Federal officials say single-state health insurers can form alliances to compete for Medicare managed care and Medicare drug benefit plan contracts.[@@]

The U.S. Department of Health and Human Services has issued a pair of final rules stating that several health plans can unite to form a “joint enterprise” that can enter into contracts to offer a single prescription drug plan or a single Medicare Advantage managed care plan in a multistate region.

Several health plans have asked about the possibility of forming regional alliances, according to the rulings, which were issued by Mark McClellan, administrator for the Centers for Medicare & Medicaid Services, and HHS Secretary Michael Leavitt.

“The statute generally requires that the [contracting] ?entity’ be licensed by the state as a risk-bearing entity where it offers benefits,” officials write in a preamble to the rulings, which appear today in the Federal Register.

A joint enterprise could be treated as a single entity for purposes of offering a prescription drug plan or a Medicare Advantage plan “as long as the enterprise as a whole meets all applicable Medicare requirements, and there is no substantive difference between this arrangement and a traditional entity from a Medicare enrollee’s perspective,” officials write.

A joint enterprise must serve the entire region that it asks to serve and use a single name throughout the entire region, officials write.

A joint enterprise also must “provide uniform enrollee customer service and appeal and grievance rights throughout the region,” officials write.

Copies of the drug and managed care plan rulings are on the Web at http://a257.g.akamaitech.net/7/257/2422/01jan20051800/edocket.access.gpo.gov/2005/pdf/05-5591.pdf and http://a257.g.akamaitech.net/7/257/2422/01jan20051800/edocket.access.gpo.gov/2005/pdf/05-5592.pdf