[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 577 Introduced in Senate (IS)]
107th CONGRESS
1st Session
S. 577
To limit the administrative expenses and profits of managed care
entities to not more than 15 percent of premium revenues.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
March 20, 2001
Mrs. Feinstein introduced the following bill; which was read twice and
referred to the Committee on Health, Education, Labor, and Pensions
_______________________________________________________________________
A BILL
To limit the administrative expenses and profits of managed care
entities to not more than 15 percent of premium revenues.
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 ``Managed Care Integrity Act of
2001''.
SEC. 2. LIMITATION OF ADMINISTRATIVE EXPENSES AND PROFITS OF MANAGED
CARE ENTITIES.
(a) Application to Managed Care Entities.--
(1) In general.--Notwithstanding any other provision of
law, each health benefits plan offered by a managed care entity
shall ensure that, with respect to a contract year, the
actuarial value of the aggregate benefits provided under the
plan during such year to enrollees is not less than 85 percent
of the aggregate amount of payments received from, or on behalf
of, such enrollees for such year.
(2) Waiver of requirements.--
(A) In general.--The Secretary of Health and Human
Services may waive the requirement of paragraph (1) for
a 12-month period with respect to a managed care entity
if the Secretary determines, based on the
recommendations of the agency responsible for licensing
such entity (or the health care plans of such entity)
in a State, that--
(i) the solvency of the entity is in
jeopardy; or
(ii) compliance with the requirement would
cause the entity to fail to meet the solvency
requirements required for licensure in the
State.
(B) Renewals.--The Secretary of Health and Human
Services may renew a waiver under subparagraph (A),
except that the no waiver may be granted for a period
in excess of 24 months in any 36-month period.
(3) Administrative costs.--
(A) Limitation.--For purposes of this subsection,
the costs associated with the management and operation
of a managed care plan (including the costs of
compensation and personnel fringe benefits, interest
expenses, costs of occupancy of a facility, and
marketing costs) shall not be included in determining
the actuarial value of the aggregate benefits provided
under the plan.
(B) Regulations.--The Secretary of Health and Human
Services shall promulgate regulations to define ``costs
associated with the management and operation of a
manages care plan'' for purposes of subparagraph (A).
(4) Definition.--For purposes of this subsection, the term
``managed care entity'' shall include--
(A) managed care entities providing health care
coverage for individuals under a group health plan or
individual health insurance coverage;
(B) medicaid managed care organizations as defined
in section 1903(m)(1)(A) of the Social Security Act (42
U.S.C. 1396b(m)(1)(A));
(C) managed care entities that provide health care
coverage for individuals under the Federal Employees
Health Benefits Program under chapter 89 of title 5,
United States Code; and
(D) managed care entities that provide health care
coverage for members of the armed forces and their
families under chapter 55 of title 10, United States
Code.
(5) Effective date.--Paragraph (1) shall apply to contract
years beginning on or after January 1, 2002.
(6) Enforcement.--The Secretary of Health and Human
Services shall develop formal investigation and compliance
procedures with respect to complaints received by the Secretary
concerning the failure of a health benefits plan to comply with
the provisions of this subsection. Under such procedures--
(A) the Secretary shall provide the plan with the
reasonable opportunity to develop and implement a
corrective action plan to correct the deficiencies that
were the basis of the complaint received by the
Secretary; and
(B) the Secretary shall provide the plan with
reasonable notice and opportunity for a hearing
(including the right to appeal an initial decision)
prior to applying the sanctions described in subsection
(c).
(b) Medicare+Choice Organizations.--
(1) In general.--Section 1852 of the Social Security Act
(42 U.S.C. 1395w-22) is amended by adding at the end the
following new subsection:
``(l) Requirement Relating to the Provision of Benefits.--
``(1) In general.--Each Medicare+Choice plan offered by a
Medicare+Choice organization shall ensure that, with respect to
a contract year, the actuarial value of the aggregate benefits
provided under the plan during such year to Medicare+Choice
eligible individuals enrolled in the plan is not less than 85
percent of the aggregate amount of payments received from, or
on behalf of, such individuals for such year.
``(2) Waiver of requirement.--
``(A) In general.--The Secretary may waive the
requirement under paragraph (1) for a 12-month period
with respect to a Medicare+Choice plan offered by a Medicare+Choice
organization, if the Secretary determines, based, except for an
organization with a waiver under section 1855(a)(2), on the
recommendations of the agency responsible for licensing such plan in a
State, that--
``(i) the solvency of the Medicare+Choice
organization is in jeopardy; or
``(ii) compliance with the requirement
would cause the Medicare+Choice organization to
fail to meet the solvency requirements required
for licensure in the State or under this part.
``(B) Renewals.--The Secretary may renew a waiver
under subparagraph (A), except that no waiver may be
granted for a period in excess of 24 months in any 36-
month period.
``(3) Administrative costs.--
``(A) Limitation.--For purposes of this subsection,
the costs associated with the management and operation
of a Medicare+Choice plan (including the costs of
compensation and personnel fringe benefits, interest
expenses, costs of occupancy of a facility, and
marketing costs) shall not be included in determining
the actuarial value of the aggregate benefits provided
under the plan.
``(B) Regulations.--The Secretary shall promulgate
regulations to define `costs associated with the
management and operation of a manages care plan' for
purposes of subparagraph (A).
``(4) Enforcement.--The Secretary may terminate a contract
with a Medicare+Choice organization under section 1857 in
accordance with formal investigation and compliance procedures
established by the Secretary under which--
``(A) the Secretary provides the organization with
the reasonable opportunity to develop and implement a
corrective action plan to correct the deficiencies that
were the basis of the Secretary's determination under
this paragraph; and
``(B) the Secretary provides the organization with
reasonable notice and opportunity for hearing
(including the right to appeal an initial decision)
before terminating the contract.''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to contract years beginning on or after January 1,
2002.
(c) Sanctions.--
(1) In general.--If the Secretary of Health and Human
Services determines that a health benefits plan or a
Medicare+Choice organization fails substantially to comply with
the provision of this Act or section 1852(l) of the Social
Security Act the Secretary may provide, in addition to any
other remedies authorized by law, for any of the remedies
described in paragraph (2).
(2) Remedies.--The remedies described in this paragraph
are--
(A) civil money penalties of not more than $25,000
for each determination under paragraph (1) or, with
respect to such a determination involving
misrepresentation or falsifying information, of not
more than $100,000 for each such determination; and
(B) with respect to Medicare+Choice organizations--
(i) suspension of enrollment of individuals
under part C of title XVIII of the Social
Security Act after the date the Secretary
notifies the organization of a determination
under paragraph (1) and until the Secretary is
satisfied that the basis for such determination
has been corrected and is not likely to recur;
or
(ii) suspension of payment to the
organization under such part for individuals
enrolled after the date the Secretary notifies
the organization of a determination under
paragraph (1) and until the Secretary is
satisfied that the basis for such determination
has been corrected and is not likely to recur.
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