II

106TH CONGRESS

2D SESSION S. 2110

To amend title XVIII of the Social Security Act to provide for payment

of claims by health care providers against insolvent Medicare+Choice

organizations and for other purposes.

IN THE SENATE OF THE UNITED STATES

FEBRUARY 28, 2000

Mr. KYL 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 provide

for payment of claims by health care providers against

insolvent Medicare+Choice organizations and for other

purposes.

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

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

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

5 ‘‘Medicare+Choice Beneficiary Confidence Act of 2000’’.

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

7 this Act is as follows:

Sec. 1. Short title; table of contents.

Sec. 2. Payment of claims against insolvent Medicare+Choice organizations.
2

•S 2110 IS

‘‘Sec. 1856A. Payment of claims against insolvent Medicare+Choice organizations.’’.

Sec. 3. Improved communication regarding the solvency of Medicare+Choice

organizations between HCFA and the States.

Sec. 4. Response by the Secretary to failure of Medicare+Choice organizations

to provide prompt payment.

Sec. 5. Surety bond required of Medicare+Choice organizations.

1 SEC. 2. PAYMENT OF CLAIMS AGAINST INSOLVENT

2 MEDICARE+CHOICE ORGANIZATIONS.

3 (a) IN GENERAL.—Title XVIII of the Social Security

4 Act (42 U.S.C. 1395 et seq.) is amended by inserting after

5 section 1856 the following new section:

6 ‘‘PAYMENT OF CLAIMS AGAINST INSOLVENT

7 MEDICARE+CHOICE ORGANIZATIONS

8 ‘‘SEC. 1856A. (a) PAYMENT OF CLAIMS.—

9 ‘‘(1) INSOLVENT MEDICARE+CHOICE ORGANI10 ZATIONS.—

11 ‘‘(A) SUBMISSION OF UNPAID CLAIMS TO

12 HCFA.—If a statutory successor is appointed

13 for an insolvent Medicare+Choice organization,

14 such statutory successor shall submit to the

15 Secretary each valid unpaid clean claim (as de16 fined in section 1842(c)(2)(B)(i)) by a health

17 care provider for payment for any covered item

18 or service furnished before the date on which

19 such statutory successor was appointed to a

20 Medicare+Choice eligible individual enrolled in

21 a Medicare+Choice plan offered by such orga22 nization.
3

•S 2110 IS

1 ‘‘(B) PAYMENTS FROM TRUST FUNDS.—

2 Not later than 30 days after a clean claim is

3 submitted under subparagraph (A), the Sec4 retary shall pay to the health care provider the

5 amount described in subparagraph (C) from the

6 Federal Hospital Insurance Trust Fund and

7 the Federal Supplementary Medical Insurance

8 Trust Fund in such proportion as the Secretary

9 determines appropriate.

10 ‘‘(C) AMOUNT DESCRIBED.—The amount

11 described in this subparagraph is as follows:

12 ‘‘(i) CONTRACTING PROVIDERS.—In

13 the case of a health care provider having

14 a written agreement with the insolvent

15 Medicare+Choice organization, the amount

16 that would have been paid to the health

17 care provider under such agreement for the

18 covered item or service.

19 ‘‘(ii) NONCONTRACTING PROVIDERS.—

20 In the case of a health care provider that

21 did not have a written agreement with the

22 insolvent Medicare+Choice organization,

23 the reasonable cost of the covered item or

24 service.
4

•S 2110 IS

1 ‘‘(2) ENROLLEES IN MEDICARE+CHOICE PLANS

2 OFFERED BY INSOLVENT MEDICARE+CHOICE ORGA3 NIZATIONS.—

4 ‘‘(A) REIMBURSEMENT AND COLLEC5 TION.—In the case of an individual enrolled in

6 a Medicare+Choice plan offered by an insolvent

7 Medicare+Choice organization, the Secretary

8 shall provide for the following:

9 ‘‘(i) REIMBURSEMENT OF AMOUNTS

10 PAID.—The reimbursement of such indi11 vidual for any amount paid by such indi12 vidual to a health care provider for each

13 covered item or service that such organiza14 tion would have paid, but for the insol15 vency of such organization, to the health

16 care provider under the plan in which the

17 individual is enrolled.

18 ‘‘(ii) COLLECTION OF AMOUNTS

19 DUE.—The collection from such individual

20 of any amount that remains due and owing

21 by such individual under such plan for

22 each covered item or service for which pay23 ment is made under paragraph (1)(B) as

24 of the date of the notice of collection.
5

•S 2110 IS

1 ‘‘(B) ENROLLEE PROTECTION AGAINST IN2 SOLVENCY.—No Medicare+Choice eligible indi3 vidual may be held liable to any health care

4 provider for the debts of an insolvent

5 Medicare+Choice organization.

6 ‘‘(b) HCFA A CREDITOR OF BANKRUPTCY OR RE7 CEIVERSHIP ESTATE.—

8 ‘‘(1) IN GENERAL.—The Secretary shall be

9 deemed to be a creditor of the estate of the insolvent

10 Medicare+Choice organization for any amount paid

11 under paragraph (1)(B) or (2)(A)(i) of subsection

12 (a) and not collected from a beneficiary under para13 graph (2)(A)(ii) of such subsection.

14 ‘‘(2) PRIORITY.—For purposes of applying

15 paragraph (1), the Secretary shall be given the same

16 priority that the health care provider paid under

17 paragraph (1)(B) would have been given if the

18 amount paid to such provider remained due and

19 owing.

20 ‘‘(c) DEFINITIONS.—In this section:

21 ‘‘(1) INSOLVENT MEDICARE+CHOICE ORGANI22 ZATION.—The term ‘insolvent Medicare+Choice or23 ganization’ means a Medicare+Choice organization

24 for which—
6

•S 2110 IS

1 ‘‘(A) a petition for bankruptcy has been

2 filed under title 11, United States Code;

3 ‘‘(B) a petition for receivership has been

4 filed on account of insolvency under State law;

5 or

6 ‘‘(C) any similar proceeding has com7 menced under State law.

8 ‘‘(2) HEALTH CARE PROVIDER.—The term

9 ‘health care provider’ means a provider or other per10 son that meets the applicable requirements of this

11 title and part A of title XI.’’.

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

13 subsection (a) shall—

14 (1) take effect on the date of enactment of this

15 Act; and

16 (2) apply with respect to Medicare+Choice or17 ganizations for which a statutory successor is ap18 pointed on or after November 1, 1999.

19 SEC. 3. IMPROVED COMMUNICATION REGARDING THE SOL20 VENCY OF MEDICARE+CHOICE ORGANIZA21 TIONS BETWEEN HCFA AND THE STATES.

22 (a) IN GENERAL.—Section 1857(d) of the Social Se23 curity Act (42 U.S.C. 1395w–27(d)) is amended by adding

24 at the end the following new paragraph:
7

•S 2110 IS

1 ‘‘(6) NOTIFICATION OF STATES.—Each contract

2 under this section shall provide that in the case that

3 the Secretary determines, based on any information

4 obtained under this subsection, that a

5 Medicare+Choice organization may not be able to

6 bear the risk of potential financial losses (as de7 scribed in paragraph (2)(B)(i)), the Secretary shall,

8 within a reasonable period of time—

9 ‘‘(A) notify each State in which the

10 Medicare+Choice organization provides any

11 covered item or service of such determination;

12 and

13 ‘‘(B) provide each such State with the in14 formation obtained under this subsection on

15 which the determination is based.’’.

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

17 subsection (a) shall—

18 (1) take effect on the date of enactment of this

19 Act; and

20 (2) apply with respect to contracts entered into

21 or renewed on or after the date of enactment of this

22 Act.
8

•S 2110 IS

1 SEC. 4. RESPONSE BY THE SECRETARY TO FAILURE OF

2 MEDICARE+CHOICE ORGANIZATIONS TO PRO3 VIDE PROMPT PAYMENT.

4 (a) IN GENERAL.—Section 1857(f) of the Social Se5 curity Act (42 U.S.C. 1395w–27(f)) is amended by adding

6 at the end the following new paragraph:

7 ‘‘(3) SECRETARY REQUIRED TO BYPASS NON8 COMPLYING ORGANIZATION.—

9 ‘‘(A) IN GENERAL.—In the case of a

10 Medicare+Choice eligible organization which

11 the Secretary determines, after notice and op12 portunity for a hearing, that—

13 ‘‘(i) such organization has failed to

14 make payments of amounts in compliance

15 with paragraph (1); and

16 ‘‘(ii) such payments are more than 60

17 days overdue;

18 the Secretary shall provide for direct payment

19 of the amounts owed to providers and suppliers

20 (or, in the case of a Medicare+Choice private

21 fee-for-service plan, amounts owed to the enroll22 ees) for covered services and supplies furnished

23 to individuals enrolled under this part under the

24 contract.

25 ‘‘(B) OFFSET.—If the Secretary provides

26 for direct payments under subparagraph (A),
9

•S 2110 IS

1 the Secretary shall provide for an appropriate

2 reduction in the amount of payments otherwise

3 made to the organization under this part to re4 flect the amount of the Secretary’s payments

5 (and the Secretary’s costs in making the pay6 ments).’’.

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

8 subsection (a) shall—

9 (1) take effect on the date of enactment of this

10 Act; and

11 (2) apply with respect to contracts entered into

12 or renewed on or after the date of enactment of this

13 Act.

14 SEC. 5. SURETY BOND REQUIRED OF MEDICARE+CHOICE

15 ORGANIZATIONS.

16 (a) IN GENERAL.—Section 1857(e) of the Social Se17 curity Act (42 U.S.C. 1395w–27(e)) is amended by adding

18 at the end the following new paragraph:

19 ‘‘(3) SURETY BOND.—

20 ‘‘(A) IN GENERAL.—Each Medicare+Choice

21 organization shall provide the Secretary with a

22 surety bond—

23 ‘‘(i) effective for a period of 4 years

24 (as specified by the Secretary) or in the

25 case of a change in the ownership or con-
10

•S 2110 IS

1 trol of the agency (as determined by the

2 Secretary) during or after such 4-year pe3 riod, an additional period of time that the

4 Secretary determines appropriate, such ad5 ditional period not to exceed 4 years from

6 the date of such change in ownership or

7 control;

8 ‘‘(ii) in a form specified by the Sec9 retary; and

10 ‘‘(iii) for a year in the period de11 scribed in subparagraph (A) in an amount

12 that is equal to the lesser of $500,000 or

13 10 percent of the aggregate amount of

14 payments to the agency under this title

15 and title XIX for that year, as estimated

16 by the Secretary.

17 ‘‘(B) ADDITIONAL REQUIREMENTS.—Each

18 Medicare+Choice organization shall meet such

19 additional requirements (including conditions

20 relating to bonding or establishing of escrow ac21 counts as the Secretary finds necessary for the

22 financial security of the program) as the Sec23 retary finds necessary for the effective and effi24 cient operation of the program.
11

•S 2110 IS

1 ‘‘(C) WAIVER.—The Secretary may waive

2 the requirement of a surety bond under sub3 paragraph (A) in the case of an organization

4 that provides a comparable surety bond under

5 State law.

6 ‘‘(D) FORFEITURE.—If a Medicare+Choice

7 organization forfeits a surety bond provided

8 under subparagraph (A), the Secretary shall

9 use the proceeds from such forfeiture for the

10 benefit of beneficiaries, providers, and suppliers

11 under this title.’’.

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

13 subsection (a) shall—

14 (1) take effect on the date of enactment of this

15 Act; and

16 (2) apply with respect to contracts entered into

17 or renewed on or after the date of enactment of this

18 Act.

Æ