II

104TH CONGRESS

1ST SESSION S. 839

To amend title XIX of the Social Security Act to permit greater flexibility

for States to enroll medicaid beneficiaries in managed care arrangements,

to remove barriers preventing the provision of medical assistance under

State medicaid plans through managed care, and for other purposes.

IN THE SENATE OF THE UNITED STATES

MAY 22 (legislative day, MAY 15), 1995

Mr. CHAFEE (for himself, Mr. GRAHAM, and Mr. CONRAD) introduced the

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

A BILL

To amend title XIX of the Social Security Act to permit

greater flexibility for States to enroll medicaid beneficiaries in managed care arrangements, to remove barriers preventing the provision of medical assistance under

State medicaid plans through managed care, 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.

4 This Act may be cited as the ‘‘Medicaid Managed

5 Care Act of 1995’’.
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1 SEC. 2. PERMITTING GREATER FLEXIBILITY FOR STATES

2 TO ENROLL BENEFICIARIES IN MANAGED

3 CARE ARRANGEMENTS.

4 (a) IN GENERAL.—Title XIX of the Social Security

5 Act (42 U.S.C. 1396 et seq.) is amended—

6 (1) by redesignating section 1931 as section

7 1932; and

8 (2) by inserting after section 1930 the following

9 new section:

10 ‘‘STATE OPTIONS FOR ENROLLMENT OF BENEFICIARIES

11 IN MANAGED CARE ARRANGEMENTS

12 ‘‘SEC. 1931. (a) MANDATORY ENROLLMENT.—

13 ‘‘(1) IN GENERAL.—Subject to the succeeding

14 provisions of this section, a State may require an in15 dividual eligible for medical assistance under the

16 State plan under this title to enroll with an eligible

17 managed care provider as a condition of receiving

18 such assistance and, with respect to assistance fur19 nished by or under arrangements with such provider,

20 to receive such assistance through the provider, if

21 the following provisions are met:

22 ‘‘(A) The provider meets the requirements

23 of section 1932.

24 ‘‘(B) The provider enters into a contract

25 with the State to provide services for the bene26 fit of individuals eligible for benefits under this
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1 title under which prepaid payments to such pro2 vider are made on an actuarially sound basis.

3 ‘‘(C) There is sufficient capacity among all

4 providers meeting such requirements to enroll

5 and serve the individuals required to enroll with

6 such providers.

7 ‘‘(D) The individual is not a special needs

8 individual (as defined in subsection (c)).

9 ‘‘(E) The State—

10 ‘‘(i) permits an individual to choose

11 an eligible managed care provider—

12 ‘‘(I) from among not less than 2

13 medicaid managed care plans; or

14 ‘‘(II) between a medicaid man15 aged care plan and a primary care

16 case management provider;

17 ‘‘(ii) provides the individual with the

18 opportunity to change enrollment among

19 eligible managed care providers not less

20 than once annually and notifies the indi21 vidual of such opportunity not later than

22 60 days prior to the first date on which

23 the individual may change enrollment;

24 ‘‘(iii) establishes a method for estab25 lishing enrollment priorities in the case of
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1 an eligible managed care provider that

2 does not have sufficient capacity to enroll

3 all such individuals seeking enrollment

4 under which individuals already enrolled

5 with the provider are given priority in con6 tinuing enrollment with the provider;

7 ‘‘(iv) establishes a default enrollment

8 process which meets the requirements de9 scribed in paragraph (2) and under which

10 any such individual who does not enroll

11 with an eligible managed care provider

12 during the enrollment period specified by

13 the State shall be enrolled by the State

14 with such a provider in accordance with

15 such process; and

16 ‘‘(v) establishes the sanctions provided

17 for in section 1933.

18 ‘‘(2) DEFAULT ENROLLMENT PROCESS RE19 QUIREMENTS.—The default enrollment process es20 tablished by a State under paragraph (1)(E)(iv)

21 shall—

22 ‘‘(A) provide that the State may not enroll

23 individuals with an eligible managed care pro24 vider which is not in compliance with the re25 quirements of section 1932; and
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1 ‘‘(B) provide for an equitable distribution

2 of individuals among all eligible managed care

3 providers available to enroll individuals through

4 such default enrollment process, consistent with

5 the enrollment capacities of such providers.

6 ‘‘(3) EXCEPTION FOR CERTAIN SERVICES.—A

7 State may not require an individual eligible for med8 ical assistance under the State plan under this title

9 to enroll with an eligible managed care provider as

10 a condition of receiving medical assistance consisting

11 of payment for medicare cost-sharing under section

12 1905(p)(3).

13 ‘‘(b) REENROLLMENT OF INDIVIDUALS WHO REGAIN

14 ELIGIBILITY.—

15 ‘‘(1) IN GENERAL.—If an individual eligible for

16 medical assistance under a State plan under this

17 title and enrolled with an eligible managed care pro18 vider with a contract under subsection (a)(1)(B)

19 ceases to be eligible for such assistance for a period

20 of not greater than 2 months, the State may provide

21 for the automatic reenrollment of the individual with

22 the provider as of the first day of the month in

23 which the individual is again eligible for such assist24 ance.
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1 ‘‘(2) CONDITIONS.—Paragraph (1) shall only

2 apply if—

3 ‘‘(A) the month for which the individual is

4 to be reenrolled occurs during the enrollment

5 period covered by the individual’s original en6 rollment with the eligible managed care pro7 vider;

8 ‘‘(B) the eligible managed care provider

9 continues to have a contract with the State

10 agency under subsection (a)(1)(B) as of the

11 first day of such month; and

12 ‘‘(C) the eligible managed care provider

13 complies with the requirements of section 1932.

14 ‘‘(3) NOTICE OF REENROLLMENT.—The State

15 shall provide timely notice to an eligible managed

16 care provider of any reenrollment of an individual

17 under this subsection.

18 ‘‘(c) SPECIAL NEEDS INDIVIDUALS DESCRIBED.—In

19 this section, a ‘special needs individual’ means any of the

20 following:

21 ‘‘(1) SPECIAL NEEDS CHILD.—An individual

22 who is under 19 years of age who—

23 ‘‘(A) is eligible for supplemental security

24 income under title XVI;
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1 ‘‘(B) is described under section

2 501(a)(1)(D);

3 ‘‘(C) is a child described in section

4 1902(e)(3); or

5 ‘‘(D) is in foster care or is otherwise in an

6 out-of-home placement.

7 ‘‘(2) HOMELESS INDIVIDUALS.—An individual

8 who is homeless (without regard to whether the indi9 vidual is a member of a family), including—

10 ‘‘(A) an individual whose primary residence

11 during the night is a supervised public or pri12 vate facility that provides temporary living ac13 commodations; or

14 ‘‘(B) an individual who is a resident in

15 transitional housing.

16 ‘‘(3) MIGRANT AGRICULTURAL WORKERS.—A

17 migratory agricultural worker or a seasonal agricul18 tural worker (as such terms are defined in section

19 329 of the Public Health Service Act), or the spouse

20 or dependent of such a worker.’’.

21 (b) CONFORMING AMENDMENT.—Section

22 1902(a)(23) of such Act (42 U.S.C. 1396a(a)(23)) is

23 amended—

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

25 by striking ‘‘subsection (g) and in section 1915’’ and
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1 inserting ‘‘subsection (g), section 1915, and section

2 1931,’’; and

3 (2) in subparagraph (B)—

4 (A) by striking ‘‘a health maintenance or5 ganization, or a’’ and inserting ‘‘or with an eli6 gible managed care provider, as defined in sec7 tion 1932(g)(1), or’’.

8 SEC. 3. REMOVAL OF BARRIERS TO PROVISION OF MEDIC9 AID SERVICES THROUGH MANAGED CARE.

10 (a) REPEAL OF CURRENT BARRIERS.—Except as

11 provided in subsection (b), section 1903(m) of the Social

12 Security Act (42 U.S.C. 1396b(m)) is repealed on the date

13 of the enactment of this Act.

14 (b) EXISTING CONTRACTS.—In the case of any con15 tract under section 1903(m) of such Act which is in effect

16 on the day before the date of the enactment of this Act,

17 the provisions of such section shall apply to such contract

18 until the earlier of—

19 (1) the day after the date of the expiration of

20 the contract; or

21 (2) the date which is 1 year after the date of

22 the enactment of this Act.

23 (c) ELIGIBLE MANAGED CARE PROVIDERS DE24 SCRIBED.—Title XIX of such Act (42 U.S.C. 1396 et

25 seq.), as amended by section 2(a), is amended—
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1 (1) by redesignating section 1932 as section

2 1933; and

3 (2) by inserting after section 1931 the following

4 new section:

5 ‘‘ELIGIBLE MANAGED CARE PROVIDERS

6 ‘‘SEC. 1932. (a) DEFINITIONS.—In this section, the

7 following definitions shall apply:

8 ‘‘(1) ELIGIBLE MANAGED CARE PROVIDER.—

9 The term ‘eligible managed care provider’ means—

10 ‘‘(A) a medicaid managed care plan; or

11 ‘‘(B) a primary care case management pro12 vider.

13 ‘‘(2) MEDICAID MANAGED CARE PLAN.—The

14 term ‘medicaid managed care plan’ means a health

15 maintenance organization or any other plan which

16 provides or arranges for the provision of one or more

17 items and services to individuals eligible for medical

18 assistance under the State plan under this title in

19 accordance with a contract with the State under sec20 tion 1931(a)(1)(B).

21 ‘‘(3) PRIMARY CARE CASE MANAGEMENT PRO22 VIDER.—

23 ‘‘(A) IN GENERAL.—The term ‘primary

24 care case management provider’ means a health

25 care provider that—
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1 ‘‘(i) is a physician, group of physi2 cians, a Federally-qualified health center, a

3 rural health clinic, or an entity employing

4 or having other arrangements with physi5 cians that provides or arranges for the pro6 vision of one or more items and services to

7 individuals eligible for medical assistance

8 under the State plan under this title in ac9 cordance with a contract with the State

10 under section 1931(a)(1)(B);

11 ‘‘(ii) receives payment on a fee-for12 service basis (or, in the case of a Feder13 ally-qualified health center or a rural

14 health clinic, on a reasonable cost per en15 counter basis) for the provision of health

16 care items and services specified in such

17 contract to enrolled individuals;

18 ‘‘(iii) receives an additional fixed fee

19 per enrollee for a period specified in such

20 contract for providing case management

21 services (including approving and arrang22 ing for the provision of health care items

23 and services specified in such contract on

24 a referral basis) to enrolled individuals;

25 and
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1 ‘‘(iv) is not an entity that is at risk.

2 ‘‘(B) AT RISK.—In subparagraph (A)(iv),

3 the term ‘at risk’ means an entity that—

4 ‘‘(i) has a contract with the State

5 under which such entity is paid a fixed

6 amount for providing or arranging for the

7 provision of health care items or services

8 specified in such contract to an individual

9 eligible for medical assistance under the

10 State plan and enrolled with such entity,

11 regardless of whether such items or serv12 ices are furnished to such individual; and

13 ‘‘(ii) is liable for all or part of the cost

14 of furnishing such items or services, re15 gardless of whether such cost exceeds such

16 fixed payment.

17 ‘‘(b) ENROLLMENT.—

18 ‘‘(1) NONDISCRIMINATION.—An eligible man19 aged care provider may not discriminate on the basis

20 of health status or anticipated need for services in

21 the enrollment, reenrollment, or disenrollment of in22 dividuals eligible to receive medical assistance under

23 a State plan under this title.

24 ‘‘(2) TERMINATION OF ENROLLMENT.—
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1 ‘‘(A) IN GENERAL.—An eligible managed

2 care provider shall permit an individual eligible

3 for medical assistance under the State plan

4 under this title who is enrolled with the pro5 vider to terminate such enrollment for cause at

6 any time, and without cause during the 60-day

7 period beginning on the date the individual re8 ceives notice of enrollment, and shall notify

9 each such individual of the opportunity to ter10 minate enrollment under these conditions.

11 ‘‘(B) FRAUDULENT INDUCEMENT OR CO12 ERCION AS GROUNDS FOR CAUSE.—For pur13 poses of subparagraph (A), an individual termi14 nating enrollment with an eligible managed care

15 provider on the grounds that the enrollment

16 was based on fraudulent inducement or was ob17 tained through coercion shall be considered to

18 terminate such enrollment for cause.

19 ‘‘(C) NOTICE OF TERMINATION.—

20 ‘‘(i) NOTICE TO STATE.—

21 ‘‘(I) BY INDIVIDUALS.—Each in22 dividual terminating enrollment with

23 an eligible managed care provider

24 under subparagraph (A) shall do so

25 by providing notice of the termination
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1 to an office of the State agency ad2 ministering the State plan under this

3 title, the State or local welfare agency,

4 or an office of an eligible managed

5 care provider.

6 ‘‘(II) BY PLANS.—Any eligible

7 managed care provider which receives

8 notice of an individual’s termination

9 of enrollment with such provider

10 through receipt of such notice at an

11 office of an eligible managed care pro12 vider shall provide timely notice of the

13 termination to the State agency ad14 ministering the State plan under this

15 title.

16 ‘‘(ii) NOTICE TO PLAN.—The State

17 agency administering the State plan under

18 this title or the State or local welfare agen19 cy which receives notice of an individual’s

20 termination of enrollment with an eligible

21 managed care provider under clause (i)

22 shall provide timely notice of the termi23 nation to such provider.

24 ‘‘(D) REENROLLMENT.—Each State shall

25 establish a process under which an individual
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1 terminating enrollment under this paragraph

2 shall be promptly enrolled with another eligible

3 managed care provider and notified of such en4 rollment.

5 ‘‘(3) PROVISION OF ENROLLMENT MATERIALS

6 IN UNDERSTANDABLE FORM.—Each eligible man7 aged care provider shall provide all enrollment mate8 rials in a manner and form which may be easily un9 derstood by a typical adult enrollee of the provider

10 who is eligible for medical assistance under the State

11 plan under this title.

12 ‘‘(c) QUALITY ASSURANCE.—

13 ‘‘(1) ACCESS TO SERVICES.—Each eligible man14 aged care provider shall provide or arrange for the

15 provision of all medically necessary medical assist16 ance under this title which is specified in the con17 tract entered into between such provider and the

18 State under section 1931(a)(1)(B) for enrollees who

19 are eligible for medical assistance under the State

20 plan under this title.

21 ‘‘(2) TIMELY DELIVERY OF SERVICES.—Each

22 eligible managed care provider shall respond to re23 quests from enrollees for the delivery of medical as24 sistance in a manner which—

25 ‘‘(A) makes such assistance—
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1 ‘‘(i) available and accessible to each

2 such individual, within the area served by

3 the provider, with reasonable promptness

4 and in a manner which assures continuity;

5 and

6 ‘‘(ii) when medically necessary, avail7 able and accessible 24 hours a day and 7

8 days a week; and

9 ‘‘(B) with respect to assistance provided to

10 such an individual other than through the pro11 vider, or without prior authorization, in the

12 case of a primary care case management pro13 vider, provides for reimbursement to the indi14 vidual (if applicable under the contract between

15 the State and the provider) if—

16 ‘‘(i) the services were medically nec17 essary and immediately required because of

18 an unforeseen illness, injury, or condition;

19 and

20 ‘‘(ii) it was not reasonable given the

21 circumstances to obtain the services

22 through the provider, or, in the case of a

23 primary care case management provider,

24 with prior authorization.
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1 ‘‘(3) EXTERNAL INDEPENDENT REVIEW OF ELI2 GIBLE MANAGED CARE PROVIDER ACTIVITIES.—

3 ‘‘(A) REVIEW OF MEDICAID MANAGED

4 CARE PLAN CONTRACT.—

5 ‘‘(i) IN GENERAL.—Except as pro6 vided in subparagraph (B), each medicaid

7 managed care plan shall be subject to an

8 annual external independent review of the

9 quality and timeliness of, and access to,

10 the items and services specified in such

11 plan’s contract with the State under sec12 tion 1931(a)(1)(B). Such review shall spe13 cifically evaluate the extent to which the

14 medicaid managed care plan provides such

15 services in a timely manner.

16 ‘‘(ii) AVAILABILITY OF RESULTS.—

17 The results of each external independent

18 review conducted under this subparagraph

19 shall be available to participating health

20 care providers, enrollees, and potential en21 rollees of the medicaid managed care plan,

22 except that the results may not be made

23 available in a manner that discloses the

24 identity of any individual patient.

25 ‘‘(B) DEEMED COMPLIANCE.—
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1 ‘‘(i) MEDICARE PLANS.—The require2 ments of subparagraph (A) shall not apply

3 with respect to a medicaid managed care

4 plan if the plan is an eligible organization

5 with a contract in effect under section

6 1876.

7 ‘‘(ii) PRIVATE ACCREDITATION.—

8 ‘‘(I) IN GENERAL.—The require9 ments of subparagraph (A) shall not

10 apply with respect to a medicaid man11 aged care plan if—

12 ‘‘(aa) the plan is accredited

13 by an organization meeting the

14 requirements described in clause

15 (iii); and

16 ‘‘(bb) the standards and

17 process under which the plan is

18 accredited meet such require19 ments as are established under

20 subclause (II), without regard to

21 whether or not the time require22 ment of such subclause is satis23 fied.

24 ‘‘(II) STANDARDS AND PROC25 ESS.—Not later than 180 days after
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1 the date of the enactment of this Act,

2 the Secretary shall specify require3 ments for the standards and process

4 under which a medicaid managed care

5 plan is accredited by an organization

6 meeting the requirements of clause

7 (iii).

8 ‘‘(iii) ACCREDITING ORGANIZATION.—

9 An accrediting organization meets the re10 quirements of this clause if the organiza11 tion—

12 ‘‘(I) is a private, nonprofit orga13 nization;

14 ‘‘(II) exists for the primary pur15 pose of accrediting managed care

16 plans or health care providers; and

17 ‘‘(III) is independent of health

18 care providers or associations of

19 health care providers.

20 ‘‘(C) REVIEW OF PRIMARY CARE CASE

21 MANAGEMENT PROVIDER CONTRACT.—Each

22 primary care case management provider shall

23 be subject to an annual external independent

24 review of the quality and timeliness of, and ac25 cess to, the items and services specified in the
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1 contract entered into between the State and the

2 primary care case management provider under

3 section 1931(a)(1)(B).

4 ‘‘(4) PROVIDING INFORMATION ON SERVICES.—

5 ‘‘(A) REQUIREMENTS FOR MEDICAID MAN6 AGED CARE PLANS.—

7 ‘‘(i) INFORMATION TO THE STATE.—

8 Each medicaid managed care plan shall

9 provide to the State (at such frequency as

10 the Secretary may require), complete and

11 timely information concerning the follow12 ing:

13 ‘‘(I) The services that the plan

14 provides to (or arranges to be pro15 vided to) individuals eligible for medi16 cal assistance under the State plan

17 under this title.

18 ‘‘(II) The identity, locations,

19 qualifications, and availability of par20 ticipating health care providers.

21 ‘‘(III) The rights and responsibil22 ities of enrollees.

23 ‘‘(IV) The services provided by

24 the plan which are subject to prior au25 thorization by the plan as a condition
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1 of coverage (in accordance with para2 graph (6)(A)).

3 ‘‘(V) The procedures available to

4 an enrollee and a health care provider

5 to appeal the failure of the plan to

6 cover a service.

7 ‘‘(VI) The performance of the

8 plan in serving individuals eligible for

9 medical assistance under the State

10 plan under this title.

11 ‘‘(ii) INFORMATION TO HEALTH CARE

12 PROVIDERS, ENROLLEES, AND POTENTIAL

13 ENROLLEES.—Each medicaid managed

14 care plan shall—

15 ‘‘(I) upon request, make the in16 formation described in clause (i) avail17 able to participating health care pro18 viders, enrollees, and potential enroll19 ees in the plan’s service area; and

20 ‘‘(II) provide to enrollees and po21 tential enrollees information regarding

22 all items and services that are avail23 able to enrollees under the contract

24 between the State and the plan that

25 are covered either directly or through
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1 a method of referral and prior author2 ization.

3 ‘‘(B) REQUIREMENTS FOR PRIMARY CARE

4 CASE MANAGEMENT PROVIDERS.—Each pri5 mary care case management provider shall—

6 ‘‘(i) provide to the State (at such fre7 quency as the Secretary may require),

8 complete and timely information concern9 ing the services that the primary care case

10 management provider provides to (or ar11 ranges to be provided to) individuals eligi12 ble for medical assistance under the State

13 plan under this title;

14 ‘‘(ii) make available to enrollees and

15 potential enrollees information concerning

16 services available to the enrollee for which

17 prior authorization by the primary care

18 case management provider is required; and

19 ‘‘(iii) provide enrollees and potential

20 enrollees information regarding all items

21 and services that are available to enrollees

22 under the contract between the State and

23 the primary care case management pro24 vider that are covered either directly or
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1 through a method of referral and prior au2 thorization.

3 ‘‘(C) REQUIREMENTS FOR BOTH MEDICAID

4 MANAGED CARE PLANS AND PRIMARY CARE

5 CASE MANAGEMENT PROVIDERS.—Each eligible

6 managed care provider shall provide the State

7 with aggregate encounter data for early and

8 periodic screening, diagnostic, and treatment

9 services under section 1905(r) furnished to in10 dividuals under 21 years of age. Any such data

11 provided may be audited by the State and the

12 Secretary.

13 ‘‘(5) TIMELINESS OF PAYMENT.—An eligible

14 managed care provider shall make payment to health

15 care providers for items and services which are sub16 ject to the contract under section 1931(a)(1)(B) and

17 which are furnished to individuals eligible for medi18 cal assistance under the State plan under this title

19 who are enrolled with the provider on a timely basis

20 and under the claims payment procedures described

21 in section 1902(a)(37)(A), unless the health care

22 provider and the eligible managed care provider

23 agree to an alternate payment schedule.
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1 ‘‘(6) ADDITIONAL QUALITY ASSURANCE RE2 QUIREMENTS FOR MEDICAID MANAGED CARE

3 PLANS.—

4 ‘‘(A) CONDITIONS FOR PRIOR AUTHORIZA5 TION.—A medicaid managed care plan may re6 quire the approval of medical assistance for

7 nonemergency services before the assistance is

8 furnished to an enrollee only if the system pro9 viding for such approval—

10 ‘‘(i) provides that such decisions are

11 made in a timely manner, depending upon

12 the urgency of the situation; and

13 ‘‘(ii) permits coverage of medically

14 necessary medical assistance provided to

15 an enrollee without prior authorization in

16 the event of an emergency.

17 ‘‘(B) INTERNAL GRIEVANCE PROCE18 DURE.—Each medicaid managed care plan shall

19 establish an internal grievance procedure under

20 which a plan enrollee or a provider on behalf of

21 such an enrollee who is eligible for medical as22 sistance under the State plan under this title

23 may challenge the denial of coverage of or pay24 ment for such assistance.
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1 ‘‘(C) USE OF UNIQUE PHYSICIAN IDENTI2 FIER FOR PARTICIPATING PHYSICIANS.—Each

3 medicaid managed care plan shall require each

4 physician providing services to enrollees eligible

5 for medical assistance under the State plan

6 under this title to have a unique identifier in

7 accordance with the system established under

8 section 1902(x).

9 ‘‘(D) PATIENT ENCOUNTER DATA.—

10 ‘‘(i) IN GENERAL.—Each medicaid

11 managed care plan shall maintain suffi12 cient patient encounter data to identify the

13 health care provider who delivers services

14 to patients and to otherwise enable the

15 State plan to meet the requirements of sec16 tion 1902(a)(27). The plan shall incor17 porate such information in the mainte18 nance of patient encounter data with re19 spect to such health care provider.

20 ‘‘(ii) COMPLIANCE.—A medicaid man21 aged care plan shall—

22 ‘‘(I) submit the data maintained

23 under clause (i) to the State; or

24 ‘‘(II) demonstrate to the State

25 that the data complies with managed
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1 care quality assurance guidelines es2 tablished by the Secretary in accord3 ance with clause (iii).

4 ‘‘(iii) STANDARDS.—In establishing

5 managed care quality assurance guidelines

6 under clause (ii)(II), the Secretary shall

7 consider—

8 ‘‘(I) managed care industry

9 standards for—

10 ‘‘(aa) internal quality assur11 ance; and

12 ‘‘(bb) performance meas13 ures; and

14 ‘‘(II) any managed care quality

15 standards established by the National

16 Association of Insurance Commis17 sioners.

18 ‘‘(d) DUE PROCESS REQUIREMENTS FOR ELIGIBLE

19 MANAGED CARE PROVIDERS.—

20 ‘‘(1) DENIAL OF OR UNREASONABLE DELAY IN

21 DETERMINING COVERAGE AS GROUNDS FOR HEAR22 ING.—If an eligible managed care provider—

23 ‘‘(A) denies coverage of or payment for

24 medical assistance with respect to an enrollee
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1 who is eligible for such assistance under the

2 State plan under this title; or

3 ‘‘(B) fails to make any eligibility or cov4 erage determination sought by an enrollee or, in

5 the case of a medicaid managed care plan, by

6 a participating health care provider or enrollee,

7 in a timely manner, depending upon the ur8 gency of the situation,

9 the enrollee or the health care provider furnishing

10 such assistance to the enrollee (as applicable) may

11 obtain a hearing before the State agency administer12 ing the State plan under this title in accordance

13 with section 1902(a)(3), but only, with respect to a

14 medicaid managed care plan, after completion of the

15 internal grievance procedure established by the plan

16 under subsection (c)(6)(B).

17 ‘‘(2) COMPLETION OF INTERNAL GRIEVANCE

18 PROCEDURE.—Nothing in this subsection shall re19 quire completion of an internal grievance procedure

20 if such procedure does not exist or if the procedure

21 does not provide for timely review of health needs

22 considered by the enrollee’s health care provider to

23 be of an urgent nature.

24 ‘‘(e) MISCELLANEOUS.—
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1 ‘‘(1) PROTECTING ENROLLEES AGAINST THE

2 INSOLVENCY OF ELIGIBLE MANAGED CARE PROVID3 ERS AND AGAINST THE FAILURE OF THE STATE TO

4 PAY SUCH PROVIDERS.—Each eligible managed care

5 provider shall provide that an individual eligible for

6 medical assistance under the State plan under this

7 title who is enrolled with the provider may not be

8 held liable—

9 ‘‘(A) for the debts of the eligible managed

10 care provider, in the event of the provider’s in11 solvency;

12 ‘‘(B) for services provided to the individ13 ual—

14 ‘‘(i) in the event of the provider fail15 ing to receive payment from the State for

16 such services; or

17 ‘‘(ii) in the event of a health care pro18 vider with a contractual or other arrange19 ment with the eligible managed care pro20 vider failing to receive payment from the

21 State or the eligible managed care provider

22 for such services; or

23 ‘‘(C) for the debts of any health care pro24 vider with a contractual or other arrangement

25 with the provider to provide services to the indi-
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1 vidual, in the event of the insolvency of the

2 health care provider.

3 ‘‘(2) TREATMENT OF CHILDREN WITH SPECIAL

4 HEALTH CARE NEEDS.—

5 ‘‘(A) IN GENERAL.—In the case of an en6 rollee of an eligible managed care provider who

7 is a child with special health care needs—

8 ‘‘(i) if any medical assistance specified

9 in the contract with the State is identified

10 in a treatment plan prepared for the en11 rollee by a program described in subpara12 graph (C), the eligible managed care pro13 vider shall provide (or arrange to be pro14 vided) such assistance in accordance with

15 the treatment plan either—

16 ‘‘(I) by referring the enrollee to a

17 pediatric health care provider who is

18 trained and experienced in the provi19 sion of such assistance and who has a

20 contract with the eligible managed

21 care provider to provide such assist22 ance; or

23 ‘‘(II) if appropriate services are

24 not available through the eligible man25 aged care provider, permitting such
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•S 839 IS

1 enrollee to seek appropriate specialty

2 services from pediatric health care

3 providers outside of or apart from the

4 eligible managed care provider; and

5 ‘‘(ii) the eligible managed care pro6 vider shall require each health care pro7 vider with whom the eligible managed care

8 provider has entered into an agreement to

9 provide medical assistance to enrollees to

10 furnish the medical assistance specified in

11 such enrollee’s treatment plan to the ex12 tent the health care provider is able to

13 carry out such treatment plan.

14 ‘‘(B) PRIOR AUTHORIZATION.—An enrollee

15 referred for treatment under subparagraph

16 (A)(i)(I), or permitted to seek treatment out17 side of or apart from the eligible managed care

18 provider under subparagraph (A)(i)(II) shall be

19 deemed to have obtained any prior authoriza20 tion required by the provider.

21 ‘‘(C) CHILD WITH SPECIAL HEALTH CARE

22 NEEDS.—For purposes of subparagraph (A), a

23 child with special health care needs is a child

24 who is receiving services under—
30

•S 839 IS

1 ‘‘(i) a program administered under

2 part B or part H of the Individuals with

3 Disabilities Education Act;

4 ‘‘(ii) a program for children with spe5 cial health care needs under title V;

6 ‘‘(iii) a program under part B or part

7 D of title IV; or

8 ‘‘(iv) any other program for children

9 with special health care needs identified by

10 the Secretary.

11 ‘‘(3) PHYSICIAN INCENTIVE PLANS.—Each

12 medicaid managed care plan shall require that any

13 physician incentive plan covering physicians who are

14 participating in the medicaid managed care plan

15 shall meet the requirements of section 1876(i)(8).

16 ‘‘(4) INCENTIVES FOR HIGH QUALITY ELIGIBLE

17 MANAGED CARE PROVIDERS.—The Secretary and the

18 State may establish a program to reward, through

19 public recognition, incentive payments, or enrollment

20 of additional individuals (or combinations of such re21 wards), eligible managed care providers that provide

22 the highest quality care to individuals eligible for

23 medical assistance under the State plan under this

24 title who are enrolled with such providers. For pur25 poses of section 1903(a)(7), proper expenses in-
31

•S 839 IS

1 curred by a State in carrying out such a program

2 shall be considered to be expenses necessary for the

3 proper and efficient administration of the State plan

4 under this title.’’.

5 (d) CLARIFICATION OF APPLICATION OF FFP DE6 NIAL RULES TO PAYMENTS MADE PURSUANT TO MEDIC7 AID MANAGED CARE PLANS.—Section 1903(i) of such Act

8 (42 U.S.C. 1396b(i)) is amended by adding at the end

9 the following sentence: ‘‘Paragraphs (1)(A), (1)(B), (2),

10 (5), and (12) shall apply with respect to items or services

11 furnished and amounts expended by or through an eligible

12 managed care provider (as defined in section 1932(a)(1))

13 in the same manner as such paragraphs apply to items

14 or services furnished and amounts expended directly by

15 the State.’’.

16 (e) CLARIFICATION OF CERTIFICATION REQUIRE17 MENTS FOR PHYSICIANS PROVIDING SERVICES TO CHIL18 DREN AND PREGNANT WOMEN.—Section 1903(i)(12) of

19 such Act (42 U.S.C. 1396b(i)(12)) is amended—

20 (1) in subparagraph (A)(i), to read as follows:

21 ‘‘(i) is certified in family practice or

22 pediatrics by the medical specialty board

23 recognized by the American Board of Med24 ical Specialties for family practice or pedi25 atrics or is certified in general practice or
32

•S 839 IS

1 pediatrics by the medical specialty board

2 recognized by the American Osteopathic

3 Association,’’;

4 (2) in subparagraph (B)(i), to read as follows:

5 ‘‘(i) is certified in family practice or

6 obstetrics by the medical specialty board

7 recognized by the American Board of Med8 ical Specialties for family practice or ob9 stetrics or is certified in family practice or

10 obstetrics by the medical specialty board

11 recognized by the American Osteopathic

12 Association,’’; and

13 (3) in both subparagraphs (A) and (B)—

14 (A) by striking ‘‘or’’ at the end of clause

15 (v);

16 (B) by redesignating clause (vi) as clause

17 (vii); and

18 (C) by inserting after clause (v) the follow19 ing new clause:

20 ‘‘(vi) delivers such services in the

21 emergency department of a hospital par22 ticipating in the State plan approved under

23 this title, or’’.
33

•S 839 IS

1 SEC. 4. ADDITIONAL REQUIREMENTS FOR MEDICAID MAN2 AGED CARE PLANS.

3 Section 1932 of the Social Security Act, as added by

4 section 3(c)(2), is amended—

5 (1) by redesignating subsections (d) and (e) as

6 subsections (e) and (f), respectively; and

7 (2) by inserting after subsection (c) the follow8 ing new subsection:

9 ‘‘(d) ADDITIONAL REQUIREMENTS FOR MEDICAID

10 MANAGED CARE PLANS.—

11 ‘‘(1) DEMONSTRATION OF ADEQUATE CAPACITY

12 AND SERVICES.—

13 ‘‘(A) IN GENERAL.—Subject to subpara14 graph (C), each medicaid managed care plan

15 shall provide the State and the Secretary with

16 adequate assurances (as determined by the Sec17 retary) that the plan, with respect to a service

18 area—

19 ‘‘(i) has the capacity to serve the ex20 pected enrollment in such service area;

21 ‘‘(ii) offers an appropriate range of

22 services for the population expected to be

23 enrolled in such service area, including

24 transportation services and translation

25 services consisting of the principal lan26 guages spoken in the service area;
34

•S 839 IS

1 ‘‘(iii) maintains sufficient numbers of

2 providers of services included in the con3 tract with the State to ensure that services

4 are available to individuals receiving medi5 cal assistance and enrolled in the plan to

6 the same extent that such services are

7 available to individuals enrolled in the plan

8 who are not recipients of medical assist9 ance under the State plan under this title;

10 ‘‘(iv) maintains extended hours of op11 eration with respect to primary care serv12 ices that are beyond those maintained dur13 ing a normal business day;

14 ‘‘(v) provides preventive and primary

15 care services in locations that are readily

16 accessible to members of the community;

17 and

18 ‘‘(vi) provides information concerning

19 educational, social, health, and nutritional

20 services offered by other programs for

21 which enrollees may be eligible.

22 ‘‘(B) PROOF OF ADEQUATE PRIMARY CARE

23 CAPACITY AND SERVICES.—Subject to subpara24 graph (C), a medicaid managed care plan that

25 contracts with a reasonable number of primary
35

•S 839 IS

1 care providers (as determined by the Secretary)

2 and whose primary care membership includes a

3 reasonable number (as so determined) of the

4 following providers will be deemed to have satis5 fied the requirements of subparagraph (A):

6 ‘‘(i) Rural health clinics, as defined in

7 section 1905(l)(1).

8 ‘‘(ii) Federally-qualified health cen9 ters, as defined in section 1905(l)(2)(B).

10 ‘‘(iii) Clinics which are eligible to re11 ceive payment for services provided under

12 title X of the Public Health Service Act.

13 ‘‘(C) SUFFICIENT PROVIDERS OF SPECIAL14 IZED SERVICES.—Notwithstanding subpara15 graphs (A) and (B), a medicaid managed care

16 plan may not be considered to have satisfied the

17 requirements of subparagraph (A) if the plan

18 does not have a sufficient number (as deter19 mined by the Secretary) of providers of special20 ized services, including perinatal and pediatric

21 specialty care, to ensure that such services are

22 available and accessible.

23 ‘‘(2) WRITTEN PROVIDER PARTICIPATION

24 AGREEMENTS FOR CERTAIN PROVIDERS.—Each

25 medicaid managed care plan that enters into a writ-
36

•S 839 IS

1 ten provider participation agreement with a provider

2 described in paragraph (1)(B) shall—

3 ‘‘(A) include terms and conditions that are

4 no more restrictive than the terms and condi5 tions that the medicaid managed care plan in6 cludes in its agreements with other participat7 ing providers with respect to—

8 ‘‘(i) the scope of covered services for

9 which payment is made to the provider;

10 ‘‘(ii) the assignment of enrollees by

11 the plan to the provider;

12 ‘‘(iii) the limitation on financial risk

13 or availability of financial incentives to the

14 provider;

15 ‘‘(iv) accessibility of care;

16 ‘‘(v) professional credentialing and

17 recredentialing;

18 ‘‘(vi) licensure;

19 ‘‘(vii) quality and utilization manage20 ment;

21 ‘‘(viii) confidentiality of patient

22 records;

23 ‘‘(ix) grievance procedures; and

24 ‘‘(x) indemnification arrangements be25 tween the plans and providers; and
37

•S 839 IS

1 ‘‘(B) provide for payment to the provider

2 on a basis that is comparable to the basis on

3 which other providers are paid.’’.

4 SEC. 5. PREVENTING FRAUD IN MEDICAID MANAGED CARE.

5 (a) IN GENERAL.—Section 1932 of the Social Secu6 rity Act, as added by section 3(c)(2) and amended by sec7 tion 4, is amended—

8 (1) by redesignating subsection (f) as sub9 section (g); and

10 (2) by inserting after subsection (e) the follow11 ing new subsection:

12 ‘‘(f) ANTI-FRAUD PROVISIONS.—

13 ‘‘(1) PROVISIONS APPLICABLE TO ELIGIBLE

14 MANAGED CARE PROVIDERS.—

15 ‘‘(A) PROHIBITING AFFILIATIONS WITH IN16 DIVIDUALS DEBARRED BY FEDERAL AGEN17 CIES.—

18 ‘‘(i) IN GENERAL.—An eligible man19 aged care provider may not knowingly—

20 ‘‘(I) have a person described in

21 clause (iii) as a director, officer, part22 ner, or person with beneficial owner23 ship of more than 5 percent of the

24 plan’s equity; or
38

•S 839 IS

1 ‘‘(II) have an employment, con2 sulting, or other agreement with a

3 person described in clause (iii) for the

4 provision of items and services that

5 are significant and material to the or6 ganization’s obligations under its con7 tract with the State.

8 ‘‘(ii) EFFECT OF NONCOMPLIANCE.—

9 If a State finds that an eligible managed

10 care provider is not in compliance with

11 subclause (I) or (II) of clause (i), the

12 State—

13 ‘‘(I) shall notify the Secretary of

14 such noncompliance;

15 ‘‘(II) may continue an existing

16 agreement with the provider unless

17 the Secretary (in consultation with the

18 Inspector General of the Department

19 of Health and Human Services) di20 rects otherwise; and

21 ‘‘(III) may not renew or other22 wise extend the duration of an exist23 ing agreement with the provider un24 less the Secretary (in consultation

25 with the Inspector General of the De-
39

•S 839 IS

1 partment of Health and Human Serv2 ices) provides to the State and to the

3 Congress a written statement describ4 ing compelling reasons that exist for

5 renewing or extending the agreement.

6 ‘‘(iii) PERSONS DESCRIBED.—A per7 son is described in this clause if such per8 son—

9 ‘‘(I) is debarred or suspended by

10 the Federal Government, pursuant to

11 the Federal acquisition regulation,

12 from Government contracting and

13 subcontracting;

14 ‘‘(II) is an affiliate (within the

15 meaning of the Federal acquisition

16 regulation) of a person described in

17 clause (i); or

18 ‘‘(III) is excluded from participa19 tion in any program under title XVIII

20 or any State health care program, as

21 defined in section 1128(h).

22 ‘‘(B) RESTRICTIONS ON MARKETING.—

23 ‘‘(i) DISTRIBUTION OF MATERIALS.—

24 ‘‘(I) IN GENERAL.—An eligible

25 managed care provider may not dis-
40

•S 839 IS

1 tribute marketing materials within

2 any State—

3 ‘‘(aa) without the prior ap4 proval of the State; and

5 ‘‘(bb) that contain false or

6 materially misleading informa7 tion.

8 ‘‘(II) PROHIBITION.—The State

9 may not enter into or renew a con10 tract with an eligible managed care

11 provider for the provision of services

12 to individuals enrolled under the State

13 plan under this title if the State de14 termines that the provider inten15 tionally distributed false or materially

16 misleading information in violation of

17 subclause (I)(bb).

18 ‘‘(ii) SERVICE MARKET.—An eligible

19 managed care provider shall distribute

20 marketing materials to the entire service

21 area of such provider.

22 ‘‘(iii) PROHIBITION OF TIE-INS.—An

23 eligible managed care provider, or any

24 agency of such provider, may not seek to

25 influence an individual’s enrollment with
41

•S 839 IS

1 the provider in conjunction with the sale of

2 any other insurance.

3 ‘‘(iv) PROHIBITING MARKETING

4 FRAUD.—Each eligible managed care pro5 vider shall comply with such procedures

6 and conditions as the Secretary prescribes

7 in order to ensure that, before an individ8 ual is enrolled with the provider, the indi9 vidual is provided accurate and sufficient

10 information to make an informed decision

11 whether or not to enroll.

12 ‘‘(2) PROVISIONS APPLICABLE ONLY TO MEDIC13 AID MANAGED CARE PLANS.—

14 ‘‘(A) STATE CONFLICT-OF-INTEREST SAFE15 GUARDS IN MEDICAID RISK CONTRACTING.—A

16 medicaid managed care plan may not enter into

17 a contract with any State under section

18 1931(a)(1)(B) unless the State has in effect

19 conflict-of-interest safeguards with respect to

20 officers and employees of the State with respon21 sibilities relating to contracts with such plans or

22 to the default enrollment process described in

23 section 1931(a)(1)(D)(iv) that are at least as

24 effective as the Federal safeguards provided

25 under section 27 of the Office of Federal Pro-
42

•S 839 IS

1 curement Policy Act (41 U.S.C. 423), against

2 conflicts of interest that apply with respect to

3 Federal procurement officials with comparable

4 responsibilities with respect to such contracts.

5 ‘‘(B) REQUIRING DISCLOSURE OF FINAN6 CIAL INFORMATION.—In addition to any re7 quirements applicable under section

8 1902(a)(27) or 1902(a)(35), a medicaid man9 aged care plan shall—

10 ‘‘(i) report to the State (and to the

11 Secretary upon the Secretary’s request)

12 such financial information as the State or

13 the Secretary may require to demonstrate

14 that—

15 ‘‘(I) the plan has the ability to

16 bear the risk of potential financial

17 losses and otherwise has a fiscally

18 sound operation;

19 ‘‘(II) the plan uses the funds

20 paid to it by the State and the Sec21 retary for activities consistent with

22 the requirements of this title and the

23 contract between the State and plan;

24 and
43

•S 839 IS

1 ‘‘(III) the plan does not place an

2 individual physician, physician group,

3 or other health care provider at sub4 stantial risk (as determined by the

5 Secretary) for services not provided by

6 such physician, group, or health care

7 provider, by providing adequate pro8 tection (as determined by the Sec9 retary) to limit the liability of such

10 physician, group, or health care pro11 vider, through measures such as stop

12 loss insurance or appropriate risk cor13 ridors;

14 ‘‘(ii) agree that the Secretary and the

15 State (or any person or organization des16 ignated by either) shall have the right to

17 audit and inspect any books and records of

18 the plan (and of any subcontractor) relat19 ing to the information reported pursuant

20 to clause (i) and any information required

21 to be furnished under section paragraphs

22 (27) or (35) of section 1902(a);

23 ‘‘(iii) make available to the Secretary

24 and the State a description of each trans25 action described in subparagraphs (A)
44

•S 839 IS

1 through (C) of section 1318(a)(3) of the

2 Public Health Service Act between the

3 plan and a party in interest (as defined in

4 section 1318(b) of such Act); and

5 ‘‘(iv) agree to make available to its

6 enrollees upon reasonable request—

7 ‘‘(I) the information reported

8 pursuant to clause (i); and

9 ‘‘(II) the information required to

10 be disclosed under sections 1124 and

11 1126.

12 ‘‘(C) ADEQUATE PROVISION AGAINST RISK

13 OF INSOLVENCY.—

14 ‘‘(i) ESTABLISHMENT OF STAND15 ARDS.—The Secretary shall establish

16 standards, including appropriate equity

17 standards, under which each medicaid

18 managed care plan shall make adequate

19 provision against the risk of insolvency.

20 ‘‘(ii) CONSIDERATION OF OTHER

21 STANDARDS.—In establishing the stand22 ards described in clause (i), the Secretary

23 shall consider—
45

•S 839 IS

1 ‘‘(I) such solvency standards as

2 the National Association of Insurance

3 Commissioners may prescribe; and

4 ‘‘(II) solvency standards applica5 ble to eligible organizations with a

6 risk-sharing contract under section

7 1876.

8 ‘‘(D) REQUIRING REPORT ON NET EARN9 INGS AND ADDITIONAL BENEFITS.—Each med10 icaid managed care plan shall submit a report

11 to the State and the Secretary not later than

12 12 months after the close of a contract year

13 containing—

14 ‘‘(i) the most recent audited financial

15 statement of the plan’s net earnings, in ac16 cordance with guidelines established by the

17 Secretary in consultation with the States,

18 and consistent with generally accepted ac19 counting principles; and

20 ‘‘(ii) a description of any benefits that

21 are in addition to the benefits required to

22 be provided under the contract that were

23 provided during the contract year to mem24 bers enrolled with the plan and entitled to
46

•S 839 IS

1 medical assistance under the State plan

2 under this title.’’.

3 SEC. 6. SANCTIONS FOR NONCOMPLIANCE BY ELIGIBLE

4 MANAGED CARE PROVIDERS.

5 (a) SANCTIONS DESCRIBED.—Title XIX of such Act

6 (42 U.S.C. 1396 et seq.), as amended by section 3(c), is

7 amended—

8 (1) by redesignating section 1933 as section

9 1934; and

10 (2) by inserting after section 1932 the following

11 new section:

12 ‘‘SANCTIONS FOR NONCOMPLIANCE BY ELIGIBLE

13 MANAGED CARE PROVIDERS

14 ‘‘SEC. 1933. (a) USE OF INTERMEDIATE SANCTIONS

15 BY THE STATE TO ENFORCE REQUIREMENTS.—Each

16 State shall establish intermediate sanctions, which may in17 clude any of the types described in subsection (b) other

18 than the termination of a contract with an eligible man19 aged care provider, which the State may impose against

20 an eligible managed care provider with a contract under

21 section 1931(a)(1)(B) if the provider—

22 ‘‘(1) fails substantially to provide medically nec23 essary items and services that are required (under

24 law or under such provider’s contract with the

25 State) to be provided to an enrollee covered under

26 the contract, if the failure has adversely affected (or
47

•S 839 IS

1 has a substantial likelihood of adversely affecting)

2 the enrollee;

3 ‘‘(2) imposes premiums on enrollees in excess of

4 the premiums permitted under this title;

5 ‘‘(3) acts to discriminate among enrollees on

6 the basis of their health status or requirements for

7 health care services, including expulsion or refusal to

8 reenroll an individual, except as permitted by sec9 tions 1931 and 1932, or engaging in any practice

10 that would reasonably be expected to have the effect

11 of denying or discouraging enrollment with the pro12 vider by eligible individuals whose medical condition

13 or history indicates a need for substantial future

14 medical services;

15 ‘‘(4) misrepresents or falsifies information that

16 is furnished—

17 ‘‘(A) to the Secretary or the State under

18 section 1931 or 1932; or

19 ‘‘(B) to an enrollee, potential enrollee, or a

20 health care provider under such sections; or

21 ‘‘(5) fails to comply with the requirements of

22 section 1876(i)(8).

23 ‘‘(b) INTERMEDIATE SANCTIONS.—The sanctions de24 scribed in this subsection are as follows:

25 ‘‘(1) Civil money penalties as follows:
48

•S 839 IS

1 ‘‘(A) Except as provided in subparagraph

2 (B), (C), or (D), not more than $25,000 for

3 each determination under subsection (a).

4 ‘‘(B) With respect to a determination

5 under paragraph (3) or (4)(A) of subsection

6 (a), not more than $100,000 for each such de7 termination.

8 ‘‘(C) With respect to a determination

9 under subsection (a)(2), double the excess

10 amount charged in violation of such subsection

11 (and the excess amount charged shall be de12 ducted from the penalty and returned to the in13 dividual concerned).

14 ‘‘(D) Subject to subparagraph (B), with

15 respect to a determination under subsection

16 (a)(3), $15,000 for each individual not enrolled

17 as a result of a practice described in such sub18 section.

19 ‘‘(2) The appointment of temporary manage20 ment to oversee the operation of the eligible man21 aged care provider and to assure the health of the

22 provider’s enrollees, if there is a need for temporary

23 management while—
49

•S 839 IS

1 ‘‘(A) there is an orderly termination or re2 organization of the eligible managed care pro3 vider; or

4 ‘‘(B) improvements are made to remedy

5 the violations found under subsection (a),

6 except that temporary management under this para7 graph may not be terminated until the State has de8 termined that the eligible managed care provider has

9 the capability to ensure that the violations shall not

10 recur.

11 ‘‘(3) Permitting individuals enrolled with the el12 igible managed care provider to terminate enroll13 ment without cause, and notifying such individuals

14 of such right to terminate enrollment.

15 ‘‘(c) TREATMENT OF CHRONIC SUBSTANDARD PRO16 VIDERS.—In the case of an eligible managed care provider

17 which has repeatedly failed to meet the requirements of

18 section 1931 or 1932, the State shall (regardless of what

19 other sanctions are provided) impose the sanctions de20 scribed in paragraphs (2) and (3) of subsection (b).

21 ‘‘(d) AUTHORITY TO TERMINATE CONTRACT.—In

22 the case of an eligible managed care provider which has

23 failed to meet the requirements of section 1931 or 1932,

24 the State shall have the authority to terminate its contract

25 with such provider under section 1931(a)(1)(B) and to en-
50

•S 839 IS

1 roll such provider’s enrollees with other eligible managed

2 care providers (or to permit such enrollees to receive medi3 cal assistance under the State plan under this title other

4 than through an eligible managed care provider).

5 ‘‘(e) AVAILABILITY OF SANCTIONS TO THE SEC6 RETARY.—

7 ‘‘(1) INTERMEDIATE SANCTIONS.—In addition

8 to the sanctions described in paragraph (2) and any

9 other sanctions available under law, the Secretary

10 may provide for any of the sanctions described in

11 subsection (b) if the Secretary determines that—

12 ‘‘(A) an eligible managed care provider

13 with a contract under section 1931(a)(1)(B)

14 fails to meet any of the requirements of section

15 1931 or 1932; and

16 ‘‘(B) the State has failed to act appro17 priately to address such failure.

18 ‘‘(2) DENIAL OF PAYMENTS TO THE STATE.—

19 The Secretary may deny payments to the State for

20 medical assistance furnished under the contract

21 under section 1931(a)(1)(B) for individuals enrolled

22 after the date the Secretary notifies an eligible man23 aged care provider of a determination under sub24 section (a) and until the Secretary is satisfied that
51

•S 839 IS

1 the basis for such determination has been corrected

2 and is not likely to recur.

3 ‘‘(f) DUE PROCESS FOR ELIGIBLE MANAGED CARE

4 PROVIDERS.—

5 ‘‘(1) AVAILABILITY OF HEARING PRIOR TO TER6 MINATION OF CONTRACT.—A State may not termi7 nate a contract with an eligible managed care pro8 vider under section 1931(a)(1)(B) unless the pro9 vider is provided with a hearing prior to the termi10 nation.

11 ‘‘(2) NOTICE TO ENROLLEES OF TERMINATION

12 HEARING.—A State shall notify all individuals en13 rolled with an eligible managed care provider which

14 is the subject of a hearing to terminate the provid15 er’s contract with the State of the hearing and that

16 the enrollees may immediately disenroll with the pro17 vider for cause.

18 ‘‘(3) OTHER PROTECTIONS FOR ELIGIBLE MAN19 AGED CARE PROVIDERS AGAINST SANCTIONS IM20 POSED BY STATE.—Before imposing any sanction

21 against an eligible managed care provider other than

22 termination of the provider’s contract, the State

23 shall provide the provider with notice and such other

24 due process protections as the State may provide,

25 except that a State may not provide an eligible man-
52

•S 839 IS

1 aged care provider with a pretermination hearing be2 fore imposing the sanction described in subsection

3 (b)(2).

4 ‘‘(4) IMPOSITION OF CIVIL MONETARY PEN5 ALTIES BY SECRETARY.—The provisions of section

6 1128A (other than subsections (a) and (b)) shall

7 apply with respect to a civil money penalty imposed

8 by the Secretary under subsection (b)(1) in the same

9 manner as such provisions apply to a penalty or pro10 ceeding under section 1128A.’’.

11 (b) CONFORMING AMENDMENT RELATING TO TERMI12 NATION OF ENROLLMENT FOR CAUSE.—Section

13 1932(b)(2)(B) of the Social Security Act, as added by sec14 tion 3(c)(2), is amended by inserting after ‘‘coercion’’ the

15 following: ‘‘, or pursuant to the imposition against the eli16 gible managed care provider of the sanction described in

17 section 1933(b)(3),’’.

18 SEC. 7. CONFORMING AMENDMENTS.

19 (a) EXCLUSION OF CERTAIN INDIVIDUALS AND EN20 TITIES FROM PARTICIPATION IN PROGRAM.—Section

21 1128(b)(6)(C) of the Social Security Act (42 U.S.C.

22 1320a–7(b)(6)(C)) is amended—

23 (1) in clause (i), by striking ‘‘a health mainte24 nance organization (as defined in section 1903(m))’’
53

•S 839 IS

1 and inserting ‘‘an eligible managed care provider, as

2 defined in section 1932(a)(1),’’; and

3 (2) in clause (ii), by inserting ‘‘section 1115 or’’

4 after ‘‘approved under’’.

5 (b) STATE PLAN REQUIREMENTS.—Section 1902 of

6 the Social Security Act (42 U.S.C. 1396a) is amended—

7 (1) in subsection (a)(30)(C), by striking ‘‘sec8 tion 1903(m)’’ and inserting ‘‘section

9 1931(a)(1)(B)’’; and

10 (2) in subsection (a)(57), by striking ‘‘hospice

11 program, or health maintenance organization (as de12 fined in section 1903(m)(1)(A))’’ and inserting ‘‘or

13 hospice program’’;

14 (3) in subsection (e)(2)(A), by striking ‘‘or with

15 an entity described in paragraph (2)(B)(iii), (2)(E),

16 (2)(G), or (6) of section 1903(m) under a contract

17 described in section 1903(m)(2)(A)’’;

18 (4) in subsection (p)(2)—

19 (A) by striking ‘‘a health maintenance or20 ganization (as defined in section 1903(m))’’ and

21 inserting ‘‘an eligible managed care provider, as

22 defined in section 1932(a)(1),’’;

23 (B) by striking ‘‘an organization’’ and in24 serting ‘‘a provider’’; and
54

•S 839 IS

1 (C) by striking ‘‘any organization’’ and in2 serting ‘‘any provider’’; and

3 (5) in subsection (w)(1), by striking ‘‘sections

4 1903(m)(1)(A) and’’ and inserting ‘‘section’’.

5 (c) PAYMENT TO STATES.—Section

6 1903(w)(7)(A)(viii) of the Social Security Act (42 U.S.C.

7 1396b(w)(7)(A)(viii)) is amended to read as follows:

8 ‘‘(viii) Services of an eligible managed care

9 provider with a contract under section

10 1931(a)(1)(B).’’.

11 (d) USE OF ENROLLMENT FEES AND OTHER

12 CHARGES.—Section 1916 of the Social Security Act (42

13 U.S.C. 1396o) is amended in subsections (a)(2)(D) and

14 (b)(2)(D) by striking ‘‘a health maintenance organization

15 (as defined in section 1903(m))’’ and inserting ‘‘an eligible

16 managed care provider, as defined in section 1932(a)(1),’’

17 each place it appears.

18 (e) EXTENSION OF ELIGIBILITY FOR MEDICAL AS19 SISTANCE.—Section 1925(b)(4)(D)(iv) of the Social Secu20 rity Act (42 U.S.C. 1396r–6(b)(4)(D)(iv)) is amended to

21 read as follows:

22 ‘‘(iv) ENROLLMENT WITH ELIGIBLE

23 MANAGED CARE PROVIDER.—Enrollment of

24 the caretaker relative and dependent chil25 dren with an eligible managed care pro-
55

•S 839 IS

1 vider, as defined in section 1932(a)(1), less

2 than 50 percent of the membership (en3 rolled on a prepaid basis) of which consists

4 of individuals who are eligible to receive

5 benefits under this title (other than be6 cause of the option offered under this

7 clause). The option of enrollment under

8 this clause is in addition to, and not in lieu

9 of, any enrollment option that the State

10 might offer under subparagraph (A)(i)

11 with respect to receiving services through

12 an eligible managed care provider in ac13 cordance with sections 1931, 1932, and

14 1933.’’.

15 (f) ASSURING ADEQUATE PAYMENT LEVELS FOR OB16 STETRICAL AND PEDIATRIC SERVICES.—Section 1926(a)

17 of the Social Security Act (42 U.S.C. 1396r–7(a)) is

18 amended in paragraphs (1) and (2) by striking ‘‘health

19 maintenance organizations under section 1903(m)’’ and

20 inserting ‘‘eligible managed care providers under contracts

21 entered into under section 1931(a)(1)(B)’’ each place it

22 appears.

23 (g) PAYMENT FOR COVERED OUTPATIENT DRUGS.—

24 Section 1927(j)(1) of the Social Security Act (42 U.S.C.

25 1396r–8(j)(1)) is amended by striking ‘‘***Health Main-
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1 tenance Organizations, including those organizations that

2 contract under section 1903(m),’’ and inserting ‘‘health

3 maintenance organizations and medicaid managed care

4 plans, as defined in section 1932(a)(2),’’.

5 (h) DEMONSTRATION PROJECTS TO STUDY EFFECT

6 OF ALLOWING STATES TO EXTEND MEDICAID COVERAGE

7 FOR CERTAIN FAMILIES.—Section 4745(a)(5)(A) of the

8 Omnibus Budget Reconciliation Act of 1990 (42 U.S.C.

9 1396a note) is amended by striking ‘‘(except section

10 1903(m)’’ and inserting ‘‘(except sections 1931, 1932, and

11 1933)’’.

12 SEC. 8. EFFECTIVE DATE; STATUS OF WAIVERS.

13 (a) EFFECTIVE DATE.—Except as provided in sub14 section (b), the amendments made by this Act shall apply

15 to medical assistance furnished—

16 (1) during quarters beginning on or after Octo17 ber 1, 1995; or

18 (2) in the case of assistance furnished under a

19 contract described in section 3(b), during quarters

20 beginning after the earlier of—

21 (A) the date of the expiration of the con22 tract; or

23 (B) the expiration of the 1-year period

24 which begins on the date of the enactment of

25 this Act.
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1 (b) APPLICATION TO WAIVERS.—

2 (1) EXISTING WAIVERS.—If any waiver granted

3 to a State under section 1115 or 1915 of the Social

4 Security Act (42 U.S.C. 1315, 1396n) or otherwise

5 which relates to the provision of medical assistance

6 under a State plan under title XIX of the such Act

7 (42 U.S.C. 1396 et seq.), is in effect or approved by

8 the Secretary of Health and Human Services (in this

9 subsection referred to as the ‘‘Secretary’’) as of the

10 applicable effective date described in subsection (a),

11 the amendments made by this Act shall not apply

12 with respect to the State before the expiration (de13 termined without regard to any extensions) of the

14 waiver to the extent such amendments are inconsist15 ent with the terms of the waiver.

16 (2) SECRETARIAL EVALUATION AND REPORT

17 FOR EXISTING WAIVERS AND EXTENSIONS.—

18 (A) PRIOR TO APPROVAL.—On and after

19 the applicable effective date described in sub20 section (a), the Secretary, prior to extending

21 any waiver granted under section 1115 or 1915

22 of the Social Security Act (42 U.S.C. 1315,

23 1396n) or otherwise which relates to the provi24 sion of medical assistance under a State plan
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1 under title XIX of the such Act (42 U.S.C.

2 1396 et seq.), shall—

3 (i) conduct an evaluation of—

4 (I) the waivers existing under

5 such sections or other provision of law

6 as of the date of the enactment of this

7 Act; and

8 (II) any applications pending, as

9 of the date of the enactment of this

10 Act, for extensions of waivers under

11 such sections or other provision of

12 law; and

13 (ii) submit a report to the Congress

14 recommending whether the extension of a

15 waiver under such sections or provision of

16 law should be conditioned on the State

17 submitting the request for an extension

18 complying with the provisions of sections

19 1931, 1932, and 1933 of the Social Secu20 rity Act (as added by this Act).

21 (B) DEEMED APPROVAL.—If the Congress

22 has not enacted legislation based on a report

23 submitted under subparagraph (A)(ii) within

24 120 days after the date such report is submit25 ted to the Congress, the recommendations con-
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1 tained in such report shall be deemed to be ap2 proved by the Congress.

3 (3) FUTURE WAIVERS.—

4 (A) IN GENERAL.—Except as provided in

5 paragraphs (1) and (2), and subparagraph (B),

6 the Secretary may not waive the application of

7 section 1931, 1932, or 1933 of such Act (as

8 added by this Act) with respect to any State.

9 (B) SPECIAL RULE REGARDING A WAIVER

10 OF THE REQUIREMENTS APPLICABLE TO ELIGI11 BLE MANAGED CARE PROVIDERS FOR CHIL12 DREN WITH SPECIAL HEALTH CARE NEEDS.—

13 Notwithstanding the provisions of subparagraph

14 (A), the Secretary may waive, pursuant to sec15 tion 1115 or 1915 of the Social Security Act

16 (42 U.S.C. 1315, 1396n), or otherwise, the ap17 plication of section 1932(g)(2) of such Act (as

18 added by this Act) if the State applying for the

19 waiver demonstrates that, with respect to each

20 eligible managed care provider having an en21 rollee who is a child with special health care

22 needs (as defined in section 1932(g)(2)(B) of

23 such Act), such provider shall—

24 (i) provide (or arrange to be provided)

25 any medical assistance specified in the pro-
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1 vider’s contract with the State that is iden2 tified in a treatment plan for the enrollee

3 prepared by a program described in section

4 1932(g)(2)(B) of such Act in accordance

5 with such treatment plan—

6 (I) without regard to any prior

7 authorization requirement which

8 would otherwise apply to the provision

9 of such assistance; and

10 (II) unless the eligible managed

11 care provider demonstrates to the sat12 isfaction of the Secretary that the

13 provider is or has an arrangement

14 with a health care provider with the

15 specialized pediatric expertise required

16 to provide the medical assistance spec17 ified in the treatment plan, without

18 regard to whether or not the health

19 care provider specified in the treat20 ment plan has otherwise entered into

21 an agreement with the eligible man22 aged care provider to provide medical

23 assistance to plan enrollees;

24 (ii) require each health care provider

25 with whom the eligible managed care pro-
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1 vider has entered into an agreement to

2 provide medical assistance to enrollees to

3 furnish medical assistance specified in such

4 treatment plan to the extent necessary to

5 carry out such treatment plan; and

6 (iii) demonstrate that it has adequate

7 written agreements with pediatric special8 ists as determined by the Secretary to en9 sure appropriate specialist care and refer10 rals.

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