I
104TH CONGRESS
1ST SESSION
H. R. 2350
To amend title XVIII of the Social Security Act to provide protections
for medicare beneficiaries who enroll in medicare managed care plans.
IN THE HOUSE OF REPRESENTATIVES
SEPTEMBER 18, 1995
Mr. COBURN introduced the following bill; which was referred to the Commit-
tee 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 title XVIII of the Social Security Act to provide
protections for medicare beneficiaries who enroll in medi-
care managed care plans.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Medicare Patient
Choice and Access Act of 1995’’.
SEC. 2. FINDINGS.
Congress finds the following:
(1) There should be no unreasonable barriers or
impediments to the ability of individuals enrolled in
health care plans to obtain appropriate specialized
medical services.
(2) The patient’s first point of contact in a
health care plan must be encouraged to make all ap-
propriate medical referrals and should not be con-
strained financially from making such referrals.
(3) Some health care plans may impede timely
access to specialty care.
(4) At any time, patients must be able to access
out-of-network items, treatment, and services at an
additional cost to the patient which is not so prohibi-
tive that they are deterred from seeing the health
care provider of their own choice.
(5) Specialty care must be available for the full
duration of the patient’s medical needs and not lim-
ited by time or number of visits.
(6) Direct access to specialty care is essential
for patients in emergency and non-emergency situa-
tions and for patients with chronic and temporary
conditions.
SEC. 3. PROTECTION FOR MEDICARE HMO ENROLLEES.
(a) IN GENERAL.—Section 1876 of the Social Secu-
rity Act (42 U.S.C. 1395mm) is amended—
(1) in subsection (c)(1), by striking ‘‘subsection
(e)’’ and inserting ‘‘subsections (e) and (k)’’, and
(2) by adding at the end the following new sub-
section:
‘‘(k) BENEFICIARY PROTECTION.—
‘‘(1) MINIMUM LOSS RATIO.—
‘‘(A) IN GENERAL.—Each eligible organi-
zation shall have a loss-ratio that is not less
than 85 percent for each contract year.
‘‘(B) LOSS RATIO DEFINED.—In subpara-
graph (A), the term ‘loss-ratio’ means, with re-
spect to an organization for a contract year, the
ratio of (i) the anticipated aggregate benefits
provided under this section to enrollees for the
year, to (ii) the aggregate amount of the pre-
miums collected (including payments to the or-
ganization under subsection (a) for the year, as
estimated on the basis of incurred claims expe-
rience and earned premium for the year.
‘‘(2) ASSURING
ADEQUATE
IN-NETWORK
AC-
CESS.—
‘‘(A) TIMELY ACCESS.—An eligible organi-
zation that restricts the providers from whom
benefits may be obtained must guarantee to en-
rollees under this section timely access to pri-
mary and specialty health care providers who
are appropriate to the enrollee’s condition.
‘‘(B) ACCESS TO SPECIALIZED CARE.—En-
rollees must have access to specialized treat-
ment when the treating provider deems nec-
essary. This access may be satisfied through
contractual arrangements with specialized pro-
viders outside of the network.
‘‘(C) CONTINUITY OF CARE.—An eligible
organization’s use of case management may not
create an undue burden for enrollees under this
section. An organization must ensure direct ac-
cess to specialists for ongoing care as so deter-
mined by the case manager in consultation with
the specialty care provider. This continuity of
care may be satisfied for enrollees with chronic
conditions through the use of a specialist serv-
ing as case manager.
‘‘(3) ASSURING OUT-OF-NETWORK ACCESS.—
‘‘(A) IN GENERAL.—An eligible organiza-
tion that contracts with a specific network of
providers must not limit the ability of its enroll-
ees under this section to seek at any time items,
treatment, and services from out-of-network
providers for all covered benefits.
‘‘(B) REIMBURSEMENT FOR OUT-OF-NET-
WORK
SERVICES.—An 
eligible 
organization
under this section shall provide for reimburse-
ment for the enrollee, consistent with the cost-
sharing schedule established under subpara-
graph (C), with respect to out-of-network serv-
ices which are described in subparagraph (A),
so long as the services were medically appro-
priate, and were covered benefits in-network.
‘‘(C) ESTABLISHMENT
OF
COST-SHARING
SCHEDULE.—Each eligible organization shall
establish (by not later than one year after the
enactment of the Medicare Patient Choice and
Access Act of 1995) a cost-sharing schedule
which applies to payment required under sub-
paragraph (B) for out-of-network services.
‘‘(4) GRIEVANCE AND APPEALS PROCESSES.—
‘‘(A) GRIEVANCE PROCESS.—The organiza-
tion must provide meaningful procedures for
hearing and resolving grievances between the
organization (including any entity or individual
through which the organization provides health
care services) and members enrolled with the
organization under this section.
‘‘(B) BOARD OF APPEALS.—
‘‘(i) IN GENERAL.—Each eligible or-
ganization shall establish a board of ap-
peals to hear and make determinations on
complaints by enrollees concerning denials
of coverage or payment for services
(whether in-network or out-of-network)
and the medical necessity and appropriate-
ness of covered items and services.
‘‘(ii) COMPOSITION.—A board of ap-
peals of an eligible organization shall con-
sist of—
‘‘(I) representatives of the orga-
nization, 
including 
physicians,
nonphysicians, 
administrators, 
and
enrollees;
‘‘(II) consumers who are not en-
rollees; and
‘‘(III) providers with expertise in
the field of medicine which neces-
sitates treatment.
‘‘(iii) DEADLINE
FOR
DECISION.—A
board of appeals shall hear and resolve
complaints within 30 days after the date
the complaint is filed with the board.
‘‘(C) APPEAL TO SECRETARY.—Nothing in
this paragraph may be construed to replace or
supercede any appeals mechanism otherwise
provided for an individual entitled to benefits
under this title.
‘‘(5) NOTICE OF ENROLLEE RIGHTS AND EN-
ROLLEE INFORMATION CHECKLIST.—
‘‘(A) IN GENERAL.—Each eligible organi-
zation shall provide each enrollee, at the time of
enrollment and not less frequently than annu-
ally thereafter, an explanation of the enrollee’s
rights under this section and a copy of the most
recent enrollee information checklist for the or-
ganization (as described in subparagraph (C)).
‘‘(B) RIGHTS
DESCRIBED.—The expla-
nation of rights under subparagraph (A) shall
include an explanation of—
‘‘(i) the enrollee’s rights to benefits
from the organization;
‘‘(ii) the restrictions on payments
under this title for services furnished other
than by or through the organization;
‘‘(iii) out-of-area coverage provided by
the organization;
‘‘(iv) the organization’s coverage of
emergency services and urgently needed
care;
‘‘(v) the organization’s coverage of
out-of-network services, including services
that are additional to the items and serv-
ices covered under parts A and B; and
‘‘(vi) appeal rights of enrollees.
‘‘(C) ENROLLEE
INFORMATION
CHECK-
LIST.—For purposes of subparagraph (A), the
term ‘enrollee information checklist’ means,
with respect to an eligible organization for a
year, a list containing the following information
(provided in a manner that permits consumers
to compare organizations with respect to the in-
formation):
‘‘(i) For each plan, on—
‘‘(I) the premium for the plan,
‘‘(II) identity, location, qualifica-
tions and availability of providers in
any provider networks of the plan,
‘‘(III) the number of individuals
enrolling and disenrolling from the
plan,
‘‘(IV) procedures used by the
plan to control utilization of services
and expenditures,
‘‘(V) procedures used by the plan
to assure quality of care,
‘‘(VI) the plan’s loss ratio, and
‘‘(VII) rights and responsibilities
of enrollees.
‘‘(ii) In addition, for each managed
care plan, on—
‘‘(I) restrictions on payment for
services provided outside the plan’s
provider network,
‘‘(II) the process by which serv-
ices may be obtained through the
plan’s provider network,
‘‘(III) coverage for out-of-area
services, and
‘‘(IV) any exclusions in the types
of providers participating in the plan’s
provider network.
‘‘(6) RESTRICTIONS ON PROVIDER INCENTIVE
PLANS.—
‘‘(A) IN GENERAL.—Each contract with an
eligible organization under this section shall
provide that the organization may not operate
any provider incentive plan (as defined in sub-
paragraph (B)) unless the following require-
ments are met:
‘‘(i) No specific payment is made di-
rectly or indirectly under the plan to a pro-
vider or provider group as an inducement
to reduce or limit medically necessary serv-
ices provided with respect to a specific in-
dividual enrolled with the organization.
‘‘(ii) If the plan places a provider or
provider group at substantial financial risk
(as determined by the Secretary) for serv-
ices not provided by the provider or pro-
vider group, the organization—
‘‘(I) provides stop-loss protection
for the provider or group that is ade-
quate and appropriate, based on
standards developed by the Secretary
that take into account the number
(and type) of providers placed at such
substantial financial risk in the group
or under the plan and the number of
individuals enrolled with the organiza-
tion who receive services from the pro-
vider or the group, and
‘‘(II) conducts periodic surveys of
both individuals enrolled and individ-
uals previously enrolled with the orga-
nization to determine the degree of
access of such individuals to services
provided by the organization and sat-
isfaction with the quality of such serv-
ices.
‘‘(iii) The organization provides the
Secretary with descriptive information re-
garding the plan, sufficient to permit the
Secretary to determine whether the plan is
in compliance with the requirements of this
subparagraph.
‘‘(B) PROVIDER
INCENTIVE
PLAN
DE-
FINED.—In this paragraph, the term ‘provider
incentive plan’ means any compensation ar-
rangement between an eligible organization and
a provider or provider group that may directly
or indirectly have the effect of reducing or lim-
iting medically necessary services provided with
respect to individuals enrolled with the organi-
zation.
‘‘(7) ADDITIONAL DEFINITIONS.—
‘‘(A) IN-NETWORK.—The term ‘in-network’
means services provided by health care provid-
ers who have entered into a contract or agree-
ment with the organization under which such
providers are obligated to provide items, treat-
ment, and services under this section to individ-
uals enrolled with the organization under this
section.
‘‘(B) 
NETWORK.—The 
term 
‘network’
means, with respect to an eligible organization,
the health care providers who have entered into
a contract or agreement with the organization
under which such providers are obligated to
provide items, treatment, and services under
this section to individuals enrolled with the or-
ganization under this section.
‘‘(C) OUT-OF-NETWORK.—The term ‘out-
of-network’ means services provided by health
care providers who have not entered into a con-
tract agreement with the organization under
which such providers are obligated to provide
items, treatment, and services under this sec-
tion to individuals enrolled with the organiza-
tion under this section.’’.
(b) CONFORMING AMENDMENTS.—Section 1876 of
such Act is further amended—
(1) by striking subparagraph (E) of subsection
(c)(3);
(2) by striking paragraphs (4) and (5) of sub-
section (c); and
(3) by striking paragraph (8) of subsection (i).
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to contracts entered into or re-
newed under section 1876 of the Social Security Act after
the expiration of the 1-year period which begins on the
date of the enactment of this Act.
SEC. 4. APPLICATION OF PROTECTIONS TO MEDICARE SE-
LECT POLICIES.
(a) IN GENERAL.—Section 1882(t)(1) of the Social
Security Act (42 U.S.C. 1395ss(t)(1)) is amended—
(1) by striking ‘‘and’’ at the end of subpara-
graph (E);
(2) by striking the period at the end of sub-
paragraph (F) and inserting a semicolon; and
(3) by adding at the end the following new sub-
paragraph:
‘‘(G) notwithstanding any other provision
of this section to the contrary, if the issuer of
the policy—
‘‘(i) meets the requirements of section
1876(k) with respect to individuals en-
rolled under the policy in the same manner
such requirements apply with respect to an
eligible organization under such section
with respect to individuals enrolled with
the organization under such section, and
‘‘(ii) discloses (in a form and manner
specified by the Secretary) the loss ratio
described in subsection (r)(1) most re-
cently calculated for purposes of such sub-
section.’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) shall apply to policies issued or renewed on
or after the expiration of the 1-year period which begins
on the date of the enactment of this Act.
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