with respect to any medical or remedial care and services furnished under the plan, is imposed on any medically needy individual, specify the amount and the method of determining it.

(1) The cost sharing must be reasonably related to the recipient's income or his income and resources.

(2) The cost sharing must be administratively feasible.

(c) Provide that any medical resource of an individual in the form of insurance or other entitlement will be used to reduce the amount, duration and scope of care provided under the plan. However, assistance may be provided subject to the provision in section 1902 (a) (25) of the Act regarding third party liability. Also, care covered by excess income or resources of the individual in accordance with section 1902(a) (17) of the Act may not reduce the assistance available under the plan.

[34 F.R. 1323, Jan. 28, 1969]

§ 249.41

Coordination of title XIX with part B of title XVIII, Social Security Act.

(a) Requests for “buy-in" agreements. States have through December 31, 1969, to request a "buy-in" agreement for the following two groups:

(1) Individuals receiving money payments under the plan of the State approved under titles I, X, XIV, and XVI, and part A of title IV of the Social Security Act (under the prior law, States had only through December 31, 1967, to request an agreement for such individuals) and

(2) All individuals who are eligible to receive medical assistance under the State's plan under title XIX of the Act.

(b) Comparability. Payment made by a State of premiums under title XVIII, part B of the Act, whether through a "buy-in" agreement or otherwise, or provision for meeting part or all of the cost of the deductibles, cost sharing, or similar charges under part B, does not impose an obligation on the State to make comparable services available to other title XIX recipients (below age 65). This provision permits the States to enter into agreements to pay the premium charges under part B or to pay the deductibles and other charges under that program without obligating themselves to provide the range of part B benefits to other individuals who are under title XIX of

the Act. Any State implementing this provision must amend its plan accordingly.

(c) Federal financial participation. (1) There will be no Federal financial participation in the monthly insurance premium under title XVIII, part B of the Act which the title XIX State pays on behalf of nonmoney payment individuals eligible to receive medical assistance under title XIX of the Act.

(2) There will also be no Federal financial participation for State expenditures for medical assistance after December 31, 1969, under title XIX of the Act, which would not have been so expended if the individuals involved had been enrolled in the insurance program established by part B of title XVIII of the Act. This applies to all persons who could have been covered under such program, whether on an individual basis or through the "buy-in."

[34 F.R. 1324, Jan. 28, 1969]

§ 249.70 Liens and recoveries.

State plan requirements: A State plan under title XIX of the Social Security Act must provide that:

(a) No lien or encumbrance of any kind will be required from or be imposed against the property of any individual prior to his death because of medical assistance paid or to be paid on his behalf or at any time if he was under 65 years of age when he received such assistance (except pursuant to the judgment of a court on account of benefits incorrectly paid on behalf of such individual).

(b) There will be no adjustment or recovery of medical assistance correctly paid, except from the estate of an individual who was 65 years of age or older when he received such assistance, and then only after the death of his surviving spouse, if any, and only at a time when he has no surviving child who is under age 21 or is blind or permanently and totally disabled

Under this regulation, the term "property" includes not only the homestead but all other personal and real property in which the recipient has a legal interest; and a money payment under another program may not be reduced as a method of recovery for vendor payments incorrectly paid under title XIX of the Act.

[36 F.R. 3873, Feb. 27, 1971]

§ 249.81

Time limitations for Federal financial participation in medical assistance payments.

Vendor payments for medical care and services are eligible for Federal financial participation for the month in which they are paid, regardless of the eligibility status of the individual in the month of payment, provided:

(a) He was found eligible for medical assistance for the month during which the medical care and services were rendered, and was alive at the time the application was made;

(b) he received such medical care and services in or after the third month before the month in which he made application; and

(c) not more than 24 months have elapsed since the month of the latest services for which the particular payment is being made with respect to the individual, except that this time limitation does not apply with respect to retroactive adjustment payments where services are reimbursed on the same basis as under title XVIII. [36 F.R. 2870, Feb. 11, 1971]

§ 249.82 Contracts with health insurance organizations, fiscal agents, and private nonmedical institutions.

(a) Definitions.-(1) Arrangement with health-insuring organization. A health-insuring arrangement is present where the contractor agrees to pay the costs of benefits provided under the contract in consideration of an amount called a premium, paid by the State agency for each eligible individual. Under this arrangement, the State agency would be obligated to pay for eligible individuals a monthly premium for each month for which coverage of the medical care and services provided for in the contract is to be made available, whether or not such individuals needed such care and services. Such payment might be made in advance of the coverage period or shortly thereafter. Also, the State agency would not pay for any loss incurred by the contractor from claims exceeding premiums paid or from increases in administrative costs of the contractor during the covered period, and, normally, the State agency would not be charged separately for the administrative functions performed by the contractor since these

functions are a coordinate part of the health insurance agreement.

(2) Arrangement with fiscal agent. A fiscal agent type arrangement is present where the contractor agrees to process and audit vendor claims for payment and may perform certain other functions which would otherwise be performed by the State agency in providing medical care and services to recipients for an amount sufficient to cover his costs of performing the agreed-upon functions. Under this arrangement, the State agency assumes liability for vendor claims for medical care and services rendered eligible recipients, and frequently pays a separate charge to the contractor for costs incurred in performing the agreed-upon functions.

(3) Arrangement with private nonmedical institution. An arrangement with a private nonmedical institution, such as a child-care institution or maternity home, is present where the contractor agrees to provide specified medical services through its own salaried medical personnel or to provide such services through contracts or other arrangements with medical providers. Under this arrangement, the State agency would be obligated to pay for eligible individuals a monthly capitation amount for each month for which coverage of the medical care and services provided for in the contract is to be made available, whether or not such individuals needed such care and services. Such payment might be made in advance of the coverage period or shortly thereafter.

(b) State plan requirements. (1) A State plan under title XIX of the Social Security Act which provides part or all of its medical assistance through arrangement with health-insuring organizations must provide that, as a minimum, the contract will:

(i) Identify the amount of the premium to be paid, when it is to be paid, and the coverage group and period;

(ii) Specify the amount, duration, and scope of medical care and services to be provided, and the fee schedule or other basis on which the contractor will make payment;

(iii) Provide that the premium payment constitutes full discharge of all responsibility by the State for costs of covered medical care and services provided to covered eligible recipients during the contract period;

(iv) Provide for periodic renegotiation of the premium rate and/or medical care and services furnished under contract;

(v) Provide that the contractor shall maintain and provide such records as are necessary for the State to meet the requirements for reporting placed on the State by the Federal agency, and provide that the contractor shall furnish such other reports as required by the State or local agency; and

(vi) Include the period of time the contract will be in effect, together with provisions for termination.

(2) A State plan under title XIX of the Act which provides part or all of its medical assistance through arrangement with fiscal agents must provide that, as a minimum, the contract will:

(i) Identify the type of functions to be performed by the contractor, the amount to be paid the contractor for performing the functions, the basis for the amount, when payment is to be made, and the coverage group;

(ii) Provide that the contractor will make payments for medical care in accordance with the rules and regulations established by the State agency;

(iii) Provide that the contractor shall maintain and provide such records as are necessary for the State to meet the requirements for reporting placed on the State by the Federal agency, and provide that the contractor shall furnish such other reports as required by the State or local agency;

(iv) Provide for periodic renegotiation of the amount paid in relation to the costs of service provided; and

(v) Include the period of time the contract will be in effect together with provisions for termination.

(3) A State plan under title XIX of the Act which provides part of its medical assistance through arrangement with private nonmedical institutions must provide that, as a minimum, the contract will:

maintain and provide such records as are necessary for the State to meet the requirements for reporting placed on the State by the Federal agency, and provide that the contractor shall furnish such other reports as required by the State or local agency; and

(vi) Include the period of time the contract will be in effect, together with provisions for termination.

(c) Conditions for Federal financial participation. (1) The total amount paid to the health-insuring organization (pursuant to paragraph (b)(1) of this section) for carrying out the provisions of the contract will be regarded as assistance costs for Federal financial participation even if the contract provides for a separate charge for the contractor's administrative costs.

(2) The total amount paid to the private nonmedical institution (pursuant to paragraph (b)(3) of this section) for carrying out the provisions of the contract will be limited to cost of medical care and services and will be regarded as assistance costs for Federal financial participation.

(3) Under contracts with fiscal agents, the amount paid to the supplier of medical care will be considered for Federal financial participation as assistance costs, and the amount paid to the contractor for performing the agreedupon functions will be considered as administrative costs.

(4) For Federal financial participation, the State agency must submit the contract to the Social and Rehabilitation Service not later than the end of the first quarter for which Federal financial participation will be claimed for expenditures made thereunder. [36 F.R. 3873, Feb. 27, 1971]

(i) Identify the capitation amount to be paid, when it is to be paid; and the coverage group;

(ii) Specify the amount, duration and scope of medical care and services to be provided;

(iii) Specify the basis for payment to the provider for authorized service;

250.30

inspections in skilled nursing homes and mental hospitals. Reasonable charges.

Subpart A-General

Payments for medical services and care by a third party.

Consultative services to medical institutions.

250.210

Subpart C-Fiscal Administration

State financial participation; State plan requirements.

AUTHORITY: The provisions of this Part 250 issued under sec. 1102, 49 Stat. 647; 42 U.S.C. 1302.

NOTE: For interim policies published under this part, see 34 F.R. 19775, Dec. 17, 1969. § 250.20 Utilization review of care and services.

(a) State plan requirements. A State plan for medical assistance under title XIX of the Social Security Act must:

(1) Provide that a process(es) of utilization review is established for each item of care or service listed in section 1905 (a) of the Act that is included in the State's medical assistance program.

(i) The agency (ies) which monitors utilization review activities on inpatient hospital and extended care services under title XVIII of the Act may be designated by the single State agency to monitor those activities similarly for inpatient hospital and skilled nursing home services under title XIX. Such delegation may incorporate the monitoring of utilization review activities in provider institutions not participating under the XVIII. If such an arrangement is secured, the single State agency and the agency (ies) to which delegation is made should work closely together (in addition to any formal written agreement) in order to accommodate their mutual utilization review requirements. Such delegation is encouraged to avoid duplication of effort and expense and to achieve uniformity of utilization review requirements and methods. Such common effort is a means of striving for efficiency and economy in administration.

(ii) For all items of care or service for which utilization review is not delegated under subdivision (i) of this subparagraph, the medical assistance unit of the single State agency will perform untilization reviews itself and/or monitor those utilization reviews which may be performed by agents for the State government, or by agencies of local govern

ments, or by individual provider organizations or institutions as in subparagraph (2)(1). Review of professional services through existing peer review mechanism is encouraged to the fullest extent possible.

(iii) Utilization review requirements for providers of inpatient hospital and extended care services under title XVIII will be considered to meet the utilization review requirements for providers of inpatient hospital and skilled nursing home services under title XIX, except as in subparagraph (2) (i) (b).

(2) Provide that the medical assistance unit of the single State agency is responsible for all utilization review plans and activities under the medical assistance program. If utilization review is not delegated as in subparagraph (1) (i) of this section, the following will be met in each utilization review plan:

(i) The activities of utilization review will be performed by a utilization review committee with representation appropriate to the medical care or service to be reviewed. Determination of committee composition and selection of committee membership will be made at the point where utilization review will be performed.

(a) A professional practitioner, e.g., physician, dentist, optometrist, etc., may not review cases in which he is the attending practitioner or in which he has (or has had) significant professional responsibility.

(b) The committee may include no member who has an ownership interest in the facility under review, except in the case of committees which conduct review on both title XVIII and XIX patients.

(ii) Utilization review will be based on a statistically significant sample or other reasonable basis of pertinent data as determined appropriate to the medical care or service under scrutiny; for example, admissions, duration of stays, number of visits, number and kind of prescriptions, relation of tests or medications to diagnosis, etc. While some services may lend themselves to review both concurrently with and subsequent to the rendering of care (e.g. institutional care), other services may be best reviewed only subsequently. Since, for many provider services, the measurements will apply to patterns of care rather than to individual episodes of care and because of the difficulties inherent in evaluating medical

necessity, a postaudit procedure will be employed. Utilization review will be made within the context of medical necessity (including overutilization and underutilization and appropriateness of care rendered) and availability of facilities and services.

(iii) The utilization review process will not be limited to isolated cases, but will be considered in the context of overall utilization within an institution, or in a service area, or in a provider's total title XIX workload, etc., as appropriate to the medical care or service under scrutiny.

(iv) A utilization review plan will be developed by the agency, organization, or institution which determines the committee composition as in subparagraph (2) (i). Each plan developed by an agent, organization, or institution other than the single State agency will be submitted to the medical assistance unit of the single State agency for approval. In all cases a utilization review plan will describe:

(a) Objectives.

(b) Authority, responsibility, accountability.

(c) Organization.

(1) Composition of committee and subgroups, if any.

(2) Frequency of meetings.

(3) Format and/or description of records and minutes.

(d) Definitions.

(e) Data.

(1) Methods of case selection.

(2) Relationship of utilization review to title XIX claims administration and medical assistance unit of the single State agency.

(f) Arrangements for committee reports, recommendations, and followup.

(g) Responsibilities of related administrative staff in support of utilization review.

(v) A utilization review committee will maintain appropriate records and prepare regular reports of its activities and findings. The State Medical Advisory Committee will advise the responsible medical assistance unit of any recommendations or requirements on utilization review, consolidated reporting, etc. The medical assistance unit of the single State agency will maintain surveillance of the committees' activities and provide appropriate consultation to committees in order to insure adequate functioning.

(b) Federal financial participation.

Federal financial participation is available for the costs of utilization review, in accordance with the conditions, and at the rates, applicable under title XIX. [34 F.R. 3745, Mar. 4, 1969]

§ 250.21 State plan requirements; agreements with providers.

A State plan for medical assistance under Title XIX of the Social Security Act must provide for agreements with every person or institution providing services under the State plan under which such person or institution agrees:

(a) To keep such records as are necessary fully to disclose the extent of the services provided to individuals receiving assistance under the State plan; and

(b) To furnish the State agency with such information, regarding any payments claimed by such person or institution for providing services under the State plan, as the State agency may from time to time request.

[34 F.R. 14649, Sept. 20, 1969]

§ 250.23 Periodic medical review and medical inspections in skilled nursing homes and mental hospitals. (a) State plan requirements; medical review. A State plan for medical assistance under title XIX of the Social Security Act must:

(1) Provide, with respect to patients eligible under the State plan who are admitted to a skilled nursing home or who make application while in such a home, for a medical review (including medical evaluation) of the need for care in such a home, a written plan of care and, where applicable, a plan of rehabilitation; and if the State plan includes medical assistance in behalf of individuals 65 years of age or older who are patients in institutions for mental diseases, provide, with respect to patients eligible under the State plan who are admitted to a mental hospital or who make application while in such a hospital, for a medical review (including medical evaluation) of the need for care in such a hospital, and a written plan of care. Such a review and plans would be made by the patient's attending physician with respect to care in skilled nursing homes, and by the attending physician or staff physician with respect to care in mental hospitals. Provisions required by this subparagraph shall include descriptions of methods and procedures to be followed in each case which assure that prior to admission or prior