H. R. 2491—284
enrolled in a MedicarePlus plan may continue to be enrolled
in that plan.
‘‘(b) SPECIAL RULES.—
‘‘(1) RESIDENCE REQUIREMENT.—
‘‘(A) IN GENERAL.—Except as the Secretary may other-
wise provide, an individual is eligible to elect a
MedicarePlus plan offered by a MedicarePlus organization
only if the organization serves the geographic area in which
the individual resides under the plan.
‘‘(B) CONTINUATION
OF
ENROLLMENT
PERMITTED.—
Pursuant to rules specified by the Secretary, the Secretary
shall provide that an individual may continue enrollment
in a plan, notwithstanding that the individual no longer
resides in the service area of the plan, so long as the
plan provides benefits for providers located in the area
in which the individual resides.
‘‘(2) AFFILIATION REQUIREMENTS FOR CERTAIN PLANS.—
‘‘(A) IN
GENERAL.—Subject to subparagraph (B), an
individual is eligible to elect a MedicarePlus plan offered
by—
‘‘(i) a union sponsor only if (I) the individual is
a member of the sponsor and affiliated with the sponsor
through 
an 
employment 
relationship 
with 
any
employer or is the spouse of such a member, and
(II) the individual elected under this section a
MedicarePlus plan offered by the sponsor during the
first enrollment period in which the individual was
eligible to make such election with respect to such
sponsor;
‘‘(ii) a Taft-Hartley sponsor only if (I) the individual
is entitled to obtain benefits through such plans under
the terms of an applicable collective bargaining agree-
ment, and (II) the individual elected under this section
a MedicarePlus plan offered by the sponsor during
the first enrollment period in which the individual
was eligible to make such election with respect to
such sponsor; and
‘‘(iii) a qualified association sponsor only if the
individual is a member of the association (or is a
spouse of such a member).
‘‘(B) LIMITATION ON ENROLLMENT.—Subject to subpara-
graph (C)—
‘‘(i) a union sponsor may not enroll an individual
under this part unless the individual is described in
subparagraph (A)(i)(I),
‘‘(ii) a Taft-Hartley sponsor may not enroll an
individual under this part unless the individual is
described in subparagraph (A)(ii)(I), and
‘‘(iii) a qualified association sponsor may not enroll
an individual under this part unless the individual
is described in subparagraph (A)(iii).
‘‘(C) LIMITATION
ON
TERMINATION
OF
COVERAGE.—A
qualified association sponsor offering a MedicarePlus plan
to an individual may not terminate coverage of the individ-
ual on the basis that the individual is no longer a member
of the association except pursuant to a change of election
H. R. 2491—285
during an open election period occurring on or after the
date of the termination of membership.
‘‘(3) SPECIAL RULES FOR UNION, TAFT-HARTLEY, AND QUALI-
FIED ASSOCIATION SPONSORS.—
‘‘(A) UNIONS.—Subject to subparagraph (D), a union
sponsor (as defined in section 1859(a)(5)) shall limit eligi-
bility of enrollees under this part for MedicarePlus plans
it offers to individuals who are members of the sponsor
and affiliated with the sponsor through an employment
relationship with any employer or are the spouses of such
members.
‘‘(B) TAFT-HARTLEY
SPONSORS.—Subject to subpara-
graph (D), a MedicarePlus organization that is a Taft-
Hartley sponsor (as defined in section 1859(a)(4)) shall
limit 
eligibility 
of 
enrollees 
under 
this 
part 
for
MedicarePlus plans it offers to individuals who are entitled
to obtain benefits through such plans under the terms
of an applicable collective bargaining agreement.
‘‘(C) QUALIFIED ASSOCIATION SPONSORS.—
‘‘(i) IN GENERAL.—Subject to subparagraph (D), a
MedicarePlus organization that is a qualified associa-
tion sponsor (as defined in section 1859(a)(3)) shall
limit eligibility of individuals under this part for plans
it offers to individuals who are members of the associa-
tion (or who are spouses of such individuals).
‘‘(ii) LIMITATION ON TERMINATION OF COVERAGE.—
Such a qualifying association sponsor offering a
MedicarePlus plan to an individual may not terminate
coverage of the individual on the basis that the individ-
ual is no longer a member of the association except
pursuant to a change of election during an open elec-
tion period occurring on or after the date of the termi-
nation of membership.
‘‘(D) LIMITATION.—Rules of eligibility to carry out the
previous subparagraphs of this paragraph shall not have
the effect of denying eligibility to individuals on the basis
of health status, claims experience, receipt of health care,
medical history, or lack of evidence of insurability.
‘‘(E) NO REELECTION AFTER DISENROLLMENT FOR CER-
TAIN
PLANS.—An individual is not eligible to elect a
MedicarePlus plan offered by a MedicarePlus organization
that is a union sponsor or a Taft-Hartley sponsor if the
individual previously had elected a MedicarePlus plan
offered by the organization and had subsequently discon-
tinued election of such a plan offered by the organization.
‘‘(4) SPECIAL
RULE
FOR
CERTAIN
INDIVIDUALS
COVERED
UNDER FEHBP.—An individual who is enrolled in a health bene-
fit plan under chapter 89 of title 5, United States Code, is
not eligible to enroll in a high deductible plan until such time
as the Director of the Office of Management and Budget cer-
tifies to the Secretary that the Office of Personnel Management
has adopted policies which will ensure that the enrollment
of such individuals in such plans will not result in increased
expenditures for the Federal Government for health benefit
plans under such chapter.
‘‘(c) PROCESS FOR EXERCISING CHOICE.—
H. R. 2491—286
‘‘(1) IN GENERAL.—The Secretary shall establish a process
through which elections described in subsection (a) are made
and changed, including the form and manner in which such
elections are made and changed. Such elections shall be made
or changed only during coverage election periods specified under
subsection (e) and shall become effective as provided in sub-
section (f).
‘‘(2) EXPEDITED
IMPLEMENTATION.—The Secretary shall
establish the process of electing coverage under this section
during the transition period (as defined in subsection (e)(1)(B))
in such an expedited manner as will permit such an election
for MedicarePlus plans in an area as soon as such plans become
available in that area.
‘‘(3) COORDINATION
THROUGH
MEDICAREPLUS
ORGANIZA-
TIONS.—
‘‘(A) ENROLLMENT.—Such process shall permit an
individual who wishes to elect a MedicarePlus plan offered
by a MedicarePlus organization to make such election
through the filing of an appropriate election form with
the organization.
‘‘(B) DISENROLLMENT.—Such process shall permit an
individual, who has elected a MedicarePlus plan offered
by a MedicarePlus organization and who wishes to termi-
nate such election, to terminate such election through the
filing of an appropriate election form with the organization.
‘‘(4) DEFAULT.—
‘‘(A) INITIAL ELECTION.—
‘‘(i) IN GENERAL.—Subject to clause (ii), an individ-
ual who fails to make an election during an initial
election period under subsection (e)(1) is deemed to
have chosen the Medicare fee-for-service program
option.
‘‘(ii) SEAMLESS CONTINUATION OF COVERAGE.—The
Secretary shall establish procedures under which
individuals who are enrolled with a MedicarePlus
organization at the time of the initial election period
and who fail to elect to receive coverage other than
through the organization are deemed to have elected
the MedicarePlus plan offered by the organization (or,
if the organization offers more than one such plan,
the MedicarePlus plan offered by the organization with
the lowest net monthly premium).
‘‘(B) CONTINUING
PERIODS.—An individual who has
made (or is deemed to have made) an election under this
section is considered to have continued to make such elec-
tion until such time as—
‘‘(i) the individual changes the election under this
section, or
‘‘(ii) a MedicarePlus plan is discontinued, if the
individual had elected such plan at the time of the
discontinuation.
‘‘(d) PROVIDING INFORMATION TO PROMOTE INFORMED CHOICE.—
‘‘(1) IN GENERAL.—The Secretary shall provide for activities
under this subsection to broadly disseminate information to
medicare beneficiaries (and prospective medicare beneficiaries)
on the coverage options provided under this section in order
to promote an active, informed selection among such options.
H. R. 2491—287
‘‘(2) PROVISION OF NOTICE.—
‘‘(A) OPEN
SEASON
NOTIFICATION.—At least 15 days
before the beginning of each annual, coordinated election
period, the Secretary shall mail to each MedicarePlus
eligible individual residing in an area the following:
‘‘(i) 
GENERAL
ELECTION
INFORMATION
AND
INFORMATION ABOUT MEDICARE FEE-FOR-SERVICE PRO-
GRAM.—The general information regarding election,
benefits coverage, and procedures described in para-
graph (3).
‘‘(ii) LIST
OF
PLANS
AND
COMPARISON
OF
PLAN
OPTIONS.—A list identifying the MedicarePlus plans
that are (or will be) available to residents of the area
(and their service areas) and information, described
in paragraph (4) and in comparative form, concerning
such plans.
‘‘(iii) MEDICAREPLUS MONTHLY CAPITATION RATE.—
The amount of the monthly MedicarePlus capitation
rate for the area.
‘‘(iv) 
ADDITIONAL
INFORMATION.—Any 
other
information that the Secretary determines will assist
the individual in making the election under this sec-
tion.
The mailing of such information shall be coordinated with
the mailing of any annual notice under section 1804.
‘‘(B) NOTIFICATION TO NEWLY MEDICAREPLUS ELIGIBLE
INDIVIDUALS.—To the extent practicable, the Secretary
shall, not later than 2 months before the beginning of
the initial MedicarePlus enrollment period for an individual
described in subsection (e)(1)(A), mail to the individual
the information described in subparagraph (A).
‘‘(C) FORM.—The information disseminated under this
paragraph shall be written and formatted in the most
easily understandable manner possible.
‘‘(D) PERIODIC UPDATING.—The information described
in subparagraph (A) shall be updated on at least an annual
basis to reflect changes in the availability of MedicarePlus
plans and the benefits and monthly premiums (and net
monthly premiums) for such plans.
‘‘(3) GENERAL
ELECTION
INFORMATION
AND
INFORMATION
ABOUT MEDICARE FEE-FOR-SERVICE PROGRAM.—General informa-
tion under this paragraph, with respect to coverage under this
part during a year, shall include the following:
‘‘(A) BENEFITS.—A general description of the benefits
covered (and not covered) under the medicare fee-for-service
program under parts A and B, including—
‘‘(i) covered items and services, and
‘‘(ii) beneficiary cost sharing, such as deductibles,
coinsurance, and copayment amounts, and the bene-
ficiary liability for balance billing.
‘‘(B) PART
B
PREMIUM.—The part B premium rates
that will be charged for part B coverage.
‘‘(C) ELECTION PROCEDURES.—Information and instruc-
tions on how to exercise election options under this section.
‘‘(D) PROCEDURAL RIGHTS.—The general description of
procedural rights (including grievance procedures) of bene-
H. R. 2491—288
ficiaries under the medicare fee-for-service program and
the MedicarePlus program.
‘‘(E) RIGHT
OF
ORGANIZATION
TO
TERMINATE
CON-
TRACT.—The right of each MedicarePlus organization by
law to terminate or refuse to renew its contract and the
effect the termination or nonrenewal of its contract may
have on individuals enrolled with the MedicarePlus plan
under this part.
‘‘(F) USE OF 911 EMERGENCY NUMBER.—A statement
that the use of the 911 emergency telephone number is
appropriate in emergency situations and an explanation
of what constitutes an emergency situation.
‘‘(4) INFORMATION COMPARING PLAN OPTIONS.—Information
under this paragraph, with respect to a MedicarePlus plan
for a year, shall include the following:
‘‘(A) BENEFITS.—The benefits covered under the plan,
including covered items and services beyond those provided
under the medicare fee-for-service program, any reductions
in beneficiary cost sharing, and any maximum limitations
on out-of-pocket losses.
‘‘(B) PREMIUMS.—The monthly premium (and net
monthly premium, including any rebate) for the plan.
‘‘(C) QUALITY.—(i) To the extent available, quality
indicators for the benefits under the plan (in comparison
with quality indicators under the Medicare fee-for-service
program under parts A and B in the area involved), includ-
ing—
‘‘(I) disenrollment rates for medicare enrollees
electing to receive benefits through the plan for the
previous 2 years (excluding disenrollment due to death
or moving outside the plan’s service area),
‘‘(II) information on medicare enrollee satisfaction
and health outcomes, and
‘‘(III) whether the plan is out of compliance with
any requirements of this part (as determined by the
Secretary).
‘‘(D) SUPPLEMENTAL COVERAGE OPTIONS.—Whether the
organization offering the plan offers optional supplemental
coverage.
‘‘(5) MAINTAINING
A
TOLL-FREE
NUMBER.—The Secretary
shall maintain a toll-free number for inquiries regarding
MedicarePlus options and the operation of part C in all areas
in which MedicarePlus plans are offered.
‘‘(6) USE OF NONFEDERAL ENTITIES.—The Secretary shall,
to the maximum extent feasible, enter into contracts with
appropriate non-Federal entities to carry out activities under
this subsection.
‘‘(7) 
PROVISION
OF
INFORMATION.—A 
MedicarePlus
organization shall provide the Secretary with such information
on the organization and each MedicarePlus plan it offers as
may be required for the preparation of the information referred
to in paragraph (2)(A).
‘‘(e) COVERAGE ELECTION PERIODS.—
‘‘(1) INITIAL CHOICE UPON ELIGIBILITY TO MAKE ELECTION.—
‘‘(A) IN GENERAL.—In the case of an individual who
first becomes entitled to benefits under part A and enrolled
under part B after the beginning of the transition period
H. R. 2491—289
(as defined in subparagraph (B)), the individual shall make
the election under this section during a period (of a dura-
tion and beginning at a time specified by the Secretary)
at the first time the individual both is entitled to benefits
under part A and enrolled under part B. Such period shall
be specified in a manner so that, in the case of an individual
who elects a MedicarePlus plan during the period, coverage
under the plan becomes effective as of the first date on
which the individual may receive such coverage.
‘‘(B) TRANSITION PERIOD DEFINED.—In this subsection,
the term ‘transition period’ means, with respect to an
individual in an area, the period beginning on the first
day of the first month in which a MedicarePlus plan is
first made available to individuals in the area and ending
with the month preceding the beginning of the first annual,
coordinated election period under paragraph (3).
‘‘(2) DURING
TRANSITION
PERIOD.—Subject to paragraph
(6)—
‘‘(A) 
CONTINUOUS
OPEN
ENROLLMENT
INTO
A
MEDICAREPLUS
OPTION.—During the transition period, a
MedicarePlus eligible individual who has elected the Medi-
care fee-for-service program option described in subsection
(a)(1)(A) may change such election to a MedicarePlus option
described in subsection (a)(1)(B) at any time.
‘‘(B) OPEN DISENROLLMENT BEFORE END OF TRANSITION
PERIOD.—
‘‘(i) IN GENERAL.—During the transition period, an
individual who has elected a MedicarePlus option
described in subsection (a)(1)(B) for a MedicarePlus
plan may change such election to another MedicarePlus
plan or to the Medicare fee-for-service program option
described in subsection (a)(1)(A).
‘‘(ii) SPECIAL RULE.—During the transition period,
an individual who has elected a high deductible plan
may not change such election to a MedicarePlus plan
that is not a high deductible plan unless the individual
has had such election in effect for 12 consecutive
months.
‘‘(3) ANNUAL, COORDINATED ELECTION PERIOD.—
‘‘(A) IN
GENERAL.—Subject to paragraph (5), each
individual who is eligible to make an election under this
section may change such election during an annual, coordi-
nated election period.
‘‘(B) ANNUAL, COORDINATED
ELECTION
PERIOD.—For
purposes of this section, the term ‘annual, coordinated elec-
tion period’ means, with respect to a calendar year (begin-
ning with 1998), the month of October before such year.
‘‘(C) MEDICAREPLUS
HEALTH
FAIR
DURING
OCTOBER,
1996.—In the month of October, 1996, the Secretary shall
provide for a nationally coordinated educational and public-
ity campaign to inform MedicarePlus eligible individuals
about such plans and the election process provided under
this section (including the annual, coordinated election peri-
ods that occur in subsequent years).
‘‘(4) SPECIAL 90-DAY DISENROLLMENT OPTION.—
‘‘(A) IN GENERAL.—In the case of the first time an
individual elects any MedicarePlus plan (other than a high
H. R. 2491—290
deductible plan) offered by a particular MedicarePlus
organization under this section, the individual may change
such election through the filing of an appropriate notice
during the 90-day period beginning on the first day on
which the individual’s coverage under the MedicarePlus
plan under such option becomes effective.
‘‘(B) LIMITATION.—Subparagraph (A)—
‘‘(i) shall only apply once for an individual with
respect to any particular organization, and
‘‘(ii) may not apply more than twice for any individ-
ual in a calendar year.
‘‘(C) EFFECT OF DISCONTINUATION OF ELECTION.—An
individual who discontinues an election under subpara-
graph (A) may, during the period specified by the Secretary,
make a new election under this subsection (a) (or, in the
absence of such an election, is deemed at the time of
such discontinuation to have elected the Medicare fee-for-
service program option described in subsection (a)(1)(A)).
‘‘(5) SPECIAL ELECTION PERIODS.—An individual may dis-
continue an election of a MedicarePlus plan offered by a
MedicarePlus organization other than during an annual, coordi-
nated election period and make a new election under this
section if—
‘‘(A) the organization’s or plan’s certification under part
C has been terminated or the organization has terminated
or otherwise discontinued providing the plan;
‘‘(B) the individual is no longer eligible to elect the
plan because of a change in the individual’s place of resi-
dence or other change in circumstances (specified by the
Secretary, but not including termination of membership
in a qualified association in the case of a plan offered
by a qualified association sponsor or termination of the
individual’s enrollment on the basis described in clause
(i) or (ii) section 1851(g)(3)(B));
‘‘(C) the individual demonstrates (in accordance with
guidelines established by the Secretary) that—
‘‘(i) the organization offering the plan substantially
violated a material provision of the organization’s con-
tract under part C in relation to the individual and
the plan; or
‘‘(ii) the organization (or an agent or other entity
acting on the organization’s behalf) materially mis-
represented the plan’s provisions in marketing the plan
to the individual; or
‘‘(D) the individual meets such other conditions as the
Secretary may provide.
‘‘(6) SPECIAL RULE FOR HIGH DEDUCTIBLE PLANS.—Notwith-
standing the previous provisions of this subsection, an individ-
ual may elect a high deductible plan only during an annual,
coordinated election period described in paragraph (3)(B) or
during the month of October, 1996.
‘‘(f) EFFECTIVENESS OF ELECTIONS.—
‘‘(1) DURING INITIAL COVERAGE ELECTION PERIOD.—An elec-
tion of coverage made during the initial coverage election period
under subsection (e)(1)(A) shall take effect upon the date the
individual becomes entitled to benefits under part A and
enrolled under part B, except as the Secretary may provide
H. R. 2491—291
(consistent with section 1838) in order to prevent retroactive
coverage.
‘‘(2) DURING TRANSITION; 90-DAY DISENROLLMENT OPTION.—
An election of coverage made under subsection (e)(2) and an
election to discontinue a MedicarePlus option under subsection
(e)(4) at any time shall take effect with the first calendar
month following the date on which the election is made.
‘‘(3) ANNUAL, COORDINATED
ELECTION
PERIOD
AND
HIGH
DEDUCTIBLE
PLAN
ELECTION.—An election of coverage made
during an annual, coordinated election period (as defined in
subsection (e)(3)(B)) in a year or for a high deductible plan
shall take effect as of the first day of the following year.
‘‘(4) OTHER PERIODS.—An election of coverage made during
any other period under subsection (e)(5) shall take effect in
such manner as the Secretary provides in a manner consistent
(to the extent practicable) with protecting continuity of health
benefit coverage.
‘‘(g) GUARANTEED ISSUE AND RENEWAL.—
‘‘(1) IN GENERAL.—Except as provided in this subsection,
a MedicarePlus organization shall provide that at any time
during which elections are accepted under this section with
respect to a MedicarePlus plan offered by the organization,
the organization will accept without restrictions individuals
who are eligible to make such election.
‘‘(2) PRIORITY.—If the Secretary determines that a
MedicarePlus organization, in relation to a MedicarePlus plan
it offers, has a capacity limit and the number of MedicarePlus
eligible individuals who elect the plan under this section
exceeds the capacity limit, the organization may limit the elec-
tion of individuals of the plan under this section but only
if priority in election is provided—
‘‘(A) first to such individuals as have elected the plan
at the time of the determination, and
‘‘(B) then to other such individuals in such a manner
that does not discriminate among the individuals (who
seek to elect the plan) on a basis described in section
1852(b).
The preceding sentence shall not apply if it would result in
the enrollment of enrollees substantially nonrepresentative, as
determined in accordance with regulations of the Secretary,
of the medicare population in the service area of the plan.
‘‘(3) LIMITATION ON TERMINATION OF ELECTION.—
‘‘(A) IN
GENERAL.—Subject to subparagraph (B), a
MedicarePlus organization may not for any reason termi-
nate the election of any individual under this section for
a MedicarePlus plan it offers.
‘‘(B) 
BASIS
FOR
TERMINATION
OF
ELECTION.—A
MedicarePlus organization may terminate an individual’s
election under this section with respect to a MedicarePlus
plan it offers if—
‘‘(i) any net monthly premiums required with
respect to such plan are not paid on a timely basis
(consistent with standards under section 1856 that
provide for a grace period for late payment of net
monthly premiums),
‘‘(ii) the individual has engaged in disruptive
behavior (as specified in such standards), or
H. R. 2491—292
‘‘(iii) the plan is terminated with respect to all
individuals under this part.
Any individual whose election is so terminated is deemed
to have elected the Medicare fee-for-service program option
described in subsection (a)(1)(A).
‘‘(C) LIMITATION
ON
TERMINATION
OF
COVERAGE.—A
qualified association sponsor offering a MedicarePlus plan
to an individual may not terminate coverage of the individ-
ual on the basis that the individual is no longer a member
of the association except pursuant to a change of election
during an open election period occurring on or after the
date of the termination of membership.
‘‘(D) ORGANIZATION OBLIGATION WITH RESPECT TO ELEC-
TION FORMS.—Pursuant to a contract under section 1857,
each MedicarePlus organization receiving an election form
under subsection (c)(3) shall transmit to the Secretary (at
such time and in such manner as the Secretary may
specify) a copy of such form or such other information
respecting the election as the Secretary may specify.
‘‘(h) APPROVAL OF MARKETING MATERIALS.—
‘‘(1) SUBMISSION.—No marketing materials may be distrib-
uted by a MedicarePlus organization to (or for the use of)
MedicarePlus eligible individuals unless—
‘‘(A) at least 45 days before the date of distribution
the organization has submitted the material to the Sec-
retary for review, and
‘‘(B) the Secretary has not disapproved the distribution
of such material.
‘‘(2) REVIEW.—The standards established under section
1856 shall include guidelines for the review of all such material
submitted and under such guidelines the Secretary shall dis-
approve such material if the material is materially inaccurate
or misleading or otherwise makes a material misrepresentation.
‘‘(3) DEEMED APPROVAL (1-STOP SHOPPING).—In the case of
material that is submitted under paragraph (1)(A) to the Sec-
retary or a regional office of the Department of Health and
Human Services and the Secretary or the office has not dis-
approved the distribution of marketing materials under para-
graph (1)(B) with respect to a MedicarePlus plan in an area,
the Secretary is deemed not to have disapproved such distribu-
tion in all other areas covered by the plan and organization.
‘‘(4) PROHIBITION OF CERTAIN MARKETING PRACTICES.—Each
MedicarePlus organization shall conform to fair marketing
standards in relation to MedicarePlus plans offered under this
part, included in the standards established under section 1856.
Such standards shall include a prohibition against an organiza-
tion (or agent of such an organization) completing any portion
of any election form used to carry out elections under this
section on behalf of any individual.
‘‘(i) EFFECT OF ELECTION OF MEDICAREPLUS PLAN OPTION.—
Subject to section 1852(a)(5)—
‘‘(1) payments under a contract with a MedicarePlus
organization under section 1854(a) with respect to an individual
electing a MedicarePlus plan offered by the organization shall
be instead of the amounts which (in the absence of the contract)
would otherwise be payable under parts A and B for items
and services furnished to the individual, and
H. R. 2491—293
‘‘(2) subject to subsections (e) and (f) of section 1854, only
the MedicarePlus organization shall be entitled to receive pay-
ments from the Secretary under this title for services furnished
to the individual.
‘‘(j) ADMINISTRATION.—
‘‘(1) IN
GENERAL.—This part and section 1876 shall be
administered through an operating division (A) that is estab-
lished or identified by the Secretary and is in the Department
of Health and Human Services, (B) that is separate from the
Health Care Financing Administration, and (C) the primary
function of which is the administration of this part and such
section. The director of such division shall be of equal pay
and rank to that of the individual responsible for overall
administration of parts A and B.
‘‘(2) TRANSFER AUTHORITY.—The Secretary shall transfer
such personnel, administrative support systems, assets, records,
funds, and other resources in the Health Care Financing
Administration to the operating division referred to in para-
graph (1) as are used in the administration of section 1876
and as may be required to implement the provisions of this
part promptly and efficiently.
‘‘BENEFITS AND BENEFICIARY PROTECTIONS
‘‘SEC. 1852. (a) BASIC BENEFITS.—
‘‘(1) IN GENERAL.—Except as provided in section 1859(b)(2)
for high deductible plans, each MedicarePlus plan shall provide
to members enrolled under this part, through providers and
other persons that meet the applicable requirements of this
title and part A of title XI—
‘‘(A) those items and services for which benefits are
available under parts A and B to individuals residing in
the area served by the plan, and
‘‘(B) additional health services as the Secretary may
approve.
The Secretary shall approve any such additional health care
services which the plan proposes to offer to such members,
unless the Secretary determines that including such additional
services 
will 
substantially 
discourage 
enrollment 
by
MedicarePlus eligible individuals with the plan.
‘‘(2) SATISFACTION OF REQUIREMENT.—A MedicarePlus plan
(other than a high deductible plan) offered by a MedicarePlus
organization satisfies paragraph (1)(A) with respect to benefits
for items and services if the following requirements are met:
‘‘(A) FEE FOR SERVICE PROVIDERS.—In the case of bene-
fits furnished through a provider that does not have a
contract with the organization, the plan provides for at
least the dollar amount of payment for such items and
services as would otherwise be provided under parts A
and B.
‘‘(B) PARTICIPATING PROVIDERS.—In the case of benefits
furnished through a provider that has such a contract,
the individual’s liability for payment for such items and
services does not exceed (after taking into account any
deductible, which does not exceed any deductible under
parts A and B) the lesser of the following:
‘‘(i) INDIVIDUAL’S LIABILITY UNDER MEDICARE FEE-
FOR-SERVICE
PROGRAM.—The amount of the liability
H. R. 2491—294
that the individual would have had (based on the pro-
vider being a participating provider) if the individual
had not elected coverage under a MedicarePlus plan.
‘‘(ii) MEDICARE COINSURANCE APPLIED TO PLAN PAY-
MENT
RATES.—The 
applicable 
coinsurance 
or
copayment rate (that would have applied under
theedicare fee-for-service program option described in
section 1851(a)(1)(A)) of the payment rate provided
under the contract.
‘‘(3) 
SUPPLEMENTAL
OPTIONAL
BENEFITS.—Each
MedicarePlus organization may offer under a MedicarePlus
plan optional supplemental benefits to each individual enrolled
in the plan under this part for an additional premium amount.
If the supplemental benefits are offered only to individuals
enrolled in the sponsor’s plan under this part, the additional
premium amount shall be the same for all enrolled individuals
in the MedicarePlus payment area. Such benefits may be mar-
keted and sold by the MedicarePlus organization outside of
the enrollment process described in section 1851(c).
‘‘(4) ORGANIZATION AS SECONDARY PAYER.—Notwithstanding
any other provision of law, a MedicarePlus organization may
(in the case of the provision of items and services to an individ-
ual under a MedicarePlus plan under circumstances in which
payment under this title is made secondary pursuant to section
1862(b)(2)) charge or authorize the provider of such services
to charge, in accordance with the charges allowed under such
a law, plan, or policy—
‘‘(A) the insurance carrier, employer, or other entity
which under such law, plan, or policy is to pay for the
provision of such services, or
‘‘(B) such individual to the extent that the individual
has been paid under such law, plan, or policy for such
services.
‘‘(5) NATIONAL COVERAGE DETERMINATIONS.—If there is a
national coverage determination made in the period beginning
on the date of an announcement under section 1854(b) and
ending on the date of the next announcement under such sec-
tion and the Secretary projects that the determination will
result in a significant change in the costs to a MedicarePlus
organization of providing the benefits that are the subject of
such national coverage determination and that such change
in costs was not incorporated in the determination of the annual
MedicarePlus capitation rate under section 1854 included in
the announcement made at the beginning of such period—
‘‘(A) such determination shall not apply to contracts
under this part until the first contract year that begins
after the end of such period, and
‘‘(B) if such coverage determination provides for cov-
erage of additional benefits or coverage under additional
circumstances, section 1851(i) shall not apply to payment
for such additional benefits or benefits provided under such
additional circumstances until the first contract year that
begins after the end of such period,
unless otherwise required by law.
‘‘(b) ANTIDISCRIMINATION.—A MedicarePlus organization may
not deny, limit, or condition the coverage or provision of benefits
under this part based on the health status, claims experience,
H. R. 2491—295
receipt of health care, medical history, or lack of evidence of insur-
ability, of an individual. A MedicarePlus organization shall notify
each enrollee under this part of provisions of this subsection at
the time of the individual’s enrollment.
‘‘(c) 
DETAILED
DESCRIPTION
OF
PLAN
PROVISIONS.—A
MedicarePlus organization shall disclose, in clear, accurate, and
standardized form to each enrollee with a MedicarePlus plan offered
by the organization under this part at the time of enrollment
and at least annually thereafter, the following information regard-
ing such plan:
‘‘(1) SERVICE AREA.—The plan’s service area.
‘‘(2) BENEFITS.—Benefits under the plan offered, including
information described in section 1851(d)(3)(A) and exclusions
from coverage and, if it is a high deductible plan, a comparison
of benefits under such a plan with benefits under other
MedicarePlus plans.
‘‘(3) ACCESS.—The number, mix, and distribution of partici-
pating providers.
‘‘(4) OUT-OF-AREA
COVERAGE.—Out-of-area coverage pro-
vided by the plan.
‘‘(5) EMERGENCY COVERAGE.—Coverage of emergency serv-
ices and urgently needed care.
‘‘(6) OPTIONAL SUPPLEMENTAL COVERAGE.—Optional supple-
mental coverage available from the organization offering the
plan, including—
‘‘(A) supplemental items and services covered, and
‘‘(B) the premium price for the optional supplemental
benefits.
‘‘(7) PRIOR AUTHORIZATION RULES.—Rules regarding prior
authorization or other review requirements that could result
in nonpayment.
‘‘(8) PLAN
GRIEVANCE
PROCEDURES.—Any plan-specific
appeal or grievance rights and procedures.
‘‘(9) QUALITY ASSURANCE PROGRAM.—A description of the
organization’s quality assurance program under subsection (e).
‘‘(d) ACCESS TO SERVICES.—
‘‘(1) IN
GENERAL.—A MedicarePlus organization offering
a MedicarePlus plan may restrict the providers from whom
the benefits under the plan are provided so long as—
‘‘(A) the organization makes such benefits available
and accessible to each individual electing the plan within
the plan service area with reasonable promptness and in
a manner which assures continuity in the provision of
benefits;
‘‘(B) when medically necessary the organization makes
such benefits available and accessible 24 hours a day and
7 days a week;
‘‘(C) the plan provides for reimbursement with respect
to services which are covered under subparagraphs (A)
and (B) and which are provided to such an individual
other than through the organization, if—
‘‘(i) the services were medically necessary and
immediately required because of an unforeseen illness,
injury, or condition, and
‘‘(ii) it was not reasonable given the circumstances
to obtain the services through the organization;
H. R. 2491—296
‘‘(D) the organization provides access to appropriate
providers, including credentialed specialists, for medically
necessary treatment and services, and
‘‘(E) coverage is provided for emergency services (as
defined in paragraph (3)) without regard to prior authoriza-
tion or the emergency care provider’s contractual relation-
ship with the organization.
‘‘(2) PROTECTION OF ENROLLEES FOR CERTAIN EMERGENCY
SERVICES.—
‘‘(A) PARTICIPATING PROVIDERS.—In the case of emer-
gency services described in subparagraph (C) which are
furnished by a participating physician or provider of serv-
ices to an individual enrolled with a MedicarePlus organiza-
tion under this section, the applicable participation agree-
ment is deemed to provide that the physician or provider
of services will accept as payment in full from the organiza-
tion for such emergency services described in subparagraph
(C) the amount that would be payable to the physician
or provider of services under part B and from the individual
under such part, if the individual were not enrolled with
such an organization under this part.
‘‘(B) NONPARTICIPATING
PROVIDERS.—In the case of
emergency services described in subparagraph (C) which
are furnished by a nonparticipating physician, the limita-
tions on actual charges for such services otherwise
applicable under part B (to services furnished by individ-
uals not enrolled with a MedicarePlus organization under
this section) shall apply in the same manner as such limita-
tions apply to services furnished to individuals not enrolled
with such an organization.
‘‘(C) EMERGENCY SERVICES DESCRIBED.—The emergency
services described in this subparagraph are emergency
services which are furnished to an enrollee of a
MedicarePlus organization under this part by a physician
or provider of services that is not under a contract with
the organization.
‘‘(D) EXCEPTION
FOR
UNRESTRICTED
FEE-FOR-SERVICE
PLANS.—The previous provisions of this paragraph shall
not apply in the case of a MedicarePlus organization in
relation to a MedicarePlus unrestricted fee-for-service plan
(as defined in section 1859(b)(3)).
‘‘(3) DEFINITION
OF
EMERGENCY
SERVICES.—In this sub-
section, the term ‘emergency services’ means, with respect to
an individual enrolled with an organization, covered inpatient
and outpatient services that—
‘‘(A) are furnished by an appropriate source other than
the organization,
‘‘(B) are needed immediately because of an injury or
sudden illness, and
‘‘(C) are needed because the time required to reach
the organization’s providers or suppliers would have meant
risk of serious damage to the patient’s health.
‘‘(e) QUALITY ASSURANCE PROGRAM.—
‘‘(1) IN GENERAL.—Each MedicarePlus organization must
have arrangements, established in accordance with regulations
of the Secretary, for an ongoing quality assurance program
H. R. 2491—297
for health care services it provides to individuals enrolled with
MedicarePlus plans of the organization.
‘‘(2) ELEMENTS OF PROGRAM.—The quality assurance pro-
gram shall—
‘‘(A) stress health outcomes;
‘‘(B) provide for the establishment of written protocols
for utilization review, based on current standards of medi-
cal practice;
‘‘(C) provide review by physicians and other health
care professionals of the process followed in the provision
of such health care services;
‘‘(D) monitor and evaluate high volume and high risk
services and the care of acute and chronic conditions;
‘‘(E) evaluate the continuity and coordination of care
that enrollees receive;
‘‘(F) have mechanisms to detect both underutilization
and overutilization of services;
‘‘(G) after identifying areas for improvement, establish
or alter practice parameters;
‘‘(H) take action to improve quality and assesses the
effectiveness of such action through systematic follow-up;
‘‘(I) make available information on quality and out-
comes measures to facilitate beneficiary comparison and
choice of health coverage options (in such form and on
such quality and outcomes measures as the Secretary deter-
mines to be appropriate); and
‘‘(J) be evaluated on an ongoing basis as to its effective-
ness.
‘‘(3) EXTERNAL REVIEW.—Each MedicarePlus organization
shall, for each MedicarePlus plan it operates, have an agree-
ment with an independent quality review and improvement
organization approved by the Secretary.
‘‘(4) 
EXCEPTION
FOR
UNRESTRICTED
FEE-FOR-SERVICE
PLANS.—Paragraphs (1) and (3) and subsection (h)(2) (relating
to maintaining medical records) shall not apply in the case
of a MedicarePlus organization in relation to a MedicarePlus
unrestricted fee-for-service plan.
‘‘(5) TREATMENT OF ACCREDITATION.—The Secretary shall
provide that a MedicarePlus organization is deemed to meet
the requirements of paragraphs (1) through (3) of this sub-
section and subsection (h) (relating to confidentiality and
accuracy of medical records) if the organization is accredited
(and periodically reaccredited) by a private organization under
a process that the Secretary has determined assures that the
organization meets standards that are no less stringent than
the standards established under section 1856 to carry out this
subsection and such subsection.
‘‘(f) COVERAGE DETERMINATIONS.—
‘‘(1) DECISIONS ON NONEMERGENCY CARE.—A MedicarePlus
organization shall make determinations regarding authoriza-
tion requests for nonemergency care on a timely basis, depend-
ing on the urgency of the situation.
‘‘(2) APPEALS.—
‘‘(A) IN GENERAL.—Appeals from a determination of
an organization denying coverage shall be decided within
30 days of the date of receipt of medical information, but
not later than 60 days after the date of the decision.
H. R. 2491—298
‘‘(B) PHYSICIAN DECISION ON CERTAIN APPEALS.—Appeal
decisions relating to a determination to deny coverage
based on a lack of medical necessity shall be made only
by a physician.
‘‘(C) EMERGENCY CASES.—Appeals from such a deter-
mination involving a life-threatening or emergency situa-
tion shall be decided on an expedited basis.
‘‘(g) GRIEVANCES AND APPEALS.—
‘‘(1) GRIEVANCE MECHANISM.—Each MedicarePlus 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 enrollees with MedicarePlus plans
of the organization under this part.
‘‘(2) APPEALS.—An enrollee with a MedicarePlus plan of
a MedicarePlus organization under this part who is dissatisfied
by reason of the enrollee’s failure to receive any health service
to which the enrollee believes the enrollee is entitled and at
no greater charge than the enrollee believes the enrollee is
required to pay is entitled, if the amount in controversy is
$100 or more, to a hearing before the Secretary to the same
extent as is provided in section 205(b), and in any such hearing
the Secretary shall make the organization a party. If the
amount in controversy is $1,000 or more, the individual or
organization shall, upon notifying the other party, be entitled
to judicial review of the Secretary’s final decision as provided
in section 205(g), and both the individual and the organization
shall be entitled to be parties to that judicial review. In applying
sections 205(b) and 205(g) as provided in this subparagraph,
and in applying section 205(l) thereto, any reference therein
to the Commissioner of Social Security or the Social Security
Administration shall be considered a reference to the Secretary
or the Department of Health and Human Services, respectively.
‘‘(3) 
INDEPENDENT
REVIEW
OF
CERTAIN
COVERAGE
DENIALS.—The Secretary shall contract with an independent,
outside entity to review and resolve appeals of denials of cov-
erage related to urgent or emergency services with respect
to MedicarePlus plans.
‘‘(4) COORDINATION WITH SECRETARY OF LABOR.—The Sec-
retary shall consult with the Secretary of Labor so as to ensure
that the requirements of this subsection, as they apply in
the case of grievances referred to in paragraph (1) to which
section 503 of the Employee Retirement Income Security Act
of 1974 applies, are applied in a manner consistent with the
requirements of such section 503, so long as such requirements
provide at least as much protection for beneficiaries as would
apply if this paragraph did not apply.
‘‘(h) CONFIDENTIALITY AND ACCURACY OF ENROLLEE RECORDS.—
Each MedicarePlus organization shall establish procedures—
‘‘(1) to safeguard the privacy of individually identifiable
enrollee information, and
‘‘(2) to maintain accurate and timely medical records for
enrollees.
‘‘(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).
H. R. 2491—299
‘‘(j) RULES REGARDING PHYSICIAN PARTICIPATION.—
‘‘(1) PROCEDURES.—Each MedicarePlus organization shall
establish reasonable procedures relating to the participation
(under an agreement between a physician and the organization)
of physicians under MedicarePlus plans offered by the organiza-
tion under this part. Such procedures shall include—
‘‘(A) providing notice of the rules regarding participa-
tion,
‘‘(B) providing written notice of participation decisions
that are adverse to physicians, and
‘‘(C) providing a process within the organization for
appealing adverse decisions, including the presentation of
information and views of the physician regarding such
decision.
‘‘(2) CONSULTATION IN MEDICAL POLICIES.—A MedicarePlus
organization shall consult with physicians who have entered
into participation agreements with the organization regarding
the organization’s medical policy, quality, and medical manage-
ment procedures.
‘‘(3) LIMITATIONS ON PHYSICIAN INCENTIVE PLANS.—
‘‘(A) IN GENERAL.—No MedicarePlus organization may
operate any physician incentive plan (as defined in
subparagraph (B)) unless the following requirements are
met:
‘‘(i) No specific payment is made directly or
indirectly under the plan to a physician or physician
group as an inducement 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 physi-
cian or physician group, the organization—
‘‘(I) provides stop-loss protection for the physi-
cian or group that is adequate and appropriate,
based on standards developed by the Secretary
that take into account the number of physicians
placed at such substantial financial risk in the
group or under the plan and the number of individ-
uals enrolled with the organization who receive
services from the physician or the physician group,
and
‘‘(II) conducts periodic surveys of both individ-
uals enrolled and individuals previously enrolled
with the organization to determine the degree of
access of such individuals to services provided by
the organization and satisfaction with the quality
of such services.
‘‘(iii) The organization provides the Secretary with
descriptive information regarding the plan, sufficient
to permit the Secretary to determine whether the plan
is in compliance with the requirements of this subpara-
graph.
‘‘(B) PHYSICIAN
INCENTIVE
PLAN
DEFINED.—In this
paragraph, the term ‘physician incentive plan’ means any
compensation 
arrangement 
between 
a 
MedicarePlus
organization and a physician or physician group that may
H. R. 2491—300
directly or indirectly have the effect of reducing or limiting
services provided with respect to individuals enrolled with
the organization under this part.
‘‘(4) 
LIMITATION
ON
PROVIDER
INDEMNIFICATION.—A
MedicarePlus organization may not provide (directly or
indirectly) for a provider (or group of providers) to indemnify
the organization against any liability resulting from a civil
action brought by or on behalf of an enrollee under this part
for any damage caused to an enrollee with a MedicarePlus
plan of the organization by the organization’s denial of medi-
cally necessary care.
‘‘(5) 
EXCEPTION
FOR
UNRESTRICTED
FEE-FOR-SERVICE
PLANS.—The previous provisions of this subsection shall not
apply in the case of a MedicarePlus organization in relation
to a MedicarePlus unrestricted fee-for-service plan.
‘‘ORGANIZATIONAL
AND
FINANCIAL
REQUIREMENTS
FOR
MEDICAREPLUS
ORGANIZATIONS; PROVIDER-SPONSORED
ORGANIZA-
TIONS
‘‘SEC. 1853. (a) ORGANIZED AND LICENSED UNDER STATE LAW.—
‘‘(1) IN GENERAL.—A MedicarePlus organization shall be
organized and licensed under State law as a risk-bearing entity
eligible to offer health insurance or health benefits coverage
in each State in which it offers a MedicarePlus plan.
‘‘(2) EXCEPTION FOR CERTAIN UNION SPONSORS AND TAFT-
HARTLEY
SPONSORS.—Paragraph (1) shall not apply to a
MedicarePlus organization that is a union sponsor or Taft-
Hartley sponsor.
‘‘(3) EXCEPTION FOR QUALIFIED ASSOCIATIONS SPONSOR.—
Paragraph (1) shall not apply to a MedicarePlus organization
that is a qualified association sponsor.
‘‘(4) SPECIAL RULES FOR PROVIDER-SPONSORED ORGANIZA-
TIONS.—
‘‘(A) IN GENERAL.—A provider-sponsored organization
that seeks to offer a MedicarePlus plan in a State may
apply for a waiver of the requirement of paragraph (1)
for that organization operating in that State.
‘‘(B) STANDARD.—The Secretary shall act on such an
application within 60 days after the date it is filed and
shall grant such a waiver for an organization with respect
to a State if the Secretary determines that—
‘‘(i) the State has failed to complete action on a
licensing application of the organization within 90 days
of the date of the State’s receipt of the completed
application; or
‘‘(ii) the State denied such a licensing application
and—
‘‘(I) the State’s licensing standards or review
process imposes any requirements, procedures, or
other standards to such organizations that are not
generally applicable to any other entities engaged
in substantially similar business,
‘‘(II) such standards or review process applies
solvency standards for the organization and the
State is not approved under subsection (e)(2)(B),
or
H. R. 2491—301
‘‘(III) the State has used solvency standards
to deny or discriminate against such an organiza-
tion that has been provided a certificate of solvency
under subsection (e)(2).
No period before the date of the enactment of this section
shall be included in determining the 90-day period
described in clause (i).
‘‘(C) TREATMENT OF WAIVER.—In the case of a waiver
granted under this paragraph for a provider-sponsored
organization—
‘‘(i) the waiver shall be effective for a 36-month
period, except it may be renewed based on a subse-
quent application filed during the last 6 months of
such period,
‘‘(ii) the waiver is conditioned upon the pendency
of the licensure application during the period the
waiver is in effect, and
‘‘(iii) any provisions of State law which relate to
the licensing of the organization and which prohibit
the organization from providing coverage pursuant to
a contract under this part shall be superseded.
Nothing in this subparagraph shall be construed as limiting
the number of times such a waiver may be renewed.
‘‘(D) CONSTRUCTION.—Nothing in this paragraph shall
be construed as affecting the operation of section 514 of
the Employee Retirement Income Security Act of 1974.
‘‘(5) EXCEPTION
IF
REQUIRED
TO
OFFER
MORE
THAN
MEDICAREPLUS
PLANS.—Paragraph (1) shall not apply to a
MedicarePlus organization in a State if the State requires
the organization, as a condition of licensure, to offer any product
or plan other than a MedicarePlus plan.
‘‘(6) EXCEPTION IN CASES OF UNREASONABLE BARRIERS TO
MARKET ENTRY.—
‘‘(A) IN GENERAL.—A MedicarePlus organization that
seeks to offer a MedicarePlus plan in a State may apply
for a waiver of the requirement of paragraph (1) for that
organization operating in that State.
‘‘(B) STANDARD.—The Secretary shall act on such an
application within 60 days after the date it is filed and
shall grant such a waiver for an organization with respect
to a State if the Secretary determines that—
‘‘(i) the State (I) denied such a licensing application
or (II) unreasonably delayed in acting upon the applica-
tion, and
‘‘(ii) the State’s licensing standards or review proc-
ess imposes unreasonable barriers to market entry,
including through the imposition of any requirements,
procedures, or other standards to such organizations
that are not generally applicable to any other entities
engaged in substantially similar business.
‘‘(C) APPLICATION OF CERTAIN RULES.—The provisions
of subparagraphs (C) and (D) of paragraph (4) shall apply
to this paragraph in the same manner as they apply under
such paragraph, except that for this purpose any reference
in paragraph (4)(C)(i) to a 36-month period is deemed a
reference to a 24-month period.
H. R. 2491—302
‘‘(b) PREPAID PAYMENT.—A MedicarePlus organization shall be
compensated (except for deductibles, coinsurance, and copayments)
for the provision of health care services to enrolled members by
a payment which is paid on a periodic basis without regard to
the date the health care services are provided and which is fixed
without regard to the frequency, extent, or kind of health care
service actually provided to a member.
‘‘(c) ASSUMPTION OF FULL FINANCIAL RISK.—The MedicarePlus
organization shall assume full financial risk on a prospective basis
for the provision of the health care services (except, at the election
of the organization, hospice care) for which benefits are required
to be provided under section 1852(a)(1), except that the organiza-
tion—
‘‘(1) may obtain insurance or make other arrangements
for the cost of providing to any enrolled member such services
the aggregate value of which exceeds $5,000 in any year,
‘‘(2) may obtain insurance or make other arrangements
for the cost of such services provided to its enrolled members
other than through the organization because medical necessity
required their provision before they could be secured through
the organization,
‘‘(3) may obtain insurance or make other arrangements
for not more than 90 percent of the amount by which its
costs for any of its fiscal years exceed 115 percent of its income
for such fiscal year, and
‘‘(4) may make arrangements with physicians or other
health professionals, health care institutions, or any combina-
tion of such individuals or institutions to assume all or part
of the financial risk on a prospective basis for the provision
of basic health services by the physicians or other health profes-
sionals or through the institutions.
In the case of a MedicarePlus organization that is a union sponsor,
Taft-Hartley sponsor, or a qualified association sponsor, this sub-
section shall not apply with respect to MedicarePlus plans offered
by such organization and issued by an organization to which sub-
section (b)(1) applies or by a provider-sponsored organization (as
defined in section 1854(a)).
‘‘(d) PROVISION AGAINST RISK OF INSOLVENCY.—
‘‘(1) IN GENERAL.—Each MedicarePlus organization shall
meet standards under section 1856 relating to the financial
solvency and capital adequacy of the organization and including
provision to prevent enrollees from being held liable to any
person or entity for the plan sponsor’s debts in the event
of the plan sponsor’s insolvency. Such standards shall take
into account the nature and type of MedicarePlus plans offered
by the organization.
‘‘(2) TREATMENT OF PROVIDER-SPONSORED ORGANIZATIONS.—
‘‘(A) IN
GENERAL.—In the case of an entity that is
a provider-sponsored organization that is operating—
‘‘(i) in a State approved under subparagraph (B),
the organization shall meet the standards described
in paragraph (1) through licensure by the State, or
‘‘(ii) in a State that is not so approved, the
organization shall meet the standards described in
paragraph (1) through application and certification
licensure by the Secretary.
‘‘(B) APPROVED STATES.—
H. R. 2491—303
‘‘(i) 
APPLICATION
PROCESS.—For 
purposes 
of
subparagraph (A), the Secretary shall establish a proc-
ess under which a State may apply to the Secretary
for a determination that the State is applying to pro-
vider-sponsored organizations, through its process for
licensing provider-sponsored organizations, solvency
standards that are identical with the solvency stand-
ards established under section 1856(c) for such
organizations.
‘‘(ii) DETERMINATION.—The Secretary shall approve
such a State if the Secretary determines that the State
is so applying such standards. If the Secretary denies
such an approval, the State may reapply for such a
determination.
‘‘(iii) PUBLICATION.—The Secretary shall publish
a list of States that are approved under this subpara-
graph.
‘‘(3) TREATMENT OF UNION AND TAFT-HARTLEY SPONSORS.—
An entity that is a union sponsor or a Taft-Hartley sponsor
is deemed to meet the requirement of paragraph (1).
‘‘(4) TREATMENT OF CERTAIN QUALIFIED ASSOCIATION SPON-
SORS.—An entity that is a qualified association sponsor is
deemed to meet the requirement of paragraph (1) with respect
to MedicarePlus plans offered by such association and issued
by an organization to which subsection (b)(1) applies or by
a provider-sponsored organization.
‘‘(e) PROVIDER-SPONSORED ORGANIZATION DEFINED.—
‘‘(1) IN GENERAL.—In this part, the term ‘provider-spon-
sored organization’ means a public or private entity—
‘‘(A) that is established or organized by a health care
provider, or group of affiliated health care providers,
‘‘(B) that provides a substantial proportion (as defined
by the Secretary) of the health care items and services
under the contract under this part directly through the
provider or affiliated group of providers, and
‘‘(C) with respect to which those affiliated providers
that share, directly or indirectly, substantial financial risk
with respect to the provision of such items and services
have at least a majority financial interest in the entity.
‘‘(2) SUBSTANTIAL
PROPORTION.—In defining what is a
‘substantial proportion’ for purposes of paragraph (1)(A), the
Secretary—
‘‘(A) shall take into account the need for such an
organization to assume responsibility for a substantial
proportion of services in order to assure financial stability
and the practical difficulties in such an organization
integrating a very wide range of service providers; and
‘‘(B) may vary such proportion based upon relevant
differences among organizations, such as their location in
an urban or rural area.
‘‘(3) AFFILIATION.—For purposes of this subsection, a pro-
vider is ‘affiliated’ with another provider if, through contract,
ownership, or otherwise—
‘‘(A) one provider, directly or indirectly, controls, is
controlled by, or is under common control with the other,
H. R. 2491—304
‘‘(B) both providers are part of a controlled group of
corporations under section 1563 of the Internal Revenue
Code of 1986, or
‘‘(C) both providers are part of an affiliated service
group under section 414 of such Code.
‘‘(4) CONTROL.—For purposes of paragraph (3), control is
presumed to exist if one party, directly or indirectly, owns,
controls, or holds the power to vote, or proxies for, not less
than 51 percent of the voting rights or governance rights of
another.
‘‘(5) HEALTH CARE PROVIDER DEFINED.—In this subsection
and subsection (f), the term ‘health care provider’ means—
‘‘(A) any individual who is engaged in the delivery
of health care services in a State and who is required
by State law or regulation to be licensed or certified by
the State to engage in the delivery of such services in
the State, and
‘‘(B) any entity that is engaged in the delivery of health
care services in a State and that, if it is required by
State law or regulation to be licensed or certified by the
State to engage in the delivery of such services in the
State, is so licensed.
‘‘(6) REGULATIONS.—The Secretary shall issue regulations
to carry out this subsection.
‘‘(f) ORGANIZATIONS TREATED AS MEDICAREPLUS ORGANIZATIONS
DURING TRANSITION.—Any of the following organizations shall be
considered to qualify as a MedicarePlus organization for contract
years beginning before January 1, 1998:
‘‘(1) HEALTH MAINTENANCE ORGANIZATIONS.—An organiza-
tion that is organized under the laws of any State and that
is a qualified health maintenance organization (as defined in
section 1310(d) of the Public Health Service Act), an organiza-
tion recognized under State law as a health maintenance
organization, or a similar organization regulated under State
law for solvency in the same manner and to the same extent
as such a health maintenance organization.
‘‘(2) LICENSED
INSURERS.—An organization that is orga-
nized under the laws of any State and—
‘‘(A) is licensed by a State agency as an insurer for
the offering of health benefit coverage, or
‘‘(B) is licensed by a State agency as a service benefit
plan,
but only for individuals residing in an area in which the
organization is licensed to offer health insurance coverage.
‘‘(3) CURRENT RISK-CONTRACTORS.—An organization that is
an eligible organization (as defined in section 1876(b)) and
that has a risk-sharing contract in effect under section 1876
as of the date of the enactment of this section.
‘‘PAYMENTS TO MEDICAREPLUS ORGANIZATIONS
‘‘SEC. 1854. (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 payments under this section in advance
to each MedicarePlus organization, with respect to coverage
of an individual under this part in a MedicarePlus payment
H. R. 2491—305
area for a month, in an amount equal to 1⁄12 of the annual
MedicarePlus capitation rate (as calculated under sub-
section (c)) with respect to that individual for that area,
adjusted for such risk factors as age, disability status,
gender, institutional status, and such other factors as the
Secretary determines to be appropriate, so as to ensure
actuarial equivalence. The Secretary may add to, modify,
or substitute for such factors, if such changes will improve
the determination of actuarial equivalence.
‘‘(B) SPECIAL RULE FOR END-STAGE RENAL DISEASE.—
The Secretary shall establish a separate rate of payment
to a MedicarePlus organization with respect to any individ-
ual determined to have end-stage renal disease and
enrolled in a MedicarePlus plan of the organization. Such
rate of payment shall be actuarially equivalent to rates
paid to other enrollees in the MedicarePlus payment area
(or such other area as specified by the Secretary).
‘‘(2) ADJUSTMENT TO REFLECT NUMBER OF ENROLLEES.—
‘‘(A) IN GENERAL.—The amount of payment under this
subsection may be retroactively adjusted to take into
account any difference between 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 advance pay-
ment.
‘‘(B) SPECIAL RULE FOR CERTAIN ENROLLEES.—
‘‘(i) IN GENERAL.—Subject to clause (ii), the Sec-
retary may make retroactive adjustments under
subparagraph (A) to take into account individuals
enrolled during the period beginning on the date on
which the individual enrolls with a MedicarePlus
organization under a plan operated, sponsored, or
contributed to by the individual’s employer or former
employer (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
retroactive adjustments under this subparagraph, 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 disclosure statement described in
section 1852(c) at the time the individual enrolled with
the organization.
‘‘(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 parties) 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 announcement under para-
H. R. 2491—306
graph (2) 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 announce-
ment made under paragraph (1) for a year, the Secretary shall
include an explanation of the assumptions and changes in
methodology used in the announcement in sufficient detail so
that MedicarePlus organizations can compute monthly adjusted
MedicarePlus 
capitation 
rates 
for 
individuals 
in 
each
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, the annual
MedicarePlus capitation rate, for a MedicarePlus payment area
for a contract year consisting of a calendar year, is equal
to the greatest of the following:
‘‘(A) BLENDED CAPITATION RATE.—The sum of—
‘‘(i) area-specific percentage for the year (as speci-
fied under paragraph (2) for the year) of the annual
area-specific MedicarePlus capitation rate for the year
for the MedicarePlus payment area, as determined
under paragraph (3), and
‘‘(ii) national percentage (as specified under para-
graph (2) for the year) of the input-price-adjusted
annual national MedicarePlus capitation rate for the
year, as determined under paragraph (4),
multiplied by a budget neutrality adjustment factor deter-
mined under paragraph (5).
‘‘(B) MINIMUM AMOUNT.—
‘‘(i) For 1996, $300.
‘‘(ii) For 1997, $350.
‘‘(iii) For a succeeding year, is the minimum
amount specified in this subparagraph for the preced-
ing year increased by national average per capita
growth percentage, specified under paragraph (6) for
that succeeding year.
‘‘(C) MINIMUM INCREASE OF 2 PERCENT OVER PREVIOUS
YEAR’S RATE.—
‘‘(i) For 1996, 102 percent of the annual per capita
rate of payment for 1995 determined under section
1876(a)(1)(C) for the MedicarePlus payment area.
‘‘(ii) For a subsequent year, 102 percent of the
annual MedicarePlus capitation rate under this sub-
section for the area for the previous year.
‘‘(2) AREA-SPECIFIC AND NATIONAL PERCENTAGES.—For pur-
poses of paragraph (1)(A)—
‘‘(A) for 1996 and 1997, the ‘area-specific percentage’
is 90 percent and the ‘national percentage’ is 10 percent,
‘‘(B) for 1998, the ‘area-specific percentage’ is 85 per-
cent and the ‘national percentage’ is 15 percent,
‘‘(C) for 1999, the ‘area-specific percentage’ is 80 per-
cent and the ‘national percentage’ is 20 percent,
H. R. 2491—307
‘‘(D) for 2000, the ‘area-specific percentage’ is 75 per-
cent and the ‘national percentage’ is 25 percent, and
‘‘(E) for a year after 2000, the ‘area-specific percentage’
is 70 percent and the ‘national percentage’ is 30 percent.
‘‘(3) ANNUAL
AREA-SPECIFIC
MEDICAREPLUS
CAPITATION
RATE.—For purposes of paragraph (1)(A), the annual area-spe-
cific MedicarePlus capitation rate for a MedicarePlus payment
area—
‘‘(A) for 1996 is the annual per capita rate of payment
for 1995 determined under section 1876(a)(1)(C) for the
MedicarePlus payment area, increased by the national
average per capita growth percentage for 1996 (as defined
in paragraph (6)); or
‘‘(B) for a subsequent year is the annual area-specific
MedicarePlus capitation rate for the previous year deter-
mined under this paragraph for the MedicarePlus payment
area, increased by the national average per capita growth
percentage for such subsequent year.
‘‘(4) 
INPUT-PRICE-ADJUSTED
ANNUAL
NATIONAL
MEDICAREPLUS CAPITATION RATE.—
‘‘(A) IN GENERAL.—For purposes of paragraph (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
services (as classified by the Secretary), of the plan (for
each such type) 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
‘‘(iii) an index that reflects (for that year and that
type of services) the relative input price of such services
in the area compared to the national average input
price of such services.
In applying clause (iii), the Secretary shall, subject to
subparagraph (C), apply those indices under this title that
are used in applying (or updating) national payment rates
for specific areas and localities.
‘‘(B) NATIONAL STANDARDIZED ANNUAL MEDICAREPLUS
CAPITATION
RATE.—In subparagraph (A)(i), the ‘national
standardized annual MedicarePlus capitation rate’ for a
year is equal to—
‘‘(i) the sum (for all MedicarePlus payment areas)
of the product of (I) the annual area-specific
MedicarePlus capitation rate for that year for the area
under paragraph (3), and (II) the average number of
medicare beneficiaries residing in that area in the
year; divided by
‘‘(ii) the total average number of medicare bene-
ficiaries residing in all the MedicarePlus payment
areas for that year.
‘‘(C) SPECIAL RULES FOR 1996.—In applying this para-
graph for 1996—
‘‘(i) medicare services shall be divided into 2 types
of services: part A services and part B services;
H. R. 2491—309
‘‘(A) IN GENERAL.—Upon request of a State for a con-
tract year (beginning after 1996) made at least 7 months
before the beginning of the year, the Secretary shall make
a geographic adjustment to a MedicarePlus payment area
in the State otherwise determined under paragraph (1)—
‘‘(i) to a single statewide MedicarePlus payment
area,
‘‘(ii) to the metropolitan based system described
in subparagraph (C), or
‘‘(iii) to consolidating into a single MedicarePlus
payment area noncontiguous counties (or equivalent
areas described in paragraph (1)) within a State.
Such adjustment shall be effective for payments for months
beginning with January of the year following the year
in which the request is received.
‘‘(B) BUDGET
NEUTRALITY
ADJUSTMENT.—In the case
of a State requesting an adjustment under this paragraph,
the Secretary shall adjust the payment rates otherwise
established under this paragraph for MedicarePlus pay-
ment areas in the State in a manner so that the aggregate
of the payments under this section in the State shall not
exceed the aggregate payments that would have been made
under this section for MedicarePlus payment areas in the
State in the absence of the adjustment under this para-
graph.
‘‘(C) METROPOLITAN BASED SYSTEM.—The metropolitan
based system described in this subparagraph is one in
which—
‘‘(i) all the portions of each metropolitan statistical
area in the State or in the case of a consolidated
metropolitan statistical area, all of the portions of each
primary metropolitan statistical area within the
consolidated area within the State, are treated as a
single MedicarePlus payment area, and
‘‘(ii) all areas in the State that do not fall within
a metropolitan statistical area are treated as a single
MedicarePlus payment area.
‘‘(D) AREAS.—In subparagraph (C), the terms ‘metro-
politan statistical area’, ‘consolidated metropolitan statis-
tical area’, and ‘primary metropolitan statistical area’ mean
any area designated as such by the Secretary of Commerce.
‘‘(e) SPECIAL RULES FOR INDIVIDUALS ELECTING HIGH DEDUCT-
IBLE PLANS.—
‘‘(1) IN GENERAL.—In the case of an individual who has
elected a high deductible plan, notwithstanding the preceding
provisions of this section—
‘‘(A) the amount of the monthly payment to the
MedicarePlus organization offering the high deductible plan
shall not exceed the monthly premium for the plan, and
‘‘(B) subject to paragraph (2), the difference between
the amount of payment that would otherwise be made
and the amount of payment to such organization shall
be made directly into a High Deductible MedicarePlus MSA
established (and, if applicable, designated) by the individ-
ual under paragraph (2).
‘‘(2) ESTABLISHMENT AND DESIGNATION OF MEDICAREPLUS
MEDICAL SAVINGS ACCOUNT AS REQUIREMENT FOR PAYMENT OF
H. R. 2491—310
CONTRIBUTION.—In the case of an individual who has elected
coverage under a high deductible plan, no payment shall be
made under paragraph (1)(B) on behalf of an individual for
a month unless the individual—
‘‘(A) has established before the beginning of the month
(or by such other deadline as the Secretary may specify)
a High Deductible MedicarePlus MSA (as defined in section
137(b)(2) of the Internal Revenue Code of 1986), and
‘‘(B) if the individual has established more than one
High Deductible MedicarePlus MSA, has designated one
of such accounts as the individual’s High Deductible
MedicarePlus MSA for purposes of this part.
Under rules under this section, such an individual may change
the designation of such account under subparagraph (B) for
purposes of this part.
‘‘(3) LUMP SUM DEPOSIT OF MEDICAL SAVINGS ACCOUNT CON-
TRIBUTION.—In the case of an individual electing a high deduct-
ible plan effective beginning with a month in a year, the amount
of the contribution to the High Deductible MedicarePlus MSA
on behalf of the individual for that month and all successive
months in the year shall be deposited during that first month.
In the case of a termination of such an election as of a month
before the end of a year, the Secretary shall provide for a
procedure for the recovery of deposits attributable to the
remaining months in the year.
‘‘(4) PERMITTING CONTRIBUTIONS INTO MEDICAREPLUS MSA.—
Effective January 1, 1997, if a member of a federally-qualified
health maintenance organization certifies that a Rebate
MedicarePlus MSA (as defined in section 137(c) of the Internal
Revenue Code of 1986) has been established for the benefit
of such member, the health maintenance organization may
reduce the basic health services payment otherwise determined
under otherwise applicable law by requiring the payment of
a deductible by the member for basic health services.
‘‘(f) PAYMENTS OF REBATES.—
‘‘(1) IN GENERAL.—If the amount of the monthly premium
for a MedicarePlus plan (other than a high deductible plan)
for a MedicarePlus payment area for a year is less than 1⁄12
of the annual MedicarePlus capitation rate applied under this
section 1854 for the area and year involved, at the election
of an individual enrolled under the plan the Secretary shall
either—
‘‘(A) in the case of an individual who has a Rebate
MedicarePlus MSA account (as defined in section 137(b)(3)
of the Internal Revenue Code of 1986), to deposit 100
percent of such difference in such an account specified
by the individual; or
‘‘(B)(i) pay to the MedicarePlus organization on behalf
of such individual the monthly amount equal to 100 percent
of such difference up to the amount of the premium amount
of such individual for supplemental benefits described in
section 1895H(b),
‘‘(ii) pay to such individual an amount equal to 75
percent of the remainder of such difference, and
‘‘(iii) deposit any remainder of such difference in the
Federal Hospital Insurance Trust Fund.
‘‘(2) TIME FOR PAYMENT.—
H. R. 2491—311
‘‘(A) IN GENERAL.—Subject to subparagraph (B), pay-
ments and deposits described in paragraph (1) shall be
made on a monthly basis.
‘‘(B) CASH
REBATES.—A rebate under paragraph
(1)(B)(ii) shall be paid as of the close of the calendar year
to which the enrollment applied.
‘‘(g) PAYMENTS
FROM
TRUST
FUND.—The payment to a
MedicarePlus organization under this section for individuals
enrolled under this part with the organization, and payments to
a High Deductible or Rebate MedicarePlus MSA under subsection
(e)(1)(B) or subsection (f), shall be made from the Federal Hospital
Insurance Trust Fund and the Federal Supplementary Medical
Insurance Trust Fund in such proportion as the Secretary deter-
mines reflects the relative weight that benefits under part A and
under part B represents of the actuarial value of the total benefits
under this title.
‘‘(h) SPECIAL RULE FOR CERTAIN INPATIENT HOSPITAL STAYS.—
In the case of an individual who is receiving inpatient hospital
services from a subsection (d) hospital (as defined in section
1886(d)(1)(B)) as of the effective date of the individual’s—
‘‘(1) election under this part of a MedicarePlus plan offered
by a MedicarePlus organization—
‘‘(A) payment for such services until the date of the
individual’s discharge shall be made under this title
through the MedicarePlus plan or the Medicare fee-for-
service program option described in section 1851(a)(1)(A)
(as the case may be) elected before the election with such
organization,
‘‘(B) the elected organization shall not be financially
responsible for payment for such services until the date
after the date of the individual’s discharge, and
‘‘(C) the organization shall nonetheless be paid the
full amount otherwise payable to the organization under
this part; or
‘‘(2) termination of election with respect to a MedicarePlus
organization under this part—
‘‘(A) the organization shall be financially responsible
for payment for such services after such date and until
the date of the individual’s discharge,
‘‘(B) payment for such services during the stay shall
not be made under section 1886(d) or by any succeeding
MedicarePlus organization, and
‘‘(C) the terminated organization shall not receive any
payment with respect to the individual under this part
during the period the individual is not enrolled.
‘‘PREMIUMS AND REBATES
‘‘SEC. 1855. (a) SUBMISSION AND CHARGING OF PREMIUMS.—
‘‘(1) 
IN
GENERAL.—Subject 
to 
paragraph 
(3), 
each
MedicarePlus organization shall file with the Secretary each
year, in a form and manner and at a time specified by the
Secretary—
‘‘(A) the amount of the monthly premium for coverage
for services under section 1852(a) under each MedicarePlus
plan it offers under this part in each MedicarePlus payment
area (as defined in section 1854(d)) in which the plan
is being offered; and
H. R. 2491—312
‘‘(B) the enrollment capacity in relation to the plan
in each such area.
‘‘(2) TERMINOLOGY.—In this part—
‘‘(A) the term ‘monthly premium’ means, with respect
to a MedicarePlus plan offered by a MedicarePlus organiza-
tion, the monthly premium filed under paragraph (1), not
taking into account the amount of any payment made
toward the premium under section 1854; and
‘‘(B) the term ‘net monthly premium’ means, with
respect to such a plan and an individual enrolled with
the plan, the premium (as defined in subparagraph (A))
for the plan reduced by the amount of payment made
toward such premium under section 1854.
‘‘(3) LIMITATION ON PORTION OF MONTHLY PREMIUM ATTRIB-
UTABLE TO REQUIRED COVERAGE.—In no case may the portion
of the monthly premium for a MedicarePlus plan for an area
and year attributable to required services under section
1852(a)(1) exceed the adjusted community rate for the plan
(as defined in subsection (f)(5)).
‘‘(b) NET MONTHLY PREMIUM.—The amount of the net monthly
premium 
charged 
by 
a 
MedicarePlus 
organization 
for 
a
MedicarePlus plan offered in a MedicarePlus payment area to an
individual under this part shall be equal to the amount (if any)
by which—
‘‘(1) the amount of the monthly premium for the plan
for the period involved, exceeds
‘‘(2) 1⁄12 of the annual MedicarePlus capitation rate applied
under section 1854 for the area and year involved.
‘‘(c) UNIFORM
PREMIUM.—The monthly premium and net
monthly premium (including rebates offered) by a MedicarePlus
organization under this part may not vary among individuals who
reside in the same MedicarePlus payment area.
‘‘(d) TERMS AND CONDITIONS OF IMPOSING PREMIUMS.—Each
MedicarePlus organization shall permit the payment of net monthly
premiums on a monthly basis and may terminate election of individ-
uals for a MedicarePlus plan for failure to make premium payments
only in accordance with section 1851(g)(3)(B)(i).
‘‘(e) RELATION OF PREMIUMS AND COST-SHARING TO BENEFITS.—
In no case may the portion of a MedicarePlus organization’s monthly
premium and the actuarial value of its deductibles, coinsurance,
and copayments charged for (to the extent attributable to the
required benefits described in section 1852(a)(1) and not counting
any amount attributable to balance billing) to individuals who
are enrolled under this part with the organization exceed the actuar-
ial value of the coinsurance and deductibles that would be applicable
on the average to individuals enrolled under this part with the
organization (or, if the Secretary finds that adequate data are
not available to determine that actuarial value, the actuarial value
of the coinsurance and deductibles applicable on the average to
individuals in the area, in the State, or in the United States,
eligible to enroll under this part with the organization, or other
appropriate data) and entitled to benefits under part A and enrolled
under part B if they were not members of a MedicarePlus organiza-
tion.
‘‘(f) REQUIREMENT
FOR ADDITIONAL BENEFITS, REBATES, OR
BOTH.—
‘‘(1) REQUIREMENT.—
H. R. 2491—313
‘‘(A) IN GENERAL.—Each MedicarePlus organization (in
relation to a MedicarePlus plan it offers) shall provide
that if there is an excess amount (as defined in subpara-
graph (B)) for the plan for a contract year, subject to
the succeeding provisions of this subsection, the organiza-
tion shall provide to individuals such additional benefits
(as the organization may specify), a monetary rebate (paid
on a monthly basis), or a combination thereof, in a total
value which is at least equal to the adjusted excess amount
(as defined in subparagraph (C)).
‘‘(B) EXCESS AMOUNT.—For purposes of this paragraph,
the ‘excess amount’, for an organization for a plan, is the
amount (if any) by which—
‘‘(i) the average of the capitation payments made
to the organization under section 1854 for the plan
at the beginning of contract year, exceeds
‘‘(ii) the actuarial value of the required benefits
described in section 1852(a)(1) under the plan for
individuals under this part, as determined based upon
an adjusted community rate described in paragraph
(5) (as reduced for the actuarial value of the coinsur-
ance and deductibles under parts A and B).
‘‘(C) ADJUSTED EXCESS AMOUNT.—For purposes of this
paragraph, the ‘adjusted excess amount’, for an organiza-
tion for a plan, is the excess amount reduced to reflect
any amount withheld and reserved for the organization
for the year under paragraph (3).
‘‘(D) NO APPLICATION TO HIGH DEDUCTIBLE PLANS.—
Subparagraph (A) shall not apply to a high deductible
plan.
‘‘(E) UNIFORM APPLICATION.—This paragraph shall be
applied uniformly for all enrollees for a plan in a
MedicarePlus payment area.
‘‘(F) CONSTRUCTION.—Nothing in this subsection shall
be construed as preventing a MedicarePlus organization
from providing health care benefits that are in addition
to the benefits otherwise required to be provided under
this paragraph and from imposing a premium for such
additional benefits.
‘‘(2) RULES IN RELATION TO REBATES.—To the extent that
the adjusted excess amount for a plan exceeds the value of
additional benefits provided under subparagraph (A) by the
MedicarePlus organization in relation to the plan for a month,
then the organization shall provide for payment of the amount
of such excess as follows:
‘‘(A) REBATE MEDICAREPLUS MSA.—If the individual has
a Rebate MedicarePlus MSA and elects treatment under
this subparagraph, the organization shall provide for pay-
ment of such excess into such MSA.
‘‘(B) ADDITIONAL AMOUNT.—The organization shall pro-
vide for payment of the amount of any additional excess
as follows:
‘‘(i) 75 percent of such excess to the individual.
‘‘(ii) 25 percent to the Federal Hospital Insurance
Trust Fund.
‘‘(3) STABILIZATION
FUND.—A MedicarePlus organization
may provide that a part of the value of an excess actuarial
H. R. 2491—314
amount described in paragraph (1) be withheld and reserved
in the Federal Hospital Insurance Trust Fund and in the Fed-
eral Supplementary Medical Insurance Trust Fund (in such
proportions as the Secretary determines to be appropriate) by
the Secretary for subsequent annual contract periods, to the
extent required to stabilize and prevent undue fluctuations
in the additional benefits and rebates offered in those subse-
quent periods by the organization in accordance with such
paragraph. Any of such value of the amount reserved which
is not provided as additional benefits described in paragraph
(1)(A) to individuals electing the MedicarePlus plan of the
organization in accordance with such paragraph prior to the
end of such periods, shall revert for the use of such trust
funds.
‘‘(4) DETERMINATION
BASED
ON
INSUFFICIENT
DATA.—For
purposes of this subsection, if the Secretary finds that there
is insufficient enrollment experience (including no enrollment
experience in the case of a provider-sponsored organization)
to determine an average of the capitation payments to be made
under this part at the beginning of a contract period, the
Secretary may determine such an average based on the enroll-
ment experience of other contracts entered into under this
part.
‘‘(5) ADJUSTED COMMUNITY RATE.—
‘‘(A) IN GENERAL.—For purposes of this subsection, sub-
ject to subparagraph (B), the term ‘adjusted community
rate’ for a service or services means, at the election of
a MedicarePlus organization, either—
‘‘(i) the rate of payment for that service or services
which the Secretary annually determines would apply
to an individual electing a MedicarePlus plan under
this part if the rate of payment were determined under
a ‘community rating system’ (as defined in section
1302(8) of the Public Health Service Act, other than
subparagraph (C)), or
‘‘(ii) such portion of the weighted aggregate pre-
mium, which the Secretary annually estimates would
apply to such an individual, as the Secretary annually
estimates is attributable to that service or services,
but adjusted for differences between the utilization
characteristics of the individuals electing coverage under
this part and the utilization characteristics of the other
enrollees with the organization (or, if the Secretary finds
that adequate data are not available to adjust for those
differences, 
the 
differences 
between 
the 
utilization
characteristics of individuals selecting other MedicarePlus
coverage, or MedicarePlus eligible individuals in the area,
in the State, or in the United States, eligible to elect
MedicarePlus coverage under this part and the utilization
characteristics of the rest of the population in the area,
in the State, or in the United States, respectively).
‘‘(B) SPECIAL RULE FOR PROVIDER-SPONSORED ORGANIZA-
TIONS.—In the case of a MedicarePlus organization that
is a provider-sponsored organization, the adjusted commu-
nity rate under subparagraph (A) for a MedicarePlus plan
of the organization may be computed (in a manner specified
by the Secretary) using data in the general commercial
H. R. 2491—315
marketplace or (during a transition period) based on the
costs incurred by the organization in providing such a
plan.
‘‘(g) TRANSITIONAL
FILE
AND
USE
FOR
CERTAIN
REQUIRE-
MENTS.—
‘‘(1) IN GENERAL.—In the case of a MedicarePlus plan pro-
posed to be offered before the end of the transition period
(as defined in section 1851(e)(1)(B)) by a MedicarePlus organiza-
tion described in section 1853(f)(3) or by a MedicarePlus
organization with a contract in effect under section 1857, if
the organization submits complete information to the Secretary
regarding the plan demonstrating that the plan meets the
requirements and standards under section 1852(a) and sub-
sections (a) through (f) of this section (relating to benefits
and premiums), the plan shall be deemed as meeting such
requirements and standards under such provisions unless the
Secretary disapproves the plan within 60 days after the date
of submission of the complete information.
‘‘(2) CONSTRUCTION.—Nothing in paragraph (1) shall be
construed as waiving the requirement of a contract under sec-
tion 1857 or waiving requirements and standards not referred
to in paragraph (1).
‘‘ESTABLISHMENT OF STANDARDS; CERTIFICATION OF ORGANIZATIONS
AND PLANS
‘‘SEC. 1856. (a) ESTABLISHMENT OF STANDARDS.—
‘‘(1) 
STANDARDS
APPLICABLE
TO
STATE-REGULATED
ORGANIZATIONS AND PLANS AND NON-SOLVENCY STANDARDS FOR
PROVIDER-SPONSORED ORGANIZATIONS.—
‘‘(A) RECOMMENDATIONS OF NAIC.—The Secretary shall
request the National Association of Insurance Commis-
sioners to develop and submit to the Secretary, not later
than 12 months after the date of the enactment of the
Medicare Preservation Act of 1995, proposed standards
consistent with the requirements of this part for
MedicarePlus organizations (other than union sponsors and
Taft-Hartley sponsors, and other than solvency standards
described in subsection (b) for provider-sponsored organiza-
tions) and MedicarePlus plans offered by such organiza-
tions, except that such proposed standards may relate to
MedicarePlus organizations that are qualified association
sponsors only with respect to MedicarePlus plans offered
by them and only if such plans are issued by organizations
to which section 1853(a)(1) applies.
‘‘(B) REVIEW.—If the Association submits such stand-
ards on a timely basis, the Secretary shall review such
standards to determine if the standards meet the require-
ments of this part. The Secretary shall complete the review
of the standards not later than 90 days after the date
of their submission. The Secretary shall promulgate such
proposed standards to apply to organizations and plans
described in subparagraph (A) except to the extent that
the Secretary modifies such proposed standards because
they do not meet such requirements.
‘‘(C) FAILURE TO SUBMIT.—If the Association does not
submit such standards on a timely basis, the Secretary
shall promulgate such standards by not later than the
H. R. 2491—316
date the Secretary would otherwise have been required
to promulgate standards under subparagraph (B).
‘‘(D) USE OF INTERIM RULES.—For the period in which
this part is in effect and standards are being developed
and established under the preceding provisions of this sub-
section, the Secretary shall provide by not later than June
1, 1996, for the application of such interim standards (with-
out regard to any requirements for notice and public com-
ment) as may be appropriate to provide for the expedited
implementation of this part. Such interim standards shall
not apply after the date standards are established under
the preceding provisions of this paragraph.
‘‘(2) ESTABLISHMENT OF STANDARDS FOR UNION AND TAFT-
HARTLEY
SPONSORS, QUALIFIED
ASSOCIATION
SPONSORS, AND
PLANS.—
‘‘(A) IN
GENERAL.—The Secretary shall develop and
promulgate by regulation standards consistent with the
requirements of this part for union and Taft-Hartley spon-
sors, for 
qualified 
association 
sponsors, 
and 
for
MedicarePlus plans offered by such organizations (other
than MedicarePlus plans offered by qualified association
sponsors that are issued by organizations to which section
1853(a)(1) applies).
‘‘(B) CONSULTATION WITH SECRETARY OF LABOR.—The
Secretary shall consult with the Secretary of Labor with
respect to such standards for such sponsors and plans.
‘‘(C) TIMING.—Standards under this paragraph shall
be promulgated at or about the time standards are promul-
gated under paragraph (1).
‘‘(3) COORDINATION AMONG FINAL STANDARDS.—In establish-
ing standards (other than on an interim basis) under this
subsection and subsection (b), the Secretary shall seek to pro-
vide for consistency (as appropriate) across the different types
of MedicarePlus organizations, in order to promote equitable
treatment of different types of organizations and consistent
protection for individuals who elect plans offered by the dif-
ferent types of MedicarePlus organizations.
‘‘(4) USE
OF
CURRENT
STANDARDS
FOR
INTERIM
STAND-
ARDS.—To the extent practicable and consistent with the
requirements of this part, standards established on an interim
basis to carry out requirements of this part may be based
on currently applicable standards, such as the rules established
under section 1876 (as in effect as of the date of the enactment
of this section) to carry out analogous provisions of such section
or standards established or developed for application in the
private health insurance market.
‘‘(5) APPLICATION
OF
NEW
STANDARDS
TO
ENTITIES
WITH
A CONTRACT.—In the case of a MedicarePlus organization with
a contract in effect under this part at the time standards
applicable to the organization under this section are changed,
the organization may elect not to have such changes apply
to the organization until the end of the current contract year
(or, if there is less than 6 months remaining in the contract
year, until 1 year after the end of the current contract year).
‘‘(6) RELATION TO STATE LAWS.—The standards established
under this subsection shall supersede any State law or regula-
tion with respect to MedicarePlus plans which are offered by
H. R. 2491—317
MedicarePlus organizations under this part and are issued
by organizations to which section 1853(a)(1) applies, to the
extent such law or regulation is inconsistent with such stand-
ards.
‘‘(b) ESTABLISHMENT OF SOLVENCY STANDARDS FOR PROVIDER-
SPONSORED ORGANIZATIONS.—
‘‘(1) ESTABLISHMENT.—
‘‘(A) IN GENERAL.—The Secretary shall establish, on
an expedited basis and using a negotiated rulemaking proc-
ess under subchapter 3 of chapter 5 of title 5, United
States Code, standards described in section 1853(e) (relat-
ing to the financial solvency and capital adequacy of the
organization) that entities must meet to qualify as provider-
sponsored organizations under this part.
‘‘(B) FACTORS TO CONSIDER.—In establishing solvency
standards under subparagraph (A) for provider-sponsored
organizations, the Secretary shall consult with interested
parties and shall take into account—
‘‘(i) the delivery system assets of such an organiza-
tion and ability of such an organization to provide
services directly to enrollees through affiliated provid-
ers, and
‘‘(ii) alternative means of protecting against insol-
vency, including reinsurance, unrestricted surplus, let-
ters of credit, guarantees, organizational insurance cov-
erage, partnerships with other licensed entities, and
valuation attributable to the ability of such an
organization to meet its service obligations through
direct delivery of care.
‘‘(2) PUBLICATION OF NOTICE.—In carrying out the rule-
making process under this subsection, the Secretary, after con-
sultation with the National Association of Insurance Commis-
sioners, the American Academy of Actuaries, organizations rep-
resentative of medicare beneficiaries, and other interested par-
ties, shall publish the notice provided for under section 564(a)
of title 5, United States Code, by not later than 45 days after
the date of the enactment of the Medicare Preservation Act
of 1995.
‘‘(3) TARGET DATE FOR PUBLICATION OF RULE.—As part of
the notice under paragraph (2), and for purposes of this sub-
section, the ‘target date for publication’ (referred to in section
564(a)(5) of such title) shall be September 1, 1996.
‘‘(4) ABBREVIATED PERIOD FOR SUBMISSION OF COMMENTS.—
In applying section 564(c) of such title under this subsection,
‘15 days’ shall be substituted for ‘30 days’.
‘‘(5) APPOINTMENT OF NEGOTIATED RULEMAKING COMMITTEE
AND FACILITATOR.—The Secretary shall provide for—
‘‘(A) the appointment of a negotiated rulemaking
committee under section 565(a) of such title by not later
than 30 days after the end of the comment period provided
for under section 564(c) of such title (as shortened under
paragraph (4)), and
‘‘(B) the nomination of a facilitator under section 566(c)
of such title by not later than 10 days after the date
of appointment of the committee.
‘‘(6) PRELIMINARY
COMMITTEE
REPORT.—The negotiated
rulemaking committee appointed under paragraph (5) shall
H. R. 2491—318
report to the Secretary, by not later than June 1, 1996, regard-
ing the committee’s progress on achieving a consensus with
regard to the rulemaking proceeding and whether such consen-
sus is likely to occur before one month before the target date
for publication of the rule. If the committee reports that the
committee has failed to make significant progress towards such
consensus or is unlikely to reach such consensus by the target
date, the Secretary may terminate such process and provide
for the publication of a rule under this subsection through
such other methods as the Secretary may provide.
‘‘(7) FINAL COMMITTEE REPORT.—If the committee is not
terminated under paragraph (6), the rulemaking committee
shall submit a report containing a proposed rule by not later
than one month before the target publication date.
‘‘(8) INTERIM, FINAL EFFECT.—The Secretary shall publish
a rule under this subsection in the Federal Register by not
later than the target publication date. Such rule shall be effec-
tive and final immediately on an interim basis, but is subject
to change and revision after public notice and opportunity
for a period (of not less than 60 days) for public comment.
In connection with such rule, the Secretary shall specify the
process for the timely review and approval of applications of
entities to be certified as provider-sponsored organizations
pursuant to such rules and consistent with this subsection.
‘‘(9) PUBLICATION OF RULE AFTER PUBLIC COMMENT.—The
Secretary shall provide for consideration of such comments
and republication of such rule by not later than 1 year after
the target publication date.
‘‘(10) PROCESS FOR APPROVAL OF APPLICATIONS FOR CERTIFI-
CATION OF SOLVENCY.—
‘‘(A) IN GENERAL.—The Secretary shall establish a proc-
ess for the receipt and approval of applications of entities
for certification of solvency of provider-sponsored organiza-
tions under this part. Under such process, the Secretary
shall act upon a complete application submitted within
60 days after the date it is received.
‘‘(B) CIRCULATION OF PROPOSED APPLICATION FORM.—
By March 1, 1996, the Secretary, after consultation with
the negotiated rulemaking committee, shall circulate a pro-
posed application form that could be used by entities consid-
ering being certified for solvency under this part.
‘‘(c) CERTIFICATION PROCESS.—
‘‘(1) STATE CERTIFICATION PROCESS FOR STATE-REGULATED
ORGANIZATIONS AND NON-SOLVENCY STANDARDS FOR PROVIDER-
SPONSORED ORGANIZATIONS.—
‘‘(A) APPROVAL OF STATE PROCESS.—The Secretary shall
approve a MedicarePlus certification and enforcement pro-
gram established by a State for applying the standards
established under this section to MedicarePlus organiza-
tions (other than union sponsors and Taft-Hartley sponsors
and other than solvency standards for provider-sponsored
organizations) and MedicarePlus plans offered by such
organizations if the Secretary determines that the program
effectively provides for the application and enforcement
of such standards in the State with respect to such
organizations and plans and does not discriminate in its
application by type of organization or plan. Such program
H. R. 2491—319
shall provide for certification of compliance of MedicarePlus
organizations and plans with the applicable requirements
of this part not less often than once every 3 years.
‘‘(B) EFFECT
OF
CERTIFICATION
UNDER
STATE
PROC-
ESS.—A MedicarePlus organization and MedicarePlus plan
offered by such an organization that is certified under
such program is considered to have been certified under
this paragraph with respect to the offering of the plan
to individuals residing in the State.
‘‘(C) USER FEES.—The State may impose user fees on
organizations seeking certification under this paragraph
in such amounts as the State deems sufficient to finance
the costs of such certification. Nothing in this subparagraph
shall be construed as restricting a State’s authority to
impose premium taxes, other taxes, or other levies.
‘‘(D) REVIEW.—The Secretary periodically shall review
State programs approved under subparagraph (A) to deter-
mine if they continue to provide for certification and
enforcement described in such paragraph. If the Secretary
finds that a State program no longer so provides, before
making a final determination, the Secretary shall provide
the State an opportunity to adopt such a plan of correction
as would permit the State program to meet the require-
ments of paragraph (1). If the Secretary makes a final
determination that the State program, after such an oppor-
tunity, fails to meet such requirements, the provisions of
subsection (b) shall apply to MedicarePlus organizations
and plans in the State.
‘‘(E) EFFECT
OF
NO
STATE
PROGRAM.—Beginning on
the date standards are established under section 1856,
in the case of organizations and plans in States in which
a certification program has not been approved and in oper-
ation under subparagraph (A), the Secretary shall establish
a process for the certification of MedicarePlus organizations
(other than union sponsors and Taft-Hartley sponsors and
other than solvency standards for provider-sponsored
organizations) and plans of such organizations as meeting
such standards.
‘‘(F) PUBLICATION
OF
LIST
OF
APPROVED
STATE
PRO-
GRAMS.—The Secretary shall publish (and periodically
update) a list of those State programs which are approved
for purposes of this paragraph.
‘‘(2) FEDERAL CERTIFICATION PROCESS FOR UNION SPONSORS
AND TAFT-HARTLEY SPONSORS.—
‘‘(A) ESTABLISHMENT.—The Secretary shall establish
a process for the certification of union sponsors and Taft-
Hartley sponsors and MedicarePlus plans offered by such
sponsors and organizations as meeting the applicable
standards established under this section.
‘‘(B) INVOLVEMENT
OF
SECRETARY
OF
LABOR.—Such
process shall be established and operated in cooperation
with the Secretary of Labor with respect to union sponsors
and Taft-Hartley sponsors.
‘‘(C) USE OF STATE LICENSING AND PRIVATE ACCREDITA-
TION PROCESSES.—
‘‘(i) IN
GENERAL.—The process under this para-
graph shall, to the maximum extent practicable, pro-
H. R. 2491—320
vide that MedicarePlus organizations and plans that
are licensed or certified through a qualified private
accreditation process that the Secretary finds applies
standards that are no less stringent than the require-
ments of this part are deemed to meet the correspond-
ing requirements of this part for such an organization
or plan.
‘‘(ii) PERIODIC
ACCREDITATION.—The use of an
accreditation under clause (i) shall be valid only for
such period as the Secretary specifies.
‘‘(D) USER FEES.—The Secretary may impose user fees
on entities seeking certification under this paragraph in
such amounts as the Secretary deems sufficient to finance
the costs of such certification.
‘‘(3) NOTICE TO ENROLLEES IN CASE OF DECERTIFICATION.—
If a MedicarePlus organization or plan is decertified under
this subsection, the organization shall notify each enrollee with
the organization and plan under this part of such decertifica-
tion.
‘‘(4) QUALIFIED
ASSOCIATION
SPONSORS.—In the case of
MedicarePlus plans offered by a MedicarePlus organization that
is a qualified association sponsor and issued by an organization
to which section 1853(a)(1) applies or by a provider-sponsored
organization, nothing in this subsection shall be construed as
limiting the authority of States to regulate such plans.
‘‘CONTRACTS WITH MEDICAREPLUS ORGANIZATIONS
‘‘SEC. 1857. (a) IN GENERAL.—The Secretary shall not permit
the election under section 1851 of a MedicarePlus plan offered
by a MedicarePlus organization under this part, and no payment
shall be made under section 1854 to an organization, unless the
Secretary has entered into a contract under this section with an
organization with respect to the offering of such plan. Such a
contract with an organization may cover more than one
MedicarePlus plan. Such contract shall provide that the organiza-
tion agrees to comply with the applicable requirements and stand-
ards of this part and the terms and conditions of payment as
provided for in this part.
‘‘(b) MINIMUM ENROLLMENT REQUIREMENTS.—
‘‘(1) IN GENERAL.—Subject to paragraphs (2) and (3), the
Secretary may not enter into a contract under this section
with a MedicarePlus organization (other than a union sponsor
or Taft-Hartley sponsor) unless the organization has at least
5,000 individuals (or 1,500 individuals in the case of an
organization that is a provider-sponsored organization) who
are receiving health benefits through the organization, except
that the standards under section 1856 may permit the organiza-
tion to have a lesser number of beneficiaries (but not less
than 500 in the case of an organization that is a provider-
sponsored organization) if the organization primarily serves
individuals residing outside of urbanized areas.
‘‘(2) EXCEPTION FOR HIGH DEDUCTIBLE PLAN.—Paragraph
(1) shall not apply with respect to a contract that relates
only to a high deductible plan.
‘‘(3) ALLOWING TRANSITION.—The Secretary may waive the
requirement of paragraph (1) during the first 3 contract years
with respect to an organization.
H. R. 2491—321
‘‘(c) CONTRACT PERIOD AND EFFECTIVENESS.—
‘‘(1) PERIOD.—Each contract under this section shall be
for a term of at least one year, as determined by the Secretary,
and may be made automatically renewable from term to term
in the absence of notice by either party of intention to terminate
at the end of the current term.
‘‘(2) TERMINATION AUTHORITY.—In accordance with proce-
dures established under subsection (h), the Secretary may at
any time terminate any such contract or may impose the inter-
mediate sanctions described in an applicable paragraph of sub-
section (g) on the MedicarePlus organization if the Secretary
determines that the organization—
‘‘(A) has failed substantially to carry out the contract;
‘‘(B) is carrying out the contract in a manner inconsist-
ent with the efficient and effective administration of this
part; and
‘‘(C) no longer substantially meets the applicable condi-
tions of this part.
‘‘(3) EFFECTIVE DATE OF CONTRACTS.—The effective date
of any contract executed pursuant to this section shall be speci-
fied in the contract, except that in no case shall a contract
under this section which provides for coverage under a high
deductible account be effective before January 1997 with respect
to such coverage.
‘‘(4) PREVIOUS
TERMINATIONS.—The Secretary may not
enter into a contract with a MedicarePlus organization if a
previous contract with that organization under this section
was terminated at the request of the organization within the
preceding five-year period, except in circumstances which war-
rant special consideration, as determined by the Secretary.
‘‘(5) NO CONTRACTING AUTHORITY.—The authority vested
in the Secretary by this part may be performed without regard
to such provisions of law or regulations relating to the making,
performance, amendment, or modification of contracts of the
United States as the Secretary may determine to be inconsist-
ent with the furtherance of the purpose of this title.
‘‘(d) PROTECTIONS AGAINST FRAUD AND BENEFICIARY PROTEC-
TIONS.—
‘‘(1) INSPECTION AND AUDIT.—Each contract under this sec-
tion shall provide that the Secretary, or any person or organiza-
tion designated by the Secretary—
‘‘(A) shall have the right to inspect or otherwise evalu-
ate (i) the quality, appropriateness, and timeliness of serv-
ices performed under the contract and (ii) the facilities
of the organization when there is reasonable evidence of
some need for such inspection, and
‘‘(B) shall have the right to audit and inspect any
books and records of the MedicarePlus organization that
pertain (i) to the ability of the organization to bear the
risk of potential financial losses, or (ii) to services per-
formed or determinations of amounts payable under the
contract.
‘‘(2) ENROLLEE
NOTICE
AT
TIME
OF
TERMINATION.—Each
contract under this section shall require the organization to
provide (and pay for) written notice in advance of the contract’s
termination, as well as a description of alternatives for obtain-
H. R. 2491—322
ing benefits under this title, to each individual enrolled with
the organization under this part.
‘‘(3) DISCLOSURE.—
‘‘(A) IN
GENERAL.—Each MedicarePlus organization
shall, in accordance with regulations of the Secretary,
report to the Secretary financial information which shall
include the following:
‘‘(i) Such information as the Secretary may require
demonstrating that the organization has a fiscally
sound operation.
‘‘(ii) A copy of the report, if any, filed with the
Health Care Financing Administration containing the
information required to be reported under section 1124
by disclosing entities.
‘‘(iii) A description of transactions, as specified by
the Secretary, between the organization and a party
in interest. Such transactions shall include—
‘‘(I) any sale or exchange, or leasing of any
property between the organization and a party
in interest;
‘‘(II) any furnishing for consideration of goods,
services (including management services), or facili-
ties between the organization and a party in
interest, but not including salaries paid to employ-
ees for services provided in the normal course of
their employment and health services provided to
members by hospitals and other providers and by
staff, medical group (or groups), individual practice
association (or associations), or any combination
thereof; and
‘‘(III) any lending of money or other extension
of credit between an organization and a party in
interest.
The Secretary may require that information reported
respecting an organization which controls, is controlled by,
or is under common control with, another entity be in
the form of a consolidated financial statement for the
organization and such entity.
‘‘(B) PARTY IN INTEREST DEFINED.—For the purposes
of this paragraph, the term ‘party in interest’ means—
‘‘(i) any director, officer, partner, or employee
responsible for management or administration of a
MedicarePlus organization, any person who is directly
or indirectly the beneficial owner of more than 5 per-
cent of the equity of the organization, any person who
is the beneficial owner of a mortgage, deed of trust,
note, or other interest secured by, and valuing more
than 5 percent of the organization, and, in the case
of a MedicarePlus organization organized as a non-
profit corporation, an incorporator or member of such
corporation under applicable State corporation law;
‘‘(ii) any entity in which a person described in
clause (i)—
‘‘(I) is an officer or director;
‘‘(II) is a partner (if such entity is organized
as a partnership);
H. R. 2491—323
‘‘(III) has directly or indirectly a beneficial
interest of more than 5 percent of the equity; or
‘‘(IV) has a mortgage, deed of trust, note, or
other interest valuing more than 5 percent of the
assets of such entity;
‘‘(iii) any person directly or indirectly controlling,
controlled by, or under common control with an
organization; and
‘‘(iv) any spouse, child, or parent of an individual
described in clause (i).
‘‘(C) ACCESS
TO
INFORMATION.—Each MedicarePlus
organization shall make the information reported pursuant
to subparagraph (A) available to its enrollees upon reason-
able request.
‘‘(4) LOAN INFORMATION.—The contract shall require the
organization to notify the Secretary of loans and other special
financial arrangements which are made between the organiza-
tion and subcontractors, affiliates, and related parties.
‘‘(e) ADDITIONAL CONTRACT TERMS.—The contract shall contain
such other terms and conditions not inconsistent with this part
(including requiring the organization to provide the Secretary with
such information) as the Secretary may find necessary and appro-
priate.
‘‘(f) INTERMEDIATE SANCTIONS.—
‘‘(1) IN
GENERAL.—If the Secretary determines that a
MedicarePlus organization with a contract under this section—
‘‘(A) fails substantially to provide medically necessary
items and services that are required (under law or under
the contract) to be provided to an individual covered under
the contract, if the failure has adversely affected (or has
substantial likelihood of adversely affecting) the individual;
‘‘(B) imposes net monthly premiums on individuals
enrolled under this part in excess of the net monthly pre-
miums permitted;
‘‘(C) acts to expel or to refuse to re-enroll an individual
in violation of the provisions of this part;
‘‘(D) engages in any practice that would reasonably
be expected to have the effect of denying or discouraging
enrollment (except as permitted by this part) by eligible
individuals with the organization whose medical condition
or history indicates a need for substantial future medical
services;
‘‘(E) misrepresents or falsifies information that is fur-
nished—
‘‘(i) to the Secretary under this part, or
‘‘(ii) to an individual or to any other entity under
this part;
‘‘(F) fails to comply with the requirements of section
1852(j)(3); or
‘‘(G) employs or contracts with any individual or entity
that is excluded from participation under this title under
section 1128 or 1128A for the provision of health care,
utilization review, medical social work, or administrative
services or employs or contracts with any entity for the
provision (directly or indirectly) through such an excluded
individual or entity of such services;
H. R. 2491—324
the Secretary may provide, in addition to any other remedies
authorized by law, for any of the remedies described in para-
graph (2).
‘‘(2) REMEDIES.—The remedies described in this paragraph
are—
‘‘(A) civil money penalties of not more than $25,000
for each determination under paragraph (1) or, with respect
to a determination under subparagraph (D) or (E)(i) of
such paragraph, of not more than $100,000 for each such
determination, plus, with respect to a determination under
paragraph (1)(B), double the excess amount charged in
violation of such paragraph (and the excess amount charged
shall be deducted from the penalty and returned to the
individual concerned), and plus, with respect to a deter-
mination under paragraph (1)(D), $15,000 for each individ-
ual not enrolled as a result of the practice involved,
‘‘(B) suspension of enrollment of individuals under this
part after the date the Secretary notifies the organization
of a determination under paragraph (1) and until the Sec-
retary is satisfied that the basis for such determination
has been corrected and is not likely to recur, or
‘‘(C) suspension of payment to the organization under
this part for individuals enrolled after the date the Sec-
retary notifies the organization of a determination under
paragraph (1) and until the Secretary is satisfied that
the basis for such determination has been corrected and
is not likely to recur.
‘‘(3) OTHER INTERMEDIATE SANCTIONS.—In the case of a
MedicarePlus organization for which the Secretary makes a
determination under subsection (c)(2) the basis of which is
not described in paragraph (1), the Secretary may apply the
following intermediate sanctions:
‘‘(A) civil money penalties of not more than $25,000
for each determination under subsection (c)(2) if the defi-
ciency that is the basis of the determination has directly
adversely affected (or has the substantial likelihood of
adversely affecting) an individual covered under the
organization’s contract;
‘‘(B) civil money penalties of not more than $10,000
for each week beginning after the initiation of procedures
by the Secretary under subsection (h) during which the
deficiency that is the basis of a determination under sub-
section (c)(2) exists; and
‘‘(C) suspension of enrollment of individuals under this
part after the date the Secretary notifies the organization
of a determination under subsection (c)(2) and until the
Secretary is satisfied that the deficiency that is the basis
for the determination has been corrected and is not likely
to recur.
‘‘(4) PROCEEDINGS.—The provisions of section 1128A (other
than subsections (a) and (b)) shall apply to a civil money
penalty under paragraph (1) or (2) in the same manner as
they apply to a civil money penalty or proceeding under section
1128A(a).
‘‘(g) PROCEDURES
FOR IMPOSING SANCTIONS.—The Secretary
may terminate a contract with a MedicarePlus organization under
this section or may impose the intermediate sanctions described
H. R. 2491—325
in subsection (f) on the organization in accordance with formal
investigation and compliance procedures established by the Sec-
retary under which—
‘‘(1) the Secretary provides the organization with the
reasonable opportunity to develop and implement a corrective
action plan to correct the deficiencies that were the basis of
the Secretary’s determination under subsection (c)(2);
‘‘(2) the Secretary shall impose more severe sanctions on
organizations that have a history of deficiencies or that have
not taken steps to correct deficiencies the Secretary has brought
to their attention;
‘‘(3) there are no unreasonable or unnecessary delays
between the finding of a deficiency and the imposition of sanc-
tions; and
‘‘(4) the Secretary provides the organization with reason-
able notice and opportunity for hearing (including the right
to appeal an initial decision) before imposing any sanction
or terminating the contract.
‘‘STANDARDS FOR MEDICAREPLUS AND MEDICARE INFORMATION
TRANSACTIONS AND DATA ELEMENTS
‘‘SEC. 1858. (a) ADOPTION
OF STANDARDS
FOR DATA ELE-
MENTS.—
‘‘(1) IN GENERAL.—Pursuant to subsection (b), the Secretary
shall adopt standards for information transactions and data
elements of MedicarePlus and medicare information and modi-
fications to the standards under this section that are—
‘‘(A) consistent with the objective of reducing the
administrative costs of providing and paying for health
care; and
‘‘(B) developed or modified by a standard setting
organization (as defined in subsection (h)(8)).
‘‘(2) SPECIAL RULE RELATING TO DATA ELEMENTS.—The Sec-
retary may adopt or modify a standard relating to data elements
that is different from the standard developed by a standard
setting organization, if—
‘‘(A) the different standard or modification will substan-
tially reduce administrative costs to health care providers
and health plans compared to the alternative; and
‘‘(B) the standard or modification is promulgated in
accordance with the rulemaking procedures of subchapter
III of chapter 5 of title 5, United States Code.
‘‘(3) SECURITY STANDARDS FOR HEALTH INFORMATION NET-
WORK.—
‘‘(A) IN
GENERAL.—Each person, who maintains or
transmits MedicarePlus and medicare information or data
elements of MedicarePlus and medicare information and
is subject to this section, shall maintain reasonable and
appropriate administrative, technical, and physical safe-
guards—
‘‘(i) to ensure the integrity and confidentiality of
the information;
‘‘(ii) to protect against any reasonably antici-
pated—
‘‘(I) threats or hazards to the security or integ-
rity of the information; and
H. R. 2491—326
‘‘(II) unauthorized uses or disclosures of the
information; and
‘‘(iii) to otherwise ensure compliance with this sec-
tion by the officers and employees of such person.
‘‘(B) SECURITY STANDARDS.—The Secretary shall estab-
lish security standards and modifications to such standards
with respect to MedicarePlus and medicare information
network services, health plans, and health care providers
that—
‘‘(i) take into account—
‘‘(I) the technical capabilities of record systems
used to maintain MedicarePlus and medicare
information;
‘‘(II) the costs of security measures;
‘‘(III) the need for training persons who have
access to MedicarePlus and medicare information;
and
‘‘(IV) the value of audit trails in computerized
record systems; and
‘‘(ii) ensure that a MedicarePlus and medicare
information network service, if it is part of a larger
organization, has policies and security procedures
which isolate the activities of such service with respect
to processing information in a manner that prevents
unauthorized access to such information by such larger
organization.
The security standards established by the Secretary shall
be based on the standards developed or modified by stand-
ard setting organizations. If such standards do not exist,
the Secretary shall rely on the recommendations of the
MedicarePlus and Medicare Information Advisory Commit-
tee (established under subsection (g)) and shall consult
with 
appropriate 
government 
agencies 
and 
private
organizations in accordance with paragraph (5).
‘‘(4) IMPLEMENTATION SPECIFICATIONS.—The Secretary shall
establish specifications for implementing each of the standards
and the modifications to the standards adopted pursuant to
paragraph (1) or (3).
‘‘(5) ASSISTANCE TO THE SECRETARY.—In complying with
the requirements of this section, the Secretary shall rely on
recommendations of the MedicarePlus and Medicare Informa-
tion Advisory Committee established under subsection (g) and
shall consult with appropriate Federal and State agencies and
private organizations. The Secretary shall publish in the Fed-
eral Register the recommendations of the MedicarePlus and
Medicare Information Advisory Committee regarding the adop-
tion of a standard under this section.
‘‘(b) STANDARDS
FOR INFORMATION TRANSACTIONS
AND DATA
ELEMENTS.—
‘‘(1) IN GENERAL.—The Secretary shall adopt standards for
transactions and data elements to make MedicarePlus and
medicare information uniformly available to be exchanged elec-
tronically, that is—
‘‘(A) appropriate for the following financial and
administrative transactions: claims (including coordination
of benefits) or equivalent encounter information, enrollment
H. R. 2491—327
and disenrollment, eligibility, premium payments, and
referral certification and authorization; and
‘‘(B) related to other financial and administrative trans-
actions determined appropriate by the Secretary consistent
with the goals of improving the operation of the health
care system and reducing administrative costs.
‘‘(2) UNIQUE HEALTH IDENTIFIERS.—
‘‘(A) ADOPTION
OF
STANDARDS.—The Secretary shall
adopt standards providing for a standard unique health
identifier for each individual, employer, health plan, and
health care provider for use in the MedicarePlus and medi-
care information system. In developing unique health
identifiers for each health plan and health care provider,
the Secretary shall take into account multiple uses for
identifiers and multiple locations and specialty classifica-
tions for health care providers.
‘‘(B) PENALTY FOR IMPROPER DISCLOSURE.—A person
who knowingly uses or causes to be used a unique health
identifier under subparagraph (A) for a purpose that is
not authorized by the Secretary shall—
‘‘(i) be fined not more than $50,000, imprisoned
not more than 1 year, or both; or
‘‘(ii) if the offense is committed under false pre-
tenses, be fined not more than $100,000, imprisoned
not more than 5 years, or both.
‘‘(3) CODE SETS.—
‘‘(A) IN GENERAL.—The Secretary, in consultation with
the MedicarePlus and Medicare Information Advisory
Committee, experts from the private sector, and Federal
and State agencies, shall—
‘‘(i) select code sets for appropriate data elements
from among the code sets that have been developed
by private and public entities; or
‘‘(ii) establish code sets for such data elements
if no code sets for the data elements have been devel-
oped.
‘‘(B) DISTRIBUTION.—The Secretary shall establish effi-
cient and low-cost procedures for distribution (including
electronic distribution) of code sets and modifications made
to such code sets under subsection (c)(2).
‘‘(4) ELECTRONIC SIGNATURE.—
‘‘(A) IN
GENERAL.—The Secretary, after consultation
with the MedicarePlus and Medicare Information Advisory
Committee, shall promulgate regulations specifying proce-
dures for the electronic transmission and authentication
of signatures, compliance with which will be deemed to
satisfy Federal and State statutory requirements for writ-
ten signatures with respect to information transactions
required by this section and written signatures on enroll-
ment and disenrollment forms.
‘‘(B) PAYMENTS FOR SERVICES AND PREMIUMS.—Nothing
in this section shall be construed to prohibit the payment
of health care services or health plan premiums by debit,
credit, payment card or numbers, or other electronic means.
‘‘(5) TRANSFER OF INFORMATION BETWEEN HEALTH PLANS.—
The Secretary shall develop rules and procedures—
H. R. 2491—328
‘‘(A) for determining the financial liability of health
plans when health care benefits are payable under two
or more health plans; and
‘‘(B) for transferring among health plans appropriate
standard data elements needed for the coordination of bene-
fits, the sequential processing of claims, and other data
elements for individuals who have more than one health
plan.
‘‘(6) COORDINATION
OF
BENEFITS.—If, at the end of the
5-year period beginning on the date of the enactment of this
section, the Secretary determines that additional transaction
standards for coordinating benefits are necessary to reduce
administrative costs or duplicative (or inappropriate) payment
of claims, the Secretary shall establish further transaction
standards for the coordination of benefits between health plans.
‘‘(7) PROTECTION OF TRADE SECRETS.—Except as otherwise
required by law, the standards adopted under this section shall
not require disclosure of trade secrets or confidential commer-
cial information by an entity operating a MedicarePlus and
medicare information network.
‘‘(c) TIMETABLES FOR ADOPTION OF STANDARDS.—
‘‘(1) INITIAL STANDARDS.—Not later than 18 months after
the date of the enactment of this section, the Secretary shall
adopt standards relating to the information transactions, data
elements of MedicarePlus and medicare information and secu-
rity described in subsections (a) and (b).
‘‘(2) ADDITIONS AND MODIFICATIONS TO STANDARDS.—
‘‘(A) IN
GENERAL.—The Secretary shall review the
standards adopted under this section and shall adopt addi-
tional or modified standards, that have been developed
or modified by a standard setting organization, as deter-
mined appropriate, but not more frequently than once every
12 months. Any addition or modification to such standards
shall be completed in a manner which minimizes the
disruption and cost of compliance.
‘‘(B) ADDITIONS AND MODIFICATIONS TO CODE SETS.—
‘‘(i) IN GENERAL.—The Secretary shall ensure that
procedures exist for the routine maintenance, testing,
enhancement, and expansion of code sets.
‘‘(ii) ADDITIONAL RULES.—If a code set is modified
under this paragraph, the modified code set shall
include 
instructions 
on 
how 
data 
elements 
of
MedicarePlus and medicare information that were
encoded prior to the modification may be converted
or translated so as to preserve the informational value
of the data elements that existed before the modifica-
tion. Any modification to a code set under this para-
graph shall be implemented in a manner that mini-
mizes the disruption and cost of complying with such
modification.
‘‘(d) REQUIREMENTS FOR HEALTH PLANS.—
‘‘(1) IN GENERAL.—If a person desires to conduct any of
the information transactions described in subsection (b)(1) with
a health plan as a standard transaction, the health plan shall
conduct such standard transaction in a timely manner and
the information transmitted or received in connection with
H. R. 2491—329
such transaction shall be in the form of standard data elements
of MedicarePlus and medicare information.
‘‘(2) SATISFACTION OF REQUIREMENTS.—A health plan may
satisfy the requirement imposed on such plan under paragraph
(1) by directly transmitting standard data elements of
MedicarePlus and medicare information or submitting non-
standard data elements to a MedicarePlus and medicare
information network service for processing into standard data
elements and transmission.
‘‘(3) TIMETABLES FOR COMPLIANCE WITH REQUIREMENTS.—
Not later than 24 months after the date on which standards
are adopted under subsections (a) and (b) with respect to any
type of information transaction or data element of MedicarePlus
and medicare information or with respect to security, a health
plan shall comply with the requirements of this section with
respect to such transaction or data element.
‘‘(4) COMPLIANCE WITH MODIFIED STANDARDS.—If the Sec-
retary adopts a modified standard under subsection (a) or (b),
a health plan shall be required to comply with the modified
standard at such time as the Secretary determines appropriate
taking into account the time needed to comply due to the
nature and extent of the modification. However, the time deter-
mined appropriate under the preceding sentence shall be not
earlier than the last day of the 180-day period beginning on
the date such modified standard is adopted. The Secretary
may extend the time for compliance for small health plans,
if the Secretary determines such extension is appropriate.
‘‘(e) GENERAL PENALTY FOR FAILURE TO COMPLY WITH REQUIRE-
MENTS AND STANDARDS.—
‘‘(1) GENERAL PENALTY.—
‘‘(A) IN GENERAL.—Except as provided in paragraph
(2), the Secretary shall impose on any person that violates
a requirement or standard—
‘‘(i) with respect to MedicarePlus and medicare
information 
transactions, 
data 
elements 
of
MedicarePlus and medicare information, or security
imposed under subsection (a) or (b); or
‘‘(ii) with respect to health plans imposed under
subsection (d);
a penalty of not more than $100 for each such violation
of a specific standard or requirement, but the total amount
imposed for all such violations of a specific standard or
requirement during the calendar year shall not exceed
$25,000.
‘‘(B) PROCEDURES.—The provisions of section 1128A
(other than subsections (a) and (b) and the second sentence
of subsection (f)) shall apply to the imposition of a civil
money penalty under this paragraph in the same manner
as such provisions apply to the imposition of a penalty
under such section 1128A.
‘‘(C) DENIAL OF PAYMENT.—Except as provided in para-
graph (2), the Secretary may deny payment under this
title for an item or service furnished by a person if the
person fails to comply with an applicable requirement or
standard for MedicarePlus and medicare information relat-
ing to that item or service.
‘‘(2) LIMITATIONS.—
H. R. 2491—330
‘‘(A) NONCOMPLIANCE
NOT
DISCOVERED.—A penalty
may not be imposed under paragraph (1) if it is established
to the satisfaction of the Secretary that the person liable
for the penalty did not know, and by exercising reasonable
diligence would not have known, that such person failed
to comply with the requirement or standard described in
paragraph (1).
‘‘(B) FAILURES DUE TO REASONABLE CAUSE.—
‘‘(i) IN
GENERAL.—Except as provided in clause
(ii), a penalty may not be imposed under paragraph
(1) if—
‘‘(I) the failure to comply was due to reasonable
cause and not to willful neglect; and
‘‘(II) the failure to comply is corrected during
the 30-day period beginning on the first date the
person liable for the penalty knew, or by exercising
reasonable diligence would have known, that the
failure to comply occurred.
‘‘(ii) EXTENSION OF PERIOD.—
‘‘(I) NO PENALTY.—The period referred to in
clause (i)(II) may be extended as determined appro-
priate by the Secretary based on the nature and
extent of the failure to comply.
‘‘(II) ASSISTANCE.—If the Secretary determines
that a health plan failed to comply because such
plan was unable to comply, the Secretary may
provide technical assistance to such plan during
the period described in clause (i)(II). Such assist-
ance shall be provided in any manner determined
appropriate by the Secretary.
‘‘(C) REDUCTION.—In the case of a failure to comply
which is due to reasonable cause and not to willful neglect,
any penalty under paragraph (1) that is not entirely waived
under subparagraph (B) may be waived to the extent that
the payment of such penalty would be excessive relative
to the compliance failure involved.
‘‘(f) EFFECT ON STATE LAW.—
‘‘(1) GENERAL EFFECT.—
‘‘(A) GENERAL RULE.—Except as provided in subpara-
graph (B), a provision, requirement, or standard under
this section shall supersede any contrary provision of State
law, including a provision of State law that requires medi-
cal or health plan records (including billing information)
to be maintained or transmitted in written rather than
electronic form.
‘‘(B) EXCEPTIONS.—A provision, requirement, or stand-
ard under this section shall not supersede a contrary provi-
sion of State law if the Secretary determines that the
provision of State law should be continued for any reason,
including for reasons relating to prevention of fraud and
abuse or regulation of controlled substances.
‘‘(2) PUBLIC HEALTH REPORTING.—Nothing in this section
shall be construed to invalidate or limit the authority, power,
or procedures established under any law providing for the
reporting of disease or injury, child abuse, birth, or death,
public health surveillance, or public health investigation or
intervention.
H. R. 2491—331
‘‘(g) MEDICAREPLUS
AND MEDICARE INFORMATION ADVISORY
COMMITTEE.—
‘‘(1) ESTABLISHMENT.—There is established a committee to
be known as the MedicarePlus and Medicare Information
Advisory Committee (in this subsection referred to as the
‘committee’).
‘‘(2) DUTIES.—The committee shall—
‘‘(A) advise the Secretary in the development of stand-
ards under this section; and
‘‘(B) be generally responsible for advising the Secretary
and the Congress on the status and the future of the
MedicarePlus and medicare information network.
‘‘(3) MEMBERSHIP.—
‘‘(A) IN GENERAL.—The committee shall consist of 9
members of whom—
‘‘(i) 3 shall be appointed by the President;
‘‘(ii) 3 shall be appointed by the Speaker of the
House of Representatives after consultation with the
minority leader of the House of Representatives; and
‘‘(iii) 3 shall be appointed by the President pro
tempore of the Senate after consultation with the
minority leader of the Senate.
The appointments of the members shall be made not later
than 60 days after the date of the enactment of this section.
The President shall designate 1 member as the Chair.
‘‘(B) EXPERTISE.—The membership of the committee
shall consist of individuals who are of recognized standing
and distinction in the areas of information systems,
information networking and integration, consumer health,
or health care financial management, and who possess
the demonstrated capacity to discharge the duties imposed
on the committee.
‘‘(C) TERMS.—Each member of the committee shall be
appointed for a term of 5 years, except that the members
first appointed shall serve staggered terms such that the
terms of not more than 3 members expire at one time.
‘‘(D) INITIAL MEETING.—Not later than 30 days after
the date on which a majority of the members have been
appointed, the committee shall hold its first meeting.
‘‘(4) REPORTS.—Not later than 1 year after the date of
the enactment of this section, and annually thereafter, the
committee shall submit to Congress and the Secretary a report
regarding—
‘‘(A) 
the 
extent 
to 
which 
entities 
using 
the
MedicarePlus and medicare information network are meet-
ing the standards adopted under this section and working
together to form an integrated network that meets the
needs of its users;
‘‘(B) the extent to which such entities are meeting
the security standards established pursuant to this section
and the types of penalties assessed for noncompliance with
such standards;
‘‘(C) 
any 
problems 
that 
exist 
with 
respect 
to
implementation of the MedicarePlus and medicare informa-
tion network; and
‘‘(D) the extent to which timetables under this section
are being met.
H. R. 2491—332
Reports made under this subsection shall be made available
to health care providers, health plans, and other entities that
use the MedicarePlus and medicare information network to
exchange MedicarePlus and medicare information.
‘‘(h) DEFINITIONS.—For purposes of this section:
‘‘(1) CODE SET.—The term ‘code set’ means any set of codes
used for encoding data elements, such as tables of terms, enroll-
ment information, and encounter data.
‘‘(2) COORDINATION OF BENEFITS.—The term ‘coordination
of benefits’ means determining and coordinating the financial
obligations of health plans when health care benefits are pay-
able under such a plan and under this title (including under
a MedicarePlus plan).
‘‘(3) MEDICAREPLUS
AND
MEDICARE
INFORMATION.—The
term ‘MedicarePlus and medicare information’ means any
information that relates to the enrollment of individuals under
this title (including information relating to elections of
MedicarePlus plans under section 1851) and the provision of
health benefits (including benefits provided under such plans)
under this title.
‘‘(4) MEDICAREPLUS
AND
MEDICARE
INFORMATION
NET-
WORK.—The term ‘MedicarePlus and medicare information net-
work’ means the MedicarePlus and medicare information sys-
tem that is formed through the application of the requirements
and standards established under this section.
‘‘(5) MEDICAREPLUS AND MEDICARE INFORMATION NETWORK
SERVICE.—The term ‘MedicarePlus and medicare information
network service’ means a public or private entity that—
‘‘(A) processes or facilitates the processing of non-
standard data elements of MedicarePlus and medicare
information into standard data elements;
‘‘(B) provides the means by which persons may meet
the requirements of this section; or
‘‘(C) provides specific information processing services.
‘‘(6) HEALTH PLAN.—The term ‘health plan’ means a plan
which provides, or pays the cost of, health benefits. Such term
includes the following, or any combination thereof:
‘‘(A) Part A or part B of this title, and includes a
MedicarePlus plan.
‘‘(B) The medicaid program under title XIX and the
MediGrant program under title XXI.
‘‘(C) A medicare supplemental policy (as defined in
section 1882(g)(1)).
‘‘(D) Worker’s compensation or similar insurance.
‘‘(E) Automobile or automobile medical-payment insur-
ance.
‘‘(F) A long-term care policy, other than a fixed indem-
nity policy.
‘‘(G) The Federal Employees Health Benefit Plan under
chapter 89 of title 5, United States Code.
‘‘(H) An employee welfare benefit plan, as defined in
section 3(1) of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1002(1)), but only to the extent
the plan is established or maintained for the purpose of
providing health benefits.
‘‘(7) INDIVIDUALLY IDENTIFIABLE MEDICAREPLUS AND MEDI-
CARE
INFORMATION.—The 
term 
‘individually 
identifiable
H. R. 2491—333
MedicarePlus and medicare information’ means MedicarePlus
and medicare enrollment information, including demographic
information collected from an individual, that—
‘‘(A) is created or received by a health care provider,
health plan, employer, or MedicarePlus and medicare
information network service, and
‘‘(B) identifies an individual.
‘‘(8) STANDARD SETTING ORGANIZATION.—The term ‘standard
setting organization’ means a standard setting organization
accredited by the American National Standards Institute and
includes the National Council for Prescription Drug Program.
‘‘(9) STANDARD TRANSACTION.—The term ‘standard trans-
action’ means, when referring to an information transaction
or to data elements of MedicarePlus and medicare information,
any transaction that meets the requirements and implementa-
tion specifications adopted by the Secretary under subsections
(a) and (b).
‘‘DEFINITIONS; MISCELLANEOUS PROVISIONS
‘‘SEC. 1859. (a) DEFINITIONS
RELATING
TO
MEDICAREPLUS
ORGANIZATIONS.—In this part—
‘‘(1) 
MEDICAREPLUS
ORGANIZATION.—The 
term
‘MedicarePlus organization’ means a public or private entity
that is certified under section 1857 as meeting the requirements
and standards of this part for such an organization.
‘‘(2) PROVIDER-SPONSORED ORGANIZATION.—The term ‘pro-
vider-sponsored organization’ is defined in section 1853(e).
‘‘(3) QUALIFIED ASSOCIATION SPONSOR.—The term ‘qualified
association sponsor’ means an association, religious fraternal
organization, or other organization (which may be a trade,
industry, or professional association, a chamber of commerce,
or a public entity association) that the Secretary finds—
‘‘(A) is organized for purposes other than to market
a health plan,
‘‘(B) may not condition its membership on health sta-
tus, health claims experience, receipt of health care, medi-
cal history, or lack of evidence of insurability of a potential
member,
‘‘(C) may not exclude a member or spouse of a member
from health plan coverage based on factors described in
clause (ii);
‘‘(D) does not exist solely or principally for the purpose
of selling insurance,
‘‘(E) has at least 1,000 individual members or 200
employer members,
‘‘(F) is a permanent entity which receives a substantial
proportion of its financial support from active members;
and
‘‘(G) is not owned or controlled by an insurance com-
pany.
Such term includes a subsidiary or corporation that is wholly
owned by one or more qualified organizations.
‘‘(4) TAFT-HARTLEY SPONSOR.—The term ‘Taft-Hartley spon-
sor’ means, in relation to a group health plan that is established
or maintained by two or more employers or jointly by one
or more employers and one or more employee organizations,
the association, committee, joint board of trustees, or other
H. R. 2491—334
similar group of representatives of parties who establish or
maintain the plan.
‘‘(5) UNION SPONSOR.—The term ‘union sponsor’ means an
employee organization in relation to a group health plan that
is established or maintained by the organization other than
pursuant to a collective bargaining agreement.
‘‘(6) EMPLOYER, 
ETC.—In this subsection and section
1851(b), the terms ‘employer’, ‘employee organization’, and
‘group health plan’ have the meanings given such terms for
purposes of part 6 of subtitle B of title I of the Employee
Retirement Income Security Act of 1974.
‘‘(b) DEFINITIONS RELATING TO MEDICAREPLUS PLANS.—
‘‘(1) MEDICAREPLUS PLAN.—The term ‘MedicarePlus plan’
means health benefits coverage offered under a policy, contract,
or plan by a MedicarePlus organization pursuant to and in
accordance with a contract under section 1857.
‘‘(2) HIGH DEDUCTIBLE PLAN.—
‘‘(A) IN
GENERAL.—The term ‘high deductible plan’
means a MedicarePlus plan that—
‘‘(i) provides reimbursement for at least the items
and services described in section 1852(a)(1) in a year
but only after the enrollee incurs countable expenses
(as specified under the plan) equal to the amount of
a deductible (described in subparagraph (B));
‘‘(ii) counts as such expenses (for purposes of such
deductible) at least all amounts that would have been
payable under parts A and B or by the enrollee if
the enrollee had elected to receive benefits through
the provisions of such parts; and
‘‘(iii) provides, after such deductible is met for a
year and for all subsequent expenses for benefits
referred to in clause (i) in the year, for a level of
reimbursement that is not less than—
‘‘(I) 100 percent of such expenses, or
‘‘(II) 100 percent of the amounts that would
have been paid (without regard to any deductibles
or coinsurance) under parts A and B with respect
to such expenses,
whichever is less.
‘‘(B) DEDUCTIBLE.—The amount of deductible under
a high deductible plan—
‘‘(i) for contract year 1997 shall be not more than
$6,000; and
‘‘(ii) for a subsequent contract year shall be not
more than the maximum amount of such deductible
for the previous contract year under this subparagraph
increased by the national average per capita growth
percentage under section 1854(c)(6) for the year.
If the amount of the deductible under clause (ii) is not
a multiple of $50, the amount shall be rounded to the
nearest multiple of $50.
‘‘(3) 
MEDICAREPLUS
UNRESTRICTED
FEE-FOR-SERVICE
PLAN.—The term ‘MedicarePlus unrestricted fee-for-service
plan’ means a MedicarePlus plan that provides for coverage
of benefits without restrictions relating to utilization and with-
out regard to whether the provider has a contract or other
H. R. 2491—335
arrangement with the organization offering the plan for the
provision of such benefits.
‘‘(c) OTHER REFERENCES TO OTHER TERMS.—
‘‘(1) 
MEDICAREPLUS
ELIGIBLE
INDIVIDUAL.—The 
term
‘MedicarePlus 
eligible 
individual’ 
is 
defined 
in 
section
1851(a)(3).
‘‘(2) 
MEDICAREPLUS
PAYMENT
AREA.—The 
term
‘MedicarePlus payment area’ is defined in section 1854(d).
‘‘(3) NATIONAL AVERAGE PER CAPITA GROWTH PERCENTAGE.—
The ‘national average per capita growth percentage’ is defined
in section 1854(c)(6).
‘‘(4) MONTHLY
PREMIUM; NET
MONTHLY
PREMIUM.—The
terms ‘monthly premium’ and ‘net monthly premium’ are
defined in section 1855(a)(2).
‘‘(d) COORDINATED ACUTE
AND LONG-TERM CARE BENEFITS
UNDER A MEDICAREPLUS PLAN.—Nothing in this part shall be con-
strued as preventing a State from coordinating benefits under its
MediGrant program under title XXI with those provided under
a MedicarePlus plan in a manner that assures continuity of a
full-range of acute care and long-term care services to poor elderly
or disabled individuals eligible for benefits under this title and
under such program.’’.
(b) CONFORMING REFERENCES TO PREVIOUS PART C.—Any ref-
erence in law (in effect before the date of the enactment of this
Act) to part C of title XVIII of the Social Security Act is deemed
a reference to part D of such title (as in effect after such date).
(c) USE OF INTERIM, FINAL REGULATIONS.—In order to carry
out the amendment made by subsection (a) in a timely manner,
the Secretary of Health and Human Services may promulgate regu-
lations that take effect on an interim basis, after notice and pending
opportunity for public comment.
(d) ADVANCE
DIRECTIVES.—Section 1866(f)(1) (42 U.S.C.
1395cc(f)(1)) is amended—
(1) by inserting ‘‘1853(g),’’ after ‘‘1833(s),’’, and
(2) by inserting ‘‘, MedicarePlus organization,’’ after ‘‘pro-
vider of services’’.
(e) CONFORMING AMENDMENT.—Section 1866(a)(1)(O) (42 U.S.C.
1395cc(a)(1)(O)) is amended by inserting before the semicolon at
the end the following: ‘‘and in the case of hospitals to accept as
payment in full for inpatient hospital services that are emergency
services (as defined in section 1853(b)(4)) that are covered under
this title and are furnished to any individual enrolled under part
C with a MedicarePlus organization which does not have a contract
establishing payment amounts for services furnished to members
of the organization the amounts that would be made as a payment
in full under this title if the individuals were not so enrolled’’.
(f) SECRETARIAL SUBMISSION OF LEGISLATIVE PROPOSAL.—Not
later than 90 days after the date of the enactment of this Act,
the Secretary of Health and Human Services shall submit to the
appropriate committees of Congress a legislative proposal providing
for such technical and conforming amendments in the law as are
required by the provisions of this chapter.
SEC. 8002. DUPLICATION AND COORDINATION OF MEDICARE-RELATED
PLANS.
(a) TREATMENT OF CERTAIN HEALTH INSURANCE POLICIES AS
NONDUPLICATIVE.—
H. R. 2491—336
(1) 
IN
GENERAL.—Section 
1882(d)(3)(A) 
(42 
U.S.C.
1395ss(d)(3)(A)) is amended—
(A) by amending clause (i) to read as follows:
‘‘(i) It is unlawful for a person to sell or issue to an individual
entitled to benefits under part A or enrolled under part B of this
title or electing a MedicarePlus plan under section 1851—
‘‘(I) a health insurance policy (other than a medicare
supplemental policy) with knowledge that the policy duplicates
health benefits to which the individual is otherwise entitled
under this title or title XIX,
‘‘(II) in the case of an individual not electing a MedicarePlus
plan, a medicare supplemental policy with knowledge that the
individual is entitled to benefits under another medicare supple-
mental policy, or
‘‘(III) in the case of an individual electing a MedicarePlus
plan, a medicare supplemental policy with knowledge that the
policy duplicates health benefits to which the individual is
otherwise entitled under this title or under another medicare
supplemental policy.’’;
(B) in clause (iii), by striking ‘‘clause (i)’’ and inserting
‘‘clause (i)(II)’’; and
(C) by adding at the end the following new clauses:
‘‘(iv) For purposes of this subparagraph, a health insurance
policy shall be considered to ‘duplicate’ benefits under this title
only when, under its terms, the policy provides specific reimburse-
ment for identical items and services to the extent paid for under
this title, and a health insurance policy providing for benefits which
are payable to or on behalf of an individual without regard to
other health benefit coverage of such individual is not considered
to ‘duplicate’ any health benefits under this title.
‘‘(v) For purposes of this subparagraph, a health insurance
policy (or a rider to an insurance contract which is not a health
insurance policy), including a policy (such as a qualified long-term
care insurance contract described in section 7702B(b) of the Internal
Revenue Code of 1986, as added by the Revenue Reconciliation
Act of 1995) providing benefits for long-term care, nursing home
care, home health care, or community-based care, that coordinates
against or excludes items and services available or paid for under
this title and (for policies sold or issued after January 1, 1996)
that discloses such coordination or exclusion in the policy’s outline
of coverage, is not considered to ‘duplicate’ health benefits under
this title. For purposes of this clause, the terms ‘coordinates’ and
‘coordination’ mean, with respect to a policy in relation to health
benefits under this title, that the policy under its terms is secondary
to, or excludes from payment, items and services to the extent
available or paid for under this title.
‘‘(vi) A State may not impose, with respect to the sale or
issuance of a policy (or rider) that meets the requirements of this
title pursuant to clause (iv) or (v) to an individual entitled to
benefits under part A or enrolled under part B or enrolled under
a MedicarePlus plan under part C, any requirement based on
the premise that such a policy or rider duplicates health benefits
to which the individual is otherwise entitled under this title.’’.
(2) CONFORMING
AMENDMENTS.—Section 1882(d)(3) (42
U.S.C. 1395ss(d)(3)) is amended—
(A) in subparagraph (B), by inserting ‘‘(including any
MedicarePlus plan)’’ after ‘‘health insurance policies’’;
H. R. 2491—337
(B) in subparagraph (C)—
(i) by striking ‘‘with respect to (i)’’ and inserting
‘‘with respect to’’, and
(ii) by striking ‘‘, (ii) the sale’’ and all that follows
up to the period at the end; and
(C) by striking subparagraph (D).
(3) MEDICAREPLUS
PLANS
NOT
TREATED
AS
MEDICARE
SUPPLEMENTARY
POLICIES.—Section 
1882(g)(1) 
(42 
U.S.C.
1395ss(g)(1)) is amended by inserting ‘‘a MedicarePlus plan
or’’ after ‘‘and does not include’’.
(b) ADDITIONAL RULES RELATING TO INDIVIDUALS ENROLLED
IN MEDICAREPLUS PLANS.—Section 1882 (42 U.S.C. 1395ss) is fur-
ther amended by adding at the end the following new subsection:
‘‘(u)(1) Notwithstanding the previous provisions of this section,
this section shall not apply to the sale or issuance of a medicare
supplemental policy to an individual who has elected to enroll
in a MedicarePlus plan under section 1851.
‘‘(2)(A) It is unlawful for a person to sell or issue a policy
described in subparagraph (B) to an individual with knowledge
that the individual has in effect under section 1851 an election
of a high deductible plan.
‘‘(B) A policy described in this subparagraph is a health insur-
ance policy that provides for coverage of expenses that are otherwise
required to be counted toward meeting the annual deductible
amount provided under the high deductible plan.’’.
SEC. 8003. TRANSITIONAL RULES FOR CURRENT MEDICARE HMO PRO-
GRAM.
(a) IN GENERAL.—Section 1876 (42 U.S.C. 1395mm) is amend-
ed—
(1) in subsection (c)(3)(A)(i), by striking ‘‘would result in
failure to meet the requirements of subsection (f) or’’;
(2) by amending subsection (f) to read as follows:
‘‘(f)(1) Except as provided in paragraph (3), the Secretary shall
not enter into, renew, or continue any risk-sharing contract under
this section with an eligible organization for any contract year
beginning on or after—
‘‘(A) the date standards for MedicarePlus organizations and
plans are first established under section 1856(a) with respect
to MedicarePlus organizations that are insurers or health
maintenance organizations, or
‘‘(B) in the case of such an organization with such a contract
in effect as of the date such standards were first established,
1 year after such date.
‘‘(2) The Secretary shall not enter into, renew, or continue
any risk-sharing contract under this section with an eligible
organization for any contract year beginning on or after January
1, 2000.
‘‘(3) An individual who is enrolled in part B only and is enrolled
in an eligible organization with a risk-sharing contract under this
section on December 31, 1996, may continue enrollment in such
organization. Not later then July 1, 1996, the Secretary shall issue
regulations relating to such individuals and such organizations.
‘‘(4) Notwithstanding subsection (a), the Secretary shall provide
that payment amounts under risk-sharing contracts under this
section for months in a year (beginning with January 1996) shall
be computed—
H. R. 2491—338
‘‘(A) with respect to individuals entitled to benefits under
both parts A and B, by substituting payment rates under section
1854(a) for the payment rates otherwise established under sub-
section 1876(a), and
‘‘(B) with respect to individuals only entitled to benefits
under part B, by substituting an appropriate proportion of
such rates (reflecting the relative proportion of payments under
this title attributable to such part) for the payment rates other-
wise established under subsection (a).
For purposes of carrying out this paragraph for payments for
months in 1996, the Secretary shall compute, announce, and apply
the payment rates under section 1854(a) (notwithstanding any dead-
lines specified in such section) in as timely a manner as possible
and may (to the extent necessary) provide for retroactive adjustment
in payments made under this section not in accordance with such
rates.’’; and
(3) in subsection (i)(1)(C), by striking ‘‘(e), and (f)’’ and
inserting ‘‘and (e)’’.
CHAPTER 2—SPECIAL RULES FOR MEDICAREPLUS
MEDICAL SAVINGS ACCOUNTS
SEC. 8011. MEDICAREPLUS MSA.
(a) IN GENERAL.—Part III of subchapter B of chapter 1 of
the Internal Revenue Code of 1986 (relating to amounts specifically
excluded from gross income) is amended by redesignating section
137 as section 138 and by inserting after section 136 the following
new section:
‘‘SEC. 137. MEDICAREPLUS MSA.
‘‘(a) EXCLUSION.—Gross income shall not include any payment
to the MedicarePlus MSA of an individual by the Secretary of
Health and Human Services under part C of title XVIII of the
Social Security Act.
‘‘(b) MEDICAREPLUS MSA.—For purposes of this section—
‘‘(1) MEDICAREPLUS MSA.—The term ‘MedicarePlus MSA’
means a medical savings account (as defined in section
222(d))—
‘‘(A) which is designated as a MedicarePlus MSA,
‘‘(B) notwithstanding section 222(f)(5), with respect to
which no contribution may be made other than—
‘‘(i) a contribution made by the Secretary of Health
and Human Services pursuant to part C of title XVIII
of the Social Security Act, or
‘‘(ii) a trustee-to-trustee transfer described in sub-
section (c)(4), and
‘‘(C) the governing instrument of which provides that
trustee-to-trustee transfers described in subsection (c)(4)
may be made to and from such account.
‘‘(2) HIGH DEDUCTIBLE MSA.—The term ‘High Deductible
MedicarePlus MSA’ means a MedicarePlus MSA which is estab-
lished in connection with a high deductible plan described
in section 1859(b)(2) of the Social Security Act.
‘‘(3) REBATE
MEDICAREPLUS
MSA.—The term ‘Rebate
MedicarePlus MSA’ means a MedicarePlus MSA other than
a High Deductible MedicarePlus MSA.
‘‘(c) SPECIAL RULES FOR DISTRIBUTIONS.—
H. R. 2491—339
‘‘(1) DISTRIBUTIONS FOR QUALIFIED MEDICAL EXPENSES.—
In applying section 222—
‘‘(A) to a High Deductible MedicarePlus MSA, qualified
medical expenses shall include only expenses for medical
care of the account holder, and
‘‘(B) to a Rebate MedicarePlus MSA, qualified medical
expenses shall include only expenses for medical care of
the account holder and of the spouse of the account holder
if such spouse is entitled to benefits under part A of title
XVIII of the Social Security Act and is enrolled under
part B of such title.
‘‘(2) PENALTY FOR DISTRIBUTIONS FROM HIGH DEDUCTIBLE
MSA NOT USED FOR QUALIFIED MEDICAL EXPENSES IF MINIMUM
BALANCE NOT MAINTAINED.—
‘‘(A) IN GENERAL.—The tax imposed by this chapter
for any taxable year in which there is a payment or dis-
tribution from a High Deductible MedicarePlus MSA which
is not used exclusively to pay the qualified medical
expenses of the account holder shall be increased by 50
percent of the excess (if any) of—
‘‘(i) the amount of such payment or distribution,
over
‘‘(ii) the excess (if any) of—
‘‘(I) the fair market value of the assets in
such MSA as of the close of the calendar year
preceding the calendar year in which the taxable
year begins, over
‘‘(II) an amount equal to 60 percent of the
deductible under the high deductible plan covering
the account holder as of January 1 of the calendar
year in which the taxable year begins.
Section 222(f)(2) shall not apply to any payment or distribu-
tion from a High Deductible MedicarePlus MSA.
‘‘(B) EXCEPTIONS.—Subparagraph (A) shall not apply
if the payment or distribution is made on or after the
date the account holder—
‘‘(i) becomes disabled within the meaning of section
72(m)(7), or
‘‘(ii) dies.
‘‘(C) SPECIAL RULES.—For purposes of subparagraph
(A)—
‘‘(i) all High Deductible MedicarePlus MSAs of the
account holder shall be treated as 1 account,
‘‘(ii) all payments and distributions not used exclu-
sively to pay the qualified medical expenses of the
account holder during any taxable year shall be treated
as 1 distribution, and
‘‘(iii) any distribution of property shall be taken
into account at its fair market value on the date of
the distribution.
‘‘(3) WITHDRAWAL OF ERRONEOUS CONTRIBUTIONS.—Section
222(f)(2) and paragraph (2) of this subsection shall not apply
to any payment or distribution from a MedicarePlus MSA to
the Secretary of Health and Human Services of an erroneous
contribution to such MSA and of the net income attributable
to such contribution.
H. R. 2491—340
‘‘(4) TRUSTEE-TO-TRUSTEE
TRANSFERS.—Section 222(f)(2)
and paragraph (2) of this subsection shall not apply to—
‘‘(A) any trustee-to-trustee transfer from a High
Deductible MedicarePlus MSA of an account holder to
another High Deductible MedicarePlus MSA of such
account holder, and
‘‘(B) any trustee-to-trustee transfer from a Rebate
MedicarePlus MSA of an account holder to another Rebate
MedicarePlus MSA of such account holder.
‘‘(d) SPECIAL RULES FOR TREATMENT OF ACCOUNT AFTER DEATH
OF ACCOUNT HOLDER.—Notwithstanding section 222(f)(1)(B), if, as
of the date of the death of the account holder, the spouse of such
holder is not entitled to benefits under title XVIII of the Social
Security Act, then after the date of such death—
‘‘(1) the Secretary of Health and Human Services may
not make any payments to such MedicarePlus MSA, other
than payments attributable to periods before such date, and
‘‘(2) such MSA shall be treated as medical savings account
which is not a MedicarePlus MSA.
‘‘(e) REPORTS.—In the case of a MedicarePlus MSA, the report
under section 222(h)—
‘‘(1) shall include the fair market value of the assets in
such MedicarePlus MSA as of the close of each calendar year,
and
‘‘(2) shall be furnished to the account holder—
‘‘(A) not later than January 31 of the calendar year
following the calendar year to which such reports relate,
and
‘‘(B) in such manner as the Secretary prescribes in
such regulations.’’
(b) CONFORMING AMENDMENTS.—
(1) The last sentence of section 4973(d) of such Code, as
added by section 11066(f)(4), is amended by ‘‘or section
137(c)(3)’’ after ‘‘section 222(f)(3)’’.
(2) The table of sections for part III of subchapter B of
chapter 1 of such Code is amended by striking the last item
and inserting the following:
‘‘Sec. 137. MedicarePlus MSA.
‘‘Sec. 138. Cross references to other Acts.’’
(c) EFFECTIVE DATE.—The amendments made by this section
shall apply to taxable years beginning after December 31, 1996.
SEC. 8012. CERTAIN REBATES EXCLUDED FROM GROSS INCOME.
(a) IN GENERAL.—Section 105 of the Internal Revenue Code
of 1986 (relating to amounts received under accident and health
plans) is amended by adding at the end the following new sub-
section:
‘‘(j) CERTAIN REBATES UNDER SOCIAL SECURITY ACT.—Gross
income does not include any rebate received under part C of title
XVIII of the Social Security Act during the taxable year.’’
(b) EFFECTIVE DATE.—The amendment made by subsection (a)
shall apply to amounts received after the date of the enactment
of this Act.
H. R. 2491—341
CHAPTER 3—MEDICARE PAYMENT REVIEW
COMMISSION
SEC. 8021. MEDICARE PAYMENT REVIEW COMMISSION.
(a) IN GENERAL.—Title XVIII is amended by inserting after
section 1804 the following new section:
‘‘MEDICARE PAYMENT REVIEW COMMISSION
‘‘SEC. 1805. (a) ESTABLISHMENT.—There is hereby established
the Medicare Payment Review Commission (in this section referred
to as the ‘Commission’).
‘‘(b) DUTIES.—
‘‘(1) GENERAL DUTIES AND REPORTS.—
‘‘(A) IN GENERAL.—The Commission shall review, and
make recommendations to Congress concerning payment
policies under this title.
‘‘(B) ANNUAL REPORTS.—By not later than June 1 of
each year, the Commission shall submit a report to Con-
gress containing an examination of issues affecting the
medicare program, including the implications of changes
in health care delivery in the United States and in the
market for health care services on the medicare program.
‘‘(C) ADDITIONAL REPORTS.—The Commission may sub-
mit to Congress from time to time such other reports as
the Commission deems appropriate. By not later than May
1, 1997, the Commission shall submit to Congress a report
on the matter described in paragraph (2)(G).
‘‘(D) AVAILABILITY OF REPORTS.—The Commission shall
transmit to the Secretary a copy of each report submitted
to Congress under this subsection and shall make such
reports available to the public.
‘‘(2) SPECIFIC
DUTIES
RELATING
TO
MEDICAREPLUS
PRO-
GRAM.—Specifically, the Commission shall review, with respect
to the MedicarePlus program under part C—
‘‘(A) the methodology for making payment to plans
under such program, including the making of differential
payments and the distribution of differential updates
among different payment areas;
‘‘(B) the mechanisms used to adjust payments for risk
and the need to adjust such mechanisms to take into
account health status of beneficiaries;
‘‘(C) the implications of risk selection both among
MedicarePlus organizations and between the MedicarePlus
option and the medicare fee-for-service option;
‘‘(D) in relation to payment under part C, the develop-
ment and implementation of mechanisms to assure the
quality of care for those enrolled with MedicarePlus
organizations;
‘‘(E) the impact of the MedicarePlus program on access
to care for medicare beneficiaries;
‘‘(F) the feasibility and desirability of extending the
rules for open enrollment that apply during the transition
period to apply in each county during the first 2 years
in which MedicarePlus plans are made available to individ-
uals residing in the county; and
H. R. 2491—342
‘‘(G) other major issues in implementation and further
development of the MedicarePlus program.
‘‘(3) SPECIFIC DUTIES RELATING TO THE FEE-FOR-SERVICE
SYSTEM.—Specifically, the Commission shall review payment
policies under parts A and B, including—
‘‘(A) the factors affecting expenditures for services in
different sectors, including the process for updating hos-
pital, physician, and other fees,
‘‘(B) payment methodologies; and
‘‘(C) the impact of payment policies on access and qual-
ity of care for medicare beneficiaries.
‘‘(4) SPECIFIC DUTIES RELATING TO INTERACTION OF PAYMENT
POLICIES WITH HEALTH CARE DELIVERY GENERALLY.—Specifically
the Commission shall review the effect of payment policies
under this title on the delivery of health care services under
this title and assess the implications of changes in the health
services market on the medicare program.
‘‘(c) MEMBERSHIP.—
‘‘(1) NUMBER AND APPOINTMENT.—The Commission shall
be composed of 15 members appointed by the Comptroller Gen-
eral.
‘‘(2) QUALIFICATIONS.—The membership of the Commission
shall include individuals with national recognition for their
expertise in health finance and economics, actuarial science,
health facility management, health plans and integrated deliv-
ery systems, reimbursement of health facilities, allopathic and
osteopathic physicians, and other providers of services, and
other related fields, who provide a mix of different professionals,
broad geographic representation, and a balance between urban
and rural representatives, including physicians and other
health professionals, employers, third party payors, individuals
skilled in the conduct and interpretation of biomedical, health
services, and health economics research and expertise in out-
comes and effectiveness research and technology assessment.
Such membership shall also include representatives of consum-
ers and the elderly.
‘‘(3) TERMS.—
‘‘(A) IN
GENERAL.—The terms of members of the
Commission shall be for 3 years except that the Comptroller
General shall designate staggered terms for the members
first appointed.
‘‘(B) VACANCIES.—Any member appointed to fill a
vacancy occurring before the expiration of the term for
which the member’s predecessor was appointed shall be
appointed only for the remainder of that term. A member
may serve after the expiration of that member’s term until
a successor has taken office. A vacancy in the Commission
shall be filled in the manner in which the original appoint-
ment was made.
‘‘(4) COMPENSATION.—While serving on the business of the
Commission (including traveltime), a member of the Commis-
sion shall be entitled to compensation at the per diem equiva-
lent of the rate provided for level IV of the Executive Schedule
under section 5315 of title 5, United States Code; and while
so serving away from home and member’s regular place of
business, a member may be allowed travel expenses, as author-
ized by the Chairman of the Commission. Physicians serving
H. R. 2491—343
as personnel of the Commission may be provided a physician
comparability allowance by the Commission in the same man-
ner as Government physicians may be provided such an allow-
ance by an agency under section 5948 of title 5, United States
Code, and for such purpose subsection (i) of such section shall
apply to the Commission in the same manner as it applies
to the Tennessee Valley Authority. For purposes of pay (other
than pay of members of the Commission) and employment
benefits, rights, and privileges, all personnel of the Commission
shall be treated as if they were employees of the United States
Senate.
‘‘(5) CHAIRMAN; VICE CHAIRMAN.—The Comptroller General
shall designate a member of the Commission, at the time of
appointment of the member, as Chairman and a member as
Vice Chairman for that term of appointment.
‘‘(6) MEETINGS.—The Commission shall meet at the call
of the Chairman.
‘‘(d) DIRECTOR AND STAFF; EXPERTS AND CONSULTANTS.—Sub-
ject to such review as the Comptroller General deems necessary
to assure the efficient administration of the Commission, the
Commission may—
‘‘(1) employ and fix the compensation of an Executive Direc-
tor (subject to the approval of the Comptroller General) and
such other personnel as may be necessary to carry out its
duties (without regard to the provisions of title 5, United States
Code, governing appointments in the competitive service);
‘‘(2) seek such assistance and support as may be required
in the performance of its duties from appropriate Federal
departments and agencies;
‘‘(3) enter into contracts or make other arrangements, as
may be necessary for the conduct of the work of the Commission
(without regard to section 3709 of the Revised Statutes (41
U.S.C. 5));
‘‘(4) make advance, progress, and other payments which
relate to the work of the Commission;
‘‘(5) provide transportation and subsistence for persons
serving without compensation; and
‘‘(6) prescribe such rules and regulations as it deems nec-
essary with respect to the internal organization and operation
of the Commission.
‘‘(e) POWERS.—
‘‘(1) OBTAINING
OFFICIAL
DATA.—The Commission may
secure directly from any department or agency of the United
States information necessary to enable it to carry out this
section. Upon request of the Chairman, the head of that depart-
ment or agency shall furnish that information to the Commis-
sion on an agreed upon schedule.
‘‘(2) DATA COLLECTION.—In order to carry out its functions,
the Commission shall collect and assess information to—
‘‘(A) utilize existing information, both published and
unpublished, where possible, collected and assessed either
by its own staff or under other arrangements made in
accordance with this section,
‘‘(B) carry out, or award grants or contracts for, original
research and experimentation, where existing information
is inadequate, and
H. R. 2491—344
‘‘(C) adopt procedures allowing any interested party
to submit information for the Commission’s use in making
reports and recommendations.
‘‘(3) ACCESS
OF
GAO
TO
INFORMATION.—The Comptroller
General shall have unrestricted access to all deliberations,
records, and data of the Commission, immediately upon request.
‘‘(4) PERIODIC
AUDIT.—The Commission shall be subject
to periodic audit by the General Accounting Office.
‘‘(5) OPEN MEETINGS, ETC.—Pursuant to regulations of the
Comptroller General, rules based upon the requirements of
section 10 of the Federal Advisory Committee Act shall apply
with respect to the Commission.
‘‘(f) AUTHORIZATION OF APPROPRIATIONS.—
‘‘(1) REQUEST FOR APPROPRIATIONS.—The Commission shall
submit requests for appropriations in the same manner as
the Comptroller General submits requests for appropriations,
but amounts appropriated for the Commission shall be separate
from amounts appropriated for the Comptroller General.
‘‘(2) AUTHORIZATION.—There are authorized to be appro-
priated such sums as may be necessary to carry out the provi-
sions of this section. 60 percent of such appropriation shall
be payable from the Federal Hospital Insurance Trust Fund,
and 40 percent of such appropriation shall be payable from
the Federal Supplementary Medical Insurance Trust Fund.’’.
(b) ABOLITION OF PROPAC AND PPRC.—
(1) PROPAC.—
(A) 
IN
GENERAL.—Section 
1886(e) 
(42 
U.S.C.
1395ww(e)) is amended—
(i) by striking paragraphs (2) and (6); and
(ii) in paragraph (3), by striking ‘‘(A) The Commis-
sion’’ and all that follows through ‘‘(B)’’.
(B) CONFORMING
AMENDMENT.—Section 1862 (42
U.S.C. 1395y) is amended by striking ‘‘Prospective Payment
Assessment Commission’’ each place it appears in sub-
section (a)(1)(D) and subsection (i) and inserting ‘‘Medicare
Payment Review Commission’’.
(2) PPRC.—
(A) IN GENERAL.—Title XVIII is amended by striking
section 1845 (42 U.S.C. 1395w–1).
(B) CONFORMING AMENDMENTS.—
(i) Section 1834(b)(2) (42 U.S.C. 1395m(b)(2)) is
amended by striking ‘‘Physician Payment Review
Commission’’ and inserting ‘‘Medicare Payment Review
Commission’’.
(ii) Section 1842(b) (42 U.S.C. 1395u(b)) is
amended by striking ‘‘Physician Payment Review
Commission’’ each place it appears in paragraphs (9)(D)
and (14)(C)(i) and inserting ‘‘Medicare Payment Review
Commission’’.
(iii) Section 1848 (42 U.S.C. 1395w–4) is amended
by striking ‘‘Physician Payment Review Commission’’
and inserting ‘‘Medicare Payment Review Commission’’
each place it appears in paragraph (2)(A)(ii), (2)(B)(iii),
and (5) of subsection (c), subsection (d)(2)(F), para-
graphs (1)(B), (3), and (4)(A) of subsection (f), and
paragraphs (6)(C) and (7)(C) of subsection (g).
(c) EFFECTIVE DATE; TRANSITION.—
H. R. 2491—345
(1) IN GENERAL.—The Comptroller General shall first pro-
vide for appointment of members to the Medicare Payment
Review Commission (in this subsection referred to as ‘‘MPRC’’)
by not later than September 30, 1996.
(2) TRANSITION.—Effective January 1, 1997, the Prospective
Payment Assessment Commission (in this subsection referred
to as ‘‘ProPAC’’) and the Physician Payment Review Commis-
sion (in this subsection referred to as ‘‘PPRC’’) are terminated
and amendments made by subsection (b) shall become effective.
The Comptroller General, to the maximum extent feasible, shall
provide for the transfer to the MPRC of assets and staff of
ProPAC and PPRC, without any loss of benefits or seniority
by virtue of such transfers. Fund balances available to the
ProPAC or PPRC for any period shall be available to the
MPRC for such period for like purposes.
(3) CONTINUING RESPONSIBILITY FOR REPORTS.—The MPRC
shall be responsible for the preparation and submission of
reports required by law to be submitted (and which have not
been submitted by the date of establishment of the MPRC)
by the ProPAC and PPRC, and, for this purpose, any reference
in law to either such Commission is deemed, after the appoint-
ment of the MPRC, to refer to the MPRC.
CHAPTER 4—TREATMENT OF HOSPITALS WHICH PAR-
TICIPATE IN PROVIDER-SPONSORED ORGANIZATIONS
SEC. 8031. TREATMENT OF HOSPITALS WHICH PARTICIPATE IN PRO-
VIDER-SPONSORED ORGANIZATIONS.
(a) IN GENERAL.—Section 501 of the Internal Revenue Code
of 1986 (relating to exemption from tax on corporations, certain
trusts, etc.), as amended by title XI, is amended by redesignating
subsection (o) as subsection (p) and by inserting after subsection
(n) the following new subsection:
‘‘(o) TREATMENT
OF HOSPITALS PARTICIPATING
IN PROVIDER-
SPONSORED ORGANIZATIONS.—An organization shall not fail to be
treated as organized and operated exclusively for a charitable pur-
pose for purposes of subsection (c)(3) solely because a hospital
which is owned and operated by such organization participates
in a provider-sponsored organization (as defined in section 1853
of the Social Security Act), whether or not the provider-sponsored
organization is exempt from tax. For purposes of subsection (c)(3),
any person with a material financial interest in such a provider-
sponsored organization shall be treated as a private shareholder
or individual with respect to the hospital.’’
(b) EFFECTIVE DATE.—The amendment made by subsection (a)
shall take effect on the date of the enactment of this Act.
Subtitle B—Health Care Fraud and Abuse
Prevention
CHAPTER 1—FRAUD AND ABUSE CONTROL PROGRAM
SEC. 8101. FRAUD AND ABUSE CONTROL PROGRAM.
(a) ESTABLISHMENT OF PROGRAM.—Title XI (42 U.S.C. 1301
et seq.) is amended by inserting after section 1128B the following
new section:
H. R. 2491—346
‘‘FRAUD AND ABUSE CONTROL PROGRAM
‘‘SEC. 1128C. (a) ESTABLISHMENT OF PROGRAM.—
‘‘(1) IN GENERAL.—Not later than January 1, 1996, the
Secretary, acting through the Office of the Inspector General
of the Department of Health and Human Services, and the
Attorney General shall establish a program—
‘‘(A) to coordinate Federal, State, and local law enforce-
ment programs to control fraud and abuse with respect
to health plans,
‘‘(B) to conduct investigations, audits, evaluations, and
inspections relating to the delivery of and payment for
health care in the United States,
‘‘(C) to facilitate the enforcement of the provisions of
sections 1128, 1128A, and 1128B and other statutes
applicable to health care fraud and abuse,
‘‘(D) to provide for the modification and establishment
of safe harbors and to issue interpretative rulings and
special fraud alerts pursuant to section 1128D, and
‘‘(E) to provide for the reporting and disclosure of cer-
tain final adverse actions against health care providers,
suppliers, or practitioners pursuant to the data collection
system established under section 1128E.
‘‘(2) COORDINATION WITH HEALTH PLANS.—In carrying out
the program established under paragraph (1), the Secretary
and the Attorney General shall consult with, and arrange for
the sharing of data with representatives of health plans.
‘‘(3) GUIDELINES.—
‘‘(A) IN
GENERAL.—The Secretary and the Attorney
General shall issue guidelines to carry out the program
under paragraph (1). The provisions of sections 553, 556,
and 557 of title 5, United States Code, shall not apply
in the issuance of such guidelines.
‘‘(B) INFORMATION GUIDELINES.—
‘‘(i) IN
GENERAL.—Such guidelines shall include
guidelines relating to the furnishing of information
by health plans, providers, and others to enable the
Secretary and the Attorney General to carry out the
program (including coordination with health plans
under paragraph (2)).
‘‘(ii) 
CONFIDENTIALITY.—Such 
guidelines 
shall
include procedures to assure that such information
is provided and utilized in a manner that appropriately
protects the confidentiality of the information and the
privacy of individuals receiving health care services
and items.
‘‘(iii) 
QUALIFIED
IMMUNITY
FOR
PROVIDING
INFORMATION.—The provisions of section 1157(a) (relat-
ing to limitation on liability) shall apply to a person
providing information to the Secretary or the Attorney
General in conjunction with their performance of duties
under this section.
‘‘(4) ENSURING ACCESS TO DOCUMENTATION.—The Inspector
General of the Department of Health and Human Services
is authorized to exercise such authority described in paragraphs
(3) through (9) of section 6 of the Inspector General Act of
1978 (5 U.S.C. App.) as necessary with respect to the activities
H. R. 2491—347
under the fraud and abuse control program established under
this subsection.
‘‘(5) AUTHORITY OF INSPECTOR GENERAL.—Nothing in this
Act shall be construed to diminish the authority of any Inspec-
tor General, including such authority as provided in the Inspec-
tor General Act of 1978 (5 U.S.C. App.).
‘‘(b) ADDITIONAL USE OF FUNDS BY INSPECTOR GENERAL.—
‘‘(1) REIMBURSEMENTS FOR INVESTIGATIONS.—The Inspector
General of the Department of Health and Human Services
is authorized to receive and retain for current use reimburse-
ment for the costs of conducting investigations and audits and
for monitoring compliance plans when such costs are ordered
by a court, voluntarily agreed to by the payor, or otherwise.
‘‘(2) CREDITING.—Funds received by the Inspector General
under paragraph (1) as reimbursement for costs of conducting
investigations shall be deposited to the credit of the appropria-
tion from which initially paid, or to appropriations for similar
purposes currently available at the time of deposit, and shall
remain available for obligation for 1 year from the date of
the deposit of such funds.
‘‘(c) HEALTH PLAN DEFINED.—For purposes of this section, the
term ‘health plan’ means a plan or program that provides health
benefits, whether directly, through insurance, or otherwise, and
includes—
‘‘(1) a policy of health insurance;
‘‘(2) a contract of a service benefit organization; and
‘‘(3) a membership agreement with a health maintenance
organization or other prepaid health plan.’’.
(b) ESTABLISHMENT OF HEALTH CARE FRAUD AND ABUSE CON-
TROL ACCOUNT IN FEDERAL HOSPITAL INSURANCE TRUST FUND.—
Section 1817 (42 U.S.C. 1395i) is amended by adding at the end
the following new subsection:
‘‘(k) HEALTH CARE FRAUD AND ABUSE CONTROL ACCOUNT.—
‘‘(1) ESTABLISHMENT.—There is hereby established in the
Trust Fund an expenditure account to be known as the ‘Health
Care Fraud and Abuse Control Account’ (in this subsection
referred to as the ‘Account’).
‘‘(2) APPROPRIATED AMOUNTS TO TRUST FUND.—
‘‘(A) IN GENERAL.—There are hereby appropriated to
the Trust Fund—
‘‘(i) such gifts and bequests as may be made as
provided in subparagraph (B);
‘‘(ii) such amounts as may be deposited in the
Trust Fund as provided in sections 8141(b) and 8142(c)
of the Medicare Preservation Act of 1995, and title
XI; and
‘‘(iii) such amounts as are transferred to the Trust
Fund under subparagraph (C).
‘‘(B) AUTHORIZATION
TO
ACCEPT
GIFTS.—The Trust
Fund is authorized to accept on behalf of the United States
money gifts and bequests made unconditionally to the Trust
Fund, for the benefit of the Account or any activity financed
through the Account.
‘‘(C) TRANSFER OF AMOUNTS.—The Managing Trustee
shall transfer to the Trust Fund, under rules similar to
the rules in section 9601 of the Internal Revenue Code
of 1986, an amount equal to the sum of the following:
H. R. 2491—348
‘‘(i) Criminal fines recovered in cases involving
a Federal health care offense (as defined in section
982(a)(6)(B) of title 18, United States Code).
‘‘(ii) Civil monetary penalties and assessments
imposed in health care cases, including amounts recov-
ered under titles XI, XVIII, and XXI, and chapter
38 of title 31, United States Code (except as otherwise
provided by law).
‘‘(iii) Amounts resulting from the forfeiture of prop-
erty by reason of a Federal health care offense.
‘‘(iv) Penalties and damages obtained and other-
wise creditable to miscellaneous receipts of the general
fund of the Treasury obtained under sections 3729
through 3733 of title 31, United States Code (known
as the False Claims Act), in cases involving claims
related to the provision of health care items and serv-
ices (other than funds awarded to a relator, for restitu-
tion or otherwise authorized by law).
‘‘(3) APPROPRIATED AMOUNTS TO ACCOUNT FOR FRAUD AND
ABUSE CONTROL PROGRAM, ETC.—
‘‘(A) DEPARTMENTS OF HEALTH AND HUMAN SERVICES
AND JUSTICE.—
‘‘(i) IN GENERAL.—There are hereby appropriated
to the Account from the Trust Fund such sums as
the Secretary and the Attorney General certify are
necessary to carry out the purposes described in
subparagraph (C), to be available without further
appropriation, in an amount not to exceed—
‘‘(I) for fiscal year 1996, $104,000,000, and
‘‘(II) for each of the fiscal years 1997 through
2002, the limit for the preceding fiscal year,
increased by 15 percent; and
‘‘(III) for each fiscal year after fiscal year 2002,
the limit for fiscal year 2002.
‘‘(ii) MEDICARE AND MEDIGRANT ACTIVITIES.—For
each fiscal year, of the amount appropriated in clause
(i), the following amounts shall be available only for
the purposes of the activities of the Office of the Inspec-
tor General of the Department of Health and Human
Services with respect to the medicare and MediGrant
programs—
‘‘(I) for fiscal year 1996, not less than
$60,000,000 and not more than $70,000,000;
‘‘(II) for fiscal year 1997, not less than
$80,000,000 and not more than $90,000,000;
‘‘(III) for fiscal year 1998, not less than
$90,000,000 and not more than $100,000,000;
‘‘(IV) for fiscal year 1999, not less than
$110,000,000 and not more than $120,000,000;
‘‘(V) for fiscal year 2000, not less than
$120,000,000 and not more than $130,000,000;
‘‘(VI) for fiscal year 2001, not less than
$140,000,000 and not more than $150,000,000; and
‘‘(VII) for each fiscal year after fiscal year
2001, not less than $150,000,000 and not more
than $160,000,000.
H. R. 2491—349
‘‘(B) FEDERAL BUREAU OF INVESTIGATION.—There are
hereby appropriated from the general fund of the United
States Treasury and hereby appropriated to the Account
for transfer to the Federal Bureau of Investigation to carry
out the purposes described in subparagraph (C)(i), to be
available without further appropriation—
‘‘(i) for fiscal year 1996, $47,000,000;
‘‘(ii) for fiscal year 1997, $56,000,000;
‘‘(iii) for fiscal year 1998, $66,000,000;
‘‘(iv) for fiscal year 1999, $76,000,000;
‘‘(v) for fiscal year 2000, $88,000,000;
‘‘(vi) for fiscal year 2001, $101,000,000; and
‘‘(vii) for each fiscal year after fiscal year 2001,
$114,000,000.
‘‘(C) USE OF FUNDS.—The purposes described in this
subparagraph are as follows:
‘‘(i) GENERAL USE.—To cover the costs (including
equipment, salaries and benefits, and travel and train-
ing) of the administration and operation of the health
care fraud and abuse control program established
under section 1128C(a), including the costs of—
‘‘(I) prosecuting health care matters (through
criminal, civil, and administrative proceedings);
‘‘(II) investigations;
‘‘(III) financial and performance audits of
health care programs and operations;
‘‘(IV) inspections and other evaluations; and
‘‘(V) provider and consumer education regard-
ing compliance with the provisions of title XI.
‘‘(ii) USE BY STATE MEDIGRANT FRAUD CONTROL UNITS
FOR INVESTIGATION REIMBURSEMENTS.—To reimburse the
various State MediGrant fraud control units established
under section 2134(a) upon request to the Secretary for
the costs of the activities authorized under section 2134(b).
‘‘(4) APPROPRIATED AMOUNTS TO ACCOUNT FOR MEDICARE
INTEGRITY PROGRAM.—
‘‘(A) IN GENERAL.—There are hereby appropriated to
the Account from the Trust Fund for each fiscal year such
amounts as are necessary to carry out the Medicare Integ-
rity Program under section 1893, subject to subparagraph
(B) and to be available without further appropriation.
‘‘(B) AMOUNTS SPECIFIED.—The amount appropriated
under subparagraph (A) for a fiscal year is as follows:
‘‘(i) For fiscal year 1996, such amount shall be
not less than $430,000,000 and not more than
$440,000,000.
‘‘(ii) For fiscal year 1997, such amount shall be
not less than $490,000,000 and not more than
$500,000,000.
‘‘(iii) For fiscal year 1998, such amount shall be
not less than $550,000,000 and not more than
$560,000,000.
‘‘(iv) For fiscal year 1999, such amount shall be
not less than $620,000,000 and not more than
$630,000,000.
H. R. 2491—350
‘‘(v) For fiscal year 2000, such amount shall be
not less than $670,000,000 and not more than
$680,000,000.
‘‘(vi) For fiscal year 2001, such amount shall be
not less than $690,000,000 and not more than
$700,000,000.
‘‘(vii) For each fiscal year after fiscal year 2001,
such amount shall be not less than $710,000,000 and
not more than $720,000,000.
‘‘(5) ANNUAL
REPORT.—The Secretary and the Attorney
General shall submit jointly an annual report to Congress
on the amount of revenue which is generated and disbursed,
and the justification for such disbursements, by the Account
in each fiscal year.’’.
SEC. 8102. MEDICARE INTEGRITY PROGRAM.
(a) ESTABLISHMENT OF MEDICARE INTEGRITY PROGRAM.—Title
XVIII is amended by adding at the end the following new section:
‘‘MEDICARE INTEGRITY PROGRAM
‘‘SEC. 1893. (a) ESTABLISHMENT OF PROGRAM.—There is hereby
established the Medicare Integrity Program (in this section referred
to as the ‘Program’) under which the Secretary shall promote the
integrity of the medicare program by entering into contracts in
accordance with this section with eligible private entities to carry
out the activities described in subsection (b).
‘‘(b) ACTIVITIES DESCRIBED.—The activities described in this
subsection are as follows:
‘‘(1) Review of activities of providers of services or other
individuals and entities furnishing items and services for which
payment may be made under this title (including skilled nurs-
ing facilities and home health agencies), including medical and
utilization review and fraud review (employing similar stand-
ards, processes, and technologies used by private health plans,
including equipment and software technologies which surpass
the capability of the equipment and technologies used in the
review of claims under this title as of the date of the enactment
of this section).
‘‘(2) Audit of cost reports.
‘‘(3) Determinations as to whether payment should not
be, or should not have been, made under this title by reason
of section 1862(b), and recovery of payments that should not
have been made.
‘‘(4) Education of providers of services, beneficiaries, and
other persons with respect to payment integrity and benefit
quality assurance issues.
‘‘(5) Developing (and periodically updating) a list of items
of durable medical equipment in accordance with section
1834(a)(15) which are subject to prior authorization under such
section.
‘‘(c) ELIGIBILITY OF ENTITIES.—An entity is eligible to enter
into a contract under the Program to carry out any of the activities
described in subsection (b) if—
‘‘(1) the entity has demonstrated capability to carry out
such activities;
‘‘(2) in carrying out such activities, the entity agrees to
cooperate with the Inspector General of the Department of
H. R. 2491—351
Health and Human Services, the Attorney General of the
United States, and other law enforcement agencies, as appro-
priate, in the investigation and deterrence of fraud and abuse
in relation to this title and in other cases arising out of such
activities;
‘‘(3) the entity demonstrates to the Secretary that the enti-
ty’s financial holdings, interests, or relationships will not inter-
fere with its ability to perform the functions to be required
by the contract in an effective and impartial manner; and
‘‘(4) the entity meets such other requirements as the Sec-
retary may impose.
In the case of the activity described in subsection (b)(5), an entity
shall be deemed to be eligible to enter into a contract under the
Program to carry out the activity if the entity is a carrier with
a contract in effect under section 1842.
‘‘(d) PROCESS FOR ENTERING INTO CONTRACTS.—The Secretary
shall enter into contracts under the Program in accordance with
such procedures as the Secretary shall by regulation establish,
except that such procedures shall include the following:
‘‘(1) The Secretary shall determine the appropriate number
of separate contracts which are necessary to carry out the
Program and the appropriate times at which the Secretary
shall enter into such contracts.
‘‘(2)(A) Except as provided in subparagraph (B), the provi-
sions of section 1153(e)(1) shall apply to contracts and contract-
ing authority under this section.
‘‘(B) Competitive procedures must be used when entering
into new contracts under this section, or at any other time
considered appropriate by the Secretary, except that the Sec-
retary may contract with entities that are carrying out the
activities described in this section pursuant to agreements
under section 1816 or contracts under section 1842 in effect
on the date of the enactment of this section.
‘‘(3) A contract under this section may be renewed without
regard to any provision of law requiring competition if the
contractor has met or exceeded the performance requirements
established in the current contract.
‘‘(e) LIMITATION
ON CONTRACTOR LIABILITY.—The Secretary
shall by regulation provide for the limitation of a contractor’s liabil-
ity for actions taken to carry out a contract under the Program,
and such regulation shall, to the extent the Secretary finds appro-
priate, employ the same or comparable standards and other sub-
stantive and procedural provisions as are contained in section
1157.’’.
(b) ELIMINATION
OF FI AND CARRIER RESPONSIBILITY
FOR
CARRYING OUT ACTIVITIES SUBJECT TO PROGRAM.—
(1) RESPONSIBILITIES
OF
FISCAL
INTERMEDIARIES
UNDER
PART A.—Section 1816 (42 U.S.C. 1395h) is amended by adding
at the end the following new subsection:
‘‘(l) No agency or organization may carry out (or receive pay-
ment for carrying out) any activity pursuant to an agreement under
this section to the extent that the activity is carried out pursuant
to a contract under the Medicare Integrity Program under section
1893.’’.
(2) RESPONSIBILITIES OF CARRIERS UNDER PART B.—Section
1842(c) (42 U.S.C. 1395u(c)) is amended by adding at the end
the following new paragraph:
H. R. 2491—352
‘‘(6) No carrier may carry out (or receive payment for carrying
out) any activity pursuant to a contract under this subsection
to the extent that the activity is carried out pursuant to a contract
under the Medicare Integrity Program under section 1893. The
previous sentence shall not apply with respect to the activity
described in section 1893(b)(5) (relating to prior authorization of
certain items of durable medical equipment under section
1834(a)(15)).’’.
SEC. 8103. BENEFICIARY INCENTIVE PROGRAMS.
(a) CLARIFICATION OF REQUIREMENT TO PROVIDE EXPLANATION
OF MEDICARE BENEFITS.—The Secretary of Health and Human Serv-
ices (in this section referred to as the ‘‘Secretary’’) shall provide
an explanation of benefits under the medicare program under title
XVIII of the Social Security Act with respect to each item or
service for which payment may be made under the program which
is furnished to an individual, without regard to whether or not
a deductible or coinsurance may be imposed against the individual
with respect to the item or service.
(b) PROGRAM
TO
COLLECT
INFORMATION
ON
FRAUD
AND
ABUSE.—
(1) ESTABLISHMENT OF PROGRAM.—Not later than 3 months
after the date of the enactment of this Act, the Secretary
shall establish a program under which the Secretary shall
encourage individuals to report to the Secretary information
on individuals and entities who are engaging or who have
engaged in acts or omissions which constitute grounds for the
imposition of a sanction under section 1128, section 1128A,
or section 1128B of the Social Security Act, or who have other-
wise engaged in fraud and abuse against the medicare program
for which there is a sanction provided under law. The program
shall discourage provision of, and not consider, information
which is frivolous or otherwise not relevant or material to
the imposition of such a sanction.
(2) PAYMENT OF PORTION OF AMOUNTS COLLECTED.—If an
individual reports information to the Secretary under the pro-
gram established under paragraph (1) which serves as the
basis for the collection by the Secretary or the Attorney General
of any amount of at least $100 (other than any amount paid
as a penalty under section 1128B of the Social Security Act),
the Secretary may pay a portion of the amount collected to
the individual (under procedures similar to those applicable
under section 7623 of the Internal Revenue Code of 1986 to
payments to individuals providing information on violations
of such Code).
(c) PROGRAM
TO COLLECT INFORMATION
ON PROGRAM EFFI-
CIENCY.—
(1) ESTABLISHMENT OF PROGRAM.—Not later than 3 months
after the date of the enactment of this Act, the Secretary
shall establish a program under which the Secretary shall
encourage individuals to submit to the Secretary suggestions
on methods to improve the efficiency of the medicare program.
(2) PAYMENT
OF
PORTION
OF
PROGRAM
SAVINGS.—If an
individual submits a suggestion to the Secretary under the
program established under paragraph (1) which is adopted
by the Secretary and which results in savings to the program,
H. R. 2491—353
the Secretary may make a payment to the individual of such
amount as the Secretary considers appropriate.
SEC. 8104. APPLICATION OF CERTAIN HEALTH ANTI-FRAUD AND ABUSE
SANCTIONS TO FRAUD AND ABUSE AGAINST FEDERAL
HEALTH CARE PROGRAMS.
(a) IN
GENERAL.—Section 1128B (42 U.S.C. 1320a–7b) is
amended as follows:
(1) In the heading, by striking ‘‘MEDICARE OR STATE HEALTH
CARE PROGRAMS’’ and inserting ‘‘FEDERAL HEALTH CARE PRO-
GRAMS’’.
(2) In subsection (a)(1), by striking ‘‘a program under title
XVIII or a State health care program (as defined in section
1128(h))’’ and inserting ‘‘a Federal health care program’’.
(3) In subsection (a)(5), by striking ‘‘a program under title
XVIII or a State health care program’’ and inserting ‘‘a Federal
health care program’’.
(4) In the second sentence of subsection (a)—
(A) by striking ‘‘a State plan approved under title
XIX’’ and inserting ‘‘a Federal health care program’’, and
(B) by striking ‘‘the State may at its option (notwith-
standing any other provision of that title or of such plan)’’
and inserting ‘‘the administrator of such program may at
its option (notwithstanding any other provision of such
program)’’.
(5) In subsection (b), by striking ‘‘title XVIII or a State
health care program’’ each place it appears and inserting ‘‘a
Federal health care program’’.
(6) In subsection (c), by inserting ‘‘(as defined in section
1128(h))’’ after ‘‘a State health care program’’.
(7) By adding at the end the following new subsection:
‘‘(f) For purposes of this section, the term ‘Federal health care
program’ means—
‘‘(1) any plan or program that provides health benefits,
whether directly, through insurance, or otherwise, which is
funded directly, in whole or in part, by the United States
Government; or
‘‘(2) any State health care program, as defined in section
1128(h).’’.
(b) EFFECTIVE DATE.—The amendments made by this section
shall take effect on January 1, 1996.
SEC. 8105. GUIDANCE REGARDING APPLICATION OF HEALTH CARE
FRAUD AND ABUSE SANCTIONS.
Title XI (42 U.S.C. 1301 et seq.), as amended by section 8101,
is amended by inserting after section 1128C the following new
section:
‘‘GUIDANCE REGARDING APPLICATION OF HEALTH CARE FRAUD AND
ABUSE SANCTIONS
‘‘SEC. 1128D. (a) SOLICITATION AND PUBLICATION OF MODIFICA-
TIONS
TO EXISTING SAFE HARBORS
AND NEW SAFE HARBORS.—
‘‘(1) IN GENERAL.—
‘‘(A) SOLICITATION OF PROPOSALS FOR SAFE HARBORS.—
Not later than January 1, 1996, and not less than annually
thereafter, the Secretary shall publish a notice in the Fed-
H. R. 2491—354
eral Register soliciting proposals, which will be accepted
during a 60-day period, for—
‘‘(i) modifications to existing safe harbors issued
pursuant to section 14(a) of the Medicare and Medicaid
Patient and Program Protection Act of 1987 (42 U.S.C.
1320a–7b note);
‘‘(ii) additional safe harbors specifying payment
practices that shall not be treated as a criminal offense
under section 1128B(b) and shall not serve as the
basis for an exclusion under section 1128(b)(7);
‘‘(iii) interpretive rulings to be issued pursuant
to subsection (b); and
‘‘(iv) special fraud alerts to be issued pursuant
to subsection (c).
‘‘(B) PUBLICATION
OF
PROPOSED
MODIFICATIONS
AND
PROPOSED
ADDITIONAL
SAFE
HARBORS.—After considering
the proposals described in clauses (i) and (ii) of subpara-
graph (A), the Secretary, in consultation with the Attorney
General, shall publish in the Federal Register proposed
modifications to existing safe harbors and proposed addi-
tional safe harbors, if appropriate, with a 60-day comment
period. After considering any public comments received
during this period, the Secretary shall issue final rules
modifying the existing safe harbors and establishing new
safe harbors, as appropriate.
‘‘(C) REPORT.—The Inspector General of the Depart-
ment of Health and Human Services (in this section
referred to as the ‘Inspector General’) shall, in an annual
report to Congress or as part of the year-end semiannual
report required by section 5 of the Inspector General Act
of 1978 (5 U.S.C. App.), describe the proposals received
under clauses (i) and (ii) of subparagraph (A) and explain
which proposals were included in the publication described
in subparagraph (B), which proposals were not included
in that publication, and the reasons for the rejection of
the proposals that were not included.
‘‘(2) CRITERIA FOR MODIFYING AND ESTABLISHING SAFE HAR-
BORS.—In modifying and establishing safe harbors under para-
graph (1)(B), the Secretary may consider the extent to which
providing a safe harbor for the specified payment practice may
result in any of the following:
‘‘(A) An increase or decrease in access to health care
services.
‘‘(B) An increase or decrease in the quality of health
care services.
‘‘(C) An increase or decrease in patient freedom of
choice among health care providers.
‘‘(D) An increase or decrease in competition among
health care providers.
‘‘(E) An increase or decrease in the ability of health
care facilities to provide services in medically underserved
areas or to medically underserved populations.
‘‘(F) An increase or decrease in the cost to Federal
health care programs (as defined in section 1128B(f)).
‘‘(G) An increase or decrease in the potential
overutilization of health care services.