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Leslie Bonacum
Neil Allen

HCFA Makes MEDICARE+Choice Rule Changes CCH Profiles Changes That Will Affect Millions of Americans

 (RIVERWOODS, ILL., February 17, 1999) – Seven months after the release of the massive Interim Final Rule for the Medicare+Choice program, the Health Care Financing Administration (HCFA) finalized a limited number of program changes today, and promised to be back later this year with additional changes in a more comprehensive M+C Final Rule. The much-awaited changes focus on operational requirements involving provider participation rules, beneficiary enrollment options and beneficiary access to care, according to CCH INCORPORATED (CCH), a leading provider of health care law and managed care information.

The changes were made in response to comments on the Interim Final Rule that HCFA received from a wide array of health care interests. The Interim Final Rule, which implemented sweeping changes in the Medicare program, was issued in June 1998.

"In addition to allowing Medicare+Choice plans the flexibility they requested in coordinating beneficiaries' care, these rule changes signal HCFA's responsiveness to plans' objections that the Interim Final Rule required them, in some instances, to release what they consider to be proprietary information," said Susan Hahn Reizner, an attorney, CCH health law analyst and author of CCH Medicare+Choice Interim Final Rule.

"HCFA's response to the plans' concerns is particularly apparent in rule changes that narrow the scope of plan participation rules that must be disclosed to providers. Also, it has eliminated special requirements for notifying enrollees if a network specialist is involuntarily terminated," Hahn Reizner added.

HCFA is expected to address other issues raised during the comment period by the end of 1999.

Summary of Changes

While the changes in this final regulation are less extensive than the original "mega reg" released last June, which introduced free-market competition into the Medicare program, the changes are significant.

Following is a summary of the changes HCFA made to the Interim Final Rule:

  • Notification of specialist terminations: HCFA has completely deleted 42 CFR 422.112(a)(5), a controversial provision that required M+C plans to notify enrollees if their specialists were involuntarily terminated from the plan network. The provision also required that the enrollees' plan furnish the names of other M+C plans in the enrollees' area that contract with the enrollees’ choice of specialist, along with information about the procedure for returning to original Medicare. Many commenters persuasively argued that the now-deleted requirement called for them to access competing plans' network information, and to delve into contractual relationships that constituted proprietary information.
  • Provider participation rules: HCFA adopted a less expansive interpretation of providers' rights in participating in M+C plan networks. Provider participation rules that previously applied to a full array of health care practitioners now are limited to physicians only. Although M+C organizations must continue to disclose their plan participation rules, the notification requirement has been narrowed. Specifically, HCFA revised the regulations to state that written notice of an M+C organization's participation rules may be limited to include terms of payment, the organization's credentialing policies and other rules that directly impact participation decisions.

In addition, an M+C organization's initial denial of a physician's application to participate is no longer subject to appeal – a change that addresses a particularly contentious issue among plans and providers. HCFA declined to adopt some suggestions that appeal rights be limited to provider terminations based on quality of care. The elimination of appeal rights for terminations characterized as "business decisions" would undermine the intent of the provider protection measures, HCFA responded.

  • Coordination of care: HCFA eliminated the former requirement that a treatment plan could be prepared and updated only by a primary care provider. The agency agreed that greater flexibility is warranted because not all managed care plan types assign enrollees to primary care providers. Thus, any healthcare professional, or team of such professionals, now may develop a treatment plan. HCFA added a requirement, however, that the M+C organization assure adequate coordination among the providers.
  • Initial health assessment: Maintaining that required initial health assessments for new M+C plan enrollees is consistent with industry practice and need not unduly burden M+C organizations, HCFA has allowed some flexibility in conducting these assessments. The requirement that initial health assessments of new enrollees be conducted within 90 days of enrollment will be considered satisfied if enrollees "age in" or switch plans while remaining under the care of the same primary care provider.

When an initial assessment is done, HCFA has clarified that the M+C organization may choose the form that the assessment will take, as long as the organization makes a "best-effort" attempt to conduct it, documents unsuccessful attempts and follows up. An initial assessment can be accomplished with a phone call, questionnaire, home visit or physical examination.

  • Special election and Medigap: HCFA has cleared up confusion about the effective date of M+C plans’ obligations to accept new enrollments during special election periods. HCFA clearly states in the regulations that individuals enrolled in an M+C plan that withdraws or is terminated from the program are entitled to a special election period among any other M+C plans in their area, effective July 1, 1998. In addition, HCFA has reiterated that the guaranteed issue of Medigap supplemental policies A, B, C and F also took effect on July 1, 1998.
  • Rehabilitation Act: The Rehabilitation Act of 1973 has been added to the list of anti-discrimination laws with which M+C organizations must comply.
  • Notification timeframes: HCFA specified that M+C organizations must notify enrollees by October 15 of plan changes that will go into effect on January 1 of the following year. An existing 30-day notification rule still applies to midyear changes, however.

What You Don’t See

"HCFA declined in this release to define ‘complex and serious medical conditions,’ as many of those commenting had requested," Hahn Reizner noted.

Until HCFA issues further guidance, M+C organizations are expected to adopt and implement their own definitions and procedures, HCFA has said.

"Those who filed comments were unsuccessful in their attempts to persuade HCFA to move back the date for submitting their adjusted community rate proposals from the current May 1 deadline to either July 1 or August 1," according to Hahn Reizner. "Nor will M+C organizations be allowed to modify the benefit, premium and copayment proposals they submit to HCFA on May 1."

The deadline is mandated under the Social Security Act and is not within HCFA’s discretion to change, the agency said.

"Those who submitted comments on the Medicare+Choice Interim Final Rule will likely agree with HCFA's assessment that much remains to be addressed by way of change and clarification through more comprehensive rule changes still on the horizon this year," Hahn Reizner said.

"Although HCFA is not able to push back the May 1, 1999, deadline mandated by law, for Medicare+Choice organizations to submit their plans' benefit, premium and copayment proposals, the plans may gain the deadline extension they seek in a proposal that President Clinton has included in his FY 2000 budget plan," said Hahn Reizner.


CCH INCORPORATED, headquartered in Riverwoods, Ill., was founded in 1913 and has served four generations of business professionals and their clients. For more than 50 years, the company has tracked regularly, reported, explained and analyzed health and entitlement law for healthcare providers, insurers, attorneys and consumers. CCH is the premier provider of Medicare and Medicaid information and publishes the industry standard, the CCH Medicare and Medicaid Guide. CCH is a wholly owned subsidiary of Wolters Kluwer. The CCH web site can be accessed at

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