When CMS Terminates an MA Contract

80.1 - When CMS Terminates an MA Contract (Rev. 79, Issued 02-17-06, Effective Date 02-17-06) Medicare Advantage contract terminations differ from Medicare Advantage contract non- renewals in that the Secretary may initiate a contract termination at any time for reasons set forth in the Medicare statute. In contrast, Medicare Advantage contract non-renewals occur according to a prescribed time-schedule, whereby in most cases CMS must notify an MA organization of its intention to non-renew the MA organization's MA contract by May 1 of the final contract year. CMS may terminate an MA contract for any of the following reasons: • The MA organization fails substantially to carry out the terms of its contract with CMS; • The MA organization carries out its contract with CMS in a manner that is inconsistent with the effective and efficient implementation of the MA program; • The MA organization no longer meets the requirements of this manual for being a contracting organization; • The MA organization commits or participates in fraudulent or abusive activities affecting the Medicare program including the submission of fraudulent data (see 423.504(b)(4)(vi)(H) of 42 CFR Part 423 for additional requirements MA organizations must follow when offering a prescription drug benefit under Part D); • The MA organization experiences financial difficulties so severe that its ability to make necessary health services available is impaired to the point of posing an imminent and serious risk to the health of its enrollees, or otherwise fails to make services available to the extent that such a risk to health exists. When this occurs, CMS may immediately terminate its contract with an MA organization; • The MA organization substantially fails to comply with the grievances and appeals requirements described in Chapter 13 of this manual, when published; • The MA organization fails to provide CMS with valid risk adjustment data; • The MA organization fails to implement an acceptable quality improvement program; • The MA organization substantially fails to comply with the prompt payment requirements; • The MA organization fails to comply with the service access requirements; • The MA organization fails to comply with the requirements regarding physician incentive plans; and • The MA organization substantially fails to comply with the marketing requirements. In determining whether a failure is "substantial," CMS considers both the frequency and the seriousness of the noncompliance. In the case of a serious violation that could put the health of an enrollee at risk, even a single violation might be considered substantial. In the case of a less serious violation, the noncompliance would have to be more pervasive or systematic in order to be considered substantial.