I

106TH CONGRESS

1ST SESSION H. R. 491

To amend parts C and D of title XVIII of the Social Security Act to

improve the operation of the Medicare+Choice and Medigap programs.

IN THE HOUSE OF REPRESENTATIVES

FEBRUARY 2, 1999

Mr. STARK (for himself, Mr. BROWN of Ohio, Mrs. THURMAN, Mr. WAXMAN,

Mr. LEWIS of Georgia, Mr. MCDERMOTT, Mr. LEVIN, Mr. MATSUI, Mr.

NEAL of Massachusetts, Mr. FRANK of Massachusetts, Mr. MORAN of

Virginia, Mr. FROST, Mr. MARKEY, and Ms. SCHAKOWSKY) introduced

the following bill; which was referred to the Committee on Ways and

Means, and in addition to the Committee on Commerce, for a period to

be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee

concerned

A BILL

To amend parts C and D of title XVIII of the Social Security

Act to improve the operation of the Medicare+Choice

and Medigap programs.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE; AMENDMENTS TO SOCIAL SECU4 RITY ACT; TABLE OF CONTENTS.

5 (a) SHORT TITLE.—This Act may be cited as the

6 ‘‘Medicare+Choice Program Improvement Act of 1999’’.
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1 (b) AMENDMENTS TO SOCIAL SECURITY ACT.—Ex2 cept as otherwise specifically provided, whenever in this

3 Act an amendment is expressed in terms of an amendment

4 to or repeal of a section or other provision, the reference

5 shall be considered to be made to that section or other

6 provision of the Social Security Act.

7 (c) TABLE OF CONTENTS.—The table of contents of

8 this Act is as follows:

Sec. 1. Short title; amendments to Social Security Act; table of contents.

Sec. 2. Enrollment of medicare beneficiaries in alternative Medicare+Choice

plans and Medigap coverage in case of involuntary termination

of Medicare+Choice enrollment.

Sec. 3. Applying Medigap and Medicare+Choice protections to disabled and

ESRD medicare beneficiaries.

Sec. 4. Prohibition of attained-age rating of premiums for Medigap policies.

Sec. 5. Non-preemption of State prescription drug coverage mandates in case

of approved State Medigap waivers.

Sec. 6. Prohibition of cold-call marketing of Medicare+Choice plans.

Sec. 7. Flexibility in definition of service area under the Medicare+Choice program.

Sec. 8. 3-year phase-in of risk adjustment of Medicare+Choice plan payments.

Sec. 9. Delay in certain deadlines under the Medicare+Choice program.

Sec. 10. Taking into account costs of VA and DOD military facility services to

medicare-eligible beneficiaries in calculation of

Medicare+Choice plan payment rates.

Sec. 11. Increase in civil monetary penalties for failure to meet Medigap open

enrollment requirements.

Sec. 12. NAIC review and update of benefit packages for Medigap policies.

9 SEC. 2. ENROLLMENT OF MEDICARE BENEFICIARIES IN AL10 TERNATIVE MEDICARE+CHOICE PLANS AND

11 MEDIGAP COVERAGE IN CASE OF INVOLUN12 TARY TERMINATION OF MEDICARE+CHOICE

13 ENROLLMENT.

14 (a) PERMITTING ENROLLMENT IN ALTERNATIVE

15 PLANS UPON RECEIPT OF NOTICE OF

16 MEDICARE+CHOICE PLAN TERMINATION.—
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1 (1) ENROLLMENT IN ALTERNATIVE

2 MEDICARE+CHOICE PLANS.—Section 1851(e)(4) (42

3 U.S.C. 1395w–21(e)(4)) is amended—

4 (A) in subparagraph (A), by inserting be5 fore the semicolon at the end the following: ‘‘or

6 the organization or plan, respectively, has pro7 vided notice to the individual of the impending

8 termination (or termination or discontinuation,

9 respectively)’’; and

10 (B) by adding at the end the following: ‘‘In

11 the case described in subparagraph (A), the

12 right to make a new election under this para13 graph shall extend through the end of the next

14 annual, coordinated election period.’’.

15 (2) MEDIGAP PLANS.—Section 1882(s)(3)(A)

16 (42 U.S.C. 1395ss(s)(3)(A)) is amended, in the mat17 ter following clause (iii)—

18 (A) by inserting ‘‘(or, if elected by the in19 dividual, the date of notification of the individ20 ual by the plan or organization of the impend21 ing termination or discontinuance of the plan in

22 the area in which the individual resides)’’ after

23 ‘‘the date of the termination of enrollment de24 scribed in such subparagraph’’;
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1 (B) by inserting ‘‘(or date of such notifica2 tion, respectively)’’ after ‘‘the date of termi3 nation or disenrollment’’; and

4 (C) by inserting after ‘‘63 days’’ the fol5 lowing: ‘‘(or 92 days in the case of a termi6 nation or discontinuation of coverage under the

7 types of circumstances described in section

8 1851(e)(4)(A))’’.

9 (3) EFFECTIVE DATE.—The amendments made

10 by this subsection apply to notices of intended termi11 nation made by group health plans and

12 Medicare+Choice organizations after the date of the

13 enactment of this Act.

14 (b) GUARANTEED ACCESS FOR CERTAIN MEDICARE

15 BENEFICIARIES TO MEDIGAP POLICIES IN CASE OF IN16 VOLUNTARY TERMINATION OF COVERAGE UNDER A

17 MEDICARE+CHOICE PLAN.—

18 (1) IN GENERAL.—Section 1882(s)(3)(C)(iii)

19 (42 U.S.C. 1395ss(s)(3)(C)(iii)) is amended by in20 serting ‘‘or an individual described in subparagraph

21 (B)(ii) or (B)(iii) in the case of circumstances de22 scribed in section 1851(e)(4)(A)’’ after ‘‘subpara23 graph (B)(vi)’’.

24 (2) EFFECTIVE DATE.—
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1 (A) IN GENERAL.—Subject to subpara2 graph (B), the amendment made by paragraph

3 (1) applies to terminations of coverage effected

4 on or after the date of the enactment of this

5 Act.

6 (B) TRANSITIONAL MEDIGAP OPEN EN7 ROLLMENT PERIOD FOR CERTAIN INDIVIDUALS

8 AFFECTED BY PLAN WITHDRAWALS DURING

9 1998.—In the case of an individual described in

10 subparagraph (B)(ii) or (B)(iii) of section

11 1882(s)(3) of the Social Security Act in the

12 case of circumstances described in section

13 1851(e)(4)(A) of such Act (relating to dis14 continuation of a plan or organization entirely

15 or in an area), if the termination or discontinu16 ation of coverage occurred as of the end of

17 1998, and before the date of the enactment of

18 this Act, the provisions of subparagraph (A) of

19 section 1882(s)(3) such Act (in the matter up

20 to and including clause (iii) thereof) shall apply

21 to such an individual who seeks enrollment

22 under a medicare supplemental policy during

23 the 92-day period beginning with the first

24 month that begins more than 30 days after the

25 date of the enactment of this Act in the same
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1 manner as such provisions apply to an individ2 ual described in the matter following such

3 clause (iii).

4 SEC. 3. APPLYING MEDIGAP AND MEDICARE+CHOICE PRO5 TECTIONS TO DISABLED AND ESRD MEDI6 CARE BENEFICIARIES.

7 (a) ASSURING AVAILABILITY OF MEDIGAP COV8 ERAGE.—

9 (1) IN GENERAL.—Section 1882(s) (42 U.S.C.

10 1395ss(s)) is amended—

11 (A) in paragraph (2)(A), by striking ‘‘is 65

12 years of age or older and is’’ and inserting ‘‘is

13 first’’;

14 (B) in paragraph (2)(D), by striking ‘‘who

15 is 65 years of age or older as of the date of

16 issuance and’’; and

17 (C) paragraph (3)(B)(vi), by striking ‘‘at

18 age 65’’.

19 (2) EFFECTIVE DATE.—The amendments made

20 by paragraph (1) apply terminations of coverage ef21 fected on or after the date of the enactment of this

22 Act, regardless of when the individuals become eligi23 ble for benefits under part A or part B of title

24 XVIII of the Social Security Act.
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1 (b) PERMITTING ESRD BENEFICIARIES TO ELECT

2 ANOTHER MEDICARE+CHOICE PLAN IN CASE OF PLAN

3 DISCONTINUANCE.—

4 (1) IN GENERAL.—Section 1851(a)(3)(B) (42

5 U.S.C. 1395w–21(a)(3)(B)) is amended by striking

6 ‘‘except that’’ and all that follows and inserting the

7 following: ‘‘except that—

8 ‘‘(i) an individual who develops end9 stage renal disease while enrolled in a

10 Medicare+Choice plan may continue to be

11 enrolled in that plan; and

12 ‘‘(ii) in the case of such an individual

13 who is enrolled in a Medicare+Choice plan

14 under clause (i) (or subsequently under

15 this clause), if the enrollment is discon16 tinued under section 1851(e)(4)(A) the in17 dividual will be treated as a

18 ‘Medicare+Choice eligible individual’ for

19 purposes of electing to continue enrollment

20 in another Medicare+Choice plan.’’.

21 (2) EFFECTIVE DATE.—(A) The amendment

22 made by paragraph (1) applies to terminations and

23 discontinuations occurring on or after the date of

24 the enactment of this Act.
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1 (B) Clause (ii) of section 1851(a)(3)(B) of the Social

2 Security Act (as inserted by such amendment) also shall

3 apply to individuals whose enrollment in a

4 Medicare+Choice plan was terminated or discontinued as

5 of the end of 1998. In applying this subparagraph, such

6 an individual shall be treated, for purposes of part C of

7 title XVIII of the Social Security Act, as having discon8 tinued enrollment in such a plan as of the date of the

9 enactment of this Act.

10 SEC. 4. PROHIBITION OF ATTAINED-AGE RATING OF PRE11 MIUMS FOR MEDIGAP POLICIES.

12 Section 1882 (42 U.S.C. 1395ss) is amended by add13 ing at the end the following new subsection:

14 ‘‘(v)(1) A medicare supplemental policy may not be

15 issued or renewed (or otherwise provide coverage after the

16 deadline established under paragraph (2)) in any State

17 unless the premiums for the policy do not increase for an

18 individual under the policy based on the aging of the indi19 vidual.

20 ‘‘(2) The requirement of paragraph (1) shall apply

21 to premiums for policies under a timetable, recognized by

22 the Secretary, that provides for an appropriate phase-in

23 of such requirement. The Secretary shall recognize as the

24 timetable such timetable as the National Association of

25 Insurance Commissioners may recommend to the Sec-
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1 retary within 9 months after the date of the enactment

2 of this subsection.’’.

3 SEC. 5. NON-PREEMPTION OF STATE PRESCRIPTION DRUG

4 COVERAGE MANDATES IN CASE OF AP5 PROVED STATE MEDIGAP WAIVERS.

6 (a) IN GENERAL.—Section 1856(b)(3) (42 U.S.C.

7 1395w–26(b)(3)) is amended—

8 (1) in subparagraph (A), by striking ‘‘The

9 standards’’ and inserting ‘‘Subject to subparagraph

10 (C), the standards’’, and

11 (2) by adding at the end the following new sub12 paragraph:

13 ‘‘(C) CONTINUATION OF STATE PRESCRIP14 TION DRUG LAWS.—Subparagraph (A) shall not

15 supersede any State law that requires the com16 prehensive coverage of prescription drugs or

17 any regulation that carries out such a law, if—

18 ‘‘(i) the State has a waiver in effect

19 under section 1882(p)(6)(A) with respect

20 to requiring such coverage under medicare

21 supplemental policies; or

22 ‘‘(ii) the Secretary provides for a

23 waiver for the State to impose such a re24 quirement under section 1882(p)(6)(B).’’.
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1 (b) MEDIGAP WAIVER.—Section 1882(p)(6) (42

2 U.S.C. 1395ss(p)(6)) is amended—

3 (1) by inserting ‘‘(A)’’ after ‘‘(6)’’, and

4 (2) by adding at the end the following new sub5 paragraph:

6 ‘‘(B) The Secretary also may waive the application

7 of the standards described in paragraph (1)(A)(i) for a

8 State to include comprehensive prescription drug coverage

9 among the benefits required for all medicare supplemental

10 policies.’’.

11 (c) EFFECTIVE DATE.—The amendments made by

12 this section take effect on the date of the enactment of

13 this Act.

14 SEC. 6. PROHIBITION OF COLD-CALL MARKETING OF

15 MEDICARE+CHOICE PLANS.

16 (a) IN GENERAL.—Section 1851(h)(4) (42 U.S.C.

17 1395w–21(h)(4)) is amended—

18 (1) by striking ‘‘and’’ at the end of subpara19 graph (A),

20 (2) by striking the period at the end of sub21 paragraph (B) and inserting ‘‘; and’’, and

22 (3) by adding at the end the following new sub23 paragraph:

24 ‘‘(C) shall include a prohibition against, di25 rectly or indirectly, conducting door-to-door, tel-
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1 ephonic, or other ‘cold-call’ marketing of enroll2 ment under this part.’’.

3 (b) EFFECTIVE DATE.—The amendments made by

4 subsection (a) apply to marketing of enrollment conducted

5 on or after the date of the enactment of this Act.

6 SEC. 7. FLEXIBILITY IN DEFINITION OF SERVICE AREA

7 UNDER THE MEDICARE+CHOICE PROGRAM.

8 (a) IN GENERAL.—Section 1854(a) (42 U.S.C.

9 1395w–24(a)) is amended by adding at the end the follow10 ing new paragraph:

11 ‘‘(6) SPECIAL RULES FOR SERVICE AREAS.—

12 ‘‘(A) IN GENERAL.—For purposes of this

13 subsection, except as provided in this para14 graph, the term ‘service area’ means, for a

15 Medicare+Choice organization that—

16 ‘‘(i) offers commercial health insur17 ance coverage, that portion of the area

18 identical to the service area used for pur19 poses of offering such commercial cov20 erage; or

21 ‘‘(ii) is a provider-sponsored organiza22 tion that receives a Federal waiver of cer23 tain requirements under section 1855(a)(2)

24 and does not offer commercial health in25 surance coverage, such area proposed by
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1 the organization and approved by the Sec2 retary.

3 ‘‘(B) LIMITATION ON SERVICE AREA.—In

4 no case shall a service area for an organization

5 include any area in which the organization is

6 unable to provide benefits consistent with the

7 requirements of section 1852(d).

8 ‘‘(C) TRANSITION FOR CURRENT CONTRAC9 TORS.—In the case of a Medicare+Choice orga10 nization that has in effect a contract under this

11 part with the Secretary as of January 1, 1999,

12 subparagraph (A) shall not apply to a contract

13 year that begins before January 1, 2004, if the

14 organization provides evidence that it has not

15 (on or after January 1, 1999) eliminated, from

16 the service area under this part, any area in

17 which the organization continues to offer com18 mercial health insurance coverage.

19 ‘‘(D) PERMITTING USE OF SEPARATE COM20 MERCIAL RATING AREAS.—

21 ‘‘(i) IN GENERAL.—If a

22 Medicare+Choice organization offers com23 mercial health insurance coverage and has

24 multiple geographic areas with separate

25 premium rates, subject to clause (ii), each
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1 of those commercial geographic rating

2 areas may, at the option of the organiza3 tion, be treated as a separate service area.

4 ‘‘(ii) LIMITATION ON SIZE.—Unless

5 otherwise approved by the Secretary, in no

6 case shall a commercial geographic rating

7 area that includes less than an entire coun8 ty (or equivalent area) be treated as a sep9 arate service area.’’.

10 (b) EFFECTIVE DATE.—The amendment made by

11 subsection (a) applies to contract years beginning on or

12 after January 1, 2000.

13 SEC. 8. 3-YEAR PHASE-IN OF RISK ADJUSTMENT OF

14 MEDICARE+CHOICE PLAN PAYMENTS.

15 Section 1853(a)(3)(C) (42 U.S.C. 1395w–

16 23(a)(3)(C)) is amended by adding at the end the follow17 ing: ‘‘Such risk adjustment methodology shall be imple18 mented in a phased-in manner over a 3-year period.’’.

19 SEC. 9. DELAY IN CERTAIN DEADLINES UNDER THE

20 MEDICARE+CHOICE PROGRAM.

21 (a) DELAY IN RATE PROMULGATION DEADLINE.—

22 Section 1853(b)(1) (42 U.S.C. 1395w–23(b)(1)) is

23 amended by striking ‘‘March 1’’ and inserting ‘‘May 1’’.
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1 (b) DELAY IN DEADLINE FOR SUBMISSION OF AD2 JUSTED COMMUNITY RATES AND RELATED INFORMA3 TION.—

4 (1) IN GENERAL.—Section 1854(a)(1) (42

5 U.S.C. 1395w–24(a)(1)) is amended by striking

6 ‘‘May 1’’ and inserting ‘‘July 1’’.

7 (2) ADJUSTMENT IN INFORMATION DISCLOSURE

8 PROVISIONS.—Section 1851(d)(2)(A)(ii) (42 U.S.C.

9 1395w–21(d)(2)(A)(ii)) is amended by inserting

10 after ‘‘information described in paragraph (4) con11 cerning such plans’’ the following: ‘‘, to the extent

12 such information is available at the time of prepara13 tion of the material for mailing’’.

14 (c) DELAY IN DEADLINE FOR GUBERNATORIAL RE15 QUESTS FOR CHANGES IN PAYMENT AREAS.—Section

16 1853(d)(3) (42 U.S.C. 1395w–23(d)(3)) is amended by

17 striking ‘‘February 1’’ and inserting ‘‘March 1’’.

18 SEC. 10. TAKING INTO ACCOUNT COSTS OF VA AND DOD

19 MILITARY FACILITY SERVICES TO MEDICARE20 ELIGIBLE BENEFICIARIES IN CALCULATION

21 OF MEDICARE+CHOICE PLAN PAYMENT

22 RATES.

23 (a) IN GENERAL.—Section 1853(c)(3) (42 U.S.C.

24 1395w–23(c)(3)) is amended—
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1 (1) in subparagraph (A), by striking ‘‘subpara2 graph (B)’’ and inserting ‘‘subparagraphs (B) and

3 (E)’’, and

4 (2) by adding at the end the following new sub5 paragraph:

6 ‘‘(E) INCLUSION OF COSTS OF VA AND

7 DOD MILITARY FACILITY SERVICES TO MEDI8 CARE-ELIGIBLE BENEFICIARIES.—In determin9 ing the area-specific Medicare+Choice capita10 tion rate under subparagraph (A) for a year

11 (beginning with 2000), the annual per capita

12 rate of payment for 1997 determined under sec13 tion 1876(a)(1)(C) shall be adjusted to include

14 in the rate the Secretary’s best estimate on a

15 per capita basis of the amount of additional

16 payments that would have been made in the

17 area involved under this title if beneficiaries

18 under this title had not received services from

19 facilities of the Department of Veterans Affairs

20 or the Department of Defense.’’.

21 (b) BUDGET NEUTRALITY.—Section 1853(c) (42

22 U.S.C. 1395w–23(c)) is amended—

23 (1) in paragraph (1)(A), by striking ‘‘paragraph

24 (5)’’ and inserting ‘‘paragraph (5)(A)’’;
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1 (2) in paragraph (1)(C)(ii), by inserting before

2 the period at the end the following: ‘‘and multiplied

3 by the budget neutrality adjustment factor deter4 mined under paragraph (5)(B)’’; and

5 (3) in paragraph (5)—

6 (A) by striking ‘‘FACTOR.—’’ and inserting

7 ‘‘FACTORS.—(A)’’,

8 (B) by inserting ‘‘(not taking into account

9 subparagraph (B))’’ after ‘‘so that’’, and

10 (C) by adding at the end the following new

11 subparagraph:

12 ‘‘(B) For purposes of paragraph (1)(C)(ii),

13 for each year, the Secretary shall determine a

14 budget neutrality adjustment factor so that the

15 aggregate of the payments under this part shall

16 equal the aggregate payments that would have

17 been made under this part if paragraph (3)(E)

18 did not apply.’’.

19 SEC. 11. INCREASE IN CIVIL MONETARY PENALTIES FOR

20 FAILURE TO MEET MEDIGAP OPEN ENROLL21 MENT REQUIREMENTS.

22 (a) IN GENERAL.—Section 1882(s)(4) (42 U.S.C.

23 1395ss(s)(4)) is amended by striking ‘‘$5,000’’ and insert24 ing ‘‘$50,000’’.
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1 (b) EFFECTIVE DATE.—The amendment made by

2 subsection (a) applies to failures occurring on or after the

3 date of the enactment of this Act.

4 SEC. 12. NAIC REVIEW AND UPDATE OF BENEFIT PACK5 AGES FOR MEDIGAP POLICIES.

6 Section 1882(p) (42 U.S.C. 1395ss(p)) is amended—

7 (1) in paragraph (2), by striking ‘‘The bene8 fits’’ and inserting ‘‘Subject to paragraph (12), the

9 benefits’’; and

10 (2) by adding at the end the following new

11 paragraph:

12 ‘‘(12)(A) The Secretary may request the National As13 sociation of Insurance Commissioners to review the appro14 priateness of the benefit packages established under para15 graph (2) and, if appropriate, to recommend to the Sec16 retary from time to time recommendations for changes in

17 such packages to better reflect the needs of beneficiaries

18 and modern medical practice.

19 ‘‘(B) If a recommendation for a change in benefit

20 packages is recommended under subparagraph (A) and

21 the Secretary finds that implementation of such rec22 ommendation is appropriate and consistent with carrying

23 out the purposes of this section, the Secretary may provide

24 that any reference in this subsection to the 1991 NAIC

25 Model Regulation is deemed a reference to such Regula-
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1 tion as modified by the proposed recommendation. Any

2 such change shall take effect as specified by the Secretary

3 in such a manner as does not unduly disrupt the market4 ing of medicare supplemental policies.

5 ‘‘(C) Before implementing any recommendation

6 under subparagraph (B), the Secretary shall submit a re7 port to Congress on such recommendation, including a jus8 tification for the implementation of such recommenda9 tion.’’.

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