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entitled 'Medicare and Medicaid: Consumer Protection Requirements 
Affecting Dual-Eligible Beneficiaries Vary across Programs, Payment 
Systems, and States' which was released on December 5, 2012. 

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United States Government Accountability Office: 
GAO: 

Report to Congressional Requesters: 

December 2012: 

Medicare and Medicaid: 

Consumer Protection Requirements Affecting Dual-Eligible Beneficiaries 
Vary across Programs, Payment Systems, and States: 

GAO-13-100: 

GAO Highlights: 

Highlights of GAO-13-100, a report to congressional requesters. 

Why GAO Did This Study: 

Dual-eligible beneficiaries are low-income seniors and individuals 
with disabilities enrolled in Medicare and Medicaid. In 2010, there 
were about 9.9 million dual-eligible beneficiaries. Both programs have 
requirements to protect the rights of beneficiaries. These 
requirements are particularly important to dual-eligible 
beneficiaries, who must navigate the rules of both programs and 
generally have poorer health status. 

To help inform efforts to better integrate the financing and care for 
dual-eligible beneficiaries, GAO (1) compared selected consumer 
protection requirements within Medicare FFS and Medicare Advantage, 
and Medicaid FFS and managed care, and (2) described related 
compliance and enforcement actions taken by CMS and selected states 
against managed care plans. 

GAO identified consumer protections of particular importance to dual-
eligible beneficiaries on the basis of expert interviews and 
literature, including protections related to enrollment, provider 
networks, and appeals. GAO reviewed relevant federal and state 
statutes, regulations, and policy statements, and interviewed 
officials from CMS and four states selected on the basis of their 
share of dual-eligible beneficiaries and use of managed care (Arizona, 
California, Minnesota, and North Carolina). GAO analyzed data on 
compliance and enforcement actions in Medicare Advantage and Medicaid 
managed care from January 1, 2010, through June 30, 2012. 

What GAO Found: 

Medicare and Medicaid consumer protection requirements vary across 
programs, payment systems-—either fee-for-service (FFS) or managed 
care—-and states. Within Medicare, enrollment in managed care through 
the Medicare Advantage (MA) program must always be voluntary, whereas 
state Medicaid programs can require enrollment in managed care in 
certain situations. For example, Arizona requires nearly all 
beneficiaries, including dual-eligible beneficiaries, to enroll in 
managed care, but in North Carolina all beneficiaries are in FFS. In 
addition, Medicare and state Medicaid programs require managed care 
plans to meet certain provider network requirements to ensure 
beneficiaries have adequate access to covered services. For example, 
MA plans in rural counties must have at least one primary care 
provider per 1,000 beneficiaries. Subject to federal parameters, 
states establish network requirements for their Medicaid programs. For 
example, in California every plan must have at least one primary care 
provider per 2,000 beneficiaries. Finally, Medicare and Medicaid also 
have different appeals processes that do not align with each other. 
The Medicare appeals process has up to five levels of review for 
decisions to deny, reduce, or terminate services, with certain 
differences between FFS and MA. In Medicaid, states can structure 
appeals processes within federal parameters. States must establish a 
Medicaid appeals process that provides access to a state fair hearing 
and Medicaid managed care plans must provide beneficiaries with the 
right to appeal to the plan, though states can determine the sequence 
of these appeals. For example, Arizona requires beneficiaries to 
appeal to the managed care plan first, while a beneficiary in 
Minnesota may go directly to a state fair hearing without an initial 
appeal to the managed care plan. 

Both the Centers for Medicare & Medicaid Services (CMS), the agency 
that administers the Medicare program and oversees states’ operation 
of Medicaid programs, and states took a range of compliance and 
enforcement actions to help ensure that MA and Medicaid managed care 
organizations complied with their consumer protection requirements. 
Between January 1, 2010, and June 30, 2012, CMS took 546 compliance 
actions against MA organizations on the issues GAO identified as 
generally related to consumer protections of particular importance to 
dual-eligible beneficiaries. Compliance actions included notices, 
warning letters, and requests for corrective action plans (CAP). 
During the same period, CMS took 22 enforcement actions against MA 
organizations, including the imposition of 17 civil money penalties—
nearly all for late or inaccurate marketing materials. For five 
serious violations, CMS suspended enrollment into the MA plan and 
suspended the MA plan’s ability to market to beneficiaries. Similarly, 
states used notices, letters, fines, and CAPs to improve Medicaid 
managed care plan compliance with Medicaid consumer protection 
requirements. During the same period, Arizona, California, and 
Minnesota required managed care plans to undertake 91 corrective 
action plans, 52 percent of which related to problems with plans’ 
appeals and grievances processes. 

In commenting on a draft of the report, the Department of Health and 
Human Services noted that the report was an accurate assessment of the 
programs we reviewed. 

View [hyperlink, http://www.gao.gov/products/GAO-13-100]. For more 
information, contact Kathleen King at (202) 512-7114 or kingk@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

Medicare and Medicaid Consumer Protection Requirements Vary across 
Programs, Payment Systems, and States: 

CMS and States Used a Range of Actions to Help Ensure Organizations 
Comply with Medicare and Medicaid Consumer Protection Requirements: 

Agency Comments: 

Appendix I: Information on Selected States' Medicaid Programs: 

Appendix II: Description of Selected Federal and State Requirements: 

Appendix III: Comments from the Department of Health and Human 
Services: 

Appendix IV: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: Selected CMS Compliance Actions against Medicare Advantage 
(MA) Organizations, January 1, 2010-June 30, 2012: 

Table 2: CMS Enforcement Actions against Medicare Advantage (MA) 
Organizations, January 1, 2010-June 30, 2012: 

Table 3: Selected Requirements in Medicare and Medicaid FFS: 

Table 4: Selected Requirements in Medicare Advantage (MA) and Medicaid 
Managed Care: 

Figure: 

Figure 1: Number of and Reasons for Corrective Action Plans (CAP) 
Required by Selected States, January 1, 2010-June 30, 2012: 

Abbreviations: 

ADL: activities of daily living: 

ALJ: administrative law judge: 

CAM: Compliance Activity Module: 

CAP: corrective action plan: 

CMP: civil money penalties: 

CMS: Centers for Medicare & Medicaid Services: 

D-SNP: dual-eligible special needs plan: 

FFS: fee-for-service: 

FTE: full-time equivalent: 

HCBS: home-and community-based services: 

IADL: instrumental activities of daily living: 

MA: Medicare Advantage: 

MMA: Medicare Prescription Drug, Improvement, and Modernization Act of 
2003: 

MSC+: Minnesota Senior Care Plus: 

MSHO: Minnesota Senior Health Options: 

PACE: Program for All-Inclusive Care for the Elderly: 

PCCM: primary care case management: 

QIC: qualified independent contractor: 

SNF: skilled nursing facility: 

[End of section] 

United States Government Accountability Office: 
Washington, DC 20548: 

December 5, 2012: 

Congressional Requesters: 

About 9.9 million low-income seniors and persons with disabilities 
were enrolled in both the Medicare and Medicaid programs in 2010. 
[Footnote 1] Known as "dual-eligible beneficiaries," many of these 
individuals have significantly more health care needs than other 
beneficiaries in either program. In fiscal year 2008, dual-eligible 
beneficiaries accounted for about 17 percent of the Medicare 
population but 29 percent of Medicare spending,[Footnote 2] and 16 
percent of the Medicaid population but about 35 percent of Medicaid 
spending.[Footnote 3] Health care spending for dual-eligible 
beneficiaries in 2010 exceeded $300 billion.[Footnote 4] 

Both Medicare and Medicaid can be provided in a fee-for-service (FFS) 
or managed care payment system. Under FFS, healthcare providers are 
paid on a per-service basis. Under managed care, either the Centers 
for Medicare & Medicaid Services (CMS), the agency that administers 
Medicare, or the state Medicaid agency contracts with managed care 
organizations to provide covered health care services in return for a 
fixed monthly payment per enrollee. Under Medicare managed care, 
private organizations offer health plans through the Medicare 
Advantage program. These plans are referred to as Medicare Advantage, 
or MA, plans. 

Whether within the context of FFS, managed care, or both, dual-
eligible beneficiaries navigate both the Medicare and Medicaid 
programs to access services. Under Medicare, dual-eligible 
beneficiaries have access to coverage for most acute care services, 
such as care provided by physicians or inpatient hospitals, post-acute 
skilled nursing facility (SNF) care, and prescription drugs. Under 
state Medicaid programs, dual-eligible beneficiaries who qualify also 
have access to coverage for long-term nursing facility care and home-
and community-based services. These beneficiaries may also qualify for 
payment of Medicare premiums and cost sharing.[Footnote 5] 

Both the Medicare and Medicaid programs have consumer protection 
requirements to help ensure that beneficiaries have access to health 
care providers and services covered under the programs. Such 
protections generally apply to all beneficiaries, but some are of 
particular importance to dual-eligible beneficiaries. Dual-eligible 
beneficiaries may have a greater need for health care services because 
of increased physical and mental health needs. Further, dual-eligible 
beneficiaries, because they are in both programs, face navigating the 
different requirements in the two separate programs. For instance, a 
dual-eligible beneficiary who wants to appeal a denial of benefits 
must first determine which program denied the benefit, because the 
entity to which he or she needs to appeal and the time frames they 
have for making that appeal may differ depending on whether the 
service was covered by Medicare or Medicaid, or which program has 
primary responsibility for payment. 

To integrate benefits more effectively under the Medicare and Medicaid 
programs, and to improve the coordination between the federal 
government and states to ensure that dual-eligible beneficiaries get 
access to the items and services to which they are entitled, the 
Patient Protection and Affordable Care Act established the Federal 
Coordinated Health Care Office (also known as the Medicare-Medicaid 
Coordination Office) within CMS.[Footnote 6] CMS administers the 
Medicare program as well as oversees the design and operation of state 
Medicaid programs. Goals for the Medicare-Medicaid Coordination Office 
include increasing dual-eligible beneficiaries' understanding of and 
satisfaction with coverage under Medicare and Medicaid and aligning 
the requirements between the two programs. To support these efforts, 
CMS is working with states to develop demonstrations to integrate 
Medicare and Medicaid for dual-eligible beneficiaries. Key objectives 
are to improve beneficiary experience in accessing care, improve 
quality, eliminate cost shifting between Medicare and Medicaid, and 
achieve cost savings for states and CMS. Twenty-six states have 
proposed demonstrations to integrate the care of dual-eligible 
beneficiaries, starting in either 2013 or 2014. 

As CMS's integrated care demonstrations proceed, you were interested 
in understanding the requirements related to consumer protections of 
particular importance to dual-eligible beneficiaries. Such an 
understanding will help policymakers assess the demonstrations and any 
future integration efforts. You were also interested in information on 
enforcement tools available to CMS and states to ensure that managed 
care organizations comply with these requirements, as well as the 
recent compliance and enforcement actions taken by CMS and states 
against Medicare and Medicaid managed care plans. This study: 

1. compares selected consumer protection requirements in Medicare FFS, 
Medicare Advantage, Medicaid FFS, and Medicaid managed care; and: 

2. describes recent compliance and enforcement actions generally 
related to these consumer protections taken by the federal government 
and selected state governments against Medicare Advantage plans and 
Medicaid managed care plans. 

To compare consumer protections associated with Medicare and Medicaid, 
we identified and defined categories of consumer protections that are 
particularly important to dual-eligible beneficiaries on the basis of 
a review of the literature and interviews with researchers 
knowledgeable about the experiences of dual-eligible beneficiaries. We 
identified and defined six such categories: enrollment choice, 
[Footnote 7] continuity of care, provider networks, marketing, scope 
of home health and nursing facility services,[Footnote 8] and appeals. 
[Footnote 9] With respect to continuity of care, provider networks, 
and marketing, we reviewed those requirements only with respect to 
their application in managed care.[Footnote 10] We reviewed relevant 
federal statutes, regulations, and policy statements and interviewed 
federal officials to describe requirements in Medicare FFS, Medicare 
Advantage,[Footnote 11] Medicaid FFS, and Medicaid managed care plans. 
[Footnote 12] 

We also selected four states for review to provide illustrative 
examples of the variation in consumer protection requirements among 
state Medicaid programs. We chose the four states to achieve a range 
in terms of the share of dual-eligible beneficiaries in each state's 
Medicaid population and each state's overall use of managed care 
within Medicaid. The four states we selected were Arizona, California, 
Minnesota, and North Carolina. (See app. I for information on each 
state's Medicaid program.) For each of these states, we focused on 
state requirements as related to the federal requirements summarized 
above. To describe these state requirements, we interviewed state 
Medicaid officials, and reviewed relevant state statutes and 
regulations, state contracts with health plans, and policy manuals. 

To describe recent compliance and enforcement actions generally 
related to the six categories of consumer protections taken by the 
federal government and selected state governments, we interviewed CMS 
officials about federal compliance and enforcement actions the agency 
can take against MA plans or Medicaid managed care plans, 
respectively. For the Medicare program, we also analyzed data from 
CMS's Compliance Activity Module (CAM) for the period January 1, 2010, 
through June 30, 2012. The CAM includes information on all federal 
compliance actions taken against MA plans. To assess the reliability 
of the CAM data, we interviewed CMS staff and reviewed the system 
documentation. We determined that the data were sufficiently reliable 
for the purposes of this report. In addition, we analyzed the MA 
enforcement letters posted on the CMS website. To describe recent 
state compliance and enforcement actions in the Medicaid program, we 
interviewed Medicaid officials in each of the same four states. We 
received information from those states with managed care programs on 
the numbers and types of compliance and enforcement actions taken 
against Medicaid managed care plans, as well as the general reasons 
for these actions. 

The categories of consumer protections we examined in both Medicare 
and Medicaid are generally applicable to all beneficiaries in these 
two programs, not just dual-eligible beneficiaries. We note those 
cases where specific protections for dual-eligible beneficiaries are 
different than for other beneficiaries in Medicare or Medicaid. We did 
not evaluate the adequacy of the consumer protections we examined in 
terms of achieving their intended goal. The data on compliance and 
enforcement actions, both at the federal and state level, allowed us 
to report actions taken in response to issues that were generally 
related to a broad category of the consumer protection requirements we 
identify in this report and that affected or could have affected any 
Medicare or Medicaid beneficiary. We were unable to identify those 
actions that addressed the specific type of consumer protection 
requirements discussed in this report or that only affected dual-
eligible beneficiaries. We did not evaluate the adequacy of the 
federal or state oversight systems or the specific performance of 
managed care plans in either program. 

We conducted our work from June 2012 to December 2012 in accordance 
with all sections of GAO's Quality Assurance Framework that are 
relevant to our objectives. The framework requires that we plan and 
perform the engagement to obtain sufficient and appropriate evidence 
to meet our stated objectives and to discuss any limitations in our 
work. We believe that the information and data obtained, and the 
analysis conducted, provide a reasonable basis for any findings and 
conclusions in this product. 

Background: 

Dual-eligible beneficiaries--individuals eligible for both Medicare 
and Medicaid--generally fall into two categories: low-income seniors 
(those aged 65 years old and over) and individuals with disabilities 
under the age of 65 years. Requirements to protect the rights of 
beneficiaries under both programs are of particular importance to dual-
eligible beneficiaries because of their generally greater health care 
needs. Several efforts have been made in the past to better integrate 
care for dual-eligible beneficiaries. 

Medicare: 

Medicare is a federally financed program that in 2011 provided health 
insurance coverage to nearly 49 million beneficiaries--people age 65 
and older, certain individuals with disabilities, and those with end-
stage renal disease. In Medicare FFS, beneficiaries may choose their 
health care providers among any enrolled in Medicare. However, CMS 
also contracts with MA organizations, private entities that offer 
managed care plans to Medicare beneficiaries. As of 2011, about 25 
percent of Medicare beneficiaries were enrolled in a MA plan. 

As part of the agency's oversight of MA plans, CMS responds to 
complaints from beneficiaries and other parties, conducts 
surveillance, and conducts compliance audits. CMS responds to 
complaints from beneficiaries, health care providers, and other 
parties that come into the agency through a 1-800-MEDICARE phone line. 
It is through this mechanism that CMS generally resolves issues that 
are beneficiary-specific.[Footnote 13] CMS conducts surveillance by 
having routine discussions with managed care organizations, monitoring 
plan-submitted data, and tracking and monitoring complaint rates by MA 
plan and complaint category. CMS uses compliance audits to assess 
whether a managed care organization's operations are consistent with 
federal laws, regulations, and CMS policies and procedures. Audits 
typically involve a combination of desk reviews of documents submitted 
by MA organizations, and, at CMS's discretion, site visits. 

Medicaid: 

Medicaid is a joint federal-state program that finances health care 
coverage for certain low-income individuals.[Footnote 14] To receive 
federal matching funds for services provided to Medicaid 
beneficiaries, each state must submit a state Medicaid plan for 
approval by CMS. The state Medicaid plan defines how the state will 
operate its Medicaid program, including which populations and services 
are covered. 

States must operate their Medicaid programs within broad federal 
parameters. While complying with these federal requirements, however, 
states have the flexibility to tailor their programs to the 
populations they serve, including the imposition of additional 
protections for beneficiaries. For example, states generally are 
required by federal Medicaid law to cover certain benefits, while 
other benefits may be included at a state's option. Subject to CMS 
approval, states may choose to operate a portion of or their entire 
Medicaid programs as FFS or managed care. With respect to managed 
care, states vary widely in terms of the scope of services they 
provide and the populations they enroll.[Footnote 15] 

States have certain options when considering whether to enroll 
Medicaid beneficiaries into managed care, including whether enrollment 
is voluntary or mandatory. States may obtain the authority to 
mandatorily enroll Medicaid beneficiaries into managed care plans with 
CMS approval of a state plan amendment. However, under federal law, 
states cannot require certain categories of beneficiaries, including 
dual-eligible beneficiaries, to mandatorily enroll under this 
authority.[Footnote 16] Alternatively, states may obtain the authority 
to enroll Medicaid beneficiaries, including dual-eligible 
beneficiaries, into managed care through the approval of two types of 
Medicaid waivers:[Footnote 17] 

* Section 1115 of the Social Security Act provides the Secretary of 
Health and Human Services with the authority to grant states waivers 
of certain federal Medicaid requirements and allow costs that would 
not otherwise be eligible for federal funds for the purpose of 
demonstrating alternative approaches to service delivery.[Footnote 18] 

* Under a 1915(b) waiver, the Secretary may waive certain Medicaid 
requirements, allowing states to operate a managed care program to the 
extent it is cost-effective and consistent with the purposes of the 
program.[Footnote 19] 

Historically, states have been more likely to require beneficiaries 
who are not dually eligible, such as children and families, to enroll 
in Medicaid managed care plans. However, more recently states are 
beginning to move dual-eligible beneficiaries into managed care plans 
as well. In 2010, about 9.3 percent of dual-eligible beneficiaries 
were enrolled in Medicaid managed care plans.[Footnote 20] 

Another type of waiver, the 1915(c) waiver, is the primary means by 
which states provide home-and community-based services (HCBS) to 
Medicaid beneficiaries. Under a 1915(c) waiver, states can provide 
HCBS that may not be available under the state's Medicaid plan to 
beneficiaries that would, if not for the services provided under the 
waiver, require institutional care.[Footnote 21] Home health care is 
one of the services that states may provide under a 1915(c) waiver or 
through the state's Medicaid plan, in addition to other services such 
as respite care, personal care, and case management. 

At the federal level, CMS oversight of state Medicaid programs 
includes monitoring the programs and providing guidance to states. 
States must provide assurances to CMS that they have mechanisms in 
place to ensure that any managed care organization with which the 
state contracts complies with federal regulations in order to obtain 
approval for enrolling Medicaid beneficiaries into managed care. 
Though CMS is not a party to the contract, states are required to 
obtain CMS approval of the contracts between states and managed care 
organizations in order to qualify for federal funding. States 
administer the day-to-day operations of their Medicaid programs. At 
the state level, requirements for Medicaid managed care plans are 
often included as part of the contract between the state and the 
managed care plan and may derive from federal or state law, 
regulations, or policies. States generally oversee managed care plans 
through a combination of informal and formal monitoring that may 
include regular meetings, reviews of plan-submitted reports, audits, 
and financial reviews.[Footnote 22] 

Selected Consumer Protection Requirements: 

Medicare and Medicaid have a number of requirements intended to 
protect the rights of beneficiaries, some of which are of particular 
importance to dual-eligible beneficiaries. 

Enrollment Choice: 

Medicare and Medicaid have requirements that specify the circumstances 
under which a beneficiary may be compelled to enroll in a managed care 
plan instead of obtaining services through the FFS program. How 
beneficiaries are enrolled in managed care, for example whether the 
enrollment is mandatory or voluntary, could have implications for dual-
eligible beneficiaries who may have more serious health care needs and 
who, because of cognitive impairments, may require assistance in 
understanding their options or the implications of their choices. 

Continuity and Coordination of Care: 

In general, federal law and regulations do not specifically require MA 
plans or Medicaid managed care plans to cover services provided by a 
beneficiary's previous providers if that provider is not in the plan's 
network when a beneficiary first enrolls in a plan or switches plans. 
There are limited circumstances when managed care plans are required 
to cover such services during a transition period. Medicare and 
Medicaid also have certain federal requirements for managed care plans 
to ensure coordination of at least some services for beneficiaries. 
Dual-eligible beneficiaries often have complex health care needs and, 
therefore, may see several different providers. Accordingly, 
continuing relationships with providers, as well as ensuring 
coordination of care, is of particular importance to this population. 
[Footnote 23] 

Provider Networks: 

Medicare and Medicaid have requirements for managed care plans to 
maintain provider networks that ensure beneficiaries can access a 
range of health care providers and obtain services in a timely manner. 
[Footnote 24] Within Medicaid managed care, provider participation 
problems have been specifically noted for specialty and dental care. 
[Footnote 25] 

Marketing Materials: 

Medicare and Medicaid have requirements about the type and format of 
materials provided to beneficiaries to promote enrollment into a 
managed care plan or communicate information about coverage and costs. 
Inappropriate marketing practices have in the past led some Medicare 
beneficiaries to enroll in MA plans in which they had not intended to 
enroll or that did not meet their health care needs. Inappropriate 
marketing may include activities such as providing inaccurate 
information about covered benefits and conducting prohibited marketing 
practices, such as door-to-door marketing without appointments and 
providing potential beneficiaries with meals or gifts of more than 
nominal value to induce enrollment. 

Scope of Services: 

Medicare and Medicaid have requirements about how beneficiaries can 
qualify for certain services and the scope of coverage provided. 
According to CMS, two services where coverage differences between 
Medicare and Medicaid are particularly problematic for dual-eligible 
beneficiaries are nursing facility services and home health care. 
While both programs cover these benefits, they differ in terms of how 
a dual-eligible beneficiary can qualify for the benefit and the scope 
of the coverage provided. As a result, there can be cost-shifting 
between the programs. 

Nursing Facility Services. Medicare and Medicaid both set requirements 
for the conditions a beneficiary must meet to become eligible for 
coverage of nursing facility services. Medicare's coverage of nursing 
facility care is limited to 100 days of post-hospital skilled nursing 
facility (SNF) services.[Footnote 26] SNF services may only be 
provided in an inpatient setting and include skilled nursing (such as 
intravenous injections, administration of prescription medications, 
and administration and replacement of catheters); room and board; and 
physical, occupational, and speech language therapies. In contrast, 
Medicaid's coverage of nursing facility services includes skilled 
nursing, rehabilitation needed due to injury, disability or illness, 
and long-term care.[Footnote 27] Under federal law, state Medicaid 
programs must cover nursing facility services for qualified 
individuals age 21 or over.[Footnote 28] All states have chosen to 
also offer the optional benefit of nursing facility services for 
individuals under 21 years of age. 

Medicare beneficiaries may continue to need nursing facility care 
after their Medicare benefit is exhausted. In such instances 
beneficiaries may pay privately or use any long-term care insurance 
they may have. In certain circumstances, the beneficiaries may also be 
eligible for Medicaid if, for example, they spend enough of their 
resources to meet Medicaid eligibility rules in their state. If the 
beneficiary does become dually eligible, the beneficiary may then 
qualify for Medicaid coverage of nursing facility services, beyond 
what Medicare covers. 

Overlapping coverage of nursing facility care in Medicare and Medicaid 
provides nursing facilities with a financial incentive to transfer 
dual-eligible beneficiaries back to hospitals when nursing facility 
care is being paid for by Medicaid.[Footnote 29] By transferring dual-
eligible beneficiaries from a nursing facility to a hospital, the 
nursing facility will qualify for what is generally a higher payment 
under Medicare when beneficiaries are readmitted and require skilled 
nursing services. One study of hospitalizations among dually eligible 
nursing facility residents in 2005 found that approximately 45 percent 
of hospitalizations among beneficiaries receiving Medicare SNF 
services or Medicaid nursing facility services were potentially 
avoidable.[Footnote 30] 

Home Health Care. Medicare and Medicaid both set requirements for how 
a beneficiary can qualify for home health services, and state Medicaid 
programs further refine these requirements for Medicaid coverage. 
Medicare's home health benefit covers skilled nursing services, 
physical therapy, speech-language pathology, occupational therapy, 
medical social services, and medical equipment.[Footnote 31] State 
Medicaid programs are required to cover home health services for 
certain categories of beneficiaries, including those who are entitled 
to nursing facility services under the state plan.[Footnote 32] Under 
Medicaid's home health benefit, states must cover nursing services, 
home health aide services, and medical supplies and equipment for use 
in the home. States may also choose to cover physical, occupational, 
or speech therapy under this benefit.[Footnote 33] The Medicare 
Payment Advisory Commission reported that some states have tried to 
increase the proportion of home health services for dual-eligible 
beneficiaries covered by Medicare, rather than Medicaid. For instance, 
some states have required home health agencies to show proof of a 
Medicare denial for home health services for a dual-eligible 
beneficiary before covering the service under Medicaid.[Footnote 34] 

Additionally, states also have the option of covering home-and 
community-based services, including home health care and personal care 
services, for beneficiaries under different authorities. Personal care 
is designed to provide assistance inside or outside the home with 
activities of daily living (ADL), instrumental activities of daily 
living (IADL), supervision or guidance with ADLs, or a mix of those. 
[Footnote 35] 

Appeals: 

Beneficiaries' ability to contest a determination that their benefits 
will be denied, reduced, or terminated is a basic right provided for 
both Medicare and Medicaid beneficiaries.[Footnote 36] The appeals 
process that a beneficiary must follow depends on whether the benefit 
being contested is a Medicare or Medicaid benefit. 

Programs to Integrate Medicare and Medicaid for Dual-Eligible 
Beneficiaries: 

For many years, efforts have been made to improve coordination of 
services for dual-eligible beneficiaries. One of these efforts is the 
Program of All-Inclusive Care for the Elderly (PACE), a provider-based 
program that serves frail, elderly individuals with the goal of 
keeping them in the community rather than in long-term care 
institutions as long as medically and socially feasible. PACE is 
covered under Medicare, and states may choose to cover the program as 
an optional benefit under Medicaid. According to CMS, nearly 94 
percent of 2011 enrollees in PACE were dual-eligible beneficiaries. 
Dual-eligible beneficiaries may enroll in PACE if they are age 55 or 
older, are certified by their state as being eligible for coverage of 
nursing facility services, and live in a PACE program's service area. 
PACE providers receive separate capitation payments from Medicare and 
their state's Medicaid program, which represent total reimbursement 
for all the services they provide, including primary, acute, and long-
term care; behavioral health services; prescription drugs; and end-of-
life care planning.[Footnote 37] The majority of PACE programs provide 
adult day care, where enrollees receive therapy, medical care, and 
social support from an interdisciplinary team. As of January 2012, 84 
PACE sites in 29 states enrolled about 21,000 beneficiaries.[Footnote 
38] 

Dual eligible special needs plans (D-SNP), first authorized by the 
Medicare Prescription Drug, Improvement, and Modernization Act of 2003 
(MMA),[Footnote 39] are a more recent attempt to integrate care for 
dual-eligible beneficiaries.[Footnote 40] D-SNPs are a type of MA plan 
exclusively for dual-eligible beneficiaries. As of 2011, about 9 
percent of dual-eligible beneficiaries nationally were enrolled in a D-
SNP, and another 10 percent were enrolled in other MA plans.[Footnote 
41] MA organizations seeking to offer D-SNPs must contract with the 
relevant state Medicaid agency.[Footnote 42] 

Medicare and Medicaid Consumer Protection Requirements Vary across 
Programs, Payment Systems, and States: 

There are key differences in enrollment choice requirements across the 
Medicare and Medicaid programs, the FFS and managed care payment 
systems and the selected states. Certain consumer protection 
requirements are unique to managed care plans in areas such as 
continuity and coordination of care and provider networks. Other 
consumer protection requirements also differ across the programs, 
payment systems, and selected states. 

Notable Differences Exist in Requirements for Enrollment Choice across 
the Programs, Payment Systems, and Selected States: 

Within Medicare, enrollment in managed care is always voluntary, 
whereas state Medicaid programs can require enrollment in managed care 
in certain situations. In Medicare, beneficiaries--including dual-
eligible beneficiaries--are enrolled in FFS unless they select an MA 
plan. In general, beneficiaries may select an MA plan voluntarily when 
they first become eligible for Medicare, during an annual coordinated 
election period,[Footnote 43] or during special election periods, such 
as when an MA plan's contract is terminated or discontinued in the 
area where a beneficiary lives or when CMS determines that 
beneficiaries meet exceptional conditions.[Footnote 44] CMS has 
created a special election period for dual-eligible beneficiaries, and 
accordingly, they may opt into MA or FFS or change MA plans at any 
time. They generally may select any MA plan, including D-SNPs, that 
serves the area where they live, though the number of plans available 
varies by area. MA plans may limit the providers from whom Medicare 
beneficiaries, including dual-eligible beneficiaries, may receive 
covered services,[Footnote 45] whereas beneficiaries in Medicare FFS 
may receive covered services from any provider enrolled in Medicare. 
[Footnote 46] 

In contrast, a Medicaid beneficiary's ability to choose to remain in 
FFS or enroll in managed care depends on how the state structures its 
Medicaid program. As an alternative to FFS, states can structure their 
Medicaid programs to require enrollment in managed care, or allow 
beneficiaries to choose between the two payment systems. Unlike in 
Medicare, states can mandatorily enroll beneficiaries, including dual-
eligible beneficiaries, into Medicaid managed care with CMS approval 
of a section 1115 demonstration waiver or section 1915(b) waiver. 
[Footnote 47] States mandating enrollment into a managed care plan 
generally must provide beneficiaries a choice of at least two plans, 
except in specific circumstances, such as in rural areas.[Footnote 48] 
Otherwise, similar to Medicare, the number of available Medicaid 
managed care plans varies, depending on how many plans are offered 
where the beneficiary lives. Subject to the terms and conditions of 
the waiver, Medicaid managed care plans can generally limit 
beneficiaries, including dual-eligible beneficiaries, to the plan's 
provider network,[Footnote 49] whereas beneficiaries in Medicaid FFS 
may receive covered services from any qualified Medicaid provider. 
[Footnote 50] CMS officials informed us, however, that for dual-
eligible beneficiaries, the agency does not have the authority to 
allow states to limit the beneficiary's choice of provider for 
Medicare covered benefits when mandatorily enrolling them into 
Medicaid managed care plans. 

State requirements vary with respect to Medicaid enrollment into FFS 
or managed care and for choice between plans if beneficiaries enroll 
in managed care. For example: 

* Arizona: The state requires Medicaid beneficiaries, including all 
dual-eligible beneficiaries, to enroll in either the Medicaid acute or 
long-term managed care programs under a section 1115 demonstration 
waiver. Beneficiaries in the state's acute care program have a choice 
among managed care plans. Beneficiaries enrolled in the long-term care 
program generally have a choice of plans if they live in or are moving 
to Pima or Maricopa counties, which are the state's two most populated 
counties and the only counties where more than one long-term care plan 
operates. 

* California: Medicaid beneficiaries' choice of payment system varies 
depending on where they live among California's 58 counties. In 28 
mostly rural counties all dual-eligible beneficiaries are in FFS. 
[Footnote 51] In the remaining 30 counties, the state has three 
different Medicaid programs for enrolling beneficiaries in managed 
care. Dual-eligible beneficiaries in 14 California counties are 
mandatorily enrolled in managed care through a county-organized health 
system, which is a health plan operated by a county that contracts 
with the state to provide health care benefits to Medicaid 
beneficiaries. Because there is only one plan in each of these 
counties, beneficiaries enrolled in the county-organized health 
systems have no choice between plans. Dual-eligible beneficiaries in 
14 counties may choose between FFS or the state's Two-Plan managed 
care program. Under the Two-Plan program, beneficiaries who enroll in 
managed care have a choice between the Local Initiative Health Plan--a 
public agency that is independent of the county--and a commercial 
plan. In the remaining two counties--Sacramento and San Diego--dual-
eligible beneficiaries can choose between FFS or the Geographic 
Managed Care program.[Footnote 52] Under the Geographic Managed Care 
program, dual-eligible beneficiaries who enroll in managed care can 
choose from several commercial managed care plans. 

* Minnesota: Dually eligible seniors in Minnesota must enroll in one 
of two managed care programs, and dual-eligible beneficiaries who 
became eligible on the basis of their disabilities can choose whether 
to enroll in a managed care program. Minnesota has a 1915(b)(c) waiver 
to mandatorily enroll dually eligible seniors in a Medicaid managed 
care plan.[Footnote 53] Alternatively, these seniors can choose to 
enroll in a participating D-SNP that, under contract with the state, 
integrates Medicare and Medicaid financing and services. Dual-eligible 
beneficiaries age 18 to 64 who have disabilities may opt back into 
FFS. If they do not opt into FFS, they are enrolled in managed care 
and may opt into FFS at any time. Whether dual-eligible beneficiaries 
have a choice between plans varies depending on the county where they 
live. 

* North Carolina: According to North Carolina Medicaid officials, all 
Medicaid beneficiaries, including dual-eligible beneficiaries, are in 
FFS, and the majority of dual-eligible beneficiaries are in a primary 
care case management program, where primary care providers are paid on 
a FFS basis, in addition to receiving a monthly fee to perform certain 
care coordination activities. 

Certain Requirements for Continuity and Coordination of Care, Provider 
Networks, and Marketing Materials Are Unique to Managed Care: 

Continuity and Coordination of Care: 

In general, federal law and regulations do not specifically require MA 
plans or Medicaid managed care plans to cover services provided by a 
beneficiary's previous providers if that provider is not in the plan's 
network when a beneficiary first enrolls in a plan or switches plans. 
There are limited circumstances when managed care plans are required 
to cover such services during a transition period. MA organizations 
must ensure that covered services are available and accessible to 
beneficiaries. In implementing this requirement, CMS officials 
informed us that MA organizations must ensure that there is no gap in 
coverage or problems with access to medically necessary services when 
a beneficiary must change to a plan-contracted provider. For example, 
a beneficiary receiving oxygen may need to switch to a new oxygen 
supplier when the beneficiary joins the MA plan or switches plans. As 
the beneficiary transitions to the new oxygen supplier, the MA plan 
may need to reimburse the beneficiary's previous provider to ensure 
that there is no gap in coverage, and that the beneficiary maintains 
access to medically necessary services. MA organizations also must 
ensure coordination of services through various arrangements with 
network providers, such as programs that coordinate plan services with 
community and social services in the area, such as services offered by 
an area agency on aging.[Footnote 54] Additionally, D-SNPs or any 
other type of SNP must provide dual-eligible beneficiaries with access 
to appropriate staff to coordinate or deliver all services and 
benefits, and coordinate communication among plan personnel, 
providers, and the dual-eligible beneficiaries themselves.[Footnote 55] 

As with Medicare, Medicaid managed care plans are generally not 
required to cover services by a beneficiary's previous provider if 
that provider is not in the plan's network.[Footnote 56] However, 
states determine to what extent Medicaid managed care plans must 
provide beneficiaries with access to a person or entity primarily 
responsible for coordinating health services on the basis of the 
services the plan must cover.[Footnote 57] Individual states may have 
continuity of care requirements for their Medicaid managed care 
programs, as defined under an applicable waiver or state requirements. 
For example, in California, beneficiaries newly enrolled in managed 
care plans may request and receive coverage of the completion of 
treatments initiated by an out-of-network provider with whom they have 
an ongoing relationship in certain circumstances, such as for the 
treatment of a terminal illness or acute condition. The length of the 
coverage depends on the stability of the beneficiary and the nature of 
the medical condition.[Footnote 58] Minnesota also has continuity of 
care requirements. For newly enrolled dually eligible seniors, managed 
care plans must cover medically necessary services that an out-of-
network provider, a different plan, or the state agency authorized 
before the dual-eligible beneficiary enrolled with the managed care 
plan. However, the plan is allowed to require that the dual-eligible 
beneficiary receive the services from an in-network provider if that 
would not create an undue hardship on the dual-eligible beneficiary 
and the services are clinically appropriate. Arizona requires that 
managed care plans employ transition coordinators to ensure continuity 
of care, and beneficiaries in the state's long-term care program 
receive additional case management for help navigating their care 
options, including planning, coordinating and facilitating access to 
services. 

Provider networks: 

Medicare and state Medicaid programs require managed care plans to 
meet certain provider network standards. In order to limit 
beneficiaries to a network of providers, MA organizations must meet a 
number of requirements, including maintaining and monitoring a network 
of appropriate providers, under contract, that is sufficient to 
provide adequate access to covered services to meet the needs of 
enrolled beneficiaries.[Footnote 59] Federal guidelines establish 
minimum network adequacy requirements that vary depending on a 
county's geographic designation, such as whether the county is urban 
or rural. MA organizations must contract with sufficient numbers of 
certain types of provider specialists per 1,000 Medicare beneficiaries 
in a county. For example, MA plans operating in rural counties must 
have at least one full-time equivalent (FTE) primary care provider per 
1,000 beneficiaries.[Footnote 60] Additionally, MA organizations must 
demonstrate that their network meets geographic requirements related 
to the time and distance it takes beneficiaries to travel to 
providers. For example, in rural counties, MA organizations must also 
ensure that 90 percent of beneficiaries can access primary care 
providers within 40 minutes and 30 miles of travel. MA organizations 
must also ensure that the networks include a minimum number of 
specialists and specialty facilities, such as at least one 
cardiologist and one skilled nursing facility per 1,000 beneficiaries. 

States must ensure, through contracts, that Medicaid managed care 
plans demonstrate that they have the capacity to serve expected 
enrollment in the service area in accordance with state standards. 
[Footnote 61] For example, plans must submit documentation to the 
state that they offer an appropriate range of preventive, primary 
care, and specialty services, and maintain a network of providers that 
is sufficient in number, mix, and geographic distribution to meet the 
needs of the enrollees. 

Unlike Medicare, however, federal Medicaid laws and regulations do not 
establish minimum provider network requirements and instead generally 
require states to set the standards for access to care. Accordingly, 
subject to the terms and conditions of a waiver, if applicable, states 
may establish requirements that define the minimum number and types of 
providers in a network, and time and distance requirements between 
beneficiaries and primary care providers, as well as other network 
adequacy requirements. For example, Medicaid managed care plans in 
California must maintain a provider to beneficiary ratio of one FTE 
primary care physician for every 2,000 beneficiaries and one FTE 
physician from any specialty for every 1,200 beneficiaries. In some 
counties, managed care plans must also ensure that primary care 
physicians are located within 30 minutes or 10 miles of beneficiaries' 
residences, unless the state approves an alternative time and distance 
standard. In addition to time and distance standards, Arizona requires 
managed care plans to contract with a specific number of providers, as 
determined by the state, which varies by each area that the plan 
serves. Arizona also defines time frames for beneficiaries to be able 
to access some services. For example, Arizona Medicaid managed care 
plans must provide beneficiaries with access to emergency primary care 
services within 24 hours, urgent primary care services within 2 days, 
and routine primary care services within 21 days. Plans must include a 
minimum number of other types of providers--such as dentists, 
pharmacists, home-and community-based services providers, and 
behavioral health facilities--in their networks as well. 

Marketing materials: 

Medicare and Medicaid each have requirements regarding the marketing 
materials managed care organizations send out to beneficiaries. MA 
organizations are required to comply with a variety of federal 
requirements for marketing materials that are intended to promote 
enrollment in a specific health plan. For example, organizations 
generally must submit marketing materials to CMS for review prior to 
sending to beneficiaries.[Footnote 62] Materials must provide an 
adequate written description of the plan's benefits and services and 
comply with formatting requirements, such as a minimum font size. In 
addition, MA organizations must translate materials into any non-
English language that is the primary language of at least 5 percent of 
individuals in the plan's service area.[Footnote 63] 

Medicaid managed care plans are required to comply with both federal 
and state requirements for marketing materials. For example, Medicaid 
managed care plans must obtain state approval before distributing 
marketing materials.[Footnote 64] Federal requirements also mandate 
that materials must be written in an easily understood language and 
format,[Footnote 65] though requirements for format are not precisely 
defined. In addition, plans must make information, including Medicaid 
marketing materials, available in each prevalent language spoken by 
enrollees and potential enrollees in the plan's service area.[Footnote 
66] Subject to the terms and conditions of a waiver, if applicable, 
states may further define requirements for readability and material 
translation, while other states may prohibit marketing altogether. For 
example, marketing materials in California must be translated when a 
threshold number of beneficiaries whose primary language is not 
English live in a managed care plan's service area or in the same or 
adjacent zip codes, among other circumstances. Additionally, all 
Medicaid marketing materials in California must be written at no 
higher than the sixth-grade reading level and be approved by the state 
Medicaid agency. Arizona prohibits Medicaid managed care plans from 
conducting any marketing that is solely intended to promote 
enrollment; all marketing materials must include a health message. 

Other Requirements Also Vary by Program, Payment System, and State: 

Other requirements affecting dual-eligible beneficiaries, such as 
coverage for nursing facility and home health services and the appeals 
process, vary between Medicare and Medicaid, and between the FFS and 
managed care payment systems. 

Scope of Services: Nursing Facility Care: 

Beneficiaries must meet different requirements to qualify for nursing 
facility care under Medicare and Medicaid. As required under federal 
law, to qualify for Medicare's 100 days of SNF coverage, beneficiaries 
must have a prior hospital stay.[Footnote 67] Specifically, Medicare 
beneficiaries must have been hospitalized for medically necessary 
inpatient hospital care for at least 3 consecutive calendar days, not 
including the discharge date. In addition, Medicare beneficiaries must 
meet certain criteria, such as: (1) require skilled nursing or 
rehabilitative services on a daily basis, (2) services must only be 
rendered for a condition the beneficiary had during hospitalization, 
and (3) require daily skilled services that can only be provided in an 
SNF.[Footnote 68] 

Unlike Medicare, Medicaid does not limit coverage of nursing facility 
services to beneficiaries with prior hospital stays and states must 
cover services provided by qualified SNFs as well as other types of 
nursing facilities.[Footnote 69] Instead, federal Medicaid law 
requires states to provide coverage of nursing facility services for 
adult Medicaid beneficiaries when medically necessary.[Footnote 70] 
Within broad federal parameters, such as requiring that beneficiaries 
need daily, inpatient nursing facility services that are ordered by a 
physician, states may impose additional requirements when defining 
coverage for this benefit.[Footnote 71] For example, beneficiaries in 
North Carolina, must show they meet the requirements to be in a 
nursing facility by demonstrating some qualifying conditions. 
Qualifying conditions may include, among other things, (1) the need 
for services that require a registered nurse a minimum of 8 hours a 
day and other personnel working under the supervision of a licensed 
nurse, (2) the need for restorative nursing to maintain or restore 
maximum function or prevent deterioration in individuals with 
progressive disabilities as much as possible, or (3) the need for a 
specialized therapeutic diet. In Arizona, the acute care program 
covers nursing facility services for a limited amount of time (90 
days) if hospitalization will occur otherwise or the treatment cannot 
be administered safely in a less restrictive setting, such as at home. 
Medicaid beneficiaries in the long-term care program in Arizona have 
longer-term nursing facility benefits. Beneficiaries qualify for the 
long-term-care program when they have a functional or medical 
condition that impairs functioning to the extent that the individual 
would be deemed at immediate risk of institutionalization. Impairments 
may include, among other things, requiring nursing care, daily nurse 
supervision, regular medical monitoring, or presenting impairments 
with cognitive functioning or self-care with ADLs. 

Scope of Services: Home Health Care: 

Beneficiaries must meet different requirements to qualify for home 
health services under Medicare and Medicaid. Medicare beneficiaries 
may only qualify for home health coverage when they are confined to a 
home or an institution that is not a hospital, SNF, or nursing 
facility. Additionally, the beneficiary must be under the care of a 
physician, need intermittent skilled nursing care,[Footnote 72] 
physical therapy, speech language pathology services, or have a 
continuing need for occupational therapy services, and receive 
services under a written plan of care.[Footnote 73] 

Unlike in Medicare, states may not require that Medicaid beneficiaries 
be confined to a home or institution in order to qualify for home 
health benefits. Instead, federal regulations require that in order to 
qualify for Medicaid coverage, home health services generally must be 
provided at the beneficiary's home and ordered by a physician as part 
of a written plan of care, which must be renewed every 60 days. 
[Footnote 74] As with nursing facility services, state Medicaid 
programs have the authority to impose additional conditions on 
accessing home health benefits, and accordingly state programs vary 
with respect to when beneficiaries may qualify for home health 
benefits.[Footnote 75] For example, to receive home health coverage in 
North Carolina, a physician must order the home health services and 
must have face-to-face contact with the beneficiary 90 days prior to 
care or 30 days after care, and the services must be medically 
necessary. Beneficiaries must have at least one reason, from a 
specific list of reasons set by the state, to receive home health 
services.[Footnote 76] For example, beneficiaries might qualify if 
they require assistance leaving the home because of a physical 
impairment or medical condition, or if they are medically fragile. 

Appeals Processes: 

Medicare and Medicaid each have multiple levels of appeals, which vary 
further between each program's managed care and FFS delivery systems. 
Accordingly, the appeals processes that dual-eligible beneficiaries 
encounter differ depending on whether the benefit being denied, 
reduced, or terminated is a Medicare or Medicaid benefit, and whether 
the individual is enrolled in FFS or managed care.[Footnote 77] Both 
programs require that beneficiaries in either managed care and FFS be 
notified of their right to appeal.[Footnote 78] 

Medicare has five levels of appeals for managed care and FFS. 

1. Beneficiaries enrolled in an MA plan must first request review by 
the MA organization.[Footnote 79] In FFS, beneficiaries first request 
review by the claims processing contractor that made the initial 
coverage decision.[Footnote 80] 

2. For MA, if the adverse determination is affirmed, the issues must 
be automatically reviewed and resolved by an independent review 
entity, and for Medicare FFS, beneficiaries may request review by a 
qualified independent contractor.[Footnote 81] For beneficiaries in 
either FFS or managed care, this is the earliest opportunity for their 
claim to be reviewed by a different entity than the one that made the 
original determination. 

3. If the independent entity affirms the adverse determination, MA and 
FFS beneficiaries have the right to request a hearing before an 
administrative law judge (ALJ) in the Department of Health and Human 
Services if the amount remaining in controversy--the projected value 
of denied services or a calculated amount based on charges for 
services provided--is above a specified level.[Footnote 82] 

4. MA and FFS beneficiaries who are dissatisfied with the ALJ hearing 
decision may request review by the Medicare Appeals Council.[Footnote 
83] 

5. MA and FFS beneficiaries may request judicial review by a U.S. 
district court of a decision by the Medicare Appeals Council if the 
amount in controversy is above a specified level.[Footnote 84] 

There are no federal Medicare requirements that benefits continue 
during the appeals processes for either managed care or FFS, nor do 
federal law and regulations require that FFS or MA beneficiaries 
receive personal assistance, including assistance from a care 
coordinator or other specialist, when navigating the appeals process. 
However, there are certain protections incorporated into the appeals 
process that are designed to assist Medicare beneficiaries. For 
example, Medicare beneficiaries may appoint a representative to assist 
them with an appeal. Beneficiaries also may seek assistance through 
the Office of the Medicare Beneficiary Ombudsman, which is responsible 
for resolving inquiries and complaints for all aspects of the Medicare 
program, through the 1-800-MEDICARE help line. 

States can structure their Medicaid appeals processes within the 
parameters of federal requirements. Medicaid FFS beneficiaries must 
have access to a fair hearing before a state agency for certain 
actions, including when benefits are terminated, suspended, or 
reduced.[Footnote 85] Once a final agency decision is made, Medicaid 
FFS beneficiaries may request a judicial review of the decision if 
permitted under state law. Beneficiaries in Medicaid managed care 
plans must have the ability to appeal a termination, suspension, or 
reduction of a benefit to the plan as well as have access to a state 
fair hearing.[Footnote 86] States determine whether beneficiaries must 
first exhaust their appeal to their Medicaid managed care plans before 
they may request a state fair hearing. During these appeals, benefits 
generally must continue in certain circumstances. Benefits generally 
must continue until a final agency decision is made if the beneficiary 
is mailed a notice of action and files an appeal before the date of 
the action.[Footnote 87] As in Medicare, neither federal regulations 
nor law require that beneficiaries in Medicaid FFS have access to 
personal assistance in navigating the appeals process. States, 
however, have the option of providing this assistance to FFS 
beneficiaries.[Footnote 88] For beneficiaries in Medicaid managed 
care, plans must give beneficiaries assistance with completing appeal 
forms and taking other procedural steps, including providing 
interpreter services and toll-free numbers for assistance.[Footnote 89] 

The appeals processes in the states that we reviewed varied, for 
instance as to whether a beneficiary in managed care has to appeal to 
his or her managed care plan first. For example, Arizona requires 
beneficiaries to first appeal to their managed care plan before 
requesting a state fair hearing. In contrast, Minnesota allows 
beneficiaries to request a state fair hearing without first appealing 
to their managed care plan. Dual-eligible beneficiaries in Minnesota 
may also request help from the state ombudsman, and county boards are 
required to designate a coordinator to assist the state Medicaid 
agency, including coordinating appeals with the ombudsman. 

See appendix II for a more detailed summary of these consumer 
protection requirements across programs, payment systems, and selected 
states. 

CMS and States Used a Range of Actions to Help Ensure Organizations 
Comply with Medicare and Medicaid Consumer Protection Requirements: 

CMS and states used compliance and enforcement actions that ranged 
from informal written notices to contract terminations in order to 
help ensure MA organizations and Medicaid managed care plans complied 
with consumer protection requirements. 

CMS Took Compliance and Enforcement Actions against Medicare Advantage 
Organizations: 

CMS used both compliance and enforcement actions to bring noncompliant 
MA organizations into compliance with federal requirements. Compliance 
actions are intended to prompt managed care organizations to address 
issues of noncompliance, such as the timing of disenrollments, whereas 
enforcement actions impose a penalty on a managed care organization 
and are taken to address more significant violations. According to 
CMS, the nature of each violation is considered when determining the 
appropriate compliance or enforcement action and the actions generally 
proceed through the process in a step-by-step manner before 
enforcement actions are taken.[Footnote 90] 

Compliance Actions: 

CMS takes compliance actions against MA organizations to address 
violations that are identified during the agency's monitoring and 
auditing activities. According to agency guidance, compliance actions 
are appropriate when the MA organization: (1) demonstrates sustained 
poor performance over a period of time; (2) has a noncompliance issue 
that involves a large number of beneficiaries; or (3) does not meet 
its contractual requirements. The lowest-level compliance action is a 
notice of noncompliance, which may be an e-mail from a CMS contract 
manager to a managed care plan stating that an aspect of the program 
is out of compliance. The notice of noncompliance requests the plan 
respond with how it will address the problem and may be followed by a 
warning letter from CMS that identifies a limited and quickly fixable 
issue of noncompliance that requires immediate remedy. If CMS 
determines that the noncompliance affects multiple beneficiaries and 
represents an ongoing or systemic inability by the plan to adhere to 
Medicare requirements, CMS will send a formal letter to the MA's chief 
executive officer stating the concern and requiring the organization 
to develop and implement a corrective action plan (CAP). The CAP must 
address the deficiencies identified by CMS, provide an attainable time 
frame for implementing corrective actions, and devise a process for 
the managed care organization to validate and monitor that the 
corrective actions were taken and remain effective. 

Between January 1, 2010, and June 30, 2012, CMS took 546 compliance 
actions generally related to consumer protection requirements of 
importance to dual-eligible beneficiaries.[Footnote 91] (See table 1.) 
These issues of noncompliance that could potentially affect dual-
eligible beneficiaries were identified during CMS's ongoing oversight 
activities, analysis of plan deliverables, and complaints made by 
beneficiaries or providers. Of these 546 actions, 386, or 70 percent, 
were due to marketing issues.[Footnote 92] CMS sent notice of 
noncompliance or warning letters for marketing issues related to 
misrepresentation of requirements for enrollment and use of unapproved 
marketing materials. 

Table 1: Selected CMS Compliance Actions against Medicare Advantage 
(MA) Organizations, January 1, 2010-June 30, 2012: 

Issue: Marketing; 
Compliance actions: 
Notice of noncompliance: 314; 
Warning letters: 72; 
Corrective action plans: 0; 
Total compliance actions: 386. 

Issue: Enrollment/disenrollment; 
Compliance actions: 
Notice of noncompliance: 94; 
Warning letters: 23; 
Corrective action plans: 1; 
Total compliance actions: 118. 

Issue: Appeals/grievances[A]; 
Compliance actions: 
Notice of noncompliance: 12; 
Warning letters: 2; 
Corrective action plans: 2; 
Total compliance actions: 16. 

Issue: Benefits administration; 
Compliance actions: 
Notice of noncompliance: 11; 
Warning letters: 0; 
Corrective action plans: 0; 
Total compliance actions: 11. 

Issue: Complaint monitoring; 
Compliance actions: 
Notice of noncompliance: 5; 
Warning letters: 1; 
Corrective action plans: 0; 
Total compliance actions: 6. 

Issue: Premium/copay Billing; 
Compliance actions: 
Notice of noncompliance: 4; 
Warning letters: 0; 
Corrective action plans: 2; 
Total compliance actions: 6. 

Issue: Access to services/providers; 
Compliance actions: 
Notice of noncompliance: 3; 
Warning letters: 0; 
Corrective action plans: 0; 
Total compliance actions: 3. 

Issue: Coordination of benefits; 
Compliance actions: 
Notice of noncompliance: 0; 
Warning letters: 0; 
Corrective action plans: 0; 
Total compliance actions: 0. 

Issue: Total actions; 
Compliance actions: 
Notice of noncompliance: 443; 
Warning letters: 98; 
Corrective action plans: 5; 
Total compliance actions: 546. 

Source: CMS. 

Note: Data are from CMS's Compliance Activity Module (CAM). The CAM 
includes 45 different compliance categories. In consultation with CMS 
staff, we determined the top eight issue categories most closely 
aligned with the consumer protections identified by researchers and 
detailed in our first finding. However, actions directly tied to dual-
eligible beneficiaries could not be broken out from actions tied to 
the Medicare beneficiary population broadly. Data exclude compliance 
actions taken against Medicare prescription drug plans. 

[A] A grievance is any complaint or dispute expressing dissatisfaction 
with any aspect of the operations, activities, or behavior of a 
Medicare health plan, or its providers, regardless of whether remedial 
action is requested. 

[End of table] 

The second most common issue resulting in a compliance action was 
related to beneficiary enrollment/disenrollment in a MA plan. Twenty-
two percent, or 118, of CMS's compliance actions were due to issues 
such as delays in disenrollment processing, lack of monthly 
attestation of enrollment data, and failure to verify that 
beneficiaries were eligible to enroll in SNPs. 

Enforcement Actions: 

In addition to compliance actions, CMS may take enforcement actions 
against MA organizations for more serious violations. Enforcement 
actions can be taken when (1) all compliance actions have been 
exhausted, (2) the MA organization has a repeat deficiency, (3) the 
area of noncompliance could result in harm to one or more Medicare 
beneficiaries, or (4) the area of noncompliance is deemed a 
"substantial failure" of Medicare requirements. Enforcement actions 
include the imposition of intermediate sanctions defined as the 
imposition of civil money penalties (CMP), the suspension of 
enrollment of or marketing to Medicare beneficiaries, or the 
suspension of payment to a MA organization.[Footnote 93] CMS also has 
the authority to terminate the organization's MA contract.[Footnote 94] 

CMS took 22 enforcement actions related to consumer protection 
requirements against MA organizations between January 1, 2010, and 
June 30, 2012. (See table 2.) These enforcement actions were taken 
against MA organizations offering plans serving all beneficiaries, not 
just dual-eligible beneficiaries. Seventeen of the 22 enforcement 
actions were CMPs imposed because of marketing violations. According 
to CMS, these violations included incomplete, inaccurate, or late 
marketing communications about plan benefits or changes that prevented 
beneficiaries from having complete information to choose among 
competing MA plans. CMS levied a total of about $3.4 million in CMPs 
against MA organizations during the period. The average CMP was about 
$200,000. 

Table 2: CMS Enforcement Actions against Medicare Advantage (MA) 
Organizations, January 1, 2010-June 30, 2012: 

Violation issue: Access to services; 
CMS enforcement action: 
Suspension of enrollment or marketing: 0; 
Civil monetary penalties: 0; 
Termination: 0. 

Violation issue: Access to drugs; 
CMS enforcement action: 
Suspension of enrollment or marketing: 3; 
Civil monetary penalties: 1; 
Termination: 0. 

Violation issue: Marketing communications/broker; 
CMS enforcement action: 
Suspension of enrollment or marketing: 2; 
Civil monetary penalties: 15; 
Termination: 0. 

Violation issue: Patient billing/contract administration; 
CMS enforcement action: 
Suspension of enrollment or marketing: 0; 
Civil monetary penalties: 1; 
Termination: 0. 

Violation issue: Total; 
CMS enforcement action: 
Suspension of enrollment or marketing: 5; 
Civil monetary penalties: 17; 
Termination: 0. 

Source: CMS. 

Note: Data are from CMS enforcement letters. These enforcement actions 
include those taken in response to issues affecting all MA 
beneficiaries, not just dual-eligible beneficiaries. Data exclude 
enforcement actions taken against Medicare prescription drug plans. 

[End of table] 

CMS suspended plan enrollment and marketing activities five times. 
Three plans were suspended because of deficiencies in the 
administration of their prescription drug benefit resulting in 
beneficiaries not receiving medications. The agency suspended two 
other MA plans because of the use of prohibited marketing practices 
affecting vulnerable populations. These practices included brokers 
using aggressive tactics,[Footnote 95] misrepresenting plan 
information, and enrolling beneficiaries in plans without their 
knowledge. Once the five plans corrected these violations to CMS's 
satisfaction, the agency released them from sanctions and they were 
permitted to market to and enroll beneficiaries again. Four of the 
suspensions were for 14 months or longer. CMS did not terminate any MA 
plan during our reporting period. 

States Took Actions against Medicaid Managed Care Plans: 

Oversight of Medicaid managed care plans is the primary responsibility 
of the states. The states we interviewed have systems in place to 
monitor ongoing activities and to take action when the need arises. 
[Footnote 96] State officials said they communicate regularly with 
plans to anticipate and troubleshoot potential problems. They also 
provide plans with guidance and offer training and technical 
assistance resources. In addition, all three of the states we reviewed 
required monthly reports of plan activities, and conducted periodic 
audits of their managed care plans to identify and address issues of 
noncompliance. 

The three states we reviewed used similar sequences of actions to 
identify and address issues of noncompliance by their Medicaid managed 
care plans. State officials reported that when noncompliance issues 
are suspected they first notify the plans and give them an opportunity 
to remedy the problem. Subsequent deficiencies may require a Medicaid 
managed care plan to initiate a corrective action plan that the state 
would monitor to assure the appropriate changes are made. Between 
January 1, 2010, and June 30, 2012, the three states reported they 
took a total of 157 compliance actions against their Medicaid managed 
care plans. These actions ranged from sending warning letters, issuing 
notices to cure, requiring CAPs, and imposing financial penalties. 
[Footnote 97] The most common action taken by the states was to 
require a managed care plan to implement a CAP. 

The reasons that states required Medicaid managed care plans to 
institute CAPs during the reporting period varied. California and 
Minnesota identified noncompliance with the appeals and grievance 
process that required corrective actions.[Footnote 98] California 
required plans to take corrective actions to ensure beneficiaries were 
able to access appropriate translation services. The majority of the 
CAPs required by Minnesota's Medicaid office dealt with plan 
management of beneficiary appeals and grievances. Arizona required 
CAPs to address the use of unapproved marketing materials. After 
appeals, the next most frequent reason states requested CAPs on 
consumer protection requirements was to address problems regarding 
beneficiaries' access to providers, services, or drugs. Figure 2 
illustrates the reasons why Medicaid managed care plans were required 
to implement a CAP for the 91 CAPs issued during the period. 

Figure 1: Number of and Reasons for Corrective Action Plans (CAP) 
Required by Selected States, January 1, 2010-June 30, 2012: 

[Refer to PDF for image: pie-chart] 

Appeals, Grievances, and denials: 47 (52%); 
Access to providers, services, or drugs: 27 (30%); 
Cultural linguistics: 13 (13%); 
Marketing: 5 (5%). 

Source: GAO analysis of information obtained from state Medicaid 
offices in Arizona, California, and Minnesota. 

Note: Corrective action plans (CAP) may include actions to address 
multiple deficiencies. 

[End of figure] 

In addition to termination of contracts, under federal law states must 
establish a series of intermediate sanctions that may be imposed on 
Medicaid managed care plans for failing to comply with certain federal 
requirements.[Footnote 99] An intermediate sanction may be imposed 
when a managed care plan (1) fails substantially to provide medically 
necessary services under its contract with the state, (2) imposes 
premiums or charges on enrollees that are in excess of those permitted 
under the program, (3) discriminates among enrollees on the basis of 
their health status, and (4) misrepresents or falsifies information 
that it furnishes to CMS or the state. Under these circumstances, 
states may impose a CMP, appoint temporary management for the health 
plan, grant enrollees the right to terminate enrollment without cause, 
suspend new enrollment in the plan, or suspend payment to the plan. If 
a state takes an intermediate sanction against a managed care plan it 
must report it to CMS. According to CMS, none of the three states we 
reviewed imposed an intermediate sanction against a managed care plan 
because of violations of consumer protection requirements during our 
reporting period. 

While CMS does not directly oversee the operation of Medicaid managed 
care plans, CMS has the authority to disallow or withhold federal 
matching funds to states for certain reasons, including if states fail 
to obtain prior approval of contracts with Medicaid managed care plans 
or if the contracts fail to meet applicable federal requirements. 
[Footnote 100] Between January 1, 2010, and June 30, 2012, CMS did not 
stop or defer federal Medicaid payments to any state Medicaid program 
because of contractual issues related to consumer protections, 
according to agency officials.[Footnote 101] 

Agency Comments: 

We received written comments on a draft of this report from the 
Department of Health and Human Services, which are reprinted in 
appendix III, and technical comments, which we incorporated as 
appropriate. The department noted that the report was an accurate 
assessment of the programs we reviewed, and added that the Medicare-
Medicaid Coordination Office has already made some progress aligning 
the requirements between the two programs in the area of appeals. CMS 
has developed a revised Notice of Medicare Denial of Coverage (or 
Payment) that includes optional language to be used in cases where a 
Medicare health plan enrollee also receives full Medicaid benefits 
that are being managed by the Medicare health plan. The revised Notice 
of Medicare Denial of Coverage (or Payment) is under review as part of 
the approval process. 

We will send copies of this report to the Administrator of CMS and 
interested congressional committees. We will also make copies 
available at no charge on GAO's website at [hyperlink, 
http://www.gao.gov]. 

If you or your staff have any questions about this report, please 
contact me at (202) 512-7114 or KingK@gao.gov. Contact points for our 
Offices of Congressional Relations and Public Affairs may be found on 
the last page of this report. GAO staff who made key contributions to 
this report are listed in appendix IV. 

Signed by: 

Kathleen M. King: 
Director, Health Care: 

List of Requesters: 

The Honorable Max Baucus: 
Chairman: 
Committee on Finance: 
United States Senate: 

The Honorable John D. Rockefeller IV: 
Chairman: 
Subcommittee on Health Care: 
Committee on Finance: 
United States Senate: 

The Honorable Sander M. Levin: 
Ranking Member: 
Committee on Ways and Means: 
House of Representatives: 

The Honorable Henry A. Waxman: 
Ranking Member: 
Committee on Energy & Commerce: 
House of Representatives: 

The Honorable Pete Stark: 
Ranking Member: 
Subcommittee on Health: 
Committee on Ways and Means: 
House of Representatives: 

The Honorable Frank Pallone Jr. 
Ranking Member: 
Subcommittee on Health: 
Committee on Energy and Commerce: 
House of Representatives: 

[End of section] 

Appendix I: Information on Selected States' Medicaid Programs: 

Arizona: 

In Arizona's Medicaid program, called the Arizona Health Care Cost 
Containment System, nearly all Medicaid beneficiaries, including dual-
eligible beneficiaries, are enrolled in the acute care managed care 
program for Medicaid benefits. Individuals requiring long-term 
supports and services are enrolled in a separate long-term care 
managed care program. Both managed care programs operate under a 
section 1115 demonstration waiver. As of January 2012, Arizona had 
about 110,000 dual-eligible beneficiaries enrolled in Medicaid managed 
care, and over 1.3 million total Medicaid beneficiaries. 

California: 

California's Medicaid system, called Medi-Cal, includes 28 counties 
with only a fee-for-service (FFS) system and 30 counties with one of 
three different managed care programs. Of the managed care options, 
the first is a county-operated health system, which requires nearly 
all Medicaid beneficiaries in participating counties, including dual-
eligible beneficiaries, to enroll in a plan operated by the county. 
The second is the Two-Plan model, which has a commercial plan and a 
Local Initiative Health Plan--a public agency that is independent of 
the county. In the third program, called Geographic Managed Care, 
several commercial plans are offered as choice for beneficiaries. In 
both the Two-Plan and Geographic Managed Care programs, most Medicaid 
beneficiaries in the county are mandatorily enrolled in a managed care 
plan, but dual-eligible beneficiaries are in FFS unless they enroll 
voluntarily into one of the health plans. California officials 
reported that, as of June 2012, 26 percent of California's 
approximately 1 million dual-eligible beneficiaries are enrolled in 
managed care, while the remaining 74 percent of dual-eligible 
beneficiaries are in FFS. 

Minnesota: 

In Minnesota, dual-eligible beneficiaries who are 65 years old and 
older are required to enroll in a managed care program called 
Minnesota Senior Care Plus (MSC+). As of June 2012, about 10,500 
dually eligible beneficiaries 65 and older in Minnesota are enrolled 
in MSC+. Alternatively, dual-eligible beneficiaries 65 and older may 
choose to enroll in the Minnesota Senior Health Options (MSHO) 
program. Unlike MSC+ plans, MSHO plans are Medicare special needs 
plans that also have contracts with the state for the Medicaid 
benefits package, which enables the plans to integrate Medicare and 
Medicaid financing and services for dual-eligible beneficiaries. About 
35,700 dually eligible beneficiaries 65 and older in Minnesota are 
enrolled in a MSHO plan. Dual-eligible beneficiaries age 18 to 64 who 
have a disability are enrolled in the state's Special Needs Basic Care 
managed care program if they do not opt into Medicaid FFS. As of July 
2012, about 39,000 of the state's disabled population (both dual-
eligible beneficiaries and non-dual-eligible beneficiaries) are 
enrolled in Special Needs Basic Care. More than 21,000 of these 
disabled beneficiaries were dual-eligible beneficiaries. According to 
Minnesota Medicaid officials, as of June 2012, almost 14 percent, or 
about 114,500, of Minnesota's Medicaid population are dual-eligible 
beneficiaries, and 59 percent of the state's dual-eligible 
beneficiaries are enrolled in managed care. 

North Carolina: 

According to North Carolina Medicaid officials, North Carolina 
primarily operates its Medicaid program through a primary care case 
management (PCCM) program, called Carolina Access. Under the PCCM 
program, primary care providers are paid on a FFS basis, in addition 
to receiving a monthly fee for certain care coordination activities. 
The state's enhanced PCCM program, called Community Care of North 
Carolina, includes 14 networks of primary care providers that are 
responsible for an enhanced set of care coordination activities. 
According to North Carolina Medicaid officials, dual-eligible 
beneficiaries are assigned a primary care provider in one of the 14 
networks, but they may opt out of the program if they choose a 
healthcare provider outside of the state's Medicaid program. As of 
June 2012, according to state officials, about 13 percent of the 
state's Medicaid population was dually eligible for Medicare and 
Medicaid and almost 68 percent of dual-eligible beneficiaries in the 
state were enrolled in the state's PCCM program. 

[End of section] 

Appendix II: Description of Selected Federal and State Requirements: 

Table 3 describes selected consumer protection requirements for 
Medicare and Medicaid fee-for-service (FFS), and table 4 describes 
selected consumer protection requirements for Medicare Advantage (MA) 
and Medicaid managed care. 

Table 3: Selected Requirements in Medicare and Medicaid FFS: 

Requirement: Enrollment and choice: 

How are beneficiaries enrolled (e.g., mandatory or voluntary 
enrollment)? 
Payment system: Medicare FFS: Federal requirements; Beneficiaries are 
enrolled in FFS if they do not enroll in managed care voluntarily; 
Payment system: Medicaid FFS: Federal requirements; 
Beneficiaries may enroll voluntarily in a managed care plan or are 
mandatorily enrolled if the state has the Centers for Medicare and 
Medicaid Services (CMS) approval. They are in FFS if they are not 
enrolled in managed care. 
Examples of state requirements: 
Arizona has a section 1115 demonstration waiver to mandatorily enroll 
beneficiaries in managed care; 
In California, all beneficiaries in 28 counties are in FFS. Dual-
eligible beneficiaries in another 16 counties are in FFS unless they 
enroll voluntarily in a managed care plan. Dual-eligible beneficiaries 
in the 14 remaining counties are mandatorily enrolled in managed care; 
Minnesota has a section 1915(b)(c) waiver to mandatorily enroll dually 
eligible seniors in managed care. A 1915(b)(c) waiver simultaneously 
implements a 1915(b) and a 1915(c) waiver. The combined waiver allows 
states to provide a continuum of services for the elderly and people 
with disabilities as long as the requirements of both waivers are met. 
Dual-eligible beneficiaries age 18 to 64 who have disabilities may opt 
into FFS. If they do not opt into FFS, they are enrolled in managed 
care and may opt into FFS at any time; 
All North Carolina beneficiaries are in FFS. 

To what extent can beneficiaries select their primary care provider? 
Payment system: Medicare FFS: Federal requirements; Beneficiaries may 
generally select any provider who is enrolled as a Medicare 
provider[A]; 
Payment system: Medicaid FFS: Federal requirements; 
Beneficiaries may generally select any provider who is enrolled as a 
Medicaid provider.[B] 

Can beneficiaries enrolled in managed care switch to FFS? 
Payment system: Medicare FFS: Federal requirements; 
Dual-eligible beneficiaries may switch to FFS at any time, while most 
other beneficiaries may only switch during certain periods[C]; 
Payment system: Medicaid FFS: Federal requirements; 
Requirements depend on whether dual-eligible beneficiaries are 
voluntarily or mandatorily enrolled into plans[D]; 
Examples of state requirements: 
Beneficiaries in Arizona generally may not switch to FFS; 
In California, dual-eligible beneficiaries in 16 counties are enrolled 
voluntarily in managed care and may switch to FFS at any time. Dual-
eligible beneficiaries in 14 counties are mandatorily enrolled in 
managed care and may not switch to FFS; 
In Minnesota, dually eligible beneficiaries with a disability who are 
enrolled voluntarily in managed care may switch to FFS in any month. 
Dually eligible seniors may not switch to FFS. 

How are beneficiaries informed of and counseled on enrollment options? 
Payment system: Medicare FFS: Federal requirements; 
Beneficiaries receive information about Medicare coverage from CMS. 
Beneficiaries may also receive CMS-reviewed marketing materials sent 
by MA organizations[D]; 
Payment system: Medicaid FFS: Federal requirements; 
In states that also have managed care programs, states must ensure 
that beneficiaries receive a summary of the state's Medicaid managed 
care program from the state or its contracted representatives. The 
summary must include, among other things, information about the 
program requirements, covered benefits, and cost for each plan 
operating in the service area[E]; 
Examples of state requirements: 
In Arizona, beneficiaries in the long-term care program have access to 
an eligibility case worker who determines eligibility and helps them 
navigate their enrollment options; 
Beneficiaries in Minnesota may call a help line specifically for 
senior citizens or people with disabilities for information about 
enrollment options. The state or county agency is responsible for 
describing the available managed care plans for dually eligible 
seniors through presentations or written materials; 
In North Carolina, county Departments of Social Services are 
responsible for notifying beneficiaries about their provider options. 

Requirement: Scope of services: 

Under what circumstances can beneficiaries obtain coverage for nursing 
facility services? 
Payment system: Medicare FFS: Federal requirements; 
Medicare covers post-hospital extended care services for up to 100 
days for any spell of illness[F]; 
In order to access post-hospital skilled nursing facility (SNF) care, 
beneficiaries must have been hospitalized for medically necessary 
inpatient hospital care for at least 3 consecutive calendar days, not 
including the discharge date and be eligible for Medicare on the date 
of discharge. The beneficiary also generally must be admitted to the 
facility within 30 days after the date of discharge from the 
hospital[G]; 
In addition, (1) the beneficiary must require skilled nursing or 
rehabilitative services on a daily basis, (2) the services must be 
furnished for a condition the beneficiary had during hospitalization, 
and (3) the daily skilled services required are those that can only be 
provided in an SNF[H]; 
Payment system: Medicaid FFS: Federal requirements; 
State Medicaid programs must cover nursing facility care for adult 
Medicaid beneficiaries and may cover this benefit for children as an 
optional benefit[I]; 
Beneficiaries must need daily, inpatient nursing facility services 
ordered by a physician in order to qualify for nursing facility 
services.[J] States must cover services provided by qualified SNFs as 
well as nursing facility services.[K] States, however, may place 
appropriate limits on services on the basis of criteria such as 
medical necessity and utilization control procedures[L]; 
Examples of state requirements: 
In Minnesota, beneficiaries must meet one of several criteria for 
nursing facility care, as determined by the state. The criteria 
include, among other things: requiring assistance with activities of 
daily living; exhibiting impaired cognition, such as short term memory 
loss; or experiencing frailty or vulnerability, such as frequent falls; 
Beneficiaries in North Carolina must show they meet the requirements 
to be in nursing facility care by demonstrating some qualifying 
conditions. Qualifying conditions may include, among other things, the 
need for services that require a registered nurse a minimum of 8 hours 
daily and other personnel working under the supervision of a licensed 
nurse, the need for restorative nursing to maintain or restore maximum 
function or prevent deterioration in individuals with progressive 
disabilities as much as possible, or the need for a specialized 
therapeutic diet. The services must be medically necessary. 

Under what circumstances can beneficiaries obtain coverage for home 
health services? 
Payment system: Medicare FFS: Federal requirements; 
Beneficiaries must: be confined to a home or an institution that is 
not a hospital, SNF, or nursing facility, need intermittent skilled 
nursing care,[M] physical therapy, speech language pathology services, 
or have a continuing need for occupational therapy services; 
and receive services under a written plan of care; 
Home health services must be ordered by a physician as part of a 
written plan of care, which must be reviewed every 60 days, or more 
frequently in some circumstances, such as when there is a significant 
change in the beneficiary's condition[N]; 
Payment system: Medicaid FFS: Federal requirements; 
State Medicaid programs must cover home health services for categories 
of beneficiaries, including those who are entitled to nursing facility 
benefits under the state's Medicaid plan[O]; 
Home health services must be ordered by a physician as part of a 
written plan of care, which must be renewed every 60 days.[P] States 
are not allowed to require that beneficiaries be homebound in order to 
access home health services. States, however, may place appropriate 
limits on services on the basis of criteria such as medical necessity 
and utilization control procedures.q Additionally, states also have 
the option of covering home-and community-based services, including 
home health care and personal care services, for beneficiaries under 
different authorities; 
Examples of state requirements: 
In California, beneficiaries have multiple paths to obtain home health 
services. For example, to qualify for home health services through the 
1915(c) HCBS waiver for nursing facilities and acute health, the 
beneficiary must be medically fragile or technology dependent. 
Specifically, the beneficiary must have a medical need for at least 90 
days of care in an acute hospital setting or an inpatient nursing 
facility. Qualifying criteria may include, among other things, the 
need for constantly available skilled nursing services for conditions 
such as those that require therapeutic procedures, like dressing 
postsurgical wounds; 
In Minnesota, home health services must be medically necessary, 
ordered by a physician, documented in a care plan that is reviewed 
every 60 days, and generally provided at the beneficiary's residence 
other than a hospital or long-term care facility. Home health services 
including skilled nurse visits and home health aide visits must be 
authorized by the commissioner or the commissioner's designee. They 
base their authorization on medical necessity and cost-effectiveness 
when compared with other care options, among other things. The 
commissioner must receive the request for authorization of skilled 
nurse visits and home health aide visits within 20 working days of the 
start of service. When home health services are used in combination 
with personal care and private duty nursing, the cost of all home care 
services is considered for cost-effectiveness. Authorization may be 
valid for up to 1 year. Dually eligible beneficiaries may also access 
home health services under Minnesota's 1915(c) waivers; 
In North Carolina, a physician must order home health services and 
have face-to-face contact with the beneficiary within 90 days prior to 
care or within 30 days after care, and the services must be medically 
necessary. Beneficiaries must have at least one reason, from a 
specific list of reasons created by North Carolina Medicaid officials, 
to receive home health services,[R] For example, beneficiaries might 
qualify if they require assistance leaving the home because of a 
physical impairment or medical condition, or if they are medically 
fragile. Dually eligible beneficiaries may also access home health 
services under North Carolina's 1915(c) waivers. 

Requirement: Appeals: 

How are beneficiaries notified of their right to appeal a denial, 
reduction, or termination of benefits? 
Payment system: Medicare FFS: Federal requirements; 
Beneficiaries must receive a notice of the initial coverage 
determination that services are denied, which must include information 
on the right to an appeal[S]; 
Payment system: Medicaid FFS: Federal requirements; 
Beneficiaries must receive notice from the state when it intends to 
terminate, suspend or reduce services. The notice must include 
information about the right to an appeal[T]. 

What is the appeals process for beneficiaries that have a benefit 
denied, reduced, or terminated? 
Payment system: Medicare FFS: Federal requirements; 
Medicare has five levels of appeals. Beneficiaries first appeal to the 
Medicare contractor that made the initial coverage decision and is 
responsible for processing claims.[U] In the second level, 
beneficiaries may request review by a qualified independent contractor 
(QIC).[V] In the third level, beneficiaries may file an appeal to an 
administrative law judge (ALJ) if the amount remaining in controversy--
the projected value of denied services or a calculated amount based on 
charges for services provided--is above a specified level.[W] In the 
fourth level, they may request review by the Medicare Appeals 
Council.[X] Finally, beneficiaries may request judicial review of the 
decision by the Medicare Appeals Council by a U.S. district court if 
the amount in controversy is above a specified level.[Y]; 
Payment system: Medicaid FFS: Federal requirements; 
Beneficiaries must have access to a fair hearing before the state 
agency. Beyond this federal requirement, states may define other 
levels of appeals, which can include a request for a hearing prior to 
a state fair hearing and an appeal to state court.[Z]; 
Examples of state requirements: 
In California, beneficiaries may request a state fair hearing 
conducted by an ALJ employed by the state Medicaid agency. The state 
Medicaid agency may adopt the ALJ's decision, decide the matter for 
himself or herself, or order a further hearing. After receiving a 
final decision from the state Medicaid agency, beneficiaries may 
request a rehearing or may file a petition for judicial review in 
state court; 
In Minnesota, beneficiaries may request a state fair hearing, during 
which a hearing officer recommends an order to the commissioner of 
human services, who either accepts, rejects, or modifies the order. 
Beneficiaries who disagree with the commissioner can request 
reconsideration by the commissioner, who may either amend or affirm 
the original order. A beneficiary may then request judicial review in 
state court; 
In North Carolina, beneficiaries may request a state fair hearing. The 
state Medicaid agency then accepts or reverses the ALJ determination. 
After receiving a final decision, beneficiaries may request judicial 
review in state court. Beneficiaries may opt for mediation instead of 
a state fair hearing. If they do not accept the terms of the 
mediation, they receive a fair hearing. 

Are there provisions to ensure continuity of access to benefits 
throughout the duration of the appeal process? 
Payment system: Medicare FFS: Federal requirements; 
There are no federal requirements that benefits continue during the 
appeals; 
Payment system: Medicaid FFS: Federal requirements; 
Benefits generally must continue if the beneficiary is mailed a notice 
of action and filed an appeal before the date of action.[AA] 

To what extent are beneficiaries required to have personal assistance, 
including from a care coordinator or other specialist, in navigating 
their appeal options? 
Payment system: Medicare FFS: Federal requirements; 
Although federal law and regulations do not require that beneficiaries 
receive personal assistance when navigating the appeals process, there 
are certain protections. For example, Medicare beneficiaries may 
appoint a representative to assist them with an appeal.[BB] 
Beneficiaries also may seek assistance through the office of the 
Medicare Beneficiary Ombudsman, which is responsible for resolving 
inquiries and complaints for all aspects of the Medicare program, 
through the 1-800-MEDICARE help line; 
Payment system: Medicaid FFS: Federal requirements; 
Although federal law and regulations do not require that beneficiaries 
receive personal assistance when navigating the appeals process, 
Medicaid beneficiaries may appoint a representative for the state fair 
hearing.[CC] Federal regulations provide states with the option of 
providing assistance.[DD]; 
Examples of state requirements: 
Beneficiaries in California may request help from the county when 
filing a state fair hearing request; 
In North Carolina, notice that service(s) will be denied, terminated, 
suspended, or reduced must inform beneficiaries that they may contact 
Legal Aid, which provides free legal services to low income 
individuals. 

Source: GAO analysis of federal and state statutes, regulations, and 
guidance. 

Notes: Information on state laws was confirmed by state Medicaid 
agency officials. We use "beneficiaries" to refer to statements or 
requirements that apply to all individuals receiving Medicare or 
Medicaid benefits, and "dual-eligible beneficiaries" to refer to 
statements or requirements that apply only to the dual-eligible 
beneficiaries. 

[A] 42 U.S.C. § 1395cc. Any provider of service may be qualified to 
receive Medicare reimbursement for services rendered to a beneficiary 
if that provider enters into an agreement with CMS that meets 
applicable requirements. 

[B] 42 U.S.C. § 1396a(a)(23)(A). 

[C] 42 U.S.C. § 1395w-21(a), (e), 42 C.F.R. § 422.62. 

[D] 42 C.F.R. § 422.2262(b). 

[E] 42 C.F.R. § 438.10(e). 

[F] 42 U.S.C. § 1395(d)(2). 

[G] 42 C.F.R. §§ 409.30, .31. For beneficiaries enrolled in MA plans, 
however, the plans may determine that a direct admission to an SNF 
without a hospital stay is medically appropriate. 

[H] 42 C.F.R. § 409.31. 

[I] 42.U.S.C. §§ 1396a(a)(10)(A), .1396d(a). 

[J] 42 C.F.R. § 440.50. 

[K] SNFs provide skilled nursing care or rehabilitation services. In 
addition to these services, nursing facilities may also provide health-
related care to beneficiaries who because of their mental or physical 
condition require institutional services (above the level of room and 
board). 

[L] 42 C.F.R. § 440.230. 

[M] Intermittent means that the skilled care is either provided or 
needed fewer than 7 days each week, or less than 8 hours of each day 
for periods of 21 days or less, with extensions in exceptional 
circumstances when the need for additional care is finite and 
predictable. 

[N] 42 C.F.R. §§ 409.42., .43. 

[O] 42 U.S.C. § 1396a(a)(10)(D). 

[P] 42 C.F.R. § 440.70. 

[Q] 42 C.F.R. § 440.230. 

[R] North Carolina has several 1915(c) waivers to cover additional 
services for certain populations. 

[S] 42 U.S.C. § 1395ff(a)(4), 42 C.F.R. § 405.921(a). 

[T] 42 C.F.R. § 431.206. 

[U] 42 U.S.C. § 1395ff(a), (b), 42 C.F.R. § 405.940. 

[V] 42 U.S.C. § 1395ff(c), 42 C.F.R. § 405.960. 

[W] 42 U.S.C. § 1395ff(b), 42 C.F.R. § 405.1000. ALJs are employed by 
the Department of Health and Human Services and are responsible for 
conducting formal proceedings such as hearings, among other things. 
CMS established a formula for annually calculating the minimum amount 
that must be in controversy for beneficiaries to appeal to an ALJ. 
That amount was $130 for 2012. Beneficiaries may request an ALJ 
hearing if (1) they are dissatisfied with the QIC's decision, (2) the 
QIC did not render its decision within applicable timeframes, or (3) 
the QIC dismissed the request. 

[X] 42 C.F.R. § 405.1100. The Medicare Appeals Council undertakes a de 
novo review and may issue a final decision, dismiss the appeal, or 
remand the case to the ALJ with instructions for rehearing the case. 
Beneficiaries may also request this review if the ALJ dismissed their 
case or failed to issue a timely decision. 

[Y] The minimum amount that must be in controversy for beneficiaries 
to request judicial review is updated annually. The amount was $1,350 
for 2012. In addition to the threshold amount, beneficiaries may also 
request judicial review if the Medicare Appeals Council does not issue 
a decision, dismisses the case, or remands the case back to an ALJ 
within relevant time frames. 42 U.S.C. § 1395ff(b), 42 C.F.R. § 
405.1132. 

[Z] 42 U.S.C. § 1396a(a)(3), 42 C.F.R. §§ 431.205, .240(a)(3). State 
Medicaid agencies must provide for a hearing before the agency or an 
evidentiary hearing at the local level with the right to appeal to a 
state agency hearing. The state agency hearing must be conducted by 
one or more impartial officials. In providing a final agency decision 
to the beneficiary, state agencies may choose to accept or reverse the 
officials' determination or request a rehearing. 

[AA] Benefits generally must continue unless it is determined at the 
hearing that the sole issue is one of federal or state law or policy. 
42 C.F.R. § 431.230. States may also reinstate benefits if the 
beneficiary requests a hearing within a certain time frame after the 
date of action. 42 C.F.R. § 431.231. 

[BB] 42 C.F.R. § 405.910. 

[CC] 42 C.F.R. § 431.206(b). 

[DD] 42 C.F.R. § 431.221(c). States may assist beneficiaries with the 
submission and processing of their fair hearing requests. 

[End of table] 

Table 4: Selected Requirements in Medicare Advantage (MA) and Medicaid 
Managed Care: 

Requirement: Enrollment and choice: 

Requirement: How are beneficiaries enrolled in managed care (e.g., 
mandatory or voluntary enrollment)? 
Payment system: Medicare Advantage: Federal requirements; 
Beneficiaries may enroll voluntarily in an MA plan; 
Payment system: Medicaid managed care: Federal requirements; 
Beneficiaries may enroll voluntarily in a Medicaid managed care plan, 
or they are enrolled mandatorily if the state has CMS approval of a 
State Plan Amendment, 1115 demonstration waiver, or 1915(b) waiver.[A]; 
Examples of state requirements: 
Arizona has a section 1115 demonstration waiver to mandatorily enroll 
beneficiaries in managed care; 
In California, all dual-eligible beneficiaries in 28 counties are in 
FFS. Thirty counties have one of three different managed care 
programs. The first program is a county-operated health system, which 
requires nearly all Medicaid beneficiaries, including dual-eligible 
beneficiaries, in the 14 participating counties to enroll in a health 
system operated by the county. The second program is the Two-Plan 
program, which has a Local Initiative Health Plan--a public agency 
that is independent of the county--and a commercial plan in 14 
counties. The third program, called Geographic Managed Care, has 
several commercial health plans in 2 counties. In the Two-Plan and 
Geographic Managed Care programs, dual-eligible beneficiaries are in 
FFS unless they enroll voluntarily in managed care; 
Minnesota has a section 1915(b)(c) waiver to mandatorily enroll dually 
eligible seniors in managed care. A 1915(b)(c) waiver simultaneously 
implements a 1915(b) and a 1915(c) waiver. The combined waiver allows 
states to provide a continuum of services for the elderly and people 
with disabilities as long as the requirements of both waivers are met. 
Dual-eligible beneficiaries age 18 to 64 who have disabilities may opt 
into FFS. If they do not opt into FFS, they are enrolled in managed 
care and may opt into FFS at any time; 
Not applicable in North Carolina where all beneficiaries are enrolled 
in FFS. 

To what extent can beneficiaries select their primary care provider? 
Payment system: Medicare Advantage: Federal requirements; 
Beneficiaries in MA may be limited to the plan's provider network[B]; 
Medicaid managed care: Federal requirements; 
Subject to terms and conditions of a waiver, if applicable, 
beneficiaries in managed care may be limited to the plan's provider 
network[C]. 

To what extent can beneficiaries select their managed care plan? 
Payment system: Medicare Advantage: Federal requirements; 
The number of plan options varies by county. Beneficiaries may select 
any plan for which they are eligible that serves the area where they 
live[D]; 
Payment system: Medicaid managed care: Federal requirements; 
Whether beneficiaries may select among plans varies by state. For 
example, states that mandate enrollment in a managed care plan must 
provide beneficiaries a choice of at least two plans, except in 
specific circumstances, such as in rural areas[E]; 
Examples of state requirements: 
Beneficiaries in Arizona's acute care program have a choice among 
managed care plans, and have choice in the long-term care program in 
some circumstances, including if they live in or are moving to one of 
the state's two most populated counties--Pima or Maricopa counties; 
Dual-eligible beneficiaries' choice of managed care plans in 
California varies, depending on the county where they live. Dual-
eligible beneficiaries living in the counties that have the Geographic 
Managed Care program may choose from several plans. Dual-eligible 
beneficiaries living in counties that have the Two-Plan program may 
choose between one of two plans. In the other counties that have the 
county-operated health system, dual-eligible beneficiaries have no 
choice because there is only one plan operating in the county; 
Dual-eligible beneficiaries' choice of managed care plans in Minnesota 
varies, depending on the county where they live. 

When can beneficiaries switch between managed care and FFS or change 
managed care plans? 
Payment system: Medicare Advantage: Federal requirements; 
Dual-eligible beneficiaries may switch between MA and FFS or change MA 
plans at any time. Most other beneficiaries may only switch to FFS or 
between plans during certain periods[F]; 
Payment system: Medicaid managed care: Federal requirements; 
Requirements depend on whether dual-eligible beneficiaries are 
voluntarily or mandatorily enrolled in plans. For mandatory 
enrollment, subject to the terms and conditions of the waiver, if 
applicable, states may limit disenrollment to 90 days following 
initial enrollment and at least once a year or at other times with 
cause[G]; 
Examples of state requirements: 
In Arizona, beneficiaries may generally enroll in or switch plans 
within 30 days of the date of notice of enrollment, during an annual 
election period, or in special circumstances, such as when a 
notification of the annual enrollment period was not sent. For 
beneficiaries in the long-term care program, in limited circumstances 
generally involving preexisting conditions and continuity of care 
issues, beneficiaries may request to change plans on a case-by-case 
basis if they live in a county with more than one plan; 
In California, dual-eligible beneficiaries living in counties that 
have either the Two-Plan or Geographic Managed Care programs may 
enroll in a plan, switch plans, or opt out of managed care into FFS at 
any time. Dual-eligible beneficiaries living in counties that have the 
county-operated health system may not switch plans or change into FFS; 
In Minnesota, dual-eligible beneficiaries with a disability may change 
plans or enroll in managed care in any month. Dually eligible seniors 
enrolled in a special needs plan for duals (D-SNP)--a type of Medicare 
managed care plan exclusively for dual-eligible beneficiaries--may 
change plans once per month and during an annual open enrollment 
period. Dually eligible seniors who are not enrolled in a D-SNP may 
change plans during an annual open enrollment period, once during the 
first year of enrolling in the program, and in limited circumstances, 
such as within 60 days of moving to a new county or at any time for 
good cause (e.g., poor quality of care); 
Not applicable in North Carolina where all beneficiaries are enrolled 
in FFS. 

How are beneficiaries informed of and counseled on enrollment options? 
Payment system: Medicare Advantage: Federal requirements; 
Beneficiaries receive information about Medicare coverage from CMS, 
which distributes material that MA organizations submit. Beneficiaries 
may also receive CMS-reviewed marketing materials sent by MA 
organizations[H]; 
Payment system: Medicaid managed care: Federal requirements; 
Beneficiaries must receive a summary of the state's Medicaid managed 
care program from the state or its contracted representatives. The 
summary must include, among other things, information about the 
program requirements, covered benefits, and cost for each plan 
operating in the service area[I]; 
Examples of state requirements: 
In Arizona, beneficiaries in the long-term care program have access to 
an eligibility case worker who determines eligibility and helps them 
navigate their enrollment options; 
In California's counties where managed care enrollment is voluntary, 
enrollment brokers--who provide plan information to beneficiaries and 
help them choose a plan--must provide a presentation on plan options 
and enrollment to beneficiaries; 
In Minnesota, dual-eligible beneficiaries may call a help line 
specifically for seniors or people with disabilities for information 
about enrollment options. The state or county agency is also 
responsible for providing presentations or written materials to dually 
eligible seniors. 

Requirement: Continuity and coordination of care: 

Requirement: Can beneficiaries continue to see historical providers 
not in the managed care plan's network when transitioning into managed 
care or between plans? 
Payment system: Medicare Advantage: Federal requirements; 
MA organizations generally are not required to cover services by a 
beneficiary's previous provider who is not part of the MA network when 
a beneficiary first enrolls in a plan or switches plans. There are 
limited circumstances when MA organizations are required to cover such 
services during a transition period. MA organizations must ensure that 
covered services are available and accessible to beneficiaries. In 
implementing this requirement, CMS officials informed us that MA 
organizations must ensure that there is no gap in coverage or problems 
with access to medically necessary services when a beneficiary must 
change to a plan-contracted provider; 
Payment system: Medicaid managed care: Federal requirements; 
Medicaid managed care plans generally are not required to cover 
services by a beneficiary's previous provider who is not part of the 
managed care network.[J] Individual states, however, may have 
continuity of care requirements as defined under the terms and 
conditions of their waiver or state requirements; 
Examples of state requirements: 
In California, beneficiaries newly enrolled in managed care plans may 
request and receive coverage of the completion of treatments initiated 
by an out-of-network provider with whom they have an ongoing 
relationship in certain circumstances, such as for treatment of a 
terminal illness or acute condition. The length of the coverage 
depends on the stability of the beneficiary's health and the nature of 
the medical condition. For coverage to continue, the provider must 
accept either the health plan rate or Medicaid FFS rate, whichever is 
higher. Health plans must ensure, to the maximum extent possible, 
existing provider-beneficiary relationships are not disrupted for 
certain providers. These providers include traditional providers, 
which are physicians who have delivered services to Medicaid 
beneficiaries in the prior 6 months, and safety-net providers, which 
are any providers of comprehensive primary care or acute hospital 
inpatient services that provide these services to a significant number 
of Medicaid, charity, or medically indigent patients.[K]; 
In Minnesota, for newly enrolled dually eligible seniors, managed care 
plans must cover medically necessary services that an out-of-network 
provider, a different plan, or the state agency authorized before the 
dual-eligible beneficiary enrolled with the managed care plan. 
However, the plan may require the dual-eligible beneficiary to receive 
the authorized services from an in-network provider and the services 
be clinically appropriate. 

To what extent do beneficiaries have access to assistance with 
coordination of care? 
Payment system: Medicare Advantage: Federal requirements; 
MA plans must ensure coordination of services through various 
arrangements with network providers such as programs that coordinate 
plan services with community and social services in the service 
area.[L] Beneficiaries who enroll in an SNP--which can be a D-SNP or 
other type of SNP--must have access to appropriate staff to coordinate 
or deliver all services and benefits and coordinate communication 
among plan personnel, providers, and beneficiaries to ensure 
continuity of care[M]; 
Payment system: Medicaid managed care: Federal requirements; 
States determine whether plans must ensure that dual-eligible 
beneficiaries have a person or entity formally designated as primarily 
responsible for coordinating services. States also may determine that, 
on the basis of an assessment of special health care needs, plans must 
provide a treatment plan for these beneficiaries.[N]; 
Examples of state requirements: 
In Arizona, managed care plans are required to employ a transition 
coordinator who advocates for beneficiaries who are leaving or joining 
the plan and coordinates the transition between plans to ensure 
continuity of care. Beneficiaries in the long-term care program must 
receive case management from a case manager who helps them navigate 
their care options, including service planning and coordination and 
facilitating access to services; 
In California, beneficiaries enrolled in managed care have access to a 
state ombudsman office to provide assistance. Some beneficiaries, 
including those deemed medically fragile or those who have multiple 
diagnoses and require services from multiple providers, may receive 
targeted case management including help navigating care options. 
Managed care plans must also identify beneficiaries who are receiving 
services from out-of-network providers and ensure coordination of 
care. Additionally, managed care plans must have a call center and a 
24-hour nurse advice line to assist beneficiaries with care options; 
In Minnesota, for dually eligible seniors, access to a patient 
advocate or ombudsman to help navigate care options depends on the 
program. Dually eligible seniors enrolled in the program where the 
health plan is a Medicare D-SNP contracted to provide Medicaid 
benefits receive additional care coordination and case management. 
This is intended to ensure access and integration of covered services, 
which includes an assigned case manager to arrange and coordinate the 
necessary provision of supports and services. Dually eligible seniors 
who are in a non-D-SNP managed care plan have a case manager to 
coordinate plan services, but do not receive the additional care 
coordination. Managed care plans for dual-eligible beneficiaries with 
disabilities must have a range of case management services available, 
from telephone consultation to intensive ongoing intervention 
depending on the dual-eligible beneficiary's health status. Dual-
eligible beneficiaries have access to a 24-hour nurse line for 
consultations. 

Requirement: Provider network: 

Requirement: Are there requirements addressing whether the provider 
network has an adequate number of providers? 
Payment system: Medicare Advantage: Federal requirements; 
In order to limit beneficiaries to a network of providers, MA 
organizations must meet a number of requirements, including 
maintaining and monitoring a network of appropriate providers, under 
contract, that is sufficient to provide adequate access to covered 
services to meet the needs of enrolled beneficiaries[O]; 
Federal guidelines establish minimum requirements that vary, depending 
on a county's geographic designation, such as whether the county is 
urban or rural. MA organizations must contract with sufficient numbers 
of certain types of provider specialists per 1,000 beneficiaries in a 
county. For example, the networks of managed care plans operating in 
rural counties must have at least one full-time equivalent (FTE) 
primary care provider per 1,000 beneficiaries in a county.[P] 
Additionally, MA organizations must demonstrate that their network 
meets geographic requirements related to the time and distance it 
takes beneficiaries to travel to their providers. For example, in 
rural counties, MA organizations must also ensure that 90 percent of 
beneficiaries can access primary care providers within 40 minutes and 
30 miles of travel; 
Payment system: Medicaid managed care: Federal requirements; 
States must ensure, through contracts, that Medicaid managed care 
plans demonstrate that they have the capacity to serve expected 
enrollment in the service area in accordance with state standards.[Q] 
For example, plans must submit documentation to the state that they 
offer an appropriate range of preventive, primary care, and specialty 
services, and maintain a network of providers that is sufficient in 
number, mix, and geographic distribution to meet the needs of the 
anticipated number of enrollees. Federal regulations do not establish 
a minimum number of providers that must be in the network, though 
states may be subject to requirements under the terms and conditions 
of their waiver, if applicable; 
Examples of state requirements: 
In Arizona, managed care plans must ensure that their network of 
primary care providers is sufficient to provide beneficiaries with 
available and accessible services within specified time frames. 
Managed care plans also must contract with a specific number of 
providers established by the state, which varies depending on the area 
covered by the plan. For example, beneficiaries must be able to access 
emergency primary care services within 24 hours, urgent primary care 
services within 2 days, and routine primary care services within 21 
days. The network must also be sufficient to provide covered services 
within designated distance limits. For example, for the acute program, 
in Arizona's two most populated counties, at least 95 percent of the 
beneficiaries living in a metropolitan area must be within 5 miles of 
a primary care physician, dentist, or pharmacy; 
In California, plans ensure their provider network is adequate to 
provide the covered services for beneficiaries in the service area. 
For example, plans must maintain a provider to beneficiary ratio of 
one FTE primary care physician for every 2,000 beneficiaries, and one 
total FTE physician in the network for every 1,200 beneficiaries. 
Primary care physicians must be located within 30 minutes or 10 miles 
of a beneficiary's residence, unless the state has approved an 
alternative time and distance standard; 
In Minnesota, the maximum travel distance or time must be the lesser 
of 30 miles or 30 minutes from the beneficiary to the nearest provider 
for each of the following services: primary care, mental health, and 
general hospital services. For primary care, the plan must arrange 
services on a timely basis; 
appointment times are not to exceed 45 days from the date of a 
beneficiary's request for routine and preventive care and 24 hours for 
urgent care. Managed care plans may receive an exception by 
demonstrating this requirement is not feasible in a service area, or 
if the beneficiary has full knowledge when choosing a plan that 
contracts with no providers meeting these requirements. 

Are there requirements addressing whether the provider network has the 
appropriate types of providers? 
Payment system: Medicare Advantage: Federal requirements; 
Federal guidelines establish the minimum number of each provider and 
facility specialty type for each MA network. For example, the networks 
of MA plans must have at least one general surgeon and one 
cardiologist per 1,000 beneficiaries in a county. These networks must 
also include at least one occupational therapy and skilled nursing 
facility per 1,000 beneficiaries. MA organizations may need to 
contract with more than the minimum number of providers and facility 
specialty types to meet the time and distance requirements; 
Payment system: Medicaid managed care: Federal requirements; 
States must ensure, through contracts, that Medicaid managed care 
plans demonstrate that they have the capacity to serve expected 
enrollment in the service area in accordance with state standards.[Q] 
For example, plans must submit documentation to the state that they 
offer an appropriate range of preventive, primary care, and specialty 
services, and maintain a network of providers that is sufficient in 
number, mix, and geographic distribution to meet the needs of the 
anticipated number of enrollees. Federal regulations do not establish 
minimum numbers for specialty providers and facility specialty types 
that must be in the network, though states may be subject to 
requirements under the terms and conditions of their waiver, if 
applicable; 
Examples of state requirements: 
In Arizona, managed care plans must contract with specific types of 
providers, which varies by geographic service area and is determined 
by the state. The state has contracting requirements for a variety of 
types of providers, including dentists, pharmacists, and primary care 
providers. For long-term care plans, providers include nursing 
facilities, assisted living facilities, home-and community-based care 
providers, and behavioral health facilities; 
In Minnesota, generally, the maximum distance or time must be the 
lesser of 60 miles or 60 minutes from the beneficiary to the nearest 
provider of each of the following services: specialty physician, 
ancillary, specialized hospital, and all other health services not 
included in the 30 miles or 30 minutes requirement. Managed care plans 
may receive an exception by demonstrating this requirement is not 
feasible in a service area. 

Under what circumstances can beneficiaries access out-of-network 
services? 
Payment system: Medicare Advantage: Federal requirements; 
MA organizations must cover out-of-network benefits in some 
circumstances, such as ambulance services dispatched through 911 or 
for emergency or urgently needed services[R]; 
Payment system: Medicaid managed care: Federal requirements; 
Beneficiaries must receive out-of-network coverage if the network is 
unable to provide necessary services that are covered under the state 
plan. The cost to the beneficiary may be no greater than if the 
services were provided in network[S]; 
Examples of state requirements: 
In Arizona, out-of-network services are covered if: the beneficiary is 
referred by a primary care provider for specialty care outside the 
service area (the plan is required to provide all other medically 
necessary covered services); there is a net savings in costs without 
undue travel time or hardship for the beneficiary; the plan authorizes 
placement in a nursing facility outside the service area; or the 
services were provided during a prior period of coverage; 
In California, in addition to the federal requirement described above, 
Medicaid managed care plans in certain counties must arrange for 
rarely used medically necessary services to be provided by specialists 
outside the network if unavailable within the network. 

Requirement: Marketing materials[T]: 

Requirement: Are marketing materials permitted to promote enrollment 
in a specific health plan? 
Payment system: Medicare Advantage: Federal requirements; 
Yes, marketing materials are permitted to promote enrollment in a 
specific health plan if MA organizations send the materials to CMS for 
review prior to distribution[U]; 
Payment system: Medicaid managed care: Federal requirements; 
Yes, marketing materials are permitted to promote enrollment in a 
specific health plan[V] However, in some circumstances states have 
prohibited such materials; 
Examples of state requirements: 
Arizona does not permit Medicaid managed care plans to send marketing 
materials that are intended solely to promote enrollment in a specific 
health plan. All marketing materials must include a health message; 
California permits marketing materials to promote enrollment in a 
specific health plan through means such as billboards and flyers; 
Minnesota permits marketing materials to promote enrollment for some 
beneficiaries, including dual-eligible beneficiaries with 
disabilities, dually eligible seniors who are in a D-SNP, and Medicaid 
beneficiaries who will be eligible for Medicare within 6 months. 
Marketing is not permitted to dually eligible seniors who are not in a 
D-SNP. 

What requirements, if any, exist for the readability of marketing 
materials? 
Payment system: Medicare Advantage: Federal requirements; 
Marketing materials must provide an adequate written description of 
the plan's benefits and services and comply with formatting 
requirements, such as using a minimum font size; 
Payment system: Medicaid managed care: Federal requirements; 
Marketing materials must be written in easily understood language and 
format[W]. 

At what reading level do managed care organizations have to write 
marketing materials? 
Payment system: Medicare Advantage: Federal requirements; 
There are no federal requirements that marketing materials be written 
at a certain reading level; 
Payment system: Medicaid managed care: Federal requirements; 
There are no federal requirements that marketing materials be written 
at a certain reading level, however materials must be available in a 
format that considers those who have limited reading proficiency.[W]; 
Examples of state requirements: 
All correspondence sent to managed care beneficiaries, including 
marketing materials, in California must be written at or below the 
sixth-grade reading level; 
Marketing materials in Minnesota must be written at or below the 
seventh-grade reading level. 

When do marketing materials have to be translated for beneficiaries 
who do not speak English? 
Payment system: Medicare Advantage: Federal requirements; 
Medicare marketing material must be translated into any non-English 
language that is the primary language of at least 5 percent of 
individuals in the plan's service area.[X]; 
Payment system: Medicaid managed care: Federal requirements; 
Medicaid marketing materials must be translated into each prevalent 
language spoken by enrollees and potential enrollees in the plan's 
service area[Y]; 
Examples of state requirements: 
In California, marketing materials must be translated when: 3,000 
mandatorily enrolled managed care beneficiaries live in the plan's 
service area and indicate their primary language as other than English; 
or 1,000 mandatorily enrolled managed care beneficiaries in a single 
zip code or 1,500 mandatory managed care beneficiaries in adjacent zip 
codes live in the service area and indicate their primary language as 
other than English; 
In Minnesota, vital documents must be translated into 10 languages 
specified by the state. Additionally, vital documents must be 
translated when the lesser of either 5 percent or 1,000 beneficiaries 
eligible to be served or likely to be affected in the service area 
speak a non-English language. Plans that enroll dually eligible 
seniors must provide oral translation or translation by other means to 
any potential or current beneficiary who does not speak English. 

Requirement: Scope of services: 

Under what circumstances can beneficiaries obtain coverage for nursing 
facility services? 
Payment system: Medicare Advantage: Federal requirements; 
MA plans must provide coverage using the same criteria as FFS, which 
are described in table 3; 
For beneficiaries in MA plans, the plans may determine that a direct 
admission to an SNF without a prior hospital stay is medically 
appropriate; 
Payment system: Medicaid managed care: Federal requirements; 
Coverage of nursing facility services by managed care plans must be no 
more restrictive than Medicaid FFS coverage[Z]; 
Examples of state requirements: 
In Arizona, nursing facility services are covered when beneficiaries 
qualify for the state's long-term care program. Beneficiaries qualify 
for the long-term care program when they have a functional or medical 
condition that impairs functioning to the extent that the individual 
would be deemed at immediate risk of institutionalization. Impairments 
may include, among other things, requiring nursing care, daily nurse 
supervision, regular medical monitoring, or presenting impairments 
with cognitive functioning or self-care with activities of daily 
living. General requirements also include that nursing facility 
services are medically necessary, cost-effective, federally 
reimbursable, coordinated by a case manager, have prior authorization, 
provided in licensed or certified facilities, provided by registered 
providers, and the appropriate type of care as determined by the case 
manager or primary care provider. The acute care program covers 
nursing facility services for a limited amount of time if 
hospitalization will occur otherwise or the treatment cannot be 
administered safely in a less restrictive setting, such as at home; 
In California, county-organized health system plans must cover nursing 
facility services as covered under FFS. In the Two-Plan and Geographic 
Managed Care programs, health plans only cover the first month of 
admission and 1 additional month. At that point, the beneficiary is 
disenrolled into FFS; 
In Minnesota, managed care plans must cover nursing facility services 
under the same circumstances as when beneficiaries receive coverage in 
FFS. 

Under what circumstances can beneficiaries obtain coverage for home 
health services? 
Payment system: Medicare Advantage: Federal requirements; 
MA plans must provide coverage using the same criteria as FFS, which 
are described in table 3; 
Payment system: Medicaid managed care: Federal requirements; 
Coverage of home health services by managed care plans must be no more 
restrictive than Medicaid FFS coverage[Z]; 
Examples of state requirements: 
In Arizona, one way that beneficiaries can qualify for coverage of 
home health services is by qualifying for the state's long-term care 
program, which may occur when they have a functional or medical 
condition that impairs functioning to the extent that the individual 
would be deemed at immediate risk of institutionalization. Impairments 
may include, among other things, requiring nursing care, daily nurse 
supervision, regular medical monitoring, or presenting impairments 
with cognitive functioning or self-care with activities of daily 
living. General requirements for coverage also include that home 
health services are medically necessary, cost-effective, federally 
reimbursable, coordinated by a case manager, with prior authorization, 
provided in licensed or certified facilities, provided by registered 
providers, and the appropriate type of care as determined by the case 
manager or primary care provider. Reassessments must be conducted 
within 62-day periods after the initial assessment or more often if 
necessary; 
In California, home health coverage is not covered by managed care 
plans, and is provided under FFS; 
In Minnesota, managed care plans must provide coverage using the same 
criteria as FFS. 

Requirement: Appeals: 

How are beneficiaries notified of their right to appeal a denial, 
reduction, or termination of benefits? 
Payment system: Medicare Advantage: Federal requirements; 
Beneficiaries receive a notice of the initial coverage determination 
from their managed care plan, which must include information on the 
right to request another review by the MA organization and a 
subsequent appeal[AA]; 
Payment system: Medicaid managed care: Federal requirements; 
Beneficiaries must receive a notice of the initial coverage 
determination from their managed care plan, which must include 
information on the right to file an appeal with the plan. If the state 
does not require beneficiaries to exhaust the managed care plan's 
appeals process, the notice must also inform the beneficiaries of 
their right to request a state fair hearing[BB]. 

What is the appeals process for beneficiaries that have a benefit 
denied, reduced, or terminated? 
Payment system: Medicare Advantage: Federal requirements; 
Beneficiaries enrolled in an MA plan must first request the MA 
organization that made the initial determination to review the 
decision.[CC] For MA, if the adverse determination is affirmed, the 
issues must be reviewed and resolved by an independent review entity. 
[DD] If the independent entity affirms the adverse determination and 
the amount remaining in controversy is above a specified level, MA 
beneficiaries have the right to request a hearing before an 
administrative law judge (ALJ) in the Department of Health and Human 
Services.[EE] MA beneficiaries who are dissatisfied with the ALJ 
hearing decision may request review by the Medicare Appeals Council. 
[FF] MA beneficiaries may request judicial review by a U.S. district 
court if the amount in controversy is above a specified level and the 
Medicare Appeals Council's decision is the final determination of CMS 
or the Council denied the request for review.[GG] 
Payment system: Medicaid managed care: Federal requirements; 
Beneficiaries must have the ability to file an appeal with their 
Medicaid managed care plan as well as request a fair hearing before 
the state agency. States determine whether beneficiaries must first 
exhaust their plan-level appeal before they can request a state fair 
hearing. Once a final agency decision is made following a fair 
hearing, beneficiaries may request judicial review of the decision if 
permitted under state law[HH]; 
Examples of state requirements: 
Arizona requires beneficiaries to appeal first to their managed care 
plan before requesting a state fair hearing with a state ALJ. The 
state Medicaid agency must accept, modify, or reject the ALJ decision. 
After receiving the agency decision, beneficiaries can request another 
review. The state Medicaid agency will grant a rehearing or review if 
the beneficiary's rights have been materially affected, such as 
misconduct by a party or newly discovered evidence. Beneficiaries may 
then appeal to state court; 
In California, beneficiaries may submit an appeal to the plan, or may 
request a state fair hearing before exhausting the plan's appeals 
process. After appealing to the plan, if the service is denied, 
reduced, or terminated, or the plan fails to satisfactorily resolve 
the dispute, the beneficiary may request a review by the Independent 
Medical Review System, where an independent contractor reviews the 
appeal and makes a determination as to whether the service was 
medically necessary. The Department of Managed Health Care must adopt 
this determination. Beneficiaries may also request a state fair 
hearing prior to, during, or at the conclusion of the plan's appeal 
process. If the hearing is conducted by an ALJ, the Director of the 
Department of Health Services may adopt the ALJ's decision, decide the 
matter for himself or herself, or order a further hearing. After 
receiving a final decision from the state Medicaid agency, 
beneficiaries may request a rehearing or may file a petition for 
judicial review in state court; 
In Minnesota, beneficiaries may submit an appeal to their managed care 
plan, or may request a state fair hearing without first appealing to 
their plan. During the state fair hearing, a hearing officer 
recommends an order to the Commissioner of Human Services, who either 
accepts, rejects, or modifies the order. Beneficiaries who disagree 
with the commissioner may request reconsideration by the commissioner, 
who may either issue an amended order or affirm the original order. A 
beneficiary may then request judicial review in state court. 

Are there provisions to ensure continuity of access to benefits 
throughout the duration of the appeal process? 
Payment system: Medicare Advantage: Federal requirements; 
There are no federal requirements that benefits must continue during 
the appeals; 
Payment system: Medicaid managed care: Federal requirements; 
Benefits must continue during the appeal if: the beneficiary is mailed 
a notice of action and files an appeal prior to the effective date of 
action, the appeal involves services that are being reduced, 
terminated or denied; the course of treatment was previously 
authorized; the services were ordered by an authorized provider; 
the original period covered by the authorization has not expired; 
and the beneficiary requests an extension of benefits.[II] If the 
beneficiary also requests a state fair hearing, benefits must continue 
during that process in the circumstances as described above. 

To what extent are beneficiaries required to receive personal 
assistance, including from a care coordinator or other specialist, in 
navigating the appeals process? 
Payment system: Medicare Advantage: Federal requirements; 
Although federal law and regulations do not require that beneficiaries 
receive personal assistance when navigating the appeals process, there 
are certain protections. For example, Medicare beneficiaries may 
appoint a representative to assist them with an appeal.[JJ] 
Beneficiaries may also seek assistance from the Medicare Beneficiary 
Ombudsman through the 1-800-MEDICARE help line; 
Payment system: Medicaid managed care: Federal requirements; 
Federal regulations require that Medicaid managed care plans provide 
beneficiaries assistance with completing appeal forms and take other 
procedural steps, including providing interpreter services and toll-
free numbers for assistance for plan-level appeals.[KK] Medicaid 
beneficiaries may appoint a representative for the state fair 
hearing.[LL] Federal regulations provide states with the option of 
providing assistance during the state four hearing process[MM]; 
Examples of state requirements: 
In Arizona, managed care plans are required to provide reasonable 
assistance to beneficiaries when completing forms and taking other 
procedural steps during the appeals process, including, for example, 
providing interpreter services. 

Source: GAO analysis of federal and state statutes, regulations and 
guidance. 

Note: Information on state laws was confirmed by state Medicaid agency 
officials. We use "beneficiaries" when referring to statements or 
requirements that apply to all individuals receiving Medicare or 
Medicaid benefits, and "dual-eligible beneficiaries" when referring to 
statements or requirements that apply only to the dual-eligible 
beneficiaries. 

[A] Dual-eligible beneficiaries can only be mandatorily enrolled in 
managed care under an 1115 demonstration waiver or 1915(b) waiver. 

[B] 42 U.S.C. § 1395w-22(d), 42 C.F.R. § 422.112(a). In order to limit 
beneficiaries to a network, MA organizations must meet certain federal 
requirements, such as ensuring that covered services are available and 
accessible within the plan's service area. 

[C] 42 U.S.C. § 1396u-2(b)(5), 42 C.F.R. § 438.207. In establishing 
provider networks, plans must demonstrate that they have the capacity 
to serve expected enrollment in the service area in accordance with 
state standards. 

[D] 42 U.S.C. § 1395w-21(a)(1), (b)(1). 

[E] 42 U.S.C. § 1396u-2(a)(3), 42 C.F.R. § 438.52. States may also 
limit beneficiaries to enrollment in a single health insuring 
organization, which is a certain type of plan operated by a county, as 
long as the beneficiaries have a choice of at least two primary care 
providers. This option only applies in the state of California. 

[F] 42 U.S.C. § 1395w-21(a), (e), 42 C.F.R. § 422.62. 

[G] 42 C.F.R. § 438.56(c). 

[H] 42 C.F.R. § 422.2262(b). 

[I] 42 C.F.R. § 438.10(e). 

[J] There are certain exceptions. States that mandatorily enroll 
beneficiaries into plans in rural areas without providing a choice of 
plans must cover out-of-network services and give the beneficiary's 
prior provider an opportunity to join the network. If the provider 
does not join, the beneficiary must select or be transitioned to a 
participating provider within 60 days. 42 C.F.R. § 438.52. In 
addition, states that mandatorily enroll Medicaid beneficiaries under 
a state plan amendment must meet certain federal requirements. 
Specifically, if beneficiaries do not select a plan, the state must 
ensure there is an enrollment process to assign them to a plan. This 
process must seek to preserve existing provider-beneficiary 
relationships in which the provider was the main source of Medicaid 
services for the beneficiary during the previous year. 42 C.F.R. § 
438.50(f). However, these federal requirements do not apply to dual-
eligible beneficiaries, who cannot be mandatorily enrolled in managed 
care under a state plan amendment. 

[K] In 2011, California began mandatorily enrolling seniors and 
persons with disabilities--excluding dual-eligibles--into Medicaid 
managed care. Beneficiaries who are mandatorily enrolled in managed 
care may see the their prior FFS provider for the first 12 months if 
the provider works with and accepts payment from the managed care plan 
and had no quality of care issues. 

[L] 42 C.F.R. § 422.112(b). 

[M] 42 C.F.R. § 422.101(f). 

[N] 42 C.F.R. § 438.208(a)(3). 

[O] 42 U.S.C. § 1395w-22(d), 42 C.F.R. § 422.112(a)(1). 

[P] For CMS's network adequacy calculations, the primary care provider 
category comprises physicians in general practice, family practice, 
internal medicine, and geriatrics, and primary care physician 
assistants and primary care nurse practitioners. 

[Q] 42 U.S.C. § 1396u-2(b)(5), 42 C.F.R. § 438.207. 

[R] 42 C.F.R. § 422.100(b). 

[S] 42 C.F.R. § 438.207(b). 

[T] We refer to marketing communications in the context of materials 
intended to promote enrollment in a specific health plan. 

[U] 42 C.F.R. § 422.2262. 

[V] 42 C.F.R. § 438.104. 

[W] 42 U.S.C. § 1396u-2(a)(5), 42 C.F.R. §§ 438.10(b), 438.104(b)(iii). 

[X] 42 C.F.R. § 422.2264. 

[Y] 42 C.F.R. § 438.10(c). States must establish a methodology for 
identifying prevalent non-English languages spoken by enrollees and 
potential enrollees throughout the state. 

[Z] 42 C.F.R. § 438.210. 

[AA] 42 U.S.C. § 1395w-22(g)(1), 42 C.F.R. § 422.568(e). 

[BB] 42 C.F.R. § 438.404. 

[CC] 42 U.S.C. § 1395w-22(g)(1)-(2), 42 C.F.R. §§ 422.566, .578. MA 
organizations must have a process in place to make organizational 
determinations as to whether a beneficiary is entitled to receive 
coverage for a health service. Beneficiaries have the right to request 
the MA organization that made the initial determination to review any 
adverse determination. When a denial of coverage is based on the lack 
of medical necessity, the reconsidered determination must be made by a 
physician with the appropriate medical expertise. 

[DD] 42 U.S.C. § 1395w-22(g)(4), 42 C.F.R. § 422.592. 

[EE] 42 U.S.C. § 1395w-22(g)(5), 42 C.F.R. § 422.600. ALJs are 
employed by the Department of Health and Human Services and are 
responsible for conducting formal proceedings such as hearings, among 
other things. CMS has established a formula for annually calculating 
the minimum amount that must be in controversy for beneficiaries to 
appeal to an ALJ. That amount was $130 for 2012. 

[FF] 42 C.F.R. § 422.608.The Medicare Appeals Council undertakes a de 
novo review and may issue a final decision, dismiss the appeal, or 
remand the case to the ALJ with instructions for re-hearing the case. 

[GG] The minimum amount that must be in controversy for beneficiaries 
to request judicial review is updated annually. The amount was $1,350 
for 2012. 

[HH] 42 U.S.C. § 1396a(a)(3), 42 U.S.C. § 1396u-2(b)(4), 42 C.F.R. §§ 
431.205, .240(a)(3), 438.400, .402. Each Medicaid managed care plan 
must have an internal appeals process in place for beneficiaries to 
challenge certain actions, including termination, suspension, or 
reduction of a service, denial or limited authorization of a service, 
or a denial of payment for a service. State Medicaid agencies must 
provide for a hearing before the agency or an evidentiary hearing at 
the local level with the right to appeal to a state agency hearing. 
State agency hearings must be conducted by one or more impartial 
officials. In providing a final agency decision to the beneficiary, 
state agencies may choose to accept or reverse the officials' 
determination or request a rehearing. 

[II] 42 C.F.R. § 438.420. 

[JJ] 42 C.F.R. §§ 422.672. 

[KK] 42 C.F.R. § 438.206. 

[LL] 42 C.F.R. § 431.206(b). 

[MM] 42 C.F.R. § 431.221(c). States may assist beneficiaries with the 
submission and processing of their fair hearing requests. 

[End of table] 

[End of section] 

Appendix III: Comments from the Department of Health and Human 
Services: 

Department of Health & Human Services: 
Office of the Secretary: 
Assistant Secretary for Legislation: 
Washington, DC 20201: 

November 21, 2012: 

Kathleen King: 
Director, Health Care: 
U.S. Government Accountability Office: 
441 G Street NW: 
Washington, DC 20548: 

Dear Ms. King: 

Attached are comments on the U.S. Government Accountability Office's 
(GAO) report entitled, "Medicare and Medicaid: Consumer Protection 
Requirements Affecting Dual-Eligible Beneficiaries Vary Across 
Programs, Payment Systems, and States" (GA0-13-100). 

The Department appreciates the opportunity to review this report prior 
to publication. 

Sincerely, 

Signed by: 

Jim R. Esquea: 
Assistant Secretary for Legislation: 

Attachment: 

General Comments Of The Department Of Health And Human Services (HHS) 
On The Government Accountability Office's (GAO) Draft Report Entitled, 
"Medicare And Medicaid: Consumer Protection Requirements Affecting 
Dual-Eligible Beneficiaries Vary Across Programs, Payment Systems, And 
States". (GAO-13-100) 

The Department appreciates the opportunity to review and comment on 
this draft report. The Federal Coordinated Health Care Office 
(Medicare-Medicaid Coordination Office) serves people who are enrolled 
in both Medicare and Medicaid, Medicare-Medicaid enrollees, also known 
as dual eligible benefiCiaries. Our goal is to make sure Medicare-
Medicaid enrollees have full access to seamless, high quality health 
care and to make the system as cost-effective as possible. We also 
strive to provide consumer protections for dual eligible beneficiaries. 

While this report provides no recommendations for the Centers for 
Medicare & Medicaid Services (CMS), HHS agrees that the report is an 
accurate assessment of the programs overviewed. 

We would also like to note that, as mentioned in GAO's report, one of 
the goals of our Medicare-Medicaid Coordination Office is to align the 
regulations between the two programs, and in support of these and 
other efforts, we are working with states to develop demonstrations to 
integrate Medicare and Medicaid for dual eligible beneficiaries. We 
identified a number of specific opportunities through our Alignment 
initiative and have used the Initiative as a starting point for 
streamlining Medicare and Medicaid Program rules, requirements and 
policies and to inform the development of our state Demonstrations to 
Integrate Care for Dual-Eligible Individuals. 

Through the Alignment initiative, we have already made some progte4s 
in the area of appeals, one of the consumer protections described in 
the report, CMS has developed a revised Notice of Medicare Denial of 
Coverage (or Payment) (CMS-10003). This notice combines the existing 
Notice of Denial of Medicare Coverage with the Notice of Denial of 
Payment and includes optional language to be used in cases where a 
Medicare health plan enrollee, also receives full Medicaid benefits 
that are being managed by the Medicate health plan. We believe that the
combined notice, currently in the Paperwork Reduction Act approval 
process, will greatly increase flexibility for health plans 
administering benefits to the dual-eligible population and enhance 
enrollee understanding of and access to all of their appeal rights. 

[End of section] 

Appendix IV: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Kathleen M. King, (202) 512-7114 or kingk@gao.gov: 

Staff Acknowledgments: 

In addition to the contact named above, Randy DiRosa (Assistant 
Director), Lori Achman, Anne Hopewell, Lisa Motley, Laurie Pachter, 
Pauline Seretakis, Lillian Shields, and Hemi Tewarson made key 
contributions to this report. 

[End of section] 

Footnotes: 

[1] Medicare Payment Advisory Committee (MEDPAC), Report to Congress: 
Medicare and the Health Care Delivery System (Washington, D.C.: June 
2012). Medicare is the federal health insurance program for seniors, 
certain individuals with disabilities, and individuals with end-stage 
renal disease. Medicaid is the joint federal-state health care program 
that provides health care coverage for certain categories of low-
income adults and children. The estimated number of dual-eligible 
beneficiaries includes both those who qualified for full Medicaid 
benefits ("full" duals) and those who received only assistance with 
Medicare premiums and cost sharing ("partial" duals). About 80 percent 
of dual-eligible beneficiaries were full duals. In this report, unless 
otherwise stated, the dual-eligible beneficiaries to which we refer 
are those entitled to full Medicaid benefits. 

[2] MEDPAC, A Data Book: Health Care Spending and the Medicare Program 
(Washington, D.C.: June 2012). Spending is for dual-eligible 
beneficiaries in Medicare fee-for-service (FFS) only. Under a FFS 
system, providers are paid on a per-service basis. 

[3] Medicaid and CHIP Payment and Access Commission (MACPAC), Report 
to the Congress: The Evolution of Managed Care in Medicaid 
(Washington, D.C.: June 2012). These data include both full and 
partial dual-eligible beneficiaries. 

[4] Melanie Bella, Director, the Medicare-Medicaid Coordination 
Office, Centers for Medicare & Medicaid Services (CMS), Examining 
Medicare and Medicaid Coordination for Dual Eligibles, testimony 
before the Special Committee on Aging, 112th Cong., July 18, 2012. 
Total includes spending for both full and partial dual-eligible 
beneficiaries. 

[5] In general, Medicare beneficiaries pay monthly premiums and a 
portion of their health care costs as coinsurance or deductibles. In 
the case of dual-eligible beneficiaries, their state Medicaid program 
covers some or all of these costs. 

[6] Pub. L. No. 111-148, § 2602. 124 Stat. 119, 315 (2010). 

[7] For enrollment choice, we reviewed federal requirements relating 
to (1) a beneficiary's choice between mandatory and voluntary 
enrollment in Medicare Advantage (MA) and Medicaid managed care, (2) 
the ability of beneficiaries to select primary care providers, (3) the 
ability of beneficiaries to switch between managed care and FFS, and 
(4) informing and counseling beneficiaries on enrollment choices. 

[8] We focused on the scope of the nursing facility and home health 
benefits, among all benefits, specifically because both Medicare and 
Medicaid cover these services, though under different circumstances, 
and a disproportionately large number of dual-eligible beneficiaries 
use these services. In this report, we limited our review to federal 
requirements related to circumstances under which beneficiaries can 
obtain nursing facility or home health services under Medicare or 
Medicaid. 

[9] We reviewed federal requirements related to certain aspects of 
appeals defined as (1) how beneficiaries are notified of their right 
to appeal a denial of benefits, (2) the appeals process for when 
beneficiaries have a benefit denied, reduced, or terminated, (3) 
whether there is continuity of benefits during the appeals process, 
and (4) whether beneficiaries are required to receive help when 
navigating appeal options. 

[10] For purposes of this report, we defined continuity of care as 
federal requirements relating to (1) the ability of beneficiaries to 
continue seeing historical providers not in the plan's network when 
transitioning to managed care or between plans and (2) whether 
beneficiaries have access to assistance with coordination of care 
options. For provider networks, we reviewed federal requirements 
related to (1) the adequacy of the number and types of providers and 
(2) coverage of out-of-network services. With respect to marketing, we 
reviewed federal requirements addressing (1) whether marketing 
materials are permitted to promote enrollment and (2) the readability, 
reading level, and translation of marketing materials. 

[11] Under MA, Medicare beneficiaries may choose to have their 
benefits provided by private entities that offer plans under contract 
with CMS. In this report we only looked at requirements applicable to 
MA organizations that offer one type of plan: coordinated care plans. 
We refer to these entities as "MA organizations" or "MA plans." 
Coordinated care plans include traditional managed care plans such as 
health maintenance organizations, preferred provider organizations, 
and provider service organizations. As this report is for 
consideration of future integrated plan models that coordinate care 
for dual-eligible beneficiaries, we do not include other types of MA 
plans such as private fee-for-service plans or Medicare savings 
accounts. We also did not consider requirements that may apply to the 
Medicare Part D prescription drug benefit specifically. 

[12] For purposes of this report, we only reviewed requirements that 
are applicable to managed care plans that offer the full range of 
Medicaid benefits. Accordingly, we did not address requirements that 
may apply to limited benefit plans which may provide only a single 
service, such as dental or behavioral health. 

[13] MA organizations are required to respond to grievances, which are 
complaints that come directly to the MA organization from 
beneficiaries. CMS oversees MA organizations' grievance processes 
through the review of plan-submitted data. 

[14] Under federal law, states must cover certain populations such as 
low-income children, pregnant women, and individuals with disabilities 
under their Medicaid programs. Subject to federal approval, states 
also have the option of extending Medicaid coverage to additional 
populations, beyond these mandatory categories. 

[15] States commonly contract with managed care organizations to 
provide the full range of covered Medicaid services to certain 
enrollees. States may also rely on other arrangements, such as primary 
care case management programs in which enrollees are assigned to a 
primary care provider who is responsible for providing primary care 
services and for coordinating other needed health care services. 

[16] See 42 U.S.C. § 1396u-2(a)(1)-(2). 

[17] States must comply with the specific terms and conditions of an 
approved waiver, which in some cases may be different than the federal 
requirements that would otherwise apply. 

[18] See 42 U.S.C. § 1315(a). 

[19] See 42 U.S.C. § 1396n(b). Under these waivers, the Secretary has 
the authority to waive the requirement that Medicaid beneficiaries can 
obtain services from any qualified Medicaid provider, thereby allowing 
states to limit beneficiaries' choice to a network of providers. 

[20] Marsha Gold, Gretchen Jacobson, and Rachel Garfield, "There is 
Little Experience and Limited Data to Support Policy Making on 
Integrated Care for Dual Eligibles," Health Affairs, vol. 31, no. 6 
(June 2012). This percentage does not include dual-eligible 
beneficiaries enrolled in managed care plans that provide a single or 
limited set of services, such as dental or behavioral health. 

[21] States may also receive CMS approval for a state plan amendment 
to provide access to home-and community-based services to Medicaid 
beneficiaries under section 1915(i) authority or section 1915(k) 
authority. Section 1915(i) authority provides states with the option 
to furnish home-and community-based services to Medicaid beneficiaries 
who do not meet institutional level-of-care requirements. Section 
1915(k) allows states to cover home-and community-based attendant 
services for Medicaid beneficiaries who would otherwise qualify for 
institutional care. 

[22] As an illustration, federal regulations require that states have 
procedures in effect for monitoring the following: (1) recipient 
enrollment and disenrollment, (2) processing of grievances and 
appeals, (3) violations subject to intermediate sanctions, (4) 
violations of conditions of the receipt of federal funding, and (5) 
all other contractual provisions, as appropriate. 42 C.F.R. § 438.66. 

[23] While our discussion of continuity of care focuses on the period 
of transition as a beneficiary changes managed care plans or payment 
systems, continuing relationships with providers and coordinating care 
are also important for dual-eligible beneficiaries in FFS given the 
complex array of services they may receive from several different 
providers. 

[24] Although we focus on provider networks in relation to managed 
care plans, studies have found differences between provider 
participation in Medicare FFS and Medicaid FFS. See MACPAC, Report to 
the Congress on Medicaid and CHIP (Washington, D.C.: March 2011), and 
Sandra Decker, "In 2011 Nearly One-Third of Physicians Said They Would 
Not Accept New Medicaid Patients, But Rising Fees May Help," Health 
Affairs, vol. 31, no. 8 (August 2012). 

[25] Kathleen Gifford et al., A Profile of Medicaid Managed Care 
Programs in 2010: Findings from a 50-State Survey, The Henry J. Kaiser 
Family Foundation (Washington, D.C.: September 2011). 

[26] 42 U.S.C. § 1395d(2). 

[27] Long-term care consists of health-related care and services above 
the level of room and board that are not available in the community 
and are needed regularly due to a mental or physical condition. 

[28] 42 U.S.C. § 1396a(a)(10)(A). 

[29] CMS, Initiative to Reduce Avoidable Hospitalizations among 
Nursing Facility Residents (Mar. 15, 2012). 

[30] Edith Walsh et al., Cost Drivers for Dually Eligible 
Beneficiaries: Potentially Avoidable Hospitalizations from Nursing 
Facility, Skilled Nursing Facility, and Home and Community Based 
Services Waiver Programs, prepared for the Centers for Medicare & 
Medicaid Services (Washington, D.C.: August 2010). 

[31] Medicare may also cover home health aide services on a part-time 
or intermittent basis if they are needed as support services for 
skilled nursing services. 

[32] 42 U.S.C. § 1396a(a)(10)(D). 

[33] 42 C.F.R. § 440.70. 

[34] MEDPAC, Report to the Congress: New Approaches in Medicare, 
(Washington, D.C.: June 2004). 

[35] ADLs generally refer to activities such as eating, bathing, using 
the toilet, dressing, walking across a small room, and getting into or 
out of a chair or bed. IADLs are necessary for an individual to live 
independently in the community and include activities such as 
preparing meals, managing money, shopping for groceries or personal 
items, performing housework, using a telephone, doing laundry, getting 
around outside the home, and taking medications. 

[36] Both Medicare and Medicaid have standard appeals processes and 
expedited appeals processes in cases of urgent need. In this report, 
we only describe the standard Medicare and Medicaid appeals processes. 

[37] A PACE benefit program must include all Medicare covered items 
and services, Medicaid covered items and services as determined by the 
state, and other services determined necessary by an interdisciplinary 
team to improve the participant's overall health status. 

[38] National PACE Association, "PACE in the States" (Alexandria, Va.: 
September 2012). 

[39] The MMA authorized a type of MA plan referred to as a special 
needs plan to address the unique needs of certain categories of 
Medicare beneficiaries, including dual-eligibles. Pub. L. No. 108-173, 
§ 231, 117 Stat. 2066, 2207 (2003) (codified, as amended, at 42 U.S.C. 
§ 1395w-21(a)(2)(A)(ii)). SNPs, including D-SNPs, have been 
reauthorized several times since their establishment was first 
authorized in 2003. 

[40] Dual-eligible beneficiaries may also choose to enroll in other 
types of special needs plans for which they are eligible, including 
institutional SNPs for individuals residing in nursing facilities or 
institutions, and chronic condition SNPs for individuals with severe 
or disabling chronic conditions. 

[41] See GAO, Medicare Special Needs Plans: CMS Should Improve 
Information Available about Dual Eligible Plans' Performance, 
[hyperlink, http://www.gao.gov/products/GAO-12-864] (Washington, D.C.: 
Sept. 13, 2012) 

[42] Effective January 1, 2010, all MA organizations offering a new D-
SNP must have a contract with the state Medicaid agency to operate 
within a state. Existing D-SNPs that do not have a contract may 
continue to operate through the 2012 contract year but may not expand 
service areas during this period. 42 C.F.R. § 422.107(b)(d). If a D-
SNP contracts with a state Medicaid agency, the D-SNP receives 
capitation payments from both Medicare and Medicaid. 

[43] The annual coordinated election period extends from October 15 
through December 7 of each year. 

[44] During these times, beneficiaries may also switch between managed 
care plans. Beneficiaries may also disenroll from MA plans and enroll 
in FFS at any time from January 1 through February 14 of each year. 42 
U.S.C. §§ 1395w-21(a), (e), 42 C.F.R. § 422.62. 

[45] An MA organization may specify the network of providers from whom 
beneficiaries may obtain services if the organization meets certain 
criteria such as ensuring that covered services are available and 
accessible within the plan's service area. 42 U.S.C. § 1395w-22(d), 42 
C.F.R. § 422.112(a). There are certain circumstances, however, when MA 
plans must provide coverage of out-of-network services such as for 
emergency or urgently needed services. 42 C.F.R. § 422.100(b). 

[46] 42 U.S.C. § 1395cc(a). A provider may be qualified to receive 
Medicare reimbursement for services rendered to a beneficiary if that 
provider enters into an agreement with CMS that meets applicable 
standards. 

[47] In addition to using waivers, states may also amend their 
Medicaid state plan to require certain Medicaid populations to enroll 
in managed care; however, federal law prohibits states from enrolling 
dual-eligible beneficiaries under this authority. If a state operates 
its Medicaid managed care program under this authority, enrollment of 
dual-eligible beneficiaries would need to be voluntary. See 42 U.S.C. 
§ 1396u-2(a)(1). 

[48] 42 U.S.C. § 1396u-2(a)(3), 42 C.F.R. § 438.52. States may also 
limit beneficiaries to enrollment into a single health insuring 
organization, which is a certain type of plan operated by a county, as 
long as the beneficiaries have a choice of at least two primary care 
providers. This option only applies to the state of California. 

[49] States must ensure that Medicaid managed care plans maintain a 
network of appropriate providers that is sufficient to provide 
adequate access to all covered services. In addition, there are 
certain circumstances when a Medicaid managed care plan must cover out-
of-network services, such as when a beneficiary is unable to obtain 
necessary services within the plan's provider network. 42 C.F.R. § 
438.206(b). 

[50] 42 U.S.C. § 1396a(a)(23)(A). 

[51] California is planning an expansion of Medicaid managed care in 
the state. By June 2013, all counties in the state will offer Medicaid 
managed care plans to beneficiaries. 

[52] In the counties with the Two-Plan or Geographic Managed Care 
programs, most other Medicaid populations are mandatorily enrolled in 
managed care. 

[53] A 1915(b)(c) waiver simultaneously implements a 1915(b) and a 
1915(c) waiver. The combined waiver allows states to provide a 
continuum of services for the elderly and people with disabilities as 
long as the requirements of both waivers are met. 

Minnesota's program for seniors is for all beneficiaries age 65 and 
over, whether or not they have a disability. Minnesota has a separate 
program for other Medicaid populations who are not dual-eligible 
beneficiaries. 

[54] 42 C.F.R. § 422.112(b). 

[55] 42 C.F.R. § 422.101(f). 

[56] States that mandatorily enroll beneficiaries, including dual-
eligibles, in rural areas into managed care without providing a choice 
of plans must cover out-of-network services and give the beneficiary's 
prior FFS provider an opportunity to become a network provider. If the 
provider does not join the network, the beneficiary must select or be 
transitioned to a participating provider within 60 days. 42 C.F.R. § 
438.52(b). 

[57] 42 C.F.R. § 438.208(a)(3). For example, states determine whether 
plans must ensure that dual-eligible beneficiaries have a person or 
entity formally designated as primarily responsible for coordinating 
services. States also may determine that, on the basis of an 
assessment of special health care needs, plans must provide a 
treatment plan for these beneficiaries. 

[58] In addition, during California's transition of non-dually 
eligible seniors and persons with disabilities into managed care, if 
beneficiaries were seeing a FFS provider before enrolling into a 
health plan, the beneficiaries may have been able to continue to see 
that doctor for 12 months while enrolled in the health plan, as long 
as the physician accepted payment from and agreed to work with the 
health plan and had no quality of care issues. 

[59] See 42 U.S.C. § 1395w-22(d), 42 C.F.R. § 422.112(a)(1). 

[60] For CMS's network adequacy calculations, the primary care 
provider category comprises physicians in general practice, family 
practice, internal medicine, and geriatrics, and primary care 
physician assistants and primary care nurse practitioners. 

[61] 42 U.S.C. § 1396u-2(b)(5), 42 C.F.R. § 438.207. 

[62] 42 U.S.C. § 1395w-21(h)(1), 42 C.F.R. § 422.2262(a). 

[63] 42 C.F.R. § 422.2264. 

[64] 42 U.S.C. § 1396u-2(d)(2)(A), 42 C.F.R. § 438.104(b). 

[65] 42 U.S.C. § 1396u-2(a)(5), 42 C.F.R. §§ 438.10(b), 
438.104(b)(iii). 

[66] 42 C.F.R. §§ 438.104(b)(iii), 438.10(c). States must establish a 
methodology for identifying prevalent non-English languages spoken by 
enrollees and potential enrollees throughout the state. 

[67] 42 U.S.C. § 1395d(2). MA plans generally must cover all services 
covered by Medicare FFS. 

[68] 42 C.F.R. §§ 409.30, 31. For beneficiaries in MA plans, however, 
the plans may determine that a direct admission to an SNF without a 
prior hospital stay is medically appropriate. 

[69] SNFs provide skilled nursing care or rehabilitation services. In 
addition to these services, nursing facilities may also provide health-
related care to beneficiaries who, because of their mental or physical 
condition, require institutional services (above the level of room and 
board). 

[70] 42 U.S.C. § 1396a(a)(10)(A). Medicaid managed care plans must 
cover the same benefits as covered by FFS under the state Medicaid 
plan. 

[71] 42 C.F.R. § 440.50. Although coverage of services must be 
sufficient in amount, duration, and scope to achieve its purpose, 
states may place appropriate limits on services on the basis of 
criteria such as medical necessity or utilization control procedures. 
42 C.F.R. § 440.230. While Medicaid managed care plans are required to 
cover services in the same manner as under the state Medicaid plan, in 
some cases states allow managed care plans to modify requirements so 
long as they are no more restrictive than the requirements under FFS. 
44 C.F.R. § 438.210. 

[72] Intermittent means that the skilled care is either provided or 
needed fewer than 7 days each week, or less than 8 hours of each day 
for periods of 21 days or less, with extensions in exceptional 
circumstances when the need for additional care is finite and 
predictable. 

[73] 42 C.F.R. §§ 409.42, 43. The written plan of care must be 
reviewed every 60 days or more frequently in some circumstances, such 
as when there is a change in the beneficiary's condition. 

[74] 42 C.F.R. § 440.70. As referenced earlier, states may also 
provide coverage for home health services under a 1915(c) waiver, or 
other authorities, under which there may be additional requirements to 
access home health benefits. 

[75] Although coverage of services must be sufficient in amount, 
duration, and scope to achieve its purpose, states may place 
appropriate limits on services on the basis of criteria such as 
medical necessity or utilization control procedures. 42 C.F.R. § 
440.230. In addition, while Medicaid managed care plans are required 
to cover services in the same manner as under the state Medicaid plan, 
in some cases states allow managed care plans to modify requirements 
so long as they are no more restrictive than the requirements under 
FFS. 44 C.F.R. § 438.210. 

[76] North Carolina has several 1915(c) waivers to cover additional 
services for certain populations. 

[77] These appeals processes also apply when eligibility is denied or 
a claim is not acted upon with reasonable promptness. For this report, 
we are focusing on appeals for coverage that is denied, reduced, or 
terminated. There are other parties that may appeal a denial, 
reduction, or termination of a benefit. For purposes of this report, 
however, we only address the beneficiary's rights with respect to 
these appeal processes. 

[78] For Medicare, beneficiaries must receive a notice of the initial 
coverage determination that includes information on the right to 
request review by the appropriate entity and subsequent appeals 
processes, when applicable. 42 U.S.C. §§ 1395w-22(g)(1), 1395ff(a)(4), 
42 C.F.R. §§ 405.921(a), 422.568(e). Medicaid FFS beneficiaries must 
receive notice from the state informing them of their right to a state 
fair hearing when the state intends to terminate, suspend, or reduce 
covered services. 42 C.F.R. § 431.206. Medicaid managed care enrollees 
must receive a notice of the initial coverage determination from their 
managed care plan, which must include information on the right to file 
an appeal with the plan or request a state fair hearing, when 
applicable. 42 C.F.R. § 438.404. 

[79] MA organizations must have a process in place to make 
organizational determinations as to whether a beneficiary is entitled 
to receive coverage for a health service. Beneficiaries have the right 
to request reconsideration by the MA organization of any adverse 
organizational determination. When a denial of coverage is based on 
the lack of medical necessity, the reconsidered determination must be 
made by a physician with the appropriate medical expertise. 42 U.S.C. 
§1395w-22(g)(1)-(2), 42 C.F.R. §§ 422.566, .578. 

[80] 42 U.S.C. § 1395ff(a), (b), 42 C.F.R. § 405.940. CMS contracts 
with Medicare Administrative Contractors to process claims in Medicare 
FFS. The contractors make initial determinations as to whether 
Medicare will cover services. Beneficiaries dissatisfied with this 
initial determination may request a redetermination from the 
contractor, regardless of the amount. 

[81] 42 U.S.C. §§ 1395w-22(g)(4), 1395ff(c), 42 C.F.R. §§ 405.960, 
422.592. 

[82] 42 U.S.C. § 1395w-22(g)(5), 42 U.S.C. § 1395ff(b), (d), 42 C.F.R. 
§§ 405.1000, 405.1004, 422.600. Medicare FFS beneficiaries have the 
right to request an ALJ hearing if (1) they are dissatisfied with the 
qualified independent contractor's decision, (2) the qualified 
independent contractor has not rendered its decision within applicable 
time frames, or (3) the qualified independent contractor dismissed 
their request. ALJs are employed by the Department of Health and Human 
Services and are responsible for conducting formal proceedings such as 
hearings, among other things. CMS established a formula for annually 
calculating the minimum amount that must be in controversy for 
beneficiaries to appeal to an ALJ. That amount was $130 for 2012. 

[83] 42 C.F.R. §§ 405.1100, 422.608. The Medicare Appeals Council 
undertakes a de novo review and may issue a final decision, dismiss 
the appeal, or remand the case to the ALJ with instructions for 
rehearing the case. Medicare FFS beneficiaries may also request this 
review if the ALJ dismissed their case or failed to issue a timely 
decision. 

[84] 42 U.S.C. § 1395w-22(g)(5), 42 U.S.C. § 1395ff(b), 42 C.F.R. §§ 
405.1132, 422.612.The minimum amount that must be in controversy for 
beneficiaries to request judicial review is updated annually. The 
amount was $1,350 for 2012. In addition to the threshold amount 
requirement, Medicare FFS beneficiaries may request judicial review if 
the Medicare Appeals Council has not issued a decision, dismissed the 
case or remanded the case back to an ALJ within the relevant period. 
MA beneficiaries may request judicial review if the council's decision 
is the final determination of CMS or the council denied the request 
for review. 

[85] 42 U.S.C. § 1396a(a)(3), 42 C.F.R. §§ 431.205, .240(a)(3). State 
Medicaid agencies must provide for a hearing before the agency or an 
evidentiary hearing at the local level with the right to appeal to a 
state agency hearing. The state agency hearing must be conducted by 
one or more impartial officials. In providing a final agency decision 
to the beneficiary, state agencies may choose to accept or reverse the 
hearing officials' decision or request a rehearing. 

[86] 42 U.S.C. § 1396u-2(b)(4), 42 C.F.R. §§ 438.400, .402. Each 
Medicaid managed care plan must have an internal appeals process in 
place for beneficiaries to challenge certain actions, including 
termination, suspension, or reduction of a service, denial or limited 
authorization of a service, or a denial of payment for a service. 

[87] For Medicaid FFS beneficiaries, benefits must continue unless it 
is determined at the hearing that the sole issue is one of federal or 
state law or policy. 42 C.F.R. § 431.230. States may also reinstate 
benefits if the beneficiary requests a hearing within a certain time 
frame after the date of action. 42 C.F.R. § 431.231. For Medicaid 
managed care beneficiaries, benefits must continue if the beneficiary 
files a timely appeal, the appeal involves the termination, 
suspension, or reduction of a previously authorized service, the 
service was ordered by an authorized provider, the original period 
covered by the authorization has not expired, and the beneficiary 
requests the extension of benefits. 42 C.F.R. § 438.420. 

[88] For example, states may assist beneficiaries with the submission 
and processing of their appeal requests. See 42 C.F.R. § 431.221(c). 

[89] 42 C.F.R. § 438.406. 

[90] For more serious violations, CMS may choose to immediately 
proceed to later-stage compliance or enforcement actions. 

[91] CMS's Compliance Activity Module (CAM) includes 45 different 
compliance categories. In consultation with CMS staff, we determined 
the top eight issue categories most closely aligned with the consumer 
protections identified and detailed in our first finding. However, 
actions directly tied to dual-eligible beneficiaries could not be 
broken out from actions tied to the Medicare beneficiary population 
broadly. 

[92] We have previously reported on marketing violations by MA 
organizations. See GAO, Medicare Advantage: CMS Assists Beneficiaries 
Affected by Inappropriate Marketing but Has Limited Data on Scope of 
Issue, [hyperlink, http://www.gao.gov/products/GAO-10-36] (Washington, 
D.C.: Dec. 17, 2009). 

[93] 42 U.S.C. 1395w-27(g). Intermediate sanctions may be imposed for 
certain categories of misconduct including (1) failing substantially 
to provide medically necessary services in a manner that has adversely 
affected beneficiaries, (2) imposing premiums or charges on enrollees 
that are in excess of those permitted under the program, (3) 
misrepresenting or falsifying information that is furnished to the 
Secretary or beneficiaries, and (4) failing to comply with marketing 
requirements. 

[94] Prior to termination of a contract, CMS must provide the MA 
organization with the opportunity to develop and implement a 
corrective action plan (CAP) and the opportunity to appeal the 
termination. 

[95] A broker is an individual who markets a specific MA plan and may 
receive compensation directly or indirectly from a managed care 
organization for marketing activities. 

[96] North Carolina does not contract with managed care plans. 

[97] In California, two departments--the Department of Health Care 
Services and the Department of Managed Health Care--share 
responsibility for oversight of Medicaid managed care plans. We 
obtained compliance and enforcement data from the Department of Health 
Care Services, which operates the Medicaid managed care program in 
California. We were not able to obtain similar information from the 
Department of Managed Health Care, which oversees all managed care 
plans in the state, because its data do not separate Medicaid lines of 
business from other lines of business a managed care organization may 
operate. Officials from the Department of Managed Health Care told us 
that issues related specifically to Medicaid managed care plans 
represent a small percentage of total compliance and enforcement 
actions taken by that agency. 

[98] A grievance is any complaint or dispute expressing 
dissatisfaction with any aspect of the operations, activities, or 
behavior of a health plan, or its providers, regardless of whether 
remedial action is requested. 

[99] 42 U.S.C. § 1396u-2(e). While the intermediate sanction authority 
pertains to statutorily defined categories of noncompliance, states 
also have authority to take action for other types of noncompliance 
such as defined under the terms of their contracts with Medicaid 
managed care plans. 

[100] As a condition of federal matching funds for Medicaid managed 
care programs, CMS must review and approve comprehensive risk 
contracts between states and Medicaid managed care plans. 

[101] CMS did defer four payments to two states for reasons unrelated 
to the consumer protections we reviewed for this report. The four 
deferred payments were for $6,477, $64,227, $65,732, and $4,203,782, 
totaling about $4.34 million. 

[End of section] 

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