42 C.F.R. Subpart A—General Provisions
Title 42 - Public Health
Source: 63 FR 35068, June 26, 1998, unless otherwise noted.
(a) Basis. This part is based on the indicated provisions of the following sections of the Act:
1851—Eligibility, election, and enrollment. 1852—Benefits and beneficiary protections. 1853—Payments to Medicare Advantage (MA) organizations. 1854—Premiums. 1855—Organization, licensure, and solvency of MA organizations. 1856—Standards. 1857—Contract requirements. 1858—Special rules for MA Regional Plans. 1859—Definitions; enrollment restriction for certain MA plans. (b) Scope. This part establishes standards and sets forth the requirements, limitations, and procedures for Medicare services furnished, or paid for, by Medicare Advantage organizations through Medicare Advantage plans. [63 FR 35068, June 26, 1998, as amended at 70 FR 4714, Jan. 28, 2005] As used in this part— Arrangement means a written agreement between an MA organization and a provider or provider network, under which— (1) The provider or provider network agrees to furnish for a specific MA plan(s) specified services to the organization's MA enrollees; (2) The organization retains responsibilities for the services; and (3) Medicare payment to the organization discharges the enrollee's obligation to pay for the services. Balance billing generally refers to an amount billed by a provider that represents the difference between the amount the provider charges an individual for a service and the sum of the amount the individual's health insurer (for example, the original Medicare program) will pay for the service plus any cost-sharing by the individual. Basic benefits means all Medicare-covered benefits (except hospice services). Benefits means health care services that are intended to maintain or improve the health status of enrollees, for which the MA organization incurs a cost or liability under an MA plan (not solely an administrative processing cost). Benefits are submitted and approved through the annual bidding process. Coinsurance is a fixed percentage of the total amount paid for a health care service that can be charged to an MA enrollee on a per-service basis. Copayment is a fixed amount that can be charged to an MA plan enrollee on a per-service basis. Cost-sharing includes deductibles, coinsurance, and copayments. Institutionalized means for the purpose of defining a special needs individual, an MA eligible individual who continuously resides or is expected to continuously reside for 90 days or longer in a long-term care facility which is a skilled nursing facility (SNF) nursing facility (NF); SNF/NF; an intermediate care facility for the mentally retarded (ICF/MR); or an inpatient psychiatric facility. Licensed by the State as a risk-bearing entity means the entity is licensed or otherwise authorized by the State to assume risk for offering health insurance or health benefits coverage, such that the entity is authorized to accept prepaid capitation for providing, arranging, or paying for comprehensive health services under an MA contract. MA stands for Medicare Advantage. MA local area is defined in §422.252. MA local plan means an MA plan that is not an MA regional plan. MA-Prescription drug (PD) plan means an MA plan that provides qualified prescription drug coverage under Part D of the Social Security Act. MA regional plan means a coordinated care plan structured as a preferred provider organization (PPO) that serves one or more entire regions. An MA regional plan must have a network of contracting providers that have agreed to a specific reimbursement for the plan's covered services and must pay for all covered services whether provided in or out of the network. MA eligible individual means an individual who meets the requirements of §422.50. MA organization means a public or private entity organized and licensed by a State as a risk-bearing entity (with the exception of provider-sponsored organizations receiving waivers) that is certified by CMS as meeting the MA contract requirements. MA plan means health benefits coverage offered under a policy or contract by an MA organization that includes a specific set of health benefits offered at a uniform premium and uniform level of cost-sharing to all Medicare beneficiaries residing in the service area of the MA plan (or in individual segments of a service area, under §422.304(b)(2)). MA plan enrollee is an MA eligible individual who has elected an MA plan offered by an MA organization. Mandatory supplemental benefits means health care services not covered by Medicare that an MA enrollee must accept or purchase as part of an MA plan. The benefits may include reductions in cost sharing for benefits under the original Medicare fee for service program and are paid for in the form of premiums and cost sharing, or by an application of the beneficiary rebate rule in section 1854(b)(1)(C)(ii)(I) of the Act, or both. MSA stands for medical savings account. MSA trustee means a person or business with which an enrollee establishes an MA MSA. A trustee may be a bank, an insurance company, or any other entity that— (1) Is approved by the Internal Revenue Service to be a trustee or custodian of an individual retirement account (IRA); and (2) Meets the requirements of §422.262(b). National coverage determination (NCD) means a national policy determination regarding the coverage status of a particular service that CMS makes under section 1862(a)(1) of the Act, and publishes as a Optional supplemental benefits are health services not covered by Medicare that are purchased at the option of the MA enrollee and paid for in full, directly by (or on behalf of) the Medicare enrollee, in the form of premiums or cost-sharing. These services may be grouped or offered individually. Original Medicare means health insurance available under Medicare Part A and Part B through the traditional fee-for service payment system. Point of service (POS) is a benefit option that an MA coordinated care plan can offer to its Medicare enrollees as an additional, mandatory supplemental, or optional supplemental benefit. Under the POS benefit option, the MA plan allows members the option of receiving specified services outside of the MA plan's provider network. In return for this flexibility, members typically have higher cost-sharing requirements for services received and, where offered as a mandatory or optional supplemental benefit, may also be charged a premium for the POS benefit option. Prescription drug plan (PDP). PDP has the definition set forth in §423.4 of this chapter. Prescription drug plan (PDP) sponsor. A prescription drug plan sponsor has the definition set forth in §423.4 of this chapter. 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 engage in 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 to deliver those services if such licensing or certification is required by State law or regulation. Provider network means the providers with which an MA organization contracts or makes arrangements to furnish covered health care services to Medicare enrollees under an MA coordinated care plan or network PFFS plan. Religious Fraternal benefit (RFB) society means an organization that— (1) Is described in section 501(c)(8) of the Internal Revenue Code of 1986 and is exempt from taxation under section 501(a) of that Act; and (2) Is affiliated with, carries out the tenets of, and shares a religious bond with, a church or convention or association of churches or an affiliated group of churches. RFB plan means an MA plan that is offered by an RFB society. Service area means a geographic area that for local MA plans is a county or multiple counties, and for MA regional plans is a region approved by CMS within which an MA-eligible individual may enroll in a particular MA plan offered by an MA organization. Each MA plan must be available to all MA-eligible individuals within the plan's service area. In deciding whether to approve an MA plan's proposed service area, CMS considers the following criteria: (1) For local MA plans: (i) Whether the area meets the “county integrity rule” that a service area generally consists of a full county or counties. (ii) However, CMS may approve a service area that includes only a portion of a county if it determines that the “partial county” area is necessary, nondiscriminatory, and in the best interests of the beneficiaries. CMS may also consider the extent to which the proposed service area mirrors service areas of existing commercial health care plans or MA plans offered by the organization. (2) For all MA coordinated care plans, whether the contracting provider network meets the access and availability standards set forth in §422.112. Although not all contracting providers must be located within the plan's service area, CMS must determine that all services covered under the plan are accessible from the service area. (3) For MA regional plans, whether the service area consists of the entire region. Special needs individual means an MA eligible individual who is institutionalized, as defined above, is entitled to medical assistance under a State plan under title XIX, or has a severe or disabling chronic condition(s) and would benefit from enrollment in a specialized MA plan. Specialized MA Plans for Special Needs Individuals means a MA coordinated care plan that exclusively enrolls or enrolls a disproportionate percentage of special needs individuals as set forth in §422.4(a)(1)(iv) and that, beginning January 1, 2006, provides Part D benefits under part 423 of this chapter to all enrollees; and which has been designated by CMS as meeting the requirements of a MA SNP as determined on a case-by-case basis using criteria that include the appropriateness of the target population, the existence of clinical programs or special expertise to serve the target population, and whether the proposal discriminates against sicker members of the target population. [63 FR 35068, June 26, 1998, as amended at 65 FR 40314, June 29, 2000; 68 FR 50855, Aug. 22, 2003; 70 FR 4714, Jan. 28, 2005; 70 FR 52026, Sept. 1, 2005; 70 FR 76197, Dec. 23, 2005] (a) General rule. An MA plan may be a coordinated care plan, a combination of an MA MSA plan and a contribution into an MA MSA established in accordance with §422.262, or an MA private fee-for-service plan. (1) A coordinated care plan. A coordinated care plan is a plan that includes a network of providers that are under contract or arrangement with the organization to deliver the benefit package approved by CMS. (i) The network is approved by CMS to ensure that all applicable requirements are met, including access and availability, service area, and quality. (ii) Coordinated care plans may include mechanisms to control utilization, such as referrals from a gatekeeper for an enrollee to receive services within the plan, and financial arrangements that offer incentives to providers to furnish high quality and cost-effective care. (iii) Coordinated care plans include plans offered by health maintenance organizations (HMOs), provider-sponsored organizations (PSOs), regional or local preferred provider organizations (PPOs) as specified in paragraph (a)(1)(v) of this section, and other network plans (except PFFS plans). (iv) A specialized MA plan for special needs individuals (SNP) includes any type of coordinated care plan that meets CMS'SNP requirements and either— (A) Exclusively enrolls special needs individuals as defined in §422.2; or (B) Enrolls a greater proportion of special needs individuals than occur nationally in the Medicare population as defined by CMS. (v) A PPO plan is a plan that has a network of providers that have agreed to a contractually specified reimbursement for covered benefits with the organization offering the plan; provides for reimbursement for all covered benefits regardless of whether the benefits are provided within the network of providers; and, only for purposes of quality assurance requirements in §422.152(e), is offered by an organization that is not licensed or organized under State law as an HMO. (2) A combination of an MA MSA plan and a contribution into the MA MSA established in accordance with §422.262. (i) MA MSA plan means a plan that— (A) Pays at least for the services described in §422.101, after the enrollee has incurred countable expenses (as specified in the plan) equal in amount to the annual deductible specified in §422.103(d); and (B) Meets all other applicable requirements of this part. (ii) MA MSA means a trust or custodial account— (A) That is established in conjunction with an MSA plan for the purpose of paying the qualified expenses of the account holder; and (B) Into which no deposits are made other than contributions by CMS under the MA program, or a trustee-to-trustee transfer or rollover from another MA MSA of the same account holder, in accordance with the requirements of sections 138 and 220 of the Internal Revenue Code. (3) MA private fee-for-service plan. An MA private fee-for-service plan is an MA plan that— (i) Pays providers of services at a rate determined by the plan on a fee-for-service basis without placing the provider at financial risk; (ii) Does not vary the rates for a provider based on the utilization of that provider's services; and (iii) Does not restrict enrollees' choices among providers that are lawfully authorized to provide services and agree to accept the plan's terms and conditions of payment. (b) Multiple plans. Under its contract, an MA organization may offer multiple plans, regardless of type, provided that the MA organization is licensed or approved under State law to provide those types of plans (or, in the case of a PSO plan, has received from CMS a waiver of the State licensing requirement). If an MA organization has received a waiver for the licensing requirement to offer a PSO plan, that waiver does not apply to the licensing requirement for any other type of MA plan. (c) Rule for MA Plans' Part D coverage. (1) Coordinated care plans. In order to offer an MA coordinated care plan in an area, the MA organization offering the coordinated care plan must offer qualified Part D coverage meeting the requirements in §423.104 of this chapter in that plan or in another MA plan in the same area. (2) MSAs. MA organizations offering MSA plans are not permitted to offer prescription drug coverage, other than that required under Parts A and B of Title XVIII of the Act. (3) Private Fee-For-Service. MA organizations offering private fee-for-service plans can choose to offer qualified Part D coverage meeting the requirements in §423.104 in that plan. [63 FR 35068, June 26, 1998, as amended at 65 FR 40315, June 29, 2000; 70 FR 4714, Jan. 28, 2005; 70 FR 52026, Sept. 1, 2005] (a) Basis and scope. This section implements that portion of section 1857 of the Act that pertains to cost-sharing in enrollment-related costs. It sets forth the procedures that CMS follows to determine the aggregate annual “user fee” to be contributed by MA organizations and PDP sponsors under Medicare Part D and to assess the required user fees for each MA plan offered by MA organizations and PDP sponsors. (b) Purpose of assessment. Section 1857(e)(2) of the Act authorizes CMS to charge and collect from each MA plan offered by an MA organization its pro rata share of fees for administering section 1851 of the Act (relating to dissemination of enrollment information), and section 4360 of the Omnibus Budget Reconciliation Act of 1990 (relating to the health insurance counseling and assistance program) and section 1860D–1(c) of the Act (relating to dissemination of enrollment information for the drug benefit). (c) Applicability. The fee assessment also applies to those demonstrations for which enrollment is effected or coordinated under section 1851 of the Act. (d) Collection of fees—(1) Timing of collection. CMS collects the fees over 9 consecutive months beginning with January of each fiscal year. (2) Amount to be collected. The aggregate amount of fees for a fiscal year is the lesser of— (i) The estimated costs to be incurred by CMS in that fiscal year to carry out the activities described in paragraph (b) of this section; or (ii) For fiscal year 2006 and each succeeding year, the applicable portion (as defined in paragraph (e) of this section) of $200 million.” (e) Applicable portion. In this section, the term “applicable portion” with respect to an MA plan means, for a fiscal year, CMS's estimate of Medicare Part C and D expenditures for those MA organizations as a percentage of all expenditures under title XVIII and with respect to PDP sponsors, the applicable portion is CMS's estimate of Medicare Part D prescription drug expenditures for those PDP sponsors as a percentage of all expenditures under title XVIII. (f) Assessment methodology. (1) The amount of the applicable portion of the user fee each MA organization and PDP sponsor must pay is assessed as a percentage of the total Medicare payments to each organization. CMS determines the annual assessment percentage rate separately for MA organizations and for PDPs using the following formula: (i) The assessment formula for MA organizations (including MA-PD plans): C divided by A times B where— A is the total estimated January payments to all MA organizations subject to the assessment; B is the 9-month (January through September) assessment period; and C is the total fiscal year MA organization user fee assessment amount determined in accordance with paragraph (d)(2) of this section. (ii) The assessment formula for PDPs: C divided by A times B where—A is the total estimated January payments to all PDP sponsors subject to the assessment; B is the 9-month (January through September) assessment period; and C is the total fiscal year PDP sponsor's user fee assessment amount determined in accordance with paragraph (d)(2) of this section. (2) CMS determines each MA organization's and PDP sponsor's pro rata share of the annual fee on the basis of the organization's calculated monthly payment amount during the 9 consecutive months beginning with January. CMS calculates each organization's monthly pro rata share by multiplying the established percentage rate by the total monthly calculated Medicare payment amount to the organization as recorded in CMS's payment system on the first day of the month. (3) CMS deducts the organization's fee from the amount of Federal funds otherwise payable to the MA organization or PDP sponsor for that month. (4) If assessments reach the amount authorized for the year before the end of September, CMS discontinues assessment. (5) If there are delays in determining the amount of the annual aggregate fees specified in paragraph (d)(2) of this section, or the fee percentage rate specified in paragraph (f)(2), CMS may adjust the assessment time period and the fee percentage amount. [65 FR 40315, June 29, 2000. Redesignated and amended at 70 FR 4715, Jan. 28, 2005; 70 FR 52026, Sept. 1, 2005]
Title 42: Public Health
PART 422—MEDICARE ADVANTAGE PROGRAM
Subpart A—General Provisions
§ 422.1 Basis and scope.
§ 422.2 Definitions.
§ 422.4 Types of MA plans.
§ 422.6 Cost-sharing in enrollment-related costs.
