CMS Pub. 100-16, ch. mc86c17b, § 10

Maintenance Organizations and Competitive Medical Plans

(HMO/CMPs) - General

(Rev. 4, 10-01-01)

Unless otherwise specified in this manual, costs generally incurred by providers of

service (e.g., hospitals, Skilled Nursing Facilities (SNFs), Home Health Agencies

(HHAs)) that are allowable under the principles of payment for providers (see

42 CFR Parts 405, 412, and 413) are allowable when incurred by Health Maintenance

Organizations and Competitive Medical Plans (HMO/CMPs). This also applies to costs

incurred by providers of services and other facilities owned and operated by HMO/CMPs

or related to the HMO/CMP by common ownership or control. An exception to the

application of provider payment principles is available for the cost incurred by a

HMO/CMP for covered services furnished by a provider under an arrangement with the

cost-based HMO/CMP. In order to qualify for payment in excess of the amount

authorized under 42 CFR Part 405, Subpart D, §§412 and 413, the HMO/CMP must

demonstrate to CMS’ satisfaction that the excess payment is justified on the basis of

advantages gained by the HMO/CMP. (See §§90 and 110 of this subchapter.)

Under these principles, allowable costs are determined according to the Medicare

principles of reimbursement as set out in the Provider Reimbursement Manual (Pub. 15)

and Generally Accepted Accounting Principles (GAAP), in that order. Contracting

organizations will be furnished a copy of the Provider Reimbursement Manual, Pub. 15,

for reference to the principles of provider reimbursement.