Medicare Managed Care Manual 
Chapter 4 - Benefits and Beneficiary Protections 
 
Table of Contents 
(Rev. 121, Issued: 04-22-16) 
 
Transmittals for Chapter 4 
 
10  Introduction 
10.1  General Requirements 
10.2  Basic Rule 
10.2.1  Inpatient Stay During Which Enrollment Ends  
10.2.2  Exceptions to Requirement for MA plans to Cover FFS Benefits 
10.3  Types of Benefits 
10.4  Hospice Coverage 
10.5  Federal Medicare Requirements Related to Uniform Benefits and Non-
Discrimination 
10.5.1  Uniformity 
10.5.2  Anti-Discrimination 
10.5.3  Review for Discrimination and Steering 
10.5.4  Confidentiality 
10.6  Multiple Plan Offerings and Benefit Caps 
10.7  Clinical Trials 
10.7.1  Payment for Services 
10.7.2  Payment for Investigational Device Exemption (IDE) Studies 
10.7.3  Payment for Clinical Studies Approved Under Coverage with 
Evidence 
10.7.4  Claims Processing Instructions for Clinical Studies 
10.8  Drugs Covered Under Original Medicare Part B 
10.9  Return to Enrollees Home Skilled Nursing Facility (SNF) 
10.10  Therapy Caps and Exceptions 
10.11  Transplant Services 
10.12  Durable Medical Equipment, Prosthetics, Orthotics and Supplies 
10.12.1  Designation of DME Providers/Suppliers 
10.12.2  Specifying Brands or Manufacturers of DME 
10.12.3  Brands/Manufacturers of DME not Subject to Limitation 
10.12.4  Prosthetics and Orthotics 
10.12.5  DMEPOS Competitive Bid Program 
10.13  Skilled Nursing Facility (SNF) Coverage  10.14  No Dollar Limits on Provision of Part B Drugs 
10.15  Part D Rules for MA Plans 
10.16  Medical Necessity 
20  Ambulance, Emergency, Urgently Needed and Post-Stabilization  
20.1  Ambulance Services 
20.2  Definitions of Emergency and Urgently Needed Services 
20.3  MAO Responsibilities for Coverage of Emergency Services 
20.4  Stabilization of an Emergency Medical Condition 
20.5  Post-Stabilization Care Services 
20.5.1  Definition of Post-Stabilization 
20.5.2  MAO Financial Responsibility 
20.5.3  End of Post-Stabilization 
20.5.4  Cost-Sharing 
30  Supplemental Benefits 
30.1  Definition of Supplemental Benefit 
30.2  Supplemental Benefits Extending Original Medicare Benefits 
30.3  Examples of Eligible Supplemental Benefits 
30.4  Items and Services Not Eligible as Supplemental Benefits 
40  Over-the-Counter (OTC) Benefits 
40.1  Overview of OTC Benefit 
40.2  Access to OTC Benefits 
40.3  Payment Methods 
40.3.1  Special Rules for Manual Reimbursement 
40.4  Items and Their OTC Status 
50  Cost-sharing Guidance 
50.1  Guidance on Acceptable Cost-sharing  
50.2  Cost-sharing for In Network Preventive Services 
50.3  Total Beneficiary Cost (TBC) 
50.4  Single Deductible Rules for Regional and Local PPOs 
50.5  Guidance on Other Enrollee Out-of-Pocket Liability 
50.6  Cost Sharing for Dual-Eligible Enrollees Requiring an Institutional 
Level of Care 
60  Meaningful Difference 
70  Non-Renewal Based on Low Enrollment 
80  Value-Added Items and Services (VAIS) 
80.1  Definition and Requirements 
80.2  Explanatory Examples 
90  National and Local Coverage Determinations  90.1  Overview 
90.2  Definitions Related to National Coverage Determinations (NCDs) 
90.3  General Rules for NCDs 
90.3.1  When the Significant Cost Criterion is Not Met 
90.3.2  When the Significant Cost Criterion is Met 
90.3.3  Payment for NCD Items and Services 
90.4  Local Coverage Determinations (LCDs) 
90.4.1  MAC with Exclusive Jurisdiction over a Medicare Item or 
Service 
90.4.2  Multiple A/B MACs with Different Policies 
90.5  Creating New Guidance 
90.6  Sources for Obtaining Information 
100  Rewards and Incentives 
100.1  Health Related Services and Activities 
100.2  Non-discrimination 
100.3  Offering Rewards In Connection With the Entire Service or Activity 
100.4  Valuing Rewards and Incentives 
100.5  Permissible Rewards and Incentives 
100.6  Marketing RI Programs 
100.7  Reporting to CMS 
110  Access to and Availability of Services 
110.1  Access and Availability Rules for Coordinated Care Plans 
110.1.1  Provider Network Standards 
110.1.2  Significant Changes to Networks 
110.1.2.1  General 
110.1.2.2  Notification to CMS 
110.1.2.3  Notification to Enrollees 
110.1.2.4  MAO/Provider Notification 
110.1.2.5  Significant Network Change Special Election Period 
(SEP) 
110.1.3  Services for Which MA Plans Must Pay Non-contracted  
110.2  Provider Directories 
110.2.1  General 
110.2.2  Provider Directory Updates 
110.2.3  Provider Directory Dissemination and Timing 
110.2.4  Online Provider Directory Requirements 
110.2.5  Provider Directory Disclaimers 
110.2.6  Provider Directory Submission to CMS  110.3  Health Maintenance Organization (HMO) and HMO Point of Service 
(POS) Coverage and Access 
110.4  Preferred Provider Organization (PPO) Coverage and Access 
110.5  Special Rules for RPPOs 
110.5.1  Access through Non-contracted Providers 
110.5.2  Essential Hospitals 
110.6  Ensuring Coordination of Care 
110.7  Access, Gatekeeper and Cost-Sharing by Plan Type 
120  Coordination of Medicare Benefits with Employer/Union Group 
120.1  General Rule 
120.2  Requirements, Rights, and Beneficiary Protections 
120.3  Employer/Union Plans 
130  Medicare Secondary Payer (MSP) Procedures 
130.1  Basic Rule 
130.2  Responsibilities of the MAO 
130.3  Medicare Benefits Secondary to Group Health Plans (GHPs) and Large 
Group Health Plans (LGHPs) and in Settlements 
130.4  Collecting From Other Entities 
130.5  Collecting From Other Insurers or the Enrollee 
130.6  Collecting From Group Health Plans (GHPs) and Large Groups 
130.7  Medicare as Secondary Payer (MSP) Rules and State Laws 
140  Service Area 
140.1  Service Area Defined 
140.2  Factors That Influence Service Area Approvals 
140.3  Partial County Service Areas 
140.3.1  Necessity 
140.3.2  Non-Discriminatory 
140.3.3  Best Interests of Beneficiaries 
150  Benefits during Disasters and Catastrophic Events 
160  Beneficiary Protections Related to Plan-Directed Care 
170  Balance Billing 
170.1  Definitions 
170.2  Balance Billing by Provider Type 
180  Information on Advance Directives 
180.1  Definition 
180.2  Basic Rule 
180.3  State Law Primary 
180.4  Content of Enrollee Information and Other MA Obligations 
180.5  Incapacitated Enrollees  180.6  Community Education Requirements 
180.7  MAO Rights 
180.8  Anti-discrimination Rights 
190  Part C Explanation of Benefits (EOB) 
200  Educating and Enrolling Members in Medicaid and Medicare Savings 
200.1  Defining Guidance 
200.2  Relationship to D-SNP Eligibility/Enrollment 
200.3  Relationship to Dual Eligible Demonstration Programs 
200.4  Scope of Financial Assistance Programs 
200.5  Targeting Membership 
200.6  Required Elements of Education/Enrollment Assistance Programs 
200.7  CMS Oversight 
   
PART I: BENEFITS 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
Part I of this chapter provides key information for Medicare Advantage Organizations 
(MAOs) regarding Medicare Advantage (MA) benefits for use in designing Plan Benefit 
Packages (PBP).  Part II of this chapter, which begins at section 110, provides 
information on beneficiary protections, and includes topics such as rules for plan 
renewals, coordination of benefits, and educating and enrolling individuals in Medicaid 
and Medicare Savings Programs. 
 
10  Introduction 
(Rev. 120, Issued: 01-16-15, Effective: 01-01-15, Implementation: 01-01-15) 
 
10.1  General Requirements 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
These guidelines reflect CMS current interpretation of the provisions of the Medicare 
Advantage statute and regulations (chapter 42 of the Code of Federal Regulations, part 
422) pertaining to benefits and beneficiary protections.  This guidance is subject to 
change as technology and industry practices in plan design and administration evolve and 
as CMS gains additional experience administering the MA program. 
 
This chapter is governed by regulations set forth at 42 CFR 422, Subpart C, and is 
generally limited to the benefits offered under Medicare Part C of the Social Security 
Act.  Guidance on cost plans may be found in Subpart F of chapter 17 of the Medicare 
Managed Care Manual (MMCM).  Guidance on Part D requirements may be found in the 
Prescription Drug Benefit Manual located at: http://www.cms.gov/Medicare/Prescription-
Drug-Coverage/PrescriptionDrugCovContra/PartDManuals.html.  Part D prescription 
drug coverage is defined at 42 CFR 423.100 and in chapter 5 of the Prescription Drug 
Benefit Manual. 
 
10.2  Basic Rule 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
An MAO offering an MA plan must provide enrollees in that plan with all Part A and Part 
B original Medicare services, if the enrollee is entitled to benefits under both parts, and 
Part B services if the enrollee is a grandfathered Part B only enrollee. The MAO fulfills 
its obligation of providing original Medicare benefits by furnishing the benefits directly, 
through arrangements, or by paying for the benefits on behalf of enrollees.  
  
Basic benefits must be furnished through providers meeting requirements that are 
specified at 42 CFR 422.204(b)(3) and discussed more fully in chapter 6 of this manual, 
Relationships with Providers, which may be found at: 
http://www.cms.gov/Regulations-and-
Guidance/Guidance/Manuals/Downloads/mc86c06.pdf.    
Administration of the Medicare program is governed by title XVIII of the Social Security 
Act (the Act). Under the Medicare program, the scope of benefits available to eligible 
beneficiaries is prescribed by law and divided into several main parts. Part A is the 
hospital insurance program and Part B is the voluntary supplementary medical insurance 
program. 
 
The scope of the benefits under Part A and Part B is defined in the Act. Part A and Part B 
benefits are discussed in sections 1812  and 1832 of the Act, respectively, while section 
1861 of the Act lays out the definition of medical and other health services. Specific 
health care services must fit into one of these benefit categories, and not be otherwise 
excluded from coverage under the Medicare program (see 1862 for exclusions). 
 
In general, the Act lists categories of items and services covered by Medicare, although 
Congress occasionally adds specific services to be covered by Medicare. Some categories 
are defined more broadly than others; for example, the Act includes hospital outpatient 
services furnished incident to physicians services (1861(s)(2)(B)) but also specifically 
includes diabetes screening tests (1861(s)(2)(Y)). The Secretary has the authority to 
make determinations about which specific items and services, within categories, may be 
covered under the Medicare program. Further interpretation is provided in the Code of 
Federal Regulations and CMS guidance. 
 
In general, Medicare coverage and payment is contingent upon a determination that: 
 
  A service is in a covered benefit category; 
 
  A service is not specifically excluded from Medicare coverage by the Act; and 
 
  The item or service is reasonable and necessary for the diagnosis or treatment of an 
illness or injury, to improve functioning of a malformed body member, or is a 
covered preventive service. 
 
These criteria are codified through rulemaking in the Code of Federal Regulations and/or 
applied in manual guidance, or are applied through coverage determinations (see section 
90 of this chapter). In addition, beneficiaries under part B are entitled to receive an 
annual wellness visit, certain preventive services for which no cost-sharing may be 
charged, and additional preventive services.  
 
Several original Medicare covered benefits and services are covered only for specific 
benefit periods, e.g., inpatient hospital services, skilled nursing facility services, and 
inpatient psychiatric hospital services. While an MA plan may offer additional coverage 
as a supplemental benefit, it may not limit the original Medicare coverage. 
 
MA plans must provide their enrollees with all basic benefits covered under original 
Medicare. Consequently, plans may not impose limitations, waiting periods or exclusions 
from coverage due to pre-existing conditions that are not present in original Medicare.   
The following requirements apply with respect to the rule that MAOs must cover the 
costs of original Medicare benefits:  
 
  Benefits: MA plans must provide or pay for medically necessary Part A (for those 
entitled) and Part B covered items and services. 
 
  Access: MA enrollees must have access to all medically necessary Part A and Part B 
services. However, MA plans are not required to provide MA enrollees the same 
access to providers that is provided under original Medicare (see accessibility rules 
for MA plans under section 110 of this chapter).  
 
  Cost-Sharing: With the exception of the services listed at 42 CFR 422.100(j) and 
certain preventive services graded A or B by the United States Preventive Services 
Task Force and covered by original Medicare without cost-sharing (co-insurance), 
MA plans may impose cost-sharing for a particular item or service that is above or 
below the original Medicare cost-sharing for that service, provided the overall cost-
sharing under the plan is actuarially equivalent to that under original Medicare and 
the plan cost-sharing structure does not discriminate against sicker beneficiaries, as 
discussed in sections 10.5.2 and 10.5.3 of this chapter. MA plans may require 
enrollees to pay higher cost-sharing amounts for services furnished out-of-network. 
 
  Billing and Payment: MA plans need not follow original Medicare claims processing 
procedures. MA plans may create their own billing and payment procedures as long 
as providers  whether contracted or not  are paid accurately, timely and with an 
audit trail. MA plans may not require enrollees to pay providers  whether contracted 
or not  for original Medicare services and then be reimbursed by the plan. See 
section 110.1.3 of this chapter for rules governing payment to non-contracted 
providers for original Medicare non-emergent services. 
 
10.2.1  Inpatient Stay During Which Enrollment Ends 
(Rev. 120, Issued: 01-16-15, Effective: 01-01-15, Implementation: 01-01-15) 
 
MAOs must continue to cover, through discharge, inpatient services of a non-plan 
enrollee if the individual was an enrollee at the beginning of the inpatient stay. Note that 
incurred non-inpatient services are paid by original Medicare or the new MAO the 
enrollee joined as of the effective date of the new coverage. 
 
Enrollee cost-sharing for the inpatient hospital stay is based on the cost-sharing amounts 
as of the entry date into the hospital. 
  
If the enrollee is in a SNF in December and in an MAO that does not require a prior 
qualifying 3-day hospital stay and then joins original Medicare on January 1, the stay 
continues to be considered a covered stay (if medically required).  
 
10.2.2  Exceptions to Requirement for MA plans to Cover FFS Benefits  (Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
The following circumstances are exceptions to the rule that MAOs must cover the costs 
of original Medicare benefits: 
 
  Hospice: Original Medicare (rather than the MAO) will pay the hospice for the 
services received by an enrollee who has elected hospice while enrolled in the plan. 
For detailed information about services furnished to an enrollee who has elected 
hospice care, see section 10.4 below.  
 
  Clinical trials: Original Medicare pays for the costs of routine services provided to an 
MA enrollee who joins a qualifying clinical trial. MA plans pay the enrollee the 
difference between original Medicare cost-sharing incurred for qualifying clinical 
trial items and services and the MA plans in-network cost-sharing for the same 
category of items and services. For further information on coverage and payment of 
clinical trials in MA plans, see section 10.7 below. 
 
  Inpatient stay during which MA enrollment begins: (42 CFR  422.318) If a Medicare 
beneficiary is in an inpatient stay and his enrollment in an MA plan takes effect after 
the stay begins, but prior to discharge from that stay: 
 
  Original Medicare is responsible for the costs of that inpatient stay; and 
o
 
  The beneficiary is responsible for payment of cost-sharing as required under 
o
original Medicare.  
 
In addition to providing original Medicare benefits, the MAO also must furnish, arrange, 
or pay for supplemental benefits and prescription drug benefits covered under the plan. 
 
CMS reviews and approves an MAOs coverage of benefits by ensuring compliance with 
requirements described in this manual, including those outlined in this chapter, chapter 8,  
Payments to Medicare Advantage Organizations, and other applicable CMS guidance, 
such as that contained in the annual Call Letter. 
 
10.3  Types of Benefits 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
Basic benefits: All MA plans must offer and identify in plan bids all medically necessary 
Medicare Part A and Part B services, including Part B prescription drugs, as basic 
benefits. 
 
Part D prescription drug benefits: MA plans may choose to offer Part D benefits as 
described at 42 CFR 423 and in chapter 5 of the Prescription Drug Benefit Manual. 
 
Supplemental benefits: MA plans may choose to offer some benefits to enrollees in 
addition to the covered Medicare Part A and Part B (and Part D, as applicable) benefits  they are required to offer if the item or service also meets the criteria described in 
sections 30 and 40 of this chapter. 
 
Supplemental benefits are further classified as either mandatory or optional: 
 
Mandatory supplemental benefits are benefits not covered under Part A, Part B, or Part 
D but are covered by the MAO for every person enrolled in the MA plan. Mandatory 
supplemental benefits are paid for either in full, directly by, or on behalf of, MA enrollees 
by premiums and cost-sharing, or through the application of rebate dollars. MAOs may 
not impose waiting periods on mandatory supplemental benefits. An MA Medical Savings 
Account (MSA) plan may not provide mandatory supplemental benefits. 
 
Optional supplemental benefits are benefits not covered under Part A, Part B, or Part D, 
but are offered uniformly to all enrollees. Enrollees may choose to pay extra to receive 
coverage under the optional supplemental benefit. The optional supplemental benefit is 
paid for directly by the enrollee or on behalf of the enrollee through an additional 
premium and cost-sharing. MA plans may offer their enrollees a group of services as one 
optional supplemental benefit, offer optional supplemental services individually, or offer 
a combination of group and individual optional supplemental services. MA plan enrollees 
choose whether to elect and pay for any particular optional supplemental benefit offered 
under the MA plan. 
 
Rebate dollars may not be applied toward optional supplemental benefits. An MA plan 
may not offer as an optional supplemental benefit reduced cost-sharing for original 
Medicare benefits (42 CFR 422.102(a)(4)). An MA plan may not list a dual eligible 
beneficiarys State Medicaid wraparound benefits as either a mandatory or optional 
supplemental benefit. 
 
MA MSA plans are permitted to offer optional supplemental benefits, provided that the 
MSA plan does not offer an optional supplemental benefit that covers expenses that count 
toward the annual MSA deductible. 
 
Optional supplemental benefits must be offered: (1) at the beginning of the contract year 
to all MA plan enrollees and (2) at the time of initial enrollment to new enrollees who 
enroll during the contract year. 
The MA plan may then: 
 
  Continuously offer each optional supplemental benefit uniformly to all enrollees for 
the remainder of the contract year; or 
 
  Choose to place a time limit of at least 30 consecutive days starting from the enrollee 
effective date during which a new enrollee can select any particular optional 
supplemental benefit offered by the MA plan. After the enrollees 30-day selection 
period ends, the optional benefits may be closed to that enrollee for the rest of that 
contract year during which the beneficiary remains continuously enrolled. 
  Although MA plans may limit the availability of optional supplemental benefits to current 
enrollees as described above, enrollees may voluntarily drop or discontinue optional 
supplemental benefits at any time during the contract year upon proper advance notice to 
the MA plan. An enrollee who drops an optional supplemental benefit through proper 
advance notice as determined by the MAO, typically 30 days, need not pay further 
monthly premiums for the optional supplemental benefit. Furthermore, if s/he paid a 
complete annual premium for the optional supplemental benefit, s/he is entitled to a pro-
rated refund of unpaid premium for the remaining portion of the year. 
 
Chapter 2 of the MMCM, Enrollment and Disenrollment, linked at 
http://www.cms.gov/Medicare/Eligibility-and-
Enrollment/MedicareMangCareEligEnrol/index.html?redirect=/MedicareMangCareElig
Enrol/, provides the requirements for an involuntary disenrollment of an enrollee from an 
MA plan when that enrollee fails to make timely payments of premium for optional 
supplemental benefits. 
 
MA plans may impose waiting periods for optional supplemental benefits that require 
enrollees to have the specified coverage for a period of time before utilization. However, 
MA plans that choose to impose waiting periods must describe the details, including the 
length of the waiting period, in their annual bid as well as include the information in any 
relevant marketing materials. 
 
10.4  Hospice Coverage 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
As defined in 42 CFR 422.320, MA plans must inform each enrollee eligible for hospice 
care about its availability. This is true whether a Medicare hospice program is located 
within the plan's service area or if it is common practice to refer patients to hospice 
programs outside the plans service area. 
 
An MA enrollee who elects hospice care, but chooses not to disenroll from the plan, is 
entitled to continue to receive through the plan any MA benefits other than those that are 
the responsibility of the hospice. Under such circumstances, the MA plan is paid a 
reduced capitation rate for that enrollee by CMS and the MA plan is responsible for 
continued coverage of supplemental benefits. CMS pays: (a) the hospice program for 
hospice care furnished to the enrollee and (b) the MA plan, providers, and suppliers for 
other Medicare-covered services furnished to the enrollee through the original Medicare 
program, subject to the usual rules of payment. 
 
Hospice coverage is effective immediately on the date of election; the reduced rate paid 
to the MA plan begins the next month (42 CFR 422.320).  
 
Table I below summarizes the cost-sharing and provider payments for services furnished 
to an MA plan enrollee who elects hospice. 
 
Table I: Payments for Services Furnished to an Enrollee who has Elected Hospice  Enrollee Coverage  Payments to 
Type of Services  Enrollee Cost-sharing 
Choice  Providers 
Original Medicare cost- Original 
Hospice program   Hospice program  
sharing  Medicare 
MA plan cost-sharing, 
Original 
if enrollee follows MA 
Medicare2 
plan rules3 
Non-hospice care1, Parts  MA plan or original 
Original Medicare cost-
A & B  Medicare  
sharing, if enrollee  Original 
does not follow MA  Medicare 
plan rules3 
Non-hospice care1, Part  MA plan (if 
MA plan cost-sharing  MAO 
D  applicable) 
Supplemental   MA plan  MA plan cost-sharing  MAO 
 
Notes:  
 
1)  The term hospice care refers to original Medicare items and services related to the 
terminal illness for which the enrollee entered the hospice. The term non-hospice 
care refers either to services not covered by original Medicare or to services not 
related to the terminal condition for which the enrollee entered the hospice. 
 
2)  If the enrollee chooses original Medicare for coverage of covered, non-hospice-care, 
original Medicare services and also follows MA plan requirements, then, the 
enrollee pays plan cost-sharing and original Medicare pays the provider. The MA 
plan must pay the provider the difference between original Medicare cost-sharing 
and plan cost-sharing, if applicable. 
 
3)  An HMO enrollee who chooses to receive services out of network has not followed 
plan rules and therefore is responsible to pay FFS cost-sharing; a PPO enrollee who 
receives services out of network has followed plan rules and is only responsible for 
plan cost-sharing. The enrollee need not communicate to the plan in advance his/her 
choice of where services are obtained. 
 
Please see the following resources for additional information: 
 
  The Social Security Act, section 1853(h)(2)(B); and 
 
  The Medicare Claims Processing Manual, chapter 11 - Processing Hospice Claims, 
section 30.4 
 
10.5  Federal Medicare Requirements Related to Uniform Benefits and 
Non-Discrimination 
(Rev. 120, Issued: 01-16-15, Effective: 01-01-15, Implementation: 01-01-15) 
 
10.5.1  Uniformity  (Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
The following rules apply to any MA plan, regardless of plan type, and to any category of 
benefit  basic, mandatory supplemental, and optional supplemental. 
 
  All plan benefits must be offered uniformly to all enrollees residing in the service 
area of the plan; 
 
  When an MA plan has an authorized service area with one or more approved 
segments, as defined in 42 CFR 422.2, the MA plan may vary premiums and cost-
sharing by segment, but the premium and cost-sharing must be uniform within each 
segment. Furthermore, plan benefits must be uniformly provided throughout the 
authorized service area of the plan, including any segments in the service area; 
 
  The uniform premium requirement prohibits plans from offering nominal discounts to 
those enrollees electing to pay premiums electronically; 
 
  All plans must offer to, but may not require of, their enrollees: 
 
  The option of having their premiums deducted from their Social Security check or 
o
benefit; 
 
  The option of having their premiums paid by an electronic transfer mechanism 
o
(such as automatic charges of an account at a financial institution or a credit or 
debit card account); and 
 
  The option of paying their premium by check. 
o
 
10.5.2  Anti-Discrimination 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
An MAO may not deny, limit, or condition enrollment to individuals eligible to enroll in 
an MA plan offered by the organization on the basis of any factor that is related to health 
status, including, but not limited to the following: 
 
  Claims experience; 
 
  Receipt of health care; 
 
  Medical history and medical condition including physical and mental illness; 
 
  Genetic information; 
 
  Evidence of insurability, including conditions arising out of acts of domestic 
violence; or 
    Disability. 
 
Additionally, an MAO must: 
 
  Comply with the provisions of section 1557 of the Affordable Care Act, title VI of the 
Civil Rights Act of 1964, the Age Discrimination Act of 1975, section 504 of the 
Rehabilitation Act of 1973, title II of the Americans with Disabilities Act (ADA) of 
1990, and the Genetic Information Nondiscrimination Act of 2008; and  
 
  Have procedures in place for each of its MA plans to ensure that enrollees are not 
discriminated against in the delivery of health care services, consistent with the 
benefits covered in their policy, based on race, ethnicity, national origin, religion, 
gender, age, mental or physical disability, sexual orientation, genetic information, or 
source of payment. Discrimination based on source of payment means, for 
example, that MA providers cannot refuse to serve enrollees because they receive 
assistance with Medicare cost-sharing from a State Medicaid program. 
 
However, there are three situations in which enrollment in an MA plan may be denied 
based on the presence or absence of a medical condition: 
 
  To a person who does not fulfill the eligibility criteria for enrollment in a Special 
Needs Plan (SNP), under the circumstances mentioned in chapter 16b of the MMCM, 
Special Needs Plans, at:https://www.cms.gov/Regulations-and-
Guidance/Guidance/Manuals/Downloads/mc86c16b.pdf;  
 
  To a person with end-stage renal disease (ESRD), under the circumstances mentioned 
in chapter 2 of the MMCM, Enrollment and Disenrollment, at: 
http://www.cms.gov/Medicare/Eligibility-and-
Enrollment/MedicareMangCareEligEnrol/index.html?redirect=/MedicareMangCareEl
igEnrol/; and 
 
  To a person receiving hospice benefits prior to completing an enrollment request for 
an MSA plan. Refer to chapter 2 of the MMCM, Enrollment and Disenrollment at: 
http://www.cms.gov/Medicare/Eligibility-and-
Enrollment/MedicareMangCareEligEnrol/index.html?redirect=/MedicareMangCareEl
igEnrol/ 
 
Additional information about Federal law and regulations related to discrimination may 
be found at the following sites: 
 
Age 
HHS OCR Page on Age Discrimination 
  http://www.hhs.gov/ocr/civilrights/understanding/age/index.html 
 
Race, color, national origin 
HHS OCR Page on Discrimination Based on Race, Color, and National Origin    http://www.hhs.gov/ocr/civilrights/understanding/race/index.html  
 
Guidance to Federal Financial Assistance Recipients Regarding Title VI Prohibition 
Against National Origin Discrimination Affecting Limited English Proficient Persons 
  http://www.hhs.gov/ocr/civilrights/resources/specialtopics/lep/hhslepguidancepdf.pdf  
 
The National Culturally and Linguistically Appropriate Services (CLAS) Standards in 
Health and Health Care 
  http://minorityhealth.hhs.gov/templates/browse.aspx?lvl=2&lvlID=15 
 
Medical history/history of mental illness, claims experience, evidence of insurability, 
genetic information 
HHS Health Information Privacy Page 
  http://www.hhs.gov/ocr/privacy/hipaa/understanding/special/genetic/  
 
DOL HIPPA Nondiscrimination Requirements 
  http://www.dol.gov/ebsa/faqs/faq_hipaa_ND.html  
 
Disability  
HHS OCR Page on Disability Rights 
  http://www.hhs.gov/ocr/civilrights/understanding/disability/ 
 
Medicare Page on Resources for People with Disabilities  
  http://www.medicare.gov/people-like-me/disability/disability.html 
 
DOJ Civil Rights Division Page on the Americans with Disabilities Act  
  http://www.ada.gov/ 
 
Medicare Provider Applicants 
HHS OCR Page on Medicare Provider Applicants 
  http://www.hhs.gov/ocr/civilrights/clearance/index.html 
 
10.5.3  Review for Discrimination and Steering 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
CMS reviews and approves MA PBPs based on statutes, regulations, and policy 
guidelines contained in this manual and other CMS instructions. Review is to ensure that: 
 
  An MAO provides Medicare-covered services that meet CMS guidelines under 
original Medicare; 
 
  An MAO is responsible for how its downstream entities present the MAO, the MA 
plan, and its benefits. If the downstream entity offers other items or services, not part 
of the MA PBP, then they must not reference the MA plan or in any way characterize 
such items or services as benefits covered or offered by the MA plan.  
    An MAO does not offer a cost-sharing structure or plan benefits that: 
 
  Condition eligibility for a supplemental benefit on utilization. For example, a 
o
plan may not condition the offering of a gym benefit based on an enrollee 
meeting minimal gym attendance requirements; 
 
  Promote discrimination; 
o
 
  Discourage enrollment; 
o
 
  Encourage disenrollment; 
o
 
  Steer specific subsets of Medicare beneficiaries to particular MA plans (with 
o
the exception of SNPs);  
 
  Inhibit access to services; and  
o
 
  Design cost-sharing differentials in such a way as to unduly limit choice or 
o
availability to the beneficiary. An MAO:  
 
  May not, for example, charge higher copays for all providers in the 
o
western portion of the county while charging lower co-payments for 
providers in the eastern portion of the county; 
 
  As indicated in section 50.1 below, must clearly disclose any tiered cost-
o
sharing to its enrollees; and 
 
  May not design a plan with supplemental benefits that only appeal to 
o
healthier beneficiaries. 
 
  Benefit designs meet other MA program requirements. 
o
 
Note: Section 50.1 below contains general guidance on acceptable cost-sharing. The anti-
discrimination prohibitions in this section apply to both original Medicare, mandatory 
supplemental, and optional supplemental benefits. 
 
An MAO must comply with all Federal laws and regulations designed to prevent or 
ameliorate fraud, waste, and abuse including, but not limited to, applicable provisions of 
the Federal criminal law, the False Claims Act (31 U.S.C. 3729 et seq.), the anti-kickback 
statute (section 1128B(b)) of the Act, and HIPAA administrative simplification rules at 
45 CFR parts 160, 162 and 164. 
 
10.5.4  Confidentiality 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
  MAOs must establish procedures to ensure the confidentiality and accuracy of all 
enrollee records, including medical records, as well as other health and enrollment 
information the MAO maintains. MAOs must ensure that they:  
 
  Abide by all Federal and state laws regarding confidentiality and disclosure of 
medical records or other health and enrollment information, including the HIPAA 
privacy rule at 45 CFR part 164 that require MAOs to report the loss of protected 
health information without delay and, in cases affecting 500 or more individuals, no 
later than 60 days after discovery. 
 
  The MAO must safeguard the privacy of any information that identifies a particular 
enrollee and have procedures that specify: 
 
  For what purpose(s) the information will be used within the organization; and 
o
 
  To whom and for what purpose(s) it will disclose the information outside the 
o
organization; 
 
  Ensure that medical information is released only in accordance with applicable 
Federal or state law or pursuant to court orders or subpoenas; 
 
  Maintain the records and information in an accurate and timely manner; and 
 
  Ensure timely access by enrollees to the records and information that pertain to them. 
 
For purposes of CMS audits of risk adjustment data, MAO network providers and 
deemed contracted providers (of PFFS plans) must be required, under their contracts or 
the plans Terms and Conditions of Payment, to provide medical records requested by the 
MAO. 
 
Medical records from providers also may be used by MAOs for the following purposes: 
 
  Advance determinations of coverage;  
 
  Plan coverage;  
 
  Medical necessity; 
 
  Proper billing; 
 
  Quality reporting; 
 
  Fraud and abuse investigations; and 
 
  Plan initiated internal risk adjustment validation. 
  To encourage providers to submit enrollee medical records to the plan, an MAO may 
choose to send staff to assist in the record collection or to reimburse providers for the 
costs associated with furnishing the records. MAOs are prohibited from using medical 
record reviews to delay payments to providers. Both required and voluntary provision of 
medical records by providers must be consistent with HIPAA privacy statute and 
regulations (http://www.hhs.gov/ocr/privacy/). 
 
10.6- Multiple Plan Offerings and Benefit Caps 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
An MAO may offer more than one MA plan in the same service area (though each plan is 
subject to the conditions and limitations established for the MA program). Caps for a 
supplemental benefit can only be imposed at the MA plan level. For example, during a 
contract year, if an enrollee switches to another MA plan offered by the same MAO in 
the same service area, then an enrollee who has exhausted the supplemental benefit of 
one plan is entitled to the full benefit of the other plan. This does not preclude MAOs 
from providing benefits with periodic caps such as monthly or quarterly caps, so long as 
general benefit standards, such as actuarial equivalence for basic benefits and compliance 
with anti-discrimination provisions, are met. 
 
10.7  Clinical Trials 
(Rev. 120, Issued: 01-16-15, Effective: 01-01-15, Implementation: 01-01-15) 
 
10.7.1  Payment for Services 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
For clinical trials covered under the Clinical Trials National Coverage Determination 
310.1 (NCD) (NCD manual, Pub. 100-03, Part 4, section 310), original Medicare covers 
the routine costs of qualifying clinical trials for all Medicare enrollees, including those 
enrolled in MA plans, as well as reasonable and necessary items and services used to 
diagnose and treat complications arising from participating in qualifying clinical trials. 
All other original Medicare rules apply.  
 
Refer to the Medicare Clinical Trial Policy at: http://www.cms.gov/medicare-coverage-
database/details/ncd-details.aspx?NCDId=1&ncdver=2&bc=BAABAAAAAAAA and 
for more information on the definition of routine costs and the clinical trial Medicare 
qualification process. This policy does not withdraw Medicare coverage for items and 
services that may be covered according to Local Coverage Determinations (LCDs) or the 
regulations on category B investigational device exemptions (IDE) found in 42 CFR 405, 
Subpart B, 411.15, and 411.406. MAOs may contact the Medicare Administrative 
Contractor (MAC) for information about qualification and payment for clinical trial items 
and services. 
 
MAOs pay the enrollee the difference between original Medicare cost-sharing incurred 
for qualified clinical trial items and services and the MA plans in-network cost-sharing 
for the same category of items and services. This cost-sharing reduction requirement  applies to all qualifying clinical trials as defined in the NCD manual, Pub. 100-03, Part 4, 
section 310.1. MAOs may not choose the clinical trial or clinical trial items and services 
to which this policy applies. The MAO owes the difference even if the enrollee has not 
yet paid the clinical trial provider. Additionally, the enrollee's in-network cost-sharing 
portion also must be included in the plans out-of-pocket maximum calculation. 
 
To be eligible for reimbursement, an enrollee (or providers acting on the enrollees 
behalf) must notify their plan that the enrollee received a qualified clinical trial service 
and provide documentation of the cost-sharing incurred, such as a provider bill. MAOs 
also are permitted to seek the MA enrollees original Medicare cost-sharing information 
directly from clinical trial providers. 
 
MA enrollees are free to participate in any qualifying clinical trial that is open to 
beneficiaries in original Medicare. If an MAO conducts its own clinical trial, the MAO 
can explain to its enrollees the benefits of participating in its clinical trial; however, the 
MAO may not require prior authorization for participation in a Medicare-qualified 
clinical trial not sponsored by the plan, nor may it create impediments to an enrollees 
participation in a non-plan-sponsored clinical trial, even if the MAO believes it is 
sponsoring a clinical trial of a similar nature. Examples of impediments to an enrollees 
participation include, but are not limited to, requiring enrollees to pay the original 
Medicare cost-sharing amount for routine care services before being compensated by the 
MAO for the difference or unduly delaying any required cost-sharing refund. Enrollees 
retain the right to choose the clinical trial(s) in which they wish to participate. However, 
an MAO may request, but not require, enrollees to notify the plan in advance when they 
choose to participate in Medicare-qualified clinical trials. 
 
10.7.2  Payment for Investigational Device Exemption (IDE) Studies 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
MAOs are responsible for payment of claims related to enrollees participation in both 
Category A and B IDE studies that are covered by the MAC with jurisdiction over the 
MA plans service area. The MAO is responsible for payment of routine care items and 
services in CMS-approved Category A and Category B IDE studies.  The MAO is also 
responsible for CMS-approved Category B devices. CMS will not approve Category A 
devices because they are statutorily excluded from coverage. 
 
CMS finalized changes to the IDE regulations (42 CFR  405 Subpart B), effective 
January 1, 2015. A listing of all CMS-approved Category A IDE studies and Category B 
IDE studies will be posted on the CMS Coverage webpage site located at:  
http://www.cms.hhs.gov/center/coverage.asp and published in the Federal Register. 
 
10.7.3  Payment for Clinical Studies Approved Under Coverage with 
Evidence Development (CED)  
(Rev. 120, Issued: 01-16-15, Effective: 01-01-15, Implementation: 01-01-15) 
  In National Coverage Determinations (NCDs) requiring CED, Medicare covers items and 
services in CMS-approved CED studies. MAOs are responsible for payment of items and 
services in CMS-approved CED studies unless CMS determines that the significant cost 
threshold is exceeded for that item or service (see 42 CFR 422.109). Approved CED 
studies are posted on the CMS Coverage with Evidence Development webpage (see 
http://www.cms.gov/Medicare/Coverage/Coverage-with-Evidence-
Development/index.html). Billing instructions are issued for each NCD. 
 
10.7.4  Claims Processing Instructions for Clinical Studies  
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
Complete requirements for claims processing and payment for clinical studies may be 
found in the Medicare Claims Processing Manual, Transmittal 2955 
(https://www.cms.gov/Regulations-and-
Guidance/Guidance/Transmittals/downloads/R2955CP.pdf). 
 
10.8  Drugs Covered Under Original Medicare Part B 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
For this subsection, the term drug means drug or biological. Drugs that are covered 
under Medicare Part B are governed by original Medicare regulations and local coverage 
decisions. For more coverage details, see the Medicare Benefits Policy Manual 
Publication 100-02, chapter 15, section 50 Drugs and Biologicals and the Medicare 
Claims Processing Manual, Publication 100-04, chapter 17, and sections of the Manual 
referenced therein. 
 
The following broad categories of drugs may be covered under Medicare Part B, subject 
to coverage requirements and regulatory and statutory limitations. Note: These examples 
are illustrative and do not comprise a comprehensive list. 
 
  Injectable drugs that have been determined by MACs to be not usually self-
administered and are administered incident to physician services. For further 
information, see the Medicare Policy Benefits Manual Publication 100-02, chapter 
15, section 50.2 and 50.3. 
 
  Drugs that are administered via durable medical equipment (such as nebulizers) that 
were authorized by the enrollees MA plan. 
 
  Drugs covered under Part B include, but are not limited to: 
 
  Certain vaccines, including pneumococcal, hepatitis B (high or intermediate risk 
o
only) influenza, and vaccines directly related to the treatment of an injury or 
direct exposure to a disease or condition. For further details, see section 50.4.4.2 
of chapter 15 of the Medicare Benefit Policy Manual accessible at 
http://www.cms.hhs.gov/manuals/Downloads/bp102c15.pdf; 
    Certain oral anti-cancer drugs and anti-nausea drugs; 
o
 
  Hemophilia clotting factors; 
o
 
  Immunosuppressive drugs; 
o
 
  Some antigens; 
o
 
  Intravenous immune globulin administered in the home for the treatment of 
o
primary immune deficiency;  
 
  Injectable drugs used for the treatment of osteoporosis in limited situations; and 
o
 
  Certain drugs, including erythropoietin, administered during the treatment of end-
o
stage renal disease. 
 
If an MA enrollee wishes to receive a Part B covered drug in a physicians office, then 
the MAO must cover the drug and the service of administering the drug. MAOs may not 
determine whether it was reasonable and necessary for the patient to choose to have his 
or her Part B covered drug administered incident to physician services and may not 
impose any uniform policy that prevents enrollees from having a Part B covered drug 
administered in a physicians office.  
 
Injectable drugs that the applicable MAC has determined are not usually self-
administered, but that enrollees purchase at a pharmacy and administer at home may only 
be offered by MAOs as a Part D benefit. However, MA enrollees always have the option 
of receiving the Medicare-covered benefit, i.e., administration of the covered drug, in a 
physicians office from the physicians stock of drugs. 
 
Some drugs are covered under either Part B or Part D depending on the circumstances 
and enrollees generally may not be denied Part D coverage of a drug based solely on its 
availability under Part B. It is critical to understand when a drug is covered under Part 
B or Part D in order to protect beneficiaries from coverage disruption and to ensure that 
Part C and Part D bids properly reflect appropriate coverage under either Part B or 
Part D. For detailed guidance and clarification on coverage under Part B versus Part D, 
see Appendix C of chapter 6 of the Part D Prescription Drug Benefit Manual located at: 
http://www.cms.gov/Medicare/Prescription-Drug-
Coverage/PrescriptionDrugCovContra/PartDManuals.html. 
 
10.9  Return to Enrollees Home Skilled Nursing Facility (SNF) 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
An MA plan must provide coverage through a home SNF (defined at 42 CFR 
422.133(b)) of post-hospital extended care services to enrollees who resided in a nursing 
facility prior to the hospitalization, provided: 
    The enrollee elects to receive the coverage through the home SNF; and  
 
  The home SNF either has a contract with the MA plan or agrees to accept 
substantially similar payment under the same terms and conditions that apply to 
similar nursing facilities that contract with the MA plan.  
 
This requirement also applies if the MA plan offers SNF care without requiring a prior 
qualifying hospital stay. 
 
The post-hospital extended care scope of services, cost-sharing, and access to coverage 
provided by the home SNF must be no less favorable to the enrollee than post-hospital 
extended care services coverage that would be provided to the enrollee by a SNF that 
would be otherwise covered under the MA plan (42 CFR 422.133(c)). In a PPO, in-
network cost-sharing applies. 
 
10.10  Therapy Caps and Exceptions 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
Certain services are exempted from original Medicare caps for rehabilitation services. 
Complete details can be found in section 10.2 of chapter 5 of publication 100-04, the 
Medicare Claims Processing Manual, at http://www.cms.gov/Regulations-and-
Guidance/Guidance/Manuals/Internet-Only-Manuals-IOMs-Items/CMS018912.html. 
 
10.11  Transplant Services 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
As explained in section 10.2 above, MA plans must provide all original Medicare 
services to its enrollees. For coordinated care plans, in-network transplant services may 
be provided outside of the plan service area if the services are accessible and available to 
enrollees, and that service delivery is consistent with community patterns of care for 
original Medicare beneficiaries who reside in the same area. 
 
MA plans, for reasons of cost (as explained below), may wish to provide a required 
original Medicare transplant service at a distant location (further away than the normal 
community patterns of care for that service), even though provision of the service is 
available locally (within the service area), consistent with community patterns of care for 
original Medicare beneficiaries who reside in the service area.  
 
The MA plans provision of transplant services at a distant location, farther away than the 
normal community patterns of care for transplant services, depends on the local cost of 
transplants: 
 
  If the local providers of transplants, within the normal community patterns of care for 
transplants, are not willing to cover transplants for MA enrollees at a mutually agreed 
upon payment rate, then the MA plan must offer transplants through alternative 
transplant providers.    
  If the local providers of transplants, within the normal community patterns of care for 
transplants, are willing to cover transplants for MA enrollees at the original Medicare 
rate or at a mutually agreed upon rate, then, although the MA plan may also offer 
transplants at a more distant location, the MA plan must allow enrollees the option of 
obtaining transplant services locally. 
 
When providing an original Medicare service at a more distant location, farther away 
than the normal community patterns of care for transplants, the MA plan must ensure that 
the distant location provides at least the same quality and timeliness of services as at the 
local providers of this service. More specifically, the transplant center at the distant 
location must be a Medicare-eligible transplant provider and the waiting time for the 
transplant should not be significantly longer than the waiting within the normal 
community patterns of care. 
 
In any circumstance in which an MA plan provides transplant services at a more distant 
location, the MA plan must: 
 
  Provide reasonable transportation for the enrollee and a companion to the distant 
facility; and  
 
  Provide reasonable accommodations for the enrollee and a companion while in the 
distant location for medical care. 
 
10.12  Durable Medical Equipment, Prosthetics, Orthotics and 
Supplies (DMEPOS) 
(Rev. 120, Issued: 01-16-15, Effective: 01-01-15, Implementation: 01-01-15) 
 
MA plans are required to provide coverage of, by furnishing, arranging for, or making 
payment for, all services that are covered by Medicare Part A and Part B (see 42 CFR 
422.101(a)), which includes coverage of durable medical equipment, prosthetics and 
supplies. The MAO is responsible for maintaining continuity of care for its enrollee by 
ensuring uninterrupted access to the medically necessary covered DME item, including 
when the item needs to be repaired or replaced. If necessary, the MAO must purchase or 
rent a replacement item for the beneficiary to use. 
 
10.12.1  Designation of DME Providers/Suppliers 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
During the application process, MA plans identify specific DME suppliers with whom 
they have a contract to provide enrollees with all medically necessary DME items and 
supplies. MA plans are also expected to update provider/supplier directory information 
any time they become aware of changes. All updates to the online directory are expected 
to be done in real-time. For more information about provider directory requirements, see 
section 110.2 below. 
  The plan may disclose information on the suppliers contracted to provide DME to 
enrollees as an attachment to the Annual Notice of Change (ANOC) and the Evidence of 
Coverage (EOC) and plans that limit the DME brands and manufacturers it will cover are 
instructed to attach to the EOC or ANOC, as appropriate, a list of those brands and 
manufacturers. 
 
10.12.2  Specifying Brands or Manufacturers of DME  
(Rev. 120, Issued: 01-16-15, Effective: 01-01-15, Implementation: 01-01-15) 
 
MA plans may specify brands and manufacturers as preferred and charge lower cost-
sharing for the preferred brands or may limit the DME to only those preferred brands and 
manufacturers, as long as the following conditions are met (42 CFR 422.100(l)): 
 
  The MA plan provides all categories of DME covered under original Medicare Part 
B;  
 
  The MA plan ensures that enrollees have access to all medically necessary (including 
non-preferred) DME products or brands; 
 
  The MA plans contracted suppliers provide access to all preferred DME brands; 
 
  During an enrollees first year of enrollment in an MA plan, if the enrollee requests, 
the plan will provide a 90-day transition period (commencing with the initial time of 
enrollment) during which the plan provides (and repairs, as applicable) non-preferred 
DME brands furnished in the previous year; 
 
  Although the MA plan may add brands to its preferred formulary during the year, it 
may not remove any brands mid-year; 
 
  The MA plan treats denials of non-preferred DME products or brands as organization 
determinations;  
 
  The MA plan discloses DME coverage limitations and appeal rights in the case of a 
denial of a non-preferred DME product or brand with the EOC and ANOC and on its 
website; and 
 
  The MA plan provides full coverage, without limitation on brand and manufacturer, 
to DME categories or subcategories annually determined by CMS to require full 
coverage. 
 
10.12.3  Brands/Manufacturers of DME not Subject to Limitation  
(Rev. 120, Issued: 01-16-15, Effective: 01-01-15, Implementation: 01-01-15) 
 
Some DME items are not interchangeable, that is, they must be tailored to fit individual 
enrollees. As a result, such items, as designated by CMS annually, will not be subject to  limitation based on brand or manufacturer or may not be limited under certain 
circumstances. Up-to-date information is published annually in the Call Letter.  
 
10.12.4  Prosthetics and Orthotics 
(Rev. 120, Issued: 01-16-15, Effective: 01-01-15, Implementation: 01-01-15) 
 
The MA plan must provide all brands and manufacturers of Prosthetics and Orthotics 
without limitation. 
 
10.12.5  DMEPOS Competitive Bid Program 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
On January 1, 2011, the original Medicare payment amount for DMEPOS competitive 
bid items furnished in Competitive Bidding Areas (CBAs) was reduced below the fee 
schedule payment. The program only affects certain geographic areas and certain 
categories of DMEPOS; exceptions may apply. For the latest guidance refer to 
information at http://www.cms.gov/DMEPOSCompetitiveBid/. The program affects MA 
payments in those situations when an MA plan is only required to pay at least the original 
Medicare rate, for example, when reimbursing suppliers that are not under contract with 
the MA plan. MAOs must disclose information on the new program to their plan 
enrollees. MAOs should inform enrollees how the DMEPOS competitive bidding 
program will affect them and what they should do if they need to change suppliers, for 
example, in cases where an enrollees current supplier is not one of the Medicare 
contract suppliers under the DMEPOS competitive bidding program and they cannot be 
grandfathered under the DMEPOS competitive bidding program. 
 
10.13  Skilled Nursing Facility (SNF) Coverage 
(Rev. 120, Issued: 01-16-15, Effective: 01-01-15, Implementation: 01-01-15) 
 
Prior to termination of SNF services, the provider must deliver a valid written notice to 
the enrollee of the MAOs decision to terminate covered services no later than two days 
before the proposed end of the services (42 CFR  422.624(b)). The MAO is financially 
liable for continued services until two days after the enrollee receives valid notice. If the 
enrollees services are expected to be fewer than two days in duration, the provider 
should notify the enrollee at the time of admission to the provider. An enrollee who 
receives advance notice and agrees with the termination of services earlier than 2 days 
hence, may waive continuation of services. 
 
10.14  No Dollar Limits on Provision of Part B Drugs 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
No dollar limits may be placed on the provision of Part B drugs covered under original 
Medicare unless the Medicare statute imposes the limit on original Medicare coverage, it 
is specified in a national or applicable local coverage determination, or CMS imposes a 
dollar limit. (See section 90.2 below for more detailed guidance on the obligation of plans 
to follow local coverage determinations.)   
10.15  Part D Rules for MA Plans 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
As provided at 42 CFR 422.4(c), an MAO cannot offer an MA coordinated care plan in 
an area unless that plan or another plan offered by the MAO in that same service area 
includes Part D prescription drug coverage. Table II provides a summary of the basic 
requirements for Part D coverage by MA plans. For complete information, please rely on 
the Part D prescription drug coverage information provided in chapter 5 of the 
Prescription Drug Benefit Manual.  
 
Regardless of whether an MAO offers a coordinated care plan in the area with Part D 
benefits, all Special Needs plans (SNPs) are required to include Part D prescription drug 
coverage (see the definition of SNPs at 42 CFR 422.2). 
 
Note that Over-the-Counter (OTC) drug benefits are not classified as Part D prescription 
drug benefits.  
 
Table II: Part D Prescription Drug Coverage by Plan Type  Plan Type  Regional or  Must offer Part  Can an enrollee 
Local MA  D?  elect a PDP? 
Plan? 
MA Coordinated Care Plan (CCP) 
HMO, Point of Service  Local  Yes, unless  No 
(HMOPOS), Provider Sponsored  another non-SNP 
Organization (PSO)  MA plan offered 
by the same 
organization in the 
same service area 
includes required 
prescription drug 
coverage under 
Part D (42 CFR 
422.4(c))1.  
PPO  Either  Yes, unless  No 
another non-SNP 
MA plan offered 
by the same 
organization in the 
same service area 
includes required 
prescription drug 
coverage under 
Part D (42 CFR 
422.4(c)).  
Special Needs Plan (SNP)  Either  Yes, required. 42  No 
CFR 422.2 
(definition of 
SNP) 
Private Fee-for-Service (PFFS)  Local  No  Yes, provided the 
plan  PFFS plan does not 
offer Part D 
coverage. 
MA Medical Savings Account  Local  Not permitted  Yes 
(MSA) Plan 
Section 1876 Cost Plans       
Cost plan offering qualified Part D  NA  No, but Part D  Yes 
prescription drug coverage  coverage may be 
offered as an 
optional 
supplemental 
benefit 
Cost plan offering non-qualified  NA  No. The cost plan  Yes 
prescription drug coverage  cannot offer both 
Part D coverage 
and non-qualified 
prescription drug 
coverage. 
Section 1833 HCPP (Health Care  NA  No  Yes 
Pre-payment Plan) 
PACE Programs (Program for  NA  Yes2  No 
the All-inclusive Care of the 
Elderly)   
Notes to Table II: 
 
1.  See chapter 5 of the Prescription Drug Benefit manual located at 
http://www.cms.gov/Medicare/Prescription-Drug-
Coverage/PrescriptionDrugCovContra/PartDManuals.html for the definition of 
required drug coverage. 
 
2.  Program for the All-Inclusive Care of the Elderly (PACE) organizations offering 
PACE Programs, as defined in section 1894 of the Act generally have elected to 
provide Part D coverage in order to receive payment for the prescription drug 
coverage that they are statutorily required to provide. 
 
10.16  Medical Necessity 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
Every MA plan: 
 
  Must have policies and procedures, that is, coverage rules, practice guidelines, 
payment policies, and utilization management, that allow for individual medical 
necessity determinations (42 CFR 422.112(a)(6)(ii)); 
 
  Must employ a medical director who is responsible for ensuring the clinical accuracy 
of all organization determinations and reconsiderations involving medical necessity. 
The medical director must be a physician with a current and unrestricted license to 
practice medicine in a State, Territory, Commonwealth of the United States (that is, 
Puerto Rico), or the District of Columbia (42 CFR 422.562(a)(4)); 
 
  If the MAO expects to issue a partially or fully adverse medical necessity (or any 
substantively equivalent term used to describe the concept of medical necessity) 
decision based on the initial review of the request, the organization determination 
must be reviewed by a physician or other appropriate health care professional with 
sufficient medical and other expertise, including knowledge of Medicare coverage 
criteria, before the MAO issues the organization determination decision. The 
physician or other health care professional must have a current and unrestricted 
license to practice within the scope of his or her profession in a State, Territory, 
Commonwealth of the United States (that is, Puerto Rico), or the District of Columbia 
(42 CFR 422.566(d), MMCM chapter 13, 40.1.1); 
 
  Must make determinations based on: (1) the medical necessity of plan-covered 
services - including emergency, urgent care and post-stabilization - based on internal 
policies (including coverage criteria no more restrictive than original Medicares 
national and local coverage policies) reviewed and approved by the medical director; 
(2) where appropriate, involvement of the organizations medical director per 42 CFR 
422.562(a)(4); and (3) the enrollee's medical history (e.g., diagnoses, conditions, 
functional status), physician recommendations, and clinical notes. Furthermore, if the  plan approved the furnishing of a service through an advance determination of 
coverage, it may not deny coverage later on the basis of a lack of medical necessity 
(Program Integrity Manual, chapter 6, Section 6.1.3(A)); and 
 
  Must accept and process appeals consistent with the rules set forth at 42 CFR Part 
422, Subpart M, and chapter 13 of the MMCM. 
 
20  Ambulance, Emergency, Urgently Needed and Post-Stabilization 
Services 
(Rev. 120, Issued: 01-16-15, Effective: 01-01-15, Implementation: 01-01-15) 
 
20.1  Ambulance Services 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
MAOs are financially responsible for ambulance services, including ambulance services 
dispatched through 911 or its local equivalent, when either an emergency situation exists 
as defined in section 20.2 below or other means of transportation would endanger the 
beneficiarys health. The enrollee is financially responsible for plan-allowed cost-sharing. 
Medicare rules on coverage for ambulance services are set forth at 42 CFR 410.40. For 
original Medicare coverage rules for ambulance services, refer to chapter 10 of the 
Medicare Benefit Policy Manual, publication 100-02, located at 
http://www.cms.hhs.gov/manuals/Downloads/bp102c10.pdf. 
 
20.2  Definitions of Emergency and Urgently Needed Services 
(Rev. 120, Issued: 01-16-15, Effective: 01-01-15, Implementation: 01-01-15) 
 
An emergency medical condition is a medical condition manifesting itself by acute 
symptoms of sufficient severity (including severe pain) such that a prudent layperson, 
with an average knowledge of health and medicine, could reasonably expect the absence 
of immediate medical attention to result in: 
 
  Serious jeopardy to the health of the individual or, in the case of a pregnant woman, 
the health of the woman or her unborn child; 
 
  Serious impairment to bodily functions; or 
 
  Serious dysfunction of any bodily organ or part. 
 
Emergency medical condition status is not affected if a later medical review found no 
actual emergency present.  
 
Emergency services are covered inpatient and outpatient services that are: 
 
  Furnished by a provider qualified to furnish emergency services; and 
    Needed to evaluate or treat an emergency medical condition. 
 
Urgently needed services are covered services that: 
 
  Are not emergency services as defined in this section but are medically necessary and 
immediately required as a result of an unforeseen illness, injury, or condition; 
 
  Are provided when (A) the enrollee is temporarily absent from the plans service (or, 
if applicable, continuation) area and therefore, he/she cannot obtain the needed 
service from a network provider; or (B) when the enrollee is in the service or 
continuation area but the network is temporarily unavailable or inaccessible; and  
 
  Given the circumstances, it was not reasonable, for the enrollee to wait to obtain the 
needed services from his/her regular plan provider after the enrollee returns to the 
service area or the network becomes available.  
 
An MA organization may choose to cover non-emergency services outside the network at 
higher cost-sharing.  
 
20.3  MAO Responsibilities for Coverage of Emergency Services 
(Rev. 120, Issued: 01-16-15, Effective: 01-01-15, Implementation: 01-01-15) 
 
The MAO must inform enrollees of their right to call 911 and: 
 
  No materials furnished to enrollees, including wallet card instructions, may contain 
instructions to seek prior authorization for emergency or urgently needed services; 
and 
 
  No materials furnished to providers, including contracts, may contain instructions to 
providers to seek prior authorization before the enrollee has been stabilized. 
 
The MAO is financially responsible for emergency services and urgently needed 
services: 
 
  Regardless of whether services are obtained within or outside the plans authorized 
service area and/or network (if applicable);  
 
  Regardless of whether there is prior authorization for the services; 
 
  If the emergency situation is in accordance with a prudent laypersons definition of 
emergency medical condition, regardless of the final medical diagnosis; and 
 
  Whenever a plan provider - a provider with whom the MAO has a written contract to 
furnish plan covered services to its enrollees - or other plan representative instructs an 
enrollee to seek emergency services within or outside the plan. 
  The MAO is not responsible for the care provided for an unrelated non-emergency 
problem during treatment for an emergency situation. For example, if the attending 
physician is treating a fracture, the plan is not responsible for any costs connected with a 
biopsy of skin lesions performed while treating the facture. 
 
20.4  Stabilization of an Emergency Medical Condition 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
The physician treating the enrollee must decide when the enrollee may be considered 
stabilized for transfer or discharge, and that decision is binding on the MAO. Refer to 
section 20.5 below for the MAOs obligations regarding services provided following 
stabilization. Chapter 13 of the MMCM, MA Beneficiary Grievances, Organization 
Determinations, and Appeals, addresses the enrollees right to request a Quality 
Improvement Organization review of hospital discharges to a lower level of care. For 
transfers from one inpatient setting to another inpatient setting, an enrollee or person 
authorized to act on his or her behalf who disagrees with the decision and believes the 
enrollee cannot safely be transferred may request that the organization pay for continued 
out-of-network services. If the MAO declines to pay for the services, appeal rights are 
available to the enrollee. 
 
20.5  Post-Stabilization Care Services 
(Rev. 120, Issued: 01-16-15, Effective: 01-01-15, Implementation: 01-01-15) 
 
20.5.1  Definition of Post-Stabilization 
(Rev. 120, Issued: 01-16-15, Effective: 01-01-15, Implementation: 01-01-15) 
 
Post-stabilization care services are covered services that are: 
 
  Related to an emergency medical condition; 
 
  Provided after an enrollee is stabilized; and 
 
  Provided to maintain the stabilized condition, or under certain circumstances (see 
below), to improve or resolve the enrollees condition. 
 
20.5.2  MAO Financial Responsibility 
(Rev. 120, Issued: 01-16-15, Effective: 01-01-15, Implementation: 01-01-15) 
 
The MAO is financially responsible for post-stabilization care services obtained within or 
outside the MAO that: 
 
  Are pre-approved by a plan provider or other MAO representative; 
    Although not pre-approved by a plan provider or other MAO representative, are 
administered to maintain the enrollees stabilized condition within one hour of a 
request to the MAO for pre-approval of further post-stabilization care; or 
 
  Although not pre-approved by a plan provider or other MAO representative, are 
administered to maintain, improve, or resolve the enrollees stabilized condition 
when: 
 
  The MAO does not respond to a request for pre-approval within one hour; 
o
 
  The MAO cannot be contacted; or 
o
 
  The MAO representative and the treating physician cannot reach an agreement 
o
concerning the enrollees care, and a plan physician is not available for 
consultation. 
 
(In this situation, the MAO must give the treating physician the opportunity to consult 
with a plan physician. The treating physician may continue with care of the patient until a 
plan physician is reached or one of the criteria below is met.) 
 
20.5.3  End of Post-Stabilization 
(Rev. 120, Issued: 01-16-15, Effective: 01-01-15, Implementation: 01-01-15) 
 
The MAOs financial responsibility for post-stabilization care services it has not pre-
approved ends when: 
 
  A plan physician with privileges at the treating hospital assumes responsibility for the 
enrollees care; 
 
  A plan physician assumes responsibility for the enrollees care through transfer; 
 
  An MAO representative and the treating physician reach an agreement concerning the 
enrollees care; or 
 
  The enrollee is discharged. 
 
20.5.4  Cost-Sharing 
(Rev. 120, Issued: 01-16-15, Effective: 01-01-15, Implementation: 01-01-15) 
 
Enrollee charges for post-stabilization care services may not be greater than what the 
organization would charge the enrollee if s/he had obtained the services through a 
contracted provider of the MAO. For purposes of cost-sharing, post-stabilization care 
services begin when the patient is stabilized and the emergency ends. 
 
30  Supplemental Benefits 
(Rev. 120, Issued: 01-16-15, Effective: 01-01-15, Implementation: 01-01-15)   
30.1  Definition of Supplemental Benefit 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
A supplemental benefit is an item or service not covered by original Medicare, that is 
primarily health related and for which the MA plan must incur a non-zero direct medical 
cost. These criteria are defined below. 
 
(1) A supplemental benefit may not be a Medicare Part A or Part B covered service;  
 
(2) The item or service must be primarily health related; that is, the primary purpose of 
the item or service is to prevent, cure or diminish an illness or injury. If the primary 
purpose of the item or service is comfort, cosmetic or daily maintenance, then it is not 
eligible as a supplemental benefit. The primary purpose of an item or service is 
determined by national typical usages of most people using the item or service, or by 
community patterns of care; and  
 
(3) The MA plan must incur a non-zero direct medical cost in providing the benefit. If the 
MA plan only incurs an administrative cost, this requirement is not met. 
 
An item or service that meets the above three conditions may be proposed as a 
supplemental benefit in an MA plans bid and submitted plan benefit package. The final 
determination of benefit status is made by CMS during the annual benefit package 
review. 
Mid-year benefit enhancements are not allowed for non-employer plans. For more 
information regarding requirements specific to employer group plans, please refer to 
chapter 9 of the MMCM, Employer/Union Sponsored Group Health Plans. 
 
MA plans are allowed to cover some benefits over more than one contract year. Such 
benefits, referred to as multi-year benefits, are supplemental benefits that are provided 
to an MA plans Medicare enrollees over a period exceeding one contract year. For 
example, it is permissible for an MA plan to cover one new pair of eyeglasses every two 
years. While some benefits may be appropriately offered over multiple years, CMS encourages MA plans to limit offerings to one 
contract year where possible. 
 
Supplemental benefits need not be provided through Medicare providers nor at Medicare 
certified facilities. Please note, however, MA plans may not make payment to providers 
who have opted out or been excluded from Medicare through 422.220 and 
422.204(b)(4)/422.752(a)(8). 
 
30.2  Supplemental Benefits Extending Original Medicare Benefits 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
In designing supplemental benefits that extend original Medicare benefits, MA plans 
should consider:   
  Medical Necessity: An MA plan may offer coverage of a supplemental benefit only if 
it is medically necessary and additional to the benefit covered by original Medicare. 
For example, an MA plan may offer additional inpatient hospital days as a 
supplemental benefit. An MA plan may not offer home health coverage or home 
health services beyond that covered by original Medicare, if the Home Health Agency 
Manual has classified those additional services as not covered by original Medicare 
because they are not considered medically necessary. The Home Health Agency 
Manual is located in chapter 7 of the Medicare Benefit Policy manual, located at: 
http://www.cms.gov/Regulations-and-
Guidance/Guidance/Manuals/Downloads/bp102c07.pdf, publication 100-02. (All 
original Medicare manuals may be found in the Internet-only and paper-based manual 
links located at http://www.cms.gov/Regulations-and-
Guidance/Guidance/Manuals/Internet-Only-Manuals-IOMs.html.) 
 
  Distinct Naming: An MA plan must be careful in the selection of terminology 
describing a supplemental benefit that furnishes coverage beyond that of original 
Medicare. The terminology should make clear what the supplemental benefit is. An 
MA plan offering a supplemental benefit for which there is no specified service 
category in the PBP must use CMS-specified terminology, if available. 
 
  Prohibition of Benefits for Non-enrollees: An MA plan may not offer as a benefit 
services furnished to a person other than the enrollee (unless original Medicare 
specifically allows such services, e.g., original Medicare coverage of a living donor 
for medical complications arising from a kidney transplant). Similarly, other than the 
original Medicare respite benefit, an MA plan may not offer other types of caregiver 
support as a supplemental benefit. However, an MA plan may, and is even 
encouraged, to include information about services available in the community to 
assist caregivers in obtaining relief so long as the MA plan does not refer to those 
services as plan benefits. Such information may be included in newsletters or other 
communications to enrollees, for example. For information on the original Medicare 
respite benefit see publication 100-02, the Medicare Benefit Policy Manual, chapter 
9. 
 
  Benefit Naming Conventions: An MA plan should not single out specific aspects of 
the benefit, in its marketing materials and PBP descriptions of original Medicare 
benefits. For example: 
 
  An MA plan may state that it offers ESRD services; however, it need not further 
o
mention that living donor expenses are covered because ESRD services 
specifically includes living donor expenses. It would be misleading, from a 
marketing perspective, to single out only one aspect of the benefit. 
 
  While an MA plan must offer Occupational Therapy, it should not single out 
o
any particular aspect of this coverage in its marketing materials, such as massage 
therapy, or indicate that it offers massage therapy as a benefit. Similarly,  although an MA plan may offer chiropractic visits as a benefit, the description 
of the benefit should not include the word massage, even though the 
chiropractor may use massage during the visit. 
 
Examples of benefits meeting these standards that are eligible for MA plans to offer as 
supplemental benefits include: 
 
  Additional days or sessions of certain original Medicare covered services such as 
inpatient days, sessions of smoking and tobacco cessation counseling, cardiac 
rehabilitation, pulmonary rehabilitation. 
 
  Expansion of coverage to allow enrollees to receive benefits for which they do not 
qualify under original Medicare such as medical nutrition therapy for enrollees that 
do not meet original Medicare coverage criteria and transportation services for non-
emergency purposes. 
 
Table III: Medicare Covered Benefits with Related Supplemental Benefit 
Fields in the PBP  
 
Medicare Covered Benefits  Benefits Eligible to be offered as a 
Supplemental Benefits 
Inpatient Hospital-Acute  Additional Days 
Non-Medicare covered stays 
Upgrades 
Inpatient Hospital-Psych  Additional Days 
Non-Medicare covered stays 
Skilled Nursing Facility  Additional Days 
Emergency Care  Worldwide Emergency/Urgent Coverage 
Chiropractor  Routine Care/Other* 
Podiatry  Routine Care 
Outpatient Blood  Waiver of 3 pint deductible  
Medicare Part B Rx & Home  Home Infusion Bundled Services 
Infusion Drugs 
$0 Cost-sharing Preventive  Additional Smoking and Tobacco Use 
Services   Cessation Counseling 
Comprehensive Dental  Routine services, diagnostic services, 
Services  restorative, endodontic/periodontal/extractive, 
prosthodontics, Other oral/maxillofacial 
surgery, other services  
Eye Exams  Routine eye exams/Other* 
Eye Wear  Contact lenses, eye glasses, lenses, frames, 
upgrades 
Non-routine Hearing Exams   Routine hearing exams, fitting/evaluation for 
hearing aids 
  *Other refers to any Non-Medicare covered service  
  Table III identifies the Medicare-covered and other benefits for which supplemental 
benefits are coded into the PBP as options. Other supplemental benefits to extend original 
Medicare coverage may be entered in the PBP Other Supplemental Benefit fields. CMS 
will review these benefits during bid review. 
 
 
30.3  Examples of Eligible Supplemental Benefits 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
The list below identifies items or services that may be offered as supplemental benefits, 
subject to CMS bid review and meeting the criteria identified in section 30.1. Definitions 
and limitations of the eligible benefits are provided below. This list below is intended to 
be illustrative, not exhaustive. 
 
Acupuncture  
 
The acupuncture provided by MA plans as a supplemental benefit must be provided by 
practitioners who are licensed or certified, as applicable, in the state in which they 
practice and are furnishing services within the scope of practice defined by their licensing 
or certifying state. 
 
Alternative Therapies 
 
MA plans may offer alternative therapies as supplemental benefits. These alternative 
therapies must be provided by practitioners who are licensed or certified, as applicable, in 
the state in which they practice and are furnishing services within the scope of practice 
defined by their licensing or certifying state. MA plans are to provide a description of 
therapies offered in the PBP Notes section. 
 
Bathroom Safety Devices  
 
MA plans may choose to offer, as a supplemental benefit, provision of specific non-
Medicare-covered safety devices to prevent injuries in the bathroom. In addition to 
providing and installing appropriate safety devices, the benefit may include an in-home 
bathroom safety inspection conducted by a qualified health professional, in accordance 
with applicable state and Federal requirements, to identify the need for safety devices, as 
well as the applicability to the specific enrollees bathroom (e.g., to determine whether a 
specific safety device can be installed into the bathroom). 
 
The MA plan should describe the proposed benefit and, if an in-home assessment is 
offered, the qualifications of the health professional that will be performing those 
evaluations, in its submitted PBP. 
 
Routine Chiropractic Services 
  MA plans may choose to offer routine chiropractic services as a supplemental benefit as 
long as the services are provided by a state-licensed chiropractor practicing in the state in 
which he/she is licensed and is furnishing services within the scope of practice defined by 
that states licensure and practice guidelines. The routine services may include 
conservative management of neuromusculoskeletal disorders and related functional 
clinical conditions including, but not limited to, back pain, neck pain and headaches, and 
the provision of spinal and other therapeutic manipulation/adjustments. 
 
X-rays or other diagnostic or therapeutic services furnished or ordered by a chiropractor 
may be covered by the MA plan as a supplemental benefit as long as the chiropractor is 
state-licensed and is practicing within the states licensure and practice guidelines. 
 
Counseling Services 
 
Medicare Part B covers individual and group therapy services to diagnose and treat 
mental illness. The Part B coverage usually requires a physician referral for mental health 
care and is based on a mental health diagnosis. 
 
Counseling services not covered by original Medicare may be offered as a supplemental 
benefit to all beneficiaries. These supplemental benefits may address general topics, such 
as: coping with life changes; conflict resolution; or grief counseling and be offered as 
individual or group sessions. 
 
Fitness Benefit 
 
Fitness benefits (e.g., fitness center membership, exercise and yoga classes) may be 
offered by MA plans as supplemental benefits designed to improve or maintain good 
health. The fitness benefit must, if applicable, include an orientation for each enrollee to 
the facility and the equipment. The benefit also may include development of a 
personalized exercise plan and a limited number of sessions with a certified trainer. 
 
MA plans may not offer personal trainers or exercise coaches for in-home sessions. 
 
MA plans should describe specifically what is included in the supplemental fitness benefit 
(e.g., access to fitness center or other facilities, support staff, general goals of the 
program) in the applicable PBP notes field. 
 
Enhanced Disease Management (EDM) 
 
Non-SNP MA plans may offer Enhanced Disease Management (EDM) as a supplemental 
benefit. EDM must be targeted to groups of enrollees based on a diagnosis of, or risk for, 
a specific disease condition (e.g., diabetes, heart failure, cognitive impairment such as 
Alzheimers and related dementias). Services that CMS would expect to be included in a 
supplemental EDM benefit for coordinated care plans, and which would be expected to 
be approved as supplemental benefits, would include the following three activities: 
    Enrollees in the target group are assigned to qualified case managers with 
specialized knowledge about the disease(s) who contact the enrollee to provide 
additional case management and monitoring services. We believe that this should 
be an essential aspect of an effective EDM program and it is important for MA plans 
to understand the difference between the assignment of case managers for all 
enrollees and the assignment of a case manager with specialized knowledge about a 
specific individual enrollees disease(s). The case manager or other qualified health 
professional assigned to the enrollee should work to ensure that the enrollee makes 
and keeps appointments necessary to receive appropriate care from physicians and 
other health care providers including obtaining preventive services. That assigned 
case manager or other qualified health professional should facilitate the enrollees 
participation in both standard disease management activities and supplemental EDM 
programs offered by the MA plan. The assigned case manager or other qualified 
health professional should ensure that all scheduled monitoring of the enrollee takes 
place and that information is analyzed and communicated to all members of the care 
team so that early signs of deterioration in the enrollees condition are detected and 
action is taken to prevent further deterioration. 
 
  Educational activities being provided by certified or licensed professionals that 
are focused on the specific disease/condition. Educational programs are designed to 
help enrollees develop knowledge and self-care skills and to foster the motivation and 
confidence necessary to use those skills to improve health. Examples of educational 
services that may qualify as a supplemental benefit include provision of information 
about the specific disease process(es), treatments and drug therapies, signs and 
symptoms to watch for, self-care strategies and techniques, dietary restrictions, and 
nutritional counseling. 
 
  Routine monitoring of measures, signs and symptoms, applicable to the specific 
disease(s)/condition(s) of the enrollee. We expect the MA plan to collect and act 
upon the information gathered from routing monitoring in order to coordinate care in 
an appropriate and timely manner. Clinical staff with specialized knowledge of the 
enrollees specific disease/condition should conduct this review of the EDM program. 
 
Health Education 
 
A health education program may be offered as a supplemental benefit if it: 
 
  Is offered to all enrollees or targeted to groups of enrollees based on a diagnosis of, or 
risk for, a specific disease condition (e.g., diabetes, heart failure, cognitive 
impairment such as Alzheimers and related dementias); 
 
  Provides more than written material or a website and go beyond content alone to 
include interaction with a certified health educator or other qualified health 
professional. 
  The interactive sessions are expected to:  
 
  Primarily provide health information;  
 
  Encourage enrollees adoption of healthy behaviors;  
 
  Build skills to enhance enrollees self-care capabilities;   
 
  Align with the overall goal to improve participants health; and  
 
  May be provided in a number of modalities including, but not limited to:  
 
  Group sessions in which the educator provides information or skills 
o
instruction;  
 
  One-on-one instructional sessions; and  
o
 
  Interactive web- and/or telephone-based coaching to reinforce what an 
o
enrollee learned in a group or individual session. 
 
Consistent with our description of health education activities and services above, MA 
plans may develop health education services to address health-related topics they identify 
as appropriate for their enrollee population and could include, as supplemental benefits, 
programs that support and encourage enrollees to adopt healthier lifestyles.  
 
In-Home Safety Assessment 
 
The In-Home Safety Assessment should be performed by an occupational therapist or 
other qualified health provider. Services included in such a benefit are provided only to 
enrollees who do not qualify for an in-home safety assessment under original Medicares 
home health benefit and the MA plan must ensure the following conditions apply:  
 
  The assessments focus is on the beneficiarys risk for falls or injuries and 
identification of how falls may be prevented; and  
 
  The bathroom safety devices that may be installed should be appropriate for the 
individual beneficiarys home, determined to be necessary by the occupational 
therapist or other qualified health provider furnishing the safety assessment in order 
to prevent injury, and be approved by the beneficiary. 
 
The assessment may include identification and/or minor modification of some home 
hazards outside of the bathroom, in order to reduce risk of injury. Such modifications 
may include removal of rugs that are not attached to the floor and rearrangement of 
furniture to create clear pathways. 
 
Meals   
Meals may be offered as a supplemental benefit to address the following two types of 
circumstances: 
 
  Immediately following surgery or an inpatient hospital stay, for a temporary duration, 
typically a four-week period, per enrollee per year, provided they are ordered by a 
physician or non-physician practitioner. As discussed in 42 CFR  422.112(b)(3), 
after the temporary duration, the provider should refer the enrollee to community and 
social services for further meals, if needed, or 
 
  For a chronic condition, including but not limited to cardiovascular disorders, COPD 
or diabetes, for a temporary period, typically two weeks, per enrollee per year 
provided they are ordered by a physician or non-physician practitioner; and are part 
of a supervised program designed to transition the enrollee to life style modifications. 
 
Home delivery of meals may be offered as a supplemental benefit if the services are: 
 
1) Needed due to an illness; 
 
2) Consistent with established medical treatment of the illness; and  
 
3) Offered for a short duration. 
 
Social factors, by themselves, do not qualify an enrollee for meal services.  
 
Note that all MA coordinated care plans are required to coordinate MA benefits with 
community and social services generally available in the area served by the MA plan 
(422.112(b)(3)). Therefore, MA plans are to: 
 
  Provide information and links to websites with nutritious diet planning information, 
such as ChooseMyPlate.Gov;  
 
  Provide nutritional tips in their newsletters and/or on their websites; and  
 
  Partner with social community services such as Meals on Wheels. 
 
However, the MA plan may not classify any of these community services as plan 
benefits. Additionally, an MA plan offering a meal benefit complying with the 
requirements described in this chapter may not advertise it as a Meals on Wheels 
benefit or use the term Meals on Wheels in the name of the benefit. It is important that 
prospective enrollees not confuse the limited meal services offered as a supplemental 
benefit with the broader services offered under the Meals on Wheels program. 
However, if an MA plan has entered into a contract with Meals on Wheels to furnish 
the approved meals benefit, it may inform its enrollees that the supplemental benefit 
(meal benefit) under the MA plan will be delivered by Meals on Wheels. 
  Nutritional/Dietary Benefit 
 
General nutritional education for all enrollees through classes and/or individual 
counseling may be provided as a supplemental benefit as long as the services are 
provided by practitioners who are practicing in the state in which s/he is licensed or 
certified, and are furnishing services within the scope of practice defined by their 
licensing or certifying state. (i.e., physician, nurse, registered dietician or nutritionist). 
The number of visits, time limitations, and whether the benefit is for classes and/or 
individual counseling must be defined in the PBP.  
 
Over-the-Counter (OTC) Benefit 
 
MA plans may offer OTC items as a supplemental benefit under Part C. OTC items 
include non-prescription drugs, also known as OTC drugs and health-related items. See 
section 40 below for details. 
 
Personal Emergency Response System (PERS) 
 
MA plans may provide enrollees with in-home Personal Emergency Response devices 
designed to notify appropriate personnel of an emergency (e.g., a fall), provided that they 
are primarily health related. A PERS may not include cellular telephones because such 
devices are not primarily health related (a definitive component of being a supplemental 
benefit). 
 
Preventive Benefits Eligible as Supplemental Benefits 
 
An example of a preventive benefit that is eligible as a supplemental benefit is providing 
additional sessions of smoking and tobacco cessation counseling. MA plans may offer 
additional sessions of face-to-face intermediate counseling and/or additional sessions of 
face-to-face intensive counseling per contract year and/or the MA plans may offer as a 
supplemental benefit interactive, on-line or telephone-based coaching and support 
programs to enhance enrollees successful smoking and tobacco cessation. 
 
Medical Nutrition Therapy (MNT)  
 
MA plans may offer as a supplemental benefit additional hours of one-on-one MNT 
counseling provided by a registered dietician or other nutrition professional, to enrollees 
who are eligible for the Medicare Part B-covered MNT benefit; that is, those with 
diabetes, renal disease, or who have received a kidney transplant in the last three years. In 
addition, MA plans may offer as a supplemental benefit one-on-one MNT counseling 
provided by a registered dietician or other nutrition professional, to all, or a disease-
defined group, of its enrollees. As with all supplemental benefits, the MNT benefits 
primary purpose must be to improve health outcomes. 
 
Physical Exam 
  Non-SNP MA plans may offer as a supplemental benefit a physical exam that provides 
services beyond those services required to be provided in the Annual Wellness Visit. To 
be considered an Annual Physical Exam that qualifies as a supplemental benefit by CMS, 
the exam would be provided by a qualified physician or qualified non-physician 
practitioner, hereafter referred to as a practitioner. At a minimum, the exam would 
include a detailed medical/family history and the performance of a detailed head to toe 
assessment with hands-on examination of all the body systems. For example, the 
practitioner uses visual inspection, palpation, auscultation and 133 manual examination 
in his/her full examination to assess overall general health and detect abnormalities or 
signs that could indicate a disease process that should be addressed. We consider these 
components minimum elements and not an exhaustive list.  
 
Other aspects of the Annual Physical Exam may include, as appropriate, follow-up 
orders for referral to other practitioners, lab tests, clinical screenings, EKG, etc. The 
Annual Physical Exam also should emphasize prevention, i.e., the recommendations for 
preventive screenings, vaccination(s), and counseling about healthy behaviors. 
Practitioners should exercise clinical judgment when determining the additional 
components necessary for an Annual Physical Exam to meet the individual needs of the 
enrollee. MA plans do not need to fully describe in the PBP notes the non-Medicare 
covered activities and services included in the physical exam if the benefit is consistent 
with our guidance. 
 
Point of Service (POS) 
 
HMOs may offer a POS option as a mandatory or optional supplemental benefit pursuant 
to 42 CFR 422.105 and 422.111. This supplemental benefit may not be offered by any 
other MA plan type. The POS benefit provides coverage for some plan-covered services 
outside of the HMOs network. The HMO plan: 
 
  May limit POS benefits to certain items and services, geographic area, or provider(s); 
 
  May require that enrollees pay higher cost-sharing (e.g., deductibles) for POS 
services; 
 
  May either require or waive prior authorization rules for obtaining POS services; 
 
  May establish a plan maximum dollar amount it will pay for the POS benefit and/or a 
enrollee maximum out-of-pocket maximum for the POS benefit; if the plan chooses 
to establish a plan maximum dollar amount, it must inform the enrollee how much 
cost-sharing is required before the enrollee reaches this maximum amount and 
explain that the enrollee is liable for 100% of the cost of services after the enrollee 
has reached the plan maximum; 
 
  Must fully disclose and clearly specify all limitations (e.g., benefits, geographic area, 
providers) and describe all POS benefits and cost-sharing; 
    Must track enrollee and plan utilization and spending for POS services and provide 
this information to enrollees (i.e., in advance of meeting limitations and/or upon 
request by the enrollee); and 
 
  Must be prepared to report enrollee utilization of contracting and non-contracting 
providers, at the plan level and in the form and manner prescribed by CMS. 
 
Note: A PPO must cover all plan benefits furnished to its enrollees anywhere in the 
United States. Therefore, an MAO wishing to furnish specific plan-covered services 
outside its service area, but only in certain geographic locations, should offer an HMO 
plan with a POS option. 
 
Post-discharge In-home Medication Reconciliation 
 
An MA plan may offer a post-discharge medication reconciliation as a supplemental 
benefit.  For example, immediately following discharge (e.g., within the first week) from 
a hospital or SNF inpatient stay, MA plans may offer, as a supplemental benefit, the 
services of a qualified health care provider who, in cooperation with the enrollees 
physician, would review the enrollees complete medication regimen that was in place 
prior to admission and compare and reconcile with the regimen prescribed for the 
enrollee at discharge to ensure new prescriptions are obtained and discontinued 
medications are discarded. This reconciliation of the enrollees medications may be 
provided in the home and is designed to identify and eliminate medication side effects 
and interactions that could result in illness or injury.  
 
Readmission Prevention 
 
MA Plans may offer, as a supplemental benefit, non-Medicare covered services that are 
primarily for the purpose of preventing the enrollees readmission to a hospital or other 
institution, immediately following an enrollees discharge from a hospital or skilled 
nursing facility (SNF) inpatient stay (e.g., within the first week). 
 
Services included in a supplemental readmission prevention benefit that CMS would 
expect to approve would:  
 
  Not duplicate Medicare-covered benefits (e.g., home health which may provide some 
services to homebound beneficiaries);  
 
  Be initiated immediately after an enrollees discharge from an institutional setting 
(e.g., hospital, SNF); and 
 
  Be provided for a limited and specified period of time not to exceed four weeks. 
 
An MA plan may combine the benefits, suggested as examples below, as a complete 
Readmission Prevention benefit or offer the benefits separately. Examples include: 
    In-Home Safety Assessment as described earlier in this section; 
 
  Meals, as described earlier in this section; and 
 
  Post discharge In-home Medication Reconciliation, as described earlier in this 
section; 
 
Remote Access Technologies (including Web/Phone based technologies and Nursing 
Hotline)  
 
MA plans may propose a supplemental benefit to allow a contracted provider to diagnose 
and treat some conditions via telephone, and/or real time interactive audio and video 
technologies. MA plans must ensure that this type of service will not be used as a 
substitute for an effective, ongoing doctor-patient relationship, but rather, will be 
supportive of that relationship and of efficient delivery of needed care. MA plans offering 
such a benefit should ensure that:  
 
  Enrollees are not required to use remote access technologies, but may choose to use 
those services;  
 
  Medical protocols are established and regularly updated based on relevant clinical 
guidelines and that prescribing and/or treatment recommendations are consistent with 
the state laws in the jurisdiction where the MA plan operates and are within the 
providers scope of practice;  
 
  The enrollee is made aware when using the technology that he or she is not required 
to use it and may contact his/her plan provider directly and request an in-person 
appointment;  
 
  The information provided by, and to, the enrollee during the interactive process is 
directed to his/her PCP or other plan provider specified by the enrollee and will 
become part of the enrollees medical record; and  
 
  The MA plan will have a protocol for monitoring the use of the system by enrollees. 
The protocol should enable the MA plan to identify potential misuse and instances 
where the system is supplanting appropriate PCP visits. The protocol should be 
implemented at the beginning of the contract year the benefit is offered. The MA plan 
must provide CMS with this information upon request.  
 
A PPO may not use remote access technologies services as described above to fulfill its 
requirement to provide out-of-network services. Email communication between an 
enrollee and his/her physician would not be acceptable as a supplemental benefit because 
that communication is part of the Part B physician services MA plans are required to 
provide. 
  MA plans must include in the 110.1 field a description of the remote access technologies 
services they propose to provide as a mandatory supplemental benefit. In addition, the 
remote access technology supplemental benefit may not replace the Medicare telehealth 
basic benefit described at 42 CFR  414.65. 
 
Repairs  
 
Repairs of an item furnished as a supplemental benefit may be included as part of that 
supplemental benefit, as appropriate (e.g., eye glass and hearing aid repairs). However, as 
indicated in section 10.12, repairs of Medicare-covered DME are part of the Part B 
benefit and, consequently, may not be offered as supplemental benefits. 
 
Telemonitoring Services 
 
MA plans may offer a supplemental benefit that provides in-home equipment and 
telecommunication technology to monitor enrollees with specific health conditions (e.g., 
hypertension or heart failure). The benefit should be referred to as Telemonitoring 
services in the PBP and may not duplicate items or services provided under original 
Medicare (e.g., glucometers for diabetic beneficiaries). MA plans should include in the 
PBP notes field a description of the monitoring services they propose to provide as 
supplemental benefits. These benefits are distinct from telehealth benefits covered under 
original Medicare (see 42 CFR  414.65). Telemonitoring equipment may not include a 
cellular telephone because such devices are not primarily health related. In addition, the 
supplemental benefit description should address the following issues:  
 
  Telemonitoring services supplement, rather than replace, face-to-face physician visits;  
 
  The enrollee should have an initial physician visit to diagnose or confirm the 
diagnosis of the specific condition prior to the use of the telemonitoring benefit; 
 
  Except in rare circumstances, the data submitted should be collected/transmitted at 
least weekly, but may be sent daily or more frequently, as appropriate for the 
particular disease;  
 
  The equipment provided to the enrollee should be disease-appropriate;  
 
  The enrollee should be trained on how to use the equipment and transmit the data 
properly;  
 
  Health care professionals should monitor and take action, as needed, based on the 
collected/transmitted data;  
 
  The enrollees physician should be included in the communication process; and  
 
  All devices must comply with applicable state and federal requirements. 
  Transportation Services 
 
An MA plan is not obligated to provide transportation to obtain non-emergent, covered 
Part A and Part B services. However, such transportation may be offered as a 
supplemental benefit. 
 
The transportation offered must be used exclusively to accommodate the enrollees health 
care needs: for example, the MA plan may offer a supplemental benefit that provides 
transportation to enrollees for physician office visits. The transportation must be 
arranged, or directly provided, by the MA plan and may not be used to transport enrollees 
for non-health-related purposes. The MA plan must describe the proposed benefit in the 
PBP. 
 
Visitor/Travel Benefit 
 
A Visitor/Travel (V/T) benefit may be offered as a supplemental benefit as a means to 
provide covered services outside of the service area of the MA plan. Under plan 
enrollment rules, MA plans that do not offer a V/T supplemental benefit must disenroll 
current enrollees who are temporarily absent from the MA plans service area for more 
than six consecutive months. However, MA plans that offer a V/T benefit may retain 
enrollees who are covered by the benefit, but temporarily out of the service area (and still 
within the United States or its territories) for more than six, but less than 12 months (42 
CFR  422.74(d)(4)(iii)). See chapter 2 of the MMCM, Medicare Advantage Enrollment 
and Disenrollment, located at 
http://www.cms.gov/MedicareMangCareEligEnrol/01_Overview.asp, for further details. 
 
The specific requirements for the V/T benefit are as follows: 
 
  The V/T benefit must furnish all plan-covered services in its designated V/T 
service area(s), including all Medicare Part A and Part B services and all 
mandatory and optional supplemental benefits, at in-network cost-sharing levels, 
consistent with Medicare access and availability requirements at 42 CFR 
422.112; 
 
  The MA plan must define the geographic areas within the United States and its 
territories where the V/T benefit is available; 
 
  The V/T benefit must be available to all plan enrollees covered by the benefit who 
are temporarily in the designated geographic areas where the V/T benefit is 
offered; 
 
  V/T benefits may not be offered outside the United States and its territories; and 
 
  Subject to compliance with Medicare access requirements and CMS review of 
bids, an MA plan may designate an area where it is not able to form a network of  direct-contracted providers as a covered V/T service area as long as the plan can 
ensure that its enrollees have access to all covered services. 
 
Weight Management Programs 
 
Weight management programs may be offered as a supplemental benefit designed to 
promote healthy behaviors that help an individual to lose weight and keep it off, but the 
program may not offer meals as part of the benefit. As with all supplemental benefits, 
Weight Management Programs must be health driven and aim to improve health 
outcomes. For CMS to consider a Weight Management Program sufficiently health 
related, the benefit includes: 
 
  A plan to keep the weight off over the long run:  
  Guidance on how to develop healthier eating and physical activity habits; and 
  Ongoing feedback, monitoring, and support.   
The weight management program should provide structured lessons on a weekly basis 
that are tailored to the beneficiaries personal goals. The program should support self-
monitoring of eating and physical activity as well as offer regular feedback from a 
counselor on goals, progress, and results. The program may be offered online (fully or 
partly), but must also be entirely available to enrollees without access to online 
capabilities.  
 
Wigs for Hair Loss Related to Chemotherapy 
 
An MA plan may offer as a supplemental benefit wigs for hair loss that is a result of 
chemotherapy. However, wigs may not be offered as a supplemental benefit for any other 
purpose. 
 
Worldwide Emergency/Urgent Coverage 
 
Worldwide Emergency/Urgent Coverage refers to coverage of services, either as a 
mandatory or optional supplemental benefit, outside the United States and its territories. 
Under this benefit, enrollees may obtain only services that would be classified as 
emergency and urgently needed services had they been covered inside the United States. 
MA plans that offer a Worldwide Emergency/Urgent Coverage benefit may retain 
enrollees who are covered by the benefit but temporarily outside of the United States or 
its territories for up to six months. This coverage may also include ambulance services 
worldwide. 
 
As explained in section 10.5.2 above, a plan benefit design may not discriminate based 
on health status. In particular, the cost of a mandatory supplemental Worldwide 
Emergency/Urgent Coverage benefit should be nominal within the bid; otherwise, CMS 
may determine that the benefit discriminates against enrollees who are unable to travel 
due to health status. 
  30.4  Items and Services Not Eligible as Supplemental Benefits 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
The items and services listed in this section have been previously proposed by MA plans 
as supplemental benefits in submitted plan benefit packages and, because they are not 
sufficiently health related, are not allowable supplemental benefits:  
 
  Cosmetic services, including, but not limited to beauty salon services such as 
pedicures and manicures;  
 
  Homemaker and maid services (when not covered by the original Medicare Home 
Health benefit); 
  
  A massage benefit even when furnished by a state licensed massage therapist; 
 
  Stand-alone peripherals such as hearing aid batteries and contact lens cases when not 
factory packaged with the hearing aids or contact lenses, respectively; 
 
  Meals not meeting the criteria specified in section 30.3 above; 
 
  Smoke detectors and fire extinguishers; 
 
  Screening Pap test/screening pelvic exams provided more frequently than every 24 
months for non-high risk enrollees. This policy follows the Medicare Part B schedule; 
  
  Electronic medical records and electronic data storage devices; 
  
  Loaner DME items when the enrollees rented or owned DME is being repaired. 
Loaner DME is a required Medicare Part B service. See section 10.12 above; 
 
  A stand-alone memory fitness benefit (Note: Memory fitness activities may be 
offered as a component of a health education supplemental benefit); and 
 
  Case management and care coordination services because these are required activities 
in all coordinated care plans. Those required activities are described in section 110.5 
of this chapter.  
 
Note: For information specific to Special Needs Plan benefit offerings, see chapter 16b of 
the MMCM, Special Needs Plans. 
 
40  Over-the-Counter (OTC) Benefits 
(Rev. 120, Issued: 01-16-15, Effective: 01-01-15, Implementation: 01-01-15) 
 
40.1  Overview of OTC Benefit 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
  MA plans may offer as a supplemental benefit health-related items and medications that 
are: available without a prescription, and are not covered by Medicare Part A, Part B or 
Part D. MA plans may never offer as a Part C supplemental benefit an OTC drug or item 
that also is covered under Part B or that is paid for under Part D for the plans enrollees. 
OTC drugs and items that are eligible to be included in a Part C supplemental benefit 
must meet our criteria for qualification as a supplemental benefit in section 30 of this 
chapter. Detailed information about OTC drugs paid for under Part D may be found in 
Chapters 5 and 7 of the Medicare Prescription Benefit Manual, Pub 100-18. 
 
Under Part C, MA plans may cover health-related OTC items such as adhesive or elastic 
bandages, and OTC drugs such as antihistamines and analgesics, that meet the criteria as 
eligible supplemental benefits under Part C, presented in section 30.1 above. 
 
Medical supplies associated with the administration of insulin, (e.g., alcohol wipes and 
syringes) must be paid for under Part D and are not eligible to be covered as a 
supplemental benefit. 
 
Since items and drugs that may be covered by the MA plan as supplemental benefits are 
for the enrollee, OTC items may be purchased for the enrollee only. 
 
40.2 - Access to OTC Benefits 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
The OTC drugs and/or items offered, regardless of how they are packaged or paid for, 
must be available at a wide variety of retail outlets or through a mail order catalog. The 
MA plan must ensure that the retail outlets through which enrollees may obtain the 
covered OTC items are distributed within the service area to ensure that the benefit is 
uniformly offered and that all enrollees have access to the benefit. An MA plan that 
contracts with a single mail order company to provide OTC items has fulfilled its 
obligation of providing uniform and sufficient access to the OTC benefit. 
 
An MA plans catalog for OTC may consist of an actual paper catalog that displays 
covered OTC drugs and/or items, a list on a website, or a simple order form. Enrollees 
may place their orders either through a secure website, mail, or a toll-free number. The 
OTC catalog must contain: a list of all plan-covered OTC items and the price of each 
item. The MA plan is responsible for the cost of mailing. To avoid excessive mailing 
costs, the MA plan may impose a minimum purchase amount per order. 
 
40.3  Payment Methods 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
The MA plan may not give enrollees money to purchase covered OTC items or drugs but 
may, for example: (1) reimburse enrollees for eligible purchases when receipts are 
presented; (2) allow enrollees to purchase OTC items through a plan catalog or list; or (3) 
issue a debit card that is electronically linked to eligible OTC items and drugs. The plan 
may establish a certain dollar amount that each covered enrollee may spend to purchase  covered OTC items and drugs on a per-month or per-year basis. The method (debit card, 
mail order etc.) by which enrollees are able to purchase covered OTC items and drugs is 
not part of the benefit and may be changed during the year with appropriate prior 
notification to enrollees and the MA plans account manager to ensure the new method 
provides adequate access. 
 
40.3.1  Special Rules for Manual Reimbursement 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
Every MA plan, independent of the payment method it chooses, must also allow  under 
circumstances which it describes (for example, when the debit card network is not 
operating correctly)  for manual reimbursement for the purchase of OTC items based on 
submitted receipts. The MA plan must indicate the forms and process (as well as the 
circumstances) by which manual reimbursement is allowed. 
 
40.4  Items and Their OTC Status 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
Table IV below displays examples of categories of OTC items that MA plans may cover 
as supplemental benefits, and also provides guidance to help plans distinguish between 
items that would be eligible for coverage and those that would not. Those items shown as 
eligible OTC items may be purchased by the enrollee without restriction. Those items 
shown as dual purpose may be purchased only after the enrollee discusses the purchase 
with their personal provider (or satisfies other requirements the plan may specify, to 
ensure that the covered item or service is health-related and appropriate for the enrollee). 
The plan may require a written note from, or a verbal discussion with, the enrollees 
personal health care provider as a condition for purchase of eligible or dual purpose 
items. 
 
Table V displays examples of categories of items that are not eligible as OTC 
supplemental benefits because they are not health benefits within the meaning of the 
statute.  
 
Note: Tables IV and V display categories of items rather than listing individual items. For 
example, a plan that chooses to offer cough medicines as a Part C OTC supplemental 
benefit must cover all items and brands and may not choose to cover only specified items 
or brands, in order to meet access requirements for the benefit. 
 
The plan must clearly indicate in its OTC listing the items and drugs that, under certain 
circumstances, may be covered under either Part B or Part D.  When an item is covered 
by Part B or Part D due to particular circumstances, the enrollee would not use his or her 
OTC benefit to obtain the item because it is Medicare-covered in those circumstances, 
and not part of the supplemental OTC benefit. For example, gauze may be covered under 
Part B when it is being used as prescribed, to perform surgical wound dressing changes.  
 
Table IV: Eligibility Status of OTC Items    
Eligible?  Category  Examples of items and drugs 
included in this category 
Dual Purpose  Minerals and vitamins    
Dual Purpose  In home testing and  Equipment to monitor blood pressure, 
monitoring  cholesterol, blood sugar, to test for 
pregnancy, HIV, fecal occult blood. 
Bathroom scales may be covered for 
enrollees with CHF or liver disease to 
monitor fluid retention 
Dual Purpose  Hormone replacement   Phytohormone, natural progesterone, 
DHEA 
Dual Purpose  Weight loss items  Appetite suppressants, fat absorption 
inhibitors, food scales 
Eligible  Fiber supplements  Pills, powders and non-food liquids 
that supplement fiber in the diet 
Eligible  First Aid supplies  Adhesive bandages, gauze and other 
dressings, antibacterial ointment, 
peroxide, thermometers, non-sport 
tapes 
Eligible  Incontinence supplies   Diapers, pads 
Eligible  Medicines, ointments and  Antacids, analgesics, anti-bacterials, 
sprays with active medical  anti-histamines, anti-inflammatories, 
ingredients that alleviate  antiseptics, decongestants, sleep aids 
symptoms  
Eligible  Topical Sunscreen    
Eligible  Supportive items for  Compression hosiery, rib belts, elastic 
comfort  knee support 
Eligible  Mouth care  Toothbrushes, toothpaste, floss, 
denture adhesives, denture cleaners 
and gum stimulators  
 
Table V: OTC Items Not Eligible as a Supplemental Benefit  Eligible?  Category  Examples of Items/Drugs Included in 
this Category 
Non-eligible  Alternative  Homeopathic and alternative medicines 
medicines  including botanicals, herbals, probiotics 
and nutraceuticals 
Non-eligible  Baby items  Diapers, formula 
Non-eligible  Contraceptives  Birth control pills, spermacide, 
prophylactics 
Non-eligible  Convenience  Scales, fans, magnifying glasses, ear 
and comfort  plugs, insoles, arch supports and gloves 
Non-eligible  Cosmetics  Mouthwashes, bad breath remedies, 
deodorants, lip soothers, grooming 
devices, skin moisturizers, teeth-
whiteners  
Non-eligible  Food product  Sugar / salt supplements, energy bars, 
or  liquid energizers, protein bars, power 
supplements  drinks 
Non-eligible  Replacement  Hearing aid batteries, contact-lens 
items,  containers, etc. when not factory 
attachments,  packaged with the original item 
peripherals  
 
50  Cost-sharing Guidance 
(Rev. 120, Issued: 01-16-15, Effective: 01-01-15, Implementation: 01-01-15) 
 
50.1  Guidance on Acceptable Cost-sharing 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
CMS, in its annual bid review of proposed plan packages, applies categories of cost-
sharing standards as detailed below. MAOs should note that benefit design and cost-
sharing amounts approved for a previous contract year are not automatically considered 
acceptable for the following contract year.  A separate and distinct CMS review is 
conducted each contract year. Throughout this section, the term cost-sharing refers to 
co-payments, coinsurances and deductibles (42 CFR 422.2). 
 
The categories of cost-sharing standards include the following: 
 
Maximum Out-of-Pocket (MOOP) and Combined (Catastrophic) Limits on cost-sharing: 
To ensure that MAO cost-sharing does not discourage enrollment of higher cost 
individuals, and to provide for transparent plan benefit designs that permit beneficiaries 
to better predict their out-of-pocket costs, all local MA plans (employer and non-
employer)  including HMOs, HMOPOS, local PPO (LPPO), Regional PPO (RPPO) and 
PFFS plans  are subject to a mandatory maximum out-of-pocket (MOOP) limit on 
enrollee cost-sharing for all Part A and Part B services. In addition, both RPPO and 
LPPO plans are required to have a combined limit on cost-sharing that is inclusive of  both in- and out-of-network cost-sharing for all Part A and Part B services. The MOOP 
dollar limits are set annually by CMS and include all cost-sharing (i.e., deductibles, 
coinsurance, and co-payments) for Part A and Part B services, although an MA plan may 
also include supplemental benefits as services subject to the MOOP. CMS also may 
annually establish a lower, voluntary MOOP limit. Plans that adopt the lower voluntary 
MOOP limit will have more flexibility in establishing cost-sharing amounts for Part A 
and Part B services than those that do not elect the voluntary MOOP. MAOs must track 
enrollee out-of-pocket costs and should notify enrollees when they reach, or are near, the 
plans MOOP limit. 
 
For any dual eligible enrollee, MA plans must count toward the MOOP limit only those 
amounts the individual enrollee is responsible for paying, net of any state responsibility 
or exemption from cost-sharing, and not the cost-sharing amounts for services the plan 
has established in its plan benefit package. Effectively, this means that, for dual eligible 
enrollees who are not responsible for paying the Medicare Part A and Part B cost-sharing, 
the MOOP limit will rarely, if ever, be reached. However, plans must still track out-of-
pocket spending for these enrollees.  
 
During a contract year, when an enrollee switches to another plan of the same type (for 
example, from one HMO to another HMO) offered by the plan, his/her accumulated 
annual contribution toward the annual MOOP limit in the previous plan to date is to be 
counted towards his/her MOOP limit in the new MA plan. As applicable, this transfer of 
MOOP applies to both in-network and out-of-network MOOP.  
 
Additionally, MA plans may extend the transferability of the enrollees contribution 
toward his/her annual MOOP so that it applies to an enrollees transfer during the 
contract year to any MA plan type offered by the MAO. For example, if an enrollee 
makes a mid-year change to move from an HMO to a PPO offered by the same MAO, 
his/her current contribution toward the MOOP limit may follow the enrollee and be 
counted towards the MOOP limit in the PPO. This allows those enrollees who are eligible 
to make mid-year plan changes to freely select among the diverse MA plan options 
offered by an MAO.  
 
Per Member Per Month (PMPM) Actuarial Equivalent (AE) Cost-sharing Requirement: 
The actuarially estimated total MA cost-sharing for Part A and Part B services must not 
exceed cost-sharing for those services in original Medicare. In addition, CMS evaluates 
particular service categories; inpatient facility, SNF, DME, and Part B drugs, for actuarial 
equivalence. MA plans should refer to annually published guidance regarding the 
application of this requirement. 
 
Service Category Cost-sharing Standards: As provided under 42 CFR 422.100(f)(6), 
MA plan cost-sharing for Part A and Part B services specified by CMS must not exceed 
levels annually determined by CMS to be discriminatory. In addition, under section 
1852(a)(1)(B)(iii) of the Act (as amended by the Affordable Care Act) the cost-sharing 
charged by MA plans for chemotherapy administration services, dialysis services, and  skilled nursing services for which cost-sharing would apply under original Medicare may 
not exceed the cost-sharing for those services under Part A and Part B. 
 
Discriminatory Pattern Analysis: CMS may perform an additional general discriminatory 
pattern analysis of cost-sharing to ensure that discriminatory benefit designs are 
identified and corrected. 
 
Additional cost-sharing guidance:  
 
  MAOs may, in certain situations, use co-payments for services that have CMS cost-
sharing standards based on original Medicare coinsurance levels. In those situations, 
the plan may charge a co-payment that is actuarially equivalent, based on the 
expected distribution of costs, to the coinsurance standard; 
 
  Plans may not use different co-payment amounts that are based on the cumulative 
number of visits (e.g., cost-sharing of $5 for visits 1 through 5, and $10 for visits 6 
and greater); 
 
  Any foundation or organization that is owned and operated by an MA plan cannot 
pay cost-sharing for MA plan enrollees; 
 
  Deductibles: While high deductibles are required for MSA plans, CMS will closely 
scrutinize high deductibles in other plan types; 
 
  Use of Coinsurance vs. Co-payments: CMS will, in its annual review of plan cost-
sharing, monitor both co-payment amounts and coinsurance percentages. Although 
MAOs have the flexibility to establish cost-sharing amounts as co-payments or 
coinsurance, MAOs should keep in mind, when designing their cost-sharing, that 
enrollees generally find co-payment amounts more predictable and less confusing 
than coinsurance; 
 
  The 50% cap on original Medicare services: In order for an original Medicare in-
network or out-of-network item or service category to be considered a plan benefit, 
plans may not pay less than 50% of the contracted (or Medicare allowable) rate and 
cost-sharing for services cannot exceed 50% of the total MA plan financial liability 
for the benefit. Consequently: 
 
  If a plan uses a coinsurance method of cost-sharing, then the coinsurance for 
o
an in-network or out-of-network service category cannot exceed 50%; 
 
  If a plan uses a copay method of cost-sharing, then the copay for an out-of-
o
network original Medicare service category cannot exceed 50% of the average 
Medicare rate in that area; 
 
  If a plan uses a copay method of cost-sharing, then the copay for an in-
o
network original Medicare service category cannot exceed 50% of the average  contracted rate of that service. For example, if the plans service area consists 
of two counties with equal frequency of utilization with contracted rates for a 
particular service of $90 and $110 in the two counties, then the plan may 
uniformly charge no more than a $50 copay for that service category; and 
 
  The 50% cap is in addition to any other caps. Thus, for those service 
o
categories subject to fee-for-service cost-sharing limits (e.g. 20% coinsurance) 
the plan may not charge more than the fee-for-service cost-sharing limit; 
 
  Stratified co-payments for DME and/or Part B Drugs: MA plans may use a stratified 
co-payment arrangement for DME and/or Part B drugs provided that the copayment is 
non-discriminatory and follows all Medicare rules. Below is one example of stratified 
copayment which would be acceptable to CMS because it is not discriminatory and 
does not violate other Medicare rules. In the table below note that: (1) for each strata, 
the co-payment amount is no greater than the CMS coinsurance requirement for the 
lower limit of the strata, and (2) the number of co-payment strata does not exceed 
four. The following example complies with CMS standards. 
 
Cost Range For service  Co-payment 
$0 - $199      $0 
$200 - $499      $40 
$500 - $999      $100 
$1000 and above    $200 
 
  Tiered cost-sharing of medical benefits: The following guidance applies to benefit 
package designs that include tiered cost-sharing of medical benefits. MA plans may 
choose to tier the cost-sharing for contracted providers as an incentive to encourage 
enrollees to seek care from providers the plan identifies based on efficiency and 
quality data. The tiered cost-sharing must satisfy the following standards:  
 
  The plan fully discloses tiered cost-sharing amounts and requirements to enrollees 
o
and plan providers;  
 
  The services at each tier of cost-sharing are available to all enrollees;  
o
 
  Enrollees may not be limited to obtaining services from providers/suppliers 
o
assigned to a particular tier; and 
 
  All enrollees are charged the same amount for the same service provided by the 
o
same provider.  
 
Thus, an MA plan may offer access to two or more physician groups to which 
different levels of cost-sharing apply, but it may not require that an enrollee receive 
all needed care during the contract year from a particular provider group. Restricting 
enrollee choice by requiring that all services be furnished by a specific group within 
the network has the effect of creating multiple MA plans within one MA plan and,  therefore, conflicts with the uniformity of premium and cost-sharing requirement (see 
42 CFR 422.100(d)(2)). 
 
The following scenarios are examples of differential cost-sharing rather than tiering 
of medical benefits and are allowed when the variation in cost-sharing is based on: 
 
  Facility settings for furnishing some services, such as diagnostic imaging 
o
services; and 
 
  In-network versus out-of-network services, as explained in sections 110.2, 110.3 
o
and 110.6 below, and in the POS subsection of section 30.3 above. 
 
However, while MA plans may have differential cost-sharing based on facility 
settings, they should include the enrollees entire cost sharing responsibility in a 
single copay. This is consistent with Medicare Advantage disclosure requirements at 
42 CFR 422.111(b)(2) which require that MA plans clearly and accurately disclose 
benefits and cost sharing. Accordingly, in situations where there is a difference in 
cost sharing based on place of service, those fees should be combined (bundled) into 
the cost sharing amount for that particular place of service and clearly reflected as a 
total copayment in appropriate materials distributed to beneficiaries. 
 
  Dialysis Services: Cost-sharing for dialysis services may not exceed the cost-sharing 
imposed in original Medicare. The cost-sharing for out-of-network (OON) and out of 
service area, medically-necessary dialysis services may not exceed the in-network 
cost-sharing. The cost-sharing charged by MA plans for dialysis services furnished in 
the service area, but OON, may be higher than the in-network cost-sharing charged 
by the plan for the services. This guidance is summarized in Table VI. 
 
 
 
Table VI: Summary of Dialysis Cost-sharing. 
 
Cost-sharing for dialysis  In-network  Out-of-network 
In service area    May be higher than the in-
network, in service area cost-
sharing 
Out of service area  Must be the same as in- Must be the same as in-
network, in service area cost- network, in service area cost-
sharing  sharing 
 
Post-Stabilization Services: The cost-sharing amount for post-stabilization services must 
be the same or lower for out-of-network providers as for in-network plan providers. 
 
50.2  Cost-sharing for In Network Preventive Services 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
  MA plans are required to cover without cost-sharing all in-network Medicare-covered 
preventive services for which there is no cost-sharing under original Medicare (42 CFR 
422.100(k)). Plans are responsible for monitoring CMS National Coverage 
Determinations and publications in order to ensure they are offering, in a timely manner, 
all Medicare Part A and Part B services, including the zero cost-sharing preventive 
services. 
 
MA plans may not charge for facility fees, professional services, or physician office visits 
if the only service(s) provided during the visit is a preventive service that is covered at 
zero cost-sharing under original Medicare. However, if during provision of the preventive 
service, additional non-preventive services are furnished, then the plans cost-sharing 
standards apply. 
 
Enrollees of a plan may directly access (through self-referral to any plan participating 
provider) in-network screening mammography and influenza vaccine. 
 
Please see section 90 of this chapter for information on National Coverage 
Determinations (NCDs) which describes the requirements for plan compliance with new 
NCDs, as well as website resources for monitoring NCDs. 
 
50.3  Total Beneficiary Cost (TBC) 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
As provided under section 1854(a)(5)(C)(ii) of the Affordable Care Act, and regulations 
at 42 CFR 422.256(a), CMS may deny bids if CMS determines that a bid proposes too 
significant an increase in cost-sharing or decrease in benefits from one plan year to the 
next. CMS uses the Total Beneficiary Cost (TBC) metric as a means of evaluating 
changes in plan benefits from one year to the next, and evaluating whether such changes 
impose significant increases in cost-sharing or decreases in benefits. The change in TBC 
from one year to the next captures the combined financial impact of premium changes 
and benefit design changes (i.e., cost-sharing changes) on plan enrollees; an increase in 
TBC is indicative of a reduction in benefits. By limiting the change in the TBC from one 
year to the next, CMS is able to ensure that enrollees are not exposed to significant cost 
increases from one plan year to the next. Annually, CMS provides TBC requirements and 
operational information to plans through the Call Letter and other guidance documents. 
 
50.4  Single Deductible Rules for Regional and Local PPOs 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
A single deductible is a specified dollar amount to be paid annually by the enrollee for 
health care services or for covered Part D drugs before the plan begins to pay its share of 
the cost for those benefits. The single deductible amount may apply to all plan services or 
to specific categories of plan services with the exception of emergency or urgently 
needed services. 
  Plans may not charge enrollees the plan-level deductible prior to receiving Emergency 
Care/Urgently Needed Services and the cost sharing for those services must always 
contribute to satisfying the MOOP. Plans may count Emergency Care/Urgently Needed 
Services cost sharing towards the plan-level deductible or plans may choose to not have 
enrollee cost sharing count towards the plan-level deductible. However, plans must apply 
this policy uniformly across the entire plan and marketing materials provided to 
enrollees must be transparent regarding whether or not cost sharing applies toward the 
plan-level deductible. 
 
In addition to the applicable cost-sharing requirements listed in section 50.1 above, both 
local and regional PPOs that choose to charge a deductible must establish a single 
deductible that applies to services furnished in-network and out-of-network (OON). The 
local or regional PPO may: 
 
  Not apply the deductible to in-network $0 cost-share preventive services, but may 
exempt any or all other in-network Medicare Part A and Part B services from the 
deductible; that is, the regional or local PPO may choose to cover specific in-network 
items or services at plan cost-sharing levels whether or not the single deductible has 
been met; 
 
  Charge different dollar amounts that count toward the single deductible for specified 
Medicare Part A and Part B services furnished in-network;  
 
  Exempt the OON $0 cost-share preventive services from the plan deductible. 
However, plans may not exempt from the single deductible any other OON Medicare 
Part A and Part B services; and 
 
  Choose whether to require that the single deductible applies to non-Medicare covered 
services (optional and mandatory supplemental benefits) furnished either IN or OON. 
  
Example: A local or regional PPO charges a single deductible of $1,000. The plan limits 
the application and amount of the deductible to IN inpatient hospital services ($500) and 
IN physician services ($100). Additionally, the MA plan exempts Medicare covered 
OON $0 preventive services from the deductible.  
 
Analysis: The local or regional PPO in this example, complies with the PPO deductible 
guidance because it: 
 
  Charges a single plan deductible; 
 
  Has elected to differentiate the applicability of this single deductible for two in-
network Medicare Part A and Part B services (Inpatient hospital and physician 
services); and 
 
  Does not exempt from the single deductible any Medicare Part A or B benefits 
furnished out-of-network.   
50.5  Guidance on Other Enrollee Out-of-Pocket Liability 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
Missed Appointment and Other Charges: MA plans may charge "administrative fees" to 
enrollees for missed appointments with contracting providers and for not paying 
contracting providers required cost-sharing at the time of service.  
 
Under the MA program, such charges are allowable only if the charge is priced in the bid 
and documentation submitted with the bid clearly shows these charges. Furthermore, 
those additional charges must be clearly outlined in the notes section of the PBP and in 
the Evidence of Coverage and ANOC, as applicable. 
 
Contracted and non-contracted providers may charge a fee for missed appointments, 
provided such fees apply uniformly to all Medicare and non-Medicare patients. This 
applies even if the MAO itself does not charge an administrative fee for missed 
appointments. 
 
Neither MA plans nor their contracted providers may require enrollees to create a fund or 
escrow account for a provider to ensure payment of missed appointment fees. Such a 
practice creates a barrier to access to care and violates CMS anti-discrimination 
regulations. 
 
No balance billing: As indicated in section 170 below, an enrollee is responsible for 
paying non-contracted providers only the plan-allowed cost-sharing for covered services. 
The MA plan, not the enrollee, is obligated to pay balance billing when it is allowed 
under Medicare rules. Furthermore, if an enrollee inadvertently paid balance billing 
which is the plans responsibility, the plan must refund the balance billing amount to the 
enrollee. 
 
No reimbursement relationship: Plans may not require enrollees to pay a contracted 
provider more than the plans specified cost-sharing for Part A and Part B services; that 
is, plans may not require enrollees to pay the plans share of the costs for a service and 
then reimburse the enrollee. 
 
50.6  Cost Sharing for Dual-Eligible Enrollees Requiring an Institutional 
Level of Care 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
As provided under section 1860D-14 of the Act, Full Medicaid institutionalized 
individuals have no cost sharing for covered Part D drugs under their PDP or MA-PD 
plan.  Effective January 1, 2012, section 1860D-14 of the Act also eliminates Part D cost 
sharing for Full Medicaid individuals who would be institutionalized if they were not 
receiving home and community-based services (HCBS) either through: 
    A HCBS waiver authorized for a state under section 1115 or subsection (c) or (d) 
of section 1915 of the Act; 
 
  A Medicaid State Plan Amendment under section 1915(i) of the Act; or 
 
  A Medicaid managed care organization with a contract under section 1903(m) or 
section 1932 of the Act. 
 
A SNP must determine or an enrollee must demonstrate that s/he is a Full Medicaid 
individual receiving HCBS under title XIX with the following: 
 
  A copy of a state-issued Notice of Action, Notice of Determination, or Notice of 
Enrollment that includes the enrollees name and HCBS eligibility date during a 
month after June of the previous calendar year; 
 
  A copy of a state-approved HCBS Service Plan that includes the enrollees name 
and effective date beginning during a month after June of the previous calendar 
year; 
 
  A copy of a state-issued prior authorization approval letter for HCBS that 
includes the enrollees name and effective date beginning during a month after 
June of the previous calendar year; or 
 
  Other documentation provided by the state showing HCBS eligibility status 
during a month after June of the previous calendar year. 
 
See chapter 16b of the MMCM, Special Needs Plans for more information on dual 
eligible enrollees, SNPs, and D-SNPs at https://www.cms.gov/Regulations-and-
Guidance/Guidance/Manuals/Downloads/mc86c16b.pdf. 
 
60  Meaningful Difference 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
The guidance in this section applies to non-employer MA and MA-PD plans of all types. 
CMS reserves the right to extend the guidance in this section to employer plans in future 
years. 
 
As provided under 42 CFR 422.254(a) (5) and 422.256(b)(4)(i), CMS annually reviews 
bids to ensure that an MAOs plans in a given service area are meaningfully different 
from one another in terms of key benefits or plan characteristics. Although the specific 
guidelines and criteria for meaningful difference may change, the criteria CMS may use 
to make this determination include: 
 
  Cost-sharing: CMS sets a minimum differential in enrollees expected out-of-pocket 
spending between an MAOs plans of the same type in a service area; 
    Mandatory supplemental benefits offered; 
 
  Plan type;  
 
  Inclusion of a Part D benefit (i.e., MA plan is meaningfully different from an MA-
PD); and 
 
  Premiums. 
 
CMS annually publishes guidelines to assist MAOs in creating plan designs in a given 
area with meaningful differences. MAOs offering more than one plan in a given service 
area should ensure that enrollees can easily identify the differences in benefit coverage 
between the plans. Beneficiaries should be able, for example, to determine which plan 
provides the highest value based on their needs. Plan bids that CMS determines are not 
meaningfully different during the annual CMS review of submitted plan bids will not be 
approved and MAOs will be required either to withdraw or consolidate such offerings. 
 
Example: An MAO offers three plans in a service area with the characteristics listed 
below. Since each plan differs from the other two plans by one of the characteristics 
described above, this MAO is considered to be offering plans with meaningful 
differences;  
  
  Non SNP, MA-only; 
 
  Non SNP, MA-PD; and 
 
  SNP, MA-PD. 
 
70  Non-Renewal Based on Low Enrollment 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
The guidance in this section applies to non-employer MA plans, including SNPs. CMS 
may review employer plans for low enrollment in future years. 
 
Pursuant to 42 CFR 422.514, CMS may not enter into or renew an MA contract with an 
organization unless the organization has enrollment of at least: 
 
(1) 5,000 individuals (or 1,500 individuals if the organization is a PSO) 
are enrolled for the purpose of receiving health benefits from the 
organization; or 
 
(2) 1,500 individuals (or 500 individuals if the organization is a PSO) are 
enrolled for purposes of receiving health benefits from the organization and 
the organization primarily serves individuals residing outside of urbanized 
areas as defined in 412.62(f) (or, in the case of a PSO, the PSO meets the 
requirements in 422.352(c)).   
However, a waiver of this enrollment may be provided at the time of an initial contract or 
for the first three years the MA plan is offered.  CMS will consider the experience of the 
organization, its management personnel and its providers; the administrative and 
marketing abilities of the organization; and the financial solvency and resources of the 
organization in determining whether the organization is capable of administering and 
managing an MA contract and is able to manage the level of risk required under the 
contract to grant a waiver. 
 
As provided under 42 CFR 422.506(b)(1)(iv), CMS may non-renew MA plans that have 
an insufficient number of enrollees to be considered a viable plan option. Prior to bid 
submission, CMS annually provides MAOs with criteria CMS uses to identify low 
enrollment plans and contacts those MAOs that offer plans in the current contract year 
that are identified as having low enrollment. The MAOs are instructed to either give 
notice that they are terminating or consolidating the low enrollment plan(s), or submit, 
within acceptable timeframes, a justification for continuing the plan(s). CMS will review 
the submitted justifications and make a final decision on the continuation of the plan(s) 
for the next contract year. 
 
Determining whether an MA plan has sufficient enrollment to remain or be a viable plan 
option each year requires consideration of many factors, including overall enrollment in 
the MA program and enrollment in individual plans. CMS will announce in the spring its 
interpretation and parameters for applying the regulation.  These will take into account, 
in addition to enrollment, the following: 
 
  The number of years the plan has been in operation; and 
 
  Whether the plan is a SNP. 
 
80  Value-Added Items and Services (VAIS) 
(Rev. 120, Issued: 01-16-15, Effective: 01-01-15, Implementation: 01-01-15) 
 
80.1  Definition and Requirements 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
Value-Added Items and Services (VAIS) are items and services that are not plan benefits, 
are not part of the MAO plans benefit package and may not be marketed to prospective 
enrollees, or used as an inducement or incentive for enrollment. VAIS are non-Medicare 
covered services or items, typically discounts, offered by a VAIS provider to the 
enrollees of an MA plan. The plan may choose to facilitate access for its enrollees to the 
VAIS by acting on behalf of the VAIS provider by performing certain administrative 
activities, such as notifying enrollees about the VAIS or verifying enrollee membership 
in the plan.  
 
Thus, the MAO incurs either no cost for facilitating enrollees access to the VAIS, or the 
costs are solely administrative. Solely administrative costs are defined as those required 
to administer the plans facilitation of enrollee access to the VAIS, e.g., clerical items or  equipment and supplies related to communication about the VAIS (such as phone and 
postage) or database administration (such as verifying enrollment or tracking utilization). 
Minimal cost, in and of itself, does not qualify a cost as being solely administrative. 
 
It is important to note the following: 
 
  Plan enrollees who choose to obtain VAIS items or services are responsible for all 
costs.  
 
  Any notification a plan sends to its enrollees about the availability of VAIS must 
include a disclaimer explaining that the VAIS is not a plan benefit.  
 
  MAOs may not include VAIS in any marketing materials. 
 
  VAIS is not an alternative to a supplemental benefit. That is, if CMS determines that 
a specific item or service for which the plan would incur more than administrative 
cost, is not allowable as a supplemental benefit, the plan may not offer the item or 
service as a VAIS. 
 
An MAO is expected to comply with the following related to VAIS:  
 
  Offer the VAIS for the entire contract year; 
 
  Offer the VAIS uniformly to all plan enrollees; 
 
  Maintain the privacy and confidentiality of enrollee records in accordance with all 
applicable statues and regulations;  
 
  Comply with all applicable fraud and abuse laws, including the anti-kickback statute 
and prohibition on inducements to enrollees; 
 
  Not price the VAIS in the plan bid; 
 
  Costs incurred, if any for the VAIS, are solely administrative; 
 
  Clearly include a disclaimer in any material provided to enrollees about the VAIS that 
the VAIS is not a part of the plans benefits; and 
 
  Only offer the VAIS to plan enrollees. Dependents, spouses and other non-plan 
enrollees are not permitted to receive VAIS through the MAO. 
 
Note: Although VAIS may not be included in the plan bid, CMS may review a plans 
VAIS in its audit of the plan or in response to enrollee complaints related to the VAIS. 
 
80.2  Explanatory Examples 
(Rev. 120, Issued: 01-16-15, Effective: 01-01-15, Implementation: 01-01-15)   
The following are some examples of CMS approach to VAIS: 
 
  Example 1: In addition to a plan covering an in-network mandatory supplemental 
routine vision exam benefit (for which the plan incurs a direct medical cost), it offers 
as a VAIS a 5% discount on a routine vision exam furnished by an out-of-network 
vision center. The plan does not incur any medical cost for the out-of-network exam, 
but does incur some administrative cost to verify enrollee plan membership for the 
discount and to inform its enrollees about the 5% discount. 
 
Analysis: Because the plan does not incur any medical cost in offering the discount 
for the routine vision exam out-of-network, by definition, the discount cannot be 
classified as a benefit, and is therefore, eligible to be offered as a VAIS. Furthermore, 
because the out-of-network routine vision exam is a VAIS, it may neither be 
advertised to prospective enrollees nor included in the plan bid.  
 
  Example 2: An MA plan wishes to offer vouchers for free groceries to its enrollees 
for which it incurs a minimal cost. 
 
Analysis: Grocery vouchers may not be offered as a VAIS if the plan incurs a cost for 
the vouchers. Although the cost may be minimal, it is not solely administrative and 
therefore, is not consistent with CMS guidance. 
 
  Example 3: An MA plan contracts with a provider or another insurer, such as an 
insurer for dental or vision services, to furnish non-Medicare covered benefits to its 
enrollees at a reduced cost. The provider or insurer requires the plan to collect and 
aggregate payments from its enrollees and to send those payments to the provider or 
insurer. 
 
Analysis:  MA plans must include in the plan benefit package all benefits it furnishes 
by way of a contract with a provider or insurer on behalf of its enrollees and may not 
contract to offer such a benefit as a VAIS. The plan may not collect payments from 
its enrollees for services that are not benefits covered by the plan. 
 
However, if the provider or insurer in the example offers its services at a discounted rate 
to the MA plan enrollees, who directly pay the provider or insurer for the services, 
without additional payment from the plan, then the plan may provide access to this 
discount as a VAIS. 
 
90  National and Local Coverage Determinations 
(Rev. 120, Issued: 01-16-15, Effective: 01-01-15, Implementation: 01-01-15) 
 
90.1  Overview 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
  MAOs are expected to stay apprised of new and/or changing Medicare Part A and Part B 
coverage policies, including those that result from CMSs National Coverage 
Determination (NCD) process. Information regarding NCDs is continuously updated on 
the CMS website at: http://www.cms.hhs.gov/center/coverage.asp. See section 90.6 of 
this chapter for a list of CMS website sources containing information. 
 
As discussed in section 10.2 of this chapter, an item or service classified as an original 
Medicare benefit must be covered by every MA plan if: 
 
  Its coverage is consistent with general coverage guidelines included in original 
Medicare regulations, manuals and instructions (unless superseded by written CMS 
instructions or regulations regarding Part C of the Medicare program);  
 
  It is covered by CMS national coverage determinations (see sections 90.3 and 90.4, 
below); or 
 
  It is covered by written coverage decisions of local Medicare Administrative 
Contractors (MACs) with jurisdiction for claims in the geographic area in which 
services are covered under the MA plan, as described in section 90.2 below. 
 
90.2  Definitions Related to National Coverage Determinations (NCDs) 
(Rev. 120, Issued: 01-16-15, Effective: 01-01-15, Implementation: 01-01-15) 
 
The contents of this section are governed by statutes and regulations including those set 
forth at 42 CFR 422.109. The following definitions related to national coverage 
determinations apply: 
 
  A National Coverage Determination (NCD) is a determination by the Secretary 
with respect to whether or not a particular item or service is covered under Medicare. 
An NCD does not include a determination of what code, if any, is assigned to a 
service or a determination about the payment amount for the service. HCPCS and 
other codes are assigned through separate guidance. 
 
  An NCD is issued under procedures that are established in the Federal Register and is 
published in the Medicare National Coverage Determination (NCD) manual. Each 
NCD will contain a specific effective date.  
 
  A legislative change in benefits is a coverage requirement adopted by the Congress 
and mandated by statute. The Secretary of Health and Human Services generally 
implements a legislative coverage change through regulation and/or sub-regulatory 
guidance. 
 
  The term significant cost, as it relates to a particular NCD or legislative change in 
benefits, means either of the following: 
    The average cost of furnishing a single service exceeds a cost threshold that for a 
o
calendar year is the preceding years dollar threshold adjusted to reflect the 
national per capita growth percentage described at 42 CFR 422.308(a); or 
 
  The estimated cost of Medicare services furnished as a result of a particular NCD 
o
or legislative change in benefits represents at least 0.1 percent of the national 
average per capita costs. 
 
90.3  General Rules for NCDs 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
Medicare coverage policies specify which items and services are covered (or not covered) 
under Part A or Part B of the Medicare program and under what circumstances (including 
the clinical criteria under which the item or service must be covered). Medicare coverage 
policies have several sources: 
 
  NCDs made by CMS; 
 
  Local Coverage Determinations (LCDs);  
 
  Legislative changes in benefits applied through notice and comment rulemaking 
(often codifying the changes in the Code of Federal Regulations); and 
 
  Other coverage guidelines and instructions issued by CMS (e.g., Change requests and 
Program Transmittals). 
 
As indicated in section 10.2 above, MA plans must provide all items and services 
classified as original Medicare-covered benefits. In applying this rule to NCDs, different 
rules apply depending on whether the significant cost criterion, described above in 
section 90.3, has been met. 
 
90.3.1  When the Significant Cost Criterion is Not Met 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
When CMS determines that a NCD or legislative change in benefits does not meet a 
criterion for significant cost, the MA plan is required to provide coverage for the NCD or 
legislative change in benefits and assume risk for the costs of that service or benefit as of 
the effective date of the NCD or as of the date specified in the legislation/regulation. 
NCDs are effective on the date that CMS releases the Final Decision Memorandum for 
the NCD. The NCD effective date is the date when the new or changed benefit/service 
must be made available to enrollees by the plan. The implementation date in the 
corresponding Medicare Change Request (CR) /Transmittal guidance (TR) is the latest 
date by which MA plans must have payment system edits in place and coverage/non-
coverage fully implemented for providers/suppliers.  Plans must ensure that the 
items/services are covered, and provider claims paid, retroactive to the NCD effective  date. More information related to Medicare CR/TRs and manual guidance may be found 
in references provided in section 90.6 below. 
 
90.3.2  When the Significant Cost Criterion is Met 
(Rev. 120, Issued: 01-16-15, Effective: 01-01-15, Implementation: 01-01-15) 
 
Prior to the adjustment of the annual MA capitation rate, if CMS determines and 
announces that an individual NCD item, service or legislative change in benefits does 
meet a criterion for significant cost, then plans are not required to assume risk for the 
costs of that service or benefit until the contract year for which payments are 
appropriately adjusted to take into account the significant cost of the service or benefit. 
However, a plan must pay for the following: 
 
  Diagnostic services related to the NCD item, service, or legislative change in benefits 
and most follow-up services related to the NCD item, service, or legislative change 
(42 CFR  422.109(c)(2)(i),(ii));  
 
  NCD items, services, or legislative change to benefits that are already included in the 
plans benefit package either as original Medicare benefits or supplemental benefits. 
 
Although the item or service may not be specifically included in the services MAOs must 
cover under their contract with CMS, MAOs must still provide access to the NCD item or 
service by furnishing or arranging for the service. 
 
The MACs are responsible for reimbursements for NCD items, services, or legislative 
changes that are not the legal obligation of the MAO. 
 
90.3.3  Payment for NCD Items and Services 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
Chapter 8 of the MMCM, Payments to Medicare Advantage Organizations, contains the 
detailed rules on payment for NCD items and services or legislative changes in benefits 
that meet the significant cost threshold. That manual chapter includes a description of 
services for which MAOs are responsible. Enrollees are responsible for any applicable 
coinsurance amounts under original Medicare. 
 
Once the annual MA capitation rate, or other payment adjustment, reflects the new costs, 
the service or benefit is considered included in the MAOs contract with CMS and is a 
covered benefit under the contract. The MAO must furnish, arrange, or pay for the NCD 
service or legislative change in benefits, subject to all applicable rules. MAOs may 
establish separate plan rules for these services and benefits, subject to CMS review and 
approval. CMS may, at its discretion, issue overriding instructions limiting or revising the 
MA plan rules, depending on the specific NCD or legislative change in benefits. For 
these services or benefits, the enrollee is responsible for any MA plan cost-sharing, as 
approved by CMS or unless otherwise instructed by CMS. 
  90.4  Local Coverage Determinations (LCDs) 
(Rev. 120, Issued: 01-16-15, Effective: 01-01-15, Implementation: 01-01-15) 
 
90.4.1  MAC with Exclusive Jurisdiction over a Medicare Item or 
Service 
(Rev. 120, Issued: 01-16-15, Effective: 01-01-15, Implementation: 01-01-15) 
 
In some instances, one Medicare A/B MAC processes all of the claims for a particular 
Medicare-covered item or service for all Medicare beneficiaries around the country. This 
generally occurs when there is only one provider of a particular item or service (for 
example, certain pathology and lab tests furnished by independent laboratories). In this 
situation, MA plans must follow the coverage policy reflected in an LCD issued by the 
A/B MAC that enrolled the provider and processes all of the Medicare claims for that 
item or service. 
 
90.4.2  Multiple A/B MACs with Different Policies 
(Rev. 120, Issued: 01-16-15, Effective: 01-01-15, Implementation: 01-01-15) 
 
When there are multiple A/B MACs that have different coverage policies in an MA 
plans service area, the MA plan must choose from the following alternatives for its 
coverage policy.  Note: All DME MACs have the same LCDs; therefore, there should not 
be differences related to DME coverage in a plans service area. 
  
Local Plans: 
 
1.  A local MA plan may choose to adopt the coverage policy that applies to original 
Medicare beneficiaries. In this alternative, the coverage policy that applies to plan 
enrollees will be that of the A/B MAC with jurisdiction over the state in which the 
service is furnished to the enrollee. 
 
2.  A local MA plan that chooses to adopt a uniform coverage policy that will apply 
uniformly to all plan enrollees, may choose the A/B MAC coverage policy 
applicable in its service area that is the most beneficial to enrollees.  
 
  The MA plan must make information on the selected coverage policy 
determinations readily available, including through the plans website, to all 
enrollees and health care providers; and   
 
  The MAO must notify CMS, through its account manager, 60 days before the 
date bids are due, if it elects to adopt a uniform local coverage policy for any 
plan or plans in the subsequent year (42 CFR  422.101(b)(3)(i)). In preparing 
this notification, the MAO should include, at a minimum: 
 
  An identification of the plan(s) and service area(s) to which the uniform 
o
local coverage policy or policies will apply;  
    The competing local coverage policies involved; and  
o
 
  A table contrasting the local coverage areas by listing and comparing 
o
those policies in each coverage area that represent expansions of Medicare 
Part A and Part B services. 
 
CMS will review notices provided to evaluate the selected policy or policies on 
the bases of cost, access, geographic distribution and health status of enrollees. 
CMS will notify the MAO of its approval or denial of the selected uniform local 
coverage policy or policies. 
 
Regional Plans:  
1.  A regional MA plan may choose to adopt the coverage policy that applies to 
original Medicare beneficiaries. In this alternative, the coverage policy that 
applies to plan enrollees will be that of the A/B MAC with jurisdiction over the 
state in which the service is furnished to the enrollee or 
  
2.  A regional MA plan that chooses to adopt a uniform coverage policy must select 
one of the A/B MACs with jurisdiction in the plan service area and apply the 
policies of that A/B MAC uniformly to all enrollees of the plan.  
 
  Plans must make information on the selected local coverage policy 
determinations readily available, including through the plans website, to all 
enrollees and health care providers. 
 
  Regional MA plans may not select local coverage policies from more than one 
A/B MAC and selection of the coverage policy is not subject to CMS pre-
approval (42 CFR  422.101(b)(4)) but must notify CMS, through their 
account managers, 60 days before the date bids are due, if the plan elects to 
adopt a uniform local coverage policy for any plan or plans in the subsequent 
year (42 CFR  422.101(b)(3)(i)). In preparing this notification, plans should 
include, at a minimum: 
 
  An identification of the plan(s) and service area(s) to which the uniform 
o
local coverage policy or policies will apply;  
 
  The competing local coverage policies involved; and  
o
 
  A table contrasting the local coverage areas by listing and comparing 
o
those policies in each coverage area that represent expansions of Medicare 
Part A and Part B services. 
 
Note: If a local or regional MA plan adopts a uniform coverage policy as indicated above, 
that uniform coverage policy only applies to its service area. Services for an enrollee 
from a provider outside the service area are covered based on the local coverage 
determinations of that providers geographic location.   
90.5  Creating New Guidance 
(Rev. 120, Issued: 01-16-15, Effective: 01-01-15, Implementation: 01-01-15) 
 
In coverage situations where there is no NCD, LCD, or guidance on coverage in original 
Medicare manuals, an MAO may adopt the coverage policies of other MAOs in its 
service area. 
 
However, if the MAO decides not to use coverage policies of other MAOs in its service 
area, the MAO: 
 
  Must make its own coverage determination; 
 
  Must provide CMS an objective evidence-based rationale relying on authoritative 
evidence such as: 
 
  Studies from government agencies (e.g. the FDA); 
o
 
  Evaluations performed by independent technology assessment groups (e.g. 
o
BCBSA); and 
 
  Well-designed controlled clinical studies that have appeared in peer review 
o
journals; and 
 
  In providing its justification, the MAO may not use conclusory statements with no 
accompanying rationale (e.g., It is our policy to deny coverage for this service.) 
 
The requirement that an MA plan provide coverage for all Medicare-covered services is 
not intended to dictate care delivery approaches for a particular service. MA plans may 
encourage enrollees to see more cost-effective provider types than would be the typical 
pattern in original Medicare, as long as those providers are licensed and working within 
the scope of their licenses and the plan complies with the provider anti-discrimination 
rules set forth in 42 CFR 422.205. 
 
An MA plans flexibility to deliver care using cost-effective approaches should not be 
construed to mean that Medicare coverage policies do not apply to the MA program. If 
original Medicare covers a service only when certain conditions are met, then such 
conditions must be met in order for the service to be considered part of the original 
Medicare benefits component of an MA plan. An MA plan may cover the same service 
when the conditions are not met, but these benefits would then be defined as 
supplemental. 
 
90.6  Sources for Obtaining Information 
(Rev. 120, Issued: 01-16-15, Effective: 01-01-15, Implementation: 01-01-15) 
  Generally, legislative changes to Medicare coverage rules are established by statute and 
implemented through notice-and-comment rulemaking. For example, if Medicare Part B 
coverage is affected, the changes are usually included in the annual Medicare Physician 
Fee Schedule (MPFS) proposed and final rules, published in the Federal Register every 
summer and fall, respectively. These rules are codified in the Code of Federal 
Regulations. Medicare manual guidance corresponding to legislative changes in benefits 
may also be released in the Medicare Benefit Policy Manual (Pub. 100-02) and/or the 
Medicare Claims Processing Manual (Pub. 100-04). 
 
Implementation of coverage changes resulting from the NCD process and all related 
changes to original Medicare claims processing are made through Change Requests 
(CRs) and Transmittals (TRs) that also are used to update the Medicare National 
Coverage Determinations Manual (Pub. 100-03) and the Medicare Claims Processing 
Manual (Pub. 100-04). 
 
Although MA plans have not been required to use original Medicare claims processing 
systems, MAOs must follow the coverage instructions in the original Medicare CRs/TRs. 
We also encourage plans to use claims processing guidance as a source of information 
that will support their implementation of the new benefit/service or other change in 
coverage. 
 
The following Internet resources provide information on NCDs and LCDs: 
 
The Medicare Coverage webpage located at: 
http://www.cms.hhs.gov/center/coverage.asp has links that: 
 
  Provide a listing of all NCDs; 
 
  Provide a listing of all National Coverage Analyses (NCAs) and final Decision 
Memos;  
 
  Provide an index of Local Coverage Determinations (LCDs);  
 
  Enable users to subscribe to the CMS Coverage Listserv and receive weekly 
notifications when national coverage documents are updated, such as national 
coverage analyses (NCAs) and national coverage determinations (NCDs). Listserv 
subscribers also receive special updates, including CMS announcements of new 
topics opened for national decision, posting of decision memos, and posting of final 
technology assessment (TA) reports;  
 
  Provide a list of all email coverage updates sorted by year; and 
 
  Enable users to search the database. 
  Both pending and closed coverage determinations are listed. For each coverage topic 
CMS provides a staff name and e-mail link so that interested individuals can send 
questions and provide feedback. 
 
The Medicare National Coverage Determinations Manual, Publication 100-03, 
accessible at: http://www.cms.gov/Regulations-and-
Guidance/Guidance/Manuals/Internet-Only-Manuals-IOMs.html, includes the Medicare 
national coverage determinations.  
 
Program Transmittals and Change Requests transmit CMS new policies and 
procedures on new coverage determinations and Medicare benefits. Links to the Program 
Transmittals and Change Requests can be found at http://www.cms.gov/Regulations-and-
Guidance/Guidance/Transmittals/index.html; and 
 
Medicare Internet-Only Manuals, located at http://www.cms.gov/Regulations-and-
Guidance/Guidance/Manuals/Internet-Only-Manuals-IOMs.html. These manuals, 
including the Benefit Policy Manual and Claims Processing Manuals, as described above, 
present information on Medicare coverage of items and services and claims processing. 
Changes to these manuals are released through Program Transmittals and Change 
Requests. 
 
100  Rewards and Incentives 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
An MA plan may create one or more Rewards and Incentives (RI) Programs that provide 
rewards and/or incentives to enrollees in connection with participation in activities that 
focus on promoting improved health, preventing injuries and illness, and promoting 
efficient use of health care resources. The overall goal of RI Programs is to encourage 
enrollees to be actively engaged in their health care and, ultimately, improve and sustain 
their overall health and well-being.  
 
An RI Program incentivizes an enrollee to participate in health-promoting services or 
activities while inspiring a long-term commitment to healthy behaviors.  Accordingly, in 
addition to providing rewards and/or incentives, plans should consider including an 
enrollee support component within their RI Program design (e.g., coaches or motivators 
to encourage and assist the enrollee with RI Program engagement). 
 
At this time, RI Programs apply only to Part C (Medicare Advantage) at 42 CFR 422 
and may not be offered in connection with any Part D benefits governed by 42 CFR 423.  
 
Pursuant to 42 CFR 422.134, each RI Program offered by an MA plan: 
 
  Must not discriminate against enrollees based on race, gender, chronic disease,   
institutionalization, frailty, health status or other impairments; and 
 
  Must be designed so that all enrollees are able to earn rewards.   
Rewards and incentives associated with the RI Program must: 
 
  Be offered in connection with the entire service or activity; 
 
  Be offered to all eligible enrollees without discrimination; 
 
  Have a value that may be expected to affect enrollee behavior, but not exceed the 
value of the health related service or activity itself; and 
 
  Otherwise comply with all relevant fraud and abuse laws, including, when 
applicable, the anti-kickback statute and civil money penalty prohibiting 
inducements to enrollees. 
 
Rewards and incentives associated with the RI Program may not: 
 
  Be offered in the form of cash or other monetary rebates or 
 
  Be used to target potential enrollees. 
 
An RI Program is not a benefit. It must be included in the bid as a non-benefit expense 
but must not be entered in the Plan Benefit Package.  Per CMS Office of the Actuary 
Bidding Guidance, non-benefit expenses are all of the bid-level administrative and other 
non-medical costs incurred in the operation of the MA plan. 
 
The timeframe for earning and redeeming rewards and/or incentives must be within the 
contract year in which the RI Program has been implemented. In order to prevent the use 
of rewards as motivation to stay in a plan, RI Programs may not allow enrollees to carry 
over rewards and/or incentives from one contract year to the next. 
 
100.1  Health-Related Services and Activities  
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
MA plans have significant flexibility in designing RI Programs that are specific to their 
populations interests, abilities and needs. Plans are free to determine the specific 
services, activities, or behaviors that are subject to rewards or incentives within their RI 
Program design. Health-related services and activities associated with an RI Program 
may include, for example, the utilization of a particular service(s) or preventive 
screening benefit(s), adherence to prescribed treatment regimens, attending 
education/self-care management lessons, meeting nutritional goals, and making and 
keeping appointments with the doctor. 
 
Plans may not discriminate based on health status, therefore, rewards and incentives 
based on health outcomes may not be offered. However, enrollees may be rewarded for 
continued healthy behaviors over time. For example, plans may not provide rewards and 
incentives for the amount of weight lost or a lowered blood pressure, as those are health  outcomes and health status factors. Instead, the plan may provide rewards and/or 
incentives to enrollees for reporting their weights or blood pressures at regular intervals. 
 
Plans also may reward sustained behavior changes by enrollees in order to support and 
promote the ultimate goal of RI Programs, which is lasting, positive changes in health-
related behaviors. For example, an RI Program might include rewards and incentives for 
those enrollees that report that they remain smoke-free at several time intervals after 
completion of a smoking cessation program. 
 
Note: Completion of a federally mandated survey, though arguably a health-related 
activity, may not be included in an RI Program because of the potential for biased 
responses due to the influence of rewards or incentives.  
 
100.2  Non-discrimination 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
Any RI Program offered by an MA plan must not discriminate against enrollees based on 
race, gender, chronic disease, institutionalization, frailty, health status or other 
impairments and must be designed so that all enrollees are able to earn rewards. 
 
The non-discrimination and equal access requirements do not preclude plans from 
offering RI Programs that target enrollees with a specific disease or chronic condition as 
long as the RI Program does not discriminate against any enrollee who would otherwise 
qualify for participation. Thus, any RI Program must accommodate otherwise qualified 
enrollees who receive services in an institutional setting or who need a modified 
approach to enable effective participation and attainment of designated rewards and 
incentives. 
 
For example, while internet-based RI Programs are allowed, an alternate method of 
earning and/or claiming rewards and incentives must be offered to those enrollees who 
do not have internet access. Another example is an RI Program in which participants 
earn a reward for participating in an exercise class. An alternate method of fulfilling an 
exercise activity must be offered to those individuals who are unable to attend the class, 
perhaps due to institutionalization, lack of transportation, or are disabled or wheelchair 
bound. 
 
A caretaker may not participate in place of the enrollee in the services or activities in 
order to earn rewards or incentives on behalf of the enrollee. The goal of an RI Program 
is to encourage and maintain healthy behaviors that have a positive impact on enrollees; 
therefore, the enrollee must participate directly in the RI Program. 
 
All RI Programs must provide the same rewards to all qualifying participants who 
perform the same action(s). An RI Program may not distinguish enrollees based on their 
medical encounter history. In other words, plans may not reward enrollees who have 
historically not utilized appropriate/recommended services at a higher level than other 
enrollees for participating in a RI Program activity. While RI Programs may aim to  encourage more participation in preventive care, they may not discriminate against 
enrollees who have a good record of participation. 
 
100.3  Offering Rewards In Connection With the Entire Service or 
Activity 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
Within an RI Program, rewards and incentives must be earned by completing an entire 
service or activity (or combination of services/activities), as established by the MA plan, 
and may not be offered for completion of less than any/all required component(s) of the 
eligible service or activity. This requirement allows CMS and MA plans to interpret the 
value of a reward or incentive in relation to the service or activity for which it is being 
offered. 
 
Plans are expected to reasonably define the scope of the entire service or activity 
within their RI Program design and assign a value of the reward or incentive 
accordingly. For example, a plan may decide to offer rewards and/or incentives for 
participation in a smoking cessation program. The plan may decide to give smaller 
rewards for each class or counseling session attended or may offer a single, larger 
reward for completing a pre-determined number of classes or counseling sessions. 
 
Consistent with the requirement that rewards and incentives be of a value that may be 
expected to affect enrollees behavior, the service or activity for which rewards and/or 
incentives are being offered should be at a level that is meaningful. 
 
100.4  Valuing Rewards and Incentives 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
Rewards and incentives for each RI Program must have values that are expected to elicit 
intended enrollee behavior but may not exceed the value of the health related service or 
activity (422.134(C)(1)(iii)). 
 
At this time, CMS has not identified the monetary values that exceed what is necessary to 
influence enrollee behavior. There is also no express limit on how often rewards and/or 
incentives may be offered to enrollees throughout a contract year. Instead, MA plans are 
to establish reasonable and appropriate values for rewards and/or incentives that comply 
with 422.134. 
 
If necessary, in the future, we may issue additional guidance applying the regulation 
standards to specify limits on the value of rewards and incentives.  
 
100.5  Permissible Rewards and Incentives 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
  Rewards and/or incentives may not be offered in the form of cash or monetary rebates, 
including reduced cost-sharing or premiums. Otherwise, MAOs have considerable 
flexibility with regard to what may be offered as a reward or incentive. 
 
Gift cards are a permissible form of reward or incentive as long as they are not 
redeemable for cash. MA plans are encouraged to offer enrollees a choice of gift cards 
from which to choose in order to account for differences in enrollees preferences and 
accessibility of retailers. 
 
Discount coupons are also a permissible form of reward or incentive as long as they are 
not transferable for cash and follow the valuing guidelines addressed above.  However, 
we would note that coupons that provide only nominal discounts may not provide 
adequate incentive to drive the intended changes in enrollee behavior and thus not align 
with CMS valuing guidelines. 
 
An RI Program that is designed so that enrollees earn points or tokens that can be 
used to purchase rewards (or some variation of this type of program) is permissible as 
long as the points and the rewards that may be purchased are earned and valued 
(according to CMS guidelines as set forth within this guidance and in accordance with 
422.134) and are redeemed during the contract year in which they are earned. 
 
Rewards and/or incentives must be tangible items that align with the purpose of the RI 
Program and must directly benefit the enrollee. For example, a plans charitable 
contribution made on behalf of the enrollee does not satisfy the CMS criteria as a 
permissible reward or incentive because the enrollee who earned the reward does not 
benefit from such a contribution by the plan. However, the use of points (which are not 
themselves tangible), to purchase a reward, does satisfy CMS criteria because the points 
are used by each enrollee to obtain a tangible reward that is of value to the enrollee.  
 
Rewards and/or incentives that are to be won based on probability, including programs 
in which an enrollee may earn entries into a lottery or drawing in order to receive a 
reward or incentive of a significant value, are not permissible because all enrollees who 
participate in and complete the services or activities required of them within the RI 
Programs design must receive a tangible reward and incentive. The potentially 
negligible chance of winning the reward in such a scheme (depending on the pool of 
eligible enrollees) does not qualify as a tangible reward or incentive. Furthermore, RI 
Programs structured in this manner are potentially vulnerable to fraud and abuse 
implications.  
 
100.6  Marketing RI Programs 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
MA plans may include information about RI Programs in marketing materials as long as 
those communications are provided to all current and prospective enrollees without 
discrimination. Additionally, any marketing of RI Programs must be done in conjunction 
with marketing of plan covered benefits.   
Importantly, reward and/or incentive items may not be offered to potential enrollees 
under any circumstances. Nominal gifts as part of promotional activities are separate 
and distinct from RI Programs. For more information about the marketing aspects of RI 
Programs as well as promotional activity guidance, see the Medicare Marketing 
Guidelines at https://www.cms.gov/Medicare/Health-
Plans/ManagedCareMarketing/FinalPartCMarketingGuidelines.html.  
 
100.7  Reporting to CMS 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
MA plans will be required to report on RI Programs through the annual Part C Medicare 
Advantage Reporting Requirements. MA plans offering an RI Program are expected to 
document and track information regarding their RI Programs and be prepared to provide 
that information to CMS upon request. Appropriate documentation includes, but is not 
limited to: date(s) of enrollee-specific participation in RI Program services and activities, 
rewards and/or incentives attained, how enrollee participation is measured, and 
available alternative methods of participation. 
  PART II  BENEFICIARY PROTECTIONS 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
Part II of this chapter, which begins in section 110, provides information on beneficiary 
protections, and includes topics such as rules for plan renewals, coordination of benefits, 
providers, provision of benefits during disaster situations, and educating and enrolling 
enrollees in Medicaid and Medicare savings programs. 
 
110  Access to and Availability of Services 
(Rev. 120, Issued: 01-16-15, Effective: 01-01-15, Implementation: 01-01-15) 
 
110.1  Access and Availability Rules for Coordinated Care Plans 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
An MA plan may specify the providers through whom enrollees may obtain services if it 
ensures that all original Medicare covered services and supplemental benefits contracted 
for, by, or on behalf of Medicare enrollees are available and accessible under the 
coordinated care requirements.  
 
Plans are required to maintain and monitor a network of appropriate providers, supported 
by written arrangements, that is sufficient to provide adequate access to covered services 
to meet the needs of the population served. This involves ensuring that services are 
geographically accessible and consistent with local community patterns of care. In other 
words, the plan must ensure that contracted providers are distributed so that no enrollee 
residing in the service area must travel an unreasonable distance to obtain covered 
services. CMS standards for access are provided by the Health Service Delivery (HSD) 
tables used to evaluate plan networks during the initial application, service area 
expansion application, and continued operations throughout the contract year. The HSD 
process uses a mostly automated process to measure access by county and specialty. The 
assessment measures used include measuring the number of providers, as well as the 
average distance and time needed for enrollees to access each provider and facility in 
each county. 
 
All MAOs are expected to continuously monitor their networks to ensure compliance with 
contractual obligations and in accordance with 42 CFR 422.112(a)(1)(i).  CMS 
encourages MAOs to use the organization-initiated automated review feature in the 
Network Management Module (NMM) in HPMS.  For more information, please refer to 
the December 23, 2015, HPMS memo Release of Network Management Module in 
Health Plan Management System (HPMS).  
 
In addition, as part of this continuous network self-monitoring, CMS expects that if an 
MAO becomes aware of network deficiencies at any time or believes that an exception is 
warranted for a particular specialty in a given service area, then the MAO will alert its 
CMS Account Manager. 
 
110.1.1  Provider Network Standards  (Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
MAOs are required to establish and maintain provider networks that:  
 
  Define the types of providers to be used when more than one type of provider can 
furnish a particular item or service; 
 
  Identify the types of mental health and substance abuse providers in their network;  
 
  Specify the types of providers who may serve as an enrollees primary care physician; 
 
  Are accurately reflected in up-to-date directories. Plans are responsible for verifying 
and regularly updating their network directories to ensure that providers included in 
the directories are available to their enrollees (i.e., listed providers accept new 
patients who are enrolled in the plan). Please see section 110.2 below for more 
information on provider directory updating requirements.  
 
  Employ written standards for timeliness of access to care and member services that 
meet or exceed such standards as may be established by CMS, make these standards 
known to all first tier and downstream providers, continuously monitor its provider 
networks compliance with these standards, and take corrective action as necessary. 
These standards must ensure that the hours of operation of the plans providers are 
convenient to, and do not discriminate against, enrollees. The plan must also ensure 
that, when medically necessary, services are available 24 hours a day, 7 days a week. 
This includes requiring primary care physicians to have appropriate backup for 
absences. The standards should consider the enrollees need and common waiting 
times for comparable services in the community. (Examples of reasonable standards 
for primary care services are: (1) urgently needed services or emergency - 
immediately; (2) services that are not emergency or urgently needed, but in need of 
medical attention - within one week; and (3) routine and preventive care - within 30 
days); 
 
  Establish, maintain, monitor and validate credentials for a panel of primary care 
providers from which the enrollee may select a personal primary care provider. All 
MA plan enrollees may select and/or change their primary care provider within the 
plan without interference. Plans that require enrollees to obtain a referral before 
receiving specialist services typically require this referral be obtained from a primary 
care provider. However, some enrollees do not select primary care providers. 
Consequently, plans must ensure that there is a mechanism for assigning primary care 
providers (for purposes of referral) to enrollees who do not select a primary care 
provider; 
 
  Regardless of the MA plan type being offered, arrange for medically necessary care 
outside of the network, but at in-network cost-sharing, in order to provide all 
Medicare Part A and Part B benefits. That is, if an enrollee requires a medically 
necessary covered service that is not provided by the providers in the network, the  plan must arrange for that service to be provided by a qualified non-contracted 
provider;  
 
  Provide or arrange for necessary specialist care, and in particular give female 
enrollees the option of direct access to a womens health specialist within the network 
for womens routine and preventive health care services;  
 
  Ensure that all services, both clinical and non-clinical, are provided in a culturally 
competent manner and are accessible to all enrollees, including those with limited 
English proficiency, limited reading skills, hearing incapacity, or those with diverse 
cultural and ethnic backgrounds. Examples of how a plan may meet these 
accessibility requirements include, but are not limited to provision of translator 
services, interpreter services, teletypewriters, or TTY (text telephone or teletypewriter 
phone) connection; 
 
  Establish and maintain written standards, including coverage rules, practice 
guidelines, payment policies and utilization management protocols that allow for 
individual medical necessity determinations. These standards must be available to 
both enrollees and providers. Section 90.5 of this chapter provides guidance and 
criteria for formulating such standards;  
 
  Provide coverage for ambulance services, emergency and urgently needed services, 
and post-stabilization care services in accordance with the requirements in section 20 
above; and 
 
  Have a quality improvement program plan as outlined in chapter 5 of the MMCM. 
The quality improvement program plan must include a Chronic Care Improvement 
Program (CCIP) and a Quality Improvement Project (QIP).  
 
Plans may not implement utilization management protocols that create inappropriate 
barriers to needed care. Prior authorization and referral are two utilization management 
approaches frequently used by plans and are entered in the PBP; the following 
definitions and requirements clarify the meaning and appropriate use of these two 
approaches: 
 
  Prior Authorization: A process through which the physician or other health care 
provider is required to obtain advance approval from the plan that payment will be 
made for a service or item furnished to an enrollee. Unless specified otherwise with 
respect to a particular item or service, the enrollee is not responsible for obtaining 
(prior) authorization.  
 
  Referral: A process through which the enrollees primary care physician or other 
network physician (depending on the plan policy) permits or instructs the enrollee to 
obtain an item or service from another physician or other provider type. 
 
110.1.2  Significant Changes to Networks  (Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
110.1.2.1  General 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
When MAOs submit PBPs for CMS review and approval, they attest that the benefits 
included in those packages ...will be offered in accordance with all applicable 
Medicare program authorizing statutes and regulations and program guidance that CMS 
has issued to date... Thus, MAOs PBPs for the upcoming contract year must meet, and 
continue to meet, CMS network adequacy standards, as outlined in the guidance in this 
chapter and current MA HSD Network Adequacy Criteria Guidance, which can be found 
on the MA Applications webpage at: https://www.cms.gov/MedicareAdvantageApps.  
See 42 CFR 422.112(a)(1)(i). 
 
MAOs have considerable discretion to select the providers with whom to contract in 
order to build high-performing, cost effective provider networks. They are able to make 
changes to these networks at any time during the contract year, as long as they continue 
to furnish all Medicare-covered services in a non-discriminatory manner, meet 
established access and availability standards and timely notice requirements, and ensure 
continuity of care for enrollees. 
 
CMS recognizes that significant no-cause network changes may occur during the 
contract year. MAOs may be in the best position to determine whether or not a provider 
termination without cause is significant. CMS considers significant changes to provider 
networks to be those that go beyond individual or limited provider terminations that 
occur during the routine course of plan operations and affect, or have the potential to 
affect, a large number of the MAOs enrollees.   
 
Please note: Significant network changes could result from any no-cause provider 
termination, whether it is initiated by the MAO or the provider. In addition, significant 
network changes could result from no-cause provider terminations that are effective at 
any point during the contract year, whether it is mid-year or on January 1. 
 
110.1.2.2  Notification to CMS 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
An MAO must notify its CMS Account Manager of any no-cause provider termination 
that the MAO deems to be significant, at least 90 days prior to the effective date of the 
termination. To the extent possible, CMS would like to ensure that appropriate 
contingency planning is in place prior to an MAO making any significant network 
change. For example, an MAO should notify its Account Manager if it is in current 
contract negotiations with a provider group that would have a significant impact on the 
network if the negotiations were not successfully concluded. 
 
CMS expects MAOs to take a conservative approach in determining whether a network 
change is significant by notifying CMS if there is any doubt as to whether the no-cause  provider termination represents significant change to the network. This prior notification 
facilitates CMS oversight and verification of MAO compliance with current CMS network 
adequacy standards. An MAO that does not notify CMS of network changes that are 
ultimately deemed significant will be subject to appropriate compliance actions. 
 
Upon CMS notification, CMS may ask the MAO to provide additional information about 
the network change, and CMS will verify whether the network change is indeed 
significant.  If CMS deems the MAOs network change to be significant, then CMS may 
ask the MAO to demonstrate its continued compliance with current CMS network 
adequacy standards through the submission of HSD tables to the NMM. 
 
CMS may also ask the MAO to submit a written plan that provides a detailed description of 
the steps the MAO will take to ensure that affected enrollees are able to locate new providers 
that meet their individual needs and describe how continuity of care would be maintained for 
affected enrollees. MAOs would also provide, upon request, information about the number 
and outcome of continuity of care requests that they receive so that CMS may confirm that 
the MAO is in compliance with all applicable requirements. 
 
In addition, CMS may require the MAO to augment its network by contracting with 
additional providers to meet network adequacy standards or, if necessary in order to 
meet immediate access needs, to allow enrollees to access care from non-contracted 
providers and limit enrollee cost-sharing to in-network amounts. Furthermore, it may be 
necessary for MAOs to allow care to continue to be furnished on an interim, transitional 
basis, by providers who have been terminated from the network in order to adequately 
address continuity of care needs for affected enrollees. 
 
110.1.2.3  Notification to Enrollees 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
Pursuant to 42 CFR 422.111(e), when an MAO makes changes to its provider network, 
the MAO must make a good faith effort to provide written notice of a termination of a 
contracted provider at least 30 calendar days before the termination effective date to all 
enrollees who are patients seen on a regular basis by the provider whose contract is 
terminating, irrespective of whether the termination was for cause or without cause. 
When a contract termination involves a primary care professional, all enrollees who are 
patients of that primary care professional must be notified.  
 
Please note that CMS considers enrollees who are patients seen on a regular basis by 
the provider whose contract is terminating to be affected enrollees. An affected 
enrollee as an enrollee who is assigned to, currently receiving care from, or has 
received care within the past three months from a provider or facility being terminated. 
 
When an MAO makes significant network changes, at any point during the contract year, 
the MAO must also follow the requirements at 42 CFR 422.111(e). CMS recommends 
that as a best practice, MAOs making significant no-cause network changes should 
provide affected enrollees more than the required 30 days advance notice. A longer 
notification period is important, not only to address enrollee concerns, furnish enrollees  with needed assistance in selecting new providers, and manage the continuity of care for 
those undergoing medical treatment, but also for maintaining enrollee satisfaction. If 
enrollees are notified sooner than 30 days prior to a significant provider termination, 
then they will be afforded additional time to transition to a new provider. 
 
CMS expects that when an MAO has 60 days advance notice that a contract with a 
provider will be terminated (as discussed in section 110.1.2.4 below), the MAO should 
notify affected enrollees at least 30 days in advance of the contract termination but 
preferably more than 30 days in advance. For those MAOs that do not have the 60 days 
advance notice of a contract termination, they must make a good faith effort to notify 
affected enrollees as soon as possible and at least 30 days before termination. 
 
As a best practice, MAOs should include the following information in notices to enrollees 
in addition to the mandatory identification of the provider(s) being terminated from the 
network: 
 
  Names and phone numbers of in-network providers that enrollees may access for 
continued care (Note: This information may be supplemented with information for 
accessing a current provider directory, including both online and direct mail 
options); 
 
  Information regarding how enrollees can request continuation of ongoing medical 
treatment or therapies with their current providers; and 
 
  Customer service number(s) where answers to questions about the network changes 
will be available.  
 
MAOs should also develop detailed scripts, call center talking points and frequently 
asked questions so it can effectively respond to phone inquiries from enrollees and other 
stakeholders.  
 
110.1.2.4  MAO/Provider Notification 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
In accordance with 42 CFR 422.202(d)(4), an MAO and a contracting provider must 
provide at least 60 days written notice to each other before terminating the contract 
without cause.   
 
110.1.2.5  Significant Network Change Special Election Period (SEP) 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
Pursuant to 42 CFR  422.62(b)(4), enrollees who meet the exceptional conditions of 
being substantially affected by a significant no-cause provider network termination may 
be afforded a special election period (SEP). 
  If CMS determines that an MAOs network change is significant with substantial enrollee 
impact, then a significant network change SEP may be warranted. CMS will use a 
variety of criteria for making this determination, such as: (1) the number of enrollees 
affected; (2) the size of the service area affected; (3) the timing of the termination; (4) 
whether adequate and timely notice is provided to enrollees, (5) and any other 
information that may be relevant to the particular circumstance(s). 
 
The MAO will be required to notify eligible enrollees of the significant network change 
SEP if the SEP is granted by CMS. SEPs will not be granted when MAOs make changes 
to their network that are effective on January 1 of the following contract year, as long as 
affected enrollees are notified of the changes prior to the AEP.  
 
For more information regarding the significant network change SEP, please see the 
Medicare Advantage Enrollment and Disenrollment Guidance at: 
https://www.cms.gov/Medicare/Eligibility-and-
Enrollment/MedicareMangCareEligEnrol/index.html. 
 
110.1.3  Services for Which MA Plans Must Pay Non-contracted 
Providers and Suppliers 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
All MAOs must make timely and reasonable payment to, or on behalf of, plan enrollees for 
the following services obtained from a provider or supplier that does not contract with the 
MAO:  
 
  Ambulance services dispatched through 911 or its local equivalent where other means 
of transportation would endanger the beneficiarys health, as provided in section 20.1 
of this chapter; 
 
  Emergency and urgently needed services under the circumstances described in 
sections 20.2 through 20.4 of this chapter; 
 
  Maintenance and post-stabilization care services under the circumstances described in 
section 20.5 of this chapter; 
 
  Medically necessary dialysis from any qualified provider selected by an enrollee 
when the enrollee is temporarily absent from the plans service area and cannot 
reasonably access the plans contracted dialysis providers. An MA plan cannot 
require prior authorization or notification for these services. However, the MA plan 
may provide medical advice and recommend that the enrollee use a qualified dialysis 
provider if the enrollee voluntarily requests such advice because he/she will be out of 
area. The MA plan must clearly inform the enrollee that the plan will pay for care 
from any qualified dialysis provider the enrollee may independently select. 
Furthermore, the cost-sharing for out-of-network medically necessary dialysis may 
not exceed the cost-sharing for in-network dialysis;  
    Services for which coverage has been denied by the MAO and found (upon appeal 
under subpart M of 42 CFR Part 422) to be services the enrollee was entitled to have 
furnished, or paid for, by the MAO; and 
 
  Regardless of the MA plan type being offered, arrange for specialty care outside of 
the network, but at in-network cost-sharing, in order to provide all Medicare Part A 
and Part B benefits. That is, if an enrollee requires a very specialized covered service 
that is not provided by the physicians in the network, the plan must arrange for that 
service to be provided by a qualified non-contracted provider.  
 
An MA plan (and an MA MSA plan, after the annual deductible has been met) offered by 
an MAO generally satisfies its requirements of providing basic benefits with respect to 
benefits for services furnished by a non-contracting provider if that MA plan provides 
payment in an amount the provider would have been entitled to collect under original 
Medicare (see section 170 for guidance on balance billing). 
 
MAOs may negotiate payment amounts with their contracted providers and need not 
follow original Medicare payment rates. However, in the absence of a mutual agreement 
between the non-contracted provider and the MAO to receive less than the original 
Medicare rate, non-contracted providers must accept the original Medicare amount as 
payment in full. For further information on payment to non-contracted providers and 
suppliers refer to chapter 6, Relationships with Providers, of the MMCM. Additional 
useful information on payment requirements by MAOs to non-network providers may be 
found in the MA Payment Guide for Out-of-network Payments, at:  
http://www.cms.hhs.gov/MedicareAdvtgSpecRateStats/downloads/oon-payments.pdf. 
 
When an enrollee visits an in-network provider, even though that in-network provider 
may work with an out of network provider, (e.g., a diagnostic lab that sends specimens to 
a central location), then the enrollee is only responsible for in-network cost-sharing. 
 
For further information on an MA plans obligation to pay non-contracted providers 
when a referral to such a provider was made, see section 160 below. 
 
110.2  Provider Directories 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
110.2.1  General 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
Pursuant to 42 CFR 422.111(b)(3) MAOs must provide the number, mix, and 
distribution (addresses) of providers from whom enrollees may reasonably be expected to 
obtain services.  
 
If an MAO chooses to develop a non-model provider directory for either hardcopy or 
online provider directories, the directory must contain all information and follow all 
instructions within the CMS model provider directory located at:  http://www.cms.gov/Medicare/Health-
Plans/ManagedCareMarketing/MarketngModelsStandardDocumentsandEducationalMat
erial.html. This includes the introductory language and disclaimers. 
 
MAOs can find complete website and electronic media related requirements at section 
100 of the Medicare Marketing Guidelines. 
 
MAOs must include information regarding all contracted network providers in 
directories at the time of enrollment. Directories must include information about the 
number, mix, and distribution of all network providers. MAOs may have separate 
directories for each geographic area they serve, (e.g., metropolitan areas, surrounding 
county areas), provided that all directories together cover the entire service area. 
 
MAOs may print a separate directory for each sub-network and disseminate that 
information to enrollees residing in that particular geographic sub-network. To ensure 
that enrollees are fully aware of their overall network provider options, plans that furnish 
their enrollees with directories containing a sub-network of plan providers must also 
advise enrollees that the complete directory of network providers is available online and 
that it will be furnished in hard copy upon request.in plans that have sub-networks. 
 
MAOs also may publish separate primary care physician (PCP) and specialty physician 
directories provided both directories are available, online and hard copy, to enrollees at 
the time of enrollment and throughout the contract year. 
 
MAOs MA-PD plans may combine the model provider and model pharmacy directories 
in one document. The guidance in this section, combined with the specific guidance on 
pharmacy directories, should be followed when creating a combined provider/pharmacy 
directory. 
 
110.2.2  Provider Directory Updates 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
MAOs are expected to update directory information any time they become aware of 
changes. All updates to the online provider directories are expected to be completed 
within 30 days of receiving information. Updates to hardcopy provider directories must 
be completed within 30 days, however, hardcopy directories that include separate 
updates via addenda are considered up-to-date. 
 
MAOs should contact their network/contracted providers on a quarterly basis to update 
the following information in provider directories: 
 
  Ability to accept new patients; 
 
  Street address;  
 
  Phone number; and   
  Any other changes that affect availability to patients. 
 
MAOs should contact providers using a method that is likely to achieve the highest 
response rate. It is not sufficient to determine that a group practice is accepting new 
patients. Outreach does not apply to entities such as hospitals. 
 
All providers listed in hard copy or online directories must have current contracts to 
participate in the MA plan network. Directories provided during the AEP for the 
upcoming plan year are expected to fairly represent the network for the upcoming plan 
year. 
 
Note: Employer/Union-only Group Waiver Plans (EGWP) may direct enrollees to their 
employer for information on the available providers. Employer/Union-only Group 
Waiver Plans (EGWP) must comply with the same requirements that are applicable to all 
MA and PDP plans regarding the provision of hard copy and online directories. 
 
110.2.3  Provider Directory Dissemination and Timing 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
MAOs must make the provider directory available to all enrollees at the time of 
enrollment, and at least annually thereafter by September 30.  
 
MAOs have some flexibility in how they provide access to their provider directories. 
MAOs must send all enrollees either the provider directory in hard copy, or a distinct 
and separate notice (in hard copy) describing where enrollees can find the provider 
directories online and how enrollees can request a hard copy. This notice must be a 
stand-alone document (i.e., not bound with other materials) and may be included in the 
same mailing envelope as the Annual Notice of Change/Evidence of Coverage 
(ANOC/EOC). 
 
To take advantage of this flexibility under 422.11 to provide a notice of on-line 
availability instead of providing a hard copy, an MAO must incudes in the notice the 
following to ensure that enrollees may access a hard copy: 
 
  If the MAO will not allow requests for a hard copy by email: If you need help 
finding a network provider, please call [customer service phone #] or visit [URL] 
to access our online [searchable, if applicable] directory. If you would like a 
provider directory mailed to you, you may call the number above, or request one 
at the website link provided above.; 
 
  If the MAO will allow requests for a hard copy by email: If you need help 
finding a network provider, please call [customer service phone #] or visit [URL] 
to access our online [searchable, if applicable] directory. If you would like a 
provider directory mailed to you, you may call the number above, request one at 
the website link provided above, or email [MAO email address].   
110.2.4  Online Provider Directory Requirements 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
MAOs must post a provider directory for all products offered by service areas or by 
general geographic area. The provision of accurate provider information and ensuring 
adequate access to covered services are essential protections for enrollees. Accurate 
provider directories are critical to helping enrollees make educated decisions about their 
MA plan choices.  
 
The following formats for the online provider directory are acceptable: 
  A searchable master provider directory that represents the complete network 
for the MAO;  
 
  Individual provider directories by plan product and/or service area (e.g., 
mirroring those that will be printed for the MAO membership); and 
 
  A search engine. If an MAO uses only a search engine on its website, it must meet 
all the requirements for the model Directory. 
 
MAOs must also provide the option on their websites for users to request a hard copy 
provider directory, as applicable. MAOs are expected to mail the requested hard copy 
directory within three (3) business days of the request. 
 
110.2.5  Provider Directory Disclaimers 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
The following is expected to be included in hardcopy and online provider directories if a 
directory is for a subset of a service area, Plans must advise members that: This 
directory is for <geographic area>. 
 
110.2.6  Provider Directory Submissions to CMS 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
MAOs must submit their hardcopy directories to CMS on a yearly basis. All hardcopy 
directories must be uploaded into HPMS as a non-marketing material under the XXX 
submission code. All hardcopy directories must be uploaded prior to making the 
directory available by September 30.  
 
Note that updates and/or addenda pages are not to be uploaded. Because provider 
directories are considered non-marketing, MAOs should not include a status after the 
material ID. To distinguish the provider directories as non-marketing, the following 
material ID should be used: MAOs contract number, followed by an underscore, 
followed by a series of alpha numeric characters chosen at the discretion of the MAO, 
followed by an underscore, followed by the letters NM (for example, 
H1234_ABC123_NM).   
110.3  Health Maintenance Organization (HMO) and HMO Point of 
Service (POS) Coverage and Access  
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
HMOs restrict the network of providers from which a beneficiary can receive non-
urgent/emergent covered services. HMOs furnish in-network services only.  
 
To ease restrictions on access to out-of-network providers, however, an HMO may offer 
a point of service (POS) benefit option. The following rules apply to an HMOPOS: 
 
  Enrollees are allowed the option of receiving specified services outside of the 
plan's provider network; 
 
  An HMOPOS may require enrollees to incur increased cost-sharing for POS 
services;  
 
  An HMOPOS benefit option may limit out-of-network coverage to a specific 
service or services, and may also limit the dollar amount of coverage that will be 
provided; and 
 
  The HMOPOS option may be offered as a mandatory supplemental benefit or as 
an optional supplemental benefit. 
 
For more information about the POS benefit option for an HMO, see section 30.3 above. 
 
110.4  Preferred Provider Organization (PPO) Coverage and Access 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
PPOs must furnish all services in-network and out-of-network, but may charge higher 
cost-sharing for plan covered services obtained out-of-network. The following rules 
apply to PPO coverage outside the service area: 
 
  The out-of-network requirement for PPOs applies to the entire United States and its 
territories. For example, a PPO with a service area in Puerto Rico must cover all 
plan benefits furnished to its enrollees on the mainland. An MAO wishing to furnish 
all plan-covered services outside its service area but only in certain geographic 
locations should offer an HMOPOS plan; 
 
  PPO plans must provide reimbursement for all plan-covered medically necessary 
services received from non-contracted providers without prior authorization 
requirements. However, both enrollees and providers have the right to request a prior 
written advance determination of coverage from the plan prior to receiving/providing 
services; 
    PPO plans offering an optional supplemental benefit must offer the same benefit in-
network and out-of-network; 
 
  PPO plans that cap the dollar value of supplemental benefits must use the same cap 
for both in-network and out-of-network benefits; and 
 
  PPO plans are prohibited from establishing prior notification rules under which an 
enrollee is charged lower cost-sharing when either the enrollee or the provider 
notifies the plan before a service is furnished. 
 
 
110.5  Special Rules for RPPOs 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
110.5.1 -- Access through Non-contracted Providers 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
Situations may arise where an MA plan cannot establish contracts with providers that 
meet Medicare access requirements in portions of an RPPOs defined service area. In 
such cases, RPPOs may meet Medicare access requirements by demonstrating to CMS 
satisfaction that there is adequate access to all plan-covered services through 
arrangements other than through contracted provider (42 CFR 422.112(a)(1)(ii)). 
Enrollees who receive plan-covered services in non-network areas of an RPPO must be 
covered at in-network cost-sharing levels for the enrollee. 
 
110.5.2  Essential Hospitals 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
42 CFR 422.112(c) describes the requirements for an RPPO to apply to CMS to 
designate a non-contracting hospital as an essential hospital. If CMS approves the 
application and the hospital continues to meet the requirements at 422.112(c) then the 
essential hospital is deemed to be a network hospital of the RPPO and normal in-
network inpatient hospital cost-sharing levels (including the catastrophic limit described 
in 42 CFR 422.101(d)(2)) apply to all enrollees accessing covered inpatient hospital 
services in that hospital. 
 
110.6  Ensuring Coordination of Care 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
The MA plan must ensure continuity of services through arrangements that include, but 
are not limited to, the following: 
 
  Implementing policies that specify under what circumstances services are 
coordinated and the methods for coordination. The policies should specify whether 
the services are coordinated by the enrollees primary care provider or in  conjunction or through some other means, e.g. a care management system, a nurse 
case manager, clinical prompts, etc.; 
 
  Offering to provide each enrollee with an ongoing source of primary care and 
providing a primary care source to each enrollee who accepts the offer; 
 
  Establishing coordination of plan services that integrate services through 
arrangements with community and social service programs generally available 
through contracted providers or non-contracted providers in the area served by the 
MA plan, including nursing home and community-based services; 
 
  Developing and implementing procedures to ensure that the plan and its provider 
network have the information required for effective and continuous patient care and 
quality review, including procedures to ensure that: 
 
  The plan makes its best effort to conduct an initial health risk assessment (HRA) 
o
of all new enrollees within 90 days of the effective date of enrollment and follows 
up on unsuccessful attempts to contact an enrollee. The original Medicare initial 
preventive visit (i.e. Welcome to Medicare preventive visit), an Annual 
Wellness Visit, or a recent previous physical examination in a commercial plan 
(to which the MAO has access) would fulfill this obligation; 
 
  The plan makes its best effort to conduct an HRA annually and follows up on 
o
unsuccessful attempts to contact an enrollee.  
 
  The plan makes a good faith effort to annually notify enrollees about the Annual 
o
Wellness Visit; 
 
  Each provider, supplier, and practitioner furnishing services to enrollees 
o
maintains an enrollee health record in accordance with standards established by 
CMS and the MAO, taking into account professional standards;  
 
  Enrollees are informed of specific health care needs that require follow up and 
o
receive, as appropriate, information to support and promote their own health;  
 
  Systems are employed to identify and address barriers to enrollee compliance 
o
with prescribed treatments or regimens; and 
 
  There is appropriate, timely, and confidential exchange of clinical information 
o
among provider network components.  
 
110.7  Access, Gatekeeper and Cost-Sharing by Plan Type 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
MAOs may offer a variety of plan types, as shown in Table VII below.  
  Table VII: Plan Type and Access Attributes for Non-emergent Non-urgent care 
Services 
Plan Type  Is a  Is a network  Must benefits  May Cost-
gatekeeper1  required?  be provided In- sharing 
allowed?  network and  requirements 
OON?  differ In-
network/OON 
HMO  Optional  Must contract   Must provide  Not applicable  
In-network only  
HMOPOS  Optional  Must contract   Must provide  May have higher 
in-network;  cost-sharing 
must provide  OON 
specific OON 
PPO, RPPO  Optional, In- Must contract2  Must provide  May have higher 
network;   both in- cost-sharing 
Prohibited Out- network/OON  OON 
of-network 
(OON) 
MSA and  Prohibited  May use full,  Must provide  May have higher 
PFFS  partial, or non- both in- cost-sharing 
network model  network/OON  OON 
 
Notes: 
1) A gatekeeper, when allowed, is typically, but not necessarily, a PCP. A primary 
purpose of a gatekeeper is to comply with plan requirements for medically necessary 
referrals to in-network specialists. A coordinated care plan may require referral by a 
gatekeeper for in-network dialysis services but is prohibited from requiring gatekeeper 
referral for out-of-network dialysis services. 
 
2) Although an RPPO must contract with a network, it may, upon obtaining a waiver 
from CMS, only contract with a network in part of its service area (42 CFR 
422.112(a)(1)(ii)). 
 
120  Coordination of Medicare Benefits with Employer/Union Group 
Health Plans and Medicaid 
(Rev. 120, Issued: 01-16-15, Effective: 01-01-15, Implementation: 01-01-15) 
 
If an MAO contracts with an employer, labor organization, or the trustees of a fund 
established by one or more employers or labor organizations that cover enrollees in an 
MA plan, or contracts with a State Medicaid agency to provide Medicaid benefits to 
individuals who are eligible for both Medicare and Medicaid, and who are enrolled in an 
MA plan, the enrollees must be provided the same benefits as all other enrollees in the 
MA plan, with the employer, labor organization, fund trustees, or Medicaid benefits 
supplementing the MA plan benefits.   
120.1  General Rule 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
An MAO may contract with employers, unions, or State Medicaid Agencies to pay for 
benefits that complement those that an employee or retiree receives under an MA plan 
(see 42 CFR 422.106(a)(2)). Some examples of complementary benefits include the 
following: 
 
  The employer, union or State Medicaid Agency pays, or is financially responsible, for 
some, or all, of the MA plans basic premiums, supplemental premiums, or cost-
sharing; 
 
  The employer, union, or State Medicaid Agency provides other employer-sponsored 
(or state-sponsored) services that may require additional premium and cost-sharing; 
or 
 
  The employer, union or State Medicaid Agency purchases a non-Part D drug benefit 
from the MAO.  
 
These complementary benefits may not be classified as MA benefits and therefore are not 
regulated or reviewed by CMS. However, the MAO must comply with all state 
regulations governing such benefits. Refer to chapter 9, Employer/Union Group Health 
Plans, of the MMCM, for further information. 
 
120.2  Requirements, Rights, and Beneficiary Protections 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
All requirements, rights, and protections that apply to the MA program also apply to all 
MA plan benefits  that is, the basic, mandatory and optional supplemental benefits 
discussed in this chapter. By contrast, the employer, labor organization, fund trustees or 
State Medicaid benefits that complement the MA plan benefits are not considered MA 
benefits and are therefore beyond the scope of MA regulations. Marketing materials 
associated with the complementary benefits are also not subject to CMS approval. (See 
the Medicare Marketing Guidelines for further discussion at: 
https://www.cms.gov/Medicare/Health-Plans/ManagedCareMarketing/Downloads/2016-
Medicare-Marketing-Guidelines-Updated.pdf.) 
 
Medicaid benefits provided through a contract with an MAO to provide coverage for 
individuals eligible for both Medicare and Medicaid and who are enrolled in an MA plan 
are subject to Medicaid rules and regulations, including CMS review where applicable. 
 
120.3  Employer/Union Plans 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
  For more details on employer/union coverage see chapter 9 of the MMCM, 
Employer/Union-Sponsored Group Health Plans. 
 
130  Medicare Secondary Payer (MSP) Procedures 
(Rev. 120, Issued: 01-16-15, Effective: 01-01-15, Implementation: 01-01-15) 
 
 
130.1  Basic Rule 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
CMS does not pay for services to the extent that there is a third party that is required to 
be the primary payer. The principles on cost-sharing that are discussed below may not 
apply in circumstances where CMS has granted an employer group waiver. (See chapter 
9 of the MMCM Employer/Union Sponsored Group Health Plans, for further 
discussion.) 
 
This section only applies to collections related to Part C benefits. Special rules apply to 
the collection of cost-sharing related to Part D benefits offered in an MA-PD plan. These 
Part D rules are found in chapter 14, Coordination of Benefits, of the Prescription Drug 
Benefit Manual, publication 100-18, located at: http://www.cms.gov/Regulations-and-
Guidance/Guidance/Manuals/Downloads/Pub100_18.pdf. 
 
130.2  Responsibilities of the MAO 
(Rev. 120, Issued: 01-16-15, Effective: 01-01-15, Implementation: 01-01-15) 
 
The MAO must, for each MA plan: 
 
  Identify payers that are primary to Medicare; 
 
  Identify the amounts payable by those payers; and 
 
  Coordinate its benefits to Medicare enrollees with the benefits of the primary payers. 
 
130.3  Medicare Benefits Secondary to Group Health Plans (GHPs) 
and Large Group Health Plans (LGHPs) and in Settlements 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
Secondary payer status can arise from legal settlements, as well as other insurance plans. 
MAOs should refer to the Medicare Secondary Payer Manual, publication 100-05, located 
at: http://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Internet-Only-
Manuals-IOMs-Items/CMS019017.html  for additional information. 
 
In the case of an enrollees coverage by another insurance plan, secondary payer status 
may, in certain circumstances, depend on: 
 
  Whether the enrollee entitlement to Medicare is due to age, ESRD, or disability;   
  Who is the primary beneficiary of the other insurance plan;  
 
  Whether the primary beneficiary is covered by the employer Group Health Plan 
(GHP) as an active or former employee; and/or 
 
  The size (number of employees) of the sponsoring employer group. 
 
Specifically, but not exclusively, an MAO is the secondary payer in the following 
situations: 
 
  When the MA plan has an MA enrollee who is 65 years or older, and the enrollee: 
 
  Is covered by a GHP because of either: 
o
 
  The enrollees current employment; or  
 
  Current employment of a spouse of any age; and 
 
  The employer that sponsors or contributes to the GHP employs 20 or more 
o
employees. 
 
  When the MA plan has an MA enrollee who is disabled, and the enrollee: 
 
  Is covered by a Large Group Health Plan (LGHP) because of either:  
o
 
  Current employment; or  
  A family members current employment; and  
  The employer that sponsors or contributes to the LGHP plan employs 100 
o
or more employees; or 
 
  During the first 30 months of eligibility or entitlement to Medicare for an MA 
enrollee whose entitlement to Medicare is solely on the basis of ESRD and group 
health plan coverage (including a retirement plan). This provision applies regardless 
of the number of employees and the enrollees employment status. 
 
Secondary payer status may also be triggered due to legal settlements. In this case, the 
MAO is the secondary payer for an MA enrollee when: 
 
  The proceeds from the enrollees workers compensation settlement are available; and 
 
  The proceeds from the enrollees no-fault or liability settlement is available. 
 
Medicare does not pay at all for services covered by a primary GHP. In the case of the 
presence of workers compensation, no-fault and liability insurance (including self- insurance), Medicare makes conditional payments if the other insurance does not pay 
promptly. These conditional payments are subject to recovery when and if the other 
insurance does make payment. 
 
MAOs may not withhold primary payment unless there is a reasonable expectation that 
another insurer will actually promptly pay primary to Medicare. Thus for example, if an 
MA enrollee did not have auto insurance, the MAO cannot withhold primary payment on 
the grounds that the enrollee should have had this insurance because it is a state 
requirement. 
 
130.4  Collecting From Other Entities 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
The MAO may bill, or authorize a provider to bill, other individuals or entities for 
covered Medicare services for which Medicare is not the primary payer, as specified in 
sections 130.5 and 130.6 below. 
 
130.5  Collecting From Other Insurers or the Enrollee 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
If an MA enrollee receives plan-covered services that are also covered under an employer 
group health plan, state or Federal workers compensation, no-fault insurance, or any 
liability insurance policy or plan, including a self-insured plan, the MAO may bill, or 
authorize a provider to bill any of the following:  
 
  The insurance carrier, the employer/union, or any other entity that is liable for 
payment for the services under section 1862(b) of the Act; and 
 
  The enrollee, to the extent that s/he has been paid by the insurance carrier, 
employer/union, or entity for covered medical expenses. 
 
130.6  Collecting From Group Health Plans (GHPs) and Large Groups 
Health Plans (LGHPs) 
(Rev. 120, Issued: 01-16-15, Effective: 01-01-15, Implementation: 01-01-15) 
 
If an MAO is the secondary payer to a GHP/LGHP and, for a given service, the cost-
sharing required by the GHP/LGHP is greater than the cost-sharing required by the MAO 
then: 
 
  The enrollee must pay the MAOs plan cost-sharing; and 
 
  The MAO pays the GHP/LGHP the difference between that higher cost-sharing and 
the MAO plan cost-sharing (see 42 CFR  422.504(g), which obligates the MAO, 
even if it is a secondary payer, to protect the enrollee from paying more than plan 
cost-sharing).  
  Example: If the GHP (the primary payer) has a co-payment of $20 and the MA plan has a 
co-payment of $10 for a plan-covered service that the enrollee properly received 
(following all plan requirements), the enrollee may not be held liable for paying more 
than the MA plans co-payment of $10. The MAO must hold the enrollee harmless for 
any amount in excess of the MA plan co-payment of $10. 
 
130.7  Medicare as Secondary Payer (MSP) Rules and State Laws 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
Consistent with Federal preemption of state law, addressed at 42 CFR  422.402 and 42 
CFR  422.108, a state cannot take away an MAO's right under Federal law and the MSP 
regulations to bill, or to authorize providers and suppliers to bill, for services for which 
Medicare is not the primary payer. The MAO may exercise the same rights to recover 
from a primary plan, entity, or individual that the Secretary exercises under the MSP 
regulations as they apply to MA Plans. 
 
(See chapter 8 of the MMCM, Payments to Medicare Advantage Organizations for 
further discussion of Medicare Secondary Payer and Coordination of Benefits.) 
 
140  Service Area 
(Rev. 120, Issued: 01-16-15, Effective: 01-01-15, Implementation: 01-01-15) 
 
140.1  Service Area Defined 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
A service area is a geographical area approved by CMS within which an MA eligible 
individual may enroll in a particular MA plan offered by an MAO. A local MA plans 
service area does not need to be contiguous. A regional PPOs service area must be the 
entire MA region. The basic requirement of service area is that each MA plan offered by 
an MAO must be offered to all enrollees in an MA plans service area and must provide a 
uniform benefit package and uniform cost-sharing arrangements. 
 
The designation of an MA plans service area affects the following five items: 
 
  Payment Rate: The service area designation determines the benchmark applicable to 
the plan, and therefore, CMS payment rate to the MAO for the MA plan; 
 
  Required Benefits: The designation affects which benefits will be provided under the 
MA plan, because benefits and premiums must be uniform for all Medicare 
beneficiaries residing in the plans service area; 
 
  Eligibility: The designation determines which Medicare beneficiaries are able to elect 
the plan. With the exception of SNPs, which can limit enrollment based upon 
statutory and regulatory parameters, MAOs are obligated to enroll any MA eligible 
resident in the service area who elects the plan during an applicable enrollment period 
(provided an approved capacity limit has not yet been reached (see chapter 2 of the  MMCM, Enrollment and Disenrollment) located at: 
http://www.cms.gov/Medicare/Eligibility-and-
Enrollment/MedicareMangCareEligEnrol/index.html?redirect=/MedicareMangCareEl
igEnrol/); 
 
  Access Requirements: For coordinated care plans, the designation identifies the 
geographical area in which the plans covered services must be available and 
accessible; and 
 
  Urgently Needed Services: For coordinated care plans, the designation defines the 
boundaries beyond which the MAO must cover urgently needed services. 
 
140.2  Factors That Influence Service Area Approvals 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
In deciding whether to approve an MA plans service area, CMS considers whether: 
 
   Each MA plan (except for Employer/Union-Only plans; see chapter 9 of the 
MMCM, Employer/Union-Sponsored Group Plans) will be made available to all MA 
eligible individuals within the plans service area; 
 
  The plan will offer a uniform premium, benefit package and cost-sharing 
arrangement to all beneficiaries in the service area, or segment of a service area; 
 
  The service area meets the county integrity rule that a service area generally 
consists of a full county or counties as described in  422.2 (definition of service area) 
and below in section 140.3; and 
 
  For coordinated care plans, the contracting provider network meets CMS access and 
availability standards for the service area, as explained in section 110 of this chapter, 
even if some of the contracting providers are physically located outside of the service 
area. 
 
140.3  Partial County Service Areas 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
This subsection only applies to local MA plans. 
 
CMS will generally approve only full counties in a service area, in order to prevent the 
establishment of boundaries that could game the county-wide MA payment system by 
excluding an area of the county where beneficiaries with expected higher health care 
utilization might reside. However, the counties do not need to be contiguous, and under 
limited circumstances described below, CMS may approve the inclusion of partial 
counties in a service area. 
  CMS will consider approving a service area that includes a partial county, if it determines 
that the inclusion of a partial county is: (1) necessary, (2) non-discriminatory, and (3) in 
the best interest of the beneficiaries. All three of these factors must be present in order 
for CMS to approve an exception to the county integrity rule. CMS may also consider the 
extent to which the proposed service area mirrors the service area of existing commercial 
health care plans or MA plans offered by the MAO and whether there are other MA plans 
serving the entire county. 
 
140.3.1  Necessity 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
For CMS to determine that a partial county is necessary, an MAO must be able to 
demonstrate that the MAO cannot establish a provider network to make health care 
services available and accessible to beneficiaries residing in the portion of the county to 
be excluded from the service area. 
 
The following examples illustrate how an HMO or other type of local MA plan may have 
a health care network that is limited to one part of a county and cannot be extended to 
encompass an entire county.  
 
Example 1: A section of a county has an insufficient number of providers (or insufficient 
capacity among existing providers) to ensure access and availability to covered services. 
 
  Example 2: Geographic features, such as mountains, water barriers, and exceptionally 
large counties create situations where the local pattern of care in the county justifies 
less than a complete county because covered services are not available and accessible 
throughout the entire county. 
 
140.3.2  Non-Discriminatory 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
For CMS to determine if a partial county is non-discriminatory, an MAO must be able to 
demonstrate the following: 
 
  The anticipated enrollee health care cost of the portion of the county it proposes to 
serve is similar to the area of the county that will be excluded from the service area. 
For example, if the MAO is requesting a service area reduction (creating a new partial 
county) the MAO can demonstrate its anticipated cost of care (in the partial county 
area) by using data from the previous year of MA contracting comparing the health 
care costs of its enrollees in the excluded area to those in the area of the county it 
proposes to serve; and 
 
  The racial and economic composition of the population in the portion of the county it 
wants to serve is comparable to the excluded portion of the county. For example, the 
MAO can use U.S. census data to show the demographic make-up of the included 
portion of the county as compared to the excluded portion.   
Note that the existence of other MA plans operating in the entire county may provide 
evidence that approving a partial county service area application would be 
discriminatory. 
 
140.3.3 -Best Interests of Beneficiaries 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
In order for CMS to determine whether a partial county is in the best interest of 
beneficiaries, an MAO must provide reasonable documentation to support their request. 
As previously noted, CMS will generally only approve partial counties when it is not 
possible for an MAO to serve an entire county. 
 
An MAO may not create a service area that excludes portions of a county because it 
believes enrollees with anticipated higher health care costs or needs reside in the portions 
of the county to be excluded from the service area. 
 
150  Benefits during Disasters and Catastrophic Events 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
The Secretary of Health and Human Services (the Secretary) has the right to exercise his 
or her waiver authority under section 1135 of the Social Security Act if, in addition to a 
Presidential declaration of a disaster or emergency under the Stafford Act or National 
Emergencies Act, the Secretary declares a public health emergency under section 319 of 
the Public Health Service Act. If an 1135 waiver is issued, CMS will identify all plan 
requirements and responsibilities. Detailed guidance and requirements for MA plans 
under the section 1135 waiver, including timeframes associated with those requirements 
and responsibilities, will be posted on the Department of Health and Human Services 
website, (http://www.hhs.gov/) and the CMS website (http://www.cms.hhs.gov/). MAOs 
are expected to check these sites frequently during such disasters and emergencies. 
 
Under the Secretarys section 1135 waiver authority, CMS may authorize DME and A/B 
MACs to pay for Part C-covered services furnished to enrollees and seek reimbursement 
from MAOs for those health care services, retrospectively. 
 
In the event of a Presidential emergency declaration, a Presidential (major) disaster 
declaration, a declaration of emergency or disaster by a Governor, or an announcement 
of a public health emergency by the Secretary of Health and Human Services, but absent, 
or prior to the issuance of, a section 1135 waiver by the Secretary, MAOs must: 
 
  Allow Part A and Part B and supplemental Part C plan benefits to be furnished at 
specified non-contracted facilities (note that Part A and Part B benefits must, per 42 
CFR 422.204(b)(3), be furnished at Medicare certified facilities); 
 
  Waive in full, requirements for gatekeeper referrals where applicable;  
    Temporarily reduce plan-approved out-of-network cost-sharing to in-network cost-
sharing amounts; and 
 
  Waive the 30-day notification requirement to enrollees as long as all the changes 
(such as reduction of cost-sharing and waiving authorization) benefit the enrollee. 
 
Typically, the source that declared the disaster will clarify when the disaster or 
emergency is over. If, however, the disaster or emergency timeframe has not been closed 
30 days from the initial declaration, and if CMS has not indicated an end date to the 
disaster or emergency, plans should resume normal operations 30 days from the initial 
declaration. MAOs not able to resume normal operations after 30 days should notify 
CMS. 
 
MAOs must disclose their policies about providing benefits during disasters on their plan 
websites. 
 
If the President has declared a major disaster or the Secretary has declared a public 
health emergency, MAOs must follow the guidance in chapter 5 of the Prescription Drug 
Benefit Manual, regarding refills of Part D medications. The Prescription Drug Benefit 
Manual may be found at: http://www.cms.gov/Regulations-and-
Guidance/Guidance/Manuals/Downloads/Pub100_18.pdf. 
 
160  Beneficiary Protections Related to Plan-Directed Care  
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
Organization Determinations: An enrollee, or a provider acting on behalf of the enrollee, 
always has the right to request a pre-service organization determination if there is a 
question as to whether an item or service will be covered by the plan.  If the plan denies 
an enrollees (or his/her treating providers) request for coverage as part of the 
organization determination process, the plan must provide the enrollee (and provider, as 
appropriate) with the standardized denial notice (Notice of Denial of Medical Coverage 
(or Payment)/CMS-10003).  For the requirements related to organization determinations 
and issuance of the standardized denial notice (CMS-10003), see chapter 13 of the 
MMCM located at: https://www.cms.gov/Regulations-and-
Guidance/Guidance/Manuals/downloads/mc86c13.pdf. 
 
Limitations on Enrollee Liability: CMS considers a contracted provider an agent of the 
MAO offering the plan. As stated in the preamble to the January 28, 2005 final rule 
(CMS-4069-F): 
 
MA organizations have a responsibility to ensure that contracting physicians and 
providers know whether specific items and services are covered in the MA plan in which 
their patients are enrolled.  If a network physician furnishes a service or directs an MA 
beneficiary to another provider to receive a plan-covered service without following the 
plans internal procedures (such as obtaining the appropriate plan pre-authorization),  then the beneficiary should not be penalized to the extent the physician did not follow 
plan rules. 
 
Consequently, when a contracted provider furnishes a service or refers an enrollee for a 
service that an enrollee reasonably believes is a plan-covered service, the enrollee 
cannot be financially liable for more than the applicable cost-sharing for that service.  If 
a contracted provider believes an item or service may not be covered for an enrollee, or 
could be covered only under specific conditions, the appropriate process is for the 
enrollee or provider to request a pre-service organization determination from the plan. 
 
If a contracted provider refers an enrollee to a non-contracted provider for a service that 
is covered by the plan upon referral, the enrollee is financially liable only for the 
applicable cost-sharing for that service. Contracted providers are expected to coordinate 
care or work with plans prior to referring an enrollee to a non-contracted provider to 
ensure, to the extent possible, that enrollees are receiving medically necessary services 
covered by their plan. Furthermore, plans are expected to work with their contracted 
providers to ensure that clear processes are in place and providers are educated about 
those processes, including appropriate documentation, to substantiate that a referral has 
been made. 
 
If a service is never covered by the plan and the plans Evidence of Coverage (EOC) 
provided to the enrollee is clear that the service or item is never covered, the plan is not 
required to hold the enrollee harmless from the full cost of the service or item.  For a 
service or item that is typically not covered, but could be covered under specific 
conditions (e.g., dental care that is necessary to treat an illness or injury), the EOC, in 
and of itself, is not adequate notice of non-coverage for purposes of determining enrollee 
liability.  In such instances, the appropriate process is for the enrollee, or the provider 
acting on behalf of the enrollee, to request a pre-service organization determination.  If 
the plan denies the service, the plan must issue the standardized denial notice with 
appeal rights.  The enrollee has the right to appeal any denial of a service or item.  Plans 
also must educate their contracted providers about the limits of plan coverage and the 
need to correctly advise enrollees when providing referrals for covered services. This 
will prevent confusion related to plan coverage and enrollee financial liability as well as 
ensure coordination of the care furnished. 
 
When the provider, or the plan acting on behalf of the provider, can show that an 
enrollee was notified (via a clear exclusion in the EOC or the standardized denial notice) 
prior to receipt of the item or service that the item or service is not covered by the plan or 
that coverage is available only if the enrollee is referred for the service by a contracted 
provider but the enrollee nonetheless receives that item or service in the absence of a 
referral, the regulation at 422.105(a) does not require the MA plan to hold the enrollee 
harmless from the full cost of the service or item charged by the provider. 
 
170  Balance Billing 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
  The guidance in this section applies to HMOs (Health Maintenance Organizations), 
HMOPOS (HMO Point of Service), PPOs (Preferred Provider Organizations), and 
RPPOs (Regional PPOs). 
 
When enrollees obtain plan-covered services in an HMO, PPO, or RPPO, they may not 
be charged or held liable for more than plan-allowed cost-sharing. Providers who are 
permitted to balance bill must obtain the amount in excess of the enrollees cost-
sharing (the balance) for services, directly from the MAO and not from the enrollee. 
 
170.1  Definitions 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
Note: Under original Medicare rules, a Medicare participating provider (hereinafter 
referred to as a participating provider) is a provider that signs an agreement with 
Medicare to always accept assignment. The MACs post lists of Medicare participating 
providers. Participating providers may never balance bill because they have agreed to 
always accept the Medicare allowed amount as payment in full. An original Medicare 
non-participating provider (hereinafter referred to as a non-participating, or non-par, 
provider) may accept assignment on a case-by-case basis and indicates this by checking 
affirmatively in field 27 on the CMS 5010 claims form. In these instances, no balance 
billing of enrollees by the provider is permitted. 
 
170.2  Balance Billing by Provider Type 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
The rules governing balance billing as well as the rules governing the MA payment of 
MA-plan contracting providers, non-contracting providers and original Medicare 
participating and non-participating providers are listed below by type of provider. 
 
  Contracted provider: There is no balance billing paid by either the plan or the 
enrollee. 
 
  Non-contracting, original Medicare, participating provider: There is no balance 
billing paid by either the plan or the enrollee. 
 
  Non-contracting, non-(Medicare)-participating provider: The MAO must pay the 
non-contracting, non-participating (non-par) provider the difference between the 
enrollees cost-sharing and the original Medicare limiting charge, which is the 
maximum amount that original Medicare requires an MAO to reimburse a provider. 
The enrollee only pays plan-allowed cost-sharing, which equals: 
 
  The copay amount, if the MAO uses a copay for its cost-sharing; or 
o
 
  The coinsurance percentage multiplied by the limiting charge, if the MAO uses a 
o
coinsurance method for its cost-sharing.  
    MA-plan, non-contracting, non-participating DME supplier: The MAO must pay the 
non-contracting non-participating (non-par) DME supplier the difference between 
the enrollees cost-sharing and the DME suppliers bill; the enrollee only pays plan-
allowed cost-sharing, which equals: 
 
  The copay amount, if the MAO uses a copay for its cost-sharing; or 
o
 
  The coinsurance percentage multiplied by the total provider bill, if the MAO uses 
o
a coinsurance method for its cost-sharing. Note that the total provider bill may 
include permitted balance billing. 
 
For information about payment to providers that have opted-out of Medicare, refer to 
chapter 6 of the MMCM, Relationships with Providers at: 
http://www.cms.gov/Regulations-and-
Guidance/Guidance/Manuals/Downloads/mc86c06.pdf 
 
Additional useful information on payment requirements by MAOs to non-network 
providers may be found in MA Payment Guide for Out-of-network Payments, at:  
http://www.cms.hhs.gov/MedicareAdvtgSpecRateStats/downloads/oon-payments.pdf. 
 
MA plans must clearly communicate to enrollees through the Evidence of Coverage 
(EOC) and Summary of Benefits (SB) their cost-sharing obligations as well as the 
enrollees lack of obligation to pay more than the allowed plan cost-sharing as described 
above. 
 
180  Information on Advance Directives 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
180.1  Definition 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
Advance directives are written instructions, such as living wills or durable powers of 
attorney for health care, recognized under state law and signed by a patient, that explain 
the patients wishes concerning the provision of health care if the patient becomes 
incapacitated and is unable to make those wishes known. 
 
180.2  Basic Rule 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
Pursuant to 42 CFR 422.128, the MAO must: 
 
  Maintain written policies and procedures that meet the requirements for advance 
directives that are set forth in this section; and 
 
  Provide to its adult enrollees, at the time of initial enrollment, written information on 
their rights under the law of the state in which the MAO furnishes services to make  decisions concerning their medical care, including the right to accept or refuse 
medical or surgical treatment, and the right to formulate advance directives. 
 
The MAO is permitted to contract with other entities to furnish information concerning 
advance directive requirements. However, the MAO remains legally responsible for 
ensuring that the requirements of this section are met. Further details concerning the 
written information that must be given to enrollees as well as other obligations are 
outlined below in section 180.4. 
 
180.3  State Law Primary 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
The MA programs advance directive requirements are guidelines that refer to state law, 
whether statutory or recognized by the courts of the state. Therefore, MAOs must comply 
with the advance directive requirements of the states in which they provide services. CMS 
cannot provide detailed guidelines as to what constitutes best efforts in each state. 
Medicare regulations give MAOs and states a great deal of flexibility, and CMS will 
work with the MAO (and the state, if needed) to ensure that advance directive 
requirements conform to Federal law. Changes in state law must be reflected in the 
information MAOs provide their enrollees as soon as possible, but no later than 90 days 
after the effective date of the state law or the date of the court order. 
 
180.4  Content of Enrollee Information and Other MA Obligations 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
The written information provided to enrollees must, at a minimum, include a description 
of the MAOs written policies on advance directives, including an explanation of the 
following: 
 
  That the MAO cannot refuse care or otherwise discriminate against an individual 
based on whether or not the individual has executed an advance directive; 
 
  The right to file a complaint about an MAOs noncompliance with advance directive 
requirements, and where to file the complaint; 
 
  That the plan must document in a prominent part of the individuals current medical 
record whether or not the individual has executed an advance directive; 
 
  That the MAO is required to comply with state law (See section 180.3 for details); 
 
  That the MAO must educate its staff about its policies and procedures for advance 
directives; and 
 
  That the MAO must provide for community education regarding advance directives. 
  If the MAO cannot implement an advance directive as a matter of conscience, it must 
issue a clear and precise written statement of this limitation. The statement must include 
information that: 
 
  Explains the differences between institution-wide objections based on conscience and 
those that may be raised by individual physicians; 
 
  Identifies the state legal authority permitting such objection; and 
 
  Describes the range of medical conditions or procedures affected by the conscience 
objection. 
 
180.5  Incapacitated Enrollees 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
If an enrollee is incapacitated at the time of initial enrollment and is unable to receive 
information due to an incapacitating condition, the MAO may give advance directive 
information to the enrollees family or surrogate. The MAO is not relieved of its 
obligation to provide this information to the enrollee once s/he is no longer incapacitated 
or unable to receive such information. Follow-up procedures must be in place to ensure 
that the information is given directly to the individual at the appropriate time. 
 
180.6  Community Education Requirements 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
The MAO must provide for community education regarding advance directives either 
directly or in concert with other providers or entities. Separate community education 
materials may be developed and used at the discretion of the MAO for separate parts of 
the community. Although the same written materials are not required for all settings, the 
material should define what constitutes an advance directive, emphasizing that an 
advance directive is designed to enhance an incapacitated individuals control over 
medical treatment, and describe applicable state law concerning advance directives. An 
MAO must be able to document its community education efforts. 
 
180.7  MAO Rights 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
The MAO is not required to provide care that conflicts with an advance directive. The 
MAO is not required to implement an advance directive if, as a matter of conscience, the 
MAO cannot implement an advance directive and state law allows any health care 
provider or any agent of the provider to conscientiously object. 
 
180.8  Anti-discrimination Rights 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
  An MAO may not condition the provision of care or otherwise discriminate against an 
individual based on whether or not the individual has executed an advance directive. 
Furthermore, the MAO must inform individuals that complaints concerning 
noncompliance with the advance directive requirements may be filed with the State 
Survey and Certification Agency. 
 
190  Part C Explanation of Benefits (EOB) 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
The Part C EOB is an ad hoc enrollee communication that provides MA enrollees with 
clear and timely information about their medical claims to support informed decisions 
about their healthcare options. MAOs are required to issue EOBs that include the 
information reflected in the CMS-developed templates. For additional information, 
please see the final templates and instructions at: http://www.cms.gov/Medicare/Health-
Plans/ManagedCareMarketing/MarketngModelsStandardDocumentsandEducationalMat
erial.html. 
 
200  Educating and Enrolling Members in Medicaid and Medicare 
Savings Programs 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
200.1  Defining Guidance 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
This guidance pertains to Medicare contracting organizations (and entities with which 
they contract) that educate their current Medicare (including Part C, Part D and Cost 
plan) enrollees about Medicaid and/or Medicare Savings Programs, assist enrollees with 
determining potential eligibility for those programs and helping enrollees actually enroll 
in those programs. This guidance also pertains to organizations that help enrollees 
maintain their eligibility and enrollment in these programs. 
 
200.2  Relationship to D-SNP Eligibility/Enrollment 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
This guidance on educating and enrolling enrollees in financial assistance programs in 
no way affects or relates to an MAOs responsibility for determining an enrollees, or 
potential enrollees, eligibility to enroll in the MAOs Dual-Eligible Special Needs Plan 
(D-SNP). Refer to the MMCM chapter 2 for guidance on D-SNP eligibility and 
enrollment. 
 
200.3  Relationship to Dual Eligible Demonstration Programs 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
MAOs should be aware of how an enrollees eligibility for Medicaid might affect their 
enrollees continued plan enrollment in those states or counties where Financial  Alignment Initiative demonstrations with passive enrollment exist. More information, 
including state-specific names for the Financial Alignment Initiative, is available at 
https://www.cms.gov/Medicare-Medicaid-Coordination/Medicare-and-Medicaid-
Coordination/Medicare-Medicaid-Coordination-
Office/FinancialAlignmentInitiative/FinancialModelstoSupportStatesEffortsinCareCoord
ination.html.  
 
200.4  Scope of Financial Assistance Programs 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
MAOs that provide education and/or enrollment assistance to enrollees must provide this 
across the full scope of Medicaid and Medicare Savings Programs:  
  Qualified Medicare Beneficiaries (QMBs) without other Medicaid (QMB Only)  
 
  QMBs with full Medicaid (QMB Plus)  
 
  Specified Low-Income Medicare Beneficiaries (SLMBs) without other Medicaid 
(SLMB Only)  
 
  SLMBs with full Medicaid (SLMB Plus)  
 
  Qualified Disabled and Working Individuals (QDWIs)  
 
  Qualifying Individuals (QIs)  
 
  Medicaid-Only Dual Eligibles (Non QMB, SLMB, QDWI, QI) 
 
200.5  Targeting Membership 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
MAOs may conduct education and enrollment assistance for only a portion of its plan 
membership. Selection of the focus population may be based upon demographic data or 
on a specific geographic area. However, the MAO must provide outreach to all enrollees 
within those pre-identified population segments. Additionally, if the MAO receives an 
inquiry from a plan enrollee not previously identified in the targeted group, it must 
provide assistance to that enrollee as if he or she had been included in the initial group. 
 
200.6  Required Elements of Education/Enrollment Assistance Programs 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
In its education and enrollment assistance programs, the MAO must include the 
following elements in its written and oral communications with plan enrollees: 
    Clarification that the enrollee may  voluntarily offer information, including financial 
information, for assistance with enrolling in or maintaining enrollment in state 
financial assistance, but that the enrollee is not obligated to provide this information. 
 
  Clarification that the enrollees failure to provide information will in no way 
adversely affect the enrollees membership in his or her health plan. 
 
  Clarification that the Medicare Savings Programs are part of either the State 
Medicaid program or State medical assistance programs.  
 
  Clarification that the plan sponsor is only providing an initial eligibility screening 
and that only the appropriate State Agency can make a final eligibility determination.  
 
  Guidance to an enrollee on how to proceed with the application process even if the 
MAOs screening process indicates that the enrollee is probably not eligible for 
assistance under any of the dual eligibility programs.  
 
  Alternate sources of information, including the telephone number for enrollees to call 
the SHIP and the appropriate State Agency. Outreach materials may also include the 
1-800-MEDICARE (1-800-633-4227) number and the (1-800-486-2048) TTY number.  
 
The MAO must coordinate its education and enrollment efforts with the appropriate State 
Medicaid Agency and local SHIP offices so that these entities are aware of the MAOs 
efforts. 
 
MAOs may provide assistance to the enrollee in completing applications for financial 
assistance including submitting the paperwork to the appropriate State office.  
 
200.7  CMS Oversight 
(Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) 
 
At any time, CMS may request, and the MAO must provide, any information related to the 
education and enrollment assistance program. This includes, but is not limited to, the 
information listed below. Should any of that information be unavailable or show lack of 
compliance with the required elements of the program, CMS may take compliance 
actions against the MAO.  
 
  A detailed description of each step in the outreach process and the entity responsible 
for each step. (CMS recommends a flow chart showing the result of each action.);  
 
  A timeline showing the proposed dates of outreach activities, the number of enrollees 
involved in each activity, and the service area, (e.g., county), included in the 
activities;  
 
  Executed contracts with all external entities involved in the outreach process. This 
includes contracts with any subcontractors taking part in the activities;    
  Supporting documentation from the appropriate state agency providing specific state 
income requirements for each savings program level, and names and contacts within 
the appropriate state agency/agencies; 
 
  Internal training programs the MAO is using to educate staff involved in education 
and enrollment assistance. An internal plan for protecting the confidentiality of the 
enrollees financial or other personal information gathered in the outreach process; 
 
  Outreach letters and other materials, (e.g., brochures, Authorization to Represent 
form), going to plan enrollees; and 
 
Telephone scripts or other outreach assistance scripts that will guide representatives in 
answering enrollees questions or discussing the assistance available to them. Such 
scripts must include a privacy statement clarifying that the enrollee is not required to 
provide any information to the representative and that the information provided will in 
no way affect the enrollees membership in the plan. 
  Transmittals Issued for this Chapter 
 
Rev #  Issue Date  Subject  Impl Date  CR# 
R116MCM 01/16/2015  Chapter 4, Quality Improvement Program  01/01/2015 N/A 
R115MCM 08/23/2013  Chapter 4,Benefits and Beneficiary  08/23/2013 N/A 
Protections 
R107MCM 06/22/2012  Chapter 4,Benefits and Beneficiary  06/22/2012 N/A 
Protections 
R97MCM  05/20/2011  Chapter 4,Benefits and Beneficiary  05/20/2011 N/A 
Protections 
R94MCM  12/03/2010  Chapter 4,Benefits and Beneficiary  12/03/2010 N/A 
Protections 
R92MCM  12/18/2009  Chapter 4,Benefits and Beneficiary  12/18/2009 N/A 
Protections 
R87MCM  06/08/2007  Update of Chapter 4,Benefits and  06/08/2007 N/A 
Beneficiary Protections 
R72MCM  09/30/2005  Changes in Manual Instructions for Benefits  N/A  N/A 
and Beneficiary Protections 
R61MCM  09/03/2003  Emergency and Urgently Needed Services  N/A  N/A 
R49MCM  04/09/2004  Access and Availability Rules for  N/A  N/A 
Coordinated Care Plans and Continuity of 
Care 
R43MCM  01/09/2004  Sources for Obtaining Information  N/A  N/A 
R36MCM  10/31/2003  Miscellaneous Changes  N/A  N/A 
R23MCM  06/06/2003  Initial Issuance of Chapter  N/A  N/A 
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