Methodology Used to Identify the Location of Network Areas

30.3.2 - Methodology Used to Identify the Location of Network Areas (Rev. 99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11) “Network area” is defined, for a given plan year, as the area that the Secretary identifies (in the announcement of the risk and other factors to be used in adjusting MA capitation rates for each MA payment area (also known as the “Rate Announcement”) for the previous plan year) as “having at least 2 network-based plans (as defined in section 1852(d)(5)(C) of the Act) with enrollment as of the first day of the year in which the announcement is made.” For purposes of this requirement, CMS interprets “having” a network-based plan with enrollment to mean having a network-based plan in an area that is generally open to enrollment. Thus, an area that has only one network-based plan that is generally open to enrollment, along with other limited enrollment network-based plans, such as a plan limited to members of an employer group or special needs population, would not meet this test. Therefore, employer/union sponsored group health plans and special needs plans (SNPs), which are not generally open to enrollment, are not considered network- based plans. CMS also interprets the phrase “having at least 2 network-based plans” to mean that there are at least 2 plans (i.e. plan benefit packages (PBPs) each of which meets the definition of a network-based plan and that are offered by the same MAO or by different MAOs. Additionally, CMS interprets the phrase “with enrollment” to mean that a network-based plan is required to have at least one beneficiary enrolled in the plan in order to be counted for purposes of identifying the location of network areas. Therefore, if a plan has no members, it would not be counted as a network-based plan. “Network-based plan” is defined as: (1) an MA plan that is a coordinated care plan as described in section 1851(a)(2)(A)(i) of the Act, excluding non-network regional PPOs (RPPOs); (2) a network-based MSA plan; or (3) a section 1876 cost plan. The types of coordinated care plans that meet the definition of a network-based plan are HMOs, PSOs, local PPOs, and certain RPPOs (refer to section 30 of Chapter 1 of this manual). An RPPO meets the definition of a network-based plan in only the portions of its service area where the RPPO meets access standards solely by establishing signed contracts or agreements with providers in accordance with section 110.1 of Chapter 4 of this manual, and therefore, is operating as a network RPPO. 42 CFR 422.112(a)(1)(ii) permits RPPOs to meet access standards, upon CMS approval, using methods other than written agreements with providers (that is, the plan may allow members to see non- contracting providers at in-network cost sharing in areas where the plan has not established a network of direct-contracting providers). An RPPO that meets access standards in portions of its service area under the authority of 42 CFR 422.112(a)(1)(ii), rather than signed contracts, does not meet the definition of a network-based plan. These plans operate as non-network RPPOs. For purposes of identifying the location of network areas for a given plan year, CMS will annually determine whether at least 2 network-based plans with enrollment exist in each of the counties in the United States, including its 5 territories and the District of Columbia. In some cases, network areas consist of partial counties and are identified by zip codes. Refer to the annual Advance Notice and the Rate Announcement for more information about the specific methodology used to identify the location of network areas for each plan year.