[Congressional Record Volume 146, Number 19 (Monday, February 28, 2000)]
[Senate]
[Pages S867-S868]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. KYL:
  S. 2110. A bill to amend title XVIII of the Social Security Act to 
provide for payment of claims by health care providers against 
insolvent Medicare+Choice Organizations, and for other purposes; to the 
Committee on Finance.


                       bankruptcy of premier HMO

  Mr. KYL. Mr. President, I rise to bring to the attention of the 
Senate a serious problem facing many thousands of Medicare 
beneficiaries in Arizona. On November 16, 1999, Premier Health Care of 
Arizona went into receivership. The health care of more than 20,000 
Medicare beneficiaries who were enrolled in Premier has been affected 
by this solvency.
  Since Premier Medicare HMO was placed in receivership, I have been 
advised that some non-contract providers--providers outside of the HMO 
network--have asserted that Medicare beneficiaries are personally 
liable for unpaid claims and have referred the outstanding claims to 
collection agencies.
  These unpaid claims--some of which may date back more than six months 
and amount to significant sums of money--have made it difficult for 
many contract and non-contract providers to continue to provide care to 
Medicare beneficiaries. Because Premier operated in a largely rural 
area where few alternative providers were accessible, this has created 
a dire health-care delivery situation for Medicare beneficiaries.
  Mr. President, today I introduce legislation that addresses the 
Arizona situation, as well as future

[[Page S868]]

Medicare+Choice insolvencies, wherever they may occur. This legislation 
mandates that, after a Medicare+Choice goes into receivership, the 
receiver--in this case, the state insurance commissioner--may apply to 
the Secretary of HHS for payment of all valid, unpaid provider claims 
for items or services furnished to Medicare enrollees before the date 
the receiver was appointed.
  Contract providers will be paid at their contract rate, while non-
contract providers will be paid for the ``reasonable cost'' of the 
covered item or service. Amounts needed to make these payments will be 
paid out of the Part A or Part B trust fund, as is appropriate based on 
which fund would have paid the claim on a fee-for-services basis.
  To recover these amounts paid to providers, the bill establishes that 
HCFA will become a creditor of the receivership estate and assumes the 
priority position of the respective providers it has paid.
  The bill also mandates that Medicare+Choice enrollees may not be held 
liable to contract or non-contract providers for any claims that are 
unpaid by the Medicare+Choice organization.
  While the regulation of state-licensed Medicare+Choice organizations 
is primarily a state responsibility, the Medicare law makes clear that 
the Secretary of Health and Human Services and the administrator of 
HCFA have an ongoing ``responsibility to ensure that it (HCFA) 
contracts only with fiscally-sound Medicare+Choice organizations.''
  To this end, Section 1857(d) gives the Secretary the right to audit 
and inspect any books and records that pertain either to the ability of 
the Medicare HMO to bear the risk of potential financial loss, or to 
the quality and timeliness of services provided for Medicare 
beneficiaries. See 42 CFR 422.502, 516 and 552.
  My bill strengthens current law and regulation by requiring that, 
once HCFA determines that a Medicare+Choice organization may not be 
able to bear the risk of financial losses, the Secretary must promptly 
notify the appropriate state officials and provide those officials with 
the information on which that determination is based.
  The bill also strengthens current law by requiring that, when 
Medicare+Choice organizations fail to provide prompt payments to 
providers, the Secretary must pay providers directly. Under my bill, if 
the Medicare+Choice plan fails to provide prompt payment of 10 percent 
of claims submitted for services and supplies furnished to enrollees 
within 60 days of the date on which the claim was submitted, the 
Secretary must pay contract and non-contract providers directly--there 
is no discretion as there is in current law.
  To avoid a repeat of this problem with other carriers in the future, 
the bill requires that Medicare+Choice organizations post a surety bond 
of no less than $500,000, as well as meet any additional requirements 
related to bonding or escrow accounts that the Secretary deems 
necessary. The bond requirement may be waived if a comparable surety 
bond is required under state law.
  Mr. President, this legislation will enable the government to fulfill 
its promise to those seniors who have chosen to receive their Medicare 
coverage through a Medicare+Choice organization. It will prevent 
seniors from being billed for covered services and providers from 
losing large sums in unpaid bills.
  If providers aren't paid, many may be unwilling--or unable--to 
continue providing care. If quality care is not available through 
experienced providers, or if seniors are the subject of legal action 
for the bills of insolvent Medicare+Choice organizations, beneficiaries 
will lose confidence in the Medicare+Choice programs, and ultimately, 
in Medicare fee-for-service as well. We simply can't let that happen.
  The Congress must ensure that providers are paid and Medicare 
beneficiaries are protected. This is a commitment we have made to 
seniors--it is a commitment we must fulfill.
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