I

104TH CONGRESS

1ST SESSION H. R. 2350

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 18, 1995

Mr. COBURN 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 and Access 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 non-emergency 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 not limit the ability of its enroll23 ees under this section to seek at any time items,

24 treatment, and services from out-of-network

25 providers for all covered benefits.
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1 ‘‘(B) REIMBURSEMENT FOR OUT-OF-NET2 WORK SERVICES.—An eligible organization

3 under this section shall provide for reimburse4 ment for the enrollee, consistent with the cost5 sharing schedule established under subpara6 graph (C), with respect to out-of-network serv7 ices which are described in subparagraph (A),

8 so long as the services were medically appro9 priate, and were covered benefits in-network.

10 ‘‘(C) ESTABLISHMENT OF COST-SHARING

11 SCHEDULE.—Each eligible organization shall

12 establish (by not later than one year after the

13 enactment of the Medicare Patient Choice and

14 Access Act of 1995) a cost-sharing schedule

15 which applies to payment required under sub16 paragraph (B) for out-of-network services.

17 ‘‘(4) GRIEVANCE AND APPEALS PROCESSES.—

18 ‘‘(A) GRIEVANCE PROCESS.—The organiza19 tion must provide meaningful procedures for

20 hearing and resolving grievances between the

21 organization (including any entity or individual

22 through which the organization provides health

23 care services) and members enrolled with the

24 organization under this section.

25 ‘‘(B) BOARD OF APPEALS.—
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1 ‘‘(i) IN GENERAL.—Each eligible or2 ganization shall establish a board of ap3 peals to hear and make determinations on

4 complaints by enrollees concerning denials

5 of coverage or payment for services

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

7 and the medical necessity and appropriate8 ness of covered items and services.

9 ‘‘(ii) COMPOSITION.—A board of ap10 peals of an eligible organization shall con11 sist of—

12 ‘‘(I) representatives of the orga13 nization, including physicians,

14 nonphysicians, administrators, and

15 enrollees;

16 ‘‘(II) consumers who are not en17 rollees; and

18 ‘‘(III) providers with expertise in

19 the field of medicine which neces20 sitates treatment.

21 ‘‘(iii) DEADLINE FOR DECISION.—A

22 board of appeals shall hear and resolve

23 complaints within 30 days after the date

24 the complaint is filed with the board.
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1 ‘‘(C) APPEAL TO SECRETARY.—Nothing in

2 this paragraph may be construed to replace or

3 supercede any appeals mechanism otherwise

4 provided for an individual entitled to benefits

5 under this title.

6 ‘‘(5) NOTICE OF ENROLLEE RIGHTS AND EN7 ROLLEE INFORMATION CHECKLIST.—

8 ‘‘(A) IN GENERAL.—Each eligible organi9 zation shall provide each enrollee, at the time of

10 enrollment and not less frequently than annu11 ally thereafter, an explanation of the enrollee’s

12 rights under this section and a copy of the most

13 recent enrollee information checklist for the or14 ganization (as described in subparagraph (C)).

15 ‘‘(B) RIGHTS DESCRIBED.—The expla16 nation of rights under subparagraph (A) shall

17 include an explanation of—

18 ‘‘(i) the enrollee’s rights to benefits

19 from the organization;

20 ‘‘(ii) the restrictions on payments

21 under this title for services furnished other

22 than by or through the organization;

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

24 the organization;
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1 ‘‘(iv) the organization’s coverage of

2 emergency services and urgently needed

3 care;

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

5 out-of-network services, including services

6 that are additional to the items and serv7 ices covered under parts A and B; and

8 ‘‘(vi) appeal rights of enrollees.

9 ‘‘(C) ENROLLEE INFORMATION CHECK10 LIST.—For purposes of subparagraph (A), the

11 term ‘enrollee information checklist’ means,

12 with respect to an eligible organization for a

13 year, a list containing the following information

14 (provided in a manner that permits consumers

15 to compare organizations with respect to the in16 formation):

17 ‘‘(i) For each plan, on—

18 ‘‘(I) the premium for the plan,

19 ‘‘(II) identity, location, qualifica20 tions and availability of providers in

21 any provider networks of the plan,

22 ‘‘(III) the number of individuals

23 enrolling and disenrolling from the

24 plan,
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1 ‘‘(IV) procedures used by the

2 plan to control utilization of services

3 and expenditures,

4 ‘‘(V) procedures used by the plan

5 to assure quality of care,

6 ‘‘(VI) the plan’s loss ratio, and

7 ‘‘(VII) rights and responsibilities

8 of enrollees.

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

10 care plan, on—

11 ‘‘(I) restrictions on payment for

12 services provided outside the plan’s

13 provider network,

14 ‘‘(II) the process by which serv15 ices may be obtained through the

16 plan’s provider network,

17 ‘‘(III) coverage for out-of-area

18 services, and

19 ‘‘(IV) any exclusions in the types

20 of providers participating in the plan’s

21 provider network.

22 ‘‘(6) RESTRICTIONS ON PROVIDER INCENTIVE

23 PLANS.—

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

25 eligible organization under this section shall
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1 provide that the organization may not operate

2 any provider incentive plan (as defined in sub3 paragraph (B)) unless the following require4 ments are met:

5 ‘‘(i) No specific payment is made di6 rectly or indirectly under the plan to a pro7 vider or provider group as an inducement

8 to reduce or limit medically necessary serv9 ices provided with respect to a specific in10 dividual enrolled with the organization.

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

12 provider group at substantial financial risk

13 (as determined by the Secretary) for serv14 ices not provided by the provider or pro15 vider group, the organization—

16 ‘‘(I) provides stop-loss protection

17 for the provider or group that is ade18 quate and appropriate, based on

19 standards developed by the Secretary

20 that take into account the number

21 (and type) of providers placed at such

22 substantial financial risk in the group

23 or under the plan and the number of

24 individuals enrolled with the organiza-
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1 tion who receive services from the pro2 vider or the group, and

3 ‘‘(II) conducts periodic surveys of

4 both individuals enrolled and individ5 uals previously enrolled with the orga6 nization to determine the degree of

7 access of such individuals to services

8 provided by the organization and sat9 isfaction with the quality of such serv10 ices.

11 ‘‘(iii) The organization provides the

12 Secretary with descriptive information re13 garding the plan, sufficient to permit the

14 Secretary to determine whether the plan is

15 in compliance with the requirements of this

16 subparagraph.

17 ‘‘(B) PROVIDER INCENTIVE PLAN DE18 FINED.—In this paragraph, the term ‘provider

19 incentive plan’ means any compensation ar20 rangement between an eligible organization and

21 a provider or provider group that may directly

22 or indirectly have the effect of reducing or lim23 iting medically necessary services provided with

24 respect to individuals enrolled with the organi25 zation.
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1 ‘‘(7) ADDITIONAL DEFINITIONS.—

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

3 means services provided by health care provid4 ers who have entered into a contract or agree5 ment with the organization under which such

6 providers are obligated to provide items, treat7 ment, and services under this section to individ8 uals enrolled with the organization under this

9 section.

10 ‘‘(B) NETWORK.—The term ‘network’

11 means, with respect to an eligible organization,

12 the health care providers who have entered into

13 a contract or agreement with the organization

14 under which such providers are obligated to

15 provide items, treatment, and services under

16 this section to individuals enrolled with the or17 ganization under this section.

18 ‘‘(C) OUT-OF-NETWORK.—The term ‘out19 of-network’ means services provided by health

20 care providers who have not entered into a con21 tract agreement with the organization under

22 which such providers are obligated to provide

23 items, treatment, and services under this sec24 tion to individuals enrolled with the organiza25 tion under this section.’’.
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1 (b) CONFORMING AMENDMENTS.—Section 1876 of

2 such Act is further amended—

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

4 (c)(3);

5 (2) by striking paragraphs (4) and (5) of sub6 section (c); and

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

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

9 this section shall apply to contracts entered into or re10 newed under section 1876 of the Social Security Act after

11 the expiration of the 1-year period which begins on the

12 date of the enactment of this Act.

13 SEC. 4. APPLICATION OF PROTECTIONS TO MEDICARE SE14 LECT POLICIES.

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

16 Security Act (42 U.S.C. 1395ss(t)(1)) is amended—

17 (1) by striking ‘‘and’’ at the end of subpara18 graph (E);

19 (2) by striking the period at the end of sub20 paragraph (F) and inserting a semicolon; and

21 (3) by adding at the end the following new sub22 paragraph:

23 ‘‘(G) notwithstanding any other provision

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

25 the policy—
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1 ‘‘(i) meets the requirements of section

2 1876(k) with respect to individuals en3 rolled under the policy in the same manner

4 such requirements apply with respect to an

5 eligible organization under such section

6 with respect to individuals enrolled with

7 the organization under such section, and

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

9 specified by the Secretary) the loss ratio

10 described in subsection (r)(1) most re11 cently calculated for purposes of such sub12 section.’’.

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

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

15 or after the expiration of the 1-year period which begins

16 on the date of the enactment of this Act.

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