I

104TH CONGRESS

1ST SESSION H. R. 2329

To amend title XVIII of the Social Security Act to provide protections

for medicare beneficiaries who enroll in medicare managed care plans.

IN THE HOUSE OF REPRESENTATIVES

SEPTEMBER 14, 1995

Mr. BROWN of Ohio 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 title XVIII of the Social Security Act to provide

protections for medicare beneficiaries who enroll in medicare managed care plans.

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.

4 This Act may be cited as the ‘‘Medicare Patient

5 Choice Act of 1995’’.

6 SEC. 2. FINDINGS.

7 Congress finds the following:
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1 (1) There should be no unreasonable barriers or

2 impediments to the ability of individuals enrolled in

3 health care plans to obtain appropriate specialized

4 medical services.

5 (2) The patient’s first point of contact in a

6 health care plan must be encouraged to make all ap7 propriate medical referrals and should not be con8 strained financially from making such referrals.

9 (3) Some health care plans may impede timely

10 access to specialty care.

11 (4) At any time, patients must be able to access

12 out-of-network items, treatment, and services at an

13 additional cost to the patient which is not so prohibi14 tive that they are deterred from seeing the health

15 care provider of their own choice.

16 (5) Specialty care must be available for the full

17 duration of the patient’s medical needs and not lim18 ited by time or number of visits.

19 (6) Direct access to specialty care is essential

20 for patients in emergency and nonemergency situa21 tions and for patients with chronic and temporary

22 conditions.

23 SEC. 3. PROTECTION FOR MEDICARE HMO ENROLLEES.

24 (a) IN GENERAL.—Section 1876 of the Social Secu25 rity Act (42 U.S.C. 1395mm) is amended—
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1 (1) in subsection (c)(1), by striking ‘‘subsection

2 (e)’’ and inserting ‘‘subsections (e) and (k)’’, and

3 (2) by adding at the end the following new sub4 section:

5 ‘‘(k) BENEFICIARY PROTECTION.—

6 ‘‘(1) MINIMUM LOSS RATIO.—

7 ‘‘(A) IN GENERAL.—Each eligible organi8 zation shall have a loss-ratio that is not less

9 than 85 percent for each contract year.

10 ‘‘(B) LOSS RATIO DEFINED.—In subpara11 graph (A), the term ‘loss-ratio’ means, with re12 spect to an organization for a contract year, the

13 ratio of (i) the anticipated aggregate benefits

14 provided under this section to enrollees for the

15 year, to (ii) the aggregate amount of the pre16 miums collected (including payments to the or17 ganization under subsection (a) for the year, as

18 estimated on the basis of incurred claims expe19 rience and earned premium for the year.

20 ‘‘(2) ASSURING ADEQUATE IN-NETWORK AC21 CESS.—

22 ‘‘(A) TIMELY ACCESS.—An eligible organi23 zation that restricts the providers from whom

24 benefits may be obtained must guarantee to en25 rollees under this section timely access to pri-
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1 mary and specialty health care providers who

2 are appropriate to the enrollee’s condition.

3 ‘‘(B) ACCESS TO SPECIALIZED CARE.—En4 rollees must have access to specialized treat5 ment when the treating provider deems nec6 essary. This access may be satisfied through

7 contractual arrangements with specialized pro8 viders outside of the network.

9 ‘‘(C) CONTINUITY OF CARE.—An eligible

10 organization’s use of case management may not

11 create an undue burden for enrollees under this

12 section. An organization must ensure direct ac13 cess to specialists for ongoing care as so deter14 mined by the case manager in consultation with

15 the specialty care provider. This continuity of

16 care may be satisfied for enrollees with chronic

17 conditions through the use of a specialist serv18 ing as case manager.

19 ‘‘(3) ASSURING OUT-OF-NETWORK ACCESS.—

20 ‘‘(A) IN GENERAL.—An eligible organiza21 tion that contracts with a specific network of

22 providers must offer its enrollees or their treat23 ing provider with the patient’s authorization

24 under this section, the ability at any time, to
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1 seek items, services, and treatment from out-of2 network providers for all covered benefits.

3 ‘‘(B) REIMBURSEMENT FOR OUT-OF-NET4 WORK SERVICES.—An eligible organization

5 under this section shall provide for reimburse6 ment for the enrollee, consistent with the cost7 sharing schedule established under subpara8 graph (C), with respect to out-of-network serv9 ices which are described in subparagraph (A),

10 so long as the services were medically appro11 priate, and were covered benefits in-network.

12 ‘‘(C) ESTABLISHMENT OF COST-SHARING

13 SCHEDULE.—In consultation with the National

14 Association of Insurance Commissioners, the

15 Secretary shall establish (by not later than one

16 year after enactment of this Act) a cost-sharing

17 schedule which applies to payment required

18 under subparagraph (B) for out-of-network

19 services.

20 ‘‘(4) APPROPRIATE RANGE OF SERVICES.—A

21 health plan shall not deny any health care profes22 sionals, based solely on the license or certification as

23 applicable under State law, the ability to participate

24 in providing covered health care services, or be reim25 bursed or indemnified or by a network plan for pro-
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1 viding such services. Organizations must ensure a

2 sufficient number, mix, and distribution of health

3 care professionals within a network plan to ensure

4 enrollees access to appropriate medical services.

5 ‘‘(5) GRIEVANCE AND APPEALS PROCESSES.—

6 ‘‘(A) GRIEVANCE PROCESS.—The organiza7 tion must provide meaningful procedures for

8 hearing and resolving grievances between the

9 organization (including any entity or individual

10 through which the organization provides health

11 care services) and members enrolled with the

12 organization under this section.

13 ‘‘(B) BOARD OF APPEALS.—

14 ‘‘(i) IN GENERAL.—Each eligible or15 ganization shall establish a board of ap16 peals to hear and make determinations on

17 complaints by enrollees concerning denials

18 of coverage or payment for services

19 (whether in-network or out-of-network)

20 and the medical necessity and appropriate21 ness of covered items and services.

22 ‘‘(ii) COMPOSITION.—A board of ap23 peals of an eligible organization shall con24 sist of—
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1 ‘‘(I) representatives of the orga2 nization, including physicians,

3 nonphysicians, administrators, and

4 enrollees;

5 ‘‘(II) consumers who are not en6 rollees and those who have disenrolled;

7 and

8 ‘‘(III) providers with expertise in

9 the field of medicine which neces10 sitates treatment.

11 ‘‘(iii) DEADLINE FOR DECISION.—A

12 board of appeals shall hear and resolve

13 complaints within 30 days after the date

14 the complaint is filed with the board.

15 ‘‘(C) APPEAL TO SECRETARY.—A member

16 enrolled in an eligible organization under this

17 section who is dissatisfied with a determination

18 of a board of appeals of the organization under

19 subparagraph (B) is entitled, if the amount in

20 controversy is $100 or more, to a hearing be21 fore the Secretary to the same extent as is pro22 vided in section 205(b), and in any such hear23 ing the Secretary shall make the eligible organi24 zation a party. If the amount in controversy is

25 $1,000 or more, the individual or eligible orga-
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1 nization shall, upon notifying the other party,

2 be entitled to judicial review of the Secretary’s

3 final decision as provided in section 205(g), and

4 both the individual and the eligible organization

5 shall be entitled to be parties to that judicial re6 view. In applying sections 205(b) and 205(g) as

7 provided in this subparagraph, and in applying

8 section 205(l) thereto, any reference therein to

9 the Commissioner of Social Security or the So10 cial Security Administration shall be considered

11 a reference to the Secretary or the Department

12 of Health and Human Services, respectively.

13 ‘‘(6) NOTICE OF ENROLLEE RIGHTS AND

14 CONSUMER REPORT CARD.—

15 ‘‘(A) IN GENERAL.—Each eligible organi16 zation shall provide each enrollee, at the time of

17 enrollment and not less frequently than annu18 ally thereafter, an explanation of the enrollee’s

19 rights under this section and a copy of the most

20 recent consumer report card for the organiza21 tion (as described in subparagraph (C)).

22 ‘‘(B) RIGHTS DESCRIBED.—The expla23 nation of rights under subparagraph (A) shall

24 include an explanation of—
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1 ‘‘(i) the enrollee’s rights to benefits

2 from the organization;

3 ‘‘(ii) the restrictions on payments

4 under this title for services furnished other

5 than by or through the organization;

6 ‘‘(iii) out-of-area coverage provided by

7 the organization;

8 ‘‘(iv) the organization’s coverage of

9 emergency services and urgently needed

10 care;

11 ‘‘(v) the organization’s coverage of

12 out-of-network services, including services

13 that are additional to the items and serv14 ices covered under parts A and B; and

15 ‘‘(vi) appeal rights of enrollees.

16 ‘‘(C) CONSUMER REPORT CARD.—For pur17 poses of subparagraph (A), the term ‘consumer

18 report card’ means, with respect to an eligible

19 organization for a year, a report issued by the

20 organization which contains indicators of the

21 quality of the services under this section pro22 vided by the organization during the year. In23 formation must be provided in a manner that

24 permits consumers to compare organizations

25 with respect to the following:
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1 ‘‘(i) For each plan, on—

2 ‘‘(I) the premium for the plan,

3 ‘‘(II) identity, location, qualifica4 tions, and availability of providers in

5 any provider networks of the plan,

6 ‘‘(III) the number of individuals

7 enrolling and disenrolling from the

8 plan,

9 ‘‘(IV) procedures used by the

10 plan to control utilization of services

11 and expenditures,

12 ‘‘(V) procedures used by the plan

13 to assure quality of care,

14 ‘‘(VI) the plan’s loss ratio, and

15 ‘‘(VII) rights and responsibilities

16 of enrollees.

17 ‘‘(ii) In addition, for each managed

18 care plan, on—

19 ‘‘(I) restrictions on payment for

20 services provided outside the plan’s

21 provider network,

22 ‘‘(II) the process by which serv23 ices may be obtained through the

24 plan’s provider network,
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1 ‘‘(III) coverage for out-of-area

2 services, and

3 ‘‘(IV) any exclusions in the types

4 of providers participating in the plan’s

5 provider network.

6 ‘‘(7) RESTRICTIONS ON PROVIDER INCENTIVE

7 PLANS.—

8 ‘‘(A) IN GENERAL.—Each contract with an

9 eligible organization under this section shall

10 provide that the organization may not operate

11 any provider incentive plan (as defined in sub12 paragraph (B)) unless the following require13 ments are met:

14 ‘‘(i) No specific payment is made di15 rectly or indirectly under the plan to a pro16 vider or provider group as an inducement

17 to reduce or limit medically necessary serv18 ices provided with respect to a specific in19 dividual enrolled with the organization.

20 ‘‘(ii) If the plan places a provider or

21 provider group at substantial financial risk

22 (as determined by the Secretary) for serv23 ices not provided by the provider or pro24 vider group, the organization—
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1 ‘‘(I) provides stop-loss protection

2 for the provider or group that is ade3 quate and appropriate, based on

4 standards developed by the Secretary

5 that take into account the number

6 (and type) of providers placed at such

7 substantial financial risk in the group

8 or under the plan and the number of

9 individuals enrolled with the organiza10 tion who receive services from the pro11 vider or the group, and

12 ‘‘(II) conducts periodic surveys of

13 both individuals enrolled and individ14 uals previously enrolled with the orga15 nization to determine the degree of

16 access of such individuals to services

17 provided by the organization and sat18 isfaction with the quality of such serv19 ices.

20 ‘‘(iii) The organization provides the

21 Secretary with descriptive information re22 garding the plan, sufficient to permit the

23 Secretary to determine whether the plan is

24 in compliance with the requirements of this

25 subparagraph.
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1 ‘‘(B) PROVIDER INCENTIVE PLAN DE2 FINED.—In this paragraph, the term ‘provider

3 incentive plan’ means any compensation ar4 rangement between an eligible organization and

5 a provider or provider group that may directly

6 or indirectly have the effect of reducing or lim7 iting services provided with respect to individ8 uals enrolled with the organization.

9 ‘‘(8) ADDITIONAL DEFINITIONS.—

10 ‘‘(A) IN-NETWORK.—The term ‘in-network’

11 means services provided by health care provid12 ers who have entered into a contract or agree13 ment with the organization under which such

14 providers are obligated to provide items, treat15 ment, and services under this section to individ16 uals enrolled with the organization under this

17 section.

18 ‘‘(B) NETWORK.—The term ‘network’

19 means, with respect to an eligible organization,

20 the health care providers who have entered into

21 a contract or agreement with the organization

22 under which such providers are obligated to

23 provide items, treatment, and services under

24 this section to individuals enrolled with the or25 ganization under this section.
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1 ‘‘(C) OUT-OF-NETWORK.—The term ‘out2 of-network’ means services provided by health

3 care providers who have not entered into a con4 tract agreement with the organization under

5 which such providers are obligated to provide

6 items, treatment, and services under this sec7 tion to individuals enrolled with the organiza8 tion under this section.’’.

9 (b) CONFORMING AMENDMENTS.—Section 1876 of

10 such Act is further amended—

11 (1) by striking subparagraph (E) of subsection

12 (c)(3);

13 (2) by striking paragraphs (4) and (5) of sub14 section (c); and

15 (3) by striking paragraph (8) of subsection (i).

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

17 this section shall apply to contract years beginning at least

18 60 days after the date the Secretary establishes the cost19 sharing schedule for out-of-network services under section

20 1876(k)(2)(C) of the Social Security Act (as added by sub21 section (a)(2)).

22 SEC. 4. APPLICATION OF PROTECTIONS TO MEDICARE SE23 LECT POLICIES.

24 (a) IN GENERAL.—Section 1882(t)(1) of the Social

25 Security Act (42 U.S.C. 1395ss(t)(1)) is amended—
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1 (1) by striking ‘‘and’’ at the end of subpara2 graph (E);

3 (2) by striking the period at the end of sub4 paragraph (F) and inserting a semicolon; and

5 (3) by adding at the end the following new sub6 paragraph:

7 ‘‘(G) notwithstanding any other provision

8 of this section to the contrary, if the issuer of

9 the policy—

10 ‘‘(i) meets the requirements of section

11 1876(k) with respect to individuals en12 rolled under the policy in the same manner

13 such requirements apply with respect to an

14 eligible organization under such section

15 with respect to individuals enrolled with

16 the organization under such section, and

17 ‘‘(ii) discloses (in a form and manner

18 specified by the Secretary) the loss ratio

19 described in subsection (r)(1) most re20 cently calculated for purposes of such sub21 section.’’.

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

23 subsection (a) shall apply to policies issued or renewed on

24 or after the effective date described in section 3(c).

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