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e-CFR data is current as of February 23, 2021

Title 42Chapter IVSubchapter DPart 457Subpart L → Subject Group


Title 42: Public Health
PART 457—ALLOTMENTS AND GRANTS TO STATES
Subpart L—Managed Care


General Provisions

§457.1200   Basis, scope, and applicability.

(a) Statutory basis. This subpart implements the following sections of the Act:

(1) Section 2101(a) of the Act, which provides that the purpose of Title XXI is to provide funds to States to enable them to initiate and expand the provision of child health assistance to uninsured, low-income children in an effective and efficient manner.

(2) Section 2103(f)(3) and 2107(e)(1)(M) of the Act, which apply certain provisions of Title XIX related to Medicaid managed care to CHIP.

(3) Sections 2107(b) and 2107(e)(2) of the Act, which relate to program integrity.

(b) Scope. This subpart sets forth requirements for the provision of services through MCOs, PIHPs, PAHPs, and PCCM entities, as defined in §457.10.

(c) Applicability. The requirements of this subpart apply to child health assistance provided under a separate child health program operating a managed care delivery system. Regulations relating to managed care that are applicable to a Medicaid expansion program are found at part 438 of this chapter.

§457.1201   Standard contract requirements.

(a) CMS review. The State must submit all MCO, PAHP, PIHP, PCCM, and PCCM entity contracts for review in the form and manner established by CMS.

(b) Entities eligible for comprehensive risk contracts. The State may enter into a comprehensive risk contract only with the entities specified in §438.3(b)(1) through (3) of this chapter.

(c) Payment. The final capitation rates for all MCO, PIHP or PAHP contracts must be identified and developed, and payment must be made in accordance with §438.3(c) of this chapter, except that the requirement for preapproval of contracts does not apply, and contract rates must be submitted to CMS upon request of the Secretary.

(d) Enrollment discrimination prohibited. Contracts with MCOs, PAHPs, PIHPs, PCCMs and PCCM entities must comply with prohibitions on enrollment discrimination in accordance with §438.3(d) of this chapter, except that §438.3(d)(2) of this chapter (related to voluntary enrollment) does not apply.

(e) Services that may be covered by an MCO, PIHP, or PAHP. An MCO, PIHP, or PAHP may cover, for enrollees, services that are not covered under the State plan in accordance with §438.3(e) of this chapter.

(f) Compliance with applicable laws and conflict of interest safeguards. Contracts with MCOs, PAHPs, PIHPs, PCCMs or PCCM entities must comply with Federal laws and regulations in accordance with §438.3(f) of this chapter.

(g) Inspection and audit of records and access to facilities. Contracts with MCOs, PIHPs, PAHPs, PCCMs or PCCM entities must allow for the inspection and audit of records and access to facilities in accordance with §438.3(h) of this chapter.

(h) Physician incentive plans. If a contract with an MCO, PAHP, or PIHP provides for a physician incentive plan, it must comply with §438.3(i) of this chapter (which cross references §§422.208 and 422.210 of this chapter).

(i) Subcontractual relationships and delegations. The state must ensure, through its contracts with MCOs, PIHPs, and PAHPs, that any contract or written agreement that the MCO, PIHP, or PAHP has with any individual or entity that relates directly or indirectly to the performance of the MCOs, PIHPs, or PAHPs obligations under its contract comply with §457.1233(b) (which cross references §438.230 of this chapter).

(j) Choice of network provider. The contract must allow each enrollee to choose his or her network provider in accordance with §438.3(l) of this chapter.

(k) Audited financial reports. Contracts with MCOs, PAHPs, and PIHPs must comply with the requirements for submission of audited financial reports in §438.3(m) of this chapter.

(l) Parity in mental health and substance use disorder benefits. Contracts with MCOs, PAHPs, and PIHPs must comply with the requirements of §457.496.

(m) Additional rules for contracts with PCCMs. Contracts with PCCMs must comply with the requirements of §438.3(q) of this chapter, except that the right to disenroll is in accordance with §457.1212.

(n) Additional rules for contracts with PCCM entities. (1) States must submit PCCM entity contracts to CMS for review.

(2) Contracts with PCCMs must comply with the requirements of paragraph (o) of this section; §457.1207; §457.1240(b) (cross-referencing §438.330(b)(2), (b)(3), (c), and (e) of this chapter); §457.1240(e) (cross-referencing §438.340 of this chapter); and §457.1250(a) (cross-referencing §438.350 of this chapter).

(o) Attestations. Contracts with MCO, PAHP, PIHP, PCCM or PCCM entities must include an attestation to the accuracy, completeness, and truthfulness of claims and payment data, under penalty of perjury.

(p) Guarantee not to avoid costs. Contracts with an MCO, PAHP, PIHP, PCCM or PCCM entities must include a guarantee that the MCO, PAHP, PIHP, PCCM or PCCM entity will not avoid costs for services covered in its contract by referring enrollees to publicly supported health care resources.

(q) Recordkeeping requirements. Contracts with MCOs, PIHPs, and PAHPs, must comply with the recordkeeping requirements of §438.3(u) of this chapter.

[81 FR 27897, May 6, 2016, as amended at 82 FR 40, Jan. 3, 2017]

§457.1203   Rate development standards and medical loss ratio.

(a) A state must use payment rates based on public or private payment rates for comparable services for comparable populations, consistent with actuarially sound principles as defined at §457.10. This requirement for using actuarially sound principles to develop payment rates does not prohibit a state from implementing value-based purchasing models for provider reimbursement, such as pay for performance arrangements, bundled payments, or other service payment models intended to recognize value or outcomes over volume of services; such alternate payment models should be developed using actuarially sound principles to the extent applicable.

(b) A State may establish higher rates than permitted under paragraph (a) of this section if such rates are necessary to ensure sufficient provider participation or provider access or to enroll providers who demonstrate exceptional efficiency or quality in the provision of services.

(c) The rates must be designed to reasonably achieve a medical loss ratio standard, calculated in accordance with the provisions of §438.8 of this chapter, that—

(1) Is equal to at least 85 percent for the rate year; and

(2) Provides for reasonable administrative costs.

(d) The State must provide to CMS, if requested, a description of the manner in which rates were developed in accordance with the requirements of paragraphs (a), (b), or (c) of this section.

(e) The state must comply with the requirements related to medical loss ratios in accordance with the terms of §438.74 of this chapter, except that the description of the reports received from the MCOs, PIHPs and PAHPs under §438.8(k) of this chapter will be submitted independently, and not with the actuarial certification described in §438.7 of this chapter.

(f) The state must ensure, through its contracts, that each MCO, PIHP, and PAHP complies with the requirements §438.8 of this chapter.

[81 FR 27897, May 6, 2016, as amended at 82 FR 40, Jan. 3, 2017]

§457.1206   Non-emergency medical transportation PAHPs.

(a) For purposes of this section Non-Emergency Medical Transportation (NEMT) Prepaid Ambulatory Health Plan (PAHP) means an entity that provides only NEMT services to enrollees under contract with the State, and on the basis of prepaid capitation payments, or other payment arrangements that do not use State plan payment rates.

(b) The following requirements and options apply to NEMT PAHPs, NEMT PAHP contracts, and States in connection with NEMT PAHPs, to the same extent that they apply to PAHPs, PAHP contracts, and States in connection with PAHPs.

(1) All contract provisions in §457.1201 except those set forth in §457.1201(h) (related to physician incentive plans) §457.1201(l) (related to mental health parity).

(2) The information requirements in §457.1207.

(3) The provision against provider discrimination in §457.1208.

(4) The State responsibility provisions in §§457.1212 and 457.1214, and §438.62(a) of this chapter, as cross-referenced in §457.1216.

(5) The provisions on enrollee rights and protections in §§457.1220, 457.1222, 457.1224, and 457.1226.

(6) The PAHP standards in §438.206(b)(1) of this chapter, as cross-referenced by §§457.1230(a), 457.1230(d), and 457.1233(a), (b) and (d).

(7) An enrollee's right to a State review under subpart K of this part.

(8) Prohibitions against affiliations with individuals debarred or excluded by Federal agencies in §438.610 of this chapter, as cross referenced by §457.1285.

(9) Requirements relating to contracts involving Indians, Indian Health Care Providers, and Indian managed care entities in §457.1209.

§457.1207   Information requirements.

The State must provide, or ensure its contracted MCO, PAHP, PIHP, PCCM, and PCCM entities provide, all enrollment notices, informational materials, and instructional materials related to enrollees and potential enrollees in accordance with the terms of §438.10 of this chapter, except that the terms of §438.10(c)(2), (g)(2)(xi)(E), and (g)(2)(xii) of this chapter do not apply.

[85 FR 72842, Nov. 13, 2020]

§457.1208   Provider discrimination prohibited.

The state must ensure through its contracts that each MCO, PIHP, and PAHP follow the requirements related to the prohibition on provider discrimination in §438.12 of this chapter.

§457.1209   Requirements that apply to MCO, PIHP, PAHP, PCCM, and PCCM entity contracts involving Indians, Indian health care provider (IHCP), and Indian managed care entities (IMCE).

The State must follow, and ensure through its contracts, that each MCO, PIHP, PAHP, PCCM, and PCCM entity follows, the requirements related to Indians, IHCPs, and IMCEs in accordance with the terms of §438.14 of this chapter.

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