I
104TH CONGRESS
2D SESSION
H. R. 4220
To amend the Internal Revenue Code of 1986 and titles XVIII and XIX
of the Social Security Act to ensure access to services and prevent
fraud and abuse for enrollees of managed care plans, to amend standards
for Medicare supplemental policies, to modify the Medicare select pro-
gram, and to provide other protections for beneficiaries of health plans
generally, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
SEPTEMBER 26, 1996
Mr. STARK introduced the following bill; which was referred to the Committee
on Ways and Means, and in addition to the Committee on Commerce,
for a period to be subsequently determined by the Speaker, in each case
for consideration of such provisions as fall within the jurisdiction of the
committee concerned
A BILL
To amend the Internal Revenue Code of 1986 and titles
XVIII and XIX of the Social Security Act to ensure
access to services and prevent fraud and abuse for enroll-
ees of managed care plans, to amend standards for Medi-
care supplemental policies, to modify the Medicare select
program, and to provide other protections for bene-
ficiaries of health plans generally, and for other pur-
poses.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Managed Care Consumer Protection Act of 1996’’.
(b) TABLE OF CONTENTS.—The table of contents of
this Act is as follows:
Sec. 1. Short title; table of contents.
TITLE I—PROTECTIONS FOR BENEFICIARIES ENROLLED IN
MANAGED CARE PLANS
‘‘Subtitle L—Protections for Beneficiaries Under Managed Care Plans
‘‘CHAPTER 101—PROTECTIONS FOR BENEFICIARIES
UNDER MANAGED CARE PLANS
‘‘SUBCHAPTER A—IMPOSITION OF TAX
‘‘Sec. 9901. Excise tax on failure to meet requirement of beneficiary pro-
tection.
‘‘Sec. 9902. Definitions.
‘‘SUBCHAPTER B—REQUIREMENTS
‘‘Sec. 9911. Requirements relating to managed care organizations and pro-
viders of health services.
‘‘Sec. 9912. Grievance procedures and deadline for responding to requests
for coverage of services.
‘‘Sec. 9913. Requirements for organization service areas; nondiscrimina-
tion.
‘‘Sec. 9914. Providing information.
‘‘Sec. 9915. Restrictions on commissions for agents.
‘‘Sec. 9916. Protection of patient right to know.
‘‘Sec. 9917. Patient access to clinical studies.
‘‘Sec. 9918. Required minimum childbirth benefits.
‘‘Sec. 9919. Assuring equitable health plan coverage with respect to emer-
gency services.
Subtitle C—Effective Date
Sec. 121. Effective date.
TITLE II—MEDICARE
Sec. 201. Prohibition on payments under Medicare until completion of orienta-
tion and medical profile.
Sec. 202. Changes in requirements for Medicare supplemental policies relating
to community rating and loss ratios.
Sec. 203. Other additional consumer protections for Medicare supplemental in-
surance.
Sec. 204. Application of standards to Medicare select policies.
Sec. 205. Arrangements for out-of-area dialysis services.
Sec. 206. Coordination of Medicare enrollment.
TITLE III—MEDICAID
Sec. 301. Prohibition on payments under Medicaid until completion of orienta-
tion, medical profile, and immunization.
Sec. 302. Requirement for Medicaid capitated plans to assure appropriate child-
hood immunizations.
TITLE 
I—PROTECTIONS 
FOR
BENEFICIARIES 
ENROLLED
IN MANAGED CARE PLANS
(a) IN GENERAL.—The Internal Revenue Code of
1986 (as amended by the Health Insurance Portability
and Accountability Act of 1996) is amended by adding at
the end the following:
‘‘Subtitle L—Protections for Bene-
ficiaries Under Managed Care
Plans
‘‘CHAPTER 101—PROTECTIONS FOR BENE-
FICIARIES UNDER MANAGED CARE
PLANS
‘‘Subchapter A. Imposition of tax.
‘‘Subchapter B. Requirements.
‘‘Subchapter A—Imposition of Tax
‘‘Sec. 9901. Excise tax on failure to meet requirement of bene-
ficiary protection.
‘‘Sec. 9902. Definitions.
‘‘SEC. 9901. EXCISE TAX ON FAILURE TO MEET REQUIRE-
MENT OF BENEFICIARY PROTECTION.
‘‘(a) IMPOSITION OF TAX.—There is hereby imposed
a tax on the failure of—
‘‘(1) a managed care group health plan to meet
the requirements of subchapter B; and
‘‘(2) an insurer that offers managed care health
insurance coverage (other than to a group health
plan subject to paragraph (1)) to meet the require-
ments of such subchapter.
‘‘(b) AMOUNT OF TAX.—
‘‘(1) GROUP HEALTH PLAN.—
‘‘(A) IN
GENERAL.—The amount of tax
imposed by subsection (a)(1) on any failure
with respect to a participant or beneficiary of a
group health plan shall be 25 percent of each
premium received by the group health plan for
the plan year in which such failure occurs.
‘‘(B) SELF-INSURED PLANS.—In the case
that the group health plan is self-insured, the
cost to the plan of the coverage of participants
and beneficiaries shall be treated as the pre-
mium received for the purposes of subpara-
graph (A).
‘‘(2) INSURER OFFERING INDIVIDUAL HEALTH
INSURANCE
COVERAGE.—The amount of tax im-
posed by subsection (a)(2) on any failure of an in-
surer with respect to an individual described in para-
graph (1) or (2) of section 9902(b) shall be 25 per-
cent of the total amount of the premiums paid to the
insurer for such coverage for the plan year in which
such failure occurs.
‘‘(c) LIMITATIONS ON AMOUNT OF TAX.—
‘‘(1) TAX NOT TO APPLY WHERE FAILURE NOT
DISCOVERED
EXERCISING
REASONABLE
DILI-
GENCE.—No tax shall be imposed by subsection (a)
on any failure during any period for which it is es-
tablished to the satisfaction of the Secretary that
none of the persons referred to in subsection (e)
knew, or exercising reasonable diligence would have
known, that such failure existed.
‘‘(2) TAX NOT TO APPLY TO FAILURES COR-
RECTED WITHIN 30 DAYS.—No tax shall be imposed
by subsection (a) on any failure if—
‘‘(A) such failure was due to reasonable
cause and not to willful neglect, and
‘‘(B) such failure is corrected during the
30-day period beginning on the 1st date any of
the persons referred to in subsection (e) knew,
or exercising reasonable diligence would have
known, that such failure existed.
‘‘(3) WAIVER.—In the case of a failure which is
due to reasonable cause and not to willful neglect,
the Secretary may waive part or all of the tax im-
posed by subsection (a) to the extent that the pay-
ment of such tax would be excessive relative to the
failure involved.
‘‘(d) TAX NOT TO APPLY TO CERTAIN PLANS.—This
section shall not apply to—
‘‘(1) any governmental plan (within the mean-
ing of section 414(d)), or
‘‘(2) any church plan (within the meaning of
section 414(e)).
‘‘(e) LIABILITY FOR TAX.—The following shall be re-
sponsible for the tax imposed by subsection (a):
‘‘(1) In the case of the tax imposed by sub-
section (a)(1) on a group health plan, the plan.
‘‘(2) In the case of the tax imposed by sub-
section (a)(2) on an insurer offering health insur-
ance coverage, the insurer.
‘‘SEC. 9902. DEFINITIONS.
‘‘(a) DEFINITIONS RELATING TO MANAGED CARE.—
For purposes of this chapter—
‘‘(1) ENROLLEE.—The term ‘enrollee’ means,
with respect to a group health plan or health insur-
ance issuer offering health insurance coverage, an
individual enrolled with the plan or enrolled with the
issuer with respect to such coverage.
‘‘(2) MANAGED
CARE.—The term ‘managed
care’ means, with respect to a group health plan or
health insurance coverage offered by a health insur-
ance issuer, such a plan or coverage that—
‘‘(A) provides or arranges for the provision
of health care items and services to enrollees
primarily through participating physicians and
providers, or
‘‘(B) provides financial incentives (such as
variable copayments and deductibles) to induce
enrollees to obtain benefits primarily through
participating physicians and providers,
or both.
‘‘(3) PARTICIPATING.—The term ‘participating’
means, with respect to a physician or provider in re-
lation to a group health plan or health insurance
coverage offered by a health insurance issuer, a phy-
sician or provider that furnishes health care items
and services to enrollees of the plan or issuer under
an agreement with the plan or issuer.
‘‘(4) PROVIDER NETWORK.—The term ‘provider
network’ means, with respect to a plan or issuer,
providers of health care services provided by or
through the plan or issuer who have entered into an
agreement with the plan or issuer or an agreement
with a subcontracting organization under which the
providers are obligated to provide such services to
individuals enrolled with the plan or issuer.
‘‘(b) ADDITIONAL DEFINITIONS.—The provisions of
section 9805 apply for purposes of this chapter in the
same manner as they apply for purposes of chapter 100.
‘‘Subchapter B—Requirements
‘‘Sec. 9911. Requirements relating to managed care plans and
coverage and providers of health services.
‘‘Sec. 9912. Grievance procedures and deadline for responding to
requests for coverage of services.
‘‘Sec. 9913. Requirements for service areas; nondiscrimination.
‘‘Sec. 9914. Providing information.
‘‘Sec. 9915. Restrictions on commissions for agents.
‘‘Sec. 9916. Protection of patient right to know.
‘‘Sec. 9917. Patient access to clinical studies.
‘‘Sec. 9918. Required minimum childbirth benefits.
‘‘Sec. 9919. Assuring equitable health plan coverage with respect
to emergency services.
‘‘SEC. 9911. REQUIREMENTS RELATING TO MANAGED CARE
PLANS AND COVERAGE AND PROVIDERS OF
HEALTH SERVICES.
‘‘(a) UTILIZATION REVIEW.—
‘‘(1) MEETING REQUIREMENTS.—
‘‘(A) IN
GENERAL.—A managed care
group health plan (or health insurance issuer
that offers managed care health insurance cov-
erage) may not deny coverage of or payment for
items and services on the basis of a utilization
review program unless the Secretary of Health
and Human Services certifies (and periodically
provider may obtain timely review of a denial of
coverage under section 9912; and
‘‘(I) the plan or issuer shall provide each
covered individual, at the time of enrollment
and not less frequently than annually there-
after, an explanation of the utilization review
requirements of the plan or under the coverage
offered by the issuer.
‘‘(b) ASSURANCE OF ACCESS.—
‘‘(1) IN GENERAL.—Each managed care group
health plan, and each health insurance issuer offer-
ing managed care health insurance coverage, shall
demonstrate that the plan or issuer (in relation to
the coverage) has a sufficient number, distribution,
and variety of qualified health care providers to en-
sure that all covered health care services will be
available and accessible in a timely manner to all in-
dividuals enrolled under the plan or such coverage.
‘‘(2) ACCESS TO SPECIALIZED TREATMENT EX-
PERTISE.—Such a plan or issuer shall demonstrate
that enrollees have access, when medically or clini-
cally indicated in the judgment of the treating health
professional, to specialized treatment expertise.
‘‘(3) COORDINATION OF CARE.—
‘‘(A) IN
GENERAL.—Any process estab-
lished by such a plan or issuer to coordinate
care and control costs may not impose an
undue burden on enrollees with chronic health
conditions. Such a plan or issuer shall ensure a
continuity of care and shall, when medically or
clinically indicated in the judgment of the treat-
ing health professional, ensure direct access to
relevant specialists for continued care.
‘‘(B) COMPLEX CONDITIONS.—In the case
of an enrollee who has a severe, complex, or
chronic condition, such a plan or issuer shall
determine, based on the judgment of the treat-
ing health professional, whether it is medically
or clinically necessary or appropriate to use a
care coordinator from an interdisciplinary team
or a specialist to ensure continuity of care.
‘‘(4) NO WAIVER.—
‘‘(A) IN GENERAL.—The requirements of
this subsection may not be waived and shall be
met in all areas where the plan or issuer (in re-
lation to managed care health insurance cov-
erage) has enrollees, including rural areas.
‘‘(B) OUT-OF-PLAN COVERAGE.—If such a
plan or issuer fails to meet the requirements of
this subsection, the plan or issuer shall arrange
for the provision of out-of-plan or out-of-issuer
services to enrollees in a manner that provides
enrollees with access to services in accordance
with this subsection.
‘‘(c) ACCESS TO CENTERS OF EXCELLENCE.—
‘‘(1) IN GENERAL.—Each managed care group
health plan or health insurance issuer offering man-
aged care health insurance coverage shall dem-
onstrate that individuals enrolled with the plan or
under such coverage who have chronic diseases or
otherwise require specialized services have access
through the plan or issuer to specialized treatment
expertise of designated centers of excellence. Such a
plan or issuer shall demonstrate such access accord-
ing to standards developed by the Secretary of
Health and Human Services, including requirements
relating to arrangements with such centers and re-
ferral of enrollees to such centers.
‘‘(2) DESIGNATION PROCESS.—Such Secretary
shall establish a process for the designation of facili-
ties as centers of excellence for purposes of this sub-
section. A facility may not be designated unless the
facility is determined—
‘‘(A) to provide specialty care,
‘‘(B) to deliver care for complex cases re-
quiring specialized treatment or for individuals
with chronic diseases, and
‘‘(C) to meet other requirements that may
be established by such Secretary relating to spe-
cialized education and training of health profes-
sionals, participation in peer-reviewed research,
or treatment of patients from outside the geo-
graphic area of the facility.
‘‘(d) RECOGNITION OF TRAUMA CENTERS.—
‘‘(1) IN
GENERAL.—A managed care group
health plan or health insurance issuer offering man-
aged care health insurance coverage shall provide for
health services contracted for and which are pro-
vided to such an individual other than through the
plan or coverage (including trauma services provided
by designated trauma centers), if (A) the services
were medically necessary and immediately required
because of an unforeseen illness, injury, or condition
and (B) it was not reasonable given the cir-
cumstances to obtain the services through the plan
or participating providers in relation to such cov-
erage.
‘‘(2) DEFINITION.—In paragraph (1), the term
‘designated trauma center’ has the meaning given
such term in section 1231 of the Public Health
Service Act, and includes a trauma 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.—A managed care group health plan
or health insurance issuer offering managed care health
insurance coverage may not require an individual to obtain
a referral from a physician in order to obtain covered
items and services from a physician who specializes in ob-
stetrics and gynecology.
‘‘(f) COVERAGE OF SERVICES OF ESSENTIAL COM-
MUNITY PROVIDERS.—
‘‘(1) IN GENERAL.—The Secretary of Health
and Human Services may require a managed care
group health plan or health insurance issuer that of-
fers managed health insurance coverage to enter into
agreements with essential community providers serv-
ing the plan’s or issuer’s service area (in relation to
the coverage) to join the plan’s or issuer’s provider
network if such Secretary finds that such agree-
ments are necessary for the plan or issuer to make
contracted for services (A) available and accessible
to each enrollee, within the area served by the plan
or issuer (in relation to such coverage), with reason-
able promptness and in a manner which assures con-
tinuity, and (B) when medically necessary, available
and accessible twenty-four hours a day and seven
days a week.
‘‘(2) ESSENTIAL
COMMUNITY
PROVIDER
DE-
FINED.—For purposes of paragraph (1), the term
‘essential community provider’ means a rural health
clinic (described in section 1861(aa)(2) of the Social
Security Act), a Federally qualified health center
(described in section 1861(aa)(4) of such Act), and
any other provider meeting such standards as the
Secretary of Health and Human Services may re-
quire.
‘‘(g) DUE PROCESS PROTECTIONS
FOR PROVID-
ERS.—
(1) IN GENERAL.—In consultation with provid-
ers of health care services who are members of the
plan’s or issuer’s provider network, each managed
care group health plan and each health insurance is-
suer offering managed care health insurance cov-
erage shall establish standards to be used by the
plan or issuer (in relation to such coverage) for con-
tracting with providers, and shall make descriptive
information regarding these standards available to
enrollees, providers who are members of the net-
work, and prospective enrollees and prospective
members of the network.
‘‘(2) LIMITATION ON TERMINATION.—
‘‘(A) IN GENERAL.—Such a group health
plan or health insurance issuer may not termi-
nate or refuse to renew an agreement with a
provider of health care services to participate in
the plan’s or issuer’s provider network unless
the plan or issuer provides written notification
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
plan’s or issuer’s decision, consistent with the
standards established under paragraph (1).
‘‘(B) NOTICE.—Such a plan or issuer shall
provide the notification required under subpara-
graph (A) at least 45 days prior to the effective
date of the termination or expiration of the
agreement (whichever is applicable). The pre-
vious sentence shall not apply if failure to ter-
minate the agreement prior to the deadline
would adversely affect the health or safety of an
individual enrolled with the plan or issuer.
‘‘(3) REVIEW PROCESS.—
‘‘(A) IN GENERAL.—Each such plan or is-
suer shall provide a process under which a pro-
vider of health care services may request a re-
view of the plan’s or issuer’s decision to termi-
nate or refuse to renew the provider’s participa-
tion agreement. Such review shall be conducted
by a group of individuals the majority of whom
are providers of health care services who are
members of the plan’s or issuer’s provider net-
work or employees of the plan or issuer, and, to
the extent possible, who are members of the
same profession as the provider who requests
the review and, for physicians, the same medi-
cal branch (allopathic or osteopathic medicine).
‘‘(B) REPRESENTATION.—If the provider
requests in advance, the plan or issuer shall
permit an attorney representing the provider to
be present at the provider’s review.
‘‘(C) ADVISORY FINDINGS.—The findings
and conclusions of a review under this para-
graph shall be advisory and non-binding.
‘‘(D) CONSTRUCTION.—Nothing in this
paragraph shall be construed to affect any
other provision of law that provides an appeals
process or other form of relief to a provider of
health care services.
‘‘SEC. 9912. GRIEVANCE PROCEDURES AND DEADLINE FOR
RESPONDING TO REQUESTS FOR COVERAGE
OF SERVICES.
‘‘(a) GRIEVANCE PROCEDURES.—A managed care
group health plan and a health insurance issuer offering
managed care health insurance coverage shall provide
meaningful procedures for hearing and resolving griev-
ances between the plan or issuer (any entity or individual
through which the plan or issuer provides health care serv-
ices) and members enrolled with the plan or issuer.
‘‘(b) DETAILS.—The procedures provided under sub-
section (a) shall include—
‘‘(1) recorded (written or otherwise) procedures
for registering and responding to complaints and
grievances in a timely manner;
‘‘(2) documentation concerning the substance of
complaints, grievances, and actions taken concerning
such complaints and grievances, which shall be in
writing.
‘‘(3) procedures to ensure a resolution of a
complaint or grievance;
‘‘(4) the compilation and analysis of complaint
and grievance data;
‘‘(5) procedures to expedite the complaint proc-
ess if the complaint involves a dispute about the cov-
erage of an immediately and urgently needed service;
and
‘‘(6) procedures to ensure that if an enrollee
orally notifies the plan or issuer about a complaint,
the plan or issuer (if requested) must send the en-
rollee a complaint form that includes the telephone
numbers and addresses of member services, and a
description of the plan’s or issuer’s grievance proce-
dure.
The Secretary of Health and Human Services may estab-
lish deadlines for the complaint procedures under para-
graph (5) in order to ensure timely resolution of disputes
involving immediately and urgently needed services.
‘‘(c) APPEALS PROCESS.—Such a plan or issuer shall
adopt an appeals process to enable covered individuals to
appeal decisions that are adverse to the individuals. Such
a process shall include—
‘‘(1) the right to a review by a grievance panel;
‘‘(2) the right to a second review with a dif-
ferent panel, independent of the plan or issuer, or to
a review through an impartial arbitration process
which shall be described in writing by the plan or is-
suer; and
‘‘(3) an expedited process for review in emer-
gency cases.
The Secretary of Health and Human Services shall de-
velop guidelines for the structure and requirements appli-
cable to the independent review panel and impartial arbi-
tration process described in paragraph (2).
‘‘(d) WRITTEN DECISION.—With respect to the com-
plaint, grievance, and appeals processes required under
this section, the plan or issuer shall, upon the request of
an enrollee, provide the enrollee a written decision con-
cerning a complaint, grievance, or appeal in a timely fash-
ion.
‘‘(e) CONSTRUCTION.—The complaint, grievance, and
appeals processes established in accordance with this sec-
tion may not be used in any fashion to discourage or pre-
vent an enrollee from receiving medically necessary care
in a timely manner.
‘‘(f) PROMPT RESPONSE TO REQUESTS FOR SERV-
ICES.—In addition to the procedures available pursuant
to the previous provisions of this section, in the case of
the request of an enrollee with such a plan or issuer—
‘‘(i) the plan or issuer shall respond to the re-
quest not later than 24 hours after the request is
made; and
‘‘(ii) the plan or issuer shall hear and resolve
the enrollee’s appeal of a denial of coverage of such
services in accordance with a process meeting stand-
ards established by the Secretary of Health and
Human Services.
‘‘SEC. 9913. REQUIREMENTS FOR SERVICE AREAS; NON-
DISCRIMINATION.
‘‘(a) SERVICE AREA REQUIREMENTS.—
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), if the service area of a group health plan
or health insurance issuer offering health insurance
coverage includes any part of a metropolitan statis-
tical area, the service area shall include the entire
metropolitan statistical area (including any area des-
ignated by the Secretary of Health and Human
Services as a health professional shortage area
under section 332(a)(1)(A) of the Public Health
Service Act within such metropolitan statistical
area).
‘‘(2) EXCEPTION.—The Secretary of Health
and Human Services may permit a plan’s or issuer’s
service area to exclude any portion of a metropolitan
statistical area (other than the central county of
such metropolitan statistical area) if—
‘‘(A) the plan or issuer demonstrates that
it lacks the financial or administrative capacity
to serve the entire metropolitan statistical area;
and
‘‘(B) such Secretary finds that the com-
position of the plan’s or issuer’s service area
does not reduce the financial risk to the plan or
issuer of providing services to enrollees because
of the health status or other demographic char-
acteristics of individuals residing in the service
area (as compared to the health status or demo-
graphic characteristics of individuals residing in
the portion of the metropolitan statistical area
not included in the plan’s or issuer’s service
area).
‘‘(b) NONDISCRIMINATION.—No group health plan
and no health insurance issuer offering health insurance
coverage may discriminate (directly or through contractual
arrangements) in any activity, including the selection of
a service area, that has the effect of discriminating against
an individual on the basis of race, national origin, gender,
language, socioeconomic status, age, disability, health sta-
tus, or anticipated need for health services.
‘‘SEC. 9914. PROVIDING INFORMATION.
‘‘(a) INFORMATION
ON
PHYSICIAN
INCENTIVE
PLANS.—
‘‘(1) IN GENERAL.—Upon the request of an en-
rollee of a managed care group health plan or under
managed care health insurance coverage offered by
a health insurance issuer or an individual consider-
ing enrollment with such a plan or for such cov-
erage, the plan or issuer shall provide the enrollee or
individual with descriptive information regarding any
physician incentive plan of the plan or issuer appli-
cable to such enrollment.
‘‘(2) PHYSICIAN INCENTIVE PLAN DEFINED.—
In this subsection, the term ‘physician incentive
plan’ means any compensation arrangement between
a managed care group health plan or health insur-
ance issuer offering managed care health insurance
coverage and a physician or physician group that
may directly or indirectly have the effect of reducing
or limiting services provided with respect to individ-
uals enrolled with the plan or under such coverage.
‘‘(b) INFORMATION ON PROVIDER CREDENTIALS.—
Each managed care group health plan and each health in-
surance issuer offering managed care health insurance
coverage shall provide each enrollee, at the time of enroll-
ment and not less frequently than annually thereafter, an
explanation of the credentials of the individuals and enti-
ties providing services to enrollees under the plan or cov-
erage.
‘‘(c) OTHER INFORMATION.—Each such plan and is-
suer shall provide prospective enrollees with written infor-
mation concerning the following with respect to coverage
offered under the plan or coverage:
‘‘(1) Coverage provisions, benefits, and any ex-
clusions by category of service or product, including
premiums, deductibles, and copayments associated
with any point-of-service benefits.
‘‘(2) Loss ratios with an explanation that such
ratios reflect the percentage of the premiums ex-
pended for health services.
‘‘(3) Prior authorization or other review re-
quirements including preauthorization review, con-
current review, post-service review, post-payment re-
view, and procedures that may lead the patient to be
denied coverage for, or not be provided, a particular
service or product.
‘‘(4) Covered individual satisfaction statistics,
including disenrollment statistics.
‘‘(5) Advance directives and organ donation.
‘‘(6) The characteristics and availability of
health care professionals and institutions participat-
ing in the plan or coverage, including descriptions of
the financial arrangements or contractual provisions
with hospitals, utilization review organizations, phy-
sicians, or any other provider of health care services
that would affect the services offered, referral or
treatment options, or physician’s fiduciary respon-
sibility to patients, including financial incentives re-
garding the provision of medical or other services.
‘‘(7) Quality indicators for the plan or issuer
and for participating health professionals and pro-
viders under the plan or coverage, including popu-
lation-based statistics such as immunization rates
and other preventive care and health outcomes
measures such as survival after surgery, adjusted for
case mix.
‘‘(8) An explanation of the appeals process and
the grievance procedure.
‘‘(9) Salaries and other compensation for key
executives of the plan or issuer.
‘‘(10) Physician ownership and investment
structure of the plan or issuer.
‘‘(11) Fiscal year reports of the plan or issuer.
‘‘(12) A description of lawsuits that are filed
against the plan or issuer, insofar as they may have
a material bearing on the financial circumstances of
the plan or issuer or reveal quality and medical cov-
erage issues.
Information under this subsection shall be disclosed in a
standard format, specified by the Secretary of Health and
Human Services, so that prospective covered individuals
may compare the attributes of all such plans and coverage
offered within an area.
‘‘SEC. 9915. RESTRICTIONS ON COMMISSIONS FOR AGENTS.
‘‘In the case of a managed care group health plan
or health insurance issuer that offers managed care health
insurance coverage which employs or otherwise com-
pensates agents to enroll individuals under the plan or cov-
erage and which pays an agent a commission with respect
to the enrollment of an individual—
‘‘(1) such commissions may not constitute the
predominant source of the agent’s total compensa-
tion from the plan or issuer (in accordance with
standards established by the Secretary of Health
and Human Services); and
‘‘(2) if an agent receives a commission from the
plan or issuer with respect to an individual who en-
rolls with the plan or under such coverage and the
individual terminates enrollment with the plan or
such coverage during the 90-day period beginning on
the date of the individual’s enrollment, the plan or
issuer shall recoup the commission from the agent.
‘‘SEC. 9916. PROTECTION OF PATIENT RIGHT TO KNOW.
‘‘(a) IN GENERAL.—
‘‘(1) PROHIBITION OF CERTAIN PROVISION.—A
managed care group health plan and health insur-
ance issuer offering managed care health insurance
coverage may not include as part of such plan or in
relation to such coverage any provision that pro-
hibits, restricts, or interferes with any medical com-
munication (as defined in subsection (b)) as part
of—
‘‘(A) a written contract or agreement with
a health care provider,
‘‘(B) a written statement to such a pro-
vider, or
‘‘(C) an oral communication to such a pro-
vider.
‘‘(2) PROHIBITION OF ADVERSE ACTION.—Such
a plan or issuer may not take any of the following
actions against a health care provider on the basis
of a medical communication:
‘‘(A) Refusal to contract with the health
care provider.
‘‘(B) Termination or refusal to renew a
contract with the health care provider.
‘‘(C) Refusal to refer patients to or allow
others to refer patients to the health care pro-
vider.
‘‘(D) Refusal to compensate the health
care provider for covered services.
‘‘(E) Any other retaliatory action against
the health care provider.
‘‘(3) NULLIFICATION.—Any provision that is
prohibited under paragraph (1) is null and void.
‘‘(b) MEDICAL
COMMUNICATION
DEFINED.—For
purposes of this section, the term ‘medical communica-
tion’—
‘‘(1) means any communication, other than a
knowing and willful misrepresentation, made by the
health care provider—
‘‘(A) regarding the mental or physical
health care needs or treatment of a patient and
the provisions, terms, or requirements of the
managed care group health plan or managed
care health insurance coverage or another plan
or coverage relating to such needs or treatment,
and
‘‘(B) between—
‘‘(i) the provider and a current,
former, or prospective patient (or the
guardian or legal representative of a pa-
tient),
‘‘(ii) the provider and any employee or
representative of the plan or issuer, or
‘‘(iii) the provider and any employee
or representative of any State or Federal
authority with responsibility for the licens-
ing or oversight with respect to the plan or
issuer; and
‘‘(2) includes communications concerning—
‘‘(A) any tests, consultations, and treat-
ment options,
‘‘(B) any risks or benefits associated with
such tests, consultations, and options,
‘‘(C) variation among any health care pro-
viders and any institutions providing such serv-
ices in experience, quality, or outcomes,
‘‘(D) the basis or standard for the decision
of a managed care group health plan or health
insurance issuer in relation to managed care
health insurance coverage to authorize or deny
health care services or benefits,
‘‘(E) the process used by the plan or issuer
to determine whether to authorize or deny
health care services or benefits, and
‘‘(F) any financial incentives or disincen-
tives provided by the plan or issuer to a health
care provider that are based on service utiliza-
tion.
‘‘(c) NON-PREEMPTION OF STATE LAW.—A State
may establish or enforce requirements with respect to the
subject matter of this section, but only if such require-
ments are more protective of medical communications
than the requirements established under this section.
‘‘(d) CONSTRUCTION.—Nothing in this section shall
be construed as—
‘‘(1) requiring a managed care group health
plan or health insurance issuer in relation to man-
aged care health insurance coverage to enter into or
renew a contract or agreement with any willing
health care provider, or
‘‘(2) preventing such a plan or issuer from act-
ing on information relating to treatment actually
provided to a patient or the failure of a health care
provider to comply with legal standards relating to
the provision of care.
‘‘SEC. 9917. PATIENT ACCESS TO CLINICAL STUDIES.
‘‘(a) PERMITTING
PARTICIPATION
IN
APPROVED
CLINICAL STUDIES.—A managed care group health plan
and a health insurance issuer offering managed care
health insurance coverage health plan may not deny (or
limit or impose additional conditions on) coverage of items
and services furnished to an enrollee if—
‘‘(1) the enrollee is participating in an approved
clinical study,
‘‘(2) the items and services are furnished ac-
cording to the design of the study or to treat condi-
tions resulting from participation in the study, and
‘‘(3) the items and services would otherwise be
covered under the plan or coverage except for the
fact that they are provided in connection with par-
ticipation in such a study.
Such a plan or issuer may not discriminate against an
enrollee on the basis of the enrollee’s participation in such
a study.
‘‘(b) CONSTRUCTION.—Nothing in subsection (a)
shall be construed as requiring a plan or issuer to provide
for payment for items and services routinely paid for as
part of an approved clinical study.
‘‘(c) APPROVED CLINICAL STUDY DEFINED.—For
purposes of this section, the term ‘approved clinical study’
means—
‘‘(1) a research study approved by the Sec-
retary of Health and Human Services, the Director
of the National Institutes of Health, the Commis-
sioner of the Food and Drug Administration, the
Secretary of Veterans Affairs, the Secretary of De-
fense, or a qualified nongovernmental research entity
(as defined in guidelines of the National Institute of
Health), or
‘‘(2) a peer-reviewed and approved research
program, as defined by the Secretary of Health and
Human Services, conducted for the primary purpose
of determining whether or not a treatment is safe,
efficacious, or having any other characteristic of a
treatment which must be demonstrated in order for
the treatment to be medically necessary or appro-
priate.
‘‘SEC. 9918. REQUIRED MINIMUM CHILDBIRTH BENEFITS.
‘‘(a) MINIMUM CHILDBIRTH BENEFITS.—If a man-
aged care group health plan or managed care health insur-
ance coverage offered by a health insurance issuer pro-
vides coverage that includes any benefits for inpatient care
for childbirth for a mother or newborn child, the plan or
issuer (in relation to such coverage) shall meet the follow-
ing requirements:
‘‘(1) MINIMUM
LENGTH
OF
STAY
FOR
INPA-
TIENT CARE BENEFITS.—The plan or coverage shall
provide benefits for inpatient care for childbirth for
a minimum length of stay of 48 hours following a
vaginal delivery and a minimum length of stay of 96
hours following a caesarean section.
‘‘(2) COVERAGE OF POST-DELIVERY FOLLOW-UP
CARE.—If an attending provider, in consultation
with the mother, decides to discharge a covered
mother or newborn child from an inpatient setting
before the expiration of the minimum length of stay
period described in paragraph (1), the plan or cov-
erage shall include benefits for timely post-delivery
care by a registered nurse, physician, nurse practi-
tioner, nurse midwife or physician assistant experi-
enced in maternal and child health in the home, a
provider’s office, a hospital, a federally qualified
health center, a federally qualified rural health clin-
ic, a State health department maternity clinic, or an-
other setting (such as a birthing center or an inter-
mediate care facility) determined appropriate under
regulations promulgated by the Secretary of Health
and Human Services.
‘‘(3) NOTICE.—The plan or issuer shall provide
notice to each enrollee eligible for childbirth benefits
under this subsection regarding the requirements of
this section.
(b) PROHIBITIONS.—In implementing the require-
ments of subsection (a), such a plan or issuer may not—
‘‘(1) require or condition the provision of bene-
fits under subsection (a) on any authorization or ap-
proval of an attending or other provider;
‘‘(2) deny enrollment, renewal, or continued
coverage to a mother and her newborn child who are
otherwise eligible to be so covered based on compli-
ance with this section;
‘‘(3) provide monetary incentives to mothers to
encourage such mothers to request less than the
minimum coverage required under subsection (a);
‘‘(4) provide incentives (monetary or otherwise)
to an attending provider to induce such provider to
provide treatment in a manner inconsistent with this
section; or
‘‘(5) penalize or otherwise reduce or limit the
reimbursement of an attending provider because
such provider provided treatment in accordance with
this section.
‘‘(c) ADDITIONAL TERMS AND CONDITIONS.—
‘‘(1) ATTENDING PROVIDER.—As used in this
section, the term ‘attending provider’ means, with
respect to a mother and her newborn child, an obste-
trician-gynecologist, pediatrician, family physician,
or other physician, or any other health care provider
(such as a nurse midwife or nurse practitioner),
who, acting in accordance with applicable State law,
is primarily responsible for the care of the mother
and child.
(2) TIMELY CARE DEFINED.—As used in sub-
section (a)(2), the term ‘timely post-delivery care’
means health care that is provided—
‘‘(A) following the discharge of a mother
and her newborn child from the inpatient set-
ting following childbirth; and
‘‘(B) in a manner that meets the health
care needs of the mother and her newborn
child, that provides for the appropriate monitor-
ing of the conditions of the mother and child,
and that occurs within the 72-hour period im-
mediately following discharge.
‘‘(3) REGULATIONS
REGARDING
APPROPRIATE
POST-CARE DELIVERY SETTINGS.—The Secretary of
Health and Human Services, with respect to regula-
tions promulgated under subsection (a)(2) concern-
ing appropriate post-delivery care settings—
‘‘(A) shall ensure that, to the extent prac-
ticable, such regulations are consistent with
State licensing and practice laws,
‘‘(B) shall consider telemedicine and other
innovative means to provide follow-up care, and
‘‘(C) shall consider both urban and rural
settings.
‘‘(4) RULE
OF
CONSTRUCTION.—Nothing in
this section shall be construed to require that a
mother—
‘‘(A) give birth in a hospital; or
‘‘(B) stay in the hospital for a fixed period
of time following the birth of her child.
‘‘(5) REQUIREMENTS.—The notice required
under subsection (a)(3) shall be in accordance with
regulations promulgated by the Secretary of Health
and Human Services. Such regulations shall provide
that the notice shall be in writing, shall be conspicu-
ous and prominently positioned, and shall be re-
quired to be provided as follows:
‘‘(A) HEALTH INSURANCE COVERAGE.—By
a health insurance issuer in relation to man-
aged care health insurance coverage—
‘‘(i) to enrollees described in sub-
section (a) who are enrolled on the effec-
tive date of this chapter within 120 days
after such effective date and annually
thereafter, and
‘‘(ii) to other enrollees at the time of
enrollment and annually thereafter.
‘‘(B) GROUP HEALTH PLANS.—By a man-
aged care group health plan—
‘‘(i) to enrollees described in sub-
section (a) who are enrolled on the effec-
tive date of this chapter within 120 days
after such effective date, and
‘‘(ii) for plan years beginning on or
after such effective date, as part of its
summary plan description.
‘‘SEC. 9919. ASSURING EQUITABLE HEALTH PLAN COV-
ERAGE WITH RESPECT TO EMERGENCY SERV-
ICES.
‘‘(a) PROHIBITION OF CONTRACTUAL LIMITATIONS
ON COVERAGE OF EMERGENCY SERVICES.—A managed
care group health plan or managed care health insurance
coverage offered by a health insurance issuer that provides
any coverage with respect to emergency services shall
cover emergency services furnished to an enrollee of the
plan or issuer (with respect to such managed care cov-
erage)—
‘‘(1) without regard to whether or not the pro-
vider furnishing the emergency services has a con-
tractual or other arrangement with the plan or is-
suer for the provision of such services to such enroll-
ees, and
‘‘(2) without regard to prior authorization.
‘‘(b) PROHIBITION OF DISCRIMINATORY PAYMENT
OR COST-SHARING.—
‘‘(1) IN GENERAL.—Such a plan or issuer that
provides any coverage with respect to emergency
services—
‘‘(A) shall determine and make prompt
payment in a reasonable and appropriate
amount for such services, and
‘‘(B) subject to paragraph (2), may not
impose cost-sharing for services furnished in a
hospital emergency department that is cal-
culated in a manner (such as the use of a dif-
ferent percentage) that imposes greater cost
sharing with respect to such services compared
to comparable services furnished in other set-
tings.
‘‘(2) IMPOSITION OF REASONABLE COPAYMENT
PERMITTED.—Such a plan or issuer may impose a
reasonable copayment (as determined in accordance
with standards established by the Secretary of
Health and Human Services) in lieu of coinsurance
to deter inappropriate use of services of hospital
emergency departments.
‘‘(c) ASSURING TIMELINESS OF PRIOR AUTHORIZA-
TION DETERMINATION FOR NEEDED CARE IDENTIFIED
IN INITIAL EVALUATION.—
‘‘(1) IN GENERAL.—
‘‘(A) ACCESS TO PROCESS.—If an enrollee
of a managed care group health plan or health
insurance issuer in relation to managed care
health insurance coverage receives emergency
services from an emergency department pursu-
ant to a screening evaluation conducted by a
treating physician or other emergency depart-
ment personnel and pursuant to the evaluation
such physician or personnel identifies items and
services 
(other 
than 
emergency 
services)
promptly needed by the enrollee, the plan or is-
suer shall provide access 24 hours a day, 7 days
a week, to such persons as may be authorized
to make any prior authorization determinations
respecting coverage of such promptly needed
items and services.
‘‘(B) DEEMED APPROVAL.—Such a plan or
issuer is deemed to have approved a request for
a prior authorization for such promptly needed
items and services if such physician or other
personnel—
‘‘(i) has attempted to contact such a
person for authorization—
‘‘(I) to provide an appropriate re-
ferral for the items and services, or
‘‘(II) to provide the items and
services to the enrollee,
and access to the person has not been pro-
vided (as required under subparagraph
(A)), or
‘‘(ii) has requested such authorization
from such a person and the person has not
denied the authorization within 30 minutes
after the time the request is made.
‘‘(2) REFERRAL
BY
PHYSICIAN
TO
HOSPITAL
EMERGENCY DEPARTMENT DEEMED PRIOR AUTHOR-
IZATION.—If a participating physician or other per-
son authorized to make prior authorization deter-
minations for such a plan or issuer refers an enrollee
to a hospital emergency department for evaluation
or treatment, a request for prior authorization of the
items and services reasonably furnished the enrollee
pursuant to such referral shall be deemed to have
been made and approved.
‘‘(3) EFFECT OF APPROVAL.—
‘‘(A) IN GENERAL.—Approval of a request
for a prior authorization determination (includ-
ing a deemed approval under paragraph (1) or
(2)) shall be treated as approval of any health
care items and services required to treat the
medical condition identified pursuant to a
screening evaluation referred to in paragraph
(1)(A).
‘‘(B) PAYMENT.—Such a plan or issuer
may not subsequently deny or reduce payment
for an item or service furnished pursuant to
such an approval unless the approval was based
on information about the medical condition of
an enrollee that was fraudulent.
‘‘(d) ENCOURAGING
APPROPRIATE
USE
OF
911
EMERGENCY TELEPHONE NUMBER.—Such a plan or is-
suer—
‘‘(1) shall include, in any educational materials
the plan makes available to its enrollees on the pro-
cedures for obtaining emergency services—
‘‘(A) a statement that it is appropriate for
an enrollee to use the 911 emergency telephone
number for an emergency medical condition (as
defined in subsection (f)(3)), and
‘‘(B) an explanation of what is an emer-
gency medical condition;
‘‘(2) shall not discourage appropriate use of the
911 emergency telephone number by enrollees with
emergency medical conditions; and
‘‘(3) shall not deny coverage or payment for an
item or service solely on the basis that an enrollee
uses the 911 emergency telephone number to sum-
mon treatment for an emergency medical condition.
‘‘(e) EFFECT ON STATE LAW.—
‘‘(1) PREEMPTION.—Nothing in this section
shall be construed as preempting or otherwise super-
seding any provision of State law unless such provi-
sion directly conflicts with this section.
‘‘(2) CONSUMER PROTECTIONS.—A provision of
State law shall not be considered to conflict directly
with this section if the provision provides the enroll-
ees with protections that exceed the protections of
this section.
‘‘(f) DEFINITIONS.—For purposes of this section:
‘‘(1) COST-SHARING.—The term ‘cost-sharing’
means any deductible, coinsurance amount, copay-
ment, or other out-of-pocket payment that an en-
rollee is responsible for paying with respect to a
health care item or service covered under a managed
care group health plan or managed care health in-
surance coverage.
‘‘(2) EMERGENCY
DEPARTMENT.—The term
‘emergency department’ includes, with respect to a
hospital, a trauma center in the hospital if the cen-
ter—
‘‘(A) is designated under section 1213 of
the Public Health Service Act, or
‘‘(B) is in a State that has not made such
designations and is determined by the Secretary
to meet the standards under such section for
such designation.
‘‘(3) EMERGENCY
MEDICAL
CONDITION.—The
term ‘emergency medical condition’ means a medical
condition, the onset of which or change in which is
sudden, that manifests itself by symptoms of suffi-
cient severity, including severe pain, that a prudent
layperson, who possesses an average knowledge of
health and medicine, could reasonably expect the ab-
sence of immediate medical attention to result in—
‘‘(A) placing the person’s health in serious
jeopardy,
‘‘(B) serious impairment to bodily func-
tions, or
‘‘(C) serious dysfunction of any bodily
organ or part.
‘‘(4) EMERGENCY SERVICES.—The term ‘emer-
gency services’ means—
‘‘(A) health care items and services fur-
nished in the emergency department of a hos-
pital, and
‘‘(B) ancillary services routinely available
to such department,
to the extent they are required to evaluate and treat
an emergency medical condition (as defined in para-
graph (3)) until the condition is stabilized.
‘‘(5) 
PRIOR
AUTHORIZATION
DETERMINA-
TION.—The term ‘prior authorization determination’
means, with respect to health care items and serv-
ices for which coverage may be provided under a
group health plan or health insurance coverage, a
determination, before the provision of the items and
services and as a condition of coverage of the items
and services under the plan or coverage, that cov-
erage will be provided for the items and services
under the plan or coverage.
‘‘(6) 
STABILIZED.—The 
term 
‘stabilized’
means, with respect to an emergency medical condi-
tion, that no material deterioration of the condition
is likely, within reasonable medical probability, to re-
sult or occur before an individual can be transferred
in compliance with the requirements of section 1867
of the Social Security Act.
‘‘(7) 911 EMERGENCY TELEPHONE NUMBER.—
The term ‘911 emergency telephone number’ in-
cludes, in the case of a geographic area where 911
is not in use for emergencies, such other telephone
number as is in use for emergencies.’’
(b) CLERICAL AMENDMENT.—The table of contents
for the Internal Revenue Code of 1986 is amended by add-
ing after the item relating to subtitle K the following new
item:
‘‘Subtitle L. Protection for Beneficiaries Under Managed Care
Plans.’’
(c) EFFECTIVE DATE.—The requirement of section
9902 of the Internal Revenue Code of 1986 (as added by
subsection (a) of this section) shall take effect on January
1, 1998, and shall apply to coverage offered on or after
such date regardless of whether the plan year began before
such date.
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, 1998.
TITLE II—MEDICARE
SEC. 201. PROHIBITION ON PAYMENTS UNDER MEDICARE
UNTIL COMPLETION OF ORIENTATION AND
MEDICAL PROFILE.
(a) IN GENERAL.—Section 1876(c)(3) of the Social
Security Act (42 U.S.C. 1395mm(c)(3)) is amended by
adding at the end the following:
‘‘(G)(i) The Secretary may not make a payment to
an eligible organization under a risk-sharing contract
under this section with respect to an enrollee until the eli-
gible organization certifies to the Secretary that the orga-
nization—
‘‘(I) has provided the enrollee an orientation as
described in clause (ii), and
‘‘(II) has a medical profile described in clause
(iii) with respect to the enrollee.
‘‘(ii) The orientation required under this subpara-
graph includes an explanation of the following features of
the health plan offered by such organization:
‘‘(I) Access to care, including choice of physi-
cian, physician location, and hospital coverage.
‘‘(II) The information required under section
9914 of the Internal Revenue Code of 1986.
‘‘(iii) The medical profile described in this clause is
such profile of the medical condition of the enrollee as the
Secretary shall specify by regulation.’’.
(b) PROMULGATION OF REQUIREMENTS FOR ORI-
ENTATION AND MEDICAL PROFILE.—Not later that 180
days after the date of the enactment of this Act, the Sec-
retary of Health and Human Services shall, by rule, first
specify the elements of the orientation and of the medical
profile described in clauses (ii) and (iii) of section
1876(c)(3)(G) of the Social Security Act (as added by sub-
section (a)). Chapter 8 of title 5, United States Code, shall
not apply to such rule. Such rule shall apply on a final
basis, pending notice and opportunity for public comment.
(c) EFFECTIVE DATE.—The amendment made by
subsection (a) applies with respect to enrollees as of the
first day of the first month that begins more than 60 days
after the date on which the Secretary first publishes the
rule under subsection (b) in the Federal Register.
SEC. 202. CHANGES IN REQUIREMENTS FOR MEDICARE
SUPPLEMENTAL 
POLICIES 
RELATING 
TO
COMMUNITY RATING AND LOSS RATIOS.
(a) REQUIREMENT OF COMMUNITY RATING.—
(1) IN GENERAL.—Section 1882(s) of the So-
cial Security Act (42 U.S.C. 1395ss(s)) is amend-
ed—
(A) in paragraph (3), by striking ‘‘para-
graphs (1) and (2)’’ and inserting ‘‘this sub-
section’’, and by redesignating 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) 
of 
such 
Act 
(42 
U.S.C.
1395ss(s)(2)(A)) is amended by striking ‘‘, or dis-
criminate in the pricing of the policy,’’.
(b) 
INCREASE
IN
LOSS
RATIO.—Section
1882(r)(1)(A) of such Act (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 ‘‘1996 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 ‘‘1996 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 1996
NAIC Model Regulation or the 1996 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 1996 NAIC Model Regulation or
the 1996 Federal Regulation, but
(ii) having a legislature which is not
scheduled to meet in 1997 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, 1997. 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. 203. OTHER ADDITIONAL CONSUMER PROTECTIONS
FOR MEDICARE SUPPLEMENTAL INSURANCE.
(a) GUARANTEEING ISSUE WITHOUT PREEXISTING
CONDITIONS
FOR CONTINUOUSLY COVERED INDIVID-
UALS.—Section 1882(s) of the Social Security Act (42
U.S.C. 1395ss(s)), as amended by section 202(a), is
amended—
(1) by redesignating paragraph (4) as para-
graph (5), and
(2) by inserting after paragraph (3) the follow-
ing new paragraph:
‘‘(4)(A) The issuer of a Medicare supplemental pol-
icy—
‘‘(i) may not deny or condition the issuance or
effectiveness of a Medicare supplemental policy de-
scribed in subparagraph (C);
‘‘(ii) may not discriminate in the pricing of the
policy on the basis of the individual’s health status,
medical condition (including both physical and men-
tal illnesses), claims experience, receipt of health
care, medical history, genetic information, evidence
of insurability (including conditions arising out of
acts of domestic violence), or disability; and
‘‘(iii) may not impose an exclusion of benefits
based on a pre-existing condition,
in the case of an individual described in subparagraph (B)
who seeks to enroll under the policy not later than 63 days
after the date of the termination of enrollment described
in such subparagraph.
‘‘(B) An individual described in this subparagraph is
an individual described in any of the following clauses:
‘‘(i) The individual is enrolled with an eligible
organization under a contract under section 1876 or
with an organization under an agreement under sec-
tion 1833(a)(1)(A) and such enrollment ceases ei-
ther because the individual moves outside the service
area of the organization under the contract or agree-
ment or because of the termination or nonrenewal of
the contract or agreement.
‘‘(ii) The individual is enrolled with an organi-
zation under a policy described in subsection (t) and
such enrollment ceases either because the individual
moves outside the service area of the organization
under the policy, because of the bankruptcy or insol-
vency of the insurer, or because the insurer closes
the block of business to new enrollment.
‘‘(iii) The individual is covered under a Medi-
care supplemental policy and such coverage is termi-
nated because of the bankruptcy or insolvency of the
insurer issuing the policy, because the insurer closes
the block of business to new enrollment, or because
the individual changes residence so that the individ-
ual no longer resides in a State in which the issuer
of the policy is licensed.
‘‘(iv) The individual is enrolled under an em-
ployee welfare benefit plan that provides health ben-
efits that supplement the benefits under this title
and the plan terminates or ceases to provide (or sig-
nificantly reduces) such supplemental health benefits
to the individual.
‘‘(v)(I) The individual is enrolled with an eligi-
ble organization under a contract under section
1876 or with an organization under an agreement
under section 1833(a)(1)(A) and such enrollment is
terminated by the enrollee during the first 12
months of such enrollment, but only if the individual
never was previously enrolled with an eligible organi-
zation under a contract under section 1876 or with
an organization under an agreement under section
1833(a)(1)(A).
‘‘(II) The individual is enrolled under a policy
described in subsection (t) and such enrollment is
terminated during the first 12 months of such en-
rollment, but only if the individual never was pre-
viously enrolled under such a policy under such sub-
section.
‘‘(C)(i) Subject to clause (ii), a Medicare supple-
mental policy described in this subparagraph, with respect
to an individual described in subparagraph (B), is a policy
the benefits under which are comparable or lesser in rela-
tion to the benefits under the enrollment described in sub-
paragraph (B) (or, in the case of an individual described
in clause (ii), under the most recent Medicare supple-
mental policy described in clause (ii)(II)).
‘‘(ii) An individual described in this clause is an indi-
vidual who—
‘‘(I) is described in subparagraph (B)(v), and
‘‘(II) was enrolled in a Medicare supplemental
policy within the 63 day period before the enrollment
described in such subparagraph.
‘‘(iii) As a condition for approval of a State regu-
latory program under subsection (b)(1) and for purposes
of applying clause (i) to policies to be issued in the State,
the regulatory program shall provide for the method of
determining whether policy benefits are comparable or
lesser in relation to other benefits. With respect to a State
without such an approved program, the Secretary shall es-
tablish such method.
‘‘(D) At the time of an event described in subpara-
graph (B) because of which an individual ceases enroll-
ment or loses coverage or benefits under a contract or
agreement, policy, or plan, the organization that offers the
contract or agreement, the insurer offering the policy, or
the administrator of the plan, respectively, shall notify the
individual of the rights of the individual, and obligations
of issuers of Medicare supplemental policies, under sub-
paragraph (A).’’.
(b) LIMITATION ON IMPOSITION OF PREEXISTING
CONDITION EXCLUSION DURING INITIAL OPEN ENROLL-
MENT PERIOD.—Section 1882(s)(2)(B) of such Act (42
U.S.C. 1395ss(s)(2)(B)) is amended to read as follows:
‘‘(B) In the case of a policy issued during the 6-
month period described in subparagraph (A), the policy
may not exclude benefits based on a pre-existing condi-
tion.’’.
(c) CLARIFYING THE NONDISCRIMINATION REQUIRE-
MENTS DURING
THE 6-MONTH INITIAL ENROLLMENT
PERIOD.—Section 1882(s)(2)(A) of such Act (42 U.S.C.
1395ss(s)(2)(A)) is amended to read as follows:
‘‘(2)(A)(i) In the case of an individual described in
clause (ii), the issuer of a Medicare supplemental policy—
‘‘(I) may not deny or condition the issuance or
effectiveness of a Medicare supplemental policy, and
‘‘(II) may not discriminate in the pricing of the
policy on the basis of the individual’s health status,
medical condition (including both physical and men-
tal illnesses), claims experience, receipt of health
care, medical history, genetic information, evidence
of insurability (including conditions arising out of
acts of domestic violence), or disability.
‘‘(ii) An individual described in this clause is an indi-
vidual for whom an application is submitted before the end
of the 6-month period beginning with the first month as
of the first day on which the individual is 65 years of age
or older and is enrolled for benefits under part B.’’.
(d) EXTENDING 6-MONTH INITIAL ENROLLMENT
PERIOD TO NON-ELDERLY MEDICARE BENEFICIARIES.—
Section 1882(s)(2)(A)(ii) of such Act (42 U.S.C.
1395ss(s)(2)(A)), as amended by subsection (c), is amend-
ed by striking ‘‘is submitted’’ and all that follows and in-
serting the following: ‘‘is submitted—
‘‘(I) before the end of the 6-month period be-
ginning with the first month as of the first day on
which the individual is 65 years of age or older and
is enrolled for benefits under part B; and
‘‘(II) for each time the individual becomes eligi-
ble for benefits under part A pursuant to section
226(b) or 226A and is enrolled for benefits under
part B, before the end of the 6-month period begin-
ning with the first month as of the first day on
which the individual is so eligible and so enrolled.’’.
(e) EFFECTIVE DATES.—
(1) GUARANTEED
ISSUE.—The amendment
made by subsection (a) shall take effect on July 1,
1997.
(2) LIMIT ON PREEXISTING CONDITION EXCLU-
SIONS.—The amendment made by subsection (b)
shall apply to policies issued on or after July 1,
1997.
(3) CLARIFICATION
OF
NONDISCRIMINATION
REQUIREMENTS.—The amendment made by sub-
section (c) shall apply to policies issued on or after
July 1, 1997.
(4) EXTENSION OF ENROLLMENT PERIOD TO
DISABLED INDIVIDUALS.—
(A) IN GENERAL.—The amendment made
by subsection (d) shall take effect on July 1,
1997.
(B) TRANSITION RULE.—In the case of an
individual who first became eligible for benefits
under part A of title XVIII of the Social Secu-
rity Act pursuant to section 226(b) or 226A of
such Act and enrolled for benefits under part B
of such title before July 1, 1997, the 6-month
period described in section 1882(s)(2)(A) of
such Act shall begin on July 1, 1997. Before
July 1, 1997, the Secretary of Health and
Human Services shall notify any individual de-
scribed in the previous sentence of their rights
in connection with Medicare supplemental poli-
cies under section 1882 of such Act, by reason
of the amendment made by subsection (d).
(f) TRANSITION PROVISIONS.—
(1) IN GENERAL.—If the Secretary of Health
and Human Services identifies a State as requiring
a change to its statutes or regulations to conform its
regulatory program to the changes made by this sec-
tion, the State regulatory program shall not be con-
sidered to be out of compliance with the require-
ments of section 1882 of the Social Security Act due
solely to failure to make such change until the date
specified in paragraph (4).
(2) NAIC STANDARDS.—If, within 9 months
after the date of the enactment of this Act, the Na-
tional Association of Insurance Commissioners (in
this subsection referred to as the ‘‘NAIC’’) modifies
its NAIC Model Regulation relating to section 1882
of the Social Security Act (referred to in such sec-
tion as the 1991 NAIC Model Regulation, as modi-
fied pursuant to section 171(m)(2) of the Social Se-
curity Act Amendments of 1994 (Public Law 103–
432) 
and 
as 
modified 
pursuant 
to 
section
1882(d)(3)(A)(vi)(IV) of the Social Security Act, as
added by section 271(a) of the Health Care Port-
ability and Accountability Act of 1996 (Public Law
104–191) to conform to the amendments made by
this section, such revised regulation incorporating
the modifications shall be considered to be the appli-
cable NAIC model regulation (including the revised
NAIC model regulation and the 1991 NAIC Model
Regulation) for the purposes of such section.
(3) SECRETARY
STANDARDS.—If the NAIC
does not make the modifications described in para-
graph (2) within the period specified in such para-
graph, the Secretary of Health and Human Services
shall make the modifications described in such para-
graph and such revised regulation incorporating the
modifications shall be considered to be the appro-
priate Regulation for the purposes of such section.
(4) 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 changes its stat-
utes or regulations to conform its regu-
latory program to the changes made by
this section, or
(ii) 1 year after the date the NAIC or
the Secretary first makes the modifications
under paragraph (2) or (3), respectively.
(B) ADDITIONAL LEGISLATIVE ACTION RE-
QUIRED.—In the case of a State which the Sec-
retary identifies as—
(i) requiring State legislation (other
than legislation appropriating funds) to
conform its regulatory program to the
changes made in this section, but
(ii) having a legislature which is not
scheduled to meet in 1998 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 July 1,
1998. For purposes of the previous sentence, 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. 204. APPLICATION OF STANDARDS TO MEDICARE SE-
LECT POLICIES.
Section 1882(t) of the Social Security Act (42 U.S.C.
1395ss(t)) is amended—
(1) in the matter in paragraph (1) before sub-
paragraph (A), by inserting ‘‘, under the standards
established under paragraph (4)’’ after ‘‘if’’;
(2) by striking ‘‘and’’ at the end of paragraph
(1)(E);
(3) by striking the period at the end of para-
graph (1)(F) and inserting a semicolon;
(4) by adding at the end of paragraph (1) the
following new subparagraphs:
‘‘(G) notwithstanding any other provision
of this section to the contrary, if the issuer of
the policy meet the requirements of paragraph
(5).’’;
(5) by adding at the end of paragraph (2) the
following: ‘‘The intermediate sanctions described in
clauses (ii) and (iii) of section 1876(i)(6)(B) shall
apply to actions described in the first sentence of
this paragraph in the same manner as they apply to
violations described in section 1876(i)(6)(A).’’; and
(6) by adding at the end the following new
paragraphs:
‘‘(4)(A) The Secretary shall establish by regulation
standards for policies in order to be provided special treat-
ment under paragraph (1). To the extent practicable, such
standards shall be the same as the standards established
by the National Association of Insurance Commissioners
with respect to such policies. Any additional standards
shall be developed in consultation with such Association.
‘‘(B) If the Secretary determines that a State has es-
tablished an effective program to enforce the standards
established under subparagraph (A), any policy that a
State determines under such program to meet such stand-
ards shall be deemed to meet such standards for purposes
of this section.
‘‘(5) For purposes of paragraph (1), the requirements
of this paragraph, with respect to a policy are as follows:
‘‘(A) If the issuer of the policy—
‘‘(i) is an eligible organization (as defined
in section 1876(a)), the benefits under the pol-
icy (in coordination with benefits made available
under this title) are the same as the benefits re-
quired to be made available by such an organi-
zation with a risk-sharing contract under sec-
tion 1876, or
‘‘(ii) is not such an organization, the bene-
fits under the policy shall be either—
‘‘(I) the benefits required under the
Standardized Medicare supplement benefit
plan ‘E’ (as specified in section 9E(5) of
the 1991 NAIC Model Regulation), plus