[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[S. 1426 Introduced in Senate (IS)]

103d CONGRESS
  1st Session
                                S. 1426

  To amend title XVIII of the Social Security Act and the Budget and 
Emergency Deficit Control Act of 1985 with respect to essential access 
   community hospitals, the rural transition grant program, durable 
   medical equipment, adjustments to discretionary spending limits, 
 standards for medicare supplemental insurance policies, expansion and 
revision of medicare select policies, psychology services in hospitals, 
 payment for anesthesia services furnished directly or concurrently in 
 providers, improve reimbursement for clinical social worker services, 
                        and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

               August 6 (legislative day, June 30), 1993

 Mr. Conrad (for himself, Mr. Inouye, and Mr. Bingaman) introduced the 
 following bill; which was read twice and referred to the Committee on 
                                Finance

_______________________________________________________________________

                                 A BILL


 
  To amend title XVIII of the Social Security Act and the Budget and 
Emergency Deficit Control Act of 1985 with respect to essential access 
   community hospitals, the rural transition grant program, durable 
   medical equipment, adjustments to discretionary spending limits, 
 standards for medicare supplemental insurance policies, expansion and 
revision of medicare select policies, psychology services in hospitals, 
 payment for anesthesia services furnished directly or concurrently in 
 providers, improve reimbursement for clinical social worker services, 
                        and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; REFERENCES IN ACT.

    (a) Short Title.--This Act may be cited as the ``Essential Medicare 
Amendments of 1993''.
    (b) References in Act.--Except as otherwise specifically provided, 
whenever in this Act, 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.

SEC. 2. ESSENTIAL ACCESS COMMUNITY HOSPITAL (EACH) AMENDMENTS.

    (a) Increasing Number of Participating States.--Section 1820(a)(1) 
(42 U.S.C. 1395i-4(a)(1)) is amended by striking ``7'' and inserting 
``9''.
    (b) Treatment of Inpatient Hospital Services Provided in Rural 
Primary Care Hospitals.--
            (1) In general.--Section 1820(f)(1)(F) (42 U.S.C. 1395i-
        4(f)(1)(F)) is amended to read as follows:
                    ``(F) subject to paragraph (4), provides not more 
                than 6 inpatient beds (meeting such conditions as the 
                Secretary may establish) for providing inpatient care 
                to patients requiring stabilization before discharge or 
                transfer to a hospital, except that the facility may 
                not provide any inpatient hospital services--
                            ``(i) to any patient whose attending 
                        physician does not certify that the patient may 
                        reasonably be expected to be discharged or 
                        transferred to a hospital within 72 hours of 
                        admission to the facility; or
                            ``(ii) consisting of surgery or any other 
                        service requiring the use of general anesthesia 
                        (other than surgical procedures specified by 
                        the Secretary under section 1833(i)(1)(A)), 
                        unless the attending physician certifies that 
                        the risk associated with transferring the 
                        patient to a hospital for such services 
                        outweighs the benefits of transferring the 
                        patient to a hospital for such services.''.
            (2) Limitation on average length of stay.--Section 1820(f) 
        (42 U.S.C. 1395i-4(f)) is amended by adding at the end the 
        following new paragraph:
            ``(4) Limitation on average length of inpatient stays.--The 
        Secretary may terminate a designation of a rural primary care 
        hospital under paragraph (1) if the Secretary finds that the 
        average length of stay for inpatients at the facility during 
        the previous year in which the designation was in effect 
        exceeded 72 hours. In determining the compliance of a facility 
        with the requirement of the previous sentence, there shall not 
        be taken into account periods of stay of inpatients in excess 
        of 72 hours to the extent such periods exceed 72 hours because 
        transfer to a hospital is precluded because of inclement 
        weather or other emergency conditions.''.
            (3) Conforming amendment.--Section 1814(a)(8) (42 U.S.C. 
        1395f(a)(8)) is amended by striking ``such services'' and all 
        that follows and inserting ``the individual may reasonably be 
        expected to be discharged or transferred to a hospital within 
        72 hours after admission to the rural primary care hospital.''.
            (4) GAO reports.--Not later than 2 years after the date of 
        the enactment of this Act, the Comptroller General shall submit 
        reports to the Congress on--
                    (A) the application of the requirements under 
                paragraphs (1)(F) and (4) of section 1820(f) of the 
                Social Security Act (as amended by this subsection); 
                and
                    (B) the extent to which such requirements have 
                resulted in such hospitals providing inpatient care 
                beyond their capabilities or have limited the ability 
                of such hospitals to provide needed services.
    (c) Designation of Hospitals.--
            (1) Permitting designation of hospitals located in urban 
        areas.--
                    (A) In general.--Section 1820 (42 U.S.C. 1395i-4) 
                is amended--
                            (i) by striking paragraph (1) of subsection 
                        (e) and redesignating paragraphs (2) through 
                        (6) of subsection (e) as paragraphs (1) through 
                        (5);
                            (ii) in subsection (e)(1)(A), as 
                        redesignated by subparagraph (A)--
                                    (I) by striking ``is located'' and 
                                inserting ``except in the case of a 
                                hospital located in an urban area, is 
                                located''
                                    (II) by striking ``, (ii)'' and 
                                inserting ``or (ii)'', and
                                    (III) by striking ``or (iii)'' and 
                                all that follows through ``section,''; 
                                and
                            (iii) in subsection (i)(1)(B), by striking 
                        ``paragraph (3)'' and inserting ``paragraph 
                        (2)''.
                    (B) No change in medicare prospective payment.--
                Section 1886(d)(5)(D) (42 U.S.C. 1395ww(d)(5)(D)) is 
                amended--
                            (i) in clause (iii)(III), by inserting 
                        ``located in a rural area and'' after ``that 
                        is'', and
                            (ii) in clause (v), by inserting ``located 
                        in a rural area and'' after ``in the case of a 
                        hospital''.
            (2) Permitting hospitals located in adjoining states to 
        participate in state program.--
                    (A) In general.--Section 1820 (42 U.S.C. 1395i-4) 
                is amended--
                            (i) by redesignating subsection (k) as 
                        subsection (l); and
                            (ii) by inserting after subsection (j) the 
                        following new subsection:
    ``(k) Eligibility of Hospitals Not Located in Participating 
States.--Notwithstanding any other provision of this section--
            ``(1) for purposes of including a hospital or facility as a 
        member institution of a rural health network, a State may 
        designate a hospital or facility that is not located in the 
        State as an essential access community hospital or a rural 
        primary care hospital if the hospital or facility is located in 
        an adjoining State and is otherwise eligible for designation as 
        such a hospital;
            ``(2) the Secretary may designate a hospital or facility 
        that is not located in a State receiving a grant under 
        subsection (a)(1) as an essential access community hospital or 
        a rural primary care hospital if the hospital or facility is a 
        member institution of a rural health network of a State 
        receiving a grant under such subsection; and
            ``(3) a hospital or facility designated pursuant to this 
        subsection shall be eligible to receive a grant under 
        subsection (a)(2).''.
                    (B) Conforming amendments.--(i) Section 1820(c)(1) 
                (42 U.S.C. 1395i-4(c)(1)) is amended by striking 
                ``paragraph (3)'' and inserting ``paragraph (3) or 
                subsection (k)''.
                    (ii) Paragraphs (1)(A) and (2)(A) of section 
                1820(i) (42 U.S.C. 1395i-4(i)) are each amended--
                            (I) in clause (i), by striking ``(a)(1)'' 
                        and inserting ``(a)(1) (except as provided in 
                        subsection (k))'', and
                            (II) in clause (ii), by striking 
                        ``subparagraph (B)'' and inserting 
                        ``subparagraph (B) or subsection (k)''.
    (d) Skilled Nursing Services in Rural Primary Care Hospitals.--
Section 1820(f)(3) (42 U.S.C. 1395i-4(f)(3)) is amended by striking 
``because the facility'' and all that follows and inserting the 
following: ``because, at the time the facility applies to the State for 
designation as a rural primary care hospital, there is in effect an 
agreement between the facility and the Secretary under section 1883 
under which the facility's inpatient hospital facilities are used for 
the furnishing of extended care services, except that the number of 
beds used for the furnishing of such services may not exceed the total 
number of licensed inpatient beds at the time the facility applies to 
the State for such designation (minus the number of inpatient beds used 
for providing inpatient care pursuant to paragraph (1)(F)). For 
purposes of the previous sentence, the number of beds of the facility 
used for the furnishing of extended care services shall not include any 
beds of a unit of the facility that is licensed as a distinct-part 
skilled nursing facility at the time the facility applies to the State 
for designation as a rural primary care hospital.''.
    (e) Payment for Outpatient Rural Primary Care Hospital Services.--
Section 1834(g)(1) (42 U.S.C. 1395m(g)(1)) is amended by adding at the 
end the following:
        ``The amount of payment shall be determined under either method 
        without regard to the amount of the customary or other 
        charge.''.
    (f) Clarification of Physician Staffing Requirement for Rural 
Primary Care Hospitals.--Section 1820(f)(1)(H) (42 U.S.C. 1395i-
4(f)(1)(H)) is amended by striking the period and inserting the 
following: ``, except that in determining whether a facility meets the 
requirements of this subparagraph, subparagraphs (E) and (F) of that 
paragraph shall be applied as if any reference to a `physician' is a 
reference to a physician as defined in section 1861(r)(1).''.
    (g) Technical Amendments Relating to Part A Deductible, 
Coinsurance, and Spell of Illness.--(1) Section 1812(a)(1) (42 U.S.C. 
1395d(a)(1)) is amended--
            (A) by striking ``inpatient hospital services'' the first 
        place it appears and inserting ``inpatient hospital services or 
        inpatient rural primary care hospital services'';
            (B) by striking ``inpatient hospital services'' the second 
        place it appears and inserting ``such services''; and
            (C) by striking ``and inpatient rural primary care hospital 
        services''.
    (2) Sections 1813(a) and 1813(b)(3)(A) (42 U.S.C. 1395e(a), 
1395e(b)(3)(A)) are each amended by striking ``inpatient hospital 
services'' each place it appears and inserting ``inpatient hospital 
services or inpatient rural primary care hospital services''.
    (3) Section 1813(b)(3)(B) (42 U.S.C. 1395e(b)(3)(B)) is amended by 
striking ``inpatient hospital services'' and inserting ``inpatient 
hospital services, inpatient rural primary care hospital services,''.
    (4) Section 1861(a) (42 U.S.C. 1395x(a)) is amended--
            (A) in paragraph (1), by striking ``inpatient hospital 
        services'' and inserting ``inpatient hospital services, 
        inpatient rural primary care hospital services,''; and
            (B) in paragraph (2), by striking ``hospital'' and 
        inserting ``hospital or rural primary care hospital''.
    (h) Authorization of Appropriations.--Section 1820(l) (42 U.S.C. 
1395i-4(l)), as redesignated by subsection (c)(2), is amended by 
striking ``1990, 1991, and 1992'' and inserting ``1990 through 1995''.
    (i) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 3. REAUTHORIZATION OF RURAL TRANSITION GRANT PROGRAM.

    Section 4005(e)(9) of the Omnibus Budget Reconciliation Act of 
1987, as amended by section 6003(g)(1)(B) of the Omnibus Budget 
Reconciliation Act of 1989, is amended by striking ``1992'' and 
inserting ``1992 and $30,000,000 for each of fiscal years 1993 through 
1997''.

SEC. 4. DURABLE MEDICAL EQUIPMENT.

    (a) Definition of Medical Equipment and Supplies.--
            (1) In general.--Section 1861 (42 U.S.C. 1395x) is amended 
        by adding at the end the following new subsection:

                    ``medical equipment and supplies

    ``(oo) The term `medical equipment and supplies' means--
            ``(1) durable medical equipment (as defined in section 
        1861(n));
            ``(2) prosthetic devices (as described in section 
        1861(s)(8));
            ``(3) orthotics and prosthetics (as described in section 
        1861(s)(9));
            ``(4) home dialysis supplies and equipment (as described in 
        section 1861(s)(2)(F));
            ``(5) surgical dressings and other devices (as described in 
        section 1861(s)(5));
            ``(6) immunosuppressive drugs (as described in section 
        1861(s)(2)(J)); and
            ``(7) such other items as the Secretary may determine.''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall apply to items furnished on or after January 1, 1994.
    (b) Development and Application of National Standards for Suppliers 
of Medical Equipment and Supplies.--Section 1834 (42 U.S.C. 1395m) is 
amended by adding at the end the following new subsection:
    ``(i) Requirements for Issuance and Renewal of Supplier Numbers for 
Suppliers of Medical Equipment and Supplies.--
            ``(1) Payment.--No payment may be made under this part 
        after July 1, 1994, for items furnished by a supplier of 
        medical equipment and supplies (as defined in section 1861(oo)) 
        unless such supplier meets the national standards specified by 
        the Secretary and possesses a valid supplier number.
            ``(2) Revised standards.--
                    ``(A) In general.--Not later than January 1, 1996, 
                the Secretary shall, in consultation with 
                representatives of suppliers of medical equipment and 
                supplies, carriers, and consumers, revise the national 
                standards for suppliers of medical equipment and 
                supplies to include the requirements listed in 
                subparagraph (B).
                    ``(B) Standards described.--The requirements listed 
                in this subparagraph are that suppliers of medical 
                equipment and supplies shall--
                            ``(i) comply with all applicable State and 
                        Federal licensure and regulatory requirements;
                            ``(ii) maintain a physical facility on an 
                        appropriate site;
                            ``(iii) have proof of appropriate liability 
                        insurance; and
                            ``(iv) meet such other requirements as the 
                        Secretary may specify.
                    ``(C) Applicability of revised standards.--
                Beginning after December 31, 1995, each supplier of 
                medical equipment and supplies applying for a supplier 
                number or renewing such supplier's supplier number 
                shall meet the revised standards described in this 
                paragraph.''.
    (c) Certificates of Medical Necessity.--
            (1) In general.--Section 1834 (42 U.S.C. 1395m), as amended 
        by subsection (b), is amended--
                    (A) in subsection (a), by striking paragraph (16), 
                and
                    (B) by adding at the end the following new 
                subsection:
    ``(j) Certificates of Medical Necessity.--
            ``(1) Standardized certificates.--Not later than July 1, 
        1994, the Secretary shall, in consultation with carriers under 
        this part, develop one or more standardized certificates of 
        medical necessity (as defined in paragraph (3)) for medical 
        equipment and supplies (as defined in section 1861(oo) other 
        than paragraphs (4), (6), and (7)). If a certificate of medical 
        necessity is required by the Secretary, such standardized 
        certificates shall--
                    ``(A) be completed by each physician who prescribes 
                such medical equipment and supplies for any beneficiary 
                under this part, and
                    ``(B) be transmitted to the supplier and then to 
                the carrier processing the claim for payment for such 
                medical equipment and supplies under this part.
            ``(2) Prohibition against distribution by suppliers of 
        certificates of medical necessity.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), a supplier of medical equipment and 
                supplies described in paragraph (1) may not distribute 
                to physicians or to individuals entitled to benefits 
                under this part for commercial purposes any completed 
                or partially completed certificates of medical 
                necessity.
                    ``(B) Exception for certain billing information.--
                Subparagraph (A) shall not apply with respect to a 
                certificate of medical necessity to the extent that 
                such certificate contains only information completed by 
                the supplier of medical equipment and supplies 
                identifying such supplier and the beneficiary to whom 
                such medical equipment and supplies are furnished, a 
                description of such medical equipment and supplies, any 
                product code identifying such medical equipment and 
                supplies, and any other administrative information 
                identified by the Secretary. In the event a supplier 
                provides a certificate of medical necessity containing 
                information permitted under this subparagraph, such 
                certificate shall also contain the supplier's charge 
                and the fee schedule amount for the medical equipment 
                or supplies being furnished prior to distribution of 
                such certificate to the physician.
                    ``(C) Penalty.--Any supplier of medical equipment 
                and supplies who knowingly and willfully distributes a 
                certificate of medical necessity in violation of 
                subparagraph (A) is subject to a civil money penalty in 
                an amount not to exceed $1,000 for each such 
                certificate of medical necessity so distributed. The 
                provisions of section 1128A (other than subsections (a) 
                and (b)) shall apply to civil money penalties under 
                this subparagraph in the same manner as they apply to a 
                penalty or proceeding under section 1128A(a).
            ``(3) Definition.--For purposes of this subsection, the 
        term `certificate of medical necessity' means a form or other 
        document containing information required by the Secretary to be 
        submitted to show that a covered item is reasonable and 
        necessary for the diagnosis or treatment of illness or injury 
        or to improve the functioning of a malformed body member.''.
            (2) Effective date.--The amendments made by paragraph (1) 
        shall apply with respect to certificates of medical necessity 
        on or after January 1, 1994.
    (d) Coverage and Review Criteria for Certain Medical Equipment and 
Supplies.--Section 1834 (42 U.S.C. 1395m), as amended by subsection 
(c), is amended by adding at the end the following new subsection:
    ``(k) Coverage and Review Criteria.--
            ``(1) Development and establishment.--Not later than July 
        1, 1994, the Secretary, in consultation with representatives of 
        suppliers of medical equipment and supplies (as defined in 
        section 1861(oo) other than paragraphs (4), (6), and (7)), 
        individuals enrolled under this part, and appropriate medical 
        specialty societies, shall develop and establish uniform 
        national coverage and utilization review criteria for 200 items 
        of medical equipment and supplies (as so defined) selected in 
        accordance with the standards described in paragraph (2). The 
        Secretary shall publish the criteria as part of the 
        instructions provided to fiscal intermediaries and carriers 
        under this part and no further publication, including 
        publication in the Federal Register, shall be required.
            ``(2) Standards for selecting items subject to criteria.--
        The Secretary may select an item for coverage under the 
        criteria developed and established under paragraph (1) if the 
        Secretary finds that--
                    ``(A) the item is frequently purchased or rented by 
                beneficiaries;
                    ``(B) the item is frequently subject to a 
                determination that such item is not medically 
                necessary; or
                    ``(C) the coverage or utilization criteria applied 
                to the item (as of the date of the enactment of this 
                subsection) is not consistent among carriers.
            ``(3) Annual review and expansion of items subject to 
        criteria.--The Secretary shall annually review the coverage and 
        utilization of items of medical equipment and supplies to 
        determine whether items not included among the items selected 
        under paragraph (1) should be made subject to uniform national 
        coverage and utilization review criteria, and, if appropriate, 
        shall develop and apply such criteria to such additional items.
            ``(4) Report on effect of uniform criteria on utilization 
        of items.--Not later than January 1, 1995, the Secretary shall 
        submit a report to the Committee on Ways and Means and the 
        Committee on Energy and Commerce of the House of 
        Representatives and the Committee on Finance of the Senate 
        analyzing the impact of the uniform criteria established under 
        paragraph (1) on the utilization of items of medical equipment 
        and supplies by individuals enrolled under this part.''.
    (e) Prohibition Against Multiple Supplier Numbers.--
            (1) In general.--Section 1834 (42 U.S.C. 1395m), as amended 
        by subsection (d), is amended by adding at the end the 
        following new subsection:
    ``(l) Prohibition Against Multiple Supplier Numbers for Suppliers 
of Medical Equipment and Supplies.--The Secretary may not issue more 
than one supplier number to any supplier of medical equipment and 
supplies (as defined in section 1861(oo)) unless the issuance of more 
than one number is appropriate to identify subsidiary or regional 
entities under the supplier's ownership or control.''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall apply to items furnished on or after July 1, 1994.
    (f) Definition of Inducements as Kickbacks Clarified.--
            (1) In general.--Section 1128B(b)(3)(B) (42 U.S.C. 1320a-
        7b(b)(3)(B)) is amended by inserting before the semicolon 
        ``(except that in the case of a contract supply arrangement 
        between a skilled nursing facility and a supplier of medical 
        supplies and equipment (as defined in section 1861(oo) other 
        than paragraphs (4), (6), and (7)), such employment shall not 
        be considered bona fide to the extent that it includes tasks of 
        a clerical and cataloging nature in transmitting to suppliers 
        assignment rights of individuals eligible for benefits under 
        part B of title XVIII, or performance of warehousing or stock 
        inventory functions)''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall apply with respect to services furnished on or after 
        January 1, 1994.
    (g) Limitation on Beneficiary Liability.--
            (1) In general.--Section 1879 (42 U.S.C. 1395pp) is amended 
        by adding at the end the following new subsection:
    ``(h) If a supplier of medical equipment and supplies (as defined 
in section 1861(oo))--
            ``(1) furnishes an item or service to a beneficiary for 
        which no payment may be made by reason of section 1834(i);
            ``(2) furnishes an item or service to a beneficiary for 
        which payment is denied in advance under section 1834(a)(15);
            ``(3) is excluded from participation under this title; or
            ``(4) furnishes an item or service to a beneficiary for 
        which payment is denied under section 1862(a)(1);
any expenses incurred for items and services furnished to an individual 
by such a supplier on an unassigned basis shall be the responsibility 
of such supplier. The individual shall have no financial responsibility 
for such expenses and the supplier shall refund on a timely basis to 
the individual (and shall be liable to the individual for) any amounts 
collected from the individual for such items or services, unless the 
supplier informs the individual in advance that payment under this part 
will not be made for the item or services and the individual agrees to 
pay for the item or service.''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall apply to items or services furnished on or after July 1, 
        1994.
    (h) Studies.--
            (1) Supplies and services in nursing facilities.--The 
        Comptroller General of the United States shall conduct a study 
        and report to the Congress no later than January 1, 1995, on 
        the types, volume, and utilization of services and supplies 
        furnished under contract or under arrangement with suppliers to 
        individuals eligible for benefits under title XVIII of the 
        Social Security Act residing in skilled nursing facilities and 
        nursing facilities.
            (2) Descriptions relating to certain codes.--The 
        Comptroller General of the United States shall conduct a study 
        beginning no earlier than July 1, 1994, and report to the 
        Congress no later than January 1, 1995, on--
                    (A) whether changes made by the Department of 
                Health and Human Services to the descriptions relating 
                to the codes for medical equipment and supplies (as 
                defined in section 1861(oo) of the Social Security Act 
                other than paragraphs (4), (6), and (7))--
                            (i) accurately reflect the items being 
                        furnished under such codes, and
                            (ii) are sufficiently explicit to 
                        distinguish between items of varying quality 
                        and price, and
                    (B) recommendations for additional changes that 
                would improve the descriptions relating to the codes 
                for such items.

SEC. 5. ADJUSTMENTS TO DISCRETIONARY SPENDING LIMITS.

    (a) Adjustments.--Section 251(b)(2) of the Balanced Budget and 
Emergency Deficit Control Act of 1985 is amended by redesignating 
subparagraphs (E) and (F) as subparagraphs (F) and (G), respectively, 
and by inserting after subparagraph (D) the following new subparagraph:
                    ``(E) Medicare administrative costs.--To the extent 
                that appropriations are enacted that provide additional 
                new budget authority (as compared with a base level of 
                $1,526,000,000 for new budget authority) for the 
                administration of the Medicare program by fiscal 
                intermediaries and carriers pursuant to sections 1816 
                and 1842(a) of title XVIII of the Social Security Act, 
                the adjustment for that year shall be that amount, but 
                shall not exceed--
                            ``(i) for fiscal year 1994, $198,000,000 in 
                        new budget authority and $198,000,000 in 
                        outlays; and
                            ``(ii) for fiscal year 1995, $220,000,000 
                        in new budget authority and $220,000,000 in 
                        outlays; and
        the prior-year outlays resulting from these appropriations of 
        budget authority and additional adjustments equal to the sum of 
        the maximum adjustments that could have been made in preceding 
        fiscal years under this subparagraph.''.
    (b) Conforming Amendments.--
            (1) Section 603(a) of the Congressional Budget Act of 1974 
        is amended by striking ``section 251(b)(2)(E)(i)'' and 
        inserting ``section 251(b)(2)(F)(i)''.
            (2) Section 606(d) of the Congressional Budget Act of 1974 
        is amended--
                    (A) in paragraph (1)(A) by striking ``section 
                251(b)(2)(E)(i)'' and inserting ``section 
                251(b)(2)(F)(i)''; and
                    (B) in paragraph (2), by inserting 
                ``251(b)(2)(E),'' after ``251(b)(2)(D),''.

SEC. 6. STANDARDS FOR MEDICARE SUPPLEMENTAL INSURANCE POLICIES.

    (a) Simplification of Medicare Supplemental Policies.--
            (1) Section 4351 of the Omnibus Budget Reconciliation Act 
        of 1990 (Public Law 101-508), (hereafter in this Act referred 
        to as ``OBRA-1990'') is amended by striking ``(a) In General.--
        ''.
            (2) Section 1882(p) (42 U.S.C. 1395ss(p)) is amended--
                    (A) in paragraph (1)(A)--
                            (i) by striking ``promulgates'' and 
                        inserting ``changes the revised NAIC Model 
                        Regulation (described in subsection (m)) to 
                        incorporate'',
                            (ii) by striking ``(such limitations, 
                        language, definitions, format, and standards 
                        referred to collectively in this subsection as 
                        `NAIC standards'),'', and
                            (iii) by striking ``included a reference to 
                        the NAIC standards'' and inserting ``were a 
                        reference to the revised NAIC Model Regulation 
                        as changed under this subparagraph (such 
                        changed regulation referred to in this section 
                        as the `1991 NAIC Model Regulation')'';
                    (B) in paragraph (1)(B)--
                            (i) by striking ``promulgate NAIC 
                        standards'' and inserting ``make the changes in 
                        the revised NAIC Model Regulation'',
                            (ii) by striking ``limitations, language, 
                        definitions, format, and standards described in 
                        clauses (i) through (iv) of such subparagraph 
                        (in this subsection referred to collectively as 
                        `Federal standards')'' and inserting ``a 
                        regulation'', and
                            (iii) by striking ``included a reference to 
                        the Federal standards'' and inserting ``were a 
                        reference to the revised NAIC Model Regulation 
                        as changed by the Secretary under this 
                        subparagraph (such changed regulation referred 
                        to in this section as the `1991 Federal 
                        Regulation')'';
                    (C) in paragraph (1)(C)(i), by striking ``NAIC 
                standards or the Federal standards'' and inserting 
                ``1991 NAIC Model Regulation or 1991 Federal 
                Regulation'';
                    (D) in paragraphs (1)(C)(ii)(I), (1)(E), (2), and 
                (9)(B), by striking ``NAIC or Federal standards'' and 
                inserting ``1991 NAIC Model Regulation or 1991 Federal 
                Regulation'';
                    (E) in paragraph (2)(C), by striking ``(5)(B)'' and 
                inserting ``(4)(B)'';
                    (F) in paragraph (4)(A)(i), by inserting ``or 
                paragraph (6)'' after ``(B)'';
                    (G) in paragraph (4), by striking ``applicable 
                standards'' each place it appears and inserting 
                ``applicable 1991 NAIC Model Regulation or 1991 Federal 
                Regulation'';
                    (H) in paragraph (6), by striking ``in regard to 
                the limitation of benefits described in paragraph (4)'' 
                and inserting ``described in clauses (i) through (iii) 
                of paragraph (1)(A)'';
                    (I) in paragraph (7), by striking ``policyholder'' 
                and inserting ``policyholders'';
                    (J) in paragraph (8), by striking ``after the 
                effective date of the NAIC or Federal standards with 
                respect to the policy, in violation of the previous 
                requirements of this subsection'' and inserting ``on 
                and after the effective date specified in paragraph 
                (1)(C) (but subject to paragraph (10)), in violation of 
                the applicable 1991 NAIC Model Regulation or 1991 
                Federal Regulation insofar as such regulation relates 
                to the requirements of subsection (o) or (q) or clause 
                (i), (ii), or (iii) of paragraph (1)(A)'';
                    (K) in paragraph (9), by adding at the end the 
                following new subparagraph:
    ``(D) Subject to paragraph (10), this paragraph shall apply to 
sales of policies occurring on or after the effective date specified in 
paragraph (1)(C).''; and
                    (L) in paragraph (10), by striking ``this 
                subsection'' and inserting ``paragraph (1)(A)(i)''.
    (b) Guaranteed Renewability.--Section 1882(q) (42 U.S.C. 1395ss(q)) 
is amended--
            (1) in paragraph (2), by striking ``paragraph (2)'' and 
        inserting ``paragraph (4)'', and
            (2) in paragraph (4), by striking ``the succeeding issuer'' 
        and inserting ``issuer of the replacement policy''.
    (c) Enforcement of Standards.--
            (1) Section 1882(a)(2) (42 U.S.C. 1395ss(a)(2)) is 
        amended--
                    (A) in subparagraph (A), by striking ``NAIC 
                standards or the Federal standards'' and inserting 
                ``1991 NAIC Model Regulation or 1991 Federal 
                Regulation'', and
                    (B) by striking ``after the effective date of the 
                NAIC or Federal standards with respect to the policy'' 
                and inserting ``on and after the effective date 
                specified in subsection (p)(1)(C)''.
            (2) The sentence in section 1882(b)(1) added by section 
        4353(c)(5) of OBRA-1990 is amended--
                    (A) by striking ``The report'' and inserting ``Each 
                report'',
                    (B) by inserting ``and requirements'' after 
                ``standards'',
                    (C) by striking ``and'' after ``compliance,'', and
                    (D) by striking the comma after ``Commissioners''.
            (3) Section 1882(g)(2)(B) (42 U.S.C. 1395ss(g)(2)(B)) is 
        amended by striking ``Panel'' and inserting ``Secretary''.
            (4) Section 1882(b)(1) (42 U.S.C. 1395ss(b)(1)) is amended 
        by striking ``the the Secretary'' and inserting ``the 
        Secretary''.
    (d) Preventing Duplication.--
            (1) Section 1882(d)(3)(A) (42 U.S.C. 1395ss(d)(3)(A)) is 
        amended--
                    (A) by amending the first sentence to read as 
                follows:
    ``(i) It is unlawful for a person to sell or issue to an individual 
entitled to benefits under part A or enrolled under part B of this 
title--
            ``(I) a health insurance policy with knowledge that the 
        policy duplicates health benefits to which the individual is 
        otherwise entitled under this title or title XIX,
            ``(II) a medicare supplemental policy with knowledge that 
        the individual is entitled to benefits under another medicare 
        supplemental policy, or
            ``(III) a health insurance policy (other than a medicare 
        supplemental policy) with knowledge that the policy duplicates 
        health benefits to which the individual is otherwise entitled, 
        other than benefits to which the individual is entitled under a 
        requirement of State or Federal law.'';
                    (B) by designating the second sentence as clause 
                (ii) and, in such clause, by striking ``the previous 
                sentence'' and inserting ``clause (i)'';
                    (C) by designating the third sentence as clause 
                (iii) and, in such clause--
                            (i) by striking ``the previous sentence'' 
                        and inserting ``clause (i) with respect to the 
                        sale of a medicare supplemental policy'', and
                            (ii) by striking ``and the statement'' and 
                        all that follows up to the period at the end; 
                        and
                    (D) by striking the last sentence.
            (2) Section 1882(d)(3)(B) (42 U.S.C. 1395ss(d)(3)(B)) is 
        amended--
                    (A) in clause (ii)(II), by striking ``65 years of 
                age or older'',
                    (B) in clause (iii)(I), by striking ``another 
                medicare'' and inserting ``a medicare'',
                    (C) in clause (iii)(I), by striking ``such a 
                policy'' and inserting ``a medicare supplemental 
                policy'',
                    (D) in clause (iii)(II), by striking ``another 
                policy'' and inserting ``a medicare supplemental 
                policy'', and
                    (E) by amending subclause (III) of clause (iii) to 
                read as follows:
    ``(III) If the statement required by clause (i) is obtained and 
indicates that the individual is entitled to any medical assistance 
under title XIX, the sale of the policy is not in violation of clause 
(i) (insofar as such clause relates to such medical assistance), if a 
State medicaid plan under such title pays the premiums for the policy, 
or, in the case of a qualified medicare beneficiary described in 
section 1905(p)(1), if the State pays less than the full amount of 
medicare cost-sharing as described in subparagraphs (B), (C), and (D) 
of section 1905(p)(3) for such individual.''.
            (3)(A) Section 1882(d)(3)(C) (42 U.S.C. 1395ss(d)(3)(C)) is 
        amended--
                    (i) by striking ``the selling'' and inserting ``(i) 
                the sale or issuance'', and
                    (ii) by inserting before the period at the end the 
                following: ``, (ii) the sale or issuance of a policy or 
                plan described in subparagraph (A)(i)(I) (other than a 
                medicare supplemental policy to an individual entitled 
                to any medical assistance under title XIX) under which 
                all the benefits are fully payable directly to or on 
                behalf of the individual without regard to other health 
                benefit coverage of the individual but only if (for 
                policies sold or issued more than 60 days after the 
                date the statements are published or promulgated under 
                subparagraph (D)) there is disclosed in a prominent 
                manner as part of (or together with) the application 
                the applicable statement (specified under subparagraph 
                (D)) of the extent to which benefits payable under the 
                policy or plan duplicate benefits under this title, or 
                (iii) the sale or issuance of a policy or plan 
                described in subparagraph (A)(i)(III) under which all 
                the benefits are fully payable directly to or on behalf 
                of the individual without regard to other health 
                benefit coverage of the individual''.
            (B) Section 1882(d)(3) (42 U.S.C. 1395ss(d)(3)) is amended 
        by adding at the end the following:
    ``(D)(i) If--
            ``(I) within the 90-day period beginning on the date of the 
        enactment of this subparagraph, the National Association of 
        Insurance Commissioners develops (after consultation with 
        consumer and insurance industry representatives) and submits to 
        the Secretary a statement for each of the types of health 
        insurance policies (other than medicare supplemental policies 
        and including, as separate types of policies, policies paying 
        directly to the beneficiary fixed, cash benefits) which are 
        sold to persons entitled to health benefits under this title, 
        of the extent to which benefits payable under the policy or 
        plan duplicate benefits under this title, and
            ``(II) the Secretary approves all the statements submitted 
        as meeting the requirements of subclause (I),
each such statement shall be (for purposes of subparagraph (C)) the 
statement specified under this subparagraph for the type of policy 
involved. The Secretary shall review and approve (or disapprove) all 
the statements submitted under subclause (I) within 30 days after the 
date of their submittal. Upon approval of such statements, the 
Secretary shall publish such statements.
    ``(ii) If the Secretary does not approve the statements under 
clause (i) or the statements are not submitted within the 90-day period 
specified in such clause, the Secretary shall promulgate (after 
consultation with consumer and insurance industry representatives and 
not later than 90 days after the date of disapproval or the end of such 
90-day period (as the case may be)) a statement for each of the types 
of health insurance policies (other than medicare supplemental policies 
and including, as separate types of policies, policies paying directly 
to the beneficiary fixed, cash benefits) which are sold to persons 
entitled to health benefits under this title, of the extent to which 
benefits payable under the policy or plan duplicate benefits under this 
title, and each such statement shall be (for purposes of subparagraph 
(C)) the statement specified under this subparagraph for the type of 
policy involved.''.
            (C) The requirement of a disclosure under section 
        1882(d)(3)(C)(ii) of the Social Security Act shall not apply to 
        an application made for a policy or plan before 60 days after 
        the date of the Secretary of Health and Human Services 
        publishes or promulgates all the statements under section 
        1882(d)(3)(D) of such Act.
            (4) Subparagraphs (A) and (B) of section 1882(q)(5) are 
        amended by striking ``of the Social Security Act''.
    (e) Loss Ratios and Refunds of Premiums.--
            (1) Section 1882(r) (42 U.S.C. 1395ss(r)) is amended--
                    (A) in paragraph (1), by striking ``or sold'' and 
                inserting ``or renewed (or otherwise provide coverage 
                after the date described in subsection (p)(1)(C))'';
                    (B) in paragraph (1)(A), by inserting ``for periods 
                after the effective date of these provisions'' after 
                ``the policy can be expected'';
                    (C) in paragraph (1)(A), by striking 
                ``Commissioners,'' and inserting ``Commissioners)'';
                    (D) in paragraph (1)(B), by inserting before the 
                period at the end the following: ``, treating policies 
                of the same type as a single policy for each standard 
                package'';
                    (E) by adding at the end of paragraph (1) the 
                following: ``For the purpose of calculating the refund 
                or credit required under paragraph (1)(B) for a policy 
                issued before the date specified in subsection 
                (p)(1)(C), the refund or credit calculation shall be 
                based on the aggregate benefits provided and premiums 
                collected under all such policies issued by an insurer 
                in a State (separated as to individual and group 
                policies) and shall be based only on aggregate benefits 
                provided and premiums collected under such policies 
                after the date specified in section 6(m)(4) of the 
                Essential Medicare Amendments of 1993.'';
                    (F) in the first sentence of paragraph (2)(A), by 
                striking ``by policy number'' and inserting ``by 
                standard package'';
                    (G) by striking the second sentence of paragraph 
                (2)(A) and inserting the following: ``Paragraph (1)(B) 
                shall not apply to a policy until 12 months following 
                issue.'';
                    (H) in the last sentence of paragraph (2)(A), by 
                striking ``in order'' and all that follows through 
                ``are effective'';
                    (I) by adding at the end of paragraph (2)(A), the 
                following new sentence: ``In the case of a policy 
                issued before the date specified in subsection 
                (p)(1)(C), paragraph (1)(B) shall not apply until 1 
                year after the date specified in section 6(m)(4) of the 
                Essential Medicare Amendments of 1993.'';
                    (J) in paragraph (2), by striking ``policy year'' 
                each place it appears and inserting ``calendar year'';
                    (K) in paragraph (4), by striking ``February'', 
                ``disllowance'', ``loss-ratios'' each place it appears, 
                and ``loss-ratio'' and inserting ``October'', 
                ``disallowance'', ``loss ratios'', and ``loss ratio'', 
                respectively;
                    (L) in paragraph (6)(A), by striking ``issues a 
                policy in violation of the loss ratio requirements of 
                this subsection'' and ``such violation'' and inserting 
                ``fails to provide refunds or credits as required in 
                paragraph (1)(B)'' and ``policy issued for which such 
                failure occurred'', respectively; and
                    (M) in paragraph (6)(B), by striking ``to 
                policyholders'' and inserting ``to the policyholder or, 
                in the case of a group policy, to the certificate 
                holder''.
            (2) Section 1882(b)(1) (42 U.S.C. 1395ss(b)(1)) is amended, 
        in the matter after subparagraph (H), by striking ``subsection 
        (F)'' and inserting ``subparagraph (F)''.
            (3) Section 4355(d) of OBRA-1990 is amended by striking 
        ``sold or issued'' and all that follows and inserting ``issued 
        or renewed (or otherwise providing coverage after the date 
        described in section 1882(p)(1)(C) of the Social Security Act) 
        on or after the date specified in section 1882(p)(1)(C) of such 
        Act.''.
    (f) Treatment of HMO's.--
            (1) Section 1882(g)(1) (42 U.S.C. 1395ss(g)(1)) is amended 
        by striking ``a health maintenance organization or other direct 
        service organization'' and all that follows through ``1833'' 
        and inserting ``an eligible organization (as defined in section 
        1876(b)) if the policy or plan provides benefits pursuant to a 
        contract under section 1876 or an approved demonstration 
        project described in section 603(c) of the Social Security 
        Amendments of 1983, section 2355 of the Deficit Reduction Act 
        of 1984, or section 9412(b) of the Omnibus Budget 
        Reconciliation Act of 1986 or, during the period beginning on 
        the date specified in subsection (p)(1)(C) and ending on 
        December 31, 1994, a policy or plan of an organization if the 
        policy or plan provides benefits pursuant to an agreement under 
        section 1833(a)(1)(A)''.
            (2) Section 4356(b) of OBRA-1990 is amended by striking 
        ``on the date of the enactment of this Act'' and inserting ``on 
        the date specified in section 1882(p)(1)(C) of the Social 
        Security Act''.
    (g) Pre-existing Condition Limitations.--Section 1882(s) (42 U.S.C. 
1395ss(s)) is amended--
            (1) in paragraph (2)(A), by striking ``for which an 
        application is submitted'' and inserting ``in the case of an 
        individual for whom an application is submitted prior to or'',
            (2) in paragraph (2)(A), by striking ``in which the 
        individual (who is 65 years of age or older) first is enrolled 
        for benefits under part B'' and inserting ``as of the first day 
        on which the individual is 65 years of age or older and is 
        enrolled for benefits under part B'', and
            (3) in paragraph (2)(B), by striking ``before it'' and 
        inserting ``before the policy''.
    (h) Medicare Select Policies.--
            (1) Section 1882(t) (42 U.S.C. 1395ss(t)) is amended--
                    (A) in paragraph (1), by inserting ``medicare 
                supplemental'' after ``If a'',
                    (B) in paragraph (1), by striking ``NAIC Model 
                Standards'' and inserting ``1991 NAIC Model Regulation 
                or 1991 Federal Regulation'',
                    (C) in paragraph (1)(A), by inserting ``or 
                agreements'' after ``contracts'',
                    (D) in subparagraphs (E)(i) and (F) of paragraph 
                (1), by striking ``NAIC standards'' and inserting 
                ``standards in the 1991 NAIC Model Regulation or 1991 
                Federal Regulation'', and
                    (E) in paragraph (2), by inserting ``the issuer'' 
                before ``is subject to a civil money penalty''.
            (2) Section 1154(a)(4)(B) (42 U.S.C. 1320c-3(a)(4)(B)) is 
        amended--
                    (A) by inserting ``that is'' after ``(or'', and
                    (B) by striking ``1882(t)'' and inserting 
                ``1882(t)(3)''.
    (i) Health Insurance Counseling.--Section 4360 of OBRA-1990 is 
amended--
            (1) in subsection (b)(2)(A)(ii), by striking ``Act'' and 
        inserting ``Act)'';
            (2) in subsection (b)(2)(D), by striking ``services'' and 
        inserting ``counseling'';
            (3) in subsection (b)(2)(I), by striking ``assistance'' and 
        inserting ``referrals'';
            (4) in subsection (c)(1), by striking ``and that such 
        activities will continue to be maintained at such level'';
            (5) in subsection (d)(3), by striking ``to the rural 
        areas'' and inserting ``eligible individuals residing in rural 
        areas'';
            (6) in subsection (e)--
                    (A) by striking ``subsection (c) or (d)'' and 
                inserting ``this section'',
                    (B) by striking ``and annually thereafter, issue an 
                annual report'' and inserting ``and annually thereafter 
                during the period of the grant, issue a report'', and
                    (C) in paragraph (1), by striking ``State-wide'';
            (7) in subsection (f), by striking paragraph (2) and by 
        redesignating paragraphs (3) through (5) as paragraphs (2) 
        through (4), respectively; and
            (8) by redesignating the second subsection (f) (relating to 
        authorization of appropriations for grants) as subsection (g).
    (j) Telephone Information System.--
            (1) Section 1804 (42 U.S.C. 1395b-2) is amended--
                    (A) by adding at the end of the heading the 
                following: ``; medicare and medigap information'',
                    (B) by inserting ``(a)'' after ``1804.'', and
                    (C) by adding at the end the following new 
                subsection:
    ``(b) The Secretary shall provide information via a toll-free 
telephone number on the programs under this title.''.
            (2) Section 1882(f) (42 U.S.C. 1395ss(f)) is amended by 
        adding at the end the following new paragraph:
    ``(3) The Secretary shall provide information via a toll-free 
telephone number on medicare supplemental policies (including the 
relationship of State programs under title XIX to such policies).''.
            (3) Section 1889 is repealed.
    (k) Mailing of Policies.--Section 1882(d)(4) (42 U.S.C. 
1395ss(d)(4)) is amended--
            (1) in subparagraph (D), by striking ``, if such policy'' 
        and all that follows up to the period at the end, and
            (2) by adding at the end the following new subparagraph:
    ``(E) Subparagraph (A) shall not apply in the case of an issuer who 
mails or causes to be mailed a policy, certificate, or other matter 
solely to comply with the requirements of subsection (q).''.
    (l) Effective Date.--The amendments made by this section shall be 
effective as if included in the enactment of OBRA-1990; except that--
            (1) the amendments made by subsection (d)(1) shall take 
        effect on the date of the enactment of this Act, but no penalty 
        shall be imposed under section 1882(d)(3)(A) of the Social 
        Security Act (for an action occurring after the effective date 
        of the amendments made by section 4354 of OBRA-1990 and before 
        the date of the enactment of this Act) with respect to the sale 
        or issuance of a policy which is not unlawful under section 
        1882(d)(3)(A)(i)(II) of the Social Security Act (as amended by 
        this section);
            (2) the amendments made by subsection (d)(2)(A) and by 
        subparagraphs (A), (B), and (E) of subsection (e)(1) shall be 
        effective on the date specified in subsection (m)(4); and
            (3) the amendment made by subsection (g)(2) shall take 
        effect on January 1, 1994, and shall apply to individuals who 
        attain 65 years of age or older on or after the effective date 
        of section 1882(s)(2) of the Social Security Act (and, in the 
        case of individuals who attained 65 years of age after such 
        effective date and before January 1, 1995, and who were not 
        covered under such section before January 1, 1995, the 6-month 
        period specified in that section shall begin January 1, 1995).
    (m) Transition Provisions.--
            (1) In general.--If the Secretary of Health and Human 
        Services identifies a State as requiring a change to its 
        statutes or regulations to conform its regulatory program to 
        the changes made by this section, the State regulatory program 
        shall not be considered to be out of compliance with the 
        requirements of section 1882 of the Social Security Act due 
        solely to failure to make such change until the date specified 
        in paragraph (4).
            (2) NAIC standards.--If, within 6 months after the date of 
        the enactment of this Act, the National Association of 
        Insurance Commissioners (in this subsection referred to as the 
        ``NAIC'') modifies its 1991 NAIC Model Regulation (adopted in 
        July 1991) to conform to the amendments made by this section 
        and to delete from section 15C the exception which begins with 
        ``unless'', such modifications shall be considered to be part 
        of that Regulation for the purposes of section 1882 of the 
        Social Security Act.
            (3) Secretary standards.--If the NAIC does not make the 
        modifications described in paragraph (2) within the period 
        specified in such paragraph, the Secretary of Health and Human 
        Services shall make the modifications described in such 
        paragraph and such modifications shall be considered to be part 
        of that Regulation for the purposes of section 1882 of the 
        Social Security Act.
            (4) Date specified.--
                    (A) In general.--Subject to subparagraph (B), the 
                date specified in this paragraph for a State is the 
                earlier of--
                            (i) the date the State changes its statutes 
                        or regulations to conform its regulatory 
                        program to the changes made by this section, or
                            (ii) 1 year after the date the NAIC or the 
                        Secretary first makes the modifications under 
                        paragraph (2) or (3), respectively.
                    (B) Additional legislative action required.--In the 
                case of a State which the Secretary identifies as--
                            (i) requiring State legislation (other than 
                        legislation appropriating funds) to conform its 
                        regulatory program to the changes made in this 
                        section, but
                            (ii) having a legislature which is not 
                        scheduled to meet in 1995 in a legislative 
                        session in which such legislation may be 
                        considered,
                the date specified in this paragraph is the first day 
                of the first calendar quarter beginning after the close 
                of the first legislative session of the State 
                legislature that begins on or after January 1, 1995. 
                For purposes of the previous sentence, in the case of a 
                State that has a 2-year legislative session, each year 
                of such session shall be deemed to be a separate 
                regular session of the State legislature.

SEC. 7. EXPANSION AND REVISION OF MEDICARE SELECT POLICIES.

    (a) Permitting Medicare Select Policies in All States.--
            (1) In general.--Subsection (c) of section 4358 of OBRA-
        1990 is hereby repealed.
            (2) Conforming amendment.--Section 4358 of OBRA-1990 is 
        amended by redesignating subsection (d) as subsection (c).
    (b) Requirements of Medicare Select Policies.--Section 1882(t)(1) 
of the Social Security Act (42 U.S.C. 1395ss(t)(1)) is amended to read 
as follows:
    ``(1)(A) If a medicare supplemental policy meets the 1991 NAIC 
Model Regulation or 1991 Federal Regulation and otherwise complies with 
the requirements of this section except that--
            ``(i) the benefits under such policy are restricted to 
        items and services furnished by certain entities (or reduced 
        benefits are provided when items or services are furnished by 
        other entities), and
            ``(ii) in the case of a policy described in subparagraph 
        (C)(i)--
                    ``(I) the benefits under such policy are not one of 
                the groups or packages of benefits described in 
                subsection (p)(2)(A),
                    ``(II) except for nominal copayments imposed for 
                services covered under part B of this title, such 
                benefits include at least the core group of basic 
                benefits described in subsection (p)(2)(B), and
                    ``(III) an enrollee's liability under such policy 
                for physician's services covered under part B of this 
                title is limited to the nominal copayments described in 
                subclause (II),
the policy shall nevertheless be treated as meeting those standards if 
the policy meets the requirements of subparagraph (B).
    ``(B) A policy meets the requirements of this subparagraph if--
            ``(i) full benefits are provided for items and services 
        furnished through a network of entities which have entered into 
        contracts or agreements with the issuer of the policy,
            ``(ii) full benefits are provided for items and services 
        furnished by other entities if the services are medically 
        necessary and immediately required because of an unforeseen 
        illness, injury, or condition and it is not reasonable given 
        the circumstances to obtain the services through the network,
            ``(iii) the network offers sufficient access,
            ``(iv) the issuer of the policy has arrangements for an 
        ongoing quality assurance program for items and services 
        furnished through the network,
            ``(v)(I) the issuer of the policy provides to each enrollee 
        at the time of enrollment an explanation of--
                    ``(aa) the restrictions on payment under the policy 
                for services furnished other than by or through the 
                network,
                    ``(bb) out of area coverage under the policy,
                    ``(cc) the policy's coverage of emergency services 
                and urgently needed care, and
                    ``(dd) the availability of a policy through the 
                entity that meets the 1991 Model NAIC Regulation or 
                1991 Federal Regulation without regard to this 
                subsection and the premium charged for such policy, and
            ``(II) each enrollee prior to enrollment acknowledges 
        receipt of the explanation provided under subclause (I), and
            ``(vi) the issuer of the policy makes available to 
        individuals, in addition to the policy described in this 
        subsection, any policy (otherwise offered by the issuer to 
        individuals in the State) that meets the 1991 Model NAIC 
        Regulation or 1991 Federal Regulation and other requirements of 
        this section without regard to this subsection.
    ``(C)(i) A policy described in this subparagraph--
            ``(I) is offered by an eligible organization (as defined in 
        section 1876(b)),
            ``(II) is not a policy or plan providing benefits pursuant 
        to a contract under section 1876 or an approved demonstration 
        project described in section 603(c) of the Social Security 
        Amendments of 1983, section 2355 of the Deficit Reduction Act 
        of 1984, or section 9412(b) of the Omnibus Budget 
        Reconciliation Act of 1986, and
            ``(III) provides benefits which, when combined with 
        benefits which are available under this title, are 
        substantially similar to benefits under policies offered to 
        individuals who are not entitled to benefits under this title.
    ``(ii) In making a determination under subclause (III) of clause 
(i) as to whether certain benefits are substantially similar, there 
shall not be taken into account, except in the case of preventive 
services, benefits provided under policies offered to individuals who 
are not entitled to benefits under this title which are in addition to 
the benefits covered by this title and which are benefits an entity 
must provide in order to meet the definition of an eligible 
organization under section 1876(b)(1).''.
    (c) Renewability of Medicare Select Policies.--Section 1882(q)(1) 
of the Social Security Act (42 U.S.C. 1395ss(q)(1)) is amended--
            (1) by striking ``(1) Each'' and inserting ``(1)(A) Except 
        as provided in subparagraph (B), each'';
            (2) by redesignating subparagraphs (A) and (B) as clauses 
        (i) and (ii), respectively; and
            (3) by adding at the end the following new subparagraph:
            ``(B)(i) Except as provided in clause (ii), in the case of 
        a policy that meets the requirements of subsection (t), an 
        issuer may cancel or nonrenew such policy with respect to an 
        individual who leaves the service area of such policy.
            ``(ii) If an individual described in clause (i) moves to a 
        geographic area where an issuer described in clause (i), or 
        where an affiliate of such issuer, is issuing medicare 
        supplemental policies, such individual must be permitted to 
        enroll in any medicare supplemental policy offered by such 
        issuer or affiliate that provides benefits comparable to or 
        less than the benefits provided in the policy being canceled or 
        nonrenewed. An individual whose coverage is canceled or 
        nonrenewed under this subparagraph shall, as part of the notice 
        of termination or nonrenewal, be notified of the right to 
        enroll in other medicare supplemental policies offered by the 
        issuer or its affiliates.
            ``(iii) For purposes of this subparagraph, the term 
        `affiliate' shall have the meaning given such term by the 1991 
        NAIC Model Regulation.''.
    (d) Civil Money Penalty.--Section 1882(t)(2) of the Social Security 
Act (42 U.S.C. 1395ss(t)(2)) is amended--
            (1) by striking ``(2)'' and inserting ``(2)(A)'';
            (2) by redesignating subparagraphs (A), (B), (C), and (D) 
        as clauses (i), (ii), (iii), and (iv), respectively;
            (3) in clause (iv), as so redesignated--
                    (A) by striking ``paragraph (1)(E)(i)'' and 
                inserting ``paragraph (1)(B)(v)(I), and
                    (B) by striking ``paragraph (1)(E)(ii)'' and 
                inserting ``paragraph (1)(B)(v)(II)'';
            (4) by striking ``the previous sentence'' and inserting 
        ``this subparagraph''; and
            (5) by adding at the end the following new subparagraph:
    ``(B) If the Secretary determines that an issuer of a policy 
approved under paragraph (1) has made a misrepresentation to the 
Secretary or has provided the Secretary with false information 
regarding such policy, the issuer is subject to a civil money penalty 
in an amount not to exceed $100,000 for each such determination. The 
provisions of section 1128A (other than the first sentence of 
subsection (a) and other than subsection (b)) shall apply to a civil 
money penalty under this subparagraph in the same manner as such 
provisions apply to a penalty or proceeding under section 1128A(a).''.
    (e) Effective Dates.--
            (1) NAIC standards.--If, within 6 months after the date of 
        the enactment of this Act, the National Association of 
        Insurance Commissioners (hereafter in this subsection referred 
        to as the ``NAIC'') makes changes in the 1991 NAIC Model 
        Regulation (as defined in section 1882(p)(1)(A) of the Social 
        Security Act) to incorporate the additional requirements 
        imposed by the amendments made by this section, section 
        1882(g)(2)(A) of such Act shall be applied in each State, 
        effective for policies issued to policyholders on and after the 
        date specified in paragraph (3), as if the reference to the 
        Model Regulation adopted on June 6, 1979, were a reference to 
        the 1991 NAIC Model Regulation (as so defined) as changed under 
        this paragraph (such changed Regulation referred to in this 
        subsection as the ``1994 NAIC Model Regulation'').
            (2) Secretary standards.--If the NAIC does not make changes 
        in the 1991 NAIC Model Regulation (as so defined) within the 6-
        month period specified in subsection (e), the Secretary of 
        Health and Human Services (hereafter in this subsection 
        referred to as the ``Secretary'') shall promulgate a regulation 
        and section 1882(g)(2)(A) of the Social Security Act shall be 
        applied in each State, effective for policies issued to 
        policyholders on and after the date specified in paragraph (3), 
        as if the reference to the Model Regulation adopted in June 6, 
        1979, were a reference to the 1991 NAIC Model Regulation (as so 
        defined) as changed by the Secretary under this paragraph (such 
        changed Regulation referred to in this subsection as the ``1994 
        Federal Regulation'').
            (3) Date specified.--
                    (A) In general.--Subject to subparagraph (B), the 
                date specified in this paragraph for a State is the 
                earlier of--
                            (i) the date the State adopts the 1994 NAIC 
                        Model Regulation or the 1994 Federal 
                        Regulation; or
                            (ii) 1 year after the date the NAIC or the 
                        Secretary first adopts such regulations.
                    (B) Additional legislative action required.--In the 
                case of a State which the Secretary identifies, in 
                consultation with the NAIC, as--
                            (i) requiring State legislation (other than 
                        legislation appropriating funds) in order for 
                        medicare supplemental policies to meet the 1994 
                        NAIC Model Regulation or the 1994 Federal 
                        Regulation, but
                            (ii) having a legislature which is not 
                        scheduled to meet in 1995 in a legislative 
                        session in which such legislation may be 
                        considered,
                the date specified in this paragraph is the first day 
                of the first calendar quarter beginning after the close 
                of the first legislative session of the State 
                legislature that begins on or after January 1, 1995. 
                For purposes of the previous sentence, in the case of a 
                State that has a 2-year legislative session, each year 
                of such session shall be deemed to be a separate 
                regular session of the State legislature.

SEC. 8. PSYCHOLOGY SERVICES IN HOSPITALS.

    Section 1861(e)(4) (42 U.S.C. 1395x(e)(4)) is amended by striking 
``physician;'' and inserting ``physician, except that a patient 
receiving qualified psychologist services (as defined in subsection 
(ii)) may be under the care of a clinical psychologist with respect to 
such services to the extent permitted under State law;''.

SEC. 9. PAYMENT FOR ANESTHESIA SERVICES FURNISHED DIRECTLY OR 
              CONCURRENTLY TO PATIENTS IN PROVIDERS.

    (a) Payment for Anesthesia Services Furnished Directly or 
Concurrently to Patients in Providers.--After consultation with 
representatives from professional associations of certified registered 
nurse anesthetists and anesthesiologists, the Secretary of Health and 
Human Services shall determine conditions for payment for anesthesia 
services furnished directly or concurrently to patients in a provider 
in accordance with the requirements of subsection (b), without regard 
to section 405.552(a) of title 42, Code of Federal Regulations (and 
without regard to any other regulation, ruling, or decision reaching 
the same result as, or a result similar to, the result set forth in 
such section), and with full regard to section 405.550 of such title.
    (b) Requirements.--The requirements of this subsection are that the 
conditions for such payment--
            (1) shall not restrict certified registered nurse 
        anesthetists, who work with anesthesiologists, from performing 
        all the components of the anesthesia service that such 
        anesthetists are legally authorized to perform;
            (2) shall not encourage the use of 2 anesthesia providers 
        in cases when it is not medically justified; and
            (3) shall prevent fraud and abuse in payment for anesthesia 
        services.

SEC. 10. IMPROVED REIMBURSEMENT FOR CLINICAL SOCIAL WORKER SERVICES 
              UNDER MEDICARE.

    (a) In General.--Section 1833(a)(1)(F)(ii) (42 U.S.C. 
1395l(a)(1)(F)(ii)) is amended to read as follows: ``(ii) the amount 
determined by a fee schedule established by the Secretary.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
become effective with respect to payments made for clinical social 
worker services furnished on or after January 1, 1994.

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