II

103D CONGRESS

1ST SESSION S. 1426

To amend title XVIII of the Social Security Act and the Budget and Emergency Deficit Control Act of 1985 with respect to essential access community hospitals, the rural transition grant program, durable medical

equipment, adjustments to discretionary spending limits, standards for

medicare supplemental insurance policies, expansion and revision of medicare select policies, psychology services in hospitals, payment for anesthesia services furnished directly or concurrently in providers, improve reimbursement for clinical social worker services, and for other purposes.

IN THE SENATE OF THE UNITED STATES

AUGUST 6 (legislative day, JUNE 30), 1993

Mr. CONRAD (for himself, Mr. INOUYE, and Mr. BINGAMAN) 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 and the

Budget and Emergency Deficit Control Act of 1985 with

respect to essential access community hospitals, the rural

transition grant program, durable medical equipment,

adjustments to discretionary spending limits, standards

for medicare supplemental insurance policies, expansion

and revision of medicare select policies, psychology services in hospitals, payment for anesthesia services furnished directly or concurrently in providers, improve reimbursement for clinical social worker services, and for

other purposes.
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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; REFERENCES IN ACT.

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

5 ‘‘Essential Medicare Amendments of 1993’’.

6 (b) REFERENCES IN ACT.—Except as otherwise spe7 cifically provided, whenever in this Act, an amendment is

8 expressed in terms of an amendment to or repeal of a sec9 tion or other provision, the reference shall be considered

10 to be made to that section or other provision of the Social

11 Security Act.

12 SEC. 2. ESSENTIAL ACCESS COMMUNITY HOSPITAL (EACH)

13 AMENDMENTS.

14 (a) INCREASING NUMBER OF PARTICIPATING

15 STATES.—Section 1820(a)(1) (42 U.S.C. 1395i–4(a)(1))

16 is amended by striking ‘‘7’’ and inserting ‘‘9’’.

17 (b) TREATMENT OF INPATIENT HOSPITAL SERVICES

18 PROVIDED IN RURAL PRIMARY CARE HOSPITALS.—

19 (1) IN GENERAL.—Section 1820(f)(1)(F) (42

20 U.S.C. 1395i–4(f)(1)(F)) is amended to read as fol21 lows:

22 ‘‘(F) subject to paragraph (4), provides not

23 more than 6 inpatient beds (meeting such con24 ditions as the Secretary may establish) for pro25 viding inpatient care to patients requiring sta-
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1 bilization before discharge or transfer to a hos2 pital, except that the facility may not provide

3 any inpatient hospital services—

4 ‘‘(i) to any patient whose attending

5 physician does not certify that the patient

6 may reasonably be expected to be dis7 charged or transferred to a hospital within

8 72 hours of admission to the facility; or

9 ‘‘(ii) consisting of surgery or any

10 other service requiring the use of general

11 anesthesia (other than surgical procedures

12 specified by the Secretary under section

13 1833(i)(1)(A)), unless the attending physi14 cian certifies that the risk associated with

15 transferring the patient to a hospital for

16 such services outweighs the benefits of

17 transferring the patient to a hospital for

18 such services.’’.

19 (2) LIMITATION ON AVERAGE LENGTH OF

20 STAY.—Section 1820(f) (42 U.S.C. 1395i–4(f)) is

21 amended by adding at the end the following new

22 paragraph:

23 ‘‘(4) LIMITATION ON AVERAGE LENGTH OF IN24 PATIENT STAYS.—The Secretary may terminate a

25 designation of a rural primary care hospital under
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1 paragraph (1) if the Secretary finds that the average

2 length of stay for inpatients at the facility during

3 the previous year in which the designation was in ef4 fect exceeded 72 hours. In determining the compli5 ance of a facility with the requirement of the pre6 vious sentence, there shall not be taken into account

7 periods of stay of inpatients in excess of 72 hours

8 to the extent such periods exceed 72 hours because

9 transfer to a hospital is precluded because of inclem10 ent weather or other emergency conditions.’’.

11 (3) CONFORMING AMENDMENT.—Section

12 1814(a)(8) (42 U.S.C. 1395f(a)(8)) is amended by

13 striking ‘‘such services’’ and all that follows and in14 serting ‘‘the individual may reasonably be expected

15 to be discharged or transferred to a hospital within

16 72 hours after admission to the rural primary care

17 hospital.’’.

18 (4) GAO REPORTS.—Not later than 2 years

19 after the date of the enactment of this Act, the

20 Comptroller General shall submit reports to the Con21 gress on—

22 (A) the application of the requirements

23 under paragraphs (1)(F) and (4) of section

24 1820(f) of the Social Security Act (as amended

25 by this subsection); and
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1 (B) the extent to which such requirements

2 have resulted in such hospitals providing inpa3 tient care beyond their capabilities or have lim4 ited the ability of such hospitals to provide

5 needed services.

6 (c) DESIGNATION OF HOSPITALS.—

7 (1) PERMITTING DESIGNATION OF HOSPITALS

8 LOCATED IN URBAN AREAS.—

9 (A) IN GENERAL.—Section 1820 (42

10 U.S.C. 1395i–4) is amended—

11 (i) by striking paragraph (1) of sub12 section (e) and redesignating paragraphs

13 (2) through (6) of subsection (e) as para14 graphs (1) through (5);

15 (ii) in subsection (e)(1)(A), as redesig16 nated by subparagraph (A)—

17 (I) by striking ‘‘is located’’ and

18 inserting ‘‘except in the case of a hos19 pital located in an urban area, is lo20 cated’’

21 (II) by striking ‘‘, (ii)’’ and in22 serting ‘‘or (ii)’’, and

23 (III) by striking ‘‘or (iii)’’ and all

24 that follows through ‘‘section,’’; and
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1 (iii) in subsection (i)(1)(B), by strik2 ing ‘‘paragraph (3)’’ and inserting ‘‘para3 graph (2)’’.

4 (B) NO CHANGE IN MEDICARE PROSPEC5 TIVE PAYMENT.—Section 1886(d)(5)(D) (42

6 U.S.C. 1395ww(d)(5)(D)) is amended—

7 (i) in clause (iii)(III), by inserting ‘‘lo8 cated in a rural area and’’ after ‘‘that is’’,

9 and

10 (ii) in clause (v), by inserting ‘‘located

11 in a rural area and’’ after ‘‘in the case of

12 a hospital’’.

13 (2) PERMITTING HOSPITALS LOCATED IN AD14 JOINING STATES TO PARTICIPATE IN STATE PRO15 GRAM.—

16 (A) IN GENERAL.—Section 1820 (42

17 U.S.C. 1395i–4) is amended—

18 (i) by redesignating subsection (k) as

19 subsection (l); and

20 (ii) by inserting after subsection (j)

21 the following new subsection:

22 ‘‘(k) ELIGIBILITY OF HOSPITALS NOT LOCATED IN

23 PARTICIPATING STATES.—Notwithstanding any other

24 provision of this section—
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1 ‘‘(1) for purposes of including a hospital or fa2 cility as a member institution of a rural health net3 work, a State may designate a hospital or facility

4 that is not located in the State as an essential access

5 community hospital or a rural primary care hospital

6 if the hospital or facility is located in an adjoining

7 State and is otherwise eligible for designation as

8 such a hospital;

9 ‘‘(2) the Secretary may designate a hospital or

10 facility that is not located in a State receiving a

11 grant under subsection (a)(1) as an essential access

12 community hospital or a rural primary care hospital

13 if the hospital or facility is a member institution of

14 a rural health network of a State receiving a grant

15 under such subsection; and

16 ‘‘(3) a hospital or facility designated pursuant

17 to this subsection shall be eligible to receive a grant

18 under subsection (a)(2).’’.

19 (B) CONFORMING AMENDMENTS.—(i) Sec20 tion 1820(c)(1) (42 U.S.C. 1395i–4(c)(1)) is

21 amended by striking ‘‘paragraph (3)’’ and in22 serting ‘‘paragraph (3) or subsection (k)’’.

23 (ii) Paragraphs (1)(A) and (2)(A) of sec24 tion 1820(i) (42 U.S.C. 1395i–4(i)) are each

25 amended—
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1 (I) in clause (i), by striking ‘‘(a)(1)’’

2 and inserting ‘‘(a)(1) (except as provided

3 in subsection (k))’’, and

4 (II) in clause (ii), by striking ‘‘sub5 paragraph (B)’’ and inserting ‘‘subpara6 graph (B) or subsection (k)’’.

7 (d) SKILLED NURSING SERVICES IN RURAL PRIMARY

8 CARE HOSPITALS.—Section 1820(f)(3) (42 U.S.C. 1395i–

9 4(f)(3)) is amended by striking ‘‘because the facility’’ and

10 all that follows and inserting the following: ‘‘because, at

11 the time the facility applies to the State for designation

12 as a rural primary care hospital, there is in effect an

13 agreement between the facility and the Secretary under

14 section 1883 under which the facility’s inpatient hospital

15 facilities are used for the furnishing of extended care serv16 ices, except that the number of beds used for the furnish17 ing of such services may not exceed the total number of

18 licensed inpatient beds at the time the facility applies to

19 the State for such designation (minus the number of inpa20 tient beds used for providing inpatient care pursuant to

21 paragraph (1)(F)). For purposes of the previous sentence,

22 the number of beds of the facility used for the furnishing

23 of extended care services shall not include any beds of a

24 unit of the facility that is licensed as a distinct-part skilled
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1 nursing facility at the time the facility applies to the State

2 for designation as a rural primary care hospital.’’.

3 (e) PAYMENT FOR OUTPATIENT RURAL PRIMARY

4 CARE HOSPITAL SERVICES.—Section 1834(g)(1) (42

5 U.S.C. 1395m(g)(1)) is amended by adding at the end the

6 following:

7 ‘‘The amount of payment shall be determined under

8 either method without regard to the amount of the

9 customary or other charge.’’.

10 (f) CLARIFICATION OF PHYSICIAN STAFFING RE11 QUIREMENT FOR RURAL PRIMARY CARE HOSPITALS.—

12 Section 1820(f)(1)(H) (42 U.S.C. 1395i–4(f)(1)(H)) is

13 amended by striking the period and inserting the follow14 ing: ‘‘, except that in determining whether a facility meets

15 the requirements of this subparagraph, subparagraphs (E)

16 and (F) of that paragraph shall be applied as if any ref17 erence to a ‘physician’ is a reference to a physician as de18 fined in section 1861(r)(1).’’.

19 (g) TECHNICAL AMENDMENTS RELATING TO PART

20 A DEDUCTIBLE, COINSURANCE, AND SPELL OF ILL21 NESS.—(1) Section 1812(a)(1) (42 U.S.C. 1395d(a)(1))

22 is amended—

23 (A) by striking ‘‘inpatient hospital services’’ the

24 first place it appears and inserting ‘‘inpatient hos-
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1 pital services or inpatient rural primary care hos2 pital services’’;

3 (B) by striking ‘‘inpatient hospital services’’ the

4 second place it appears and inserting ‘‘such serv5 ices’’; and

6 (C) by striking ‘‘and inpatient rural primary

7 care hospital services’’.

8 (2) Sections 1813(a) and 1813(b)(3)(A) (42 U.S.C.

9 1395e(a), 1395e(b)(3)(A)) are each amended by striking

10 ‘‘inpatient hospital services’’ each place it appears and in11 serting ‘‘inpatient hospital services or inpatient rural pri12 mary care hospital services’’.

13 (3) Section 1813(b)(3)(B) (42 U.S.C.

14 1395e(b)(3)(B)) is amended by striking ‘‘inpatient hos15 pital services’’ and inserting ‘‘inpatient hospital services,

16 inpatient rural primary care hospital services,’’.

17 (4) Section 1861(a) (42 U.S.C. 1395x(a)) is amend18 ed—

19 (A) in paragraph (1), by striking ‘‘inpatient

20 hospital services’’ and inserting ‘‘inpatient hospital

21 services, inpatient rural primary care hospital serv22 ices,’’; and

23 (B) in paragraph (2), by striking ‘‘hospital’’

24 and inserting ‘‘hospital or rural primary care hos25 pital’’.
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1 (h) AUTHORIZATION OF APPROPRIATIONS.—Section

2 1820(l) (42 U.S.C. 1395i–4(l)), as redesignated by sub3 section (c)(2), is amended by striking ‘‘1990, 1991, and

4 1992’’ and inserting ‘‘1990 through 1995’’.

5 (i) EFFECTIVE DATE.—The amendments made by

6 this section shall take effect on the date of the enactment

7 of this Act.

8 SEC. 3. REAUTHORIZATION OF RURAL TRANSITION GRANT

9 PROGRAM.

10 Section 4005(e)(9) of the Omnibus Budget Reconcili11 ation Act of 1987, as amended by section 6003(g)(1)(B)

12 of the Omnibus Budget Reconciliation Act of 1989, is

13 amended by striking ‘‘1992’’ and inserting ‘‘1992 and

14 $30,000,000 for each of fiscal years 1993 through 1997’’.

15 SEC. 4. DURABLE MEDICAL EQUIPMENT.

16 (a) DEFINITION OF MEDICAL EQUIPMENT AND SUP17 PLIES.—

18 (1) IN GENERAL.—Section 1861 (42 U.S.C.

19 1395x) is amended by adding at the end the follow20 ing new subsection:

21 ‘‘MEDICAL EQUIPMENT AND SUPPLIES

22 ‘‘(oo) The term ‘medical equipment and supplies’

23 means—

24 ‘‘(1) durable medical equipment (as defined in

25 section 1861(n));
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1 ‘‘(2) prosthetic devices (as described in section

2 1861(s)(8));

3 ‘‘(3) orthotics and prosthetics (as described in

4 section 1861(s)(9));

5 ‘‘(4) home dialysis supplies and equipment (as

6 described in section 1861(s)(2)(F));

7 ‘‘(5) surgical dressings and other devices (as

8 described in section 1861(s)(5));

9 ‘‘(6) immunosuppressive drugs (as described in

10 section 1861(s)(2)(J)); and

11 ‘‘(7) such other items as the Secretary may de12 termine.’’.

13 (2) EFFECTIVE DATE.—The amendment made

14 by paragraph (1) shall apply to items furnished on

15 or after January 1, 1994.

16 (b) DEVELOPMENT AND APPLICATION OF NATIONAL

17 STANDARDS FOR SUPPLIERS OF MEDICAL EQUIPMENT

18 AND SUPPLIES.—Section 1834 (42 U.S.C. 1395m) is

19 amended by adding at the end the following new sub20 section:

21 ‘‘(i) REQUIREMENTS FOR ISSUANCE AND RENEWAL

22 OF SUPPLIER NUMBERS FOR SUPPLIERS OF MEDICAL

23 EQUIPMENT AND SUPPLIES.—

24 ‘‘(1) PAYMENT.—No payment may be made

25 under this part after July 1, 1994, for items fur-
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1 nished by a supplier of medical equipment and sup2 plies (as defined in section 1861(oo)) unless such

3 supplier meets the national standards specified by

4 the Secretary and possesses a valid supplier number.

5 ‘‘(2) REVISED STANDARDS.—

6 ‘‘(A) IN GENERAL.—Not later than Janu7 ary 1, 1996, the Secretary shall, in consultation

8 with representatives of suppliers of medical

9 equipment and supplies, carriers, and consum10 ers, revise the national standards for suppliers

11 of medical equipment and supplies to include

12 the requirements listed in subparagraph (B).

13 ‘‘(B) STANDARDS DESCRIBED.—The re14 quirements listed in this subparagraph are that

15 suppliers of medical equipment and supplies

16 shall—

17 ‘‘(i) comply with all applicable State

18 and Federal licensure and regulatory re19 quirements;

20 ‘‘(ii) maintain a physical facility on an

21 appropriate site;

22 ‘‘(iii) have proof of appropriate liabil23 ity insurance; and

24 ‘‘(iv) meet such other requirements as

25 the Secretary may specify.
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1 ‘‘(C) APPLICABILITY OF REVISED STAND2 ARDS.—Beginning after December 31, 1995,

3 each supplier of medical equipment and supplies

4 applying for a supplier number or renewing

5 such supplier’s supplier number shall meet the

6 revised standards described in this paragraph.’’.

7 (c) CERTIFICATES OF MEDICAL NECESSITY.—

8 (1) IN GENERAL.—Section 1834 (42 U.S.C.

9 1395m), as amended by subsection (b), is amend10 ed—

11 (A) in subsection (a), by striking para12 graph (16), and

13 (B) by adding at the end the following new

14 subsection:

15 ‘‘(j) CERTIFICATES OF MEDICAL NECESSITY.—

16 ‘‘(1) STANDARDIZED CERTIFICATES.—Not later

17 than July 1, 1994, the Secretary shall, in consulta18 tion with carriers under this part, develop one or

19 more standardized certificates of medical necessity

20 (as defined in paragraph (3)) for medical equipment

21 and supplies (as defined in section 1861(oo) other

22 than paragraphs (4), (6), and (7)). If a certificate

23 of medical necessity is required by the Secretary,

24 such standardized certificates shall—
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1 ‘‘(A) be completed by each physician who

2 prescribes such medical equipment and supplies

3 for any beneficiary under this part, and

4 ‘‘(B) be transmitted to the supplier and

5 then to the carrier processing the claim for pay6 ment for such medical equipment and supplies

7 under this part.

8 ‘‘(2) PROHIBITION AGAINST DISTRIBUTION BY

9 SUPPLIERS OF CERTIFICATES OF MEDICAL NECES10 SITY.—

11 ‘‘(A) IN GENERAL.—Except as provided in

12 subparagraph (B), a supplier of medical equip13 ment and supplies described in paragraph (1)

14 may not distribute to physicians or to individ15 uals entitled to benefits under this part for

16 commercial purposes any completed or partially

17 completed certificates of medical necessity.

18 ‘‘(B) EXCEPTION FOR CERTAIN BILLING

19 INFORMATION.—Subparagraph (A) shall not

20 apply with respect to a certificate of medical ne21 cessity to the extent that such certificate con22 tains only information completed by the sup23 plier of medical equipment and supplies identi24 fying such supplier and the beneficiary to whom

25 such medical equipment and supplies are fur-
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1 nished, a description of such medical equipment

2 and supplies, any product code identifying such

3 medical equipment and supplies, and any other

4 administrative information identified by the

5 Secretary. In the event a supplier provides a

6 certificate of medical necessity containing infor7 mation permitted under this subparagraph,

8 such certificate shall also contain the supplier’s

9 charge and the fee schedule amount for the

10 medical equipment or supplies being furnished

11 prior to distribution of such certificate to the

12 physician.

13 ‘‘(C) PENALTY.—Any supplier of medical

14 equipment and supplies who knowingly and will15 fully distributes a certificate of medical neces16 sity in violation of subparagraph (A) is subject

17 to a civil money penalty in an amount not to

18 exceed $1,000 for each such certificate of medi19 cal necessity so distributed. The provisions of

20 section 1128A (other than subsections (a) and

21 (b)) shall apply to civil money penalties under

22 this subparagraph in the same manner as they

23 apply to a penalty or proceeding under section

24 1128A(a).
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1 ‘‘(3) DEFINITION.—For purposes of this sub2 section, the term ‘certificate of medical necessity’

3 means a form or other document containing infor4 mation required by the Secretary to be submitted to

5 show that a covered item is reasonable and nec6 essary for the diagnosis or treatment of illness or in7 jury or to improve the functioning of a malformed

8 body member.’’.

9 (2) EFFECTIVE DATE.—The amendments made

10 by paragraph (1) shall apply with respect to certifi11 cates of medical necessity on or after January 1,

12 1994.

13 (d) COVERAGE AND REVIEW CRITERIA FOR CERTAIN

14 MEDICAL EQUIPMENT AND SUPPLIES.—Section 1834 (42

15 U.S.C. 1395m), as amended by subsection (c), is amended

16 by adding at the end the following new subsection:

17 ‘‘(k) COVERAGE AND REVIEW CRITERIA.—

18 ‘‘(1) DEVELOPMENT AND ESTABLISHMENT.—

19 Not later than July 1, 1994, the Secretary, in con20 sultation with representatives of suppliers of medical

21 equipment and supplies (as defined in section

22 1861(oo) other than paragraphs (4), (6), and (7)),

23 individuals enrolled under this part, and appropriate

24 medical specialty societies, shall develop and estab25 lish uniform national coverage and utilization review
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1 criteria for 200 items of medical equipment and sup2 plies (as so defined) selected in accordance with the

3 standards described in paragraph (2). The Secretary

4 shall publish the criteria as part of the instructions

5 provided to fiscal intermediaries and carriers under

6 this part and no further publication, including publi7 cation in the Federal Register, shall be required.

8 ‘‘(2) STANDARDS FOR SELECTING ITEMS SUB9 JECT TO CRITERIA.—The Secretary may select an

10 item for coverage under the criteria developed and

11 established under paragraph (1) if the Secretary

12 finds that—

13 ‘‘(A) the item is frequently purchased or

14 rented by beneficiaries;

15 ‘‘(B) the item is frequently subject to a de16 termination that such item is not medically nec17 essary; or

18 ‘‘(C) the coverage or utilization criteria ap19 plied to the item (as of the date of the enact20 ment of this subsection) is not consistent

21 among carriers.

22 ‘‘(3) ANNUAL REVIEW AND EXPANSION OF

23 ITEMS SUBJECT TO CRITERIA.—The Secretary shall

24 annually review the coverage and utilization of items

25 of medical equipment and supplies to determine
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1 whether items not included among the items selected

2 under paragraph (1) should be made subject to uni3 form national coverage and utilization review cri4 teria, and, if appropriate, shall develop and apply

5 such criteria to such additional items.

6 ‘‘(4) REPORT ON EFFECT OF UNIFORM CRI7 TERIA ON UTILIZATION OF ITEMS.—Not later than

8 January 1, 1995, the Secretary shall submit a re9 port to the Committee on Ways and Means and the

10 Committee on Energy and Commerce of the House

11 of Representatives and the Committee on Finance of

12 the Senate analyzing the impact of the uniform cri13 teria established under paragraph (1) on the utiliza14 tion of items of medical equipment and supplies by

15 individuals enrolled under this part.’’.

16 (e) PROHIBITION AGAINST MULTIPLE SUPPLIER

17 NUMBERS.—

18 (1) IN GENERAL.—Section 1834 (42 U.S.C.

19 1395m), as amended by subsection (d), is amended

20 by adding at the end the following new subsection:

21 ‘‘(l) PROHIBITION AGAINST MULTIPLE SUPPLIER

22 NUMBERS FOR SUPPLIERS OF MEDICAL EQUIPMENT AND

23 SUPPLIES.—The Secretary may not issue more than one

24 supplier number to any supplier of medical equipment and

25 supplies (as defined in section 1861(oo)) unless the issu-
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1 ance of more than one number is appropriate to identify

2 subsidiary or regional entities under the supplier’s owner3 ship or control.’’.

4 (2) EFFECTIVE DATE.—The amendment made

5 by paragraph (1) shall apply to items furnished on

6 or after July 1, 1994.

7 (f) DEFINITION OF INDUCEMENTS AS KICKBACKS

8 CLARIFIED.—

9 (1) IN GENERAL.—Section 1128B(b)(3)(B) (42

10 U.S.C. 1320a–7b(b)(3)(B)) is amended by inserting

11 before the semicolon ‘‘(except that in the case of a

12 contract supply arrangement between a skilled nurs13 ing facility and a supplier of medical supplies and

14 equipment (as defined in section 1861(oo) other

15 than paragraphs (4), (6), and (7)), such employment

16 shall not be considered bona fide to the extent that

17 it includes tasks of a clerical and cataloging nature

18 in transmitting to suppliers assignment rights of in19 dividuals eligible for benefits under part B of title

20 XVIII, or performance of warehousing or stock in21 ventory functions)’’.

22 (2) EFFECTIVE DATE.—The amendment made

23 by paragraph (1) shall apply with respect to services

24 furnished on or after January 1, 1994.

25 (g) LIMITATION ON BENEFICIARY LIABILITY.—
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1 (1) IN GENERAL.—Section 1879 (42 U.S.C.

2 1395pp) is amended by adding at the end the follow3 ing new subsection:

4 ‘‘(h) If a supplier of medical equipment and supplies

5 (as defined in section 1861(oo))—

6 ‘‘(1) furnishes an item or service to a bene7 ficiary for which no payment may be made by reason

8 of section 1834(i);

9 ‘‘(2) furnishes an item or service to a bene10 ficiary for which payment is denied in advance under

11 section 1834(a)(15);

12 ‘‘(3) is excluded from participation under this

13 title; or

14 ‘‘(4) furnishes an item or service to a bene15 ficiary for which payment is denied under section

16 1862(a)(1);

17 any expenses incurred for items and services furnished to

18 an individual by such a supplier on an unassigned basis

19 shall be the responsibility of such supplier. The individual

20 shall have no financial responsibility for such expenses and

21 the supplier shall refund on a timely basis to the individual

22 (and shall be liable to the individual for) any amounts col23 lected from the individual for such items or services, un24 less the supplier informs the individual in advance that

25 payment under this part will not be made for the item
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1 or services and the individual agrees to pay for the item

2 or service.’’.

3 (2) EFFECTIVE DATE.—The amendment made

4 by paragraph (1) shall apply to items or services

5 furnished on or after July 1, 1994.

6 (h) STUDIES.—

7 (1) SUPPLIES AND SERVICES IN NURSING FA8 CILITIES.—The Comptroller General of the United

9 States shall conduct a study and report to the Con10 gress no later than January 1, 1995, on the types,

11 volume, and utilization of services and supplies fur12 nished under contract or under arrangement with

13 suppliers to individuals eligible for benefits under

14 title XVIII of the Social Security Act residing in

15 skilled nursing facilities and nursing facilities.

16 (2) DESCRIPTIONS RELATING TO CERTAIN

17 CODES.—The Comptroller General of the United

18 States shall conduct a study beginning no earlier

19 than July 1, 1994, and report to the Congress no

20 later than January 1, 1995, on—

21 (A) whether changes made by the Depart22 ment of Health and Human Services to the de23 scriptions relating to the codes for medical

24 equipment and supplies (as defined in section
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1 1861(oo) of the Social Security Act other than

2 paragraphs (4), (6), and (7))—

3 (i) accurately reflect the items being

4 furnished under such codes, and

5 (ii) are sufficiently explicit to distin6 guish between items of varying quality and

7 price, and

8 (B) recommendations for additional

9 changes that would improve the descriptions re10 lating to the codes for such items.

11 SEC. 5. ADJUSTMENTS TO DISCRETIONARY SPENDING LIM12 ITS.

13 (a) ADJUSTMENTS.—Section 251(b)(2) of the Bal14 anced Budget and Emergency Deficit Control Act of 1985

15 is amended by redesignating subparagraphs (E) and (F)

16 as subparagraphs (F) and (G), respectively, and by insert17 ing after subparagraph (D) the following new subpara18 graph:

19 ‘‘(E) MEDICARE ADMINISTRATIVE

20 COSTS.—To the extent that appropriations are

21 enacted that provide additional new budget au22 thority (as compared with a base level of

23 $1,526,000,000 for new budget authority) for

24 the administration of the Medicare program by

25 fiscal intermediaries and carriers pursuant to
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1 sections 1816 and 1842(a) of title XVIII of the

2 Social Security Act, the adjustment for that

3 year shall be that amount, but shall not ex4 ceed—

5 ‘‘(i) for fiscal year 1994,

6 $198,000,000 in new budget authority and

7 $198,000,000 in outlays; and

8 ‘‘(ii) for fiscal year 1995,

9 $220,000,000 in new budget authority and

10 $220,000,000 in outlays; and

11 the prior-year outlays resulting from these appro12 priations of budget authority and additional adjust13 ments equal to the sum of the maximum adjust14 ments that could have been made in preceding fiscal

15 years under this subparagraph.’’.

16 (b) CONFORMING AMENDMENTS.—

17 (1) Section 603(a) of the Congressional Budget

18 Act of 1974 is amended by striking ‘‘section

19 251(b)(2)(E)(i)’’ and inserting ‘‘section

20 251(b)(2)(F)(i)’’.

21 (2) Section 606(d) of the Congressional Budget

22 Act of 1974 is amended—

23 (A) in paragraph (1)(A) by striking ‘‘sec24 tion 251(b)(2)(E)(i)’’ and inserting ‘‘section

25 251(b)(2)(F)(i)’’; and
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1 (B) in paragraph (2), by inserting

2 ‘‘251(b)(2)(E),’’ after ‘‘251(b)(2)(D),’’.

3 SEC. 6. STANDARDS FOR MEDICARE SUPPLEMENTAL IN4 SURANCE POLICIES.

5 (a) SIMPLIFICATION OF MEDICARE SUPPLEMENTAL

6 POLICIES.—

7 (1) Section 4351 of the Omnibus Budget Rec8 onciliation Act of 1990 (Public Law 101–508),

9 (hereafter in this Act referred to as ‘‘OBRA–1990’’)

10 is amended by striking ‘‘(a) IN GENERAL.—’’.

11 (2) Section 1882(p) (42 U.S.C. 1395ss(p)) is

12 amended—

13 (A) in paragraph (1)(A)—

14 (i) by striking ‘‘promulgates’’ and in15 serting ‘‘changes the revised NAIC Model

16 Regulation (described in subsection (m)) to

17 incorporate’’,

18 (ii) by striking ‘‘(such limitations, lan19 guage, definitions, format, and standards

20 referred to collectively in this subsection as

21 ‘NAIC standards’),’’, and

22 (iii) by striking ‘‘included a reference

23 to the NAIC standards’’ and inserting

24 ‘‘were a reference to the revised NAIC

25 Model Regulation as changed under this
26

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1 subparagraph (such changed regulation re2 ferred to in this section as the ‘1991 NAIC

3 Model Regulation’)’’;

4 (B) in paragraph (1)(B)—

5 (i) by striking ‘‘promulgate NAIC

6 standards’’ and inserting ‘‘make the

7 changes in the revised NAIC Model Regu8 lation’’,

9 (ii) by striking ‘‘limitations, language,

10 definitions, format, and standards de11 scribed in clauses (i) through (iv) of such

12 subparagraph (in this subsection referred

13 to collectively as ‘Federal standards’)’’ and

14 inserting ‘‘a regulation’’, and

15 (iii) by striking ‘‘included a reference

16 to the Federal standards’’ and inserting

17 ‘‘were a reference to the revised NAIC

18 Model Regulation as changed by the Sec19 retary under this subparagraph (such

20 changed regulation referred to in this sec21 tion as the ‘1991 Federal Regulation’)’’;

22 (C) in paragraph (1)(C)(i), by striking

23 ‘‘NAIC standards or the Federal standards’’

24 and inserting ‘‘1991 NAIC Model Regulation or

25 1991 Federal Regulation’’;
27

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1 (D) in paragraphs (1)(C)(ii)(I), (1)(E),

2 (2), and (9)(B), by striking ‘‘NAIC or Federal

3 standards’’ and inserting ‘‘1991 NAIC Model

4 Regulation or 1991 Federal Regulation’’;

5 (E) in paragraph (2)(C), by striking

6 ‘‘(5)(B)’’ and inserting ‘‘(4)(B)’’;

7 (F) in paragraph (4)(A)(i), by inserting

8 ‘‘or paragraph (6)’’ after ‘‘(B)’’;

9 (G) in paragraph (4), by striking ‘‘applica10 ble standards’’ each place it appears and insert11 ing ‘‘applicable 1991 NAIC Model Regulation

12 or 1991 Federal Regulation’’;

13 (H) in paragraph (6), by striking ‘‘in re14 gard to the limitation of benefits described in

15 paragraph (4)’’ and inserting ‘‘described in

16 clauses (i) through (iii) of paragraph (1)(A)’’;

17 (I) in paragraph (7), by striking ‘‘policy18 holder’’ and inserting ‘‘policyholders’’;

19 (J) in paragraph (8), by striking ‘‘after the

20 effective date of the NAIC or Federal standards

21 with respect to the policy, in violation of the

22 previous requirements of this subsection’’ and

23 inserting ‘‘on and after the effective date speci24 fied in paragraph (1)(C) (but subject to para25 graph (10)), in violation of the applicable 1991
28

•S 1426 IS

1 NAIC Model Regulation or 1991 Federal Regu2 lation insofar as such regulation relates to the

3 requirements of subsection (o) or (q) or clause

4 (i), (ii), or (iii) of paragraph (1)(A)’’;

5 (K) in paragraph (9), by adding at the end

6 the following new subparagraph:

7 ‘‘(D) Subject to paragraph (10), this paragraph shall

8 apply to sales of policies occurring on or after the effective

9 date specified in paragraph (1)(C).’’; and

10 (L) in paragraph (10), by striking ‘‘this

11 subsection’’ and inserting ‘‘paragraph

12 (1)(A)(i)’’.

13 (b) GUARANTEED RENEWABILITY.—Section 1882(q)

14 (42 U.S.C. 1395ss(q)) is amended—

15 (1) in paragraph (2), by striking ‘‘paragraph

16 (2)’’ and inserting ‘‘paragraph (4)’’, and

17 (2) in paragraph (4), by striking ‘‘the succeed18 ing issuer’’ and inserting ‘‘issuer of the replacement

19 policy’’.

20 (c) ENFORCEMENT OF STANDARDS.—

21 (1) Section 1882(a)(2) (42 U.S.C.

22 1395ss(a)(2)) is amended—

23 (A) in subparagraph (A), by striking

24 ‘‘NAIC standards or the Federal standards’’
29

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1 and inserting ‘‘1991 NAIC Model Regulation or

2 1991 Federal Regulation’’, and

3 (B) by striking ‘‘after the effective date of

4 the NAIC or Federal standards with respect to

5 the policy’’ and inserting ‘‘on and after the ef6 fective date specified in subsection (p)(1)(C)’’.

7 (2) The sentence in section 1882(b)(1) added

8 by section 4353(c)(5) of OBRA–1990 is amended—

9 (A) by striking ‘‘The report’’ and inserting

10 ‘‘Each report’’,

11 (B) by inserting ‘‘and requirements’’ after

12 ‘‘standards’’,

13 (C) by striking ‘‘and’’ after ‘‘compliance,’’,

14 and

15 (D) by striking the comma after ‘‘Commis16 sioners’’.

17 (3) Section 1882(g)(2)(B) (42 U.S.C.

18 1395ss(g)(2)(B)) is amended by striking ‘‘Panel’’

19 and inserting ‘‘Secretary’’.

20 (4) Section 1882(b)(1) (42 U.S.C.

21 1395ss(b)(1)) is amended by striking ‘‘the the Sec22 retary’’ and inserting ‘‘the Secretary’’.

23 (d) PREVENTING DUPLICATION.—

24 (1) Section 1882(d)(3)(A) (42 U.S.C.

25 1395ss(d)(3)(A)) is amended—
30

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1 (A) by amending the first sentence to read

2 as follows:

3 ‘‘(i) It is unlawful for a person to sell or issue to an

4 individual entitled to benefits under part A or enrolled

5 under part B of this title—

6 ‘‘(I) a health insurance policy with knowledge

7 that the policy duplicates health benefits to which

8 the individual is otherwise entitled under this title or

9 title XIX,

10 ‘‘(II) a medicare supplemental policy with

11 knowledge that the individual is entitled to benefits

12 under another medicare supplemental policy, or

13 ‘‘(III) a health insurance policy (other than a

14 medicare supplemental policy) with knowledge that

15 the policy duplicates health benefits to which the in16 dividual is otherwise entitled, other than benefits to

17 which the individual is entitled under a requirement

18 of State or Federal law.’’;

19 (B) by designating the second sentence as

20 clause (ii) and, in such clause, by striking ‘‘the

21 previous sentence’’ and inserting ‘‘clause (i)’’;

22 (C) by designating the third sentence as

23 clause (iii) and, in such clause—

24 (i) by striking ‘‘the previous sentence’’

25 and inserting ‘‘clause (i) with respect to
31

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1 the sale of a medicare supplemental pol2 icy’’, and

3 (ii) by striking ‘‘and the statement’’

4 and all that follows up to the period at the

5 end; and

6 (D) by striking the last sentence.

7 (2) Section 1882(d)(3)(B) (42 U.S.C.

8 1395ss(d)(3)(B)) is amended—

9 (A) in clause (ii)(II), by striking ‘‘65 years

10 of age or older’’,

11 (B) in clause (iii)(I), by striking ‘‘another

12 medicare’’ and inserting ‘‘a medicare’’,

13 (C) in clause (iii)(I), by striking ‘‘such a

14 policy’’ and inserting ‘‘a medicare supplemental

15 policy’’,

16 (D) in clause (iii)(II), by striking ‘‘another

17 policy’’ and inserting ‘‘a medicare supplemental

18 policy’’, and

19 (E) by amending subclause (III) of clause

20 (iii) to read as follows:

21 ‘‘(III) If the statement required by clause (i) is ob22 tained and indicates that the individual is entitled to any

23 medical assistance under title XIX, the sale of the policy

24 is not in violation of clause (i) (insofar as such clause re25 lates to such medical assistance), if a State medicaid plan
32

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1 under such title pays the premiums for the policy, or, in

2 the case of a qualified medicare beneficiary described in

3 section 1905(p)(1), if the State pays less than the full

4 amount of medicare cost-sharing as described in subpara5 graphs (B), (C), and (D) of section 1905(p)(3) for such

6 individual.’’.

7 (3)(A) Section 1882(d)(3)(C) (42 U.S.C.

8 1395ss(d)(3)(C)) is amended—

9 (i) by striking ‘‘the selling’’ and inserting

10 ‘‘(i) the sale or issuance’’, and

11 (ii) by inserting before the period at the

12 end the following: ‘‘, (ii) the sale or issuance of

13 a policy or plan described in subparagraph

14 (A)(i)(I) (other than a medicare supplemental

15 policy to an individual entitled to any medical

16 assistance under title XIX) under which all the

17 benefits are fully payable directly to or on be18 half of the individual without regard to other

19 health benefit coverage of the individual but

20 only if (for policies sold or issued more than 60

21 days after the date the statements are pub22 lished or promulgated under subparagraph (D))

23 there is disclosed in a prominent manner as

24 part of (or together with) the application the

25 applicable statement (specified under subpara-
33

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1 graph (D)) of the extent to which benefits pay2 able under the policy or plan duplicate benefits

3 under this title, or (iii) the sale or issuance of

4 a policy or plan described in subparagraph

5 (A)(i)(III) under which all the benefits are fully

6 payable directly to or on behalf of the individual

7 without regard to other health benefit coverage

8 of the individual’’.

9 (B) Section 1882(d)(3) (42 U.S.C.

10 1395ss(d)(3)) is amended by adding at the end the

11 following:

12 ‘‘(D)(i) If—

13 ‘‘(I) within the 90-day period beginning on the

14 date of the enactment of this subparagraph, the Na15 tional Association of Insurance Commissioners devel16 ops (after consultation with consumer and insurance

17 industry representatives) and submits to the Sec18 retary a statement for each of the types of health in19 surance policies (other than medicare supplemental

20 policies and including, as separate types of policies,

21 policies paying directly to the beneficiary fixed, cash

22 benefits) which are sold to persons entitled to health

23 benefits under this title, of the extent to which bene24 fits payable under the policy or plan duplicate bene25 fits under this title, and
34

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1 ‘‘(II) the Secretary approves all the statements

2 submitted as meeting the requirements of subclause

3 (I),

4 each such statement shall be (for purposes of subpara5 graph (C)) the statement specified under this subpara6 graph for the type of policy involved. The Secretary shall

7 review and approve (or disapprove) all the statements sub8 mitted under subclause (I) within 30 days after the date

9 of their submittal. Upon approval of such statements, the

10 Secretary shall publish such statements.

11 ‘‘(ii) If the Secretary does not approve the statements

12 under clause (i) or the statements are not submitted with13 in the 90-day period specified in such clause, the Secretary

14 shall promulgate (after consultation with consumer and

15 insurance industry representatives and not later than 90

16 days after the date of disapproval or the end of such 90-

17 day period (as the case may be)) a statement for each

18 of the types of health insurance policies (other than medi19 care supplemental policies and including, as separate types

20 of policies, policies paying directly to the beneficiary fixed,

21 cash benefits) which are sold to persons entitled to health

22 benefits under this title, of the extent to which benefits

23 payable under the policy or plan duplicate benefits under

24 this title, and each such statement shall be (for purposes
35

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1 of subparagraph (C)) the statement specified under this

2 subparagraph for the type of policy involved.’’.

3 (C) The requirement of a disclosure under sec4 tion 1882(d)(3)(C)(ii) of the Social Security Act

5 shall not apply to an application made for a policy

6 or plan before 60 days after the date of the Sec7 retary of Health and Human Services publishes or

8 promulgates all the statements under section

9 1882(d)(3)(D) of such Act.

10 (4) Subparagraphs (A) and (B) of section

11 1882(q)(5) are amended by striking ‘‘of the Social

12 Security Act’’.

13 (e) LOSS RATIOS AND REFUNDS OF PREMIUMS.—

14 (1) Section 1882(r) (42 U.S.C. 1395ss(r)) is

15 amended—

16 (A) in paragraph (1), by striking ‘‘or sold’’

17 and inserting ‘‘or renewed (or otherwise provide

18 coverage after the date described in subsection

19 (p)(1)(C))’’;

20 (B) in paragraph (1)(A), by inserting ‘‘for

21 periods after the effective date of these provi22 sions’’ after ‘‘the policy can be expected’’;

23 (C) in paragraph (1)(A), by striking

24 ‘‘Commissioners,’’ and inserting ‘‘Commis25 sioners)’’;
36

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1 (D) in paragraph (1)(B), by inserting be2 fore the period at the end the following: ‘‘,

3 treating policies of the same type as a single

4 policy for each standard package’’;

5 (E) by adding at the end of paragraph (1)

6 the following: ‘‘For the purpose of calculating

7 the refund or credit required under paragraph

8 (1)(B) for a policy issued before the date speci9 fied in subsection (p)(1)(C), the refund or cred10 it calculation shall be based on the aggregate

11 benefits provided and premiums collected under

12 all such policies issued by an insurer in a State

13 (separated as to individual and group policies)

14 and shall be based only on aggregate benefits

15 provided and premiums collected under such

16 policies after the date specified in section

17 6(m)(4) of the Essential Medicare Amendments

18 of 1993.’’;

19 (F) in the first sentence of paragraph

20 (2)(A), by striking ‘‘by policy number’’ and in21 serting ‘‘by standard package’’;

22 (G) by striking the second sentence of

23 paragraph (2)(A) and inserting the following:

24 ‘‘Paragraph (1)(B) shall not apply to a policy

25 until 12 months following issue.’’;
37

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1 (H) in the last sentence of paragraph

2 (2)(A), by striking ‘‘in order’’ and all that fol3 lows through ‘‘are effective’’;

4 (I) by adding at the end of paragraph

5 (2)(A), the following new sentence: ‘‘In the case

6 of a policy issued before the date specified in

7 subsection (p)(1)(C), paragraph (1)(B) shall

8 not apply until 1 year after the date specified

9 in section 6(m)(4) of the Essential Medicare

10 Amendments of 1993.’’;

11 (J) in paragraph (2), by striking ‘‘policy

12 year’’ each place it appears and inserting ‘‘cal13 endar year’’;

14 (K) in paragraph (4), by striking ‘‘Feb15 ruary’’, ‘‘disllowance’’, ‘‘loss-ratios’’ each place

16 it appears, and ‘‘loss-ratio’’ and inserting ‘‘Oc17 tober’’, ‘‘disallowance’’, ‘‘loss ratios’’, and ‘‘loss

18 ratio’’, respectively;

19 (L) in paragraph (6)(A), by striking ‘‘is20 sues a policy in violation of the loss ratio re21 quirements of this subsection’’ and ‘‘such viola22 tion’’ and inserting ‘‘fails to provide refunds or

23 credits as required in paragraph (1)(B)’’ and

24 ‘‘policy issued for which such failure occurred’’,

25 respectively; and
38

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1 (M) in paragraph (6)(B), by striking ‘‘to

2 policyholders’’ and inserting ‘‘to the policy3 holder or, in the case of a group policy, to the

4 certificate holder’’.

5 (2) Section 1882(b)(1) (42 U.S.C.

6 1395ss(b)(1)) is amended, in the matter after sub7 paragraph (H), by striking ‘‘subsection (F)’’ and in8 serting ‘‘subparagraph (F)’’.

9 (3) Section 4355(d) of OBRA–1990 is amended

10 by striking ‘‘sold or issued’’ and all that follows and

11 inserting ‘‘issued or renewed (or otherwise providing

12 coverage after the date described in section

13 1882(p)(1)(C) of the Social Security Act) on or after

14 the date specified in section 1882(p)(1)(C) of such

15 Act.’’.

16 (f) TREATMENT OF HMO’S.—

17 (1) Section 1882(g)(1) (42 U.S.C.

18 1395ss(g)(1)) is amended by striking ‘‘a health

19 maintenance organization or other direct service or20 ganization’’ and all that follows through ‘‘1833’’ and

21 inserting ‘‘an eligible organization (as defined in sec22 tion 1876(b)) if the policy or plan provides benefits

23 pursuant to a contract under section 1876 or an ap24 proved demonstration project described in section

25 603(c) of the Social Security Amendments of 1983,
39

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1 section 2355 of the Deficit Reduction Act of 1984,

2 or section 9412(b) of the Omnibus Budget Reconcili3 ation Act of 1986 or, during the period beginning on

4 the date specified in subsection (p)(1)(C) and ending

5 on December 31, 1994, a policy or plan of an orga6 nization if the policy or plan provides benefits pursu7 ant to an agreement under section 1833(a)(1)(A)’’.

8 (2) Section 4356(b) of OBRA–1990 is amended

9 by striking ‘‘on the date of the enactment of this

10 Act’’ and inserting ‘‘on the date specified in section

11 1882(p)(1)(C) of the Social Security Act’’.

12 (g) PRE-EXISTING CONDITION LIMITATIONS.—Sec13 tion 1882(s) (42 U.S.C. 1395ss(s)) is amended—

14 (1) in paragraph (2)(A), by striking ‘‘for which

15 an application is submitted’’ and inserting ‘‘in the

16 case of an individual for whom an application is sub17 mitted prior to or’’,

18 (2) in paragraph (2)(A), by striking ‘‘in which

19 the individual (who is 65 years of age or older) first

20 is enrolled for benefits under part B’’ and inserting

21 ‘‘as of the first day on which the individual is 65

22 years of age or older and is enrolled for benefits

23 under part B’’, and

24 (3) in paragraph (2)(B), by striking ‘‘before it’’

25 and inserting ‘‘before the policy’’.
40

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1 (h) MEDICARE SELECT POLICIES.—

2 (1) Section 1882(t) (42 U.S.C. 1395ss(t)) is

3 amended—

4 (A) in paragraph (1), by inserting ‘‘medi5 care supplemental’’ after ‘‘If a’’,

6 (B) in paragraph (1), by striking ‘‘NAIC

7 Model Standards’’ and inserting ‘‘1991 NAIC

8 Model Regulation or 1991 Federal Regulation’’,

9 (C) in paragraph (1)(A), by inserting ‘‘or

10 agreements’’ after ‘‘contracts’’,

11 (D) in subparagraphs (E)(i) and (F) of

12 paragraph (1), by striking ‘‘NAIC standards’’

13 and inserting ‘‘standards in the 1991 NAIC

14 Model Regulation or 1991 Federal Regulation’’,

15 and

16 (E) in paragraph (2), by inserting ‘‘the is17 suer’’ before ‘‘is subject to a civil money pen18 alty’’.

19 (2) Section 1154(a)(4)(B) (42 U.S.C. 1320c–

20 3(a)(4)(B)) is amended—

21 (A) by inserting ‘‘that is’’ after ‘‘(or’’, and

22 (B) by striking ‘‘1882(t)’’ and inserting

23 ‘‘1882(t)(3)’’.

24 (i) HEALTH INSURANCE COUNSELING.—Section

25 4360 of OBRA–1990 is amended—
41

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1 (1) in subsection (b)(2)(A)(ii), by striking

2 ‘‘Act’’ and inserting ‘‘Act)’’;

3 (2) in subsection (b)(2)(D), by striking ‘‘serv4 ices’’ and inserting ‘‘counseling’’;

5 (3) in subsection (b)(2)(I), by striking ‘‘assist6 ance’’ and inserting ‘‘referrals’’;

7 (4) in subsection (c)(1), by striking ‘‘and that

8 such activities will continue to be maintained at such

9 level’’;

10 (5) in subsection (d)(3), by striking ‘‘to the

11 rural areas’’ and inserting ‘‘eligible individuals resid12 ing in rural areas’’;

13 (6) in subsection (e)—

14 (A) by striking ‘‘subsection (c) or (d)’’ and

15 inserting ‘‘this section’’,

16 (B) by striking ‘‘and annually thereafter,

17 issue an annual report’’ and inserting ‘‘and an18 nually thereafter during the period of the grant,

19 issue a report’’, and

20 (C) in paragraph (1), by striking ‘‘State21 wide’’;

22 (7) in subsection (f), by striking paragraph (2)

23 and by redesignating paragraphs (3) through (5) as

24 paragraphs (2) through (4), respectively; and
42

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1 (8) by redesignating the second subsection (f)

2 (relating to authorization of appropriations for

3 grants) as subsection (g).

4 (j) TELEPHONE INFORMATION SYSTEM.—

5 (1) Section 1804 (42 U.S.C. 1395b–2) is

6 amended—

7 (A) by adding at the end of the heading

8 the following: ‘‘; MEDICARE AND MEDIGAP IN9 FORMATION’’,

10 (B) by inserting ‘‘(a)’’ after ‘‘1804.’’, and

11 (C) by adding at the end the following new

12 subsection:

13 ‘‘(b) The Secretary shall provide information via a

14 toll-free telephone number on the programs under this

15 title.’’.

16 (2) Section 1882(f) (42 U.S.C. 1395ss(f)) is

17 amended by adding at the end the following new

18 paragraph:

19 ‘‘(3) The Secretary shall provide information via a

20 toll-free telephone number on medicare supplemental poli21 cies (including the relationship of State programs under

22 title XIX to such policies).’’.

23 (3) Section 1889 is repealed.

24 (k) MAILING OF POLICIES.—Section 1882(d)(4) (42

25 U.S.C. 1395ss(d)(4)) is amended—
43

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1 (1) in subparagraph (D), by striking ‘‘, if such

2 policy’’ and all that follows up to the period at the

3 end, and

4 (2) by adding at the end the following new sub5 paragraph:

6 ‘‘(E) Subparagraph (A) shall not apply in the case

7 of an issuer who mails or causes to be mailed a policy,

8 certificate, or other matter solely to comply with the re9 quirements of subsection (q).’’.

10 (l) EFFECTIVE DATE.—The amendments made by

11 this section shall be effective as if included in the enact12 ment of OBRA–1990; except that—

13 (1) the amendments made by subsection (d)(1)

14 shall take effect on the date of the enactment of this

15 Act, but no penalty shall be imposed under section

16 1882(d)(3)(A) of the Social Security Act (for an ac17 tion occurring after the effective date of the amend18 ments made by section 4354 of OBRA–1990 and be19 fore the date of the enactment of this Act) with re20 spect to the sale or issuance of a policy which is not

21 unlawful under section 1882(d)(3)(A)(i)(II) of the

22 Social Security Act (as amended by this section);

23 (2) the amendments made by subsection

24 (d)(2)(A) and by subparagraphs (A), (B), and (E)
44

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1 of subsection (e)(1) shall be effective on the date

2 specified in subsection (m)(4); and

3 (3) the amendment made by subsection (g)(2)

4 shall take effect on January 1, 1994, and shall apply

5 to individuals who attain 65 years of age or older on

6 or after the effective date of section 1882(s)(2) of

7 the Social Security Act (and, in the case of individ8 uals who attained 65 years of age after such effec9 tive date and before January 1, 1995, and who were

10 not covered under such section before January 1,

11 1995, the 6-month period specified in that section

12 shall begin January 1, 1995).

13 (m) TRANSITION PROVISIONS.—

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

15 and Human Services identifies a State as requiring

16 a change to its statutes or regulations to conform its

17 regulatory program to the changes made by this sec18 tion, the State regulatory program shall not be con19 sidered to be out of compliance with the require20 ments of section 1882 of the Social Security Act due

21 solely to failure to make such change until the date

22 specified in paragraph (4).

23 (2) NAIC STANDARDS.—If, within 6 months

24 after the date of the enactment of this Act, the Na25 tional Association of Insurance Commissioners (in
45

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

2 its 1991 NAIC Model Regulation (adopted in July

3 1991) to conform to the amendments made by this

4 section and to delete from section 15C the exception

5 which begins with ‘‘unless’’, such modifications shall

6 be considered to be part of that Regulation for the

7 purposes of section 1882 of the Social Security Act.

8 (3) SECRETARY STANDARDS.—If the NAIC

9 does not make the modifications described in para10 graph (2) within the period specified in such para11 graph, the Secretary of Health and Human Services

12 shall make the modifications described in such para13 graph and such modifications shall be considered to

14 be part of that Regulation for the purposes of sec15 tion 1882 of the Social Security Act.

16 (4) DATE SPECIFIED.—

17 (A) IN GENERAL.—Subject to subpara18 graph (B), the date specified in this paragraph

19 for a State is the earlier of—

20 (i) the date the State changes its stat21 utes or regulations to conform its regu22 latory program to the changes made by

23 this section, or
46

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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 1995 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 Janu19 ary 1, 1995. For purposes of the previous sen20 tence, in the case of a State that has a 2-year

21 legislative session, each year of such session

22 shall be deemed to be a separate regular session

23 of the State legislature.
47

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1 SEC. 7. EXPANSION AND REVISION OF MEDICARE SELECT

2 POLICIES.

3 (a) PERMITTING MEDICARE SELECT POLICIES IN

4 ALL STATES.—

5 (1) IN GENERAL.—Subsection (c) of section

6 4358 of OBRA–1990 is hereby repealed.

7 (2) CONFORMING AMENDMENT.—Section 4358

8 of OBRA–1990 is amended by redesignating sub9 section (d) as subsection (c).

10 (b) REQUIREMENTS OF MEDICARE SELECT POLI11 CIES.—Section 1882(t)(1) of the Social Security Act (42

12 U.S.C. 1395ss(t)(1)) is amended to read as follows:

13 ‘‘(1)(A) If a medicare supplemental policy meets the

14 1991 NAIC Model Regulation or 1991 Federal Regulation

15 and otherwise complies with the requirements of this sec16 tion except that—

17 ‘‘(i) the benefits under such policy are re18 stricted to items and services furnished by certain

19 entities (or reduced benefits are provided when items

20 or services are furnished by other entities), and

21 ‘‘(ii) in the case of a policy described in sub22 paragraph (C)(i)—

23 ‘‘(I) the benefits under such policy are not

24 one of the groups or packages of benefits de25 scribed in subsection (p)(2)(A),
48

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1 ‘‘(II) except for nominal copayments im2 posed for services covered under part B of this

3 title, such benefits include at least the core

4 group of basic benefits described in subsection

5 (p)(2)(B), and

6 ‘‘(III) an enrollee’s liability under such pol7 icy for physician’s services covered under part

8 B of this title is limited to the nominal

9 copayments described in subclause (II),

10 the policy shall nevertheless be treated as meeting those

11 standards if the policy meets the requirements of subpara12 graph (B).

13 ‘‘(B) A policy meets the requirements of this sub14 paragraph if—

15 ‘‘(i) full benefits are provided for items and

16 services furnished through a network of entities

17 which have entered into contracts or agreements

18 with the issuer of the policy,

19 ‘‘(ii) full benefits are provided for items and

20 services furnished by other entities if the services are

21 medically necessary and immediately required be22 cause of an unforeseen illness, injury, or condition

23 and it is not reasonable given the circumstances to

24 obtain the services through the network,

25 ‘‘(iii) the network offers sufficient access,
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1 ‘‘(iv) the issuer of the policy has arrangements

2 for an ongoing quality assurance program for items

3 and services furnished through the network,

4 ‘‘(v)(I) the issuer of the policy provides to each

5 enrollee at the time of enrollment an explanation

6 of—

7 ‘‘(aa) the restrictions on payment under

8 the policy for services furnished other than by

9 or through the network,

10 ‘‘(bb) out of area coverage under the

11 policy,

12 ‘‘(cc) the policy’s coverage of emergency

13 services and urgently needed care, and

14 ‘‘(dd) the availability of a policy through

15 the entity that meets the 1991 Model NAIC

16 Regulation or 1991 Federal Regulation without

17 regard to this subsection and the premium

18 charged for such policy, and

19 ‘‘(II) each enrollee prior to enrollment acknowl20 edges receipt of the explanation provided under

21 subclause (I), and

22 ‘‘(vi) the issuer of the policy makes available to

23 individuals, in addition to the policy described in this

24 subsection, any policy (otherwise offered by the is25 suer to individuals in the State) that meets the 1991
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1 Model NAIC Regulation or 1991 Federal Regulation

2 and other requirements of this section without re3 gard to this subsection.

4 ‘‘(C)(i) A policy described in this subparagraph—

5 ‘‘(I) is offered by an eligible organization (as

6 defined in section 1876(b)),

7 ‘‘(II) is not a policy or plan providing benefits

8 pursuant to a contract under section 1876 or an ap9 proved demonstration project described in section

10 603(c) of the Social Security Amendments of 1983,

11 section 2355 of the Deficit Reduction Act of 1984,

12 or section 9412(b) of the Omnibus Budget Reconcili13 ation Act of 1986, and

14 ‘‘(III) provides benefits which, when combined

15 with benefits which are available under this title, are

16 substantially similar to benefits under policies of17 fered to individuals who are not entitled to benefits

18 under this title.

19 ‘‘(ii) In making a determination under subclause (III)

20 of clause (i) as to whether certain benefits are substan21 tially similar, there shall not be taken into account, except

22 in the case of preventive services, benefits provided under

23 policies offered to individuals who are not entitled to bene24 fits under this title which are in addition to the benefits

25 covered by this title and which are benefits an entity must
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1 provide in order to meet the definition of an eligible orga2 nization under section 1876(b)(1).’’.

3 (c) RENEWABILITY OF MEDICARE SELECT POLI4 CIES.—Section 1882(q)(1) of the Social Security Act (42

5 U.S.C. 1395ss(q)(1)) is amended—

6 (1) by striking ‘‘(1) Each’’ and inserting

7 ‘‘(1)(A) Except as provided in subparagraph (B),

8 each’’;

9 (2) by redesignating subparagraphs (A) and

10 (B) as clauses (i) and (ii), respectively; and

11 (3) by adding at the end the following new sub12 paragraph:

13 ‘‘(B)(i) Except as provided in clause (ii), in the

14 case of a policy that meets the requirements of sub15 section (t), an issuer may cancel or nonrenew such

16 policy with respect to an individual who leaves the

17 service area of such policy.

18 ‘‘(ii) If an individual described in clause (i)

19 moves to a geographic area where an issuer de20 scribed in clause (i), or where an affiliate of such is21 suer, is issuing medicare supplemental policies, such

22 individual must be permitted to enroll in any medi23 care supplemental policy offered by such issuer or

24 affiliate that provides benefits comparable to or less

25 than the benefits provided in the policy being can-
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1 celed or nonrenewed. An individual whose coverage

2 is canceled or nonrenewed under this subparagraph

3 shall, as part of the notice of termination or

4 nonrenewal, be notified of the right to enroll in other

5 medicare supplemental policies offered by the issuer

6 or its affiliates.

7 ‘‘(iii) For purposes of this subparagraph, the

8 term ‘affiliate’ shall have the meaning given such

9 term by the 1991 NAIC Model Regulation.’’.

10 (d) CIVIL MONEY PENALTY.—Section 1882(t)(2) of

11 the Social Security Act (42 U.S.C. 1395ss(t)(2)) is

12 amended—

13 (1) by striking ‘‘(2)’’ and inserting ‘‘(2)(A)’’;

14 (2) by redesignating subparagraphs (A), (B),

15 (C), and (D) as clauses (i), (ii), (iii), and (iv), re16 spectively;

17 (3) in clause (iv), as so redesignated—

18 (A) by striking ‘‘paragraph (1)(E)(i)’’ and

19 inserting ‘‘paragraph (1)(B)(v)(I), and

20 (B) by striking ‘‘paragraph (1)(E)(ii)’’ and

21 inserting ‘‘paragraph (1)(B)(v)(II)’’;

22 (4) by striking ‘‘the previous sentence’’ and in23 serting ‘‘this subparagraph’’; and

24 (5) by adding at the end the following new sub25 paragraph:
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1 ‘‘(B) If the Secretary determines that an issuer of

2 a policy approved under paragraph (1) has made a mis3 representation to the Secretary or has provided the Sec4 retary with false information regarding such policy, the

5 issuer is subject to a civil money penalty in an amount

6 not to exceed $100,000 for each such determination. The

7 provisions of section 1128A (other than the first sentence

8 of subsection (a) and other than subsection (b)) shall

9 apply to a civil money penalty under this subparagraph

10 in the same manner as such provisions apply to a penalty

11 or proceeding under section 1128A(a).’’.

12 (e) EFFECTIVE DATES.—

13 (1) NAIC STANDARDS.—If, within 6 months

14 after the date of the enactment of this Act, the Na15 tional Association of Insurance Commissioners

16 (hereafter in this subsection referred to as the

17 ‘‘NAIC’’) makes changes in the 1991 NAIC Model

18 Regulation (as defined in section 1882(p)(1)(A) of

19 the Social Security Act) to incorporate the additional

20 requirements imposed by the amendments made by

21 this section, section 1882(g)(2)(A) of such Act shall

22 be applied in each State, effective for policies issued

23 to policyholders on and after the date specified in

24 paragraph (3), as if the reference to the Model Reg25 ulation adopted on June 6, 1979, were a reference
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1 to the 1991 NAIC Model Regulation (as so defined)

2 as changed under this paragraph (such changed

3 Regulation referred to in this subsection as the

4 ‘‘1994 NAIC Model Regulation’’).

5 (2) SECRETARY STANDARDS.—If the NAIC

6 does not make changes in the 1991 NAIC Model

7 Regulation (as so defined) within the 6-month period

8 specified in subsection (e), the Secretary of Health

9 and Human Services (hereafter in this subsection re10 ferred to as the ‘‘Secretary’’) shall promulgate a reg11 ulation and section 1882(g)(2)(A) of the Social Se12 curity Act shall be applied in each State, effective

13 for policies issued to policyholders on and after the

14 date specified in paragraph (3), as if the reference

15 to the Model Regulation adopted in June 6, 1979,

16 were a reference to the 1991 NAIC Model Regula17 tion (as so defined) as changed by the Secretary

18 under this paragraph (such changed Regulation re19 ferred to in this subsection as the ‘‘1994 Federal

20 Regulation’’).

21 (3) DATE SPECIFIED.—

22 (A) IN GENERAL.—Subject to subpara23 graph (B), the date specified in this paragraph

24 for a State is the earlier of—
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1 (i) the date the State adopts the 1994

2 NAIC Model Regulation or the 1994 Fed3 eral Regulation; or

4 (ii) 1 year after the date the NAIC or

5 the Secretary first adopts such regulations.

6 (B) ADDITIONAL LEGISLATIVE ACTION RE7 QUIRED.—In the case of a State which the Sec8 retary identifies, in consultation with the NAIC,

9 as—

10 (i) requiring State legislation (other

11 than legislation appropriating funds) in

12 order for medicare supplemental policies to

13 meet the 1994 NAIC Model Regulation or

14 the 1994 Federal Regulation, but

15 (ii) having a legislature which is not

16 scheduled to meet in 1995 in a legislative

17 session in which such legislation may be

18 considered,

19 the date specified in this paragraph is the first

20 day of the first calendar quarter beginning after

21 the close of the first legislative session of the

22 State legislature that begins on or after Janu23 ary 1, 1995. For purposes of the previous sen24 tence, in the case of a State that has a 2-year

25 legislative session, each year of such session
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1 shall be deemed to be a separate regular session

2 of the State legislature.

3 SEC. 8. PSYCHOLOGY SERVICES IN HOSPITALS.

4 Section 1861(e)(4) (42 U.S.C. 1395x(e)(4)) is

5 amended by striking ‘‘physician;’’ and inserting ‘‘physi6 cian, except that a patient receiving qualified psychologist

7 services (as defined in subsection (ii)) may be under the

8 care of a clinical psychologist with respect to such services

9 to the extent permitted under State law;’’.

10 SEC. 9. PAYMENT FOR ANESTHESIA SERVICES FURNISHED

11 DIRECTLY OR CONCURRENTLY TO PATIENTS

12 IN PROVIDERS.

13 (a) PAYMENT FOR ANESTHESIA SERVICES FUR14 NISHED DIRECTLY OR CONCURRENTLY TO PATIENTS IN

15 PROVIDERS.—After consultation with representatives

16 from professional associations of certified registered nurse

17 anesthetists and anesthesiologists, the Secretary of Health

18 and Human Services shall determine conditions for pay19 ment for anesthesia services furnished directly or concur20 rently to patients in a provider in accordance with the re21 quirements of subsection (b), without regard to section

22 405.552(a) of title 42, Code of Federal Regulations (and

23 without regard to any other regulation, ruling, or decision

24 reaching the same result as, or a result similar to, the
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1 result set forth in such section), and with full regard to

2 section 405.550 of such title.

3 (b) REQUIREMENTS.—The requirements of this sub4 section are that the conditions for such payment—

5 (1) shall not restrict certified registered nurse

6 anesthetists, who work with anesthesiologists, from

7 performing all the components of the anesthesia

8 service that such anesthetists are legally authorized

9 to perform;

10 (2) shall not encourage the use of 2 anesthesia

11 providers in cases when it is not medically justified;

12 and

13 (3) shall prevent fraud and abuse in payment

14 for anesthesia services.

15 SEC. 10. IMPROVED REIMBURSEMENT FOR CLINICAL SO16 CIAL WORKER SERVICES UNDER MEDICARE.

17 (a) IN GENERAL.—Section 1833(a)(1)(F)(ii) (42

18 U.S.C. 1395l(a)(1)(F)(ii)) is amended to read as follows:

19 ‘‘(ii) the amount determined by a fee schedule established

20 by the Secretary.’’.

21 (b) EFFECTIVE DATE.—The amendment made by

22 subsection (a) shall become effective with respect to pay23 ments made for clinical social worker services furnished

24 on or after January 1, 1994.
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