444
Subtitle A, Part 1
provide for at least the following activi-
ties in all areas in which MedicarePlus
products are offered:
‘‘(A) INFORMATION BOOKLET.—
‘‘(i) 
IN
GENERAL.—The 
Sec-
retary shall publish an informa-
tion booklet and disseminate the
booklet to all individuals eligible
to elect the MedicarePlus option
under this section during cov-
erage election periods.
‘‘(ii) INFORMATION INCLUDED.—
The booklet shall include infor-
mation presented in plain English
and in a standardized format re-
garding—
‘‘(I) the benefits (including
cost-sharing) and premiums
for the various MedicarePlus
products 
in 
the 
areas 
in-
volved;
‘‘(II) the quality of such
products, including consumer
satisfaction information; and
445
Subtitle A, Part 1
‘‘(III) rights and respon-
sibilities of medicare bene-
ficiaries under such products.
‘‘(iii) PERIODIC UPDATING.—The
booklet shall be updated on a reg-
ular basis (not less often than
once every 12 months) to reflect
changes in the availability of
MedicarePlus products and the
benefits and premiums for such
products.
‘‘(B) TOLL-FREE NUMBER.—The Sec-
retary shall maintain a toll-free num-
ber 
for 
inquiries 
regarding
MedicarePlus options and the oper-
ation of part C.
‘‘(C) GENERAL INFORMATION IN MED-
ICARE HANDBOOK.—The Secretary shall
include 
information 
about 
the
MedicarePlus option provided under
this section in the annual notice of
medicare benefits under section 1804.
‘‘(e) COVERAGE ELECTION PERIODS.—
‘‘(1) INITIAL
CHOICE
UPON
ELIGIBILITY
TO MAKE ELECTION.—
446
Subtitle A, Part 1
‘‘(A) IN
GENERAL.—In the case of
an individual who first becomes enti-
tled to benefits under part A and en-
rolled under part B after the begin-
ning of the transition period (as de-
fined in subparagraph (B)), the indi-
vidual shall make the election under
this section during a period (of a du-
ration and beginning at a time speci-
fied by the Secretary) at the first time
the individual both is entitled to ben-
efits under part A and enrolled under
part B. Such period shall be specified
in a manner so that, in the case of an
individual who elects a MedicarePlus
product during the period, coverage
under the product becomes effective
as of the first date on which the indi-
vidual may receive such coverage.
‘‘(B) TRANSITION PERIOD DEFINED.—
In this subsection, the term ‘transi-
tion period’ means, with respect to an
individual in an area, the period be-
ginning on the first day of the first
month in which a MedicarePlus prod-
447
Subtitle A, Part 1
uct is first made available to individ-
uals in the area and ending with the
month preceding the beginning of the
first annual, coordinated election pe-
riod under paragraph (3).
‘‘(2) DURING TRANSITION PERIOD.—Sub-
ject to paragraph (6)—
‘‘(A) CONTINUOUS
OPEN
ENROLL-
MENT INTO A MEDICARE-PLUS OPTION.—
During the transition period, an indi-
vidual who is eligible to make an
election under this section and who
has elected the non-MedicarePlus op-
tion may change such election to a
MedicarePlus option at any time.
‘‘(B) OPEN DISENROLLMENT BEFORE
END OF TRANSITION PERIOD.—
‘‘(i) IN
GENERAL.—During the
transition period, an individual
who has elected a MedicarePlus
option for a MedicarePlus prod-
uct may change such election to
another MedicarePlus product or
to the non-MedicarePlus option.
448
Subtitle A, Part 1
‘‘(ii) 
SPECIAL
RULE.—During
the transition period, an individ-
ual who has elected a high de-
ductible/medisave 
product 
may
not change such election to a
MedicarePlus product that is not
a high deductible/medisave prod-
uct unless the individual has had
such election in effect for 12
months.
‘‘(3) ANNUAL, COORDINATED
ELECTION
PERIOD.—
‘‘(A) IN GENERAL.—Subject to para-
graph (5), each individual who is eli-
gible to make an election under this
section may change such election
during annual, coordinated election
periods.
‘‘(B) ANNUAL, COORDINATED
ELEC-
TION
PERIOD.—For purposes of this
section, the term ‘annual, coordinated
election period’ means, with respect
to a calendar year (beginning with
1998), the month of October before
such year.
450
Subtitle A, Part 1
MedicarePlus product under such op-
tion becomes effective.
‘‘(B) EFFECT
OF
DISCONTINUATION
OF ELECTION.—An individual who dis-
continues 
an 
election 
under 
this
paragraph shall be deemed at the
time of such discontinuation to have
elected the Non-MedicarePlus option.
‘‘(5) SPECIAL
ELECTION
PERIODS.—An
individual may discontinue an election of
a MedicarePlus product offered by a
MedicarePlus organization other than
during an annual, coordinated election
period and make a new election under
this section if—
‘‘(A) the organization’s or prod-
uct’s certification under part C has
been terminated or the organization
has terminated or otherwise discon-
tinued providing the product;
‘‘(B) in the case of an individual
who has elected a MedicarePlus prod-
uct offered by a MedicarePlus organi-
zation, the individual is no longer eli-
gible to elect the product because of a
451
Subtitle A, Part 1
change in the individual’s place of
residence or other change in cir-
cumstances (specified by the Sec-
retary, but not including termination
of membership in a qualified associa-
tion in the case of a product offered
by a qualified association or termi-
nation of the individual’s enrollment
on the basis described in clause (i) or
(ii) section 1852(c)(3)(B));
‘‘(C) the individual demonstrates
(in accordance with guidelines estab-
lished by the Secretary) that—
‘‘(i) the organization offering
the product substantially violated
a material provision of the orga-
nization’s contract under part C
in relation to the individual and
the product; or
‘‘(ii) the organization (or an
agent or other entity acting on
the organization’s behalf) materi-
ally misrepresented the product’s
provisions in marketing the prod-
uct to the individual; or
452
Subtitle A, Part 1
‘‘(D) the individual meets such
other conditions as the Secretary may
provide.
‘‘(6) SPECIAL
RULE
FOR
HIGH
DEDUCT-
IBLE/MEDISAVE
PRODUCTS.—Notwithstand-
ing the previous provisions of this sub-
section, an individual may elect a high
deductible/medisave product only during
an annual, coordinated election period
described in paragraph (3)(B) or during
the month of October, 1996.
‘‘(f) EFFECTIVENESS OF ELECTIONS.—
‘‘(1) DURING
INITIAL
COVERAGE
ELEC-
TION
PERIOD.—An election of coverage
made during the initial coverage election
period under subsection (e)(1)(A) shall
take effect upon the date the individual
becomes entitled to benefits under part A
and enrolled under part B, except as the
Secretary may provide (consistent with
section 1838) in order to prevent retro-
active coverage.
‘‘(2) 
DURING
TRANSITION; 
90-DAY
DISENROLLMENT
OPTION.—An election of
coverage made under subsection (e)(2)
453
Subtitle A, Part 1
and 
an 
election 
to 
discontinue 
a
MedicarePlus option under subsection
(e)(4) at any time shall take effect with
the first calendar month following the
date on which the election is made.
‘‘(3) ANNUAL, COORDINATED
ELECTION
PERIOD AND MEDISAVE ELECTION.—An elec-
tion of coverage made during an annual,
coordinated election period (as defined in
subsection (e)(3)(B)) in a year or for a
high deductible/medisave product shall
take effect as of the first day of the fol-
lowing year.
‘‘(4) OTHER
PERIODS.—An election of
coverage made during any other period
under subsection (e)(5) shall take effect
in such manner as the Secretary provides
in a manner consistent (to the extent
practicable) with protecting continuity of
health benefit coverage.
‘‘(g) EFFECT OF ELECTION OF MEDICAREPLUS
OPTION.—Subject to the provisions of section
1855(f), payments under a contract with a
MedicarePlus 
organization 
under 
section
1857(a) with respect to an individual electing
454
Subtitle A, Part 1
a MedicarePlus product offered by the organi-
zation shall be instead of the amounts which
(in the absence of the contract) would other-
wise be payable under parts A and B for items
and services furnished to the individual.
‘‘(h) ADMINISTRATION.—
‘‘(1) IN GENERAL.—This part and sec-
tions 1805 and 1876 shall be administered
through an operating division (A) that is
established or identified by the Secretary
in the Department of Health and Human
Services, (B) that is separate from the
Health Care Financing Administration,
and (C) the primary function of which is
the administration of this part and such
sections. The director of such division
shall be of equal pay and rank to that of
the individual responsible for overall ad-
ministration of parts A and B.
‘‘(2) TRANSFER
AUTHORITY.—The Sec-
retary shall transfer such personnel, ad-
ministrative 
support 
systems, 
assets,
records, funds, and other resources in the
Health Care Financing Administration to
the operating division referred to in
455
Subtitle A, Part 1
paragraph (1) as are used in the adminis-
tration of section 1876 and as may be re-
quired to implement the provisions re-
ferred to in such paragraph promptly
and efficiently.’’.
SEC. 15002. MEDICAREPLUS PROGRAM.
(a) IN GENERAL.—Title XVIII is amended
by redesignating part C as part D and by in-
serting after part B the following new part:
‘‘PART C—PROVISIONS RELATING TO
MEDICAREPLUS
‘‘REQUIREMENTS FOR MEDICAREPLUS ORGANIZA-
TIONS; HIGH
DEDUCTIBLE/MEDISAVE
PROD-
UCTS
‘‘SEC. 1851. (a) MEDICAREPLUS ORGANIZA-
TION DEFINED.—In this part, subject to the suc-
ceeding provisions of this section, the term
‘MedicarePlus organization’ means a public or
private entity that is certified under section
1857 as meeting the requirements and stand-
ards of this part for such an organization.
‘‘(b) 
ORGANIZED
AND
LICENSED
UNDER
STATE LAW.—
‘‘(1) IN GENERAL.—A MedicarePlus or-
ganization shall be organized and li-
456
Subtitle A, Part 1
censed under State law to offer health in-
surance or health benefits coverage in
each 
State 
in 
which 
it 
offers 
a
MedicarePlus product.
‘‘(2) 
EXCEPTION
FOR
TAFT-HARTLEY
SPONSORS.—Paragraph (1) shall not apply
to an MedicarePlus organization that is a
Taft-Hartley sponsor (as defined in sec-
tion 1852(c)(4)).
‘‘(3) EXCEPTION
FOR
PROVIDER-SPON-
SORED
ORGANIZATIONS.—Paragraph 
(1)
shall not apply to a MedicarePlus organi-
zation that is a provider-sponsored orga-
nization (as defined in section 1854(a))
except to the extent provided under sec-
tion 1857(c).
‘‘(4) EXCEPTION FOR QUALIFIED ASSOCIA-
TIONS.—Paragraph (1) shall not apply to a
MedicarePlus 
organization 
that 
is 
a
qualified association (as defined in sec-
tion 1852(c)(4)(B)).
‘‘(c) PREPAID PAYMENT.—A MedicarePlus
organization shall be compensated (except for
deductibles, coinsurance, and copayments)
for the provision of health care services to en-
457
Subtitle A, Part 1
rolled members by a payment which is paid
on a periodic basis without regard to the date
the health care services are provided and
which is fixed without regard to the fre-
quency, extent, or kind of health care service
actually provided to a member.
‘‘(d) 
ASSUMPTION
OF
FULL
FINANCIAL
RISK.—The MedicarePlus organization shall
assume full financial risk on a prospective
basis for the provision of the health care serv-
ices (other than hospice care) for which bene-
fits are required to be provided under section
1852(a)(1), except that the organization—
‘‘(1) may obtain insurance or make
other arrangements for the cost of pro-
viding to any enrolled member such serv-
ices the aggregate value of which exceeds
$5,000 in any year,
‘‘(2) may obtain insurance or make
other arrangements for the cost of such
services provided to its enrolled members
other than through the organization be-
cause medical necessity required their
provision before they could be secured
through the organization,
458
Subtitle A, Part 1
‘‘(3) may obtain insurance or make
other arrangements for not more than 90
percent of the amount by which its costs
for any of its fiscal years exceed 115 per-
cent of its income for such fiscal year,
and
‘‘(4) may make arrangements with
physicians or other health professionals,
health care institutions, or any combina-
tion of such individuals or institutions to
assume all or part of the financial risk on
a prospective basis for the provision of
basic health services by the physicians or
other health professionals or through the
institutions.
In the case of a MedicarePlus organization
that is a Taft-Hartley sponsor (as defined in
section 1852(c)(4)(A)) or a qualified associa-
tion (as defined in section 1852(c)(4)(B)), this
subsection shall not apply with respect to
MedicarePlus products offered by such orga-
nization and issued by an organization to
which subsection (b)(1) applies or by a pro-
vider-sponsored organization (as defined in
section 1854(a)).
459
Subtitle A, Part 1
‘‘(e) PROVISION AGAINST RISK
OF INSOL-
VENCY.—
‘‘(1) IN GENERAL.—Each MedicarePlus
organization shall meet standards under
section 1856 relating to the financial sol-
vency and capital adequacy of the organi-
zation. Such standards shall take into ac-
count 
the 
nature 
and 
type 
of
MedicarePlus products offered by the or-
ganization.
‘‘(2) TREATMENT OF TAFT-HARTLEY SPON-
SORS.—An entity that is a Taft-Hartley
sponsor is deemed to meet the require-
ment of paragraph (1).
‘‘(3) TREATMENT OF CERTAIN QUALIFIED
ASSOCIATIONS.—An entity that is a quali-
fied association is deemed to meet the re-
quirement of paragraph (1) with respect
to MedicarePlus products offered by such
association and issued by an organization
to which subsection (b)(1) applies or by a
provider-sponsored organization.
‘‘(f) HIGH DEDUCTIBLE/MEDISAVE PRODUCT
DEFINED.—
460
Subtitle A, Part 1
‘‘(1) IN
GENERAL.—In this part, the
term ‘high deductible/medisave product’
means a MedicarePlus product that—
‘‘(A) provides reimbursement for
at least the items and services de-
scribed in section 1852(a)(1) in a year
but only after the enrollee incurs
countable 
expenses 
(as 
specified
under the product) equal to the
amount of a deductible (described in
paragraph (2));
‘‘(B) counts as such expenses (for
purposes of such deductible) at least
all amounts that would have been
payable under parts A and B or by
the enrollee if the enrollee had elect-
ed to receive benefits through the
provisions of such parts; and
‘‘(C) provides, after such deduct-
ible is met for a year and for all sub-
sequent expenses for benefits re-
ferred to in subparagraph (A) in the
year, for a level of reimbursement
that is not less than—
461
Subtitle A, Part 1
‘‘(i) 100 percent of such ex-
penses, or
‘‘(ii) 
100 
percent 
of 
the
amounts that would have been
paid 
(without 
regard 
to 
any
deductibles 
or 
coinsurance)
under parts A and B with respect
to such expenses,
whichever is less. Such term does not
include the MedicarePlus MSA itself
or any contribution into such ac-
count.
‘‘(2) DEDUCTIBLE.—The amount of de-
ductible 
under 
a 
high 
deductible/
medisave product—
‘‘(A) for contract year 1997 shall
be not more than $10,000; and
‘‘(B) for a subsequent contract
year shall be not more than the maxi-
mum amount of such deductible for
the previous contract year under this
paragraph increased by the national
average per capita growth rate under
section 1855(c)(3) for the year.
462
Subtitle A, Part 1
If the amount of the deductible under
subparagraph (B) is not a multiple of $50,
the amount shall be rounded to the near-
est multiple of $50.
‘‘(g) 
ORGANIZATIONS
TREATED
AS
MEDICAREPLUS ORGANIZATIONS DURING TRANSI-
TION.—Any of the following organizations
shall 
be 
considered 
to 
qualify 
as 
a
MedicarePlus organization for contract years
beginning before January 1, 1998:
‘‘(1) HEALTH
MAINTENANCE
ORGANIZA-
TIONS.—An organization that is organized
under the laws of any State and that is a
qualified health maintenance organiza-
tion (as defined in section 1310(d) of the
Public Health Service Act), an organiza-
tion recognized under State law as a
health maintenance organization, or a
similar 
organization 
regulated 
under
State law for solvency in the same man-
ner and to the same extent as such a
health maintenance organization.
‘‘(2) LICENSED INSURERS.—An organiza-
tion that is organized under the laws of
any State and—
463
Subtitle A, Part 1
‘‘(A) is licensed by a State agency
as an insurer for the offering of
health benefit coverage, or
‘‘(B) is licensed by a State agency
as a service benefit plan,
but only for individuals residing in an
area in which the organization is li-
censed to offer health insurance cov-
erage.
‘‘(3) CURRENT
RISK-CONTRACTORS.—An
organization that is an eligible organiza-
tion (as defined in section 1876(b)) and
that has a risk-sharing contract in effect
under section 1876 as of the date of the
enactment of this section.
‘‘REQUIREMENTS RELATING TO BENEFITS, PROVI-
SION OF SERVICES, ENROLLMENT, AND PRE-
MIUMS
‘‘SEC. 1852. (a) BENEFITS COVERED.—
‘‘(1) IN GENERAL.—Except as provided
in section 1851(f)(1) with respect to high
deductible/medisave 
products, 
each
MedicarePlus product offered under this
part shall provide benefits for at least the
items and services for which benefits are
available under parts A and B consistent
464
Subtitle A, Part 1
with the standards for coverage of such
items and services applicable under this
title.
‘‘(2) 
ORGANIZATION
AS
SECONDARY
PAYER.—Notwithstanding any other provi-
sion of law, a MedicarePlus organization
may (in the case of the provision of items
and services to an individual under this
part under circumstances in which pay-
ment under this title is made secondary
pursuant to section 1862(b)(2)) charge or
authorize the provider of such services to
charge, in accordance with the charges
allowed under such law or policy—
‘‘(A) the insurance carrier, em-
ployer, or other entity which under
such law, plan, or policy is to pay for
the provision of such services, or
‘‘(B) such individual to the extent
that the individual has been paid
under such law, plan, or policy for
such services.
‘‘(3) SATISFACTION OF REQUIREMENT.—A
MedicarePlus product (other than a high
deductible/medisave product) offered by
465
Subtitle A, Part 1
a 
MedicarePlus 
organization 
satisfies
paragraph (1) with respect to benefits for
items and services if the following re-
quirements are met:
‘‘(A) FEE FOR SERVICE PROVIDERS.—
In the case of benefits furnished
through a provider that does not
have a contract with the organiza-
tion, the product provides for at least
the dollar amount of payment for
such items and services as would oth-
erwise be provided under parts A and
B.
‘‘(B) PARTICIPATING PROVIDERS.—In
the 
case 
of 
benefits 
furnished
through a provider that has such a
contract, the individual’s liability for
payment for such items and services
does not exceed (after taking into ac-
count any deductible, which does not
exceed any deductible under parts A
and B) the lesser of the following:
‘‘(i) NON-MEDICAREPLUS LIABIL-
ITY.—The amount of the liability
that the individual would have
466
Subtitle A, Part 1
had (based on the provider being
a participating provider) if the in-
dividual had elected the non-
MedicarePlus option.
‘‘(ii) 
MEDICARE
COINSURANCE
APPLIED
TO
PRODUCT
PAYMENT
RATES.—The applicable coinsur-
ance or copayment rate (that
would have applied under the
non-MedicarePlus option) of the
payment rate provided under the
contract.
‘‘(b) ANTIDISCRIMINATION.—A MedicarePlus
organization may not deny, limit, or condition
the coverage or provision of benefits under
this part based on the health status, claims
experience, receipt of health care, medical
history, or lack of evidence of insurability, of
an individual.
‘‘(c) GUARANTEED ISSUE AND RENEWAL.—
‘‘(1) IN GENERAL.—Except as provided
in this subsection, a MedicarePlus orga-
nization shall provide that at any time
during which elections are accepted
under section 1805 with respect to a
467
Subtitle A, Part 1
MedicarePlus product offered by the or-
ganization, the organization will accept
without restrictions individuals who are
eligible to make such election.
‘‘(2) PRIORITY.—If the Secretary deter-
mines that a MedicarePlus organization,
in relation to a MedicarePlus product it
offers, has a capacity limit and the num-
ber of eligible individuals who elect the
product under section 1805 exceeds the
capacity limit, the organization may limit
the election of individuals of the product
under such section but only if priority in
election is provided—
‘‘(A) first to such individuals as
have elected the product at the time
of the determination, and
‘‘(B) then to other such individ-
uals in such a manner that does not
discriminate among the individuals
(who seek to elect the product) on a
basis described in subsection (b).
‘‘(3) LIMITATION
ON
TERMINATION
OF
ELECTION.—
468
Subtitle A, Part 1
‘‘(A) IN GENERAL.—Subject to sub-
paragraph (B), a MedicarePlus orga-
nization may not for any reason ter-
minate the election of any individual
under 
section 
1805 
for 
a
MedicarePlus product it offers.
‘‘(B) BASIS
FOR
TERMINATION
OF
ELECTION.—A MedicarePlus organiza-
tion may terminate an individual’s
election under section 1805 with re-
spect to a MedicarePlus product it of-
fers if—
‘‘(i) any premiums required
with respect to such product are
not paid on a timely basis (con-
sistent with standards under sec-
tion 1856 that provide for a grace
period for late payment of pre-
miums),
‘‘(ii) the individual has en-
gaged in disruptive behavior (as
specified in such standards), or
‘‘(iii) the product is termi-
nated with respect to all individ-
uals under this part.
469
Subtitle A, Part 1
Any individual whose election is so
terminated is deemed to have elected
the Non-MedicarePlus option (as de-
fined in section 1805(a)(3)(A)).
‘‘(C) 
ORGANIZATION
OBLIGATION
WITH
RESPECT
TO
ELECTION
FORMS.—
Pursuant to a contract under section
1858, each MedicarePlus organization
receiving an election form under sec-
tion 1805(c)(2) shall transmit to the
Secretary (at such time and in such
manner as the Secretary may specify)
a copy of such form or such other in-
formation respecting the election as
the Secretary may specify.
‘‘(4) SPECIAL
RULES
FOR
LIMITED
EN-
ROLLMENT MEDICAREPLUS ORGANIZATIONS.—
‘‘(A) TAFT-HARTLEY SPONSORS.—
‘‘(i) IN
GENERAL.—Subject to
subparagraph (C), a MedicarePlus
organization that is a Taft-Hart-
ley sponsor (as defined in clause
(ii)) shall limit eligibility of en-
rollees 
under 
this 
part 
for
MedicarePlus products it offers to
470
Subtitle A, Part 1
individuals who are entitled to
obtain 
benefits 
through 
such
products under the terms of an
applicable collective bargaining
agreement.
‘‘(ii) TAFT-HARTLEY
SPONSOR.—
In this part and section 1805, the
term 
‘Taft-Hartley 
sponsor’
means, in relation to a group
health plan that is established or
maintained by two or more em-
ployers or jointly by one or more
employers and one or more em-
ployee organizations, the associa-
tion, committee, joint board of
trustees, or other similar group of
representatives of parties who es-
tablish or maintain the plan.
‘‘(B) QUALIFIED ASSOCIATIONS.—
‘‘(i) IN
GENERAL.—Subject to
subparagraph (C), a MedicarePlus
organization that is a qualified
association (as defined in clause
(iii)) shall limit eligibility of indi-
viduals under this part for prod-
471
Subtitle A, Part 1
ucts it offers to individuals who
are members of the association
(or who are spouses of such indi-
viduals).
‘‘(ii) 
LIMITATION
ON
TERMI-
NATION
OF
COVERAGE.—Such 
a
qualifying association offering a
MedicarePlus product to an indi-
vidual may not terminate cov-
erage of the individual on the
basis that the individual is no
longer a member of the associa-
tion except pursuant to a change
of election during an open elec-
tion period occurring on or after
the date of the termination of
membership.
‘‘(iii) QUALIFIED ASSOCIATION.—
In this part and section 1805, the
term ‘qualified association’ means
an association, religious fraternal
organization, or other organiza-
tion (which may be a trade, indus-
try, or professional association, a
chamber of commerce, or a public
472
Subtitle A, Part 1
entity association) that the Sec-
retary finds—
‘‘(I) has been formed for
purposes other than the sale
of any health insurance and
does not restrict membership
based on the health status,
claims experience, receipt of
health care, medical history,
or lack of evidence of insur-
ability, of an individual,
‘‘(II) does not exist solely
or principally for the purpose
of selling insurance, and
‘‘(III) has at least 1,000 in-
dividual members or 200 em-
ployer members.
Such term includes a subsidiary
or corporation that is wholly
owned by one or more qualified
organizations.
‘‘(C) LIMITATION.—Rules of eligi-
bility to carry out the previous sub-
paragraphs of this paragraph shall
not have the effect of denying eligi-
473
Subtitle A, Part 1
bility to individuals on the basis of
health status, claims experience, re-
ceipt of health care, medical history,
or lack of evidence of insurability.
‘‘(D) 
LIMITED
ENROLLMENT
MEDICAREPLUS
ORGANIZATION.—In this
part and section 1805, the term ‘lim-
ited enrollment MedicarePlus organi-
zation’ means a MedicarePlus organi-
zation that is a Taft-Hartley sponsor
or a qualified association.
‘‘(E) EMPLOYER, ETC.—In this para-
graph, the terms ‘employer’, ‘em-
ployee 
organization’, 
and 
‘group
health plan’ have the meanings given
such terms for purposes of part 6 of
subtitle B of title I of the Employee
Retirement Income Security Act of
1974.
‘‘(d) SUBMISSION
AND CHARGING
OF PRE-
MIUMS.—
‘‘(1) IN GENERAL.—Each MedicarePlus
organization shall file with the Secretary
each year, in a form and manner and at
a time specified by the Secretary—
474
Subtitle A, Part 1
‘‘(A) the amount of the monthly
premiums for coverage under each
MedicarePlus product it offers under
this part in each payment area (as de-
termined for purposes of section
1855) in which the product is being
offered; and
‘‘(B) the enrollment capacity in re-
lation to the product in each such
area.
‘‘(2) AMOUNTS OF PREMIUMS CHARGED.—
The amount of the monthly premium
charged by a MedicarePlus organization
for a MedicarePlus product offered in a
payment area to an individual under this
part shall be equal to the amount (if any)
by which—
‘‘(A) the amount of the monthly
premium for the product for the pe-
riod involved, as established under
paragraph (3) and submitted under
paragraph (1), exceeds
‘‘(B)(i) 
1⁄12
of 
the 
annual
MedicarePlus capitation rate speci-
fied in section 1855(b)(2) for the area
475
Subtitle A, Part 1
and period involved, or (ii) in the
case of a high deductible/medisave
product, 
the 
monthly 
adjusted
MedicarePlus capitation rate speci-
fied in section 1855(b)(1) for the indi-
vidual and period involved.
‘‘(3) UNIFORM PREMIUM.—
‘‘(A) IN GENERAL.—Except as pro-
vided in subparagraph (B), the pre-
miums 
charged 
by 
a 
Medi-
carePlus organization under this part
may not vary among individuals who
reside in the same payment area.
‘‘(B) EXCEPTION FOR HIGH DEDUCT-
IBLE/MEDISAVE
PRODUCTS.—A
MedicarePlus organization shall es-
tablish premiums for any high de-
ductible/medisave product it offers in
a payment area based on each of the
risk 
adjustment 
categories 
estab-
lished for purposes of determining
the 
amount 
of 
the 
payment 
to
MedicarePlus 
organizations 
under
section 1855(b)(1) and using the iden-
tical demographic and other adjust-
476
Subtitle A, Part 1
ments among such categories as are
used for such purposes.
‘‘(4) TERMS AND CONDITIONS OF IMPOS-
ING PREMIUMS.—Each MedicarePlus orga-
nization shall permit the payment of
monthly premiums on a monthly basis
and may terminate election of individuals
for a MedicarePlus product for failure to
make premium payments only in accord-
ance with subsection (c)(3)(B).
‘‘(5) RELATION OF PREMIUMS AND COST-
SHARING TO BENEFITS.—In no case may the
portion of a MedicarePlus organization’s
premium rate and the actuarial value of
its 
deductibles, 
coinsurance, 
and
copayments charged (to the extent attrib-
utable to the minimum benefits described
in subsection (a)(1) and not counting any
amount attributable to balance billing) to
individuals who are enrolled under this
part with the organization exceed the ac-
tuarial value of the coinsurance and
deductibles that would be applicable on
the average to individuals enrolled under
this part with the organization (or, if the
477
Subtitle A, Part 1
Secretary finds that adequate data are
not available to determine that actuarial
value, the actuarial value of the coinsur-
ance and deductibles applicable on the
average to individuals in the area, in the
State, or in the United States, eligible to
enroll under this part with the organiza-
tion, or other appropriate data) and enti-
tled to benefits under part A and enrolled
under part B if they were not members of
a MedicarePlus organization.
‘‘(e) REQUIREMENT FOR ADDITIONAL BENE-
FITS, PART B PREMIUM DISCOUNT REBATES, OR
BOTH.—
‘‘(1) REQUIREMENT.—
‘‘(A) 
IN
GENERAL.—Each 
Medi-
carePlus organization (in relation to
a MedicarePlus product it offers)
shall provide that if there is an excess
amount (as defined in subparagraph
(B)) for the product for a contract
year, subject to the succeeding provi-
sions of this subsection, the organiza-
tion shall provide to individuals such
additional benefits (as the organiza-
478
Subtitle A, Part 1
tion may specify), a monetary rebate
(paid on a monthly basis) of the part
B monthly premium, or a combina-
tion thereof, in an total value which
is at least equal to the adjusted ex-
cess amount (as defined in subpara-
graph (C)).
‘‘(B) EXCESS
AMOUNT.—For pur-
poses of this paragraph, the ‘excess
amount’, for an organization for a
product, is the amount (if any) by
which—
‘‘(i) the average of the capita-
tion payments made to the orga-
nization under this part for the
product at the beginning of con-
tract year, exceeds
‘‘(ii) the actuarial value of the
minimum benefits described in
subsection (a)(1) under the prod-
uct for individuals under this
part, as determined based upon
an adjusted community rate de-
scribed in paragraph (5) (as re-
duced for the actuarial value of
479
Subtitle A, Part 1
the coinsurance and deductibles
under parts A and B).
‘‘(C) ADJUSTED
EXCESS
AMOUNT.—
For purposes of this paragraph, the
‘adjusted excess amount’, for an orga-
nization for a product, is the excess
amount 
reduced 
to 
reflect 
any
amount withheld and reserved for the
organization for the year under para-
graph (3).
‘‘(D) NO APPLICATION TO HIGH DE-
DUCTIBLE/MEDISAVE
PRODUCT.—Sub-
paragraph (A) shall not apply to a
high deductible/medisave product.
‘‘(E) UNIFORM
APPLICATION.—This
paragraph shall be applied uniformly
for all enrollees for a product in a
service area.
‘‘(F) CONSTRUCTION.—Nothing in
this subsection shall be construed as
preventing a MedicarePlus organiza-
tion from providing health care bene-
fits that are in addition to the bene-
fits otherwise required to be provided
under this paragraph and from im-
480
Subtitle A, Part 1
posing a premium for such additional
benefits.
‘‘(2) LIMITATION ON AMOUNT OF PART B
PREMIUM
DISCOUNT
REBATE.—In no case
shall the amount of a part B premium
discount rebate under paragraph (1)(A)
exceed, with respect to a month, the
amount of premiums imposed under part
B (not taking into account section 1839(b)
(relating to penalty for late enrollment)
or 1839(h) (relating to affluence testing)),
for the individual for the month. Except
as provided in the previous sentence, a
MedicarePlus organization is not author-
ized to provide for cash or other mone-
tary rebates as an inducement for enroll-
ment or otherwise.
‘‘(3) 
STABILIZATION
FUND.—A 
Medi-
carePlus organization may provide that a
part of the value of an excess actuarial
amount described in paragraph (1) be
withheld and reserved in the Federal
Hospital Insurance Trust Fund and in the
Federal Supplementary Medical Insur-
ance Trust Fund (in such proportions as
481
Subtitle A, Part 1
the Secretary determines to be appro-
priate) by the Secretary for subsequent
annual contract periods, to the extent re-
quired to stabilize and prevent undue
fluctuations in the additional benefits
and rebates offered in those subsequent
periods by the organization in accord-
ance with such paragraph. Any of such
value of amount reserved which is not
provided as additional benefits described
in paragraph (1)(A) to individuals elect-
ing the MedicarePlus product in accord-
ance with such paragraph prior to the
end of such periods, shall revert for the
use of such trust funds.
‘‘(4) DETERMINATION BASED ON INSUFFI-
CIENT
DATA.—For purposes of this sub-
section, if the Secretary finds that there
is insufficient enrollment experience (in-
cluding no enrollment experience in the
case of a provider-sponsored organiza-
tion) to determine an average of the capi-
tation payments to be made under this
part at the beginning of a contract pe-
riod, the Secretary may determine such
482
Subtitle A, Part 1
an average based on the enrollment expe-
rience of other contracts entered into
under this part.
‘‘(5) ADJUSTED COMMUNITY RATE.—
‘‘(A) IN GENERAL.—For purposes of
this subsection, subject to subpara-
graph (B), the term ‘adjusted commu-
nity rate’ for a service or services
means, 
at 
the 
election 
of 
a
MedicarePlus organization, either—
‘‘(i) the rate of payment for
that service or services which the
Secretary 
annually 
determines
would apply to an individual
electing a MedicarePlus product
under this part if the rate of pay-
ment were determined under a
‘community rating system’ (as de-
fined in section 1302(8) of the
Public Health Service Act, other
than subparagraph (C)), or
‘‘(ii) 
such 
portion 
of 
the
weighted 
aggregate 
premium,
which the Secretary annually es-
timates would apply to such an
483
Subtitle A, Part 1
individual, as the Secretary annu-
ally estimates is attributable to
that service or services,
but adjusted for differences between
the utilization characteristics of the
individuals electing coverage under
this part and the utilization charac-
teristics of the other enrollees with
the organization (or, if the Secretary
finds that adequate data are not
available to adjust for those dif-
ferences, the differences between the
utilization characteristics of individ-
uals selecting other MedicarePlus
coverage, or individuals in the area,
in the State, or in the United States,
eligible to elect MedicarePlus cov-
erage under this part and the utiliza-
tion characteristics of the rest of the
population in the area, in the State,
or in the United States, respectively).
‘‘(B) SPECIAL RULE FOR PROVIDER-
SPONSORED
ORGANIZATIONS.—In 
the
case of a MedicarePlus organization
that is a provider-sponsored organi-
484
Subtitle A, Part 1
zation, the adjusted community rate
under 
subparagraph 
(A) 
for 
a
MedicarePlus product may be com-
puted (in a manner specified by the
Secretary) using data in the general
commercial marketplace or (during a
transition period) based on the costs
incurred by the organization in pro-
viding such a product.
‘‘(f) RULES REGARDING PHYSICIAN PARTICI-
PATION.—
‘‘(1) PROCEDURES.—Each MedicarePlus
organization shall establish reasonable
procedures relating to the participation
(under an agreement between a physi-
cian and the organization) of physicians
under MedicarePlus products offered by
the organization under this part. Such
procedures shall include—
‘‘(A) providing notice of the rules
regarding participation,
‘‘(B) providing written notice of
participation decisions that are ad-
verse to physicians, and
485
Subtitle A, Part 1
‘‘(C) providing a process within
the organization for appealing ad-
verse decisions, including the presen-
tation of information and views of the
physician regarding such decision.
‘‘(2) CONSULTATION
IN
MEDICAL
POLI-
CIES.—A MedicarePlus organization shall
consult with physicians who have en-
tered into participation agreements with
the organization regarding the organiza-
tion’s medical policy, quality, and medi-
cal management procedures.
‘‘(3) LIMITATIONS ON PHYSICIAN INCEN-
TIVE PLANS.—
‘‘(A) 
IN
GENERAL.—Each 
Medi-
carePlus organization may not oper-
ate any physician incentive plan (as
defined in subparagraph (B)) unless
the following requirements are met:
‘‘(i) No specific payment is
made directly or indirectly under
the plan to a physician or physi-
cian group as an inducement to
reduce or limit medically nec-
essary services provided with re-
486
Subtitle A, Part 1
spect to a specific individual en-
rolled with the organization.
‘‘(ii) If the plan places a physi-
cian or physician group at sub-
stantial financial risk (as deter-
mined by the Secretary) for serv-
ices not provided by the physi-
cian or physician group, the orga-
nization—
‘‘(I) provides stop-loss pro-
tection for the physician or
group that is adequate and
appropriate, based on stand-
ards developed by the Sec-
retary that take into account
the 
number 
of 
physicians
placed at such substantial fi-
nancial risk in the group or
under the plan and the num-
ber of individuals enrolled
with the organization who re-
ceive services from the physi-
cian or the physician group,
and
487
Subtitle A, Part 1
‘‘(II) 
conducts 
periodic
surveys of both individuals
enrolled and individuals pre-
viously enrolled with the or-
ganization to determine the
degree of access of such indi-
viduals to services provided
by the organization and satis-
faction with the quality of
such services.
‘‘(iii) The organization pro-
vides the Secretary with descrip-
tive information regarding the
plan, sufficient to permit the Sec-
retary to determine whether the
plan is in compliance with the re-
quirements of this subparagraph.
‘‘(B) PHYSICIAN INCENTIVE PLAN DE-
FINED.—In this paragraph, the term
‘physician incentive plan’ means any
compensation arrangement between
a MedicarePlus organization and a
physician or physician group that
may directly or indirectly have the ef-
fect of reducing or limiting services
488
Subtitle A, Part 1
provided with respect to individuals
enrolled with the organization under
this part.
‘‘(4) LIMITATION
ON
PROVIDER
INDEM-
NIFICATION.—A MedicarePlus organization
may not provide (directly or indirectly)
for a provider (or group of providers) to
indemnify the organization against any
liability resulting from a civil action
brought by or on behalf of an enrollee
under this part for any damage caused to
the enrollee by the organization’s denial
of medically necessary care.
‘‘(5) EXCEPTION FOR CERTAIN FEE-FOR-
SERVICE PLANS.—The previous provisions
of this subsection shall not apply in the
case of a MedicarePlus organization in
relation to a MedicarePlus product if the
organization does not have agreements
between physicians and the organization
for the provision of benefits under the
product.
‘‘(g) APPROPRIATE RANGE OF SERVICES.—A
MedicarePlus organization shall not deny any
health care professionals, based solely on the
489
Subtitle A, Part 1
license or certification as applicable under
State law, the ability to participate in provid-
ing covered health care services, or be reim-
bursed or indemnified by a network plan for
providing such services under this part.
‘‘(h) 
PROVISION
OF
INFORMATION.—A
MedicarePlus organization shall provide the
Secretary with such information on the orga-
nization and each MedicarePlus product it of-
fers as may be required for the preparation of
the information booklet described in section
1805(d)(3)(A).
‘‘(i) COORDINATED ACUTE
AND LONG-TERM
CARE BENEFITS UNDER A MEDICAREPLUS PROD-
UCT.—Nothing in this part shall be construed
as preventing a State from coordinating bene-
fits under its MediGrant program under title
XXI 
with 
those 
provided 
under 
a
MedicarePlus product in a manner that
assures continuity of a full-range of acute
care and long-term care services to poor el-
derly or disabled individuals eligible for bene-
fits under this title and under such program.
‘‘(j) TRANSITIONAL FILE AND USE FOR CER-
TAIN REQUIREMENTS.—
490
Subtitle A, Part 1
‘‘(1) IN
GENERAL.—In the case of a
MedicarePlus product proposed to be of-
fered before the end of the transition pe-
riod (as defined in section 1805(e)(1)(B)),
by 
a 
MedicarePlus 
organization 
de-
scribed in section 1851(g)(3) or by a
MedicarePlus organization with a con-
tract in effect under section 1858, if the
organization submits complete informa-
tion to the Secretary regarding the prod-
uct demonstrating that the product meets
the requirements and standards under
subsections (a), (d), and (e) (relating to
benefits and premiums), the product shall
be deemed as meeting such requirements
and standards under such subsections
unless the Secretary disapproves the
product within 60 days after the date of
submission of the complete information.
‘‘(2) CONSTRUCTION.—Nothing in para-
graph (1) shall be construed as waiving
the requirement of a contract under sec-
tion 1858 or waiving requirements and
standards not referred to in paragraph
(1).
491
Subtitle A, Part 1
‘‘PATIENT PROTECTION STANDARDS
‘‘SEC. 1853. (a) DISCLOSURE
TO ENROLL-
EES.—A MedicarePlus organization shall dis-
close in clear, accurate, and standardized
form, information regarding all of the follow-
ing for each MedicarePlus product it offers:
‘‘(1) Benefits under the MedicarePlus
product 
offered, 
including 
exclusions
from coverage and, if it is a high deduct-
ible/medisave product, a comparison of
benefits under such a product with bene-
fits under other MedicarePlus products.
‘‘(2) Rules regarding prior authoriza-
tion or other review requirements that
could result in nonpayment.
‘‘(3) Potential liability for cost-sharing
for out-of-network services.
‘‘(4) The number, mix, and distribu-
tion of participating providers.
‘‘(5) The financial obligations of the
enrollee, 
including 
premiums,
deductibles, co-payments, and maximum
limits on out-of-pocket losses for items
and services (both in and out of net-
work).
492
Subtitle A, Part 1
‘‘(6) Statistics on enrollee satisfaction
with the product and organization, in-
cluding rates of reenrollment.
‘‘(7) Enrollee rights and responsibil-
ities, including the grievance process pro-
vided under subsection (f).
‘‘(8) A statement that the use of the
911 emergency telephone number is ap-
propriate in emergency situations and an
explanation of what constitutes an emer-
gency situation.
‘‘(9) A description of the organiza-
tion’s quality assurance program under
subsection (d).
Such information shall be disclosed to each
enrollee under this part at the time of enroll-
ment and at least annually thereafter.
‘‘(b) ACCESS TO SERVICES.—
‘‘(1) IN GENERAL.—A MedicarePlus or-
ganization offering a MedicarePlus prod-
uct may restrict the providers from
whom the benefits under the product are
provided so long as—
‘‘(A) the organization makes such
benefits available and accessible to
493
Subtitle A, Part 1
each individual electing the product
within the product service area with
reasonable promptness and in a man-
ner which assures continuity in the
provision of benefits;
‘‘(B) when medically necessary
the organization makes such benefits
available and accessible 24 hours a
day and 7 days a week;
‘‘(C) the product provides for re-
imbursement with respect to services
which are covered under subpara-
graphs (A) and (B) and which are pro-
vided to such an individual other
than through the organization, if—
‘‘(i) the services were medi-
cally necessary and immediately
required because of an unfore-
seen illness, injury, or condition,
and
‘‘(ii) it was not reasonable
given the circumstances to obtain
the services through the organi-
zation; and
494
Subtitle A, Part 1
‘‘(D) coverage is provided for
emergency services (as defined in
paragraph (5)) without regard to
prior authorization or the emergency
care provider’s contractual relation-
ship with the organization.
‘‘(2) MINIMUM PAYMENT LEVELS WHERE
PROVIDING POINT-OF-SERVICE COVERAGE.—If
a MedicarePlus product provides benefits
for items and services (not described in
paragraph (1)(C)) through a network of
providers and also permits payment to be
made under the product for such items
and services not provided through such a
network, the payment level under the
product with respect to such items and
services furnished outside the network
shall be at least 70 percent (or, if the ef-
fective cost-sharing rate is 50 percent, at
least 35 percent) of the lesser of—
‘‘(A) the payment basis (deter-
mined without regard to deductibles
and cost-sharing) that would have ap-
plied for such items and services
under parts A and B, or
495
Subtitle A, Part 1
‘‘(B) the amount charged by the
entity furnishing such items and serv-
ices.
‘‘(3) PROTECTION
OF
ENROLLEES
FOR
CERTAIN EMERGENCY SERVICES.—
‘‘(A) PARTICIPATING PROVIDERS.—In
the case of emergency services de-
scribed in subparagraph (C) which
are furnished by a participating phy-
sician or provider of services to an in-
dividual 
enrolled 
with 
a
MedicarePlus organization under this
section, the applicable participation
agreement is deemed to provide that
the physician or provider of services
will accept as payment in full from
the organization for such emergency
services described in subparagraph
(C) the amount that would be payable
to the physician or provider of serv-
ices under part B and from the indi-
vidual under such part, if the individ-
ual were not enrolled with such an
organization under this part.
496
Subtitle A, Part 1
‘‘(B) 
NONPARTICIPATING
PROVID-
ERS.—In the case of emergency serv-
ices described in subparagraph (C)
which 
are 
furnished 
by 
a
nonparticipating physician, the limi-
tations on actual charges for such
services otherwise applicable under
part B (to services furnished by indi-
viduals 
not 
enrolled 
with 
a
MedicarePlus organization under this
section) shall apply in the same man-
ner as such limitations apply to serv-
ices furnished to individuals not en-
rolled with such an organization.
‘‘(C) 
EMERGENCY
SERVICES
DE-
SCRIBED.—The emergency services de-
scribed in this subparagraph are
emergency services which which are
furnished 
to 
an 
enrollee 
of 
a
MedicarePlus organization under this
part by a physician or provider of
services that is not under a contract
with the organization.
‘‘(4) 
TIMELY
AUTHORIZATION
FOR
PROMPTLY
NEEDED
CARE
IDENTIFIED
AS
A
498
Subtitle A, Part 1
authorization to provide an ap-
propriate referral for such items
and services or to provide the
items and services to the individ-
ual and access to the person has
not been provided (as required in
subparagraph (A)), or
‘‘(ii) has requested such au-
thorization from the person and
the person has not denied the au-
thorization 
within 
minutes
after the time the request is
made.
‘‘(C) EFFECT
OF
APPROVAL.—Ap-
proval of a request for a prior author-
ization determination (including a
deemed 
approval 
under 
subpara-
graph (B)) shall be treated as ap-
proval of a request for any items and
services that are required to treat the
medical condition identified pursuant
to the required screening evaluation.
‘‘(5) DEFINITION
OF
EMERGENCY
SERV-
ICES.—In this subsection, the term ‘emer-
gency services’ means—