[Federal Register Volume 59, Number 223 (Monday, November 21, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-28399]
[[Page Unknown]]
[Federal Register: November 21, 1994]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Health Care Financing Administration
42 CFR Part 417
[OMC-008-F]
RIN 0938-AD79
Medicare Program; Appeal Rights and Procedures for Beneficiaries
Enrolled in Prepaid Health Care Plans
AGENCY: Health Care Financing Administration (HCFA), HHS.
ACTION: Final rule.
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SUMMARY: This final rule modifies or establishes administrative review
procedures for Medicare beneficiaries enrolled in health maintenance
organizations (HMOs), competitive medical plans (CMPs), and health care
prepayment plans (HCPPs). Specifically, it requires that an HMO or CMP
complete a reconsideration, requested by a Medicare enrollee for denied
services or claims, within 60 days from the date of receipt of the
reconsideration request; extends to HMO and CMP enrollees the right to
request immediate review by a Utilization and Quality Control Peer
Review Organization of an HMO's, CMP's, or hospital's determination
that an inpatient hospital stay is no longer necessary; and requires an
HCPP to establish administrative review procedures for its Medicare
enrollees who are dissatisfied with decisions on denied services or
claims.
DATES: These regulations are effective December 21, 1994. HMOs and CMPs
must comply with the requirements of this final rule beginning February
21, 1995. HCPPs must comply with the requirements of this final rule
beginning May 22, 1995.
FOR FURTHER INFORMATION CONTACT: Maureen Miller, (202) 619-0129.
SUPPLEMENTARY INFORMATION:
I. General Background
Payment for services provided to Medicare beneficiaries under title
XVIII of the Social Security Act (the Act) is generally made on a fee-
for-service basis or on a prepayment basis. This rule deals with
Medicare services provided to beneficiaries by entities paid on a
prepayment basis. We refer to these entities collectively as ``prepaid
health care organizations.'' Under the prepayment method, health
maintenance organizations (HMOs), competitive medical plans (CMPs), and
health care prepayment plans (HCPPs), enter into contracts or
agreements with us to provide a range of services to Medicare
beneficiaries who voluntarily enroll in these plans.
Section 1876 of the Act provides the authority for us to enter into
contracts with HMOs and CMPs to furnish Medicare covered services to
beneficiaries and specifies the requirements these organizations must
meet. Contracting HMOs and CMPs may be paid on either (1) a risk basis,
under which they are paid a prospectively determined per capita monthly
payment, or (2) a cost basis under which interim per capita payments
are made on the basis of a budget and a retrospective cost settlement
occurs to reflect the reasonable costs actually incurred by the HMO or
CMP for the covered services it furnishes to enrolled members.
Section 1833 of the Act provides the basis for regulations under
which we enter into written agreements with HCPPs to furnish or arrange
to have furnished covered Medicare Part B services to a defined
population on a prepayment basis.
II. Additional Background and Provisions of the Proposed Rule
On October 7, 1992, we published a proposed rule (57 FR 46119) in
which we proposed to amend the Medicare regulations governing
administrative review rights and procedures for Medicare enrollees in
prepaid health care organizations to: (1) Impose a 60-calendar-day
limit for an HMO or CMP to complete a reconsideration requested by a
Medicare enrollee (or authorized representative) for denied services or
claims; (2) permit an HMO or CMP enrollee (or authorized
representative) to request immediate Utilization and Quality Control
Peer Review Organization (PRO) review of an HMO, CMP, or hospital
notice of a determination that an inpatient hospital stay is no longer
necessary; and (3) require HCPPs to establish administrative review
procedures for Medicare enrollees similar to those that we require HMOs
and CMPs to establish for Medicare enrollees.
A. Time Limit on Reconsiderations
Section 1876(c)(5)(A) of the Act requires a contracting HMO or CMP
to establish procedures for hearing and resolving grievances between
the organization and its Medicare enrollees. Section 1876(c)(5)(B)
provides specific administrative and judicial review rights to Medicare
enrollees who are dissatisfied with determinations by the HMO or CMP
regarding services and claims. These rights are similar to those
available to beneficiaries in the fee-for-service system, except that,
under the existing regulations at 42 CFR 417.614 and 417.620, the
initial level of review is by the HMO or CMP rather than by a PRO,
intermediary, or carrier. Issues that are subject to the full scope of
administrative and judicial review are those in which beneficiaries
believe they: (l) Have been denied access to a service to which they
are entitled, or (2) are required to pay an amount that is the
responsibility of the HMO or CMP. (Other issues are only subject to the
HMO's or CMP's internal grievance procedures.)
Regulations at Secs. 417.600 through 417.638 describe the
administrative and judicial review process. Under the first step of the
process, the rules provide that the HMO or CMP must make a timely
determination and notify the beneficiary of the reasons for the
determination. A determination regarding a request for payment must be
made within 60 days of receiving the claim. If the decision is
unfavorable (in whole or in part), the beneficiary (or his or her
authorized representative) may request that the HMO or CMP reconsider
the decision. (The beneficiary must request reconsideration before
proceeding to the next step in the review process.) An organization may
issue a reconsidered determination on a case only if the reconsidered
determination is entirely favorable to the beneficiary. If the
organization reaffirms its denial of payment or services, in whole or
in part, the organization may not issue a reconsidered decision to the
beneficiary. Instead, the organization must prepare a written
explanation and refer the case to us, along with a justification for
its initial denial, so that we may make a new and independent
determination concerning coverage of the services at issue. This step
is considered part of the reconsideration process. If our
reconsideration determination is not fully favorable to the
beneficiary, the beneficiary has a right to request a hearing before an
administrative law judge (ALJ) of the Social Security Administration if
the amount remaining in controversy is $100 or more. If the ALJ hearing
does not result in a fully favorable determination, the beneficiary may
request Appeals Council review of the ALJ decision. Following the
administrative review process, the beneficiary is entitled to judicial
review of the final determination if the amount remaining in
controversy is $1,000 or more.
Existing regulations do not establish time limits for an HMO or CMP
to complete a reconsideration. A beneficiary may not proceed to the
next level of administrative review, however, until the HMO or CMP
issues its decision or refers the matter to us. Therefore, we proposed
to amend Sec. 417.620 (``Responsibility for reconsideration; time
limits'') to require the following:
That an HMO or CMP act on the beneficiary's
reconsideration request within 60 calendar days from the date of
receipt of the request.
That, if the decision made by the organization is entirely
favorable to the beneficiary, the organization so notify the
beneficiary within the 60-calendar-day period.
That, if the organization cannot make a decision that is
fully favorable to the beneficiary, the organization must submit the
case file to us (or our designated agent) within the 60-calendar-day
period described above.
B. PRO Review of Decisions for Hospital Discharges
Section 1154(e) of the Act, as amended by section 9351 of the
Omnibus Budget Reconciliation Act of 1986 (Public Law 99-509), provides
Medicare beneficiaries with the right to an immediate review by a PRO
and, in some cases, certain financial protections when a hospital, with
the concurrence of the attending physician, determines that the
beneficiary no longer requires inpatient hospital care. To exercise the
immediate review right, after receiving the hospital's notice of
noncoverage, the beneficiary must request (by telephone or in writing)
that the PRO review the validity of the hospital's decision. The
beneficiary must make the request by noon of the first working day
after receipt of the notice. The PRO then must determine within 1 full
working day of the request (and receipt of pertinent information and/or
records from the hospital) the appropriateness of the hospital's
decision that the beneficiary no longer requires inpatient hospital
care. The hospital cannot charge the beneficiary for the cost of
additional hospital days until noon of the day after receipt of the
PRO's determination that the hospital's decision was correct.
Under current law, if the hospital (rather than the HMO or CMP)
sends the discharge notice, the beneficiary is entitled to request
immediate review by a PRO whether or not he or she is enrolled in an
HMO or CMP. However, while a beneficiary enrolled in an HMO or CMP may
be protected from being charged by the hospital, he or she is not
necessarily protected from potential financial liability. If the PRO
upholds the hospital's notice of noncoverage, there is no regulation
prohibiting the HMO or CMP from billing the beneficiary for the extra
days of care while the PRO is reviewing the case if the extra days
result in additional costs to the HMO or CMP. (Depending on the payment
arrangement with the hospital, it is possible that the HMO or CMP will
not incur any additional costs by virtue of the patient's additional
days in the hospital. For example, if there is no contract between the
HMO and the hospital, the hospital may not charge more than the amount
Medicare would pay. Under the prospective payment system (PPS), that
amount remains the same regardless of the length of the hospital stay,
unless outlier payment is involved, that is, additional payment for
covered services for extended length-of-stay cases. Similarly, a
contract between an HMO and a hospital might provide that the hospital
is paid on a basis similar to PPS, rather than on a per diem basis.)
If the HMO or CMP, rather than the hospital, makes the
determination of noncoverage, the current regulations do not
specifically afford an immediate PRO review right to the enrollees.
Therefore, we proposed to amend Sec. 417.440 (``Entitlement to health
care services from an HMO or CMP''), Sec. 417.454 (``Charges to
Medicare enrollees''), and Sec. 417.604 (``General Provisions'') and
add a new Sec. 417.605 (``Immediate PRO review of a determination of
noncoverage of inpatient hospital care'') to provide the Medicare HMO
or CMP enrollee with the same administrative review rights and
financial protection as are available to beneficiaries under the fee-
for-service system.
We proposed to require that an HMO or CMP that has not delegated
the discharge decision to the hospital and attending physician: (l)
Have the concurrence of the attending physician before making a
determination that an enrollee no longer needs inpatient hospital care;
and (2) give the beneficiary a written notice of noncoverage that
specifies the effective date of his or her liability, states why the
HMO or CMP believes he or she no longer requires a hospital level of
care, and explains immediate review procedures.
We proposed to revise the beneficiary administrative review
procedures to offer an immediate review by the PRO with which the
hospital has an agreement under Sec. 466.78. We proposed to adopt the
same timeframes for immediate PRO reviews for HMO and CMP enrollees
that are applicable to fee-for-service beneficiaries. Upon receiving a
written notice from the HMO or CMP or a hospital of a determination
that an inpatient hospital stay is no longer necessary, the enrollee
(or authorized representative) would have until noon of the first
working day after receipt of the notice to file (by telephone or in
writing) a request for immediate PRO review. The PRO would notify the
HMO or CMP that an appeal has been filed and require the HMO or CMP to
provide any pertinent records or information by close of business of
the first working day immediately following the day the beneficiary
made the appeal. Further, in response to a request from the HMO or CMP,
the hospital would be required to submit medical records and other
pertinent information to the PRO by close of business of the first full
working day immediately following the day the HMO or CMP makes its
request. The PRO would also solicit the views of the enrollee who
requested immediate PRO review (or the enrollee's authorized
representative). The PRO would have 1 working day after receipt of the
information from the HMO or CMP to make a determination. The HMO or CMP
would be financially liable for the costs of the hospital stay until
noon of the calendar day following receipt of the PRO determination.
In addition, we also proposed to prohibit the HMO or CMP from
billing the Medicare beneficiary for the added cost of hospital days
during the immediate review process. An enrollee who requests immediate
PRO review would not be entitled to any subsequent review, under the
HMO's or CMP's administrative review process, of the issue of whether
hospitalization was still needed. However, the PRO determination would
be subject to appeal under the administrative and judicial review
process set forth in 42 CFR part 473 (that is, PRO reconsiderations and
hearings and judicial review of PRO reconsiderations). As under the
current fee-for-service system, the beneficiary who requests that a PRO
reconsider its determination would not be protected from financial
liability.
Under the proposed rule, the hospital would not be required to be a
concurring party in a discharge decision if the HMO or CMP issues the
notice of noncoverage. However, the hospital could submit the request
to the PRO for immediate review on behalf of the HMO or CMP enrollee.
We proposed to clarify that, with one exception, the HMO or CMP is
financially responsible for the costs of the hospital stay until noon
of the calendar day following the day the PRO notifies the enrollee of
its review determination. Under the exception, a hospital may not
charge the HMO or CMP (or the beneficiary) for the costs of the
continued hospital stay during the PRO review process if the hospital
files the request for immediate PRO review on behalf of a beneficiary
and the PRO upholds the noncoverage determination made by the HMO or
CMP.
C. Providing Administrative Review Rights to HCPP Members
Section 1833(a)(l)(A) of the Act provides that an organization that
furnishes services on a prepayment basis may elect to receive payment
for Part B services on a reasonable cost basis rather than a reasonable
charge basis. There is no indication that the Congress intended to deny
Medicare beneficiaries enrolled in these organizations (referred to in
these regulations as health care prepayment plans (HCPPs)) their full
administrative review rights under section 1869 of the Act because they
receive services through an organization that chooses this alternate
payment option. The regulations at 42 CFR part 417, subpart D,
applicable to HCPPs, do not, however, specifically address
administrative review rights for Medicare enrollees of HCPPs.
The fact that existing regulations do not specifically provide for
administrative review of HCPP decisions is an oversight we proposed to
correct by amending Sec. 417.801 (``Agreements between HCFA and health
care prepayment plans'') and adding new Secs. 417.830 through 417.840
to establish administrative review procedures for Medicare enrollees of
HCPPs who are dissatisfied with denied services or claims. We proposed
to adopt under these sections administrative review procedures for HCPP
enrollees that are the same as those for HMO and CMP enrollees.
D. Technical Changes
We also proposed to make several clarifying technical changes to
the regulations relating to administrative reviews for HMO or CMP
enrollees:
Subpart Q, Secs. 417.600, 417.604, 417.606, 417.608,
417.610, 417.612, 417.614, 417.616, 416.618, 416.620, 417.622, and
417.638--We proposed to change the term ``initial determination'' to
``organization determination'' to distinguish between a determination
made by the HMO or CMP and one made by us. We also proposed to delete
references to carriers and intermediaries making determinations on
behalf of HMOs and CMPs. Carriers and intermediaries now make only fee-
for-service determinations.
Sections 417.604 and 417.610--We proposed to revise
Sec. 417.604(a)(4) to clarify that physicians and other individuals who
furnish items or services under arrangements with an organization do
not have a right to appeal under the regulations. We proposed to make a
conforming change to Sec. 417.610(b).
Section 417.614--We proposed to clarify the language by
making a distinction between an original determination and a revised or
reopened determination.
Section 417.630--We proposed to clarify that the reference
to the ``amount in controversy'' as a condition for a party to request
a hearing is the amount ``remaining'' in controversy, not the amount of
the total bill. We also proposed to add a phrase to clarify that if
beneficiaries combine bills to meet the amount in controversy
requirements, they can use both Part A and Part B bills.
III. Analysis of and Response to Public Comments
We received timely comments from 16 commenters. The commenters
included HMOs, a CMP, national and local professional associations, a
State department of health, and consumer advocacy groups.
A. Time Limits
Comment: While many of the commenters supported the proposed time
limit for issuing reconsideration determinations, two commenters
expressed concern about the initial organization determination. The
concern is that HMOs and CMPs deny (or delay) referrals and other
services without providing a written notice and, because there is no
record of a denial or a decision date, it is unclear whether and when a
request for reconsideration may be filed. One commenter proposed that
written notices be given for all services granted or denied.
Response: Regulations at Sec. 417.608(c) state that failure by an
HMO or CMP to make timely notification of an adverse organization
determination constitutes an adverse determination and may be appealed.
In addition, no provision of Sec. 417.616 (``Request for
reconsideration'') prevents or impedes a Medicare enrollee from filing
a request for reconsideration if the HMO or CMP failed to provide the
enrollee with written notice that a service is denied. Thus, if a
Medicare enrollee maintains that he or she is being denied a covered
service but is unable to obtain an explicit denial, we believe that the
regulations permit the enrollee to move to the next step of the appeals
process and file a request for reconsideration.
Written notices for all decisions to grant or deny services, as
proposed by the commenter, would require an inestimable amount of
additional paperwork, with marginal benefit. This requirement would
also eliminate the current flexibility of the regulations which allows
enrollees to file for a reconsideration without a written denial.
Comment: Two commenters expressed concern that the Medicare appeals
process does not recognize the need for expedited determinations in
time-sensitive medical situations. One commenter proposed incorporation
of an expedited appeals process for denied services, depending on the
relative urgency of the perceived need for the service.
Response: We recognize that there are medical situations in which
outcomes are greatly affected by the promptness of treatment. We also
recognize that our regulations do not specifically address these
situations. In order to establish an expedited process for organization
determinations, however, we would need the benefit of proposed
rulemaking and public comment. We will consider the need for
regulations in this area in the near future. In the interim, we believe
that regulations at Sec. 417.608(c), as noted above, permit the
Medicare enrollee some flexibility in assuming a service is denied and
seeking a timely reconsideration. Medicare enrollees also may obtain
denied services outside the plan and use the appeals process to pursue
payment, or complain in writing or by telephone to the HCFA regional
office for the area. Complaints to the regional office are not intended
to, and usually will not, circumvent the appeals process, but introduce
Federal followup and tracking of HMO/CMP responses in these situations.
Even in the absence of specific regulatory requirements, we expect
Medicare contracting HMOs and CMPs to expedite any initial coverage
determination and reconsideration if a delay in the decision, and a
subsequent postponement or suspension of treatment, could have serious,
adverse consequences on the health status of the beneficiary (for
example, cause impairment of any bodily function and/or serious
dysfunction of any bodily organ or part).
Comment: Two commenters believed that the 60-day time period
frequently is not long enough, and that the time limit should apply
only to ``clean cases'' or should begin after all materials are
received.
Response: The 60-day limit is consistent with the time period
allowed in making the initial organization determination, is supported
as reasonable by most commenters on the proposed rule, and should be
adequate in most circumstances. Nonetheless, while we do not agree with
the specific suggestion of the commenters, we are amending Sec. 417.620
(Responsibility for reconsideration; time limits) to allow extensions
for ``good cause.'' The ``good cause'' extension authority will not
diminish the new time limit requirement, but will allow for unusual
circumstances such as natural disasters or circumstances that make it
difficult or impossible for the enrollee to provide necessary
information in a timely way. This will benefit both the enrollee and
the health plan.
Comment: Several commenters believed that a time limit similar to
the 60-day limit on reconsiderations that is placed on HMOs/CMPs should
be placed on HCFA's reconsiderations. In support of this position, one
commenter cited the stipulated settlement in the case of Levy v.
Sullivan concerning HMO appeal delays.
Response: We do not accept this comment. In order to provide
meaningful review of the HMO's/CMP's decision, we (or the independent
reviewer with which we contract) must have the complete record of the
dispute. When the HMO/CMP conducts a reconsideration of its original
decision, it presumably has all of the documentation it considered
relevant to its initial decision. However, our experience demonstrates
that the independent reviewer must often request that additional
material be submitted. Our current policy allows the HMO time to obtain
the additional information. If the information is not received, the
contractor will make its decision based on the record available. Since
legitimate delays may occur, however, we believe it would be to the
parties' advantage to have a flexible deadline for the independent
review.
We are, on the other hand, concerned that beneficiaries not suffer
undue financial hardship during an appeal. We monitor the activities of
the contractor and the status of reconsiderations as part of our
overall monitoring of compliance with program requirements. Our
contract with the independent reviewer also contains a 30-day
timeliness standard for clean claims, as stipulated in Levy v.
Sullivan, Civ. No. 88-3271 DT (TX) (S.D. Cal., filed March 13, 1989).
That agreement, however, did not require that this be incorporated into
regulations and does not preclude us from revising the contract to
reflect intervening circumstances.
Comment: One commenter suggested that the 60-day period begin with
the date of receipt of the request by the health plan.
Response: Section 417.620(c) specifies that the HMO must act within
60 calendar days ``from the date of receipt of the request for
reconsideration.''
Comment: One commenter suggested that the appeals regulations
explain the consequences of failure to meet the 60-day time limit or to
issue written determinations. One commenter urged a system of
intermediate sanctions for HMOs/CMPs that fail to make timely
organization or reconsideration determinations.
Response: We agree with the commenter that there should be
consequences for failure to provide determinations in a timely manner
and within established time standards. As explained in an earlier
response to a comment, we believe that the regulations at
Sec. 417.608(c) permit a Medicare enrollee to move to the
reconsideration process if timely notification of an adverse
organization determination is not made. To ensure that the 60-day limit
serves as a time ceiling for this stage of the appeals process, we are
adding a provision to Sec. 417.620. This provision clarifies that
failure to complete the reconsideration within the time allowed, or to
obtain a ``good cause'' extension from us, constitutes an adverse
determination and the appeals file must be submitted to us.
Regulations were published on July 15, 1994 (59 FR 36072) that
allow us to impose intermediate sanctions and civil money penalties for
a number of performance violations on the part of HMOs and CMPs. Though
the sanction and penalty authorities are untested at this time, we will
be assessing how information from the appeals process may be used to
improve plan performance or initiate a sanctions process in response to
suspected violations such as a substantial failure to provide required
medically necessary services and the failure adversely affects the
enrollee.
B. Requests for Immediate PRO Review of Decisions for Hospital
Discharges
Comment: While many of the commenters supported the proposed
provision, several commenters opposed it on several accounts, including
that it would have an adverse economic impact on HMOs/CMPs, that
adequate enrollee protections already exist, and that it would
interfere with the patient-physician relationship.
Response: We are aware that the right to immediate PRO review may
add to the costs of caring for Medicare enrollees. It is difficult to
assess the degree to which this will affect HMOs and CMPs, because many
Medicare-contracting plans delegate the discharge decision to the
physician and hospital. In these circumstances, PRO review has already
been in effect and no additional financial impact is anticipated. In
addition, some HMOs/CMPs pay hospitals on a diagnosis-related group
basis and hospital payments may not be affected. In circumstances where
the HMO/CMP makes the discharge decision in conjunction with its
affiliated physicians and pays the hospital on a per diem basis and
thus faces additional hospital charges, we do not concur with the
commenters' position, that is, that the HMO/CMP not be held financially
accountable for the additional hospital days. For risk-contracting
HMOs/CMPs, the Medicare payment rate is based on fee-for-service costs,
and the costs of extra hospital days during the PRO review process are
incorporated into these calculations. Therefore, the average cost for
hospital inpatient days during the PRO review period in the HMO's/CMP's
area are already included in the adjusted average per capita cost rate.
Since all cost-contracting HMOs/CMPs currently choose to have the
hospital seek payment directly from the fiscal intermediary, there
should be no additional costs to the health plan.
While we do not have evidence of early discharge complaints against
HMOs and CMPs, it is possible that some Medicare enrollees are
dissatisfied but have no mechanism for expressing it. Moreover, in the
interests of due process, we believe it is important to provide
beneficiaries comparable rights whether they do or do not enroll in an
HMO/CMP, and whether or not they have the need to take advantage of
those rights. Moreover, if there really are no complaints, then this
will not be a burdensome requirement on HMOs and CMPs.
Lastly, in response to concern about the patient-physician
relationship, there has been no problem of this type arising out of the
right to immediate PRO review under the fee-for-service program. Also,
HMOs/CMPs, because they coordinate their enrollees' total health care
needs, generally have a strong relationship between their Medicare
enrollees and physicians (as well as other health plan staff). We
believe that HMOs/CMPs that maintain positive communications and
relationships with their Medicare enrollees will not experience any
difficulty in this area.
Comment: One commenter was concerned about frivolous claims and the
potential incentives to appeal to the PRO for review. This commenter
suggested that either the Medicare program or the enrollee be
responsible for the expense of extra hospital days if the noncoverage
decision is upheld.
Response: Our experience with immediate PRO review of hospital
discharge (noncoverage) decisions does not support a concern about
frivolous claims. Relative to the number of discharges under the
Medicare fee-for-service program, the number of appeals to the PRO is
extremely small. We expect that HMOs/CMPs, because they are more
involved in the health care of their enrollees, would have a similar
experience, and may even experience fewer PRO appeals if they
communicate effectively with their enrollees and have adequate
safeguards against premature discharges.
With respect to financial liability for extra hospital days, the
adjusted average per capita cost calculation includes these costs. We
would be overpaying if a separate payment was made to plans for these
charges.
We will not shift these costs to the Medicare enrollee because fee-
for-service beneficiaries are already protected, and we believe that
beneficiaries should be treated similarly whether they choose managed
care or fee-for-service. We do not believe this difference in
protections should have to be a factor in the beneficiaries' choice.
Further, we believe that financial responsibility for extra hospital
days related to an appeal would be a strong disincentive to any
beneficiary who questions the appropriateness of a discharge decision.
Such a requirement would undermine the intent of an appeals process.
Comment: One commenter stated that we mischaracterized the HMO's
and CMP's responsibility for discharge decisions in the preamble of the
proposed rule. The commenter stated that the final authority for
discharge rests with the physician and that HMOs/CMPs cannot discharge
enrollees from a hospital.
Response: We agree that the preamble should have referred to
``noncoverage'' decisions by the HMO/CMP rather than ``discharge''
decisions. The right to immediate PRO review affects noncoverage
decisions in cases in which the HMO/CMP and its affiliated physicians
agree that a Medicare enrollee no longer requires hospitalization and
the hospital does not make the noncoverage decision. We also believe
that the use of the term ``attending physician'' in proposed
Secs. 417.440 (f)(2) and (f)(4) (which require concurrence of a
physician in the discharge decision) does not clearly express the
relationship between the HMO/CMP and its affiliated physician
providers. Therefore, in the final rule we have removed the term
``attending physician'' and inserted ``its affiliated physician
responsible for the hospital care of the enrollee, or other physician
as authorized by the HMO or CMP'' in its place.
Comment: One commenter stated that the attending physician should
be allowed to represent his or her patients and request PRO review of
noncoverage decisions.
Response: Usually, the HMO/CMP-affiliated physician makes the
decision that a Medicare enrollee is ready for discharge. Some HMOs/
CMPs make use of an extended treatment team, such as case managers,
discharge coordinators, or utilization review coordinators, and a
member of this team may believe an enrollee is ready for discharge when
the physician does not. In these situations, the health plan's internal
procedures will provide guidance for making the discharge decision.
HMO/CMP physicians have legal arrangements or contracts with their
health plans, and must abide by the plan's procedures. We support the
HMO/CMP structure for the delivery of health care, and we would not
support a policy that undermines the nature of managed care operations.
In cases in which the physician caring for a hospitalized enrollee
is not under contract or bound by the terms of an arrangement with an
HMO/CMP, the physician could represent the patient.
Comment: One commenter believed that the time period (1 working
day) for the HMO/CMP to submit information to the PRO is unreasonable
and is concerned that PROs may take longer than 1 day to complete their
review.
Response: We do not agree with the commenter. Under the fee-for-
service Medicare program, hospitals have their charts ready to submit
to the PRO at the same time that the notice of noncoverage is given.
This, in effect, gives the PRO another working day to review the
medical chart. We believe HMOs/CMPs can adopt the same efficiencies and
that it is in the financial interest of the HMO/CMP to ensure that all
records are submitted as soon as possible. In regard to PRO timeliness,
the PROs have an excellent record for completing these reviews in the
time allotted and, in many cases, earlier.
Comment: Two commenters believed that the proposed appeals process
should be available to Medicare enrollees in nursing homes and those
receiving home health services.
Response: We will consider this comment for regulatory action at a
later date. This modification is significant enough to require issuance
of a second proposed rule, and we believe that this final rule should
not be delayed.
Comment: One commenter asked that Sec. 417.440(f)(3) be revised to
add the date of discharge to the list of information the notice of
noncoverage will include.
Response: We believe that HMOs and CMPs should have the flexibility
either to use the Medicare hospital notice of noncoverage or to develop
their own. In our interactions with PROs and hospitals on this matter,
the inclusion or absence of the discharge date on the notice has not
been identified as a problem or a concern. Therefore we have not
modified this provision in the final rule.
Comment: Several provisions of Sec. 417.454 appear to have been
dropped as part of the proposed rule.
Response: The revision to Sec. 417.454 as published in the proposed
rule does remove existing paragraphs (a)(1) through (a)(3). This was
done in error and is corrected in the final rule. In the final rule, a
paragraph heading is added to existing paragraph (a); the new provision
that limits charges for inpatient hospital stays is added as a new
paragraph (b); and a paragraph heading is added to existing paragraph
(b), and the paragraph redesignated as paragraph (c). No modification
is made to other existing text in section Sec. 417.454.
C. Administrative Review Requirements for HCPPs
Comment: Two commenters expressed concern about our regulations
extending the section 1876 managed care administrative review
requirements to HCPPs and disagreed with our interpretation of the
intent of the Congress in this regard. It was the opinion of both
commenters that the Congress should expressly legislate these
requirements.
Response: As noted previously, section 1833 of the Act simply
permits entities that provide Part B services on a prepayment basis to
be paid reasonable costs rather than reasonable charges. There is no
indication that the Congress intended to deprive enrolled beneficiaries
of meaningful appeal rights. Our regulations governing HCPPs were
designed to establish a workable mechanism for reimbursing them, in
light of the fact that the way they do business is more comparable to
HMOs and CMPs than it is to physicians, suppliers, and providers who
are paid under Part B.
As certain aspects of the Medicare program have been improved over
the years, such as the addition of beneficiary protections, we have not
revised HCPP regulations to reflect these changes. Recently, we have
embarked on an effort to identify actions that are within our
authority, to ensure that the HCPP program is administered prudently
and that Medicare beneficiaries enrolled in these plans have rights and
benefits comparable to those that beneficiaries have in the fee-for-
service system and in HMOs/CMPs. We believe that we have administrative
authority to ensure that these beneficiaries are given appropriate
appeal rights.
Comment: One commenter was concerned that, since HCPPs are not
required to provide all Part B services, the administrative review
process be limited to those Medicare covered services provided by the
health plan under its agreement with us.
Response: Paragraph (b)(2) of Sec. 417.838 (``Organization
determinations'') of the regulation addresses this concern by
specifying that a determination regarding services that are not covered
under the HCPP's agreement with HCFA is not an organization
determination.
Comment: One commenter stated that disputes over the level or
manner in which a service is provided, such as model variations of
durable medical equipment, should not be subject to the appeals
process.
Response: The appeal rights of Medicare enrollees of an HCPP
pertain to disputes involving an organization determination. We believe
that Sec. 417.838(a), which identifies actions that are organization
determinations, responds to this concern. Section 417.838(a) limits the
applicability of the appeals process to a refusal, on the grounds that
the services are not covered by Medicare, to furnish or arrange for
services or pay for services furnished to the beneficiary.
Comment: One commenter sought clarification on whether an HCPP's
refusal to pay coinsurance on services obtained out-of-plan (and paid
for by the carrier) would be subject to the appeals process.
Response: The HCPP's obligation to pay coinsurance amounts, where
the plan's Medicare premium covers such amounts, would depend on the
circumstances. If an enrollee is denied a service by the HCPP, then
obtains the service out-of-plan, and subsequently the service is
determined to be a covered service and paid for by the carrier under
Medicare principles of reimbursement, the enrollee can request that the
health plan pay the coinsurance amount. Then, if the HCPP makes an
organization determination that is adverse to the enrollee, or fails to
complete its review in 60 days, the matter would be referred to us for
reconsideration.
Comment: One commenter suggested allowing HCPP enrollees to retain
existing appeal rights through Medicare carriers if the HCPP review
process proves futile or ineffective.
Response: We disagree. One intent of this rule is to ensure that
HCPP enrollees have the same appeal rights as other beneficiaries in
Medicare managed care. A back-up system does not exist for other
Medicare beneficiaries and cannot be justified on either a cost or
programmatic basis. When this rule takes effect, HCPP performance in
operating an effective administrative review process will be added to
our contractor monitoring process.
Comment: One commenter stated that the estimate for additional
paperwork burden on HCPPs related to these new requirements is grossly
underestimated.
Response: Health plans that contract with us as HCPPs vary in their
administrative systems and capability to adapt to the new requirements.
While we agree that the estimate may underrepresent the additional
burden on some health plans, it may not for others. We attempted to
estimate an ``average'' additional workload, given that most HCPPs have
a grievance system for commercial enrollees on which to build an
appeals system for Medicare enrollees.
Comment: One commenter stated that they opposed a change to
Sec. 417.630 (``Right to a hearing'') regarding ``amounts remaining in
controversy'' to qualify for a hearing.
Response: Addition of this phrase is a clarification of existing
practice, not a substantive change. Beneficiary appeals made to
Medicare managed care organizations may be denied in full or in part.
Once a service or a claim has been covered by an HMO/CMP, even if the
service is only one part of the appeal, Sec. 417.604(a)(2) specifies
that the service or claim is no longer subject to appeal. Only those
services that continue to be denied may be moved through the process of
reconsideration to hearing.
Comment: One commenter opposed the change in terminology from
``initial determination'' to ``organization determination.'' The
commenter is concerned that policy issues may be mislabeled as
``organization issues'' and be misdirected to the appeals process.
Response: The concern of the commenter, we believe, is that
communications to an HMO or CMP questioning the plan's coverage
policies will be misinterpreted and directed to the plan's appeal
process. We believe that HMOs and CMPs can distinguish between
challenges to the plan's coverage policies, in general, and appeals of
coverage decisions for specifically requested services, if clearly
communicated. We do not believe that the commenter's rationale warrants
a change from using the terminology ``organization determination'' as
proposed.
D. Other Comments
Comment: One commenter suggested that HMOs be granted formal appeal
rights.
Response: We have considered this suggestion. However, because the
commenter is suggesting a significant change that was not addressed in
the proposed rule, we cannot address this issue at this time. The issue
of HMO and CMP appeal rights, as well as other appeals process issues,
will be evaluated and considered for development as a separate
regulation.
Comment: One commenter questioned allowing HMOs/CMPs to request a
reopening of a determination and another commenter recommended that an
HMO/CMP request for a reopening should not delay implementation of the
reconsideration determination.
Response: With regard to the first comment, the regulations impose
no limitation on who may request a reopening, although the decision
whether to reopen is discretionary with the decisionmaker. In response
to the second comment, Sec. 417.626 provides that a reconsidered
determination is ``final and binding'' on all parties unless a hearing
request is filed, or the determination ``is revised'' in accordance
with a reopening decision. Therefore, if an HMO's or CMP's denial of a
service or claim is overturned upon reconsideration, the plan must
abide by the determination unless and until the termination is
overturned as the result of the reopening.
We will consider the need for intermediate sanction authority for
HMOs and CMPs failing to abide by reconsidered determinations in a
forthcoming rulemaking initiative.
Comment: Two commenters recommended that we require HMOs/CMPs to
prominently post information about the appeals process and send out a
national notice communicating information about appeal rights.
Response: Existing Sec. 417.604(c) (``Written description of
appeals procedure'') requires HMOs/CMPs to provide enrollees with
written materials on appeal procedures. We believe that this is a
better method for ensuring that all enrollees are informed. Further,
this approach makes the information readily available in the enrollee's
own home. With regard to the need for a national communication, we
agree that beneficiaries should be made aware of the new appeal rights
and procedures. We will modify the Medicare Handbook and other booklets
and pamphlets routinely distributed by us to incorporate the policies
of this final regulation.
Comment: One commenter suggested that we require HMOs/CMPs to
notify enrollees, in writing, of the changes adopted in the final rule
and to submit a plan for educating enrollees about the new rights and
procedures.
Response: While we disagree that a special education program is
needed, we agree that HMOs/CMPs must inform Medicare enrollees of these
new protections. HMOs/CMPs have various means of communicating with
enrollees, including written material (for example, newsletters), and
use of these means for informing Medicare beneficiaries of these new
appeal rights is acceptable to us. The requirement at Sec. 417.604,
discussed above, is adequate for this purpose and another regulatory
requirement is unnecessary. HMOs, CMPs, and HCPPs must notify their
enrollees of the changes/additions to the appeal rights and when they
are effective.
Comment: Two commenters recommended that these appeal rights be
extended to Medicaid recipients in prepaid health plans.
Response: Appeal rights for Medicaid beneficiaries is not part of
the scope of this rulemaking effort. These comments, however, have
merit and have been brought to the attention of appropriate persons
within our Office of Managed Care.
Comment: One commenter stated that we changed Sec. 417.801(4)
without addressing it in the preamble.
Response: We assume that the commenter is referring to
Sec. 418.801(b)(4). In the amendatory language of the proposed rule, we
stated that ``In Sec. 417.801, the introductory language of paragraph
(b) is republished, paragraph (b)(4) is revised, paragraph (b)(5) is
redesignated as paragraph (b)(6), and a new paragraph (b)(5) is added
to read as follows:''. That amendatory language contained technical
errors. Paragraph (b)(4) was not revised; the language published in the
proposed rule is the same as existing paragraph (b)(4). Additionally,
existing paragraph (b)(5) should not have been redesignated; existing
paragraph (b)(6) should have been redesignated as paragraph (b)(7) and
a new paragraph (b)(6) added. These errors have been corrected in the
final rule.
IV. Provisions of This Final Rule
We have adopted the provisions of the October 7, 1992, proposed
rule, with the following changes, which have been discussed above:
We have revised proposed Sec. 417.440(f) (``Notice of
noncoverage of inpatient hospital care''). This proposed section
required that, before giving notice of noncoverage, the HMO or CMP must
obtain the concurrence of the attending physician. We have revised
``attending physician'' to ``its affiliated physician responsible for
the hospital care of the enrollee, or other physician as authorized by
the HMO or CMP''.
Proposed Sec. 417.454 (``Charges to Medicare enrollees'')
is revised to restore existing provisions that were erroneously removed
in the proposed rule.
We have revised paragraph (c) of proposed Sec. 417.620
(``Responsibility for reconsiderations; time limits) to require that
the HMO or CMP issue the reconsidered determination to the enrollee, or
submit an explanation and file to us, within 60 days from the date of
receipt of the request for reconsideration.
We have revised proposed Sec. 417.838(b) (``Actions that
are not organization determinations'') by adding a new paragraph (3).
New paragraph (3) specifies that a determination regarding services
that are covered under the HCPP's agreement with us that the enrollee
obtained from unaffiliated providers or physicians, in violation of the
HCPP's enrollment agreement, is not an organization determination for
purposes of administrative review procedures.
In addition to the above changes, in a number of sections, we made
a nomenclature change by substituting ``HMO or CMP'' and its plural and
possessive forms for the words ``organization'', ``organizations'' and
``organization's'', respectively. This change was made to use
consistent terminology throughout part 417.
We also have made technical changes and minor editorial changes
that do not affect the substance of the provisions.
V. Paperwork Burden
Sections 417.440(f), 417.605, 417.620, and 417.836 of this rule
contain additional requirements that are subject to review by the
Office of Management and Budget under the authority of the Paperwork
Reduction Act of 1980 (44 U.S.C. Chapter 35). HMOs and CMPs are
required to notify beneficiaries if the HMO or CMP refers a request for
reconsideration to HCFA. We estimate that this reporting burden will be
approximately 5 minutes per case. Also, before a hospital discharge,
HMOs and CMPs are required to provide Medicare enrollees with a written
notice of a determination that an enrollee's inpatient hospital stay is
no longer necessary. We estimate that the reporting burden for an HMO
or CMP that has not delegated the discharge decision to the hospital to
provide the written notice of noncoverage to be approximately 10
minutes per notice; for a Medicare enrollee of an HMO or CMP to
complete a request for immediate PRO review of a notice of a
determination that an inpatient hospital stay is no longer necessary to
be approximately 10 minutes per request; for the HMO or CMP to submit
requested medical information to the PRO, to be approximately \1/2\
hour per response. HCPPs are required to develop appeal procedures and
inform Medicare enrollees of appeal rights. We estimate that it will
take an HCPP 40 hours to develop these appeal procedures and 1 hour to
process each appeal. A notice will be published in the Federal Register
when OMB approval is obtained.
VI. Regulatory Impact Statement
Consistent with the Regulatory Flexibility Act (RFA) (5 U.S.C. 601
through 612), we prepare a regulatory flexibility analysis unless the
Secretary certifies that a rule will not have a significant economic
impact on a substantial number of small entities. For purposes of the
RFA, we consider all HMOs, CMPs, and HCPPs to be small entities.
Also, section 1102(b) of the Act requires the Secretary to prepare
a regulatory impact analysis if a rule may have a significant impact on
the operations of a substantial number of small rural hospitals. This
analysis must conform to the provisions of section 604 of the RFA. For
purposes of section 1102(b) of the Act, we define a small rural
hospital as a hospital that is located outside of a Metropolitan
Statistical Area and has fewer than 50 beds.
This final rule provides the Medicare HMO or CMP enrollee with the
same administrative review rights and financial protections as are
available to beneficiaries in the fee-for-service system. To the extent
that current Medicare membership in HMOs, CMPs, and HCPPs to which this
rule will apply is low (approximately 7 percent of the total Medicare
population), we do not expect any significant increased costs or
savings as a result of this final rule.
We are not preparing analyses for either the RFA or section 1102(b)
of the Act because we have determined, and the Secretary certifies,
that this final rule will not have a significant economic impact on a
substantial number of small entities or a significant impact on the
operations of a substantial number of small rural hospitals.
In accordance with the provisions of Executive Order 12866, this
regulation was not reviewed by the Office of Management and Budget.
Lists of Subjects in 42 CFR Part 417
Administrative practice and procedure, Health maintenance
organization (HMO), Medicare, Reporting and recordkeeping requirements.
42 CFR part 417 is amended as follows:
PART 417--HEALTH MAINTENANCE ORGANIZATIONS, COMPETITIVE MEDICAL
PLANS, AND HEALTH CARE PREPAYMENT PLANS
1. The authority citation for Part 417 is revised to read as
follows:
Authority: Secs. 1102 and 1871 of the Social Security Act (42
U.S.C. 1302 and 1395hh), secs. 1301, 1306, and 1310 of the Public
Health Service Act (42 U.S.C. 300e, 300e-5, and 300e-9); and 31
U.S.C. 9701.
2. In Sec. 417.440, a new paragraph (f) is added, to read as
follows:
Sec. 417.440 Entitlement to health care services from an HMO or CMP.
* * * * *
(f) Notice of noncoverage of inpatient hospital care. (1) If an
enrollee is an inpatient of a hospital, entitlement to inpatient
hospital care continues until he or she receives notice of noncoverage
of that care.
(2) Before giving notice of noncoverage, the HMO or CMP must obtain
the concurrence of its affiliated physician responsible for the
hospital care of the enrollee, or other physician as authorized by the
HMO or CMP.
(3) The HMO or CMP must give the enrollee written notice that
includes the following:
(i) The reason why inpatient hospital care is no longer needed.
(ii) The effective date of the enrollee's liability for continued
inpatient care.
(iii) The enrollee's appeal rights.
(4) If the HMO or CMP delegates to the hospital the determination
of noncoverage of inpatient care, the hospital obtains the concurrence
of the HMO- or CMP-affiliated physician responsible for the hospital
care of the enrollee, or other physician as authorized by the HMO or
CMP, and sends notice, following the procedures set forth in
Sec. 412.42(c)(3) of this chapter.
3. Section 417.454 is amended by adding a paragraph heading to
paragraph (a), redesignating paragraph (b) as paragraph (c) and adding
a paragraph heading, and adding a new paragraph (b), to read as
follows:
Sec. 417.454 Charges to Medicare enrollees.
(a) Charges that are permitted. * * *
(b) Limit on charges for inpatient hospital care. If a Medicare
enrollee who is an inpatient of a hospital requests immediate PRO
review (as provided in Sec. 417.605) of any determination by the
hospital furnishing services or the HMO or CMP that the inpatient
hospital services will no longer be covered, the HMO or CMP may not
charge the enrollee for any inpatient care costs incurred before noon
of the first working day after the PRO issues its review decision.
(c) Reporting requirements. * * *
Secs. 417.600, 417.612, 417.622 [Amended]
4. Nomenclature change: In the following sections of subpart Q, the
term ``initial determination'' or ``initial determinations'' is revised
to read ``organization determination'' or ``organization
determinations'', respectively, wherever it appears:
a. Sec. 417.600.
b. Sec. 417.612, section title and text.
c. Sec. 417.622(b).
5. Section 417.604 is amended by revising paragraphs (a) and (b) to
read as follows:
Sec. 417.604 General provisions.
(a) Applicability. The appeals procedures set forth in this subpart
apply to organization determinations as defined in Sec. 417.606, with
the following exceptions:
(1) If an enrollee requests immediate PRO review (as provided in
Sec. 417.605) of a determination of noncoverage of inpatient hospital
care--
(i) The enrollee is not entitled to subsequent review of that issue
under this subpart; and
(ii) The PRO review decision is subject to the appeals procedures
set forth in part 473 of this chapter.
(2) Any determination regarding services that were furnished by the
HMO or CMP, either directly or under arrangement, for which the
enrollee has no further liability for payment are not subject to
appeal.
(3) Services included in an optional supplemental plan (see
Sec. 417.440(b)(2)) are subject only to a grievance procedure under
Sec. 417.436(a)(2).
(4) Physicians and other individuals who furnish items or services
under arrangement with an HMO or CMP have no right of appeal under this
subpart.
(5) The provisions of subpart R of 20 CFR part 404 dealing with
representation of parties under title II of the Act are, unless
otherwise provided in this subpart, also applicable to appeals under
this subpart.
(b) Responsibility for establishing appeals procedures. The HMO or
CMP is responsible for establishing and maintaining the appeals
procedures that are specified in Secs. 417.604 through 417.638.
* * * * *
6. A new Sec. 417.605 is added to read as follows:
Sec. 417.605 Immediate PRO review of a determination of noncoverage of
inpatient hospital care.
(a) Right to review. A Medicare enrollee who disagrees with a
determination made by an HMO, CMP, or a hospital that inpatient care is
no longer necessary may remain in the hospital and may (directly or
through his or her authorized representative) request immediate PRO
review of the determination.
(b) Procedures. For the immediate PRO review process, the following
rules apply:
(1) The enrollee or authorized representative must submit the
request for immediate review--
(i) To the PRO that has an agreement with the hospital under
Sec. 466.78 of this chapter;
(ii) In writing or by telephone; and
(iii) By noon of the first working day after receipt of the written
notice of the determination that the hospital stay is no longer
necessary.
(2) On the date it receives the enrollee's request, the PRO must
notify the HMO or CMP that a request for immediate review has been
filed.
(3) The HMO or CMP must supply any information that the PRO
requires to conduct its review and must make it available, by phone or
in writing, by the close of business of the first full working day
immediately following the day the enrollee submits the request for
review.
(4) In response to a request from the HMO or CMP, the hospital must
submit medical records and other pertinent information to the PRO by
close of business of the first full working day immediately following
the day the HMO or CMP makes its request.
(5) The PRO must solicit the views of the enrollee who requested
the immediate PRO review (or the enrollee's representative).
(6) The PRO must make a determination and notify the enrollee, the
hospital, and the HMO or CMP by close of business of the first working
day after it receives the information from the hospital, or the HMO or
CMP, or both.
(c) Financial responsibility--(1) General rule. Except as provided
in paragraph (c)(2) of this section, the HMO or CMP continues to be
financially responsible for the costs of the hospital stay until noon
of the calendar day following the day the PRO notifies the enrollee of
its review determination.
(2) Exception. The hospital may not charge the HMO or CMP (or the
enrollee) if--
(i) It was the hospital (acting on behalf of the enrollee) that
filed the request for immediate PRO review; and
(ii) The PRO upholds the noncoverage determination made by the HMO
or CMP.
7. Section 417.606 is revised to read as follows:
Sec. 417.606 Organization determinations.
(a) Actions that are organization determinations. An organization
determination is any determination made by an HMO or CMP with respect
to any of the following:
(1) Payment for emergency or urgently needed services.
(2) Any other health services furnished by a provider or supplier
other than the HMO or CMP that the enrollee believes--
(i) Are covered under Medicare; and
(ii) Should have been furnished, arranged for, or reimbursed by the
HMO or CMP.
(3) The HMO's or CMP's refusal to provide services that the
enrollee believes should be furnished or arranged for by the HMO or CMP
and the enrollee has not received the services outside the HMO or CMP.
(b) Actions that are not organization determinations. The following
are not organization determinations for purposes of this subpart:
(1) A determination regarding services that were furnished by the
HMO or CMP, either directly or under arrangement, for which the
enrollee has no further obligation for payment.
(2) A determination regarding services included in an optional
supplemental plan (see Sec. 417.440(b)(2)).
(c) Relation to grievances. A determination that is not an
organization determination is subject only to a grievance procedure
under Sec. 417.436(a)(2).
8. Section 417.608 is amended by revising the section heading and
paragraphs (a) and (c) to read as follows:
Sec. 417.608 Notice of adverse organization determination.
(a) If an HMO or CMP makes an organization determination that is
partially or fully adverse to the enrollee, it must notify the enrollee
of the determination within 60 days of receiving the enrollee's request
for payment for services.
* * * * *
(c) The failure to provide the enrollee with timely notification of
an adverse organization determination constitutes an adverse
organization determination and may be appealed.
9. In Sec. 417.610, the section heading is revised, the
undesignated introductory text is revised, and paragraph (b) is
revised, to read as follows:
Sec. 417.610 Parties to the organization determination.
The parties to the organization determination are--
* * * * *
(b) An assignee of the enrollee (that is, a physician or other
supplier who has provided a service to the enrollee and formally agrees
to waive any right to payment from the enrollee for that service);
* * * * *
10. Section 417.614 is revised to read as follows:
Sec. 417.614 Right to reconsideration.
Any party who is dissatisfied with an organization determination or
with one that has been reopened and revised may request reconsideration
of the determination in accordance with the procedures of Sec. 417.616.
11. In Sec. 417.616, the introductory text of paragraph (a) is
republished, and paragraphs (a)(1), (b), (c)(1), and (c)(2)
introductory text are revised, to read as follows:
Sec. 417.616 Request for reconsideration.
(a) Method and place for filing a request. A request for
reconsideration must be made in writing and filed with--(1) The HMO or
CMP that made the organization determination;
* * * * *
(b) Time for filing a request. Except as provided in paragraph (c)
of this section, the request for reconsideration must be filed within
60 days from the date of the notice of the organization determination.
(c) Extension of time to file a request--(1) Rule. If good cause is
shown, the HMO or CMP that made the organization determination may
extend the time for filing the request for reconsideration.
(2) Method of requesting an extension. If the time limit in
paragraph (b) of this section has expired, a party to the organization
determination may file a request for reconsideration with the HMO or
CMP, HCFA, SSA, or, in the case of a qualified railroad retirement
beneficiary, an RRB office. The request to extend the time limit must--
* * * * *
Sec. 417.618 [Amended]
12. In Sec. 417.618, ``, carrier, or intermediary'' is removed.
13. Section 417.620 is revised to read as follows:
Sec. 417.620 Responsibility for reconsiderations; time limits.
(a) If the HMO or CMP can make a reconsidered determination that is
completely favorable to the enrollee, the HMO or CMP issues the
reconsidered determination.
(b) If the HMO or CMP recommends partial or complete affirmation of
its adverse determination, the HMO or CMP must prepare a written
explanation and send the entire case to HCFA. HCFA makes the
reconsidered determination.
(c) The HMO or CMP must issue the reconsidered determination to the
enrollee, or submit the explanation and file to HCFA, within 60
calendar days from the date of receipt of the request for
reconsideration.
(d) For good cause shown, HCFA may allow exceptions to the time
limit set forth in paragraph (c) of this section.
(e) Failure by the HMO or CMP to provide the enrollee with a
reconsidered determination within the 60-day limit described in
paragraph (c) of this section or to obtain a good cause extension
described in paragraph (d) of this section constitutes an adverse
determination, and the HMO or CMP must submit the file to HCFA.
(f) If the HMO or CMP refers the matter to HCFA, it must
concurrently notify the beneficiary of that action.
14. In Sec. 417.622, the introductory text is republished, and
paragraph (a) is revised to read as follows. [For a nomenclature change
in paragraph (b), see amendatory item 4.]
Sec. 417.622 Reconsidered determination.
A reconsidered determination is a new determination that--
(a) Is based on a review of the organization determination, the
evidence and findings upon which it was based, and any other evidence
submitted by the parties or obtained by HCFA or the HMO or CMP; and
* * * * *
15. Section 417.630 is revised to read as follows:
Sec. 417.630 Right to a hearing.
If the amount remaining in controversy is $100 or more, any party
to the reconsideration who is dissatisfied with the reconsidered
determination has a right to a hearing. (The amount remaining in
controversy, which can include any combination of Part A and Part B
services, is computed in accordance with Sec. 405.740 of this chapter
for Part A services and Sec. 405.820(b) of this chapter for Part B
services. If the basis for the appeal is the refusal of services, the
projected value of those services is used in computing the amount
remaining in controversy.)
16. Section 417.638 is revised to read as follows:
Sec. 417.638 Reopening determinations and decisions.
An organization, reconsidered, or revised determination made by an
HMO, CMP, or HCFA, or a decision or revised decision of an ALJ or the
Appeals Council, may be reopened in accordance with the provisions of
Sec. 405.750 of this chapter.
17. In Sec. 417.801, the introductory language of paragraph (b) is
republished, paragraph (b)(6) is redesignated and republished as
paragraph (b)(7), and a new paragraph (b)(6) is added to read as
follows:
Sec. 417.801 Agreements between HCFA and health care prepayment plans.
* * * * *
(b) Terms. The agreement must provide that the HCPP agrees to--
* * * * *
(6) Establish administrative review procedures in accordance with
Secs. 417.830 through 417.840 for Medicare enrollees who are
dissatisfied with denied services or claims; and
(7) Consider any additional requirements that HCFA finds necessary
or desirable for efficient and effective program administration.
* * * * *
18. New Secs. 417.830, 417.832, 417.834, 417.836, 417.838, and
417.840 are added under subpart U to read as follows:
Sec. 417.830 Scope of regulations on beneficiary appeals.
Sections 417.832 through 417.840 establish procedures for the
presentation and resolution of organization determinations,
reconsiderations, hearings, Appeals Council review, court reviews, and
finality of decisions that are applicable to Medicare enrollees of an
HCPP.
Sec. 417.832 Applicability of requirements and procedures.
(a) The administrative review rights and procedures specified in
Secs. 417.834 through 417.840 pertain to disputes involving an
organization determination, as defined in Sec. 417.838, with which the
enrollee is dissatisfied.
(b) Physicians and other individuals who furnish items or services
under arrangements with an HCPP have no right of administrative review
under Secs. 417.834 through 417.840.
(c) The provisions of subpart R of 20 CFR part 404 dealing with
representation of parties under title II of the Act are, unless
otherwise provided, also applicable.
Sec. 417.834 Responsibility for establishing administrative review
procedures.
The HCPP is responsible for establishing and maintaining the
administrative review procedures that are specified in Secs. 417.830
through 417.840.
Sec. 417.836 Written description of administrative review procedures.
Each HCPP is responsible for ensuring that all Medicare enrollees
are informed in writing of the administrative review procedures that
are available to them.
Sec. 417.838 Organization determinations.
(a) Actions that are organization determinations. For purposes of
Secs. 417.830 through 417.840, an organization determination is a
refusal to furnish or arrange for services, or reimburse the party for
services provided to the beneficiary, on the grounds that the services
are not covered by Medicare.
(b) Actions that are not organization determinations. The following
are not organization determinations for purposes of Secs. 417.830
through 417.840:
(1) A determination regarding services that were furnished by the
HCPP, either directly or under arrangement, for which the enrollee has
no further obligation for payment.
(2) A determination regarding services that are not covered under
the HCPP's agreement with HCFA.
Sec. 417.840 Administrative review procedures.
The HCPP must apply Secs. 417.608 through 417.638 to organization
determinations that affect its Medicare enrollees, and to
reconsideration, hearings, Appeals Council review, and judicial review
of those organization determinations.
(Catalog of Federal Domestic Assistance Program No. 93.773,
Medicare--Hospital Insurance; and Program No. 93.774, Medicare--
Supplementary Medical Insurance.)
Dated: May 20, 1994.
Bruce C. Vladeck,
Administrator, Health Care Financing Administration.
Dated: November 4, 1994.
Donna E. Shalala,
Secretary.
[FR Doc. 94-28399 Filed 11-18-94; 8:45 am]
BILLING CODE 4120-01-P
