I
106TH CONGRESS
2D SESSION
H. R. 4087
To amend title XVIII of the Social Security Act to provide for payment
of claims by health care providers against insolvent Medicare+Choice
organizations, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
MARCH 23, 2000
Mr. SALMON (for himself and Mr. SOUDER) introduced the following bill;
which was referred to the Committee on Ways and Means, and in addi-
tion to the Committee on Commerce, for a period to be subsequently de-
termined by the Speaker, in each case for consideration of such provisions
as fall within the jurisdiction of the committee concerned
A BILL
To amend title XVIII of the Social Security Act to provide
for payment of claims by health care providers against
insolvent Medicare+Choice organizations, and for other
purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Medicare+Choice Beneficiary Confidence Act of 2000’’.
(b) TABLE OF CONTENTS.—The table of contents of
this Act is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Payment of claims against insolvent Medicare+Choice organizations.
‘‘Sec. 1856A. Payment of claims against insolvent Medicare+Choice orga-
nizations.’’.
Sec. 3. Improved communication regarding the solvency of Medicare+Choice
organizations between HCFA and the States.
Sec. 4. Response by the Secretary to failure of Medicare+Choice organizations
to provide prompt payment.
Sec. 5. Surety bond required of Medicare+Choice organizations.
SEC. 
2. 
PAYMENT 
OF 
CLAIMS 
AGAINST 
INSOLVENT
MEDICARE+CHOICE ORGANIZATIONS.
(a) IN GENERAL.—Title XVIII of the Social Security
Act (42 U.S.C. 1395 et seq.) is amended by inserting after
section 1856 the following new section:
‘‘PAYMENT OF CLAIMS AGAINST INSOLVENT
MEDICARE+CHOICE ORGANIZATIONS
‘‘SEC. 1856A. (a) PAYMENT OF CLAIMS.—
‘‘(1) INSOLVENT
MEDICARE+CHOICE
ORGANI-
ZATIONS.—
‘‘(A) SUBMISSION OF UNPAID CLAIMS TO
HCFA.—If a statutory successor is appointed
for an insolvent Medicare+Choice organization,
such statutory successor shall submit to the
Secretary each valid unpaid clean claim (as de-
fined in section 1842(c)(2)(B)(i)) by a health
care provider for payment for any covered item
or service furnished before the date on which
such statutory successor was appointed to a
Medicare+Choice eligible individual enrolled in
a Medicare+Choice plan offered by such orga-
nization.
‘‘(B) PAYMENTS
FROM
TRUST
FUNDS.—
Not later than 30 days after a clean claim is
submitted under subparagraph (A), the Sec-
retary shall pay to the health care provider the
amount described in subparagraph (C) from the
Federal Hospital Insurance Trust Fund and
the Federal Supplementary Medical Insurance
Trust Fund in such proportion as the Secretary
determines appropriate.
‘‘(C) AMOUNT DESCRIBED.—The amount
described in this subparagraph is as follows:
‘‘(i) CONTRACTING
PROVIDERS.—In
the case of a health care provider having
a written agreement with the insolvent
Medicare+Choice organization, the amount
that would have been paid to the health
care provider under such agreement for the
covered item or service.
‘‘(ii) NONCONTRACTING PROVIDERS.—
In the case of a health care provider that
did not have a written agreement with the
insolvent Medicare+Choice organization,
the reasonable cost of the covered item or
service.
‘‘(2) ENROLLEES IN MEDICARE+CHOICE PLANS
OFFERED BY INSOLVENT MEDICARE+CHOICE ORGA-
NIZATIONS.—
‘‘(A) 
REIMBURSEMENT
AND
COLLEC-
TION.—In the case of an individual enrolled in
a Medicare+Choice plan offered by an insolvent
Medicare+Choice organization, the Secretary
shall provide for the following:
‘‘(i) REIMBURSEMENT
OF
AMOUNTS
PAID.—The reimbursement of such indi-
vidual for any amount paid by such indi-
vidual to a health care provider for each
covered item or service that such organiza-
tion would have paid, but for the insol-
vency of such organization, to the health
care provider under the plan in which the
individual is enrolled.
‘‘(ii) 
COLLECTION
OF
AMOUNTS
DUE.—The collection from such individual
of any amount that remains due and owing
by such individual under such plan for
each covered item or service for which pay-
ment is made under paragraph (1)(B) as
of the date of the notice of collection.
‘‘(B) ENROLLEE PROTECTION AGAINST IN-
SOLVENCY.—No Medicare+Choice eligible indi-
vidual may be held liable to any health care
provider 
for 
the 
debts 
of 
an 
insolvent
Medicare+Choice organization.
‘‘(b) HCFA A CREDITOR OF BANKRUPTCY OR RE-
CEIVERSHIP ESTATE.—
‘‘(1) IN
GENERAL.—The Secretary shall be
deemed to be a creditor of the estate of the insolvent
Medicare+Choice organization for any amount paid
under paragraph (1)(B) or (2)(A)(i) of subsection
(a) and not collected from a beneficiary under para-
graph (2)(A)(ii) of such subsection.
‘‘(2) PRIORITY.—For purposes of applying
paragraph (1), the Secretary shall be given the same
priority that the health care provider paid under
paragraph (1)(B) would have been given if the
amount paid to such provider remained due and
owing.
‘‘(c) DEFINITIONS.—In this section:
‘‘(1) INSOLVENT
MEDICARE+CHOICE
ORGANI-
ZATION.—The term ‘insolvent Medicare+Choice or-
ganization’ means a Medicare+Choice organization
for which—
‘‘(A) a petition for bankruptcy has been
filed under title 11, United States Code;
‘‘(B) a petition for receivership has been
filed on account of insolvency under State law;
or
‘‘(C) any similar proceeding has com-
menced under State law.
‘‘(2) HEALTH
CARE
PROVIDER.—The term
‘health care provider’ means a provider or other per-
son that meets the applicable requirements of this
title and part A of title XI.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall—
(1) take effect on the date of enactment of this
Act; and
(2) apply with respect to Medicare+Choice or-
ganizations for which a statutory successor is ap-
pointed on or after November 1, 1999.
SEC. 3. IMPROVED COMMUNICATION REGARDING THE SOL-
VENCY OF MEDICARE+CHOICE ORGANIZA-
TIONS BETWEEN HCFA AND THE STATES.
(a) IN GENERAL.—Section 1857(d) of the Social Se-
curity Act (42 U.S.C. 1395w–27(d)) is amended by adding
at the end the following new paragraph:
‘‘(6) NOTIFICATION OF STATES.—Each contract
under this section shall provide that in the case that
the Secretary determines, based on any information
obtained 
under 
this 
subsection, 
that 
a
Medicare+Choice organization may not be able to
bear the risk of potential financial losses (as de-
scribed in paragraph (2)(B)(i)), the Secretary shall,
within a reasonable period of time—
‘‘(A) notify each State in which the
Medicare+Choice organization provides any
covered item or service of such determination;
and
‘‘(B) provide each such State with the in-
formation obtained under this subsection on
which the determination is based.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall—
(1) take effect on the date of enactment of this
Act; and
(2) apply with respect to contracts entered into
or renewed on or after the date of enactment of this
Act.
SEC. 4. RESPONSE BY THE SECRETARY TO FAILURE OF
MEDICARE+CHOICE ORGANIZATIONS TO PRO-
VIDE PROMPT PAYMENT.
(a) IN GENERAL.—Section 1857(f) of the Social Se-
curity Act (42 U.S.C. 1395w–27(f)) is amended by adding
at the end the following new paragraph:
‘‘(3) SECRETARY REQUIRED TO BYPASS NON-
COMPLYING ORGANIZATION.—
‘‘(A) IN
GENERAL.—In the case of a
Medicare+Choice eligible organization which
the Secretary determines, after notice and op-
portunity for a hearing, that—
‘‘(i) such organization has failed to
make payments of amounts in compliance
with paragraph (1); and
‘‘(ii) such payments are more than 60
days overdue;
the Secretary shall provide for direct payment
of the amounts owed to providers and suppliers
(or, in the case of a Medicare+Choice private
fee-for-service plan, amounts owed to the enroll-
ees) for covered services and supplies furnished
to individuals enrolled under this part under the
contract.
‘‘(B) OFFSET.—If the Secretary provides
for direct payments under subparagraph (A),
the Secretary shall provide for an appropriate
reduction in the amount of payments otherwise
made to the organization under this part to re-
flect the amount of the Secretary’s payments
(and the Secretary’s costs in making the pay-
ments).’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall—
(1) take effect on the date of enactment of this
Act; and
(2) apply with respect to contracts entered into
or renewed on or after the date of enactment of this
Act.
SEC. 5. SURETY BOND REQUIRED OF MEDICARE+CHOICE
ORGANIZATIONS.
(a) IN GENERAL.—Section 1857(e) of the Social Se-
curity Act (42 U.S.C. 1395w–27(e)) is amended by adding
at the end the following new paragraph:
‘‘(3) SURETY BOND.—