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105TH CONGRESS

1ST SESSION H. R. 625

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

consumer protections for Medicare supplemental insurance.

IN THE HOUSE OF REPRESENTATIVES

FEBRUARY 6, 1997

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

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

DEFAZIO, Mr. MCDERMOTT, Mr. KLECZKA, Mr. RAHALL, Mr. ACKERMAN, Mr. HILLIARD, Mr. COBURN, Ms. PELOSI, Mr. BORSKI, Mr. ENSIGN, Mr. LEACH, Mr. DEUTSCH, Mr. GORDON, Mr. WAXMAN, Mrs.

THURMAN, Mr. MILLER of California, Ms. SLAUGHTER, Mr. OLVER, Mr.

DELLUMS, Ms. LOFGREN, Mr. SHAYS, Mr. FOGLIETTA, Mr. NEY, Mr.

NADLER, Mrs. CLAYTON, Mr. TOWNS, Mr. SAWYER, Mr. KLINK, Mr.

RUSH, Mr. STUPAK, Mr. LAFALCE, Mr. FRANK of Massachusetts, Ms.

ESHOO, Mr. BROWN of Ohio, Mr. GREEN, Ms. FURSE, Mr. ENGEL, Mr.

MARKEY, Mr. STRICKLAND, Mr. FROST, Mr. BOUCHER, Ms. DEGETTE,

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

Committee on Commerce, and in addition to the Committee on Ways and

Means, for a period to be subsequently determined by the Speaker, in

each case for consideration of such provisions as fall within the jurisdiction of the committee concerned

A BILL

To amend title XVIII of the Social Security Act to provide

additional consumer protections for Medicare supplemental insurance.

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

2 This Act may be cited as the ‘‘Medigap Amendments

3 of 1997’’.

4 SEC. 2. MEDIGAP AMENDMENTS.

5 (a) GUARANTEEING ISSUE WITHOUT PREEXISTING

6 CONDITIONS FOR CONTINUOUSLY COVERED INDIVID7 UALS.—Section 1882(s) of the Social Security Act (42

8 U.S.C. 1395ss(s)) is amended—

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

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

11 (2) by redesignating paragraph (3) as para12 graph (4), and

13 (3) by inserting after paragraph (2) the follow14 ing new paragraph:

15 ‘‘(3)(A) The issuer of a Medicare supplemental pol16 icy—

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

18 effectiveness of a Medicare supplemental policy de19 scribed in subparagraph (C);

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

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

22 medical condition (including both physical and men23 tal illnesses), claims experience, receipt of health

24 care, medical history, genetic information, evidence

25 of insurability (including conditions arising out of

26 acts of domestic violence), or disability; and
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1 ‘‘(iii) may not impose an exclusion of benefits

2 based on a pre-existing condition,

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

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

5 after the date of the termination of enrollment described

6 in such subparagraph.

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

8 an individual described in any of the following clauses:

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

10 organization under a contract under section 1876 or

11 with an organization under an agreement under sec12 tion 1833(a)(1)(A) and such enrollment ceases ei13 ther because the individual moves outside the service

14 area of the organization under the contract or agree15 ment or because of the termination or nonrenewal of

16 the contract or agreement.

17 ‘‘(ii) The individual is enrolled with an organi18 zation under a policy described in subsection (t) and

19 such enrollment ceases either because the individual

20 moves outside the service area of the organization

21 under the policy, because of the bankruptcy or insol22 vency of the insurer, or because the insurer closes

23 the block of business to new enrollment.
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1 ‘‘(iii) The individual is covered under a Medi2 care supplemental policy and such coverage is termi3 nated because of the bankruptcy or insolvency of the

4 insurer issuing the policy, because the insurer closes

5 the block of business to new enrollment, or because

6 the individual changes residence so that the individ7 ual no longer resides in a State in which the issuer

8 of the policy is licensed.

9 ‘‘(iv) The individual is enrolled under an em10 ployee welfare benefit plan that provides health ben11 efits that supplement the benefits under this title

12 and the plan terminates or ceases to provide (or sig13 nificantly reduces) such supplemental health benefits

14 to the individual.

15 ‘‘(v)(I) The individual is enrolled with an eligi16 ble organization under a contract under section

17 1876 or with an organization under an agreement

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

19 terminated by the enrollee during the first 12

20 months of such enrollment, but only if the individual

21 never was previously enrolled with an eligible organi22 zation under a contract under section 1876 or with

23 an organization under an agreement under section

24 1833(a)(1)(A).
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1 ‘‘(II) The individual is enrolled under a policy

2 described in subsection (t) and such enrollment is

3 terminated during the first 12 months of such en4 rollment, but only if the individual never was pre5 viously enrolled under such a policy under such sub6 section.

7 ‘‘(C)(i) Subject to clause (ii), a Medicare supple8 mental policy described in this subparagraph, with respect

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

10 the benefits under which are comparable or lesser in rela11 tion to the benefits under the enrollment described in sub12 paragraph (B) (or, in the case of an individual described

13 in clause (ii), under the most recent Medicare supple14 mental policy described in clause (ii)(II)).

15 ‘‘(ii) An individual described in this clause is an indi16 vidual who—

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

18 ‘‘(II) was enrolled in a Medicare supplemental

19 policy within the 63 day period before the enrollment

20 described in such subparagraph.

21 ‘‘(iii) As a condition for approval of a State regu22 latory program under subsection (b)(1) and for purposes

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

24 the regulatory program shall provide for the method of

25 determining whether policy benefits are comparable or
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1 lesser in relation to other benefits. With respect to a State

2 without such an approved program, the Secretary shall es3 tablish such method.

4 ‘‘(D) At the time of an event described in subpara5 graph (B) because of which an individual ceases enroll6 ment or loses coverage or benefits under a contract or

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

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

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

10 individual of the rights of the individual, and obligations

11 of issuers of Medicare supplemental policies, under sub12 paragraph (A).’’.

13 (b) LIMITATION ON IMPOSITION OF PREEXISTING

14 CONDITION EXCLUSION DURING INITIAL OPEN ENROLL15 MENT PERIOD.—Section 1882(s)(2)(B) of such Act (42

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

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

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

19 may not exclude benefits based on a pre-existing condi20 tion.’’.

21 (c) CLARIFYING THE NONDISCRIMINATION REQUIRE22 MENTS DURING THE 6-MONTH INITIAL ENROLLMENT

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

24 1395ss(s)(2)(A)) is amended to read as follows:
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1 ‘‘(2)(A)(i) In the case of an individual described in

2 clause (ii), the issuer of a Medicare supplemental policy—

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

4 effectiveness of a Medicare supplemental policy, and

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

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

7 medical condition (including both physical and men8 tal illnesses), claims experience, receipt of health

9 care, medical history, genetic information, evidence

10 of insurability (including conditions arising out of

11 acts of domestic violence), or disability.

12 ‘‘(ii) An individual described in this clause is an indi13 vidual for whom an application is submitted before the end

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

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

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

17 (d) EXTENDING 6-MONTH INITIAL ENROLLMENT

18 PERIOD TO NON-ELDERLY MEDICARE BENEFICIARIES.—

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

20 1395ss(s)(2)(A)), as amended by subsection (c), is amend21 ed by striking ‘‘is submitted’’ and all that follows and in22 serting the following: ‘‘is submitted—

23 ‘‘(I) before the end of the 6-month period be24 ginning with the first month as of the first day on
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1 which the individual is 65 years of age or older and

2 is enrolled for benefits under part B; and

3 ‘‘(II) for each time the individual becomes eligi4 ble for benefits under part A pursuant to section

5 226(b) or 226A and is enrolled for benefits under

6 part B, before the end of the 6-month period begin7 ning with the first month as of the first day on

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

9 (e) EFFECTIVE DATES.—

10 (1) GUARANTEED ISSUE.—The amendment

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

12 1998.

13 (2) LIMIT ON PREEXISTING CONDITION EXCLU14 SIONS.—The amendment made by subsection (b)

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

16 1998.

17 (3) CLARIFICATION OF NONDISCRIMINATION

18 REQUIREMENTS.—The amendment made by sub19 section (c) shall apply to policies issued on or after

20 July 1, 1998.

21 (4) EXTENSION OF ENROLLMENT PERIOD TO

22 DISABLED INDIVIDUALS.—

23 (A) IN GENERAL.—The amendment made

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

25 1998.
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1 (B) TRANSITION RULE.—In the case of an

2 individual who first became eligible for benefits

3 under part A of title XVIII of the Social Secu4 rity Act pursuant to section 226(b) or 226A of

5 such Act and enrolled for benefits under part B

6 of such title before July 1, 1998, the 6-month

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

8 such Act shall begin on July 1, 1998. Before

9 July 1, 1998, the Secretary of Health and

10 Human Services shall notify any individual de11 scribed in the previous sentence of their rights

12 in connection with Medicare supplemental poli13 cies under section 1882 of such Act, by reason

14 of the amendment made by subsection (d).

15 (f) TRANSITION PROVISIONS.—

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

17 and Human Services identifies a State as requiring

18 a change to its statutes or regulations to conform its

19 regulatory program to the changes made by this sec20 tion, the State regulatory program shall not be con21 sidered to be out of compliance with the require22 ments of section 1882 of the Social Security Act due

23 solely to failure to make such change until the date

24 specified in paragraph (4).
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1 (2) NAIC STANDARDS.—If, within 9 months

2 after the date of the enactment of this Act, the Na3 tional Association of Insurance Commissioners (in

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

5 its NAIC Model Regulation relating to section 1882

6 of the Social Security Act (referred to in such sec7 tion as the 1991 NAIC Model Regulation, as modi8 fied pursuant to section 171(m)(2) of the Social Se9 curity Act Amendments of 1994 (Public Law 103–

10 432) and as modified pursuant to section

11 1882(d)(3)(A)(vi)(IV) of the Social Security Act, as

12 added by section 271(a) of the Health Care Port13 ability and Accountability Act of 1996 (Public Law

14 104–191) to conform to the amendments made by

15 this section, such revised regulation incorporating

16 the modifications shall be considered to be the appli17 cable NAIC model regulation (including the revised

18 NAIC model regulation and the 1991 NAIC Model

19 Regulation) for the purposes of such section.

20 (3) SECRETARY STANDARDS.—If the NAIC

21 does not make the modifications described in para22 graph (2) within the period specified in such para23 graph, the Secretary of Health and Human Services

24 shall make the modifications described in such para25 graph and such revised regulation incorporating the
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1 modifications shall be considered to be the appro2 priate Regulation for the purposes of such section.

3 (4) DATE SPECIFIED.—

4 (A) IN GENERAL.—Subject to subpara5 graph (B), the date specified in this paragraph

6 for a State is the earlier of—

7 (i) the date the State changes its stat8 utes or regulations to conform its regu9 latory program to the changes made by

10 this section, or

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

12 the Secretary first makes the modifications

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

14 (B) ADDITIONAL LEGISLATIVE ACTION RE15 QUIRED.—In the case of a State which the Sec16 retary identifies as—

17 (i) requiring State legislation (other

18 than legislation appropriating funds) to

19 conform its regulatory program to the

20 changes made in this section, but

21 (ii) having a legislature which is not

22 scheduled to meet in 1999 in a legislative

23 session in which such legislation may be

24 considered,
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1 the date specified in this paragraph is the first

2 day of the first calendar quarter beginning after

3 the close of the first legislative session of the

4 State legislature that begins on or after July 1,

5 1999. For purposes of the previous sentence, in

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

7 session, each year of such session shall be

8 deemed to be a separate regular session of the

9 State legislature.

10 SEC. 3. INFORMATION FOR MEDICARE BENEFICIARIES.

11 (a) GRANT PROGRAM.—

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

13 Human Services (in this section referred to as the

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

15 (A) private, independent, non-profit

16 consumer organizations, and

17 (B) State agencies,

18 to conduct programs to prepare and make available

19 to Medicare beneficiaries comprehensive and under20 standable information on enrollment in health plans

21 with a Medicare managed care contract and in Medi22 care supplemental policies in which they are eligible

23 to enroll. Nothing in this section shall be construed

24 as preventing the Secretary from making a grant to
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1 an organization under this section to carry out ac2 tivities for which a grant may be made under section

3 4360 of the Omnibus Budget Reconciliation Act of

4 1990 (Public Law 101–508).

5 (2) CONSUMER SATISFACTION SURVEYS.—Any

6 eligible organization with a Medicare managed care

7 contract or any issuer of a Medicare supplemental

8 policy shall—

9 (A) conduct, in accordance with minimum

10 standards approved by the Secretary, a

11 consumer satisfaction survey of the enrollees

12 under such contract or such policy; and

13 (B) make the results of such survey avail14 able to Secretary and the State Insurance Com15 missioner of the State in which the enrollees are

16 so enrolled.

17 The Secretary shall make the results of such surveys

18 available to organizations which receive grants under

19 paragraph (1).

20 (3) INFORMATION.—

21 (A) CONTENTS.—The information de22 scribed in paragraph (1) shall include at least

23 a comparison of such contracts and policies, in24 cluding a comparison of the benefits provided,

25 quality and performance, the costs to enrollees,
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1 the results of consumer satisfaction surveys on

2 such contracts and policies, as described in sub3 section (a)(2), and such additional information

4 as the Secretary may prescribe.

5 (B) INFORMATION STANDARDS.—The Sec6 retary shall develop standards and criteria to

7 ensure that the information provided to Medi8 care beneficiaries under a grant under this sec9 tion is complete, accurate, and uniform.

10 (C) REVIEW OF INFORMATION.—The Sec11 retary may prescribe the procedures and condi12 tions under which an organization that has ob13 tained a grant under this section may furnish

14 information obtained under the grant to Medi15 care beneficiaries. Such information shall be

16 submitted to the Secretary at least 45 days be17 fore the date the information is first furnished

18 to such beneficiaries.

19 (4) CONSULTATION WITH OTHER ORGANIZA20 TIONS AND PROVIDERS.—An organization which re21 ceives a grant under paragraph (1) shall consult

22 with private insurers, managed care plan providers

23 and other health care providers, and public and pri24 vate purchasers of health care benefits in order to

25 provide the information described in paragraph (1).
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1 (5) TERMS AND CONDITIONS.—To be eligible

2 for a grant under this section, an organization shall

3 prepare and submit to the Secretary an application

4 at such time, in such form, and containing such in5 formation as the Secretary may require. Grants

6 made under this section shall be in accordance with

7 terms and conditions specified by the Secretary.

8 (b) COST-SHARING.—

9 (1) IN GENERAL.—Each organization which

10 provides a Medicare managed care contract or issues

11 a Medicare supplemental policy (including a Medi12 care select policy) shall pay to the Secretary its pro

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

14 estimated costs to be incurred by the Secretary in

15 providing the grants described in subsection (a).

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

17 be paid under paragraph (1) shall not exceed

18 $35,000,000 in any fiscal year.

19 (3) APPLICATION OF PROCEEDS.—Amounts re20 ceived under paragraph (1) are hereby appropriated

21 to the Secretary to defray the costs described in

22 such paragraph and shall remain available until ex23 pended.

24 (c) DEFINITIONS.—In this section:
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1 (1) MEDICARE MANAGED CARE CONTRACT.—

2 The term ‘‘Medicare managed care contract’’ means

3 a contract under section 1876 or section

4 1833(a)(1)(A) of the Social Security Act.

5 (2) MEDICARE SUPPLEMENTAL POLICY.—The

6 term ‘‘Medicare supplemental policy’’ has the mean7 ing given such term in section 1882(g) of the Social

8 Security Act.

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