Subchapter A--Medicare+Choice Competitive Pricing Demonstration Project
SEC. 4011. MEDICARE PREPAID COMPETITIVE PRICING DEMONSTRATION PROJECT.
(a) Establishment of Project.--The Secretary of Health and Human Services (in this subchapter referred to as "the Secretary") shall establish a demonstration project (in this subchapter referred to as "the project") under which payments to Medicare+Choice organizations in medicare payment areas in which the project is being conducted are determined in accordance with a competitive pricing methodology established under this subchapter.
(b) Designation of 7 Medicare Payment Areas Covered by Project.-- (1) In general.--The Secretary shall designate, in accordance with the recommendations of the Competitive Pricing Advisory Committee under paragraphs (2) and (3), medicare payment areas as areas in which the project under this subchapter will be conducted.
In this section, the term "Competitive Pricing Advisory Committee" means the Competitive Pricing Advisory Committee established under section 4012(a).
(2) Initial designation of 4 areas.-- (A) In general.--The Competitive Pricing Advisory Committee shall recommend to the Secretary, consistent with subparagraph (B), the designation of 4 specific areas as medicare payment areas to be included in the project. Such recommendations shall be made in a manner so as to ensure that payments under the project in 2 such areas will begin on January 1, 1999, and in 2 such areas will begin on January 1, 2000.
(B) Location of designation.--Of the 4 areas recommended under subparagraph (A), 3 shall be in urban areas and 1 shall be in a rural area.
(3) Designation of additional 3 areas.--Not later than December 31, 2001, the Competitive Pricing Advisory Committee may recommend to the Secretary the designation of up to 3 additional, specific medicare payment areas to be included in the project.
(c) Project Implementation.-- (1) In general.--Subject to paragraph (2), the Secretary shall for each medicare payment area designated under subsection (b)-- (A) in accordance with the recommendations of the Competitive Pricing Advisory Committee-- (i) establish the benefit design among plans offered in such area, and (ii) structure the method for selecting plans offered in such area; and (B) in consultation with such Committee-- (i) establish methods for setting the price to be paid to plans, including, if the Secretaries determines appropriate, the rewarding and penalizing of Medicare+Choice plans in the area on the basis of the attainment of, or failure to attain, applicable quality standards, and (ii) provide for the collection of plan information (including information concerning quality and access to care), the dissemination of information, and the methods of evaluating the results of the project.
(2) Consultation.--The Secretary shall take into account the recommendations of the area advisory committee established in section 4012(b), in implementing a project design for any area, except that no modifications may be made in the project design without consultation with the Competitive Pricing Advisory Committee. In no case may the Secretary change the designation of an area based on recommendations of any area advisory committee.
(d) Monitoring and Report.-- (1) Monitoring impact.--Taking into consideration the recommendations of the Competitive Pricing Advisory Committee and the area advisory committees, the Secretary shall closely monitor and measure the impact of the project in the different areas on the price and quality of, and access to, medicare covered services, choice of health plans, changes in enrollment, and other relevant factors.
(2) Report.--Not later than December 31, 2002, the Secretary shall submit to Congress a report on the progress under the project under this subchapter, including a comparison of the matters monitored under paragraph (1) among the different designated areas.
The report may include any legislative recommendations for extending the project to the entire medicare population.
(e) Waiver Authority.--The Secretary of Health and Human Services may waive such requirements of title XVIII of the Social Security Act (as amended by this Act) as may be necessary for the purposes of carrying out the project.
(f) Relationship to Other Authority.--Except pursuant to this subchapter, the Secretary of Health and Human Services may not conduct or continue any medicare demonstration project relating to payment of health maintenance organizations, Medicare+Choice organizations, or similar prepaid managed care entities on the basis of a competitive bidding process or pricing system described in subsection (a).
(g) No Additional Costs to Medicare Program.--The aggregate payments to Medicare+Choice organizations under the project for any designated area for a fiscal year may not exceed the aggregate payments to such organizations that would have been made under title XVIII of the Social Security Act (42 U.S.C. 1395 et seq.), as amended by section 4001, if the project had not been conducted.
(h) Definitions.--Any term used in this subchapter which is also used in part C of title XVIII of the Social Security Act, as amended by section 4001, shall have the same meaning as when used in such part.
(a) Competitive Pricing Advisory Committee.-- (1) In general.--Before implementing the project under this subchapter, the Secretary shall appoint the Competitive Pricing Advisory Committee, including independent actuaries, individuals with expertise in competitive health plan pricing, and an employee of the Office of Personnel Management with expertise in the administration of the Federal Employees Health Benefit Program, to make recommendations to the Secretary concerning the designation of areas for inclusion in the project and appropriate research design for implementing the project.
(2) Initial recommendations.--The Competitive Pricing Advisory Committee initially shall submit recommendations regarding the area selection, benefit design among plans offered, structuring choice among health plans offered, methods for setting the price to be paid to plans, collection of plan information (including information concerning quality and access to care), information dissemination, and methods of evaluating the results of the project.
(3) Quality recommendation.--The Competitive Pricing Advisory Committee shall study and make recommendations regarding the feasibility of providing financial incentives and penalties to plans operating under the project that meet, or fail to meet, applicable quality standards.
(4) Advice during implementation.--Upon implementation of the project, the Competitive Pricing Advisory Committee shall continue to advise the Secretary on the application of the design in different areas and changes in the project based on experience with its operations.
(5) Sunset.--The Competitive Pricing Advisory Committee shall terminate on December 31, 2004.
(b) Appointment of Area Advisory Committee.--Upon the designation of an area for inclusion in the project, the Secretary shall appoint an area advisory committee, composed of representatives of health plans, providers, and medicare beneficiaries in the area, to advise the Secretary concerning how the project will be implemented in the area.
Such advice may include advice concerning the marketing and pricing of plans in the area and other salient factors. The duration of such a committee for an area shall be for the duration of the operation of the project in the area.
(c) Special application.--Notwithstanding section 9(c) of the Federal Advisory Committee Act (5 U.S.C. App.), the Competitive Pricing Advisory Commission and any area advisory committee (described in subsection (b)) may meet as soon as the members of the commission or committee, respectively, are appointed.
SEC. 4014. SOCIAL HEALTH MAINTENANCE ORGANIZATIONS (SHMOS).
(a) Extension of Demonstration Project Authorities.--Section 4018(b) of the Omnibus Budget Reconciliation Act of 1987 is amended-- (1) in paragraph (1), by striking "1997" and inserting "2000", and (2) in paragraph (4), by striking "1998" and inserting "2001".
(b) Expansion of Cap.--Section 13567(c) of the Omnibus Budget Reconciliation Act of 1993 is amended by striking "12,000" and inserting "36,000".
(c) Report on Integration and Transition.-- (1) In general.--The Secretary of Health and Human Services shall submit to Congress, by not later than January 1, 1999, a plan for the integration of health plans offered by social health maintenance organizations (including SHMO I and SHMO II sites developed under section 2355 of the Deficit Reduction Act of 1984 and under the amendment made by section 4207(b)(3)(B)(i) of OBRA- 1990, respectively) and similar plans as an option under the Medicare+Choice program under part C of title XVIII of the Social Security Act.
(2) Provision for transition.--Such plan shall include a transition for social health maintenance organizations operating under demonstration project authority under such section.
(3) Payment policy.--The report shall also include recommendations on appropriate payment levels for plans offered by such organizations, including an analysis of the application of risk adjustment factors appropriate to the population served by such organizations.
(a) In General.--Title XVIII (42 U.S.C. 1395 et seq.) (as amended by sections 4603 and 4801) is amended by adding at the end the following:
MEDICARE SUBVENTION DEMONSTRATION PROJECT FOR MILITARY RETIREES
Sec. 1896. (a) Definitions.--In this section: (1) Administering secretaries.--The term 'administering Secretaries' means the Secretary and the Secretary of Defense acting jointly.
(2) Demonstration project; project.--The terms 'demonstration project' and 'project' mean the demonstration project carried out under this section.
(3) Designated provider.--The term 'designated provider' has the meaning given that term in section 721(5) of the National Defense Authorization Act For Fiscal Year 1997 (Public Law 104-201; 110 Stat. 2593; 10 U.S.C. 1073 note).
(4) Medicare-eligible military retiree or dependent.--The term 'medicare-eligible military retiree or dependent' means an individual described in section 1074(b) or 1076(b) of title 10, United States Code, who-- (A) would be eligible for health benefits under section 1086 of such title by reason of subsection (c)(1) of such section 1086 but for the operation of subsection (d) of such section 1086; (B)(i) is entitled to benefits under part A of this title; and (ii) if the individual was entitled to such benefits before July 1, 1997, received health care items or services from a health care facility of the uniformed services before that date, but after becoming entitled to benefits under part A of this title; (C) is enrolled for benefits under part B of this title; and (D) has attained age 65.
(5) Medicare health care services.--The term 'medicare health care services' means items or services covered under part A or B of this title.
(6) Military treatment facility.--The term 'military treatment facility' means a facility referred to in section 1074(a) of title 10, United States Code.
(7) TRICARE.--The term 'TRICARE' has the same meaning as the term 'TRICARE program' under section 711 of the National Defense Authorization Act for Fiscal Year 1996 (10 U.S.C. 1073 note).
(8) Trust funds.--The term 'trust funds' means the Federal Hospital Insurance Trust Fund established in section 1817 and the Federal Supplementary Medical Insurance Trust Fund established in section 1841.
(b) Demonstration Project.-- (1) In general.-- (A) Establishment.--The administering Secretaries are authorized to establish a demonstration project (under an agreement entered into by the administering Secretaries) under which the Secretary shall reimburse the Secretary of Defense, from the trust funds, for medicare health care services furnished to certain medicare-eligible military retirees or dependents in a military treatment facility or by a designated provider.
(B) Agreement.--The agreement entered into under subparagraph (A) shall include at a minimum-- (i) a description of the benefits to be provided to the participants of the demonstration project established under this section; (ii) a description of the eligibility rules for participation in the demonstration project, including any cost sharing requirements; (iii) a description of how the demonstration project will satisfy the requirements under this title; (iv) a description of the sites selected under paragraph (2); (v) a description of how reimbursement requirements under subsection (i) and maintenance of effort requirements under subsection (j) will be implemented in the demonstration project; (vi) a statement that the Secretary shall have access to all data of the Department of Defense that the Secretary determines is necessary to conduct independent estimates and audits of the maintenance of effort requirement, the annual reconciliation, and related matters required under the demonstration project; (vii) a description of any requirement that the Secretary waives pursuant to subsection (d); and (viii) a certification, provided after review by the administering Secretaries, that any entity that is receiving payments by reason of the demonstration project has sufficient--
(I) resources and expertise to provide, consistent with payments under subsection (i), the full range of benefits required to be provided to beneficiaries under the project; and (II) information and billing systems in place to ensure the accurate and timely submission of claims for benefits and to ensure that providers of services, physicians, and other health care professionals are reimbursed by the entity in a timely and accurate manner.
(2) Number of sites.--The project established under this section shall be conducted in no more than 6 sites, designated jointly by the administering Secretaries after review of all TRICARE regions.
(3) Restriction.--No new military treatment facilities will be built or expanded with funds from the demonstration project.
(4) Duration.--The administering Secretaries shall conduct the demonstration project during the 3-year period beginning on January 1, 1998.
(5) Report.--At least 60 days prior to the commencement of the demonstration project, the administering Secretaries shall submit a copy of the agreement entered into under paragraph (1) to the committees of jurisdiction under this title.
(c) Crediting of Payments.--A payment received by the Secretary of Defense under the demonstration project shall be credited to the applicable Department of Defense medical appropriation (and within that appropriation). Any such payment received during a fiscal year for services provided during a prior fiscal year may be obligated by the Secretary of Defense during the fiscal year during which the payment is received.
(d) Waiver of Certain Medicare Requirements.-- (1) Authority.-- (A) In general.--Except as provided under subparagraph (B), the demonstration project shall meet all requirements of Medicare+Choice plans under part C of this title and regulations pertaining thereto, and other requirements for receiving medicare payments, except that the prohibition of payments to Federal providers of services under sections 1814(c) and 1835(d), and paragraphs (2) and (3) of section 1862(a) shall not apply.
(B) Waiver.--Except as provided in paragraph (2), the Secretary is authorized to waive any requirement described under subparagraph (A), or approve equivalent or alternative ways of meeting such a requirement, but only if such waiver or approval-- (i) reflects the unique status of the Department of Defense as an agency of the Federal Government; and (ii) is necessary to carry out the demonstration project.
(2) Beneficiary protections and other matters.--The demonstration project shall comply with the requirements of part C of this title that relate to beneficiary protections and other matters, including such requirements relating to the following areas: (A) Enrollment and disenrollment.
(B) Nondiscrimination.
(C) Information provided to beneficiaries.
(D) Cost-sharing limitations.
(E) Appeal and grievance procedures.
(F) Provider participation.
(G) Access to services.
(H) Quality assurance and external review.
(I) Advance directives.
(J) Other areas of beneficiary protections that the Secretary determines are applicable to such project.
(e) Inspector General.--Nothing in the agreement entered into under subsection (b) shall limit the Inspector General of the Department of Health and Human Services from investigating any matters regarding the expenditure of funds under this title for the demonstration project, including compliance with the provisions of this title and all other relevant laws.
(f) Voluntary Participation.--Participation of medicare-eligible military retirees or dependents in the demonstration project shall be voluntary.
(g) TRICARE Health Care Plans.-- (1) Modification of tricare contracts.--In carrying out the demonstration project, the Secretary of Defense is authorized to amend existing TRICARE contracts (including contracts with designated providers) in order to provide the medicare health care services to the medicare-eligible military retirees and dependents enrolled in the demonstration project consistent with part C of this title.
(2) Health care benefits.--The administering Secretaries shall prescribe the minimum health care benefits to be provided under such a plan to medicare-eligible military retirees or dependents enrolled in the plan. Those benefits shall include at least all medicare health care services covered under this title.
(h) Additional Plans.--Notwithstanding any provisions of title 10, United States Code, the administering Secretaries may agree to include in the demonstration project any of the Medicare+Choice plans described in section 1851(a)(2)(A), and such agreement may include an agreement between the Secretary of Defense and the Medicare+Choice organization offering such plan to provide medicare health care services to medicare-eligible military retirees or dependents and for such Secretary to receive payments from such organization for the provision of such services.
(i) Payments Based on Regular Medicare Payment Rates.-- (1) In general.--Subject to the succeeding provisions of this subsection, the Secretary shall reimburse the Secretary of Defense for services provided under the demonstration project at a rate equal to 95 percent of the amount paid to a Medicare+Choice organization under part C of this title with respect to such an enrollee. In cases in which a payment amount may not otherwise be readily computed, the Secretary shall establish rules for computing equivalent or comparable payment amounts.
(2) Exclusion of certain amounts.--In computing the amount of payment under paragraph (1), the following shall be excluded: (A) Special payments.--Any amount attributable to an adjustment under subparagraphs (B) and (F) of section 1886(d)(5) and subsection (h) of such section.
(B) Percentage of capital payments.--An amount determined by the administering Secretaries for amounts attributable to payments for capital-related costs under subsection (g) of such section.
(3) Periodic payments from medicare trust funds.--Payments under this subsection shall be made-- (A) on a periodic basis consistent with the periodicity of payments under this title; and (B) in appropriate part, as determined by the Secretary, from the trust funds.
(4) Cap on amount.--The aggregate amount to be reimbursed under this subsection pursuant to the agreement entered into between the administering Secretaries under subsection (b) shall not exceed a total of-- (A) $50,000,000 for calendar year 1998; (B) $60,000,000 for calendar year 1999; and (C) $65,000,000 for calendar year 2000.
(j) Maintenance of Effort.-- (1) Monitoring effect of demonstration program on costs to medicare program.-- (A) In general.--The administering Secretaries, in consultation with the Comptroller General, shall closely monitor the expenditures made under the medicare program for medicare-eligible military retirees or dependents during the period of the demonstration project compared to the expenditures that would have been made for such medicare- eligible military retirees or dependents during that period if the demonstration project had not been conducted. The agreement entered into by the administering Secretaries under subsection (b) shall require any participating military treatment facility to maintain the level of effort for space available care to medicare-eligible military retirees or dependents.
(B) Annual report by the comptroller general.--Not later than December 31 of each year during which the demonstration project is conducted, the Comptroller General shall submit to the administering Secretaries and the appropriate committees of Congress a report on the extent, if any, to which the costs of the Secretary under the medicare program under this title increased during the preceding fiscal year as a result of the demonstration project.
(2) Required response in case of increase in costs.-- (A) In general.--If the administering Secretaries find, based on paragraph (1), that the expenditures under the medicare program under this title increased (or are expected to increase) during a fiscal year because of the demonstration project, the administering Secretaries shall take such steps as may be needed-- (i) to recoup for the medicare program the amount of such increase in expenditures; and (ii) to prevent any such increase in the future.
(B) Steps.--Such steps-- (i) under subparagraph (A)(i) shall include payment of the amount of such increased expenditures by the Secretary of Defense from the current medical care appropriation of the Department of Defense to the trust funds; and (ii) under subparagraph (A)(ii) shall include suspending or terminating the demonstration project (in whole or in part) or lowering the amount of payment under subsection (i)(1).
(k) Evaluation and Reports.-- (1) Independent evaluation.--The Comptroller General of the United States shall conduct an evaluation of the demonstration project, and shall submit annual reports on the demonstration project to the administering Secretaries and to the committees of jurisdiction in the Congress. The first report shall be submitted not later than 12 months after the date on which the demonstration project begins operation, and the final report not later than 3\1/ 2\ years after that date. The evaluation and reports shall include an assessment, based on the agreement entered into under subsection (b), of the following: (A) Any savings or costs to the medicare program under this title resulting from the demonstration project.
(B) The cost to the Department of Defense of providing care to medicare-eligible military retirees and dependents under the demonstration project.
(C) A description of the effects of the demonstration project on military treatment facility readiness and training and the probable effects of the project on overall Department of Defense medical readiness and training.
(D) Any impact of the demonstration project on access to care for active duty military personnel and their dependents.
(E) An analysis of how the demonstration project affects the overall accessibility of the uniformed services treatment system and the amount of space available for point-of-service care, and a description of the unintended effects (if any) upon the normal treatment priority system.
(F) Compliance by the Department of Defense with the requirements under this title.
(G) The number of medicare-eligible military retirees and dependents opting to participate in the demonstration project instead of receiving health benefits through another health insurance plan (including benefits under this title).
(H) A list of the health insurance plans and programs that were the primary payers for medicare-eligible military retirees and dependents during the year prior to their participation in the demonstration project and the distribution of their previous enrollment in such plans and programs.
(I) Any impact of the demonstration project on private health care providers and beneficiaries under this title that are not enrolled in the demonstration project.
(J) An assessment of the access to care and quality of care for medicare-eligible military retirees and dependents under the demonstration project.
(K) An analysis of whether, and in what manner, easier access to the uniformed services treatment system affects the number of medicare-eligible military retirees and dependents receiving medicare health care services.
(L) Any impact of the demonstration project on the access to care for medicare-eligible military retirees and dependents who did not enroll in the demonstration project and for other individuals entitled to benefits under this title.
(M) A description of the difficulties (if any) experienced by the Department of Defense in managing the demonstration project and TRICARE contracts.
(N) Any additional elements specified in the agreement entered into under subsection (b).
(O) Any additional elements that the Comptroller General of the United States determines is appropriate to assess regarding the demonstration project.
(2) Report on extension and expansion of demonstration project.--Not later than 6 months after the date of the submission of the final report by the Comptroller General of the United States under paragraph (1), the administering Secretaries shall submit to Congress a report containing their recommendation as to-- (A) whether there is a cost to the health care program under this title in conducting the demonstration project, and whether the demonstration project could be expanded without there being a cost to such health care program or to the Federal Government; (B) whether to extend the demonstration project or make the project permanent; and (C) whether the terms and conditions of the project should be continued (or modified) if the project is extended or expanded.".
(b) Implementation Plan for Veterans Subvention.--Not later than 12 months after the start of the demonstration project, the Secretary of Health and Human Services and the Secretary of Veterans Affairs shall jointly submit to Congress a detailed implementation plan for a subvention demonstration project (that follows the model of the demonstration project conducted under section 1896 of the Social Security Act (as added by subsection (a)) to begin in 1999 for veterans (as defined in section 101 of title 38, United States Code) that are eligible for benefits under title XVIII of the Social Security Act.
SEC. 4016. MEDICARE COORDINATED CARE DEMONSTRATION PROJECT.
(a) Demonstration Projects.-- (1) In general.--The Secretary of Health and Human Services (in this section referred to as the Secretary") shall conduct demonstration projects for the purpose of evaluating methods, such as case management and other models of coordinated care, that-- (A) improve the quality of items and services provided to target individuals; and (B) reduce expenditures under the medicare program under title XVIII of the Social Security Act (42 U.S.C. 1395 et seq.) for items and services provided to target individuals.
(2) Target individual defined.--In this section, the term "target individual" means an individual that has a chronic illness, as defined and identified by the Secretary, and is enrolled under the fee-for-service program under parts A and B of title XVIII of the Social Security Act (42 U.S.C. 1395c et seq.; 1395j et seq.).
(b) Program Design.-- (1) Initial design.--The Secretary shall evaluate best practices in the private sector of methods of coordinated care for a period of 1 year and design the demonstration project based on such evaluation.
(2) Number and project areas.--Not later than 2 years after the date of enactment of this Act, the Secretary shall implement at least 9 demonstration projects, including-- (A) 5 projects in urban areas; (B) 3 projects in rural areas; and (C) 1 project within the District of Columbia which is operated by a nonprofit academic medical center that maintains a National Cancer Institute certified comprehensive cancer center.
(3) Expansion of projects; implementation of demonstration project results.-- (A) Expansion of projects.--If the initial report under subsection (c) contains an evaluation that demonstration projects-- (i) reduce expenditures under the medicare program; or (ii) do not increase expenditures under the medicare program and increase the quality of health care services provided to target individuals and satisfaction of beneficiaries and health care providers; the Secretary shall continue the existing demonstration projects and may expand the number of demonstration projects.
(B) Implementation of demonstration project results.--If a report under subsection (c) contains an evaluation as described in subparagraph (A), the Secretary may issue regulations to implement, on a permanent basis, the components of the demonstration project that are beneficial to the medicare program.
(c) Report to Congress.-- (1) In general.--Not later than 2 years after the Secretary implements the initial demonstration projects under this section, and biannually thereafter, the Secretary shall submit to Congress a report regarding the demonstration projects conducted under this section.
(2) Contents of report.--The report in paragraph (1) shall include the following: (A) A description of the demonstration projects conducted under this section.
(B) An evaluation of-- (i) the cost-effectiveness of the demonstration projects; (ii) the quality of the health care services provided to target individuals under the demonstration projects; and (iii) beneficiary and health care provider satisfaction under the demonstration project.
(C) Any other information regarding the demonstration projects conducted under this section that the Secretary determines to be appropriate.
(d) Waiver Authority.--The Secretary shall waive compliance with the requirements of title XVIII of the Social Security Act (42 U.S.C.1395 et seq.) to such extent and for such period as the Secretary determines is necessary to conduct demonstration projects.
(e) Funding.-- (1) Demonstration projects.-- (A) In general.-- (i) State projects.--Except as provided in clause (ii), the Secretary shall provide for the transfer from the Federal Hospital Insurance Trust Fund and the Federal Supplementary Insurance Trust Fund under title XVIII of the Social Security Act (42 U.S.C. 1395i, 1395t), in such proportions as the Secretary determines to be appropriate, of such funds as are necessary for the costs of carrying out the demonstration projects under this section.
(ii) Cancer hospital.--In the case of the project described in subsection (b)(2)(C), amounts shall be available only as provided in any Federal law making appropriations for the District of Columbia.
(B) Limitation.--In conducting the demonstration project under this section, the Secretary shall ensure that the aggregate payments made by the Secretary do not exceed the amount which the Secretary would have paid if the demonstration projects under this section were not implemented.
(2) Evaluation and report.--There are authorized to be appropriated such sums as are necessary for the purpose of developing and submitting the report to Congress under subsection (c).
Section 9215 of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended by section 6135 of OBRA-1989 and section 13557 of OBRA-1993, is further amended-- (1) by inserting "(a)" before "The Secretary", and (2) by adding at the end the following: Subject to subsection (c), the Secretary may further extend such demonstration projects through December 31, 2000, but only with respect to individuals who received at least one service during the period beginning on January 1, 1996, and ending on the date of the enactment of the Balanced Budget Act of 1997.
(b) The Secretary shall work with each such demonstration project to develop a plan, to be submitted to the Committee on Ways and Means and the Committee on Commerce of the House of Representatives and the Committee on Finance of the Senate by March 31, 1998, for the orderly transition of demonstration projects and the project participants to a non-demonstration project health care delivery system, such as through integration with a private or public health plan, including a medicaid managed care or Medicare+Choice plan.
(c) A demonstration project under subsection (a) which does not develop and submit a transition plan under subsection (b) by March 31, 1998, or, if later, 6 months after the date of the enactment of the Balanced Budget Act of 1997, shall be discontinued as of December 31, 1998. The Secretary shall provide appropriate technical assistance to assist in the transition so that disruption of medical services to project participants may be minimized.".
(a) Demonstration Project.-- (1) Establishment.--The Secretary shall implement a demonstration project (in this section referred to as the project") for the purpose of evaluating the use of a third-party contractor to conduct the Medicare+Choice plan enrollment and disenrollment functions, as described in part C of title XVIII of the Social Security Act (as added by section 4001 of this Act), in an area.
(2) Consultation.--Before implementing the project under this section, the Secretary shall consult with affected parties on-- (A) the design of the project; (B) the selection criteria for the third-party contractor; and (C) the establishment of performance standards, as described in paragraph (3).
(3) Performance standards.-- (A) In general.--The Secretary shall establish performance standards for the accuracy and timeliness of the Medicare+Choice plan enrollment and disenrollment functions performed by the third-party contractor.
(B) Noncompliance.--In the event that the third-party contractor is not in substantial compliance with the performance standards established under subparagraph (A), such enrollment and disenrollment functions shall be performed by the Medicare+Choice plan until the Secretary appoints a new third-party contractor.
(b) Report to Congress.--The Secretary shall periodically report to Congress on the progress of the project conducted pursuant to this section.
(c) Waiver Authority.--The Secretary shall waive compliance with the requirements of part C of title XVIII of the Social Security Act (as amended by section 4001 of this Act) to such extent and for such period as the Secretary determines is necessary to conduct the project.
(d) Duration.--A demonstration project under this section shall be conducted for a 3-year period.
(e) Separate From Other Demonstration Projects.--A project implemented by the Secretary under this section shall not be conducted in conjunction with any other demonstration project.
Notwithstanding any other provision of law, demonstration projects conducted under section 4079 of the Omnibus Budget Reconciliation Act of 1987 may be conducted for an additional period of 2 years, and the deadline for any report required relating to the results of such projects shall be not later than 6 months before the end of such additional period.
SEC. 4021. NATIONAL BIPARTISAN COMMISSION ON THE FUTURE OF MEDICARE.
(a) Establishment.--There is established a commission to be known as the National Bipartisan Commission on the Future of Medicare (in this section referred to as the Commission").
(b) Duties of the Commission.--The Commission shall-- (1) review and analyze the long-term financial condition of the medicare program under title XVIII of the Social Security Act (42 U.S.C. 1395 et seq.); (2) identify problems that threaten the financial integrity of the Federal Hospital Insurance Trust Fund and the Federal Supplementary Medical Insurance Trust Fund established under that title (42 U.S.C. 1395i, 1395t), including-- (A) the financial impact on the medicare program of the significant increase in the number of medicare eligible individuals which will occur beginning approximately during 2010 and lasting for approximately 25 years, and (B) the extent to which current medicare update indexes do not accurately reflect inflation; (3) analyze potential solutions to the problems identified under paragraph (2) that will ensure both the financial integrity of the medicare program and the provision of appropriate benefits under such program, including methods used by other nations to respond to comparable demographic patterns in eligibility for health care benefits for elderly and disabled individuals and trends in employment-related health care for retirees; (4) make recommendations to restore the solvency of the Federal Hospital Insurance Trust Fund and the financial integrity of the Federal Supplementary Medical Insurance Trust Fund; (5) make recommendations for establishing the appropriate financial structure of the medicare program as a whole; (6) make recommendations for establishing the appropriate balance of benefits covered and beneficiary contributions to the medicare program; (7) make recommendations for the time periods during which the recommendations described in paragraphs (4), (5), and (6) should be implemented; (8) make recommendations regarding the financing of graduate medical education (GME), including consideration of alternative broad-based sources of funding for such education and funding for institutions not currently eligible for such GME support that conduct approved graduate medical residency programs, such as children's hospitals; (9) make recommendations on modifying age-based eligibility to correspond to changes in age-based eligibility under the OASDI program and on the feasibility of allowing individuals between the age of 62 and the medicare eligibility age to buy into the medicare program; (10) make recommendations on the impact of chronic disease and disability trends on future costs and quality of services under the current benefit, financing, and delivery system structure of the medicare program; (11) make recommendations regarding a comprehensive approach to preserve the program; and (12) review and analyze such other matters as the Commission deems appropriate.
(c) Membership.-- (1) Number and appointment.--The Commission shall be composed of 17 members, of whom-- (A) four shall be appointed by the President; (B) six shall be appointed by the Majority Leader of the Senate, in consultation with the Minority Leader of the Senate, of whom not more than 4 shall be of the same political party; (C) six shall be appointed by the Speaker of the House of Representatives, in consultation with the Minority Leader of the House of Representatives, of whom not more than 4 shall be of the same political party; and (D) one, who shall serve as Chairman of the Commission, appointed jointly by the President, Majority Leader of the Senate, and the Speaker of the House of Representatives.
(2) Deadline for appointment.--Members of the Commission shall be appointed by not later than December 1, 1997.
(3) Terms of appointment.--The term of any appointment under paragraph (1) to the Commission shall be for the life of the Commission.
(4) Meetings.--The Commission shall meet at the call of its Chairman or a majority of its members.
(5) Quorum.--A quorum shall consist of 8 members of the Commission, except that 4 members may conduct a hearing under subsection (e).
(6) Vacancies.--A vacancy on the Commission shall be filled in the same manner in which the original appointment was made not later than 30 days after the Commission is given notice of the vacancy and shall not affect the power of the remaining members to execute the duties of the Commission.
(7) Compensation.--Members of the Commission shall receive no additional pay, allowances, or benefits by reason of their service on the Commission.
(8) Expenses.--Each member of the Commission shall receive travel expenses and per diem in lieu of subsistence in accordance with sections 5702 and 5703 of title 5, United States Code.
(d) Staff and Support Services.-- (1) Executive director.-- (A) Appointment.--The Chairman shall appoint an executive director of the Commission.
(B) Compensation.--The executive director shall be paid the rate of basic pay for level V of the Executive Schedule.
(2) Staff.--With the approval of the Commission, the executive director may appoint such personnel as the executive director considers appropriate.
(3) Applicability of civil service laws.--The staff of the Commission shall be appointed without regard to the provisions of title 5, United States Code, governing appointments in the competitive service, and shall be paid without regard to the provisions of chapter 51 and subchapter III of chapter 53 of such title (relating to classification and General Schedule pay rates).
(4) Experts and consultants.--With the approval of the Commission, the executive director may procure temporary and intermittent services under section 3109(b) of title 5, United States Code.
(5) Physical facilities.--The Administrator of the General Services Administration shall locate suitable office space for the operation of the Commission. The facilities shall serve as the headquarters of the Commission and shall include all necessary equipment and incidentals required for the proper functioning of the Commission.
(e) Powers of Commission.-- (1) Hearings and other activities.--For the purpose of carrying out its duties, the Commission may hold such hearings and undertake such other activities as the Commission determines to be necessary to carry out its duties.
(2) Studies by gao.--Upon the request of the Commission, the Comptroller General shall conduct such studies or investigations as the Commission determines to be necessary to carry out its duties.
(3) Cost estimates by congressional budget office and office of the chief actuary of hcfa.-- (A) The Director of the Congressional Budget Office or the Chief Actuary of the Health Care Financing Administration, or both, shall provide to the Commission, upon the request of the Commission, such cost estimates as the Commission determines to be necessary to carry out its duties.
(B) The Commission shall reimburse the Director of the Congressional Budget Office for expenses relating to the employment in the office of the Director of such additional staff as may be necessary for the Director to comply with requests by the Commission under subparagraph (A).
(4) Detail of federal employees.--Upon the request of the Commission, the head of any Federal agency is authorized to detail, without reimbursement, any of the personnel of such agency to the Commission to assist the Commission in carrying out its duties. Any such detail shall not interrupt or otherwise affect the civil service status or privileges of the Federal employee.
(5) Technical assistance.--Upon the request of the Commission, the head of a Federal agency shall provide such technical assistance to the Commission as the Commission determines to be necessary to carry out its duties.
(6) Use of mails.--The Commission may use the United States mails in the same manner and under the same conditions as Federal agencies and shall, for purposes of the frank, be considered a commission of Congress as described in section 3215 of title 39, United States Code.
(7) Obtaining information.--The Commission may secure directly from any Federal agency information necessary to enable it to carry out its duties, if the information may be disclosed under section 552 of title 5, United States Code. Upon request of the Chairman of the Commission, the head of such agency shall furnish such information to the Commission.
(8) Administrative support services.--Upon the request of the Commission, the Administrator of General Services shall provide to the Commission on a reimbursable basis such administrative support services as the Commission may request.
(9) Printing.--For purposes of costs relating to printing and binding, including the cost of personnel detailed from the Government Printing Office, the Commission shall be deemed to be a committee of the Congress.
(f) Report.--Not later than March 1, 1999, the Commission shall submit a report to the President and Congress which shall contain a detailed statement of only those recommendations, findings, and conclusions of the Commission that receive the approval of at least 11 members of the Commission.
(g) Termination.--The Commission shall terminate 30 days after the date of submission of the report required in subsection (f).
(h) Authorization of Appropriations.--There are authorized to be appropriated $1,500,000 to carry out 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 under title XVIII of the Social Security Act (42 U.S.C. 1395i, 1395t).
(a) In General.--Title XVIII is amended by inserting after section 1804 the following new section:
Sec. 1805. (a) Establishment.--There is hereby established the Medicare Payment Advisory Commission (in this section referred to as the 'Commission').
(b) Duties.-- (1) Review of payment policies and annual reports.--The Commission shall-- (A) review payment policies under this title, including the topics described in paragraph (2); (B) make recommendations to Congress concerning such payment policies; (C) by not later than March 1 of each year (beginning with 1998), submit a report to Congress containing the results of such reviews and its recommendations concerning such policies; and (D) by not later than June 1 of each year (beginning with 1998), submit a report to Congress 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.
(2) Specific topics to be reviewed.-- (A) Medicare+choice program.--Specifically, the Commission shall review, with respect to the Medicare+Choice program under part C, the following: (i) 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.
(ii) The mechanisms used to adjust payments for risk and the need to adjust such mechanisms to take into account health status of beneficiaries.
(iii) The implications of risk selection both among Medicare+Choice organizations and between the Medicare+Choice option and the original medicare fee-for- service option.
(iv) The development and implementation of mechanisms to assure the quality of care for those enrolled with Medicare+Choice organizations.
(v) The impact of the Medicare+Choice program on access to care for medicare beneficiaries.
(vi) Other major issues in implementation and further development of the Medicare+Choice program.
(B) Original medicare fee-for-service system.-- Specifically, the Commission shall review payment policies under parts A and B, including-- (i) the factors affecting expenditures for services in different sectors, including the process for updating hospital, skilled nursing facility, physician, and other fees, (ii) payment methodologies, and (iii) their relationship to access and quality of care for medicare beneficiaries.
(C) Interaction of medicare 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 other than under this title and assess the implications of changes in health care delivery in the United States and in the general market for health care services on the medicare program.
(3) Comments on certain secretarial reports.--If the Secretary submits to Congress (or a committee of Congress) a report that is required by law and that relates to payment policies under this title, the Secretary shall transmit a copy of the report to the Commission. The Commission shall review the report and, not later than 6 months after the date of submittal of the Secretary's report to Congress, shall submit to the appropriate committees of Congress written comments on such report. Such comments may include such recommendations as the Commission deems appropriate.
(4) Agenda and additional reviews.--The Commission shall consult periodically with the chairmen and ranking minority members of the appropriate committees of Congress regarding the Commission's agenda and progress towards achieving the agenda. The Commission may conduct additional reviews, and submit additional reports to the appropriate committees of Congress, from time to time on such topics relating to the program under this title as may be requested by such chairmen and members and as the Commission deems appropriate.
(5) Availability of reports.--The Commission shall transmit to the Secretary a copy of each report submitted under this subsection and shall make such reports available to the public.
(6) Appropriate committees of congress.--For purposes of this section, the term 'appropriate committees of Congress' means the Committees on Ways and Means and Commerce of the House of Representatives and the Committee on Finance of the Senate.
(c) Membership.-- (1) Number and appointment.--The Commission shall be composed of 15 members appointed by the Comptroller General.
(2) Qualifications.-- (A) In general.--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 delivery systems, reimbursement of health facilities, allopathic and osteopathic physicians, and other providers of health services, and other related fields, who provide a mix of different professionals, broad geographic representation, and a balance between urban and rural representatives.
(B) Inclusion.--The membership of the Commission shall include (but not be limited to) physicians and other health professionals, employers, third-party payers, individuals skilled in the conduct and interpretation of biomedical, health services, and health economics research and expertise in outcomes and effectiveness research and technology assessment.
Such membership shall also include representatives of consumers and the elderly.
(C) Majority nonproviders.--Individuals who are directly involved in the provision, or management of the delivery, of items and services covered under this title shall not constitute a majority of the membership of the Commission.
(D) Ethical disclosure.--The Comptroller General shall establish a system for public disclosure by members of the Commission of financial and other potential conflicts of interest relating to such members.
(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 appointment was made.
(4) Compensation.--While serving on the business of the Commission (including traveltime), a member of the Commission shall be entitled to compensation at the per diem equivalent 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 the member's regular place of business, a member may be allowed travel expenses, as authorized by the Chairman of the Commission.
Physicians serving as personnel of the Commission may be provided a physician comparability allowance by the Commission in the same manner as Government physicians may be provided such an allowance 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, except that in the case of vacancy of the Chairmanship or Vice Chairmanship, the Comptroller General may designate another member for the remainder of that member's term.
(6) Meetings.--The Commission shall meet at the call of the Chairman.
(d) Director and Staff; Experts and Consultants.--Subject 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 Director (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 necessary 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 department or agency shall furnish that information to the Commission on an agreed upon schedule.
(2) Data collection.--In order to carry out its functions, the Commission shall-- (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 (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 nonproprietary data of the Commission, immediately upon request.
(4) Periodic audit.--The Commission shall be subject to periodic audit by the Comptroller General.
(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 appropriated such sums as may be necessary to carry out the provisions of this section. Sixty 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 Commission" 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 subsection (a)(1)(D) and subsection (i) and inserting "Medicare Payment Advisory Commission".
(2) PPRC.-- (A) In general.--Title XVIII is amended by striking section 1845 (42 U.S.C. 1395w-1).
(B) Elimination of certain reports.--Section 1848 (42 U.S.C. 1395w-4) is amended-- (i) by striking subparagraph (F) of subsection (d)(2), (ii) by striking subparagraph (B) of subsection (f)(1), and (iii) in subsection (f)(3), by striking "Physician Payment Review Commission,".
(C) Conforming amendments.--Section 1848 (42 U.S.C. 1395w- 4) is amended by striking "Physician Payment Review Commission" and inserting "Medicare Payment Advisory Commission" each place it appears in subsections (c)(2)(B)(iii), (g)(6)(C), and (g)(7)(C).
(c) Effective Date; Transition.-- (1) In general.--The Comptroller General shall first provide for appointment of members to the Medicare Payment Advisory Commission (in this subsection referred to as MedPAC") by not later than September 30, 1997.
(2) Transition.--As quickly as possible after the date a majority of members of MedPAC are first appointed, the Comptroller General, in consultation with the Prospective Payment Assessment Commission (in this subsection referred to as ProPAC") and the Physician Payment Review Commission (in this subsection referred to as PPRC"), shall provide for the termination of the ProPAC and the PPRC. As of the date of termination of the respective Commissions, the amendments made by paragraphs (1) and (2), respectively, of subsection (b) become effective. The Comptroller General, to the extent feasible, shall provide for the transfer to the MedPAC of assets and staff of the ProPAC and the PPRC, without any loss of benefits or seniority by virtue of such transfers. Fund balances available to the ProPAC or the PPRC for any period shall be available to the MedPAC for such period for like purposes.
(3) Continuing responsibility for reports.--The MedPAC 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 MedPAC) by the ProPAC and the PPRC, and, for this purpose, any reference in law to either such Commission is deemed, after the appointment of the MedPAC, to refer to the MedPAC.
SEC. 4031. MEDIGAP PROTECTIONS.
(a) Guaranteeing Issue Without Preexisting Conditions for Continuously Covered Individuals.--Section 1882(s) (42 U.S.C.1395ss(s)) is amended-- (1) in paragraph (3), by striking paragraphs (1) and (2) and inserting this subsection, (2) by redesignating paragraph (3) as paragraph (4), and (3) by inserting after paragraph (2) the following new paragraph: (3)(A) The issuer of a medicare supplemental policy-- (i) may not deny or condition the issuance or effectiveness of a medicare supplemental policy described in subparagraph (C) that is offered and is available for issuance to new enrollees by such issuer; (ii) may not discriminate in the pricing of such policy, because of health status, claims experience, receipt of health care, or medical condition; and (iii) may not impose an exclusion of benefits based on a pre- existing condition under such policy, in the case of an individual described in subparagraph (B) who seeks to enroll under the policy not later than 63 days after the date of the termination of enrollment described in such subparagraph and who submits evidence of the date of termination or disenrollment along with the application for such medicare supplemental policy.
(B) An individual described in this subparagraph is an individual described in any of the following clauses: (i) The individual is enrolled under an employee welfare benefit plan that provides health benefits that supplement the benefits under this title and the plan terminates or ceases to provide all such supplemental health benefits to the individual.
(ii) The individual is enrolled with a Medicare+Choice organization under a Medicare+Choice plan under part C, and there are circumstances permitting discontinuance of the individual's election of the plan under the first sentence of section 1851(e)(4).
(iii) The individual is enrolled with an eligible organization under a contract under section 1876, a similar organization operating under demonstration project authority, effective for periods before April 1, 1999, with an organization under an agreement under section 1833(a)(1)(A), or with an organization under a policy described in subsection (t), and such enrollment ceases under the same circumstances that would permit discontinuance of an individual's election of coverage under the first sentence of section 1851(e)(4) and, in the case of a policy described in subsection (t), there is no provision under applicable State law for the continuation or conversion of coverage under such policy.
(iv) The individual is enrolled under a medicare supplemental policy under this section and such enrollment ceases because-- (I) of the bankruptcy or insolvency of the issuer or because of other involuntary termination of coverage or enrollment under such policy and there is no provision under applicable State law for the continuation or conversion of such coverage; (II) the issuer of the policy substantially violated a material provision of the policy; or (III) the issuer (or an agent or other entity acting on the issuer's behalf) materially misrepresented the policy's provisions in marketing the policy to the individual.
(v) The individual-- (I) was enrolled under a medicare supplemental policy under this section, (II) subsequently terminates such enrollment and enrolls, for the first time, with any Medicare+Choice organization under a Medicare+Choice plan under part C, any eligible organization under a contract under section 1876, any similar organization operating under demonstration project authority, or any policy described in subsection (t), and (III) the subsequent enrollment under subclause (II) is terminated by the enrollee during any period within the first 12 months of such enrollment (during which the enrollee is permitted to terminate such subsequent enrollment under section 1851(e)).
(vi) The individual, upon first becoming eligible for benefits under part A at age 65, enrolls in a Medicare+Choice plan under part C, and disenrolls from such plan by not later than 12 months after the effective date of such enrollment.
(C)(i) Subject to clauses (ii) and (iii), a medicare supplemental policy described in this subparagraph is a medicare supplemental policy which has a benefit package classified as 'A', 'B', 'C', or 'F' under the standards established under subsection (p)(2).
(ii) Only for purposes of an individual described in subparagraph (B)(v), a medicare supplemental policy described in this subparagraph is the same medicare supplemental policy referred to in such subparagraph in which the individual was most recently previously enrolled, if available from the same issuer, or, if not so available, a policy described in clause (i).
(iii) Only for purposes of an individual described in subparagraph (B)(vi), a medicare supplemental policy described in this subparagraph shall include any medicare supplemental policy.
(iv) For purposes of applying this paragraph in the case of a State that provides for offering of benefit packages other than under the classification referred to in clause (i), the references to benefit packages in such clause are deemed references to comparable benefit packages offered in such State.
(D) At the time of an event described in subparagraph (B) because of which an individual ceases enrollment or loses coverage or benefits under a contract or agreement, policy, or plan, the organization that offers the contract or agreement, the insurer offering the policy, or the administrator of the plan, respectively, shall notify the individual of the rights of the individual under this paragraph, and obligations of issuers of medicare supplemental policies, under subparagraph (A).".
(b) Limitation on Imposition of Preexisting Condition Exclusion During Initial Open Enrollment Period.--Section 1882(s)(2) (42 U.S.C.1395ss(s)(2)) is amended-- (1) in subparagraph (B), by striking "subparagraph (C)" and inserting "subparagraphs (C) and (D)", and (2) by adding at the end the following new subparagraph: (D) In the case of a policy issued during the 6-month period described in subparagraph (A) to an individual who is 65 years of age or older as of the date of issuance and who as of the date of the application for enrollment has a continuous period of creditable coverage (as defined in 2701(c) of the Public Health Service Act) of-- (i) at least 6 months, the policy may not exclude benefits based on a pre-existing condition; or (ii) less than 6 months, if the policy excludes benefits based on a preexisting condition, the policy shall reduce the period of any preexisting condition exclusion by the aggregate of the periods of creditable coverage (if any, as so defined) applicable to the individual as of the enrollment date.
The Secretary shall specify the manner of the reduction under clause (ii), based upon the rules used by the Secretary in carrying out section 2701(a)(3) of such Act.".
(c) Conforming Amendment.--Section 1882(d)(3)(A)(vi)(III) (42 U.S.C. 1395ss(d)(2)(A)(vi)(III)) is amended by inserting ", a policy described in clause (v)," after "Medicare supplemental policy".
(d) Effective Dates.-- (1) Guaranteed issue.--The amendment made by subsection (a) shall take effect on July 1, 1998.
(2) Limit on preexisting condition exclusions.--The amendment made by subsection (b) shall apply to policies issued on or after July 1, 1998.
(3) Conforming amendment.--The amendment made by subsection (c) shall be effective as if included in the enactment of the Health Insurance Portability and Accountability Act of 1996.
(e) Transition Provisions.-- (1) In general.--If the Secretary of Health and Human Services identifies a State as requiring a change to its statutes or regulations to conform its regulatory program to the changes made by this section, the State regulatory program shall not be considered to be out of compliance with the requirements of section 1882 of the Social Security Act due solely to failure to make such change until the date specified in paragraph (4).
(2) NAIC standards.--If, within 9 months after the date of the enactment of this Act, the National Association of Insurance Commissioners (in this subsection referred to as the NAIC") modifies its NAIC Model Regulation relating to section 1882 of the Social Security Act (referred to in such section as the 1991 NAIC Model Regulation, as modified pursuant to section 171(m)(2) of the Social Security Act Amendments of 1994 (Public Law 103-432) and as modified pursuant to section 1882(d)(3)(A)(vi)(IV) of the Social Security Act, as added by section 271(a) of the Health Insurance Portability and Accountability Act of 1996 (Public Law 104-191) to conform to the amendments made by this section, such revised regulation incorporating the modifications shall be considered to be the applicable NAIC model regulation (including the revised NAIC model regulation and the 1991 NAIC Model Regulation) for the purposes of such section.
(3) Secretary standards.--If the NAIC does not make the modifications described in paragraph (2) within the period specified in such paragraph, the Secretary of Health and Human Services shall make the modifications described in such paragraph and such revised regulation incorporating the modifications shall be considered to be the appropriate Regulation for the purposes of such section.
(4) Date specified.-- (A) In general.--Subject to subparagraph (B), the date specified in this paragraph for a State is the earlier of-- (i) the date the State changes its statutes or regulations to conform its regulatory program to the changes made by this section, or (ii) 1 year after the date the NAIC or the Secretary first makes the modifications under paragraph (2) or (3), respectively.
(B) Additional legislative action required.--In the case of a State which the Secretary identifies as-- (i) requiring State legislation (other than legislation appropriating funds) to conform its regulatory program to the changes made in this section, but (ii) having a legislature which is not scheduled to meet in 1999 in a legislative session in which such legislation may be considered, the date specified in this paragraph is the first day of the first calendar quarter beginning after the close of the first legislative session of the State legislature that begins on or after July 1, 1999. For purposes of the previous sentence, in the case of a State that has a 2-year legislative session, each year of such session shall be deemed to be a separate regular session of the State legislature.
(f) Conforming Benefits to Changes in Terminology for Hospital Outpatient Department Cost Sharing.--For purposes of apply section 1882 of the Social Security Act (42 U.S.C. 1395ss) and regulations referred to in subsection (e), copayment amounts provided under section 1833(t)(5) of such Act with respect to hospital outpatient department services shall be treated under medicare supplemental policies in the same manner as coinsurance with respect to such services.
(a) In General.--Section 1882(p) (42 U.S.C. 1395ss(p)) is amended-- (1) in paragraph (2)(C), by inserting "plus the 2 plans described in paragraph (11)(A)" after "exceed 10"; and (2) by adding at the end the following: (11)(A) For purposes of paragraph (2), the benefit packages described in this subparagraph are as follows: (i) The benefit package classified as 'F' under the standards established by such paragraph, except that it has a high deductible feature.
(ii) The benefit package classified as 'J' under the standards established by such paragraph, except that it has a high deductible feature.
(B) For purposes of subparagraph (A), a high deductible feature is one which-- (i) requires the beneficiary of the policy to pay annual out- of-pocket expenses (other than premiums) in the amount specified in subparagraph (C) before the policy begins payment of benefits, and (ii) covers 100 percent of covered out-of-pocket expenses once such deductible has been satisfied in a year.
(C) The amount specified in this subparagraph-- (i) for 1998 and 1999 is $1,500, and (ii) for a subsequent year, is the amount specified in this subparagraph for the previous year increased by the percentage increase in the Consumer Price Index for all urban consumers (all items; U.S. city average) for the 12-month period ending with August of the preceding year.
If any amount determined under clause (ii) is not a multiple of $10, it shall be rounded to the nearest multiple of $10.".
(b) Effective Date.-- (1) In general.--The amendments made by subsection (a) shall take effect the date of the enactment of this Act.
(2) Transition.--The provisions of section 4031(e) shall apply with respect to this section in the same manner as they apply to section 4031.
SEC. 4041. TAX TREATMENT OF HOSPITALS WHICH PARTICIPATE IN PROVIDER- SPONSORED ORGANIZATIONS.
(a) In General.--Section 501 of the Internal Revenue Code of 1986 (relating to exemption from tax on corporations, certain trusts, etc.) 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 purpose 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(e) 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.