[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 145 Introduced in House (IH)]
107th CONGRESS
1st Session
H. R. 145
To amend titles XVIII and XIX of the Social Security Act to assure the
financial solvency of Medicare+Choice organizations and Medicaid
managed care organizations.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
January 3, 2001
Mr. Pascrell (for himself, Mr. Frost, Mrs. McCarthy of New York, and
Mr. Graham) introduced the following bill; which was referred to the
Committee on Energy and Commerce, and in addition to the Committee on
Ways and Means, 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 titles XVIII and XIX of the Social Security Act to assure the
financial solvency of Medicare+Choice organizations and Medicaid
managed care organizations.
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 ``HMO Solvency Act of 2001''.
SEC. 2. ASSURING THE SOLVENCY OF MEDICAID MANAGED CARE ORGANIZATIONS.
(a) Medicaid Program.--Section 1932(b) of the Social Security Act
(42 U.S.C. 1396u-2(b)) is amended by adding at the end the following
new paragraph:
``(9) Solvency-related requirements.--
``(A) Periodic reporting.--Each medicaid managed
care organization shall submit to the State not less
often than each quarter (or such more frequent basis as
a State may specify) such financial reports as may be
necessary to monitor the financial stability of the
organization and provide an early warning of any risk
of insolvency. The State shall review the reports so
submitted and shall determine the appropriate course of
action based upon such review.
``(B) Audits.--
``(i) Preapproval independent audit of
operations.--Before a State enters into a
contract under section 1903(m) (on and after
the effective date of this subparagraph) with a
medicaid managed care organization, the
organization shall provide for such on-site
audit as the Secretary shall require to
evaluate its internal structure upon which the
organization's financial projections are based.
Such audit shall be undertaken by an
independent entity (which may be an appropriate
State agency) with such qualifications as the
Secretary shall specify. The audit shall
include at least a review of the organization's
claims processing capability and utilization
management and accounting functions and shall
focus on the key business risks the
organization is facing, including regulatory
risks, competition, provider network, pricing,
claims processing environment, reserves, and
information system integrity.
``(ii) Periodic audits under a state audit
plan.--Each medicaid managed care organization
shall provide for such periodic audits as the
State shall require under an audit plan
designed by the State and approved by the
Secretary. The frequency of such audits shall
take into account changes in subcontracting by,
and ownership of, the organization.
``(C) Minimum net worth in cash or cash
equivalents.--Each medicaid managed care organization
shall maintain, on an ongoing basis, such minimum net
worth (in cash or cash equivalents) in such amount,
form, and manner as the State shall specify, consistent
with guidelines established by the Secretary. The State
may permit the minimum net worth requirement to be met
through a written guarantee by a guarantor that meets
such requirements as the State shall specify consistent
with such guidelines.
``(D) Approval of certain subcontractors.--In the
case of a medicaid managed care organization that
proposes to enter into (on and after the effective date
of this subparagraph) a subcontract with another entity
to provide health care services to enrollees under this
title, to perform health care provider reimbursement
under this title, or to carry out other functions of
the organization under this title that have a direct
impact on enrollees--
``(i) the organization shall provide notice
(and a copy of the contract) to the State at
least 90 days before the date it is entered
into; and
``(ii) before the subcontract takes effect,
the organization shall provide for an
independent audit of the proposed subcontractor
to establish that the subcontractor will be
able to provide the services under the
subcontract and to guarantee its performance
financially in a manner satisfactory to the
State.
``(E) Reporting of significant changes in ownership
or scope of operations.--Each medicaid managed care
organization shall provide for such timely reports to
the State of such significant changes in the ownership
of the organization, or of the scope of operations of
the organization, including by takeover or merger, as
the State shall require in order to appropriately
assure the continuing solvency of the organization
after the date such changes take effect.
``(F) Federal solvency standards.--Each medicaid
managed care organization shall comply with, and each
State shall apply, such additional solvency standards
as the Secretary may establish to carry out this
paragraph.
``(G) Application of certain requirements to
controlling organizations and entities.--In the case of
a medicaid managed care organization that is
substantially owned or controlled by another
organization or entity, subparagraphs (A), (C), (E),
and (as appropriate) (F) shall apply to such other
organization or entity as well as to the medicaid
managed care organization.''.
(b) Effective Date.--
(1) In general.--Subject to paragraph (2), the amendment
made by subsection (a) applies as of such date (not later than
6 months after the date of the enactment of this Act) as the
Secretary of Health and Human Services shall specify.
(2) Transition.--The Secretary--
(A) may delay the effective date of such amendment
in the case of a State that requires the enactment of
legislation (other than legislation appropriating
funds) in order for the State medicaid plan under title
XIX of the Social Security Act to meet the additional
requirements imposed by such amendment; and
(B) may permit medicaid managed care organizations
that are operating as of the effective date of such
amendment such additional time as might be appropriate
to meet the additional requirement of section
1932(b)(9)(C) of the Social Security Act (relating to
minimum net worth), as added by such amendment.
SEC. 3. ASSURING THE SOLVENCY OF MEDICARE+CHOICE ORGANIZATIONS.
(a) Application to Medicare+Choice Organizations.--Section 1855 of
the Social Security Act (42 U.S.C. 1395w-25) is amended by adding at
the end the following new subsection:
``(e) Solvency-Related Requirements.--
``(1) In general.--Except as provided in this subsection,
the requirements of section 1932(b)(9) shall apply to
Medicare+Choice organizations in the same manner as they apply
to medicaid managed care organizations except that, for
purposes of this subsection, any reference in such section to a
State, title XIX, or a contract under section 1903(m) is deemed
a reference to the Secretary, this title, and a contract under
section 1857, respectively.
``(2) Recognition of state enforcement.--Insofar as the
Secretary finds that a State under section 1932(b)(9) is
applying to a Medicare+Choice organization the requirements of
such section and the organization meets such requirements, the
Secretary shall deem the organization as meeting the comparable
requirements that would otherwise be imposed under paragraph
(1).
``(3) Relation to other requirements.--The Secretary shall
waive the application of a requirement of paragraph (1) to an
organization insofar as the Secretary finds that the
application of the requirement would be duplicative of other,
similar requirements of this part and would not provide greater
protection to Medicare+Choice enrollees.''.
(b) Application to Other Organizations Providing Medicare Benefits
on a Capitated Basis.--The Secretary of Health and Human Services shall
provide for the application of the requirement of section 1855(e) of
the Social Security Act (as added by subsection (a)) to organizations
(other than Medicare+Choice organizations) that receive payment on a
capitated basis for provision of services under title XVIII of the
Social Security Act.
(c) Effective Date.--The Secretary of Health and Human Services
shall implement the amendment made by subsection (a) and shall
implement subsection (b) in a manner similar to the manner in which the
amendment made by section 2(a) becomes effective under paragraphs (1)
and (2)(B) of section 2(b).
SEC. 4. REPORT ON PROTECTION OF HEALTH CARE PROVIDERS IN CASE OF PLAN
INSOLVENCY.
The Secretary of Health and Human Services shall report to
Congress, not later than 1 year after the date of the enactment of this
Act, on--
(1) the steps States are taking to guaranty that, in the
event of insolvency of a medicaid managed care organization
that offers coverage under the medicaid program or a
Medicare+Choice organization that offers a Medicare+Choice
plan, health care providers will be protected from financial
losses; and
(2) what additional steps the Secretary deems appropriate
for States or the Federal Government to take to protect health
care providers in the event of such an insolvency.
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