HMOs and other types of health care organizations contract with CMS to offer M+C health plans. Selected M+C Requirements for HMOs

An HMO that contracts to serve Medicare beneficiaries must meet M+C  program requirements specified by CMS regarding benefit package  proposals, the beneficiary enrollment process, marketing and enrollee  communications, and quality improvement. Benefit Package Proposals

For each M+C health plan that it intends to offer, an HMO must annually  submit a benefit package proposal for CMS review and approval. An  HMO must cover all services available in the FFS program except hospice. A beneficiary who wants to enroll in a health plan submits an  application to the HMO, which then must make a preliminary  determination about whether the beneficiary lives in the geographic area  served by the health plan and is otherwise eligible to enroll. The HMO then  forwards the beneficiary’s information to CMS. Quality Improvement

HMOs must meet M+C requirements designed to improve the quality of  care and services they deliver. Marketing and Enrollee Communication Materials

NAIC’s model requirements for marketing materials specify that an HMO  must produce advertising that is clear, complete, and does not mislead  beneficiaries. Beneficiary Enrollment

M+C and FEHBP have HMO requirements that pertain to beneficiary  enrollment.
What GAO Found

Since the early 1980s, health maintenance organizations (HMO) have entered into risk-based contracts with Medicare and offered beneficiaries an alternative to the traditional fee-for-service (FFS) program. By 1997, 5.2 million Medicare beneficiaries were enrolled in an HMO. Although Medicare HMOs were available in most urban areas, they were often unavailable in rural areas. Medicare+Choice (M+C) has HMO requirements pertaining to benefit package proposals, the beneficiary enrollment process, marketing and enrollee communication materials, and quality improvement, among other areas. An HMO must annually submit a benefit package proposal to the Centers for Medicare and Medicaid Services (CMS) for each M+C health plan that the HMO intends to offer. M+C requirements for the beneficiary enrollment process specify the information that an HMO must include in its enrollment application and the checks that it must perform to ensure that beneficiaries who submit applications are eligible to enroll in the HMO's health plan. M+C marketing requirements prohibit HMOs from using inaccurate or misleading language in advertisements or materials distributed to enrollees. M+C requirements for quality improvements specify that HMOs must undertake multiyear projects intended to improve the quality of health care and must routinely gather and report performance data to CMS.