[Congressional Record Volume 149, Number 84 (Tuesday, June 10, 2003)]
[Senate]
[Pages S7626-S7627]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. ALLARD (for himself, , Mr. Wyden, Mr. Smith, Mr. Inouye, 
        Mr. Akaka, Mr. Coleman, Mrs. Hutchison, and Mr. Campbell):
  S. 1220. A bill to amend title XVIII of the Social Security Act to 
extend reasonable cost contracts under the medicare program, to expand 
the area in which plans offered under such contracts may operate, to 
apply certain provisions of the Medicare+Choice program to such plans, 
and for other purposes; to the Committee on Finance.
  Mr. ALLARD. Mr. President, currently approximately 19,500 Colorado 
seniors are beneficiaries of Medicare health plans called ``cost 
contracts.'' Under current law, cost contracts will expire. Along with 
Senator Wyden, Senator Smith, Senator Inouye, Senator Akaka, and 
Senator Coleman, I am pleased to introduce the Medicare Cost Contract 
Extension and Refinement Act of 2003 to refine and to allow seniors to 
continue using these valued health plans.
  Medicare cost contracts are managed care plans that are reimbursed at 
the cost of providing health benefits. Currently, seniors have three 
Medicare plans to choose from: basic Medicare fee-for-service, 
Medicare+Choice, and Medicare cost contracts.
  Cost contract plans offer more benefits than basic Medicare and is 
available in more areas than Medicare+Choice. Cost contracts also offer 
lower out-of-pocket expenses and more benefits than supplemental 
Medigap, such as preventive care and prescription drug benefits. In 
addition, cost contract premiums cover Medicare deductibles and 
additional benefits not covered by basic Medicare. Further, for the 
costs of a normal Medicare fee-for-service copayment, seniors with cost 
contracts can use any Medicare provider whether they participate in the 
health plan's network.
  Cost contracts are especially important in rural Colorado. Of the 
19,500 Coloradans with cost contract plans, about 90 percent live in 
rural Colorado, where few basic Medicare and Medicare+Choice providers 
operate. If Medicare cost contracts are eliminated, then thousands of 
seniors will be forced into these other Medicare programs.
  Seniors with cost contracts value them. According to the 1999 
Medicare Managed Care Consumer Assessment of Health Plans Study, 
conducted by the U.S. Department of Health and Human Services, Medicare 
beneficiaries gave Medicare cost contract health insurers higher 
ratings than non-cost contract providers. Beneficiaries noted cost 
contracting HMOs solved problems, provided care, and provided customer 
service better than the majority of non-cost contracting providers. 
These ratings demonstrate that cost contract plans provide the quality 
service seniors want and need.
  Unfortunately, under current law cost contracts soon will terminate. 
In 1997, in an effort to refine Medicare+Choice, Congress passed the 
Balanced Budget Act. Among other provisions, this bill terminated the 
Medicare cost contract program effective December 31, 2002. To prevent 
the termination of this valuable plan, in 1999 I introduced legislation 
to extend cost contracts. That year Congress passed the Balanced Budget 
and Refinement Act, which extended cost contracts for two years through 
2004.
  Congress should extend Medicare cost contracts further. Legislation I 
am introducing, the Cost Contracting Extension and Refinement Act, 
would accomplish this by extending by ten years the cost contract 
sunset date of December 31, 2004 to December 31, 2014.

  While the goal of Congress in the Balanced Budget Act of 1997 was to 
provide an alternative to basic Medicare through Medicare+Choice, 
Medicare+Choice has not yet met this goal in rural Colorado. Until 
Medicare+Choice coverage is readily available to rural cost contract 
recipients, Congress should extend the current cost contract sunset for 
an additional 10 years.
  This legislation would provide another reform. It would apply certain 
existing requirements under the Medicare+Choice program to Medicare 
cost contract plans in order to allow better administration, education, 
and protections to patients, providers, and insurers. The legislation 
would allow beneficiaries to be informed and educated about the option 
of cost contracts, apply quality assurance requirements, prevent plans 
from discriminating against certain patients by offering lower 
premiums, and prohibit States from taxing cost contract premiums. These 
provisions help refine and strengthen the Medicare cost contract 
program, and they help streamline the dual administration of 
Medicare+Choice and cost contracts.
  Last, the Medicare Cost Contract Extension and Refinement Act would 
allow certain health plans, called group model health plans, to offer 
Medicare patients a cost contract plan. These group model health plans 
have traditionally been shown to provide care efficiently and at a cost 
lower than the costs that would be incurred if the services are 
furnished under the Medicare fee-for-service program. Group health 
plans are health insurers that offer health care through providers that 
are employed by the insurer, such as the Kaiser Foundation Health Plan. 
If, for example, Kaiser provides Medicare patients the cost contract 
option, then Colorado's approximate 50,000 seniors, who are now 
enrolled in Kaiser's Medicare+Choice plans, would be eligible to obtain 
a cost contract plan.
  Medicare beneficiaries deserve a choice in how they receive their 
health care. Congress should allow one of these choices to remain 
Medicare cost contracts. On behalf of the 19,500 Colorado Medicare 
beneficiaries who obtain their health care from cost contract plans, I 
am pleased to sponsor the Medicare Cost Contract Extension Act.
  I ask unanimous consent that the text of this legislation be printed 
in the Record
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1220

       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 Cost Contract 
     Extension and Refinement Act of 2003''.

     SEC. 2. EXTENSION OF REASONABLE COST CONTRACTS.

       (a) Ten-Year Extension.--Section 1876(h)(5)(C) of the 
     Social Security Act (42 U.S.C. 1395mm(h)(5)(C)) is amended by 
     striking ``2004'' and inserting ``2014''.
       (b) Ten-Year Extension of Period During Which Cost 
     Contracts May Expand Service Areas.--Section 1876(h)(5)(B)(i) 
     of the Social Security Act (42 U.S.C. 1395mm(h)(5)(B)(i)) is 
     amended by striking ``2003'' and inserting ``2013''.

     SEC. 3. APPLICATION OF CERTAIN MEDICARE+CHOICE REQUIREMENTS 
                   TO COST CONTRACTS EXTENDED OR RENEWED AFTER 
                   2003.

       Section 1876(h) of the Social Security Act (42 U.S.C. 
     1395mm(h)), as amended by subsections (a) and (b), is 
     amended--
       (1) by redesignating paragraph (5) as paragraph (6); and
       (2) by inserting after paragraph (4) the following new 
     paragraph:
       ``(5)(A) Any reasonable cost reimbursement contract with an 
     eligible organization under this subsection that is extended 
     or renewed on or after the date of enactment of the Medicare 
     Cost Contract Extension and Refinement Act of 2003 or that is 
     entered into pursuant to paragraph (6)(C) for plan years 
     beginning on or after January 1, 2004, shall provide that the 
     provisions of the Medicare+Choice program under part C 
     described in subparagraph (B) shall apply to

[[Page S7627]]

     such organization and such contract in a substantially 
     similar manner as such provisions apply to Medicare+Choice 
     organizations and Medicare+Choice plans under such part.
       ``(B) The provisions described in this subparagraph are as 
     follows:
       ``(i) Section 1851(d) (relating to the provision of 
     information to promote informed choice).
       ``(ii) Section 1851(h) (relating to the approval of 
     marketing material and application forms).
       ``(iii) Section 1852(a)(3)(A) (regarding the authority of 
     organizations to include supplemental health care benefits 
     under the plan subject to the approval of the Secretary).
       ``(iv) Paragraph (1) of section 1852(e) (relating to the 
     requirement of having an ongoing quality assurance program) 
     and paragraph (2)(B) of such section (relating to the 
     required elements for such a program).
       ``(v) Section 1852(e)(4) (relating to treatment of 
     accreditation).
       ``(vi) Section 1852(j)(4) (relating to limitations on 
     physician incentive plans).
       ``(vii) Section 1854(c) (relating to the requirement of 
     uniform premiums among individuals enrolled in the plan).
       ``(viii) Section 1854(g) (relating to restrictions on 
     imposition of premium taxes with respect to payments to 
     organizations).
       ``(ix) Section 1856(b)(3) (relating to relation to State 
     laws).
       ``(x) Section 1857(i) (relating to Medicare+Choice program 
     compatibility with employer or union group health plans).
       ``(xi) The provisions of part C relating to timelines for 
     contract renewal and beneficiary notification.''.

     SEC. 4. PERMITTING DEDICATED GROUP PRACTICE HEALTH 
                   MAINTENANCE ORGANIZATIONS TO PARTICIPATE IN THE 
                   MEDICARE COST CONTRACT PROGRAM.

       Section 1876(h)(6) of the Social Security Act (42 U.S.C. 
     1395mm(h)(6)), as redesignated and amended by section 2, is 
     amended--
       (1) in subparagraph (A), by striking ``After the date of 
     the enactment'' and inserting ``Except as provided in 
     subparagraph (C), after the date of the enactment'';
       (2) in subparagraph (B), by striking ``subparagraph (C)'' 
     and inserting ``subparagraph (D)'';
       (3) by redesignating subparagraph (C) as subparagraph (D); 
     and
       (4) by inserting after subparagraph (B), the following new 
     subparagraph:
       ``(C) Subject to paragraph (5) and subparagraph (D), the 
     Secretary shall approve an application to enter into a 
     reasonable cost contract under this section if--
       ``(i) the application is submitted to the Secretary by a 
     health maintenance organization (as defined in section 
     1301(a) of the Public Health Service Act) that, as of January 
     1, 2004, and except as provided in section 1301(b)(3)(B) of 
     such Act, provides at least 85 percent of the services of a 
     physician which are provided as basic health services through 
     a medical group (or groups), as defined in section 1302(4) of 
     such Act; and
       ``(ii) the Secretary determines that the organization meets 
     the requirements applicable to such organizations and 
     contracts under this section.''.
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