```

[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[S. 1307 Introduced in Senate (IS)]

111th CONGRESS
  1st Session
                                S. 1307

To amend part C of title XVIII of the Social Security Act with respect 
   to Medicare special needs plans and the alignment of Medicare and 
   Medicaid for dually eligible individuals, and for other purposes.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                             June 19, 2009

 Mr. Feingold (for himself and Ms. Klobuchar) introduced the following 
  bill; which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL

 
To amend part C of title XVIII of the Social Security Act with respect 
   to Medicare special needs plans and the alignment of Medicare and 
   Medicaid for dually eligible individuals, 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; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Medicare Specialty 
Care Improvement and Protection Act of 2009''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Extension of SNP authority.
Sec. 3. Improve risk adjustment for high-risk, high-cost beneficiaries.
Sec. 4. Additional enhancements to ensure payment equity for 
                            specialized MA plans.
Sec. 5. Advance alignment of Medicare and Medicaid for dual eligibles.
Sec. 6. Medicaid presumptive eligibility option.
Sec. 7. Extension of prescription drug discounts to enrollees of 
                            Medicaid managed care organizations.
Sec. 8. Definitions.

SEC. 2. EXTENSION OF SNP AUTHORITY.

    Section 1859(f)(1) of the Social Security Act (42 U.S.C. 1395w-
28(f)(1)), as amended by section 164(a) of the Medicare Improvements 
for Patients and Providers Act of 2008 (Public Law 110-275), is 
amended--
            (1) by striking ``2011'' and inserting ``2014''; and
            (2) by adding at the end the following new sentence: ``In 
        the case of a specialized MA plan for special needs individuals 
        that is designated as a Fully Integrated Dual Eligible Special 
        Needs Plan under section 5(a)(1) of the Medicare Specialty Care 
        Improvement and Protection Act of 2009, the preceding sentence 
        shall be applied by substituting `2016' for `2014'.''.

SEC. 3. IMPROVE RISK ADJUSTMENT FOR HIGH-RISK, HIGH-COST BENEFICIARIES.

    (a) Evaluation.--
            (1) In general.--The Secretary shall evaluate the Medicare 
        Advantage risk adjustment payment mechanism under section 
        1853(a)(1)(C) of the Social Security Act (42 U.S.C. 1395w-
        23(a)(1)(C)) and the risk adjustment payment mechanism under 
        section 1860D-15(c)(1)(A) of such Act (42 U.S.C. 1395w-
        115(c)(1)(A)) in order to resolve plan payment inequities 
        relative to Medicare fee-for-service payments for beneficiaries 
        identified under paragraph (2).
            (2) Requirements.--The evaluation conducted under paragraph 
        (1) shall address the need for improving the adequacy of the 
        existing hierarchical condition categories and pharmacy risk 
        adjustment methods for Medicare Advantage plans that 
        exclusively or disproportionately serve high-risk beneficiaries 
        as it relates to--
                    (A) accurately predicting costs relative to 
                Medicare fee-for-service for beneficiaries with--
                            (i) sustained high-risk scores over 
                        multiple contract periods;
                            (ii) sustained high costs over multiple 
                        contract periods;
                            (iii) co-morbid chronic conditions;
                            (iv) diagnoses not included in the risk-
                        adjustment methodology, including dementia and 
                        other cognitive impairments;
                            (v) physical disabilities, developmental 
                        disabilities, or both; and
                            (vi) frailty;
                    (B) accurately predicting costs relative to 
                Medicare fee-for-service for beneficiaries near the end 
                of life;
                    (C) accurately predicting costs relative to 
                Medicare fee-for-service for other conditions for which 
                the current risk adjustment methodology underpays in 
                relation to Medicare fee-for-service, as determined by 
                the Secretary;
                    (D) further gradations of diseases and conditions 
                to better reflect stage of condition, condition 
                severity, and costs related to burden of illness;
                    (E) accounting for costs of pre-existing conditions 
                at the time of initial enrollment for new entrants into 
                Medicare; and
                    (F) enhancing coding persistency by calculating 
                risk scores using data covering at least 2 years.
    (b) Use of the Results of the Study for Refinements.--
            (1) Refinements.--
                    (A) In general.--Beginning with plan year 2011, the 
                Secretary, using the results of the evaluation 
                conducted under subsection (a)(1), shall refine the 
                risk adjustment payment mechanisms referred to in 
                subsection (a)(1) for beneficiaries identified under 
                subsection (a)(2). The Secretary shall make additional 
                refinements, as appropriate, for subsequent plan years.
                    (B) Protection.--To the extent that the Secretary 
                determines that the risk adjustment payment mechanisms 
                referred to in subsection (a)(1) do not accurately pay 
                for Medicare beneficiaries identified under subsection 
                (a)(2), the Secretary shall ensure that a Medicare 
                Advantage plan that exclusively or disproportionately 
                serves high-risk beneficiaries is not paid less, in the 
                aggregate, than 100 percent of Medicare fee-for-service 
                payment rates (as determined under section 
                1853(c)(1)(D)(i)).
                    (C) Recalibration.--Beginning with plan year 2011, 
                the Secretary shall recalibrate the risk adjustment 
                payment mechanisms referred to in subsection (a)(1) so 
                that the overall predicted costs for all Medicare 
                beneficiaries are identical to what they would have 
                been in the absence of the new risk adjustment payment 
                mechanism.
            (2) Budget neutral adjustments.--If the Secretary 
        determines that the application of paragraph (1) results in 
        expenditures under title XVIII of the Social Security Act that 
        exceed the expenditures under such title that would have been 
        made without such application, the Secretary shall provide for 
        an appropriate adjustment to payment rates under part C of such 
        title for beneficiaries for whom the risk adjustment payment 
        mechanism overpays in relation to Medicare fee-for-service in 
        order to eliminate such excess.

SEC. 4. ADDITIONAL ENHANCEMENTS TO ENSURE PAYMENT EQUITY FOR 
              SPECIALIZED MA PLANS.

    (a) Accounting for Added Regulatory Costs.--For plan year 2011 and 
subsequent plan years, the Secretary shall provide bonus payments to 
account for added SNP costs associated with additional benefit, care 
management, reporting, and other requirements established by Congress 
and the Secretary in excess of other Medicare Advantage plans.
    (b) Ensuring Fair Bidding Practices.--For plan year 2011 and 
subsequent plan years, the Secretary shall take into account the 
following factors with respect to the bid structure for SNPs:
            (1) Dual eligibility.
            (2) Geographic cost differences.
            (3) Population characteristics.
            (4) The differences in plan requirements, including 
        differences in additional benefits, care management, and 
        reporting requirements.
            (5) The differences between community-based and regional or 
        nationally based plans.
    (c) Authority To Apply PACE Rules.--For plan year 2011 and 
subsequent plan years, the Secretary may apply the payment rules under 
section 1894(d) of the Social Security Act (42 U.S.C. 1395eee(d)) to 
Fully Integrated Dual Eligible Special Needs Plans rather than the 
payment rules that would otherwise apply to such plans under part C.
    (d) Budget Neutral Adjustments.--If the Secretary determines that 
the application of subsections (a), (b), and (c) result in expenditures 
under title XVIII of the Social Security Act that exceed the 
expenditures under such title that would have been made without such 
application, the Secretary shall provide for an appropriate adjustment 
to payment rates under part C of such title for beneficiaries for whom 
the risk adjustment payment mechanism overpays in relation to Medicare 
fee-for-service in order to eliminate such excess.

SEC. 5. ADVANCE ALIGNMENT OF MEDICARE AND MEDICAID FOR DUAL ELIGIBLES.

    (a) Medicare and Medicaid Integration Programs.--
            (1) Designation.--
                    (A) In general.--For plan year 2011 and subsequent 
                plan years, the Secretary shall have in place a process 
                under which the Secretary designates dual eligible SNPs 
                as Fully Integrated Dual Eligible Special Needs Plans 
                for the purpose of advancing fully integrated Medicare 
                and Medicaid benefits and services for dual 
                beneficiaries, including State designated Dual subsets.
                    (B) Criteria for designation.--In order to be 
                designated as a Fully Integrated Dual Eligible Special 
                Needs Plan, the dual eligible SNP shall meet the 
                following requirements:
                            (i) The dual eligible SNP provides dual 
                        eligibles with access to Medicare and Medicaid 
                        benefits specified by the State for Medicaid 
                        beneficiaries enrolled in integrated programs 
                        under a single managed care organization (MCO).
                            (ii) The dual eligible SNP has a contract 
                        in place with a State Medicaid agency that 
                        includes coverage of specified primary, acute, 
                        and long-term care benefits and services, 
                        consistent with State policy, under risk-based 
                        financing.
                            (iii) The dual eligible SNP coordinates the 
                        delivery of covered Medicare and Medicaid 
                        health and long-term care services, consistent 
                        with State policy, using aligned care 
                        management and specialty care network methods 
                        for high-risk beneficiaries.
                            (iv) The dual eligible SNP employs policies 
                        and procedures approved by the Secretary and 
                        the State to coordinate or integrate 
                        enrollment, member materials, communications, 
                        grievance and appeals, and quality assurance.
                            (v) The dual eligible SNP provides advanced 
                        person-centered, integrated care for the full 
                        array of primary, acute, and residential and 
                        home and community-based long-term care 
                        services, using a robust advanced medical home 
                        model that--
                                    (I) empowers dual eligibles with 
                                serious chronic conditions and their 
                                family caregivers to optimize their 
                                health and well-being;
                                    (II) provides a comprehensive array 
                                of patient-centered benefits and 
                                services designed to meet the unique 
                                needs of dual eligibles;
                                    (III) helps dual eligibles and 
                                their family caregivers to access the 
                                right care, at the right time, in the 
                                right place, given the nature of their 
                                condition;
                                    (IV) aligns the incentives of 
                                related care providers to improve 
                                transitions and care continuity; and
                                    (V) optimizes total quality and 
                                cost performance across time, place, 
                                and profession.
            (2) Integration authority.--In order to increase simplicity 
        for dual eligibles in accessing and coordinating Medicare and 
        Medicaid benefits, the Secretary, working in conjunction with 
        States, on a State by State basis, consistent with existing 
        statutory authority, is encouraged to establish a single 
        administrative structure and process under titles XVIII and XIX 
        for Fully Integrated Dual Eligible Special Needs Plans, under a 
        three-way contract or Memorandum of Understanding, among CMS, 
        the State, and related plans, for--
                    (A) the enrollment of dual eligibles;
                    (B) member materials and related communications;
                    (C) care management and model of care requirements;
                    (D) reporting, auditing, and performance 
                evaluation;
                    (E) grievance and appeals procedures; and
                    (F) payment methods.
            (3) Alignment of medicare and medicaid policies and 
        procedures for snps serving dual eligibles.--In order to 
        increase simplicity for dual eligibles in accessing and 
        coordinating Medicare and Medicaid benefits by enhancing 
        coordination between CMS and State Medicaid agencies in the 
        oversight of SNPs insofar as they serve dual eligibles, the 
        Secretary, working in collaboration with State Medicaid 
        agencies, may modify rules, policies, and procedures under 
        titles XVIII and XIX of such Act in order to provide for the 
        alignment of Medicare and Medicaid requirements, including 
        marketing, enrollment, care coordination, auditing, reporting, 
        quality assurance, and other relevant oversight functions.
            (4) Reports to congress.--
                    (A) Interim report.--Not later than December 31, 
                2013, the Secretary shall submit to Congress an interim 
                report on the impact of integrating Medicare and 
                Medicaid benefits and services on total quality and 
                cost performance in serving dual eligibles.
                    (B) Final report.--Not later than December 31, 
                2015, the Secretary shall submit to Congress a final 
                report on the impact of integrating Medicare and 
                Medicaid benefits and services on total quality and 
                cost performance in serving dual eligibles.
                    (C) Requirement.--A report under subparagraph (A) 
                and (B) shall include recommendations for such 
                legislative and administrative actions as the Secretary 
                determines appropriate to further advance Medicare and 
                Medicaid integration, including options for integrating 
                Medicare and Medicaid funding, to facilitate ongoing 
                improvements in total quality and cost performance in 
                care of dual eligibles.
                    (D) Quality and cost performance.--Not later than 6 
                months after the date of the enactment of this Act, the 
                Secretary, working in consultation with consumers, 
                plans, and States, shall identify the measures and 
                benchmarks to be used for evaluating cost and quality 
                performance for purposes of subparagraph (C).
    (b) Office of Medicare/Medicaid Integration.--
            (1) Establishment.--The Secretary shall establish or 
        designate an Office on Medicare/Medicaid Integration (in this 
        subsection referred to as the ``Office'') for the purpose of 
        aligning Medicare and Medicaid policies and procedures and 
        developing tools to support State integration efforts in order 
        to--
                    (A) simplify dual eligible access to Medicare and 
                Medicaid benefits and services;
                    (B) improve care continuity and ensure safe and 
                effective care transitions;
                    (C) eliminate cost shifting between Medicare and 
                Medicaid and among related care providers;
                    (D) eliminate regulatory conflicts between Medicare 
                and Medicaid rules; and
                    (E) improve total cost and quality performance.
            (2) Responsibilities.--The responsibilities of the Office 
        are to develop policies and procedures to--
                    (A) oversee the designation, implementation, and 
                oversight of Fully Integrated Dual Eligible Special 
                Needs Plans under subsection (a)(1) in collaboration 
                with the States, with authority to effectively align 
                Medicare and Medicaid policy for dual eligibles;
                    (B) provide State Medicaid agencies with training, 
                materials, technical assistance, and other resources in 
                support of advancing Medicare and Medicaid integration 
                in States where Fully Integrated Dual Eligible Special 
                Needs Plans have been designated and other integration 
                initiatives are being advanced to coordinate and align 
                primary, acute, and long-term care benefits for dual 
                eligibles through a State plan option or other means;
                    (C) identify incentives for States to advance the 
                integration of Medicare and Medicaid to improve total 
                cost and quality performance, including shared cost 
                savings among consumers, plans, and Federal and State 
                governments with respect to State initiatives for 
                advancing Medicare and Medicaid integration;
                    (D) support State efforts to coordinate and align 
                acute and long-term care benefits for dual eligibles 
                through a State plan option or other means;
                    (E) provide support for coordination of State and 
                Federal contracting and oversight for dual integration 
                programs supportive of the goals described in paragraph 
                (1);
                    (F) align Federal rules for Medicaid managed care 
                and Medicare Advantage Plans to include methods for 
                integrating marketing, enrollment, grievances and 
                appeals, auditing, reporting, quality assurance, and 
                other relevant oversight functions;
                    (G) serve as a liaison between CMS central and 
                regional offices to ensure consistent application of 
                CMS rules, policies, and auditing practices as such 
                rules, policies, and auditing practices pertain to dual 
                eligibles;
                    (H) monitor total combined Medicare and Medicaid 
                costs in serving dual eligibles and make 
                recommendations for optimizing total quality and cost 
                performance across both programs; and
                    (I) work with the Congressional Budget Office and 
                the Office of Management and Budget to establish a 
                process for evaluating total Medicare and Medicaid 
                spending for dual eligibles who are enrolled in Fully 
                Integrated Dual Eligible Special Needs Plans such that 
                the enrollment of such dual eligibles in such plans is 
                treated as ``budget neutral'' if the combined Medicare 
                and Medicaid costs under such plans do not exceed the 
                combined costs of providing Medicare and Medicaid 
                services on a fee-for-service basis for a comparable 
                risk group.
            (3) Funding from savings.--
                    (A) In general.--For purposes of funding for the 
                Office, there shall be made available for each of 
                fiscal years 2010 through 2014, $2,000,000 from the 
                savings described in subparagraph (B).
                    (B) Savings.--The savings described in this 
                subparagraph are the average per capita savings 
                described in paragraphs (3)(C) and (4)(C) of section 
                1854(b) for which monthly rebates are provided under 
                section 1854(b)(1)(C) in the fiscal year involved.
                    (C) Availability.--Funds made available under this 
                paragraph shall be transferred to the Secretary from 
                the Federal Hospital Insurance Trust Fund under section 
                1817 of the Social Security Act (42 U.S.C. 1395i) and 
                the Federal Supplementary Insurance Trust Fund under 
                section 1841 of such Act (42 U.S.C. 1395t) in the 
                proportion specified in section 1853(f) of such Act (42 
                U.S.C. 1395w-23(f)).

SEC. 6. MEDICAID PRESUMPTIVE ELIGIBILITY OPTION.

    (a) In General.--Section 1902(e) of the Social Security Act (42 
U.S.C. 1396a(e)) is amended by adding at the end the following:
    ``(14) At the option of the State, the plan may provide for a 
period of presumptive eligibility for an individual who has attained 
age 65, who has 12 or more consecutive months of eligibility under this 
title, and who the State has reason to believe will be determined to be 
a full-benefit dual eligible individual (as defined in section 
1935(c)(6)), but only if the State--
            ``(A) agrees to randomly conducted eligibility audits by 
        the Secretary; and
            ``(B) ensures that any individual enrolled under the State 
        plan who is determined to be ineligible for medical assistance 
        as a result of such an audit (and, if such individual is 
        enrolled in a specialized MA plan for special needs individuals 
        under part C of title XVIII, ensures that the organization 
        offering such plan) is notified at least 30 days prior to the 
        date on which the individual is disenrolled from the State 
        plan.''.
    (b) Effective Date.--The amendment made by subsection (a) takes 
effect on January 1, 2010.

SEC. 7. EXTENSION OF PRESCRIPTION DRUG DISCOUNTS TO ENROLLEES OF 
              MEDICAID MANAGED CARE ORGANIZATIONS.

    (a) In General.--Section 1903(m)(2)(A) of the Social Security Act 
(42 U.S.C. 1396b(m)(2)(A)) is amended--
            (1) in clause (xi), by striking ``and'' at the end;
            (2) in clause (xii), by striking the period at the end and 
        inserting ``; and''; and
            (3) by adding at the end the following:
                            ``(xiii) such contract provides that (I) 
                        payment for covered outpatient drugs dispensed 
                        to individuals eligible for medical assistance 
                        who are enrolled with the entity shall be 
                        subject to the same rebate required by the 
                        agreement entered into under section 1927 as 
                        the State is subject to, and (II) capitation 
                        rates paid to the entity shall be based on 
                        actual cost experience related to rebates and 
                        subject to the Federal regulations requiring 
                        actuarially sound rates.''.
    (b) Conforming Amendments.--Section 1927 of the Social Security Act 
(42 U.S.C. 1396r-8) is amended--
            (1) in subsection (d)--
                    (A) in paragraph (1), by adding at the end the 
                following:
                    ``(C) Notwithstanding the subparagraphs (A) and 
                (B)--
                            ``(i) a Medicaid managed care organization 
                        with a contract under section 1903(m) may 
                        exclude or otherwise restrict coverage of a 
                        covered outpatient drug on the basis of 
                        policies or practices of the organization, such 
                        as those affecting utilization management, 
                        formulary adherence, and cost sharing or 
                        dispute resolution, in lieu of any State 
                        policies or practices relating to the exclusion 
                        or restriction of coverage of such drugs, 
                        provided, however, that any such exclusions and 
                        restrictions of coverage shall be subject to 
                        any contractual requirements and oversight by 
                        the State as contained in the Medicaid managed 
                        care organization's contract with the State, 
                        and the State shall maintain approval authority 
                        over the formulary used by the Medicaid managed 
                        care organization; and
                            ``(ii) nothing in this section or paragraph 
                        (2)(A)(xiii) of section 1903(m) shall be 
                        construed as requiring a Medicaid managed care 
                        organization with a contract under such section 
                        to maintain the same such policies and 
                        practices as those established by the State for 
                        purposes of individuals who receive medical 
                        assistance for covered outpatient drugs on a 
                        fee-for-service basis.''; and
                    (B) in paragraph (4), by inserting after 
                subparagraph (E) the following:
                    ``(F) Notwithstanding the preceding subparagraphs 
                of this paragraph, any formulary established by 
                Medicaid managed care organization with a contract 
                under section 1903(m) may be based on positive 
                inclusion of drugs selected by a formulary committee 
                consisting of physicians, pharmacists, and other 
                individuals with appropriate clinical experience as 
                long as drugs excluded from the formulary are available 
                through prior authorization, as described in paragraph 
                (5).''; and
            (2) in subsection (j), by striking paragraph (1) and 
        inserting the following:
            ``(1) Covered outpatients drugs are not subject to the 
        requirements of this section if such drugs are--
                    ``(A) dispensed by health maintenance 
                organizations, including Medicaid managed care 
                organizations that contract under section 1903(m); and
                    ``(B) subject to discounts under section 340B of 
                the Public Health Service Act.''.
    (c) Reports.--Each State with a contract with a Medicaid managed 
care organization under section 1903(m) of the Social Security Act (42 
U.S.C. 1396b(m)) shall report to the Secretary on a quarterly basis the 
total amount of rebates in dollars and volume received from 
manufacturers (as defined in section 1927(k)(5) of such Act (42 U.S.C. 
1396r-8(k)(5)) for drugs provided to individuals enrolled with such an 
organization as a result of the amendments made by this section for 
both brand-name and generic drugs. The Secretary shall review the 
reports submitted by States under this subsection and, after such 
review, make publically available the aggregate data contained in such 
reports.
    (d) Effective Date.--This section and the amendments made by this 
section take effect on the date of enactment of this Act and apply to 
rebate agreements entered into or renewed under section 1927 of the 
Social Security Act (42 U.S.C. 1396r-8) on or after such date.

SEC. 8. DEFINITIONS.

    In this Act:
            (1) CMS.--The term ``CMS'' means the Centers for Medicare & 
        Medicaid Services.
            (2) Dual eligible.--The term ``dual eligible'' means an MA 
        eligible individual (as defined in section 1851(a)(3) of the 
        Social Security Act, 42 U.S.C. 13195w-21(a)(3)) who is also 
        entitled to medical assistance under a State plan under title 
        XIX of the Social Security Act.
            (3) Dual eligible snp.--The term ``dual eligible SNP'' 
        means a SNP described in section 1859(b)(6)(A)(ii) of the 
        Social Security Act.
            (4) Medicaid.--The term ``Medicaid'' means the program 
        under title XIX of the Social Security Act.
            (5) Medicare.--The term ``Medicare'' means the program 
        under title XVIII of the Social Security Act.
            (6) Medicare fee-for-service.--The term ``Medicare fee-for-
        service'' means the original Medicare fee-for-service program 
        under parts A and B of title XVIII of the Social Security Act.
            (7) Secretary.--The term ``Secretary'' means the Secretary 
        of Health and Human Services.
            (8) SNP.--The term ``SNP'' means a specialized MA plan for 
        special needs individuals, as defined in section 1859(b)(6)(A) 
        of the Social Security Act (42 U.S.C. 1395w-28(b)(6)(A)).
            (9) State.--The term ``State'' has the meaning given such 
        term for purposes of title XIX of the Social Security Act.
                                 <all>
```