[Code of Federal Regulations]
[Title 42, Volume 2]
[Revised as of October 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 42CFR421.200]

[Page 822-823]
 
                         TITLE 42--PUBLIC HEALTH
 
                             HUMAN SERVICES
 
PART 421--INTERMEDIARIES AND CARRIERS--Table of Contents
 
                           Subpart C--Carriers
 
Sec. 421.200  Carrier functions.


    A contract between CMS and a carrier, other than a regional DMEPOS 
carrier, specifies the functions to be performed by the carrier which 
must include, but are not necessarily limited to, the following:
    (a) Coverage. (1) The carrier ensures that payment is made only for 
services that are:
    (i) Furnished to Medicare beneficiaries;
    (ii) Covered under Medicare; and
    (iii) In accordance with QIO determinations when they are services 
for

[[Page 823]]

which the QIO has assumed review responsibility under its contract with 
CMS.
    (2) The carrier takes appropriate action to reject or adjust the 
claim if--
    (i) The carrier or the QIO determines that the services furnished or 
proposed to be furnished were not reasonable, not medically necessary, 
or not furnished in the most appropriate setting;
    (ii) The carrier determines that the claim does not properly reflect 
the kind and amount of services furnished.
    (b) Payment on a cost basis. If payment is on a cost basis, the 
carrier must assure that payments are based on reasonable costs, as 
determined under part 413 of this chapter.
    (c) Payment on a charge basis. If payment is on a charge basis, 
under part 405, subpart E of this chapter, the carrier must ensure that-
-
    (1) Charges are reasonable and not higher than the charge for a 
comparable service furnished under comparable circumstances to the 
carrier's policy holders and subscribers; and
    (2) The payment is based on one of the following--
    (i) An itemized bill.
    (ii) An assignment under the terms of which the reasonable charge is 
the full charge for the service, as specified in Sec. 424.55 of this 
chapter.
    (iii) If the beneficiary has died, the procedures set forth in 
Secs. 424.62 and 424.64 of this chapter.
    (d) Fiscal management. The carrier must receive, disburse, and 
account for funds in making payments under Medicare.
    (e) Provider audits. The carrier must audit the records of providers 
to whom it makes Medicare Part B payments to assure that payments are 
made properly.
    (f) Utilization patterns. (1) The carrier must have methods and 
procedures for identifying utilization patterns that deviate from 
professionally established norms and bring the deviant patterns to the 
attention of appropriate professional groups.
    (2) The carrier must assist providers and other persons who furnish 
Medicare Part B services to--
    (i) Develop procedures relating to utilization practices;
    (ii) Make studies of the effectiveness of those procedures and 
devise methods to improve them;
    (iii) Apply safeguards against unnecessary utilization of services; 
and
    (iv) Develop procedures for utilization review, and establish groups 
to perform such reviews of providers to whom it makes Medicare Part B 
payments.
    (g) Information and reports. The carrier must furnish to CMS any 
information and reports that CMS requests in order to carry out CMS's 
responsibilities in the administration of the Medicare program. The 
carrier must be responsive to requests for information from the public.
    (h) Maintenance and availability of records. The carrier must 
maintain and make available to CMS the records necessary for 
verification of payments and for other related purposes.
    (i) Hearings to Part B beneficiaries. (1) The carrier must provide 
an opportunity for a fair hearing if it denies the beneficiary's request 
for payment, does not act upon the request with reasonable promptness, 
or pays less than the amount claimed.
    (2) The hearing procedures must be in accordance with part 405, 
subpart H, of this chapter (Review and Hearing Under the Supplementary 
Medical Insurance Program).
    (j) Other terms and conditions. The carrier must comply with any 
other terms and conditions included in its contract.

[45 FR 42183, Jun. 23, 1980; 45 FR 64913, Oct. 1, 1980, as amended at 49 
FR 3660, Jan. 30, 1984; 49 FR 9174, Mar. 12, 1984; 51 FR 34833, Sept. 
30, 1986; 51 FR 41350, Nov. 14, 1986; 51 FR 43198, Dec. 1, 1986; 52 FR 
4499, Feb. 12, 1987; 53 FR 6648, Mar. 2, 1988; 54 FR 4027, Jan. 27, 
1989; 57 FR 27307, June 18, 1992]