Title 42—Public Health--Volume 1
PART 438—MANAGED CARE
§ 438.68   Network adequacy standards.
(a) General rule. A State that contracts with an MCO, PIHP or PAHP to deliver Medicaid services must develop and enforce network adequacy standards consistent with this section.
(b) Provider-specific network adequacy standards. -(1) Provider types. At a minimum, a State must develop a quantitative network adequacy standard, other than appointment wait times, for the following provider types, if covered under the contract:
(i) Primary care, adult and pediatric.
(ii) OB/GYN.
(iii) Mental health and substance use disorder, adult and pediatric.
(iv) Specialist (as designated by the State), adult, and pediatric.
(v) Hospital.
(vi) Pharmacy.
(vii) Pediatric dental.
(2) LTSS. States with MCO, PIHP, or PAHP contracts which cover LTSS must develop a quantitative network adequacy standard for LTSS provider types.
(3) Scope of network adequacy standards. Network standards established in accordance with paragraphs (b)(1) and (2) of this section must include all geographic areas covered by the managed care program or, if applicable, the contract between the State and the MCO, PIHP or PAHP. States are permitted to have varying standards for the same provider type based on geographic areas.
(c) Development of network adequacy standards. (1) States developing network adequacy standards consistent with paragraph (b)(1) of this section must consider, at a minimum, the following elements:
(i) The anticipated Medicaid enrollment.
(ii) The expected utilization of services.
(iii) The characteristics and health care needs of specific Medicaid populations covered in the MCO, PIHP, and PAHP contract.
(iv) The numbers and types (in terms of training, experience, and specialization) of network providers required to furnish the contracted Medicaid services.
(v) The numbers of network providers who are not accepting new Medicaid patients.
(vi) The geographic location of network providers and Medicaid enrollees, considering distance, travel time, the means of transportation ordinarily used by Medicaid enrollees.
(vii) The ability of network providers to communicate with limited English proficient enrollees in their preferred language.
(viii) The ability of network providers to ensure physical access, reasonable accommodations, culturally competent communications, and accessible equipment for Medicaid enrollees with physical or mental disabilities.
(ix) The availability of triage lines or screening systems, as well as the use of telemedicine, e-visits, and/or other evolving and innovative technological solutions.
(2) States developing standards consistent with paragraph (b)(2) of this section must consider the following:
(i) All elements in paragraphs (c)(1)(i) through (ix) of this section.
(ii) Elements that would support an enrollee's choice of provider.
(iii) Strategies that would ensure the health and welfare of the enrollee and support community integration of the enrollee.
(iv) Other considerations that are in the best interest of the enrollees that need LTSS.
(d) Exceptions process. (1) To the extent the State permits an exception to any of the network standards developed under this section, the standard by which the exception will be evaluated and approved must:
(i) Be specified in the MCO, PIHP, or PAHP contract.
(ii) Be based, at a minimum, on the number of providers in that specialty practicing in the MCO, PIHP, or PAHP service area.
(iii) Include consideration of the payment rates offered by the MCO, PIHP, or PAHP to the provider type or for the service type for which an exception is being requested.
(2) States that grant an exception in accordance with paragraph (d)(1) of this section to an MCO, PIHP, or PAHP must monitor enrollee access to that provider type or service on an ongoing basis and include the findings to CMS in the managed care program assessment report required under § 438.66(e).
(e) Appointment wait time standards. States must establish and enforce appointment wait time standards.
(1) Routine appointments. Standards must be established for routine appointments for the following services and within the specified limits:
(i) If covered in the MCO's, PIHP's, or PAHP's contract, outpatient mental health and substance use disorder, adult and pediatric, within State-established timeframes but no longer than 10 business days from the date of request.
(ii) If covered in the MCO's, PIHP's, or PAHP's contract, primary care, adult and pediatric, within State-established timeframes but no longer than 15 business days from the date of request.
(iii) If covered in the MCO's, PIHP's, or PAHP's contract, obstetrics and gynecological within State-established timeframes but no longer than 15 business days from the date of request.
(iv) State-selected, other than those listed in paragraphs (e)(1)(i) through (iii) of this section and covered in the MCO's, PIHP's, or PAHP's contract, chosen in an evidence-based manner within State-established timeframes.
(2) Minimum compliance. MCOs, PIHPs, and PAHPs will be deemed compliant with the standards established in paragraph (e)(1) of this section when secret shopper results, consistent with paragraph (f)(2) of this section, reflect a rate of appointment availability that meets the standards established at paragraph (e)(1)(i) through (iv) of this section of at least 90 percent.
(3) Selection of additional types of services. After consulting with States and other interested parties and providing public notice and opportunity to comment, CMS may select additional types of services to be added to paragraph (e)(1) of this section.
(f) Secret shopper surveys. States must contract with an entity, independent of the State Medicaid agency and any of its contracted MCOs, PIHPs and PAHPs subject to the survey, to conduct annual secret shopper surveys of each MCO's, PIHP's, and PAHP's compliance with the provider directory requirements in § 438.10(h) as specified in paragraph (f)(1) of this section and appointment wait time requirements as specified in paragraph (f)(2) of this section.
(1) Provider directories. (i) A secret shopper survey must be conducted to determine the accuracy of the information specified in paragraph (f)(1)(ii) of this section in each MCO's, PIHP's, and PAHP's most current electronic provider directories, as required at § 438.10(h), for the following provider types:
(A) Primary care providers, if they are included in the MCO's, PIHP's, or PAHP's provider directory;
(B) Obstetric and gynecological providers, if they are included in the MCO's, PIHP's, or PAHP's provider directory;
(C) Outpatient mental health and substance use disorder providers, if they are included in the MCO's, PIHP's, or PAHP's provider directory; and
(D) The provider type that provides the service type chosen by the State in paragraph (e)(1)(iv) of this section.
(ii) A secret shopper survey must assess the accuracy of the information in each MCO's, PIHP's, and PAHP's most current electronic provider directories for at least:
(A) The active network status with the MCO, PIHP, or PAHP;
(B) The street address(es) as required at § 438.10(h)(1)(ii);
(C) The telephone number(s) as required at § 438.10(h)(1)(iii); and
(D) Whether the provider is accepting new enrollees as required at § 438.10(h)(1)(vi).
(iii) States must receive information, sufficient to facilitate correction by the MCO, PIHP, or PAHP, on errors in directory data identified in secret shopper surveys from the entity conducting the secret shopper survey no later than 3 business days from the day the error is identified by the entity conducting the secret shopper survey.
(iv) States must send information required in paragraph (f)(1)(iii) of this section to the applicable MCO, PIHP, or PAHP no later than 3 business days from receipt.
(2) Timely appointment access. A secret shopper survey must be used to determine each MCO's, PIHP's, and PAHP's rate of network compliance with the appointment wait time standards in paragraph (e)(1) of this section.
(i) After consulting with States and other interested parties and providing public notice and opportunity to comment, CMS may select additional types of appointments to be added to a secret shopper survey.
(ii) Appointments offered via telehealth can only be counted toward compliance with the appointment wait time standards in paragraph (e)(1) of this section if the provider being surveyed also offers in-person appointments to the MCO's, PIHP's, or PAHP's enrollees and must be identified separately from in-person appointments in survey results.
(3) Independence. An entity will be considered independent of the State as specified in paragraph (f)(3)(i) of this section and independent of the MCOs, PIHPs, or PAHPs subject to the surveys as specified in paragraph (f)(3)(ii) of this section.
(i) An entity will be considered independent of the State if it is not part of the State Medicaid agency.
(ii) An entity will be considered independent of an MCO, PIHP, or PAHP subject to the secret shopper surveys if the entity is not an MCO, PIHP, or PAHP, is not owned or controlled by any of the MCOs, PIHPs, or PAHPs subject to the surveys, and does not own or control any of the MCOs, PIHPs, or PAHPs subject to the surveys.
(4) Methodological standards. Secret shopper surveys required in this paragraph must:
(i) Use a random sample;
(ii) Include all areas of the State covered by the MCO's, PIHP's, or PAHP's contract; and
(iii) For secret shopper surveys required in paragraph (f)(2) of this section for appointment wait time standards, be completed for a statistically valid sample of providers.
(5) Results reporting. Results of the secret shopper surveys conducted pursuant to paragraphs (f)(1) and (2) of this section must be analyzed, summarized, and:
(i) Reported to CMS using the content, form, and submission times as specified at § 438.207(d); and
(ii) Posted on the State's website required at § 438.10(c)(3) within 30 calendar days of submission to CMS.
(g) Publication of network adequacy standards. States must publish the standards developed in accordance with paragraphs (b)(1) and (2), and (e) of this section on the website required by § 438.10(c)(3). Upon request, network adequacy standards must also be made available at no cost to enrollees with disabilities in alternate formats or through the provision of auxiliary aids and services.
(h) Applicability. States will not be held out of compliance with the requirements of paragraph (b)(1) and of this section prior to the first rating period for contracts with MCOs, PIHPs, or PAHPs beginning on or after 3 years after July 9, 2024, so long as they comply with the corresponding standard(s) codified in 42 CFR 438.68 (b) (effective as of October 1, 2023). Paragraph (d)(1)(iii) of this section applies to the first rating period for contracts with MCOs, PIHPs, or PAHPs beginning on or after 2 years after July 9, 2024. States will not be held out of compliance with the requirements of paragraph (d)(2) and of this section prior to the first rating period for contracts with MCOs, PIHPs, or PAHPs beginning on or after 2 years after July 9, 2024, so long as they comply with the corresponding standard(s) codified in 42 CFR 438.68 (d)(2) (effective as of October 1, 2023). Paragraph (e) of this section applies to the first rating period for contracts with MCOs, PIHPs, or PAHPs beginning on or after 3 years after July 9, 2024. Paragraph (f) of this section applies to the first rating period for contracts with MCOs, PIHPs, or PAHPs beginning on or after 4 years after July 9, 2024. States will not be held out of compliance with the requirements of paragraph (g) of this section prior to the first rating period that begins on or after 3 years after July 9, 2024, so long as they comply with the corresponding standard(s) codified in paragraph 42 CFR 438.68 (g) (effective as of October 1, 2023).
§ 438.70   Stakeholder engagement when LTSS is delivered through a managed care program.
The State must ensure the views of beneficiaries, individuals representing beneficiaries, providers, and other stakeholders are solicited and addressed during the design, implementation, and oversight of a State's managed LTSS program. The composition of the stakeholder group and frequency of meetings must be sufficient to ensure meaningful stakeholder engagement.
§ 438.71   Beneficiary support system.
(a) General requirement. The State must develop and implement a beneficiary support system that provides support to beneficiaries both prior to and after enrollment in a MCO, PIHP, PAHP, PCCM or PCCM entity.
(b) Elements of the support system. (1) A State beneficiary support system must include at a minimum:
(i) Choice counseling for all beneficiaries.
(ii) Assistance for enrollees in understanding managed care.
(iii) Assistance as specified for enrollees who use, or express a desire to receive, LTSS in paragraph (d) of this section.
(2) The beneficiary support system must perform outreach to beneficiaries and/or authorized representatives and be accessible in multiple ways including phone, Internet, in-person, and via auxiliary aids and services when requested.
(c) Choice counseling. (1) Choice counseling, as defined in § 438.2, must be provided to all potential enrollees and enrollees who disenroll from a MCO, PIHP, PAHP, PCCM or PCCM entity for reasons specified in § 438.56(b) and (c).
(2) If an individual or entity provides choice counseling on the State's behalf under a memorandum of agreement or contract, it is considered an enrollment broker as defined in § 438.810(a) and must meet the independence and freedom from conflict of interest standards in § 438.810(b)(1) and (2).
(3) An entity that receives non-Medicaid funding to represent beneficiaries at hearings may provide choice counseling on behalf of the State so long as the State requires firewalls to ensure that the requirements for the provision of choice counseling are met.
(d) Functions specific to LTSS activities. At a minimum, the beneficiary support system must provide the following support to enrollees who use, or express a desire to receive, LTSS:
(1) An access point for complaints and concerns about MCO, PIHP, PAHP, PCCM, and PCCM entity enrollment, access to covered services, and other related matters.
(2) Education on enrollees' grievance and appeal rights within the MCO, PIHP or PAHP; the State fair hearing process; enrollee rights and responsibilities; and additional resources outside of the MCO, PIHP or PAHP.
(3) Assistance, upon request, in navigating the grievance and appeal process within the MCO, PIHP or PAHP, as well as appealing adverse benefit determinations by the MCO, PIHP, or PAHP to a State fair hearing. The system may not provide representation to the enrollee at a State fair hearing but may refer enrollees to sources of legal representation.
(4) Review and oversight of LTSS program data to provide guidance to the State Medicaid Agency on identification, remediation and resolution of systemic issues.
§ 438.72   Additional requirements for long-term services and supports.
(a) [Reserved]
(b) Services authorized under section 1915(c) waivers and section 1915(i), (j), and (k) State plan authorities. The State must comply with the requirements at §§ 441.301(c)(1) through (3), 441.302(a)(6), 441.302(k), 441.311, and 441.313 for services authorized under section 1915(c) waivers and section 1915(i), (j), and (k) State plan authorities.
§ 438.74   State oversight of the minimum MLR requirement.
(a) State reporting requirement. (1) The State must annually submit to CMS a summary description of each report(s) received from the MCO(s), PIHP(s), and PAHP(s) under contract with the State, according to § 438.8(k), with the rate certification required in § 438.7.
(2) The summary description must be provided for each MCO, PIHP, or PAHP under contract with the State and must include, at a minimum, the amount of the numerator, the amount of the denominator, the MLR percentage achieved, the number of member months, and any remittances owed by each MCO, PIHP, or PAHP for that MLR reporting year.
(b) Repayment of Federal share of remittances. (1) If a State requires a MCO, PIHP, or PAHP to pay remittances through the contract for not meeting the minimum MLR required by the State, the State must reimburse CMS for an amount equal to the Federal share of the remittance, taking into account applicable differences in the Federal matching rate.
(2) If a remittance is owed according to paragraph (b)(1) of this section, the State must submit a separate report describing the methodology used to determine the State and Federal share of the remittance with the report required in paragraph (a) of this section.
§ 438.100   Enrollee rights.
(a) General rule. The State must ensure that:
(1) Each MCO, PIHP, PAHP, PCCM and PCCM entity has written policies regarding the enrollee rights specified in this section; and
(2) Each MCO, PIHP, PAHP, PCCM and PCCM entity complies with any applicable Federal and State laws that pertain to enrollee rights, and ensures that its employees and contracted providers observe and protect those rights.
(b) Specific rights —(1) Basic requirement. The State must ensure that each managed care enrollee is guaranteed the rights as specified in paragraphs (b)(2) and (3) of this section.
(2) An enrollee of an MCO, PIHP, PAHP, PCCM, or PCCM entity has the following rights: The right to—
(i) Receive information in accordance with § 438.10.
(ii) Be treated with respect and with due consideration for his or her dignity and privacy.
(iii) Receive information on available treatment options and alternatives, presented in a manner appropriate to the enrollee's condition and ability to understand. (The information requirements for services that are not covered under the contract because of moral or religious objections are set forth in § 438.10(g)(2)(ii)(A) and (B).)
(iv) Participate in decisions regarding his or her health care, including the right to refuse treatment.
(v) Be free from any form of restraint or seclusion used as a means of coercion, discipline, convenience or retaliation, as specified in other Federal regulations on the use of restraints and seclusion.
(vi) If the privacy rule, as set forth in 45 CFR parts 160 and 164 subparts A and E, applies, request and receive a copy of his or her medical records, and request that they be amended or corrected, as specified in 45 CFR 164.524 and 164.526.
(3) An enrollee of an MCO, PIHP, or PAHP (consistent with the scope of the PAHP's contracted services) has the right to be furnished health care services in accordance with §§ 438.206 through 438.210.
(c) Free exercise of rights. The State must ensure that each enrollee is free to exercise his or her rights, and that the exercise of those rights does not adversely affect the way the MCO, PIHP, PAHP, PCCM or PCCM entity and its network providers or the State agency treat the enrollee.
(d) Compliance with other Federal and State laws. The State must ensure that each MCO, PIHP, PAHP, PCCM and PCCM entity complies with any other applicable Federal and State laws (including: Title VI of the Civil Rights Act of 1964 as implemented by regulations at 45 CFR part 80; the Age Discrimination Act of 1975 as implemented by regulations at 45 CFR part 91; the Rehabilitation Act of 1973; Title IX of the Education Amendments of 1972 (regarding education programs and activities); Titles II and III of the Americans with Disabilities Act; and section 1557 of the Patient Protection and Affordable Care Act.
§ 438.102   Provider-enrollee communications.
(a) General rules. (1) An MCO, PIHP, or PAHP may not prohibit, or otherwise restrict, a provider acting within the lawful scope of practice, from advising or advocating on behalf of an enrollee who is his or her patient, for the following:
(i) The enrollee's health status, medical care, or treatment options, including any alternative treatment that may be self-administered.
(ii) Any information the enrollee needs to decide among all relevant treatment options.
(iii) The risks, benefits, and consequences of treatment or non-treatment.
(iv) The enrollee's right to participate in decisions regarding his or her health care, including the right to refuse treatment, and to express preferences about future treatment decisions.
(2) Subject to the information requirements of paragraph (b) of this section, an MCO, PIHP, or PAHP that would otherwise be required to provide, reimburse for, or provide coverage of, a counseling or referral service because of the requirement in paragraph (a)(1) of this section is not required to do so if the MCO, PIHP, or PAHP objects to the service on moral or religious grounds.
(b) Information requirements: MCO, PIHP, and PAHP responsibility. (1)(i) An MCO, PIHP, or PAHP that elects the option provided in paragraph (a)(2) of this section must furnish information about the services it does not cover as follows:
(A) To the State—
( 1 ) With its application for a Medicaid contract.
( 2 ) Whenever it adopts the policy during the term of the contract.
(B) Consistent with the provisions of § 438.10, to enrollees, within 90 days after adopting the policy for any particular service.
(ii) Although this timeframe would be sufficient to entitle the MCO, PIHP, or PAHP to the option provided in paragraph (a)(2) of this section, the overriding rule in § 438.10(g)(4) requires the State, its contracted representative, or MCO, PIHP, or PAHP to furnish the information at least 30 days before the effective date of the policy.
(2) As specified in § 438.10(g)(2)(ii)(A) and (B), the MCOs, PIHPs, and PAHPs must inform enrollees how they can obtain information from the State about how to access the service excluded under paragraph (a)(2) of this section.
(c) Information requirements: State responsibility. For each service excluded by an MCO, PIHP, or PAHP under paragraph (a)(2) of this section, the State must provide information on how and where to obtain the service, as specified in § 438.10.
(d) Sanction. An MCO that violates the prohibition of paragraph (a)(1) of this section is subject to intermediate sanctions under subpart I of this part.
§ 438.104   Marketing activities.
(a) Definitions. As used in this section, the following terms have the indicated meanings:
Cold-call marketing means any unsolicited personal contact by the MCO, PIHP, PAHP, PCCM or PCCM entity with a potential enrollee for the purpose of marketing as defined in this paragraph (a).
Marketing means any communication, from an MCO, PIHP, PAHP, PCCM or PCCM entity to a Medicaid beneficiary who is not enrolled in that entity, that can reasonably be interpreted as intended to influence the beneficiary to enroll in that particular MCO's, PIHP's, PAHP's, PCCM's or PCCM entity's Medicaid product, or either to not enroll in or to disenroll from another MCO's, PIHP's, PAHP's, PCCM's or PCCM entity's Medicaid product. Marketing does not include communication to a Medicaid beneficiary from the issuer of a qualified health plan, as defined in 45 CFR 155.20, about the qualified health plan.
Marketing materials means materials that—
(i) Are produced in any medium, by or on behalf of an MCO, PIHP, PAHP, PCCM, or PCCM entity; and
(ii) Can reasonably be interpreted as intended to market the MCO, PIHP, PAHP, PCCM, or PCCM entity to potential enrollees.
MCO, PIHP, PAHP, PCCM or PCCM entity include any of the entity's employees, network providers, agents, or contractors.
Private insurance does not include a qualified health plan, as defined in 45 CFR 155.20.
(b) Contract requirements. Each contract with an MCO, PIHP, PAHP, PCCM, or PCCM entity must comply with the following requirements:
(1) Provide that the entity—
(i) Does not distribute any marketing materials without first obtaining State approval.
(ii) Distributes the materials to its entire service area as indicated in the contract.
(iii) Complies with the information requirements of § 438.10 to ensure that, before enrolling, the beneficiary receives, from the entity or the State, the accurate oral and written information he or she needs to make an informed decision on whether to enroll.
(iv) Does not seek to influence enrollment in conjunction with the sale or offering of any private insurance.
(v) Does not, directly or indirectly, engage in door-to-door, telephone, email, texting, or other cold-call marketing activities.
(2) Specify the methods by which the entity ensures the State agency that marketing, including plans and materials, is accurate and does not mislead, confuse, or defraud the beneficiaries or the State agency. Statements that will be considered inaccurate, false, or misleading include, but are not limited to, any assertion or statement (whether written or oral) that—
(i) The beneficiary must enroll in the MCO, PIHP, PAHP, PCCM or PCCM entity to obtain benefits or to not lose benefits; or
(ii) The MCO, PIHP, PAHP, PCCM or PCCM entity is endorsed by CMS, the Federal or State government, or similar entity.
(c) State agency review. In reviewing the marketing materials submitted by the entity, the State must consult with the Medical Care Advisory Committee established under § 431.12 of this chapter or an advisory committee with similar membership.
§ 438.106   Liability for payment.
Each MCO, PIHP, and PAHP must provide that its Medicaid enrollees are not held liable for any of the following:
(a) The MCO's, PIHP's, or PAHP's debts, in the event of the entity's insolvency.
(b) Covered services provided to the enrollee, for which—
(1) The State does not pay the MCO, PIHP, or PAHP; or
(2) The State, or the MCO, PIHP, or PAHP does not pay the individual or health care provider that furnished the services under a contractual, referral, or other arrangement.
(c) Payments for covered services furnished under a contract, referral, or other arrangement, to the extent that those payments are in excess of the amount that the enrollee would owe if the MCO, PIHP, or PAHP covered the services directly.
§ 438.108   Cost sharing.
The contract must provide that any cost sharing imposed on Medicaid enrollees is in accordance with §§ 447.50 through 447.82 of this chapter.
§ 438.110   Member advisory committee.
(a) General rule. When LTSS are covered under a risk contract between a State and an MCO, PIHP, or PAHP, the contract must provide that each MCO, PIHP or PAHP establish and maintain a member advisory committee.
(b) Committee composition. The committee required in paragraph (a) of this section must include at least a reasonably representative sample of the LTSS populations, or other individuals representing those enrollees, covered under the contract with the MCO, PIHP, or PAHP.
§ 438.114   Emergency and poststabilization services.
(a) Definitions. As used in this section—
Emergency medical condition means a medical condition manifesting itself by acute symptoms of sufficient severity (including severe pain) that a prudent layperson, who possesses an average knowledge of health and medicine, could reasonably expect the absence of immediate medical attention to result in the following:
(i) Placing the health of the individual (or, for a pregnant woman, the health of the woman or her unborn child) in serious jeopardy.
(ii) Serious impairment to bodily functions.
(iii) Serious dysfunction of any bodily organ or part.
Emergency services means covered inpatient and outpatient services that are as follows:
(i) Furnished by a provider that is qualified to furnish these services under this Title.
(ii) Needed to evaluate or stabilize an emergency medical condition.
Poststabilization care services means covered services, related to an emergency medical condition that are provided after an enrollee is stabilized to maintain the stabilized condition, or, under the circumstances described in paragraph (e) of this section, to improve or resolve the enrollee's condition.
(b) Coverage and payment: General rule. The following entities are responsible for coverage and payment of emergency services and poststabilization care services.
(1) The MCO, PIHP, or PAHP.
(2) The State, for managed care programs that contract with PCCMs or PCCM entities
(c) Coverage and payment: Emergency services. (1) The entities identified in paragraph (b) of this section—
(i) Must cover and pay for emergency services regardless of whether the provider that furnishes the services has a contract with the MCO, PIHP, PAHP, PCCM or PCCM entity; and
(ii) May not deny payment for treatment obtained under either of the following circumstances:
(A) An enrollee had an emergency medical condition, including cases in which the absence of immediate medical attention would not have had the outcomes specified in paragraphs (1), (2), and (3) of the definition of emergency medical condition in paragraph (a) of this section.
(B) A representative of the MCO, PIHP, PAHP, PCCM, or PCCM entity instructs the enrollee to seek emergency services.
(2) A PCCM or PCCM entity must allow enrollees to obtain emergency services outside the primary care case management system regardless of whether the case manager referred the enrollee to the provider that furnishes the services.
(d) Additional rules for emergency services. (1) The entities specified in paragraph (b) of this section may not—
(i) Limit what constitutes an emergency medical condition with reference to paragraph (a) of this section, on the basis of lists of diagnoses or symptoms; and
(ii) Refuse to cover emergency services based on the emergency room provider, hospital, or fiscal agent not notifying the enrollee's primary care provider, MCO, PIHP, PAHP or applicable State entity of the enrollee's screening and treatment within 10 calendar days of presentation for emergency services.
(2) An enrollee who has an emergency medical condition may not be held liable for payment of subsequent screening and treatment needed to diagnose the specific condition or stabilize the patient.
(3) The attending emergency physician, or the provider actually treating the enrollee, is responsible for determining when the enrollee is sufficiently stabilized for transfer or discharge, and that determination is binding on the entities identified in paragraph (b) of this section as responsible for coverage and payment.
(e) Coverage and payment: Poststabilization care services. Poststabilization care services are covered and paid for in accordance with provisions set forth at § 422.113(c) of this chapter. In applying those provisions, reference to “MA organization” and “financially responsible” must be read as reference to the entities responsible for Medicaid payment, as specified in paragraph (b) of this section, and payment rules governed by Title XIX of the Act and the States.
(f) Applicability to PIHPs and PAHPs. To the extent that services required to treat an emergency medical condition fall within the scope of the services for which the PIHP or PAHP is responsible, the rules under this section apply.
§ 438.116   Solvency standards.
(a) Requirement for assurances. (1) Each MCO, PIHP, and PAHP that is not a Federally qualified HMO (as defined in section 1310 of the Public Health Service Act) must provide assurances satisfactory to the State showing that its provision against the risk of insolvency is adequate to ensure that its Medicaid enrollees will not be liable for the MCO's, PIHP's, or PAHP's debts if the entity becomes insolvent.
(2) Federally qualified HMOs, as defined in section 1310 of the Public Health Service Act, are exempt from this requirement.
(b) Other requirements —(1) General rule. Except as provided in paragraph (b)(2) of this section, an MCO or PIHP, must meet the solvency standards established by the State for private health maintenance organizations, or be licensed or certified by the State as a risk-bearing entity.
(2) Exception. Paragraph (b)(1) of this section does not apply to an MCO or PIHP that meets any of the following conditions:
(i) Does not provide both inpatient hospital services and physician services.
(ii) Is a public entity.
(iii) Is (or is controlled by) one or more Federally qualified health centers and meets the solvency standards established by the State for those centers.
(iv) Has its solvency guaranteed by the State.
§ 438.206   Availability of services.
(a) Basic rule. Each State must ensure that all services covered under the State plan are available and accessible to enrollees of MCOs, PIHPs, and PAHPs in a timely manner. The State must also ensure that MCO, PIHP and PAHP provider networks for services covered under the contract meet the standards developed by the State in accordance with § 438.68.
(b) Delivery network. The State must ensure, through its contracts, that each MCO, PIHP and PAHP, consistent with the scope of its contracted services, meets the following requirements:
(1) Maintains and monitors a network of appropriate providers that is supported by written agreements and is sufficient to provide adequate access to all services covered under the contract for all enrollees, including those with limited English proficiency or physical or mental disabilities.
(2) Provides female enrollees with direct access to a women's health specialist within the provider network for covered care necessary to provide women's routine and preventive health care services. This is in addition to the enrollee's designated source of primary care if that source is not a women's health specialist.
(3) Provides for a second opinion from a network provider, or arranges for the enrollee to obtain one outside the network, at no cost to the enrollee.
(4) If the provider network is unable to provide necessary services, covered under the contract, to a particular enrollee, the MCO, PIHP, or PAHP must adequately and timely cover these services out of network for the enrollee, for as long as the MCO, PIHP, or PAHP's provider network is unable to provide them.
(5) Requires out-of-network providers to coordinate with the MCO, PIHP, or PAHP for payment and ensures the cost to the enrollee is no greater than it would be if the services were furnished within the network.
(6) Demonstrates that its network providers are credentialed as required by § 438.214.
(7) Demonstrates that its network includes sufficient family planning providers to ensure timely access to covered services.
(c) Furnishing of services. The State must ensure that each contract with a MCO, PIHP, and PAHP complies with the following requirements.
(1) Timely access. Each MCO, PIHP, and PAHP must do the following:
(i) Meet and require its network providers to meet State standards for timely access to care and services taking into account the urgency of the need for services, as well as appointment wait times specified in § 438.68(e).
(ii) Ensure that the network providers offer hours of operation that are no less than the hours of operation offered to commercial enrollees or comparable to Medicaid FFS, if the provider serves only Medicaid enrollees.
(iii) Make services included in the contract available 24 hours a day, 7 days a week, when medically necessary.
(iv) Establish mechanisms to ensure compliance by network providers.
(v) Monitor network providers regularly to determine compliance.
(vi) Take corrective action if there is a failure to comply by a network provider.
(2) Access and cultural considerations. Each MCO, PIHP, and PAHP participates in the State's efforts to promote the delivery of services in a culturally competent manner to all enrollees, including those with limited English proficiency and diverse cultural and ethnic backgrounds, disabilities, and regardless of sex which includes sex characteristics, including intersex traits; pregnancy or related conditions; sexual orientation; gender identity and sex stereotypes.
(3) Accessibility considerations. Each MCO, PIHP, and PAHP must ensure that network providers provide physical access, reasonable accommodations, and accessible equipment for Medicaid enrollees with physical or mental disabilities.
(d) Applicability date. States will not be held out of compliance with the requirements of paragraphs (c)(1)(i) of this section prior to the first rating period that begins on or after 3 years after July 9, 2024, so long as they comply with the corresponding standard(s) codified in 42 CFR 438.206(c)(1)(i) (effective as of October 1, 2023).
§ 438.207   Assurances of adequate capacity and services.
(a) Basic rule. The State must ensure, through its contracts, that each MCO, PIHP, and PAHP gives assurances to the State and provides supporting documentation that demonstrates that it has the capacity to serve the expected enrollment in its service area in accordance with the State's standards for access to care under this part, including the standards at § 438.68 and § 438.206(c)(1).
(b) Nature of supporting documentation. Each MCO, PIHP, and PAHP must submit documentation to the State, in a format specified by the State, to demonstrate that it complies with the following requirements:
(1) Offers an appropriate range of preventive, primary care, specialty services, and LTSS that is adequate for the anticipated number of enrollees for the service area;
(2) Maintains a network of providers that is sufficient in number, mix, and geographic distribution to meet the needs of the anticipated number of enrollees in the service area; and
(3) Except as specified in paragraphs (b)(3)(iii) and (iv) of this section and if covered by the MCO's, PIHP's, or PAHP's contract, provides an annual payment analysis using paid claims data from the immediate prior rating period that demonstrates each MCO's, PIHP's, or PAHP's level of payment as specified in paragraphs (b)(3)(i) and (ii) of this section.
(i) The payment analysis must provide the total amount paid for evaluation and management current procedural terminology codes in the paid claims data from the immediate prior rating period for primary care, obstetrical and gynecological, mental health, and substance use disorder services, as well as the percentage that results from dividing the total amount paid by the published Medicare payment rate for the same services.
(A) A separate total and percentage must be reported for primary care, obstetrics and gynecology, mental health, and substance use disorder services; and
(B) If the percentage differs between adult and pediatric services, the percentages must be reported separately.
(ii) For homemaker services, home health aide services, personal care services, and habilitation services, the payment analysis must provide the total amount paid and the percentage that results from dividing the total amount paid by the amount the State's Medicaid FFS program would have paid for the same services.
(A) A separate total and percentage must be reported for homemaker services, home health aide services, personal care services, and habilitation services; and
(B) If the percentage differs between adult and pediatric services, the percentages must be reported separately.
(iii) Payments by MCOs, PIHPS, and PAHPs for the services specified in § 438.207(b)(3)(i) and (ii) for which the MCO, PIHP, or PAHP is not the primary payer are excluded from the analysis required in this paragraph.
(iv) Services furnished by a Federally-qualified health center as defined in section 1905(l)(2) and services furnished by a rural health clinic as defined in section 1905(l)(1) are excluded from the analysis required in this paragraph.
(c) Timing of documentation. Each MCO, PIHP, and PAHP must submit the documentation described in paragraph (b) of this section as specified by the State, but no less frequently than the following:
(1) At the time it enters into a contract with the State.
(2) On an annual basis.
(3) At any time there has been a significant change (as defined by the State) in the MCO's, PIHP's, or PAHP's operations that would affect the adequacy of capacity and services, including—
(i) Changes in MCO, PIHP, or PAHP services, benefits, geographic service area, composition of or payments to its provider network; or
(ii) Enrollment of a new population in the MCO, PIHP, or PAHP.
(d) State review and certification to CMS. After the State reviews the documentation submitted by the MCO, PIHP, or PAHP as specified in paragraph (b) of this section and the secret shopper evaluation results as required at § 438.68(f), the State must submit an assurance of compliance to CMS, in the format prescribed by CMS, that the MCO, PIHP, or PAHP meets the State's requirements for availability of services, as set forth in §§ 438.68 and 438.206.
(1) The submission to CMS must include documentation of an analysis that supports the assurance of the adequacy of the network for each contracted MCO, PIHP or PAHP related to its provider network.
(2) The analysis in paragraph (d)(1) of this section must include the payment analysis submitted by each MCO, PIHP, or PAHP, as required in paragraph (b)(3) of this section, and contain:
(i) The data provided by each MCO, PIHP, and PAHP in paragraph (b)(3) of this section; and
(ii) A State level payment percentage for each service type specified in paragraphs (b)(3)(i) and (ii) of this section produced by using the number of member months for the applicable rating period to weight each MCO's, PIHP's, or PAHP's reported percentages, as required in paragraph (b)(3) of this section.
(3) States must submit the assurance of compliance required in paragraph (d) of this section as specified in paragraphs (i) through (iii) of this section and post the report on the State's website required in § 438.10(c)(3) within 30 calendar days of submission to CMS.
(i) Sufficiently in advance to enable CMS to make a determination that the contract entered into as specified at § 438.207(c)(1) is approved under § 438.3(a).
(ii) On an annual basis and no later than 180 calendar days after each rating period.
(iii) At any time there has been a significant change as specified in paragraph (c)(3) of this section and with the submission of the associated contract, as required at § 438.3(a).
(e) CMS's right to inspect documentation. The State must make available to CMS, upon request, all documentation collected by the State from the MCO, PIHP, or PAHP, as well as documentation from all secret shopper surveys required at § 438.68(f).
(f) Remedy plans to improve access. (1) When the State, MCO, PIHP, PAHP, or CMS identifies an area in which an MCO's, PIHP's, or PAHP's access to care under the access standards in this part could be improved, including the standards at §§ 438.68 and 438.206, the State must:
(i) Submit to CMS for approval a remedy plan as specified in paragraph (f)(ii) of this section no later than 90 calendar days following the date that the State becomes aware of an MCO's, PIHP's, or PAHP's access issue;
(ii) Develop a remedy plan that addresses the identified access issue within 12 months and that identifies specific steps with timelines for implementation and completion, and responsible parties. State's and MCO's, PIHP's, or PAHP's actions may include a variety of approaches, including but not limited to: increasing payment rates to providers, improving outreach and problem resolution to providers, reducing barriers to provider credentialing and contracting, providing for improved or expanded use of telehealth, and improving the timeliness and accuracy of processes such as claim payment and prior authorization;
(iii) Ensure that improvements in access are measurable and sustainable; and
(iv) Submit quarterly progress updates to CMS on implementation of the remedy plan.
(2) If the remedy plan required in paragraph (f)(1) of this section does not result in addressing the MCO's, PIHP's, or PAHP's access issue by improving access within 12 months, CMS may require the State to continue the remedy plan for another 12 months and may require revision to the remedy plan required in paragraph (f)(1) of this section.
(g) Applicability date. Paragraphs (b)(3) and (d)(2) of this section apply to the first rating period for contracts with MCOs, PIHPs, or PAHPs beginning on or after 2 years after July 9, 2024. Paragraph (d)(3) of this section applies to the first rating period for contracts with MCOs, PIHPs, or PAHPs beginning on or after 1 year after July 9, 2024. States will not be held out of compliance with the requirements of paragraph (e) of this section prior to the rating period for contracts with MCOs, PIHPs, or PAHPs beginning on or after 4 year after July 9, 2024, so long as they comply with the corresponding standard(s) codified in 42 CFR 438.207 (e) (effective as of October 1, 2023) Paragraph (f) of this section applies to the first rating period for contracts with MCOs, PIHPs, or PAHPs beginning on or after 4 years after July 9, 2024.
§ 438.208   Coordination and continuity of care.
(a) Basic requirement —(1) General rule. Except as specified in paragraphs (a)(2) and (3) of this section, the State must ensure through its contracts, that each MCO, PIHP, and PAHP complies with the requirements of this section.
(2) PIHP and PAHP exception. For PIHPs and PAHPs, the State determines, based on the scope of the entity's services, and on the way the State has organized the delivery of managed care services, whether a particular PIHP or PAHP is required to implement mechanisms for identifying, assessing, and producing a treatment plan for an individual with special health care needs, as specified in paragraph (c) of this section.
(3) Exception for MCOs that serve dually eligible enrollees. (i) For each MCO that serves enrollees who are also enrolled in and receive Medicare benefits from a Medicare Advantage Organization (as defined in § 422.2 of this chapter), the State determines to what extent the MCO must meet the identification, assessment, and treatment planning provisions of paragraph (c) of this section for dually eligible individuals.
(ii) The State bases its determination on the needs of the population it requires the MCO to serve.
(b) Care and coordination of services for all MCO, PIHP, and PAHP enrollees. Each MCO, PIHP, and PAHP must implement procedures to deliver care to and coordinate services for all MCO, PIHP, and PAHP enrollees. These procedures must meet State requirements and must do the following:
(1) Ensure that each enrollee has an ongoing source of care appropriate to his or her needs and a person or entity formally designated as primarily responsible for coordinating the services accessed by the enrollee. The enrollee must be provided information on how to contact their designated person or entity;
(2) Coordinate the services the MCO, PIHP, or PAHP furnishes to the enrollee:
(i) Between settings of care, including appropriate discharge planning for short term and long-term hospital and institutional stays;
(ii) With the services the enrollee receives from any other MCO, PIHP, or PAHP;
(iii) With the services the enrollee receives in FFS Medicaid; and
(iv) With the services the enrollee receives from community and social support providers.
(3) Provide that the MCO, PIHP or PAHP makes a best effort to conduct an initial screening of each enrollee's needs, within 90 days of the effective date of enrollment for all new enrollees, including subsequent attempts if the initial attempt to contact the enrollee is unsuccessful;
(4) Share with the State or other MCOs, PIHPs, and PAHPs serving the enrollee the results of any identification and assessment of that enrollee's needs to prevent duplication of those activities;
(5) Ensure that each provider furnishing services to enrollees maintains and shares, as appropriate, an enrollee health record in accordance with professional standards; and
(6) Ensure that in the process of coordinating care, each enrollee's privacy is protected in accordance with the privacy requirements in 45 CFR parts 160 and 164 subparts A and E, to the extent that they are applicable.
(c) Additional services for enrollees with special health care needs or who need LTSS —(1) Identification. The State must implement mechanisms to identify persons who need LTSS or persons with special health care needs to MCOs, PIHPs and PAHPs, as those persons are defined by the State. These identification mechanisms—
(i) Must be specified in the State's quality strategy under § 438.340.
(ii) May use State staff, the State's enrollment broker, or the State's MCOs, PIHPs and PAHPs.
(2) Assessment. Each MCO, PIHP, and PAHP must implement mechanisms to comprehensively assess each Medicaid enrollee identified by the State (through the mechanism specified in paragraph (c)(1) of this section) and identified to the MCO, PIHP, and PAHP by the State as needing LTSS or having special health care needs to identify any ongoing special conditions of the enrollee that require a course of treatment or regular care monitoring. The assessment mechanisms must use appropriate providers or individuals meeting LTSS service coordination requirements of the State or the MCO, PIHP, or PAHP as appropriate.
(3) Treatment/service plans. MCOs, PIHPs, or PAHPs must produce a treatment or service plan meeting the criteria in paragraphs (c)(3)(i) through (v) of this section for enrollees who require LTSS and, if the State requires, must produce a treatment or service plan meeting the criteria in paragraphs (c)(3)(iii) through (v) of this section for enrollees with special health care needs that are determined through assessment to need a course of treatment or regular care monitoring. The treatment or service plan must be:
(i) Developed by an individual meeting LTSS service coordination requirements with enrollee participation, and in consultation with any providers caring for the enrollee;
(ii) Developed by a person trained in person-centered planning using a person-centered process and plan as defined in § 441.301(c)(1) and (2) of this chapter for LTSS treatment or service plans;
(iii) Approved by the MCO, PIHP, or PAHP in a timely manner, if this approval is required by the MCO, PIHP, or PAHP;
(iv) In accordance with any applicable State quality assurance and utilization review standards; and
(v) Reviewed and revised upon reassessment of functional need, at least every 12 months, or when the enrollee's circumstances or needs change significantly, or at the request of the enrollee per § 441.301(c)(3) of this chapter.
(4) Direct access to specialists. For enrollees with special health care needs determined through an assessment (consistent with paragraph (c)(2) of this section) to need a course of treatment or regular care monitoring, each MCO, PIHP, and PAHP must have a mechanism in place to allow enrollees to directly access a specialist (for example, through a standing referral or an approved number of visits) as appropriate for the enrollee's condition and identified needs.
(d) Applicability date. This section applies to the rating period for contracts with MCOs, PIHPs, and PAHPs beginning on or after July 1, 2017. Until that applicability date, states are required to continue to comply with § 438.208 contained in the 42 CFR parts 430 to 481, edition revised as of October 1, 2015.
§ 438.210   Coverage and authorization of services.
(a) Coverage. Each contract between a State and an MCO, PIHP, or PAHP must do the following:
(1) Identify, define, and specify the amount, duration, and scope of each service that the MCO, PIHP, or PAHP is required to offer.
(2) Require that the services identified in paragraph (a)(1) of this section be furnished in an amount, duration, and scope that is no less than the amount, duration, and scope for the same services furnished to beneficiaries under FFS Medicaid, as set forth in § 440.230 of this chapter, and for enrollees under the age of 21, as set forth in subpart B of part 441 of this chapter.
(3) Provide that the MCO, PIHP, or PAHP—
(i) Must ensure that the services are sufficient in amount, duration, or scope to reasonably achieve the purpose for which the services are furnished.
(ii) May not arbitrarily deny or reduce the amount, duration, or scope of a required service solely because of diagnosis, type of illness, or condition of the beneficiary.
(4) Permit an MCO, PIHP, or PAHP to place appropriate limits on a service—
(i) On the basis of criteria applied under the State plan, such as medical necessity; or
(ii) For the purpose of utilization control, provided that—
(A) The services furnished can reasonably achieve their purpose, as required in paragraph (a)(3)(i) of this section;
(B) The services supporting individuals with ongoing or chronic conditions or who require long-term services and supports are authorized in a manner that reflects the enrollee's ongoing need for such services and supports; and
(C) Family planning services are provided in a manner that protects and enables the enrollee's freedom to choose the method of family planning to be used consistent with § 441.20 of this chapter.
(5) Specify what constitutes “medically necessary services” in a manner that—
(i) Is no more restrictive than that used in the State Medicaid program, including quantitative and non-quantitative treatment limits, as indicated in State statutes and regulations, the State Plan, and other State policy and procedures; and
(ii) Addresses the extent to which the MCO, PIHP, or PAHP is responsible for covering services that address:
(A) The prevention, diagnosis, and treatment of an enrollee's disease, condition, and/or disorder that results in health impairments and/or disability.
(B) The ability for an enrollee to achieve age-appropriate growth and development.
(C) The ability for an enrollee to attain, maintain, or regain functional capacity.
(D) The opportunity for an enrollee receiving long-term services and supports to have access to the benefits of community living, to achieve person-centered goals, and live and work in the setting of their choice.
(b) Authorization of services. For the processing of requests for initial and continuing authorizations of services, each contract must require—
(1) That the MCO, PIHP, or PAHP and its subcontractors have in place, and follow, written policies and procedures.
(2) That the MCO, PIHP, or PAHP—
(i) Have in effect mechanisms to ensure consistent application of review criteria for authorization decisions.
(ii) Consult with the requesting provider for medical services when appropriate.
(iii) Authorize LTSS based on an enrollee's current needs assessment and consistent with the person-centered service plan.
(3) That any decision to deny a service authorization request or to authorize a service in an amount, duration, or scope that is less than requested, be made by an individual who has appropriate expertise in addressing the enrollee's medical, behavioral health, or long-term services and supports needs.
(c) Notice of adverse benefit determination. Each contract must provide for the MCO, PIHP, or PAHP to notify the requesting provider, and give the enrollee written notice of any decision by the MCO, PIHP, or PAHP to deny a service authorization request, or to authorize a service in an amount, duration, or scope that is less than requested. For MCOs, PIHPs, and PAHPs, the enrollee's notice must meet the requirements of § 438.404. For Medicaid contracts with an applicable integrated plan, as defined in § 422.561 of this chapter, in lieu of the provisions in this paragraph governing notices of adverse benefit determinations, the provisions set forth in §§ 422.629 through 422.634 of this chapter apply to determinations affecting dually eligible individuals who are also enrolled in a dual eligible special needs plan with exclusively aligned enrollment, as defined in § 422.2 of this chapter.
(d) Timeframe for decisions. Each MCO, PIHP, or PAHP contract must provide for the following decisions and notices:
(1) Standard authorization decisions. (i) For standard authorization decisions, provide notice as expeditiously as the enrollee's condition requires and:
(A) For rating periods that start before January 1, 2026, within state established time frames that may not exceed 14 calendar days after receiving the request for service.
(B) For rating periods that start on or after January 1, 2026, within state established time frames that may not exceed 7 calendar days after receiving the request for service.
(ii) Standard authorization decisions may have an extension to the timeframes in paragraph (d)(1)(i) of this section up to 14 additional calendar days if—
(A) The enrollee or the provider requests the extension; or
(B) The MCO, PIHP, or PAHP justifies (to the State agency upon request) a need for additional information and how the extension is in the enrollee's interest.
(2) Expedited authorization decisions. (i) For cases in which a provider indicates, or the MCO, PIHP, or PAHP determines, that following the standard timeframe could seriously jeopardize the enrollee's life or health or ability to attain, maintain, or regain maximum function, the MCO, PIHP, or PAHP must make an expedited authorization decision and provide notice as expeditiously as the enrollee's health condition requires and no later than 72 hours after receipt of the request for service.
(ii) The MCO, PIHP, or PAHP may extend the 72 hour time period by up to 14 calendar days if the enrollee requests an extension, or if the MCO, PIHP, or PAHP justifies (to the State agency upon request) a need for additional information and how the extension is in the enrollee's interest.
(3) Covered outpatient drug decisions. For all covered outpatient drug authorization decisions, provide notice as described in section 1927(d)(5)(A) of the Act.
(4) For Medicaid contracts with an applicable integrated plan, as defined in § 422.561 of this chapter, timelines for decisions and notices must be compliant with the provisions set forth in §§ 422.629 through 422.634 of this chapter in lieu of §§ 438.404 through 438.424.
(e) Compensation for utilization management activities. Each contract between a State and MCO, PIHP, or PAHP must provide that, consistent with §§ 438.3(i), and 422.208 of this chapter, compensation to individuals or entities that conduct utilization management activities is not structured so as to provide incentives for the individual or entity to deny, limit, or discontinue medically necessary services to any enrollee.
(f) Publicly reporting prior authorization metrics. Beginning January 1, 2026, following each calendar year it has a contract with a State Medicaid agency, the MCO, PIHP, or PAHP must report prior authorization data, excluding data on any and all drugs covered by the MCO, PIHP, or PAHP, at the plan level by March 31. The MCO, PIHP, or PAHP must make the following data from the previous calendar year publicly accessible by posting them on its website:
(1) A list of all items and services that require prior authorization.
(2) The percentage of standard prior authorization requests that were approved, aggregated for all items and services.
(3) The percentage of standard prior authorization requests that were denied, aggregated for all items and services.
(4) The percentage of standard prior authorization requests that were approved after appeal, aggregated for all items and services.
(5) The percentage of prior authorization requests for which the timeframe for review was extended, and the request was approved, aggregated for all items and services.
(6) The percentage of expedited prior authorization requests that were approved, aggregated for all items and services.
(7) The percentage of expedited prior authorization requests that were denied, aggregated for all items and services.
(8) The average and median time that elapsed between the submission of a request and a determination by the MCO, PIHP or PAHP, for standard prior authorizations, aggregated for all items and services.
(9) The average and median time that elapsed between the submission of a request and a decision by the MCO, PIHP or PAHP, for expedited prior authorizations, aggregated for all items and services.
(g) Applicability date. (1) Subject to paragraph (f)(2) of this section, this section applies to the rating period for contracts with MCOs, PIHPs, and PAHPs beginning on or after July 1, 2017. Until that applicability date, States are required to continue to comply with § 438.210 contained in the 42 CFR parts 430 to 481, edition revised as of October 1, 2015.
(2) Provisions in this section affecting applicable integrated plans, as defined in § 422.561 of this chapter, are applicable no later than January 1, 2021.
§ 438.214   Provider selection.
(a) General rules. The State must ensure, through its contracts, that each MCO, PIHP, or PAHP implements written policies and procedures for selection and retention of network providers and that those policies and procedures, at a minimum, meet the requirements of this section.
(b) Credentialing and recredentialing requirements. (1) Each State must establish a uniform credentialing and recredentialing policy that addresses acute, primary, mental health, substance use disorders, and LTSS providers, as appropriate, and requires each MCO, PIHP and PAHP to follow those policies.
(2) Each MCO, PIHP, and PAHP must follow a documented process for credentialing and recredentialing of network providers.
(c) Nondiscrimination. MCO, PIHP, and PAHP network provider selection policies and procedures, consistent with § 438.12, must not discriminate against particular providers that serve high-risk populations or specialize in conditions that require costly treatment.
(d) Excluded providers. (1) MCOs, PIHPs, and PAHPs may not employ or contract with providers excluded from participation in Federal health care programs under either section 1128 or section 1128A of the Act.
(2) States must ensure through its contracts that MCOs, PIHPs, and PAHPs terminate any providers of services or persons terminated (as described in section 1902(kk)(8) of the Social Security Act) from participation under this title, title XVIII, or title XXI from participating as a provider in any network.
(e) State requirements. Each MCO, PIHP, and PAHP must comply with any additional requirements established by the State.
§ 438.224   Confidentiality.
The State must ensure, through its contracts, that (consistent with subpart F of part 431 of this chapter), for medical records and any other health and enrollment information that identifies a particular enrollee, each MCO, PIHP, and PAHP uses and discloses such individually identifiable health information in accordance with the privacy requirements in 45 CFR parts 160 and 164, subparts A and E, to the extent that these requirements are applicable.
§ 438.228   Grievance and appeal systems.
(a) The State must ensure, through its contracts, that each MCO, PIHP, and PAHP has in effect a grievance and appeal system that meets the requirements of subpart F of this part.
(b) If the State delegates to the MCO, PIHP, or PAHP responsibility for notice of action under subpart E of part 431 of this chapter, the State must conduct random reviews of each delegated MCO, PIHP, or PAHP and its providers and subcontractors to ensure that they are notifying enrollees in a timely manner.
§ 438.230   Subcontractual relationships and delegation.
(a) Applicability. The requirements of this section apply to any contract or written arrangement that an MCO, PIHP, PAHP, or PCCM entity has with any subcontractor.
(b) General rule. The State must ensure, through its contracts with MCOs, PIHPs, PAHPs, and PCCM entities that—
(1) Notwithstanding any relationship(s) that the MCO, PIHP, PAHP, or PCCM entity may have with any subcontractor, the MCO, PIHP, PAHP, or PCCM entity maintains ultimate responsibility for adhering to and otherwise fully complying with all terms and conditions of its contract with the State; and
(2) All contracts or written arrangements between the MCO, PIHP, PAHP, or PCCM entity and any subcontractor must meet the requirements of paragraph (c) of this section.
(c) Each contract or written arrangement described in paragraph (b)(2) of this section must specify that:
(1) If any of the MCO's, PIHP's, PAHP's, or PCCM entity's activities or obligations under its contract with the State are delegated to a subcontractor—
(i) The delegated activities or obligations, and related reporting responsibilities, are specified in the contract or written agreement.
(ii) The subcontractor agrees to perform the delegated activities and reporting responsibilities specified in compliance with the MCO's, PIHP's, PAHP's, or PCCM entity's contract obligations.
(iii) The contract or written arrangement must either provide for revocation of the delegation of activities or obligations, or specify other remedies in instances where the State or the MCO, PIHP, PAHP, or PCCM entity determine that the subcontractor has not performed satisfactorily.
(2) The subcontractor agrees to comply with all applicable Medicaid laws, regulations, including applicable subregulatory guidance and contract provisions;
(3) The subcontractor agrees that—
(i) The State, CMS, the HHS Inspector General, the Comptroller General, or their designees have the right to audit, evaluate, and inspect any books, records, contracts, computer or other electronic systems of the subcontractor, or of the subcontractor's contractor, that pertain to any aspect of services and activities performed, or determination of amounts payable under the MCO's, PIHP's, or PAHP's contract with the State.
(ii) The subcontractor will make available, for purposes of an audit, evaluation, or inspection under paragraph (c)(3)(i) of this section, its premises, physical facilities, equipment, books, records, contracts, computer or other electronic systems relating to its Medicaid enrollees.
(iii) The right to audit under paragraph (c)(3)(i) of this section will exist through 10 years from the final date of the contract period or from the date of completion of any audit, whichever is later.
(iv) If the State, CMS, or the HHS Inspector General determines that there is a reasonable possibility of fraud or similar risk, the State, CMS, or the HHS Inspector General may inspect, evaluate, and audit the subcontractor at any time.
(d) Applicability date. This section applies to the rating period for contracts with MCOs, PIHPs, PAHPs, and PCCM entities beginning on or after July 1, 2017. Until that applicability date, states are required to continue to comply with § 438.230 contained in the 42 CFR parts 430 to 481, edition revised as of October 1, 2015.
§ 438.236   Practice guidelines.
(a) Basic rule. The State must ensure, through its contracts, that each MCO, PIHP, and PAHP meets the requirements of this section.
(b) Adoption of practice guidelines. Each MCO and, when applicable, each PIHP and PAHP adopts practice guidelines that meet the following requirements:
(1) Are based on valid and reliable clinical evidence or a consensus of providers in the particular field.
(2) Consider the needs of the MCO's, PIHP's, or PAHP's enrollees.
(3) Are adopted in consultation with network providers.
(4) Are reviewed and updated periodically as appropriate.
(c) Dissemination of guidelines. Each MCO, PIHP, and PAHP disseminates the guidelines to all affected providers and, upon request, to enrollees and potential enrollees.
(d) Application of guidelines. Decisions for utilization management, enrollee education, coverage of services, and other areas to which the guidelines apply are consistent with the guidelines.
§ 438.242   Health information systems.
(a) General rule. The State must ensure, through its contracts that each MCO, PIHP, and PAHP maintains a health information system that collects, analyzes, integrates, and reports data and can achieve the objectives of this part. The systems must provide information on areas including, but not limited to, utilization, claims, grievances and appeals, and disenrollments for other than loss of Medicaid eligibility.
(b) Basic elements of a health information system. The State must require, at a minimum, that each MCO, PIHP, and PAHP comply with the following:
(1) Section 6504(a) of the Affordable Care Act, which requires that State claims processing and retrieval systems are able to collect data elements necessary to enable the mechanized claims processing and information retrieval systems in operation by the State to meet the requirements of section 1903(r)(1)(F) of the Act.
(2) Collect data on enrollee and provider characteristics as specified by the State, and on all services furnished to enrollees through an encounter data system or other methods as may be specified by the State.
(3) Ensure that data received from providers is accurate and complete by—
(i) Verifying the accuracy and timeliness of reported data, including data from network providers the MCO, PIHP, or PAHP is compensating on the basis of capitation payments.
(ii) Screening the data for completeness, logic, and consistency.
(iii) Collecting data from providers in standardized formats to the extent feasible and appropriate, including secure information exchanges and technologies utilized for State Medicaid quality improvement and care coordination efforts.
(4) Make all collected data available to the State and upon request to CMS.
(5) Subject to paragraph (b)(8) of this section, implement and maintain a Patient Access Application Programming Interface (API) required in § 431.60 of this chapter as if such requirements applied directly to the MCO, PIHP, or PAHP and:
(i) Include all encounter data, including encounter data from any network providers the MCO, PIHP, or PAHP is compensating based on capitation payments and adjudicated claims and encounter data from any subcontractors.
(ii) Exclude covered outpatient drugs as defined in section 1927(k)(2) of the Act.
(iii) Report metrics specified in § 431.60(f) of this chapter at the plan level.
(6) Implement, by January 1, 2021, and maintain a publicly accessible standards-based API described in § 431.70, which must include all information specified in § 438.10(h)(1) and (2) of this chapter.
(7) By the rating period beginning on or after January 1, 2027, comply with §§ 431.61(a), (b)(1) and (4) through (6), and (b)(7)(ii) and (iii) and 431.80(b) of this chapter as if such requirements applied directly to the MCO, PIHP, or PAHP
(8) By the rating period beginning on or after January 1, 2026, comply with § 431.80(a) of this chapter as if such requirements applied directly to the MCO, PIHP, or PAHP according to the decision timeframes in § 438.210(d).
(9) The following timeframes apply to paragraph (b)(5) of this section:
(i) Except for the requirements in § 431.60(b)(5), (g), and (h) of this chapter, comply with the requirements of § 431.60 of this chapter by January 1, 2021.
(ii) Comply with the requirements in § 431.60(b)(5) and (g) of this chapter by the rating period beginning on or after January 1, 2026.
(iii) Beginning in 2026, by March 31 following any year the MCO, PIHP, or PAHP operates, comply with the reporting requirements in § 431.60(h) of this chapter for the previous calendar year's data, in the form of aggregated, de-identified metrics, at the plan level.
(c) Enrollee encounter data. Contracts between a State and a MCO, PIHP, or PAHP must provide for:
(1) Collection and maintenance of sufficient enrollee encounter data to identify the provider who delivers any item(s) or service(s) to enrollees.
(2) Submission of enrollee encounter data to the State at a frequency and level of detail to be specified by CMS and the State, based on program administration, oversight, and program integrity needs.
(3) Submission of all enrollee encounter data, including allowed amount and paid amount, that the State is required to report to CMS under § 438.818.
(4) Specifications for submitting encounter data to the State in standardized ASC X12N 837 and NCPDP formats, and the ASC X12N 835 format as appropriate.
(d) State review and validation of encounter data. The State must review and validate that the encounter data collected, maintained, and submitted to the State by the MCO, PIHP, or PAHP, meets the requirements of this section. The State must have procedures and quality assurance protocols to ensure that enrollee encounter data submitted under paragraph (c) of this section is a complete and accurate representation of the services provided to the enrollees under the contract between the State and the MCO, PIHP, or PAHP.
(e) Applicability date. This section applies to the rating period for contracts with MCOs, PIHPs, PAHPs, and PCCM entities beginning on or after July 1, 2017. Until that applicability date, states are required to continue to comply with § 438.242 contained in the 42 CFR parts 430 to 481, edition revised as of October 1, 2015.
§ 438.310   Basis, scope, and applicability.
(a) Statutory basis. This subpart is based on sections 1932(c), 1903(a)(3)(C)(ii), 1902(a)(4), and 1902(a)(19) of the Act.
(b) Scope. This subpart sets forth:
(1) Specifications for a quality assessment and performance improvement program that States must require each contracting MCO, PIHP, and PAHP to implement and maintain.
(2) Requirements for the State review of the accreditation status of all contracting MCOs, PIHPs, and PAHPs.
(3) Specifications for a Medicaid managed care quality rating system for all States contracting with MCOs, PIHPs, and PAHPs.
(4) Specifications for a Medicaid managed care quality strategy that States contracting with MCOs, PIHPs, PAHPs, and PCCM entities (described in paragraph (c)(2) of this section) must implement to ensure the delivery of quality health care.
(5) Requirements for annual external quality reviews of each contracting MCO, PIHP, PAHP including—
(i) Criteria that States must use in selecting entities to perform the reviews.
(ii) Specifications for the activities related to external quality review.
(iii) Circumstances under which external quality review may use the results of Medicare quality reviews or private accreditation reviews.
(iv) Requirements for making the results of the reviews publicly available.
(c) Applicability. (1) The provisions of this subpart apply to States contracting with MCOs, PIHPs, and PAHPs for the delivery of services covered under Medicaid.
(2) The provisions of § 438.330(b)(2) and (3), (c), and (e), and § 438.340 apply to States contracting with PCCM entities whose contracts with the State provide for shared savings, incentive payments or other financial reward for the PCCM entity for improved quality outcomes.
(d) Applicability dates. States will not be held out of compliance with the following requirements of this subpart prior to the dates noted below so long as they comply with the corresponding standard(s) in 42 CFR part 438 contained in the 42 CFR parts 430 to 481, edition revised as of July 9, 2024:
(1) States must comply with updates to § 438.340(c) no later than 1 year from July 9, 2024.
(2) States must comply with updates to §§ 438.358(a)(3), 438.358(b)(1) and 438.364(c)(2)(iii) no later than December 31, 2025.
(3) States must comply with § 438.364(a)(2)(iii) no later 1 year from the issuance of the associated protocol.
§ 438.320   Definitions.
As used in this subpart—
Access, as it pertains to external quality review, means the timely use of services to achieve optimal outcomes, as evidenced by managed care plans successfully demonstrating and reporting on outcome information for the availability and timeliness elements defined under § 438.68 (Network adequacy standards) and § 438.206 (Availability of services).
EQR stands for external quality review.
EQRO stands for external quality review organization.
External quality review means the analysis and evaluation by an EQRO, of aggregated information on quality, timeliness, and access to the health care services that an MCO, PIHP, PAHP, or PCCM entity (described in § 438.310(c)(2)), or their contractors furnish to Medicaid beneficiaries.
External quality review organization means an organization that meets the competence and independence requirements set forth in § 438.354, and performs external quality review, other EQR-related activities as set forth in § 438.358, or both.
Financial relationship means—
(1) A direct or indirect ownership or investment interest (including an option or nonvested interest) in any entity. This direct or indirect interest may be in the form of equity, debt, or other means, and includes any indirect ownership or investment interest no matter how many levels removed from a direct interest; or
(2) A compensation arrangement with an entity.
Health care services means all Medicaid services provided by an MCO, PIHP, or PAHP under contract with the State Medicaid agency in any setting, including but not limited to medical care, behavioral health care, and long-term services and supports.
Outcomes means changes in patient health, functional status, satisfaction or goal achievement that result from health care or supportive services.
Quality, as it pertains to external quality review, means the degree to which an MCO, PIHP, PAHP, or PCCM entity (described in § 438.310(c)(2)) increases the likelihood of desired outcomes of its enrollees through:
(1) Its structural and operational characteristics.
(2) The provision of services that are consistent with current professional, evidenced-based-knowledge.
(3) Interventions for performance improvement.
Validation means the review of information, data, and procedures to determine the extent to which they are accurate, reliable, free from bias, and in accord with standards for data collection and analysis.
§ 438.330   Quality assessment and performance improvement program.
(a) General rules. (1) The State must require, through its contracts, that each MCO, PIHP, and PAHP establish and implement an ongoing comprehensive quality assessment and performance improvement program for the services it furnishes to its enrollees that includes the elements identified in paragraph (b) of this section.
(2) After consulting with States and other stakeholders and providing public notice and opportunity to comment, CMS may specify performance measures and PIPs, which must be included in the standard measures identified and PIPs required by the State in accordance with paragraphs (c) and (d) of this section. A State may request an exemption from including the performance measures or PIPs established under paragraph (a)(2) of this section, by submitting a written request to CMS explaining the basis for such request.
(3) The State must require, through its contracts, that each PCCM entity described in § 438.310(c)(2) establish and implement an ongoing comprehensive quality assessment and performance improvement program for the services it furnishes to its enrollees which incorporates, at a minimum, paragraphs (b)(2) and (3) of this section and the performance measures identified by the State per paragraph (c) of this section.
(b) Basic elements of quality assessment and performance improvement programs. The comprehensive quality assessment and performance improvement program described in paragraph (a) of this section must include at least the following elements:
(1) Performance improvement projects in accordance with paragraph (d) of this section.
(2) Collection and submission of performance measurement data in accordance with paragraph (c) of this section.
(3) Mechanisms to detect both underutilization and overutilization of services.
(4) Mechanisms to assess the quality and appropriateness of care furnished to enrollees with special health care needs, as defined by the State in the quality strategy under § 438.340.
(5) For MCOs, PIHPs, or PAHPs providing long-term services and supports:
(i) Mechanisms to assess the quality and appropriateness of care furnished to enrollees using long-term services and supports, including assessment of care between care settings and a comparison of services and supports received with those set forth in the enrollee's treatment/service plan, if applicable; and
(ii) Participate in efforts by the State to prevent, detect, and remediate critical incidents (consistent with assuring beneficiary health and welfare per §§ 441.302 and 441.730(a) of this chapter) that are based, at a minimum, on the requirements on the State for home and community-based waiver programs per § 441.302(h) of this chapter.
(c) Performance measurement. The State must—
(1)(i) Identify standard performance measures, including those performance measures that may be specified by CMS under paragraph (a)(2) of this section, relating to the performance of MCOs, PIHPs, and PAHPs; and
(ii) In addition to the measures specified in paragraph (c)(1)(i) of this section, in the case of an MCO, PIHP, or PAHP providing long-term services and supports, identify standard performance measures relating to quality of life, rebalancing, and community integration activities for individuals receiving long-term services and supports.
(2) Require that each MCO, PIHP, and PAHP annually—
(i) Measure and report to the State on its performance, using the standard measures required by the State in paragraph (c)(1) of this section;
(ii) Submit to the State data, specified by the State, which enables the State to calculate the MCO's, PIHP's, or PAHP's performance using the standard measures identified by the State under paragraph (c)(1) of this section; or
(iii) Perform a combination of the activities described in paragraphs (c)(2)(i) and (ii) of this section.
(d) Performance improvement projects. (1) The State must require that MCOs, PIHPs, and PAHPs conduct performance improvement projects, including any performance improvement projects required by CMS in accordance with paragraph (a)(2) of this section, that focus on both clinical and nonclinical areas.
(2) Each performance improvement project must be designed to achieve significant improvement, sustained over time, in health outcomes and enrollee satisfaction, and must include the following elements:
(i) Measurement of performance using objective quality indicators.
(ii) Implementation of interventions to achieve improvement in the access to and quality of care.
(iii) Evaluation of the effectiveness of the interventions based on the performance measures in paragraph (d)(2)(i) of this section.
(iv) Planning and initiation of activities for increasing or sustaining improvement.
(3) The State must require each MCO, PIHP, and PAHP to report the status and results of each project conducted per paragraph (d)(1) of this section to the State as requested, but not less than once per year.
(4) The State may permit an MCO, PIHP, or PAHP exclusively serving dual eligibles to substitute an MA organization chronic care improvement program conducted under § 422.152(c) of this chapter for one or more of the performance improvement projects otherwise required under this section.
(e) Program review by the State. (1) The State must review, at least annually, the impact and effectiveness of the quality assessment and performance improvement program of each MCO, PIHP, PAHP, and PCCM entity described in § 438.310(c)(2). The review must include—
(i) The MCO's, PIHP's, PAHP's, and PCCM entity's performance on the measures on which it is required to report.
(ii) The outcomes and trended results of each MCO's, PIHP's, and PAHP's performance improvement projects.
(iii) The results of any efforts by the MCO, PIHP, or PAHP to support community integration for enrollees using long-term services and supports.
(2) The State may require that an MCO, PIHP, PAHP, or PCCM entity described in § 438.310(c)(2) develop a process to evaluate the impact and effectiveness of its own quality assessment and performance improvement program.
§ 438.332   State review of the accreditation status of MCOs, PIHPs, and PAHPs.
(a) The State must require, through its contracts, that each MCO, PIHP, and PAHP inform the State whether it has been accredited by a private independent accrediting entity.
(b) The State must require, through its contracts, that each MCO, PIHP, and PAHP that has received accreditation by a private independent accrediting entity must authorize the private independent accrediting entity to provide the State a copy of its most recent accreditation review, including:
(1) Accreditation status, survey type, and level (as applicable);
(2) Accreditation results, including recommended actions or improvements, corrective action plans, and summaries of findings; and
(3) Expiration date of the accreditation.
(c) The State must—
(1) Make the accreditation status for each contracted MCO, PIHP, and PAHP available on the Web site required under § 438.10(c)(3), including whether each MCO, PIHP, and PAHP has been accredited and, if applicable, the name of the accrediting entity, accreditation program, and accreditation level; and
(2) Update this information at least annually.
§ 438.334   [Reserved]
§ 438.340   Managed care State quality strategy.
(a) General rule. Each State contracting with an MCO, PIHP, or PAHP as defined in § 438.2 or with a PCCM entity as described in § 438.310(c)(2) must draft and implement a written quality strategy for assessing and improving the quality of health care and services furnished by the MCO, PIHP, PAHP or PCCM entity.
(b) Elements of the State quality strategy. At a minimum, the State's quality strategy must include the following:
(1) The State-defined network adequacy and availability of services standards for MCOs, PIHPs, and PAHPs required by §§ 438.68 and 438.206 and examples of evidence-based clinical practice guidelines the State requires in accordance with § 438.236.
(2) The State's goals and objectives for continuous quality improvement which must be measurable and take into consideration the health status of all populations in the State served by the MCO, PIHP, PAHP, and PCCM entity described in § 438.310(c)(2).
(3) A description of—
(i) The quality metrics and performance targets to be used in measuring the performance and improvement of each MCO, PIHP, PAHP, and PCCM entity described in § 438.310(c)(2) with which the State contracts, including but not limited to, the performance measures reported in accordance with § 438.330(c). The State must identify which quality measures and performance outcomes the State will publish at least annually on the website required under § 438.10(c)(3); and,
(ii) The performance improvement projects to be implemented in accordance with § 438.330(d), including a description of any interventions the State proposes to improve access, quality, or timeliness of care for beneficiaries enrolled in an MCO, PIHP, or PAHP.
(4) Arrangements for annual, external independent reviews, in accordance with § 438.350, of the quality outcomes and timeliness of, and access to, the services covered under each MCO, PIHP, and PAHP contract.
(5) A description of the State's transition of care policy required under § 438.62(b)(3).
(6) The State's plan to identify, evaluate, and reduce, to the extent practicable, health disparities based on age, race, ethnicity, sex, primary language, and disability status. For purposes of this paragraph (b)(6), “disability status” means, at a minimum, whether the individual qualified for Medicaid on the basis of a disability. States must include in this plan the State's definition of disability status and how the State will make the determination that a Medicaid enrollee meets the standard including the data source(s) that the State will use to identify disability status.
(7) For MCOs, appropriate use of intermediate sanctions that, at a minimum, meet the requirements of subpart I of this part.
(8) The mechanisms implemented by the State to comply with § 438.208(c)(1) (relating to the identification of persons who need long-term services and supports or persons with special health care needs).
(9) The information required under § 438.360(c) (relating to nonduplication of EQR activities).
(10) The State's definition of a “significant change” for the purposes of paragraph (c)(3)(ii) of this section.
(c) Development, evaluation, and revision. In drafting or revising its quality strategy, the State must:
(1) Make the strategy available for public comment before submitting the strategy to CMS for review in accordance with paragraph (c)(3) of this section, including:
(i) Obtaining input from the Medical Care Advisory Committee (established by § 431.12 of this chapter), beneficiaries, and other stakeholders.
(ii) If the State enrolls Indians in the MCO, PIHP, PAHP, or PCCM entity described in § 438.310(c)(2), consulting with Tribes in accordance with the State's Tribal consultation policy.
(2) Review and update the quality strategy as needed, but no less than once every 3 years.
(i) This review must include an evaluation of the effectiveness of the quality strategy conducted within the previous 3 years.
(ii) The State must make the results of the review, including the evaluation conducted pursuant to paragraph (c)(2)(i) of this section, available on the website required under § 438.10(c)(3).
(iii) Updates to the quality strategy must take into consideration the recommendations provided pursuant to § 438.364(a)(4).
(3) Prior to adopting as final, submit to CMS the following:
(i) A copy of the initial strategy for CMS comment and feedback.
(ii) A copy of the strategy—
(A) Every 3 years following the review in paragraph (c)(2) of this section;
(B) Whenever significant changes, as defined in the State's quality strategy per paragraph (b)(10) of this section, are made to the document;
(C) Whenever significant changes occur within the State's Medicaid program.
(d) Availability. The State must make the final quality strategy available on the Web site required under § 438.10(c)(3).
§ 438.350   External quality review.
Each State that contracts with MCOs, PIHPs, or PAHPs must ensure that—
(a) Except as provided in § 438.362, a qualified EQRO performs an annual EQR for each such contracting MCO, PIHP, or PAHP.
(b) The EQRO has sufficient information to use in performing the review.
(c) The information used to carry out the review must be obtained from the EQR-related activities described in § 438.358 or, if applicable, from a Medicare or private accreditation review as described in § 438.360.
(d) For each EQR-related activity, the information gathered for use in the EQR must include the elements described in § 438.364(a)(2)(i) through (iv).
(e) The information provided to the EQRO in accordance with paragraph (b) of this section is obtained through methods consistent with the protocols established by the Secretary in accordance with § 438.352.
(f) The results of the reviews are made available as specified in § 438.364.
§ 438.352   External quality review protocols.
The Secretary, in coordination with the National Governor's Association, must develop protocols for the external quality reviews required under this subpart. Each protocol issued by the Secretary must specify—
(a) The data to be gathered;
(b) The sources of the data;
(c) The activities and steps to be followed in collecting the data to promote its accuracy, validity, and reliability;
(d) The proposed method or methods for validly analyzing and interpreting the data once obtained; and
(e) Instructions, guidelines, worksheets, and other documents or tools necessary for implementing the protocol.
§ 438.354   Qualifications of external quality review organizations.
(a) General rule. The State must ensure that an EQRO meets the requirements of this section.
(b) Competence. The EQRO must have at a minimum the following:
(1) Staff with demonstrated experience and knowledge of—
(i) Medicaid beneficiaries, policies, data systems, and processes;
(ii) Managed care delivery systems, organizations, and financing;
(iii) Quality assessment and improvement methods; and
(iv) Research design and methodology, including statistical analysis.
(2) Sufficient physical, technological, and financial resources to conduct EQR or EQR-related activities.
(3) Other clinical and nonclinical skills necessary to carry out EQR or EQR-related activities and to oversee the work of any subcontractors.
(c) Independence. The EQRO and its subcontractors must be independent from the State Medicaid agency and from the MCOs, PIHPs, PAHPs, or PCCM entities (described in § 438.310(c)(2)) that they review. To qualify as “independent”—
(1) If a State agency, department, university, or other State entity:
(i) May not have Medicaid purchasing or managed care licensing authority; and
(ii) Must be governed by a Board or similar body the majority of whose members are not government employees.
(2) An EQRO may not:
(i) Review any MCO, PIHP, PAHP, or PCCM entity (described in § 438.310(c)(2)), or a competitor operating in the State, over which the EQRO exerts control or which exerts control over the EQRO (as used in this paragraph, “control” has the meaning given the term in 48 CFR 19.101) through—
(A) Stock ownership;
(B) Stock options and convertible debentures;
(C) Voting trusts;
(D) Common management, including interlocking management; and
(E) Contractual relationships.
(ii) Deliver any health care services to Medicaid beneficiaries;
(iii) Conduct, on the State's behalf, ongoing Medicaid managed care program operations related to oversight of the quality of MCO, PIHP, PAHP, or PCCM entity (described in § 438.310(c)(2)) services that it will review as an EQRO, except for the related activities specified in § 438.358;
(iv) Review any MCO, PIHP, PAHP or PCCM entity (described in § 438.310(c)(2)) for which it is conducting or has conducted an accreditation review within the previous 3 years; or
(v) Have a present, or known future, direct or indirect financial relationship with an MCO, PIHP, PAHP, or PCCM entity (described in § 438.310(c)(2)) that it will review as an EQRO.
§ 438.356   State contract options for external quality review.
(a) The State—
(1) Must contract with one EQRO to conduct either EQR alone or EQR and other EQR-related activities.
(2) May contract with additional EQROs or other entities to conduct EQR-related activities as set forth in § 438.358.
(b) Each EQRO must meet the competence requirements as specified in § 438.354(b).
(c) Each EQRO is permitted to use subcontractors. The EQRO is accountable for, and must oversee, all subcontractor functions.
(d) Each EQRO and its subcontractors performing EQR or EQR-related activities must meet the requirements for independence, as specified in § 438.354(c).
(e) For each contract with an EQRO described in paragraph (a) of this section, the State must follow an open, competitive procurement process that is in accordance with State law and regulations. In addition, the State must comply with 45 CFR part 75 as it applies to State procurement of Medicaid services.
§ 438.358   Activities related to external quality review.
(a) General rule. (1) The State, its agent that is not an MCO, PIHP, or PAHP or an EQRO may perform the mandatory and optional EQR-related activities in this section.
(2) The data obtained from the mandatory and optional EQR-related activities in this section must be used for the annual EQR in § 438.350 and must include, at a minimum, the elements in § 438.364(a)(2)(i) through (iv).
(3) For the EQR-related activities described in paragraph (b)(1) of this section (except paragraph (b)(1)(iii) of this section), the review period begins on the first day of the most recently concluded contract year or calendar year, whichever is nearest to the date of the EQR-related activity and is twelve months in duration.
(b) Mandatory activities.
(1) For each MCO, PIHP, or PAHP the following EQR-related activities must be performed in the 12 months preceding the finalization of the annual report:
(i) Validation of performance improvement projects required in accordance with § 438.330(b)(1) that were underway during the EQR review period per paragraph (a)(3) of this section.
(ii) Validation of MCO, PIHP, or PAHP performance measures required in accordance with § 438.330(b)(2) or MCO, PIHP, or PAHP performance measures calculated by the State during the EQR review period described in paragraph (a)(3) of this section.
(iii) A review, conducted within the previous 3-year period, to determine the MCO's, PIHP's, or PAHP's compliance with the standards set forth in subpart D of this part, the disenrollment requirements and limitations described in § 438.56, the enrollee rights requirements described in § 438.100, the emergency and post-stabilization services requirements described in § 438.114, and the quality assessment and performance improvement requirements described in § 438.330.
(iv) Validation of MCO, PIHP, or PAHP network adequacy during the EQR review period per paragraph (a)(3) of this section to comply with requirements set forth in § 438.68 and, if the State enrolls Indians in the MCO, PIHP, or PAHP, § 438.14(b)(1).
(2) For each PCCM entity (described in § 438.310(c)(2)), the EQR-related activities in paragraphs (b)(1)(ii) and (iii) of this section may be performed.
(3) For the EQR-related activities described in paragraph (b)(1) of this section (except paragraph (b)(1)(iii) of this section), the review period begins on the first day of the most recently concluded contract year or calendar year, whichever is nearest to the date of the EQR-related activity and is 12 months in duration.
(c) Optional activities. For each MCO, PIHP, PAHP, and PCCM entity (described in § 438.310(c)(2)), the following activities may be performed:
(1) Validation of encounter data reported by an MCO, PIHP, PAHP, or PCCM entity (described in § 438.310(c)(2)).
(2) Administration or validation of consumer or provider surveys of quality of care.
(3) Calculation of performance measures in addition to those reported by an MCO, PIHP, or PAHP and validated by an EQRO in accordance with paragraph (b)(1)(ii) of this section.
(4) Conduct of performance improvement projects in addition to those conducted by an MCO, PIHP or PAHP and/or validated by an EQRO in accordance with paragraph (b)(1)(i) of this section.
(5) Conduct of studies on quality that focus on a particular aspect of clinical or nonclinical services at a point in time.
(6) Assist with the quality rating of MCOs, PIHPs, and PAHPs consistent with 42 CFR part 438, subpart G.
(7) Assist with evaluations required under §§ 438.16(e)(1), 438.340(c)(2)(i), and 438.6(c)(2)(iv) and (v) pertaining to outcomes, quality, or access to health care services.
(d) Technical assistance. The EQRO may, at the State's direction, provide technical guidance to groups of MCOs, PIHPs, PAHPs, or PCCM entities (described in § 438.310(c)(2)) to assist them in conducting activities related to the mandatory and optional activities described in this section that provide information for the EQR and the resulting EQR technical report.
§ 438.360   Nonduplication of mandatory activities with Medicare or accreditation review.
(a) General rule. Consistent with guidance issued by the Secretary under § 438.352, to avoid duplication the State may use information from a Medicare or private accreditation review of an MCO, PIHP, or PAHP to provide information for the annual EQR (described in § 438.350) instead of conducting one or more of the EQR activities described in § 438.358(b)(1)(i) through (iii) (relating to the validation of performance improvement projects, validation of performance measures, and compliance review) if the following conditions are met:
(1) The MCO, PIHP, or PAHP is in compliance with the applicable Medicare Advantage standards established by CMS, as determined by CMS or its contractor for Medicare, or has obtained accreditation from a private accrediting organization recognized by CMS;
(2) The Medicare or private accreditation review standards are comparable to standards established through the EQR protocols (§ 438.352) for the EQR activities described in § 438.358(b)(1)(i) through (iii); and
(3) The MCO, PIHP, or PAHP provides to the State all the reports, findings, and other results of the Medicare or private accreditation review activities applicable to the standards for the EQR activities.
(b) External quality review report. If the State uses information from a Medicare or private accreditation review in accordance with paragraph (a) of this section, the State must ensure that all such information is furnished to the EQRO for analysis and inclusion in the report described in § 438.364(a).
(c) Quality strategy. The State must identify in its quality strategy under § 438.340 the EQR activities for which it has exercised the option described in this section, and explain the rationale for the State's determination that the Medicare review or private accreditation activity is comparable to such EQR activities, consistent with paragraph (a)(2) of this section.
§ 438.362   Exemption from external quality review.
(a) Basis for exemption. The State may exempt an MCO from EQR if the following conditions are met:
(1) The MCO has a current Medicare contract under part C of Title XVIII or under section 1876 of the Act, and a current Medicaid contract under section 1903(m) of the Act.
(2) The two contracts cover all or part of the same geographic area within the State.
(3) The Medicaid contract has been in effect for at least 2 consecutive years before the effective date of the exemption and during those 2 years the MCO has been subject to EQR under this part, and found to be performing acceptably for the quality, timeliness, and access to health care services it provides to Medicaid beneficiaries.
(b) Information on exempted MCOs. When the State exercises this option, the State must obtain either of the following:
(1) Information on Medicare review findings. Each year, the State must obtain from each MCO that it exempts from EQR the most recent Medicare review findings reported on the MCO including—
(i) All data, correspondence, information, and findings pertaining to the MCO's compliance with Medicare standards for access, quality assessment and performance improvement, health services, or delegation of these activities.
(ii) All measures of the MCO's performance.
(iii) The findings and results of all performance improvement projects pertaining to Medicare enrollees.
(2) Medicare information from a private accrediting organization. (i) If an exempted MCO has been reviewed by a private accrediting organization, the State must require the MCO to provide the State with a copy of all findings pertaining to its most recent accreditation review if that review has been used to fulfill certain requirements for Medicare external review under subpart D of part 422 of this chapter.
(ii) These findings must include, but need not be limited to, accreditation review results of evaluation of compliance with individual accreditation standards, noted deficiencies, corrective action plans, and summaries of unmet accreditation requirements.
(c) Identification of exempted MCOs. The State must annually identify, on the website required under § 438.10(c)(3) and in the same location where the EQR technical reports are posted in accordance with § 438.364(c)(2)(i), the names of the MCOs exempt from external quality review by the State, including the beginning date of the current exemption period, or that no MCOs are exempt, as appropriate.
§ 438.364   External quality review results.
(a) Information that must be produced. The State must ensure that the EQR results in an annual detailed technical report that summarizes findings on access and quality of care, including:
(1) A description of the manner in which the data from all activities conducted in accordance with § 438.358 were aggregated and analyzed, and conclusions were drawn as to the quality, timeliness, and access to the care furnished by the MCO, PIHP, or PAHP.
(2) For each EQR-related activity conducted in accordance with § 438.358:
(i) Objectives;
(ii) Technical methods of data collection and analysis;
(iii) The data and a description of data obtained, including validated performance measurement, any outcomes data and results from quantitative assessments, for each activity conducted in accordance with § 438.358(b)(1)(i), (ii) and (iv) of this subpart; and
(iv) Conclusions drawn from the data.
(3) An assessment of each MCO's, PIHP's, or PAHP's-strengths and weaknesses for the quality, timeliness, and access to health care services furnished to Medicaid beneficiaries.
(4) Recommendations for improving the quality of health care services furnished by each MCO, PIHP, or PAHP, including how the State can target goals and objectives in the quality strategy, under § 438.340, to better support improvement in the quality, timeliness, and access to health care services furnished to Medicaid beneficiaries.
(5) Methodologically appropriate, comparative information about all MCOs, PIHPs, or PAHPs, consistent with guidance included in the EQR protocols issued in accordance with § 438.352(e).
(6) An assessment of the degree to which each MCO, PIHP, or PAHP has addressed effectively the recommendations for quality improvement made by the EQRO during the previous year's EQR.
(7) The names of the MCOs exempt from external quality review by the State, including the beginning date of the current exemption period, or that no MCOs are exempt, as appropriate.
(b) Revision. States may not substantively revise the content of the final EQR technical report without evidence of error or omission.
(c) Availability of information. (1) The State must contract with a qualified EQRO to produce and submit to the State an annual EQR technical report in accordance with paragraph (a) of this section. The State must finalize the annual technical report by April 30th of each year.
(2) The State must—
(i) Post the most recent copy of the annual EQR technical report on the website required-under § 438.10(c)(3) by April 30th of each year and notify CMS, in a form and manner determined by CMS, within 14 calendar days of the Web posting.
(ii) Provide printed or electronic copies of the information specified in paragraph (a) of this section, upon request, to interested parties such as participating health care providers, enrollees and potential enrollees of the MCO, PIHP, or PAHP, beneficiary advocacy groups, and members of the general public.
(iii) Maintain at least the previous 5 years of EQR technical reports on the on the website required under § 438.10(c)(3).
(3) The State must make the information specified in paragraph (a) of this section available in alternative formats for persons with disabilities, when requested.
(d) Safeguarding patient identity. The information released under paragraph (c) of this section may not disclose the identity or other protected health information of any patient.
§ 438.370   Federal financial participation (FFP).
(a) FFP at the 75 percent rate is available in expenditures for EQR (including the production of EQR results) and the EQR-related activities set forth in § 438.358 performed on MCOs and conducted by EQROs and their subcontractors.
(b) FFP at the 50 percent rate is available in expenditures for EQR-related activities conducted by any entity that does not qualify as an EQRO, and for EQR (including the production of EQR results) and EQR-related activities performed by an EQRO on entities other than MCOs.
(c) Prior to claiming FFP at the 75 percent rate in accordance with paragraph (a) of this section, the State must submit each EQRO contract to CMS for review and approval.
§ 438.400   Statutory basis, definitions, and applicability.
(a) Statutory basis. This subpart is based on the following statutory sections:
(1) Section 1902(a)(3) of the Act requires that a State plan provide an opportunity for a fair hearing to any person whose claim for assistance is denied or not acted upon promptly.
(2) Section 1902(a)(4) of the Act requires that the State plan provide for methods of administration that the Secretary finds necessary for the proper and efficient operation of the plan.
(3) Section 1932(b)(4) of the Act requires Medicaid managed care organizations to establish internal grievance procedures under which Medicaid enrollees, or providers acting on their behalf, may challenge the denial of coverage of, or payment for, medical assistance.
(4) Section 1859(f)(8)(B) of the Act requires that the Secretary, to the extent feasible, establish procedures unifying grievances and appeals procedures under sections 1852(f), 1852(g), 1902(a)(3), 1902(a)(5), and 1932(b)(4) of the Act for items and services provided, by specialized Medicare Advantage plans for special needs individuals described in section 1859(b)(6)(B)(ii), under Titles XVIII and XIX of the Act.
(b) Definitions. As used in this subpart, the following terms have the indicated meanings:
Adverse benefit determination means, in the case of an MCO, PIHP, or PAHP, any of the following:
(1) The denial or limited authorization of a requested service, including determinations based on the type or level of service, requirements for medical necessity, appropriateness, setting, or effectiveness of a covered benefit.
(2) The reduction, suspension, or termination of a previously authorized service.
(3) The denial, in whole or in part, of payment for a service. A denial, in whole or in part, of a payment for a service solely because the claim does not meet the definition of a “clean claim” at § 447.45(b) of this chapter is not an adverse benefit determination.
(4) The failure to provide services in a timely manner, as defined by the State.
(5) The failure of an MCO, PIHP, or PAHP to act within the timeframes provided in § 438.408(b)(1) and (2) regarding the standard resolution of grievances and appeals.
(6) For a resident of a rural area with only one MCO, the denial of an enrollee's request to exercise his or her right, under § 438.52(b)(2)(ii), to obtain services outside the network.
(7) The denial of an enrollee's request to dispute a financial liability, including cost sharing, copayments, premiums, deductibles, coinsurance, and other enrollee financial liabilities.
Appeal means a review by an MCO, PIHP, or PAHP of an adverse benefit determination.
Grievance means an expression of dissatisfaction about any matter other than an adverse benefit determination. Grievances may include, but are not limited to, the quality of care or services provided, and aspects of interpersonal relationships such as rudeness of a provider or employee, or failure to respect the enrollee's rights regardless of whether remedial action is requested. Grievance includes an enrollee's right to dispute an extension of time proposed by the MCO, PIHP or PAHP to make an authorization decision.
Grievance and appeal system means the processes the MCO, PIHP, or PAHP implements to handle appeals of an adverse benefit determination and grievances, as well as the processes to collect and track information about them.
State fair hearing means the process set forth in subpart E of part 431 of this chapter.
(c) Applicability. (1) Subject to paragraph (c)(2) of this section, this subpart applies to the rating period for contracts with MCOs, PIHPs, and PAHPs beginning on or after July 1, 2017. Until that applicability date, States, MCOs, PIHPs, and PAHPs are required to continue to comply with subpart F contained in the 42 CFR parts 430 to 481, edition revised as of October 1, 2015.
(2) Provisions in this part affecting applicable integrated plans, as defined in § 422.561 of this chapter, are applicable no later than January 1, 2021.
§ 438.402   General requirements.
(a) The grievance and appeal system. Each MCO, PIHP, and PAHP must have a grievance and appeal system in place for enrollees. Non-emergency medical transportation PAHPs, as defined in § 438.9, are not subject to this subpart F. For grievances and appeals at the plan level, an applicable integrated plan as defined in § 422.561 of this chapter is not subject to this subpart F, and is instead subject to the requirements of §§ 422.629 through 422.634 of this chapter. For appeals of integrated reconsiderations, applicable integrated plans are subject to § 438.408(f).
(b) Level of appeals. Each MCO, PIHP, and PAHP may have only one level of appeal for enrollees.
(c) Filing requirements —(1) Authority to file. (i) An enrollee may file a grievance and request an appeal with the MCO, PIHP, or PAHP. An enrollee may request a State fair hearing after receiving notice under § 438.408 that the adverse benefit determination is upheld.
(A) Deemed exhaustion of appeals processes. In the case of an MCO, PIHP, or PAHP that fails to adhere to the notice and timing requirements in § 438.408, the enrollee is deemed to have exhausted the MCO's, PIHP's, or PAHP's appeals process. The enrollee may initiate a State fair hearing.
(B) External medical review. The State may offer and arrange for an external medical review if the following conditions are met.
( 1 ) The review must be at the enrollee's option and must not be required before or used as a deterrent to proceeding to the State fair hearing.
( 2 ) The review must be independent of both the State and MCO, PIHP, or PAHP.
( 3 ) The review must be offered without any cost to the enrollee.
( 4 ) The review must not extend any of the timeframes specified in § 438.408 and must not disrupt the continuation of benefits in § 438.420.
(ii) If State law permits and with the written consent of the enrollee, a provider or an authorized representative may request an appeal or file a grievance, or request a State fair hearing, on behalf of an enrollee. When the term “enrollee” is used throughout subpart F of this part, it includes providers and authorized representatives consistent with this paragraph, with the exception that providers cannot request continuation of benefits as specified in § 438.420(b)(5).
(2) Timing —(i) Grievance. An enrollee may file a grievance with the MCO, PIHP, or PAHP at any time.
(ii) Appeal. Following receipt of a notification of an adverse benefit determination by an MCO, PIHP, or PAHP, an enrollee has 60 calendar days from the date on the adverse benefit determination notice in which to file a request for an appeal to the managed care plan.
(3) Procedures —(i) Grievance. The enrollee may file a grievance either orally or in writing and, as determined by the State, either with the State or with the MCO, PIHP, or PAHP.
(ii) Appeal. The enrollee may request an appeal either orally or in writing.
§ 438.404   Timely and adequate notice of adverse benefit determination.
(a) Notice. The MCO, PIHP, or PAHP must give enrollees timely and adequate notice of an adverse benefit determination in writing consistent with the requirements below and in § 438.10.
(b) Content of notice. The notice must explain the following:
(1) The adverse benefit determination the MCO, PIHP, or PAHP has made or intends to make.
(2) The reasons for the adverse benefit determination, including the right of the enrollee to be provided upon request and free of charge, reasonable access to and copies of all documents, records, and other information relevant to the enrollee's adverse benefit determination. Such information includes medical necessity criteria, and any processes, strategies, or evidentiary standards used in setting coverage limits.
(3) The enrollee's right to request an appeal of the MCO's, PIHP's, or PAHP's adverse benefit determination, including information on exhausting the MCO's, PIHP's, or PAHP's one level of appeal described at § 438.402(b) and the right to request a State fair hearing consistent with § 438.402(c).
(4) The procedures for exercising the rights specified in this paragraph (b).
(5) The circumstances under which an appeal process can be expedited and how to request it.
(6) The enrollee's right to have benefits continue pending resolution of the appeal, how to request that benefits be continued, and the circumstances, consistent with state policy, under which the enrollee may be required to pay the costs of these services.
(c) Timing of notice. The MCO, PIHP, or PAHP must mail the notice within the following timeframes:
(1) For termination, suspension, or reduction of previously authorized Medicaid-covered services, within the timeframes specified in §§ 431.211, 431.213, and 431.214 of this chapter.
(2) For denial of payment, at the time of any action affecting the claim.
(3) For standard service authorization decisions that deny or limit services, within the timeframe specified in § 438.210(d)(1).
(4) If the MCO, PIHP, or PAHP meets the criteria set forth for extending the timeframe for standard service authorization decisions consistent with § 438.210(d)(1)(ii), it must—
(i) Give the enrollee written notice of the reason for the decision to extend the timeframe and inform the enrollee of the right to file a grievance if he or she disagrees with that decision; and
(ii) Issue and carry out its determination as expeditiously as the enrollee's health condition requires and no later than the date the extension expires.
(5) For service authorization decisions not reached within the timeframes specified in § 438.210(d) (which constitutes a denial and is thus an adverse benefit determination), on the date that the timeframes expire.
(6) For expedited service authorization decisions, within the timeframes specified in § 438.210(d)(2).
§ 438.406   Handling of grievances and appeals.
(a) General requirements. In handling grievances and appeals, each MCO, PIHP, and PAHP must give enrollees any reasonable assistance in completing forms and taking other procedural steps related to a grievance or appeal. This includes, but is not limited to, auxiliary aids and services upon request, such as providing interpreter services and toll-free numbers that have adequate TTY/TTD and interpreter capability.
(b) Special requirements. An MCO's, PIHP's or PAHP's process for handling enrollee grievances and appeals of adverse benefit determinations must:
(1) Acknowledge receipt of each grievance and appeal.
(2) Ensure that the individuals who make decisions on grievances and appeals are individuals—
(i) Who were neither involved in any previous level of review or decision-making nor a subordinate of any such individual.
(ii) Who, if deciding any of the following, are individuals who have the appropriate clinical expertise, as determined by the State, in treating the enrollee's condition or disease.
(A) An appeal of a denial that is based on lack of medical necessity.
(B) A grievance regarding denial of expedited resolution of an appeal.
(C) A grievance or appeal that involves clinical issues.
(iii) Who take into account all comments, documents, records, and other information submitted by the enrollee or their representative without regard to whether such information was submitted or considered in the initial adverse benefit determination.
(3) Provide that oral inquiries seeking to appeal an adverse benefit determination are treated as appeals.
(4) Provide the enrollee a reasonable opportunity, in person and in writing, to present evidence and testimony and make legal and factual arguments. The MCO, PIHP, or PAHP must inform the enrollee of the limited time available for this sufficiently in advance of the resolution timeframe for appeals as specified in § 438.408(b) and (c) in the case of expedited resolution.
(5) Provide the enrollee and his or her representative the enrollee's case file, including medical records, other documents and records, and any new or additional evidence considered, relied upon, or generated by the MCO, PIHP or PAHP (or at the direction of the MCO, PIHP or PAHP) in connection with the appeal of the adverse benefit determination. This information must be provided free of charge and sufficiently in advance of the resolution timeframe for appeals as specified in § 438.408(b) and (c).
(6) Include, as parties to the appeal—
(i) The enrollee and his or her representative; or
(ii) The legal representative of a deceased enrollee's estate.
§ 438.408   Resolution and notification: Grievances and appeals.
(a) Basic rule. Each MCO, PIHP, or PAHP must resolve each grievance and appeal, and provide notice, as expeditiously as the enrollee's health condition requires, within State-established timeframes that may not exceed the timeframes specified in this section.
(b) Specific timeframes —(1) Standard resolution of grievances. For standard resolution of a grievance and notice to the affected parties, the timeframe is established by the State but may not exceed 90 calendar days from the day the MCO, PIHP, or PAHP receives the grievance.
(2) Standard resolution of appeals. For standard resolution of an appeal and notice to the affected parties, the State must establish a timeframe that is no longer than 30 calendar days from the day the MCO, PIHP, or PAHP receives the appeal. This timeframe may be extended under paragraph (c) of this section.
(3) Expedited resolution of appeals. For expedited resolution of an appeal and notice to affected parties, the State must establish a timeframe that is no longer than 72 hours after the MCO, PIHP, or PAHP receives the appeal. This timeframe may be extended under paragraph (c) of this section.
(c) Extension of timeframes. (1) The MCO, PIHP, or PAHP may extend the timeframes from paragraph (b) of this section by up to 14 calendar days if—
(i) The enrollee requests the extension; or
(ii) The MCO, PIHP, or PAHP shows (to the satisfaction of the State agency, upon its request) that there is need for additional information and how the delay is in the enrollee's interest.
(2) Requirements following extension. If the MCO, PIHP, or PAHP extends the timeframes not at the request of the enrollee, it must complete all of the following:
(i) Make reasonable efforts to give the enrollee prompt oral notice of the delay.
(ii) Within 2 calendar days give the enrollee written notice of the reason for the decision to extend the timeframe and inform the enrollee of the right to file a grievance if he or she disagrees with that decision.
(iii) Resolve the appeal as expeditiously as the enrollee's health condition requires and no later than the date the extension expires.
(3) Deemed exhaustion of appeals processes. In the case of an MCO, PIHP, or PAHP that fails to adhere to the notice and timing requirements in this section, the enrollee is deemed to have exhausted the MCO's, PIHP's, or PAHP's appeals process. The enrollee may initiate a State fair hearing.
(d) Format of notice —(1) Grievances. The State must establish the method that an MCO, PIHP, and PAHP will use to notify an enrollee of the resolution of a grievance and ensure that such methods meet, at a minimum, the standards described at § 438.10.
(2) Appeals. (i) For all appeals, the MCO, PIHP, or PAHP must provide written notice of resolution in a format and language that, at a minimum, meet the standards described at § 438.10.
(ii) For notice of an expedited resolution, the MCO, PIHP, or PAHP must also make reasonable efforts to provide oral notice.
(e) Content of notice of appeal resolution. The written notice of the resolution must include the following:
(1) The results of the resolution process and the date it was completed.
(2) For appeals not resolved wholly in favor of the enrollees—
(i) The right to request a State fair hearing, and how to do so.
(ii) The right to request and receive benefits while the hearing is pending, and how to make the request.
(iii) That the enrollee may, consistent with state policy, be held liable for the cost of those benefits if the hearing decision upholds the MCO's, PIHP's, or PAHP's adverse benefit determination.
(f) Requirements for State fair hearings —(1) Availability. An enrollee may request a State fair hearing only after receiving notice that the MCO, PIHP, or PAHP is upholding the adverse benefit determination.
(i) Deemed exhaustion of appeals processes. In the case of an MCO, PIHP, or PAHP that fails to adhere to the notice and timing requirements in § 438.408, the enrollee is deemed to have exhausted the MCO's, PIHP's, or PAHP's appeals process. The enrollee may initiate a State fair hearing.
(ii) External medical review. The State may offer and arrange for an external medical review if the following conditions are met.
(A) The review must be at the enrollee's option and must not be required before or used as a deterrent to proceeding to the State fair hearing.
(B) The review must be independent of both the State and MCO, PIHP, or PAHP.
(C) The review must be offered without any cost to the enrollee.
(D) The review must not extend any of the timeframes specified in § 438.408 and must not disrupt the continuation of benefits in § 438.420.
(2) State fair hearing. The enrollee must have no less than 90 calendar days and no more than 120 calendar days from the date of the MCO's, PIHP's, or PAHP's notice of resolution to request a State fair hearing.
(3) Parties. The parties to the State fair hearing include the MCO, PIHP, or PAHP, as well as the enrollee and his or her representative or the representative of a deceased enrollee's estate.
§ 438.410   Expedited resolution of appeals.
(a) General rule. Each MCO, PIHP, and PAHP must establish and maintain an expedited review process for appeals, when the MCO, PIHP, or PAHP determines (for a request from the enrollee) or the provider indicates (in making the request on the enrollee's behalf or supporting the enrollee's request) that taking the time for a standard resolution could seriously jeopardize the enrollee's life, physical or mental health, or ability to attain, maintain, or regain maximum function.
(b) Punitive action. The MCO, PIHP, or PAHP must ensure that punitive action is not taken against a provider who requests an expedited resolution or supports an enrollee's appeal.
(c) Action following denial of a request for expedited resolution. If the MCO, PIHP, or PAHP denies a request for expedited resolution of an appeal, it must—
(1) Transfer the appeal to the timeframe for standard resolution in accordance with § 438.408(b)(2).
(2) Follow the requirements in § 438.408(c)(2).
§ 438.414   Information about the grievance and appeal system to providers and subcontractors.
The MCO, PIHP, or PAHP must provide information specified in § 438.10(g)(2)(xi) about the grievance and appeal system to all providers and subcontractors at the time they enter into a contract.
§ 438.416   Recordkeeping requirements.
(a) The State must require MCOs, PIHPs, and PAHPs to maintain records of grievances and appeals and must review the information as part of its ongoing monitoring procedures, as well as for updates and revisions to the State quality strategy.
(b) The record of each grievance or appeal must contain, at a minimum, all of the following information:
(1) A general description of the reason for the appeal or grievance.
(2) The date received.
(3) The date of each review or, if applicable, review meeting.
(4) Resolution at each level of the appeal or grievance, if applicable.
(5) Date of resolution at each level, if applicable.
(6) Name of the covered person for whom the appeal or grievance was filed.
(c) The record must be accurately maintained in a manner accessible to the state and available upon request to CMS.
§ 438.420   Continuation of benefits while the MCO, PIHP, or PAHP appeal and the State fair hearing are pending.
(a) Definition. As used in this section—
Timely files means files for continuation of benefits on or before the later of the following:
(i) Within 10 calendar days of the MCO, PIHP, or PAHP sending the notice of adverse benefit determination.
(ii) The intended effective date of the MCO's, PIHP's, or PAHP's proposed adverse benefit determination.
(b) Continuation of benefits. The MCO, PIHP, or PAHP must continue the enrollee's benefits if all of the following occur:
(1) The enrollee files the request for an appeal timely in accordance with § 438.402(c)(1)(ii) and (c)(2)(ii);
(2) The appeal involves the termination, suspension, or reduction of previously authorized services;
(3) The services were ordered by an authorized provider;
(4) The period covered by the original authorization has not expired; and
(5) The enrollee timely files for continuation of benefits.
(c) Duration of continued or reinstated benefits. If, at the enrollee's request, the MCO, PIHP, or PAHP continues or reinstates the enrollee's benefits while the appeal or state fair hearing is pending, the benefits must be continued until one of following occurs:
(1) The enrollee withdraws the appeal or request for state fair hearing.
(2) The enrollee fails to request a state fair hearing and continuation of benefits within 10 calendar days after the MCO, PIHP, or PAHP sends the notice of an adverse resolution to the enrollee's appeal under § 438.408(d)(2).
(3) A State fair hearing office issues a hearing decision adverse to the enrollee.
(d) Enrollee responsibility for services furnished while the appeal or state fair hearing is pending. If the final resolution of the appeal or state fair hearing is adverse to the enrollee, that is, upholds the MCO's, PIHP's, or PAHP's adverse benefit determination, the MCO, PIHP, or PAHP may, consistent with the state's usual policy on recoveries under § 431.230(b) of this chapter and as specified in the MCO's, PIHP's, or PAHP's contract, recover the cost of services furnished to the enrollee while the appeal and state fair hearing was pending, to the extent that they were furnished solely because of the requirements of this section.
§ 438.424   Effectuation of reversed appeal resolutions.
(a) Services not furnished while the appeal is pending. If the MCO, PIHP, or PAHP, or the State fair hearing officer reverses a decision to deny, limit, or delay services that were not furnished while the appeal was pending, the MCO, PIHP, or PAHP must authorize or provide the disputed services promptly and as expeditiously as the enrollee's health condition requires but no later than 72 hours from the date it receives notice reversing the determination.
(b) Services furnished while the appeal is pending. If the MCO, PIHP, or PAHP, or the State fair hearing officer reverses a decision to deny authorization of services, and the enrollee received the disputed services while the appeal was pending, the MCO, PIHP, or PAHP, or the State must pay for those services, in accordance with State policy and regulations.
§ 438.500   Definitions.
(a) Definitions. As used in this subpart, the following terms have the indicated meanings:
Measurement period means the period for which data are collected for a measure or the performance period that a measure covers.
Measurement year means the first calendar year and each calendar year thereafter for which a full calendar year of claims and encounter data necessary to calculate a measure are available.
Medicaid managed care quality rating system framework (QRS framework) means the mandatory measure set identified by CMS in the Medicaid and CHIP managed care quality rating system technical resource manual described in § 438.530, the methodology for calculating quality ratings described in § 438.515, and the website display described in § 438.520 of this subpart.
Medicare Advantage and Part D 5-Star Rating System (MA and Part D quality rating system) means the rating system described in subpart D of parts 422 and 423 of this chapter.
Qualified health plan quality rating system (QHP quality rating system) means the health plan quality rating system developed in accordance with 45 CFR 156.1120.
Quality rating means the numeric or other value of a quality measure or an assigned indicator that data for the measure is not available.
Technical resource manual means the guidance described in § 438.530.
Validation means the review of information, data, and procedures to determine the extent to which they are accurate, reliable, free from bias, and in accord with standards for data collection and analysis.
§ 438.505   General rule and applicability.
(a) General rule. As part of its quality assessment and improvement strategy for its managed care program, each State contracting with an applicable managed care plan, as described in paragraph (b) of this section, to furnish services to Medicaid beneficiaries—
(1)(i) Must adopt the QRS framework developed by CMS, which must implement either the MAC QRS methodology developed by CMS or an alternative MAC QRS rating methodology approved by CMS in accordance with § 438.515(c) of this subpart.
(ii) May, in addition to the MAC QRS framework adopted under paragraph (a)(1)(i) of this section, implement website features in addition to those identified in § 438.520(a), as described in § 438.520(c).
(2) Must implement such managed care quality rating system by the end of the fourth calendar year following July 9, 2024, unless otherwise specified in this subpart.
(3) Must use the State's beneficiary support system implemented under § 438.71 to provide the services identified at § 438.71(b)(1)(i) and (ii) to beneficiaries, enrollees, or both seeking assistance using the managed care quality rating system implemented by the State under this subpart.
(b) Applicability. The provisions of this subpart apply to States contracting with MCOs, PIHPs, and PAHPs for the delivery of services covered under Medicaid. The provisions of this subpart do not apply to Medicare Advantage Dual Eligible Special Needs Plans that contract with States for only Medicaid coverage of Medicare cost sharing.
(c) Continued alignment. To maintain the QRS framework, CMS aligns the mandatory measure set and methodology described in §§ 438.510 and 438.515 of this subpart, to the extent appropriate, with the qualified health plan quality rating system developed in accordance with 45 CFR 156.1120, the MA and Part D quality rating system, and other similar CMS quality measurement and rating initiatives.
§ 438.510   Mandatory QRS measure set for Medicaid managed care quality rating system.
(a) Measures required. The quality rating system implemented by the State—
(1) Must include the measures that are:
(i) In the mandatory QRS measure set identified and described by CMS in the Medicaid and CHIP managed care quality rating system technical resource manual, and
(ii) Applicable to the State because the measures assess a service or action covered by a managed care program established by the State.
(2) May include other measures identified by the State as provided in § 438.520(c)(1).
(b) Subregulatory process to update mandatory measure set. Subject to paragraph (d) of this section, CMS will—
(1) At least every other year, engage with States and other interested parties (such as State officials, measure experts, health plans, beneficiary advocates, tribal organizations, health plan associations, and external quality review organizations) to evaluate the current mandatory measure set and make recommendations to CMS to add, remove or update existing measures based on the criteria and standards in paragraph (c) of this section; and
(2) Provide public notice and opportunity to comment through a call letter (or similar subregulatory process using written guidance) on any planned modifications to the mandatory measure set following the engagement described in paragraph (b)(1) of this section.
(c) Standards for adding mandatory measures. Based on available relevant information, including the input received during the process described in paragraph (b) of this section, CMS will add a measure in the mandatory measure set when each of the standards described in (c)(1) through (3) of this section are met.
(1) The measure meets at least 5 of the following criteria:
(i) Is meaningful and useful for beneficiaries or their caregivers when choosing a managed care plan;
(ii) Aligns, to the extent appropriate, with other CMS programs described in § 438.505(c);
(iii) Measures health plan performance in at least one of the following areas: customer experience, access to services, health outcomes, quality of care, health plan administration, and health equity;
(iv) Presents an opportunity for managed care plans to influence their performance on the measure;
(v) Is based on data that are available without undue burden on States, managed care plans, and providers such that it is feasible to report by many States, managed care plans, and providers;
(vi) Demonstrates scientific acceptability, meaning that the measure, as specified, produces consistent and credible results;
(2) The proposed measure contributes to balanced representation of beneficiary subpopulations, age groups, health conditions, services, and performance areas within a concise mandatory measure set, and
(3) The burdens associated with including the measure does not outweigh the benefits to the overall quality rating system framework of including the new measure based on the criteria listed in paragraph (c)(1) of this section.
(4) When making the determinations required under paragraphs (c)(2) and (3) of this section, to add, remove, or update a measure, CMS may consider the measure set as a whole, each specific measure individually, or a comparison of measures that assess similar aspects of care or performance areas.
(d) Removing mandatory measures. CMS may remove existing mandatory measures from the mandatory measure set if—
(1) After following the process described in paragraph (b) of this section, CMS determines that the measure no longer meets the standards described in paragraph (c) of this section;
(2) The measure steward (other than CMS) retires or stops maintaining a measure;
(3) CMS determines that the clinical guidelines associated with the specifications of the measure change such that the specifications no longer align with positive health outcomes; or
(4) CMS determines that the measure shows low statistical reliability under the standard identified in §§ 422.164(e) and 423.184(e) of this chapter.
(e) Updating existing mandatory measures. CMS will modify the existing mandatory measures that undergo measure technical specifications updates as follows—
(1) Non-substantive updates. CMS will update changes to the technical specifications for a measure made by the measure steward; such changes will be in the technical resource manual issued under paragraph (f) of this section and § 438.530. Examples of non-substantive updates include those that:
(i) Narrow the denominator or population covered by the measure.
(ii) Do not meaningfully impact the numerator or denominator of the measure.
(iii) Update the clinical codes with no change in the target population or the intent of the measure.
(iv) Provide additional clarifications such as:
(A) Adding additional tests that would meet the numerator requirements;
(B) Clarifying documentation requirements;
(C) Adding additional instructions to identify services or procedures; or
(D) Adding alternative data sources or expanding of modes of data collection to calculate a measure.
(2) Substantive updates. CMS may adopt substantive updates to a mandatory measure not subject to paragraphs (e)(1)(i) through (iv) of this section only after following the process specified in paragraph (b) of this section.
(f) Finalization and display of mandatory measures and updates. CMS will finalize modifications to the mandatory measure set and the timeline for State implementation of such modifications in the technical resource manual. For new or substantively updated measures, CMS will provide each State with at least 2 calendar years from the start of the measurement year immediately following the release of the annual technical resource manual in which the modification to the mandatory measure set is finalized to display measurement results and ratings using the new or updated measure(s).
§ 438.515   Medicaid managed care quality rating system methodology.
(a) Quality ratings. For each measurement year, the State must ensure that—
(1) The data necessary to calculate quality ratings for each quality measure described in § 438.510(a)(1) of this subpart are collected from:
(i) The State's contracted managed care plans that have 500 or more enrollees from the State's Medicaid program, to be calculated as described by CMS in the technical resource manual; and
(ii) Sources of Medicare data (including Medicare Advantage plans, Medicare providers, and CMS), the State's Medicaid fee-for-service providers, or both if all data necessary to calculate a measure cannot be provided by the managed care plans described in paragraph (a)(1) of this section and such data are available for collection by the State to the extent feasible without undue burden.
(2) Validation of data collected under paragraph (a)(1) of this section is performed, including all Medicaid managed care data and, to the extent feasible without undue burden, all data from sources described in paragraph (a)(1)(ii) of this section. Validation of data must not be performed by any entity with a conflict of interest, including managed care plans.
(3) A measure performance rate for each managed care plan whose contract covers a service or action assessed by the measure, as determined by the State, is calculated, for each quality measure identified under § 438.510(a)(1) of this subpart, using the methodology described in paragraph (b) of this section and the validated data described in paragraph (a)(2) of this section, including all Medicaid managed care data and, to the extent feasible without undue burden, all data from sources described in paragraph (a)(1)(ii) of this section.
(4) Quality ratings are issued by the State for each managed care plan for each measure that assesses a service or action covered by the plan's contract with the State, as determined by the State under paragraph (a)(3) of this section.
(b) Methodology. The State must ensure that the quality ratings issued under paragraph (a)(4) of this section:
(1) Include data for all enrollees who receive coverage through the managed care plan for a service or action for which data are necessary to calculate the quality rating for the managed care plan including Medicaid FFS and Medicare data for enrollees who receive Medicaid benefits for the State through FFS and managed care, are dually eligible for both Medicare and Medicaid and receive full benefits from Medicaid, or both).
(2) Are issued to each managed care plan at the plan level and by managed care program, so that a plan participating in multiple managed care programs is issued distinct ratings for each program in which it participates, resulting in quality ratings that are representative of services provided only to those beneficiaries enrolled in the plan through the rated program.
(c) Alternative QRS methodology. (1) A State may apply an alternative QRS methodology (that is, other than that described in paragraph (b) of this section) to the mandatory measures described in § 438.510(a)(1) of this subpart provided that—
(i) The ratings generated by the alternative QRS methodology yield information regarding managed care plan performance which, to the extent feasible, is substantially comparable to that yielded by the methodology described in § 438.515(b) of this subpart, taking into account such factors as differences in covered populations, benefits, and stage of delivery system transformation, to enable meaningful comparison of performance across States.
(ii) The State receives CMS approval prior to implementing an alternative QRS methodology or modifications to an approved alternative QRS methodology.
(2) To receive CMS approval for an alternative QRS methodology, a State must:
(i) Submit a request for, or modification of, an alternative QRS methodology to CMS in a form and manner and by a date determined by CMS; and
(ii) Include the following in the State's request for, or modification of, an alternative QRS methodology:
(A) The alternative QRS methodology to be used in generating plan ratings;
(B) Other information or documentation specified by CMS to demonstrate compliance with paragraph (c)(1) of this section; and
(C) Other supporting documents and evidence that the State believes demonstrates compliance with the requirements of (c)(1)(i) of this section.
(3) Subject to requirements established in paragraphs (c)(1)(i) and (ii) and (c)(2) of this section, the flexibility described in paragraph (c)(1) of this section permits the State to request and receive CMS approval to apply an alternative methodology from that described in paragraph (b)(1) and (2) of this section when calculating quality ratings issued to health plans as required under paragraph (a)(4) of this section. CMS will not review or approve an alternative methodology request submitted by the State that requests to implement a MAC QRS that—
(i) Does not comply with—
(A) The requirement to include mandatory measures established in § 438.510(a)(1).
(B) The general requirements for calculating quality ratings established in paragraphs (a)(1) through (4) of this section.
(C) The requirement to include the website features identified in § 438.520(a)(1) through (6) established in § 438.520(a).
(ii) Requests to include plans that do not meet the threshold established in paragraph (a)(1)(i) of this section, which is permitted without CMS review or approval.
(iii) Requests to implement additional measures or website features, which are permitted, without CMS review or approval, as described § 438.520(c).
(d) Request for implementation extension. In a form and manner determined by CMS, the State may request a one-year extension to the implementation date specified in this subpart for one or more MAC QRS requirements established in paragraph (b) of this section.
(1) A request for extension of the implementation deadline for the methodology requirements in this section must meet the following requirements:
(i) Identify the specific requirement(s) for which an extension is requested and;
(ii) Include a timeline of the steps the State has taken to meet the requirement as well as an anticipated timeline of the steps that remain;
(iii) Explain why the State will be unable to fully comply with the requirement by the implementation date, which must include a detailed description of the specific barriers the State has faced or faces in complying with the requirement; and
(iv) Include a detailed plan to implement the requirement by the end of the one-year extension including, but not limited to, the operational steps the State will take to address identified implementation barriers.
(2) The State must submit an extension request by September 1 of the fourth calendar year following July 9, 2024.
(3) CMS will approve an extension for 1 year if it determines that the request:
(i) Includes the information described in paragraph (d)(1) of this section;
(ii) Demonstrates that the State has made a good-faith effort to identify and begin executing an implementation strategy but is unable to comply with the specified requirement by the implementation date identified in this subpart; and
(iii) Demonstrates that the State has an actionable plan to implement the requirements by the end of the 1-year extension.
(e) Domain ratings. After engaging with States, beneficiaries, and other interested parties, CMS implements domain-level quality ratings, including care domains for which States are required to calculate and assign domain-level quality ratings for managed care plans, a methodology to calculate such ratings, and website display requirements for displaying such ratings on the MAC QRS website display described in § 438.520.
§ 438.520   website display.
(a) website display requirements. In a manner that complies with the accessibility standards outlined in § 438.10(d) of this part and in a form and manner specified by CMS, the State must prominently display and make accessible to the public on the website required under § 438.10(c)(3):
(1) Information necessary for users to understand and navigate the contents of the QRS website display, including:
(i) A statement of the purpose of the Medicaid managed care quality rating system, relevant information on Medicaid, CHIP and Medicare and an overview of how to use the information available in the display to select a quality managed care plan;
(ii) Information on how to access the beneficiary support system described in § 438.71 to answer questions about using the State's managed care quality rating system to select a managed care plan; and
(iii) If users are requested to input user-specific information, including the information described in paragraph (a)(2)(i) of this section, an explanation of why the information is requested, how it will be used, and whether it is optional or required to access a QRS feature or type of information.
(2) Information that allows beneficiaries to identify managed care plans available to them that align with their coverage needs and preferences including:
(i) All available managed care programs and plans for which a user may be eligible based on the user's age, geographic location, and dually eligible status, if applicable, as well as other demographic data identified by CMS;
(ii) A description of the drug coverage for each managed care plan, including the formulary information specified in § 438.10(i) and other similar information as specified by CMS;
(iii) Provider directory information for each managed care plan including all information required by § 438.10(h)(1) and (2) and such other provider information as specified by CMS;
(iv) Quality ratings described at § 438.515(a)(4) that are calculated by the State for each managed care plan in accordance with § 438.515 for mandatory measures identified by CMS in the technical resource manual, and
(v) The quality ratings described in § 438.520(a)(2)(iv) calculated by the State for each managed care plan in accordance with § 438.515 for mandatory measures identified by CMS, stratified by dual eligibility status, race and ethnicity, and sex.
(3) Standardized information identified by CMS that allows users to compare available managed care plans and programs, including:
(i) The name of each managed care plan;
(ii) An internet hyperlink to each managed care plan's website and each available managed care plan's toll-free customer service telephone number;
(iii) Premium and cost-sharing information including differences in premium and cost-sharing among available managed care plans within a single program;
(iv) A summary of benefits including differences in benefits among available managed care plans within a single program and other similar information specified by CMS, such as whether access to the benefit requires prior authorization from the plan;
(v) Certain metrics, as specified by CMS, of managed care plan performance that States must make available to the public under subparts B and D of this part, including data most recently reported to CMS on each managed care program pursuant to § 438.66(e) of this part and the results of the secret shopper survey specified in § 438.68(f) of this part;
(vi) If a managed care plan offers an integrated Medicare-Medicaid plan or a highly or fully integrated Medicare Advantage D-SNP (as those terms are defined in § 422.2 of this chapter), an indication that an integrated plan is available and a link to the integrated plan's most recent rating under the Medicare Advantage and Part D 5-Star Rating System.
(4) Information on quality ratings displayed in accordance with paragraph (a)(2)(iv) of this section in a manner that promotes beneficiary understanding of and trust in the ratings, including:
(i) A plain language description of the importance and impact of each quality measure assigned a quality rating;
(ii) The measurement period during which the data used to calculate the quality rating was produced; and
(iii) Information on quality ratings data validation, including a plain language description of when, how and by whom the data were validated.
(5) Information or hyperlinks directing users to resources on how and where to apply for Medicaid and enroll in a Medicaid or CHIP plan.
(6) By a date specified by CMS, which shall be no earlier than 2 years after the implementation date for the quality rating system specified in § 438.505:
(i) The quality ratings described in paragraph (a)(2)(iv) of this section calculated by the State for each managed care plan in accordance with § 438.515 for mandatory measures identified by CMS, including the display of such measures stratified by dual eligibility status, race and ethnicity, sex, age, rural/urban status, disability, language of the enrollee, or other factors specified by CMS in the annual technical resource manual.
(ii) An interactive tool that enables users to view the quality ratings described at paragraph (a)(2)(iv) of this section, stratified by the factors described in paragraph (a)(6)(i) of this section.
(iii) For managed care programs with two or more participating plans—
(A) A search tool that enables users to identify available managed care plans within the managed care program that provide coverage for a drug identified by the user; and
(B) A search tool that enables users to identify available managed care plans within the managed care program that include a provider identified by the user in the plan's network of providers.
(b) Request for implementation extension. In a form and manner determined by CMS, the State may request a 1-year extension to the implementation date specified in this subpart for one or more of the requirements established under paragraphs (a)(2)(v) and (6) of this section.
(1) A request for extension of the implementation deadline for the website display requirements in this section must meet the requirements described in § 438.515(d)(1);
(2) For extensions of the website requirements specified in paragraph (a)(6) of this section, the extension request must be submitted no later than 4 months prior to the implementation date specified pursuant to paragraph (a)(6) of this section for those requirements; for extensions of the requirements specified in paragraphs (a)(2)(v) of this section, the extension request must be submitted no later than September 1, 2027.
(3) CMS will approve the State's request for a 1-year extension if CMS determines that the request meets the conditions described in § 438.515(d)(3).
(c) Additional website features. The State may choose to display additional website features not described in § 438.520(a) in their MAC QRS, or may choose to implement the features described in § 438.520(a)(6)(i) through (iv) before the date specified by CMS as described in paragraph (a)(6) of this section.
(1) Additional website features may include additional measures not included in the mandatory measure set described in § 438.510(a)(1), supplementary data on displayed quality measures, and extra interactive functions, and may be implemented without CMS review.
(2) If the State chooses to display quality ratings for additional measures as described in paragraph (c)(1) of this section, the State must:
(i) Obtain input on the additional measures, prior to their use, from prospective users, including beneficiaries, caregivers, and, if the State enrolls American Indians/Alaska Natives in managed care, consult with Tribes and Tribal Organizations in accordance with the State's Tribal consultation policy; and
(ii) Document the input received from prospective users required under paragraph (c)(2)(i) of this section, including modifications made to the additional measure(s) in response to the input and rationale for input not accepted.
(d) Continued consultation. CMS will periodically consult with States and interested parties including Medicaid managed care quality rating system users to evaluate the website display requirements described in this section for continued alignment with beneficiary preferences and values.
§ 438.525   [Reserved]
§ 438.530   Annual technical resource manual.
(a) Beginning in calendar year 2027, CMS will publish a Medicaid managed care quality rating system technical resource manual annually, which may be released in increments throughout the year. Subject to the limitation described in paragraph (a)(4) of this section, the technical resource manual must include all the following:
(1) Identification of all Medicaid managed care quality rating system measures, including:
(i) A list of the mandatory measures
(ii) Any measures newly added or removed from the prior year's mandatory measure set.
(iii) The subset of mandatory measures that must be displayed and stratified by factors such as race and ethnicity, sex, age, rural/urban status, disability, language, or such other factors as may be specified by the CMS in accordance with § 438.520(a)(2)(v) and (a)(6)(i).
(2) Guidance on the application of the methodology used to calculate and issue quality ratings as described in § 438.515(b).
(3) Measure steward technical specifications for mandatory measures.
(4) If the public notice and comment process described in § 438.510(b) of this subpart occurs in the calendar year in which the manual is published, a summary of interested party engagement and public comments received during the notice and comment process using the process identified in § 438.510(c) for the most recent modifications to the mandatory measure set including:
(i) Discussion of the feedback and recommendations received on potential modifications to mandatory measures;
(ii) The final modifications and the timeline by which such modifications must be implemented; and
(iii) The rationale for not accepting or implementing specific recommendations or feedback submitted during the consultation process.
(b) In developing and issuing the manual content described in paragraphs (a)(1) and (2) of this section, CMS will take into account whether stratification is currently required by the measure steward or other CMS programs and by which factors when issuing guidance that identifies which measures, and by which factors, States must stratify mandatory measures.
(c) No later than August 1, 2025, CMS will publish the information described at paragraph (a)(1) of this section for the initial mandatory measure set.
§ 438.535   Annual reporting.
(a) Upon CMS' request, but no more frequently than annually, the State must submit a Medicaid managed care quality rating system report in a form and manner determined by CMS. Such report must include:
(1) The following measure information:
(i) A list of all mandatory measures identified in the most recent technical resource manual that indicates for each measure:
(A) Whether the State has identified the measure as applicable or not applicable to the State's managed care program under § 438.510(a)(1) of this subpart;
(B) For any measures identified as inapplicable to the State's managed care program, a brief explanation of why the State determined that the measure is inapplicable; and,
(C) For any measure identified as applicable to the State's managed care program, the managed care programs to which the measure is applicable.
(ii) A list of any additional measures the State chooses to include in the Medicaid managed care quality rating system as permitted under § 438.510(a)(2).
(2) An attestation that all displayed quality ratings for mandatory measures were calculated and issued in compliance with § 438.515, and a description of the methodology used to calculate ratings for any additional measures if such methodology deviates from the methodology in § 438.515.
(3) The documentation required under § 438.520(c), if including additional measures in the State's Medicaid managed care quality rating system.
(4) The date on which the State publishes or updates the quality ratings for the State's managed care plans.
(5) A link to the State's website for their Medicaid managed care quality rating system.
(6) The application of any technical specification adjustments used to calculate and issue quality ratings described in § 438.515(a)(3) and (4), at the plan- or State-level, that are outside a measure steward's allowable adjustments for a mandatory measure but that the measure steward has approved for use by the State.
(7) A summary of each alternative QRS methodology approved by CMS, including the effective dates for each approved alternative QRS.
(8) If all data necessary to calculate a measure described in § 438.510(a)(1) of this subpart cannot be provided by the managed care plans described in § 438.515(a)(1) of this subpart:
(i) A description of any Medicare data, Medicaid FFS data, or both that cannot, without undue burden, be collected, validated, or used to calculate a quality rating for the measure per § 438.515(a) and (b), including an estimate of the proportion of Medicare data or Medicaid FFS data that such missing data represent.
(ii) A description of the undue burden(s) that prevents the State from ensuring that such data are collected, validated, or used to calculate the measure, the resources necessary to overcome the burden, and the State's plan to address the burden.
(iii) An assessment of the impact of the missing data on the State's ability to fully comply with § 438.515(b)(1).
(b) States will be given no less than 90 days to submit such a report to CMS on their Medicaid managed care quality rating system.
§ 438.600   Statutory basis, basic rule, and applicability.
(a) Statutory basis. This subpart is based on the following statutory sections:
(1) Section 1128 of the Act provides for the exclusion of certain individuals and entities from participation in the Medicaid program.
(2) Section 1128J(d) of the Act requires that persons who have received an overpayment under Medicaid report and return the overpayment within 60 days after the date on which the overpayment was identified.
(3) Section 1902(a)(4) of the Act requires that the State plan provide for methods of administration that the Secretary finds necessary for the proper and efficient operation of the plan.
(4) Section 1902(a)(19) of the Act requires that the State plan provide the safeguards necessary to ensure that eligibility is determined and services are provided in a manner consistent with simplicity of administration and the best interests of the beneficiaries.
(5) Section 1902(a)(27) of the Act requires States to enroll persons or institutions that provide services under the State plan.
(6) Section 1902(a)(68) of the Act requires that any entity that receives or makes annual payments under the State plan of at least $5,000,000 must establish certain minimum written policies relating to the Federal False Claims Act.
(7) Section 1902(a)(77) of the Act requires that States comply with provider and supplier screening, oversight, and reporting requirements described in section 1902(kk)(1) of the Act.
(8) Section 1902(a)(80) of the Act prohibits payments for items or services provided under the State plan or under a waiver to any financial institution or entity located outside of the United States.
(9) Section 1902(kk)(7) of the Act requires States to enroll physicians or other professionals that order or refer services under the State plan.
(10) Section 1903(i) of the Act prohibits FFP for amounts expended by MCOs or PCCMs for providers excluded by Medicare, Medicaid, or CHIP, except for emergency services.
(11) Section 1903(m) of the Act establishes conditions for payments to the State for contracts with MCOs.
(12) Section 1932(d)(1) of the Act prohibits MCOs and PCCMs from knowingly having certain types of relationships with individuals and entities debarred under Federal regulations from participating in specified activities, or with affiliates of those individuals.
(b) Basic rule. As a condition for receiving payment under a Medicaid managed care program, an MCO, PIHP, PAHP, PCCM or PCCM entity must comply with the requirements in §§ 438.604, 438.606, 438.608 and 438.610, as applicable.
(c) Applicability. States will not be held out compliance with the following requirements of this subpart prior to the dates noted below so long as they comply with the corresponding standard(s) in 42 CFR part 438 contained in the CFR, parts 430 to 481, edition revised as of October 1, 2015:
(1) States must comply with §§ 438.602(a), 438.602(c) through (h), 438.604, 438.606, 438.608(a), and 438.608(c) and (d), no later than the rating period for contracts starting on or after July 1, 2017.
(2) States must comply with § 438.602(b) and § 438.608(b) no later than the rating period for contracts beginning on or after July 1, 2018.
§ 438.602   State responsibilities.
(a) Monitoring contractor compliance. Consistent with § 438.66, the State must monitor the MCO's, PIHP's, PAHP's, PCCM's or PCCM entity's compliance, as applicable, with §§ 438.604, 438.606, 438.608, 438.610, 438.230, and 438.808.
(b) Screening and enrollment and revalidation of providers. (1) The State must screen and enroll, and periodically revalidate, all network providers of MCOs, PIHPs, and PAHPs, in accordance with the requirements of part 455, subparts B and E of this chapter. This requirement extends to PCCMs and PCCM entities to the extent the primary care case manager is not otherwise enrolled with the State to provide services to FFS beneficiaries. This provision does not require the network provider to render services to FFS beneficiaries.
(2) MCOs, PIHPs, and PAHPs may execute network provider agreements pending the outcome of the process in paragraph (b)(1) of this section of up to 120 days, but must terminate a network provider immediately upon notification from the State that the network provider cannot be enrolled, or the expiration of one 120 day period without enrollment of the provider, and notify affected enrollees.
(c) Ownership and control information. The State must review the ownership and control disclosures submitted by the MCO, PIHP, PAHP, PCCM or PCCM entity, and any subcontractors as required in § 438.608(c).
(d) Federal database checks. Consistent with the requirements at § 455.436 of this chapter, the State must confirm the identity and determine the exclusion status of the MCO, PIHP, PAHP, PCCM or PCCM entity, any subcontractor, as well as any person with an ownership or control interest, or who is an agent or managing employee of the MCO, PIHP, PAHP, PCCM or PCCM entity through routine checks of Federal databases. This includes the Social Security Administration's Death Master File, the National Plan and Provider Enumeration System (NPPES), the List of Excluded Individuals/Entities (LEIE), the System for Award Management (SAM), and any other databases as the State or Secretary may prescribe. These databases must be consulted upon contracting and no less frequently than monthly thereafter. If the State finds a party that is excluded, it must promptly notify the MCO, PIHP, PAHP, PCCM, or PCCM entity and take action consistent with § 438.610(c).
(e) Periodic audits. The State must periodically, but no less frequently than once every 3 years, conduct, or contract for the conduct of, an independent audit of the accuracy, truthfulness, and completeness of the encounter and financial data submitted by, or on behalf of, each MCO, PIHP or PAHP.
(f) Whistleblowers. The State must receive and investigate information from whistleblowers relating to the integrity of the MCO, PIHP, PAHP, PCCM, or PCCM entity, subcontractors, or network providers receiving Federal funds under this part.
(g) Transparency. The State must post on its Web site, as required in § 438.10(c)(3), the following documents and reports:
(1) The MCO, PIHP, PAHP, or PCCM entity contract.
(2) The data at § 438.604(a)(5).
(3) The name and title of individuals included in § 438.604(a)(6).
(4) The results of any audits under paragraph (e) of this section.
(5) Enrollee handbooks, provider directories, and formularies required at § 438.10(g) through (i).
(6) The information on rate ranges required at § 438.4(c)(2)(iv), if applicable.
(7) The reports required at §§ 438.66(e) and 438.207(d).
(8) The network adequacy standards required at § 438.68(b)(1) through (2) and (e).
(9) The results of secret shopper surveys required at § 438.68(f).
(10) State directed payment evaluation reports required in § 438.6(c)(2)(v)(C).
(11) Information on all required Application Programming Interfaces including as specified in § 431.60(d) and (f).
(12) Quality related information as required in §§ 438.332(c)(1), 438.340(d), 438.362(c) and 438.364(c)(2)(i).
(13) Documentation of compliance with requirements in subpart K—Parity in Mental Health and Substance Use Disorder Benefits.
(h) Contracting integrity. The State must have in place conflict of interest safeguards described in § 438.58 and must comply with the requirement described in section 1902(a)(4)(C) of the Act applicable to contracting officers, employees, or independent contractors.
(i) Entities located outside of the U.S. The State must ensure that the MCO, PIHP, PAHP, PCCM, or PCCM entity with which the State contracts under this part is not located outside of the United States and that no claims paid by an MCO, PIHP, or PAHP to a network provider, out-of-network provider, subcontractor or financial institution located outside of the U.S. are considered in the development of actuarially sound capitation rates.
(j) Applicability. Paragraphs (g)(5) through (13) of this section apply to the first rating period for contracts with MCOs, PIHPs and PAHPs beginning on or after 2 years after July 9, 2024.
§ 438.604   Data, information, and documentation that must be submitted.
(a) Specified data, information, and documentation. The State must require any MCO, PIHP, PAHP, PCCM or PCCM entity to submit to the State the following data:
(1) Encounter data in the form and manner described in § 438.818.
(2) Data on the basis of which the State certifies the actuarial soundness of capitation rates to an MCO, PIHP or PAHP under § 438.4, including base data described in § 438.5(c) that is generated by the MCO, PIHP or PAHP.
(3) Data on the basis of which the State determines the compliance of the MCO, PIHP, or PAHP with the medical loss ratio requirement described in § 438.8.
(4) Data on the basis of which the State determines that the MCO, PIHP or PAHP has made adequate provision against the risk of insolvency as required under § 438.116.
(5) Documentation described in § 438.207(b) on which the State bases its certification that the MCO, PIHP or PAHP has complied with the State's requirements for availability and accessibility of services, including the adequacy of the provider network, as set forth in § 438.206.
(6) Information on ownership and control described in § 455.104 of this chapter from MCOs, PIHPs, PAHPs, PCCMs, PCCM entities, and subcontractors as governed by § 438.230.
(7) The annual report of overpayment recoveries as required in § 438.608(d)(3).
(b) Additional data, documentation, or information. In addition to the data, documentation, or information specified in paragraph (a) of this section, an MCO, PIHP, PAHP, PCCM or PCCM entity must submit any other data, documentation, or information relating to the performance of the entity's obligations under this part required by the State or the Secretary.
§ 438.606   Source, content, and timing of certification.
(a) Source of certification. For the data, documentation, or information specified in § 438.604, the State must require that the data, documentation or information the MCO, PIHP, PAHP, PCCM or PCCM entity submits to the State be certified by either the MCO's, PIHP's, PAHP's, PCCM's, or PCCM entity's Chief Executive Officer; Chief Financial Officer; or an individual who reports directly to the Chief Executive Officer or Chief Financial Officer with delegated authority to sign for the Chief Executive Officer or Chief Financial Officer so that the Chief Executive Officer or Chief Financial Officer is ultimately responsible for the certification.
(b) Content of certification. The certification provided by the individual in paragraph (a) of this section must attest that, based on best information, knowledge, and belief, the data, documentation, and information specified in § 438.604 is accurate, complete, and truthful.
(c) Timing of certification. The State must require the MCO, PIHP, PAHP, PCCM, or PCCM entity to submit the certification concurrently with the submission of the data, documentation, or information required in § 438.604(a) and (b).
§ 438.608   Program integrity requirements under the contract.
(a) Administrative and management arrangements or procedures to detect and prevent fraud, waste and abuse. The State, through its contract with the MCO, PIHP or PAHP, must require that the MCO, PIHP, or PAHP, or subcontractor to the extent that the subcontractor is delegated responsibility by the MCO, PIHP, or PAHP for coverage of services and payment of claims under the contract between the State and the MCO, PIHP, or PAHP, implement and maintain arrangements or procedures that are designed to detect and prevent fraud, waste, and abuse. The arrangements or procedures must include the following:
(1) A compliance program that includes, at a minimum, all of the following elements:
(i) Written policies, procedures, and standards of conduct that articulate the organization's commitment to comply with all applicable requirements and standards under the contract, and all applicable Federal and State requirements.
(ii) The designation of a Compliance Officer who is responsible for developing and implementing policies, procedures, and practices designed to ensure compliance with the requirements of the contract and who reports directly to the Chief Executive Officer and the board of directors.
(iii) The establishment of a Regulatory Compliance Committee on the Board of Directors and at the senior management level charged with overseeing the organization's compliance program and its compliance with the requirements under the contract.
(iv) A system for training and education for the Compliance Officer, the organization's senior management, and the organization's employees for the Federal and State standards and requirements under the contract.
(v) Effective lines of communication between the compliance officer and the organization's employees.
(vi) Enforcement of standards through well-publicized disciplinary guidelines.
(vii) Establishment and implementation of procedures and a system with dedicated staff for routine internal monitoring and auditing of compliance risks, prompt response to compliance issues as they are raised, investigation of potential compliance problems as identified in the course of self-evaluation and audits, correction of such problems promptly and thoroughly (or coordination of suspected criminal acts with law enforcement agencies) to reduce the potential for recurrence, and ongoing compliance with the requirements under the contract.
(2) Provision for reporting within 30 calendar days all overpayments identified or recovered, specifying the overpayments due to potential fraud, to the State.
(3) Provision for prompt notification to the State when it receives information about changes in an enrollee's circumstances that may affect the enrollee's eligibility including all of the following:
(i) Changes in the enrollee's residence;
(ii) The death of an enrollee.
(4) Provision for notification to the State when it receives information about a change in a network provider's circumstances that may affect the network provider's eligibility to participate in the managed care program, including the termination of the provider agreement with the MCO, PIHP or PAHP.
(5) Provision for a method to verify, by sampling or other methods, whether services that have been represented to have been delivered by network providers were received by enrollees and the application of such verification processes on a regular basis.
(6) In the case of MCOs, PIHPs, or PAHPs that make or receive annual payments under the contract of at least $5,000,000, provision for written policies for all employees of the entity, and of any contractor or agent, that provide detailed information about the False Claims Act and other Federal and State laws described in section 1902(a)(68) of the Act, including information about rights of employees to be protected as whistleblowers.
(7) Provision for the prompt referral of any potential fraud, waste, or abuse that the MCO, PIHP, or PAHP identifies to the State Medicaid program integrity unit or any potential fraud directly to the State Medicaid Fraud Control Unit.
(8) Provision for the MCO's, PIHP's, or PAHP's suspension of payments to a network provider for which the State determines there is a credible allegation of fraud in accordance with § 455.23 of this chapter.
(b) Provider screening and enrollment requirements. The State, through its contracts with a MCO, PIHP, PAHP, PCCM, or PCCM entity must ensure that all network providers are enrolled with the State as Medicaid providers consistent with the provider disclosure, screening and enrollment requirements of part 455, subparts B and E of this chapter. This provision does not require the network provider to render services to FFS beneficiaries.
(c) Disclosures. The State must ensure, through its contracts, that each MCO, PIHP, PAHP, PCCM, PCCM entity, and any subcontractors:
(1) Provides written disclosure of any prohibited affiliation under § 438.610.
(2) Provides written disclosures of information on ownership and control required under § 455.104 of this chapter.
(3) Reports to the State within 60 calendar days when it has identified the capitation payments or other payments in excess of amounts specified in the contract.
(d) Treatment of recoveries made by the MCO, PIHP or PAHP of overpayments to providers. (1) Contracts with a MCO, PIHP, or PAHP must specify:
(i) The retention policies for the treatment of recoveries of all overpayments from the MCO, PIHP, or PAHP to a provider, including specifically the retention policies for the treatment of recoveries of overpayments due to fraud, waste, or abuse.
(ii) The process, timeframes, and documentation required for reporting the recovery of all overpayments.
(iii) The process, timeframes, and documentation required for payment of recoveries of overpayments to the State in situations where the MCO, PIHP, or PAHP is not permitted to retain some or all of the recoveries of overpayments.
(iv) This provision does not apply to any amount of a recovery to be retained under False Claims Act cases or through other investigations.
(2) Each MCO, PIHP, or PAHP requires and has a mechanism for a network provider to report to the MCO, PIHP or PAHP when it has received an overpayment, to return the overpayment to the MCO, PIHP or PAHP within 60 calendar days after the date on which the overpayment was identified, and to notify the MCO, PIHP or PAHP in writing of the reason for the overpayment.
(3) Each MCO, PIHP, or PAHP must report annually to the State on all overpayments identified or recovered.
(4) The State must use the results of the information and documentation collected in paragraph (d)(1) of this section and the report in paragraph (d)(3) of this section for setting actuarially sound capitation rates for each MCO, PIHP, or PAHP consistent with the requirements in § 438.4.
(e) Standards for provider incentive or bonus arrangements. The State, through its contract with the MCO, PIHP or PAHP, must require that incentive payment contracts between managed care plans and network providers meet the requirements as specified in §§ 438.3(i)(3) and (4).
(f) Applicability date. Paragraphs (a)(2), (d)(3) and (e) of this section apply to the first rating period for contracts with MCOs, PIHPs, or PAHPs beginning on or after 1 year from July 9, 2024.
§ 438.610   Prohibited affiliations.
(a) An MCO, PIHP, PAHP, PCCM, or PCCM entity may not knowingly have a relationship of the type described in paragraph (c) of this section with the following:
(1) An individual or entity that is debarred, suspended, or otherwise excluded from participating in procurement activities under the Federal Acquisition Regulation or from participating in nonprocurement activities under regulations issued under Executive Order No. 12549 or under guidelines implementing Executive Order No. 12549.
(2) An individual or entity who is an affiliate, as defined in the Federal Acquisition Regulation at 48 CFR 2.101, of a person described in paragraph (a)(1) of this section.
(b) An MCO, PIHP, PAHP, PCCM, or PCCM entity may not have a relationship with an individual or entity that is excluded from participation in any Federal health care program under section 1128 or 1128A of the Act.
(c) The relationships described in paragraph (a) of this section, are as follows:
(1) A director, officer, or partner of the MCO, PIHP, PAHP, PCCM. or PCCM entity.
(2) A subcontractor of the MCO, PIHP, PAHP, PCCM, or PCCM entity, as governed by § 438.230.
(3) A person with beneficial ownership of 5 percent or more of the MCO's, PIHP's, PAHP's, PCCM's, or PCCM entity's equity.
(4) A network provider or person with an employment, consulting or other arrangement with the MCO, PIHP, PAHP, PCCM, or PCCM entity for the provision of items and services that are significant and material to the MCO's, PIHP's, PAHP's, PCCM's, or PCCM entity's obligations under its contract with the State.
(d) If a State finds that an MCO, PIHP, PAHP, PCCM, or PCCM entity is not in compliance with paragraphs (a) and (b) of this section, the State:
(1) Must notify the Secretary of the noncompliance.
(2) May continue an existing agreement with the MCO, PIHP, PAHP, PCCM, or PCCM entity unless the Secretary directs otherwise.
(3) May not renew or otherwise extend the duration of an existing agreement with the MCO, PIHP, PAHP, PCCM, or PCCM entity unless the Secretary provides to the State and to Congress a written statement describing compelling reasons that exist for renewing or extending the agreement despite the prohibited affiliations.
(4) Nothing in this section must be construed to limit or otherwise affect any remedies available to the U.S. under sections 1128, 1128A or 1128B of the Act.
(e) Consultation with the Inspector General. Any action by the Secretary described in paragraphs (d)(2) or (3) of this section is taken in consultation with the Inspector General.
§ 438.700   Basis for imposition of sanctions.
(a) Each State that contracts with an MCO must, and each State that contracts with a PCCM or PCCM entity may, establish intermediate sanctions (which may include those specified in § 438.702) that it may impose if it makes any of the determinations specified in paragraphs (b) through (d) of this section. The State may base its determinations on findings from onsite surveys, enrollee or other complaints, financial status, or any other source.
(b) A State determines that an MCO acts or fails to act as follows:
(1) Fails substantially to provide medically necessary services that the MCO is required to provide, under law or under its contract with the State, to an enrollee covered under the contract.
(2) Imposes on enrollees premiums or charges that are in excess of the premiums or charges permitted under the Medicaid program.
(3) Acts to discriminate among enrollees on the basis of their health status or need for health care services. This includes termination of enrollment or refusal to reenroll a beneficiary, except as permitted under the Medicaid program, or any practice that would reasonably be expected to discourage enrollment by beneficiaries whose medical condition or history indicates probable need for substantial future medical services.
(4) Misrepresents or falsifies information that it furnishes to CMS or to the State.
(5) Misrepresents or falsifies information that it furnishes to an enrollee, potential enrollee, or health care provider.
(6) Fails to comply with the requirements for physician incentive plans, as set forth (for Medicare) in §§ 422.208 and 422.210 of this chapter.
(c) A State determines that an MCO, PCCM or PCCM entity has distributed directly, or indirectly through any agent or independent contractor, marketing materials that have not been approved by the State or that contain false or materially misleading information.
(d) A State determines that—
(1) An MCO has violated any of the other requirements of sections 1903(m) or 1932 of the Act, or any implementing regulations.
(2) A PCCM or PCCM entity has violated any of the other applicable requirements of sections 1932 or 1905(t)(3) of the Act, or any implementing regulations.
(3) For any of the violations under paragraphs (d)(1) and (2) of this section, only the sanctions specified in § 438.702(a)(3), (4), and (5) may be imposed.
§ 438.702   Types of intermediate sanctions.
(a) The types of intermediate sanctions that a State may impose under this subpart include the following:
(1) Civil money penalties in the amounts specified in § 438.704.
(2) Appointment of temporary management for an MCO as provided in § 438.706.
(3) Granting enrollees the right to terminate enrollment without cause and notifying the affected enrollees of their right to disenroll.
(4) Suspension of all new enrollment, including default enrollment, after the date the Secretary or the State notifies the MCO of a determination of a violation of any requirement under sections 1903(m) or 1932 of the Act.
(5) Suspension of payment for beneficiaries enrolled after the effective date of the sanction and until CMS or the State is satisfied that the reason for imposition of the sanction no longer exists and is not likely to recur.
(b) State agencies retain authority to impose additional sanctions under State statutes or State regulations that address areas of noncompliance specified in § 438.700, as well as additional areas of noncompliance. Nothing in this subpart prevents State agencies from exercising that authority.
§ 438.704   Amounts of civil money penalties.
(a) General rule. If the State imposes civil monetary penalties as provided under § 438.702(a)(1), the maximum civil money penalty the State may impose varies depending on the nature of the MCO's, PCCM or PCCM entity's action or failure to act, as provided in this section.
(b) Specific limits. (1) The limit is $25,000 for each determination under § 438.700(b)(1), (5), (6), and (c).
(2) The limit is $100,000 for each determination under § 438.700(b)(3) or (4).
(3) The limit is $15,000 for each beneficiary the State determines was not enrolled because of a discriminatory practice under § 438.700(b)(3). (This is subject to the overall limit of $100,000 under paragraph (b)(2) of this section).
(c) Specific amount. For premiums or charges in excess of the amounts permitted under the Medicaid program, the maximum amount of the penalty is $25,000 or double the amount of the excess charges, whichever is greater. The State must deduct from the penalty the amount of overcharge and return it to the affected enrollees.
§ 438.706   Special rules for temporary management.
(a) Optional imposition of sanction. If the State imposes temporary management under § 438.702(a)(2), the State may do so only if it finds (through onsite surveys, enrollee or other complaints, financial status, or any other source) any of the following:
(1) There is continued egregious behavior by the MCO, including but not limited to behavior that is described in § 438.700, or that is contrary to any requirements of sections 1903(m) and 1932 of the Act.
(2) There is substantial risk to enrollees' health.
(3) The sanction is necessary to ensure the health of the MCO's enrollees—
(i) While improvements are made to remedy violations under § 438.700.
(ii) Until there is an orderly termination or reorganization of the MCO.
(b) Required imposition of sanction. The State must impose temporary management (regardless of any other sanction that may be imposed) if it finds that an MCO has repeatedly failed to meet substantive requirements in sections 1903(m) or 1932 of the Act, or this subpart. The State must also grant enrollees the right to terminate enrollment without cause, as described in § 438.702(a)(3), and must notify the affected enrollees of their right to terminate enrollment.
(c) Hearing. The State may not delay imposition of temporary management to provide a hearing before imposing this sanction.
(d) Duration of sanction. The State may not terminate temporary management until it determines that the MCO can ensure that the sanctioned behavior will not recur.
§ 438.708   Termination of an MCO, PCCM or PCCM entity contract.
A State has the authority to terminate an MCO, PCCM or PCCM entity contract and enroll that entity's enrollees in other MCOs, PCCMs or PCCM entities, or provide their Medicaid benefits through other options included in the State plan, if the State determines that the MCO, PCCM or PCCM entity has failed to do either of the following:
(a) Carry out the substantive terms of its contract.
(b) Meet applicable requirements in sections 1932, 1903(m), and 1905(t) of the Act.
§ 438.710   Notice of sanction and pre-termination hearing.
(a) Notice of sanction. Except as provided in § 438.706(c), before imposing any of the intermediate sanctions specified in this subpart, the State must give the affected entity timely written notice that explains the following:
(1) The basis and nature of the sanction.
(2) Any other appeal rights that the State elects to provide.
(b) Pre-termination hearing —(1) General rule. Before terminating an MCO, PCCM or PCCM entity contract under § 438.708, the State must provide the entity a pre-termination hearing.
(2) Procedures. The State must do all of the following:
(i) Give the MCO, PCCM or PCCM entity written notice of its intent to terminate, the reason for termination, and the time and place of the hearing.
(ii) After the hearing, give the entity written notice of the decision affirming or reversing the proposed termination of the contract and, for an affirming decision, the effective date of termination.
(iii) For an affirming decision, give enrollees of the MCO, PCCM or PCCM entity notice of the termination and information, consistent with § 438.10, on their options for receiving Medicaid services following the effective date of termination.
§ 438.722   Disenrollment during termination hearing process.
After a State notifies an MCO, PCCM or PCCM entity that it intends to terminate the contract, the State may do the following:
(a) Give the entity's enrollees written notice of the State's intent to terminate the contract.
(b) Allow enrollees to disenroll immediately without cause.
§ 438.724   Notice to CMS.
(a) The State must give CMS written notice whenever it imposes or lifts a sanction for one of the violations listed in § 438.700.
(b) The notice must adhere to all of the following requirements:
(1) Be given no later than 30 days after the State imposes or lifts a sanction.
(2) Specify the affected MCO, the kind of sanction, and the reason for the State's decision to impose or lift a sanction.
§ 438.726   State plan requirement.
(a) The State plan must include a plan to monitor for violations that involve the actions and failures to act specified in this part and to implement the provisions of this part.
(b) A contract with an MCO must provide that payments provided for under the contract will be denied for new enrollees when, and for so long as, payment for those enrollees is denied by CMS under § 438.730(e).
§ 438.730   Sanction by CMS: Special rules for MCOs.
(a) Basis for sanction. A State may recommend that CMS impose the denial of payment sanction specified in paragraph (e) of this section on an MCO with a contract under this part if the agency determines that the MCO acts or fails to act as specified in § 438.700(b)(1) through (6).
(b) Effect of an agency determination. (1) The State's determination becomes CMS' determination for purposes of section 1903(m)(5)(A) of the Act unless CMS reverses or modifies it within 15 days.
(2) When the State decides to recommend imposing the sanction described in paragraph (e) of this section, this recommendation becomes CMS' decision, for purposes of section 1903(m)(5)(B)(ii) of the Act, unless CMS rejects this recommendation within 15 days.
(c) Notice of sanction. If the State's determination becomes CMS' determination under paragraph (b)(2) of this section, the State takes all of the following actions:
(1) Gives the MCO written notice of the nature and basis of the proposed sanction.
(2) Allows the MCO 15 days from the date it receives the notice to provide evidence that it has not acted or failed to act in the manner that is the basis for the recommended sanction.
(3) May extend the initial 15-day period for an additional 15 days if—
(i) The MCO submits a written request that includes a credible explanation of why it needs additional time.
(ii) The request is received by CMS before the end of the initial period.
(iii) CMS has not determined that the MCO's conduct poses a threat to an enrollee's health or safety.
(d) Informal reconsideration. (1) If the MCO submits a timely response to the notice of sanction, the State—
(i) Conducts an informal reconsideration that includes review of the evidence by a State agency official who did not participate in the original recommendation.
(ii) Gives the MCO a concise written decision setting forth the factual and legal basis for the decision.
(iii) Forwards the decision to CMS.
(2) The State's decision under paragraph (d)(1)(ii) of this section becomes CMS' decision unless CMS reverses or modifies the decision within 15 days from date of receipt by CMS.
(3) If CMS reverses or modifies the State decision, the agency sends the MCO a copy of CMS' decision.
(e) Denial of payment. (1) CMS, based upon the recommendation of the agency, may deny payment to the State for new enrollees of the MCO under section 1903(m)(5)(B)(ii) of the Act in the following situations:
(i) If a CMS determination that an MCO has acted or failed to act, as described in paragraphs (b)(1) through (6) of § 438.700, is affirmed on review under paragraph (d) of this section.
(ii) If the CMS determination is not timely contested by the MCO under paragraph (c) of this section.
(2) Under § 438.726(b), CMS' denial of payment for new enrollees automatically results in a denial of agency payments to the MCO for the same enrollees. (A new enrollee is an enrollee that applies for enrollment after the effective date in paragraph (f)(1) of this section.)
(f) Effective date of sanction. (1) If the MCO does not seek reconsideration, a sanction is effective 15 days after the date the MCO is notified under paragraph (c) of this section of the decision to impose the sanction.
(2) If the MCO seeks reconsideration, the following rules apply:
(i) Except as specified in paragraph (d)(2) of this section, the sanction is effective on the date specified in CMS' reconsideration notice.
(ii) If CMS, in consultation with the State, determines that the MCO's conduct poses a serious threat to an enrollee's health or safety, the sanction may be made effective earlier than the date of the agency's reconsideration decision under paragraph (d)(1)(ii) of this section.
(g) CMS' role. (1) CMS retains the right to independently perform the functions assigned to the State under paragraphs (a) through (d) of this section.
(2) At the same time that the State sends notice to the MCO under paragraph (c)(1) of this section, CMS forwards a copy of the notice to the OIG.
(3) CMS conveys the determination described in paragraph (b) of this section to the OIG for consideration of possible imposition of civil money penalties under section 1903(m)(5)(A) of the Act and part 1003 of this title. In accordance with the provisions of part 1003, the OIG may impose civil money penalties on the MCO in addition to, or in place of, the sanctions that may be imposed under this section.
§ 438.802   Basic requirements.
FFP is available in expenditures for payments under an MCO contract only for the periods during which the contract—
(a) Meets the requirements of this part; and
(b) Is in effect.
§ 438.806   Prior approval.
(a) Comprehensive risk contracts. FFP is available under a comprehensive risk contract only if all of the following apply:
(1) CMS has confirmed that the contractor meets the definition of an MCO or is one of the entities described in paragraphs (b)(2) through (5) of § 438.3.
(2) The contract meets all the requirements of section 1903(m)(2)(A) of the Act, the applicable requirements of section 1932 of the Act, and the provisions of this part.
(b) MCO contracts. Prior approval by CMS is a condition for FFP under any MCO contract that extends for less than one full year or that has a value equal to, or greater than, the following threshold amounts:
(1) For 1998, the threshold is $1,000,000.
(2) For subsequent years, the amount is increased by the percentage increase in the consumer price index for all urban consumers.
(c) FFP is not available in an MCO contract that does not have prior approval from CMS under paragraph (b) of this section.
§ 438.808   Exclusion of entities.
(a) General rule. FFP is available in payments under MCO contracts or PIHP, PAHP, PCCM, or PCCM entity contracts under a section 1915(b)(1) of the Act waiver only if the State excludes from the contracts any entities described in paragraph (b) of this section.
(b) Entities that must be excluded. (1) An entity that could be excluded under section 1128(b)(8) of the Act as being controlled by a sanctioned individual.
(2) An entity that has a substantial contractual relationship as defined in § 431.55(h)(3) of this chapter, either directly or indirectly, with an individual convicted of certain crimes as described in section 1128(b)(8)(B) of the Act or an individual described in § 438.610(a) and (b).
(3) An entity that employs or contracts, directly or indirectly, for the furnishing of health care, utilization review, medical social work, or administrative services, with one of the following:
(i) Any individual or entity described in § 438.610(a) and (b).
(ii) Any individual or entity that would provide those services through an individual or entity described in § 438.610(a) and (b).