42 USC 1395w-25 - Organizational and financial requirements for Medicare+Choice organizations; provider-sponsored organizations

U.S Code last checked for updates: Nov 22, 2024

§ 1395w–25.

Organizational and financial requirements for Medicare+Choice organizations; provider-sponsored organizations

(a)

Organized and licensed under State law

(1)

In general

(2)

Special exception for provider-sponsored organizations

(A)

In general

In the case of a provider-sponsored organization that seeks to offer a Medicare+Choice plan in a State, the Secretary shall waive the requirement of paragraph (1) that the organization be licensed in that State if—

(i)

the organization files an application for such waiver with the Secretary by not later than November 1, 2002, and

(ii)

the Secretary determines, based on the application and other evidence presented to the Secretary, that any of the grounds for approval of the application described in subparagraph (B), (C), or (D) has been met.

(B)

Failure to act on licensure application on a timely basis

(C)

Denial of application based on discriminatory treatment

The ground for approval of such a waiver application described in this subparagraph is that the State has denied such a licensing application and—

(i)

the standards or review process imposed by the State as a condition of approval of the license imposes any material requirements, procedures, or standards (other than solvency requirements) to such organizations that are not generally applicable to other entities engaged in a substantially similar business, or

(ii)

the State requires the organization, as a condition of licensure, to offer any product or plan other than a Medicare+ÐChoice plan.

(D)

Denial of application based on application of solvency requirements

With respect to waiver applications filed on or after the date of publication of solvency standards under section 1395w–26(a) of this title, the ground for approval of such a waiver application described in this subparagraph is that the State has denied such a licensing application based (in whole or in part) on the organization’s failure to meet applicable solvency requirements and—

(i)

such requirements are not the same as the solvency standards established under section 1395w–26(a) of this title; or

(ii)

the State has imposed as a condition of approval of the license documentation or information requirements relating to solvency or other material requirements, procedures, or standards relating to solvency that are different from the requirements, procedures, and standards applied by the Secretary under subsection (d)(2).

(E)

Treatment of waiver

In the case of a waiver granted under this paragraph for a provider-sponsored organization with respect to a State—

(i)

Limitation to State

(ii)

Limitation to 36-month period

(iii)

Conditioned on compliance with consumer protection and quality standards

(iv)

Preemption of State law

(F)

Prompt action on application

(G)

Application and enforcement of State consumer protection and quality standards

(i)

In general

A waiver granted under this paragraph to an organization with respect to licensing under State law is conditioned upon the organization’s compliance with all consumer protection and quality standards insofar as such standards—

(I)

would apply in the State to the organization if it were licensed under State law;

(II)

are generally applicable to other Medicare+Choice organizations and plans in the State; and

(III)

are consistent with the standards established under this part.

Such standards shall not include any standard preempted under section 1395w–26(b)(3)(B) of this title.

(ii)

Incorporation into contract

(iii)

Enforcement

(H)

Report

(3)

Licensure does not substitute for or constitute certification

(b)

Assumption of full financial risk

The Medicare+Choice organization shall assume full financial risk on a prospective basis for the provision of the health care services for which benefits are required to be provided under section 1395w–22(a)(1) of this title, except that the organization—

(1)

may obtain insurance or make other arrangements for the cost of providing to any enrolled member such services the aggregate value of which exceeds such aggregate level as the Secretary specifies from time to time,

(2)

may obtain insurance or make other arrangements for the cost of such services provided to its enrolled members other than through the organization because medical necessity required their provision before they could be secured through the organization,

(3)

may obtain insurance or make other arrangements for not more than 90 percent of the amount by which its costs for any of its fiscal years exceed 115 percent of its income for such fiscal year, and

(4)

may make arrangements with physicians or other health care professionals, health care institutions, or any combination of such individuals or institutions to assume all or part of the financial risk on a prospective basis for the provision of basic health services by the physicians or other health professionals or through the institutions.

(c)

Certification of provision against risk of insolvency for unlicensed PSOs

(1)

In general

(2)

Certification process for solvency standards for PSOs

(d)

“Provider-sponsored organization” defined

(1)

In general

In this part, the term “provider-sponsored organization” means a public or private entity—

(A)

that is established or organized, and operated, by a health care provider, or group of affiliated health care providers,

(B)

that provides a substantial proportion (as defined by the Secretary in accordance with paragraph (2)) of the health care items and services under the contract under this part directly through the provider or affiliated group of providers, and

(C)

with respect to which the affiliated providers share, directly or indirectly, substantial financial risk with respect to the provision of such items and services and have at least a majority financial interest in the entity.

(2)

Substantial proportion

In defining what is a “substantial proportion” for purposes of paragraph (1)(B), the Secretary—

(A)

shall take into account the need for such an organization to assume responsibility for providing—

(i)

significantly more than the majority of the items and services under the contract under this section through its own affiliated providers; and

(ii)

most of the remainder of the items and services under the contract through providers with which the organization has an agreement to provide such items and services,

in order to assure financial stability and to address the practical considerations involved in integrating the delivery of a wide range of service providers;

(B)

shall take into account the need for such an organization to provide a limited proportion of the items and services under the contract through providers that are neither affiliated with nor have an agreement with the organization; and

(C)

may allow for variation in the definition of substantial proportion among such organizations based on relevant differences among the organizations, such as their location in an urban or rural area.

(3)

Affiliation

For purposes of this subsection, a provider is “affiliated” with another provider if, through contract, ownership, or otherwise—

(A)

one provider, directly or indirectly, controls, is controlled by, or is under common control with the other,

(B)

both providers are part of a controlled group of corporations under section 1563 of the Internal Revenue Code of 1986,

(C)

each provider is a participant in a lawful combination under which each provider shares substantial financial risk in connection with the organization’s operations, or

(D)

both providers are part of an affiliated service group under section 414 of such Code.

(4)

Control

(5)

“Health care provider” defined

In this subsection, the term “health care provider” means—

(A)

any individual who is engaged in the delivery of health care services in a State and who is required by State law or regulation to be licensed or certified by the State to engage in the delivery of such services in the State, and

(B)

any entity that is engaged in the delivery of health care services in a State and that, if it is required by State law or regulation to be licensed or certified by the State to engage in the delivery of such services in the State, is so licensed.

(6)

Regulations

(Aug. 14, 1935, ch. 531, title XVIII, § 1855, as added Pub. L. 105–33, title IV, § 4001, Aug. 5, 1997, 111 Stat. 312.)

cite as: 42 USC 1395w-25

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