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[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4903 Introduced in House (IH)]

108th CONGRESS
  2d Session
                                H. R. 4903

To amend title XVIII of the Social Security Act to provide for improved 
    accountability in the Medicare Advantage and prescription drug 
                               programs.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                             July 22, 2004

Mr. Brown of Ohio (for himself, Mr. Dingell, Mr. Rangel, Mr. Stark, and 
 Mr. Waxman) introduced the following bill; which was referred to the 
Committee on Ways and Means, and in addition to the Committee on Energy 
    and Commerce, for a period to be subsequently determined by the 
  Speaker, in each case for consideration of such provisions as fall 
           within the jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL

 
To amend title XVIII of the Social Security Act to provide for improved 
    accountability in the Medicare Advantage and prescription drug 
                               programs.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Medicare Advantage 
and Prescription Drug Accountability Act of 2004''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Requirement for reasonable return of benefits.
Sec. 3. Financial transparency.
Sec. 4. Beneficiary sign-off.
Sec. 5. Annual accountability reports.
Sec. 6. Auditing of actuarial equivalency.
Sec. 7. Report comparing costs and benefits under Medicare Advantage 
                            plans, medicare supplemental policies, and 
                            fee-for-service medicare.

SEC. 2. REQUIREMENT FOR REASONABLE RETURN OF BENEFITS.

    (a) Medicare Advantage Plans.--Section 1857(e) of the Social 
Security Act (42 U.S.C. 1395w-27(e)) is amended by adding at the end 
the following new paragraph:
            ``(4) Negotiation for loss and administrative cost 
        ratios.--
                    ``(A) In general.--The contract with an MA 
                organization under this part shall provide for the 
                following:
                            ``(i) Minimum loss ratio.--Aggregate 
                        average benefits that are at least a minimum 
                        ratio of the aggregate average revenues 
                        collected under the contract.
                            ``(ii) Maximum administrative cost ratio.--
                        Aggregate average administrative costs that do 
                        not exceed a maximum ratio of the aggregate 
                        average revenues collected under the contract.
                    ``(B) Establishment of ratios.--The ratios under 
                clauses (i) and (ii) of subparagraph (A) shall be 
                established by the Secretary. In establishing such 
                ratios, the Secretary shall take into account, at a 
                minimum, ratios typical of those--
                            ``(i) under private health insurance plans;
                            ``(ii) under parts A and B of this title; 
                        and
                            ``(iii) under health benefits plans offered 
                        under chapter 89 of title 5, United States Code 
                        (relating to the Federal Employees Health 
                        Benefits Program).''.
    (b) Audit of Administrative Costs and Compliance With the Federal 
Acquisition Regulation.--Section 1857(d)(2)(B) of such Act (42 U.S.C. 
1395w-27(d)(2)(B)) is amended--
            (1) by striking ``or (ii)'' and inserting ``(ii)''; and
            (2) by inserting before the period at the end the 
        following: ``, or (iii) to compliance with the requirements of 
        subsection (e)(4)(A) and the extent to which administrative 
        costs comply with the applicable requirements for such costs 
        under the Federal Acquisition Regulation''.
    (c) Application to Prescription Drug Plans.--The amendments made by 
subsections (a) and (b) apply, pursuant to section 1860D-12(b)(3) of 
the Social Security Act (42 U.S.C. 1395w-112(b)(3)), to contracts with 
prescription drug sponsors under part D of title XVIII of such Act.
    (d) Effective Date.--The amendments made by this section shall 
apply for contract years beginning after the date of the enactment of 
this Act.

SEC. 3. FINANCIAL TRANSPARENCY.

    (a) Medicare Advantage Plans.--Section 1851(d) of the Social 
Security Act (42 U.S.C. 1395w-21(d)) is amended by adding at the end 
the following new paragraph:
            ``(8) Financial transparency.--
                    ``(A) In general.--Each MA organization shall 
                provide annually to the Secretary (in a form and manner 
                specified by the Secretary), with respect to each MA 
                plan it offers and not later than 6 months after the 
                end of each contract year, information describing the 
                organization's compliance with the requirements of 
                section 1857(e)(4) and a functional listing of the 
                organization's administrative costs (by category of 
                such costs, including, at a minimum, marketing costs 
                and claims processing costs), profits, and investment 
                income (as defined by the Secretary), as a ratio of 
                aggregate average revenues collected under the contract 
                for that year.
                    ``(B) Publication.--The Secretary shall publish the 
                information provided under subparagraph (A) for each MA 
                plan.''.
    (b) Conforming Application to Prescription Drug Plans.--Section 
1860D-11(b)(2) of the Social Security Act (42 U.S.C. 1395w-111(b)(2)) 
is amended by redesignating subparagraph (F) as subparagraph (G) and by 
inserting after subparagraph (E) the following new subparagraph:
                    ``(F) Periodic auditing.--Information with respect 
                to the prescription drug plan of the type described in 
                section 1851(d)(8) with respect to an MA plan.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to reporting of information for contract years to which the 
amendments made by section 2 apply.

SEC. 4. BENEFICIARY SIGN-OFF.

    (a) Medicare Advantage Plans.--Section 1851(c)(2) of the Social 
Security Act (42 U.S.C. 1395w-21(c)(2)) is amended by adding at the end 
the following new subparagraph:
                    ``(C) Beneficiary sign-off in election process.--An 
                election to enroll with an MA plan shall not be 
                effective unless the election form is signed by the 
                individual and specifically acknowledges each of the 
                following:
                            ``(i) The premiums, cost-sharing 
                        requirements, and benefits under the plan may 
                        change at the beginning of each 12-month 
                        contract period.
                            ``(ii) The individual may lose coverage of 
                        the individual's physician or other provider at 
                        the beginning of each such period.
                            ``(iii) The plan may be terminated at the 
                        beginning of any such period.
                            ``(iv) Premiums and benefits under the plan 
                        may vary based on the county or other MA area 
                        in which the plan is offered.''.
    (b) Application to Prescription Drug Plans.--The amendment made by 
subsection (a) applies, pursuant to section 1860D-1(b)(1)(B)(ii) of the 
Social Security Act (42 U.S.C. 1395w-101(b)(1)(B)(ii)), to prescription 
drug plans under part D of title XVIII of such Act.
    (c) Effective Date.--The amendment made by subsection (a) shall 
apply to elections made on or after the date specified by the Secretary 
of Health and Human Services, but in no case later than 60 days after 
the date of the enactment of this Act.

SEC. 5. ANNUAL ACCOUNTABILITY REPORTS.

    (a) Medicare Advantage Accountability Report.--Section 1856 of the 
Social Security Act (42 U.S.C. 1395w-26) is amended--
            (1) by amending the heading to read as follows:

     ``establishment of standards; annual accountability report'';

        and
            (2) by adding at the end the following new subsection:
    ``(c) Annual Accountability Report.--
            ``(1) In general.--The Secretary shall compile, and 
        transmit to Congress, at the end of each year (beginning with 
        2004), an annual Medicare Advantage accountability report.
            ``(2) Contents.--Each annual accountability report shall 
        include the following:
                    ``(A) A detailed analysis of geographic variation 
                in cost-sharing and premiums among MA plans.
                    ``(B) A comparison of the use of amounts paid to MA 
                plans for benefit payments, administrative costs, and 
                profits with the amounts expended under the fee-for-
                service programs under parts A and B for benefit 
                payments and administrative expenses.
                    ``(C) Recommendations for legislative changes to 
                the Medicare Advantage program, or the fee-for-service 
                programs under parts A and B, to assure that medicare 
                beneficiaries under both programs have access to 
                comparable benefits at comparable cost and that 
                Government subsidies under the two programs are 
                equivalent.
                    ``(D) The results of audits conducted under section 
                1857(d) and enforcement actions taken in response to 
                findings of inappropriate expenditures of funds under 
                this part.''.
    (b) Prescription Drug Accountability Report.--Section 1860D-12 of 
such Act (42 U.S.C. 1395w-112) is amended by adding at the end the 
following new subsection:
    ``(h) Annual Accountability Report.--
            ``(1) In general.--The Secretary shall compile, and 
        transmit to Congress, at the end of each year (beginning with 
        2006), an annual prescription drug accountability report.
            ``(2) Contents.--Each annual accountability report shall 
        include the same types of information (as specified by the 
        Secretary) with respect to prescription drug plans as are 
        provided under subparagraphs (A), (B), and (D) of section 
        1856(c)(2) with respect to MA plans.''.

SEC. 6. AUDITING OF ACTUARIAL EQUIVALENCY.

    (a) Medicare Advantage Plans.--Section 1854(a)(5) of the Social 
Security Act (42 U.S.C. 1395w-24(a)(5)) is amended by adding at the end 
the following new subparagraph:
                    ``(B) Periodic audits of actuarial equivalency 
                determinations.--In the case of MA plans that provide 
                for an actuarially equivalent level of benefits under 
                this part, the Inspector General of the Department of 
                Health and Human Services shall periodically audit a 
                representative sample of the determinations made by the 
                Secretary regarding such actuarial equivalency to 
                ensure that the Secretary is only approving plans with 
                benefits that are actuarially equivalent.''.
    (b) Application to Prescription Drug Plans.--Section 1860D-11(e) of 
the Social Security Act (42 U.S.C. 1395w-111(e)) is amended by adding 
at the end the following new paragraph:
            ``(3) Periodic auditing of actuarial equivalency 
        determinations.--The provisions of section 1854(a)(5)(B) shall 
        apply with respect to determinations of actuarial equivalence 
        of benefits under prescription drug plans in the same manner as 
        they apply to determinations of actuarial equivalence of 
        benefits under MA plans.''.

SEC. 7. REPORT COMPARING COSTS AND BENEFITS UNDER MEDICARE ADVANTAGE 
              PLANS, MEDICARE SUPPLEMENTAL POLICIES, AND FEE-FOR-
              SERVICE MEDICARE.

    Not later than 1 year after the date of the enactment of this Act, 
the Secretary of Health and Human Services shall submit to Congress a 
report that compares the average benefit payments, administrative 
costs, profits, and investment income (expressed as a percentage of 
revenues collected) for MA plans with such average for the fee-for-
service programs under parts A and B and for group and individual 
medicare supplemental policies.
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