I
105TH CONGRESS
1ST SESSION
H. R. 554
To amend title XVIII of the Social Security Act to provide for equalization
of Medicare reimbursement rates to managed care plans to improve
the health of residents of rural areas.
IN THE HOUSE OF REPRESENTATIVES
FEBRUARY 4, 1997
Mr. RAMSTAD (for himself, Mr. OBERSTAR, Mr. VENTO, Mr. BEREUTER, Mr.
PETRI, Mr. STENHOLM, Mr. EVANS, Mr. HOUGHTON, Mr. UPTON, Mr.
WALSH, Mr. CONDIT, Mr. KLUG, Mr. NUSSLE, Mr. SANDERS, Mr.
CLYBURN, Mr. MCHUGH, Mr. MINGE, Mr. EHLERS, Mr. CAMPBELL, Mr.
GRAHAM, Mr. GUTKNECHT, Mr. LUTHER, Mr. NETHERCUTT, and Mr.
HILL) introduced the following bill; which was referred to the Committee
on Ways and Means, and in addition to the Committee on Commerce,
for a period to be subsequently determined by the Speaker, in each case
for consideration of such provisions as fall within the jurisdiction of the
committee concerned
A BILL
To amend title XVIII of the Social Security Act to provide
for equalization of Medicare reimbursement rates to
managed care plans to improve the health of residents
of rural areas.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION. 1. PAYMENTS TO MEDICARE MANAGED CARE
PLANS.
(a) IN GENERAL.—Section 1876(a) of the Social Se-
curity Act (42 U.S.C. 1395mm(a)) is amended to read as
follows:
‘‘(a)(1)(A) The Secretary shall annually determine,
and shall announce (in a manner intended to provide no-
tice to interested parties) not later than August 1 before
the calendar year concerned—
‘‘(i) a per capita rate of payment for individuals
who are enrolled under this section with an eligible
organization which has entered into a risk-sharing
contract and who are entitled to benefits under part
A and enrolled under part B, and
‘‘(ii) a per capita rate of payment for individ-
uals who are so enrolled with such an organization
and who are enrolled under part B only.
For purposes of this section, the term ‘‘risk-sharing con-
tract’’ means a contract entered into under subsection (g)
and the term ‘‘reasonable cost reimbursement contract’’
means a contract entered into under subsection (h).
‘‘(B) The annual per capita rate of payment for each
Medicare payment area (as defined in paragraph (5)) shall
be equal to the adjusted capitation rate (as defined in
paragraph (4)), adjusted by the Secretary for—
‘‘(i) individuals who are enrolled under this sec-
tion with an eligible organization which has entered
into a risk-sharing contract and who are enrolled
under part B only; and
‘‘(ii) 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.
‘‘(C) In the case of an eligible organization with a
risk-sharing contract, the Secretary shall make monthly
payments in advance and in accordance with the rate de-
termined under subparagraph (B) and except as provided
in subsection (g)(2), to the organization for each individ-
ual enrolled with the organization under this section.
‘‘(D) The Secretary shall establish a separate rate of
payment to an eligible organization with respect to any
individual determined to have end-stage renal disease and
enrolled with the organization. Such rate of payment shall
be actuarially equivalent to rates paid to other enrollees
in the payment area (or such other area as specified by
the Secretary).
services furnished by or through the organization to indi-
viduals enrolled with the organization under this section.
‘‘(4)(A) For purposes of this section, the ‘adjusted
capitation rate’ for a medicare payment area (as defined
in paragraph (5)) is equal to the greatest of the following:
‘‘(i) The sum of—
‘‘(I) the area-specific percentage for the
year (as specified under subparagraph (B) for
the year) of the area-specific adjusted capita-
tion rate for the year for the medicare payment
area, as determined under subparagraph (C),
and
‘‘(II) the national percentage (as specified
under subparagraph (B) for the year) of the
input-price-adjusted national adjusted capita-
tion rate for the year, as determined under sub-
paragraph (D),
multiplied by a budget neutrality adjustment factor
determined under subparagraph (E).
‘‘(ii) An amount equal to—
‘‘(I) in the case of 1998, 80 percent of the
input-price-adjusted national adjusted capita-
tion rate for the year, as determined under sub-
paragraph (D); and
‘‘(II) in the case of a succeeding year, the
amount specified in this clause for the preced-
ing year increased by the national average per
capita growth percentage specified under sub-
paragraph (F) for that succeeding year.
‘‘(iii) An amount equal to—
‘‘(I) in the case of 1998, 102 percent of
the annual per capita rate of payment for 1997
for the medicare payment area (determined
under this subsection), as in effect on the day
before the date of enactment of this subclause;
and
‘‘(II) in the case of a subsequent year, 102
percent of the adjusted capitation rate under
this subsection for the area for the previous
year.
‘‘(B) For purposes of subparagraph (A)(i)—
‘‘(i) for 1998, the ‘area-specific percentage’ is
90 percent and the ‘national percentage’ is 10 per-
cent,
‘‘(ii) for 1999, the ‘area-specific percentage’ is
85 percent and the ‘national percentage’ is 15 per-
cent,
‘‘(iii) for 2000, the ‘area-specific percentage’ is
80 percent and the ‘national percentage’ is 20 per-
cent,
‘‘(iv) for 2001, the ‘area-specific percentage’ is
75 percent and the ‘national percentage’ is 25 per-
cent, and
‘‘(v) for a year after 2001, the ‘area-specific
percentage’ is 70 percent and the ‘national percent-
age’ is 30 percent.
‘‘(C) For purposes of subparagraph (A)(i), the area-
specific adjusted capitation rate for a medicare payment
area—
‘‘(i) for 1998, is the average of the annual per
capita rates of payment for the area for 1994
through 1997, after adjusting the 1994 and 1995
rates of payment to 1997 dollars, increased by the
national average per capita growth percentage for
1997 (as defined in subparagraph (F)); or
‘‘(ii) for a subsequent year, is the area-specific
adjusted capitation rate for the previous year deter-
mined under this subparagraph for the area, in-
creased by the national average per capita growth
percentage for such subsequent year.
‘‘(D)(i) For purposes of subparagraph (A)(i) and
subparagraph (A)(ii), the input-price-adjusted national
adjusted capitation rate for a medicare payment area for
a year is equal to the sum, for all the types of medicare
services (as classified by the Secretary), of the product
(for each such type of service) of—
‘‘(I) the national standardized adjusted capita-
tion rate (determined under clause (ii)) 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 aver-
age input price of such services.
In applying subclause (III), the Secretary shall, subject
to clause (iii), apply those indices under this title that are
used in applying (or updating) national payment rates for
specific areas and localities.
‘‘(ii) In clause (i)(I), the ‘national standardized ad-
justed capitation rate’ for a year is equal to—
‘‘(I) the sum (for all medicare payment areas)
of the product of (aa) the area-specific adjusted
capitation rate for that year for the area under sub-
paragraph (C), and (bb) the average number of
standardized medicare beneficiaries residing in that
area in the year; divided by