I

104TH CONGRESS

2D SESSION H. R. 4047

To amend title XVIII of the Social Security Act to provide additional

consumer protections for Medicare supplemental insurance.

IN THE HOUSE OF REPRESENTATIVES

SEPTEMBER 11, 1996

Mrs. JOHNSON of Connecticut (for herself, Mr. DINGELL, Mr. GREENWOOD,

Mr. STARK, Mr. SHAW, Mr. CARDIN, Mr. SAXTON, Mr. PALLONE, Mr.

DEFAZIO, Mr. MCDERMOTT, Mr. KLECZKA, Mr. LEWIS of Georgia, Mr.

MATSUI, Mr. DURBIN, Mr. RAHALL, Mr. ACKERMAN, Mr. ANDREWS, and

Mr. HILLIARD) introduced the following bill; which was referred to the

Committee on Commerce

A BILL

To amend title XVIII of the Social Security Act to provide

additional consumer protections for Medicare supplemental insurance.

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 ‘‘Medigap Amendments

5 of 1996’’.

6 SEC. 2. MEDIGAP AMENDMENTS.

7 (a) GUARANTEEING ISSUE WITHOUT PREEXISTING

8 CONDITIONS FOR CONTINUOUSLY COVERED INDIVID-
2

•HR 4047 IH

1 UALS.—Section 1882(s) of the Social Security Act (42

2 U.S.C. 1395ss(s)) is amended—

3 (1) in paragraph (3), by striking ‘‘paragraphs

4 (1) and (2)’’ and inserting ‘‘this subsection’’,

5 (2) by redesignating paragraph (3) as para6 graph (4), and

7 (3) by inserting after paragraph (2) the follow8 ing new paragraph:

9 ‘‘(3)(A) The issuer of a Medicare supplemental pol10 icy—

11 ‘‘(i) may not deny or condition the issuance or

12 effectiveness of a Medicare supplemental policy de13 scribed in subparagraph (C);

14 ‘‘(ii) may not discriminate in the pricing of the

15 policy on the basis of the individual’s health status,

16 medical condition (including both physical and men17 tal illnesses), claims experience, receipt of health

18 care, medical history, genetic information, evidence

19 of insurability (including conditions arising out of

20 acts of domestic violence), or disability; and

21 ‘‘(iii) may not impose an exclusion of benefits

22 based on a pre-existing condition,

23 in the case of an individual described in subparagraph (B)

24 who seeks to enroll under the policy not later than 63 days
3

•HR 4047 IH

1 after the date of the termination of enrollment described

2 in such subparagraph.

3 ‘‘(B) An individual described in this subparagraph is

4 an individual described in any of the following clauses:

5 ‘‘(i) The individual is enrolled with an eligible

6 organization under a contract under section 1876 or

7 with an organization under an agreement under sec8 tion 1833(a)(1)(A) and such enrollment ceases ei9 ther because the individual moves outside the service

10 area of the organization under the contract or agree11 ment or because of the termination or nonrenewal of

12 the contract or agreement.

13 ‘‘(ii) The individual is enrolled with an organi14 zation under a policy described in subsection (t) and

15 such enrollment ceases either because the individual

16 moves outside the service area of the organization

17 under the policy, because of the bankruptcy or insol18 vency of the insurer, or because the insurer closes

19 the block of business to new enrollment.

20 ‘‘(iii) The individual is covered under a medi21 care supplemental policy and such coverage is termi22 nated because of the bankruptcy or insolvency of the

23 insurer issuing the policy, because the insurer closes

24 the block of business to new enrollment, or because

25 the individual changes residence so that the individ-
4

•HR 4047 IH

1 ual no longer resides in a State in which the issuer

2 of the policy is licensed.

3 ‘‘(iv) The individual is enrolled under an em4 ployee welfare benefit plan that provides health ben5 efits that supplement the benefits under this title

6 and the plan terminates or ceases to provide (or sig7 nificantly reduces) such supplemental health benefits

8 to the individual.

9 ‘‘(v)(I) The individual is enrolled with an eligi10 ble organization under a contract under section

11 1876 or with an organization under an agreement

12 under section 1833(a)(1)(A) and such enrollment is

13 terminated by the enrollee during the first 12

14 months of such enrollment, but only if the individual

15 never was previously enrolled with an eligible organi16 zation under a contract under section 1876 or with

17 an organization under an agreement under section

18 1833(a)(1)(A).

19 ‘‘(II) The individual is enrolled under a policy

20 described in subsection (t) and such enrollment is

21 terminated during the first 12 months of such en22 rollment, but only if the individual never was pre23 viously enrolled under such a policy under such sub24 section.
5

•HR 4047 IH

1 ‘‘(C)(i) Subject to clause (ii), a medicare supple2 mental policy described in this subparagraph, with respect

3 to an individual described in subparagraph (B), is a policy

4 the benefits under which are comparable or lesser in rela5 tion to the benefits under the enrollment described in sub6 paragraph (B) (or, in the case of an individual described

7 in clause (ii), under the most recent medicare supple8 mental policy described in clause (ii)(II)).

9 ‘‘(ii) An individual described in this clause is an indi10 vidual who—

11 ‘‘(I) is described in subparagraph (B)(v), and

12 ‘‘(II) was enrolled in a medicare supplemental

13 policy within the 63 day period before the enrollment

14 described in such subparagraph.

15 ‘‘(iii) As a condition for approval of a State regu16 latory program under subsection (b)(1) and for purposes

17 of applying clause (i) to policies to be issued in the State,

18 the regulatory program shall provide for the method of

19 determining whether policy benefits are comparable or

20 lesser in relation to other benefits. With respect to a State

21 without such an approved program, the Secretary shall es22 tablish such method.

23 ‘‘(D) At the time of an event described in subpara24 graph (B) because of which an individual ceases enroll25 ment or loses coverage or benefits under a contract or
6

•HR 4047 IH

1 agreement, policy, or plan, the organization that offers the

2 contract or agreement, the insurer offering the policy, or

3 the administrator of the plan, respectively, shall notify the

4 individual of the rights of the individual, and obligations

5 of issuers of medicare supplemental policies, under sub6 paragraph (A).’’.

7 (b) LIMITATION ON IMPOSITION OF PREEXISTING

8 CONDITION EXCLUSION DURING INITIAL OPEN ENROLL9 MENT PERIOD.—Section 1882(s)(2)(B) of such Act (42

10 U.S.C. 1395ss(s)(2)(B)) is amended to read as follows:

11 ‘‘(B) In the case of a policy issued during the 6-

12 month period described in subparagraph (A), the policy

13 may not exclude benefits based on a pre-existing condi14 tion.’’.

15 (c) CLARIFYING THE NONDISCRIMINATION REQUIRE16 MENTS DURING THE 6-MONTH INITIAL ENROLLMENT

17 PERIOD.—Section 1882(s)(2)(A) of such Act (42 U.S.C.

18 1395ss(s)(2)(A)) is amended to read as follows:

19 ‘‘(2)(A)(i) In the case of an individual described in

20 clause (ii), the issuer of a medicare supplemental policy—

21 ‘‘(I) may not deny or condition the issuance or

22 effectiveness of a medicare supplemental policy, and

23 ‘‘(II) may not discriminate in the pricing of the

24 policy on the basis of the individual’s health status,

25 medical condition (including both physical and men-
7

•HR 4047 IH

1 tal illnesses), claims experience, receipt of health

2 care, medical history, genetic information, evidence

3 of insurability (including conditions arising out of

4 acts of domestic violence), or disability.

5 ‘‘(ii) An individual described in this clause is an indi6 vidual for whom an application is submitted before the end

7 of the 6-month period beginning with the first month as

8 of the first day on which the individual is 65 years of age

9 or older and is enrolled for benefits under part B.’’.

10 (d) EXTENDING 6-MONTH INITIAL ENROLLMENT

11 PERIOD TO NON-ELDERLY MEDICARE BENEFICIARIES.—

12 Section 1882(s)(2)(A)(ii) of such Act (42 U.S.C.

13 1395ss(s)(2)(A)), as amended by subsection (c), is amend14 ed by striking ‘‘is submitted’’ and all that follows and in15 serting the following: ‘‘is submitted—

16 ‘‘(I) before the end of the 6-month period be17 ginning with the first month as of the first day on

18 which the individual is 65 years of age or older and

19 is enrolled for benefits under part B; and

20 ‘‘(II) for each time the individual becomes eligi21 ble for benefits under part A pursuant to section

22 226(b) or 226A and is enrolled for benefits under

23 part B, before the end of the 6-month period begin24 ning with the first month as of the first day on

25 which the individual is so eligible and so enrolled.’’.
8

•HR 4047 IH

1 (e) EFFECTIVE DATES.—

2 (1) GUARANTEED ISSUE.—The amendment

3 made by subsection (a) shall take effect on July 1,

4 1997.

5 (2) LIMIT ON PREEXISTING CONDITION EXCLU6 SIONS.—The amendment made by subsection (b)

7 shall apply to policies issued on or after July 1,

8 1997.

9 (3) CLARIFICATION OF NONDISCRIMINATION

10 REQUIREMENTS.—The amendment made by sub11 section (c) shall apply to policies issued on or after

12 July 1, 1997.

13 (4) EXTENSION OF ENROLLMENT PERIOD TO

14 DISABLED INDIVIDUALS.—

15 (A) IN GENERAL.—The amendment made

16 by subsection (d) shall take effect on July 1,

17 1997.

18 (B) TRANSITION RULE.—In the case of an

19 individual who first became eligible for benefits

20 under part A of title XVIII of the Social Secu21 rity Act pursuant to section 226(b) or 226A of

22 such Act and enrolled for benefits under part B

23 of such title before July 1, 1997, the 6-month

24 period described in section 1882(s)(2)(A) of

25 such Act shall begin on July 1, 1997. Before
9

•HR 4047 IH

1 July 1, 1997, the Secretary of Health and

2 Human Services shall notify any individual de3 scribed in the previous sentence of their rights

4 in connection with medicare supplemental poli5 cies under section 1882 of such Act, by reason

6 of the amendment made by subsection (d).

7 (f) TRANSITION PROVISIONS.—

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

9 and Human Services identifies a State as requiring

10 a change to its statutes or regulations to conform its

11 regulatory program to the changes made by this sec12 tion, the State regulatory program shall not be con13 sidered to be out of compliance with the require14 ments of section 1882 of the Social Security Act due

15 solely to failure to make such change until the date

16 specified in paragraph (4).

17 (2) NAIC STANDARDS.—If, within 9 months

18 after the date of the enactment of this Act, the Na19 tional Association of Insurance Commissioners (in

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

21 its NAIC Model Regulation relating to section 1882

22 of the Social Security Act (referred to in such sec23 tion as the 1991 NAIC Model Regulation, as modi24 fied pursuant to section 171(m)(2) of the Social Se25 curity Act Amendments of 1994 (Public Law 103–
10

•HR 4047 IH

1 432) and as modified pursuant to section

2 1882(d)(3)(A)(vi)(IV) of the Social Security Act, as

3 added by section 271(a) of the Health Care Port4 ability and Accountability Act of 1996 (Public Law

5 104–191) to conform to the amendments made by

6 this section, such revised regulation incorporating

7 the modifications shall be considered to be the appli8 cable NAIC model regulation (including the revised

9 NAIC model regulation and the 1991 NAIC Model

10 Regulation) for the purposes of such section.

11 (3) SECRETARY STANDARDS.—If the NAIC

12 does not make the modifications described in para13 graph (2) within the period specified in such para14 graph, the Secretary of Health and Human Services

15 shall make the modifications described in such para16 graph and such revised regulation incorporating the

17 modifications shall be considered to be the appro18 priate Regulation for the purposes of such section.

19 (4) DATE SPECIFIED.—

20 (A) IN GENERAL.—Subject to subpara21 graph (B), the date specified in this paragraph

22 for a State is the earlier of—

23 (i) the date the State changes its stat24 utes or regulations to conform its regu-
11

•HR 4047 IH

1 latory program to the changes made by

2 this section, or

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

4 the Secretary first makes the modifications

5 under paragraph (2) or (3), respectively.

6 (B) ADDITIONAL LEGISLATIVE ACTION RE7 QUIRED.—In the case of a State which the Sec8 retary identifies as—

9 (i) requiring State legislation (other

10 than legislation appropriating funds) to

11 conform its regulatory program to the

12 changes made in this section, but

13 (ii) having a legislature which is not

14 scheduled to meet in 1998 in a legislative

15 session in which such legislation may be

16 considered,

17 the date specified in this paragraph is the first

18 day of the first calendar quarter beginning after

19 the close of the first legislative session of the

20 State legislature that begins on or after July 1,

21 1998. For purposes of the previous sentence, in

22 the case of a State that has a 2-year legislative

23 session, each year of such session shall be

24 deemed to be a separate regular session of the

25 State legislature.
12

•HR 4047 IH

1 SEC. 3. INFORMATION FOR MEDICARE BENEFICIARIES.

2 (a) GRANT PROGRAM.—

3 (1) IN GENERAL.—The Secretary of Health and

4 Human Services (in this section referred to as the

5 ‘‘Secretary’’) is authorized to provide grants to—

6 (A) private, independent, non-profit

7 consumer organizations, and

8 (B) State agencies,

9 to conduct programs to prepare and make available

10 to medicare beneficiaries comprehensive and under11 standable information on enrollment in health plans

12 with a medicare managed care contract and in medi13 care supplemental policies in which they are eligible

14 to enroll. Nothing in this section shall be construed

15 as preventing the Secretary from making a grant to

16 an organization under this section to carry out ac17 tivities for which a grant may be made under section

18 4360 of the Omnibus Budget Reconciliation Act of

19 1990 (Public Law 101–508).

20 (2) CONSUMER SATISFACTION SURVEYS.—Any

21 eligible organization with a medicare managed care

22 contract or any issuer of a medicare supplemental

23 policy shall—

24 (A) conduct, in accordance with minimum

25 standards approved by the Secretary, a
13

•HR 4047 IH

1 consumer satisfaction survey of the enrollees

2 under such contract or such policy; and

3 (B) make the results of such survey avail4 able to Secretary and the State Insurance Com5 missioner of the State in which the enrollees are

6 so enrolled.

7 The Secretary shall make the results of such surveys

8 available to organizations which receive grants under

9 paragraph (1).

10 (3) INFORMATION.—

11 (A) CONTENTS.—The information de12 scribed in paragraph (1) shall include at least

13 a comparison of such contracts and policies, in14 cluding a comparison of the benefits provided,

15 quality and performance, the costs to enrollees,

16 the results of consumer satisfaction surveys on

17 such contracts and policies, as described in sub18 section (a)(2), and such additional information

19 as the Secretary may prescribe.

20 (B) INFORMATION STANDARDS.—The Sec21 retary shall develop standards and criteria to

22 ensure that the information provided to medi23 care beneficiaries under a grant under this sec24 tion is complete, accurate, and uniform.
14

•HR 4047 IH

1 (C) REVIEW OF INFORMATION.—The Sec2 retary may prescribe the procedures and condi3 tions under which an organization that has ob4 tained a grant under this section may furnish

5 information obtained under the grant to medi6 care beneficiaries. Such information shall be

7 submitted to the Secretary at least 45 days be8 fore the date the information is first furnished

9 to such beneficiaries.

10 (4) CONSULTATION WITH OTHER ORGANIZA11 TIONS AND PROVIDERS.—An organization which re12 ceives a grant under paragraph (1) shall consult

13 with private insurers, managed care plan providers

14 and other health care providers, and public and pri15 vate purchasers of health care benefits in order to

16 provide the information described in paragraph (1).

17 (5) TERMS AND CONDITIONS.—To be eligible

18 for a grant under this section, an organization shall

19 prepare and submit to the Secretary an application

20 at such time, in such form, and containing such in21 formation as the Secretary may require. Grants

22 made under this section shall be in accordance with

23 terms and conditions specified by the Secretary.

24 (b) COST-SHARING.—
15

•HR 4047 IH

1 (1) IN GENERAL.—Each organization which

2 provides a medicare managed care contract or issues

3 a medicare supplemental policy (including a medi4 care select policy) shall pay to the Secretary its pro

5 rata share (as determined by the Secretary) of the

6 estimated costs to be incurred by the Secretary in

7 providing the grants described in subsection (a).

8 (2) LIMITATION.—The total amount required to

9 be paid under paragraph (1) shall not exceed

10 $35,000,000 in any fiscal year.

11 (3) APPLICATION OF PROCEEDS.—Amounts re12 ceived under paragraph (1) are hereby appropriated

13 to the Secretary to defray the costs described in

14 such paragraph and shall remain available until ex15 pended.

16 (c) DEFINITIONS.—In this section:

17 (1) MEDICARE MANAGED CARE CONTRACT.—

18 The term ‘‘medicare managed care contract’’ means

19 a contract under section 1876 or section

20 1833(a)(1)(A) of the Social Security Act.

21 (2) MEDICARE SUPPLEMENTAL POLICY.—The

22 term ‘‘medicare supplemental policy’’ has the mean23 ing given such term in section 1882(g) of the Social

24 Security Act.

Æ