[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 2729 Introduced in Senate (IS)]
107th CONGRESS
2d Session
S. 2729
To amend title XVIII of the Social Security Act to provide for a
medicare voluntary prescription drug delivery program under the
medicare program, to modernize the medicare program, and for other
purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
July 15, 2002
Mr. Grassley (for himself, Ms. Snowe, Mr. Jeffords, Mr. Breaux, Mr.
Hatch, Ms. Collins, Ms. Landrieu, Mr. Hutchinson, and Mr. Domenici)
introduced the following bill; which was read twice and referred to the
Committee on Finance
_______________________________________________________________________
A BILL
To amend title XVIII of the Social Security Act to provide for a
medicare voluntary prescription drug delivery program under the
medicare program, to modernize the medicare program, and for other
purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; AMENDMENTS TO SOCIAL SECURITY ACT; REFERENCES
TO BIPA; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``21st Century
Medicare Act''.
(b) Amendments to Social Security Act.--Except as otherwise
specifically provided, whenever in this Act an amendment is expressed
in terms of an amendment to or repeal of a section or other provision,
the reference shall be considered to be made to that section or other
provision of the Social Security Act.
(c) BIPA; Secretary.--In this Act:
(1) BIPA.--The term ``BIPA'' means the Medicare, Medicaid,
and SCHIP Benefits Improvement and Protection Act of 2000, as
enacted into law by section 1(a)(6) of Public Law 106-554.
(2) Secretary.--The term ``Secretary'' means the Secretary
of Health and Human Services.
(d) Table of Contents.--The table of contents of this Act is as
follows:
Sec. 1. Short title; amendments to Social Security Act; references to
BIPA; table of contents.
TITLE I--MEDICARE VOLUNTARY PRESCRIPTION DRUG DELIVERY PROGRAM
Sec. 101. Medicare voluntary prescription drug delivery program.
``Part D--Voluntary Prescription Drug Delivery Program
``Sec. 1860D. Definitions; treatment of references to provisions in
Medicare+Choice program.
``Subpart 1--Establishment of Voluntary Prescription Drug Delivery
Program
``Sec. 1860D-1. Establishment of voluntary prescription drug
delivery program.
``Sec. 1860D-2. Enrollment under program.
``Sec. 1860D-3. Election of a Medicare Prescription Drug plan.
``Sec. 1860D-4. Providing information to beneficiaries.
``Sec. 1860D-5. Beneficiary protections.
``Sec. 1860D-6. Prescription drug benefits.
``Sec. 1860D-7. Requirements for entities offering Medicare
Prescription Drug plans; establishment of
standards.
``Subpart 2--Prescription Drug Delivery System
``Sec. 1860D-10. Establishment of service areas.
``Sec. 1860D-11. Publication of risk adjusters.
``Sec. 1860D-12. Submission of bids for proposed Medicare
Prescription Drug plans.
``Sec. 1860D-13. Approval of proposed Medicare Prescription
Drug plans.
``Sec. 1860D-14. Computation of monthly standard coverage
premiums.
``Sec. 1860D-15. Computation of monthly national average
premium.
``Sec. 1860D-16. Payments to eligible entities offering
Medicare Prescription Drug plans.
``Sec. 1860D-17. Computation of beneficiary obligation.
``Sec. 1860D-18. Collection of beneficiary obligation.
``Sec. 1860D-19. Premium and cost-sharing subsidies for low-
income individuals.
``Sec. 1860D-20. Reinsurance payments for qualified
prescription drug coverage.
``Subpart 3--Medicare Competitive Agency; Prescription Drug Account in
the Federal Supplementary Medical Insurance Trust Fund
``Sec. 1860D-25. Establishment of Medicare Competitive Agency.
``Sec. 1860D-26. Prescription Drug Account in the Federal
Supplementary Medical Insurance Trust
Fund.''.
Sec. 102. Study and report on permitting part B only individuals to
enroll in medicare voluntary prescription
drug delivery program.
Sec. 103. Additional requirements for annual financial report and
oversight on medicare program.
Sec. 104. Reference to medigap provisions.
Sec. 105. Medicaid amendments.
Sec. 106. Expansion of membership and duties of Medicare Payment
Advisory Commission (MedPAC).
Sec. 107. Miscellaneous administrative provisions.
TITLE II--OPTION FOR ENHANCED MEDICARE BENEFITS
Sec. 201. Option for enhanced medicare benefits.
``Part E--Enhanced Medicare Benefits
``Sec. 1860E-1. Entitlement to elect to receive enhanced
medicare benefits.
``Sec. 1860E-2. Scope of enhanced medicare benefits.
``Sec. 1860E-3. Payment of benefits.
``Sec. 1860E-4. Eligible beneficiaries; election of enhanced
medicare benefits; termination of election.
``Sec. 1860E-5. Premium adjustments; late election penalty.''.
Sec. 202. Rules relating to medigap policies that provide prescription
drug coverage; establishment of enhanced
medicare fee-for-service medigap policies.
TITLE III--MEDICARE+CHOICE COMPETITION
Sec. 301. Annual calculation of benchmark amounts based on floor rates
and local fee-for-service rates.
Sec. 302. Application of comprehensive risk adjustment methodology.
Sec. 303. Annual announcement of benchmark amounts and other payment
factors.
Sec. 304. Submission of bids by Medicare+Choice organizations.
Sec. 305. Adjustment of plan bids; comparison of adjusted bid to
benchmark; payment amount.
Sec. 306. Determination of premium reductions, reduced cost-sharing,
additional benefits, and beneficiary
premiums.
Sec. 307. Eligibility, election, and enrollment in competitive
Medicare+Choice plans.
Sec. 308. Benefits and beneficiary protections under competitive
Medicare+Choice plans.
Sec. 309. Payments to Medicare+Choice organizations for enhanced
medicare benefits under part E based on
risk-adjusted bids.
Sec. 310. Separate payments to Medicare+Choice organizations for part D
benefits.
Sec. 311. Administration by the Medicare Competitive Agency.
Sec. 312. Continued calculation of annual Medicare+Choice capitation
rates.
Sec. 313. Five-year extension of medicare cost contracts.
Sec. 314. Effective date.
TITLE I--MEDICARE VOLUNTARY PRESCRIPTION DRUG DELIVERY PROGRAM
SEC. 101. MEDICARE VOLUNTARY PRESCRIPTION DRUG DELIVERY PROGRAM.
(a) Establishment.--Title XVIII (42 U.S.C. 1395 et seq.) is amended
by redesignating part D as part F and by inserting after part C the
following new part:
``Part D--Voluntary Prescription Drug Delivery Program
``definitions; treatment of references to provisions in medicare+choice
program
``Sec. 1860D. (a) Definitions.--In this part:
``(1) Administrator.--The term `Administrator' means the
Administrator of the Medicare Competitive Agency as established
under section 1860D-25.
``(2) Covered drug.--
``(A) In general.--Except as provided in
subparagraph (B), the term `covered drug' means--
``(i) a drug that may be dispensed only
upon a prescription and that is described in
clause (i) or (ii) of subparagraph (A) of
section 1927(k)(2); or
``(ii) a biological product or insulin
described in subparagraph (B) or (C) of such
section;
and such term includes a vaccine licensed under section
351 of the Public Health Service Act and any use of a
covered outpatient drug for a medically accepted
indication (as defined in section 1927(k)(6)).
``(B) Exclusions.--
``(i) In general.--The term `covered drug'
does not include drugs or classes of drugs, or
their medical uses, which may be excluded from
coverage or otherwise restricted under section
1927(d)(2), other than subparagraph (E) thereof
(relating to smoking cessation agents), or
under section 1927(d)(3).
``(ii) Avoidance of duplicate coverage.--A
drug prescribed for an individual that would
otherwise be a covered drug under this part
shall not be so considered if payment for such
drug is available under part A or B (or under
part E for an eligible beneficiary who elects
to receive enhanced medicare benefits under
that part), but shall be so considered if such
payment is not available because benefits under
part A or B (or part E, as applicable) have
been exhausted.
``(3) Eligible beneficiary.--The term `eligible
beneficiary' means an individual that is entitled to benefits
under part A and enrolled under part B.
``(4) Eligible entity.--The term `eligible entity' means
any risk-bearing entity that the Administrator determines to be
appropriate to provide eligible beneficiaries with the benefits
under a Medicare Prescription Drug plan, including--
``(A) a pharmaceutical benefit management company;
``(B) a wholesale or retail pharmacist delivery
system;
``(C) an insurer (including an insurer that offers
medicare supplemental policies under section 1882);
``(D) another entity; or
``(E) any combination of the entities described in
subparagraphs (A) through (D).
``(5) Initial coverage limit.--The term `initial coverage
limit' means the limit as established under section 1860D-
6(c)(3), or, in the case of coverage that is not standard
coverage, the comparable limit (if any) established under the
coverage.
``(6) Medicare+choice organization; medicare+choice plan.--
The terms `Medicare+Choice organization' and `Medicare+Choice
plan' have the meanings given such terms in subsections (a)(1)
and (b)(1), respectively, of section 1859 (relating to
definitions relating to Medicare+Choice organizations).
``(7) Medicare prescription drug plan.--The term `Medicare
Prescription Drug plan' means prescription drug coverage that
is offered under a policy, contract, or plan--
``(A) by an eligible entity pursuant to, and in
accordance with, a contract between the Administrator
and the entity under section 1860D-7(b); and
``(B) that has been approved under section 1860D-
13.
``(8) Prescription drug account.--The term `Prescription
Drug Account' means the Prescription Drug Account (as
established under section 1860D-26) in the Federal
Supplementary Medical Insurance Trust Fund under section 1841.
``(9) Qualified prescription drug coverage.--The term
`qualified prescription drug coverage' means the coverage
described in section 1860D-6(a)(1).
``(10) Standard coverage.--The term `standard coverage'
means the coverage described in section 1860D-6(c).
``(b) Application of Medicare+Choice Provisions Under This Part.--
For purposes of applying provisions of part C under this part with
respect to a Medicare Prescription Drug plan and an eligible entity,
unless otherwise provided in this part such provisions shall be applied
as if--
``(1) any reference to a Medicare+Choice plan included a
reference to a Medicare Prescription Drug plan;
``(2) any reference to a provider-sponsored organization
included a reference to an eligible entity;
``(3) any reference to a contract under section 1857
included a reference to a contract under section 1860D-7(b);
and
``(4) any reference to part C included a reference to this
part.
``Subpart 1--Establishment of Voluntary Prescription Drug Delivery
Program
``establishment of voluntary prescription drug delivery program
``Sec. 1860D-1. (a) Provision of Benefit.--
``(1) In general.--The Administrator shall provide for and
administer a voluntary prescription drug delivery program under
which each eligible beneficiary enrolled under this part shall
be provided with access to qualified prescription drug coverage
as follows:
``(A) Medicare+choice plan.--An eligible
beneficiary who is enrolled under this part and
enrolled in a Medicare+Choice plan offered by a
Medicare+Choice organization shall receive coverage of
benefits under this part through such plan if such plan
provides qualified prescription drug coverage.
``(B) Medicare prescription drug plan.--An eligible
beneficiary who is enrolled under this part but is not
enrolled in a Medicare+Choice plan that provides
qualified prescription drug coverage shall receive
coverage of benefits under this part through enrollment
in a Medicare Prescription Drug plan that is offered in
the geographic area in which the beneficiary resides.
``(2) Voluntary nature of program.--Nothing in this part
shall be construed as requiring an eligible beneficiary to
enroll in the program under this part.
``(3) Scope of benefits.--The program established under
this part shall provide for coverage of all therapeutic classes
of covered drugs.
``(4) Program to begin in 2005.--The Administrator shall
establish the program under this part in a manner so that
benefits are first provided for months beginning with January
2005.
``(b) Access to Alternative Prescription Drug Coverage.--In the
case of an eligible beneficiary who has creditable prescription drug
coverage (as defined in section 1860D-2(b)(1)(F)), such beneficiary--
``(1) may continue to receive such coverage and not enroll
under this part; and
``(2) pursuant to section 1860D-2(b)(1)(C), is permitted to
subsequently enroll under this part without any penalty and
obtain access to qualified prescription drug coverage in the
manner described in subsection (a) if the beneficiary
involuntarily loses such coverage.
``(c) Financing.--The costs of providing benefits under this part
shall be payable from the Prescription Drug Account.
``enrollment under program
``Sec. 1860D-2. (a) Establishment of Enrollment Process.--
``(1) Process similar to part b enrollment.--The
Administrator shall establish a process through which an
eligible beneficiary (including an eligible beneficiary
enrolled in a Medicare+Choice plan offered by a Medicare+Choice
organization) may make an election to enroll under this part.
Such process shall be similar to the process for enrollment in
part B under section 1837, including the deeming provisions of
such section.
``(2) Condition of enrollment.--An eligible beneficiary
must be enrolled under this part in order to be eligible to
receive access to qualified prescription drug coverage.
``(b) Special Enrollment Procedures.--
``(1) Late enrollment penalty.--
``(A) Increase in premium.--Subject to the
succeeding provisions of this paragraph, in the case of
an eligible beneficiary whose coverage period under
this part began pursuant to an enrollment after the
beneficiary's initial enrollment period under part B
(determined pursuant to section 1837(d)) and not
pursuant to the open enrollment period described in
paragraph (2), the Administrator shall establish
procedures for increasing the amount of the monthly
beneficiary obligation under section 1860D-17
applicable to such beneficiary by an amount that the
Administrator determines is actuarially sound for each
full 12-month period (in the same continuous period of
eligibility) in which the eligible beneficiary could
have been enrolled under this part but was not so
enrolled.
``(B) Periods taken into account.--For purposes of
calculating any 12-month period under subparagraph (A),
there shall be taken into account--
``(i) the months which elapsed between the
close of the eligible beneficiary's initial
enrollment period and the close of the
enrollment period in which the beneficiary
enrolled; and
``(ii) in the case of an eligible
beneficiary who reenrolls under this part, the
months which elapsed between the date of
termination of a previous coverage period and
the close of the enrollment period in which the
beneficiary reenrolled.
``(C) Periods not taken into account.--
``(i) In general.--For purposes of
calculating any 12-month period under
subparagraph (A), subject to clauses (ii) and
(iii), there shall not be taken into account
months for which the eligible beneficiary can
demonstrate that the beneficiary had creditable
prescription drug coverage (as defined in
subparagraph (F)).
``(ii) Beneficiary must involuntarily lose
coverage.--Clause (i) shall only apply with
respect to coverage--
``(I) in the case of coverage
described in clause (ii) of
subparagraph (F), if the plan
terminates, ceases to provide, or
reduces the value of the prescription
drug coverage under such plan to below
the actuarial value of standard
coverage (as determined under section
1860D-6(f));
``(II) in the case of coverage
described in clause (i), (iii), or (iv)
of subparagraph (F), if the beneficiary
loses eligibility for such coverage; or
``(III) in the case of a
beneficiary with coverage described in
clause (v) of subparagraph (F), if the
issuer of the policy terminates
coverage under the policy.
``(iii) Partial credit for certain medigap
coverage.--In the case of a beneficiary that
had creditable prescription drug coverage
described in subparagraph (F)(v) that does not
provide coverage of the cost of prescription
drugs the actuarial value of which (as defined
by the Administrator) to the beneficiary equals
or exceeds the actuarial value of standard
coverage (as determined under section 1860D-
6(f)), the Administrator shall determine a
percentage of the period in which the
beneficiary had such creditable prescription
drug coverage that will be taken into account
under subparagraph (B) (and not considered to
be such creditable prescription drug coverage
under clause (i)).
``(D) Periods treated separately.--Any increase in
an eligible beneficiary's monthly beneficiary
obligation under subparagraph (A) with respect to a
particular continuous period of eligibility shall not
be applicable with respect to any other continuous
period of eligibility which the beneficiary may have.
``(E) Continuous period of eligibility.--
``(i) In general.--Subject to clause (ii),
for purposes of this paragraph, an eligible
beneficiary's `continuous period of
eligibility' is the period that begins with the
first day on which the beneficiary is eligible
to enroll under section 1836 and ends with the
beneficiary's death.
``(ii) Separate period.--Any period during
all of which an eligible beneficiary satisfied
paragraph (1) of section 1836 and which
terminated in or before the month preceding the
month in which the beneficiary attained age 65
shall be a separate `continuous period of
eligibility' with respect to the beneficiary
(and each such period which terminates shall be
deemed not to have existed for purposes of
subsequently applying this paragraph).
``(F) Creditable prescription drug coverage
defined.--For purposes of this part, the term
`creditable prescription drug coverage' means any of
the following:
``(i) Medicaid prescription drug
coverage.--Prescription drug coverage under a
medicaid plan under title XIX, including
through the Program of All-inclusive Care for
the Elderly (PACE) under section 1934, through
a social health maintenance organization
(referred to in section 4104(c) of the
Balanced Budget Act of 1997), and through a Medicare+Choice project
that demonstrates the application of capitation payment rates for frail
elderly medicare beneficiaries through the use of a interdisciplinary
team and through the provision of primary care services to such
beneficiaries by means of such a team at the nursing facility involved,
but only if the coverage provides coverage of the cost of prescription
drugs the actuarial value of which (as defined by the Administrator) to
the beneficiary equals or exceeds the actuarial value of standard
coverage (as determined under section 1860D-6(f)).
``(ii) Prescription drug coverage under a
group health plan.--Any outpatient prescription
drug coverage under a group health plan,
including a health benefits plan under the
Federal Employees Health Benefit Program under
chapter 89 of title 5, United States Code, and
a qualified retiree prescription drug plan (as
defined in section 1860D-20(f)(1)), but only if
the coverage provides coverage of the cost of
prescription drugs the actuarial value of which
(as defined by the Administrator) to the
beneficiary equals or exceeds the actuarial
value of standard coverage (as determined under
section 1860D-6(f)).
``(iii) State pharmaceutical assistance
program.--Coverage of prescription drugs under
a State pharmaceutical assistance program, but
only if the coverage provides coverage of the
cost of prescription drugs the actuarial value
of which (as defined by the Administrator) to
the beneficiary equals or exceeds the actuarial
value of standard coverage (as determined under
section 1860D-6(f)).
``(iv) Veterans' coverage of prescription
drugs.--Coverage of prescription drugs for
veterans, and survivors and dependents of
veterans, under chapter 17 of title 38, United
States Code, but only if the coverage provides
coverage of the cost of prescription drugs the
actuarial value of which (as defined by the
Administrator) to the beneficiary equals or
exceeds the actuarial value of standard
coverage (as determined under section 1860D-
6(f)).
``(v) Prescription drug coverage under
medigap policies.--Subject to subparagraph
(C)(iii), coverage under a medicare
supplemental policy under section 1882 that
provides benefits for prescription drugs
(whether or not such coverage conforms to the
standards for packages of benefits under
section 1882(p)(1)).
``(2) Open enrollment period for current beneficiaries in
which late enrollment procedures do not apply.--In the case of
an individual who is an eligible beneficiary as of January 1,
2005, the Administrator shall establish procedures under which
such beneficiary may enroll under this part during the open
enrollment period without the application of the late
enrollment procedures established under paragraph (1)(A). For
purposes of the preceding sentence, the open enrollment period
shall be the 7-month period that begins on April 1, 2004, and
ends on November 30, 2004.
``(3) Special enrollment period for beneficiaries who
involuntarily lose creditable prescription drug coverage.--
``(A) Establishment.--The Administrator shall
establish a special open enrollment period (as
described in subparagraph (B)) for an eligible
beneficiary that loses creditable prescription drug
coverage.
``(B) Special open enrollment period.--The special
open enrollment period described in this subparagraph
is the 63-day period that begins--
``(i) in the case of a beneficiary with
coverage described in clause (ii) of paragraph
(1)(F), the date on which the plan terminates,
ceases to provide, or substantially reduces (as
defined by the Administrator) the value of the
prescription drug coverage under such plan;
``(ii) in the case of a beneficiary with
coverage described in clause (i), (iii), or
(iv) of paragraph (1)(F), the date on which the
beneficiary loses eligibility for such
coverage; or
``(iii) in the case of a beneficiary with
coverage described in clause (v) of paragraph
(1)(F), the date on which the issuer of the
policy terminates coverage under the policy.
``(c) Period of Coverage.--
``(1) In general.--Except as provided in paragraph (2) and
subject to paragraph (3), an eligible beneficiary's coverage
under the program under this part shall be effective for the
period provided in section 1838, as if that section applied to
the program under this part.
``(2) Open and special enrollment.--
``(A) Open enrollment.--An eligible beneficiary who
enrolls under the program under this part pursuant to
subsection (b)(2) shall be entitled to the benefits
under this part beginning on January 1, 2005.
``(B) Special enrollment.--Subject to paragraph
(3), an eligible beneficiary who enrolls under the
program under this part pursuant to subsection (b)(3)
shall be entitled to the benefits under this part
beginning on the first day of the month following the
month in which such enrollment occurs.
``(3) Limitation.--Coverage under this part shall not begin
prior to January 1, 2005.
``(d) Termination.--
``(1) In general.--The causes of termination specified in
section 1838 shall apply to this part in the same manner as
such causes apply to part B.
``(2) Coverage terminated by termination of coverage under
parts a or b.--
``(A) In general.--In addition to the causes of
termination specified in paragraph (1), the
Administrator shall terminate an individual's coverage
under this part if the individual is no longer enrolled
in both parts A and B.
``(B) Effective date.--The termination described in
subparagraph (A) shall be effective on the effective
date of termination of coverage under part A or (if
earlier) under part B.
``(3) Procedures regarding termination of a beneficiary
under a plan.--The Administrator shall establish procedures for
determining the status of an eligible beneficiary's enrollment
under this part if the beneficiary's enrollment in a Medicare
Prescription Drug plan offered by an eligible entity under this
part is terminated by the entity for cause (pursuant to
procedures established by the Administrator under section
1860D-3(a)(1)).
``election of a medicare prescription drug plan
``Sec. 1860D-3. (a) In General.--
``(1) Process.--
``(A) Election.--
``(i) In general.--The Administrator shall
establish a process through which an eligible
beneficiary who is enrolled under this part but
not enrolled in a Medicare+Choice plan offered
by a Medicare+Choice organization that provides
qualified prescription drug coverage--
``(I) shall make an election to
enroll in any Medicare Prescription
Drug plan that is offered by an
eligible entity and that serves the
geographic area in which the
beneficiary resides; and
``(II) may make an annual election
to change the election under this
clause.
``(ii) Clarification regarding
enrollment.--The process established under
clause (i) shall include, in the case of an
eligible beneficiary who is enrolled under this
part but who has failed to make an election of
a Medicare Prescription Drug plan in an area,
for the enrollment in the Medicare Prescription
Drug plan with the lowest monthly premium that
is available in the area.
``(B) Requirements for process.--In establishing
the process under subparagraph (A), the Administrator
shall--
``(i) use rules similar to the rules for
enrollment, disenrollment, and termination of
enrollment with a Medicare+Choice plan under
section 1851, including--
``(I) the establishment of special
election periods under subsection
(e)(4) of such section; and
``(II) the application of the
guaranteed issue and renewal provisions
of section 1851(g) (other than clause
(i) and the second sentence of clause
(ii) of paragraph (3)(C), relating to
default enrollment); and
``(ii) coordinate enrollments,
disenrollments, and terminations of enrollment
under part C with enrollments, disenrollments,
and terminations of enrollment under this part.
``(2) First enrollment period for plan enrollment.--The
process developed under paragraph (1) shall ensure that
eligible beneficiaries who enroll under this part during the
open enrollment period under section 1860D-2(b)(2) are
permitted to elect an eligible entity prior to January 1, 2005,
in order to ensure that coverage under this part is effective
as of such date.
``(b) Enrollment in a Medicare+Choice Plan.--
``(1) In general.--An eligible beneficiary who is enrolled
under this part and enrolled in a Medicare+Choice plan offered
by a Medicare+Choice organization that provides qualified
prescription drug coverage shall receive access to such
coverage under this part through such plan.
``(2) Rules.--Enrollment in a Medicare+Choice plan is
subject to the rules for enrollment in such plan under section
1851.
``providing information to beneficiaries
``Sec. 1860D-4. (a) Activities.--
``(1) In general.--The Administrator shall conduct
activities that are designed to broadly disseminate information
to eligible beneficiaries (and prospective eligible
beneficiaries) regarding the coverage provided under this part.
``(2) Special rule for first enrollment under the
program.--The activities described in paragraph (1) shall
ensure that eligible beneficiaries are provided with such
information at least 30 days prior to the first enrollment
period described in section 1860D-3(a)(2).
``(b) Requirements.--
``(1) In general.--The activities described in subsection
(a) shall--
``(A) be similar to the activities performed by the
Administrator under section 1851(d);
``(B) be coordinated with the activities performed
by--
``(i) the Administrator under such section;
and
``(ii) the Secretary under section 1804;
and
``(C) provide for the dissemination of information
comparing the plans offered by eligible entities under
this part that are available to eligible beneficiaries
residing in an area.
``(2) Comparative information.--The comparative information
described in paragraph (1)(C) shall include a comparison of the
following:
``(A) Benefits.--The benefits provided under the
plan and the formularies and appeals processes under
the plan.
``(B) Quality and performance.--To the extent
available, the quality and performance of the eligible
entity offering the plan.
``(C) Beneficiary cost-sharing.--The cost-sharing
required of eligible beneficiaries under the plan.
``(D) Consumer satisfaction surveys.--To the extent
available, the results of consumer satisfaction surveys
regarding the plan and the eligible entity offering
such plan.
``(E) Additional information.--Such additional
information as the Administrator may prescribe.
``beneficiary protections
``Sec. 1860D-5. (a) Dissemination of Information.--
``(1) General information.--An eligible entity offering a
Medicare Prescription Drug plan shall disclose, in a clear,
accurate, and standardized form to each enrollee at the time of
enrollment and at least annually thereafter, the information
described in section 1852(c)(1) relating to such plan. Such
information includes the following:
``(A) Access to covered drugs, including access
through pharmacy networks.
``(B) How any formulary used by the entity
functions.
``(C) Copayments, coinsurance, and deductible
requirements.
``(D) Grievance and appeals procedures.
``(2) Disclosure upon request of general coverage,
utilization, and grievance information.--Upon request of an
individual eligible to enroll in a Medicare Prescription Drug
plan, the eligible entity offering such plan shall provide the
information described in section 1852(c)(2) to such individual.
``(3) Response to beneficiary questions.--An eligible
entity offering a Medicare Prescription Drug plan shall have a
mechanism for providing specific information to enrollees upon
request, including information on the coverage of specific
drugs and changes in its formulary on a timely basis.
``(4) Claims information.--An eligible entity offering a
Medicare Prescription Drug plan must furnish to enrolled
individuals in a form easily understandable to such individuals
an explanation of benefits (in accordance with section 1806(a)
or in a comparable manner) and a notice of the benefits in
relation to initial coverage limit and annual out-of-pocket
limit for the current year, whenever prescription drug benefits
are provided under this part (except that such notice need not
be provided more often than monthly).
``(5) Approval of marketing material and application
forms.--The provisions of section 1851(h) shall apply to
marketing material and application forms under this part in the
same manner as such provisions apply to marketing material and
application forms under part C.
``(b) Access to Covered Drugs.--
``(1) Access to negotiated prices for prescription drugs.--
An eligible entity offering a Medicare Prescription Drug plan
shall issue such a card (or other technology) that may be used
by an enrolled beneficiary to assure access to negotiated
prices under section 1860D-6(e) for the purchase of
prescription drugs for which coverage is not otherwise provided
under the Medicare Prescription Drug plan.
``(2) Assuring pharmacy access.--
``(A) In general.--An eligible entity offering a
Medicare Prescription Drug plan shall secure the
participation in its network of a sufficient number of
pharmacies that dispense (other than by mail order)
drugs directly to patients to ensure convenient access
(as determined by the Administrator and including
adequate emergency access) for enrolled beneficiaries,
in accordance with standards established under section
1860D-7(f) that ensure such convenient access. Such
standards shall take into account reasonable distances
to pharmacy services in both urban and rural areas.
``(B) Use of point-of-service system.--An eligible
entity offering a Medicare Prescription Drug plan shall
establish an optional point-of-service method of
operation under which--
``(i) the plan provides access to any or
all pharmacies that are not participating
pharmacies in its network; and
``(ii) the plan may charge beneficiaries
through adjustments in copayments any
additional costs associated with the point-of-
service option.
The additional copayments so charged shall not count
toward the application of section 1860D-6(c).
``(3) Requirements on development and application of
formularies.--If an eligible entity offering a Medicare
Prescription Drug plan uses a formulary, the following
requirements must be met:
``(A) Pharmacy and therapeutic (p&t) committee.--
The eligible entity must establish a pharmacy and
therapeutic committee that develops and reviews the
formulary. Such committee shall include at least one
practicing physician and at least one practicing
pharmacist both with expertise in the care of elderly
or disabled persons and a majority of its members shall
consist of individuals who are a practicing physician
or a practicing pharmacist (or both).
``(B) Formulary development.--In developing and
reviewing the formulary, the committee shall base
clinical decisions on the strength of scientific
evidence and standards of practice, including assessing
peer-reviewed medical literature, such as randomized
clinical trials, pharmacoeconomic studies, outcomes
research data, and such other information as the
committee determines to be appropriate.
``(C) Inclusion of drugs in all therapeutic
categories.--The formulary must include drugs within
each therapeutic category and class of covered
outpatient drugs (although not necessarily for all
drugs within such categories and classes).
``(D) Provider education.--The committee shall
establish policies and procedures to educate and inform
health care providers concerning the formulary.
``(E) Notice before removing drugs from
formulary.--Any removal of a drug from a formulary
shall take effect only after appropriate notice is made
available to beneficiaries and physicians.
``(F) Appeals and exceptions to application.--The
eligible entity must have, as part of the appeals
process under subsection (e)(3), a process for timely
appeals for denials of coverage based on such
application of the formulary.
``(c) Cost and Utilization Management; Quality Assurance;
Medication Therapy Management Program.--
``(1) In general.--An eligible entity shall have in place
the following with respect to covered drugs:
``(A) A cost-effective drug utilization management
program, including incentives to reduce costs when
appropriate.
``(B) Quality assurance measures to reduce medical
errors and adverse drug interactions, which--
``(i) shall include a medication therapy
management program described in paragraph (2);
and
``(ii) may include beneficiary education
programs, counseling, medication refill
reminders, and special packaging.
``(C) A program to control fraud, abuse, and waste.
``(2) Medication therapy management program.--
``(A) In general.--A medication therapy management
program described in this paragraph is a program of
drug therapy management and medication administration
that is designed to assure, with respect to
beneficiaries with chronic diseases (such as diabetes,
asthma, hypertension, and congestive heart failure) or
multiple prescriptions, that covered outpatient drugs
under the prescription drug plan are appropriately used
to achieve therapeutic goals and reduce the risk of
adverse events, including adverse drug interactions.
``(B) Elements.--Such program may include--
``(i) enhanced beneficiary understanding of
such appropriate use through beneficiary
education, counseling, and other appropriate
means;
``(ii) increased beneficiary adherence with
prescription medication regimens through
medication refill reminders, special packaging,
and other appropriate means; and
``(iii) detection of patterns of overuse
and underuse of prescription drugs.
``(C) Development of program in cooperation with
licensed pharmacists.--The program shall be developed
in cooperation with licensed and practicing pharmacists
and physicians.
``(D) Considerations in pharmacy fees.--The
eligible entity offering a Medicare Prescription Drug
plan shall take into account, in establishing fees for
pharmacists and others providing services under the
medication therapy management program, the resources
and time used in implementing the program.
``(3) Public disclosure of pharmaceutical prices for
equivalent drugs.--The eligible entity offering a Medicare
Prescription Drug plan shall provide that each pharmacy or
other dispenser that arranges for the dispensing of a covered
drug shall inform the beneficiary at the time of purchase of
the drug of any differential between the price of the
prescribed drug to the enrollee and the price of the lowest
cost generic drug covered under the plan that is
therapeutically equivalent and bioequivalent.
``(d) Grievance Mechanism.--An eligible entity shall provide
meaningful procedures for hearing and resolving grievances between the
eligible entity (including any entity or individual through which the
eligible entity provides covered benefits) and enrollees in a Medicare
Prescription Drug plan offered by the eligible entity in accordance
with section 1852(f).
``(e) Coverage Determinations, Reconsiderations, and Appeals.--
``(1) In general.--An eligible entity shall meet the
requirements of section 1852(g) with respect to covered
benefits under the Medicare Prescription Drug plan it offers
under this part in the same manner as such requirements apply
to a Medicare+Choice organization with respect to benefits it
offers under a Medicare+Choice plan under part C.
``(2) Request for review of tiered formulary
determinations.--In the case of a Medicare Prescription Drug
plan offered by an eligible entity that provides for tiered
cost-sharing for covered drugs included within a formulary and
provides lower cost-sharing for preferred drugs included within
the formulary, an individual who is enrolled in the plan may
request coverage of a nonpreferred drug under the terms
applicable for preferred drugs if the prescribing physician
determines that the preferred drug for treatment of the same
condition is not as effective for the individual or has adverse
effects for the individual.
``(3) Appeals of formulary determinations.--
``(A) In general.--Subject to subparagraph (B),
consistent with the requirements of section 1852(g), an
eligible entity shall establish a process for
individuals to appeal formulary determinations.
``(B) Formulary determinations.--An individual who
is enrolled in a Medicare Prescription Drug plan
offered by an eligible entity may appeal to obtain
coverage for a covered drug that is not on a formulary
of the eligible entity if the prescribing physician
determines that the formulary drug for treatment of the
same condition is not as effective for the individual
or has adverse effects for the individual.
``(f) Confidentiality and Accuracy of Enrollee Records.--An
eligible entity shall meet the requirements of section 1852(h) with
respect to enrollees under this part in the same manner as such
requirements apply to a Medicare+Choice organization with respect to
enrollees under part C.
``(g) Uniform Premium.--An eligible entity shall ensure that the
monthly premium for a Medicare Prescription Drug plan charged under
this part is the same for all eligible beneficiaries enrolled in the
plan.
``prescription drug benefits
``Sec. 1860D-6. (a) Requirements.--
``(1) In general.--For purposes of this part and part C,
the term `qualified prescription drug coverage' means either of
the following:
``(A) Standard coverage with access to negotiated
prices.--Standard coverage (as defined in subsection
(c)) and access to negotiated prices under subsection
(e).
``(B) Actuarially equivalent coverage with access
to negotiated prices.--Coverage of covered drugs which
meets the alternative coverage requirements of
subsection (d) and access to negotiated prices under
subsection (e), but only if it is approved by the
Administrator, as provided under subsection (d).
``(2) Permitting additional prescription drug coverage.--
``(A) In general.--Subject to subparagraph (B) and
section 1860D-13(c)(2), nothing in this part shall be
construed as preventing qualified prescription drug
coverage from including coverage of covered drugs that
exceeds the coverage required under paragraph (1).
``(B) Requirement.--An eligible entity may not
offer a Medicare Prescription Drug plan that provides
additional benefits pursuant to subparagraph (A) in an
area unless the eligible entity offering such plan also
offers a Medicare Prescription Drug plan in the area
that only provides the coverage of prescription drugs
that is required under subsection (a)(1).
``(3) Cost control mechanisms.--In providing qualified
prescription drug coverage, the entity offering the Medicare
Prescription Drug plan or the Medicare+Choice plan may use cost
control mechanisms that are customarily used in employer-
sponsored health care plans that offer coverage for
prescription drugs, including the use of formularies, tiered
copayments, selective contracting with providers of
prescription drugs, and mail order pharmacies.
``(b) Application of Secondary Payor Provisions.--The provisions of
section 1852(a)(4) shall apply under this part in the same manner as
they apply under part C.
``(c) Standard Coverage.--For purposes of this part and part C, the
term `standard coverage' means coverage of covered drugs that meets the
following requirements:
``(1) Deductible.--
``(A) In general.--The coverage has an annual
deductible--
``(i) for 2005, that is equal to $250; or
``(ii) for a subsequent year, that is equal
to the amount specified under this paragraph
for the previous year increased by the
percentage specified in paragraph (5) for the
year involved.
``(B) Rounding.--Any amount determined under
subparagraph (A)(ii) that is not a multiple of $1 shall
be rounded to the nearest multiple of $1.
``(2) Limits on cost-sharing.--The coverage has cost-
sharing (for costs above the annual deductible specified in
paragraph (1) and up to the initial coverage limit under
paragraph (3)) that is equal to 50 percent or that is
actuarially consistent (using processes established under
subsection (f)) with an average expected payment of 50 percent
of such costs.
``(3) Initial coverage limit.--
``(A) In general.--Subject to paragraph (4), the
coverage has an initial coverage limit on the maximum
costs that may be recognized for payment purposes
(above the annual deductible)--
``(i) for 2005, that is equal to $3,450; or
``(ii) for a subsequent year, that is equal
to the amount specified in this paragraph for
the previous year, increased by the annual
percentage increase described in paragraph (5)
for the year involved.
``(B) Rounding.--Any amount determined under
subparagraph (A)(ii) that is not a multiple of $1 shall
be rounded to the nearest multiple of $1.
``(4) Limitation on out-of-pocket expenditures by
beneficiary.--
``(A) In general.--Notwithstanding paragraph (3),
the coverage provides benefits with cost-sharing that
is equal to 10 percent after the individual has
incurred costs (as described in subparagraph (C)) for
covered drugs in a year equal to the annual out-of-pocket limit
specified in subparagraph (B).
``(B) Annual out-of-pocket limit.--
``(i) In general.--For purposes of this
part, the `annual out-of-pocket limit'
specified in this subparagraph--
``(I) for 2005, is equal to $3,700;
or
``(II) for a subsequent year, is
equal to the amount specified in the
subparagraph for the previous year,
increased by the annual percentage
increase described in paragraph (5) for
the year involved.
``(ii) Rounding.--Any amount determined
under clause (i)(II) that is not a multiple of
$1 shall be rounded to the nearest multiple of
$1.
``(C) Application.--In applying subparagraph (A)--
``(i) incurred costs shall only include
costs incurred for the annual deductible
(described in paragraph (1)), cost-sharing
(described in paragraph (2)), and amounts for
which benefits are not provided because of the
application of the initial coverage limit
described in paragraph (3); and
``(ii) such costs shall be treated as
incurred only if they are paid by the
individual (or by another individual, such as a
family member, on behalf of the individual),
under section 1860D-19, or under title XIX and
the individual (or other individual) is not
reimbursed through insurance or otherwise, a
group health plan, or other third-party payment
arrangement for such costs.
``(5) Annual percentage increase.--For purposes of this
part, the annual percentage increase specified in this
paragraph for a year is equal to the annual percentage increase
in average per capita aggregate expenditures for covered drugs
in the United States for beneficiaries under this title, as
determined by the Administrator for the 12-month period ending
in July of the previous year.
``(d) Alternative Coverage Requirements.--A Medicare Prescription
Drug plan or Medicare+Choice plan may provide a different prescription
drug benefit design from the standard coverage described in subsection
(c) so long as the Administrator determines (based on an actuarial
analysis by the Administrator) that the following requirements are met
and the plan applies for, and receives, the approval of the
Administrator for such benefit design:
``(1) Assuring at least actuarially equivalent coverage.--
``(A) Assuring equivalent value of total
coverage.--The actuarial value of the total coverage
(as determined under subsection (f)) is at least equal
to the actuarial value (as so determined) of standard
coverage.
``(B) Assuring equivalent unsubsidized value of
coverage.--The unsubsidized value of the coverage is at
least equal to the unsubsidized value of standard
coverage. For purposes of this subparagraph, the
unsubsidized value of coverage is the amount by which
the actuarial value of the coverage (as determined
under subsection (f)) exceeds the actuarial value of
the amounts associated with the application of section
1860D-17(c) and reinsurance payments under section
1860D-20 with respect to such coverage.
``(C) Assuring standard payment for costs at
initial coverage limit.--The coverage is designed,
based upon an actuarially representative pattern of
utilization (as determined under subsection (f)), to
provide for the payment, with respect to costs incurred
that are equal to the sum of the deductible under
subsection (c)(1) and the initial coverage limit under
subsection (c)(3), of an amount equal to at least such
initial coverage limit multiplied by the percentage
specified in subsection (c)(2).
Benefits other than qualified prescription drug coverage shall
not be taken into account for purposes of this paragraph.
``(2) Limitation on out-of-pocket expenditures by
beneficiaries.--The coverage provides the limitation on out-of-
pocket expenditures by beneficiaries described in subsection
(c)(4).
``(e) Access to Negotiated Prices.--
``(1) Access.--
``(A) In general.--Under qualified prescription
drug coverage offered by an eligible entity or a
Medicare+Choice organization, the entity or
organization shall provide beneficiaries with access to
negotiated prices (including applicable discounts) used
for payment for covered drugs, regardless of the fact
that no benefits may be payable under the coverage with
respect to such drugs because of the application of the
deductible, any cost-sharing, or an initial coverage
limit (described in subsection (c)(3)).
``(B) Medicaid related provisions.--Insofar as a
State elects to provide medical assistance under title
XIX for a drug based on the prices negotiated under a
Medicare Prescription Drug plan under this part, the
requirements of section 1927 shall not apply to such
drugs. The prices negotiated under a Medicare
Prescription Drug plan with respect to covered drugs,
under a Medicare+Choice plan with respect to such
drugs, or under a qualified retiree prescription drug
plan (as defined in section 1860D-20(f)(1)) with
respect to such drugs, on behalf of eligible
beneficiaries, shall (notwithstanding any other
provision of law) not be taken into account for the
purposes of establishing the best price under section
1927(c)(1)(C).
``(2) Cards or other technology.--In providing the access
under paragraph (1), the eligible entity or Medicare+Choice
organization shall issue a card or use other technology pursuant to
section 1860D-5(b)(1).
``(f) Actuarial Valuation; Determination of Annual Percentage
Increases.--
``(1) Processes.--For purposes of this section, the
Administrator shall establish processes and methods--
``(A) for determining the actuarial valuation of
prescription drug coverage, including--
``(i) an actuarial valuation of standard
coverage and of the reinsurance payments under
section 1860D-20;
``(ii) the use of generally accepted
actuarial principles and methodologies; and
``(iii) applying the same methodology for
determinations of alternative coverage under
subsection (d) as is used with respect to
determinations of standard coverage under
subsection (c); and
``(B) for determining annual percentage increases
described in subsection (c)(5).
``(2) Use of outside actuaries.--Under the processes under
paragraph (1)(A), eligible entities and Medicare+Choice
organizations may use actuarial opinions certified by
independent, qualified actuaries to establish actuarial values,
but the Administrator shall determine whether such actuarial
values meet the requirements under subsection (c)(1).
``requirements for entities offering medicare prescription drug plans;
establishment of standards
``Sec. 1860D-7. (a) General Requirements.--An eligible entity
offering a Medicare Prescription Drug plan shall meet the following
requirements:
``(1) Licensure.--Subject to subsection (c), the entity is
organized and licensed under State law as a risk-bearing entity
eligible to offer health insurance or health benefits coverage
in each State in which it offers a Medicare Prescription Drug
plan.
``(2) Assumption of financial risk.--
``(A) In general.--Subject to subparagraph (B) and
section 1860D-20, the entity assumes financial risk on
a prospective basis for the benefits that it offers
under a Medicare Prescription Drug plan and that is not
covered under such section or section 1860D-16.
``(B) Reinsurance permitted.--The entity may obtain
insurance or make other arrangements for the cost of
coverage provided to any enrolled member under this
part.
``(3) Solvency for unlicensed entities.--In the case of an
eligible entity that is not described in paragraph (1) and for
which a waiver has been approved under subsection (c), such
entity shall meet solvency standards established by the
Administrator under subsection (d).
``(b) Contract Requirements.--The Administrator shall not permit an
eligible beneficiary to elect a Medicare Prescription Drug plan offered
by an eligible entity under this part, and the entity shall not be
eligible for payments under section 1860D-16 or 1860D-20, unless the
Administrator has entered into a contract under this subsection with
the entity with respect to the offering of such plan. Such a contract
with an entity may cover more than 1 Medicare Prescription Drug plan.
Such contract shall provide that the entity agrees to comply with the
applicable requirements and standards of this part and the terms and
conditions of payment as provided for in this part.
``(c) Waiver of Certain Requirements in Order To Ensure Beneficiary
Choice.--
``(1) In general.--In the case of an eligible entity that
seeks to offer a Medicare Prescription Drug plan in a State,
the Administrator shall waive the requirement of subsection
(a)(1) that the entity be licensed in that State if the
Administrator determines, based on the application and other
evidence presented to the Administrator, that any of the
grounds for approval of the application described in paragraph
(2) have been met.
``(2) Grounds for approval.--The grounds for approval under
this paragraph are the grounds for approval described in
subparagraphs (B), (C), and (D) of section 1855(a)(2), and also
include the application by a State of any grounds other than
those required under Federal law.
``(3) Application of waiver procedures.--With respect to an
application for a waiver (or a waiver granted) under this
subsection, the provisions of subparagraphs (E), (F), and (G)
of section 1855(a)(2) shall apply.
``(4) References to certain provisions.--For purposes of
this subsection, in applying the provisions of section
1855(a)(2) under this subsection to Medicare Prescription Drug
plans and eligible entities--
``(A) any reference to a waiver application under
section 1855 shall be treated as a reference to a
waiver application under paragraph (1); and
``(B) any reference to solvency standards were
treated as a reference to solvency standards
established under subsection (d).
``(d) Solvency Standards for Non-Licensed Entities.--
``(1) Establishment and publication.--The Administrator, in
consultation with the National Association of Insurance
Commissioners, shall establish and publish, by not later than
January 1, 2004, financial solvency and capital adequacy
standards for entities described in paragraph (2).
``(2) Compliance with standards.--An eligible entity that
is not licensed by a State under subsection (a)(1) and for
which a waiver application has been approved under subsection
(c) shall meet solvency and capital adequacy standards
established under paragraph (1). The Administrator shall
establish certification procedures for such eligible entities
with respect to such solvency standards in the manner described
in section 1855(c)(2).
``(e) Licensure Does Not Substitute for or Constitute
Certification.--The fact that an entity is licensed in accordance with
subsection (a)(1) or has a waiver application approved under subsection
(c) does not deem the eligible entity to meet other requirements
imposed under this part for an eligible entity.
``(f) Other Standards.--The Administrator shall establish by
regulation other standards (not described in subsection (d)) for
eligible entities and Medicare Prescription Drug plans consistent with,
and to carry out, this part. The Administrator shall publish such
regulations by January 1, 2004.
``(g) Periodic Review and Revision of Standards.--The Administrator
shall periodically review the standards established under this section
and, based on such review, may revise such standards if the
Administrator determines such revision to be appropriate.
``(h) Relation to State Laws.--
``(1) In general.--The standards established under this
part shall supersede any State law or regulation (including
standards described in paragraph (2)) with respect to Medicare
Prescription Drug plans which are offered by eligible entities
under this part--
``(A) to the extent such law or regulation is
inconsistent with such standards; and
``(B) in the same manner as such laws and
regulations are superseded under section 1856(b)(3).
``(2) Standards specifically superseded.--State standards
relating to the following are superseded under this section:
``(A) Benefit requirements.
``(B) Requirements relating to inclusion or
treatment of providers.
``(C) Coverage determinations (including related
appeals and grievance processes).
``(3) Prohibition of state imposition of premium taxes.--No
State may impose a premium tax or similar tax with respect to--
``(A) premiums paid to the Administrator for
Medicare Prescription Drug plans under this part; or
``(B) any payments made by the Administrator under
this part to an eligible entity offering such a plan.
``Subpart 2--Prescription Drug Delivery System
``establishment of service areas
``Sec. 1860D-10. (a) Establishment.--
``(1) Initial establishment.--Not later than April 15,
2004, the Administrator shall establish and publish the service
areas in which Medicare Prescription Drug plans may offer
benefits under this part.
``(2) Periodic review and revision of service areas.--The
Administrator shall periodically review the service areas
applicable under this section and, based on such review, may
revise such service areas if the Administrator determines such
revision to be appropriate.
``(b) Requirements for Establishment of Service Areas.--
``(1) In general.--The Administrator shall establish the
service areas under subsection (a) in a manner that--
``(A) maximizes the availability of Medicare
Prescription Drug plans to eligible beneficiaries; and
``(B) minimizes the ability of eligible entities
offering such plans to favorably select eligible
beneficiaries.
``(2) Service area may not be smaller than a state.--A
service area established under subsection (a) may not be
smaller than a State.
``publication of risk adjusters
``Sec. 1860D-11. (a) Publication.--Not later than April 15 of each
year (beginning in 2004), the Administrator shall publish the risk
adjusters established under subsection (b) to be used in computing--
``(1) under section 1860D-16(a) the amount of payment to
Medicare Prescription Drug plans in the subsequent year; and
``(2) under section 1853(k)(2) the amount of payment to
Medicare+Choice organizations that offer qualified prescription
drug coverage in the subsequent year.
``(b) Establishment of Risk Adjusters.--
``(1) In general.--Subject to paragraph (2), the
Administrator shall establish an appropriate methodology for
adjusting the amount of payment to Medicare Prescription Drug
plans computed under section 1860D-16(a) to take into account,
in a budget neutral manner, variation in costs based on the
differences in actuarial risk of different enrollees being
served.
``(2) Considerations.--In establishing the methodology
under paragraph (1), the Administrator may take into account
the similar methodologies used under section 1853(a)(3) to
adjust payments to Medicare+Choice organizations (with respect
to enhanced medicare benefits under part E).
``submission of bids for proposed medicare prescription drug plans
``Sec. 1860D-12. (a) In General.--Each eligible entity that intends
to offer a Medicare Prescription Drug plan in a year (beginning with
2005) shall submit to the Administrator, at such time and in such
manner as the Administrator may specify, such information as the
Administrator may require, including the information described in
subsection (b).
``(b) Information Described.--The information described in this
subsection includes information on each of the following:
``(1) A description of the benefits under the plan (as
required under section 1860D-6).
``(2) Information on the actuarial value of the qualified
prescription drug coverage.
``(3) Information on the monthly premium to be charged for
all benefits, including an actuarial certification of--
``(A) the actuarial basis for such premium; and
``(B) the portion of such premium attributable to
benefits in excess of standard coverage; and
``(C) the reduction in such bid and premium
resulting from the payments associated with section
1860D-16(c) and payments provided under section 1860D-
20.
``(4) The service area for the plan.
``(5) Such other information as the Administrator may
require to carry out this part.
``(c) Options Regarding Service Areas.--
``(1) In general.--The service area of a Medicare
Prescription Drug plan shall be either--
``(A) the entire area of 1 of the service areas
established by the Administrator under section 1860D-
10; or
``(B) the entire area covered by the medicare
program.
``(2) Rule of construction.--Nothing in this part shall be
construed as prohibiting an eligible entity from submitting
separate bids in multiple service areas as long as each bid is
for a single service area.
``approval of proposed medicare prescription drug plans
``Sec. 1860D-13. (a) In General.--The Administrator shall review
the information filed under section 1860D-12 and shall approve or
disapprove the Medicare Prescription Drug plan. The Administrator may
not approve a plan if--
``(1) the plan and the entity offering the plan comply with
the requirements under this part; and
``(2) the premium accurately reflects both (A) the
actuarial value of the benefits provided, and (B) the payments
associated with the application of 186D-16(c) and the payments
under section 1860D-20 for the standard benefit.
``(b) Negotiation.--In exercising the authority under subsection
(a), the Administrator shall have the same authority to negotiate the
terms and conditions of the premiums submitted and other terms and
conditions of proposed plans as the Director of the Office of Personnel
Management has with respect to health benefits plans under chapter 89
of title 5, United States Code.
``(c) Special Rules for Approval.--The Administrator may approve a
Medicare Prescription Drug plan submitted under section 1860D-12 only
if the benefits under such plan--
``(1) include the required benefits under section 1860D-
6(a)(1); and
``(2) are not designed in such a manner that the
Administrator finds is likely to result in favorable selection
of eligible beneficiaries.
``(d) Assuring Access.--
``(1) Number of contracts.--The Administrator shall,
consistent with the requirements of this part and the goal of
containing costs under this title, approve at least 2 contracts
to offer a Medicare Prescription Drug plan in an area.
``(2) Guaranteeing access to coverage.--In order to assure
access under paragraph (1) in an area and consistent with
paragraph (3), the Administrator may provide financial
incentives (including partial underwriting of risk) for an
eligible entity to offer a Medicare Prescription Drug plan in
that area, but only so long as (and to the extent) necessary to
assure the access guaranteed under paragraph (1) in that area.
``(3) Limitation on authority.--In exercising authority
under this subsection, the Administrator--
``(A) shall not provide for the full underwriting
of financial risk for any eligible entity;
``(B) shall not provide for any underwriting of
financial risk for a public eligible entity with
respect to the offering of a nationwide prescription
drug plan; and
``(C) shall seek to maximize the assumption of
financial risk by an eligible entity.
``(4) Reports.--The Administrator shall, in each annual
report to Congress under section 1860D-25(c)(1)(D), include
information on the exercise of authority under this subsection.
The Administrator also shall include such recommendations as
may be appropriate to limit the exercise of such authority,
including minimizing the assumption of financial risk.
``(e) Annual Contracts.--A contract approved under this part shall
be for a 1-year period.
``computation of monthly standard coverage premiums
``Sec. 1860D-14. (a) In General.--For each year (beginning with
2005), the Administrator shall compute a monthly standard coverage
premium for each Medicare Prescription Drug plan approved under section
1860D-13.
``(b) Requirements.--The monthly standard coverage premium for a
Medicare Prescription Drug plan for a year shall be equal to--
``(1) in the case of a plan offered by an eligible entity
that provides standard coverage or an actuarially equivalent
coverage and does not provide additional prescription drug
coverage pursuant to section 1860D-6(a)(2), the monthly premium
approved for the plan under section 1860D-13 for the year; and
``(2) in the case of a plan offered by an eligible entity
that provides additional prescription drug coverage pursuant to
section 1860D-6(a)(2)--
``(A) an amount that reflects only the actuarial
value of the standard coverage offered under the plan;
or
``(B) if determined appropriate by the
Administrator, the monthly premium approved under
section 1860D-13 for the year for the Medicare
Prescription Drug plan that (as required under
subparagraph (B) of such section)--
``(i) is offered by such entity in the same
area as the plan; and
``(ii) does not provide additional
prescription drug coverage pursuant to such
section.
``computation of monthly national average premium
``Sec. 1860D-15. (a) Computation.--
``(1) In general.--For each year (beginning with 2005) the
Administrator shall compute a monthly national average premium
equal to the average of the monthly standard coverage premium
for each Medicare Prescription Drug plan (as computed under
section 1860D-14).
``(2) Weighted average.--The monthly national average
premium computed under paragraph (1) shall be a weighted
average, with the weight for each plan being equal to the
average number of beneficiaries enrolled under such plan in the
previous year.
``(b) Special Rule for 2005.--For purposes of applying this section
for 2005, the Administrator shall establish procedures for determining
the weighted average under subsection (a)(2) for 2004.
``payments to eligible entities offering medicare prescription drug
plans
``Sec. 1860D-16. (a) Payment of Premiums.--For each year (beginning
with 2005), the Administrator shall pay to each entity offering a
Medicare Prescription Drug plan in which an eligible beneficiary is
enrolled an amount equal to the full amount of the monthly premium
approved for the plan under section 1860D-13 on behalf of each eligible
beneficiary enrolled in such plan for the year, as adjusted using the
risk adjusters that apply to the standard coverage published under
section 1860D-11.
``(b) Payment Terms.--Payment under this section to an entity
offering a Medicare Prescription Drug plan shall be made in a manner
determined by the Administrator and based upon the manner in which
payments are made under section 1853(a) (relating to payments to
Medicare+Choice organizations).
``(c) Payments to Medicare+Choice Plans.--For provisions related to
payments to Medicare+Choice organizations offering Medicare+Choice
plans that provide qualified prescription drug coverage, see section
1853(k)(2).
``(d) Secondary Payer Provisions.--The provisions of section
1862(b) shall apply to the benefits provided under this part.
``computation of beneficiary obligation
``Sec. 1860D-17. (a) Beneficiaries Enrolled in a Medicare
Prescription Drug Plan.--In the case of an eligible beneficiary
enrolled under this part and in a Medicare Prescription Drug plan, the
monthly beneficiary obligation for enrollment in such plan in a year
shall be determined as follows:
``(1) Medicare prescription drug plan premiums equal to the
monthly national average.--If the amount of the monthly premium
approved by the Administrator under section 1860D-13 for a
Medicare Prescription Drug plan for the year is equal to the
monthly national average premium (as computed under section
1860D-15) for the year, the monthly obligation of the eligible
beneficiary in that year shall be an amount equal to the
applicable percent (as defined in subsection (c)) of the amount
of the monthly national average premium.
``(2) Medicare prescription drug plan premiums that are
less than the monthly national average.--If the amount of the
monthly premium approved by the Administrator under section
1860D-13 for the Medicare Prescription Drug plan for the year
is less than the monthly national average premium (as computed
under section 1860D-15) for the year, the monthly obligation of
the eligible beneficiary in that year shall be an amount equal
to--
``(A) the applicable percent of the amount of the
monthly national average premium; minus
``(B) the amount by which the monthly national
average premium exceeds the amount of the premium
approved by the Administrator for the plan.
``(3) Medicare prescription drug plan premiums that are
greater than the monthly national average.--If the amount of
the monthly premium approved by the Administrator under section
1860D-13 for a Medicare Prescription Drug plan for the year
exceeds the monthly national average premium (as computed under
section 1860D-15) for the year, the monthly obligation of the
eligible beneficiary in that year shall be an amount equal to
the sum of--
``(A) the applicable percent of the amount of the
monthly national average premium; plus
``(B) the amount by which the premium approved by
the Administrator for the plan exceeds the amount of
the monthly national average premium.
``(b) Beneficiaries Enrolled in a Medicare+Choice Plan.--In the
case of an eligible beneficiary that is receiving qualified
prescription drug coverage under a Medicare+Choice plan, the monthly
obligation for such coverage shall be determined pursuant to section
1853(k)(3).
``(c) Applicable Percent Defined.--For purposes of this section,
except as provided in section 1860D-19 (relating to premium subsidies
for low-income individuals), the term `applicable percent' means 55
percent.
``collection of beneficiary obligation
``Sec. 1860D-18. (a) Collection of Amount in Same Manner as Part B
Premium.--The amount of the monthly beneficiary obligation (determined
under section 1860D-17) applicable to an eligible beneficiary under
this part (after application of any increase under section 1860D-
2(b)(1)(A)) shall be collected and credited to the Prescription Drug
Account in the same manner as the monthly premium determined under
section 1839 is collected and credited to the Federal Supplementary
Medical Insurance Trust Fund under section 1840.
``(b) Information Necessary for Collection.--In order to carry out
subsection (a), the Administrator shall transmit to the Commissioner of
Social Security--
``(1) at the beginning of each year, the name, social
security account number, and annual beneficiary obligation owed
by each individual enrolled in a Medicare Prescription Drug
plan for each month during the year; and
``(2) periodically throughout the year, information to
update the information previously transmitted under this
paragraph for the year.
``(c) Collection for Beneficiaries Receiving Qualified Prescription
Drug Coverage Under a Medicare+Choice Plan.--For provisions related to
the collection of the monthly beneficiary obligation for qualified
prescription drug coverage under a Medicare+Choice plan, see section
1853(k)(4).
``premium and cost-sharing subsidies for low-income individuals
``Sec. 1860D-19. (a) In General.--
``(1) Full premium subsidy and reduction of cost-sharing
for individuals with income below 135 percent of federal
poverty line.--In the case of a subsidy-eligible individual (as
defined in paragraph (3)) who is determined to have income that
does not exceed 135 percent of the Federal poverty line--
``(A) section 1860D-17 shall be applied--
``(i) in subsection (c), by substituting `0
percent' for `55 percent'; and
``(ii) in subparagraphs (A) and (B) of
subsection (a)(3), by substituting ``the amount
of the premium for the Medicare Prescription
Drug plan with the lowest monthly premium in
the area that the beneficiary resides'' for
``the amount of the monthly national average
premium'', but only if there is no Medicare
Prescription Drug plan offered in the area in
which the individual resides that has a monthly
premium for the year that is equal to or less
than the monthly national average premium (as
computed under section 1860D-15) for the year;
``(B) the annual deductible applicable under
section 1860D-6(c)(1) in a year shall be reduced to an
amount equal to 5 percent of the annual deductible
otherwise applicable under such section for that year;
``(C) section 1860D-6(c)(2) shall be applied by
substituting `2.5 percent' for `50 percent' each place
it appears;
``(D) such individual shall be responsible for
cost-sharing for the cost of any covered drug provided
in the year (after the individual has reached such
initial coverage limit and before the individual has
reached the limitation under section 1860D-6(c)(4)(A)),
that is equal to 50 percent; and
``(E) section 1860D-6(c)(4)(A) shall be applied by
substituting `0 percent' for `10 percent'.
In no case may the application of subparagraph (A) result in a
monthly beneficiary obligation that is below zero.
``(2) Sliding scale premium subsidy and reduction of cost-
sharing for individuals with income between 135 and 150 percent
of federal poverty line.--
``(A) In general.--In the case of a subsidy-
eligible individual who is determined to have income
that exceeds 135 percent, but is less than 150 percent,
of the Federal poverty line--
``(i) section 1860D-17 shall be applied--
``(I) in subsection (c), by
substituting `subsidy percent' for `55
percent'; and
``(II) in subparagraphs (A) and (B)
of subsection (a)(3), by substituting
``the amount of the premium for the
Medicare Prescription Drug plan with
the lowest monthly premium in the area
that the beneficiary resides'' for
``the amount of the monthly national
average premium'', but only if there is
no Medicare Prescription Drug plan
offered in the area in which the
individual resides that has a monthly
premium for the year that is equal to
or less than the monthly national
average premium (as computed under
section 1860D-15) for the year; and
``(ii) such individual shall be responsible
for cost-sharing for the cost of any covered
drug provided in the year (after the individual
has reached such initial coverage limit and
before the individual has reached the
limitation under section 1860D-6(c)(4)(A)),
that is equal to 50 percent.
In no case may the application of clause (i) result in
a monthly beneficiary obligation that is below zero.
``(B) Subsidy percent defined.--For purposes of
subparagraph (A)(i), the term `subsidy percent' means a
percent determined on a linear sliding scale ranging
from 0 percent for individuals with incomes at 135
percent of such level to 55 percent for individuals
with incomes at 150 percent of such level.
``(3) Determination of eligibility.--
``(A) Subsidy-eligible individual defined.--For
purposes of this section, subject to subparagraph (D),
the term `subsidy-eligible individual' means an
individual who--
``(i) is enrolled under this part,
including an individual receiving qualified
prescription drug coverage under a
Medicare+Choice plan;
``(ii) has income that is less that 150
percent of the Federal poverty line; and
``(iii) meets the resources requirement
described in section 1905(p)(1)(C).
``(B) Determinations.--The determination of whether
an individual residing in a State is a subsidy-eligible
individual and the amount of such individual's income
shall be determined under the State medicaid plan for
the State under section 1935(a). In the case of a State
that does not operate such a medicaid plan (either
under title XIX or under a statewide waiver granted
under section 1115), such determination shall be made
under arrangements made by the Administrator.
``(C) Income determinations.--For purposes of
applying this section--
``(i) income shall be determined in the
manner described in section 1905(p)(1)(B); and
``(ii) the term `Federal poverty line'
means the official poverty line (as defined by
the Office of Management and Budget, and
revised annually in accordance with section
673(2) of the Omnibus Budget Reconciliation Act
of 1981) applicable to a family of the size
involved.
``(D) Treatment of territorial residents.--In the
case of an individual who is not a resident of the 50
States or the District of Columbia, the individual is
not eligible to be a subsidy-eligible individual but
may be eligible for financial assistance with
prescription drug expenses under section 1935(e).
``(b) Rules in Applying Cost-Sharing Subsidies.--
``(1) Additional benefits.--In applying subparagraphs (B)
and (C) of subsection (a)(1) and clauses (ii) and (iii) of
subsection (a)(2)(A), nothing in this part shall be construed
as preventing an eligible entity offering a Medicare
Prescription Drug plan or a Medicare+Choice organization
offering a Medicare+Choice plan in which qualified drug
coverage is provided from waiving or reducing the amount of the
deductible or other cost-sharing otherwise applicable pursuant
to section 1860D-6(a)(2).
``(2) Limitation on charges.--In the case of an individual
receiving cost-sharing subsidies under subparagraphs (B) and
(C) of subsection (a)(1) or under clauses (ii) and (iii) of
subsection (a)(2)(A), the eligible entity offering a Medicare
Prescription Drug plan or the Medicare+Choice organization
offering a Medicare+Choice plan in which qualified drug
coverage is provided may not charge more than the deductible or
other cost-sharing required pursuant to such subsection.
``(c) Administration of Subsidy Program.--The Administrator shall
provide a process whereby, in the case of an individual eligible for a
cost-sharing under subparagraphs (B) and (C) of subsection (a)(1) or
under clauses (ii) and (iii) of subsection (a)(2)(A) and who is
enrolled in a Medicare Prescription Drug plan or is enrolled in a
Medicare+Choice plan under which qualified prescription drug coverage
is provided--
``(1) the Administrator provides for a notification of the
eligible entity or Medicare+Choice organization involved that
the individual is eligible for a cost-sharing subsidy and the
amount of the subsidy under such subsection;
``(2) the entity or organization involved reduces the cost-
sharing otherwise imposed by the amount of the applicable
subsidy and submits to the Administrator information on the
amount of such reduction; and
``(3) the Administrator periodically and on a timely basis
reimburses the entity or organization for the amount of such
reductions.
The reimbursement under paragraph (3) may be computed on a capitated
basis, taking into account the actuarial value of the subsidies and
with appropriate adjustments to reflect differences in the risks
actually involved.
``(d) Relation to Medicaid Program.--
``(1) In general.--For provisions providing for eligibility
determinations, and additional financing, under the medicaid
program, see section 1935.
``(2) Medicaid providing wrap around benefits.--The
coverage provided under this part is primary payor to benefits
for prescribed drugs provided under the medicaid program under
title XIX.
``reinsurance payments for qualified prescription drug coverage
``Sec. 1860D-20. (a) Reinsurance Payments.--
``(1) In general.--The Administrator shall provide in
accordance with this section for payment to a qualifying entity
(as defined in subsection (b)) of the reinsurance payment
amount (as defined in subsection (c)), which in the aggregate
is 30 percent of the total payments made by a qualifying entity
for standard coverage under the respective plan, for excess
costs incurred in providing qualified prescription drug
coverage for qualifying covered individuals (as defined in
subsection (g)(1)).
``(2) Budget authority.--This section constitutes budget
authority in advance of appropriations Acts and represents the
obligation of the Administrator to provide for the payment of
amounts provided under this section.
``(b) Qualifying Entity Defined.--For purposes of this section, the
term `qualifying entity' means any of the following that has entered
into an agreement with the Administrator to provide the Administrator
with such information as may be required to carry out this section:
``(1) An eligible entity offering a Medicare Prescription
Drug plan under this part.
``(2) A Medicare+Choice organization that provides
qualified prescription drug coverage under a Medicare+Choice
plan under part C.
``(3) The sponsor of a qualified retiree prescription drug
plan (as defined in subsection (f)).
``(c) Reinsurance Payment Amount.--
``(1) In general.--Subject to subsection (d)(2), the
reinsurance payment amount under this subsection for a
qualifying covered individual for a coverage year (as defined
in subsection (g)(2)) is equal to the sum of the following:
``(A) For the portion of the individual's gross
covered drug costs (as defined in paragraph (3)) for
the year that exceeds the amount specified in paragraph
(2), but does not exceed the initial coverage limit, an
amount equal to 50 percent of the allowable costs (as
defined in paragraph (3)) attributable to such gross
covered drug costs.
``(B) For the portion of the individual's gross
covered drug costs for the year that exceeds the annual
out-of-pocket threshold specified in section 1860D-
6(c)(4)(B), an amount equal to 80 percent of the
allowable costs attributable to such gross covered drug
costs.
``(2) Amount specified.--The amount specified under this
paragraph--
``(A) for 2005, is equal to $2,000; and
``(B) for a subsequent year, is equal to the amount
specified in this paragraph for the previous year,
increased by the annual percentage increase described
in section 1860D-6(c)(5).
``(3) Allowable costs.--For purposes of this section, the
term `allowable costs' means, with respect to gross covered
drug costs (as defined in paragraph (4)) under a plan described
in subsection (b) offered by a qualifying entity, the part of
such costs that are actually paid (net of average percentage
rebates) under the plan, but in no case more than the part of
such costs that would have been paid under the plan if the
prescription drug coverage under the plan were standard
coverage.
``(4) Gross covered drug costs.--For purposes of this
section, the term `gross covered drug costs' means, with
respect to an enrollee with a qualifying entity under a plan
described in subsection (b) during a coverage year, the costs
incurred under the plan (including costs attributable to
administrative costs) for covered drugs dispensed during the
year, including costs relating to the deductible, whether paid
by the enrollee or under the plan, regardless of whether the
coverage under the plan exceeds standard coverage and
regardless of when the payment for such drugs is made.
``(d) Adjustment of Reinsurance Payments to Assure 30 Percent Level
of Payment.--
``(1) Estimation of payments.--The Administrator shall
estimate--
``(A) the total payments to be made (without regard
to this subsection) during a year under subsections (a)
and (c); and
``(B) the total payments to be made by qualifying
entities for standard coverage under plans described in
subsection (b) during the year.
``(2) Adjustment.--The Administrator shall proportionally
adjust the payments made under subsections (a) and (c) for a
coverage year in such manner so that the total of the payments
made under such subsections for the year is equal to 30 percent
of the total payments described in subparagraph (A)(ii).
``(e) Payment Methods.--
``(1) In general.--Payments under this section shall be
based on such a method as the Administrator determines. The
Administrator may establish a payment method by which interim
payments of amounts under this section are made during a year
based on the Administrator's best estimate of amounts that will
be payable after obtaining all of the information.
``(2) Source of payments.--Payments under this section
shall be made from the Prescription Drug Account.
``(f) Qualified Retiree Prescription Drug Plan Defined.--
``(1) In general.--For purposes of this section, the term
`qualified retiree prescription drug plan' means employment-
based retiree health coverage (as defined in paragraph (3)(A))
if, with respect to a qualifying covered individual who is
covered under the plan, the following requirements are met:
``(A) Assurance.--The sponsor of the plan shall
annually attest, and provide such assurances as the
Administrator may require, that the coverage meets or
exceeds the requirements for qualified prescription
drug coverage.
``(B) Audits.--The sponsor (and the plan) shall
maintain, and afford the Administrator access to, such
records as the Administrator may require for purposes
of audits and other oversight activities necessary to
ensure the adequacy of prescription drug coverage, and
the accuracy of payments made.
``(2) Limitation on benefit eligibility.--No payment shall
be provided under this section with respect to an individual
who is enrolled under a qualified retiree prescription drug
plan unless the individual--
``(A) is covered under the plan; and
``(B) was eligible for, but was not enrolled in,
the program under this part.
``(3) Definitions.--As used in this section:
``(A) Employment-based retiree health coverage.--
The term `employment-based retiree health coverage'
means health insurance or other coverage of health care
costs for individuals (or for such individuals and
their spouses and dependents) based on their status as
former employees or labor union members.
``(B) Sponsor.--The term `sponsor' means a plan
sponsor, as defined in section 3(16)(B) of the Employee
Retirement Income Security Act of 1974.
``(g) General Definitions.--For purposes of this section:
``(1) Qualifying covered individual.--The term `qualifying
covered individual' means an individual who--
``(A) is enrolled in this part and in a Medicare
Prescription Drug plan;
``(B) is enrolled in this part and in a
Medicare+Choice plan that provides qualified
prescription drug coverage; or
``(C) is eligible for, but not enrolled in, the
program under this part, and is covered under a
qualified retiree prescription drug plan.
``(2) Coverage year.--The term `coverage year' means a
calendar year in which covered drugs are dispensed if a claim
for payment is made under the plan for such drugs, regardless
of when the claim is paid.
``Subpart 3--Medicare Competitive Agency; Prescription Drug Account in
the Federal Supplementary Medical Insurance Trust Fund
``establishment of medicare competitive agency
``Sec. 1860D-25. (a) Establishment.--By not later than March 1,
2003, the Secretary shall establish within the Department of Health and
Human Services an agency to be known as the Medicare Competitive
Agency.
``(b) Administrator and Deputy Administrator.--
``(1) Administrator.--
``(A) In general.--The Medicare Competitive Agency
shall be headed by an Administrator (in this section
referred to as the `Administrator') who shall be
appointed by the President, by and with the advice and
consent of the Senate. The Administrator shall report
directly to the Secretary.
``(B) Compensation.--The Administrator shall be
paid at the rate of basic pay payable for level III of
the Executive Schedule under section 5314 of title 5,
United States Code.
``(C) Term of office.--The Administrator shall be
appointed for a term of 5 years. In any case in which a
successor does not take office at the end of an
Administrator's term of office, that Administrator may
continue in office until the entry upon office of such
a successor. An Administrator appointed to a term of
office after the commencement of such term may serve
under such appointment only for the remainder of such
term.
``(D) General authority.--The Administrator shall
be responsible for the exercise of all powers and the
discharge of all duties of the Administration, and
shall have authority and control over all personnel and
activities thereof.
``(E) Rulemaking authority.--The Administrator may
prescribe such rules and regulations as the
Administrator determines necessary or appropriate to
carry out the functions of the Administration. The
regulations prescribed by the Administrator shall be
subject to the rulemaking procedures established under
section 553 of title 5, United States Code.
``(F) Authority to establish organizational
units.--The Administrator may establish, alter,
consolidate, or discontinue such organizational units
or components within the Administration as the
Administrator considers necessary or appropriate,
except that this subparagraph shall not apply with
respect to any unit, component, or provision provided
for by this section.
``(G) Authority to delegate.--The Administrator may
assign duties, and delegate, or authorize successive
redelegations of, authority to act and to render
decisions, to such officers and employees of the
Administration as the Administrator may find necessary.
Within the limitations of such delegations,
redelegations, or assignments, all official acts and
decisions of such officers and employees shall have the
same force and effect as though performed or rendered
by the Administrator.
``(2) Deputy administrator.--
``(A) In general.--There shall be a Deputy
Administrator of the Medicare Competitive Agency who
shall be appointed by the President, by and with the
advice and consent of the Senate.
``(B) Compensation.--The Deputy Administrator shall
be paid at the rate of basic pay payable for level IV
of the Executive Schedule under section 5315 of title
5, United States Code.
``(C) Term of office.--The Deputy Administrator
shall be appointed for a term of 5 years. In any case
in which a successor does not take office at the end of
a Deputy Administrator's term of office, such Deputy
Administrator may continue in office until the entry
upon office of such a successor. A Deputy Administrator
appointed to a term of office after the commencement of
such term may serve under such appointment only for the
remainder of such term.
``(D) Duties.--The Deputy Administrator shall
perform such duties and exercise such powers as the
Administrator shall from time to time assign or
delegate. The Deputy Administrator shall be Acting
Administrator of the Administration during the absence
or disability of the Administrator and, unless the
President designates another officer of the Government
as Acting Administrator, in the event of a vacancy in
the office of the Administrator.
``(3) Secretarial coordination of program administration.--
The Secretary shall ensure appropriate coordination between the
Administrator and the Administrator of the Centers for Medicare
& Medicaid Services in carrying out the programs under this
title.
``(c) Duties; Administrative Provisions.--
``(1) Duties.--
``(A) General duties.--The Administrator shall
carry out parts C and D, including--
``(i) negotiating, entering into, and
enforcing, contracts with plans for the
offering of Medicare+Choice plans under part C,
including the offering of qualified
prescription drug coverage under such plans;
and
``(ii) negotiating, entering into, and
enforcing, contracts with eligible entities for
the offering of Medicare Prescription Drug
plans under part D.
``(B) Other duties.--The Administrator shall carry
out any duty provided for under part C or D, including
demonstration projects carried out in part or in whole
under such parts, the programs of all-inclusive care
for the elderly (PACE program) under section 1894, the
social health maintenance organization (SHMO)
demonstration projects (referred to in section 4104(c)
of the Balanced Budget Act of 1997), and through a
Medicare+Choice project that demonstrates the
application of capitation payment rates for frail
elderly medicare beneficiaries through the use of an
interdisciplinary team and through the provision of
primary care services to such beneficiaries by means of
such a team at the nursing facility involved.
``(C) Noninterference.--In carrying out its duties
with respect to the provision of qualified prescription
drug coverage to beneficiaries under this title, the
Administrator may not--
``(i) require a particular formulary or
institute a price structure for the
reimbursement of covered drugs;
``(ii) interfere in any way with
negotiations between eligible entities and
Medicare+Choice organizations and drug
manufacturers, wholesalers, or other suppliers
of covered drugs; and
``(iii) otherwise interfere with the
competitive nature of providing such qualified
prescription drug coverage through such
entities and organizations.
``(D) Annual reports.--Not later than March 31 of
each year, the Administrator shall submit to Congress
and the President a report on the administration of the
voluntary prescription drug delivery program under this
part during the previous fiscal year.
``(2) Staff.--
``(A) In general.--The Administrator, with the
approval of the Secretary, may employ, without regard
to chapter 31 of title 5, United States Code, other
than sections 3110 and 3112, such officers and
employees as are necessary to administer the activities
to be carried out through the Medicare Competitive
Agency. The Administrator shall employ staff with
appropriate and necessary expertise in negotiating
contracts in the private sector.
``(B) Flexibility with respect to compensation.--
``(i) In general.--The staff of the
Medicare Competitive Agency shall, subject to
clause (ii), be paid without regard to the
provisions of chapter 51 (other than section
5101) and chapter 53 (other than section 5301)
of such title (relating to classification and
schedule pay rates).
``(ii) Maximum rate.--In no case may the
rate of compensation determined under clause
(i) exceed the rate of basic pay payable for
level IV of the Executive Schedule under
section 5315 of title 5, United States Code.
``(C) Limitation on full-time equivalent staffing
for current cms functions being transferred.--The
Administrator may not employ under this paragraph a
number of full-time equivalent employees, to carry out
functions that were previously conducted by the Centers
for Medicare & Medicaid Services and that are conducted by the
Administrator by reason of this section, that exceeds the number of
such full-time equivalent employees authorized to be employed by the
Centers for Medicare & Medicaid Services to conduct such functions as
of the date of enactment of this Act.
``(3) Redelegation of certain functions of the centers for
medicare and medicaid services.--
``(A) In general.--The Secretary, the
Administrator, and the Administrator of the Centers for
Medicare & Medicaid Services shall establish an
appropriate transition of responsibility in order to
redelegate the administration of part C from the
Secretary and the Administrator of the Centers for
Medicare & Medicaid Services to the Administrator as is
appropriate to carry out the purposes of this section.
``(B) Transfer of data and information.--The
Secretary shall ensure that the Administrator of the
Centers for Medicare & Medicaid Services transfers to
the Administrator such information and data in the
possession of the Administrator of the Centers for
Medicare & Medicaid Services as the Administrator
requires to carry out the duties described in paragraph
(1).
``(C) Construction.--Insofar as a responsibility of
the Secretary or the Administrator of the Centers for
Medicare & Medicaid Services is redelegated to the
Administrator under this section, any reference to the
Secretary or the Administrator of the Centers for
Medicare & Medicaid Services in this title or title XI
with respect to such responsibility is deemed to be a
reference to the Administrator.
``(d) Office of Beneficiary Assistance.--
``(1) Establishment.--The Secretary shall establish within
the Medicare Competitive Agency an Office of Beneficiary
Assistance to carry out functions relating to medicare
beneficiaries under this title, including making determinations
of eligibility of individuals for benefits under this title,
providing for enrollment of medicare beneficiaries under this
title, and the functions described in paragraph (2). The Office
shall be a separate operating division within the
Administration.
``(2) Dissemination of information on benefits and appeals
rights.--
``(A) Dissemination of benefits information.--The
Office of Beneficiary Assistance shall disseminate to
medicare beneficiaries, by mail, by posting on the
Internet site of the Medicare Competitive Agency, and
through the toll-free telephone number provided for
under section 1804(b), information with respect to the
following:
``(i) Benefits, and limitations on payment
(including cost-sharing, stop-loss provisions,
and formulary restrictions) under parts C and
D.
``(ii) Benefits, and limitations on payment
under parts A, B, and E, including information
on medicare supplemental policies under section
1882.
Such information shall be presented in a manner so that
medicare beneficiaries may compare benefits under parts
A, B, D, and E, and medicare supplemental policies with
benefits under Medicare+Choice plans under part C.
``(B) Dissemination of appeals rights
information.--The Office of Beneficiary Assistance
shall disseminate to medicare beneficiaries in the
manner provided under subparagraph (A) a description of
procedural rights (including grievance and appeals
procedures) of beneficiaries under the original
medicare fee-for-service program under parts A and B
(including beneficiaries who elect to receive enhanced
medicare benefits under part E), the Medicare+Choice
program under part C, and the voluntary prescription
drug delivery program under part D.
``(3) Medicare ombudsman.--
``(A) In general.--Within the Office of Beneficiary
Assistance, there shall be a Medicare Ombudsman,
appointed by the Secretary from among individuals with
expertise and experience in the fields of health care
and advocacy, to carry out the duties described in
subparagraph (B).
``(B) Duties.--The Medicare Ombudsman shall--
``(i) receive complaints, grievances, and
requests for information submitted by a
medicare beneficiary, with respect to any
aspect of the medicare program;
``(ii) provide assistance with respect to
complaints, grievances, and requests referred
to in clause (i), including--
``(I) assistance in collecting
relevant information for such
beneficiaries, to seek an appeal of a
decision or determination made by a
fiscal intermediary, carrier,
Medicare+Choice organization, an
eligible entity under part D, or the
Secretary; and
``(II) assistance to such
beneficiaries with any problems arising
from disenrollment from a
Medicare+Choice plan under part C or a
prescription drug plan under part D;
and
``(iii) submit annual reports to Congress,
the Secretary, and the Medicare Competitive
Policy Advisory Board describing the activities
of the Office, and including such
recommendations for improvement in the
administration of this title as the Ombudsman
determines appropriate.
``(C) Coordination with state ombudsman programs
and consumer organizations.--The Medicare Ombudsman
shall, to the extent appropriate, coordinate with State
medical Ombudsman programs, and with State- and
community-based consumer organizations, to--
``(i) provide information about the
medicare program; and
``(ii) conduct outreach to educate medicare
beneficiaries with respect to manners in which
problems under the medicare program may be
resolved or avoided.
``(e) Medicare Competitive Policy Advisory Board.--
``(1) Establishment.--There is established within the
Medicare Competitive Agency the Medicare Competitive Policy
Advisory Board (in this section referred to as the `Board').
The Board shall advise, consult with, and make recommendations
to the Administrator with respect to the administration of
parts C and D, including the review of payment policies under
such parts.
``(2) Reports.--
``(A) In general.--With respect to matters of the
administration of parts C and D, the Board shall submit
to Congress and to the Administrator such reports as
the Board determines appropriate. Each such report may
contain such recommendations as the Board determines
appropriate for legislative or administrative changes
to improve the administration of such parts, including
the stability and solvency of the programs under such
parts and the topics described in subparagraph (B).
Each such report shall be published in the Federal
Register.
``(B) Topics described.--Reports required under
subparagraph (A) may include the following topics:
``(i) Fostering competition.--
Recommendations or proposals to increase
competition under parts C and D for services
furnished to medicare beneficiaries.
``(ii) Education and enrollment.--
Recommendations for the improvement of efforts
to provide medicare beneficiaries information
and education on the program under this title,
and specifically parts C and D, and the program
for enrollment under the title.
``(iii) Quality.--Recommendations on ways
to improve the quality of benefits provided
under plans under parts C and D.
``(iv) Disease management programs.--
Recommendations on the incorporation of disease
management programs under parts C and D.
``(v) Rural access.--Recommendations to
improve competition and access to plans under
parts C and D in rural areas.
``(C) Maintaining independence of board.--The Board
shall directly submit to Congress reports required
under subparagraph (A). No officer or agency of the
United States may require the Board to submit to any
officer or agency of the United States for approval,
comments, or review, prior to the submission to
Congress of such reports.
``(3) Duty of administrator.--With respect to any report
submitted by the Board under paragraph (2)(A), not later than
90 days after the report is submitted, the Administrator shall
submit to Congress and the President an analysis of
recommendations made by the Board in such report. Each such
analysis shall be published in the Federal Register.
``(4) Membership.--
``(A) Appointment.--Subject to the succeeding
provisions of this paragraph, the Board shall consist
of 7 members to be appointed as follows:
``(i) Three members shall be appointed by
the President.
``(ii) Two members shall be appointed by
the Speaker of the House of Representatives,
with the advice of the chairman and the ranking
minority member of the Committees on Ways and
Means and on Energy and Commerce of the House
of Representatives.
``(iii) Two members shall be appointed by
the President pro tempore of the Senate with
the advice of the chairman and the ranking
minority member of the Committee on Finance of
the Senate.
``(B) Qualifications.--The members shall be chosen
on the basis of their integrity, impartiality, and good
judgment, and shall be individuals who are, by reason
of their education and experience in health care
benefits management, exceptionally qualified to perform
the duties of members of the Board.
``(C) Prohibition on inclusion of federal
employees.--No officer or employee of the United States
may serve as a member of the Board.
``(5) Compensation.--Members of the Board shall receive,
for each day (including travel time) they are engaged in the
performance of the functions of the Board, compensation at
rates not to exceed the daily equivalent to the annual rate in
effect for level IV of the Executive Schedule under section
5315 of title 5, United States Code.
``(6) Terms of office.--
``(A) In general.--The term of office of members of
the Board shall be 3 years.
``(B) Terms of initial appointees.--As designated
by the President at the time of appointment, of the
members first appointed--
``(i) one shall be appointed for a term of
1 year;
``(ii) three shall be appointed for terms
of 2 years; and
``(iii) three shall be appointed for terms
of 3 years.
``(C) Reappointments.--Any person appointed as a
member of the Board may not serve for more than 8
years.
``(D) Vacancy.--Any member appointed to fill a
vacancy occurring before the expiration of the term for
which the member's predecessor was appointed shall be
appointed only for the remainder of that term. A member
may serve after the expiration of that member's term
until a successor has taken office. A vacancy in the
Board shall be filled in the manner in which the
original appointment was made.
``(7) Chair.--The Chair of the Board shall be elected by
the members. The term of office of the Chair shall be 3 years.
``(8) Meetings.--The Board shall meet at the call of the
Chair, but in no event less than 3 times during each fiscal
year.
``(9) Director and staff.--
``(A) Appointment of director.--The Board shall
have a Director who shall be appointed by the Chair.
``(B) In general.--With the approval of the Board,
the Director may appoint, without regard to chapter 31
of title 5, United States Code, such additional
personnel as the Director considers appropriate.
``(C) Flexibility with respect to compensation.--
``(i) In general.--The Director and staff
of the Board shall, subject to clause (ii), be
paid without regard to the provisions of
chapter 51 and chapter 53 of such title
(relating to classification and schedule pay
rates).
``(ii) Maximum rate.--In no case may the
rate of compensation determined under clause
(i) exceed the rate of basic pay payable for
level IV of the Executive Schedule under
section 5315 of title 5, United States Code.
``(D) Assistance from the administrator.--The
Administrator shall make available to the Board such
information and other assistance as it may require to
carry out its functions.
``(10) Contract authority.--The Board may contract with and
compensate government and private agencies or persons to carry
out its duties under this subsection, without regard to section
3709 of the Revised Statutes (41 U.S.C. 5).
``(f) Funding.--There is authorized to be appropriated, in
appropriate part from the Federal Hospital Insurance Trust Fund and
from the Federal Supplementary Medical Insurance Trust Fund (including
the Prescription Drug Account), such sums as are necessary to carry out
this section.
``prescription drug account in the federal supplementary medical
insurance trust fund
``Sec. 1860D-26. (a) Establishment.--
``(1) In general.--There is created within the Federal
Supplementary Medical Insurance Trust Fund established by
section 1841 an account to be known as the `Prescription Drug
Account' (in this section referred to as the `Account').
``(2) Funds.--The Account shall consist of such gifts and
bequests as may be made as provided in section 201(i)(1), and
such amounts as may be deposited in, or appropriated to, the
Account as provided in this part.
``(3) Separate from rest of trust fund.--Funds provided
under this part to the Account shall be kept separate from all
other funds within the Federal Supplementary Medical Insurance
Trust Fund.
``(b) Payments From Account.--
``(1) In general.--The Managing Trustee shall pay from time
to time from the Account such amounts as the Secretary
certifies are necessary to make payments to operate the program
under this part, including payments to eligible entities under
section 1860D-16, payments under 1860D-19 for low-income
subsidy payments for cost-sharing, reinsurance payments under
section 1860D-20, and payments with respect to administrative
expenses under this part in accordance with section 201(g).
``(2) Transfer to parts a and b trust funds for
medicare+choice payments.--The Managing Trustee shall establish
procedures for the transfer of funds from the Account, in an
amount determined appropriate by the Secretary, to the Federal
Hospital Insurance Trust Fund and the Federal Supplementary
Medical Insurance Trust Fund in order to reimburse such trust
funds for payments to Medicare+Choice organizations for the
provision of qualified prescription drug coverage pursuant to
section 1853(k).
``(3) Transfers to medicaid account for increased
administrative costs.--The Managing Trustee shall transfer from
time to time from the Account to the Grants to States for
Medicaid account amounts the Secretary certifies are
attributable to increases in payment resulting from the
application of a higher Federal matching percentage under
section 1935(b).
``(4) Treatment in relation to part b premium.--Amounts
payable from the Account shall not be taken into account in
computing actuarial rates or premium amounts under section
1839.
``(c) Deposits Into Account.--
``(1) Medicaid transfer.--There is hereby transferred to
the Account, from amounts appropriated for Grants to States for
Medicaid, amounts equivalent to the aggregate amount of the
reductions in payments under section 1903(a)(1) attributable to
the application of section 1935(c).
``(2) Appropriations to cover benefits and administrative
costs.--There are appropriated to the Account in a fiscal year,
out of any moneys in the Treasury not otherwise appropriated,
an amount equal to the amount by which--
``(A) the payments and transfers made from the
Account under subsection (b) in the year; exceed
``(B) the premiums collected under section 1860D-18
and 1853(k)(4) (for beneficiaries receiving qualified
prescription drug coverage under a Medicare+Choice
plan).''.
(b) Conforming Amendments to Federal Supplementary Medical
Insurance Trust Fund.--Section 1841 (42 U.S.C. 1395t) is amended--
(1) in the last sentence of subsection (a)--
(A) by striking ``and'' before ``such amounts'';
and
(B) by inserting before the period the following:
``, and such amounts as may be deposited in, or
appropriated to, the Prescription Drug Account
established by section 1860D-26'';
(2) in subsection (g), by inserting after ``by this part,''
the following: ``the payments provided for under part D (in
which case the payments shall be made from the Prescription
Drug Account in the Trust Fund),'';
(3) in subsection (h), by inserting after ``1840(d)'' the
following: ``and section 1860D-18 (in which case the payments
shall be made from the Prescription Drug Account in the Trust
Fund)''; and
(4) in subsection (i), by inserting after ``section
1840(b)(1)'' the following: ``, section 1860D-18 (in which case
the payments shall be made from the Prescription Drug Account
in the Trust Fund),''.
(c) Conforming References to Previous Part D.--Any reference in law
(in effect before the date of enactment of this Act) to part D of title
XVIII of the Social Security Act is deemed a reference to part F of
such title (as in effect after such date).
SEC. 102. STUDY AND REPORT ON PERMITTING PART B ONLY INDIVIDUALS TO
ENROLL IN MEDICARE VOLUNTARY PRESCRIPTION DRUG DELIVERY
PROGRAM.
(a) Study.--The Administrator of the Medicare Competitive Agency
(as established under section 1860D-25 of the Social Security Act (as
added by section 301(a))) shall conduct a study on the need for rules
relating to permitting individuals who are enrolled under part B of
title XVIII of the Social Security Act but are not entitled to benefits
under part A of such title to buy into the medicare voluntary
prescription drug delivery program under part D of such title (as so
added).
(b) Report.--Not later than January 1, 2004, the Administrator of
the Medicare Competitive Agency shall submit a report to Congress on
the study conducted under subsection (a), together with any
recommendations for legislation that the Administrator determines to be
appropriate as a result of such study.
SEC. 103. ADDITIONAL REQUIREMENTS FOR ANNUAL FINANCIAL REPORT AND
OVERSIGHT ON MEDICARE PROGRAM.
(a) In General.--Section 1817 (42 U.S.C. 1395i) is amended by
adding at the end the following new subsection:
``(l) Combined Report on Operation and Status of the Trust Fund and
the Federal Supplementary Medical Insurance Trust Fund (Including the
Prescription Drug Account).--In addition to the duty of the Board of
Trustees to report to Congress under subsection (b), on the date the
Board submits the report required under subsection (b)(2), the Board
shall submit to Congress a report on the operation and status of the
Trust Fund and the Federal Supplementary Medical Insurance Trust Fund
established under section 1841, including the Prescription Drug Account
within such Trust Fund, (in this subsection referred to as the `Trust
Funds'). Such report shall include the following information:
``(1) Overall spending from the general fund of the
treasury.--A statement of total amounts obligated during the
preceding fiscal year from the General Revenues of the Treasury
to the Trust Funds, separately stated in terms of the total
amount and in terms of the percentage such amount bears to all
other amounts obligated from such General Revenues during such
fiscal year, for each of the following amounts:
``(A) Medicare benefits.--The amount expended for
payment of benefits covered under this title.
``(B) Administrative and other expenses.--The
amount expended for payments not related to the
benefits described in subparagraph (A).
``(2) Historical overview of spending.--From the date of
the inception of the program of insurance under this title
through the fiscal year involved, a statement of the total
amounts referred to in paragraph (1), separately stated for the
amounts described in subparagraphs (A) and (B) of such
paragraph.
``(3) 10-year and 50-year projections.--An estimate of
total amounts referred to in paragraph (1), separately stated
for the amounts described in subparagraphs (A) and (B) of such
paragraph, required to be obligated for payment for benefits
covered under this title for each of the 10 fiscal years
succeeding the fiscal year involved and for the 50-year period
beginning with the succeeding fiscal year.
``(4) Relation to other measures of growth.--A comparison
of the rate of growth of the total amounts referred to in
paragraph (1), separately stated for the amounts described in
subparagraphs (A) and (B) of such paragraph, to the rate of
growth for the same period in--
``(A) the gross domestic product;
``(B) health insurance costs in the private sector;
``(C) employment-based health insurance costs in
the public and private sectors; and
``(D) other areas as determined appropriate by the
Board of Trustees.''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply with respect to fiscal years beginning on or after the date of
enactment of this Act.
(c) Congressional Hearings.--It is the sense of Congress that the
committees of jurisdiction of Congress shall hold hearings on the
reports submitted under section 1817(l) of the Social Security Act (as
added by subsection (a)).
SEC. 104. REFERENCE TO MEDIGAP PROVISIONS.
For provisions related to medicare supplemental policies under
section 1882 of the Social Security Act (42 U.S.C. 1395ss), see section
202.
SEC. 105. MEDICAID AMENDMENTS.
(a) Determinations of Eligibility for Low-Income Subsidies.--
(1) Requirement.--Section 1902 (42 U.S.C. 1396a) is
amended--
(A) in subsection (a)--
(i) by striking ``and'' at the end of
paragraph (64);
(ii) by striking the period at the end of
paragraph (65) and inserting ``; and''; and
(iii) by inserting after paragraph (65) the
following new paragraph:
``(66) provide for making eligibility determinations under
section 1935(a).''.
(2) New section.--Title XIX (42 U.S.C. 1396 et seq.) is
amended--
(A) by redesignating section 1935 as section 1936;
and
(B) by inserting after section 1934 the following
new section:
``special provisions relating to medicare prescription drug benefit
``Sec. 1935. (a) Requirement for Making Eligibility Determinations
for Low-Income Subsidies.--As a condition of its State plan under this
title under section 1902(a)(66) and receipt of any Federal financial
assistance under section 1903(a), a State shall--
``(1) make determinations of eligibility for premium and
cost-sharing subsidies under (and in accordance with) section
1860D-19;
``(2) inform the Administrator of the Medicare Competitive
Agency of such determinations in cases in which such
eligibility is established; and
``(3) otherwise provide such Administrator with such
information as may be required to carry out part D of title
XVIII (including section 1860D-19).
``(b) Payments for Additional Administrative Costs.--
``(1) In general.--The amounts expended by a State in
carrying out subsection (a) are, subject to paragraph (2),
expenditures reimbursable under the appropriate paragraph of
section 1903(a); except that, notwithstanding any other
provision of such section, the applicable Federal matching
rates with respect to such expenditures under such section
shall be increased as follows:
``(A) For expenditures attributable to costs
incurred during 2005, the otherwise applicable Federal
matching rate shall be increased by 20 percent of the
percentage otherwise payable (but for this subsection)
by the State.
``(B) For expenditures attributable to costs
incurred during 2006, the otherwise applicable Federal
matching rate shall be increased by 40 percent of the
percentage otherwise payable (but for this subsection)
by the State.
``(C) For expenditures attributable to costs
incurred during 2007, the otherwise applicable Federal
matching rate shall be increased by 60 percent of the
percentage otherwise payable (but for this subsection)
by the State.
``(D) For expenditures attributable to costs
incurred during 2008, the otherwise applicable Federal
matching rate shall be increased by 80 percent of the
percentage otherwise payable (but for this subsection)
by the State.
``(E) For expenditures attributable to costs
incurred after 2008, the otherwise applicable Federal
matching rate shall be increased to 100 percent.
``(2) Coordination.--The State shall provide the Secretary
with such information as may be necessary to properly allocate
administrative expenditures described in paragraph (1) that may
otherwise be made for similar eligibility determinations.''.
(b) Phased-In Federal Assumption of Medicaid Responsibility for
Premium and Cost-Sharing Subsidies for Dually Eligible Individuals.--
(1) In general.--Section 1903(a)(1) (42 U.S.C. 1396b(a)(1))
is amended by inserting before the semicolon the following: ``,
reduced by the amount computed under section 1935(c)(1) for the
State and the quarter''.
(2) Amount described.--Section 1935, as added by subsection
(a)(2), is amended by adding at the end the following new
subsection:
``(c) Federal Assumption of Medicaid Prescription Drug Costs for
Dually-Eligible Beneficiaries.--
``(1) In general.--For purposes of section 1903(a)(1), for
a State for a calendar quarter in a year (beginning with 2005)
the amount computed under this subsection is equal to the
product of the following:
``(A) Standard prescription drug coverage under
medicare.--With respect to individuals who are
residents of the State and are entitled to benefits
with respect to prescribed drugs under the State plan
under this title (including such a plan operating under
a waiver under section 1115)--
``(i) the total amount of payments made (or
not collected from the individuals) in the
quarter under section 1860D-19 (relating to
premium and cost-sharing prescription drug
subsidies for low-income medicare
beneficiaries) that are attributable to such
individuals; and
``(ii) the actuarial value of standard
coverage (as determined under section 1860D-
6(f)) provided for all such individuals.
``(B) State matching rate.--A proportion computed
by subtracting from 100 percent the Federal medical
assistance percentage (as defined in section 1905(b)) applicable to the
State and the quarter.
``(C) Phase-out proportion.--The phase-out
proportion (as defined in paragraph (2)) for the
quarter.
``(2) Phase-out proportion.--For purposes of paragraph
(1)(C), the `phase-out proportion' for a calendar quarter in--
``(A) 2005 is 90 percent;
``(B) 2006 is 80 percent;
``(C) 2007 is 70 percent;
``(D) 2008 is 60 percent; or
``(E) a year after 2008 is 50 percent.''.
(c) Medicaid Providing Wrap-Around Benefits.--Section 1935, as
added by subsection (a)(2) and amended by subsection (b)(2), is amended
by adding at the end the following new subsection:
``(d) Additional Provisions.--
``(1) Medicaid as secondary payor.--In the case of an
individual who is enrolled under part D of title XVIII and
entitled to medical assistance for prescribed drugs under this
title, medical assistance shall continue to be provided under
this title for prescribed drugs to the extent payment is not
made under the Medicare Prescription Drug plan or the
Medicare+Choice plan selected by the individual to receive part
D benefits.
``(2) Condition.--A State may require, as a condition for
the receipt of medical assistance under this title with respect
to prescription drug benefits for an individual eligible to
enroll in part D, that the individual elect to enroll under
such part.''.
(d) Treatment of Territories.--
(1) In general.--Section 1935, as added by subsection
(a)(2) and amended by subsections (b)(2) and (c), is amended--
(A) in subsection (a) in the matter preceding
paragraph (1), by inserting ``subject to subsection
(e)'' after ``section 1903(a)'';
(B) in subsection (c)(1), by inserting ``subject to
subsection (e)'' after ``1903(a)(1)''; and
(C) by adding at the end the following new
subsection:
``(e) Treatment of Territories.--
``(1) In general.--In the case of a State, other than the
50 States and the District of Columbia--
``(A) the previous provisions of this section shall
not apply to residents of such State; and
``(B) if the State establishes a plan described in
paragraph (2) (for providing medical assistance with
respect to the provision of prescription drugs to
medicare beneficiaries), the amount otherwise
determined under section 1108(f) (as increased under
section 1108(g)) for the State shall be increased by
the amount specified in paragraph (3).
``(2) Plan.--The plan described in this paragraph is a plan
that--
``(A) provides medical assistance with respect to
the provision of covered drugs (as defined in section
1860D(a)(2)) to low-income medicare beneficiaries; and
``(B) assures that additional amounts received by
the State that are attributable to the operation of
this subsection are used only for such assistance.
``(3) Increased amount.--
``(A) In general.--The amount specified in this
paragraph for a State for a year is equal to the
product of--
``(i) the aggregate amount specified in
subparagraph (B); and
``(ii) the amount specified in section
1108(g)(1) for that State, divided by the sum
of the amounts specified in such section for
all such States.
``(B) Aggregate amount.--The aggregate amount
specified in this subparagraph for--
``(i) 2005, is equal to $20,000,000; or
``(ii) a subsequent year, is equal to the
aggregate amount specified in this subparagraph
for the previous year increased by the annual
percentage increase specified in section 1860D-
6(c)(5) for the year involved.
``(4) Report.--The Secretary shall submit to Congress a
report on the application of this subsection and may include in
the report such recommendations as the Secretary deems
appropriate.''.
(2) Conforming amendment.--Section 1108(f) (42 U.S.C.
1308(f)) is amended by inserting ``and section 1935(e)(1)(B)''
after ``Subject to subsection (g)''.
(e) Amendment to Best Price.--Section 1927(c)(1)(C)(i) (42 U.S.C.
1396r-8(c)(1)(C)(i)) is amended--
(1) by striking ``and'' at the end of subclause (III);
(2) by striking the period at the end of subclause (IV) and
inserting ``; and''; and
(3) by adding at the end the following new subclause:
``(V) any prices charged which are
negotiated under a Medicare
Prescription Drug plan under part D of
title XVIII with respect to covered
drugs, under a Medicare+Choice plan
under part C of such title with respect
to such drugs, or under a qualified
retiree prescription drug plan (as
defined in section 1860D-20(f)(1)) with
respect to such drugs, on behalf of
eligible beneficiaries (as defined in
section 1860D(a)(3).''.
SEC. 106. EXPANSION OF MEMBERSHIP AND DUTIES OF MEDICARE PAYMENT
ADVISORY COMMISSION (MEDPAC).
(a) Expansion of Membership.--
(1) In general.--Section 1805(c) (42 U.S.C. 1395b-6(c)) is
amended--
(A) in paragraph (1), by striking ``17'' and
inserting ``19''; and
(B) in paragraph (2)(B), by inserting ``experts in
the area of pharmacology and prescription drug benefit
programs,'' after ``other health professionals,''.
(2) Initial terms of additional members.--
(A) In general.--For purposes of staggering the
initial terms of members of the Medicare Payment
Advisory Commission under section 1805(c)(3) of the
Social Security Act (42 U.S.C. 1395b-6(c)(3)), the
initial terms of the 2 additional members of the
Commission provided for by the amendment under
paragraph (1)(A) are as follows:
(i) One member shall be appointed for 1
year.
(ii) One member shall be appointed for 2
years.
(B) Commencement of terms.--Such terms shall begin
on January 1, 2004.
(b) Expansion of Duties.--Section 1805(b)(2) (42 U.S.C. 1395b-
6(b)(2)) is amended by adding at the end the following new
subparagraph:
``(D) Voluntary prescription drug delivery
program.--Specifically, the Commission shall review,
with respect to the voluntary prescription drug
delivery program under part D, competition among
eligible entities offering Medicare Prescription Drug
plans and beneficiary access to such plans and covered
drugs, particularly in rural areas.''.
SEC. 107. MISCELLANEOUS ADMINISTRATIVE PROVISIONS.
(a) Administrator as Member of the Board of Trustees of the
Medicare Trust Funds.--Sections 1817(b) and 1841(b) (42 U.S.C.
1395i(b), 1395t(b)) are each amended by striking ``and the Secretary of
Health and Human Services, all ex officio,'' and inserting ``the
Secretary of Health and Human Services, and the Administrator of the
Medicare Competitive Agency, all ex officio,''.
(b) Increase in Grade to Executive Level III for the Administrator
of the Centers for Medicare & Medicaid Services.--
(1) In general.--Section 5314 of title 5, United States
Code, is amended by adding at the end the following:
``Administrator of the Centers for Medicare & Medicaid
Services.''.
(2) Conforming amendment.--Section 5315 of such title is
amended by striking ``Administrator of the Health Care
Financing Administration.''.
(3) Effective date.--The amendments made by this subsection
take effect on March 1, 2003.
TITLE II--OPTION FOR ENHANCED MEDICARE BENEFITS
SEC. 201. OPTION FOR ENHANCED MEDICARE BENEFITS.
(a) Establishment.--Title XVIII (42 U.S.C. 1395 et seq.), as
amended by section 101, is amended by inserting after part D the
following new part:
``Part E--Enhanced Medicare Benefits
``entitlement to elect to receive enhanced medicare benefits
``Sec. 1860E-1. (a) In General.--The Secretary shall establish
procedures under which each eligible beneficiary shall be entitled to
elect to receive enhanced medicare benefits under this part instead of
the benefits under parts A and B.
``(b) Enhanced Medicare Benefits To Be Available in 2005.--The
Secretary shall establish the procedures under subsection (a) in a
manner such that enhanced medicare benefits are first provided for
months beginning with January 2005.
``(c) Preservation of Original Medicare Fee-For-Service Benefits.--
Nothing in this part shall be construed to limit the right of an
individual who is entitled to benefits under part A or enrolled under
part B to receive benefits under such part if an election to receive
enhanced medicare benefits under this part is not in effect with
respect to such individual.
``scope of enhanced medicare benefits
``Sec. 1860E-2. (a) In General.--Except for the modifications
described in the succeeding provisions of this section, enhanced
medicare benefits shall be identical to the benefits that are available
under parts A and B.
``(b) Unified Deductible.--
``(1) In general.--In the case of an eligible beneficiary
who has elected to receive enhanced medicare benefits under
this part--
``(A) the amount otherwise payable under part A and
the total amount of expenses incurred by an eligible
beneficiary during a year which would (except for this
section) constitute incurred expenses from which
benefits payable under section 1833(a) are
determinable, shall be reduced under sections 1813(b)
and 1833(b) by the amount of the unified deductible
under paragraph (2); and
``(B) the eligible beneficiary shall be responsible
for the payment of such amount.
``(2) Amount of unified deductible.--
``(A) In general.--The amount of the unified
deductible under this subsection shall be--
``(i) for 2005, $300; or
``(ii) for a subsequent year, the amount
specified in this subparagraph for the
preceding year increased by the percentage
increase in the per capita actuarial value of
benefits under parts A and B for such
subsequent year.
``(B) Rounding.--If any amount determined under
subparagraph (A) is not a multiple of $1, such amount
shall be rounded to the nearest multiple of $1.
``(3) Application.--The unified deductible under this
subsection for a year shall be applied--
``(A) with respect to benefits under part A, on the
basis of the amount that is payable for such benefits
without regard to any other copayments or coinsurance
and before the application of any such copayments or
coinsurance;
``(B) with respect to benefits under part B, on the
basis of the total amount of the expenses incurred by
an eligible beneficiary during a year which would,
except for the application of the deductible,
constitute incurred expenses from which benefits
payable under section 1833(a) are determinable, without
regard to any other copayments or coinsurance and
before the application of any such copayments or
coinsurance; and
``(C) instead of the deductibles described in
sections 1813(b) and 1833(b).
``(c) Serious Illness Protection.--
``(1) In general.--In the case of an eligible beneficiary
who has elected to receive enhanced medicare benefits under
this part, if the amount of the out-of-pocket cost-sharing of
such beneficiary for a calendar year equals or exceeds the
serious illness protection threshold for that year--
``(A) the beneficiary shall not be responsible for
additional out-of-pocket cost-sharing incurred during
that year; and
``(B) the Secretary shall establish procedures
under which the Secretary shall pay on behalf of the
beneficiary the amount of the additional out-of-pocket
cost-sharing described in subparagraph (A) from the
Federal Hospital Insurance Trust Fund and the Federal
Supplementary Medical Insurance Trust Fund, in such
proportion as the Secretary determines appropriate.
``(2) Serious illness protection threshold.--
``(A) In general.--The amount of the serious
illness protection threshold under this subsection
shall be--
``(i) for 2005, $6,000; or
``(ii) for a subsequent year, the amount
specified in this subparagraph for the
preceding year increased by the percentage
increase in the per capita actuarial value of
benefits under parts A and B for such
subsequent year.
``(B) Rounding.--If any amount determined under
subparagraph (A) is not a multiple of $1, such amount
shall be rounded to the nearest multiple of $1.
``(3) Out-of-pocket cost-sharing defined.--In this
subsection, the term `out-of-pocket cost-sharing' means, with
respect to an eligible beneficiary, the amount of costs
incurred by the beneficiary that are attributable to
deductibles, coinsurance, and copayments imposed under part A
or B (as modified by this part), without regard to whether the
beneficiary or another person, including a State program or
other third-party coverage, has paid for such costs.
``(d) Enhanced Hospital Benefits.--
``(1) Elimination of durational limits on inpatient
hospital services.--In the case of an eligible beneficiary who
has elected to receive enhanced medicare benefits under this
part--
``(A) there shall be no spell of illness limit or
lifetime limit on inpatient hospital services under
subsections (a)(1) and (b)(1) of section 1812 during
the period in which the election of the beneficiary to
receive enhanced medicare benefits under this part is
in effect; and
``(B) section 1812(c) shall not be applied during
such period.
``(2) Revision of inpatient hospital coinsurance.--
``(A) In general.--In the case of an eligible
beneficiary who has elected to receive enhanced
medicare benefits under this part, after the
application of the unified deductible under subsection
(b), instead of imposing any coinsurance under the
second sentence of section 1813(a)(1), the amount
payable under part A for inpatient hospital services or
inpatient critical access hospital services furnished
to the eligible beneficiary during any year, shall be
reduced by the amount of the inpatient hospital
copayment specified in subparagraph (B) for each period
of hospitalization and the beneficiary shall be
responsible for payment of such amount for each such
period.
``(B) Amount of inpatient hospital copayment.--
``(i) In general.--The amount of the
inpatient hospital copayment under this
paragraph shall be--
``(I) for 2005, $400; or
``(II) for a subsequent year, the
amount specified in this clause for the
preceding year increased by the
percentage increase in the per capita
actuarial value of benefits under parts
A and B for such subsequent year.
``(ii) Rounding.--If any amount determined
under clause (i) is not a multiple of $1, such
amount shall be rounded to the nearest multiple
of $1.
``(C) Period of hospitalization defined.--In this
subsection, the term `period of hospitalization' means
the period that begins on the date that the eligible
beneficiary is admitted to the hospital and ends on the
date on which the beneficiary has not been hospitalized
for a 72-hour period.
``(D) Collection of copayments.--For purposes of
section 1866(a)(2)(A), hospitals shall substitute the
imposition of the inpatient hospital copayment under
this paragraph for the hospital coinsurance described
in the second sentence of section 1813(a)(1).
``(e) Elimination of Cost-Sharing for Preventive Health Care Items
and Services.--
``(1) In general.--In the case of an eligible beneficiary
who has elected to receive enhanced medicare benefits under
this part, the unified deductible under subsection (b) and
deductibles and the coinsurance otherwise applicable under
subsections (a) and (b) of section 1833 shall not be applied
with respect to expenses incurred for any preventive health
care items and services (and no charges may be imposed under
section 1866(a)(2) where such deductibles and coinsurance are
not imposed).
``(2) Preventive health care items and services defined.--
In this subsection, the term `preventive health care items and
services' means any of the following health care items and
services:
``(A) Screening mammography under section
1861(s)(13).
``(B) Screening pap smear and screening pelvic
examinations under section 1861(s)(14).
``(C) Bone mass measurement under section
1861(s)(15).
``(D) Prostate cancer screening tests under section
1861(s)(2)(P).
``(E) Colorectal cancer screening under section
1861(s)(2)(R).
``(F) Blood testing strips, lancets, and blood
glucose monitors for individuals with diabetes under
section 1861(n).
``(G) Diabetes outpatient self-management training
services under section 1861(s)(2)(S).
``(H) Pneumococcal, influenza, and hepatitis B
vaccines and administration under section 1861(s)(10).
``(I) Screening for glaucoma under section
1861(s)(2)(U).
``(J) Medical nutrition therapy services under
section 1861(s)(2)(V).
``(f) Simplification of Cost-Sharing.--In the case of an eligible
beneficiary who has elected to receive enhanced medicare benefits under
this part, the following cost-sharing rules shall apply:
``(1) Modification of skilled nursing facility cost-
sharing.--Instead of the coinsurance established under section
1813(b) for extended care services, under section 1888(e)--
``(A) the payment amount under paragraph (1)(B) of
such section shall be equal to the amount otherwise
provided minus the amount described in subparagraph
(B); and
``(B) the eligible beneficiary shall be responsible
for a copayment amount for each of the 100 days of care
for which payment is made on behalf of an eligible
beneficiary under that section equal to--
``(i) for 2005, $60; and
``(ii) for a subsequent year, the amount
specified in this subparagraph for the
preceding year increased by the percentage
increase in the per capita actuarial value of
benefits under parts A and B for such
subsequent year.
If any amount determined under this subparagraph is not
a multiple of $1, such amount shall be rounded to the
nearest multiple of $1.
``(2) Application of home health service coinsurance.--
``(A) In general.--The amount of the payment
otherwise made under section 1895 for home health
services (other than such services for which payment is
made under section 1834(a)) shall be reduced by the
amount described in clause (ii).
``(B) Copayment amount.--
``(i) In general.--Subject to clause (ii),
the eligible beneficiary shall be responsible
for a copayment amount for each of the first 5
visits during an episode of care for which
payment is made on behalf of an eligible
beneficiary under section 1895 equal to--
``(I) for 2005, $10; and
``(II) for a subsequent year, the
amount specified in this clause for the
preceding year increased by the
percentage increase in the per capita
actuarial value of benefits under parts
A and B for such subsequent year.
If any amount determined under this clause is
not a multiple of $1, such amount shall be
rounded to the nearest multiple of $1.
``(ii) Annual limit.--For each year in
which an election to receive enhanced medicare
benefits under this part is in effect, the
eligible beneficiary shall not be responsible
for the payment of any copayment amount under
this subparagraph after the date on which the
amount of payments made as a result of the
application of this paragraph equals $300.
``(3) Blood deductible.--The Secretary shall not apply the
deductible under sections 1813(a)(2) and 1833(b) for blood or
blood cells furnished to an eligible beneficiary during the
period in which an election of the beneficiary to receive
enhanced medicare benefits under this part is in effect.
``payment of benefits
``Sec. 1860E-3. Payment for enhanced medicare benefits on behalf of
an eligible beneficiary who has elected to receive such benefits under
this part shall be made in the same manner as payment for such benefits
would have been made under parts A and B, subject to the modifications
described in section 1860E-2, from the Federal Hospital Insurance Trust
Fund and the Federal Supplementary Medical Insurance Trust Fund, in
such proportion as the Secretary determines appropriate.
``eligible beneficiaries; election of enhanced medicare benefits;
termination of election
``Sec. 1860E-4. (a) Eligible Beneficiary Defined.--For purposes of
this part, the term `eligible beneficiary' has the meaning given that
term in section 1860D(a)(3).
``(b) Election of Enhanced Medicare Benefits.--
``(1) Election by individuals who become eligible
beneficiaries after january 1, 2005.--
``(A) Initial election.--Any individual whose
initial election period begins after September 30,
2004, shall be deemed to have elected to receive
enhanced medicare benefits under this part as of the
date on which such individual first becomes entitled to
benefits under part A or eligible to enroll for
benefits under part B, whichever is later, unless that
individual affirmatively elects (in such form and
manner as the Secretary may specify) to receive
benefits under parts A and B.
``(B) Initial election period.--For purposes of
this paragraph, the term `initial election period'
means, with respect to an individual, the period that
begins on the first day of the third month before the
month in which such individual first becomes entitled
to benefits under part A or eligible to enroll for
benefits under part B, whichever is later, and ends 7
months later.
``(C) Effect of election.--If an individual makes
an election under subparagraph (A) and such individual
is not entitled to benefits under part A or enrolled
for benefits under part B at the time of such election,
such individual shall be deemed--
``(i) to have elected to enroll for
benefits under such part under section 1818 or
1837 (as appropriate) if such individual
is eligible to enroll for benefits under such section, as of the date
of such election; or
``(ii) if such individual is not eligible
to enroll for benefits under section 1818 or
1837, to have elected to enroll under part B as
of the first date on which the individual is
eligible to enroll under such part.
``(2) Special election periods.--The Secretary shall
establish special election periods for individuals under this
part who have elected not to make an election (or to be deemed
to have made such an election) under this part that are similar
to the special enrollment periods under section 1837(i) for
individuals described in such section.
``(3) Transitional election for individuals who become
eligible beneficiaries on or before january 1, 2005.--
``(A) In general.--In the case of an individual who
is an eligible beneficiary as of January 1, 2005, the
Secretary shall establish procedures under which such
beneficiary may affirmatively elect to receive enhanced
medicare benefits under this part during the 7-month
period that begins on April 1, 2004, and ends on
November 30, 2004, for such election to take effect on
January 1, 2005.
``(B) Effect of medicare+choice enrollment.--If an
eligible beneficiary enrolls in a Medicare+Choice plan
under part C during November 2004, such individual
shall be deemed to have elected to receive enhanced
medicare benefits under subparagraph (A).
``(4) Changes in election.--
``(A) In general.--An individual who has elected
(or is deemed to have elected) to receive enhanced
medicare benefits under this part under paragraph (1),
(2), or (3) may change such election during an annual,
coordinated election period and such election shall
take effect on January 1 of the subsequent year. In no
case shall such a change of election take effect on a
date other than on January 1 of a year (unless the
election is automatic pursuant to a termination
resulting from a loss or termination of coverage under
part A or part B).
``(B) Annual, coordinated election period.--For
purposes of this section, the term `annual, coordinated
election period' means, with respect to a calendar year
(beginning with 2005), the month of November preceding
such year.
``(5) Procedures.--The Secretary shall establish procedures
for the termination and reinstatement of an election under this
section.
``(c) Coverage Terminated by Termination of Coverage Under Part A
or B.--
``(1) In general.--The Secretary shall terminate an
individual's coverage under this part if the individual is no
longer enrolled in both parts A and B.
``(2) Effective date.--The termination described in
subparagraph (A) shall be effective on the effective date of
termination of coverage under part A or (if earlier) under part
B.
``premium adjustments; late election penalty
``Sec. 1860E-5. (a) General Rule of No Change in Amount of
Premiums.--Except as provided in this section, an election to receive
enhanced medicare benefits under this part shall not affect the amount
of any premium charged under part A or B.
``(b) Late Election Penalty.--
``(1) In general.--In the case of an eligible beneficiary
who does not elect to receive enhanced medicare benefits under
this part during an election period described in paragraph (1),
(2), or (3) of section 1860E-4(b) of that beneficiary,
reinstates such an election under the procedures established
under paragraph (5) of such section, or otherwise does not have
such an election continuously in effect from the first date on
which such election could be in effect, the premium otherwise
imposed under part B (taking into account any late enrollment
penalty under section 1839(b)) shall be increased during the
period in which such individual has an election to receive
enhanced medicare benefits under this part in effect by an
amount that the Secretary determines is actuarially sound
(based on the financial impact on the program under this part
of the late election of the beneficiary or of the reinstatement
of an election of the beneficiary) for each full 12-month
period (in the same continuous period of eligibility) in which
the eligible beneficiary could have elected to receive enhanced
medicare benefits under this part but did not elect to receive
such benefits.
``(2) Procedures.--In applying the late election penalty
under paragraph (1), the Secretary shall establish procedures
for applying the penalty under this subsection that are similar
to the procedures for applying the late enrollment penalty
under section 1839(b).
``(c) Late Reversal of Election Penalty.--
``(1) In general.--In the case of an eligible beneficiary
who has elected to receive enhanced medicare benefits under
this part and terminates such election under the procedures
established under section 1860E-4(b)(5) on a date that is more
than 1 year after the date on which such beneficiary first
elected to receive enhanced medicare benefits under this part,
the premium otherwise imposed under part B (taking into account
any late enrollment penalty under section 1839(b)) shall be
increased during the period in which such individual is
enrolled under such part by an amount that the Secretary
determines is actuarially sound based on the financial impact
on the program under this part of the reversal of the election
of the beneficiary.
``(2) Procedures.--In applying the late reversal of
election penalty under paragraph (1), the Secretary shall
establish procedures for applying the penalty under this
subsection that are similar to the procedures for applying the
late enrollment penalty under section 1839(b).''.
(b) Providing Information to Beneficiaries.--During 2004, the
Secretary shall provide for an extensive, national educational and
publicity campaign to inform eligible beneficiaries (and prospective
eligible beneficiaries) regarding the enhanced medicare benefits to be
made available under part E of title XVIII of the Social Security Act
(as added by subsection (a)).
(c) Conforming Adjustments to Part A and B Premiums.--
(1) Effect of part e on part a premium.--Section 1818(d)(1)
(42 U.S.C. 1395i-2(d)(1)) is amended by adding at the end the
following new sentence: ``In making the estimate under the
previous sentence, the Secretary shall take into account the
effect of elections to receive enhanced medicare benefits under
part E on the amounts paid from such Trust Fund.''.
(2) Effect of part e on part b premium.--Section 1839(a)
(42 U.S.C. 1395r(a)) is amended--
(A) in paragraph (1)--
(i) by inserting ``(including eligible
beneficiaries who elect to receive enhanced
medicare benefits under part E)'' after ``age
65 and over''; and
(ii) by inserting ``(including eligible
beneficiaries who elect to receive enhanced
medicare benefits under part E)'' after ``age
65 and older'';
(B) in paragraph (2), by inserting ``, as adjusted
under section 1860E-5'' before the period at the end;
(C) in paragraph (3)--
(i) by inserting ``(including eligible
beneficiaries who elect to receive enhanced
medicare benefits under part E)'' after ``age
65 and over''; and
(ii) by inserting ``(including eligible
beneficiaries who elect to receive enhanced
medicare benefits under part E)'' after ``age
65 and older''; and
(D) in paragraph (4)--
(i) in the first sentence, by inserting
``(including eligible beneficiaries who elect
to receive enhanced medicare benefits under
part E)'' after ``under age 65''; and
(ii) in the second sentence, by striking
``under age 65 which'' and inserting ``under
age 65 (including eligible beneficiaries who
elect to receive enhanced medicare benefits
under part E)''.
(d) Clarification of Application of Exclusions From Coverage to
Part E.--Section 1862(a) (42 U.S.C. 1395y(a)) is amended in the matter
preceding paragraph (1) by inserting ``(including for enhanced medicare
benefits under part E)'' after ``for items or services''.
SEC. 202. RULES RELATING TO MEDIGAP POLICIES THAT PROVIDE PRESCRIPTION
DRUG COVERAGE; ESTABLISHMENT OF ENHANCED MEDICARE FEE-
FOR-SERVICE MEDIGAP POLICIES.
(a) Rules Relating to Medigap Policies That Provide Prescription
Drug Coverage.--Section 1882 (42 U.S.C. 1395ss) is amended by adding at
the end the following new subsection:
``(v) Rules Relating to Medigap Policies That Provide Prescription
Drug Coverage.--
``(1) Prohibition on sale, issuance, and renewal of
policies that provide prescription drug coverage to part d
enrollees.--
``(A) In general.--Notwithstanding any other
provision of law, on or after January 1, 2005, no
medicare supplemental policy that provides coverage of
expenses for prescription drugs may be sold, issued, or
renewed under this section to an individual who is
enrolled under part D.
``(B) Penalties.--The penalties described in
subsection (d)(3)(A)(ii) shall apply with respect to a
violation of subparagraph (A).
``(2) Issuance of substitute policies if the policyholder
obtains prescription drug coverage under part d.--
``(A) In general.--The issuer of a medicare
supplemental policy--
``(i) may not deny or condition the
issuance or effectiveness of a medicare
supplemental policy that has a benefit package
classified as `A', `B', `C', `D', `E', `F'
(including the benefit package classified as
`F' with a high deductible feature, as
described in subsection (p)(11)), or `G' (under
the standards established under subsection
(p)(2)) and that is offered and is available
for issuance to new enrollees by such issuer;
``(ii) may not discriminate in the pricing
of such policy, because of health status,
claims experience, receipt of health care, or
medical condition; and
``(iii) may not impose an exclusion of
benefits based on a pre-existing condition
under such policy,
in the case of an individual described in subparagraph
(B) who seeks to enroll under the policy during the
open enrollment period established under section 1860D-
2(b)(2) and who submits evidence that they meet the
requirements under subparagraph (B) along with the
application for such medicare supplemental policy.
``(B) Individual described.--An individual
described in this subparagraph is an individual who--
``(i) enrolls in the medicare prescription
drug delivery program under part D; and
``(ii) at the time of such enrollment was
enrolled and terminates enrollment in a
medicare supplemental policy which has a
benefit package classified as `H', `I', or `J'
(including the benefit package classified as
`J' with a high deductible feature, as
described in section 1882(p)(11)) under the
standards referred to in subparagraph (A)(i) or
terminates enrollment in a policy to which such
standards do not apply but which provides
benefits for prescription drugs.
``(C) Enforcement.--The provisions of subparagraph
(A) shall be enforced as though they were included in
subsection (s).
``(3) Notice required to be provided to current
policyholders with prescription drug coverage.--
``(A) In general.--No medicare supplemental policy
of an issuer shall be deemed to meet the standards in
subsection (c) unless the issuer provides written
notice during the 60-day period immediately preceding
the period established for the open enrollment period
established under section 1860D-2(b)(2), to each
individual who is a policyholder or certificate holder
of a medicare supplemental policy issued by that issuer
that provides some coverage of expenses for
prescription drugs (at the most recent available
address of that individual) of--
``(i) the ability to enroll in a new
medicare supplemental policy pursuant to
paragraph (2); and
``(ii) the fact that, so long as such
individual retains coverage under such policy,
the individual shall be ineligible for coverage
of prescription drugs under part D and
ineligible to elect to receive enhanced medicare benefits under part E.
``(B) Coordination.--The notice provided under
subparagraph (A) shall be coordinated with the notice
required under subsection (v)(4)(A)(i).
``(4) Clarification regarding one-time availability of a
guaranteed issue policy for beneficiaries who lose coverage
under a medicare+choice plan of january 1, 2005, because they
elect not to receive enhanced part e benefits.--In the case of
a beneficiary who is enrolled in a Medicare+Choice plan as of
December 31, 2004, will not be eligible to be enrolled under
such plan as of January 1, 2005, because the beneficiary has
elected not to receive enhanced medicare benefits under part
E--
``(A) such beneficiary shall be deemed to be
described in subsection (s)(3)(B)(ii); and
``(B) for purposes of (s)(3)(E)(ii), the date of
the termination of coverage shall be January 1,
2005.''.
(b) Establishment of Enhanced Medicare Fee-For-Service Medigap
Policies.--Section 1882 (42 U.S.C. 1395ss), as amended by subsection
(a), is amended by adding at the end the following new subsection:
``(w) Enhanced Medicare Fee-For-Service Supplemental Policies.--
``(1) Additional benefit packages.--
``(A) Establishment.--
``(i) In general.--In addition to the
benefit packages classified under the standards
established by subsection (p)(2), there shall
be established benefit packages that may only
be purchased by beneficiaries who have elected
to receive enhanced medicare benefits under
part E that--
``(I) complement but do not
duplicate enhanced medicare benefits
described in section 1860E-2;
``(II) do not provide for coverage
of the unified deductible under section
1860E-2(b);
``(III) subject to clause (ii), do
not provide coverage for more than 50
percent of the amount of coinsurance
and copayments applicable under section
1860E-2;
``(IV) do not provide for coverage
of expenses for prescription drugs;
``(V) provide a range of coverage
options for beneficiaries; and
``(VI) use uniform language,
definitions, and format with respect to
the coverage provided under a policy.
``(ii) One package required to cover all
cost-sharing.--
``(I) In general.--One of the
benefit packages established under
clause (i) shall include coverage of
all coinsurance and copayments
applicable under section 1860E-2.
``(II) Availability limited to
beneficiaries that enrolled in part e
during certain periods.--The benefit
package that includes the coverage
described in subclause (II) shall only
be made available to beneficiaries who
elect to receive enhanced medicare
benefits under part E during the
beneficiary's initial election period
(as defined in paragraph (1)(B) of
section 1860D-4(b)), during a special
election period described in paragraph
(2) of such section, or during the
transitional election period under
paragraph (3) of such section.
``(B) Manner of establishment.--The benefit
packages established under this section shall be
established in the manner described in subparagraph (E)
of subsection (p)(1), except that for purposes of
subparagraph (C) of such subsection, the standards
established under this subsection shall take effect not
later than January 1, 2005.
``(2) Construction of benefits in other medicare
supplemental policies.--Nothing in this subsection shall be
construed to affect the benefit packages classified as `A'
through `J' under the standards established by subsection
(p)(2) (including the benefit packages classified as `F' and
`J' with a high deductible feature, as described in subsection
(p)(11)).
``(3) Guaranteed issuance and renewal of enhanced medicare
fee-for-service supplemental policies.--The provisions of
subsections (q) and (s), including provisions of subsection
(s)(3) (relating to special enrollment periods in cases of
termination or disenrollment), shall apply to medicare
supplemental policies established under this subsection in a
similar manner as such provisions apply to medicare
supplemental policies issued under the standards established
under subsection (p).
``(4) Opportunity of current policyholders to purchase
enhanced medicare fee-for-service supplemental policies.--
``(A) Requirements for issuers of policies with
respect to current policyholders.--No medicare
supplemental policy of an issuer with a benefit package
that is established under paragraph (1) shall be deemed
to meet the standards in subsection (c) unless the
issuer does all of the following:
``(i) Notice to current policyholders.--
Provide written notice during the 60-day period
immediately preceding the period established
under section 1860E-4(b)(1), to each individual
who is a policyholder or certificate holder of
a medicare supplemental policy issued by that
issuer (at the most recent available address of
that individual) of the offer described in
clause (ii) and of the fact that, so long as
such individual retains coverage under such
policy, the individual shall be ineligible to
elect enhanced medicare benefits under part E.
``(ii) Offer for current policyholders.--
Offer the policyholder or certificate holder
under the terms described in subparagraph (C),
during at least the period established under
section 1860E-4(b)(1), a medicare supplemental
policy established under paragraph (1) with the
benefit package that the Secretary determines
is most comparable to the policy in which the
individual is enrolled with coverage effective
as of the effective date of the election of the
individual under part E.
``(iii) Offer for individuals covered under
policies issued by other issuers if that issuer
is not going to offer enhanced medicare fee-
for-service supplemental policies.--Offer an
individual described in subparagraph (B), under
the terms described in subparagraph (C), and
during at least the period established under
section 1860E-4(b)(1), a medicare supplemental policy established under
paragraph (1) with the benefit package that the Secretary determines is
most comparable to the policy in which the individual is enrolled with
coverage effective as of the effective date of the election of the
individual under part E.
The notice provided under clause (i) shall be
coordinated with the notice required under subsection
(v)(3)(A).
``(B) Individual described.--An individual
described in this subparagraph is an individual who is
a policyholder or certificate holder of a medicare
supplemental policy issued by an issuer who is not
going to offer a policy with a benefit package
established under paragraph (1).
``(C) Terms of offer described.--The terms
described in this subparagraph are terms which do not--
``(i) deny or condition the issuance or
effectiveness of a medicare supplemental policy
described in subparagraph (A)(ii) that is
offered and is available for issuance to new
enrollees by such issuer;
``(ii) discriminate in the pricing of such
policy because of health status, claims
experience, receipt of health care, or medical
condition; or
``(iii) impose an exclusion of benefits
based on a preexisting condition under such
policy.
``(5) Prohibition of sale of enhanced policies to original
medicare fee-for-service enrollees; prohibition of sale of
original policies to enhanced medicare fee-for-service
enrollees.--
``(A) Prohibition.--No person may sell, issue, or
renew a medicare supplemental policy with--
``(i) a benefit package established under
this subsection to an individual who has not
elected to receive enhanced medicare benefits
under part E; or
``(ii) a benefit package classified as `A'
through `J' under the standards established by
subsection (p)(2) (including the benefit
packages classified as `F' and `J' with a high
deductible feature, as described in subsection
(p)(11)) to an individual who has elected to
receive enhanced medicare benefits under part
E.
``(B) Penalty.--Any person who violates the
provisions of subparagraph (A) shall be subject to a
civil money penalty in an amount that does not exceed
$25,000 (or $15,000 in the case of a seller who is not
an issuer of a policy) for each such violation. The
provisions of section 1128A (other than the first
sentence of subsection (a) and other than subsection
(b)) shall apply to a civil money penalty under the
previous sentence in the same manner as such provisions
apply to a penalty or proceeding under section
1128A(a).
``(6) Other prohibitions and penalties.--Each penalty under
this section shall apply with respect to policies established
under this subsection as if such policies were issued under the
standards established under subsection (p), including the
penalties under subsections (a), (d), (p)(8), (p)(9), (q)(5),
(r)(6)(A), (s)(4), and (t)(2)(D).''.
TITLE III--MEDICARE+CHOICE COMPETITION
SEC. 301. ANNUAL CALCULATION OF BENCHMARK AMOUNTS BASED ON FLOOR RATES
AND LOCAL FEE-FOR-SERVICE RATES.
(a) Annual Calculation of Benchmark Amounts Based on Floor Rates
and Local Fee-For-Service Rates.--Section 1853(a) (42 U.S.C. 1395w-
23(a)) is amended by adding at the end the following new paragraph:
``(4) Annual calculation of benchmark amounts.--For each
year, the Secretary shall calculate a benchmark amount for each
Medicare+Choice payment area for each month for such year with
respect to coverage of enhanced medicare benefits under part E
equal to the greatest of the following amounts:
``(A) Minimum amount.--\1/12\ of the annual
Medicare+Choice capitation rate determined under
subsection (c)(1)(B) for the payment area for the year;
or
``(B) Local fee-for-service rate.--The local fee-
for-service rate for such area for the year (as
calculated under paragraph (5)).''.
(b) Annual Calculation of Local Fee-For-Service Rates.--Section
1853(a) (42 U.S.C. 1395w-23(a)), as amended by subsection (a), is
amended by adding at the end the following new paragraph:
``(5) Annual calculation of local fee-for-service rates.--
``(A) In general.--Subject to subparagraphs (B) and
(C), the term `local fee-for-service rate' means the
amount of payment for a month in a Medicare+Choice
payment area for benefits under this title and
associated claims processing costs for an individual
who has elected to receive enhanced medicare benefits
under part E (but, if the Medicare+Choice plan offers
prescription drug coverage, excluding any costs
associated with part D), and not enrolled in a
Medicare+Choice plan under this part. The Secretary
shall annually calculate such amount in a manner
similar to the manner in which the Secretary calculated
the adjusted average per capita cost under section
1876, except that such calculation shall include in
such amount, to the extent practicable, any amounts
that would have been paid under this title if
individuals entitled to benefits under this title had
not received services from facilities of the Department
of Veterans Affairs or the Department of Defense.
``(B) Removal of medical education costs from
calculation of local fee-for-service rate.--
``(i) In general.--In calculating the local
fee-for-service rate under subparagraph (A) for
a year, the amount of payment described in such
subparagraph shall be adjusted to exclude from
such payment the payment adjustments described
in clause (ii).
``(ii) Payment adjustments described.--
``(I) In general.--Subject to
subclause (II), the payment adjustments
described in this subparagraph are
payment adjustments that the Secretary
estimates were payable during each
month for direct graduate medical
education costs under section 1886(h).
``(II) Treatment of payments
covered under state hospital
reimbursement system.--To the extent
that the Secretary estimates that the
amount of the local fee-for-service
rates reflects payments to hospitals
reimbursed under section 1814(b)(3),
the Secretary shall estimate a payment
adjustment that is comparable to the
payment adjustment that would have been
made under clause (i) if the hospitals
had not been reimbursed under such
section.
``(C) Special rule for rural areas.--
``(i) In general.--Subject to clause (ii),
in calculating the local fee-for-service rates
under subparagraph (A) for a year, the
Secretary shall calculate such costs for rural
areas (as defined in section 1886(d)(2)(D)) of
a State as if each rural area were part of a
single Medicare+Choice payment area.
``(ii) Limitation.--Payment amounts
determined under subparagraph (A) may not be
less than the amounts that would have been paid
if clause (i) did not apply.''.
(c) CPI Increases in Floor Payment Rates.--Section 1853(c)(1)(B)
(42 U.S.C. 1395w-23(c)(1)(B)) is amended--
(1) in clause (iv), by striking ``and each succeeding
year,'' and inserting ``, 2003, and 2004,''; and
(2) by adding at the end the following new clause:
``(v) For 2005 and each succeeding year,
the minimum amount specified in this clause (or
clause (iv)) for the preceding year increased
by the percentage increase in the Consumer
Price Index for all urban consumers (U.S. urban
average) for the 12-month period ending with
June of the previous year.''.
(d) Furnishing of Claims Data by VA and DoD.--Upon the request of
the Secretary of Health and Human Services, the Secretary of Veterans
Affairs and the Secretary of Defense shall provide such claims data as
the Secretary of Health and Human Services may require to determine the
amount that would have been paid under the medicare program under title
XVIII of the Social Security Act if individuals entitled to benefits
under such program had not received services from facilities of the
Department of Veterans Affairs or the Department of Defense for
purposes calculating the amounts under section 1853(a)(5) of such Act
(as added by subsection (b)) and section 1853(c)(8) of such Act (as
added by section 312(b)).
SEC. 302. APPLICATION OF COMPREHENSIVE RISK ADJUSTMENT METHODOLOGY.
Section 1853(a)(3) is amended to read as follows:
``(3) Comprehensive risk adjustment methodology.--
``(A) Application of methodology.--The Secretary
shall apply the comprehensive risk adjustment
methodology described in subparagraph (B) to 100
percent of the amount of the plan bids under section
1853(d)(1) and the weighted service area benchmark
amounts calculated under section 1853(d)(3).
``(B) Comprehensive risk adjustment methodology
described.--The comprehensive risk adjustment
methodology described in this subparagraph is the risk
adjustment methodology that would apply with respect to
Medicare+Choice plans offered by Medicare+Choice
organizations in 2004, except that if such methodology
does not apply to groups of beneficiaries who are aged
or disabled and groups of beneficiaries who have end-
stage renal disease, the Secretary shall revise such
methodology to apply to such groups.
``(C) Uniform application to all types of plans.--
Subject to section 1859(e)(4), the comprehensive risk
adjustment methodology established under this paragraph
shall be applied uniformly without regard to the type
of plan.
``(D) Data collection.--In order to carry out this
paragraph, the Secretary shall require Medicare+Choice
organizations to submit such data and other information
as the Secretary deems necessary.
``(E) Improvement of payment accuracy.--
Notwithstanding any other provision of this paragraph,
the Secretary may revise the comprehensive risk
adjustment methodology described in subparagraph (B)
from time to time to improve payment accuracy.''.
SEC. 303. ANNUAL ANNOUNCEMENT OF BENCHMARK AMOUNTS AND OTHER PAYMENT
FACTORS.
Section 1853(b) (42 U.S.C. 1395w-23(b)), as amended by section
532(d)(1) of the Public Health Security and Bioterrorism Preparedness
and Response Act of 2002 (Public Law 107-188; 116 Stat. 696), is
amended--
(1) in the heading, by striking ``Payment Rates'' and
inserting ``Payment Factors'';
(2) by striking paragraph (1) and inserting the following:
``(1) Annual announcement.--Beginning in 2004, at the same
time as the Secretary publishes the risk adjusters under
section 1860D-11, the Secretary shall annually announce (in a
manner intended to provide notice to interested parties) the
following payment factors:
``(A) The benchmark amount for each Medicare+Choice
payment area (as calculated under subsection (a)(4))
for the year.
``(B) The factors to be used for adjusting payments
under the comprehensive risk adjustment methodology
described in subsection (a)(3)(B) with respect to each
Medicare+Choice payment area for the year.'';
(3) in paragraph (3), by striking ``monthly adjusted'' and
all that follows before the period at the end and inserting
``each payment factor described in paragraph (1)''; and
(4) by striking paragraph (4).
SEC. 304. SUBMISSION OF BIDS BY MEDICARE+CHOICE ORGANIZATIONS.
Section 1854(a) (42 U.S.C. 1395w-24(a)), as amended by section
532(b)(1) of the Public Health Security and Bioterrorism Preparedness
and Response Act of 2002 (Public Law 107-188; 116 Stat. 696), is
amended to read as follows:
``(a) Submission of Bids by Medicare+Choice Organizations.--
``(1) In general.--Not later than the second Monday in
September (or July 1 of each year before 2002) and except as
provided in paragraph (3), each Medicare+Choice organization
shall submit to the Secretary, in such form and manner as the
Secretary may specify, for each Medicare+Choice plan that the
organization intends to offer in a service area in the
following year--
``(A) notice of such intent and information on the
service area of the plan;
``(B) the plan type for each plan;
``(C) if the Medicare+Choice plan is a coordinated
care plan (as described in section 1851(a)(2)(A)) or a
private fee-for-service plan (as described in section
1851(a)(2)(C)), the information described in paragraph
(2) with respect to each payment area;
``(D) the enrollment capacity (if any) in relation
to the plan and each payment area;
``(E) the expected mix, by health status, of
enrolled individuals; and
``(F) such other information as the Secretary may
specify.
``(2) Information required for coordinated care plans and
private fee-for-service plans.--For a Medicare+Choice plan that
is a coordinated care plan (as described in section
1851(a)(2)(A)) or a private fee-for-service plan (as described
in section 1851(a)(2)(C)), the information described in this
paragraph is as follows:
``(A) Information required with respect to benefits
under part e.--Information relating to the coverage of
benefits under part E as follows:
``(i) The plan bid, which shall consist of
a dollar amount that represents the total
amount that the plan is willing to accept
(after the application of the comprehensive
risk adjustment methodology under section
1853(a)(3)) for providing coverage of the
benefits under part E to an individual enrolled
in the plan that resides in the service area of
the plan for a month.
``(ii) For the supplemental benefits
package offered (if any)--
``(I) the adjusted community rate
(as defined in subsection (g)(3)) of
the package;
``(II) the Medicare+Choice monthly
supplemental beneficiary premium (as
defined in subsection (b)(2)(C));
``(III) a description of any cost-
sharing; and
``(IV) such other information as
the Secretary considers necessary.
``(iii) The assumptions that the
Medicare+Choice organization used in preparing
the plan bid with respect to numbers, in each
payment area, of enrolled individuals and the
mix, by health status, of such individuals.
``(B) Information required with respect to part
d.--If the Medicare+Choice organization elects to offer
prescription drug coverage, the information required to
be submitted by an eligible entity under section 1860D-
12, including the monthly premiums for standard
coverage and any other qualified prescription drug
coverage available to individuals enrolled under part
D.
``(3) Requirements for msa plans.--For an MSA plan
described in section 1851(a)(2)(B), the information described
in this paragraph is the information that such a plan would
have been required to submit under this part if the 21st
Century Medicare Act had not been enacted.
``(4) Review.--
``(A) In general.--Subject to subparagraph (B), the
Secretary shall review the adjusted community rates (as
defined in section 1854(g)(3)), the amounts of the
Medicare+Choice monthly basic and supplemental
beneficiary premiums filed under this subsection and
shall approve or disapprove such rates and amounts so
submitted. The Chief Actuary of the Medicare
Competitive Agency shall review the actuarial
assumptions and data used by the Medicare+Choice
organization with respect to such rates and amounts so
submitted to determine the appropriateness of such
assumptions and data.
``(B) Exception.--The Secretary shall not review,
approve, or disapprove the amounts submitted under
paragraph (3).''.
SEC. 305. ADJUSTMENT OF PLAN BIDS; COMPARISON OF ADJUSTED BID TO
BENCHMARK; PAYMENT AMOUNT.
(a) In General.--Section 1853 (42 U.S.C. 1395w-23) is amended--
(1) by redesignating subsections (d) through (i) as
subsections (e) through (j), respectively; and
(2) by inserting after subsection (c) the following new
subsection:
``(d) Secretary's Determination of Payment Amount for Enhanced
Medicare Benefits.--
``(1) Adjustment of plan bids.--The Secretary shall adjust
each plan bid submitted under section 1854(a) for the coverage
of benefits under part E using the comprehensive risk
adjustment methodology applicable under subsection (a)(3) based
on the assumptions described in section 1854(a)(2)(A)(iii) that
the plan used with respect to numbers of enrolled individuals.
``(2) Determination of weighted service area benchmark
amounts.--The Secretary shall calculate a weighted service area
benchmark amount for enhanced medicare benefits under part E
for each plan equal to the weighted average of the benchmark
amounts for enhanced medicare benefits under such part for the
payment areas included in the service area of the plan using
the assumptions described in section 1854(a)(2)(A)(iii) that
the plan used with respect to numbers of enrolled individuals.
``(3) Determination of plan benchmark.--The Secretary shall
calculate the plan benchmark amount by adjusting the weighted
service area benchmark amount determined under paragraph (1)
using--
``(A) the comprehensive risk adjustment methodology
applicable under subsection (a)(3); and
``(B) the assumptions contained in the plan bid
that the plan used with respect to numbers of enrolled
individuals.
``(4) Comparison to benchmark.--The Secretary shall
determine the difference between each plan bid (as adjusted
under paragraph (1)) and the plan benchmark amount (as
determined under paragraph (3)) for purposes of determining--
``(A) the payment amount under paragraph (5); and
``(B) the part E premium reductions and
Medicare+Choice monthly basic beneficiary premiums.
``(5) Determination of payment amount.--The Secretary shall
determine the payment amount for plans as follows:
``(A) Bids that equal or exceed the benchmark.--The
amount of each monthly payment to a Medicare+Choice
organization with respect to each individual enrolled
in a plan shall be the plan benchmark amount.
``(B) Bids below the benchmark.--The amount of each
monthly payment to a Medicare+Choice organization with
respect to each individual enrolled in a plan shall be
the plan benchmark amount reduced by 25 percent of the
difference between the bid and the benchmark amount and
further reduced by the amount of any premium reduction
elected by the plan under section 1854(d)(1)(A)(i).
``(6) Factors used in adjusting bids and benchmarks for
medicare+choice organizations and in determining enrollee
premiums.--Subject to paragraph (7), the Secretary shall use,
for purposes of adjusting plan bids and calculating plan
benchmarks under this subsection--
``(A) with respect to benefits under part E--
``(i) the benchmark amount for the
Medicare+Choice payment area announced under
section 1854(a)(1)(A); and
``(ii) the health status and other
demographic adjustment factors for the
Medicare+Choice payment area announced under
section 1854(a)(1)(B); and
``(B) if the Medicare+Choice organization elects to
offer prescription drug coverage, the risk adjusters
published under section 1860D-11 applicable with
respect to such coverage.
``(7) Adjustment for national coverage determinations and
legislative changes in benefits.--If the Secretary makes a
determination with respect to coverage under this title or
there is a change in benefits required to be provided under
this part that the Secretary projects will result in a
significant increase in the costs to Medicare+Choice
organizations of providing benefits under contracts under this
part (for periods after any period described in section
1852(a)(5)), the Secretary shall appropriately adjust the
benchmark amounts or payment amounts (as determined by the
Secretary). Such projection and adjustment shall be based on an
analysis by the Chief Actuary of the Competitive Medicare
Agency of the actuarial costs associated with the new
benefits.''.
(b) Conforming Amendment.--Section 1853(c)(7) (42 U.S.C. 1395w-
23(c)(7)) is repealed.
SEC. 306. DETERMINATION OF PREMIUM REDUCTIONS, REDUCED COST-SHARING,
ADDITIONAL BENEFITS, AND BENEFICIARY PREMIUMS.
(a) Calculation of Beneficiary Premiums.--Section 1854 (42 U.S.C.
1395-24) is amended by--
(1) redesignating subsections (d) through (h) as
subsections (e) through (i), respectively; and
(2) inserting after subsection (c) the following new
subsection:
``(d) Determination of Premium Reductions, Reduced Cost-Sharing,
Additional Benefits, and Beneficiary Premiums.--
``(1) Bids below the benchmark.--
``(A) In general.--If the Secretary determines
under section 1853(d)(4) that the plan benchmark amount
exceeds the plan bid, the Secretary shall require the
plan to return 75 percent of such excess to the
enrollee in the form of, at the option of the
organization offering the plan--
``(i) subject to subparagraph (B), a
monthly medicare premium reduction for
individuals enrolled in the plan;
``(ii) a reduction in the actuarial value
of plan cost-sharing for plan enrollees;
``(iii) subject to subparagraph (C), such
additional benefits as the organization may
specify; or
``(iv) any combination of the reductions
and benefits described in clauses (i) through
(iii).
``(B) Limitation on premium reductions.--The amount
of the reduction under subparagraph (A)(i) with respect
to any enrollee in a Medicare+Choice plan--
``(i) may not exceed the premium described
in section 1839(a)(3), as adjusted under
section 1860E-5; and
``(ii) shall apply uniformly to each
enrollee of the Medicare+Choice plan to which
such reduction applies.
``(C) Requirement of enrollment in part d to
receive prescription drug benefits.--An organization
may not specify any additional benefit that provides
for the coverage of any prescription drug (other than
that required under part E).
``(2) Bids above the benchmark.--If the Secretary
determines under section 1853(d)(4) that the plan bid (as
adjusted under section 1853(d)(1)) exceeds the plan benchmark
amount (determined under section 1853(d)(3)), the amount of
such excess shall be the Medicare+Choice monthly basic
beneficiary premium (as defined in section 1854(b)(2)(A)).''.
(b) Conforming Part E Premium Reduction Amendments.--
(1) Adjustment and payment of part e premiums.--Section
1860E-5 (as added by section 201) is amended--
(A) in subsection (a), by inserting ``, except as
reduced by the amount of any reduction elected under
section 1854(d)(1)(A)(i)'' before the period at the
end; and
(B) by adding at the end the following new
subsection:
``(c) Medicare+Choice Premium Reductions.--In the case of an
individual enrolled in a Medicare+Choice plan, the Secretary shall
reduce (but not below zero) the amount of the monthly beneficiary
premium to reflect any reduction elected under section
1854(d)(1)(A)(i). Such premium adjustment may be provided in such
manner as the Secretary may specify.''.
(2) Treatment of reduction for purposes of determining
government contribution under part e.--Section 1844(c) (42
U.S.C. 1395w) is amended by striking ``section 1854(f)(1)(E)''
and inserting ``section 1854(d)(1)(A)(i)''.
(c) Sunset of Specific Requirements for Additional Benefits.--
Section 1854(g) (as redesignated by subsection (a)(1)) is amended--
(1) in paragraph (1)(A), by striking ``Each Medicare+Choice
organization'' and inserting ``For years before 2005, each
Medicare+Choice organization''; and
(2) in paragraph (2), by striking ``A Medicare+Choice
organization'' and inserting ``For years before 2005, a
Medicare+Choice organization''.
(d) Limitation on Enrollee Liability.--
(1) For benefits under part e.--Section 1854(f)(1) (as
redesignated by subsection (a)(1)) is amended to read as
follows:
``(1) For enhanced medicare benefits.--The sum of--
``(A) the Medicare+Choice monthly basic beneficiary
premium (multiplied by 12) and the actuarial value of
the deductibles, coinsurance, and copayments (taking
into account any reductions in cost-sharing described
in subsection (d)(1)(A)(ii)) applicable on average to
individuals enrolled under this part with a
Medicare+Choice plan described in subparagraph (A) or
(C) of section 1851(a)(2) of an organization with
respect to required benefits described in section
1852(a)(1)(A) and any additional benefits described in
subsection (a)(2)(A)(iii) for a year; must equal
``(B) the actuarial value of the deductibles,
coinsurance, and copayments that would be applicable on
average to individuals who have elected to receive
enhanced medicare benefits under part E if they were
not members of a Medicare+Choice organization for the
year (adjusted as determined appropriate by the
Secretary to account for geographic differences and for
plan cost and utilization differences).''.
(2) For supplemental benefits.--Section 1854(f)(2) (as so
redesignated) is amended to read as follows:
``(2) For supplemental benefits.--If the Medicare+Choice
organization provides to its members enrolled under this part
in a Medicare+Choice plan described in subparagraph (A) or (C)
of section 1851(a)(2) with respect to supplemental benefits
relating to benefits under part E described in section
1852(a)(3)(A), the sum of the Medicare+Choice monthly
supplemental beneficiary premium (multiplied by 12) charged and
the actuarial value of its deductibles, coinsurance, and
copayments charged with respect to such benefits for a year
must equal the adjusted community rate (as defined in
subsection (g)(3)) for such benefits for the year.''.
(e) Premiums Charged; Premium Terminology.--Section 1854(b) (42
U.S.C. 1395w-24) is amended to read as follows:
``(b) Monthly Premiums Charged.--
``(1) In general.--
``(A) Coordinated care and private fee-for-service
plans.--The monthly amount of the premium charged to an
individual enrolled in a Medicare+Choice plan (other
than an MSA plan) offered by a Medicare+Choice
organization shall be equal to the sum of the
following:
``(i) The Medicare+Choice monthly basic
beneficiary premium (if any).
``(ii) The Medicare+Choice monthly
supplemental beneficiary premium (if any).
``(iii) The Medicare+Choice monthly
obligation for qualified prescription drug
coverage (if any).
``(B) MSA plans.--The rules under this section that
would have applied with respect to an MSA plan if the
21st Century Medicare Act had not been enacted shall
continue to apply to MSA plans after the date of
enactment of such Act.
``(2) Premium terminology.--For purposes of this part:
``(A) Medicare+choice monthly basic beneficiary
premium.--The term `Medicare+Choice monthly basic
beneficiary premium' means, with respect to a
Medicare+Choice plan, the amount required to be charged
under subsection (d)(2) for the plan.
``(B) Medicare+choice monthly obligation for
qualified prescription drug coverage.--The term
`Medicare+Choice monthly obligation for qualified
prescription drug coverage' means, with respect to a
Medicare+Choice plan, the amount determined under
section 1853(k)(3).
``(C) Medicare+choice monthly supplemental
beneficiary premium.--The term `Medicare+Choice monthly
supplemental beneficiary premium' means, with respect
to a Medicare+Choice plan, the amount required to be
charged under subsection (f)(2) for the plan, or, in
the case of an MSA plan, the amount filed under
subsection (a)(3).
``(D) Medicare+choice monthly msa premium.--The
term `Medicare+Choice monthly MSA premium' means, with
respect to a Medicare+Choice plan, the amount of such
premium filed under subsection (a)(3) for the plan.''.
(f) Conforming Amendments.--
(1) Section 1851(d)(2)(D) (42 U.S.C. 1395w-21(d)(2)(D)) is
amended by inserting ``and Medicare+Choice monthly obligation
for qualified prescription drug coverage'' after
``Medicare+Choice monthly basic and supplemental beneficiary
premiums''.
(2) Section 1851(g)(3)(B)(i) (42 U.S.C. 1395w-
21(g)(3)(B)(i)) is amended by striking ``any Medicare+Choice
monthly basic and supplemental beneficiary premiums'' and
inserting ``any Medicare+Choice monthly basic beneficiary
premium, Medicare+Choice monthly obligation for qualified
prescription drug coverage, Medicare+Choice monthly
supplemental beneficiary premium,''.
(3) Section 1852(c)(1)(F) (42 U.S.C. 1395w-22(c)(1)(F)) is
amended to read as follows:
``(F) Supplemental benefits.--Supplemental benefits
available from the organization offering the plan,
including the supplemental benefits covered and the
Medicare+Choice monthly supplemental beneficiary
premium for such benefits.''.
(4) Section 1853(f)(1) (as redesignated by section 305(1))
is amended by striking ``(as defined in section
1854(b)(2)(C))'' and inserting ``(as defined in section
1854(b)(2)(D))''.
(5) Section 1854(c) (42 U.S.C. 1395w-24(c)) is amended by
striking ``The Medicare+Choice monthly basic and supplemental
beneficiary premium'' and inserting ``The Medicare+Choice
monthly basic beneficiary premium, the Medicare+Choice monthly
obligation for qualified prescription drug coverage, or the
Medicare+Choice monthly supplemental beneficiary premium''.
(6) Section 1854(e) (as redesignated by subsection (a)(1))
is amended by inserting ``and the Medicare+Choice monthly
obligation for qualified prescription drug coverage'' after
``Medicare+Choice monthly basic and supplemental beneficiary
premiums''.
(7) Section 1859(c)(4) (42 U.S.C. 1395w-28(c)(4)) is
amended to read as follows:
``(4) Medicare+choice monthly basic beneficiary premium;
medicare+choice monthly obligation for qualified prescription
drug coverage; medicare+choice monthly supplemental beneficiary
premium.--The terms `Medicare+Choice monthly basic beneficiary
premium', `Medicare+Choice monthly obligation for qualified
prescription drug coverage', and `Medicare+Choice monthly
supplemental beneficiary premium' are defined in section
1854(b)(2).''.
SEC. 307. ELIGIBILITY, ELECTION, AND ENROLLMENT IN COMPETITIVE
MEDICARE+CHOICE PLANS.
(a) Eligibility.--Section 1851(a)(3) is amended to read as follows:
``(3) Medicare+choice eligible individual.--In this title,
the term `Medicare+Choice eligible individual' means an
individual who--
``(A) is entitled to benefits under part A and
enrolled under part B; and
``(B) has elected to receive enhanced medicare
benefits under part E.''.
(b) Elections.--
(1) In general.--Section 1851(a)(1)(A) is amended by
inserting ``(including through the election of enhanced
medicare benefits under part E) and, if elected by the
beneficiary and offered by the Medicare+Choice plan, through
the voluntary prescription drug delivery program under part D''
after ``parts A and B''.
(2) Default election.--Section 1851(c)(3) (42 U.S.C. 1395w-
21(c)(3)) is amended by inserting ``to receive enhanced
medicare benefits under part E of the'' after ``deemed to have
chosen''.
(3) Coverage election periods.--Section 1851(e)(1) (42
U.S.C. 1395w-21(e)(1)) is amended by striking ``entitled to
benefits under part A and enrolled under part B'' and inserting
``eligible to elect to receive enhanced medicare benefits under
part E''.
(4) Guaranteed issuance and renewal.--Section 1851(g)(3)(C)
(42 U.S.C. 1395w-21(g)(3)(C)) is amended--
(A) in clause (i), by inserting ``elected to
receive enhanced medicare benefits under part E of
the'' after ``deemed to have''; and
(B) in clause (ii), by striking ``deemed to have
chosen to change coverage to'' and inserting ``deemed
to have elected to receive enhanced medicare benefits
under part E through the''.
(5) Effect of election of medicare+choice plan option.--
Section 1851(i) (42 U.S.C. 1395w-21(i)) is amended--
(A) in paragraph (1)--
(i) by striking ``1853(g), 1853(h)'' and
inserting ``1853(h), 1853(i)''; and
(ii) by inserting ``(as modified under part
E)'' after ``parts A and B''; and
(B) in paragraph (2), by striking ``1853(e),
1853(g), 1853(h)'' and inserting ``1853(f), 1853(h),
1853(i)''.
(c) Providing Information To Promote Informed Choice.--
(1) General information on benefits.--Section 1851(d)(3)
(42 U.S.C. 1395w-21(d)(3)) is amended--
(A) by striking subparagraph (A) and inserting the
following:
``(A) Benefits under enhanced medicare fee-for-
service program option.--A general description of the
enhanced medicare benefits covered under the original
medicare fee-for-service program under parts A and B
for individuals who have elected to receive such
benefits under part E, including--
``(i) covered items and services;
``(ii) beneficiary cost-sharing, such as
deductibles, coinsurance, and copayment
amounts; and
``(iii) any beneficiary liability for
balance billing.'';
(B) by redesignating subparagraphs (B) through (E)
as subparagraphs (C) through (F), respectively;
(C) by inserting after subparagraph (A) the
following new subparagraph:
``(B) Outpatient prescription drug coverage
benefits.--For Medicare+Choice eligible individuals who
are enrolled under part D, the information required
under section 1860D-4 if the Medicare+Choice
organization elects to offer prescription drug
coverage.''; and
(D) in subparagraph (D) (as redesignated by
subparagraph (B)), by inserting ``(with the enhanced
medicare benefits under part E)'' after ``the original
medicare fee-for-service program''.
(2) Information comparing plan options.--Section 1851(d)(4)
(42 U.S.C. 1395w-21(d)(4)) is amended--
(A) in subparagraph (A), by adding at the end the
following new clause:
``(ix) For Medicare+Choice eligible
individuals who are enrolled under part D, the
comparative information described in section
1860D-4(b)(2) if the Medicare+Choice
organization elects to offer prescription drug
coverage.''; and
(B) in subparagraph (D), by inserting ``with
respect to eligible beneficiaries who elect to receive
enhanced medicare benefits under part E'' after ``under
parts A and B''.
SEC. 308. BENEFITS AND BENEFICIARY PROTECTIONS UNDER COMPETITIVE
MEDICARE+CHOICE PLANS.
(a) Basic Benefits.--Section 1852(a) (42 U.S.C. 1395w-22(a)(1)(A))
is amended--
(1) in paragraph (1)--
(A) by striking subparagraph (A) and inserting the
following new subparagraph:
``(A) those items and services (other than hospice
care) for which benefits are available under parts A
and B to individuals residing in the area served by the
plan and who have elected to receive enhanced medicare
benefits under part E;'';
(B) by redesignating subparagraph (B) as
subparagraph (C);
(C) by inserting after subparagraph (A) the
following new subparagraph:
``(B) if the Medicare+Choice organization elects to
offer prescription drug coverage, prescription drug
coverage under part D to individuals who are enrolled
under that part and who reside in the area served by
the plan; and''; and
(D) in subparagraph (C) (as redesignated by
paragraph (2)), by striking ``1854(f)(1)(A)'' and
inserting ``1854(d)(1)'';
(2) in paragraph (2), by striking ``parts A and B
(including any balance billing permitted under such parts'' and
inserting ``part E (including any balance billing permitted
under such part'';
(3) in paragraph (3), by adding at the end the following
new subparagraph:
``(D) Requirement of enrollment in part d to
receive prescription drug benefits.--Notwithstanding
the preceding provisions of this paragraph, the
Secretary may not approve any supplemental health care
benefit that provides for the coverage of any
prescription drug (other than that required under part E).''; and
(4) in paragraph (5), by striking ``Health Care Financing
Administration'' and inserting ``Medicare Competitive Agency''
in the flush matter following subparagraph (B).
(b) ESRD Antidiscrimination.--Section 1852(b)(1) (42 U.S.C. 1395w-
22(b)(1)) is amended to read as follows:
``(1) Beneficiaries.--A Medicare+Choice organization may
not deny, limit, or condition the coverage or provision of
benefits under this part, for individuals permitted to be
enrolled with the organization under this part, based on any
health status-related factor described in section 2702(a)(1) of
the Public Health Service Act.''.
(c) Disclosure Requirements.--Section 1852(c)(1)(B) (42 U.S.C.
1395w-22(c)(1)(B)) is amended by striking ``section 1851(d)(3)(A)'' and
inserting ``subparagraphs (A) and (B) of section 1851(d)(3)''.
(d) Assuring Access to Services in Medicare+Choice Private Fee-For-
Service Plans.--Section 1852(d)(4)(A) is amended by striking ``part A,
part B, or both, for such services, or'' and inserting ``part E for
such services (and, if the Medicare+Choice organization elects to offer
prescription drug coverage, that are not less than the payment rates
provided under part D for such services for Medicare+Choice eligible
individuals enrolled under that part); or''.
(e) Information on Beneficiary Liability for Medicare+Choice
Private Fee-For-Service Plans.--Section 1852(k)(2)(C)(i) (42 U.S.C.
1395w-22(k)(2)(C)(i)) is amended by striking ``parts A and B'' and
inserting ``part E, under part D for individuals enrolled under that
part (if the Medicare+Choice organization elects to offer prescription
drug coverage),''.
SEC. 309. PAYMENTS TO MEDICARE+CHOICE ORGANIZATIONS FOR ENHANCED
MEDICARE BENEFITS UNDER PART E BASED ON RISK-ADJUSTED
BIDS.
(a) In General.--Section 1853(a)(1)(A) (42 U.S.C. 1395w-
23(a)(1)(A)) is amended to read as follows:
``(1) Monthly payments.--Under a contract under section
1857 and subject to subsections (f), (h), and (j) and section
1859(e)(4), the Secretary shall make, to each Medicare+Choice
organization, with respect to coverage of an individual for a
month under this part in a Medicare+Choice payment area,
separate monthly payments with respect to--
``(A) enhanced medicare benefits under part E in
accordance with subsection (d); and
``(B) if the Medicare+Choice organization elects to
offer prescription drug coverage, benefits under part D
in accordance with subsection (k) for individuals
enrolled under that part.''.
(b) Conforming Amendment.--Section 1853(g)(1)(A) (42 U.S.C. 1395w-
23(g)(1)(A)) is amended by inserting ``as part of the enhanced medicare
benefits elected under part E of'' before ``the original medicare fee-
for-service program option''.
SEC. 310. SEPARATE PAYMENTS TO MEDICARE+CHOICE ORGANIZATIONS FOR PART D
BENEFITS.
(a) In General.--Section 1853 (42 U.S.C. 1395w-27) is amended by
adding at the end the following new subsection:
``(k) Availability of Prescription Drug Benefits.--
``(1) Scope of prescription drug benefits.--
``(A) Availability of standard coverage.--If a
Medicare+Choice organization elects to offer
prescription drug coverage under a Medicare+Choice
plan, such organization shall make such coverage (other
than that required under part E) available to each
enrollee under that plan who is also enrolled under
part D that includes only standard coverage and that
meets the requirements of this subsection.
``(B) Additional qualified prescription drug
coverage.--In addition to the standard coverage option
made available to each enrollee under paragraph (1), a
Medicare+Choice plan may make available to each
enrollee that is also enrolled under part D, other
qualified prescription drug coverage (other than that
required under part E) that meets the requirements of
this subsection under a Medicare+Choice plan offered
under this part.
``(C) Requirement of enrollment in part d to
receive prescription drug benefits.--A Medicare+Choice
organization may not provide for the coverage of any
prescription drugs (other than that required under part
E) to an enrollee unless that enrollee is also enrolled
under part D.
``(2) Payment of full amount of premium to organizations
for qualified prescription drug coverage.--For each year
(beginning with 2005), the Secretary shall pay to each
Medicare+Choice organization offering a Medicare+Choice plan
that provides qualified prescription drug coverage in which a
Medicare+Choice eligible individual is enrolled, an amount
equal to the full amount of the monthly premium submitted under
section 1854(a)(2)(B) on behalf of each such individual
enrolled in such plan for the year, as adjusted using the risk
adjusters that apply to the standard coverage under section
1853(b)(4)(B).
``(3) Amount of medicare+choice monthly obligation for
qualified prescription drug coverage.--In the case of a
Medicare+Choice eligible individual receiving qualified
prescription drug coverage under a Medicare+Choice plan, the
obligation for qualified prescription drug coverage of such
individual in a year shall be determined as follows:
``(A) Premiums equal to the monthly national
average.--If the amount of the monthly premium for
qualified prescription drug coverage submitted under
section 1854(a)(2)(B) for the plan for the year is
equal to the monthly national average premium (as
computed under section 1860D-15) for the year, the monthly obligation
of the individual in that year shall be an amount equal to the
applicable percent (as defined in section 1860D-17(c)) of the amount of
the monthly national average premium.
``(B) Premiums that are less than the monthly
national average.--If the amount of the monthly premium
for qualified prescription drug coverage submitted
under section 1854(a)(2)(B) for the plan for the year
is less than the monthly national average premium (as
computed under section 1860D-15) for the year, the
monthly obligation of the individual in that year shall
be an amount equal to--
``(i) the applicable percent (as defined in
section 1860D-17(c)) of the amount of the
monthly national average premium; minus
``(ii) the amount by which the monthly
national average premium exceeds the amount of
the premium submitted under section
1854(a)(2)(B).
``(C) Premiums that are greater than the monthly
national average.--If the amount of the monthly premium
for qualified prescription drug coverage submitted
under section 1854(a)(2)(B) for the plan for the year
exceeds the monthly national average premium (as
computed under section 1860D-15) for the year, the
monthly obligation of the individual in that year shall
be an amount equal to the sum of--
``(i) the applicable percent (as defined in
section 1860D-17(c)) of the amount of the
monthly national average premium; plus
``(ii) the amount by which the premium
submitted under section 1854(a)(2)(B) exceeds
the amount of the monthly national average
premium.
``(4) Collection of medicare+choice monthly obligation for
qualified prescription drug coverage.--The provisions of
section 1860D-18, including subsection (b) of such section,
shall apply to the amount of the monthly premium required to be
paid by a Medicare+Choice eligible individual receiving
qualified prescription drug coverage under a Medicare+Choice
plan (as determined under paragraph (3)) in the same manner as
such provisions apply to the monthly beneficiary obligation
required to be paid by an eligible beneficiary enrolled in a
Medicare Prescription Drug plan.
``(5) Compliance with additional beneficiary protections.--
With respect to the offering of qualified prescription drug
coverage by a Medicare+Choice organization under a
Medicare+Choice plan, the organization and plan shall meet the
requirements of section 1860D-5, including requirements
relating to information dissemination and grievance and
appeals, in the same manner as they apply to an eligible entity
and a Medicare Prescription Drug plan under part D. The
Secretary shall waive such requirements to the extent the
Secretary determines that such requirements duplicate
requirements otherwise applicable to the organization or plan
under this part.
``(6) Coverage of prescription drugs for enrollees in plans
that do not offer prescription drug coverage.--If an individual
who is enrolled under part D is enrolled in a Medicare+Choice
plan that does not offer prescription drug coverage, such
individual shall be permitted to enroll for prescription drug
coverage under such part in the same manner as if such
individual was not enrolled in a Medicare+Choice plan.
``(7) Availability of premium subsidy and cost-sharing
reductions for low-income enrollees.--For provisions--
``(A) providing premium subsidies and cost-sharing
reductions for low-income individuals receiving
qualified prescription drug coverage through a
Medicare+Choice plan, see section 1860D-19; and
``(B) providing a Medicare+Choice organization with
insurance subsidy payments for providing qualified
prescription drug coverage through a Medicare+Choice
plan, see section 1860D-20.
``(8) Qualified prescription drug coverage; standard
coverage.--For purposes of this part, the terms `qualified
prescription drug coverage' and `standard coverage' have the
meanings given such terms in paragraphs (9) and (10),
respectively, of section 1860D.''.
(b) Sanctions for Improper Prescription Drug Coverage.--Section
1857(g)(1) (42 U.S.C. 1395w-27(g)(1)) is amended--
(1) in subparagraph (F), by striking ``or'' after the
semicolon at the end;
(2) in subparagraph (G), by adding ``or'' after the
semicolon at the end; and
(3) by adding at the end the following new subparagraph:
``(H) charges any individual an amount in excess of
the Medicare+Choice monthly obligation for qualified
prescription drug coverage under section 1853(k)(3),
provides coverage for prescription drugs that is not
qualified prescription drug coverage (as defined in
section 1853(k)(7)), offers prescription drug coverage,
but does not make standard prescription drug coverage
available (as defined in such section), or provides
coverage for prescription drugs (other than those
covered under part E) to an individual who is not
enrolled under part D;''.
SEC. 311. ADMINISTRATION BY THE MEDICARE COMPETITIVE AGENCY.
On and after January 1, 2005, the Medicare+Choice program under
part C of title XVIII of the Social Security Act shall be administered
by the Medicare Competitive Agency in accordance with subpart 3 of part
D of such title (as added by section 101), and, in accordance
with section 1860D-25(c)(3)(C) of such Act (as added by section 101),
each reference to the Secretary made in this title, or the amendments
made by this title, shall be deemed to be a reference to the
Administrator of the Medicare Competitive Agency.
SEC. 312. CONTINUED CALCULATION OF ANNUAL MEDICARE+CHOICE CAPITATION
RATES.
(a) Continued Calculation.--
(1) In general.--Section 1853(c) (as amended by subsection
(b)) is amended by adding at the end the following new
paragraph:
``(7) Transition to medicare+choice competition.--
``(A) In general.--For each year (beginning with
2005) payments to Medicare+Choice plans shall not be
computed under this subsection, but instead shall be
based on the payment amount determined under subsection
(d).
``(B) Continued calculation of capitation rates.--
For each year (beginning with 2004) the Secretary shall
calculate and publish the annual Medicare+Choice
capitation rates under this subsection and shall use
the annual Medicare+Choice capitation rate determined
under subsection (c)(1)(B) for purposes of determining
the benchmark amount under subsection (a)(4).''.
(2) Conforming amendment.--Section 1853(c)(1) (42 U.S.C.
1395w-23(c)(1)) is amended by striking ``For purposes of this
part, subject to paragraphs (6)(C) and (7),'' and inserting
``For purposes of making payments under this part for years
before 2004 and for purposes of calculating the annual
Medicare+Choice capitation rates under paragraph (7) beginning
with such year, subject to paragraph (6)(C),'' in the matter
preceding subparagraph (A).
(b) Inclusion of Costs of VA and DoD Military Facility Services in
Continued Calculation.--Section 1853(c) (42 U.S.C. 1395w-23(c)), as
amended by subsection (a)(1), is amended by adding at the end the
following new paragraph:
``(8) Inclusion of costs of va and dod military facility
services to medicare-eligible beneficiaries.--For purposes of
determining the blended capitation rate under subparagraph (A)
of paragraph (1) and the minimum percentage increase under
subparagraph (C) of such paragraph for a year, the annual per
capita rate of payment for 1997 determined under section
1876(a)(1)(C) shall be adjusted to include in such rate, to the
extent practicable, the Secretary's estimate, on a per capita
basis, of the amount of additional payments that would have
been made in the area involved under this title if individuals
entitled to benefits under this title had not received services
from facilities of the Department of Veterans Affairs or the
Department of Defense.''.
SEC. 313. FIVE-YEAR EXTENSION OF MEDICARE COST CONTRACTS.
(a) In General.--Section 1876(h)(5)(C) (42 U.S.C. 1395mm(h)(5)(C)),
as redesignated by section 634(1) of BIPA (114 Stat. 2763A-568), is
amended by striking ``2004'' and inserting ``2009''.
(b) Effective Date.--The amendment made by subsection (a) shall
take effect on the date of enactment of this Act.
SEC. 314. EFFECTIVE DATE.
(a) In General.--Except as provided in section 306(b)(1)(B),
section 313(b), and subsection (b), the amendments made by this title
shall apply to plan years beginning on and after January 1, 2005.
(b) Medicare+Choice MSA Plans.--Notwithstanding any provision of
this title, the Secretary shall apply the payment and other rules that
apply with respect to an MSA plan described in section 1851(a)(2)(B) of
the Social Security Act (42 U.S.C. 1395w-21(a)(2)(B)) as if this title
had not been enacted.
<all>
Introduced in Senate
Read twice and referred to the Committee on Finance.
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