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104TH CONGRESS

1ST SESSION H. R. 483

To amend title XVIII of the Social Security Act to permit medicare select

policies to be offered in all States, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

JANUARY 11, 1995

Mrs. JOHNSON of Connecticut (for herself, Mr. POMEROY, Mr. THOMAS, Mr.

GOSS, Mr. SHAYS, Mr. KOLBE, Mr. ROYCE, Mr. ARCHER, Mr. STUMP,

Mr. BOEHLERT, Mr. HOUGHTON, Mr. PETRI, Mr. MILLER of Florida,

Mr. ROHRABACHER, Mr. BARRETT of Wisconsin, Mrs. MEEK of Florida,

Ms. WOOLSEY, Mr. MANZULLO, Mr. OBERSTAR, Mr. FORBES, Mr. BERMAN, Mr. TALENT, Mr. WALSH, Mr. BROWN of California, Mr. MINGE,

Mr. DOOLEY, Mr. PETERSON of Florida, Mr. PORTER, Mr. YOUNG of

Alaska, Mr. MARTINEZ, Mr. KLECZKA, Mr. ZIMMER, Mr. BAKER of California, Mr. HOBSON, Mr. FRANK of Massachusetts, Mr. MOORHEAD, Mr.

FOX, Mr. FARR, and Mr. GREENWOOD) introduced the following bill;

which was referred to the Committee on Commerce and, in addition, to

the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions

as fall within the jurisdiction of the committee concerned

A BILL

To amend title XVIII of the Social Security Act to permit

medicare select policies to be offered in all States, 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,
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1 SECTION 1. EXPANSION AND REVISION OF MEDICARE SE2 LECT POLICIES.

3 (a) PERMITTING MEDICARE SELECT POLICIES IN

4 ALL STATES.—

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

6 4358 of the Omnibus Budget Reconciliation Act of

7 1990 is hereby repealed.

8 (2) CONFORMING AMENDMENT.—Section 4358

9 of such Act is amended by redesignating subsection

10 (d) as subsection (c).

11 (b) REQUIREMENTS OF MEDICARE SELECT POLI12 CIES.—Section 1882(t)(1) of the Social Security Act (42

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

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

15 1991 NAIC Model Regulation or 1991 Federal Regulation

16 and otherwise complies with the requirements of this sec17 tion except that—

18 ‘‘(i) the benefits under such policy are re19 stricted to items and services furnished by certain

20 entities (or reduced benefits are provided when items

21 or services are furnished by other entities), and

22 ‘‘(ii) in the case of a policy described in sub23 paragraph (C)(i)—

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

25 one of the groups or packages of benefits de26 scribed in subsection (p)(2)(A),
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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 of

6 the matters described in subparagraph (D), and

7 ‘‘(II) each enrollee prior to enrollment acknowl8 edges receipt of the explanation provided under

9 subclause (I); and

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

11 individuals, in addition to the policy described in this

12 subsection, any policy (otherwise offered by the is13 suer to individuals in the State) that meets the 1991

14 Model NAIC Regulation or 1991 Federal Regulation

15 and other requirements of this section without re16 gard to this subsection.

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

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

19 defined in section 1876(b)),

20 ‘‘(II) is not a policy providing benefits pursuant

21 to a contract under section 1876 or an approved

22 demonstration project described in section 603(c) of

23 the Social Security Amendments of 1983, section

24 2355 of the Deficit Reduction Act of 1984, or sec-
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1 tion 9412(b) of the Omnibus Budget Reconciliation

2 Act of 1986, and

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

4 with benefits which are available under this title, are

5 substantially similar to benefits under policies of6 fered to individuals who are not entitled to benefits

7 under this title.

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

9 of clause (i) as to whether certain benefits are substan10 tially similar, there shall not be taken into account, except

11 in the case of preventive services, benefits provided under

12 policies offered to individuals who are not entitled to bene13 fits under this title which are in addition to the benefits

14 covered by this title and which are benefits an entity must

15 provide in order to meet the definition of an eligible orga16 nization under section 1876(b)(1).

17 ‘‘(D) The matters described in this subparagraph,

18 with respect to a policy, are as follows:

19 ‘‘(i) The restrictions on payment under the pol20 icy for services furnished other than by or through

21 the network.

22 ‘‘(ii) Out of area coverage under the policy.

23 ‘‘(iii) The policy’s coverage of emergency serv24 ices and urgently needed care.
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1 ‘‘(iv) The availability of a policy through the en2 tity that meets the 1991 Model NAIC Regulation or

3 1991 Federal Regulation without regard to this sub4 section and the premium charged for such policy.’’.

5 (c) RENEWABILITY OF MEDICARE SELECT POLI6 CIES.—Section 1882(q)(1) of the Social Security Act (42

7 U.S.C. 1395ss(q)(1)) is amended—

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

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

10 each’’;

11 (2) by redesignating subparagraphs (A) and

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

13 (3) by adding at the end the following new sub14 paragraph:

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

16 case of a policy that meets the requirements of sub17 section (t), an issuer may cancel or nonrenew such

18 policy with respect to an individual who leaves the

19 service area of such policy.

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

21 moves to a geographic area where an issuer de22 scribed in clause (i), or where an affiliate of such is23 suer, is issuing medicare supplemental policies, such

24 individual must be permitted to enroll in any medi25 care supplemental policy offered by such issuer or
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1 affiliate that provides benefits comparable to or less

2 than the benefits provided in the policy being can3 celed or nonrenewed. An individual whose coverage

4 is canceled or nonrenewed under this subparagraph

5 shall, as part of the notice of termination or

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

7 medicare supplemental policies offered by the issuer

8 or its affiliates.

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

10 term ‘affiliate’ shall have the meaning given such

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

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

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

14 amended—

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

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

17 (C), and (D) as clauses (i), (ii), (iii), and (iv), re18 spectively;

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

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

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

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

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

24 (4) by striking ‘‘the previous sentence’’ and in25 serting ‘‘this subparagraph’’; and
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1 (5) by adding at the end the following new sub2 paragraph:

3 ‘‘(B) If the Secretary determines that an issuer of

4 a policy approved under paragraph (1) has made a mis5 representation to the Secretary or has provided the Sec6 retary with false information regarding such policy, the

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

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

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

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

11 apply to a civil money penalty under this subparagraph

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

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

14 SEC. 2. EFFECTIVE DATES.

15 (a) NAIC STANDARDS.—If, within 6 months after

16 the date of the enactment of this Act, the National Asso17 ciation of Insurance Commissioners (in this subsection re18 ferred to as the ‘‘NAIC’’) makes changes in the 1991

19 NAIC Model Regulation (as defined in section

20 1882(p)(1)(A) of the Social Security Act) to incorporate

21 the additional requirements imposed by the amendments

22 made by section 1, section 1882(g)(2)(A) of such Act shall

23 be applied in each State, effective for policies issued to

24 policyholders on and after the date specified in paragraph

25 (3), as if the reference to the Model Regulation adopted
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1 on June 6, 1979, were a reference to the 1991 NAIC

2 Model Regulation (as so defined) as changed under this

3 paragraph (such changed Regulation referred to in this

4 subsection as the ‘‘1995 NAIC Model Regulation’’).

5 (b) SECRETARY STANDARDS.—If the NAIC does not

6 make changes in the 1991 NAIC Model Regulation (as

7 so defined) within the 6-month period specified in sub8 section (a), the Secretary of Health and Human Services

9 (in this subsection as the ‘‘Secretary’’) shall promulgate

10 a regulation and section 1882(g)(2)(A) of the Social Secu11 rity Act shall be applied in each State, effective for policies

12 issued to policyholders on and after the date specified in

13 paragraph (3), as if the reference to the Model Regulation

14 adopted in June 6, 1979, were a reference to the 1991

15 NAIC Model Regulation (as so defined) as changed by the

16 Secretary under this paragraph (such changed Regulation

17 referred to in this subsection as the ‘‘1995 Federal Regu18 lation’’).

19 (c) DATE SPECIFIED.—

20 (1) IN GENERAL.—Subject to paragraph (2),

21 the date specified in this subsection for a State is

22 the earlier of—

23 (A) the date the State adopts the 1995

24 NAIC Model Regulation or the 1995 Federal

25 Regulation; or
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1 (B) 1 year after the date the NAIC or the

2 Secretary first adopts such regulations.

3 (2) ADDITIONAL LEGISLATIVE ACTION RE4 QUIRED.—In the case of a State which the Secretary

5 identifies, in consultation with the NAIC, as—

6 (A) requiring State legislation (other than

7 legislation appropriating funds) in order for

8 medicare supplemental policies to meet the

9 1995 NAIC Model Regulation or the 1995 Fed10 eral Regulation, but

11 (B) having a legislature which is not

12 scheduled to meet in 1995 in a legislative ses13 sion in which such legislation may be consid14 ered,

15 the date specified in this subsection is the first day

16 of the first calendar quarter beginning after the

17 close of the first legislative session of the State legis18 lature that begins on or after January 1, 1995. For

19 purposes of the previous sentence, in the case of a

20 State that has a 2-year legislative session, each year

21 of such session shall be deemed to be a separate reg22 ular session of the State legislature.

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