822
ceipt of the request for the determination
or reconsideration (or receipt of the infor-
mation necessary to make the determina-
tion or reconsideration), or such longer pe-
riod as the Secretary may permit in speci-
fied cases.
‘‘(h) CONFIDENTIALITY
AND ACCURACY
OF EN-
ROLLEE
RECORDS.—Each MedicarePlus organization
shall establish procedures—
‘‘(1) to safeguard the privacy of individually
identifiable enrollee information,
‘‘(2) to maintain accurate and timely medical
records and other health information for enrollees,
and
‘‘(3) to assure timely access of enrollees to their
medical information.
‘‘(i) INFORMATION ON ADVANCE DIRECTIVES.—Each
MedicarePlus organization shall meet the requirement of
section 1866(f) (relating to maintaining written policies
and procedures respecting advance directives).
‘‘(j) RULES
REGARDING
PHYSICIAN
PARTICIPA-
TION.—
‘‘(1) PROCEDURES.—Each MedicarePlus orga-
nization shall establish reasonable procedures relat-
ing to the participation (under an agreement be-
823
tween a physician and the organization) of physi-
cians under MedicarePlus plans offered by the orga-
nization under this part. Such procedures shall in-
clude—
‘‘(A) providing notice of the rules regard-
ing participation,
‘‘(B) providing written notice of participa-
tion decisions that are adverse to physicians,
and
‘‘(C) providing a process within the organi-
zation for appealing such adverse decisions, in-
cluding the presentation of information and
views of the physician regarding such decision.
‘‘(2) CONSULTATION IN MEDICAL POLICIES.—A
MedicarePlus organization shall consult with physi-
cians who have entered into participation agree-
ments with the organization regarding the organiza-
tion’s medical policy, quality, and medical manage-
ment procedures.
‘‘(3) PROHIBITING INTERFERENCE WITH PRO-
VIDER ADVICE TO ENROLLEES.—
‘‘(A) IN
GENERAL.—Subject to subpara-
graphs (B) and (C), a MedicarePlus organiza-
tion (in relation to an individual enrolled under
a MedicarePlus plan offered by the organization
824
under this part) shall not prohibit or otherwise
restrict a covered health care professional (as
defined in subparagraph (D)) from advising
such an individual who is a patient of the pro-
fessional about the health status of the individ-
ual or medical care or treatment for the individ-
ual’s condition or disease, regardless of whether
benefits for such care or treatment are provided
under the plan, if the professional is acting
within the lawful scope of practice.
‘‘(B) 
CONSCIENCE
PROTECTION.—Sub-
paragraph (A) shall not be construed as requir-
ing a MedicarePlus plan to provide, reimburse
for, or provide coverage of a counseling or re-
ferral service if the MedicarePlus organization
offering the plan—
‘‘(i) objects to the provision of such
service on moral or religious grounds; and
‘‘(ii) in the manner and through the
written 
instrumentalities 
such
MedicarePlus organization deems appro-
priate, makes available information on its
policies regarding such service to prospec-
tive enrollees before or during enrollment
and to enrollees within 90 days after the
825
date that the organization or plan adopts
a change in policy regarding such a coun-
seling or referral service.
‘‘(C) CONSTRUCTION.—Nothing in sub-
paragraph (B) shall be construed to affect dis-
closure requirements under State law or under
the Employee Retirement Income Security Act
of 1974.
‘‘(D) HEALTH
CARE
PROFESSIONAL
DE-
FINED.—For purposes of this paragraph, the
term ‘health care professional’ means a physi-
cian (as defined in section 1861(r)) or other
health care professional if coverage for the pro-
fessional’s services is provided under the
MedicarePlus plan for the services of the pro-
fessional. Such term includes a podiatrist, op-
tometrist, chiropractor, psychologist, dentist,
physician assistant, physical or occupational
therapist and therapy assistant, speech-lan-
guage pathologist, audiologist, registered or li-
censed practical nurse (including nurse practi-
tioner, clinical nurse specialist, certified reg-
istered nurse anesthetist, and certified nurse-
midwife), licensed certified social worker, reg-
826
istered respiratory therapist, and certified res-
piratory therapy technician.
‘‘(4) LIMITATIONS
ON
PHYSICIAN
INCENTIVE
PLANS.—
‘‘(A) IN GENERAL.—No MedicarePlus or-
ganization may operate any physician incentive
plan (as defined in subparagraph (B)) unless
the following requirements are met:
‘‘(i) No specific payment is made di-
rectly or indirectly under the plan to a
physician or physician group as an induce-
ment to reduce or limit medically necessary
services provided with respect to a specific
individual enrolled with the organization.
‘‘(ii) If the plan places a physician or
physician group at substantial financial
risk (as determined by the Secretary) for
services not provided by the physician or
physician group, the organization—
‘‘(I) provides stop-loss protection
for the physician or group that is ade-
quate and appropriate, based on
standards developed by the Secretary
that take into account the number of
physicians placed at such substantial
827
financial risk in the group or under
the plan and the number of individ-
uals enrolled with the organization
who receive services from the physi-
cian or 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) PHYSICIAN
INCENTIVE
PLAN
DE-
FINED.—In this paragraph, the term ‘physician
incentive plan’ means any compensation ar-
rangement between a MedicarePlus organiza-
tion and a physician or physician group that
may directly or indirectly have the effect of re-
828
ducing or limiting services provided with respect
to individuals enrolled with the organization
under this part.
‘‘(5) LIMITATION ON PROVIDER INDEMNIFICA-
TION.—A MedicarePlus organization may not pro-
vide (directly or indirectly) for a provider (or group
of providers) to indemnify the organization against
any liability resulting from a civil action brought for
any 
damage 
caused 
to 
an 
enrollee 
with 
a
MedicarePlus plan of the organization under this
part by the organization’s denial of medically nec-
essary care.
‘‘(k) TREATMENT OF SERVICES FURNISHED BY CER-
TAIN PROVIDERS.—A physician or other entity (other
than a provider of services) that does not have a contract
establishing payment amounts for services furnished to an
individual enrolled under this part with a MedicarePlus
organization (other than under an MSA plan) shall accept
as payment in full for covered services under this title that
are furnished to such an individual the amounts that the
physician or other entity could collect if the individual
were not so enrolled. Any penalty or other provision of
law that applies to such a payment with respect to an indi-
vidual entitled to benefits under this title (but not enrolled
829
with a MedicarePlus organization under this part) also ap-
plies with respect to an individual so enrolled.
‘‘(l) DISCLOSURE OF USE OF DSH AND TEACHING
HOSPITALS.—Each MedicarePlus organization shall pro-
vide the Secretary with information on—
‘‘(1) the extent to which the organization pro-
vides inpatient and outpatient hospital benefits
under this part—
‘‘(A) through the use of hospitals that are
eligible for additional payments under section
1886(d)(5)(F)(i) (relating to so-called DSH
hospitals), or
‘‘(B) through the use of teaching hospitals
that receive payments under section 1886(h);
and
‘‘(2) the extent to which differences between
payment rates to different hospitals reflect the dis-
proportionate share percentage of low-income pa-
tients and the presence of medical residency training
programs in those hospitals.
‘‘PAYMENTS TO MEDICAREPLUS ORGANIZATIONS
‘‘SEC. 1853. (a) PAYMENTS TO ORGANIZATIONS.—
‘‘(1) MONTHLY PAYMENTS.—
‘‘(A) IN
GENERAL.—Under a contract
under section 1857 and subject to subsections
(e) and (f), the Secretary shall make monthly
830
payments under this section in advance to each
MedicarePlus organization, with respect to cov-
erage of an individual under this part in a
MedicarePlus payment area for a month, in an
amount 
equal 
to 
1⁄12
of 
the 
annual
MedicarePlus capitation rate (as calculated
under subsection (c)) with respect to that indi-
vidual for that area, adjusted for such risk fac-
tors as age, disability status, gender, institu-
tional status, and such other factors as the Sec-
retary determines to be appropriate, so as to
ensure actuarial equivalence. The Secretary
may add to, modify, or substitute for such fac-
tors, if such changes will improve the deter-
mination of actuarial equivalence.
‘‘(B) SPECIAL
RULE
FOR
END-STAGE
RENAL DISEASE.—The Secretary shall establish
separate rates of payment to a MedicarePlus
organization with respect to classes of individ-
uals determined to have end-stage renal disease
and enrolled in a MedicarePlus plan of the or-
ganization. Such rates of payment shall be ac-
tuarially equivalent to rates paid to other en-
rollees in the MedicarePlus payment area (or
such other area as specified by the Secretary).
831
In accordance with regulations, the Secretary
shall provide for the application of the seventh
sentence of section 1881(b)(7) to payments
under this section covering the provision of
renal dialysis treatment in the same manner as
such sentence applies to composite rate pay-
ments described in such sentence.
‘‘(2) ADJUSTMENT
TO
REFLECT
NUMBER
OF
ENROLLEES.—
‘‘(A) IN GENERAL.—The amount of pay-
ment under this subsection may be retroactively
adjusted to take into account any difference be-
tween the actual number of individuals enrolled
with an organization under this part and the
number of such individuals estimated to be so
enrolled in determining the amount of the ad-
vance payment.
‘‘(B) SPECIAL
RULE
FOR
CERTAIN
EN-
ROLLEES.—
‘‘(i) IN GENERAL.—Subject to clause
(ii), the Secretary may make retroactive
adjustments under subparagraph (A) to
take into account individuals enrolled dur-
ing the period beginning on the date on
which 
the 
individual 
enrolls 
with 
a
832
MedicarePlus organization under a plan
operated, sponsored, or contributed to by
the individual’s employer or former em-
ployer (or the employer or former employer
of the individual’s spouse) and ending on
the date on which the individual is enrolled
in the organization under this part, except
that for purposes of making such retro-
active adjustments under this subpara-
graph, such period may not exceed 90
days.
‘‘(ii) 
EXCEPTION.—No 
adjustment
may be made under clause (i) with respect
to any individual who does not certify that
the organization provided the individual
with the information required to be dis-
closed under section 1852(c) at the time
the individual enrolled with the organiza-
tion.
‘‘(3) ESTABLISHMENT
OF
RISK
ADJUSTMENT
FACTORS.—
‘‘(A) REPORT.—The Secretary shall de-
velop, and submit to Congress by not later than
October 1, 1999, a report on a method of risk
adjustment of payment rates under this section
833
that accounts for variations in per capita costs
based on health status. Such report shall in-
clude an evaluation of such method by an out-
side, independent actuary of the actuarial
soundness of the proposal.
‘‘(B) DATA
COLLECTION.—In order to
carry out this paragraph, the Secretary shall re-
quire MedicarePlus organizations (and eligible
organizations with risk-sharing contracts under
section 1876) to submit, for periods beginning
on or after January 1, 1998, data regarding in-
patient hospital services and other services and
other information the Secretary deems nec-
essary.
‘‘(C) 
INITIAL
IMPLEMENTATION.—The
Secretary shall first provide for implementation
of a risk adjustment methodology that accounts
for variations in per capita costs based on
health status and other demographic factors for
payments by no later than January 1, 2000.
‘‘(b) 
ANNUAL
ANNOUNCEMENT
OF
PAYMENT
RATES.—
‘‘(1) ANNUAL ANNOUNCEMENT.—The Secretary
shall annually determine, and shall announce (in a
manner intended to provide notice to interested par-
834
ties) not later than August 1 before the calendar
year concerned—
‘‘(A) the annual MedicarePlus capitation
rate for each MedicarePlus payment area for
the year, and
‘‘(B) the risk and other factors to be used
in adjusting such rates under subsection
(a)(1)(A) for payments for months in that year.
‘‘(2) ADVANCE
NOTICE
OF
METHODOLOGICAL
CHANGES.—At least 45 days before making the an-
nouncement under paragraph (1) for a year, the
Secretary shall provide for notice to MedicarePlus
organizations of proposed changes to be made in the
methodology from the methodology and assumptions
used in the previous announcement and shall provide
such organizations an opportunity to comment on
such proposed changes.
‘‘(3) EXPLANATION OF ASSUMPTIONS.—In each
announcement made under paragraph (1), the Sec-
retary shall include an explanation of the assump-
tions and changes in methodology used in the an-
nouncement in sufficient detail so that MedicarePlus
organizations 
can 
compute 
monthly 
adjusted
MedicarePlus capitation rates for individuals in each
835
MedicarePlus payment area which is in whole or in
part within the service area of such an organization.
‘‘(c) CALCULATION
OF
ANNUAL
MEDICAREPLUS
CAPITATION RATES.—
‘‘(1) IN GENERAL.—For purposes of this part,
each annual MedicarePlus capitation rate, for a
MedicarePlus payment area for a contract year con-
sisting of a calendar year, is equal to the largest of
the amounts specified in the following subpara-
graphs (A), (B), or (C):
‘‘(A) BLENDED
CAPITATION
RATE.—The
sum of—
‘‘(i) area-specific percentage for the
year (as specified under paragraph (2) for
the year) of the annual area-specific
MedicarePlus capitation rate for the year
for the MedicarePlus payment area, as de-
termined under paragraph (3), and
‘‘(ii) national percentage (as specified
under paragraph (2) for the year) of the
input-price-adjusted 
annual 
national
MedicarePlus capitation rate for the year,
as determined under paragraph (4),
836
multiplied by the payment adjustment factors
described in subparagraphs (A) and (B) of
paragraph (5).
‘‘(B) MINIMUM
AMOUNT.—12 multiplied
by the following amount:
‘‘(i) For 1998, $350 (but not to ex-
ceed, in the case of an area outside the 50
States and the District of Columbia, 150
percent of the annual per capita rate of
payment for 1997 determined under sec-
tion 1876(a)(1)(C) for the area).
‘‘(ii) For a succeeding year, the mini-
mum amount specified in this clause (or
clause (i)) for the preceding year increased
by the national per capita MedicarePlus
growth percentage, specified under para-
graph (6) for that succeeding year.
‘‘(C) MINIMUM PERCENTAGE INCREASE.—
‘‘(i) For 1998, 102 percent of the an-
nual per capita rate of payment for 1997
determined under section 1876(a)(1)(C)
for the MedicarePlus payment area.
‘‘(ii) For a subsequent year, 102 per-
cent of the annual MedicarePlus capitation
837
rate under this paragraph for the area for
the previous year.
‘‘(2) AREA-SPECIFIC AND NATIONAL PERCENT-
AGES.—For purposes of paragraph (1)(A)—
‘‘(A) for 1998, the ‘area-specific percent-
age’ is 90 percent and the ‘national percentage’
is 10 percent,
‘‘(B) for 1999, the ‘area-specific percent-
age’ is 80 percent and the ‘national percentage’
is 20 percent,
‘‘(C) for 2000, the ‘area-specific percent-
age’ is 70 percent and the ‘national percentage’
is 30 percent,
‘‘(D) for 2001, the ‘area-specific percent-
age’ is 60 percent and the ‘national percentage’
is 40 percent, and
‘‘(E) for a year after 2001, the ‘area-spe-
cific percentage’ is 50 percent and the ‘national
percentage’ is 50 percent.
‘‘(3) ANNUAL
AREA-SPECIFIC
MEDICAREPLUS
CAPITATION
RATE.—For purposes of paragraph
(1)(A), the annual area-specific MedicarePlus capita-
tion rate for a MedicarePlus payment area—
‘‘(A) for 1998 is the annual per capita rate
of payment for 1997 determined under section
838
1876(a)(1)(C) for the area, increased by the
national per capita MedicarePlus growth per-
centage for 1998 (as defined in paragraph (6));
or
‘‘(B) for a subsequent year is the annual
area-specific MedicarePlus capitation rate for
the previous year determined under this para-
graph for the area, increased by the national
per capita MedicarePlus growth percentage for
such subsequent year.
‘‘(4) 
INPUT-PRICE-ADJUSTED
ANNUAL
NA-
TIONAL MEDICAREPLUS CAPITATION RATE.—
‘‘(A) IN GENERAL.—For purposes of para-
graph (1)(A), the input-price-adjusted annual
national MedicarePlus capitation rate for a
MedicarePlus payment area for a year is equal
to the sum, for all the types of medicare serv-
ices (as classified by the Secretary), of the
product (for each such type of service) of—
‘‘(i) the national standardized annual
MedicarePlus capitation rate (determined
under subparagraph (B)) for the year,
‘‘(ii) the proportion of such rate for
the year which is attributable to such type
of services, and