HMO-RELATED PROVISIONS.

SEC. 4113. HMO-RELATED PROVISIONS. (a) Treatment of Garden State Health Plan.— (1) Section 1903(m) of the Social Security Act (42 U.S.C. 1396(m)) is amended— (A) by adding at the end the following new paragraph: 101 STAT. 1330–151 “(6) (A) For purposes of this subsection and section 1902(eX2KA), in the case of the State of New Jersey, the term ‘contract’ shall be deemed to include an undertaking by the State agency, in the State plan under this title, to operate a program meeting all requirements of this subsection. “(B) The undertaking described in subparagraph (A) must provide— “(i) for the establishment of a separate entity responsible for the operation of a program meeting the requirements of this subsection, which entity may be a subdivision of the State agency administering the State plan under this title; “(ii) for separate accounting for the funds used to operate such program; “(iii) for setting the capitation rates and any other payment rates for services provided in accordance with this subsection using a methodology satisfactory to the Secretary designed to ensure that total Federal matching payments under this title for such services will be lower than the matching payments that would be made for the same services, if provided under the State plan on a fee for service basis to an actuarially equivalent population; and “(iv) that the State agency will contract, for purposes of meeting the requirement under section 1902(a)(30)(C), with an organization or entity that under section 1154 reviews services provided by an eligible organization pursuant to a contract under section 1876 for the purpose of determining whether the quality of services meets professionally recognized standards of health care. “(C) The undertaking described in subparagraph (A) shall be subject to approval (and annual re-approval) by the Secretary in the same manner as a contract under this subsection. “(D) The undertaking described in subparagraph (A) shall not be eligible for a waiver under section 1915(b).”; and (B) in paragraph (2)(F), by striking all that precedes “a State plan may restrict” and inserting the following: 5252Copy read “ ‘(F)”.“(E) In the case of— 5353Copy read “(i)”. “(i) a contract with an entity described in subparagraph (G) or with a qualified health maintenance organization (as defined in section 1310(d) of the Public Health Service Act) which meets the requirement of subparagraph (A)(ii), or “(ii) a program pursuant to an undertaking described in paragraph (6) in which at least 25 percent of the membership enrolled on a prepaid basis are individuals who (I) are not insured for benefits under part B of title XVIII or eligible for benefits under this title, and (II) (in the case of such individuals whose prepayments are made in whole or in part by any government entity) had the opportunity at the time of enrollment in the program to elect other coverage of health care costs that would have been paid in whole or in part by any governmental entity,”. (2) Section 1902(e)(2)(A) of such Act (42 U.S.C. 1396a(e)(2)(A)) is amended by striking “section 1903(m)(2)(G)” and inserting “paragraph (2)(G) or (6) of section 1903(m)”. 101 STAT. 1330–152 (b) Medicaid Matching Rate for Quality Review of HMO Services.— (1) Section 1902(a)(30)(C) of such Act (42 U.S.C. 1396a(a)(30)(C)) is amended by inserting “, an entity which meets the requirements of section 1152, as determined by the Secretary,” after “title XI)”. (2) Section 1902(d) of such Act (42 U.S.C. 1396a(d)) is amended— (i) by inserting after “contracts with” the following: “an entity which meets the requirements of section 1152, as determined by the Secretary, for the performance of the quality review functions described in subsection (a)(30)(C), or”, and (ii) by striking “organization (or organizations)” each place it appears and inserting “such an entity or organization”. (3) Section 1903(a)(3)(C) of such Act (42 U.S.C. 1396b(a)(3)(C)) is amended by inserting “or by an entity which meets the requirements of section 1152, as determined by the Secretary,” after “utilization and quality control peer review organization”. (c) Freedom of Choice.— (1) Section 1902(a)(23) of such Act (42 U.S.C. 1396a(a)(23)) is amended— (A) by inserting “(A)” after “Guam, provide that”, and (B) by inserting before the semicolon at the end the following: “, and (B) an enrollment of an individual eligible for medical assistance in a primary care case-management system (described in section 1915(b)(1)), a health maintenance organization, or a similar entity shall not restrict the choice of the qualified person from whom the individual may receive services under section 1905(a)(4)(C)”. (2) Section 1902(e)(2)(A) of such Act (42 U.S.C. 1396a(e)(2)(A)) is amended by striking “but only” and inserting “but, except for benefits furnished under section 1905(a)(4)(C), only”. (3) The amendments made by this subsection shall apply to services furnished on and after July 1, 1988. (d) Technical Amendments.— (1) Section 1903(m)(2)(F) of such Act (42 U.S.C. 1396b(m)(2)(F)) is amended by striking “subparagraph (G)” and inserting “subparagraphs (E) or (G)”. (2) Section 1902(e)(2)(A) of such Act (42 U.S.C. 1396a(e)(2)(A)) is amended by striking “section 1903(m)(2)(G)” and inserting “subparagraph (B)(iii), (E), or (G) of section 1903(m)(2)”. (e) Continued Eligibility and Restriction on Disenrollment Without Cause for Metropolitan Health Plan HMO.— For purposes of sections 1902(e)(2)(A) and 1903(m)(2)(F) of the Social Security Act, the Metropolitan Health Plan HMO operated by the New York City public hospitals shall be treated in the same manner as a qualified health maintenance organization (as defined in section 1310(d) of the Public Health Service Act).