Editorial Note on Part 422
Editorial Note: Nomenclature changes to part 422 appear at 70 FR 4741, Jan. 28, 2005.

§ 422.514 Enrollment requirements. ( a ) *Minimum enrollment rules.* Except as provided in paragraph (b) of this section, CMS does not enter into a contract under this subpart unless the organization meets the following minimum enrollment requirement— ( 1 ) At least 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 ) At least 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)).
( 3 ) Except as provided for in paragraph (b) of this section, an MA organization must maintain a minimum enrollment as defined in paragraphs (a)(1) and (a)(2) of this section for the duration of its contract.
( b ) *Minimum enrollment waiver.* For a contract applicant that does not meet the applicable requirement of paragraph (a) of this section at application for an MA contract, CMS may waive the minimum enrollment requirement for the first 3 years of the contract. To receive a waiver, a contract applicant must demonstrate to CMS's satisfaction that it is capable of administering and managing an MA contract and is able to manage the level of risk required under the contract during the first 3 years of the contract. Factors that CMS takes into consideration in making this evaluation include the extent to which— ( 1 ) The contract applicant management and providers have previous experience in managing and providing health care services under a risk-based payment arrangement to at least as many individuals as the applicable minimum enrollment for the entity as described in paragraph (a) of this section; or
( 2 ) The contract applicant has the financial ability to bear financial risk under an MA contract. In determining whether an organization is capable of bearing risk, CMS considers factors such as the organization's management experience as described in paragraph (b)(1) of this section and stop-loss insurance that is adequate and acceptable to CMS; and
( 3 ) The contract applicant is able to establish a marketing and enrollment process that allows it to meet the applicable enrollment requirement specified in paragraph (a) of this section before completion of the third contract year.
( c ) Failure to meet enrollment requirements. CMS may elect not to renew its contract with an MA organization that fails to meet the applicable enrollment requirement in paragraph (a) of this section.
( d ) *Rule on dual eligible enrollment.* In any state where there is a dual eligible special needs plan or any other plan authorized by CMS to exclusively enroll individuals entitled to medical assistance under a state plan under title XIX, CMS does not: ( 1 ) Enter into or renew a contract under this subpart for a MA plan that— ( i ) Is not a specialized MA plan for special needs individuals as defined in § 422.2; and
( ii ) Projects enrollment in its bid submitted under § 422.254 in which enrollees entitled to medical assistance under a State plan under title XIX constitute a percentage of the plan's total enrollment that meets or exceeds one of the following:— ( A ) For plan year 2024, 80 percent.
( B ) For plan year 2025, 70 percent.
( C ) For plan year 2026 and subsequent years, 60 percent.
( 2 ) Renew a contract under this subpart for an MA plan that— ( i ) Is not a specialized MA plan for special needs individuals as defined in § 422.2; and
( ii ) Unless the MA plan has been active for less than 1 year and has enrollment of 200 or fewer individuals at the time of such determination, has actual enrollment, as determined by CMS using the January enrollment of the current year in which enrollees who are entitled to medical assistance under a state plan under title XIX, constitute a percentage of the plan's total enrollment that meets or exceeds one of the following: ( A ) For renewals for plan year 2024, 80 percent.
( B ) For renewals for plan year 2025, 70 percent.
( C ) For renewals for plan year 2026 and subsequent years, 60 percent.
( e ) *Transition process and procedures.* ( 1 ) For coverage effective January 1 of the next year, and subject to the disclosure requirements described in paragraph (e)(2) of this section, an MA organization may transition enrollees in a plan specified in paragraph (d)(2) of this section into another MA plan or plans (including into a dual eligible special needs plan for enrollees who are eligible for such a plan) offered by the MA organization, or another MA organization that shares the same parent organization as the MA organization, for which the individual is eligible in accordance with §§ 422.50 through 422.53 if the MA plan or plans receiving such enrollment— ( i ) Would not meet the criteria in paragraph (d)(2)(ii) of this section, as determined in the procedures described in paragraph (e)(3) of this section, with the addition of the newly enrolled individuals (unless such plan is a specialized MA plan for special needs individuals as defined in § 422.2);
( ii ) Is an MA-PD plan described at § 422.2;
( iii ) Has a combined Part C and Part D premium of $0.00 for individuals eligible for the premium subsidy for full subsidy eligible individuals described in § 423.780(a) of this chapter;
( iv ) Is of the same plan type (for example, HMO or PPO) as the plan specified in paragraph (d)(2) of this section; and
( v ) For transitions for plan year 2027 and subsequent years, is a dual eligible special needs plan as defined in § 422.2.
( 2 ) An MA organization may transition individuals under paragraph (e)(1) of this section without requiring the individual to file the election form under § 422.66(a) if— ( i ) The enrolled individual is eligible to enroll in the MA plan; and
( ii ) The MA-PD plan into which individuals are transitioned describes changes to MA-PD benefits and provides information about the MA-PD plan in the Annual Notice of Change, which must be sent consistent with § 422.111(a), (d), and (e).
( 3 ) For the purpose of approving a MA organization to transition enrollment under this paragraph (e), CMS determines whether a non-SNP MA plan would meet the criteria in paragraph (d)(2) of this section by adding the cohort of individuals identified by the MA organization for enrollment in a non-SNP MA plan to the April enrollment of such plan and calculating the resulting percentage of dual eligible enrollment.
( 4 ) In cases where an MA organization does not transition current enrollees under paragraph (e)(1) of this section, the MA organization must send a written notice to enrollees who are not transitioned, consistent with § 422.506(a)(2).
( f ) *Special considerations.* Actions taken pursuant to paragraph (d) of this section warrant special consideration to exempt affected MA organizations from the denial of an application for a new contract or service area expansion in accordance with §§ 422.502(b)(3) and (4), 422.503(b)(6) and (7), 422.506(a)(3) and (4), 422.508(c) and (d), and 422.512(e)(1) and (2).
( g ) *Applicability to segments.* The rules under paragraphs (d) through (f) of this section also apply to segments of the MA plan as provided for local MA plans under § 422.262(c)(2).
( h ) *Rule on dual eligible special needs plans in relation to Medicaid managed care.* ( 1 ) Beginning in 2027, where an MA organization offers a dual eligible special needs plan and the MA organization, its parent organization, or any entity that shares a parent organization with the MA organization also contracts with a State as a Medicaid managed care organization (MCO) (as defined in § 438.2) that enrolls full-benefit dual eligible individuals as defined in § 423.772, during the effective dates and in the same service area (even if there is only partial overlap of the service areas) of that Medicaid MCO contract, the MA organization— ( i ) May only offer, or have a parent organization or share a parent organization with another MA organization that offers, one D-SNP for full-benefit dual eligible individuals, except as permitted in paragraph (h)(3) of this section; and
( ii ) Must limit new enrollment in the D-SNP to individuals enrolled in, or in the process of enrolling in, the Medicaid MCO.
( 2 ) Beginning in 2030, such D-SNPs may only enroll (or continue to cover individuals enrolled in (or in the process of enrolling in) the Medicaid MCO, except that such D-SNPs may continue to implement deemed continued eligibility requirements as described in § 422.52(d).
( 3 ) ( i ) If a State Medicaid agency's contract(s) with the MA organization differentiates enrollment into D-SNPs by age group or to align enrollment in each D-SNP with the eligibility or benefit design used in the State's Medicaid managed care program(s) (as defined in § 438.2), the MA organization, its parent organization, or an entity that shares a parent organization with the MA organization may offer one or more additional D-SNPs for full-benefit dual eligible individuals in the same service area in accordance with the group (or groups) eligible for D-SNPs based on provisions of the contract with the State Medicaid agency under § 422.107.
( ii ) If the MA organization, its parent organization, or an entity that shares a parent organization with the MA organization offers both HMO D-SNP(s) and PPO D-SNP(s), and one or more of the— ( A ) HMO D-SNPs is subject to paragraph (h)(1) of this section, the PPO D-SNP(s) not subject to paragraph (h)(1) of this section may continue if they no longer accept new enrollment of full-benefit dual eligible individuals in the same service area as the plan (or plans) subject to paragraph (h)(1) of this section.
( B ) PPO D-SNPs is subject to paragraph (h)(1) of this section, the HMO D-SNP(s) not subject to paragraph (h)(1) of this section may continue if they no longer accept new enrollment of full-benefit dual eligible individuals in the same service area as the plan (or plans) subject to paragraph (h)(1) of this section.
[63 FR 35099, June 26, 1998, as amended at 65 FR 40328, June 29, 2000; 83 FR 16734, Apr. 16, 2018; 85 FR 33908, June 2, 2020; 88 FR 22334, Apr. 12, 2023; 89 FR 30824, Apr. 23, 2024]