[House Report 104-751]
[From the U.S. Government Publishing Office]



104th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 2d Session                                                     104-751
_______________________________________________________________________


 
            MEDICAID HEALTH INSURING ORGANIZATION CORRECTION

                                _______
                                

 August 2, 1996.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

  Mr. Bliley, from the Committee on Commerce, submitted the following

                              R E P O R T

                        [To accompany H.R. 3056]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Commerce, to whom was referred the bill 
(H.R. 3056) to permit a county-operated health insuring 
organization to qualify as an organization exempt from certain 
requirements otherwise applicable to health insuring 
organizations under the Medicaid program notwithstanding that 
the organization enrolls Medicaid beneficiaries residing in 
another county, having considered the same, report favorably 
thereon without amendment and recommend that the bill do pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     2
Background and Need for Legislation..............................     2
Hearings.........................................................     2
Committee Consideration..........................................     3
Rollcall Votes...................................................     3
Committee Oversight Findings.....................................     3
Committee on Government Reform and Oversight.....................     3
New Budget Authority and Tax Expenditures........................     3
Committee Cost Estimate..........................................     3
Congressional Budget Office Estimate.............................     3
Inflationary Impact Statement....................................     5
Advisory Committee Statement.....................................     5
Section-by-Section Analysis of the Legislation...................     5
Changes in Existing Law Made by the Bill, as Reported............     5

                          Purpose and Summary

    This measure amends section 9517(c)(3)(B)(ii) of the 
Consolidated Omnibus Budget Reconciliation Act of 1985, as 
added by section 4734 of Omnibus Budget Reconciliation Act of 
1990, to allow a health insuring organization to serve Medicaid 
beneficiaries residing in one or more counties. Existing 
statutory language concerning county organized health systems 
has been interpreted by the Health Care Financing 
Administration as limiting the number of counties in a State 
that may be served by such plans, rather than the number of 
plans that may operate within the State. The consequence of 
this interpretation is the limitation of the coverage provided 
by a health insuring organization solely to the county in which 
it operates. The bill clarifies that the existing statutory 
language does not limit the number of counties in which a 
health insuring organization may operate by defining an 
eligible health insuring organization as one that enrolls 
Medicaid beneficiaries residing in the county or counties in 
which it operates.

                  Background and Need for Legislation

    In order to participate in State Medicaid programs, health 
maintenance organizations must meet a number of statutory and 
regulatory requirements. Among these is a provision of the 
Consolidated Omnibus Budget Reconciliation Act of 1985 which 
established that a health insuring organization serving 
Medicaid recipients must be subject to the same requirements as 
a health maintenance organization. The Omnibus Budget 
Reconciliation Act of 1990 included a provision that exempted 
the State of California from the requirements that are 
otherwise applicable to a Medicaid risk contract. The provision 
specifically exempted health insuring organizations operating 
in California and required that each such organization be 
operated directly by a public entity established by a county 
government of the State.
    An additional requirement to which an exempted health 
insuring organization is subject is that it must enroll the 
Medicaid beneficiaries residing in the county in which it 
operates. This provision has been interpreted by the Health 
Care Financing Administration as limiting the number of 
counties in a State that may be served by such plans, rather 
than the number of plans that may operate within the State. The 
consequence of this interpretation is the limitation of the 
coverage provided by a health insuring organization solely to 
the county in which it operates. As a result, States are 
currently unable to permit eligible health insuring 
organizations from serving Medicaid beneficiaries in counties 
other than those in which their operations are based, 
notwithstanding the quality of coverage or financial savings 
that may result.

                                Hearings

    The Committee on Commerce has not held hearings on this 
legislation.

                        Committee Consideration

    On July 24, 1996, the Committee on Commerce met in open 
markup session and ordered H.R. 3056, a bill to permit a 
county-operated health insuring organization to qualify as an 
organization exempt from certain requirements otherwise 
applicable to health insuring organizations under the Medicaid 
program notwithstanding that the organization enrolls Medicaid 
beneficiaries residing in another county, reported to the 
House, without amendment, by a voice vote.

                             Rollcall Votes

    Clause 2(l)(2)(B) of rule XI of the Rules of the House 
requires the Committee to list the recorded votes on the motion 
to report legislation and amendments thereto. There were no 
recorded votes taken in connection with ordering H.R. 3056 
reported. A motion by Mr. Bliley to order H.R. 3056 reported to 
the House, without amendment, was agreed to by a voice vote, a 
quorum being present.

                      Committee Oversight Findings

    Pursuant to clause 2(l)(3)(A) of rule XI of the Rules of 
the House of Representatives, the Committee has not held 
oversight or legislative hearings on this legislation.

              Committee on Government Reform and Oversight

    Pursuant to clause 2(l)(3)(D) of rule XI of the Rules of 
the House of Representatives, no oversight findings have been 
submitted to the Committee by the Committee on Government 
Reform and Oversight.

               New Budget Authority and Tax Expenditures

    In compliance with clause 2(l)(3)(B) of rule XI of the 
Rules of the House of Representatives, the Committee states 
that H.R. 3056 would result in no new or increased budget 
authority or tax expenditures or revenues.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 403 of the Congressional Budget Act of 1974.

                  Congressional Budget Office Estimate

    Pursuant to clause 2(l)(3)(C) of rule XI of the Rules of 
the House of Representatives, the following is the cost 
estimate provided by the Congressional Budget Office pursuant 
to section 403 of the Congressional Budget Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                    Washington, DC, August 2, 1996.
Hon. Thomas J. Bliley, Jr.,
Chairman, Committee on Commerce,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 3056, as ordered 
reported on July 24, 1996.
    The bill would affect direct spending and thus would be 
subject to pay-as-you-go procedures under Section 252 of the 
Balanced Budget Amendment and Emergency Deficit Control Act of 
1985.
    If you wish further details on this estimate, we will be 
pleased to provide them.
            Sincerely,
                                         June E. O'Neill, Director.
    Enclosure.

               Congressional Budget Office Cost Estimate

    1. Bill number: H.R. 3056.
    2. Bill title: None.
    3. Bill status: As ordered reported by the House Committee 
on Commerce on July 24, 1996.
    4. Bill purpose: H.R. 3056 would ensure that certain health 
insuring organizations (HIOs) operating in the State of 
California maintain waivers of the 75 percent enrollment 
composition rule and of certain organizational requirements as 
described in sec. 9517 of P.L. 99-272 (the Consolidated Omnibus 
Budget Reconciliation Act of 1986), even if they serve Medicaid 
beneficiaries in more than one county.
    5. Estimated cost to the Federal Government: CBO estimates 
that enactment of H.R. 3056 would reduce federal spending for 
Medicaid by less than $500,000 annually. The savings from this 
bill fall within budget function 550.
    6. Basis of estimate: The estimate assumes that without the 
enrollment waiver for the Solano Partnership Health Plan (the 
Solano County HIO), about 12,000 additional Medicaid 
beneficiaries in Napa County would receive services paid on a 
fee-for-service basis at a per person cost of about 2 percent 
more than the per capita payments in the HIO.
    7. Pay-as-you-go considerations: The Balanced Budget and 
Emergency Deficit Control Act of 1985 sets up pay-as-you-go 
procedures for legislation affecting direct spending or 
receipts through 1998. These procedures would apply to H.R. 
3056 because the bill would affect direct spending. The 
estimated change in direct spending, however, is not 
significant.
    8. Estimated impact on State, local, and tribal 
governments: This bill contains no intergovernmental mandates 
as defined in the Unfunded Mandates Reform Act of 1995 (Public 
Law 104-4) and would impose no costs on state, local, or tribal 
governments. Because the state of California pays 50 percent of 
the Medicaid costs, the state would accrue 50 percent of the 
savings that would result from this bill, a savings that would 
total less than $500,000 annually.
    9. Estimated impact on the private sector: H.R. 3056 
contains no private sector mandates as defined in P.L. 104-4. 
The bill affects up to three county-operated HIOs in 
California, exempting them from certain Medicaid requirements 
otherwise applicable to HIOs, even if they serve Medicaid 
beneficiaries in more than one county.
    10. Previous CBO estimate: None.
    11. Estimated prepared by: Federal cost estimate: Jean 
Hearne. State and local cost estimate: John Patterson. Private 
sector mandate estimate: Linda Bilheimer.
    12. Estimate approved by: Paul N. Van de Water, Assistant 
Director for Budget Analysis.

                      Inflationary Impact Statement

     Pursuant to clause 2(l)(4) of rule XI of the Rules of the 
House of Representatives, the Committee finds that H.R. 3056 
would have no inflationary impact.

                      Advisory Committee Statement

     No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

             Section-by-Section Analysis of the Legislation

    Section 1. Permitting County-Operated Health Insuring 
Organizations to Enroll Medicaid Beneficiaries Residing in 
Another County under Medicaid Waiver for Certain County-
Operated Health Insuring Organizations.
     (a) In General.--This section amends Section 
9517(c)(3)(B)(ii) of the Consolidated Omnibus Budget 
Reconciliation Act of 1985 (42 U.S.C. 1396b note), as added by 
section 4734 of Omnibus Budget Reconciliation Act of 1990, by 
inserting ``or counties'' after ``county'.
     (b) Effective Date.--The effective date of this change is 
for quarters beginning on or after October 1, 1996.

         Changes in Existing Law Made by the Bill, as Reported

    In compliance with clause 3 of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (new matter is 
printed in italic, existing law in which no change is proposed 
is shown in roman):

 SECTION 9517 OF THE CONSOLIDATED OMNIBUS BUDGET RECONCILIATION ACT OF 
                                  1985

SEC. 9517. MODIFYING APPLICATION OF MEDICAID HMO PROVISIONS FOR CERTAIN 
                    HEALTH CENTERS.

  (a) * * *
          * * * * * * *
    (c) Health Insuring Organizations.--(1) * * *
          * * * * * * *
    (3)(A) * * *
    (B) A health insuring organization described in this 
subparagraph is one that--
          (i) is operated directly by a public entity 
        established by a county government in the State of 
        California under a State enabling statute;
          (ii) enrolls all medicaid beneficiaries residing in 
        the county or counties in which it operates;
          * * * * * * *