[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3682 Introduced in House (IH)]







106th CONGRESS
  2d Session
                                H. R. 3682

To amend title XVIII of the Social Security Act to prohibit the use of 
Medicare risk-based managed care payments for administrative costs not 
          permitted under the Federal Acquisition Regulation.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           February 16, 2000

Mr. Gejdenson introduced the following bill; which was referred to the 
   Committee on Ways and Means, and in addition to the Committee on 
Commerce, 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 prohibit the use of 
Medicare risk-based managed care payments for administrative costs not 
          permitted under the Federal Acquisition Regulation.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Medicare HMO Administrative Payment 
Integrity Act of 2000''.

SEC. 2. FINDINGS.

    Congress finds the following:
            (1) There are 6.5 million Americans enrolled in medicare 
        risk-based managed care organizations, primarily through the 
        Medicare+Choice program.
            (2) Congress established the Medicare+Choice program in 
        part to reduce dramatic increases in Federal expenditures for 
        medicare and to give seniors additional choices for health care 
        services.
            (3) Over the past two years, Medicare+Choice organizations 
        have terminated coverage for 734,000 medicare beneficiaries 
        nationwide.
            (4) Medicare+Choice organizations maintain that 
        reimbursement rates in many regions of the country are too low 
        to meet expenses.
            (5) The Health Care Financing Administration has repeatedly 
        concluded that reimbursement rates are adequate to cover 
        reasonable expenses of Medicare+Choice organizations.
            (6) The Inspector General of the Department of Health and 
        Human Services has also estimated that risk-based managed care 
        organizations received approximately $1,000,000,000 in excess 
        administrative payments under the medicare program annually 
        between 1994 and 1998.
            (7) Excessive administrative payments received by risk-
        based managed care organizations further undermine the 
        contention that such organizations have not received adequate 
        compensation from the American taxpayer.
            (8) The Inspector General of the Department of Health and 
        Human Services has also concluded that some risk-based managed 
        care organizations have used administrative payments received 
        through medicare for purposes other than paying expenses 
        directly related to the provision of medical care.
            (9) The Inspector General found that taxpayer dollars were 
        used to pay for trips, tickets to sporting events, parties, 
        gifts, and other expenses unrelated to the direct provision of 
        medical care.
            (10) The use of taxpayer dollars for such non-medical 
        purposes is unacceptable and should be prohibited by law.

SEC. 3. PURPOSE.

    It is the purpose of this Act to ensure that medicare payments to 
risk-based managed care organizations for administrative costs are made 
in a manner consistent with Federal Acquisition Regulation.

SEC. 4. PROHIBITION ON USE OF MEDICARE RISK-BASED MANAGED CARE PAYMENTS 
              FOR ADMINISTRATIVE COSTS NOT PERMITTED UNDER THE FEDERAL 
              ACQUISITION REGULATION.

    (a) Prohibition of Use of Medicare Payments for Costs Not 
Recognized as Reasonable Under the Federal Acquisition Regulation.--
Section 1857(e) of the Social Security Act (42 U.S.C. 1395w-27(e)) is 
amended by adding at the end the following new paragraph:
            ``(3) Prohibition of use of medicare payments for costs not 
        recognized as reasonable under the federal acquisition 
        regulation.--The contract shall provide that none of the funds 
        paid to the organization under this title may be used for 
        expenditures that would not be recognized as reasonable under 
        the Federal Acquisition Regulation.''
    (b) Disallowance of Unreasonable Administrative Costs in 
Determining the Adjusted Community Rate in Computing Additional 
Benefits for Medicare Beneficiaries.--Section 1854(f) of such Act (42 
U.S.C. 1395w-24(f)) is amended--
            (1) in paragraph (3), by striking ``paragraph (4)'' and 
        inserting ``paragraphs (4) and (5)''; and
            (2) by adding at the end the following new paragraph:
            ``(5) Disallowance of unreasonable administrative 
        expenditures.--In determining the adjusted community rate, 
        administrative expenditures shall not be taken into account if 
        they would not be recognized as reasonable under the Federal 
        Acquisition Regulation.''.
    (c) Effective Date.--The amendments made by this section apply to 
contracts entered into or renewed for plans years beginning on or after 
January 1, 2001.
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