II 

108TH CONGRESS 

2D SESSION S. 2300 

To amend the Medicare Prescription Drug, Improvement, and Modernization 

Act of 2003 to eliminate privatization of the medicare program and 

to reduce excessive payments to health maintenance organizations and 

other private sector insurance plans. 

IN THE SENATE OF THE UNITED STATES 

APRIL 7, 2004 

Mr. KENNEDY (for himself, Mr. BINGAMAN, Mrs. BOXER, Mr. PRYOR, Mr. 

HOLLINGS, Mr. CORZINE, Mr. EDWARDS, Ms. MIKULSKI, Mr. LAUTENBERG, Mr. DURBIN, and Ms. STABENOW) introduced the following bill; 

which was read twice and referred to the Committee on Finance 

A BILL 

To amend the Medicare Prescription Drug, Improvement, 

and Modernization Act of 2003 to eliminate privatization 

of the medicare program and to reduce excessive payments to health maintenance organizations and other 

private sector insurance plans. 

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 ‘‘Defense of Medicare Act’’. 
2 

•S 2300 IS 

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

2 this Act is as follows: 

Sec. 1. Short title; table of contents. 

Sec. 2. Application of risk adjustment reflecting characteristics for the entire 

medicare population in payments to Medicare Advantage organizations. 

Sec. 3. Annual Medicare Advantage capitation rate at 100 percent of fee-forservice rate with a hold harmless. 

Sec. 4. Elimination of MA Regional Plan Stabilization Fund (slush fund). 

Sec. 5. Repeal of premium support program. 

Sec. 6. Requiring two prescription drug plans to avoid Federal fallback. 

3 SEC. 2. APPLICATION OF RISK ADJUSTMENT REFLECTING 

4 CHARACTERISTICS FOR THE ENTIRE MEDI5 CARE POPULATION IN PAYMENTS TO MEDI6 CARE ADVANTAGE ORGANIZATIONS. 

7 Effective January 1, 2005, in applying risk adjust8 ment factors to payments to organizations under section 

9 1853 of the Social Security Act (42 U.S.C. 1395w–23), 

10 the Secretary of Health and Human Services shall ensure 

11 that payments to such organizations are adjusted based 

12 on such factors to ensure that the health status of the 

13 enrollee is reflected in such adjusted payments, including 

14 adjusting for the difference between the health status of 

15 the enrollee and individuals enrolled under the original 

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

17 title XVIII of such Act. Payments to such organizations 

18 must, in aggregate, reflect such differences. 
3 

•S 2300 IS 

1 SEC. 3. ANNUAL MEDICARE ADVANTAGE CAPITATION RATE 

2 AT 100 PERCENT OF FEE-FOR-SERVICE RATE 

3 WITH A HOLD HARMLESS. 

4 Section 1853(c)(1) of the Social Security Act (42 

5 U.S.C. 1395w–23(c)(1)), as amended by section 211 of 

6 the Medicare Prescription Drug, Improvement, and Mod7 ernization Act of 2003 (Public Law 108–173; 117 Stat. 

8 2176) is amended— 

9 (1) in subparagraph (B), by adding at the end 

10 the following new clause: 

11 ‘‘(v) For 2005 and each subsequent 

12 year, the amount specified in clause (iv) 

13 for the area for 2004.’’; and 

14 (2) in subparagraph (C)(v), in the matter pre15 ceding subclause (I), by striking ‘‘and each suc16 ceeding year’’. 

17 SEC. 4. ELIMINATION OF MA REGIONAL PLAN STABILIZA18 TION FUND (SLUSH FUND). 

19 Subsection (e) of section 1858 of the Social Security 

20 Act, as added by section 221(c) of the Medicare Prescrip21 tion Drug, Improvement, and Modernization Act of 2003 

22 (Public Law 108–173), is repealed. 

23 SEC. 5. REPEAL OF PREMIUM SUPPORT PROGRAM. 

24 Effective as if included in the enactment of the Medi25 care Prescription Drug, Improvement, and Modernization 

26 Act of 2003 (Public Law 108–173), subtitle E of title II 
4 

•S 2300 IS 

1 of such Act is repealed and any provisions of law amended 

2 by such subtitle are restored as if such subtitle had not 

3 been enacted. 

4 SEC. 6. REQUIRING TWO PRESCRIPTION DRUG PLANS TO 

5 AVOID FEDERAL FALLBACK. 

6 Section 1860D–3(a) of the Social Security Act, as 

7 added by section 101(a) of the Medicare Prescription 

8 Drug, Improvement, and Modernization Act of 2003, is 

9 amended— 

10 (1) in paragraph (1)— 

11 (A) by striking ‘‘qualifying plans (as de12 fined in paragraph (3))’’ and inserting ‘‘pre13 scription drug plans’’; and 

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

15 a prescription drug plan’’; 

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

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

18 (3) by striking paragraph (3). 

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