article: SECTION 1. SHORT TITLE. This Act may be cited as the ``Managed Care Integrity Act of 2001''. SEC. 2. LIMITATION OF ADMINISTRATIVE EXPENSES AND PROFITS OF MANAGED CARE ENTITIES. (a) Application to Managed Care Entities.-- (1) In general.--Notwithstanding any other provision of law, each health benefits plan offered by a managed care entity shall ensure that, with respect to a contract year, the actuarial value of the aggregate benefits provided under the plan during such year to enrollees is not less than 85 percent of the aggregate amount of payments received from, or on behalf of, such enrollees for such year. (2) Waiver of requirements.-- (A) In general.--The Secretary of Health and Human Services may waive the requirement of paragraph (1) for a 12-month period with respect to a managed care entity if the Secretary determines, based on the recommendations of the agency responsible for licensing such entity (or the health care plans of such entity) in a State, that-- (i) the solvency of the entity is in jeopardy; or (ii) compliance with the requirement would cause the entity to fail to meet the solvency requirements required for licensure in the State. (B) Renewals.--The Secretary of Health and Human Services may renew a waiver under subparagraph (A), except that the no waiver may be granted for a period in excess of 24 months in any 36-month period. (3) Administrative costs.-- (A) Limitation.--For purposes of this subsection, the costs associated with the management and operation of a managed care plan (including the costs of compensation and personnel fringe benefits, interest expenses, costs of occupancy of a facility, and marketing costs) shall not be included in determining the actuarial value of the aggregate benefits provided under the plan. (B) Regulations.--The Secretary of Health and Human Services shall promulgate regulations to define ``costs associated with the management and operation of a manages care plan'' for purposes of subparagraph (A). (4) Definition.--For purposes of this subsection, the term ``managed care entity'' shall include-- (A) managed care entities providing health care coverage for individuals under a group health plan or individual health insurance coverage; (B) medicaid managed care organizations as defined in section 1903(m)(1)(A) of the Social Security Act (42 U.S.C. 1396b(m)(1)(A)); (C) managed care entities that provide health care coverage for individuals under the Federal Employees Health Benefits Program under chapter 89 of title 5, United States Code; and (D) managed care entities that provide health care coverage for members of the armed forces and their families under chapter 55 of title 10, United States Code. (5) Effective date.--Paragraph (1) shall apply to contract years beginning on or after January 1, 2002. (6) Enforcement.--The Secretary of Health and Human Services shall develop formal investigation and compliance procedures with respect to complaints received by the Secretary concerning the failure of a health benefits plan to comply with the provisions of this subsection. Under such procedures-- (A) the Secretary shall provide the plan with the reasonable opportunity to develop and implement a corrective action plan to correct the deficiencies that were the basis of the complaint received by the Secretary; and (B) the Secretary shall provide the plan with reasonable notice and opportunity for a hearing (including the right to appeal an initial decision) prior to applying the sanctions described in subsection (c). (b) Medicare+Choice Organizations.-- (1) In general.--Section 1852 of the Social Security Act (42 U.S.C. 1395w-22) is amended by adding at the end the following new subsection: ``(l) Requirement Relating to the Provision of Benefits.-- ``(1) In general.--Each Medicare+Choice plan offered by a Medicare+Choice organization shall ensure that, with respect to a contract year, the actuarial value of the aggregate benefits provided under the plan during such year to Medicare+Choice eligible individuals enrolled in the plan is not less than 85 percent of the aggregate amount of payments received from, or on behalf of, such individuals for such year. ``(2) Waiver of requirement.-- ``(A) In general.--The Secretary may waive the requirement under paragraph (1) for a 12-month period with respect to a Medicare+Choice plan offered by a Medicare+Choice organization, if the Secretary determines, based, except for an organization with a waiver under section 1855(a)(2), on the recommendations of the agency responsible for licensing such plan in a State, that-- ``(i) the solvency of the Medicare+Choice organization is in jeopardy; or ``(ii) compliance with the requirement would cause the Medicare+Choice organization to fail to meet the solvency requirements required for licensure in the State or under this part. ``(B) Renewals.--The Secretary may renew a waiver under subparagraph (A), except that no waiver may be granted for a period in excess of 24 months in any 36- month period. ``(3) Administrative costs.-- ``(A) Limitation.--For purposes of this subsection, the costs associated with the management and operation of a Medicare+Choice plan (including the costs of compensation and personnel fringe benefits, interest expenses, costs of occupancy of a facility, and marketing costs) shall not be included in determining the actuarial value of the aggregate benefits provided under the plan. ``(B) Regulations.--The Secretary shall promulgate regulations to define `costs associated with the management and operation of a manages care plan' for purposes of subparagraph (A). ``(4) Enforcement.--The Secretary may terminate a contract with a Medicare+Choice organization under section 1857 in accordance with formal investigation and compliance procedures established by the Secretary under which-- ``(A) the Secretary 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 this paragraph; and ``(B) the Secretary provides the organization with reasonable notice and opportunity for hearing (including the right to appeal an initial decision) before terminating the contract.''. (2) Effective date.--The amendment made by paragraph (1) shall apply to contract years beginning on or after January 1, 2002. (c) Sanctions.-- (1) In general.--If the Secretary of Health and Human Services determines that a health benefits plan or a Medicare+Choice organization fails substantially to comply with the provision of this Act or section 1852(l) of the Social Security Act the Secretary may provide, in addition to any other remedies authorized by law, for any of the remedies described in paragraph (2). (2) Remedies.--The remedies described in this paragraph are-- (A) civil money penalties of not more than $25,000 for each determination under paragraph (1) or, with respect to such a determination involving misrepresentation or falsifying information, of not more than $100,000 for each such determination; and (B) with respect to Medicare+Choice organizations-- (i) suspension of enrollment of individuals under part C of title XVIII of the Social Security Act after the date the Secretary notifies the organization of a determination under paragraph (1) and until the Secretary is satisfied that the basis for such determination has been corrected and is not likely to recur; or (ii) suspension of payment to the organization under such part for individuals enrolled after the date the Secretary notifies the organization of a determination under paragraph (1) and until the Secretary is satisfied that the basis for such determination has been corrected and is not likely to recur.
summary: Managed Care Integrity Act of 2001 - Requires health benefits plans offered by managed care entities to ensure that the actuarial value of the aggregate plan benefits is at least 85 percent of the aggregate amount of payments received from, or on behalf of, plan enrollees. Waives such requirement for a limited period if an entity's solvency is in jeopardy or compliance would cause the entity's failure to meet State solvency requirements. Includes Medicaid managed care organizations and managed care entities providing health care coverage for Federal employees and members of the armed forces within the definition of "managed care entity."Requires the Secretary of Health and Human Services to develop related investigation and compliance procedures.Amends title XVIII (Medicare) of the Social Security Act to apply the requirements of this Act to Medicare+Choice organizations.Sets forth noncompliance remedies.