CMS-10237_Supporting_Statement_for_2013_Applications

Supporting Statement for Applications for
Part C Medicare Advantage, 1876 Cost Plans, and Employer Group Waiver Plans
to Provide Part C Benefits as defined in Part 417 & 422 of 42 C.F. R.

A

Background

The Balanced Budget Act of 1997 (BBA) Pub. L. 105-33, established a new “Part C” in
the Medicare statute (sections 1851 through 1859 of the Social Security Act (the
Act)).which provided for a Medicare+Choice (M+C) program. Under section 1851(a)(1)
of the Act, every individual entitled to Medicare Part A and enrolled under Part B, except
for most individuals with end-stage renal disease (ESRD), could elect to receive benefits
either through the Original Medicare Program or an M+C plan, if one was offered where
he or she lived.
The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA)
Pub. L. 108-173 was enacted on December 8, 2003. The MMA established the Medicare
Prescription Drug Benefit Program (Part D) and made revisions to the provisions of
Medicare Part C, governing what is now called the Medicare Advantage (MA) program
(formerly Medicare+Choice). The MMA directed that important aspects of the new
Medicare Prescription Drug Benefit Program under Part D by similar to and coordinated
with regulations for the MA program.
The MMA also enacted the prescription drug benefits program and revised MA program
provisions with a required implementation date of January 1, 2006. The final rules for
the MA and Part D prescription drug programs appeared in the Federal Register on
January 28, 2005 (70 FR 4588 through 4741 and 70 CFR 4194 through 458,5
respectively. Many of the provisions relating to applications, marketing, contracts and
the new bidding process for the MA program became effective on March 22, 2005, 60
days after publication of the rule, so that the requirements for both programs could be
implemented by January 1, 2006. As we have gained more experience with the MA and
the Part D programs, we are revising areas of both programs. Many of these revisions
clarify existing polices or codify current guidance.

B

Justification
1. Need and Legal Basis

Collection of this information is mandated in Part C of the Medicare Prescription Drug,
Improvement and Modernization Act of 2003 (MMA) in Subpart K of 42 CRF 422
entitled “Contracts with Medicare Advantage Organizations.” In addition, the Medicare

CY2013 Part C MA APP (60 day)

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Improvements for Patients and Providers Act of 2008 (MIPPA) amended titles XVII and
XIX of the Social Security Act to improve the Medicare program.
In general, coverage for the prescription drug benefit is provided through prescription
drug plans (PDPs) that offer drug-only coverage or through Medicare Advantage (MA)
organizations that offer integrated prescription drug and health care products (MA-PD
plans). PDPs must offer a basic drug benefit. Medicare Advantage Coordinated Care
Plans (MA-CCPs) either must offer a basic benefit or may offer broader coverage for no
additional cost. Medicare Advantage Private Fee for Service Plans (MA-PFFS) may
choose to offer enrollees a Part D benefit. Employer Group Plans may also provide Part
D benefits. If any of the contracting organizations meet basic requirements, they may
also offer supplemental benefits through enhanced alternative coverage for an additional
premium.
Organizations wishing to provide healthcare services under MA and/or MA-PD plans
must complete an application, file a bid, and receive final approval from CMS. Existing
MA plans may request to expand their contracted service area by completing the Service
Area Expansion (SAE) application. Applicants may offer a local MA plan in a county, a
portion of a county (i.e., a partial county) or multiple counties. Applicants may offer a
MA regional plan in one or more of the 26 MA regions.
This clearance request is for the information collected to ensure applicant compliance
with CMS requirements and to gather data used to support determination of contract
awards.

1876 Cost Plan SAE
The Cost plan application is based on Section 1876 of Title XVIII of the Social Security
Act and applicable regulations and Title XIII of the Public Health Services Act and the
applicable regulations.
Any current 1876 Cost Plan Contractor that wants to expand its Medicare cost-based
contract with CMS under Section 1876 of the Social Security Act, as amended by the Tax
Equity and Fiscal Responsibility Act of 1982 (TEFRA) and subsequent legislation can
complete the service area expansion application. 1876 Cost plans under section 1876 of
the Social Security Act

2.

Information Users

The information will be collected under the solicitation of Part C application from MA,
EGWP Plan, and Cost Plan applicants. The collection information will be used by CMS
to: (1) ensure that applicants meet CMS requirements, (2) support the determination of
contract awards.

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Participation in all Programs is voluntary in nature. Only organizations that are interested
in participating in the program will respond to the solicitation. MA-PDs that voluntarily
participate in the Part C program must submit a Part D application and successful bid.
3.

Improved Information Technology

In the application process, technology is used in the collection, processing and storage of
the data. Specifically, applicants must submit the entire application and supporting
documentation through CMS’ Health Plan Management System (HPMS). The
application submission is 100% electronic.

4.

Duplication of Similar Information

This form does not duplicate any information currently collected. It contains information
essential for the operation and implementation of the Medicare Advantage program. It is
the only standardized mechanism available to record data from organizations interested in
contracting with CMS. Where possible, we have modified the standard application to
accommodate information that is captured in prior data collection and resides in (HPMS).
.
5.

Small Business

The collection of information will have a minimal impact on small businesses since
applicants must possess an insurance license and be able to accept substantial financial
risk. Generally, state statutory licensure requirements effectively preclude small business
from being licensed to bear risk needed to serve Medicare enrollees.
6.

Less Frequent Collection

If this information is not collected, CMS will have no mechanism to: (1) ensure that
applicants meet the CMS requirements, and (2) support determination of contract awards
or denials.

7.

Special Circumstances

Each applicant is required to enter and maintain data in the CMS Health Plan
Management System (HPMS). Prompt entry and ongoing maintenance of the data in
HPMS will facilitate the tracing of the applicant’s application throughout the review
process. If the applicant is awarded a contract after negotiation, the collection
information will be used for frequent communications during implementation of the
Medicare Advantage Organizations Program. Applicants are expected to ensure the
accuracy of the collected information on an ongoing basis.
8.

Federal Register Notice/Outside Consultation

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.
The 60-day Federal Register notice published on July 1, 2011 (76 FR 38655).

9.

Payment/Gift To Respondent

There are no payments or gifts associated with this collection.
10.

Confidentiality

Consistent with federal government and CMS policies, CMS will protect the
confidentiality of the requested proprietary information. Specifically, only information
within a submitted application (or attachments thereto) that constitutes a trade secret,
privileged or confidential information, (as such terms are interpreted under the Freedom
of Information Act and applicable case law), and is clearly labeled as such by the
Applicant, and which includes an explanation of how it meets one of the expectations
specified n 45 CFR Part 5, will be protected from release by CMS under 5
U.S.C.§552(b)(4). Information not labeled as trades secret, privileged, or confidential or
not including an explanation of why it meets one or more of the FOIA exceptions in 45
CFR Part 5 will not be withheld from release under 5 U.S. C. § 552(b)(4).
11.

Sensitive Questions

Other than, the labeled information noted above in section 10, there are no sensitive
questions included in the information request.
12.

Burden Estimate (Total Hours & Wages)

CMS estimates that respondent burden for completion of an MA Initial application is 40
hours per application. CMS estimates the respondent burden for completion a Special
Needs Plan Proposal (SNP) is 40 hours. CMS estimates the respondent burden for
completion of an EGWP Direct application is 1 hour per application. These estimates
are based an internal assessment of the application materials.
The total annual hours requested is calculated as follows:
Table 1
Summary of Hours Burden by Type of Applicant and Process
In total, CMS estimates that it will receive 378 applications/responses. This would
amount to 13,296 total annual hours.

Application/Responses

Initial
(CCP,PFFSNetwork,
EGWP )

CY2013 Part C MA APP (60 day)

PFFS
(InitialNonnetwork)

SAE
(CCP,
PFFSNetwork,

MSA

4

Initial
with
SNP

SAE
with
SNP

SNP
only

Direct
EGWP

Cost
Plan
SAE

Summary

EGWP)

Expected Applications/
Responses
Review Instructions
(#of hours)

30
0.5

5
0.5

150
0.5

0
0

80*
0.5

60*
0.5

50*
0

1
0.5

2
0.5

378
3.5

39.5

34.5

34.5

0

39.5

39.5

20

0.5

34.5

242.5

Overall # of hours per
application /proposal

40

35

35

0

40

40

20

1

35

246

Annual Burden hours

1200

175

5250

0

3200

2400

1000

1

70

13,296

Complete
Application/Proposal
(# of hours)

*Number represents # of expected SNP proposals
Table 2
Total Wage burden by Application
The estimated wage burden for the MA Part C Application is $731,280 based on an estimate
wage rate of $55.00 per hour wage
Application/
Responses

Initial
(CCP,
PFFSNetwork,
EGWP )

PFFS
(InitialNonnetwork)

SAE (CCP,
PFFSNetwork,
EGWP)

MSA

MA with
SNP

SAE with
SNP

SNP
only

Direct
EGWP

Cost
Plan
SAE

Total

1200

175

5250

0

3200

2400

1000

1

70

13296

Hourly
Wages.

$55.00

$55.00

$55.00

$55.00

$55.00

$55.00

$55.00

$55.00

$55.00

$55.00

Total Wage
burden

$66,000

$9,625

$288,750

0

$176,000

$132,000

$55,000

$55.00

$3,850

$731,280

Annual
burden
Hours

Table 3
Summary of Burden Hours Comparison CY2012 to CY2013
The overall burden hour decrease 2400 hours (CY2012 Burden hours-CY2013 Burden hours).
The overall number of expected respondents has decreased by 492.
CY2012
Number of
Respondents

2012(hours)
Estimates

Number of
Respondents

2013(hours)
Estimates

35

CY2012
Annual
Burden
Hours
1050

30

40

CY2013
Annual
Burden
Hours
1200

MA (initials)

30

PFFS nonnetwork

30

35

1050

5

35

175

CY2013 Part C MA APP (60 day)

5

SAE
MSA
SNP with MA
SNP with
SAE
SNP Only
Direct EGWP
800 Series*
only

170
0
65
50

33
0
41
39

5610
0
2665
1950

150
0
80
60

35
0
40
40

5250
0
3200
2400

500
1
22

6.5
33
1

3250
33
22

50
1
0

20
1
0

1000
1

Cost Plan
SAE

2

33

66

2

35

70

Total

870

15696

378

13296

*For CY2013, EGWP 800 series only are included in the CCP and SAE

Estimate of total annual cost burden to respondents from collection of information – (a)
total capital and start-up cost; (b) total operation and maintenance
Not applicable. The entities that apply are ongoing health organizations that voluntarily
elect to pursue a CMS MA contract to offer health coverage to beneficiaries.

13.

Capital Cost (Maintenance of Capital Costs)

We do not anticipate additional capital costs. CMS requirements do not require the
acquisition of new systems or the development of new technology to complete the
application.
System requirements for submitting HPMS applicant information are minimal. MAOs
will need the following access to HPMS: (1) Internet or Medicare Data Communications
Network (MDCN) connectivity, (2) use of Microsoft Internet Explorer web browser
(version 5.1 or higher) with 128-bits encryption and (3) a CMS-issued user ID and
password with access rights to HPMS for each user within the MAO’s organization who
will require such access. CMS anticipates that all qualified applicants meet these system
requirements and will not incur additional capital costs.
14.

Cost to Federal Government

The estimated cost for preparation, review, and evaluation of the MAO’s application is
$2,509. This estimated cost is based on the budgeted amount for application review and
estimate wages of key reviewers and support staff.
Annualized cost to Federal Government

Systems staff
(HPMS)
SME (MCAG)

4 hours x $50.00/hr x 378
applications
4 hours x $50.00/hr x 378
applications

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$75,600
$75,600

RO Acct.
Manager**
RO Sp. Review**
(HSD)

20 hours x $50.00/hr x 328
applications
20 hours x $50.00/hr x 328
applications

$328,000

RO Supervisor**

4 hours x $50.00/hr x 328
applications
20 hours x $50.00/hr x 190
applications

$75,600

SNP Clinical
Total

$328,000

$65,600
$948,400

**Do not review SNP only responses

The estimated approximated cost for per application review is $2,508 ($948,400 divided
by 378 applications).
15.

Program or Burden Changes

Increase Burden Hours per application:
An additional 5 hours of burden was added to the Initial application. This increase stems
from an internal assessment of the application materials. For CY2013, CMS added three
(3) new templates to clarify information that is being requested and to reduce confusion
amongst applicants and reviewers. CMS also added three (3) new attestations. These
attestations stems from regulatory changes at 42 CFR 422 subpart K.
Decrease in Overall Burden of Hour and Respondents:

The decrease in the overall burden hours is due to the decrease in the expected number of
respondents. The number of SNP-only request will decrease because CMS has made an
internal decision to not have all MA contractors that are currently offering a SNP product
to complete and submit a SNP proposal. Only the MAO’s that currently offer a SNPs
will be reviewed for re-approval under the NCQA SNP Approval process and therefore
would be required to submit their Models of Care (MOCs) written narrative and Model of
Care Matrix Upload Document portion of the SNP Proposal.
16. Publication and Tabulation Dates
This information is not published or tabulated.
17. Expiration Date
CMS is not requesting an exemption from displaying the expiration date.
18. Certification Statement
There are no exceptions to the certification statement.
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C. Collection of Information Employing Statistical Methods
There has been no statistical method employed in this collection.

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