I
104TH CONGRESS
1ST SESSION
H. R. 1707
To amend title XVIII of the Social Security Act to ensure access to services
and prevent fraud and abuse for enrollees of health maintenance organi-
zations under the medicare program, to amend standards for medicare
supplemental policies, to modify the medicare select program, and for
other purposes.
IN THE HOUSE OF REPRESENTATIVES
MAY 24, 1995
Mr. STARK (for himself, Mr. WAXMAN, Mr. ACKERMAN, Mr. COYNE, Mr. DEL-
LUMS, Mr. FOGLIETTA, Mr. GONZALEZ, Mr. KENNEDY of Rhode Island,
Mr. MCDERMOTT, Mr. OLVER, Mr. PALLONE, Ms. PELOSI, Mr. RANGEL,
and Ms. WOOLSEY) 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 juris-
diction of the committee concerned
A BILL
To amend title XVIII of the Social Security Act to ensure
access to services and prevent fraud and abuse for enroll-
ees of health maintenance organizations under the medi-
care program, to amend standards for medicare supple-
mental policies, to modify the medicare select program,
and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Medicare Beneficiary
Protection Amendments of 1995’’.
SEC. 2. REFERENCES IN ACT; TABLE OF CONTENTS.
(a) AMENDMENTS TO SOCIAL SECURITY ACT.—Ex-
cept as otherwise specifically provided, whenever in this
Act an amendment is expressed in terms of an amendment
to or repeal of a section or other provision, the reference
shall be considered to be made to that section or other
provision of the Social Security Act.
(b) TABLE OF CONTENTS.—The table of contents of
this Act is as follows:
Sec. 1. Short title.
Sec. 2. References in act; table of contents.
TITLE I—PROTECTIONS FOR BENEFICIARIES ENROLLED IN
HEALTH MAINTENANCE ORGANIZATIONS
Subtitle A—Access to Services
Sec. 101. Requirements relating to providers of health services.
Sec. 102. Deadline for responding to requests for coverage of services.
Sec. 103. Requirements for organization service areas.
Sec. 104. Other enrollee protections.
Sec. 105. Requiring plans to provide expanded services.
Sec. 106. Outlier payments.
Sec. 107. Demonstration project on competitive rate setting.
Subtitle B—Protections Against Fraud and Abuse
Sec. 111. Intermediate sanctions for program violations.
Sec. 112. Treatment of health care prepayment plans.
Sec. 113. Providing enrollees with certain information on plans.
Sec. 114. Restrictions on commissions for agents.
Sec. 115. Restrictions on in-person enrollment.
Sec. 116. Application of peer review to cost-based health maintenance organiza-
tions and health care pre-payment plans.
Subtitle C—Effective Date
Sec. 121. Effective date.
TITLE II—PROTECTIONS FOR BENEFICIARIES ENROLLED IN
MEDICARE SUPPLEMENTAL AND MEDICARE SELECT POLICIES
Sec. 201. Changes in requirements for medicare supplemental policies.
Sec. 202. Application of standards to medicare select policies.
TITLE III—COORDINATION OF ENROLLMENT AND TERMINATION
OF ENROLLMENT
Sec. 301. Uniform open enrollment periods.
Sec. 302. Enrollments for new medicare beneficiaries and those who move.
Sec. 303. Provision by Secretary of enrollment information and other informa-
tion on eligible organizations and medicare supplemental poli-
cies.
Sec. 304. Effective date.
TITLE 
I—PROTECTIONS 
FOR
BENEFICIARIES 
ENROLLED
IN 
HEALTH 
MAINTENANCE
ORGANIZATIONS
Subtitle A—Access to Services
SEC. 101. REQUIREMENTS RELATING TO PROVIDERS OF
HEALTH SERVICES.
(a) DUE PROCESS PROTECTIONS FOR PROVIDERS.—
Section 1876(c) (42 U.S.C. 1395mm(c)) is amended by
adding at the end the following new paragraph:
‘‘(9)(A) In consultation with providers of health care
services who are members of the organization’s provider
network, each eligible organization shall establish stand-
ards to be used by the organization for contracting with
providers, and shall make descriptive information regard-
ing these standards available to enrollees, providers who
are members of the network, and prospective enrollees and
prospective members of the network.
‘‘(B)(i) An eligible organization may not terminate or
refuse to renew an agreement with a provider of health
care services to participate in the organization’s provider
network unless the organization provides written notifica-
tion to the provider of the decision to terminate or refuse
to renew the agreement. The notification shall include a
statement of the reasons for the organization’s decision,
consistent with the standards established under subpara-
graph (A).
‘‘(ii) The eligible organization shall provide the notifi-
cation required under clause (i) at least 45 days prior to
the effective date of the termination or expiration of the
agreement (whichever is applicable). The previous sen-
tence shall not apply if failure to terminate the agreement
prior to the deadline would adversely affect the health or
safety of an individual enrolled with the organization.
‘‘(C)(i) Each eligible organization shall provide a
process under which a provider of health care services may
request a review of the organization’s decision to termi-
nate or refuse to renew the provider’s participation agree-
ment. Such review shall be conducted by a group of indi-
viduals the majority of whom are providers of health care
services who are members of the organization’s provider
network or employees of the organization, and who are
members of the same profession as the provider who re-
quests the review.
‘‘(ii) If the provider requests in advance, the eligible
organization shall permit an attorney representing the
provider to be present at the provider’s review.
‘‘(iii) The findings and conclusions of a review under
this subparagraph shall be advisory and non-binding.
‘‘(iv) Nothing in this subparagraph shall be construed
to affect any other provision of law that provides an ap-
peals process or other form of relief to a provider of health
care services.
‘‘(D) The term ‘provider network’ means, with re-
spect to an eligible organization, providers of health care
services provided by or through the organization who have
entered into an agreement with the organization under
which the providers are obligated to provide such services
to individuals enrolled with the organization.’’.
(b) UTILIZATION REVIEW.—
(1) IN GENERAL.—Section 1876(c) (42 U.S.C.
1395mm(c)), as amended by subsection (a), is
amended by adding at the end the following new
paragraph:
‘‘(10)(A) An eligible organization may not deny cov-
erage of or payment for items and services on the basis
of a utilization review program unless the program meets
the standards established by the Secretary under this
paragraph.
‘‘(B) The Secretary shall establish standards for utili-
zation review programs of eligible organizations, consist-
ent with subparagraph (C), and shall periodically review
and update such standards to reflect changes in the deliv-
ery of health care services. The Secretary shall establish
such standards in consultation with appropriate parties.
‘‘(C) Under the standards established under subpara-
graph (B)—
‘‘(i) individuals performing utilization review
may not receive financial compensation based upon
the number of denials of coverage;
‘‘(ii) negative determinations of the medical ne-
cessity or appropriateness of services or the site at
which services are furnished may be made only by
clinically qualified personnel;
‘‘(iii) the utilization review program shall pro-
vide for a process under which an enrollee or pro-
vider may obtain timely review of a denial of cov-
erage;
‘‘(iv) utilization review shall be conducted in ac-
cordance with uniformly applied standards that are
based on the most currently available medical evi-
dence; and
‘‘(v) providers shall participate in the develop-
ment of the utilization review program.’’.
(2) PROVIDING ENROLLEES WITH DESCRIPTION
OF
REQUIREMENTS.—Section 1876(c)(3)(E) (42
U.S.C. 1395mm(c)(3)(E)) is amended—
(A) by striking ‘‘and’’ at the end of clause
(iv);
(B) by striking the period at the end of
clause (v); and
(C) by adding at the end the following new
clause:
‘‘(vi) the organization’s utilization review re-
quirements.’’.
(c) ACCESS TO CENTERS OF EXCELLENCE.—Section
1876(c) (42 U.S.C. 1395mm(c)), as amended by sub-
sections (a) and (b), is amended by adding at the end the
following new paragraph:
‘‘(11)(A) Each eligible organization shall dem-
onstrate that individuals enrolled with the plan who have
chronic diseases or otherwise require specialized services
have access through the organization to specialized treat-
ment expertise of designated centers of excellence. The or-
ganization shall demonstrate such access according to
standards developed by the Secretary, including require-
ments relating to arrangements with such centers and re-
ferral of enrollees to such centers.
‘‘(B) The Secretary shall establish a process for the
designation of facilities as centers of excellence for pur-
poses of this paragraph. A facility may not be designated
unless the facility is determined—
‘‘(i) to provide specialty care,
‘‘(ii) to deliver care for complex cases requiring
specialized treatment and for individuals with chron-
ic diseases, and
‘‘(iii) to meet other requirements that may be
established by the Secretary relating to specialized
education and training of health professionals, par-
ticipation in peer-reviewed research, or treatment of
patients from outside the geographic area of the fa-
cility.’’.
(d) RECOGNITION OF TRAUMA CENTERS.—Section
1876(c)(4) (42 U.S.C. 1395mm(c)(4)) is amended—
(1) in subparagraph (B), by inserting after ‘‘or-
ganization’’ the following: ‘‘(including trauma serv-
ices provided by designated trauma centers)’’; and
(2) by adding at the end the following sentence:
‘‘In subparagraph (B), a ‘designated trauma center’
has the meaning given such term in section 1231 of
the Public Health Service Act, and includes a trau-
ma center which the Secretary finds meets the
standards under section 1213 of such Act to be a
designated trauma center but is located in a State
that has not designated trauma centers under such
section.’’.
(e) NO REFERRAL REQUIRED FOR OBSTETRICS AND
GYNECOLOGY.—Section 1876(c) (42 U.S.C. 1395mm(c)),
as amended by subsections (a), (b), and (c), is amended
by adding at the end the following new paragraph:
‘‘(12) An eligible organization may not require an in-
dividual to obtain a referral from a physician in order to
obtain covered items and services from a physician who
specializes in obstetrics and gynecology.’’.
(f) COVERAGE OF SERVICES OF ESSENTIAL COMMU-
NITY
PROVIDERS.—Section 
1876(c) 
(42 
U.S.C.
1395mm(c)), as amended by subsections (a), (b), (c), and
(e), is amended by adding at the end the following new
paragraph:
‘‘(13)(A) For purposes of paragraph (4)(A), the Sec-
retary may require an eligible organization to enter into
agreements with essential community providers serving
the organization’s service area to join the organization’s
provider network (as defined in paragraph (9)(D)) if the
Secretary finds that such agreements are necessary for the
organization to meet the requirements of such subpara-
graph.
‘‘(B) In subparagraph (A), an ‘essential community
provider’ means a rural health clinic (described in section
1861(aa)(2)), a Federally qualified health center (de-
scribed in section 1861(aa)(4)), and any other provider
meeting such standards as the Secretary may require.’’.
(g) ACCESS TO EMERGENCY CARE SERVICES.—Sec-
tion 1876(c)(4)(B) (42 U.S.C. 1395mm(c)(4)(B)), as
amended by subsection (d), is further amended—
(1) by inserting ‘‘emergency’’ before ‘‘services’’
the first place it appears;
(2) by striking ‘‘, if (i)’’ and all that follows
through ‘‘the organization’’; and
(3) by adding at the end the following new sen-
tence: ‘‘In such subparagraph, ‘emergency services’
are services provided to an individual after the sud-
den onset of a medical condition that manifests itself
by symptoms of sufficient severity (including severe
pain) such that the absence of immediate medical at-
tention could reasonably be expected by a prudent
layperson (possessing an average knowledge of
health and medicine) to result in placing the individ-
ual’s health in serious jeopardy, the serious impair-
ment of a bodily function, or the serious dysfunction
of any bodily organ or part, and includes services
provided as a result of a call through the 911 emer-
gency system.’’.
SEC. 102. DEADLINE FOR RESPONDING TO REQUESTS FOR
COVERAGE OF SERVICES.
Section 1876(c)(5) (42 U.S.C. 1395mm(c)(5)) is
amended by adding at the end the following new subpara-
graph:
‘‘(C) In addition to the procedures available pursuant
to subparagraph (A), in the case of the request of a mem-
ber enrolled with an eligible organization for health serv-
ices—
‘‘(i) the eligible organization shall respond to
the request not later than 24 hours after the request
is made; and
‘‘(ii) the organization shall hear and resolve a
member’s appeal of a denial of coverage of such
services in accordance with a process meeting stand-
ards established by the Secretary.’’.
SEC. 103. REQUIREMENTS FOR ORGANIZATION SERVICE
AREAS.
(a) 
IN
GENERAL.—Section 
1876 
(42 
U.S.C.
1395mm(c)) is amended by adding at the end the follow-
ing new subsection:
‘‘(k)(1) Except as provided in paragraph (2), for pur-
poses of this section, if an eligible organization’s service
area includes any part of a metropolitan statistical area,
the service area shall include the entire metropolitan sta-
tistical area (including any area designated by the Sec-
retary as a health professional shortage area under section
332(a)(1)(A) of the Public Health Service Act within such
metropolitan statistical area).
‘‘(2) The Secretary may permit an organization’s
service area to exclude any portion of a metropolitan sta-
tistical area (other than the central county of such metro-
politan statistical area) if—
‘‘(A) the organization demonstrates that it
lacks the financial or administrative capacity to
serve the entire metropolitan statistical area; and
‘‘(B) the Secretary finds that the composition
of the organization’s service area does not reduce
the financial risk to the organization of providing
services to enrollees because of the health status or
other demographic characteristics of individuals re-
siding in the service area (as compared to the health
status or demographic characteristics of individuals
residing in the portion of the metropolitan statistical
area not included in the organization’s service
area).’’.
(b) 
CONFORMING
AMENDMENT.—Section
1876(c)(4)(A)(i) (42 U.S.C. 1395mm(c)(4)(A)(i)) is
amended by striking ‘‘the area served by the organization’’
and inserting ‘‘the organization’s service area’’.
SEC. 104. OTHER ENROLLEE PROTECTIONS.
(a) CLARIFICATION OF RESTRICTIONS ON CHARGES
FOR OUT-OF-PLAN SERVICES.—
(1) INPATIENT HOSPITAL AND EXTENDED CARE
SERVICES.—Section 
1866(a)(1)(O) 
(42 
U.S.C.
1395cc(a)(1)(O)) is amended in the matter preced-
ing clause (i) by inserting after ‘‘this title’’ the fol-
lowing: ‘‘(without regard to whether or not the serv-
ices are furnished on an emergency basis)’’.
(2) PHYSICIANS’ SERVICES AND RENAL DIALY-
SIS
SERVICES.—Section 1876(f)(2) (42 U.S.C.
1395mm(f)(2)) is amended by striking ‘‘this sec-
tion’’ and inserting ‘‘this section (without regard to
whether or not the services are furnished on an
emergency basis)’’.
(b) ARRANGEMENTS FOR DIALYSIS SERVICES.—Sec-
tion 1876(c) (42 U.S.C. 1395mm(c)), as amended by sub-
sections (a), (b), (c), (e), and (f) of section 101, is amend-
ed by adding at the end the following new paragraph:
‘‘(14) Each eligible organization shall assure that en-
rollees requiring renal dialysis services who are tempo-
rarily outside of the organization’s service area (within the
United States) have reasonable access to such services
by—
‘‘(A) making such arrangements with providers
of services or renal dialysis facilities outside the
service area for the coverage of and payment for
such services furnished to enrollees as the Secretary
determines necessary to assure reasonable access; or
‘‘(B) providing for the reimbursement of any
provider of services or renal dialysis facility outside
the service area for the furnishing of such services
to enrollees.’’.
SEC. 105. REQUIRING PLANS TO PROVIDE EXPANDED SERV-
ICES.
(a) IN GENERAL.—The first sentence of section
1876(c)(2)(A) (42 U.S.C. 1395mm(c)(2)(A)) is amend-
ed—
(1) by striking ‘‘(I)’’ and inserting ‘‘(III)’’;
(2) by striking ‘‘and (II)’’ and inserting ‘‘(IV)’’;
(3) by inserting after ‘‘except that’’ the follow-
ing: ‘‘(I) the organization shall provide members en-
titled to benefits under part A with inpatient hos-
pital services under this title without regard to any
limitation on the number of days of coverage other-
wise applicable under section 1812 and with ex-
tended care services under this title without regard
to whether or not such services are post-hospital ex-
tended care services, (II) the organization may not
impose any cost-sharing with respect to the services
it provides which are covered under this title or are
described in subclause (I) unless the amount im-
posed is nominal (in accordance with standards es-
tablished by the Secretary),’’; and
(4) by striking the period at the end and insert-
ing the following: ‘‘, and (V) the organization may
not discontinue coverage of any such additional
health care services unless the organization provides
enrollees with reasonable notice that the services are
to be discontinued.’’.
(b) PROVIDING ENROLLEES WITH INFORMATION ON
ADDITIONAL
COVERED
SERVICES.—Section
1876(c)(3)(E) (42 U.S.C. 1395mm(c)(3)(E)), as amended
by section 101(b)(2), is amended—
(1) by striking ‘‘and’’ at the end of clause (v);
(2) by striking the period at the end of clause
(vi) and inserting ‘‘, and’’; and
(3) by adding at the end the following new
clause:
‘‘(vii) the services provided by the organization
which are not covered under this title, including any
limits imposed by the organization on the provision
of such services.’’.
(c) CONFORMING CALCULATION OF ADJUSTED COM-
MUNITY
RATE.—Section 1876(g)(2)(A) (42 U.S.C.
1395mm(g)(2)(A)) is amended by striking ‘‘parts)’’ and
inserting the following: ‘‘parts and taking into account the
expanded inpatient hospital services, extended care serv-
ices, and nominal cost-sharing the organization is required
to provide under subsection (c)(2)(A))’’.
SEC. 106. OUTLIER PAYMENTS.
(a) GENERAL RULE.—Section 1876(a)(1) (42 U.S.C.
1395mm(a)(1)) is amended by adding at the end the fol-
lowing:
‘‘(G)(i) In the case of an eligible organization with
a risk-sharing contract, the Secretary may make addi-
tional payments to the organization equal to not more
than 50 percent of the imputed reasonable cost (or, if so
requested by the organization, the reasonable cost) above
the threshold amount of services covered under parts A
and B and provided (or paid for) in a year by the organi-
zation to any individual enrolled with the organization
under this section.
‘‘(ii) For purposes of clause (i), the ‘imputed reason-
able cost’ is an amount determined by the Secretary on
a national, regional, or other basis that is related to the
reasonable cost of services.
‘‘(iii) For purposes of clause (i), the ‘threshold
amount’ is an amount determined by the Secretary from
time to time, adjusted by the geographic factor utilized
in determining payments to the organization under sub-
paragraph (C) and rounded to the nearest multiple of
$100, such that the total amount to be paid under this
subparagraph for a year is estimated to be 5 percent or
less of the total amount to be paid under risk-sharing con-
tracts for services furnished for that year.
‘‘(iv) An eligible organization shall submit a claim for
additional payments under subsection (i) within such time
as the Secretary may specify.
‘‘(v) To the extent that total payments under clause
(i) in a year—
‘‘(I) exceed the payment set aside as a result of
the reduction under subparagraph (C) for the year,
the Secretary shall increase the percentage reduction
under such subparagraph for the following year by
such percentage as will result in an increase in the
reduction equal to such excess in previous payments,
or
‘‘(II) are less than the payment set aside as a
result of the reduction under subparagraph (C) for
the year, the amount of such difference shall remain
available in the succeeding years for additional pay-
ments under this subparagraph and the Secretary
may take such difference into account in establishing
the percentage reduction under subparagraph (C)
for the following year.’’.
(b) 
CONFORMING
AMENDMENT.—Section
1876(a)(1)(C) (42 U.S.C. 1395mm(a)(1)(C)) is amended
by inserting ‘‘, reduced by a uniform percentage (deter-
mined by the Secretary for a year, subject to adjustment
under subparagraph (G)(v)) so that the total reduction is
estimated to equal the amount to be paid under subpara-
graph (G)’’ before the period.
SEC. 107. DEMONSTRATION PROJECT ON COMPETITIVE
RATE SETTING.
The Secretary of Health and Human Services shall
conduct a demonstration project in not more than 4 met-
ropolitan statistical areas under which—
(1) eligible organizations under section 1876 of
the Social Security Act with enrollees residing in
such areas shall participate in a competitive bidding
process established by the Secretary;
(2) the amount of payment made to such orga-
nizations under section 1876 of such Act shall be de-
termined in accordance with a methodology which
takes such bids into account; and
(3) an eligible organization may not enter into
a risk-sharing contract under section 1876 of such
Act with respect to such enrollees unless the organi-
zation agrees to accept the payment amount deter-
mined pursuant to paragraph (1) as the amount
paid to the organization under such section.
Subtitle B—Protections Against
Fraud and Abuse
SEC. 111. INTERMEDIATE SANCTIONS FOR PROGRAM VIO-
LATIONS.
(a) APPLICATION OF INTERMEDIATE SANCTIONS FOR
ANY PROGRAM VIOLATIONS.—
(1) IN
GENERAL.—Section 1876(i)(1) (42
U.S.C. 1395mm(i)(1)) is amended by striking ‘‘the
Secretary may terminate’’ and all that follows and
inserting the following: ‘‘in accordance with proce-
dures established under paragraph (9), the Secretary
may at any time terminate any such contract or may
impose the intermediate sanctions described in para-
graph (6)(B) or (6)(C) (whichever is applicable) on
the eligible organization if the Secretary determines
that the organization—
‘‘(A) has failed substantially to carry out the
contract;
‘‘(B) is carrying out the contract in a manner
inconsistent with the efficient and effective adminis-
tration of this section;
‘‘(C) is operating in a manner that is not in the
best interests of the individuals covered under the
contract; or
‘‘(D) no longer substantially meets the applica-
ble conditions of subsections (b), (c), (e), and (f).’’.
(2) OTHER
INTERMEDIATE
SANCTIONS
FOR
MISCELLANEOUS
PROGRAM
VIOLATIONS.—Section
1876(i)(6) (42 U.S.C. 1395mm(i)(6)) is amended by
adding at the end the following new subparagraph:
‘‘(C) In the case of an eligible organization for which
the Secretary makes a determination under paragraph (1)
the basis of which is not described in subparagraph (A),
the Secretary may apply the following intermediate sanc-
tions:
‘‘(i) civil money penalties of not more than
$25,000 for each determination under paragraph (1)
if the deficiency that is the basis of the determina-
tion has directly adversely affected (or has the sub-
stantial likelihood of adversely affecting) an individ-
ual covered under the organization’s contract;
‘‘(ii) civil money penalties of not more than
$10,000 for each week beginning after the initiation
of procedures by the Secretary under paragraph (9)
during which the deficiency that is the basis of a de-
termination under paragraph (1) exists; and
‘‘(iii) suspension of enrollment of individuals
under this section after the date the Secretary noti-
fies the organization of a determination under para-
graph (1) and until the Secretary is satisfied that
the deficiency that is the basis for the determination
has been corrected and is not likely to recur.’’.
(3) PROCEDURES FOR IMPOSING SANCTIONS.—
Section 1876(i) (42 U.S.C. 1395mm(i)) is amended
by adding at the end the following new paragraph:
‘‘(9) The Secretary may terminate a contract with an
eligible organization under this section or may impose the
intermediate sanctions described in paragraph (6) on the
organization in accordance with formal investigation and
compliance procedures established by the Secretary under
which—
‘‘(A) the Secretary provides the organization
with the opportunity to develop and implement a
corrective action plan to correct the deficiencies that
were the basis of the Secretary’s determination
under paragraph (1);
‘‘(B) the Secretary shall impose more severe
sanctions on organizations that have a history of de-
ficiencies or that have not taken steps to correct de-
ficiencies the Secretary has brought to their atten-
tion;
‘‘(C) there are no unreasonable or unnecessary
delays between the finding of a deficiency and the
imposition of sanctions; and
‘‘(D) the Secretary provides the organization
with reasonable notice and opportunity for hearing
(including the right to appeal an initial decision) be-
fore imposing any sanction or terminating the con-
tract.’’.
(4) CONFORMING AMENDMENTS.—(A) Section
1876(i)(6)(B) (42 U.S.C. 1395mm(i)(6)(B)) is
amended by striking the second sentence.
(B) 
Section 
1876(i)(6) 
(42 
U.S.C.
1395mm(i)(6)) is further amended by adding at the
end the following new subparagraph:
‘‘(D) The provisions of section 1128A (other than
subsections (a) and (b)) shall apply to a civil money pen-
alty under subparagraph (A) or (B) in the same manner
as they apply to a civil money penalty or proceeding under
section 1128A(a).’’.
(b) AGREEMENTS WITH PEER REVIEW ORGANIZA-
TIONS.—
(1) REQUIREMENT
FOR
WRITTEN
AGREE-
MENT.—Section 
1876(i)(7)(A) 
(42 
U.S.C.
1395mm(i)(7)(A)) is amended by striking ‘‘an agree-
ment’’ and inserting ‘‘a written agreement’’.
(2) DEVELOPMENT OF MODEL AGREEMENT.—
Not later than July 1, 1996, the Secretary of Health
and Human Services shall develop a model of the
agreement that an eligible organization with a risk-
sharing contract under section 1876 of the Social
Security Act must enter into with an entity provid-
ing peer review services with respect to services pro-
vided 
by 
the 
organization 
under 
section
1876(i)(7)(A) of such Act.
(3) REPORT BY GAO.—
(A) STUDY.—The Comptroller General
shall conduct a study of the costs incurred by
eligible organizations with risk-sharing con-
tracts under section 1876(b) of such Act of
complying with the requirement of entering into
a written agreement with an entity providing
peer review services with respect to services pro-
vided by the organization, together with an
analysis of how information generated by such
entities is used by the Secretary of Health and
Human Services to assess the quality of
services provided by such eligible organizations.
(B) REPORT
TO
CONGRESS.—Not later
than July 1, 1996, the Comptroller General
shall submit a report to the Committee on
Ways and Means and the Committee on Com-
merce of the House of Representatives and the
Committee on Finance of the Senate on the
study conducted under subparagraph (A).
SEC. 112. TREATMENT OF HEALTH CARE PREPAYMENT
PLANS.
(a) 
APPLICABILITY
OF
REQUIREMENTS
FOR
PLANS.—Section 
1833(a)(1)(A) 
(42 
U.S.C.
1395l(a)(1)(A)) is amended by inserting after ‘‘prepay-
ment basis’’ the following: ‘‘and which meets the require-
ments of subsection (t)’’.
(b) REQUIREMENTS DESCRIBED.—Section 1833 (42
U.S.C. 1395l), as amended by section 160(d)(1) of the So-
cial Security Act Amendments of 1994, is amended by
adding at the end the following new subsection:
‘‘(t)(1) For purposes of subsection (a)(1)(A), an or-
ganization meets the requirements of this subsection for
a year if the organization—
‘‘(A) meets solvency standards established by
the Secretary’’;
‘‘(B) meets requirements established by the
Secretary for the marketing of its plan to bene-
ficiaries; and
‘‘(C) is not an eligible organization with a con-
tract in effect for the year under section 1876.
‘‘(2) If the Secretary finds that an organization fails
to meet the requirements described in paragraph (1), the
Secretary may terminate the organization’s contract under
this section or impose any of the intermediate sanctions
or remedies described in section 1876(i)(6) on the organi-
zation in the same manner as the Secretary may terminate
a contract with an eligible organization under section
1876(i) or impose such sanctions or remedies on an eligi-
ble organization under section 1876(i)(6).’’.
(c) REPEAL OF APPLICATION OF MEDIGAP STAND-
ARDS.—Section 1882(g)(1) (42 U.S.C. 1395ss(g)(1)), as
amended by section 171(f)(1) of the Social Security Act
Amendments of 1994, is amended by striking ‘‘, or, during
the period’’ and all that follows through ‘‘section
1833(a)(1)(A)’’.
SEC. 113. PROVIDING ENROLLEES WITH CERTAIN INFOR-
MATION ON PLANS.
(a) 
INFORMATION
ON
PHYSICIAN
INCENTIVE
PLANS.—
Section 1876(i)(8)(A) (42 U.S.C. 1395mm(i)(8)(A))
is amended by adding at the end the following new clause:
‘‘(iv) Upon the request of an enrollee of the or-
ganization or an individual considering enrollment
with the organization, the organization shall provide
the enrollee with descriptive information regarding
the physician incentive plan.’’.
(b) INFORMATION ON PROVIDER CREDENTIALS.—
Section 1876(c)(3)(E) (42 U.S.C. 1395mm(c)(3)(E)), as
amended by section 101(b)(2) and section 105(b), is
amended—
(1) by striking ‘‘and’’ at the end of clause (vi);
(2) by striking the period at the end of clause
(vii) and inserting ‘‘, and’’; and
(3) by adding at the end the following new
clause:
‘‘(viii) the credentials of the individuals and en-
tities providing services to enrollees.’’.
SEC. 114. RESTRICTIONS ON COMMISSIONS FOR AGENTS.
Section 1876(c) (42 U.S.C. 1395mm(c)), as amended
by paragraphs (1), (2), (3), (5), and (6) of subsection (a)
and section 104(b), is amended by adding at the end the
following new paragraph:
‘‘(15) In the case of an eligible organization which
employs agents to enroll individuals under this section and
which pays an agent a commission with respect to the en-
rollment of an individual—
‘‘(A) such commissions may not constitute the
predominant source of the agent’s total compensa-
tion from the organization (in accordance with
standards established by the Secretary); and
‘‘(B) if an agent receives a commission from the
organization with respect to an individual who en-
rolls with the organization and the individual termi-
nates enrollment with the organization during the
90-day period beginning on the date of the individ-
ual’s enrollment, the organization shall recoup the
commission from the agent.’’.
SEC. 115. RESTRICTIONS ON IN-PERSON ENROLLMENT.
Section 1876(c)(3) (42 U.S.C. 1395mm(c)(3)) is
amended by adding at the end the following new subpara-
graph:
‘‘(H) Each eligible organization shall permit an indi-
vidual entitled to benefits under part A to obtain enroll-
ment forms and information and to enroll under this sec-
tion by mail, and no agent of an eligible organization may
visit the residence of such an individual for purposes of
enrolling the individual under this section or providing en-
rollment information to the individual other than at the
individual’s request.’’.
SEC. 116. APPLICATION OF PEER REVIEW TO COST-BASED
HEALTH 
MAINTENANCE 
ORGANIZATIONS
AND HEALTH CARE PRE-PAYMENT PLANS.
Section 1876(i)(7)(A) (42 U.S.C. 1395mm(i)(7)(A))
is amended—
(1) by striking ‘‘risk-sharing’’;
(2) by inserting after ‘‘this section’’ the follow-
ing: ‘‘and each contract with an organization de-
scribed in section 1833(a)(1)(A)’’; and
(3) by striking ‘‘eligible’’ the second and third
place it appears.
Subtitle C—Effective Date
SEC. 121. EFFECTIVE DATE.
The amendments made by this title shall apply with
respect to contract years beginning on or after January
1, 1997.
TITLE 
II—PROTECTIONS 
FOR
BENEFICIARIES 
ENROLLED
IN 
MEDICARE 
SUPPLE-
MENTAL AND MEDICARE SE-
LECT POLICIES
SEC. 201. CHANGES IN REQUIREMENTS FOR MEDICARE
SUPPLEMENTAL POLICIES.
(a) REQUIREMENT OF COMMUNITY RATING.—
(1) IN GENERAL.—Section 1882(s) (42 U.S.C.
1395ss(s)) is amended—
(A) in paragraph (3), by striking ‘‘and
(2)’’ and inserting ‘‘, (2), and (3)’’, and by re-
designating such paragraph as paragraph (4),
and
(B) by inserting after paragraph (2) the
following new paragraph:
‘‘(3)(A) Except as provided in this paragraph, the is-
suer of a medicare supplemental policy may not vary the
premium among individuals who reside in the same com-
munity rating area.
‘‘(B)(i) In the first year for which this paragraph ap-
plies to such an issuer in a State, the premium rate
charged by the issuer for such a policy in a community
may vary so long as the premium range percentage (as
defined in clause (iii)) does not exceed 2⁄3 of the premium
range percentage of premium rates charged by the insurer
for such policies in the community rating area in the pre-
vious year.
‘‘(ii) In the second year for which this paragraph ap-
plies to such an issuer in a State, the premium rate
charged by the issuer for such a policy in a community
may vary so long as the premium range percentage (as
defined in clause (iii)) does not exceed 1⁄2 of the maximum
premium range percentage permitted under clause (i) for
the previous year.
‘‘(iii) In this paragraph, the term ‘premium range
percentage’ means—
‘‘(I) the highest premium rate minus the lowest
premium rate, divided by
‘‘(II) the lowest premium rate,
expressed as a percentage.
‘‘(C) For purposes of this paragraph, each of the fol-
lowing is considered to be a separate ‘community rating
area’:
‘‘(1) Each metropolitan statistical area.
‘‘(2) The area of each State that is not within
a metropolitan statistical area.
(2) 
CONFORMING
AMENDMENT.—Section
1882(s)(2)(A) 
(42 
U.S.C. 
1395ss(s)(2)(A)) 
is
amended by striking ‘‘, or discriminate in the pricing
of the policy,’’.
(b) 
INCREASE
IN
LOSS
RATIO.—Section
1882(r)(1)(A) (42 U.S.C. 1395ss(r)(1)(A)) is amended by
striking ‘‘75 percent’’ and all that follows through the
semicolon and inserting ‘‘85 percent;’’.
(c) EFFECTIVE DATE.—
(1) NAIC STANDARDS.—If, within 6 months
after the date of the enactment of this Act, the Na-
tional Association of Insurance Commissioners (in
this section referred to as the ‘‘NAIC’’) makes
changes in the 1991 NAIC Model Regulation (as de-
fined in section 1882(p)(1)(A) of the Social Security
Act) to incorporate the additional requirements im-
posed by the amendments made by this section, sec-
tion 1882(g)(2)(A) of such Act shall be applied in
each State, effective for policies issued to policy-
holders on and after the date specified in paragraph
(3), as if the reference to the Model Regulation
adopted on June 6, 1979, were a reference to the
1991 NAIC Model Regulation (as so defined) as
changed under this section (such changed Regula-
tion referred to in this section as the ‘‘1995 NAIC
Model Regulation’’).
(2) SECRETARY
STANDARDS.—If the NAIC
does not make changes in the 1991 NAIC Model
Regulation (as so defined) within the 6-month period
specified in paragraph (1), the Secretary of Health
and Human Services (in this subsection as the ‘‘Sec-
retary’’) shall promulgate a regulation and section
1882(g)(2)(A) of the Social Security Act shall be ap-
plied in each State, effective for policies issued to
policyholders on and after the date specified in para-
graph (3), as if the reference to the Model Regula-
tion adopted in June 6, 1979, were a reference to
the 1991 NAIC Model Regulation (as so defined) as
changed by the Secretary under this subsection
(such changed Regulation referred to in this sub-
section as the ‘‘1995 Federal Regulation’’).
(3) DATE SPECIFIED.—
(A) IN
GENERAL.—Subject to subpara-
graph (B), the date specified in this paragraph
for a State is the earlier of—
(i) the date the State adopts the 1995
NAIC Model Regulation or the 1995 Fed-
eral Regulation; or
(ii) 1 year after the date the NAIC or
the Secretary first adopts such regulations.
(B) ADDITIONAL LEGISLATIVE ACTION RE-
QUIRED.—In the case of a State which the Sec-
retary identifies, in consultation with the NAIC,
as—
(i) requiring State legislation (other
than legislation appropriating funds) in
order for medicare supplemental policies to
meet the 1995 NAIC Model Regulation or
the 1995 Federal Regulation, but
(ii) having a legislature which is not
scheduled to meet in 1996 in a legislative
session in which such legislation may be
considered,
the date specified in this paragraph is the first
day of the first calendar quarter beginning after
the close of the first legislative session of the
State legislature that begins on or after Janu-
ary 1, 1996. For purposes of the previous sen-
tence, in the case of a State that has a 2-year
legislative session, each year of such session
shall be deemed to be a separate regular session
of the State legislature.
SEC. 202. APPLICATION OF STANDARDS TO MEDICARE SE-
LECT POLICIES.
Section 1882(t) (42 U.S.C. 1395ss(t)) is amended—