II 

109TH CONGRESS 

1ST SESSION S. 18 

To amend title XVIII of the Social Security Act to make improvements 

to the medicare program for beneficiaries. 

IN THE SENATE OF THE UNITED STATES 

JANUARY 24, 2005 

Mr. DAYTON (for himself, Mr. REID, Ms. STABENOW, Mrs. FEINSTEIN, Mr. 

KENNEDY, Mr. CORZINE, Mr. SCHUMER, Mrs. MURRAY, Ms. MIKULSKI, 

Mr. LAUTENBERG, Mr. AKAKA, Mr. INOUYE, Mrs. CLINTON, Mr. LEVIN, 

Mr. KERRY, Mr. LEAHY, Mr. ROCKEFELLER, Mr. DODD, Mr. SARBANES, 

and Mr. DURBIN) 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 make 

improvements to the medicare program for beneficiaries. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Meeting Our Responsibility to Medicare Beneficiaries Act 

6 of 2005’’. 

7 (b) TABLE OF CONTENTS.—The table of contents of 

8 this Act is as follows: 
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Sec. 1. Short title; table of contents. 

TITLE I—ELIMINATING SPECIAL INTEREST PREFERENCES 

Sec. 101. Negotiating fair prices for medicare prescription drugs. 

Sec. 102. Elimination of MA Regional Plan Stabilization Fund (Slush Fund). 

Sec. 103. Application of risk adjustment reflecting characteristics for the entire 

medicare population in payments to Medicare Advantage organizations. 

TITLE II—IMPROVING THE MEDICARE PROGRAM FOR 

BENEFICIARIES 

Sec. 201. Eliminating coverage gap. 

Sec. 202. Requiring two prescription drug plans to avoid Federal fallback. 

Sec. 203. Waiver of part D late enrollment penalty for transition period. 

Sec. 204. Improving the transition of full-benefit dual eligible individuals to 

coverage under the medicare drug benefit. 

Sec. 205. Part B premium reduction. 

Sec. 206. Study and report on providing incentives to preserve retiree coverage. 

Sec. 207. Promoting transparency in employer subsidy payments. 

1 TITLE I—ELIMINATING SPECIAL 

2 INTEREST PREFERENCES 

3 SEC. 101. NEGOTIATING FAIR PRICES FOR MEDICARE PRE4 SCRIPTION DRUGS. 

5 (a) IN GENERAL.—Section 1860D–11 of the Social 

6 Security Act (42 U.S.C. 1395w–111) is amended by strik7 ing subsection (i) (relating to noninterference) and by in8 serting the following new subsection: 

9 ‘‘(i) AUTHORITY TO NEGOTIATE PRICES WITH MAN10 UFACTURERS.— 

11 ‘‘(1) IN GENERAL.—The Secretary shall have 

12 authority similar to that of other Federal entities 

13 that purchase prescription drugs in bulk to negotiate 

14 contracts with manufacturers of covered part D 

15 drugs, consistent with the requirements and in fur-
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1 therance of the goals of providing quality care and 

2 containing costs under this part. 

3 ‘‘(2) REQUIRED USE OF AUTHORITY.— 

4 ‘‘(A) FALLBACK PLANS.—The Secretary 

5 shall exercise the authority described in para6 graph (1) with respect to covered part D drugs 

7 offered under each fallback prescription drug 

8 plan under subsection (g). 

9 ‘‘(B) PDPS AND MA–PD PLANS.—In order 

10 to ensure that beneficiaries enrolled under pre11 scription drug plans and MA–PD plans and 

12 taxpayers are getting fair and affordable prices 

13 for covered part D drugs that reflect the bulk 

14 purchasing power of such enrollees, the Sec15 retary shall exercise the authority described in 

16 paragraph (1) with respect to such drugs of17 fered under all such plans if the Secretary de18 termines that the negotiated prices available 

19 under such plans for such drugs are not fair 

20 and affordable prices compared to the prices ob21 tained by other Federal government programs 

22 for such drugs.’’. 

23 (b) EFFECTIVE DATE.—The amendment made by 

24 this section shall take effect as if included in the enact25 ment of section 101(a) of the Medicare Prescription Drug, 
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1 Improvement, and Modernization Act of 2003 (Public Law 

2 108–173; 117 Stat. 2071). 

3 SEC. 102. ELIMINATION OF MA REGIONAL PLAN STABILIZA4 TION FUND (SLUSH FUND). 

5 (a) IN GENERAL.—Subsection (e) of section 1858 of 

6 the Social Security Act (42 U.S.C. 1395w–27a) is re7 pealed. 

8 (b) CONFORMING AMENDMENT.—Section 1858(f)(1) 

9 of the Social Security Act (42 U.S.C. 1395w–27a(f)(1)) 

10 is amended by striking ‘‘subject to subsection (e),’’. 

11 (c) EFFECTIVE DATE.—The amendments made by 

12 this section shall take effect as if included in the enact13 ment of section 221(c) of the Medicare Prescription Drug, 

14 Improvement, and Modernization Act of 2003 (Public Law 

15 108–173; 117 Stat. 2181). 

16 SEC. 103. APPLICATION OF RISK ADJUSTMENT REFLECT17 ING CHARACTERISTICS FOR THE ENTIRE 

18 MEDICARE POPULATION IN PAYMENTS TO 

19 MEDICARE ADVANTAGE ORGANIZATIONS. 

20 Effective January 1, 2006, in applying risk adjust21 ment factors to payments to organizations under section 

22 1853 of the Social Security Act (42 U.S.C. 1395w–23), 

23 the Secretary of Health and Human Services shall ensure 

24 that payments to such organizations are adjusted based 

25 on such factors to ensure that the health status of the 
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1 enrollee is reflected in such adjusted payments, including 

2 adjusting for the difference between the health status of 

3 the enrollee and individuals enrolled under the original 

4 medicare fee-for-service program under parts A and B of 

5 title XVIII of such Act. Payments to such organizations 

6 must, in aggregate, reflect such differences. 

7 TITLE II—IMPROVING THE MEDI8 CARE PROGRAM FOR BENE9 FICIARIES 

10 SEC. 201. ELIMINATING COVERAGE GAP. 

11 (a) IN GENERAL.—Section 1860D–2(b)(4)(B) of the 

12 Social Security Act (42 U.S.C. 1395w–102(b)(4)(B)) is 

13 amended to read as follows: 

14 ‘‘(B) ANNUAL OUT-OF-POCKET THRESH15 OLD.—For purposes of this part, the ‘annual 

16 out-of-pocket threshold’ specified in this sub17 paragraph for a year is equal to the greater 

18 of— 

19 ‘‘(i) $3,600; or 

20 ‘‘(ii) the initial coverage limit for the 

21 year specified in paragraph (3).’’. 

22 (b) CONFORMING AMENDMENT.—Section 1860D– 

23 22(a)(3)(B)(ii) of the Social Security Act (42 U.S.C. 

24 1395w–132(b)(4)(B)(ii)) is amended by striking ‘‘and the 

25 annual out-of-pocket threshold, respectively, are annually 
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1 adjusted under paragraphs (1) and (4)(B) of section 

2 1860D–2(b)’’ and inserting ‘‘is annually adjusted under 

3 paragraph (1) of section 1860D–2(b) (using the percent4 age increase specified in paragraph (6) of such section)’’. 

5 (c) EFFECTIVE DATE.—The amendments made by 

6 this section shall take effect as if included in the enact7 ment of section 101(a) of the Medicare Prescription Drug, 

8 Improvement, and Modernization Act of 2003 (Public Law 

9 108–173; 117 Stat. 2071). 

10 SEC. 202. REQUIRING TWO PRESCRIPTION DRUG PLANS TO 

11 AVOID FEDERAL FALLBACK. 

12 (a) IN GENERAL.—Section 1860D–3(a) of the Social 

13 Security Act (42 U.S.C. 1395w–103(a)) is amended— 

14 (1) in paragraph (1)— 

15 (A) by striking ‘‘qualifying plans (as de16 fined in paragraph (3))’’ and inserting ‘‘pre17 scription drug plans’’; and 

18 (B) by striking ‘‘, at least one of which is 

19 a prescription drug plan’’; 

20 (2) in paragraph (2), by striking ‘‘qualifying 

21 plans’’ and inserting ‘‘prescription drug plans’’; and 

22 (3) by striking paragraph (3). 

23 (b) EFFECTIVE DATE.—The amendments made by 

24 this section shall take effect as if included in the enact25 ment of section 101(a) of the Medicare Prescription Drug, 
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1 Improvement, and Modernization Act of 2003 (Public Law 

2 108–173; 117 Stat. 2071). 

3 SEC. 203. WAIVER OF PART D LATE ENROLLMENT PENALTY 

4 FOR TRANSITION PERIOD. 

5 (a) IN GENERAL.—Section 1860D–13(b) of the So6 cial Security Act (42 U.S.C. 1895w–113(b)) is amended 

7 by adding at the end the following new paragraph: 

8 ‘‘(8) WAIVER OF PENALTY FOR MONTHS PRIOR

9 TO 2008.—A part D eligible individual who enrolls 

10 for the first time in a prescription drug plan or an 

11 MA–PD plan under this part prior to January 1, 

12 2008, shall not be subject an increase in the month13 ly beneficiary premium established under subsection 

14 (a) with respect to months occurring prior to such 

15 date.’’. 

16 (b) EFFECTIVE DATE.—The amendment made by 

17 this section shall take effect as if included in the enact18 ment of section 101(a) of the Medicare Prescription Drug, 

19 Improvement, and Modernization Act of 2003 (117 Stat. 

20 2071). 

21 SEC. 204. IMPROVING THE TRANSITION OF FULL-BENEFIT 

22 DUAL ELIGIBLE INDIVIDUALS TO COVERAGE 

23 UNDER THE MEDICARE DRUG BENEFIT. 

24 (a) IN GENERAL.—Notwithstanding subsection 

25 (d)(1) of section 1935 of the Social Security Act (42 
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1 U.S.C. 1396u–5), beginning on January 1, 2006, the Sec2 retary of Health and Human Services shall administer a 

3 12-month period during which full-benefit dual eligible in4 dividuals (as defined in section 1935(c)(6) of the Social 

5 Security Act) shall gradually transition from receiving 

6 medical assistance for prescribed drugs under the med7 icaid program under title XIX of such Act to obtaining 

8 coverage of covered part D drugs (as defined in section 

9 1860D–2(e) (42 U.S.C. 1395w–102(e)) under title XVIII 

10 of such Act in order to assure that such individuals con11 tinue to receive the outpatient prescription drugs they 

12 need. 

13 (b) ADJUSTMENTS TO PHASED-DOWN STATE CON14 TRIBUTION.—The Secretary of Health and Human Serv15 ices shall make appropriate adjustments to the amount of 

16 payments required to be made by a State or the District 

17 of Columbia under section 1935(c) of the Social Security 

18 Act (42 U.S.C. 1396u–5(c)) for months occurring during 

19 the period described in subsection (a) in order to account 

20 for increased costs for the provision of medical assistance 

21 incurred by the State or the District of Columbia by rea22 son of the application of the transition period required 

23 under this section. 
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1 SEC. 205. PART B PREMIUM REDUCTION. 

2 Section 1839(a) of the Social Security Act (42 U.S.C. 

3 1395r(a)) is amended— 

4 (1) in paragraph (3), in the first sentence, by 

5 striking ‘‘The Secretary’’ and inserting ‘‘Subject to 

6 paragraph (5), the Secretary’’; and 

7 (2) by adding at the end the following new 

8 paragraph: 

9 ‘‘(5) For each year (beginning with 2006), the Sec10 retary shall reduce the monthly premium rate determined 

11 under paragraph (3) for each month in the year for each 

12 individual enrolled under this part (including such an indi13 vidual subject to an increased premium under subsection 

14 (b) or (i)) so that the aggregate amount of such reductions 

15 in the year is equal to the aggregate amount of reduced 

16 expenditures from the Federal Supplementary Medicare 

17 Insurance Trust Fund in the year that the Secretary esti18 mates will result from the provisions of section 103 of the 

19 Meeting Our Responsibility to Medicare Beneficiaries Act 

20 of 2005.’’. 

21 SEC. 206. STUDY AND REPORT ON PROVIDING INCENTIVES 

22 TO PRESERVE RETIREE COVERAGE. 

23 (a) STUDY.—The Secretary of Health and Human 

24 Services shall conduct a study to determine what addi25 tional incentives should be provided to employers in order 

26 for such employers to continue to provide retirees with 
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1 prescription drug coverage. Such study shall include an 

2 assessment of permitting costs incurred by an employer 

3 for covered part D drugs on behalf of a retiree to be treat4 ed as incurred costs for purposes of reaching the annual 

5 out-of-pocket threshold under section 1860D–2(b)(4) of 

6 the Social Security Act (42 U.S.C. 1395w–102(b)(4)). 

7 (b) REPORT.—Not later than January 1, 2006, the 

8 Secretary of Health and Human Services shall submit to 

9 Congress a report on the study under subsection (a) to10 gether with such recommendations for legislation as the 

11 Secretary deems appropriate. 

12 SEC. 207. PROMOTING TRANSPARENCY IN EMPLOYER SUB13 SIDY PAYMENTS. 

14 (a) IN GENERAL.—Section 1860D–22(a) of the So15 cial Security Act (42 U.S.C. 1895w–132(a)) is amended 

16 by adding at the end the following new paragraph: 

17 ‘‘(7) DISCLOSURE OF CERTAIN INFORMA18 TION.—The Secretary shall make the following in19 formation regarding the sponsor of a qualified pre20 scription drug plan receiving a subsidy under this 

21 section available to the public through the Internet 

22 website of the Centers for Medicare & Medicaid 

23 Services and other appropriate means: 

24 ‘‘(A) The information used by the Sec25 retary to ensure that the prescription drug cov-
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1 erage offered under the plan meets the require2 ments for subsidy payments under this section. 

3 ‘‘(B) The total amount of the subsidy pay4 ments made to the sponsor under this section.’’. 

5 (b) EFFECTIVE DATE.—The amendment made by 

6 this section shall take effect as if included in the enact7 ment of section 101(a) of the Medicare Prescription Drug, 

8 Improvement, and Modernization Act of 2003 (Public Law 

9 108–173; 117 Stat. 2071). 

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