I

103D CONGRESS

1ST SESSION H. R. 2770

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

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

IN THE HOUSE OF REPRESENTATIVES

JULY 28, 1993

Mrs. JOHNSON of Connecticut (for herself and Mr. POMEROY) introduced the

following bill; which was referred to the Committee on Energy and Commerce

A BILL

To amend title XVIII of the Social Security Act to permit

medicare select policies to be offered in all States, and

for other purposes.

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

3 SECTION 1. EXPANSION AND REVISION OF MEDICARE SE4 LECT POLICIES.

5 (a) PERMITTING MEDICARE SELECT POLICIES IN

6 ALL STATES.—

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

8 4358 of the Omnibus Budget Reconciliation Act of

9 1990 (hereafter referred to as ‘‘OBRA–1990’’) is

10 hereby repealed.
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1 (2) CONFORMING AMENDMENT.—Section 4358

2 of OBRA–1990 is amended by redesignating sub3 section (d) as subsection (c).

4 (b) REQUIREMENTS OF MEDICARE SELECT POLI5 CIES.—Section 1882(t)(1) of the Social Security Act (42

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

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

8 1991 NAIC Model Regulation or 1991 Federal Regulation

9 and otherwise complies with the requirements of this sec10 tion except that—

11 ‘‘(i) the benefits under such policy are re12 stricted to items and services furnished by certain

13 entities (or reduced benefits are provided when items

14 or services are furnished by other entities), and

15 ‘‘(ii) in the case of a policy described in sub16 paragraph (C)(i)—

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

18 one of the groups or packages of benefits de19 scribed in subsection (p)(2)(A),

20 ‘‘(II) except for nominal copayments im21 posed for services covered under part B of this

22 title, such benefits include at least the core

23 group of basic benefits described in subsection

24 (p)(2)(B), and
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1 ‘‘(III) an enrollee’s liability under such pol2 icy for physician’s services covered under part

3 B of this title is limited to the nominal

4 copayments described in subclause (II),

5 the policy shall nevertheless be treated as meeting those

6 standards if the policy meets the requirements of subpara7 graph (B).

8 ‘‘(B) A policy meets the requirements of this sub9 paragraph if—

10 ‘‘(i) full benefits are provided for items and

11 services furnished through a network of entities

12 which have entered into contracts or agreements

13 with the issuer of the policy,

14 ‘‘(ii) full benefits are provided for items and

15 services furnished by other entities if the services are

16 medically necessary and immediately required be17 cause of an unforeseen illness, injury, or condition

18 and it is not reasonable given the circumstances to

19 obtain the services through the network,

20 ‘‘(iii) the network offers sufficient access,

21 ‘‘(iv) the issuer of the policy has arrangements

22 for an ongoing quality assurance program for items

23 and services furnished through the network,
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1 ‘‘(v)(I) the issuer of the policy provides to each

2 enrollee at the time of enrollment an explanation

3 of—

4 ‘‘(aa) the restrictions on payment under

5 the policy for services furnished other than by

6 or through the network,

7 ‘‘(bb) out of area coverage under the

8 policy,

9 ‘‘(cc) the policy’s coverage of emergency

10 services and urgently needed care, and

11 ‘‘(dd) the availability of a policy through

12 the entity that meets the 1991 Model NAIC

13 Regulation or 1991 Federal Regulation without

14 regard to this subsection and the premium

15 charged for such policy, and

16 ‘‘(II) each enrollee prior to enrollment acknowl17 edges receipt of the explanation provided under

18 subclause (I), and

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

20 individuals, in addition to the policy described in this

21 subsection, any policy (otherwise offered by the is22 suer to individuals in the State) that meets the 1991

23 Model NAIC Regulation or 1991 Federal Regulation

24 and other requirements of this section without re25 gard to this subsection.
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1 ‘‘(C)(i) A policy described in this subparagraph—

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

3 defined in section 1876(b)),

4 ‘‘(II) is not a policy or plan providing benefits

5 pursuant to a contract under section 1876 or an ap6 proved demonstration project described in section

7 603(c) of the Social Security Amendments of 1983,

8 section 2355 of the Deficit Reduction Act of 1984,

9 or section 9412(b) of the Omnibus Budget Reconcili10 ation Act of 1986, and

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

12 with benefits which are available under this title, are

13 substantially similar to benefits under policies of14 fered to individuals who are not entitled to benefits

15 under this title.

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

17 of clause (i) as to whether certain benefits are substan18 tially similar, there shall not be taken into account, except

19 in the case of preventive services, benefits provided under

20 policies offered to individuals who are not entitled to bene21 fits under this title which are in addition to the benefits

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

23 provide in order to meet the definition of an eligible orga24 nization under section 1876(b)(1).’’.
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1 (c) RENEWABILITY OF MEDICARE SELECT POLI2 CIES.—Section 1882(q)(1) of the Social Security Act (42

3 U.S.C. 1395ss(q)(1)) is amended—

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

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

6 each’’;

7 (2) by redesignating subparagraphs (A) and

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

9 (3) by adding at the end the following new sub10 paragraph:

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

12 case of a policy that meets the requirements of sub13 section (t), an issuer may cancel or nonrenew such

14 policy with respect to an individual who leaves the

15 service area of such policy.

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

17 moves to a geographic area where an issuer de18 scribed in clause (i), or where an affiliate of such is19 suer, is issuing medicare supplemental policies, such

20 individual must be permitted to enroll in any medi21 care supplemental policy offered by such issuer or

22 affiliate that provides benefits comparable to or less

23 than the benefits provided in the policy being can24 celed or nonrenewed. An individual whose coverage

25 is canceled or nonrenewed under this subparagraph
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1 shall, as part of the notice of termination or

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

3 medicare supplemental policies offered by the issuer

4 or its affiliates.

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

6 term ‘affiliate’ shall have the meaning given such

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

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

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

10 amended—

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

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

13 (C), and (D) as clauses (i), (ii), (iii), and (iv), re14 spectively;

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

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

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

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

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

20 (4) by striking ‘‘the previous sentence’’ and in21 serting ‘‘this subparagraph’’; and

22 (5) by adding at the end the following new sub23 paragraph:

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

25 a policy approved under paragraph (1) has made a mis-
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1 representation to the Secretary or has provided the Sec2 retary with false information regarding such policy, the

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

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

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

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

7 apply to a civil money penalty under this subparagraph

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

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

10 SEC. 2. EFFECTIVE DATES.

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

12 the date of the enactment of this Act, the National Asso13 ciation of Insurance Commissioners (hereafter in this sub14 section referred to as the ‘‘NAIC’’) makes changes in the

15 1991 NAIC Model Regulation (as defined in section

16 1882(p)(1)(A) of the Social Security Act) to incorporate

17 the additional requirements imposed by the amendments

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

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

20 policyholders on and after the date specified in paragraph

21 (3), as if the reference to the Model Regulation adopted

22 on June 6, 1979, were a reference to the 1991 NAIC

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

24 paragraph (such changed Regulation referred to in this

25 subsection as the ‘‘1994 NAIC Model Regulation’’).
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1 (b) SECRETARY STANDARDS.—If the NAIC does not

2 make changes in the 1991 NAIC Model Regulation (as

3 so defined) within the 6-month period specified in sub4 section (a), the Secretary of Health and Human Services

5 (hereafter in this subsection as the ‘‘Secretary’’) shall pro6 mulgate a regulation and section 1882(g)(2)(A) of the So7 cial Security Act shall be applied in each State, effective

8 for policies issued to policyholders on and after the date

9 specified in paragraph (3), as if the reference to the Model

10 Regulation adopted in June 6, 1979, were a reference to

11 the 1991 NAIC Model Regulation (as so defined) as

12 changed by the Secretary under this paragraph (such

13 changed Regulation referred to in this subsection as the

14 ‘‘1994 Federal Regulation’’).

15 (c) DATE SPECIFIED.—

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

17 the date specified in this subsection for a State is

18 the earlier of—

19 (A) the date the State adopts the 1994

20 NAIC Model Regulation or the 1994 Federal

21 Regulation; or

22 (B) 1 year after the date the NAIC or the

23 Secretary first adopts such regulations.
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1 (2) ADDITIONAL LEGISLATIVE ACTION RE2 QUIRED.—In the case of a State which the Secretary

3 identifies, in consultation with the NAIC, as—

4 (A) requiring State legislation (other than

5 legislation appropriating funds) in order for

6 medicare supplemental policies to meet the

7 1994 NAIC Model Regulation or the 1994 Fed8 eral Regulation, but

9 (B) having a legislature which is not

10 scheduled to meet in 1995 in a legislative ses11 sion in which such legislation may be consid12 ered,

13 the date specified in this subsection is the first day

14 of the first calendar quarter beginning after the

15 close of the first legislative session of the State legis16 lature that begins on or after January 1, 1995. For

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

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

19 of such session shall be deemed to be a separate reg20 ular session of the State legislature.

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