II

106TH CONGRESS

1ST SESSION S. 1895

To amend the Social Security Act to preserve and improve the Medicare

Program.

IN THE SENATE OF THE UNITED STATES

NOVEMBER 9, 1999

Mr. BREAUX (for himself, Mr. FRIST, Mr. KERREY, and Mr. HAGEL) introduced the following bill; which was read twice and referred to the Committee on Finance

A BILL

To amend the Social Security Act to preserve and improve

the Medicare Program.

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 ‘‘Medicare Preservation and Improvement Act of 1999’’.

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

7 this Act is as follows:

Sec. 1. Short title; table of contents.

Sec. 2. Findings and purposes.

TITLE I—ESTABLISHMENT OF MEDICARE COMPETITIVE

PREMIUM SYSTEM
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Sec. 101. Establishment of Medicare competitive premium system.

‘‘TITLE XXII—ESTABLISHMENT OF MEDICARE COMPETITIVE

PREMIUM SYSTEM

‘‘Sec. 2200. Construction; references; definitions.

‘‘PART A—MEDICARE PLANS; COMBINING PARTS A AND B

‘‘Sec. 2201. Election of coverage through a Medicare plan and consolidated

Medicare eligibility.

‘‘Sec. 2202. Health benefits coverage.

‘‘Sec. 2203. Continuation of beneficiary protections and other qualifications for Medicare plans.

‘‘Sec. 2204. Exclusive payment methodology.

‘‘PART B—COMPETITIVE PREMIUM SYSTEM

‘‘Sec. 2221. Publication of geographic and risk adjusters.

‘‘Sec. 2222. Submission of proposed Medicare plans.

‘‘Sec. 2223. Board approval of proposed Medicare plans.

‘‘Sec. 2224. Computation of core benefit premiums.

‘‘Sec. 2225. Computation of national average premium.

‘‘Sec. 2226. Payment of full amount of Medicare plan premiums.

‘‘Sec. 2227. Computation of beneficiary obligation and drug discounts for

beneficiaries enrolled in high option Medicare plans.

‘‘Sec. 2228. Collection of beneficiary obligation.

‘‘Sec. 2229. Relation to certain provisions.

‘‘PART C—MEDICARE BOARD CHARTER

‘‘Sec. 2241. Medicare Board.

‘‘Sec. 2242. Duties of the Board.

‘‘Sec. 2243. Powers of the Board.

‘‘Sec. 2244. Board personnel matters.

‘‘Sec. 2245. Reports; communications with Congress.

‘‘Sec. 2246. Funding of the Board.

‘‘PART D—UNIFIED MEDICARE TRUST FUND

‘‘Sec. 2261. Unified Medicare Trust Fund.

‘‘Sec. 2262. Programmatic insolvency and limitation on general revenue financing.

‘‘PART E—HCFA DUTIES AND RESPONSIBILITIES

‘‘Sec. 2281. Reorganization of HCFA.

‘‘Sec. 2282. Establishment of HCFA-sponsored plans.

‘‘Sec. 2283. Partnerships with private entities to offer HCFA-sponsored

high option plans.

‘‘Sec. 2284. HCFA business planning and administrative flexibility.’’.

TITLE II—SPECIAL PROTECTIONS

SUBTITLE A—PROTECTION PACKAGE FOR CERTAIN AREAS

Sec. 201. Limitation on beneficiary obligations in certain areas.

Sec. 202. Guarantee of outpatient prescription drugs under HCFA-sponsored

high option plans.
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SUBTITLE B—LOW-INCOME MEDICARE BENEFICIARY PROTECTION PACKAGE

Sec. 251. Medicare plans for low-income Medicare beneficiaries.

‘‘Sec. 2229. Medicare plans for low-income Medicare beneficiaries.’’.

TITLE III—MEDICARE BENEFICIARY OUTREACH AND EDUCATION

Sec. 301. Medicare Consumer Coalitions.

TITLE IV—MISCELLANEOUS

Sec. 401. Conforming amendments.

Sec. 402. Medicare supplemental policies.

Sec. 403. Effective date.

1 SEC. 2. FINDINGS AND PURPOSES.

2 (a) FINDINGS.—

3 (1) Based on the deliberations of the National

4 Bipartisan Commission on the Future of Medicare,

5 the Medicare Program under title XVIII of the So6 cial Security Act in its current form is unsustainable

7 and is scheduled to become insolvent in 2015.

8 (2) Medicare’s spending, left unchecked, will

9 continue to consume an increasing share of the Fed10 eral budget, leaving little room for other priorities,

11 such as defense, education, debt reduction, tax cuts,

12 and domestic spending.

13 (3) Medicare’s current benefit package is out14 dated in that it does not provide a prescription drug

15 benefit and limits beneficiary access to new tech16 nologies.

17 (4) Medicare only covers 53 percent of a bene18 ficiary’s average health care costs and exposes bene19 ficiaries to large out-of-pocket liabilities.
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1 (5) The number of beneficiaries in the Medicare

2 Program is estimated to more than double by the

3 end of 2030, due to the influx of 77,000,000 baby

4 boomers beginning in 2010.

5 (6) Each year there are fewer workers paying

6 payroll taxes to fund current Medicare obligations,

7 evidenced by a decrease in the number of workers

8 per retiree from 4.5 in 1960 to 3.9 in 2000. This

9 number is expected to decline further to 2.8 in 2020.

10 (7) The Balanced Budget Act of 1997 and the

11 recent movement to restore some of its payment re12 ductions underscore the need to fundamentally re13 structure Medicare and reduce Government micro14 management of the Medicare Program.

15 (b) PURPOSES.—The purposes of this Act are—

16 (1) to promote high quality, comprehensive, in17 tegrated health care to meet the individual needs of

18 each Medicare beneficiary;

19 (2) to assist all Medicare beneficiaries, espe20 cially those with low incomes, in obtaining com21 prehensive benefits, including prescription drugs

22 through a health plan;

23 (3) to increase the flexibility of the Medicare

24 Program and provide Medicare beneficiaries timely
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1 access to the latest advances in the practice of medi2 cine and delivery of care;

3 (4) to end the congressional micromanagement

4 over prices and delivery of benefits currently admin5 istered through approximately 130,000 pages of reg6 ulations established under the Medicare Program;

7 and

8 (5) to improve the existing Medicare Program

9 by adopting a stable, competitive system based on

10 the proven model of the Federal Employees Health

11 Benefits Plan, thereby providing Medicare bene12 ficiaries with better and broader health coverage and

13 a greater variety of reasonably priced health care op14 tions from which to choose.

15 TITLE I—ESTABLISHMENT OF

16 MEDICARE COMPETITIVE

17 PREMIUM SYSTEM

18 SEC. 101. ESTABLISHMENT OF MEDICARE COMPETITIVE

19 PREMIUM SYSTEM.

20 The Social Security Act is amended by adding at the

21 end the following:
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1 ‘‘TITLE XXII—ESTABLISHMENT OF MEDICARE

2 COMPETITIVE PREMIUM SYSTEM

3 ‘‘SEC. 2200. CONSTRUCTION; REFERENCES; DEFINITIONS.

4 ‘‘(a) CONSTRUCTION OF TITLE.—The provisions of

5 this title shall be construed to modify and supersede the

6 provisions and operation of title XVIII to the extent such

7 provisions are inconsistent with the provisions of this title.

8 ‘‘(b) REFERENCES TO MEDICARE PROVISIONS.—Any

9 reference in any law or regulation to any provision of title

10 XVIII is deemed a reference to such provision as modified

11 through the operation of this title.

12 ‘‘(c) DEFINITIONS RELATING TO MEDICARE

13 PLANS.—As used in this title:

14 ‘‘(1) MEDICARE PLAN.—The term ‘Medicare

15 plan’ means a health benefits plan which the Medi16 care Board has approved under section 2223, and

17 includes each HCFA-sponsored plan.

18 ‘‘(2) STANDARD MEDICARE PLAN.—The term

19 ‘standard Medicare plan’ means a Medicare plan

20 that includes the core benefits under section

21 2202(a), but is not a high option Medicare plan.

22 ‘‘(3) HIGH OPTION MEDICARE PLAN.—The term

23 ‘high option Medicare plan’ means a Medicare plan

24 that, in addition to providing coverage for the core

25 benefits under section 2202(a), includes coverage for
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1 outpatient prescription drugs under section 2202(b),

2 and stop-loss coverage under section 2202(c).

3 ‘‘(4) HCFA-SPONSORED PLAN.—The term

4 ‘HCFA-sponsored plan’ means a standard or high

5 option Medicare plan established under section

6 2282.

7 ‘‘(d) OTHER DEFINITIONS.—As used in this title:

8 ‘‘(1) CORE BENEFITS.—The term ‘core benefits’

9 means the items and services described in section

10 2202(a).

11 ‘‘(2) HCFA.—The term ‘HCFA’ means the

12 Health Care Financing Administration, acting

13 through the Administrator of such Administration.

14 ‘‘(3) MEDICARE BENEFICIARY.—The term

15 ‘Medicare beneficiary’ means an individual entitled

16 to benefits under title XVIII.

17 ‘‘(4) MEDICARE BOARD; BOARD.—The terms

18 ‘Medicare Board’ and ‘Board’ mean the Board es19 tablished under section 2241.

20 ‘‘(5) MEDICARE+CHOICE ORGANIZATION;

21 MEDICARE+CHOICE PLAN.—The terms

22 ‘Medicare+Choice organization’ and

23 ‘Medicare+Choice plan’ have the meanings given

24 such terms in subsections (a)(1) and (b)(1), respec-
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1 tively, of section 1859 (relating to definitions relat2 ing to Medicare+Choice organizations).

3 ‘‘(6) MEDICARE TRUST FUND.—The term

4 ‘Medicare Trust Fund’ means the Trust Fund estab5 lished under section 2261.

6 ‘‘PART A—MEDICARE PLANS; COMBINING PARTS A

7 AND B

8 ‘‘SEC. 2201. ELECTION OF COVERAGE THROUGH A MEDI9 CARE PLAN AND CONSOLIDATED MEDICARE

10 ELIGIBILITY.

11 ‘‘(a) CONTINUED ENTITLEMENT TO MEDICARE BEN12 EFITS.—Beginning on January 1, 2003, Medicare bene13 ficiaries shall continue to be entitled to receive benefits

14 under title XVIII and shall receive such benefits through

15 enrollment in a Medicare plan.

16 ‘‘(b) CONSOLIDATED MEDICARE ELIGIBILITY.—Be17 ginning January 1, 2003, an individual may receive bene18 fits under title XVIII only if such individual is entitled

19 under part A (or enrolled under such part) and enrolled

20 under part B of such title.

21 ‘‘(c) ENROLLMENT PROCESS.—

22 ‘‘(1) IN GENERAL.—The Medicare Board shall

23 establish a process for the enrollment of Medicare

24 beneficiaries under Medicare plans that is based, ex25 cept as the Board may provide, upon the process for
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1 enrollment with Medicare+Choice plans under part

2 C of title XVIII, including the provision of informa3 tion and open enrollment and disenrollment opportu4 nities.

5 ‘‘(2) TRANSITIONAL ENROLLMENT.—The Medi6 care Board shall provide for such general enrollment

7 period before January 1, 2003, as may be appro8 priate to permit all individuals who are eligible to re9 ceive benefits under part A or part B of title XVIII,

10 but not both, to become eligible to receive benefits

11 under such other part.

12 ‘‘(3) STUDY AND REPORT TO CONGRESS RE13 GARDING TRANSITION PERIOD.—

14 ‘‘(A) STUDY.—The Medicare Board shall

15 conduct a study on the need for—

16 ‘‘(i) establishing a period after Janu17 ary 1, 2003, in which an individual, not18 withstanding subsection (a), may receive

19 benefits under part A of title XVIII with20 out being enrolled under part B of such

21 title or may receive benefits under part B

22 of such title without being entitled under

23 part A of such title; and

24 ‘‘(ii) adjusting the amount of the ben25 eficiary obligation and drug discount com-
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1 puted under section 2227 during the pe2 riod described in subparagraph (A).

3 ‘‘(B) REPORT.—Not later than January 1,

4 2002, the Medicare Board shall submit a report

5 to Congress on the study conducted under sub6 paragraph (A), together with any recommenda7 tions for legislation that the Board determines

8 to be appropriate as a result of such study.

9 ‘‘(4) STUDY AND REPORT TO CONGRESS RE10 GARDING SPECIAL RULES FOR END-STAGE RENAL

11 DISEASE.—

12 ‘‘(A) STUDY.—The Medicare Board shall

13 conduct a study on the need for a special rule

14 for individuals medically determined to have

15 end-stage renal disease, similar to the special

16 rule established under section 1851(a)(3)(B)

17 (relating to Medicare+Choice eligible individ18 uals).

19 ‘‘(B) REPORT.—Not later than January 1,

20 2002, the Medicare Board shall submit a report

21 to Congress on the study conducted under sub22 paragraph (A), together with any recommenda23 tions for legislation that the Board determines

24 to be appropriate as a result of such study.
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1 ‘‘(5) STUDY AND REPORT ON ONE-TIME EN2 ROLLMENT.—

3 ‘‘(A) STUDY.—The Medicare Board shall

4 conduct a study on the need for rules relating

5 to a one-time enrollment of Medicare bene6 ficiaries in high option Medicare plans, includ7 ing HCFA-sponsored high option plans, similar

8 to the rules established under section 1882(s)

9 (relating to guaranteed issuance of Medicare

10 supplemental policies).

11 ‘‘(B) REPORT.—Not later than January 1,

12 2002, the Medicare Board shall submit a report

13 to Congress on the study conducted under sub14 paragraph (A), together with any recommenda15 tions for legislation that the Board determines

16 to be appropriate as a result of such study.

17 ‘‘SEC. 2202. HEALTH BENEFITS COVERAGE.

18 ‘‘(a) CORE BENEFITS.—Each Medicare plan shall

19 provide those items and services for which benefits are

20 available under parts A and B of title XVIII to Medicare

21 beneficiaries enrolled in the plan.

22 ‘‘(b) OUTPATIENT PRESCRIPTION DRUG BENEFIT.—

23 ‘‘(1) IN GENERAL.—Each high option Medicare

24 plan shall provide a benefit for outpatient prescrip25 tion drugs—
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1 ‘‘(A) during 2003, that is actuarially

2 equivalent to an amount equal to $800 on Jan3 uary 1, 2003; and

4 ‘‘(B) during a subsequent year, that is ac5 tuarially equivalent to the amount for each

6 Medicare beneficiary during the previous year,

7 adjusted for any increase in the reasonable cost

8 of outpatient prescription drugs during such

9 previous year.

10 ‘‘(2) COST CONTROL MECHANISMS.—In pro11 viding the outpatient prescription drug benefit under

12 paragraph (1), the entity offering each Medicare

13 plan (including a private entity with a contract

14 under section 2283) may use cost control mecha15 nisms that are customarily used in employer spon16 sored plans, including the use formularies, tiered co17 payments, selective contracting with providers of

18 outpatient prescription drugs, and mail order phar19 macies.

20 ‘‘(c) STOP-LOSS COVERAGE.—Each high option

21 Medicare plan shall provide a benefit for stop-loss cov22 erage that is designed to limit Medicare beneficiary cost23 sharing for core benefits during a year after the Medicare

24 beneficiary incurs out-of-pocket expenditures in excess

25 of—
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1 ‘‘(1) during 2003, $2,000 for the core benefits;

2 and

3 ‘‘(2) for any subsequent calendar year, the

4 amount for the previous year for the core benefits

5 increased by the average annual percentage increase

6 in expenditures per beneficiary under title XVIII

7 during the previous year, as estimated by the Medi8 care Board.

9 ‘‘SEC. 2203. CONTINUATION OF BENEFICIARY PROTECTIONS

10 AND OTHER QUALIFICATIONS FOR MEDI11 CARE PLANS.

12 ‘‘In order to be offered as a Medicare plan under this

13 part, except as otherwise provided in this title, the plan

14 and the entity offering the plan shall meet the require15 ments applicable to Medicare+Choice plans and

16 Medicare+Choice organizations under part C of title

17 XVIII, including—

18 ‘‘(1) the offering of Medicare benefits; and

19 ‘‘(2) protections for Medicare beneficiaries en20 rolled in the plans.

21 ‘‘SEC. 2204. EXCLUSIVE PAYMENT METHODOLOGY.

22 ‘‘(a) IN GENERAL.—Except as provided in this title,

23 for items and services furnished on or after January 1,

24 2003—
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1 ‘‘(1) payment to an entity offering a Medicare

2 plan in the amounts provided under this part shall

3 be instead of any amounts that may be otherwise

4 payable under title XVIII; and

5 ‘‘(2) only the entity offering the Medicare plan

6 is eligible to receive payment for items and services

7 under such title.

8 ‘‘(b) EXCEPTIONS.—Under rules established by the

9 Medicare Board, the Board may provide for exceptions to

10 subsection (a) under circumstances that are similar to the

11 circumstances provided for under section 1851(i) (relating

12 to effect of election of Medicare+Choice plan option).

13 ‘‘PART B—COMPETITIVE PREMIUM SYSTEM

14 ‘‘SEC. 2221. PUBLICATION OF GEOGRAPHIC AND RISK AD15 JUSTERS.

16 ‘‘(a) PUBLICATION.—Not later than April 15 of each

17 year (beginning in 2002), the Medicare Board shall pub18 lish the geographic and risk adjusters established under

19 subsection (b) to be used in determining the amount of

20 payment to Medicare plans computed under section 2226.

21 ‘‘(b) ESTABLISHMENT OF GEOGRAPHIC AND RISK

22 ADJUSTERS.—

23 ‘‘(1) IN GENERAL.—Subject to paragraph (2),

24 the Medicare Board shall establish an appropriate

25 methodology for adjusting the amount of payment to
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1 Medicare plans computed under section 2226 to take

2 into account, in a budget neutral manner, appro3 priate variation in costs for core benefits—

4 ‘‘(A) based on the provision of items and

5 services in different geographic areas; and

6 ‘‘(B) based on the differences in actuarial

7 risk of different enrollees being served.

8 ‘‘(2) CONSIDERATIONS.—In establishing an ap9 propriate methodology under this subsection, the

10 Medicare Board—

11 ‘‘(A)(i) subject to clause (ii), may take into

12 account the similar methodologies used under

13 section 1853 (relating to payments to

14 Medicare+Choice organizations); and

15 ‘‘(ii) shall limit the geographic adjustment

16 to variations based on input costs of providing

17 covered items and services in different areas;

18 ‘‘(B) may provide for the risk adjustment

19 to be effected through a pooling arrangement in

20 which unfavorable risks are shared among the

21 entities offering Medicare plans in an area,

22 rather than through risk adjustment of pay23 ment made with respect to Medicare bene24 ficiaries;
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1 ‘‘(C) may establish other risk adjusters,

2 such as those based on the length of time a

3 Medicare beneficiary has been continuously en4 rolled in a Medicare plan;

5 ‘‘(D) may phase-in geographic and risk ad6 justers established under this section during the

7 transition from the Medicare Program under

8 title XVIII of the Social Security Act in effect

9 on the date of enactment of this title as nec10 essary to prevent large changes in the obliga11 tion of Medicare beneficiaries during a year;

12 and

13 ‘‘(E) shall consider the interrelationship of

14 all adjustments to the amount paid to Medicare

15 plans and obligations of Medicare beneficiaries

16 under this section, to ensure that all Medicare

17 plans have an incentive to provide efficient care.

18 ‘‘SEC. 2222. SUBMISSION OF PROPOSED MEDICARE PLANS.

19 ‘‘(a) IN GENERAL.—Each entity that intends to offer

20 a Medicare plan in a year (beginning with 2003) shall sub21 mit to the Medicare Board, at such time and in such man22 ner as the Board may specify, such information as the

23 Board may require to carry out title XVIII, including the

24 information described in subsection (b) and taking into ac-
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1 count the geographic and risk adjusters published under

2 section 2221.

3 ‘‘(b) INFORMATION DESCRIBED.—The information

4 described in this paragraph includes information on each

5 of the following:

6 ‘‘(1) BENEFITS.—A description of the benefits

7 under the plan.

8 ‘‘(2) PREMIUM BID.—The premium proposed to

9 be charged for enrollment under the plan.

10 ‘‘(3) SERVICE AREA.—The service area for the

11 plan.

12 ‘‘SEC. 2223. BOARD APPROVAL OF PROPOSED MEDICARE

13 PLANS.

14 ‘‘(a) APPROVAL OF MEDICARE PLANS BY MEDICARE

15 BOARD.—

16 ‘‘(1) IN GENERAL.—Subject to paragraph (2),

17 the Medicare Board shall approve Medicare plans—

18 ‘‘(A) in accordance with the requirements

19 established under subsection (b) and, in the

20 case of a high option Medicare plan, subsection

21 (c); and

22 ‘‘(B) subject to the terms and conditions

23 established under subsection (d).

24 ‘‘(2) HIGH OPTION MEDICARE PLAN RE25 QUIRED.—The Medicare Board may approve the of-
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1 fering of a standard Medicare plan by an entity

2 under this title in a service area only if the entity

3 also offers a Medicare plan that has been approved

4 as a high option Medicare plan in accordance with

5 the requirements established under subsection (c) in

6 that service area.

7 ‘‘(b) REQUIREMENTS FOR ALL MEDICARE PLANS.—

8 The Medicare Board may approve a Medicare plan only

9 if such plan meets the following requirements:

10 ‘‘(1) BENEFITS.—

11 ‘‘(A) IN GENERAL.—The Board may ap12 prove a Medicare plan submitted under section

13 2222 only if the benefits under such plan—

14 ‘‘(i) include the core benefits under

15 section 2202(a); and

16 ‘‘(ii) are not designed in such a man17 ner that the Board finds that it is likely to

18 result in favorable selection of Medicare

19 beneficiaries.

20 ‘‘(B) VARIATION IN COST-SHARING.—

21 ‘‘(i) IN GENERAL.—Except for the

22 HCFA-sponsored plans established under

23 section 2202, for purposes of approving a

24 Medicare plan, the Medicare Board may

25 permit reasonable variation in cost-sharing
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1 so long as the actuarial equivalence of total

2 cost-sharing for the core benefits is main3 tained.

4 ‘‘(ii) RULE OF CONSTRUCTION.—

5 Nothing in this subparagraph shall be con6 strued as preventing a Medicare plan from

7 providing, as an additional benefit, a lower

8 level of cost-sharing from that otherwise

9 described in title XVIII.

10 ‘‘(2) PREMIUM BID.—The Board may approve a

11 premium bid submitted under section 2222 only if

12 the Board finds that the premium rates are ade13 quate in terms of actuarial soundness to assure the

14 financial solvency of the entity offering the plan.

15 ‘‘(3) SERVICE AREA.—The Board may approve

16 a service area submitted under section 2222 only if

17 the Board finds that—

18 ‘‘(A) the use of such an area is consistent

19 with the purposes of this title; and

20 ‘‘(B) the service area for the plan is not

21 designed so as to discriminate based on the

22 health status, economic status, or prior receipt

23 of health care of Medicare beneficiaries.

24 ‘‘(c) SPECIAL REQUIREMENTS FOR HIGH OPTION

25 MEDICARE PLANS.—The Medicare Board may approve a
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1 Medicare plan as a high option Medicare plan only if such

2 plan includes, in addition to the core benefits under sec3 tion 2202(a), coverage for outpatient prescription drugs

4 under section 2202(b), and stop-loss coverage under

5 2202(c).

6 ‘‘(d) TERMS AND CONDITIONS.—

7 ‘‘(1) IN GENERAL.—Medicare plans approved

8 under this section shall be subject to such additional

9 terms and conditions as the Board may specify.

10 ‘‘(2) NEGOTIATION.—

11 ‘‘(A) IN GENERAL.—Subject to subpara12 graph (B), for purposes of specifying the terms

13 and conditions under paragraph (1), the Board

14 may negotiate with any entity offering a Medi15 care plan regarding the terms and conditions of

16 such plan.

17 ‘‘(B) LIMITATION.—The Medicare Board

18 may approve a Medicare plan only if the Board

19 finds that the negotiated terms and conditions

20 are consistent with the requirements of this

21 title.

22 ‘‘SEC. 2224. COMPUTATION OF CORE BENEFIT PREMIUMS.

23 ‘‘(a) IN GENERAL.—For each year (beginning with

24 2003), the Medicare Board shall compute a core benefit

25 premium for each Medicare plan approved under section
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1 2223 that reflects only the actuarial value of the core ben2 efits offered under the Medicare plan.

3 ‘‘(b) DE MINIMIS BENEFITS INCLUDED.—For pur4 poses of computing the core-benefit premium under sub5 section (a), the Board may include de minimis benefits

6 that are not core benefits.

7 ‘‘SEC. 2225. COMPUTATION OF NATIONAL AVERAGE PRE8 MIUM.

9 ‘‘(a) COMPUTATION.—

10 ‘‘(1) IN GENERAL.—For each year (beginning

11 with 2003) the Medicare Board shall compute a na12 tional average premium equal to the average of the

13 core benefit premium for each Medicare plan (as

14 computed under section 2224).

15 ‘‘(2) WEIGHTED AVERAGE.—The national aver16 age premium computed under paragraph (1) shall be

17 a weighted average, with the weight for each plan

18 being equal to the average number of beneficiaries

19 enrolled under such plan in the previous year.

20 ‘‘(b) SPECIAL RULE FOR 2003.—For purposes of ap21 plying subsection (a) in 2003, Medicare beneficiaries who

22 obtained benefits—

23 ‘‘(1) under the original fee-for-service program

24 under parts A and B of title XVIII as in effect on

25 the date of enactment of this title are deemed to
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1 have been enrolled in the HCFA-sponsored standard

2 plan; and

3 ‘‘(2) through enrollment in a Medicare+Choice

4 plan (or similar plan) are deemed to have been en5 rolled in the Medicare plan the Board determines is

6 most comparable to the Medicare+Choice plan (or

7 similar plan) in which the individual was enrolled on

8 such date.

9 ‘‘SEC. 2226. PAYMENT OF FULL AMOUNT OF MEDICARE

10 PLAN PREMIUMS.

11 ‘‘(a) IN GENERAL.—Subject to subsection (b), for

12 each year (beginning with 2003), the Board shall pay to

13 each Medicare plan in which a Medicare beneficiary is en14 rolled an amount equal to—

15 ‘‘(1) the full amount of the premium approved

16 under section 2223(b)(2) on behalf of each Medicare

17 beneficiary enrolled in such plan for the year, as ad18 justed using the geographic and risk adjusters that

19 apply to the core benefits published under section

20 2221; minus

21 ‘‘(2) the amount of any fees (as computed

22 under section 2246(b)).

23 ‘‘(b) PAYMENT TERMS.—Payment under this section

24 to an entity offering a Medicare plan shall be made in

25 a manner determined by the Medicare Board and based
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1 upon the manner in which payments are under section

2 1853(a) (relating to payments to Medicare+Choice orga3 nizations).

4 ‘‘SEC. 2227. COMPUTATION OF BENEFICIARY OBLIGATION

5 AND DRUG DISCOUNTS FOR BENEFICIARIES

6 ENROLLED IN HIGH OPTION MEDICARE

7 PLANS.

8 ‘‘(a) COMPUTATION OF BENEFICIARY OBLIGA9 TION.—Subject to subsection (b), the annual beneficiary

10 obligation for enrollment in a Medicare plan for a year

11 shall be determined as follows:

12 ‘‘(1) MEDICARE PLAN PREMIUMS OF LESS

13 THAN 85 PERCENT OF THE NATIONAL AVERAGE.—If

14 the amount of the premium approved by the Board

15 under section 2223 for the Medicare plan does not

16 exceed 85 percent of the national average premium

17 (as computed under section 2225) the obligation of

18 the Medicare beneficiary shall be zero.

19 ‘‘(2) MEDICARE PLAN PREMIUMS BETWEEN 85

20 AND 100 PERCENT OF THE NATIONAL AVERAGE.—If

21 the amount of the premium approved by the Board

22 under section 2223 for a Medicare plan exceeds 85

23 percent of the national average premium, but does

24 not exceed 100 percent of the national average pre25 mium, the obligation of the Medicare beneficiary
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1 shall be equal to 80 percent of the amount by which

2 the premium for the plan exceeds 85 percent of the

3 national average premium.

4 ‘‘(3) MEDICARE PLAN PREMIUMS EQUAL TO OR

5 GREATER THAN THE NATIONAL AVERAGE.—If the

6 amount of the premium approved by the Board

7 under section 2223 for a Medicare plan equals or ex8 ceeds 100 percent of the national average premium

9 the obligation of the Medicare beneficiary shall be

10 equal to the sum of—

11 ‘‘(A) 12 percent of the national average

12 premium; and

13 ‘‘(B) the amount by which the premium

14 approved by the Board under section 2223 for

15 the Medicare plan exceeds the amount of the

16 national average premium.

17 ‘‘(b) DISCOUNTS FOR BENEFICIARIES ENROLLED IN

18 HIGH OPTION MEDICARE PLANS.—

19 ‘‘(1) IN GENERAL.—The beneficiary obligation

20 determined under this section for any Medicare ben21 eficiary enrolled in a high option Medicare plan shall

22 be reduced by the discount determined under para23 graph (2).

24 ‘‘(2) DETERMINATION OF DISCOUNT.—The dis25 count determined under this paragraph is the
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1 amount equal to the applicable percentage (as deter2 mined under paragraph (3)) of the benefit amount

3 for outpatient prescription drugs determined under

4 section 2202(b) for the year.

5 ‘‘(3) APPLICABLE PERCENTAGE.—

6 ‘‘(A) INDIVIDUALS WITH INCOME THAT EX7 CEEDS 150 PERCENT OF POVERTY.—In the case

8 of a Medicare beneficiary whose income (as de9 termined for purposes of section 1905(p) and

10 without regard to paragraph (4)) exceeds 150

11 percent of the official poverty line (referred to

12 in paragraph (2)(A) of such section) applicable

13 to a family of the size involved, the applicable

14 percentage shall be 25 percent.

15 ‘‘(B) INDIVIDUALS WITH INCOME BE16 TWEEN 135 AND 150 PERCENT OF POVERTY.—

17 In the case of a Medicare beneficiary whose in18 come (as so determined) exceeds 135 percent

19 but does not exceed 150 percent of such poverty

20 line, the applicable percentage shall be a per21 cent, equal to 50 percent reduced (but not

22 below 25 percent) by 1.67 percentage points for

23 each percentage point by which such income ex24 ceeds 135 percent of such poverty line.

25 ‘‘(4) TAX TREATMENT OF DISCOUNT.—
26

•S 1895 IS

1 ‘‘(A) IN GENERAL.—For purposes of the

2 Internal Revenue Code of 1986, the discount

3 determined under paragraph (2) for a Medicare

4 beneficiary for a year shall be included in the

5 gross income of the beneficiary for the year.

6 ‘‘(B) STATEMENT OF TAXABLE AMOUNT.—

7 Not later than January 31 of each year (begin8 ning with 2004), the Medicare Board shall

9 provide—

10 ‘‘(i) each Medicare beneficiary with a

11 statement that describes the amount of the

12 discount that is required to be included in

13 the gross income of the beneficiary for the

14 previous year pursuant to subparagraph

15 (A); and

16 ‘‘(ii) the Secretary of the Treasury

17 with the information described in clause

18 (i).

19 ‘‘(5) PUBLICATION OF DISCOUNTED PRE20 MIUMS.—For each year (beginning with 2003), the

21 Medicare Board shall publish in the Board’s an22 nouncement of the premiums for Medicare plans

23 each year the amount of the beneficiary obligation

24 after applying the discount determined under para25 graph (2) for each high option Medicare plan.
27

•S 1895 IS

1 ‘‘SEC. 2228. COLLECTION OF BENEFICIARY OBLIGATION.

2 ‘‘(a) COLLECTION OF AMOUNT IN SAME MANNER AS

3 PART B PREMIUM.—The amount of the annual bene4 ficiary obligation determined under section 2227 shall be

5 paid to the Medicare Trust Fund in the same manner as

6 monthly premiums under part B of title XVIII were pay7 able to the credit of the Federal Supplementary Medical

8 Insurance Trust Fund under section 1840 (relating to

9 payment of premiums) as in effect as of the date of enact10 ment of this title.

11 ‘‘(b) INFORMATION NECESSARY FOR COLLECTION.—

12 In order to carry out paragraph (1), the Medicare Board

13 shall transmit to the Commissioner of Social Security—

14 ‘‘(1) at the beginning of each year, the name,

15 social security account number, and annual bene16 ficiary obligation owed by each individual enrolled in

17 a Medicare plan for each month during the year;

18 and

19 ‘‘(2) periodically throughout the year, informa20 tion to update the information previously trans21 mitted under this paragraph for the year.

22 ‘‘SEC. 2229. RELATION TO CERTAIN PROVISIONS.

23 ‘‘(a) RELATION TO CERTAIN PROVISIONS.—Begin24 ning on January 1, 2003, the following provisions of law

25 are modified as follows, in order to reflect the policies

26 specified in this part:
28

•S 1895 IS

1 ‘‘(1) CHANGE IN PAYMENT RULES.—Subject to

2 subsection (b), in applying section 1853 (relating to

3 payments to Medicare+Choice organizations), pay4 ment rates established under section 2226 shall su5 persede the annual Medicare+Choice capitation rate

6 calculated under section 1853(c) (relating to calcula7 tion of annual Medicare+Choice capitation rates).

8 ‘‘(2) PART B PREMIUM.—No separate premium

9 is payable under section 1839 (relating to amount of

10 premiums).

11 ‘‘(b) RELATION TO OTHER PROVISIONS.—The fact

12 that a provision is not cited in this subsection does not

13 indicate that the provision is not modified under this title

14 in some manner consistent with section 2200(a).

15 ‘‘PART C—MEDICARE BOARD CHARTER

16 ‘‘SEC. 2241. MEDICARE BOARD.

17 ‘‘(a) ESTABLISHMENT.—There is established as an

18 independent agency of the United States a Medicare

19 Board (in this part referred to as the ‘Board’).

20 ‘‘(b) MEMBERSHIP.—

21 ‘‘(1) NUMBER AND APPOINTMENT.—The Board

22 shall be composed of 7 members appointed by the

23 President, by and with the advice and consent of the

24 Senate.
29

•S 1895 IS

1 ‘‘(2) DEADLINE FOR INITIAL APPOINTMENT.—

2 The initial members of the Board shall be nominated

3 for appointment by not later than 6 months after

4 the date of enactment of this title.

5 ‘‘(3) TERMS.—

6 ‘‘(A) IN GENERAL.—The terms of mem7 bers of the Board shall be for 7 years, except

8 that of the members first appointed—

9 ‘‘(i) 3 shall be appointed for terms of

10 3 years;

11 ‘‘(ii) 2 shall be appointed for terms of

12 5 years; and

13 ‘‘(iii) 2 shall be appointed for terms of

14 7 years.

15 ‘‘(B) VACANCIES.—Any member appointed

16 to fill a vacancy occurring before the expiration

17 of the term for which the member’s predecessor

18 was appointed shall be appointed only for the

19 remainder of that term. A member may serve

20 after the expiration of that member’s term until

21 a successor has taken office.

22 ‘‘(C) LIMITATION ON NUMBER OF

23 TERMS.—Any person appointed as a member of

24 the Board shall not be eligible for reappoint25 ment to the Board after having served 2 terms.
30

•S 1895 IS

1 ‘‘(4) CHAIRPERSON AND OTHER OFFICERS.—

2 The Board shall elect a chairperson and such offi3 cers as the Board determines appropriate.

4 ‘‘(c) OPERATION OF THE BOARD.—

5 ‘‘(1) MEETINGS.—The Board shall meet at the

6 call of its chairperson or a majority of its members.

7 ‘‘(2) QUORUM.—A quorum shall consist of 4

8 members of the Board, except that the Board may

9 establish a lesser quorum to conduct a hearing

10 under section 2243(a).

11 ‘‘SEC. 2242. DUTIES OF THE BOARD.

12 ‘‘(a) ADMINISTRATION OF COMPETITIVE PREMIUM

13 SYSTEM.—Except as otherwise provided in this title and

14 effective with respect to benefits furnished on or after Jan15 uary 1, 2003, the Board shall—

16 ‘‘(1) coordinate determinations of beneficiary

17 eligibility and enrollment under title XVIII with the

18 Commissioner of Social Security;

19 ‘‘(2) enter into, and enforce, contracts with en20 tities for the offering of Medicare plans under part

21 A of this title, including contracting with the Divi22 sion of HCFA-Sponsored Plans of HCFA (as estab23 lished under section 2281(a)(1)) for the offering of

24 the HCFA-sponsored plans;
31

•S 1895 IS

1 ‘‘(3) disseminate to Medicare beneficiaries in2 formation with respect to benefits, limitations on

3 payment, under Medicare plans, including a com4 parative analysis of Medicare plans and the quality

5 of such plans in the area in which the Medicare ben6 eficiary resides; and

7 ‘‘(4) establish a Medicare beneficiary education

8 program to provide timely, readable, accurate, and

9 understandable information to Medicare beneficiaries

10 regarding Medicare plan options.

11 ‘‘(b) RELATION TO HCFA-SPONSORED PLANS.—The

12 Board shall not be responsible for the establishment and

13 operation of HCFA-sponsored plans (provided for under

14 section 2282), but shall have oversight authority over such

15 plans in a similar manner to that provided with respect

16 to other Medicare plans.

17 ‘‘(c) TRANSITION PROVISIONS.—The Secretary and

18 the Board shall cooperate to establish an appropriate tran19 sition of responsibility for the administration of title

20 XVIII and other related laws, from the Secretary to the

21 Board as is appropriate to carry out the purposes of this

22 title and as is consistent with the responsibilities of the

23 Division of Health Programs of HCFA (established under

24 section 2281(a)(2)). Insofar as a responsibility is trans25 ferred to the Board under this subsection, any reference
32

•S 1895 IS

1 to the Secretary in title XVIII or other provision of law

2 with respect to such responsibility is deemed to be a ref3 erence to the Board.

4 ‘‘SEC. 2243. POWERS OF THE BOARD.

5 ‘‘(a) IN GENERAL.—The Board may, for the purpose

6 of carrying out its duties, promulgate regulations, hold

7 hearings, sit and act at times and places, take testimony,

8 and receive evidence as the Board considers appropriate.

9 ‘‘(b) CONTRACT AUTHORITY.—The Board may con10 tract with, and compensate, government and private agen11 cies or persons for items and services, without regard to

12 section 3709 of the Revised Statutes (41 U.S.C. 5).

13 ‘‘(c) BOARD AUTHORITY TO PERMIT FLEXIBILITY IN

14 REQUIREMENTS.—In promulgating regulations under

15 subsection (a) to carry out the requirements of part C of

16 title XVIII, the Board may modify the regulations pre17 viously promulgated by the Secretary to carry out such

18 requirements (other than those relating to benefits or ben19 eficiary protections) as may be appropriate to better meet

20 the needs of Medicare beneficiaries and promote fair and

21 open competition among Medicare plans.

22 ‘‘(d) OVERSEEING SOLVENCY OF HCFA-SPONSORED

23 PLANS.—The Board shall monitor and oversee the finan24 cial solvency of the HCFA-sponsored plans in a manner

25 similar to the manner in which State insurance commis-
33

•S 1895 IS

1 sioners monitor and oversee the solvency of health insur2 ance issuers in the States. The Board shall include in its

3 periodic reports to Congress an analysis of the solvency

4 of such plans.

5 ‘‘SEC. 2244. BOARD PERSONNEL MATTERS.

6 ‘‘(a) MEMBERS.—

7 ‘‘(1) COMPENSATION.—Members of the Board

8 shall devote their entire time to the business of the

9 Board, and each member shall be compensated at a

10 rate equal to the per diem equivalent of the rate pro11 vided for level II of the Executive Schedule under

12 section 5315 of title 5, United States Code.

13 ‘‘(2) TRAVEL EXPENSES.—The members of the

14 Board shall be allowed travel expenses, including per

15 diem in lieu of subsistence, at rates authorized for

16 employees of agencies under subchapter I of chapter

17 57 of title 5, United States Code, while away from

18 their homes or regular places of business in the per19 formance of service for the Board.

20 ‘‘(3) REMOVAL.—The President may remove a

21 member of the Board only for neglect of duty or

22 malfeasance in office.

23 ‘‘(b) STAFF AND SUPPORT SERVICES.—
34

•S 1895 IS

1 ‘‘(1) EXECUTIVE DIRECTOR.—The chairperson

2 shall appoint an executive director of the Board who

3 shall be paid at a rate specified by the Board.

4 ‘‘(2) STAFF.—With the approval of the Board,

5 the executive director may appoint such personnel as

6 the executive director considers appropriate.

7 ‘‘(3) INAPPLICABILITY OF CIVIL SERVICE

8 LAWS.—The staff of the Board shall be appointed

9 without regard to the provisions of title 5, United

10 States Code, governing appointments in the competi11 tive service, and shall be paid without regard to the

12 provisions of chapter 51 and subchapter III of chap13 ter 53 of such title (relating to classification and

14 General Schedule pay rates).

15 ‘‘(4) EXPERTS AND CONSULTANTS.—With the

16 approval of the Board, the executive director may

17 procure temporary and intermittent services under

18 section 3109(b) of title 5, United States Code.

19 ‘‘(c) TRANSFER OF PERSONNEL, ASSETS, ETC.—For

20 purposes of the Board carrying out its duties, the Sec21 retary and the Board may provide for the transfer to the

22 Board of such civil service personnel employed by the De23 partment of Health and Human Services, and such re24 sources and assets of the Department used in carrying out

25 title XVIII, as the Board requires.
35

•S 1895 IS

1 ‘‘SEC. 2245. REPORTS; COMMUNICATIONS WITH CONGRESS.

2 ‘‘(a) REPORT ON MEDICARE PROGRAM.—Not less

3 frequently than annually, the Board shall submit to Con4 gress such reports describing the Medicare Program under

5 title XVIII as the Board determines appropriate.

6 ‘‘(b) MAINTAINING INDEPENDENCE OF BOARD IN

7 COMMUNICATIONS WITH CONGRESS.—The Board may di8 rectly submit to Congress reports, legislative recommenda9 tions, testimony, or comments on legislation. No officer

10 or agency of the United States may require the Board to

11 submit to any officer or agency of the United States for

12 approval, comments, or review, prior to the submission to

13 Congress of such reports, recommendations, testimony, or

14 comments.

15 ‘‘SEC. 2246. FUNDING OF THE BOARD.

16 ‘‘(a) INITIAL YEARS.—There is authorized to be ap17 propriated to the Board for each of fiscal years 2000

18 through 2002, in appropriate part from the Federal Hos19 pital Insurance Trust Fund and from the Federal Supple20 mentary Medical Insurance Trust Fund, such sums as are

21 necessary for the Board to carry out its duties.

22 ‘‘(b) FEES.—For purposes of the Board carrying out

23 its duties for fiscal years beginning after fiscal year 2002,

24 the Board may levy on Medicare plans an assessment suf25 ficient to pay its estimated expenses and the salaries of

26 its members and employees for a fiscal year. Such assess-
36

•S 1895 IS

1 ments shall be deposited into the Medicare Trust Fund

2 (established under section 2221) and shall be available for

3 such purpose without regard to amounts provided for in

4 advance by appropriations Acts.

5 ‘‘PART D—UNIFIED MEDICARE TRUST FUND

6 ‘‘SEC. 2261. UNIFIED MEDICARE TRUST FUND.

7 ‘‘(a) ESTABLISHMENT.—Beginning on January 1,

8 2003, there is created on the books of the Treasury of

9 the United States a trust fund to be known as the Medi10 care Trust Fund.

11 ‘‘(b) AMOUNTS IN MEDICARE TRUST FUND.—

12 ‘‘(1) IN GENERAL.—The Medicare Trust Fund

13 shall consist of the following amounts:

14 ‘‘(A) Amounts deposited in, or appro15 priated to, the Medicare Trust Fund as pro16 vided in this title.

17 ‘‘(B) Any gifts and bequests made to the

18 Medicare Trust Fund as provided in section

19 201(i)(1).

20 ‘‘(2) APPROPRIATION OF HOSPITAL INSURANCE

21 TAXES.—

22 ‘‘(A) IN GENERAL.—Beginning January 1,

23 2003, and for each subsequent year, there is

24 appropriated to the Medicare Trust Fund, out

25 of moneys in the Treasury not otherwise appro-
37

•S 1895 IS

1 priated, an amount equal to 100 percent of the

2 taxes described in paragraphs (1) and (2) of

3 section 1817(a).

4 ‘‘(B) TRANSFER.—The amounts appro5 priated pursuant to subparagraph (A) shall be

6 transferred from time to time from the general

7 fund in the Treasury to the Medicare Trust

8 Fund. The amount to be transferred under this

9 paragraph shall be determined on the basis of

10 estimates by the Secretary of the Treasury of

11 the taxes, described in such paragraph, paid to

12 or deposited into the Treasury. The Secretary

13 of the Treasury shall make adjustments in

14 amounts subsequently transferred to the extent

15 that prior estimates were in excess of, or were

16 less than, such taxes.

17 ‘‘(3) GENERAL REVENUE CONTRIBUTION.—Be18 ginning January 1, 2003, and for each subsequent

19 year, there is appropriated to the Medicare Trust

20 Fund, out of moneys in the Treasury not otherwise

21 appropriated, from time to time, subject to the limi22 tation described in section 2262(c), an amount equal

23 to the amount by which the aggregate expenditures

24 under this title (including payments made to Medi25 care plans under section 2226) exceed the sum of—
38

•S 1895 IS

1 ‘‘(A) the amount appropriated under para2 graph (2) for the period involved;

3 ‘‘(B) the beneficiary obligations collected

4 under section 2227 for such period; and

5 ‘‘(C) the fees collected under section 2246

6 for such period.

7 ‘‘(4) TRANSFER OF BALANCES IN HI AND SMI

8 TRUST FUNDS.—On January 1, 2003, the Secretary

9 of the Treasury shall transfer to the Medicare Trust

10 Fund any balances in the Federal Hospital Insur11 ance Trust Fund or the Federal Supplementary

12 Medical Insurance Trust Fund.

13 ‘‘(5) APPLICATION TO OBLIGATIONS OF, AND

14 AMOUNTS OWED TO, THE PART A AND B TRUST

15 FUNDS.—

16 ‘‘(A) CERTIFICATION.—Beginning January

17 1, 2003, the Director of the Division of HCFA18 Sponsored Plans of HCFA shall periodically

19 certify to the Board of Trustees of the Medicare

20 Trust Fund any amounts that would otherwise

21 be—

22 ‘‘(i) payable from the Federal Hos23 pital Insurance Trust Fund or the Federal

24 Supplementary Medical Insurance Trust
39

•S 1895 IS

1 Fund for items and services provided prior

2 to such date; or

3 ‘‘(ii) due to such Trust Funds for

4 items and services provided prior to such

5 date.

6 ‘‘(B) TRANSFERS AND DEPOSITS.—

7 ‘‘(i) TRANSFERS.—If the Director of

8 the Division of HCFA-Sponsored Plans of

9 HCFA certifies an amount pursuant to

10 subparagraph (A)(i), the Board of Trust11 ees of the Medicare Trust Fund shall

12 transfer to the Director of the Division of

13 HCFA-Sponsored Plans of HCFA from

14 such Trust Fund an amount equal to the

15 amount certified.

16 ‘‘(ii) DEPOSITS.—If the Director of

17 the Division of HCFA-Sponsored Plans of

18 HCFA certifies an amount pursuant to

19 subparagraph (A)(ii), the Director of the

20 Division of HCFA-Sponsored Plans shall

21 deposit in the Medicare Trust Fund an

22 amount equal to the amount certified.

23 ‘‘(c) APPLICATION OF HI TRUST FUND PROVI24 SIONS.—Subject to other provisions of this title, the provi25 sions of subsections (b) through (k) of section 1817 shall
40

•S 1895 IS

1 apply to title XVIII and the Medicare Trust Fund in the

2 same manner as they apply to part A of title XVIII and

3 the Federal Hospital Insurance Trust Fund, respectively.

4 ‘‘(d) CONFORMING PROVISIONS.—Beginning on Jan5 uary 1, 2003—

6 ‘‘(1) no additional amounts are authorized to be

7 appropriated under section 1844(a); and

8 ‘‘(2) no amounts shall be deposited in, or ap9 propriated to, the Federal Hospital Insurance Trust

10 Fund or the Federal Supplementary Medical Insur11 ance Trust Fund.

12 ‘‘(e) CONFORMING REFERENCES.—Beginning on

13 January 1, 2003, any reference in law or regulation (in

14 effect before such date) to the Federal Hospital Insurance

15 Trust Fund or the Federal Supplementary Medical Insur16 ance Trust Fund is deemed a reference to the Medicare

17 Trust Fund.

18 ‘‘SEC. 2262. PROGRAMMATIC INSOLVENCY AND LIMITATION

19 ON GENERAL REVENUE FINANCING.

20 ‘‘(a) ANNUAL DETERMINATIONS.—In addition to any

21 other duties, the Board of Trustees of the Medicare Trust

22 Fund (in this section referred to as the ‘Board of Trust23 ees’) shall determine and report to Congress as part of

24 its annual report each year the following:
41

•S 1895 IS

1 ‘‘(1) The percentage of total expenditures from

2 the Medicare Trust Fund that is financed by the

3 general revenue contributions described in section

4 2261(b)(3).

5 ‘‘(2) The first fiscal year (if any) that the Medi6 care Trust Fund is projected to become program7 matically insolvent (as defined in subsection (b)).

8 ‘‘(3) After taking into account the limitation

9 described in subsection (c), the first fiscal year (if

10 any) in which the amounts in the Medicare Trust

11 Fund will be insufficient to pay for the total ex12 penses incurred under title XVIII (as revised by this

13 title).

14 ‘‘(b) PROGRAMMATIC INSOLVENCY DEFINED.—

15 ‘‘(1) IN GENERAL.—For purposes of this part,

16 the Medicare Trust Fund shall be deemed to be

17 ‘programmatically insolvent’ for a fiscal year if the

18 amount appropriated to the Medicare Trust Fund

19 under section 2261(b)(3) would, but for subsection

20 (c), exceed 40 percent of the amount described in

21 paragraph (2).

22 ‘‘(2) NET EXPENDITURES ON BASIC BENE23 FITS.—The amount described in this paragraph is,

24 as estimated by the Board of Trustees in consulta25 tion with the Medicare Board and the Secretary of
42

•S 1895 IS

1 the Treasury, the total expenditures from the Medi2 care Trust Fund in the fiscal year involved, reduced

3 by an amount equal to the administrative expenses

4 of the Medicare Board for that fiscal year.

5 ‘‘(c) LIMITATION ON GENERAL REVENUE FINANC6 ING.—The amount of the appropriation provided in sec7 tion 2261(b)(3) in a fiscal year may not exceed 40 percent

8 of the amount described in subsection (b)(2).

9 ‘‘PART E—HCFA DUTIES AND RESPONSIBILITIES

10 ‘‘SEC. 2281. REORGANIZATION OF HCFA.

11 ‘‘(a) ESTABLISHMENT OF DIVISIONS.—

12 ‘‘(1) DIVISION OF HCFA-SPONSORED PLANS.—

13 There is established within HCFA the Division of

14 HCFA-Sponsored Plans.

15 ‘‘(2) DIVISION OF HEALTH PROGRAMS.—There

16 is established within HCFA the Division of Health

17 Programs.

18 ‘‘(b) ADMINISTRATION.—

19 ‘‘(1) IN GENERAL.—Each Division established

20 under subsection (a) shall be administered by a Di21 rector appointed by the President with the advice

22 and consent of the Senate. Level V of the Executive

23 Schedule Pay Rates shall apply to each Director.

24 ‘‘(2) APPOINTMENT.—The President shall

25 nominate a Director for each Division established
43

•S 1895 IS

1 under subsection (a) by not later than 6 months

2 after the date of enactment of this Act.

3 ‘‘(c) TRANSFER OF FUNCTIONS.—

4 ‘‘(1) DIVISION OF HCFA-SPONSORED

5 PLANS.—There are transferred to the Division of

6 HCFA-Sponsored Plans all functions relating to

7 health care benefits that are made available under

8 title XVIII through the original fee-for-service pro9 gram (referred to in section 1851(a)(1)(A)) which

10 HCFA exercised on the day before the date of enact11 ment of this title (including all related functions of

12 any officer or employee of HCFA).

13 ‘‘(2) DIVISION OF HEALTH PROGRAMS.—There

14 are transferred to the Division of Health Programs

15 all functions which HCFA exercised on the day be16 fore the date of enactment of this title which are not

17 transferred under paragraph (1) to the Division of

18 HCFA-Sponsored Plans, including functions relating

19 to the following:

20 ‘‘(A) The administration of the Medicaid

21 Program under title XIX.

22 ‘‘(B) The administration of the State chil23 dren’s health insurance program under title

24 XXI.
44

•S 1895 IS

1 ‘‘(C) Federal support of graduate medical

2 education.

3 ‘‘(D) Federal support of hospitals that

4 serve a significantly disproportionate number of

5 patients who have low income.

6 ‘‘(3) DETERMINATION OF CERTAIN FUNC7 TIONS.—If necessary, the Office of Management and

8 Budget shall make any determination of the func9 tions that are transferred under paragraphs (1) and

10 (2).

11 ‘‘(4) DEFINITION OF FUNCTION.—In this sec12 tion, the term ‘function’ means any duty, obligation,

13 power, authority, responsibility, right, privilege, ac14 tivity, or program.

15 ‘‘(5) OFFICE.—The term ‘office’ includes any

16 office, administration, agency, institute, unit, organi17 zational entity, or component thereof.

18 ‘‘(d) PERSONNEL.—

19 ‘‘(1) APPOINTMENTS.—Each Director ap20 pointed in accordance with subsection (b) may ap21 point and fix the compensation of such officers and

22 employees, including investigators, attorneys, and

23 administrative law judges, as may be necessary to

24 carry out the respective functions transferred under

25 subsection (c). Except as otherwise provided by law,
45

•S 1895 IS

1 such officers and employees shall be appointed in ac2 cordance with the civil service laws and their com3 pensation fixed in accordance with title 5, United

4 States Code.

5 ‘‘(2) EXPERTS AND CONSULTANTS.—Each such

6 Director may—

7 ‘‘(A) obtain the services of experts and

8 consultants in accordance with section 3109 of

9 title 5, United States Code, and compensate

10 such experts and consultants for each day (in11 cluding travel time) at rates not in excess of the

12 rate of pay for level IV of the Executive Sched13 ule under section 5315 of such title; and

14 ‘‘(B) pay experts and consultants who are

15 serving away from their homes or regular place

16 of business travel expenses and per diem in lieu

17 of subsistence at rates authorized by sections

18 5702 and 5703 of such title for persons in Gov19 ernment service employed intermittently.

20 ‘‘(e) DELEGATION AND ASSIGNMENT.—Except where

21 otherwise expressly prohibited by law or otherwise pro22 vided by this section, each Director appointed in accord23 ance with subsection (b) may delegate any of the functions

24 transferred to the Director under subsection (c) and any

25 function transferred or granted to such Director after the
46

•S 1895 IS

1 effective date of this title to such officers and employees

2 of the Division headed by such Director as the Director

3 may designate, and may authorize successive redelegations

4 of such functions as may be necessary or appropriate. No

5 delegation of functions by the Director of the Division of

6 HCFA-Sponsored Plans or the Division of Health Pro7 grams under this paragraph or under any other provision

8 of law shall relieve such Director of responsibility for the

9 administration of such functions.

10 ‘‘(f) REORGANIZATION.—Each Director appointed in

11 accordance with subsection (b) may allocate or reallocate

12 any function transferred under subsection (c) among the

13 officers of the Division headed by the Director, and to es14 tablish, consolidate, alter, or discontinue such organiza15 tional entities in the Division as may be necessary or ap16 propriate.

17 ‘‘(g) RULES.—Each Director appointed in accordance

18 with subsection (b) may prescribe, in accordance with the

19 provisions of chapters 5 and 6 of title 5, United States

20 Code, such rules and regulations as such Director deter21 mines are necessary or appropriate to administer and

22 manage the functions of the Division headed by the Direc23 tor.

24 ‘‘(h) TRANSFER AND ALLOCATIONS OF APPROPRIA25 TIONS AND PERSONNEL.—Except as otherwise provided
47

•S 1895 IS

1 in this section, the personnel employed in connection with,

2 and the assets, liabilities, contracts, property, records, and

3 unexpended balances of appropriations, authorizations, al4 locations, and other funds employed, used, held, arising

5 from, available to, or to be made available in connection

6 with the functions transferred under subsection (c), sub7 ject to section 1531 of title 31, United States Code, shall

8 be transferred to the Division of HCFA-Sponsored Plans

9 or the Division of Health Programs, as appropriate. Unex10 pended funds transferred pursuant to this subsection shall

11 be used only for the purposes for which the funds were

12 originally authorized and appropriated.

13 ‘‘(i) INCIDENTAL TRANSFERS.—The Director of the

14 Office of Management and Budget, at such time or times

15 as the Director shall provide, is authorized to make such

16 determinations as may be necessary with regard to the

17 functions transferred by subsection (c), and to make such

18 additional incidental dispositions of personnel, assets, li19 abilities, grants, contracts, property, records, and unex20 pended balances of appropriations, authorizations, alloca21 tions, and other funds held, used, arising from, available

22 to, or to be made available in connection with such func23 tions, as may be necessary to carry out the provisions of

24 this section. The Director of the Office of Management

25 and Budget shall provide for the termination of the affairs
48

•S 1895 IS

1 of all entities terminated by this section and for such fur2 ther measures and dispositions as may be necessary to ef3 fectuate the purposes of this section.

4 ‘‘(j) EFFECT ON PERSONNEL.—

5 ‘‘(1) IN GENERAL.—Except as otherwise pro6 vided by this section, the transfer pursuant to this

7 section of full-time personnel (except special Govern8 ment employees) and part-time personnel holding

9 permanent positions shall not cause any such per10 sonnel to be separated or reduced in grade or com11 pensation for 1 year after the date of transfer of

12 such personnel under this section.

13 ‘‘(2) EXECUTIVE SCHEDULE POSITIONS.—Ex14 cept as otherwise provided in this section, any per15 son who, on the day preceding the effective date of

16 this title, held a position compensated in accordance

17 with the Executive Schedule prescribed in chapter

18 53 of title 5, United States Code, and who, without

19 a break in service, is appointed in the Division of

20 HCFA-Sponsored Plans or the Division of Health

21 Programs to a position having duties comparable to

22 the duties performed immediately preceding such ap23 pointment shall continue to be compensated in such

24 new position at not less than the rate provided for
49

•S 1895 IS

1 such previous position, for the duration of the serv2 ice of such person in such new position.

3 ‘‘(k) SAVINGS PROVISIONS.—

4 ‘‘(1) CONTINUING EFFECT OF LEGAL DOCU5 MENTS.—All orders, determinations, rules, regula6 tions, permits, agreements, grants, contracts, certifi7 cates, licenses, registrations, privileges, and other

8 administrative actions—

9 ‘‘(A) which have been issued, made, grant10 ed, or allowed to become effective by the Presi11 dent, any Federal agency or official thereof, or

12 by a court of competent jurisdiction, in the per13 formance of functions which are transferred

14 under subsection (c); and

15 ‘‘(B) which are in effect at the time this

16 title takes effect, or were final before the effec17 tive date of this title and are to become effec18 tive on or after the effective date of this title,

19 shall continue in effect according to their terms until

20 modified, terminated, superseded, set aside, or re21 voked in accordance with law by the President, the

22 Director of the Division of HCFA-Sponsored Plans

23 or the Director of the Division of Health Programs

24 (as appropriate) or other authorized official, a court

25 of competent jurisdiction, or by operation of law.
50

•S 1895 IS

1 ‘‘(2) PROCEEDINGS NOT AFFECTED.—The pro2 visions of this section shall not affect any pro3 ceedings, including notices of proposed rulemaking,

4 or any application for any license, permit, certificate,

5 or financial assistance pending before HCFA at the

6 time this title takes effect, with respect to functions

7 transferred by subsection (c), and such proceedings

8 and applications shall be continued. Orders shall be

9 issued in such proceedings, appeals shall be taken

10 therefrom, and payments shall be made pursuant to

11 such orders, as if this section had not been enacted,

12 and orders issued in any such proceedings shall con13 tinue in effect until modified, terminated, super14 seded, or revoked by a duly authorized official, by a

15 court of competent jurisdiction, or by operation of

16 law. Nothing in this paragraph shall be deemed to

17 prohibit the discontinuance or modification of any

18 such proceeding under the same terms and condi19 tions and to the same extent that such proceeding

20 could have been discontinued or modified if this sec21 tion had not been enacted.

22 ‘‘(3) SUITS NOT AFFECTED.—The provisions of

23 this section shall not affect suits commenced before

24 the effective date of this title, and in all such suits,

25 proceedings shall be had, appeals taken, and judg-
51

•S 1895 IS

1 ments rendered in the same manner and with the

2 same effect as if this section had not been enacted.

3 ‘‘(4) NONABATEMENT OF ACTIONS.—No suit,

4 action, or other proceeding commenced by or against

5 HCFA or by or against any individual in the official

6 capacity of such individual as an officer of HCFA,

7 shall abate by reason of enactment of this section.

8 ‘‘(5) ADMINISTRATIVE ACTIONS RELATING TO

9 PROMULGATION OF REGULATIONS.—Any administra10 tive action relating to the preparation or promulga11 tion of a regulation by HCFA relating to a function

12 transferred under this section may be continued by

13 the Division of HCFA-Sponsored Plans or the Divi14 sion of Health Programs (as appropriate) with the

15 same effect as if this section had not been enacted.

16 ‘‘(l) SEPARABILITY.—If a provision of this section or

17 its application to any person or circumstance is held in18 valid, neither the remainder of this section nor the applica19 tion of the provision to other persons or circumstances

20 shall be affected.

21 ‘‘(m) TRANSITION.—Each Director appointed in ac22 cordance with subsection (b) may utilize—

23 ‘‘(1) the services of such officers, employees,

24 and other personnel of the Department of Health

25 and Human Services with respect to functions trans-
52

•S 1895 IS

1 ferred to the Division of HCFA-Sponsored Plans or

2 the Division of Health Programs under subsection

3 (c); and

4 ‘‘(2) funds appropriated to such functions for

5 such period of time as may reasonably be needed to

6 facilitate the orderly implementation of this section.

7 ‘‘(n) REFERENCES.—Reference in any other Federal

8 law, Executive order, rule, regulation, or delegation of au9 thority, or any document of or relating to HCFA with re10 gard to functions transferred under subsection (c), shall

11 be deemed to refer to the Division of HCFA-Sponsored

12 Plans, the Director of the Division of HCFA-Sponsored

13 Plans, the Division of Health Programs, or the Director

14 of the Division of Health Programs, as appropriate.

15 ‘‘SEC. 2282. ESTABLISHMENT OF HCFA-SPONSORED PLANS.

16 ‘‘(a) ESTABLISHMENT.—

17 ‘‘(1) IN GENERAL.—Beginning on January 1,

18 2003, the Director of the Division of HCFA-Spon19 sored Plans of HCFA (in this section referred to as

20 the ‘‘Director’’) shall offer the Medicare plans de21 scribed in paragraph (2).

22 ‘‘(2) HCFA-SPONSORED PLANS.—

23 ‘‘(A) HCFA-SPONSORED STANDARD

24 PLANS.—The Director shall offer 1 standard

25 Medicare plan throughout the United States,
53

•S 1895 IS

1 which shall include only the core benefits under

2 section 2202(a).

3 ‘‘(B) HCFA-SPONSORED HIGH OPTION

4 PLANS.—The Director shall offer at least 1

5 high option Medicare plan in each area within

6 the United States, which shall include only—

7 ‘‘(i) the core benefits under section

8 2202(a);

9 ‘‘(ii) the outpatient prescription drug

10 benefit under section 2202(b), which shall

11 be provided in accordance with section

12 2283; and

13 ‘‘(iii) stop-loss coverage under section

14 2202(c).

15 ‘‘(3) APPROVAL OF HCFA-SPONSORED PLANS.—

16 ‘‘(A) IN GENERAL.—Except as otherwise

17 provided in this title, the HCFA-sponsored

18 plans shall be subject to the provisions of this

19 title in the same manner as other Medicare

20 plans, including the requirement that the Direc21 tor submit information regarding each HCFA22 sponsored plan to be offered pursuant to section

23 2222 and the required Board approval of such

24 plans pursuant to section 2223.
54

•S 1895 IS

1 ‘‘(B) PREMIUM BID APPROVAL.—The pre2 miums submitted under section 2222 for the

3 HCFA-sponsored standard plan and each

4 HCFA-sponsored high option plan shall be com5 puted separately to ensure that the HCFA6 sponsored standard plan and each HCFA-spon7 sored high option plan is separately self-sus8 taining, without cross subsidies between the

9 plans.

10 ‘‘(b) FINANCIAL PROVISIONS.—

11 ‘‘(1) ASSUMPTION OF FINANCIAL RISK.—Except

12 as provided in section 2283(c), the Division of

13 HCFA-Sponsored Plans of HCFA shall bear full fi14 nancial risk for the provision of services under the

15 HCFA-sponsored plans in the same manner as a

16 Medicare+Choice organization bears full financial

17 risk for a Medicare+Choice plan that it offers under

18 section 1855(b). In assuming such risk, the Division

19 of HCFA-Sponsored Plans may ensure continued

20 solvency of such plans through improvements in the

21 efficiency and economy of the HCFA-sponsored

22 plans.

23 ‘‘(2) FUNDING.—

24 ‘‘(A) IN GENERAL.—In order to provide

25 for capital for the HCFA-sponsored plans prior
55

•S 1895 IS

1 to January 1, 2003, the Board of Trustees of

2 the Federal Hospital Insurance Trust Fund, at

3 the direction of the Medicare Board, shall

4 transfer from such Trust Fund to the Division

5 of HCFA-Sponsored Plans of HCFA such

6 amounts as may be necessary to provide for the

7 following:

8 ‘‘(i) INITIAL CAPITALIZATION AC9 COUNT.—Amounts that may be required

10 for the initial organization of HCFA-spon11 sored plans.

12 ‘‘(ii) WORKING CAPITAL (CASH FLOW)

13 ACCOUNT.—Amounts that may be required

14 as working capital in order to assure time15 ly payment of obligations by such plans.

16 ‘‘(iii) CONTINGENCY RESERVE.—Rea17 sonable amounts that should be held in re18 serve to cover actuarial contingencies.

19 ‘‘(B) ESTABLISHMENT OF AMOUNTS.—The

20 amounts described in subparagraph (A) shall be

21 established by the Director and are subject to

22 review and approval by the Medicare Board.

23 ‘‘(C) AMOUNT OF CONTINGENCY RE24 SERVE.—In reviewing and approving the

25 amount of the contingency reserve described in
56

•S 1895 IS

1 subparagraph (A)(iii), the Medicare Board shall

2 consider similar amounts required for health in3 surance coverage offered under State law, tak4 ing into account differences between the dif5 ferent actuarial risks and demographic charac6 teristics of the populations being served.

7 ‘‘(3) SEPARATE ACCOUNT.—

8 ‘‘(A) IN GENERAL.—Subject to subpara9 graph (B), the Division of HCFA-Sponsored

10 Plans of HCFA shall maintain the amounts

11 transferred under this paragraph in a separate

12 account, which shall only be available for ex13 penses associated with the establishment and

14 operation of the HCFA-sponsored plans.

15 ‘‘(B) LIMITATION.—Except as provided in

16 section 2281(h) (relating to transfer of appro17 priations in connection with functions trans18 ferred to the Division of HCFA-Sponsored

19 Plans under such section), and section

20 2261(b)(4) (relating to obligations of the part

21 A and part B trust funds), no funds from the

22 Medicare Trust Fund may be appropriated to

23 the Division of HCFA-Sponsored Plans of

24 HCFA.
57

•S 1895 IS

1 ‘‘SEC. 2283. PARTNERSHIPS WITH PRIVATE ENTITIES TO

2 OFFER HCFA-SPONSORED HIGH OPTION

3 PLANS.

4 ‘‘(a) PARTNERSHIPS.—

5 ‘‘(1) IN GENERAL.—The Director of the Divi6 sion of HCFA-Sponsored Plans of HCFA (in this

7 section referred to as the ‘Director’) shall contract

8 with private entities for the provision of outpatient

9 prescription drug benefits under a HCFA-sponsored

10 high option plan.

11 ‘‘(2) PRIVATE ENTITIES.—The private entities

12 described in paragraph (1) shall include insurers (in13 cluding issuers of Medicare supplemental policies

14 under section 1882), pharmaceutical benefit man15 agers, chain pharmacies, groups of independent

16 pharmacies, and other private entities that the Medi17 care Board determines are appropriate.

18 ‘‘(3) AREAS.—The Director may award a con19 tract to a private entity under this section on a

20 local, regional, or national basis.

21 ‘‘(4) DRUG BENEFITS ONLY THROUGH PRIVATE

22 ENTITIES.—Drug benefits under a HCFA-sponsored

23 high option plan shall only be offered through a con24 tract with a private entity under this section.

25 ‘‘(b) DIRECTOR REQUIRED TO CONTRACT WITH ANY

26 WILLING QUALIFIED PRIVATE ENTITY.—The Director
58

•S 1895 IS

1 may not exclude a private entity from receiving a contract

2 to provide outpatient prescription drug benefits under a

3 HCFA-sponsored high option plan if—

4 ‘‘(1) the private entity meets all of the require5 ments established by the Medicare Board for pro6 viding such benefits; and

7 ‘‘(2) the Medicare Board approves the partner8 ship.

9 ‘‘(c) PRIVATE ENTITY AT FINANCIAL RISK.—A pri10 vate entity with a contract under this section shall bear

11 full financial risk for the provision of outpatient prescrip12 tion drug benefits under a HCFA-sponsored high option

13 plan. The Division of HCFA-Sponsored Plans of HCFA

14 shall bear no financial risk for the provision of such bene15 fits.

16 ‘‘SEC. 2284. HCFA BUSINESS PLANNING AND ADMINISTRA17 TIVE FLEXIBILITY.

18 ‘‘(a) SUBMISSION OF BUSINESS PLAN.—

19 ‘‘(1) IN GENERAL.—On January 1 of each year

20 (but not later than January 1, 2002), the Director

21 of the Division of HCFA-Sponsored Plans of HCFA

22 (in this section referred to as the ‘Director’) shall

23 submit a business plan on the operation of the

24 HCFA-sponsored standard and high-option plans

25 to—
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•S 1895 IS

1 ‘‘(A) both Houses of Congress;

2 ‘‘(B) the Director of the Congressional

3 Budget Office;

4 ‘‘(C) the Comptroller General of the

5 United States; and

6 ‘‘(D) the Chairman of the Medicare Pay7 ment Advisory Commission.

8 ‘‘(2) BUSINESS PLAN.—The business plan on

9 the operation of the HCFA-sponsored standard and

10 high-option plans described in paragraph (1) shall

11 include—

12 ‘‘(A) a comprehensive payment and man13 agement plan for all aspects of offering the core

14 benefits under such plans;

15 ‘‘(B) information regarding contracts with

16 private entities under section 2283 for the pro17 vision of outpatient prescription drug benefits

18 under HCFA-sponsored high option plans;

19 ‘‘(C) recommendations for the coordination

20 of, and improvements to, benefits provided

21 under the HCFA-sponsored standard and high22 option plans; and

23 ‘‘(D) a legislative proposal that implements

24 the business plan.

25 ‘‘(b) MAINTAINING INDEPENDENCE.—
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•S 1895 IS

1 ‘‘(1) EXEMPTION FROM OMB OVERSIGHT.—The

2 Director may directly submit the business plan

3 under subsection (a) to Congress and the individuals

4 described in subparagraphs (B) through (D) of sub5 section (a)(1). No officer or agency of the United

6 States may require the Director to submit such plan

7 to any officer or agency of the United States for ap8 proval, comments, or review, prior to the submission

9 of the plan to Congress and such individuals.

10 ‘‘(2) EXEMPTION FROM APA REQUIREMENTS.—

11 Any action of the Director in preparing or submit12 ting the business plan under subsection (a) to Con13 gress and the individuals described in subparagraphs

14 (B) through (D) of subsection (a)(1) shall be exempt

15 from the requirements of subchapter 2 of chapter 5

16 of title 5, United States Code (commonly known as

17 the ‘Administrative Procedure Act’).

18 ‘‘(c) COMMENTS.—

19 ‘‘(1) IN GENERAL.—Not later than 60 days

20 after the date on which the Director submits the

21 business plan under subsection (a) to the individuals

22 described in subparagraphs (B) through (D) of sub23 section (a)(1), such individuals shall independently

24 submit comments on such plan to Congress. Such

25 comments should address the impact that the plan
61

•S 1895 IS

1 would have on costs, providers, and beneficiary ac2 cess to care under the Medicare Program.

3 ‘‘(2) OPPORTUNITY FOR PUBLIC COMMENT.—

4 The Director shall establish a procedure that allows

5 for public comment on the business plan and shall

6 submit to Congress a summary of such comments

7 not later than the date described in paragraph (1).

8 ‘‘(d) CONGRESSIONAL HEARINGS.—Each year that

9 the business plan is submitted to Congress pursuant to

10 subsection (a)(1), the appropriate committees of Congress

11 shall hold hearings on such plan.

12 ‘‘(e) FAST-TRACK CONSIDERATION OF BUSINESS

13 PLAN LEGISLATION.—

14 ‘‘(1) RULES OF HOUSE OF REPRESENTATIVES

15 AND SENATE.—This subsection is enacted by

16 Congress—

17 ‘‘(A) as an exercise of the rulemaking

18 power of the House of Representatives and the

19 Senate, respectively, and is deemed a part of

20 the rules of each House of Congress, but—

21 ‘‘(i) is applicable only with respect to

22 the procedure to be followed in that House

23 of Congress in the case of an implementing

24 bill (as defined in paragraph (4)); and
62

•S 1895 IS

1 ‘‘(ii) supersedes other rules only to

2 the extent that such rules are inconsistent

3 with this section; and

4 ‘‘(B) with full recognition of the constitu5 tional right of either House of Congress to

6 change the rules (so far as relating to the pro7 cedure of that House of Congress) at any time,

8 in the same manner and to the same extent as

9 in the case of any other rule of that House of

10 Congress.

11 ‘‘(2) INTRODUCTION AND REFERRAL.—

12 ‘‘(A) INTRODUCTION.—

13 ‘‘(i) IN GENERAL.—Subject to sub14 paragraph (B), on the day on which the

15 Director submits the business plan re16 quired to be submitted on January 1,

17 2005, pursuant to subsection (a)(1) to the

18 House of Representatives and the Senate,

19 the legislative proposal contained in such

20 plan shall be introduced as a bill (by re21 quest) in the following manner:

22 ‘‘(I) HOUSE OF REPRESENTA23 TIVES.—In the House of Representa24 tives, by the Majority Leader, for

25 himself and the Minority Leader, or
63

•S 1895 IS

1 by Members of the House of Rep2 resentatives designated by the Major3 ity Leader and Minority Leader.

4 ‘‘(II) SENATE.—In the Senate,

5 by the Majority Leader, for himself

6 and the Minority Leader, or by Mem7 bers of the Senate designated by the

8 Majority Leader and Minority Leader.

9 ‘‘(ii) SPECIAL RULE.—If either House

10 of Congress is not in session on the day on

11 which the business plan is submitted, the

12 legislative proposal contained in such plan

13 shall be introduced as a bill in that House

14 of Congress, as provided in subparagraph

15 (A), on the first day thereafter on which

16 that House of Congress is in session.

17 ‘‘(B) REFERRAL.—Such bills shall be re18 ferred by the presiding officers of the respective

19 Houses to the appropriate committee, or, in the

20 case of a bill containing provisions within the

21 jurisdiction of 2 or more committees, jointly to

22 such committees for consideration of those pro23 visions within their respective jurisdictions.

24 ‘‘(3) CONSIDERATION.—After the legislative

25 proposal has been introduced as a bill and referred
64

•S 1895 IS

1 under paragraph (2), such implementing bill shall be

2 considered in the same manner as an implementing

3 bill is considered under subsections (d), (e), (f), and

4 (g) of section 151 of the Trade Act of 1974 (19

5 U.S.C. 2191).

6 ‘‘(4) IMPLEMENTING BILL DEFINED.—In this

7 section, the term ‘implementing bill’ means only the

8 legislative proposal contained in the business plan

9 required to be submitted on January 1, 2005, by the

10 Director to the House of Representatives and the

11 Senate under subsection (a)(1), and introduced and

12 referred as provided in paragraph (2) as a bill of ei13 ther House of Congress.

14 ‘‘(5) COUNTING OF DAYS.—For purposes of this

15 section, any period of days referred to in section 151

16 of the Trade Act of 1974 shall be computed by

17 excluding—

18 ‘‘(A) the days on which either House of

19 Congress is not in session because of an ad20 journment of more than 3 days to a day certain

21 or an adjournment of Congress sine die; and

22 ‘‘(B) any Saturday and Sunday, not ex23 cluded under subparagraph (A), when either

24 House is not in session.
65

•S 1895 IS

1 ‘‘(f) IMPLEMENTATION OF BUSINESS PLANS SUB2 MITTED AFTER 2007.—Beginning with the business plan

3 required to be submitted on January 1, 2008, under sub4 section (a)(1), the Director may implement the provisions

5 of such plan without further legislative action.’’.

6 TITLE II—SPECIAL

7 PROTECTIONS

8 Subtitle A—Protection Package for

9 Certain Areas

10 SEC. 201. LIMITATION ON BENEFICIARY OBLIGATIONS IN

11 CERTAIN AREAS.

12 Section 2227(a) of the Social Security Act, as added

13 by section 101, is amended—

14 (1) in paragraph (3), by redesignating subpara15 graphs (A) and (B) as clauses (i) and (ii), respec16 tively;

17 (2) by redesignating paragraphs (1) through

18 (3) as subparagraphs (A) through (C), respectively;

19 (3) by striking ‘‘(a) COMPUTATION OF BENE20 FICIARY OBLIGATION.—Subject to subsection (b),’’

21 and inserting the following:

22 ‘‘(a) COMPUTATION OF BENEFICIARY OBLIGA23 TION.—

24 ‘‘(1) IN GENERAL.—Subject to subsection (b),’’;

25 and
66

•S 1895 IS

1 (4) by adding at the end the following:

2 ‘‘(2) LIMITATION ON BENEFICIARY OBLIGA3 TIONS IN CERTAIN AREAS.—Notwithstanding para4 graph (1), if the only Medicare plans offered in a

5 service area are the HCFA-sponsored plans—

6 ‘‘(A) the beneficiary obligation for the

7 HCFA-sponsored standard plan shall not ex8 ceed 12 percent of the national average pre9 mium; and

10 ‘‘(B) the beneficiary obligation for any

11 HCFA-sponsored high option plan shall not ex12 ceed the sum of—

13 ‘‘(i) 12 percent of the national aver14 age premium; and

15 ‘‘(ii) the amount by which the bene16 ficiary obligation for the HCFA-sponsored

17 high option plan exceeds the beneficiary

18 obligation for the HCFA-sponsored stand19 ard plan.’’.

20 SEC. 202. GUARANTEE OF OUTPATIENT PRESCRIPTION

21 DRUGS UNDER HCFA-SPONSORED HIGH OP22 TION PLANS.

23 Section 2283 of the Social Security Act, as added by

24 section 101, is amended—
67

•S 1895 IS

1 (1) in subsection (a)(4), by striking ‘‘Drug ben2 efits’’ and inserting ‘‘Except as provided in sub3 section (d), drug benefits’’; and

4 (2) by adding at the end the following:

5 ‘‘(d) PROTECTION FOR AREAS WITH NO CONTRACT

6 WITH A PRIVATE ENTITY IN EFFECT.—In the case of an

7 area where no private entity has entered into a contract

8 with the Director for the provision of outpatient prescrip9 tion drug benefits under a HCFA-sponsored high option

10 plan, the Medicare Board shall establish an arrangement

11 through which the Board guarantees to Medicare bene12 ficiaries enrolled in such plan the coverage for outpatient

13 prescription drugs required under section 2282.’’.

14 Subtitle B—Low-Income Medicare

15 Beneficiary Protection Package

16 SEC. 251. MEDICARE PLANS FOR LOW-INCOME MEDICARE

17 BENEFICIARIES.

18 (a) IN GENERAL.—Title XXII of the Social Security

19 Act, as added by section 101, is amended—

20 (1) by redesignating section 2229 as 2230; and

21 (2) by inserting after section 2228 the fol22 lowing:

23 ‘‘SEC. 2229. MEDICARE PLANS FOR LOW-INCOME MEDICARE

24 BENEFICIARIES.

25 ‘‘(a) ENROLLMENT IN A MEDICARE PLAN.—
68

•S 1895 IS

1 ‘‘(1) LOW-INCOME MEDICARE BENEFICIARY DE2 FINED.—For purposes of this part, the term ‘low-in3 come Medicare beneficiary’ means a Medicare bene4 ficiary whose income (as determined for purposes of

5 section 1905(p)) does not exceed 135 percent of the

6 official poverty line (referred to in paragraph (2)(A)

7 of such section) applicable to a family of the size in8 volved.

9 ‘‘(2) ZERO BENEFICIARY PREMIUM OBLIGATION

10 FOR THE LOWEST COST HIGH OPTION MEDICARE

11 PLAN.—A low-income Medicare beneficiary shall

12 have no obligation to pay any amount for enrollment

13 in the lowest cost (for such year) high option Medi14 care plan that is available (including on the basis of

15 capacity to deliver services to enrollees) for the serv16 ice area in which such beneficiary resides.

17 ‘‘(3) BENEFICIARY OBLIGATION IN CASE OF EN18 ROLLMENT IN A MEDICARE PLAN THAT IS NOT THE

19 LOWEST COST HIGH OPTION MEDICARE PLAN.—If a

20 low-income Medicare beneficiary enrolls in a Medi21 care plan other than the lowest cost high option

22 Medicare plan available to the beneficiary (including

23 a standard Medicare plan), the amount of the bene24 ficiary obligation shall be the lesser of—
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•S 1895 IS

1 ‘‘(A) the amount of the beneficiary obliga2 tion computed under section 2227; or

3 ‘‘(B) the amount by which—

4 ‘‘(i) the amount of the premium ap5 proved by the Board under section 2223

6 for the Medicare plan in which the bene7 ficiary is enrolled; exceeds

8 ‘‘(ii) the amount of the premium ap9 proved by the Board under such section for

10 the lowest cost high option Medicare plan

11 available to the beneficiary.

12 ‘‘(4) BOARD PAYMENTS TO PLANS.—Payments

13 to Medicare plans in which low-income Medicare

14 beneficiaries are enrolled shall be made in the same

15 manner as payments are made to Medicare plans

16 under section 2226.

17 ‘‘(5) COLLECTION OF BENEFICIARY OBLIGA18 TION.—The Medicare Board shall collect any bene19 ficiary obligation determined under paragraph (3) in

20 the same manner as the Board collects such obliga21 tions under section 2228.

22 ‘‘(b) ANNUAL ELIGIBILITY AND ENROLLMENT DE23 TERMINATION BY STATES.—

24 ‘‘(1) IN GENERAL.—The Medicare Board shall

25 establish an arrangement with each State (as de-
70

•S 1895 IS

1 fined for purposes of title XIX) under which the

2 State shall—

3 ‘‘(A) determine whether a Medicare bene4 ficiary in the State is a low-income Medicare

5 beneficiary; and

6 ‘‘(B) notify the Board of such determina7 tion and of the Medicare plan in which the ben8 eficiary chooses to enroll for such year.

9 ‘‘(2) DURATION.—A determination that a Medi10 care beneficiary is a low-income Medicare beneficiary

11 shall remain valid for a period of 12 months so long

12 as the beneficiary remains enrolled in a Medicare

13 plan.

14 ‘‘(3) FEDERAL FINANCIAL ASSISTANCE FOR AD15 MINISTRATIVE COSTS.—For provisions relating to

16 Federal financial assistance for the administrative

17 costs incurred by a State in conducting the activities

18 described in paragraph (1) of this section, see sec19 tion 1903(a)(7)(B).

20 ‘‘(c) CONTINUATION OF STATE CONTRIBUTION RE21 QUIREMENTS.—With respect to each low-income Medicare

22 beneficiary enrolled in a Medicare plan for a year, each

23 State shall pay (to the Medicare Board, Medicare plan,

24 or a provider, as appropriate) the following:
71

•S 1895 IS

1 ‘‘(1) DUAL ELIGIBLES.—In the case of such a

2 beneficiary who is eligible for medical assistance

3 under title XIX—

4 ‘‘(A) the lesser of—

5 ‘‘(i) 12 percent of the national aver6 age premium determined under section

7 2225(a) for such year; or

8 ‘‘(ii) the amount of the beneficiary ob9 ligation computed under section 2227 for

10 the HCFA-sponsored standard plan for the

11 service area in which the beneficiary re12 sides for such year;

13 ‘‘(B) all coinsurance, deductibles, and cost14 sharing imposed under the Medicare plan in

15 which the beneficiary is enrolled;

16 ‘‘(C) any additional costs incurred by the

17 beneficiary in excess of the stop-loss coverage

18 for the core benefits provided under the Medi19 care plan in which the beneficiary is enrolled;

20 and

21 ‘‘(D) to the extent consistent with the

22 State plan under title XIX, any additional costs

23 incurred by the beneficiary for outpatient pre24 scription drugs in excess of the limit (if any)

25 imposed for coverage of such drugs under the
72

•S 1895 IS

1 Medicare plan in which the beneficiary is en2 rolled.

3 ‘‘(2) QMBS, SLMBS, QI–IS.—

4 ‘‘(A) QMBS.—In the case of such a bene5 ficiary who is described in section 1905(p)(1)—

6 ‘‘(i) the amount determined under

7 paragraph (1)(A) of this section for such

8 beneficiary; and

9 ‘‘(ii) all coinsurance, deductibles, and

10 cost-sharing imposed under the Medicare

11 plan in which the beneficiary is enrolled

12 other than with respect to coverage of out13 patient prescription drugs.

14 ‘‘(B) SLMBS, QI–IS.—In the case of such

15 a beneficiary who is described in clause (iii) or

16 clause (iv)(I) of section 1902(a)(10)(E), the

17 amount determined under paragraph (1)(A) of

18 this section for such beneficiary.

19 ‘‘(3) FEDERAL FINANCIAL ASSISTANCE FOR

20 STATE CONTRIBUTIONS.—For payment of the Fed21 eral medical assistance percentage (as defined in sec22 tion 1905(b)) of the payments made by a State

23 under this subsection, see section 1903(a)(1)(B).

24 ‘‘(4) NONAPPLICATION OF OTHER STATE CON25 TRIBUTION REQUIREMENTS UNDER MEDICAID.—In-
73

•S 1895 IS

1 sofar as this subsection applies to a low-income

2 Medicare beneficiary, notwithstanding any other pro3 vision of law—

4 ‘‘(A) a State is not required to provide

5 such beneficiary under a State plan under title

6 XIX medical assistance with respect to Medi7 care cost-sharing described in section

8 1905(p)(3) that would otherwise be required to

9 be provided under such plan to the beneficiary;

10 and

11 ‘‘(B) except as provided in paragraph

12 (1)(B) and (7)(B) of section 1903(a), Federal

13 financial assistance shall not be available under

14 section 1903 with respect to any Medicare cost15 sharing provided for such beneficiary.

16 ‘‘(5) NO EFFECT ON OTHER FMAP.—Nothing in

17 this section shall be construed as limiting the ability

18 of a State to receive Federal financial assistance

19 under section 1903 for medical assistance (other

20 than Medicare cost-sharing, insofar as the State’s

21 requirement to provide Medicare cost-sharing to a

22 low-income Medicare beneficiary is modified by this

23 section) provided to a low-income Medicare bene24 ficiary who is eligible for medical assistance under

25 the State plan under title XIX.’’.
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•S 1895 IS

1 (b) CONFORMING AMENDMENTS.—

2 (1) FEDERAL FINANCIAL ASSISTANCE.—Section

3 1903(a) of the Social Security Act (42 U.S.C.

4 1396b(a)) is amended—

5 (A) in paragraph (1), by striking ‘‘quarter

6 as medical assistance under the State plan;

7 plus’’ and inserting ‘‘quarter—

8 ‘‘(A) as medical assistance under the State

9 plan; and

10 ‘‘(B) under section 2229(c); plus’’; and

11 (B) in paragraph (7)—

12 (i) by striking ‘‘of the remainder’’ and

13 inserting ‘‘of—

14 ‘‘(A) the remainder’’;

15 (ii) by striking the period and insert16 ing ‘‘; and’’

17 (iii) by adding at the end the fol18 lowing:

19 ‘‘(B) the amounts expended during such

20 quarter to conduct the activities described in

21 section 2229(b)(1).’’.

22 (2) STUDY AND REPORT TO CONGRESS RE23 GARDING TRANSITION PERIOD.—Section

24 2201(c)(3)(A)(ii) of the Social Security Act, as

25 added by section 101, is amended by inserting
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1 ‘‘(and, if applicable, under section 2229)’’ after

2 ‘‘under section 2227’’.

3 (3) AMOUNTS IN MEDICARE TRUST FUND.—

4 Section 2261(b)(3)(B) of such Act, as so added, is

5 amended by striking ‘‘section 2227’’ and inserting

6 ‘‘sections 2227 and 2229’’.

7 TITLE III—MEDICARE BENE8 FICIARY OUTREACH AND

9 EDUCATION

10 SEC. 301. MEDICARE CONSUMER COALITIONS.

11 (a) ESTABLISHMENT OF MEDICARE CONSUMER COA12 LITIONS.—The Medicare Board (as defined in section

13 2200(d)(4) of the Social Security Act) shall establish

14 Medicare Consumer Coalitions (as defined in subsection

15 (b)) to conduct information programs in accordance with

16 subsection (e) that—

17 (1) prepare comprehensive, accurate, and un18 derstandable information for Medicare beneficiaries

19 (as defined in section 2200(d)(3) of such Act) on en20 rollment in Medicare plans (as defined in section

21 2200(c)(1) of such Act); and

22 (2) disseminate such information to Medicare

23 beneficiaries in a timely fashion.

24 (b) MEDICARE CONSUMER COALITION DEFINED.—In

25 this section, the term ‘‘Medicare Consumer Coalition’’
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1 means an entity that is a nonprofit organization operated

2 under the direction of a board of directors that is pri3 marily composed of Medicare beneficiaries.

4 (c) ESTABLISHMENT OF MEDICARE CONSUMER COA5 LITIONS.—The Board shall—

6 (1) develop and disseminate a request for pro7 posals to establish Medicare Consumer Coalitions in

8 such areas as the Board determines appropriate to

9 conduct the information programs described in sub10 section (a); and

11 (2) select a proposal to establish a Medicare

12 Consumer Coalition to conduct the information pro13 grams in each such area, with a preference for broad

14 participation by organizations with experience in

15 providing information to Medicare beneficiaries.

16 (d) PAYMENT TO MEDICARE CONSUMER COALI17 TIONS.—The Board shall pay to each Medicare Consumer

18 Coalition established under subsection (c) an amount

19 equal to the sum of any costs incurred—

20 (A) in conducting the information pro21 grams under subsection (a); and

22 (B) in the hiring of staff to conduct the in23 formation programs under such subsection.

24 (e) INFORMATION PROGRAMS.—
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1 (1) CONTENTS.—The information programs

2 under subsection (a) shall include a comparison

3 among available Medicare plans as follows:

4 (A) BENEFITS.—A comparison of the ben5 efits provided under each Medicare plan.

6 (B) QUALITY AND PERFORMANCE.—The

7 quality and performance of each Medicare plan.

8 (C) BENEFICIARY COSTS.—The costs to

9 Medicare beneficiaries enrolled under each

10 Medicare plan.

11 (D) CONSUMER SATISFACTION SURVEYS.—

12 The results of consumer satisfaction surveys re13 garding each Medicare plan.

14 (E) ADDITIONAL INFORMATION.—Such ad15 ditional information as the Board may pre16 scribe.

17 (2) INFORMATION STANDARDS.—The Board

18 shall develop standards to ensure that the informa19 tion provided to Medicare beneficiaries under the in20 formation programs is complete, accurate, and uni21 form.

22 (3) REVIEW OF INFORMATION.—

23 (A) IN GENERAL.—Subject to subpara24 graph (B), the Board may prescribe the proce25 dures and conditions under which a Medicare
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1 Consumer Coalition may disseminate informa2 tion to Medicare beneficiaries to ensure the co3 ordination of Federal, State, and local outreach

4 efforts to Medicare beneficiaries.

5 (B) DEADLINE.—Any information pro6 posed to be furnished to Medicare beneficiaries

7 under this section shall be submitted to the

8 Board not later than 45 days before the date on

9 which the information is to be disseminated to

10 such beneficiaries.

11 (4) CONSULTATION.—In order to conduct the

12 information programs under subsection (a), Medi13 care Consumer Coalitions shall consult with entities

14 that offer Medicare plans, and public and private

15 purchasers of health care benefits.

16 (f) MONITORING AND REPORT.—

17 (1) MONITORING.—The Board shall closely

18 monitor and measure the impact of Medicare Con19 sumer Coalitions on—

20 (A) the premiums of Medicare plans in

21 such area;

22 (B) the quality of items and services cov23 ered under any such Medicare plan;
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1 (C) the access of Medicare beneficiaries to

2 items and services covered under the Medicare

3 plan in such area;

4 (D) the choice of Medicare plans in such

5 area;

6 (E) changes in enrollment in Medicare

7 plans in such area; and

8 (F) such other factors as the Board deter9 mines appropriate.

10 (2) REPORT.—Not later than December 31,

11 2003, the Board shall submit to the appropriate

12 committees of Congress a report on the aspects of

13 Medicare Consumer Coalitions monitored under

14 paragraph (1), together with an assessment of the

15 outreach efforts conducted under this section.

16 (g) AUTHORIZATION OF APPROPRIATIONS.—

17 (1) IN GENERAL.—There are authorized to be

18 appropriated to carry out this section such sums as

19 may be necessary.

20 (2) DEPOSIT INTO MEDICARE TRUST FUND.—

21 Sums appropriated under paragraph (1) shall be

22 transferred to the Medicare Trust Fund.

23 (h) EFFECTIVE DATE.—The Board shall establish

24 the Medicare Consumer Coalitions under this section in

25 a timely manner that ensures the information programs
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1 conducted by Medicare Consumer Coalitions begin not

2 later than January 1, 2003.

3 TITLE IV—MISCELLANEOUS

4 SEC. 401. CONFORMING AMENDMENTS.

5 (a) EXECUTIVE SCHEDULE PAY RATES.—Section

6 5316 of title 5, United States Code, is amended by adding

7 at the end the following:

8 ‘‘Director, Division of HCFA-Sponsored Plans,

9 Health Care Financing Administration.

10 ‘‘Director, Division of Health Programs, Health

11 Care Financing Administration.’’.

12 (b) SUBMISSION OF ADDITIONAL CONFORMING

13 AMENDMENTS.—Not later than 6 months after the date

14 of enactment of this Act, the Secretary of Health and

15 Human Services shall submit a legislative proposal to Con16 gress containing technical and conforming amendments to

17 reflect the changes made by this Act.

18 SEC. 402. MEDICARE SUPPLEMENTAL POLICIES.

19 Notwithstanding section 1882 of the Social Security

20 Act (42 U.S.C. 1395ss), beginning on January 1, 2003,

21 only Medicare beneficiaries enrolled in the HCFA-spon22 sored standard plan established under section

23 2282(a)(2)(A) may purchase or renew Medicare supple24 mental insurance policies.
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1 SEC. 403. EFFECTIVE DATE.

2 Unless otherwise specified in this Act, this Act and

3 the amendments made by this Act shall take effect on the

4 date of enactment of this Act.

Æ