42 C.F.R. Subpart B—Intermediaries
Title 42 - Public Health
An agreement between CMS and an intermediary specifies the functions to be performed by the intermediary, which must include, but are not necessarily limited to, the following: (a) Coverage. (1) The intermediary ensures that it makes payments only for services that are: (i) Furnished to Medicare beneficiaries; (ii) Covered under Medicare; and (iii) In accordance with QIO determinations when they are services for which the QIO has assumed review responsibility under its contract with CMS. (2) The intermediary takes appropriate action to reject or adjust the claim if— (i) The intermediary or the QIO determines that the services furnished or proposed to be furnished were not reasonable, not medically necessary, or not furnished in the most appropriate setting; or (ii) The intermediary determines that the claim does not properly reflect the kind and amount of services furnished. (b) Fiscal management. The intermediary must receive, disburse, and account for funds in making Medicare payments. (c) Provider audits. The intermediary must audit the records of providers of services as necessary to assure proper payments. (d) Utilization patterns. The intermediary must assist providers to— (1) Develop procedures relating to utilization practices; (2) Make studies of the effectiveness of those procedures and recommend methods to improve them; (3) Evaluate the results of utilization review activity; and (4) Assist in the application of safeguards against unnecessary utilization of services. (e) Resolution of cost report disputes. The intermediary must establish and maintain procedures approved by CMS to consider and resolve any disputes that may result from provider dissatisfaction with an intermediary's determinations concerning provider cost reports. (f) Reconsideration of determinations. The intermediary must establish and maintain procedures approved by CMS for the reconsideration of its determinations to deny payments to an individual or to the provider that furnished services to the individual. The QIO performs reconsideration of cases in which it made a determination subject to reconsideration. (g) Information and reports. The intermediary must furnish to CMS any information and reports that CMS requests in order to carry out its responsibilities in the administration of the Medicare program. (h) Other terms and conditions. The intermediary must comply with all applicable laws and regulations and with any other terms and conditions included in its agreement. (i) Dual intermediary responsibilities. With respect to the responsibility for service to provider-based HHAs and provider-based hospices, where the HHA or hospice and its parent provider will be served by different intermediaries under §421.117 of this part, the designated regional intermediary will process bills, make coverage determinations and make payments to the HHAs and hospices. The intermediary serving the parent provider will perform all fiscal functions, including audits and settlement of the Medicare cost reports and the HHA and hospice supplement worksheets. [45 FR 42179, June 23, 1980, as amended at 48 FR 7178, Feb. 18, 1983; 49 FR 3659, Jan. 30, 1984; 51 FR 43198, Dec. 1, 1986; 53 FR 17944, May 19, 1988; 54 FR 4026, Jan. 27, 1989] (a) Except for hospices (which are covered under §421.117), a provider may elect to receive payment for covered services furnished to Medicare beneficiaries— (1) Directly from CMS (subject to the provisions of paragraph (b) of this section); or (2) Through an intermediary, when both CMS and the intermediary consent. (b) Whenever CMS determines it appropriate, it may contract with any organization (including an intermediary with which CMS has previously entered into an agreement under §421.105 and §421.110 or designated as a regional or alternative regional intermediary under §421.117) for the purposes of making payments to any provider that does not elect to receive payment from an intermediary. [49 FR 3659, Jan. 30, 1984; 49 FR 9174, Mar. 12, 1984] (a) Nomination by groups or associations of providers. (1) An association of providers, except for hospices, may nominate an organization or agency to serve as intermediary for its members. (2) The nomination is not binding on any member of the association if it notifies CMS of its nonconcurrence with the nomination. (3) The nomination must be made in writing, to CMS, and must— (i) Identify the proposed intermediary by giving the complete name and address; (ii) Include, or furnish as an attachment, the name, address, and bed capacity (or patient care capacity in the case of home health agencies) of each member of the association; (iii) List the members that have concurred in the nomination of the proposed intermediary; and (iv) Be signed by an authorized representative of the association. (b) Action by nonmembers or nonconcurring members. Providers that nonconcur in their association's nomination, or are not members of an association, may— (1) Form a group of 2 or more providers for the specific purpose of nominating an intermediary, in accordance with provisions of paragraph (a) of this section; (2) Elect to receive payments from a fiscal intermediary with which CMS already has an agreement, if CMS and the intermediary agree to it (see §421.106); or (3) Elect to receive payment from CMS as provided in §421.103. (c) CMS is not required to enter into an agreement with a proposed intermediary solely because it has been nominated. [45 FR 42179, June 23, 1980, as amended at 48 FR 56035, Dec. 16, 1983; 49 FR 3659, Jan. 30, 1984] (a) CMS will send, to each member of a nominating association or group, written notice of a decision to enter into or not enter into an agreement with the nominated organization or agency. (b) Any member of a group or association having more than one nominated intermediary approved by CMS to act on its behalf must withdraw its nomination from all but one or exercise the option provided in §421.103(a), subject to §421.103(b), to receive payment directly from CMS. [45 FR 42179, June 23, 1980, as amended at 49 FR 3660, Jan. 30, 1984] (a) Any provider may request a change of intermediary, or except for a hospice, that it be paid directly by CMS, by— (1) Giving CMS written notice of its desire at least 120 days before the end of its current fiscal year; and (2) Concurrently giving written notice to its intermediary. (b) If CMS finds the change is consistent with effective and efficient administration of the program and approves the request under paragraph (a) of this section, it will notify the provider, the outgoing intermediary, and the newly-elected intermediary (if any) that the change will be effective on the first day following the close of the fiscal year in which the request was filed. [45 FR 42179, June 23, 1980, as amended at 49 FR 56036, Dec. 16, 1983; 49 FR 3660, Jan. 30, 1984] Before entering into or renewing an intermediary agreement, CMS will— (a) Determine that to do so is consistent with the effective and efficient administration of the Medicare program; (b) Review the performance of the intermediary as measured by the criteria (§421.120) and standards (§421.122); and (c) Determine that the intermediary or prospective intermediary— (1) Is willing and able to assist providers in the application of safeguards against unnecessary utilization of services; (2) Meets all solvency and financial responsibility requirements imposed by the statutes and regulatory authorities of the State or States in which it, or any subcontractor performing some or all of its functions, would serve; (3) Has the overall resources and experience to administer its responsibilities under the Medicare program and has an existing operational, statistical, and recordkeeping capacity to carry out the additional program responsibilities it proposes to assume. CMS will presume that an intermediary or prospective intermediary meets this requirement if it has at least 5 years experience in paying for or reimbursing the cost of health services; (4) Will serve a sufficient number of providers to permit a finding of effective and efficient administration. Under this criterion no intermediary or prospective intermediary shall be found to be not efficient or effective solely on the grounds that it serves only providers located in a single State; (5) Has acted in good faith to achieve effective cooperation with the providers it will service and with the physicians and medical societies in the area; (6) Has established a record of integrity and satisfactory service to the public; and (7) Has an affirmative equal employment opportunity program that complies with the fair employment provisions of the Civil Rights Act of 1964 and Executive Order 11246, as amended. (a) In order to accomplish the most effective and efficient administration of the Medicare program, determinations may be made by the Secretary with respect to the termination of an intermediary agreement, or by CMS with respect to the— (1) Renewal of an intermediary agreement (§421.110); (2) Assignment or reassignment of providers to an intermediary (§421.114); or (3) Designation of a regional or national intermediary to serve a class of providers (§421.116). (b) When taking the actions listed in paragraph (a), the Secretary or CMS will consider the performance of the individual intermediary in its Medicare operations using the factors contained in the performance criteria (§421.120) and performance standards (§421.122). (c) In addition, when taking the actions listed in paragraph (a) of this section, the Secretary or CMS may consider factors relating to— (1) Consistency in the administration of program policy; (2) Development of intermediary expertise in difficult areas of program administration; (3) Individual capacity of available intermediaries to serve providers as it is affected by such considerations as— (i) Program emphasis on the number or type of providers to be served; or (ii) Changes in data processing technology; (4) Overdependence of the program on the capacity of an intermediary to an extent that services could be interrupted; (5) Economy in the delivery of intermediary services; (6) Timeliness in the delivery of intermediary services; (7) Duplication in the availability of intermediaries; (8) Conflict of interest between an intermediary and provider; and (9) Any additional pertinent factors. [45 FR 42179, June 23, 1980, as amended at 59 FR 682, Jan. 6, 1994] CMS may assign or reassign any provider to any intermediary if it determines that the assignment or reassignment will result in a more effective and efficient administration of the Medicare program. Before making this determination CMS will consider— (a) The preferences of the provider; (b) The availability of an intermediary as specified in §421.5(e); and (c) Intermediary performance measured against the criteria and standards specified in §§421.120 and 421.122. [45 FR 42179, June 23, 1980, as amended at 49 FR 3660, Jan. 30, 1984] (a) After considering intermediary performance measured against the criteria and standards specified in §§421.120 and 421.122, CMS may designate a particular intermediary to serve a class of providers nationwide or in any geographic area it defines. CMS may make this designation if it determines that the designation will result in a greater degree of effectiveness and efficiency in the administration of the Medicare program than could be achieved by an assignment of providers to an intermediary preferred by the providers. (b) No designation may be made until the affected providers and intermediaries are given an explanation and the intermediaries are advised of their right to a hearing and judicial review as specified in §421.128. This provision does not apply to experimental contracts awarded under §421.118. (c) To designate an intermediary, CMS may establish classes of providers on the basis of— (1) The type of provider, for example, hospital, skilled nursing facility, home health agency; or (2) Common characteristics. [45 FR 42179, June 23, 1980, as amended at 49 FR 3660, Jan. 30, 1984] (a) This section is based on section 1816(e)(4) of the Social Security Act, which requires the Secretary to designate regional intermediaries for home health agencies (HHAs) other than hospital-based HHAs but permits him or her to designate regional intermediaries for hospital-based HHAs only if the designation meets promulgated criteria concerning administrative efficiency and effectiveness; on section 1816(e)(5) of the Social Security Act, which requires the Secretary to designate intermediaries for hospices; and on section 1874 of the Act, which permits CMS to contract with any organization for the purpose of making payments to any provider that elects to receive payment directly from CMS. (b) CMS applies the following criteria to determine whether the assignment of hospital-based HHAs to designated regional intermediaries will result in the more effective and efficient administration of the Medicare program: (1) Uniform interpretation of Medicare rules; (2) Expertise in bill processing; (3) Control of administrative costs; (4) Ease of communication of program policy and issues to affected providers; (5) Ease of data collection; (6) Ease of CMS's monitoring of intermediary performance; and (7) Other criteria as the Secretary believes to be pertinent. (c) Except as provided in paragraphs (e), (f), and (g) of this section, an HHA must receive payment through a regional intermediary designated by CMS. (d) Except as provided in paragraphs (f) through (h) of this section, a hospice must receive payment for covered services furnished to Medicare beneficiaries through an intermediary designated by CMS. (e) An HHA chain not desiring to receive payment from designated regional intermediaries may request service by one lead intermediary with the assistance of a local designated regional intermediary. Alternatively, the chain may request to be serviced by a single intermediary. A lead, local, or a single intermediary must be an organization that is a designated regional intermediary. Any request made under this paragraph is evaluated by CMS in accordance with the criteria contained at §421.106 of this subpart. (f) An HHA or hospice not wishing to receive payment from a regional intermediary designated under paragraph (c) or (d) of this section may submit a request to the CMS Regional Office to receive payment through an alternative regional intermediary designated by CMS. (g) Except as provided in paragraph (h) of this section, any request that an HHA or hospice may make to change from a designated regional intermediary to an alternative designated regional intermediary, in accordance with paragraph (f) of this section, is evaluated by CMS in accordance with the criteria set forth at §421.106(b) of this subpart and must be filed within the timeframe established at §421.106(a) of this subpart. (h) Exception: An HHA or a hospice that, as of June 20, 1988 is receiving payment from a designated regional intermediary may, without regard to the limitations contained in §421.106 of this subpart, continue to receive payment from that intermediary. It may do so even if that intermediary is not the designated regional intermediary or the alternative designated regional intermediary for the particular State in which the HHA or hospice is located. [53 FR 17944, May 19, 1988] Notwithstanding the provisions of §§421.103 and 421.104, CMS may award a fixed price or performance incentive contract under the experimental authority contained in 42 U.S.C. 1395b–1 for performance of any of the functions specified in §421.100. Action taken by CMS under this paragraph is not subject to— (a) The administrative and judicial review which would otherwise be available under §421.128; or (b) Performance criteria and performance standards review as provided for in §§421.120 and 421.122. [45 FR 42179, June 23, 1980, as amended at 59 FR 682, Jan. 6, 1994] (a) Application of performance criteria. As part of the intermediary evaluations authorized by section 1816(f) of the Act, CMS periodically assesses the performance of intermediaries in their Medicare operations using performance criteria. The criteria measure and evaluate intermediary performance of functional responsibilities such as— (1) Correct coverage and payment determinations; (2) Responsiveness to beneficiary concerns; and (3) Proper management of administrative funds. (b) Basis for criteria. CMS will base the performance criteria on— (1) Nationwide intermediary experience; (2) Changes in intermediary operations due to fiscal constraints; and (3) HFCA's objectives in achieving better performance. (c) Publication of criteria. The development and revision of criteria for evaluating intermediary performance is a continuing process. Therefore, before the beginning of each evaluation period, CMS will publish the performance criteria as a notice in the [48 FR 7178, Feb. 18, 1983] (a) Development of standards. In addition to the performance criteria (§421.120), CMS develops detailed performance standards for use in evaluating intermediary performance which may be based on historical performance, application of acceptable statistical measures of variation to nationwide intermediary experience during a base period, or changing program emphases or requirements. These standards are also developed considering intermediary experience and evaluate the specific requirements of each functional responsibility or criterion. (b) Factors beyond intermediary's control. To identify measurable factors that significantly affect an intermediary's performance, but that are not within the intermediary's control, CMS will— (1) Study the performance of intermediaries during the base period, and (2) Consider the noncontrollable factors in developing performance standards. (c) Publication of standards. The development and revision of standards for evaluating intermediary performance is a continuing process. Therefore, before the beginning of each evaluation period, which usually coincides with the Federal fiscal year period of October 1–September 30, CMS publishes the performance standards as part of the [59 FR 682, Jan. 6, 1994] (a) Failure by an intermediary to meet, or to demonstrate the capacity to meet, the criteria or standards specified in §§421.120 and 421.122 may be grounds for adverse action by the Secretary or by CMS, such as reassignment of providers, offer of a short-term agreement, termination of a contract, or non-renewal of a contract. If an intermediary meets all criteria and standards in its overall performance, but does not meet them with respect to a specific provider or class of providers, CMS may reassign that provider or class of providers to another intermediary in accordance with §421.114. (b) In addition, notwithstanding whether an intermediary meets the criteria and standards, if the cost incurred by the intermediary to meet its contractual requirements exceeds the amount which CMS finds to be reasonable and adequate to meet the cost which must be incurred by an efficiently and economically operated intermediary, those high costs may also be grounds for adverse action. [59 FR 682, Jan. 6, 1994] (a) Termination by intermediary. An intermediary may terminate its agreement at any time by— (1) Giving written notice of its intention to CMS and to the providers it services at least 180 days before its intended termination date; and (2) Giving public notice of its intention by publishing a statement of the effective date of termination at least 60 days before that date. Publication must be in a newspaper of general circulation in each community served by the intermediary. (b) Termination by the Secretary, and right of appeal. (1) The Secretary may terminate an agreement if— (i) The intermediary fails to comply with the requirements of this subpart; (ii) The intermediary fails to meet the criteria or standards specified in §§421.120 and 421.122; or (iii) CMS has reassigned, under §421.114 or §421.116, all of the providers assigned to the intermediary. (2) If the Secretary decides to terminate an agreement, he or she will offer the intermediary an opportunity for a hearing, in accordance with §421.128. (3) If the intermediary does not request a hearing, or if the hearing decision affirms the Secretary's decision, the Secretary will provide reasonable notice of the effective date of termination to— (i) The intermediary; (ii) The providers served by the intermediary; and (iii) The general public. (4) The providers served by the intermediary will be given the opportunity to nominate another intermediary, in accordance with §421.104. (a) Basis for appeal. An intermediary adversely affected by any of the following actions shall be granted an opportunity for a hearing: (1) Assignment or reassignment of providers to another intermediary. (2) Designation of a national or regional intermediary to serve a class of providers. (3) Termination of the agreement. (b) Request for hearing. The intermediary shall file the request with CMS within 20 days from the date on the notice of intended action. (c) Hearing procedures. The hearing officer shall be a representative of the Secretary and not otherwise a party to the initial administrative decision. The intermediary may be represented by counsel and may present evidence and examine witnesses. A complete recording of the proceedings at the hearing will be made and transcribed. (d) Judicial review. An adverse hearing decision concerning action under paragraph (a)(1) or (a)(2) of this section is subject to judicial review in accordance with 5 U.S.C. chapter 7. (e) As specified in §421.118, contracts awarded under the experimental authority of CMS are not subject to the provisions of this section. (f) Exception. An intermediary adversely affected by the designation of a regional intermediary or an alternative regional intermediary for HHAs, or an intermediary for hospices, under §421.117 of this subpart is not entitled to a hearing or judicial review concerning adverse effects caused by the designation of an intermediary. [45 FR 42179, June 23, 1980, as amended at 47 FR 38540, Sept. 1, 1982; 49 FR 3660, Jan. 30, 1984; 53 FR 17945, May 19, 1988]
Title 42: Public Health
PART 421—INTERMEDIARIES AND CARRIERS
Subpart B—Intermediaries
§ 421.100 Intermediary functions.
§ 421.103 Options available to providers and CMS.
§ 421.104 Nominations for intermediary.
§ 421.105 Notification of action on nomination.
§ 421.106 Change to another intermediary or to direct payment.
§ 421.110 Requirements for approval of an agreement.
§ 421.112 Considerations relating to the effective and efficient administration of the program.
§ 421.114 Assignment and reassignment of providers by CMS.
§ 421.116 Designation of national or regional intermediaries.
§ 421.117 Designation of regional and alternative designated regional intermediaries for home health agencies and hospices.
§ 421.118 Awarding of experimental contracts.
§ 421.120 Performance criteria.
§ 421.122 Performance standards.
§ 421.124 Intermediary's failure to perform efficiently and effectively.
§ 421.126 Termination of agreements.
§ 421.128 Intermediary's opportunity for hearing and right to judicial review.
