D. Policy — 1876 cost contracts

In a cost plan, Medicare enrollees are not restricted to the HMO or CMP for receipt of covered Medicare services, i.e., services may be received through non-HMO/CMP sources and are reimbursed separately by Medicare intermediaries and carriers. Medicare payment to the HMO/CMP is based on the reasonable costs of providing services to the Medicare beneficiaries. Beginning in 2006, Cost Plans were permitted to offer Part D of Medicare as an optional supplemental benefit. In other words, a cost plan that elects to offer qualified prescription drug coverage may offer alternative coverage as an optional supplemental benefit only if the cost plan also offers basic prescription drug coverage. Thus, an enrollee in the cost plan may, at the individual’s option, elect whether to receive qualified prescription drug coverage under the cost plan. If so, the enrollee has the option to elect whether to receive basic prescription drug coverage or if offered by the cost plan, enhanced alternative coverage.

There can be no new cost plans. Cost plans were permitted to expand service areas, as long as requests for such expansions were submitted on or before September 1, 2006, and all other requirements were met. Beginning in 2008, cost plans located in areas where there are two or more MA coordinated care plans meeting minimum enrollment requirements will not by renewed by CMS.