42 U.S.C. § 1395mm : US Code - Section 1395MM: Payments to health maintenance organizations and competitive medical plans

Search 42 U.S.C. § 1395mm : US Code - Section 1395MM: Payments to health maintenance organizations and competitive medical plans

(a) Rates and adjustments
(1)(A) The Secretary shall annually determine, and shall announce
(in a manner intended to provide notice to interested parties) not
later than September 7 before the calendar year concerned -
(i) a per capita rate of payment for each class of individuals
who are enrolled under this section with an eligible organization
which has entered into a risk-sharing contract and who are
entitled to benefits under part A of this subchapter and enrolled
under part B of this subchapter, and
(ii) a per capita rate of payment for each class of individuals
who are so enrolled with such an organization and who are
enrolled under part B of this subchapter only.
For purposes of this section, the term "risk-sharing contract"
means a contract entered into under subsection (g) of this section
and the term "reasonable cost reimbursement contract" means a
contract entered into under subsection (h) of this section.
(B) The Secretary shall define appropriate classes of members,
based on age, disability status, and such other factors as the
Secretary determines to be appropriate, so as to ensure actuarial
equivalence. The Secretary may add to, modify, or substitute for
such classes, if such changes will improve the determination of
actuarial equivalence.
(C) The annual per capita rate of payment for each such class
shall be equal to 95 percent of the adjusted average per capita
cost (as defined in paragraph (4)) for that class.
(D) In the case of an eligible organization with a risk-sharing
contract, the Secretary shall make monthly payments in advance and
in accordance with the rate determined under subparagraph (C) and
except as provided in subsection (g)(2) of this section, to the
organization for each individual enrolled with the organization
under this section.
(E)(i) The amount of payment under this paragraph may be
retroactively adjusted to take into account any difference between
the actual number of individuals enrolled in the plan under this
section and the number of such individuals estimated to be so
enrolled in determining the amount of the advance payment.
(ii)(I) Subject to subclause (II), the Secretary may make
retroactive adjustments under clause (i) to take into account
individuals enrolled during the period beginning on the date on
which the individual enrolls with an eligible organization (which
has a risk-sharing contract under this section) under a health
benefit plan operated, sponsored, or contributed to by the
individual's employer or former employer (or the employer or former
employer of the individual's spouse) and ending on the date on
which the individual is enrolled in the plan under this section,
except that for purposes of making such retroactive adjustments
under this clause, such period may not exceed 90 days.
(II) No adjustment may be made under subclause (I) with respect
to any individual who does not certify that the organization
provided the individual with the explanation described in
subsection (c)(3)(E) of this section at the time the individual
enrolled with the organization.
(F)(i) At least 45 days before making the announcement under
subparagraph (A) for a year (beginning with the announcement for
1991), the Secretary shall provide for notice to eligible
organizations of proposed changes to be made in the methodology or
benefit coverage assumptions from the methodology and assumptions
used in the previous announcement and shall provide such
organizations an opportunity to comment on such proposed changes.
(ii) In each announcement made under subparagraph (A) for a year
(beginning with the announcement for 1991), the Secretary shall
include an explanation of the assumptions (including any benefit
coverage assumptions) and changes in methodology used in the
announcement in sufficient detail so that eligible organizations
can compute per capita rates of payment for classes of individuals
located in each county (or equivalent area) which is in whole or in
part within the service area of such an organization.
(2) With respect to any eligible organization which has entered
into a reasonable cost reimbursement contract, payments shall be
made to such plan in accordance with subsection (h)(2) of this
section rather than paragraph (1).
(3) Subject to subsections (c)(2)(B)(ii) and (c)(7) of this
section, payments under a contract to an eligible organization
under paragraph (1) or (2) shall be instead of the amounts which
(in the absence of the contract) would be otherwise payable,
pursuant to sections 1395f(b) and 1395l(a) of this title, for
services furnished by or through the organization to individuals
enrolled with the organization under this section.
(4) For purposes of this section, the term "adjusted average per
capita cost" means the average per capita amount that the Secretary
estimates in advance (on the basis of actual experience, or
retrospective actuarial equivalent based upon an adequate sample
and other information and data, in a geographic area served by an
eligible organization or in a similar area, with appropriate
adjustments to assure actuarial equivalence) would be payable in
any contract year for services covered under parts A and B of this
subchapter, or part B only, and types of expenses otherwise
reimbursable under parts A and B of this subchapter, or part B only
(including administrative costs incurred by organizations described
in sections 1395h and 1395u of this title), if the services were to
be furnished by other than an eligible organization or, in the case
of services covered only under section 1395x(s)(2)(H) of this
title, if the services were to be furnished by a physician or as an
incident to a physician's service.
(5) The payment to an eligible organization under this section
for individuals enrolled under this section with the organization
and entitled to benefits under part A of this subchapter and
enrolled under part B of this subchapter shall be made from the
Federal Hospital Insurance Trust Fund and the Federal Supplementary
Medical Insurance Trust Fund. The portion of that payment to the
organization for a month to be paid by each trust fund shall be
determined as follows:
(A) In regard to expenditures by eligible organizations having
risk-sharing contracts, the allocation shall be determined each
year by the Secretary based on the relative weight that benefits
from each fund contribute to the adjusted average per capita
cost.
(B) In regard to expenditures by eligible organizations
operating under a reasonable cost reimbursement contract, the
initial allocation shall be based on the plan's most recent
budget, such allocation to be adjusted, as needed, after cost
settlement to reflect the distribution of actual expenditures.
The remainder of that payment shall be paid by the former trust
fund.
(6) Subject to subsections (c)(2)(B)(ii) and (c)(7) of this
section, if an individual is enrolled under this section with an
eligible organization having a risk-sharing contract, only the
eligible organization shall be entitled to receive payments from
the Secretary under this subchapter for services furnished to the
individual.
(b) Definitions; requirements
For purposes of this section, the term "eligible organization"
means a public or private entity (which may be a health maintenance
organization or a competitive medical plan), organized under the
laws of any State, which -
(1) is a qualified health maintenance organization (as defined
in section 300e-9(d) (!1) of this title), or
(2) meets the following requirements:
(A) The entity provides to enrolled members at least the
following health care services:
(i) Physicians' services performed by physicians (as
defined in section 1395x(r)(1) of this title).
(ii) Inpatient hospital services.
(iii) Laboratory, X-ray, emergency, and preventive
services.
(iv) Out-of-area coverage.
(B) The entity is compensated (except for deductibles,
coinsurance, and copayments) for the provision of health care
services to enrolled members by a payment which is paid on a
periodic basis without regard to the date the health care
services are provided and which is fixed without regard to the
frequency, extent, or kind of health care service actually
provided to a member.
(C) The entity provides physicians' services primarily (i)
directly through physicians who are either employees or
partners of such organization, or (ii) through contracts with
individual physicians or one or more groups of physicians
(organized on a group practice or individual practice basis).
(D) The entity assumes full financial risk on a prospective
basis for the provision of the health care services listed in
subparagraph (A), except that such entity may -
(i) obtain insurance or make other arrangements for the
cost of providing to any enrolled member health care services
listed in subparagraph (A) the aggregate value of which
exceeds $5,000 in any year,
(ii) obtain insurance or make other arrangements for the
cost of health care service listed in subparagraph (A)
provided to its enrolled members other than through the
entity because medical necessity required their provision
before they could be secured through the entity,
(iii) obtain insurance or make other arrangements for not
more than 90 percent of the amount by which its costs for any
of its fiscal years exceed 115 percent of its income for such
fiscal year, and
(iv) make arrangements with physicians or other health
professionals, health care institutions, or any combination
of such individuals or institutions to assume all or part of
the financial risk on a prospective basis for the provision
of basic health services by the physicians or other health
professionals or through the institutions.
(E) The entity has made adequate provision against the risk
of insolvency, which provision is satisfactory to the
Secretary.
Paragraph (2)(A)(ii) shall not apply to an entity which had
contracted with a single State agency administering a State plan
approved under subchapter XIX of this chapter for the provision of
services (other than inpatient hospital services) to individuals
eligible for such services under such State plan on a prepaid risk
basis prior to 1970.
(c) Enrollment in plan; duties of organization to enrollees
(1) The Secretary may not enter into a contract under this
section with an eligible organization unless it meets the
requirements of this subsection and subsection (e) of this section
with respect to members enrolled under this section.
(2)(A) The organization must provide to members enrolled under
this section, through providers and other persons that meet the
applicable requirements of this subchapter and part A of subchapter
XI of this chapter -
(i) only those services covered under parts A and B of this
subchapter, for those members entitled to benefits under part A
of this subchapter and enrolled under part B of this subchapter,
or
(ii) only those services covered under part B of this
subchapter, for those members enrolled only under such part,
which are available to individuals residing in the geographic area
served by the organization, except that (I) the organization may
provide such members with such additional health care services as
the members may elect, at their option, to have covered, and (II)
in the case of an organization with a risk-sharing contract, the
organization may provide such members with such additional health
care services as the Secretary may approve. The Secretary shall
approve any such additional health care services which the
organization proposes to offer to such members, unless the
Secretary determines that including such additional services will
substantially discourage enrollment by covered individuals with the
organization.
(B) If there is a national coverage determination made in the
period beginning on the date of an announcement under subsection
(a)(1)(A) of this section and ending on the date of the next
announcement under such subsection that the Secretary projects will
result in a significant change in the costs to the organization of
providing the benefits that are the subject of such national
coverage determination and that was not incorporated in the
determination of the per capita rate of payment included in the
announcement made at the beginning of such period -
(i) such determination shall not apply to risk-sharing
contracts under this section until the first contract year that
begins after the end of such period; and
(ii) if such coverage determination provides for coverage of
additional benefits or under additional circumstances, subsection
(a)(3) of this section shall not apply to payment for such
additional benefits or benefits provided under such additional
circumstances until the first contract year that begins after the
end of such period,
unless otherwise required by law.
(3)(A)(i) Each eligible organization must have an open enrollment
period, for the enrollment of individuals under this section, of at
least 30 days duration every year and including the period or
periods specified under clause (ii), and must provide that at any
time during which enrollments are accepted, the organization will
accept up to the limits of its capacity (as determined by the
Secretary) and without restrictions, except as may be authorized in
regulations, individuals who are eligible to enroll under
subsection (d) of this section in the order in which they apply for
enrollment, unless to do so would result in failure to meet the
requirements of subsection (f) of this section or would result in
the enrollment of enrollees substantially nonrepresentative, as
determined in accordance with regulations of the Secretary, of the
population in the geographic area served by the organization.
(ii)(I) If a risk-sharing contract under this section is not
renewed or is otherwise terminated, eligible organizations with
risk-sharing contracts under this section and serving a part of the
same service area as under the terminated contract are required to
have an open enrollment period for individuals who were enrolled
under the terminated contract as of the date of notice of such
termination. If a risk-sharing contract under this section is
renewed in a manner that discontinues coverage for individuals
residing in part of the service area, eligible organizations with
risk-sharing contracts under this section and enrolling individuals
residing in that part of the service area are required to have an
open enrollment period for individuals residing in the part of the
service area who were enrolled under the contract as of the date of
notice of such discontinued coverage.
(II) The open enrollment periods required under subclause (I)
shall be for 30 days and shall begin 30 days after the date that
the Secretary provides notice of such requirement.
(III) Enrollment under this clause shall be effective 30 days
after the end of the open enrollment period, or, if the Secretary
determines that such date is not feasible, such other date as the
Secretary specifies.
(B) An individual may enroll under this section with an eligible
organization in such manner as may be prescribed in regulations and
may terminate his enrollment with the eligible organization as of
the beginning of the first calendar month following the date on
which the request is made for such termination (or, in the case of
financial insolvency of the organization, as may be prescribed by
regulations) or, in the case of such an organization with a
reasonable cost reimbursement contract, as may be prescribed by
regulations. In the case of an individual's termination of
enrollment, the organization shall provide the individual with a
copy of the written request for termination of enrollment and a
written explanation of the period (ending on the effective date of
the termination) during which the individual continues to be
enrolled with the organization and may not receive benefits under
this subchapter other than through the organization.
(C) The Secretary may prescribe the procedures and conditions
under which an eligible organization that has entered into a
contract with the Secretary under this subsection may inform
individuals eligible to enroll under this section with the
organization about the organization, or may enroll such individuals
with the organization. No brochures, application forms, or other
promotional or informational material may be distributed by an
organization to (or for the use of) individuals eligible to enroll
with the organization under this section unless (i) at least 45
days before its distribution, the organization has submitted the
material to the Secretary for review and (ii) the Secretary has not
disapproved the distribution of the material. The Secretary shall
review all such material submitted and shall disapprove such
material if the Secretary determines, in the Secretary's
discretion, that the material is materially inaccurate or
misleading or otherwise makes a material misrepresentation.
(D) The organization must provide assurances to the Secretary
that it will not expel or refuse to re-enroll any such individual
because of the individual's health status or requirements for
health care services, and that it will notify each such individual
of such fact at the time of the individual's enrollment.
(E) Each eligible organization shall provide each enrollee, at
the time of enrollment and not less frequently than annually
thereafter, an explanation of the enrollee's rights under this
section, including an explanation of -
(i) the enrollee's rights to benefits from the organization,
(ii) the restrictions on payments under this subchapter for
services furnished other than by or through the organization,
(iii) out-of-area coverage provided by the organization,
(iv) the organization's coverage of emergency services and
urgently needed care, and
(v) appeal rights of enrollees.
(F) Each eligible organization that provides items and services
pursuant to a contract under this section shall provide assurances
to the Secretary that in the event the organization ceases to
provide such items and services, the organization shall provide or
arrange for supplemental coverage of benefits under this subchapter
related to a pre-existing condition with respect to any exclusion
period, to all individuals enrolled with the entity who receive
benefits under this subchapter, for the lesser of six months or the
duration of such period.
(G)(i) Each eligible organization having a risk-sharing contract
under this section shall notify individuals eligible to enroll with
the organization under this section and individuals enrolled with
the organization under this section that -
(I) the organization is authorized by law to terminate or
refuse to renew the contract, and
(II) termination or nonrenewal of the contract may result in
termination of the enrollments of individuals enrolled with the
organization under this section.
(ii) The notice required by clause (i) shall be included in -
(I) any marketing materials described in subparagraph (C) that
are distributed by an eligible organization to individuals
eligible to enroll under this section with the organization, and
(II) any explanation provided to enrollees by the organization
pursuant to subparagraph (E).
(4) The organization must -
(A) make the services described in paragraph (2) (and such
other health care services as such individuals have contracted
for) (i) available and accessible to each such individual, within
the area served by the organization, with reasonable promptness
and in a manner which assures continuity, and (ii) when medically
necessary, available and accessible twenty-four hours a day and
seven days a week, and
(B) provide for reimbursement with respect to services which
are described in subparagraph (A) and which are provided to such
an individual other than through the organization, if (i) the
services were medically necessary and immediately required
because of an unforeseen illness, injury, or condition and (ii)
it was not reasonable given the circumstances to obtain the
services through the organization.
(5)(A) The organization must provide meaningful procedures for
hearing and resolving grievances between the organization
(including any entity or individual through which the organization
provides health care services) and members enrolled with the
organization under this section.
(B) A member enrolled with an eligible organization under this
section who is dissatisfied by reason of his failure to receive any
health service to which he believes he is entitled and at no
greater charge than he believes he is required to pay is entitled,
if the amount in controversy is $100 or more, to a hearing before
the Secretary to the same extent as is provided in section 405(b)
of this title, and in any such hearing the Secretary shall make the
eligible organization a party. If the amount in controversy is
$1,000 or more, the individual or eligible organization shall, upon
notifying the other party, be entitled to judicial review of the
Secretary's final decision as provided in section 405(g) of this
title, and both the individual and the eligible organization shall
be entitled to be parties to that judicial review. In applying
sections 405(b) and 405(g) of this title as provided in this
subparagraph, and in applying section 405(l) of this title thereto,
any reference therein to the Commissioner of Social Security or the
Social Security Administration shall be considered a reference to
the Secretary or the Department of Health and Human Services,
respectively. The provisions of section 1395ff(b)(1)(E)(iii) of
this title shall apply with respect to dollar amounts specified in
the first 2 sentences of this subparagraph in the same manner as
they apply to the dollar amounts specified in section
1395ff(b)(1)(E)(i) of this title.
(6) The organization must have arrangements, established in
accordance with regulations of the Secretary, for an ongoing
quality assurance program for health care services it provides to
such individuals, which program (A) stresses health outcomes and
(B) provides review by physicians and other health care
professionals of the process followed in the provision of such
health care services.
(7) A risk-sharing contract under this section shall provide that
in the case of an individual who is receiving inpatient hospital
services from a subsection (d) hospital (as defined in section
1395ww(d)(1)(B) of this title) as of the effective date of the
individual's -
(A) enrollment with an eligible organization under this section
-
(i) payment for such services until the date of the
individual's discharge shall be made under this subchapter as
if the individual were not enrolled with the organization,
(ii) the organization shall not be financially responsible
for payment for such services until the date after the date of
the individual's discharge, and
(iii) the organization shall nonetheless be paid the full
amount otherwise payable to the organization under this
section; or
(B) termination of enrollment with an eligible organization
under this section -
(i) the organization shall be financially responsible for
payment for such services after such date and until the date of
the individual's discharge,
(ii) payment for such services during the stay shall not be
made under section 1395ww(d) of this title, and
(iii) the organization shall not receive any payment with
respect to the individual under this section during the period
the individual is not enrolled.
(8) A contract under this section shall provide that the eligible
organization shall meet the requirement of section 1395cc(f) of
this title (relating to maintaining written policies and procedures
respecting advance directives).
(d) Right to enroll with contracting organization in geographic
area
Subject to the provisions of subsection (c)(3) of this section,
every individual entitled to benefits under part A of this
subchapter and enrolled under part B of this subchapter or enrolled
under part B of this subchapter only (other than an individual
medically determined to have end-stage renal disease) shall be
eligible to enroll under this section with any eligible
organization with which the Secretary has entered into a contract
under this section and which serves the geographic area in which
the individual resides.
(e) Limitation on charges; election of coverage; "adjusted
community rate" defined; workmen's compensation and insurance
benefits
(1) In no case may -
(A) the portion of an eligible organization's premium rate and
the actuarial value of its deductibles, coinsurance, and
copayments charged (with respect to services covered under parts
A and B of this subchapter) to individuals who are enrolled under
this section with the organization and who are entitled to
benefits under part A of this subchapter and enrolled under part
B of this subchapter, or
(B) the portion of its premium rate and the actuarial value of
its deductibles, coinsurance, and copayments charged (with
respect to services covered under part B of this subchapter) to
individuals who are enrolled under this section with the
organization and enrolled under part B of this subchapter only
exceed the actuarial value of the coinsurance and deductibles that
would be applicable on the average to individuals enrolled under
this section with the organization (or, if the Secretary finds that
adequate data are not available to determine that actuarial value,
the actuarial value of the coinsurance and deductibles applicable
on the average to individuals in the area, in the State, or in the
United States, eligible to enroll under this section with the
organization, or other appropriate data) and entitled to benefits
under part A of this subchapter and enrolled under part B of this
subchapter, or enrolled under part B only, respectively, if they
were not members of an eligible organization.
(2) If the eligible organization provides to its members enrolled
under this section services in addition to services covered under
parts A and B of this subchapter, election of coverage for such
additional services (unless such services have been approved by the
Secretary under subsection (c)(2) of this section) shall be
optional for such members and such organization shall furnish such
members with information on the portion of its premium rate or
other charges applicable to such additional services. In no case
may the sum of -
(A) the portion of such organization's premium rate charged,
with respect to such additional services, to members enrolled
under this section, and
(B) the actuarial value of its deductibles, coinsurance, and
copayments charged, with respect to such services to such members
exceed the adjusted community rate for such services.
(3) For purposes of this section, the term "adjusted community
rate" for a service or services means, at the election of an
eligible organization, either -
(A) the rate of payment for that service or services which the
Secretary annually determines would apply to a member enrolled
under this section with an eligible organization if the rate of
payment were determined under a "community rating system" (as
defined in section 300e-1(8) of this title, other than
subparagraph (C)), or
(B) such portion of the weighted aggregate premium, which the
Secretary annually estimates would apply to a member enrolled
under this section with the eligible organization, as the
Secretary annually estimates is attributable to that service or
services,
but adjusted for differences between the utilization
characteristics of the members enrolled with the eligible
organization under this section and the utilization characteristics
of the other members of the organization (or, if the Secretary
finds that adequate data are not available to adjust for those
differences, the differences between the utilization
characteristics of members in other eligible organizations, or
individuals in the area, in the State, or in the United States,
eligible to enroll under this section with an eligible organization
and the utilization characteristics of the rest of the population
in the area, in the State, or in the United States, respectively).
(4) Notwithstanding any other provision of law, the eligible
organization may (in the case of the provision of services to a
member enrolled under this section for an illness or injury for
which the member is entitled to benefits under a workmen's
compensation law or plan of the United States or a State, under an
automobile or liability insurance policy or plan, including a self-
insured plan, or under no fault insurance) charge or authorize the
provider of such services to charge, in accordance with the charges
allowed under such law or policy -
(A) the insurance carrier, employer, or other entity which
under such law, plan, or policy is to pay for the provision of
such services, or
(B) such member to the extent that the member has been paid
under such law, plan, or policy for such services.
(f) Membership requirements
(1) For contract periods beginning before January 1, 1999, each
eligible organization with which the Secretary enters into a
contract under this section shall have, for the duration of such
contract, an enrolled membership at least one-half of which
consists of individuals who are not entitled to benefits under this
subchapter.
(2) Subject to paragraph (4), the Secretary may modify or waive
the requirement imposed by paragraph (1) only -
(A) to the extent that more than 50 percent of the population
of the area served by the organization consists of individuals
who are entitled to benefits under this subchapter or under a
State plan approved under subchapter XIX of this chapter, or
(B) in the case of an eligible organization that is owned and
operated by a governmental entity, only with respect to a period
of three years beginning on the date the organization first
enters into a contract under this section, and only if the
organization has taken and is making reasonable efforts to enroll
individuals who are not entitled to benefits under this
subchapter or under a State plan approved under subchapter XIX of
this chapter.
(3) If the Secretary determines that an eligible organization has
failed to comply with the requirements of this subsection, the
Secretary may provide for the suspension of enrollment of
individuals under this section or of payment to the organization
under this section for individuals newly enrolled with the
organization, after the date the Secretary notifies the
organization of such noncompliance.
(4) Effective for contract periods beginning after December 31,
1996, the Secretary may waive or modify the requirement imposed by
paragraph (1) to the extent the Secretary finds that it is in the
public interest.
(g) Risk-sharing contract
(1) The Secretary may enter a risk-sharing contract with any
eligible organization, as defined in subsection (b) of this
section, which has at least 5,000 members, except that the
Secretary may enter into such a contract with an eligible
organization that has fewer members if the organization primarily
serves members residing outside of urbanized areas.
(2) Each risk-sharing contract shall provide that -
(A) if the adjusted community rate, as defined in subsection
(e)(3) of this section, for services under parts A and B of this
subchapter (as reduced for the actuarial value of the coinsurance
and deductibles under those parts) for members enrolled under
this section with the organization and entitled to benefits under
part A of this subchapter and enrolled in part B of this
subchapter, or
(B) if the adjusted community rate for services under part B of
this subchapter (as reduced for the actuarial value of the
coinsurance and deductibles under that part) for members enrolled
under this section with the organization and entitled to benefits
under part B of this subchapter only
is less than the average of the per capita rates of payment to be
made under subsection (a)(1) of this section at the beginning of an
annual contract period for members enrolled under this section with
the organization and entitled to benefits under part A of this
subchapter and enrolled in part B of this subchapter, or enrolled
in part B of this subchapter only, respectively, the eligible
organization shall provide to members enrolled under a risk-sharing
contract under this section with the organization and entitled to
benefits under part A of this subchapter and enrolled in part B of
this subchapter, or enrolled in part B of this subchapter only,
respectively, the additional benefits described in paragraph (3)
which are selected by the eligible organization and which the
Secretary finds are at least equal in value to the difference
between that average per capita payment and the adjusted community
rate (as so reduced); except that this paragraph shall not apply
with respect to any organization which elects to receive a lesser
payment to the extent that there is no longer a difference between
the average per capita payment and adjusted community rate (as so
reduced) and except that an organization (with the approval of the
Secretary) may provide that a part of the value of such additional
benefits be withheld and reserved by the Secretary as provided in
paragraph (5). If the Secretary finds that there is insufficient
enrollment experience to determine an average of the per capita
rates of payment to be made under subsection (a)(1) of this section
at the beginning of a contract period, the Secretary may determine
such an average based on the enrollment experience of other
contracts entered into under this section.
(3) The additional benefits referred to in paragraph (2) are -
(A) the reduction of the premium rate or other charges made
with respect to services furnished by the organization to members
enrolled under this section, or
(B) the provision of additional health benefits,
or both.
(4) Repealed. Pub. L. 100-203, title IV, Sec. 4012(b), Dec. 22,
1987, 101 Stat. 1330-61.
(5) An organization having a risk-sharing contract under this
section may (with the approval of the Secretary) provide that a
part of the value of additional benefits otherwise required to be
provided by reason of paragraph (2) be withheld and reserved in the
Federal Hospital Insurance Trust Fund and in the Federal
Supplementary Medical Insurance Trust Fund (in such proportions as
the Secretary determines to be appropriate) by the Secretary for
subsequent annual contract periods, to the extent required to
stabilize and prevent undue fluctuations in the additional benefits
offered in those subsequent periods by the organization in
accordance with paragraph (3). Any of such value of additional
benefits which is not provided to members of the organization in
accordance with paragraph (3) prior to the end of such period,
shall revert for the use of such trust funds.
(6)(A) A risk-sharing contract under this section shall require
the eligible organization to provide prompt payment (consistent
with the provisions of sections 1395h(c)(2) and 1395u(c)(2) of this
title) of claims submitted for services and supplies furnished to
individuals pursuant to such contract, if the services or supplies
are not furnished under a contract between the organization and the
provider or supplier.
(B) In the case of an eligible organization which the Secretary
determines, after notice and opportunity for a hearing, has failed
to make payments of amounts in compliance with subparagraph (A),
the Secretary may provide for direct payment of the amounts owed to
providers and suppliers for such covered services furnished to
individuals enrolled under this section under the contract. If the
Secretary provides for such direct payments, the Secretary shall
provide for an appropriate reduction in the amount of payments
otherwise made to the organization under this section to reflect
the amount of the Secretary's payments (and costs incurred by the
Secretary in making such payments).
(h) Reasonable cost reimbursement contract; requirements
(1) If -
(A) the Secretary is not satisfied that an eligible
organization has the capacity to bear the risk of potential
losses under a risk-sharing contract under this section, or
(B) the eligible organization so elects or has an insufficient
number of members to be eligible to enter into a risk-sharing
contract under subsection (g)(1) of this section,
the Secretary may, if he is otherwise satisfied that the eligible
organization is able to perform its contractual obligations
effectively and efficiently, enter into a contract with such
organization pursuant to which such organization is reimbursed on
the basis of its reasonable cost (as defined in section 1395x(v) of
this title) in the manner prescribed in paragraph (3).
(2) A reasonable cost reimbursement contract under this
subsection may, at the option of such organization, provide that
the Secretary -
(A) will reimburse hospitals and skilled nursing facilities
either for the reasonable cost (as determined under section
1395x(v) of this title) or for payment amounts determined in
accordance with section 1395ww of this title, as applicable, of
services furnished to individuals enrolled with such organization
pursuant to subsection (d) of this section, and
(B) will deduct the amount of such reimbursement from payment
which would otherwise be made to such organization.
If such an eligible organization pays a hospital or skilled nursing
facility directly, the amount paid shall not exceed the reasonable
cost of the services (as determined under section 1395x(v) of this
title) or the amount determined under section 1395ww of this title,
as applicable, unless such organization demonstrates to the
satisfaction of the Secretary that such excess payments are
justified on the basis of advantages gained by the organization.
(3) Payments made to an organization with a reasonable cost
reimbursement contract shall be subject to appropriate retroactive
corrective adjustment at the end of each contract year so as to
assure that such organization is paid for the reasonable cost
actually incurred (excluding any part of incurred cost found to be
unnecessary in the efficient delivery of health services) or the
amounts otherwise determined under section 1395ww of this title for
the types of expenses otherwise reimbursable under this subchapter
for providing services covered under this subchapter to individuals
described in subsection (a)(1) of this section.
(4) Any reasonable cost reimbursement contract with an eligible
organization under this subsection shall provide that the Secretary
shall require, at such time following the expiration of each
accounting period of the eligible organization (and in such form
and in such detail) as he may prescribe -
(A) that the organization report to him in an independently
certified financial statement its per capita incurred cost based
on the types of components of expenses otherwise reimbursable
under this subchapter for providing services described in
subsection (a)(1) of this section, including therein, in
accordance with accounting procedures prescribed by the
Secretary, its methods of allocating costs between individuals
enrolled under this section and other individuals enrolled with
such organization;
(B) that failure to report such information as may be required
may be deemed to constitute evidence of likely overpayment on the
basis of which appropriate collection action may be taken;
(C) that in any case in which an eligible organization is
related to another organization by common ownership or control, a
consolidated financial statement shall be filed and that the
allowable costs for such organization may not include costs for
the types of expense otherwise reimbursable under this
subchapter, in excess of those which would be determined to be
reasonable in accordance with regulations (providing for limiting
reimbursement to costs rather than charges to the eligible
organization by related organizations and owners) issued by the
Secretary; and
(D) that in any case in which compensation is paid by an
eligible organization substantially in excess of what is normally
paid for similar services by similar practitioners (regardless of
method of compensation), such compensation may as appropriate be
considered to constitute a distribution of profits.
(5)(A) After August 5, 1997, the Secretary may not enter into a
reasonable cost reimbursement contract under this subsection (if
the contract is not in effect as of August 5, 1997), except for a
contract with an eligible organization which, immediately previous
to entering into such contract, had an agreement in effect under
section 1395l(a)(1)(A) of this title.
(B) Subject to subparagraph (C), the Secretary shall approve an
application for a modification to a reasonable cost contract under
this section in order to expand the service area of such contract
if -
(i) such application is submitted to the Secretary on or before
September 1, 2003; and
(ii) the Secretary determines that the organization with the
contract continues to meet the requirements applicable to such
organizations and contracts under this section.
(C)(i) Subject to clause (ii), a reasonable cost reimbursement
contract under this subsection may be extended or renewed
indefinitely.
(ii) For any period beginning on or after January 1, 2008, a
reasonable cost reimbursement contract under this subsection may
not be extended or renewed for a service area insofar as such area
during the entire previous year was within the service area of -
(I) 2 or more MA regional plans described in clause (iii); or
(II) 2 or more MA local plans described in clause (iii).
(iii) A plan described in this clause for a year for a service
area is a plan described in section 1395w-21(a)(2)(A)(i) of this
title if the service area for the year meets the following minimum
enrollment requirements:
(I) With respect to any portion of the area involved that is
within a Metropolitan Statistical Area with a population of more
than 250,000 and counties contiguous to such Metropolitan
Statistical Area, 5,000 individuals.
(II) With respect to any other portion of such area, 1,500
individuals.
(i) Duration, termination, effective date, and terms of contract;
powers and duties of Secretary
(1) Each contract under this section shall be for a term of at
least one year, as determined by the Secretary, and may be made
automatically renewable from term to term in the absence of notice
by either party of intention to terminate at the end of the current
term; except that in accordance with procedures established under
paragraph (9), the Secretary may at any time terminate any such
contract or may impose the intermediate sanctions described in
paragraph (6)(B) or (6)(C) (whichever is applicable) on the
eligible organization if the Secretary determines that the
organization -
(A) has failed substantially to carry out the contract;
(B) is carrying out the contract in a manner substantially
inconsistent with the efficient and effective administration of
this section; or
(C) no longer substantially meets the applicable conditions of
subsections (b), (c), (e), and (f) of this section.
(2) The effective date of any contract executed pursuant to this
section shall be specified in the contract.
(3) Each contract under this section -
(A) shall provide that the Secretary, or any person or
organization designated by him -
(i) shall have the right to inspect or otherwise evaluate (I)
the quality, appropriateness, and timeliness of services
performed under the contract and (II) the facilities of the
organization when there is reasonable evidence of some need for
such inspection, and
(ii) shall have the right to audit and inspect any books and
records of the eligible organization that pertain (I) to the
ability of the organization to bear the risk of potential
financial losses, or (II) to services performed or
determinations of amounts payable under the contract;
(B) shall require the organization with a risk-sharing contract
to provide (and pay for) written notice in advance of the
contract's termination, as well as a description of alternatives
for obtaining benefits under this subchapter, to each individual
enrolled under this section with the organization; and
(C)(i) shall require the organization to comply with
subsections (a) and (c) of section 300e-17 of this title
(relating to disclosure of certain financial information) and
with the requirement of section 300e(c)(8) (!2) of this title
(relating to liability arrangements to protect members);
(ii) shall require the organization to provide and supply
information (described in section 1395cc(b)(2)(C)(ii) of this
title) in the manner such information is required to be provided
or supplied under that section;
(iii) shall require the organization to notify the Secretary of
loans and other special financial arrangements which are made
between the organization and subcontractors, affiliates, and
related parties; and
(D) shall contain such other terms and conditions not
inconsistent with this section (including requiring the
organization to provide the Secretary with such information) as
the Secretary may find necessary and appropriate.
(4) The Secretary may not enter into a risk-sharing contract with
an eligible organization if a previous risk-sharing contract with
that organization under this section was terminated at the request
of the organization within the preceding five-year period, except
in circumstances which warrant special consideration, as determined
by the Secretary.
(5) The authority vested in the Secretary by this section may be
performed without regard to such provisions of law or regulations
relating to the making, performance, amendment, or modification of
contracts of the United States as the Secretary may determine to be
inconsistent with the furtherance of the purpose of this
subchapter.
(6)(A) If the Secretary determines that an eligible organization
with a contract under this section -
(i) fails substantially to provide medically necessary items
and services that are required (under law or under the contract)
to be provided to an individual covered under the contract, if
the failure has adversely affected (or has substantial likelihood
of adversely affecting) the individual;
(ii) imposes premiums on individuals enrolled under this
section in excess of the premiums permitted;
(iii) acts to expel or to refuse to re-enroll an individual in
violation of the provisions of this section;
(iv) engages in any practice that would reasonably be expected
to have the effect of denying or discouraging enrollment (except
as permitted by this section) by eligible individuals with the
organization whose medical condition or history indicates a need
for substantial future medical services;
(v) misrepresents or falsifies information that is furnished -
(I) to the Secretary under this section, or
(II) to an individual or to any other entity under this
section;
(vi) fails to comply with the requirements of subsection
(g)(6)(A) of this section or paragraph (8); or
(vii) in the case of a risk-sharing contract, employs or
contracts with any individual or entity that is excluded from
participation under this subchapter under section 1320a-7 or
1320a-7a of this title for the provision of health care,
utilization review, medical social work, or administrative
services or employs or contracts with any entity for the
provision (directly or indirectly) through such an excluded
individual or entity of such services;
the Secretary may provide, in addition to any other remedies
authorized by law, for any of the remedies described in
subparagraph (B).
(B) The remedies described in this subparagraph are -
(i) civil money penalties of not more than $25,000 for each
determination under subparagraph (A) or, with respect to a
determination under clause (iv) or (v)(I) of such subparagraph,
of not more than $100,000 for each such determination, plus, with
respect to a determination under subparagraph (A)(ii), double the
excess amount charged in violation of such subparagraph (and the
excess amount charged shall be deducted from the penalty and
returned to the individual concerned), and plus, with respect to
a determination under subparagraph (A)(iv), $15,000 for each
individual not enrolled as a result of the practice involved,
(ii) suspension of enrollment of individuals under this section
after the date the Secretary notifies the organization of a
determination under subparagraph (A) and until the Secretary is
satisfied that the basis for such determination has been
corrected and is not likely to recur, or
(iii) suspension of payment to the organization under this
section for individuals enrolled after the date the Secretary
notifies the organization of a determination under subparagraph
(A) and until the Secretary is satisfied that the basis for such
determination has been corrected and is not likely to recur.
(C) In the case of an eligible organization for which the
Secretary makes a determination under paragraph (1), the basis of
which is not described in subparagraph (A), the Secretary may apply
the following intermediate sanctions:
(i) Civil money penalties of not more than $25,000 for each
determination under paragraph (1) if the deficiency that is the
basis of the determination has directly adversely affected (or
has the substantial likelihood of adversely affecting) an
individual covered under the organization's contract.
(ii) Civil money penalties of not more than $10,000 for each
week beginning after the initiation of procedures by the
Secretary under paragraph (9) during which the deficiency that is
the basis of a determination under paragraph (1) exists.
(iii) Suspension of enrollment of individuals under this
section after the date the Secretary notifies the organization of
a determination under paragraph (1) and until the Secretary is
satisfied that the deficiency that is the basis for the
determination has been corrected and is not likely to recur.
(D) The provisions of section 1320a-7a of this title (other than
subsections (a) and (b)) shall apply to a civil money penalty under
subparagraph (B)(i) or (C)(i) in the same manner as such provisions
apply to a civil money penalty or proceeding under section 1320a-
7a(a) of this title.
(7)(A) Each risk-sharing contract with an eligible organization
under this section shall provide that the organization will
maintain a written agreement with a utilization and quality control
peer review organization (which has a contract with the Secretary
under part B of subchapter XI of this chapter for the area in which
the eligible organization is located) or with an entity selected by
the Secretary under section 1320c-3(a)(4)(C) of this title under
which the review organization will perform functions under section
1320c-3(a)(4)(B) of this title and section 1320c-3(a)(14) of this
title (other than those performed under contracts described in
section 1395cc(a)(1)(F) of this title) with respect to services,
furnished by the eligible organization, for which payment may be
made under this subchapter.
(B) For purposes of payment under this subchapter, the cost of
such agreement to the eligible organization shall be considered a
cost incurred by a provider of services in providing covered
services under this subchapter and shall be paid directly by the
Secretary to the review organization on behalf of such eligible
organization in accordance with a schedule established by the
Secretary.
(C) Such payments -
(i) shall be transferred in appropriate proportions from the
Federal Hospital Insurance Trust Fund and from the Supplementary
Medical Insurance Trust Fund, without regard to amounts
appropriated in advance in appropriation Acts, in the same manner
as transfers are made for payment for services provided directly
to beneficiaries, and
(ii) shall not be less in the aggregate for such organizations
for a fiscal year than the amounts the Secretary determines to be
sufficient to cover the costs of such organizations' conducting
activities described in subparagraph (A) with respect to such
eligible organizations under part B of subchapter XI of this
chapter.
(8)(A) Each contract with an eligible organization under this
section shall provide that the organization may not operate any
physician incentive plan (as defined in subparagraph (B)) unless
the following requirements are met:
(i) No specific payment is made directly or indirectly under
the plan to a physician or physician group as an inducement to
reduce or limit medically necessary services provided with
respect to a specific individual enrolled with the organization.
(ii) If the plan places a physician or physician group at
substantial financial risk (as determined by the Secretary) for
services not provided by the physician or physician group, the
organization -
(I) provides stop-loss protection for the physician or group
that is adequate and appropriate, based on standards developed
by the Secretary that take into account the number of
physicians placed at such substantial financial risk in the
group or under the plan and the number of individuals enrolled
with the organization who receive services from the physician
or the physician group, and
(II) conducts periodic surveys of both individuals enrolled
and individuals previously enrolled with the organization to
determine the degree of access of such individuals to services
provided by the organization and satisfaction with the quality
of such services.
(iii) The organization provides the Secretary with descriptive
information regarding the plan, sufficient to permit the
Secretary to determine whether the plan is in compliance with the
requirements of this subparagraph.
(B) In this paragraph, the term "physician incentive plan" means
any compensation arrangement between an eligible organization and a
physician or physician group that may directly or indirectly have
the effect of reducing or limiting services provided with respect
to individuals enrolled with the organization.
(9) The Secretary may terminate a contract with an eligible
organization under this section or may impose the intermediate
sanctions described in paragraph (6) on the organization in
accordance with formal investigation and compliance procedures
established by the Secretary under which -
(A) the Secretary first provides the organization with the
reasonable opportunity to develop and implement a corrective
action plan to correct the deficiencies that were the basis of
the Secretary's determination under paragraph (1) and the
organization fails to develop or implement such a plan;
(B) in deciding whether to impose sanctions, the Secretary
considers aggravating factors such as whether an organization has
a history of deficiencies or has not taken action to correct
deficiencies the Secretary has brought to the organization's
attention;
(C) there are no unreasonable or unnecessary delays between the
finding of a deficiency and the imposition of sanctions; and
(D) the Secretary provides the organization with reasonable
notice and opportunity for hearing (including the right to appeal
an initial decision) before imposing any sanction or terminating
the contract.
(j) Payment in full and limitation on actual charges; physicians,
providers of services, or renal dialysis facilities not under
contract with organization
(1)(A) In the case of physicians' services or renal dialysis
services described in paragraph (2) which are furnished by a
participating physician or provider of services or renal dialysis
facility to an individual enrolled with an eligible organization
under this section and enrolled under part B of this subchapter,
the applicable participation agreement is deemed to provide that
the physician or provider of services or renal dialysis facility
will accept as payment in full from the eligible organization the
amount that would be payable to the physician or provider of
services or renal dialysis facility under part B of this subchapter
and from the individual under such part, if the individual were not
enrolled with an eligible organization under this section.
(B) In the case of physicians' services described in paragraph
(2) which are furnished by a nonparticipating physician, the
limitations on actual charges for such services otherwise
applicable under part B of this subchapter (to services furnished
by individuals not enrolled with an eligible organization under
this section) shall apply in the same manner as such limitations
apply to services furnished to individuals not enrolled with such
an organization.
(2) The physicians' services or renal dialysis services described
in this paragraph are physicians' services or renal dialysis
services which are furnished to an enrollee of an eligible
organization under this section by a physician, provider of
services, or renal dialysis facility who is not under a contract
with the organization.
(k) Risk-sharing contracts
(1) Except as provided in paragraph (2) -
(A) on or after the date standards for Medicare+Choice
organizations and plans are first established under section 1395w-
26(b)(1) of this title, the Secretary shall not enter into any
risk-sharing contract under this section with an eligible
organization; and
(B) for any contract year beginning on or after January 1,
1999, the Secretary shall not renew any such contract.
(2) An individual who is enrolled in part B of this subchapter
only and is enrolled in an eligible organization with a risk-
sharing contract under this section on December 31, 1998, may
continue enrollment in such organization in accordance with
regulations described in section 1395w-26(b)(1) of this title.
(3) Notwithstanding subsection (a) of this section, the Secretary
shall provide that payment amounts under risk-sharing contracts
under this section for months in a year (beginning with January
1998) shall be computed -
(A) with respect to individuals entitled to benefits under both
parts A and B of this subchapter, by substituting payment rates
under section 1395w-23(a) of this title for the payment rates
otherwise established under subsection (a) of this section, and
(B) with respect to individuals only entitled to benefits under
part B of this subchapter, by substituting an appropriate
proportion of such rates (reflecting the relative proportion of
payments under this subchapter attributable to such part) for the
payment rates otherwise established under subsection (a) of this
section.
(4) The following requirements shall apply to eligible
organizations with risk-sharing contracts under this section in the
same manner as they apply to Medicare+Choice organizations under
part C of this subchapter:
(A) Data collection requirements under section 1395w-
23(a)(3)(B) of this title.
(B) Restrictions on imposition of premium taxes under section
1395w-24(g) of this title in relating to payments to such
organizations under this section.
(C) The requirement to accept enrollment of new enrollees
during November 1998 under section 1395w-21(e)(6) of this title.
(D) Payments under section 1395w-27(e)(2) of this title.