that in border areas, the out of network provider can
be in a different State if that provider is geographically closer.
Response: Regarding the comment about border areas, the Medicaid
program already accommodates crossing State lines in circumstances in
which this is consistent with traditional patterns of care. We do not
expect that this regulation will disrupt or change this situation.
Regarding the other situations mentioned by commenters, as we have
stated previously, the ability to go out of network is meant to be
interpreted broadly. We expect that in cases in which enrollees with
disabilities can make a case that their needs are not well-served by
the MCO, they would be allowed to go out of network by the State
pursuant to Sec. 438.52(b)(2)(A) or (E). However, we also expect that
because of the breadth of these provisions, MCOs serving rural
beneficiaries will make strong efforts to have a comprehensive network
that meets the needs of all of their enrollees. Rural MCOs, like all
other MCOs, are responsible for making sure they have a network
adequate to meet the needs of their anticipated enrollment, and this
includes individuals with disabilities.
Comment: We received a few comments recommending that the
provisions allowing enrollees to go out of network be expanded. Some
commenters said all enrollees in all mandatory and voluntary managed
care systems should have the same rights to go out of network. One
commenter said urban beneficiaries should be able to use FQHC services
if they are enrolled in MCOs that do not offer FQHC services.
Response: We believe that where there is a choice between MCOs, it
is not necessary to give beneficiaries the same rights to go out of
network that exist in rural areas with a single MCO. Regarding the FQHC
comment, FQHC services are already a mandatory service under the
Medicaid program. FQHC services must be available through a State's
managed care program, or be provided as an out-of-network option. We
expect beneficiaries who have a choice of MCOs and who wish to use
FQHCs to choose their MCO accordingly. In addition, beneficiaries who
either choose or are enrolled by default into an MCO that does not
include an FQHC have 90 days to disenroll without cause.
Comment: We received a number of comments stating that the
provision allowing beneficiaries to go out of network if the service or
type of provider desired is not available within the MCO network is too
broad. One commenter simply said the provision is
[[Page 6260]]
inappropriate. Other commenters said that this should be permitted only
if the MCO does not have other in-network alternatives.
Response: In providing for a rural exception to choice, the
Congress clearly intended to protect enrollees by giving them the right
to go out of network in appropriate circumstances. We expect States to
monitor their managed care programs, particularly in rural areas, to
ensure that enrollees have access to appropriate services. We are not
revising Sec. 438.52(b)(2) in response to these comments.
Comment: We received a number of comments recommending that we
clarify what is meant by not available within the network. The
commenters recommended that we define ``available'' to encompass such
factors as geographic accessibility, cultural and linguistic
competency, appointment waiting times, and appropriateness of provider
(for example, pediatric verses adult specialist). One of the commenters
also recommended that we make it clear that when we refer to providers
in this provision, we are including safety-net providers and clinics.
Response: We do not agree that it is necessary to amend the
regulation. Under this final rule with comment period, rural MCOs must
meet many new requirements addressing geographic, cultural, and
linguistic accessibility. Section 438.207(b)(2) requires that MCOs
maintain network of providers sufficient in number, mix, and geographic
distribution to meet the needs of the anticipated number of enrollees.
Section 438.206(d)(1)(v) requires that MCOs consider the geographic
location of enrollees in developing their provider networks. Section
438.206(e)(2) requires that MCOs deliver services in a culturally
competent manner, and Sec. 438.10 requires that States and MCOs, PHPs,
and PCCMs make information available in languages in use in the
enrollment area. In the instance of a service for which there is no
available provider who meets the above provisions, that service would
not be considered available, and under Sec. 438.206(d)(5), the enrollee
would be able to obtain the service out-of-network. Regarding the
comment about appropriateness of provider, we do expect States and MCOs
to consider this when evaluating requests to obtain needed services
out-of-network. In evaluating such requests, States may consider such
factors as age, medical condition, general medical practice in the
area, and overall availability of specific providers. Regarding the
clinic and safety-net services, we have decided not to amend the
regulation in response to this comment. This provision is meant to
address beneficiary choice, and is not meant to single out certain
types of providers for guaranteed participation.
Comment: A large number of commenters disagreed with giving rural
beneficiaries the right to go out-of-network when they have an existing
relationship with a provider who is not in the MCO network. Some
commenters recommended that HCFA place a time limit on how long the
relationship can be continued, and a few said the final rule should
define what is meant by an existing relationship. Other commenters
recommended that various limitations be placed on this provision, such
as only allowing it when the beneficiary also meets one of the other
criteria for going out-of-network; only permitting it when the
individual has a chronic or terminal illness; only permitting it when
the provider is in the MCO's service area; and permitting it only when
a change in the provider relationship will result in an adverse health
outcome. In addition, one commenter said it should be left to the MCO's
discretion whether the relationship should be continued, and one
commenter said the provider should be required to pass the MCO's
credentialing process. One commenter said we should clarify that an
existing relationship includes the example of a pregnant woman who
initiated prenatal care with a provider before enrolling in the MCO.
Response: The requirement for choice in managed care programs is an
important right granted to enrollees by the Congress. Where there is no
choice, such as in rural areas with one MCO, The Congress intended for
beneficiaries to have the protection of going out-of-network in
appropriate circumstances, and directed the Secretary to publish
regulations to specify the circumstances. However, we agree with the
commenters who urged us to clarify what is meant by an existing
relationship, and how long the relationship should be continued.
Therefore, we amended the regulation to specify that this provision
applies when the provider is the main source of a service to an
enrollee and that the enrollee may continue to see the provider as long
as the provider continues to be the main source of the service. We
believe that these provisions cover a pregnant enrollee who, before
enrolling in the MCO, had initiated prenatal care with a provider
outside the MCO's network, and wished to continue seeing that provider.
Comment: We received a few comments recommending that we add to the
scope of the provision allowing rural beneficiaries to go out of plan
to a provider with whom they have an existing relationship. Some
commenters recommended that the final rule clarify that this exception
applies to specialists as well as primary care providers. One commenter
said the final rule should specify the scope of services the out-of-
network provider may provide. For example, this commenter said an
obstetrician caring for a high-risk pregnant woman should be able to
order tests without any limitation.
Response: In providing for this exception, and in further
clarifying it, we clearly intend for specialists as well as PCPs to be
included. We do not believe any further clarification is necessary.
Furthermore, we intend for the scope of services provided by the out-
of-network provider to be directly related to the beneficiary's overall
condition and medical history, and we expect out-of-network providers
and the MCO to share information regarding the patient's care for all
treatment, because the MCO is ultimately responsible for payment.
Again, we do not believe it is necessary to add language allowing
providers the right to provide unlimited diagnostic and treatment
services.
Comment: We received two comments recommending that the provision
allowing rural beneficiaries to go out of network also apply to urban
beneficiaries who want to go out of network to use Indian Health
Service/Tribal providers/Urban Indian (I/T/U) providers.
Response: We disagree that it is necessary to add the suggested
language to the regulation because Indian enrollees, whether in urban
or rural areas, already have the right to access
I/T/U providers outside of their networks in programs established under
section 1915(b) or section 1115 authority, and in voluntary programs.
Neither the BBA nor this regulation removes that authority.
Additionally, Indians are exempt from mandatory enrollment into an MCO
or PCCM under the new section 1932(a) authority, except where the MCO
or PCCM is an I/T/U provider.
In responding to this comment, we have noted that Urban Indian
health programs were inadvertently omitted from the list of entities
into which an Indian eligible could be mandatorily enrolled under
section 1932(a). In this Final rule with comment period, we have
modified Sec. 438.50(d)(2) to correct this omission.
Comment: One commenter recommended that we increase the State
requirements for quality monitoring in areas falling under the rural
exception.
Response: This regulation implements strong new quality
requirements for
[[Page 6261]]
Medicaid managed care arrangements. We expect States to aggressively
monitor quality in all managed care programs, including those covered
by the rural exception. We do not agree with the commenter that the
quality requirements for rural programs should be different from the
general quality requirements.
3. Enrollment and Disenrollment: Requirements and Limitations (Proposed
Sec. 438.56)
Applicability
Section 1932(a)(4) sets forth a number of requirements relating to
enrollment and disenrollment in Medicaid managed care programs.
Proposed Sec. 438.56(a)(2) specified that most of the enrollment/
disenrollment provisions apply to all MCO, PHP, and PCCM contracts,
regardless of whether enrollment is mandated under a waiver or section
1932, or is voluntary. The only provisions in this section that apply
only to programs under which enrollment is mandated under section
1932(a)(1)(A) are the limitations on enrollment and default enrollment
provisions. (In the final rule with comment period, these Section 1932
provisions have been moved to Sec. 438.50.)
Comment: We received a number of comments objecting to the proposed
rule's provisions concerning the applicability of enrollment
requirements. One commenter contended that the 90-day right to
disenroll without cause, the disenrollment for cause provisions, and
the appeals provisions should apply only to mandatory managed care
programs under section 1932(a)(1)(A) of the Act. A number of other
commenters did not believe a 12-month lock-in should be applied in
cases of voluntary enrollment. Two comments appear to be based upon
misunderstanding because the proposed rule as written already reflected
their suggestions. (One comment urged us to apply subsections (e)
through (h) of the proposed rule to PHPs, and one comment says
subsections (b) through (d) should apply only to section 1932
programs.) The commenters who indicated we applied various provisions
too broadly would like HCFA to restrict the applicability of the
provisions to mandatory enrollment under section 1932 programs.
Response: The BBA amended section 1903(m)(2)(A) of the Act to
require, in a new paragraph (xi), that MCOs and MCO contracts ``comply
with the applicable requirements of section 1932.'' The BBA also
amended section 1903(m)(2)(A)(vi) to require that contracts with MCOs
permit ``individuals to terminate * * * enrollment in accordance with
section 1932(a)(4),'' and must provide for ``notification in accordance
with [that] section.'' (Emphasis added.) These requirements apply to
all MCO contracts, regardless of whether enrollment in the contracts is
voluntary, mandated under a waiver, or mandated under section 1932(a)
of the Act. The enrollment requirements the proposed rule applies to
MCOs all either apply by their own terms to MCOs, or are incorporated
as set forth above under section 1903(m)(2)(A)(vi) of the Act.
In the case of primary care case managers, section 1905(t)(3)(F)
similarly requires that primary care case manager contracts comply with
``applicable provisions of section 1932,'' while section 1905(t)(3)(F)
requires that enrollees be provided the ``right to terminate enrollment
in accordance with section 1932(a)(4).'' Again, this provision is not
limited to cases in which the primary care case manager is
participating in a mandatory program under section 1932(a).
The only provisions of section 1932 of the Act that not are
applicable to all MCO, PHP, and PCCM contracts are those which include
the language ``In carrying out paragraph (1)(A),'' which refers to the
statutory authority to establish mandatory managed care programs
through the State Plan Amendment process. These are the provisions we
have designated as applicable to section 1932(a)(1)(A) programs only.
In order to prevent any future confusion regarding which provisions
apply only to section 1932(a)(1)(A) programs, we are in this final rule
with comment period moving all such provisions to Sec. 438.50.
With respect to the commenters who believed that the 12-month lock
in should not apply when enrollment is voluntary, again, this result is
dictated by the statute. Under section 1903(m)(2)(A)(vi) of the Act, an
enrollee in an MCO has the right to disenroll only to the extent this
is provided for in section 1932(a)(4) of the Act, which permits
disenrollment without cause only in the first 90 days and annually
thereafter. Under section 1915(a) of the Act, where enrollment is
voluntary such an arrangement will not be considered to violate the
general freedom of choice provision in section 1902(a)(23).
Disenrollment by the Recipient: Timing
Section 438.56(e) of the proposed rule (recodified at
Sec. 438.56(c) in the final rule with comment period) set forth the
general rules regarding disenrollment rights. These provisions apply to
all situations in which States choose to restrict disenrollment.
Beneficiaries are permitted to disenroll for cause at any time, without
cause during their first 90 days of enrollment, and annually
thereafter. In certain circumstances (rural areas with only one MCO, or
areas in which the statute permits contracting with only a single
county-sponsored HIO), these rules apply to changes between individual
physicians or primary care case managers.
Comment: We received one comment suggesting that the proposed rule
did not go far enough in setting up a consistent process for
disenrollment. The commenter recommended that HCFA include a
requirement in the final rule that the disenrollment (and enrollment)
process should be consistent across all MCOs, and PCCMs in a State.
Response: We are sensitive to the concern that to the greatest
extent possible, a State's program should be consistent in order to
avoid confusion and misunderstanding on the part of enrollees. We
encourage States to establish uniform procedures in the area of
enrollment and disenrollment, and we note that this section sets forth
rules regarding the process that must be followed in all Medicaid
managed care programs that restrict disenrollment in any way. We
believe the proposed regulation provided a great degree of consistency
in this process. We also believe the information requirements in
Sec. 438.10 and the notice requirements in Sec. 438.56 will alleviate
any potential confusion among enrollees. Therefore, we have decided not
to change the final rule with comment period in response to this
comment.
Comment: Several commenters noted that the proposed rule did not
include a provision providing for MCO or PCCM disenrollments of
beneficiaries for cause. Commenters recommended that HCFA adopt the
language in the Medicare+Choice regulation allowing MCOs and PCCMs to
request disenrollment of beneficiaries for uncooperative or disruptive
behavior, or for fraudulent behavior.
Response: The previous regulation (at Sec. 434.27) required PHP and
HMO contracts to specify the process by which they could request that
the State disenroll beneficiaries. It appears that the omission of this
provision in Sec. 438.56 was simply an oversight. In response to this
comment, we are including a provision in this rule allowing MCOs, PHPs,
and PCCMs to request disenrollment of enrollees. Section 438.56(b) of
the final rule with comment period requires that MCO, PHP, and PCCM
contracts specify the
[[Page 6262]]
reasons for which an MCO, PHP, or PCCM may request disenrollment of an
enrollee. This section also prohibits MCOs, PHPs, and PCCMs from
requesting disenrollment on the basis of the enrollee's adverse changes
in health status, diminished mental capacity, utilization of medical
services, or uncooperative or disruptive behavior resulting from an
enrollee's special needs. The only exception to this rule is where the
beneficiary's continued enrollment in the MCO, PHP, or PCCM seriously
impairs the entity's ability to furnish services to either this
enrollee or other enrollees in the entity.
Contracts must also specify how the MCO, PHP, or PCCM will assure
the State agency that it will not request disenrollment for reasons
other than those permitted under the contract. As suggested by the
commenter, these changes reflect the provisions contained in the
Medicare+Choice regulations.
Comment: We received comments regarding the special circumstances
of persons who are homeless, particularly related to their transience
and special needs in obtaining information critical in choosing an MCO
or PCCM.
Response: We agree that persons who are homeless present a unique
situation. Due to the lack of a mailing address and general transience,
it is likely that they may not receive information about choice of MCOs
or PCCMs or the fact they have been enrolled in an MCO or PCCM until
they attempt to receive care. As a protection for this population, we
are revising the regulation to include, as a cause for disenrollment,
(under paragraph (d)(2) of the section) the fact that a person was
homeless (as defined by the State) or a migrant worker at the time of
an enrollment by default. This is in addition to all other
disenrollment rights offered to all enrollees.
Comment: We received many comments asserting that cause is not
adequately defined. Commenters urged HCFA to publish a broad definition
of cause. Comments suggesting what would constitute cause included--
inadequacy of an MCO's medical personnel in treating HIV; inability to
access primary and preventive care; inability to access family planning
services; the MCO's failure to offer family planning services;
geographic, cultural, and linguistic barriers; an enrollee's PCP has
left the MCO; lack of access to pediatric and pediatric sub-specialty
services; the need for the enrollee to access local Indian health care
services that are not available in the MCO; inability to obtain
information in an accessible format; and inability to receive services
appropriate to the medical condition. In addition, one commenter
suggested that States be required to ``look behind'' HIV-related
disenrollment requests to determine whether there are systemic problems
in serving individuals with HIV.
Response: We agree that cause should be more specifically defined,
and have revised Sec. 438.56(d)(2) to provide examples that will be
deemed to constitute cause. These reasons for disenrollment are similar
to the grounds for going out of plan where the rural area exception
applies. Specifically, under Sec. 438.56(d)(2), an enrollee may
disenroll for cause if (1) the enrollee was homeless (as defined by the
State) or a migrant worker at the time of enrollment and was enrolled
in the MCO, PHP or PCCM by default, (2) the MCO or PCCM does not,
because of moral or religious objections, cover services the enrollee
seeks, (3) the enrollee needs related services (for example a cesarean
section and a tubal ligation) to be performed at the same time; not all
related services are available within the network; and the enrollee's
primary care provider or another provider determines that receiving the
services separately would subject the enrollee to unnecessary risk, and
(4) other reasons, including but not limited to, poor quality of care,
lack of access to services covered under the contract, or lack of
access to providers experienced in dealing with the enrollee's health
care needs.
Further regarding the related services provision, we recognize that
enrollees in this situation who are otherwise satisfied in their MCO or
PHP may not want to disenroll in order to receive the related services
together. We note that Sec. 438.206 specifies that if the network
cannot provide the necessary services covered under the contract
(including related services) needed by the enrollee, these services
must be adequately and timely covered out-of-network for as long as the
MCO or PHP is unable to provide them. Under this provision, the
enrollee would be able to avoid the need to disenroll from his or her
current MCO or PHP but could still receive the related services
concurrently.
Comment: One commenter pointed out that while a later section of
the proposed rule speaks to the effective date of for-cause
disenrollments, it does not address the effective date for without-
cause disenrollments. The commenter recommended that there be a
required effective date, and that it be no later than the timeframe
provided for in the for-cause section, that is the beginning of the
second calendar month following the month in which the request for
disenrollment was made.
Response: We realize that the heading of Sec. 438.56(f) in the
proposed rule, ``Procedures for Disenrollment for Cause,'' suggests
that we intended to limit these requirements to disenrollment for
cause. However, HCFA did not intend that States be required or
encouraged to set up a different process based upon whether or not the
disenrollment request is for cause. Therefore, we have retitled the two
paragraphs which now contain the same provisions (Sec. 438.56(d) and
(e)) as ``Procedures for Disenrollment'' and ``Time-frame for
disenrollment determination''
Comment: We received a number of comments disagreeing with giving
enrollees the right to disenroll without cause for 90 days after
enrolling in (or being default enrolled into) an MCO, PHP or PCCM.
Several commenters believed that the 90-day period was too lengthy, but
one commenter stated that ``[t]he removal of the right to disenroll at
any time troubles us.'' The commenters opposing the 90-day period did
not offer suggestions of a shorter time period. One commenter
recommended that there should only be one 90-day period, and not a new
opportunity to disenroll without cause every time a recipient enters a
new MCO, PHP, or PCCM.
Response: The requirement to allow beneficiaries to disenroll
without cause for 90 days appears in section 1932(a)(4), so we do not
have authority to remove or alter this right, or the length of the 90
day time period. As for the question of whether there is a new 90-day
period with each new MCO, PHP, or PCCM enrollment, the statute refers
to enrollment with the MCO or PCCM and not initial enrollment in the
managed care program. Therefore, there is no room for interpretation of
that provision as just allowing for a single 90-day disenrollment
period without regard to whether the beneficiary enrolls in a new MCO
or PCCM.
Comment: A number of commenters disagreed with our interpretation
that the right to disenroll for 90 days without cause only applies the
first time a recipient is enrolled in a particular MCO, PHP, or PCCM.
The commenters recommended that the final rule provide for a right to
disenroll for 90 days each time a recipient enters an MCO, PHP, or
PCCM, even if he or she has been enrolled in that MCO. PHP, or PCCM
previously. Commenters indicated that this is justified on the basis
that there could have been substantial changes in an MCO, PHP, or PCCM
since the recipient's previous enrollment.
Response: The statute does not make clear whether the 90 day period
[[Page 6263]]
following notice of enrollment with an MCO or PCCM applies only once,
when the individual is initially enrolled with the MCO or PCCM, or each
time the individual enrolls with an MCO or PCCM, even if he or she has
been enrolled in the MCO or PCCM before. We believe that the purpose of
the extended 90 day disenrollment period is to allow the beneficiary to
become familiar with an MCO or PCCM before deciding whether to remain
enrolled. Once a beneficiary has been an enrollee of an MCO or PCCM
this rationale no longer applies. While it is true that an MCO, PHP, or
PCCM might change in the interim, this is equally true of an MCO, PHP,
or PCCM that the enrollee might remain enrolled with. A beneficiary
would still have an annual opportunity to disenroll in both cases. We
believe that the interpretation the commenter has suggested would
create a potential for abuse by providing an incentive for frequent
changes in enrollment that could result in multiple 90 day periods for
the same MCO, PHP, or PCCM.
Comment: The proposed rule specifies that the 90-day clock for
enrollees to disenroll without cause begins upon the actual date of
enrollment, and further provides that if notice of enrollment is
delayed, the State may extend the 90-day period. All comments we
received on this issue urged HCFA to adopt what they consider to be
stronger language. The commenters suggested that HCFA provide that the
90-day disenrollment period begins when notice of enrollment is
actually received. Furthermore, they contended that States should be
required, rather than permitted, to extend the 90-day period in the
event that notice to the enrollee is delayed. A couple of commenters
also believed that States and MCOs, PHPs, and PCCMs should be required
to guarantee that the notice is actually received; and in the case of
homeless individuals, that the notice is received prior to the initial
assessment by the MCO, PHP, or PCCM.
Response: By providing for the 90-day period to begin when the
enrollment takes effect, HCFA was attempting an interpretation of the
statute that would offer maximum protection to enrollees. That is
because in many States, notice of enrollment may be sent to the
recipient up to 60 days before the effective date of the enrollment.
However, because there is such a high level of concern that
beneficiaries will be harmed in cases when notice of enrollment is
mailed after the effective date, we are adding regulation text
providing that the 90 day period begins upon the enrollment, or the
date the notice is sent, whichever is later. Regarding the request that
States and MCOs, PHPs, and PCCMs be required to guarantee that notices
are actually received, we do not believe it is appropriate to require
such a guarantee when there are certain factors beyond the control of
the State or MCO, PHP, or PCCM. However, it is in a State's best
interest to make the maximum effort possible to ensure that notices are
received, and we encourage States to take measures to ensure this to
the best of their ability.
Comment: We received one question about whether States should be
able to differentiate between different types of MCOs, PHPs, and PCCMs
in the 12-month lock-in provision. The commenter recommended that
States be allowed to have different lock-in periods depending upon
whether the enrollee was locked into a PCCM or an MCO.
Response: Section 1932(a)(4), which applies to both MCOs and PCCMs,
requires that enrollees be allowed to disenroll for cause at any time,
and without cause during the initial 90 days, and ``at least every 12
months thereafter.'' As long as no enrollee is locked-in for a period
of more than 12 months, there is no prohibition against States
implementing different lock-ins for MCOs, PHPs, and PCCMs.
Comment: A number of commenters said they believe the provision for
an annual disenrollment opportunity may create confusion. The
commenters suggested that States be required to hold an annual open
enrollment period.
Response: The statute requires States to permit enrollees to
disenroll from an MCO or PCCM for a 90-day period at the beginning of
enrollment, and ``at least every 12 months thereafter.'' As long as the
State meets the requirement to inform beneficiaries of their right to
terminate or change enrollment at least 60 days in advance, the State
may structure the annual opportunity in whatever way it sees fit. This
may involve holding an annual open enrollment period as the commenters
suggested, or individually offering each recipient an opportunity to
change enrollment upon his or her enrollment anniversary.
Comment: Section 438.56(e)(2) of the proposed rule (moved to
Sec. 438.52(c) in the final rule) provided that in rural areas with
only one MCO, States may meet the disenrollment requirements by
allowing enrollees to change physicians or case managers within the
MCO. A commenter contended that PCCM enrollees in rural areas should be
allowed to disenroll and transfer to fee-for-service Medicaid if only a
single PCCM is available, since section 1905(t)(3)(E) of the Act
requires that a beneficiary have a choice.
Response: Section 1905(t)(3)(E) of the Act requires that primary
care case manager contracts permit disenrollment in accordance with
section 1932(a)(4) of the Act. As defined in Sec. 438.2, a primary care
case manager may be an individual physician or a group of physicians.
Therefore, a State arguably would be complying with the requirement in
section 1932(a)(4) of the Act if it allows enrollees to change primary
care case managers since (to the extent these individual managers are
each considered managed care entities.) More importantly, however, we
believe that section 1932(a)(3)(B) provides an exception not only to
the rule set forth in section 1932(a)(3)(A) of the Act that an enrollee
have a choice of more than one MCO, but as an implicit exception to the
requirement in section 1932(a)(4)(A) of the Act that a beneficiary be
able to disenroll from an MCO. Thus, even if the State has only a
single MCO contract in a rural area pursuant to section 1932(a)(3)(B)
of the Act, we believe that the requirements in section 1932(a)(4) of
the Act would be satisfied by permitting disenrollment from an
individual primary care physician. The authority in section
1932(a)(3)(B) of Act to permit the choice of entity requirement in
section 1932(a)(3)(A) of the Act to be fulfilled by providing a choice
of individual physicians would be meaningless if section 1932(a)(4) of
the Act were nonetheless construed to permit an individual to disenroll
from an MCO, as opposed to changing individual physicians. Thus, where
the conditions in section 1932(a)(3)(B) have been satisfied, the
requirement in section 1932(a)(4), as made applicable by section
1905(t)(3)(E), is satisfied by permitting beneficiaries to disenroll
from their primary care physician.
Procedures for Disenrollment
Section 438.56(f) of the notice of proposed rulemaking set forth
the required procedures for processing disenrollment requests. (We note
here that the proposed rule referred to ``Procedures for disenrollment
for cause,'' but as noted above, in response to comments, we have
renamed the two paragraphs containing material from proposed
Sec. 438.56(f) ``Procedures for disenrollment'' and ``Timeframe for
Disenrollment Decisions.'') In Sec. 438.56(f), we proposed that
enrollees be required to submit written requests for disenrollment to
the State agency or to the MCO, PHP, or PCCM. MCOs, PHPs, and PCCMs are
required to
[[Page 6264]]
submit copies of disenrollment requests to the State agency. Proposed
Sec. 438.56(f) provided that while MCOs, PHPs, and PCCMs may approve
disenrollment requests, only the State agency may deny such requests.
In cases where the State agency receives the request, under
proposed Sec. 438.56(f) it could either approve the request or deny it.
Requests for disenrollment had to be processed in time for the
disenrollment to take effect no later than the first day of the second
month following the month in which the enrollee made the request.
Proposed Sec. 438.56(f) further provided that if the State or MCO, PHP,
or PCCM does not act within the specified timeframe, the request was
considered approved.
Response: This comment is quoting language from proposed
Sec. 438.56(e)(1), which is retained in the final rule with comment
period in Sec. 438.56(c). This language states that if the State
chooses to limit or restrict enrollment, it must permit enrollment
without cause in the first 90 days an individual is enrolled in an MCO,
PHP, or PCCM, and annually thereafter. This rule would be irrelevant if
a State chose not to limit disenrollment at all. To clarify our
position in response to the commenter, if a State wishes to permit
disenrollment at any time, or more frequently than the minimum
disenrollment rights required under Sec. 438.56(c), the same rules on
notice and effective date apply as apply when a State ``chooses to
restrict disenrollment.''
Comment: Several comments felt that the final rule should specify
that disenrollment requests may be submitted by either the enrollee or
his or her representative. In addition, others felt that we should
delete the reference to 20 CFR part 404, subpart R in the definition of
authorized representative. The commenters believed that these rules,
which generally govern representative payees for Social Security
programs, have little, if any, relevance to the Medicaid program and
that these requirements would limit assistance to beneficiaries in the
Medicaid managed care enrollment process. They indicated that current
rules recognize that beneficiaries may require assistance in a variety
of circumstances and provide that applicants and recipients may obtain
that assistance from a variety of sources. For example, commenters
pointed out that in formal proceedings such as fair hearings, Medicaid
beneficiaries enjoy the right to ``represent themselves, use legal
counsel, a relative, friend or other spokesman.'' (42 CFR 431.206). If
the applicant is incompetent or incapacitated, anyone acting
responsibly for the applicant can make application on the applicant's
behalf (42 CFR 435.907). People with disabilities who are incompetent
or incapacitated can currently be represented by anyone acting
responsibly on their behalf. Commenters indicated that State law is
available, and is used to step in when a person cannot make medical
decisions on his or her behalf.
Response: We concur with the commenters and have modified
Sec. 438.56(d) to add ``his or her representative'' to enrollee. In
addition, we have deleted the reference to 20 CFR Part 404. We have
also deleted the reference to ``authorized'', using only the term
representative to allow for a broad range of representatives,
consistent with existing policies and practices. The definition, which
has been moved to Sec. 430.5, now reads ``Representative has the
meaning given the term by each State consistent with its laws,
regulations, and policies.''
We agree with the commenters that the appropriateness of a
representative depends on the significance of the activity for which
they are acting as representative, so that States should have the
flexibility to determine who may represent the beneficiary in various
activities. The State may establish various criteria depending upon the
situation (for example, disenrollment requests, choice of health plans,
receiving notices, filing grievance and appeals (including requests for
expedited review, being included as a party to the appeal and the State
fair hearing, receiving marketing materials, being provided opportunity
to review records, etc.) In determining who may represent
beneficiaries, we anticipate that States will provide special
consideration for individuals with cognitive impairments, who are
unable to appoint their own representatives, but who may be especially
vulnerable and require assistance in accessing the protections offered
in these regulations.
Comment: A number of commenters disagreed with the requirement that
disenrollment requests be submitted in writing, contending that this
may present a barrier to some enrollees, and that the process should be
as barrier-free as possible.
Response: We agree and are interested in reducing or eliminating
barriers wherever possible. Therefore, Sec. 438.56(d) has been amended
to specify that disenrollment requests may be written or oral. Further,
we note that States cannot impose a requirement that beneficiaries
appear in person to request disenrollment.
Comment: We received a number of comments relating to the time
allowed for processing disenrollment requests. The only references to a
timeframe appeared in the proposed rule at Sec. 438.56(f)(2)(ii) and
Sec. 438.56(f)(4)(i). (These sections are redesignated as
Sec. 438.56(d)(3)(ii) and Sec. 438.56(e)(1) in the final rule.)
Disenrollment requests, if approved, must take effect no later than
``the first day of the second month after the enrollee makes the
request.'' (This is re-wording of previous statutory language, formerly
found at section 1903(m)(2)(A)(vi) of the Act, which required
disenrollment requests to be effective at the ``beginning of the first
calendar month following a full calendar month after the request is
made for such termination.'' This specific language was removed by BBA
and was not replaced with any alternative timeframe.) Commenters urged
HCFA to spell out a more specific list of requirements relating to
processing of requests. Although not all comments suggested a specific
timeframe, most urged an ``expedited'' process for urgent or emergency
situations. Commenters who did specify a timeframe for urgent or
emergency situations indicated that requests should be required to be
processed within 3 or 5 days. One commenter said disenrollment requests
on behalf of children with special health care needs should be
processed within 72 hours. It is important to note that the comments
addressed ``processing'' of disenrollment requests, and not the
effective dates. It is safe to assume, however, that the commenters
would support an expedited effective date as well as expedited
processing.
Response: Because of the removal of the effective date requirement
in section 1903(m)(2)(A)(vi) of the Act, the statute is silent on how
long the disenrollment process should take.
In response to the above comments, we believe that other
beneficiary protections within this final rule with comment period, for
example Sec. 438.206(d)(5), provide adequate protection and access to
necessary medical services covered under the contract out-of-network
for as long as the MCO pro PHP is unable to provide them.
Comment: One commenter recommended that HCFA require States to
establish an Ombudsman program to intervene in the disenrollment
process.
Response: We are sensitive to the need for enrollees to have
adequate protection in the enrollment and disenrollment process. This
is particularly a concern for those who may have limited experience
with managed care systems. We believe we have built numerous
protections into
[[Page 6265]]
Sec. 438.56, including a provision for an appeals process when
disenrollment requests are denied. In addition, it is important to note
that many States use enrollment brokers, who act as independent third
parties and assist enrollees in making their choice of managed care
organizations. We believe that it is not necessary to require States to
establish Ombudsman programs, although we would encourage them to do
so.
Comment: One commenter believed the provision describing how MCOs,
PHPs, and PCCMs should process disenrollment requests was too
prescriptive. The commenter felt we should allow States to individually
develop the process for MCO, PHP, and PCCM handling of disenrollment
requests. However, other commenters felt this provision was too
flexible, and recommended that MCOs, PHPs, and PCCMs not be permitted
to process disenrollment requests. These commenters recommended that
only the State or an independent third party, such as an enrollment
broker, be permitted to handle disenrollment requests.
Response: Disenrollment is an important right granted to
beneficiaries by the Congress, especially in an environment in which
States can now require a lock-in period of up to 12 months. The
consistent process required under this regulation is intended to
guarantee that beneficiaries will be able to exercise this right as
intended by the Congress. However, the statute is silent on certain
aspect of disenrollment, including who should process such requests.
Allowing MCOs, PHPs, and PCCMs to process requests is longstanding
policy, and is based upon the principle of State flexibility, because
States are closest to the situation and should be aware of whether such
a policy would be beneficial to enrollees.
Further, we understand the concern that MCOs, PHPs, and PCCMs may
have an incentive to discourage beneficiaries from disenrolling, or to
disenroll more costly beneficiaries, but we believe adequate safeguards
have been built into the process to protect enrollees. For example,
MCOs, PHPs, and PCCMs may approve disenrollment requests, but they may
not disapprove them. If an MCO, PHP, or PCCM does not take action to
approve a request, it must refer the request to the State agency for a
decision. States are also required to give enrollees who disagree with
disenrollment decisions access to the State fair hearing system. It is
important to note, also, that involving the MCO, PHP, or PCCM in the
process may benefit enrollees. In many instances, the MCO, PHP, or PCCM
may be able to resolve the problem that led the enrollee to request
disenrollment, thus meeting the beneficiary's needs while preventing
the necessity to disenroll. In addition, we expect that MCOs would
track reasons for these requests as part of their quality improvement
programs.
In this rule we believe we have taken the interests of
beneficiaries and States into account and balanced the need for
beneficiary protection with the need for flexibility in program
administration. We therefore disagree with the commenters, and have
decided not to change this provision in the final rule with comment
period.
Comment: A number of commenters asked for clarification of the
requirement that MCOs, PHP, and PCCMs to notify the State if they do
not take action on a request for disenrollment. Commenters recommended
that the final rule be revised to provide that MCOs, PHPs, and PCCMs
are required to notify the State when they disapprove requests, as well
as when they do not take action. In addition, one commenter proposed
that HCFA require the State to aggressively monitor MCO, PHP, and PCCM
denials of disenrollment requests. These commenters apparently did not
understand that MCOs, PHPs and PCCMs would not be permitted to
disapprove disenrollment requests.
Response: We disagreed with the commenters who argued the provision
(re-designated as Sec. 438.56(d)(5) in the final rule with comment
period) should be deleted. We have decided to retain the provision for
two reasons. First, the internal grievance process can eliminate the
need to disenroll by resolving the issue that led to the disenrollment
request. We consider this to be beneficial from a continuity of care
standpoint, as well as a quality standpoint. Secondly, we believe that
States should have flexibility to decide whether the internal grievance
process is helpful in the context of disenrollment requests. States are
in the best position to make this determination based upon their
programs and beneficiaries. We do agree, however, that there are cases
where requiring the use of the internal grievance process may not be
appropriate, therefore, we have specified that in cases expedited
disenrollment, this provision does not apply.
Comment: Proposed Sec. 438.56(f)(3) provided that States may
require beneficiaries to use the internal MCO grievance process before
making a determination on a request for disenrollment if a delay would
not pose jeopardy to the enrollee's health. Some commenters disagreed
with this provision, while another recommended that enrollees be
required to use the internal grievance process. Other commenters said
enrollees should be allowed to go straight to the State's fair hearing
process for disenrollment requests. Still other commenters commented
proposed that HCFA clarify that the exception for jeopardy to health
should apply in cases in which the harm to an enrollee's health may not
become apparent until later. Also, the commenter recommended that we
include language indicating that in the case of pregnant women,
jeopardy to the health of the fetus also be considered. Another
commenter recommended that in the case of children, the delays that
would jeopardize development be addressed.
Response: We disagreed with the commenters who argued the provision
(redesignated as Sec. 438.56(d)(5) in the final rule) should be
deleted. We have decided to retain the provision for two reasons.
First, the internal grievance process can eliminate the need to
disenroll by resolving the issue that led to the disenrollment request.
We consider this to be beneficial from a continuity of care standpoint,
as well as a quality standpoint. Secondly, we believe that States
should have the flexibility to decide whether the internal grievance
process is helpful in the context of disenrollment requests. States are
in the best position to make this determination based upon their
knowledge of their programs and beneficiaries.
Comment: The proposed rule requires disenrollment requests, if
approved, to take effect no later than the first day of the second
month following the month in which the enrollee makes the request. A
number of commenters were dissatisfied with this provision and said it
should be made more specific. One commenter recommended that the
timeframes specified in the Subpart F (Grievance System) be applied to
the disenrollment process. A number of commenters recommended that the
timeframe be made more specific, with a number of recommendations that
requests be processed within five days.
Response: As stated elsewhere, the required timeframe for
processing disenrollments is meant to be a maximum, not a minimum.
However, the regulation is also designed to be workable in all States,
and States have very different systems capabilities to accommodate
changes in managed care enrollment. As noted above, the timeframes we
have adopted were in place for many years under section 1903(m) before
the BBA. Because
[[Page 6266]]
capitation payments are made on a monthly basis, most States may want
to make disenrollments effective on the first day of a month. However,
there is no prohibition against a State adopting a process that calls
for timeframes that mirror those contained in Subpart F, as the
commenter recommended.
Comment: Proposed Sec. 438.56(f)(4)(ii) provided that if the State
agency fails to make a determination on a disenrollment request within
the specified timeframe, the request is deemed approved. Commenters
recommended that HCFA make clear that the ``deemed approved'' language
applies whether the State or the MCO, PHP, or PCCM is processing the
disenrollment request.
Response: We agree that in cases where MCOs, PHPs, and PCCMs are
permitted by the State to process disenrollment requests, the same
timeframes should apply. Section 438.56(e)(3) of the final rule with
comment period makes this clear.
Notice and Appeals
Section 438.56(g) of the proposed rule (Sec. 438.56(f) in the final
rule with comment period) specified that States restricting
disenrollment in Medicaid managed care programs must require MCOs and
PCCMs to notify beneficiaries of their disenrollment rights at least 60
days before the start of each enrollment period and at least once a
year. The paragraph further required that the State establish an appeal
process for any enrollee dissatisfied with a State agency determination
that there is not good cause for disenrollment.
Comment: Some commenters disagreed with our approach of providing
for MCOs and PCCMs to provide disenrollment rights notices, while
others agreed with this general approach, but said we should impose
additional requirements on States. In addition, some commenters
believed that the provision is too prescriptive.
The commenters who disagreed with permitting MCOs and PCCMs to
provide disenrollment rights notices said the final rule should provide
that only the State or an enrollment broker should notify enrollees of
their disenrollment rights. In addition, these commenters proposed that
States be required to develop a model from which would be translated
into all languages in use in the State, and field tested before being
used in the Medicaid program.
Commenters who supported additional requirements said the
regulation should require such notice to be provided upon initial
enrollment, and that we should add language requiring that the notice
be understandable to beneficiaries, consistent with the provisions of
regulations that apply to the Medicare + Choice program.
The commenters who said the provision was too prescriptive
recommended that we mirror the statutory language requiring one annual
notice 60 days before the beginning of the enrollment period, and that
the final rule should reflect that the enrollee handbook constitutes
sufficient notice regarding disenrollment rights. One commenter
suggested that we require ``adequate notice'' at a time specified by
the State.
Response: Section 1932(a)(4) requires an annual notice at least 60
days before the beginning of an individual's annual opportunity to
disenroll, but does not specify whether the MCO, PHP, PCCM or the State
should send the notice. In response to the concerns raised by the
commenters, and in recognition of the fact that some States may want to
send the notices themselves (or employ an enrollment broker to perform
this function), the final rule with comment period (at Sec. 438.56(f))
requires the State to provide that enrollees are given written notice
and ensure access to State fair hearing for those dissatisfied with a
denial based on lack of good cause. Regarding the model form comment,
this seems to be a reasonable approach and it is one we believe many
States will employ, but we do not believe it is necessary or prudent to
make this a regulatory requirement. Regarding the comment about
mirroring the Medicare+Choice regulation, we believe that the statutory
requirements provide sufficient protections to beneficiaries in this
case. We also believe the information requirements found at Sec. 438.10
provide a great degree to specificity in terms of how States will
inform enrollees of their rights and responsibilities.
Comment: One commenter said we should require that the notice of
disenrollment rights be sent to a representative payee, if one exists.
Response: The concerns of this commenter have been addressed by our
decision to revise the final rule with comment period to provide that
notice be provided to an enrollee or his or her representative. We note
that a representative payee would not necessarily be authorized by the
enrollee, or under State law, to represent the enrollee for purposes
other than handling the benefits check. The final rule with comment
period provides for notice to the representative.
Comment: Two commenters said that in addition to laying out
notification requirements, the final rule should speak to the form used
to request disenrollment. One commenter suggested that HCFA develop a
model form, while the other suggested that HCFA require States to
develop a single form for use throughout their program.
Response: We agree that in many cases, use of a standard form for
disenrollments (both annual and for-cause) can aid in program
administration. Many States will probably choose this approach, which
they are free to do under this final rule with comment period as long
as they also permit oral disenrollment requests as required under
Sec. 438.56(d). Because we believe that States may have legitimate
reasons for choosing other approaches, however, and in light of our
decision in response to comments to permit oral disenrollment requests,
we have decided not to make this a regulatory requirement.
Comment: We received a number of comments on the requirement for
States to establish an appeals process for enrollees who disagree with
denials of disenrollment requests. The commenters said that when
enrollees disagree with a State denial of a disenrollment request, they
should be able to proceed directly to the fair hearings process without
going through a separate appeals process.
Response: The cited provision was not intended to require States to
establish a process separate from the fair hearing system. As noted
above, Sec. 438.56(f)(2) of the final rule with comment period requires
that State fair hearings be made available.
Automatic Re-enrollment
Proposed Sec. 438.56(h) reflected the provision in section
1903(m)(2)(H) of the Act specifying that if the State plan so provides,
MCO and PCCM contracts must provide for automatic re-enrollment of
individuals who are disenrolled only because they lose Medicaid
eligibility for a period of two months or less.
Comment: One commenter pointed out that the proposed language did
not specify how the enrollment/disenrollment provisions (such as
timeframes for changing MCOs and PCCMs) in this rule apply in cases of
automatic re-enrollment.
Response: Section 438.56(h) reflects a statutory provision that was
enacted in 1990, and is simply being incorporated into regulation. The
commenter is correct that the proposed rule did not address how to
apply the enrollment/disenrollment provisions to enrollees who have a
temporary loss of Medicaid eligibility. We have decided to add
[[Page 6267]]
clarifying language to the final rule with comment period in
Sec. 438.56(c)(2)(iii) indicating that if a temporary loss of
eligibility causes a recipient to miss the annual right to disenroll
without cause, that right will be given upon re-enrollment. The
enrollee would not, however, be entitled to a new 90 day period.
Comment: Two commenters pointed out that the preamble and
regulations text of the proposed rule were in conflict regarding the
re-enrollment timeframe. (The preamble indicated a window of up to four
months.) The commenters indicated their preference for the four-month
window. One commenter said they favor State flexibility and indicated
they currently use a window of 90 days in their program. Two other
commenters suggested a three-month window.
Response: Section 1903(m)(2)(H) provides a re-enrollment window of
two months, therefore, the reference to four months in the preamble to
the proposed rule was an error. States may use a shorter timeframe, but
not a longer one.
4. Conflict of Interest Safeguards (Sec. 438.58)
Proposed Sec. 438.58 required as a condition for contracting with
MCOs that States establish conflict of interest safeguards at least as
effective as those specified in section 27 of the Office of Federal
Procurement Policy Act.
Comment: One commenter supported the provision as written requiring
that there be conflict of interest safeguards on the part of State and
local officers and employees and agents of the State who have
responsibilities relating to MCO contracts or default enrollments.
Response: The final rule with comment period makes no change in the
proposed language, other than to reflect the applicability of this
provision, like other provisions in subpart B, to PHPs (see section 2.
above).
Comment: Two commenters suggested that the safeguards be applied to
all MCOs, PHPs and PCCMs, not just MCOs.
Response: Section 438.58 implements section 1932(d)(3), which
specifies only contracts under section 1903(m) (i.e, contracts with
MCOs). For this reason, we referenced only MCOs in proposed
Sec. 438.58. However, while the conflict of interest standards in
Sec. 438.58 are triggered by MCOs, in the sense that the State cannot
enter into MCO contracts unless they are in place, they apply to anyone
with responsibilities ``relating to'' MCOs or to the ``default
enrollment process specified in Sec. 438.56,'' which would also include
responsibilities for PCCMs. In addition, as discussed in section 2.
above, we have made all provisions in subpart B except for Sec. 438.50,
applicable to PHPs.
Comment: One commenter agreed that these safeguards regarding
conflicts of interest for State and local officials were necessary and
welcome; however, it envisioned additional protections for any entity
engaged in ``determining or providing managed health care to Medicaid-
eligible beneficiaries [should] have policy-making bodies that consist
of at least 60 percent'' of beneficiaries who will be served by the
program.
Response: We do not believe that the regulation should be amended.
Ensuring 60% Medicaid beneficiary representation on any board involved
in determining how managed care will be provided to Medicaid eligibles
is not feasible, given resource constraints at the State level.
Furthermore, we have no statutory basis for requiring such
representation.
5. Limit on Payment to Other Providers (Sec. 438.60)
Proposed section 438.60 prohibited payment for services which were
covered under a contract between an MCO and the State, except for
emergency and post-stabilization services in accordance with section
438.114(c) and (d).
Comment: All commenters maintained that the language in Sec. 438.60
is too restrictive: the only exempted service are emergency services
and post-stabilization services. Additional ``exceptions'' proposed
were--family planning, school-based services, immunizations by local
health agencies, certified nurse midwife services, tribal health
provider services, and EPSDT services.
Response: We believe that the commenters have misunderstood this
provision and that the exemption for emergency and post stabilization
services in the proposed rule may have helped create this confusion.
The intent of section 438.60 is to prohibit duplicate payments (once
through capitation, once through FFS) for services for which the State
had contracted with an MCO to provide. We believe that the exemption
for emergency and post stabilization services was incorrect, since the
MCO is obligated to cover and pay for these services for its enrollees.
Thus, any payment by the State would be a duplicate payment. We are
deleting this exemption from the final rule with comment period.
A State has in effect already paid for services that are included
in an MCO's contract, and does not have an obligation to pay for them a
second time, if a beneficiary obtains the services outside of the MCO's
network.
In instances where out-of-network services may be authorized, e.g.,
the rural exception to the choice requirement, family planning, school-
based services, immunizations, CMN or tribal services either the MCO or
the state has the financial obligation to pay for the services. The
State may pay for the services that were under the contract only if
there is an adjustment or reconciliation made to the amounts paid the
MCO in its capitation payments. In this situation, the services were
not considered ultimately to be covered under the MCO contract. In
situations where any of these services are carved out of the contracts
(and the capitation rates paid the MCO) this is not an issue. State
option to allow beneficiaries to go out-of-network for these services
is not hindered by this section.
In addition, this provision precludes States from making additional
payments directly to providers for services provided under a contract
with an MCO or PHP, except when these payments are required by statute
or regulation, such as with DSH or FQHC payments. We have clarified
this provision accordingly in the final rule.
Comment: One commenter wanted HCFA to clarify what ``service
availability'' actually means.
Response: For purposes of this provision, ``available'' would refer
to services covered under the contract. A State is held accountable
(Sec. 438.306) for ensuring that all covered services are available and
accessible to enrollees--both services under the contract and those
State plan services not included in the contract with the MCO.
6. Continued Service to Recipients (Sec. 438.62)
Proposed Sec. 438.62 required States to arrange for continued
services to beneficiaries who were enrolled in an MCO whose contract
was terminated or beneficiaries who were disenrolled for any reason
other than a loss of Medicaid eligibility.
Comment: We received a series of general comments that, overall,
Sec. 438.62 did not address the continuation of an enrollee's ongoing
treatment when transitioning to managed care. Specifically, the
commenters expressed concern that the proposed regulation did not
highlight the need for identification and continuation of an enrollee's
treatment when transitioning from FFS into managed care or from one
managed care organization to another. Several commenters stated that
the interruption of treatment for only a short period of time could
have serious
[[Page 6268]]
and possibly irreversible consequences on an individual's health. Other
commenters suggested that ongoing treatment without interruption was
especially critical for persons suffering from mental illness,
substance abuse, and chronic conditions such as HIV/AIDS.
Response: Section 438.308 addresses continuity and coordination of
care requirements on MCOs, and comments on this provision generally are
discussed in more detail in section II. D. below, discussing comments
on proposed subpart E. We believe, however, that some comments on
perceived inadequacies in Sec. 438.308, specifically those expressing
concerns about continued access to services as beneficiaries are
transitioned from FFS into managed care, could be addressed in part by
amending proposed Sec. 438.62. Proposed Sec. 438.62 represented a
recodification of a longstanding requirement in part 434, at
Sec. 434.59, which required that provision be made for continued
services when enrollment in an MCO or a PHP is terminated. This
requirement was imposed under our authority in section 1902(a)(4) to
specify methods necessary for proper and efficient administration. In
response to the above comments, we believe it is appropriate to extend
the requirement in Sec. 438.62 (previously in Sec. 434.59) to
situations other than the transition out of an MCO or PHP.
We believe that most States already have mechanisms in place to
transition enrollees into managed care from fee-for-service and from
one MCO to another. However, we acknowledge the commenters' concerns
that our proposed regulation does not address an enrollee's potential
disruption of services, even for a short period of time, from the
period of initial enrollment until the time of assessment by the new
primary care physician or specialist in the receiving MCO or PHP.
In response to the large number of comments received on this issue,
we are in this final rule with comment period, again under our
authority in section 1902(a)(4), expanding the scope of Sec. 438.62.
The commenters referred to ``managed care'' generally, in asking that
our regulations address ``transitioning from FFS into managed care.''
We therefore are extending Sec. 438.62 to enrollees in PCCMs, as well
as MCOs and PHPs. The language of the proposed version of Sec. 438.62
becomes paragraph (a) in the final rule with comment period, except
with reference to MCOs, PHPs, and PCCMs rather than only MCOs, to
afford enrollees of PHPs and PCCMs the same protections. The added
paragraph (b) requires States to have mechanisms to ensure continued
access to services when an enrollee with on-going health care needs is
transitioned from fee-for-service to an MCO, PHP, or PCCM, from one
MCO, PHP, or PCCM to another, or from an MCO, PHP, or PCCM to fee-for-
service.
We wish to emphasize that we are not mandating any specific
mechanism that States must implement, nor are we mandating a specific
list of services or equipment that must be covered during the
transition period. However, we are requiring that the mechanism apply
to at least the following categories of enrollees: (1) Children and
adults receiving SSI; (2) children in Title IV-E foster care; (3)
recipients aged 65 or older; (4) pregnant women; (5) any other
recipient whose care is paid for under State-established, risk-
adjusted, high-cost payment categories; and (5) any other category of
recipients identified by HCFA. We also specify that the State must
notify the enrollee that a transition mechanism exists, and provide
instructions on how to access the mechanism. Further, the State must
ensure that the enrollee's ongoing health care needs are met during the
transition period by establishing procedures to ensure that, at a
minimum, the enrollee has access to services consistent with the State
plan, and is referred to appropriate health care providers; new
providers are able to obtain copies of appropriate records consistent
with applicable Federal and State law; and any other necessary
procedures are in effect.
Comment: One commenter believes that it is unclear what level of
effort by the State is sufficient to comply with the requirement. In an
FFS environment, referral services are less comprehensive and
``delays'' might be defined differently.
Response: We believe that both terms, ``without delay'' and
``delay'' represent straightforward guidance and that no further
changes are needed.
7. Monitoring Procedures (Sec. 438.66)
Proposed section 438.66 states that a State must have in place
procedures for monitoring MCO practices and procedures with regard to
enrollment/termination, implementation of grievance procedures,
violations subject to intermediate sanctions (such as failing to
provide services for which it has contracted), and violations for the
conditions for FFP (such as conditions of FFP for enrollment broker
services). As noted above, we have made this and most other provisions
applicable to PHPs in response to comments. We therefore in this final
rule with comment period have added ``to the extent applicable, for
PHPs,'' since not all of these provisions apply to PHPs.
Comment: One commenter noted that with regard to enrollment and
termination practices, HCFA did not specify ``beneficiaries'' or
``providers,'' but assumes we meant beneficiaries only.
Response: This section of the regulation does not implement a BBA
requirement, and was incorporated from existing regulations without
substantive changes. We did not intend to modify or expand its meaning.
That said, we agree that paragraph (a) needs clarification, and in
response to this comment, the final rule with comment period specifies
that it applies to ``recipient enrollment and disenrollment,'' and adds
a paragraph (e) ``All other provisions of the contract, as
appropriate.''
Comment: Another commenter states that the regulation should
specify timeframes, and suggests annual monitoring for grievance
procedures, and quarterly monitoring for enrollment/termination. This
commenter furthermore notes that we have required the latter in some
1915(b) waivers and 1115 demonstrations.
Response: Given our desire to maximize States' flexibility in
administering their State plans, we do not specify for each item how
often the monitoring must be done, merely that it is a requirement to
do so. Our experience with States' monitoring of MCOs in section 1115
demonstrations and in 1915(b) program waivers suggests to us that
States implementing these procedures will do so on an annual or
quarterly basis--if not more often than that.
Comment: One commenter suggested that HCFA require States to have
procedures to monitor specialty referral services.
Response: With respect to the suggestion of monitoring procedures
for specialty referral services, we note that 438.10 already requires
MCOs to make available information to beneficiaries on how to access
services, including those (such as referrals) that may require
authorization. If these procedures are not being followed, we believe
that the complaints and grievances data (which the State is required
under this subsection to monitor) will demonstrate whether the MCO is
following its own (State-approved, see Sec. 438.700) procedures.
Furthermore, we have clarified with new paragraph (e) what has always
been our expectation; namely, that States monitor compliance with all
aspects of the contract. Such a requirement implicitly includes the
monitoring of special referral services.
[[Page 6269]]
Comment: One commenter believed that HCFA should require States to
have procedures in place to monitor the degree of enrollment of
pediatricians/other providers, the provision and access to services not
covered under the contract, and EPSDT services.
Response: We believe that it would be unnecessarily onerous to add
requirements regarding monitoring the participation of pediatricians
and other providers and EPSDT services. The MCOs have already agreed to
provide all medically necessary services in their contract (including
EPSDT, if included in a particular contract) and therefore have strong
incentives to have adequate provider and specialist network capacity,
especially because if it they do not, the State can impose intermediate
sanctions or terminate the contract before it would otherwise expire
(see Sec. 438.718). Furthermore, it is a contract requirement that MCOs
provide for arrangements with, or referrals to, ``sufficient numbers of
physicians and other practitioners to ensure that services under the
contract'' are furnished (see Sec. 438.6). Furthermore, again, we have
clarified in paragraph (e) that States monitor contract compliance.
Such a requirement implicitly includes the monitoring of number of
pediatricians and other providers. Moreover, States are required at
Sec. 441.56 to meet certain EPSDT targets, whether or not they are
contracted services. With regard to ``wraparound services,'' we note
that Sec. 438.206(c) makes clear that it is the responsibility of the
State to ensure that services not covered by the contract are provided
to Medicaid beneficiaries. If such services are not being provided, a
State's monitoring of trends in its Fair Hearings process should reveal
any problem with respect to access to ``wraparound'' services.
Comment: One commenter believed that HCFA should require the State
to have procedures for monitoring training (of both beneficiaries and
providers).
Response: We believe the fact that under Sec. 438.218, the
information requirements in Sec. 438.10 are part of the State's quality
assurance program provides assurance that the State will have to
monitor the training and education of beneficiaries with respect to
their enrollment and participation in MCOs or PCCMs. Furthermore we
have clarified with (e) what has always been our expectation; namely
that States monitor contract compliance. Such a requirement implicitly
includes the monitoring of beneficiary education. We believe that with
respect to provider training, it is the responsibility of the State to
ensure that MCOs, PHPs, or their subcontractors have the requisite
training and information for program participation.
Comment: One commenter requests that States be required to monitor
samples of all notices sent to the enrollee by the MCO, PHP, or PCCM,
and by all subcontractors.
Response: HCFA believes that the requirement at 438.700, which
makes a plan's or subcontractor's distribution of materials that are
not State-approved subject to sanctions addresses the concern raised by
this commenter. Such a requirement implicitly includes the State's
monitoring of materials sent to beneficiaries by the MCOs, PHPs or
PCCMs. This also would be the subject of monitoring under
Sec. 438.66(e).
Comment: We received a number of general comments on the need for
greater understanding of persons with special health care needs by MCOs
and their providers. Specifically, in the area of coverage and
authorization, a commenter contended that the managed care industry has
very little knowledge of the needs of persons with disabilities.
commenters further argued that the importance of certain services is
often overlooked by the managed care industry. Another commenter argued
that we should require MCOs to make every effort to provide training
and education for their practitioners on the diagnosis of certain
conditions such as HIV and AIDS. We also received comments on the need
for MCO providers to have appropriate knowledge and skills to treat
adults and children with special health care needs, including
recipients with mental illness, substance abuse problems, developmental
disabilities, functional disabilities, and complex problems involving
multiple medical and social needs. One commenter specifically
recognized the need for MCO recognition of the unique needs of the
homeless population.
Response: Based on comments described here and other general
comments requesting additional consumer protections for persons with
specific conditions or disabilities, we are persuaded that additional
requirements are necessary to ensure appropriate education of all
managed care entities and providers on the unique care needs of special
needs populations. Accordingly, the final rule with comment period
contains a new Sec. 438.68 Education of MCOs, PHPs, and PCCMs. This
section requires that the State agency have in effect procedures for
educating the MCO, PHP, and PCCM and any subcontracting providers about
the clinical and non-clinical service needs of enrollees with special
health care needs.
C. Subpart C (Enrollee Protections)
Proposed subpart C set forth a variety of enrollee protections
including the following: (1) requiring information on benefits be
specified (proposed Sec. 438.100); (2) rights concerning provider
communications with enrollees (proposed Sec. 438.102); (3) limits on
marketing activities (proposed Sec. 438.104); (4) limits on enrollee
liability for payment (proposed Sec. 438.106) and cost-sharing
(proposed Sec. 438.108); (4) an obligation for MCOs and PHPs to provide
assurances of adequate capacity (proposed Sec. 438.110); (5) rights in
connection with emergency and post-stabilization services (proposed
Sec. 438.114); and (6) MCO solvency standards (proposed Sec. 438.116).
1. Benefits (Sec. 438.100)
As proposed, Sec. 438.100 required that Medicaid contracts between
States and MCOs specify the benefits the MCO is responsible for
providing or making available to Medicaid enrollees. The proposed
section also required States to make arrangements for furnishing those
State plan services that MCOs were not responsible to provide under the
contract, and to give written information to enrollees on how and where
they may obtain these additional services. Many commenters were
confused by this section because it duplicated provisions in other
sections. To eliminate duplication, the requirements in proposed
Sec. 438.100 have been incorporated into other sections, notably
Sec. 438.10, Information requirements; Sec. 438.206 Availability of
services; and Sec. 438.210 Coverage and authorization of services. The
requirement in proposed Sec. 438.100(a) that contracts specify the
services the entity is required to provide to Medicaid enrollees is now
set forth in Sec. 438.210(a)(1). The requirement in proposed
Sec. 438.100(b) concerning the State's obligations to services not
covered under the contract is now set forth in Sec. 438.206(c), while
the requirement to provide information to enrollees and potential
enrollees is in Sec. 438.10(d)(2)(ii)(E), Sec. 438.10(e)(2)(vii), and
Sec. 438.10(g).
We have moved the requirements relating to enrollee rights from
proposed Sec. 438.320 to Sec. 438.100. Throughout the preamble, we have
responded to comments according to their numerical sequence in the
proposed rule. This section only addresses responses to comments
regarding proposed Sec. 438.100 (Benefits). Comments and responses
relating to the enrollee rights are now in Sec. 438.100 but were in the
proposed Sec. 438.320 are discussed in section II. D.
[[Page 6270]]
below in the discussion of comments on the subpart in which these
enrollee rights appeared in the proposed rule. In this final rule with
comment period the content of proposed subpart E has been redesignated
as subpart D with sections redesignated from the 300 series to the 200
series.
Comment: One commenter believed that we went beyond the authority
in the statute by requiring the contract to specify the services the
MCO, PHP, or PCCM is required to provide.
Response: We believe that the commenter apparently read the
proposed rule to preclude States from incorporating the description of
the benefits covered under the contract by referencing a separate
document describing the benefits (for example, a provider agreement).
However, the proposed rule was not intended to prohibit accepted
methods of incorporating substantive contract provisions by cross-
referencing separate documents. The reference documents must be
sufficiently detailed to make clear to all parties the types and scope
of the services for which the MCO is responsible.
Comment: Several commenters urged that we require States to include
specific contract language holding MCOs responsible for the early
prevention, screening, diagnosis and treatment (EPSDT) of eligible
enrollees through the full scope of EPSDT benefits required under
States' Medicaid plans. Commenters also expressed the view that States
must make arrangements for providing at no cost to enrollees EPSDT
services and benefits that are not covered or are not provided by the
entities in accordance with the contract.
Response: These issues are addressed in section II. D. below in
responses to similar questions raised with respect to Sec. 438.210
Coverage and authorization of services and Sec. 438.206(c) Availability
of services.
Comment: Commenters strongly recommended that we clarify that
contract language must address MCO, PHP, or PCCM and State agencies'
roles for case management when covered services overlap with services
that are not the responsibility of the MCO, PHP or PCCM to provide or
to make available. Some of the commenters noted that mental health
services for chronic conditions are frequently not included under MCO,
PHP, or PCCM contracts. Without clear delineation of responsibility
between the mental health services provided by the entity and those
covered outside the MCO, PHP, or PCCM, enrollees may not receive the
services they are entitled to receive under the State plan.
Response: We agree that coordination of care is an important
component of managed care and that coordination may be challenging
because an MCO may not cover all of the services included in the State
plan. To ensure that care is appropriately coordinated,
Sec. 438.208(h)(7) of this final rule with comment period requires that
each MCO and PHP implement a program to coordinate the services it
furnishes to the enrollee with the services the enrollee receives from
any other MCOs or PHPs. In section 438.10(d)(2)(i)(C), we also require
that the information furnished to potential enrollees include general
information about MCO responsibilities for coordination of care.
Comment: One commenter recommended that a mechanism be established
to assist enrollees with obtaining the services they are entitled to
under the State plan, but that are not covered by the MCO, PHP, or
PCCM. Proposed Sec. 438.100 required States to give enrollees written
instructions on how to obtain those services, but it did not specify
how enrollees would know to contact the State for instructions.
Response: Proposed Sec. 438.100(b) set forth the State's obligation
to make services under the States plan available and give enrollees
instructions on how to obtain them, but did not specifically address
the general provision of information to beneficiaries on this
obligation as required under section 1932(a)(5)(D) of the Act,
Information on Benefits not Covered. As noted above, in
Sec. 438.10(d)(2)(ii)(E), Sec. 438.10(e)(2)(vii), and Sec. 438.10(g) of
this final rule with comment period, we address the information
requirements relating to availability of services, and specify that
this information include information about benefits that are available
under the State plan but not covered under the contract, including how
and where the enrollee may obtain these benefits, any cost sharing, and
how transportation is provided.
Comment: Several commenters urged that MCO, PHP, or PCCM contracts
specify the services that the entity is to provide to Medicaid
enrollees. For those Medicaid services that are not included in the
MCO, PHP, or PCCM contract, the commenters believed that the State
should make arrangements for providing those services and give
enrollees written instruction on how to obtain them. Another commenter
found the meaning of the term ``arrangement'' in proposed
Sec. 438.100(b) unclear.
Response: Proposed Sec. 438.100(a) required that MCO contracts (and
Sec. 438.8(d) PHP contracts) specify the services that have to be
provided to Medicaid enrollees. In this final rule with comment period,
this requirement is in Sec. 438.210(a). In proposed Sec. 438.100(a), we
did not require that PCCM contracts specify this information, this was
an error, since section 1932(b)(1) of the Act requires that PCCM
contracts ``specify the benefits the provision (or arrangement) for
which the PCCM is responsible.'' Section 1932(a)(5)(D) of the Act sets
forth the obligation to inform enrollees in an entity of services ``not
made available to the enrollee through the entity,'' and of ``where and
how enrollees may access'' benefits, applies to ``managed care
entities,'' or ``MCEs'' (a term that includes both MCOs and PCCMs). We
therefore are including PCCMs in Sec. 438.210(a)(1) (which contains the
requirement that contracts specify covered services that was in
proposed Sec. 438.100(a)) and Sec. 438.206(c) (which contains the State
obligation formerly in proposed Sec. 438.100(b)).
With respect to the requirement that information be provided on
what State plan services are not covered by the contract, and how and
where enrollees may obtain services, proposed Sec. 438.10(g) already
extended this requirement to PCCMs. This is retained in Sec. 438.10(g)
of this final rule with comment period.
Proposed Sec. 438.100(b) provided that States must make
``arrangements'' for furnishing services not covered under the contract
with the MCO. We agree with the last commenter that the term is
unclear. Therefore, in Sec. 438.206(c), we provide that if an MCO
contract does not cover all of the services under the State plan, the
State must make available those services from other sources and provide
to enrollees information on where and how to obtain them, including how
transportation is provided. We interpret the phrase ``make available
from other sources'' to mean that the State must directly pay for the
service through a fee-for-service contract or contract with another
organization to provide the service.
Comment: One commenter recommended that the representative payee or
other responsible person be included in dissemination of information
advising enrollees on how and where to access these additional
benefits.
Response: We did not adopt the exact language recommended. The
information requirements in Sec. 438.10 provide for informing
authorized representatives.
2. Enrollee-Provider Communications (Sec. 438.102)
Medicaid beneficiaries are entitled to receive from their health
care providers
[[Page 6271]]
the full range of medical advice and counseling that is appropriate for
their condition. Section 1932(b)(3) of the Act added by the BBA
clarifies and expands on this basic right by precluding an MCO from
establishing restrictions that interfere with enrollee-provider
communications. In Sec. 438.102 of the proposed rule, we provided a
definition of the term ``practitioner'' and outlined the general rule
prohibiting interference with provider-enrollee communications. We also
specified that this general rule would not require the MCO to cover,
furnish or pay for a particular counseling or referral service if the
MCO objects to the provision of that service on moral or religious
grounds, and provides information to the State, prospective enrollees,
and to current enrollees within 90 days after adopting the policy with
respect to any particular service.
Comment: Several commenters found the definition of
``practitioner'' at Sec. 438.102(a) too restrictive and felt that it
needed to be expanded to include professionals as: dental hygienists;
marriage, substance abuse, and family counselors; interns; licensed
psychiatric technicians; and pharmacists. One commenter pointed out
that the proposed definition referred to a limited number of providers
and excluded several of those referenced in the statute. Commenters
recommended either adding those professions referenced in the statute
or specifying that those listed in the regulations served as examples
only. Another commenter suggested adding ``including, but not limited
to'' language.
Response: Section 1932(b)(3)(C) of the Act provides an exact list
of professions that are covered under this provision. In the proposed
rule, we erroneously omitted several classes of professionals that were
included in the statute. Therefore, we have revised Sec. 438.102(a) to
mirror the list contained in the statute. We have also replaced the
term ``practitioner'' with ``health care professional'' in order to be
consistent with the statute.
Comment: One commenter expressed concern that proposed
Sec. 438.102(b) did not require that State contracts with MCO or MCO
contracts with providers be made available for public viewing.
Response: In this final rule with comment period, we do not require
that contracts be made available to the public because doing so may
deter MCOs from bidding on Medicaid contracts and may result in States
not getting the best price. However, in Sec. 438.10(f)(5), we have
required that States and MCOs make available, upon request, information
relating to the type of compensation arrangements that physicians have
with MCOs and States.
Comment: Several commenters preferred the language included in the
Medicare+Choice regulation implementing statutory authority for
protecting provider-enrollee communications that is similar to that in
the BBA for Medicaid. The commenters believed that the Medicare+Choice
provisions in Sec. 422.206 are more encompassing than those in proposed
Sec. 438.102 because they also bar Medicare+Choice organizations from--
(1) restricting providers from advocating on the patient's behalf; (2)
prohibiting providers from sharing information regarding alternative
treatment; and (3) prohibiting providers from discussing the risks,
benefits, and consequences of treatment or lack of treatment, and the
opportunity for the enrollee to refuse treatment or express preferences
for future treatment. The commenters also state that violations are
subject to Federal sanctions. Two commenters stressed that providers
must be free of all restrictions on communicating with enrollees and be
able to provide complete information on all treatment options.
Response: We agree with the commenters who favor the approach taken
in the Medicare+Choice regulations and have revised Sec. 438.102(b) to
parallel the requirements in Sec. 422.206. We note that since the
intermediate sanctions in subpart I apply only to MCOs, the new
paragraph referring to sanctions applies only to MCOs.
Comment: Some commenters suggested that we reinforce the fact that
a health care professional cannot be prevented from furnishing needed
information to patients during the course of routine primary and
preventive care visits or other treatment. These commenters expressed
concern about language in the preamble to the proposed rule which
states that, `` an MCO may not limit a provider's ability to counsel or
advise an enrollee on treatment options that may be appropriate for the
enrollee's condition or disease, unless the terms of Sec. 438.102(c)
apply and are satisfied.'' Specifically, the commenters requested that
we remove reference to Sec. 438.102(c).
Response: We agree with the commenters that the preamble language
was misleading in implying that Sec. 438.102(c) would permit an MCO to
actually prevent a provider from providing counseling. We have revised
Sec. 438.102 in this final rule with comment period so that it is clear
that Sec. 438.102(c) only relieves an MCO from being required to
provide, arrange, or pay for counseling or referrals as the result of
the prohibition in Sec. 438.102(b)(1), but does not give the MCO the
right to prevent a physician from giving counseling if the physician is
willing to forego any payment that may be associated.
Comment: One commenter recommended allowing an enrollee to
terminate or change enrollment at any time after they receive
notification that an MCO will exercise its right under Sec. 438.102(c)
not to provide, reimburse, or provide coverage of a counseling or
referral service that is provided as the result of the requirement in
Sec. 438.102(b).
Response: We agree with the commenter. Section 438.56(d)(2)(ii) of
this final rule with comment period provides that if an MCO does not
provide a service because of moral or religious objections (whether
pursuant to Sec. 438.102(c), or otherwise) the enrollee may disenroll
for cause. It is important to note that regardless of whether the MCO
covers a certain service that is included in the State plan, the
enrollee will have access to that service. If an MCO contract does not
cover all of the services under the State plan (regardless of the
reason) the State must make available those services from other
sources. In addition, the Medicaid statute guarantees freedom of choice
for family planning services so an enrollee may always seek services
out-of-network. Therefore, we permit enrollees to disenroll if services
are not covered because of moral or religious objections. We emphasize
that disenrollment is not necessary in order to access the services.
Comment: Most commenters supported the conscience clause provision
at proposed Sec. 438.102(b)(2) which provides that, subject to certain
information requirements, an MCO is not required to provide, reimburse
for, or provide coverage of a counseling or referral services furnished
as the result of the rule in Sec. 438.102(b)(1) if the MCO objects on
moral or religious grounds. However, several commenters objected to the
policy that MCOs may elect not to provide coverage for some services
that are included in the State plan. They stated that if the MCO
objects to a Medicaid-covered service on moral or religious grounds, it
is their responsibility to arrange for coverage through subcontracts or
by providing access to the service out-of-network. Others stated that
to allow MCOs to pick and choose what services they will be responsible
for runs counter to how
[[Page 6272]]
managed care contracts are designed and bid out. This provision would
in these commenters' view complicate bid pricing and evaluation,
increase administrative costs to the State (to make separate
arrangements for these services and provide notice to beneficiaries),
and could be confusing to beneficiaries.
One commenter believed that the proposed rule creates an undue
burden for enrollees who are seeking family planning services and
disrupts their continuity of care, and that these disruptions could
result in lower quality of family planning care for women. Commenters
recommend either removing the conscience protection provisions or
changing the regulation to allow States to require MCOs that have moral
objections to providing certain services to obtain them through
subcontracts or out-of-network arrangements.
Response: We do not have the authority to delete the conscience
protection provision because it is required by section 1932(b)(3)(B) of
the Act. However, this conscience provision alone would not by itself
permit an MCO to avoid providing a State plan service that it has
contracted to provide. As noted in the preamble to this final rule with
comment period, the conscience protection in section 1932(b)(3)(B) of
the Act only protects an MCO from being required to pay for something
as the result of the rule in section 1932(b)(3)(A) of the Act. Section
1932(b)(3)(B) of the Act begins with the words ``Subparagraph (A) shall
not be construed as requiring a Medicaid managed care organization to
provide, reimburse for, or provide coverage of, a counseling or
referral service'', if the MCO objects and gives the required notice.
This is an exception to the obligations under paragraph (A), not a
``blanket'' authority to decline to cover services the MCO would
otherwise be obligated to provide. As noted in section II. B above,
however, unlike a Medicare+Choice organization, that must contract to
provide Medicare services, a Medicaid contracting MCO is free to
negotiate with the State over which services it will provide. Clearly,
section 1932(a)(5)(D) of the Act (requiring that certain arrangements
be made with respect to State plan services not furnished through an
MCO or PCCM) contemplates an MCO's right to decide which State plan
services to agree to include in its contract. An MCO that objects to
covering a State plan service would not agree in the contract to
provide that service. In such a case, the State is clearly obligated to
ensure the availability of the service out of plan. If the MCO did
agree to provide a State plan service under its contract, it could not
attempt to ``change its mind'' by relying on the ``conscience
protection'' in section 1932(a)(3)(B) of the Act, since its obligation
to provide the State plan service would be pursuant to its contract,
not section 1932(a)(3)(A) of the Act. It is important to note that
under existing regulations, MCOs may not restrict an enrollee's freedom
of choice with respect to family planning services. In other words,
enrollees may always seek family planning services out-of-network.
Comment: Commenters expressed concern about how enrollees will
receive notice of an MCO change in policy. One commenter recommended
linking this requirement with the information requirements in
Sec. 438.10(c), which requires plans to use easily understood language
and format and take into consideration the special needs of those, for
example, are visually impaired or have limited reading proficiency.
Others recommended that we explain how an MCO should provide notice to
ensure enrollees are adequately informed.
Response: We agree with the commenters that the information
furnished to enrollees and potential enrollees under this section
should be governed by the same rules as the information furnished under
Sec. 438.10. Therefore, we have revised Sec. 438.102(c) to require that
the information furnished under this section be ``consistent with the
provisions of Sec. 438.10.''
We believe that it is critical that enrollees and potential
enrollees have sufficient information to understand how and where to
obtain a service that is not covered by the MCO. This responsibility is
shared by the MCO and the State. As discussed in section II. A. above
under Sec. 438.10(e)(1)(ii), an MCO or PHP must inform potential
enrollees of any ``significant'' change in the information in
Sec. 438.10(e)(2) at least 30 days prior to the change. Section
438.10(e)(2) includes a description of what services the MCO or PHP
covers. This advance notice requirement would ordinarily apply to a
change in what the MCO or PHP would cover. While section 1932(a)(3)(B)
of the Act requires only that notice be provided within 90 days after a
decision was made not to cover something under its provisions, and
meeting this condition would permit an MCO to qualify for the exception
in section 1932(a)(3)(B) of the Act. We believe that the general rule
in Sec. 438.10(e)(1)(ii) should continue to apply, and are revising
Sec. 438.102(b)(1)(B) to clarify this fact.
Comment: Commenters were concerned that public entities may want to
exercise the conscience protection exception at Sec. 438.102(c), which
the commenters believe could violate the Constitution (presumably
because the first amendment ``establishment clause'' would prevent a
public entity from citing a ``religious'' objection to covering a
service). These commenters recommended that we state that public
entities that sponsor or operate MCOs cannot assert moral or religious
objections, and thus decline to provide, reimburse for, or provide
coverage of any counseling or referral service.
Response: We have not incorporated the commenters suggestion
because section 1932(b), (3)(B) of the Act and Sec. 438.102(c) are not
limited to an objection on ``religious'' grounds, but also on ``moral''
grounds, and there is nothing to preclude a governmental entity from
expressing a moral objection. However, there is no basis in the BBA for
making a distinction between public and private MCOs in this area.
Comment: One commenter was concerned that subcontractors may not be
required to adhere to the provisions of Sec. 438.102 regarding
enrollee-provider communications. The commenter suggested that
subcontractors should expressly be covered as they were in proposed
Sec. 438.310(b)(1), which explicitly sets forth requirements for ``the
MCO and its subcontractors.''
Response: In Sec. 438.6(l) of this final rule with comment period,
we state that all subcontracts must fulfill the requirements of this
part that are appropriate to the service or activity delegated under
the subcontract. In addition, Sec. 438.230 provides that for all
1903(m) contracts, ``the State must ensure that each MCO oversees and
is accountable for any functions and responsibilities that it delegates
to any subcontractor * * *''. We believe that the combination of these
two provisions satisfies the commenter's concerns and that additional
subcontractor language is not needed in Sec. 438.102.
Comment: One commenter indicated that Sec. 438.102 does not address
enforcement mechanisms nor remedies for providers that believe they
were penalized or terminated by the plan for providing information to
an enrollee. The commenter suggest that we provide these enforcement
mechanisms.
Response: If providers believe that an MCO has violated the
requirements of section 1932(b)(3)(A) of the Act and Sec. 438.102(b),
they should bring this to the attention of the State Medicaid agency,
which could then investigate the situation and determine whether to
[[Page 6273]]
impose sanctions under Sec. 438.102(e) and Sec. 438.700(d). We believe
that this sanction authority provides a sufficient enforcement
mechanism.
3. Marketing (Sec. 438.104)
In accordance with section 1932(d)(2) of the Act, proposed
Sec. 438.104 set forth requirements for, and restrictions on, marketing
activities by MCO, PHP and PCCMs. (The regulations text referred to
``MCEs,'' includes MCOs and PCCMs and proposed Sec. 438.8(d) made the
requirements applicable to PHPs.). Proposed Sec. 438.104 included
definitions of ``choice counseling'', ``cold-call marketing'',
``enrollment activities'', ``enrollment broker'', ``marketing
materials'', and ``recipient and potential recipient.'' The definitions
related to enrollment broker functions (``choice counseling,''
``enrollment activities,'' and ``enrollment broker'') were included in
error and have in this final rule with comment period been moved to
Sec. 438.810, Expenditures for Enrollment Broker Services. We also
proposed requirements and prohibitions for MCO, PHP, or PCCM contracts.
Specifically, Sec. 438.104(b)(1) proposed that the contract must
specify the methods by which the entity assures the State agency that
the marketing plans and materials are accurate and do not mislead,
confuse, or defraud the recipients or State agency. Section
438.104(b)(2) proposed restrictions on MCO, PHP, or PCCM contracts,
which are discussed in detail below. Section Sec. 438.104(c) proposed
to require the State to consult with a MCAC or an advisory committee
with similar membership in reviewing marketing materials. Comments we
received on these issues and our responses follow.
a. General Comments
Comment: Proposed Sec. 438.8(d) provided that the error of subpart
C, including Sec. 438.104 applies to PHPs to the same extent that the
sections apply to MCOs. Section 438.104 only includes references to
managed care entities (MCEs) which appears to mean the section is not
applicable to PHPs.
Response: The marketing rules set forth in Sec. 438.104 apply to
MCOs, PCCMs and, as specified in Sec. 438.8(d), to PHPs as well. Given
the confusion reflected in this comment, throughout this final rule
with comment period, we have revised the regulation text to indicate in
each requirement whether it applies to PHPs, while also retaining
Sec. 438.8.
Comment: One commenter believed that we should establish specific
and significant monetary fines for coercive or unethical marketing
practices.
Response: Many States have already determined what marketing
violations are punishable and have set significant fines or sanctions.
In addition, Sec. 438.700 requires States that contract with MCOs to
establish intermediate sanctions and includes as reasons for imposing
these sanctions: (1) discrimination among enrollees based on health
status or need for services; (2) misrepresenting or falsifying
information furnished to either the State, enrollees, potential
enrollees, health care providers or us; and (3) distributing marketing
materials that have not been approved by the State, or that contain
false or materially misleading information. States have the flexibility
to impose sanctions or restrictions as they find appropriate. In
addition, Sec. 438.730 allows us to impose a sanction either based upon
a State agency's recommendation, or directly.
Comment: Several commenters urged HCFA to prohibit other types of
marketing, and require more strict oversight of MCOs'', PHPs'', and
PCCMs' activities.
Response: Some degree of flexibility is needed if MCOs, PHPs, and
PCCMs are to continue offering Medicaid products in a competitive
environment. Section 438.104(b)(2)1)(i) requires States to review and
approve all marketing materials prior to distribution, and
Sec. 438.104(b)(2) requires assurances that marketing materials do not
confuse, mislead or defraud. Section 438.104(b)(1)(v) prohibits
specific marketing practices, such as door to door, telephone, or other
``cold call'' marketing. It is not clear what ``other types of
marketing'' would warrant a prohibition. Therefore, we do not believe
that additional regulatory requirements are necessary.
Comment: Commenters suggested that we revise the preamble to
indicate that the marketing limitations apply to homeless shelters as
well as other institutional settings. The commenters believe that it is
not appropriate to approach homeless people, and that strong Federal
protection is needed.
Response: The general prohibition on ``cold call'' marketing would
prohibit ``approaching'' homeless people in a shelter (or elsewhere) or
other institutionalized individuals. We agree with the commenters, and
are stating here that all limitations on marketing apply equally in
these settings.
Comment: One commenter indicated that it makes little sense to
mandate choice of an MCO when under the proposed regulation, MCOs may
not use marketing to effectively differentiate their Medicaid products
and compete for greater enrollment.
Response: We do not believe that these marketing rules unfairly
restrict an MCO, PHP, or PCCM's ability to compete in the marketplace.
We do not prohibit all types of marketing activity. States may permit
MCO, PHP, and PCCMs to--(1) participate in health fairs and community
presentations; (2) use various forms of ``broadcast'' advertising; (3)
send mailings to potential enrollees; (4) respond to individual
requests for information; and (5) engage in other activities as long as
they are approved and subject to sufficient oversight. Even where MCOs,
PHPs, and PCCMs have similar structures and networks, it is possible
for them to offer additional benefits, for example, child care to
differentiate one MCO, PHP, or PCCM from another. In addition, MCOs,
PHPs and PCCMs can provide results of enrollee satisfaction surveys,
report cards, or other types of information on quality of care to
potential enrollees.
b. Cold-Call Marketing
Proposed Sec. 438.104(a) defined cold-call marketing as any
unsolicited personal contact by the MCO, PHP, or PCCM with a potential
enrollee for the purpose of influencing the individual to enroll in
that particular MCO, PHP, or PCCM. Cold-call marketing includes door-
to-door, telephone or other related marketing activities performed by
MCOs, PHPs, or PCCMs and their employees (that is, direct marketing) or
by agents, affiliated providers, or contractors (that is, indirect
marketing). In the preamble to the proposed rule, we noted that cold-
call marketing includes activities as a physician or other members of
the medical staff, or a salesperson, or other MCO, PHP, or PCCM
employee or independent contractor approaching a beneficiary in order
to influence a beneficiaries decision to enroll with a particular MCO,
PHP, or PCCM. In proposed Sec. 438.104(b)(2)(v), we expressly
prohibited MCO, PHP, or PCCMs from directly or indirectly engaging in
door-to-door, telephone, or other cold-call marketing activities.
Comment: One commenter felt that the definition of ``cold-call
marketing'' could inadvertently prohibit appropriate marketing
activities, for example, direct contact at health fairs and community-
based organization offices.
Response: The prohibition on cold-call marketing only applies to
``unsolicited'' contact by the MCO, PHP, or PCCM. For example, if a
beneficiary attends a health fair or similar event, the beneficiary
would be seeking information about health care and, therefore, the
contact between the MCO,
[[Page 6274]]
PHP, or PCCM and the beneficiary would not be considered
``unsolicited.'' We note, however, that MCO, PHP, or PCCM participation
in health fairs and other community activities is considered marketing
and, therefore, must have the State's approval.
Comment: Commenters suggested that we return to the statutory
language defining cold-call marketing. The commenters' rationale was
that because the regulations apply to voluntary as well as mandatory
programs, the prohibited activities would preclude viable enrollment
numbers.
Another commenter contended that the proposed definition of
``direct marketing'' went beyond the statutory prohibition of ``cold-
call'' marketing. Another commenter believed that the restriction
against providers attempting to influence patients' choice could
severely limit opportunities for MCOs, PHPs, and PCCMs to attract
members and might unintentionally create an unlevel playing field
because this sort of marketing is currently conducted by PSOs, hospital
systems, and providers with a particular interest in one health plan.
Response: Section 1932(d)(2)(E) of the Act prohibits direct or
indirect door-to-door, telephonic, or other ``cold-call'' marketing of
enrollment. These provisions were added to the Act by section 4707 of
the BBA, Protections Against Fraud and Abuse. Our interpretation of the
Congress' intent is that the statutory language was meant to minimize
the potential for abusive marketing practices in both voluntary and
mandatory programs. Specifically, we interpreted the term ``direct
marketing'' to mean marketing by an MCO, PHP or PCCM or its employees;
the term ``indirect marketing'' to mean marketing by an MCO, PHP, or
PCCM, or its agents, affiliated providers, or contractors. The terms
``door-to-door'' and ``telephonic'' marketing are self-explanatory. We
interpreted the term ``other cold-call marketing'' as other unsolicited
contacts. If the Congress intended to prohibit only unsolicited door-
to-door or telephone contacts, the ``other'' forms would not have been
included in the prohibition. There are several other types of marketing
that are permitted under this regulation. For example, States may
permit the use of billboards, newspaper, television, and other media to
advertise MCOs, PHPs, MCOs, or PHPs. Mailings are also permitted as
long as they are distributed to the MCO's, PHP's, or PCCM's entire
service area covered by the contact. States may also provide marketing
materials on behalf of MCOs, PHPs, and PCCMs.
Comment: Several commenters, while indicating support for the ban
on door-to-door, telephonic and other cold call marketing, expressed
concern over the inclusion of physician activities including
approaching a beneficiary to influence a decision to enroll with a
certain plan. The commenters considered it inappropriate to place any
limits on information provided to a beneficiary within the context of a
doctor-patient relationship. Another commenter stated that the
prohibition on contact by affiliated physicians and medical staff seems
to conflict with the need to preserve continuity of care between
patients and providers. The commenters observed that, although these
providers may have incentives to recruit patients, these incentives
must be balanced against the desire of many Medicaid patients to
continue seeing providers with whom they have established a
relationship.
Response: There is no prohibition against a physician responding to
a patient's request for advice in the context of the doctor-patient
relationship, or identifying all MCOs, PHPs, or PCCMs with which the
physician has a contract. The intent of Sec. 438.104(b)(1)(v) is to
prohibit unsolicited marketing activities. Medical advice given as part
of a doctor-patient relationship is not considered marketing. Our
definition of cold-call marketing as ``unsolicited'' leaves patients
free to seek out the advice of their providers. However, the cold call
prohibition would prevent providers or their staff from approaching a
patient about choosing an MCO, PHP, or PCCM. Providers are often
members of several MCOs, PHPs, and PCCMs and permitting them to
approach a member about any particular MCO, PHP, or PCCM could give the
appearance of influence by factors not necessarily in the best
interests of the patient.
Comment: One commenter called the cold-call provision ``overly
restrictive'' and felt that it presented serious problems for MCOs,
PHPs, and PCCMs that use clinic-based community providers. The
commenter also felt that the regulation contradicted the proposed
default assignment process because States are expected to assign
individuals to existing providers and these providers would be
restricted from giving information to assist in the process. The
commenter recommended that participating physicians be permitted to
provide approved informational materials about plans in which they
participate to patients in their offices in an unbiased, non-
threatening manner, and that the State monitor to ensure compliance.
Response: The default assignment process is considered a State's
last resort for matching a non-responding individual with a provider.
The fact that an individual is in a physician's office inquiring about
what MCOs, PHPs, or PCCMs the provider participates in, indicates that
default assignment is not likely to be necessary. However, if the
individual does not make a selection, the office visit may facilitate
the default assignment process because, under Sec. 438.50(f), the
State's default enrollment process must seek to preserve existing
provider-beneficiary relationships. In addition, a State may choose to
permit providers to display approved materials about all plans in which
they participate. The regulation only prohibits unsolicited personal
contact by any person or entity representing a particular MCO, PHP, or
PCCM.
Comment: A commenter pointed out that safety net providers often
perform outreach to uninsured individuals who may be eligible for
Medicaid. The commenter believes that the marketing prohibition could
discourage providers from promoting Medicaid enrollment. It was
suggested that a discussion on the subject of maintaining an existing
provider relationship could be interpreted as cold-call marketing. A
safety-net provider indicated that they allow their physicians and
medical staff to discuss options and provide literature supplied by
MCOs, PHP, or PCCMs. They felt that a patient's physician often
provides the best assistance and information for making an informed
decision.
Response: We encourage outreach to those individuals who may be
eligible for Medicaid. However, outreach which relates to establishing
Medicaid eligibility should be distinct from marketing, which is
considered to have a bias in favor of one MCO, PHP, or PCCM or provider
option over another. Medical staff will be assumed to be acting in the
best interest of the beneficiary's health when discussing or
encouraging a Medicaid application. This activity would not be
considered marketing unless it also includes a distinct attempt to
encourage selection of a particular MCO, PHP, or PCCM. If, in the
course of a discussion, a beneficiary inquires about how to continue
seeing a particular provider, there is no prohibition on providing
information on the MCOs, PHPs, or PCCMs in which that provider
participates. On the other hand, contact with an enrollee or potential
enrollee by any other person or entity on behalf of a particular MCO,
PHP or PCCM (prior to establishing Medicaid eligibility or
[[Page 6275]]
selecting an MCO, PHP, or PCCM option) will be considered marketing and
will be subject to State and Federal scrutiny.
Comment: A commenter called the restriction on physicians advising
their patients ``an unnecessary gag rule'' and indicated that it would
prevent a physician from steering a severe asthmatic to an MCO, PHP, or
PCCM that excels in managing asthma care. The commenter also pointed
out that the rule would not prevent physicians from ``trashing'' other
MCOs, PHPs, or PCCMs.
Response: A distinction should be made between patient counseling
based on a patient's request done by medical staff on the basis of
medical factors, and steering, which may be based on inappropriate
factors such as administrative or fiscal issues. Providers are free to
advise their patients, as specified in Sec. 438.102, and they may
respond to questions about the availability of specific services from
MCOs, PHPs, or PCCMs with which they are affiliated. States should keep
in mind, however, that medical staff providing patient counseling may
not necessarily be aware of other factors, such as health conditions of
other family members required to join an MCO, PHP, or PHP or of areas
in which other MCOS, PHPS, or PCCMs may excel.
We agree with the commenter that negative marketing activities
(``trashing'') should also be addressed in this regulation, and we have
done so through a new definition of ``marketing'' in Sec. 438.104(a).
Under this definition, any communication by an MCO, PHP, or PCCM (or
any of its agents or independent contractors) with an enrollee or
potential enrollee that can reasonably be interpreted as intended to
influence that individual to decide to enroll or re-enroll in that
particular Medicaid product, or either not to enroll in or to disenroll
from another MCO's, PHP's, or PCCM's Medicaid product would be
considered marketing and, therefore, would be covered by this
regulation. We also have revised the definitions of ``marketing
materials'' and ``cold call marketing to incorporate the new marketing
definition.
Comment: One commenter contended that the language of the
regulation was inconsistent with the language in the preamble because
the regulation merely prohibits unsolicited personal contact by the
MCO, PHP, or PCCM with a potential enrollee for the purpose of
influencing the individual to enroll. The commenter noted that the
preamble describes cold-call marketing as unsolicited contact by an
employee, affiliated provider or contractor of the entity. The
commenter stated that the language of the regulation was clear and
concise and did not require the explanation in the preamble.
Response: In Sec. 438.104(a), we state that any reference to MCO,
PHP, or PCCM and entity includes ``any of the entity's employees,
affiliated providers, agents, or contractors.'' Therefore, the
regulatory language is consistent with the preamble.
Comment: Commenters agreed with the prohibition against providers
attempting to influence patients to join a particular MCO, PHP, or
PCCM. However, the commenters pointed out that it is difficult for
States to detect this type of activity.
Response: As systems have become more sophisticated, new and more
effective methods of oversight continue to evolve. The difficulty in
detecting certain inappropriate activities does not relieve MCOs, PHPS,
and PCCMs or States from the obligation to protect the interests of the
beneficiary. Many standard methods of monitoring marketing, such as
reviewing grievances and appeals from beneficiaries and providers,
tracking enrollment and disenrollment trends, and conducting
beneficiary surveys will help detect patterns of aggressive or unfair
marketing practices.
Comment: A commenter expressed concern that this provision unduly
restricts the ability of MCOs to educate enrollees or potential
enrollees about managed care and does not focus on group settings for
example, schools, day care centers, and churches, where MCOs could
target larger groups of Medicaid enrollees. The commenter asked HCFA to
broaden the provision by giving additional examples of State approved
activities.
Response: This regulation does not prohibit educational activities
on the part of MCOs. However, any contacts other than patient
counseling by any MCO, PHP, or PCCM staff or representative would be
considered marketing, subject to State oversight. The regulation does
not prohibit States from permitting MCOs, PHPs, or PCCMs to market to
groups, for example, schools, churches, and day care centers. States
are responsible for approving and monitoring these types of
presentations and ensuring that beneficiaries attend voluntarily with
knowledge that they are attending a marketing presentation.
Comment: Another commenter indicated that the definition of ``cold-
call marketing'' might be too broadly defined and should not apply to
public places where MCOs are engaging in marketing practices approved
by the State.
Response: States may permit and establish rules for marketing in
public places. However, States may not permit uninvited personal
solicitations in public places, for example, eligibility offices and
supermarkets. Some States allow representatives of available MCOs,
PHPs, and PCCMs to be in eligibility offices or other locations on
certain days, or on a rotating basis to answer questions and provide
information to beneficiaries. In these situations, there should be
provisions to monitor contacts to ensure that unbiased information is
available about all options and that beneficiaries are not coerced.
However, marketing or other MCO, PHP, or PCCM representatives who
approach beneficiaries as they enter or exit eligibility offices or
other public places, call at residences uninvited, are considered cold-
call contacts and are not permitted.
Comment: One commenter expressed concern that the regulation
narrows marketing options by restricting the role of MCOs in community-
based efforts.
Response: We believe the statute gives States broad authority to
determine what marketing activities are permitted with the exception of
unsolicited personal contacts by MCOs, PHPs, and PCCMs or their
representatives. States are free to use MCOs in community-based
efforts. However, those efforts are considered marketing, therefore the
materials (for example, activities and presentations) are subject to
State review and approval.
Definition of Marketing Materials
In the NPRM, we proposed to define marketing materials as materials
that--(1) are produced in any medium, by or on behalf of an MCO, PHP,
or PCCM; ( 2) are used by the MCO, PHP, or PCCM to communicate with
individuals who are not its enrollees; and (3) can reasonably be
interpreted as intended to influence the individuals to enroll or re-
enroll in that particular MCO, PHP, or PCCM.
Comment: Some commenters said that the definition of marketing
materials should not include communication intended to serve the needs
of existing enrollees and suggested that the regulation be revised to
clarify that marketing materials are those materials intended to
influence non-enrollees to join a particular MCO, PHP, or PCCM. One
commenter thought the definition of marketing materials was incomplete
and should be changed to read ``can reasonably be interpreted as
intended to influence the individual to enroll or re-enroll in that
particular MCO, PHP, or
[[Page 6276]]
PCCM.'' Another commenter indicated that the combination of
requirements at proposed Sec. 438.104(a) (definition of marketing
materials) and proposed Sec. 438.104(b)(2)(1) (prohibition on the
distribution of marketing material without State approval) required
States to approve all marketing materials prior to distribution,
whether or not they are targeted to Medicaid beneficiaries. It was
pointed out that this would be administratively impossible and could
raise constitutional issues.
Response: We disagree with the first commenters who favored
limiting marketing materials to those directed at individuals who are
not enrollees (which was the position taken in the NPRM), and agree
with the second commenter who endorsed the language in the definition
referring to influencing individuals to ``re-enroll.'' In such a case,
the individual already is enrolled and the portion of the definition
referring to ``individuals not enrolled'' conflicts with the language
favored by the commenter. We therefore have removed the portion of the
definition limiting its applicability so that it is clear that
marketing materials include those intended to influence both enrollees
and potential enrollees. States retain the authority to interpret the
term and are responsible for evaluating whether certain materials
satisfy the definition. States may interpret this term broadly and
determine that all materials are subject to review, but we assume that
many States will determine that routine correspondence (such as
appointment reminders) do not fall within the definition of ``marketing
materials'' and therefore are not subject to review.
We have incorporated the new definition of marketing into the
definition of ``marketing materials.''
Comment: Commenters supported our broad definition of marketing
materials and our efforts to ensure the accuracy and truthfulness of
the materials. However, some commenters felt that an absence of a clear
definition of marketing could mean that many activities, for example,
hiring community residents to talk about the benefits of belonging to a
particular plan or persuading neighbors to join a plan, might not be
covered. The commenters indicated that a common usage understanding of
the term ``materials'' would not appear to include a spokesperson or
representative. They also stated that it was unclear whether paying
neighbors to say nice things about a plan would constitute cold call
marketing. They suggested that we include a broad definition of
marketing and include examples of marketing, and of false and
misleading marketing. One commenter suggested that the following
language, ``inaccurate, false, or misleading statements include, but
are not limited to, any assertion or statement (whether written or
oral) that--(1) the beneficiary must enroll in the MCO, PHP, or PCCM in
order to obtain benefits or in order not to lose benefits; or (2) the
MCO, PHP, or PCCM is endorsed by the Federal government, State
government or us.'' Another commenter recommended that we expand the
regulation by requiring States to review marketing materials to ensure
that MCOs do not imply that all persons are required to enroll in
managed care in order to continue receiving Medicaid benefits.
Response: The comments recommending a ``definition of marketing''
have been addressed by our inclusion of a separate definition of
marketing in this final rule with comment period. As noted above, we
have defined ``marketing'' as ``any communication, from an MCO, PHP, or
PCCM to an enrollee or potential enrollee that can reasonably be
interpreted as intended to influence the recipient to enroll or re-
enroll in that particular MCO's, PHP's, or PCCM's Medicaid product, or
either not to enroll, or to disenroll from another MCO's, PHP's, or
PCCM's Medicaid product.'' We also agree that language suggested by the
commenter would be helpful, and provide in Sec. 438.104(b)(2) that
inaccurate, false, or misleading statements include, but not limited to
any assertion or statement (whether written or oral) that the
beneficiary must enroll in the MCO, PHP, or PCCM in order to obtain
benefits, not to lose benefits, or that the MCO, PHP, or PCCM, is
endorsed by either the Federal government, State government, similar
entities or us.
States are required to review and approve all marketing materials
under Sec. 438.104(b)(1)(i). We expect this review to include screening
for misleading information including any implication that individuals
who are not required to enroll will lose their benefits if they do not
enroll. In addition, the revised information provision at
Sec. 438.10(d)(2)(i)(B) requires that beneficiaries must be informed
prior to selection of an MCO about which populations are excluded from
enrollment, subject to mandatory enrollment, or free to enroll
voluntarily.
Comment: One commenter believed that the definition of marketing
materials was too narrow because it did not address materials developed
by State agencies (for example, the Office of Mental Hygiene and the
Office of Developmental Disabilities) that participate in informing and
encouraging potential enrollees about managed care. The commenter
recommended that other parties have the authority to refer materials
being used for marketing purposes to the MCAC or similar reviewing body
to review and determine if the materials are unbiased.
Response: Section 438.104 addresses marketing materials that are
produced by or on behalf of an MCO, PHP, or PCCM. To the extent that a
State agency such as those mentioned by the commenter is acting as a
PHP (for example, as a provider of behavioral health services under a
``carve-out''), any materials it generates would be subject to the
requirements in Sec. 438.104. If, however, the agency has no stake in
where an individual enrolls, and is essentially acting on behalf of the
State Medicaid agency, it is not clear what ``bias'' the agency would
have that would be detected by review. We therefore do not believe that
review of such materials pursuant to Sec. 438.104 is necessary or
appropriate.
We note that Sec. 438.10 requires that all information for
enrollees and potential enrollees meet language and format requirements
to facilitate understanding and take into consideration special needs.
This applies to information furnished by any State or local agencies.
States may choose to require the review of materials other than those
subject to review as marketing materials under Sec. 438.104.
Comment: A commenter suggested that we require that marketing
material be distributed to the entire geographic area at least 90 days
prior to enrollment, and only after the material is approved.
Response: The length of time needed for distribution of marketing
materials may vary from State to State depending on factors, for
example, Medicaid managed care penetration. Therefore, we do not
mandate specific time frames for marketing activity. We encourage
States to carefully consider the timing of the distribution of any
marketing or other materials to maximize informed choice. The
information provision at Sec. 438.10(d)(1)(iii) requires that basic
information be provided within a time frame that enables potential
enrollees to use the information in choosing among available MCOs. With
respect to mandatory managed care programs, we require States to
establish standards and time requirements for fully informing and
providing sufficient time to make an informed choice.
In response to the last part of the commenter's concerns, the
regulation does require that all marketing materials
[[Continued on page 6277]]
[Federal Register: January 19, 2001 (Volume 66, Number 13)]
[Rules and Regulations]
[Page 6377-6426]
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[DOCID:fr19ja01-31]
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[[Continued from page 6376]]
[[Page 6377]]
transportation agencies and other human service providers increased the
efficiency of the transportation system, helped control costs, and can
provide better service to Medicaid and non-Medicaid users of the
transportation system. The commenter noted that it is in the interest
of the community, State, and the health care and transportation
industries to develop coordinated networks of transportation. Further,
according to the commenter, States should have the ability to operate
their non-emergency transportation services with Federal matching
funding comparable to the optional medical service match to improve the
States' capacity to coordinate transportation services, thereby saving
Medicaid related costs while supporting the existing public
transportation network.
Response: The issue of non-emergency transportation services is not
an issue that is unique to managed care. This regulation only pertains
to the Medicaid managed care provisions in the BBA, and thus, non-
emergency transportation is beyond the scope of this regulation and the
statute it implements.
Comment: One commenter disagreed with the deletion of the
requirement that no more than 75 percent of enrollees in risk contracts
be eligible for Medicare or Medicaid. Although it is not clear why this
would be the case, the commenter apparently believed that this deletion
would result in MCOs decreasing the numbers of Medicaid beneficiaries.
Response: First, the 75/25 enrollment requirement is a limit on the
percentage of enrollees eligible for Medicaid, and therefore there is
no reason to believe it would result in decreased Medicaid enrollment.
Any changes that resulted from its elimination would presumably
increase Medicaid enrollment. More importantly, this change was made by
Congress in the BBA, and we thus had no discretion in this rulemaking
to retain it. We note that this requirement was previously used as a
rough ``proxy'' to ensure quality services by requiring that an MCO
attract commercial customers. This ``proxy'' has been replaced in the
BBA with more direct quality requirements implemented in this final
rule.
Comment: We received one comment urging that the proposed rule deal
with the effects on Medicaid of the law prohibiting ``public benefits''
going to individuals who are not citizens or permanent residents.
Response: This subject is outside the scope of this rulemaking.
Comment: A few commenters suggested that HCFA require State
agencies to consult with beneficiaries and the physician community at
all stages of the planning and implementation of new managed care
initiatives. The commenters believed that physician organizations can
offer significant input into the development of professional standards
effecting patient care delivery, evaluating the adequacy of provider
networks, and assessing quality of care delivered. Further, the
commenters believed that we should continuously monitor and evaluate
State experiences with physician participation and serve as a
clearinghouse of information for States on successful strategies.
Response: We realize that public and physician consultation are
important factors in the development of Medicaid managed care
initiatives and encourage stakeholder input at all stages of managed
care development. However, we are not requiring a specific requirement
for stakeholder involvement since States, based on the uniqueness of
their Medicaid managed care programs, are in the best position to
determine how this involvement should be structured. Each State is
required to have a Medical Care Advisory Committee (MCAC) established
for the purpose of advising the Medicaid agency about health and
medical services. This committee, by regulatory definition, is required
to include physicians and beneficiaries. We encourage States to
continue to use the MCAC as a mechanism for obtaining input on managed
care issues. Likewise, under Sec. 438.302, we are requiring public
consultation in development of the State's quality strategy, though we
are not specifying the structure of this consultation.
Comment: One commenter expressed concern with the lack of
discussion in the preamble and proposed regulation text of requirements
or directions to States regarding long term care services and support
delivered by MCOs. The commenter believed that this was of particular
concern since the elderly and people with disabilities account for the
majority of Medicaid spending.
Response: While long-term care services were not explicitly
addressed in the regulation, we believe the regulation was written in
such a manner to encompass all the types of services delivered under
managed care including long-term care. Long-term care issues were
considered in discussions during the development of the final
regulation.
Comment: Several commenters were concerned with what they believed
to be a lack of clarity and specificity in the proposed rule concerning
children and children with special health care needs. These commenters
believed that the final rule should be more specific on child health
requirements separate from adult health requirements, since children
have distinct medical and developmental health care needs. The
commenters also stated that the proposed rule offered no special
protection for children with special health care needs. One commenter
stated that when Congress enacted section 1932(a)(2)(A) of the Act, it
intended that HCFA develop standards and protections for special needs
children above and beyond the managed care standards and protections
provided to all beneficiaries. The commenter further indicated that
because children with special health care needs are the most
vulnerable, it was essential that HCFA provide specific regulations
that protects these children in managed care environments.
Response: We agree that children, and particularly children with
special health care needs, have unique needs that differ from the adult
population. While this final rule establishes a general framework for
States to use when developing managed care programs to serve all of its
enrolled populations, as discussed in section II. D. above, it also
takes into account and implements recommendations set forth in HCFA's
report to Congress on special needs beneficiaries required under
section 4705(c)(2) of the BBA. We note that section 1932(a)(2)(A)
specifically exempts special needs children from being mandatorily
enrolled in the State Plan Option for Medicaid managed care. In
addition, under 1915(b) waivers HCFA has established new interim
criteria that States must meet when establishing programs for children
with special health care needs. These criteria require additional
reporting and monitoring for children with special health care needs.
And finally, the terms and conditions for 1115 waiver programs also
contain specific areas that address the needs of these types of
children.
Comment: One commenter was concerned about the impact of Medicaid
managed care on the nation's dental schools and other hospital-based or
allied dental education programs. The commenter urged HCFA to recognize
the special role of dental education institutions in serving the
Medicaid population and to use the regulations to strengthen the
Medicaid program by improving access to dental prevention and treatment
services. Finally, this commenter recommended that the proposed
regulations be revised to amplify the specific requirements of law
related to the access of diagnostic,
[[Page 6378]]
preventive and treatment services for children under Medicaid's EPSDT
program. The commenter was specifically concerned about the impact of
managed care on the utilization rate for children's dental services.
Response: We recognize the importance of the nation's dental
schools and other hospital-based dental education programs in serving
the dental needs of the Medicaid population. At this time, we do not
believe it is necessary to develop a separate regulation to address
access to dental prevention and treatment services. This final rule is
designed to address access issues related to all Medicaid managed care
services. For example, an MCO that delivers dental services to Medicaid
beneficiaries must comply with the access requirements in the
regulation. The MCO must ensure that it offers an appropriate range of
services and that it maintains a network of providers that is
sufficient to meet the needs of its enrollees. Further, according to
Sec. 438.206(a), each State must ensure, through its contract with an
MCO, that all of the covered services are accessible for all the
beneficiaries enrolled with the MCO. We are also optimistic that
managed care will facilitate increased utilization in the area of
dental services.
Comment: Several commenters recommended that HCFA develop a final
rule which ensures that States, MCOs and PCCMs will develop Medicaid
managed care programs that protect the rights of enrollees who are
homeless, promote their access to an appropriate range of services, and
improve the quality of care available to them.
Response: We believe this final rule protects the rights of all
beneficiaries, including persons who are homeless. For example,
Sec. 438.206 requires that the delivery network meet the needs of the
population served and that access to services be guaranteed, while
under Sec. 438.100 all beneficiaries must be treated with dignity and
respect. We recognize that persons who are homeless face unique
difficulties in receiving information needed to make appropriate
choices among MCO or PCCM options due to transience, lack of mailing
address, and other circumstances. Under Sec. 438.56(d)(2)(i), persons
who are homeless, and who have been automatically assigned at their
initial enrollment into an MCO or PCCM, may disenroll and re-enroll
with a different MCO or PCCM at any time. We believe this will give
persons who are homeless the opportunity to learn more about managed
care when they need medical services and make the most effective choice
of MCOs or PCCMs at that time.
Comment: One commenter recommended that there should be some form
of consumer assistance programs to help enrollees navigate the managed
care system.
Response: We agree that there must be adequate and appropriate
consumer assistance programs available to enable beneficiaries to
navigate the managed care system. We also agree that it is a State's
responsibility to ensure that consumer assistance is available to its
beneficiaries. However, because consumer assistance can be accomplished
in many different ways, and should be designed by each State to meet
the unique characteristics of its managed care population and program,
we are not imposing a Federal requirement for this. Some States already
use toll free hotlines for consumer assistance, while others have
developed ombudsman programs. We do require that MCOs must give
enrollees reasonable assistance they need in completing forms or other
procedural steps in the grievance process.
Comment: Several commenters believed that the regulation should
clearly respond to the special needs of medically vulnerable
beneficiaries with acute, chronic and disabling conditions and contain
specific definitions of these diagnoses, as well as clear definitions
of ``mental illness'' and ``addictive disorders'' so that coverage for
these conditions are included under the service plan. One commenter
recommended the inclusion within all Medicaid mental health managed
care benefit packages of psychosocial rehabilitative services, self-
help services and peer supports, and other non-medical services
designed to help consumers improve their level of functioning, increase
their ability to live independently and cope with ongoing symptoms and
side effects of medications. Further, the commenter contended that
States should be required to establish the methodology necessary to
measure the prevalence of chronic mental illness, acute mental illness,
or substance abuse per county, taking into account the predicted health
care needs of the population to be enrolled. Another commenter believed
that the regulation should incorporate a requirement that each Medicaid
managed care behavioral health plan name and provide a full continuum
of addiction treatment services in the network including: hospital and
non-hospital detoxification, hospital and non-hospital rehabilitation,
short and long term rehabilitation, outpatient, partial hospitalization
services and treatment for the family. This commenter also recommended
that a particular university be given a strong role in review of these
provisions, and that this role should be written into regulation.
Response: The regulation was intended to address needs and
protections for all Medicaid beneficiaries in managed care. The
information requirements at Sec. 438.10 require that the State must,
directly, or through the MCO, PHP, or PCCM, provide information on any
benefits to which the beneficiary is entitled under the Medicaid
program, but that are not covered under the MCO, PHP, or PCCM contract,
and specific instructions on where and how to obtain those benefits,
including how transportation is provided. Further, we are not
identifying specific types of treatment and services in the regulation
for one type of service category. Each State has the flexibility to
determine the services that will be covered under their own State
Medicaid program. This regulation pertains only to the delivery of
services, not the benefits provided under the State's Medicaid program.
With respect to the last comment on the role of a specified university,
we do not believe it would be appropriate to grant an outside private
body government oversight authority.
Comment: One commenter suggested that MCO, PHP, and PCCM contracts
should specify the services that the entity is responsible to provide,
and that the State should be required to make arrangements for
providing other State plan services, and give beneficiaries written
information on how to obtain them.
Response: As noted above in section II. C., Sec. 438.210(a)
requires that contracts specify the services the entity is required to
provide, and Sec. 438.206(c) requires that if an MCO contract does not
cover all of the services covered under the State plan, the State must
make available those services from other sources and instruct all
enrollees on where and how to obtain them, including how transportation
is provided. Further, the information requirements under Sec. 438.10
require that the State must, directly or through the MCO, PHP, or PCCM,
provide to Medicaid beneficiaries information on any services to which
they may be entitled under the Medicaid program, but that are not
covered under the MCO PHP, or PCCM contract and specific instructions
on where and how to obtain those services, including how transportation
is provided.
[[Page 6379]]
Comment: One commenter recommended that a new paragraph should be
included (titled ``Americans with Disabilities Act'') to require that
each MCO must ensure that: (1) the physical and mental disabilities of
enrollees and potential enrollees are reasonably accommodated,
including flexible scheduling, extra assistance and specialized staff
training; (2) enrollees with disabilities receive services in the most
integrated setting appropriate to their needs, including community
based services to enable them to live in community settings instead of
institutions or residential treatment facilities; (3) no eligibility
criteria, service authorization procedures, utilization review
practices or other methods of administration are employed that defeat
or substantially impair, with respect to individuals with disabilities,
accomplishment of the objectives of the State's medical assistance
program; and (4) qualified individuals with disabilities be provided
services, benefits and aids that are as effective in affording equal
opportunity to obtain the same result, to gain the same benefit or to
reach the same level of achievement as that provided to others.
Response: We do not feel it is necessary to add a separate
provision as other areas of the regulation respond to this issue.
Section 438.100 requires that the State must ensure that each MCO and
PHP comply with any and all Federal laws pertaining to enrollee rights,
including the Americans with Disabilities Act. Further, Sec. 438.6(f)
requires that all contracts must comply with all applicable State and
Federal laws and regulations, including Title VI of the Civil Rights
Act of 1964; Title IX of the Education Amendments of 1972 (regarding
education programs and activities); the Age Discrimination Act of 1975;
the Rehabilitation Act of 1973; and the Americans with Disabilities
Act.
Comment: One commenter was concerned with what will happen to
people with mental retardation should an MCO, PHP, or PCCM withdraw
from the Medicaid market. The commenter stated that if a Medicaid MCO
or PHP leaves the Medicaid market, there must be protections in place
to ensure continuing access to medically necessary services for
individuals with mental retardation and other disabilities who
critically need access to these health and health related services and
supports to live in the community.
Response: It is the State's ultimate responsibility to ensure
access to Medicaid covered services. In the event that an MCO or PHP
withdraws from the Medicaid market, the State must ensure that services
are delivered to all Medicaid beneficiaries either through another
Medicaid MCO or PHP, or through fee-for-service arrangements.
Comment: One commenter found it disturbing that managed care
consumer protections and quality measures for the Medicare population
have more ``teeth'' than those required for Medicaid. The commenter
felt that this perceived distinction in the requirements of Medicare
managed care and Medicaid managed care continues what the commenter
believed to be ongoing discrimination against people who are poor and
disabled.
Response: It was our intent to create consistency with the
Medicare+Choice requirements to lessen the impact that multiple
regulatory and administrative standards exert on the managed care
industry. However, where there was a clear need for greater beneficiary
protection or where consistency with the Medicare+Choice program was
not appropriate for Medicaid managed care, we deviated from the
Medicare+Choice policy. We believe that this final rule balances the
need for flexibility and consistency, while providing States with the
broad tools necessary to become better purchasers of health care. We
believe that this final rule contains protections for enrollees that
are equal to or exceed those in the Medicare+Choice final rule. This
includes sanction and civil money penalty authority similar to that in
the Medicare+Choice rule. We thus disagree with the commenter's premise
about the Medicare+Choice rule having more ``teeth.''
Comment: Several commenters urged HCFA to provide special attention
to the effect of these regulations on people with disabilities. The
commenters believed that the regulations must provide specific
protections for special needs populations, such as those with spinal
cord injury or dysfunction when enrollment in Medicaid managed care is
mandatory. One commenter believed a methodology should be developed
which would allow States to inventory disabled populations on a per
county basis in order to ensure that adequate numbers of providers,
especially specialists, would be available to serve the enrolled
special needs population.
Response: The regulation was intended to address the needs and
protections for all Medicaid beneficiaries in managed care, including
persons with disabilities. The regulation was written in a manner to
establish a general framework for States to use when developing managed
care programs to serve all of its enrolled populations. We believe the
regulation allows greater access to quality health care services
delivered through managed care arrangements for persons with
disabilities. As noted above in section II. C., Sec. 438.206(d)
requires that MCOs and PHPs take into account the anticipated
enrollment of persons with special health care needs in establishing
their provider network, and must have the appropriate numbers and
``types'' of providers in terms of training and experience to meet
these needs. We believe these provisions directly address the
commenters' concerns.
Comment: One commenter suggested that the final regulation make
clear that all States are free to adopt more rigorous standards of
consumer protections in Medicaid managed care.
Response: The consumer protections in this regulation were not
designed to prevent States from developing more rigorous standards.
States retain the flexibility to develop more restrictive consumer
protection provisions that go beyond those contained in this
regulation.
Comment: Several commenters noted that the issue of low physician
participation in Medicaid does not appear to have been addressed in the
proposed rule, and believed that this has always been a concern under
the Medicaid program. Some of the commenters believed that because of
inadequate funding and administrative requirements, physicians have
minimized their participation in the Medicaid program. These commenters
believed that financial incentives may be an appropriate mechanism to
entice physician participation. On the other hand, a commenter felt
that financial incentives that may prevent the delivery of medically
necessary services may be partially controlled by prohibiting any
financial incentives. Another commenter recommended that in addition to
physician incentive plans that place physicians at substantial
financial risk for services they do not provide, having to conduct
enrollee surveys, and provide adequate and appropriate stop loss
protection, HCFA should also state that financial risk will reside with
the plan in instances where a plan decision results in a limit on the
services provided. Finally, one commenter felt that there was a need to
develop financial incentives for managed care plans to compete on the
basis of quality rather than the basis of price. This commenter
believed that it is important for Medicaid managed care regulations to
establish rewards for MCOs based on quality, not merely cost
reductions.
Response: The general issue of relatively low levels of physician
participation in the Medicaid program is
[[Page 6380]]
outside the scope of this rulemaking. We note, however, that levels of
participation in managed care settings have been higher than under fee-
for-service Medicaid, and that a managed care enrollee is ensured
access to a primary care provider under this final rule. Thus, to the
extent managed care is involved, physician participation is guaranteed
under this final rule to the extent necessary to meet access
requirements. Specifically, Sec. 438.207 requires that each MCO and PHP
must ensure that it maintains a network of providers that is sufficient
in number, mix and geographic distribution to meet the needs of the
anticipated number of enrollees in the MCO's or PHP's service area.
Further, under Sec. 438.214, the State must ensure that each MCO and
PHP have a process for formal selection and retention of providers that
does not discriminate against those that serve high risk populations or
specialize in conditions that require costly treatment. With respect to
financial incentives for MCOs and PHPs, these are addressed in
Sec. 422.6(c)(5) as part of the discussion of actuarially sound rates.
See section II. A. above. Beyond these limits, we believe States should
have flexibility in this area. With respect to financial incentives for
individual physicians, Sec. 438.6(h) requires that MCO and PHP
contracts provide for compliance with the physician incentive plan
requirements.
Comment: One commenter wrote to express concerns regarding the
quality of care delivered by a particular managed care program. The
commenter was concerned about the introduction of managed care for
persons with disabilities and persons with chronic conditions. The
commenter contended that they were misled by their health plan, and the
organization denied and reduced care when not appropriate.
Response: We anticipate that the new consumer protections, quality
provisions and grievance system requirements in this final rule will
work to alleviate problems in the areas addressed by the commenter.
Comment: One commenter believed that the final rule should maintain
an adequate safety net to guarantee the continued viability of Medicaid
managed care and to allow for reasonable alternatives. The commenter
cautioned States moving towards mandatory managed care that they must
avoid the tendency to make the area fit MCOs rather than the MCOs
address the area. The commenter felt that ``cookie cutter'' approaches
will not work in large rural States, and it might be difficult to
develop health plan networks in rural areas.
Response: We recognize that States are unique and have different
needs for their enrolled populations. This final rule was designed to
maintain State flexibility as much as possible, so that States can
implement managed care programs that meet the needs of their
beneficiaries.
VI. Collection of Information Requirements
Under the Paperwork Reduction Act (PRA) of 1995, we are required to
provide 30-day notice in the Federal Register and solicit public
comment before a collection of information requirement is submitted to
the Office of Management and Budget (OMB) for review and approval.
In order to fairly evaluate whether an information collection
should be approved by OMB, section 3506(c)(2)(A) of the PRA of 1995
requires that we solicit comment on the following issues:
The need for the information collection and its usefulness
in carrying out the proper functions of our agency.
The accuracy of our estimate of the information collection
burden.
The quality, utility, and clarity of the information to be
collected.
Recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.
Therefore, we are soliciting public comments on each of these
issues for the information collection requirements discussed below.
The following information collection requirements and associated
burdens are subject to the PRA. For purposes of this requirement, we
incorporated pertinent managed care data from the 1999 Medicaid
enrollment report. As of June, 1999, there were 375 managed care
organizations (MCOs) (this includes 2 HIOs that must adhere to the MCO
requirements of this regulation), 37 primary care case management
systems (PCCMs), 412 managed care entities (MCOs and PCCMs combined),
and 129 prepaid health plans (PHPs). There were a total of 24,470,583
beneficiaries enrolled in these plans (some beneficiaries are enrolled
in more than one plan) in forty-eight States and the District of
Columbia (Wyoming and Alaska do not currently enroll beneficiaries in
any type of managed care).
A. Section 438.6 Contract Requirements
1. Section 438.6(c) Payments Under the Contracts
a. Requirement
In summary, Sec. 438.6(c) modifies the rules governing payments to
MCOs and PHPs by doing the following: (1) eliminates the upper payment
limit (UPL) requirement; (2) requires actuarial certification of
capitation rates; (3) specifies data elements that must be included in
the methodology used to set capitation rates; (4) requires States to
consider the costs for individuals with chronic illness, disablility,
ongoing health care needs, or catastrophic claims in developing rates;
(5) requires States to provide explanations of risk sharing or
incentive methodologies; and (6) imposes special rules, including a
limitation on the amount that can be paid under FFP in some of these
arrangements.
b. Burden
We believe that the burden of providing additional information to
support the actuarial soundness of a State's capitation rates will be
offset by the elimination of the UPL requirement. States will no longer
be required to extract fee-for-service (FFP) data and manipulate that
data by trending and other adjustments in order to establish a FFP
equivalent for purposes of comparison to capitation rates.
2. Section 438.6(i)(2) Advance Directives
a. Requirement
This paragraph requires that MCOs and PHPs (States may determine
that it is inappropriate to require this of some PHPs) provide adult
enrollees with written information on advance directives policies and
include a description of applicable State law.
b. Burden
The burden associated with this requirement is the time it takes to
furnish the information to enrollees. We assume that this information
would be furnished with the rest of the information required by other
regulations sections and is therefore subsumed under those
requirements.
B. Section 438.8 Provisions That Apply to PHPs
Section 438.8(a) Contract Requirements
a. Requirement
This section imposes most of the contract requirements contained in
Sec. 438.6 on PHPs, including advance
[[Page 6381]]
directives (in most instances) and physician incentive plan
requirements.
2. Burden
PHPs have not previously been required to maintain written policies
and procedures with respect to advance directives. This requires the
PHP to provide written information to enrollees of their rights under
this provision and the PHP's policies with respect to the
implementation of those rights. We project 8 hours for each of the 129
PHPs to establish this policy and 2 minutes per enrollee for provision
of this information, and acceptance of this right to each of
approximately 8.1 million individuals enrolled in PHPs. The total time
for this would be 271,032 hours.
Under the physician incentive plan provision, PHPs, like MCOs, will
be required to provide descriptive information to States and HCFA to
determine whether or not there is substantial financial risk in their
subcontracts. In addition, enrollees must be surveyed and provided
information on the risk arrangements when substantial risk exists.
We are basing our projections of burden upon information published
in the Federal Register on March 27, 1996 and December 31, 1996 (61 FR
13445 and 61 FR 69049) which contained the original regulatory
provisions on physician incentive plans for Medicare and Medicaid HMOs.
Based on those assumptions, we believe no more than one third of the
approximately 130 PHPs use incentive or risk payment arrangements with
their subcontracting providers. Affected PHPs would be required to
provide detailed responses to State surveys regarding their payment
mechanisms and amounts. At the projected 100 hours per response for
approximately 43 PHPs the total burden would be 4300 hours. For those
PHPs with substantial financial risk, there are other requirements such
as stop loss insurance and beneficiary surveys. We believe there would
be minimal additional burden as a result of these requirements (because
many already comply with these requirements) and that this would apply
to no more than one fourth of those PHPs with risk or incentive
payments, or a total of 11. We estimate an additional 10 hours per plan
for a total of 110 hours. Altogether, we estimate 4,410 hours of burden
through imposition of this requirement on PHPs.
C. Section 438.10 Information Requirements
1. Section 438.10(b), (d), (e), and (f)
a. Requirement
In summary, Sec. 438.10(b), (d) and (e) state that each State, MCO,
PHP, and PCCM must furnish information to enrollees and potential
enrollees, to meet the requirements of this section. Paragraph (b)
requires that the State notify enrollees and potential enrollees, and
require each MCO, PHP, and PCCM to notify its enrollees and potential
enrollees that oral interpretation and written information are
available in languages other than English and how to access those
services. The basic information listed in paragraph (d) and (e) of this
section must be provided to each enrollee or to any potential enrollee
upon request, by the MCO or PHP (unless the State chooses to furnish it
directly), within a reasonable time after it receives from the State
notice of the beneficiary's enrollment. This information must be
provided on an annual basis thereafter, the MCO or PHP must notify
enrollees of their right to obtain this information upon request. The
information that must be provided includes the following:
Information for potential enrollees
General information must be provided about the basic features of
managed care, which populations are excluded from enrollment, subject
to mandatory enrollment, or free to enroll voluntarily in an MCO or
PHP, and MCO and PHP responsibilities for coordination of enrollee
care.
Information specific to each MCO and PHP serving an area that
encompasses the potential enrollee's service area must be provided.
This includes information on benefits covered; cost sharing if any;
service area; names, locations, and telephone numbers of current
network providers, including at a minimum information on primary care
physicians, specialists, and hospitals, and identification of providers
that are not accepting new patients; and benefits that are available
under the State plan but are not covered under the contract, including
how and where the enrollee may obtain those benefits, any cost sharing,
and how transportation is provided.
Information for enrollees
The State must give each enrollee written notice of any change
(that the State defines as ``significant'') in the information
specified at least 30 days before the intended effective date of the
change and make a good faith effort to give written notice of
termination of a contracted provider, within 15 days after receipt or
issuance of the termination notice, to each enrollee who received his
or her primary care from, or was seen on a regular basis by, the
terminated provider.
Required information:
Kinds of benefits, and amount, duration, and scope of
benefits available under the contract; enrollee rights as specified in
Sec. 438.100.
Procedures for obtaining benefits, including authorization
requirements.
Names, locations, and telephone numbers of current network
providers, including information at least on primary care physicians,
specialists, and hospitals, and identification of providers that are
not accepting new patients.
Any restrictions on the enrollee's freedom of choice among
network providers.
The extent to which, and how, enrollees may obtain
benefits, including family planning services, from out-of-network
providers.
The extent to which, and how, after-hours and emergency
coverage are provided.
Policy on referrals for specialty care and for other
benefits not furnished by the enrollee's primary care provider.
Cost sharing, if any.
Grievance, appeal, and fair hearing procedures for
enrollees, including time-frames, required under Sec. 438.414(b).
Any appeal rights that the State chooses to make available
to providers to challenge the failure of the organization to cover a
service.
Any benefits that are available under the State plan but
are not covered under the contract, including how and where the
enrollee may obtain those benefits, any cost sharing, and how
transportation is provided. The State must furnish information about
how and where to obtain the service.
Information on how to obtain continued services during a
transition, as provided in Sec. 438.62.
The rules for emergency and post-stabilization services,
as set forth in Sec. 438.114.
Additional information that is available upon request, and
how to request that information.
At least once a year, the MCO or PHP, or the State or its
contracted representative, must notify enrollees of their right to
request and obtain the information listed above.
In addition, Sec. 438.10(f) requires that information related to
the licensure, certification, and accreditation status of MCOs, PHPs,
and their providers be
[[Page 6382]]
furnished to each enrollee and each potential enrollee.
b. Burden
We believe the burden placed on States, MCOs, PHPs, and enrollment
brokers as a result of this requirement is the time associated with
modifying the content of existing information materials, as well as the
time associated with distributing the materials to enrollees as
specified by the regulation. We estimate that it will initially take 12
hours for each MCO or PHP to modify existing information materials to
conform with the requirement above. We further estimate that there are
approximately 375 MCOs and 129 PHPs, equating to an initial
modification burden of approximately 6,048 hours. After the initial
modification, we estimate that it will take MCOs and PHPs approximately
4 hours each to annually update the information materials, equating to
an annual total burden of approximately 2,016 hours.
We expect that it will take MCOs, PHPs, or States approximately 5
minutes per enrollee to mail the initial packet, for an estimated 20.2
million enrollees. The total burden associated with this requirement is
approximately 1,683,000 hours, approximately 3,340 hours per MCO or
PHP, or 34,000 hours per State.
We similarly estimate that it annually will take MCOs, PHPs, or
States 5 minutes per enrollee to mail information materials upon
request. We estimate that 10 percent of enrollees and potential
enrollees will request information annually, equating to approximately
2,020,000 enrollees and potential enrollees. The annual mailing burden
associated with this requirement is estimated to be 2,020,000
individuals multiplied by 5 minutes per person, for a total burden of
approximately 168,300 hours (approximately 330 hours per MCO or PHP, or
3,400 hours per State).
Finally, we estimate that it will annually take MCOs, PHPs, or
States 5 minutes per enrollee to notify enrollees of their right to
receive information. Five minutes multiplied by an estimated total
enrollee population of 20,200,000 individuals equates to an annual
burden of approximately 16,830,000 hours or approximately 3,300 hours
per MCE or PHP or 33,400 hours per State.
2. Section 438.10(g)
a. Requirement
Section 438.10(g) requires that each primary care case manager
(PCCM) (and PHPs that operate like PCCMs) provide similar types
information to potential enrollees including information on provider
names and locations, benefits, grievance procedures, and procedures for
obtaining services during the appeals process.
b. Burden
The burden associated with this requirement is the amount of time
required by States or their contracted representative to mail the
required information to potential enrollees. We believe that it will
take the 30 States approximately 5 minutes per enrollee to mail this
information. We estimate that there are a total of approximately
4,274,000 PCCM enrollees, and that 10 percent of those enrollees will
request this information. This equates to an annual burden of 5 minutes
multiplied by 427,400 enrollees, or approximately 35,600 hours
(approximately 962 hours per primary care case manager).
3. Section 438.10(h)
a. Requirement
In summary, Sec. 438.10(h) states that if a State plan provides for
mandatory MCO, PHP, or PCCM enrollment under section 1932(a)(1)(A) of
the Act, the State or its contracted representative must provide
information in a comparative, chart-like format, to potential enrollees
and at least once a year thereafter. The information must include the
MCO's, PHP's or PCCM's service area, the benefits covered under the
contract, any cost sharing imposed by the MCO, PHP, or PCCM and, to the
extent available, quality and performance indicators, including but not
limited to disenrollment rates and enrollee satisfaction.
b. Burden
We believe that the additional burden on States (for example those
not yet captured in the above provisions) is the length of time
associated with creating the comparative chart. We estimate that it
will take States approximately 4 hours each to create the comparative
chart. We further estimate that approximately 8 States per year will
avail themselves of the State Plan Option, for a total annual burden of
approximately 32 hours.
D. Section 438.12 Provider Discrimination Prohibited
a. Requirement
This section requires that if an MCO or PHP declines to include
individual or groups of providers in its network, it must give the
affected providers written notice of the reason for its decision.
b. Burden
The burden associated with this requirement is the time it takes
the MCO or PHP to draft and furnish the providers with the requisite
notice. We estimate that it will take an hour to draft and furnish any
given notice. We estimate that on average each MCO and PHP will need to
produce 10 notices per year for a total of 5,040 hours.
E. Section 438.50(b) State Plan Information
a. Requirements
Each State must have a process for the design and initial
implementation of the State plan that involves the public and have
methods in place to ensure ongoing public involvement once the State
plan has been implemented.
b. Burden
The burden associated with this section includes the time
associated with developing the process for public involvement,
including annual updates. We estimate that it will take 40 hours per
State to develop the process for, and involving, the public for a total
burden of 1960 hours (48 States and D.C.). We estimate that ensuring
ongoing public involvement will take another 20 hours per State
annually for a total annual burden of 980 hours.
F. Section 438.56z Disenrollment: Requirements and Limitations
1. Section 438.56(b)
a. Requirement
All MCO, PHP, and PCCM contracts must--
(1) Specify the reasons for which the MCO, PHP, or PCCM may request
disenrollment of an enrollee;
(2) Provide that the MCO, PHP, or PCCM may not request
disenrollment because of a change in the enrollee's health status, or
because of the enrollee's utilization of medical services, diminished
mental capacity, or uncooperative or disruptive behavior resulting from
his or her special needs; and
(3) Specify the methods by which the MCO, PHP, or PCCM ensures the
agency that it does not request disenrollment for reasons other than
those permitted under the contract.
b. Burden
The burden of submitting this supporting documentation when MCOs,
PHPs, or PCCMs request disenrollment of beneficiaries would be two
hours per request. We calculate that approximately one-tenth of one
percent of enrollees (24,470) would be affected, or 43 per MCO, PHP, or
PCCM annually. The total burden would be 48,940 hours, or 87 hours per
MCO, PHP, or PCCM.
[[Page 6383]]
2. Section 438.56(d)(1)
a. Requirement
In order to disenroll, the beneficiary (or his or her
representative) must submit an oral or written request to the State
agency (or its agent) or to the MCO, PHP or PCCM where permitted.
b. Burden
We believe that the burden associated with this requirement is the
length of time it would take enrollees to submit in writing a
disenrollment request, if they choose to use the written format. We
estimate that it will take approximately 10 minutes per enrollee to
generate a written disenrollment request. We estimate that
approximately 5 percent of MCO, PHP, and PCCM enrollees will request
that they be disenrolled from an MCO, PHP, or PCCM. Approximately one-
fourth of the enrollees will choose a written rather than an oral
request. This equates to an annual burden of approximately 10 minutes
multiplied by 306,000 affected enrollees (one-fourth of the 1,221,000
enrollees requesting disenrollment), or approximately 51,000 hours.
3. Section 438.56(d)(3)
a. Requirement
When MCOs, PHPs, or PCCMs are processing disenrollment requests and
do not act to approve them, they must submit written notice to the
State and then the State takes action. When a State is acting on a for-
cause disenrollment request, they may request written information from
the MCO, PHP, or PCCM to determine the outcome. In addition, if the
MCO, PHP, or PCCM approves the disenrollment for cause, it must give
the enrollee and the State agency written notice of its determination.
b. Burden
We believe that the burden associated with this requirement is the
time taken for MCOs, PHPs, or PCCMs to submit written notice to the
State and beneficiaries.
Of the 1,221,000 affected enrollees, we calculate that one-fifth
(244,000) will not be approved. If each notice takes 15 minutes to
produce, the total burden would be 61,000 hours. Of the 244,000
enrollees not approved, we calculate that three-fourths (183,000) will
involve the State requesting information from the MCO, PHP, or PCCM
justifying the denial. At one hour per request, the total burden on
MCOs, PHPs, or PCCMs would be 183,000 hours.
We estimate that the MCOs, PHPs, and PCCMs will need to produce
notices for the remaining four-fifths of enrollees requesting
disenrollment (977,000) and the States to approve the request for
disenrollment. As this notice will probably be a short form letter,
with attachments as necessary, we believe that it will take ten minutes
per request to send out the notices, or an annual burden of 163,000
hours.
G. Section 438.102 Enrollee-Provider Communications
a. Requirement
Section 438.102(c) states that the general rule in paragraph (b) of
this section does not require the MCOs and PHPs to cover, furnish, or
pay for a particular counseling or referral service if the MCO or PHP
objects to the provision of that service on moral or religious grounds;
and makes written information on these policies available to (1)
prospective enrollees, before and during enrollment and, (2) current
enrollees, within 90 days after adopting the policy with respect to any
particular service.
b. Burden
The above information collection requirement is subject to the PRA.
However, we believe the burden associated with these requirements is
captured in the general information requirements in Sec. 438.10.
H. Section 438.114 Emergency Services
a. Requirement
Section 438.114(b) states that at the time of enrollment and at
least annually thereafter, each MCO, PHP, and State (for PCCMs) must
provide, in clear, accurate, and standardized form, information that,
at a minimum, describes or explains (1) What constitutes an emergency,
with reference to the definitions in paragraph (a) of this section, (2)
the appropriate use of emergency services, (3) the process and
procedures for obtaining emergency services, including use of the 911
telephone system or its local equivalent, (4) the locations of
emergency settings and other locations at which MCO physicians and
hospitals provide emergency services and post-stabilization care
covered under the contract, and (5) the fact that prior authorization
is not required.
a. Burden
The following information collection requirement is subject to the
PRA. However, we believe the burden associated with these requirements
is captured in the general information requirements in Sec. 438.10.
I. Section 438.202 State Responsibilities
a. Requirement
Each State contracting with an MCO or PHP must have a strategy for
assessing and improving the quality of managed care services offered by
the MCO or PHP, document the strategy in writing and make it available
for public comment before adopting it in final, and conduct periodic
reviews to evaluate the effectiveness of the strategy at least every
three years. Each State must also submit to HCFA a copy of the initial
strategy and a copy of the revised strategy whenever significant
changes are made. In addition, States are required to submit to HCFA
regular reports on the implementation and effectiveness of the
strategy, consistent with the State's own periodic review of its
strategy's effectiveness, but at least every three years.
b. Burden
The burden associated with this section is limited to those States
offering managed care through MCOs or PHPs (49) and includes the time
associated with developing the proposed strategy, publicizing the
proposed strategy, incorporating public comments, submitting an initial
copy of the strategy to HCFA prior to its implementation and whenever
significant changes are made, and submitting regular reports on the
implementation and effectiveness of the strategy at least every three
years. We estimate that it will take 40 hours per State to develop the
proposed strategy for a total burden of 1960 hours. We estimate that
publicizing the proposed strategy will take 2 hours per State for a
total burden of 98 hours. We estimate that incorporating public
comments for the final strategy will take another 40 hours per State
for a total burden of 1960 hours. We estimate it will take one hour per
State to submit an initial copy of the strategy to HCFA and whenever
significant changes are made for a total of 49 hours. We estimate it
will take 40 hours per State to create and submit a report on the
implementation and effectiveness of the strategy. We assume that these
reports will be submitted at least every three years for a total annual
burden of 653 hours.
K. Section 438.204 Elements of State Quality Strategies
a. Requirement
In this final rule we have added a new requirement at
Sec. 438.204(b)(1)(iii) that a State identify the race, ethnicity, and
primary language spoken by each MCO
[[Page 6384]]
and PHP enrollee and report this information to each MCO and PHP in
which each beneficiary enrolls at the time of their enrollment.
b. Burden
We believe that most States currently track race and ethnicity data
in their eligibility systems. If States do not, minor changes in their
software will be needed. With respect to primary language of enrollees,
there will likely be additional programming needed for all States. We
estimate that this would require 2 hours of programming for each of the
49 jurisdicitons for a total of 98 hours.
L. Section 438.206 Availability of Services
a. Requirement
Paragraph (c) of this section requires that if an MCO, PHP, or PCCM
contract does not cover all of the services under the State plan, the
State must make those services available from other sources and provide
to enrollees information on where and how to obtain them, including how
transportation is provided.
b. Burden
The burden associated with this requirement is the time it takes to
provide the information. This burden of this requirement is included in
the general disclosure requirements in Sec. 438.10.
M. Section 438.207 Assurances of Adequate Capacity and Services
a. Requirement
Section 438.207 requires that each MCO and PHP must submit
documentation to the State, in a format specified by the State and
acceptable to HCFA, that it has the capacity to serve the expected
enrollment in its service area in accordance with the States' standards
for access to care and meets specified requirements.
Section 438.207(c) requires that this documentation be submitted to
the State at least annually, and specifically at the time the MCO or
PHP enters into a contract with the State and at any time there has
been a significant change (as defined both by the State and this
regulation) in the MCO's or PHP's operations that would affect adequate
capacity and services.
Section 438.207(d) requires the State, after reviewing the MCO's or
PHP's documentation, to certify to HCFA that the MCO or PHP has
complied with the State's requirements for availability of services, as
set forth at Sec. 438.206.
b. Burden
We believe that MCOs and PHPs already collect and provide this
information to State agencies as part of their customary and usual
business practices and that the only additional burden on MCOs and PHPs
is the length of time required for MCOs and PHPs to compile this
information in the format specified by the State agency, and the length
of time for the MCOs and PHPs to mail the information to the State and
the HCFA. We estimate that it will take each MCO and PHP approximately
20 hours to compile the information necessary to meet this requirement,
for a total of 20 hours multiplied by 504 MCOs and PHPs, or
approximately 10,000 hours. In addition, we estimate that it will take
MCOs and PHPs approximately 5 minutes each to mail the materials
associated with this burden to the State for an annual burden of
approximately 5 minutes multiplied by 502 MCOs and PHPs, or
approximately 42 hours.
In this final rule we have added requirements to the types of
assurances that MCOs and PHPs must provide (for example assurances that
the MCO or PHP has policies and practices to address situations where
there are: (1) unanticipated needs for providers with particular types
of experience; and (2) unanticipated limitations on the availability of
such providers. In addition, we have added new requirements under
Sec. 438.206(d) that when establishing and maintaining provider
networks, each MCO and PHP must consider the anticipated enrollment
with respect to persons with special health care needs and the
experience of providers required to furnish contracted services.
Documentation to support assurances by each MCO and PHP that they have
considered the anticipated enrollment of persons with special health
care needs and have recruited or are in the process of recruiting
experienced providers is part of the assurances that must be provided
to the State. We do not believe that it is customary, or part of the
ususal business practice of MCOs and PHPs to collect data that includes
totals for projected enrollment of persons with special health care
needs and their specialized provider requirements. We estimate that
obtaining information on: (1) the numbers and types of persons with
special health care needs that could be anticipated to enroll in the
MCO or PHP; (2) the types of experienced providers they would require;
(3) the experience of the existing providers in the MCO's or PHP's
network; and (4) the numbers and types of additional experienced
providers needed, would require an estimated 40 hours of work for each
of the 504 MCOs and PHPs for a total estimated burden of 20,160 hours.
N. Section 438.240 QualityAssessment and Performance Improvement
Program; Performance Improvement Projects
a. Requirement
Section 438.240(c) states that each MCO and PHP must annually
measure its performance using standard measures required by the State
and report its performance to the State. In this final rule we have
added a requirement that the State must include any minimum performance
measures and levels specified by HCFA. In addition to using and
reporting on measures of its performance, in Sec. 438.240(d)(3) States
are to ensure that each MCO and PHP initiates each year one or more
performance improvement projects. In Sec. 438.240(d)(10) each MCO and
PHP is required to report the status and results of each such project
to the State as requested.
B. Burden
This regulation would require States to require each MCO and PHP to
annually produce at least two performance measures. Based on
discussions with the 17 States with the largest Medicaid managed care
enrollments, all 17 States are already doing so. Because the use of
performance measures in managed care has become commonplace in
commercial, Medicare and Medicaid managed care, we do not believe that
this regulatory provision imposes any new burden on MCOs, PHPs, or
States.
With respect to the requirements for performance improvement
projects in Sec. 438.240(d), we expect that, in any given year, each
MCO and PHP will complete two projects, and will have four others
underway. We further expect that States will request the status and
results of each MCO's and PHP's projects annually. Accordingly, we
estimate that it will take each MCO and PHP 5 hours to prepare its
report for each project, for an annual total burden of 30 hours per MCO
and PHP. In aggregate, this burden equates to 30 hours multiplied by an
estimated 504 MCOs and PHPs, or approximately 15,120 hours.
[[Page 6385]]
O. Section 438.242 Health Information Systems
a. Requirement
Section 438.242(b)(2) requires the State to require each MCO and
PHP to collect data on enrollee and provider characteristics as
specified by the State, and on services furnished to enrollees, through
an encounter data system or other such methods as may be specified by
the State. Section 438.242(b)(3) states that each MCO and PHP must make
all collected data available to the State and to HCFA, as required in
this subpart, or upon request.
b. Burden
The above information collection requirements are subject to the
PRA. However, we believe that the burden associated with these
information collection requirements is exempt from the Act in
accordance with 5 CFR 1320.3(b)(2) because the time, effort, and
financial resources necessary to comply with these requirements would
be incurred by persons in the normal course of their activities.
P. Section 438.402 General Requirements
a. Requirement
In summary, Sec. 438.402 requires each MCO and PHP to have a
grievance system, sets out general requirements for the system, and
establishes filing requirements. It provides that grievances and
appeals may be filed either orally or in writing, but that oral appeals
(except those with respect to expedited service authorization
decisions) must be followed by a written request.
b. Burden
We estimate that approximately 1 percent of 20.2 million MCO and
PHP enrollees (202,000) annually will file a grievance with their MCO
or PHP and that approximately .5 percent (101,000) annually will file
an appeal. For these cases, we estimate that the burden on the enrollee
filing a grievance or appeal is approximately 20 minutes per case. The
total annual burden on enrollees is 101,000 hours.
Q. Section 438.404 Notice of Action
a. Requirement
In summary, Sec. 438.404 states that if an MCO or PHP intends to
deny, limit, reduce, or terminate a service; deny payment; deny the
request of an enrollee in a rural area with one MCO or PHP to go out of
network to obtain a service; or fails to furnish, arrange, provide, or
pay for a service in a timely manner, the MCO or PHP must give the
enrollee timely written notice and sets forth the requirements of that
notice.
b. Burden
We estimate that the burden associated with this requirement is the
length of time it would take an MCO or PHP to provide written notice of
an intended action. We estimate that it will take MCOs and PHPs 30
seconds per action to make this notification. We estimate that
approximately 5 percent (1,010,000) of the approximately 20.2 million
MCO and PHP enrollees will receive one notice of intended action per
year from their MCO or PHP (2,004 hours per MCO or PHP) for a total
burden of approximately 8417 hours.
R. Section 438.406 Handling of Grievances and Appeals
a. Requirement
In summary, Sec. 438.406 states that each MCO and PHP must
acknowledge receipt of each grievance and appeal.
b. Burden
The above information collection requirement is not subject to the
PRA. It is exempt under 5 CFR 1320.4(a) because it occurs as part of an
administrative action.
S. Section 438.408 Resolution and Notification: Grievances and
Appeals
a. Requirement
In summary, Sec. 438.408 states that for grievances filed in
writing or related to quality of care, the MCO or PHP must notify the
enrollee in writing of its decision within specified timeframes. The
notice must also specify that the enrollee has the right to seek
further review by the State and how to seek it. All decisions on
appeals must be sent to the enrollee in writing within specified
timeframes and, for notice of expedited resolution, the MCO or PHP must
also provide oral notice. The decision notice must include the MCO or
PHP contact for the appeal, the results of the process and the date it
was completed, and a summary of the steps the MCO or PHP has taken on
the enrollee's behalf to resolve the issue. For an oral grievance that
does not relate to quality of care, the MCO or PHP may provide oral
notice unless the enrollee requests that it be written.
This section also provides, for expedited appeals, that MCOs and
PHPs must submit delayed and adverse appeal decisions to the State fair
hearing office along with all supporting documentation.
b. Burden
The above information collection requirements are not subject to
the PRA. They are exempt under 5 CFR 1320.4(a) because they occur as
part of an administrative action.
T. Section 438.410 Expedited Resolution of Grievances
1. Paragraph (c)
a. Requirement
Paragraph (c), Requirements for appeals, requires each MCO and PHP
to document all oral requests in writing and maintain the documentation
in the case file.
b. Burden
The above information collection requirement is not subject to the
PRA. It is exempt under 5 CFR 1320.4(a) because it occurs as part of an
administrative action.
2. Paragraph (d)
a. Requirement
Section 438.410(d) states that if an MCO denies a request for
expedited grievance, it must automatically transfer the request to the
standard time frame process and give the enrollee prompt oral notice of
the denial and follow up, within 2 working days, with a written letter.
b. Burden
The above information collection requirements are not subject to
the PRA. They are exempt under 5 CFR 1320.4(a) because they occur as
part of an administrative action.
U. Section 438.414 Information About the Grievance System
a. Requirement
Sections 438.414(a) and (b) state that each MCO and PHP must
provide information about the grievance system, as specified in
Sec. 438.10 and this subpart to: (1) Enrollees, (2) potential enrollees
(as permitted by the State), and (3) all providers and contractors, at
the time of subcontracting. The information must explain the grievance
system through a State-developed or State-approved description and must
include the information set forth in Sec. 438.414 (b)(1) through (6).
In addition, Sec. 438.414(c) states that upon request, the MCO or
PHP must provide enrollees and potential enrollees with aggregate
information derived from the collected information in Sec. 438.416(e),
regarding the nature of enrollee grievances and their resolution.
[[Page 6386]]
(c) Requirements for appeals. Each MCO and PHP must meet the
following requirements with respect to appeals:
(1) Establish a convenient and efficient means for an enrollee or a
provider to request expedited resolution of an appeal;
(2) Provide expedited resolution of an appeal in response to an
oral or written request if the MCO or PHP determines (with respect to a
request from the enrollee) or the provider indicates (in making the
request on the enrollee's behalf or supporting the enrollee's request)
that taking the time for a standard resolution could seriously
jeopardize the enrollee's life or health or ability to attain,
maintain, or regain maximum function.
(3) Document all oral requests in writing; and
(4) Maintain the documentation in the case file.
b. Burden
These information collection requirements are subject to the PRA.
However, we believe the burden associated with these requirements is
captured in the general information requirements in Sec. 438.10.
V. Section 438.416 Recordkeeping and Reporting Requirements
a. Requirement
Sections 438.416 (a) and (c) state that each MCO and PHP must
maintain a log of all complaints and grievances and their resolution,
and retain the records of complaints, grievances (including their
resolution) and disenrollments for three years, in a central location,
and make them accessible to the State.
In addition, Sec. 438.416(d) states that each MCO and PHP must, at
least once a year, send to the State a summary that includes the
following information, (1) the number and nature of all grievances and
appeals, (2) the time frames within which they were acknowledged and
resolved, and (3) the nature of the decisions. This material is
available to the public upon request under Sec. 438.10.
b. Burden
We estimate that approximately .5 percent of the approximately 20.2
million MCO and PHP enrollees will file a grievance with their MCO or
PHP (200 per MCO or PHP). The recording and tracking burden associated
with each grievance is estimated to be 1 minute per request (3.4 hours
per MCO or PHP), for a total burden of 1,680 hours (1 minute multiplied
by an estimated 101,000 enrollees who would file a grievance).
This section also contains the applicable requirements that MCOs
and PHPs must follow to submit the annual summary of complaints and
grievances. Every MCO and PHP (approximately 504 organizations) must
submit an annual report. We estimate that the burden on the MCO or PHP
for collecting information and preparing this summary will be
approximately 4 hours per MCO/PHP or approximately 2,016 hours total.
W. Section 438.604 Data That Must Be Certified
a. Requirement
When payments from States to MCOs and PHPs are based on data
submitted by the MCO or PHP that include, but are not limited to,
enrollment information, encounter data, or other information required
by the State, the MCO or PHP must attest to such data's accuracy,
completeness, and truthfulness as a condition of receiving such
payment. Each MCO and PHP must certify that it is in substantial
compliance with its contract. Certification is required, as provided in
Sec. 438.606, for all documents specified by the State.
b. Burden
While the requirement for MCOs and PHPs (and their contractors) to
attest to the accuracy of enrollment information encounter data or
other information required by the State is subject to the PRA, as is
the requirement for MCOs and PHPs to certify the accuracy,
completeness, and truthfulness of all information provided in
contracts, requests for proposals, or other related documents specified
by the State, the burden associated with these requirements is captured
during the submission of such information. Therefore, we are assigning
one token hour of burden for this requirement.
X. Section 438.710 Due Process: Notice of Sanction and Pre-
termination Hearing
1. (a) Due Process: Notice of Sanction and Pre-Termination Hearing
a. Requirement
Section 438.710(a) states that before imposing any of the sanctions
specified in this subpart, the State must give the affected MCO or PCCM
written notice that explains the basis and nature of the sanction.
Section 438.724 also requires all intermediate sanctions to be
published in a newspaper in order to notify the public.
b. Burden
The above information collection requirements are not subject to
the P.A. They are exempt under 5 CFR 1320.4(a) because they occur as
part of an administrative action.
2. (b)(1) Due Process: Notice of Sanction and Pre-Termination Hearing
a. Requirement
Section 438.710(b)(1) states that before terminating an MCO's or
PCCM's contract, the State must give the MCO or PCCM written notice of
its intent to terminate, the reason for termination, and the time and
place of the hearing.
b. Burden
The above information collection requirement is not subject to the
PRA. It is exempt under 5 CFR 1320.4(a) because it occurs as part of an
administrative action.
Y. Section 438.722 Disenrollment During Termination Hearing
Process
a. Requirement
Section 438.722(a) states that after a State has notified an MCO or
PCCM of its intention to terminate the MCO or PCCM's contract, the
State may give the MCO's or PCCM's enrollees written notice of the
State's intent to terminate the MCO's or PCCM's contract.
b. Burden
States already have the authority to terminate MCO or PCCM
contracts according to State law and have been providing written notice
to the MCOs or PCCMs. States are now given, at their discretion, the
option of notifying the MCO's or PCCM's enrollees of the State's intent
to terminate the MCO's or PCCM's contract. While it is not possible to
gather an exact figure, we estimate that 12 States may terminate 1
contract per year. We estimate that it will take States 1 hour to
prepare the notice to enrollees, for a total burden of 12 hours. In
addition, we estimate that it will take States approximately 5 minutes
per beneficiary to notify them of the termination, equating to a burden
of 5 minutes multiplied by 12 States multiplied by 40,080 beneficiaries
per MCO or PCCM, for a burden of approximately 40,080 hours. The total
burden of preparing the notice and notifying enrollees is 40,096.
Z. Section 438.810 Expenditures for Enrollment Broker Services
a. Requirement
Section 438.810(c) requires that a State contracting with an
enrollment broker must submit the contract or memorandum of agreement
(MOA) for services performed by the broker to HCFA for review and
approval prior to the effective date of services required by the
contract or MOA.
[[Page 6387]]
b. Burden
The burden associated with this requirement is the length of time
for a State to mail each contract to HCFA for review. We estimate that
the burden associated with this requirement is 5 minutes per enrollment
broker contract, for a total annual burden of approximately 3 hours per
year (5 minutes multiplied by an estimated 35 enrollment broker
contracts in the States using brokers).
We have submitted a copy of this proposed rule to OMB for its
review of the information collection requirements described above.
These requirements are not effective until they have been approved by
OMB.
If you comment on these information collection requirements, please
mail copies directly to the following: Health Care Financing
Administration, Office of Information Services, DHES, SSG, Attn: Julie
Brown, HCFA-2001-F, Room N2-14-26, 7500 Security Boulevard, Baltimore,
MD 21244-1850; and Office of Information and Regulatory Affairs, Office
of Management and Budget, Room 10235, New Executive Office Building,
Washington, DC 20503, Attn: Brenda Aguilar, Desk Officer.
VII. Provisions of the Final Rule
For reasons specified in the preamble, we have made the following
changes to the proposed rule:
Part 400--Introduction; Definitions
Section 400.203
We have revised this section to include three new provisions.
First, we specify that PCCM stands for primary care case manager.
Second, we specify that PCP stands for primary care physician. Third,
we have revised the definition of provider to clarify that, for the
fee-for service program, it means any individual or entity furnishing
Medicaid services under an agreement with the Medicaid agency and for
the managed care program, it means an any individual or entity that is
engaged in the delivery of health care services and is legally
authorized to do so by the State in which it delivers the services.
Part 430--Grants to States for Medical Assistance
Section 430.5
We have revised this section by removing the definition of clinical
laboratory, moving the definition of authorized representative to this
section from Sec. 438.2, and moving the definitions of capitation
payment, federally qualified HMO, health insuring organization, nonrisk
contract, prepaid health plan, and risk contract from this section to
Sec. 438.2. We have revised the definition of authorized representative
to provide that the term will be defined by each State consistent with
its laws, regulations, and policies.
Part 431--State Organization and General Administration
Section 431.200
We have revised paragraph (c) to include a reference to section
1819(f)(3) of the Act.
Section 431.201
We have defined service authorization request to mean a managed
care enrollee's request for the provision of a Medicaid-covered
service.
Section 431.244
We have revised paragraph (f) regarding time frames for State fair
hearings to include a requirement for an expedited hearing for certain
service authorization requests. We have redesignated paragraph (g) as
(h) and included a new paragraph (g) which permits States to allow a
hearing officer to grant an extension of the time frames under certain
circumstances.
Part 434--Contracts
Section 435.212
We revised this section to replace ``HMO,'' wherever it appears,
with ``MCO and PCCM'' rather than ``MCO.''
Section 435.1002
We revised paragraph a to include a reference to Sec. 438.814.
Part 438--Managed Care Provisions
Subpart A--General Provisions
Section 438.2
We have revised this section by moving the definition of authorized
representative to Sec. 430.5 and moving the definitions of capitation
payment, federally qualified HMO, health insuring organization, nonrisk
contract, prepaid health plan, and risk contract from Sec. 430.5 to
this section. We have revised the definition of capitation payment to
clarify that the State agency makes the payment regardless of whether
the particular recipient receives services during the period covered by
the payment, rather than a fee. We have clarified the definition of
health insuring organization (HIO) so that it does not appear to
require that an HIO's subcontractors be capitated. Since we have
decided to specify within each regulatory provision, whether it applies
to MCOs, PHPs, and/or PCCMs, we no longer use the term managed care
entity, and have deleted that definition. We have revised the
definition of nonrisk contract to clarify that the term refers to a
contract under which the contractor is not at financial risk for
changes in utilization or for costs incurred under the contract that do
not exceed the upper payment limits specified in Sec. 447.362 of this
chapter. In addition, under a nonrisk contract, the contractor may be
reimbursed by the State at the end of the contract period on the basis
of the incurred costs, subject to the specified limits. Finally, we
have clarified the definition of PHP to indicate that PHPs may be
reimbursed by any non-state plan methodology, not just capitation.
Section 438.6
We have revised this section to include a new paragraph (a) that
provides for regional office review of all MCO and PHP contracts
including those that are not subject to the prior approval requirements
in Sec. 438.806. We are making significant revisions to paragraph (c).
We have extended the rate setting requirements to all risk contracts.
We are removing the requirement that rates not exceed the upper payment
limit (UPL) set forth in Sec. 447.361 and substituting an expanded
requirement for actuarial soundness including certification of
capitation rates by an actuary. We specify data elements to be included
in the methodology used to set capitation rates and require States to
consider the costs for individuals with chronic illness, disability,
ongoing health care needs, or catastrophic claims in developing rates.
We also require States to provide explanations of risk-sharing or
incentive methodologies and impose special rules, including a
limitation on FFP, in contracts utilizing some of these arrangements.
These changes are being made as a Final Rule with a 60-day period for
submission of comments.
We have revised paragraph (d) to clarify that the provision applies
to MCOs and PHPs, not MCEs. Paragraph (i)(2) is revised to clarify that
MCOs and PHPs are not required to provide adult enrollees with oral
information on advance directives.
Section 438.8
We have revised paragraph (a) to provide that the requirements for
advance directives specified in Sec. 438.6 apply to all PHPs except
where the State believes that they are not appropriate, for example, if
the PHP contract only covers dental services or non-clinical services
such as transportation. We have also expanded the PHP requirements to
include compliance with the physician incentive plan rules and all of
the State
[[Page 6388]]
responsibility provisions of Subpart B (except for the State plan
provisions in Sec. 438.50).
Section 438.10
We have revised this section to include the substantive
requirements from Sec. 438.318. We have also made several minor wording
and organizational changes that served to clarify the requirements of
this section. We have clarified how these rules apply to PHPs, whereby
PHPs that have PCCM contracts are subject to the rules governing PCCMs,
but all other PHPs are subject to the rules governing MCOs.
In paragraph (c), we have clarified that informational material
must be available in alternative formats and in a manner that takes
into consideration special needs, such as visual impairment or limited
reading proficiency. In addition, paragraph (c) provides that the State
and MCE must provide instructions to enrollees and potential enrollees
regarding how they may obtain information in an appropriate format.
We have revised paragraph (d) to require the State or its
contracted representative to provide information to potential enrollees
regarding which populations are excluded from enrollment, subject to
mandatory enrollment, or free to enroll voluntarily.
We have included a new provision in paragraph (e)(1)(ii), which
requires an MCO to inform enrollees regarding any significant changes
in any of the information that was furnished to them. The MCO must
furnish the information within 90 days after the effective date of the
change. We have included regulatory language in paragraph (e)(2)
requiring the information provided to enrollees to include names and
locations of current network providers, including information at least
on primary care physicians, specialists, and hospitals, and
identification of providers that are not accepting new patients. In
paragraph (e)(3), we have revised the annual notice requirement to
provide that at least once each year, the MCO, the State or its
contracted representative must notify enrollees of their right to
request and obtain specified information.
In paragraph (g), we have clarified that the time frames for
furnishing information are the same for both PCCMs and MCOs.
We have revised paragraph (f) to provide that enrollees and
potential enrollees may request and receive information on requirements
for accessing services, including factors such as physical
accessibility.
Section 438.12
We have revised paragraph (b) to permit different reimbursement
amounts for the different specialties or for the same specialty.
Subpart B--State Responsibilities
Section 438.50
We have revised this section by including paragraph (b)(4), which
requires the State plan to specify the process that the State uses to
involve the public in both the design and the initial implementation of
the program and the methods it uses to ensure ongoing public
involvement once the State plan has been implemented. We have also
revised the language in paragraph (a) to clarify that the provisions of
this section do not apply to programs that have mandatory managed care
enrollment pursuant to a waiver under either section 1115 or section
1915(b) of the Act. We have moved the requirements regarding
limitations on enrollment and default enrollment from Sec. 438.56 to
this section so that they are only applicable in State plan managed
care programs.
Section 438.52
We have revised the definition of ``rural'' area in paragraph (a)
to eliminate the State's option to use definitions other than any area
outside an ``urban area'' as defined in Sec. 412.62(f)(1)(ii). We have
revised the exception for rural area residents in paragraph (c) to
clarify that an enrollee must be permitted to obtain services from an
out of network provider if the provider is the main source of a service
to that individual. We also require that, in rural areas, an enrollee
must be permitted to obtain services from an out of network provider if
he or she needs related services, not all related services are
available within the network, and the enrollee's primary care provider
or another provider determines that receiving the services separately
would subject the enrollee to unnecessary risk.
Section 438.56
We have moved the requirements regarding limitations on enrollment
and default enrollment from this section to Sec. 438.50. We have
revised paragraph (a) to provide that the provisions of this section
apply to all managed care arrangements whether enrollment is mandatory
or voluntary and whether the contract is with an MCO, a PHP, or a PCCM
provider.
We have revised paragraph (b) to require that all MCE contracts
must specify the reasons for which the MCO, PHP, or PCCM may request
disenrollment of an enrollee. The contracts must also provide that the
MCO, PHP, or PCCM may not request disenrollment because of a change in
the enrollee's health status, or because of the enrollee's utilization
of medical services, diminished mental capacity, or uncooperative or
disruptive behavior resulting from his or her special needs except
where the behavior impairs the ability of the MCO, PHP, or PCCM to
furnish services to this enrollee or others.
In paragraph (c), we have clarified that an enrollee may request
disenrollment without cause in four instances:
During the 90 days following the date of the recipient's
initial enrollment, or the date the State sends the recipient notice of
the enrollment, whichever is later.
At lease once every 12 months thereafter.
Upon automatic reenrollment, if the temporary loss of
Medicaid eligibility has caused the recipient to miss the annual
disenrollment opportunity.
When the State imposes an intermediate sanction, as
specified in Sec. 438.702(a)(3)
We have revised paragraph (d) to permit an enrollee to submit
either an oral or a written request for disenrollment. In subparagraph
(d)(2), we have significantly revised the provisions relating to ``for
cause'' disenrollment. We identify three circumstances that would
constitute cause under the final rule:
The enrollee was homeless (as defined by the State) or a
migrant worker at the time of enrollment and was enrolled in the MCO,
PHP, or PCCM by default.
The plan does not, because of moral or religious objects,
cover the service the enrollee seeks.
The enrollee needs related services to be performed at the
same time, not all related services are available within the network,
and the enrollee's primary care provider or another provider determines
that receiving the services separately would subject the enrollee to
unnecessary risk.
In subparagraph (d)(iv), we recognize that the enrollee may cite
other reasons for requesting disenrollment that could constitute
``cause'' under the rule, including poor quality of care, lack of
access to services covered under the contract, or lack of access to
providers experienced in dealing with an enrollee's special health care
needs.
In paragraph (e), we clarify the time frames for disenrollments to
provide that regardless of the procedures followed, the effective date
of an approved disenrollment must be no
[[Page 6389]]
later than the first day of the second month following the month in
which the enrollee or the MCO, PHP, or PCCM files a request.
We have revised paragraph (f) to clarify that if a State restricts
disenrollment under this section, it must provide that enrollees are
furnished a written notice of their disenrollment rights at least 60
days before the start of each enrollment period. In addition, if a
State denies a disenrollment request, it must provide notice to the
enrollee of their right to file a request for a State Fair Hearing.
Section 438.60
We have deleted an exception for emergency and post stabilization
services from this provision, which had been erroneously included in
the NPRM, since duplicate payments are prohibited for these services.
Section 438.62
We have added a new paragraph (b) that requires the State agency to
have in effect a mechanism to ensure continued access to services when
an enrollee with ongoing health care needs is transitioned from fee-
for-service to an MCO, PHP, or PCCM, from one MCO, PHP, or PCCM to
another, or from an MCO, PHP, or PCCM to fee-for-service. We require
that this mechanism apply at least to the following groups:
Children and adults receiving SSI benefits.
Children in Title IV-E foster care.
Recipients aged 65 or older.
Any other recipients whose care is paid for under State-
established, risk-adjusted, high-cost payment categories.
Any other category of recipients identified by HCFA.
In addition, we require the State to notify the enrollee that a
transition mechanism exists, and provide instructions on how to access
the mechanism. We also require the State to ensure that an enrollee's
ongoing health care needs are met during the transition period, by
establishing procedures to ensure that, at a minimum--
The enrollee has access to services consistent with the
State plan and is referred to appropriate health care providers.
Consistent with Federal and State law, new providers are
able to obtain copies of appropriate medical records.
Any other necessary procedures are in effect.
Section 438.64
We have deleted this section which required that capitation
payments be computed on an actuarially sound basis, and incorporated it
into the new Sec. 438.6(c) provisions.
Section 438.68
We have added this new section which requires the State agency to
have in effect procedures for educating MCOs, PHPs, or PCCMs and their
providers about the clinical and other needs of enrollees with special
health care needs.
Subpart C--Enrollee Rights and Protections
Section 438.100
We removed the language relating to benefits and moved the
provisions relating to ``Enrollee Rights'' from Sec. 438.320 to this
section. We revised the enrollee rights in paragraph (b) to include the
following two rights:
To obtain a second opinion from an appropriately qualified
health care professional in accordance with Sec. 438.3206(d)(3).
To be free from any form of restraint or seclusion used as
a means of coercion, discipline, convenience, or retaliation, as
specified in other Federal regulations on the use of restraints.
In addition, we have revised three of the enrollee rights to
provide that the State must ensure that the enrollee has the right--
To receive information on available treatment options and
alternatives, presented in a manner appropriate to the enrollee's
condition and ability to understand. We clarify that if the MCO does
not cover a service because of moral or religious objections, then the
MCO need not furnish information on where and how to obtain the
service, but only on where and how to obtain information about the
service.
To participate in decisions regarding his or her health
care, including the right to refuse treatment.
To request and receive a copy of his or her medical
records and to request that they be amended or corrected, in accordance
with Sec. 438.3224.
We have included a new requirement in paragraph (c) that provides
that the State must ensure that an enrollee's free exercise of his or
her rights does not adversely affect the way the MCO, PCCM, or PHP, the
MCO, PCCM, or PHP's providers, or the State agency treat the enrollee.
In paragraph (d), we have revised the list of examples of applicable
Federal and State laws for which States must ensure MCO, PCCM, or PHP
compliance.
Section 438.102
We have replaced the term ``practitioner'' with ``health care
professional'' and revised the definition to mirror the statutory
language. We have reorganized the substantive provisions of the section
to clarify the requirements. We revised paragraph (c) to include all of
the information requirements that apply if an MCO does not provide a
counseling or referral service based on moral or religious objections.
We have clarified that, if the MCO does not cover a service under this
section, then it is not required to inform enrollees and potential
enrollees about how and where to obtain the service, but rather how and
where to obtain information about a service. In paragraph (d), we
require the State to provide information to enrollees on how and where
to obtain a service that the MCO does not cover based on moral or
religious objections.
Section 438.104
In paragraph (a) we moved the definitions of choice counseling,
enrollment activities, and enrollment broker from this section to
Sec. 438.810. We revised the definition of marketing materials to mean
materials that are produced in any medium, by or on behalf of an MCO,
PCCM, or PHP and can reasonably be interpreted as intended to market to
enrollees or potential enrollees. We also defined marketing to mean any
communication from an MCO, PCCM, or PHP, any of its agents or
independent contractors, with an enrollee or potential enrollee that
can reasonably be interpreted as intended to influence that individual
to enroll or reenroll in that particular MCO, PCCM, or PHP's Medicaid
product or disenroll from another MCO, PCCM, or PHP's Medicaid product.
In paragraph (b), we have clarified that inaccurate, false, or
misleading statements include, but are not limited to, any assertion or
statement (whether oral or written) that the beneficiary must enroll in
the MCO, PCCM, or PHP in order to obtain benefits or in order to not
lose benefits or that the MCO, PCCM, or PHP is endorsed by HCFA, the
Federal or the State government, or similar entity. We have also
revised two of the provisions in subparagraph (b)(2) in order to
clarify that the MCO, PCCM, or PHP contract must provide that the MCO,
PCCM, or PHP distributes their marketing materials to its entire
service area, as indicated in the contract and that the MCO, PCCM, or
PHP does not seek to influence enrollment in conjunction with the sale
or offering of any other insurance.
Section 438.108
In Sec. 447.53(e), we now prohibit providers from denying care or
services to an individual eligible for the care or services on account
of the individual's inability to pay the cost sharing.
[[Page 6390]]
Section 438.110
We have moved the provisions related to assurances of adequate
capacity and services to Sec. 438.207.
Section 438.114
We have removed the definitions of emergency medical condition,
emergency services, and post-stabilization services and included cross
references to the definitions of the same terms in the regulations
governing the Medicare+Choice program. We have revised paragraph (c) to
provide that the following entities are responsible for coverage and
payment of emergency services and post-stabilization services:
The MCO
The primary care case manager that has a risk contract
The State, in the case of a primary care case manager that
has a fee-for-service contract.
In paragraph (d), we clarify the specific rules governing coverage
and payment for emergency services. We revised paragraph (e) to provide
for additional rules that govern emergency services. First, the entity
responsible for payment may not limit what constitutes an emergency
medical condition based on lists of particular diagnoses or symptoms
and it may not refuse to process a claim because it does not contain
the primary care provider's authorization number. Second, once a
qualified provider determines that an enrollee has an emergency medical
condition, the enrollee may not be held liable for subsequent screening
and treatment needed to diagnose the specific condition, or stabilize
the patient. Third, the attending emergency physician or the provider
actually treating the enrollee is responsible for determining when the
enrollee is sufficiently stabilized, and that determination is binding
on the entities responsible for payment.
We have also revised paragraph (f) to require post-stabilization
services to be covered and paid for as provided in the regulations
governing the Medicare+Choice program (Sec. 422.113). We explain that,
in applying the Medicare+Choice provisions, reference to ``M+C''
organization'' must be read as reference to the entity responsible for
Medicaid payment, as specified in paragraph (c) of this section.
Subpart D--Quality Assessment and Performance Improvement
Note: In the proposed rule, this subpart was subpart E, and the
sections were numbered as Secs. 438.300 to 438.342. In this final
rule, this subpart has been relocated as Subpart D and the sections
are numbered as Secs. 438.200 to 438.242. Sections referenced herein
use the Secs. 438.200 to 438.242 numbering of the final rule.
Section 438.202 State responsibilities
In paragraph (b) we require each State contracting with an MCO or
PHP to document its quality strategy in writing. In paragraph (c) we
require each State to provide for the input of recipients and other
stakeholders in the development of the quality strategy, including
making the strategy available for public comment before adopting it in
final. In paragraph (e) we require the State to update the strategy. In
paragraph (f) we require each State to submit to HCFA a copy of the
initial strategy and a copy of the revised strategy whenever
significant changes are made. In addition, we require the State to
submit to HCFA regular reports on the implementation and effectiveness
of the strategy.
Section 438.204 Elements of State Strategies
We have revised paragraph (b) to require that the State quality
strategy must include procedures for identifying enrollees with special
health care needs and assessing the quality and appropriateness of care
furnished to those enrollees. We included a new paragraph (c) to
require the State quality strategy to incorporate performance measures
and levels prescribed by HCFA.
Section 438.206 Availability of Services
We have revised paragraph (d) to clarify that the State must ensure
that when each MCO and PHP establishes and maintains its network of
providers, each MCO and PHP considers the anticipated enrollment, with
particular attention to pregnant women, children, and persons with
special health care needs. We have also clarified that each MCO and PHP
must consider the training and experience of providers when
establishing and maintaining its provider network. In subparagraph
(d)(3), we have included a new requirement for MCO and PHP networks
(consistent with the scope of the PHP's contracted services) to provide
for a second opinion from a qualified health care professional within
the network or otherwise arrange for the enrollee to obtain one outside
the network at no cost to the enrollee if an additional professional is
not currently available within the network. In subparagraph (d)(5) we
have added a new requirement that the MCO or PHP must permit an
enrollee to access out-of-network providers to receive medical
services, if the MCO's or PHP's network is unable to provide the
necessary medical services, for as long as the MCO or PHP is unable to
provide the services. We have added a new requirement at subparagraph
(d)(7) requiring an MCO or PHP to ensure that its providers do not
discriminate against Medicaid enrollees. At subparagraph (d)(8) we have
added a new requirement that requires the MCO or PHP to require out-of-
network providers to coordinate with the MCO or PHP with respect to
payment and ensure that the cost to the enrollee is no greater than it
would be if the services were furnished within the network. We have
moved requirements that MCOs and PHPs must ensure that provider hours
of operation are convenient for the enrollees from subparagraph (d)(6)
to subparagraph (e)(1)(ii), and have added a requirement that
convenience be determined by a State-established methodology, and at
least comparable to Medicaid fee-for-service. We have also moved the
requirement that services must be available 24 hours a day, 7 days a
week, when medically necessary from subparagraph (d)(5) to (e)(1)(iii).
We have moved the requirements relating to initial assessment from
this section to Sec. 438.208.
Section 438.207 Assurances of Adequate Capacity and Services
We have created this new section which relocates and adds to the
requirements regarding assurances of adequate capacity and services
previously located at Sec. 438.110. We have revised paragraph (a) to
provide that each MCO and PHP must give assurances to the State (in the
NPRM the MCO was to also give assurance to HCFA) that it has the
capacity to serve the expected enrollment in its service area in
accordance with the State's standards for access to care under this
subpart. In paragraph (b), we have required that each MCO and PHP must
submit specific documentation that must be in a format specified by the
State and acceptable to the HCFA. In subparagraph (b)(4), we have added
requirements that each MCO and PHP must document that it has policies
and practices in place to address situations in which there is
unanticipated need for providers with particular types of experience or
unanticipated limitation of the availability of such providers. We
revised paragraph (c) to require the submission of the assurance
documentation at least once a year as opposed to every two years as
stated in the proposed rule. We also added in paragraph (c)
circumstances which we believe constitute a significant change in the
MCO's or PHP's operation and
[[Page 6391]]
which would require the MCO or PHP to resubmit assurances documenting
adequate capacity and services. These are: (1) A significant change in
the MCO's or PHP's services or benefits; (2) an expansion or reduction
of the MCO's or PHP's geographic service area; (3) the enrollment of a
new population in the MCO or PHP; and (4) a significant change in the
MCO or PHP rates. We also revised paragraph (d) to provide that after
the State reviews the documentation submitted by the MCO or PHP, the
State must certify to HCFA that the MCO or PHP has complied with the
State's requirements for availability of services, as set forth in
Sec. 438.206. We have added a new paragraph (e) to provide that the
State must make available to HCFA, upon request, all documentation
collected by the State from the MCO or PHP.
Section 438.208 Coordination and Continuity of Care
We have made significant changes to the content and organization of
this section. As a part of those changes, we have moved section
438.306(e)(2) and (3) pertaining to initial assessment, and pregnancy
and complex and serious medical conditions, to this section. We have
clarified that the words ``initial assessment'' used in the proposed
rule are actually two different functions: screening and assessment. We
have also replaced the words ``persons with serious and complex medical
conditions'' with the words ``persons with special health care needs.''
In new paragraph (a) we have clarified that the State needs to
determine the extent to which requirements pertaining to initial and
ongoing screenings and assessments, and primary care are appropriate
requirements for PHPs based on the scope of the PHP's services, and the
way the State has organized the delivery of managed care services. New
paragraph (b) requires the State to implement mechanisms to identify to
the MCO and PHP upon enrollment, the following groups:
Enrollees at risk of having special health care needs,
including --
++Children and adults who are receiving SSI benefits;
++Children in Title IV-E foster care;
++Enrollees over the age of 65;
++Enrollees in relevant, State-established, risk-adjusted, higher-cost
payment categories; and
++Any other category of recipients identified by HCFA
Other enrollees known to be pregnant or to have special
health care needs
Children under the age of 2
We have revised paragraph (d) to clarify and expand upon MCO and
PHP responsibilities for screening and assessment. In subparagraph
(d)(1)(i), we require that for enrollees identified by the State as
being at risk of having special health care needs, the MCO (and PHP as
determined appropriate by the State) must make a best effort attempt to
perform a screening within 30 days of receiving the identification from
the State. For any enrollee that the screening identifies as being
pregnant or having special health care needs, the MCO (and PHP as
determined appropriate by the State) must perform a comprehensive
assessment as expeditiously as the enrollee's health requires, but no
later than 30 days from the date of identification.
In subparagraph(d)(2), we require that for enrollees under the age
of two or other enrollees known by the State to be pregnant or to have
special health care needs, each MCO (and PHP as determined appropriate
by the State) must perform a comprehensive assessment as expeditiously
as the enrollee's health requires, but no later than 30 days from the
date of identification.
In subparagraph (d)(3), we require that for all other enrollees,
each MCO (and PHP as determined appropriate by the State) must screen
them within 90 days from the date of enrollment. For any enrollee that
the screening identifies as being pregnant or having special health
care needs, each MCO (and PHP as determined appropriate by the State)
must perform a comprehensive assessment as expeditiously as the
enrollee's health requires, but no later than 30 days from the date of
identification.
We have also added a requirement in subparagraph (e) for MCOs (and
PHPs as determined appropriate by the State) to implement mechanisms to
identify enrollees who develop special health care needs after
enrollment in the MCO or PHP and perform comprehensive assessments as
expeditiously as the enrollee's health requires, but no later than 30
days from the date of identification.
In subparagraph (f), we have revised the requirements relating to
treatment plans. We require that each MCO and PHP must implement a
treatment plan for pregnant women and for enrollees determined to have
special health care needs. The treatment plan must --
Be appropriate to the conditions and needs identified and
assessed;
Be for a specific period of time and periodically updated;
Specify a standing referral or an adequate number of
direct access visits to specialists;
Ensure adequate coordination of care among providers;
Be developed with enrollee participation; and
Ensure periodic reassessment of each enrollee as his or
her health requires.
In subparagraph (g), we clarify that MCOs and PHPs must use
appropriate health care professionals to perform any comprehensive
assessments required by this section and develop and implement any
treatment plans required by this section. In paragraph (h) and
subparagraph (h)(1), we have revised the requirements relating to
primary care and over-all coordination to clarify that the MCO (and PHP
as determined appropriate by the State) must have a coordination
program that meets State requirements and ensures that each enrollee
has an ongoing source of primary care appropriate to his or her needs
and a person or entity formally designated as primarily responsible for
coordinating the health care furnished to the enrollee. In subparagraph
(h)(2) we require the MCO or PHP to coordinate the services it
furnishes to the enrollee with the services the enrollee receives from
any other MCOs or PHPs. In addition, subparagraph (h)(3) requires the
MCO's or PHP's coordination program to ensure that the results of its
screening and assessment of an enrollee is shared with the other
entities serving the enrollee, so that those entities need not
duplicate the screening or assessment. Subparagraph (h)(4) requires
that in the process of coordinating care, the MCO or PHP ensures that
each enrollee's privacy is protected consistent with confidentiality
requirements at Sec. 438.224. Subparagraph (h)(5) requires MCOs and
PHPs to ensure that each provider maintains health records that meet
professional standards and that there is appropriate and confidential
sharing of information among providers.
In subparagraph (h)(6), we require each MCO and PHP to have in
effect procedures to address factors that hinder enrollee adherence to
prescribed treatments or regimens. In subparagraph (h)(7), we require
the MCO to ensure that its providers have the information necessary for
effective and continuous patient care and quality improvement,
consistent with the confidentiality requirements in Sec. 438.224 and
the information system requirements of Sec. 438.242.
[[Page 6392]]
Section 438.210 Coverage and Authorization of Services
We have revised paragraph (a) to clarify the contract requirements
relating to coverage of services. In subparagraph (a)(1), we require
that each contract identify, define and specify each service that the
MCO or PHP is required to offer. In subparagraph (a)(2), we require
that the MCO or PHP make available the services it is required to offer
at least in the amount, duration, and scope that are specified in the
State plan and can reasonably be expected to achieve the purpose for
which the services are furnished. Subparagraph (a)(3) specifies that
the MCO or PHP may not arbitrarily deny or reduce the amount, duration,
or scope of a required services solely because of the diagnosis, type
of illness, or condition and that the MCO or PHP may place appropriate
limits on a service on the basis of criteria such as medical necessity
or for the purposes of utilization control (provided the services
furnished can reasonably be expected to achieve their purpose).
In subparagraph (a)(4), we require the contract to specify what
constitutes medically necessary services in a manner that is no more
restrictive than the State Medicaid program as indicated in State
statutes and regulations, the State plan, and other State policy and
procedures. The contract must specify the extent to which ``medically
necessary services'' includes services to prevent, diagnose, treat, or
cure health impairments, enable the enrollee to achieve age-appropriate
growth and development, and enable the enrollee to attain, maintain, or
regain functional capacity. Subparagraph (a)(5) requires the MCO or PHP
to furnish services in accordance with their contract specifications.
We have revised paragraph (b) to specify that with respect to the
processing of requests for initial and continuing authorization of
services, each contract must not have information requirements that are
unnecessary or unduly burdensome for the provider or the enrollee. We
have also included a requirement that any decision to deny a service
authorization request or to authorize service in an amount, duration,
or scope that is less than requested, be made by an individual who has
appropriate expertise in the field of medicine that encompasses the
enrollee's condition or disease.
We have revised paragraph (c) to clarify that each contract must
provide for the MCO or PHP to notify the requesting provider and give
the enrollee written notice of any decision to deny a service
authorization request, or to authorize a service in an amount,
duration, or scope that is less than requested. We also clarify that
the notice must meet the requirements of Sec. 438.404, except that the
notice to the provider need not be in writing.
We have revised the time frames for expedited service authorization
decisions. In paragraph (e), we require that under specific
circumstances, the contract must provide for the MCO or PHP to make a
decision as expeditiously as the enrollee's health condition requires
but not later than 72 hours after receipt of the request for service.
Section 438.214 Provider Selection
We have changed the name of this section from ``establishment of
provider networks'' to ``provider selection.'' We have reorganized this
section to clarify the requirements that apply to licensed independent
providers (for example, physicians) and other providers. In
subparagraph (b)(3), we have created an exception that applies to
providers who are permitted to furnish services only under the direct
supervision of a physician or other provider and hospital-based
providers who provide services only incident to hospital services. The
latter exception does not apply if the provider contracts independently
with the MCO or PHP or is promoted by the MCO or PHP as part of the
provider network. In subparagraph (b)(4) we have added requirements
that the initial credentialling application be dated and signed and
that applications, updates, and supporting information submitted by the
applicant include an attestation of the correctness and completeness of
the information. We have added a new requirement in paragraph (d) that
specifies that MCOs and PHPs may not employ or contract with providers
excluded from participation in Federal health care programs. In
addition, we state in paragraph (e) that each MCO and PHP must comply
with any additional requirements established by the State.
Section 438.218 Enrollee Information
We have moved the provisions from this section to Sec. 438.10 and
clarified that the information requirements that States must meet under
Sec. 438.10 constitute part of the State's quality strategy.
Section 438.320 Enrollee Rights
We have moved the requirements regarding enrollee rights to
Sec. 438.100.
Section 438.224 Confidentiality and Accuracy of Enrollee Records
We have changed the name of this section from ``confidentiality''
to ``confidentiality and accuracy of enrollee records.'' We have also
reorganized this section to clarify the requirements that apply to MCOs
and PHPs. We clarify that this section applies to medical records and
any other health and enrollment information maintained with respect to
enrollees. In paragraph (c) we require MCOs and PHPs to establish and
implement procedures that specify for what purposes the MCO or PHP uses
the information and to which entities outside the MCO or PHP (and for
what purposes) it discloses the information. In paragraph (d), we
clarify that MCO and PHP procedures must safeguard the confidentiality
of any information (in any form) that identifies a particular enrollee.
We have revised the requirements of paragraph (e) to provide that MCO
and PHP procedures must ensure that originals of medical records are
released only in accordance with Federal and State law. We have also
revised the requirements for access in paragraph (f) to require that,
consistent with applicable Federal and State law, MCO and PHP
procedures must ensure that each enrollee may request and receive a
copy of his or her records and information and added a requirement that
the enrollee may request that they be amended or corrected.
Section 438.228 Grievance Systems
We have added to this section two new paragraphs. Paragraph (b)
requires that if the State delegates to the MCO or PHP responsibility
for notice of action under subpart E of part 431 of this chapter, the
State must conduct random reviews of each MCO and PHP and its providers
and subcontractors to ensure that they are notifying enrollees in a
timely manner. Paragraph (c) requires the State to establish a process
to review, upon request by the enrollee, quality of care grievances not
resolved by the MCO or PHP to the satisfaction of the enrollee.
Section 438.230 Subcontractual Relationships and Delegations
We have revised subparagraph (b)(3) to require each MCO and PHP to
formally review its subcontractors' performances according to a
periodic schedule established by the State, consistent with industry
standards or State MCO laws and regulations. In the proposed rule this
formal review was to be carried out at least once a year. We have
included a new requirement in
[[Page 6393]]
subparagraph (b)(5) that, consistent with the requirements in
Secs. 438.604 and 438.606 pertaining to submission of certain data by
the MCO and PHP that must be certified, each MCO and PHP must require
subcontractors to provide certifications with respect to the
performance of their duties under the contract and submissions that may
be related to State payments.
Section 438.236 Practice Guidelines
We have revised the requirements in paragraph (b) to clarify that
each MCO and PHP must adopt (as opposed to develop) practice
guidelines. We have further revised the regulation to require that the
guidelines--
Are based, in part, on valid and reliable clinical
evidence as opposed to ``reasonable medical evidence''; and
Are reviewed and updated periodically as appropriate.
We include an example of practice guidelines that satisfy the
requirements of this section (The Guidelines for the Use of
Antiretroviral Agents in HIV-Infected Adults and Adolescents and the
Guidelines for the Use of Antiretroviral Agents in Pediatric HIV
Infection).
In paragraph (c), we clarify the dissemination requirements by
specifying that each MCO and PHP must disseminate the guidelines to
affected providers, and upon request to enrollees and potential
enrollees.
Section 438.240 Quality Assessment and Performance Improvement Program
We have added additional provisions and made clarifications to this
section. We have added in paragraph (a) a provision that HCFA may
specify standardized quality measures and topics for performance
improvement projects to be required by States in their contracts with
MCOs and PHPs. We have added as subparagraph (b)(4) a provision that
the State must require each MCO and PHP to have in effect mechanisms to
assess the quality and appropriateness of care furnished to enrollees
with special health care needs. We have revised subparagraph (c)(1) to
clarify that each MCO and PHP must measure its performance annually. We
have added in subparagraph (c)(2) a new requirement that the State
must, in establishing minimum performance levels for MCOs and PHPs,
include any minimum performance levels specified by HCFA.
In subparagraph (d)(2) we clarified that each performance
improvement project must represent the entire Medicaid enrolled
population to which the measurement specified in paragraph (d)(1)(i) of
this section is relevant. In subparagraph (d)(3), we have clarified
that the State is to ensure that each MCO and PHP initiates each year
one or more performance improvement projects. In subparagraph (d)(4),
we have added ``cultural competence'' as a required non-clinical area
for MCO and PHP performance improvement projects.
Section 438.242 Health Information Systems
In paragraph (a) we have deleted the requirement that MCO and PHP
health information systems should provide information on MCO or PHP
solvency. In paragraph (a) we also have clarified that information on
Medicaid enrollee disenrollments pertains to disenrollments for other
than loss of Medicaid eligibility.
Subpart F--Grievance System
Section 438.400
We have revised the terms used in this section, using ``grievance
and appeal'' to replace ``complaint and grievance''. We have added a
definition of ``action'' and of ``quality of care grievance''. We have
also defined what constitutes an action.
Section 438.402
We have revised this section to include filing requirements as well
as general requirements. In the general requirements in paragraph (b),
we add that grievances and appeals must be accepted from the
representative of the enrollee as well as from the enrollee; that the
enrollee or his or her representative is to receive required notices
and information; that the MCO or PHP must ensure that punitive action
is neither threatened nor taken against a provider who requests an
expedited resolution, or supports an enrollee's grievance or appeal;
that at the enrollee's request, the MCO or PHP must refer to the State
quality of care grievances not resolved to the satisfaction of the
enrollee, and the MCO or PHP must require providers to give notice to
enrollees of actions. Under the filing requirements in paragraph (c) we
add that a provider may file an appeal on behalf of an enrollee with
the enrollee's written consent. We clarify that an enrollee has a
reasonable time specified by the State, not to exceed 90 days, to file
an appeal after the date of an action. We also provide that a appeal
may be filed either orally or in writing but that an oral request for
standard resolution of the appeal must be followed by a written
request. We specify that notice of action for failure to furnish or
arrange for a service or provide payment in a timely manner must be
provided whenever the entity has delayed access to the service to the
point when there is substantial risk that further delay will adversely
affect the enrollee's heart condition.
Section 438.404
We have revised paragraph (a) to provide that the notice of action
must be in writing and must meet the language and format requirements
of Sec. 438.10. In paragraph (b), we specify what must be contained in
the notice of action. In this paragraph we have added that the notice
must include information on the circumstances under which the enrollee
may be required to pay for the costs of services furnished while the
appeal is pending and how the enrolees may decline amortization of
benefits; that the enrollee has the right to represent himself or
herself, to use legal counsel, or to use a relative, or friend or other
individual as spokesperson; and that filing an appeal or requesting a
State fair hearing will not negatively affect or impact the way the MCO
and the PHP and their providers, or the State agency, treat the
enrollee. In paragraph (c), we refer to Sec. 438.210 for the time
frames that apply to mailing the notice. In paragraph (d), we specify
certain notice requirements for subcontractors or providers who are not
employees to furnish a notice of action. We also moved to Sec. 438.406
the provision on the right of the enrollee to appear before the MCO or
PHP in person and removed the provision that the appearance must be
before the person assigned to resolve the grievance.
Section 438.406
We have revised paragraph (a) to clarify that each MCO or PHP must
give enrollees any reasonable assistance in completing forms and taking
other procedural steps, including providing interpreter services and
toll-free numbers that have adequate TTY/TTD and interpreter
capability. We also require the MCO or PHP to ensure that the
enrollee's communication is correctly classified as a ``grievance'' or
an ``appeal'', that each communication is transmitted timely to staff
who have the authority to act upon it, and that it is investigated and
disposed of or resolved as required. We expanded the provision in the
proposed rule concerning the types of appeals that must be decided by a
health care professional to include, in addition to denials based on
lack of medical necessity, all grievances and appeals that involve
clinical issues and grievances regarding a denial to expedite
resolution of an appeal. We also clarify that a health care
[[Page 6394]]
professional with appropriate clinical expertise, not only a physician,
can serve as the decision maker. In paragraph (b), we have included
several additional requirements that apply only to appeals, including
that the timeframes for resolution of appeals must take account of the
enrollee's health condition, that the enrollee and his or her
representative have the opportunity to examine the enrollee's case
file, and that the enrollee and his or her representative are parties
to the appeal.
Section 438.408
In paragraph (a), we added a basic rule that an MCO or PHP must
dispose of grievances and resolve appeals as expeditiously as the
enrollee's health condition requires within State-established
timeframes not exceeding the timeframes specified in this section. We
have included in paragraph (b) the provision in paragraph (a)(4) of the
proposed rule regarding the basis for decisions. In paragraph (c) we
specify the timeframes for disposing of grievances and resolving
appeals. We have added timeframes for disposing of grievances,
specifying that grievances of a denial of a request to expedite
resolution of an appeal must be disposed of within 72 hours of receipt
of the grievance. We also added a provision that all other grievances
must be disposed of within 90 days. We continue to provide for a 30-day
timeframe for resolving appeals that are not expedited. In paragraph
(d) we address extensions of timeframes for decisions. In the final
rule we eliminated the authority of the MCO or PHP to grant itself an
extension when an appeal is expedited. In the final rule we have added
a provision that when an MCO or PHP grants itself an extension of the
timeframe for decision of an appeal that is not expedited, the enrollee
must be given written notice of the reason for the delay and of the
enrollee's right to file a grievance with the decision. We added in the
final rule the provision in paragraph (e) that the enrollee must be
given written notice of the disposition of all grievances filed in
writing and of all quality of care grievances. Oral notices can be
provided to enrollees who file oral grievances not related to quality
of care, unless the enrollee requests a written notice. In paragraph
(f) we have added to the final rule that the notice on disposition of a
quality of care grievance must include information that the enrollee
has the right to seek further review by the State, and how to request
it. In paragraph (h) we have revised the requirement of the proposed
regulation that the notice of an appeal resolution must include the
name of the MCO or PHP contact and now specify that the title of the
contact, not the name, must be included. In paragraph (h) we add a
requirement that the MCO or PHP must work with the State to dispose of
the grievance if the State considers that the MCO or PHP response was
insufficient. In paragraph (i) of the final rule we specify that
expedited appeals not wholly favorable to the enrollee must be
submitted to the State. In paragraph (j) we provide that the timeframe
for fair hearing decision is 90 days minus the number of days taken by
the MCO or PHP to resolve the internal appeal. The time used by the
beneficiary to file for a State fair hearing does not count toward the
90 days. We have added a provision stating that the parties to a State
fair hearing are the enrollee and his or er representative, or the
representative of the deceased enrollee's estate. Finally, we add that
for appeals of service authorization denials that meet the criteria for
expedited resolution, the State fair hearing decision must be within 72
hours of receipt of the file.
Section 438.410
In paragraph (a), we retain the requirement from the proposed rule
that each MCO and PHP must establish and maintain an expedited review
process for grievances and appeals. In paragraph (b), we add to the
final rule a requirement for expedited review of certain grievances. In
paragraph (c), we describe the requirements that apply to appeals. In
the proposed rule we provided for expedited resolution of appeal if
non-expedited resolution would jeopardize the enrollee's life or health
or the enrollee's ability to regain maximum function. In the final rule
we add ``attain and maintain'' maximum function. In paragraph (d), we
specify the steps that the MCO or PHP must take if it denies a request
for expedited resolution of an appeal. In the final rule we require
that the enrollee be notified of the decision within two calendar days.
The proposed rule specified the timeframe as two working days. We also
specify in the final rule that if the enroll resubmits the request for
expedited resolution with a provider's letter of support, the
resolution of the appeal will be expedited.
Section 438.414
In this section on information about the grievance system, in the
final rule we differentiate between information that must be available
with respect to fair hearings from that with respect to grievances and
appeals. We added to the required items information about the right of
the enrollee to represent himself or herself or to be represented by
legal counsel, a friend or relative, or other spokesperson. We also
added that information be provided on the fact that benefits will be
continued if requested by an enrollee who files an appeal or requests
for fair hearing and that the enrollee may be required to pay the cost
of services while an appeal is pending if the final decision is adverse
to the enrollee. In the proposed rule we provided that benefits would
continue only if requested by the enrollee.
Section 438.416
We have added to the reporting requirements that grievances and
appeals be tracked according to whether the disposition and resolution
was standard or expedited and that a record must be maintained of when
grievances and appeals were acknowledged and provide that . We have
deleted the requirement to record disenrollments and that the summary
submitted to the State include trends by particular providers or
services.
Section 438.420
We have revised the provision that for services to be continued
they must have been ordered by the MCO or PHP treating physician or
another MCO or PHP physician and that the physician is authorized to
order services under the MCO or PHP contract. The new requirement is
that the services must have been ordered by an authorized provider. The
final rule adds in paragraph (d) specifications for the duration of
continued or reinstated benefits.
Section 438.421
We have removed this section and moved the provisions relating to
effectuation of reversed appeal resolutions from this section to
Sec. 438.424.
Section 438.422
We have removed this section and moved the provisions relating to
monitoring of the grievance and appeal system from this section to
Sec. 438.426.
Section 438.424
We have removed the 30-calendar day and 60-calendar day time
periods for providing services originally denied but authorized through
an appeal or fair hearing, respectively. We retain as the sole time
determinate that the service must be provided as expeditiously as the
enrollee's health condition requires. We also add to the final rule a
provision that services denied during appeal that were received and are
subsequently
[[Page 6395]]
authorized must be paid for by the MCO, PHP, or the State, to State
policy and regulations.
Section 438.426
We have added this new section and moved the requirements relating
to monitoring of the grievance and appeal system from Sec. 438.422 to
this section. We also provide in this section that if the summaries of
grievances and appeals reveal a need for changing the system, the MCO
or PHP must conduct an in-depth review and take corrective action.
Subpart H--Certifications and Program Integrity Protections
Section 438.602
We have revised the name and content of this section to address the
basic rule that as a condition for contracting and for receiving
payment under the Medicaid managed care program, an MCO and its
subcontractors must comply with the certification and program integrity
requirements of this subpart.
Section 438.604
We have added this new section to identify the types of data that
must be certified. In paragraph (a), we require that when State
payments to the MCO is based on data submitted by the MCO, including,
but not limited to, enrollment information, encounter data, and other
information required by the State, including data in contracts,
proposals and other related documents, the State must require
certification of the data as provided in Sec. 438.606. In paragraph
(b), we require that the certification must ensure that the MCO is in
substantial compliance with the terms of the contract, and must be as
provided in Sec. 438.606, regardless of whether or not payment is based
on data. In paragraph (c), we provide that certification is required
for all documents specified by the State.
Section 438.606
We have revised the name and content of this section to address the
source, content and timing of certification. In paragraph (a), we
provide that subcontractors must certify data that they submit to the
MCO and that the MCO certify the data that it submits to the State. One
of the following individuals must certify the MCOs data:
The MCO's Chief Executive Officer (CEO)
The MCO's Chief Financial Officer (CFO)
An individual who has delegated authority to sign for, and
who reports directly to, the MCO's CEO or CFO.
In paragraph (b), in the case of data and/or other documents
specified by the State, we require that the certification must attest
to the accuracy, completeness, and truthfulness of the data/documents,
based on best knowledge, information, and belief. In paragraph (b), in
the case of certification of contract compliance, we require that the
MCO attest based on best knowledge, information, and belief that they
are in substantial compliance with their contract. In paragraph (c), we
require the MCO to submit the certification concurrently with the
certified data. In paragraph (c), we require that the MCO submit the
certification of substantial compliance when requesting payment.
Section 438.608
We have revised the name and content of this section to include the
program integrity requirements. In paragraph (a), we specify that the
general rule is that the MCO must have administrative and management
arrangements or procedures, including a mandatory compliance plan, that
are designed to guard against fraud and abuse. In paragraph (b), we
describe the specific requirements that apply to the administrative and
management arrangements or procedures, which include:
Written policies, procedures, and standards of conduct
that articulate the organization's commitment to comply with all
applicable Federal and State standards.
The designation of a compliance officer and a compliance
committee that are accountable to senior management.
Effective training and education for the compliance
officer and the organization's employees.
Effective lines of communication between the compliance
officer and the organization's employees.
Enforcement of standards through well-publicized
disciplinary guidelines.
Provision of internal monitoring and auditing.
Provision for prompt response to detected offenses and
development of corrective action initiatives relating to the MCO's
contract, including specific reporting requirements.
Subpart I--Sanctions
Section 438.700
We have revised paragraph (a) to clarify that States that contract
with either MCOs or PHPs must establish intermediate sanctions. We have
added a sentence to paragraph (a) specifying that a State's
determination may be based on findings from onsite surveys, enrollee or
other complaints, financial audits, or any other means. In paragraph
(c) we clarify that the intermediate sanctions may be imposed if the
State determines that the MCO or PHP distributes directly, or
indirectly through any agent or independent contract, marketing
materials that have not been approved by the State or that contain
false or materially misleading information.
We have moved the requirements that were previously in
Sec. 438.702(b) to this section for clarity. In the new paragraph (d)
we provide that the intermediate sanctions described in
Sec. 438.702(a)(4) and (a)(5) may be imposed if the State determines
that an MCO or PHP violates any of the requirements in section 1903(m)
of the Act or an MCO or PHP violates any of the requirements of section
1932 of the Act.
Section 438.702
We have revised subparagraph (a)(4) to provide that the State may
impose an intermediate sanction that suspends all new enrollment,
including default enrollment, after the effective date of the sanction.
We have revised subparagraph (a)(5) to provide that the State may
suspend payment for recipients enrolled after the effective date of the
sanction. We have revised paragraph (b) to specify that State agencies
retain authority to impose additional sanctions under State statutes or
State regulations that address areas of noncompliance.
Section 438.704
We have revised subparagraph (b)(3) to clarify that the penalty is
subject to the overall limit of $100,000 under subparagraph (b)(2). We
have also revised subparagraph (b)(4) to clarify that the limit on the
penalty is greater of double the amount of the excess charge or
$25,000.
Section 438.706
We have revised paragraph (a) to clarify that the State may impose
the sanction of temporary management under certain circumstances. We
also removed a reference to Sec. 434.67. We have moved the requirements
that were previously in Sec. 438.708 to paragraph (b) of this section.
That paragraph provides that the State must impose the sanction of
temporary management if it finds that an MCO or PHP has repeatedly
failed to meet substantive requirements in section 1903(m) or 1932 of
the Act, or this subpart. In addition, the State must also grant
enrollees the right to terminate enrollment without cause. In
[[Page 6396]]
paragraph (c) we specify that the State may not delay imposition of
temporary management to carry out due process procedures and may not
provide a hearing before imposing this sanction.
Section 438.708
We have revised the name and content of this section to include the
requirements relating to termination of an MCO or PHP contract that
were previously in Sec. 438.718. We have moved the requirements
relating to mandatory imposition of the sanction of temporary
management from this section to Sec. 438.706. We have revised
terminology in paragraph (a) from ``substantially'' to ``substantive.''
Section 438.710
We have revised the name and content of this section to include the
requirements relating pre-termination hearing that were previously in
Sec. 438.720. We have revised paragraph (b) by removing the required
time frames. Paragraph (b)(2) provides that prior to a pre-termination
hearing, the State must give the MCO or PHP written notice of its
intent to terminate, the reason for termination, and the time and place
of the hearing. In addition, after the hearing, the State must give the
MCO or PHP written notice of the decision affirming or reversing the
proposed termination and, for an affirming decision, the effective date
of termination. We have added a statement at paragraph (b)(2)(iii) that
for an affirming decision, the State must give enrollees of the MCO or
PHP notice of the termination along with information on their options
for receiving care following the effective date of termination.
Section 438.718
We have removed this section and moved the requirements relating to
termination of an MCE contract to Sec. 438.708.
Section 438.720
We have removed this section and moved the requirements relating to
pre-termination hearing to Sec. 438.710.
Section 438.724
We have revised the name and content of this section to by removing
the requirements for providing notice to HCFA of sanctions and by
including new requirements for providing public notice of sanctions. In
paragraph (a), we provide that the State must publish a notice that
describes the intermediate sanction imposed, explains the reasons for
the sanction and specifies the amount of any civil money penalty. In
paragraph (b), we require the State to publish the notice no later than
30 days after it imposes the sanction. The notice must be a public
announcement in either the newspaper of widest circulation in each city
within the MCO's or PHP's service area that has a population of 50,000
or more or the newspaper of widest circulation in the MCO's or PHP's
service area, if there is no city with a population of 50,000 or more
in that area.
Section 438.726
We have added this new section to include the requirement that was
previously in Sec. 438.730(g). We require that the State plan must
provide for the State to monitor for violation that involve the actions
and failures to act specified in this section and to implement the
provisions of this section.
Section 438.730
We have revised paragraph (a) to provide that a State agency may
recommend that HCFA impose the denial of payment sanction on an MCO
with a comprehensive risk contract if the MCO acts or fails to act as
specified in Sec. 438.700(b)(1) through (b)(6). Under paragraph (b), we
have clarified that if HCFA accepts a State's recommendation, HCFA must
convey the determination to the OIG for consideration of possible
imposition of civil money penalties under section 1902(m)(5)(A) of the
Act and part 1003 of this title. We also explain that, in accordance
with the provisions of part 10003, the OIG may impose civil money
penalties in addition to, or in place of, the sanctions that may be
imposed under this section.
Subpart J--Conditions for Federal Financial Participation
Section 438.802
We have revised paragraph (b) to provide that FFP is available
under an MCO or PHP contract only for periods during which the MCO or
PHP and its subcontractors are in substantial compliance with the
physician incentive plan requirements and the MCO or PHP and the State
are in substantial compliance with the requirements of the MCO or PHP
contract and of this part.
Section 438.810
We moved the definitions of choice counseling, enrollment
activities, and enrollment broker from Sec. 438.104 to paragraph (a) of
this section. We have also included a new definition of enrollment
services, which means choice counseling, enrollment activities, or
both. We have revised paragraph (b) to include the conditions that
enrollment brokers must meet so that State expenditures for their use
qualify for FFP. In subparagraph (b)(1), we require that the broker and
its subcontractors are independent of any managed care entity or health
care provider in the State in which they provide enrollment services.
We clarify that a broker or subcontractor is not considered
``independent'' if it is, is owned by, or owns any MCO, PHP, PCCM or
other health care provider in the State in which it provides enrollment
services. In subparagraph (b)(2), we require that the broker and its
subcontractors be free from conflict of interest.
Section 438.814
We have added this new section to prohibit FFP for payments in
accordance with risk corridors or incentive arrangements to the extent
that these arrangements result in payments that exceed 105% of the
approved capitation rates, for the services or enrollees covered by the
risk corridor or incentive arrangement.
Part 447--Payments for Services
Section 447.53
We have revised paragraph (e) to specify that no provider may deny
care or services to an individual eligible for the care or services on
account of the individual's inability to pay the cost sharing.
Section 447.361
This section, which contained the upper payment limit for risk
contracts, has been deleted and replaced by expanded requirements for
actuarial soundness of capitation rates in new Sec. 438.6(c).
Part 447--Payments for Services
Section 447.53
We have revised paragraph (e) to specify that no provider may deny
care or services to an individual eligible for the care or services on
account of the individual's inability to pay the cost sharing.
Section 447.361
This section, which contained the upper payment limit for risk
contracts, has been deleted and replaced by expanded requirements for
actuarial soundness of capitation rates in new Sec. 438.6(c).
[[Page 6397]]
Part 447--Payments for Services
Section 447.53
We have revised paragraph (e) to specify that no provider may deny
care or services to an individual eligible for the care or services on
account of the individual's inability to pay the cost sharing.
VIII. Regulatory Impact Analysis
A. Introduction
We have examined the impacts of this final rule as required by
Executive Order 12866 and the Regulatory Flexibility Act (RFA).
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. A regulatory impact analysis (RIA)
must be prepared for major rules with economically significant effects
($100 million or more in any 1 year). This rule meets the criteria of
being economically significant because the impact will be over $100
million.
The RFA requires agencies to analyze options for regulatory relief
of small entities. This rule implements Medicaid managed care
provisions as directed by BBA. The statute does not permit significant
alternatives to regulation; however, we have considered ways to reduce
burden on small entities.
This final rule with comment period primarily impacts
beneficiaries, State Medicaid agencies, enrollment brokers, MCOs, PHPs,
and PCCMs. Small entities include small businesses, nonprofit
organizations, and other entities that have annual revenues of $5
million or less. Individuals and State governments are not included in
this definition. Thus, most of the entities impacted by this regulation
do not qualify as small entities. Individual PCCMs and a limited number
of small PHPs would be considered small entities for purposes of this
regulation.
In publishing this final rule with comment period, we considered
regulatory alternatives that would reduce the burden on small entities.
Thus, we have decided against imposing additional requirements on PCCMs
beyond those specified in the BBA. We also have not applied all MCO
requirements to all PHPs. For example, the advance directives
requirements do not apply to PHPs that only cover dental or nonclinical
services. In addition, PHPs are only required to comply with quality
assessment and performance improvement provisions to the extent that
they apply services actually provided by the PHP.
Section 1102(b) of the 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. This
analysis must conform to the provisions of section 604 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.
We do not anticipate that the provisions in this final rule with
comment period will have a substantial economic impact on most
hospitals, including small rural hospitals. The BBA provisions include
some new requirements on States, MCOs, and PHPs, but no new direct
requirements on individual hospitals. The impact on individual
hospitals will vary according to each hospital's current and future
contractual relationships with MCOs and PHPs. Furthermore, the impact
will also vary according to each hospital's current procedures and
level of compliance with existing law and regulation pertaining to
Medicaid managed care. For these reasons, this final rule is not
expected to have a significant impact on the operations of a
substantial number of hospitals.
The Unfunded Mandates Reform Act of 1995 requires that agencies
prepare an assessment of anticipated costs and benefits before
proposing any rule that may result in an expenditure in any 1 year by
State, local and tribal governments, in the aggregate, or by the
private sector, of $100 million or more (adjusted annually for
inflation). This rule does not impose any mandates on State, local, or
tribal governments, or the private sector that will result in an annual
expenditure of $100 million or more.
B. Summary of the Final Rule
This rule implements the Medicaid provisions as directed by the
BBA. The primary objectives of these provisions are to allow for
greater flexibility for State agencies to participate in Medicaid
managed care programs and provide greater beneficiary protections and
quality assurance standards. The regulation addresses pertinent areas
of concern between States and MCOs, PHPs, and PCCMs, including
enrollment, access to care, provider network adequacy, and grievance
and appeal procedures for beneficiaries.
Specific provisions of the regulation include the following:
Permitting States to require in their State plan that
Medicaid beneficiaries be enrolled in managed care.
Eliminating the requirement that no more than 75 percent
of enrollees in an MCO or PHP be Medicaid or Medicare enrollees.
Specifying a grievance and appeal procedure for MCO and
PHP enrollees.
Providing for the types of information that must be given
to enrollees and potential enrollees, including language and format
requirements.
Requiring that MCOs and PHPs document for the States that
they have adequate capacity to serve their enrollees and that States
certify this to HCFA.
Specifying quality standards for States and MCOs and PHPs.
Increasing program integrity protections and requiring
certification of data by MCOs and PHPs.
Increasing the threshold for prior approval of MCO and PHP
contracts from $100,000 to $1 million.
Permitting cost sharing for managed care enrollees under
the same circumstances as permitted in fee-for-service.
Expanding the managed care population for which States can
provide 6 months of guaranteed eligibility.
Revising the rules for setting capitation rates.
It would be extremely difficult to accurately quantify the overall
impact of this regulation on States, MCOs, PHPs, and PCCMs because
there is enormous variation among States and these entities regarding
their current regulatory and contract requirements, as well as
organizational structure and capacity. Any generalization would mask
important variations in the impact by State or managed care program
type. The Lewin Group, under a contract with the Center for Health Care
Strategies, recently completed a study to measure the cost impact of
the proposed regulation. The study is the best information we currently
have available on the potential incremental impact of the proposed
regulation. Further, the study does not include an analysis of the
proposed regulation in total, as it only focused on four areas within
the proposed regulation: individual treatment plans, initial health
assessments, quality improvement porgrams and grievance systems/State
fair hearings. While the study's focus is on some of the proposed
regulation provisions, of which many have changed, we believe that the
overall cost conclusions are relevant to this final rule. In addition
to examining the four regulatory requirements, they cited the
[[Page 6398]]
need to evaluate the incremental and aggregate effects of the rule;
different managed care models (for example, overall enrollment; the
Medicare, commercial, and Medicaid mix; geographic location); and State
regulatory requirements (for example, State patient rights laws,
regulation of noninsurance entities). The Lewin report also points out
that many of the BBA provisions were implemented through previous
guidance to the States, so the regulatory impact only captures a subset
of the actual impact of the totality of BBA requirements.
According to the MCOs included in Lewin's study, many of the
proposed provisions are not expected to have large incremental costs.
The study mainly focused on the assessment and treatment management
components of the regulation, as well as the quality improvement
projects. For example, they estimate the incremental cost of an initial
assessment (called screening in the final regulation) as ranging from
$0.17 to $0.26 per member per month (PMPM), but for an MCO that
currently performs an initial assessment, the incremental cost is
estimated as $0.03 to $0.06 PMPM. Similarly, the costs of quality
improvement projects can vary from $60,000 to $100,000 in the first
year (start-up), $80,000 to $100,000 in the second and third years (the
intervention and improvement measurement cycle), and $40,000 to $50,000
for the forth and subsequent years (ongoing performance measurement).
In summary, according to the Lewin Study, States and their
contracting managed care plans have already implemented many provisions
of the BBA. While there are incremental costs associated with the
proposed and final regulatory requirements, they will vary widely based
on characteristics of individual managed care plans and States.
Finally, the BBA requirements are being implemented in an increasingly
regulatory environment. Therefore, States, MCOs, and PHPs will likely
face additional costs not related to these regulatory requirements.
Thus, the incremental impact of these requirements on costs to be
incurred would be difficult if not impossible to project.
We believe that the overall impact of this final rule will be
beneficial to Medicaid beneficiaries, MCOs, PHPs, States, and HCFA.
Many of the BBA Medicaid managed care requirements merely codify in
Federal law standards widely in place in State law or in the managed
care industry. Some of the BBA provisions represent new requirements
for States, MCOs, PHPs, and PCCMs but also provide expanded
opportunities for participation in Medicaid managed care.
It is clear that all State agencies will be affected by this
Medicaid regulation but in varying degrees. Much of the burden will be
on MCOs, PHPs, and PCCMs contracting with States, but this will also
vary by existing and continuing relationships between State agencies
and MCOs, PHPs, and PCCMs. This regulation is intended to maximize
State flexibility and minimize the compliance cost to States, MCOs, and
PHPs to the extent possible consistent with the detailed BBA
requirements. We believe the final rule will result in improved patient
care outcomes and satisfaction over the long term.
Recognizing that a large number of entities, such as hospitals,
State agencies, and MCOs will be affected by the implementation of
these statutory provisions, and a substantial number of these entities
may be required to make changes in their operations, we have prepared
the following analysis. This analysis, in combination with the rest of
the preamble, is consistent with the standards for analysis set forth
by both the RFA and RIA.
C. State Options to Use Managed Care
1. Managed Care Organizations
Under this provision, a State agency may amend its State plan to
require all Medicaid beneficiaries in the State to enroll in either an
MCO or PCCM without the need to apply for a waiver of ``freedom of
choice'' requirements under either section 1915(b) or 1115 of the Act.
However, waivers would still be required to include certain exempted
populations in mandatory managed care programs, notably SSI
populations, American Indians, and other groups of children with
special needs. Federal review would be limited to a one-time State Plan
Amendment (SPA) approval, while States would no longer need to request
waiver renewals every 2 years for section 1915(b) of the Act and 5
years for section 1115 of the Act waivers. State agencies may include
``exempted'' populations as voluntary enrollees in State plan managed
care programs to maintain parallel waiver programs. Currently, four
States use SPAs to require beneficiary enrollment in capitated managed
care organizations. In short, the new State plan option provides State
agencies with a new choice of method to require participation in
managed care. MCOs, PHPs, and providers would continue to provide care
in a manner consistent with current and future standards, regardless of
SPAs, and consequently Medicaid beneficiaries would receive the same
level of health care in compliance with current and future standards.
Pursuing the SPA option rather than a section 1915(b) or 1115 of
the Act waiver may reduce State administrative procedures because it
would eliminate the need for States to go through the waiver renewal
process. Likewise, we will benefit from a reduced administrative burden
if fewer waiver applications and renewals are requested. However, we
believe the overall reduction in burden to both States and to us would
be small in relation to the overall administrative requirements of the
Medicaid program.
2. Primary Care Case Management
Prior to the BBA, many State agencies elected to implement a PCCM
system through a freedom of choice waiver under section 1915(b)(1) of
the Act. Under the BBA, States may now require beneficiaries to use a
PCCM provider under their State plans without the need for a waiver. As
of December 2000, five States have chosen this option. Most State
agencies, however, have continued to use waiver authority to require
enrollment in PCCMs. Therefore, while the BBA provision provides
potential for more PCCM programs to come into being, we do not expect
expansion of PCCMs to be substantial due to the State plan option. To
the extent that the use of PCCMs increases, patients of these providers
will benefit from greater continuity of care and patient protections
deriving from new and existing standards.
D. Elimination of 75/5 Rule
Prior to the passage of the BBA, nearly all MCOs and PHPs
contracting with Medicaid were required to limit combined Medicare and
Medicaid participation to 75 percent of their enrollment, and State
agencies had to verify enrollment composition as a contract
requirement. Elimination of this rule allows MCOs and PHPs to
participate without meeting this requirement and eliminates the need
for States to monitor enrollment composition in contracting MCOs and
PHPs. This will broaden the number of MCOs and PHPs available to States
for contracting, leading to more choice for beneficiaries.
With greater flexibility for State and MCO or PHP participation in
managed care, providers can serve more Medicaid beneficiaries under
managed care programs. Medicaid managed care enrollees will have better
access to care and improved satisfaction.
[[Page 6399]]
E. Increased Beneficiary Protection--Grievance Procedures
The BBA requires MCOs to establish internal grievance procedures
that permit an eligible enrollee, or a provider on behalf of an
enrollee, to challenge the denials of coverage of medical assistance or
denials of payment. While these requirements were not previously
required by statute, we believe, based on recent State surveys, such as
the National Academy for State Health Policy survey of 10 States in
1999, and the American Public Human Services Association survey of 13
States in 1997, that they reflect widespread current practice and,
therefore, do not impose significant incremental costs on MCOs, PHPs,
or State agencies.
F. Provision of Information
In mandatory managed care programs, we have required that
beneficiaries be fully informed of the choices available to them in
enrolling with MCOs and PHPs. Section 1932(a)(5) of the Act, enacted in
section 4701(a)(5) of the BBA, describes the kind of information that
must be made available to Medicaid enrollees and potential enrollees.
It also requires that this information, and all enrollment notices and
instructional materials related to enrollment in MCOs and PHPs, be in a
format that can be easily understood by the individuals to which it is
directed. We do not believe that these requirements deviate
substantially from current practice. Furthermore, there is no way to
quantify the degree of burden on State agencies, MCOs, and PHPs for
several reasons. We do not have State-specific data on what information
States currently provide, or the manner in which they provide it.
Variability among States indicates that implementing or continuing
enrollee information requirements will represent different degrees of
difficulty and expense.
As a requirement under the provision of information section, State
agencies opting to implement mandatory managed care programs under the
SPA option are required to provide comparative information on MCOs and
PCCMs to potential enrollees. Currently only eight States have
exercised the option to use an SPA to require beneficiary enrollment in
managed care. However, for States that do select this option, we do not
believe that providing the comparative data in itself represents a
burden, as these are elements of information that most States currently
provide. The regulation specifies that the information must be
presented in a comparative or chart-like form that facilitates
comparison among MCOs, PHPs, and PCCMs. This may be perceived as a
burden to States that have previously provided this information in some
other manner; however, it is our belief that even in the absence of the
regulation, the trend is for States, and many accreditation bodies such
as the National Committee for Quality Assurance (NCQA), to use chart-
like formats. Consequently, enrollees will benefit from having better
information for selecting MCOs, PHPs, and PCCMs. Only a few States have
opted for SPAs so far, but it is anticipated that more States will
participate over the long term. States that participate in the future
will benefit from any comparative tools developed by other States.
G. Demonstration of Adequate Capacity and Services
The BBA requires Medicaid MCOs to provide the State and the
Secretary of HHS with assurances of adequate capacity and services,
including service coverage within reasonable time frames. States
currently require assurances of adequate capacity and services as part
of their existing contractual arrangements with MCOs and PHPs. However,
certification of adequacy has not been routinely provided to HCFA in
the past. Under this rule, each State retains its authority to
establish standards for adequate capacity and services within MCO and
PHP contracts. This may be perceived as a burden to MCOs and PHPs, and
for States which have to date not been required to formally certify
that an MCO or PHP meets the State's capacity and service requirements.
However, certification to HCFA will ensure an important beneficiary
protection while imposing only a minor burden on States to issue a
certification to HCFA.
Quantifying the additional burden on States, MCOs, or PHPs as a
result of implementing this regulation is not feasible for several
reasons. First, HCFA does not have State-specific data on the types of
detailed information States currently require of their MCOs and PHPs to
assure adequate capacity and services. Second, we do not have State-
specific information on the manner in which State agencies collect and
evaluate documentation in this area. Rather, each State agency has its
own documentation requirements and its own procedures to assure
adequate capacity and services. This regulation contemplates that
States continue to have that flexibility.
Under this regulation, State agencies will determine and specify
both the detail and type of documentation to be submitted by the MCO or
PHP to assure adequate capacity and services and the type of
certification to be submitted to us. Accordingly, variability among
State agencies implementing this regulation represents different
degrees of detail and expense. Regardless of the level of additional
burden on MCOs, PHPs, State agencies, and us, Medicaid beneficiaries
will receive continued protections in access to health care under both
State and Federal law.
H. New Quality Standards
The BBA requires that each State agency have an ongoing quality
assessment and improvement strategy for its Medicaid managed care
contracting program. The strategy, among other things, must include:
(1) standards for access to care so that covered services are available
within reasonable time frames and in a manner that ensures continuity
of care and adequate capacity of primary care and specialized services
providers; (2) examination of other aspects of care and service
directly related to quality of care, including grievance procedures,
marketing, and information standards; (3) procedures for monitoring and
evaluating the quality and appropriateness of care and service to
enrollees; and (4) regular and periodic examinations of the scope and
content of the State's quality strategy.
The provisions of this regulation establish requirements for State
quality strategies and requirements for MCOs and PHPs that States are
to incorporate as part of their quality strategy. These MCO and PHP
requirements address: (1) MCO and PHP structure and operations; (2)
Medicaid enrollees' access to care; and (3) MCO and PHP
responsibilities for measuring and improving quality. While these new
Medicaid requirements are a significant increase in Medicaid regulatory
requirements in comparison to the regulatory requirements that existed
before the BBA, we believe the increases are appropriate because many
of the requirements are either identical to or consistent with quality
requirements placed on MCOs and PHPs by private sector purchasers, the
Medicare program, State licensing agencies, and private sector
accreditation organizations. While these new requirements also will
have implications for State Medicaid agencies that will be responsible
for monitoring for compliance with the new requirements, we believe
that a number of recent statutory, regulatory, and private sector
developments will enable State Medicaid agencies to more easily monitor
for compliance than in the past at potentially less cost to the State.
First, the BBA also included provisions
[[Page 6400]]
addressing how States are to fulfill the statutory requirement for an
annual, external quality review (EQR) of each Medicaid-contracting MCO
and PHP. (These provisions are addressed in a separate rulemaking).
Prior to the BBA, 75 percent Federal financial participation in the
cost of these activities was available to States only if the State used
a narrowly defined list of entities to perform the quality review. The
BBA opened up the possibility for use of a much wider array of entities
to perform this function. Further, in HCFA's proposed rule to implement
these EQR provisions published on December 1, 1999, we specified that
the 75 percent Federal match would also be available to EQR
organizations that performed activities necessary for monitoring
compliance with these BBA quality requirements for MCOs and PHPs. The
BBA also provided that States could exercise an option whereby MCOs
that were accredited by a private accrediting organization under
certain conditions could be determined to meet certain of the quality
requirements specified in this rule, thereby avoiding costs to the
State of directly monitoring for compliance with these requirements. In
response to this, private accrediting organizations such as the
National Committee for Quality Assurance have developed Medicaid
accreditation product lines.
In addition, prior to issuance of the proposed rule, we worked
closely with State Technical Advisory Groups (TAGs) in developing the
managed care quality regulations and standards. Requirements under this
regulation build on a variety of initiatives of State Medicaid agencies
and HCFA to promote the assessment and improvement of quality in plans
contracting with Medicaid, including:
The Quality Improvement System for Managed Care (QISMC),
an initiative with State and Federal officials, beneficiary advocates,
and the managed care industry to develop a coordinated quality
oversight system for Medicare and Medicaid that reduces duplicate or
conflicting efforts and emphasizes demonstrable and measurable
improvement.
QARI, serving as a foundation to the development of QISMC,
highlights the key elements in the Health Care Quality Improvement
System (HCQIS), including internal quality assurance programs, State
agency monitoring, and Federal oversight. This guidance emphasizes
quality standards developed in conjunction with all system
participants, such as managed care contractors, State regulators,
Medicaid beneficiaries or their representatives, and external review
organizations.
Further, we have built on efforts in other sectors in developing
these quality requirements in order to capitalize on current activities
and trends in the health care industry. For example, many employers and
cooperative purchasing groups and some State agencies already require
that organizations be accredited by the National Committee on Quality
Assurance (NCQA), the Joint Commission on Accreditation of Healthcare
Organizations (JCAHO), the American Accreditation Healthcare Commission
(AAHC), or other independent bodies. Many also require that
organizations report their performance using Health Plan Employer Data
& Information Set (HEDIS), Foundation for Accountability (FACCT), or
other measures and conduct enrollee surveys using the Consumer
Assessment of Health Plans Study (CAHPS) or other instruments. NCQA
estimates that more than 90 percent of plans are collecting some or all
of HEDIS data for their commercial population. Also, States have
heightened their regulatory efforts through insurance or licensing
requirements, and the National Association of Insurance Commissioners
(NAIC) has developed model acts on network adequacy, quality assessment
and improvement, and utilization review.
While we anticipate that many organizations will need to invest in
new staff and information systems in order to perform these new quality
improvement activities, it is difficult to quantify these financial and
operational ``investments,'' as State agencies, MCOs, and PHPs across
the country exhibit varying capabilities in meeting these standards.
These new quality requirements will present administrative challenges
for some State agencies and MCOs; however, PHPs and States have
significant latitude in how these requirements will be implemented.
Acknowledging that there likely will be some degree of burden on
States, MCOs, and PHPs, we also believe that the long-term benefits of
greater accountability and improved quality in care delivery will
outweigh the costs of implementing and maintaining these processes over
time.
I. Administration
1. Certifications and Program Integrity Protections
BBA sections 1902(a)(4) and (19) require that States conduct
appropriate processes and methods to ensure the efficient operation of
the health plans. This includes mechanisms to not only safeguard
against fraud and abuse but also to ensure accurate reporting of data
among health plans, States, and HCFA.
Section 438.602 of the regulation addresses the importance of
reliable data that are submitted to States and requires MCOs and PHPs
to certify the accuracy of these data to the State. These data include
enrollment information, encounter data, or other information that is
used for payment determination. For the most part, States reimburse
MCOs and PHPs on a capitated basis and do not use claims or encounter
data as a basis for payment. However, the collection of encounter,
provider, and enrollment data will be most useful for States in
measuring quality performance and addressing various methodologies of
rate-setting and risk adjustment. The Medicaid provision of attesting
to the validity of data presents an additional step in the process of
data submission. MCOs and PHPs have historically worked closely with
States when reporting Medicaid data in order to affirm that the data
are accurate and complete. Submitting a certification of validity could
take place in a variety of ways and will represent a varying degree of
burden for health plans.
Section 438.606 requires MCOs and PHPs to have effective
operational capabilities to guard against fraud and abuse. This will
result in reporting violations of law by MCOs and PHPs to the State.
Providers and health plans have traditionally ensured compliance with
Federal and State laws when providing and delivering health care to
members. For example, many health plans comply with standards set by
the National Association of Insurance Commissioners (NAIC). However,
additional resources and procedures will be necessary to have a
systematic process for documenting violations and formally notifying
the State of these instances.
The requirement for MCOs and PHPs to certify the accuracy and
completeness of provider contracts or other documents is consistent
with current practices. These demonstrations are evident in NCQA
accreditation procedures, Medicaid waiver reviews, and audits that are
necessary for compliance with other relevant State and Federal laws.
Depending on the MCO or PHP, new processes may be necessary to comply
with this standard. This requirement may not necessarily result in new
mechanisms or resources for MCOs and PHPs but may create the need for
more coordination with additional State Medicaid Agency
[[Page 6401]]
representatives in the review of provider contracts.
2. Change in Threshold from $100,000 to $1 Million
Before the passage of the BBA, the Secretary's prior approval was
required for all HMO contracts involving expenditures in excess of
$100,000. Under the BBA, the threshold amount is increased to $1
million. This change in threshold will have minimal impact on plans
currently contracting with State agencies for Medicaid managed care.
Currently, only one or two plans in the country have annual Medicaid
expenditures of under $1 million. Therefore, this new provision will
not affect a significant number of plans or States.
J. Permitting Same Copayments in Managed Care as in FFP
Under section 4708(c) of the BBA, States may now allow copayments
for services provided by MCOs and PHPs to the same extent that they
allow copayments under fee-for-service. Imposition of copayments in
commercial markets typically results in lower utilization of medical
services, depending on the magnitude of payments required of the
enrollee. Thus, we would normally expect State agencies that implement
copayments for MCO or PHP enrollees to realize some savings as a
result. However, applying copayments in Medicaid populations may cause
States, MCOs, and PHPs to incur overhead costs related to administering
these fees that more than offset these savings. This is due to several
factors including that copayments are significantly lower for Medicaid
beneficiaries than typical commercial copayments, that it is difficult
to ensure compliance with these payments, and that collection efforts
would be necessary for MCOs or PHPs to obtain all fees due to them.
Also, if State agencies take advantage of this option, Medicaid managed
care enrollees may defer receipt of health care services and find their
health conditions deteriorate such that costs of medical treatment may
be greater over the long term. As a result of these variables, it is
difficult to predict how many States will take advantage of this new
option of permitting copayments for MCO or PHP enrollees.
K. Six-Month Guaranteed Eligibility
The legislation has expanded the States' option to guarantee up to
6 months eligibility in two ways. First, it expands the types of MCOs
whose members may have guaranteed eligibility, in that it now includes
anyone who is enrolled with a Medicaid managed care organization as
defined in section 1903(m)(1)(A) of the Act. Second, it expands the
option to include those enrolled with a PCCM as defined in section
1905(t) of the Act. These changes are effective October 1, 1997. To the
extent that State agencies choose this option, we expect MCOs, PHPs,
and PCCMs in those States to support the use of this provision since it
affords health plans with assurance of membership for a specified
period of time. Likewise, beneficiaries will gain from this coverage
expansion, and continuity of care will be enhanced. The table below
displays our estimates of the impact of the expanded option for 6
months of guaranteed eligibility under section 4709 of the BBA.
Cost of 6-Month Guaranteed Eligibility Option
[Dollars in millions rounded to the nearest $5 million]
----------------------------------------------------------------------------------------------------------------
FY 2000 FY 2001 FY 2002 FY 2003 FY 2004 FY 2005
----------------------------------------------------------------------------------------------------------------
Federal................................................... 40 55 80 115 165 230
State..................................................... 30 45 60 905 125 175
Total................................................. 70 100 140 205 290 405
----------------------------------------------------------------------------------------------------------------
The estimates of Federal costs are reflected in the current budget
baseline. The estimates assume that half of the current Medicaid
population is enrolled in managed care and that this proportion will
increase to about two-thirds by 2003. We also assume that 15 percent of
managed care enrollees are currently covered by guaranteed eligibility
under rules in effect prior to enactment of the BBA and that the effect
of the expanded option under section 4709 of the BBA will be to
increase this rate to 20 percent initially and to 30 percent by 2003.
The guaranteed eligibility provision is assumed to increase average
enrollment by 3 percent in populations covered by the option. This
assumption is based on computer simulations of enrollment and turnover
in the Medicaid program. Per capita costs used for the estimate were
taken from the President's FY 1999 budget projections and the costs for
children take into account the interaction of this provision with the
State option for 12 months of continuous eligibility under section 4731
of the BBA. The distribution between Federal and State costs is based
on the average Federal share representing 57 percent of the total
costs.
In States electing the 6-month guaranteed eligibility option,
Medicaid beneficiaries will have access to increased continuity of
care, which should result in better health care management and improved
clinical outcomes.
L. Financial Impact of Revised Rules for Setting Capitation Payments
This rule replaces the current upper payment limit (UPL)
requirement at Sec. 447.361 with new rate-setting rules incorporating
an expanded requirement for actuarial soundness of capitation rates as
described in detail in Sec. 438.6(c) below. In general, we do not
expect a major budget impact from the use of these new rate setting
rules. While the new rate setting rules may provide some States
additional flexibility in setting higher capitation rates than what
would have been allowed under current rules, we believe that the
requirements for actuarial certification of rates, along with budgetary
considerations by State policy makers, would serve to limit increases
to within reasonable amounts. Moreover, the Secretary would retain the
authority to look behind rates that appear questionable and disapprove
any that did not comply with the new rate setting requirements.
M. Administrative Costs
This regulation requires States to include certain specifications
in their contracts with MCOs, PHPs, and PCCMs and to monitor compliance
with those contract provisions. It also requires States to take a
proactive role in monitoring the quality of their managed care program.
These requirements will add some administrative burden and costs to
States. The amount of additional administrative cost will vary by State
depending on how inclusive current practice is of the new
[[Page 6402]]
requirements. In addition, for those States not using like requirements
at present, we believe that most would be adopting similar requirements
on their own in the future absent this regulation.
The regulation will also increase Federal responsibilities for
monitoring State performance in managing their managed care programs.
However, no new Federal costs are expected as HCFA plans to use
existing staff to monitor these new requirements.
N. Conclusion
This BBA managed care regulation will affect HCFA, States, MCOs,
PHPs, PCCMs, providers, and beneficiaries in different ways. The
initial investments that are needed by State agencies and MCOs, PHPs,
and PCCMs will result in improved and more consistent standards for the
delivery of health care to Medicaid beneficiaries. Greater consumer
safeguards will result from new quality improvement and protection
provisions. Consequently, long term savings will derive from more
consistent standards across States, MCOs, PHPs, and PCCMs and increased
opportunities for provider and beneficiary involvement in improved
access, outcomes, and satisfaction.
O. Federalism
Under Executive Order 13132, we are required to adhere to certain
criteria regarding Federalism in developing regulations. We have
determined that this final regulation will not significantly affect
States rights, roles, and responsibilities. The BBA requires States
that contract with section 1903(m) of the Act organizations to have
certain beneficiary protections in place when mandating managed care
enrollment. This final rule implements those BBA provisions in
accordance with the Administrative Procedure Act. This rule also
eliminates certain requirements viewed by States as impediments to the
growth of managed care programs, such as disenrollment without cause at
any time and the inability to amend the State plan without a waiver for
mandatory managed care enrollment. We apply many of these requirements
to prepaid health plans as set forth in our September 29, 1998 proposed
rule. We believe this is consistent with the intent of the Congress in
enacting the quality and beneficiary protection provisions of the BBA.
We worked closely with States in developing this regulation. We met
with State officials and other stakeholders to discuss opportunities
and concerns before the end of the comment period. Throughout the
development of the regulation, we consulted with State Medicaid agency
representatives in order to gain more understanding of potential
impacts. At the November 1997 meeting of the Executive Board of the
National Association of State Medicaid Directors (NASMD), we discussed
the process for providing initial guidance to States about the Medicaid
provisions of the BBA. We provided this guidance through issuance of a
series of letters to State Medicaid Directors. From October 1997
through April 2000, over 50 of these letters were issued. Much of the
policy included in this regulation relating to the State plan option
provision was included in these letters. In May 1998, the Executive
Committee of NASMD was briefed on the general content of the
regulation. More specific State input was obtained through discussions
throughout the Spring of 1998 with the Medicaid Technical Advisory
Groups (TAGs) on Managed Care and Quality. These groups are comprised
of Medicaid agency staff with notable expertise in the subject area and
our regional office staff and are staffed by the American Public Human
Services Association. The Managed Care TAG devoted much of its agenda
for several monthly meetings to BBA issues. The Quality TAG
participated in two conference calls exclusively devoted to discussion
of BBA quality issues. Through these contacts, HCFA explored with State
agencies their preferences regarding policy issues and the feasibility
and practicality of implementing policy under consideration. We also
invited public comments as part of the rulemaking process and received
comments from over 300 individuals and organizations. Most of the
commenters had substantial comments that addressed many provisions of
the regulation.
We also received hundreds of comments on every subpart of the final
rule, including comments for many States and membership organizations
representing States. Many of the recommendations made by commenters
have been incorporated into this final rule. For recommendations not
accepted, a response has been included in this preamble. Moreover, we
discussed technical issues with State experts through technical
advisory groups to make certain that the final rule could be
practically applied.
In accordance with the provisions of Executive Order 12866, this
regulation was reviewed by the Office of Management and Budget.
For the reasons set forth in the preamble, the Health Care
Financing Administration is amending 42 CFR Chapter IV as set forth
below:
PART 400--INTRODUCTION; DEFINITIONS
1. The authority citation for part 400 continues to read as
follows:
Authority: Secs. 1102 and 1871 of the Social Security Act (42
U.S.C. 1302 and 1395hh).
Sec. 400.203 [Amended]
2. In Sec. 400.203, the following statements are added, in
alphabetical order, and the definition of ``provider'' is revised to
read as set forth below.
PCCM stands for primary care case manager.
PCP stands for primary care physician.
Provider means either of the following:
(1) For the fee-for-service program, it means any individual or
entity furnishing Medicaid services under an agreement with the
Medicaid agency.
(2) For the managed care program, it means any individual or entity
that is engaged in the delivery of health care services and is legally
authorized to do so by the State in which it delivers the services.
PART 430--GRANTS TO STATES FOR MEDICAL ASSISTANCE PROGRAMS
1. The authority citation for part 430 continues to read as
follows:
Authority: Sec. 1102 of the Social Security Act (42 U.S.C.
1302).
2. In part 430 a new Sec. 430.5 is added, to read as follows:
Sec. 430.5 Definitions.
As used in this subchapter, unless the context indicates
otherwise--
Contractor means any entity that contracts with the State agency,
under the State plan and in return for a payment, to process claims, to
provide or pay for medical services, or to enhance the State agency's
capability for effective administration of the program.
Representative has the meaning given the term by each State
consistent with its laws, regulations, and policies.
PART 431--STATE ORGANIZATION AND GENERAL ADMINISTRATION
1. The authority citation for part 431 continues to read as
follows:
Authority: Sec. 1102 of the Social Security Act (42 U.S.C.
1302).
2. In Sec. 431.51, the following changes are made:
a. In paragraph (a) introductory text, ``and 1915(a) and (b) of the
Act.'' is
[[Page 6403]]
revised to read ``1915(a) and (b) and 1932(a)(3) of the Act.''
b. Paragraphs (a)(4) and (a)(5) are revised and a new paragraph
(a)(6) is added, as set forth below.
c. In paragraph (b)(1) introductory text, ``and part 438 of this
chapter'' is added immediately before the comma that follows ``this
section''.
d. In paragraph (b)(2), ``an HMO'' is revised to read ``a Medicaid
MCO''.
The additions and revisions read as follows:
Sec. 431.51 Free choice of providers.
(a) Statutory basis. * * *
(4) Section 1902(a)(23) of the Act provides that a recipient
enrolled in a primary care case management system or Medicaid managed
care organization (MCO) may not be denied freedom of choice of
qualified providers of family planning services.
(5) Section 1902(e)(2) of the Act provides that an enrollee who,
while completing a minimum enrollment period, is deemed eligible only
for services furnished by or through the MCO or PCCM, may, as an
exception to the deemed limitation, seek family planning services from
any qualified provider.
(6) Section 1932(a) of the Act permits a State to restrict the
freedom of choice required by section 1902(a)(23), under specified
circumstances, for all services except family planning services.
* * * * *
3. In Sec. 431.55, a sentence is added at the end of paragraph
(c)(1)(i) to read as follows:
Sec. 431.55 Waiver of other Medicaid requirements.
* * * * *
(c) * * *
(1) * * *
(i) * * * The person or agency must comply with the requirements
set forth in part 438 of this chapter for primary care case management
contracts and systems.
4. Section 431.200 is revised to read as follows:
Sec. 431.200 Basis and scope.
This subpart--
(a) Implements section 1902(a)(3) of the Act, which requires that a
State plan provide an opportunity for a fair hearing to any person
whose claim for assistance is denied or not acted upon promptly;
(b) Prescribes procedures for an opportunity for hearing if the
State agency takes action to suspend, terminate, or reduce services, or
an MCO or PHP takes action under subpart F of part 438 of this chapter;
and
(c) Implements sections 1919(f)(3) and 1919(e)(7)(F) of the Act by
providing an appeals process for any person who--
(1) Is subject to a proposed transfer or discharge from a nursing
facility; or
(2) Is adversely affected by the pre-admission screening or the
annual resident review that are required by section 1919(e)(7) of the
Act.
Sec. 431.201 [Amended]
5. In Sec. 431.201, the following definition is added in
alphabetical order:
* * * * *
Service authorization request means a managed care enrollee's
request for the provision of a service.
6. In Sec. 431.220, the introductory text of paragraph (a) is
revised, the semicolons after paragraphs (a)(1), (a)(2), and (a)(3) and
the ``and'' after the third semicolon are removed and periods are
inserted in their place, and a new paragraph (a)(5) is added, to read
as follows:
Sec. 431.220 When a hearing is required.
(a) The State agency must grant an opportunity for a hearing to the
following:
* * * * *
(5) Any MCO or PHP enrollee who is entitled to a hearing under
subpart F of part 438 of this chapter.
* * * * *
Sec. 431.244 [Amended]
7. In Sec. 431.244, paragraph (f) is revised to read as follows:
* * * * *
(f) The agency must take final administrative action as follows:
(1) Ordinarily, within 90 days from the earlier of the following:
(i) The date the enrollee files an MCO or PHP appeal.
(ii) The date the enrollee files a request for State fair hearing.
(2) As expeditiously as the enrollee's health condition requires,
but no later than 72 hours after the agency receives, from the MCO or
PHP, the case file and information for any appeal of a denial of a
service that, as indicated by the MCO or PHP--
(i) Meets the criteria for expedited resolution as set forth in
Sec. 438.410(c)(2) of this chapter, but was not resolved within the
timeframe for expedited resolution; or
(ii) Was resolved within the timeframe for expedited resolution,
but reached a decision wholly or partially adverse to the enrollee.
(3) As expeditiously as the enrollee's health condition requires,
but no later than 72 hours after the agency receives, directly from an
MCO or PHP enrollee, a fair hearing request on a decision to deny a
service that it determines meets the criteria for expedited resolution,
as set forth in Sec. 438.410(c)(2) of this chapter.
PART 434--CONTRACTS
1. The authority citation for part 434 continues to read as
follows:
Authority: Sec. 1102 of the Social Security Act (42 U.S.C.
1302).
2. In Sec. 434.1, paragraph (a) is revised to read as follows:
Sec. 434.1 Basis and scope.
(a) Statutory basis. This part is based on section 1902(a)(4) of
the Act, which requires that the State plan provide for methods of
administration that the Secretary finds necessary for the proper and
efficient operation of the plan.
* * * * *
Sec. 434.2 [Amended]
3. In Sec. 434.2, the definitions of ``Capitation fee'', ``Clinical
laboratory'', ``Contractor'', ``Enrolled recipient'', ``Federally
qualified HMO'', ``Health insuring organization (HIO)'', ``Health
maintenance organization (HMO)'', ``Nonrisk'', ``Prepaid health plan
(PHP)'', ``provisional status HMO'', and ``risk or underwriting risk''
are removed.
Secs. 434.6 [Amended]
4. In paragraph (a)(1), ``Appendix G'' is removed.
Sec. 434.20 through 434.38 [Removed]
5. Subpart C, consisting of Secs. 434.20 through 434.38, is removed
and reserved.
Secs. 434.42 and 434.44 [Removed]
6. In subpart D, Secs. 434.42 and 434.44 are removed.
Secs. 434.50 and 434.67 [Removed]
7. Subpart E, consisting of Secs. 434.50 through 434.67, is removed
and reserved.
8. Section 434.70 is revised to read as follows:
Sec. 434.70 Conditions for Federal financial participation (FFP).
(a) Basic requirements. FFP is available only for periods during
which the contract--
(1) Meets the requirements of this part;
(2) Meets the applicable requirements of 45 CFR part 74; and
(3) Is in effect.
(b) Basis for withholding. HCFA may withhold FFP for any period
during which--
[[Page 6404]]
(1) The State fails to meet the State plan requirements of this
part; or
(2) Either party substantially fails to carry out the terms of the
contract.
Secs. 434.71 through 434.75 and 434.80 [Removed]
9. Sections 434.71 through 434.75, and 434.80 are removed.
PART 435--ELIGIBILITY IN THE STATES, THE DISTRICT OF COLUMBIA, THE
NORTHERN MARIANA ISLANDS, AND AMERICAN SAMOA
1. The authority citation for part 435 continues to read as
follows:
Authority: Sec. 1102 of the Social Security Act (42 U.S.C.
1302).
2. In Sec. 435.212, the following changes are made:
a. Throughout the section, ``HMO'', wherever it appears, is revised
to read ``MCO''.
b. The section heading and the introductory text are revised to
read as follows:
Sec. 435.212 Individuals who would be ineligible if they were not
enrolled in an MCO or PCCM.
The State agency may provide that a recipient who is enrolled in an
MCO or PCCM and who becomes ineligible for Medicaid is considered to
continue to be eligible--
* * * * *
3. Section 435.326 is revised to read as follows:
Sec. 435.326 Individuals who would be ineligible if they were not
enrolled in an MCO or PCCM.
If the agency provides Medicaid to the categorically needy under
Sec. 435.212, it may provide it under the same rules to medically needy
recipients who are enrolled in MCOs or PCCMs.
Sec. 435.1002 [Amended]
4. In Sec. 435.1002, in paragraph (a), ``Secs. 435.1007 and
435.1008'' is revised to read Secs. 435.1007, 435.1008, and 438.814 of
this chapter,''
5. A new part 438 is added to chapter IV to read as follows:
PART 438--MANAGED CARE PROVISIONS
Subpart A--General Provisions
Sec.
438.1 Basis and scope.
438.2 Definitions.
438.6 Contract requirements.
438.8 Provisions that apply to PHPs.
438.10 Information requirements.
438.12 Provider discrimination prohibited.
Subpart B-- State Responsibilities
438.50 State Plan requirements.
438.52 Choice of MCOs, PHPs, and PCCMs.
438.56 Disenrollment: Requirements and limitations.
438.58 Conflict of interest safeguards.
438.60 Limit on payment to other providers.
438.62 Continued services to recipients.
438.66 Monitoring procedures.
438.68 Education of MCOs, PHPs, and PCCMs and subcontracting
providers.
Subpart C--Enrollee Rights and Protections
438.100 Enrollee rights.
438.102 Provider-enrollee communications.
438.104 Marketing activities.
438.106 Liability for payment.
438.108 Cost sharing.
438.114 Emergency and post-stabilization services.
438.116 Solvency standards.
Subpart D--Quality Assessment and Performance Improvement
438.200 Scope.
438.202 State responsibilities.
438.204 Elements of State quality strategies.
Access Standards
438.206 Availability of services.
438.207 Assurances of adequate capacity and services.
438.208 Coordination and continuity of care.
438.210 Coverage and authorization of services.
Structure and Operation Standards
438.214 Provider selection.
438.218 Enrollee information.
438.224 Confidentiality and accuracy of enrollee records.
438.226 Enrollment and disenrollment.
438.228 Grievance systems.
438.230 Subcontractual relationships and delegation.
Measurement and Improvement Standards
438.236 Practice guidelines.
438.240 Quality assessment and performance improvement program.
438.242 Health information systems.
Subpart E--[Reserved]
Subpart F--Grievance System
438.400 Statutory basis and definitions.
438.402 General requirements.
438.404 Notice of action.
438.406 Handling of grievances and appeals.
438.408 Resolution and notification: Grievances and appeals.
438.410 Expedited resolution of grievances and appeals.
438.414 Information about the grievance system.
438.416 Recordkeeping and reporting requirements.
438.420 Continuation of benefits while the MCO or PHP appeal and
the State Fair Hearing are pending.
438.424 Effectuation of reversed appeal resolutions.
438.426 Monitoring of the grievance system.
Subpart G--[Reserved]
Subpart H--Certifications and Program Integrity Provisions
438.600 Statutory basis.
438.602 Basic rule.
438.604 Data that must be certified.
438.606 Source, content, and timing of certification.
438.608 Program integrity requirements.
Subpart I--Sanctions
438.700 Basis for imposition of sanctions.
438.702 Types of intermediate sanctions.
438.704 Amounts of civil money penalties.
438.706 Special rules for temporary management.
438.708 Termination of an MCO or PCCM contract.
438.710 Due process: Notice of sanction and pre-termination
hearing.
438.722 Disenrollment during termination hearing process.
438.724 Public notice of sanction.
438.726 State plan requirement.
438.730 Sanction by HCFA: Special rules for MCOs with risk
contracts.
Subpart J--Conditions for Federal Financial Participation
438.802 Basic requirements.
438.806 Prior approval.
438.808 Exclusion of entities.
438.810 Expenditures for enrollment broker services.
438.812 Costs under risk and nonrisk contracts.
438.814 Limit on payments in excess of capitation rates.
Authority: Sec. 1102 of the Social Security Act (42 U.S.C.
1302).
Subpart A--General Provisions
Sec. 438.1 Basis and scope.
(a) Statutory basis. This part is based on sections 1902(a)(4),
1903(m), 1905(t), and 1932 of the Act.
(1) Section 1902(a)(4) requires that States provide for methods of
administration that the Secretary finds necessary for proper and
efficient operation of the State Medicaid plan. The application of the
requirements of this part to PHPs that do not meet the statutory
definition of MCO or to a PCCM is under the authority in section
1902(a)(4).
(2) Section 1903(m) contains requirements that apply to
comprehensive risk contracts.
(3) Section 1903(m)(2)(H) provides that an enrollee who loses
Medicaid eligibility for not more than 2 months may be enrolled in the
succeeding month in the same MCO or PCCM if that MCO or PCCM still has
a contract with the State.
(4) Section 1905(t) contains requirements that apply to PCCMs.
(5) Section 1932--
(i) Provides that, with specified exceptions, a State may require
[[Page 6405]]
Medicaid recipients to enroll in MCOs or PCCMs;
(ii) Establishes the rules that MCOs, PCCMs, the State, and the
contracts between the State and those entities must meet, including
compliance with requirements in sections 1903(m) and 1905(t) of the Act
that are implemented in this part;
(iii) Establishes protections for enrollees of MCOs and PCCMs;
(iv) Requires States to develop a quality assessment and
performance improvement strategy;
(v) Specifies certain prohibitions aimed at the prevention of fraud
and abuse;
(vi) Provides that a State may not enter into contracts with MCOs
unless it has established intermediate sanctions that it may impose on
an MCO that fails to comply with specified requirements; and
(vii) Makes other minor changes in the Medicaid program.
(b) Scope. This part sets forth requirements, prohibitions, and
procedures for the provision of Medicaid services through MCOs, PHPs,
and PCCMs. Requirements vary depending on the type of entity and on the
authority under which the State contracts with the entity. Provisions
that apply only when the contract is under a mandatory managed care
program authorized by section 1932(a)(1)(A) of the Act are identified
as such.
Sec. 438.2 Definitions.
As used in this part--
Capitation payment means a payment the State agency makes
periodically to a contractor on behalf of each recipient enrolled under
a contract for the provision of medical services under the State plan.
The State agency makes the payment regardless of whether the particular
recipient receives services during the period covered by the payment.
Comprehensive risk contract means a risk contract that covers
comprehensive services, that is, inpatient hospital services and any of
the following services, or any three or more of the following services:
(1) Outpatient hospital services.
(2) Rural health clinic services.
(3) FQHC services.
(4) Other laboratory and X-ray services.
(5) Nursing facility (NF) services.
(6) Early and periodic screening diagnostic, and treatment (EPSDT)
services.
(7) Family planning services.
(8) Physician services.
(9) Home health services.
Federally qualified HMO means an HMO that HCFA has determined to be
a qualified HMO under section 1310(d) of the PHS Act.
Health insuring organization (HIO) means an entity that in exchange
for capitation payments, covers services for recipients--
(1) Through payments to, or arrangements with, providers; and
(2) Under a risk contract with the State.
Managed care organization (MCO) means an entity that has, or is
seeking to qualify for, a comprehensive risk contract under this part,
and that is --
(1) A Federally qualified HMO that meets the advance directives
requirements of subpart I of part 489 of this chapter; or
(2) Any public or private entity that meets the advance directives
requirements and is determined to also meet the following conditions:
(i) Makes the services it provides to its Medicaid enrollees as
accessible (in terms of timeliness, amount, duration, and scope) as
those services are to other Medicaid recipients within the area served
by the entity.
(ii) Meets the solvency standards of Sec. 438.116.
Nonrisk contract means a contract under which the contractor--
(1) Is not at financial risk for changes in utilization or for
costs incurred under the contract that do not exceed the upper payment
limits specified in Sec. 447.362 of this chapter; and
(2) May be reimbursed by the State at the end of the contract
period on the basis of the incurred costs, subject to the specified
limits.
Prepaid health plan (PHP) means an entity that--
(1) Provides medical services to enrollees under contract with the
State agency, and on the basis of prepaid capitation payments, or other
payment arrangements that do not use State plan payment rates; and
(2) Does not have a comprehensive risk contract.
Primary care means all health care services and laboratory services
customarily furnished by or through a general practitioner, family
physician, internal medicine physician, obstetrician/gynecologist, or
pediatrician, to the extent the furnishing of those services is legally
authorized in the State in which the practitioner furnishes them.
Primary care case management means a system under which a PCCM
contracts with the State to furnish case management services (which
include the location, coordination and monitoring of primary health
care services) to Medicaid recipients.
Primary care case manager (PCCM) means a physician, a physician
group practice, an entity that employs or arranges with physicians to
furnish primary care case management services or, at State option, any
of the following:
(1) A physician assistant.
(2) A nurse practitioner.
(3) A certified nurse-midwife.
Risk contract means a contract under which the contractor--
(1) Assumes risk for the cost of the services covered under the
contract; and
(2) Incurs loss if the cost of furnishing the services exceeds the
payments under the contract.
Sec. 438.6 Contract requirements.
(a) Regional office review. The HCFA Regional Office must review
and approve all MCO and PHP contracts, including those risk and nonrisk
contracts that, on the basis of their value, are not subject to the
prior approval requirement in Sec. 438.806.
(b) Entities eligible for comprehensive risk contracts. A State
agency may enter into a comprehensive risk contract only with one of
the following:
(1) An MCO.
(2) The entities identified in section 1903(m)(2)(B)(i), (ii), and
(iii) of the Act.
(3) Community, Migrant, and Appalachian Health Centers identified
in section 1903(m)(2)(G) of the Act. Unless they qualify for a total
exemption under section 1903(m)(2)(B) of the Act, these entities are
subject to the regulations governing MCOs under this part.
(4) An HIO that arranges for services and became operational before
January 1986.
(5) An HIO described in section 9517(c)(3) of the Omnibus Budget
Reconciliation Act of 1985 (as added by section 4734(2) of the Omnibus
Budget Reconciliation Act of 1990).
(c) Payments under risk contracts.--(1) Terminology. As used in
this paragraph, the following terms have the indicated meanings:
(i) Actuarially sound capitation rates means capitation rates
that--
(A) Have been developed in accordance with generally accepted
actuarial principles and practices;
(B) Are appropriate for the populations to be covered, and the
services to be furnished under the contract; and
(C) Have been certified, as meeting the requirements of this
paragraph (c), by actuaries who meet the qualification standards
established by the American Academy of Actuaries and follow the
practice standards established by the Actuarial Standards Board.
(ii) Adjustments to smooth data means adjustments made, by cost-
neutral methods, across rate cells, to
[[Page 6406]]
compensate for distortions in costs, utilization, or the number of
eligibles.
(2) Basic requirements. (i) All capitation rates paid under risk
contracts and all risk-sharing mechanisms in contracts must be
actuarially sound.
(ii) The contract must specify the payment rates and any risk-
sharing mechanisms, and the actuarial basis for computation of those
rates and mechanisms.
(3) Requirements for actuarially sound rates. In setting
actuarially sound capitation rates, the State must apply the following
elements, or explain why they are not applicable:
(i) Base utilization and cost data that are derived from the
Medicaid population, or if not, are adjusted to make them comparable to
the Medicaid population.
(ii) Adjustments made to smooth data and adjustments to account for
factors such as inflation, MCO or PHP administration (subject to the
limits in Sec. 438.6(c)(4)(ii) of this section), and utilization;
(iii) Rate cells specific to the enrolled population, by:
(A) Eligibility category;
(B) Age;
(C) Gender;
(D) Locality/region; and
(E) Risk adjustments based on diagnosis or health status (if used).
(iv) Other payment mechanisms and utilization and cost assumptions
that are appropriate for individuals with chronic illness, disability,
ongoing health care needs, or catastrophic claims, using risk
adjustment, risk sharing, or other appropriate cost-neutral methods.
(4) Documentation. The State must provide the following
documentation:
(i) The actuarial certification of the capitation rates.
(ii) An assurance (in accordance with paragraph (c)(3) of this
section) that all payment rates are based only upon services covered
under the State plan and to be provided under the contract to Medicaid-
eligible individuals.
(iii) Its projection of expenditures under its previous year's
contract (or under its FFS program if it did not have a contract in the
previous year) compared to those projected under the proposed contract.
(iv) An explanation of any incentive arrangements, or stop-loss,
reinsurance, or any other risk-sharing methodologies under the
contract.
(5) Special contract provisions. (i) Contract provisions for
reinsurance, stop-loss limits or other risk-sharing methodologies
(other than risk corridors) must be computed on an actuarially sound
basis.
(ii) If risk corridors or incentive arrangements result in payments
that exceed the approved capitation rates, the FFP limitation of
Sec. 438.814 applies.
(iii) For all incentive arrangements, the contract must provide
that the arrangement is --
(A) For a fixed period of time;
(B) Not to be renewed automatically;
(C) Designed to include withholds or other payment penalties if the
contractor does not perform the specified activities or does not meet
the specified targets;
(D) Made available to both public and private contractors;
(E) Not conditioned on intergovernmental transfer agreements; and
(F) Necessary for the specified activities and targets.
(d) Enrollment discrimination prohibited. Contracts with MCOs,
PHPs, and PCCMs must provide as follows:
(1) The MCO, PHP or PCCM accepts individuals eligible for
enrollment in the order in which they apply without restriction (unless
authorized by the Regional Administrator), up to the limits set under
the contract.
(2) Enrollment is voluntary, except in the case of mandatory
enrollment programs that meet the conditions set forth in
Sec. 438.50(a).
(3) The MCO, PHP or PCCM will not, on the basis of health status or
need for health care services, discriminate against individuals
eligible to enroll.
(4) The MCO, PHP or PCCM will not discriminate against individuals
eligible to enroll on the basis of race, color, or national origin, and
will not use any policy or practice that has the effect of
discriminating on the basis of race, color, or national origin.
(e) Services that may be covered. An MCO or PHP contract may cover,
for enrollees, services that are in addition to those covered under the
State plan.
(f) Compliance with contracting rules. All contracts under this
subpart must:
(1) Comply with all applicable State and Federal laws and
regulations including Title VI of the Civil Rights Act of 1964; Title
IX of the Education Amendments of 1972 (regarding education programs
and activities); the Age Discrimination Act of 1975; the Rehabilitation
Act of 1973; and the Americans with Disabilities Act; and
(2) Meet all the requirements of this section.
(g) Inspection and audit of financial records. Risk contracts must
provide that the State agency and the Department may inspect and audit
any financial records of the entity or its subcontractors.
(h) Physician incentive plans. (1) MCO and PHP contracts must
provide for compliance with the requirements set forth in Secs. 422.208
and 422.210 of this chapter.
(2) In applying the provisions of Secs. 422.208 and 422.210,
references to ``M+C organization'', ``HCFA'', and ``Medicare
beneficiaries'' must be read as references to ``MCO or PHP'', ``State
agency'' and ``Medicaid recipients'', respectively.
(i) Advance directives. (1) All MCO and most PHP contracts must
provide for compliance with the requirements of Sec. 422.128 of this
chapter for maintaining written policies and procedures with respect to
advance directives. This requirement does not apply to PHP contracts
where the State has determined such application would be inappropriate,
as described in Sec. 438.8(a)(2).
(2) The MCO or PHP must provide adult enrollees with written
information on advance directives policies, and include a description
of applicable State law.
(3) The information must reflect changes in State law as soon as
possible, but no later than 90 days after the effective date of the
change.
(j) Special rules for certain HIOs. Contracts with HIOs that began
operating on or after January 1, 1986, and that the statute does not
explicitly exempt from requirements in section 1903(m) of the Act are
subject to all the requirements of this part that apply to MCOs and
contracts with MCOs. These HIOs may enter into comprehensive risk
contracts only if they meet the criteria of paragraph (a) of this
section.
(k) Additional rules for contracts with PCCMs. A PCCM contract must
meet the following requirements:
(1) Provide for reasonable and adequate hours of operation,
including 24-hour availability of information, referral, and treatment
for emergency medical conditions.
(2) Restrict enrollment to recipients who reside sufficiently near
one of the manager's delivery sites to reach that site within a
reasonable time using available and affordable modes of transportation.
(3) Provide for arrangements with, or referrals to, sufficient
numbers of physicians and other practitioners to ensure that services
under the contract can be furnished to enrollees promptly and without
compromise to quality of care.
(4) Prohibit discrimination in enrollment, disenrollment, and re-
enrollment, based on the recipient's health status or need for health
care services.
[[Page 6407]]
(5) Provide that enrollees have the right to disenroll from their
PCCM in accordance with Sec. 438.56.
(l) Subcontracts. All subcontracts must fulfill the requirements of
this part that are appropriate to the service or activity delegated
under the subcontract.
(m) Choice of health professional. The contract must allow each
enrollee to choose his or her health professional in the MCO to the
extent possible and appropriate.
Sec. 438.8 Provisions that apply to PHPs.
The following requirements and options apply to PHPs, PHP
contracts, and States with respect to PHPs, to the same extent that
they apply to MCOs, MCO contracts, and States with respect to MCOs.
(a) The contract requirements of Sec. 438.6, except for the
following:
(1) Requirements that pertain to HIOs.
(2) Requirements for advance directives, if the State believes that
they are not appropriate, for example, for a PHP contract that covers
only dental services or non-clinical services such as transportation
services.
(b) The information requirements in Sec. 438.10.
(c) The provision against provider discrimination in Sec. 438.12.
(d) The State responsibility provisions of subpart B except
Sec. 438.50.
(e) The enrollee rights and protection provisions in subpart C of
this part.
(f) The quality assessment and performance improvement provisions
in subpart D of this part to the extent that they are applicable to
services furnished by the PHP.
(g) The grievance system provisions in subpart F of this part.
(h) The certification and program integrity protection provisions
set forth in subpart H of this part.
Sec. 438.10 Information requirements.
(a) Basic rules. (1) Each State or its contracted representative,
and each MCO, PHP, or PCCM must, in furnishing information to enrollees
and potential enrollees, meet the requirements that are applicable to
it under this section.
(2) The information required for all potential enrollees must be
furnished by the State or its contracted representative or, at State
option, by the MCO or PHP.
(3) The information required for all enrollees must be furnished by
each MCO or PHP, unless the State chooses to furnish it directly or
through its contracted representative.
(4) PHPs must comply with the requirements of this section, as
appropriate. PHPs that contract as PCCMs must meet all of the
requirements applicable to PCCMs. All other PHPs must meet all of the
requirements applicable to MCOs.
(5) The language and format requirements of paragraphs (b) and (c)
of this section apply to all information furnished to enrollees and
potential enrollees, such as enrollment notices and instructions, as
well as the information specified in this section.
(6) The State must have in place a mechanism to help enrollees and
potential enrollees understand the State's managed care program.
(7) Each MCO and PHP must have in place a mechanism to help
enrollees and potential enrollees understand the requirements and
benefits of the plan.
(8) If the State plan provides for mandatory enrollment under
section 1932(a)(1)(A) of the Act (that is, as a State plan option), the
additional requirements of paragraph (h) of this section apply.
(b) Language. The State must meet the following requirements:
(1) Establish a methodology for identifying the non-English
languages spoken by enrollees and potential enrollees throughout the
State.
(2) Provide written information in each non-English language that
is necessary for effective communication with a significant number or
percentage of enrollees and potential enrollees.
(3) Require each MCO, PHP, and PCCM to make its written information
available in the languages that are prevalent in its particular service
area.
(4) Make oral interpretation services available and require each
MCO, PHP, and PCCM to make those services available free of charge to
the recipient to meet the needs of each enrollee and potential
enrollee.
(5) Notify enrollees and potential enrollees, and require each MCO,
PHP, and PCCM to notify its enrollees and potential enrollees--
(i) That oral interpretation and written information are available
in languages other than English; and
(ii) Of how to access those services.
(c) Format. (1) The material must--
(i) Use easily understood language and format; and
(ii) Be available in alternative formats and in an appropriate
manner that takes into consideration the special needs of those who,
for example, are visually limited or have limited reading proficiency.
(2) The State must provide instructions to enrollees and potential
enrollees and require each MCO, PHP, and PCCM to provide instructions
to its enrollees and potential enrollees on how to obtain information
in the appropriate format.
(d) Information for potential enrollees.--(1) To whom and when the
information must be furnished. The State or its contracted
representative must provide the information specified in paragraph
(d)(2) of this section as follows:
(i) To each potential enrollee residing in the MCO's or PHP's
service area;
(ii) At the time the potential enrollee first becomes eligible for
Medicaid, is considering choice of MCOs or PHPs under a voluntary
program, or is first required to choose an MCO or PHP under a mandatory
enrollment program; and
(iii) Within a timeframe that enables the potential enrollee to use
the information in choosing among available MCOs or PHPs.
(2) Required information. The information for potential enrollees
must include the following:
(i) General information about--
(A) The basic features of managed care;
(B) Which populations are excluded from enrollment, subject to
mandatory enrollment, or free to enroll voluntarily in an MCO or PHP;
and
(C) MCO and PHP responsibilities for coordination of enrollee care;
(ii) Information specific to each MCO and PHP serving an area that
encompasses the potential enrollee's service area:
(A) Benefits covered;
(B) Cost sharing, if any;
(C) Service area;
(D) Names, locations, telephone numbers of, and non-English
language spoken by current network providers, including at a minimum
information on primary care physicians, specialists, and hospitals, and
identification of providers that are not accepting new patients.
(E) Benefits that are available under the State plan but are not
covered under the contract, including how and where the enrollee may
obtain those benefits, any cost sharing, and how transportation is
provided. For a counseling or referral service that the MCO or PHP does
not cover because of moral or religious objections, the MCO or PHP need
not furnish information about how and where to obtain the service, but
only about how and where to obtain information about the service. The
State must furnish information about where and how to obtain the
service.
(e) Information for enrollees.--(1) To whom and when the
information must be furnished. The MCO or PHP must--
(i) Furnish to each of its enrollees the information specified in
paragraph (e)(2) of this section within a reasonable time
[[Page 6408]]
after the MCO or PHP receives, from the State or its contracted
representative, notice of the recipient's enrollment, and once a year
thereafter.
(ii) Give each enrollee written notice of any change (that the
State defines as ``significant'') in the information specified in
paragraph (e)(2) of this section, at least 30 days before the intended
effective date of the change.
(iii) Make a good faith effort to give written notice of
termination of a contracted provider, within 15 days after receipt or
issuance of the termination notice, to each enrollee who received his
or her primary care from, or was seen on a regular basis by, the
terminated provider.
(2) Required information. The information for enrollees must
include the following:
(i) Kinds of benefits, and amount, duration, and scope of benefits
available under the contract. There must be sufficient detail to ensure
that enrollees understand the benefits to which they are entitled,
including pharmaceuticals, and mental health and substance abuse
benefits.
(ii) Enrollee rights as specified in Sec. 438.100.
(iii) Procedures for obtaining benefits, including authorization
requirements.
(iv) Names, locations, telephone numbers of, and non-English
languages spoken by current network providers, including information at
least on primary care physicians, specialists, and hospitals, and
identification of providers that are not accepting new patients.
(v) Any restrictions on the enrollee's freedom of choice among
network providers.
(vi) The extent to which, and how, enrollees may obtain benefits,
including family planning services, from out-of-network providers.
(vii) The extent to which, and how, after-hours and emergency
coverage are provided.
(viii) Policy on referrals for specialty care and for other
benefits not furnished by the enrollee's primary care provider.
(ix) Cost sharing, if any.
(x) Grievance, appeal, and fair hearing procedures for enrollees,
including timeframes, required under Sec. 438.414(b).
(xi) Any appeal rights that the State chooses to make available to
providers to challenge the failure of the organization to cover a
service.
(xii) Any benefits that are available under the State plan but are
not covered under the contract, including how and where the enrollee
may obtain those benefits, any cost sharing, and how transportation is
provided. For a counseling or referral service that the MCO or PHP does
not cover because of moral or religious objections, the MCO or PHP need
not furnish information on how and where to obtain the service, but
only on how and where to obtain information about the service. The
State must furnish information about how and where to obtain the
service.
(xiii) Information on how to obtain continued services during a
transition, as provided in Sec. 438.62.
(xiv) The rules for emergency and post-stabilization services, as
set forth in Sec. 438.114.
(xv) Additional information that is available upon request, and how
to request that information.
(3) Annual notice. At least once a year, the MCO or PHP, or the
State or its contracted representative, must notify enrollees of their
right to request and obtain the information listed in paragraphs (e)(2)
and (f) of this section.
(f) MCO or PHP information available upon request. The following
information must be furnished to enrollees and potential enrollees upon
request, by the MCO or PHP, or by the State or its contracted
representative if the State prohibits the MCO or PHP from providing it:
(1) With respect to MCOs and health care facilities, their
licensure, certification, and accreditation status.
(2) With respect to health care professionals, information that
includes, but is not limited to, education, licensure, and Board
certification and recertification.
(3) Other information on requirements for accessing services to
which they are entitled under the contract, including factors such as
physical accessibility and non-English languages spoken.
(4) A description of the procedures the MCO or PHP uses to control
utilization of services and expenditures.
(5) A summary description of the methods of compensation for
physicians.
(6) Information on the financial condition of the MCO or PHP,
including the most recently audited information.
(7) Any element of information specified in paragraphs (d) and (e)
of this section.
(g) Information on PCCMs and PHPs.--(1) To whom and when the
information must be furnished. The State or its contracted
representative must furnish information on PCCMs and PHPs to potential
enrollees--
(i) When potential enrollees first become eligible for Medicaid or
are first required to choose a PCCM or PHP under a mandatory enrollment
program; and
(ii) Within a timeframe that enables them to use the information in
choosing among available PCCMs or PHPs .
(2) Required information.--(i) General rule. The information must
include the following:
(A) The names of and non-English languages spoken by PCCMs and PHPs
and the locations at which they furnish services.
(B) Any restrictions on the enrollee's choice of the listed PCCMs
and PHPs.
(C) Except as provided in paragraph (g)(2)(ii) of this section, any
benefits that are available under the State plan but not under the PCCM
or PHP contract, including how and where the enrollee may obtain those
benefits, any cost-sharing, and how transportation is provided.
(ii) Exception. For counseling and referral services that are not
covered under the PCCM or PHP contract because of moral or religious
objections, the PCCM or PHP need not furnish information about how and
where to obtain the service but only about how and where to obtain
information about the service. The State must furnish the information
on how and where to obtain the service.
(3) Additional information available upon request. Each PCCM and
PHP must, upon request, furnish information on the grievance procedures
available to enrollees, including how to obtain benefits during the
appeals process.
(h) Special rules: States with mandatory enrollment.--(1) Basic
rule. If the State plan provides for mandatory enrollment under section
1932(a)(1)(A) of the Act, the State or its contracted representative
must furnish information on MCOs, PHPs, and PCCMs (as specified in
paragraph (h)(3) of this section), either directly or through the MCO,
PHP, or PCCM.
(2) When and how the information must be furnished. The information
must be furnished to all potential enrollees--
(i) At least once a year; and
(ii) In a comparative, chart-like format.
(3) Required information. Some of the information is the same as
the information required for potential enrollees under paragraph (d) of
this section. However, all of the information in this paragraph is
subject to the timeframe and format requirements of paragraph (h)(2) of
this section, and includes the following for each contracting MCO, PHP,
or PCCM:
(i) The MCO's, PHP's, or PCCM's service area.
(ii) The benefits covered under the contract.
[[Page 6409]]
(iii) Any cost sharing imposed by the MCO, PHP, or PCCM.
(iv) To the extent available, quality and performance indicators,
including, but not limited to, disenrollment rates as defined by the
State, and enrollee satisfaction.
Sec. 438.12 Provider discrimination prohibited.
(a) General rules. (1) An MCO or PHP may not discriminate with
respect to the participation, reimbursement, or indemnification of any
provider who is acting within the scope of his or her license or
certification under applicable State law, solely on the basis of that
license or certification. If an MCO or PHP declines to include
individual or groups of providers in its network, it must give the
affected providers written notice of the reason for its decision.
(2) In all contracts with health care professionals an MCO or PHP
must comply with the requirements specified in Sec. 438.214.
(b) Construction. Paragraph (a) of this section may not be
construed to--
(1) Require the MCO or PHP to contract with providers beyond the
number necessary to meet the needs of its enrollees;
(2) Preclude the MCO or PHP from using different reimbursement
amounts for different specialties or for different practitioners in the
same specialty; or
(3) Preclude the MCO or PHP from establishing measures that are
designed to maintain quality of services and control costs and are
consistent with its responsibilities to enrollees.
Subpart B--State Responsibilities
Sec. 438.50 State plan requirements.
(a) General rule. A State plan that provides for requiring Medicaid
recipients to enroll in managed care entities must comply with the
provisions of this section, except when the State imposes the
requirement--
(1) As part of a demonstration project under section 1115 of the
Act; or
(2) Under a waiver granted under section 1915(b) of the Act.
(b) State plan information. The plan must specify--(1) The types of
entities with which the State contracts;
(2) The payment method it uses (for example, whether fee-for-
service or capitation);
(3) Whether it contracts on a comprehensive risk basis; and
(4) The process the State uses to involve the public in both design
and initial implementation of the program and the methods it uses to
ensure ongoing public involvement once the State plan has been
implemented.
(c) State plan assurances. The plan must provide assurances that
the State meets applicable requirements of the following laws and
regulations:
(1) Section 1903(m) of the Act, with respect to MCOs and MCO
contracts.
(2) Section 1905(t) of the Act, with respect to PCCMs and PCCM
contracts.
(3) Section 1932(a)(1)(A) of the Act, with respect to the State's
option to limit freedom of choice by requiring recipients to receive
their benefits through managed care entities.
(4) This part, with respect to MCOs and PCCMs.
(5) Part 434 of this chapter, with respect to all contracts.
(6) Section 438.6(c), with respect to payments under any risk
contracts, and Sec. 447.362 with respect to payments under any nonrisk
contracts.
(d) Limitations on enrollment. The State must provide assurances
that, in implementing the State plan managed care option, it will not
require the following groups to enroll in an MCO or PCCM:
(1) Recipients who are also eligible for Medicare.
(2) Indians who are members of Federally recognized tribes, except
when the MCO or PCCM is--
(i) The Indian Health Service; or
(ii) An Indian health program or Urban Indian program operated by a
tribe or tribal organization under a contract, grant, cooperative
agreement or compact with the Indian Health Service.
(3) Children under 19 years of age who are--
(i) Eligible for SSI under title XVI;
(ii) Eligible under section 1902(e)(3) of the Act;
(iii) In foster care or other out-of-home placement;
(iv) Receiving foster care or adoption assistance; or
(v) Receiving services through a family-centered, community-based,
coordinated care system that receives grant funds under section
501(a)(1)(D) of title V, and is defined by the State in terms of either
program participation or special health care needs.
(e) Priority for enrollment. The State must have an enrollment
system under which recipients already enrolled in an MCO or PCCM are
given priority to continue that enrollment if the MCO or PCCM does not
have the capacity to accept all those seeking enrollment under the
program.
(f) Enrollment by default. (1) For recipients who do not choose an
MCO or PCCM during their enrollment period, the State must have a
default enrollment process for assigning those recipients to
contracting MCOs and PCCMs.
(2) The process must seek to preserve existing provider-recipient
relationships and relationships with providers that have traditionally
served Medicaid recipients. If that is not possible, the State must
distribute the recipients equitably among qualified MCOs and PCCMs
available to enroll them, excluding those that are subject to the
intermediate sanction described in Sec. 438.702(a)(4).
(3) An ``existing provider-recipient relationship'' is one in which
the provider was the main source of Medicaid services for the recipient
during the previous year. This may be established through State records
of previous managed care enrollment or fee-for-service experience, or
through contact with the recipient.
(4) A provider is considered to have ``traditionally served''
Medicaid recipients if it has experience in serving the Medicaid
population.
Sec. 438.52 Choice of MCOs, PHPs, and PCCMs.
(a) General rule. Except as specified in paragraphs (b) and (c) of
this section, a State that requires Medicaid recipients to enroll in an
MCO, PHP, or PCCM must give those recipients a choice of at least two
entities.
(b) Exception for rural area residents. (1) Under any of the
following programs, and subject to the requirements of paragraph (b)(2)
of this section, a State may limit a rural area resident to a single
MCO, PHP, or PCCM system:
(i) A program authorized by a plan amendment under section 1932(a)
of the Act.
(ii) A waiver under section 1115 of the Act.
(iii) A waiver under section 1915(b) of the Act.
(2) A State that elects the option provided under paragraph(b)(1)
of this section, must permit the recipient--
(i) To choose from at least two physicians or case managers; and
(ii) To obtain services from any other provider under any of the
following circumstances:
(A) The service or type of provider is not available within the
MCO, PHP, or PCCM network.
(B) The provider is not part of the network, but is the main source
of a service to the recipient. (This provision applies as long as the
provider continues to be the main source of the service).
(C) The only plan or provider available to the recipient does not,
because of moral or religious objections, provide the service the
enrollee seeks.
(D) The recipient's primary care provider or other provider
determines
[[Page 6410]]
that the recipient needs related services that would subject the
recipient to unnecessary risk if received separately (for example, a
cesarean section and a tubal ligation) and not all of the related
services are available within the network.
(E) The State determines that other circumstances warrant out-of-
network treatment.
(3) As used in this paragraph, ``rural area''is any area other than
an ``urban area'' as defined in Sec. 412.62(f)(1)(ii) of this chapter.
(c) Exception for certain health insuring organizations (HIOs). The
State may limit recipients to a single HIO if--
(1) The HIO is one of those described in section 1932(a)(3)(C) of
the Act;
(2) The recipient who enrolls in the HIO has a choice of at least
two primary care providers within the entity.
(d) Limitations on changes between primary care providers. For an
enrollee of a single MCO, PHP, or HIO under paragraph (b)(2) or (b)(3)
of this section, any limitation the State imposes on his or her freedom
to change between primary care providers may be no more restrictive
than the limitations on disenrollment under Sec. 438.56(c).
Sec. 438.56 Disenrollment: Requirements and limitations.
(a) Applicability. The provisions of this section apply to all
managed care arrangements whether enrollment is mandatory or voluntary
and whether the contract is with an MCO, a PHP, or a PCCM.
(b) Disenrollment requested by the MCO, PHP or PCCM. All MCO, PHP,
and PCCM contracts must--(1) Specify the reasons for which the MCO, PHP
or PCCM may request disenrollment of an enrollee;
(2) Provide that the MCO, PHP or PCCM may not request disenrollment
because of a change in the enrollee's health status, or because of the
enrollee's utilization of medical services, diminished mental capacity,
or uncooperative or disruptive behavior resulting from his or her
special needs (except where his or her continued enrollment in the MCO,
PHP or PCCM seriously impairs the entity's ability to furnish services
to either this particular enrollee or other enrollees); and
(3) Specify the methods by which the MCO, PHP or PCCM assures the
agency that it does not request disenrollment for reasons other than
those permitted under the contract.
(c) Disenrollment requested by the enrollee. If the State chooses
to limit disenrollment, its MCO, PHP, and PCCM contracts must provide
that a recipient may request disenrollment as follows:
(1) For cause, at any time.
(2) Without cause, at the following times:
(i) During the 90 days following the date of the recipient's
initial enrollment with the MCO, PHP or PCCM, or the date the State
sends the recipient notice of the enrollment, whichever is later.
(ii) At least once every 12 months thereafter.
(iii) Upon automatic reenrollment under paragraph (g) of this
section, if the temporary loss of Medicaid eligibility has caused the
recipient to miss the annual disenrollment opportunity.
(iv) When the State imposes the intermediate sanction specified in
Sec. 438.702(a)(3).
(d) Procedures for disenrollment. (1) Request for disenrollment.
The recipient (or his or her representative) must submit an oral or
written request--
(i) To the State agency (or its agent); or
(ii) To the MCO, PHP or PCCM, if the State permits MCOs, PHPs, and
PCCMs to process disenrollment requests.
(2) Cause for disenrollment. The following are cause for
disenrollment:
(i) The enrollee was homeless (as defined by the State) or a
migrant worker at the time of enrollment and was enrolled in the MCO,
PHP or PCCM by default.
(ii) The plan does not, because of moral or religious objections,
cover the service the enrollee seeks.
(iii) The enrollee needs related services (for example a cesarean
section and a tubal ligation) to be performed at the same time; not all
related services are available within the network; and the enrollee's
primary care provider or another provider determines that receiving the
services separately would subject the enrollee to unnecessary risk.
(iv) Other reasons, including but not limited to, poor quality of
care, lack of access to services covered under the contract, or lack of
access to providers experienced in dealing with the enrollee's health
care needs.
(3) MCO, PHP or PCCM action on request. (i) An MCO, PHP or PCCM may
either approve a request for disenrollment or refer the request to the
State.
(ii) If the MCO, PHP, PCCM, or State agency (whichever is
responsible) fails to make a disenrollment determination so that the
recipient can be disenrolled within the timeframes specified in
paragraphs (e)(1) of this section, the disenrollment is considered
approved.
(4) State agency action on request. For a request received directly
from the recipient, or one referred by the MCO, PHP or PCCM, the State
agency must take action to approve or disapprove the request based on
the following:
(i) Reasons cited in the request.
(ii) Information provided by the MCO, PHP or the PCCM at the
agency's request.
(iii) Any of the reasons specified in paragraph (d)(2) of this
section.
(5) Use of the MCO, PHP, or PCCM grievance procedures. (i) The
State agency may require that the enrollee seek redress through the
MCO, PHP, or PCCM's grievance system before making a determination on
the enrollee's request.
(ii) The grievance process, if used, must be completed in time to
permit the disenrollment (if approved) to be effective in accordance
with the timeframe specified in Sec. 438.56(e)(1).
(iii) If, as a result of the grievance process, the MCO, PHP, or
PCCM approves the disenrollment, the State agency is not required to
make a determination.
(e) Timeframe for disenrollment determinations. (1) Regardless of
the procedures followed, the effective date of an approved
disenrollment must be no later than the first day of the second month
following the month in which the enrollee or the MCO, PHP or PCCM files
the request.
(2) If the MCO, PHP or PCCM or the State agency (whichever is
responsible) fails to make the determination within the timeframes
specified in paragraphs (e)(1) and (e)(2) of this section, the
disenrollment is considered approved.
(f) Notice and appeals. A State that restricts disenrollment under
this section must take the following actions:
(1) Provide that enrollees and their representatives are given
written notice of disenrollment rights at least 60 days before the
start of each enrollment period.
(2) Ensure access to State fair hearing for any enrollee
dissatisfied with a State agency determination that there is not good
cause for disenrollment.
(g) Automatic reenrollment: Contract requirement. If the State plan
so specifies, the contract must provide for automatic reenrollment of a
recipient who is disenrolled solely because he or she loses Medicaid
eligibility for a period of 2 months or less.
Sec. 438.58 Conflict of interest safeguards.
(a) As a condition for contracting with MCOs or PHPs, a State must
have in effect safeguards against conflict of interest on the part of
State and local officers and employees and agents of the State who have
responsibilities relating to MCO or PHP contracts or the default
[[Page 6411]]
enrollment process specified in Sec. 438.50(f).
(b) These safeguards must be at least as effective as the
safeguards specified in section 27 of the Office of Federal Procurement
Policy Act (41 U.S.C. 423).
Sec. 438.60 Limit on payment to other providers.
The State agency must ensure that no payment is made to a provider
other than the MCO or PHP for services available under the contract
between the State and the MCO or PHP, except where such payments are
provided for in title XIX of the Act or 42 CFR.
Sec. 438.62 Continued services to recipients.
(a) The State agency must arrange for Medicaid services to be
provided without delay to any Medicaid enrollee of an MCO, PHP or PCCM
whose contract is terminated and for any Medicaid enrollee who is
disenrolled from an MCO, PHP or PCCM for any reason other than
ineligibility for Medicaid.
(b) The State agency must have in effect a mechanism to ensure
continued access to services when an enrollee with ongoing health care
needs is transitioned from fee-for-service to an MCO, PHP or PCCM, from
one MCO, PHP or PCCM to another, or from an MCO, PHP or PCCM to fee-
for-service.
(1) The mechanism must apply at least to the following:
(i) Children and adults receiving SSI benefits.
(ii) Children in title IV-E foster care.
(iii) Recipients aged 65 or older.
(iv) Pregnant women.
(v) Any other recipients whose care is paid for under State-
established, risk-adjusted, high-cost payment categories.
(vi) Any other category of recipients identified by HCFA.
(2) The State must notify the enrollee that a transition mechanism
exists, and provide instructions on how to access the mechanism.
(3) The State must ensure that an enrollee's ongoing health care
needs are met during the transition period, by establishing procedures
to ensure that, at a minimum--
(i) The enrollee has access to services consistent with the State
plan, and is referred to appropriate health care providers;
(ii) Consistent with Federal and State law, new providers are able
to obtain copies of appropriate medical records; and
(iii) Any other necessary procedures are in effect.
Sec. 438.66 Monitoring procedures.
The State agency must have in effect procedures for monitoring the
MCO's or PHP's operations, including, at a minimum, operations related
to:
(a) Recipient enrollment and disenrollment.
(b) Processing of grievances and appeals.
(c) Violations subject to intermediate sanctions, as set forth in
subpart I of this part.
(d) Violations of the conditions for FFP, as set forth in subpart J
of this part.
(e) All other provisions of the contract, as appropriate.
Sec. 438.68 Education of MCOs, PHPs, and PCCMs and subcontracting
providers.
The State agency must have in effect procedures for educating MCOs,
PHPs, PCCMs and any subcontracting providers about the clinical and
other needs of enrollees with special health care needs.
Subpart C--Enrollee Rights and Protections
Sec. 438.100 Enrollee rights.
(a) General rule. The State must ensure that--
(1) Each MCO and each PHP has written policies regarding the
enrollee rights specified in this section; and
(2) Each MCO, PHP, and PCCM complies with any applicable Federal
and State laws that pertain to enrollee rights, and ensures that its
staff and affiliated providers take those rights into account when
furnishing services to enrollees.
(b) Specific rights--(1) Basic requirement. The State must ensure
that each managed care enrollee is guaranteed the rights as specified
in paragraphs (b)(2) and (b)(3) of this section.
(2) An enrollee of an MCO, PHP, or PCCM has the following rights:
The right
(i) To receive information in accordance with Sec. 438.10.
(ii) To be treated with respect and with due consideration for his
or her dignity and privacy.
(iii) To receive information on available treatment options and
alternatives, presented in a manner appropriate to the enrollee's
condition and ability to understand. (The information requirements for
services that are not covered under the contract because of moral or
religious objections are set forth in Sec. 438.10(e).)
(iv) To participate in decisions regarding his or her health care,
including the right to refuse treatment.
(v) To be free from any form of restraint or seclusion used as a
means of coercion, discipline, convenience or retaliation, as specified
in other Federal regulations on the use of restraints and seclusion.
(3) An enrollee of an MCO or a PHP also has the following rights--
The right
(i) To be furnished health care services in accordance with
Secs. 438.206 through 438.210.
(ii) To obtain a second opinion from an appropriately qualified
health care professional in accordance with Sec. 438.206(d)(3).
(iii) To request and receive a copy of his or her medical records,
and to request that they be amended or corrected, as specified in
Sec. 438.224.
(c) Free exercise of rights. The State must ensure that each
enrollee is free to exercise his or her rights, and that the exercise
of those rights does not adversely affect the way the MCO, PHP or PCCM
and its providers or the State agency treat the enrollee.
(d) Compliance with other Federal and State laws. The State must
ensure that each MCO, PHP, and PCCM complies with any other applicable
Federal and State laws (such as: Title VI of the Civil Rights Act of
1964 as implemented by regulations at 45 CFR part 484; the Age
Discrimination Act of 1975 as implemented by regulations at 45 CFR part
91; the Rehabilitation Act of 1973; and Titles II and III of the
Americans with Disabilities Act and other laws regarding privacy and
confidentiality).
Sec. 438.102 Provider-enrollee communications.
(a) Health care professional defined. As used in this subpart,
``health care professional'' means a physician or any of the following:
a podiatrist, optometrist, chiropractor, psychologist, dentist,
physician assistant, physical or occupational therapist, therapist
assistant, speech-language pathologist, audiologist, registered or
practical nurse (including nurse practitioner, clinical nurse
specialist, certified registered nurse anesthetist, and certified nurse
midwife), licensed certified social worker, registered respiratory
therapist, and certified respiratory therapy technician.
(b) General rules. (1) An MCO or PHP may not prohibit, or otherwise
restrict a health care professional acting within the lawful scope of
practice, from advising or advocating on behalf of an enrollee who is
his or her patient, with respect to the following:
(i) The enrollee's health status, medical care, or treatment
options, including any alternative treatment that may be self-
administered.
(ii) Any information the enrollee needs in order to decide among
all relevant treatment options.
[[Page 6412]]
(iii) The risks, benefits, and consequences of treatment or non-
treatment.
(iv) The enrollee's right to participate in decisions regarding his
or her health care, including the right to refuse treatment, and to
express preferences about future treatment decisions.
(2) MCOs and PHPs must take steps to ensure that health care
professionals--
(i) Furnish information about treatment options (including the
option of no treatment) in a culturally competent manner; and
(ii) Ensure that enrollees with disabilities have effective
communication with all health system participants in making decisions
with respect to treatment options.
(3) Subject to the information requirements of paragraph (c) of
this section, an MCO or PHP that would otherwise be required to
provide, reimburse for, or provide coverage of, a counseling or
referral service because of the requirement in paragraph (b)(1) of this
section is not required to do so if the MCO or PHP objects to the
service on moral or religious grounds.
(c) Information requirements: MCO and PHP responsibility. (1) An
MCO or PHP that elects the option provided in paragraph (b) (3) of this
section must furnish information about the services it does not cover
as follows:
(i) To the State--
(A) With its application for a Medicaid contract; and
(B) Whenever it adopts the policy during the term of the contract.
(ii) Consistent with the provisions of Sec. 438.10--
(A) To potential enrollees, before and during enrollment; and
(B) To enrollees, within 90 days after adopting the policy with
respect to any particular service. (Although this timeframe would be
sufficient to entitle the MCO or PHP to the option provided in
paragraph (b)(3) of this section, the overriding rule in
Sec. 438.10(e)(1)(ii) requires the MCO or the PHP to furnish the
information at least 30 days before the effective date of the policy.)
(2) As specified in Sec. 438.10(d) and (e), the information that
MCOs and PHPs must furnish to enrollees and potential enrollees does
not include how and where to obtain the service excluded under
paragraph (b)(3) of this section, but only how and where to obtain
information about the service.
(d) Information requirements: State responsibility. For each
service excluded by an MCO or PHP under paragraph (b)(2) of this
section, the State must furnish information on how and where to obtain
the service, as specified in Secs. 438.10(e)(2)(xii) and 438.206(c).
(e) Sanction. An MCO or PHP that violates the prohibition of
paragraph (b)(1) of this section is subject to intermediate sanctions
under subpart I of this part.
Sec. 438.104 Marketing activities.
(a) Terminology. As used in this section, the following terms have
the indicated meanings:
Cold-call marketing means any unsolicited personal contact by the
MCO, PHP, or PCCM with a potential enrollee for the purpose of
marketing as defined in this paragraph.
Marketing means any communication, from an MCO, PHP, or PCCM to an
enrollee or potential enrollee, that can reasonably be interpreted as
intended to influence the recipient to enroll or reenroll in that
particular MCO's, PHP's, or PCCM's Medicaid product, or either to not
enroll in, or to disenroll from, another MCO's, PHP's, or PCCM's
Medicaid product.
Marketing materials means materials that--
(1) Are produced in any medium, by or on behalf of an MCO, PHP, or
PCCM; and
(2) Can reasonably be interpreted as intended to market to
enrollees or potential enrollees.
MCO, PHP, PCCM, and entity include any of the entity's employees,
affiliated providers, agents, or contractors.
(b) Contract requirements. Each contract with an MCO, PHP, or PCCM
must comply with the following requirements:
(1) Provide that the entity--
(i) Does not distribute any marketing materials without first
obtaining State approval;
(ii) Distributes the materials to its entire service area as
indicated in the contract;
(iii) Complies with the information requirements of Sec. 438.10 to
ensure that, before enrolling, the recipient receives, from the entity
or the State, the accurate oral and written information he or she needs
to make an informed decision on whether to enroll;
(iv) Does not seek to influence enrollment in conjunction with the
sale or offering of any other insurance; and
(v) Does not, directly or indirectly, engage in door-to-door,
telephone, or other cold-call marketing activities.
(2) Specify the methods by which the entity assures the State
agency that marketing, including plans and materials, is accurate and
does not mislead, confuse, or defraud the recipients or the State
agency. Statements that would be considered inaccurate, false, or
misleading include, but are not limited to, any assertion or statement
(whether written or oral) that--
(i) The recipient must enroll in the MCO, PHP, or PCCM in order to
obtain benefits or in order to not lose benefits; or
(ii) The MCO, PHP, or PCCM is endorsed by HCFA, the Federal or
State government, or similar entity.
(c) State agency review. In reviewing the marketing materials
submitted by the entity, the State must consult with the Medical Care
Advisory Committee established under Sec. 431.12 of this chapter or an
advisory committee with similar membership.
Sec. 438.106 Liability for payment.
Each MCO and PHP must provide that its Medicaid enrollees are not
held liable for any of the following:
(a) The MCO's or PHP's debts, in the event of the entity's
insolvency.
(b) Covered services provided to the enrollee, for which--
(1) The State does not pay the MCO or the PHP; or
(2) The State, or the MCO or PHP does not pay the individual or
health care provider that furnishes the services under a contractual,
referral, or other arrangement.
(c) Payments for covered services furnished under a contract,
referral, or other arrangement, to the extent that those payments are
in excess of the amount that the enrollee would owe if the MCO or PHP
provided the services directly.
Sec. 438.108 Cost sharing.
The contract must provide that any cost sharing imposed on Medicaid
enrollees is in accordance with Secs. 447.50 through 447.60 of this
chapter.
Sec. 438.114 Emergency and post-stabilization services.
(a) Definitions. As used in this section--
Emergency medical condition has the meaning given the term in
Sec. 422.113(b) of this chapter.
Emergency services has the meaning given the term in
Sec. 422.113(b) of this chapter.
Post-stabilization care services has the meaning given the term in
Sec. 422.113(c) of this chapter.
(b) Information requirements. To enrollees and potential enrollees
upon request, and to enrollees during enrollment and at least annually
thereafter, each State (or at State option, each MCO, PHP, and PCCM)
must provide, in clear, accurate, and
[[Page 6413]]
standardized form, information that describes or explains at least the
following:
(1) What constitutes emergency medical condition, emergency
services, and post-stabilization services, with reference to the
definitions in paragraph (a) of this section.
(2) The fact that prior authorization is not required for emergency
services.
(3) The process and procedures for obtaining emergency services,
including use of the 911 telephone system or its local equivalent.
(4) The locations of any emergency settings and other locations at
which MCO, PHP, and PCCM providers and hospitals furnish emergency
services and post-stabilization services covered under the contract.
(5) The fact that, subject to the provisions of this section, the
enrollee has a right to use any hospital or other setting for emergency
care.
(6) The post-stabilization care services rules set forth at
Sec. 422.113(c) of this chapter.
(c) Coverage and payment: General rule. The following entities are
responsible for coverage and payment of emergency services and post-
stabilization care services.
(1) The MCO or PHP.
(2) The PCCM that has a risk contract that covers such services.
(3) The State, in the case of a PCCM that has a fee-for-service
contract.
(d) Coverage and payment: Emergency services. (1) The entities
identified in paragraph (c) of this section--
(i) Must cover and pay for emergency services regardless of whether
the entity that furnishes the services has a contract with the MCO,
PHP, or PCCM; and
(ii) May not deny payment for treatment obtained under either of
the following circumstances:
(A) An enrollee had an emergency medical condition, including cases
in which the absence of immediate medical attention would not have had
the outcomes specified in paragraphs (b)(1)(A), (B), and (C) of the
definition of emergency medical condition in Sec. 422.113 of this
chapter.
(B) A representative of the MCO, PHP, or PCCM instructs the
enrollee to seek emergency services.
(2) A PCCM must--
(i) Allow enrollees to obtain emergency services outside the
primary care case management system regardless of whether the case
manager referred the enrollee to the provider that furnishes the
services; and
(ii) Pay for the services if the manager's contract is a risk
contract that covers those services.
(e) Additional rules for emergency services. (1) The entities
specified in paragraph (c) of this section--
(i) May not limit what constitutes an emergency medical condition
with reference to paragraph (a) of this section, on the basis of lists
of diagnoses or symptoms; and
(ii) May not refuse to process any claim because it does not
contain the primary care provider's authorization number.
(2) An enrollee who has an emergency medical condition may not be
held liable for payment of subsequent screening and treatment needed to
diagnose the specific condition or stabilize the patient.
(3) The attending emergency physician, or the provider actually
treating the enrollee, is responsible for determining when the enrollee
is sufficiently stabilized for transfer or discharge, and that
determination is binding on the entities identified in paragraph (c) of
this section as responsible for coverage and payment.
(f) Coverage and payment: Post-stabilization services. Post-
stabilization care services are covered and paid for in accordance with
provisions set forth at Sec. 422.113(c) of this chapter. In applying
those provisions, reference to ``M+C organization'' must be read as
reference to the entities responsible for Medicaid payment, as
specified in paragraph (c) of this section.
Sec. 438.116 Solvency standards.
(a) Requirement for assurances. (1) Each MCO and PHP that is not a
Federally qualified HMO (as defined in section 1310 of the Public
Health Service Act) must provide assurances satisfactory to the State
showing that its provision against the risk of insolvency is adequate
to ensure that its Medicaid enrollees will not be liable for the MCO's
or PHP's debts if the entity becomes insolvent.
(2) Federally qualified HMOs, as defined in section 1310 of the
Public Health Service Act, are exempt from this requirement.
(b) Other requirements.--(1) General rule. Except as provided in
paragraph (b)(2) of this section, a MCO and a PHP must meet the
solvency standards established by the State for private health
maintenance organizations, or be licensed or certified by the State as
a risk-bearing entity.
(2) Exception. Paragraph (b)(1) of this section does not apply to
an MCO or PHP that meets any of the following conditions:
(i) Does not provide both inpatient hospital services and physician
services.
(ii) Is a public entity.
(iii) Is (or is controlled by) one or more Federally qualified
health centers and meets the solvency standards established by the
State for those centers.
(iv) Has its solvency guaranteed by the State.
Subpart D--Quality Assessment and Performance Improvement
Sec. 438.200 Scope.
This subpart implements section 1932(c)(1) of the Act and sets
forth specifications for quality assessment and performance improvement
strategies that States must implement to ensure the delivery of quality
health care by all MCOs and PHPs. It also establishes standards that
States, MCOs and PHPs must meet.
Sec. 438.202 State responsibilities.
Each State contracting with an MCO or PHP must--
(a) Have a strategy for assessing and improving the quality of
managed care services offered by all MCOs and PHPs:
(b) Document the strategy in writing.
(c) Provide for the input of recipients and other stake-holders in
the development of the strategy, including making the strategy
available for public comment before adopting it in final;
(d) Ensure compliance with standards established by the State,
consistent with this subpart; and
(e) Conduct periodic reviews to evaluate the effectiveness of the
strategy, and update the strategy as often as the State considers
appropriate, but at least every 3 years.
(f) Submit to HCFA the following:
(1) A copy of the initial strategy, and a copy of the revised
strategy, whenever significant changes are made.
(2) Regular reports on the implementation and effectiveness of the
strategy, consistent with paragraph (e), at least every 3 years.
Sec. 438.204 Elements of State quality strategies.
At a minimum, State strategies must include the following--
(a) MCO and PHP contract provisions that incorporate the standards
specified in this subpart.
(b) Procedures for assessing the quality and appropriateness of
care and services furnished to all Medicaid enrollees under the MCO and
PHP contracts. These include, but are not limited to--
(1) Procedures that--
(i) Identify enrollees with special health-care needs; and
(ii) Assess the quality and appropriateness of care furnished to
[[Page 6414]]
enrollees with special health-care needs; and
(iii) Identify the race, ethnicity, and primary language spoken of
each Medicaid enrollee. States must provide this information to the MCO
and PHP for each Medicaid enrollee at the time of enrollment.
(2) Continuous monitoring and evaluation of MCO and PHP compliance
with the standards.
(c) Performance measures and levels prescribed by HCFA consistent
with section 1932(c)(1) of the Act.
(d) Arranging for annual, external independent reviews of the
quality outcomes and timeliness of, and access to the services covered
under each MCO and PHP contract.
(e) Appropriate use of intermediate sanctions that, at a minimum,
meet the requirements of Subpart I of this part.
(f) An information system that supports initial and ongoing
operation and review of the State's quality strategy.
(g) Standards, at least as stringent as those in the following
sections of this subpart, for access to care, structure and operations,
and quality measurement and improvement.
Access Standards
Sec. 438.206 Availability of services.
(a) Basic rule. Each State must ensure that all covered services
are available and accessible to enrollees.
(b) Choice of entities. If a State limits freedom of choice, it
must comply with the requirements of Sec. 438.52, which specifies the
choices that the State must make available.
(c) Services not covered by an MCO, PHP, or PCCM contract. If an
MCO, PHP, or PCCM contract does not cover all of the services under the
State plan, the State must make those services available from other
sources and provide to enrollees information on where and how to obtain
them, including how transportation is provided.
(d) Delivery network. The State must ensure that each MCO, and each
PHP consistent with the scope of PHP's contracted services, meets the
following requirements:
(1) Maintains and monitors a network of appropriate providers that
is supported by written agreements and is sufficient to provide
adequate access to all services covered under the contract. In
establishing and maintaining the network, each MCO and PHP must
consider the following:
(i) The anticipated Medicaid enrollment, with particular attention
to pregnant women, children, and persons with special health-care
needs.
(ii) The expected utilization of services, considering Medicaid
enrollee characteristics and health care needs.
(iii) The numbers and types (in terms of training, experience, and
specialization) of providers required to furnish the contracted
Medicaid services.
(iv) The numbers of network providers who are not accepting new
Medicaid patients.
(v) The geographic location of providers and Medicaid enrollees,
considering distance, travel time, the means of transportation
ordinarily used by Medicaid enrollees, and whether the location
provides physical access for Medicaid enrollees with disabilities.
(2) Provides female enrollees with direct access to a women's
health specialist within the network for covered care necessary to
provide women's routine and preventive health care services. This is in
addition to the enrollee's designated source of primary care if that
source is not a women's health specialist.
(3) Provides for a second opinion from a qualified health care
professional within the network, or arranges for the enrollee to obtain
one outside the network, at no cost to the enrollee, if an additional
qualified professional is not currently available within the network.
(4) When seeking an expansion of its service area, demonstrates
that it has sufficient numbers and types (in terms of training,
experience, and specialization) of providers to meet the anticipated
additional volume and types of services the added Medicaid enrollee
population may require.
(5) If the network is unable to provide necessary medical services,
covered under the contract, to a particular enrollee, the MCO or PHP
must adequately and timely cover these services out of network for the
enrollee, for as long as the MCO or PHP is unable to provide them.
(6) Demonstrates that its providers are credentialed as required by
Sec. 438.214.
(7) Ensures that its providers do not discriminate against Medicaid
enrollees.
(8) Requires out-of-network providers to coordinate with the MCO or
PHP with respect to payment and ensures that cost to the enrollee is no
greater than it would be if the services were furnished within the
network.
(e) Furnishing of services. The State must ensure that each MCO and
PHP complies with the requirements of this paragraph.
(1) Timely access. Each MCO and each PHP must --
(i) Meet and require its providers to meet State standards for
timely access to care and services, taking into account the urgency of
need for services;
(ii) Ensure that its network's provider hours of operation are
convenient for the enrollees, as determined by a State-established
methodology, and at least comparable to Medicaid fee-for-service.
(iii) Make services available 24 hours a day, 7 days a week, when
medically necessary.
(iv) Establish mechanisms to ensure compliance;
(v) Monitor continuously to determine compliance; and
(vi) Take corrective action if there is a failure to comply.
(2) Cultural considerations. Each MCO and each PHP ensures that
services are provided in a culturally competent manner to all
enrollees, including those with limited English proficiency and diverse
cultural and ethnic backgrounds.
Sec. 438.207 Assurances of adequate capacity and services.
(a) Basic rule. Each MCO and each PHP must give assurances to the
State that it has the capacity to serve the expected enrollment in its
service area in accordance with the State's standards for access to
care under this subpart.
(b) Nature of assurances. Each MCO and each PHP must submit
documentation to the State, in a format specified by the State and
acceptable to HCFA, to demonstrate that it complies with the following
requirements:
(1) Offers an appropriate range of services, including preventive
services, primary care services and specialty services that is adequate
for the anticipated number of enrollees for the service area.
(2) Maintains a network of providers that is sufficient in number,
mix, and geographic distribution to meet the needs of the anticipated
number of enrollees in the service area.
(3) Meets the availability of services requirements in
Sec. 438.206.
(4) Has in place policies and practices to deal with situations in
which there is--
(i) Unanticipated need for providers with particular types of
experience; or (ii) Unanticipated limitation of the availability of
such providers.
(c) Timing of documentation. Each MCO and each PHP must submit the
documentation described in paragraph (b) of this section at least once
a year, and specifically--
(1) At the time it enters into a contract with the State; and
(2) At any time there has been a significant change (as defined by
the State) in the MCO's or PHP's operations that would affect adequate
capacity and services, including--
[[Page 6415]]
(i) A significant change in the MCO's or PHP's services or
benefits;
(ii) An expansion or reduction of the MCO's or PHP's geographic
service area;
(iii) The enrollment of a new population in the MCO or PHP; and
(iv) A significant change in the MCO or PHP rates.
(d) State review and submission to HCFA. After the State reviews
the documentation submitted by the MCO or PHP, the State must certify
to HCFA that the MCO or PHP has complied with the State's requirements
for availability of services, as set forth in Sec. 438.206.
(e) HCFA's right to inspect documentation. The State must make
available to HCFA, upon request, all documentation collected by the
State from the MCO or PHP.
Sec. 438.208 Coordination and continuity of care.
(a) Basic requirement.--(1) General rule. Except as specified in
paragraphs (a)(2) and (a)(3) of this section, the State must ensure
that MCOs and PHPs comply with the requirements of this section.
(2) PHP exception. For PHPs, the State determines, based on the
scope of the entity's services, and on the way the State has organized
the delivery of managed care services, whether a particular PHP is
required--
(i) To perform the initial and ongoing screenings and assessments
specified in paragraphs (d) and (e) of this section; and
(ii) To meet the primary care requirement of paragraph (h)(1) of
this section.
(3) Exception for MCOs that serve dually eligible enrollees. (i)
For an MCO that serves enrollees who are also enrolled in a
Medicare+Choice plan and also receive Medicare benefits, the State
determines to what extent that MCO must meet the initial screening,
assessment, and treatment planning provisions of paragraphs (d), (e),
and (f) of this section.
(ii) The State bases its determination on the services it requires
the MCO to furnish to dually eligible enrollees.
(b) State responsibility to identify enrollees with special health
care needs. The State must implement mechanisms to identify to the MCO
and PHP, upon enrollment, the following groups:
(1) Enrollees at risk of having special health care needs,
including--
(i) Children and adults who are receiving SSI benefits;
(ii) Children in Title IV-E foster care;
(iii) Enrollees over the age of 65; and
(iv) Enrollees in relevant, State-established, risk-adjusted,
higher-cost payment categories.
(v) Any other category of recipients identified by HCFA.
(2) Children under the age of 2.
(3) Other enrollees known by the State to be pregnant or to have
special health care needs.
(c) Requirements for MCOs and PHPs. The State must ensure--
(1) That each MCO, and each PHP for which the State determines it
is appropriate in accordance with paragraphs (a)(2) and (a)(3) of this
section, meets the requirements of paragraphs (d), (e), and (h)(1) of
this section; and
(2) That each MCO and each PHP meets the requirements of paragraphs
(f), (g), and (h)(2) through (h)(6) of this section.
(d) Initial screening and assessment. Each MCO and each PHP must
make a best effort attempt to meet the following standards:
(1) For enrollees identified under paragraph (b)(1) of this
section,
(i) Performs enrollee screening within 30 days of receiving the
identification; and
(ii) For any enrollee the screening identifies as being pregnant or
having special health care needs, performs a comprehensive health
assessment as expeditiously as the enrollee's health requires, but no
later than 30 days from the date of identification.
(2) For enrollees identified under paragraphs (b)(2) and (b)(3) of
this section, or who identify themselves as being pregnant or having
special health care needs, performs a comprehensive health assessment
as expeditiously as the enrollee's health requires, but no later than
30 days from the date of identification.
(3) For all other enrollees--
(i) Performs screening within 90 days from the date of enrollment;
and
(ii) For any enrollee the screening identifies as being pregnant or
having special health care needs, performs the comprehensive health
assessment as expeditiously as the enrollee's health requires but no
later than 30 days from the date of identification.
(e) On-going screening and assessment. Each MCO and each PHP must
implement mechanisms to--
(1) Identify enrollees who develop special health care needs after
they enroll in the MCO or PHP; and
(2) Perform comprehensive health assessments as expeditiously as
the enrollee's health requires, but no later than 30 days from the date
of identification.
(f) Treatment plans. For pregnant women and for enrollees
determined to have special health care needs, each MCO and each PHP
implements a treatment plan that--
(1) Is appropriate to the conditions and needs identified and
assessed under paragraphs (d) and (e) of this section;
(2) Is for a specific period of time and is updated periodically;
(3) Specifies a standing referral or an adequate number of direct
access visits to specialists;
(4) Ensures adequate coordination of care among providers;
(5) Is developed with enrollee participation; and
(6) Ensures periodic reassessment of each enrollee as his or her
health condition requires.
(g) Use of health care professionals. Each MCO and each PHP uses
appropriate health care professionals to--
(1) Perform any comprehensive health assessments required by this
section; and
(2) Develop, implement, and update any treatment plans required by
this section.
(h) Primary care and coordination program. Each MCO and each PHP
must implement a coordination program that meets State requirements and
achieves the following:
(1) Ensures that each enrollee has an ongoing source of primary
care appropriate to his or her needs and a person or entity formally
designated as primarily responsible for coordinating the health care
services furnished to the enrollee.
(2) Coordinates the services the MCO or PHP furnishes to the
enrollee with the services the enrollee receives from any other MCOs
and PHPs;
(3) Shares with other MCOs and PHPs serving the enrollee the
results of its screenings and assessments of the enrollee so that those
activities need not be duplicated.
(4) Ensures that in the process of coordinating care, each
enrollee's privacy is protected consistent with the confidentiality
requirements in Sec. 438.224.
(5) Ensures that each provider maintains health records that meet
professional standards and that there is appropriate and confidential
sharing of information among providers.
(6) Has in effect procedures to address factors (such as a lack of
transportation) that may hinder enrollee adherence to prescribed
treatments or regimens.
(7) Ensures that its providers have the information necessary for
effective and continuous patient care and quality improvement,
consistent with the confidentiality and accuracy requirements of
Sec. 438.224 and the information system requirements of Sec. 438.242.
[[Page 6416]]
Sec. 438.210 Coverage and authorization of services.
(a) Coverage. Each contract with an MCO, PHP, or PCCM must
identify, define, and specify each service that the MCO, PHP, or PCCM
is required to offer, and each contract with an MCO or PHP must meet
the following requirements:
(1) Require that the MCO or PHP make available the services it is
required to offer at least in the amount, duration, and scope that--
(i) Are specified in the State plan; and
(ii) Are sufficient to reasonably be expected to achieve the
purpose for which the services are furnished.
(2) Provide that the MCO or PHP--
(i) May not arbitrarily deny or reduce the amount, duration, or
scope of a required service solely because of the diagnosis, type of
illness, or condition; and
(ii) May place appropriate limits on a service--
(A) On the basis of criteria such as medical necessity; or
(B) For the purpose of utilization control, provided the services
furnished can reasonably be expected to achieve their purpose, as
required in paragraph (a)(1)(ii) of this section.
(3) Specify what constitutes ``medically necessary services'' in a
manner that--
(i) Is no more restrictive than the State Medicaid program as
indicated in State statutes and regulations, the State Plan, and other
State policy and procedures; and
(ii) Addresses the extent to which the MCO or PHP is responsible
for covering services related to the following:
(A) The prevention, diagnosis, and treatment of health impairments.
(B) The ability to achieve age-appropriate growth and development.
(C) The ability to attain, maintain, or regain functional capacity.
(4) Provide that the MCO or PHP furnishes the services in
accordance with the specifications of paragraph (a)(3) of this section.
(b) Processing of requests. With respect to the processing of
requests for initial and continuing authorizations of services, each
contract must require--
(1) That the MCO or PHP and its subcontractors have in place, and
follow, written policies and procedures that reflect current standards
of medical practice;
(2) That the MCO or PHP--
(i) Not have information requirements that are unnecessary, or
unduly burdensome for the provider or the enrollee;
(ii) Have in effect mechanisms to ensure consistent application of
review criteria for authorization decisions; and
(iii) Consult with the requesting provider when appropriate.
(3) That any decision to deny a service authorization request or to
authorize a service in an amount, duration, or scope that is less than
requested, be made by a health care professional who has appropriate
clinical expertise in treating the enrollees's condition or disease.
(c) Notice of adverse action. Each contract must provide for the
MCO or PHP to notify the requesting provider, and give the enrollee
written notice of any decision by the MCO or PHP to deny a service
authorization request, or to authorize a service in an amount,
duration, or scope that is less than requested. The notice must meet
the requirements of Sec. 438.404, except that the notice to the
provider need not be in writing.
(d) Timeframe for standard authorization decisions. Each contract
must provide for the MCO or PHP to make a standard authorization
decision and provide notice--
(1) As expeditiously as the enrollee's health condition requires
and within State-established timeframes that may not exceed 14 calendar
days following receipt of the request for service, with a possible
extension of up to 14 additional calendar days, if--
(i) The enrollee, or the provider, requests extension; or
(ii) The MCO or the PHP justifies (to the State agency upon
request) a need for additional information and how the extension is in
the enrollee's interest.
(e) Timeframe for expedited authorization decisions. (1) For cases
in which a provider indicates, or the MCO or PHP determines, that
following the standard timeframe could seriously jeopardize the
enrollee's life or health or ability to attain, maintain, or regain
maximum function, each contract must provide for the MCO or PHP to make
an expedited authorization decision and provide notice as expeditiously
as the enrollee's health condition requires and no later than 72 hours
after receipt of the request for service.
(2) The MCO or PHP may extend the 72-hour time period by up to 14
calendar days if the enrollee requests extension.
(f) Compensation for utilization management activities. Each
contract must provide that, consistent with Sec. 438.6(g), and
Sec. 422.208 of this chapter, compensation to individuals or entities
that conduct utilization management activities is not structured so as
to provide incentives for the individual or entity to deny, limit, or
discontinue medically necessary services to any enrollee.
Structure and Operation Standards
Sec. 438.214 Provider selection.
(a) General rules. The State must ensure that each contracted MCO
and PHP implements written policies and procedures for selection and
retention of providers and that those policies and procedures include,
at a minimum, the requirements of this section.
(b) Credentialing and recredentialing requirements. Each MCO and
each PHP must follow a documented credentialing process for providers
who have signed contracts or participation agreements with the MCO or
the PHP.
(1) Physicians and other licensed independent providers. The
process for physicians, including members of physician groups, and
other licensed independent providers, includes--
(i) Initial credentialing when a physician or other provider enters
the MCO or PHP network or a physician enters a physician group; and
(ii) Recredentialing within timeframes set by the State, which may
be no less than the State requires for private MCOs.
(2) Other providers. The process for other providers must include
an initial determination, and redetermination at specified intervals.
The redetermination cycles must be the same as Federal or State
credentialing cycles. The purpose is to ensure that, at a minimum, the
provider--
(i) Is licensed (if required by the State); and
(ii) Has met any other applicable Federal or State requirements.
(3) Exception. The requirements of paragraphs (b)(1) and (b)(2) of
this section do not apply to either of the following:
(i) Providers who are permitted to furnish services only under the
direct supervision of a physician or other provider.
(ii) Hospital-based providers (such as emergency room physicians,
anesthesiologists, or certified nurse anesthetists) who provide
services only incident to hospital services. This exception does not
apply if the provider contracts independently with the MCO or PHP or is
promoted by the MCO or PHP as part of the provider network.
(4) Initial credentialing. Initial credentialing--
(i) Requires a written, dated and signed application that is
updated in writing at recredentialing;
(ii) Requires that applications, updates, and supporting
information submitted by the applicant include an attestation of the
correctness and completeness of the information; and
[[Page 6417]]
(iii) Is based on primary source verification of licensure,
disciplinary status, and a site visit as appropriate.
(5) Recredentialing. Recredentialing includes updating of
information obtained during initial credentialing and an assessment of
provider performance indicators obtained through the following:
(i) Quality Assessment and Performance Improvement Programs.
(ii) The utilization management system.
(iii) The grievance system.
(iv) Enrollee satisfaction surveys.
(v) Other MCO or PHP activities specified by the State.
(c) Nondiscrimination. MCO and PHP provider selection policies and
procedures, consistent with Sec. 438.12, do not discriminate against
particular providers that serve high risk populations or specialize in
conditions that require costly treatment.
(d) Excluded providers. MCOs or PHPs may not employ or contract
with providers excluded from participation in Federal health care
programs under either section 1128 or section 1128A of the Act.
(e) State requirements. Each MCO and PHP must comply with any
additional requirements established by the State.
Sec. 438.218 Enrollee information.
The requirements that States must meet under Sec. 438.10 constitute
part of the State's quality strategy at Sec. 438.204.
Sec. 438.224 Confidentiality and accuracy of enrollee records.
The State must ensure that (consistent with subpart F of part 431
of this chapter), for medical records and any other health and
enrollment information that identifies a particular enrollee, each MCO
and PHP establishes and implements procedures to do the following:
(a) Maintain the records and information in a timely and accurate
manner.
(b) Abide by all Federal and State laws regarding confidentiality
and disclosure.
(c) Specify--
(1) For what purposes the MCO or PHP uses the information; and
(2) To which entities outside the MCO or PHP, and for what
purposes, it discloses the information.
(d) Except as provided in applicable Federal and State law, ensure
that each enrollee may request and receive a copy of records and
information pertaining to him or her and request that they be amended
or corrected.
(e) Ensure that each enrollee may request and receive information
on how the MCO or PHP uses and discloses information that identifies
the enrollee.
Sec. 438.226 Enrollment and disenrollment.
The State must ensure that each MCO and PHP complies with the
enrollment and disenrollment requirements and limitations set forth in
Sec. 438.56.
Sec. 438.228 Grievance systems.
(a) The State must ensure that each MCO and PHP has in effect a
grievance system that meets the requirements of subpart F of this part.
(b) If the State delegates to the MCO or PHP responsibility for
notice of action under subpart E of part 431 of this chapter, the State
must conduct random reviews of each delegated MCO or PHP and its
providers and subcontractors to ensure that they are notifying
enrollees in a timely manner.
(c) The State must establish a process to review, upon request by
the enrollee, any quality of care grievance that the MCO or the PHP
does not resolve to the enrollee's satisfaction.
Sec. 438.230 Subcontractual relationships and delegation.
(a) General rule. The State must ensure that each MCO and PHP--
(1) Oversees and is accountable for any functions and
responsibilities that it delegates to any subcontractor; and
(2) Meets the conditions of paragraph (b) of this section.
(b) Specific conditions. (1) Before any delegation, each MCO and
PHP evaluates the prospective subcontractor's ability to perform the
activities to be delegated.
(2) There is a written agreement that--
(i) Specifies the activities and report responsibilities delegated
to the subcontractor; and
(ii) Provides for revoking delegation or imposing other sanctions
if the subcontractor's performance is inadequate.
(3) The MCO or PHP monitors the subcontractor's performance on an
ongoing basis and subjects it to formal review according to a periodic
schedule established by the State, consistent with industry standards
or State MCO laws and regulations.
(4) If any MCO or PHP identifies deficiencies or areas for
improvement, the MCO and the subcontractor take corrective action.
(5) Consistent with Secs. 438.604 and 438.606, each MCO and PHP
requires from subcontractors certifications with respect to--
(i) Submissions that may be related to State payments; and
(ii) The performance of their duties under the contract.
Measurement and Improvement Standards
Sec. 438.236 Practice guidelines.
(a) Basic rule. The State must ensure that each MCO and PHP meets
the requirements of this section.
(b) Adoption of practice guidelines. Each MCO and PHP adopts
practice guidelines (for example, The Guidelines for the Use of
Antiretroviral Agents in HIV-Infected Adults and Adolescents and the
Guidelines for the Use of Antiretroviral Agents in Pediatric HIV
Infection) that meet the following requirements:
(1) Are based on valid and reliable clinical evidence or a
consensus of health care professionals in the particular field;
(2) Consider the needs of the MCO's or PHP's enrollees;
(3) Are adopted in consultation with contracting health care
professionals; and
(4) Are reviewed and updated periodically as appropriate.
(c) Dissemination of guidelines. Each MCO and PHP disseminates the
guidelines to all affected providers and, upon request, to enrollees
and potential enrollees.
(d) Application of guidelines. Decisions with respect to
utilization management, enrollee education, coverage of services, and
other areas to which the guidelines apply are consistent with the
guidelines.
Sec. 438.240 Quality assessment and performance improvement program.
(a) General rules. (1) The State must require, through its
contracts, that each MCO and PHP have an ongoing quality assessment and
performance improvement program for the services it furnishes to its
enrollees.
(2) Paragraphs (b) through (d) of this section set forth the basic
elements, minimum performance levels, and performance improvement
projects required for MCOs and PHPs.
(3) HCFA may specify standardized quality measures, and topics for
performance improvement projects to be required by States in their
contracts with MCOs and PHPs.
(b) Basic elements of MCO and PHP quality assessment and
performance improvement programs. At a minimum, the State must require
that each MCO and PHP comply with the following requirements:
(1) Achieve required minimum performance levels on standardized
quality measures, in accordance with paragraph (c) of this section;
(2) Conduct performance improvement projects as described in
[[Page 6418]]
paragraph (d) of this section. These projects must achieve, through
ongoing measurements and intervention, demonstrable and sustained
improvement in significant aspects of clinical care and non-clinical
care areas that can be expected to have a favorable effect on health
outcomes and enrollee satisfaction; and
(3) Have in effect mechanisms to detect both underutilization and
overutilization of services.
(4) Have in effect mechanisms to assess the quality and
appropriateness of care furnished to enrollees with special health care
needs.
(c) Minimum performance levels. (1) Each MCO and PHP must meet the
following requirements:
(i) Annually measure its performance, using standard measures
required by the State, consistent with the requirements of
Sec. 438.204(c), and report its performance to the State.
(ii) Achieve all minimum performance levels that the State
establishes with respect to the standard measures.
(2) The State--
(i) May specify the standard measures in uniform data collection
and reporting instruments; and
(ii) Must, in establishing minimum performance levels for the MCOs
and PHPs--
(A) Include any minimum performance measures and levels specified
by HCFA;
(B) Consider data and trends for both the MCOs and PHPs and fee-
for-service Medicaid in that State; and
(C) Establish the minimum performance levels prospectively, each
time a contract is initiated or renewed.
(d) Performance improvement projects. (1) Performance improvement
projects are MCO and PHP initiatives that focus on clinical and non-
clinical areas, and that involve the following:
(i) Measurement of performance using objective quality indicators.
(ii) Implementation of system interventions to achieve improvement
in quality.
(iii) Evaluation of the effectiveness of the interventions.
(iv) Planning and initiation of activities for increasing or
sustaining improvement.
(2) Each project must represent the entire Medicaid enrollee
population to which the measurement specified in paragraph (d)(1)(i) of
this section is relevant.
(3) The State must ensure that each MCO and PHP initiates each year
one or more projects among the required clinical and non-clinical areas
specified in paragraphs (d)(4) and (d)(5) of this section. To ensure
that the projects are representative of the entire spectrum of clinical
and non-clinical areas associated with MCOs and PHPs, the State must
specify the appropriate distribution of projects.
(4) Clinical areas include--
(i) Prevention and care of acute and chronic conditions;
(ii) High-volume services;
(iii) High-risk services; and
(iv) Continuity and coordination of care.
(5) Non-clinical areas include--
(i) Grievances and appeals;
(ii) Access to, and availability of, services; and
(iii) Cultural competence.
(6) In addition to requiring each MCO and PHP to initiate its own
performance improvement projects, the State may require that an MCO or
PHP--
(i) Conduct particular performance improvement projects on a topic
specified by the State; and
(ii) Participate annually in at least one Statewide performance
improvement project.
(7) For each project, each MCO and PHP must assess its performance
using quality indicators that are--
(i) Objective, clearly and unambiguously defined, and based on
current clinical knowledge or health services research; and
(ii) Capable of measuring outcomes such as changes in health
status, functional status, and enrollee satisfaction, or valid proxies
of these outcomes.
(8) Performance assessment on the selected indicators must be based
on systematic ongoing collection and analysis of valid and reliable
data.
(9) Each MCO's and PHP's interventions must achieve improvement
that is significant and sustained over time.
(10) Each MCO and PHP must report the status and results of each
project to the State as requested.
(e) Program review by the State. (1) The State must review, at
least annually, the impact and effectiveness of each MCO's and PHP's
quality assessment and performance improvement program. The review must
include--
(i) The Each MCO's and PHP's performance on the standard measures
on which it is required to report; and
(ii) The results of the each MCO's and PHP's performance
improvement projects.
(2) The State may require that an MCO or PHP have in effect a
process for its own evaluation of the impact and effectiveness of its
quality assessment and performance improvement program.
Sec. 438.242 Health information systems.
(a) General rule. The State must ensure that each MCO and PHP
maintains a health information system that collects, analyzes,
integrates, and reports data and can achieve the objectives of this
subpart. The system should provide information on areas including, but
not limited to, utilization, grievances, and disenrollments for other
than loss of Medicaid eligibility.
(b) Basic elements of a health information system. The State must
require, at a minimum, that each MCO and PHP comply with the following:
(1) Collect data on enrollee and provider characteristics as
specified by the State, and on services furnished to enrollees through
an encounter data system or such other methods as may be specified by
the State.
(2) Ensure that data received from providers is accurate and
complete by--
(i) Verifying the accuracy and timeliness of reported data;
(ii) Screening the data for completeness, logic, and consistency;
and
(iii) Collecting service information in standardized formats to the
extent feasible and appropriate.
(3) Make all collected data available to the State and upon request
to HCFA, as required in this subpart.
Subpart E [Reserved]
Subpart F--Grievance System
Sec. 438.400 Statutory basis and definitions.
(a) Statutory basis. This subpart is based on sections 1902(a)(3),
1902(a)(4), and 1932(b)(4)of the Act.
(1) Section 1902(a)(3) requires that a State plan provide an
opportunity for a fair hearing to any person whose claim for assistance
is denied or not acted upon promptly.
(2) Section 1902(a)(4) requires that the State plan provide for
methods of administration that the Secretary finds necessary for the
proper and efficient operation of the plan.
(3) Section 1932(b)(4) requires Medicaid managed care organizations
to establish internal grievance procedures under which Medicaid
enrollees, or providers acting on their behalf, may challenge the
denial of coverage of, or payment for, medical assistance.
(b) Definitions. As used in this subpart, the following terms have
the indicated meanings:
Action means--
(1) In the case of an MCO or PHP or any of its providers--
(i) The denial or limited authorization of a requested service,
including the type or level of service;
[[Page 6419]]
(ii) The reduction, suspension, or termination of a previously
authorized service;
(iii) The denial, in whole or in part, of payment for a service;
(iv) For a resident of a rural area with only one MCO or PHP, the
denial of a Medicaid enrollee's request to exercise his or her right to
obtain services outside the network; or
(v) The failure to furnish or arrange for a service or provide
payment for a service in a timely manner.
(vi) The failure, of an MCO or PHP, to resolve an appeal within the
timeframes provided in Sec. 408(i)(2).
(2) In the case of a State agency, the denial of a Medicaid
enrollee's request for disenrollment. An appeal of this type is to the
State Fair Hearing Office.
Appeal means a request for review of an action, as ``action'' is
defined in this section.
Governing body means the MCO's or PHP's Board of Directors, or a
designated committee of its senior management.
Grievance means an expression of dissatisfaction about any matter
other than an action, as ``action'' is defined in this section. The
term is also used to refer to the overall system that includes
grievances and appeals handled at the MCO or PHP level and access to
the State Fair Hearing process. (Possible subjects for grievances
include, but are not limited to, the quality of care or services
provided, and aspects of interpersonal relationships such as rudeness
of a provider or employee, or failure to respect the enrollee's
rights.)
Quality of care grievance means a grievance filed because the
enrollee believes that any aspect of the care or treatment that he or
she received failed to meet accepted standards of health care and
caused or could have caused harm to the enrollee.
Sec. 438.402 General requirements.
(a) The grievance system. Each MCO and PHP must have a system that
includes a grievance process, an appeal process, and access to the
State's fair hearing system.
(b) General requirements for the grievance system. The MCO or PHP
must--
(1) Base its grievance and appeal processes on written policies and
procedures that, at a minimum, meet the conditions set forth in this
subpart;
(2) Obtain the State's written approval of the policies and
procedures before implementing them;
(3) Provide for its governing body to approve and be responsible
for the effective operation of the system;
(4) Provide for its governing body to review and dispose of
grievances and resolve appeals, or make written delegation of this
responsibility to a grievance committee;
(5) Ensure that punitive action is neither threatened nor taken
against a provider who requests an expedited resolution, or supports an
enrollee's grievance or appeal;
(6) Accept grievances and appeals, and requests for expedited
disposition or resolution or extension of timeframes from the enrollee,
from his or her representative, or from the provider acting on the
enrollee's behalf and with the enrollee's written consent.
(7) Provide to the enrollee and to his or her representative the
notices and information required under this subpart; and
(8) At the enrollee's request, refer for State review any quality
of care grievance resolution with which the enrollee is dissatisfied.
(9) Require providers to give notice in accordance with
Sec. 438.404(d).
(c) Filing requirements.--(1) Authority to file. (i) An enrollee
may file a grievance and an MCO or PHP level appeal, and may request a
State fair hearing.
(ii) A provider, acting on behalf of the enrollee and with the
enrollee's written consent, may file an appeal. A provider may not file
a grievance or request a State fair hearing.
(2) Timing. (i) For an action as defined in Sec. 438.400 (b)(1)(v),
the enrollee or the provider may file an appeal whenever the entity has
delayed access to the service to the point where there is a substantial
risk that further delay will adversely affect the enrollee's health
condition.
(ii) For all other actions, the State specifies a reasonable
timeframe that may be no less than 20 days and not to exceed 90 days
from the date on the MCO's or PHP's notice of action.
Within that timeframe--
(A) The enrollee or the provider may file an appeal; and
(B) In a State that does not require exhaustion of MCO and PHP
level appeals, the enrollee may request a State fair hearing.
(3) Procedures. (i) The enrollee may file a grievance either orally
or in writing and, as determined by the State, either with the State or
with the MCO or the PHP.
(ii) The enrollee or the provider may file an appeal either orally
or in writing, and unless he or she requests expedited resolution, must
follow an oral filing with a written, signed, appeal.
Sec. 438.404 Notice of action.
(a) Language and format requirements. The notice must be in writing
and must meet the language and format requirements of Sec. 438.10(b)
and (c) of this chapter to ensure ease of understanding.
(b) Content of notice. The notice must explain the following:
(1) The action the MCO or PHP or its contractor has taken or
intends to take.
(2) The reasons for the action.
(3) Any laws and rules that require or permit the action.
(4) The enrollee's or the provider's right to file an MCO or PHP
appeal.
(5) The enrollee's right to request a State fair hearing.
(6) The enrollee's right to present evidence in person if he or she
chooses.
(7) The procedures for exercising the rights specified in this
paragraph.
(8) The circumstances under which expedited resolution is available
and how to request it.
(9) The enrollees right to have benefits continue pending
resolution of the appeal or issuance of a fair hearing decision, if the
enrollee or the provider timely files the appeal or the enrollee timely
requests a State fair hearing.
(10) The circumstances under which the enrollee may be required to
pay the costs of any services furnished while the appeal is pending if
the final outcome is an adverse decision.
(11) How the enrollee may request continuation of benefits.
(12) How to contact the MCO or PHP to receive assistance in filing
an appeal or requesting a State fair hearing.
(13) How to obtain copies of enrollee records, including records
other than medical records.
(14) That the enrollee has the right to represent himself or
herself, to use legal counsel, or to use a relative, or friend or other
individual as spokesperson.
(15) That filing an appeal or requesting a State fair hearing will
not negatively affect or impact the way the MCO and the PHP and their
providers, or the State agency, treat the enrollee.
(c) Timing of notice. Except as provided in paragraph (d) of this
section, the MCO or PHP must mail the notice within the following
timeframes:
(1) For termination, suspension, or reduction of previously
authorized Medicaid-covered services, within the timeframes specified
in Secs. 431.211, 431.213, and 431.214 of this chapter.
(2) For denial of payment, at the time of any action affecting the
claim.
(3) For standard service authorization decisions that deny or limit
services, within the timeframe specified in Sec. 438.210(d)
(4) If the MCO or PHP extends the timeframe in accordance with
Sec. 438.210(d), it must--
(i) Give the enrollee written notice of the reason for the decision
to extend the
[[Page 6420]]
timeframe and inform the enrollee of the right to file a grievance if
he or she disagrees with that decision; and
(ii) Issue and carry out its determination as expeditiously as the
enrollee's health condition requires and no later than the date the
extension expires.
(5) For service authorization decisions not reached within the
timeframes specified in Sec. 438.210(d) (which constitutes a denial and
is thus an adverse action), on the date that the timeframes expire.
(6) For expedited service authorization decisions, within the
timeframes specified in Sec. 438.210(e).
(d) Special rule for subcontractors and providers who are not
employees. (1) An MCO or PHP may permit its subcontractors and
providers who are not employees to give enrollees notice that includes
only the information specified in paragraphs (b)(4) through (b)(15) of
this section.
(2) If the MCO or PHP elects the option provided in paragraph
(d)(1) of this section, and receives an appeal on any action by the
subcontractor or provider who is not an employee, the MCO or PHP must,
in acknowledging the appeal, include the information required under
paragraphs (b)(1) through (b)(3) of this section.
Sec. 438.406 Handling of grievances and appeals.
(a) General requirements. In handling grievances and appeals, each
MCO and each PHP must meet the following requirements:
(1) Have an adequately staffed office that is designated as the
central point for enrollee issues, including grievances and appeals.
(2) Establish an appeals process that meets the requirements of
paragraph (b) of this section.
(3) Give enrollees any reasonable assistance in completing forms
and taking other procedural steps. This includes providing interpreter
services and toll-free numbers that have adequate TTY/TTD and
interpreter capability.
(4) Ensure that the enrollee's communication is correctly
classified as a ``grievance'' or an ``appeal'.
(5) Acknowledge receipt of each grievance and appeal.
(6) Ensure that each grievance and appeal--
(i) Is transmitted timely to staff who have authority to act upon
it; and
(ii) Is investigated and disposed of or resolved in accordance with
Sec. 438.408.
(7) Ensure that the individuals who make decisions on grievances
and appeals are individuals--
(i) Who were not involved in any previous level of review or
decision-making; and
(ii) Who, if deciding any of the following, are health care
professionals who have the appropriate clinical expertise in treating
the enrollee's condition or disease.
(A) An appeal of a denial that is based on lack of medical
necessity.
(B) A grievance regarding denial of expedited resolution of an
appeal.
(C) A grievance or appeal that involves clinical issues.
(b) Special requirements for appeals. The process for appeals must
consist of clearly explained steps that meet the following
requirements:
(1) Include, for each step, timeframes that take account of the
enrollee's health condition and provide for expedited resolution in
accordance with Sec. 438.410.
(2) Provide that oral inquiries about the opportunity to appeal are
treated as appeals (to establish the earliest possible filing date for
the appeal) and must be confirmed in writing, unless the enrollee or
the provider requests expedited resolution.
(3) Ensure that the acknowledgment of an oral appeal specifies
that, although the time allowed for the MCO or PHP to resolve the
appeal has begun, unless the request is for expedited resolution, the
MCO or PHP cannot complete the resolution until the enrollee or the
provider submits the appeal in writing.
(4) Provide the enrollee a reasonable opportunity to present
evidence, and allegations of fact or law, in person as well as in
writing. (The MCO or PHP must inform the enrollee of the limited time
available for this in the case of expedited resolution.)
(5) Provide the enrollee and his or her representative opportunity,
before and during the appeals process, to examine the enrollee's case
file, including medical records, and any other documents and records
considered during the appeals process.
(6) Include, as parties to the appeal--
(i) The enrollee and his or her representative; or
(ii) The legal representative of a deceased enrollee's estate.
Sec. 438.408 Resolution and notification: Grievances and appeals.
(a) Basic rule. The MCO or PHP must dispose of each grievance and
resolve each appeal, and provide notice, as expeditiously as the
enrollee's health condition requires, within State-established
timeframes that may not exceed the timeframes specified in this
section.
(b) Basis for decision. The MCO or PHP must base the decision on
the record of the case, including all relevant Federal and State
statutes, program regulations and policies, and any evidence presented
under Sec. 438.406(b)(4), in connection with the filing of the appeal.
(c) Specific timeframes.--(1) Standard disposition of grievances.
For standard disposition of a grievance and notice to the affected
parties, the timeframe is established by the State but may not exceed
90 days from the day the MCO or PHP receives the grievance.
(2) Expedited disposition of grievances. For a grievance on a
denial of a request to expedite resolution of an appeal, the timeframe
is 72 hours after receipt of the grievance.
(3) Standard resolution of appeals. For standard resolution of an
appeal and notice to the affected parties, the timeframe is 30 days
after the MCO or the PHP receives the appeal. This timeframe may be
extended under paragraph (d) of this section.
(4) Expedited resolution of appeals. For expedited resolution of an
appeal, the timeframe for resolution and notice to the enrollee is 72
hours after the MCO or PHP receives the appeal. This timeframe may be
extended under paragraph (d) of this section.
(d) Extension of timeframes.--(1) Limits on extension. (i) For a
grievance on denial of a request to expedite resolution of an appeal,
the timeframe may not be extended.
(ii) For expedited resolution of an appeal, the MCO or PHP may
extend the 72-hour timeframe by up to 14 calendar days only if the
enrollee requests extension.
(iii) For standard resolution of an appeal or for a quality of care
grievance, the MCO or PHP may extend the 30-day timeframe for up to 14
calendar days if--
(A) The enrollee requests extension; or
(B) The MCO or PHP shows (to the satisfaction of the State agency,
upon its request) that there is need for additional information and how
the delay is in the enrollee's interest.
(2) Requirements following extension. If the MCO or PHP extends the
timeframes, it must--
(i) For any extension not requested by the enrollee, give the
enrollee written notice of the reason for the delay and of the
enrollee's right to file a grievance if he or she disagrees with the
decision to extend the timeframe; and
(ii) For any extension, dispose of the grievance or resolve the
appeal no later than the date on which the extension expires.
(e) Format of notice--(1) Grievances. (i) For all written
grievances and all
[[Page 6421]]
grievances that relate to quality of care, the MCO or PHP must provide
a written notice of disposition.
(ii) For an oral grievance that does not relate to quality of care,
the MCO may provide oral notice unless the enrollee requests that it be
written.
(2) Appeals. (i) For all appeals, the MCO or PHP must provide
written notice of disposition.
(ii) For notice of expedited resolution, the MCO or PHP must also
provide oral notice.
(f) Content of notice of MCO or PHP grievance disposition. The
written notice must explain the following:
(i) The disposition of the grievance.
(ii) The fact that, if dissatisfied with the disposition of a
quality of care grievance, the enrollee has the right to seek further
State review, and how to request it.
(g) Content of notice of appeal resolution. The written notice of
the resolution must include the following:
(1) The title of the MCO or PHP contact for the appeal.
(2) The results of the resolution process and the date it was
completed.
(3) A summary of the steps the MCO or the PHP has taken on the
enrollee's behalf in resolving the issue.
(4) For appeals not resolved wholly in favor of the enrollees--
(i) The right to request a State Fair Hearing, and how to do so;
(ii) The right to request to receive benefits while the hearing is
pending, and how to make the request; and
(iii) That the enrollee may be held liable for the cost of those
benefits if the hearing decision upholds the MCO's or PHP's action.
(h) Collaboration on State review of grievances. The MCO or PHP
must work with the State to dispose of the grievance if the State
considers that the MCO or PHP response was insufficient.
(i) Referral of adverse or delayed appeal decisions to the State
Fair Hearing Office--(1) Basis for submission. The MCO or PHP must
submit to the State Fair Hearing Office the file and all supporting
documentation--
(i) For any appeal that was subject to expedited resolution and for
which the MCO or PHP--
(A) Reaches a decision that is wholly or partially adverse to the
enrollee; or
(B) Fails to reach a decision within the timeframes specified in
paragraph (i)(2) of this section.
(ii) For any appeal that was not expedited, at the request of the
State.
(2) Timeframes for decision--(i) Standard resolution. For a
standard resolution, the basic timeframe is 30 days from receipt of the
appeal, and may be extended for an additional 14 calendar days if the
enrollee requests extension or the MCO or PHP justifies (to the State
agency upon request) a need for additional information and how the
extension is in the enrollee's interest.
(ii) Expedited resolution. For an expedited resolution, the basic
timeframe is 72 hours from receipt of the appeal and may be extended
for up to 14 calendar days, but only if the enrollee requests
extension.
(3) Timeframes for submission. The timeframes for submission to the
State Fair Hearing Office are as follows:
(i) For a standard resolution: 72 hours after the MCO or PHP
receives the State's request.
(ii) For an expedited resolution: 24 hours after the MCO or PHP
reaches an adverse decision, or the basic or extended timeframe for
decision expires.
(j) Requirements for State fair hearings--(1) Availability. The
State must permit the enrollee to request a State fair hearing within a
reasonable time period specified by the State, but not less than 20 or
in excess of 90 days if--
(i) The State requires exhaustion of the MCO or PHP level appeal
procedures, from the date of the MCO's or PHP's notice of resolution;
and
(ii) The State does not require exhaustion of the MCO or PHP level
appeal procedures and the enrollee appeals directly to the State for a
fair hearing, from the date on the MCO's or PHP's notice of action.
(2) Parties. The parties to the State fair hearing include the MCO
or PHP as well as the enrollee and his or her representative or the
representative of a deceased enrollee's estate.
(3) Timeframes for decision. The State agency must take final
administrative action as follows:
(i) Other than as specified in paragraph (j)(3)(ii) of this
section, within a period of time not to exceed 90 days minus the number
of days taken by the MCO or PHP to resolve the internal appeal. This
timeframe begins on the date the State receives the beneficiaries'
request for a State Fair Hearing.
(ii) For service authorization appeals that meet the criteria for
expedited resolution as set forth in Sec. 438.410, as expeditiously as
the enrollee's health condition requires, but no later than 72 hours
after receipt of a fair hearing request from the enrollee, or the file
from the MCO or PHP.
Sec. 438.410 Expedited resolution of grievances and appeals.
(a) General rule. Each MCO and PHP must establish and maintain an
expedited review process for grievances and appeals.
(b) Requirements for grievances. (1) The MCO or PHP must expedite
disposition of grievances that pertain to denial of a request for
expedited resolution of an appeal.
(2) The MCO or PHP may expedite disposition of other grievances,
consistent with State guidelines.
(c) Requirements for appeals. Each MCO and PHP must meet the
following requirements with respect to appeals:
(1) Establish a convenient and efficient means for an enrollee or a
provider to request expedited resolution of an appeal;
(2) Provide expedited resolution of an appeal in response to an
oral or written request if the MCO or PHP determines (with respect to a
request from the enrollee) or the provider indicates (in making the
request on the enrollee's behalf or supporting the enrollee's request)
that taking the time for a standard resolution could seriously
jeopardize the enrollee's life or health or ability to attain,
maintain, or regain maximum function.
(3) Document all oral requests in writing; and
(4) Maintain the documentation in the case file.
(d) Action following denial of a request for expedited resolution.
If the MCO or PHP denies a request for expedited resolution of an
appeal, it must--
(1) Transfer the appeal to the timeframe for standard resolution,
beginning the 30-day period as of the day it received the request for
expedited resolution;
(2) Give the enrollee prompt oral notice of the denial, and follow
up within two calendar days with a written notice that includes the
following:
(i) Informs the enrollee of the right to--
(A) File a grievance if he or she is dissatisfied with the MCO's or
PHP's decision not to expedite resolution of the appeal; or
(B) Resubmit the request with a provider's letter of support.
(ii) Explains that--
(A) If the enrollee files a grievance, the MCO or PHP will process
the appeal using the 30-day timeframe for standard resolution; and
(B) If the enrollee resubmits the request with a provider's letter
of support, the MCO or PHP will expedite resolution of the appeal.
(iii) Provides instructions about grievance procedures, including
timeframes.
[[Page 6422]]
Sec. 438.414 Information about the grievance system.
(a) To whom information must be furnished. (1) Each MCO and PHP
must provide the information specified in paragraph (b) of this section
to enrollees and to all providers and subcontractors at the time they
enter into a contract.
(2) Each MCO or PHP or, at State option, the State or its
contracted representative must provide the information specified in
paragraph (b) to all potential enrollees.
(b) Required information. The information that is provided under
paragraph (a) of this section must explain the grievance system through
a State-developed or State-approved description, in the format required
under Sec. 438.10(c), and must include the following:
(1) With respect to State fair hearing--
(i) The right to hearing;
(ii) The method for obtaining a hearing; and
(iii) The rules that govern representation at the hearing.
(2) The right to file grievances and appeals.
(3) The requirements and timeframes for filing a grievance or
appeal.
(4) The availability of assistance in the filing process.
(5) The right to represent himself or herself or to be represented
by legal counsel or a relative or friend or other spokesperson.
(6) The toll-free numbers that the enrollee can use to file a
grievance or an appeal by phone.
(7) The fact that filing a grievance or appeal or requesting a
State fair hearing will not adversely affect or impact the way the MCO
or the PHP and their providers or the State agency treat the enrollee.
(8) The fact that, when requested by the enrollee
(i) Benefits will continue if the enrollee files an appeal or a
request for State fair hearing within the timeframes specified for
filing; and
(ii) The enrollee may be required to pay the cost of services
furnished while the appeal is pending, if the final decision is adverse
to the enrollee.
(c) Language, format, and timing requirements. The information
furnished under this section must meet the language and format
requirements of Sec. 438.10(b) and (c), and must be furnished to
enrollees and potential enrollees at the times specified in
Sec. 438.10(e) through (h).
(d) Aggregate information. Upon request, the MCO or PHP must
provide to enrollees, potential enrollees, and the general public,
aggregate information based on the information required under
Sec. 438.416(d).
Sec. 438.416 Record keeping and reporting requirements.
Each MCO and PHP must comply with the following requirements, and
in so doing must also comply with the confidentiality requirements of
Sec. 438.224.
(a) Log. Maintain a log of all grievances and appeals, showing the
date of acknowledgment, the MCO's or PHP's decision, and the date of
disposition or resolution.
(b) Tracking. Track each grievance and appeal until its final
disposition or resolution, and classify them in terms of whether the
disposition or resolution was standard or expedited.
(c) Retention of records. (1) Retain the record of each grievance
and appeal, and its disposition or resolution in a central location,
and accessible to the State, for at least 3 years.
(2) If any litigation, claim negotiation, audit, or other activity
involving these records is initiated before the end of the 3-year
period, retain the record until the later of the following:
(i) The date the activity is completed and any issues arising from
it are resolved.
(ii) The end of the 3-year period.
(d) Reporting. As often as the State requests, but at least once a
year, each MCO and PHP must analyze the records maintained under this
paragraph and submit to the State a summary that includes the following
information:
(1) The number and nature of all grievances and appeals.
(2) The timeframes within which they were acknowledged and disposed
of or resolved.
(3) The nature of the decisions.
Sec. 438.420 Continuation of benefits while the MCO or PHP appeal and
the State Fair Hearing are pending.
(a) Terminology. As used in this section, ``timely'' filing means
filing on or before the later of the following:
(1) The expiration of the timeframe specified by the State (in
accordance with Sec. 438.404(c)(3)) and communicated in the notice of
action.
(2) The intended effective date of the MCO's or PHP's proposed
action.
(b) Continuation of benefits. The MCO or PHP must continue the
enrollee's benefits if--
(1) The enrollee or the provider files the appeal timely;
(2) The appeal involves the termination, suspension, or reduction
of a previously authorized course of treatment;
(3) The services were ordered by an authorized provider;
(4) The period covered by the authorization has not expired; and
(5) The enrollee requests extension of benefits.
(c) Reinstatement of benefits. The MCO or PHP must reinstate the
enrollee's benefits under any of the circumstances specified in
Sec. 431.231 of this chapter.
(d) Duration of continued or reinstated benefits. If the MCO or PHP
continues or reinstates the enrollee's benefits while the appeal is
pending, the following rules apply:
(1) The MCO or PHP must continue the benefits until one of the
following occurs:
(i) The enrollee withdraws the appeal.
(ii) The MCO or PHP resolves the appeal in the enrollee's favor.
(iii) The State Fair Hearing Office issues a hearing decision on a
request received directly from the enrollee or referred by the MCO or
PHP.
(2) If the MCO or PHP appeals the decision or the State fair
hearing decision is favorable to the enrollee, the MCO or PHP must
restore regular benefits.
(e) Enrollee responsibility for services furnished while the appeal
is pending. If the final resolution of the appeal is adverse to the
enrollee, that is, upholds the MCO's or PHP's action, the MCO or PHP
may recover the cost of the services furnished to the enrollee while
the appeal is pending, to the extent that they were furnished solely
because of the requirements of this section, and in accordance with the
policy set forth in Sec. 431.230(b) of this chapter.
Sec. 438.424 Effectuation of reversed appeal resolutions.
(a) Services not furnished while the appeal is pending. If the MCO
or PHP, or the State fair hearing officer reverses a decision to deny,
limit, or delay services that were not furnished while the appeal was
pending, the MCO or PHP must authorize or provide the disputed services
promptly, and as expeditiously as the enrollee's health condition
requires.
(b) Services furnished while the appeal is pending. If the MCO or
PHP, or the State fair hearing officer reverses a decision to deny
authorization of services, and the enrollee received the disputed
services while the appeal was pending, the MCO or the PHP or the State
must pay for those services, in accordance with State policy and
regulations.
Sec. 438.426 Monitoring of the grievance system.
(a) Basis for monitoring. The records that the MCOs and PHPs are
required to maintain and summarize under Sec. 438.416 provide the basis
for
[[Page 6423]]
monitoring by the MCO or PHP, and by the State.
(b) Responsibility for corrective action. If the summaries required
under paragraph (d) of Sec. 438.416 reveal a need for changing the
system, the MCO or the PHP must conduct an in-depth review, and take
corrective action.
Subpart G--[Reserved]
Subpart H--Certifications and Program Integrity Provisions
Sec. 438.600 Statutory basis.
This subpart is based on sections 1902(a)(4) and 1902(a)(19) of the
Act.
(a) Section 1902(a)(4) requires that the State plan provide for
methods of administration that the Secretary finds necessary for the
proper and efficient operation of the plan.
(b) Section 1902(a)(19) requires that the State plan provide the
safeguards necessary to ensure that eligibility is determined and
services are provided in a manner consistent with simplicity of
administration and the best interests of the recipients.
Sec. 438.602 Basic rule.
As a condition for contracting and for receiving payment under the
Medicaid managed care program, an MCO or PHP and its subcontractors
must comply with the certification and program integrity requirements
of this section.
Sec. 438.604 Data that must be certified.
(a) Data certifications. When State payments to the MCO or PHP are
based on data submitted by the MCO or PHP, the State must require
certification of the data as provided in Sec. 438.606. The data that
must be certified includes, but is not limited to, enrollment
information, encounter data, and other information required by the
State and contained in contracts, proposals, and related documents.
(b) Certification of substantial compliance with contract.
Regardless of whether payment is based on data, each MCO and PHP must
certify that it is in substantial compliance with its contract.
(c) Additional certifications. Certification is required, as
provided in Sec. 438.606, for all documents specified by the State.
Sec. 438.606 Source, content, and timing of certification.
(a) Source of certification. With respect to the data specified in
Sec. 438.604, the MCO or PHP must require--
(1) That subcontractors certify the data they submit to the MCO or
PHP; and
(2) That one of the following certify the data the MCO or PHP
submits to the State:
(i) The MCO's or PHP's Chief Executive Officer.
(ii) The MCO's or PHP's Chief Financial Officer.
(iii) An individual who has delegated authority to sign for, and
who reports directly to, the MCO's or PHP's Chief Executive Officer or
Chief Financial Officer.
(b) Content of certification. The certification must attest, based
on best knowledge, information, and belief, as follows:
(1) To the accuracy, completeness and truthfulness of data.
(2) That the MCO or PHP is in substantial compliance with its
contract.
(3) To the accuracy, completeness and truthfulness of documents
specified by the State.
(c) Timing of certification. The MCO or PHP must submit the
certification concurrently with the certified data or, in the case of
compliance with the terms of the contract, when requesting payment.
Sec. 438.608 Program integrity requirements.
(a) General requirement. The MCO or PHP must have administrative
and management arrangements or procedures, including a mandatory
compliance plan, that are designed to guard against fraud and abuse.
(b) Specific requirements. The arrangements or procedures must
include the following:
(1) Written policies, procedures, and standards of conduct that
articulate the organization's commitment to comply with all applicable
Federal and State standards.
(2) The designation of a compliance officer and a compliance
committee that are accountable to senior management.
(3) Effective training and education for the compliance officer and
the organization's employees.
(4) Effective lines of communication between the compliance officer
and the organization's employees.
(5) Enforcement of standards through well-publicized disciplinary
guidelines.
(6) Provision of internal monitoring and auditing.
(7) Provision for prompt response to detected offenses, and for
development of corrective action initiatives relating to the MCO's or
PHP's contract.
Subpart I--Sanctions
Sec. 438.700 Basis for imposition of sanctions.
(a) Each State that contracts with an MCO must, and each State that
contracts with a PCCM may, establish intermediate sanctions, as
specified in Sec. 438.702, that it may impose if it makes any of the
determinations specified in paragraphs (b) through (d) of this section.
The State's determination may be based on findings from onsite survey,
enrollee or other complaints, financial status, or any other source.
(b) An MCO acts or fails to act as follows:
(1) Fails substantially to provide medically necessary services
that the MCO is required to provide, under law or under its contract
with the State, to an enrollee covered under the contract.
(2) Imposes on enrollees premiums or charges that are in excess of
the premiums or charges permitted under the Medicaid program.
(3) Acts to discriminate among enrollees on the basis of their
health status or need for health care services. This includes
termination of enrollment or refusal to reenroll a recipient, except as
permitted under the Medicaid program, or any practice that would
reasonably be expected to discourage enrollment by recipients whose
medical condition or history indicates probable need for substantial
future medical services.
(4) Misrepresents or falsifies information that it furnishes to
HCFA or to the State.
(5) Misrepresents or falsifies information that it furnishes to an
enrollee, potential enrollee, or health care provider.
(6) Fails to comply with the requirements for physician incentive
plans, as set forth (for Medicare) in Secs. 422.208 and 422.210 of this
chapter.
(c) An MCO or a PCCM distributes directly, or indirectly through
any agent or independent contractor, marketing materials that have not
been approved by the State or that contain false or materially
misleading information.
(d) An MCO violates any of the requirements in section 1903(m) of
the Act and implementing regulations, or an MCO or a PCCM violates any
of the requirements of section 1932 of the Act and implementing
regulations. (For these violations, only the sanctions specified in
Sec. 438.702(a)(4) and (a)(5) may be imposed.)
Sec. 438.702 Types of intermediate sanctions.
(a) The types of intermediate sanctions that a State may impose
under this subpart include the following:
(1) Civil money penalties in the amounts specified in Sec. 438.704.
(2) Appointment of temporary management as provided in
Sec. 438.706. (The State may not impose this sanction on a PCCM.)
[[Page 6424]]
(3) Granting enrollees the right to terminate enrollment without
cause. (The State must notify the affected enrollees of their right to
disenroll.)
(4) Suspension of all new enrollment, including default enrollment,
after the effective date of the sanction.
(5) Suspension of payment for recipients enrolled after the
effective date of the sanction and until HCFA or the State is satisfied
that the reason for imposition of the sanction no longer exists and is
not likely to recur.
(b) State agencies retain authority to impose additional sanctions
under State statutes or State regulations that address areas of
noncompliance specified in Sec. 438.700, as well as additional areas of
noncompliance. Nothing in this subpart prevents State agencies from
exercising that authority.
Sec. 438.704 Amounts of civil money penalties
(a) General rule. The limit on, or specific amount of, a civil
money penalty the State may impose varies depending on the nature of
the MCO's or PCCM's action or failure to act, as provided in this
section.
(b) Specific limits. (1) The limit is $25,000 for each
determination under the following paragraphs of Sec. 438.700:
(i) Paragraph (b)(1) (Failure to provide services).
(ii) Paragraph (b)(5) (Misrepresentation or false statements to
enrollees, potential enrollees, or health care providers).
(iii) Paragraph (b)(6) (failure to comply with physician incentive
plan requirements).
(iv) Paragraph (c) (Marketing violations).
(2) The limit is $100,000 for each determination under paragraph
(b)(3) (discrimination) or (b)(4) (Misrepresentation or false
statements to HCFA or the State) of Sec. 438.700.
(3) The limit is $15,000 for each recipient the State determines
was not enrolled because of a discriminatory practice under paragraph
(b)(3) of Sec. 438.700. (This is subject to the overall limit of
$100,000 under paragraph (b)(2) of this section).
(c) Specific amount. For premiums or charges in excess of the
amounts permitted under the Medicaid program, the amount of the penalty
is $25,000 or double the amount of the excess charges, whichever is
greater. The State must deduct from the penalty the amount of
overcharge and return it to the affected enrollees.
Sec. 438.706 Special rules for temporary management.
(a) Optional imposition of sanction. The State may impose temporary
management if it finds (through onsite survey, enrollee complaints,
financial audits, or any other means) that --
(1) There is continued egregious behavior by the MCO, including but
not limited to behavior that is described in Sec. 438.700, or that is
contrary to any requirements of sections 1903(m) and 1932 of the Act;
(2) There is substantial risk to enrollees' health; or
(3) The sanction is necessary to ensure the health of the MCO's
enrollees--
(i) While improvements are made to remedy violations under
Sec. 438.700; or
(ii) Until there is an orderly termination or reorganization of the
MCO.
(b) Required imposition of sanction. (1) The State must impose
temporary management ( regardless of any other sanction that may be
imposed) if it finds that an MCO has repeatedly failed to meet
substantive requirements in section 1903(m) or 1932 of the Act, or this
subpart. The State must also grant enrollees the right to terminate
enrollment without cause, as described in Sec. 438.702(a)(3).
(c) Hearing. The State may not delay imposition of temporary
management to provide a hearing before imposing this sanction.
(d) Duration of sanction. The State may not terminate temporary
management until it determines that the MCO can ensure that the
sanctioned behavior will not recur.
Sec. 438.708 Termination of an MCO or PCCM contract.
A State has the authority to terminate an MCO or PCCM contract and
enroll that entity's enrollees in other MCOs or PCCMs, or provide their
Medicaid benefits through other options included in the State plan, if
the State determines that the MCO or PCCM--
(a) Has failed to carry out the substantive terms of its contract;
or
(b) Has failed to meet applicable requirements in sections 1932,
1903(m), and 1905(t) of the Act.
Sec. 438.710 Due process: Notice of sanction and pre-termination
hearing.
(a) Notice of sanction. Before imposing any of the alternative
sanctions specified in this subpart, the State must give the affected
entity timely written notice that explains--
(1) The basis and nature of the sanction; and
(2) Any other due process protections that the State elects to
provide.
(b) Pre-termination hearing.--(1) General rule. Before terminating
an MCO or PCCM contract under Sec. 438.708, the State must provide the
entity a pretermination hearing.
(2) Procedures. The State must--
(i) Give the MCO or PCCM written notice of its intent to terminate,
the reason for termination, and the time and place of the hearing;
(ii) After the hearing, give the entity written notice of the
decision affirming or reversing the proposed termination of the
contract and, for an affirming decision, the effective date of
termination; and
(iii) For an affirming decision, give enrollees of the MCO or PCCM
notice of the termination and information, consistent with Sec. 438.10,
on their options for receiving Medicaid services following the
effective date of termination.
Sec. 438.722 Disenrollment during termination hearing process.
After a State notifies an MCO or PCCM that it intends to terminate
the contract, the State may--
(a) Give the entity's enrollees written notice of the State's
intent to terminate the contract; and
(b) Allow enrollees to disenroll immediately without cause.
Sec. 438.724 Public notice of sanction.
(a) Content of notice. The State must publish a notice that
describes the intermediate sanction imposed, explains the reasons for
the sanction and specifies the amount of any civil money penalty.
(b) Publication of notice. The State must publish the notice--
(1) No later than 30 days after it imposes the sanction; and
(2) As a public announcement in--
(i) The newspaper of widest circulation in each city within the
MCO's service area that has a population of 50,000 or more; or
(ii) The newspaper of widest circulation in the MCO's service area,
if there is no city with a population of 50,000 or more in that area.
Sec. 438.726 State plan requirement.
The State plan must provide for the State to monitor for violations
that involve the actions and failures to act specified in this section
and to implement the provisions of this section.
Sec. 438.730 Sanction by HCFA: Special rules for MCOs with risk
contracts.
(a) Basis for sanction. (1) A State agency may recommend that HCFA
impose the denial of payment sanction on an MCO with a comprehensive
risk contract if the MCO acts or fails to act as specified in
Sec. 438.700(b)(1) through (b)(6).
[[Page 6425]]
(2) The State agency's recommendation becomes HCFA's recommendation
unless HCFA rejects it within 15 days of receipt.
(b) Notice of sanction. If HCFA accepts the recommendation, the
State agency and HCFA take the following actions:
(1) The State agency--
(i) Gives the MCO written notice of the proposed sanction;
(ii) Allows the MCO 15 days from date of receipt of the notice to
provide evidence that it has not acted or failed to act in the manner
that is the basis for the recommended sanction;
(iii) May extend the initial 15-day period for an additional 15
days if, before the end of the initial period, the MCO submits a
written request that includes a credible explanation of why it needs
additional time; and
(iv) May not grant an extension if HCFA determines that the MCO's
conduct poses a threat to an enrollee's health or safety.
(2) HCFA conveys the determination to the OIG for consideration of
possible imposition of civil money penalties under section
1903(m)(5)(A) of the Act and part 1003 of this title. In accordance
with the provisions of part 1003, the OIG may impose civil money
penalties in addition to, or in place of, the sanctions that may be
imposed under this section.
(c) Informal reconsideration. (1) If the MCO submits a timely
response to the notice of sanction, the State agency--
(i) Conducts an informal reconsideration that includes review of
the evidence by a State agency official who did not participate in the
original recommendation; and
(ii) Gives the MCO a concise written decision setting forth the
factual and legal basis for the decision.
(2) The State agency decision under paragraph (c)(1) of this
section, forwarded to HCFA, becomes HCFA's decision unless HCFA
reverses or modifies the decision within 15 days from date of receipt.
(3) If HCFA reverses or modifies the State agency decision, the
agency sends the MCO a copy of HCFA's decision.
(d) Effective date of sanction. (1) If the MCO does not seek
reconsideration, a sanction is effective 15 days after the date of the
notice of sanction under paragraph (b) of this section.
(2) If the MCO seeks reconsideration, the following rules apply:
(i) Except as specified in paragraph (d)(2)(ii) of this section,
the sanction is effective on the date specified in HCFA's
reconsideration notice.
(ii) If HCFA, in consultation with the State agency, determines
that the MCO's conduct poses a serious threat to an enrollee's health
or safety, HCFA may make the sanction effective earlier than the date
of HCFA's reconsideration decision under paragraph (c) of this section.
(e) HCFA's role. HCFA retains the right to independently perform
the functions assigned to the State agency under this section.
Subpart J--Conditions for Federal Financial Participation
Sec. 438.802 Basic requirements.
FFP is available in expenditures for payments under an MCO contract
only for the periods during which the following conditions are met:
(a) The contract--
(1) Meets the requirements of this part; and
(2) Is in effect.
(b) The MCO and its subcontractors are in substantial compliance
with the physician incentive plan requirements set forth in
Secs. 422.208 and 422.210 of this chapter.
(c) The MCO and the State are in substantial compliance with the
requirements of the MCO contract and of this part.
Sec. 438.806 Prior approval.
(a) Comprehensive risk contracts. FFP is available under a
comprehensive risk contract only if--
(1) The Regional Office has confirmed that the contractor meets the
definition of MCO or is one of the entities described in paragraphs
(a)(2) through (a)(5) of Sec. 438.6; and
(2) The contract meets all the requirements of section
1903(m)(2)(A) of the Act, the applicable requirements of section 1932
of the Act, and the implementing regulations in this part.
(b) MCO contracts. Prior approval by HCFA is a condition for FFP
under any MCO contract that extends for less than one full year or that
has a value equal to, or greater than, the following threshold amounts:
(1) For 1998, the threshold is $1,000,000.
(2) For subsequent years, the amount is increased by the percentage
increase in the consumer price index for all urban consumers.
(c) FFP is not available in an MCO contract that does not have
prior approval from HCFA under paragraph (b) of this section.
Sec. 438.808 Exclusion of entities.
(a) General rule. FFP is available in payments under MCO contracts
only if the State excludes from such contracts any entities described
in paragraph (b) of this section.
(b) Entities that must be excluded. (1) An entity that could be
excluded under section 1128(b)(8) of the Act as being controlled by a
sanctioned individual.
(2) An entity that has a substantial contractual relationship as
defined in Sec. 431.55(h)(3), either directly or indirectly, with an
individual convicted of certain crimes as described in section
1128(b)(8)(B) of the Act.
(3) An entity that employs or contracts, directly or indirectly,
for the furnishing of health care, utilization review, medical social
work, or administrative services, with one of the following:
(i) Any individual or entity excluded from participation in Federal
health care programs under either section 1128 or section 1128A of the
Act.
(ii) Any entity that would provide those services through an
excluded individual or entity.
Sec. 438.810 Expenditures for enrollment broker services.
(a) Terminology. As used in this section--
Choice counseling means activities such as answering questions and
providing information (in an unbiased manner) on available MCO, PHP, or
PCCM delivery system options, and advising on what factors to consider
when choosing among them and in selecting a primary care provider;
Enrollment activities means activities such as distributing,
collecting, and processing enrollment materials and taking enrollments
by phone or in person; and
Enrollment broker means an individual or entity that performs
choice counseling or enrollment activities, or both.
Enrollment services means choice counseling, or enrollment
activities, or both.
(b) Conditions that enrollment brokers must meet. State
expenditures for the use of enrollment brokers are considered necessary
for the proper and efficient operation of the State plan and thus
eligible for FFP only if the broker and its subcontractors meet the
following conditions:
(1) Independence. The broker and its subcontractors are independent
of any MCO, PHP, PCCM, or other health care provider in the State in
which they provide enrollment services. A broker or subcontractor is
not considered ``independent'' if it--
(i) Is an MCO, PHP, PCCM or other health care provider in the State
(ii) Is owned or controlled by an MCO, PHP, PCCM, or other health
care provider in the State; or
[[Page 6426]]
(iii) Owns or controls an MCO, PHP, PCCM or other health care
provider in the State.
(2) Freedom from conflict of interest. The broker and its
subcontractor are free from conflict of interest. A broker or
subcontractor is not considered free from conflict of interest if any
person who is the owner, employee, or consultant of the broker or
subcontractor or has any contract with them--
(i) Has any direct or indirect financial interest in any entity or
health care provider that furnishes services in the State in which the
broker or subcontractor provides enrollment services;
(ii) Has been excluded from participation under title XVIII or XIX
of the Act;
(iii) Has been debarred by any Federal agency; or
(iv) Has been, or is now, subject to civil money penalties under
the Act.
(c) Prior approval. The initial contract or memorandum of agreement
(MOA) for services performed by the broker has been reviewed and
approved by HCFA before the effective date of the contract or MOA.
Sec. 438.812 Costs under risk and nonrisk contracts.
(a) Under a risk contract, the total amount the State agency pays
for carrying out the contract provisions is a medical assistance cost.
(b) Under a nonrisk contract--
(1) The amount the State agency pays for the furnishing of medical
services to eligible recipients is a medical assistance cost; and
(2) The amount the State agency pays for the contractor's
performance of other functions is an administrative cost.
Sec. 438.814 Limit on payments in excess of capitation rates.
FFP is not available for payments pursuant to risk corridors or
incentive arrangements that exceed 105 percent of that portion of the
aggregate amount approved capitation payments attributable to the
enrollees or services covered by the risk corridor or incentive
management.
PART 440--SERVICES: GENERAL PROVISIONS
1. The statutory citation for part 440 continues to read as
follows:
Authority: Sec. 1102 of the Social Security Act (42 U.S.C.
1302).
2. In subpart A, a new Sec. 440.168 is added, to read as follows:
Sec. 440.168 Primary care case management services.
(a) Primary care case management services means case management
related services that--
(1) Include location, coordination, and monitoring of primary
health care services; and
(2) Are provided under a contract between the State and either of
the following:
(i) A PCCM who is a physician or may, at State option, be a
physician assistant, nurse practitioner, or certified nurse-midwife.
(ii) A physician group practice, or an entity that employs or
arranges with physicians to furnish the services.
(b) Primary care case management services may be offered by the
State--
(1) As a voluntary option under the regular State plan program; or
(2) On a mandatory basis under section 1932 (a)(1) of the Act or
under section 1915(b) or section 1115 waiver authority.
PART 447--PAYMENTS FOR SERVICES
1. The authority citation for part 447 continues to read as
follows:
Authority: Sec. 1102 of the Social Security Act (42 U.S.C.
1302).
2. A new Sec. 447.46 is added, to read as follows:
Sec. 447.46 Timely claims payment by MCOs.
(a) Basis and scope. This section implements section 1932(f) of the
Act by specifying the rules and exceptions for prompt payment of claims
by MCOs.
(b) Definitions. ``Claim'' and ``clean claim'' have the meaning
given those terms in Sec. 447.45.
(c) Contract requirements.--(1) Basic rule. A contract with an MCO
must provide that the organization will meet the requirements of
paragraphs (d)(2), (d)(3) of Sec. 447.45, and abide by the
specifications of paragraphs (d)(5) and (d)(6) of that section..
(2) Exception. The MCO and its providers may, by mutual agreement,
establish an alternative payment schedule.
(3) Any alternative schedule must be stipulated in the contract.
Sec. 447.53 [Amended]
3. In Sec. 447.53(b), the following changes are made:
A. In paragraph (b) introductory text, the parenthetical phrase is
removed.
B. Paragraph (b)(6) is removed.
4. A new paragraph (e) is added to read as follows:
(e) No provider may deny services, to an individual who is eligible
for the services, on account of the individual's inability to pay the
cost sharing.
Sec. 447.58 [Amended]
5. In Sec. 447.58, ``Except for HMO services subject to the
copayment exclusion in Sec. 447.53(b)(6), if `` is removed and ``If''
is inserted in its place.
6. A new Sec. 447.60 is added to subpart A to read as follows:
Sec. 447.60 Cost-sharing requirements for services furnished by MCOs.
Contracts with MCOs must provide that any cost-sharing charges the
MCO imposes on Medicaid enrollees are in accordance with the
requirements set forth in Secs. 447.50 and 447.53 through 447.58 for
cost-sharing charges imposed by the State agency.
Sec. 447.361 [Removed]
Section 447.361 is removed.
(Catalog of Federal Domestic Assistance Program No. 93778, Medical
Assistance)
Dated: December 21, 2000.
Robert A. Berenson,
Acting Deputy Administrator, Health Care Financing Administration.
Dated: December 20, 2000.
Donna E. Shalala,
Secretary.
[FR Doc. 01-1447 Filed 1-18-01; 8:45 am]
BILLING CODE 4120-01-P