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[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2469 Introduced in House (IH)]

108th CONGRESS
  1st Session
                                H. R. 2469

    To amend the Social Security Act to modify the Medicare Program.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                             June 12, 2003

Mr. Terry (for himself, Mr. Tancredo, Mrs. Musgrave, Mr. Sessions, Mr. 
  Manzullo, and Mr. Jenkins) introduced the following bill; which was 
  referred to the Committee on Ways and Means, and in addition to the 
   Committee on Energy and Commerce, for a period to be subsequently 
   determined by the Speaker, in each case for consideration of such 
 provisions as fall within the jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL

 
    To amend the Social Security Act to modify the Medicare Program.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Medicare Reform 
Act of 2003''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Establishment of Medicare premium support system.
     ``TITLE XXII--ESTABLISHMENT OF MEDICARE PREMIUM SUPPORT SYSTEM

        ``Sec. 2200. Construction; references; general definitions.
                    ``Part A--Premium Support System

        ``Sec. 2201. Offering of benefits through Medicare plans.
        ``Sec. 2202. Standard and high option Medicare plans.
        ``Sec. 2203. Submission of benefit packages and premium rates 
                            for Medicare plans.
        ``Sec. 2204. Government contribution toward coverage and 
                            beneficiary premium.
        ``Sec. 2205. Subsidized premiums for low-income individuals to 
                            enroll in high option Medicare plans.
        ``Sec. 2206. Relation to certain laws; treatment of current 
                            plans.
                     ``Part B--Medicare Trust Fund

        ``Sec. 2211. Medicare Trust Fund.
        ``Sec. 2212. Programmatic insolvency and limitation on general 
                            revenue financing.
Sec. 3. Conforming amendments to the Internal Revenue Code of 1986.

SEC. 2. ESTABLISHMENT OF MEDICARE PREMIUM SUPPORT SYSTEM.

    The Social Security Act is amended by adding at the end the 
following:

     ``TITLE XXII--ESTABLISHMENT OF MEDICARE PREMIUM SUPPORT SYSTEM

``SEC. 2200. CONSTRUCTION; REFERENCES; GENERAL DEFINITIONS.

    ``(a) Construction of Title.--The provisions of this title shall be 
construed to modify and supersede the provisions and operation of title 
XVIII to the extent such provisions are inconsistent with the 
provisions of this title.
    ``(b) References to Medicare Provisions.--Any reference in any law 
or regulation (other than in this title) to any provision of title 
XVIII is deemed a reference to such provision as modified through the 
operation of this title.
    ``(c) Definitions Relating to Medicare Plans.--
            ``(1) Medicare plan.--The term `Medicare plan' means a 
        health benefits plan which the Secretary permits to be offered 
        by an entity that is licensed under State law to provide health 
        benefits plans in the State involved to Medicare beneficiaries 
        under this title.
            ``(2) High option medicare plan.--The term `high option 
        Medicare plan' means a Medicare plan that includes stop loss 
        coverage consistent with section 2202(b).
            ``(3) Standard medicare plan.--The term `standard Medicare 
        plan' means a Medicare plan that is not a high option Medicare 
        plan.
            ``(4) FEHBP.--The term `FEHBP' means the Federal Employees 
        Health Benefits program under chapter 89 of title 5, United 
        States Code.
    ``(d) Other General Definitions.--For purposes of this title:
            ``(1) Medicare beneficiary.--The term `Medicare 
        beneficiary' means an individual entitled to benefits under 
        part A of title XVIII, enrolled for benefits under part B of 
        such title, or both.
            ``(2) Medicare trust fund.--The term `Medicare Trust Fund' 
        means such trust fund as established under section 2211.

                    ``Part A--Premium Support System

``SEC. 2201. OFFERING OF BENEFITS THROUGH MEDICARE PLANS.

    ``(a) Election of Coverage Through a Medicare Plan.--
            ``(1) Continued entitlement to medicare benefits.--
        Effective January 1, 2008, in accordance with this title, 
        Medicare beneficiaries shall continue to be entitled to receive 
        benefits under title XVIII (as modified by this title) and with 
        respect to medicare beneficiaries first eligible for benefits 
        on or after January 1, 2008, shall only receive such benefits 
        through enrollment in a Medicare plan.
            ``(2) Election for certain medicare beneficiaries to retain 
        current medicare benefits program.--In the case of a medicare 
        beneficiary who was first eligible for benefits under title 
        XVIII before January 1, 2008, such beneficiaries may make a 
        one-time, irrevocable election, in a form and manner determined 
        by the Secretary to continue to receive benefits for items and 
services for which payment may be made under title XVIII.
            ``(3) Enrollment process.--The Secretary shall establish a 
        process for the enrollment of Medicare beneficiaries under 
        Medicare plans that is based, except as the Secretary may 
        provide, upon the process for enrollment for health plans under 
        FEHBP, including provision of information and open enrollment 
        and disenrollment opportunities.
            ``(4) Contract period.--Each contract under this part with 
        an entity offering a Medicare plan shall be for a term of at 
        least 2 years, as determined by the Secretary, and may be made 
        automatically renewable from term to term in the absence of 
        notice by either party of intention to terminate at the end of 
        the current term.
            ``(5) Plan period.--The plan period for a Medicare plan 
        offered by an entity with a contract under paragraph (4) shall 
        be a term of 2 years.
    ``(b) Beneficiary Protections and Other Qualifications for Medicare 
Plans.--In order to be offered as a Medicare plan under this part, 
except as provided in this title, the plan and the entity offering the 
plan shall meet the requirements applicable to health benefits plans 
and qualified carriers under FEHBP, including--
            ``(1) the offering and scope of benefits;
            ``(2) protections for beneficiaries enrolled in the plans; 
        and
            ``(3) requirements for financial solvency.
    ``(c) Selection of Plans.--
            ``(1) In general.--With respect to each plan period under 
        subsection (a)(5), a medicare beneficiary shall be deemed to 
        have elected to remain enrolled in the medicare plan in which 
        the beneficiary was enrolled during the prior plan period.
            ``(2) Default.--In the case of a medicare beneficiary who 
        fails to enroll in a medicare plan for a plan period, the 
        Secretary shall provide for enrollment of the beneficiary under 
        a medicare plan offered in the State in which the beneficiary 
        resides that the Secretary determines to be appropriate.
    ``(d) Exclusive Payment Methodology.--Except as provided in 
subsection (a)(2) and other provisions of this title, for items and 
services furnished on or after January 1, 2008--
            ``(1) payment to an entity offering a Medicare plan in the 
        amounts provided under this title shall be instead of any 
        amounts that may be otherwise payable under title XVIII; and
            ``(2) only the entity offering the Medicare plan is 
        eligible to receive payment for items and services under such 
        title.

``SEC. 2202. STANDARD AND HIGH OPTION MEDICARE PLANS.

    ``(a) Benefits Under Standard Plans.--Subject to section 
2203(b)(2), the Secretary may approve benefits submitted under section 
2203(a)(1) with respect to a standard plan only if the plan include 
benefits for the items and services described in subsection (d).
    ``(b) Benefits Under High Option Plans.--The Secretary may approve 
the benefits submitted under section 2203(a)(1) with respect to a high 
option Medicare plan only if the plan includes benefits required for a 
standard plan under subsection (a) and also includes--
            ``(1) rates of beneficiary deductible, cost-sharing, and 
        coinsurance requirements that are lower than such rates 
        applicable under standard plans under subsection (a); and
            ``(2) stop-loss coverage benefits that are designed to 
        limit the application of beneficiary cost-sharing for covered 
        benefits in a year after incurring out-of-pocket covered 
        expenditures that exceed a limit applicable to health benefits 
        plans under FEHBP.
    ``(c) Requirement To Offer High Option Medicare Plan.--The 
Secretary may not approve the offering of a standard Medicare plan by 
an entity under this title in an area unless the entity also offers a 
high option Medicare plan in that area that the Secretary approves 
under this title.
    ``(d) Benefits Described.--For purposes of this part, a Medicare 
plan shall provide for coverage for the following items and services 
that are medically necessary and appropriate:
            ``(1) Hospital services, including inpatient, outpatient, 
        and 24-hour a day emergency services.
            ``(2) Services of health professionals, such as physicians 
        services and services that would be physicians services if 
        furnished by a physician but are provided by any other licensed 
        health care professional.
            ``(3) Emergency and ambulatory medical and surgical 
        services furnished by a facility that is not a hospital.
            ``(4) Clinical preventive services.
            ``(5) Services for pregnant women.
            ``(6) Hospice care.
            ``(7) Home health care and home infusion drug therapy 
        services.
            ``(8) Extended care services, as defined in section 
        1861(h).
            ``(9) Ambulance services, including ground, air, and water 
        transportation, as appropriate.
            ``(10) Outpatient laboratory, radiology, and diagnostic 
        services.
            ``(11) Outpatient prescription drugs and biologicals.
            ``(12) Outpatient rehabilitation services, including 
        outpatient occupational therapy, physical therapy, and speech 
        pathology services.
            ``(13) Durable medical equipment and prosthetic and 
        orthotic devices.
            ``(14) Vision care, to the same extent such services are a 
        covered benefit under title XVIII as of the date of the 
        enactment of this Act.
    ``(e) Scope of Benefits.--Each Medicare plan shall establish the 
scope of benefits applicable under the plan, subject to approval by the 
Secretary, including the scope of outpatient prescription drugs under 
the plan, any formulary restrictions for such drugs, and any copayment 
structure under such formulary (if any).
    ``(f) Paperwork Reduction.--Each Medicare plan shall comply with 
the provisions of part C of title XI, relating to administrative 
simplification and paperwork reduction with respect to health care 
transactions for health care providers submitting claims to health 
plans.
    ``(g) Licensure.--Each entity offering a Medicare plan shall be 
licensed under State law to provide health benefits plans in the State.

``SEC. 2203. SUBMISSION OF BENEFIT PACKAGES AND PREMIUM RATES FOR 
              MEDICARE PLANS.

    ``(a) In General.--Each entity that intends to offer a Medicare 
plan in a year (beginning with 2008) in a State shall submit to the 
Secretary, at such time (before the beginning of each open enrollment 
period for each year) and in such manner as the Secretary specifies, 
such information as the Secretary may require to carry out title XVIII 
(as modified by this title). Such information shall include information 
on each of the following:
            ``(1) Benefits.--A description of the benefits under the 
        plan.
            ``(2) Premium bid.--The premium proposed to be charged for 
        enrollment under the plan.
    ``(b) Review and Approval by Secretary.--
            ``(1) In general.--The Secretary shall review the benefits 
        and premium bids submitted under subsection (a).
            ``(2) Authority to negotiate.--The Secretary may negotiate 
        with the entities offering such plans regarding such terms and 
        conditions but may approve such a submission only if the 
        Secretary finds that it complies with the requirements of this 
        section and section 2202. The terms and conditions with respect 
        to which the Secretary may negotiate include--
                    ``(A) the scope of benefits offered under the plan;
                    ``(B) the premium bid for the benefits so offered; 
                and
                    ``(C) the assumptions of the entities offering the 
                plan with respect to cost, risk, geographic variation, 
                and projected number of enrollees.
            ``(3) Special rule for high option medicare plans.--If 
        information is submitted to establish that a Medicare plan is a 
        high option Medicare plan, the Secretary shall determine 
        whether or not the plan meets the requirements to be a high 
        option Medicare plan.
            ``(4) Benefit approval.--Subject to section 2202, the 
        following applies to approval by the Secretary of benefits 
        submitted under subsection (a)(1):
                    ``(A) In general.--The Secretary may approve 
                benefits submitted under subsection (a)(1) only if the 
                benefits are not designed in such a manner that the 
                Secretary finds that it is likely to result in 
                favorable selection of beneficiaries.
                    ``(B) Variation in cost-sharing.--For purposes of 
                meeting the requirement of section 2202, the Secretary 
                shall permit reasonable variation in cost-sharing so 
                long as actuarial equivalence of total cost-sharing for 
                the benefits described in such section is maintained. 
                Nothing in this subparagraph shall be construed as 
                preventing a Medicare plan from providing, as an 
                additional benefit, a lower level of cost-sharing from 
                that otherwise described in title XVIII (as modified by 
                this title).
            ``(5) Premium approval.--The Secretary may approve premiums 
        submitted under subsection (a)(2) only if the Secretary finds 
        that the premium rates are adequate in terms of actuarial 
        soundness to assure the financial solvency of the entity 
        offering the plan.
            ``(6) Statewide service area.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), for purposes of this title, a State 
                shall be the service area for a Medicare plan.
                    ``(B) Discretion to establish multistate areas.--If 
                the Secretary determines that medicare plans will not 
                be offered in a State for a plan period, the Secretary 
                may provide for a multistate service area to ensure the 
                offering of such plans in such State during such plan 
                period.
    ``(c) Providing Information To Promote Informed Choice.--The 
Secretary shall provide for activities to broadly disseminate 
information to medicare beneficiaries (and prospective medicare 
beneficiaries) on the coverage options under medicare plans provided 
under this title in order to promote an active, informed selection 
among such options.

``SEC. 2204. GOVERNMENT CONTRIBUTION TOWARD COVERAGE AND BENEFICIARY 
              PREMIUM.

    ``(a) Premium Support Payment by Government.--Except as provided in 
subsection (d), the amount of payment to an entity offering a Medicare 
plan in a State for a Medicare beneficiary (other than a qualified low-
income Medicare beneficiary, as defined in section 2115(a)) residing in 
the State who is enrolled in the plan for a year is equal to the bid 
amount determined or negotiated, as the case may be, by the Secretary 
under section 2203.
    ``(b) Computation and Collection of Beneficiary Premium.--
            ``(1) Computation of total beneficiary premium.--
                    ``(A) In general.--For purposes of this section, 
                the amount of the total beneficiary premium for a 
                Medicare beneficiary enrolled in a Medicare plan is 
                equal 30 percent (or in the case of an individual to 
                whom subsection (c) applies, the means-tested premium 
                percentage determined under such subsection) of the 
                amount of payment to the entity offering the Medicare 
                plan under subsection (a).
                    ``(B) No application to qualified low-income 
                medicare beneficiaries.--For provisions relating to 
                computation of beneficiary premiums for qualified low-
                income Medicare beneficiaries, see section 2205(b).
            ``(2) Collection of amount in same manner as part b 
        premium.--
                    ``(A) In general.--The amount of the total 
                beneficiary premium under paragraph (1) shall be paid 
                to the Medicare Trust Fund in the same manner as 
                monthly premiums under part B of title XVIII were 
                payable to the credit of the Federal Supplementary 
                Medical Insurance Trust Fund under section 1840 (as in 
                effect as of the date of the enactment of this title).
                    ``(B) Collection.--In order to carry out 
                subparagraph (A), the Secretary shall transmit to the 
                Commissioner of Social Security--
                            ``(i) at the beginning of each year, 
                        information on the name, social security 
                        account number, and the total beneficiary 
                        premium owed by each individual enrolled in a 
                        Medicare plan for months in the year; and
                            ``(ii) periodically throughout the year, 
                        information to update the information 
                        previously transmitted under this subparagraph 
                        during the year.
    ``(c) Means-Tested Premium Percentage.--
            ``(1) Increase in premium amount.--
                    ``(A) In general.--Subject to subparagraph (B), in 
                the case of an Medicare beneficiary whose modified 
                adjusted gross income for a taxable year ending with or 
                within a calendar year (as initially determined by the 
                Secretary in accordance with paragraph (2)) is equal to 
                or greater than 300 percent of the official poverty 
                line (referred to in section 1905(p)(2)(A)), the 
                Secretary shall increase the amount of the total 
                beneficiary premium under subsection (b) for months in 
                the calendar year by 10 percent for each multiple of 
                100 percent by which such individual's income exceeds 
                200 percent of such poverty line.
                    ``(B) Upper limit on premium amount.--In no case 
                may the application of subparagraph (A) result in a 
                premium contribution amount under subsection (b) of 
                greater than 70 percent of the amount of payment to the 
                entity offering the Medicare plan under subsection (a).
            ``(2) Determination of Income.--The Secretary shall make an 
        initial determination of the amount of an individual's modified 
        adjusted gross income for a taxable year ending with or within 
        a calendar year for purposes of this subsection as follows:
                    ``(A) Secretary's estimate of amount.--Not later 
                than September 1 of the year preceding the year, the 
                Secretary shall provide notice to each individual whom 
                the Secretary finds (on the basis of the individual's 
                actual modified adjusted gross income for the most 
                recent taxable year for which such information is 
                available or other information provided to the 
                Secretary by the Secretary of the Treasury) will be 
                subject to an increase under this subsection that the 
                individual will be subject to such an increase, and 
                shall include in such notice the Secretary's estimate 
                of the individual's modified adjusted gross income for 
                the year.
                    ``(B) Modification of secretary's estimate.--If, 
                during the 30-day period beginning on the date notice 
                is provided to an individual under subparagraph (A), 
                the individual provides the Secretary with information 
                on the individual's anticipated modified adjusted gross 
                income for the year, the amount initially determined by 
                the Secretary under this paragraph with respect to the 
                individual shall be based on the information provided 
                by the individual.
                    ``(C) Default income amount.--If an individual does 
                not provide the Secretary with information under 
                subparagraph (B), the amount initially determined by 
                the Secretary under this paragraph with respect to the 
                individual shall be the amount included in the notice 
                provided to the individual under subparagraph (A).
            ``(3) Adjustment of premiums to account for 
        misestimation.--
                    ``(A) In general.--If the Secretary determines (on 
                the basis of final information provided by the 
                Secretary of the Treasury) that the amount of an 
                individual's actual modified adjusted gross income for 
                a taxable year ending with or within a calendar year is 
                less than or greater than the amount initially 
                determined by the Secretary under paragraph (3), the 
                Secretary shall increase or decrease the amount of the 
                individual's monthly premium under this section (as the 
                case may be) for months during the following calendar 
                year by an amount equal to \1/12\ of the difference 
                between--
                            ``(i) the total amount of all monthly 
                        premiums paid by the individual under this 
                        section during the previous calendar year; and
                            ``(ii) the total amount of all such 
                        premiums which would have been paid by the 
                        individual during the previous calendar year if 
                        the amount of the individual's modified 
                        adjusted gross income initially determined 
                        under paragraph (3) were equal to the actual 
                        amount of the individual's modified adjusted 
                        gross income determined under this paragraph.
                    ``(B) Application of interest charge.--
                            ``(i) In general.--In the case of an 
                        individual for whom the amount initially 
                        determined by the Secretary under paragraph (3) 
                        is based on information provided by the 
                        individual under subparagraph (B) of such 
                        paragraph, if the Secretary determines under 
                        subparagraph (A) that the amount of the 
                        individual's actual modified adjusted gross 
                        income for a taxable year is greater than the 
                        amount initially determined under paragraph 
                        (3), the Secretary shall increase the amount 
                        otherwise determined for the year under 
                        subparagraph (A) by interest in an amount equal 
                        to the sum of the amounts determined under 
clause (ii) for each of the months described in clause (ii).
                            ``(ii) Computation of interest charge.--
                        Interest shall be computed for any month in an 
                        amount determined by applying the underpayment 
                        rate established under section 6621 of the 
                        Internal Revenue Code of 1986 (compounded 
                        daily) to any portion of the difference between 
                        the amount initially determined under paragraph 
                        (3) and the amount determined under 
                        subparagraph (A) for the period beginning on 
                        the first day of the month beginning after the 
                        individual provided information to the 
                        Secretary under subparagraph (B) of paragraph 
                        (3) and ending 30 days before the first month 
                        for which the individual's monthly premium is 
                        increased under this paragraph.
                            ``(iii) Waiver of interest charge.--
                        Interest shall not be imposed under this 
                        subparagraph if the amount of the individual's 
                        modified adjusted gross income provided by the 
                        individual under subparagraph (B) of paragraph 
                        (3) was not less than the individual's modified 
                        adjusted gross income determined on the basis 
                        of information shown on the return of tax 
                        imposed by chapter 1 of the Internal Revenue 
                        Code of 1986 for the taxable year involved.
                    ``(C) Enrollment during a portion of the year.--In 
                the case of an individual who is not enrolled under 
                this part for any calendar year for which the 
                individual's monthly premium under this section for 
                months during the year would be increased pursuant to 
                subparagraph (A) if the individual were enrolled under 
                this part for the year, the Secretary may take such 
                steps as the Secretary considers appropriate to recover 
                from the individual the total amount by which the 
                individual's monthly premium for months during the year 
                would have been increased under subparagraph (A) if the 
                individual were enrolled under this part for the year.
                    ``(D) Payments to surviving spouse for enrollees 
                who die during the year.--In the case of a deceased 
                individual for whom the amount of the monthly premium 
                under this section for months in a year would have been 
                decreased pursuant to subparagraph (A) if the 
                individual were not deceased, the Secretary shall make 
                a payment to the individual's surviving spouse (or, in 
                the case of an individual who does not have a surviving 
                spouse, to the individual's estate) in an amount equal 
                to the difference between--
                            ``(i) the total amount by which the 
                        individual's premium would have been decreased 
                        for all months during the year pursuant to 
                        subparagraph (A); and
                            ``(ii) the amount (if any) by which the 
                        individual's premium was decreased for months 
                        during the year pursuant to subparagraph (A).
            ``(4) Modified adjusted gross income defined.--In this 
        subsection, the term `modified adjusted gross income' means 
        adjusted gross income (as defined in section 62 of the Internal 
        Revenue Code of 1986)--
                    ``(A) determined without regard to sections 135, 
                911, 931, and 933 of such Code, and
                    ``(B) increased by the amount of interest received 
                or accrued by the taxpayer during the taxable year 
                which is exempt from tax under such Code.
    ``(d) Payment Terms.--Payment under this section or section 2205(c) 
to an entity offering a Medicare plan shall be made in a manner 
determined by the Secretary and based upon the manner in which payments 
are made to qualified carriers under FEHBP for health benefits plans.
    ``(e) Special Adjustment for Medicare Beneficiaries With End-Stage 
Renal Disease.--
            ``(1) In general.--Subject to paragraph (2), the amount of 
        payment to an entity offering a Medicare plan for a Medicare 
        beneficiary under subsection (a) shall be increased by 20 
        percent for each Medicare beneficiary who is diagnosed with 
        end-stage renal disease.
            ``(2) Exception.--Paragraph (1) shall not apply to a 
        Medicare beneficiary who develops end-stage renal disease while 
        enrolled in a Medicare plan.

``SEC. 2205. SUBSIDIZED PREMIUMS FOR LOW-INCOME INDIVIDUALS TO ENROLL 
              IN HIGH OPTION MEDICARE PLANS.

    ``(a) Qualified Low-Income Medicare Beneficiary Defined.--
            ``(1) In general.--For purposes of this part, the term 
        `qualified low-income Medicare beneficiary' means a Medicare 
        beneficiary whose income (as determined for purposes of section 
        1905(p)) does not exceed 200 percent of the official poverty 
        line (referred to in paragraph (2)(A) of such section) 
        applicable to a family of the size involved and who is enrolled 
        in a high option Medicare plan.
            ``(2) Annual eligibility determination by states.--The 
        Secretary shall establish an arrangement with each State (as 
        defined under section 1861(x) for purposes of title XVIII) 
        under which the State provides for the determination of whether 
        a Medicare beneficiary in the State is a qualified low-income 
        Medicare beneficiary. A determination that a Medicare 
        beneficiary is a qualified low-income Medicare beneficiary 
        shall remain valid for a period of 12 months but is conditioned 
        upon continuing enrollment in a high option Medicare plan.
    ``(b) Payment by Government on Behalf of Qualified Low-Income 
Medicare Beneficiaries.--
            ``(1) Amount.--The amount of payment to an entity offering 
        a Medicare plan for a qualified low-income Medicare beneficiary 
        who is enrolled in the plan for a year is equal to--
                    ``(A) in the case of a plan that is the lowest cost 
                high option plan offered in the State, the full premium 
                for the plan determined or negotiated, as the case may 
                be, by the Secretary under section 2203; and
                    ``(B) in the case of a plan that is not the lowest 
                cost high option plan, the full premium for the plan 
                described in subparagraph (A).
If a qualified low-income Medicare beneficiary elects a plan referred 
to in subparagraph (B), the beneficiary is responsible for payment, in 
the manner prescribed in subsection (c), of any premium in excess of 
the amount payable by the Secretary under such subparagraph.
            ``(2) Geographic and risk adjustment.--
                    ``(A) In general.--Subject to subparagraph (B), the 
                Secretary shall establish an appropriate methodology 
                for adjusting the amount paid under paragraph (1) to 
                take into account, in a budget neutral manner, 
                appropriate variations in costs--
                            ``(i) based on provision of items and 
                        services in different geographic areas; and
                            ``(ii) based on differences in the 
                        actuarial risk of different enrollees being 
                        served.
                    ``(B) Considerations.--The provisions of section 
                2204(b)(2)(B) shall apply to establishing adjustors 
                under subparagraph (A) in the same manner as they apply 
                to establishing adjustors under section 2204(b)(2)(A), 
                except that the population for which such adjustors is 
                computed and applicable shall be the population of 
                qualified low-income Medicare beneficiaries.
    ``(c) Collection of Beneficiary Premium (if any).--The provisions 
of section 2204 apply to collection of premiums under subsection 
(b)(1)(B) in the same manner as they apply to collection of premiums 
under section 2204(b)(2).
    ``(d) Construction Relative to Other Benefits.--
            ``(1) No requirement for state medicaid payment.--Nothing 
        in this section shall be construed as requiring a State, under 
        its plan under title XIX, to pay any part of the additional 
        subsidy provided under this section to qualified low-income 
        Medicare beneficiaries.
            ``(2) No medicaid matching for payment.--Insofar as this 
        section applies to an individual, notwithstanding any other 
        provision of law, a State plan under title XIX is not required 
        to provide medical assistance with respect to Medicare cost-
        sharing described in section 1905(p)(3)(A) and Federal 
        financial assistance shall not be available under section 1903 
        with respect to such medical assistance.
            ``(3) Nonduplication of prescription drug benefits.--In the 
        case of prescription drugs provided to a qualified low-income 
        Medicare beneficiary enrolled in a high option Medicare plan to 
        the extent the beneficiary is covered under a State-funded 
        prescription drug program, the entity offering the plan may 
        charge or authorize the provider of such services to charge, in 
        accordance with the charges allowed under the program--
                    ``(A) the State program for payment for the drugs; 
                or
                    ``(B) such beneficiary to the extent that the 
                beneficiary has been paid under such program for such 
                drugs.

``SEC. 2206. RELATION TO CERTAIN LAWS; TREATMENT OF CURRENT PLANS.

    ``(a) In General.--Effective January 1, 2008, the following 
provisions of law are modified as follows, in order to reflect the 
policies specified in this part:
            ``(1) Change in payment rules.--Payment rates established 
        under sections 2204 and 2205 shall supersede the payment rates 
        and amounts applicable under parts A, B, C, and D of title 
        XVIII in the case of individuals enrolled in a medicare plan 
        under this title.
            ``(2) Elimination of adjusted community rate rules.--
        Section 1854(f)(1)(A) (relating to requiring additional 
        benefits) no longer applies in the case of individuals enrolled 
        in a medicare plan under this title.
            ``(3) Elimination of premium regulations.--Section 1854(e) 
        (relating to regulations of Medicare+Choice premiums) no longer 
        applies in the case of individuals enrolled in a medicare plan 
        under this title.
            ``(4) Part b premium.--No separate premium is payable under 
        section 1839 in the case of individuals enrolled in a medicare 
        plan under this title.
            ``(5) Medicaid premium assistance.--Sections 1902(a)(10)(E) 
        and 1905(p)(3)(A), insofar as they require the provision of 
        medical assistance for Medicare cost-sharing described in 
        section 1905(p)(3)(A) for qualified low-income Medicare 
        beneficiaries, no longer apply in the case of individuals 
        enrolled in a medicare plan under this title.
            ``(6) Elimination of restriction on enrollment under 
        certain plans.--Subparagraph (B) of section 1851(a)(3) no 
        longer applies in the case of individuals enrolled in a 
        medicare plan under this title.
The fact that a provision is not cited in this subsection does not 
indicate that the provision is not modified under this title in some 
manner consistent with section 2200(a).
    ``(b) Relation to State Laws.--Any standard established under this 
title or by the Secretary pursuant to this title shall supersede any 
State law or regulation with respect to Medicare plans which are 
offered by entities under this title to the extent such law or 
regulation is inconsistent with such standards.

                     ``Part B--Medicare Trust Fund

``SEC. 2211. MEDICARE TRUST FUND.

    ``(a) Establishment.--Effective January 1, 2008, there is created 
on the books of the Treasury of the United States a trust fund to be 
known as the Medicare Trust Fund.
    ``(b) Amounts in Medicare Trust Fund.--
            ``(1) In general.--The Medicare Trust Fund shall consist of 
        the following amounts:
                    ``(A) Amounts deposited in, or appropriated to, the 
                Medicare Trust Fund as provided in this title.
                    ``(B) Any gifts and bequests made to the Medicare 
                Trust Fund as provided in section 201(i)(1).
            ``(2) Appropriation of hospital insurance taxes.--
                    ``(A) In general.--Beginning January 1, 2008, and 
                for each subsequent year, there is appropriated to the 
                Medicare Trust Fund, out of moneys in the Treasury not 
                otherwise appropriated, an amount equal to such percent 
                of the taxes described in paragraphs (1) and (2) of 
                section 1817(a) that the Secretary estimates reflects 
                the relative weight that benefits under part A 
                represents of the actuarial value of the total benefits 
                under this title.
                    ``(B) Transfer.--The amounts appropriated pursuant 
                to subparagraph (A) shall be transferred from time to 
                time from the general fund in the Treasury to the 
                Medicare Trust Fund. The amount to be transferred under 
                this paragraph shall be determined on the basis of 
                estimates by the Secretary of the Treasury of the 
                taxes, described in such paragraph, paid to or 
                deposited into the Treasury. The Secretary of the 
                Treasury shall make adjustments in amounts subsequently 
                transferred to the extent that prior estimates were in 
                excess of, or were less than, such taxes.
            ``(3) General revenue contribution.--Beginning January 1, 
        2008, and for each subsequent year, there is appropriated to 
        the Medicare Trust Fund, out of moneys in the Treasury not 
        otherwise appropriated, from time to time, an amount equal to 
        the amount by which the aggregate expenditures under this title 
        (including payments made to Medicare plans under section 2204) 
        exceed the sum of--
                    ``(A) the amount appropriated under paragraph (2) 
                for the period involved;
                    ``(B) the premiums collected under sections 
                2204(b)(2) and 2205(c) for such period; and
                    ``(C) the fees collected under section 2206 for 
                such period.
            ``(4) Application to obligations of, and amounts owed to, 
        the part a and b trust funds.--
                    ``(A) Certification.--Beginning January 1, 2008, 
                the Secretary shall periodically certify to the Board 
                of Trustees of the Medicare Trust Fund any amounts that 
                would otherwise be--
                            ``(i) payable from the Federal Hospital 
                        Insurance Trust Fund or the Federal 
                        Supplementary Medical Insurance Trust Fund for 
                        items and services provided prior to such date; 
                        or
                            ``(ii) due to such trust funds for items 
                        and services provided prior to such date.
                    ``(B) Transfers and deposits.--
                            ``(i) Transfers.--If Secretary certifies an 
                        amount pursuant to subparagraph (A)(i), the 
                        Board of Trustees of the Medicare Trust Fund 
                        shall transfer to the Secretary from such trust 
                        fund an amount equal to the amount certified.
                            ``(ii) Deposits.--If Secretary certifies an 
                        amount pursuant to subparagraph (A)(ii), the 
                        Secretary shall deposit in the Medicare Trust 
                        Fund an amount equal to the amount certified.
    ``(c) Application of HI Trust Fund Provisions.--Subject to other 
provisions of this title, the provisions of subsections (b) through (i) 
of section 1817 shall apply to title XVIII (as modified by this title) 
and the Medicare Trust Fund in the same manner as they apply to part A 
of title XVIII and the Federal Hospital Insurance Trust Fund, 
respectively.

``SEC. 2212. PROGRAMMATIC INSOLVENCY AND LIMITATION ON GENERAL REVENUE 
              FINANCING.

    ``(a) Annual Determinations.--In addition to any other duties, the 
Board of Trustees of the Medicare Trust Fund (in this section referred 
to as the `Board of Trustees') shall determine and report to Congress 
as part of its annual report each year the following:
            ``(1) The percentage of total expenditures from the 
        Medicare Trust Fund that is financed by the general revenue 
        contributions described in section 2211(b)(3).
            ``(2) The first fiscal year (if any) that the Medicare 
        Trust Fund is projected to become programmatically insolvent 
        (as defined in subsection (b)).
            ``(3) The first fiscal year (if any) in which the amounts 
        in the Medicare Trust Fund will be insufficient to pay for the 
        total expenses incurred under title XVIII (as revised by this 
        title).
            ``(4) Recommendations to preclude the program from becoming 
        programmatically insolvent.
    ``(b) Programmatic Insolvency Defined.--
            ``(1) In general.--For purposes of this part, the Medicare 
        Trust Fund shall be deemed to be `programmatically insolvent' 
        for a fiscal year if the amount appropriated to the Medicare 
        Trust Fund under section 2211(b)(3) would exceed 40 percent of 
        the amount described in paragraph (2).
            ``(2) Net expenditures on basic benefits.--The amount 
        described in this paragraph is, as estimated by the Board of 
        Trustees in consultation with the Secretary and the Secretary 
        of the Treasury, the total expenditures from the Medicare Trust 
        Fund in the fiscal year involved, reduced by an amount equal to 
        the administrative expenses of the Secretary for that fiscal 
        year.''.

SEC. 3. CONFORMING AMENDMENTS TO THE INTERNAL REVENUE CODE OF 1986.

    (a) Reporting Requirements for Secretary of the Treasury.--
            (1) In general.--Subsection (l) of section 6103 of the 
        Internal Revenue Code of 1986 (relating to confidentiality and 
        disclosure of returns and return information) is amended by 
        adding at the end the following new paragraph:
            ``(19) Disclosure of return information to carry out 
        income-related reduction in medicare part b premium.--
                    ``(A) In general.--The Secretary may, upon written 
                request from the Secretary of Health and Human 
                Services, disclose to officers and employees of the 
                Centers for Medicare & Medicaid Services return 
                information with respect to a taxpayer who is required 
                to pay a monthly premium under section 1839 of the 
                Social Security Act. Such return information shall be 
                limited to--
                            ``(i) taxpayer identity information with 
                        respect to such taxpayer,
                            ``(ii) the filing status of such taxpayer,
                            ``(iii) the adjusted gross income of such 
                        taxpayer,
                            ``(iv) the amounts excluded from such 
                        taxpayer's gross income under sections 135 and 
                        911,
                            ``(v) the interest received or accrued 
                        during the taxable year which is exempt from 
                        the tax imposed by chapter 1 to the extent such 
                        information is available, and
                            ``(vi) the amounts excluded from such 
                        taxpayer's gross income by sections 931 and 933 
                        to the extent such information is available.
                    ``(B) Restriction on use of disclosed 
                information.--Return information disclosed under 
                subparagraph (A) may be used by officers and employees 
                of the Centers for Medicare & Medicaid Services only 
                for the purposes of, and to the extent necessary in, 
                establishing the appropriate monthly premium under 
                section 1839 of the Social Security Act.''
            (2) Conforming amendment.--Paragraphs (3)(A) and (4) of 
        section 6103(p) of such Code are each amended by striking ``or 
        (14)'' each place it appears and inserting ``(14), or (19)''.
    (b) Effective Date.--
            (1) In general.--The amendments made by subsection (a) 
        shall apply to the monthly premium under section 2204 of the 
        Social Security Act for months beginning with January 2008.
            (2) Information for prior years.--The Secretary of Health 
        and Human Services may request information under section 
        6013(l)(15) of the Social Security Act (as added by subsection 
        (c)) for taxable years beginning after December 31, 2007.
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