Title 42, The Public Health and WelfareRelease 119-110
§1395w–27a Special Rules for Ma Regional Plans
Title 42 › CHAPTER 7 — SOCIAL SECURITY › SUBCHAPTER XVIII — HEALTH INSURANCE FOR AGED AND DISABLED › Part C — Medicare+Choice Program › § 1395w–27a
Summary
The Secretary must create Medicare Advantage (MA) regions across the 50 States and D.C. and publish them by January 1, 2005. There must be at least 10 and no more than 50 regions. The regions should help as many eligible people as possible get regional MA plans, especially people in rural areas. Before setting regions, the Secretary must study insurance markets. A regional plan can be sold in more than one region or nationwide. Regional plans must use one deductible for original Medicare benefits (not separate hospital and medical deductibles). That deductible can be different for in‑network care and can be waived for preventive services. Plans must also have a catastrophic out‑of‑pocket limit for in‑network benefits and a limit for total benefits. For plans offered in 2006 and 2007, the organization must report its allowable costs to the Secretary each year. “Allowable costs” are the plan’s cost for original Medicare benefits and certain integrated supplemental benefits, minus administrative expenses. The Secretary compares those costs to a target amount and adjusts monthly payments under set rules: no change if costs are 97%–103% of target; increases if costs exceed 103% (50% of the gap between 103% and 108%, and a larger formula above 108% including 2.5% of target plus 80% of the excess); reductions if costs are below 97% (50% of the shortfall down to 92%, and a larger reduction below 92% including 2.5% plus 80% of the deeper shortfall). Plans must give the Secretary cost data and allow audits. The Secretary and HHS staff may use the data only to run these rules. If an organization meets one State’s requirements in a region but not others, the Secretary can temporarily waive other States’ requirements while applications are processed. The Secretary computes a yearly region-specific non‑drug benchmark before each annual election period (starting 2006) from two parts: a statutory component and a plan-bid component using market shares and weighted plan bids. A plan sponsor can choose one local coverage decision to apply across the whole region. To keep networks adequate, the Secretary may pay an “essential hospital” when a plan cannot reach an agreement with the hospital, if the hospital shows costs exceed standard payments. Available funds for those payments were $25,000,000 in 2006 and then grow each year by the market basket percentage; payments come from the Federal Hospital Insurance Trust Fund.
Full Legal Text
Title 42, §1395w–27a
The Public Health and Welfare, Source: USLM XML via OLRC
(a)Regional service area; establishment of MA regions
(1)Coverage of entire MA region
The service area for an MA regional plan shall consist of an entire MA region established under paragraph (2) and the provisions of section 1395w–24(h) of this title shall not apply to such a plan.
(2)Establishment of MA regions
(A)MA region
For purposes of this subchapter, the term “MA region” means such a region within the 50 States and the District of Columbia as established by the Secretary under this paragraph.
(B)Establishment
(i)Initial establishment
Not later than January 1, 2005, the Secretary shall first establish and publish MA regions.
(ii)Periodic review and revision of service areas
The Secretary may periodically review MA regions under this paragraph and, based on such review, may revise such regions if the Secretary determines such revision to be appropriate.
(C)Requirements for MA regions
The Secretary shall establish, and may revise, MA regions under this paragraph in a manner consistent with the following:
(i)Number of regions
There shall be no fewer than 10 regions, and no more than 50 regions.
(ii)Maximizing availability of plans
The regions shall maximize the availability of MA regional plans to all MA eligible individuals without regard to health status, especially those residing in rural areas.
(D)Market survey and analysis
Before establishing MA regions, the Secretary shall conduct a market survey and analysis, including an examination of current insurance markets, to determine how the regions should be established.
(3)National plan
Nothing in this subsection shall be construed as preventing an MA regional plan from being offered in more than one MA region (including all regions).
(b)Application of single deductible and catastrophic limit on out-of-pocket expenses
An MA regional plan shall include the following:
(1)Single deductible
Any deductible for benefits under the original medicare fee-for-service program option shall be a single deductible (instead of a separate inpatient hospital deductible and a part B deductible) and may be applied differentially for in-network services and may be waived for preventive or other items and services.
(2)Catastrophic limit
(A)In-network
A catastrophic limit on out-of-pocket expenditures for in-network benefits under the original medicare fee-for-service program option.
(B)Total
A catastrophic limit on out-of-pocket expenditures for all benefits under the original medicare fee-for-service program option.
(c)Portion of total payments to an organization subject to risk for 2006 and 2007
(1)Application of risk corridors
(A)In general
This subsection shall only apply to MA regional plans offered during 2006 or 2007.
(B)Notification of allowable costs under the plan
In the case of an MA organization that offers an MA regional plan in an MA region in 2006 or 2007, the organization shall notify the Secretary, before such date in the succeeding year as the Secretary specifies, of— (i)
(ii)its total amount of costs that the organization incurred in providing rebatable integrated benefits (as defined in subparagraph (D)) and with respect to such benefits the portion of such costs that is attributable to administrative expenses described in subparagraph (C) and not described in clause (i) of this subparagraph.
(C)Allowable costs defined
For purposes of this subsection, the term “allowable costs” means, with respect to an MA regional plan for a year, the total amount of costs described in subparagraph (B) for the plan and year, reduced by the portion of such costs attributable to administrative expenses incurred in providing the benefits described in such subparagraph.
(D)Rebatable integrated benefits
For purposes of this subsection, the term “rebatable integrated benefits” means such non-drug supplemental benefits under subclause (I) of section 1395w–24(b)(1)(C)(ii) of this title pursuant to a rebate under such section that the Secretary determines are integrated with the benefits described in subparagraph (B)(i).
(2)Adjustment of payment
(A)No adjustment if allowable costs within 3 percent of target amount
If the allowable costs for the plan for the year are at least 97 percent, but do not exceed 103 percent, of the target amount for the plan and year, there shall be no payment adjustment under this subsection for the plan and year.
(B)Increase in payment if allowable costs above 103 percent of target amount
(i)Costs between 103 and 108 percent of target amount
If the allowable costs for the plan for the year are greater than 103 percent, but not greater than 108 percent, of the target amount for the plan and year, the Secretary shall increase the total of the monthly payments made to the organization offering the plan for the year under section 1395w–23(a) of this title by an amount equal to 50 percent of the difference between such allowable costs and 103 percent of such target amount.
(ii)Costs above 108 percent of target amount
If the allowable costs for the plan for the year are greater than 108 percent of the target amount for the plan and year, the Secretary shall increase the total of the monthly payments made to the organization offering the plan for the year under section 1395w–23(a) of this title by an amount equal to the sum of— (I)
(II)80 percent of the difference between such allowable costs and 108 percent of such target amount.
(C)Reduction in payment if allowable costs below 97 percent of target amount
(i)Costs between 92 and 97 percent of target amount
If the allowable costs for the plan for the year are less than 97 percent, but greater than or equal to 92 percent, of the target amount for the plan and year, the Secretary shall reduce the total of the monthly payments made to the organization offering the plan for the year under section 1395w–23(a) of this title by an amount (or otherwise recover from the plan an amount) equal to 50 percent of the difference between 97 percent of the target amount and such allowable costs.
(ii)Costs below 92 percent of target amount
If the allowable costs for the plan for the year are less than 92 percent of the target amount for the plan and year, the Secretary shall reduce the total of the monthly payments made to the organization offering the plan for the year under section 1395w–23(a) of this title by an amount (or otherwise recover from the plan an amount) equal to the sum of— (I)
(II)80 percent of the difference between 92 percent of such target amount and such allowable costs.
(D)Target amount described
For purposes of this paragraph, the term “target amount” means, with respect to an MA regional plan offered by an organization in a year, an amount equal to—
(i)the sum of—
(I)the total monthly payments made to the organization for enrollees in the plan for the year that are attributable to benefits under the original medicare fee-for-service program option (as defined in section 1395w–22(a)(1)(B) of this title);
(II)the total of the MA monthly basic beneficiary premium collectable for such enrollees for the year; and
(III)the total amount of the rebates under section 1395w–24(b)(1)(C)(ii) of this title that are attributable to rebatable integrated benefits; reduced by
(ii)the amount of administrative expenses assumed in the bid insofar as the bid is attributable to benefits described in clause (i)(I) or (i)(III).
(3)Disclosure of information
(A)In general
Each contract under this part shall provide—
(i)that an MA organization offering an MA regional plan shall provide the Secretary with such information as the Secretary determines is necessary to carry out this subsection; and
(ii)that, pursuant to section 1395w–27(d)(2)(B) of this title, the Secretary has the right to inspect and audit any books and records of the organization that pertain to the information regarding costs provided to the Secretary under paragraph (1)(B).
(B)Restriction on use of information
Information disclosed or obtained pursuant to the provisions of this subsection may be used by officers, employees, and contractors of the Department of Health and Human Services only for the purposes of, and to the extent necessary in, carrying out this subsection.
(d)Organizational and financial requirements
(1)In general
In the case of an MA organization that is offering an MA regional plan in an MA region and— (A)
(B)with respect to each other State in such region in which it does not meet requirements, it demonstrates to the satisfaction of the Secretary that it has filed the necessary application to meet such requirements,
the Secretary may waive such requirement with respect to each State described in subparagraph (B) for such period of time as the Secretary determines appropriate for the timely processing of such an application by the State (and, if such application is denied, through the end of such plan year as the Secretary determines appropriate to provide for a transition).
(2)Selection of appropriate State
In applying paragraph (1) in the case of an MA organization that meets the requirements of section 1395w–25(a)(1) of this title with respect to more than one State in a region, the organization shall select, in a manner specified by the Secretary among such States, one State the rules of which shall apply in the case of the States described in paragraph (1)(B).
(e)Repealed. Pub. L. 111–148, title X, § 10327(c)(1), Mar. 23, 2010, 124 Stat. 964
(f)Computation of applicable MA region-specific non-drug monthly benchmark amounts
(1)Computation for regions
For purposes of section 1395w–23(j)(2) of this title and this section, subject to subsection (e), the term “MA region-specific non-drug monthly benchmark amount” means, with respect to an MA region for a month in a year, the sum of the 2 components described in paragraph (2) for the region and year. The Secretary shall compute such benchmark amount for each MA region before the beginning of each annual, coordinated election period under section 1395w–21(e)(3)(B) of this title for each year (beginning with 2006).
(2)2 components
For purposes of paragraph (1), the 2 components described in this paragraph for an MA region and a year are the following:
(A)Statutory component
The product of the following:
(i)Statutory region-specific non-drug amount
The statutory region-specific non-drug amount (as defined in paragraph (3)) for the region and year.
(ii)Statutory national market share
The statutory national market share percentage, determined under paragraph (4) for the year.
(B)Plan-bid component
The product of the following:
(i)Weighted average of MA plan bids in region
The weighted average of the plan bids for the region and year (as determined under paragraph (5)(A)).
(ii)Non-statutory market share
1 minus the statutory national market share percentage, determined under paragraph (4) for the year.
(3)Statutory region-specific non-drug amount
For purposes of paragraph (2)(A)(i), the term “statutory region-specific non-drug amount” means, for an MA region and year, an amount equal the sum (for each MA local area within the region) of the product of— (A)
(B)the number of MA eligible individuals residing in the local area, divided by the total number of MA eligible individuals residing in the region.
(4)Computation of statutory market share percentage
(A)In general
The Secretary shall determine for each year a statutory national market share percentage that is equal to the proportion of MA eligible individuals nationally who were not enrolled in an MA plan during the reference month.
(B)Reference month defined
For purposes of this part, the term “reference month” means, with respect to a year, the most recent month during the previous year for which the Secretary determines that data are available to compute the percentage specified in subparagraph (A) and other relevant percentages under this part.
(5)Determination of weighted average MA bids for a region
(A)In general
For purposes of paragraph (2)(B)(i), the weighted average of plan bids for an MA region and a year is the sum, for MA regional plans described in subparagraph (D) in the region and year, of the products (for each such plan) of the following:
(i)Monthly MA statutory non-drug bid amount
The unadjusted MA statutory non-drug monthly bid amount for the plan.
(ii)Plan’s share of MA enrollment in region
The factor described in subparagraph (B) for the plan.
(B)Plan’s share of MA enrollment in region
(i)In general
Subject to the succeeding provisions of this subparagraph, the factor described in this subparagraph for a plan is equal to the number of individuals described in subparagraph (C) for such plan, divided by the total number of such individuals for all MA regional plans described in subparagraph (D) for that region and year.
(ii)Single plan rule
In the case of an MA region in which only a single MA regional plan is being offered, the factor described in this subparagraph shall be equal to 1.
(iii)Equal division among multiple plans in year in which plans are first available
In the case of an MA region in the first year in which any MA regional plan is offered, if more than one MA regional plan is offered in such year, the factor described in this subparagraph for a plan shall (as specified by the Secretary) be equal to—
(I)1 divided by the number of such plans offered in such year; or
(II)a factor for such plan that is based upon the organization’s estimate of projected enrollment, as reviewed and adjusted by the Secretary to ensure reasonableness and as is certified by the Chief Actuary of the Centers for Medicare & Medicaid Services.
(C)Counting of individuals
For purposes of subparagraph (B)(i), the Secretary shall count for each MA regional plan described in subparagraph (D) for an MA region and year, the number of individuals who reside in the region and who were enrolled under such plan under this part during the reference month.
(D)Plans covered
For an MA region and year, an MA regional plan described in this subparagraph is an MA regional plan that is offered in the region and year and was offered in the region in the reference month.
(g)Election of uniform coverage determination
Instead of applying section 1395w–22(a)(2)(C) of this title with respect to an MA regional plan, the organization offering the plan may elect to have a local coverage determination for the entire MA region be the local coverage determination applied for any part of such region (as selected by the organization).
(h)Assuring network adequacy
(1)In general
For purposes of enabling MA organizations that offer MA regional plans to meet applicable provider access requirements under section 1395w–22 of this title with respect to such plans, the Secretary may provide for payment under this section to an essential hospital that provides inpatient hospital services to enrollees in such a plan where the MA organization offering the plan certifies to the Secretary that the organization was unable to reach an agreement between the hospital and the organization regarding provision of such services under the plan. Such payment shall be available only if—
(A)the organization provides assurances satisfactory to the Secretary that the organization will make payment to the hospital for inpatient hospital services of an amount that is not less than the amount that would be payable to the hospital under section 1395ww of this title with respect to such services; and
(B)with respect to specific inpatient hospital services provided to an enrollee, the hospital demonstrates to the satisfaction of the Secretary that the hospital’s costs of such services exceed the payment amount described in subparagraph (A).
(2)Payment amounts
The payment amount under this subsection for inpatient hospital services provided by a subsection (d) hospital to an enrollee in an MA regional plan shall be, subject to the limitation of funds under paragraph (3), the amount (if any) by which—
(A)the amount of payment that would have been paid for such services under this subchapter if the enrollees were covered under the original medicare fee-for-service program option and the hospital were a critical access hospital; exceeds
(B)the amount of payment made for such services under paragraph (1)(A).
(3)Available amounts
There shall be available for payments under this subsection— (A)
(B)in each succeeding year the amount specified in this paragraph for the preceding year increased by the market basket percentage increase (as defined in section 1395ww(b)(3)(B)(iii) of this title) for the fiscal year ending in such succeeding year.
Payments under this subsection shall be made from the Federal Hospital Insurance Trust Fund.
(4)Essential hospital
In this subsection, the term “essential hospital” means, with respect to an MA regional plan offered by an MA organization, a subsection (d) hospital (as defined in section 1395ww(d) of this title) that the Secretary determines, based upon an application filed by the organization with the Secretary, is necessary to meet the requirements referred to in paragraph (1) for such plan.
Legislative History
Notes & Related Subsidiaries
Editorial Notes
Amendments
2010—Subsec. (e). Pub. L. 111–148, § 10327(c)(1), struck out subsec. (e) which related to the MA Regional Plan Stabilization Fund. Subsec. (f)(1). Pub. L. 111–148, § 3201(a)(2)(C)(i), (f)(2)(A), which directed substitution of “1395w–23(j)(1)(B)” for “1395w–23(j)(2)” and “subsections (e) and (i)” for “subsection (e)”, respectively, was repealed by Pub. L. 111–152, § 1102(a). See
Effective Date
of 2010 Amendment note below. Subsec. (f)(3)(A). Pub. L. 111–148, § 3201(a)(2)(C)(ii), which directed substitution of “1395w–23(j)(1)(A)(i)” for “1395w–23(j)(1)(A)”, was repealed by Pub. L. 111–152, § 1102(a). See
Effective Date
of 2010 Amendment note below. Subsec. (i). Pub. L. 111–148, § 3201(f)(2)(B), which directed addition of subsec. (i), was repealed by Pub. L. 111–152, § 1102(a). As enacted, text read as follows: “For years beginning with 2014, the Secretary shall apply the performance bonuses under section 1395w–23(n) of this title (relating to bonuses for care coordination and management, quality performance, and new and low enrollment MA plans) to MA regional plans in a similar manner as such performance bonuses apply to MA plans under such subsection.” See
Effective Date
of 2010 Amendment note below. 2009—Subsec. (e)(7). Pub. L. 111–8 struck out par. (7) which related to biennial GAO reports to be submitted by the Comptroller General to the Secretary and Congress. 2008—Subsec. (e)(2)(A)(i). Pub. L. 110–275 substituted “2014” for “2013” and “$1” for “$1,790,000,000”. 2007—Subsec. (e)(2)(A)(i). Pub. L. 110–173, which directed substitution of “the Fund during 2013, $1,790,000,000.” for “the Fund” and all that follows, was executed by making the substitution for “the Fund— “(I) during 2012, $1,600,000,000; and “(II) during 2013, $1,790,000,000.” to reflect the probable intent of Congress. Pub. L. 110–48 substituted “the Fund— “(I) during 2012, $1,600,000,000; and “(II) during 2013, $1,790,000,000.” for “the Fund during the period beginning on
January 1, 2012, and ending on
December 31, 2013, a total of $3,500,000,000.” 2006—Subsec. (e)(2)(A)(i). Pub. L. 109–432 substituted “2012” for “2007” and “$3,500,000,000” for “$10,000,000,000”.
Statutory Notes and Related Subsidiaries
Effective Date
of 2010 AmendmentRepeal of section 3201 and 3203 of Pub. L. 111–148 and the
Amendments
made by such sections, effective as if included in the enactment of Pub. L. 111–148, see section 1102(a) of Pub. L. 111–152, set out as a note under section 1395w–21 of this title.
Effective Date
Section applicable with respect to plan years beginning on or after Jan. 1, 2006, see section 223(a) of Pub. L. 108–173, set out as an
Effective Date
of 2003 Amendment note under section 1395w–21 of this title. Elimination of MA Regional Plan Stabilization Fund; Transition Pub. L. 111–148, title X, § 10327(c)(2), Mar. 23, 2010, 124 Stat. 964, provided that: “Any amount contained in the MA Regional Plan Stabilization Fund as of the date of the enactment of this Act [Mar. 23, 2010] shall be transferred to the Federal Supplementary Medical Insurance Trust Fund.”
Reference
Citations & Metadata
Citation
42 U.S.C. § 1395w–27a
Title 42, The Public Health and Welfare
Last Updated
Sep 22, 2026
Release point: 119-110