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114th Congress    }                                 {   Rept. 114-158
                        HOUSE OF REPRESENTATIVES
 1st Session      }                                 {          Part 1

======================================================================



 
            SENIORS' HEALTH CARE PLAN PROTECTION ACT OF 2015

                                _______
                                

 June 16, 2015.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

Mr. Ryan of Wisconsin, from the Committee on Ways and Means, submitted 
                             the following

                              R E P O R T

                        [To accompany H.R. 2506]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Ways and Means, to whom was referred the 
bill (H.R. 2506) to amend title XVIII of the Social Security 
Act to delay the authority to terminate Medicare Advantage 
contracts for MA plans failing to achieve minimum quality 
ratings, having considered the same, report favorably thereon 
with an amendment and recommend that the bill as amended do 
pass.

                                CONTENTS

                                                                   Page
 I. SUMMARY AND BACKGROUND............................................2
        A. PURPOSE AND SUMMARY...................................     2
        B. BACKGROUND AND NEED FOR LEGISLATION...................     2
        C. LEGISLATIVE HISTORY...................................     3
II. EXPLANATION OF THE BILL...........................................3
III.VOTES OF THE COMMITTEE............................................4

IV. BUDGET EFFECTS OF THE BILL........................................4
        A. Committee Estimate of Budgetary Effects...............     4
        B. Statement Regarding New Budget Authority and Tax 
            Expenditures Budget Authority........................     4
        C. Cost Estimate Prepared by the Congressional Budget 
            Office...............................................     4
 V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE........5
        A. Committee Oversight Findings and Recommendations......     5
        B. Statement of General Performance Goals and Objectives.     6
        C. Information Relating to Unfunded Mandates.............     6
        D. Congressional Earmarks, Limited Tax Benefits, and 
            Limited Tariff Benefits..............................     6
        E. Duplication of Federal Programs.......................     6
        F. Disclosure of Directed Rule Makings...................     6
VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED.............6
        A. Text of Existing Law Amended or Repealed by the Bill, 
            as Reported..........................................     6
        B. Changes in Existing Law Proposed by the Bill, as 
            Reported.............................................    16

    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Seniors' Health Care Plan Protection 
Act of 2015''.

SEC. 2. DELAY IN AUTHORITY TO TERMINATE CONTRACTS FOR MEDICARE 
                    ADVANTAGE PLANS FAILING TO ACHIEVE MINIMUM QUALITY 
                    RATINGS.

  (a) Findings.--Consistent with the studies provided under the IMPACT 
Act of 2014 (Public Law 113-185), it is the intent of Congress--
          (1) to continue to study and request input on the effects of 
        socioeconomic status and dual-eligible populations on the 
        Medicare Advantage STARS rating system before reforming such 
        system with the input of stakeholders; and
          (2) pending the results of such studies and input, to provide 
        for a temporary delay in authority of the Centers for Medicare 
        & Medicaid Services (CMS) to terminate Medicare Advantage plan 
        contracts solely on the basis of performance of plans under the 
        STARS rating system.
  (b) Delay in MA Contract Termination Authority for Plans Failing To 
Achieve Minimum Quality Ratings.--Section 1857(h) of the Social 
Security Act (42 U.S.C. 1395w-27(h)) is amended by adding at the end 
the following new paragraph:
          ``(3) Delay in contract termination authority for plans 
        failing to achieve minimum quality rating.--The Secretary may 
        not terminate a contract under this section with respect to the 
        offering of an MA plan by a Medicare Advantage organization 
        solely because the MA plan has failed to achieve a minimum 
        quality rating under the 5-star rating system established under 
        section 1853(o) during the period beginning on the date of the 
        enactment of this paragraph and through the end of plan year 
        2018.''.

                       I. SUMMARY AND BACKGROUND


                         A. Purpose and Summary

    The bill, H.R. 2506, was ordered reported by the Committee 
on Ways and Means on June 2, 2015, as legislation to delay the 
termination of Medicare Advantage contracts for plans that 
receive three stars or fewer under the performance standards of 
the STARS ratings system for three consecutive years.

                 B. Background and Need for Legislation

    On May 21, 2015, Representative Buchanan (R-FL), 
Representative Blackburn (R-TN), and Representative Rangel (D-
NY) introduced H.R. 2506, a bill that would limit the 
Secretary's ability to terminate Medicare Advantage plans based 
solely on not meeting the three-star minimum rating requirement 
for three consecutive years. The legislation would not limit 
the Secretary's authority to terminate plans under the other 
ten measures that allow for termination. The Committee believes 
that the STARS ratings system does not properly account for 
beneficiary socioeconomic status and the amount of low-income 
and dual beneficiaries enrolled by a plan. The Committee plans 
to work with stakeholders and the Centers for Medicare and 
Medicaid Services (CMS) on reforming the STARS ratings system, 
and this legislation delays potentially unfair terminations of 
plans, especially those serving Medicare's frailest seniors.

                         C. Legislative History


Background

    H.R. 2506 was introduced on May 21, 2015, and was referred 
to the Committee on Ways and Means and subsequently, the 
Committee on Energy and Commerce.

Committee hearings

    On July 24, 2014, the Committee on Ways and Means 
Subcommittee on Health held a hearing on the status of the 
Medicare Advantage program.
    The panel of witnesses included the following:

Chris Wing, Chief Executive Officer, SCAN Health Plans
Jeff Burnich, M.D., Senior Vice President & Executive Officer, 
        Sutter Medical Network, (Sacramento, CA) on behalf of 
        CAPG
Robert Book, PhD, Senior Research Director, Health Systems 
        Innovation Network, LLC,
Outside Healthcare and Economics Expert, American Action Forum
Joe Baker, President, Medicare Rights Center

Committee action

    The Committee on Ways and Means marked up H.R. 2506, 
Senior's Health Care Plan Protection Act of 2015, on June 2, 
2015, and ordered the bill, as amended, favorably reported 
(with a quorum being present).

                      II. EXPLANATION OF THE BILL


            Senior's Health Care Plan Protection Act of 2015


                              PRESENT LAW

    Section 1857(h) of the Social Security Act allows the 
Secretary to terminate Medicare Advantage contracts based on 
compliance measures established by the Secretary through the 
regulatory process.

                           REASONS FOR CHANGE

    The Secretary of Health and Human Services, under 
regulatory powers established under the Social Security Act, 
may terminate Medicare Advantage contracts for any of the 
eleven different reasons discoverable during performance 
reviews of such contracts during each application period's 
Application Cycle Past Performance Review. One performance 
category would allow CMS to terminate a contract if a plan did 
not meet the required star-rating standards for a three-year 
period. A decision to terminate such a contract could be very 
disruptive, particularly to low-income or duals beneficiaries, 
as well as those with limited medical access. H.R. 2506 
proposes limiting the Secretary's authority by delaying the 
termination of plans specifically due to a lack of meeting 
minimum STARS measures for three consecutive years while 
Congress works with CMS and stakeholders to reform the STARS 
ratings system to properly weigh for the furnishing of plans to 
said beneficiaries.

                       EXPLANATION OF PROVISIONS

    The Senior's Health Care Plan Protection Act of 2015 delays 
contract termination authority for failing to meet minimum 
quality ratings for three years.

                             EFFECTIVE DATE

    This bill would take effect immediately after passage, and 
continue until December 31, 2018.

                      III. VOTES OF THE COMMITTEE

    In compliance with clause 3(b) of rule XIII of the Rules of 
the House of Representatives, the following statement is made 
concerning the vote of the Committee on Ways and Means in its 
consideration of H.R. 2506, Senior's Health Care Plan 
Protection Act of 2015, on June 2, 2015.
    The bill, H.R.2506, was ordered favorably reported to the 
House of Representatives as amended by voice-vote (with a 
quorum being present).

                     IV. BUDGET EFFECTS OF THE BILL


               A. Committee Estimate of Budgetary Effects

    In compliance with clause 3(d) of rule XIII of the Rules of 
the House of Representatives, the following statement is made 
concerning the effects on the budget of the bill, H.R. 2506, as 
reported. The Committee agrees with the estimate prepared by 
the Congressional Budget Office (CBO), which is included below.

B. Statement Regarding New Budget Authority and Tax Expenditures Budget 
                               Authority

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee states that the 
bill involves no new or increased budget authority. The 
Committee states further that the bill involves no new or 
increased tax expenditures.

      C. Cost Estimate Prepared by the Congressional Budget Office

    In compliance with clause 3(c)(3) of rule XIII of the Rules 
of the House of Representatives, requiring a cost estimate 
prepared by the CBO, the following statement by CBO is 
provided.

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, June 12, 2015.
Hon. Paul Ryan,
Chairman, Committee on Ways and Means,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 2506, the Seniors' 
Health Care Plan Protection Act of 2015.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Paul Masi.
            Sincerely,
                                                Keith Hall,
                                                          Director.
    Enclosure.

H.R. 2506--Seniors' Health Care Plan Protection Act of 2015

    H.R. 2506 would prohibit the Centers for Medicare and 
Medicaid Services (CMS) from terminating Medicare Advantage 
contracts that fail to achieve a minimum quality rating. That 
prohibition would be in effect until 2019. Under current law, 
CMS has announced that, beginning with contracts for calendar 
year 2017, it will exercise its authority to not renew 
contracts that for three consecutive years do not achieve at 
least three stars under the five-star rating system. Thus, 
enacting H.R. 2506 would permit certain plans to continue 
operating in 2017 and 2018 that otherwise will be terminated 
under current law. Those plans tend to receive slightly lower 
payments than other Medicare Advantage plans in the same areas, 
in part because they do not receive bonus payments under the 
five-star rating system.
    CBO projects that very few beneficiaries will be enrolled 
in plans that fail to achieve minimum quality ratings, and thus 
would be subject to the changes under the legislation. 
Permitting those plans to continue operating would reduce 
direct spending by $30 million over the 2016-2025 period, CBO 
estimates. Because the legislation would affect direct 
spending, pay-as-you-go procedures apply. The net changes in 
direct spending that are subject to pay-as-you-go procedures 
are shown in the following table.

            CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 2506, AS ORDERED REPORTED BY THE HOUSE COMMITTEE ON WAYS AND MEANS ON JUNE 2, 2015
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                              By fiscal year, in millions of dollars--
                                           -------------------------------------------------------------------------------------------------------------
                                             2015    2016    2017    2018    2019    2020    2021    2022    2023    2024    2025   2016-2020  2016-2025
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             NET DECREASE (-) IN THE DEFICIT
 
Statutory Pay-As-You-Go Impact............       0       0     -10     -15      -5       0       0       0       0       0       0       -30        -30
--------------------------------------------------------------------------------------------------------------------------------------------------------

    H.R. 2506 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would not affect the budgets of state, local or tribal 
governments.
    The CBO staff contact for this estimate is Paul Masi. The 
estimate was approved by Holly Harvey, Deputy Assistant 
Director for Budget Analysis.

     V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE


          A. Committee Oversight Findings and Recommendations

    With respect to clause 3(c)(1) of rule XIII of the Rules of 
the House of Representatives (relating to oversight findings), 
the Committee advises that it was as a result of the 
Committee's review of the provisions of H.R. 2506 that the 
Committee concluded that it is appropriate to report the bill, 
as amended, favorably to the House of Representatives with the 
recommendation that the bill do pass.

        B. Statement of General Performance Goals and Objectives

    With respect to clause 3(c)(4) of rule XIII of the Rules of 
the House of Representatives, the Committee advises that the 
bill contains no measure that authorizes funding, so no 
statement of general performance goals and objectives for which 
any measure authorizes funding is required.

              C. Information Relating to Unfunded Mandates

    This information is provided in accordance with section 423 
of the Unfunded Mandates Reform Act of 1995 (Pub. L. No. 104-
4).
    The Committee has determined that the bill does not contain 
Federal mandates on the private sector. The Committee has 
determined that the bill does not impose a Federal 
intergovernmental mandate on State, local, or tribal 
governments.

  D. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff 
                                Benefits

    With respect to clause 9 of rule XXI of the Rules of the 
House of Representatives, the Committee has carefully reviewed 
the provisions of the bill, and states that the provisions of 
the bill do not contain any congressional earmarks, limited tax 
benefits, or limited tariff benefits within the meaning of the 
rule.

                   E. Duplication of Federal Programs

    In compliance with Sec. 3(g)(2) of H. Res. 5 (114th 
Congress), the Committee states that no provision of the bill 
establishes or reauthorizes: (1) a program of the Federal 
Government known to be duplicative of another Federal program; 
(2) a program included in any report from the Government 
Accountability Office to Congress pursuant to section 21 of 
Public Law 111-139; or (3) a program related to a program 
identified in the most recent Catalog of Federal Domestic 
Assistance, published pursuant to the Federal Program 
Information Act (Pub. L. No. 95-220, as amended by Pub. L. No. 
98-169).

                 F. Disclosure of Directed Rule Makings

    In compliance with Sec. 3(i) of H. Res. 5 (114th Congress), 
the following statement is made concerning directed rule 
makings: The Committee estimates that the bill requires no 
directed rule makings within the meaning of such section.

       VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED


  A. Text of Existing Law Amended or Repealed by the Bill, as Reported

    In compliance with clause 3(e)(1)(A) of rule XIII of the 
Rules of the House of Representatives, the text of each section 
proposed to be amended or repealed by the bill, as reported, is 
shown below:

                          SOCIAL SECURITY ACT




           *       *       *       *       *       *       *
TITLE XVIII--HEALTH INSURANCE FOR THE AGED AND DISABLED

           *       *       *       *       *       *       *



Part C--Medicare+Choice Program

           *       *       *       *       *       *       *



              contracts with medicare+choice organizations

  Sec. 1857. (a) In General.--The Secretary shall not permit 
the election under section 1851 of a Medicare+Choice plan 
offered by a Medicare+Choice organization under this part, and 
no payment shall be made under section 1853 to an organization, 
unless the Secretary has entered into a contract under this 
section with the organization with respect to the offering of 
such plan. Such a contract with an organization may cover more 
than 1 Medicare+Choice plan. Such contract shall provide that 
the organization agrees to comply with the applicable 
requirements and standards of this part and the terms and 
conditions of payment as provided for in this part.
  (b) Minimum Enrollment Requirements.--
          (1) In general.--Subject to paragraph (2), the 
        Secretary may not enter into a contract under this 
        section with a Medicare+Choice organization unless the 
        organization has--
                  (A) at least 5,000 individuals (or 1,500 
                individuals in the case of an organization that 
                is a provider-sponsored organization) who are 
                receiving health benefits through the 
                organization, or
                  (B) at least 1,500 individuals (or 500 
                individuals in the case of an organization that 
                is a provider-sponsored organization) who are 
                receiving health benefits through the 
                organization if the organization primarily 
                serves individuals residing outside of 
                urbanized areas.
          (2) Application to msa plans.--In applying paragraph 
        (1) in the case of a Medicare+Choice organization that 
        is offering an MSA plan, paragraph (1) shall be applied 
        by substituting covered lives for individuals.
          (3) Allowing transition.--The Secretary may waive the 
        requirement of paragraph (1) during the first 3 
        contract years with respect to an organization.
  (c) Contract Period and Effectiveness.--
          (1) Period.--Each contract under this section shall 
        be for a term of at least 1 year, as determined by the 
        Secretary, and may be made automatically renewable from 
        term to term in the absence of notice by either party 
        of intention to terminate at the end of the current 
        term.
          (2) Termination authority.--In accordance with 
        procedures established under subsection (h), the 
        Secretary may at any time terminate any such contract 
        if the Secretary determines that the organization--
                  (A) has failed substantially to carry out the 
                contract;
                  (B) is carrying out the contract in a manner 
                inconsistent with the efficient and effective 
                administration of this part; or
                  (C) no longer substantially meets the 
                applicable conditions of this part.
          (3) Effective date of contracts.--The effective date 
        of any contract executed pursuant to this section shall 
        be specified in the contract, except that in no case 
        shall a contract under this section which provides for 
        coverage under an MSA plan be effective before January 
        1999 with respect to such coverage.
          (4) Previous terminations.--
                  (A) In general.--The Secretary may not enter 
                into a contract with a Medicare+Choice 
                organization if a previous contract with that 
                organization under this section was terminated 
                at the request of the organization within the 
                preceding 2-year period, except as provided in 
                subparagraph (B) and except in such other 
                circumstances which warrant special 
                consideration, as determined by the Secretary.
                  (B) Earlier re-entry permitted where change 
                in payment policy.--Subparagraph (A) shall not 
                apply with respect to the offering by a 
                Medicare+Choice organization of a 
                Medicare+Choice plan in a Medicare+Choice 
                payment area if during the 6-month period 
                beginning on the date the organization notified 
                the Secretary of the intention to terminate the 
                most recent previous contract, there was a 
                legislative change enacted (or a regulatory 
                change adopted) that has the effect of 
                increasing payment amounts under section 1853 
                for that Medicare+Choice payment area.
          (5) Contracting authority.--The authority vested in 
        the Secretary by this part may be performed without 
        regard to such provisions of law or regulations 
        relating to the making, performance, amendment, or 
        modification of contracts of the United States as the 
        Secretary may determine to be inconsistent with the 
        furtherance of the purpose of this title.
  (d) Protections Against Fraud and Beneficiary Protections.--
          (1) Periodic auditing.--The Secretary shall provide 
        for the annual auditing of the financial records 
        (including data relating to medicare utilization and 
        costs, including allowable costs under section 1858(c)) 
        of at least one-third of the Medicare+Choice 
        organizations offering Medicare+Choice plans under this 
        part. The Comptroller General shall monitor auditing 
        activities conducted under this subsection.
          (2) Inspection and audit.--Each contract under this 
        section shall provide that the Secretary, or any person 
        or organization designated by the Secretary--
                  (A) shall have the right to timely inspect or 
                otherwise evaluate (i) the quality, 
                appropriateness, and timeliness of services 
                performed under the contract, and (ii) the 
                facilities of the organization when there is 
                reasonable evidence of some need for such 
                inspection, and
                  (B) shall have the right to timely audit and 
                inspect any books and records of the 
                Medicare+Choice organization that pertain (i) 
                to the ability of the organization to bear the 
                risk of potential financial losses, or (ii) to 
                services performed or determinations of amounts 
                payable under the contract.
          (3) Enrollee notice at time of termination.--Each 
        contract under this section shall require the 
        organization to provide (and pay for) written notice in 
        advance of the contract's termination, as well as a 
        description of alternatives for obtaining benefits 
        under this title, to each individual enrolled with the 
        organization under this part.
          (4) Disclosure.--
                  (A) In general.--Each Medicare+Choice 
                organization shall, in accordance with 
                regulations of the Secretary, report to the 
                Secretary financial information which shall 
                include the following:
                          (i) Such information as the Secretary 
                        may require demonstrating that the 
                        organization has a fiscally sound 
                        operation.
                          (ii) A copy of the report, if any, 
                        filed with the Secretary containing the 
                        information required to be reported 
                        under section 1124 by disclosing 
                        entities.
                          (iii) A description of transactions, 
                        as specified by the Secretary, between 
                        the organization and a party in 
                        interest. Such transactions shall 
                        include--
                                  (I) any sale or exchange, or 
                                leasing of any property between 
                                the organization and a party in 
                                interest;
                                  (II) any furnishing for 
                                consideration of goods, 
                                services (including management 
                                services), or facilities 
                                between the organization and a 
                                party in interest, but not 
                                including salaries paid to 
                                employees for services provided 
                                in the normal course of their 
                                employment and health services 
                                provided to members by 
                                hospitals and other providers 
                                and by staff, medical group (or 
                                groups), individual practice 
                                association (or associations), 
                                or any combination thereof; and
                                  (III) any lending of money or 
                                other extension of credit 
                                between an organization and a 
                                party in interest.
                The Secretary may require that information 
                reported respecting an organization which 
                controls, is controlled by, or is under common 
                control with, another entity be in the form of 
                a consolidated financial statement for the 
                organization and such entity.
                  (B) Party in interest defined.--For the 
                purposes of this paragraph, the term ``party in 
                interest'' means--
                          (i) any director, officer, partner, 
                        or employee responsible for management 
                        or administration of a Medicare+Choice 
                        organization, any person who is 
                        directly or indirectly the beneficial 
                        owner of more than 5 percent of the 
                        equity of the organization, any person 
                        who is the beneficial owner of a 
                        mortgage, deed of trust, note, or other 
                        interest secured by, and valuing more 
                        than 5 percent of the organization, 
                        and, in the case of a Medicare+Choice 
                        organization organized as a nonprofit 
                        corporation, an incorporator or member 
                        of such corporation under applicable 
                        State corporation law;
                          (ii) any entity in which a person 
                        described in clause (i)--
                                  (I) is an officer or 
                                director;
                                  (II) is a partner (if such 
                                entity is organized as a 
                                partnership);
                                  (III) has directly or 
                                indirectly a beneficial 
                                interest of more than 5 percent 
                                of the equity; or
                                  (IV) has a mortgage, deed of 
                                trust, note, or other interest 
                                valuing more than 5 percent of 
                                the assets of such entity;
                          (iii) any person directly or 
                        indirectly controlling, controlled by, 
                        or under common control with an 
                        organization; and
                          (iv) any spouse, child, or parent of 
                        an individual described in clause (i).
                  (C) Access to information.--Each 
                Medicare+Choice organization shall make the 
                information reported pursuant to subparagraph 
                (A) available to its enrollees upon reasonable 
                request.
          (5) Loan information.--The contract shall require the 
        organization to notify the Secretary of loans and other 
        special financial arrangements which are made between 
        the organization and subcontractors, affiliates, and 
        related parties.
          (6) Review to ensure compliance with care management 
        requirements for specialized medicare advantage plans 
        for special needs individuals.--In conjunction with the 
        periodic audit of a specialized Medicare Advantage plan 
        for special needs individuals under paragraph (1), the 
        Secretary shall conduct a review to ensure that such 
        organization offering the plan meets the requirements 
        described in section 1859(f)(5).
  (e) Additional Contract Terms.--
          (1) In general.--The contract shall contain such 
        other terms and conditions not inconsistent with this 
        part (including requiring the organization to provide 
        the Secretary with such information) as the Secretary 
        may find necessary and appropriate.
          (2) Cost-sharing in enrollment-related costs.--
                  (A) In general.--A Medicare+Choice 
                organization and a PDP sponsor under part D 
                shall pay the fee established by the Secretary 
                under subparagraph (B).
                  (B) Authorization.--The Secretary is 
                authorized to charge a fee to each 
                Medicare+Choice organization with a contract 
                under this part and each PDP sponsor with a 
                contract under part D that is equal to the 
                organization' or sponsor's pro rata share (as 
                determined by the Secretary) of the aggregate 
                amount of fees which the Secretary is directed 
                to collect in a fiscal year. Any amounts 
                collected shall be available without further 
                appropriation to the Secretary for the purpose 
                of carrying out section 1851 (relating to 
                enrollment and dissemination of information), 
                section 1860D-1(c), and section 4360 of the 
                Omnibus Budget Reconciliation Act of 1990 
                (relating to the health insurance counseling 
                and assistance program).
                  (C) Authorization of appropriations.--There 
                are authorized to be appropriated for the 
                purposes described in subparagraph (B) for each 
                fiscal year beginning with fiscal year 2001 and 
                ending with fiscal year 2005 an amount equal to 
                $100,000,000, and for each fiscal year 
                beginning with fiscal year 2006 an amount equal 
                to $200,000,000, reduced by the amount of fees 
                authorized to be collected under this paragraph 
                and section 1860D-12(b)(3)(D) for the fiscal 
                year.
                  (D) Limitation.--In any fiscal year the fees 
                collected by the Secretary under subparagraph 
                (B) shall not exceed the lesser of--
                          (i) the estimated costs to be 
                        incurred by the Secretary in the fiscal 
                        year in carrying out the activities 
                        described in section 1851 and section 
                        1860D-1(c) and section 4360 of the 
                        Omnibus Budget Reconciliation Act of 
                        1990; or
                          (ii)(I) $200,000,000 in fiscal year 
                        1998;
                          (II) $150,000,000 in fiscal year 
                        1999;
                          (III) $100,000,000 in fiscal year 
                        2000;
                          (IV) the Medicare+Choice portion (as 
                        defined in subparagraph (E)) of 
                        $100,000,000 in fiscal year 2001 and 
                        each succeeding fiscal year before 
                        fiscal year 2006; and
                          (V) the applicable portion (as 
                        defined in subparagraph (F)) of 
                        $200,000,000 in fiscal year 2006 and 
                        each succeeding fiscal year.
                  (E) Medicare+choice portion defined.--In this 
                paragraph, the term ``Medicare+Choice portion'' 
                means, for a fiscal year, the ratio, as 
                estimated by the Secretary, of--
                          (i) the average number of individuals 
                        enrolled in Medicare+Choice plans 
                        during the fiscal year, to
                          (ii) the average number of 
                        individuals entitled to benefits under 
                        part A, and enrolled under part B, 
                        during the fiscal year.
                  (F) Applicable portion defined.--In this 
                paragraph, the term ``applicable portion'' 
                means, for a fiscal year--
                          (i) with respect to MA organizations, 
                        the Secretary's estimate of the total 
                        proportion of expenditures under this 
                        title that are attributable to 
                        expenditures made under this part 
                        (including payments under part D that 
                        are made to such organizations); or
                          (ii) with respect to PDP sponsors, 
                        the Secretary's estimate of the total 
                        proportion of expenditures under this 
                        title that are attributable to 
                        expenditures made to such sponsors 
                        under part D.
          (3) Agreements with federally qualified health 
        centers.--
                  (A) Payment levels and amounts.--A contract 
                under this section with an MA organization 
                shall require the organization to provide, in 
                any written agreement described in section 
                1853(a)(4) between the organization and a 
                federally qualified health center, for a level 
                and amount of payment to the federally 
                qualified health center for services provided 
                by such health center that is not less than the 
                level and amount of payment that the plan would 
                make for such services if the services had been 
                furnished by a entity providing similar 
                services that was not a federally qualified 
                health center.
                  (B) Cost-sharing.--Under the written 
                agreement referred to in subparagraph (A), a 
                federally qualified health center must accept 
                the payment amount referred to in such 
                subparagraph plus the Federal payment provided 
                for in section 1833(a)(3)(B) as payment in full 
                for services covered by the agreement, except 
                that such a health center may collect any 
                amount of cost-sharing permitted under the 
                contract under this section, so long as the 
                amounts of any deductible, coinsurance, or 
                copayment comply with the requirements under 
                section 1854(e).
          (4) Requirement for minimum medical loss ratio.--If 
        the Secretary determines for a contract year (beginning 
        with 2014) that an MA plan has failed to have a medical 
        loss ratio of at least .85--
                  (A) the MA plan shall remit to the Secretary 
                an amount equal to the product of--
                          (i) the total revenue of the MA plan 
                        under this part for the contract year; 
                        and
                          (ii) the difference between .85 and 
                        the medical loss ratio;
                  (B) for 3 consecutive contract years, the 
                Secretary shall not permit the enrollment of 
                new enrollees under the plan for coverage 
                during the second succeeding contract year; and
                  (C) the Secretary shall terminate the plan 
                contract if the plan fails to have such a 
                medical loss ratio for 5 consecutive contract 
                years.
  (f) Prompt Payment by Medicare+Choice Organization.--
          (1) Requirement.--A contract under this part shall 
        require a Medicare+Choice organization to provide 
        prompt payment (consistent with the provisions of 
        sections 1816(c)(2) and 1842(c)(2)) of claims submitted 
        for services and supplies furnished to enrollees 
        pursuant to the contract, if the services or supplies 
        are not furnished under a contract between the 
        organization and the provider or supplier (or in the 
        case of a Medicare+Choice private fee-for-service plan, 
        if a claim is submitted to such organization by an 
        enrollee).
          (2) Secretary's option to bypass noncomplying 
        organization.--In the case of a Medicare+Choice 
        eligible organization which the Secretary determines, 
        after notice and opportunity for a hearing, has failed 
        to make payments of amounts in compliance with 
        paragraph (1), the Secretary may provide for direct 
        payment of the amounts owed to providers and suppliers 
        (or, in the case of a Medicare+Choice private fee-for-
        service plan, amounts owed to the enrollees) for 
        covered services and supplies furnished to individuals 
        enrolled under this part under the contract. If the 
        Secretary provides for the direct payments, the 
        Secretary shall provide for an appropriate reduction in 
        the amount of payments otherwise made to the 
        organization under this part to reflect the amount of 
        the Secretary's payments (and the Secretary's costs in 
        making the payments).
          (3) Incorporation of certain prescription drug plan 
        contract requirements.--The following provisions shall 
        apply to contracts with a Medicare Advantage 
        organization offering an MA-PD plan in the same manner 
        as they apply to contracts with a PDP sponsor offering 
        a prescription drug plan under part D:
                  (A) Prompt payment.--Section 1860D-12(b)(4).
                  (B) Submission of claims by pharmacies 
                located in or contracting with long-term care 
                facilities.--Section 1860D-12(b)(5).
                  (C) Regular update of prescription drug 
                pricing standard.--Section 1860D-12(b)(6).
  (g) Intermediate Sanctions.--
          (1) In general.--If the Secretary determines that a 
        Medicare+Choice organization with a contract under this 
        section--
                  (A) fails substantially to provide medically 
                necessary items and services that are required 
                (under law or under the contract) to be 
                provided to an individual covered under the 
                contract, if the failure has adversely affected 
                (or has substantial likelihood of adversely 
                affecting) the individual;
                  (B) imposes premiums on individuals enrolled 
                under this part in excess of the amount of the 
                Medicare+Choice monthly basic and supplemental 
                beneficiary premiums permitted under section 
                1854;
                  (C) acts to expel or to refuse to re-enroll 
                an individual in violation of the provisions of 
                this part;
                  (D) engages in any practice that would 
                reasonably be expected to have the effect of 
                denying or discouraging enrollment (except as 
                permitted by this part) by eligible individuals 
                with the organization whose medical condition 
                or history indicates a need for substantial 
                future medical services;
                  (E) misrepresents or falsifies information 
                that is furnished--
                          (i) to the Secretary under this part, 
                        or
                          (ii) to an individual or to any other 
                        entity under this part;
                  (F) fails to comply with the applicable 
                requirements of section 1852(j)(3) or 
                1852(k)(2)(A)(ii);
                  (G) employs or contracts with any individual 
                or entity that is excluded from participation 
                under this title under section 1128 or 1128A 
                for the provision of health care, utilization 
                review, medical social work, or administrative 
                services or employs or contracts with any 
                entity for the provision (directly or 
                indirectly) through such an excluded individual 
                or entity of such services;
                  (H) except as provided under subparagraph (C) 
                or (D) of section 1860D-1(b)(1), enrolls an 
                individual in any plan under this part without 
                the prior consent of the individual or the 
                designee of the individual;
                  (I) transfers an individual enrolled under 
                this part from one plan to another without the 
                prior consent of the individual or the designee 
                of the individual or solely for the purpose of 
                earning a commission;
                  (J) fails to comply with marketing 
                restrictions described in subsections (h) and 
                (j) of section 1851 or applicable implementing 
                regulations or guidance; or
                  (K) employs or contracts with any individual 
                or entity who engages in the conduct described 
                in subparagraphs (A) through (J) of this 
                paragraph;
        the Secretary may provide, in addition to any other 
        remedies authorized by law, for any of the remedies 
        described in paragraph (2). The Secretary may provide, 
        in addition to any other remedies authorized by law, 
        for any of the remedies described in paragraph (2), if 
        the Secretary determines that any employee or agent of 
        such organization, or any provider or supplier who 
        contracts with such organization, has engaged in any 
        conduct described in subparagraphs (A) through (K) of 
        this paragraph.
          (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 a determination under 
                subparagraph (D) or (E)(i) of such paragraph, 
                of not more than $100,000 for each such 
                determination, except with respect to a 
                determination under subparagraph (E), an 
                assessment of not more than the amount claimed 
                by such plan or plan sponsor based upon the 
                misrepresentation or falsified information 
                involved, plus, with respect to a determination 
                under paragraph (1)(B), double the excess 
                amount charged in violation of such paragraph 
                (and the excess amount charged shall be 
                deducted from the penalty and returned to the 
                individual concerned), and plus, with respect 
                to a determination under paragraph (1)(D), 
                $15,000 for each individual not enrolled as a 
                result of the practice involved,
                  (B) suspension of enrollment of individuals 
                under this part 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
                  (C) suspension of payment to the organization 
                under this 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.
          (3) Other intermediate sanctions.--In the case of a 
        Medicare+Choice organization for which the Secretary 
        makes a determination under subsection (c)(2) the basis 
        of which is not described in paragraph (1), the 
        Secretary may apply the following intermediate 
        sanctions:
                  (A) Civil money penalties of not more than 
                $25,000 for each determination under subsection 
                (c)(2) if the deficiency that is the basis of 
                the determination has directly adversely 
                affected (or has the substantial likelihood of 
                adversely affecting) an individual covered 
                under the organization's contract.
                  (B) Civil money penalties of not more than 
                $10,000 for each week beginning after the 
                initiation of civil money penalty procedures by 
                the Secretary during which the deficiency that 
                is the basis of a determination under 
                subsection (c)(2) exists.
                  (C) Suspension of enrollment of individuals 
                under this part after the date the Secretary 
                notifies the organization of a determination 
                under subsection (c)(2) and until the Secretary 
                is satisfied that the deficiency that is the 
                basis for the determination has been corrected 
                and is not likely to recur.
                  (D) Civil monetary penalties of not more than 
                $100,000, or such higher amount as the 
                Secretary may establish by regulation, where 
                the finding under subsection (c)(2)(A) is based 
                on the organization's termination of its 
                contract under this section other than at a 
                time and in a manner provided for under 
                subsection (a).
          (4) Civil money penalties.--The provisions of section 
        1128A (other than subsections (a) and (b)) shall apply 
        to a civil money penalty under paragraph (2) or (3) in 
        the same manner as they apply to a civil money penalty 
        or proceeding under section 1128A(a).
  (h) Procedures for Termination.--
          (1) In general.--The Secretary may terminate a 
        contract with a Medicare+Choice organization under this 
        section 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 subsection 
                (c)(2); 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) Exception for imminent and serious risk to 
        health.--Paragraph (1) shall not apply if the Secretary 
        determines that a delay in termination, resulting from 
        compliance with the procedures specified in such 
        paragraph prior to termination, would pose an imminent 
        and serious risk to the health of individuals enrolled 
        under this part with the organization.
  (i) Medicare+Choice Program Compatibility With Employer or 
Union Group Health Plans.--
          (1) Contracts with ma organizations.--To facilitate 
        the offering of Medicare+Choice plans under contracts 
        between Medicare+Choice organizations and employers, 
        labor organizations, or the trustees of a fund 
        established by one or more employers or labor 
        organizations (or combination thereof) to furnish 
        benefits to the entity's employees, former employees 
        (or combination thereof) or members or former members 
        (or combination thereof) of the labor organizations, 
        the Secretary may waive or modify requirements that 
        hinder the design of, the offering of, or the 
        enrollment in such Medicare+Choice plans.
          (2) Employer sponsored ma plans.--To facilitate the 
        offering of MA plans by employers, labor organizations, 
        or the trustees of a fund established by one or more 
        employers or labor organizations (or combination 
        thereof) to furnish benefits to the entity's employees, 
        former employees (or combination thereof) or members or 
        former members (or combination thereof) of the labor 
        organizations, the Secretary may waive or modify 
        requirements that hinder the design of, the offering 
        of, or the enrollment in such MA plans. Notwithstanding 
        section 1851(g), an MA plan described in the previous 
        sentence may restrict the enrollment of individuals 
        under this part to individuals who are beneficiaries 
        and participants in such plan.

           *       *       *       *       *       *       *


      B. Changes in Existing Law Proposed by the Bill, as Reported

    In compliance with clause 3(e)(1)(B) of rule XIII of the 
Rules of the House of Representatives, changes in existing law 
proposed by the bill, as reported, are shown as follows 
(existing law proposed to be omitted is enclosed in black 
brackets, new matter is printed in italic, existing law in 
which no change is proposed is shown in roman):

                          SOCIAL SECURITY ACT




           *       *       *       *       *       *       *
TITLE XVIII--HEALTH INSURANCE FOR THE AGED AND DISABLED

           *       *       *       *       *       *       *



Part C--Medicare+Choice Program

           *       *       *       *       *       *       *



              contracts with medicare+choice organizations

  Sec. 1857. (a) In General.--The Secretary shall not permit 
the election under section 1851 of a Medicare+Choice plan 
offered by a Medicare+Choice organization under this part, and 
no payment shall be made under section 1853 to an organization, 
unless the Secretary has entered into a contract under this 
section with the organization with respect to the offering of 
such plan. Such a contract with an organization may cover more 
than 1 Medicare+Choice plan. Such contract shall provide that 
the organization agrees to comply with the applicable 
requirements and standards of this part and the terms and 
conditions of payment as provided for in this part.
  (b) Minimum Enrollment Requirements.--
          (1) In general.--Subject to paragraph (2), the 
        Secretary may not enter into a contract under this 
        section with a Medicare+Choice organization unless the 
        organization has--
                  (A) at least 5,000 individuals (or 1,500 
                individuals in the case of an organization that 
                is a provider-sponsored organization) who are 
                receiving health benefits through the 
                organization, or
                  (B) at least 1,500 individuals (or 500 
                individuals in the case of an organization that 
                is a provider-sponsored organization) who are 
                receiving health benefits through the 
                organization if the organization primarily 
                serves individuals residing outside of 
                urbanized areas.
          (2) Application to msa plans.--In applying paragraph 
        (1) in the case of a Medicare+Choice organization that 
        is offering an MSA plan, paragraph (1) shall be applied 
        by substituting covered lives for individuals.
          (3) Allowing transition.--The Secretary may waive the 
        requirement of paragraph (1) during the first 3 
        contract years with respect to an organization.
  (c) Contract Period and Effectiveness.--
          (1) Period.--Each contract under this section shall 
        be for a term of at least 1 year, as determined by the 
        Secretary, and may be made automatically renewable from 
        term to term in the absence of notice by either party 
        of intention to terminate at the end of the current 
        term.
          (2) Termination authority.--In accordance with 
        procedures established under subsection (h), the 
        Secretary may at any time terminate any such contract 
        if the Secretary determines that the organization--
                  (A) has failed substantially to carry out the 
                contract;
                  (B) is carrying out the contract in a manner 
                inconsistent with the efficient and effective 
                administration of this part; or
                  (C) no longer substantially meets the 
                applicable conditions of this part.
          (3) Effective date of contracts.--The effective date 
        of any contract executed pursuant to this section shall 
        be specified in the contract, except that in no case 
        shall a contract under this section which provides for 
        coverage under an MSA plan be effective before January 
        1999 with respect to such coverage.
          (4) Previous terminations.--
                  (A) In general.--The Secretary may not enter 
                into a contract with a Medicare+Choice 
                organization if a previous contract with that 
                organization under this section was terminated 
                at the request of the organization within the 
                preceding 2-year period, except as provided in 
                subparagraph (B) and except in such other 
                circumstances which warrant special 
                consideration, as determined by the Secretary.
                  (B) Earlier re-entry permitted where change 
                in payment policy.--Subparagraph (A) shall not 
                apply with respect to the offering by a 
                Medicare+Choice organization of a 
                Medicare+Choice plan in a Medicare+Choice 
                payment area if during the 6-month period 
                beginning on the date the organization notified 
                the Secretary of the intention to terminate the 
                most recent previous contract, there was a 
                legislative change enacted (or a regulatory 
                change adopted) that has the effect of 
                increasing payment amounts under section 1853 
                for that Medicare+Choice payment area.
          (5) Contracting authority.--The authority vested in 
        the Secretary by this part may be performed without 
        regard to such provisions of law or regulations 
        relating to the making, performance, amendment, or 
        modification of contracts of the United States as the 
        Secretary may determine to be inconsistent with the 
        furtherance of the purpose of this title.
  (d) Protections Against Fraud and Beneficiary Protections.--
          (1) Periodic auditing.--The Secretary shall provide 
        for the annual auditing of the financial records 
        (including data relating to medicare utilization and 
        costs, including allowable costs under section 1858(c)) 
        of at least one-third of the Medicare+Choice 
        organizations offering Medicare+Choice plans under this 
        part. The Comptroller General shall monitor auditing 
        activities conducted under this subsection.
          (2) Inspection and audit.--Each contract under this 
        section shall provide that the Secretary, or any person 
        or organization designated by the Secretary--
                  (A) shall have the right to timely inspect or 
                otherwise evaluate (i) the quality, 
                appropriateness, and timeliness of services 
                performed under the contract, and (ii) the 
                facilities of the organization when there is 
                reasonable evidence of some need for such 
                inspection, and
                  (B) shall have the right to timely audit and 
                inspect any books and records of the 
                Medicare+Choice organization that pertain (i) 
                to the ability of the organization to bear the 
                risk of potential financial losses, or (ii) to 
                services performed or determinations of amounts 
                payable under the contract.
          (3) Enrollee notice at time of termination.--Each 
        contract under this section shall require the 
        organization to provide (and pay for) written notice in 
        advance of the contract's termination, as well as a 
        description of alternatives for obtaining benefits 
        under this title, to each individual enrolled with the 
        organization under this part.
          (4) Disclosure.--
                  (A) In general.--Each Medicare+Choice 
                organization shall, in accordance with 
                regulations of the Secretary, report to the 
                Secretary financial information which shall 
                include the following:
                          (i) Such information as the Secretary 
                        may require demonstrating that the 
                        organization has a fiscally sound 
                        operation.
                          (ii) A copy of the report, if any, 
                        filed with the Secretary containing the 
                        information required to be reported 
                        under section 1124 by disclosing 
                        entities.
                          (iii) A description of transactions, 
                        as specified by the Secretary, between 
                        the organization and a party in 
                        interest. Such transactions shall 
                        include--
                                  (I) any sale or exchange, or 
                                leasing of any property between 
                                the organization and a party in 
                                interest;
                                  (II) any furnishing for 
                                consideration of goods, 
                                services (including management 
                                services), or facilities 
                                between the organization and a 
                                party in interest, but not 
                                including salaries paid to 
                                employees for services provided 
                                in the normal course of their 
                                employment and health services 
                                provided to members by 
                                hospitals and other providers 
                                and by staff, medical group (or 
                                groups), individual practice 
                                association (or associations), 
                                or any combination thereof; and
                                  (III) any lending of money or 
                                other extension of credit 
                                between an organization and a 
                                party in interest.
                The Secretary may require that information 
                reported respecting an organization which 
                controls, is controlled by, or is under common 
                control with, another entity be in the form of 
                a consolidated financial statement for the 
                organization and such entity.
                  (B) Party in interest defined.--For the 
                purposes of this paragraph, the term ``party in 
                interest'' means--
                          (i) any director, officer, partner, 
                        or employee responsible for management 
                        or administration of a Medicare+Choice 
                        organization, any person who is 
                        directly or indirectly the beneficial 
                        owner of more than 5 percent of the 
                        equity of the organization, any person 
                        who is the beneficial owner of a 
                        mortgage, deed of trust, note, or other 
                        interest secured by, and valuing more 
                        than 5 percent of the organization, 
                        and, in the case of a Medicare+Choice 
                        organization organized as a nonprofit 
                        corporation, an incorporator or member 
                        of such corporation under applicable 
                        State corporation law;
                          (ii) any entity in which a person 
                        described in clause (i)--
                                  (I) is an officer or 
                                director;
                                  (II) is a partner (if such 
                                entity is organized as a 
                                partnership);
                                  (III) has directly or 
                                indirectly a beneficial 
                                interest of more than 5 percent 
                                of the equity; or
                                  (IV) has a mortgage, deed of 
                                trust, note, or other interest 
                                valuing more than 5 percent of 
                                the assets of such entity;
                          (iii) any person directly or 
                        indirectly controlling, controlled by, 
                        or under common control with an 
                        organization; and
                          (iv) any spouse, child, or parent of 
                        an individual described in clause (i).
                  (C) Access to information.--Each 
                Medicare+Choice organization shall make the 
                information reported pursuant to subparagraph 
                (A) available to its enrollees upon reasonable 
                request.
          (5) Loan information.--The contract shall require the 
        organization to notify the Secretary of loans and other 
        special financial arrangements which are made between 
        the organization and subcontractors, affiliates, and 
        related parties.
          (6) Review to ensure compliance with care management 
        requirements for specialized medicare advantage plans 
        for special needs individuals.--In conjunction with the 
        periodic audit of a specialized Medicare Advantage plan 
        for special needs individuals under paragraph (1), the 
        Secretary shall conduct a review to ensure that such 
        organization offering the plan meets the requirements 
        described in section 1859(f)(5).
  (e) Additional Contract Terms.--
          (1) In general.--The contract shall contain such 
        other terms and conditions not inconsistent with this 
        part (including requiring the organization to provide 
        the Secretary with such information) as the Secretary 
        may find necessary and appropriate.
          (2) Cost-sharing in enrollment-related costs.--
                  (A) In general.--A Medicare+Choice 
                organization and a PDP sponsor under part D 
                shall pay the fee established by the Secretary 
                under subparagraph (B).
                  (B) Authorization.--The Secretary is 
                authorized to charge a fee to each 
                Medicare+Choice organization with a contract 
                under this part and each PDP sponsor with a 
                contract under part D that is equal to the 
                organization' or sponsor's pro rata share (as 
                determined by the Secretary) of the aggregate 
                amount of fees which the Secretary is directed 
                to collect in a fiscal year. Any amounts 
                collected shall be available without further 
                appropriation to the Secretary for the purpose 
                of carrying out section 1851 (relating to 
                enrollment and dissemination of information), 
                section 1860D-1(c), and section 4360 of the 
                Omnibus Budget Reconciliation Act of 1990 
                (relating to the health insurance counseling 
                and assistance program).
                  (C) Authorization of appropriations.--There 
                are authorized to be appropriated for the 
                purposes described in subparagraph (B) for each 
                fiscal year beginning with fiscal year 2001 and 
                ending with fiscal year 2005 an amount equal to 
                $100,000,000, and for each fiscal year 
                beginning with fiscal year 2006 an amount equal 
                to $200,000,000, reduced by the amount of fees 
                authorized to be collected under this paragraph 
                and section 1860D-12(b)(3)(D) for the fiscal 
                year.
                  (D) Limitation.--In any fiscal year the fees 
                collected by the Secretary under subparagraph 
                (B) shall not exceed the lesser of--
                          (i) the estimated costs to be 
                        incurred by the Secretary in the fiscal 
                        year in carrying out the activities 
                        described in section 1851 and section 
                        1860D-1(c) and section 4360 of the 
                        Omnibus Budget Reconciliation Act of 
                        1990; or
                          (ii)(I) $200,000,000 in fiscal year 
                        1998;
                          (II) $150,000,000 in fiscal year 
                        1999;
                          (III) $100,000,000 in fiscal year 
                        2000;
                          (IV) the Medicare+Choice portion (as 
                        defined in subparagraph (E)) of 
                        $100,000,000 in fiscal year 2001 and 
                        each succeeding fiscal year before 
                        fiscal year 2006; and
                          (V) the applicable portion (as 
                        defined in subparagraph (F)) of 
                        $200,000,000 in fiscal year 2006 and 
                        each succeeding fiscal year.
                  (E) Medicare+choice portion defined.--In this 
                paragraph, the term ``Medicare+Choice portion'' 
                means, for a fiscal year, the ratio, as 
                estimated by the Secretary, of--
                          (i) the average number of individuals 
                        enrolled in Medicare+Choice plans 
                        during the fiscal year, to
                          (ii) the average number of 
                        individuals entitled to benefits under 
                        part A, and enrolled under part B, 
                        during the fiscal year.
                  (F) Applicable portion defined.--In this 
                paragraph, the term ``applicable portion'' 
                means, for a fiscal year--
                          (i) with respect to MA organizations, 
                        the Secretary's estimate of the total 
                        proportion of expenditures under this 
                        title that are attributable to 
                        expenditures made under this part 
                        (including payments under part D that 
                        are made to such organizations); or
                          (ii) with respect to PDP sponsors, 
                        the Secretary's estimate of the total 
                        proportion of expenditures under this 
                        title that are attributable to 
                        expenditures made to such sponsors 
                        under part D.
          (3) Agreements with federally qualified health 
        centers.--
                  (A) Payment levels and amounts.--A contract 
                under this section with an MA organization 
                shall require the organization to provide, in 
                any written agreement described in section 
                1853(a)(4) between the organization and a 
                federally qualified health center, for a level 
                and amount of payment to the federally 
                qualified health center for services provided 
                by such health center that is not less than the 
                level and amount of payment that the plan would 
                make for such services if the services had been 
                furnished by a entity providing similar 
                services that was not a federally qualified 
                health center.
                  (B) Cost-sharing.--Under the written 
                agreement referred to in subparagraph (A), a 
                federally qualified health center must accept 
                the payment amount referred to in such 
                subparagraph plus the Federal payment provided 
                for in section 1833(a)(3)(B) as payment in full 
                for services covered by the agreement, except 
                that such a health center may collect any 
                amount of cost-sharing permitted under the 
                contract under this section, so long as the 
                amounts of any deductible, coinsurance, or 
                copayment comply with the requirements under 
                section 1854(e).
          (4) Requirement for minimum medical loss ratio.--If 
        the Secretary determines for a contract year (beginning 
        with 2014) that an MA plan has failed to have a medical 
        loss ratio of at least .85--
                  (A) the MA plan shall remit to the Secretary 
                an amount equal to the product of--
                          (i) the total revenue of the MA plan 
                        under this part for the contract year; 
                        and
                          (ii) the difference between .85 and 
                        the medical loss ratio;
                  (B) for 3 consecutive contract years, the 
                Secretary shall not permit the enrollment of 
                new enrollees under the plan for coverage 
                during the second succeeding contract year; and
                  (C) the Secretary shall terminate the plan 
                contract if the plan fails to have such a 
                medical loss ratio for 5 consecutive contract 
                years.
  (f) Prompt Payment by Medicare+Choice Organization.--
          (1) Requirement.--A contract under this part shall 
        require a Medicare+Choice organization to provide 
        prompt payment (consistent with the provisions of 
        sections 1816(c)(2) and 1842(c)(2)) of claims submitted 
        for services and supplies furnished to enrollees 
        pursuant to the contract, if the services or supplies 
        are not furnished under a contract between the 
        organization and the provider or supplier (or in the 
        case of a Medicare+Choice private fee-for-service plan, 
        if a claim is submitted to such organization by an 
        enrollee).
          (2) Secretary's option to bypass noncomplying 
        organization.--In the case of a Medicare+Choice 
        eligible organization which the Secretary determines, 
        after notice and opportunity for a hearing, has failed 
        to make payments of amounts in compliance with 
        paragraph (1), the Secretary may provide for direct 
        payment of the amounts owed to providers and suppliers 
        (or, in the case of a Medicare+Choice private fee-for-
        service plan, amounts owed to the enrollees) for 
        covered services and supplies furnished to individuals 
        enrolled under this part under the contract. If the 
        Secretary provides for the direct payments, the 
        Secretary shall provide for an appropriate reduction in 
        the amount of payments otherwise made to the 
        organization under this part to reflect the amount of 
        the Secretary's payments (and the Secretary's costs in 
        making the payments).
          (3) Incorporation of certain prescription drug plan 
        contract requirements.--The following provisions shall 
        apply to contracts with a Medicare Advantage 
        organization offering an MA-PD plan in the same manner 
        as they apply to contracts with a PDP sponsor offering 
        a prescription drug plan under part D:
                  (A) Prompt payment.--Section 1860D-12(b)(4).
                  (B) Submission of claims by pharmacies 
                located in or contracting with long-term care 
                facilities.--Section 1860D-12(b)(5).
                  (C) Regular update of prescription drug 
                pricing standard.--Section 1860D-12(b)(6).
  (g) Intermediate Sanctions.--
          (1) In general.--If the Secretary determines that a 
        Medicare+Choice organization with a contract under this 
        section--
                  (A) fails substantially to provide medically 
                necessary items and services that are required 
                (under law or under the contract) to be 
                provided to an individual covered under the 
                contract, if the failure has adversely affected 
                (or has substantial likelihood of adversely 
                affecting) the individual;
                  (B) imposes premiums on individuals enrolled 
                under this part in excess of the amount of the 
                Medicare+Choice monthly basic and supplemental 
                beneficiary premiums permitted under section 
                1854;
                  (C) acts to expel or to refuse to re-enroll 
                an individual in violation of the provisions of 
                this part;
                  (D) engages in any practice that would 
                reasonably be expected to have the effect of 
                denying or discouraging enrollment (except as 
                permitted by this part) by eligible individuals 
                with the organization whose medical condition 
                or history indicates a need for substantial 
                future medical services;
                  (E) misrepresents or falsifies information 
                that is furnished--
                          (i) to the Secretary under this part, 
                        or
                          (ii) to an individual or to any other 
                        entity under this part;
                  (F) fails to comply with the applicable 
                requirements of section 1852(j)(3) or 
                1852(k)(2)(A)(ii);
                  (G) employs or contracts with any individual 
                or entity that is excluded from participation 
                under this title under section 1128 or 1128A 
                for the provision of health care, utilization 
                review, medical social work, or administrative 
                services or employs or contracts with any 
                entity for the provision (directly or 
                indirectly) through such an excluded individual 
                or entity of such services;
                  (H) except as provided under subparagraph (C) 
                or (D) of section 1860D-1(b)(1), enrolls an 
                individual in any plan under this part without 
                the prior consent of the individual or the 
                designee of the individual;
                  (I) transfers an individual enrolled under 
                this part from one plan to another without the 
                prior consent of the individual or the designee 
                of the individual or solely for the purpose of 
                earning a commission;
                  (J) fails to comply with marketing 
                restrictions described in subsections (h) and 
                (j) of section 1851 or applicable implementing 
                regulations or guidance; or
                  (K) employs or contracts with any individual 
                or entity who engages in the conduct described 
                in subparagraphs (A) through (J) of this 
                paragraph;
        the Secretary may provide, in addition to any other 
        remedies authorized by law, for any of the remedies 
        described in paragraph (2). The Secretary may provide, 
        in addition to any other remedies authorized by law, 
        for any of the remedies described in paragraph (2), if 
        the Secretary determines that any employee or agent of 
        such organization, or any provider or supplier who 
        contracts with such organization, has engaged in any 
        conduct described in subparagraphs (A) through (K) of 
        this paragraph.
          (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 a determination under 
                subparagraph (D) or (E)(i) of such paragraph, 
                of not more than $100,000 for each such 
                determination, except with respect to a 
                determination under subparagraph (E), an 
                assessment of not more than the amount claimed 
                by such plan or plan sponsor based upon the 
                misrepresentation or falsified information 
                involved, plus, with respect to a determination 
                under paragraph (1)(B), double the excess 
                amount charged in violation of such paragraph 
                (and the excess amount charged shall be 
                deducted from the penalty and returned to the 
                individual concerned), and plus, with respect 
                to a determination under paragraph (1)(D), 
                $15,000 for each individual not enrolled as a 
                result of the practice involved,
                  (B) suspension of enrollment of individuals 
                under this part 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
                  (C) suspension of payment to the organization 
                under this 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.
          (3) Other intermediate sanctions.--In the case of a 
        Medicare+Choice organization for which the Secretary 
        makes a determination under subsection (c)(2) the basis 
        of which is not described in paragraph (1), the 
        Secretary may apply the following intermediate 
        sanctions:
                  (A) Civil money penalties of not more than 
                $25,000 for each determination under subsection 
                (c)(2) if the deficiency that is the basis of 
                the determination has directly adversely 
                affected (or has the substantial likelihood of 
                adversely affecting) an individual covered 
                under the organization's contract.
                  (B) Civil money penalties of not more than 
                $10,000 for each week beginning after the 
                initiation of civil money penalty procedures by 
                the Secretary during which the deficiency that 
                is the basis of a determination under 
                subsection (c)(2) exists.
                  (C) Suspension of enrollment of individuals 
                under this part after the date the Secretary 
                notifies the organization of a determination 
                under subsection (c)(2) and until the Secretary 
                is satisfied that the deficiency that is the 
                basis for the determination has been corrected 
                and is not likely to recur.
                  (D) Civil monetary penalties of not more than 
                $100,000, or such higher amount as the 
                Secretary may establish by regulation, where 
                the finding under subsection (c)(2)(A) is based 
                on the organization's termination of its 
                contract under this section other than at a 
                time and in a manner provided for under 
                subsection (a).
          (4) Civil money penalties.--The provisions of section 
        1128A (other than subsections (a) and (b)) shall apply 
        to a civil money penalty under paragraph (2) or (3) in 
        the same manner as they apply to a civil money penalty 
        or proceeding under section 1128A(a).
  (h) Procedures for Termination.--
          (1) In general.--The Secretary may terminate a 
        contract with a Medicare+Choice organization under this 
        section 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 subsection 
                (c)(2); 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) Exception for imminent and serious risk to 
        health.--Paragraph (1) shall not apply if the Secretary 
        determines that a delay in termination, resulting from 
        compliance with the procedures specified in such 
        paragraph prior to termination, would pose an imminent 
        and serious risk to the health of individuals enrolled 
        under this part with the organization.
          (3) Delay in contract termination authority for plans 
        failing to achieve minimum quality rating.--The 
        Secretary may not terminate a contract under this 
        section with respect to the offering of an MA plan by a 
        Medicare Advantage organization solely because the MA 
        plan has failed to achieve a minimum quality rating 
        under the 5-star rating system established under 
        section 1853(o) during the period beginning on the date 
        of the enactment of this paragraph and through the end 
        of plan year 2018.
  (i) Medicare+Choice Program Compatibility With Employer or 
Union Group Health Plans.--
          (1) Contracts with ma organizations.--To facilitate 
        the offering of Medicare+Choice plans under contracts 
        between Medicare+Choice organizations and employers, 
        labor organizations, or the trustees of a fund 
        established by one or more employers or labor 
        organizations (or combination thereof) to furnish 
        benefits to the entity's employees, former employees 
        (or combination thereof) or members or former members 
        (or combination thereof) of the labor organizations, 
        the Secretary may waive or modify requirements that 
        hinder the design of, the offering of, or the 
        enrollment in such Medicare+Choice plans.
          (2) Employer sponsored ma plans.--To facilitate the 
        offering of MA plans by employers, labor organizations, 
        or the trustees of a fund established by one or more 
        employers or labor organizations (or combination 
        thereof) to furnish benefits to the entity's employees, 
        former employees (or combination thereof) or members or 
        former members (or combination thereof) of the labor 
        organizations, the Secretary may waive or modify 
        requirements that hinder the design of, the offering 
        of, or the enrollment in such MA plans. Notwithstanding 
        section 1851(g), an MA plan described in the previous 
        sentence may restrict the enrollment of individuals 
        under this part to individuals who are beneficiaries 
        and participants in such plan.

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