Article XXII
DISPUTES

A. Except as otherwise provided in this agreement, any dispute concerning a question of fact arising under this contract which is not disposed of by agreement shall be decided by a duly authorized representative of the Secretary who shall reduce his decision to writing and mail or otherwise furnish a copy thereof to the Intermediary and the Plan. This decision shall be final and conclusive unless, within 30 days from the date of receipt of such copy, the Intermediary or the Plan mails or otherwise furnishes to the Secretary a written appeal. The decision of the Secretary or his duly authorized representative for the determination of such appeals shall be final and conclusive unless determined by a court of competent jurisdiction to have been fraudulent, or capricious, or arbitrary, or so grossly erroneous as necessarily to imply bad faith, or not supported by substantial evidence. In connection with any appeal proceeding under this clause, the Intermediary and the Plan shall be afforded an opportunity to be heard and to offer evidence in support of its appeal. Pending final decision of a dispute hereunder, the Plan shall proceed diligently with the performance of the contract and in accordance with the Secretary's decision.

B. This dispute clause does not preclude consideration of law questions in connection with decisions provided for in paragraph A above: Provided, that nothing in this contract shall be construed as making final the decision of any administrative official, representative, or board on a question of law. C. Disputes concerning the interpretation or application of regulations, and general instructions or administrative procedures in connection therewith shall not be subject to the provisions of this Article. In addition, this Article shall not apply to termination of this agreement under Article XXVI, Termination of Agreement.

Article XXIII
APPENDICES

The Appendices attached hereto are a part of this agreement.

Article XXIV

TERM OF AGREEMENT

This agreement shall begin on July 1, 1975, and end on September 30, 1976. It will be automatically renewed for a period of one year unless the Intermediary or the Plan gives notice of intention to terminate the agreement at least 6 months before the end of the current period. The Secretary shall have the authority to not approve renewal of a Plan subcontract by giving notice to the Intermediary and Plan at least 6 months prior to the end of the current term of the Plan subcontract.

Article XXV

MODIFICATION OF AGREEMENT

A. This agreement may be modified or terminated at any time by mutual consent.

B. If the Secretary finds that because of enactment of P.L. 92-603, or any other subsequent legislative changes, modification of this agreement is necessary to carry out the provisions of the Act, as amended, or to perform experiments and demonstration projects pursuant to legislative enactment, he may modify any of the functions, duties, parts thereof, or any other services to be performed by the In

termediary and the Plan. Prior to any such modification, the Secretary shall afford the Intermediary and the Plan an opportunity to consult and participate in planning for adjustments which might be necessary and thereafter provide the Intermediary and the Plan written notice that the modification is to be made within 90 days after a date specified in the notice.

C. Within 10 days of receipt of the Secretary's notification provided in paragraph B of this Article, the Plan may terminate this agreement upon 90 days written notice to the Secretary and the Intermediary, and shall not be required to implement any modifications of this agreement provided for in such notification during such 90 day period.

D. Any costs referred to in Article XXVI of this agreement, as being applicable if incurred at the termination of this agreement, shall be allowable if incurred in the effectuation of any of the aforementioned provisions.

Article XXVI

TERMINATION OF AGREEMENT

A. The Intermediary or the Plan may terminate this agreement at any time upon 180 days notice to the Secretary, to the public, and to its providers of services.

B. The Secretary, notwithstanding any other provisions of this agreement, may terminate this subcontract upon notification to the Intermediary and the Plan within 90 days after July 1, 1975, provided that the termination shall be effective as of a date not less than 90 days following the date of such notification as specified therein.

C. If the Secretary finds, after 60 days notice and opportunity for hearing to the Intermediary and the Plan that:

1. the Plan failed substantially to carry out this agreement, or

2. the continuation of some or all of the functions provided for in this agreement is disadvantageous or is inconsistent with the efficient administration of Title XVIII of the Act, the Secretary may terminate this agreement at any time upon 120 days notice to the Plan and to its providers of services. D. If this agreement is terminated by either the Secretary, the Intermediary or the Plan in any manner provided in this agreement (including non-renewals under Article XXIV), any funds advanced to the Plan under this agreement which have not been expended or encumbered in accordance with the terms of this agreement prior to the date the agreement was terminated, shall be returned to the Intermediary, and any funds determined to be due the Intermediary or the Plan, after the application of Article VI, shall be paid to such party. Prior to final payment under this agreement, the Plan shall execute and deliver an assignment to the Intermediary, in such form as he may prescribe, of refunds, rebates, credits, or other amounts (including interest thereon) which are due the Plan and which are properly allocable to costs for which the Plan has been reimbursed under this agreement. In determining the amount due to either party, reimbursable costs shall be determined in accordance with paragraph B of Article XIII.

E. Any costs referred to under this Article shall be allowable if incurred in the implementation of any of the aforementioned provisions.

Article XXVII

CONTINUANCE OF FUNCTIONS AND DUTIES UNDER PRIOR AGREEMENT

It is understood and agreed that the continuance of performance after June 30, 1975, of any function or duty undertaken under the agreement between the Plan and the Intermediary pursuant to sections

1816 and 1842 of the Act in effect prior to July 1, 1975, shall be deemed to have been performed under and subject to the terms of this agreement. It is further understood and agreed that any subcontract entered into by the Plan with the approval of the Secretary and the Intermediary the term of which extends beyond June 30, 1975, shall not be subject to Article XIV of this agreement and shall remain in full force and effect until the expiration date thereof except where such subcontract shall be terminated prior to the expiration date in accordance with the provisions thereof or where such subcontract shall require further approval by the Secretary in accordance with paragraph F of Article XIV of this agree

ment.

In Witness Whereof, the parties hereby execute this agreement this day of

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corporation; that said agreement was duly signed for and in behalf of said corporation by authority of its governing body, and is within the scope of its corporate powers.

Hon. FORTNEY H. STARK, Jr.,

ATTACHMENT 6

BLUE CROSS ASSOCIATION, Chicago, Ill., September 10, 1976

9th District, California, Congress of the United States, House of Representatives, Washington, D.C.

DEAR MR. STARK: During my presentation before your Study Group on August 27th, I agreed to supply additional information on certain matters raised during the discussion. Following is that information with appropriate attachments relating to the questions raised.

1. A copy of the Blue Cross Association's performance indices and weighting factors.

Attached is Administrative Bulletin No. 835 which describes methods developed by BCA for Medicare statistical performance ranges for use as a management tool. I have not included the Exhibits relating to these A.B.'s, but they are available for committee review. I have included our most recent bulletin updating the methodology. (Attachment 12 and 13). [Material deleted; available at committee office.]

2. A list of policy clarification issues related to the 1972 Amendments.

Claims-Related

Section 228. Advance Approval of Extended Care and Home Health Coverage

This section of the legislation gave the Secretary authority to establish presumed periods of coverage of post-hospital extended care and home health services by diagnosis. Although final regulations on this subject were published in May 25, 1976, no implementing instructions have been released.

Section 226: Health Maintenance Organizations

Currently, there are no claims processing instructions for intermediaries concerning the handling of claims for beneficiaries who belong to a Health Maintenance Organization. Draft instructions required that intermediaries undertake extensive activities on these claims with no recognition for these activities in their workload reporting.

Section 294F: Professional Standards Review Organizations (PSRO's)

The Bureau of Health Insurance has not issued any instructions to intermediaries concerning their ongoing responsibilities where conditional PSRO's are assuming the review of hospital claims for medical necessity and appropriateness. BHI regional offices have attempted to fill the void created by the lack of instructions which has resulted in significantly different methods of monitoring PSRO's. In addition, information being issued by the Bureau of Quality Assurance (BQA) is not consistent with any information available to intermediaries. Prior consultations issued by the Bureau on monitoring of PSRO's and claims processing under PSRO's have contained significant problems and have yet to be finalized.

Section 247: Definition of Care in Skilled Nursing Facilities

Final regulations concerning this provision of the Law were published in the September 24, 1975, Federal Register and became effective on November 24, 1975. A prior consultation was released in March 1976 which proposed claims processing instructions which would have required extensive development of each SNF claim by intermediaries to the point of measuring miles from a HHA to the beneficiary's home to determine if home health services were an economic alternative to SNF confinement. Interim claims processing instructions were issued by BHI in December 1975 which are to be used for processing most cases while guidelines are being developed. Final instructions have not as yet been issued.

Section 213. Waiver of beneficiary liability

Although final regulations concerning this provision appeared in the January 6, 1975, Federal Register and became effective on February 5, 1975, manualized instructions were not issued until November 1975. These instructions are complicated and incomplete, causing confusion and problems. The Bureau has agreed to a Technical Advisory Group task force meeting in September 1976, to address the broad scope of problems that currently exist with waiver of liability.