§ 417.143 Application requirements.

(a) General requirements. This section sets forth application requirements for entities that seek qualification as HMOs; HMOs that seek expansion of their service areas; and HMOS that seek qualification of their regional components as HMOs.

(b) Completion of an application form. (1) In order to receive a determination concerning whether an entity is a qualified HMO, an individual authorized to act for the entity (the applicant) must complete an application form provided by HCFA.

(2) The authorized individual must describe thoroughly how the entity meets, or will meet, the requirements for qualified HMOs described in the Public Health Service Act and in §§ 417.100 through 417.109 and 417.140 through 417.144 of this subpart.

(c) Collection of an application fee. In accordance with the requirements of 31 U.S.C. 9701, Fees and charges for Government services and things of value, HCFA determines the amount of the application fee that must be submitted with each type of application.

(1) The fee is reasonably related to the Federal government's cost of qualifying an entity and may vary based on the type of application.

(2) Each type of application has one set fee rather than a charge based on the specific cost of each determination. (For example, each Federally qualified HMO applicant seeking Federal qualification of one of its regional components as an HMO is charged the same amount, unless the amount of the fee has been changed under paragraph (f) of this section.)

(d) Application fee amounts. The application fee amounts for applications completed on or after July 13, 1987 are as follows:

(1) $18,400 for an entity seeking qualification as an HMO or qualification of a regional component of an HMO.

If, in the case of an HMO seeking qualification of a regional component, HCFA determines that there is no need for a site visit, $8,000 will be returned to the applicant.

(2) $6,900 for an HMO seeking expansion of its service area.

(3) $3,100 for a CMP seeking qualification as an HMO.

(e) Refund of an application fee. HCFA refunds an application fee only if the entity withdraws its application within 10 working days after receipt by HCFA. Application fees are not returned in any other circumstance, even if qualification or certification is denied.

(f) Procedure for changing the amount of an application fee. If HCFA determines that a change in the amount of a fee is appropriate, HCFA issues a notice of proposed rulemaking in the FEDERAL REGISTER to announce the proposed new amount.

(g) New application after denial. An entity may not submit another appli cation under §§ 417.140 through 417.144 for the same type of determination for four full months after the date of the notice in which HCFA denied the application.

(h) Disclosure of application infor mation under the Freedom of Informa tion Act. An applicant submitting material that he or she believes is protected from disclosure under 5 U.S.C. 552, the Freedom of Information Act, or because of exceptions provided in 45 CFR part 5, the Departinent's regu lations providing exceptions to disclo sure, should label the material "privileged" and include an explanation of the applicability of an exception described in 45 CFR part 5.

[52 FR 22321, June 11, 1987. Redesignated at 52 FR 36746, Sept. 30, 1987]

§ 417.144 Evaluation and determination of

qualification.

(a) The Secretary will evaluate ap plications submitted under §§ 417.140 through 417.144 and will obtain any additional necessary information, em ploying site visits, public hearings of any other appropriate procedures. If an application is incomplete, the Sec retary will notify the applicant and provide it with an opportunity to fur nish the missing information within 60 days of the date of the notice. Follow ing the evaluation of all relevant in formation, the Secretary will determine whether the applicant meets the appropriate requirements of §§ 417.142 and 417.143, section 1301 of the Public

Health Service Act, and §§ 417.100 through 417.109 of this subpart.

(b) Upon finding that an applicant (1) does not appear to meet the requirements for qualification and (2) appears to be able to meet the requirements within 60 days, the Secretary will issue to the applicant a notice of intent to deny qualification and a summary of the basis for this preliminary finding. Within 60 days of the date of this notice, the applicant may respond in writing to the issues or other matters which were the basis for the Secretary's preliminary finding, and may revise its application to remedy any defects identified by the Secretary.

(c) The Secretary will notify each applicant for qualification under §§ 417.140 through 417.144 of the determination and the basis for the determination.

(d) Upon the denial of an application for qualification under §§ 417.140 through 417.144, the Secretary will notify the applicant in writing and provide the applicant an opportunity to request a reconsideration of the determination. A request for reconsideration must be submitted in writing, within 60 days following the date of the notification of denial, be addressed to the officer or employee of the Department of Health and Human Services who has denied the application, and set forth the grounds upon which the reconsideration is requested, specifying the material issues of fact and of law upon which the applicant relies. Reconsideration will be based upon the record compiled during the qualification review proceedings, materials submitted in support of the request for reconsideration, and other relevant materials available to the Secretary. The Secretary will provide written notice of the reconsidered determination to the applicant. The notice will set forth the basis for the determination.

(e) The Secretary will publish on a monthly basis in the FEDERAL REGISTER the names, addresses, and descriptions of the service areas of the newly qualified HMOs. A cumulative list of qualified HMOs may be obtained by writing the Document Control Unit, Office of Health Maintenance Organizations, Park Building, 3rd Floor, 12420 Park

§ 417.150 Definitions.

In addition to the terms defined in §§ 417.100 and 417.141, as used in §§ 417.150 through 417.159:

Bargaining representative means a representative designated or selected for the purposes of collective bargaining under the National Labor Relations Act, as amended, (29 U.S.C. 151 et seq.) or under the Railway Labor Act, as amended, (45 U.S.C. 151 et seq.) or under a public entity collective bargaining agreement, or under the laws of any State or political subdivison thereof, or other employee representative designated or selected under any law.

Carrier means a voluntary association, corporation, partnership, or other organization which is engaged in providing, paying for, or reimbursing all or part of the cost of health benefits under group insurance policies or contracts, medical or hospital service agreements, membership or subscription contracts, or similar group arrangements, in consideration of premiums or other periodic charges payable to the carrier.

Collective bargaining agreement means an agreement entered into between an employing entity and the bargaining representative of its employees, and includes agreements entered into on behalf of groups of employing entities with the bargaining representative of their employees in accordance with the provisions of the National Labor Relations Act, as amended (29 U.S.C. 151 et seq.), or the Railway Labor Act, as amended, (45

U.S.C. 151 et seq.) or the laws of any State or political subdivision thereof.

Designee means any person or entity authorized to act on behalf of an employing entity or a group of employing entities to offer the option of membership in a qualified health maintenance organization to their eligible employ

ees.

Eligible employee means an employee who is eligible to participate in a health benefits plan.

Employee means any individual employed by an employer or public entity on a full- or part-time basis.

Employer shall have the meaning given that term in section 3(d) of the Fair Labor Standards Act of 1938, as amended, (29 U.S.C 203(d), 203(x)), except that the term "employer" includes non-appropriated fund instrumentalities of the Government of the United States, but does not include (1) the Government of the United States, the government of the District of Columbia or any territory or possession of the United States, a State or any political subdivision thereof, or any agency or instrumentality (including the United States Postal Service and Postal Rate Commission) of any of the foregoing; or (2) a church, convention or association of churches, or any organization operated, supervised, or controlled by a church, convention, or association of churches which organization (i) is an organization described in section 501(c)(3) of the Internal Revenue Code of 1954, and (ii) does not discriminate (A) in the employment, compensation, promotion, or termination of employment of any personnel, or (B) in the extension of staff or other privileges to any physician or other health personnel, because such persons seek to obtain or obtained health care, or participate in providing health care, through an HMO.

Employing entity means an employer or public entity.

Employing entity-employee contract means a legally enforceable agreement (other than a collective bargaining agreement) between an employing entity and its employees for the provision of, or payment for, health benefits for its employees, or for its employees and their eligible dependents.

Group enrollment period means the period of at least 10 working days each calendar year during which each eligible employee is given the opportunity to select among the alternatives included in a health benefits plan.

Health benefits means health benefits and services.

Health benefits contract means a contract or other agreement between an employing entity or a designee and a carrier for the provision of, or payment for, health benefits to eligible employees or to eligible employees and their eligible dependents.

Health benefits plan means any arrangement for the provision of, or payment for, any of the basic and supplemental health benefits described in §§ 417.101 and 417.102 of this subpart offered to eligible employees, or to eligible employees and their eligible dependents, by or on behalf of an employing entity.

Public entity means a State as defined by section 2(f) of the Public Health Service Act (42 U.S.C. 201(f)), a political subdivision of a State, or any agency or instrumentality of the foregoing. "Political subdivision" includes counties, parishes, townships, cities, municipalities, towns, villages, and incorporated villages.

To offer a health benefits plan means to make participation in a health benefits plan available to eligible employees, or to eligible employees and their eligible dependents, and to make a financial contribution to the plan whether the financial contribution by the employing entity on behalf of these employees is made directly or indirectly, (e.g. through payments on any basis into a health and welfare trust fund).

[45 FR 72517, Oct. 31, 1980, as amended at 47 FR 19341, May 5, 1982; Redesignated at 52 FR 36746, Sept. 30, 1987]

§ 417.151 Applicability.

The regulations in §§ 417.150 through 417.159 apply in each calendar year to:

(a) Each employer which was required during any calendar quarter of the previous calendar year to pay its employees the minimum wage specified by section 6 of the Fair Labor

Standards Act of 1938 (or would have been required to pay its employees the minimum wage but for section 13(a) of that Act) and which during any calendar quarter of the previous calendar year employed an average of not less than 25 employees; and

(b) Each public entity, as a condition of the payment to the State of funds under sections 314(d), 317, 318, 1002, 1525, or 1610 of the Public Health Service Act, which during any calendar quarter of the previous calendar year employed an average of not less than 25 employees, if the employer or public entity:

(1) Offers, or if there is offered on behalf of the employer or public entity, in the calendar year beginning after any calendar quarter of the previous calendar year in which the employer or public entity employed an average of not less than 25 employees, a health benefits plan to its eligible employees; and

(2) Has received a written request for inclusion in the employer's or public entity's health benefits plan (which request meets the requirements of § 417.152) from one or more qualified HMOs which provide basic health services in an HMO service area in which at least 25 employees of the employer or the public entity, respectively, reside.

§ 417.152 Requirements for a request for inclusion of the HMO option in a health benefits plan; employing entity

response.

an

(a) Time limitations. (1) Unless otherwise agreed to by the HMO and the employing entity or designee, HMO's request for inclusion in an employing entity's health benefits plan must be received by the employing entity or designee no more than 365 days and not less than 180 days before the expiration or renewal date of a health benefits contract or employing entity-employee contract, and no more than 365 days and not less than 180 days before the expiration date of a collective bargaining agreement, or in the case of a public entity, such longer period as may be prescribed by State law.

(2) For the purposes of this paragraph:

(i) A collective bargaining agreement that is automatically renewable or without fixed term shall be treated as having an expiration or renewal date on the earliest anniversary date of the collective bargaining agreement.

(ii) A collective bargaining agreement that is for a fixed term in excess of one year and provides that its terms regarding health benefits may be renegotiated during the term of the agreement shall be treated as having an expiration or renewal date at the time provided by the agreement for discussion of these changes.

(b) To whom the written request is to be directed. The request for inclusion must be in writing and (1) in the case of an employer, be directed specifically to the employer's managing official at the employer site being solicited or to the employer's designee; and (2) in the case of a public entity, be directed to the Chief Executive Officer of the public entity, or to the public entity's designee.

(c) Information which the request must include. The request must (1) Provide evidence that the Secretary has determined that the HMO is a qualified HMO in accordance with section 1310(d) of the Public Health Service Act and §§ 417.140 through 417.144 of this subpart;

(2) Describe the HMO's service area or proposed service area and give the dates basic and supplemental health services will be provided in the area or areas;

(3) Indicate whether the services of health professionals which are provided as basic health services are provided through health professionals who are (i) members of the staff of the organization, or (ii) members of a medical group(s), or (iii) members of an individual practice association(s), or (iv) health professionals who have contracted with the HMO for the provision of these services or (v) any combination of the above;

(4) If the HMO provides health services through an individual practice association(s), provide a listing of member physicians by name, specialty, and whether they are accepting new patients from the HMO membership. This listing must be current within 90

days of the date of the request for inclusion;

(5) If the HMO provides health services other than through an individual practice association, provide for each ambulatory care facility the facility's address, days and hours of operation, a statement whether it is accepting new patients from the HMO membership, and the names and specialities of the facility's providers of basic and supplemental health services. This information must be current within 90 days of the date of the request for inclusion;

(6) List the hospitals where HMO members will be provided basic and supplemental health services;

(7) Identify (i) the nature of the HMO entity, i.e., for profit or nonprofit, public or private, sole proprietorship, partnership, or stock or nonstock corporation, (ii) the members of the HMO's policymaking body, and (iii) the principal managing officer of the HMO;

(8) Provide a statement of the HMO's capacity to enroll new members and the likelihood of any future limitations on enrollment;

(9) Provide the HMO's most recently audited annual financial statements;

(10) Provide proposed implementing agreements between the HMO and the employer, public entity, or designee for the HMO offering;

(11) Provide sample copies of solicitation brochures and membership literature which will be used in the offer of the HMO alternative to employees;

(12) State either (i) the HMO's current rates, including copayments, if any, for basic (and uniformly included supplemental) health services and the dates these rates became effective, or (ii) the HMO's estimated rates for these services.

(d) Employing entity response. An employing entity or designee shall respond in writing to an HMO's request for inclusion no later than 60 days after the receipt of the request and shall state whether the employing entity has 25 or more employees who reside within the service area of the HMO. If so, the employing entity or designee shall also state the expiration or renewal dates of its health benefits contracts, employer-employee con

tracts, and public entity-employee contracts covering these employees, the amount of the employing entity's current contribution (and, where applicable, the employee's contribution) for health benefits, including the dates those contribution levels became effective, and the expiration dates of any collective bargaining agreements covering these employees. In addition, in this response, a public entity or its designee shall furnish the HMO with a description of health benefits, including limitations and exclusions, required under State law or regulation for health benefits plans for employees of the public entity.

(e) Effect of inadequate request. If the request for inclusion does not meet the requirements of paragraphs (a) through (c) of this section, the employing entity is not required to include the HMO alternative in its employees' health benefits plan under § 417.154 until the HMO makes its request in accordance with those paragraphs. In such a case, the employing entity or its designee shall, within 60 days after receipt of the request, notify the HMO in writing of the basis for its conclusion that the request does not meet the requirements of paragraphs (a) through (c) of this section.

(a)

(f) New request for inclusion. If an employing entity includes the HMC alternative in a health benefits pian in accordance with a request meeting the requirements of paragraphs through (c) of this section, the employing entity shall offer the HMO alternative to the employees described in § 417.155(e)(2) during the entire health benefits year. However, if no employees enroll during the health benefits year, the HMO seeking inclusion in the health benefits plan for subsequent enrollment periods shall submit a new request in accordance with paragraphs (a) through (c) of this section.

[45 FR 72517, Oct. 31, 1980, as amended at 50 FR 6176, Feb. 14, 1985. Redesignated at 52 FR 36746, Sept. 30, 1987]