100-16 Medicare Managed Care Manual: Chapter 16a - Subchapter A - Private Fee-for-Service (PFFS) Plans

Medicare Managed Care
Chapter 16a – Private Fee-for-Service (PFFS) Plans
Table of Contents
(Rev. 99, Issued: 05-27-11)
Transmittals for Chapter 16a
10 – Introduction
20 – General Requirements
30 – Access to Services
30.1 - General Requirements
30.2 - Access Standards for Full and Partial Network Plans
30.3 - Requirement for Certain Non-Employer PFFS Plans to Use Contract
Providers
30.3.1 - General Requirements
30.3.2 - Methodology Used to Identify the Location of Network Areas
30.3.3 – Operational Impact on Non-Employer PFFS Plans
30.4 - Requirement for All Employer/Union Sponsored PFFS Plans to Use
Contract Providers
30.4.1 – General Requirements
30.4.2 – Operational Impact on Employer PFFS Plans
40 - Provider Types: Direct-Contracting, Deemed-Contracting, and Non-Contracting
40.1 – Direct-Contracting Providers
40.2 – Deemed-Contracting Providers
40.3 – Non-Contracting Providers
50 – PFFS Terms and Conditions of Payment for Deemed Providers
50.1 – General Requirements
50.2 - Model Terms and Conditions of Payment
50.3 - Process for Submission and Review of Terms and Conditions of Payment
50.4 - Mid-year Changes to Terms and Conditions of Payment
50.5 - Availability of the Terms and Conditions of Payment
50.6 - Terms and Conditions of Payment Identification System
60 - Variations in Payment Rates to Providers
70 – PFFS Payment Rules for Providers and Cost Sharing Rules for Members
70.1 – General Rules
70.2 – Non-Network PFFS Plan Rules
70.2.1 - General Rules

70.2.2 - Payment Rules for Deemed Providers
70.2.3 - Payment Rules for Direct-Contracting Providers
70.2.4 - Cost Sharing Rules for Members
70.2.5 - Review of Provider Networks
70.3 – Full Network PFFS Plan Rules
70.3.1 - General Rules
70.3.2 - Payment Rules for Direct-Contracting Providers
70.3.3 - Payment Rules for Deemed Providers
70.3.4 - Cost Sharing Rules for Members
70.3.5 - Review of Provider Networks
70.4 – Partial Network PFFS Plan Rules
70.4.1 - General Rules
70.4.2 - Payment Rules for Direct-Contracting Providers
70.4.3 - Payment Rules for Deemed Providers
70.4.4 - Cost Sharing Rules for Members
70.4.5 - Review of Provider Networks
80 - Balance Billing Rules
80.1 – Original Medicare Balance Billing Rules that Apply to Deemed and Non-
Contracting Providers under PFFS Plans
80.2 - Additional Balance Billing Rules Allowed under PFFS Plans for Deemed
and Direct-Contracting Providers
80.2.1 - Advance Notice for Hospital Services
90 – Prohibition on Prior Authorization, Prior Notification, and Referrals
90.1 – General Requirements
90.2 – Prior Authorization
90.3 – Prior Notification
90.4 – Referrals
100 - Written Advance Organization Determinations
110 - Prompt Payment Requirements
120 – Timing Filing Requirement
130 – Provider Payment Dispute Resolution Process
130.1 – Process for Resolving Provider Payment Disputes through the PFFS Plan
130.2 - Process for Resolving Provider Payment Disputes through the Payment
Dispute Resolution Contractor
140 - Requirement for PFFS Plans to Provide an Explanation of Benefits to Members
150 - Requirement for PFFS Plans to have a Quality Improvement Program
150.1 – General Requirements
150.2 – Quality Data Collection and Reporting Requirements
160 – PFFS Crosswalk Options

160.1 - Non-Network PFFS Plan Transitioning to a Partial Network PFFS Plan
160.2 - Some Counties of a Non-Network PFFS Plan Transitioning to a Partial
Network PFFS Plan
160.3 - Non-Network PFFS Plan Transitioning to a Full Network PFFS Plan
160.4 - Some Counties of a Non-Network PFFS Plan Transitioning to a Full
Network PFFS Plan
160.5 - Partial Network PFFS Plan Transitioning to a Full Network PFFS Plan
160.6 - Some Counties of a Partial Network PFFS Plan Transitioning to a Full
Network PFFS Plan

10 – Introduction
(Rev. 99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)
42 CFR 422.4(a)(3)
A Medicare Advantage private fee-for-service (PFFS) plan is an MA plan that:
• 	Pays providers of services at a payment rate determined by the plan on a fee-for-
service basis without placing the provider at financial risk;
• 	Does not vary the payment rates for a provider based on the utilization of that
provider's services, except under the following two circumstances (refer to section
60 of this chapter):
o 	A PFFS plan may vary the payment rates for a provider based on the
specialty of the provider, the location of the provider, or other factors
related to the provider that are not related to utilization and do not violate
the provider antidiscrimination rules under 42 CFR 422.205.
o 	A PFFS plan may also increase the payment rates for a provider based on
increased utilization of specified preventive or screening services.
• 	Does not restrict members' choices among providers that are lawfully authorized
to provide services and agree to accept the plan's terms and conditions of
payment; and
• 	May not require prior notification (refer to section 90.3 of this chapter).
20 – General Requirements
(Rev. 99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)
An MA organization that offers a PFFS plan must meet all applicable requirements for
MA organizations as required by the Social Security Act (the Act) and the Code of
Federal Regulations (CFR). This chapter is generally limited to the requirements
specifically for PFFS plans as set forth in Part C of Title XVIII of the Act and Part 422 of
Chapter 42 of the CFR.
Guidance on requirements that apply to all MA organizations, including organizations
offering PFFS plans, may be found in other chapters of this manual, notably Chapter 1
(General Provisions), Chapter 2 (Enrollment and Disenrollment), Chapter 3 (Marketing),
Chapter 4 (Benefits and Beneficiary Protections), Chapter 5 (Quality Improvement
Program), and Chapter 13 (Beneficiary Grievances, Organization Determinations, and
Appeals). Furthermore, PFFS plans that choose to provide qualified Part D prescription
drug coverage must abide by applicable requirements of Part D of Title XVIII of the Act
and Part 423 of Chapter 42 of the CFR. Guidance on Part D requirements may be found

in the Medicare Prescription Drug Benefit Manual (Publication 100-18) located at
http://www.cms.gov/Manuals/IOM/.
Unless specified in Chapter 9 of this manual or waived by CMS under employer/union
plan waiver authority, employer/union sponsored PFFS plans are also required to meet
the requirements described in this chapter.
The requirements that all MA organizations offering a PFFS plan must meet include, but
are not limited to:
• 	Providing members with all medically necessary Original Medicare (Part A and
Part B) covered items and services as described in section 10.2 of Chapter 4 of
this manual. A PFFS plan may offer mandatory or optional supplemental benefits
as well. In addition, a PFFS plan can choose to offer qualified Part D prescription
drug coverage (as defined at 42 CFR 423.100 and section 20.1 of Chapter 5 of the
Prescription Drug Benefit Manual).
This obligation to provide coverage applies to all PFFS plan types and provider
types that can furnish services under a PFFS plan, as described in section 70 of
this chapter.
• 	Allowing members to use any provider, such as a physician, health professional,
hospital, or other Medicare provider in the United States if (1) the provider agrees
to accept the plan’s terms and conditions of payment before providing services to
the member, and (2) the provider is eligible to provide services under Medicare
Part A and Part B.
• 	Meeting the requirement for access to services described in section 30.1 of this
chapter.
• 	Paying deemed-contracting providers of all categories of Part A and Part B
services at least the Original Medicare rates or higher. Specifically, including
plan allowed cost sharing paid by the enrollee, PFFS plans must pay these
providers at least the amounts they would have received as participating or non-
participating physicians, as applicable, under Original Medicare for Medicare-
covered services. Refer to sections 40.2, 70, and 80.1 of this chapter for more
information.
• 	Establishing and disclosing a terms and conditions of payment for deemed-
contracting providers. The terms and conditions of payment must be submitted to
CMS and approved on an annual basis. Refer to section 50 of this chapter.
• 	Not requiring prior authorization, prior notification, or referral as a condition of
coverage when medically necessary, plan-covered services are furnished to
members. Refer to section 90 of this chapter.

• 	Abiding by the prompt payment requirements. Refer to section 110 of this
chapter.
• 	Meeting the quality improvement program requirements described in section 150
of this chapter and Chapter 5 of this manual.
• 	Complying with all applicable MA beneficiary grievances, organization
determinations, and appeals requirements described in Chapter 13 of this manual.
PFFS plans may, but are not required to, provide Part D coverage. As described in
section 10.5 of Chapter 4 of this manual, enrollees in a PFFS plan that does not elect to
include Part D coverage may enroll in a stand-alone prescription drug plan (PDP) for
their Part D coverage.
30 – Access to Services
(Rev. 99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)
42 CFR 422.114
30.1 - General Requirements
(Rev.99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)
42 CFR 422.114(a)(1) and (2)
An MA organization that offers a PFFS plan must provide sufficient access to health care
services by demonstrating to CMS that it has a sufficient number and range of providers
willing to furnish services under the plan. CMS will find that an MA organization meets
this access to services requirement if, with respect to a particular category of health care
providers, the PFFS plan has—
(1) Payment rates that are not less than the rates that apply under Original
Medicare for the provider in question. (These plans are called non-network PFFS
plans. Refer to section 70.2 of this chapter.); OR
(2) Signed contracts or agreements with a sufficient number and range of
providers to meet the access standards described in section 1852(d)(1) of the Act.
(These plans are called full network PFFS plans. Refer to sections 30.2 and 70.3
of this chapter.); OR
(3) A combination of (1) and (2). (These plans are called partial network PFFS
plans. Refer to sections 30.2 and 70.4 of this chapter.)
Non-employer PFFS plans offered in network areas and all employer/union sponsored
PFFS plans must meet the access to services requirement for all categories of Part A and
Part B health care providers by establishing signed contracts or agreements with a
sufficient number and range of providers to meet the access standards described in

section 1852(d)(1) of the Act and section 30.2 of this chapter. Consequently, these plans
must operate as full network PFFS plans. Refer to sections 30.3 and 30.4 of this chapter
for more information about these requirements.
30.2 – Access Standards for Full and Partial Network Plans
(Rev. 99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)
42 CFR 422.114(a)(2)(ii)(A)
As discussed in section 30.1 of this chapter, a PFFS plan can meet the access to services
requirement with respect to a particular category of health care providers by establishing
signed contracts or agreements with a sufficient number and range of providers to meet
the access standards described in section 1852(d)(1) of the Act. Section 1852(d)(1) of the
Act describes the requirements that MA organizations offering a coordinated care plan
(CCP) must meet when selecting providers to furnish benefits covered under the plan.
The access standards for CCPs are described in 42 CFR 422.112(a) and section 110.1 of
Chapter 4 of this manual.
Full and partial (only for the categories of providers for which the plan is using a network
of providers with signed contracts or agreements with the plan) network PFFS plans are
required to meet the same access standards as CCPs. Providers with signed contracts or
agreements with the plan are also known as direct-contracting providers or network
providers. CMS reviewers follow the same procedure when reviewing the Health Service
Delivery (HSD) Tables for initial and service area expansion applications for coordinated
care, PFFS, and network MSA plans in order to determine whether an MA organization’s
proposed network meets the access standards. Full and partial network plans must submit
information about their proposed provider networks to CMS. CMS reviews that
information as part of the application approval process to ensure that timely, accessible,
and appropriate care is provided.
30.3 - Requirement for Certain Non-Employer PFFS Plans to Use
Contract Providers
(Rev. 99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)
42 CFR 422.114(a)(3)
30.3.1 - General Requirements
(Rev. 99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)
Non-employer PFFS plans that are operating in a network area (as defined in section
1852(d)(5)(B) of the Act) must meet the access to services requirements through signed
contracts with providers. These plans must establish signed contracts or agreements with
a sufficient number and range of health care providers in their service area for all
categories of Part A and Part B services in accordance with the access standards
described in 1851(d)(1) of the Act and section 30.2 of this chapter.

Non-employer PFFS plans operating in network areas will not be allowed to meet the
access to services requirement by establishing payment rates that are not less than the
rates that apply under Original Medicare for a particular category of provider and having
providers deemed to be contracted under the plan as provided under 42 CFR 422.216(f)
and described in section 40.2 of this chapter. Consequently, these plans must operate as
full network PFFS plans, instead of non-network or partial network plans.
While a non-employer PFFS plan operating in a network area must meet the access to
services requirement by establishing signed contracts or agreements with providers and
operate as a full network plan, providers who do not have a signed contract or agreement
with the plan may continue to furnish out-of-network Part A and Part B services to
members of the plan by agreeing to accept the PFFS plan’s terms and conditions of
payment and becoming a deemed provider as described in 42 CFR 422.216(f) and section
40.2 of this chapter. However, the plan may establish higher cost sharing requirements
for members who obtain covered services from deemed providers instead of plan network
providers.
CMS annually determines the location of the network areas for non-employer PFFS
plans, which can be downloaded from the following CMS website:
http://www.cms.hhs.gov/PrivateFeeforServicePlans/.
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.
30.3.3 – Operational Impact on Non-Employer PFFS Plans
(Rev. 99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)
An existing PFFS plan may, in a subsequent contract year, have some counties (or partial
counties) in its current service area that meet the definition of a network area and other
counties (or partial counties) that do not. In order to preserve benefit uniformity under an
MA plan, CMS will not permit an MA organization offering a PFFS plan to operate a
mixed model where some counties (or partial counties) in the plan’s service area are
considered network areas and other counties (or partial counties) that are non-network
areas (where there are no network-based plan options or only one other network-based
plan). In other words, a PFFS plan must be either a network based plan, a non-network
plan, or a partial network plan.
PFFS Plans Operating in Both Network and Non-Network Areas. Current MA
organizations offering PFFS plans with service areas spanning both network and non-
network areas must complete the initial application process in order to bring the network
portions of their service area into compliance with the access to services requirement.

These organizations will be issued a new contract (H) number through the application
process to encompass the network portions of the service area. If the application is
approved, the organization will be authorized to move the affected members to the new
contract number. The current contract will continue to operate in the non-network areas.
PFFS Plans Operating in Network Areas. Current MA organizations offering PFFS plans
whose service area lies solely in network areas must complete the initial application
process in order to qualify to offer their PFFS plan to current and new members as a
network PFFS plan. These organizations may NOT purport to meet the access to services
requirement by moving their enrollees into aHealth Maintenance Organization (HMO) or
Preferred Provider Organization (PPO) as it is not permissible to move affected members
from the PFFS plan into other types of MA plans. The organizations that fail to complete
the initial application process will be non-renewed or have their service area reduced and
the affected members will be disenrolled to Original Medicare.
PFFS plans operating in network areas must meet the access to services requirement for
all categories of Part A and Part B health care providers by establishing signed contracts
or agreements with a sufficient number and range of providers to meet the access
standards described in section 1852(d)(1) of the Act and section 30.2 of this chapter.
Consequently, these plans must operate as full network PFFS plans. These PFFS plans
may not use alternate methods to meet the access to services requirement in network
areas. Specifically, these plans may not operate as non-network or partial network PFFS
plans. If an MA organization is not able to establish a network of direct-contracting
providers that CMS determines to be adequate in a network area, then it may not offer a
PFFS plan in that area.
Current MA organizations offering PFFS plans that need to file an initial application to
enable them to transition some or all of their plans to full network plans must first file a
Notice of Intent to Apply (NOIA). CMS will not accept NOIAs and applications for non-
network PFFS plans for those counties (or partial counties) determined to be network
areas for a given plan year.
PFFS Plans Operating in Non-Network Areas. PFFS plans whose service areas lie solely
in non-network areas can continue to operate as non-network plans, where the plan meets
the access to services requirement by establishing payment rates that are not less than the
rates that apply under Original Medicare (refer to section 70.2 of this chapter) and having
providers deemed to be contracted under the plan as provided under 42 CFR 422.216(f)
and described in section 40.2 of this chapter. PFFS plans in non-network areas may also
choose to operate as full network plans (refer to section 70.3 of this chapter) or partial
network plans (refer to section 70.4 of this chapter). No new application is required.
A network based PFFS plan must meet the access to services requirement by establishing
signed contracts or agreements with a sufficient number and range of providers to furnish
Part A and B services. However, providers who do not have a signed contract or
agreement with the plan may continue to furnish out-of-network Part A and Part B
services to those members of the plan who seek care with them by agreeing to accept the

PFFS plan’s terms and conditions of payment and becoming a deemed providers as
described in 42 CFR 422.216(f) and section 40.2 of this chapter. However, the plan may
establish higher cost sharing requirements for members who obtain covered services from
deemed providers instead of plan’s network providers. Please note that all providers are
still subject to balance billing limitations.
30.4 - Requirement for All Employer/Union Sponsored PFFS Plans to
Use Contract Providers
(Rev. 99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)
42 CFR 422.114(a)(4)
30.4.1 – General Requirements
(Rev. 99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)
All employer/union sponsored PFFS plans that have waivers under section 1857(i) of the
Act must meet the access to services requirement by establishing signed contracts or
agreements with a sufficient number and range of health care providers in their service
area for Medicare Part A and Part B services in accordance with Medicare access and
availability to health care services standards. Consequently, these plans must operate as
full network PFFS plans, instead of non-network or partial network plans. Although
CMS does not review the HSD tables for employer/union sponsored plans, these PFFS
plans must ensure that their provider networks meet the access standards described in
section 1852(d)(1) of the Act and section 30.2 of this chapter.
While (as described above) an employer/union sponsored PFFS plan must meet the
access to services requirement by establishing signed contracts or agreements with
providers and operating as a full network plan, providers who do not have a signed
contract or agreement with the plan may continue to furnish out-of-network Part A and
Part B services to members of the plan by agreeing to accept the PFFS plan’s terms and
conditions of payment and becoming a deemed provider as described in 42 CFR
422.216(f) and section 40.2 of this chapter. However, the PFFS plan may establish
higher cost sharing requirements for members who obtain covered services from deemed
providers instead of plan’s network providers. Please note that all providers are still
subject to balance billing limitations.
30.4.2 – Operational Impact on Employer PFFS Plans
(Rev. 99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)
In order to offer new employer/union sponsored PFFS plans, organizations must first file
a notice of intent to apply (NOIA) and then complete the application for a new Medicare
Advantage contract. Employer-only PFFS plans must be network based.
Employer/union sponsored PFFS plans that operate on a non-calendar year schedule must
complete the initial application process on the same timeline as other MA applicants and
pursuant to the same requirements as indicated in the initial application and related

materials. Organizations are not required to offer the approved network-based PFFS
products, however, until the beginning of the organization’s applicable plan year. For
example, if an organization’s 2011 plan year begins on July 1, 2011, then the
organization must offer the network-based plan as of that date.
40 - Provider Types: Direct-Contracting, Deemed-Contracting, and
Non-Contracting
(Rev. 99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)
42 CFR 422.216
There are three types of providers that may furnish services to members of PFFS plans:
direct-contracting, deemed-contracting, and non-contracting providers. Each is described
in more detail sections 40.1, 40.2, and 40.3 of this chapter.
40.1 – Direct-Contracting Providers
(Rev. 99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)
A provider is a direct-contracting provider if the provider has a signed contract or
agreement with a PFFS plan to deliver covered services to the plan’s members. These
providers are also known as network providers. Direct-contracting providers have
already agreed to see members of the plan.
• 	Full network PFFS plans must establish direct-contracting providers for all
categories of Part A and Part B services in accordance with the access standards
described in section 1852(d)(1) of the Act and section 30.2 of this chapter.
• 	Partial network PFFS plans may have direct-contracting providers for one or more
categories of Part A or Part B services in accordance with the access standards
described in section 1852(d)(1) of the Act and section 30.2 of this chapter.
• 	Non-network PFFS plans generally do not have direct-contracting providers.
However, non-network plans may establish signed contracts or agreements with
some providers without meeting the access standards described in section
1852(d)(1) of the Act and section 30.2 of this chapter.
The payment rules for direct-contracting providers under the three types of PFFS plans
are discussed in section 70 of this chapter.
40.2 – Deemed-Contracting Providers
(Rev. 99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)
42 CFR 422.216(f)
Members of PFFS plans can receive health care services from any provider in the United
States, if (1) the provider agrees to accept the plan’s terms and conditions of payment

before providing services to the member, and (2) the provider is eligible to provide
services under Medicare Part A and Part B. If all of the deeming conditions described
below are met, then the provider is deemed to have agreed to accept the PFFS plan’s
terms and conditions of payment for a member specific to the visit.
A provider that furnishes health care services to a PFFS plan member, except for
emergency services, and does not have a signed contract or agreement with the plan is
deemed to have a contract with the PFFS plan if the following conditions are met:
• 	The provider is aware in advance of furnishing health care services that the
individual receiving the services is enrolled in a PFFS plan;
• 	The provider has reasonable access to the plan’s terms and conditions of payment
in advance of furnishing services (refer to section 50 of this chapter for more
information on the PFFS terms and conditions of payment); and
• 	The provider furnishes services that are covered by the plan.
These providers are considered deemed-contracting providers (or deemed providers).
A provider is aware in advance of an individual’s enrollment in a PFFS plan, if a notice
of enrollment for the individual was obtained from:
• 	The individual (e.g., presentation of an enrollment card or other document
attesting to enrollment in a PFFS plan);
• 	CMS;
• 	A Medicare intermediary, carrier or MAC; or
• 	The MA organization itself.
A provider has reasonable access to the plan’s terms and conditions of payment if the
plan makes the terms and conditions accessible through:
• 	The postal service;
• 	Electronic mail;
• 	Fax;
• 	Telephone; or
• 	The plan’s website.

Announcements in newspapers, journals, magazines, radio, or television are not
considered reasonable methods for allowing access to the terms and conditions of
payment.
It is the provider’s responsibility to call the PFFS plan or visit the plan’s website to obtain
the plan’s terms and conditions of payment. The provider doesn’t have to actually read
the terms and conditions of payment; instead, if the provider had the opportunity to read
them and treats the member, the law deems the provider to have agreed to accept the
plan’s terms and conditions of payment for that specific visit.
A deemed provider can decide whether or not to accept the PFFS plan’s terms and
conditions of payment each time the provider sees one of the plan’s members. However,
the provider cannot change his or her mind about accepting the terms and conditions of
payment after providing services to the member. A decision to treat one plan member
does not obligate the provider to treat other members of the same PFFS plan, nor does it
obligate the provider to accept the same member for treatment at a subsequent visit.
A provider is not required to agree to accept a PFFS plan’s terms and conditions of
payment or agree to treat a PFFS plan member. If a provider does not agree to accept the
plan’s terms and conditions of payment or refuses to treat the member, then the member
will need to find another provider that will accept the plan’s terms and conditions of
payment. PFFS plans should assist members to locate another provider in the member’s
area who will accept the plan’s terms and conditions of payment. For example, if there
are providers in the area that the PFFS plan knows have accepted its terms and conditions
of payment it should identify those providers to its members who are seeking a provider
willing to be deemed as possible sources of care.
A provider that decides not to accept the plan’s terms and conditions of payment should
not provide services to a member, except in emergencies. If the provider nonetheless
furnishes non-emergency services, then the provider will become a deemed provider
under the plan for that specific visit and be subject to the plan’s terms and conditions
whether the provider agrees to them or not.
If a member needs emergency care, then it is covered whether a provider agrees to accept
the plan’s terms and conditions of payment or not. Refer to section 40.3 of this chapter.
Example: If a PFFS plan member shows a provider an enrollment card identifying him
or her as a member of a PFFS plan and the provider furnishes non-emergency services to
that member, then the provider will be considered a deemed provider. Therefore, it is the
provider’s responsibility to obtain and review the terms and conditions of payment before
providing services, except in the case of emergency services.
Members of full network and partial network (for categories of services for which
network providers are available) PFFS plans can receive out-of-network Part A and Part
B services from any provider who does not have a signed contract with the plan, as long
as the provider agrees to accept the PFFS plan’s terms and conditions of payment and

meets the deeming conditions described above. Note that a PFFS plan may establish
higher cost sharing amounts for members who receive covered services from deemed
(out-of-network) providers instead of network providers.
Members of partial network PFFS plans (for categories of services for which network
providers are NOT available) can receive Part A and Part B services from any provider
who does not have a signed contract with the plan, as long the provider agrees to accept
the PFFS plan’s terms and conditions of payment and meets the deeming conditions
described above.
Non-network PFFS plans generally operate using deemed providers for all categories of
Part A and Part B services.
The payment rules for deemed providers under the three types of PFFS plans are
discussed in section 70 of this chapter.
40.3 – Non-Contracting Providers
(Rev. 99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)
A provider is a non-contracting provider if the provider is not a direct-contracting
provider or a deemed provider. Generally, these providers furnish emergency services to
PFFS plan members.
The following examples illustrate when a provider is considered non-contracting:
Example 1: A provider who provides care in an emergency to an unconscious
individual is a non-contracting provider, if the provider did not know prior to
furnishing services that the individual is a member of a PFFS plan.
Example 2: A provider who, prior to furnishing services, did not have reasonable
access to the PFFS plan’s terms and conditions of payment, is also considered
non-contracting.
The payment rules for non-contracting providers under the three types of PFFS plans are
discussed in sections 70 and 80.1 of this chapter. The rules for services furnished by non-
contracting providers are also described in section 20.7 of Chapter 4 of this manual.
50 – PFFS Terms and Conditions of Payment for Deemed Providers
(Rev. 99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)
42 CFR 422.216
50.1 – General Requirements
(Rev. 99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)

MA organizations offering full, partial, or non-network PFFS plans are required to make
information on each PFFS plan’s payment rates and provider requirements available to
deemed providers that furnish services to their members. A PFFS plan’s terms and
conditions of payment is the primary means for deemed providers to obtain necessary
information regarding a PFFS plan’s payment rates for covered items and services and
provider requirements in order to allow the providers to make a confident decision as to
whether or not they will agree to accept the terms and conditions of payment.
All full, partial, and non-network PFFS plans, including employer/union sponsored PFFS
plans, are required to implement the terms and conditions of payment for their deemed
providers effective January 1 of the applicable contract year. Employer/union sponsored
PFFS plans that operate on a non-calendar year schedule are expected to implement the
terms and conditions of payment effective the beginning of the plan’s applicable contract
year.
The terms and conditions of payment establish the payment rates for plan-covered items
and services that apply to deemed providers and the rules that deemed providers must
follow in order to be paid by the PFFS plan for furnishing services to its members. PFFS
plans must ensure that providers furnishing services to plan members are paid accurately
and timely according to the terms and conditions of payment. At a minimum, PFFS plans
are expected to include the following components in their term and conditions of
payment:
• 	An explanation of the deeming process (refer to section 40.2 of this chapter);
• 	Provider qualifications and requirements (i.e., the provider is State-licensed and in
compliance with other applicable State or Federal requirements, and the provider
is eligible to provide services under Original Medicare);
• 	Explanation of provider payment rates (i.e., the amounts the plan will pay
providers for covered items and services, the amounts providers are permitted to
collect from members, balance billing rules, and hold harmless requirements);
• 	Provider billing requirements, including prompt payment requirements;
• 	Description of rules for maintaining medical records and allowing audits;
• 	How a provider can get an advance organization determination;
• 	Description of the plan’s provider payment dispute resolution process;
• 	Description of member and provider rights for filing appeals and grievances; and
• 	Plan contact information.

Each component should contain sufficient information and instructions on how to obtain
additional information if necessary.
50.2 - Model Terms and Conditions of Payment
(Rev. 99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)
CMS annually issues a model terms and conditions of payment for PFFS plans for each
contract year. CMS expects all full, partial, and non-network PFFS plans, including
employer/union sponsored PFFS plans, to implement the model terms and conditions of
payment for their deemed providers effective January 1 of the applicable contract year.
Employer/union sponsored PFFS plans that operate on a non-calendar year schedule are
expected to implement the model terms and conditions of payment effective the
beginning of the plan’s applicable contract year.
The model terms and conditions of payment provide a uniform format and content, which
is of particular benefit to providers treating members of different PFFS plans. Use of the
model also expedites review by CMS Regional Offices (ROs). Refer to section 50.3 of
this chapter for more information. The model terms and conditions of payment are
posted on the CMS website at http://www.cms.hhs.gov/PrivateFeeforServicePlans/.
50.3 - Process for Submission and Review of Terms and Conditions of
Payment
(Rev. 99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)
All terms and conditions of payment must be reviewed and approved by the appropriate
CMS RO account manager prior to use by PFFS plans. Plans must update their terms and
conditions of payment annually to reflect changes in their plan benefit packages. The
updated terms and conditions of payment must be submitted to the plan’s RO account
manager for review and approval. Plans may not use a terms and conditions of payment
without prior approval by CMS. Similarly, plans may not change the contents of the
terms and conditions of payment during the year without CMS approval.
PFFS plans should submit their terms and conditions of payment to their RO account
manager via email. Although the terms and conditions of payment do not meet the
definition of marketing material, as defined in section 20 of Chapter 3 of this manual,
CMS will follow the standard 10-day review process described in section 90.5 of Chapter
3 of this manual for the review and approval of the terms and conditions of payment
when a plan uses the model provided by CMS. The 10-day period begins on the date on
which the terms and conditions of payment are received by the RO account manager.
50.4 - Mid-year Changes to Terms and Conditions of Payment
(Rev. 99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)
During the course of the year, it may be necessary for PFFS plans to update their terms
and conditions of payment, for example, to reflect accurate payment rates for certain
provider types, reflect changes to CMS policy (e.g., changes in coverage policy), or to

correct errors. Accordingly, PFFS plans will be permitted to update their terms and
conditions of payment under limited circumstances, subject to CMS review and approval.
Once CMS has approved mid-year changes to a PFFS plan’s terms and conditions of
payment, the plan must notify providers of the changes at least 30 days before the
effective date of the updated terms and conditions of payment. However, in some cases,
if the terms and conditions contain payment or other errors that could negatively impact
beneficiaries or providers, changes can be made effective immediately at CMS’ direction.
Notification of changes to the terms and conditions must be effected by prominently
noting the plan changes in the updated terms and conditions and by sending the updated
terms and conditions of payment to providers who previously furnished services to plan
members by electronic or direct mail.
50.5 - Availability of the Terms and Conditions of Payment
(Rev. 99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)
PFFS plans are required to make their terms and conditions of payment easily accessible
to providers in the United States. CMS considers a provider to have reasonable access to
a plan’s terms and conditions of payment if the plan makes this information easily
accessible through the postal service, electronic mail, fax, telephone, or the plan’s
website. PFFS plans should post the terms and conditions of payment on their website in
a way that requires minimal navigation from the plan’s main webpage.
50.6 - Terms and Conditions of Payment Identification System
(Rev. 99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)
All terms and conditions of payment are required to have a unique identifier. PFFS plans
are required to place on all CMS-approved terms and conditions of payment a unique
identifier in order to allow CMS to track these documents in the marketplace, address
provider inquiries and/or complaints, and allow immediate recognition of the documents
as approved items.
PFFS plans will be required to follow a specific format for the identifier similar to the
format established for marketing materials in Chapter 3 of this manual. The identifier
must: (1) begin with the organization’s contract number; (2) be followed by an
underscore; (3) be followed by the three-character plan number; (4) be followed by an
underscore; (5) be followed by a unique material-ID number (numbers or letters chosen
at the discretion of the organization); and (6) be followed by a place-holder for the CMS
approval date (the date when the plan is notified by CMS that the terms and conditions of
payment have been approved). MA organizations that will use the same CMS approved
terms and conditions of payment for multiple PFFS plans do not need to include the plan
number in the identifier. PFFS plans must ensure that the identifier is prominently
displayed on their terms and conditions of payment on the front page in the lower left- or
lower right-hand corner of the document.

60 - Variations in Payment Rates to Providers
(Rev.99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)
42 CFR 422.4(a)(3)(ii) and 42 CFR 422.216(a)
A PFFS plan cannot not vary the payment rates for a provider based on the utilization of
that provider's services, except under the following two circumstances:
• 	A PFFS plan may vary the payment rates for a provider based on the specialty of
the provider, the location of the provider, or other factors related to the provider
that are not related to utilization and do not violate the provider antidiscrimination
rules under 42 CFR 422.205; and
• 	A PFFS plan may also increase the payment rates for a provider based on
increased utilization of specified preventive or screening services.
All three types of PFFS plans (full, partial, and non-network plans) are still required to
establish uniform payment rates in their terms and conditions of payment for deemed
providers of all categories of Part A and Part B services and are required to pay these
deemed providers at least the Original Medicare rates or higher. However, plans also
have the flexibility to establish through signed contracts or agreements with specific
providers payment rates that are different than the rates listed in the terms and conditions
that would otherwise apply, as long as the variations in payment rates are not based on
utilization (as described above). As noted in section 40.1 of this chapter, providers with
signed contracts or agreements with a PFFS plan are considered direct-contracting
providers.
PFFS plans may vary payment rates for their direct-contracting providers as long as the
rates are not based on utilization, with the payment rates being effective according to the
terms of the contract or agreement between the plan and the provider. However, PFFS
plans must continue to establish uniform payment rates for deemed providers in their
terms and conditions of payment. As noted in section 40.2 of this chapter, all deemed
providers have the right to decide, on a patient-by-patient and visit-by-visit basis, whether
to treat plan members unless the provider becomes a direct-contracting provider by
entering into a signed contract or agreement with the plan to see plan members over a
certain period of time.
Example 1: PFFS plans may utilize the flexibility to establish provider-specific payment
rates to encourage participation by providers who otherwise would not have agreed to
accept the payment rates listed in the terms and conditions of payment. For example, a
PFFS plan that lists a payment rate of 100% of Original Medicare for cardiology services
in the terms and conditions of payment that apply to deemed providers can establish a
higher provider-specific payment rate (e.g., 110% of Original Medicare) through a signed
contract or agreement to encourage a provider in a rural area to provide these services.

Example 2: A PFFS plan that intends to increase payment rates to a provider based on
increased utilization of specified preventive or screening services may establish the rates
in its signed contracts or agreements with direct-contracting providers and/or in the terms
and conditions of payment for deemed providers. The plan may also choose to apply this
policy on a provider-by-provider basis.
PFFS plans must maintain a record of all provider-specific payment rates that they
negotiate with direct-contracting providers along with the final rates paid. PFFS plans
must also have the capacity to report this information to CMS or to an independent entity
contracted by CMS upon request.
Section 70 of this chapter discusses the payment rules for direct-contracting and deemed
providers in each of the three types of PFFS plans.
70 – PFFS Payment Rules for Providers and Cost Sharing Rules for
Members
(Rev. 99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)
42 CFR 422.114 and 422.216
70.1 – General Rules
(Rev. 99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)
A PFFS plan can operate as one of three plan types depending on how the plan meets the
access to services requirement. Specifically, a PFFS plan can operate as a non-network,
full network, or a partial network PFFS plan depending on the method the plan uses to
meet the access to services requirement described in section 30.1 of this chapter.
As discussed in section 60 of this chapter, a PFFS plan may vary the payment rates for a
provider based on the specialty of the provider, the location of the provider, or other
factors related to the provider that are not related to utilization. This flexibility allows
PFFS plans to establish provider-specific payment rates that are different from the
payment rates in their terms and conditions of payment for deemed providers, through
signed contracts or agreements with providers.
Below we describe the access to services rules under each of the three types of PFFS
plans, including their payment rules for deemed and direct-contracting providers and cost
sharing rules for members.
Under each plan type, the plan must pay non-contracting providers, as defined in section
40.3 of this chapter, furnishing covered services an amount that the provider would have
received under Original Medicare (including balance billing permitted under Original
Medicare). Also, refer to section 80.1 of this chapter.

Providers may only collect the plan-allowed cost sharing from PFFS members, including
any balance billing amounts permitted under the plan, and may not otherwise charge or
bill members.
70.2 – Non-Network PFFS Plan Rules
(Rev. 99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)
70.2.1 - General Rules
(Rev. 99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)
• 	The plan must meet the access to services requirement by paying all providers at
least the Original Medicare rates or higher for all categories of Part A and Part B
services.
• 	The plan must operate using deemed providers for all categories of Part A and
Part B services, if the deeming conditions described in 42 CFR 422.216(f) and
section 40.2 of this chapter are met.
• 	The plan may have some direct-contracting providers. The plan may establish
signed contracts or agreements with some providers without meeting the access
standards described in section 1852(d)(1) of the Act and section 30.2 of this
chapter.
70.2.2 - Payment Rules for Deemed Providers
(Rev. 99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)
• 	The plan must pay all deemed providers at least the Original Medicare rates or
higher. Specifically, the total payment rates for these providers (plan and member
portions) must be at least the amounts they would have received as participating
or non-participating physicians, as applicable, under Original Medicare for
Medicare-covered services, including balance billing up to the limiting charge for
non-participating physicians. Refer to section 80.1 of this chapter.
• 	The plan must establish the payment rates for deemed providers in its terms and
conditions of payment and cannot vary the rates for deemed providers within a
particular category of Part A or Part B service.
70.2.3 - Payment Rules for Direct-Contracting Providers
(Rev. 99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)
• 	The plan may establish payment rates for direct-contracting providers that are
different than the rates established in the terms and conditions of payment for
deemed providers.

• 	Since the plan meets the access to services requirement by paying all providers at
least the Original Medicare rates or higher, direct-contracting providers must also
be paid at least the Original Medicare rates or higher.
• 	The payment rates for direct-contracting providers must be established in the
signed contract or agreement between the plan and the provider.
• 	The payment rates can be provider-specific, and public disclosure of the rates is
not required.
70.2.4 - Cost Sharing Rules for Members
(Rev. 99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)
The plan cannot vary a member’s actual out-of-pocket costs (regardless of whether
copayment or coinsurance applies) with respect to a particular category of Part A or Part
B service, regardless of whether the provider is a deemed or direct-contracting provider.
70.2.5 - Review of Provider Networks
(Rev. 99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)
A plan that has some direct-contracting providers is not required to meet the access
standards described in section 1852(d)(1) of the Act and section 30.2 of this chapter.
The plan must disclose information about its direct-contracting providers to CMS upon
request.
70.3 – Full Network PFFS Plan Rules
(Rev. 99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)
70.3.1 - General Rules
(Rev. 99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)
• 	The plan must meet the access to services requirement by establishing signed
contracts or agreements with a sufficient number and range of providers that meet
the access standards described in section 1852(d)(1) of the Act and section 30.2 of
this chapter.
• 	The plan must operate a network of direct-contracting providers (also known as
network providers) for all categories of Part A and Part B services.
• 	This access method is required for a plan that establishes payment rates for all
categories of Part A and Part B services that are less than the rates paid under
Original Medicare.

• 	As discussed in sections 30.3 and 30.4 of this chapter, beginning in plan year
2011, non-employer PFFS plans located in network areas and all employer/union
sponsored PFFS plans must meet the access to services requirement by operating
as full network plans.
• 	The plan must also cover out-of-network Part A and Part B services furnished by
providers who do not have a signed contract or agreement with the plan, if the
provider agrees to accept the plan’s terms and conditions of payment and becomes
a deemed provider as described in 42 CFR 422.216(f) and section 40.2 of this
chapter.
70.3.2 - Payment Rules for Direct-Contracting Providers
(Rev. 99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)
• 	The plan may establish payment rates for direct-contracting providers that are
different than the rates established in the terms and conditions of payment for
deemed providers. The plan may also vary the payment rates among the direct-
contracting providers within a particular category of Part A or Part B service.
• 	The payment rates for direct-contracting providers may be higher, lower, or equal
to the Original Medicare rates.
• 	The payment rates for direct-contracting providers must be established in the
signed contract or agreement between the plan and the provider.
• 	The payment rates can be provider-specific, and public disclosure of the rates is
not required.
70.3.3 - Payment Rules for Deemed Providers
(Rev. 99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)
• 	The plan must pay all deemed providers at least the Original Medicare rates or
higher. Specifically, the total payment rates for these providers (plan and member
portions) must be at least the amounts they would have received as participating
or non-participating physicians, as applicable, under Original Medicare for
Medicare-covered services, including balance billing up to the limiting charge for
non-participating physicians. Refer to section 80.1 of this chapter.
• 	The plan must establish the payment rates for deemed providers in its terms and
conditions of payment and cannot vary the rates for deemed providers within a
particular category of Part A or Part B service.
70.3.4 - Cost Sharing Rules for Members
(Rev. 99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)

• 	The plan cannot vary a member’s actual out-of-pocket costs (regardless of
whether copayment or coinsurance applies) with respect to a particular category
of Part A or Part B service for direct-contracting providers.
• 	The plan cannot vary a member’s actual out-of-pocket costs (regardless of
whether copayment or coinsurance applies) with respect to a particular category
of Part A or Part B service for deemed providers.
• 	The member’s actual out-of-pocket costs (regardless of whether copayment or
coinsurance applies) with respect to a particular category of Part A or Part B
service may be higher when the member receives out-of-network services from a
deemed provider instead of in-network services from a direct-contracting
provider.
70.3.5 – Review of Provider Networks
(Rev. 99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)
Review of all direct-contracting provider networks is required in accordance with section
30.2 of this chapter.
70.4 – Partial Network PFFS Plan Rules
(Rev. 99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)
70.4.1 - General Rules
(Rev. 99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)
• 	The plan must meet the access to services requirement using a combination of the
methods used by full network and non-network PFFS plans.
• 	The plan must operate a network of direct-contracting providers for one or more
categories of Part A and Part B services that meets the access standards described
in section 1852(d)(1) of the Act and section 30.2 of this chapter.
• 	For the categories of Part A and Part B services for which the plan uses direct-
contracting providers, the plan must also cover out-of-network services furnished
by providers who do not have a signed contract or agreement with the plan, if the
provider agrees to accept the plan’s terms and conditions of payment and becomes
a deemed provider as described in 42 CFR 422.216(f) and section 40.2 of this
chapter.
• 	The plan must pay all providers for the other categories of Part A and Part B
services (i.e., those categories for which direct-contracting providers are not used)
at least the Original Medicare rates or higher. The plan must operate using
deemed providers for these categories of services; however, the plan may have
some direct-contracting providers. The plan may establish signed contracts or

agreements with some providers without meeting the access standards described
in section 1852(d)(1) of the Act and section 30.2 of this chapter.
70.4.2 - Payment Rules for Direct-Contracting Providers
(Rev. 99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)
The payment rules that apply under full network PFFS plans also apply to partial network
plans. Refer to section 70.3.2 of this chapter.
70.4.3 - Payment Rules for Deemed Providers
(Rev. 99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)
The payment rules that apply under non-network and full network PFFS plans also apply
for partial network plans. Refer to sections 70.2.2 and 70.3.3 of this chapter.
70.4.4 - Cost Sharing Rules for Members
(Rev. 99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)
The member cost sharing rules that apply under full network PFFS plans also apply to
partial network plans. Refer to section 70.3.4 of this chapter.
70.4.5 - Review of Provider Networks
(Rev. 99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)
Review of all direct-contracting provider networks is required in accordance with section
30.2 of this chapter.
80 - Balance Billing Rules
(Rev. 99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)
80.1 – Original Medicare Balance Billing Rules that Apply to Deemed
and Non-Contracting Providers under PFFS Plans
(Rev. 99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)
42 CFR 422.100(b)(2)
Non-contracting providers are required to accept as payment in full from a PFFS plan
(including any member cost sharing) the amount they would have received under
Original Medicare for a covered service (including any balance billing permitted under
Original Medicare). While a non-contracting physician can only collect the plan-allowed
cost sharing from a PFFS plan member, the difference that the plan must pay the provider
varies depending on whether the provider is a participating or non-participating physician
under Original Medicare. If a deemed provider collects more from an enrollee than is
allowed under the PFFS plans terms and conditions of payment the PFFS plan must
reimburse the member for their overpayment and seek the money the plan is still owed

from the provider. In the event the provider is non-cooperative the PFFS plan must
report the provider to CMS and advise their plan member to not return to that provider
until the provider has agreed to accept the plans terms and conditions of payment.
PFFS plans that are required to pay deemed physicians at least the Original Medicare
payment rates must also take into account whether a physician is participating or non-
participating under Original Medicare in order to determine the total amount due to the
deemed physician.
The total amount due to the physician is as follows:
• 	Participating, deemed or non-contracting physicians: The physician is required to
accept the fee schedule amount, including any plan-allowed member cost sharing,
as payment in full.
• 	Non-participating, deemed or non-contracting physicians: The physician can
charge an additional amount, up to the limiting charge, above the non-
participating physician fee schedule amount. The limiting charge is defined as the
maximum amount that non-participating physicians can charge above the non-
participating physician fee schedule, which is 15%. The PFFS plan member is
only required to pay the plan-allowed cost sharing. However, the PFFS plan must
pay the provider the difference between the non-participating physician fee
schedule amount (including any additional amount up to the limiting charge) and
the member cost sharing.
80.2 - Additional Balance Billing Rules Allowed under PFFS Plans for
Deemed and Direct-Contracting Providers
(Rev. 99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)
42 CFR 422.216(b)(1)(ii)
In addition to the Original Medicare balance billing rules described in section 80.1, there
is a special rule that permits a PFFS plan to allow deemed and direct-contracting
providers to charge the member up to 15% of the PFFS plan’s total payment rate for a
service, in addition to the plan-allowed member cost sharing. However, this special PFFS
balance billing is only permitted if it is explicitly stated in the plan’s terms and conditions
of payment for deemed providers or in the signed contract or agreement between the plan
and the direct-contracting providers. Providers are not permitted to balance bill a member
who is also enrolled in a State Medicaid program, and as a result, the member is held
harmless from Medicare cost sharing.
If a PFFS plan prohibits this special balance billing, then the deemed or direct-contracting
providers may only collect the plan-allowed cost sharing from the member and may not
otherwise charge or bill members.

80.2.1 - Advance Notice for Hospital Services
(Rev. 99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)
42 CFR 422.216(d)(2)
PFFS plans must require a deemed or direct-contracting hospital that intends to impose
balance billing to provide members, before furnishing any hospital services for which the
balance billing amount could be greater than $500, with the following:
(1) A notice that balance billing is permitted for those services;
(2) A good faith estimate of the likely amount of balance billing based on the
member’s presenting condition; and
(3) The amount of any deductible, coinsurance, and copayment that may be due in
addition to the balance billing amount.
The PFFS plan must include these requirements in its terms and conditions of payment
for deemed hospitals or in the signed contract or agreement between the plan and the
direct-contracting hospital.
90 – Prohibition on Prior Authorization, Prior Notification, and
Referrals
(Rev. 99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)
42 CFR 422.4(a)(3)
90.1 – General Requirements
(Rev. 99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)
PFFS plans are prohibited from restricting a members’ access to services by requiring
prior authorization, prior notification, or referrals as a condition of coverage when
medically necessary, plan-covered services are furnished to members. However,
members and providers have the right to request a written advance organization
determination from the plan, in accordance with Subpart M of Part 422, before a member
receives a service in order to confirm that the service is medically necessary and will be
covered by the plan. Refer to section 100 of this chapter for information on advance
organization determinations. The requirements described below apply to all three types
(full, partial, and non-network) of PFFS plans.
90.2 – Prior Authorization
(Rev. 99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)
PFFS plans can perform retrospective review of claims for the purpose of verifying
medical necessity and that the service furnished is a covered service. However, PFFS
plans may not require members or providers to obtain prior authorization from the plan as

a condition of coverage. Prior authorization occurs when a plan requires its members or
their providers to seek approval from the plan before the member receives a service from
the provider as a condition of coverage. However, as described below both enrollees and
providers are entitled to request and receive an advance determination of coverage if they
want to ensure that a particular service will be covered by the PFFS plan as described
below under section 100.
90.3 – Prior Notification
(Rev. 99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)
Under prior notification, a plan reduces its standard cost sharing levels when the provider
from whom a member is receiving plan-covered services voluntarily notifies the plan
prior to furnishing those services, or the member voluntarily notifies the plan prior to
receiving plan-covered services from a provider. PFFS plans may not require members
or providers to prior notify the plan as a condition of coverage nor can PFFS plans
establish voluntary prior notification rules.
90.4 – Referrals
(Rev. 99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)
PFFS plans may not require members to obtain referrals in order to receive medically
necessary, plan-covered services. If a member receives a medically necessary, plan-
covered service from a qualified provider, without a referral or prior authorization from
the plan, the PFFS plan must pay for the service.
100 - Written Advance Organization Determinations
(Rev. 99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)
42 CFR 422.216(e)
If a member of a full, partial, or non-network PFFS plan sees a deemed provider who
agrees to accept the plan’s terms and conditions of payment, then the member and the
provider have the right to request a written advance organization determination (also
known as an advance coverage determination) from the plan before the member receives
a service from the deemed provider. This allows the member and the provider to confirm
that the service is medically necessary and a covered service, and therefore, will be paid
for by the plan. The PFFS plan must make advance organization determinations in
accordance with Subpart M of Part 422 and Chapter 13 of this manual.
In the absence of an advance organization determination, a PFFS plan can retroactively
deny payment for a service furnished to a member only if the plan determines that the
service was not covered by the plan or was not medically necessary. However, members
and providers have the right to dispute the plan’s decision by exercising member appeals
rights. Refer to Chapter 13 of this manual for more information.
PFFS plans should take an active role to educate their members and providers about their
right to request a written advance organization determination from the plan before a

member receives a service in order to confirm that the service is medically necessary and
will be covered by the plan. PFFS plans should clearly explain the process for requesting
an initial organization determination in member materials and respond to requests from
members and providers on a timely basis as described in subpart M section 422.568 and
422.572. PFFS plans should also encourage members and providers to request advance
organization determinations prior to receiving costly services.
110 - Prompt Payment Requirements
(Rev. 99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)
42 CFR 422.520
MA organizations offering PFFS plans must establish prompt payment requirements for
deemed providers in their terms and conditions of payment. At a minimum:
• 	The MA organization must pay 95 percent of the “clean claims” within 30 days of
receipt, if they are submitted by or on behalf of a member of a PFFS plan; and
• 	The MA organization must pay interest on clean claims that are not paid within 30
days in accordance with sections 1816(c)(2)(B) and 1842(c)(2)(B) of the Act.
A clean claim includes the minimum information necessary to adjudicate a claim, not to
exceed the information required by Original Medicare. PFFS plans will process all non-
clean claims from deemed providers and notify providers of the determination within 60
days of receiving such claims.
MA organizations offering PFFS plans are also required to include a prompt payment
provision in the signed contracts or agreements with their direct-contracting providers,
the terms of which are developed and agreed to by both the MA organization and the
relevant provider. The MA organization is obligated to pay direct-contracting providers
under the terms of the contract between the MA organization and the provider.
120 – Timely Filing Requirement
(Rev. 99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)
For services furnished on or after January 1, 2010, deemed and non-contracting providers
furnishing services to PFFS plan members must submit a claim to the plan for an Original
Medicare-covered service within the same time frame the provider would have to submit
under Original Medicare, which is within 1 calendar year after the date of service
The rules for submitting timely claims under Original Medicare can be found at
https://www.cms.gov/MLNMattersArticles/downloads/MM6960.pdf.
130 – Provider Payment Dispute Resolution Process
(Rev. 99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)

130.1 – Process for Resolving Provider Payment Disputes through the
PFFS Plan
(Rev. 99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)
Under its contract with CMS, PFFS plans are required to have a process in place to
resolve provider payment disputes.
A PFFS plan is required to ensure that deemed providers are being paid according to its
terms and conditions of payment. If a deemed provider believes that the payment amount
the provider received from the PFFS plan is less than the amount indicated in the plan’s
terms and conditions of payment, then the provider has the right to dispute the payment
amount following the plan’s provider payment dispute resolution process.
The provider payment dispute resolution process must be explained in the PFFS plan’s
terms and conditions of payment. In its description of the provider payment dispute
resolution process, the PFFS plan must describe how a provider can file a dispute with
the plan and the appropriate documentation that the provider should submit to the plan to
demonstrate that the plan paid the provider less than required under the PFFS plan’s
terms and conditions of payment.
The following guidelines identify some optimal features of a provider payment dispute
resolution process, which CMS encourages all PFFS plans to implement. PFFS plans
that follow the model features of the provider payment dispute process will meet CMS’
requirements. CMS considers an effective provider payment dispute process a critical
part of a PFFS plan since it will encourage provider participation in the plan.
Model Features of a Provider Payment Dispute Process:
1. The PFFS plan has a system for receiving provider payment disputes (e.g., dedicated
phone line, e-mail address) and establishes a specific and reasonable timeline for
resolution/adjudication of disputes. (CMS recommends 30 days from the time the
provider payment dispute is first received by the plan.)
2. The PFFS plan maintains a record of provider payment disputes and documents its
final decisions regarding provider payment disputes. The PFFS plan has the capacity to
report this information to CMS upon request - including documentation of any corrective
actions taken to prevent future payment errors.
3. If the PFFS plan finds for the provider (i.e., it agrees that it initially underpaid the
provider), in addition to paying the provider the additional amount due in a timely
manner, the plan should correct its payment system going forward, and identify similar
claims for that contract year to ensure that it has paid them correctly.
4. The PFFS plan informs the provider in writing of its decision in cases where a provider
payment dispute is denied by the plan.

CMS has provided language in its model terms and conditions of payment to describe a
PFFS plan’s provider payment dispute resolution process. Refer to section 50.2 of this
chapter.
As discussed in section 110 of this chapter, PFFS plans must pay clean claims from
deemed providers within 30 days. When reviewing a provider payment dispute process,
CMS will review the PFFS plan’s terms and conditions of payment and the rate at which
it rejects provider claims from the clean-claim process. Specifically, the plan’s terms and
conditions of payment must furnish clear instructions telling providers how to bill the
plan for services furnished to its members. CMS will pay particular attention to PFFS
plans that reject a large percentage of claims because they are not clean (i.e., claims not
paid because they were not billed according to plan instructions). CMS will determine
what constitutes a large number of rejected claims based on comparisons with the
average rejection rate of other PFFS plans. CMS will also review the terms and
conditions of payment to ensure that it clearly informs providers how they can appeal to
the plan if the provider believes the amount paid by the plan is less than what is described
in its terms and conditions of payment. In its review, CMS will pay particular attention
to how the plan documents its process and if it appropriately responds to provider appeals
in a timely manner.
130.2 - Process for Resolving Provider Payment Disputes through the
Payment Dispute Resolution Contractor
(Rev. 99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)
After completing the PFFS plan’s provider payment dispute resolution process, if a
deemed provider still believes that the plan has reached an incorrect decision regarding
payment on a claim, the provider may file an additional request for review with an
independent review organization contracted by CMS. To file this additional request for
review of a payment dispute with the independent review organization, the provider may
contact the Payment Dispute Resolution Contractor (PDRC) directly. Information on
filing a dispute with the PDRC is available on the CMS website at
https://www.cms.gov/HealthPlansGenInfo/18_ProviderPaymentDisputeResolution.asp.
The deemed provider must first complete the PFFS plan’s provider payment dispute
resolution process before requesting a review by the independent review organization.
Both deemed and non-contracting providers furnishing services to PFFS members may
file payment disputes with the PDRC.
The provider payment dispute process cannot be used to challenge payment denials by
organizations that result in zero payment being made to the non-contracted provider.
Instead, these matters must be processed as appeals under 42 CFR Subpart M. In
addition, the payment dispute process may not be used to resolve payment disputes
between contracted network providers and organizations covered by this process.
However, in cases where the plan makes a payment but the provider disputes the amount
of the payment the provider may utilize the provider payment dispute process.

140 - Requirement for PFFS Plans to Provide an Explanation of
Benefits to Members
(Rev. 99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)
42 CFR 422.216(d)(1)
MA organizations offering PFFS plans must provide plan members, for each claim filed
by the member or the provider that furnished the service, with an appropriate explanation
of benefits. The explanation of benefits must include a clear statement of the member's
liability for deductibles, coinsurance, copayment, and balance billing.
150 - Requirement for PFFS Plans to have a Quality Improvement
Program
(Rev. 99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)
42 CFR 422.152
150.1 – General Requirements
(Rev. 99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)
42 CFR 422.152(a)
MA organizations offering PFFS plans must meet the requirement that MA plans have an
ongoing quality improvement program. As part of its ongoing quality improvement
program, a PFFS must:
• 	Have chronic care improvement programs;
• 	Conduct quality improvement projects on an annual basis; and
• 	Encourage its providers to participate in CMS and HHS quality improvement
initiatives. PFFS plans are required to meet this requirement only for their direct-
contracting providers (i.e., providers who have a signed contract with the plan).
In order to implement the quality improvement program requirements, MA organizations
should follow guidance in Chapter 5 of this manual and seek assistance from State
Quality Improvement Organizations as well as CMS.
150.2 – Quality Data Collection and Reporting Requirements
(Rev. 99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)
42 CFR 422.152(h)
PFFS plans must provide for the collection, analysis, and reporting of data that permits

the measurement of health outcomes and other indices of quality. The quality data
collection and reporting requirements for PFFS plans cannot exceed the data collection
and reporting requirements established for local PPO plans under 42 CFR 422.152(e).
Refer to Chapter 5 of this manual more information.
160 – PFFS Crosswalk Options
(Rev.99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)
CMS has established specific rules that MA organizations must follow in order for CMS
to allow non-network and partial network PFFS plans to transition to partial or full
network PFFS plans. These rules are described below. Contract year-specific deadlines
and processes associated with plan crosswalks are articulated in greater detail in the
annual call letter and other CMS guidance.
160.1 - Non-Network PFFS Plan Transitioning to a Partial Network
PFFS Plan
(Rev. 99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)
An MA organization with a PFFS non-network contract may consolidate one or more
current non-network PFFS PBPs into a new or renewal partial network PFFS plan benefit
package (PBP) under a separate contract held by the same legal entity.
Current members of a PFFS non-network plan or plans being consolidated into a new or
renewal PFFS partial network plan will not be required to take any enrollment action, and
the organization will not submit enrollment transactions to MARx for those current
members, although it may need to submit updated 4Rx data to CMS for the current
members affected by the consolidation. New members must complete enrollment
requests, and the MA organization will submit enrollment transactions to MARx for
those new members. Current members of the consolidated PFFS partial network plan
must receive a standard annual notice of change (ANOC).
160.2 - Some Counties of a Non-Network PFFS Plan Transitioning to a
Partial Network PFFS Plan
(Rev. 99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)
An MA organization with a PFFS non-network contract may consolidate some counties
in the service area of a current non-network PFFS PBP into a single new or renewal
partial network PFFS PBP under a separate contract held by the same legal entity.
Current members in the remaining counties in the current year’s non-network PFFS PBP
may remain in the current non-network PBP provided the MA organization follows the
rules for a renewal plan with a SAR described in section 140.6 of Chapter 4 of this
manual.
The MA organization must submit enrollment transactions to MARx for current members
in the counties affected by the SAR who will be transitioned to a new or renewing partial
network PBP under a separate contract held by the same legal entity. New members must

complete enrollment requests, and the MA organization will submit enrollment
transactions to MARx for those new members as usual. Current members transitioned to
the PFFS partial network plan must receive a standard ANOC.
160.3 - Non-Network PFFS Plan Transitioning to a Full Network PFFS
Plan
(Rev. 99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)
An MA organization with a PFFS non-network contract may consolidate one or more
current entire non-network PFFS PBPs into a new or renewal full network PFFS PBP
under a separate contract held by the same legal entity.
Current members of a PFFS non-network plan or plans being consolidated into a new or
renewal PFFS full network plan will not be required to take any enrollment action, and
the organization will not submit enrollment transactions to MARx for those current
members, although it may need to submit updated 4Rx data to CMS for the current
members affected by the consolidation. New members must complete enrollment
requests, and the MA organization will submit enrollment transactions to MARx for
those new members. Current members of the consolidated PFFS full network plan must
receive a standard ANOC.
160.4 - Some Counties of a Non-Network PFFS Plan Transitioning to a
Full Network PFFS Plan
(Rev. 99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)
An MA organization with a PFFS non-network contract may consolidate some counties
in the service area of a current non-network PFFS PBP into a single new or renewal full
network PFFS PBP under a separate contract held by the same legal entity. Current
members in the remaining counties in the current year non-network PFFS PBP may
remain in subsequent year’s non-network PBP provided the MA organization follows the
rules for a renewal plan with a SAR described in section 140.6 of Chapter 4 of this
manual.
The MA organization must submit enrollment transactions to MARx for current members
in the counties affected by the SAR who will be transitioned to a new or renewing full
network PBP under a separate contract held by the same legal entity. New members must
complete enrollment requests, and the MA organization will submit enrollment
transactions to MARx for those new members. Current members transitioned to the
PFFS full network plan must receive a standard ANOC.
160.5 - Partial Network PFFS Plan Transitioning to a Full Network
PFFS Plan
(Rev. 99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)

An MA organization with a PFFS partial network contract may consolidate one or more
current partial network PFFS PBPs into a new or renewal full network PFFS PBP under a
separate contract held by the same legal entity.
Current members of a PFFS partial network plan or plans being consolidated into a new
or renewal PFFS full network plan will not be required to take any enrollment action, and
the organization will not submit enrollment transactions to MARx for those current
members. New members must complete enrollment requests, and the MA organization
will submit enrollment transactions to MARx for those new members. Current members
of the consolidated PFFS full network plan must receive a standard ANOC.
160.6 - Some Counties of a Partial Network PFFS Plan Transitioning to
a Full Network PFFS Plan
(Rev. 99, Issued: 05-27-11, Effective: 05-27-11, Implementation: 05-27-11)
An MA organization with a PFFS partial network contract may consolidate some
counties in the service area of a current partial network PFFS PBP into a single new or
renewal full network PFFS PBP under a separate contract held by the same legal entity.
Current members in the remaining counties in the current year’s partial network PFFS
PBP may remain in the subsequent year’s partial network PBP provided the MA
organization follows the rules for a renewal plan with a SAR described in section 140.6
of Chapter 4 of this manual.
The MA organization must submit enrollment transactions to MARx for current members
in the counties affected by the SAR who will be transitioned to a new or renewing full
network PBP under a separate contract held by the same legal entity. New members must
complete enrollment requests, and the MA organization will submit enrollment
transactions to MARx for those new members. Current members transitioned to the
PFFS full network plan must receive a standard ANOC.

Transmittals Issued for this Chapter
Rev # 	Issue Date 	Subject 	Impl Date CR#
R99MCM 05/27/2011 	Initial Issuance of Chapter 	05/27/2011 N/A