Subpart J-Fair Hearing [Reserved]

AUTHORITY: Sec. 215, 58 Stat. 690, (42 U.S.C. 216); secs. 1301-1316, as amended, 90 Stat. 1945-1960 (42 U.S.C. 300e-300e-15).

SOURCE: 40 FR 37311, Oct. 18, 1974, unless otherwise noted.

Subpart A-Requirements for a Health Maintenance Organization

SOURCE: 42 FR 29401, June 8, 1977, unless otherwise noted.

§ 110.101 Definitions.

As used in this part:

(a) "Health maintenance organization" means a legal entity which provides or arranges for the provision of basic and supplemental health services to its members in the manner prescribed by, is organized and operated in the manner prescribed by, and otherwise meets the requirements of, section 1301 of the Act and the regulations under this subpart.

(b) "Basic health services" means: (1) Physicians services (including consultant and referral services by a physician);

(2) Outpatient services and inpatient hospital services;

(3) Medically necessary outpatient and inpatient emergency health services;

(4) Short-term (not to exceed twenty visits), outpatient evaluative, and crisis intervention mental health services;

(5) Medical treatment and referral services (including referral services to appropriate ancillary services) for the abuse of or addiction to alcohol and drugs;

(6) Diagnostic laboratory and diagnostic and therapeutic radiologic services;

(7) Home health services; and

(8) Preventive health services (including (i) immunizations, (ii) wellchild care from birth, (iii) periodic health evaluation for adults, (iv) voluntary family planning services, (v) services for infertility, and (vi) children's eye and ear examinations conducted to determine the need for vision and hearing correction).

(c) "Supplemental health services"

means:

(1) Services of facilities for intermediate and long-term care;

(2) Vision care not included as a basic health service;

(3) Dental services;

(4) Mental health services not included as a basic health service;

(5) Long-term physical medicine and rehabilitative services (including physical therapy); and

(6) The provision of prescription drugs prescribed in the delivery of a basic health service or a supplemental health service provided by the health maintenance organization.

(d) "In-area" means the geographical area defined by the health maintenance organization as its service area in which it provides health services to its members directly through its own resources or through arrangements with other providers in the area.

(e) "Out-of-area" means that area outside of the geographical area defined by the health maintenance organization as its service area.

(f) "Member", when used in connection with a health maintenance organization, means an individual who has entered into a contractual arrangement, or on whose behalf a contractual arrangement has been entered into, with the organization under which the organization assumes the responsibility for the provision to such individual of basic health services and of such supplemental health services as may be contracted for.

(g) "Subscriber" means a member who has entered into a contractual relationship with the health maintenance organization.

(h)(1) "Health professionals" means physicians, dentists, nurses, podiatrists, optometrists, physicians' assistants, clinical psychologists, social workers, pharmacists, nutritionists, occupational therapists, physical therapists, and other professionals engaged in the delivery of health services who are licensed, practice under an institutional license, are certified, or practice under authority of the health maintenance organization, a medical group, individual practice association or other authority consistent with State law.

(2) "Physician" means a doctor of medicine or a doctor of osteopathy.

(i) "Medical group" means a partnership, association, corporation, or other entity:

(1) Which is composed of health professionals licensed to practice medicine or osteopathy and of such other licensed health professionals (including dentists, optometrists, and podiatrists) as are necessary for the provision of health services for which the group is responsible;

(2) A majority of the members of which are licensed to practice medicine or osteopathy; and

(3) The members of which

(i) As their principal (over 50 percent individually) professional activity and as a group responsibility engage in the coordinated practice of their profession and as a group have substantial responsibility (over 35 percent in the aggregate of their professional activity) for the delivery of health services to members of a health maintenance organization or present a time phased plan, which is acceptable to the Secretary and to which they are committed, to meet this requirement within 3 years from the date the health maintenance organization is found by the Secretary to be a qualified health maintenance organization. Following the expiration of such 3 year period, the Secretary may waive the requirement that over 35 percent of the activity of a medical group be for members of a health maintenance organization;

(ii) Pool their income from practice as members of the group and distribute it among themselves according to a prearranged salary or drawing account or other similar plan unrelated to the provision of specific health services;

(iii) Share health (including medical) records and substantial portions of major equipment and of professional, technical, and administrative staff; (iv) Establish an arrangement whereby a member's enrollment status is not known to the health professional who provides health services to the member; and

(v) Arrange for and encourage continuing education in the field of clini

cal medicine and related areas for the members of the group; and

(4) Which has a written services agreement with a health maintenance organization to provide services to members of the health maintenance organization.

(j) "Individual practice association" means a partnership, corporation, association, or other entity: (1) Which has as its primary objective the delivery or arrangements for the delivery of health services and which has entered into a written service arrangement or arrangements with health professionals, a majority of whom are licensed to practice medicine or osteopathy. Such written services arrangement shall provide:

(i) That such persons shall provide their professional services in accordance with a compensation arrangement established by the entity; and

(ii) To the extent feasible:

(A) For the sharing by such persons of health (including medical) and other records, equipment, and professional, technical, and administrative staff; and

(B) For the arrangement and encouragement of the continuing education of such persons in the field of clinical medicine and related areas; and

(2) Which has a written services agreement with a health maintenance organization to arrange for the provision of services to members of the health maintenance organization.

(k) "Medically underserved population" means the population of an urban or rural area designated by the Secretary as an area with a shortage of personal health services. Designations with respect to such urban or rural areas will be made by the Secretary as described in § 110.203(g).

(1) "Community rating system" (community rate) means a system of fixing rates of payments for health services. Under such a system rates of payments may be determined on a perperson or per-family basis and may vary with the number of persons in a family, but except as otherwise authorized in this paragraph, such rates must be equivalent for all individuals and for all families of similar composi

tion. This does not preclude changes in the rates of payments for health services based on a community rating system which are established for new enrollments or reenrollments and which changes do not apply to existing contracts until the renewal of such contracts. Only the following differentials in rates of payments may be established under such system:

(1) Nominal differentials in such rates may be established to reflect differences in marketing costs and the different administrative costs of collecting payments from the following categories of subscribers:

(i) Individual (non-group) subscribers (including their families),

(ii) Small groups of subscribers (100 subscribers or less),

(iii) Large groups of subscribers (over 100 subscribers).

(2) Nominal differentials in such rates may be established to reflect the compositing of the rates of payment in a systematic manner to accommodate group purchasing practices of the various employers.

(3) Differentials in such rates may be established for subscribers enrolled in a health maintenance organization: (i) Under a contract with a governmental authority under section 1079 ("Contracts for Medical Care for Spouses and Children: Plans") or section 1086 ("Contracts for Health Benefits for Certain Members, Former Members and their Dependents") of Title 10 ("Armed Forces"), United States Code; or (ii) Under any other governmental program (other than the health benefits program authorized by chapter 89 ("Health Insurance"), of Title 5 ("Government Organization and Employees"), United States Code); or (iii) Under any health benefits program for employees of States, political subdivisions of States, and other public entities.

(4) A health maintenance organization may establish a separate community rate for separate regional components of the organization upon satisfactory demonstration to the Secretary of the following:

(i) Each such regional component is geographically distinct and separate from any other regional component;

(ii) Membership is established with respect to the individual regional component, rather than with respect to the parent health maintenance organization; and

(iii) Each such regional component provides substantially the full range of basic health services to its members, without extensive referral between components of the organization for such services, and without substantial utilization by any two such components of the same health care facilities. The separate community rate for each such regional component of the health maintenance organization must be based on the different costs of providing health services in such regions.

(m) "Nonmetropolitan area" means an area no part of which is within an area designated as a standard metropolitan statistical area by the Office of Management and Budget and which does not contain a city whose population exceeds fifty thousand individuals.

(n) "Rural area" means any area not listed as a place having a population of 2,500 or more in Document #PC(1)-A, "Number of Inhabitants", Table VI, "Population of Places", and not listed as an urbanized area in Table XI, "Population of Urbanized Areas" of the same document (1970 Census, Bureau of the Census, U.S. Department of Commerce).

(o) "Non-Federal lender" means any lender other than an agency or instrumentality of the United States.

(p) "Act" means the Public Health Service Act.

(q) "Secretary" means the Secretary of Health, Education, and Welfare and any other officer or employee of the Department of Health, Education, and Welfare to whom the authority involved has been delegated.

(r) "Qualified health maintenance organization" means an entity which has been found by the Secretary to meet the applicable requirements of title XIII of the Act and the applicable regulations of this Part.

(s) "Comprehensive health services" means health services which are provided or arranged for individuals or groups by a public or private organization and are health services which in

dividuals might reasonably require in order to be maintained in good health. These health services include as a minimum the following services, which may be limited as to time and cost: Physician services (§ 110.102(a)(1)); outpatient services and inpatient hospital services (§ 110.102(a)(2)); medically necessary emergency health services (§ 110.102(a)(3)); diagnostic laboratory and diagnostic and therapeutic radiologic services (§ 110.102(a)(6)).

§ 110.102 Health benefits plan; basic health services.

A health maintenance organization shall:

(a) Provide or arrange for the provision of basic health services to its members as needed and without limitations as to time and cost other than those prescribed in the Act and these regulations, as follows:

(1) Physician services (including consultant and referral services by a physician), which shall be provided by a licensed physician, or if a service of a physician may also be provided under applicable State law by other health professionals, a health maintenance organization may provide such service through such other health professionals;

(2) Outpatient services, which shall include diagnostic or treatment services or both for patients who are ambulatory and may be provided in a nonhospital-based health care facility or at a hospital; inpatient hospital services, which shall include but not be limited to, room and board, general nursing care, meals and special diets when medically necessary, use of operating room and related facilities, intensive care unit and services, X-ray, laboratory, and other diagnostic tests, drugs, medications, biologicals, anesthesia and oxygen services, special duty nursing when medically necessary, physical therapy, radiation therapy, inhalation therapy, and administration of whole blood and blood plasma; outpatient services and inpatient hospital services shall include short-term rehabilitation services as appropriate;

(3) Instructions to its members on procedures to be followed to secure in

area and out-of-area medically necessary emergency health services (see § 110.104(a)(2));

(4) At least 20 outpatient visits per member per year, as may be necessary and appropriate, for short-term evaluative or crisis intervention mental health services, or both;

(5) Diagnosis, medical treatment and referral services (including referral services to appropriate ancillary services) for the abuse of or addiction to alcohol and drugs:

(i) Diagnosis and medical treatment shall include detoxification for alcoholism or drug abuse on either an outpatient or inpatient basis, whichever is medically determined to be appropriate, in addition to treatment for other medical conditions;

(ii) Referral services may be either for medical or for non-medical ancillary services. Medical services shall be a part of basic health services; nonmedical ancillary services (such as vocational rehabilitation, employment counseling), need not be a part of basic health services;

(6) Diagnostic laboratory and diagnostic and therapeutic radiology services in support of basic health services;

(7) Home health services provided at a member's home by health care personnel, as prescribed or directed by the responsible physician or other authority designated by the health maintenance organization; and

(8) Preventive health services, which shall be made available to members and shall include at least the following:

(i) A broad range of voluntary family planning services;

(ii) Services for infertility;

(iii) Well-child care from birth and periodic health evaluations for adults. (iv) Eye and ear examinations for children through age 17, to determine the need for vision and hearing correction; and

(v) Pediatric and adult immunizations, in accord with accepted medical practice.

(b) In addition, a health maintenance organization may include a health service defined as a supplemental health service by § 110.101(c) among the basic health services pro