Opinion ID: 894907
Heading Depth: 1
Heading Rank: 1

Heading: The Medicare Advantage Program

Text: Medicare was established in 1965 as part of the Social Security Act. 42 U.S.C. §§ 1395-1395ggg (2000). It is administered by the Centers for Medicare and Medicaid Services (CMS), an agency whose mission is to serve Medicare and Medicaid beneficiaries, [1] and provides health insurance for most Americans over sixty-five, for certain disabled persons under sixty-five, and for persons with end-stage renal disease. 42 U.S.C. § 1395c. In 1997, Medicare was amended to include Part C, also known as the Medicare Advantage program. [2] Medicare + Choice Program, 65 Fed.Reg. 40170, 40171 (June 29, 2000). The Medicare Advantage program provides Medicare beneficiaries with a wider range of health plan choices through which to obtain their Medicare benefits. Establishment of the Medicare Advantage Program, 70 Fed.Reg. 4588, 4589 (Jan. 28, 2005). Under Medicare Advantage, CMS contracts with health maintenance organizations and other private entities to provide health care services to Medicare enrollees. Id. at 4589-90. Those that enter into such contracts with CMS are called Medicare Advantage organizations, 42 C.F.R. § 422.2, and there are detailed requirements for entities that wish to qualify. 42 C.F.R. § 422.503. Once CMS and a Medicare Advantage organization enter into a contract, CMS makes capitation payments [3] to Medicare Advantage organizations for enrollee health care services. 42 C.F.R. § 422.304(a). Upon payment from CMS, the Medicare Advantage organization assume[s] full financial risk . . . for the provision of the health care services for which benefits are required to be provided, 42 U.S.C. § 1395w-25(b), and must adopt and maintain arrangements satisfactory to CMS to protect its enrollees from incurring liability (for example, as a result of an organization's insolvency or other financial difficulties) for payment of any fees that are the legal obligation of the [Medicare Advantage] organization. 42 C.F.R. 422.504(g)(1). Medicare Advantage organizations may contract with third parties to provide administrative and health care services to enrollees. 42 C.F.R. § 422.214(a). Contracts between Medicare Advantage organizations or their delegates and downstream providers are freely negotiated, with very few exceptions. See, e.g., 42 C.F.R. § 422.504(g)(1)(i) (requiring Medicare Advantage organizations to [e]nsure that all contractual or other written arrangements with providers prohibit the organization's providers from holding any beneficiary enrollee liable for payment of [fees that are the legal obligation of the Medicare Advantage organization.]).