[Code of Federal Regulations]

[Title 42, Volume 4]

[Revised as of October 1, 2006]

From the U.S. Government Printing Office via GPO Access

[CITE: 42CFR434.40]



[Page 111-112]

 

                         TITLE 42--PUBLIC HEALTH

 

  CHAPTER IV--CENTERS FOR MEDICARE & MEDICAID SERVICES, DEPARTMENT OF 

                  HEALTH AND HUMAN SERVICES (CONTINUED)

 

PART 434_CONTRACTS--Table of Contents

 

         Subpart D_Contracts With Health Insuring Organizations

 

Sec.  434.40  Contract requirements.





    (a) Contracts with health insuring organizations that are not 

subject to the requirements in section 1903(m)(2)(A) must:

    (1) Meet the general requirements for all contracts and subcontracts 

specified in Sec.  434.6;

    (2) Specify that the contractor assumes at least part of the 

underwriting risk and;

    (i) If the contractor assumes the full underwriting risk, specify 

that payment of the capitation fees to the contractor during the 

contract period constitutes full payment by the agency for the cost of 

medical services provided under the contract;

    (ii) If the contractor assumes less than the full underwriting risk, 

specify how the risk is apportioned between the agency and the 

contractor;

    (3) Specify whether the contractor returns to the agency part of any 

savings remaining after the allowable costs are deducted from the 

capitations fees, and if savings are returned, the apportionment between 

agency and the contractor; and



[[Page 112]]



    (4) Specify the extent, if any, to which the contractor may obtain 

reinsurance of a portion of the underwriting risk.

    (b) The contract must--

    (1) Specify that the capitation fee will not exceed the limits set 

forth under part 447 of this chapter.

    (2) Specify that, except as permitted under paragraph (b) of this 

section, the capitation fee paid on behalf of each recipient may not be 

renegotiated--

    (i) During the contract period if the contract period is 1 year or 

less; or

    (ii) More often than annually if the contract period is for more 

than 1 year.

    (3) Specify that the capitation fee will not include any amount for 

recoupment of any specific losses suffered by the contractor for risks 

assumed under the same contract or a prior contract with the agency; and

    (4) Specify the actuarial basis for computation of the capitation 

fee.

    (c) The capitation fee may be renegotiated more frequently than 

annually for recipients who are not enrolled at the time of 

renegotiation or if the renegotiation is required by changes in Federal 

or State law.



[55 FR 51295, Dec. 13, 1990]



Subpart E [Reserved]