MEDICARE PAYMENT DEMONSTRATION PROJECTS.

SEC. 4015. MEDICARE PAYMENT DEMONSTRATION PROJECTS. (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 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, 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) 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) for classes of individuals described in section 1876(a)(1)(B) of that Act, 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)) 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), the project— 101 STAT. 1330–63 (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 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 and the benefits available through any alternative plans in which the individual can enroll through the 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 and Committee on Ways and Means of the House of Representatives on the status of such projects and the affect 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 au-101 STAT. 1330–64thorized 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, including— (A) computing adjustments to the average per capita cost under section 1876 of such Act 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), and (B) unless the project meets all the requirements of subsections (c) and (i)(3) of section 1876 of such Act. (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 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.