apply to payment for drugs provided as part of skilled nursing facility services and intermediate care facility services and under prepaid capitation arrangements.

INDIVIDUAL PRACTITIONERS

§ 447.341 Individual practitioners: Upper limits of payment.

(a) This section applies to doctors of medicine, dentistry, osteopathy, podiatry, and any other individual practitioner services the agency chooses to include.

(b) The agency must not pay the individual practitioner more than the lowest of―

(1) His actual charge for service;

(2) His reasonable charge for the same service under part B, medicare (Part 405, Subpart D, of this chapter);

or

(3) His median charge for a given service.

(c) The median charge for a given service is determined from claims submitted during all of the calendar year preceding the fiscal year in which the determination is made.

(d) The agency must not pay more than the highest of

(1) The 75th percentile of the range of weighted customary charges in the same locality that are set under medicare during the calendar year preceding the fiscal year in which the determination is made; or

(2) The prevailing reasonable charge under part B, medicare.

OTHER NONINSTITUTIONAL SERVICES

§ 447.351 Selected medical services, supplies and equipment: Upper limits.

(a) Under the medicare criteria for determination of reasonable charges, the Secretary selects and lists in the FEDERAL REGISTER, under § 405.511 of this chapter, medical services, supplies, and equipment (including equipment servicing) that do not generally vary significantly in quality from one supplier to another. Medicare carriers calculate the lowest charge levels at which such services, supplies, and equipment are widely and consistently available within their locality, accord

ing to the procedures prescribed in § 405.511.

(b) For those selected services and items furnished under both medicare and medicaid, the agency must not pay more than the lowest charge level calculated by the medicare carrier for the item or service in the locality.

(c) For those selected services and items furnished only under medicaid, the agency must not pay more than the lowest charge levels calculated by the agency under the procedures specified in § 405.511 (c) and (d) of this chapter.

§ 447.352 Other noninstitutional services: Upper limits.

(a) For any noninstitutional item or service furnished under both medicare and medicaid and not subject to the upper limits specified in § 447.351 or other sections of this part, the agency must not pay more than the reasonable charge established for that item or service by a medicare carrier serving part or all of the State.

(b) For all other noninstitutional items or services furnished only under medicaid and not subject to the upper limits specified in § 447.351 or other sections of this part, the agency must not pay more than the customary charge for a provider or the prevailing charge in the locality for comparable items or services under comparable circumstances, whichever is lower. For this purpose, the agency must set prevailing charges on the basis of the combined payments that providers receive from other third party insurers and their subscribers and policyholders.

PREPAID CAPITATION PLANS

§ 447.361 Prepaid capitation plans: Upper limits of payment.

The agency must not pay more for a defined scope of services to a defined number of recipients under a capitation arrangement than the cost of providing those same services on a fee-forservice basis, and must not pay more than other third party payors are paying for comparable services under comparable circumstances.

RURAL HEALTH CLINIC SERVICES

§ 447.371 Se. vices furnished by rural health clinics.

The agency must pay for rural health clinic services, as defined in § 440.20(b) of this subchapter, and for other ambulatory services furnished by a rural health clinic, as defined in § 440.20(c) of this subchapter, as follows:

(a) For provider clinics, the agency must pay the reasonable cost of rural health clinic services and other ambulatory services on the basis of the cost reimbursement principles in Subpart D of part 405 of this chapter. For purposes of this section, a provider clinic is an integral part of a hospital, skilled nursing facility, or home health agency that is participating in medicare and is licensed, governed, and supervised with other departments of the facility.

(b) For clinics other than provider clinics that do not offer any ambulatory services other than rural health clinic services, the agency must pay for rural health clinic services at the reasonable cost rate per visit determined by a medicare carrier under §§ 405.2426 through 405.2429 of this chapter.

(c) For clinics other than provider clinics that do offer ambulatory services other than rural health clinic services, the agency must pay for the other ambulatory services by one of the following methods:

(1) The agency may pay for other ambulatory services and rural health clinic services at a single rate per visit that is based on the cost of all services furnished by the clinic. The rate must be determined by a medicare carrier under §§ 405.2426 through 405.2429 of this chapter.

(2) The agency may pay for other ambulatory services at a rate set for each service by the agency. The rate must not exceed the upper limits in this subpart. The agency must pay for rural health clinic services at the medicare reimbursement rate per visit, as specified in § 405.2426 of this chapter.

(3) The agency may pay for dental services at a rate per visit that is based on the cost of dental services fur

nished by the clinic. The rate must be determined by a medicare carrier under §§ 405.2426 through 405.2429 of this chapter. The agency must pay for ambulatory services other than dental services under paragraph (c) (1) or (2) of this section.

(d) For purposes of paragraph (c) (1) and (3) of this section, "visit" means a face-to-face encounter between a clinic patient and any health professional whose services are reimbursed under the State plan. Encounters with more than one health professional, and multiple encounters with the same health professional, that take place on the same day and at a single location constitute a single visit, except when the patient, after the first encounter, suffers illness or injury requiring additional diagnosis or treatment.

(a) Prescribes requirements, based on section 1902(a)(4) of the Act, for medicaid agency prevention and control of program fraud and abuse;

(b) Requires agencies to inform providers and recipients of the Federal penalties for fraud under section 1909 of the Act; and

(c) Implements section 1903(i)(2) of the Act, prohibiting FFP for payments to Medicaid providers who are ineligible for payments under medicare because of a determination by the Secretary relating to false or excessive claims.

§ 455.11 Definition of fraud.

For purposes of this subpart the definition of fraud is determined according to State law.

§ 455.12 State plan requirement.

A State plan must meet the requirements of §§ 455.13-455.22.

§ 455.13 Methods for identification, investigation and referral.

The medicaid agency must have(a) Methods and criteria for identifying suspected fraud cases;

(b) Methods for investigating these cases that

(1) Do not infringe on the legal rights of persons involved; and

(2) Afford due process of law; and (c) Procedures, developed in cooperation with State legal authorities, for

§ 455.18 Provider's statements on claims form.

(a) Except as provided in § 455.19, the agency must provide that all provider claims forms be imprinted in boldface type with the following statements, or with alternate wording that is approved by the Regional HCFA Administrator:

(1) "This is to certify that the foregoing information is true, accurate, and complete."

(2) "I understand that payment of this claim will be from Federal and State funds, and that any falsification, or concealment of a material fact, may be prosecuted under Federal and State laws."

(b) The statements may be printed above the claimant's signature or, if they are printed on the reverse of the form, a reference to the statements must appear immediately preceding the claimant's signature.

§ 455.19 Provider's statement on check.

As an alternative to the statements required in § 455.18, the agency may print the following wording above the claimant's endorsement on the reverse of checks or warrants payable to each provider: "I understand in endorsing or depositing this check that payment will be from Federal and State funds and that any falsification, or concealment of a material fact, may be prosecuted under Federal and State laws."

§ 455.20 Recipient verification procedure.

(a) The agency must have a method for verifying with recipients whether services billed by providers were received.

(b) In States receiving Federal matching funds for a mechanized claims processing and information retrieval system under part 433, subpart C, of this subchapter, the agency must provide prompt written notice as required by § 433.113(b)(2) to—

(1) Each recipient for whom services were billed; or

(2) Each recipient in a sample group of recipients for whom services were billed.

(c) In States not receiving Federal matching funds for a mechanized system, verification may be made by:

(1) A random sample of recipients for each provider who is paid significant amounts (i.e., high-volume providers); and

(2) A random sample of recipients for groups of providers who are not paid significant amounts (i.e., lowvolume providers).

§ 455.21 Cooperation with State medicaid fraud control units.

In a State with a medicaid fraud control unit established and certified under Subpart D of this Part:

(a) The agency must

(1) Refer all cases of suspected provider fraud to the unit;

(2) If the unit determines that it may be useful in carrying out the unit's responsibilities, promptly comply with a request from the unit for

(i) Access to, and free copies of, any records or information kept by the agency or its contractors;

(ii) Computerized data stored by the agency or its contractors. This data must be supplied without charge and in the form requested by the unit; and

(iii) Access to any information kept by providers to which the agency is authorized access by sec. 1902(a)(27) of the Act and § 431.107 of this subchapter. In using this information, the unit must protect the privacy rights of recipients; and

(3) On referral from the unit, initiate any available administrative or ju

dicial action to recover improper payments to a provider.

(b) The agency need not comply with specific requirements under this subpart that are the same as the responsibilities placed on the unit under Subpart D of this Part.

§ 455.22 Notification of penalties.

The agency must notify providers and recipients of the provisions of sec. 1909 of the Act that provide Federal penalties for fraudulent acts and false reporting.

Subpart B-Disclosure of Information by Providers and Fiscal Agents

AUTHORITY: Secs. 1102, 1124, 1126, 1861(j)(11), 1866(a), 1866(b)(2), 1902(a)(38), 1903(1)(2), and 1903(n) of the Social Security Act; 42 U.S.C. 1302, 1302a-3, 1320a-5, 1395x(j)(11), 1395cc(a), 1395cc(b)(2), 1396a(a)(38), 1396(i)(2), and 1396b(n)).

SOURCE: 44 FR 41644, July 17, 1979, unless. otherwise noted.

EFFECTIVE DATE NOTE: At 44 FR 41644, July 17, 1979, Subpart B (old § 455.104) was revised, effective October 15, 1979.

§ 455.100 Purpose.

This subpart implements sections 1124, 1126, 1902(a)(38), 1903(i)(2), and 1903(n) of the Social Security Act. It sets forth State plan requirements regarding:

(a) Disclosure by providers and fiscal agents of ownership and control information; and

(b) Disclosure of information on a provider's owners and other persons convicted of criminal offenses against Medicare, Medicaid, or the title XX services program.

The subpart also specifies conditions under which the Administrator will deny Federal financial participation for services furnished by providers or fiscal agents who fail to comply with the disclosure requirements.

less of whether an appeal from that judgment is pending.

"Disclosing entity" means a Medicaid provider (other than an individual practitioner or group of practitioners), or a fiscal agent.

"Other disclosing entity" means any other Medicaid disclosing entity and any entity that does not participate in Medicaid, but is required to disclose certain ownership and control information because of participation in any of the programs established under title V, XVIII, or XX of the Act. This includes:

(1) Any hospital, skilled nursing facility, home health agency, independent clinical laboratory, renal disease facility, rural health clinic, or health maintenance organization that participates in Medicare (title XVIII);

(2) Any Medicare intermediary or carrier; and

(3) Any entity (other than an individual practitioner or group of practitioners) that furnishes, or arranges for the furnishing of, health-related services for which it claims payment under any plan or program established under title V or title XX of the Act.

"Fiscal agent" means a contractor that processes or pays vendor claims on behalf of the Medicaid agency.

"Group of practitioners" means two or more health care practitioners who practice their profession at a common location (whether or not they share common facilities, common supporting staff, or common equipment).

"Indirect ownership interest" means an ownership interest in an entity that has an ownership interest in the disclosing entity. This term includes an ownership interest in any entity that has an indirect ownership interest in the disclosing entity.

"Managing employee" means a general manager, business manager, administrator, director, or other individual who exercises operational or managerial control over, or who directly or indirectly conducts the day-to-day operation of, an institution, organization, or agency.

"Ownership interest" means the possession of equity in the capital, the stock, or the profits of the disclosing entity.