MEDICARE PREPAID COMPETITIVE PRICING DEMONSTRATION PROJECT.

SEC. 4011. MEDICARE PREPAID COMPETITIVE PRICING DEMONSTRATION PROJECT. (a) Establishment of Project.—The Secretary of Health and Human Services (in this subchapter referred to as the “Secretary”) shall establish a demonstration project (in this subchapter referred to as the “project”) under which payments to Medicare+Choice organizations in medicare payment areas in which the project is being conducted are determined in accordance with a competitive pricing methodology established under this subchapter. (b) Designation of 7 Medicare Payment Areas Covered by Project.— (1) In general.—The Secretary shall designate, in accordance with the recommendations of the Competitive Pricing Advisory Committee under paragraphs (2) and (3), medicare payment areas as areas in which the project under this subchapter will be conducted. In this section, the term “Competitive Pricing Advisory Committee” means the Competitive Pricing Advisory Committee established under section 4012(a). (2) Initial designation of 4 areas.— (A) In general.—The Competitive Pricing Advisory Committee shall recommend to the Secretary, consistent with subparagraph (B), the designation of 4 specific areas as medicare payment areas to be included in the project. Such recommendations shall be made in a manner so as to ensure that payments under the project in 2 such areas will begin on January 1, 1999, and in 2 such areas will begin on January 1, 2000. (B) Location of designation.—Of the 4 areas recommended under subparagraph (A), 3 shall be in urban areas and 1 shall be in a rural area. (3) Designation of additional 3 areas.—Not later than December 31, 2001, the Competitive Pricing Advisory Committee may recommend to the Secretary the designation of up to 3 additional, specific medicare payment areas to be included in the project. (c) Project Implementation.— (1) In general.—Subject to paragraph (2), the Secretary shall for each medicare payment area designated under subsection (b)— (A) in accordance with the recommendations of the Competitive Pricing Advisory Committee— (i) establish the benefit design among plans offered in such area, and111 STAT. 335 (ii) structure the method for selecting plans offered in such area; and (B) in consultation with such Committee— (i) establish methods for setting the price to be paid to plans, including, if the Secretaries determines appropriate, the rewarding and penalizing of Medicare+Choice plans in the area on the basis of the attainment of, or failure to attain, applicable quality standards, and (ii) provide for the collection of plan information (including information concerning quality and access to care), the dissemination of information, and the methods of evaluating the results of the project. (2) Consultation.—The Secretary shall take into account the recommendations of the area advisory committee established in section 4012(b), in implementing a project design for any area, except that no modifications may be made in the project design without consultation with the Competitive Pricing Advisory Committee. In no case may the Secretary change the designation of an area based on recommendations of any area advisory committee. (d) Monitoring and Report.— (1) Monitoring impact.—Taking into consideration the recommendations of the Competitive Pricing Advisory Committee and the area advisory committees, the Secretary shall closely monitor and measure the impact of the project in the different areas on the price and quality of, and access to, medicare covered services, choice of health plans, changes in enrollment, and other relevant factors. (2) Report.—Not later than December 31, 2002, the Secretary shall submit to Congress a report on the progress under the project under this subchapter, including a comparison of the matters monitored under paragraph (1) among the different designated areas. The report may include any legislative recommendations for extending the project to the entire medicare population. (e) Waiver Authority.—The Secretary of Health and Human Services may waive such requirements of title XVIII of the Social Security Act (as amended by this Act) as may be necessary for the purposes of carrying out the project. (f) Relationship to Other Authority.—Except pursuant to this subchapter, the Secretary of Health and Human Services may not conduct or continue any medicare demonstration project relating to payment of health maintenance organizations, Medicare+Choice organizations, or similar prepaid managed care entities on the basis of a competitive bidding process or pricing system described in subsection (a). (g) No Additional Costs to Medicare Program.—The aggregate payments to Medicare+Choice organizations under the project for any designated area for a fiscal year may not exceed the aggregate payments to such organizations that would have been made under title XVIII of the Social Security Act (42 U.S.C. 1395 et seq.), as amended by section 4001, if the project had not been conducted. (h) Definitions.—Any term used in this subchapter which is also used in part C of title XVIII of the Social Security Act, 111 STAT. 336as amended by section 4001, shall have the same meaning as when used in such part.