Medicare Plus Choice (M+C): Interim Final Rule
Subpart N–Medicare Contract Determinations and Appeals
Sec. 422.641 Contract determinations.
This subpart establishes the procedures for making and reviewing
the following contract determinations:
(a) A determination that an entity is not qualified to enter into
a contract with HCFA under Part C of title XVIII of the Act.
(b) A determination to terminate a contract with an M+C
organization in accordance with Sec. 422.510(a).
Sec. 422.644 Notice of contract determination.
(a) When HCFA makes a contract determination, it gives the M+C
organization written notice.
(b) The notice specifies– (1) The reasons for the determination;
and (2) The M+C organization’s right to request reconsideration.
(c) For HCFA-initiated terminations, HCFA mails notice 90 days
before the anticipated effective date of the termination. For
terminations based on initial determinations described at Sec.
422.510(a)(5), HCFA immediately notifies the M+C organization of its
decision to terminate the organization’s M+C contract.
Sec. 422.646 Effect of contract determination.
The contract determination is final and binding unless–
(a) The determination is reconsidered in accordance with Secs.
422.648 through 422.658;
(b) A timely request for a hearing is filed under Sec. 422.662; or
Sec. 422.648 Reconsideration: Applicability.
(a) Reconsideration is the first step for appealing a contract
determination specified in Sec. 422.641.
Sec. 422.650 Request for reconsideration.
(a) Method and place for filing a request.
A request for reconsideration must be made in writing and
filed with any HCFA office.
(b) Time for filing a request. The
request for reconsideration must be filed within 15 days from the
date of the notice of the initial determination.
(c) Proper party to file a request.
Only an authorized official of the entity or M+C organization
that was the subject of a contract determination may file the request
(d) Withdrawal of a request. The M+C organization or M+C contract
applicant who filed the request for a reconsideration may withdraw it
at any time before the notice of the reconsidered determination is
mailed. The request for withdrawal must be in writing and filed with
Sec. 422.652 Opportunity to submit evidence.
HCFA provides the M+C organization or M+C contract applicant and
the HCFA official or officials who made the contract determination
reasonable opportunity to present as evidence any documents or
written statements that are relevant and material to the matters at
Sec. 422.654 Reconsidered determination.
A reconsidered determination is a new determination that–
(a) Is based on a review of the contract determination, the
evidence and findings upon which that was based, and any other
written evidence submitted before notice of the reconsidered
determination is mailed, including facts relating to the status of
the M+C organization subsequent to the contract determination; and
Sec. 422.656 Notice of reconsidered determination.
(a) HCFA gives the M+C organization or M+C contract applicant
written notice of the reconsidered determination.
(b) The notice– (1) Contains findings with respect to the M+C
organization’s qualifications to enter into or remain under a
contract with HCFA pursuant to Part C of title XVIII of the Act; (2)
States the specific reasons for the reconsidered determination; and
(3) Informs the M+C organization or M+C contract applicant of its
right to a hearing if it is dissatisfied with the
Sec. 422.658 Effect of reconsidered determination.
Sec. 422.660 Right to a hearing.
The following parties are entitled to a hearing:
(a) An applicant entity that has been determined in a reconsidered
determination to be unqualified to enter into a contract with HCFA
under Part C of the Act.
Sec. 422.662 Request for hearing.
(a) Method and place for filing a request.
A request for a hearing must be made in writing and filed by
an authorized official of the applicant entity or M+C organization
that was the party to the determination under appeal. The request for
a hearing must be filed with any HCFA office.
(b) Time for filing a request. A
request for a hearing must be filed within 15 days after the date of
the notice of contract or reconsidered determination.
(c) Parties to a hearing. The parties
to a hearing must be– (1) The parties described in Sec. 422.660; (2)
At the discretion of the hearing officer, any interested parties who
make a showing that their rights may be prejudiced by the decision to
be rendered at the hearing; and (3) HCFA.
Sec. 422.664 Postponement of effective date of a contract
determination when a request for a hearing with respect to a contract
determination is filed timely.
(a) HCFA postpones the proposed effective date of the contract
determination to terminate a contract with an M+C organization until
a hearing decision is reached and affirmed by the Administrator
following review under Sec. 422.692 in instances where an M+C
organization requests review by the Administrator; and
(b) HCFA extends the current contract at the end of the contract
period (in the [[Page 35114]] case of a determination not to renew)
only– (1) If HCFA finds that an extension of the contract will be
consistent with the purpose of this part; and (2) For such period as
HCFA and the M+C organization agree.
Sec. 422.666 Designation of hearing officer.
Sec. 422.668 Disqualification of hearing officer.
(a) A hearing officer may not conduct a hearing in a case in which
he or she is prejudiced or partial to any party or has any interest
in the matter pending for decision.
(b) A party to the hearing who objects to the designated hearing
officer must notify that officer in writing at the earliest
(c) The hearing officer must consider the objections, and may, at
his or her discretion, either proceed with the hearing or withdraw.
(1) If the hearing officer withdraws, HCFA designates another hearing
officer to conduct the hearing. (2) If the hearing officer does not
withdraw, the objecting party may, after the hearing, present
objections and request that the officer’s decision be revised or a
new hearing be held before another hearing officer. The objections
must be submitted in writing to HCFA.
Sec. 422.670 Time and place of hearing.
(a) The hearing officer fixes a time and place for the hearing,
which is not to exceed 30 days from the receipt of the request for
the hearing, and sends written notice to the parties. The notice also
informs the parties of the general and specific issues to be resolved
and information about the hearing procedure.
(b) The hearing officer may, on his or her own motion, or at the
request of a party, change the time and place for the hearing. The
hearing officer may adjourn or postpone the hearing.
Sec. 422.672 Appointment of representatives.
Sec. 422.674 Authority of representatives.
(a) A representative appointed and qualified in accordance with
Sec. 422.672 may, on behalf of the represented party– (1) Gives or
accepts any notice or request pertinent to the proceedings set forth
in this subpart; (2) Presents evidence and allegations as to facts
and law in any proceedings affecting that party; and (3) Obtains
information to the same extent as the party.
Sec. 422.676 Conduct of hearing.
(a) The hearing is open to the parties and to the public.
(b) The hearing officer inquires fully into all the matters at
issue and receives in evidence the testimony of witnesses and any
documents that are relevant and material.
(c) The hearing officer provides the parties an opportunity to
enter any objection to the inclusion of any document.
Sec. 422.678 Evidence.
Sec. 422.680 Witnesses.
(a) The hearing officer may examine the witnesses.
Sec. 422.682 Discovery.
(a) Prehearing discovery is permitted upon timely request of a
(b) A request is timely if it is made before the beginning of the
(c) A reasonable time for inspection and reproduction of documents
is provided by order of the hearing officer.
Sec. 422.684 Prehearing.
Sec. 422.686 Record of hearing.
(a) A complete record of the proceedings at the hearing is made
and transcribed and made available to all parties upon request.
Sec. 422.688 Authority of hearing officer.
In exercising his or her authority, the hearing officer must
comply with the provisions of title XVIII and related provisions of
the Act, the regulations issued by the Secretary, and general
instructions issued by HCFA in implementing the
Sec. 422.690 Notice and effect of hearing decision.
(a) As soon as practical after the close of the hearing, the
hearing officer issues a written decision that– (1) Is based upon
the evidence of record; and (2) Contains separately numbered findings
of fact and conclusions of law.
(b) The hearing officer provides a copy of the hearing decision to
Sec. 422.692 Review by the Administrator.
(a) Request for Review by
Administrator. An M+C organization that has received a hearing
decision upholding a contract termination determination may request
review by the Administrator within 15 days of receiving the hearing
decision as provided under Sec. 422.690(b).
(b) Review by the Administrator. The
Administrator shall review the hearing officer’s decision, and
determine, based upon this decision, the hearing record, and any
written arguments submitted by the M+C organization, whether the
termination decision should be upheld, reversed, or modified.
Sec. 422.694 Effect of Administrator’s decision.
Sec. 422.696 Reopening of contract or reconsidered
determination or decision of a hearing officer or the
(a) Initial or reconsidered
determination. HCFA may reopen and revise an initial or
reconsidered determination upon its own motion within one year of the
date of the notice of determination.
(b) Decision of hearing officer. A
decision of a hearing officer that is [[Page 35115]] unfavorable to
any party and is otherwise final may be reopened and revised by the
hearing officer upon the officer’s own motion within one year of the
notice of the hearing decision. Another hearing officer designated by
HCFA may reopen and revise the decision if the hearing officer who
issued the decision is unavailable.
(c) Decision of Administrator. A
decision by the Administrator that is otherwise final may be reopened
and revised by the Administrator upon the Administrator’s own motion
within one year of the notice of the Administrator’s decision.
Sec. 422.698 Effect of revised determination.
Subpart O–Intermediate Sanctions
Sec. 422.750 Kinds of sanctions.
(a) The following intermediate sanctions and civil money penalties
may be imposed: (1) Civil money penalties ranging from $10,000 to
$100,000 depending upon the violation. (2) Suspension of enrollment
of Medicare beneficiaries. (3) Suspension of payment to the M+C
organization for Medicare beneficiaries who enroll. (4) Require the
M+C organization to suspend all marketing activities to Medicare
beneficiaries for the M+C plan subject to the intermediate sanctions.
Sec. 422.752 Basis for imposing sanctions.
(a) All intermediate sanctions. For
the violations listed below, HCFA may impose any of the sanctions
specified in Sec. 422.750 on any M+C organization that has a contract
in effect. The M+C organization may also be subject to other
applicable remedies available under law. (1) Fails substantially to
provide, to an M+C enrollee, medically necessary services that the
organization is required to provide (under law or under the contract)
to an M+C enrollee, and that failure adversely affects (or is
substantially likely to adversely affect) the enrollee. (2) Imposes
on M+C enrollees premiums in excess of the monthly basic and
supplemental beneficiary premiums permitted under section 1854 of the
Act and Subpart G of this part. (3) Expels or refuses to reenroll a
beneficiary in violation of the provisions of this part. (4) Engages
in any practice that could reasonably be expected to have the effect
of denying or discouraging enrollment of individuals whose medical
condition or history indicates a need for substantial future medical
services. (5) Misrepresents or falsifies information that it
furnishes– (i) To HCFA; or (ii) To an individual or to any other
entity. (6) Fails to comply with the requirements of Sec. 422.204,
which prohibits interference with practitioners’ advice to enrollees.
(7) Fails to comply with Sec. 422.216, which requires the
organization to enforce the limit on balance billing under a private
fee-for service plan. (8) Employs or contracts with an individual who
is excluded from participation in Medicare under section 1128 or
1128A of the Act (or with an entity that employs or contracts with
such an individual) for the provision of any of the following: (i)
Health care. (ii) Utilization review. (iii) Medical social work. (iv)
Sec. 422.756 Procedures for imposing sanctions.
(a) Notice of Sanction and opportunity to
respond–(1) Notice of sanction. Before imposing the
intermediate sanctions specified in paragraph (c) of this section
HCFA– (i) Sends a written notice to the M+C organization stating the
nature and basis of the proposed sanction; and (ii) Sends the OIG a
copy of the notice. (2) Opportunity to respond. HCFA allows the M+C
organization 15 days from receipt of the notice to provide evidence
that it has not committed an act or failed to comply with the
requirements described in Sec. 422.752, as applicable. HCFA may allow
a 15-day addition to the original 15 days upon receipt of a written
request from the M+C organization. To be approved, the request must
provide a credible explanation of why additional time is necessary
and be received by HCFA before the end of the 15-day period following
the date of receipt of the sanction notice. HCFA does not grant an
extension if it determines that the M+C organization’s conduct poses
a threat to an enrollee’s health and safety.
(b) Informal reconsideration. If,
consistent with paragraph (a)(2) of this section the M+C organization
submits a timely response to HCFA’s notice of sanction, HCFA conducts
an informal reconsideration that: (1) Consists of a review of the
evidence by an HCFA official who did not participate in the initial
decision to impose a sanction; and (2) Gives the M+C organization a
concise written decision setting forth the factual and legal basis
for the decision that affirms or rescinds the original determination.
(c) Specific sanctions. If HCFA
determines that an M+C organization has acted or failed to act as
specified in Sec. 422.752 and affirms this determination in
accordance with paragraph (b) of this section, HCFA may– (1) Require
the M+C organization to suspend acceptance of applications made by
Medicare beneficiaries for enrollment in the sanctioned M+C plan
during the sanction period; (2) In the case of a violation under Sec.
422.752(a), suspend payments to the M+C organization for Medicare
beneficiaries enrolled in the sanctioned M+C plan during the sanction
period; and (3) Require the M+C organization to suspend all marketing
activities for the sanctioned M+C plan to Medicare enrollees.
(d) Effective date and duration of
sanctions–(1) Effective date. Except as provided in paragraph
(d)(2) of this section, a sanction is effective 15 days after the
date that the organization is notified of the decision to impose the
sanction or, if the M+C organization timely seeks reconsideration
under paragraph (b) of this section, on the date specified in the
notice of HCFA’s reconsidered determination. (2) Exception. If HCFA
determines that the M+C organization’s conduct poses a serious threat
to an enrollee’s health and safety, HCFA may make the sanction
effective on a date before issuance of HCFA’s reconsidered
determination. (3) Duration of sanction. The sanction remains in
effect until HCFA notifies the M+C organization that HCFA is
satisfied that the basis for imposing the [[Page 35116]] sanction has
been corrected and is not likely to recur.
(e) Termination by HCFA. In addition
to or as an alternative to the sanctions described in paragraph (c)
of this section, HCFA may decline to authorize the renewal of an
organization’s contract in accordance with Sec. 422.506(b)(2) and
(b)(3), or terminate the contract in accordance with Sec. 422.510.
(f) Civil Money Penalties. (1) If
HCFA determines that an M+C organization has committed an act or
failed to comply with a requirement described in Sec. 422.752, HCFA
notifies the OIG of this determination, and also notifies OIG when
HCFA reverses or terminates a sanction imposed under this part. (2)
In the case of a violation described in paragraph (a) of Sec.
422.752, or a determination under paragraph (b) of Sec. 422.752 based
upon a violation under Sec. 422.510(a)(4) (involving fraudulent or
abusive activities), in accordance with the provisions of 42 CFR
parts 1003 and 1005, the OIG may impose civil money penalties on the
M+C organization in accordance with parts 1003 and 1005 of this title
in addition to, or in place of, the sanctions that HCFA may impose
under paragraph (c) of this section. (3) In the case of a
determination under paragraph (b) of Sec. 422.752 other than a
determination based upon a violation under Sec. 422.510(a)(4), in
accordance with the provisions of 42 CFR parts 1003 and 1005, HCFA
may impose civil money penalties on the M+C organization in the
amounts specified in Sec. 422.758 in addition to, or in place of, the
sanctions that HCFA may impose under paragraph (c) of this
Sec. 422.758 Maximum amount of civil money penalties imposed by
If HCFA makes a determination under Sec. 422.752(b), based on any
determination under Sec. 422.510(a) except a determination under Sec.
422.510(a)(4), HCFA may impose civil money penalties in the following
amounts: (a) If the deficiency on which the determination is based
has directly adversely affected (or has the substantial likelihood of
adversely affecting) one or more M+C enrollees–$25,000 for each
determination. (b) For each week that a deficiency remains
uncorrected after the week in which the M+C organization receives
HCFA’s notice of the determination–$10,000.
Sec. 422.760 Other applicable provisions.
The provisions of section 1128A of the Act (except subsections (a)
and (b)) apply to civil money penalties under this subpart to the
same extent that they apply to a civil money penalty or procedure
under section 1128A of the Act.
(Catalog of Federal Domestic Assistance Program No. 93.773,
Medicare–Hospital Insurance; and Program No. 93.774, Medicare–
Supplementary Medical Insurance Program)
Dated: June 17, 1998. Nancy-Ann Min DeParle, Administrator, Health
Care Financing Administration.
Dated: June 18, 1998. Donna E. Shalala, Secretary. [FR Doc.
98-16731 Filed 6-19-98; 11:35 am]
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