mippa CMS–4131–F and CMS 4138–F

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54600 Federal Register /Vol. 76, No. 170 / Thursday, September1, 2011 /Rules and Regulations

DEPARTMENT OF HEALTH ANDHUMAN SERVICES

Centers for Medicare & MedicaidServices

42 CFR Parts 417, 422, and 423

[CMS4131F and CMS 4138F]

RIN 0938AP24 and 0938AP52

Medicare Program; MedicareAdvantage and Prescript ion DrugBenefit Programs

AGENCY: Centers for Medicare &

Medicaid Services (CMS), HHS.

ACTION: Final rule.

SUMMARY: This final rule finalizesrevisions to the regulations governingtheMedicare Advantage (MA) program(Part C),prescription drug benefitprogram (Part D) and section 1876 costplans including conforming changes to

the MA regulations to implementstatutory requirements regarding specialneeds plans (SNPs), private fee-for-service plans (PFFS), regional preferred

provider organizations (RPPO) plans,andMedicare medical savings accounts(MSA) plans, cost-sharing fordual-eligible enrollees in the MA programandprescription drug pricing, coverage,andpayment processes in the Part Dprogram, and requirements governingthe marketing of Part C and Part Dplans.

DATES: EffectiveDate: Except asotherwise specified these regulations are

effective on October31, 2011.FOR FURTHER INFORMATION CONTACT:

Vanessa Duran, (410) 7868697 and

HeatherRudo, (410) 7867627,General information.

Christopher McClintick, (410) 7864682, Part C issues.

Lisa Thorpe, (410) 7863048, Part Dissues.

Frank Szeflinski, (303) 8447119, Part Cpayment issues.

Camille Brown, (410) 7860274,Marketing issues.

SUPPLEMENTARY INFORMATION:

I. Background

The Balanced Budget Act of1997(BBA) (Pub. L. 10533) established anew Part C in the Medicare statute(sections 1851 through 1859 oftheSocial Security Act (the Act)) whichestablishedthe current MA program.The Medicare Prescription Drug,Improvement, and Modernization Act of2003 (MMA) (Pub. L. 108173)establishedthe Part Dprogram andmade significant revisions to Part Cprovisions governing the Medicare

Advantage (MA) program. The MMAdirectedthat important aspects ofthePart Dprogrambe similarto, andcoordinated with, regulations for theMA program. Generally, the provisionsenactedin the MMA took effect January1, 2006. The final rules implementingthe MMA for the MA and Part Dprescription drug programs appeared in

the January 28, 2005 Federal Registeron (70 FR 4588 through 4741 and 70 FR4194 through 4585, respectively).

As we gainedmore experience withthe MA program and the prescriptiondrug benefit program, we proposed torevise areas of both programs and issuedaproposedrule on May 16, 2008 (73 FR28556) that wouldhave clarified existing

policies or codified current guidance forboth programs. The MedicareImprovements for Patients and ProvidersAct (MIPPA) (Pub. L. 110275), enactedon July 15, 2008, calledupon the Secretary to revise themarketing requirements for Part C andPart Dplans in several areas. MIPPAalso enacted changes with respect toSpecial Needs Plans (SNPs), Private Fee-For-Service plans (PFFS), QualityImprovement Programs, the prompt

payment of Part D claims, and the useof Part D data. With the exceptionsnotedin this final rule, MIPPA requiredthat these new rules take effect at a datespecifiedby the Secretary, but no laterthan November15, 2008.

Because several ofthese proposedregulatory revisions in our May 16, 2008

proposedrule were overtaken bystatutory provisions in MIPPA, theMIPPA provisions superseded our

proposed rulemaking in these areas. Forexample, some provisions in our May16, 2008 proposedrule addressed issuesin areas in which MIPPA required thatwe establish marketing limits no laterthan November15, 2008. As a result, weimplementedall provisions addressedin our May 16, 2008 proposedrule, andlater overtakenby MIPPA provisions, inour September18, 2008 andNovember14, 2008 interim final rules withcomment (IFCs). We finalizedthe non-MIPPA related provisions of our May

16, 2008 proposedrule in our January16, 2009 final rule with commentperiod.

This final rule finalizes the MIPPA-related provisions of our September 18,2008 IFC (73 FR 54226), ourNovember14, 2008 IFC (73 FR 67406), ourNovember21, 2008 correction notice (73FR 70598), and one provision on twoSNP-relatedstatutory definitions thatwas finalized with a comment periodinour January 16, 2009 final rule withcomment period(74 FR2881).

II. Provisions of This Final Rule

Revisions made in this final rulegovern section 1876 cost contract plansand the MA andprescription drugbenefit programs. Several of the finalprovisions affect both the MA and PartDprograms. In our discussion thatfollows, we note when aprovisionaffectsboth the MA andprescriptiondrug benefit, and we include in sectionII.C. of this final rule, a table comparingthe final Part C and Part Dprogramchangesby specifying each issue andthesections of the Code ofFederalRegulations that we are revising forbothprograms.

A. Changes to the Regulations in Part422Medicare Advantage Program

1. Special Needs Plans

Congress authorized special needsplans (SNPs) as a type ofMedicareAdvantage (MA)plan designedto enrollindividuals with special needs. Thethreetypes ofspecial needs individualseligible for enrollment in a SNPidentifiedin the MMA include(1)Institutionalized individuals (definedin 422.2 as an individual continuouslyresiding, or expecting to continuouslyreside, for 90 days or longerin a longterm care facility); (2) individualsentitledto medical assistance under aState Plan undertitle XIX of the Act; or(3) other individuals with severe ordisabling chronic conditions that would

benefit from enrollment in a SNP.As ofJanuary 2011, there are 455 SNP

plan benefit packages (PBPs) in

operation nationwide. These SNP PBPsinclude 298 dual-eligible SNP (DSNP)PBPs, 92 chronic care SNP (CSNP)PBPs, and 65 institutional SNP (ISNP)PBPs.

a. Model of Care ( 422.101(f))

Section 164 of MIPPA added caremanagement requirements for all SNPseffective January 1, 2010, as set forth insection 1859(f)(5) of the Act (42 U.S.C.1395w28(f)). The new mandate requireddual-eligible, institutional, andchroniccondition SNPs to implement caremanagement requirements which havetwo explicit components: an evidence-

based model of care and abattery of caremanagement services. While therevisions made in our September18,2008 IFC simply reflectedthe substanceof the new MIPPAprovisions, our May16, 2008 proposedrule proposed other,related provisions which were finalizedin our January 12,2009 final rule.

The first component of the newmandate enactedin section 164 ofMIPPA is a requirement for an evidence-

based model of care with an appropriate


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54601Federal Register /Vol. 76, No. 170 / Thursday, September1, 2011 /Rules and Regulations

networkofproviders and specialiststhat meet the specialized needs oftheSNP target population. We received afew comments on our September 18,2008 IFC about whetherwe would issueevidence-based guidelines for the modelof care, but we did not in our September18, 2008 IFC implement this mandate toendorse any particularset ofevidence-

based guidelines orprotocols; instead,we expectedthat SNPs would developsuch guidelines andprotocols based onthe specific elements to be included inthe model of care as foundin the 2008and 2009 Call Letters. We expected thatSNPs wouldbe able to use resourcessuch as the Agency forHealthcareResearch and Quality (AHRQ, http://www.ahrq.gov/). AHRQ does notendorse any particularset ofevidence-

based guidelines orprotocols; however,its Web site includes access tonationally-recognized evidence-based

practices. The second component is a

batteryof care

management servicesthat

includes: (1) A comprehensive initialassessment and annual reassessments ofan individuals physical, psychosocial,and functional needs; (2) anindividualized plan of care thatincludes goals and measurableoutcomes, including specific servicesandbenefits to be provided; and (3) aninterdisciplinary team to manage care.In addition, MIPPA mandatedaperiodicaudit of SNPs to ensure SNPs meet themodel of care requirements.

We also have issued guidance on theSNP model of care in our 2008 and 2009Call Letters. In addition, care

coordination and the presence ofaprovider network comprisedofclinicalexperts pertinent to a SNPs targetpopulation have long been thecornerstones of the SNP model ofcare.

In this final rule, we are revising 422.101(f)(1), which was effectiveJanuary 1, 2010, to correct a typo. Thephrase that we are replacing isindentifying goals, and addingidentifying goals in its place.

b. Definitions: Institutional-Equivalentand Severe or Disabling ChronicCondition ( 422.2)

Section 164 of MIPPA, inter alia,modifiedthe requirements anddefinitions pertaining to an institutionalspecial needs individual and a severeordisabling chronic condition specialneeds individual, without specificallydefining the relevant terms. In responseto our May 16, 2008 proposed ruleregarding eligibility for institutional-level individuals and severe or disablingchronic condition individuals, wereceived public comments thatrequestedthat we propose twoadditional SNP definitions.

Accordingly, in our January 12, 2009final rule with comment periodinwhich we added definitions based oncomments from the May 16, 2008

proposedrule, we specified thefollowing definitions for InstitutionalEquivalent and Disabling ChronicCondition.

Institutional-equivalent means, for

the purpose ofdefining a special needsindividual, an MA eligible individualwho is living in the community, butrequires an institutional level ofcare(LOC). The determination that theindividual requires an institutional LOCmustbe made by The use of a State assessment tool

from the State in which the individualresides; and An assessment conductedby an

impartial entity with the requisiteknowledge and experience to accuratelyidentify whetherthe beneficiary meetsthe institutional LOC criteria.

In States and territories that do nothave an existing institutional LOC tool,the individual mustbe assessed usingthe same methodology that specificState uses to determine institutionalLOC for Medicaid nursing homeeligibility.

In our January 12, 2009 final rule withcomment period, we specifiedthat thedetermination ofinstitutional LOC must

be made using a State assessment toolbecause States have extensiveexperience in making LOCdeterminations. We also specified thatthis LOC determination also be made byan additional entity, other than the

Medicare Advantage Organization(MAO), to ensure the impartially oftheassessment.

Severe or Disabling ChronicCondition means, for the purposes ofdefining a special needs individual, anMA eligible individual who has one ormore co-morbidand medically complexchronic conditions that are substantiallydisabling or life-threatening; has a highrisk ofhospitalization or othersignificantadverse health outcomes;and requires specialized deliverysystems across domains ofcare.

We did not receive any comments on

these definitions. As such, they areadopted without modification in thisfinal rule.

c. Dual-Eligible SNPs and ContractsWith States ( 422.107)

Section 164(c) of MIPPA modifiedsection 1859(f)(3)(D) of the Act torequire that, effective January 1, 2010,all MA organizations offering new dual-eligible SNPs (DSNPs), or seeking toexpandthe service area ofexisting DSNPs, have a contract with the StateMedicaid agency(ies) in the State(s) in

which the DSNP operates to providebenefits, or to arrange for the provisionofbenefits to individuals entitled toreceive medical assistance under titleXIX of the Act. In orderto implementthis requirement, we specifiedin our(74 FR 54226) IFCpublished onSeptember18, 2008 that the contractwith the State Medicaid agency(ies)

must include, at minimum: (1) TheMAOs responsibility to provide orarrange for Medicaid benefits; (2) thecategory(ies) ofeligibility coveredunderthe DSNP; (3) the Medicaid benefitscovered underthe DSNP; (4) the cost-sharing protections coveredunder theDSNP; (5) the identification andsharing ofinformation on Medicaid

provider participation; (6) theverification ofenrollees eligibility for

both Medicare and Medicaid; (7) theservice area coveredby the DSNP; and(8) the contract periodfor the DSNP.We further clarifiedthat States are notrequiredto enterinto these contractswith aparticular plan or any SNP in thestate at all, and that we would notpermit DSNPs without State contractsto expand their service areas in 2010.We also specifiedthat, forcontract year2010, MAOs with existing DSNPs maycontinue to operate in their existingservice area without a State MedicaidAgency contract, provided they meet allother statutory requirements, includingcare management and qualityimprovement program requirements. Weset forth these requirements at 422.107.

Comment: Many commenters

supported requiring the collaborationbetween MAOs offering DSNPs andState Medicaid agencies. However, themajority ofcomments that offeredqualified support raised questions andconcerns about operational issuesrelatedto the submission ofthese StateMedicaid Agency contracts to CMS.Several commenters contended thatvariation in State contracting and

procurement processes make it difficultfor DSNPs to obtain State MedicaidAgency contracts by CMS deadline, andrequestedthat we give DSNPsadditional time and flexibility, on a case

by case basis, to meet our contractingdeadlines.Response: We appreciate the

commenters support for therequirement that DSNPs contract withthe State Medicaid agencies in theStates within which the DSNPsoperate. Although we appreciate theinformation about how DSNPs areimpactedby our State Medicaid Agencycontract submission deadlines, we arenot modifying the provision to addressthe operational issues that thecommenters raised because we do not
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believe that rulemaking is theappropriate vehicle for addressing suchissues. However, we note, that while weare not addressing these specificoperational concerns in this final rule,we provided operational guidance toMAOs well in advance of the 2012contract submission deadline.Additional guidance for the 2013

contract submission deadline will beincludedin the 2013 SNP Application,the Call Letter for CY 2013, and in anyadditional HPMS memoranda about theDSNPState Medicaid agency contractrequirement.

Comment: A numberofcommentersthat submitted comments soughtclarification on the States obligations tocontract with DSNPs, includingwhethera State Medicaid agency isrequiredto enterinto contracts with allDSNPs that seek to operate in its State.One commenter expressed concernabout being able to contract with all ofthe DSNPs that operate in its State

because ofbudgetary concerns andcontendedthat this MIPPA requirementto contract with DSNPs conflicts withits established Medicaid managed caremodels. A few commenters suggestedthat CMS holdDSNPs harmless iftheDSNP made a good faith effort tocontract and the State Medicaidagencies either refusedto contract withthe DSNP at all or refusedto includethe required provisions of 422.107(c)in the contract between the DSNP andthe State Medicaid agency. Several ofthese commenters requestedthat CMS

provide incentives and assistance to

States to contract with DSNPs andfacilitate the contracting process

between DSNPs and the StateMedicaid agencies. By contrast, onecommenter recommendedthat CMScommunicate with State Medicaidagencies about DSNPs that seek tooperate in its State so the State can letCMS know what SNPs it will notcontract with, thereby alleviating CMSburden ofreviewing SNPs with which aState will not contract.

Response: As explicitly providedinsection 164(c)(4) of MIPPA, States arenot underany obligations to contractwith DSNPs and can decline a DSNPs request to enterinto a contract forany reason. DSNPs must still complywith the State contract requirements asestablishedin section 164(c) and ourregulations at 422.107. However, asrequiredby MIPPA and modifiedby theAffordable Care Act of 2010, to operateduring contract year 2013 andbeyond,all DSNPs must secure a StateMedicaid Agency contract containing, atminimum, all provisions listedin 422.107(c); existing DSNPs that donot obtain a required contract with their

State Medicaid agency(ies) will not bepermittedto continue. We do notbelieve that Congress intended that weholdDSNPs harmless if the DSNPmade a good faith effort to contract andthe State Medicaid agencies eitherrefusedto contract with the DSNP atall orrefusedto include the required

provisions. As requiredby section

164(c) of MIPPA, and in an effort tofacilitate the contracting process

between State Medicaid agencies andDSNPs, we have establisheda StateResource Centerto provide States withhelpful information as they engage incontract negotiations with DSNPs. ThisState Resource Centeris designed tofacilitate integration and coordination of

benefits, policies, and day-to-daybusiness processes between StateMedicaid agencies and DSNPs, andwas also developedto provide a forumfor States to make inquiries and shareinformation with CMS and each other

aboutthe

coordinationof State and

Federal policies pertaining to SNPs.States and DSNPs seeking assistancewith these requirements may e-mail [email protected],orvisit the State Resource CenterWeb siteat https://www.cms.hhs.gov/SpecialNeedsPlans/05_StateResourceCenter.asp.We are,therefore, finalizing this provisionwithout further modification.

Comment: Several commentersrequested clarification on the meaningof providing benefits, or arranging for

benefits to be provided under 422.107(b), which states that [t]he

MA organization retains responsibilityunderthe contract forprovidingbenefits, or arranging forbenefits to beprovided, for individuals entitled toreceive medical assistance under titleXIX * * *. A few commenters soughtconfirmation that, with this language,CMS is not requiring DSNPs to providethe Medicaid benefits directly to thedual-eligible beneficiary; rather, thesecommenters suggestedthat they should

be able to subcontract with anotherentity for the provision of the benefits.Additionally, one commenterquestioned whether States may enter

into a State Medicaid Agency contractwith a DSNP under which the SNPdoes not have a contractual obligation toprovide any Medicaid benefits. As notedby this commenter, such an optionwouldenable States to facilitate thecontinued operation of DSNPs withoutcreating a conflict with the Statesexisting managedcare models.

Response: DSNPs may provideMedicaid benefits directly, or undercontract with another entity,but mustretain responsibility for the Medicaidbenefits. States and DSNPs identify the

package ofMedicaid benefits includedunderthe DSNP in their contractnegotiations. The requirement that theDSNP retain responsibility for theMedicaid benefits does not allow for aMIPPA compliant State MedicaidAgencycontract under which the SNPdoes not have a contractual obligation to

provide any Medicaid benefits. We are,

therefore, finalizing this provisionwithout further modification.

Comment: Many commentersquestionedand sought clarification onthe minimum contract requirementsspecifiedin 422.107(c) and questionedwhether various existing contractingarrangements between MAOs and States(that is, HIPAA business associateagreements or existing contracts

between States and Medicaid managedcare organizations) would satisfy therequirements of 422.107(c).Commenters also requestedwe clarify:(1) The meaning ofprovide or arrange

forMedicaid benefits under 422.107(c)(1); (2) whether under 422.107(c)(2), the State Plan governsthe categories ofdual eligible

beneficiaries to be specified under theState contract, and whetherthe DSNPmust serve all duals in a State asopposedto smaller subsets of the Statesdual-eligible population; (3) the scope ofMedicaid benefits to be coveredunderthe SNP; (4) the meaning cost sharingprovisions underthe SNP; (5) themeaning ofidentification and sharingofinformation on Medicaid providerparticipation; (6) the meaning of

verification ofenrollees eligibility forboth Medicare and Medicaid; (7)whetherthe Medicaid managed carecontract service area must match upwith the DSNP service area; and (8)whetherCMS will accept contracts withevergreen clauses.

Response: In orderto comply with theState Medicaid Agency contractrequirements under section 164 ofMIPPA, all contracts must, at minimum,contain the provisions outlinedin 422.107(c). We are unable to make a

blanket determination that certainagreements between SNPs and StateMedicaid agencies do or do not containall of the required provisions; rather, wewill review each contract individuallyfor each required element to determinecompliance. To provide DSNPs moreinformation on these requirements, wereleasedand will continue to updateadditional guidance through theMedicare ManagedCare Manual andother guidance vehicles (that is, HPMSmemos) on the minimum contractrequirements specifiedin 422.107.Additionally, the followingexplanations provide some further
mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]://www.cms.hhs.gov/SpecialNeedsPlans/05_StateResourceCenter.asphttps://www.cms.hhs.gov/SpecialNeedsPlans/05_StateResourceCenter.asphttps://www.cms.hhs.gov/SpecialNeedsPlans/05_StateResourceCenter.asphttps://www.cms.hhs.gov/SpecialNeedsPlans/05_StateResourceCenter.asphttps://www.cms.hhs.gov/SpecialNeedsPlans/05_StateResourceCenter.asphttps://www.cms.hhs.gov/SpecialNeedsPlans/05_StateResourceCenter.asphttps://www.cms.hhs.gov/SpecialNeedsPlans/05_StateResourceCenter.asphttps://www.cms.hhs.gov/SpecialNeedsPlans/05_StateResourceCenter.asphttps://www.cms.hhs.gov/SpecialNeedsPlans/05_StateResourceCenter.asphttps://www.cms.hhs.gov/SpecialNeedsPlans/05_StateResourceCenter.asphttps://www.cms.hhs.gov/SpecialNeedsPlans/05_StateResourceCenter.aspmailto:[email protected]


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clarification on the required contractprovisions: The MA organizations

responsibility, including financialobligations, toprovide or arrange forMedicaid benefits: This requirementunder 422.107(c) simply requires thatthe contract between the DSNP and theState Medicaid agency clearly outline

theprocessby which the DSNP willprovide or arrange forMedicaid benefitsand specify how the Medicare andMedicaid benefits will be integratedand/or coordinated. The meaning ofprovide or arrange for Medicaidbenefits is previously discussedinresponse to the previous commentregarding the meaning ofthese termsunder 422.107(b). The category(ies) ofeligibility for

dual-eligible beneficiaries to be enrolledunderthe SNP, including the targetingofspecific subsets: This contract

provision must specify the populationofdual-eligible beneficiaries eligible toenroll in the DSNP, and anyenrollment limitations for Medicare

beneficiaries under this DSNP mustparallel any enrollment limitationsunderthe Medicaid program andMedicaidState Plan. A DSNP contractwith a State Medicaid agency may be forthe States entire population ofdual-eligible beneficiaries or may covercertain categories ofdual-eligibleindividuals. To the extent a StateMedicaid agency excludes specificgroups ofdual eligibles from theirMedicaid contracts or agreements, thosesame groups mustbe excluded from

enrollment in the SNP, provided thatthe enrollment limitations parallel thestructure and care delivery of the StateMedicaid program. For organizationsthat contract with the State as aMedicaid managedcare plan,enrollment in the DSNP must belimitedto the dual-eligible beneficiariespermittedto enroll in that organizationsMedicaid managedcare contract. The Medicaid benefits covered

underthe SNP: This State contractprovision must specify information onbenefit design and administration, anddelineate plan responsibility to provideor arrange forbenefits. The contractshould specify the Medicaid benefitsoffered underthe State Plan as well asthose benefits the DSNP will offer thatgobeyond what is required underOriginal Medicare. The cost-sharingprotections

covered underthe SNP: The StateMedicaid Agency contract shouldinclude the limitation on out ofpocketcosts for the applicable categories ofdual eligible beneficiaries (for example,full benefit dual-eligible individuals).DSNPs must enforce limits on out-of-

pocket costs fordual-eligibles, andcontracts between DSNPs and StateMedicaid agencies must specify that theDSNP will not impose cost-sharingrequirements on specified dual-eligibleindividuals that would exceed theamounts permitted underthe StateMedicaidPlan if the individual werenot enrolledin the DSNP.

The identification and sharing ofinformation on Medicaid providerparticipation: Meeting this contractingelement requires that the information

provided include aprocess for the Stateto identify and share information on

providers contracted with the StateMedicaid agency for inclusion in theSNP provider directory. Although CMSdoes not require all providers to accept

both Medicare and Medicaid, the DSNPs Medicare and Medicaid networksshouldmeet the needs of the dual-eligible population served. The verification ofenrollees

eligibilityfor both Medicare andMedicaid: The contract must describe indetail how the State Medicaid agencywill provide DSNPs with access to realtime information to verify eligibility ofenrolled dual eligible members. The service area coveredby the

SNP: The State contract provision mustclearly identify the covered service areain which the State has agreedthe DSNP may operate. The DSNPs servicearea cannot exceedthe service areaspecifiedin the State Medicaid Agencycontract. By contrast, the Medicaidmanagedcare service area can exceed orinclude more counties than the DSNP

service area. The contract periodfor the SNP:

The State Medicaid Agency contractrequires a contract term covering at leastJanuary 1 through December31 oftherelevant MA contract year. If the Stateis unable to meet this required contractterm provision, the DSNP may includean evergreen clause within the contractandprovide information about when theState issues updates to its existingcontracts with evergreen clauses.Therefore, we are finalizing this

provision without modification. Comment: One commenter sought

clarification about whethera DSNPwithauthority to operate without a StateMedicaid Agency contract can increaseenrollment in the existing counties in itsservice area.

Response: DSNPs that are permittedto operate in contract year 2012 withouta State Medicaid Agency contract arealso permittedto increase enrollment inthe counties in their existing servicearea. Section 164(c) of MIPPA providedthat all new DSNPs must havecontractswith the State Medicaidagencies in the States in which the D

SNPs operate. This provision allowedexisting DSNPs that were not seekingto expand their service areas theauthority to continue operating withouta State contract through the 2010contract year. In 2010, section 3205 ofthe Affordable Care Act extended this

provision for existing, non-expandingDSNPs through the end of the 2012

contract year. As such, forcontract year2012, DSNPs are only requiredto havea signedState Medicaid Agency contractto operate if they: (1) Are offering a newDSNP-type in CY 2012; (2) areexpanding the service area of an existingDSNP type in CY 2012; (3) offered anew DSNP type in CY 2010 or CY2011; or (4) expandedthe service areaof an existing DSNP during either ofthese 2 contract years. Since our April2011 final rule (76 FR 21563) entitled,Medicare Program: Changes to theMedicare Advantage and the MedicarePrescription Drug Benefit Programs forContract Year 2012 and Other Changes,finalized changes to 422.107(d)(1)(ii)such that existing DSNPs can operatewithout State Medicaid contractsthrough CY 2012, providedthey do notexpand their service areas, theregulatory text changes we made to 422.107(d)(1)(ii) in our September 18,2008 IFC have been superseded.Therefore, in this final rule, we are notfinalizing the regulatory text changes to 422.107(d)(1)(ii) that we describedinour September18, 2008 IFC.

Comment: Two commenters soughtclarification on whetherMIPPAs StateMedicaid Agency contract requirement

applies only to DSNPs or to all SNPstypes that serve and enroll dual-eligible

beneficiaries. One commenter suggestedthis provision broadly apply to all SNPtypes.

Response: Section 164(c) ofMIPPArequires that DSNPs contract with theState Medicaid agencies in the States inwhich the DSNP operates to providebenefits, or arrange forbenefits to beprovided, for individuals entitled toreceive medical assistance under titleXIX. This requirement is found insection 164(c) of MIPPA under asubsection starting with the statutorytext ADDITIONAL REQUIREMENTSFOR DUAL SNPS. Further, this

provision specifically refers to aspecializedMA plan forspecial needsindividuals describedin subsection(b)(6)(B)(ii), which we have interpretedin past guidance to mean DSNPs. Assuch, it is clear that Congress onlyintendedthat this State contractrequirement apply to DSNPs, and notCSNPs and ISNPs that enroll dual-eligible beneficiaries. Therefore, we arefinalizing this provision withoutmodification.


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d. SNPs and Quality ImprovementProgram ( 422.152)

Section 164 of MIPPA amendedsection 1852(e)(3)(A) of the Act to addclause (ii) and addeda new paragraph(6) to section 1857(d) of the Act. Section1852(e)(3)(A)(ii) of the Act requires thatdata collected, analyzed, and reportedas part of the plans qualityimprovement (QI)program mustmeasure health outcomes and otherindices ofquality at the plan level withrespect to the model of care (MOC) asrequiredin section 1859(f)(2) through(5) of the Act. As a Medicare Advantage(MA)plan, each SNP must implement adocumentedQIprogram forwhich allinformation is available forsubmissionto CMS or forreview during monitoringvisits. The focus of the SNP QI programshouldbe the monitoring andevaluation of the performance ofitsMOC (see 422.101(f)). In theSeptember18, 2008 IFC, we stated that,

no later than January 1, 2010, theprogram shouldbe executedas a three-tier system ofperformanceimprovement.

The first tier of this program consistedofcollection and analysis of data onquality and outcome to enable

beneficiaries to compare and selectamong health coverage options. Aspartof the first tier implementation and topilot the development ofcomparativemeasures to facilitate beneficiary choice,SNPs were requiredto collect, analyze,and submit 13 Healthcare EffectivenessData and Information Set (HEDIS)

measures and three National Committeeon Quality Assurance (NCQA) structureandprocess measures in CY 2008. SinceCY 2008, we have requiredSNPs tosubmit eight HEDISand six NCQAstructure andprocess measures.

The secondtier of the QI program forSNPs was effective on January 1, 2010and was implemented consistent withthe requirements 422.152(g). As wearticulatedin our September18, 2008IFC, 422.152(g) reflects therequirement under section1852(e)(3)(A)(ii) of the Act, added byMIPPA, that SNPs collect, analyze, andreport data that measures the

performance oftheir plan-specific MOC.SNPs may measure the effectiveness oftheirMOCs, as required under 422.152(g), using a variety ofplan-determined methodologies, such asclaims data, record reviews,administrative data, clinical outcomes,and other existing validand reliablemeasures (for example, Assessing CareofVulnerable Elders (ACOVE)measures, Minimum Data Set (MDS),HEDIS,Health Outcomes Survey(HOS), and the Outcome and

Assessment Information Set (OASIS)) atthe plan level to evaluate theeffectiveness of the process of care andclinical outcomes. Specifically, eachSNPmust measure the effectiveness ofits MOC through the collection,aggregation, analysis, and reporting ofdata that demonstrate: Access to care;improvement in beneficiary health

status; staff implementation of the MOCas evidencedby measures ofcarestructure andprocess from thecontinuity of care domain;comprehensive health risk assessment;care management through anindividualized plan of care; provision ofspecialized clinical expertise targetingits special needs population through a

provider network; coordination anddelivery ofservices andbenefits throughtransitions across settings and

providers; coordination and delivery ofextra services andbenefits that meet theneeds of the most vulnerable

beneficiaries; use ofevidence-basedpractices and/or nationally recognizedclinical protocols; and the application ofintegrated systems ofcommunication.As we specifiedin our September 18,2008 IFC, each SNP must coordinate thesystematic collection of data usingindicators that are objective, clearlydefined, andbasedon measures havingestablished validity and reliability. Wefurther clarifiedthat the indicatorsshouldbe selectedfrom a variety ofquality and outcome measurementdomains such as functional status, caretransitioning, disease management,

behavioral health, medicationmanagement, personal andenvironmental safety, beneficiaryinvolvement and satisfaction, andfamily and caregiver support. We alsostatedthat SNPs must document allaspects oftheirQIprogram, includingdata collection and analysis, actionstaken to improve the performance oftheMOC, and the participation oftheinterdisciplinary team members andnetwork providers in QI activities.

We are currently implementing thethirdtier of the QIprogram, which isthe required reporting ofmonitoring

data, that consists of a prescribedsample of data that SNPs collect underthe secondtier of the QIprogram tomeasure their performance under theirMOCs. MA organizations must currentlycollect and report data that permits themeasurement ofhealth outcomes andother indices ofquality. Accordingly,MA organizations must collect andreport data from the HEDIS, HOS, andCAHPSinstruments, as well as theSNP structure andprocess measures.We make these performance data

available to the public (on a summarybasis and at the plan level).

The Affordable Care Act (ACA)requires that, starting in 2012, all SNPsbe approvedby the National Committeeon Quality Assurance (NCQA) based onstandards developedby the Secretary. Inour April 2011 final rule (76 FR2146621448), we specifiedthat the SNP MOC

wouldbe the basis of NCQAs approvalof SNPs. We developedthe standardsand scoring criteria for each of the 11elements of the MOC for the NCQA touse for the SNP approval process.

Section 1857(d)(6) of the Actstipulates that we will conduct reviewsof the SNP MOC in conjunction with theperiodic audits of the MA organizations.During 2010 and 2011, we conducted apilot study to assist us in determiningthe best methods for assessing the MOCsonce they were implementedby theSNPs. We will expandthis effort in2012, by assessing a sample of the SNPsthat attaineda 3-year approval as aresult of the NCQA SNP approval

process that was mandated under theAffordable Care Act. This assessmentwill help us ensure that SNPs are

providing care consistent with theirapprovedMOC and to identify MAOsstrengths and weaknesses inimplementing theirMOCs. We alsohope to use this information to identify

best practices to share with plans andthe public.

After considering comments wereceived, we are finalizing these

provisions without modification.Comment: One commenter viewed

this provision as apositive addition todemonstrating the value andeffectiveness of the SNP model. Toensure successful implementation andto improve clarity the commenterofferedthe following suggestions: Section 422.152(g)(2)To ensure

that CMS, contracting plans, and otherinterested parties are referring to thesame standard, the commentersuggestedthat the regulation specify thesource of the domains referenced (forexample, CMS, NCQA, NIH). Section 422.152(g)(2)(viii)The

commenterwas concernedthat thedelivery of extra services andbenefits tomeet the specialized needs of the mostvulnerable beneficiaries may conflictwith current CMS guidance on MAbidsandbenefits. The commenter requeststhat CMS clarify how a SNP would

provide a different benefit set or set ofservices to those populations as the termextra services andbenefits seems toimply. Section 422.152(g)(2)(x)The

commenter believes that the use oftheterm plans demonstrating use ofintegrated systems ofcommunication


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is unclearand requests that CMSprovide additional clarification as to theintent of the measure CMS references.

Response: We appreciate thecommenters interest in this issue. Withrespect to 422.152(g)(2), we are usingthe definitions ofdomains as described

by the Care Continuum Alliance,formerly the Disease Management

Association ofAmerica. An integratedsystem ofcommunication is the systemthe plan employs to communicate withall of its stakeholdersproviders,

beneficiaries, the public and regulatoryagencies. This definition is included inChapter5 of the Medicare Managed CareManual (Quality ImprovementProgram). The chapter, which is part ofthe Publication 10016, may beaccessed online at http://www.cms.hhs.gov/Manuals/IOM.

We expect MA organizations offeringSNPs to incorporate some or all ofthefollowing benefits that exceedthe basicrequired Medicare A and Bbenefitsofferedby otherMA products availablein the same service area(1) No orlower beneficiary cost-sharing; (2)longer benefit coverage periods forinpatient services; (3) longer benefitcoverage periods for specialty medicalservices; (4)parity (equity) betweenmedical and mental health benefits andservices; (5) additional preventivehealth benefits (for example, dentalscreening, vision screening, hearingscreening, age-appropriate cancerscreening, risk-based cardiac screening);(6) social services (for example,connection to community resources for

economic assistance); (7) transportationservices; and (8) wellness programs to

prevent the progression ofchronicconditions.

Finally, in 422.152(g)(2)(x), we statethat, as part of its quality program, aSNPmust incorporate use ofintegratedsystems ofcommunication as evidenced

by measures from the care coordinationdomain. An integrated system ofcommunication is the system the planemploys to communicate with all ofitsstakeholdersproviders, beneficiaries,the public and regulatory agencies. Anexample of an integratedcommunication system is a call centerthat might, as a reminder, reach out toclients in advance oftheir scheduledappointments.

Comment: One commenter expressedthe view that current CMS policy in thearea ofallowedextra services and

benefits to meet the needs ofvulnerablebeneficiaries is unclear, resulting ininstability ofbenefit packages (forexample, an extra benefit ofindependent living skills was approvedone year and disapprovedthe nextyear). The commenteralso contends that

CMSpolicy is not applied consistentlyacross organizations, resulting in anunlevel playing field for some MAOs.Another commenter advisedthat theplans care management approach maybe more a matterof how and whenbenefits are providedand reimbursedthan what extra benefits and services are

provided.

Response: We have providedguidance to MA organizations offeringSNPs that they should incorporate someor all of the following benefits thatexceedthe basic required Medicare Aand Bbenefits offeredby other MA

products available in the same servicearea(1) No or lower beneficiary cost-sharing; (2) longer benefit coverage

periods for inpatient services; (3) longerbenefit coverage periods forspecialtymedical services; (4)parity (equity)

between medical and mental healthbenefits and services; (5) additionalpreventive health benefits (for example,dental screening, vision screening,hearing screening, age-appropriatecancer screening, risk-based cardiacscreening); (6) social services (forexample, connection to communityresources foreconomic assistance); (7)transportation services; and (8) wellnessprograms to prevent the progression ofchronic conditions. As the commenterasserts, as important as the provision ofextra services is plans appropriatemanagement of all benefitsboth thosecoveredby Parts A and B and those thatextendor enrich Parts A and B servicesor provide supplemental benefitsfortheir particular populations is equally as

important to us. With respect to thecommenters assertion that ourpolicy isnot applied consistently acrossorganizations, we note that ourbidreview process very carefullyscrutinizes permissible supplementalbenefits across all MAplan.

Comment: A commenter statedthatthe term health status, in reference tothe second-tier language in theSeptember18, 2008 IFC, can beinterpretedin a variety of ways. In aneffort to promote consistent compliance

by SNPs, the commenter recommendsthat CMS provide an explanation ofthemeaning of the term. The commenteralso statedthat depending upon thebeneficiarys disease state, the course ofthe beneficiarys medical condition may

be expectedto result in declining healthstatus. The commenter recommends thatCMS revise the regulation toaccommodate this circumstance.

Response: We have not provided aspecific definition ofhealth status, as itis more appropriate for SNPs to apply adefinition that is appropriate for itspopulation. We understandthat forbeneficiaries with certain medical

conditions, the natural course ofthedisease will result in a decline in healthstatus and death. However, our intent isto improve health status for the overallMedicarepopulation.

Comment: Several commenterscontendedthat health outcomes cannot

be achieved without consideration ofother quality of life indicators, such as

adequate housing, engagement inmeaningful activities, employment/community activities, and self-determination. These commenterssuggestedthat meaningful measures ofoutcomes and quality should include

personal experience outcomes. One ofthe commenters urgedCMS to considerhow improvement in health statuswill apply to persons whose care planis focusedon maintaining currentfunctioning, delaying decline, orapproaching the end oflife.

Response: We agree that healthoutcomes are linkedto many otherfactors in apatients life. We intend tocontinue to explorebest practices formeasuring health outcomes in theMedicare population. We will alsoconsiderhow improvement in healthstatus will apply to persons whose careplan is focusedon maintaining currentfunctioning, delaying decline, orapproaching the end oflife.

Comment: One commenternoted thatthe regulation identifies data collection,analysis, and reporting as well as auditrequirements in its QI systembut that itdoes not provide in-depthspecifications. The commenter suggeststhat such measures and specifications

need further development and shouldbe integrated with States qualitymeasures and data requirements.

Response: Since the publication oftheSeptember18, 2008 IFC, we have issuedguidance to plans regarding in-depthdata specifications in various guidancevehicles, including HPMS memoranda.Much of this guidance is alsoconsolidatedin Chapter5 oftheMedicare ManagedCare Manual,Quality Improvement Program.

We are currently revising the processthat MA organizations will use tosubmittheir2012 Chronic CareImprovement Programs (CCIPs) andQuality Improvement Projects (QIPs)and automating collection within a newmodule in the Health Plan ManagementSystem (HPMS). We are also revisingand streamlining the templates that MAorganizations will use for CCIP and QIPsubmission through the PaperworkReduction Act process. The new formatwill allow MA organizations todemonstrate how the CCIP and/orQIP isdeveloped, implementedand analyzedon a continuous cycle and to showwhere improvements in care occur. We
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will provide more detailed guidanceand timelines, as well as in-depthtraining on the new CCIP and QIP toolsin the fall of 2011. We are alsodeveloping an MA quality Web page,which we intendto use to provideimportant information to externalstakeholders, including MAorganizations.

With respect to the commentersspecific concern about integration ofquality data specifications with those ofindividual States, we note that is it notcurrently possible to integrate Medicareand Medicaid quality reportingrequirements at this time. However, thisis an issue we are currently exploring incoordination with the FederalCoordinated Health Care Office (FCHO).

Comment: Several commentersadvisedthat States have many qualityassurance requirement processes in

place forMedicaidas such the newrequirements must not conflict/override/interfere with currentMedicaidcontract requirements.According to the commenters, SNPs areconcernedthat they will be forcedto tryand reconcile conflicting Medicare andMedicaid requirements with Stateswithout clear guidance from CMS. Areasofpotential overlap include care plans,initial/annual health risk assessments,

performance measures, and appeals andgrievances.

Response: We understand thepotential for conflicting requirementsand are currently working with theFCHO to considerways of more closelyaligning Medicare and Medicaid

requirements.The FCHO publishedthe Alignment

Initiative on May 16, 2011. ThisInitiative is focusedon the new Officesefforts to address misalignments

between Medicare and Medicaid,including extensive treatment anddiscussion ofdiffering Medicare andMedicaid requirements for integratedmanagedcare plans, including SNPs.CMS is reviewing the extensivecomments that it has receivedand isworking on addressing issues identified

by this Office and commenters. Furtherguidance will be forthcoming.

Comment: One commenter questionedhow continuum of care is defined. Thecommenter urgedthat CMS be carefulnot to encroach on the right ofStateMedicaid agencies to define what

benefits to include in its contracts withSNPs.

Response: We have no intention ofencroaching on State Medicaid agenciesrights to define the Medicaid benefitsthat are available for the dual eligible

population. Continuum of care refers topatients receiving the care that isappropriate formanaging their specific

health conditions. We recommend usingthe Care Continuum Alliancesdefinition as a resource. Additionalinformation on continuum of care can

be foundat http://www.carecontinuum.org.

Comment: One commenter believedthere was a lack ofevidence basedguidelines for some populations, such

as specific disability groups; thecommenter suggests that CMS shouldinclude language allowing locallyrecognized protocols to permitmaximum flexibility. Anothercommenter statedthat an evidence basedoes not exist for the co-morbidpopulations most likely to receive carevia SNPs.

Response: We understand thatevidence-based practice in medicine is agrowing field and, as such, acknowledgethat there may not be evidence-based

protocols for all clinical conditions andco-morbidities. We do, however, expectplans to institute evidence-basedprotocols andpractices that areavailable and appropriate fortheirpatient population. Where there is noevidence-based guidance, then weexpect that the plan will seek guidancefrom their account managerat theregional office and, in conjunction withCMS, determine the best approach toimplement.

Comment: One commenter expressedconcern that SNPs which have highcost, high need dual populations will becompared with otherSNPs serving othersubsets of the population without anappropriate risk adjustment and

stratification system. The commenterquestions whetherCMS has aplan formaking fair comparisons of data acrosssuch differences in populations amongDSNPs, as well as between CSNPs,ISNPs, and DSNPs.

Another commenter questioned howthere can be comparisons acrossdifferent types of SNPs when thepopulations are so different. Thecommenter recommends that CMSexclude integrated, full benefit DSNPsfrom the requirements.

Response: We understandthat thereare differences in SNP populations. TheMOC is the vehicle for SNPs to identify,implement, provide, and coordinateappropriate health care for their specifictarget populations. Effecting the type ofdata comparisons recommendedby thecommenter would require us to developdata measures specific to each SNPtype. At this time, we do not anticipatedeveloping such measures. We areaware, however, of the measurementissues that SNPs with small enrollmentsface. We are currently focusing ourattention on these issues in order torefine our measures for SNPs, including

those with low enrollments. One waywe are addressing this concern isthrough a contract to develop outcomemeasures for MA organizations, as wellas for SNPs more specifically. Throughthis contract we are reviewing allcurrent SNP measures and developingmeasures where there are gaps,including for SNPs with low

enrollment. We expect this work onoutcome measures to be completedinlate 2014.

We do not agree with the commenterthat fully integrated dual eligible SNPsshouldbe exempt from data reportingrequirements. All SNP types mustcomply with our requirements.

Comment: One commentercontendedthat reporting quality data by PBP/planwould result in many low enrollmentSNPs not having any members in thedenominator, or so few that the data/rates wouldnot be meaningful. Thecommenter recommends that quality

data insteadbe reportedby SNP type(for example, DSNP) to ensure CMSandbeneficiaries have meaningful dataforplan comparison purposes.

Response: We understandthat thereare potentially SNPs with very lowenrollment (small denominators).Because of this, we currently have datareportedat the contract level. Weunderstandthat plans with smallenrollments, especially SNPs, may nothave the data resources available tothem to track and monitor quality on anongoingbasis. However, SNPs arerequiredto collect HEDISdata using

selected measures that have beendevelopedjust forplans with smallerenrollments. These data, as well as the

NCQA structure andprocess measures,shouldbe usedto track and monitorareas that could benefit from ongoingquality improvement. Also, small plansmay have encounterdata or other dataspecific to the operations oftheirorganization that couldbe useful forquality improvement.

As part of our continuedeffort toexplore measures that are more sensitiveforplans with low enrollment, we aredeveloping outcome measures for theMAprogram, including SNPs. We willalso conduct apilot study to test themeasures (for example, measures thataddress health outcomes related tocoordination of care and transitions ofcare), as well as a larger study tovalidate the measures. One of our goalsis to incorporate some ofthese measuresinto the MA plan rating system. Thiswork will also assist us in developingmeasures to address the concerns ofplans with low enrollment that cannotreport using some of the currentmeasures in the CAHPS; HEDIS,
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and/orHOS instruments. We expect tocomplete our work in late 2014.

Comment: One commenter advisedthat they have heard concerns from bothStates andplans regarding thestringency of the QI requirements andtheir potential impact on plansstability.

Response: We appreciate the

commenters interest in this issue. Webelieve that improving quality andhaving the data to demonstrate theseimprovements will help support thestability and viability of the program.

Comment: One commenterrecommendedthat CMS promptly issueguidance with operational instructionsimplementing the 2008 SNP ChronicCondition Panel Final Report. MIPPArestricted enrollment in CSNPs tospecial needs individuals that haveone or more co-morbidand medicallycomplex chronic conditions that aresubstantially disabling or life-

threatening, have a high risk ofhospitalization or other significantadverse health outcomes, and requirespecialized delivery systems acrossdomains ofcare.

Response: Fifteen SNP-specificchronic conditions were recommended

by the panel and adopted beginningwith the CY 2009 plan year. The SpecialNeeds Plan Chronic Condition PanelFinal Report was made public onNovember12, 2008. The final report isavailable on the CMS Web site at:https://www.cms.gov/SpecialNeedsPlans/Downloads/

SNP_

CC_

Panel_

Final_Report.zip. Comment: In questioning how the new

requirements to collect, analyze, andreport data as well as new requirementsfor MOC, care management,etc., relate toexisting CCI, HEDIS, and structure and

process measures, one commenter urgedCMS to work closely with SNPs and

NCQA to minimize any new datareportingburdens, to preventduplication ofdata collection andreporting efforts and to maximize use ofexisting structure andprocess measuresto the extent possible in meeting newreporting requirements. The commenteralso requestedthat CMS take intoconsideration the development timerequiredto ensure accurate andcomplete data as well as providetechnical specifications well in advance(for example, plans shouldhave thetechnical specifications 6 months inadvance). In addition, the commenterrequested, that since SNPs have to meet

both standardMA reporting as well asSNP-specific reporting, CMS take intoaccount the total data and reportingburden on SNPs and consider staggeringreporting of any new SNP requirements,

similarto the process for Part Creporting.

Response: We are sensitive to thepotential overlap of QI data reportingrequirements. As part of our overall QIstrategy, are carefully and systematicallyevaluating the impact of data collectionrequirements relatedto QI in an attemptto decrease burden andprevent

duplication, while achieving ourprogrammatic goals. Where possible, wewill attempt to stagger reportingrequirements.

Many of the measures that we havereceived comments on are included inthe 5-starplan rating system. We arelooking systematically at all of our QIreporting tools and measures andmaking a numberofchanges. Forexample, we are in the process ofimproving and implementing newreporting tools for the CCIPs and theQIPs for the CY 2012 reporting cycle.We expect that these new reportingtools will decrease the data collectionand reporting burden for all MAorganizations. We are also developing amodule in HPMS that will allow for thisreporting process to be automated. CMSis committedto continuing to reviewandto assess the measures to addressthese concerns.

We acknowledge that the NCQAstructure andprocess measures overlapheavily with the MOC and QI reportingrequirements. The structure andprocessmeasures were developedin an effort toidentify SNP-specific measures that arenot affectedby aplans enrollment size.Anothergoal ofthese measures is to

evaluate some of the specific features ofSNPs that make them unique among MA

plans. These measures cannot replacethe QIPs, since QIPs are a tool forevaluating weaknesses in the overall QIprogram for and MA organization, aswell as monitoring the impact ofanyintervention that was implemented tomitigate a specific problem.

Similarly, the MOC serves a uniquepurposeby ensuring that SNPs design aclinical care program to address thehealth care needs of the specificvulnerable populations they serve. TheMOC is not a data collection system but,rather, a frameworkfor coordinating thekey evidence based elements critical to

providing integrated, high quality careto vulnerable patients.

We are looking systematically at all ofour QI reporting tools and measures,and are in the process ofmakingchanges to eliminate some of the burdenon plans. For example, we are in the

process ofstreamlining and improvingthe CCIP and QIP reporting tools. Byimproving the reporting tools we expectto use in the 2012 reporting cycle weexpect to decrease the burden for

completing the data collection andreporting. We are also developingautomating the submission processthrough an HPMS module.

Comment: One commenterrecommendedthat CMS require the datato be reported uniformly. Thecommenterpointedout that the first tierpurpose of the QIprogram to provide

data on quality and outcomes to enablebeneficiaries to compare and select fromamong health coverage options and thesecondtierpurpose for measuringessential components of the MOC usinga variety ofplan-determinedmethodologies discussedin the rule donot appearto require uniform datareporting that would promotecomparisons amongplans.

Response: We appreciate thecommenters interest in this issue. Weunderstandthe needfor uniformity inreporting and will strive to incorporatethis principle in the QIprogram.

d. Special Needs Plans and Other MAPlans With Dual-Eligibles:Responsibility for Cost-Sharing( 422.504(g)(1)) and Written DisclosureofCost-Sharing Requirements ( 422.111(b)(2)(iii))

(1) Comprehensive Written DisclosureRequirement for Dual Eligible SNPs( 422.111(b)(2)(iii))

Section 164(c)(1) of MIPPA requiresthat plan sponsors offering DSNPsmust provide each prospective enrollee,priorto enrollment, with acomprehensive written statement that

describes the benefits and cost-sharingprotections that the individual would beentitledto underthe DSNP and therelevant State Medicaid plan. Thecomprehensive written statement mustinclude the benefits that the individualis entitledto under Medicaid (TitleXIX), the cost-sharingprotections thatthe individual is entitledto underMedicaid(Title XIX), and a descriptionofwhich ofthese benefits and cost-sharing protections are coveredunderthe DSNP. This provision is effectiveJanuary 1, 2010. In the September 18,2008 IFC (73 FR 54226), we introducedthe regulations at 422.111(b)(2)(iii) toreflect these statutory requirements, andare finalizing it without modification inthis final rule.

Comment: One commentermentionedthat itbelievedthat CMSs currentmarketing materials forduals wereconfusing and inaccurate. Thecommenter expressed support for thecomprehensive written statementrequirement, which it believed would

provide dual eligible enrollees withcrucial information on aplans cost-sharing benefits.
https://www.cms.gov/SpecialNeedsPlans/Downloads/SNP_CC_Panel_Final_Report.ziphttps://www.cms.gov/SpecialNeedsPlans/Downloads/SNP_CC_Panel_Final_Report.ziphttps://www.cms.gov/SpecialNeedsPlans/Downloads/SNP_CC_Panel_Final_Report.ziphttps://www.cms.gov/SpecialNeedsPlans/Downloads/SNP_CC_Panel_Final_Report.ziphttps://www.cms.gov/SpecialNeedsPlans/Downloads/SNP_CC_Panel_Final_Report.ziphttps://www.cms.gov/SpecialNeedsPlans/Downloads/SNP_CC_Panel_Final_Report.ziphttps://www.cms.gov/SpecialNeedsPlans/Downloads/SNP_CC_Panel_Final_Report.ziphttps://www.cms.gov/SpecialNeedsPlans/Downloads/SNP_CC_Panel_Final_Report.ziphttps://www.cms.gov/SpecialNeedsPlans/Downloads/SNP_CC_Panel_Final_Report.ziphttps://www.cms.gov/SpecialNeedsPlans/Downloads/SNP_CC_Panel_Final_Report.ziphttps://www.cms.gov/SpecialNeedsPlans/Downloads/SNP_CC_Panel_Final_Report.ziphttps://www.cms.gov/SpecialNeedsPlans/Downloads/SNP_CC_Panel_Final_Report.ziphttps://www.cms.gov/SpecialNeedsPlans/Downloads/SNP_CC_Panel_Final_Report.ziphttps://www.cms.gov/SpecialNeedsPlans/Downloads/SNP_CC_Panel_Final_Report.ziphttps://www.cms.gov/SpecialNeedsPlans/Downloads/SNP_CC_Panel_Final_Report.zip


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Response: We agree that thecomprehensive written statement willhelp dual-eligible beneficiaries makemore informed enrollment choices.

Comment: One commenter statedthatthe comprehensive written statement

provision, as written in the interim finalrule, was narrower than thecorresponding section of MIPPA, which

requires that CMS establish a standardcontent and format for the noticeconcerning cost sharing protections andMedicare and Medicaid benefits. Thecommenteralso recommended addinglanguage to the rule to specify that thecomprehensive written statement mustinclude a statement of the benefits thatthe SNP provides.

Response: We disagree with thecommenters assertion that we shouldmodify the rule to specifically referenceCMSs responsibility to establish astandard content and format for thecomprehensive written notice. Section164(c)(1) of MIPPA (section 1859(f)(3)(c)of the Act) directly mandates that CMSdetermine the form and content ofthecomprehensive written statement.Regulatory language is neither anecessary nor appropriate means ofeffectuating this statutory directive tothe agency. Therefore, we are not addingthis language to the final rule.

In addition, the language in theregulatory text for this provisionincludes the requirement that thecomprehensive written statement mustinclude a description of the benefits andcost-sharing protections that the DSNP

provides. We do not believe this

provision requires further clarification.Comment: Two commenters requested

clarification on the format andadministration of the requirementsestablishedin this provision. One commenter suggestedthat CMS developa simple template that States could useto describe their Medicaid benefits, andrequestedthat CMS clarify how thewritten statement couldbe modified toreflect States mid-year benefit changes.The commenter additionally asked CMSto define the role of the CMS CentralOffice and CMS Regional offices incoordinating the flow ofinformation

between States and SNPs. Anothercommenter askedCMS to clarifywhetheraplan that included thisinformation on its Evidence ofCoverage(EOC) document wouldbe compliantwith the comprehensive writtenstatement requirement.

Response: We are not modifying theprovision to address the operationalissues that the commenters raised. Wedo not believe that rulemaking is theappropriate vehicle for addressingcomments on the operational issuesrelatedto the comprehensive written

statement requirement. We will addressoperational issues relatedto thecomprehensive written statementrequirement for DSNPs throughoperational guidance vehicles (forexample, call letters, manual chapters,and HPMS memoranda). We anticipatethat this future guidance will addressthe commenters concerns regarding the

operational aspects ofthecomprehensive written disclosurerequirement.

(2) Limitation on Cost-Sharing forCertain Dual Eligible Special NeedsIndividuals ( 422.504(g)(1))

Section 165 of MIPPA, which revisedsection 1852(a) of the Act, prohibits DSNPs from imposing cost-sharingrequirements on full benefit dual-eligible individuals and QualifiedMedicare Beneficiaries (QMBs), asdescribedin sections 1935(c)(6) and1905(p)(1) of the Act, that would exceedthe cost-sharing amounts permittedunderthe State Medicaid plan iftheindividual were not enrolledin the DSNP. The effective date of this provisionis January 1, 2010.

Comment: One commenter askedCMS to clarify the difference betweenthis provisions requirement that limitscost-sharing for full benefit dual-eligible

beneficiaries and the prohibition onbalance billing Qualified MedicareBeneficiaries (QMBs) that is establishedin 1903(n) of the Act. The commenteralso requestedthat CMS explain thedifference between this provision and

provisions that hold beneficiaries

harmless in instances ofnon-paymentby a health plan or a State MedicaidAgency. Another commenter asked CMSto clarify how aplan should constructits benefits and its bid for full benefitduals when the liability of the Statevariesby the reimbursement level in itsState Medicaidplan.

Response: We will continue toprovide all MA plans, including DSNPs, with guidance on the bidsubmission process. We do not believethat it is appropriate to address issuesrelating to planbids through formalrulemaking. Unlike the statutory

prohibition on QMBbalance billing thatoutlines State cost-sharingresponsibilities andprovider billingrequirements, this requirement at 422.504(g)(1)) limits the cost-sharingthat MAplans may impose on their fullbenefit and zero-cost-share dual eligibleenrollees. We are not describing therequirements ofbalance billing or holdharmless provisions in detail in this

preamble, as they are outside the scopeof this final rule.

Comment: One commenter requestedthat CMS address how this requirement

would apply to DSNPs that enroll dualeligible individuals who are not alleligible for full State Medicaid benefits.The commenteralso suggestedthat CMSstrengthen its language regarding Statescost-sharing responsibility. Finally, thecommenter notedits belief that the

protection offull-benefit dual eligiblebeneficiaries from cost-sharing aboveMedicaid levels should extendto full

benefit dual eligible beneficiaries in allMAplans, not just those who areenrolledin SNPs.

Response: In our January 2009 finalrule (74 FR 1499) entitled, MedicareProgram; Medicare Advantage andPrescription Drug Benefit Programs:Negotiated Pricing and RemainingRevisions, we extendedthe cost-sharing requirements that MIPPAimposedon DSNPs to all MA plans.We also appliedthis cost-sharing

protection to individuals who belong to

any Medicaid dual eligibility categoryforwhich the State provides a zero cost-share. Our January 2009 final rule (74FR 1499) replacedand superseded thelanguage in our September18, 2008 IFC,and finalized changes to 422.504(g)(1)(iii). Therefore, in thisfinal rule, we are not finalizing theregulatory text changes to 422.504(g)(1)(iii) that we describedinour September18, 2008 IFC.

(3) Private Fee-For-Service (PFFS) Plans

(a) Changes in Access Requirements forPFFS Plans

Section 162(a)(3) of MIPPA amendedsection 1852(d)(4)(B) of the Act torequire, effective January 1, 2010, thatPFFS plans meeting access standards

basedon signed contracts meet accessstandards with respect to aparticularcategory ofproviderby establishingcontracts or agreements with a sufficientnumberand range ofproviders to meetthe access and availability standardsdescribedin section 1852(d)(1) oftheAct. Section 1852(d)(1) of the Actdescribes the requirements that MAorganizations offering a network MA

plan must satisfy when selectingproviders to furnish benefits coveredunderthe plan.

In the September18, 2008 IFC, werevised 422.114(a)(2)(ii) to reflect thisnew statutory requirement. We did notreceive any comments on thisrequirement; therefore, we are finalizingthe revisions to 422.114(a)(2) asdescribedin the September18, 2008IFC.


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(b) Requirement for Certain Non-EmployerPFFS Plans to Use ContractProviders

Section 162(a)(1) of MIPPA added anew paragraph (5) to section 1852(d) ofthe Act. The new paragraph creates arequirement for certain non-employerMA PFFS plans to establish contractswith providers. Specifically, forplanyear 2011 and subsequent plan years,MIPPA requiredthat non-employer/union MA PFFS plans (employer/unionsponsoredPFFS plans were addressedin a separate provision of MIPPA) thatare operating in a networkarea (asdefinedin section 1852(d)(5)(B) oftheAct) must meet the access standardsdescribedin section 1852(d)(4). Asnotedabove, section 1852(d)(4)(B) oftheAct as amendedby MIPPA, requires thatPFFS plans must have contracts with asufficient numberand range of

providers to meet the access andavailability standards describedin

section 1852(d)(1) of the Act. Therefore,we statedin the September18, 2008 IFCthat these PFFS plans may no longermeet the access standards by paying notless than the Original Medicare paymentrate and having providers deemedto becontracted, as provided under 422.216(f).

Networkarea is definedin section1852(d)(5)(B) of the Act, for a given planyear, as the area that the Secretaryidentifies (in the announcement oftherisk and other factors to be used inadjusting MA capitation rates foreachMA payment area for the previous plan

year) as having at least two network-based plans (as definedin section1852(d)(5)(C) of the Act) withenrollment as of the first day of the yearin which the announcement is made.For plan year 2011, we informed PFFSplans of the networkareas in theannouncement of CY 2010 MAcapitation rates, which was publishedon the first Monday ofApril 2009. Weused enrollment data for January 1, 2009to identify the location ofnetwork areas.

Network-basedplan is definedinsection 1852(d)(5)(C) of the Act as (1) anMAplan that is a coordinatedcare planas describedin section 1851(a)(2)(A)(i)ofthe Act, excluding non-networkregional PPOs; (2) a network-based MSA

plan; or (3) a section 1876 cost plan.Types ofcoordinatedcare plans (CCPs)that meet the definition of a network-

basedplan are HMOs, PSOs, localPPOs, as well as regional PPOs withrespect to portions oftheir service areain which access standards are metthrough establishing written contracts oragreements with providers. MIPPAspecifiedthat the term network-based

plan excludeda regional PPO that

meets access requirements in its servicearea substantially through the authorityof 422.112(a)(1)(ii), rather thanthroughwritten contracts. Section422.112(a)(1)(ii) permits regional PPOsto meet access requirements usingmethods other than written agreementswith providers (that is, allowingmembers to see non-contract providers

at in-networkcost sharing in areaswhere the plan does not haveestablisheda networkofcontracted

providers).We statedin the September18, 2008

IFC that, forpurposes ofdeterminingthe networkarea of a PFFS plan, we willdetermine whetherany network-basedplans with enrollment exist in each ofthecounties in the United States.Beginning in plan year 2011, in countieswhere there is availability of two ormore network-based plans (such as anHMO plan, a PSO plan, a local PPOplan, a network regional PPO plan, anetwork-basedMSA plan, or a section1876 cost plan), a PFFS plan operatingin these counties must establish anetworkofcontracted providers tofurnish services in these counties inaccordance with the amended section1852(d)(4)(B) of the Act. In suchcounties, a PFFS plan wouldno longer

be able to meet access requirementsthrough providers deemedto have acontract with the plan at the point ofservice in these counties. In countieswhere there are no network-basedplanoptions, or only one other network-

based plan, the statute allows PFFSplans to continue to meet access

requirements in accordance with section1852(d)(4) of the Act and 422.114(a)(2). Regardless ofwhether aPFFS plan meets access requirementsthrough deeming or is subject to therequirement that it establish a networkofproviders with signed contracts,

providers who do not have a contractwith the PFFS plan may continue to bedeemedto have a contract with the planif the deeming conditions describedin 422.216(f) are met.

An existing PFFS plan may have somecounties in its current service area thatmeet the definition of a network areaand other counties that do not. We alsostatedthat, in orderto operationalizesection 162(a)(1) of MIPPA, we will notpermit a PFFS plan to operate a mixedmodel where some counties in the

plans service area are considerednetworkareas and other counties areconsidered non-network areas.Beginning in plan year 2011, an MAorganization offering a PFFS plan will

be requiredto create separate planswithin its existing service areas where itis offering PFFS plans basedon whetherthe counties locatedin those service

areas are considered networkareas ornot. For example, if an existing PFFSplan has some counties in its currentservice area that are networkareas andother counties that are non-networkareas, then in orderto operate in thisservice area in plan year 2011 andsubsequent plan years, the MAorganization must establish a unique

plan with service area consisting ofthecounties that are networkareas andanother plan with service areaconsisting of the counties that are non-networkareas. Consequently, the PFFS

plan operating in the counties that arenetworkareas must establish a networkofcontracted providers in thesecounties in accordance with section1852(d)(4)(B) of the Act in orderto meetaccess requirements. The PFFS planoperating in the counties that are notnetworkareas can continue to meetaccess requirements under 422.114(a)(2)by paying rates at least ashigh as rates under Medicare Part A orPart B to providers deemedto have acontract with the plan if the conditionsdescribedin 422.216(f) are met. TheMA organization must file separateplanbenefit packages for the PFFS plan thatwill operate in networkareas and theplan that will operate in non-networkareas.

We statedin the September18, 2008IFC that forpurposes ofmaking the

judgment ofprovider network adequacyfor PFFS plans that will be required tooperate using a networkofcontracted

providers in plan year 2011 andafterwards, we will apply the same

standards for PFFS plans that we applyto coordinatedcare plans. To determinewhere a PFFS plans proposed networkmeets access and availability standards,we will follow the procedure describedin the section above on Changes inaccess requirements for PFFS plans.

We are finalizing the revisions to 422.114(a)(3) as describedin the (73FR 54226) IFCpublishedon September18, 2008 IFC to reflect the requirementsfoundin section 162(a)(1) of MIPPA fornon-employerPFFS plans.

Comment: A few commenters urgedCMS to modify the definition ofanetworkarea to mean an area withCCPs offeredby two differentorganizations in orderto ensure thatthere is real competition in the area.

Response: MIPPA defines networkarea, for a given plan year, as the areathat the Secretary identifies (in theannouncement of the risk and otherfactors to be usedin adjusting MAcapitation rates for each MA paymentarea for the previous plan year) ashaving at least 2 network-basedplanswith enrollment as of the first day of theyear in which the announcement is


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made. Network-basedplan isdefinedin MIPPA as (1) an MA planthat is a coordinatedcare plan asdescribedin section 1851(a)(2)(A)(i) ofthe Act, excluding non-network regionalPPOs; (2) a network-based MSA plan; or(3) a section 1876 cost plan. Weinterpret having at least 2 network-

basedplans to mean that there are at

least 2plans, which meet the definitionof a network-based plan, that are offered

by the same MA organization orbydifferent MA organizations. We believethis interpretation is consistent with thestatutory requirements for identifyingnetworkareas. We do not believe wehave the statutory authority to interpretthe definition of a networkarea in adifferent manner.

Comment: A commenterrecommendedthat network-basedplanswith enrollment shouldbe defined asplans with a minimum enrollmentthresholdof 5,000 in MSAs with apopulation of more than 250,000 and1,500 in all otherareas. The commenterstatedthat establishing a minimummembership standard would ensure thatthe CCPs that remain in the market arestable and minimize the possibility offuture plan exit and furtherMA memberdisruption.

Response: MIPPA defines networkarea, for a given plan year, as the areathat the Secretary identifies (in theannouncement of the risk and otherfactors to be usedin adjusting MAcapitation rates for each MA paymentarea for the previous plan year) ashaving at least 2 network-basedplans

with enrollment as of the first day oftheyear in which the announcement ismade. We interpret the phrase withenrollment to mean that a network-

based plan is requiredto have at least1beneficiary enrolledin the plan inorderto be countedforpurposes ofidentifying the location of the networkareas. We believe that interpreting withenrollment any differently wouldresult in an artificial threshold andwouldnot be consistent with thestatute.

Comment: A commenterrecommendedthat CMS provide

preliminary information about CY 2011networkareas, basedon January 1, 2009,enrollment data, in the CY 2010announcement and later update thisinformation in the CY 2011announcement to reflect January 1,2010, enrollment data. The commenterfurther statedthat the 2010 data andresulting networkareas shouldbe the

basis for determining PFFS plancompliance with the MIPPArequirement for CY 2011. Anothercommenter recommendedthat onceCMS denotes a county as a network

area, that county shouldkeep thenetworkarea designation. Thecommenter statedthat counties shouldnot switch from networkto non-networkstatus over time, even if one of the twoCCPs in the county exit.

Response: The methodology foridentifying the location ofnetwork areasfor a given plan year is specifiedin the

statutory definition of a network area.MIPPA defines networkarea, for agiven plan year, as the area that theSecretary identifies (in theannouncement of the risk and otherfactors to be usedin adjusting MAcapitation rates for each MA paymentarea for the previous plan year) ashaving at least 2 network-basedplanswith enrollment as of the first day of theyear in which the announcement ismade. We accordingly used enrollmentdata as ofJanuary 1, 2009, to identifythe networkareas forplan year 2011.The methodology we usedto identify

the list ofnetworkareas forplan year2011 is consistent with statutoryrequirements. The statute also requiresus to update the list ofnetworkareas foreach plan year, and not doing so would

be inconsistent with the intent ofthestatute. Because of this requirement, wecannot allow counties to keep a networkdesignation when one or more ofthenetwork-based plans in those countiesexits the market because the county nolonger meets the network designationcriteria.

Comment: A commenter urgedthatCMS recognize that MA organizations

are in the process ofcreating PPOs andotherMAplans in areas that are likelytobe networkareas in 2011, andtherefore establish apassive enrollmentprocess whereby PFFS enrollees innetworkareas automatically enroll intheir current sponsors replacementproduct (if one is available) on January1, 2011, unless the beneficiaryaffirmatively chooses to join anotherplan or return to fee-for-serviceMedicare.

Response: On April 16, 2010, wereleased guidance via HPMS on therenewal and non-renewal options forMA organizations for CY 2011. Weallowed non-networkPFFS plans totransition their enrollees to their fullnetworkPFFS plans in CY 2011. Weextendedthis same option to PFFSplans for CY 2012 via the CY 2012 FinalCall Letter. However, we do not believeit wouldbe appropriate to allowtransition ofenrollees from one MAplan type (forexample, PFFS plan) toanotherMA type (for example, HMO orPPO plan), as this wouldbe a changefrom an open model to a closednetwork.

Comment: A commenterrecommendedthat CMS permit PFFSplans to employ a mixed model forcomplying with the network accessstandards imposedby MIPPA.

Response: We believe that requiringMA organizations offering PFFS plans tohave separate contracts for their non-network, partial, and full network plans

would allow these organizations tobetter manage their plans and allow CMSto more effectively oversee theseplans.We also believe that notpermitting PFFSplans to offer a mixed model would helpbeneficiaries to better distinguish amongthe three types ofPFFS plans.

Comment: A commenterrecommendedthat CMS establish aspecial e-mailbox for any PFFS-relatedMIPPA questions and use the questionssubmittedto the e-mailbox to developtimely guidance issuedbefore theannual Call Letter.

Response: All of the PFFS-relatedprovisions in this rule became effectivepriorto the publication of this final rule.Since we already released operationalguidance to assist with theimplementation ofthese provisions, wedo not believe it wouldbe useful toestablish an e-mailbox forPFFS-relatedMIPPA questions at this time. We notethat plans may submit questions aboutthese provisions to their Regional OfficeAccount Manager.

(c) Requirement for All Employer/UnionSponsoredPFFS Plans to Use ContractsWith Providers

Section 162(a)(2) of MIPPA amended

section 1852(d) of the Act by adding anew requirement foremployer/unionsponsoredPFFS plans. Forplan year2011 and subsequent plan years, MIPPArequiredthat all employer/unionsponsoredPFFS plans under section1857(i) of the Act meet the accessstandards describedin section1852(d)(4) of the Act only throughentering into written contracts oragreements in accordance with section1852(d)(4)(B) of the Act, and not, inwhole or in part, through establishing

payment rates meeting the requirementsunder section 1852(d)(4)(A) of the Act.We revised 422.114(a) in theSeptember2008 IFC to reflect thisstatutory change. Specifically, thechanges to 422.114(a) set forth how anMA organization that offers a PFFS planmust demonstrate to CMS that it can

provide sufficient access to servicescovered underthe plan. We statedin theSeptember18, 2008 IFC (73 FR54226)that, in orderto meet the accessrequirements beginning plan year 2011,an employer/union sponsored PFFS

plan must establish written contracts or


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agreements with a sufficient numberandrange ofhealth care providers in itsservice area for all categories ofservicesin accordance with the access andavailability requirements describedinsection 1852(d)(1) of the Act. Anemployer/union sponsoredPFFS planwill not be allowedto meet accessrequirementsby establishing payment

rates for aparticular category ofproviderthat are at least as high as ratesunder Medicare Part A or Part B. Wealsostatedthat while an employer/union-sponsoredPFFS plan must meetaccess standards through signedcontracts with providers, providers thathave not signed contracts can still bedeemedto be contractors under thedeeming procedures in 1852(j)(6) oftheAct that currently apply.

We added paragraph (a)(4) to 422.114 in orderto reflect this newstatutory requirement foremployer/union sponsoredPFFS plans.

Comment: A commenterrecommendedthat CMS provide moreclarification regarding network accessstandards foremployer-sponsored PFFSplans. The commenter statedthat CMSshould adopt access standards that areunique to each group plan andeventually adopt access standards thatevaluate provider access basedon the

population eligible for enrollment.Response: Currently, we do not

review Health Service Delivery (HSD)tables foremployer/union sponsoredPFFS plans to determine whether theplans meet our network accessstandards. However, these plans must

ensure that their enrollees haveadequate access to providers consistentwith Chapter9 of the MedicareManagedCare Manual.

We are finalizing 422.114(a)(4) asdescribedin the September18, 2008 IFCto reflect the new requirement foundinsection 162(a)(2) of MIPPA foremployer/union sponsoredPFFS plans.

(d) Variation in Payment Rates toProviders

Section 162(b) of MIPPA added aclarification to the definition of an MAPFFS plan foundat section 1859(b)(2) ofthe Act. Prior to MIPPA, the statutedefinedan MA PFFS plan as an MAplan that pays providers at a ratedeterminedby the plan on a fee-for-servicebasis without placing the

providerat financial risk; does not varythe rates for aprovider basedon theutilization of that providers services;anddoes not restrict enrollees choiceamong providers who are lawfullyauthorizedto provide covered servicesand agree to accept the plans terms andconditions ofpayment. Section 162(b) ofMIPPA addedthat although payment

rates generally cannot vary based onutilization ofservicesby aprovider, anMA PFFS plan is permittedto vary the

payment rates for aprovider based onthe specialty of the provider, thelocation of the provider, or other factorsrelatedto the providerthat are notrelatedto utilization. However, thissection of MIPPA allowedMA PFFS

plans to increase payment rates for aprovider basedon increased utilizationofspecified preventive or screeningservices. Section 162(b) of MIPPA waseffective at the time ofpublication oftheSeptember18, 2008 IFC.

In the September18, 2008 IFC, werevised paragraph (a)(3)(ii) of 422.4andparagraph (a) of 422.216 to addthe clarifications foundin section 162(b)of MIPPA. We did not receive anycomments on our revisions; therefore,we are finalizing the revisions to 422.4(a)(3) and 422.216(a) asdescribed.

3. Revisions to Quality ImprovementPrograms 422.152

a. Requirement for MA PFFS and MSAPlans to Have a Quality ImprovementProgram

Section 163(a) of MIPPA repealed,effective January 1, 2010, the statutoryexemption foundat section 1852(e)(1) ofthe Act for MA PFFS plans and MSAplans from the requirement that MAplans have quality improvementprograms meeting specified statutoryrequirements. We statedin theSeptember18, 2008 IFC that, beginning

plan year 2010, each MA PFFS andMSA plan must have an ongoing qualityimprovement program that meets therequirements under 422.152(a). Wealsorevised 422.152(a) to deletelanguage exempting PFFS and MSAplans from having quality improvementprograms.

MAOs that offer one or more MAplans must have for each oftheir plansa QIprogram under which it meets allof the following requirements: Has a chronic care improvement

program (CCIP), that meets therequirements of 422.152(c), andaddresses populations identified byCMS basedon a review ofcurrentquality performance. Conducts quality improvement

projects (QIP) that can be expected tohave a favorable effect on healthoutcomes and enrollee satisfaction,meets the requirements of 422.152(d),and addresses areas identifiedby CMS. Encourages providers to participate

in CMS and Health and Human Service(HHS) QI initiatives.

1. Developsand maintains a healthinformation system.

2. Contracts with an approvedMedicare CAHPS vendorto conduct theMedicare CAHPS satisfaction survey ofMedicare enrollees.

3. Includes aprogram reviewprocess for formal evaluation thataddresses the impact and effectivenessof its QIprograms at least annually.

4. Corrects problems for each plan.

Finally, MAOs must ensure that, (1)their reporteddata are accurate andcomplete, (2) they maintain healthinformation for CMS review asrequested, (3) they conduct an annualreview oftheir overall QIprogram, and(4) they take action to correct problemsrevealed through complaints and QI

program performance evaluationfindings.

We did not receive any comments onthis requirement; therefore, we arefinalizing the revisions to 422.152(a)as describedin the September18, 2008IFC.

b. Data Collection Requirements for MAPFFS and MSA Plans

Section 1852(e)(3)(A)(i) of the Actamendedby section 163(b)(1) ofMIPPA

by adding that MA PFFS and MSAplans must provide for the collection,analysis, and reporting of data that

permits the measurement ofhealthoutcomes and other indices ofquality,

but these requirements for PFFS andMSA plans cannot exceed therequirements establishedfor MA localplans that are PPO plans beginning inplan year 2011 and are subject to anexception forplan year 2010 (as

discussed below).The statute provideda special rulethat applies forplan year 2010, whenMA PFFS and MSA

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