text: 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.
target: 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.
feat_title: A bill to limit the administrative expenses and profits of managed care entities to not more than 15 percent of premium revenues.