Subtitle A Part 1
‘‘(2) LICENSED
INSURERS.—An organization
that is organized under the laws of any State and—
‘‘(A) is licensed by a State agency as an
insurer for the offering of health benefit cov-
erage, 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 orga-
nization that is an eligible organization (as defined
in section 1876(b)) and that has a risk-sharing con-
tract in effect under section 1876 as of the date of
the enactment of this section.
‘‘REQUIREMENTS RELATING TO BENEFITS, PROVISION OF
SERVICES, ENROLLMENT, AND PREMIUMS
‘‘SEC. 1852. (a) BENEFITS COVERED.—
‘‘(1) IN
GENERAL.—Each Medicare Choice
product offered under this part shall provide benefits
for at least the items and services for which benefits
are available under parts A and B consistent with
the standards for coverage of such items and serv-
ices applicable under this title.
‘‘(2) ORGANIZATION AS SECONDARY PAYER.—
Notwithstanding any other provision of law, a Medi-
Subtitle A Part 1
care Choice organization may (in the case of the
provision of items and services to an individual
under this part under circumstances in which pay-
ment 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 law or policy—
‘‘(A) the insurance carrier, employer, or
other entity which under such law, plan, or pol-
icy 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.
‘‘(3) 
SATISFACTION
OF
REQUIREMENT.—A
Medicare Choice product offered by a Medicare
Choice organization satisfies paragraph (1) with re-
spect to benefits for items and services if the follow-
ing requirements are met:
‘‘(A) FEE FOR SERVICE PROVIDERS.—In
the case of benefits furnished through a pro-
vider that does not have a contract with the or-
ganization, the product provides for at least the
dollar amount of payment for such items and
Subtitle A Part 1
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 liabil-
ity for payment for such items and services
does not exceed (after taking into account any
deductible, which does not exceed any deduct-
ible under parts A and B) the lesser of the fol-
lowing:
‘‘(i) NON-MEDICARE
CHOICE
LIABIL-
ITY.—The amount of the liability that the
individual would have had (based on the
provider being a participating provider) if
the individual had elected the non-Medi-
care Choice option.
‘‘(ii) MEDICARE
COINSURANCE
AP-
PLIED
TO
PRODUCT
PAYMENT
RATES.—
The applicable coinsurance or copayment
rate (that would have applied under the
non-Medicare Choice option) of the pay-
ment rate provided under the contract.
‘‘(b) ANTIDISCRIMINATION.—A Medicare Choice or-
ganization may not deny, limit, or condition the coverage
or provision of benefits under this part based on the health
Subtitle A Part 1
status, claims experience, receipt of health care, medical
history, or lack of evidence of insurability, of an individual.
‘‘(c) GUARANTEED ISSUE AND RENEWAL.—
‘‘(1) IN GENERAL.—Except as provided in this
subsection, a Medicare Choice organization shall
provide that at any time during which elections are
accepted under section 1805 with respect to a Medi-
care Choice product offered by the organization, the
organization will accept without restrictions individ-
uals who are eligible to make such election.
‘‘(2) PRIORITY.—If the Secretary determines
that a Medicare Choice organization, in relation to
a Medicare Choice product it offers, has a capacity
limit and the number of eligible individuals who elect
the product under section 1805 exceeds the capacity
limit, the organization may limit the election of indi-
viduals of the product under such section but only
if priority in election is provided—
‘‘(A) first to such individuals as have elect-
ed the product 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 product) on a
basis described in subsection (b).
Subtitle A Part 1
‘‘(3) LIMITATION ON TERMINATION OF ELEC-
TION.—
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), a Medicare Choice organization may
not for any reason terminate the election of any
individual under section 1805 for a Medicare
Choice product it offers.
‘‘(B) BASIS FOR TERMINATION OF ELEC-
TION.—A Medicare Choice organization may
terminate an individual’s election under section
1805 with respect to a Medicare Choice product
it offers if—
‘‘(i) any premiums required with re-
spect to such product are not paid on a
timely basis (consistent with standards
under section 1856 that provide for a
grace period for late payment of pre-
miums),
‘‘(ii) the individual has engaged in
disruptive behavior (as specified in such
standards), or
‘‘(iii) the product is terminated with
respect to all individuals under this part.
Any individual whose election is so terminated
is deemed to have elected the Non-Medicare
Subtitle A Part 1
Choice 
option 
(as 
defined 
in 
section
1805(a)(3)(A)).
‘‘(C) ORGANIZATION
OBLIGATION
WITH
RE-
SPECT TO ELECTION FORMS.—Pursuant to a con-
tract under section 1858, each Medicare Choice or-
ganization receiving an election form under section
1805(c)(2) 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 informa-
tion respecting the election as the Secretary may
specify.
‘‘(4) SPECIAL
RULES
FOR
LIMITED
ENROLL-
MENT MEDICARE CHOICE ORGANIZATIONS.—
‘‘(A) TAFT-HARTLEY SPONSORS.—
‘‘(i) IN
GENERAL.—Subject to sub-
paragraph (D), a Medicare Choice organi-
zation that is a Taft-Hartley sponsor (as
defined in clause (ii)) shall limit eligibility
of enrollees under this part for Medicare
Choice products it offers to individuals who
are entitled to obtain benefits through such
products under the terms of an applicable
collective bargaining agreement.
‘‘(ii) TAFT-HARTLEY
SPONSOR.—In
this part and section 1805, the term ‘Taft-
Subtitle A Part 1
Hartley sponsor’ 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 asso-
ciation, committee, joint board of trustees,
or other similar group of representatives of
parties who establish or maintain the plan.
‘‘(B) QUALIFIED ASSOCIATIONS.—
‘‘(i) IN
GENERAL.—Subject to sub-
paragraph (D), a Medicare Choice organi-
zation that is a qualified association (as
defined in clause (iii)) shall limit eligibility
of individuals under this part for products
it offers to individuals who are members of
the association (or who are spouses of such
individuals).
‘‘(ii) LIMITATION
ON
TERMINATION
OF COVERAGE.—Such a qualifying associa-
tion offering a Medicare Choice product to
an individual may not terminate coverage
of the individual on the basis that the indi-
vidual is no longer a member of the asso-
ciation except pursuant to a change of
election during an open election period oc-
Subtitle A Part 1
curring on or after the date of the termi-
nation of membership.
‘‘(iii) QUALIFIED
ASSOCIATION.—In
this part and section 1805, the term ‘quali-
fied association’ means an association, reli-
gious fraternal organization, or other orga-
nization (which may be a trade, industry,
or professional association, a chamber of
commerce, or a public entity association)
that the Secretary finds—
‘‘(I) has been formed for pur-
poses other than the sale of any
health insurance and does not restrict
membership based on the health sta-
tus, claims experience, receipt of
health care, medical history, or lack of
evidence of insurability, of an individ-
ual,
‘‘(II) does not exist solely or
principally for the purpose of selling
insurance, and
‘‘(III) has at least 1,000 individ-
ual members or 200 employer mem-
bers.
Subtitle A Part 1
Such term includes a subsidiary or cor-
poration that is wholly owned by one or
more qualified organizations.
‘‘(C) UNIONS.—
‘‘(i) IN
GENERAL.—Subject to sub-
paragraph (D), a union sponsor (as de-
fined in clause (ii)) shall limit eligibility of
enrollees under this part for MedicarePlus
products it offers to individuals who are
members of the sponsor and affiliated with
the sponsor through an employment rela-
tionship with any employer or are the
spouses of such members.
‘‘(ii) UNION SPONSOR.—In this part
and section 1805, 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.
‘‘(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,
Subtitle A Part 1
medical history, or lack of evidence of insurabil-
ity.
‘‘(E) LIMITED
ENROLLMENT
MEDICARE
CHOICE ORGANIZATION.—In this part and sec-
tion 1805, the term ‘limited enrollment Medi-
care Choice organization’ means a Medicare
Choice organization that is a union sponsor, a
Taft-Hartley sponsor, or a qualified association.
‘‘(F) EMPLOYER, ETC.—In this paragraph,
the terms ‘employer’, ‘employee organization’,
and ‘group health plan’ have the meanings
given such terms for purposes of part 6 of sub-
title B of title I of the Employee Retirement In-
come Security Act of 1974.
‘‘(d) SUBMISSION AND CHARGING OF PREMIUMS.—
‘‘(1) IN GENERAL.—Each Medicare Choice or-
ganization 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 premiums
for coverage under each Medicare Choice prod-
uct it offers under this part in each payment
area (as determined for purposes of section
1855) in which the product is being offered;
and
Subtitle A Part 1
‘‘(B) the enrollment capacity in relation to
the product in each such area.
‘‘(2) AMOUNTS OF PREMIUMS CHARGED.—The
amount of the monthly premium charged by a Medi-
care Choice organization for a Medicare Choice
product offered in a payment area to an individual
under this part shall be equal to the amount (if any)
by which—
‘‘(A) the amount of the monthly premium
for the product for the period involved, as es-
tablished under paragraph (3) and submitted
under paragraph (1), exceeds
‘‘(B) 1⁄12 of the annual Medicare Choice
capitation rate specified in section 1855(b)(2)
for the area and period involved.
‘‘(3) 
UNIFORM
PREMIUM.—The 
premiums
charged by a Medicare Choice organization under
this part may not vary among individuals who reside
in the same payment area.
‘‘(4) TERMS
AND
CONDITIONS
OF
IMPOSING
PREMIUMS.—Each Medicare Choice organization
shall permit the payment of monthly premiums on a
monthly basis and may terminate election of individ-
uals for a Medicare Choice product for failure to
Subtitle A Part 1
make premium payments only in accordance with
subsection (c)(3)(B).
‘‘(5) RELATION OF PREMIUMS AND COST-SHAR-
ING TO BENEFITS.—In no case may the portion of
a Medicare Choice organization’s premium rate and
the actuarial value of its deductibles, coinsurance,
and copayments charged (to the extent attributable
to the minimum benefits described in subsection
(a)(1) and not counting any amount attributable to
balance billing) to individuals who are enrolled under
this part with the organization exceed the actuarial
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 Sec-
retary finds that adequate data are not available to
determine that actuarial value, the actuarial value of
the coinsurance and deductibles applicable on the av-
erage 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 Medi-
care Choice organization.
‘‘(e) REQUIREMENT
FOR ADDITIONAL BENEFITS,
PART B PREMIUM DISCOUNT REBATES, OR BOTH.—
Subtitle A Part 1
under this part, as determined based upon
an adjusted community rate described in
paragraph (5) (as reduced for the actuarial
value of the coinsurance and deductibles
under parts A and B).
‘‘(C) ADJUSTED
EXCESS
AMOUNT.—For
purposes of this paragraph, the ‘adjusted excess
amount’, for an organization for a product, is
the excess amount reduced to reflect any
amount withheld and reserved for the organiza-
tion for the year under paragraph (3).
‘‘(D) UNIFORM APPLICATION.—This para-
graph shall be applied uniformly for all enroll-
ees for a product in a service area.
‘‘(E) CONSTRUCTION.—Nothing in this
subsection shall be construed as preventing a
Medicare Choice 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) LIMITATION ON AMOUNT OF PART B PRE-
MIUM
DISCOUNT
REBATE.—In no case shall the
amount of a part B premium discount rebate under
paragraph (1)(A) exceed, with respect to a month,
Subtitle A Part 1
the amount of premiums imposed under part B (not
taking into account section 1839(b) (relating to pen-
alty for late enrollment) or 1839(h) (relating to af-
fluence testing)), for the individual for the month.
Except as provided in the previous sentence, a Medi-
care Choice organization is not authorized to provide
for cash or other monetary rebates as an inducement
for enrollment or otherwise.
‘‘(3) 
STABILIZATION
FUND.—A 
Medicare
Choice organization may provide that a part of the
value of an excess actuarial amount described in
paragraph (1) be withheld and reserved in the Fed-
eral 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 an-
nual contract periods, to the extent required to sta-
bilize and prevent undue fluctuations in the addi-
tional benefits and rebates offered in those subse-
quent periods by the organization in accordance with
such paragraph. Any of such value of amount re-
served which is not provided as additional benefits
described in paragraph (1)(A) to individuals electing
the Medicare Choice product in accordance with
Subtitle A Part 1
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 Sec-
retary finds that there is insufficient enrollment ex-
perience (including no enrollment experience in the
case of a provider-sponsored organization) to deter-
mine 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 aver-
age based on the enrollment experience of other con-
tracts entered into under this part.
‘‘(5) ADJUSTED COMMUNITY RATE.—
‘‘(A) IN GENERAL.—For purposes of this
subsection, subject to subparagraph (B), the
term ‘adjusted community rate’ for a service or
services means, at the election of a Medicare
Choice organization, either—
‘‘(i) the rate of payment for that serv-
ice or services which the Secretary annu-
ally determines would apply to an individ-
ual electing a Medicare Choice product
under this part if the rate of payment were
determined under a ‘community rating sys-
tem’ (as defined in section 1302(8) of the
Subtitle A Part 1
Public Health Service Act, other than sub-
paragraph (C)), or
‘‘(ii) such portion of the weighted ag-
gregate premium, which the Secretary an-
nually estimates would apply to such an in-
dividual, as the Secretary annually esti-
mates is attributable to that service or
services,
but adjusted for differences between the utiliza-
tion 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 select-
ing other Medicare Choice coverage, or individ-
uals in the area, in the State, or in the United
States, eligible to elect Medicare Choice cov-
erage under this part and the utilization char-
acteristics of the rest of the population in the
area, in the State, or in the United States, re-
spectively).
‘‘(B) SPECIAL RULE FOR PROVIDER-SPON-
SORED ORGANIZATIONS.—In the case of a Med-
Subtitle A Part 1
icare Choice organization that is a provider-
sponsored organization, the adjusted community
rate under subparagraph (A) for a Medicare
Choice product may be computed (in a manner
specified by the Secretary) using data in the
general commercial marketplace or (during a
transition period) based on the costs incurred
by the organization in providing such a product.
‘‘(f) RULES
REGARDING
PHYSICIAN
PARTICIPA-
TION.—
‘‘(1) PROCEDURES.—Each Medicare Choice or-
ganization shall establish reasonable procedures re-
lating to the participation (under an agreement be-
tween a physician and the organization) of physi-
cians under Medicare Choice products offered by the
organization under this part. Such procedures shall
include—
‘‘(A) providing notice of the rules regard-
ing participation,
‘‘(B) providing written notice of participa-
tion decisions that are adverse to physicians,
and
‘‘(C) providing a process within the organi-
zation for appealing adverse decisions, including
Subtitle A Part 1
the presentation of information and views of the
physician regarding such decision.
‘‘(2) CONSULTATION IN MEDICAL POLICIES.—A
Medicare Choice organization shall consult with phy-
sicians who have entered into participation agree-
ments with the organization regarding the organiza-
tion’s medical policy, quality, and medical manage-
ment procedures.
‘‘(3) LIMITATIONS
ON
PHYSICIAN
INCENTIVE
PLANS.—
‘‘(A) IN GENERAL.—Each Medicare Choice
organization may not operate any physician in-
centive plan (as defined in subparagraph (B))
unless the following requirements are met:
‘‘(i) No specific payment is made di-
rectly or indirectly under the plan to a
physician or physician group as an induce-
ment to reduce or limit medically necessary
services provided with respect to a specific
individual enrolled with the organization.
‘‘(ii) If the plan places a physician or
physician group at substantial financial
risk (as determined by the Secretary) for
services not provided by the physician or
physician group, the organization—
Subtitle A Part 1
‘‘(I) provides stop-loss protection
for the physician or group that is ade-
quate and appropriate, based on
standards developed by the Secretary
that take into account the number of
physicians placed at such substantial
financial risk in the group or under
the plan and the number of individ-
uals enrolled with the organization
who receive services from the physi-
cian or the physician group, and
‘‘(II) conducts periodic surveys of
both individuals enrolled and individ-
uals previously enrolled with the orga-
nization to determine the degree of
access of such individuals to services
provided by the organization and sat-
isfaction with the quality of such serv-
ices.
‘‘(iii) The organization provides the
Secretary with descriptive information re-
garding the plan, sufficient to permit the
Secretary to determine whether the plan is
in compliance with the requirements of this
subparagraph.
Subtitle A Part 1
‘‘(B) PHYSICIAN
INCENTIVE
PLAN
DE-
FINED.—In this paragraph, the term ‘physician
incentive plan’ means any compensation ar-
rangement between a Medicare Choice organiza-
tion and a physician or physician group that
may directly or indirectly have the effect of re-
ducing or limiting services provided with respect
to individuals enrolled with the organization
under this part.
‘‘(4) EXCEPTION FOR CERTAIN FEE-FOR-SERV-
ICE PLANS.—The previous provisions of this sub-
section shall not apply in the case of a Medicare
Choice organization in relation to a Medicare Choice
product if the organization does not have agree-
ments between physicians and the organization for
the provision of benefits under the product.
‘‘(g) PROVISION
OF
INFORMATION.—A Medicare
Choice organization shall provide the Secretary with such
information on the organization and each Medicare Choice
product it offers as may be required for the preparation
of 
the 
information 
booklet 
described 
in 
section
1805(d)(3)(A).
‘‘(h) COORDINATED ACUTE AND LONG-TERM CARE
BENEFITS UNDER
A MEDICARE CHOICE PRODUCT.—
Nothing in this part shall be construed as preventing a
Subtitle A Part 1
State from coordinating benefits under its medicaid pro-
gram under title XIX with those provided under a Medi-
care Choice product 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.
‘‘PATIENT PROTECTION STANDARDS
‘‘SEC. 1853. (a) DISCLOSURE TO ENROLLEES.—A
Medicare Choice organization shall disclose in clear, accu-
rate, and standardized form, information regarding all of
the following for each Medicare Choice product it offers:
‘‘(1) Benefits under the Medicare Choice prod-
uct offered, including exclusions from coverage.
‘‘(2) Rules regarding prior authorization or
other review requirements that could result in
nonpayment.
‘‘(3) Potential liability for cost-sharing for out-
of-network services.
‘‘(4) The number, mix, and distribution of par-
ticipating providers.
‘‘(5) The financial obligations of the enrollee,
including premiums, deductibles, co-payments, and
maximum limits on out-of-pocket losses for items
and services (both in and out of network).
Subtitle A Part 1
‘‘(6) Statistics on enrollee satisfaction with the
product 
and 
organization, 
including 
rates 
of
reenrollment.
‘‘(7) Enrollee rights and responsibilities, includ-
ing the grievance process provided under subsection
(f).
‘‘(8) A statement that the use of the 911 emer-
gency telephone number is appropriate in emergency
situations and an explanation of what constitutes an
emergency situation.
‘‘(9) A description of the organization’s quality
assurance program under subsection (d).
Such information shall be disclosed to each enrollee under
this part at the time of enrollment and at least annually
thereafter.
‘‘(b) ACCESS TO SERVICES.—
‘‘(1) IN GENERAL.—A Medicare Choice organi-
zation offering a Medicare Choice product may re-
strict the providers from whom the benefits under
the product are provided so long as—
‘‘(A) the organization makes such benefits
available and accessible to each individual elect-
ing the product within the product service area
with reasonable promptness and in a manner
Subtitle A Part 1
which assures continuity in the provision of
benefits;
‘‘(B) when medically necessary the organi-
zation makes such benefits available and acces-
sible 24 hours a day and 7 days a week;
‘‘(C) the product provides for reimburse-
ment 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 nec-
essary 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; and
‘‘(D) coverage is provided for emergency
services (as defined in paragraph (5)) without
regard to prior authorization or the emergency
care provider’s contractual relationship with the
organization.
‘‘(2) MINIMUM PAYMENT LEVELS WHERE PRO-
VIDING POINT-OF-SERVICE COVERAGE.—If a Medi-
care Choice product provides benefits for items and
Subtitle A Part 1
services (not described in paragraph (1)(C)) through
a network of providers and also permits payment to
be made under the product for such items and serv-
ices not provided through such a network, the pay-
ment level under the product with respect to such
items and services furnished outside the network
shall be at least 70 percent (or, if the effective cost-
sharing rate is 50 percent, at least 35 percent) of
the lesser of—
‘‘(A) the payment basis (determined with-
out regard to deductibles and cost-sharing) that
would have applied for such items and services
under parts A and B, or
‘‘(B) the amount charged by the entity fur-
nishing such items and services.
‘‘(3) PROTECTION OF ENROLLEES FOR CERTAIN
OUT-OF-NETWORK SERVICES.—
‘‘(A) PARTICIPATING PROVIDERS.—In the
case of physicians’ services or renal dialysis
services described in subparagraph (C) which
are furnished by a participating physician or
provider of services or renal dialysis facility to
an individual enrolled with a MedicarePlus or-
ganization under this section, the applicable
participation agreement is deemed to provide
Subtitle A Part 1
through which the organization provides health care
services) and enrollees under this part.
‘‘(2) APPEALS.—An enrollee with an organiza-
tion 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 pro-
vided 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 indi-
vidual or organization shall, upon notifying the other
party, be entitled to judicial review of the Sec-
retary’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 ap-
plying 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 Administra-
tion shall be considered a reference to the Secretary
or the Department of Health and Human Services,
respectively.