To amend title XVIII of the Social Security Act to improve payments and regulation under the Medicare+Choice Program.

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Medicare+Choice 
Improvement and Stabilization Act of 2001''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Payment reforms for 2003.
Sec. 3. Change in Medicare+Choice reporting deadlines and annual, 
                            coordinated election period and delay in 
                            lock-in provisions.
Sec. 4. Avoiding duplicative State regulation.
Sec. 5. Demonstration projects for preferred provider organizations, 
                            point-of-service plans, MSA plans, and 
                            disease management programs.
Sec. 6. Suspension of limitation for program reentry for 2003 and 2004.
Sec. 7. Specialized Medicare+Choice plans for special needs 
                            beneficiaries.

SEC. 2. PAYMENT REFORMS FOR 2003.

    (a) Payment Based on 100 Percent of Fee-for-Service Costs.--
            (1) In general.--Section 1853(c)(1) of the Social Security 
        Act (42 U.S.C. 1395w-23(c)(1)) is amended by adding at the end 
        the following:
                    ``(D) Based on 100 percent of fee-for-service costs 
                for 2003.--For 2003 only, the adjusted average per 
                capita cost for that year, determined under section 
                1876(a)(4) for the Medicare+Choice payment area for 
                services covered under parts A and B for individuals 
                entitled to benefits under part A and enrolled under 
                part B who are not enrolled in a Medicare+Choice plan 
                under this part for the year, subject to the same 
                adjustment as is provided to the annual per capita rate 
                payment under paragraph (3)(B).''.
            (2) Conforming amendment.--Such section is further amended 
        in the matter before subparagraph (A), by striking ``or (C)'' 
        and inserting ``(C), or (D)''.
    (b) Revision of National Average Used in Calculation of Blend.--
Section 1853(c)(4)(B)(i)(II) of such Act (42 U.S.C. 1395w-
23(c)(4)(B)(i)(II)) is amended by inserting ``who (with respect to 
determinations for 2003) are enrolled in a Medicare+Choice plan'' after 
``the average number of medicare beneficiaries''.
    (c) Elimination of Budget Neutrality.--Section 1853(c) of such Act 
(42 U.S.C. 1395w-23(c)) is amended--
            (1) in paragraph (1)(A), by inserting ``(for a year other 
        than 2003)'' after ``multiplied''; and
            (2) in paragraph (5), by inserting ``(other than 2003)'' 
        after ``for each year''.

SEC. 3. CHANGE IN MEDICARE+CHOICE REPORTING DEADLINES AND ANNUAL, 
              COORDINATED ELECTION PERIOD AND DELAY IN LOCK-IN 
              PROVISIONS.

    (a) Change in Reporting Deadline.--Section 1854(a)(1) of the Social 
Security Act (42 U.S.C. 1395w-24(a)(1)) is amended by striking ``July 
1'' and inserting ``the third Monday in September''.
    (b) Delay in Annual, Coordinated Election Period.--Section 
1851(e)(3)(B) of such Act (42 U.S.C. 1395w-21(e)(3)(B)) is amended by 
striking ``(beginning with 2000), the month of November before such 
year'' and inserting ``, the period beginning on November 15 and ending 
on December 31 of the year before such year''.
    (c) 1-Year Delay in Lock-In.--Section 1851(e) of such Act (42 
U.S.C. 1395w-21(e)) is amended--
            (1) in paragraph (2)(A)--
                    (A) by striking ``and 2001,'' and inserting ``, 
                2001, and 2002''; and
                    (B) in the heading, by striking ``2001'' and 
                inserting ``2002'';
            (2) in paragraph (2)(B)--
                    (A) in clause (i), by striking ``2002'' each place 
                it appears and inserting ``2003''; and
                    (B) in the heading that precedes clause (i), by 
                striking ``2002'' and inserting ``2003'';
            (3) in paragraph (2)(C)(i), by striking ``2002'' each place 
        it appears and inserting ``2003''; and
            (4) in paragraph (4)--
                    (A) in the matter preceding subparagraph (A), by 
                striking ``2002'' and inserting ``2003''; and
                    (B) in the second sentence, by striking ``2002'' 
                and inserting ``2003''.
    (d) Effective Date.--The amendments made by this section shall take 
effect on January 1, 2002.

SEC. 4. AVOIDING DUPLICATIVE STATE REGULATION.

    (a) In General.--Section 1856(b)(3) of the Social Security Act (42 
U.S.C. 1395w-26(b)(3)) is amended to read as follows:
            ``(3) Relation to state laws.--The standards established 
        under this subsection shall supersede any State law or 
        regulation (other than State licensing laws or State laws 
        relating to plan solvency) with respect to Medicare+Choice 
        plans which are offered by Medicare+Choice organizations under 
        this part.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
take effect on the date of the enactment of this Act.

SEC. 5. DEMONSTRATION PROJECTS FOR PREFERRED PROVIDER ORGANIZATIONS, 
              POINT-OF-SERVICE PLANS, MSA PLANS, AND DISEASE MANAGEMENT 
              PROGRAMS.

    (a) In General.--The Secretary of Health and Human Services shall 
conduct a demonstration program (in this section referred to as the 
``demonstration program'') under which payment rules to Medicare+Choice 
organizations under section 1853 of the Social Security Act are 
modified in order to promote the offering of Medicare+Choice plans by 
preferred provider organizations under the Medicare+Choice program, the 
offering of Medicare+Choice plans that provide point-of-service 
coverage for other than participating providers, and the offering of 
MSA plans and to promote the use of disease management programs by 
Medicare+Choice plans.
    (b) Projects.--Under the demonstration program, the Secretary shall 
provide for 10 demonstration projects. Each project shall extend over a 
period of not to exceed 3 years. Of the demonstration projects 
conducted under the demonstration, to the extent feasible, at least one 
such project shall promote the offering of a Medicare+Choice plan by a 
preferred provider organization, at least one project shall promote the 
offering of a Medicare+Choice plan that provides point-of-service 
coverage for other than participating providers, and at least two 
projects shall promote the offering of a MSA plan.
    (c) Risk-Sharing Arrangements.--Under the demonstration program, 
the Secretary may provide for the assumption of portions of the 
financial risk under a split or partial risk-sharing arrangement.
    (d) Waiver Authority.--The Secretary is authorized to waive such 
provisions of section 1853 of the Social Security Act (and related 
provisions of part C of title XVIII of such Act) as the Secretary 
determines to be necessary to conduct the demonstration program under 
this section.
    (e) Evaluation and Report.--
            (1) Evaluation.--The Secretary shall provide for an 
        evaluation of the demonstration program conducted under this 
        section and its impact on enrollment, particularly in areas not 
        previously served by Medicare+Choice plans.
            (2) Report.--The Secretary shall submit to Congress a 
        report on the demonstration program and its evaluation. Such 
        report shall include an assessment of the costs and savings to 
        the medicare program as a result of the demonstration program 
        and may include such recommendations for changes in the 
        Medicare+Choice program as the Secretary deems appropriate.

SEC. 6. SUSPENSION OF LIMITATION FOR PROGRAM REENTRY FOR 2003 AND 2004.

    Section 1857(c)(4) of the Social Security Act (42 U.S.C. 1395w-
27(c)(4)) is amended--
            (1) in subparagraph (A), by striking ``subparagraph (B)'' 
        and inserting ``subparagraphs (B) and (C)''; and
            (2) by adding at the end the following new subparagraph:
                    ``(C) Applicability in certain years.--Subparagraph 
                (A) shall not apply for contracts entered into for 
                contract year 2003 or 2004.''.

SEC. 7. SPECIALIZED MEDICARE+CHOICE PLANS FOR SPECIAL NEEDS 
              BENEFICIARIES.

    (a) Treatment as Coordinated Care Plan.--Section 1851(a)(2)(A) of 
the Social Security Act (42 U.S.C. 1395w-21(a)(2)(A)) is amended by 
adding at the end the following new sentence: ``Specialized 
Medicare+Choice plans for special needs beneficiaries (as defined in 
section 1859(b)(4)) may be any type of coordinated care plan.''.
    (b) Specialized Medicare+Choice Plan for Special Needs 
Beneficiaries Defined.--Section 1859(b) of such Act (42 U.S.C. 1395w-
29(b)) is amended by adding at the end the following new paragraph:
            ``(4) Specialized medicare+choice plans for special needs 
        beneficiaries.--
                    ``(A) In general.--The term `specialized 
                Medicare+Choice plan for special needs beneficiaries' 
                means a Medicare+Choice plan that exclusively serves 
                special needs beneficiaries (as defined in subparagraph 
                (B)).
                    ``(B) Special needs beneficiary.--The term `special 
                needs beneficiary' means a Medicare+Choice eligible 
                individual who--
                            ``(i) is institutionalized (as defined by 
                        the Secretary);
                            ``(ii) is entitled to medical assistance 
                        under a State plan under title XIX; or
                            ``(iii) meets such requirements as the 
                        Secretary may determine would benefit from 
                        enrollment in such a specialized 
                        Medicare+Choice plan described in subparagraph 
                        (A) for individuals with severe or disabling 
                        chronic conditions.''.
    (c) Restriction on Enrollment Permitted.--Section 1859 of such Act 
(42 U.S.C. 1395w-29) is amended by adding at the end the following new 
subsection:
    ``(f) Restriction on Enrollment for Specialized Medicare+Choice 
Plans for Special Needs Beneficiaries.--In the case of a specialized 
Medicare+Choice plan (as defined in subsection (b)(4)), notwithstanding 
any other provision of this part and in accordance with regulations of 
the Secretary and for periods before January 1, 2007, the plan may 
restrict the enrollment of individuals under the plan to individuals 
who are within one or more classes of special needs beneficiaries.''.
    (d) Report to Congress.--Not later than December 31, 2005, the 
Secretary of Health and Human Services shall submit to Congress a 
report that assesses the impact of specialized Medicare+Choice plans 
for special needs beneficiaries on the cost and quality of services 
provided to enrollees. Such report shall include an assessment of the 
costs and savings to the medicare program as a result of amendments 
made by subsections (a), (b), and (c).
    (e) Effective Dates.--
            (1) In general.--The amendments made by subsections (a), 
        (b), and (c) shall take effect upon the date of the enactment 
        of this Act.
            (2) Deadline for issuance of requirements for special needs 
        beneficiaries; transition.--No later than September 1, 2002, 
        the Secretary of Health and Human Services shall issue final 
        regulations to establish requirements for special needs 
        beneficiaries under section 1859(b)(4)(B)(iii) of the Social 
        Security Act, as added by subsection (b).
    (f) Extension of Municipal Health Service Demonstration Projects.--
The last sentence of section 9215(a) of the Consolidated Omnibus Budget 
Reconciliation Act of 1985 (42 U.S.C. 1395b-1 note), as previously 
amended, is amended by striking ``December 31, 2004, but only with 
respect to'' and all that follows and inserting ``December 31, 2009, 
but only with respect to individuals who reside in the city in which 
the project is operated and so long as the total number of individuals 
participating in the project does not exceed the number of such 
individuals participating as of January 1, 1996.''.

Summary: MedicareChoice Improvement and Stabilization Act of 2001 - Amends part C (MedicareChoice) of title XVIII (Medicare) of the Social Security Act (SSA) to make each annual MedicareChoice capitation rate for a MedicareChoice payment area for a contract year equal to the largest of the amounts specified under current law or, for 2003, 100 percent of the fee-for-service costs for the MedicareChoice payment area for services covered under Medicare parts A or B for individuals entitled to benefits under part A and enrolled under part B who are not enrolled in a MedicareChoice plan under this part for the year. Revises the calculation of the national standardized annual MedicareChoice capitation rate used in determining the input-price-adjusted annual national MedicareChoice capitation rate for a MedicareChoice payment area for calculation of annual MedicareChoice capitation rates for 2003. Eliminates budget neutrality in such calculation for a year other than 2003. Modifies requirements for establishment of standards for provider-sponsored organizations for MedicareChoice organizations and plans in relation to State laws to avoid duplicative State regulation. Directs the Secretary of Health and Human Services to conduct a demonstration program under which payment rules for MedicareChoice organizations are modified in order to promote: (1) the offering of MedicareChoice plans by preferred provider organizations, of MedicareChoice plans that provide point-of-sale coverage for other than participating providers, and of MSA plans: and (2) the use of disease management programs by MedicareChoice plans. Amends SSA title XVII part C to: (1) suspend the limitation for program reentry for MedicareChoice organizations for 2003 and 2004. And (2) set forth rules governing specialized MedicareChoice plans for special needs beneficiaries. Amends the Consolidated Omnibus Budget Reconciliation Act of 1985 to provide for extension of municipal health service demonstration projects.