Code of Federal Regulations: Containing a Codification of Documents of ...

nization undertaken prior to application for initial development assistance.

(b) Detailed plans, which must include, at a minimum, tasks designed to accomplish the activities listed below, accompanied by a time-phased milestone chart indicating proposed funding and manpower to be allocated to each (where circumstances indicate that it would be appropriate and consistent with the intent of the Public Health Service Act, additional activities may be proposed in the application):

(1) Development of a schedule to meet the requirements of §§ 417.100 through 417.109 of this subpart;

(2) Completion of activities related to resolution of legal issues;

(3) Recruitment and training of personnel essential for operation as a health maintenance organization;

(4) Development of a comprehensive financial plan;

(5) Organization of physician health services;

(6) Organization of other basic health services;

(7) Development of a schedule to construct, lease, renovate or otherwise obtain health maintenance organization facilities;

(8) Organization of ambulatory care facility;

(9) Implementation of a staffing plan that demonstrates compliance with the appropriate 15 or 30 percent limitation on contracts for basic and supplemental health services (see § 417.103(a)), and formalization of contract arrangements;

(10) Further refinement of the projected market to be served by obtaining specific evidence of employer or union willingness to offer the health maintenance organization option on specific dates;

(11) Initiation of enrollment plan; and

(12) Establishment of any working capital or reserves or both as may be required by State authorities.

(c) Evidence from physicians and from one or more hospitals indicating that they intend to become providers of basic health services for the proposed health maintenance organization:

(1) In the case of an individual prac tice association-type health mainte nance organization, there must be such evidence from a number of physi cians adequate to serve the proposed enrollment; and

(2) In the case of a non-individual practice association-type health maintenance organization, there must be such evidence from at least three phy. sicians, indicating that they are willing to be employed by or to contract with the proposed health maintenance or ganization.

(d) In the case of an applicant which intends to serve Title XIX eligibles of Title XVIII beneficiaries as a part of the planned enrollment, as appropri ate:

(1) Evidence that the State title XIX agency is willing to negotiate a prepaid capitation contract in the form of : letter or other document from the State Title XIX agency; or

(2) Evidence that the applicant planning to or has entered into a co tract under title XVIII as a health maintenance organization.

(e) In addition, in the case of an operational prepaid health plan which proposes to become a qualified health maintenance organization, an identifi cation of gaps between its current op eration and the requirements of §§ 417.100 through 417.109 of this sub part.

(f) In addition, in the case of quali fied health maintenance organizations requesting assistance for expansion:

(1) Data on prepaid membersh totals for annual intervals over past five years, or if the health main tenance organization has not been op erating for five years, such data on quarterly basis for the time during which it has been in operation;

(2) A description of the curren health service delivery facilities, in cluding an estimate of their capacity

(3) The number and specialties d current health professionals serving its members; and

(4) The plans for the proposed e pansion which demonstrate that the definition of "expansion of services or of "significant expansion" of men bership or service area in § 417.111 be met.

23, Feb. 10, 1978, as amended at 45 Jan. 24, 1980. Redesignated at 52 , Sept. 30, 1987]

Funding duration and limita

Planning projects. (1) The of any award shall be detery the Secretary on the basis of mate of the sum necessary for costs: Provided, That any rant and the amount of princiany single loan guaranteed section 1304 of the Public Service Act may not exceed

n considering applications for for planning projects under 20 through 417.126, the Secrell give priority to applications contain assurances satisfactory Secretary that when the organibecomes operational, not less O percent of its members will be rs of a medically underserved tion. In considering applicaor loan guarantees for planning S under §§ 417.120 through 5, the Secretary will give special eration to applications for s for health maintenance organs which will have at least 10 t of their projected membership medically underserved populaApplicants may propose that the period be for one year or less, as priate to the planning activities accomplished. Planning projects be completed within the period è award. The Secretary may not more than one additional grant an guarantee for a planning et for which a grant or loan guarhas previously been made, and permit additional time (up to 12 hs) for completion of the project determines that the additional or loan guarantee (as the case be) or additional time, or both, is ed to complete the project adeely.

Funds under grants and loans anteed for planning projects shall ed only for the activities set forth 417.122(f) and for activities reed to fill the gaps referred to in .122(g).

Initial development projects. (1) aggregate amount of loan guaran

tees and grants for any initial development project may not exceed the amount specified by section 1304(f)(2) of the Public Health Service Act. The cumulative total of grants made to and the principal of loans guaranteed for an HMO for initial development projects may not exceed the amount specified by section 1304(f)(3) of the Public Health Service Act.

(2) A grant may only be made for initial development costs incurred in a period not to exceed three years.

(3) In considering applications for grants for initial development projects under §§ 417.120 through 417.126, the Secretary will give priority to applications which contain assurances satisfactory to the Secretary that when the organization becomes operational, not less than 30 percent of its members will be members of a medically underserved population. In considering applications for loan guarantees for initial development projects under §§ 417.120 through 417.126, the Secretary will give special consideration to applications for projects for health maintenance organizations which will have at least 10 percent of their projected membership from medically underserved populations.

(4) Funds under grants and loans guaranteed for projects for initial development shall be used only for activities set forth in § 417.123(b) (except that such funds may not be used for the costs of construction or for recruitment of personnel who will not engage in practice principally for the health maintenance organization) and for activities required to fill gaps referred to in § 417.123(e).

nization undertaken prior to application for initial development assistance.

(1) Development of a schedule to meet the requirements of §§ 417.100 through 417.109 of this subpart;

(2) Completion of activities related to resolution of legal issues;

(3) Recruitment and training of personnel essential for operation as a health maintenance organization;

(4) Development of a comprehensive financial plan;

(5) Organization of physician health services;

(6) Organization of other basic health services;

(7) Development of a schedule to construct, lease, renovate or otherwise obtain health maintenance organization facilities;

(8) Organization of ambulatory care facility;

(10) Further refinement of the projected market to be served by obtaining specific evidence of employer or union willingness to offer the health maintenance organization option on specific dates;

(11) Initiation of enrollment plan; and

(12) Establishment of any working capital or reserves or both as may be required by State authorities.

(c) Evidence from physicians and from one or more hospitals indicating that they intend to become providers of basic health services for the proposed health maintenance organization:

(1) In the case of an individual pra tice association-type health mainte nance organization, there must be such evidence from a number of phys cians adequate to serve the proposed enrollment; and

(2) In the case of a non-individua practice association-type health main tenance organization, there must be such evidence from at least three phy sicians, indicating that they are willing to be employed by or to contract with the proposed health maintenance a ganization.

(d) In the case of an applicant which intends to serve Title XIX eligibles or Title XVIII beneficiaries as a part of the planned enrollment, as appropri ate:

(1) Evidence that the State title XIX agency is willing to negotiate a prepaid capitation contract in the form of a letter or other document from the State Title XIX agency; or

(2) Evidence that the applicant planning to or has entered into a c tract under title XVIII as a health maintenance organization.

(e) In addition, in the case of an operational prepaid health plan which proposes to become a qualified health maintenance organization, an identification of gaps between its current op eration and the requirements of §§ 417.100 through 417.109 of this sub part.

(f) In addition, in the case of quali fied health maintenance organizations requesting assistance for expansion:

(1) Data on prepaid membership totals for annual intervals over the past five years, or if the health main tenance organization has not been op erating for five years, such data on quarterly basis for the time during which it has been in operation;

(2) A description of the current health service delivery facilities, including an estimate of their capacity:

(3) The number and specialties of current health professionals serving its members; and

(4) The plans for the proposed ex pansion which demonstrate that the definition of "expansion of services" or of "significant expansion" of mem bership or service area in § 417.111 will

be met.

D23, Feb. 10, 1978, as amended at 45 Jan. 24, 1980. Redesignated at 52 , Sept. 30, 1987]

Funding duration and limita

Planning projects. (1) The of any award shall be detery the Secretary on the basis of nate of the sum necessary for costs: Provided, That any rant and the amount of princiany single loan guaranteed section 1304 of the Public Service Act may not exceed

n considering applications for for planning projects under 20 through 417.126, the Secrell give priority to applications contain assurances satisfactory Secretary that when the organibecomes operational, not less O percent of its members will be rs of a medically underserved tion. In considering applicaor loan guarantees for planning s under §§ 417.120 through , the Secretary will give special eration to applications for s for health maintenance organs which will have at least 10 t of their projected membership medically underserved populaApplicants may propose that the period be for one year or less, as priate to the planning activities accomplished. Planning projects be completed within the period award. The Secretary may not more than one additional grant an guarantee for a planning t for which a grant or loan guarhas previously been made, and permit additional time (up to 12 s) for completion of the project determines that the additional or loan guarantee (as the case e) or additional time, or both, is d to complete the project adely.

Funds under grants and loans nteed for planning projects shall ed only for the activities set forth 417.122(f) and for activities red to fill the gaps referred to in 122(g).

Initial development projects. (1) aggregate amount of loan guaran

(2) A grant may only be made for initial development costs incurred in a period not to exceed three years.

(3) In considering applications for grants for initial development projects under §§ 417.120 through 417.126, the Secretary will give priority to applications which contain assurances satisfactory to the Secretary that when the organization becomes operational, not less than 30 percent of its members will be members of a medically underserved population. In considering applications for loan guarantees for initial development projects under 88 417.120 through 417.126, the Secretary will give special consideration to applications for projects for health maintenance organizations which will have at least 10 percent of their projected membership from medically underserved populations.

[43 FR 6023, Feb. 10, 1978, as amended at 45 FR 6059, Jan. 24, 1980. Redesignated at 52 FR 36746, Sept. 30, 1987]

8 417.125 Evaluation and award.

(a) Within the limits of funds available for such purpose, the Secretary may make awards to cover up to 90 percent of the cost of projects, or in the case of projects which will draw not less than 30 percent nor more than the appropriate percentage (as determined under § 417.107(c)) of its anticipated enrollment from medically underserved populations, up to 100

percent of the costs, to those applicants whose projects will, in his judgment, best promote the purposes of section 1304 of the Public Health Service Act and the regulations of §§ 417.120 through 417.126 taking into account:

(1) The degree to which the proposed project satisfactorily provides for the elements set forth in § 417.122 or § 417.123.

(2) The comments of the appropriate health systems agency or State health planning and development

agency.

(3) Whether the feasibility of the project has been established, and in the case of initial development applications, whether all required planning activities have been accomplished.

(4) The appropriateness of the goals and objectives of the proposed project.

(5) The effectiveness the proposed organization may reasonably be expected to have in reducing inappropriate hospital utilization, containing health care costs, using medical and other health manpower, emphasizing early detection and treatment of illnesses, and achieving a better distribution and quality of care.

(6) The capability of the applicant to organize and manage the project successfully.

(7) Evidence of the applicant's intended contribution to the project.

(8) Evidence by letters or similar statements of intent from providers expressing a willineness to be employed by or contract with the proposed health maintenance organization for the provision of basic health services and evidence that providers as necessary, will contract with the health maintenance organization other than as members of its staff or through medical groups or individual practice associations.

(9) Evidence, in form of letters, from individuals, groups, or organizations indicating that they support the development and operation of the proposed health maintenance organization.

(10) The results of the Secretary's assessment of marketing capability and the prospects for eventual financial viability as an operational health maintenance organization without continued Federal support.

(11) The inclusion of medically underserved populations in groups to be enrolled.

(12) Location relative to the number of organizations providing health services to a defined population on a prepaid capitation basis, which are already operating in the area.

(13) The percentage of anticipated total enrollment to be drawn from nonmetropolitan areas to be served.

(14) In the case of an existing organization operating on a prepaid capitation basis, the applicant's potential for expeditious transition into a qualified health maintenance organization.

(15) In the case of expansion projects, the potential rate of increase of expansion, or the potential increase in the area to be served by the expanded health maintenance organization.

(b) In considering applications under §§ 417.120 through 417.126 the Secretary will give priority to applications which contain assurances satisfactory to the Secretary that when the organizations become operational, not less than 30 percent of their members will be members of a medically underserved population.

§ 417.126 Loan guarantee provisions.

(a) Disbursement of loan proceeds. The principal amount of any loan guaranteed by the Secretary under §§ 417.120 through 417.126 shall be disbursed to the applicant in accordance with an agreement to be entered into between the parties to the loan and approved by the Secretary.

(b) Length and maturity of loans. The principal amount of each loan guarantee, together with interest thereon, shall be repayable over a period of 22 years, beginning on the date of endorsement of the loan guarantee by the Secretary. The Secretary may however, approve a shorter repayment period where he determines that a repayment period of less than 22 years is more appropriate to an applicant's total financial plan.

(c) Repayment. The principal amount of each loan guarantee, together with interest thereon, shall be repayable in accordance with a repayment schedule which is to be agreed

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