II

105TH CONGRESS

1ST SESSION S. 1194

To amend title XVIII of the Social Security Act to clarify the right of

medicare beneficiaries to enter into private contracts with physicians

and other health care professionals for the provision of health services

for which no payment is sought under the medicare program.

IN THE SENATE OF THE UNITED STATES

SEPTEMBER 18, 1997

Mr. KYL (for himself, Mr. BOND, Mr. GRAMM, and Mr. NICKLES) introduced

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

on Finance

A BILL

To amend title XVIII of the Social Security Act to clarify

the right of medicare beneficiaries to enter into private

contracts with physicians and other health care professionals for the provision of health services for which

no payment is sought under the medicare program.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Medicare Beneficiary

5 Freedom To Contract Act of 1997’’.
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1 SEC. 2. USE OF PRIVATE CONTRACTS BY MEDICARE BENE2 FICIARIES FOR PROFESSIONAL SERVICES.

3 (a) IN GENERAL.—Section 1802 of the Social Secu4 rity Act (42 U.S.C. 1395a) is amended by striking sub5 section (b), as added by section 4507(a) of the Balanced

6 Budget Act of 1997 (Public Law 105–33), and inserting

7 the following:

8 ‘‘(b) CLARIFICATION OF USE OF PRIVATE CON9 TRACTS BY MEDICARE BENEFICIARIES FOR PROFES10 SIONAL SERVICES.—

11 ‘‘(1) IN GENERAL.—Nothing in this title shall

12 prohibit a medicare beneficiary from entering into a

13 private contract with a physician or health care

14 practitioner for the provision of medicare covered

15 professional services (as defined in paragraph

16 (5)(C)) if—

17 ‘‘(A) the services are covered under a pri18 vate contract that is between the beneficiary

19 and the physician or practitioner and meets the

20 requirements of paragraph (2);

21 ‘‘(B) under the private contract no claim

22 for payment for services covered under the con23 tract is to be submitted (and no payment made)

24 under part A or B, under a contract under sec25 tion 1876, or under a Medicare+Choice plan

26 (other than an MSA plan); and
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1 ‘‘(C)(i) the Secretary has been provided

2 with the minimum information necessary to

3 avoid any payment under part A or B for serv4 ices covered under the contract, or

5 ‘‘(ii) in the case of an individual enrolled

6 under a contract under section 1876 or a

7 Medicare+Choice plan (other than an MSA

8 plan) under part C, the eligible organization

9 under the contract or the Medicare+Choice or10 ganization offering the plan has been provided

11 the minimum information necessary to avoid

12 any payment under such contract or plan for

13 services covered under the contract.

14 ‘‘(2) REQUIREMENTS FOR PRIVATE CON15 TRACTS.—The requirements in this paragraph for a

16 private contract between a medicare beneficiary and

17 a physician or health care practitioner are as fol18 lows:

19 ‘‘(A) GENERAL FORM OF CONTRACT.—The

20 contract is in writing and is signed by the medi21 care beneficiary.

22 ‘‘(B) NO CLAIMS TO BE SUBMITTED FOR

23 COVERED SERVICES.—The contract provides

24 that no party to the contract (and no entity on

25 behalf of any party to the contract) shall sub-
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1 mit any claim for (or request) payment for

2 services covered under the contract under part

3 A or B, under a contract under section 1876,

4 or under a Medicare+Choice plan (other than

5 an MSA plan).

6 ‘‘(C) SCOPE OF SERVICES.—The contract

7 identifies the medicare covered professional

8 services and the period (if any) to be covered

9 under the contract, but does not cover any serv10 ices furnished—

11 ‘‘(i) before the contract is entered

12 into; or

13 ‘‘(ii) for the treatment of an emer14 gency medical condition (as defined in sec15 tion 1867(e)(1)(A)), unless the contract

16 was entered into before the onset of the

17 emergency medical condition.

18 ‘‘(D) CLEAR DISCLOSURE OF TERMS.—The

19 contract clearly indicates that by signing the

20 contract the medicare beneficiary—

21 ‘‘(i) agrees not to submit a claim (or

22 to request that anyone submit a claim)

23 under part A or B (or under section 1876

24 or under a Medicare+Choice plan, other
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1 than an MSA plan) for services covered

2 under the contract;

3 ‘‘(ii) agrees to be responsible, whether

4 through insurance or otherwise, for pay5 ment for such services and understands

6 that no reimbursement will be provided

7 under such part, contract, or plan for such

8 services;

9 ‘‘(iii) acknowledges that no limits

10 under this title (including limits under

11 paragraph (1) and (3) of section 1848(g))

12 will apply to amounts that may be charged

13 for such services;

14 ‘‘(iv) acknowledges that medicare sup15 plemental policies under section 1882 do

16 not, and other supplemental health plans

17 and policies may elect not to, make pay18 ments for such services because payment is

19 not made under this title; and

20 ‘‘(v) acknowledges that the beneficiary

21 has the right to have such services pro22 vided by (or under the supervision of)

23 other physicians or health care practition24 ers for whom payment would be made

25 under such part, contract, or plan.
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1 Such contract shall also clearly indicate whether

2 the physician or practitioner involved is ex3 cluded from participation under this title.

4 ‘‘(3) MODIFICATIONS.—The parties to a private

5 contract may mutually agree at any time to modify

6 or terminate the contract on a prospective basis,

7 consistent with the provisions of paragraphs (1) and

8 (2).

9 ‘‘(4) NO REQUIREMENTS FOR SERVICES FUR10 NISHED TO MSA PLAN ENROLLEES.—The require11 ments of paragraphs (1) and (2) do not apply to any

12 contract or arrangement for the provision of services

13 to a medicare beneficiary enrolled in an MSA plan

14 under part C.

15 ‘‘(5) DEFINITIONS.—In this subsection:

16 ‘‘(A) HEALTH CARE PRACTITIONER.—The

17 term ‘health care practitioner’ means a practi18 tioner described in section 1842(b)(18)(C).

19 ‘‘(B) MEDICARE BENEFICIARY.—The term

20 ‘medicare beneficiary’ means an individual who

21 is enrolled under part B.

22 ‘‘(C) MEDICARE COVERED PROFESSIONAL

23 SERVICES.—The term ‘medicare covered profes24 sional services’ means—
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1 ‘‘(i) physicians’ services (as defined in

2 section 1861(q), and including services de3 scribed in section 1861(s)(2)(A)), and

4 ‘‘(ii) professional services of health

5 care practitioners, including services de6 scribed in section 1842(b)(18)(D),

7 for which payment may be made under part A

8 or B, under a contract under section 1876, or

9 under a Medicare+Choice plan but for the pro10 visions of a private contract that meets the re11 quirements of paragraph (2).

12 ‘‘(D) MEDICARE+CHOICE PLAN; MSA

13 PLAN.—The terms ‘Medicare+Choice plan’ and

14 ‘MSA plan’ have the meanings given such terms

15 in section 1859.

16 ‘‘(E) PHYSICIAN.—The term ‘physician’

17 has the meaning given such term in section

18 1861(r).’’.

19 (b) CONFORMING AMENDMENTS CLARIFYING EX20 EMPTION FROM LIMITING CHARGE AND FROM REQUIRE21 MENT FOR SUBMISSION OF CLAIMS.—Section 1848(g) of

22 the Social Security Act (42 U.S.C. 1395w–4(g)) is amend23 ed—

24 (1) in paragraph (1)(A), by striking ‘‘In’’ and

25 inserting ‘‘Subject to paragraph (8), in’’;
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1 (2) in paragraph (3)(A), by striking ‘‘Payment’’

2 and inserting ‘‘Subject to paragraph (8), payment’’;

3 (3) in paragraph (4)(A), by striking ‘‘For’’ and

4 inserting ‘‘Subject to paragraph (8), for’’; and

5 (4) by adding at the end the following new

6 paragraph:

7 ‘‘(8) EXEMPTION FROM REQUIREMENTS FOR

8 SERVICES FURNISHED UNDER PRIVATE CON9 TRACTS.—

10 ‘‘(A) IN GENERAL.—Pursuant to section

11 1802(b)(1), paragraphs (1), (3), and (4) do not

12 apply with respect to physicians’ services (and

13 services described in section 1861(s)(2)(A)) fur14 nished to an individual by (or under the super15 vision of) a physician if the conditions described

16 in section 1802(b)(1) are met with respect to

17 the services.

18 ‘‘(B) NO RESTRICTIONS FOR ENROLLEES

19 IN MSA PLANS.—Such paragraphs do not apply

20 with respect to services furnished to individuals

21 enrolled with MSA plans under part C, without

22 regard to whether the conditions described in

23 subparagraphs (A) through (C) of section

24 1802(b)(1) are met.
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1 ‘‘(C) APPLICATION TO ENROLLEES IN

2 OTHER PLANS.—Subject to subparagraph (B)

3 and section 1852(k)(2), the provisions of sub4 paragraph (A) shall apply in the case of an in5 dividual enrolled under a contract under section

6 1876 or under a Medicare+Choice plan (other

7 than an MSA plan) under part C, in the same

8 manner as they apply to individuals not enrolled

9 under such a contract or plan.’’.

10 (c) CONFORMING AMENDMENTS.—

11 (1) Section 1842(b)(18) of the Social Security

12 Act (42 U.S.C. 1395u(b)(18)) is amended by adding

13 at the end the following:

14 ‘‘(E) The provisions of section 1848(g)(8) shall apply

15 with respect to exemption from limitations on charges and

16 from billing requirements for services of health care prac17 titioners described in this paragraph in the same manner

18 as such provisions apply to exemption from the require19 ments referred to in section 1848(g)(8)(A) for physicians’

20 services.’’.

21 (2) Section 1866(a)(1)(O) of such Act (42

22 U.S.C. 1395cc(a)(1)(O)), as amended by section

23 4002(e) of the Balanced Budget Act of 1997, is

24 amended by inserting ‘‘(other than under an MSA
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1 plan)’’ after ‘‘Medicare+Choice organization under

2 part C’’.

3 (3) Section 4507(b) of the Balanced Budget

4 Act of 1997 (Public Law 105–33; 111 Stat. 441) is

5 amended—

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

7 striking ‘‘on the program under this title of pri8 vate contracts entered into under the amend9 ment made by subsection (a)’’ and inserting

10 ‘‘on title XVIII of the Social Security Act of

11 private contracts permitted under section

12 1802(b) of such Act’’; and

13 (B) in paragraph (2), by striking ‘‘section

14 1802(b) of such Act (as added by subsection

15 (a))’’ and inserting ‘‘such section’’.

16 (d) EFFECTIVE DATE.—The amendments made by

17 this section shall be effective as if included in the enact18 ment of section 4507 of the Balanced Budget Act of 1997.

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