Medigap Amendments of 1996

Summary: Medigap Amendments of 1996 - Amends title XVIII (Medicare) of the Social Security Act with respect to certification of Medicare supplemental health insurance policies, particularly coverage for pre-existing conditions, providing for additional consumer protections for certain individuals whose enrollment with an eligible organization ceases for one or more specified reasons.  Prohibits a Medicare supplemental policy issuer from denying or conditioning a policy to such an individual, from imposing preexisting condition exclusions, and from discriminating in pricing because of the individual's health, claims experience, or disability in the case of such an individual who has had continuous coverage (with no break longer than 63 days), if the policy in which the individual wishes to enroll has a comparable or less generous benefits package. 
Revises the prohibition against an insurer's excluding benefits based on a pre-existing condition during the initial six-month enrollment period after an individual first becomes eligible for Medicare.  Extends the six-month initial enrollment period to non-elderly Medicare beneficiaries. 
Authorizes the Secretary of Health and Human Services to provide grants to private, independent, nonprofit consumer organizations and State agencies applying to conduct programs to prepare and make available to Medicare beneficiaries comprehensive and understandable information on enrollment in health plans with a Medicare managed care contract and in Medicare supplemental policies in which they are eligible to enroll.  Requires any eligible organization with a Medicare managed care contract or any issuer of a Medicare supplemental policy to:  (1) conduct a consumer satisfaction survey of the enrollees under such contract or such policy; and (2) make the survey results available to the Secretary and the State Insurance Commissioner of the State in which the enrollees are so enrolled. Requires each organization which provides a Medicare managed care contract or issues a Medicare supplemental policy to pay to the Secretary its pro rata share of the estimated costs to be incurred by the Secretary in providing the grants.  Makes necessary appropriations.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Medigap Amendments of 1996''.

SEC. 2. MEDIGAP AMENDMENTS.

    (a) Guaranteeing Issue Without Preexisting Conditions for 
Continuously Covered Individuals.--Section 1882(s) of the Social 
Security Act (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);
            ``(ii) may not discriminate in the pricing of the policy on 
        the basis of the individual's health status, medical condition 
        (including both physical and mental illnesses), claims 
        experience, receipt of health care, medical history, genetic 
        information, evidence of insurability (including conditions 
        arising out of acts of domestic violence), or disability; and
            ``(iii) may not impose an exclusion of benefits based on a 
        pre-existing condition,
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.
    ``(B) An individual described in this subparagraph is an individual 
described in any of the following clauses:
            ``(i) The individual is enrolled with an eligible 
        organization under a contract under section 1876 or with an 
        organization under an agreement under section 1833(a)(1)(A) and 
        such enrollment ceases either because the individual moves 
        outside the service area of the organization under the contract 
        or agreement or because of the termination or nonrenewal of the 
        contract or agreement.
            ``(ii) The individual is enrolled with an organization 
        under a policy described in subsection (t) and such enrollment 
        ceases either because the individual moves outside the service 
        area of the organization under the policy, because of the 
        bankruptcy or insolvency of the insurer, or because the insurer 
        closes the block of business to new enrollment.
            ``(iii) The individual is covered under a medicare 
        supplemental policy and such coverage is terminated because of 
        the bankruptcy or insolvency of the insurer issuing the policy, 
        because the insurer closes the block of business to new 
enrollment, or because the individual changes residence so that the 
individual no longer resides in a State in which the issuer of the 
policy is licensed.
            ``(iv) 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 (or significantly reduces) such supplemental health 
        benefits to the individual.
            ``(v)(I) The individual is enrolled with an eligible 
        organization under a contract under section 1876 or with an 
        organization under an agreement under section 1833(a)(1)(A) and 
        such enrollment is terminated by the enrollee during the first 
        12 months of such enrollment, but only if the individual never 
        was previously enrolled with an eligible organization under a 
        contract under section 1876 or with an organization under an 
        agreement under section 1833(a)(1)(A).
            ``(II) The individual is enrolled under a policy described 
        in subsection (t) and such enrollment is terminated during the 
        first 12 months of such enrollment, but only if the individual 
        never was previously enrolled under such a policy under such 
        subsection.
    ``(C)(i) Subject to clause (ii), a medicare supplemental policy 
described in this subparagraph, with respect to an individual described 
in subparagraph (B), is a policy the benefits under which are 
comparable or lesser in relation to the benefits under the enrollment 
described in subparagraph (B) (or, in the case of an individual 
described in clause (ii), under the most recent medicare supplemental 
policy described in clause (ii)(II)).
    ``(ii) An individual described in this clause is an individual 
who--
            ``(I) is described in subparagraph (B)(v), and
            ``(II) was enrolled in a medicare supplemental policy 
        within the 63 day period before the enrollment described in 
        such subparagraph.
    ``(iii) As a condition for approval of a State regulatory program 
under subsection (b)(1) and for purposes of applying clause (i) to 
policies to be issued in the State, the regulatory program shall 
provide for the method of determining whether policy benefits are 
comparable or lesser in relation to other benefits. With respect to a 
State without such an approved program, the Secretary shall establish 
such method.
    ``(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, 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)(B) of such 
Act (42 U.S.C. 1395ss(s)(2)(B)) is amended to read as follows:
    ``(B) In the case of a policy issued during the 6-month period 
described in subparagraph (A), the policy may not exclude benefits 
based on a pre-existing condition.''.
    (c) Clarifying the Nondiscrimination Requirements During the 6-
Month Initial Enrollment Period.--Section 1882(s)(2)(A) of such Act (42 
U.S.C. 1395ss(s)(2)(A)) is amended to read as follows:
    ``(2)(A)(i) In the case of an individual described in clause (ii), 
the issuer of a medicare supplemental policy--
            ``(I) may not deny or condition the issuance or 
        effectiveness of a medicare supplemental policy, and
            ``(II) may not discriminate in the pricing of the policy on 
        the basis of the individual's health status, medical condition 
        (including both physical and mental illnesses), claims 
        experience, receipt of health care, medical history, genetic 
        information, evidence of insurability (including conditions 
        arising out of acts of domestic violence), or disability.
    ``(ii) An individual described in this clause is an individual for 
whom an application is submitted before the end of the 6-month period 
beginning with the first month as of the first day on which the 
individual is 65 years of age or older and is enrolled for benefits 
under part B.''.
    (d) Extending 6-Month Initial Enrollment Period to Non-Elderly 
Medicare Beneficiaries.--Section 1882(s)(2)(A)(ii) of such Act (42 
U.S.C. 1395ss(s)(2)(A)), as amended by subsection (c), is amended by 
striking ``is submitted'' and all that follows and inserting the 
following: ``is submitted--
            ``(I) before the end of the 6-month period beginning with 
        the first month as of the first day on which the individual is 
        65 years of age or older and is enrolled for benefits under 
        part B; and
            ``(II) for each time the individual becomes eligible for 
        benefits under part A pursuant to section 226(b) or 226A and is 
        enrolled for benefits under part B, before the end of the 6-
        month period beginning with the first month as of the first day 
        on which the individual is so eligible and so enrolled.''.
    (e) Effective Dates.--
            (1) Guaranteed issue.--The amendment made by subsection (a) 
        shall take effect on July 1, 1997.
            (2) Limit on preexisting condition exclusions.--The 
        amendment made by subsection (b) shall apply to policies issued 
        on or after July 1, 1997.
            (3) Clarification of nondiscrimination requirements.--The 
        amendment made by subsection (c) shall apply to policies issued 
        on or after July 1, 1997.
            (4) Extension of enrollment period to disabled 
        individuals.--
                    (A) In general.--The amendment made by subsection 
                (d) shall take effect on July 1, 1997.
                    (B) Transition rule.--In the case of an individual 
                who first became eligible for benefits under part A of 
                title XVIII of the Social Security Act pursuant to 
                section 226(b) or 226A of such Act and enrolled for 
                benefits under part B of such title before July 1, 
                1997, the 6-month period described in section 
                1882(s)(2)(A) of such Act shall begin on July 1, 1997. 
                Before July 1, 1997, the Secretary of Health and Human 
                Services shall notify any individual described in the 
                previous sentence of their rights in connection with 
                medicare supplemental policies under section 1882 of 
                such Act, by reason of the amendment made by subsection 
                (d).
    (f) 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 Care 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 1998 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, 1998. 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.

SEC. 3. INFORMATION FOR MEDICARE BENEFICIARIES.

    (a) Grant program.--
            (1) In general.--The Secretary of Health and Human Services 
        (in this section referred to as the ``Secretary'') is 
        authorized to provide grants to--
                    (A) private, independent, non-profit consumer 
                organizations, and
                    (B) State agencies,
        to conduct programs to prepare and make available to medicare 
        beneficiaries comprehensive and understandable information on 
        enrollment in health plans with a medicare managed care 
        contract and in medicare supplemental policies in which they 
        are eligible to enroll. Nothing in this section shall be 
        construed as preventing the Secretary from making a grant to an 
        organization under this section to carry out activities for 
        which a grant may be made under section 4360 of the Omnibus 
        Budget Reconciliation Act of 1990 (Public Law 101-508).
            (2) Consumer satisfaction surveys.--Any eligible 
        organization with a medicare managed care contract or any 
        issuer of a medicare supplemental policy shall--
                    (A) conduct, in accordance with minimum standards 
                approved by the Secretary, a consumer satisfaction 
                survey of the enrollees under such contract or such 
                policy; and
                    (B) make the results of such survey available to 
                Secretary and the State Insurance Commissioner of the 
                State in which the enrollees are so enrolled.
        The Secretary shall make the results of such surveys available 
        to organizations which receive grants under paragraph (1).
            (3) Information.--
                    (A) Contents.--The information described in 
                paragraph (1) shall include at least a comparison of 
                such contracts and policies, including a comparison of 
                the benefits provided, quality and performance, the 
                costs to enrollees, the results of consumer 
                satisfaction surveys on such contracts and policies, as 
                described in subsection (a)(2), and such additional 
                information as the Secretary may prescribe.
                    (B) Information standards.--The Secretary shall 
                develop standards and criteria to ensure that the 
                information provided to medicare beneficiaries under a 
                grant under this section is complete, accurate, and 
                uniform.
                    (C) Review of information.--The Secretary may 
                prescribe the procedures and conditions under which an 
                organization that has obtained a grant under this 
                section may furnish information obtained under the 
                grant to medicare beneficiaries. Such information shall 
                be submitted to the Secretary at least 45 days before 
                the date the information is first furnished to such 
                beneficiaries.
            (4) Consultation with other organizations and providers.--
        An organization which receives a grant under paragraph (1) 
        shall consult with private insurers, managed care plan 
        providers and other health care providers, and public and 
        private purchasers of health care benefits in order to provide 
        the information described in paragraph (1).
            (5) Terms and conditions.--To be eligible for a grant under 
        this section, an organization shall prepare and submit to the 
        Secretary an application at such time, in such form, and 
        containing such information as the Secretary may require. 
        Grants made under this section shall be in accordance with 
        terms and conditions specified by the Secretary.
    (b) Cost-Sharing.--
            (1) In general.--Each organization which provides a 
        medicare managed care contract or issues a medicare 
        supplemental policy (including a medicare select policy) shall 
        pay to the Secretary its pro rata share (as determined by the 
        Secretary) of the estimated costs to be incurred by the 
        Secretary in providing the grants described in subsection (a).
            (2) Limitation.--The total amount required to be paid under 
        paragraph (1) shall not exceed $35,000,000 in any fiscal year.
            (3) Application of proceeds.--Amounts received under 
        paragraph (1) are hereby appropriated to the Secretary to 
        defray the costs described in such paragraph and shall remain 
        available until expended.
    (c) Definitions.--In this section:
            (1) Medicare managed care contract.--The term ``medicare 
        managed care contract'' means a contract under section 1876 or 
        section 1833(a)(1)(A) of the Social Security Act.
            (2) Medicare supplemental policy.--The term ``medicare 
        supplemental policy'' has the meaning given such term in 
        section 1882(g) of the Social Security Act.