Medicare Managed Care Manual 
Chapter 17 - Subchapter F 
Benefits and Beneficiary Protections 
 
Table of Contents 
 
(Rev. 77, 10-28-05) 
10 - General Requirements 
10.1 - Medicare Covered Services 
10.2 - Emergent and Urgent Care 
10.3 - Optional Supplemental Benefits 
10.4 - Prescription Drug Coverage 
10.5 - Waiting Periods and Exclusions Not Present In Original Medicare 
10.6 - Services, Supplies and DME 
10.7 - Cost-Sharing and Deductibles 
10.8 - Cap On Beneficiary Monetary Responsibility 
10.9 - Electronic Deduction of Premium 
10.10 - Services without Authorization 
10.11 - Provider Enrollee Relationships 
10.12 - Non-Contracting Physician Assistant 
10.13 - Part B Services from a Non Plan Provider 
20 - Requirements of Specific Benefits 
20.1 - General Guidelines for Benefits 
20.2 - Chiropractic Services 
20.3 - Drugs That Are Covered Under Original Medicare 
20.4 - Drug Benefit Cap 
20.5 - Prescription Drug Card 
20.6 - Authorization and Cost-Sharing 
30 - Hospice 
40 - Financial Responsibility 
40.1 - Financial Responsibility - General 
40.2 - Refunds and Recoupment 
40.3 - Refunds by Lump Sum Payments 
40.4 - Refund by Premium Adjustment or Lump Sum Payment or Both 
40.5 - Recoupment 
50 - Out-of-Area, Out-of-Network and Extended Absence 
60 - Cost Employer Group Health Plans (EGHP) 
70 - Medicare Secondary Payer 
70.1 - The Basic Rule 
70.2 - Collection From GHPs and LGHPs 
70.3 - MSP Rules and State Laws 
80 - National Coverage Determinations and Legislative Changes in Benefits 
80.1 - Definitions 
80.2 - General Rules 
80.3 - Sources for Obtaining Information  90 - Discrimination Against Beneficiaries Prohibited 
90.1 - General Prohibition 
90.2 - Additional Requirements 
90.3 - A Medicare Cost Plans Responsibility 
100 - Disclosure Requirements 
110 - Confidentiality and Records 
120 - Availability, Accessibility, and Continuity 
120.1 - The Basic Rule 
120.2 - Certification 
120.3 - Provider Adequacy 
120.4 - Availability 
120.5 - Accessibility 
120.6 - Continuity of Care 
120.7 - Recordkeeping 
130 - Information on Advance Directives 
130.1 - Definition 
130.2 - The Basic Rule 
130.3 - State Law Primary 
130.4 - Content of Enrollee Information and Other Medicare cost plan Obligations
130.5 - Incapacitated Enrollees 
130.6 - Community Education Requirements 
130.7 - Medicare Cost Organization Rights 
130.8 - Appeal and Anti-Discrimination Rights 
 
 
10 - General Requirements 
 
(Rev. 77, Issued: 10-28-05, Effective Date: 10-28-05) 
 
These guidelines reflect CMSs current interpretation of the provisions of the Cost  
Statute and Regulations (Chapter 42 of the Code of Federal Regulations, Parts 417) 
pertaining to benefits and beneficiary protections.  These guidelines were developed after 
careful evaluation by CMS of current technology, coverage rules, and industry practices 
with respect to plan design, in light of recent changes to the Cost program enacted in the 
Medicare Modernization Act. The guidance set forth in this document may be subject to 
change as technology and industry practices in plan design and administration continue 
to evolve, and as CMS gains more experience administering the Cost program and its 
new health plan options. 
 
(42 CFR 417.440) This 10, presents details and requirements related to the provision of 
benefits that are general in nature and not specific to any particular service. The 
following section, 20, presents details and requirements related to the provision of 
specific services. 
 
10.1 - Medicare Covered Services   
(Rev. 77, Issued: 10-28-05, Effective Date: 10-28-05) 
 
(From 4.10.9 of the Medicare Managed Care Manual, Pub. 100-16) Medicare cost 
plans, (that is, HMOs or CMPs) must generally provide coverage of, by furnishing, 
arranging for, or making payment for, all medically necessary and appropriate services, 
including supplies and DME, that are covered by Part A and Part B of original Medicare 
(if the enrollee is entitled to benefits under both parts) or by Medicare Part B (if the 
enrollee is entitled only to benefits under Part B) that are available to beneficiaries 
residing in the plans geographic area. 
 
The services are considered available if either the sources of services are located in the 
Medicare cost plans approved geographic area or it is common practice to refer patients 
to sources outside that geographic area (42 CFR 417.414(b)(2)). 
 
(42 CFR 417.401) The term geographic area refers to the area found by CMS to be the 
area within which the Medicare cost plan furnishes, or arranges for furnishing, the full 
range of services that it offers to its Medicare enrollees.  
 
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.  The scopes of 
Part A and Part B are discussed in 1812 and 1832 of the Act respectively, while 1861 
of the Act lays out the definition of medical and other health services.  Each Medicare 
cost plan must offer at least all Part A benefits (other than hospice care) and all Part B 
benefits (or all Part B benefits to those entitled to only Part B) to all individuals residing 
in the area served by the plan in all benefit packages in its authorized geographic area.  
Some benefit categories are defined more broadly than others.  Specific health care 
services must fit into one of these benefit categories, and not be otherwise excluded for 
coverage under the Medicare program. 
 
The Act does not contain a comprehensive list of specific items or services eligible for 
Medicare coverage.  Rather, it lists categories of items and services, and vests in the 
Secretary the authority to make determinations about which specific items and services 
within these categories can be covered under the Medicare program.  That is, the Act 
allows Medicare to cover medical devices, surgical procedures and diagnostic services, 
but generally does not identify specific covered or excluded items or services.  Further 
guidance is presented in the Code of Federal Regulations and CMS interpretations. 
Medicare payment is contingent upon a determination that: 
 
  A service meets a benefit category; 
    Is not specifically excluded from coverage; and 
 
  The item or service is reasonable and necessary. 
 
Section 1862(a)(1)(A) of the Act states that, subject to certain limited exceptions, no 
payment may be made for any expenses incurred for items or services that are not 
reasonable and necessary for the diagnosis and treatment of illness or injury or to 
improve the functioning of a malformed body member.  These authorities are exercised to 
make coverage determinations regarding whether a specific item or service meets one of 
the broadly defined benefit categories and can be covered under the Medicare program.  
National coverage decisions are published on the National Coverage Web site - for 
further information please see 80 of this subchapter. 
 
In the absence of a specific National Coverage Decision, coverage decisions are made at 
the discretion of local contractors.  A Medicare cost plan is required to follow any local 
medical review policies (LMRP) issued by the fiscal intermediaries and carriers in its 
geographic area.  
 
10.2 - Emergent and Urgent Care 
 
(Rev. 77, Issued: 10-28-05, Effective Date: 10-28-05) 
 
(42 CFR 417.401) Each Medicare enrollee is entitled to receive timely and reasonable 
payment directly (or have payment made on his or her behalf) for services he or she 
obtained from a provider or supplier outside the Medicare cost plan if those services are: 
 
  Emergency services or urgently needed services as defined below. The Medicare 
cost plan must pay for emergent and urgently needed services even from 
providers and suppliers outside the Medicare cost plan and even in the absence of 
the Medicare cost plans prior approval (42 CFR 417.414(c)); or 
 
  Services denied by the Medicare cost plan and found upon appeal to be services 
the enrollee was entitled to have furnished by the Medicare cost plan.  
 
Emergency Services means covered inpatient or outpatient services that are furnished by 
an appropriate source other than the Medicare cost plan that: 
 
  Are needed immediately because of an injury or sudden illness; or 
 
  Are such that the time required to reach the Medicare cost plans providers or 
suppliers (or alternatives authorized by the Medicare cost plan) would mean risk 
of permanent damage to the enrollees health. 
 
Once initiated, the services continue to be considered emergency services as long as (a) 
transfer of the enrollee to the Medicare cost plans source of health care or authorized 
alternative is precluded because of risk to the enrollees health or because transfer would  be unreasonable, given the distance and the nature of the medical condition; and (b) such 
services must be, or appear to be, needed immediately. 
 
All procedures performed during evaluation and treatment of an emergency condition 
related to the care of that condition must be covered.  For example, if the attending 
physician orders diagnostic pulmonary angiography as part of the evaluation for a 
member who is treated in an emergency room for chest pain, then a retrospective review, 
cannot decide that the angiography was unnecessary and refuse coverage. 
 
The Medicare cost plan is not responsible for the care provided for an unrelated non-
emergency problem during treatment for an emergency situation. For example, the 
Medicare cost plan is not responsible for any costs, such as a biopsy, associated with 
treatment of skin lesions performed by the attending physician who is treating a fracture.  
 
If there is a disagreement over the stability of the patient for transfer to another inpatient 
facility, the judgment of the attending physician at the transferring facility prevails and is 
binding on the Medicare cost plan. 
 
Urgently Needed Services means covered services that are needed by an enrollee who is 
temporarily absent from the Medicare cost plans geographic area and that: 
  Are required in order to prevent serious deterioration of the enrollees health as a 
result of unforeseen injury or illness; and 
  Cannot be delayed until the enrollee returns to the Medicare cost plans 
geographic area. 
The Medicare cost plan need not pay for post-stabilization services offered outside of its 
network or not approved by the Medicare cost plan if: 
  These services are not emergency; 
  These services are not urgently needed; and 
  These services are not offered by the Medicare cost plan as a basic or optional 
supplemental benefit. 
However, medically necessary follow-up care to emergency and urgent care is covered, if 
the care cannot be delayed without adverse medical effects.  
Routine out-of-area renal dialysis is covered only under original Medicare. 
 
10.3 - Optional Supplemental Benefits 
 
(Rev. 77, Issued: 10-28-05, Effective Date: 10-28-05) 
 
In addition to offering a basic benefit package (that is, Medicare-covered benefits), each 
Medicare cost plan may offer (for election by the enrollee and without regard to health 
status) optional supplemental services or benefits - that is, services or benefits that are in 
addition to those included in the basic benefits.  All optional supplemental benefits must  be offered for a period of at least 30 consecutive days to both new plan enrollees and to 
all current enrollees of a plan at least once a year. 
 
Although a Medicare cost plan may limit the availability of optional supplemental 
benefits to current enrollees as described above, enrollees may voluntarily drop or 
discontinue optional supplemental benefits any time during the contract year upon proper 
advance notice to the Medicare cost plan. 
 
The Medicare cost plan may not set health status standards for those enrollees whom it 
will accept for these optional supplemental services. 
 
States may mandate that non-Medicare benefits be offered to Medicare cost plan 
enrollees as optional supplemental benefits. 
 
10.4 - Prescription Drug Coverage  
 
(Rev. 77, Issued: 10-28-05, Effective Date: 10-28-05) 
 
(70 FR 4243, Jan 28, 2005)  A Medicare cost plan offering a cost plan may, but is not 
required to, offer prescription drug coverage.  There are three methods of offering 
prescription drug coverage in a cost plan: 
 
1)  No Offering of a Part D Plan 
 
The Medicare cost plan may elect not to offer qualified Part D coverage. In such 
a case the Medicare cost plan may offer non-qualified prescription drug coverage 
as an optional supplemental benefit. This non-qualified prescription drug 
coverage may be, but is not required to be, creditable, as defined in 42 CFR 
423.56. Enrollees of a cost plan not offering qualified Part D coverage may elect 
to concurrently enroll in a Prescription Drug Plan (PDP). 
 
2)  Offering of Basic, Part D Coverage 
 
An organization may elect to offer a Medicare cost  plan that provides basic part 
D coverage. If the organization so elects, then this Part D coverage must be 
offered as an optional supplemental benefit; that is, an enrollee has the option, 
but not the obligation, to purchase Part D coverage under the plan.  All enrollees 
who purchase the Part D coverage offered by the Medicare cost plan must  
receive coverage of Part A and Part B, [or Part B only (for beneficiaries who are 
not entitled to Part A)] benefits under that cost plan.  If the enrollee elects not to 
elect the Part D coverage offered by the Medicare cost plan, then such an 
enrollee may concurrently enroll in a Prescription Drug Plan (PDP).  A 
Medicare cost plan offering qualified Part D coverage, may not offer non-
qualified prescription drug coverage.  (See 42 CFR 423.104(f)(4).) 
 
3) Offering of Both Basic and Enhanced Alternative Part D Coverage   
The Medicare cost plan may elect to offer both basic and enhanced alternative 
Part D coverage as optional supplemental benefits. An enrollee may then elect to 
either:   (a) Purchase  the basic Part D coverage; (b) Purchase the enhanced 
alternative Part D coverage; or (c) To purchase neither.  If the enrollee elects not 
to elect part D coverage through the cost plan, the enrollee retains his/her right 
to concurrently enroll in another Prescription Drug Plan (PDP).  A Medicare 
cost plan offering qualified Part D coverage, may not offer non-qualified 
prescription drug coverage.  (See 42 CFR 423.104(f)(4).) 
 
If a Medicare cost plan offers qualified Part D coverage then the funding for the 
Part D coverage is separate from the CMS funding for Part A and/or B coverage 
(42 CFR 417.534(c)).  Consequently, a Medicare cost plan may not apply 
reductions or non-collection of deductibles and coinsurance for Part A and/or B 
services to subsidize Part D coverage.  
 
See 60 of this chapter for information on benefits in a Medicare cost employer 
group health plan. 
 
10.5 - Waiting Periods and Exclusions Not Present In Original Medicare 
 
(Rev. 77, Issued: 10-28-05, Effective Date: 10-28-05) 
 
(Chapter 4, 20.6 of the Medicare Managed Care Manual)  All beneficiaries must be 
provided all medically necessary benefits covered in the plan in which they enroll 
(including supplemental benefits) at the time of their initial enrollment.  Waiting periods 
or exclusions from coverage, due to pre-existing conditions, are not permitted.  However, 
a Medicare cost plan can deny coverage of Medicare-covered services when the services 
do not meet the standard of being medically necessary and appropriate.  In addition, a 
Medicare cost plan may impose limitations or exclusions on Medicare-covered benefits 
to the extent that such limitations or exclusions are present in the original Medicare 
statute or regulations. 
 
10.6 - Services, Supplies and DME 
 
(Rev. 77, Issued: 10-28-05, Effective Date: 10-28-05) 
 
Each Medicare enrollee is entitled to receive: 
  Health care services;  
  Supplies, and 
  DME;  
either: 
  Directly from; or     Through arrangements made by the Medicare cost plan. 
 
10.7 - Cost-Sharing and Deductibles 
 
(Rev. 77, Issued: 10-28-05, Effective Date: 10-28-05) 
 
(42 CFR 417.452(a)(3)) The sum of the amounts the Medicare cost plan charges its 
Medicare enrollees for Medicare deductibles and coinsurance may not exceed, on the 
average, the actuarial value of the deductible and coinsurance the Medicare enrollees 
otherwise would have been liable for had they not enrolled in the Medicare cost plan. 
 
10.8 - Cap On Beneficiary Monetary Responsibility 
 
(Rev. 77, Issued: 10-28-05, Effective Date: 10-28-05) 
 
(Chapter 4, 10.4 of the Medicare Managed Care Manual):  A Medicare cost plan 
enrollee should never pay more than the plan required cost sharing  coinsurance, 
deductibles and copays. This cap on beneficiary liability holds even: 
 
  If a provider or delegated provider declares insolvency resulting in a plan loss; 
 
  If a non-contracted provider which provided services to the enrollee, for emergent 
or  urgent care is entitled to balanced billing; and 
 
  This cap on beneficiary liability prohibits  a plan from requiring a beneficiary to 
first pay a contracted provider, except for copayments, and then receive 
reimbursement from the Medicare cost organization. 
 
10.9 - Electronic Deduction of Premium 
 
(Rev. 77, Issued: 10-28-05, Effective Date: 10-28-05) 
 
  A Medicare cost plan offering a Part D benefit must offer the option to enrollees 
of having their Part D  premiums deducted electronically from their Social 
Security payment;  
 
  The cost plan or CMP may also offer the option of electronically paying for 
premiums from sources other than their Social Security Payment, but may not 
charge or discount for this option. 
 
  The cost plan or CMP is not required to offer enrollees the option of electronic 
payment of non-Part D premiums. 
 
10.10 - Services without Authorization 
  (Rev. 77, Issued: 10-28-05, Effective Date: 10-28-05) 
 
If a Cost plan enrollee receives services:  
 
  Under the direction or authorization of a plan physician;  
 
  Correctly identifies himself or herself as a member of that plan to the contracted 
provider before receiving the items or services; and 
 
  (The enrollee) has not been informed that he or she is liable for the costs of such 
services, 
 
then the plan must cover such services.  This means that the plan does not have the 
right, after a service is received, to retroactively overturn a plan physician's decision 
that an item or service is medically reasonable and necessary.  For example, a plan 
cannot retroactively deny a contracted physician's referral of a member for specialty 
care even when there are plan preauthorization requirements.  In such a case the 
plan  cannot  penalize  the  member  if  a  contracting  provider  fails  to  follow  plan 
preauthorization rules. 
 
An enrollee is considered informed that he or she is liable for the costs of a service if: 
 
  The enrollee should be expected to know the service is not covered by Medicare 
or under the plan, e.g.,  acupuncture; or 
 
  The contracting provider explicitly advises the enrollee prior to the service or 
referral that the service is not or will not be covered. 
 
Although a plan may require the Medicare enrollee to receive prior authorization from a 
primary care physician or a gatekeeper before specialty care is received, if a plan 
physician provides or directs a beneficiary to receive a covered Medicare service without 
following the plans internal procedures, then the plan must pay  for the service. A 
beneficiary who has already received a service may not be penalized if the authorizing 
physician's referral was improper or the specialist delivered the service without the 
necessary authorization. 
 
The enrollee should never pay more than the plan required cost sharing - coinsurance, 
deductibles and copays.  
 
10.11 - Provider Enrollee Relationships 
 
(Rev. 77, Issued: 10-28-05, Effective Date: 10-28-05) 
 
The CMS encourages a personal relationship between providers and enrollees. As such, 
providers are frequently called upon to give advice and referrals. It is of the utmost 
importance that a provider who refers a patient to a provider of a non-covered service  ensures that the enrollee is aware of his or her obligation to pay for such non-covered 
services. 
 
10.12 - Non-Contracting Physician Assistant 
 
(Rev. 77, Issued: 10-28-05, Effective Date: 10-28-05) 
 
A service provided to a cost plan or CMP enrollee who properly requested this service 
from a contracted physician who employs a non-contracted physician assistant is 
classified as a plan provided service. Therefore the physician assistant cannot look to the 
member for direct reimbursement.  The cost-plan  member must be held-harmless from 
incurring costs that exceed the copay that is otherwise applicable to the service in 
question. 
 
10.13 - Part B Services from a Non Plan Provider 
 
(Rev. 77, Issued: 10-28-05, Effective Date: 10-28-05) 
 
When a Medicare Cost Plan is legally obligated to cover services provided by a non-plan 
provider, who provided plan-covered part B services to one of its enrollees, then the cost 
plan must indemnify the member from incurring liability greater than the cost sharing 
due under the plan.  In such a case, the deductibles and co-insurance normally due under 
original Medicare must be reduced by the plan on behalf of the enrollee to the cost 
sharing amounts that otherwise apply in the Medicare Cost Plan for such services. 
 
20 - Requirements of Specific Benefits 
 
(Rev. 77, Issued: 10-28-05, Effective Date: 10-28-05) 
 
20.1 - General Guidelines for Benefits  
 
(Rev. 77, Issued: 10-28-05, Effective Date: 10-28-05) 
 
All benefits that are part of the Medicare Cost Plan must satisfy the following guidelines:  
 
  All benefits must be directly health-related, that is, health care services or items 
whose primary purpose is to prevent or cure, actual or imminent, illness or injury 
for which the MA plan incurs a cost that is not solely administrative;   
 
  All benefits must be offered uniformly to all enrollees;  
 
  All benefits must be explicitly mentioned in the appropriate marketing vehicles. 
 
20.2 - Chiropractic Services   
(Rev. 77, Issued: 10-28-05, Effective Date: 10-28-05) 
 
Section 1861(r) of the Social Security Act provides the definition of a physician for 
Medicare coverage purposes, which includes a chiropractor for treatment of manual 
manipulation of the spine to correct a subluxation.  (As a standard Medicare Part B 
benefit, manual manipulation of the spine to correct a subluxation must be made 
available to enrollees of cost plans.)  The statute specifically references manual 
manipulation of the spine to correct a subluxation as a physician service.  Thus, 
Medicare cost plan organizations offering cost plans must use physicians, which include 
chiropractors, to perform this service.  They may not use non-physician physical 
therapists for manual manipulation of the spine to correct a subluxation.  Medicare cost 
plans may continue to use physical therapists to treat enrollees for conditions not 
requiring physician services as defined in 1861 (r) of the Social Security Act. 
 
20.3 - Drugs That Are Covered Under Original Medicare 
 
(Rev. 77, Issued: 10-28-05, Effective Date: 10-28-05) 
 
(Chapter 4, 20.9 of the Medicare Managed Care Manual)  For this subsection, the term 
drug means drug or biological.  As indicated in 10.1, a Medicare cost plan must 
provide its enrollees with coverage of all drugs covered under original Medicare Part B. 
Part B Medicare covers drugs in a limited number of cases including the following: 
 
  Drugs that the Medicare cost plan enrollee takes while using durable medical 
equipment (such as nebulizers) that were authorized by the enrollees 
Medicare cost plan; 
 
  Clotting factors if the enrollee is diagnosed with specific blood-clotting 
disorders; 
 
  Immunosuppressive drugs, if the enrollee had an organ transplant that was 
covered by Medicare; 
 
  Injectable osteoporosis drugs, if the enrollee has a bone fracture that a doctor 
certifies was related to post-menopausal osteoporosis, and cannot self-
administer the drug;  
 
  Antigens; 
 
  Certain oral anti-cancer drugs and anti-nausea drugs; and 
 
  Erythropoietin by injection if the member has end-stage renal disease and 
needs this drug to treat anemia. 
    Not Usually Self-Administered (NUSA) Drugs.   If a drug is defined as:   (a) 
not usually self-administered (NUSA) by the carrier in the area covered by the 
Medicare cost plan, and (b) the drug is delivered incident to a physician 
service, then it is classified as a Medicare-covered drug under Part B.  Some 
Medicare cost plans contract with specialty pharmacies to supply NUSA 
drugs to their providers, instead of having the provider purchase and bill the 
plan.  If the drugs are furnished incident to a physician's service and they are 
covered in that setting by the carrier whose coverage decisions are followed 
by the Medicare cost plan, they are still classified as Part B drugs -- 
regardless of the payment arrangements. 
 
A Medicare cost plan cannot make their own determinations of what is a 
Medicare-covered Part B drug; rather carriers make these determinations.  
 
A NUSA drug obtained by an enrollee at a pharmacy is not covered under 
Part B.  
 
20.4 - Drug Benefit Caps 
 
(Rev. 77, Issued: 10-28-05, Effective Date: 10-28-05) 
 
(Chapter 4, 20.8 of the Medicare Managed Care Manual)  
 
As outlined above in 10.4, under certain circumstances, a Medicare cost plan may offer 
coverage for outpatient prescription drugs that would not normally be covered under the 
original Medicare program.  The CMS has approved non-Medicare prescription drug 
benefits that provide for annual, quarterly and monthly caps on the dollar amount of 
benefits available to enrolled members.  A Medicare cost plan may also pro-rate an 
annual drug benefit that has an annual cap.  Pro-rating of the annual cap is permitted 
according to the members enrollment date, since this would be similar to, but more 
generous than, a quarterly or monthly cap.  (42 CFR 417.104(a)(4)(ii))  The tracking of 
out of pocket maximums is the responsibility of the enrollee, not the plan. As indicated in 
100 of this subchapter, the Medicare cost plan must clearly notify the beneficiary of this 
limitation. 
 
20.5 - Prescription Drug Card  
 
(Rev. 77, Issued: 10-28-05, Effective Date: 10-28-05) 
 
Although transitional assistance funds may remain available in 2006, enrollment in the 
Drug Card program ends on December 31, 2005. 
 
20.6 - Authorization and Cost-Sharing 
 
(Rev. 77, Issued: 10-28-05, Effective Date: 10-28-05) 
  Medicare cost plans: 
 
  Must permit in-network direct access to influenza vaccines; 
 
  May not impose cost sharing for influenza vaccines; and 
 
  Must permit in-network direct access to screening mammographies. 
 
  Non-emergent non-urgent-care services that Medicare cost plan enrollees obtain 
from non-network providers, when not referred, are covered under original 
Medicare and subject to Medicare Fee-for-Service coinsurance and deductible 
requirements. 
 
30 - Hospice 
 
(Rev. 61, 09-03-04) 
 
A Medicare cost plan is not reimbursed through the 1876 cost Program for the provision 
of Hospice care. Medicare-covered Hospice care may only be furnished by a Medicare 
Certified Hospice.  An enrollee may elect hospice care if they are entitled to Part A 
Medicare benefits and if a physician certifies the enrollee as terminally ill. 
 
(42 CFR 417.423(2)(b)) Individuals who have already made a hospice election may not 
enroll in a Medicare cost plan. However an individual who makes a hospice election 
while enrolled in a Medicare cost plan may remain with the Medicare cost plan during 
the hospice election. 
 
(42 CFR 417.414(b)(3)) Each Medicare cost plan must inform their Medicare enrollees 
about the availability of hospice care if: 
 
  A hospice participating in Medicare is located within the Medicare cost plans 
geographic area; or 
 
  It is common practice to refer patients to hospices outside the geographic area. 
 
(42 CFR 417.440( c ))  An individual enrolled in a Medicare cost plan who elects to 
receive hospice care waives the right to receive from the Medicare cost plan any 
Medicare services that: 
 
  Are equivalent to hospice care; or 
 
  Are related to the terminal condition for which the enrollee elected hospice care 
or to a related condition. 
  However, since the Medicare cost plan continues to receive interim payments during the 
period of hospice election, they must also continue to provide and pay for all non-hospice 
related care that the Medicare member seeks from the Medicare cost plan provided that: 
 
  His or her attending physician is an employee or contractor of the Medicare cost 
plan; 
 
  His or her attending physician is not an employee of the Hospice; and 
 
  His or her attending physician does not receive compensation from the hospice 
for these activities. 
 
In the event an enrollee elects hospice care the relevant start and termination dates of 
coverage are discussed in the subpart of this cost chapter dealing with enrollment. 
 
40 - Financial Responsibility 
 
(Rev. 77, Issued: 10-28-05, Effective Date: 10-28-05) 
 
40.1 - Financial Responsibility - General 
 
(Rev. 77, Issued: 10-28-05, Effective Date: 10-28-05) 
 
(42 CFR 417.414( c ))  The Medicare cost plan assumes financial responsibility to 
provide reasonable reimbursement to its enrollees for: 
 
  Emergency services; and  
 
  Urgently needed services (as defined above); 
 
even: 
 
  From providers and suppliers outside the Medicare cost plan; 
 
and even: 
 
  In the absence of the Medicare cost plans prior approval. 
 
The Medicare cost plan also assumes financial responsibility for: 
 
  Services that were initially denied, but later granted, due to an appeal by the 
enrollee. 
  (42 CFR 417.452) A Medicare cost plan may impose: 
 
  Deductibles; 
 
  Coinsurance; or  
 
  Copays; 
 
for any of the services which it provides except for influenza vaccines for which no 
copays may be charged. 
 
The Medicare cost plan may impose annual, semi-annual, quarterly, monthly or any other 
periodic limits on the Optional Supplemental Benefits it offers its enrollees provided 
these limits are not prohibited by State law. 
 
The Medicare cost plan may not impose caps on any Medicare covered benefit unless 
original Medicare also imposes a cap (for example, the 100-day limit on SNF benefits). 
 
The deductibles and coinsurances may be paid by or on behalf of the enrollee in the form 
of a: 
 
  Premium; 
 
  Membership fee; 
 
  Charge per unit; or 
 
  Other similar charge. 
 
(42 CFR 417.454) The Medicare cost plan must agree to charge its Medicare enrollees 
only for the: 
 
  Deductible and coinsurance amounts applicable to furnished Medicare covered 
services; 
 
  Premium and cost-sharing charges for services offered as supplemental benefits 
provided that the sum of the amounts the Medicare cost plan charges its Medicare 
enrollees for these services does not exceed the actuarial value for those services 
(42 CFR 417.452(d)(3)); 
 
  Charges for services not covered under the plan; and 
 
  Services for which Medicare is not the primary payer if payment for the services 
has been made to the enrollee (42 CFR 417.528(b)(2)). 
 
40.2 - Refunds and Recoupment   
(Rev. 77, Issued: 10-28-05, Effective Date: 10-28-05) 
 
(42 CFR 417.456(b)) A Medicare cost plan must agree to refund all amounts incorrectly 
collected from its Medicare enrollees, or from others on behalf of the enrollees, and any 
other amounts due the enrollees or others on their behalf. 
 
(42 CFR 417.456(a))  Amounts incorrectly collected means amounts collected that are 
in excess of those due to: 
 
  Deductibles; 
 
  Coinsurances; 
 
  Non-covered Medicare services (which are not supplemental benefits); 
 
  Services for which Medicare is not the primary payer; or 
 
  Supplemental benefit premiums and copays. 
 
Amounts incorrectly collected include amounts collected when the enrollee was 
believed not entitled to Medicare benefits, and the services were furnished while the 
person was enrolled in the cost plan, if the enrollee is later determined, upon appeal, to 
have been entitled to Medicare benefits and CMS is liable for these payments.   
 
Other amounts due means amounts due a Medicare enrollee for services obtained 
outside the Medicare cost plan if they were: 
 
  Emergency services; 
 
  Urgently needed services for which the Medicare cost plan has assumed financial 
responsibility; or 
 
  On appeal, found to be services the enrollee was entitled to have furnished by the 
Medicare cost plan. 
 
In general a Medicare cost plan may make payments to enrollees either in the form of 
lump sum payments, premium adjustment, or both. 
 
40.3 - Refunds by Lump Sum Payments   
(Rev. 77, Issued: 10-28-05, Effective Date: 10-28-05) 
 
(42 CFR 417.456(c)) A Medicare cost plan must make refunds to its current and former 
Medicare enrollees, or to others who have made payments on behalf of enrollees, by 
lump sum payment for the following: 
 
  Incorrectly collected amounts that were not collected as premiums; 
 
  Other amounts due; and 
 
  All amounts due, if the Medicare cost plan is going out of business. 
 
40.4 - Refund by Premium Adjustment or Lump Sum Payment or Both 
 
(Rev. 77, Issued: 10-28-05, Effective Date: 10-28-05) 
 
A Medicare cost plan may make refund by adjustment of future premiums, by lump sum 
payment, or by a combination of both methods, for: 
 
  Amounts that were incorrectly collected in the form of premiums; or  
 
  For amounts that were incorrectly collected through a combination of premium 
payments and other charges. 
 
If an enrollee has died or cannot be located after reasonable effort by the Medicare cost 
plan, the Medicare cost plan must make the refund in accordance with State law.  
 
If the Medicare cost plan does not make refunds in accordance with the above payment 
methods by the end of the contract period following the contract period during which an 
amount was determined to be due an enrollee, CMS reduces its payment to the Medicare 
cost plan by the amounts incorrectly collected or otherwise due, and arranges for those 
amounts to be paid to the Medicare enrollee.  
 
40.5 - Recoupment 
 
(Rev. 77, Issued: 10-28-05, Effective Date: 10-28-05) 
 
(42 CFR 417.458) A Medicare cost plan agrees not to recoup deductible and coinsurance 
amounts for which Medicare enrollees were liable in a previous contract period except in 
the following circumstances: 
 
  The Medicare cost plan failed to collect the deductible and coinsurance amounts 
during the contract period in which they were due because of: 
  o  Underestimation of the actuarial value of the deductible and coinsurance 
amounts; or 
 
o  A billing error; 
 
  The Medicare cost plan has identified the amounts and obtained advance CMS 
approval of the recoupment and the method and timing of recoupment; 
 
  The Medicare cost plan collects these amounts no later than the end of the 
contract period following the contract period during which they were found to be 
due. 
 
50 - Out-of-Area, Out-of-Network and Extended Absence  
 
(Rev. 77, Issued: 10-28-05, Effective Date: 10-28-05) 
 
Services obtained from non-network providers (when not referred) are covered under the 
Fee-For-Service program (and thus subject to Medicare Fee-For-Service coinsurance and 
deductible requirements), unless they are emergency or urgently needed services.  For 
emergency or urgently needed services the Medicare cost plan is liable for 
reimbursement and the contracted member cost sharing applies.  Emergency and urgently 
needed services are defined in 10.2 of this subpart. 
 
As discussed in further detail in the enrollment section of this chapter Medicare cost 
plans must disenroll an individual if that individual has permanently moved from the 
Medicare cost plans geographic area. An uninterrupted absence of 90 days is deemed to 
be a permanent move and the individual must be disenrolled unless the Medicare cost 
plan offers an extended absence option (42 CFR 417.460). 
 
A Medicare cost plan that chooses to offer an extended absence option may retain 
members who temporarily (more than 90 days but less than one year) leave the 
geographic area but remain in the United States either: 
 
  By paying for all covered services for such members based on mutually agreeable 
restrictions; or 
 
  By providing services through an affiliated organization (42 CFR 417.460(f)(2)). 
 
(42 CFR 417.460(f)(2)(ii)-(iii)) A Medicare cost plan that chooses to exercise this 
exception must make the option available to all Medicare enrollees who are absent for an 
extended period from their geographic areas. However, a Medicare cost plan may limit 
this option to enrollees who go to a geographic area served by an affiliated Medicare cost 
plan. 
  When a Medicare cost plan offers an extended absence option it must provide all Part A 
and Part B services; however, non-Part D supplemental benefits may be discontinued on 
leaving the geographic area as long as the member is not required to continue paying the 
premium or portion of a premium that corresponds to these services. 
 
60 - Cost Employer Group Health Plans (EGHP) 
 
(Rev. 77, Issued: 10-28-05, Effective Date: 10-28-05) 
 
(42 CFR.440(b)) In general, since enrollment in a Medicare cost plan is at the 
organizational (not the plan) level, therefore, all enrollees of Medicare cost plan must 
receive the same basic package for the same cost-sharing or copayment amounts. 
However, employer groups can negotiate privately an EGHP on behalf of employer 
group members. An EGHP: 
 
  May elect only some, but not all of the optional supplemental benefits offered by 
Medicare cost plan for its members; 
 
  May buy-down premium and cost-sharing for its members; and 
 
  May negotiate for benefits not covered by Medicare. Such privately negotiated 
non-Medicare benefits (with their associated premiums and copays) are deemed 
outside the CMS Medicare contract. 
 
70 - Medicare Secondary Payer 
 
(Rev. 77, Issued: 10-28-05, Effective Date: 10-28-05) 
 
70.1 - The Basic Rule 
 
(Rev. 77, Issued: 10-28-05, Effective Date: 10-28-05) 
 
The rules for Medicare Secondary payer are covered with computational detail in 
Chapter 17B of the Medicare Managed Care Manual.  The following also apply to 
Medicare cost plans: 
 
70.2 - Collection From GHPs and LGHPs 
 
(Rev. 77, Issued: 10-28-05, Effective Date: 10-28-05) 
 
When a Medicare Cost Plan is the secondary payer to an employer group health plan, the 
coordination of benefits occurs in the aggregate through the cost report process.  This 
process results in a copayment as part of the Medicare cost plan benefit package for 
which every enrollee is liable.  Therefore, there is no coordination of benefits on a  beneficiary-specific basis that would relieve an enrollee with employer group health plan 
coverage of his or her cost sharing obligation under the Medicare cost plan.  As a result, 
the enrollee remains liable for payment of the Medicare cost plans cost sharing 
regardless of whether Medicare is primary or secondary.  However, under 42 CFR 
417.454, which addresses beneficiary financial protection contained in the contract 
between the Medicare cost plan and CMS, the Medicare cost plan is responsible for 
relieving the beneficiary of responsibility for payment of health care costs other than cost 
sharing, and therefore, the Medicare cost plan must relieve the enrollee of his or her 
liability under the terms of the employer group health plan. 
 
For example, if the employer group health plan (the primary payer) has a copayment of 
$20 and the Medicare cost plan has a copayment of $10 for the service the beneficiary 
received, the beneficiary cannot be liable to pay more than the plan copayment of $10.  
The Medicare cost plan must absolve the beneficiary of the liability for any amount in 
excess of the plan copayment of $10. 
 
70.3 - MSP Rules and State Laws 
 
(Rev. 77, Issued: 10-28-05, Effective Date: 10-28-05) 
 
The following guidelines govern the imposition of taxes on payments related to Cost 
plans. 
 
Payments by CMS, for the reasonable costs of cost plans, for covered Medicare Part A 
and B services, under an 1876 cost contract, do not technically represent a premium, 
but rather a reimbursement, under the Medicare program, for benefits to which Medicare 
enrollees are entitled. Therefore States cannot impose a premium tax on these payments. 
 
Non-Part D Premiums charged to cost plan members for the actuarial value of fee-for-
service deductibles and coinsurance are properly construed as premiums and would be 
correctly subject to State taxes.   
 
For premiums related to the Part D offering of a cost plan, there is specific preemption 
and waiver of State taxes.  See Chapter 17b of the Medicare Managed Care Manual, 
410 - Taxes Assessed Against the Medicare cost plan. Also see the preamble to Subpart 
J, 70 FR January 28, 2005. 
 
(70 FR 4666, Jan 28. 2005)  Other than the specific preemption authority related to the 
Part D benefits offered by a cost plan, there is no specific preemption authority provided 
to cost plans.  Therefore, to the extent State law does not invalidate or conflict with 
Federal law and regulation related to cost plans, States have the authority to require 
compliance with applicable State authority. 
  80 - National Coverage Determinations and Legislative Changes in 
Benefits 
 
(Rev. 77, Issued: 10-28-05, Effective Date: 10-28-05) 
 
80.1 - Definitions
 
(Rev. 77, Issued: 10-28-05, Effective Date: 10-28-05) 
 
(Chapter 4, 90 of the Medicare Managed Care Manual) A National Coverage 
determination (NCD) is a determination by CMS about whether or not a particular item 
or service is covered nationally under Medicare.  A Medicare cost plan must comply with 
all NCDs. 
 
A legislative change in benefits refers to new Medicare coverage of an item or service 
mandated by the Congress. 
 
80.2 - General Rules 
 
(Rev. 77, Issued: 10-28-05, Effective Date: 10-28-05) 
 
Medicare coverage policies specify which benefits are provided under the Medicare 
program and under what circumstances (including the clinical criteria under which the 
item or service must be provided).  Medicare coverage policies have several sources: 
 
1.  National coverage determinations made by CMS; 
 
2.  Other coverage guidelines and instructions issued by CMS (e.g., Program 
Memoranda and Program Transmittals); 
 
3.  Legislative changes in benefits; and 
 
4.  Local medical review policies established by Medicare contractors for local areas. 
 
As indicated in 10.1 of this subpart Medicare cost plans must provide all Medicare-
covered benefits.  Consequently, Medicare cost plans, must furnish, arrange, or pay for 
all new NCDs and legislative changes as soon as they take effect.  This is true 
independent of whether the NCD or legislative change meets a criterion for significant 
cost.  A determination of significant cost has no relevance to the Medicare cost plan 
program. For these services or benefits, the Medicare enrollee will be responsible for 
Medicare cost plan cost sharing as approved by CMS.  The costs incurred by the 
Medicare cost plan for furnishing of these benefits may be included on their annual cost 
report. 
 
80.3 - Sources for Obtaining Information   
(Rev. 77, Issued: 10-28-05, Effective Date: 10-28-05) 
 
In an effort to make the coverage process more open, understandable, and predictable, 
CMS has redesigned its Medicare coverage process.  Part of the redesign includes using 
the Internet to inform interested parties about how national coverage determinations are 
made and the progress of each issue under coverage review. 
 
  The Medicare Coverage Homepage 
 
The Medicare Coverage Homepage, located at http://cms.hhs.gov/coverage/ has 
links that: 
 
o  Provide a listing of all National Coverage Determinations; and 
 
o  Enable you 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 interested parties can use the 
Internet to send questions and to provide feedback. 
 
  The NCD Manual: 
 
The Medicare National Coverage Determinations Manual, Pub. 100-3, is the 
primary record of Medicare national coverage policies, and includes a discussion 
of the circumstances under which items and services are covered.  This manual 
may be accessed at http://cms.hhs.gov/manuals/103_cov_determ. 
 
  Program Transmittals 
 
Additional information on new coverage can be found in the Program 
Transmittals that transmit CMS new policies and procedures.  Links to the 
Program Transmittals may be found at http://cms.hhs.gov/manuals/transmittals. 
 
90 - Discrimination Against Beneficiaries Prohibited  
 
(Rev. 77, Issued: 10-28-05, Effective Date: 10-28-05) 
 
90.1 - General Prohibition   
(Chapter 4, 100 of the Medicare Managed Care Manual)  Except for not enrolling most 
individuals who have been medically determined to have end-stage renal disease, and 
except for not enrolling enrollees who have already elected hospice, a Medicare cost plan 
may not deny, limit, or condition the coverage or furnishing of benefits to individuals 
eligible to enroll in Medicare cost plan on the basis of any factor that is related to health 
status, including, but not limited to the following: 
 
  Medical condition, including mental, as well as physical illness; 
 
  Claims experience; 
 
  Receipt of health care; 
 
  Medical history; 
 
  Genetic information; 
 
  Evidence of insurability, including conditions arising out of acts of domestic 
violence; and 
 
  Disability. 
 
An individual who develops end-stage renal disease while enrolled in a health plan 
offered by the Medicare cost plan organization, is eligible to elect a cost plan. For 
additional guidance on eligibility and enrollment see Chapter 17d of this manual, 
Medicare Cost Plan Enrollment and Disenrollment Instructions. 
 
90.2 - Additional Requirements  
 
(Rev. 77, Issued: 10-28-05, Effective Date: 10-28-05) 
 
A Medicare cost plan is also required to observe the provisions of the Civil Rights Act, 
Age Discrimination Act, Rehabilitation Act of 1973, and Americans with Disabilities 
Act. 
 
90.3 - A Medicare Cost Plans Responsibility 
 
(Rev. 77, Issued: 10-28-05, Effective Date: 10-28-05) 
 
A Medicare cost plan must ensure that they have procedures in place to ensure that 
members 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, 
sex, age, mental or physical disability, sexual orientation, genetic information, or source 
of payment. 
  100 - Disclosure Requirements 
 
(Rev. 77, Issued: 10-28-05, Effective Date: 10-28-05) 
 
(42 CFR 417.436)  A Medicare cost plan must offer its plan to Medicare beneficiaries 
and provide to those interested in enrolling, adequate written descriptions of the Medicare 
cost plans rules, procedures, benefits, fees and other charges, services, and other 
information necessary for beneficiaries to make an informed decision about enrollment.  
The Medicare cost plan must furnish a copy of the rules to each Medicare enrollee at the 
time of enrollment and at least annually thereafter.  If  a Medicare cost plan changes its 
rules, it must submit the changes to CMS in accordance with proper procedure and notify 
its Medicare enrollees of the changes at least 30 days before the effective date of the 
changes. 
 
A Medicare cost plan must maintain written rules that deal with, but need not be limited 
to the following: 
 
  All benefits provided under the contract;  
 
  To the extent the plan offers Part D as an MA-PD plan, the information at 42 
CFR 423.128; 
 
  How and where to obtain services from or through the Medicare cost plan;  
 
  The restrictions on coverage for services furnished from sources outside the 
Medicare cost plan, other than emergency services and urgently needed services;  
 
  The obligation of the Medicare cost plan to assume financial responsibility and 
provide reasonable reimbursement for emergency services and urgently needed 
services;   
 
  Any services other than the emergency or urgently needed services that the 
Medicare cost plan chooses to provide from sources outside the Medicare cost 
plan;  
 
  The fact that the enrollee may receive services through any Medicare provider and 
supplier at Medicare cost-sharing levels;  
 
  Premium information, including the amount (or if the amount cannot be included, 
the telephone number of the source from which this information may be obtained) 
and the procedures for paying premiums and other charges for which enrollees 
may be liable;  
 
  Grievance and appeal procedures;  
 
  Disenrollment rights;   
  The obligation of an enrollee who is leaving the Medicare cost plans geographic 
area for more than 90 days to notify the Medicare cost plan of the move or 
extended absence and the Medicare cost plans policies concerning retention of 
enrollees who leave the geographic area for more than 90 days;  
 
  The expiration date of the Medicare contract with CMS and notice that both CMS 
and the Medicare cost plan are authorized by law to terminate or refuse to renew 
the contract, and that termination or nonrenewal of the contract may result in 
termination of the individuals enrollment in the Medicare cost plan; 
 
  Advance directives  (see 130 below); and 
 
  Any other matters that CMS may prescribe. 
 
For further information on disclosure see the subpart of this chapter that deals with 
Marketing materials. 
 
110 - Confidentiality and Records 
 
(Rev. 77, Issued: 10-28-05, Effective Date: 10-28-05) 
 
General Rule 
 
For any medical records or other health and enrollment information it maintains with 
respect to enrollees, a Medicare cost plan must establish procedures to do the following: 
 
  Abide by all Federal and state laws regarding confidentiality and disclosure of 
medical records, or other health and enrollment information.  The Medicare cost 
plan must safeguard the privacy of any information that identifies a particular 
enrollee and have procedures that specify: 
 
o  For what purposes the information will be used within the organization 
and 
 
o  To whom and for what purposes it will disclose the information outside 
the 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 pertains to 
them.   
120 - Availability, Accessibility, and Continuity 
 
(Rev. 77, Issued: 10-28-05, Effective Date: 10-28-05) 
 
120.1 - The Basic Rule 
 
(Rev. 77, Issued: 10-28-05, Effective Date: 10-28-05) 
 
(42 CFR 417.416 supplemented with material from the Medicare Managed Care Manual) 
 
The Medicare cost plan must ensure that the: 
 
  Basic required services; and 
 
  Any other optional supplemental services; 
 
for which the Medicare enrollee has contracted are: 
 
  Available; 
 
  Accessible; and  
 
  Furnished in a manner that ensures continuity. 
 
120.2 - Certification 
 
(Rev. 77, Issued: 10-28-05, Effective Date: 10-28-05) 
 
The Medicare cost plan must furnish the required services to its Medicare enrollees 
through providers and suppliers that meet applicable Medicare statutory definitions and 
implementing regulations. 
 
  Hospitals, SNFs, HHAs, CORFs, and providers of outpatient physical therapy or 
speech-language pathology services must meet the applicable conditions of 
participation in Medicare; 
 
  Suppliers must meet the conditions for coverage or conditions for certification of 
their services; 
 
  If more than one type of practitioner is qualified to furnish a particular service, the 
Medicare cost plan may select the type of practitioner to be used. 
 
120.3 - Provider Adequacy   
(Rev. 77, Issued: 10-28-05, Effective Date: 10-28-05) 
 
The provider networks for Medicare enrollees must be sufficient to deliver both: 
 
  Inpatient; and  
 
  Outpatient services; 
 
for both: 
 
  Primary; and  
 
  Specialty services; 
 
to both: 
 
  Current; and  
 
  Expected Medicare members. 
 
The obligation on the Medicare cost plan to provide services remains even if there is a 
loss of providers in a portion of the geographic area.  Medicare cost plans must inform 
members, in writing, 30 days before a physician or supplier terminates affiliation.  
 
120.4 - Availability 
 
(Rev. 77, Issued: 10-28-05, Effective Date: 10-28-05) 
 
Generally, a Medicare cost plan is obligated to provide all Medicare covered services, 
even if Medicare certified facilities are not available in the geographic area. For example, 
if Fee-For-Service beneficiaries commonly seek services in another town outside the 
geographic area then the Medicare cost plan must provide these services to its enrollees 
in a similar manner. 
 
120.5 - Accessibility 
 
(Rev. 77, Issued: 10-28-05, Effective Date: 10-28-05) 
 
The Medicare cost plan must ensure that the required services and any other services for 
which Medicare enrollees have contracted are accessible, with reasonable promptness, to 
the enrollees with respect to: 
 
  Geographic location; 
 
  Hours of operation;    
  Provision of after hours service; and 
 
  Medically necessary emergency services must be available twenty-four hours a 
day, seven days a week. 
 
A general rule of thumb is the 30-30 rule that asserts that services must be available 
either within 30 miles of an enrollees residence or within 30 minutes travel time. 
Exceptions however may be made if usual travel patterns for Fee-For-Service 
beneficiaries in parts of the geographic area exceed these amounts (as happens for 
example, in rural areas). 
 
The Medicare cost plan must have systems in place to collect data and evaluate the 
availability and accessibility of services provided or arranged for by the Medicare cost 
plan. Some typical factors that are evaluated are: 
 
  Waiting times; 
 
  Member complaints; 
 
  Emergency and urgent care; 
 
  Requests for changes of primary care physicians; 
 
  Physician requests to close their practice to new patients; 
 
  Referrals; and 
 
  Back-up arrangements. 
 
120.6 - Continuity of Care 
 
(Rev. 77, Issued: 10-28-05, Effective Date: 10-28-05) 
 
Continuity of care refers to the continuous flow of care in a timely and appropriate 
manner.  Continuity includes: 
 
  Linkages between primary and specialty care; 
 
  Coordination among specialists; 
 
  Appropriate combinations of prescribed medications; 
 
  Coordinated use of ancillary services; 
 
  Appropriate discharge planning; and    
  Timely placement at different levels of care including hospital, skilled nursing 
and home health care. 
 
(42 CFR 417.407(f), 42 CFR 417.122(b)) In the case of insolvency the HMO must 
continue to provide benefits to all enrollees for the duration of the contract period for 
which payment was made. 
 
120.7 - Recordkeeping 
 
(Rev. 77, Issued: 10-28-05, Effective Date: 10-28-05) 
 
The Medicare cost plan must maintain a health (including medical) recordkeeping system 
through which pertinent information relating to the health care of its Medicare enrollees 
is accumulated and is readily available to appropriate professionals. 
 
130 - Information on Advance Directives 
 
(Rev. 77, Issued: 10-28-05, Effective Date: 10-28-05) 
 
(Chapter 4, 160 of the Medicare Managed Care Manual)  
 
130.1 - Definition 
 
(Rev. 77, Issued: 10-28-05, Effective Date: 10-28-05) 
 
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. 
 
130.2 - The Basic Rule 
 
(Rev. 77, Issued: 10-28-05, Effective Date: 10-28-05) 
 
The Medicare cost plan 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 Medicare cost plan 
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 Medicare cost plan is permitted to contract with other entities to furnish information 
concerning advance directive requirements.  However, the organization remains legally 
responsible for ensuring that the requirements of this section are met.  The details of what 
written information must be given to the enrollee as well as other obligations of the 
Medicare cost plan are outlined below. 
 
130.3 - State Law Primary 
 
(Rev. 77, Issued: 10-28-05, Effective Date: 10-28-05) 
 
The Medicare cost plan programs advance directive requirements, which Fee-For-
Service providers have been following for some years, are guidelines, which refer to state 
law, whether statutory or recognized by the courts of the State.  Therefore, Medicare cost 
plans must comply with the advance directive requirements of the states in which they 
provide services.  The CMS cannot give detailed guidelines as to what constitutes best 
efforts in each state.  Medicare regulations give Medicare cost plans and states a great 
deal of flexibility, and CMS is prepared to work with the HMO and CMP (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 HMOs and CMPs 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. 
 
130.4 - Content of Enrollee Information and Other Medicare cost plan 
Obligations 
 
(Rev. 77, Issued: 10-28-05, Effective Date: 10-28-05) 
 
The written information provided to enrollees must, at a minimum, include a description 
of the Medicare cost plans written policies on advance directives including an 
explanation of the following: 
 
  That the organization 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 organizations 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 Medicare cost plan is required to comply with State law; 
    That the Medicare cost plan must educate its staff about its policies and 
procedures for advance directives; and 
 
  That the Medicare cost plan must provide for community education regarding 
advance directives. 
 
If the Medicare cost plan 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. 
 
130.5 - Incapacitated Enrollees 
 
(Rev. 77, Issued: 10-28-05, Effective Date: 10-28-05) 
 
If an enrollee is incapacitated at the time of initial enrollment and is unable to receive 
information due to an incapacitating condition, the Medicare cost plan may give advance 
directive information to the enrollees family or surrogate. 
 
The Medicare cost plan is not relieved of its obligation to provide this information to the 
enrollee once he or she is no longer incapacitated or unable to receive such information.  
Follow-up procedures must be in place to ensure that the information is given to the 
individual directly at the appropriate time. 
 
130.6 - Community Education Requirements 
 
(Rev. 77, Issued: 10-28-05, Effective Date: 10-28-05) 
 
The Medicare cost plan 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 
Medicare cost plan, 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.  A Medicare cost plan must be able to document its 
community education efforts. 
 
130.7 - Medicare Cost Organization Rights   
(Rev. 77, Issued: 10-28-05, Effective Date: 10-28-05) 
 
The Medicare cost plan is not required to provide care that conflicts with an advance 
directive. The Medicare cost plan is not required to implement an advance directive if, as 
a matter of conscience, the Medicare cost plan cannot implement an advance directive 
and state law allows any health care provider or any agent of the provider to 
conscientiously object. 
 
130.8 - Appeal and Anti-Discrimination Rights 
 
(Rev. 77, Issued: 10-28-05, Effective Date: 10-28-05) 
 
A Medicare cost plan 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 Medicare cost plan must inform individuals that complaints 
concerning noncompliance with the advance directive requirements may be filed with the 
State Survey and Certification Agency.