Medicare Plus Choice (M+C): Interim Final Rule
Subpart H–Provider-Sponsored Organizations
- 3. Nomenclature change. Throughout subpart H,
“Medicare+Choice”, wherever it appears, is revised to read “M+C”.
- 4. Nomenclature change. Throughout subpart H, “items and
services”, wherever it appears, is revised to read “services”.
Sec. 422.350 [Amended]
- 5. In Sec. 422.350, the following changes are made:
- a. In paragraph (a)(1), “hereinafter referred to as PSOs”
is revised to read “(PSOs)”.
- b. The definition of “capitated basis” is removed and a
definition of “capitation payment” is added in its place, to
read as set forth below.
- c. In the definition of “cash equivalent”, “accounts
receivables, which” is revised to read “accounts receivable
- d. The definition of “health care provider” and the
statement for “M+C” are removed.
- e. In the definition of “insolvency”, “where” is revised to
read “in which”.
- f. The definition of “provider-sponsored organization is
revised to read as set forth below.
Sec. 422.350 Basis, scope, and definitions.
- Capitation payment means a fixed per enrollee per month amount
paid for contracted services without regard to the type, cost, or
frequency of services furnished.
- Provider-sponsored organization (PSO) means a public or
private entity that– (1) Is established or organized, and
operated, by a health care provider or group of affiliated health
care providers; (2) Provides a substantial proportion (as defined
in Sec. 422.352) of the health care services under the M+C
contract directly through the provider or affiliated group of
providers; and (3) When it is a group, is composed of affiliated
providers who– (i) Share, directly or indirectly, substantial
financial risk, as determined under Sec. 422.356, for the
provision of services that are the obligation of the PSO under the
M+C contract; and (ii) Have at least a majority financial interest
in the PSO.
Sec. 422.352 [Amended]
6. In Sec. 422.352, the following changes are made:
- a. In paragraph (a)(1) “such licensure” is revised to read
“State licensure”, and “section 1855(a)(2) of the Act” is revised
to read “Sec. 422.370”.
- b. In paragraph (b)(2), “as defined in Sec. 422.354” is
- c. Paragraph (c) is revised to read as follows:
Sec. 422.352 Basic requirements.
(c) Rural PSO. To qualify as a rural PSO, a PSO must– (1)
Demonstrate to HCFA that– (i) It has available in the rural area, as
defined in Sec. 412.62(f) of this chapter, routine services including
but not limited to primary care, routine specialty care, and
emergency services; and (ii) The level of use of providers outside
the rural area is consistent with general referral patterns for the
area; and (2) Enroll Medicare beneficiaries, the majority of which
reside in the rural area the PSO serves.
Sec. 422.354 [Amended]
7. In Sec. 422.354, the following changes are made:
- a. In the introductory text, “of by two or more” is revised to
read “of two or more”.
- b. In paragraphs (a)(1), (a)(2), and (c), the parenthetical
phrases are removed.
- c. Paragraph (b) is revised to read as follows:
Sec. 422.354 Requirements for affiliated providers.
(b) Each affiliated provider of the PSO shares, directly or
indirectly, substantial financial risk for the furnishing of services
the PSO is obligated to provide under the contract.
Sec. 422.356 [Amended]
8. In Sec. 422.356, in paragraph (a)(3)(ii), “Agreement by the
affiliated provider” is revised to read “Affiliated providers
Sec. 422.370 [Amended]
9. In Sec. 422.370 the following changes are made:
10. Sec. 422.372 is revised to read as follows:
Sec. 422.372 Basis for waiver of State licensure.
(a) General rule. Subject to this
section and to paragraphs (a) and (e) of Sec. 422.374, HCFA may waive
the State licensure requirement if the organization has applied
(except as provided in paragraph (b)(4) of this section) for the most
closely appropriate State license or authority to conduct business as
an M+C plan.
(b) Basis for waiver of State licensure.
Any of the following may constitute a basis for HCFA’s waiver
of State licensure. (1) Failure to act timely on application. The
State failed to complete action on the licensing application within
90 days of the date the State received a substantially complete
application. (2) Denial of application based on discriminatory
treatment. The State has– (i) Denied the license application on the
basis of material requirements, procedures, or standards (other than
solvency requirements) not generally applied by the State to other
entities engaged in a substantially similar business; or (ii)
Required, as a condition of licensure that the organization offer any
product or plan other than an M+C plan. (3) Denial of application
based on different solvency requirements. (i) The State has denied
the application, in whole or in part, on the basis of the
organization’s failure to meet solvency requirements that are
different from those set forth in Secs. 422.380 through 422.390; or
(ii) HCFA determines that the State has imposed, as a condition of
licensure, any documentation or information requirements relating to
solvency or other material requirements, procedures, or standards
relating to solvency that are different from the requirements,
procedures, or standards set forth by HCFA to implement, monitor, and
enforce Secs. 422.380 through 422.390. (4) State declines to accept
licensure application. The appropriate State licensing authority has
given the organization written notice that it will not accept its
11. In Sec. 422.374, paragraph (b) is revised to read as follows:
Sec. 422.374 Waiver request and approval process.
(b) HCFA gives the organization written notice of granting or
denial of waiver within 60 days of receipt of a substantially
complete waiver request.
12. In Sec. 422.384, paragraph (b)(3) is revised to read as
Sec. 422.384 Financial plan requirement.
(b) [[Page 35099]] (3) Cash-flow statements;
13. Nomenclature change: Throughout subpart H, the phrase “health
care provider”, wherever it appears, is revised to read “provider”.
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