104th CONGRESS 1st Session H. R. 2425 To amend title XVIII of the Social Security Act to preserve and reform the medicare program. _______________________________________________________________________ IN THE HOUSE OF REPRESENTATIVES September 29, 1995 Mr. Archer (for himself, Mr. Bliley, Mr. Bilirakis, Mr. Thomas, Mr. Hyde, Mr. Greenwood, Mr. Hastert, Mrs. Johnson of Connecticut, and Mr. McCrery) introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committees on Commerce, the Judiciary, and Rules, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned _______________________________________________________________________ A BILL To amend title XVIII of the Social Security Act to preserve and reform the medicare program. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. PURPOSE. The purpose of this Act is to reform the medicare program, in order to preserve and protect the financial stability of the program. TITLE XV--MEDICARE SEC. 15000. SHORT TITLE OF TITLE; AMENDMENTS AND REFERENCES TO OBRA; TABLE OF CONTENTS OF TITLE. (a) Short Title.--This title may be cited as the ``Medicare Preservation Act of 1995''. (b) Amendments to Social Security Act.--Except as otherwise specifically provided, whenever in this title an amendment is expressed in terms of an amendment to or repeal of a section or other provision, the reference shall be considered to be made to that section or other provision of the Social Security Act. (c) References to OBRA.--In this title, the terms ``OBRA-1986'', ``OBRA-1987'', ``OBRA-1989'', ``OBRA-1990'', and ``OBRA-1993'' refer to the Omnibus Budget Reconciliation Act of 1986 (Public Law 99-509), the Omnibus Budget Reconciliation Act of 1987 (Public Law 100-203), the Omnibus Budget Reconciliation Act of 1989 (Public Law 101-239), the Omnibus Budget Reconciliation Act of 1990 (Public Law 101-508), and the Omnibus Budget Reconciliation Act of 1993 (Public Law 103-66), respectively. (d) Table of Contents of Title.--The table of contents of this title is as follows: Sec. 15000. Short title of title; amendments and references to OBRA; table of contents of title. Subtitle A--MedicarePlus Program Part 1--Increasing Choice Under the Medicare Program Sec. 15001. Increasing choice under medicare. Sec. 15002. MedicarePlus program. ``Part C--Provisions Relating to MedicarePlus ``Sec. 1851. Requirements for MedicarePlus organizations; high deductible/medisave products. ``Sec. 1852. Requirements relating to benefits, provision of services, enrollment, and premiums. ``Sec. 1853. Patient protection standards. ``Sec. 1854. Provider-sponsored organizations. ``Sec. 1855. Payments to MedicarePlus organizations. ``Sec. 1856. Establishment of standards for MedicarePlus organizations and products. ``Sec. 1857. MedicarePlus certification. ``Sec. 1858. Contracts with MedicarePlus organizations. Sec. 15003. Duplication and coordination of medicare-related products. Sec. 15004. Transitional rules for current medicare HMO program. Part 2--Special Rules for MedicarePlus Medical Savings Accounts Sec. 15011. MedicarePlus MSA's. Sec. 15012. Certain rebates excluded from gross income. Part 3--Special Antitrust Rule for Provider Service Networks Sec. 15021. Application of antitrust rule of reason to provider service networks. Part 4--Commissions Sec. 15031. Medicare Payment Review Commission. Sec. 15032. Commission on the Effect of the Baby Boom Generation on the Medicare Program. Sec. 15033. Change in appointment of Administrator of HCFA. Subtitle B--Preventing Fraud and Abuse Sec. 15101. Increasing awareness of fraud and abuse. Sec. 15102. Beneficiary incentive programs. Sec. 15103. Intermediate sanctions for medicare health maintenance organizations. Sec. 15104. Voluntary disclosure program. Sec. 15105. Revisions to current sanctions. Sec. 15106. Consolidated funding for anti-fraud and abuse activities under Medicare Integrity Program. Sec. 15107. Permitting carriers to carry out prior authorization for certain items of durable medical equipment. Sec. 15108. Establishment of Health Care Anti-Fraud Task Force. Sec. 15109. Study of adequacy of private quality assurance programs. Subtitle C--Regulatory Relief Part 1--Physician Ownership Referral Reform Sec. 15201. Repeal of prohibitions based on compensation arrangements. Sec. 15202. Revision of designated health services subject to prohibition. Sec. 15203. Delay in implementation until promulgation of regulations. Sec. 15204. Exceptions to prohibition. Sec. 15205. Repeal of reporting requirements. Sec. 15206. Preemption of State law. Sec. 15207. Effective date. Part 2--Other Medicare Regulatory Relief Sec. 15211. Repeal of Medicare and Medicaid Coverage Data Bank. Sec. 15212. Clarification of level of intent required for imposition of sanctions. Sec. 15213. Clarification of and additions to exceptions to anti- kickback penalties. Sec. 15214. Solicitation and publication of modifications to existing safe harbors and new safe harbors. Sec. 15215. Issuance of advisory opinions under title XI. Sec. 15216. Prior notice of changes in billing and claims processing requirements for physicians' services. Part 3--Promoting Physician Self-Policing Sec. 15221. Exemption from antitrust laws for certain activities of medical self-regulatory entities. Subtitle D--Medical Liability Reform Part 1--General Provisions Sec. 15301. Federal reform of health care liability actions. Sec. 15302. Definitions. Sec. 15303. Effective date. Part 2--Uniform Standards for Health Care Liability Actions Sec. 15311. Statute of limitations. Sec. 15312. Calculation and payment of damages. Sec. 15313. Alternative dispute resolution. Subtitle E--Teaching Hospitals and Graduate Medical Education Part 1--Teaching Hospital and Graduate Medical Education Trust Fund Sec. 15401. Establishment of Fund; payments to teaching hospitals. ``TITLE XXII--TEACHING HOSPITAL AND GRADUATE MEDICAL EDUCATION TRUST FUND ``Part A--Establishment of Fund ``Sec. 2201. Establishment of Fund. ``Part B--Payments to Teaching Hospitals ``Subpart 1--Requirement of Payments ``Sec. 2211. Formula payments to teaching hospitals. ``Subpart 2--Amount Relating to Indirect Costs of Graduate Medical Education ``Sec. 2221. Determination of amount relating to indirect costs. ``Sec. 2222. Indirect costs; special rules regarding determination of hospital-specific percentage. ``Sec. 2223. Indirect costs; alternative payments regarding teaching hospitals in certain States. ``Subpart 3--Amount Relating to Direct Costs of Graduate Medical Education ``Sec. 2231. Determination of amount relating to direct costs. ``Sec. 2232. Direct costs; special rules regarding determination of hospital-specific percentage. ``Sec. 2233. Direct costs; authority for payments to consortia of providers. ``Sec. 2234. Direct costs; alternative payments regarding teaching hospitals in certain States. ``Subpart 4--General Provisions ``Sec. 2241. Adjustments in payment amounts. Part 2--Amendments to Medicare Program Sec. 15411. Transfers to Teaching Hospital and Graduate Medical Education Trust Fund. Sec. 15412. Modification in payment policies regarding graduate medical education. Part 3--Reform of Federal Policies Regarding Teaching Hospitals and Graduate Medical Education Sec. 15421. Establishment of advisory panel for recommending policies. ``Part C--Other Matters ``Sec. 2251. Advisory Panel on Reform in Financing of Teaching Hospitals and Graduate Medical Education. Subtitle F--Provisions Relating to Medicare Part A subpart a--general provisions relating to hospitals Sec. 15501. Reductions in inflation updates for PPS hospitals. Sec. 15502. Reductions in disproportionate share payment adjustments. Sec. 15503. Payments for capital-related costs for inpatient hospital services. Sec. 15504. Reduction in adjustment for indirect medical education. Sec. 15505. Treatment of PPS-exempt hospitals. Sec. 15506. Reduction in payments to hospitals for enrollees' bad debts. Sec. 15507. Permanent extension of hemophilia pass-through. Sec. 15508. Conforming amendment to certification of Christian Science subpart b--provisions relating to rural hospitals Sec. 15511. Sole community hospitals. Sec. 15512. Clarification of treatment of EAC and RPC hospitals. Sec. 15513. Rural emergency access care hospitals. Sec. 15514. Classification of rural referral centers. Sec. 15515. Floor on area wage index. Part 2--Payments to Skilled Nursing Facilities Sec. 15521. Payments for routine service costs. Sec. 15522. Incentives for cost effective management of covered non- routine services. Sec. 15523. Payments for routine service costs. Sec. 15524. Reductions in payment for capital-related costs. Sec. 15525. Treatment of items and services paid for under part B. Sec. 15526. Certification of facilities meeting revised nursing home reform standards. Sec. 15527. Medical review process. Sec. 15528. Report by Medicare Payment Review Commission. Sec. 15529. Effective date. Subtitle G--Provisions Relating to Medicare Part B Part 1--Payment Reforms Sec. 15601. Payments for physicians' services. Sec. 15602. Elimination of formula-driven overpayments for certain outpatient hospital services. Sec. 15603. Reduction in updates to payment amounts for durable medical equipment. Sec. 15604. Reduction in updates to payment amounts for clinical diagnostic laboratory tests. Sec. 15605. Extension of reductions in payments for costs of hospital outpatient services. Sec. 15606. Freeze in payments for ambulatory surgical center services. Sec. 15607. Rural emergency access care hospitals. Part 2--Part B Premium Sec. 15611. Extension of part B premium. Sec. 15612. Income-related reduction in medicare subsidy. Subtitle H--Provisions Relating to Medicare Parts A and B Part 1--Home Health Services Sec. 15701. Payment for home health services. Sec. 15702. Maintaining savings resulting from temporary freeze on payment increases for home health services. Sec. 15703. Extension of waiver of presumption of lack of knowledge of exclusion from coverage for home health agencies. Part 2--Medicare Secondary Payer Improvements Sec. 15711. Extension and expansion of existing requirements. Sec. 15712. Improvements in recovery of payments. Sec. 15713. Prohibiting retroactive application of policy regarding ESRD beneficiaries enrolled in primary plans. Part 3--Failsafe Sec. 15721. Failsafe budget mechanism. Part 4--Administrative Simplification Sec. 15731. Standards for medicare information transactions and data elements. Part 5--Other Provisions Relating to Parts A and B Sec. 15741. Clarification of medicare coverage of items and services associated with certain medical devices approved for investigational use. Sec. 15742. Additional exclusion from coverage. Subtitle I--Clinical Laboratories Sec. 15801. Exemption of physician office laboratories. Subtitle A--MedicarePlus Program PART 1--INCREASING CHOICE UNDER THE MEDICARE PROGRAM Subtitle A, Part 1 SEC. 15001. INCREASING CHOICE UNDER MEDICARE. (a) In General.--Title XVIII is amended by inserting after section 1804 the following new section: ``providing for choice of coverage ``Sec. 1805. (a) Choice of Coverage.-- ``(1) In general.--Subject to the provisions of this section, every individual who is entitled to benefits under part A and enrolled under part B shall elect to receive benefits under this title through one of the following: ``(A) Through fee-for-service system.--Through the provisions of parts A and B. ``(B) Through a medicareplus product.--Through a MedicarePlus product (as defined in paragraph (2)), which may be-- ``(i) a high deductible/medisave product (and a contribution into a MedicarePlus medical savings account (MSA)), ``(ii) a product offered by a provider- sponsored organization, ``(iii) a product offered by an organization that is a union, Taft-Hartley plan, or association, or ``(iv) a product providing for benefits on a fee-for-service or other basis. ``(2) Medicareplus product defined.--For purposes this section and part C, the term `MedicarePlus product' means health benefits coverage offered under a policy, contract, or plan by a MedicarePlus organization (as defined in section 1851(a)) pursuant to and in accordance with a contract under section 1857. ``(3) Terminology relating to options.--For purposes of this section and part C-- ``(A) Non-medicareplus option.--An individual who has made the election described in paragraph (1)(A) is considered to have elected the `Non-MedicarePlus option'. ``(B) Medicareplus option.--An individual who has made the election described in paragraph (1)(B) to obtain coverage through a MedicarePlus product is considered to have elected the `MedicarePlus option' for that product. ``(b) Special Rules.-- ``(1) Residence requirement.--Except as the Secretary may otherwise provide, an individual is eligible to elect a MedicarePlus product offered by a MedicarePlus organization only if the organization in relation to the product serves the geographic area in which the individual resides. ``(2) Affiliation requirements for certain products.-- ``(A) In general.--Subject to subparagraph (B), an individual is eligible to elect a MedicarePlus product offered by a limited enrollment MedicarePlus organization (as defined in section 1852(c)(4)(E)) only if-- ``(i) the individual is eligible under section 1852(c)(4) to make such election, and ``(ii) in the case of a MedicarePlus organization that is a union sponsor or a Taft- Hartley sponsor (as defined in section 1852(c)(4)), the individual elected under this section a MedicarePlus product offered by the sponsor during the first enrollment period in which the individual was eligible to make such election with respect to such sponsor. ``(B) No reelection after disenrollment for certain products.--An individual is not eligible to elect a MedicarePlus product offered by a MedicarePlus organization that is union sponsor or a Taft-Hartley sponsor if the individual previously had elected a MedicarePlus product offered by the organization and had subsequently discontinued to elect such a product offered by the organization. ``(3) Special rule for certain annuitants.--An individual is not eligible to elect a high deductible/medisave product if the individual is entitled to benefits under chapter 89 of title 5, United States Code, as an annuitant or spouse of an annuitant. ``(c) Process for Exercising Choice.-- ``(1) In general.--The Secretary shall establish a process through which elections described in subsection (a) are made and changed, including the form and manner in which such elections are made and changed. Such elections shall be made or changed only during coverage election periods specified under subsection (e) and shall become effective as provided in subsection (f). ``(2) Expedited implementation.--The Secretary shall establish the process of electing coverage under this section during the transition period (as defined in subsection (e)(1)(B)) in such an expedited manner as will permit such an election for MedicarePlus products in an area as soon as such products become available in that area. ``(3) Coordination through medicareplus organizations.-- ``(A) Enrollment.--Such process shall permit an individual who wishes to elect a MedicarePlus product offered by a MedicarePlus organization to make such election through the filing of an appropriate election form with the organization. ``(B) Disenrollment.--Such process shall permit an individual, who has elected a MedicarePlus product offered by a MedicarePlus organization and who wishes to terminate such election, to terminate such election through the filing of an appropriate election form with the organization. ``(4) Default.-- ``(A) Initial election.-- ``(i) In general.--Subject to clause (ii), an individual who fails to make an election during an initial election period under subsection (e)(1) is deemed to have chosen the Non-MedicarePlus option. ``(ii) Seamless continuation of coverage.-- The Secretary shall establish procedures under which individuals who are enrolled with a MedicarePlus organization at the time of the initial election period and who fail to elect to receive coverage other than through the organization are deemed to have elected an appropriate MedicarePlus product offered by the organization. ``(B) Continuing periods.--An individual who has made (or deemed to have made) an election under this section is considered to have continued to make such election until such time as-- ``(i) the individual changes the election under this section, or ``(ii) a MedicarePlus product is discontinued, if the individual had elected such product at the time of the discontinuation. ``(5) Agreements with commissioner of social security to promote efficient administration.--In order to promote the efficient administration of this section and the MedicarePlus program under part C, the Secretary may enter into an agreement with the Commissioner of Social Security under which the Commissioner performs administrative responsibilities relating to enrollment and disenrollment in MedicarePlus products under this section. ``(d) Provision of Beneficiary Information to Promote Informed Choice.-- ``(1) In general.--The Secretary shall provide for activities under this subsection to disseminate broadly information to medicare beneficiaries (and prospective medicare beneficiaries) on the coverage options provided under this section in order to promote an active, informed selection among such options. Such information shall be made available on such a timely basis (such as 6 months before the date an individual would first attain eligibility for medicare on the basis of age) as to permit individuals to elect the MedicarePlus option during the initial election period described in subsection (e)(1). ``(2) Use of nonfederal entities.--The Secretary shall, to the maximum extent feasible, enter into contracts with appropriate non-Federal entities to carry out activities under this subsection. ``(3) Specific activities.--In carrying out this subsection, the Secretary shall provide for at least the following activities in all areas in which MedicarePlus products are offered: ``(A) Information booklet.-- ``(i) In general.--The Secretary shall publish an information booklet and disseminate the booklet to all individuals eligible to elect the MedicarePlus option under this section during coverage election periods. ``(ii) Information included.--The booklet shall include information presented in plain English and in a standardized format regarding-- ``(I) the benefits and premiums for the various MedicarePlus products in the areas involved; ``(II) the quality of such products, including consumer satisfaction information; and ``(III) rights and responsibilities of medicare beneficiaries under such products. ``(iii) Periodic updating.--The booklet shall be updated on a regular basis (not less often than once every 12 months) to reflect changes in the availability of MedicarePlus products and the benefits and premiums for such products. ``(B) Toll-free number.--The Secretary shall maintain a toll-free number for inquiries regarding MedicarePlus options and the operation of part C. ``(C) General information in medicare handbook.-- The Secretary shall include information about the MedicarePlus option provided under this section in the annual notice of medicare benefits under section 1804. ``(e) Coverage Election Periods.-- ``(1) Initial choice upon eligibility to make election.-- ``(A) In general.--In the case of an individual who first becomes entitled to benefits under part A and enrolled under part B after the beginning of the transition period (as defined in subparagraph (B)), the individual shall make the election under this section during a period (of a duration and beginning at a time specified by the Secretary) at the first time the individual both is entitled to benefits under part A and enrolled under part B. Such period shall be specified in a manner so that, in the case of an individual who elects a MedicarePlus product during the period, coverage under the product becomes effective as of the first date on which the individual may receive such coverage. ``(B) Transition period defined.--In this subsection, the term `transition period' means, with respect to an individual in an area, the period beginning on the first day of the first month in which a MedicarePlus product is first made available to individuals in the area and ending with the month preceding the beginning of the first annual, coordinated election period under paragraph (3). ``(2) During transition period.--Subject to paragraph (6)-- ``(A) Continuous open enrollment into a medicareplus option.--During the transition period, an individual who is eligible to make an election under this section and who has elected the non-MedicarePlus option may change such election to a MedicarePlus option at any time. ``(B) Open disenrollment before end of transition period.-- ``(i) In general.--During the transition period, an individual who has elected a MedicarePlus option for a MedicarePlus product may change such election to another MedicarePlus product or to the non-MedicarePlus option. ``(ii) Special rule.--During the transition period, an individual who has elected a high deductible/medisave product may not change such election to a MedicarePlus product that is not a high deductible/medisave product unless the individual has had such election in effect for 12 months. ``(3) Annual, coordinated election period.-- ``(A) In general.--Subject to paragraph (5), each individual who is eligible to make an election under this section may change such election during annual, coordinated election periods. ``(B) Annual, coordinated election period.--For purposes of this section, the term `annual, coordinated election period' means, with respect to a calendar year (beginning with 1998), the month of October before such year. ``(C) Medicareplus health fair during october, 1996.--In the month of October, 1996, the Secretary shall provide for a nationally coordinated educational and publicity campaign to inform individuals, who are eligible to elect MedicarePlus products, about such products and the election process provided under this section (including the annual, coordinated election periods that occur in subsequent years). ``(4) Special 90-day disenrollment option.-- ``(A) In general.--In the case of an individual who first elects a MedicarePlus option (other than a high deductible/medisave product) under this section, the individual may discontinue such election through the filing of an appropriate notice during the 90-day period beginning on the first day on which the individual's coverage under the MedicarePlus product under such option becomes effective. ``(B) Effect of discontinuation of election.--An individual who discontinues an election under this paragraph shall be deemed at the time of such discontinuation to have elected the non-MedicarePlus option. ``(5) Special election periods.--An individual may discontinue an election of a MedicarePlus product offered by a MedicarePlus organization other than during an annual, coordinated election period and make a new election under this section if-- ``(A) the organization's or product's certification under part C has been terminated or the organization has terminated or otherwise discontinued providing the product; ``(B) in the case of an individual who has elected a MedicarePlus product offered by a MedicarePlus organization, the individual is no longer eligible to elect the product because of a change in the individual's place of residence or other change in circumstances (specified by the Secretary, but not including termination of membership in a qualified association in the case of a product offered by a qualified association or termination of the individual's enrollment on the basis described in clause (i) or (ii), section 1852(c)(3)(B)); ``(C) the individual demonstrates (in accordance with guidelines established by the Secretary) that-- ``(i) the organization offering the product substantially violated a material provision of the organization's contract under part C in relation to the individual and the product; or ``(ii) the organization (or an agent or other entity acting on the organization's behalf) materially misrepresented the product's provisions in marketing the product to the individual; or ``(D) the individual meets such other conditions as the Secretary may provide. ``(6) Special rule for high deductible/medisave products.-- Notwithstanding the previous provisions of this subsection, an individual may elect a high deductible/medisave product only during an annual, coordinated election period described in paragraph (3)(B) or during the month of October, 1996. ``(f) Effectiveness of Elections.-- ``(1) During initial coverage election period.--An election of coverage made during the initial coverage election period under subsection (e)(1)(A) shall take effect upon the date the individual becomes entitled to benefits under part A and enrolled under part B, except as the Secretary may provide (consistent with section 1838) in order to prevent retroactive coverage. ``(2) During transition; 90-day disenrollment option.--An election of coverage made under subsection (e)(2) and an election to discontinue a MedicarePlus option under subsection (e)(4) at any time shall take effect with the first calendar month following the date on which the election is made. ``(3) Annual, coordinated election period and medisave election.--An election of coverage made during an annual, coordinated election period (as defined in subsection (e)(3)(B)) in a year or for a high deductible/medisave product shall take effect as of the first day of the following year. ``(4) Other periods.--An election of coverage made during any other period under subsection (e)(5) shall take effect in such manner as the Secretary provides in a manner consistent (to the extent practicable) with protecting continuity of health benefit coverage. ``(g) Effect of Election of MedicarePlus Option.--Subject to the provisions of section 1855(f), payments under a contract with a MedicarePlus organization under section 1857(a) with respect to an individual electing a MedicarePlus product offered by the organization shall be instead of the amounts which (in the absence of the contract) would otherwise be payable under parts A and B for items and services furnished to the individual. ``(h) Administration.-- ``(1) In general.--This part and sections 1805 and 1876 shall be administered through an operating division (A) that is established or identified by the Secretary in the Department of Health and Human Services, (B) that is separate from the Health Care Financing Administration, and (C) the primary function of which is the administration of this part and such sections. The director of such division shall be of equal pay and rank to that of the individual responsible for overall administration of parts A and B. ``(2) Transfer authority.--The Secretary shall transfer such personnel, administrative support systems, assets, records, funds, and other resources in the Health Care Financing Administration to the operating division referred to in paragraph (1) as are used in the administration of section 1876 and as may be required to implement the provisions referred to in such paragraph promptly and efficiently.''. SEC. 15002. MEDICAREPLUS PROGRAM. (a) In General.--Title XVIII is amended by redesignating part C as part D and by inserting after part B the following new part: ``Part C--Provisions Relating to MedicarePlus ``requirements for medicareplus organizations; high deductible/medisave products ``Sec. 1851. (a) MedicarePlus Organization Defined.--In this part, subject to the succeeding provisions of this section, the term `MedicarePlus organization' means a public or private entity that is certified under section 1857 as meeting the requirements of this part for such an organization. ``(b) Organized and Licensed Under State Law.-- ``(1) In general.--A MedicarePlus organization shall be organized and licensed under State law to offer health insurance or health benefits coverage in each State in which it offers a MedicarePlus product. ``(2) Exception for union and taft-hartley sponsors.-- Paragraph (1) shall not apply to a MedicarePlus organization that is a union sponsor or a Taft-Hartley sponsor (as defined in section 1852(c)(4)). ``(3) Exception for provider-sponsored organizations.-- Paragraph (1) shall not apply to a MedicarePlus organization that is a provider-sponsored organization (as defined in section 1854(a)) except to the extent provided under section 1857(c). ``(c) Prepaid Payment.--A MedicarePlus organization shall be compensated (except for deductibles, coinsurance, and copayments) for the provision of health care services to enrolled members by a payment which is paid on a periodic basis without regard to the date the health care services are provided and which is fixed without regard to the frequency, extent, or kind of health care service actually provided to a member. ``(d) Assumption of Full Financial Risk.--The MedicarePlus organization shall assume full financial risk on a prospective basis for the provision of the health care services (other than hospice care) for which benefits are required to be provided under section 1852(a)(1), except that the organization-- ``(1) may obtain insurance or make other arrangements for the cost of providing to any enrolled member such services the aggregate value of which exceeds $5,000 in any year, ``(2) may obtain insurance or make other arrangements for the cost of such services provided to its enrolled members other than through the organization because medical necessity required their provision before they could be secured through the organization, ``(3) may obtain insurance or make other arrangements for not more than 90 percent of the amount by which its costs for any of its fiscal years exceed 115 percent of its income for such fiscal year, and ``(4) may make arrangements with physicians or other health professionals, health care institutions, or any combination of such individuals or institutions to assume all or part of the financial risk on a prospective basis for the provision of basic health services by the physicians or other health professionals or through the institutions. ``(e) Provision Against Risk of Insolvency.-- ``(1) In general.--Each MedicarePlus organization shall meet standards under section 1856 relating to the financial solvency and capital adequacy of the organization. Such standards shall take into account the nature and type of MedicarePlus products offered by the organization. ``(2) Treatment of union and taft-hartley sponsors.--An entity that is a union sponsor or a Taft-Hartley sponsor is deemed to meet the requirement of paragraph (1). ``(f) High Deductible/Medisave Product Defined.-- ``(1) In general.--In this part, the term `high deductible/ medisave product' means a MedicarePlus product that-- ``(A) provides reimbursement for at least the items and services described in section 1852(a)(1) in a year but only after the enrollee incurs countable expenses (as specified under the product) equal to the amount of a deductible (described in paragraph (2)); ``(B) counts as such expenses (for purposes of such deductible) at least all amounts that would have been payable under parts A and B or by the enrollee if the enrollee had elected to receive benefits through the provisions of such parts; and ``(C) provides, after such deductible is met for a year and for all subsequent expenses for benefits referred to in subparagraph (A) in the year, for a level of reimbursement that is not less than-- ``(i) 100 percent of such expenses, or ``(ii) 100 percent of the amounts that would have been paid (without regard to any deductibles or coinsurance) under parts A and B with respect to such expenses, whichever is less. Such term does not include the MedicarePlus MSA itself or any contribution into such account. ``(2) Deductible.--The amount of deductible under a high deductible/medisave product-- ``(A) for contract year 1997 shall be not more than $10,000; and ``(B) for a subsequent contract year shall be not more than the maximum amount of such deductible for the previous contract year under this paragraph increased by the national average per capita growth rate under section 1855(c)(3) for the year. If the amount of the deductible under subparagraph (B) is not a multiple of $50, the amount shall be rounded to the nearest multiple of $50. ``(g) Organizations Treated as MedicarePlus Organizations During Transition.--Any of the following organizations shall be considered to qualify as a MedicarePlus organization for contract years beginning before January 1, 1998: ``(1) Health maintenance organizations.--An organization that is organized under the laws of any State and that is a qualified health maintenance organization (as defined in section 1310(d) of the Public Health Service Act), an organization recognized under State law as a health maintenance organization, or a similar organization regulated under State law for solvency in the same manner and to the same extent as such a health maintenance organization. ``(2) Licensed insurers.--An organization that is organized under the laws of any State and-- ``(A) is licensed by a State agency as an insurer for the offering of health benefit coverage, or ``(B) is licensed by a State agency as a service benefit plan, but only for individuals residing in an area in which the organization is licensed to offer health insurance coverage. ``(3) Current risk-contractors.--An organization that is an eligible organization (as defined in section 1876(b)) and that has a risk-sharing contract in effect under section 1876 as of the date of the enactment of this section. ``requirements relating to benefits, provision of services, enrollment, and premiums ``Sec. 1852. (a) Benefits Covered.-- ``(1) In general.--Except as provided in subsection (b), in section 1851(f)(1) with respect to high deductible/medisave products, and in section 1853(a), each MedicarePlus 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 services applicable under this title. ``(2) Organization as secondary payer.--Notwithstanding any other provision of law, a MedicarePlus organization may (in the case of the provision of items and services to an individual under this part under circumstances in which payment under this title is made secondary pursuant to section 1862(b)(2)) charge or authorize the provider of such services to charge, in accordance with the charges allowed under such law or policy-- ``(A) the insurance carrier, employer, or other entity which under such law, plan, or policy is to pay for the provision of such services, or ``(B) such individual to the extent that the individual has been paid under such law, plan, or policy for such services. ``(b) Antidiscrimination.--A MedicarePlus organization may not deny, limit, or condition the coverage or provision of benefits under this part based on the health status, claims experience, 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 MedicarePlus organization shall provide that at any time during which elections are accepted under section 1805 with respect to a MedicarePlus product offered by the organization, the organization will accept without restrictions individuals who are eligible to make such election. ``(2) Priority.--If the Secretary determines that a MedicarePlus organization, in relation to a MedicarePlus 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 individuals of the product under such section but only if priority in election is provided-- ``(A) first to such individuals as have elected the product at that time, 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 paragraph (1). ``(3) Limitation on termination of election.-- ``(A) In general.--Subject to subparagraph (B), a MedicarePlus organization may not for any reason terminate the election of any individual under section 1805 for a MedicarePlus product it offers. ``(B) Basis for termination of election.--A MedicarePlus organization may terminate an individual's election under section 1805 with respect to a MedicarePlus product it offers if-- ``(i) any premiums required with respect 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 premiums), ``(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-MedicarePlus option (as defined in section 1805(a)(3)(A)). ``(D) Organization obligation with respect to election forms.--Pursuant to a contract under section 1858, each MedicarePlus organization 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 information respecting the election as the Secretary may specify. ``(4) Special rules for limited enrollment medicareplus organizations.-- ``(A) Unions.-- ``(i) In general.--Subject to subparagraph (D), a union sponsor (as defined in subsection (b)(2)) 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 relationship 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. ``(B) Taft-hartley sponsors.-- ``(i) In general.--Subject to subparagraph (D), a MedicarePlus organization that is a Taft-Hartley sponsor (as defined in clause (ii)) shall limit eligibility of enrollees under this part for MedicarePlus 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-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 association, committee, joint board of trustees, or other similar group of representatives of parties who establish or maintain the plan. ``(C) Qualified associations.-- ``(i) In general.--Subject to subparagraph (D), a MedicarePlus organization 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 association offering a MedicarePlus product to an individual may not terminate coverage of the individual on the basis that the individual is no longer a member of the association except pursuant to a change of election during an open election period occurring on or after the date of the termination of membership. ``(iii) Qualified association.--In this part and section 1805, the term `qualified association' means an association, religious fraternal organization, or other organization (which may be a trade, industry, or professional association, a chamber of commerce, or a public entity association) that the Secretary finds-- ``(I) has been formed for purposes other than the sale of any health insurance and does not restrict membership based on the health status, claims experience, receipt of health care, medical history, or lack of evidence of insurability, of an individual, ``(II) does not exist solely or principally for the purpose of selling insurance, and ``(III) has at least 1,000 individual members or 200 employer members. Such term includes a subsidiary or corporation that is wholly owned by one or more qualified organizations. ``(D) Limitation.--Rules of eligibility to carry out the previous subparagraphs of this paragraph shall not have the effect of denying eligibility to individuals on the basis of health status, claims experience, receipt of health care, medical history, or lack of evidence of insurability. ``(E) Limited enrollment medicareplus organization.--In this part and section 1805, the term `limited enrollment MedicarePlus organization' means a MedicarePlus organization that is a union sponsor, 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 subtitle B of title I of the Employee Retirement Income Security Act of 1974. ``(d) Submission and Charging of Premiums.-- ``(1) In general.--Each MedicarePlus organization shall file with the Secretary each year, in a form and manner and at a time specified by the Secretary-- ``(A) the amount of the monthly premiums for coverage under each MedicarePlus product it offers under this part in each payment area (as determined for purposes of section 1855) in which the product is being offered; and ``(B) the enrollment capacity in relation to the product in each such area. ``(2) Amounts of premiums charged.--The amount of the premium charged by a MedicarePlus organization for a MedicarePlus 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 premium for the product for the area and period involved, as submitted under paragraph (1), exceeds ``(B) \1/12\ of the annual MedicarePlus capitation rate specified in section 1855(b)(2) for the area and period involved. ``(3) Uniform premium.-- ``(A) In general.--Except as provided in subparagraph (B), the premiums charged by a MedicarePlus organization under this part may not vary among individuals who reside in the same payment area. ``(B) Exception for high deductible/medisave products.--A MedicarePlus organization shall establish premiums for any high deductible/medisave product it offers in a payment area in a manner consistent with and based on each of the risk adjustment categories established for purposes of determining the amount of the payment to MedicarePlus organizations under section 1855(b)(1). ``(4) Terms and conditions of imposing premiums.--Each MedicarePlus organization shall permit the payment of monthly premiums on a monthly basis and may terminate election of individuals for a MedicarePlus product for failure to make premium payments only in accordance with subsection (c)(3)(B). ``(e) Requirement for Additional Benefits, Part B Premium Discount Rebates, or Both.-- ``(1) Requirement.-- ``(A) In general.--Each MedicarePlus organization (in relation to a MedicarePlus product it offers) shall provide that if there is an excess amount (as defined in subparagraph (B)) for the product for a contract year, subject to the succeeding provisions of this subsection, the organization shall provide to individuals such additional benefits (as the organization may specify), a monetary rebate (paid on a monthly basis) of the part B monthly premium, or a combination thereof, in a total value which is at least equal to the adjusted excess amount (as defined in subparagraph (C)). ``(B) Excess amount.--For purposes of this paragraph, the `excess amount', for an organization for a product, is the amount (if any) by which-- ``(i) the average of the capitation payments made to the organization under this part for the product at the beginning of contract year, exceeds ``(ii) the actuarial value of the minimum benefits described in subsection (a)(1) under the product for individuals under this part, as determined based upon an adjusted community rate described in paragraph (5). ``(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 organization for the year under paragraph (3). ``(D) No application to high deductible/medisave product.--Subparagraph (A) shall not apply to a high deductible/medisave product. ``(E) Uniform application.--This paragraph shall be applied uniformly for all enrollees for a product in a service area. ``(F) Construction.--Nothing in this subsection shall be construed as preventing a MedicarePlus organization from providing health care benefits that are in addition to the benefits otherwise required to be provided under this paragraph and from imposing a premium for such additional benefits. ``(2) Limitation on amount of part b premium 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, the amount of premiums imposed under part B (not taking into account section 1839(b) (relating to penalty for late enrollment) or 1839(h) (relating to affluence testing)), for the individual for the month. Except as provided in the previous sentence, a MedicarePlus organization is not authorized to provide for cash or other monetary rebates as an inducement for enrollment or otherwise. ``(3) Stabilization fund.--A MedicarePlus organization may provide that a part of the value of an excess actuarial amount described in paragraph (1) be withheld and reserved in the Federal Hospital Insurance Trust Fund and in the Federal Supplementary Medical Insurance Trust Fund (in such proportions as the Secretary determines to be appropriate) by the Secretary for subsequent annual contract periods, to the extent required to stabilize and prevent undue fluctuations in the additional benefits and rebates offered in those subsequent periods by the organization in accordance with such paragraph. Any of such value of amount reserved which is not provided as additional benefits described in paragraph (1)(A) to individuals electing the MedicarePlus product in accordance with such paragraph prior to the end of such periods, shall revert for the use of such trust funds. ``(4) Determination based on insufficient data.--For purposes of this subsection, if the Secretary finds that there is insufficient enrollment experience (including no enrollment experience in the case of a provider-sponsored organization) to determine an average of the capitation payments to be made under this part at the beginning of a contract period, the Secretary may determine such an average based on the enrollment experience of other contracts 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 MedicarePlus organization, either-- ``(i) the rate of payment for that service or services which the Secretary annually determines would apply to an individual electing a MedicarePlus product under this part if the rate of payment were determined under a `community rating system' (as defined in section 1302(8) of the Public Health Service Act, other than subparagraph (C)), or ``(ii) such portion of the weighted aggregate premium, which the Secretary annually estimates would apply to such an individual, as the Secretary annually estimates is attributable to that service or services, but adjusted for differences between the utilization characteristics of the individuals electing coverage under this part and the utilization characteristics of the other enrollees with the organization (or, if the Secretary finds that adequate data are not available to adjust for those differences, the differences between the utilization characteristics of individuals selecting other MedicarePlus coverage, or individuals in the area, in the State, or in the United States, eligible to elect MedicarePlus coverage under this part and the utilization characteristics of the rest of the population in the area, in the State, or in the United States, respectively). ``(B) Special rule for provider-sponsored organizations.--In the case of a MedicarePlus organization that is a provider-sponsored organization, the adjusted community rate under subparagraph (A) for a MedicarePlus 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 Participation.-- ``(1) Procedures.--Each MedicarePlus organization shall establish reasonable procedures relating to the participation (under an agreement between a physician and the organization) of physicians under MedicarePlus products offered by the organization under this part. Such procedures shall include-- ``(A) providing notice of the rules regarding participation, ``(B) providing written notice of participation decisions that are adverse to physicians, and ``(C) providing a process within the organization for appealing adverse decisions, including the presentation of information and views of the physician regarding such decision. ``(2) Consultation in medical policies.--A MedicarePlus organization shall consult with physicians who have entered into participation agreements with the organization regarding the organization's medical policy, quality, and medical management procedures. ``(3) Limitations on physician incentive plans.-- ``(A) In general.--Each MedicarePlus organization may not operate any physician incentive plan (as defined in subparagraph (B)) unless the following requirements are met: ``(i) No specific payment is made directly or indirectly under the plan to a physician or physician group as an inducement to reduce or limit medically necessary services provided with respect to a specific individual enrolled with the organization. ``(ii) If the plan places a physician or physician group at substantial financial risk (as determined by the Secretary) for services not provided by the physician or physician group, the organization-- ``(I) provides stop-loss protection for the physician or group that is adequate and appropriate, based on standards developed by the Secretary that take into account the number of physicians placed at such substantial financial risk in the group or under the plan and the number of individuals enrolled with the organization who receive services from the physician or the physician group, and ``(II) conducts periodic surveys of both individuals enrolled and individuals previously enrolled with the organization to determine the degree of access of such individuals to services provided by the organization and satisfaction with the quality of such services. ``(iii) The organization provides the Secretary with descriptive information regarding the plan, sufficient to permit the Secretary to determine whether the plan is in compliance with the requirements of this subparagraph. ``(B) Physician incentive plan defined.--In this paragraph, the term `physician incentive plan' means any compensation arrangement between a MedicarePlus organization and a physician or physician group that may directly or indirectly have the effect of reducing or limiting services provided with respect to individuals enrolled with the organization under this part. ``(g) Provision of Information.--A MedicarePlus organization shall provide the Secretary with such information on the organization and each MedicarePlus product it offers as may be required for the preparation of the information booklet described in section 1805(d)(2)(A). ``(h) Coordinated Acute and Long-term Care Benefits Under a MedicarePlus Product.--Nothing in this part shall be construed as preventing a State from coordinating benefits under its MediGrant program under title XXI with those provided under a MedicarePlus 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 MedicarePlus organization shall disclose in clear, accurate, and standardized form, information regarding all of the following for each MedicarePlus product it offers: ``(1) Benefits under the MedicarePlus product offered, including exclusions from coverage and, if it is a high deductible/medisave product, a comparison of benefits under such a product with benefits under other MedicarePlus products. ``(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 participating 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). ``(6) Statistics on enrollee satisfaction with the product and organization, including rates of reenrollment. ``(7) Enrollee rights and responsibilities, including the grievance process provided under subsection (f). ``(8) A statement that the use of the 911 emergency telephone number is appropriate in emergency situations and an explanation of what constitutes an emergency situation. 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 MedicarePlus organization offering a MedicarePlus product may restrict 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 electing the product within the product service area with reasonable promptness and in a manner which assures continuity in the provision of benefits; ``(B) when medically necessary the organization makes such benefits available and accessible 24 hours a day and 7 days a week; ``(C) the product provides for reimbursement with respect to services which are covered under subparagraphs (A) and (B) and which are provided to such an individual other than through the organization, if-- ``(i) the services were medically necessary and immediately required because of an unforeseen illness, injury, or condition, and ``(ii) it was not reasonable given the circumstances to obtain the services through the organization; and ``(D) coverage is provided for emergency services (as defined in paragraph (4)) without regard to prior authorization or the emergency care provider's contractual relationship with the organization. ``(2) Minimum payment levels where providing point-of- service coverage.--If a MedicarePlus product provides benefits for items and 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 services not provided through such a network, the payment 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 without 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 furnishing 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 organization under this section, the applicable participation agreement is deemed to provide that the physician or provider of services or renal dialysis facility will accept as payment in full from the organization the amount that would be payable to the physician or provider of services or renal dialysis facility under part B and from the individual under such part, if the individual were not enrolled with such an organization under this part. ``(B) Nonparticipating providers.--In the case of physicians' services described in subparagraph (C) which are furnished by a nonparticipating physician, the limitations on actual charges for such services otherwise applicable under part B (to services furnished by individuals not enrolled with a MedicarePlus organization under this section) shall apply in the same manner as such limitations apply to services furnished to individuals not enrolled with such an organization. ``(C) Services described.--The physicians' services or renal dialysis services described in this subparagraph are physicians' services or renal dialysis services which are furnished to an enrollee of a MedicarePlus organization under this part by a physician, provider of services, or renal dialysis facility who is not under a contract with the organization. ``(4) Definition of emergency services.--In this subsection, the term `emergency services' means, with respect to an individual enrolled with an organization, covered inpatient and outpatient services that-- ``(A) are furnished by an appropriate source other than the organization, ``(B) are needed immediately because of an injury or sudden illness, and ``(C) are needed because the time required to reach the organization's providers or suppliers would have meant risk of permanent damage to the patient's health. ``(c) Confidentiality and Accuracy of Enrollee Records.--Each MedicarePlus organization shall establish procedures-- ``(1) to safeguard the privacy of individually identifiable enrollee information, and ``(2) to maintain accurate and timely medical records for enrollees. ``(d) Quality Assurance Program.-- ``(1) In general.--Each MedicarePlus organization must have arrangements, established in accordance with regulations of the Secretary, for an ongoing quality assurance program for health care services it provides to such individuals. ``(2) Elements of program.--The quality assurance program shall-- ``(A) stress health outcomes; ``(B) provide for the establishment of written protocols for utilization review, based on current standards of medical practice; ``(C) provide review by physicians and other health care professionals of the process followed in the provision of such health care services; ``(D) monitors and evaluates high volume and high risk services and the care of acute and chronic conditions; ``(E) evaluates the continuity and coordination of care that enrollees receive, ``(F) has mechanisms to detect both underutilization and overutilization of services, ``(G) after identifying areas for improvement, establishes or alters practice parameters, ``(H) takes action to improve quality and assesses the effectiveness of such action through systematic follow-up, ``(I) makes available information on quality and outcomes measures to facilitate beneficiary comparison and choice of health coverage options (in such form and on such quality and outcomes measures as the Secretary determines to be appropriate), and ``(J) is evaluated on an ongoing basis as to its effectiveness. ``(e) Coverage Determinations.-- ``(1) Decisions on nonemergency care.--A MedicarePlus organization shall make determinations regarding authorization requests for nonemergency care on a timely basis, depending on the urgency of the situation. ``(2) Appeals.-- ``(A) In general.--Appeals from a determination of an organization denying coverage shall be decided within 30 days of the date of receipt of medical information, but not later than 60 days after the date of the decision. ``(B) Physician decision on certain appeals.-- Appeal decisions relating to a determination to deny coverage based on a lack of medical necessity shall be made only by a physician. ``(C) Emergency cases.--Appeals from such a determination involving a life-threatening or emergency situation shall be decided on an expedited basis. ``(f) Grievances and Appeals.-- ``(1) Grievance mechanism.--Each MedicarePlus organization must provide meaningful procedures for hearing and resolving grievances between the organization (including any entity or individual through which the organization provides health care services) and enrollees under this part. ``(2) Appeals.--An enrollee with an organization under this part who is dissatisfied by reason of the enrollee's failure to receive any health service to which the enrollee believes is entitled and at no greater charge than the enrollee believes is required to pay is entitled, if the amount in controversy is $100 or more, to a hearing before the Secretary to the same extent as is provided in section 205(b), and in any such hearing the Secretary shall make the organization a party. If the amount in controversy is $1,000 or more, the individual or organization shall, upon notifying the other party, be entitled to judicial review of the Secretary's final decision as provided in section 205(g), and both the individual and the organization shall be entitled to be parties to that judicial review. In applying sections 205(b) and 205(g) as provided in this subparagraph, and in applying section 205(l) thereto, any reference therein to the Commissioner of Social Security or the Social Security Administration shall be considered a reference to the Secretary or the Department of Health and Human Services, respectively. ``(g) Information on Advance Directives.--Each MedicarePlus organization shall meet the requirement of section 1866(f) (relating to maintaining written policies and procedures respecting advance directives). ``(h) Approval of Marketing Materials.-- ``(1) Submission.--Each MedicarePlus organization may not distribute marketing materials unless-- ``(A) at least 45 days before the date of distribution the organization has submitted the material to the Secretary for review, and ``(B) the Secretary has not disapproved the distribution of such material. ``(2) Review.--The standards established under section 1856 shall include guidelines for the review of all such material submitted and under such guidelines the Secretary shall disapprove such material if the material is materially inaccurate or misleading or otherwise makes a material misrepresentation. ``(3) Deemed approval (1-stop shopping).--In the case of material that is submitted under subparagraph (A)(i) to the Secretary or a regional office of the Department of Health and Human Services and the Secretary or the office has not disapproved the distribution of marketing materials under subparagraph (A)(ii) with respect to a MedicarePlus product in an area, the Secretary is deemed not to have disapproved such distribution in all other areas covered by the product and organization. ``(4) Prohibition of certain marketing practices.--Each MedicarePlus organization shall conform to fair marketing standards in relation to MedicarePlus products offered under this part, included in the standards established under section 1856. Such standards shall include a prohibition against an organization (or agent of such an organization) completing any portion of any election form under section 1805 on behalf of any individual. ``provider-sponsored organizations ``Sec. 1854. (a) Provider-Sponsored Organization Defined.-- ``(1) In general.--In this part, the term `provider- sponsored organization' means a public or private entity that (in accordance with standards established under subsection (b)) is a provider, or group of affiliated providers, that provides a substantial proportion (as defined by the Secretary under such standards) of the health care items and services under the contract under this part directly through the provider or affiliated group of providers. ``(2) Substantial proportion.--In defining what is a `substantial proportion' for purposes of paragraph (1), the Secretary-- ``(A) shall take into account the need for such an organization to assume responsibility for a substantial proportion of services in order to assure financial stability and the practical difficulties in such an organization integrating a very wide range of service providers; and ``(B) may vary such proportion based upon relevant differences among organizations, such as their location in an urban or rural area. ``(3) Affiliation.--For purposes of this subsection, a provider is `affiliated' with another provider if, through contract, ownership, or otherwise-- ``(A) one provider, directly or indirectly, controls, is controlled by, or is under common control with the other, ``(B) each provider is a participant in a lawful combination under which each provider shares, directly or indirectly, substantial financial risk in connection with their operations, ``(C) both providers are part of a controlled group of corporations under section 1563 of the Internal Revenue Code of 1986, or ``(D) both providers are part of an affiliated service group under section 414 of such Code. ``(4) Control.--For purposes of paragraph (3), control is presumed to exist if one party, directly or indirectly, owns, controls, or holds the power to vote, or proxies for, not less than 51 percent of the voting rights or governance rights of another. ``(b) Process for Establishing Standards for Provider-Sponsored Organizations.--For process of establishing of standards for provider- sponsored organizations, see section 1856(c). ``(c) Process for State Certification of Provider-Sponsored Organizations.--For process of State certification of provider- sponsored organizations, see section 1857(c). ``(d) Conditions for Preemption From State Insurance Licensing Requirements.-- ``(1) In general.--Except as provided in paragraph (3), notwithstanding any other provision of law, in the case of a provider-sponsored organization with respect to a State that-- ``(A) only enrolls in the State individuals who are entitled to benefits under this title, and ``(B) cannot do business as a MedicarePlus organization in the State because that State by law, regulation, or otherwise-- ``(i) requires that the organization meet requirements for insurers of health services or health maintenance organizations doing business in the State with respect to initial capitalization and establishment of financial reserves against insolvency, or ``(ii) imposes requirements that would prohibit the entity from complying with the applicable requirements of this part, such requirements shall not apply to the organization so as to prevent it from operating as a MedicarePlus organization under this part. ``(2) Not treating certain individuals as enrollees.--For purposes of paragraph (1)(A), an individual who-- ``(A) is a participant or beneficiary of an employee welfare benefit plan to which section 514(a) of the Employee Retirement Income Security Act of 1974 applies, and ``(B) receives health services from a provider- sponsored organization under an arrangement with the plan, shall be considered to be enrolled with the employee welfare benefit plan and shall not be considered to be enrolled with the organization. ``(3) Treatment of states with approved certification programs.-- ``(A) In general.--In the case of an organization that is operating in an approved State (as defined in subparagraph (C)), the provisions of paragraph (1) and section 1851(b) shall not apply. ``(B) Effective date.--Subparagraph (A) shall apply-- ``(i) in the case of an entity that has a contract under this part in effect as of the date the State becomes an approved State, at the end of the first contract year that begins after such date, or ``(ii) in the case of any other entity, for contract years that begin after such date. ``(C) Approved state defined.--In this paragraph, the term `approved State' means a State with a certification program approved under section 1857(c) with respect to provider-sponsored organizations in the State. ``payments to medicareplus organizations ``Sec. 1855. (a) Payments.-- ``(1) In general.--Under a contract under section 1858 the Secretary shall pay to each MedicarePlus organization, with respect to coverage of an individual under this part in a payment area for a month, an amount equal to the monthly adjusted MedicarePlus capitation rate (as provided under subsection (b)) with respect to that individual for that area. ``(2) Annual announcement.--The Secretary shall annually determine, and shall announce (in a manner intended to provide notice to interested parties) not later than September 7 before the calendar year concerned-- ``(A) the annual MedicarePlus capitation rate for each payment area for the year, and ``(B) the factors to be used in adjusting such rates under subsection (b) for payments for months in that year. ``(3) Advance notice of methodological changes.--At least 45 days before making the announcement under paragraph (2) for a year, the Secretary shall provide for notice to MedicarePlus organizations of proposed changes to be made in the methodology or benefit coverage assumptions from the methodology and assumptions used in the previous announcement and shall provide such organizations an opportunity to comment on such proposed changes. ``(4) Explanation of assumptions.--In each announcement made under paragraph (2) for a year, the Secretary shall include an explanation of the assumptions (including any benefit coverage assumptions) and changes in methodology used in the announcement in sufficient detail so that MedicarePlus organizations can compute monthly adjusted MedicarePlus capitation rates for classes of individuals located in each payment area which is in whole or in part within the service area of such an organization. ``(b) Monthly Adjusted MedicarePlus Capitation Rate.-- ``(1) In general.--For purposes of this section, the `monthly adjusted MedicarePlus capitation rate' under this subsection, for a month in a year for an individual in a payment area (specified under paragraph (3)) and in a class (established under paragraph (4)), is \1/12\ of the annual MedicarePlus capitation rate specified in paragraph (2) for that area for the year, adjusted to reflect the actuarial value of benefits under this title with respect to individuals in such class compared to the national average for individuals in all classes. ``(2) Annual medicareplus capitation rates.--For purposes of this section, the annual MedicarePlus capitation rate for a payment area for a year is equal to the annual MedicarePlus capitation rate for the area for the previous year (or, in the case of 1996, the average annual per capita rate of payment described in section 1876(a)(1)(C) for the area for 1995) increased by the per capita growth rate for that area and year (as determined under subsection (c)). ``(3) Payment area defined.--In this section, the term `payment area' means a county (or equivalent area specified by the Secretary), except that in the case of the population group described in paragraph (5)(C), the payment area shall be each State. ``(4) Classes.-- ``(A) In general.--For purposes of this section, the Secretary shall define appropriate classes of enrollees, consistent with paragraph (5), based on age, gender, welfare status, institutionalization, and such other factors as the Secretary determines to be appropriate, so as to ensure actuarial equivalence. The Secretary may add to, modify, or substitute for such classes, if such changes will improve the determination of actuarial equivalence. ``(B) Research.--The Secretary shall conduct such research as may be necessary to provide for greater accuracy in the adjustment of capitation rates under this subsection. Such research may include research into the addition or modification of classes under subparagraph (A). The Secretary shall submit to Congress a report on such research by not later than January 1, 1997. ``(5) Division of medicare population.--In carrying out paragraph (4) and this section, the Secretary shall recognize the following separate population groups: ``(A) Aged.--Individuals 65 years of age or older who are not described in subparagraph (C). ``(B) Disabled.--Disabled individuals who are under 65 years of age and not described in subparagraph (C). ``(C) Individuals with end stage renal disease.-- Individuals who are determined to have end stage renal disease. ``(c) Per Capita Growth Rates.-- ``(1) For 1996.-- ``(A) In general.--For purposes of this section and subject to subparagraph (B), the per capita growth rates for 1996, for a payment area assigned to a service utilization cohort under subsection (d), shall be the following: ``(i) Lowest service utilization cohort.-- For areas assigned to the lowest service utilization cohort, 9.7 percent. ``(ii) Lower service utilization cohort.-- For areas assigned to the lower service utilization cohort, 8.0 percent. ``(iii) Median service utilization cohort.--For areas assigned to the median service utilization cohort, 5.3 percent. ``(iv) Higher service utilization cohort.-- For areas assigned to the higher service utilization cohort, 4.7 percent. ``(v) Highest service utilization cohort.-- For areas assigned to the highest service utilization cohort, 4.0 percent. ``(B) Budget neutral adjustment.--The Secretary shall adjust the per capita growth rates specified in subparagraph (A) for all the areas by such uniform factor as may be necessary to assure that the total capitation payments under this section during 1996 are the same as the amount such payments would have been if the per capita growth rate for all such areas for 1996 were equal to the national average per capita growth rate, specified in paragraph (3) for 1996. ``(2) For subsequent years.-- ``(A) In general.--For purposes of this section and subject to subparagraph (B), the Secretary shall compute a per capita growth rate for each year after 1996, for each payment area as assigned to a service utilization cohort under subsection (d), consistent with the following rules: ``(i) Median service utilization cohort set at national average per capita growth rate.-- The per capita growth rate for areas assigned to the median service utilization cohort for the year shall be the national average per capita growth rate for the year (as specified under paragraph (3)). ``(ii) Highest service utilization cohort set at 75 percent of national average per capita growth rate.--The per capita growth rate for areas assigned to the highest service utilization cohort for the year shall be 75 percent of the national average per capita growth rate for the year. ``(iii) Lowest service utilization cohort set at 187.5 percent of national average per capita growth rate.--The per capita growth rate for areas assigned to the lowest service utilization cohort for the year shall be 187.5 percent of the national average per capita growth rate for the year. ``(iv) Lower service utilization cohort set at 150 percent of national average per capita growth rate.-- ``(I) In general.--Subject to subclause (II), the per capita growth rate for areas assigned to the lower service utilization cohort for the year shall be 150 percent of the national average per capita growth rate for the year. ``(II) Adjustment.--If the Secretary has established under clause (v) the per capita growth rate for areas assigned to the higher service utilization cohort for the year at 75 percent of the national average per capita growth rate, the Secretary may provide for a reduced per capita growth rate under subclause (I) to the extent necessary to comply with subparagraph (B). ``(v) Higher service utilization cohort.-- The per capita growth rate for areas assigned to the higher service utilization cohort for set year shall be such percent (not less than 75 percent) of the national average per capita growth rate, as the Secretary may determine consistent with subparagraph (B). ``(B) Average per capita growth rate at national average to assure budget neutrality.--The Secretary shall compute per capita growth rates for a year under subparagraph (A) in a manner so that the weighted average per capita growth rate for all areas for the year (weighted to reflect the number of medicare beneficiaries in each area) is equal to the national average per capita growth rate under paragraph (3) for the year. ``(3) National average per capita growth rates.--In this subsection, the `national average per capita growth rate' for-- ``(A) 1996 is 5.3 percent, ``(B) 1997 is 3.8 percent, ``(C) 1998 is 4.6 percent, ``(D) 1999 is 4.3 percent, ``(E) 2000 is 3.8 percent, ``(F) 2001 is 5.5 percent, ``(G) 2002 is 5.6 percent, and ``(H) each subsequent year is 5.0 percent. ``(d) Assignment of Payment Areas to Service Utilization Cohorts.-- ``(1) In general.--For purposes of determining per capita growth rates under subsection (c) for areas for a year, the Secretary shall assign each payment area to a service utilization cohort (based on the service utilization index value for that area determined under paragraph (2)) as follows: ``(A) Lowest service utilization cohort.--Areas with a service utilization index value of less than .80 shall be assigned to the lowest service utilization cohort. ``(B) Lower service utilization cohort.--Areas with a service utilization index value of at least .80 but less than .90 shall be assigned to the lower service utilization cohort. ``(C) Median service utilization cohort.--Areas with a service utilization index value of at least .90 but less than 1.10 shall be assigned to the median service utilization cohort. ``(D) Higher service utilization cohort.--Areas with a service utilization index value of at least 1.10 but less than 1.20 shall be assigned to the higher service utilization cohort. ``(E) Highest service utilization cohort.--Areas with a service utilization index value of at least 1.20 shall be assigned to the highest service utilization cohort. ``(2) Determination of service utilization index values.-- In order to determine the per capita growth rate for a payment area for each year (beginning with 1996), the Secretary shall determine for such area and year a service utilization index value, which is equal to-- ``(A) the annual MedicarePlus capitation rate under this section for the area for the year in which the determination is made (or, in the case of 1996, the average annual per capita rate of payment (described in section 1876(a)(1)(C)) for the area for 1995); divided by ``(B) the input-price-adjusted annual national MedicarePlus capitation rate (as determined under paragraph (3)) for that area for the year in which the determination is made. ``(3) Determination of input-price-adjusted rates.-- ``(A) In general.--For purposes of paragraph (2), the `input-price-adjusted annual national MedicarePlus capitation rate' for a payment area for a year is equal to the sum, for all the types of medicare services (as classified by the Secretary), of the product (for each such type) of-- ``(i) the national standardized MedicarePlus capitation rate (determined under subparagraph (B)) for the year, ``(ii) the proportion of such rate for the year which is attributable to such type of services, and ``(iii) an index that reflects (for that year and that type of services) the relative input price of such services in the area compared to the national average input price of such services. In applying clause (iii), the Secretary shall, subject to subparagraph (C), apply those indices under this title that are used in applying (or updating) national payment rates for specific areas and localities. ``(B) National standardized medicareplus capitation rate.--In this paragraph, the `national standardized MedicarePlus capitation rate' for a year is equal to-- ``(i) the sum (for all payment areas) of the product of (I) the annual MedicarePlus capitation rate for that year for the area under subsection (b)(2), and (II) the average number of medicare beneficiaries residing in that area in the year; divided by ``(ii) the total average number of medicare beneficiaries residing in all the payment areas for that year. ``(C) Special rules for 1996.--In applying this paragraph for 1996-- ``(i) medicare services shall be divided into 2 types of services: part A services and part B services; ``(ii) the proportions described in subparagraph (A)(ii) for such types of services shall be 66 percent and 34 percent respectively; ``(iii) for the part A services, 70 percent of payments attributable to such services shall be adjusted by the index used under section 1886(d)(3)(E) to adjust payment rates for relative hospital wage levels for hospitals located in the payment area involved; ``(iv) for part B services-- ``(I) 66 percent of payments attributable to such services shall be adjusted by the index of the geographic area factors under section 1848(e) used to adjust payment rates for physicians' services furnished in the payment area, and ``(II) of the remaining 34 percent of the amount of such payments, 70 percent shall be adjusted by the index described in clause (iii); ``(v) the index values shall be computed based only on the beneficiary population described in subsection (b)(5)(A). The Secretary may continue to apply the rules described in this subparagraph (or similar rules) for 1997. ``(e) Payment Process.-- ``(1) In general.--Subject to subsection (f), the Secretary shall make monthly payments under this section in advance and in accordance with the rate determined under subsection (a) to the plan for each individual enrolled with a MedicarePlus organization under this part. ``(2) Adjustment to reflect number of enrollees.-- ``(A) In general.--The amount of payment under this subsection may be retroactively adjusted to take into account any difference between the actual number of individuals enrolled with an organization under this part and the number of such individuals estimated to be so enrolled in determining the amount of the advance payment. ``(B) Special rule for certain enrollees.-- ``(i) In general.--Subject to clause (ii), the Secretary may make retroactive adjustments under subparagraph (A) to take into account individuals enrolled during the period beginning on the date on which the individual enrolls with a MedicarePlus organization under a product operated, sponsored, or contributed to by the individual's employer or former employer (or the employer or former employer of the individual's spouse) and ending on the date on which the individual is enrolled in the organization under this part, except that for purposes of making such retroactive adjustments under this subparagraph, such period may not exceed 90 days. ``(ii) Exception.--No adjustment may be made under clause (i) with respect to any individual who does not certify that the organization provided the individual with the disclosure statement described in section 1853(a) at the time the individual enrolled with the organization. ``(f) Special Rules for Individuals Electing High Deductible/ Medisave Product.-- ``(1) In general.--In the case of an individual who has elected a high deductible/medisave product, notwithstanding the preceding provisions of this section-- ``(A) the amount of the payment to the MedicarePlus organization offering the high deductible/medisave product shall not exceed the premium for the product, and ``(B) subject to paragraph (2), the difference between the amount of payment that would otherwise be made and the amount of payment to such organization shall be made directly into a MedicarePlus MSA established (and, if applicable, designated) by the individual under paragraph (2). ``(2) Establishment and designation of medicareplus medical savings account as requirement for payment of contribution.--In the case of an individual who has elected coverage under a high deductible/medisave product, no payment shall be made under paragraph (1)(B) on behalf of an individual for a month unless the individual-- ``(A) has established before the beginning of the month (or by such other deadline as the Secretary may specify) a MedicarePlus MSA (as defined in section 137(b) of the Internal Revenue Code of 1986), and ``(B) if the individual has established more than one MedicarePlus MSA, has designated one of such accounts as the individual's MedicarePlus MSA for purposes of this part. Under rules under this section, such an individual may change the designation of such account under subparagraph (B) for purposes of this part. ``(3) Lump sum deposit of medical savings account contribution.--In the case of an individual electing a high deductible/medisave product effective beginning with a month in a year, the amount of the contribution to the MedicarePlus MSA on behalf of the individual for that month and all successive months in the year shall be deposited during that first month. In the case of a termination of such an election as of a month before the end of a year, the Secretary shall provide for a procedure for the recovery of deposits attributable to the remaining months in the year. ``(g) Payments From Trust Fund.--The payment to a MedicarePlus organization under this section for individuals enrolled under this part with the organization, and payments to a MedicarePlus MSA under subsection (f)(1)(B), shall be made from the Federal Hospital Insurance Trust Fund and the Federal Supplementary Medical Insurance Trust Fund in such proportion as the Secretary determines reflects the relative weight that benefits under part A and under part B represents of the actuarial value of the total benefits under this title. ``(h) Special Rule for Certain Inpatient Hospital Stays.--In the case of an individual who is receiving inpatient hospital services from a subsection (d) hospital (as defined in section 1886(d)(1)(B)) as of the effective date of the individual's-- ``(1) election under this part of a MedicarePlus product offered by a MedicarePlus organization-- ``(A) payment for such services until the date of the individual's discharge shall be made under this title through the MedicarePlus product or Non- MedicarePlus option (as the case may be) elected before the election with such organization, ``(B) the elected organization shall not be financially responsible for payment for such services until the date after the date of the individual's discharge, and ``(C) the organization shall nonetheless be paid the full amount otherwise payable to the organization under this part; or ``(2) termination of election with respect to a MedicarePlus organization under this part-- ``(A) the organization shall be financially responsible for payment for such services after such date and until the date of the individual's discharge, ``(B) payment for such services during the stay shall not be made under section 1886(d) or by succeeding the MedicarePlus organization, and ``(C) the terminated organization shall not receive any payment with respect to the individual under this part during the period the individual is not enrolled. ``establishment of standards for medicareplus organizations and products ``Sec. 1856. (a) Standards Applicable to State-Regulated Organizations and Products.-- ``(1) Recommendations of naic.--The Secretary shall request the National Association of Insurance Commissioners to develop and submit to the Secretary, not later than 12 months after the date of the enactment of the Medicare Preservation Act of 1995, proposed standards consistent with the requirements of this part for MedicarePlus organizations (other than a union sponsors, Taft-Hartley sponsors, and provider-sponsored organizations) and MedicarePlus products offered by such organizations. ``(2) Review.--If the Association submits such standards on a timely basis, the Secretary shall review such standards to determine if the standards meet the requirements of the part. The Secretary shall complete the review of the standards not later than 90 days after the date of their submission. The Secretary shall promulgate such proposed standards to apply to organizations and products described in paragraph (1) except to the extent that the Secretary modifies such proposed standards because they do not meet such requirements. ``(3) Failure to submit.--If the Association does not submit such standards on a timely basis, the Secretary shall promulgate such standards by not later than the date the Secretary would otherwise have been required to promulgate standards under paragraph (2). ``(4) Use of interim rules.--For the period in which this part is in effect and standards are being developed and established under the preceding provisions of this subsection, the Secretary shall provide for the application of such interim standards (without regard to any requirements for notice and public comment) as may be appropriate to provide for the expedited implementation of this part. Such interim standards shall not apply after the date standards are established under the preceding provisions of this subsection. ``(b) Union and Taft-Hartley Sponsors and Products.-- ``(1) In general.--The Secretary shall develop and promulgate by regulation standards consistent with the requirements of this part for union and Taft-Hartley sponsors and for MedicarePlus products offered by such sponsors. ``(2) Consultation with labor.--The Secretary shall consult with the Secretary of Labor with respect to such standards for such sponsors and products. ``(3) Timing.--Standards under this subsection shall be promulgated at or about the time standards are promulgated under subsection (a). ``(c) Establishment of Standards for Provider-Sponsored Organizations.-- ``(1) In general.--The Secretary shall establish, on an expedited basis and using a negotiated rulemaking process under subchapter 3 of chapter 5 of title 5, United States Code, standards that entities must meet to qualify as provider- sponsored organizations under this part. ``(2) Publication of notice.--In carrying out the rulemaking process under this subsection, the Secretary, after consultation with the National Association of Insurance Commissioners, the American Academy of Actuaries, organizations representative of medicare beneficiaries, and other interested parties, shall publish the notice provided for under section 564(a) of title 5, United States Code, by not later than 45 days after the date of the enactment of Medicare Preservation Act of 1995. ``(3) Target date for publication of rule.--As part of the notice under paragraph (2), and for purposes of this subsection, the `target date for publication' (referred to in section 564(a)(5) of such title) shall be September 1, 1996. ``(4) Abbreviated period for submission of comments.--In applying section 564(c) of such title under this subsection, `15 days' shall be substituted for `30 days'. ``(5) Appointment of negotiated rulemaking committee and facilitator.--The Secretary shall provide for-- ``(A) the appointment of a negotiated rulemaking committee under section 565(a) of such title by not later than 30 days after the end of the comment period provided for under section 564(c) of such title (as shortened under paragraph (4)), and ``(B) the nomination of a facilitator under section 566(c) of such title by not later than 10 days after the date of appointment of the committee. ``(6) Preliminary committee report.--The negotiated rulemaking committee appointed under paragraph (5) shall report to the Secretary, by not later than June 1, 1996, regarding the committee's progress on achieving a concensus with regard to the rulemaking proceeding and whether such consensus is likely to occur before one month before the target date for publication of the rule. If the committee reports that the committee has failed to make significant progress towards such consensus or is unlikely to reach such consensus by the target date, the Secretary may terminate such process and provide for the publication of a rule under this subsection through such other methods as the Secretary may provide. ``(7) Final committee report.--If the committee is not terminated under paragraph (6), the rulemaking committee shall submit a report containing a proposed rule by not later than one month before the target publication date. ``(8) Interim, final effect.--The Secretary shall publish a rule under this subsection in the Federal Register by not later than the target publication date. Such rule shall be effective and final immediately on an interim basis, but is subject to change and revision after public notice and opportunity for a period (of not less than 60 days) for public comment. In connection with such rule, the Secretary shall specify the process for the timely review and approval of applications of entities to be certified as provider-sponsored organizations pursuant to such rules and consistent with this subsection. ``(9) Publication of rule after public comment.--The Secretary shall provide for consideration of such comments and republication of such rule by not later than 1 year after the target publication date. ``(10) Process for approval of applications for certification.-- ``(A) In general.--The Secretary shall establish a process for the receipt and approval of applications of entities for certification as provider-sponsored organizations under this part. Under such process, the Secretary shall act upon a complete application submitted within 60 days after the date it is received. ``(B) Circulation of proposed application form.--By March 1, 1996, the Secretary, after consultation with the negotiated rulemaking committee, shall circulate a proposed application form that could be used by entities considering becoming certified as a provider- sponsored organization under this part. ``(d) Coordination Among Final Standards.--In establishing standards (other than on an interim basis) under the previous provisions of this section, the Secretary shall seek to provide for consistency (as appropriate) across the different types of MedicarePlus organizations, in order to promote equitable treatment of different types of organizations and consistent protection for individuals who elect products offered by the different types of MedicarePlus organizations. ``(e) Use of Current Standards for Interim Standards.--To the extent practicable and consistent with the requirements of this part, standards established on an interim basis to carry out requirements of this part may be based on currently applicable standards, such as the rules established under section 1876 (as in effect as of the date of the enactment of this section) to carry out analogous provisions of such section or standards established or developed for application in the private health insurance market. ``(f) Application of New Standards to Entities with a Contract.--In the case of a MedicarePlus organization with a contract in effect under this part at the time standards applicable to the organization under this section are changed, the organization may elect not to have such changes apply to the organization until the end of the current contract year (or, if there is less than 6 months remaining in the contract year, until 1 year after the end of the current contract year). ``(g) Relation to State Laws.--The standards established under this section shall supersede any State law or regulation with respect to MedicarePlus products offered under this part to the extent such law or regulation is inconsistent with such standards. ``medicareplus certification ``Sec. 1857. (a) State Certification Process for State-Regulated Organizations.-- ``(1) Approval of state process.--The Secretary shall approve a MedicarePlus certification and enforcement program established by a State for applying the standards established under section 1856 to MedicarePlus organizations (other than union sponsors, Taft-Hartley sponsors, and provider-sponsored organizations) and MedicarePlus products offered by such organizations if the Secretary determines that the program effectively provides for the application and enforcement of such standards in the State with respect to such organizations and products. Such program shall provide for certification of compliance of MedicarePlus organizations and products with the applicable requirements of this part not less often than once every 3 years. ``(2) Effect of certification under state process.--A MedicarePlus organization and MedicarePlus product offered by such an organization that is certified under such program is considered to have been certified under this subsection with respect to the offering of the product to individuals residing in the State. ``(3) User fees.--The State may impose user fees on organizations seeking certification under this subsection in such amounts as the State deems sufficient to finance the costs of such certification. Nothing in this paragraph shall be construed as restricting a State's authority to impose premium taxes, other taxes, or other levies. ``(4) Review.--The Secretary periodically shall review State programs approved under paragraph (1) to determine if they continue to provide for certification and enforcement described in such paragraph. If the Secretary finds that a State program no longer so provides, before making a final determination, the Secretary shall provide the State an opportunity to adopt such a plan of correction as would permit the State program to meet the requirements of paragraph (1). If the Secretary makes a final determination that the State program, after such an opportunity, fails to meet such requirements, the provisions of subsection (b) shall apply to MedicarePlus organizations and products in the State. ``(5) Effect of no state program.--Beginning on the date standards are established under section 1856, in the case of organizations and products in States in which a certification program has not been approved and in operation under paragraph (1), the Secretary shall establish a process for the certification of MedicarePlus organizations (other than union sponsors, Taft-Hartley sponsors, and provider-sponsored organizations) and products of such organizations as meeting such standards. ``(6) Publication of list of approved state programs.--The Secretary shall publish (and periodically update) a list of those State programs which are approved for purposes of this subsection. ``(b) Federal Certification Process for Union and Taft-Hartley Sponsors and Provider-Sponsored Organizations.-- ``(1) Establishment.--The Secretary shall establish a process for the certification of union sponsors, Taft-Hartley sponsors, and provider-sponsored organizations and MedicarePlus products offered by such sponsors and organizations as meeting the applicable standards established under section 1856. ``(2) Involvement of sec