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‘‘(i) stress health outcomes,
‘‘(ii) provide for the establishment of
written protocols for utilization review,
based on current standards of medical prac-
tice,
‘‘(iii) provide review by physicians
and other health care professionals of the
process followed in the provision of such
health care services,
‘‘(iv) monitor and evaluate high-vol-
ume and high-risk services and the care of
acute and chronic conditions,
‘‘(v) evaluate the continuity and co-
ordination of care that enrollees receive,
‘‘(vi) have mechanisms to detect both
underutilization and overutilization of serv-
ices,
‘‘(vii) after identifying areas for im-
provement, establish or alter practice pa-
rameters,
‘‘(viii) take action to improve quality
and assess the effectiveness of such action
through systematic followup,
‘‘(ix) make available information on
quality and outcomes measures to facilitate
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beneficiary comparison and choice of health
coverage options (in such form and on such
quality and outcomes measures as the Sec-
retary determines to be appropriate), and
‘‘(x) provide that the program is evalu-
ated on an ongoing basis as to its effective-
ness.
‘‘(2) EXTERNAL REVIEW.—
‘‘(A) IN GENERAL.—Each medicare choice
plan sponsor shall, for each medicare choice plan
it operates, have an agreement with an inde-
pendent quality review and improvement organi-
zation approved by the Secretary.
‘‘(B) FUNCTIONS OF ORGANIZATION.—Each
independent quality review and improvement or-
ganization with an agreement under subpara-
graph (A) shall—
‘‘(i) provide an alternative mechanism
for addressing enrollee grievances,
‘‘(ii) review plan performance based on
accepted quality performance criteria,
‘‘(iii) promote and make plans ac-
countable for improved plan performance,
‘‘(iv) integrate into ongoing external
quality assurance activities a new set of
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quality indicators and standards developed
specifically for the medicare population that
would be used to determine whether a plan
is providing quality care and appropriate
continuity and coordination of care, and
‘‘(v) report to the Secretary on those
plans that have demonstrated unwillingness
or inability to improve their performance.
‘‘(3) ACCREDITATION.—Each medicare choice
plan sponsor shall be required—
‘‘(A) to meet accreditation standards estab-
lished by the Secretary, or
‘‘(B) to be accredited by an external inde-
pendent accrediting organization, recognized by
the Secretary as requiring standards at least as
stringent as the standards established under sub-
paragraph (A).
‘‘(4) ENCOUNTER
DATA.—The Secretary shall
create incentives for medicare choice plan sponsors to
report aggregate encounter data, including data on
physician visits, nursing home days, home health
days, hospital inpatient days, and rehabilitation serv-
ices.
‘‘(c) ACCESS.—Each medicare choice plan sponsor
shall—
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‘‘(1) make the services described in section
1895H(a) (and such other health care services as such
individuals have contracted for) available and acces-
sible to each such individual, within the medicare
service area of the plan, with reasonable promptness,
and in a manner which assures continuity,
‘‘(2) provide for reimbursement with respect to
such services which are provided to such an individ-
ual other than through the plan’s providers, if—
‘‘(A) the services were medically necessary
and immediately required because of an unfore-
seen illness, injury, or condition, and
‘‘(B) it was not reasonable given the cir-
cumstances to obtain the services through the
plan’s providers,
‘‘(3) provide access to appropriate providers, in-
cluding credentialed specialists, for all medically nec-
essary treatment and services, and
‘‘(4) except as provided by the Secretary on a
case-by-case basis, in the case of a coordinated care
plan described in section 1895A(b)(1)(B)(ii), provide
primary care services within 30 minutes or 30 miles
from an enrollee’s place of residence if the enrollee re-
sides in a rural area.
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‘‘(d) CAPACITY.—Each medicare choice plan sponsor
shall provide the Secretary with a demonstration of the
plan’s capacity to adequately service the plan’s expected en-
rollment of individuals under this part.
‘‘(e) CONSUMER PROTECTIONS.—
‘‘(1) 
NONDISCRIMINATION.—Each 
medicare
choice plan sponsor shall provide assurances to the
Secretary that it will not deny enrollment to, expel,
or refuse to reenroll any such individual because of
the individual’s health status or requirements for
health care services, and that it will notify each such
individual of such fact at the time of the individual’s
enrollment. A medicare choice plan sponsor may not
cancel or refuse to renew a beneficiary except in the
case of fraud or nonpayment of premium amounts
due the plan.
‘‘(2) GRIEVANCE PROCEDURES.—
‘‘(A) IN GENERAL.—Each medicare choice
plan sponsor shall provide meaningful proce-
dures for hearing and resolving grievances be-
tween the plan (including any entity or individ-
ual through which the plan provides health care
services) and members enrolled with the plan
under this part.
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‘‘(B) HEARING REQUIREMENT.—A member
enrolled with a medicare choice plan under this
part who is dissatisfied by reason of his failure
to receive any health service to which he believes
he is entitled and at no greater charge than he
believes he 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 plan spon-
sor a party. If the amount in controversy is
$1,000 or more, the individual or plan sponsor
shall, upon notifying the other party, be entitled
to judicial review of the Secretary’s final deci-
sion as provided in section 205(g), and both the
individual and the plan sponsor 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 Commis-
sioner 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.
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‘‘(C) EXPEDITED
REVIEW.—The Secretary
shall provide an expedited review procedure
under subparagraph (B) where a failure to re-
ceive any health care service or payment for such
service would result in significant harm.
‘‘(3) SUPPLEMENTAL COVERAGE IF PLAN TERMI-
NATES THE CONTRACT.—Each medicare choice plan
sponsor that provides items and services pursuant to
a contract under this part shall provide assurances to
the Secretary that in the event the contract is termi-
nated, the sponsor shall provide or arrange for sup-
plemental coverage of benefits under this title related
to a preexisting condition with respect to any exclu-
sion period, to all individuals enrolled with the entity
who receive benefits under this title, for the lesser of
6 months or the duration of such period.
‘‘(f) PROMPT PAYMENT.—
‘‘(1) IN GENERAL.—Each medicare choice plan
sponsor shall provide prompt payment (consistent
with the provisions of sections 1816(c)(2) and
1842(c)(2)) of claims submitted for services and sup-
plies furnished to individuals pursuant to such con-
tract, if the services or supplies are not furnished
under a contract between the plan and the provider
or supplier.
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‘‘(2) DIRECT PAYMENT.—In the case of a medi-
care choice plan sponsor which the Secretary deter-
mines, after notice and opportunity for a hearing, has
failed to make payments of amounts in compliance
with paragraph (1), the Secretary may provide for
direct payment of the amounts owed to providers and
suppliers for such covered services furnished to indi-
viduals enrolled under this part under the contract.
If the Secretary provides for such direct payments,
the Secretary shall provide for an appropriate reduc-
tion in the amount of payments otherwise made to the
plan sponsor under this part to reflect the amount of
the Secretary’s payments (and costs incurred by the
Secretary in making such payments).
‘‘(g) ADVANCE DIRECTIVES.—A contract under this
part shall provide that a medicare choice plan sponsor shall
meet the requirement of section 1866(f) (relating to main-
taining written policies and procedures respecting advance
directives).
‘‘(h) TIMELY AUTHORIZATION FOR PROMPTLY NEED-
ED CARE IDENTIFIED AS A RESULT OF REQUIRED SCREEN-
ING EVALUATION.—
‘‘(1) ACCESS TO PROCESS.—A medicare choice
plan sponsor shall provide access 24 hours a day, 7
days a week to such persons as may be authorized to
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make any prior authorizations required by the plan
sponsor for coverage of items and services (other than
emergency services) that a treating physician or other
emergency department personnel identify, pursuant to
a 
screening 
evaluation 
required 
under 
section
1867(a), as being needed promptly by an individual
enrolled with the organization under this part.
‘‘(2) DEEMED
APPROVAL.—A medicare choice
plan sponsor is deemed to have approved a request for
such promptly needed items and services if the physi-
cian or other emergency department personnel in-
volved—
‘‘(A) has made a reasonable effort to contact
such a person for authorization to provide an
appropriate referral for such items and services
or to provide the items and services to the indi-
vidual and access to the person has not been pro-
vided (as required in paragraph (1)), or
‘‘(B) has requested such authorization from
the person and the person has not denied the au-
thorization within 30 minutes after the time the
request is made.
‘‘(3) EFFECT OF APPROVAL.—Approval of a re-
quest for a prior authorization determination (includ-
ing a deemed approval under paragraph (2)) shall be
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treated as approval of a request for any items and
services that are required to treat the medical condi-
tion identified pursuant to the required screening
evaluation.
‘‘(4) DEFINITION OF EMERGENCY SERVICES.—In
this subsection, the term ‘emergency services’ means—
‘‘(A) health care items and services fur-
nished in the emergency department of a hospital
(including a trauma center), and
‘‘(B) ancillary services routinely available
to such department,
to the extent they are required to evaluate and treat
an emergency medical condition (as defined in para-
graph (5)) until the condition is stabilized.
‘‘(5) 
EMERGENCY
MEDICAL
CONDITION.—In
paragraph (4), the term ‘emergency medical condi-
tion’ means a medical condition, the onset of which
is sudden, that manifests itself by symptoms of suffi-
cient severity, including severe pain, that a prudent
layperson, who possesses an average knowledge of
health and medicine, could reasonably expect the ab-
sence of immediate medical attention to result in—
‘‘(A) placing the person’s health in serious
jeopardy,
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‘‘(B) serious impairment to bodily func-
tions, or
‘‘(C) serious dysfunction of any bodily
organ or part.
‘‘Subpart 4—Determination of Medicare Payment
Amounts and Rebates
‘‘SEC. 1895M. MEDICARE PAYMENT AMOUNTS.
‘‘(a) IN GENERAL.—Not later than July 31 of each cal-
endar year (beginning with 1996), the Secretary shall deter-
mine, and announce in a manner intended to provide no-
tice to interested parties, a standardized medicare payment
amount determined in accordance with this section for the
following calendar year for each medicare payment area.
‘‘(b) CALCULATION
OF
STANDARDIZED
MEDICARE
PAYMENT AMOUNTS.—For purposes of this part—
‘‘(1) 1997.—
‘‘(A) IN GENERAL.—The standardized medi-
care payment amount for calendar year 1997 for
a medicare payment area shall be equal to the
sum of—
‘‘(i) 50 percent of the modified per
capita rate for calendar year 1996, and
‘‘(ii) 50 percent of the adjusted average
national per capita rate for calendar year
1996,
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increased by the percentage increase in the gross
domestic product per capita for the 12-month pe-
riod ending on June 30, 1996.
‘‘(B) MODIFIED
PER
CAPITA
RATE.—For
purposes of subparagraph (A)(i), the modified
per capita rate for calendar year 1996 for a
medicare payment area shall be equal to the per
capita rate which would have been determined
(without 
regard 
to 
class) 
under 
section
1876(a)(1)(C) for 1995 if—
‘‘(i) the applicable geographic area
were the medicare payment area, and
‘‘(ii) 50 percent of any payments at-
tributable 
to 
sections 
1886(d)(5)(B),
1886(h), and 1886(d)(5)(F) (relating to
IME, GME, and DSH payments) were not
taken into account,
increased by the percentage increase which the
Secretary estimates will occur in medicare ex-
penditures per capita for 1996 over medicare ex-
penditures per capita for 1995.
‘‘(C) ADJUSTED
AVERAGE
NATIONAL
PER
CAPITA RATE.—
‘‘(i) IN
GENERAL.—For purposes of
subparagraph (A)(ii), the adjusted average
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national per capita rate for a medicare
payment area for calendar year 1996 shall
be equal to the sum, for all types of medi-
care services (as classified by the Secretary),
of the product for each such type of—
‘‘(I) the average national per cap-
ita rate for 1996,
‘‘(II) the proportion of such rate
for the year which is attributable to
such type of services, and
‘‘(III) an index that reflects for
1996 and that type of service the rel-
ative input price of such services in the
medicare payment area as compared to
the national average input price of
such services.
In applying subclause (III), the Secretary
shall apply those indices that are used in
applying (or updating) medicare payment
rates for specific areas and localities.
‘‘(ii) AVERAGE NATIONAL PER CAPITA
RATE.—For purposes of clause (i), the aver-
age national per capita rate for 1996 is the
weighted average of the modified per capita