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[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[S. 146 Introduced in Senate (IS)]

105th CONGRESS
  1st Session
                                 S. 146

  To permit medicare beneficiaries to enroll with qualified provider-
 sponsored organizations under title XVIII of the Social Security Act, 
                        and for other purposes.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                            January 21, 1997

 Mr. Frist for Mr. Rockefeller (for himself and Mr. Frist) introduced 
the following bill; which was read twice and referred to the Committee 
                               on Finance

_______________________________________________________________________

                                 A BILL

 
  To permit medicare beneficiaries to enroll with qualified provider-
 sponsored organizations under title XVIII of the Social Security Act, 
                        and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; REFERENCES.

    (a) Short Title.--This Act may be cited as the ``Provider-Sponsored 
Organization Act of 1997''.
    (b) References to Social Security Act.--Except as otherwise 
specifically provided, whenever in this Act an amendment is expressed 
in terms of an amendment to or repeal of a section or other provision, 
the reference shall be considered to be made to that section or other 
provision of the Social Security Act.

SEC. 2. QUALIFIED PROVIDER-SPONSORED ORGANIZATIONS AS MEDICARE HEALTH 
              PLAN OPTION.

    Section 1876(b) (42 U.S.C. 1395mm(b)) is amended to read as 
follows:
    ``(b)(1) For purposes of this section, the term `eligible 
organization' means a public or private entity (which may be a health 
maintenance organization, a competitive medical plan, or a qualified 
provider-sponsored organization) that--
            ``(A) is organized and licensed under State law to offer 
        prepaid health services or health benefits coverage in each 
        State in which the entity seeks to enroll individuals who are 
        entitled to benefits under this title; and
            ``(B) is described in paragraph (2), (3), or (4).
    ``(2) An entity is described in this paragraph if the entity is a 
qualified health maintenance organization (as defined in section 
1310(d) of the Public Health Service Act).
    ``(3)(A) An entity is described in this paragraph if the entity--
            ``(i) provides to enrolled members health care services 
        that include at least--
                    ``(I) physicians' services performed by physicians 
                (as defined in section 1861(r)(1));
                    ``(II) inpatient hospital services;
                    ``(III) laboratory, X-ray, emergency, and 
                preventive services; and
                    ``(IV) out-of-area coverage;
            ``(ii) is compensated (except for deductibles, coinsurance, 
        and copayments) for the provision of health care services to 
        enrolled members by a payment which is paid on a periodic basis 
        without regard to the date the health care services are 
        provided and which is fixed without regard to the frequency, 
        extent, or kind of health care service actually provided to a 
        member;
            ``(iii) provides physicians' services primarily--
                    ``(I) directly through physicians who are either 
                employees or partners of such organization; or
                    ``(II) through contracts with individual physicians 
                or 1 or more groups of physicians (organized on a group 
                practice or individual practice basis);
            ``(iv) except as provided in subsection (i), assumes full 
        financial risk on a prospective basis for the provision of 
        health care services listed in clause (i), except that such 
        entity may--
                    ``(I) obtain insurance or make other arrangements 
                for the cost of providing to any enrolled member health 
                care services listed in clause (i), the aggregate value 
                of which exceeds $5,000 in any year;
                    ``(II) obtain insurance or make other arrangements 
                for the cost of health care services listed in clause 
                (i) provided to its enrolled members other than through 
                the entity because medical necessity required their 
                provision before they could be secured through the 
                entity;
                    ``(III) obtain insurance or make other arrangements 
                for not more than 90 percent of the amount by which its 
                costs for any of its fiscal years exceed 115 percent of 
                its income for such fiscal year; and
                    ``(IV) make arrangements with physicians or other 
                health professionals, health care institutions, or any 
                combination of such individuals or institutions to 
                assume all or part of the financial risk on a 
                prospective basis for the provision of basic health 
                services by the physicians or other health 
professionals or through the institutions; and
            ``(v) has made adequate provision against the risk of 
        insolvency, which provision is satisfactory to the Secretary.
    ``(B) Subparagraph (A)(i)(II) shall not apply to an entity that has 
contracted with a single State agency administering a State plan 
approved under title XIX for the provision of services (other than 
inpatient hospital services) to individuals eligible for such services 
under such State plan on a prepaid risk basis prior to 1970.
    ``(4) An entity is described in this paragraph if the entity is a 
qualified provider-sponsored organization (as defined in subsection 
(l)(1)(A)).''.

SEC. 3. PARTIAL RISK ARRANGEMENTS.

    Section 1876 (42 U.S.C. 1395mm) is amended--
            (1) by redesignating subsections (i) and (j) as subsections 
        (j) and (k), respectively; and
            (2) by inserting after subsection (h) the following:
    ``(i) The Secretary may enter into a partial risk contract with an 
eligible organization under which--
            ``(1) notwithstanding subsection (b)(3)(A)(iv), the 
        organization and the program established under this title share 
        the financial risk associated with the services the 
        organization provides to individuals entitled to benefits under 
        part A and enrolled under part B or enrolled under part B only;
            ``(2) notwithstanding subsections (a)(1) and (h)(2), 
        payment is based on--
                    ``(A) a blend of--
                            ``(i) the payments that would otherwise be 
                        made to such organization under a risk-sharing 
                        contract under subsection (g); and
                            ``(ii) the payments that would be made to 
                        such organization under a reasonable cost 
                        reimbursement contract under subsection (h); or
                    ``(B) any other methodology agreed upon by the 
                Secretary and the organization; and
            ``(3) adjustments, if appropriate, are made to payments to 
        the organization under this section to reflect any risk assumed 
        by such program.''.

SEC. 4. STANDARDS AND REQUIREMENTS FOR QUALIFIED PROVIDER-SPONSORED 
              ORGANIZATIONS.

    Section 1876 (42 U.S.C. 1395mm), as amended by section 3 of this 
Act, is amended by adding at the end the following:
    ``(l)(1)(A) For purposes of this section, the term `qualified 
provider-sponsored organization' means a provider-sponsored 
organization that--
            ``(i) provides a substantial proportion (as defined by the 
        Secretary, in accordance with subparagraph (C) and the 
        regulations established under section 1889) of the health care 
        items and services under the contract under this section 
        directly through the provider or through an affiliated group of 
        providers that comprise the organization; and
            ``(ii) is certified under section 1890 as meeting the 
        regulations established under section 1889, which, except as 
        provided in the succeeding paragraphs of this subsection, shall 
        be based on the requirements that apply to an organization 
        described in subsection (b)(3) with a risk contract under 
        subsection (g).
    ``(B) For purposes of this section, the term `provider-sponsored 
organization' means a public or private entity that is a provider or a 
group of affiliated providers organized to deliver a spectrum of health 
care services (including basic hospital and physicians' services) under 
contract to purchasers of such services.
    ``(C) In defining a `substantial proportion' for purposes of 
subparagraph (A)(i), the Secretary--
            ``(i) shall take into account the need for such an 
        organization to assume responsibility for providing--
                    ``(I) significantly more than the majority of the 
                items and services under the contract under this 
                section through its own affiliated providers; and
                    ``(II) most of the remainder of the items and 
                services under the contract through providers with 
                which the organization has an agreement to provide such 
                items and services,
        in order to assure financial stability and to address the 
        practical considerations involved in integrating the delivery 
        of a wide range of service providers;
            ``(ii) shall take into account the need for such an 
        organization to provide a limited proportion of the items and 
        services under the contract through providers that are neither 
        affiliated with nor have an agreement with the organization; 
        and
            ``(iii) may allow for variation in the definition of 
        substantial proportion among such organizations based on 
        relevant differences among the organizations, such as their 
        location in an urban or rural area.
    ``(D) For purposes of this paragraph, a provider is `affiliated' 
with another provider if, through contract, ownership, or otherwise--
            ``(i) one provider, directly or indirectly, controls, is 
        controlled by, or is under the control of the other;
            ``(ii) each provider is a participant in a lawful 
        combination under which each provider shares, directly or 
        indirectly, substantial financial risk in connection with their 
        operations;
            ``(iii) both providers are part of a controlled group of 
        corporations under section 1563 of the Internal Revenue Code of 
        1986; or
            ``(iv) both providers are part of an affiliated service 
        group under section 414 of such Code.
    ``(E) For purposes of subparagraph (D), control is presumed to 
exist if one party, directly or indirectly, owns, controls, or holds 
the power to vote, or proxies for, not less than 51 percent of the 
voting rights or governance rights of another.
    ``(2)(A) Subject to subparagraph (B), subsection (b)(1)(A) 
(relating to State licensure) shall not apply to a qualified provider-
sponsored organization.
    ``(B) Beginning on January 1, 2002, subsection (b)(1)(A) shall only 
apply (and subparagraph (A) of this paragraph shall no longer apply) to 
a qualified provider-sponsored organization in a State if--
            ``(i) the financial solvency and capital adequacy standards 
        for licensure of the organization under the laws of the State 
        are identical to the regulations established under section 
        1889; and
            ``(ii) the standards for licensure of the organization 
        under the laws of the State (other than the standards referred 
        to in clause (i)) are substantially equivalent to the standards 
        established by regulations under section 1889.
    ``(C)(i) A provider-sponsored organization, to which subsection 
(b)(1)(A) applies by reason of subparagraph (B), that seeks to operate 
in a State under a full risk contract under subsection (g) or a partial 
risk contract under subsection (i) may apply for a waiver of the 
requirement of subsection (b)(1)(A) for that organization operating in 
that State.
    ``(ii) The Secretary shall act on such a waiver application within 
60 days after the date it is filed and shall grant a waiver for an 
organization with respect to a State if the Secretary determines that--
            ``(I) the State did not act upon a licensure application 
        within 90 days after the date it was filed; or
            ``(II)(aa) the State denied a licensure application; and
            ``(bb) the State's licensing standards or review process 
        are determined by the Secretary to impose unreasonable barriers 
        to market entry, including through the imposition of any 
        requirements, procedures, or other standards on such 
        organization that are not generally applicable to any other 
        entities engaged in substantially similar activities.
    ``(iii) In the case of a waiver granted under this paragraph for an 
organization--
            ``(I) the waiver shall be effective for a 24-month period, 
        except that it may be renewed based on a subsequent application 
        filed during the last 6 months of such period;
            ``(II) if the State failed to meet the requirement of 
        clause (ii)(I)--
                    ``(aa) any application for a renewal may be made on 
                the basis described in clause (ii)(I) only if the State 
                does not act on a pending licensure application during 
                the 24-month period specified in subclause (I);
                    ``(bb) any application for renewal (other than one 
                made on the basis described in clause (ii)(I)) may be 
                made only on the basis described in clause (ii)(II); 
                and
                    ``(cc) the waiver shall cease to be effective on 
                approval of the licensure application by the State 
                during such 24-month period; and
            ``(III) any provisions of State law that relate to the 
        licensing of the organization and prohibit the organization 
        from providing coverage pursuant to a contract under this title 
        shall be superseded during the period for which such waiver is 
        effective.
    ``(D) Nothing in this paragraph shall be construed as--
            ``(i) limiting the number of times such a waiver may be 
        renewed under subparagraph (C)(iii)(I); or
            ``(ii) affecting the operation of section 514 of the 
        Employee Retirement Income Security Act of 1974 (29 U.S.C. 
        1144).
    ``(3) The requirement of subsection (b)(3)(A)(i) (relating to 
benefit package for commercial enrollees) shall not apply to a 
qualified provider-sponsored organization.
    ``(4) The requirement of subsection (b)(3)(A)(iii) (relating to 
delivery of physicians' services) shall apply to a qualified provider-
sponsored organization, except that the Secretary shall by regulation 
specify alternative delivery models or arrangements that may be used by 
such organizations in lieu of the models or arrangements specified in 
such subsection.
    ``(5) The requirement of subsection (b)(3)(A)(iv) (relating to risk 
assumption) shall apply to a qualified provider-sponsored organization, 
except that any such organization with a full risk contract under 
subsection (g) may (with the approval of the Secretary) obtain 
insurance or make other arrangements for covering costs in excess of 
those permitted to be covered by such insurance and any arrangements 
under subsection (b)(3)(A)(iv)(III).
    ``(6)(A) A qualified provider-sponsored organization shall be 
treated as meeting the requirement of subsection (b)(3)(A)(v) (relating 
to adequate provision against risk of insolvency) if the organization 
is fiscally sound.
    ``(B) A qualified provider-sponsored organization shall be treated 
as fiscally sound for purposes of subparagraph (A) if the 
organization--
            ``(i) has a net worth that is not less than the required 
        net worth (as defined in subparagraph (C)); and
            ``(ii) has established adequate claims reserves (as defined 
        in subparagraph (D)).
    ``(C) For purposes of subparagraph (B)(i), the term `required net 
worth' means--
            ``(i) in the case of an organization with a full risk 
        contract under subsection (g), a net worth (determined in 
        accordance with statutory accounting principles for insurance 
        companies and health maintenance organizations), not less than 
        the greatest of--
                    ``(I) $1,500,000 at the time of application and 
                $1,000,000 thereafter,
                    ``(II) the sum of--
                            ``(aa) 8 percent of the cost of health 
                        services that are not provided directly by the 
                        organization or its affiliated providers to 
                        enrollees; and
                            ``(bb) 4 percent of the estimated annual 
                        costs of health services provided directly by 
                        the organization or its affiliated providers to 
                        enrollees; or
                    ``(III) 3 months of uncovered expenditures; and
            ``(ii) in the case of an organization with a partial risk 
        contract under subsection (i), an amount determined in 
        accordance with clause (i), except that in applying subclause 
        (II) of such clause, the Secretary shall substitute for the 
        percentages specified in such subclause such lower percentages 
        as are appropriate to reflect the risk-sharing arrangements 
        under the contract.
    ``(D) For purposes of subparagraph (B)(ii), the term `adequate 
claims reserves' means, with respect to an organization, reserves for 
claims that are--
            ``(i) incurred but not reported; or
            ``(ii) reported but unpaid,
that are determined in accordance with statutory accounting principles 
for insurance companies and health maintenance organizations and with 
professional standards of actuarial practice and are certified by an 
independent actuary as adequate in light of the operations and 
contracts of the organization.
    ``(E) In applying statutory accounting principles for purposes of 
determining the net worth of an organization under subparagraph (B)(i), 
the Secretary shall--
            ``(i) treat as `admitted assets'--
                    ``(I) land, buildings, and equipment of the 
                organization used for the direct provision of health 
                care services;
                    ``(II) any receivables from governmental programs 
                due for more than 90 days; and
                    ``(III) any other assets designated by the 
                Secretary; and
            ``(ii) recognize, as a contribution to surplus, amounts 
        received under subordinated debt (meeting such requirements as 
        the Secretary may specify).
    ``(F) The Secretary shall recognize ways of complying with the 
requirement of subparagraph (A) other than by means of subparagraph 
(B), including (alone or in combination)--
            ``(i) letters of credit from a bank;
            ``(ii) financial guarantees from financially strong parties 
        including affiliates;
            ``(iii) unrestricted fund balances;
            ``(iv) diversity of lines of business and presence of 
        nonrisk related revenue;
            ``(v) certification of fiscal soundness by an independent 
        actuary;
            ``(vi) reinsurance ceded to, or stop loss insurance 
        purchased through, a recognized commercial insurance company; 
        and
            ``(vii) any other methods that the Secretary determines are 
        acceptable for such purpose.
    ``(7)(A) A qualified provider-sponsored organization shall not be 
treated as meeting the requirements of subsection (c)(6) (relating to 
an ongoing quality assurance program) unless the quality assurance 
program of the organization meets the requirements of subparagraphs (B) 
and (C).
    ``(B) A quality assurance program meets the requirements of this 
subparagraph if the program--
            ``(i) stresses health outcomes;
            ``(ii) provides opportunities for input by physicians and 
        other health care professionals;
            ``(iii) monitors and evaluates high volume and high risk 
        services and the care of acute and chronic conditions;
            ``(iv) evaluates the continuity and coordination of care 
        that enrollees receive;
            ``(v) establishes mechanisms to detect both 
        underutilization and overutilization of services;
            ``(vi) after identifying areas for improvement, establishes 
        or alters practice parameters;
            ``(vii) takes action to improve quality and assess the 
        effectiveness of such action through systematic followup;
            ``(viii) makes available information on quality and 
        outcomes measures to facilitate beneficiary comparison and 
        choice of health coverage options (in such form and on such 
        quality and outcomes measures as the Secretary determines to be 
        appropriate); and
            ``(ix) is evaluated on an ongoing basis as to its 
        effectiveness.
    ``(C) If a qualified provider-sponsored organization utilizes case-
by-case utilization review, the organization shall--
            ``(i) base such review on written protocols developed on 
        the basis of current standards of medical practice; and
            ``(ii) implement a plan under which--
                    ``(I) such review is coordinated with the quality 
                assurance program of the organization; and
                    ``(II) a transition is made from relying 
                predominantly on case-by-case review to review focusing 
                on patterns of care.
    ``(D) A qualified provider-sponsored organization shall be treated 
as meeting the requirements of subparagraphs (A) and (B) and the 
requirements of subsection (c)(6) if the organization is accredited 
(and periodically reaccredited) by a private organization under a 
process that the Secretary has determined assures that the organization 
meets standards that are no less stringent than the standards 
established under section 1889 to carry out this paragraph and 
subsection (c).''.

SEC. 5. EXEMPTION FROM CERTAIN ENROLLMENT REQUIREMENTS FOR ELIGIBLE 
              ORGANIZATIONS MEETING ENHANCED QUALITY ASSURANCE 
              REQUIREMENTS.

    (a) In General.--Section 1876 of the Social Security Act (42 U.S.C. 
1395mm), as amended by section 4 of this Act, is amended by adding at 
the end the following:
    ``(m)(1) An eligible organization shall be deemed to meet the 
requirements of subsection (f) (relating to enrollment composition) if 
the organization demonstrates that it--
            ``(A) is capable of providing coordinated care in 
        accordance with the quality assurance standards established 
        under subsections (c)(6) and (l)(7)(B); and
            ``(B) has experience, under a past or present arrangement, 
        providing coordinated care to individuals (other than 
        individuals who are entitled to benefits under this title) who 
        are enrollees, participants, or beneficiaries of a health plan 
        or a State plan approved under title XIX.
    ``(2) An eligible organization shall be treated as meeting the 
quality assurance standards referred to in paragraph (1)(A) if the 
organization is accredited (and periodically reaccredited) by a private 
organization under a process that the Secretary has determined assures 
that the organization meets standards that are no less stringent than 
the requirements of that subparagraph.
    ``(3) For purposes of paragraph (1), the term `health plan' means--
            ``(A) any contract of insurance, including any hospital or 
        medical service policy or certificate, hospital or medical 
        service plan contract, or health maintenance organization 
        contract, that is provided by a carrier; and
            ``(B) an employee welfare benefit plan insofar as the plan 
        provides health benefits and is funded in a manner other than 
        through the purchase of one or more policies or contracts 
        described in subparagraph (A).
    ``(4) For purposes of paragraph (3), the term `carrier' means a 
licensed insurance company, a hospital or medical service corporation 
(including an existing Blue Cross or Blue Shield organization), or any 
other entity licensed or certified by a State to provide health 
insurance or health benefits.''.
    (b) Size Requirement for Eligible Organizations.--Section 
1876(g)(1) (42 U.S.C. 1395mm(g)(1)) is amended--
            (1) by striking ``5000'' and inserting ``1500''; and
            (2) by striking ``fewer'' and inserting ``500 or more''.
    (c) Conforming Amendment.--Section 1876(f)(1) (42 U.S.C. 
1395mm(f)(1)) is amended by striking ``Each eligible'' and inserting 
``Except as provided in subsection (m), each eligible''.

SEC. 6. ADJUSTED COMMUNITY RATE FOR A QUALIFIED PROVIDER-SPONSORED 
              ORGANIZATION.

    Section 1876(g) (42 U.S.C. 1395mm(g)) is amended by adding at the 
end the following:
    ``(7) In the case of a qualified provider-sponsored organization, 
the adjusted community rate under subsection (e)(3) and paragraph (2) 
may be computed (in a manner specified by the Secretary) using data in 
the general commercial marketplace or (during a transition period) 
based on the costs incurred by the organization in providing such a 
product.''.

SEC. 7. PROCEDURES RELATING TO PARTICIPATION OF A PHYSICIAN IN A 
              QUALIFIED PROVIDER-SPONSORED ORGANIZATION.

    Section 1876 (42 U.S.C. 1395mm), as amended by section 5 of this 
Act, is amended by adding at the end the following:
    ``(n) A qualified provider-sponsored organization shall not be 
treated as meeting the requirements of this section unless the 
organization--
            ``(1) establishes reasonable procedures, as determined by 
        the Secretary, relating to the participation (under an 
        agreement between a physician or group of physicians and the 
        organization) of physicians under contracts under this section, 
        including procedures to provide--
                    ``(A) notice of the rules regarding participation;
                    ``(B) written notice of a participation decision 
                that is adverse to a physician; and
                    ``(C) a process within the organization for 
                appealing an adverse decision, including the 
                presentation of information and views of the physician 
                regarding such decision; and
            ``(2) consults with physicians who have entered into 
        participation agreements with the organization regarding the 
        organization's medical policy, quality, and medical management 
        procedures.
Paragraph (1)(C) shall not be construed to require a live evidentiary 
hearing, a verbatim record, or representation of the appealing party by 
legal counsel.''.

SEC. 8. ESTABLISHMENT OF REGULATIONS; CERTIFICATION PROCEDURES.

    Part C of title XVIII (42 U.S.C. 1395x et seq.) is amended by 
inserting after section 1888 (42 U.S.C. 1395yy) the following:

    ``establishment of regulations for qualified provider-sponsored 
                             organizations

    ``Sec. 1889. (a) Interim Regulations.--
            ``(1) In general.--Not later than 180 days after the date 
        of enactment of this section, the Secretary shall promulgate 
        regulations to implement the requirements for qualified 
        provider-sponsored organizations under section 1876). Such 
        regulations shall be issued on an interim basis, but shall 
        become effective upon publication and shall remain in effect 
        until the end of December 31, 2001.
            ``(2) Consultation.--In developing regulations under this 
        subsection, the Secretary shall consult with the National 
        Association of Insurance Commissioners, the American Academy of 
        Actuaries, State health departments, associations representing 
        provider-sponsored organizations, quality experts (including 
        private accreditation organizations), and medicare 
        beneficiaries.
            ``(3) Contracts with state agencies.--The Secretary shall 
        enter into contracts with appropriate State agencies to monitor 
        performance and beneficiary access to services provided under 
        this title during the period in which interim regulations are 
        in effect under this subsection.
    ``(b) Permanent Regulations.--
            ``(1) In general.--Not later than July 1, 2001, the 
        Secretary shall issue permanent regulations to implement the 
        requirements for qualified provider-sponsored organizations 
        under section 1876.
            ``(2) Consultation.--In developing regulations under this 
        subsection, the Secretary shall consult with the organizations 
        and individuals listed in subsection (a)(2).
            ``(3) Effective date.--The permanent regulations developed 
        under this subsection shall be effective on and after January 
        1, 2002.

          ``certification of provider-sponsored organizations

    ``Sec. 1890. (a) In General.--
            ``(1) Process for certification.--The Secretary shall 
        establish a process for the certification of provider-sponsored 
        organizations as qualified provider-sponsored organizations 
        under section 1876. Such process shall provide that an 
        application for certification shall be approved or denied not 
later than 90 days after receipt of a complete application.
            ``(2) Fees.--The Secretary may impose user fees on entities 
        seeking certification under this subsection in such amounts as 
        the Secretary deems sufficient to pay the costs to the 
        Secretary resulting from the certification process.
    ``(b) Decertification.--If a qualified provider-sponsored 
organization is decertified under this section, the organization shall 
notify each enrollee with the organization under section 1876 of such 
decertification.''.

SEC. 9. DEMONSTRATION OF COORDINATED ACUTE AND LONG-TERM CARE BENEFITS; 
              QUALIFIED PROVIDER-SPONSORED ORGANIZATIONS UNDER MEDICAID 
              PROGRAMS.

    (a) Demonstration of Coordinated Acute and Long-Term Care 
Benefits.--The Secretary of Health and Human Services shall provide, in 
not less than 10 States, for demonstration projects that permit State 
medicaid programs under title XIX of the Social Security Act (42 U.S.C. 
1396 et seq.) to be treated as eligible organizations under section 
1876 of that Act (42 U.S.C. 1395mm) for the purpose of demonstrating 
the delivery of primary, acute, and long-term care through an 
integrated delivery network that emphasizes noninstitutional care to 
individuals who are--
            (1) eligible to enroll with an organization under such 
        section; and
            (2) eligible to receive medical assistance under a State 
        program approved under title XIX of the Social Security Act (42 
        U.S.C. 1396 et seq.).
    (b) Provider-Sponsored Organizations Under Medicaid Programs.--
Section 1903(m)(1)(A) (42 U.S.C. 1396b(m)(1)(A)) is amended, in the 
matter preceding clause (i), by inserting ``(which may be a provider-
sponsored organization, as defined in section 1876(l)(1)(B))'' after 
``public or private organization''.
    (c) Conforming Amendments.--
            (1) Section 1866(a)(1)(O) is amended by striking 
        ``1876(i)(2)(A)'' and inserting ``1876(j)(2)(A)''.
            (2) Section 1877(e)(3)(B)(i)(II) is amended by striking 
        ``1876(i)(8)(A)(ii)'' and inserting ``1876(j)(8)(A)(ii)''.

SEC. 10. REPORT ON MEDICARE CONTRACTS INVOLVING PARTIAL RISK.

    (a) Report.--Not later than 4 years after the date of enactment of 
this Act, the Secretary of Health and Human Services (in this section 
referred to as the ``Secretary'') shall submit a report to the 
Committee on Ways and Means and the Committee on Commerce of the House 
of Representatives and the Committee on Finance of the Senate.
    (b) Contents of Report.--The report described in subsection (a) 
shall include--
            (1) the number and type of partial-risk contracts entered 
        into by the Secretary under section 1876(i) of the Social 
        Security Act (42 U.S.C. 1395mm(i));
            (2) the type of eligible organizations operating such 
        contracts;
            (3) the impact such contracts have had on increasing 
        beneficiary access and choice under the medicare program under 
        title XVIII of that Act (42 U.S.C. 1395 et seq.); and
            (4) a recommendation as to whether the Secretary should 
        continue to enter into partial-risk contracts under section 
        1876(i) of that Act (42 U.S.C. 1395mm(i)).

SEC. 11. EFFECTIVE DATES; INTERIM FINAL REGULATIONS.

    (a) Effective Dates.--
            (1) In general.--Except as provided in paragraph (2), this 
        Act and the amendments made by this Act shall take effect on 
        the date of enactment of this Act.
            (2) Eligible organization amendments.--The amendments made 
        by sections 2 through 8 shall take effect on the date of 
        enactment of this Act and shall apply to contract years 
        beginning on or after January 1, 1998.
    (b) Use of Interim Final Regulations.--In order to carry out the 
amendments made by this Act in a timely manner for eligible 
organizations under section 1876 of the Social Security Act (42 U.S.C. 
1395mm), excluding organizations described in subsection (b)(4) of that 
section, the Secretary of Health and Human Services may promulgate 
regulations that take effect on an interim basis, after notice and 
opportunity for public comment.
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