CMS Muddies Beneficiary Notice Requirements
For Medicare Advantage (MA) Plans

On September 21, 2007, the Centers for Medicare & Medicaid Services (CMS) issued a publication which, while offering some valuable clarifications, also makes unfortunate changes to the policy of notifying MA beneficiaries about changes in services or payments.  Transmittal 88, CMS Manual System Pub. 100-16 Medicare Managed Care, effective September 21, sets forth revisions to Chapter 13 of the CMS manual system, "Medicare Managed Care Beneficiary Grievances, Organization Determinations, and Appeals Applicable to Medicare Advantage Plans, and Health Care Prepayment Plans (HCPPS)."


The transmittal announces new material, some of which conflicts with current law and regulation.  This Weekly Alert highlights elements of the new transmittal that are of particular concern for advocacy.


Non-Controversial Policy Manual Changes


Transmittal 88 clarifies that an appeal includes procedures to address disagreement with the decision of a Medicare health plan.  It clarifies that a "Medicare Health Plan" is part of the collective reference to Medicare Advantage Plans, Cost Plans, and Health Care Prepayment Plans. The transmittal also clarifies that an enrollee "or their representative" may make a complaint or a dispute, either orally or in writing, to a Medicare health plan, provider, or facility, and that the Medicare health plan must provide written information to enrollees or their representatives about grievance and appeal procedures, including expedited review.  The transmittal further clarifies that a 'representative' is an individual appointed by an enrollee or other party, or authorized under State or other applicable law, to act on behalf of an enrollee or other party involved in an appeal or grievance.


With respect to a Medicare health plan decision not to provide or pay for a requested service, in whole or in part, or if it decides to discontinue or reduce a service, Transmittal 88 clarifies that this decision constitutes an adverse organization determination.  In these circumstances, a Medicare health plan must provide the enrollee with a written denial notice which includes appeal rights.


Controversial Policy Manual Changes


Transmittal 88 purports to clarify when an enrollee must receive notice of a Medicare health plan's decision to deny, discontinue, or reduce services or payments.  The clarifying language alters current notice of discontinuation or reduction in care requirements, Section 40.2.2 (Written Notification by Medicare Health Plan of Its Own Decision).  The manual provision now reads (changes in blue bold italics):

If the Medicare health plan decides to deny, discontinue, or reduce services or payments, in whole or in part, and the enrollee believes that services should be covered, then it must give the enrollee a written notice of its determination.  The Medicare health plan must provide notice using the most efficient manner of delivery to ensure the enrollee receives the notice in time to act (e.g., via fax, hand delivery, or mail).  If the enrollee has a representative, the representative must be given a copy of the notice.  The written notice of determination may be a separate different document from any plan generated claims statement to the enrollee or provider.  Such plan-generated statements may include explanation of benefits (EOBs), detailing what the plan has paid on the enrollee's behalf and/or the enrollee's liability for payment.

The new policy manual, like the regulations at 42 C.F.R. 422.568(c) makes giving notice conditional on whether the beneficiary believes that the services should be covered.  Moreover, it is not expressed in the transmittal nor in 422.568(c) the manner in which the beneficiary is to convey his or her belief to the plan. The new policy and 422.568(c) are out of step with and contrary to the agreements reached in Weichardt v. Thompson[1] and Grijalva v. Shalala[2]Those settlements do not condition notice on beneficiary disagreement.


CMS takes the position that the transmittal merely implements existing regulations.  CMS officials justify the new language in the policy manual by stating that it (1) simply conforms the manual to the regulations, and (2) applies only to a small number of services since the Grijalva and Weichardt regulations[3] make notice mandatory in most situations.


Current regulations at 42 C.F.R. 422.568(c) set out the old standard timeframes and notice requirements for Medicare Advantage (MA) plans and provide that "If an MA organization decides to deny service or payment in whole or in part, or if an enrollee disagrees with an MA organization's decision to discontinue or reduce the level of care for an ongoing course of treatment, the organization must give the enrollee written notice of the determination."  These regulations do not follow the Grijalva and Weichardt settlements because the obligation to give notice when services are discontinued or reduced depends on enrollee disagreement with the determination. 


Regulations at 42 C.F.R. 422.620 set out the advance notice requirements for hospitals and 422.624 sets out the advance notice requirements for Home Health Agencies (HHAs), Skilled Nursing Facilities (SNFs), and Comprehensive Outpatient Rehabilitation Facilities (CORFs).  The hospital regulations provide that a written notice that describes the appeal procedures must be given: "(b)(i) at or near admission, and again (c)(ii) prior to discharge (if more than 2 days after the admission notice was given)."


The regulations at 42 C.F.R. 422.624(b) (advance written notification of termination) provide "that prior to any termination of service, the provider of the service must deliver valid written notice to the enrollee of the MA organization's decision to terminate services."  In addition, 42 C.F.R. 422.624(b)(1) requires that:

[t]he provider must notify the enrollee of the MA organization's decision to terminate covered services no later than two days before the proposed end of the services. If the enrollee's services are expected to be fewer than two days in duration, the provider should notify the enrollee at the time of admission to the provider. If, in a non-institutional setting, the span of time between services exceeds two days, the notice should be given no later than the next to last time services are furnished.

Consequently, there is disharmony between 42 C.F.R. 422.568 and 42 C.F.R. 422.620 and 422.624, with Transmittal 88 essentially following 42 C.F.R. 422.568.


Advocacy Considerations


First, the CMS view of its transmittal is erroneous.  The change goes beyond current regulations at 42 C.F.R. 422.568(c), which only gives the obligation to provide notice when the beneficiary disagrees.  The current regulation only conditions the obligation to give written notice when services are discontinued or reduced, while Transmittal 88 also makes the notice conditional when services are denied. Second, Transmittal 88, like 42 C.F.R. 422.568(c), makes giving the notice conditional on whether the beneficiary disagrees with the Medicare Health Plan determination.  Insofar as the policy conditions the receipt of notice on the beneficiary disagreeing with the determination and somehow expressing that disagreement to the Medicare Health Plan it violates Grijalva and Weichardt, as well as the regulations at 42 C.F.R. 422.620 and 422.624.  CMS must harmonize these several sets of regulations so that they all appropriately implement the unconditioned right to notice.


The Center for Medicare Advocacy, along with AARP and the Medicare Rights Center, is pursuing clarification and revision of Transmittal 88.  At this stage, the parties are sorting out their positions and are agreed that further discussion is necessary.  It is important that advocates continue to insist that Medicare Health Plans provide notices that comply with the settlements in Grijalva and Weichardt and should look closely to ascertain plan patterns of compliance. As many advocates will recall, prior to the notice requirements of Grijalva and Weichardt, beneficiaries often did not receive notice when services were denied, reduced, or terminated, and did not know of their appeal rights.




It is important to look closely at CMS' efforts to implement court decrees, settlements, and other policy directives.  In many instances, discrepancies are minor and in other situations, have vastly detrimental consequences.  Conditioning the right to notice, as CMS has done in Transmittal 88, in effect eliminates the right to notice.  Beneficiaries will not know that they have a right to an appeal nor will they know how to make known their disagreement with Medicare Health Plan decisions, including how to file an appeal.




[1] C03-05490 VRW (N.D. Cal., order approving settlement agreement, October 28, 2007) (requirement of Medicare beneficiary notice procedures for hospital discharges)

[2] 153 F.3d 1115 (9th Cir. 1998), vacated and remanded, 526 U.S. 1096 (1999), CIV93-711 TUCACM, (D. Ariz., Order Re Class Action Settlement Agreement, December 5, 2000), (requirement of notice, including appeal rights, when an MA Plan decides to reduce or terminate services)

[3] (42 C.F.R. 422.620 and 42 C.F.R. 422.624 presumably)