II

104TH CONGRESS

2D SESSION S. 2075

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

consumer protections for medicare supplemental insurance.

IN THE SENATE OF THE UNITED STATES

SEPTEMBER 16, 1996

Mr. CHAFEE (for himself and Mr. ROCKEFELLER) introduced the following

bill; which was read twice and referred to the Committee on Finance

A BILL

To amend title XVIII of the Social Security Act to provide

additional consumer protections for medicare supplemental insurance.

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 ‘‘Medigap Portability

5 Act of 1996’’.

6 SEC. 2. MEDIGAP AMENDMENTS.

7 (a) GUARANTEEING ISSUE WITHOUT PREEXISTING

8 CONDITIONS FOR CONTINUOUSLY COVERED INDIVID9 UALS.—Section 1882(s) of the Social Security Act (42

10 U.S.C. 1395ss(s)) is amended—
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1 (1) in paragraph (3), by striking ‘‘paragraphs

2 (1) and (2)’’ and inserting ‘‘this subsection’’,

3 (2) by redesignating paragraph (3) as para4 graph (4), and

5 (3) by inserting after paragraph (2) the follow6 ing new paragraph:

7 ‘‘(3)(A) The issuer of a medicare supplemental pol8 icy—

9 ‘‘(i) may not deny or condition the issuance or

10 effectiveness of a medicare supplemental policy de11 scribed in subparagraph (C);

12 ‘‘(ii) may not discriminate in the pricing of the

13 policy on the basis of the individual’s health status,

14 medical condition (including both physical and men15 tal illnesses), claims experience, receipt of health

16 care, medical history, genetic information, evidence

17 of insurability (including conditions arising out of

18 acts of domestic violence), or disability; and

19 ‘‘(iii) may not impose an exclusion of benefits

20 based on a pre-existing condition,

21 in the case of an individual described in subparagraph (B)

22 who seeks to enroll under the policy not later than 63 days

23 after the date of the termination of enrollment described

24 in such subparagraph.
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1 ‘‘(B) An individual described in this subparagraph is

2 an individual described in any of the following clauses:

3 ‘‘(i) The individual is enrolled with an eligible

4 organization under a contract under section 1876 or

5 with an organization under an agreement under sec6 tion 1833(a)(1)(A) and such enrollment ceases ei7 ther because the individual moves outside the service

8 area of the organization under the contract or agree9 ment or because of the termination or nonrenewal of

10 the contract or agreement.

11 ‘‘(ii) The individual is enrolled with an organi12 zation under a policy described in subsection (t) and

13 such enrollment ceases either because the individual

14 moves outside the service area of the organization

15 under the policy, because of the bankruptcy or insol16 vency of the insurer, or because the insurer closes

17 the block of business to new enrollment.

18 ‘‘(iii) The individual is covered under a medi19 care supplemental policy and such coverage is termi20 nated because of the bankruptcy or insolvency of the

21 insurer issuing the policy, because the insurer closes

22 the block of business to new enrollment, or because

23 the individual changes residence so that the individ24 ual no longer resides in a State in which the issuer

25 of the policy is licensed.
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1 ‘‘(iv) The individual is enrolled under an em2 ployee welfare benefit plan that provides health ben3 efits that supplement the benefits under this title

4 and the plan terminates or ceases to provide (or sig5 nificantly reduces) such supplemental health benefits

6 to the individual.

7 ‘‘(v)(I) The individual is enrolled with an eligi8 ble organization under a contract under section

9 1876 or with an organization under an agreement

10 under section 1833(a)(1)(A) and such enrollment is

11 terminated by the enrollee during the first 12

12 months of such enrollment, but only if the individual

13 never was previously enrolled with an eligible organi14 zation under a contract under section 1876 or with

15 an organization under an agreement under section

16 1833(a)(1)(A).

17 ‘‘(II) The individual is enrolled under a policy

18 described in subsection (t) and such enrollment is

19 terminated during the first 12 months of such en20 rollment, but only if the individual never was pre21 viously enrolled under such a policy under such sub22 section.

23 ‘‘(C)(i) Subject to clause (ii), a medicare supple24 mental policy described in this subparagraph, with respect

25 to an individual described in subparagraph (B), is a policy
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1 the benefits under which are comparable or lesser in rela2 tion to the benefits under the enrollment described in sub3 paragraph (B) (or, in the case of an individual described

4 in clause (ii), under the most recent medicare supple5 mental policy described in clause (ii)(II)).

6 ‘‘(ii) An individual described in this clause is an indi7 vidual who—

8 ‘‘(I) is described in subparagraph (B)(v), and

9 ‘‘(II) was enrolled in a medicare supplemental

10 policy within the 63 day period before the enrollment

11 described in such subparagraph.

12 ‘‘(iii) As a condition for approval of a State regu13 latory program under subsection (b)(1) and for purposes

14 of applying clause (i) to policies to be issued in the State,

15 the regulatory program shall provide for the method of

16 determining whether policy benefits are comparable or

17 lesser in relation to other benefits. With respect to a State

18 without such an approved program, the Secretary shall es19 tablish such method.

20 ‘‘(D) At the time of an event described in subpara21 graph (B) because of which an individual ceases enroll22 ment or loses coverage or benefits under a contract or

23 agreement, policy, or plan, the organization that offers the

24 contract or agreement, the insurer offering the policy, or

25 the administrator of the plan, respectively, shall notify the
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1 individual of the rights of the individual, and obligations

2 of issuers of medicare supplemental policies, under sub3 paragraph (A).’’.

4 (b) LIMITATION ON IMPOSITION OF PREEXISTING

5 CONDITION EXCLUSION DURING INITIAL OPEN ENROLL6 MENT PERIOD.—Section 1882(s)(2)(B) of such Act (42

7 U.S.C. 1395ss(s)(2)(B)) is amended to read as follows:

8 ‘‘(B) In the case of a policy issued during the 6-

9 month period described in subparagraph (A), the policy

10 may not exclude benefits based on a pre-existing condi11 tion.’’.

12 (c) CLARIFYING THE NONDISCRIMINATION REQUIRE13 MENTS DURING THE 6-MONTH INITIAL ENROLLMENT

14 PERIOD.—Section 1882(s)(2)(A) of such Act (42 U.S.C.

15 1395ss(s)(2)(A)) is amended to read as follows:

16 ‘‘(2)(A)(i) In the case of an individual described in

17 clause (ii), the issuer of a medicare supplemental policy—

18 ‘‘(I) may not deny or condition the issuance or

19 effectiveness of a medicare supplemental policy, and

20 ‘‘(II) may not discriminate in the pricing of the

21 policy on the basis of the individual’s health status,

22 medical condition (including both physical and men23 tal illnesses), claims experience, receipt of health

24 care, medical history, genetic information, evidence
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1 of insurability (including conditions arising out of

2 acts of domestic violence), or disability.

3 ‘‘(ii) An individual described in this clause is an indi4 vidual for whom an application is submitted before the end

5 of the 6-month period beginning with the first month as

6 of the first day on which the individual is 65 years of age

7 or older and is enrolled for benefits under part B.’’.

8 (d) EXTENDING 6-MONTH INITIAL ENROLLMENT

9 PERIOD TO NON-ELDERLY MEDICARE BENEFICIARIES.—

10 Section 1882(s)(2)(A)(ii) of such Act (42 U.S.C.

11 1395ss(s)(2)(A)), as amended by subsection (c), is amend12 ed by striking ‘‘is submitted’’ and all that follows and in13 serting the following: ‘‘is submitted—

14 ‘‘(I) before the end of the 6-month period be15 ginning with the first month as of the first day on

16 which the individual is 65 years of age or older and

17 is enrolled for benefits under part B; and

18 ‘‘(II) for each time the individual becomes eligi19 ble for benefits under part A pursuant to section

20 226(b) or 226A and is enrolled for benefits under

21 part B, before the end of the 6-month period begin22 ning with the first month as of the first day on

23 which the individual is so eligible and so enrolled.’’.

24 (e) EFFECTIVE DATES.—
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1 (1) GUARANTEED ISSUE.—The amendment

2 made by subsection (a) shall take effect on July 1,

3 1997.

4 (2) LIMIT ON PREEXISTING CONDITION EXCLU5 SIONS.—The amendment made by subsection (b)

6 shall apply to policies issued on or after July 1,

7 1997.

8 (3) CLARIFICATION OF NONDISCRIMINATION

9 REQUIREMENTS.—The amendment made by sub10 section (c) shall apply to policies issued on or after

11 July 1, 1997.

12 (4) EXTENSION OF ENROLLMENT PERIOD TO

13 DISABLED INDIVIDUALS.—

14 (A) IN GENERAL.—The amendment made

15 by subsection (d) shall take effect on July 1,

16 1997.

17 (B) TRANSITION RULE.—In the case of an

18 individual who first became eligible for benefits

19 under part A of title XVIII of the Social Secu20 rity Act pursuant to section 226(b) or 226A of

21 such Act and enrolled for benefits under part B

22 of such title before July 1, 1997, the 6-month

23 period described in section 1882(s)(2)(A) of

24 such Act shall begin on July 1, 1997. Before

25 July 1, 1997, the Secretary of Health and
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1 Human Services shall notify any individual de2 scribed in the previous sentence of their rights

3 in connection with medicare supplemental poli4 cies under section 1882 of such Act, by reason

5 of the amendment made by subsection (d).

6 (f) TRANSITION PROVISIONS.—

7 (1) IN GENERAL.—If the Secretary of Health

8 and Human Services identifies a State as requiring

9 a change to its statutes or regulations to conform its

10 regulatory program to the changes made by this sec11 tion, the State regulatory program shall not be con12 sidered to be out of compliance with the require13 ments of section 1882 of the Social Security Act due

14 solely to failure to make such change until the date

15 specified in paragraph (4).

16 (2) NAIC STANDARDS.—If, within 9 months

17 after the date of the enactment of this Act, the Na18 tional Association of Insurance Commissioners (in

19 this subsection referred to as the ‘‘NAIC’’) modifies

20 its NAIC Model Regulation relating to section 1882

21 of the Social Security Act (referred to in such sec22 tion as the 1991 NAIC Model Regulation, as modi23 fied pursuant to section 171(m)(2) of the Social Se24 curity Act Amendments of 1994 (Public Law 103–

25 432) and as modified pursuant to section
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1 1882(d)(3)(A)(vi)(IV) of the Social Security Act, as

2 added by section 271(a) of the Health Care Port3 ability and Accountability Act of 1996 (Public Law

4 104–191) to conform to the amendments made by

5 this section, such revised regulation incorporating

6 the modifications shall be considered to be the appli7 cable NAIC model regulation (including the revised

8 NAIC model regulation and the 1991 NAIC Model

9 Regulation) for the purposes of such section.

10 (3) SECRETARY STANDARDS.—If the NAIC

11 does not make the modifications described in para12 graph (2) within the period specified in such para13 graph, the Secretary of Health and Human Services

14 shall make the modifications described in such para15 graph and such revised regulation incorporating the

16 modifications shall be considered to be the appro17 priate Regulation for the purposes of such section.

18 (4) DATE SPECIFIED.—

19 (A) IN GENERAL.—Subject to subpara20 graph (B), the date specified in this paragraph

21 for a State is the earlier of—

22 (i) the date the State changes its stat23 utes or regulations to conform its regu24 latory program to the changes made by

25 this section, or
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1 (ii) 1 year after the date the NAIC or

2 the Secretary first makes the modifications

3 under paragraph (2) or (3), respectively.

4 (B) ADDITIONAL LEGISLATIVE ACTION RE5 QUIRED.—In the case of a State which the Sec6 retary identifies as—

7 (i) requiring State legislation (other

8 than legislation appropriating funds) to

9 conform its regulatory program to the

10 changes made in this section, but

11 (ii) having a legislature which is not

12 scheduled to meet in 1998 in a legislative

13 session in which such legislation may be

14 considered,

15 the date specified in this paragraph is the first

16 day of the first calendar quarter beginning after

17 the close of the first legislative session of the

18 State legislature that begins on or after July 1,

19 1998. For purposes of the previous sentence, in

20 the case of a State that has a 2-year legislative

21 session, each year of such session shall be

22 deemed to be a separate regular session of the

23 State legislature.

24 SEC. 3. INFORMATION FOR MEDICARE BENEFICIARIES.

25 (a) GRANT PROGRAM.—
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1 (1) IN GENERAL.—The Secretary of Health and

2 Human Services (in this section referred to as the

3 ‘‘Secretary’’) is authorized to provide grants to—

4 (A) private, independent, non-profit

5 consumer organizations, and

6 (B) State agencies,

7 to conduct programs to prepare and make available

8 to medicare beneficiaries comprehensive and under9 standable information on enrollment in health plans

10 with a medicare managed care contract and in medi11 care supplemental policies in which they are eligible

12 to enroll. Nothing in this section shall be construed

13 as preventing the Secretary from making a grant to

14 an organization under this section to carry out ac15 tivities for which a grant may be made under section

16 4360 of the Omnibus Budget Reconciliation Act of

17 1990 (Public Law 101–508).

18 (2) CONSUMER SATISFACTION SURVEYS.—Any

19 eligible organization with a medicare managed care

20 contract or any issuer of a medicare supplemental

21 policy shall—

22 (A) conduct, in accordance with minimum

23 standards approved by the Secretary, a

24 consumer satisfaction survey of the enrollees

25 under such contract or such policy; and
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1 (B) make the results of such survey avail2 able to the Secretary and the State Insurance

3 Commissioner of the State in which the enroll4 ees are so enrolled.

5 The Secretary shall make the results of such surveys

6 available to organizations which receive grants under

7 paragraph (1).

8 (3) INFORMATION.—

9 (A) CONTENTS.—The information de10 scribed in paragraph (1) shall include at least

11 a comparison of such contracts and policies, in12 cluding a comparison of the benefits provided,

13 quality and performance, the costs to enrollees,

14 the results of consumer satisfaction surveys on

15 such contracts and policies, as described in sub16 section (a)(2), and such additional information

17 as the Secretary may prescribe.

18 (B) INFORMATION STANDARDS.—The Sec19 retary shall develop standards and criteria to

20 ensure that the information provided to medi21 care beneficiaries under a grant under this sec22 tion is complete, accurate, and uniform.

23 (C) REVIEW OF INFORMATION.—The Sec24 retary may prescribe the procedures and condi25 tions under which an organization that has ob-
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1 tained a grant under this section may furnish

2 information obtained under the grant to medi3 care beneficiaries. Such information shall be

4 submitted to the Secretary at least 45 days be5 fore the date the information is first furnished

6 to such beneficiaries.

7 (4) CONSULTATION WITH OTHER ORGANIZA8 TIONS AND PROVIDERS.—An organization which re9 ceives a grant under paragraph (1) shall consult

10 with private insurers, managed care plan providers

11 and other health care providers, and public and pri12 vate purchasers of health care benefits in order to

13 provide the information described in paragraph (1).

14 (5) TERMS AND CONDITIONS.—To be eligible

15 for a grant under this section, an organization shall

16 prepare and submit to the Secretary an application

17 at such time, in such form, and containing such in18 formation as the Secretary may require. Grants

19 made under this section shall be in accordance with

20 terms and conditions specified by the Secretary.

21 (b) COST-SHARING.—

22 (1) IN GENERAL.—Each organization which

23 provides a medicare managed care contract or issues

24 a medicare supplemental policy (including a medi25 care select policy) shall pay to the Secretary its pro
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1 rata share (as determined by the Secretary) of the

2 estimated costs to be incurred by the Secretary in

3 providing the grants described in subsection (a).

4 (2) LIMITATION.—The total amount required to

5 be paid under paragraph (1) shall not exceed

6 $35,000,000 in any fiscal year.

7 (3) APPLICATION OF PROCEEDS.—Amounts re8 ceived under paragraph (1) are hereby appropriated

9 to the Secretary to defray the costs described in

10 such paragraph and shall remain available until ex11 pended.

12 (c) DEFINITIONS.—In this section:

13 (1) MEDICARE MANAGED CARE CONTRACT.—

14 The term ‘‘medicare managed care contract’’ means

15 a contract under section 1876 or section

16 1833(a)(1)(A) of the Social Security Act.

17 (2) MEDICARE SUPPLEMENTAL POLICY.—The

18 term ‘‘medicare supplemental policy’’ has the mean19 ing given such term in section 1882(g) of the Social

20 Security Act.

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