```

[Congressional Record Volume 141, Number 85 (Monday, May 22, 1995)]
[Senate]
[Pages S7120-S7128]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. D'AMATO:
  S. 838. A bill to provide for additional radio broadcasting to Iran 
by the United States; to the Committee on Foreign Relations.

                          RADIO FREE IRAN ACT

  Mr. D'AMATO. Mr. President, I rise today to introduce the Radio Free 
Iran Act.
  This legislation is intended to create a Farsi-language service to be 
broadcast to Iran that will supplement, not supplant the current 
programming already beamed to Iran by the Voice of America. This 
service is intended to be made political in nature and as such, will 
bring to the Iranian people the real news that they are denied access 
to be the dictatorial regime in Tehran.
  It is vital to the people of Iran that they be exposed to the truth 
of what is happening inside Iran. More must be done to detail what the 
regime is doing to this proud people. The Iranian people must 
understand how the regime has created impossible living conditions 
through massive inflation and shortages, persecuted minorities, denied 
human rights, and forced international isolation upon this proud nation 
because of its abhorrent practices.
  The regime has robbed the Iranian people of its glorious history, 
replacing it with the status of a pariah state. The regime in Tehran is 
known as the chief sponsor of international terrorism, it is known as 
one of the worst abusers of human rights, and it is known for its 
unceasing determination to obtain weapons of mass destruction. This in 
itself is lowering the Iranian people's living standards with each 
passing day.
  This legislation is intended to expose the people of Iran to a more 
balanced approach to the conditions in Iran so that they can hopefully 
have a greater impact on their own future.
  If anything is clear it is that the Iranian people deserve better. 
They deserve a chance to live free of the abusive and dictatorial 
nature of their corrupt government. They deserve to shed the status 
that this regime has cast upon them, and they deserve the chance to 
regain their proper role in the world.
  Radio Free Iran will not be the panacea, but it will be the 
beginning. I want Radio Free Iran to be for the Iranian people what 
Radio Free Europe did for the people of Eastern Europe. The only goal 
for the Iranian people is freedom from oppression.
  I urge my colleagues to support this worthwhile project.
  Mr. President, I ask unanimous consent that the bill be printed in 
the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 838

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Radio Free Iran Act''.

     SEC. 2. FINDINGS.

       Congress makes the following findings:
       (1) It is the policy of the United States to support the 
     right of the People of Iran to seek, receive, and impart 
     information and ideas through any media, regardless of 
     frontiers, in accordance with article 19 of the Universal 
     Declaration of Human Rights.
       (2) Consonant with this policy, radio broadcasting to Iran 
     may be effective in furthering the open communication of 
     accurate information and ideas about Iran to the people of 
     Iran.
       (3) Such broadcasting to Iran, operated in a manner not 
     inconsistent with the broad foreign policy of the United 
     States and in accordance with high professional standards, 
     would be in the national interest.

     SEC. 3. RADIO BROADCASTING TO IRAN.

       (a) In General.--In order to carry out the objectives set 
     forth in section 2, the United States Information Agency 
     shall provide for the open communication of information and 
     ideas on Iran through the use of radio broadcasting to Iran. 
     Radio broadcasting to Iran under this section shall serve as 
     a consistently reliable and authoritative source of accurate, 
     objective, and comprehensive news on Iran.
       (b) Requirements Relating to Broadcasting.--(1) Radio 
     broadcasting under subsection (a) shall be provided in 
     accordance with standards that ensure the broadcast of 
     programs which are objective, accurate, and balanced, and 
     which present a variety of views. Such standards shall be 
     established by the board established under section 4.
       (2) Radio broadcasting under subsection (a) shall be 
     provided in the Farsi language.
       (c) Designation of Broadcasts.--Any program of United 
     States Government radio broadcasts in the Farsi language 
     under this section shall be designated ``Radio Free Iran''.
       (d) Relationship with Other Radio Service to Iran.--It is 
     the sense of Congress that radio broadcasting under this 
     section supplement and not supplant other radio broadcasting 
     and radio broadcasting services to Iran in the Farsi language 
     that are provided by the United States Government.
       (e) Authority To Contract.--The Director of the United 
     States Information Agency may carry out this section by means 
     of grants, contracts, and leases and by such other means as 
     the Director determines appropriate. Any grant, contract, or 
     lease under this subsection shall specify that payment 
     thereunder by the Director is subject to the availability of 
     appropriations thereof. [[Page S7121]] 
       (f) Assistance from Other Government Agencies.--The 
     Director may secure on a reimbursable basis from any 
     department or agency of the Federal Government, with the 
     concurrence of the head of the department
      or agency, any technical or administrative support or 
     services (including personnel and property) that the 
     Director may require in order to provide radio 
     broadcasting to Iran under this section. Any reimbursement 
     under this subsection shall be credited to the 
     appropriation from which the support or services was 
     derived.

     SEC. 4. ADVISORY BOARD.

       (a) In General.--There is hereby established an advisory 
     board to be known as the Advisory Board for Radio Free Iran 
     (in this section referred to as the ``Board'').
       (b) Membership Matters.--(1) The Board shall be composed of 
     eight members of whom--
       (A) four shall be appointed by the President;
       (B) two shall be appointed by the President pro tempore of 
     the Senate, upon the recommendation of the majority and 
     minority leaders of the Senate; and
       (C) two shall be appointed by the Speaker of the House of 
     Representatives, in consultation with the minority leader of 
     the House of Representatives.
       (2) Members shall be appointed for terms of 4 years. Any 
     vacancy in the Board shall not affect its powers but shall be 
     filled in the same manner as the original appointment.
       (3) The President shall designate one member of the Board 
     to be the Chairman.
       (c) Duties.--The Board shall have the following duties:
       (1) To establish standards for the broadcast of programs 
     under section 3, which standards shall ensure that such 
     programs are objective, accurate, and balanced, and present a 
     variety of views.
       (2) To monitor the broadcast of programs under that section 
     in order to ensure that the programs meet the standards so 
     established.
       (d) Compensation.--(1) Each member of the Board who is not 
     an officer or employee of the Federal Government shall be 
     compensated at a rate equal to the daily equivalent of the 
     annual rate of basic pay prescribed for level IV of the 
     Executive Schedule under section 5315 of title 5, United 
     States Code, for each day (including travel time) during 
     which such member is engaged in the performance of the duties 
     of the Board. All members of the Board who are officers or 
     employees of the United States shall serve without 
     compensation in addition to that received for their services 
     as officers or employees of the United States.
       (2) The members of the Board shall be allowed travel 
     expenses, including per diem in lieu of subsistence, at rates 
     authorized for employees of agencies under subchapter I of 
     chapter 57 of title 5, United States Code, while away from 
     their homes or regular places of business in the performance 
     of services for the Board.
       (e) Procurement of Supplies and Services.--The Board may, 
     to the extent it considers necessary to carry out its duties 
     under this section, procure supplies, services, and other 
     personal property, including specialized electronic 
     equipment.

     SEC. 5. AUTHORIZATION OF APPROPRIATIONS.

       (a) Authorization of Appropriations.--There are authorized 
     to be appropriated for the United States Information Agency 
     for fiscal year 1996 such sums as may be necessary for 
     purposes of carrying out this Act, including the activities 
     of the board established under section 4.
       (b) Availability of Funds.--Amounts appropriated under this 
     section shall remain available until expended.
                                 ______

      By Mr. CHAFEE (for himself, Mr. Graham, and Mr. Conrad):
  S. 839. A bill to amend title XIX of the Social Security Act to 
permit greater flexibility for States to enroll Medicaid beneficiaries 
in managed care arrangements, to remove barriers preventing the 
provision of medical assistance under State Medicaid plans through 
managed care, and for other purposes; to the Committee on Finance.

                       medicaid managed care act

  Mr. CHAFEE. Mr. President, we face many difficult decisions in the 
next few months. Due to the increasing national deficit and our efforts 
to control it, we must carefully review all Federal programs. Of 
particular concern are Federal entitlement programs such as Medicare 
and Medicaid. Today we are debating a budget resolution that will 
reduce the growth rate in Medicaid spending by $175 billion over the 
next 7 years. I am supportive of efforts to bring Federal spending 
under control, including Federal spending on the Medicaid Program. 
However, I am deeply concerned about the future of this program which 
provides critical health care services to low-income children, pregnant 
women, persons with disabilities and the elderly.
  Clearly, as we move forward we can expect to see some dramatic 
changes in the Medicaid Program. And as a former Governor, I understand 
the need to provide States with additional flexibility to administer 
the program, and to control costs. Many may question whether it is 
possible to meet these objectives without jeopardizing health care 
services to millions of low-income Americans. Some have suggested 
converting the Medicaid Program into a block grant and capping the 
general rate of growth in Federal expenditures. While I agree that we 
should give States more flexibility, I do not believe that it is 
reasonable to expect the Federal Government to hand over more than $100 
billion per year without expecting accountability. Thus, earlier this 
year I began to look for alternatives to this approach.
  Mr. President, today I am joining with my colleagues Senators Bob 
Graham and Kent Conrad in introducing legislation that we believe will 
serve two very important objectives in the Medicaid Program. First, 
this legislation will give States the additional flexibility that they 
need to administer the Medicaid Program by allowing them to enroll 
Medicaid patients in managed care. Second, this bill will set Federal 
standards for managed care to ensure that Medicaid patients receive the 
same quality of care afforded private managed care patients.
  Specifically, this legislation would allow States to require Medicaid 
patients to enroll in managed care plans. States would be required to 
offer patients a choice of a least two plans. States would no longer 
have to go through the lengthy and cumbersome process of applying to 
the Secretary of Health and Human Services for a waiver of Medicaid 
regulations.
  This legislation sets Federal standards for managed care plans that 
wish to enroll Medicaid patients. Plans would be required to meet 
certain standards for quality, access to care, and solvency. These 
standards are especially important given recent problems in States that 
have set up Medicaid managed care programs under the waiver process. 
Plans have failed to contract with enough providers to serve the 
Medicaid population; plans have been permitted to operate under 
standards that are lower than commercial insurers are required to meet; 
and plans have used fraudulent marketing practices to entice Medicaid 
patients to sign up with their plans. These actions have resulted in 
patients being denied medically necessary services, and have resulted 
in States and the Federal Government paying for care that was never 
given.
  Considering these abuses, why should we allow Medicaid managed care 
at all? Because managed care, if done correctly, can vastly improve the 
quality of health care provided to low-income families. In today's fee-
for-service program, patients face myriad problems. Some are forced to 
get care in hospital emergency rooms because they cannot find a private 
physician willing or able to accept Medicaid's low payment rates. Those 
who do have access to providers often face waiting for hours in clinics 
which are overcrowded and understaffed. And, sadly, they often do not 
have access to primary and preventive care services which would have 
prevented them from becoming ill to begin with.
  Medicaid managed care, if done well, provides regular prenatal care 
to assure that children are born healthy. These plans provide coverage 
for check-ups and immunizations to prevent serious illnesses. And they 
give patients a medical home--a provider they know can go to if they 
are sick, or a number to call if they have questions.
  Medicaid managed care also has the potential of benefiting our 
overall health care system by providing access to primary care 
providers rather than forcing patients to make costly and unnecessary 
visits to hospital emergency rooms. It gives providers the opportunity 
to catch and treat, or prevent, costly health problems.
  Mr. President, I hope as we move forward in this budget debate that 
we will be successful in funding a means of giving Governors the 
additional flexibility they need to administer their Medicaid programs. 
I am also hopeful that we will be successful in dramatically decreasing 
the rate of growth in this program. The legislation that I introduce 
today will give States the flexibility they have sought without going 
through the costly and complicated waiver process, and I look forward 
to working with the Governors to identify [[Page S7122]] additional 
areas of flexibility in the Medicaid Program.
  We must bear in mind, however, that the Medicaid Program is the sole 
source of health insurance for millions of low-income Americans. I 
believe that it would be a mistake for Congress, in its efforts to 
control Federal spending, to take any action that would result in a 
dramatic increase in our Nation's uninsured population. I hope my 
colleagues will join with me in cosponsoring this legislation.
  Mr. President, I ask unanimous consent that the text of the bill be 
included in the Record.
  There being no objection, the bill was ordered, to be printed in the 
Record, as follows:
                                 S. 839
       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,
     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Medicaid Managed Care Act of 
     1995''.

     SEC. 2. PERMITTING GREATER FLEXIBILITY FOR STATES TO ENROLL 
                   BENEFICIARIES IN MANAGED CARE ARRANGEMENTS.

       (a) In General.--Title XIX of the Social Security Act (42 
     U.S.C. 1396 et seq.) is amended--
       (1) by redesignating section 1931 as section 1932; and
       (2) by inserting after section 1930 the following new 
     section:

   ``state options for enrollment of bene- ficiaries in managed care 
                              arrangements

       ``Sec. 1931. (a) Mandatory Enrollment.--
       ``(1) In general.--Subject to the succeeding provisions of 
     this section, a State may require an individual eligible for 
     medical assistance under the State plan under this title to 
     enroll with an eligible managed care provider as a condition 
     of receiving such assistance and, with respect to assistance 
     furnished by or under arrangements with such provider, to 
     receive such assistance through the provider, if the 
     following provisions are met:
       ``(A) The provider meets the requirements of section 1932.
       ``(B) The provider enters into a contract with the State to 
     provide services for the benefit of individuals eligible for 
     benefits under this title under which prepaid payments to 
     such provider are made on an actuarially sound basis.
       ``(C) There is sufficient capacity among all providers 
     meeting such requirements to enroll and serve the individuals 
     required to enroll with such providers.
       ``(D) The individual is not a special needs individual (as 
     defined in subsection (c)).
       ``(E) The State--
       ``(i) permits an individual to choose an eligible managed 
     care provider--

       ``(I) from among not less than 2 medicaid managed care 
     plans; or
       ``(II) between a medicaid managed care plan and a primary 
     care case management provider;

       ``(ii) provides the individual with the opportunity to 
     change enrollment among eligible managed care providers not 
     less than once annually and notifies the individual of such 
     opportunity not later than 60 days prior to the first date on 
     which the individual may change enrollment;
       ``(iii) establishes a method for establishing enrollment 
     priorities in the case of an eligible managed care provider 
     that does not have sufficient capacity to enroll all such 
     individuals seeking enrollment under which individuals 
     already enrolled with the provider are given priority in 
     continuing enrollment with the provider;
       ``(iv) establishes a default enrollment process which meets 
     the requirements described in paragraph (2) and under which 
     any such individual who does not enroll with an eligible 
     managed care provider during the enrollment period specified 
     by the State shall be enrolled by the State with such a 
     provider in accordance with such process; and
       ``(v) establishes the sanctions provided for in section 
     1933.
       ``(2) Default enrollment process requirements.--The default 
     enrollment process established by a State under paragraph 
     (1)(E)(iv) shall--
       ``(A) provide that the State may not enroll individuals 
     with an eligible managed care provider which is not in 
     compliance with the requirements of section 1932; and
       ``(B) provide for an equitable distribution of individuals 
     among all eligible managed care providers available to enroll 
     individuals through such default enrollment process, 
     consistent with the enrollment capacities of such providers.
       ``(3) Exception for certain services.--A State may not 
     require an individual eligible for medical assistance under 
     the State plan under this title to enroll with an eligible 
     managed care provider as a condition of receiving medical 
     assistance consisting of payment for medicare cost-sharing 
     under section 1905(p)(3).
       ``(b) Reenrollment of Individuals Who Regain Eligibility.--
       ``(1) In general.--If an individual eligible for medical 
     assistance under a State plan under this title and enrolled 
     with an eligible managed care provider with a contract under 
     subsection (a)(1)(B) ceases to be eligible for such 
     assistance for a period of not greater than 2 months, the 
     State may provide for the automatic reenrollment of the 
     individual with the provider as of the first day of the month 
     in which the individual is again eligible for such 
     assistance.
       ``(2) Conditions.--Paragraph (1) shall only apply if--
       ``(A) the month for which the individual is to be 
     reenrolled occurs during the enrollment period covered by the 
     individual's original enrollment with the eligible managed 
     care provider;
       ``(B) the eligible managed care provider continues to have 
     a contract with the State agency under subsection (a)(1)(B) 
     as of the first day of such month; and
       ``(C) the eligible managed care provider complies with the 
     requirements of section 1932.
       ``(3) Notice of reenrollment.--The State shall provide 
     timely notice to an eligible managed care provider of any 
     reenrollment of an individual under this subsection.
       ``(c) Special Needs Individuals Described.--In this 
     section, a `special needs individual' means any of the 
     following:
       ``(1) Special needs child.--An individual who is under 19 
     years of age who--
       ``(A) is eligible for supplemental security income under 
     title XVI;
       ``(B) is described under section 501(a)(1)(D);
       ``(C) is a child described in section 1902(e)(3); or
       ``(D) is in foster care or is otherwise in an out-of-home 
     placement.
       ``(2) Homeless individuals.--An individual who is homeless 
     (without regard to whether the individual is a member of a 
     family), including--
       ``(A) an individual whose primary residence during the 
     night is a supervised public or private facility that 
     provides temporary living accommodations; or
       ``(B) an individual who is a resident in transitional 
     housing.
       ``(3) Migrant agricultural workers.--A migratory 
     agricultural worker or a seasonal agricultural worker (as 
     such terms are defined in section 329 of the Public Health 
     Service Act), or the spouse or dependent of such a worker.''.
       (b) Conforming Amendment.--Section 1902(a)(23) of such Act 
     (42 U.S.C. 1396a(a)(23)) is amended--
       (1) in the matter preceding subparagraph (A), by striking 
     ``subsection (g) and in section 1915'' and inserting 
     ``subsection (g), section 1915, and section 1931,''; and
       (2) in subparagraph (B)--
       (A) by striking ``a health maintenance organization, or a'' 
     and inserting ``or with an eligible managed care provider, as 
     defined in section 1932(g)(1), or''.
     SEC. 3. REMOVAL OF BARRIERS TO PROVISION OF MEDICAID SERVICES 
                   THROUGH MANAGED CARE.

       (a) Repeal of Current Barriers.--Except as provided in 
     subsection (b), section 1903(m) of the Social Security Act 
     (42 U.S.C. 1396b(m)) is repealed on the date of the enactment 
     of this Act.
       (b) Existing Contracts.--In the case of any contract under 
     section 1903(m) of such Act which is in effect on the day 
     before the date of the enactment of this Act, the provisions 
     of such section shall apply to such contract until the 
     earlier of--
       (1) the day after the date of the expiration of the 
     contract; or
       (2) the date which is 1 year after the date of the 
     enactment of this Act.
       (c) Eligible Managed Care Providers Described.--Title XIX 
     of such Act (42 U.S.C. 1396 et seq.), as amended by section 
     2(a), is amended--
       (1) by redesignating section 1932 as section 1933; and
       (2) by inserting after section 1931 the following new 
     section:

                   ``eligible managed care providers

       ``Sec. 1932. (a) Definitions.--In this section, the 
     following definitions shall apply:
       ``(1) Eligible managed care provider.--The term `eligible 
     managed care provider' means--
       ``(A) a medicaid managed care plan; or
       ``(B) a primary care case management provider.
       ``(2) Medicaid managed care plan.--The term `medicaid 
     managed care plan' means a health maintenance organization or 
     any other plan which provides or arranges for the provision 
     of one or more items and services to individuals eligible for 
     medical assistance under the State plan under this title in 
     accordance with a contract with the State under section 
     1931(a)(1)(B).
       ``(3) Primary care case management provider.--
       ``(A) In general.--The term `primary care case management 
     provider' means a health care provider that--
       ``(i) is a physician, group of physicians, a Federally-
     qualified health center, a rural health clinic, or an entity 
     employing or having other arrangements with physicians that 
     provides or arranges for the provision of one or more items 
     and services to individuals eligible for medical assistance 
     under the State plan under this title in accordance with a 
     contract with the State under section 1931(a)(1)(B);
       ``(ii) receives payment on a fee-for-service basis (or, in 
     the case of a Federally-qualified health center or a rural 
     health clinic, on a reasonable cost per encounter basis) for 
     the provision of health care items and services specified in 
     such contract to enrolled individuals;
       ``(iii) receives an additional fixed fee per enrollee for a 
     period specified in such contract for providing case 
     management services (including approving and arranging for 
     [[Page S7123]] the provision of health care items and 
     services specified in such contract on a referral basis) to 
     enrolled individuals; and
       ``(iv) is not an entity that is at risk.
       ``(B) At risk.--In subparagraph (A)(iv), the term `at risk' 
     means an entity that--
       ``(i) has a contract with the State under which such entity 
     is paid a fixed amount for providing or arranging for the 
     provision of health care items or services specified in such 
     contract to an individual eligible for medical assistance 
     under the State plan and enrolled with such entity, 
     regardless of whether such items or services are furnished to 
     such individual; and
       ``(ii) is liable for all or part of the cost of furnishing 
     such items or services, regardless of whether such cost 
     exceeds such fixed payment.
       (b) Enrollment.--
       ``(1) Nondiscrimination.--An eligible managed care provider 
     may not discriminate on the basis of health status or 
     anticipated need for services in the enrollment, 
     reenrollment, or disenrollment of individuals eligible to 
     receive medical assistance under a State plan under this 
     title.
       ``(2) Termination of enrollment.--
       ``(A) In general.--An eligible managed care provider shall 
     permit an individual eligible for medical assistance under 
     the State plan under this title who is enrolled with the 
     provider to terminate such enrollment for cause at any time, 
     and without cause during the 60-day period beginning on the 
     date the individual receives notice of enrollment, and shall 
     notify each such individual of the opportunity to terminate 
     enrollment under these conditions.
       ``(B) Fraudulent inducement or coercion as grounds for 
     cause.--For purposes of subparagraph (A), an individual 
     terminating enrollment with an eligible managed care provider 
     on the grounds that the enrollment was based on fraudulent 
     inducement or was obtained through coercion shall be 
     considered to terminate such enrollment for cause.
       ``(C) Notice of termination.--
       ``(i) Notice to state.--

       ``(I) By individuals.--Each individual terminating 
     enrollment with an eligible managed care provider under 
     subparagraph (A) shall do so by providing notice of the 
     termination to an office of the State agency administering 
     the State plan under this title, the State or local welfare 
     agency, or an office of an eligible managed care provider.
       ``(II) By plans.--Any eligible managed care provider which 
     receives notice of an individual's termination of enrollment 
     with such provider through receipt of such notice at an 
     office of an eligible managed care provider shall provide 
     timely notice of the termination to the State agency 
     administering the State plan under this title.

       ``(ii) Notice to plan.--The State agency administering the 
     State plan under this title or the State or local welfare 
     agency which receives notice of an individual's termination 
     of enrollment with an eligible managed care provider under 
     clause (i) shall provide timely notice of the termination to 
     such provider.
       ``(D) Reenrollment.--Each State shall establish a process 
     under which an individual terminating enrollment under this 
     paragraph shall be promptly enrolled with another eligible 
     managed care provider and notified of such enrollment.
       ``(3) Provision of enrollment materials in understandable 
     form.--Each eligible managed care provider shall provide all 
     enrollment materials in a manner and form which may be easily 
     understood by a typical adult enrollee of the provider who is 
     eligible for medical assistance under the State plan under 
     this title.
       ``(c) Quality Assurance.--
       ``(1) Access to services.--Each eligible managed care 
     provider shall provide or arrange for the provision of all 
     medically necessary medical assistance under this title which 
     is specified in the contract entered into between such 
     provider and the State under section 1931(a)(1)(B) for 
     enrollees who are eligible for medical assistance under the 
     State plan under this title.
       ``(2) Timely delivery of services.--Each eligible managed 
     care provider shall respond to requests from enrollees for 
     the delivery of medical assistance in a manner which--
       ``(A) makes such assistance--
       ``(i) available and accessible to each such individual, 
     within the area served by the provider, with reasonable 
     promptness and in a manner which assures continuity; and
       ``(ii) when medically necessary, available and accessible 
     24 hours a day and 7 days a week; and
       ``(B) with respect to assistance provided to such an 
     individual other than through the provider, or without prior 
     authorization, in the case of a primary care case management 
     provider, provides for reimbursement to the individual (if 
     applicable under the contract between the State and the 
     provider) if--
       ``(i) the services were medically necessary and immediately 
     required because of an unforeseen illness, injury, or 
     condition; and
       ``(ii) it was not reasonable given the circumstances to 
     obtain the services through the provider, or, in the case of 
     a primary care case management provider, with prior 
     authorization.
       ``(3) External independent review of eligible managed care 
     provider activities.--
       ``(A) Review of medicaid managed care plan contract.--
       ``(i) In general.--Except as provided in subparagraph (B), 
     each medicaid managed care plan shall be subject to an annual 
     external independent review of the quality and timeliness of, 
     and access to, the items and services specified in such 
     plan's contract with the State under section 1931(a)(1)(B). 
     Such review shall specifically evaluate the extent to which 
     the medicaid managed care plan provides such services in a 
     timely manner.
       ``(ii) Availability of results.--The results of each 
     external independent review conducted under this subparagraph 
     shall be available to participating health care providers, 
     enrollees, and potential enrollees of the medicaid managed 
     care plan, except that the results may not be made available 
     in a manner that discloses the identity of any individual 
     patient.
       ``(B) Deemed compliance.--
       ``(i) Medicare plans.--The requirements of subparagraph (A) 
     shall not apply with respect to a medicaid managed care plan 
     if the plan is an eligible organization with a contract in 
     effect under section 1876.
       ``(ii) Private accreditation.--

       ``(I) In general.--The requirements of subparagraph (A) 
     shall not apply with respect to a medicaid managed care plan 
     if--

       ``(aa) the plan is accredited by an organization meeting 
     the requirements described in clause (iii); and
       ``(bb) the standards and process under which the plan is 
     accredited meet such requirements as are established under 
     subclause (II), without regard to whether or not the time 
     requirement of such subclause is satisfied.

       ``(II) Standards and process.--Not later than 180 days 
     after the date of the enactment of this Act, the Secretary 
     shall specify requirements for the standards and process 
     under which a medicaid managed care plan is accredited by an 
     organization meeting the requirements of clause (iii).

       ``(iii) Accrediting organization.--An accrediting 
     organization meets the requirements of this clause if the 
     organization--

       ``(I) is a private, nonprofit organization;
       ``(II) exists for the primary purpose of accrediting 
     managed care plans or health care providers; and
       ``(III) is independent of health care providers or 
     associations of health care providers.

       ``(C) Review of primary care case management provider 
     contract.--Each primary care case management provider shall 
     be subject to an annual external independent review of the 
     quality and timeliness of, and access to, the items and 
     services specified in the contract entered into between the 
     State and the primary care case management provider under 
     section 1931(a)(1)(B).
       ``(4) Providing information on services.--
       ``(A) Requirements for medicaid managed care plans.--
       ``(i) Information to the state.--Each medicaid managed care 
     plan shall provide to the State (at such frequency as the 
     Secretary may require), complete and timely information 
     concerning the following:

       ``(I) The services that the plan provides to (or arranges 
     to be provided to) individuals eligible for medical 
     assistance under the State plan under this title.
       ``(II) The identity, locations, qualifications, and 
     availability of participating health care providers.
       ``(III) The rights and responsibilities of enrollees.
       ``(IV) The services provided by the plan which are subject 
     to prior authorization by the plan as a condition of coverage 
     (in accordance with paragraph (6)(A)).
       ``(V) The procedures available to an enrollee and a health 
     care provider to appeal the failure of the plan to cover a 
     service.
       ``(VI) The performance of the plan in serving individuals 
     eligible for medical assistance under the State plan under 
     this title.

       ``(ii) Information to health care providers, enrollees, and 
     potential enrollees.--Each medicaid managed care plan shall--

       ``(I) upon request, make the information described in 
     clause (i) available to participating health care providers, 
     enrollees, and potential enrollees in the plan's service 
     area; and
       ``(II) provide to enrollees and potential enrollees 
     information regarding all items and services that are 
     available to enrollees under the contract between the State 
     and the plan that are covered either directly or through a 
     method of referral and prior authorization.

       ``(B) Requirements for primary care case management 
     providers.--Each primary care case management provider 
     shall--
       ``(i) provide to the State (at such frequency as the 
     Secretary may require), complete and timely information 
     concerning the services that the primary care case management 
     provider provides to (or arranges to be provided to) 
     individuals eligible for medical assistance under the State 
     plan under this title;
       ``(ii) make available to enrollees and potential enrollees 
     information concerning services available to the enrollee for 
     which prior authorization by the primary care case management 
     provider is required; and
       ``(iii) provide enrollees and potential enrollees 
     information regarding all items and services that are 
     available to enrollees under the contract between the State 
     and the primary care case management provider that are 
     covered either directly or through a method of referral and 
     prior authorization.
       ``(C) Requirements for both medicaid managed care plans and 
     primary care case management providers.--Each eligible 
     managed care provider shall provide the State with aggregate 
     encounter data for early and periodic screening, diagnostic, 
     and treatment services under section 1905(r) furnished 
     [[Page S7124]] to individuals under 21 years of age. Any such 
     data provided may be audited by the State and the Secretary.
       ``(5) Timeliness of payment.--An eligible managed care 
     provider shall make payment to health care providers for 
     items and services which are subject to the contract under 
     section 1931(a)(1)(B) and which are furnished to individuals 
     eligible for medical assistance under the State plan under 
     this title who are enrolled with the provider on a timely 
     basis and under the claims payment procedures described in 
     section 1902(a)(37)(A), unless the health care provider and 
     the eligible managed care provider agree to an alternate 
     payment schedule.
       ``(6) Additional quality assurance requirements for 
     medicaid managed care plans.--
       ``(A) Conditions for prior authorization.--A medicaid 
     managed care plan may require the approval of medical 
     assistance for nonemergency services before the assistance is 
     furnished to an enrollee only if the system providing for 
     such approval--
       ``(i) provides that such decisions are made in a timely 
     manner, depending upon the urgency of the situation; and
       ``(ii) permits coverage of medically necessary medical 
     assistance provided to an enrollee without prior 
     authorization in the event of an emergency.
       ``(B) Internal grievance procedure.--Each medicaid managed 
     care plan shall establish an internal grievance procedure 
     under which a plan enrollee or a provider on behalf of such 
     an enrollee who is eligible for medical assistance under the 
     State plan under this title may challenge the denial of 
     coverage of or payment for such assistance.
       ``(C) Use of unique physician identifier for participating 
     physicians.--Each medicaid managed care plan shall require 
     each physician providing services to enrollees eligible for 
     medical assistance under the State plan under this title to 
     have a unique identifier in accordance with the system 
     established under section 1902(x).
       ``(D) Patient encounter data.--
       ``(i) In general.--Each medicaid managed care plan shall 
     maintain sufficient patient encounter data to identify the 
     health care provider who delivers services to patients and to 
     otherwise enable the State plan to meet the requirements of 
     section 1902(a)(27). The plan shall incorporate such 
     information in the maintenance of patient encounter data with 
     respect to such health care provider.
       ``(ii) Compliance.--A medicaid managed care plan shall--

       ``(I) submit the data maintained under clause (i) to the 
     State; or
       ``(II) demonstrate to the State that the data complies with 
     managed care quality assurance guidelines established by the 
     Secretary in accordance with clause (iii).

       ``(iii) Standards.--In establishing managed care quality 
     assurance guidelines under clause (ii)(II), the Secretary 
     shall consider--

       ``(I) managed care industry standards for--

       ``(aa) internal quality assurance; and
       ``(bb) performance measures; and

       ``(II) any managed care quality standards established by 
     the National Association of Insurance Commissioners.

       ``(d) Due Process Requirements for Eligible Managed Care 
     Providers.--
       ``(1) Denial of or unreasonable delay in determining 
     coverage as grounds for hearing.--If an eligible managed care 
     provider--
       ``(A) denies coverage of or payment for medical assistance 
     with respect to an enrollee who is eligible for such 
     assistance under the State plan under this title; or
       ``(B) fails to make any eligibility or coverage 
     determination sought by an enrollee or, in the case of a 
     medicaid managed care plan, by a participating health care 
     provider or enrollee, in a timely manner, depending upon the 
     urgency of the situation,

     the enrollee or the health care provider furnishing such 
     assistance to the enrollee (as applicable) may obtain a 
     hearing before the State agency administering the State plan 
     under this title in accordance with section 1902(a)(3), but 
     only, with respect to a medicaid managed care plan, after 
     completion of the internal grievance procedure established by 
     the plan under subsection (c)(6)(B).
       ``(2) Completion of internal grievance procedure.--Nothing 
     in this subsection shall require completion of an internal 
     grievance procedure if such procedure does not exist or if 
     the procedure does not provide for timely review of health 
     needs considered by the enrollee's health care provider to be 
     of an urgent nature.
       ``(e) Miscellaneous.--
       ``(1) Protecting enrollees against the insolvency of 
     eligible managed care providers and against the failure of 
     the state to pay such providers.--Each eligible managed care 
     provider shall provide that an individual eligible for 
     medical assistance under the State plan under this title who 
     is enrolled with the provider may not be held liable--
       ``(A) for the debts of the eligible managed care provider, 
     in the event of the provider's insolvency;
       ``(B) for services provided to the individual--
       ``(i) in the event of the provider failing to receive 
     payment from the State for such services; or
       ``(ii) in the event of a health care provider with a 
     contractual or other arrangement with the eligible managed 
     care provider failing to receive payment from the State or 
     the eligible managed care provider for such services; or
       ``(C) for the debts of any health care provider with a 
     contractual or other arrangement with the provider to provide 
     services to the individual, in the event of the insolvency of 
     the health care provider.
       ``(2) Treatment of children with special health care 
     needs.--
       ``(A) In general.--In the case of an enrollee of an 
     eligible managed care provider who is a child with special 
     health care needs--
       ``(i) if any medical assistance specified in the contract 
     with the State is identified in a treatment plan prepared for 
     the enrollee by a program described in subparagraph (C), the 
     eligible managed care provider shall provide (or arrange to 
     be provided) such assistance in accordance with the treatment 
     plan either--

       ``(I) by referring the enrollee to a pediatric health care 
     provider who is trained and experienced in the provision of 
     such assistance and who has a contract with the eligible 
     managed care provider to provide such assistance; or
       ``(II) if appropriate services are not available through 
     the eligible managed care provider, permitting such enrollee 
     to seek appropriate specialty services from pediatric health 
     care providers outside of or apart from the eligible managed 
     care provider; and

       ``(ii) the eligible managed care provider shall require 
     each health care provider with whom the eligible managed care 
     provider has entered into an agreement to provide medical 
     assistance to enrollees to furnish the medical assistance 
     specified in such enrollee's treatment plan to the extent the 
     health care provider is able to carry out such treatment 
     plan.
       ``(B) Prior authorization.--An enrollee referred for 
     treatment under subparagraph (A)(i)(I), or permitted to seek 
     treatment outside of or apart from the eligible managed care 
     provider under subparagraph (A)(i)(II) shall be deemed to 
     have obtained any prior authorization required by the 
     provider.
       ``(C) Child with special health care needs.--For purposes 
     of subparagraph (A), a child with special health care needs 
     is a child who is receiving services under--
       ``(i) a program administered under part B or part H of the 
     Individuals with Disabilities Education Act;
       ``(ii) a program for children with special health care 
     needs under title V;
       ``(iii) a program under part B or part D of title IV; or
       ``(iv) any other program for children with special health 
     care needs identified by the Secretary.
       ``(3) Physician incentive plans.--Each medicaid managed 
     care plan shall require that any physician incentive plan 
     covering physicians who are participating in the medicaid 
     managed care plan shall meet the requirements of section 
     1876(i)(8).
       ``(4) Incentives for high quality eligible managed care 
     providers.--The Secretary and the State may establish a 
     program to reward, through public recognition, incentive 
     payments, or enrollment of additional individuals (or 
     combinations of such rewards), eligible managed care 
     providers that provide the highest quality care to 
     individuals eligible for medical assistance under the State 
     plan under this title who are enrolled with such providers. 
     For purposes of section 1903(a)(7), proper expenses incurred 
     by a State in carrying out such a program shall be considered 
     to be expenses necessary for the proper and efficient 
     administration of the State plan under this title.''.
       (d) Clarification of Application of FFP Denial Rules to 
     Payments Made Pursuant to Medicaid Managed Care Plans.--
     Section 1903(i) of such Act (42 U.S.C. 1396b(i)) is amended 
     by adding at the end the following sentence: ``Paragraphs 
     (1)(A), (1)(B), (2), (5), and (12) shall apply with respect 
     to items or services furnished and amounts expended by or 
     through an eligible managed care provider (as defined in 
     section 1932(a)(1)) in the same manner as such paragraphs 
     apply to items or services furnished and amounts expended 
     directly by the State.''.
       (e) Clarification of Certification Requirements for 
     Physicians Providing Services to Children and Pregnant 
     Women.--Section 1903(i)(12) of such Act (42 U.S.C. 
     1396b(i)(12)) is amended--
       (1) in subparagraph (A)(i), to read as follows:
       ``(i) is certified in family practice or pediatrics by the 
     medical specialty board recognized by the American Board of 
     Medical Specialties for family practice or pediatrics or is 
     certified in general practice or pediatrics by the medical 
     specialty board recognized by the American Osteopathic 
     Association,'';
       (2) in subparagraph (B)(i), to read as follows:
       ``(i) is certified in family practice or obstetrics by the 
     medical specialty board recognized by the American Board of 
     Medical Specialties for family practice or obstetrics or is 
     certified in family practice or obstetrics by the medical 
     specialty board recognized by the American Osteopathic 
     Association,''; and
       (3) in both subparagraphs (A) and (B)--
       (A) by striking ``or'' at the end of clause (v);
       (B) by redesignating clause (vi) as clause (vii); and
       (C) by inserting after clause (v) the following new clause:
       ``(vi) delivers such services in the emergency department 
     of a hospital participating in the State plan approved under 
     this title, or''.
     [[Page S7125]]
     
     SEC. 4. ADDITIONAL REQUIREMENTS FOR MEDICAID MANAGED CARE 
                   PLANS.

       Section 1932 of the Social Security Act, as added by 
     section 3(c)(2), is amended--
       (1) by redesignating subsections (d) and (e) as subsections 
     (e) and (f), respectively; and
       (2) by inserting after subsection (c) the following new 
     subsection:
       ``(d) Additional Requirements for Medicaid Managed Care 
     Plans.--
       ``(1) Demonstration of adequate capacity and services.--
       ``(A) In general.--Subject to subparagraph (C), each 
     medicaid managed care plan shall provide the State and the 
     Secretary with adequate assurances (as determined by the 
     Secretary) that the plan, with respect to a service area--
       ``(i) has the capacity to serve the expected enrollment in 
     such service area;
       ``(ii) offers an appropriate range of services for the 
     population expected to be enrolled in such service area, 
     including transportation services and translation services 
     consisting of the principal languages spoken in the service 
     area;
       ``(iii) maintains sufficient numbers of providers of 
     services included in the contract with the State to ensure 
     that services are available to individuals receiving medical 
     assistance and enrolled in the plan to the same extent that 
     such services are available to individuals enrolled in the 
     plan who are not recipients of medical assistance under the 
     State plan under this title;
       ``(iv) maintains extended hours of operation with respect 
     to primary care services that are beyond those maintained 
     during a normal business day;
       ``(v) provides preventive and primary care services in 
     locations that are readily accessible to members of the 
     community; and
       ``(vi) provides information concerning educational, social, 
     health, and nutritional services offered by other programs 
     for which enrollees may be eligible.
       ``(B) Proof of adequate primary care capacity and 
     services.--Subject to subparagraph (C), a medicaid managed 
     care plan that contracts with a reasonable number of primary 
     care providers (as determined by the Secretary) and whose 
     primary care membership includes a reasonable number (as so 
     determined) of the following providers will be deemed to have 
     satisfied the requirements of subparagraph (A):
       ``(i) Rural health clinics, as defined in section 
     1905(l)(1).
       ``(ii) Federally-qualified health centers, as defined in 
     section 1905(l)(2)(B).
       ``(iii) Clinics which are eligible to receive payment for 
     services provided under title X of the Public Health Service 
     Act.
       ``(C) Sufficient providers of specialized services.--
     Notwithstanding subparagraphs (A) and (B), a medicaid managed 
     care plan may not be considered to have satisfied the 
     requirements of subparagraph (A) if the plan does not have a 
     sufficient number (as determined by the Secretary) of 
     providers of specialized services, including perinatal and 
     pediatric specialty care, to ensure that such services are 
     available and accessible.
       ``(2) Written provider participation agreements for certain 
     providers.--Each medicaid managed care plan that enters into 
     a written provider participation agreement with a provider 
     described in paragraph (1)(B) shall--
       ``(A) include terms and conditions that are no more 
     restrictive than the terms and conditions that the medicaid 
     managed care plan includes in its agreements with other 
     participating providers with respect to--
       ``(i) the scope of covered services for which payment is 
     made to the provider;
       ``(ii) the assignment of enrollees by the plan to the 
     provider;
       ``(iii) the limitation on financial risk or availability of 
     financial incentives to the provider;
       ``(iv) accessibility of care;
       ``(v) professional credentialing and recredentialing;
       ``(vi) licensure;
       ``(vii) quality and utilization management;
       ``(viii) confidentiality of patient records;
       ``(ix) grievance procedures; and
       ``(x) indemnification arrangements between the plans and 
     providers; and
       ``(B) provide for payment to the provider on a basis that 
     is comparable to the basis on which other providers are 
     paid.''.

     SEC. 5. PREVENTING FRAUD IN MEDICAID MANAGED CARE.

       (a) In General.--Section 1932 of the Social Security Act, 
     as added by section 3(c)(2) and amended by section 4, is 
     amended--
       (1) by redesignating subsection (f) as subsection (g); and
       (2) by inserting after subsection (e) the following new 
     subsection:
       ``(f) Anti-Fraud Provisions.--
       ``(1) Provisions applicable to eligible managed care 
     providers.--
       ``(A) Prohibiting affiliations with individuals debarred by 
     federal agencies.--
       ``(i) In general.--An eligible managed care provider may 
     not knowingly--

       ``(I) have a person described in clause (iii) as a 
     director, officer, partner, or person with beneficial 
     ownership of more than 5 percent of the plan's equity; or
       ``(II) have an employment, consulting, or other agreement 
     with a person described in clause (iii) for the provision of 
     items and services that are significant and material to the 
     organization's obligations under its contract with the State.

       ``(ii) Effect of noncompliance.--If a State finds that an 
     eligible managed care provider is not in compliance with 
     subclause (I) or (II) of clause (i), the State--

       ``(I) shall notify the Secretary of such noncompliance;
       ``(II) may continue an existing agreement with the provider 
     unless the Secretary (in consultation with the Inspector 
     General of the Department of Health and Human Services) 
     directs otherwise; and
       ``(III) may not renew or otherwise extend the duration of 
     an existing agreement with the provider unless the Secretary 
     (in consultation with the Inspector General of the Department 
     of Health and Human Services) provides to the State and to 
     the Congress a written statement describing compelling 
     reasons that exist for renewing or extending the agreement.

       ``(iii) Persons described.--A person is described in this 
     clause if such person--

       ``(I) is debarred or suspended by the Federal Government, 
     pursuant to the Federal acquisition regulation, from 
     Government contracting and subcontracting;
       ``(II) is an affiliate (within the meaning of the Federal 
     acquisition regulation) of a person described in clause (i); 
     or
       ``(III) is excluded from participation in any program under 
     title XVIII or any State health care program, as defined in 
     section 1128(h).

       ``(B) Restrictions on marketing.--
       ``(i) Distribution of materials.--

       ``(I) In general.--An eligible managed care provider may 
     not distribute marketing materials within any State--

       ``(aa) without the prior approval of the State; and
       ``(bb) that contain false or materially misleading 
     information.

       ``(II) Prohibition.--The State may not enter into or renew 
     a contract with an eligible managed care provider for the 
     provision of services to individuals enrolled under the State 
     plan under this title if the State determines that the 
     provider intentionally distributed false or materially 
     misleading information in violation of subclause (I)(bb).

       ``(ii) Service market.--An eligible managed care provider 
     shall distribute marketing materials to the entire service 
     area of such provider.
       ``(iii) Prohibition of tie-ins.--An eligible managed care 
     provider, or any agency of such provider, may not seek to 
     influence an individual's enrollment with the provider in 
     conjunction with the sale of any other insurance.
       ``(iv) Prohibiting marketing fraud.--Each eligible managed 
     care provider shall comply with such procedures and 
     conditions as the Secretary prescribes in order to ensure 
     that, before an individual is enrolled with the provider, the 
     individual is provided accurate and sufficient information to 
     make an informed decision whether or not to enroll.
       ``(2) Provisions applicable only to medicaid managed care 
     plans.--
       ``(A) State conflict-of-interest safeguards in medicaid 
     risk contracting.--A medicaid managed care plan may not enter 
     into a contract with any State under section 1931(a)(1)(B) 
     unless the State has in effect conflict-of-interest 
     safeguards with respect to officers and employees of the 
     State with responsibilities relating to contracts with such 
     plans or to the default enrollment process described in 
     section 1931(a)(1)(D)(iv) that are at least as effective as 
     the Federal safeguards provided under section 27 of the 
     Office of Federal Procurement Policy Act (41 U.S.C. 423), 
     against conflicts of interest that apply with respect to 
     Federal procurement officials with comparable 
     responsibilities with respect to such contracts.
       ``(B) Requiring disclosure of financial information.--In 
     addition to any requirements applicable under section 
     1902(a)(27) or 1902(a)(35), a medicaid managed care plan 
     shall--
       ``(i) report to the State (and to the Secretary upon the 
     Secretary's request) such financial information as the State 
     or the Secretary may require to demonstrate that--

       ``(I) the plan has the ability to bear the risk of 
     potential financial losses and otherwise has a fiscally sound 
     operation;
       ``(II) the plan uses the funds paid to it by the State and 
     the Secretary for activities consistent with the requirements 
     of this title and the contract between the State and plan; 
     and
       ``(III) the plan does not place an individual physician, 
     physician group, or other health care provider at substantial 
     risk (as determined by the Secretary) for services not 
     provided by such physician, group, or health care provider, 
     by providing adequate protection (as determined by the 
     Secretary) to limit the liability of such physician, group, 
     or health care provider, through measures such as stop loss 
     insurance or appropriate risk corridors;

       ``(ii) agree that the Secretary and the State (or any 
     person or organization designated by either) shall have the 
     right to audit and inspect any books and records of the plan 
     (and of any subcontractor) relating to the information 
     reported pursuant to clause (i) and any information required 
     to be furnished under section paragraphs (27) or (35) of 
     section 1902(a);
       ``(iii) make available to the Secretary and the State a 
     description of each transaction described in subparagraphs 
     (A) through (C) of section 1318(a)(3) of the Public Health 
     Service Act between the plan and a party in interest (as 
     defined in section 1318(b) of such Act); and
       ``(iv) agree to make available to its enrollees upon 
     reasonable request--

       ``(I) the information reported pursuant to clause (i); 
     and [[Page S7126]] 
       ``(II) the information required to be disclosed under 
     sections 1124 and 1126.

       ``(C) Adequate provision against risk of insolvency.--
       ``(i) Establishment of standards.--The Secretary shall 
     establish standards, including appropriate equity standards, 
     under which each medicaid managed care plan shall make 
     adequate provision against the risk of insolvency.
       ``(ii) Consideration of other standards.--In establishing 
     the standards described in clause (i), the Secretary shall 
     consider--

       ``(I) such solvency standards as the National Association 
     of Insurance Commissioners may prescribe; and
       ``(II) solvency standards applicable to eligible 
     organizations with a risk-sharing contract under section 
     1876.

       ``(D) Requiring report on net earnings and additional 
     benefits.--Each medicaid managed care plan shall submit a 
     report to the State and the Secretary not later than 12 
     months after the close of a contract year containing--
       ``(i) the most recent audited financial statement of the 
     plan's net earnings, in accordance with guidelines 
     established by the Secretary in consultation with the States, 
     and consistent with generally accepted accounting principles; 
     and
       ``(ii) a description of any benefits that are in addition 
     to the benefits required to be provided under the contract 
     that were provided during the contract year to members 
     enrolled with the plan and entitled to medical assistance 
     under the State plan under this title.''.

     SEC. 6. SANCTIONS FOR NONCOMPLIANCE BY ELIGIBLE MANAGED CARE 
                   PROVIDERS.

       (a) Sanctions Described.--Title XIX of such Act (42 U.S.C. 
     1396 et seq.), as amended by section 3(c), is amended--
       (1) by redesignating section 1933 as section 1934; and
       (2) by inserting after section 1932 the following new 
     section:

    ``sanctions for noncompliance by eligible managed care providers

       ``Sec. 1933. (a) Use of Intermediate Sanctions by the State 
     to Enforce Requirements.--Each State shall establish 
     intermediate sanctions, which may include any of the types 
     described in subsection (b) other than the termination of a 
     contract with an eligible managed care provider, which the 
     State may impose against an eligible managed care provider 
     with a contract under section 1931(a)(1)(B) if the provider--
       ``(1) fails substantially to provide medically necessary 
     items and services that are required (under law or under such 
     provider's contract with the State) to be provided to an 
     enrollee covered under the contract, if the failure has 
     adversely affected (or has a substantial likelihood of 
     adversely affecting) the enrollee;
       ``(2) imposes premiums on enrollees in excess of the 
     premiums permitted under this title;
       ``(3) acts to discriminate among enrollees on the basis of 
     their health status or requirements for health care services, 
     including expulsion or refusal to reenroll an individual, 
     except as permitted by sections 1931 and 1932, or engaging in 
     any practice that would reasonably be expected to have the 
     effect of denying or discouraging enrollment with the 
     provider by eligible individuals whose medical condition or 
     history indicates a need for substantial future medical 
     services;
       ``(4) misrepresents or falsifies information that is 
     furnished--
       ``(A) to the Secretary or the State under section 1931 or 
     1932; or
       ``(B) to an enrollee, potential enrollee, or a health care 
     provider under such sections; or
       ``(5) fails to comply with the requirements of section 
     1876(i)(8).
       ``(b) Intermediate Sanctions.--The sanctions described in 
     this subsection are as follows:
       ``(1) Civil money penalties as follows:
       ``(A) Except as provided in subparagraph (B), (C), or (D), 
     not more than $25,000 for each determination under subsection 
     (a).
       ``(B) With respect to a determination under paragraph (3) 
     or (4)(A) of subsection (a), not more than $100,000 for each 
     such determination.
       ``(C) With respect to a determination under subsection 
     (a)(2), double the excess amount charged in violation of such 
     subsection (and the excess amount charged shall be deducted 
     from the penalty and returned to the individual concerned).
       ``(D) Subject to subparagraph (B), with respect to a 
     determination under subsection (a)(3), $15,000 for each 
     individual not enrolled as a result of a practice described 
     in such subsection.
       ``(2) The appointment of temporary management to oversee 
     the operation of the eligible managed care provider and to 
     assure the health of the provider's enrollees, if there is a 
     need for temporary management while--
       ``(A) there is an orderly termination or reorganization of 
     the eligible managed care provider; or
       ``(B) improvements are made to remedy the violations found 
     under subsection (a),
     except that temporary management under this paragraph may not 
     be terminated until the State has determined that the 
     eligible managed care provider has the capability to ensure 
     that the violations shall not recur.
       ``(3) Permitting individuals enrolled with the eligible 
     managed care provider to terminate enrollment without cause, 
     and notifying such individuals of such right to terminate 
     enrollment.
       ``(c) Treatment of Chronic Substandard Providers.--In the 
     case of an eligible managed care provider which has 
     repeatedly failed to meet the requirements of section 1931 or 
     1932, the State shall (regardless of what other sanctions are 
     provided) impose the sanctions described in paragraphs (2) 
     and (3) of subsection (b).
       ``(d) Authority To Terminate Contract.--In the case of an 
     eligible managed care provider which has failed to meet the 
     requirements of section 1931 or 1932, the State shall have 
     the authority to terminate its contract with such provider 
     under section 1931(a)(1)(B) and to enroll such provider's 
     enrollees with other eligible managed care providers (or to 
     permit such enrollees to receive medical assistance under the 
     State plan under this title other than through an eligible 
     managed care provider).
       ``(e) Availability of Sanctions to the Secretary.--
       ``(1) Intermediate sanctions.--In addition to the sanctions 
     described in paragraph (2) and any other sanctions available 
     under law, the Secretary may provide for any of the sanctions 
     described in subsection (b) if the Secretary determines 
     that--
       ``(A) an eligible managed care provider with a contract 
     under section 1931(a)(1)(B) fails to meet any of the 
     requirements of section 1931 or 1932; and
       ``(B) the State has failed to act appropriately to address 
     such failure.
       ``(2) Denial of payments to the state.--The Secretary may 
     deny payments to the State for medical assistance furnished 
     under the contract under section 1931(a)(1)(B) for 
     individuals enrolled after the date the Secretary notifies an 
     eligible managed care provider of a determination under 
     subsection (a) and until the Secretary is satisfied that the 
     basis for such determination has been corrected and is not 
     likely to recur.
       ``(f) Due Process for Eligible Managed Care Providers.--
       ``(1) Availability of hearing prior to termination of 
     contract.--A State may not terminate a contract with an 
     eligible managed care provider under section 1931(a)(1)(B) 
     unless the provider is provided with a hearing prior to the 
     termination.
       ``(2) Notice to enrollees of termination hearing.--A State 
     shall notify all individuals enrolled with an eligible 
     managed care provider which is the subject of a hearing to 
     terminate the provider's contract with the State of the 
     hearing and that the enrollees may immediately disenroll with 
     the provider for cause.
       ``(3) Other protections for eligible managed care providers 
     against sanctions imposed by state.--Before imposing any 
     sanction against an eligible managed care provider other than 
     termination of the provider's contract, the State shall 
     provide the provider with notice and such other due process 
     protections as the State may provide, except that a State may 
     not provide an eligible managed care provider with a 
     pretermination hearing before imposing the sanction described 
     in subsection (b)(2).
       ``(4) Imposition of civil monetary penalties by 
     secretary.--The provisions of section 1128A (other than 
     subsections (a) and (b)) shall apply with respect to a civil 
     money penalty imposed by the Secretary under subsection 
     (b)(1) in the same manner as such provisions apply to a 
     penalty or proceeding under section 1128A.''.
       (b) Conforming Amendment Relating to Termination of 
     Enrollment for Cause.--Section 1932(b)(2)(B) of the Social 
     Security Act, as added by section 3(c)(2), is amended by 
     inserting after ``coercion'' the following: ``, or pursuant 
     to the imposition against the eligible managed care provider 
     of the sanction described in section 1933(b)(3),''.

     SEC. 7. CONFORMING AMENDMENTS.

       (a) Exclusion of Certain Individuals and Entities from 
     Participation in Program.--Section 1128(b)(6)(C) of the 
     Social Security Act (42 U.S.C. 1320a-7(b)(6)(C)) is amended--
       (1) in clause (i), by striking ``a health maintenance 
     organization (as defined in section 1903(m))'' and inserting 
     ``an eligible managed care provider, as defined in section 
     1932(a)(1),''; and
       (2) in clause (ii), by inserting ``section 1115 or'' after 
     ``approved under''.
       (b) State Plan Requirements.--Section 1902 of the Social 
     Security Act (42 U.S.C. 1396a) is amended--
       (1) in subsection (a)(30)(C), by striking ``section 
     1903(m)'' and inserting ``section 1931(a)(1)(B)''; and
       (2) in subsection (a)(57), by striking ``hospice program, 
     or health maintenance organization (as defined in section 
     1903(m)(1)(A))'' and inserting ``or hospice program'';
       (3) in subsection (e)(2)(A), by striking ``or with an 
     entity described in paragraph (2)(B)(iii), (2)(E), (2)(G), or 
     (6) of section 1903(m) under a contract described in section 
     1903(m)(2)(A)'';
       (4) in subsection (p)(2)--
       (A) by striking ``a health maintenance organization (as 
     defined in section 1903(m))'' and inserting ``an eligible 
     managed care provider, as defined in section 1932(a)(1),'';
       (B) by striking ``an organization'' and inserting ``a 
     provider''; and
       (C) by striking ``any organization'' and inserting ``any 
     provider''; and
       (5) in subsection (w)(1), by striking ``sections 
     1903(m)(1)(A) and'' and inserting ``section''.
       (c) Payment to States.--Section 1903(w)(7)(A)(viii) of the 
     Social Security Act [[Page S7127]] (42 U.S.C. 
     1396b(w)(7)(A)(viii)) is amended to read as follows:
       ``(viii) Services of an eligible managed care provider with 
     a contract under section 1931(a)(1)(B).''.
       (d) Use of Enrollment Fees and Other Charges.--Section 1916 
     of the Social Security Act (42 U.S.C. 1396o) is amended in 
     subsections (a)(2)(D) and (b)(2)(D) by striking ``a health 
     maintenance organization (as defined in section 1903(m))'' 
     and inserting ``an eligible managed care provider, as defined 
     in section 1932(a)(1),'' each place it appears.
       (e) Extension of Eligibility for Medical Assistance.--
     Section 1925(b)(4)(D)(iv) of the Social Security Act (42 
     U.S.C. 1396r-6(b)(4)(D)(iv)) is amended to read as follows:
       ``(iv) Enrollment with eligible managed care provider.--
     Enrollment of the caretaker relative and dependent children 
     with an eligible managed care provider, as defined in section 
     1932(a)(1), less than 50 percent of the membership (enrolled 
     on a prepaid basis) of which consists of individuals who are 
     eligible to receive benefits under this title (other than 
     because of the option offered under this clause). The option 
     of enrollment under this clause is in addition to, and not in 
     lieu of, any enrollment option that the State might offer 
     under subparagraph (A)(i) with respect to receiving services 
     through an eligible managed care provider in accordance with 
     sections 1931, 1932, and 1933.''.
       (f) Assuring Adequate Payment Levels for Obstetrical and 
     Pediatric Services.--Section 1926(a) of the Social Security 
     Act (42 U.S.C. 1396r-7(a)) is amended in paragraphs (1) and 
     (2) by striking ``health maintenance organizations under 
     section 1903(m)'' and inserting ``eligible managed care 
     providers under contracts entered into under section 
     1931(a)(1)(B)'' each place it appears.
       (g) Payment for Covered Outpatient Drugs.--Section 
     1927(j)(1) of the Social Security Act (42 U.S.C. 1396r-
     8(j)(1)) is amended by striking ``***Health Maintenance 
     Organizations, including those organizations that contract 
     under section 1903(m),'' and inserting ``health maintenance 
     organizations and medicaid managed care plans, as defined in 
     section 1932(a)(2),''.
       (h) Demonstration Projects to Study Effect of Allowing 
     States to Extend Medicaid Coverage for Certain Families.--
     Section 4745(a)(5)(A) of the Omnibus Budget Reconciliation 
     Act of 1990 (42 U.S.C. 1396a note) is amended by striking 
     ``(except section 1903(m)'' and inserting ``(except sections 
     1931, 1932, and 1933)''.

     SEC. 8. EFFECTIVE DATE; STATUS OF WAIVERS.

       (a) Effective Date.--Except as provided in subsection (b), 
     the amendments made by this Act shall apply to medical 
     assistance furnished--
       (1) during quarters beginning on or after October 1, 1995; 
     or
       (2) in the case of assistance furnished under a contract 
     described in section 3(b), during quarters beginning after 
     the earlier of--
       (A) the date of the expiration of the contract; or
       (B) the expiration of the 1-year period which begins on the 
     date of the enactment of this Act.
       (b) Application to Waivers.--
       (1) Existing waivers.--If any waiver granted to a State 
     under section 1115 or 1915 of the Social Security Act (42 
     U.S.C. 1315, 1396n) or otherwise which relates to the 
     provision of medical assistance under a State plan under 
     title XIX of the such Act (42 U.S.C. 1396 et seq.), is in 
     effect or approved by the Secretary of Health and Human 
     Services (in this subsection referred to as the 
     ``Secretary'') as of the applicable effective date described 
     in subsection (a), the amendments made by this Act shall not 
     apply with respect to the State before the expiration 
     (determined without regard to any extensions) of the waiver 
     to the extent such amendments are inconsistent with the terms 
     of the waiver.
       (2) Secretarial evaluation and report for existing waivers 
     and extensions.--
       (A) Prior to approval.--On and after the applicable 
     effective date described in subsection (a), the Secretary, 
     prior to extending any waiver granted under section 1115 or 
     1915 of the Social Security Act (42 U.S.C. 1315, 1396n) or 
     otherwise which relates to the provision of medical 
     assistance under a State plan under title XIX of the such Act 
     (42 U.S.C. 1396 et seq.), shall--
       (i) conduct an evaluation of--

       (I) the waivers existing under such sections or other 
     provision of law as of the date of the enactment of this Act; 
     and
       (II) any applications pending, as of the date of the 
     enactment of this Act, for extensions of waivers under such 
     sections or other provision of law; and

       (ii) submit a report to the Congress recommending whether 
     the extension of a waiver under such sections or provision of 
     law should be conditioned on the State submitting the request 
     for an extension complying with the provisions of sections 
     1931, 1932, and 1933 of the Social Security Act (as added by 
     this Act).
       (B) Deemed approval.--If the Congress has not enacted 
     legislation based on a report submitted under subparagraph 
     (A)(ii) within 120 days after the date such report is 
     submitted to the Congress, the recommendations contained in 
     such report shall be deemed to be approved by the Congress.
       (3) Future waivers.--
       (A) In general.--Except as provided in paragraphs (1) and 
     (2), and subparagraph (B), the Secretary may not waive the 
     application of section 1931, 1932, or 1933 of such Act (as 
     added by this Act) with respect to any State.
       (B) Special rule regarding a waiver of the requirements 
     applicable to eligible managed care providers for children 
     with special health care needs.--Notwithstanding the 
     provisions of subparagraph (A), the Secretary may waive, 
     pursuant to section 1115 or 1915 of the Social Security Act 
     (42 U.S.C. 1315, 1396n), or otherwise, the application of 
     section 1932(g)(2) of such Act (as added by this Act) if the 
     State applying for the waiver demonstrates that, with respect 
     to each eligible managed care provider having an enrollee who 
     is a child with special health care needs (as defined in 
     section 1932(g)(2)(B) of such Act), such provider shall--
       (i) provide (or arrange to be provided) any medical 
     assistance specified in the provider's contract with the 
     State that is identified in a treatment plan for the enrollee 
     prepared by a program described in section 1932(g)(2)(B) of 
     such Act in accordance with such treatment plan--

       (I) without regard to any prior authorization requirement 
     which would otherwise apply to the provision of such 
     assistance; and
       (II) unless the eligible managed care provider demonstrates 
     to the satisfaction of the Secretary that the provider is or 
     has an arrangement with a health care provider with the 
     specialized pediatric expertise required to provide the 
     medical assistance specified in the treatment plan, without 
     regard to whether or not the health care provider specified 
     in the treatment plan has otherwise entered into an agreement 
     with the eligible managed care provider to provide medical 
     assistance to plan enrollees;

       (ii) require each health care provider with whom the 
     eligible managed care provider has entered into an agreement 
     to provide medical assistance to enrollees to furnish medical 
     assistance specified in such treatment plan to the extent 
     necessary to carry out such treatment plan; and
       (iii) demonstrate that it has adequate written agreements 
     with pediatric specialists as determined by the Secretary to 
     ensure appropriate specialist care and referrals.
                                 ______

      By Mr. CONRAD:
  S. 840. A bill to provide the States greater flexibility in providing 
jobs for, and assistance to, needy families, to improve child support 
enforcement, to reduce teenage pregnancy, and for other purposes; to 
the Committee on Finance.

                    work and gainful employment act

  Mr. CONRAD. Mr. President, I thank the Chair and I thank my 
distinguished colleague from Nebraska for securing this time and I 
thank the distinguished Republican manager of the bill, the Senator 
from New Mexico, for his graciousness in allowing me at this time to 
introduce a bill which I will send to the desk.
  This bill is a major welfare reform piece of legislation and I ask 
that it be printed, but not in the Record. I want to make that clear: I 
am not asking it to be printed in the Record, so we can save the 
taxpayers some money. But I am introducing a bill to dramatically 
revamp the welfare system in this country. I call it the Work and 
Gainful Employment Act.
  The WAGE Act significantly reforms our welfare system while 
protecting the children of America against an abdication of Federal 
responsibility. I offer an innovative approach to reforming welfare 
that is based on four principles: work, protecting children, State 
flexibility, and family. The WAGE Act is designed foremost to put 
welfare recipients to work and to make welfare recipients self-
sufficient. Under my plan, States receive unprecedented flexibility to 
experiment in developing new methods for moving welfare recipients into 
work. The WAGE Act retains a safety net for children and an automatic 
stabilizer for States.
  Mr. President, Americans overwhelmingly agree that the current 
welfare system does not work; it does not move recipients from 
dependency to work and self-sufficiency. Welfare undermines the basic 
values of our country--work,
 family, self-sufficiency, and personal responsibility--and sends a 
detrimental message to children that welfare can be a permanent way of 
life.

  The WAGE Act is a departure from the status quo. The current system 
focuses on writing checks and does little to promote work and self-
sufficiency. States are overburdened by extensive Federal regulations 
that impede their ability to enact innovative and creative approaches 
to moving individuals off of welfare. The worst part of welfare is the 
message sent to children--that if their parents do nothing, the 
government will send them a check. We have no choice but to revamp and 
reengineer welfare from the ground up.
  The WAGE Act ends welfare as we know it. In its place, States are 
given [[Page S7128]] the flexibility to design work programs that do 
one thing--move parents into the work force. But the WAGE Act does not 
just let States take the money and run.
  It is based on the principle that those who raise the money should 
have some say in how it is spent. But it discards the micromanagement 
of the past.
  The WAGE Act has four themes:
  First, work. From the day that a parent sets foot in a welfare 
office, we will expect that person to work or to demonstrate progress 
toward self-sufficiency.
  Second, State flexibility. States will have a wide latitude to design 
effective work programs under a new work and gainful employment block 
grant. The WAGE block grant will also provide incentives for moving 
parents into the work force.
  Third, profamily. Families that stay together and play by the rules 
will be supported in their efforts to be self-sufficient. For children 
in divorced and never-married families, both parents will be expected 
to provide financial support through extensive and tough new child 
support enforcement measures.
  Fourth, protects children. A transitional aid program will replace 
AFDC and provide cash assistance to families with children. States will 
have broad flexibility to determine eligibility and to set benefit 
levels and time limits. Teen parents will be required to stay in school 
and to live with their parents or in adult-supervised living 
arrangements.
  Under my proposal, the transitional aid program will be a cooperative 
Federal-State effort, with the Federal Government providing matching 
funds to States. However, unlike AFDC, it will emphasize the need for 
participants to work or prepare themselves for work. The WAGE block 
grant will provide States with the means to move welfare recipients 
into work. The WAGE Act will save money and reform the welfare system 
without
 resorting to the free-for-all of AFDC block grants that does little to 
hold States accountable and that puts America's children at great risk.

  While there are savings to be realized in ending welfare 
inefficiencies, I hope the Senate's deliberations will emphasize first 
and foremost that welfare reform is not an experiment to be tested on 
America's poor children. The House bill allows States to count people 
as working who are kicked off the rolls. Mr. President, what could be 
more absurd than to say that people are working who have just been 
eliminated from the welfare rolls? You can be eliminated from the 
welfare rolls and not working, and we should not count people as 
working who are not. Real welfare reform is about solving the problem 
of transitioning parents into the work force, not the streets.
  The person most affected by our deliberations are America's children. 
I hope that our efforts will focus on supporting and enabling their 
parents to be self-sufficient. That is the only approach that will 
ensure that we are responsible to the next generation.
  Mr. President, let me end as I began. This new welfare reform 
proposal emphasizes four principles: work, State flexibility, families, 
and protecting children.
  I think those ought to be the principles that underlie any reform of 
our welfare system.

                          ____________________
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