2920 Federal Register / Vol. 63, No. 12 / Tuesday, January 20, 1998 / Proposed Rules

program will apply to the placement of

excess spoil on abandoned mine lands

as referenced in proposed COMAR

25.20.26.05 (A)(3) and (B)(4). Maryland

responded that since existing conditions

on abandoned mine lands differ at each

site, it would be extremely difficult to

clarify exactly which requirements of

Maryland’s approved program would

apply in every case for the placement of

excess spoil. A field review during the

application review process would verify

conditions at the AML site and will

determine which requirements are

necessary to ensure that the excess spoil

is placed in an environmentally sound

manner.

c. Maryland was asked to clarify how

placement of excess spoil on abandoned

mine lands would achieve compliance

with its AML program. Maryland

responded that it considers the

environmental reviews, public notice

requirements and inspection

requirements of its federally approved

regulatory program to be comparable to

those required by the AML program.

Each abandoned mine lands site

proposed for placement of excess spoil

will be reviewed in conjunction with

the application for a surface mining

permit and subjected to the same

requirements.

2. COMAR 25.20.14.09, Procedures for

Release of Bonds

a. COMAR 25.20.14.09B(2)(e) is

further modified by changing the word

‘‘approximate’’ to ‘‘appropriate’’.

III. Public Comment Procedures

In accordance with the provisions of

30 CFR 732.17(h), OSM is seeking

comments on whether the proposed

amendment satisfies the applicable

program approval criteria of 30 CFR

732.15. Specifically, OSM is seeking

comments on the clarifications to the

State’s regulations that were submitted

on December 8, 1997 (Administrative

Record No. MD–576–07). Comments

should address whether the proposed

amendment with these clarifications

satisfies the applicable program

approval criteria of 30 CFR 732.15. If the

amendment is deemed adequate. it will

become part of the Maryland program.

Written Comments

Written comments should be specific,

pertain only to the issues proposed in

this rulemaking, and include

explanations in support of the

commenter’s recommendations.

Comments received after the time

indicated under DATES or at locations

other than the Appalachian Regional

Coordinating Center will not necessarily

be considered in the final rulemaking or

included in the Administrative Record.

IV. Procedural Determinations

Executive Order 12866

This rule is exempted from review by

the Office of Management and Budget

(OMB) under Executive Order 12866

(Regulatory Planning and Review).

Executive Order 12988

The Department of the Interior has

conducted the reviews required by

section 3 of Executive Order 12988

(Civil Justice Reform) and has

determined that, to the extent allowed

by law, this rule meets the applicable

standards of subsections (a) and (b) of

that section. However, these standards

are not applicable to the actual language

of State regulatory programs and

program amendments since each such

program is drafted and promulgated by

a specific State, not by OSM. Under

sections 503 and 505 of SMCRA (30

U.S.C. 1253 and 1255) and 30 CFR

730.11, 732.15, and 732.17(h)(10),

decisions on proposed State regulatory

programs and program amendments

submitted by the States must be based

solely on a determination of whether the

submittal is consistent with SMCRA and

its implementing Federal regulations

and whether the other requirements of

30 CFR Parts 730, 731, and 732 have

been met.

National Environmental Policy Act

No environmental impact statement is

required for this rule since section

702(d) of SMCRA (30 U.S.C. 1292(d))

provides that agency decisions on

proposed State regulatory program

provisions do not constitute major

Federal actions within the meaning of

section 102(2)(C) of the National

Environmental Policy Act (42 U.S.C.

4332(2)(C)).

Paperwork Reduction Act

This rule does not contain

information collection requirements that

require approval by OMB under the

Paperwork Reduction Act (44 U.S.C.

3507 et seq.).

Regulatory Flexibility Act

The Department of the Interior has

determined that this rule will not have

a significant economic impact on a

substantial number of small entities

under the Regulatory Flexibility Act (5

U.S.C. 601 et seq.). The State submittal

which is the subject of this rule is based

upon counterpart Federal regulations for

which an economic analysis was

prepared and certification made that

such regulations would not have a

significant economic effect upon a

substantial number of small entities.

Accordingly, this rule will ensure that

existing requirements previously

promulgated by OSM will be

implemented by the State. In making the

determination as to whether this rule

would have a significant economic

impact, the Department relied upon the

data and assumptions for the

counterpart Federal regulations.

Unfunded Mandates

This rule will not impose a cost of

$100 million or more in any given year

on any governmental entity or the

private sector.

List of Subjects in 30 CFR Part 920

Intergovernmental relations, Surface

mining, Underground mining.

Dated: January 9, 1998.

Allen D. Klein,

Regional Director, Appalachian Regional

Coordinating Center.

[FR Doc. 98–1215 Filed 1–16–98; 8:45 am]

BILLING CODE 4310–05–M

DEPARTMENT OF HEALTH AND

HUMAN SERVICES

Health Care Financing Administration

42 CFR Chapter IV

[HCFA–1014–NC]

RIN 0938–AI45

Medicare Program: Request for Public

Comments on Implementation of the

Medicare+Choice Program, and Notice

of Timeframes for Submission of

Applications for Contracts

AGENCY: Health Care Financing

Administration (HCFA), HHS.

ACTION: Notice of intent to regulate;

solicitation of comments.

SUMMARY: The Balanced Budget Act of

1997 (BBA) establishes a new

Medicare+Choice program. Under this

program, eligible individuals may elect

to receive Medicare benefits through

enrollment in one of an array of private

health plans that contract with us.

The BBA directs the Secretary to

publish by June 1, 1998, regulations

establishing standards for the

Medicare+Choice program. We have

already received comments and

inquiries from the public on a number

of issues associated with the

Medicare+Choice program. This

document solicits further public

comments on issues related to

implementation of the Medicare+Choice

program. We intend to consider these

comments as we develop an interim
Federal Register / Vol. 63, No. 12 / Tuesday, January 20, 1998 / Proposed Rules 2921

final rule to implement the

Medicare+Choice program.

This document also includes

preliminary information regarding

application procedures for organizations

that intend to contract with us to

participate in the Medicare+Choice

program.

This document also informs the

public of a meeting to discuss the

Medicare+Choice program.

DATES: We request that comments be

submitted on or before February 19,

1998.

ADDRESSES: Mail written comments (1

original and 3 copies) to the following

address: Health Care Financing

Administration, Department of Health

and Human Services, Attention: HCFA–

1014–NC, P.O. Box 26688, Baltimore,

MD 21207.

If you prefer, you may deliver your

written comments (1 original and 3

copies) to one of the following

addresses:

Room 309–G, Hubert H. Humphrey

Building, 200 Independence Avenue,

SW., Washington, DC 20201, or

Room C5–09–26, 7500 Security

Boulevard, Baltimore, MD 21244–

1850

Comments may also be submitted

electronically to the following e-mail

address: hcfa1014nc.hcfa.gov. E-mail

comments must include the full name

and address of the sender and must be

submitted to the referenced address in

order to be considered. All comments

must be incorporated in the e-mail

message because we may not be able to

access attachments. Because of staffing

and resource limitations, we cannot

accept comments by facsimile (FAX)

transmission. In commenting, please

refer to file code HCFA–1014–NC.

Comments received timely will be

available for public inspection as they

are received, generally beginning

approximately 3 weeks after publication

of a document, in Room 309–G of the

Department’s offices at 200

Independence Avenue, SW.,

Washington, DC, on Monday through

Friday of each week from 8:30 a.m. to

5 p.m. (phone: (202) 690–7890).

FOR FURTHER INFORMATION CONTACT:

Medicare+Choice Regulation Team,

(410) 786–7660.

SUPPLEMENTARY INFORMATION:

I. Background

A. General

Medicare historically has consisted of

two primary parts: Hospital insurance,

also known as ‘‘Part A,’’ and

supplementary medical insurance, also

known as ‘‘Part B.’’ Part A is generally

provided automatically to persons age

65 and over who are entitled to social

security or railroad retirement board

benefits. Similarly, individuals who

have received either of these benefits

based on their disability, for a period of

at least 24 months, are also entitled to

Part A benefits. Health care services

covered under Part A include: inpatient

hospital care, skilled nursing facility

care, home health agency care, and

hospice care.

Part B benefits are available to almost

all resident citizens age 65 and over;

certain aliens age 65 or over; and

disabled beneficiaries who are entitled

to Part A. Part B coverage is optional

and requires payment of a monthly

premium. Part B covers physician

services (in both hospital and

nonhospital settings) and services

furnished by certain nonphysician

practitioners. It also covers certain other

services, including: clinical laboratory

tests, durable medical equipment, most

supplies, diagnostic tests, ambulance

services, prescription drugs that cannot

be self-administered, certain selfadministered anticancer drugs, some

other therapy services, certain other

health services, and blood not supplied

by Part A.

B. The Balanced Budget Act of 1997

Subsequent to its initial enactment in

1965, the Medicare program has been

subject to numerous legislative and

administrative changes. However, one of

the most significant changes results

from the August 5, 1997 enactment of

the Balanced Budget Act of 1997 (BBA),

Public Law 105–33. Section 4001 of the

BBA adds a new Part C to the Medicare

program, by establishing sections 1851

through 1859 of the Social Security Act.

The new Part C is known as

‘‘Medicare+Choice.’’ Section 4002 of the

BBA establishes transitional rules for

the current Medicare health

maintenance organization (HMO)

program; and section 4006 establishes

special rules for Medicare+Choice

medical savings accounts. Prior to the

BBA, Medicare beneficiaries could

choose between receiving their

Medicare benefits on a fee-for service

basis or enrolling in an HMO with a

Medicare contract. In the latter case, the

beneficiary selects a specific HMO or

competitive medical plan (CMP) within

a service area for Medicare-covered

health care services. This selected plan

coordinates all of the Medicare-covered

health care services for the beneficiary

and receives a per-person payment from

Medicare that is predetermined. Under

the new Medicare+Choice program, the

beneficiaries’ options have been

expanded to include providersponsored organizations (PSOs),

preferred provider organizations (PPOs),

private fee-for-service plans, and, for

those who qualify, religious fraternal

benefit society plans. In addition, up to

390,000 beneficiaries nationwide (and

prior to the year 2003) may elect a new

Medical Savings Account (MSA) option.

A Medicare+Choice MSA is a taxexempt trust created to pay the qualified

medical expenses of the account holder.

A beneficiary who elects the MSA

option will receive a catastrophic health

care policy paid by Medicare. Any

difference between the MSA plan

insurance premium and the amount that

Medicare would have paid if the

beneficiary had elected

Medicare+Choice coverage under any of

the other options will be deposited into

the beneficiary’s MSA.

Under Medicare+Choice, plans with

which we contract must have quality

programs that stress outcomes, create

utilization protocols, assess consumer

satisfaction, and monitor high-risk and

high-volume services. In addition, all

plans, other than non-network MSAs

and certain private fee-for-service plans,

must provide for external review. Each

Medicare+Choice plan must provide

Medicare members all benefits (other

than hospice care) that are available

under Parts A and B. In the case of an

MSA plan, however, these benefits are

not provided until after a catastrophic

deductible amount has been satisfied.

The law sets forth provisions relating

to the following topics:

• Eligibility, election, and enrollment.

• Benefits and beneficiary

protections.

• Organizational relationships with

participating providers.

• Payments to Medicare+Choice

organizations.

• Premiums.

• Organizational and financial

requirements for Medicare+Choice

organizations.

• Establishment of standards.

• Contract requirements.

Additional information about the

Medicare+Choice program is available

on our Internet site (http://

www.hcfa.gov).

C. Issues and Questions To Be Resolved

As stated earlier, we are required to

publish regulations implementing the

Medicare+Choice program by June 1,

1998. The statute provides that these

regulations may be issued as an interim

final rule. We intend to use this

mechanism and will formally request

comments on our policies at that time.

We have already received comments

and inquiries from the public on a

number of issues associated with the
2922 Federal Register / Vol. 63, No. 12 / Tuesday, January 20, 1998 / Proposed Rules

Medicare+Choice program. However, to

ensure that we receive the full range of

public opinion, we are using this notice

as a vehicle to request public

suggestions on specific policy issues

that are detailed in the following

sections. In addition, at this time, we

encourage the public to comment on

any other relevant Medicare+Choice

program policy areas, with the

exception of comments on Federal

solvency standards for PSOs. (A

discussion of PSO solvency standard

policy decisions and implementation

issues and a request for public comment

were contained in a notice published on

September 23, 1997 (62 FR 49649).) We

will consider public comments that are

received timely as we develop the

interim final rule, but we will not

otherwise issue a separate set of

responses to those comments. We

request that commenters provide a brief

summary of any detailed comments.

Also, commenters should, whenever

possible, identify the relevant section or

subsection of the BBA or of the Social

Security Act. Note that in the following

sections, citations to the law are to

sections of the Social Security Act as

established by the BBA.

1. Information for Informed Choice

One of the objectives of the

Medicare+Choice program is to expand

Medicare beneficiaries’ options for

health care. In order to ensure that

beneficiaries have the appropriate

information necessary to choose from

the various Medicare+Choice options,

section 1851(d) of the Act requires that

we collect and disseminate information

on the coverage options available. For

example, the statute requires that, prior

to each open season, we provide a

notice to Medicare-eligible individuals

that includes a list of the

Medicare+Choice plans, a comparison

of plan options that includes

information on benefits and premiums,

a general description of the benefits

under the original Medicare fee-forservice program, and other general

information. The statute also requires, at

1851(e)(3)(D), that, during November

1998, we provide for an educational and

publicity campaign to inform

Medicare+Choice eligible individuals

about the availability of

Medicare+Choice plans and the

Medicare fee-for-service option. The

statute further requires that we maintain

a toll-free number for inquiries

regarding Medicare+Choice options and

an Internet site providing information

on Medicare+Choice options. As we

begin the information collection

process, and analyze how best to

provide information to beneficiaries, we

ask that interested parties respond to the

following questions:

• What are the most effective ways to

communicate Medicare+Choice

information to beneficiaries,

individuals, advocates, ombudsmen,

providers, and other groups that have

need of and will use this information?

• How can we reduce confusion for

beneficiaries who also receive health

care information from other sources, for

example, from employers who offer

retiree coverage or Federal purchasers

such as the Federal Employees Health

Benefit Plan, the Department of Defense,

and sellers of health care insurance

products?

• How can the information programs

best recognize the special needs of

certain populations, such as

beneficiaries with disabilities?

2. Enrollment/Disenrollment Process

Under section 1851(e) of the Act, we

are charged with establishing a process,

including the format and procedures,

through which Medicare+Choice

elections are made. According to section

1851(e), a beneficiary’s enrollment in a

Medicare+Choice option is initially

made at the time the individual

becomes entitled to Part A and enrolled

in Part B. Beneficiaries may change their

Medicare+Choice plan election during

continuous open enrollment periods

through the year 2001. After 2001,

beneficiaries are locked in to their

Medicare+Choice election for defined

time periods, except for special election

periods under certain circumstances.

The process must permit a beneficiary

to make enrollment and disenrollment

elections by filing a form with the

Medicare+Choice organization. The

statute also permits, at section 1851(g),

that a Medicare+Choice organization

may terminate an individual’s election

with respect to a Medicare+Choice plan

that it offers if (1) required premiums

are not paid on a timely basis, (2) the

individual has engaged in disruptive

behavior, or (3) the plan is terminated

with respect to all individuals residing

in the area in which the individual

resides. We request comments related to

the election and enrollment procedures

in general, and the Medicare+Choice

organization’s ability to disenroll a

beneficiary. For example—

• Should our standards be specific

with regard to each of the factors; for

example, timeframes for timely payment

of premiums or a definition for

‘‘disruptive’’? Should we require a

mechanism for appealing termination of

a beneficiary’s enrollment ‘‘for cause’’?

3. Medicare+Choice Enrollment

Demonstrations

Section 4018 of the BBA requires that

we conduct a 3-year demonstration

project to evaluate the use of a thirdparty contractor to conduct the

Medicare+Choice plan enrollment and

disenrollment functions. We are

soliciting comments on how this

demonstration could be designed. For

example—

• What constitutes an enrollment or

disenrollment ‘‘function’’? Is it

distributing applications, collecting

applications, processing applications,

providing benefits counseling,

ascertaining reasons for disenrollment,

or other activities?

• What functions should the

contractor perform?

• What exactly are the tasks involved

in enrollment/disenrollment?

• What would be the most desirable/

efficacious processes for enrollment/

disenrollment from the perspective of

the beneficiaries and plans?

• What is a demonstration ‘‘area’’?

• Should all Medicare+Choice plans

in the demonstration area be involved in

the demonstration? If not, which ones

should be exempt?

• What requirements under Medicare

Part C, if any, is the Secretary likely to

have to waive in order for the

demonstration to work?

• Should a single, standard form be

used for enrollment?

• What standards should be used to

monitor the performance of the

contractor, given that enrollment in

Medicare+Choice plans is voluntary and

that disenrollment may be due to

various causes? Should any of these

standards be tied to contractor payment?

• What would constitute ‘‘substantial

compliance’’ with the performance

standards?

• What criteria should we use to

select the third-party contractor?

4. Post-Stabilization Coverage

Section 1852(d)(2) of the Act

authorizes us to develop policies to

ensure coordination of care and

appropriate payment between

Medicare+Choice organizations and outof-plan providers after the beneficiary’s

medical condition is determined to be

stable. We are particularly interested in

comments about the following issues:

• Should we specify which provider

is responsible for developing a plan of

care to appropriately maintain the

beneficiary’s health, or should this be

negotiated between the emergency

providers and the plan providers?

• Should we establish a requirement

that the Medicare+Choice plan respond
Federal Register / Vol. 63, No. 12 / Tuesday, January 20, 1998 / Proposed Rules 2923

to an emergency service provider’s

request for approval/authorization

within a certain period of time? If so,

what should that time period be?

• Should we require that

Medicare+Choice plans make available

a central contact for emergency

providers to call for authorization and

medical history data?

• Finally, with regard to poststabilization benefits and coverage, our

primary objective is to ensure that

Medicare enrollees are held harmless in

payment disputes between the

Medicare+Choice plans and the nonnetwork service provider. What are the

most appropriate standards to

accomplish this goal?

5. Grievances, Organization

Determinations and Reconsiderations

Appropriate and meaningful appeals

and grievance procedures for the

resolution of individual enrollee

complaints about their health care are

among the most important beneficiary

protections in the Medicare+Choice

program. Section 1852(g) requires that

all Medicare+Choice organizations have

procedures for making determinations

regarding whether an enrollee is entitled

to receive specific health services. The

organization must provide for

reconsideration of adverse coverage

determinations at the request of the

enrollee within a time period specified

by us, but not later than 60 days after

the date of the receipt of the request for

reconsideration. However, the

Medicare+Choice organization must

have in place procedures for expedited

reconsiderations under certain

circumstances.

We are soliciting comments with

regard to these protections. For

example—

• Should guidelines for a grievance

process be established?

• What is an appropriate timeframe

for a reconsideration of a nonexpedited

determination?

• Should plans be able to subcontract

organization determinations and

reconsiderations to subcontractors?

• Should Medicare+Choice plans be

required to continue coverage during

the reconsideration process?

• Should reductions in care be

subject to the reconsideration process?

6. Provider Rights in Medicare+Choice

Plans

Section 1852(b)(2) provides that a

Medicare+Choice organization may not

discriminate with respect to

participation, reimbursement, or

indemnification as to any provider that

is acting within the scope of the

provider’s license or certification under

applicable State law, solely on the basis

of the license or certification. The

statute provides, however, that this

prohibition is not to be construed to

prohibit a plan from including providers

only to the extent necessary to meet the

needs of the plan’s enrollees or from

establishing any measure designed to

maintain quality and control costs

consistent with the responsibilities of

the plan.

In addition, provider rights set forth

in section 1852(j) include the right of

health care professionals to advise

Medicare beneficiaries of possible

medical procedures, treatments, or care,

regardless of whether benefits for the

treatment or care are provided under the

plan. Section 1852(j) also establishes

certain provider protections, including

the physician’s right to written notice of

a Medicare+Choice plan’s decision to

exclude him or her from participation in

the plan and provides that a process for

appealing such a decision be

established. We would like to obtain

general comments about the scope of the

various provider protection

requirements. In addition, we would

like comments regarding the following:

• What procedures should

Medicare+Choice plans be required to

put in place to ensure that providers are

notified of adverse participation

decisions?

• In a case where multiple types of

providers or practitioners can provide a

specific service, how should we

interpret the anti-discrimination

provision at section 1852(b)?

7. Encounter Data Collection

The payment standards and

methodology contained in the new Part

C anticipate an eventual transition from

a payment based on Medicare fee-forservice utilization and cost, to a

payment adjusted for the individual

medical conditions of the enrolled

population—a process known as risk

adjustment. In response to the

requirement that inpatient hospital

encounter data be collected from health

plans for services on or after July 1,

1997, we have developed instructions

concerning collection of inpatient

hospital encounter data for hospitals,

plans, and contractors. Many questions,

however, remain about non-inpatient

encounter data. For example—

• What information systems issues do

organizations face when asked to submit

non-inpatient hospital encounter data?

• What are appropriate transmission

mechanisms for collection of noninpatient hospital encounter data?

Should they vary by type of plan, by

size of plan, or by type of data

collected?

• What issues do organizations face

relating to the transmission of noninpatient hospital encounter data,

especially regarding the frequency and

the methodology of transmission? Under

what circumstances and for what

purposes are such data currently being

generated? How could we coordinate

our data collection efforts with ongoing

activities?

In addition to a January 28, 1998

general meeting (discussed in section II.

of this notice), we are considering

holding a public meeting specifically

regarding the collection of hospital

encounter data that will be used for the

implementation of risk adjustment for

payment of health plans. Individuals

and organizations interested in

attending such a meeting should write

to Cynthia Tudor, HCFA Center for

Health Plans and Providers, Room C3–

15–06, 7500 Security Blvd., Baltimore,

MD 21244, or by Internet at

‘‘Ctudor@hcfa.gov’’ (please specify

‘‘Encounter Data Meeting’’ in the

Subject line).

8. Private Fee-for-Service Plans

One of the new Medicare+Choice

health care options for beneficiaries is

the ‘‘private fee-for-service (PFFS)’’

plan. These plans are defined at

1859(b)(2). Private fee-for-service plans

must meet most of the same

requirements as other Medicare+Choice

plans and will be capitated on a full risk

basis in exchange for providing

enrollees with the full package of

Medicare benefits. Unlike coordinated

care Medicare+Choice plan options

however, PFFS plans are expressly

prohibited from placing the provider at

financial risk or from varying payment

based on utilization experience. PFFS

plans must pay all service providers

(regardless of contracting status) on a

fee-for-service basis. We request public

comments expressing opinions on the

most effective implementation of the

unique PFFS plan program

requirements, including, but not limited

to the following topics:

Section 1852(j) states that a provider

furnishing covered services to PFFS

plan enrollees must be treated as if the

provider had a direct contract with the

PFFS if, before furnishing the services,

the provider is informed of or given a

reasonable opportunity to obtain

information about the terms and

conditions of payment for these

services. We are soliciting comments on

appropriate standards to determine

when a provider has an implied contract

under section 1852(j). For example—

• What notification requirements, if

any, must be met by the PFFS plan or
2924 Federal Register / Vol. 63, No. 12 / Tuesday, January 20, 1998 / Proposed Rules

the provider in order to establish a de

facto contracting arrangement?

With regard to ‘‘fee-for-service

payment’’ as specified in the statute—

• Could the definition of these

payments include bundled provider

fees, or global fees?

• What should be the enrollee’s

responsibility for payment of claims?

• As with other Medicare+Choice

options, should providers in PFFS plans

be prohibited from billing beneficiaries

in most cases?

PFFS plans must meet substantially

different requirements than other

Medicare+Choice plans with regard to

utilization review requirements and

enrollee premiums. We are interested in

the public’s perception of the most

effective ways to implement statutory

requirements that apply certain

utilization review standards to these

entities. For example—

• How should utilization protocols

based on standards of medical practice

be defined?

• Should PFFS plans that use

utilization review to determine medical

necessity be required to include

limitation on liability as a mechanism to

protect PFFS plan enrollees against

liability for full payment when they did

not know or have reason to know that

the PFFS would deny the services as

being not medically necessary?

• How can these entities be able to

comply with the access standards in

section 1852? That is, to what extent are

Medicare+Choice program access

requirements met by establishment of a

health service delivery network?

9. Medical Savings Accounts

As part of the Medicare+Choice

program implementation, we are

establishing procedures for a maximum

of 390,000 beneficiaries to enroll under

an MSA option in accordance with

section 1851. Under the MSA option, a

beneficiary’s Medicare capitated

payment rate will be used to purchase

a MSA high deductible health insurance

plan meeting certain standards. An

MSA plan must pay for at least all

Medicare-covered items and services

after the enrollee meets the annual

deductible, which for 1999 cannot

exceed $6,000. The difference between

the individual’s capitated payment rate

and the insurance premium will be

placed in an MSA designated by the

enrollee. These funds can then be used

by the individual to meet medical

expenses under the insurance

deductible, they can be allowed to

accrue from year to year, or they can be

withdrawn for nonmedical expenses

subject to applicable tax and penalty

rules.

We are requesting input from the

public regarding the appropriate

standards for MSA insurers and account

managers. For example—

• What types of information should

potential MSA insurers be required to

submit to us as part of the application

process?

• What other standards and

requirements should approved MSA

entities meet for monitoring and

evaluation purposes?

10. Other Issues

We are also interested in receiving

responses to the following questions:

• A Medicare+Choice contract may

include more than one plan. We view

this as permitting an entity to offer more

than one Medicare+Choice product (for

example, an HMO and an PPO) as well

as allowing a national contract. How can

these contracts be structured to facilitate

the application and approval process,

including the need for multiple State

licenses?

• What standards for out-of-area

dialysis should apply?

• How should accrediting bodies be

treated for purposes of deeming that a

plan meets standards for internal quality

review, external quality review, and

confidentiality of records?

• Under what circumstances should

we waive independent external review

for plans with an excellent record of

quality and other performance?

• How should State agreements to

monitor and enforce Medicare+Choice

requirements be structured?

• What procedures or requirements

for a hearing for the organization prior

to termination of its contract should we

establish?

• How should Medicaid-only plans

be treated for Medicare+Choice

purposes? For example, how should we

define ‘‘licensed under State law as a

risk-bearing entity eligible to offer

health insurance or health benefits

coverage in [a] State’’ (section

1855(a)(1))?

II. Timelines and Procedures for

Participation in the Medicare+Choice

Program

The following discussion applies to

Medicare+Choice applications and to

Medicare risk contract applications

submitted in calendar year 1998 for

contracts with an effective date of on or

before January 1, 1999. We will discuss

application requirements for subsequent

contracting periods in subsequent HCFA

policy notices.

It should also be noted that we will

submit, as required, the three

applications and related information

collection requirements, that is, the

adjusted community rate (ACR)

proposal and the Medicare+Choice and

PSO applications, referenced in this

notice to the Office of Management and

Budget (OMB) for emergency Paperwork

Reduction Act (PRA) approval, prior to

implementation. A Federal Register

notice will be published soliciting

public comment on each of the

proposed information collections

submitted for emergency PRA approval.

Although the notices will allow the

public only an abbreviated public

comment period, the maximum

approval period of an emergency

approval is 6 months. Once, we have

obtained the required OMB approval,

we will resubmit the approved

information collections to OMB for

reapproval under the routine PRA

approval process. As part of the routine

process, we will publish two

consecutive Federal Register notices,

soliciting public comment for a total of

90 days, on the reapproval of the

collections.

We plan to apply the following

procedures to organizations that submit

applications for new risk contracts

under section 1876. In accordance with

the BBA, we may not enter into any new

risk contracts under section 1876 after

publication of the interim final rule.

Therefore, all applications for risk

contracts under section 1876 that are

not approved prior to the publication of

the interim final rule (regardless of

when submitted) will automatically be

reviewed under the Medicare+Choice

contracting standards, and organizations

will need to submit a supplemental

application as discussed below.

Adjusted Community Rate Proposals

Section 1854(a) requires that

Medicare+Choice organizations submit

ACR proposals for Medicare+Choice

plans by May 1st of the calendar year

prior to the benefit year in question.

This statutory requirement does not

apply, however, to entities that have not

yet been certified as Medicare+Choice

organizations under the interim final

rule to be published by June 1. The June

1 regulation will establish ACR

deadlines that apply when the statutory

May 1 deadline does not apply. In 1999

and thereafter, organizations that apply

for new contracts will be required to

submit their ACR proposals by May 1st.

Risk contractors that have contracts in

effect prior to May 1, 1998 should

submit ACRs by May 1, 1998 in order

to ensure timely processing.

Applicants for risk contracts whose

applications are not approved before the

publication of the interim final rule will

be reviewed as applicants for

Medicare+Choice contracts. Because we
Federal Register / Vol. 63, No. 12 / Tuesday, January 20, 1998 / Proposed Rules 2925

will publish payment rates for 1999 on

March 1, 1998, these applicants must

resubmit their ACR proposals to cover

the proposed contract period. The

contract period must cover all of

calendar year 1999 and may include a

period of time involving 1998. However,

persons are not required to comply with

the information collection requirements

associated with the ACR proposal until

OMB, PRA emergency approval has

been obtained.

Application Process for

Medicare+Choice Plans

We encourage organizations that wish

to participate in the Medicare+Choice

program to submit their applications as

soon as possible and no later than

August 1, 1998. Although our goal is to

process applications in a timely manner,

we cannot guarantee that complete

applications submitted by August 1,

1998 will be approved for an effective

date of January 1, 1999; let alone for

those applications submitted after

August 1. We may experience delays in

processing applications, as current

resources are reassigned to respond to

the requirements of the

Medicare+Choice program.

This section applies to State-licensed

organizations. The procedures for PSOs

that seek Federal waiver of the State

licensure requirement are discussed in a

subsequent section. Upon receipt of a

State-licensed candidate’s application

for a Medicare+Choice contract, we will

immediately review the application to

determine whether the responses and

documentation are complete. If we

identify incomplete responses, we will

allow only 60 days for the applicant to

submit the necessary information. We

will consider an application that, for

any reason, is not complete after the 60-

day period to be nonresponsive, and we

will return it to the applicant. Once we

determine that an application is

complete, we will initiate an extensive

review of the data, including a site visit

for most plans. We will provide

applicants a 15-day time period in

which to provide any information

required as a result of the site visit.

Note that an approved organization

must be ready to enroll and serve

beneficiaries on the first day that the

contract becomes effective. To ensure

that new applicants are approved in

time for the contract to be implemented

by January 1, 1999, we plan to establish

a two-step process whereby new

contractors may submit a core

application at any time prior to

publication of the final interim rule and

then submit a supplemental application

after the interim final rule is published.

The core application will be similar to

the current application for a risk

contract. At present, we expect that it

will contain the following information:

• Medicare+Choice option (HMO,

State-licensed PSO, MSA, etc.).

• General information: description of

plan, brief history, banking information,

board of directors, management staff,

geographic region, and other pertinent

data for the Medicare product.

• Organization and contract

information: type of legal entity, State

authority to operate, organizational

charts, and management contracts.

• Health services delivery network:

detailed description of delivery system,

Medicare subscriber agreements,

evidence of coverage, membership

information, and quality assurance

systems.

• Financial information: certified

audits, financial projections, and all

information necessary to demonstrate a

fiscally-sound operation.

• Marketing information: marketing

plans, projections, and enrollment

assumptions.

• Any additional information to

support the Medicare+Choice

application.

The core application package will be

available on our Internet web site (http:/

/www.hcfa.gov) on or about February 1,

1998. Additional information regarding

the core application process can be

obtained by writing to us at—HPPAG,

Field Liaison Staff, Health Care

Financing Administration, Center for

Health Plans and Providers, Health Plan

Purchasing and Administration Group,

7500 Security Blvd., 03–18–13 South

Building, Baltimore, MD 21244–1850.

Alternatively, you may call the Health

Plan Purchasing and Administration

Group (HPPAG) at 410–786–7623.

ACR instructions will also be

available beginning February 1, 1998 on

the Internet or from the above address.

However, persons are not required to

comply with the information collection

requirements associated with the core

Medicare+Choice application and ACR

proposal until OMB, PRA emergency

approval has been obtained.

Supplemental Medicare+Choice

Application Process

Our plans are that Medicare+Choice

applicants that submit a core

application must complete the

application process by submitting a

supplemental application. The

supplemental application will cover

provisions that are specific to the

Medicare+Choice program as specified

by the interim final rule, including the

fiscal solvency standards for PSOs,

which are scheduled to be published on

April 1, 1998. The supplemental

application will also solicit plan

specific information relevant to each of

the different types of Medicare+Choice

program options (for example, PSO,

PFFS, MSA). The supplemental

applications will be available beginning

June 1, 1998, when the interim final rule

is published. The application will be

available from our Internet web site or

from HPPAG at the above address.

Persons are not required to comply with

the information collection requirements

associated with the Medicare+Choice

supplemental application until OMB,

PRA emergency approval has been

obtained.

Federal Waiver of State Licensure

Requirement for PSOs

Consistent with current policy, only

applications that have obtained State

licenses will be approved for

Medicare+Choice contracts. The only

exception to this requirement are PSOs,

which are allowed to request waivers of

the State licensure requirement as

specified by BBA. In accordance with

section 1855(a)(2), PSO applicants may

request waivers of the State licensure

requirement under any of the following

circumstances:

• The State failed to act on a timely

basis, that is, within 90 days of its

receipt of a substantially complete

application.

• The denial of the application was

based on discriminatory treatment. The

ground for approval of such a waiver on

the basis of discriminatory treatment is

that the State has denied a licensing

application and (1) the standards or

review process imposed by the State as

a condition of approval of the license

imposes any material requirements,

procedures, or standards (other than

solvency requirements) to such

organizations that are not generally

applicable to other entities engaged in a

substantially similar business, or (2) the

State requires the organization, as a

condition of licensure, to offer any

product or plan other than a

Medicare+Choice plan.

• The denial was based on

application of solvency requirements.

With respect to waiver applications

filed on or after the date of publication

of solvency standards under section

1856(a), the ground for approval of the

waiver application on this basis is that

the State denied the licensing

application based (in whole or in part)

on the organization’s failure to meet

applicable solvency requirements and

(1) the requirements are not the same as

the solvency standards established

under section 1856(a), or (2) the State

has imposed a condition of approval of

the license documentation or
2926 Federal Register / Vol. 63, No. 12 / Tuesday, January 20, 1998 / Proposed Rules

information requirements relating to

solvency or other material requirements,

procedures, or standards relating to

solvency that are different from the

requirements, procedures, and

standards applied by us under section

1856(d)(2).

Once a prospective Medicare+Choice

contractor submits documentation that

one or more of the above conditions has

been met, we have 60 days to grant or

deny the waiver application. A separate

application for PSOs seeking a waiver

from State licensure will be available on

or about February 15, 1998, on our

Internet web site or from HPPAG at the

address given above. This application

will include the waiver forms as well as

the contract application and all

definitions. In addition, solvency

standards for PSOs seeking a waiver

will be available on April 1, 1998. PSOs

requesting a waiver that submitted an

application prior to April 1 will be

required to submit a supplemental

application showing how they meet the

solvency standards. However, persons

are not required to comply with the

information collection requirements

associated with the PSO application

until OMB, PRA emergency approval

has been obtained.

In accordance with the provisions of

Executive Order 12866, this notice was

reviewed by the Office of Management

and Budget.

Information Campaign

To assist Medicare beneficiaries’

decision-making process relative to new

Medicare+Choice health care options,

we will incorporate information on

newly-approved plans into our plan

comparison database. This database will

contain information on all existing and

new plans, except for MSAs. Plan

comparison information will be posted

on the Internet and will be updated at

least quarterly. Thus, newly-approved

plans will be entered into the plan

comparison database at the next update

cycle.

February 4, 1998 Public Meeting

In addition to seeking written

comments from the public, we will hold

a public meeting on Wednesday,

February 4, 1998 from 9 a.m. to 3 p.m.

in our auditorium at 7500 Security

Boulevard, Baltimore, Maryland. The

purpose of this meeting will be to

discuss issues and concerns from plans,

providers, beneficiaries, and other

interested parties on the requirements

and implementation of the

Medicare+Choice program. The agenda

for this meeting will be posted on our

Internet web site. Further information

can be obtained from Rondalyn Kane at

(202) 690–7874.

(Secs. 1851 through 1857, 1859, 1876, and

1877 of the Social Security Act (Secs. 4001,

4002, and 4006 of Pub.L. 105–33, 42 U.S.C.

1395l and 1395mm))

Dated: December 23, 1997.

Nancy-Ann Min DeParle,

Adminstrator, Health Care Financing

Administration.

[FR Doc. 98–1381 Filed 1–16–98; 8:45 am]

BILLING CODE 4120–01–P

DEPARTMENT OF HEALTH AND

HUMAN SERVICES

Health Care Financing Administration

42 CFR Part 424

[HCFA–1864–P]

RIN 0938–AH19

Medicare Program; Additional Supplier

Standards

AGENCY: Health Care Financing

Administration (HCFA), HHS.

ACTION: Proposed rule.

SUMMARY: This proposed rule would

establish additional standards for an

entity to qualify as a Medicare supplier

for purposes of submitting claims for

durable medical equipment, prosthetics,

orthotics, and supplies (DMEPOS). This

proposed rule would establish

additional standards that must be

satisfied before a DMEPOS supplier

could receive payment from the

Medicare program. The Social Security

Act Amendments of 1994 require that a

DMEPOS supplier meet standards

related to compliance with State and

Federal licensure requirements,

maintaining a physical facility on an

appropriate site, proof of appropriate

liability insurance, and other standards

the Secretary may specify.

DATES: Comments will be considered if

we receive them at the appropriate

address, as provided below, no later

than 5 p.m. on March 23, 1998.

ADDRESSES: Mail written comments (1

original and 3 copies) to the following

address: Health Care Financing

Administration, Department of Health

and Human Services, Attention: HCFA–

1864–P, P.O. Box 26676, Baltimore, MD

21207.

If you prefer, you may deliver your

written comments (1 original and 3

copies) to one of the following

addresses:

Room 309–G, Hubert H. Humphrey

Building, 200 Independence Avenue,

SW., Washington, DC 20201,

or

Room C5–09–26, 7500 Security

Boulevard, Baltimore, MD 21244–

1850

Because of staffing and resource

limitations, we cannot accept comments

by facsimile (FAX) transmission. In

commenting, please refer to file code

HCFA–1864–P. Comments received

timely will be available for public

inspection as they are received,

generally beginning approximately 3

weeks after publication of a document,

in Room 309–G of the Department’s

offices at 200 Independence Avenue,

SW., Washington, DC, on Monday

through Friday of each week from 8:30

a.m. to 5 p.m. (phone: (202) 690–7890).

Electronically submitted comments will

also be available for public inspection at

the Independence Avenue address.

FOR FURTHER INFORMATION CONTACT:

Larry Bonander, (410) 786–4479.

SUPPLEMENTARY INFORMATION:

I. Background

Medicare services are furnished by

two types of entities, that is, providers

and suppliers. The term ‘‘provider’’, as

defined in our regulations at § 400.202,

means a hospital, a rural primary care

hospital, a skilled nursing facility, a

comprehensive outpatient rehabilitation

facility, a home health agency, or a

hospice that has in effect an agreement

to participate in Medicare. A clinic, a

rehabilitation agency, or a public health

agency that has a similar agreement to

furnish outpatient physical therapy or

speech pathology services, or a

community mental health center with a

similar agreement to furnish partial

hospitalization services, is also

considered a provider (see sections

1861(u) and 1866(e) of the Social

Security Act (the Act)).

In general, a supplier is an individual

or entity that furnishes certain types of

medical and other health services under

Medicare Part B. There are different

definitions of the term ‘‘supplier’’ and

specific regulations governing different

types of suppliers. A supplier that

furnishes durable medical equipment,

prosthetics, orthotics, and supplies

(DMEPOS) is one category of supplier.

Other categories of suppliers could

include, for example, physicians, nurse

practitioners, and physical therapists.

The term ‘‘DMEPOS’’ encompasses the

types of items included in the definition

of medical equipment and supplies

found at section 1834(j)(5) of the Act.

For purposes of DMEPOS supplier

standards, the term ‘‘supplier’’ is

currently defined in § 424.57(a) of our

regulations as an entity or individual,

including a physician or Part A

provider, that sells or rents Part B

covered DMEPOS items to Medicare

beneficiaries, and that meets certain

standards. We are retaining this