II

106TH CONGRESS

2D SESSION S. 3029

To amend part C of title XVIII to stabilize the Medicare+Choice program

by improving the methodology for the calculation of Medicare+Choice

payment rates, and for other purposes.

IN THE SENATE OF THE UNITED STATES

SEPTEMBER 12, 2000

Mr. SANTORUM introduced the following bill; which was read twice and

referred to the Committee on Finance

A BILL

To amend part C of title XVIII to stabilize the

Medicare+Choice program by improving the methodology

for the calculation of Medicare+Choice payment rates,

and for other purposes.

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; TABLE OF CONTENTS.

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

5 ‘‘Medicare Beneficiaries’ Choice Stabilization Act of

6 2000’’.

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

8 this Act is as follows:
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Sec. 1. Short title; table of contents.

Sec. 2. Establishment of payment floor for Medicare+Choice payment rates

after applying risk-adjustment methodology.

Sec. 3. Change in application of budget neutrality adjustment for 2001 and

2002.

Sec. 4. Increase in national per capita Medicare+Choice growth percentage in

2001 and 2002.

Sec. 5. Increasing minimum payment amount.

Sec. 6. Allowing movement to 50:50 percent blend in 2002.

Sec. 7. Increased update for payment areas with only one or no

Medicare+Choice contracts.

Sec. 8. Permitting higher negotiated rates in certain Medicare+Choice payment

areas below national average.

Sec. 9. 10-year phase in of risk adjustment based on data from all settings.

Sec. 10. Delay from July to November, 2000 in deadline for offering and withdrawing Medicare+Choice plans for 2001.

Sec. 11. Miscellaneous regulatory changes.

1 SEC. 2. ESTABLISHMENT OF PAYMENT FLOOR FOR

2 MEDICARE+CHOICE PAYMENT RATES AFTER

3 APPLYING RISK-ADJUSTMENT METHOD4 OLOGY.

5 (a) IN GENERAL.—Section 1853(c)(1) of the Social

6 Security Act (42 U.S.C. 1395w–23(c)(1)) is amended—

7 (1) in the matter preceding subparagraph (A),

8 by striking ‘or (C)’ and inserting ‘(C), or (D)’; and

9 (2) by adding at the end the following new sub10 paragraph:

11 ‘‘(D) DEMOGRAPHICALLY ADJUSTED FEE12 FOR-SERVICE PER CAPITA EXPENDITURES.—

13 ‘‘(i) IN GENERAL.—For 2001 and

14 each subsequent year, 90 percent of the

15 adjusted average per capita cost for the

16 year for the Medicare+Choice payment

17 area determined by the Secretary based
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1 upon the rule specified under paragraph

2 (4) of section 1876(a) and calculated with3 out regard to the adjustment under para4 graph (1)(C) of such section.

5 ‘‘(ii) SPECIAL RULE FOR RISK AD6 JUSTMENT.—For purposes of applying risk

7 adjustment to the payment amount deter8 mined under this subparagraph for a de9 mographic class, the risk adjustment for

10 such demographic class shall be deter11 mined under the methodology applied by

12 the Secretary under section 1876(a)(4)

13 without regard to subsection (a)(3) of this

14 section.’’.

15 (b) CONTINUATION OF COMPUTATION OF AAPCC

16 DATA.—Section 1853(b) of such Act (42 U.S.C. 1395w–

17 23(b)) is amended by adding at the end the following new

18 paragraph:

19 ‘‘(4) CONTINUED COMPUTATION AND PUBLICA20 TION OF COUNTY-SPECIFIC PER CAPITA FEE-FOR21 SERVICE EXPENDITURE INFORMATION.—Using the

22 most recent data available, the Secretary shall pro23 vide for the computation and publication, on an an24 nual basis at the time of publication of the annual

25 Medicare+Choice capitation rates, of information on
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1 the level of the average annual per capita costs (de2 scribed in section 1876(a)(4)) for each

3 Medicare+Choice payment area.’’.

4 SEC. 3. ELIMINATION OF BUDGET NEUTRALITY ADJUST5 MENT FOR 2001 AND 2002.

6 Section 1853(c) of the Social Security Act (42 U.S.C.

7 1395w–23(c)) is amended—

8 (1) in paragraph (1)(A) in the matter following

9 clause (ii), by inserting ‘‘for a year (other than 2001

10 or 2002)’’ after ‘‘multiplied’’; and

11 (2) in paragraph (5), by inserting ‘‘(other than

12 2001 or 2002)’’ after ‘‘for each year’’.

13 SEC. 4. INCREASE IN NATIONAL PER CAPITA

14 MEDICARE+CHOICE GROWTH PERCENTAGE

15 IN 2001 AND 2002.

16 Section 1853(c)(6)(B) of the Social Security Act (42

17 U.S.C. 1395w–23(c)(6)(B)) is amended—

18 (1) in clause (iv), by striking ‘‘for 2001, 0.5

19 percentage points’’ and inserting ‘‘for 2001, 0 per20 centage points’’; and

21 (2) in clause (v), by striking ‘‘for 2002, 0.3 per22 centage points’’ and inserting ‘‘for 2002, 0 percent23 age points’’.
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1 SEC. 5. INCREASING MINIMUM PAYMENT AMOUNT.

2 (a) IN GENERAL.—Section 1853(c)(1)(B)(ii) of the

3 Social Security Act (42 U.S.C. 1395w–23(c)(1)(B)(ii)) is

4 amended—

5 (1) by striking ‘‘(ii) For a succeeding year’’ and

6 inserting ‘‘(ii)(I) Subject to subclause (II), for a suc7 ceeding year’’; and

8 (2) by adding at the end the following new sub9 clause:

10 ‘‘(II) For 2001 for any of the 50

11 States and the District of Columbia,

12 $475.’’.

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

14 subsection (a) apply to years beginning with 2001.

15 SEC. 6. ALLOWING MOVEMENT TO 50:50 PERCENT BLEND IN

16 2002.

17 Section 1853(c)(2) of the Social Security Act (42

18 U.S.C. 1395w–23(c)(2)) is amended—

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

21 (2) by adding after and below subparagraph

22 (F) the following:

23 ‘‘except that a Medicare+Choice organization may

24 elect to apply subparagraph (F) (rather than sub25 paragraph (E)) for 2001 and for 2002.’’.
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1 SEC. 7. INCREASED UPDATE FOR PAYMENT AREAS WITH

2 ONLY ONE OR NO MEDICARE+CHOICE CON3 TRACTS.

4 (a) IN GENERAL.—Section 1853(c)(1)(C)(ii) of the

5 Social Security Act (42 U.S.C. 1395w–23(c)(1)(C)(ii)) is

6 amended—

7 (1) by striking ‘‘(ii) For a subsequent year’’

8 and inserting ‘‘(ii)(I) Subject to subclause (II), for

9 a subsequent year’’; and

10 (2) by adding at the end the following new sub11 clause:

12 ‘‘(II) During 2001, 2002, 2003, 2004,

13 and 2005, in the case of a

14 Medicare+Choice payment area in which

15 there is no more than one contract entered

16 into under this part as of July 1 before the

17 beginning of the year, 102.5 percent of the

18 annual Medicare+Choice capitation rate

19 under this paragraph for the area for the

20 previous year.’’.

21 (b) CONSTRUCTION.—The amendments made by sub22 section (a) do not affect the payment of a first time bonus

23 under section 1853(i) of the Social Security Act (42

24 U.S.C. 1395w–23(i)).
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1 SEC. 8. PERMITTING HIGHER NEGOTIATED RATES IN CER2 TAIN MEDICARE+CHOICE PAYMENT AREAS

3 BELOW NATIONAL AVERAGE.

4 Section 1853(c)(1) of the Social Security Act (42

5 U.S.C. 1395w–23(c)(1)) is amended—

6 (1) in the matter before subparagraph (A), by

7 striking ‘‘or (C)’’ and inserting ‘‘(C), or (D)’’; and

8 (2) by adding at the end the following new sub9 paragraph:

10 ‘‘(D) PERMITTING HIGHER RATES

11 THROUGH NEGOTIATION.—

12 ‘‘(i) IN GENERAL.—For each year be13 ginning with 2004, in the case of a

14 Medicare+Choice payment area for which

15 the Medicare+Choice capitation rate under

16 this paragraph would otherwise be less

17 than the United States per capita cost

18 (USPCC), as calculated by the Secretary,

19 a Medicare+Choice organization may ne20 gotiate with the Secretary an annual per

21 capita rate that—

22 ‘‘(I) reflects an annual rate of in23 crease up to the rate of increase speci24 fied in clause (ii);

25 ‘‘(II) takes into account audited

26 current data supplied by the organiza-
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1 tion on its adjusted community rate

2 (as defined in section 1854(f)(3)); and

3 ‘‘(III) does not exceed the United

4 States per capita cost, as projected by

5 the Secretary for the year involved.

6 ‘‘(ii) MAXIMUM RATE DESCRIBED.—

7 The rate of increase specified in this clause

8 for a year is the rate of inflation in private

9 health insurance for the year involved, as

10 projected by the Secretary, and includes

11 such adjustments as may be necessary—

12 ‘‘(I) to reflect the demographic

13 characteristics in the population under

14 this title; and

15 ‘‘(II) to eliminate the costs of

16 prescription drugs.

17 ‘‘(iii) ADJUSTMENTS FOR OVER OR

18 UNDER PROJECTIONS.—If subparagraph is

19 applied to an organization and payment

20 area for a year, in applying this subpara21 graph for a subsequent year the provisions

22 of paragraph (6)(C) shall apply in the

23 same manner as such provisions apply

24 under this paragraph.’’.
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1 SEC. 9. 10-YEAR PHASE IN OF RISK ADJUSTMENT BASED ON

2 DATA FROM ALL SETTINGS.

3 Section 1853(a)(3)(C)(ii) of the Social Security Act

4 (42 U.S.C. 1395w–23(c)(1)(C)(ii)) is amended—

5 (1) by striking the period at the end of sub6 clause (II) and inserting a semicolon; and

7 (2) by adding after and below subclause (II) the

8 following:

9 ‘‘and, beginning in 2004, insofar as such

10 risk adjustment is based on data from all

11 (or substantially all) settings, the method12 ology shall be phased in equal increments

13 over a 10 year period, beginning with 2004

14 or (if later) the first year in which such

15 data is used.’’.

16 SEC. 10. DELAY FROM JULY TO NOVEMBER, 2000 IN DEAD17 LINE FOR OFFERING AND WITHDRAWING

18 MEDICARE+CHOICE PLANS FOR 2001.

19 Notwithstanding any other provision of law, the dead20 line for a Medicare+Choice organization to withdraw the

21 offering of a Medicare+Choice plan under part C of title

22 XVIII of the Social Security Act (or otherwise to submit

23 information required for the offering of such a plan) for

24 2001 is delayed from July 1, 2000, to November 1, 2000,

25 and any such organization that provided notice of with26 drawal of such a plan during 2000 before the date of the
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1 enactment of this Act may rescind such withdrawal at any

2 time before November 1, 2000.

3 SEC. 11. MISCELLANEOUS REGULATORY CHANGES.

4 (a) PROHIBITION ON REQUIREMENT TO SUBMIT EN5 COUNTER DATA.—Section 1853(a)(3)(B) of the Social Se6 curity Act (42 U.S.C. 1395w–23(a)(3)(B)) is amended—

7 (1) by designating the matter following ‘‘DATA

8 COLLECTION’’ as a clause (i) with appropriate inden9 tation and the heading ‘‘IN GENERAL’’; and

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

11 clauses:

12 ‘‘(ii) ISSUANCE OF DATA SUBMISSION

13 REQUIREMENTS.—The Secretary may not

14 require under clause (i) the submission of

15 encounter data to support a risk adjust16 ment methodology based on all (or sub17 stantially all) settings until a reasonable

18 time after the Secretary issues the com19 plete requirements for data submission.

20 Such requirements shall be limited to the

21 minimum data elements necessary to sup22 port the risk adjustment methodology.

23 Such system shall be designed to accept

24 the required minimum data elements in a

25 form and manner compatible with
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1 Medicare+Choice organizations’ oper2 ations.

3 ‘‘(iii) EVALUATION.—In issuing such

4 data submission requirements, the Sec5 retary must include an evaluation by an

6 outside, independent actuary of whether

7 the proposed data elements are the min8 imum necessary to support the risk adjust9 ment methodology.’’.

10 (b) POST-STABILIZATION GUIDELINES.—Section

11 1852(d)(2) of such Act (42 U.S.C. 1395w–22(d)(2)) is

12 amended by adding at the end the following: ‘‘In pre13 scribing such guidelines—

14 ‘‘(A) post-stabilization care shall be limited

15 to care related to treatment of the condition

16 that precipitated the provision of emergency

17 services; and

18 ‘‘(B) the provider of emergency services is

19 not authorized to provide post-stabilization care

20 unless—

21 ‘‘(i) the Medicare+Choice organiza22 tion has been notified as soon as prac23 ticable, but not later than 2 hours after

24 stabilization, in advance of the request to

25 provide such care;
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1 ‘‘(ii) the organization has either ap2 proved the request or not responded to

3 such request within a reasonable period (of

4 at least 3 hours) after it has been notified;

5 and

6 ‘‘(iii) the emergency services provider

7 maintains a written documentation con8 cerning the notice and the organization’s

9 response to such notice.’’.

10 (c) ENROLLMENT PROCESS.—

11 (1) ALLOWING ON-LINE ENROLLMENT.—Sec12 tion 1851(c)(2) of such Act (42 U.S.C. 1395w–

13 21(c)(2)) is amended by adding at the end the fol14 lowing:

15 ‘‘(C) ON-LINE APPLICATIONS.—Such proc16 ess shall permit the filing of appropriate elec17 tion forms under subparagraphs (A) and (B) to

18 be done through electronic means (including use

19 of the Internet).’’.

20 (2) MORATORIUM ON CHANGES IN

21 MEDICARE+CHOICE ENROLLMENT RULES.—The

22 Secretary of Health and Human Services shall not

23 make any changes in the enrollment and

24 disenrollment instructions and related materials (in25 cluding operational policy letters and evidence of
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1 coverage) under the Medicare+Choice program

2 under part C of title XVIII of the Social Security

3 Act between the date of the enactment of this Act

4 and January 1, 2002, except as may be specifically

5 and only required to comply with a change in

6 statute.

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