[Code of Federal Regulations]
[Title 42, Volume 3]
[Revised as of October 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 42CFR438.210]

[Page 214-216]
 
                         TITLE 42--PUBLIC HEALTH
 
  CHAPTER IV--CENTERS FOR MEDICARE & MEDICAID SERVICES, DEPARTMENT OF 
                  HEALTH AND HUMAN SERVICES (CONTINUED)
 
PART 438_MANAGED CARE--Table of Contents
 
        Subpart D_Quality Assessment and Performance Improvement
 
Sec. 438.210  Coverage and authorization of services.

    (a) Coverage. Each contract with an MCO, PIHP, or PAHP must do the 
following:
    (1) Identify, define, and specify the amount, duration, and scope of 
each service that the MCO, PIHP, or PAHP is required to offer.
    (2) Require that the services identified in paragraph (a)(1) of this 
section be furnished in an amount, duration, and scope that is no less 
than the amount, duration, and scope for the

[[Page 215]]

same services furnished to beneficiaries under fee-for-service Medicaid, 
as set forth in Sec. 440.230.
    (3) Provide that the MCO, PIHP, or PAHP--
    (i) Must ensure that the services are sufficient in amount, 
duration, or scope to reasonably be expected to achieve the purpose for 
which the services are furnished.
    (ii) May not arbitrarily deny or reduce the amount, duration, or 
scope of a required service solely because of diagnosis, type of 
illness, or condition of the beneficiary;
    (iii) May place appropriate limits on a service--
    (A) On the basis of criteria applied under the State plan, such as 
medical necessity; or
    (B) For the purpose of utilization control, provided the services 
furnished can reasonably be expected to achieve their purpose, as 
required in paragraph (a)(3)(i) of this section; and
    (4) Specify what constitutes ``medically necessary services'' in a 
manner that--
    (i) Is no more restrictive than that used in the State Medicaid 
program as indicated in State statutes and regulations, the State Plan, 
and other State policy and procedures; and
    (ii) Addresses the extent to which the MCO, PIHP, or PAHP is 
responsible for covering services related to the following:
    (A) The prevention, diagnosis, and treatment of health impairments.
    (B) The ability to achieve age-appropriate growth and development.
    (C) The ability to attain, maintain, or regain functional capacity.
    (b) Authorization of services. For the processing of requests for 
initial and continuing authorizations of services, each contract must 
require--
    (1) That the MCO, PIHP, or PAHP and its subcontractors have in 
place, and follow, written policies and procedures.
    (2) That the MCO, PIHP, or PAHP--
    (i) Have in effect mechanisms to ensure consistent application of 
review criteria for authorization decisions; and
    (ii) Consult with the requesting provider when appropriate.
    (3) That any decision to deny a service authorization request or to 
authorize a service in an amount, duration, or scope that is less than 
requested, be made by a health care professional who has appropriate 
clinical expertise in treating the enrollee's condition or disease.
    (c) Notice of adverse action. Each contract must provide for the 
MCO, PIHP, or PAHP to notify the requesting provider, and give the 
enrollee written notice of any decision by the MCO, PIHP, or PAHP to 
deny a service authorization request, or to authorize a service in an 
amount, duration, or scope that is less than requested. For MCOs and 
PIHPs, the notice must meet the requirements of Sec. 438.404, except 
that the notice to the provider need not be in writing.
    (d) Timeframe for decisions. Each MCO, PIHP, or PAHP contract must 
provide for the following decisions and notices:
    (1) Standard authorization decisions. For standard authorization 
decisions, provide notice as expeditiously as the enrollee's health 
condition requires and within State-established timeframes that may not 
exceed 14 calendar days following receipt of the request for service, 
with a possible extension of up to 14 additional calendar days, if--
    (i) The enrollee, or the provider, requests extension; or
    (ii) The MCO, PIHP, or PAHP justifies (to the State agency upon 
request) a need for additional information and how the extension is in 
the enrollee's interest.
    (2) Expedited authorization decisions. (i) For cases in which a 
provider indicates, or the MCO, PIHP, or PAHP determines, that following 
the standard timeframe could seriously jeopardize the enrollee's life or 
health or ability to attain, maintain, or regain maximum function, the 
MCO, PIHP, or PAHP must make an expedited authorization decision and 
provide notice as expeditiously as the enrollee's health condition 
requires and no later than 3 working days after receipt of the request 
for service.
    (ii) The MCO, PIHP, or PAHP may extend the 3 working days time 
period by up to 14 calendar days if the enrollee requests an extension, 
or if the MCO, PIHP, or PAHP justifies (to the

[[Page 216]]

State agency upon request) a need for additional information and how the 
extension is in the enrollee's interest.
    (e) Compensation for utilization management activities. Each 
contract must provide that, consistent with Sec. 438.6(h), and Sec. 
422.208 of this chapter, compensation to individuals or entities that 
conduct utilization management activities is not structured so as to 
provide incentives for the individual or entity to deny, limit, or 
discontinue medically necessary services to any enrollee.

                    Structure and Operation Standards