To amend part C of title XVIII of the Social Security Act to consolidate and restate the Federal laws relating to the social health maintenance organization projects, to make such projects permanent, to require the Medicare Payment Advisory Commission to conduct a study on ways to expand such projects, and for other purposes.

February 27, 2003

Mr. ISSA introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committee on Energy and Commerce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned

To amend part C of title XVIII of the Social Security Act to consolidate and restate the Federal laws relating to the social health maintenance organization projects, to make such projects permanent, to require the Medicare Payment Advisory Commission to conduct a study on ways to expand such projects, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

(a) SHORT TITLE- This Act may be cited as the `Seniors Health and Independence Preservation Act of 2003'.

(b) TABLE OF CONTENTS- The table of contents of this Act is as follows:

Sec. 1. Short title; table of contents.

Sec. 2. Making the social health maintenance organization (SHMO) projects permanent.

Sec. 3. Expansion of SHMO projects into noncontiguous service areas within a State.

Sec. 4. Permanence of SHMO planning grant sites.

Sec. 5. Procedures for SHMO benefit and payment mechanism changes.

Sec. 6. Comprehensive MedPAC study on SHMO I and SHMO II cost-effectiveness and potential expansion.

Sec. 7. SHMO Beneficiary satisfaction survey.

Sec. 8. Conforming cross-references.

Sec. 9. Legislative purpose and construction.

Sec. 10. Repeals.

SEC. 2. MAKING THE SOCIAL HEALTH MAINTENANCE ORGANIZATION (SHMO) PROJECTS PERMANENT.

Part C of title XVIII of the Social Security Act (42 U.S.C. 1395w-21 et seq.) is amended by inserting after section 1857 the following new section:

`WAIVERS FOR SOCIAL HEALTH MAINTENANCE ORGANIZATIONS

`SEC. 1858. (a) ESTABLISHMENT OF SHMO PROJECTS- In the case of a project described in subsection (b), the Secretary shall approve, with appropriate terms and conditions as defined by the Secretary, applications or protocols submitted for waivers described in subsection (c), and the evaluation of such protocols, in order to carry out such project. Such approval shall be effected not later than 30 days after the date on which the application or protocol for a waiver is submitted or not later than 30 days after the date of enactment of the Deficit Reduction Act of 1984 (Public Law 98-369; 98 Stat. 494) in the case of an application or protocol submitted before the date of enactment of such Act. Not later than 36 months after the date of enactment of the Omnibus Budget Reconciliation Act of 1990 (Public Law 101-508; 104 Stat. 1388), the Secretary shall approve applications or protocols described in paragraph (1) for not more than 4 additional projects described in subsection (b).

`(b) PROJECTS DESCRIBED- A project referred to in subsection (a) is a project--

`(1) to demonstrate--

`(A) the concept of a social health maintenance organization with the organizations as described in Project No. 18-P-9 7604/1-04 of the University Health Policy Consortium of Brandeis University; or

`(B) in the case of a project conducted as a result of the amendments made by section 4207(b)(4)(B)(i) of the Omnibus Budget Reconciliation Act of 1990 (Public Law 101-508; 104 Stat. 1388-118), the effectiveness and feasibility of innovative approaches to refining targeting and financing methodologies and benefit design, including the effectiveness of feasibility of--

`(i) the benefits of expanded post-acute and community care case management through links between chronic care case management services and acute care providers;

`(ii) refining targeting or reimbursement methodologies;

`(iii) the establishment and operation of a rural services delivery system;

`(iv) integrating acute and chronic care management for patients with end-stage renal disease through expanded community care case management services (and for purposes of a project conducted under this clause, any requirement under a waiver granted under this section that a project disenroll individuals who develop end-stage renal disease shall not apply); or

`(v) the effectiveness of second-generation sites in reducing the costs of the

commencement and management of health care service delivery;

`(2) which provides for the integration of health and social services under the direct financial management of a provider of services;

`(3) under which all services under this title will be provided by or under arrangements made by the organization at a fixed annual prepaid capitation rate for medicare of 100 percent of the adjusted average per capita cost; and

`(4) under which services under title XIX will be provided at a rate approved by the Secretary.

`(c) WAIVERS- The waivers referred to in subsection (a) are appropriate waivers of--

`(1) certain requirements of this title, pursuant to section 402(a) of the Social Security Amendments of 1967 (Public Law 90-248; 81 Stat. 930), as amended by section 222 of the Social Security Amendments of 1972 (Public Law 92-603; 86 Stat. 1390);

`(2) certain requirements of title XIX, pursuant to section 1115; and

`(3) in the case of a project conducted as a result of the amendments made by section 4207(b)(4)(B)(i) of the Omnibus Budget Reconciliation Act of 1990 (Public Law 101-508; 104 Stat. 1388-118), any requirements of title XVIII or XIX that, if imposed, would prohibit such project from being conducted.

`(d) AGGREGATE LIMIT ON NUMBER OF MEMBERS- The Secretary may not impose a limit on the number of individuals that may participate in a project conducted under this section, other than an aggregate limit of not less than 324,000 for all sites.

`(e) REPORTS-

`(1) PRELIMINARY REPORT- The Secretary shall submit a preliminary report to Congress on the status of the projects and waivers referred to in subsection (a) 45 days after the date of enactment of the Deficit Reduction Act of 1984 (Public Law 98-369; 98 Stat. 494).

`(2) INTERIM REPORT- The Secretary shall submit an interim report to Congress on the projects referred to in subsection (a) not later than 42 months after the date of enactment of the Deficit Reduction Act of 1984 (Public Law 98-369; 98 Stat. 494).

`(3) SECOND INTERIM REPORT- The Secretary shall submit a second interim report to Congress on the project referred to in paragraph (1) not later than March 31, 1993.

`(4) REPORT ON INTEGRATION AND TRANSITION-

`(A) IN GENERAL- The Secretary shall submit to Congress, by not later than January 1, 1999, a plan for the integration of health plans offered by social health maintenance organizations (including SHMO I and SHMO II sites developed under this section and similar plans) as an option under the Medicare+Choice program under this title.

`(B) PROVISION FOR TRANSITION- The plan submitted under subparagraph (A) shall include a transition for social health maintenance organizations operating under the project authority under this section.

`(C) PAYMENT POLICY- The report shall also include recommendations on appropriate payment levels for plans offered by such organizations, including an analysis of the application of risk adjustment factors appropriate to the population served by such organizations.

`(5) HHS REPORT- The Secretary shall submit a report on the projects conducted under this section not later than the date that is 21 months after the date on which the Secretary submits to Congress the report described in paragraph (4).

`(f) AUTHORIZATION OF APPROPRIATIONS- There are authorized to be appropriated $3,500,000 for the costs of technical assistance and evaluation related to projects conducted as a result of the amendments made by section 4207(b)(4)(B) of the Omnibus Budget Reconciliation Act of 1990 (Public Law 101-508; 104 Stat. 1388-118).'.

SEC. 3. EXPANSION OF SHMO PROJECTS INTO NONCONTIGUOUS SERVICE AREAS WITHIN A STATE.

Not later than the date that is 90 days after the date of enactment of this Act, the Secretary shall promulgate a regulation that permits each social health maintenance organization participating in a project conducted under section 1858 of the Social Security Act (as added by section 2) to expand the service area of such organization to include areas within the State served by the organization that are not contiguous to any other service area of the organization.

SEC. 4. PERMANENCE OF SHMO PLANNING GRANT SITES.

(a) ORIGINAL SHMO II DEMONSTRATIONS- The 5 organizations authorized by section 4207(b)(4)(B) of the Omnibus Budget Reconciliation Act of 1990 (Public Law 101-508; 104 Stat. 1388-118) to demonstrate the concept of social health maintenance organizations that were approved by the Secretary of Health and Human Services in 1995 shall be permitted to participate in the program under section 1858 of the Social Security Act (as added by section 2).

(b) SHMO II DUAL-ELIGIBLE PLANNING GRANTS- Each entity that received a planning grant in 1998 under the 1997 Grants Program for Reforming Service Delivery for Dual Eligible Beneficiaries to develop a Second Generation Social HMO Demonstration Program shall be permitted to participate in the program under section 1858 of the Social Security Act (as added by section 2).

SEC. 5. PROCEDURES FOR SHMO BENEFIT AND PAYMENT MECHANISM CHANGES.

(a) CONGRESSIONAL NOTIFICATION OF BENEFIT CHANGES- The Secretary of Health and Human Services shall notify the appropriate committees of Congress prior to making any change to the benefits available under a project under section 1858 of the Social Security Act (as added by section 2).

(b) RULEMAKING REQUIREMENT FOR PAYMENT MECHANISM CHANGES- The Secretary may not change the payment mechanism applicable with respect to any social health maintenance organization project under section

1858 of the Social Security Act (as added by section 2), except by regulation.

SEC. 6. COMPREHENSIVE MEDPAC STUDY ON SHMO I AND SHMO II COST-EFFECTIVENESS AND POTENTIAL EXPANSION.

(a) STUDY-

(1) IN GENERAL- The Medicare Payment Advisory Commission established under section 1805 of the Social Security Act (42 U.S.C. 1395b-6) (in this section referred to as the `Commission') shall conduct a study on the cost-effectiveness of the projects and the potential expansion of such projects.

(2) COST-EFFECTIVENESS-

(A) IN GENERAL- In determining the cost-effectiveness of the projects under the study conducted under paragraph (1), the Commission shall take into account--

(i) the extent to which the per beneficiary costs to the medicare program for enrollees in a social health maintenance organization do not exceed the average per beneficiary costs to the medicare program for a comparable case mix of beneficiaries who are enrolled in the original medicare fee-for-service program;

(ii) the actuarial value of items and services available to beneficiaries enrolled in a social health maintenance organization

but not available to beneficiaries enrolled in the original medicare fee-for-service program; and

(iii) the extent to which social health maintenance organizations reduced expenditures under the medicaid program under title XIX of the Social Security Act by--

(I) preventing individuals from being eligible for medical assistance under such program as medically needy individuals through the application of spend-down requirements for income and resources; or

(II) reducing the number of nursing home bed days associated with stays of 60 days or longer for medicaid beneficiaries.

(B) COMPARABLE CASE MIX- In evaluating a comparable case mix of beneficiaries for purposes of clause (i)(I), the Commission shall take into account the following factors:

(i) Age.

(ii) Gender.

(iii) Diagnoses.

(iv) Functional status.

(v) Any other available demographic or illness factor deemed appropriate by the Commission.

(C) DATA- In determining the cost-effectiveness of social health maintenance organizations under this subsection, the Commission shall evaluate data from social health maintenance organizations for the period beginning on January 1, 1997, and ending on the first December 31 occurring after the date of enactment of this Act.

(b) REPORT-

(1) IN GENERAL- Not later than the date that is 24 months after the date of enactment of this Act, the Commission shall submit to the Secretary of Health and Human Services and to the appropriate committees of Congress a report on the study conducted under subsection (a)(1).

(2) CONTENTS- The report submitted under paragraph (1) shall contain--

(A) a statement regarding whether the Commission finds social health maintenance organizations to be cost-effective;

(B) recommendations regarding whether the projects should be expanded to include additional sites and whether additional social health maintenance organizations should be permitted to participate in the projects;

(C) recommendations on whether to modify or eliminate the aggregate limit on number of members under section 1858(d) of the Social Security Act (as added by section 2); and

(D) if the Commission recommends expansion or replication of the projects, recommendations on the appropriate implementation of such expansion.

(c) DEFINITIONS- In this section:

(1) PROJECT- The term `project' means a project conducted under section 1858 of the Social Security Act (as added by section 2) other than a project described in subsection (b)(1)(B)(iv) of such section.

(2) MEDICARE PROGRAM- The term `medicare program' means the health benefits program under title XVIII of the Social Security Act.

(3) ORIGINAL MEDICARE FEE-FOR-SERVICE PROGRAM- The term `original medicare fee-for-service program' means the program under parts A and B of the medicare program.

(4) SOCIAL HEALTH MAINTENANCE ORGANIZATION- The term `social health maintenance organization' means an organization participating in a SHMO I project described in subparagraph (A) of section 1858(b)(1) of the Social Security Act (as added by section 2) or a SHMO II project described in subparagraph (B) of such section (other than a project described in clause (iv) of such subparagraph).

SEC. 7. SHMO BENEFICIARY SATISFACTION SURVEY.

(a) SURVEY-

(1) IN GENERAL- The Secretary of Health and Human Services shall conduct a comparative qualitative survey of the satisfaction of medicare beneficiaries enrolled in--

(A) the original medicare fee-for-service program under parts A and B of title XVIII of the Social Security Act;

(B) a Medicare+Choice plan under part C of title XVIII of such Act; and

(C) a social health maintenance organization under section 1858 of such Act (as added by section 2).

(2) CONSIDERATIONS- In determining beneficiary satisfaction, the Secretary of Health and Human Services shall take into account--

(A) the differences in the program or plan benefit structure;

(B) the extent to which the program or plan benefit structure enables beneficiaries to avoid or delay institutionalization;

(C) the amount of out-of-pocket costs saved by beneficiaries under the program or plan for traditional and expanded care services;

(D) the access to services by beneficiaries under the program or plan; and

(E) the satisfaction level of family members and caregivers of beneficiaries enrolled in the program or plan.

(b) PUBLICATION OF RESULTS AND SUBMISSION TO CONGRESS- Not later than the date that is 24 months after the date of enactment of this Act, the Secretary of Health and Human Services shall post the results of the survey conducted under subsection (a)(1) on an Internet website and shall submit such results to the appropriate committees of Congress.

SEC. 8. CONFORMING CROSS-REFERENCES.

(a) SOCIAL SECURITY ACT-

(1) The last sentence of section 1853(a)(1)(B) of the Social Security Act (42 U.S.C. 1395w-23(a)(1)(B)), as added by section 605(a) of the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (114 Stat. 2763A-556), is amended by striking `(established by section 2355 of the Deficit Reduction Act of 1984, as amended by section 13567(b) of the Omnibus Budget Reconciliation Act of 1993)' and inserting `(established by section 1858)'.

(2) Section 1882(g)(1) of the Social Security Act (42 U.S.C. 1395ss(g)(1)) is amended by striking `section 2355 of the Deficit Reduction Act of 1984' and inserting `section 1858'.

(b) MEDICARE, MEDICAID, AND SCHIP BENEFITS IMPROVEMENT AND PROTECTION ACT OF 2000- Section 542(b)(2)(B)(iv) of the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (114 Stat. 2763A-551), as enacted into law by section 1(a)(6) of Public Law 106-554, is amended by striking `section 4018(b) of the Omnibus Budget Reconciliation Act of 1987 (Public Law 100-203)' and inserting `section 1858 of the Social Security Act'.

SEC. 9. LEGISLATIVE PURPOSE AND CONSTRUCTION.

(a) PRINCIPAL SUBSTANTIVE CHANGES TO MAKE SHMO PROJECTS PERMANENT-

(1) IN GENERAL- Except as provided in paragraphs (2) and (3), section 2--

(A) restates, without substantive change, laws enacted before January 24, 2002, that were replaced by that section;

(B) may not be construed as making a substantive change in the laws replaced; and

(C) is superseded by any law that is enacted after January 24, 2002, that is inconsistent with such section or that supersedes that section to the extent of the inconsistency.

(2) PERMANENCY- Section 2 extends the social health maintenance organization projects for an indefinite time period (beyond the date that is 30 months after the date that the Secretary submits to Congress the report described in section 1858(e)(4) of the Social Security Act, as added by section 2).

(3) MODIFICATION OF CERTAIN REPORTING REQUIREMENTS-

(A) The report required to be submitted by the Secretary of Health and Human Services under section 1858(e)(5) of the Social Security Act (as added by section 2) is the same report as is required under the first sentence of section 4018 of the Omnibus Budget Reconciliation Act of 1987 (Public Law 100-203; 101 Stat. 1330-65), except that such report is no longer characterized as a final report.

(B) The Medicare Payment Advisory Commission established under section 1805 of the Social Security Act (42 U.S.C. 1395b-6) shall not be required to submit the report described in the second sentence of section 4018 of the Omnibus Budget Reconciliation Act of 1987 (Public Law 100-203; 101 Stat. 1330-65).

(b) REFERENCES- A reference to a law replaced by section 2, including a reference in a regulation, order, or other law, is deemed to refer to the corresponding provision enacted by this Act.

(c) CONTINUING EFFECT- An order, rule, or regulation in effect under a law replaced by section 2 shall continue in effect under the corresponding provision enacted by this Act until repealed, amended, or superseded.

(d) ACTIONS UNDER PRIOR LAW- An action taken under a law replaced by section 2 is deemed to have been taken under the corresponding provision enacted by this Act.

(e) INFERENCES- No inference of legislative construction may be drawn by reason of a heading of a provision.

(f) SEVERABILITY- If a provision enacted by this Act is--

(1) held invalid, each valid provision that is severable from the invalid provision shall remain in effect; and

(2) held invalid with respect to any application, the provision shall remain valid with respect to each valid application that is severable from the invalid application.

SEC. 10. REPEALS.

(a) INFERENCES OF REPEAL- The repeal of a law by this Act may not be construed as a legislative inference that the provision was or was not in effect before its repeal.

(b) LAWS REPEALED- Except for rights and duties that matured, penalties that were incurred, and proceedings that were begun before the date of enactment of this Act, the following provisions (and amendments made by such provisions) are repealed:

(1) Section 2355 of the Deficit Reduction Act of 1984 (Public Law 98-369; 98 Stat. 1103).

(2) Section 4018(b) of the Omnibus Budget Reconciliation Act of 1987 (Public Law 100-203; 101 Stat. 1330-65).

(3) Section 4207(b)(4) of the Omnibus Budget Reconciliation Act of 1990 (Public Law 101-508; 104 Stat. 1388-118).

(4) Section 13567 of the Omnibus Budget Reconciliation Act of 1993 (Public Law 103-66; 107 Stat. 607).

(5) Paragraphs (6) through (8) of section 160(d) of the Social Security Act Amendments of 1994 (Public Law 103-432; 108 Stat. 4443).

(6) Section 4014 of the Balanced Budget Act of 1997 (Public Law 105-33; 111 Stat. 336).

(7) Section 531 of the Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 1999 (Appendix F of Public Law 106-113; 113 Stat. 1501A-388).

(8) Section 631 of the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (Appendix F of Public Law 106-554; 114 Stat. 2763A-566).

END