Determining Total Costs for Comparison with Capitation Limits

400 - Determining Total Costs for Comparison with Capitation Limits (Rev. 4, 10-01-01) The total cost of services provided directly or arranged by the Medicare cost-based HMO/CMP, as well as emergency and urgently needed services, will be compared to 100 percent of the weighted average of the capitation amounts, for the Medicare cost-based HMO/CMP’s membership. This comparison will be used as a reasonable cost guideline. For comparison purposes, non-emergency or non-urgently needed out-of-plan care arranged independently by the Medicare enrollee would not be considered unless the HMO/CMP accepts financial responsibility for the service. CMS will use these comparisons to determine if further investigation of claimed costs is necessary. For example, CMS could require the Medicare cost-based HMO/CMP to supply additional information to verify the costs claimed on the cost report. In addition, CMS could use this information to establish the criteria used to select a cost report for audit potential. Costs will consist of those costs incurred directly by the HMO/CMP plus the costs incurred by CMS on behalf of the HMO/CMP. The bill summary report and the carrier payment report will be used to report the total cost for services furnished on behalf of the HMO/CMP. NOTE: 42 CFR 417.532(a)(3) applies the weighted average of the AAPCCs of each class of the HMOs or CMPs Medicare enrollees for that plan’s geographic area as an absolute limitation on the total amount payable. In October of 1989, Ruling HCFAR-89-2 directed CMS not to use the AAPCC as an absolute limit; however, the AAPCC can be used as a reasonable cost guideline.