I
107TH CONGRESS
1ST SESSION
H. R. 3584
To amend title XVIII of the Social Security Act to improve payments and
regulation under the Medicare+Choice Program.
IN THE HOUSE OF REPRESENTATIVES
DECEMBER 20, 2001
Mrs. JOHNSON of Connecticut (for herself, Mr. CARDIN, Mr. ISRAEL, Mr.
SMITH of New Jersey, Mr. HAYWORTH, Mr. RAMSTAD, Mr. SAM JOHN-
SON of Texas, Mr. SHAW, Mr. ENGLISH, Mr. LOBIONDO, Mr. FERGUSON,
Ms. DUNN of Washington, Mr. CRANE, Mr. SAXTON, Mr. CAMP, Mrs.
MCCARTHY of New York, Mr. PASCRELL, Mr. HERGER, Mr. SIMMONS,
Mr. MCCRERY, Mr. LARSEN of Washington, and Mr. DICKS) introduced
the following bill; which was referred to the Committee on Ways and
Means, and in addition to the Committee on Energy and 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 com-
mittee concerned
A BILL
To amend title XVIII of the Social Security Act to improve
payments and regulation under the Medicare+Choice
Program.
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 Improvement and Stabilization Act of
2001’’.
(b) TABLE OF CONTENTS.—The table of contents of
this Act is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Payment reforms for 2003.
Sec. 3. Change in Medicare+Choice reporting deadlines and annual, coordi-
nated election period and delay in lock-in provisions.
Sec. 4. Avoiding duplicative State regulation.
Sec. 5. Demonstration projects for preferred provider organizations, point-of-
service plans, MSA plans, and disease management programs.
Sec. 6. Suspension of limitation for program reentry for 2003 and 2004.
Sec. 7. Specialized Medicare+Choice plans for special needs beneficiaries.
SEC. 2. PAYMENT REFORMS FOR 2003.
(a) PAYMENT BASED ON 100 PERCENT OF FEE-FOR-
SERVICE COSTS.—
(1) IN
GENERAL.—Section 1853(c)(1) of the
Social Security Act (42 U.S.C. 1395w–23(c)(1)) is
amended by adding at the end the following:
‘‘(D) BASED
ON
100
PERCENT
OF
FEE-
FOR-SERVICE COSTS FOR 2003.—For 2003 only,
the adjusted average per capita cost for that
year, determined under section 1876(a)(4) for
the Medicare+Choice payment area for services
covered under parts A and B for individuals en-
titled to benefits under part A and enrolled
under part B who are not enrolled in a
Medicare+Choice plan under this part for the
year, subject to the same adjustment as is pro-
vided to the annual per capita rate payment
under paragraph (3)(B).’’.
(2) CONFORMING AMENDMENT.—Such section
is further amended in the matter before subpara-
graph (A), by striking ‘‘or (C)’’ and inserting ‘‘(C),
or (D)’’.
(b) REVISION OF NATIONAL AVERAGE USED IN CAL-
CULATION OF BLEND.—Section 1853(c)(4)(B)(i)(II) of
such Act (42 U.S.C. 1395w–23(c)(4)(B)(i)(II)) is amend-
ed by inserting ‘‘who (with respect to determinations for
2003) are enrolled in a Medicare+Choice plan’’ after ‘‘the
average number of medicare beneficiaries’’.
(c) ELIMINATION OF BUDGET NEUTRALITY.—Sec-
tion 1853(c) of such Act (42 U.S.C. 1395w–23(c)) is
amended—
(1) in paragraph (1)(A), by inserting ‘‘(for a
year other than 2003)’’ after ‘‘multiplied’’; and
(2) in paragraph (5), by inserting ‘‘(other than
2003)’’ after ‘‘for each year’’.
SEC. 5. DEMONSTRATION PROJECTS FOR PREFERRED PRO-
VIDER ORGANIZATIONS, POINT-OF-SERVICE
PLANS, MSA PLANS, AND DISEASE MANAGE-
MENT PROGRAMS.
(a) IN GENERAL.—The Secretary of Health and
Human Services shall conduct a demonstration program
(in this section referred to as the ‘‘demonstration pro-
gram’’) under which payment rules to Medicare+Choice
organizations under section 1853 of the Social Security
Act are modified in order to promote the offering of
Medicare+Choice plans by preferred provider organiza-
tions under the Medicare+Choice program, the offering
of Medicare+Choice plans that provide point-of-service
coverage for other than participating providers, and the
offering of MSA plans and to promote the use of disease
management programs by Medicare+Choice plans.
(b) PROJECTS.—Under the demonstration program,
the Secretary shall provide for 10 demonstration projects.
Each project shall extend over a period of not to exceed
3 years. Of the demonstration projects conducted under
the demonstration, to the extent feasible, at least one such
project shall promote the offering of a Medicare+Choice
plan by a preferred provider organization, at least one
project shall promote the offering of a Medicare+Choice
plan that provides point-of-service coverage for other than
participating providers, and at least two projects shall pro-
mote the offering of a MSA plan.
(c) RISK-SHARING
ARRANGEMENTS.—Under the
demonstration program, the Secretary may provide for the
assumption of portions of the financial risk under a split
or partial risk-sharing arrangement.
(d) WAIVER AUTHORITY.—The Secretary is author-
ized to waive such provisions of section 1853 of the Social
Security Act (and related provisions of part C of title
XVIII of such Act) as the Secretary determines to be nec-
essary to conduct the demonstration program under this
section.
(e) EVALUATION AND REPORT.—
(1) EVALUATION.—The Secretary shall provide
for an evaluation of the demonstration program con-
ducted under this section and its impact on enroll-
ment, particularly in areas not previously served by
Medicare+Choice plans.
(2) REPORT.—The Secretary shall submit to
Congress a report on the demonstration program
and its evaluation. Such report shall include an as-
sessment of the costs and savings to the medicare
program as a result of the demonstration program
and may include such recommendations for changes
in the Medicare+Choice program as the Secretary
deems appropriate.
SEC. 6. SUSPENSION OF LIMITATION FOR PROGRAM RE-
ENTRY FOR 2003 AND 2004.
Section 1857(c)(4) of the Social Security Act (42
U.S.C. 1395w–27(c)(4)) is amended—
(1) in subparagraph (A), by striking ‘‘subpara-
graph (B)’’ and inserting ‘‘subparagraphs (B) and
(C)’’; and
(2) by adding at the end the following new sub-
paragraph:
‘‘(C) APPLICABILITY IN CERTAIN YEARS.—
Subparagraph (A) shall not apply for contracts
entered into for contract year 2003 or 2004.’’.
SEC. 7. SPECIALIZED MEDICARE+CHOICE PLANS FOR SPE-
CIAL NEEDS BENEFICIARIES.
(a) TREATMENT AS COORDINATED CARE PLAN.—
Section 1851(a)(2)(A) of the Social Security Act (42
U.S.C. 1395w–21(a)(2)(A)) is amended by adding at the
end 
the 
following 
new 
sentence: 
‘‘Specialized
Medicare+Choice plans for special needs beneficiaries (as
defined in section 1859(b)(4)) may be any type of coordi-
nated care plan.’’.
(b) SPECIALIZED MEDICARE+CHOICE PLAN
FOR
SPECIAL
NEEDS
BENEFICIARIES
DEFINED.—Section
1859(b) of such Act (42 U.S.C. 1395w–29(b)) is amended
by adding at the end the following new paragraph:
‘‘(4) SPECIALIZED
MEDICARE+CHOICE
PLANS
FOR SPECIAL NEEDS BENEFICIARIES.—
‘‘(A) IN GENERAL.—The term ‘specialized
Medicare+Choice plan for special needs bene-
ficiaries’ means a Medicare+Choice plan that
exclusively serves special needs beneficiaries (as
defined in subparagraph (B)).
‘‘(B) SPECIAL NEEDS BENEFICIARY.—The
term ‘special needs beneficiary’ means a
Medicare+Choice eligible individual who—
‘‘(i) is institutionalized (as defined by
the Secretary);
‘‘(ii) is entitled to medical assistance
under a State plan under title XIX; or
‘‘(iii) meets such requirements as the
Secretary may determine would benefit
from enrollment in such a specialized
Medicare+Choice plan described in sub-
paragraph (A) for individuals with severe
or disabling chronic conditions.’’.
(c) RESTRICTION ON ENROLLMENT PERMITTED.—
Section 1859 of such Act (42 U.S.C. 1395w–29) is
amended by adding at the end the following new sub-
section:
‘‘(f) RESTRICTION ON ENROLLMENT FOR SPECIAL-
IZED MEDICARE+CHOICE PLANS FOR SPECIAL NEEDS
BENEFICIARIES.—In 
the 
case 
of 
a 
specialized
Medicare+Choice plan (as defined in subsection (b)(4)),
notwithstanding any other provision of this part and in
accordance with regulations of the Secretary and for peri-
ods before January 1, 2007, the plan may restrict the en-
rollment of individuals under the plan to individuals who
are within one or more classes of special needs bene-
ficiaries.’’.
(d) REPORT TO CONGRESS.—Not later than Decem-
ber 31, 2005, the Secretary of Health and Human Serv-
ices shall submit to Congress a report that assesses the
impact of specialized Medicare+Choice plans for special
needs beneficiaries on the cost and quality of services pro-
vided to enrollees. Such report shall include an assessment
of the costs and savings to the medicare program as a
result of amendments made by subsections (a), (b), and
(c).
(e) EFFECTIVE DATES.—
(1) IN GENERAL.—The amendments made by
subsections (a), (b), and (c) shall take effect upon
the date of the enactment of this Act.
(2) DEADLINE
FOR
ISSUANCE
OF
REQUIRE-
MENTS FOR SPECIAL NEEDS BENEFICIARIES; TRAN-
SITION.—No later than September 1, 2002, the Sec-
retary of Health and Human Services shall issue
final regulations to establish requirements for special
needs beneficiaries under section 1859(b)(4)(B)(iii)
of the Social Security Act, as added by subsection
(b).
(f) EXTENSION
OF MUNICIPAL HEALTH SERVICE
DEMONSTRATION PROJECTS.—The last sentence of sec-
tion 9215(a) of the Consolidated Omnibus Budget Rec-
onciliation Act of 1985 (42 U.S.C. 1395b–1 note), as pre-
viously amended, is amended by striking ‘‘December 31,
2004, but only with respect to’’ and all that follows and
inserting ‘‘December 31, 2009, but only with respect to
individuals who reside in the city in which the project is
operated and so long as the total number of individuals
participating in the project does not exceed the number
of such individuals participating as of January 1, 1996.’’.
Æ