Provider Service Through Arrangements

90 - Provider Service Through Arrangements (Rev. 4, 10-01-01) At the option of the contracting cost-based HMO/CMP, CMS will pay (through the FFS system) hospitals and SNFs for covered services furnished the organization’s Medicare enrollees in accordance with §1861(v) or 1886 of the Act, as applicable. In these circumstances, CMS will pay these providers for covered services furnished to the HMO/CMP’s enrollees. Section 1876 of the Act offers the cost-based HMO/CMP the option of making direct payments to hospitals and SNFs through an arrangement (as defined in Chapter 17 Subchapter C) for covered services furnished to the organization’s Medicare enrollees. The cost incurred by the HMO/CMP through this arrangement is allowable to the extent that it does not exceed: 1. The reasonable cost of furnishing such covered services (as determined under §1861(v) of the Act) for those providers currently paid on a reasonable cost basis, or 2. The payment amount determined under §1886 of the Act for those providers currently paid under Medicare’s PPS or under an approved State reimbursement cost control system. An exception is permitted if the cost-based HMO/CMP can demonstrate that payments in excess of reasonable costs or Medicare’s prospective payment, as applicable, are justified on the basis of advantages gained by the organization. Should the organization elect to pay its providers, it must adhere to the reporting requirements imposed on providers and the FFS system.