Health Hippo
- Note: this is a hand enrollment pursuant to Public Law 105-32.
- H.R.2015
- One Hundred Fifth Congress
- of the
- United States of America
- AT THE FIRST SESSION
- Begun and held at the City of Washington on Tuesday,
the seventh day of January, one thousand nine hundred and
ninety-seven
An Act
Subtitle A–Medicare+Choice
Program
CHAPTER 2–DEMONSTRATIONS
Subchapter A–Medicare+Choice Competitive Pricing Demonstration
Project
SEC. 4011. MEDICARE PREPAID COMPETITIVE PRICING DEMONSTRATION
PROJECT.
(a) Establishment of Project.–The Secretary of Health and Human
Services (in this subchapter referred to as “the Secretary”) shall
establish a demonstration project (in this subchapter referred to as
“the project”) under which payments to Medicare+Choice organizations
in medicare payment areas in which the project is being conducted are
determined in accordance with a competitive pricing methodology
established under this subchapter.
(b) Designation of 7 Medicare Payment Areas Covered by Project.–
(1) In general.–The Secretary shall designate, in accordance with
the recommendations of the Competitive Pricing Advisory Committee
under paragraphs (2) and (3), medicare payment areas as areas in
which the project under this subchapter will be conducted.
In this section, the term “Competitive Pricing Advisory Committee”
means the Competitive Pricing Advisory Committee established under
section 4012(a).
(2) Initial designation of 4 areas.– (A) In general.–The
Competitive Pricing Advisory Committee shall recommend to the
Secretary, consistent with subparagraph (B), the designation of 4
specific areas as medicare payment areas to be included in the
project. Such recommendations shall be made in a manner so as to
ensure that payments under the project in 2 such areas will begin on
January 1, 1999, and in 2 such areas will begin on January 1, 2000.
(B) Location of designation.–Of the 4 areas recommended under
subparagraph (A), 3 shall be in urban areas and 1 shall be in a rural
area.
(3) Designation of additional 3 areas.–Not later than December
31, 2001, the Competitive Pricing Advisory Committee may recommend to
the Secretary the designation of up to 3 additional, specific
medicare payment areas to be included in the project.
(c) Project Implementation.– (1) In general.–Subject to
paragraph (2), the Secretary shall for each medicare payment area
designated under subsection (b)– (A) in accordance with the
recommendations of the Competitive Pricing Advisory Committee– (i)
establish the benefit design among plans offered in such area, and
(ii) structure the method for selecting plans offered in such area;
and (B) in consultation with such Committee– (i) establish methods
for setting the price to be paid to plans, including, if the
Secretaries determines appropriate, the rewarding and penalizing of
Medicare+Choice plans in the area on the basis of the attainment of,
or failure to attain, applicable quality standards, and (ii) provide
for the collection of plan information (including information
concerning quality and access to care), the dissemination of
information, and the methods of evaluating the results of the
project.
(2) Consultation.–The Secretary shall take into account the
recommendations of the area advisory committee established in section
4012(b), in implementing a project design for any area, except that
no modifications may be made in the project design without
consultation with the Competitive Pricing Advisory Committee. In no
case may the Secretary change the designation of an area based on
recommendations of any area advisory committee.
(d) Monitoring and Report.– (1) Monitoring impact.–Taking into
consideration the recommendations of the Competitive Pricing Advisory
Committee and the area advisory committees, the Secretary shall
closely monitor and measure the impact of the project in the
different areas on the price and quality of, and access to, medicare
covered services, choice of health plans, changes in enrollment, and
other relevant factors.
(2) Report.–Not later than December 31, 2002, the Secretary shall
submit to Congress a report on the progress under the project under
this subchapter, including a comparison of the matters monitored
under paragraph (1) among the different designated areas.
The report may include any legislative recommendations for
extending the project to the entire medicare population.
(e) Waiver Authority.–The Secretary of Health and Human Services
may waive such requirements of title XVIII of the Social Security Act
(as amended by this Act) as may be necessary for the purposes of
carrying out the project.
(f) Relationship to Other Authority.–Except pursuant to this
subchapter, the Secretary of Health and Human Services may not
conduct or continue any medicare demonstration project relating to
payment of health maintenance organizations, Medicare+Choice
organizations, or similar prepaid managed care entities on the basis
of a competitive bidding process or pricing system described in
subsection (a).
(g) No Additional Costs to Medicare Program.–The aggregate
payments to Medicare+Choice organizations under the project for any
designated area for a fiscal year may not exceed the aggregate
payments to such organizations that would have been made under title
XVIII of the Social Security Act (42 U.S.C. 1395 et seq.), as amended
by section 4001, if the project had not been conducted.
(h) Definitions.–Any term used in this subchapter which is also
used in part C of title XVIII of the Social Security Act, as amended
by section 4001, shall have the same meaning as when used in such
part.
SEC. 4012. ADVISORY COMMITTEES.
(a) Competitive Pricing Advisory Committee.– (1) In
general.–Before implementing the project under this subchapter, the
Secretary shall appoint the Competitive Pricing Advisory Committee,
including independent actuaries, individuals with expertise in
competitive health plan pricing, and an employee of the Office of
Personnel Management with expertise in the administration of the
Federal Employees Health Benefit Program, to make recommendations to
the Secretary concerning the designation of areas for inclusion in
the project and appropriate research design for implementing the
project.
(2) Initial recommendations.–The Competitive Pricing Advisory
Committee initially shall submit recommendations regarding the area
selection, benefit design among plans offered, structuring choice
among health plans offered, methods for setting the price to be paid
to plans, collection of plan information (including information
concerning quality and access to care), information dissemination,
and methods of evaluating the results of the project.
(3) Quality recommendation.–The Competitive Pricing Advisory
Committee shall study and make recommendations regarding the
feasibility of providing financial incentives and penalties to plans
operating under the project that meet, or fail to meet, applicable
quality standards.
(4) Advice during implementation.–Upon implementation of the
project, the Competitive Pricing Advisory Committee shall continue to
advise the Secretary on the application of the design in different
areas and changes in the project based on experience with its
operations.
(5) Sunset.–The Competitive Pricing Advisory Committee shall
terminate on December 31, 2004.
(b) Appointment of Area Advisory Committee.–Upon the designation
of an area for inclusion in the project, the Secretary shall appoint
an area advisory committee, composed of representatives of health
plans, providers, and medicare beneficiaries in the area, to advise
the Secretary concerning how the project will be implemented in the
area.
Such advice may include advice concerning the marketing and
pricing of plans in the area and other salient factors. The duration
of such a committee for an area shall be for the duration of the
operation of the project in the area.
(c) Special application.–Notwithstanding section 9(c) of the
Federal Advisory Committee Act (5 U.S.C. App.), the Competitive
Pricing Advisory Commission and any area advisory committee
(described in subsection (b)) may meet as soon as the members of the
commission or committee, respectively, are appointed.
Subchapter B–Social Health Maintenance
Organizations
SEC. 4014. SOCIAL HEALTH MAINTENANCE ORGANIZATIONS (SHMOS).
(a) Extension of Demonstration Project Authorities.–Section
4018(b) of the Omnibus Budget Reconciliation Act of 1987 is amended–
(1) in paragraph (1), by striking “1997” and inserting “2000”, and
(2) in paragraph (4), by striking “1998” and inserting “2001”.
(b) Expansion of Cap.–Section 13567(c) of the Omnibus Budget
Reconciliation Act of 1993 is amended by striking “12,000” and
inserting “36,000”.
(c) Report on Integration and Transition.– (1) In general.–The
Secretary of Health and Human Services shall submit to Congress, by
not later than January 1, 1999, a plan for the integration of health
plans offered by social health maintenance organizations (including
SHMO I and SHMO II sites developed under section 2355 of the Deficit
Reduction Act of 1984 and under the amendment made by section
4207(b)(3)(B)(i) of OBRA- 1990, respectively) and similar plans as an
option under the Medicare+Choice program under part C of title XVIII
of the Social Security Act.
(2) Provision for transition.–Such plan shall include a
transition for social health maintenance organizations operating
under demonstration project authority under such section.
(3) Payment policy.–The report shall also include recommendations
on appropriate payment levels for plans offered by such
organizations, including an analysis of the application of risk
adjustment factors appropriate to the population served by such
organizations.
Subchapter C–Medicare Subvention Demonstration
Project for Military Retirees
SEC. 4015. MEDICARE SUBVENTION DEMONSTRATION PROJECT FOR
MILITARY RETIREES.
(a) In General.–Title XVIII (42 U.S.C. 1395 et seq.) (as amended
by sections 4603 and 4801) is amended by adding at the end the
following:
MEDICARE SUBVENTION DEMONSTRATION PROJECT FOR MILITARY RETIREES
Sec. 1896. (a) Definitions.–In this section: (1) Administering
secretaries.–The term ‘administering Secretaries’ means the
Secretary and the Secretary of Defense acting jointly.
(2) Demonstration project; project.–The terms ‘demonstration
project’ and ‘project’ mean the demonstration project carried out
under this section.
(3) Designated provider.–The term ‘designated provider’ has the
meaning given that term in section 721(5) of the National Defense
Authorization Act For Fiscal Year 1997 (Public Law 104-201; 110 Stat.
2593; 10 U.S.C. 1073 note).
(4) Medicare-eligible military retiree or dependent.–The term
‘medicare-eligible military retiree or dependent’ means an individual
described in section 1074(b) or 1076(b) of title 10, United States
Code, who– (A) would be eligible for health benefits under section
1086 of such title by reason of subsection (c)(1) of such section
1086 but for the operation of subsection (d) of such section 1086;
(B)(i) is entitled to benefits under part A of this title; and (ii)
if the individual was entitled to such benefits before July 1, 1997,
received health care items or services from a health care facility of
the uniformed services before that date, but after becoming entitled
to benefits under part A of this title; (C) is enrolled for benefits
under part B of this title; and (D) has attained age 65.
(5) Medicare health care services.–The term ‘medicare health care
services’ means items or services covered under part A or B of this
title.
(6) Military treatment facility.–The term ‘military treatment
facility’ means a facility referred to in section 1074(a) of title
10, United States Code.
(7) TRICARE.–The term ‘TRICARE’ has the same meaning as the term
‘TRICARE program’ under section 711 of the National Defense
Authorization Act for Fiscal Year 1996 (10 U.S.C. 1073 note).
(8) Trust funds.–The term ‘trust funds’ means the Federal
Hospital Insurance Trust Fund established in section 1817 and the
Federal Supplementary Medical Insurance Trust Fund established in
section 1841.
(b) Demonstration Project.– (1) In general.– (A)
Establishment.–The administering Secretaries are authorized to
establish a demonstration project (under an agreement entered into by
the administering Secretaries) under which the Secretary shall
reimburse the Secretary of Defense, from the trust funds, for
medicare health care services furnished to certain medicare-eligible
military retirees or dependents in a military treatment facility or
by a designated provider.
(B) Agreement.–The agreement entered into under subparagraph (A)
shall include at a minimum– (i) a description of the benefits to be
provided to the participants of the demonstration project established
under this section; (ii) a description of the eligibility rules for
participation in the demonstration project, including any cost
sharing requirements; (iii) a description of how the demonstration
project will satisfy the requirements under this title; (iv) a
description of the sites selected under paragraph (2); (v) a
description of how reimbursement requirements under subsection (i)
and maintenance of effort requirements under subsection (j) will be
implemented in the demonstration project; (vi) a statement that the
Secretary shall have access to all data of the Department of Defense
that the Secretary determines is necessary to conduct independent
estimates and audits of the maintenance of effort requirement, the
annual reconciliation, and related matters required under the
demonstration project; (vii) a description of any requirement that
the Secretary waives pursuant to subsection (d); and (viii) a
certification, provided after review by the administering
Secretaries, that any entity that is receiving payments by reason of
the demonstration project has sufficient–
(I) resources and expertise to provide, consistent with payments
under subsection (i), the full range of benefits required to be
provided to beneficiaries under the project; and (II) information and
billing systems in place to ensure the accurate and timely submission
of claims for benefits and to ensure that providers of services,
physicians, and other health care professionals are reimbursed by the
entity in a timely and accurate manner.
(2) Number of sites.–The project established under this section
shall be conducted in no more than 6 sites, designated jointly by the
administering Secretaries after review of all TRICARE regions.
(3) Restriction.–No new military treatment facilities will be
built or expanded with funds from the demonstration project.
(4) Duration.–The administering Secretaries shall conduct the
demonstration project during the 3-year period beginning on January
1, 1998.
(5) Report.–At least 60 days prior to the commencement of the
demonstration project, the administering Secretaries shall submit a
copy of the agreement entered into under paragraph (1) to the
committees of jurisdiction under this title.
(c) Crediting of Payments.–A payment received by the Secretary of
Defense under the demonstration project shall be credited to the
applicable Department of Defense medical appropriation (and within
that appropriation). Any such payment received during a fiscal year
for services provided during a prior fiscal year may be obligated by
the Secretary of Defense during the fiscal year during which the
payment is received.
(d) Waiver of Certain Medicare Requirements.– (1) Authority.–
(A) In general.–Except as provided under subparagraph (B), the
demonstration project shall meet all requirements of Medicare+Choice
plans under part C of this title and regulations pertaining thereto,
and other requirements for receiving medicare payments, except that
the prohibition of payments to Federal providers of services under
sections 1814(c) and 1835(d), and paragraphs (2) and (3) of section
1862(a) shall not apply.
(B) Waiver.–Except as provided in paragraph (2), the Secretary is
authorized to waive any requirement described under subparagraph (A),
or approve equivalent or alternative ways of meeting such a
requirement, but only if such waiver or approval– (i) reflects the
unique status of the Department of Defense as an agency of the
Federal Government; and (ii) is necessary to carry out the
demonstration project.
(2) Beneficiary protections and other matters.–The demonstration
project shall comply with the requirements of part C of this title
that relate to beneficiary protections and other matters, including
such requirements relating to the following areas: (A) Enrollment and
disenrollment.
(B) Nondiscrimination.
(C) Information provided to beneficiaries.
(D) Cost-sharing limitations.
(E) Appeal and grievance procedures.
(F) Provider participation.
(G) Access to services.
(H) Quality assurance and external review.
(I) Advance directives.
(J) Other areas of beneficiary protections that the Secretary
determines are applicable to such project.
(e) Inspector General.–Nothing in the agreement entered into
under subsection (b) shall limit the Inspector General of the
Department of Health and Human Services from investigating any
matters regarding the expenditure of funds under this title for the
demonstration project, including compliance with the provisions of
this title and all other relevant laws.
(f) Voluntary Participation.–Participation of medicare-eligible
military retirees or dependents in the demonstration project shall be
voluntary.
(g) TRICARE Health Care Plans.– (1) Modification of tricare
contracts.–In carrying out the demonstration project, the Secretary
of Defense is authorized to amend existing TRICARE contracts
(including contracts with designated providers) in order to provide
the medicare health care services to the medicare-eligible military
retirees and dependents enrolled in the demonstration project
consistent with part C of this title.
(2) Health care benefits.–The administering Secretaries shall
prescribe the minimum health care benefits to be provided under such
a plan to medicare-eligible military retirees or dependents enrolled
in the plan. Those benefits shall include at least all medicare
health care services covered under this title.
(h) Additional Plans.–Notwithstanding any provisions of title 10,
United States Code, the administering Secretaries may agree to
include in the demonstration project any of the Medicare+Choice plans
described in section 1851(a)(2)(A), and such agreement may include an
agreement between the Secretary of Defense and the Medicare+Choice
organization offering such plan to provide medicare health care
services to medicare-eligible military retirees or dependents and for
such Secretary to receive payments from such organization for the
provision of such services.
(i) Payments Based on Regular Medicare Payment Rates.– (1) In
general.–Subject to the succeeding provisions of this subsection,
the Secretary shall reimburse the Secretary of Defense for services
provided under the demonstration project at a rate equal to 95
percent of the amount paid to a Medicare+Choice organization under
part C of this title with respect to such an enrollee. In cases in
which a payment amount may not otherwise be readily computed, the
Secretary shall establish rules for computing equivalent or
comparable payment amounts.
(2) Exclusion of certain amounts.–In computing the amount of
payment under paragraph (1), the following shall be excluded: (A)
Special payments.–Any amount attributable to an adjustment under
subparagraphs (B) and (F) of section 1886(d)(5) and subsection (h) of
such section.
(B) Percentage of capital payments.–An amount determined by the
administering Secretaries for amounts attributable to payments for
capital-related costs under subsection (g) of such section.
(3) Periodic payments from medicare trust funds.–Payments under
this subsection shall be made– (A) on a periodic basis consistent
with the periodicity of payments under this title; and (B) in
appropriate part, as determined by the Secretary, from the trust
funds.
(4) Cap on amount.–The aggregate amount to be reimbursed under
this subsection pursuant to the agreement entered into between the
administering Secretaries under subsection (b) shall not exceed a
total of– (A) $50,000,000 for calendar year 1998; (B) $60,000,000
for calendar year 1999; and (C) $65,000,000 for calendar year 2000.
(j) Maintenance of Effort.– (1) Monitoring effect of
demonstration program on costs to medicare program.– (A) In
general.–The administering Secretaries, in consultation with the
Comptroller General, shall closely monitor the expenditures made
under the medicare program for medicare-eligible military retirees or
dependents during the period of the demonstration project compared to
the expenditures that would have been made for such medicare-
eligible military retirees or dependents during that period if the
demonstration project had not been conducted. The agreement entered
into by the administering Secretaries under subsection (b) shall
require any participating military treatment facility to maintain the
level of effort for space available care to medicare-eligible
military retirees or dependents.
(B) Annual report by the comptroller general.–Not later than
December 31 of each year during which the demonstration project is
conducted, the Comptroller General shall submit to the administering
Secretaries and the appropriate committees of Congress a report on
the extent, if any, to which the costs of the Secretary under the
medicare program under this title increased during the preceding
fiscal year as a result of the demonstration project.
(2) Required response in case of increase in costs.– (A) In
general.–If the administering Secretaries find, based on paragraph
(1), that the expenditures under the medicare program under this
title increased (or are expected to increase) during a fiscal year
because of the demonstration project, the administering Secretaries
shall take such steps as may be needed– (i) to recoup for the
medicare program the amount of such increase in expenditures; and
(ii) to prevent any such increase in the future.
(B) Steps.–Such steps– (i) under subparagraph (A)(i) shall
include payment of the amount of such increased expenditures by the
Secretary of Defense from the current medical care appropriation of
the Department of Defense to the trust funds; and (ii) under
subparagraph (A)(ii) shall include suspending or terminating the
demonstration project (in whole or in part) or lowering the amount of
payment under subsection (i)(1).
(k) Evaluation and Reports.– (1) Independent evaluation.–The
Comptroller General of the United States shall conduct an evaluation
of the demonstration project, and shall submit annual reports on the
demonstration project to the administering Secretaries and to the
committees of jurisdiction in the Congress. The first report shall be
submitted not later than 12 months after the date on which the
demonstration project begins operation, and the final report not
later than 3\1/ 2\ years after that date. The evaluation and reports
shall include an assessment, based on the agreement entered into
under subsection (b), of the following: (A) Any savings or costs to
the medicare program under this title resulting from the
demonstration project.
(B) The cost to the Department of Defense of providing care to
medicare-eligible military retirees and dependents under the
demonstration project.
(C) A description of the effects of the demonstration project on
military treatment facility readiness and training and the probable
effects of the project on overall Department of Defense medical
readiness and training.
(D) Any impact of the demonstration project on access to care for
active duty military personnel and their dependents.
(E) An analysis of how the demonstration project affects the
overall accessibility of the uniformed services treatment system and
the amount of space available for point-of-service care, and a
description of the unintended effects (if any) upon the normal
treatment priority system.
(F) Compliance by the Department of Defense with the requirements
under this title.
(G) The number of medicare-eligible military retirees and
dependents opting to participate in the demonstration project instead
of receiving health benefits through another health insurance plan
(including benefits under this title).
(H) A list of the health insurance plans and programs that were
the primary payers for medicare-eligible military retirees and
dependents during the year prior to their participation in the
demonstration project and the distribution of their previous
enrollment in such plans and programs.
(I) Any impact of the demonstration project on private health care
providers and beneficiaries under this title that are not enrolled in
the demonstration project.
(J) An assessment of the access to care and quality of care for
medicare-eligible military retirees and dependents under the
demonstration project.
(K) An analysis of whether, and in what manner, easier access to
the uniformed services treatment system affects the number of
medicare-eligible military retirees and dependents receiving medicare
health care services.
(L) Any impact of the demonstration project on the access to care
for medicare-eligible military retirees and dependents who did not
enroll in the demonstration project and for other individuals
entitled to benefits under this title.
(M) A description of the difficulties (if any) experienced by the
Department of Defense in managing the demonstration project and
TRICARE contracts.
(N) Any additional elements specified in the agreement entered
into under subsection (b).
(O) Any additional elements that the Comptroller General of the
United States determines is appropriate to assess regarding the
demonstration project.
(2) Report on extension and expansion of demonstration
project.–Not later than 6 months after the date of the submission of
the final report by the Comptroller General of the United States
under paragraph (1), the administering Secretaries shall submit to
Congress a report containing their recommendation as to– (A) whether
there is a cost to the health care program under this title in
conducting the demonstration project, and whether the demonstration
project could be expanded without there being a cost to such health
care program or to the Federal Government; (B) whether to extend the
demonstration project or make the project permanent; and (C) whether
the terms and conditions of the project should be continued (or
modified) if the project is extended or expanded.”.
(b) Implementation Plan for Veterans Subvention.–Not later than
12 months after the start of the demonstration project, the Secretary
of Health and Human Services and the Secretary of Veterans Affairs
shall jointly submit to Congress a detailed implementation plan for a
subvention demonstration project (that follows the model of the
demonstration project conducted under section 1896 of the Social
Security Act (as added by subsection (a)) to begin in 1999 for
veterans (as defined in section 101 of title 38, United States Code)
that are eligible for benefits under title XVIII of the Social
Security Act.
Subchapter D–Other Projects
SEC. 4016. MEDICARE COORDINATED CARE DEMONSTRATION PROJECT.
(a) Demonstration Projects.– (1) In general.–The Secretary of
Health and Human Services (in this section referred to as the
Secretary”) shall conduct demonstration projects for the purpose of
evaluating methods, such as case management and other models of
coordinated care, that– (A) improve the quality of items and
services provided to target individuals; and (B) reduce expenditures
under the medicare program under title XVIII of the Social Security
Act (42 U.S.C. 1395 et seq.) for items and services provided to
target individuals.
(2) Target individual defined.–In this section, the term “target
individual” means an individual that has a chronic illness, as
defined and identified by the Secretary, and is enrolled under the
fee-for-service program under parts A and B of title XVIII of the
Social Security Act (42 U.S.C. 1395c et seq.; 1395j et seq.).
(b) Program Design.– (1) Initial design.–The Secretary shall
evaluate best practices in the private sector of methods of
coordinated care for a period of 1 year and design the demonstration
project based on such evaluation.
(2) Number and project areas.–Not later than 2 years after the
date of enactment of this Act, the Secretary shall implement at least
9 demonstration projects, including– (A) 5 projects in urban areas;
(B) 3 projects in rural areas; and (C) 1 project within the District
of Columbia which is operated by a nonprofit academic medical center
that maintains a National Cancer Institute certified comprehensive
cancer center.
(3) Expansion of projects; implementation of demonstration project
results.– (A) Expansion of projects.–If the initial report under
subsection (c) contains an evaluation that demonstration projects–
(i) reduce expenditures under the medicare program; or (ii) do not
increase expenditures under the medicare program and increase the
quality of health care services provided to target individuals and
satisfaction of beneficiaries and health care providers; the
Secretary shall continue the existing demonstration projects and may
expand the number of demonstration projects.
(B) Implementation of demonstration project results.–If a report
under subsection (c) contains an evaluation as described in
subparagraph (A), the Secretary may issue regulations to implement,
on a permanent basis, the components of the demonstration project
that are beneficial to the medicare program.
(c) Report to Congress.– (1) In general.–Not later than 2 years
after the Secretary implements the initial demonstration projects
under this section, and biannually thereafter, the Secretary shall
submit to Congress a report regarding the demonstration projects
conducted under this section.
(2) Contents of report.–The report in paragraph (1) shall include
the following: (A) A description of the demonstration projects
conducted under this section.
(B) An evaluation of– (i) the cost-effectiveness of the
demonstration projects; (ii) the quality of the health care services
provided to target individuals under the demonstration projects; and
(iii) beneficiary and health care provider satisfaction under the
demonstration project.
(C) Any other information regarding the demonstration projects
conducted under this section that the Secretary determines to be
appropriate.
(d) Waiver Authority.–The Secretary shall waive compliance with
the requirements of title XVIII of the Social Security Act (42
U.S.C.1395 et seq.) to such extent and for such period as the
Secretary determines is necessary to conduct demonstration projects.
(e) Funding.– (1) Demonstration projects.– (A) In general.– (i)
State projects.–Except as provided in clause (ii), the Secretary
shall provide for the transfer from the Federal Hospital Insurance
Trust Fund and the Federal Supplementary Insurance Trust Fund under
title XVIII of the Social Security Act (42 U.S.C. 1395i, 1395t), in
such proportions as the Secretary determines to be appropriate, of
such funds as are necessary for the costs of carrying out the
demonstration projects under this section.
(ii) Cancer hospital.–In the case of the project described in
subsection (b)(2)(C), amounts shall be available only as provided in
any Federal law making appropriations for the District of Columbia.
(B) Limitation.–In conducting the demonstration project under
this section, the Secretary shall ensure that the aggregate payments
made by the Secretary do not exceed the amount which the Secretary
would have paid if the demonstration projects under this section were
not implemented.
(2) Evaluation and report.–There are authorized to be
appropriated such sums as are necessary for the purpose of developing
and submitting the report to Congress under subsection (c).
SEC. 4017. ORDERLY TRANSITION OF MUNICIPAL HEALTH SERVICE
DEMONSTRATION PROJECTS.
Section 9215 of the Consolidated Omnibus Budget Reconciliation Act
of 1985, as amended by section 6135 of OBRA-1989 and section 13557 of
OBRA-1993, is further amended– (1) by inserting “(a)” before “The
Secretary”, and (2) by adding at the end the following: Subject to
subsection (c), the Secretary may further extend such demonstration
projects through December 31, 2000, but only with respect to
individuals who received at least one service during the period
beginning on January 1, 1996, and ending on the date of the enactment
of the Balanced Budget Act of 1997.
(b) The Secretary shall work with each such demonstration project
to develop a plan, to be submitted to the Committee on Ways and Means
and the Committee on Commerce of the House of Representatives and the
Committee on Finance of the Senate by March 31, 1998, for the orderly
transition of demonstration projects and the project participants to
a non-demonstration project health care delivery system, such as
through integration with a private or public health plan, including a
medicaid managed care or Medicare+Choice plan.
(c) A demonstration project under subsection (a) which does not
develop and submit a transition plan under subsection (b) by March
31, 1998, or, if later, 6 months after the date of the enactment of
the Balanced Budget Act of 1997, shall be discontinued as of December
31, 1998. The Secretary shall provide appropriate technical
assistance to assist in the transition so that disruption of medical
services to project participants may be minimized.”.
SEC. 4018. MEDICARE ENROLLMENT DEMONSTRATION PROJECT.
(a) Demonstration Project.– (1) Establishment.–The Secretary
shall implement a demonstration project (in this section referred to
as the project”) for the purpose of evaluating the use of a
third-party contractor to conduct the Medicare+Choice plan enrollment
and disenrollment functions, as described in part C of title XVIII of
the Social Security Act (as added by section 4001 of this Act), in an
area.
(2) Consultation.–Before implementing the project under this
section, the Secretary shall consult with affected parties on– (A)
the design of the project; (B) the selection criteria for the
third-party contractor; and (C) the establishment of performance
standards, as described in paragraph (3).
(3) Performance standards.– (A) In general.–The Secretary shall
establish performance standards for the accuracy and timeliness of
the Medicare+Choice plan enrollment and disenrollment functions
performed by the third-party contractor.
(B) Noncompliance.–In the event that the third-party contractor
is not in substantial compliance with the performance standards
established under subparagraph (A), such enrollment and disenrollment
functions shall be performed by the Medicare+Choice plan until the
Secretary appoints a new third-party contractor.
(b) Report to Congress.–The Secretary shall periodically report
to Congress on the progress of the project conducted pursuant to this
section.
(c) Waiver Authority.–The Secretary shall waive compliance with
the requirements of part C of title XVIII of the Social Security Act
(as amended by section 4001 of this Act) to such extent and for such
period as the Secretary determines is necessary to conduct the
project.
(d) Duration.–A demonstration project under this section shall be
conducted for a 3-year period.
(e) Separate From Other Demonstration Projects.–A project
implemented by the Secretary under this section shall not be
conducted in conjunction with any other demonstration project.
SEC. 4019. EXTENSION OF CERTAIN MEDICARE COMMUNITY NURSING
ORGANIZATION DEMONSTRATION PROJECTS.
Notwithstanding any other provision of law, demonstration projects
conducted under section 4079 of the Omnibus Budget Reconciliation Act
of 1987 may be conducted for an additional period of 2 years, and the
deadline for any report required relating to the results of such
projects shall be not later than 6 months before the end of such
additional period.
CHAPTER 3–COMMISSIONS
SEC. 4021. NATIONAL BIPARTISAN COMMISSION ON THE FUTURE OF
MEDICARE.
(a) Establishment.–There is established a commission to be known
as the National Bipartisan Commission on the Future of Medicare (in
this section referred to as the Commission”).
(b) Duties of the Commission.–The Commission shall– (1) review
and analyze the long-term financial condition of the medicare program
under title XVIII of the Social Security Act (42 U.S.C. 1395 et
seq.); (2) identify problems that threaten the financial integrity of
the Federal Hospital Insurance Trust Fund and the Federal
Supplementary Medical Insurance Trust Fund established under that
title (42 U.S.C. 1395i, 1395t), including– (A) the financial impact
on the medicare program of the significant increase in the number of
medicare eligible individuals which will occur beginning
approximately during 2010 and lasting for approximately 25 years, and
(B) the extent to which current medicare update indexes do not
accurately reflect inflation; (3) analyze potential solutions to the
problems identified under paragraph (2) that will ensure both the
financial integrity of the medicare program and the provision of
appropriate benefits under such program, including methods used by
other nations to respond to comparable demographic patterns in
eligibility for health care benefits for elderly and disabled
individuals and trends in employment-related health care for
retirees; (4) make recommendations to restore the solvency of the
Federal Hospital Insurance Trust Fund and the financial integrity of
the Federal Supplementary Medical Insurance Trust Fund; (5) make
recommendations for establishing the appropriate financial structure
of the medicare program as a whole; (6) make recommendations for
establishing the appropriate balance of benefits covered and
beneficiary contributions to the medicare program; (7) make
recommendations for the time periods during which the recommendations
described in paragraphs (4), (5), and (6) should be implemented; (8)
make recommendations regarding the financing of graduate medical
education (GME), including consideration of alternative broad-based
sources of funding for such education and funding for institutions
not currently eligible for such GME support that conduct approved
graduate medical residency programs, such as children’s hospitals;
(9) make recommendations on modifying age-based eligibility to
correspond to changes in age-based eligibility under the OASDI
program and on the feasibility of allowing individuals between the
age of 62 and the medicare eligibility age to buy into the medicare
program; (10) make recommendations on the impact of chronic disease
and disability trends on future costs and quality of services under
the current benefit, financing, and delivery system structure of the
medicare program; (11) make recommendations regarding a comprehensive
approach to preserve the program; and (12) review and analyze such
other matters as the Commission deems appropriate.
(c) Membership.– (1) Number and appointment.–The Commission
shall be composed of 17 members, of whom– (A) four shall be
appointed by the President; (B) six shall be appointed by the
Majority Leader of the Senate, in consultation with the Minority
Leader of the Senate, of whom not more than 4 shall be of the same
political party; (C) six shall be appointed by the Speaker of the
House of Representatives, in consultation with the Minority Leader of
the House of Representatives, of whom not more than 4 shall be of the
same political party; and (D) one, who shall serve as Chairman of the
Commission, appointed jointly by the President, Majority Leader of
the Senate, and the Speaker of the House of Representatives.
(2) Deadline for appointment.–Members of the Commission shall be
appointed by not later than December 1, 1997.
(3) Terms of appointment.–The term of any appointment under
paragraph (1) to the Commission shall be for the life of the
Commission.
(4) Meetings.–The Commission shall meet at the call of its
Chairman or a majority of its members.
(5) Quorum.–A quorum shall consist of 8 members of the
Commission, except that 4 members may conduct a hearing under
subsection (e).
(6) Vacancies.–A vacancy on the Commission shall be filled in the
same manner in which the original appointment was made not later than
30 days after the Commission is given notice of the vacancy and shall
not affect the power of the remaining members to execute the duties
of the Commission.
(7) Compensation.–Members of the Commission shall receive no
additional pay, allowances, or benefits by reason of their service on
the Commission.
(8) Expenses.–Each member of the Commission shall receive travel
expenses and per diem in lieu of subsistence in accordance with
sections 5702 and 5703 of title 5, United States Code.
(d) Staff and Support Services.– (1) Executive director.– (A)
Appointment.–The Chairman shall appoint an executive director of the
Commission.
(B) Compensation.–The executive director shall be paid the rate
of basic pay for level V of the Executive Schedule.
(2) Staff.–With the approval of the Commission, the executive
director may appoint such personnel as the executive director
considers appropriate.
(3) Applicability of civil service laws.–The staff of the
Commission shall be appointed without regard to the provisions of
title 5, United States Code, governing appointments in the
competitive service, and shall be paid without regard to the
provisions of chapter 51 and subchapter III of chapter 53 of such
title (relating to classification and General Schedule pay rates).
(4) Experts and consultants.–With the approval of the Commission,
the executive director may procure temporary and intermittent
services under section 3109(b) of title 5, United States Code.
(5) Physical facilities.–The Administrator of the General
Services Administration shall locate suitable office space for the
operation of the Commission. The facilities shall serve as the
headquarters of the Commission and shall include all necessary
equipment and incidentals required for the proper functioning of the
Commission.
(e) Powers of Commission.– (1) Hearings and other
activities.–For the purpose of carrying out its duties, the
Commission may hold such hearings and undertake such other activities
as the Commission determines to be necessary to carry out its duties.
(2) Studies by gao.–Upon the request of the Commission, the
Comptroller General shall conduct such studies or investigations as
the Commission determines to be necessary to carry out its duties.
(3) Cost estimates by congressional budget office and office of
the chief actuary of hcfa.– (A) The Director of the Congressional
Budget Office or the Chief Actuary of the Health Care Financing
Administration, or both, shall provide to the Commission, upon the
request of the Commission, such cost estimates as the Commission
determines to be necessary to carry out its duties.
(B) The Commission shall reimburse the Director of the
Congressional Budget Office for expenses relating to the employment
in the office of the Director of such additional staff as may be
necessary for the Director to comply with requests by the Commission
under subparagraph (A).
(4) Detail of federal employees.–Upon the request of the
Commission, the head of any Federal agency is authorized to detail,
without reimbursement, any of the personnel of such agency to the
Commission to assist the Commission in carrying out its duties. Any
such detail shall not interrupt or otherwise affect the civil service
status or privileges of the Federal employee.
(5) Technical assistance.–Upon the request of the Commission, the
head of a Federal agency shall provide such technical assistance to
the Commission as the Commission determines to be necessary to carry
out its duties.
(6) Use of mails.–The Commission may use the United States mails
in the same manner and under the same conditions as Federal agencies
and shall, for purposes of the frank, be considered a commission of
Congress as described in section 3215 of title 39, United States
Code.
(7) Obtaining information.–The Commission may secure directly
from any Federal agency information necessary to enable it to carry
out its duties, if the information may be disclosed under section 552
of title 5, United States Code. Upon request of the Chairman of the
Commission, the head of such agency shall furnish such information to
the Commission.
(8) Administrative support services.–Upon the request of the
Commission, the Administrator of General Services shall provide to
the Commission on a reimbursable basis such administrative support
services as the Commission may request.
(9) Printing.–For purposes of costs relating to printing and
binding, including the cost of personnel detailed from the Government
Printing Office, the Commission shall be deemed to be a committee of
the Congress.
(f) Report.–Not later than March 1, 1999, the Commission shall
submit a report to the President and Congress which shall contain a
detailed statement of only those recommendations, findings, and
conclusions of the Commission that receive the approval of at least
11 members of the Commission.
(g) Termination.–The Commission shall terminate 30 days after the
date of submission of the report required in subsection (f).
(h) Authorization of Appropriations.–There are authorized to be
appropriated $1,500,000 to carry out this section. 60 percent of such
appropriation shall be payable from the Federal Hospital Insurance
Trust Fund, and 40 percent of such appropriation shall be payable
from the Federal Supplementary Medical Insurance Trust Fund under
title XVIII of the Social Security Act (42 U.S.C. 1395i, 1395t).
SEC. 4022. MEDICARE PAYMENT ADVISORY COMMISSION.
(a) In General.–Title XVIII is amended by inserting after section
1804 the following new section:
~ medicare payment advisory commission ~
Sec. 1805. (a) Establishment.–There is hereby established the
Medicare Payment Advisory Commission (in this section referred to as
the ‘Commission’).
(b) Duties.– (1) Review of payment policies and annual
reports.–The Commission shall– (A) review payment policies under
this title, including the topics described in paragraph (2); (B) make
recommendations to Congress concerning such payment policies; (C) by
not later than March 1 of each year (beginning with 1998), submit a
report to Congress containing the results of such reviews and its
recommendations concerning such policies; and (D) by not later than
June 1 of each year (beginning with 1998), submit a report to
Congress containing an examination of issues affecting the medicare
program, including the implications of changes in health care
delivery in the United States and in the market for health care
services on the medicare program.
(2) Specific topics to be reviewed.– (A) Medicare+choice
program.–Specifically, the Commission shall review, with respect to
the Medicare+Choice program under part C, the following: (i) The
methodology for making payment to plans under such program, including
the making of differential payments and the distribution of
differential updates among different payment areas.
(ii) The mechanisms used to adjust payments for risk and the need
to adjust such mechanisms to take into account health status of
beneficiaries.
(iii) The implications of risk selection both among
Medicare+Choice organizations and between the Medicare+Choice option
and the original medicare fee-for- service option.
(iv) The development and implementation of mechanisms to assure
the quality of care for those enrolled with Medicare+Choice
organizations.
(v) The impact of the Medicare+Choice program on access to care
for medicare beneficiaries.
(vi) Other major issues in implementation and further development
of the Medicare+Choice program.
(B) Original medicare fee-for-service system.– Specifically, the
Commission shall review payment policies under parts A and B,
including– (i) the factors affecting expenditures for services in
different sectors, including the process for updating hospital,
skilled nursing facility, physician, and other fees, (ii) payment
methodologies, and (iii) their relationship to access and quality of
care for medicare beneficiaries.
(C) Interaction of medicare payment policies with health care
delivery generally.–Specifically, the Commission shall review the
effect of payment policies under this title on the delivery of health
care services other than under this title and assess the implications
of changes in health care delivery in the United States and in the
general market for health care services on the medicare program.
(3) Comments on certain secretarial reports.–If the Secretary
submits to Congress (or a committee of Congress) a report that is
required by law and that relates to payment policies under this
title, the Secretary shall transmit a copy of the report to the
Commission. The Commission shall review the report and, not later
than 6 months after the date of submittal of the Secretary’s report
to Congress, shall submit to the appropriate committees of Congress
written comments on such report. Such comments may include such
recommendations as the Commission deems appropriate.
(4) Agenda and additional reviews.–The Commission shall consult
periodically with the chairmen and ranking minority members of the
appropriate committees of Congress regarding the Commission’s agenda
and progress towards achieving the agenda. The Commission may conduct
additional reviews, and submit additional reports to the appropriate
committees of Congress, from time to time on such topics relating to
the program under this title as may be requested by such chairmen and
members and as the Commission deems appropriate.
(5) Availability of reports.–The Commission shall transmit to the
Secretary a copy of each report submitted under this subsection and
shall make such reports available to the public.
(6) Appropriate committees of congress.–For purposes of this
section, the term ‘appropriate committees of Congress’ means the
Committees on Ways and Means and Commerce of the House of
Representatives and the Committee on Finance of the Senate.
(c) Membership.– (1) Number and appointment.–The Commission
shall be composed of 15 members appointed by the Comptroller General.
(2) Qualifications.– (A) In general.–The membership of the
Commission shall include individuals with national recognition for
their expertise in health finance and economics, actuarial science,
health facility management, health plans and integrated delivery
systems, reimbursement of health facilities, allopathic and
osteopathic physicians, and other providers of health services, and
other related fields, who provide a mix of different professionals,
broad geographic representation, and a balance between urban and
rural representatives.
(B) Inclusion.–The membership of the Commission shall include
(but not be limited to) physicians and other health professionals,
employers, third-party payers, individuals skilled in the conduct and
interpretation of biomedical, health services, and health economics
research and expertise in outcomes and effectiveness research and
technology assessment.
Such membership shall also include representatives of consumers
and the elderly.
(C) Majority nonproviders.–Individuals who are directly involved
in the provision, or management of the delivery, of items and
services covered under this title shall not constitute a majority of
the membership of the Commission.
(D) Ethical disclosure.–The Comptroller General shall establish a
system for public disclosure by members of the Commission of
financial and other potential conflicts of interest relating to such
members.
(3) Terms.– (A) In general.–The terms of members of the
Commission shall be for 3 years except that the Comptroller General
shall designate staggered terms for the members first appointed.
(B) Vacancies.–Any member appointed to fill a vacancy occurring
before the expiration of the term for which the member’s predecessor
was appointed shall be appointed only for the remainder of that term.
A member may serve after the expiration of that member’s term until a
successor has taken office. A vacancy in the Commission shall be
filled in the manner in which the original appointment was made.
(4) Compensation.–While serving on the business of the Commission
(including traveltime), a member of the Commission shall be entitled
to compensation at the per diem equivalent of the rate provided for
level IV of the Executive Schedule under section 5315 of title 5,
United States Code; and while so serving away from home and the
member’s regular place of business, a member may be allowed travel
expenses, as authorized by the Chairman of the Commission.
Physicians serving as personnel of the Commission may be provided
a physician comparability allowance by the Commission in the same
manner as Government physicians may be provided such an allowance by
an agency under section 5948 of title 5, United States Code, and for
such purpose subsection (i) of such section shall apply to the
Commission in the same manner as it applies to the Tennessee Valley
Authority. For purposes of pay (other than pay of members of the
Commission) and employment benefits, rights, and privileges, all
personnel of the Commission shall be treated as if they were
employees of the United States Senate.
(5) Chairman; vice chairman.–The Comptroller General shall
designate a member of the Commission, at the time of appointment of
the member as Chairman and a member as Vice Chairman for that term of
appointment, except that in the case of vacancy of the Chairmanship
or Vice Chairmanship, the Comptroller General may designate another
member for the remainder of that member’s term.
(6) Meetings.–The Commission shall meet at the call of the
Chairman.
(d) Director and Staff; Experts and Consultants.–Subject to such
review as the Comptroller General deems necessary to assure the
efficient administration of the Commission, the Commission may– (1)
employ and fix the compensation of an Executive Director (subject to
the approval of the Comptroller General) and such other personnel as
may be necessary to carry out its duties (without regard to the
provisions of title 5, United States Code, governing appointments in
the competitive service); (2) seek such assistance and support as may
be required in the performance of its duties from appropriate Federal
departments and agencies; (3) enter into contracts or make other
arrangements, as may be necessary for the conduct of the work of the
Commission (without regard to section 3709 of the Revised Statutes
(41 U.S.C. 5)); (4) make advance, progress, and other payments which
relate to the work of the Commission; (5) provide transportation and
subsistence for persons serving without compensation; and (6)
prescribe such rules and regulations as it deems necessary with
respect to the internal organization and operation of the Commission.
(e) Powers.– (1) Obtaining official data.–The Commission may
secure directly from any department or agency of the United States
information necessary to enable it to carry out this section. Upon
request of the Chairman, the head of that department or agency shall
furnish that information to the Commission on an agreed upon
schedule.
(2) Data collection.–In order to carry out its functions, the
Commission shall– (A) utilize existing information, both published
and unpublished, where possible, collected and assessed either by its
own staff or under other arrangements made in accordance with this
section, (B) carry out, or award grants or contracts for, original
research and experimentation, where existing information is
inadequate, and (C) adopt procedures allowing any interested party to
submit information for the Commission’s use in making reports and
recommendations.
(3) Access of gao to information.–The Comptroller General shall
have unrestricted access to all deliberations, records, and
nonproprietary data of the Commission, immediately upon request.
(4) Periodic audit.–The Commission shall be subject to periodic
audit by the Comptroller General.
(f) Authorization of Appropriations.– (1) Request for
appropriations.–The Commission shall submit requests for
appropriations in the same manner as the Comptroller General submits
requests for appropriations, but amounts appropriated for the
Commission shall be separate from amounts appropriated for the
Comptroller General.
(2) Authorization.–There are authorized to be appropriated such
sums as may be necessary to carry out the provisions of this section.
Sixty percent of such appropriation shall be payable from the Federal
Hospital Insurance Trust Fund, and 40 percent of such appropriation
shall be payable from the Federal Supplementary Medical Insurance
Trust Fund.”.
(b) Abolition of ProPAC and PPRC.– (1) ProPAC.– (A) In
general.–Section 1886(e) (42 U.S.C. 1395ww(e)) is amended– (i) by
striking paragraphs (2) and (6); and (ii) in paragraph (3), by
striking “(A) The Commission” and all that follows through (B)”.
(B) Conforming amendment.–Section 1862 (42 U.S.C. 1395y) is
amended by striking “Prospective Payment Assessment Commission” each
place it appears in subsection (a)(1)(D) and subsection (i) and
inserting “Medicare Payment Advisory Commission”.
(2) PPRC.– (A) In general.–Title XVIII is amended by striking
section 1845 (42 U.S.C. 1395w-1).
(B) Elimination of certain reports.–Section 1848 (42 U.S.C.
1395w-4) is amended– (i) by striking subparagraph (F) of subsection
(d)(2), (ii) by striking subparagraph (B) of subsection (f)(1), and
(iii) in subsection (f)(3), by striking “Physician Payment Review
Commission,”.
(C) Conforming amendments.–Section 1848 (42 U.S.C. 1395w- 4) is
amended by striking “Physician Payment Review Commission” and
inserting “Medicare Payment Advisory Commission” each place it
appears in subsections (c)(2)(B)(iii), (g)(6)(C), and (g)(7)(C).
(c) Effective Date; Transition.– (1) In general.–The Comptroller
General shall first provide for appointment of members to the
Medicare Payment Advisory Commission (in this subsection referred to
as MedPAC”) by not later than September 30, 1997.
(2) Transition.–As quickly as possible after the date a majority
of members of MedPAC are first appointed, the Comptroller General, in
consultation with the Prospective Payment Assessment Commission (in
this subsection referred to as ProPAC”) and the Physician Payment
Review Commission (in this subsection referred to as PPRC”), shall
provide for the termination of the ProPAC and the PPRC. As of the
date of termination of the respective Commissions, the amendments
made by paragraphs (1) and (2), respectively, of subsection (b)
become effective. The Comptroller General, to the extent feasible,
shall provide for the transfer to the MedPAC of assets and staff of
the ProPAC and the PPRC, without any loss of benefits or seniority by
virtue of such transfers. Fund balances available to the ProPAC or
the PPRC for any period shall be available to the MedPAC for such
period for like purposes.
(3) Continuing responsibility for reports.–The MedPAC shall be
responsible for the preparation and submission of reports required by
law to be submitted (and which have not been submitted by the date of
establishment of the MedPAC) by the ProPAC and the PPRC, and, for
this purpose, any reference in law to either such Commission is
deemed, after the appointment of the MedPAC, to refer to the MedPAC.
CHAPTER 4–MEDIGAP PROTECTIONS
SEC. 4031. MEDIGAP PROTECTIONS.
(a) Guaranteeing Issue Without Preexisting Conditions for
Continuously Covered Individuals.–Section 1882(s) (42
U.S.C.1395ss(s)) is amended– (1) in paragraph (3), by striking
paragraphs (1) and (2) and inserting this subsection, (2) by
redesignating paragraph (3) as paragraph (4), and (3) by inserting
after paragraph (2) the following new paragraph: (3)(A) The issuer of
a medicare supplemental policy– (i) may not deny or condition the
issuance or effectiveness of a medicare supplemental policy described
in subparagraph (C) that is offered and is available for issuance to
new enrollees by such issuer; (ii) may not discriminate in the
pricing of such policy, because of health status, claims experience,
receipt of health care, or medical condition; and (iii) may not
impose an exclusion of benefits based on a pre- existing condition
under such policy, in the case of an individual described in
subparagraph (B) who seeks to enroll under the policy not later than
63 days after the date of the termination of enrollment described in
such subparagraph and who submits evidence of the date of termination
or disenrollment along with the application for such medicare
supplemental policy.
(B) An individual described in this subparagraph is an individual
described in any of the following clauses: (i) The individual is
enrolled under an employee welfare benefit plan that provides health
benefits that supplement the benefits under this title and the plan
terminates or ceases to provide all such supplemental health benefits
to the individual.
(ii) The individual is enrolled with a Medicare+Choice
organization under a Medicare+Choice plan under part C, and there are
circumstances permitting discontinuance of the individual’s election
of the plan under the first sentence of section 1851(e)(4).
(iii) The individual is enrolled with an eligible organization
under a contract under section 1876, a similar organization operating
under demonstration project authority, effective for periods before
April 1, 1999, with an organization under an agreement under section
1833(a)(1)(A), or with an organization under a policy described in
subsection (t), and such enrollment ceases under the same
circumstances that would permit discontinuance of an individual’s
election of coverage under the first sentence of section 1851(e)(4)
and, in the case of a policy described in subsection (t), there is no
provision under applicable State law for the continuation or
conversion of coverage under such policy.
(iv) The individual is enrolled under a medicare supplemental
policy under this section and such enrollment ceases because– (I) of
the bankruptcy or insolvency of the issuer or because of other
involuntary termination of coverage or enrollment under such policy
and there is no provision under applicable State law for the
continuation or conversion of such coverage; (II) the issuer of the
policy substantially violated a material provision of the policy; or
(III) the issuer (or an agent or other entity acting on the issuer’s
behalf) materially misrepresented the policy’s provisions in
marketing the policy to the individual.
(v) The individual– (I) was enrolled under a medicare
supplemental policy under this section, (II) subsequently terminates
such enrollment and enrolls, for the first time, with any
Medicare+Choice organization under a Medicare+Choice plan under part
C, any eligible organization under a contract under section 1876, any
similar organization operating under demonstration project authority,
or any policy described in subsection (t), and (III) the subsequent
enrollment under subclause (II) is terminated by the enrollee during
any period within the first 12 months of such enrollment (during
which the enrollee is permitted to terminate such subsequent
enrollment under section 1851(e)).
(vi) The individual, upon first becoming eligible for benefits
under part A at age 65, enrolls in a Medicare+Choice plan under part
C, and disenrolls from such plan by not later than 12 months after
the effective date of such enrollment.
(C)(i) Subject to clauses (ii) and (iii), a medicare supplemental
policy described in this subparagraph is a medicare supplemental
policy which has a benefit package classified as ‘A’, ‘B’, ‘C’, or
‘F’ under the standards established under subsection (p)(2).
(ii) Only for purposes of an individual described in subparagraph
(B)(v), a medicare supplemental policy described in this subparagraph
is the same medicare supplemental policy referred to in such
subparagraph in which the individual was most recently previously
enrolled, if available from the same issuer, or, if not so available,
a policy described in clause (i).
(iii) Only for purposes of an individual described in subparagraph
(B)(vi), a medicare supplemental policy described in this
subparagraph shall include any medicare supplemental policy.
(iv) For purposes of applying this paragraph in the case of a
State that provides for offering of benefit packages other than under
the classification referred to in clause (i), the references to
benefit packages in such clause are deemed references to comparable
benefit packages offered in such State.
(D) At the time of an event described in subparagraph (B) because
of which an individual ceases enrollment or loses coverage or
benefits under a contract or agreement, policy, or plan, the
organization that offers the contract or agreement, the insurer
offering the policy, or the administrator of the plan, respectively,
shall notify the individual of the rights of the individual under
this paragraph, and obligations of issuers of medicare supplemental
policies, under subparagraph (A).”.
(b) Limitation on Imposition of Preexisting Condition Exclusion
During Initial Open Enrollment Period.–Section 1882(s)(2) (42
U.S.C.1395ss(s)(2)) is amended– (1) in subparagraph (B), by striking
“subparagraph (C)” and inserting “subparagraphs (C) and (D)”, and (2)
by adding at the end the following new subparagraph: (D) In the case
of a policy issued during the 6-month period described in
subparagraph (A) to an individual who is 65 years of age or older as
of the date of issuance and who as of the date of the application for
enrollment has a continuous period of creditable coverage (as defined
in 2701(c) of the Public Health Service Act) of– (i) at least 6
months, the policy may not exclude benefits based on a pre-existing
condition; or (ii) less than 6 months, if the policy excludes
benefits based on a preexisting condition, the policy shall reduce
the period of any preexisting condition exclusion by the aggregate of
the periods of creditable coverage (if any, as so defined) applicable
to the individual as of the enrollment date.
The Secretary shall specify the manner of the reduction under
clause (ii), based upon the rules used by the Secretary in carrying
out section 2701(a)(3) of such Act.”.
(c) Conforming Amendment.–Section 1882(d)(3)(A)(vi)(III) (42
U.S.C. 1395ss(d)(2)(A)(vi)(III)) is amended by inserting “, a policy
described in clause (v),” after “Medicare supplemental policy”.
(d) Effective Dates.– (1) Guaranteed issue.–The amendment made
by subsection (a) shall take effect on July 1, 1998.
(2) Limit on preexisting condition exclusions.–The amendment made
by subsection (b) shall apply to policies issued on or after July 1,
1998.
(3) Conforming amendment.–The amendment made by subsection (c)
shall be effective as if included in the enactment of the Health
Insurance Portability and Accountability Act of 1996.
(e) Transition Provisions.– (1) In general.–If the Secretary of
Health and Human Services identifies a State as requiring a change to
its statutes or regulations to conform its regulatory program to the
changes made by this section, the State regulatory program shall not
be considered to be out of compliance with the requirements of
section 1882 of the Social Security Act due solely to failure to make
such change until the date specified in paragraph (4).
(2) NAIC standards.–If, within 9 months after the date of the
enactment of this Act, the National Association of Insurance
Commissioners (in this subsection referred to as the NAIC”) modifies
its NAIC Model Regulation relating to section 1882 of the Social
Security Act (referred to in such section as the 1991 NAIC Model
Regulation, as modified pursuant to section 171(m)(2) of the Social
Security Act Amendments of 1994 (Public Law 103-432) and as modified
pursuant to section 1882(d)(3)(A)(vi)(IV) of the Social Security Act,
as added by section 271(a) of the Health Insurance Portability and
Accountability Act of 1996 (Public Law 104-191) to conform to the
amendments made by this section, such revised regulation
incorporating the modifications shall be considered to be the
applicable NAIC model regulation (including the revised NAIC model
regulation and the 1991 NAIC Model Regulation) for the purposes of
such section.
(3) Secretary standards.–If the NAIC does not make the
modifications described in paragraph (2) within the period specified
in such paragraph, the Secretary of Health and Human Services shall
make the modifications described in such paragraph and such revised
regulation incorporating the modifications shall be considered to be
the appropriate Regulation for the purposes of such section.
(4) Date specified.– (A) In general.–Subject to subparagraph
(B), the date specified in this paragraph for a State is the earlier
of– (i) the date the State changes its statutes or regulations to
conform its regulatory program to the changes made by this section,
or (ii) 1 year after the date the NAIC or the Secretary first makes
the modifications under paragraph (2) or (3), respectively.
(B) Additional legislative action required.–In the case of a
State which the Secretary identifies as– (i) requiring State
legislation (other than legislation appropriating funds) to conform
its regulatory program to the changes made in this section, but (ii)
having a legislature which is not scheduled to meet in 1999 in a
legislative session in which such legislation may be considered, the
date specified in this paragraph is the first day of the first
calendar quarter beginning after the close of the first legislative
session of the State legislature that begins on or after July 1,
1999. For purposes of the previous sentence, in the case of a State
that has a 2-year legislative session, each year of such session
shall be deemed to be a separate regular session of the State
legislature.
(f) Conforming Benefits to Changes in Terminology for Hospital
Outpatient Department Cost Sharing.–For purposes of apply section
1882 of the Social Security Act (42 U.S.C. 1395ss) and regulations
referred to in subsection (e), copayment amounts provided under
section 1833(t)(5) of such Act with respect to hospital outpatient
department services shall be treated under medicare supplemental
policies in the same manner as coinsurance with respect to such
services.
SEC. 4032. ADDITION OF HIGH DEDUCTIBLE MEDIGAP POLICIES.
(a) In General.–Section 1882(p) (42 U.S.C. 1395ss(p)) is
amended– (1) in paragraph (2)(C), by inserting “plus the 2 plans
described in paragraph (11)(A)” after “exceed 10”; and (2) by adding
at the end the following: (11)(A) For purposes of paragraph (2), the
benefit packages described in this subparagraph are as follows: (i)
The benefit package classified as ‘F’ under the standards established
by such paragraph, except that it has a high deductible feature.
(ii) The benefit package classified as ‘J’ under the standards
established by such paragraph, except that it has a high deductible
feature.
(B) For purposes of subparagraph (A), a high deductible feature is
one which– (i) requires the beneficiary of the policy to pay annual
out- of-pocket expenses (other than premiums) in the amount specified
in subparagraph (C) before the policy begins payment of benefits, and
(ii) covers 100 percent of covered out-of-pocket expenses once such
deductible has been satisfied in a year.
(C) The amount specified in this subparagraph– (i) for 1998 and
1999 is $1,500, and (ii) for a subsequent year, is the amount
specified in this subparagraph for the previous year increased by the
percentage increase in the Consumer Price Index for all urban
consumers (all items; U.S. city average) for the 12-month period
ending with August of the preceding year.
If any amount determined under clause (ii) is not a multiple of
$10, it shall be rounded to the nearest multiple of $10.”.
(b) Effective Date.– (1) In general.–The amendments made by
subsection (a) shall take effect the date of the enactment of this
Act.
(2) Transition.–The provisions of section 4031(e) shall apply
with respect to this section in the same manner as they apply to
section 4031.
CHAPTER 5–TAX TREATMENT OF HOSPITALS
PARTICIPATING IN PROVIDER- SPONSORED ORGANIZATIONS
SEC. 4041. TAX TREATMENT OF HOSPITALS WHICH PARTICIPATE IN
PROVIDER- SPONSORED ORGANIZATIONS.
(a) In General.–Section 501 of the Internal Revenue Code of 1986
(relating to exemption from tax on corporations, certain trusts,
etc.) is amended by redesignating subsection (o) as subsection (p)
and by inserting after subsection (n) the following new subsection:
(o) Treatment of Hospitals Participating in Provider-Sponsored
Organizations.–An organization shall not fail to be treated as
organized and operated exclusively for a charitable purpose for
purposes of subsection (c)(3) solely because a hospital which is
owned and operated by such organization participates in a
provider-sponsored organization (as defined in section 1853(e) of the
Social Security Act), whether or not the provider-sponsored
organization is exempt from tax. For purposes of subsection (c)(3),
any person with a material financial interest in such a
provider-sponsored organization shall be treated as a private
shareholder or individual with respect to the hospital.” (b)
Effective Date.–The amendment made by subsection (a) shall take
effect on the date of the enactment of this Act.
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