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[Congressional Record Volume 141, Number 87 (Wednesday, May 24, 1995)]
[Extensions of Remarks]
[Pages E1113-E1115]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

[[Page E1113]]

           MEDICARE BENEFICIARY PROTECTION AMENDMENTS OF 1995

                                 ______

                        HON. FORTNEY PETE STARK

                             of california

                    in the house of representatives

                        Wednesday, May 24, 1995
  Mr. STARK. Mr. Speaker, I am pleased to introduce the Medicare 
Beneficiary Protection Amendments of 1995. I am joined by Mr. Waxman, 
Mr. Ackerman, Mr. Coyne, Mr. Dellums, Mr. Foglietta, Mr. Gonzalez, Mr. 
Kennedy of Rhode Island, Mr. McDermott, Mr. Olver, Mr. Palone, Ms. 
Pelosi, Mr. Rangel, and Ms. Woolsey.
  This legislation is designed to achieve what its title implies--to 
improve the protections provided to Medicare beneficiaries. This 
legislation is urgently and increasingly needed, for two chief reasons.
  First, proposals are appearing that have as their focus the movement 
of more and more Medicare beneficiaries into managed care insurance 
products. Some proposals would push beneficiaries into health 
maintenance organizations. I support a less coercive approach, one that 
allows beneficiaries to determine the pace at which they move into 
HMO's. But either way, HMO's will continue to play a growing role in 
Medicare.
  Second, an extensive survey of Medicare HMO enrollees and former 
enrollees, recently completed by the inspector general of the 
Department of Health and Human Services, documents several problem 
areas with Medicare HMO's. The inspector general's findings 
substantiate numerous complaints I have received from individual 
beneficiaries over the past few years.
  It is clear that before Congress flings the Medicare doors wide open 
to managed care plans, we ought to act to prohibit managed care 
practices that are known to jeopardize beneficiary care. And we ought 
to act swiftly, because this is an area where an ounce of prevention is 
worth more than a pound of the cure.
  The summary finding of the inspector general's report, I believe, 
captures very well the overall experience we are having with the 
service delivery of Medicare HMO's:

       Generally, beneficiary responses indicated Medicare risk 
     HMOs provide adequate service access for most beneficiaries 
     who have joined. However, our survey results also indicated 
     some problem areas: beneficiaries' knowledge of appeal 
     rights, access and service to [end stage renal disease]/
     disabled beneficiaries, and inappropriate screening of 
     beneficiaries health status at application.

  Overall, Medicare beneficiaries are receiving adequate services, but 
serious problems exist with a significant number of enrollees, 
particularly among those enrollees who have the greatest health care 
needs. Some of the specific findings of the inspector general are:

       [C]ompliance with Federal enrollment standards for health 
     screening and informing beneficiaries of their rights 
     appeared to be problematic.
       Most beneficiaries reported timely doctor appointments for 
     primary and specialty care, but some enrollees and 
     disenrollees experienced noteworthy delays.
       Perceived, unmet service needs and lock-in problems led 22% 
     of disenrollees and 7% of enrollees to seek out-of-plan care.
       Disabled/ESRD [end stage renal disease] disenrollees . . . 
     reported access problems in several crucial areas of their 
     HMO care.

  In addition, the inspector general's survey found that:

       16% [of enrollees] either planned to leave or wanted to 
     leave [their HMO], but felt they could not, primarily for 
     reasons of affordability.

  The most troubling of the inspector general's findings is that:

       66% of disabled/ESRD enrollees wanted to leave their HMOs.

  I have no illusions that the ``Medicare Beneficiary Protection 
Amendments of 1995'' will completely alleviate all of these problems. 
In fact, I am hopeful that consumers, providers, and others will 
continue to offer suggestions as to how we can continue to improve the 
quality of care received by Medicare beneficiaries. Nonetheless, the 
remedies I am proposing today will take us a long way toward that goal.
  In addition to providing specific responses to managed care practices 
that have created beneficiary access problems, this legislation 
provides a framework through which Medicare beneficiaries can make 
informed choices about their Medicare coverage options.
  Too often today, while a beneficiary has the legal right to exit an 
HMO and return to traditional Medicare coverage, the inability to 
secure an affordable Medicare supplemental policy--a medigap plan--
makes this a hollow option. As proposed in this legislation, the 
institution of a coordinated open enrollment process for Medicare 
beneficiaries will guarantee that the options we claim to provide to 
beneficiaries are actually open to them.
  Central to the functioning of the coordinated open enrollment 
process--and to guaranteeing true choice for beneficiaries--is the 
beginning of attained-age pricing of medigap premiums. Attained-age 
pricing is the policy of raising medigap premiums as an enrollee gets 
older. In their report on medigap plans, Consumer Reports magazine 
described attained-age priced plans as hazardous to policyholders. I 
agree.
  A comparison of the least expensive attained-age rated medigap plan 
versus the only community-rated medigap plan in California--using plan 
E for the comparison--showed that a typical Medicare beneficiary will 
pay $3,360 more for the attained-age plan than the community-rated plan 
over his or her life. On top of being more expensive, this attained-age 
rated plan restricted access to a limited number of health care 
providers. The reason for the higher lifetime premium is that while the 
attained-age plan starts with a lower premium, the premium quickly 
rises as the beneficiary ages to well above the non-age-adjusted 
community rate.
  The premium comparison follows:

                      medicare supplemental plan e

(Premiums as of May, 1994 for the California counties of San Diego, 
Orange, Los Angeles, San Bernardino, Imperial, and Riverside)

   COMPARISON OF PREMIUMS OF ATTAINED-AGE MEDIGAP PLAN VERSUS STANDARD  
                      MEDIGAP COMMUNITY-RATED PLAN                      
------------------------------------------------------------------------
                                          Age of beneficiaries--        
                                 ---------------------------------------
    Insurer and type of plan        65-69     70-74     75-79   80+ yrs.
                                  yrs. old  yrs. old  yrs. old     old  
------------------------------------------------------------------------
Community-Rated Plan............      $957      $957      $957      $957
  AARP/Prudential plan                                                  
  Standard ``Medigap''                                                  
  No restrictions on accessing                                          
   beneficiaries' providers of                                          
   choice                                                               
Attained-Age Plan...............       780     1,080     1,260     1,380
  Blue Cross plan                                                       
  Medicare Select type                                                  
  Limited network of providers                                          
   and restricted access to the                                         
   limited network                                                      
                                 ---------------------------------------
Cumulative difference in                                                
 premiums of attained-age                                               
 supplemental plan to community                                         
 rated plan.....................     -$177     +$123     +$303      +423
                                   X 5 yrs   X 5 yrs   X 5 yrs   X 5 yrs
                                 ---------------------------------------
                                      -885      +615    +1,515    +2,115
Additional cost for a person                                            
 living to the age of 85 who                                            
 enrolls in an attained-age plan  ........  ........  ........    +3,360
------------------------------------------------------------------------
Source: Senior World Newsmagazine, San Diego Edition, May, 1994,        
  analysis conducted by the Office of Congressman Stark.                

  Because this legislation would accomplish the central goal of 
providing greater protections to Medicare beneficiaries, it has the 
endorsement of consumer and senior organizations. Two of the largest 
senior and consumer organizations made the following comments:

       Congressman Stark's proposed Medicare Beneficiary 
     Protection Amendments of 1995 will institute needed 
     protections in the Medicare Select program * * * it also 
     strengthens protections for Medicare beneficiaries in other 
     managed care options.--Testimony of the National Committee to 
     Preserve Social Security and Medicare before the Committee on 
     Ways and Means Subcommittee on Health, February 10, 1995.
       Consumers Union strongly supports the Medicare Beneficiary 
     Protections Amendments of 1995. This Act would provide 
     important protections for the Medicare beneficiaries who 
     enroll in managed care plans, purchase Medicare Select 
     policies, or purchase a medigap policy * * * [T]he 
     protections will benefit tens of millions of senior 
     citizens.--Consumers Union, May 8, 1995

  I would like to complement my colleagues who are joining me today in 
introducing this bill. They have responded to the needs of their senior 
and disabled constituents--those who rely upon Medicare for their 
health insurance coverage. They have responded to the challenge to 
balance the goals of providing a broad range of coverage choices for 
Medicare beneficiaries while at the same time making sure that these 
choices do not place Medicare beneficiaries at risk.
  I look forward to working with all my colleagues to move the Medicare 
Beneficiary Protection Amendments of 1995 forward. Due to the urgency 
of this issue, I hope we will not delay in taking up consideration of 
this legislation.
  A summary of the bill follows.
 Medicare Beneficiary Protection Amendments of 1995--Summary (5/19/95)

       i. medicare managed care beneficiary protection provisions

     A. Marketing standards
       1. Plans could not market to beneficiaries on a door-to-
     door basis.
       2. Plans could not require beneficiaries to attend an 
     enrollment seminar and would be required to permit enrollment 
     through the mail.
       3. Commissions may not constitute the predominant source of 
     compensation for agents.
       4. To the extent an agent is compensated based upon a 
     commission, the plan would be required to recover the 
     commission if the [[Page E1114]] beneficiary disenrolled 
     within 90 days after initial enrollment.
     B. Due process requirements for providers in networks
       1. Public notice would be required as to when applications 
     by participating providers are to be accepted.
       2. Descriptive information regarding the plan standards for 
     contracting with participating providers would be required to 
     be disclosed.
       3. Notification of a participating provider of a decision 
     to terminate or not renew a contract would be required not 
     later than 45 days before the decision would take effect, 
     unless the failure to terminate the contract would adversely 
     affect the health or safety of a patient.
       4. Notices would be required to include reasons for 
     termination or non-renewal. Carriers would be required to 
     offer providers receiving notification of termination or non-
     renewal an opportunity for review of the reasons, with a 
     majority of those conducting the review to be peers of the 
     provider that have contracts with the managed care plan.
       5. The findings of such a review would be advisory and non-
     binding. Federal or State laws pertaining to the right of 
     involved parties to appeal or seek recourse would not be 
     superseded.
     C. Standards for utilization review would be established by 
         the Secretary
       1. Individuals performing utilization review could not 
     receive financial compensation based upon the number of 
     certification denials made;
       2. Negative determinations about the medical necessity or 
     appropriateness of services or the site of services would be 
     required to be made by clinically-qualified personnel;
       3. Utilization review procedures would be required to be 
     based on reasonable, current medical evidence and applied 
     consistently across reviewers and developed in consultation 
     with participating providers;
       4. Plans would be required to provide to enrollees a 
     written description of the utilization review requirements of 
     the plan.
     D. Centers of excellence: Plans would be required to 
         demonstrate that enrollees have access to designated 
         centers of excellence
       1. According to standards developed by the Secretary, plans 
     would demonstrate that enrollees with chronic diseases or who 
     otherwise require specialized services would have access to 
     designated centers;
       2. The Secretary would designate centers that provide 
     specialty care, deliver care for individuals with chronic 
     diseases or other complex cases requiring specialized 
     treatment. Such centers must meet standards established by 
     the Secretary pertaining to specialized education and 
     training, participation in peer-reviewed research, and 
     treatment of patients from outside the facility's geographic 
     area.
       3. Recognition of trauma centers: The existing requirements 
     that plans provide for reimbursement of services outside the 
     plan's provider network where medically necessary and 
     immediately required because of an unforeseen illness, 
     injury, or condition would be clarified to include services 
     provided by designated trauma centers.
       4. Ob-Gyn Referral: Plans would be prohibited from 
     requiring enrollees to obtain a physician referral for 
     obstetric and gynecologic services.
     E. Access to emergency medical care
       1. Plans could not require pre-authorization for emergency 
     medical care.
       2. A definition of emergency medical condition based upon a 
     prudent layperson definition would be established to protect 
     beneficiaries from retrospective denials of legitimate claims 
     for payment for out-of-plan services.
       3. Plans could not deny any claim for a beneficiary using 
     the ``911'' system to summon emergency care.
       4. Plans would be required to provide timely authorization 
     for coverage of emergency services.
       5. Plans would be required to reimburse fully emergency 
     physicians for any services provided to beneficiaries in 
     order to fulfill the requirements of the anti-dumping 
     statute.
     F. Deadline for responding to requests for coverage of 
         services
       1. Plans would be required to make a final determination 
     within 24 hours;
       2. Secretary would be required to establish an expedited 
     process to review appeals of plan denials.
     G. Nondiscriminatory service area requirements
       1. In general the service area of a plan serving an urban 
     area would be an entire Metropolitan Statistical Area (MSA). 
     The Secretary could waive this requirement if the plan 
     demonstrated that it could not develop capacity to expand to 
     the entire MSA and that the plan's proposed service area 
     boundaries to not result in favorable risk selection. The 
     Secretary could not waive the requirement that the plan serve 
     the central county of an MSA.
       2. The Secretary could require a plan to contract with 
     Federally-qualified health centers (FQHCs), rural health 
     clinics, migrant health centers, or other essential community 
     providers located in the service area if the Secretary 
     determined that such contracts are needed in order to provide 
     reasonable access to enrollees throughout the service area.
     H. Contractors would be required to disclose information 
         about physician payment
       1. Information would be provided under the terms of the 
     contract with the Health Care Financing Administration 
     (HCFA).
       2. Information would be made available to plan enrollees, 
     or potential enrollees, upon request.
     I. Intermediate sanctions on HMOs
       1. Civil money penalties of up to $25,000 for each 
     violation that directly or indirectly adversely affects an 
     individual enrolled in the plan.
       2. Civil money penalties of up to $10,000 for each week 
     after the Secretary begins proceeding to terminate a 
     contract.
       3. A new formal process would be adopted through which HMOs 
     could submit a corrective action plan for violations of the 
     requirements. More severe penalties could be imposed on HMOs 
     with previous deficiencies.
       4. HMOs which fail to cooperate with PRO quality review and 
     which fail to meet standards for appeals would be subject to 
     existing intermediate sanctions and civil money penalties.
     J. Amendments to Health Care Prepayment Plan under section 
         1833 (HCPPs)
       1. The HCPP option would be restricted to organizations 
     that could not qualify under section 1876 as an HMO such as 
     the UMW and other union plans.
       2. New requirements would be imposed on HCPPs: Solvency and 
     marketing standards would be imposed; HCPPs would be required 
     to meet the section 1876 standards for grievance procedures 
     and physician incentive plan requirements, and would be 
     subject to the section 1876 intermediate sanctions and civil 
     money penalties.
       3. The provision of the Social Security Amendments of 1994 
     which subjects HCPPs to the MediGap standards effective 
     January 1, 1996 would be repealed.
       4. A transition rule would be provided for beneficiaries 
     enrolled in HCPPs which would not continue as a result of 
     this provision.
     K. Other beneficiary protections
       1. An enrollee of an HMO receiving unauthorized out-of-plan 
     treatment could not be charged more than what Medicare would 
     have paid under fee-for-service rules.
       2. Plans would be required to make arrangements for 
     dialysis services for beneficiaries traveling outside the 
     plan's service area.
     L. Benefit package for section 1876 HMO plans
       1. In addition to regular Medicare benefits, plans would be 
     required to provide hospitalization and SNF coverage without 
     the three-day stay requirement.
       2. For Medicare covered services, plans may not impose 
     cost-sharing other than nominal co-payments.
       3. Limits on additional benefits (if any) must be fully 
     explained and enrollees given reasonable notice that benefits 
     are expiring.
       4. Requirements to provide additional benefits to the 
     extent that the plan's adjusted community rate is exceeded by 
     the AAPCC payment would not change.
     M. Plans would be required to provide information on provider 
         credentials to enrollees and patient enrollees
     N. A demonstration project on competitive rate-setting for 
         Medicare risk contractors would be conducted
     O. HMO outlier pool
       An outlier pool would be created for HMOs with risk 
     contracts to provide reinsurance for high-cost cases. The 
     pool would be created by withholding a percentage of current 
     payments.
     P. PRO review
       All section 1876 and section 1833 plans would be subject to 
     PRO review.

                     ii. medicare select provisions

       The Medicare Select demonstration program would be amended:
     A. Establish Federal oversight of Medicare Select
       1. Secretary would establish standards for Medicare Select 
     in regulation.
       To the extent practicable the standards would be the same 
     as the standards developed by the NAIC for Medicare Select 
     plans. Any additional standards would be developed in 
     consultation with the NAIC.
       2. Medicare Select plans would generally be required to 
     meet the same requirements in effect for Medicare risk 
     contractors under section 1876: Community rating; prior 
     approval of marketing materials; intermediate sanctions and 
     civil money penalties; additional requirements added by this 
     bill as described below.
       3. If the Secretary has determined that a State has an 
     effective program to enforce the standards for Medicare 
     Select plans established by the Secretary, the State would 
     certify Medicare Select plans. If the Secretary does not make 
     such a finding with respect to a State, the Secretary would 
     certify Medicare Select plans in that State.
       4. Existing requirements for State-based standards and 
     fifteen-State restriction would be repealed.
     B. Benefit Requirements
       1. Fee-for-service Medicare Select plans would offer either 
     the MediGap ``E'' plan with payment for extra billing added 
     or the MediGap ``J'' plan. Both have preventive benefits and 
     adding extra billing benefits to ``E'' should not add cost 
     given that network doctors should all accept assignment.
       2. If an HMO or competitive medical plan (CMP) as defined 
     under section 1876 offers Medicare Select, then the benefits 
     would be [[Page E1115]] required to be offered under the same 
     rules as set forth in Title III below. Such plans would 
     therefore have different benefits than traditional MediGap 
     plans.
                        iii. medigap provisions

       A. All MediGap policies would be required to be community 
     rated.
       B. MediGap plans would be required to participate in 
     coordinated open enrollment.
       C. The loss ratio requirement for all plans would be 
     increased to 85 percent.

                    iv. coordinated open enrollment

       A. The Secretary would conduct an annual open enrollment 
     period during which Medicare beneficiaries could enroll in 
     any MediGap plan, Medicare Select, or an HMO contracting with 
     Medicare.
       1. Each Medigap plan, Medicare Select plan, and HMO 
     contractor would be required to participate in the open 
     enrollment system.
       2. The Secretary would make available to beneficiaries 
     information on Medigap and Medicare-contracting HMO plans.
       B. Generally, except for cause, an enrollee could enroll, 
     disenroll, or switch plans only during the annual open 
     enrollment period, with the following exceptions:
       During the first year of enrollment with a limited access 
     plan (including HMOs and Medicare Select) the beneficiary 
     could disenroll at the end of any calendar quarter and return 
     to fee-for-service. During the second year, disenrollment 
     could only occur mid-year at the end of the second calendar 
     quarter. After the first two years, disenrollment could only 
     occur during the open enrollment period;
       There would be an exception for HMOs which the Secretary 
     determines has reached capacity;
       There would be an exception to individuals newly eligible 
     for Medicare or who are new residents of the service area of 
     a plan who could enroll on an open enrollment basis during 
     the sixty-day period that begins thirty days before they 
     become eligible or before they become a resident of the 
     service area.
     

                          ____________________
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