I
106TH CONGRESS
1ST SESSION
H. R. 491
To amend parts C and D of title XVIII of the Social Security Act to
improve the operation of the Medicare+Choice and Medigap programs.
IN THE HOUSE OF REPRESENTATIVES
FEBRUARY 2, 1999
Mr. STARK (for himself, Mr. BROWN of Ohio, Mrs. THURMAN, Mr. WAXMAN,
Mr. LEWIS of Georgia, Mr. MCDERMOTT, Mr. LEVIN, Mr. MATSUI, Mr.
NEAL of Massachusetts, Mr. FRANK of Massachusetts, Mr. MORAN of
Virginia, Mr. FROST, Mr. MARKEY, and Ms. SCHAKOWSKY) 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 consider-
ation of such provisions as fall within the jurisdiction of the committee
concerned
A BILL
To amend parts C and D of title XVIII of the Social Security
Act to improve the operation of the Medicare+Choice
and Medigap programs.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; AMENDMENTS TO SOCIAL SECU-
RITY ACT; TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Medicare+Choice Program Improvement Act of 1999’’.
(b) AMENDMENTS TO SOCIAL SECURITY ACT.—Ex-
cept as otherwise specifically provided, whenever in this
Act an amendment is expressed in terms of an amendment
to or repeal of a section or other provision, the reference
shall be considered to be made to that section or other
provision of the Social Security Act.
(c) TABLE OF CONTENTS.—The table of contents of
this Act is as follows:
Sec. 1. Short title; amendments to Social Security Act; table of contents.
Sec. 2. Enrollment of medicare beneficiaries in alternative Medicare+Choice
plans and Medigap coverage in case of involuntary termination
of Medicare+Choice enrollment.
Sec. 3. Applying Medigap and Medicare+Choice protections to disabled and
ESRD medicare beneficiaries.
Sec. 4. Prohibition of attained-age rating of premiums for Medigap policies.
Sec. 5. Non-preemption of State prescription drug coverage mandates in case
of approved State Medigap waivers.
Sec. 6. Prohibition of cold-call marketing of Medicare+Choice plans.
Sec. 7. Flexibility in definition of service area under the Medicare+Choice pro-
gram.
Sec. 8. 3-year phase-in of risk adjustment of Medicare+Choice plan payments.
Sec. 9. Delay in certain deadlines under the Medicare+Choice program.
Sec. 10. Taking into account costs of VA and DOD military facility services to
medicare-eligible 
beneficiaries 
in 
calculation 
of
Medicare+Choice plan payment rates.
Sec. 11. Increase in civil monetary penalties for failure to meet Medigap open
enrollment requirements.
Sec. 12. NAIC review and update of benefit packages for Medigap policies.
SEC. 2. ENROLLMENT OF MEDICARE BENEFICIARIES IN AL-
TERNATIVE MEDICARE+CHOICE PLANS AND
MEDIGAP COVERAGE IN CASE OF INVOLUN-
TARY TERMINATION OF MEDICARE+CHOICE
ENROLLMENT.
(a) PERMITTING ENROLLMENT
IN ALTERNATIVE
PLANS
UPON
RECEIPT
OF
NOTICE
OF
MEDICARE+CHOICE PLAN TERMINATION.—
(1) 
ENROLLMENT
IN
ALTERNATIVE
MEDICARE+CHOICE PLANS.—Section 1851(e)(4) (42
U.S.C. 1395w–21(e)(4)) is amended—
(A) in subparagraph (A), by inserting be-
fore the semicolon at the end the following: ‘‘or
the organization or plan, respectively, has pro-
vided notice to the individual of the impending
termination (or termination or discontinuation,
respectively)’’; and
(B) by adding at the end the following: ‘‘In
the case described in subparagraph (A), the
right to make a new election under this para-
graph shall extend through the end of the next
annual, coordinated election period.’’.
(2) MEDIGAP
PLANS.—Section 1882(s)(3)(A)
(42 U.S.C. 1395ss(s)(3)(A)) is amended, in the mat-
ter following clause (iii)—
(A) by inserting ‘‘(or, if elected by the in-
dividual, the date of notification of the individ-
ual by the plan or organization of the impend-
ing termination or discontinuance of the plan in
the area in which the individual resides)’’ after
‘‘the date of the termination of enrollment de-
scribed in such subparagraph’’;
(B) by inserting ‘‘(or date of such notifica-
tion, respectively)’’ after ‘‘the date of termi-
nation or disenrollment’’; and
(C) by inserting after ‘‘63 days’’ the fol-
lowing: ‘‘(or 92 days in the case of a termi-
nation or discontinuation of coverage under the
types of circumstances described in section
1851(e)(4)(A))’’.
(3) EFFECTIVE DATE.—The amendments made
by this subsection apply to notices of intended termi-
nation 
made 
by 
group 
health 
plans 
and
Medicare+Choice organizations after the date of the
enactment of this Act.
(b) GUARANTEED ACCESS FOR CERTAIN MEDICARE
BENEFICIARIES TO MEDIGAP POLICIES IN CASE OF IN-
VOLUNTARY
TERMINATION
OF
COVERAGE
UNDER
A
MEDICARE+CHOICE PLAN.—
(1) IN
GENERAL.—Section 1882(s)(3)(C)(iii)
(42 U.S.C. 1395ss(s)(3)(C)(iii)) is amended by in-
serting ‘‘or an individual described in subparagraph
(B)(ii) or (B)(iii) in the case of circumstances de-
scribed in section 1851(e)(4)(A)’’ after ‘‘subpara-
graph (B)(vi)’’.
(2) EFFECTIVE DATE.—
(A) IN
GENERAL.—Subject to subpara-
graph (B), the amendment made by paragraph
(1) applies to terminations of coverage effected
on or after the date of the enactment of this
Act.
(B) TRANSITIONAL
MEDIGAP
OPEN
EN-
ROLLMENT PERIOD FOR CERTAIN INDIVIDUALS
AFFECTED
BY
PLAN
WITHDRAWALS
DURING
1998.—In the case of an individual described in
subparagraph (B)(ii) or (B)(iii) of section
1882(s)(3) of the Social Security Act in the
case of circumstances described in section
1851(e)(4)(A) of such Act (relating to dis-
continuation of a plan or organization entirely
or in an area), if the termination or discontinu-
ation of coverage occurred as of the end of
1998, and before the date of the enactment of
this Act, the provisions of subparagraph (A) of
section 1882(s)(3) such Act (in the matter up
to and including clause (iii) thereof) shall apply
to such an individual who seeks enrollment
under a medicare supplemental policy during
the 92-day period beginning with the first
month that begins more than 30 days after the
date of the enactment of this Act in the same
(B) Clause (ii) of section 1851(a)(3)(B) of the Social
Security Act (as inserted by such amendment) also shall
apply 
to 
individuals 
whose 
enrollment 
in 
a
Medicare+Choice plan was terminated or discontinued as
of the end of 1998. In applying this subparagraph, such
an individual shall be treated, for purposes of part C of
title XVIII of the Social Security Act, as having discon-
tinued enrollment in such a plan as of the date of the
enactment of this Act.
SEC. 4. PROHIBITION OF ATTAINED-AGE RATING OF PRE-
MIUMS FOR MEDIGAP POLICIES.
Section 1882 (42 U.S.C. 1395ss) is amended by add-
ing at the end the following new subsection:
‘‘(v)(1) A medicare supplemental policy may not be
issued or renewed (or otherwise provide coverage after the
deadline established under paragraph (2)) in any State
unless the premiums for the policy do not increase for an
individual under the policy based on the aging of the indi-
vidual.
‘‘(2) The requirement of paragraph (1) shall apply
to premiums for policies under a timetable, recognized by
the Secretary, that provides for an appropriate phase-in
of such requirement. The Secretary shall recognize as the
timetable such timetable as the National Association of
Insurance Commissioners may recommend to the Sec-
retary within 9 months after the date of the enactment
of this subsection.’’.
SEC. 5. NON-PREEMPTION OF STATE PRESCRIPTION DRUG
COVERAGE 
MANDATES 
IN 
CASE 
OF 
AP-
PROVED STATE MEDIGAP WAIVERS.
(a) IN GENERAL.—Section 1856(b)(3) (42 U.S.C.
1395w–26(b)(3)) is amended—
(1) in subparagraph (A), by striking ‘‘The
standards’’ and inserting ‘‘Subject to subparagraph
(C), the standards’’, and
(2) by adding at the end the following new sub-
paragraph:
‘‘(C) CONTINUATION OF STATE PRESCRIP-
TION DRUG LAWS.—Subparagraph (A) shall not
supersede any State law that requires the com-
prehensive coverage of prescription drugs or
any regulation that carries out such a law, if—
‘‘(i) the State has a waiver in effect
under section 1882(p)(6)(A) with respect
to requiring such coverage under medicare
supplemental policies; or
‘‘(ii) the Secretary provides for a
waiver for the State to impose such a re-
quirement under section 1882(p)(6)(B).’’.
(b) MEDIGAP
WAIVER.—Section 1882(p)(6) (42
U.S.C. 1395ss(p)(6)) is amended—
(1) by inserting ‘‘(A)’’ after ‘‘(6)’’, and
(2) by adding at the end the following new sub-
paragraph:
‘‘(B) The Secretary also may waive the application
of the standards described in paragraph (1)(A)(i) for a
State to include comprehensive prescription drug coverage
among the benefits required for all medicare supplemental
policies.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section take effect on the date of the enactment of
this Act.
SEC. 6. PROHIBITION OF COLD-CALL MARKETING OF
MEDICARE+CHOICE PLANS.
(a) IN GENERAL.—Section 1851(h)(4) (42 U.S.C.
1395w–21(h)(4)) is amended—
(1) by striking ‘‘and’’ at the end of subpara-
graph (A),
(2) by striking the period at the end of sub-
paragraph (B) and inserting ‘‘; and’’, and
(3) by adding at the end the following new sub-
paragraph:
‘‘(C) shall include a prohibition against, di-
rectly or indirectly, conducting door-to-door, tel-
ephonic, or other ‘cold-call’ marketing of enroll-
ment under this part.’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) apply to marketing of enrollment conducted
on or after the date of the enactment of this Act.
SEC. 7. FLEXIBILITY IN DEFINITION OF SERVICE AREA
UNDER THE MEDICARE+CHOICE PROGRAM.
(a) IN
GENERAL.—Section 1854(a) (42 U.S.C.
1395w–24(a)) is amended by adding at the end the follow-
ing new paragraph:
‘‘(6) SPECIAL RULES FOR SERVICE AREAS.—
‘‘(A) IN GENERAL.—For purposes of this
subsection, except as provided in this para-
graph, the term ‘service area’ means, for a
Medicare+Choice organization that—
‘‘(i) offers commercial health insur-
ance coverage, that portion of the area
identical to the service area used for pur-
poses of offering such commercial cov-
erage; or
‘‘(ii) is a provider-sponsored organiza-
tion that receives a Federal waiver of cer-
tain requirements under section 1855(a)(2)
and does not offer commercial health in-
surance coverage, such area proposed by
the organization and approved by the Sec-
retary.
‘‘(B) LIMITATION ON SERVICE AREA.—In
no case shall a service area for an organization
include any area in which the organization is
unable to provide benefits consistent with the
requirements of section 1852(d).
‘‘(C) TRANSITION FOR CURRENT CONTRAC-
TORS.—In the case of a Medicare+Choice orga-
nization that has in effect a contract under this
part with the Secretary as of January 1, 1999,
subparagraph (A) shall not apply to a contract
year that begins before January 1, 2004, if the
organization provides evidence that it has not
(on or after January 1, 1999) eliminated, from
the service area under this part, any area in
which the organization continues to offer com-
mercial health insurance coverage.
‘‘(D) PERMITTING USE OF SEPARATE COM-
MERCIAL RATING AREAS.—
‘‘(i) 
IN
GENERAL.—If 
a
Medicare+Choice organization offers com-
mercial health insurance coverage and has
multiple geographic areas with separate
premium rates, subject to clause (ii), each
of those commercial geographic rating
areas may, at the option of the organiza-
tion, be treated as a separate service area.
‘‘(ii) LIMITATION
ON
SIZE.—Unless
otherwise approved by the Secretary, in no
case shall a commercial geographic rating
area that includes less than an entire coun-
ty (or equivalent area) be treated as a sep-
arate service area.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) applies to contract years beginning on or
after January 1, 2000.
SEC. 8. 3-YEAR PHASE-IN OF RISK ADJUSTMENT OF
MEDICARE+CHOICE PLAN PAYMENTS.
Section 
1853(a)(3)(C) 
(42 
U.S.C. 
1395w–
23(a)(3)(C)) is amended by adding at the end the follow-
ing: ‘‘Such risk adjustment methodology shall be imple-
mented in a phased-in manner over a 3-year period.’’.
SEC. 9. DELAY IN CERTAIN DEADLINES UNDER THE
MEDICARE+CHOICE PROGRAM.
(a) DELAY IN RATE PROMULGATION DEADLINE.—
Section 1853(b)(1) (42 U.S.C. 1395w–23(b)(1)) is
amended by striking ‘‘March 1’’ and inserting ‘‘May 1’’.
(b) DELAY IN DEADLINE FOR SUBMISSION OF AD-
JUSTED COMMUNITY RATES
AND RELATED INFORMA-
TION.—
(1) IN
GENERAL.—Section 1854(a)(1) (42
U.S.C. 1395w–24(a)(1)) is amended by striking
‘‘May 1’’ and inserting ‘‘July 1’’.
(2) ADJUSTMENT IN INFORMATION DISCLOSURE
PROVISIONS.—Section 1851(d)(2)(A)(ii) (42 U.S.C.
1395w–21(d)(2)(A)(ii)) is amended by inserting
after ‘‘information described in paragraph (4) con-
cerning such plans’’ the following: ‘‘, to the extent
such information is available at the time of prepara-
tion of the material for mailing’’.
(c) DELAY IN DEADLINE FOR GUBERNATORIAL RE-
QUESTS
FOR CHANGES
IN PAYMENT AREAS.—Section
1853(d)(3) (42 U.S.C. 1395w–23(d)(3)) is amended by
striking ‘‘February 1’’ and inserting ‘‘March 1’’.
SEC. 10. TAKING INTO ACCOUNT COSTS OF VA AND DOD
MILITARY FACILITY SERVICES TO MEDICARE-
ELIGIBLE BENEFICIARIES IN CALCULATION
OF 
MEDICARE+CHOICE 
PLAN 
PAYMENT
RATES.
(a) IN GENERAL.—Section 1853(c)(3) (42 U.S.C.
1395w–23(c)(3)) is amended—
(1) in subparagraph (A), by striking ‘‘subpara-
graph (B)’’ and inserting ‘‘subparagraphs (B) and
(E)’’, and
(2) by adding at the end the following new sub-
paragraph:
‘‘(E) INCLUSION
OF
COSTS
OF
VA
AND
DOD
MILITARY
FACILITY
SERVICES
TO
MEDI-
CARE-ELIGIBLE BENEFICIARIES.—In determin-
ing the area-specific Medicare+Choice capita-
tion rate under subparagraph (A) for a year
(beginning with 2000), the annual per capita
rate of payment for 1997 determined under sec-
tion 1876(a)(1)(C) shall be adjusted to include
in the rate the Secretary’s best estimate on a
per capita basis of the amount of additional
payments that would have been made in the
area involved under this title if beneficiaries
under this title had not received services from
facilities of the Department of Veterans Affairs
or the Department of Defense.’’.
(b) BUDGET NEUTRALITY.—Section 1853(c) (42
U.S.C. 1395w–23(c)) is amended—
(1) in paragraph (1)(A), by striking ‘‘paragraph
(5)’’ and inserting ‘‘paragraph (5)(A)’’;
(2) in paragraph (1)(C)(ii), by inserting before
the period at the end the following: ‘‘and multiplied
by the budget neutrality adjustment factor deter-
mined under paragraph (5)(B)’’; and
(3) in paragraph (5)—
(A) by striking ‘‘FACTOR.—’’ and inserting
‘‘FACTORS.—(A)’’,
(B) by inserting ‘‘(not taking into account
subparagraph (B))’’ after ‘‘so that’’, and
(C) by adding at the end the following new
subparagraph:
‘‘(B) For purposes of paragraph (1)(C)(ii),
for each year, the Secretary shall determine a
budget neutrality adjustment factor so that the
aggregate of the payments under this part shall
equal the aggregate payments that would have
been made under this part if paragraph (3)(E)
did not apply.’’.
SEC. 11. INCREASE IN CIVIL MONETARY PENALTIES FOR
FAILURE TO MEET MEDIGAP OPEN ENROLL-
MENT REQUIREMENTS.
(a) IN GENERAL.—Section 1882(s)(4) (42 U.S.C.
1395ss(s)(4)) is amended by striking ‘‘$5,000’’ and insert-
ing ‘‘$50,000’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) applies to failures occurring on or after the
date of the enactment of this Act.
SEC. 12. NAIC REVIEW AND UPDATE OF BENEFIT PACK-
AGES FOR MEDIGAP POLICIES.
Section 1882(p) (42 U.S.C. 1395ss(p)) is amended—
(1) in paragraph (2), by striking ‘‘The bene-
fits’’ and inserting ‘‘Subject to paragraph (12), the
benefits’’; and
(2) by adding at the end the following new
paragraph:
‘‘(12)(A) The Secretary may request the National As-
sociation of Insurance Commissioners to review the appro-
priateness of the benefit packages established under para-
graph (2) and, if appropriate, to recommend to the Sec-
retary from time to time recommendations for changes in
such packages to better reflect the needs of beneficiaries
and modern medical practice.
‘‘(B) If a recommendation for a change in benefit
packages is recommended under subparagraph (A) and
the Secretary finds that implementation of such rec-
ommendation is appropriate and consistent with carrying
out the purposes of this section, the Secretary may provide
that any reference in this subsection to the 1991 NAIC
Model Regulation is deemed a reference to such Regula-
tion as modified by the proposed recommendation. Any
such change shall take effect as specified by the Secretary
in such a manner as does not unduly disrupt the market-
ing of medicare supplemental policies.
‘‘(C) Before implementing any recommendation
under subparagraph (B), the Secretary shall submit a re-
port to Congress on such recommendation, including a jus-
tification for the implementation of such recommenda-
tion.’’.
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