
From the U.S. Code Online via GPO Access
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[Laws in effect as of January 23, 2000]
[Document affected by Public Law 106-554 Section 1(a)(6)[634]]
[Document affected by Public Law 106-554 Section 1(a)(6)[632(a)]]
[Document affected by Public Law 106-554 Section 1(a)(6)[632(b)]]
[CITE: 42USC1395mm]

 
                 TITLE 42--THE PUBLIC HEALTH AND WELFARE
 
                       CHAPTER 7--SOCIAL SECURITY
 
        SUBCHAPTER XVIII--HEALTH INSURANCE FOR AGED AND DISABLED
 
                    Part D--Miscellaneous Provisions
 
Sec. 1395mm. Payments to health maintenance organizations and 
        competitive medical plans
        

(a) Rates and adjustments

    (1)(A) The Secretary shall annually determine, and shall announce 
(in a manner intended to provide notice to interested parties) not later 
than September 7 before the calendar year concerned--
        (i) a per capita rate of payment for each class of individuals 
    who are enrolled under this section with an eligible organization 
    which has entered into a risk-sharing contract and who are entitled 
    to benefits under part A of this subchapter and enrolled under part 
    B of this subchapter, and
        (ii) a per capita rate of payment for each class of individuals 
    who are so enrolled with such an organization and who are enrolled 
    under part B of this subchapter only.

For purposes of this section, the term ``risk-sharing contract'' means a 
contract entered into under subsection (g) of this section and the term 
``reasonable cost reimbursement contract'' means a contract entered into 
under subsection (h) of this section.
    (B) The Secretary shall define appropriate classes of members, based 
on age, disability status, and such other factors as the Secretary 
determines to be appropriate, so as to ensure actuarial equivalence. The 
Secretary may add to, modify, or substitute for such classes, if such 
changes will improve the determination of actuarial equivalence.
    (C) The annual per capita rate of payment for each such class shall 
be equal to 95 percent of the adjusted average per capita cost (as 
defined in paragraph (4)) for that class.
    (D) In the case of an eligible organization with a risk-sharing 
contract, the Secretary shall make monthly payments in advance and in 
accordance with the rate determined under subparagraph (C) and except as 
provided in subsection (g)(2) of this section, to the organization for 
each individual enrolled with the organization under this section.
    (E)(i) The amount of payment under this paragraph may be 
retroactively adjusted to take into account any difference between the 
actual number of individuals enrolled in the plan under this section and 
the number of such individuals estimated to be so enrolled in 
determining the amount of the advance payment.
    (ii)(I) Subject to subclause (II), the Secretary may make 
retroactive adjustments under clause (i) to take into account 
individuals enrolled during the period beginning on the date on which 
the individual enrolls with an eligible organization (which has a risk-
sharing contract under this section) under a health benefit plan 
operated, sponsored, or contributed to by the individual's employer or 
former employer (or the employer or former employer of the individual's 
spouse) and ending on the date on which the individual is enrolled in 
the plan under this section, except that for purposes of making such 
retroactive adjustments under this clause, such period may not exceed 90 
days.
    (II) No adjustment may be made under subclause (I) with respect to 
any individual who does not certify that the organization provided the 
individual with the explanation described in subsection (c)(3)(E) of 
this section at the time the individual enrolled with the organization.
    (F)(i) At least 45 days before making the announcement under 
subparagraph (A) for a year (beginning with the announcement for 1991), 
the Secretary shall provide for notice to eligible organizations of 
proposed changes to be made in the methodology or benefit coverage 
assumptions from the methodology and assumptions used in the previous 
announcement and shall provide such organizations an opportunity to 
comment on such proposed changes.
    (ii) In each announcement made under subparagraph (A) for a year 
(beginning with the announcement for 1991), the Secretary shall include 
an explanation of the assumptions (including any benefit coverage 
assumptions) and changes in methodology used in the announcement in 
sufficient detail so that eligible organizations can compute per capita 
rates of payment for classes of individuals located in each county (or 
equivalent area) which is in whole or in part within the service area of 
such an organization.
    (2) With respect to any eligible organization which has entered into 
a reasonable cost reimbursement contract, payments shall be made to such 
plan in accordance with subsection (h)(2) of this section rather than 
paragraph (1).
    (3) Subject to subsections (c)(2)(B)(ii) and (c)(7) of this section, 
payments under a contract to an eligible organization under paragraph 
(1) or (2) shall be instead of the amounts which (in the absence of the 
contract) would be otherwise payable, pursuant to sections 1395f(b) and 
1395l(a) of this title, for services furnished by or through the 
organization to individuals enrolled with the organization under this 
section.
    (4) For purposes of this section, the term ``adjusted average per 
capita cost'' means the average per capita amount that the Secretary 
estimates in advance (on the basis of actual experience, or 
retrospective actuarial equivalent based upon an adequate sample and 
other information and data, in a geographic area served by an eligible 
organization or in a similar area, with appropriate adjustments to 
assure actuarial equivalence) would be payable in any contract year for 
services covered under parts A and B of this subchapter, or part B only, 
and types of expenses otherwise reimbursable under parts A and B of this 
subchapter, or part B only (including administrative costs incurred by 
organizations described in sections 1395h and 1395u of this title), if 
the services were to be furnished by other than an eligible organization 
or, in the case of services covered only under section 1395x(s)(2)(H) of 
this title, if the services were to be furnished by a physician or as an 
incident to a physician's service.
    (5) The payment to an eligible organization under this section for 
individuals enrolled under this section with the organization and 
entitled to benefits under part A of this subchapter and enrolled under 
part B of this subchapter shall be made from the Federal Hospital 
Insurance Trust Fund and the Federal Supplementary Medical Insurance 
Trust Fund. The portion of that payment to the organization for a month 
to be paid by each trust fund shall be determined as follows:
        (A) In regard to expenditures by eligible organizations having 
    risk-sharing contracts, the allocation shall be determined each year 
    by the Secretary based on the relative weight that benefits from 
    each fund contribute to the adjusted average per capita cost.
        (B) In regard to expenditures by eligible organizations 
    operating under a reasonable cost reimbursement contract, the 
    initial allocation shall be based on the plan's most recent budget, 
    such allocation to be adjusted, as needed, after cost settlement to 
    reflect the distribution of actual expenditures.

The remainder of that payment shall be paid by the former trust fund.
    (6) Subject to subsections (c)(2)(B)(ii) and (c)(7) of this section, 
if an individual is enrolled under this section with an eligible 
organization having a risk-sharing contract, only the eligible 
organization shall be entitled to receive payments from the Secretary 
under this subchapter for services furnished to the individual.

(b) Definitions; requirements

    For purposes of this section, the term ``eligible organization'' 
means a public or private entity (which may be a health maintenance 
organization or a competitive medical plan), organized under the laws of 
any State, which--
        (1) is a qualified health maintenance organization (as defined 
    in section 300e-9(d) \1\ of this title), or
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    \1\ See References in Text note below.
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        (2) meets the following requirements:
            (A) The entity provides to enrolled members at least the 
        following health care services:
                (i) Physicians' services performed by physicians (as 
            defined in section 1395x(r)(1) of this title).
                (ii) Inpatient hospital services.
                (iii) Laboratory, X-ray, emergency, and preventive 
            services.
                (iv) Out-of-area coverage.

            (B) The entity is compensated (except for deductibles, 
        coinsurance, and copayments) for the provision of health care 
        services to enrolled members by a payment which is paid on a 
        periodic basis without regard to the date the health care 
        services are provided and which is fixed without regard to the 
        frequency, extent, or kind of health care service actually 
        provided to a member.
            (C) The entity provides physicians' services primarily (i) 
        directly through physicians who are either employees or partners 
        of such organization, or (ii) through contracts with individual 
        physicians or one or more groups of physicians (organized on a 
        group practice or individual practice basis).
            (D) The entity assumes full financial risk on a prospective 
        basis for the provision of the health care services listed in 
        subparagraph (A), except that such entity may--
                (i) obtain insurance or make other arrangements for the 
            cost of providing to any enrolled member health care 
            services listed in subparagraph (A) the aggregate value of 
            which exceeds $5,000 in any year,
                (ii) obtain insurance or make other arrangements for the 
            cost of health care service listed in subparagraph (A) 
            provided to its enrolled members other than through the 
            entity because medical necessity required their provision 
            before they could be secured through the entity,
                (iii) obtain insurance or make other arrangements for 
            not more than 90 percent of the amount by which its costs 
            for any of its fiscal years exceed 115 percent of its income 
            for such fiscal year, and
                (iv) make arrangements with physicians or other health 
            professionals, health care institutions, or any combination 
            of such individuals or institutions to assume all or part of 
            the financial risk on a prospective basis for the provision 
            of basic health services by the physicians or other health 
            professionals or through the institutions.

            (E) The entity has made adequate provision against the risk 
        of insolvency, which provision is satisfactory to the Secretary.

Paragraph (2)(A)(ii) shall not apply to an entity which had contracted 
with a single State agency administering a State plan approved under 
subchapter XIX of this chapter for the provision of services (other than 
inpatient hospital services) to individuals eligible for such services 
under such State plan on a prepaid risk basis prior to 1970.

(c) Enrollment in plan; duties of organization to enrollees

    (1) The Secretary may not enter into a contract under this section 
with an eligible organization unless it meets the requirements of this 
subsection and subsection (e) of this section with respect to members 
enrolled under this section.
    (2)(A) The organization must provide to members enrolled under this 
section, through providers and other persons that meet the applicable 
requirements of this subchapter and part A of subchapter XI of this 
chapter--
        (i) only those services covered under parts A and B of this 
    subchapter, for those members entitled to benefits under part A of 
    this subchapter and enrolled under part B of this subchapter, or
        (ii) only those services covered under part B of this 
    subchapter, for those members enrolled only under such part,

which are available to individuals residing in the geographic area 
served by the organization, except that (I) the organization may provide 
such members with such additional health care services as the members 
may elect, at their option, to have covered, and (II) in the case of an 
organization with a risk-sharing contract, the organization may provide 
such members with such additional health care services as the Secretary 
may approve. The Secretary shall approve any such additional health care 
services which the organization proposes to offer to such members, 
unless the Secretary determines that including such additional services 
will substantially discourage enrollment by covered individuals with the 
organization.
    (B) If there is a national coverage determination made in the period 
beginning on the date of an announcement under subsection (a)(1)(A) of 
this section and ending on the date of the next announcement under such 
subsection that the Secretary projects will result in a signifcant \2\ 
change in the costs to the organization of providing the benefits that 
are the subject of such national coverage determination and that was not 
incorporated in the determination of the per capita rate of payment 
included in the announcement made at the beginning of such period--
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    \2\ So in original. Probably should be ``significant''.
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        (i) such determination shall not apply to risk-sharing contracts 
    under this section until the first contract year that begins after 
    the end of such period; and
        (ii) if such coverage determination provides for coverage of 
    additional benefits or under additional circumstances, subsection 
    (a)(3) of this section shall not apply to payment for such 
    additional benefits or benefits provided under such additional 
    circumstances until the first contract year that begins after the 
    end of such period,

unless otherwise required by law.
    (3)(A)(i) Each eligible organization must have an open enrollment 
period, for the enrollment of individuals under this section, of at 
least 30 days duration every year and including the period or periods 
specified under clause (ii), and must provide that at any time during 
which enrollments are accepted, the organization will accept up to the 
limits of its capacity (as determined by the Secretary) and without 
restrictions, except as may be authorized in regulations, individuals 
who are eligible to enroll under subsection (d) of this section in the 
order in which they apply for enrollment, unless to do so would result 
in failure to meet the requirements of subsection (f) of this section or 
would result in the enrollment of enrollees substantially 
nonrepresentative, as determined in accordance with regulations of the 
Secretary, of the population in the geographic area served by the 
organization.
    (ii)(I) If a risk-sharing contract under this section is not renewed 
or is otherwise terminated, eligible organizations with risk-sharing 
contracts under this section and serving a part of the same service area 
as under the terminated contract are required to have an open enrollment 
period for individuals who were enrolled under the terminated contract 
as of the date of notice of such termination. If a risk-sharing contract 
under this section is renewed in a manner that discontinues coverage for 
individuals residing in part of the service area, eligible organizations 
with risk-sharing contracts under this section and enrolling individuals 
residing in that part of the service area are required to have an open 
enrollment period for individuals residing in the part of the service 
area who were enrolled under the contract as of the date of notice of 
such discontinued coverage.
    (II) The open enrollment periods required under subclause (I) shall 
be for 30 days and shall begin 30 days after the date that the Secretary 
provides notice of such requirement.
    (III) Enrollment under this clause shall be effective 30 days after 
the end of the open enrollment period, or, if the Secretary determines 
that such date is not feasible, such other date as the Secretary 
specifies.
    (B) An individual may enroll under this section with an eligible 
organization in such manner as may be prescribed in regulations and may 
terminate his enrollment with the eligible organization as of the 
beginning of the first calendar month following the date on which the 
request is made for such termination (or, in the case of financial 
insolvency of the organization, as may be prescribed by regulations) or, 
in the case of such an organization with a reasonable cost reimbursement 
contract, as may be prescribed by regulations. In the case of an 
individual's termination of enrollment, the organization shall provide 
the individual with a copy of the written request for termination of 
enrollment and a written explanation of the period (ending on the 
effective date of the termination) during which the individual continues 
to be enrolled with the organization and may not receive benefits under 
this subchapter other than through the organization.
    (C) The Secretary may prescribe the procedures and conditions under 
which an eligible organization that has entered into a contract with the 
Secretary under this subsection may inform individuals eligible to 
enroll under this section with the organization about the organization, 
or may enroll such individuals with the organization. No brochures, 
application forms, or other promotional or informational material may be 
distributed by an organization to (or for the use of) individuals 
eligible to enroll with the organization under this section unless (i) 
at least 45 days before its distribution, the organization has submitted 
the material to the Secretary for review and (ii) the Secretary has not 
disapproved the distribution of the material. The Secretary shall review 
all such material submitted and shall disapprove such material if the 
Secretary determines, in the Secretary's discretion, that the material 
is materially inaccurate or misleading or otherwise makes a material 
misrepresentation.
    (D) The organization must provide assurances to the Secretary that 
it will not expel or refuse to re-enroll any such individual because of 
the individual's health status or requirements for health care services, 
and that it will notify each such individual of such fact at the time of 
the individual's enrollment.
    (E) Each eligible organization shall provide each enrollee, at the 
time of enrollment and not less frequently than annually thereafter, an 
explanation of the enrollee's rights under this section, including an 
explanation of--
        (i) the enrollee's rights to benefits from the organization,
        (ii) the restrictions on payments under this subchapter for 
    services furnished other than by or through the organization,
        (iii) out-of-area coverage provided by the organization,
        (iv) the organization's coverage of emergency services and 
    urgently needed care, and
        (v) appeal rights of enrollees.

    (F) Each eligible organization that provides items and services 
pursuant to a contract under this section shall provide assurances to 
the Secretary that in the event the organization ceases to provide such 
items and services, the organization shall provide or arrange for 
supplemental coverage of benefits under this subchapter related to a 
pre-existing condition with respect to any exclusion period, to all 
individuals enrolled with the entity who receive benefits under this 
subchapter, for the lesser of six months or the duration of such period.
    (G)(i) Each eligible organization having a risk-sharing contract 
under this section shall notify individuals eligible to enroll with the 
organization under this section and individuals enrolled with the 
organization under this section that--
        (I) the organization is authorized by law to terminate or refuse 
    to renew the contract, and
        (II) termination or nonrenewal of the contract may result in 
    termination of the enrollments of individuals enrolled with the 
    organization under this section.

    (ii) The notice required by clause (i) shall be included in--
        (I) any marketing materials described in subparagraph (C) that 
    are distributed by an eligible organization to individuals eligible 
    to enroll under this section with the organization, and
        (II) any explanation provided to enrollees by the organization 
    pursuant to subparagraph (E).

    (4) The organization must--
        (A) make the services described in paragraph (2) (and such other 
    health care services as such individuals have contracted for) (i) 
    available and accessible to each such individual, within the area 
    served by the organization, with reasonable promptness and in a 
    manner which assures continuity, and (ii) when medically necessary, 
    available and accessible twenty-four hours a day and seven days a 
    week, and
        (B) provide for reimbursement with respect to services which are 
    described in subparagraph (A) and which are provided to such an 
    individual other than through the organization, if (i) the services 
    were medically necessary and immediately required because of an 
    unforeseen illness, injury, or condition and (ii) it was not 
    reasonable given the circumstances to obtain the services through 
    the organization.

    (5)(A) The organization must provide meaningful procedures for 
hearing and resolving grievances between the organization (including any 
entity or individual through which the organization provides health care 
services) and members enrolled with the organization under this section.
    (B) A member enrolled with an eligible organization under this 
section who is dissatisfied by reason of his failure to receive any 
health service to which he believes he is entitled and at no greater 
charge than he believes he is required to pay is entitled, if the amount 
in controversy is $100 or more, to a hearing before the Secretary to the 
same extent as is provided in section 405(b) of this title, and in any 
such hearing the Secretary shall make the eligible organization a party. 
If the amount in controversy is $1,000 or more, the individual or 
eligible organization shall, upon notifying the other party, be entitled 
to judicial review of the Secretary's final decision as provided in 
section 405(g) of this title, and both the individual and the eligible 
organization shall be entitled to be parties to that judicial review. In 
applying sections 405(b) and 405(g) of this title as provided in this 
subparagraph, and in applying section 405(l) of this title thereto, any 
reference therein to the Commissioner of Social Security or the Social 
Security Administration shall be considered a reference to the Secretary 
or the Department of Health and Human Services, respectively.
    (6) The organization must have arrangements, established in 
accordance with regulations of the Secretary, for an ongoing quality 
assurance program for health care services it provides to such 
individuals, which program (A) stresses health outcomes and (B) provides 
review by physicians and other health care professionals of the process 
followed in the provision of such health care services.
    (7) A risk-sharing contract under this section shall provide that in 
the case of an individual who is receiving inpatient hospital services 
from a subsection (d) hospital (as defined in section 1395ww(d)(1)(B) of 
this title) as of the effective date of the individual's--
        (A) enrollment with an eligible organization under this 
    section--
            (i) payment for such services until the date of the 
        individual's discharge shall be made under this subchapter as if 
        the individual were not enrolled with the organization,
            (ii) the organization shall not be financially responsible 
        for payment for such services until the date after the date of 
        the individual's discharge, and
            (iii) the organization shall nonetheless be paid the full 
        amount otherwise payable to the organization under this section; 
        or

        (B) termination of enrollment with an eligible organization 
    under this section--
            (i) the organization shall be financially responsible for 
        payment for such services after such date and until the date of 
        the individual's discharge,
            (ii) payment for such services during the stay shall not be 
        made under section 1395ww(d) of this title, and
            (iii) the organization shall not receive any payment with 
        respect to the individual under this section during the period 
        the individual is not enrolled.

    (8) A contract under this section shall provide that the eligible 
organization shall meet the requirement of section 1395cc(f) of this 
title (relating to maintaining written policies and procedures 
respecting advance directives).

(d) Right to enroll with contracting organization in geographic area

    Subject to the provisions of subsection (c)(3) of this section, 
every individual entitled to benefits under part A of this subchapter 
and enrolled under part B of this subchapter or enrolled under part B of 
this subchapter only (other than an individual medically determined to 
have end-stage renal disease) shall be eligible to enroll under this 
section with any eligible organization with which the Secretary has 
entered into a contract under this section and which serves the 
geographic area in which the individual resides.

(e) Limitation on charges; election of coverage; ``adjusted community 
        rate'' defined; workmen's compensation and insurance benefits

    (1) In no case may--
        (A) the portion of an eligible organization's premium rate and 
    the actuarial value of its deductibles, coinsurance, and copayments 
    charged (with respect to services covered under parts A and B of 
    this subchapter) to individuals who are enrolled under this section 
    with the organization and who are entitled to benefits under part A 
    of this subchapter and enrolled under part B of this subchapter, or
        (B) the portion of its premium rate and the actuarial value of 
    its deductibles, coinsurance, and copayments charged (with respect 
    to services covered under part B of this subchapter) to individuals 
    who are enrolled under this section with the organization and 
    enrolled under part B of this subchapter only

exceed the actuarial value of the coinsurance and deductibles that would 
be applicable on the average to individuals enrolled under this section 
with the organization (or, if the Secretary finds that adequate data are 
not available to determine that actuarial value, the actuarial value of 
the coinsurance and deductibles applicable on the average to individuals 
in the area, in the State, or in the United States, eligible to enroll 
under this section with the organization, or other appropriate data) and 
entitled to benefits under part A of this subchapter and enrolled under 
part B of this subchapter, or enrolled under part B only, respectively, 
if they were not members of an eligible organization.
    (2) If the eligible organization provides to its members enrolled 
under this section services in addition to services covered under parts 
A and B of this subchapter, election of coverage for such additional 
services (unless such services have been approved by the Secretary under 
subsection (c)(2) of this section) shall be optional for such members 
and such organization shall furnish such members with information on the 
portion of its premium rate or other charges applicable to such 
additional services. In no case may the sum of--
        (A) the portion of such organization's premium rate charged, 
    with respect to such additional services, to members enrolled under 
    this section, and
        (B) the actuarial value of its deductibles, coinsurance, and 
    copayments charged, with respect to such services to such members

exceed the adjusted community rate for such services.
    (3) For purposes of this section, the term ``adjusted community 
rate'' for a service or services means, at the election of an eligible 
organization, either--
        (A) the rate of payment for that service or services which the 
    Secretary annually determines would apply to a member enrolled under 
    this section with an eligible organization if the rate of payment 
    were determined under a ``community rating system'' (as defined in 
    section 300e-1(8) of this title, other than subparagraph (C)), or
        (B) such portion of the weighted aggregate premium, which the 
    Secretary annually estimates would apply to a member enrolled under 
    this section with the eligible organization, as the Secretary 
    annually estimates is attributable to that service or services,

but adjusted for differences between the utilization characteristics of 
the members enrolled with the eligible organization under this section 
and the utilization characteristics of the other members of the 
organization (or, if the Secretary finds that adequate data are not 
available to adjust for those differences, the differences between the 
utilization characteristics of members in other eligible organizations, 
or individuals in the area, in the State, or in the United States, 
eligible to enroll under this section with an eligible organization and 
the utilization characteristics of the rest of the population in the 
area, in the State, or in the United States, respectively).
    (4) Notwithstanding any other provision of law, the eligible 
organization may (in the case of the provision of services to a member 
enrolled under this section for an illness or injury for which the 
member is entitled to benefits under a workmen's compensation law or 
plan of the United States or a State, under an automobile or liability 
insurance policy or plan, including a self-insured plan, or under no 
fault insurance) charge or authorize the provider of such services to 
charge, in accordance with the charges allowed under such law or 
policy--
        (A) the insurance carrier, employer, or other entity which under 
    such law, plan, or policy is to pay for the provision of such 
    services, or
        (B) such member to the extent that the member has been paid 
    under such law, plan, or policy for such services.

(f) Membership requirements

    (1) For contract periods beginning before January 1, 1999, each 
eligible organization with which the Secretary enters into a contract 
under this section shall have, for the duration of such contract, an 
enrolled membership at least one-half of which consists of individuals 
who are not entitled to benefits under this subchapter.
    (2) Subject to paragraph (4), the Secretary may modify or waive the 
requirement imposed by paragraph (1) only--
        (A) to the extent that more than 50 percent of the population of 
    the area served by the organization consists of individuals who are 
    entitled to benefits under this subchapter or under a State plan 
    approved under subchapter XIX of this chapter, or
        (B) in the case of an eligible organization that is owned and 
    operated by a governmental entity, only with respect to a period of 
    three years beginning on the date the organization first enters into 
    a contract under this section, and only if the organization has 
    taken and is making reasonable efforts to enroll individuals who are 
    not entitled to benefits under this subchapter or under a State plan 
    approved under subchapter XIX of this chapter.

    (3) If the Secretary determines that an eligible organization has 
failed to comply with the requirements of this subsection, the Secretary 
may provide for the suspension of enrollment of individuals under this 
section or of payment to the organization under this section for 
individuals newly enrolled with the organization, after the date the 
Secretary notifies the organization of such noncompliance.
    (4) Effective for contract periods beginning after December 31, 
1996, the Secretary may waive or modify the requirement imposed by 
paragraph (1) to the extent the Secretary finds that it is in the public 
interest.

(g) Risk-sharing contract

    (1) The Secretary may enter a risk-sharing contract with any 
eligible organization, as defined in subsection (b) of this section, 
which has at least 5,000 members, except that the Secretary may enter 
into such a contract with an eligible organization that has fewer 
members if the organization primarily serves members residing outside of 
urbanized areas.
    (2) Each risk-sharing contract shall provide that--
        (A) if the adjusted community rate, as defined in subsection 
    (e)(3) of this section, for services under parts A and B of this 
    subchapter (as reduced for the actuarial value of the coinsurance 
    and deductibles under those parts) for members enrolled under this 
    section with the organization and entitled to benefits under part A 
    of this subchapter and enrolled in part B of this subchapter, or
        (B) if the adjusted community rate for services under part B of 
    this subchapter (as reduced for the actuarial value of the 
    coinsurance and deductibles under that part) for members enrolled 
    under this section with the organization and entitled to benefits 
    under part B of this subchapter only

is less than the average of the per capita rates of payment to be made 
under subsection (a)(1) of this section at the beginning of an annual 
contract period for members enrolled under this section with the 
organization and entitled to benefits under part A of this subchapter 
and enrolled in part B of this subchapter, or enrolled in part B of this 
subchapter only, respectively, the eligible organization shall provide 
to members enrolled under a risk-sharing contract under this section 
with the organization and entitled to benefits under part A of this 
subchapter and enrolled in part B of this subchapter, or enrolled in 
part B of this subchapter only, respectively, the additional benefits 
described in paragraph (3) which are selected by the eligible 
organization and which the Secretary finds are at least equal in value 
to the difference between that average per capita payment and the 
adjusted community rate (as so reduced); except that this paragraph 
shall not apply with respect to any organization which elects to receive 
a lesser payment to the extent that there is no longer a difference 
between the average per capita payment and adjusted community rate (as 
so reduced) and except that an organization (with the approval of the 
Secretary) may provide that a part of the value of such additional 
benefits be withheld and reserved by the Secretary as provided in 
paragraph (5). If the Secretary finds that there is insufficient 
enrollment experience to determine an average of the per capita rates of 
payment to be made under subsection (a)(1) of this section at the 
beginning of a contract period, the Secretary may determine such an 
average based on the enrollment experience of other contracts entered 
into under this section.
    (3) The additional benefits referred to in paragraph (2) are--
        (A) the reduction of the premium rate or other charges made with 
    respect to services furnished by the organization to members 
    enrolled under this section, or
        (B) the provision of additional health benefits,

or both.
    (4) Repealed. Pub. L. 100-203, title IV, Sec. 4012(b), Dec. 22, 
1987, 101 Stat. 1330-61.
    (5) An organization having a risk-sharing contract under this 
section may (with the approval of the Secretary) provide that a part of 
the value of additional benefits otherwise required to be provided by 
reason of paragraph (2) be withheld and reserved in the Federal Hospital 
Insurance Trust Fund and in the Federal Supplementary Medical Insurance 
Trust Fund (in such proportions as the Secretary determines to be 
appropriate) by the Secretary for subsequent annual contract periods, to 
the extent required to stabilize and prevent undue fluctuations in the 
additional benefits offered in those subsequent periods by the 
organization in accordance with paragraph (3). Any of such value of 
additional benefits which is not provided to members of the organization 
in accordance with paragraph (3) prior to the end of such period, shall 
revert for the use of such trust funds.
    (6)(A) A risk-sharing contract under this section shall require the 
eligible organization to provide prompt payment (consistent with the 
provisions of sections 1395h(c)(2) and 1395u(c)(2) of this title) of 
claims submitted for services and supplies furnished to individuals 
pursuant to such contract, if the services or supplies are not furnished 
under a contract between the organization and the provider or supplier.
    (B) In the case of an eligible organization which the Secretary 
determines, after notice and opportunity for a hearing, has failed to 
make payments of amounts in compliance with subparagraph (A), the 
Secretary may provide for direct payment of the amounts owed to 
providers and suppliers for such covered services furnished to 
individuals enrolled under this section under the contract. If the 
Secretary provides for such direct payments, the Secretary shall provide 
for an appropriate reduction in the amount of payments otherwise made to 
the organization under this section to reflect the amount of the 
Secretary's payments (and costs incurred by the Secretary in making such 
payments).

(h) Reasonable cost reimbursement contract; requirements

    (1) If--
        (A) the Secretary is not satisfied that an eligible organization 
    has the capacity to bear the risk of potential losses under a risk-
    sharing contract under this section, or
        (B) the eligible organization so elects or has an insufficient 
    number of members to be eligible to enter into a risk-sharing 
    contract under subsection (g)(1) of this section,

the Secretary may, if he is otherwise satisfied that the eligible 
organization is able to perform its contractual obligations effectively 
and efficiently, enter into a contract with such organization pursuant 
to which such organization is reimbursed on the basis of its reasonable 
cost (as defined in section 1395x(v) of this title) in the manner 
prescribed in paragraph (3).
    (2) A reasonable cost reimbursement contract under this subsection 
may, at the option of such organization, provide that the Secretary--
        (A) will reimburse hospitals and skilled nursing facilities 
    either for the reasonable cost (as determined under section 1395x(v) 
    of this title) or for payment amounts determined in accordance with 
    section 1395ww of this title, as applicable, of services furnished 
    to individuals enrolled with such organization pursuant to 
    subsection (d) of this section, and
        (B) will deduct the amount of such reimbursement from payment 
    which would otherwise be made to such organization.

If such an eligible organization pays a hospital or skilled nursing 
facility directly, the amount paid shall not exceed the reasonable cost 
of the services (as determined under section 1395x(v) of this title) or 
the amount determined under section 1395ww of this title, as applicable, 
unless such organization demonstrates to the satisfaction of the 
Secretary that such excess payments are justified on the basis of 
advantages gained by the organization.
    (3) Payments made to an organization with a reasonable cost 
reimbursement contract shall be subject to appropriate retroactive 
corrective adjustment at the end of each contract year so as to assure 
that such organization is paid for the reasonable cost actually incurred 
(excluding any part of incurred cost found to be unnecessary in the 
efficient delivery of health services) or the amounts otherwise 
determined under section 1395ww of this title for the types of expenses 
otherwise reimbursable under this subchapter for providing services 
covered under this subchapter to individuals described in subsection 
(a)(1) of this section.
    (4) Any reasonable cost reimbursement contract with an eligible 
organization under this subsection shall provide that the Secretary 
shall require, at such time following the expiration of each accounting 
period of the eligible organization (and in such form and in such 
detail) as he may prescribe--
        (A) that the organization report to him in an independently 
    certified financial statement its per capita incurred cost based on 
    the types of components of expenses otherwise reimbursable under 
    this subchapter for providing services described in subsection 
    (a)(1) of this section, including therein, in accordance with 
    accounting procedures prescribed by the Secretary, its methods of 
    allocating costs between individuals enrolled under this section and 
    other individuals enrolled with such organization;
        (B) that failure to report such information as may be required 
    may be deemed to constitute evidence of likely overpayment on the 
    basis of which appropriate collection action may be taken;
        (C) that in any case in which an eligible organization is 
    related to another organization by common ownership or control, a 
    consolidated financial statement shall be filed and that the 
    allowable costs for such organization may not include costs for the 
    types of expense otherwise reimbursable under this subchapter, in 
    excess of those which would be determined to be reasonable in 
    accordance with regulations (providing for limiting reimbursement to 
    costs rather than charges to the eligible organization by related 
    organizations and owners) issued by the Secretary; and
        (D) that in any case in which compensation is paid by an 
    eligible organization substantially in excess of what is normally 
    paid for similar services by similar practitioners (regardless of 
    method of compensation), such compensation may as appropriate be 
    considered to constitute a distribution of profits.

    (5)(A) After August 5, 1997, the Secretary may not enter into a 
reasonable cost reimbursement contract under this subsection (if the 
contract is not in effect as of August 5, 1997), except for a contract 
with an eligible organization which, immediately previous to entering 
into such contract, had an agreement in effect under section 
1395l(a)(1)(A) of this title.
    (B) The Secretary may not extend or renew a reasonable cost 
reimbursement contract under this subsection for any period beyond 
December 31, 2004.

(i) Duration, termination, effective date, and terms of contract; powers 
        and duties of Secretary

    (1) Each contract under this section shall be for a term of at least 
one 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; except that in 
accordance with procedures established under paragraph (9), the 
Secretary may at any time terminate any such contract or may impose the 
intermediate sanctions described in paragraph (6)(B) or (6)(C) 
(whichever is applicable) on the eligible organization 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 substantially 
    inconsistent with the efficient and effective administration of this 
    section; or
        (C) no longer substantially meets the applicable conditions of 
    subsections (b), (c), (e), and (f) of this section.

    (2) The effective date of any contract executed pursuant to this 
section shall be specified in the contract.
    (3) Each contract under this section--
        (A) shall provide that the Secretary, or any person or 
    organization designated by him--
            (i) shall have the right to 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
            (ii) shall have the right to audit and inspect any books and 
        records of the eligible 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;

        (B) shall require the organization with a risk-sharing contract 
    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 subchapter, to each individual enrolled under 
    this section with the organization; and
        (C)(i) shall require the organization to comply with subsections 
    (a) and (c) of section 300e-17 of this title (relating to disclosure 
    of certain financial information) and with the requirement of 
    section 300e(c)(8) \3\ of this title (relating to liability 
    arrangements to protect members);
---------------------------------------------------------------------------
    \3\ See References in Text note below.
---------------------------------------------------------------------------
        (ii) shall require the organization to provide and supply 
    information (described in section 1395cc(b)(2)(C)(ii) of this title) 
    in the manner such information is required to be provided or 
    supplied under that section;
        (iii) 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; and
        (D) shall contain such other terms and conditions not 
    inconsistent with this section (including requiring the organization 
    to provide the Secretary with such information) as the Secretary may 
    find necessary and appropriate.

    (4) The Secretary may not enter into a risk-sharing contract with an 
eligible organization if a previous risk-sharing contract with that 
organization under this section was terminated at the request of the 
organization within the preceding five-year period, except in 
circumstances which warrant special consideration, as determined by the 
Secretary.
    (5) The authority vested in the Secretary by this section 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 subchapter.
    (6)(A) If the Secretary determines that an eligible organization 
with a contract under this section--
        (i) 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;
        (ii) imposes premiums on individuals enrolled under this section 
    in excess of the premiums permitted;
        (iii) acts to expel or to refuse to re-enroll an individual in 
    violation of the provisions of this section;
        (iv) engages in any practice that would reasonably be expected 
    to have the effect of denying or discouraging enrollment (except as 
    permitted by this section) by eligible individuals with the 
    organization whose medical condition or history indicates a need for 
    substantial future medical services;
        (v) misrepresents or falsifies information that is furnished--
            (I) to the Secretary under this section, or
            (II) to an individual or to any other entity under this 
        section;

        (vi) fails to comply with the requirements of subsection 
    (g)(6)(A) of this section or paragraph (8); or
        (vii) in the case of a risk-sharing contract, employs or 
    contracts with any individual or entity that is excluded from 
    participation under this subchapter under section 1320a-7 or 1320a-
    7a of this title 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;

the Secretary may provide, in addition to any other remedies authorized 
by law, for any of the remedies described in subparagraph (B).
    (B) The remedies described in this subparagraph are--
        (i) civil money penalties of not more than $25,000 for each 
    determination under subparagraph (A) or, with respect to a 
    determination under clause (iv) or (v)(I) of such subparagraph, of 
    not more than $100,000 for each such determination, plus, with 
    respect to a determination under subparagraph (A)(ii), double the 
    excess amount charged in violation of such subparagraph (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 subparagraph (A)(iv), $15,000 for each 
    individual not enrolled as a result of the practice involved,
        (ii) suspension of enrollment of individuals under this section 
    after the date the Secretary notifies the organization of a 
    determination under subparagraph (A) and until the Secretary is 
    satisfied that the basis for such determination has been corrected 
    and is not likely to recur, or
        (iii) suspension of payment to the organization under this 
    section for individuals enrolled after the date the Secretary 
    notifies the organization of a determination under subparagraph (A) 
    and until the Secretary is satisfied that the basis for such 
    determination has been corrected and is not likely to recur.

    (C) In the case of an eligible organization for which the Secretary 
makes a determination under paragraph (1), the basis of which is not 
described in subparagraph (A), the Secretary may apply the following 
intermediate sanctions:
        (i) Civil money penalties of not more than $25,000 for each 
    determination under paragraph (1) 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.
        (ii) Civil money penalties of not more than $10,000 for each 
    week beginning after the initiation of procedures by the Secretary 
    under paragraph (9) during which the deficiency that is the basis of 
    a determination under paragraph (1) exists.
        (iii) Suspension of enrollment of individuals under this section 
    after the date the Secretary notifies the organization of a 
    determination under paragraph (1) 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) The provisions of section 1320a-7a of this title (other than 
subsections (a) and (b)) shall apply to a civil money penalty under 
subparagraph (B)(i) or (C)(i) in the same manner as such provisions 
apply to a civil money penalty or proceeding under section 1320a-7a(a) 
of this title.
    (7)(A) Each risk-sharing contract with an eligible organization 
under this section shall provide that the organization will maintain a 
written agreement with a utilization and quality control peer review 
organization (which has a contract with the Secretary under part B of 
subchapter XI of this chapter for the area in which the eligible 
organization is located) or with an entity selected by the Secretary 
under section 1320c-3(a)(4)(C) of this title under which the review 
organization will perform functions under section 1320c-3(a)(4)(B) of 
this title and section 1320c-3(a)(14) of this title (other than those 
performed under contracts described in section 1395cc(a)(1)(F) of this 
title) with respect to services, furnished by the eligible organization, 
for which payment may be made under this subchapter.
    (B) For purposes of payment under this subchapter, the cost of such 
agreement to the eligible organization shall be considered a cost 
incurred by a provider of services in providing covered services under 
this subchapter and shall be paid directly by the Secretary to the 
review organization on behalf of such eligible organization in 
accordance with a schedule established by the Secretary.
    (C) Such payments--
        (i) shall be transferred in appropriate proportions from the 
    Federal Hospital Insurance Trust Fund and from the Supplementary 
    Medical Insurance Trust Fund, without regard to amounts appropriated 
    in advance in appropriation Acts, in the same manner as transfers 
    are made for payment for services provided directly to 
    beneficiaries, and
        (ii) shall not be less in the aggregate for such organizations 
    for a fiscal year than the amounts the Secretary determines to be 
    sufficient to cover the costs of such organizations' conducting 
    activities described in subparagraph (A) with respect to such 
    eligible organizations under part B of subchapter XI of this 
    chapter.

    (8)(A) Each contract with an eligible organization under this 
section shall provide that the organization may not operate any 
physician incentive plan (as defined in subparagraph (B)) unless the 
following requirements are met:
        (i) No specific payment is made directly or indirectly under the 
    plan to a physician or physician group as an inducement to reduce or 
    limit medically necessary services provided with respect to a 
    specific individual enrolled with the organization.
        (ii) If the plan places a physician or physician group at 
    substantial financial risk (as determined by the Secretary) for 
    services not provided by the physician or physician group, the 
    organization--
            (I) provides stop-loss protection for the physician or group 
        that is adequate and appropriate, based on standards developed 
        by the Secretary that take into account the number of physicians 
        placed at such substantial financial risk in the group or under 
        the plan and the number of individuals enrolled with the 
        organization who receive services from the physician or the 
        physician group, and
            (II) conducts periodic surveys of both individuals enrolled 
        and individuals previously enrolled with the organization to 
        determine the degree of access of such individuals to services 
        provided by the organization and satisfaction with the quality 
        of such services.

        (iii) The organization provides the Secretary with descriptive 
    information regarding the plan, sufficient to permit the Secretary 
    to determine whether the plan is in compliance with the requirements 
    of this subparagraph.

    (B) In this paragraph, the term ``physician incentive plan'' means 
any compensation arrangement between an eligible organization and a 
physician or physician group that may directly or indirectly have the 
effect of reducing or limiting services provided with respect to 
individuals enrolled with the organization.
    (9) The Secretary may terminate a contract with an eligible 
organization under this section or may impose the intermediate sanctions 
described in paragraph (6) on the organization in accordance with formal 
investigation and compliance procedures established by the Secretary 
under which--
        (A) the Secretary first 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 paragraph (1) and the organization 
    fails to develop or implement such a plan;
        (B) in deciding whether to impose sanctions, the Secretary 
    considers aggravating factors such as whether an organization has a 
    history of deficiencies or has not taken action to correct 
    deficiencies the Secretary has brought to the organization's 
    attention;
        (C) there are no unreasonable or unnecessary delays between the 
    finding of a deficiency and the imposition of sanctions; and
        (D) the Secretary provides the organization with reasonable 
    notice and opportunity for hearing (including the right to appeal an 
    initial decision) before imposing any sanction or terminating the 
    contract.

(j) Payment in full and limitation on actual charges; physicians, 
        providers of services, or renal dialysis facilities not under 
        contract with organization

    (1)(A) In the case of physicians' services or renal dialysis 
services described in paragraph (2) which are furnished by a 
participating physician or provider of services or renal dialysis 
facility to an individual enrolled with an eligible organization under 
this section and enrolled under part B of this subchapter, the 
applicable participation agreement is deemed to provide that the 
physician or provider of services or renal dialysis facility will accept 
as payment in full from the eligible organization the amount that would 
be payable to the physician or provider of services or renal dialysis 
facility under part B of this subchapter and from the individual under 
such part, if the individual were not enrolled with an eligible 
organization under this section.
    (B) In the case of physicians' services described in paragraph (2) 
which are furnished by a nonparticipating physician, the limitations on 
actual charges for such services otherwise applicable under part B of 
this subchapter (to services furnished by individuals not enrolled with 
an eligible organization under this section) shall apply in the same 
manner as such limitations apply to services furnished to individuals 
not enrolled with such an organization.
    (2) The physicians' services or renal dialysis services described in 
this paragraph are physicians' services or renal dialysis services which 
are furnished to an enrollee of an eligible organization under this 
setion \4\ by a physician, provider of services, or renal dialysis 
facility who is not under a contract with the organization.
---------------------------------------------------------------------------
    \4\ So in original. Probably should be ``section''.
---------------------------------------------------------------------------

(k) Risk-sharing contracts

    (1) Except as provided in paragraph (2)--
        (A) on or after the date standards for Medicare+Choice 
    organizations and plans are first established under section 1395w-
    26(b)(1) of this title, the Secretary shall not enter into any risk-
    sharing contract under this section with an eligible organization; 
    and
        (B) for any contract year beginning on or after January 1, 1999, 
    the Secretary shall not renew any such contract.

    (2) An individual who is enrolled in part B of this subchapter only 
and is enrolled in an eligible organization with a risk-sharing contract 
under this section on December 31, 1998, may continue enrollment in such 
organization in accordance with regulations described in section 1395w-
26(b)(1) of this title.
    (3) Notwithstanding subsection (a) of this section, the Secretary 
shall provide that payment amounts under risk-sharing contracts under 
this section for months in a year (beginning with January 1998) shall be 
computed--
        (A) with respect to individuals entitled to benefits under both 
    parts A and B of this subchapter, by substituting payment rates 
    under section 1395w-23(a) of this title for the payment rates 
    otherwise established under subsection (a) of this section, and
        (B) with respect to individuals only entitled to benefits under 
    part B of this subchapter, by substituting an appropriate proportion 
    of such rates (reflecting the relative proportion of payments under 
    this subchapter attributable to such part) for the payment rates 
    otherwise established under subsection (a) of this section.

    (4) The following requirements shall apply to eligible organizations 
with risk-sharing contracts under this section in the same manner as 
they apply to Medicare+Choice organizations under part C of this 
subchapter:
        (A) Data collection requirements under section 1395w-23(a)(3)(B) 
    of this title.
        (B) Restrictions on imposition of premium taxes under section 
    1395w-24(g) of this title in relating to payments to such 
    organizations under this section.
        (C) The requirement to accept enrollment of new enrollees during 
    November 1998 under section 1395w-21(e)(6) of this title.
        (D) Payments under section 1395w-27(e)(2) of this title.

(Aug. 14, 1935, ch. 531, title XVIII, Sec. 1876, as added and amended 
Pub. L. 92-603, title II, Secs. 226(a), 278(b)(3), Oct. 30, 1972, 86 
Stat. 1396, 1453; Pub. L. 93-233, Sec. 18(m), (n), Dec. 31, 1973, 87 
Stat. 970, 971; Pub. L. 94-460, title II, Sec. 201(a)-(d), Oct. 8, 1976, 
90 Stat. 1956, 1957; Pub. L. 95-292, Sec. 5, June 13, 1978, 92 Stat. 
315; Pub. L. 97-248, title I, Sec. 114(a), Sept. 3, 1982, 96 Stat. 341; 
Pub. L. 97-448, title III, Sec. 309(b)(12), Jan. 12, 1983, 96 Stat. 
2409; Pub. L. 98-21, title VI, Secs. 602(g), 606(a)(3)(H), Apr. 20, 
1983, 97 Stat. 164, 171; Pub. L. 98-369, div. B, title III, 
Secs. 2350(a)(1), (b)(1), (2), (c), 2354(b)(37), (38), July 18, 1984, 98 
Stat. 1097, 1098, 1102; Pub. L. 99-272, title IX, Sec. 9211(a)-(d), Apr. 
7, 1986, 100 Stat. 178, 179; Pub. L. 99-509, title IX, Secs. 9312(b)(1), 
(c)(1), (2), (d)(1), (e)(1), (f), 9353(e)(2), Oct. 21, 1986, 100 Stat. 
1999-2001, 2048; Pub. L. 99-514, title XVIII, Sec. 1895(b)(11)(A), Oct. 
22, 1986, 100 Stat. 2934; Pub. L. 100-203, title IV, Secs. 4011(a)(1), 
(b)(1), 4012(b), 4013(a), 4014, 4018(a), 4039(h)(8), Dec. 22, 1987, 101 
Stat. 1330-60, 1330-61, 1330-65, as amended Pub. L. 100-360, title IV, 
Sec. 411(c)(3), (e)(3), July 1, 1988, 102 Stat. 773, 776; Pub. L. 100-
360, title II, Secs. 202(f), 211(c)(3), 224, title IV, Sec. 411(c)(1), 
(4), (6), formerly (5), July 1, 1988, 102 Stat. 717, 738, 748, 772, 773, 
as amended Pub. L. 100-485, title VI, Sec. 608(d)(19)(B), (C), Oct. 13, 
1988, 102 Stat. 2419; Pub. L. 100-647, title VIII, Sec. 8412(a)(1), Nov. 
10, 1988, 102 Stat. 3801; Pub. L. 101-234, title II, Secs. 201(a), 
202(a), Dec. 13, 1989, 103 Stat. 1981; Pub. L. 101-239, title VI, 
Secs. 6206(a)(1), (b)(1), 6212(b)(1), (c)(2), 6411(d)(3)(A), Dec. 19, 
1989, 103 Stat. 2244, 2250, 2271; Pub. L. 101-508, title IV, 
Secs. 4204(a)(1), (2), (c)(1), (2), (d)(1), (e)(1), 4206(b)(1), Nov. 5, 
1990, 104 Stat. 1388-108 to 1388-111, 1388-116; Pub. L. 103-296, title 
I, Sec. 108(c)(6), Aug. 15, 1994, 108 Stat. 1486; Pub. L. 103-432, title 
I, Sec. 157(b)(1), (4), Oct. 31, 1994, 108 Stat. 4442; Pub. L. 104-191, 
title II, Secs. 215(a), (b), 231(g), Aug. 21, 1996, 110 Stat. 2005-2007, 
2014; Pub. L. 105-33, title IV, Sec. 4002(a)-(b)(2)(A), Aug. 5, 1997, 
111 Stat. 328, 329; Pub. L. 106-113, div. B, 1000(a)(6) [title V, 
Sec. 503], Nov. 29, 1999, 113 Stat. 1536, 1501A-380.)

                       References in Text

    Parts A and B of this subchapter, referred to in text, are 
classified to sections 1395c et seq. and 1395j et seq., respectively, of 
this title.
    Section 300e-9(d) of this title, referred to in subsec. (b)(1), was 
redesignated section 300e-9(c) of this title by Pub. L. 100-517, 
Sec. 7(b), Oct. 24, 1988, 102 Stat. 2580.
    Parts A and B of subchapter XI of this chapter, referred to in 
subsecs. (c)(2) and (i)(7)(A), (B)(ii), are classified to sections 1301 
et seq. and 1320c et seq., respectively, of this title.
    Section 300e(c)(8) of this title, referred to in subsec. 
(i)(3)(C)(i), was redesignated section 300e(c)(7) of this title by Pub. 
L. 100-517, Sec. 5(b), Oct. 24, 1988, 102 Stat. 2579.
    Part C of this subchapter, referred to in subsec. (k)(4), is 
classified to section 1395w-21 et seq. of this title.


                               Amendments

    1999--Subsec. (h)(5)(B). Pub. L. 106-113 substituted ``2004'' for 
``2002''.
    1997--Subsec. (f)(1). Pub. L. 105-33, Sec. 4002(a)(1), substituted 
``For contract periods beginning before January 1, 1999, each'' for 
``Each'' and struck out ``or under a State plan approved under 
subchapter XIX of this chapter'' before period at end.
    Subsec. (f)(2). Pub. L. 105-33, Sec. 4002(a)(2), substituted 
``Subject to paragraph (4), the Secretary'' for ``The Secretary''.
    Subsec. (f)(4). Pub. L. 105-33, Sec. 4002(a)(3), added par. (4).
    Subsec. (h)(5). Pub. L. 105-33, Sec. 4002(b)(2)(A), added par. (5).
    Subsec. (k). Pub. L. 105-33, Sec. 4002(b)(1), added subsec. (k).
    1996--Subsec. (i)(1). Pub. L. 104-191, Sec. 215(a)(1), substituted 
``in accordance with procedures established under paragraph (9), the 
Secretary may at any time terminate any such contract or may impose the 
intermediate sanctions described in paragraph (6)(B) or (6)(C) 
(whichever is applicable) on the eligible organization if the Secretary 
determines that the organization--'' for ``the Secretary may terminate 
any such contract at any time (after such reasonable notice and 
opportunity for hearing to the eligible organization involved as he may 
provide in regulations), if he finds that the organization--'' in 
introductory provisions, added subpars. (A) to (C), and struck out 
former subpars. (A) to (C) which read as follows:
    ``(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 section, or
    ``(C) no longer substantially meets the applicable conditions of 
subsections (b), (c), (e), and (f) of this section.''
    Subsec. (i)(6)(B). Pub. L. 104-191, Sec. 215(a)(4), struck out 
concluding provisions which read as follows: ``The provisions of section 
1320a-7a of this title (other than subsections (a) and (b)) shall apply 
to a civil money penalty under clause (i) in the same manner as they 
apply to a civil money penalty or proceeding under section 1320a-7a(a) 
of this title.''
    Subsec. (i)(6)(C). Pub. L. 104-191, Sec. 215(a)(2), added subpar. 
(C).
    Subsec. (i)(6)(D). Pub. L. 104-191, Sec. 231(g), added subpar. (D).
    Subsec. (i)(7)(A). Pub. L. 104-191, Sec. 215(b), substituted ``a 
written agreement'' for ``an agreement''.
    Subsec. (i)(9). Pub. L. 104-191, Sec. 215(a)(3), added par. (9).
    1994--Subsec. (a)(1)(E)(ii)(I). Pub. L. 103-432, Sec. 157(b)(4), 
struck out comma after ``contributed to''.
    Subsec. (a)(3). Pub. L. 103-432, Sec. 157(b)(1), substituted 
``subsections (c)(2)(B)(ii) and (c)(7) of this section'' for 
``subsection (c)(7) of this section''.
    Subsec. (c)(5)(B). Pub. L. 103-296 inserted at end ``In applying 
sections 405(b) and 405(g) of this title as provided in this 
subparagraph, and in applying section 405(l) of this title thereto, any 
reference therein to the Commissioner of Social Security or the Social 
Security Administration shall be considered a reference to the Secretary 
or the Department of Health and Human Services, respectively.''
    1990--Subsec. (a)(1)(E). Pub. L. 101-508, Sec. 4204(e)(1), 
designated existing provisions as cl. (i) and added cl. (ii).
    Subsec. (a)(6). Pub. L. 101-508, Sec. 4204(c)(2), substituted 
``subsections (c)(2)(B)(ii) and (c)(7)'' for ``subsection (c)(7)''.
    Subsec. (c)(2). Pub. L. 101-508, Sec. 4204(c)(1), designated 
existing provisions as subpar. (A), redesignated former subpars. (A) and 
(B) and former cls. (i) and (ii) as cls. (i) and (ii) and subcls. (I) 
and (II), respectively, and added subpar. (B).
    Subsec. (c)(8). Pub. L. 101-508, Sec. 4206(b)(1), added par. (8).
    Subsec. (i)(6)(A)(vi). Pub. L. 101-508, Sec. 4204(a)(2), inserted 
``or paragraph (8)'' after ``(g)(6)(A) of this section''.
    Subsec. (i)(8). Pub. L. 101-508, Sec. 4204(a)(1), added par. (8).
    Subsec. (j)(1)(A). Pub. L. 101-508, Sec. 4204(d)(1)(A), substituted 
``physicians' services or renal dialysis services'' for ``physicians' 
services'', ``physician or provider of services or renal dialysis 
facility'' for ``physician'' in three places, and ``applicable 
participation agreement'' for ``participation agreement under section 
1395u(h)(1) of this title''.
    Subsec. (j)(2). Pub. L. 101-508, Sec. 4204(d)(1)(B), substituted 
``physicians' services or renal dialysis services'' for ``physicians' 
services'' in two places and ``which are furnished to an enrollee of an 
eligible organization under this setion [sic] by a physician, provider 
of services, or renal dialysis facility who is not under a contract with 
the organization.'' for ``which--'' and subpars. (A) and (B) which read 
as follows:
        ``(A) are emergency services or out-of-area coverage (described 
    in clauses (iii) and (iv) of subsection (b)(2)(A) of this section), 
    and
        ``(B) are furnished to an enrollee of an eligible organization 
    under this section by a person who is not under a contract with the 
    organization.''
    1989--Subsec. (a)(1)(F). Pub. L. 101-239, Sec. 6206(a)(1), added 
subpar. (F).
    Subsec. (a)(5). Pub. L. 101-234, Sec. 202(a), repealed Pub. L. 100-
360, Sec. 211(c)(3)(A), and provided that the provisions of law amended 
or repealed by such section are restored or revised as if such section 
had not been enacted, see 1988 Amendment note below.
    Subsec. (c)(3)(A)(i). Pub. L. 101-239, Sec. 6206(b)(1)(A), 
substituted ``period or periods'' for ``30-day period''.
    Subsec. (c)(3)(A)(ii). Pub. L. 101-239, Sec. 6206(b)(1)(B), added 
cl. (ii) and struck out former cl. (ii) which read as follows: ``For 
each area served by more than one eligible organization under this 
section, the Secretary (after consultation with such organizations) 
shall establish a single 30-day period each year during which all 
eligible organizations serving the area must provide for open enrollment 
under this section. The Secretary shall determine annual per capita 
rates under subsection (a)(1)(A) of this section in a manner that 
assures that individuals enrolling during such a 30-day period will not 
have premium charges increased or any additional benefits decreased for 
12 months beginning on the date the individual's enrollment becomes 
effective. An eligible organization may provide for such other open 
enrollment period or periods as it deems appropriate consistent with 
this section.''
    Subsecs. (e)(1), (g)(3)(A). Pub. L. 101-234, Sec. 201(a), repealed 
Pub. L. 100-360, Sec. 202(f), and provided that the provisions of law 
amended or repealed by such section are restored or revived as if such 
section had not been enacted, see 1988 Amendment notes below.
    Subsec. (g)(5). Pub. L. 101-239, Sec. 6212(c)(2), struck out ``and 
during a period of not longer than four years'' after first reference to 
``Secretary''.
    Subsec. (i)(6)(A)(vii). Pub. L. 101-239, Sec. 6411(d)(3)(A), added 
cl. (vii).
    Subsec. (j). Pub. L. 101-239, Sec. 6212(b)(1), added subsec. (j).
    1988--Subsec. (a)(5). Pub. L. 100-360, Sec. 211(c)(3)(B), amended 
second sentence generally. Prior to amendment, second sentence read as 
follows: ``The portion of that payment to the organization for a month 
to be paid by the latter trust fund shall be equal to 200 percent of the 
sum of--
        ``(A) the product of (i) the number of such individuals for the 
    month who have attained age 65, and (ii) the monthly actuarial rate 
    for supplementary medical insurance for the month as determined 
    under section 1395r(a)(1) of this title, and
        ``(B) the product of (i) the number of such individuals for the 
    month who have not attained age 65, and (ii) the monthly actuarial 
    rate for supplementary medical insurance for the month as determined 
    under section 1395r(a)(4) of this title.''
    Pub. L. 100-360, Sec. 211(c)(3)(A), substituted ``, the Federal 
Supplementary Medical Insurance Trust Fund, and the Federal Catastrophic 
Drug Insurance Trust Fund'' for ``and the Federal Supplementary Medical 
Insurance Trust Fund'' in first sentence.
    Subsec. (c)(3)(F). Pub. L. 100-360, Sec. 411(c)(1), realigned margin 
with left margin of subpar. (G).
    Subsec. (e)(1). Pub. L. 100-360, Sec. 202(f)(1), inserted at end 
``The preceding sentence shall be applied separately with respect to 
covered outpatient drugs.''
    Subsec. (f)(3). Pub. L. 100-647 redesignated par. (4) as (3) and 
struck out former par. (3) which read as follows:
    ``(A) An eligible organization described in subparagraph (B) may 
elect, for purposes of enrollment and residency requirements under this 
section and for determining the compliance of a subdivision, subsidiary, 
or affiliate described in subparagraph (B)(iii) with the requirement of 
paragraph (1) for the period before October 1, 1992, to have members 
described in subparagraph (B)(iii) who receive services through the 
subdivision, subsidiary, or affiliate considered to be members of the 
parent organization.
    ``(B) An eligible organization described in this subparagraph is an 
eligible organization which--
        ``(i) is described in section 1396b(m)(2)(B)(iii) of this title;
        ``(ii) has members who have a collectively bargained contractual 
    right to obtain health benefits from the organization;
        ``(iii) elects to provide benefits under a risk-sharing contract 
    to individuals residing in a service area, who have a collectively 
    bargained contractual right to obtain benefits from the 
    organization, through a subdivision, subsidiary, or affiliate which 
    itself is an eligible organization serving the area and which is 
    owned or controlled by the parent eligible organization; and
        ``(iv) has assumed any risk of insolvency and quality assurance 
    with respect to individuals receiving benefits through such a 
    subdivision, subsidiary, or affiliate.''
    Subsec. (f)(3)(A). Pub. L. 100-360, Sec. 411(c)(6), formerly 
Sec. 411(c)(5), as redesignated by Pub. L. 100-485, Sec. 608(d)(19)(C), 
inserted ``enrollment and residency requirements under this section and 
for'' after ``for purposes of'' and substituted ``described in 
subparagraph (B)(iii) who receives services through the subdivision'' 
for ``of the subdivision''.
    Subsec. (f)(4). Pub. L. 100-647 redesignated par. (4) as (3).
    Subsec. (g)(3)(A). Pub. L. 100-360, Sec. 202(f)(2), substituted 
``rates'' for ``rate''.
    Subsec. (g)(5). Pub. L. 100-360, Sec. 411(c)(3), amended Pub. L. 
100-203, Sec. 4013, see 1987 Amendment note below.
    Subsec. (i)(6)(A). Pub. L. 100-360, Sec. 411(c)(4)(A), inserted ``, 
in addition to any other remedies authorized by law,'' after ``the 
Secretary may provide'' in concluding provisions.
    Subsec. (i)(6)(B). Pub. L. 100-360, Sec. 411(c)(4)(C), formerly 
Sec. 411(c)(4)(B), as redesignated by Pub. L. 100-485, 
Sec. 608(d)(19)(B)(ii), substituted ``or proceeding under section 1320a-
7a(a) of this title'' for ``under that section'' in last sentence.
    Subsec. (i)(6)(B)(i). Pub. L. 100-360, Sec. 411(c)(4)(B), as added 
by Pub. L. 100-485, Sec. 608(d)(19)(B)(i), (iii), inserted ``of such 
subparagraph'' after ``(v)(I)''.
    Pub. L. 100-360, Sec. 224, inserted at end ``plus, with respect to a 
determination under subparagraph (A)(ii), double the excess amount 
charged in violation of such subparagraph (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 subparagraph 
(A)(iv), $15,000 for each individual not enrolled as a result of the 
practice involved,''.
    Subsec. (i)(7)(A). Pub. L. 100-360, Sec. 411(e)(3), added Pub. L. 
100-203, Sec. 4039(h)(8)(A), (B), see 1987 Amendment note below.
    Subsec. (i)(7)(B). Pub. L. 100-360, Sec. 411(e)(3), added Pub. L. 
100-203, Sec. 4039(h)(8)(C), see 1987 Amendment note below.
    1987--Subsec. (c)(3)(F). Pub. L. 100-203, Sec. 4011(a)(1), added 
subpar. (F).
    Subsec. (c)(3)(G). Pub. L. 100-203, Sec. 4011(b)(1), added subpar. 
(G).
    Subsec. (f)(3), (4). Pub. L. 100-203, Sec. 4018(a), added par. (3) 
and redesignated former par. (3) as (4).
    Subsec. (g)(4). Pub. L. 100-203, Sec. 4012(b), struck out par. (4) 
which read as follows: ``A risk-sharing contract under this subsection 
may, at the option of an eligible organization, provide that the 
Secretary--
        ``(A) will reimburse hospitals and skilled nursing facilities 
    either for payment amounts determined in accordance with section 
    1395ww of this title, or, if applicable, for the reasonable cost (as 
    determined under section 1395x(v) of this title) or other 
    appropriate basis for payment established under this subchapter, of 
    inpatient services furnished to individuals enrolled with such 
    organization pursuant to subsection (d) of this section, and
        ``(B) will deduct the amount of such reimbursement for payment 
    which would otherwise be made to such organization.''
    Subsec. (g)(5). Pub. L. 100-203, Sec. 4013, which directed amendment 
of par. (5) by substituting ``six years'' for ``four years'', was 
amended generally by Pub. L. 100-360, Sec. 411(c)(3), so that it does 
not amend this section.
    Subsec. (i)(6). Pub. L. 100-203, Sec. 4014, amended par. (6) 
generally. Prior to amendment, par. (6) read as follows:
    ``(6)(A) Any eligible organization with a risk-sharing contract 
under this section that fails substantially to provide medically 
necessary items and services that are required (under law or such 
contract) to be provided to individuals covered under such contract, if 
the failure has adversely affected (or has a substantial likelihood of 
adversely affecting) these individuals, is subject to a civil money 
penalty of not more than $10,000 for each such failure.
    ``(B) The provisions of section 1320a-7a of this title (other than 
subsection (a)) shall apply to a civil money penalty under subparagraph 
(A) in the same manner as they apply to a civil money penalty under that 
section.''
    Subsec. (i)(7)(A). Pub. L. 100-203, Sec. 4039(h)(8)(A), (B), as 
added by Pub. L. 100-360, Sec. 411(e)(3), substituted ``Each'' for 
``Except as provided under section 1320c-3(a)(4)(C) of this title, 
each'', inserted ``or with an entity selected by the Secretary under 
section 1320c-3(a)(4)(C) of this title'' after ``located)'', and 
substituted ``which the review organization'' for ``which the peer 
review organization''.
    Subsec. (i)(7)(B). Pub. L. 100-203, Sec. 4039(h)(8)(C), as added by 
Pub. L. 100-360, Sec. 411(e)(3), substituted ``the review organization'' 
for ``the peer review organization''.
    1986--Subsec. (a)(1)(A). Pub. L. 99-514 substituted ``announce (in a 
manner intended to provide notice to interested parties)'' for 
``publish'' in introductory provisions.
    Pub. L. 99-272, Sec. 9211(d), inserted ``, and shall publish not 
later than September 7 before the calendar year concerned'' after ``The 
Secretary shall annually determine'' in introductory provisions.
    Subsec. (a)(3). Pub. L. 99-272, Sec. 9211(a)(2), substituted 
``Subject to subsection (c)(7) of this section, payments'' for 
``Payments''.
    Subsec. (a)(6). Pub. L. 99-272, Sec. 9211(a)(3), substituted 
``Subject to subsection (c)(7) of this section, if'' for ``If''.
    Subsec. (c)(3)(B). Pub. L. 99-272, Sec. 9211(b), substituted ``the 
date on which'' for ``a full calendar month after'', and inserted 
provision at end that in the case of an individual's termination of 
enrollment, the organization shall provide the individual with a copy of 
the written request for termination of enrollment and a written 
explanation of the period (ending on the effective date of the 
termination) during which the individual continues to be enrolled with 
the organization and may not receive benefits under this subchapter 
other than through the organization.
    Subsec. (c)(3)(C). Pub. L. 99-272, Sec. 9211(c), inserted provisions 
at end that no brochures, application forms, or other promotional or 
informational material may be distributed by an organization to (or for 
the use of) individuals eligible to enroll with the organization under 
this section unless at least 45 days before its distribution, the 
organization has submitted the material to the Secretary for review and 
the Secretary has not disapproved the distribution of the material, and 
that Secretary shall review all such material submitted and shall 
disapprove such material if the Secretary determines, in the Secretary's 
discretion, that the material is materially inaccurate or misleading or 
otherwise makes a material misrepresentation.
    Subsec. (c)(7). Pub. L. 99-272, Sec. 9211(a)(1), added par. (7).
    Subsec. (c)(3)(E). Pub. L. 99-509, Sec. 9312(b)(1), added subpar. 
(E).
    Subsec. (f)(2). Pub. L. 99-509, Sec. 9312(c)(1), struck out ``if the 
Secretary determines that'' after ``imposed by paragraph (1) only'', 
added new subpars. (A) and (B), and struck out former subpars. (A) and 
(B) which read as follows:
    ``(A) special circumstances warrant such modification or waiver, and
    ``(B) the eligible organization has taken and is making reasonable 
efforts to enroll individuals who are not entitled to benefits under 
this subchapter or under a State plan approved under subchapter XIX of 
this chapter.''
    Subsec. (f)(3). Pub. L. 99-509, Sec. 9312(c)(2)(A), added par. (3).
    Subsec. (g)(6). Pub. L. 99-509, Sec. 9312(d)(1), added par. (6).
    Subsec. (i)(1)(C). Pub. L. 99-509, Sec. 9312(c)(3)(B), substituted 
``(e), and (f)'' for ``and (e)''.
    Subsec. (i)(3)(C). Pub. L. 99-509, Sec. 9312(e)(1), designated 
existing provisions as cl. (i) and added cls. (ii) and (iii).
    Subsec. (i)(6). Pub. L. 99-509, Sec. 9312(f), added par. (6).
    Subsec. (i)(7). Pub. L. 99-509, Sec. 9353(e)(2), added par. (7).
    1984--Subsec. (b)(2)(D). Pub. L. 98-369, Sec. 2354(b)(37), 
substituted ``subparagraph (A)'' for ``paragraph (1)''.
    Subsec. (c)(3)(A). Pub. L. 98-369, Sec. 2350(a)(1), designated 
existing provisions as cl. (i), inserted ``and including the 30-day 
period specified under clause (ii)'' after ``30 days duration every 
year'', and added cl. (ii).
    Subsec. (c)(4)(A)(i). Pub. L. 98-369, Sec. 2354(b)(38), substituted 
``with reasonable promptness'' for ``promptly as appropriate''.
    Subsec. (g)(2). Pub. L. 98-369, Sec. 2350(b)(1), inserted ``and 
except that an organization (with the approval of the Secretary) may 
provide that a part of the value of such additional benefits be withheld 
and reserved by the Secretary as provided in paragraph (5)'' at end of 
first sentence.
    Subsec. (g)(4)(A). Pub. L. 98-369, Sec. 2350(c), inserted ``and 
skilled nursing facilities'' after ``hospitals'', inserted ``or the 
appropriate basis for payment established under this subchapter'' after 
``section 1395x(v) of this title)'', and struck out ``hospital'' before 
``services furnished to individuals''.
    Subsec. (g)(5). Pub. L. 98-369, Sec. 2350(b)(2), added par. (5).
    1983--Subsec. (a)(5)(A)(ii), (B)(ii). Pub. L. 98-21, 
Sec. 606(a)(3)(H), substituted ``1395r(a)(1)'' for ``1395r(c)(1)''.
    Subsec. (g)(1). Pub. L. 97-448 substituted ``subsection (b)'' for 
``subsection (b)(1)''.
    Subsec. (g)(4). Pub. L. 98-21, Sec. 602(g), added par. (4).
    1982--Pub. L. 97-248 completely revised section, expanding its 
coverage to permit payments to both health maintenance organizations and 
competitive medical plans.
    1978--Subsec. (b)(2)(B). Pub. L. 95-292 substituted ``Administrator 
of the Health Care Financing Administration'' for ``Commissioner of 
Social Security''.
    1976--Subsec. (b). Pub. L. 94-460, Sec. 201(a), struck out 
provisions defining a health maintenance organization as a public or 
private organization which provides physicians' services and a 
sufficient number of primary care and specialty care physicians, assures 
its members access to qualified practitioners in specialties available 
in area served by such organization, demonstrates financial 
responsibility and means to provide comprehensive health care services, 
has at least half of its enrolled members under age 65, assures prompt 
and qualified health service, and has an open enrollment period at least 
every year, and revised the definition and requirements of an health 
maintenance organization to conform to those set forth in the Public 
Health Service Act, except that the services which such an organization 
must provide are those covered in parts A and B of this subchapter 
rather than the basic health services defined in the Public Health 
Service Act, and inserted provisions requiring Secretary to administer 
determinations of whether an organization is a health maintenance 
organization through and in the office of the Assistant Secretary for 
Health, to integrate the administration of such functions and duties 
with the administration of provisions requiring the continued regulation 
of health maintenance organizations under the Public Health Service Act, 
and to administer other provisions of this section through the 
Commissioner of Social Security.
    Subsec. (h). Pub. L. 94-460, Sec. 201(b), substituted provisions 
that each health maintenance organization with which the Secretary 
enters into a contract under this section have an enrolled membership at 
least half of which consists of individuals who have not attained age 
65, with the Secretary empowered to waive that requirement for a period 
of not more than three years from the date a health maintenance 
organization first enters into an agreement with the Secretary pursuant 
to subsection (i) of this section for provisions that such requirement 
not apply with respect to any health maintenance organization for such 
period not to exceed three years from the date such organization enters 
into an agreement with the Secretary pursuant to subsection (i) of this 
section, as the Secretary might permit.
    Subsec. (i)(6)(B). Pub. L. 94-460, Sec. 201(c), substituted ``(other 
than costs with respect to out-of-area services and, in the case of an 
organization which has entered into a risk-sharing contract with the 
Secretary pursuant to paragraph (2)(A), the cost of providing any member 
with basic health services the aggregate value of which exceeds $5,000 
in any year)'' for ``(Other than those with respect to out-of-area 
services)''.
    Subsec. (k). Pub. L. 94-460, Sec. 201(d), added subsec. (k).
    1973--Subsec. (a)(3)(A)(ii). Pub. L. 93-233, Sec. 18(m), struck out 
``, with the apportionment of savings being proportional to the losses 
absorbed and not yet offset'' at end.
    Subsec. (g)(2). Pub. L. 93-233, Sec. 18(n), substituted ``portion of 
its premium rate or other charges'' for ``portion'' and ``shall not 
exceed'' for ``may not exceed'', and struck out cl. (i) designation 
preceding ``the actuarial value'' and provisions reading ``less (ii) the 
actuarial value of other charges made in lieu of such deductible and 
coinsurance'', respectively.
    1972--Subsec. (i). Pub. L. 92-603, Sec. 278(b)(3), substituted 
``skilled nursing facility'' for ``extended care facility'' and 
``skilled nursing facilities'' for ``extended care facilities''.


                    Effective Date of 1996 Amendment

    Section 215(c) of Pub. L. 104-191 provided that: ``The amendments 
made by this section [amending this section] shall apply with respect to 
contract years beginning on or after January 1, 1997.''
    Amendment by section 231(g) of Pub. L. 104-191 applicable to acts or 
omissions occurring on or after Jan. 1, 1997, see section 231(i) of Pub. 
L. 104-191, set out as a note under section 1320a-7a of this title.


                    Effective Date of 1994 Amendments

    Amendment by Pub. L. 103-432 effective as if included in the 
enactment of Pub. L. 101-508, see section 157(b)(8) of Pub. L. 103-432, 
set out as a note under section 1395y of this title.
    Amendment by Pub. L. 103-296 effective Mar. 31, 1995, see section 
110(a) of Pub. L. 103-296, set out as a note under section 401 of this 
title.


                    Effective Date of 1990 Amendment

    Section 4204(a)(4) of Pub. L. 101-508 provided that: ``The 
amendments made by paragraphs (1) and (2) [amending this section] shall 
apply with respect to contract years beginning on or after January 1, 
1992, and the amendments made by paragraph (3) [amending section 1320a-
7a of this title] shall take effect on the date of the enactment of this 
Act [Nov. 5, 1990].''
    Section 4204(c)(3) of Pub. L. 101-508, as amended by Pub. L. 103-
432, title I, Sec. 157(b)(2), Oct. 31, 1994, 108 Stat. 4442, provided 
that: ``The amendments made by this subsection [amending this section] 
shall apply with respect to national coverage determinations that are 
not incorporated in the determination of the per capita rate of payment 
for individuals enrolled for years beginning with 1991 with an eligible 
organization which has entered into a risk-sharing contract under 
section 1876 of the Social Security Act [this section].''
    Section 4204(d)(2) of Pub. L. 101-508, as amended by Pub. L. 103-
432, title I, Sec. 157(b)(3), Oct. 31, 1994, 108 Stat. 4442, provided 
that: ``The amendments made by paragraph (1) [amending this section] 
shall apply with respect to items and services furnished on or after 
January 1, 1991.''
    Section 4204(e)(2) of Pub. L. 101-508, as amended by Pub. L. 103-
432, title I, Sec. 157(b)(5), Oct. 31, 1994, 108 Stat. 4442, provided 
that: ``The amendments made by paragraph (1) [amending this section] 
shall apply with respect to individuals enrolling with an eligible 
organization under a health benefit plan operated, sponsored, or 
contributed to, by the individual's employer or former employer (or the 
employer or former employer of the individual's spouse) on or after 
January 1, 1991.''
    Amendment by section 4206(b)(1) of Pub. L. 101-508 applicable to 
contracts under this section and payments under section 1395l(a)(1)(A) 
of this title as of the first day of the first month beginning more than 
1 year after Nov. 5, 1990, see section 4206(e)(2) of Pub. L. 101-508, 
set out as a note under section 1395l of this title.


                    Effective Date of 1989 Amendments

    Section 6206(b)(2) of Pub. L. 101-239 provided that: ``The 
amendments made by paragraph (1) [amending this section] shall take 
effect 60 days after the date of the enactment of this Act [Dec. 19, 
1989].''
    Section 6212(b)(2) of Pub. L. 101-239 provided that: ``The amendment 
made by paragraph (1) [amending this section] shall apply to services 
furnished on or after April 1, 1990.''
    Section 6212(c)(3) of Pub. L. 101-239 provided that: ``The 
amendments made by this subsection [amending this section and repealing 
provisions set out as notes below] shall take effect on the date of the 
enactment of this Act [Dec. 19, 1989].''
    Section 6411(d)(4)(B) of Pub. L. 101-239 provided that: ``The 
amendments made by paragraph (3) [amending this section and section 
1396a of this title] shall apply to employment and contracts as of 90 
days after the date of the enactment of this Act [Dec. 19, 1989].''
    Amendment by section 201(a) of Pub. L. 101-234 effective Jan. 1, 
1990, see section 201(c) of Pub. L. 101-234, set out as a note under 
section 1320a-7a of this title.
    Amendment by section 202(a) of Pub. L. 101-234 effective Jan. 1, 
1990, and applicable to premiums for months beginning after Dec. 31, 
1989, see section 202(b) of Pub. L. 101-234, set out as a note under 
section 401 of this title.


                    Effective Date of 1988 Amendments

    Section 8412(b) of Pub. L. 100-647 provided that: ``The amendments 
made by subsection (a) [amending this section] shall not apply to 
contracts in effect on the date of the enactment of this Act [Nov. 10, 
1988] or extensions (not exceeding 90 days) thereof.''
    Amendment by Pub. L. 100-485 effective as if included in the 
enactment of the Medicare Catastrophic Coverage Act of 1988, Pub. L. 
100-360, see section 608(g)(1) of Pub. L. 100-485, set out as a note 
under section 704 of this title.
    Amendment by section 202(f) of Pub. L. 100-360 applicable to 
enrollments effected on or after Jan. 1, 1990, see section 202(m)(3) of 
Pub. L. 100-360, set out as a note under section 1395u of this title.
    Amendment by section 211(c)(3) of Pub. L. 100-360 applicable, except 
as specified in such amendment, to monthly premiums for months beginning 
with January 1989, see section 211(d) of Pub. L. 100-360, set out as a 
note under section 1395r of this title.
    Except as specifically provided in section 411 of Pub. L. 100-360, 
amendment by section 411(c)(1), (3), (4), (6), (e)(3) of Pub. L. 100-
360, as it relates to a provision in the Omnibus Budget Reconciliation 
Act of 1987, Pub. L. 100-203, effective as if included in the enactment 
of that provision in Pub. L. 100-203, see section 411(a) of Pub. L. 100-
360, set out as a Reference to OBRA; Effective Date note under section 
106 of Title 1, General Provisions.


                    Effective Date of 1987 Amendment

    Section 4011(a)(2) of Pub. L. 100-203 provided that: ``The amendment 
made by paragraph (1) [amending this section] shall apply with respect 
to contracts entered into or renewed on or after the date of enactment 
of this Act [Dec. 22, 1987].''
    Section 4011(b)(2) of Pub. L. 100-203 provided that: ``The amendment 
made by paragraph (1) [amending this section] shall apply to contracts 
entered into or renewed on or after the date of the enactment of this 
Act [Dec. 22, 1987].''
    Section 4012(d) of Pub. L. 100-203 provided that: ``The amendments 
made by subsections (a) and (b) [amending this section and section 
1395cc this title] shall apply to admissions occurring on or after April 
1, 1988, or, if later, the earliest date the Secretary can provide the 
information required under subsection (c) [set out as a note below] in 
machine readable form.''
    Section 4013(b) of Pub. L. 100-203, which provided the effective 
date for amendment made by section 4013(a) of Pub. L. 100-203, was 
omitted in the general amendment of section 4013 of Pub. L. 100-203 by 
Pub. L. 100-360, title IV, Sec. 411(c)(3), July 1, 1988, 102 Stat. 773.


                    Effective Date of 1986 Amendments

    Section 1895(b)(11)(B) of Pub. L. 99-514 provided that: ``The 
amendment made by subparagraph (A) [amending this section] shall apply 
to determinations of per capita payment rates for 1987 and subsequent 
years.''
    Section 9312(b)(2) of Pub. L. 99-509 provided that: ``The amendment 
made by paragraph (1) [amending this section] shall take effect on 
January 1, 1987, and shall apply to enrollments effected on or after 
such date.''
    Section 9312(c)(3) of Pub. L. 99-509, as amended by Pub. L. 100-203, 
title IV, Sec. 4018(d), Dec. 22, 1987, 101 Stat. 1330-66; Pub. L. 101-
239, title VI, Sec. 6212(a), Dec. 19, 1989, 103 Stat. 2249; Pub. L. 103-
66, title XIII, Sec. 13569, Aug. 10, 1993, 107 Stat. 608, provided that:
    ``(A) New restriction.--The amendment made by paragraph (1) 
[amending this section] shall apply to modifications and waivers granted 
after the date of the enactment of this Act [Oct. 21, 1986].
    ``(B) Sanctions for noncompliance.--The amendments made by paragraph 
(2) [amending this section] shall take effect on the date of the 
enactment of this Act.
    ``(C) Treatment of current waivers.--In the case of an eligible 
organization (or successor organization) that--
        ``(i) as of the date of the enactment of this Act, has been 
    granted, under paragraph (2) of section 1876(f) of the Social 
    Security Act [subsec. (f)(2) of this section], a modification or 
    waiver of the requirement imposed by paragraph (1) of that section, 
    but
        ``(ii) does not meet the requirement for such modification or 
    waiver under the amendment made by paragraph (1) of this subsection,
the organization shall make, and continue to make, reasonable efforts to 
meet scheduled enrollment goals, consistent with a schedule of 
compliance approved by the Secretary of Health and Human Services. If 
the Secretary determines that the organization has complied, or made 
significant progress towards compliance, with such schedule of 
compliance, the Secretary may extend such waiver. If the Secretary 
determines that the organization has not complied with such schedule, 
the Secretary may provide for a sanction described in section 1876(f)(3) 
of the Social Security Act [subsec. (f)(3) of this section] (as amended 
by this section) effective with respect to individuals enrolling with 
the organization after the date the Secretary notifies the organization 
of such noncompliance.
    ``(D) Treatment of certain waivers.--In the case of an eligible 
organization (or successor organization) that is described in clauses 
(i) and (ii) of subparagraph (C) and that received a grant or grants 
totaling at least $3,000,000 in fiscal year 1987 under section 
329(d)(1)(A) or 330(d)(1) of the Public Health Service Act [42 U.S.C. 
254b(d)(1)(A), 254c(d)(1)]--
        ``(i) before January 1, 1996, section 1876(f) of the Social 
    Security Act [subsec. (f) of this section] shall not apply to the 
    organization;
        ``(ii) beginning on January 1, 1990, the Secretary of Health and 
    Human Services shall conduct an annual review of the organization to 
    determine the organization's compliance with the quality assurance 
    requirements of section 1876(c)(6) of such Act [subsec. (c)(6) of 
    this section]; and
        ``(iii) after January 1, 1990, if the organization receives an 
    unfavorable review under clause (ii), the Secretary, after notice to 
    the organization of the unfavorable review and an opportunity to 
    correct any deficiencies identified during the review, may provide 
    for the sanction described in section 1876(f)(3) of such Act 
    [subsec. (f)(3) of this section] effective with respect to 
    individuals enrolling with the organization after the date the 
    Secretary notifies the organization that the organization is not in 
    compliance with the requirements of section 1876(c)(6) of such 
    Act.''
    Section 9312(d)(2) of Pub. L. 99-509 provided that: ``The amendment 
made by paragraph (1) [amending this section] shall apply to risk-
sharing contracts under section 1876 of the Social Security Act [this 
section] with respect to services furnished on or after January 1, 
1987.''
    Section 9312(e)(2) of Pub. L. 99-509 provided that: ``The amendments 
made by paragraph (1) [amending this section] shall apply to contracts 
as of January 1, 1987.''
    Section 9353(e)(3)(B) of Pub. L. 99-509, as amended by Pub. L. 100-
203, title IV, Sec. 4039(h)(9)(C), as added by Pub. L. 100-360, title 
IV, Sec. 411(e)(3), July 1, 1988, 102 Stat. 776, provided that: ``The 
amendment made by paragraph (2) [amending this section] shall apply to 
risk-sharing contracts with eligible organizations, under section 1876 
of the Social Security Act [this section], as of April 1, 1987. The 
provisions of section 1876(i)(7) of the Social Security Act [subsec. 
(i)(7) of this section] (added by such amendment) shall apply to health 
maintenance organizations with contracts in effect under section 1876 of 
such Act (as in effect before the date of the enactment of Public Law 
97-248 [Sept. 3, 1982]) in the same manner as it applies to eligible 
organizations with risk-sharing contracts in effect under section 1876 
of such Act (as in effect on the date of the enactment of this Act [Dec. 
22, 1987]).''
    Section 9211(e) of Pub. L. 99-272 provided that:
    ``(1) Financial responsibility.--The amendments made by subsection 
(a) [amending this section] shall apply to enrollments and 
disenrollments that become effective on or after the date of the 
enactment of this Act [Apr. 7, 1986].
    ``(2) Disenrollments.--The amendments made by subsection (b) 
[amending this section] shall apply to requests for termination of 
enrollment submitted on or after May 1, 1986.
    ``(3) Material review.--(A) The amendment made by subsection (c) 
[amending this section] shall not apply to material which has been 
distributed before July 1, 1986.
    ``(B) Such amendment also shall not apply so as to require the 
submission of material which is distributed before July 1, 1986.
    ``(C) Such amendment shall also not apply to material which the 
Secretary determines has been prepared before the date of the enactment 
of this Act [Apr. 7, 1986] and for which a commitment for distribution 
has been made, if the application of such amendment would constitute a 
hardship for the organization involved.
    ``(4) Publication.--The amendment made by subsection (d) [amending 
this section] shall apply to determinations of per capita rates of 
payment for 1987 and subsequent years.
    ``(5) Necessary modification of contracts.--The Secretary of Health 
and Human Services shall provide for such changes in the risk-sharing 
contracts which have been entered into under section 1876 of the Social 
Security Act [this section] as may be necessary to conform to the 
requirements imposed by the amendments made by this section [amending 
this section] on a timely basis.''


                    Effective Date of 1984 Amendment

    Section 2350(d) of Pub. L. 98-369 provided that: ``The amendments 
made by this section [amending this section and enacting provisions set 
out as notes under this section] shall become effective on the date of 
the enactment of this Act [July 18, 1984].''
    Amendment by section 2354(b)(37), (38) of Pub. L. 98-369 effective 
July 18, 1984, but not to be construed as changing or affecting any 
right, liability, status, or interpretation which existed (under the 
provisions of law involved) before that date, see section 2354(e)(1) of 
Pub. L. 98-369, set out as a note under section 1320a-1 of this title.


          Effective Date of 1983 Amendments; Transitional Rule

    Amendment by section 602(g) of Pub. L. 98-21 applicable to items and 
services furnished by or under arrangement with a hospital beginning 
with its first cost reporting period that begins on or after Oct. 1, 
1983, any change in a hospital's cost reporting period made after 
November 1982 to be recognized for such purposes only if the Secretary 
finds good cause therefor, see section 604(a)(1) of Pub. L. 98-21, set 
out as a note under section 1395ww of this title.
    Amendment by section 606(a)(3)(H) of Pub. L. 98-21 applicable to 
premiums for months beginning with January 1984, but for months after 
June 1983 and before January 1984, the monthly premium for June 1983 
shall apply to individuals enrolled under parts A and B of this 
subchapter, see section 606(c) of Pub. L. 98-21, set out as a note under 
section 1395r of this title.
    Amendment by section 309(b)(12) of Pub. L. 97-448 effective as if 
originally included as a part of this section as this section was 
amended by the Tax Equity and Fiscal Responsibility Act of 1982, Pub. L. 
97-248, see section 309(c)(2) of Pub. L. 97-448, set out as a note under 
section 426-1 of this title.


                    Effective Date of 1982 Amendment

    Section 114(c) of Pub. L. 97-248, as amended by Pub. L. 98-369, div. 
B, title III, Sec. 2354(c)(3)(A), (B), July 18, 1984, 98 Stat. 1102; 
Pub. L. 98-617, Sec. 3(a)(5), Nov. 8, 1984, 98 Stat. 3295; Pub. L. 99-
509, title IX, Sec. 9312(a), Oct. 21, 1986, 100 Stat. 1999, provided 
that:
    ``(1) Subject to paragraph (2), the amendment made by subsection (a) 
[amending this section] shall apply with respect to services furnished 
on or after the initial effective date (as defined in paragraph (4)), 
except that such amendment shall not apply--
        ``(A) with respect to services furnished by an eligible 
    organization to any individual who is enrolled with that 
    organization under an existing cost contract (as defined in 
    paragraph (3)(A)) and entitled to benefits under part A, or enrolled 
    in part B, of title XVIII of the Social Security Act [this 
    subchapter] at the time the organization first enters into a new 
    risk-sharing contract (as defined in paragraph (3)(D)) unless--
            ``(i) the individual requests at any time that the amendment 
        apply, or
            ``(ii) the Secretary determines at any time that the 
        amendment should apply to all members of the organization 
        because of administrative costs or other administrative burdens 
        involved and so informs in advance each affected member of the 
        eligible organization;
        ``(B) with respect to services furnished by an eligible 
    organization during the five-year period beginning on the initial 
    effective date, if--
            ``(i) the organization has an existing risk-sharing contract 
        (as defined in paragraph (3)(B)) on the initial effective date, 
        or
            ``(ii) on the date of the enactment of this Act [Sept. 3, 
        1982] the organization was furnishing services pursuant to an 
        existing demonstration project (as defined in paragraph (3)(C)), 
        such demonstration project is concluded before the initial 
        effective date, and before such initial effective date the 
        organization enters into an existing risk-sharing contract,
    unless the organization requests that the amendment apply earlier; 
    or
        ``(C) with respect to services furnished by an eligible 
    organization during the period of an existing demonstration project 
    if on the initial effective date the organization was furnishing 
    services pursuant to the project and if the project concludes after 
    such date.
    ``(2)(A) In the case of an eligible organization which has in effect 
an existing cost contract (as defined in paragraph (3)(A)) on the 
initial effective date, the organization may receive payment under a new 
risk-sharing contract with respect to a current, nonrisk medicare 
enrollee (as defined in subparagraph (C)) only to the extent that the 
organization enrolls, for each such enrollee, two new medicare enrollees 
(as defined in subparagraph (D)). The selection of those current nonrisk 
medicare enrollees with respect to whom payment may be so received under 
a new risk-sharing contract shall be made in a nonbiased manner.
    ``(B) Subparagraph (A) shall not be construed to prevent an eligible 
organization from providing for enrollment, on a basis described in 
subsection (a)(6) of section 1876 of the Social Security Act [subsec. 
(a)(6) of this section] (as amended by this Act [Pub. L. 97-248], other 
than under a reasonable cost reimbursement contract), of current, 
nonrisk medicare enrollees and from providing such enrollees with some 
or all of the additional benefits described in section 1876(g)(2) of the 
Social Security Act [subsec. (g)(2) of this section] (as amended by this 
Act [Pub. L. 97-248]), but (except as provided in subparagraph (A))--
        ``(i) payment to the organization with respect to such enrollees 
    shall only be made in accordance with the terms of a reasonable cost 
    reimbursement contract, and
        ``(ii) no payment may be made under section 1876 of such Act 
    [this section] with respect to such enrollees for any such 
    additional benefits.
Individuals enrolled with the organization under this subparagraph shall 
be considered to be individuals enrolled with the organization for the 
purpose of meeting the requirement of section 1876(g)(2) of the Social 
Security Act [subsec. (g)(2) of this section] (as amended by this Act 
[Pub. L. 97-248]).
    ``(C) For purposes of this paragraph, the term `current, nonrisk 
medicare enrollee' means, with respect to an organization, an individual 
who on the initial effective date--
        ``(i) is enrolled with that organization under an existing cost 
    contract, and
        ``(ii) is entitled to benefits under part A and enrolled under 
    part B, or enrolled in part B, of title XVIII of the Social Security 
    Act [this subchapter].
    ``(D) For purposes of this paragraph, the term `new medicare 
enrollee' means, with respect to an organization, an individual who--
        ``(i) is enrolled with the organization after the date the 
    organization first enters into a new risk-sharing contract,
        ``(ii) at the time of such enrollment is entitled to benefits 
    under part A, or enrolled in part B, of title XVIII of the Social 
    Security Act [this subchapter], and
        ``(iii) was not enrolled with the organization at the time the 
    individual became entitled to benefits under part A, or to enroll in 
    part B, of such title [this subchapter].
        ``(E) The preceding provisions of this paragraph shall not to 
    [sic] apply to payments made for current, nonrisk medicare enrollees 
    for months beginning with April 1987.
    ``(3) For purposes of this subsection:
        ``(A) The term `existing cost contract' means a contract which 
    is entered into under section 1876 of the Social Security Act [this 
    section], as in effect before the initial effective date, or 
    reimbursement on a reasonable cost basis under section 1833(a)(1)(A) 
    of such Act [section 1395l(a)(1)(A) of this title], and which is not 
    an existing risk-sharing contract or an existing demonstration 
    project.
        ``(B) The term `existing risk-sharing contract' means a contract 
    entered into under section 1876(i)(2)(A) of the Social Security Act 
    [subsec. (i)(2)(A) of this section], as in effect before the initial 
    effective date.
        ``(C) The term `existing demonstration project' means a 
    demonstration project under section 402(a) of the Social Security 
    Amendments of 1967 [section 1395b-1(a) of this title] or under 
    section 222(a) of the Social Security Amendments of 1972 [section 
    222(a) of Pub. L. 92-603, set out as a note under section 1395b-1 of 
    this title], relating to the provision of services for which payment 
    may be made under title XVIII of the Social Security Act [this 
    subchapter].
        ``(D) The term `new risk-sharing contract' means a contract 
    entered into under section 1876(g) of the Social Security Act 
    [subsec. (g) of this section], as amended by this Act [Pub. L. 97-
    248].
        ``(E) The term `reasonable cost reimbursement contract' means a 
    contract entered into under section 1876(h) of such Act [subsec. (h) 
    of this section], as amended by this Act, or reimbursement on a 
    reasonable cost basis under section 1833(a)(1)(A) of such Act 
    [section 1395l(a)(1)(A) of this title].
    ``(4) As used in this section, the term `initial effective date' 
means--
        ``(A) the first day of the thirteenth month which begins after 
    the date of the enactment of this Act [Sept. 3, 1982], or
        ``(B) the first day of the first month [Feb. 1, 1985] after the 
    month in which the Secretary of Health and Human Services notifies 
    the Committee on Finance of the Senate and the Committees on Ways 
    and Means and on Energy and Commerce of the House of Representatives 
    that he is reasonably certain that the methodology to make 
    appropriate adjustments (referred to in section 1876(a)(4) of the 
    Social Security Act [subsec. (a)(4) of this section], as amended by 
    this Act [Pub. L. 97-248]) has been developed and can be implemented 
    to assure actuarial equivalence in the estimation of adjusted 
    average per capita costs under that section,
whichever is later.''


                    Effective Date of 1978 Amendment

    Amendment by Pub. L. 95-292 effective with respect to services, 
supplies, and equipment furnished after the third calendar month 
beginning after June 13, 1978, except that provisions for the 
implementation of an incentive reimbursement system for dialysis 
services furnished in facilities and providers to become effective with 
respect to a facility's or provider's first accounting period beginning 
after the last day of the twelfth month following the month of June 
1978, and except that provisions for reimbursement rates for home 
dialysis to become effective on Apr. 1, 1979, see section 6 of Pub. L. 
95-292, set out as a note under section 426 of this title.


                    Effective Date of 1976 Amendment

    Section 201(e) of Pub. L. 94-460 provided that: ``The amendments 
made by this section [amending this section] shall be effective with 
respect to contracts entered into between the Secretary and health 
maintenance organizations under section 1876 of the Social Security Act 
[this section] on and after the first day of the first calendar month 
which begins more than 30 days after the date of enactment of this Act 
[Oct. 8, 1976].''


                    Effective Date of 1973 Amendment

    Section 18(z-3)(3) of Pub. L. 93-233 provided that: ``The amendments 
made by subsections (m) and (n) [amending this section] shall be 
effective with respect to services provided after June 30, 1973.''


                             Effective Date

    Section 226(f) of Pub. L. 92-603 provided that: ``The amendments 
made by this section [enacting this section, amending sections 1395f, 
1395l, 1395ll, and 1396b of this title, and enacting provisions set out 
as notes under this section] shall be effective with respect to services 
provided on or after July 1, 1973.''


                            Report on Impact

    Section 4002(b)(2)(B) of Pub. L. 105-33 provided that: ``By not 
later than January 1, 2001, the Secretary of Health and Human Services 
shall submit to Congress a report that analyzes the potential impact of 
termination of reasonable cost reimbursement contracts, pursuant to the 
amendment made by subparagraph (A), on medicare beneficiaries enrolled 
under such contracts and on the medicare program. The report shall 
include such recommendations regarding any extension or transition with 
respect to such contracts as the Secretary deems appropriate.''


                   Transition Rule for PSO Enrollment

    Section 4002(h) of Pub. L. 105-33 provided that: ``In applying 
subsection (g)(1) of section 1876 of the Social Security Act (42 U.S.C. 
1395mm) to a risk-sharing contract entered into with an eligible 
organization that is a provider-sponsored organization (as defined in 
section 1855(d)(1) of such Act [section 1395w-25(d)(1) of this title], 
as inserted by section 5001 [4001]) for a contract year beginning on or 
after January 1, 1998, there shall be substituted for the minimum number 
of enrollees provided under such section the minimum number of enrollees 
permitted under section 1857(b)(1) of such Act [1395w-27(b)(1) of this 
title] (as so inserted).''


       Requirements With Respect to Actuarial Equivalence of AAPCC

    Section 4204(b) of Pub. L. 101-508, as amended by Pub. L. 103-432, 
title I, Sec. 157(a), Oct. 31, 1994, 108 Stat. 4441; Pub. L. 104-316, 
title I, Sec. 122(g), Oct. 19, 1996, 110 Stat. 3837, provided that:
    ``(1)(A) Not later than October 1, 1995, the Secretary of Health and 
Human Services (in this subsection referred to as the `Secretary') shall 
submit a proposal to the Congress that provides for revisions to the 
payment method to be applied in years beginning with 1997 for 
organizations with a risk-sharing contract under section 1876(g) of the 
Social Security Act [subsec. (g) of this section].
    ``(B) In proposing the revisions required under subparagraph (A), 
the Secretary shall consider--
        ``(i) the difference in costs associated with medicare 
    beneficiaries with differing health status and demographic 
    characteristics; and
        ``(ii) the effects of using alternative geographic 
    classifications on the determinations of costs associated with 
    beneficiaries residing in different areas.
    ``(2) Not later than 3 months after the date of submittal of the 
proposal under paragraph (1), the Comptroller General shall review the 
proposal and shall report to Congress on the appropriateness of the 
proposed modifications.''
    [Amendment by section 122(g) of Pub. L. 104-316 to section 
4204(b)(4), (5) of Pub. L. 101-508, set out above, could not be 
executed, because section 4204(b) of Pub. L. 101-508 did not contain 
pars. (4) and (5) subsequent to amendment by Pub. L. 103-432.]


                     Study of Chiropractic Services

    Section 4204(f) of Pub. L. 101-508, as amended by Pub. L. 103-432, 
title I, Sec. 157(b)(6), Oct. 31, 1994, 108 Stat. 4442, directed 
Secretary to conduct a study of the extent to which health maintenance 
organizations with contracts under section 1876 of the Social Security 
Act (this section) make available to enrollees entitled to benefits 
under title XVIII of such Act (this subchapter) chiropractic services 
that are covered under such title, such study to examine the 
arrangements under which such services are made available and the types 
of practitioners furnishing such services to such enrollees and to be 
based on contracts entered into or renewed on or after Jan. 1, 1991, and 
before Jan. 1, 1993, with Secretary to issue a report to Congress on 
results of the study not later than Jan. 1, 1993, including 
recommendations with respect to any legislative and regulatory changes 
determined necessary by Secretary to ensure access to such services.


                           Effect on State Law

    Conscientious objections of health care provider under State law 
unaffected by enactment of subsec. (c)(8) of this section, see section 
4206(c) of Pub. L. 101-508, set out as a note under section 1395cc of 
this title.


  Notice of Methodology Used in Making Announcements Under Subsection 
                                (a)(1)(A)

    Section 6206(a)(2) of Pub. L. 101-239 provided that: ``Before July 
1, 1990, the Secretary of Health and Human Services shall provide for 
notice to eligible organizations of the methodology used in making the 
announcement under section 1876(a)(1)(A) of the Social Security Act 
[subsec. (a)(1)(A) of this section] for 1990.''


            Adjustment of Contracts With Prepaid Health Plans

    Section 203(b) of Pub. L. 101-234 provided that: ``Notwithstanding 
any other provision of this Act [see Tables for classification], the 
amendments made by this Act (other than the repeal of sections 
1833(c)(5) and 1834(c)(6) of the Social Security Act [sections 
1395l(c)(5) and 1395m(c)(6) of this title]) shall not apply to risk-
sharing contracts, for contract year 1990--
        ``(1) with eligible organizations under section 1876 of the 
    Social Security Act [this section], or
        ``(2) with health maintenance organizations under section 
    1876(i)(2)(A) of such Act [subsec. (i)(2)(A) of this section] (as in 
    effect before February 1, 1985), under section 402(a) of the Social 
    Security Amendments of 1967 [section 1395b-1(a) of this title], or 
    under section 222(a) of the Social Security Amendments of 1972 [Pub. 
    L. 92-603, set out as a note under section 1395b-1 of this title].''


            Adjustment of Contracts With Prepaid Health Plans

    Section 222 of Pub. L. 100-360, as amended by Pub. L. 100-485, title 
VI, Sec. 608(d)(13), Oct. 13, 1988, 102 Stat. 2415, provided that: ``The 
Secretary of Health and Human Services shall--
        ``(1) modify contracts under section 1876 of the Social Security 
    Act [this section], for portions of contract years occurring after 
    December 31, 1988, to take into account the amendments made by this 
    Act [see Short Title of 1988 Amendment note under section 1305 of 
    this title]; and
        ``(2) require such organizations and organizations paid under 
    section 1833(a)(1)(A) of such Act [section 1395l(a)(1)(A) of this 
    title] to make appropriate adjustments (including adjustments in 
    premiums and benefits) in the terms of their agreements with 
    medicare beneficiaries to take into account such amendments.
The Secretary shall also provide for appropriate modifications of 
contracts with health maintenance organizations under section 
1876(i)(2)(A) of the Social Security Act [subsec. (i)(2)(A) of this 
section] (as in effect before February 1, 1985), under section 402(a) of 
the Social Security Amendments of 1967 [section 1395b-1(a) of this 
title], or under section 222(a) of the Social Security Amendments of 
1972 [42 U.S.C. 1395b-1 note], for portions of contract years occurring 
after December 31, 1988, so as to apply to such organizations and 
contracts the requirements imposed by the amendments made by this Act 
upon an organization with a risk-sharing contract under section 1876 of 
the Social Security Act.''


    Provision of Medicare DRG Rates for Certain Payments and Data on 
                    Inpatient Cost Pass-Through Items

    Section 4012(c) of Pub. L. 100-203, as amended by Pub. L. 100-360, 
title IV, Sec. 411(c)(2)(B), July 1, 1988, 102 Stat. 773, provided that: 
``The Secretary of Health and Human Services shall provide (in machine 
readable form) to eligible organizations under section 1876 of the 
Social Security Act [this section] medicare DRG rates for payments 
required by the amendment made by subsection (a) [amending section 
1395cc of this title] and data on cost pass-through items for all 
inpatient services provided to medicare beneficiaries enrolled with such 
organizations.''


                 Medicare Payment Demonstration Projects

    Section 4015 of Pub. L. 100-203, as amended by Pub. L. 100-360, 
title IV, Sec. 411(c)(5), as added by Pub. L. 100-485, title VI, 
Sec. 608(d)(19)(C), Oct. 13, 1988, 102 Stat. 2419, provided that:
    ``(a) Medicare Insured Group Demonstration Projects.--
        ``(1) The Secretary of Health and Human Services (in this 
    subsection referred to as the `Secretary') may provide for 
    capitation demonstration projects (in this subsection referred to as 
    `projects') with an entity which is an eligible organization with a 
    contract with the Secretary under section 1876 of the Social 
    Security Act [this section] or which meets the restrictions and 
    requirements of this subsection. The Secretary may not approve a 
    project unless it meets the requirements of this subsection.
        ``(2) The Secretary may not conduct more than 3 projects and may 
    not expend, from funds under title XVIII of the Social Security Act 
    [this subchapter], more than $600,000,000 in any fiscal year for all 
    such projects.
        ``(3) The per capita rate of payment under a project--
            ``(A) may be based on the adjusted average per capita cost 
        (as defined in section 1876(a)(4) of the Social Security Act 
        [subsec. (a)(4) of this section]) determined only with respect 
        to the group of individuals involved (rather than with respect 
        to medicare beneficiaries generally), but
            ``(B) the rate of payment may not exceed the lesser of--
                ``(i) 95 percent of the adjusted average per capita cost 
            described in subparagraph (A), or
                ``(ii)(I) in the 4th year or 5th year of a project, 115 
            percent of the adjusted average per capita cost (as defined 
            in section 1876(a)(4) of such Act [subsec. (a)(4) of this 
            section]) for classes of individuals described in section 
            1876(a)(1)(B) of that Act [subsec. (a)(1)(B) of this 
            section], or
                ``(II) in any subsequent year of a project, 95 percent 
            of the adjusted average per capita cost (as defined in 
            section 1876(a)(4) [subsec. (a)(4) of this section]) for 
            such classes.
        ``(4) If the payment amounts made to a project are greater than 
    the costs of the project (as determined by the Secretary or, if 
    applicable, on the basis of adjusted community rates described in 
    section 1876(e)(3) of the Social Security Act [subsec. (e)(3) of 
    this section]), the project--
            ``(A) may retain the surplus, but not to exceed 5 percent of 
        the average adjusted per capita cost determined in accordance 
        with paragraph (3)(A), and
            ``(B) with respect to any additional surplus not retained by 
        the project, shall apply such surplus to additional benefits for 
        individuals served by the project or return such surplus to the 
        Secretary.
        ``(5) Enrollment under the project shall be voluntary. 
    Individuals enrolled with the project may terminate such enrollment 
    as of the beginning of the first calendar month following the date 
    on which the request is made for such termination. Upon such 
    termination, such individuals shall retain the same rights to other 
    health benefits that such individuals would have had if they had 
    never enrolled with the project without any exclusion or waiting 
    period for pre-existing conditions.
        ``(6) The requirements of--
            ``(A) subsection (c)(3)(C) (relating to dissemination of 
        information),
            ``(B) subsection (c)(3)(E) (annual statement of rights),
            ``(C) subsection (c)(5) (grievance procedures),
            ``(D) subsection (c)(6) (on-going quality),
            ``(E) subsection (g)(6) (relating to prompt payment of 
        claims),
            ``(F) subsection (i)(3)(A) and (B) (relating to access to 
        information and termination notices),
            ``(G) subsection (i)(6) (relating to providing necessary 
        services), and
            ``(H) subsection (i)(7) (relating to agreements with peer 
        review organizations),
    of section 1876 of the Social Security Act [this section] shall 
    apply to a project in the same manner as they apply to eligible 
    organizations with risk-sharing contracts under such section.
        ``(7) The benefits provided under a project must be at least 
    actuarially equivalent to the combination of the benefits available 
    under title XVIII of the Social Security Act [this subchapter] and 
    the benefits available through any alternative plans in which the 
    individual can enroll through the employer. The project shall 
    guarantee the actuarial value of benefits available under the 
    employer plan for the duration of the project.
        ``(8) A project shall comply with all applicable State laws.
        ``(9) The Secretary may not authorize a project unless the 
    entity offering the project demonstrates to the satisfaction of the 
    Secretary that it has the necessary financial reserves to pay for 
    any liability for benefits under the project (including those 
    liabilities for health benefits under medicare and any supplemental 
    benefits).
        ``(10) The Comptroller General shall monitor projects under this 
    subsection and shall report periodically (not less often than once 
    every year) to the Committee on Finance of the Senate and the 
    Committee on Energy and Commerce [now Committee on Commerce] and 
    Committee on Ways and Means of the House of Representatives on the 
    status of such projects and the effect on such projects of the 
    requirements of this section and shall submit a final report to each 
    such committee on the results of such projects.
    ``(b) Payment Methodology Reform Demonstrations Projects.--
        ``(1) The Secretary of Health and Human Services (in this 
    subsection referred to as the `Secretary') is specifically 
    authorized to conduct demonstration projects under this subsection 
    for the purpose of testing alternative payment methodologies 
    pertaining to capitation payments under title XVIII of the Social 
    Security Act [this subchapter], including--
            ``(A) computing adjustments to the average per capita cost 
        under section 1876 of such Act [this section] on the basis of 
        health status or prior utilization of services, and
            ``(B) accounting for geographic variations in cost in the 
        adjusted average per capita costs applicable to an eligible 
        organization under such section which differs from payments 
        currently provided on a county-by-county basis.
        ``(2) No project may be conducted under this subsection--
            ``(A) with an entity which is not an eligible organization 
        (as defined in section 1876(b) of the Social Security Act 
        [subsec. (b) of this section]), and
            ``(B) unless the project meets all the requirements of 
        subsections (c) and (i)(3) of section 1876 of such Act [subsecs. 
        (c) and (i)(3) of this section].
        ``(3) There are authorized to be appropriated to carry out 
    projects under this subsection $5,000,000 in each of fiscal years 
    1989 and 1990.
    ``(c) Application of Provisions.--The provisions of subsection 
(a)(2) and the first sentence of subsection (b) of section 402 of the 
Social Security Amendments of 1967 [section 1395b-1(a)(2), (b) of this 
title] shall apply to the demonstration projects under this section in 
the same manner as they apply to experiments under subsection (a)(1) of 
that section.''


              GAO Study and Reports on Medicare Capitation

    Section 4017 of Pub. L. 100-203 directed Comptroller General to 
conduct a study on medicare capitation rates that would include an 
analysis and assessment of the current method for computing per capita 
rates of payment under section 1876 of the Social Security Act (this 
section), including the method for determining the United States per 
capita cost; the method for establishing relative costs for geographic 
areas and the data used to establish age, sex, and other weighting 
factors; ways to refine the calculation of adjusted average per capita 
costs under section 1876 of such Act, including making adjustments for 
health status or prior utilization of services and improvements in the 
definition of geographic areas; the extent to which individuals enrolled 
with organizations with a risk-sharing contract with the Secretary under 
section 1876 of such Act differ in utilization and cost from fee-for-
service beneficiaries and ways for modifying enrollment patterns through 
program changes or for reflecting the differences in rates through group 
experience rating or other means; approaches for limiting the liability 
of the contracting organization under section 1876 of such Act in 
catastrophic cases; ways of establishing capitation rates on a basis 
other than fee-for-service experience in areas with high prepaid market 
penetration; and methods for providing the rate levels necessary to 
maintain access to quality prepaid services in rural or medically 
underserved areas, while maintaining cost savings; and directed 
Comptroller General, not later than January 1 of 1989 and 1990, to 
submit to Congress interim reports on the progress of the study and, not 
later than Jan. 1, 1991, a final report on the results of such study.


Demonstration Projects To Provide Payment on a Prepaid, Capitated Basis 
    for Community Nursing and Ambulatory Care Furnished to Medicare 
                              Beneficiaries

    Pub. L. 106-113, div. B, Sec. 1000(a)(6) [title V, Sec. 532], Nov. 
29, 1999, 113 Stat. 1536, 1501A-388, provided that:
    ``(a) Extension.--Notwithstanding any other provision of law, any 
demonstration project conducted under section 4079 of the Omnibus Budget 
Reconciliation Act of 1987 (Public Law 100-123 [Pub. L. 100-203]; 42 
U.S.C. 1395mm note) and conducted for the additional period of 2 years 
as provided for under section 4019 of BBA [Pub. L. 105-33, set out as a 
note below], shall be conducted for an additional period of 2 years. The 
Secretary of Health and Human Services shall provide for such reduction 
in payments under such project in the extension period provided under 
the previous sentence as the Secretary determines is necessary to ensure 
that total Federal expenditures during the extension period under the 
project do not exceed the total Federal expenditures that would have 
been made under title XVIII of the Social Security Act [this subchapter] 
if such project had not been so extended.
    ``(b) Report.--Not later than July 1, 2001, the Secretary of Health 
and Human Services shall submit to Congress a report describing the 
results of any demonstration project conducted under section 4079 of the 
Omnibus Budget Reconciliation Act of 1987, and describing the data 
collected by the Secretary relevant to the analysis of the results of 
such project, including the most recently available data through the end 
of 2000.''
    Section 4019 of Pub. L. 105-33 provided that: ``Notwithstanding any 
other provision of law, demonstration projects conducted under section 
4079 of the Omnibus Budget Reconciliation Act of 1987 [Pub. L. 100-203, 
set out as a note below] may be conducted for an additional period of 2 
years, and the deadline for any report required relating to the results 
of such projects shall be not later than 6 months before the end of such 
additional period.''
    Section 4079 of Pub. L. 100-203, as amended by Pub. L. 100-360, 
title IV, Sec. 411(h)(8), July 1, 1988, 102 Stat. 787, provided that:
    ``(a) In General.--The Secretary of Health and Human Services (in 
this section referred to as the `Secretary') shall enter into an 
agreement with not less than four eligible organizations submitting 
applications under this section to conduct demonstration projects to 
provide payment on a prepaid, capitated basis for community nursing and 
ambulatory care furnished to any individual entitled to benefits under 
part A and enrolled under part B of title XVIII of the Social Security 
Act [part A and part B of this subchapter] (other than an individual 
medically determined to have end-stage renal disease) who resides in the 
geographic area served by the organization and enrolls with such 
organization (in accordance with subsection (c)(2)).
    ``(b) Definitions of Community Nursing and Ambulatory Care and 
Eligible Organization.--As used in this section:
        ``(1) The term `community nursing and ambulatory care' means the 
    following services:
            ``(A) Part-time or intermittent nursing care furnished by or 
        under the supervision of registered professional nurses.
            ``(B) Physical, occupational, or speech therapy.
            ``(C) Social and related services supportive of a plan of 
        ambulatory care.
            ``(D) Part-time or intermittent services of a home health 
        aide.
            ``(E) Medical supplies (other than drugs and biologicals) 
        and durable medical equipment while under a plan of care.
            ``(F) Medical and other health services described in 
        paragraphs (2)(H)(ii) and (5) through (9) of section 1861(s) of 
        the Social Security Act [section 1395x(s)(2)(H)(ii), (5)-(9) of 
        this title].
            ``(G) Rural health clinic services described in section 
        1861(aa)(1)(C) of such Act [section 1395x(aa)(1)(C) of this 
        title].
            ``(H) Certain other related services listed in section 
        1915(c)(4)(B) of such Act [section 1396n(c)(4)(B) of this title] 
        to the extent the Secretary finds such services are appropriate 
        to prevent the need for institutionalization of a patient.
        ``(2) The term `eligible organization' means a public or private 
    entity, organized under the laws of any State, which meets the 
    following requirements:
            ``(A) The entity (or a division or part of such entity) is 
        primarily engaged in the direct provision of community nursing 
        and ambulatory care.
            ``(B) The entity provides directly, or through arrangements 
        with other qualified personnel, the services described in 
        paragraph (1).
            ``(C) The entity provides that all nursing care (including 
        services of home health aids) is furnished by or under the 
        supervision of a registered nurse.
            ``(D) The entity provides that all services are furnished by 
        qualified staff and are coordinated by a registered professional 
        nurse.
            ``(E) The entity has policies governing the furnishing of 
        community nursing and ambulatory care that are developed by 
        registered professional nurses in cooperation with (as 
        appropriate) other professionals.
            ``(F) The entity maintains clinical records on all patients.
            ``(G) The entity has protocols and procedures to assure, 
        when appropriate, timely referral to or consultation with other 
        health care providers or professionals.
            ``(H) The entity complies with applicable State and local 
        laws governing the provision of community nursing and ambulatory 
        care to patients.
            ``(I) The requirements of subparagraphs (B), (D), and (E) of 
        section 1876(b)(2) of the Social Security Act [42 U.S.C. 
        1395mm(b)(2)(B), (D), (E)].
    ``(c) Agreements With Eligible Organizations To Conduct 
Demonstration Projects.--
        ``(1) The Secretary may not enter into an agreement with an 
    eligible organization to conduct a demonstration project under this 
    section unless the organization meets the requirements of this 
    subsection and subsection (e) with respect to members enrolled with 
    the organization under this section.
        ``(2) The organization shall have an open enrollment period for 
    the enrollment of individuals under this section. The duration of 
    such period of enrollment and any other requirement pertaining to 
    enrollment or termination of enrollment shall be specified in the 
    agreement with the organization.
        ``(3) The organization must provide to members enrolled with the 
    organization under this section, through providers and other persons 
    that meet the applicable requirements of titles XVIII and XIX of the 
    Social Security Act [this subchapter and subchapter XIX of this 
    chapter], community nursing and ambulatory care (as defined in 
    subsection (b)(1)) which is generally available to individuals 
    residing in the geographic area served by the organization, except 
    that the organization may provide such members with such additional 
    health care services as the members may elect, at their option, to 
    have covered.
        ``(4) The organization must make community nursing and 
    ambulatory care (and such other health care services as such 
    individuals have contracted for) available and accessible to each 
    individual enrolled with the organization under this section, within 
    the area served by the organization, with reasonable promptness and 
    in a manner which assures continuity.
        ``(5) Section 1876(c)(5) of the Social Security Act [subsec. 
    (c)(5) of this section] shall apply to organizations under this 
    section in the same manner as it applies to organizations under 
    section 1876 of such Act.
        ``(6) The organization must have arrangements, established in 
    accordance with regulations of the Secretary, for an ongoing quality 
    assurance program for health care services it provides to such 
    individuals under the demonstration project conducted under this 
    section, which program (A) stresses health outcomes and (B) provides 
    review by health care professionals of the process followed in the 
    provision of such health care services.
        ``(7) Under a demonstration project under this section--
            ``(A) the Secretary could require the organization to 
        provide financial or other assurances (including financial risk-
        sharing) that minimize the inappropriate substitution of other 
        services under title XVIII of such Act [this subchapter] for 
        community nursing services; and
            ``(B) if the Secretary determines that the organization has 
        failed to perform in accordance with the requirements of the 
        project (including meeting financial responsibility requirements 
        under the project, any pattern of disproportionate or 
        inappropriate institutionalization) the Secretary shall, after 
        notice, terminate the project.
    ``(d) Determination of Per Capita Payment Rates.--
        ``(1) The Secretary shall determine for each 12-month period in 
    which a demonstration project is conducted under this section, and 
    shall announce (in a manner intended to provide notice to interested 
    parties) not later than three months before the beginning of such 
    period, with respect to each eligible organization conducting a 
    demonstration project under this section, a per capita rate of 
    payment for each class of individuals who are enrolled with such 
    organization who are entitled to benefits under part A and enrolled 
    under part B of title XVIII of the Social Security Act [part A and 
    part B of this subchapter].
        ``(2)(A) Except as provided in paragraph (3), the per capita 
    rate of payment under paragraph (1) shall be determined in 
    accordance with this paragraph.
        ``(B) The Secretary shall define appropriate classes of members, 
    based on age, disability status, and such other factors as the 
    Secretary determines to be appropriate, so as to ensure actuarial 
    equivalence. The Secretary may add to, modify, or substitute for 
    such classes, if such changes will improve the determination of 
    actuarial equivalence.
        ``(C) The per capita rate of payment under paragraph (1) for 
    each such class shall be equal to 95 percent of the adjusted average 
    per capita cost (as defined in subparagraph (D)) for that class.
        ``(D) For purposes of subparagraph (C), the term `adjusted 
    average per capita cost' means the average per capita amount that 
    the Secretary estimates in advance (on the basis of actual 
    experience, or retrospective actuarial equivalent based upon an 
    adequate sample and other information and data, in a geographic area 
    served by an eligible organization or in a similar area, with 
    appropriate adjustments to assure actuarial equivalence) would be 
    payable in any contract year for those services covered under parts 
    A and B of title XVIII of the Social Security Act [parts A and B of 
    this subchapter] and types of expenses otherwise reimbursable under 
    such parts A and B which are described in subparagraphs (A) through 
    (G) of subsection (b)(1) (including administrative costs incurred by 
    organizations described in sections 1816 and 1842 of such Act 
    [sections 1395h and 1395u of this title]), if the services were to 
    be furnished by other than an eligible organization.
        ``(3) The Secretary shall, in consultation with providers, 
    health policy experts, and consumer groups develop capitation-based 
    reimbursement rates for such classes of individuals entitled to 
    benefits under part A and enrolled under part B of the Social 
    Security Act [probably means parts A and B of title XVIII of that 
    Act, this subchapter] as the Secretary shall determine. Such rates 
    shall be applied in determining per capita rates of payment under 
    paragraph (1) with respect to at least one eligible organization 
    conducting a demonstration project under this section.
        ``(4)(A) In the case of an eligible organization conducting a 
    demonstration project under this section, the Secretary shall make 
    monthly payments in advance and in accordance with the rate 
    determined under paragraph (2) or (3), except as provided in 
    subsection (e)(3)(B), to the organization for each individual 
    enrolled with the organization.
        ``(B) The amount of payment under paragraph (2) or (3) may be 
    retroactively adjusted to take into account any difference between 
    the actual number of individuals enrolled in the plan under this 
    section and the number of such individuals estimated to be so 
    enrolled in determining the amount of the advance payment.
        ``(5) The payment to an eligible organization under this section 
    for individuals enrolled under this section with the organization 
    and entitled to benefits under part A and enrolled under part B of 
    the Social Security Act shall be made from the Federal Hospital 
    Insurance Trust Fund and the Federal Supplementary Medical Insurance 
    Trust Fund established under such Act [this chapter] in such 
    proportions from each such trust fund as the Secretary deems to be 
    fair and equitable taking into consideration benefits attributable 
    to such parts A and B, respectively.
        ``(6) During any period in which an individual is enrolled with 
    an eligible organization conducting a demonstration project under 
    this section, only the eligible organization (and no other 
    individual or person) shall be entitled to receive payments from the 
    Secretary under this title [probably means title XVIII of the Social 
    Security Act, this subchapter] for community nursing and ambulatory 
    care (as defined in subsection (b)(1)) furnished to the individual.
    ``(e) Restriction on Premiums, Deductibles, Copayments, and 
Coinsurance.--
        ``(1) In no case may the portion of an eligible organization's 
    premium rate and the actuarial value of its deductibles, 
    coinsurance, and copayments charged (with respect to community 
    nursing and ambulatory care) to individuals who are enrolled under 
    this section with the organization, exceed the actuarial value of 
    the coinsurance and deductibles that would be applicable on the 
    average to individuals enrolled under this section with the 
    organization (or, if the Secretary finds that adequate data are not 
    available to determine that actuarial value, the actuarial value of 
    the coinsurance and deductibles applicable on the average to 
    individuals in the area, in the State, or in the United States, 
    eligible to enroll under this section with the organization, or 
    other appropriate data) and entitled to benefits under part A and 
    enrolled under part B of the Social Security Act [probably means 
    parts A and B of title XVIII of that Act, this subchapter], if they 
    were not members of an eligible organization.
        ``(2) If the eligible organization provides to its members 
    enrolled under this section services in addition to community 
    nursing and ambulatory care, election of coverage for such 
    additional services shall be optional for such members and such 
    organization shall furnish such members with information on the 
    portion of its premium rate or other charges applicable to such 
    additional services. In no case may the sum of--
            ``(A) the portion of such organization's premium rate 
        charged, with respect to such additional services, to members 
        enrolled under this section, and
            ``(B) the actuarial value of its deductibles, coinsurance, 
        and copayments charged, with respect to such services to such 
        members
    exceed the adjusted community rate for such services (as defined in 
    section 1876(e)(3) of the Social Security Act [subsec. (e)(3) of 
    this section]).
        ``(3)(A) Subject to subparagraphs (B) and (C), each agreement to 
    conduct a demonstration project under this section shall provide 
    that if--
            ``(i) the adjusted community rate, referred to in paragraph 
        (2), for community nursing and ambulatory care covered under 
        parts A and B of title XVIII of the Social Security Act [parts A 
        and B of this subchapter] (as reduced for the actuarial value of 
        the coinsurance and deductibles under those parts) for members 
        enrolled under this section with the organization,
    is less than
            ``(ii) the average of the per capita rates of payment to be 
        made under subsection (d)(1) at the beginning of the 12-month 
        period (as determined on such basis as the Secretary determines 
        appropriate) described in such subsection for members enrolled 
        under this section with the organization,
    the eligible organization shall provide to such members the 
    additional benefits described in section 1876(g)(3) of the Social 
    Security Act [subsec. (g)(3) of this section] which are selected by 
    the eligible organization and which the Secretary finds are at least 
    equal in value to the difference between that average per capita 
    payment and the adjusted community rate (as so reduced).
        ``(B) Subparagraph (A) shall not apply with respect to any 
    organization which elects to receive a lesser payment to the extent 
    that there is no longer a difference between the average per capita 
    payment and adjusted community rate (as so reduced).
        ``(C) An organization conducting a demonstration project under 
    this section may provide (with the approval of the Secretary) that a 
    part of the value of such additional benefits under subparagraph (A) 
    be withheld and reserved by the Secretary as provided in section 
    1876(g)(5) of the Social Security Act [subsec. (g)(5) of this 
    section].
        ``(4) The provisions of paragraphs (3), (5), and (6) of section 
    1876(g) of the Social Security Act [subsec. (g)(3), (5), and (6) of 
    this section] shall apply in the same manner to agreements under 
    this section as they apply to risk-sharing contracts under section 
    1876 of such Act, and, for this purpose, any reference in such 
    paragraphs to paragraph (2) is deemed a reference to paragraph (3) 
    of this subsection.
        ``(5) Section 1876(e)(4) of the Social Security Act [subsec. 
    (e)(4) of this section] shall apply to eligible organizations under 
    this section in the same manner as it applies to eligible 
    organizations under section 1876 of such Act.
    ``(f) Commencement and Duration of Projects.--Each demonstration 
project under this section shall begin not later than July 1, 1989, and 
shall be conducted for a period of three years.
    ``(g) Report.--Not later than January 1, 1992, the Secretary shall 
submit to the Congress a report on the results of the demonstration 
projects conducted under this section.''


                         Study of AAPCC and ACR

    Section 9312(g) of Pub. L. 99-509 directed Secretary of Health and 
Human Services to provide, through contract with an appropriate 
organization, for a study of the methods by which the adjusted average 
per capita cost (``AAPCC'', as defined in subsec. (a)(4) of this 
section) can be refined to more accurately reflect the average cost of 
providing care to different classes of patients, and the adjusted 
community rate (``ACR'', as defined in subsec. (e)(3) of this section) 
can be refined, with Secretary to submit to Congress, by not later than 
Jan. 1, 1988, specific legislative recommendations concerning methods by 
which the calculation of the AAPCC and the ACR could be refined.


 Allowing Medicare Beneficiaries To Disenroll at Local Social Security 
                                 Offices

    Section 9312(h) of Pub. L. 99-509 provided that: ``The Secretary of 
Health and Human Services shall provide that individuals enrolled with 
an eligible organization under section 1876 of the Social Security Act 
[this section] may disenroll, on and after June 1, 1987, at any local 
office of the Social Security Administration.''


                          Use of Reserve Funds

    Section 9312(i) of Pub. L. 99-509 provided that: ``Notwithstanding 
any provision of section 1876(g)(5) of the Social Security Act (42 
U.S.C. 1395mm(g)(5)) to the contrary, funds reserved by an eligible 
organization under such section before the date of the enactment of this 
Act [Oct. 21, 1986] may be applied, at the organization's option, to 
offset the amount of any reduction in payment amounts to the 
organization effected under Public Law 99-177 [Dec. 12, 1985, 99 Stat. 
1037, see Tables for classification] during fiscal year 1986.''


               Phase-in of Enrollment Period by Secretary

    Section 2350(a)(2) of Pub. L. 98-369 provided that: ``The Secretary 
of Health and Human Services may phase in, over a period of not longer 
than three years, the application of the amendments made by paragraph 
(1) [amending this section] to all applicable areas in the United States 
if the Secretary determines that it is not administratively feasible to 
establish a single 30-day open enrollment period for all such applicable 
areas before the end of the period.''


 Stabilization Fund; Establishment Limitation; Uses; Report to Congress

    Section 2350(b)(3), (4) of Pub. L. 98-369, as amended by Pub. L. 
100-203, title IV, Sec. 4013, Dec. 22, 1987, 101 Stat. 1330-61; Pub. L. 
100-360, title IV, Sec. 411(c)(3), July 1, 1988, 102 Stat. 773, 
prohibited Secretary of Health and Human Services from approving the 
establishment of a stabilization fund by an eligible organization under 
subsec. (g)(5) of this section for any contract period beginning later 
than Sept. 30, 1990, and directed Secretary to report to Congress with 
respect to use of stabilization funds by eligible organizations under 
subsec. (g)(5) of this section and to assess the need for such funds not 
later than 54 months after July 1984, prior to repeal by Pub. L. 101-
239, title VI, Sec. 6212(c)(1), Dec. 19, 1989, 103 Stat. 2250.


     Study of Additional Benefits Selected by Eligible Organizations

    Section 114(d) of Pub. L. 97-248 directed Secretary of Health and 
Human Services to conduct a study of the additional benefits selected by 
eligible organizations pursuant to subsec. (g)(2) of this section, with 
Secretary to report to Congress within 24 months of the initial 
effective date (as defined in subsec. (c)(4) of section 114 of Pub. L. 
97-248) with respect to the findings and conclusions made as a result of 
such study.


Study Evaluating the Extent of, and Reasons for, Termination by Medicare 
 Beneficiaries of Membership in Organizations With Contracts Under This 
                                 Section

    Section 114(e) of Pub. L. 97-248 directed Secretary of Health and 
Human Services to conduct a study evaluating the extent of, and reasons 
for, the termination by medicare beneficiaries of their memberships in 
organizations with contracts under section 1876 of the Social Security 
Act (this section), with Secretary to submit an interim report to 
Congress, within two years after the initial effective date (as defined 
in subsec. (c)(4) of section 114 of Pub. L. 97-248), and a final report 
within five years after such date containing the respective interim and 
final findings and conclusions made as a result of such study.


                       Reimbursement for Services

    Section 226(b) of Pub. L. 92-603 provided that:
    ``(1) Notwithstanding the provisions of section 1814 and section 
1833 of the Social Security Act [sections 1395f and 1395l of this 
title], any health maintenance organization which has entered into a 
contract with the Secretary pursuant to section 1876 of such Act [this 
section] shall, for the duration of such contract, (except as provided 
in paragraph (2)) be entitled to reimbursement only as provided in 
section 1876 of such Act [this section] for individuals who are members 
of such organizations.
    ``(2) With respect to individuals who are members of organizations 
which have entered into a risk-sharing contract with the Secretary 
pursuant to subsection (i)(2)(A) [of this section] prior to July 1, 
1973, and who, although eligible to have payment made pursuant to 
section 1876 of such Act [this section] for services rendered to them, 
chose (in accordance with regulations) not to have such payment made 
pursuant to such section, the Secretary shall, for a period not to 
exceed three years commencing on July 1, 1973, pay to such organization 
on the basis of an interim per capita rate, determined in accordance 
with the provisions of section 1876(a)(2) of such Act [subsec. (a)(2) of 
this section], with appropriate actuarial adjustments to reflect the 
difference in utilization of out-of-plan services, which would have been 
considered sufficiently reasonable and necessary under the rules of the 
health maintenance organization to be provided by that organization, 
between such individuals and individuals who are enrolled with such 
organization pursuant to section 1876 of such Act [this section]. 
Payments under this paragraph shall be subject to retroactive adjustment 
at the end of each contract year as provided in paragraph (3).
    ``(3) If the Secretary determines that the per capita cost of any 
such organization in any contract year for providing services to 
individuals described in paragraph (2), when combined with the cost of 
the Federal Hospital Insurance Trust Fund and the Federal Supplementary 
Medical Insurance Trust Fund in such year for providing out-of-plan 
services to such individuals, is less than or greater than the adjusted 
average per capita cost (as defined in section 1876(a)(3) of such Act) 
[subsec. (a)(3) of this section] of providing such services, the 
resulting savings shall be apportioned between such organization and 
such Trust Funds, or the resulting losses shall be absorbed by such 
organization, in the manner prescribed in section 1876(a)(3) of such Act 
[subsec. (a)(3) of this section].''

                  Section Referred to in Other Sections

    This section is referred to in sections 1320a-1, 1320a-7, 1320a-7b, 
1320c-2, 1320c-3, 1395f, 1395i-2, 1395l, 1395u, 1395w-4, 1395w-21, 
1395w-23, 1395w-26, 1395x, 1395cc, 1395ll, 1395nn, 1395ss, 1395ww, 
1395ccc, 1395eee, 1396a, 1396b, 1396d, 1396u-2, 1396u-4 of this title; 
title 2 section 906.
