Policies and Procedures for Assessing Contracting Provider

110.4 - Policies and Procedures for Assessing Contracting Provider Groups' Administrative and Fiscal Capacity to Manage Financial Risk (Rev. 79, Issued 02-17-06, Effective Date 02-17-06) Before an MA organization contracts with an entity to perform functions that are otherwise the responsibility of the MA organization under its contract with CMS, the MA organization should develop, implement, and maintain policies and procedures for assessing contracting provider groups' administrative and fiscal capacity to manage financial risk prior to delegating MA-related risk to these groups. Suggested policies and procedures include: • Establish minimum net worth, adequate liquidity and reserve requirements that the delegated entity must meet before the MA organization contracts with a group; • Conduct on-site audits to assess the delegated entity's administrative capabilities. Audit activities would include, but are not limited to: assessment of claims processing capabilities; financial planning and oversight capabilities; assessing a group's capacity to measure and accurately report incurred but not reported (IBNR) claims estimates. After an MA organization has entered a contract with an entity to perform delegated functions it must develop policies and procedures for monitoring the fiscal soundness of at-risk delegated entities on an ongoing basis. These policies and procedures should specify thresholds that trigger MA organization intervention. Suggested policies and procedures include: • Periodic collection of at-risk entity's financial statements and claims timeliness reports; • Periodic auditing of claims payment timeliness and accuracy; • Periodic administrative performance assessments; • Listing of interventions that the MA organization will take and corrective actions it will require when an at-risk delegated entity falls below minimum standards or other thresholds; and • Develop, maintain, and implement contingency plans to enable the MA organization to quickly respond to delegated entity financial failures. Particular emphasis should be placed on assessing the availability, accessibility, and continuity of care for Medicare beneficiaries enrolled in an MA plan, and for preventing inappropriate beneficiary billing for services that are the legal obligation of the MA organization. See §110.4.1 for suggested elements of a contingency plan.