1674 
ed by inserting before the period at the end 
the following: ‘‘, but only if 90 percent of the 
Medicare Advantage eligible individuals en-
rolled under such plan reside in a county in 
which the MA organization offers an MA local 
plan’’. 
(b) EFFECTIVE
DATE.—The amendment 
made by subsection (a) shall apply for plan 
years beginning on or after January 1, 2011, 
and shall not apply to plans which were in ef-
fect as of December 31, 2010. 
SEC. 1167. IMPROVING RISK ADJUSTMENT FOR PAYMENTS. 
(a) REPORT TO CONGRESS.—Not later than 
1 year after the date of the enactment of this 
Act, the Secretary of Health and Human Serv-
ices shall submit to Congress a report that 
evaluates the adequacy of the risk adjustment 
system under section 1853(a)(1)(C) of the So-
cial Security Act (42 U.S.C. 1395–23(a)(1)(C)) 
in predicting costs for beneficiaries with 
chronic or co-morbid conditions, beneficiaries 
dually-eligible for Medicare and Medicaid, 
and non-Medicaid eligible low-income bene-
ficiaries; and the need and feasibility of in-
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cluding further gradations of diseases or con-
ditions and multiple years of beneficiary data. 
(b) IMPROVEMENTS TO RISK ADJUSTMENT.— 
Not later than January 1, 2012, the Secretary 
shall implement necessary improvements to 
the risk adjustment system under section 
1853(a)(1)(C) of the Social Security Act (42 
U.S.C. 1395–23(a)(1)(C)), taking into account 
the evaluation under subsection (a). 
SEC. 1168. ELIMINATION OF MA REGIONAL PLAN STA-
BILIZATION FUND. 
(a) IN GENERAL.—Section 1858 of the So-
cial Security Act (42 U.S.C. 1395w–27a) is 
amended by striking subsection (e). 
(b) TRANSITION.—Any amount contained in 
the MA Regional Plan Stabilization Fund as of 
the date of the enactment of this Act shall be 
transferred to the Federal Supplementary 
Medical Insurance Trust Fund. 
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PART 2—BENEFICIARY PROTECTIONS AND ANTI- 
FRAUD 
SEC. 1171. LIMITATION ON COST-SHARING FOR INDIVIDUAL 
HEALTH SERVICES. 
(a) IN GENERAL.—Section 1852(a)(1) of the 
Social Security Act (42 U.S.C. 1395w–22(a)(1)) 
is amended— 
(1) in subparagraph (A), by inserting 
before the period at the end the fol-
lowing: ‘‘with cost-sharing that is no 
greater (and may be less) than the cost- 
sharing that would otherwise be imposed 
under such program option’’; 
(2) in subparagraph (B)(i), by striking 
‘‘or an actuarially equivalent level of 
cost-sharing as determined in this part’’; 
and 
(3) by amending clause (ii) of sub-
paragraph (B) to read as follows: 
‘‘(ii) PERMITTING
USE
OF
FLAT 
COPAYMENT
OR
PER
DIEM
RATE.— 
Nothing in clause (i) shall be con-
strued as prohibiting a Medicare 
Advantage plan from using a flat 
copayment or per diem rate, in 
lieu 
of 
the 
cost-sharing 
that 
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would be imposed under part A or 
B, so long as the amount of the 
cost-sharing imposed does not ex-
ceed the amount of the cost-shar-
ing that would be imposed under 
the respective part if the indi-
vidual were not enrolled in a plan 
under this part.’’. 
(b) LIMITATION
FOR DUAL ELIGIBLES
AND 
QUALIFIED MEDICARE BENEFICIARIES.—Section 
1852(a)(7) of such Act is amended to read as 
follows: 
‘‘(7) LIMITATION ON COST-SHARING FOR 
DUAL
ELIGIBLES
AND
QUALIFIED
MEDICARE 
BENEFICIARIES.—In the case of a indi-
vidual who is a full-benefit dual eligible 
individual 
(as 
defined 
in 
section 
1935(c)(6)) or a qualified medicare bene-
ficiary (as defined in section 1905(p)(1)) 
who is enrolled in a Medicare Advantage 
plan, the plan may not impose cost-shar-
ing that exceeds the amount of cost-shar-
ing that would be permitted with respect 
to the individual under this title and title 
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XIX if the individual were not enrolled 
with such plan.’’. 
(c) EFFECTIVE DATES.— 
(1) The amendments made by sub-
section (a) shall apply to plan years be-
ginning on or after January 1, 2011. 
(2) The amendments made by sub-
section (b) shall apply to plan years be-
ginning on or after January 1, 2011. 
SEC. 1172. CONTINUOUS OPEN ENROLLMENT FOR ENROLL-
EES IN PLANS WITH ENROLLMENT SUSPEN-
SION. 
Section 1851(e)(4) of the Social Security 
Act (42 U.S.C. 1395w(e)(4)) is amended— 
(1) in subparagraph (C), by striking at 
the end ‘‘or’’; 
(2) in subparagraph (D)— 
(A) by inserting ‘‘, taking into ac-
count the health or well-being of the 
individual’’ before the period; and 
(B) by redesignating such sub-
paragraph as subparagraph (E); and 
(3) by inserting after subparagraph 
(C) the following new subparagraph: 
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‘‘(D) the individual is enrolled in 
an MA plan and enrollment in the 
plan is suspended under paragraph 
(2)(B) or (3)(C) of section 1857(g) be-
cause of a failure of the plan to meet 
applicable requirements; or’’. 
SEC. 1173. INFORMATION FOR BENEFICIARIES ON MA PLAN 
ADMINISTRATIVE COSTS. 
(a) DISCLOSURE OF MEDICAL LOSS RATIOS 
AND OTHER EXPENSE DATA.—Section 1851 of 
the Social Security Act (42 U.S.C. 1395w–21), 
as previously amended by this subtitle, is 
amended by adding at the end the following 
new subsection: 
‘‘(p) PUBLICATION OF MEDICAL LOSS RATIOS 
AND OTHER COST-RELATED INFORMATION.— 
‘‘(1) IN GENERAL.—The Secretary shall 
publish, not later than November 1 of 
each year (beginning with 2011), for each 
MA plan contract, the medical loss ratio 
of the plan in the previous year. 
‘‘(2) SUBMISSION OF DATA.— 
‘‘(A) IN GENERAL.—Each MA orga-
nization shall submit to the Sec-
retary, in a form and manner speci-
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fied by the Secretary, data necessary 
for the Secretary to publish the med-
ical loss ratio on a timely basis. 
‘‘(B) DATA FOR 2010 AND 2011.—The 
data submitted under subparagraph 
(A) for 2010 and for 2011 shall be con-
sistent in content with the data re-
ported as part of the MA plan bid in 
June 2009 for 2010. 
‘‘(C) USE
OF
STANDARDIZED
ELE-
MENTS AND DEFINITIONS.—The data to 
be submitted under subparagraph (A) 
relating to medical loss ratio for a 
year, beginning with 2012, shall be 
submitted based on the standardized 
elements and definitions developed 
under paragraph (3). 
‘‘(3) DEVELOPMENT OF DATA REPORTING 
STANDARDS.— 
‘‘(A) IN
GENERAL.—The Secretary 
shall develop and implement stand-
ardized data elements and definitions 
for reporting under this subsection, 
for contract years beginning with 
2012, of data necessary for the cal-
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culation of the medical loss ratio for 
MA plans. Not later than December 
31, 2010, the Secretary shall publish a 
report describing the elements and 
definitions so developed. 
‘‘(B) 
CONSULTATION.—The 
Sec-
retary shall consult with the Health 
Choices 
Commissioner, 
representa-
tives of MA organizations, experts on 
health plan accounting systems, and 
representatives of the National Asso-
ciation of Insurance Commissioners, 
in the development of such data ele-
ments and definitions. 
‘‘(4) MEDICAL
LOSS
RATIO
TO
BE
DE-
FINED.—For purposes of this part, the 
term ‘medical loss ratio’ has the meaning 
given such term by the Secretary, taking 
into account the meaning given such 
term by the Health Choices Commis-
sioner under section 116 of the America’s 
Affordable Health Choices Act of 2009.’’. 
(b) MINIMUM MEDICAL LOSS RATIO.—Sec-
tion 1857(e) of the Social Security Act (42 
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U.S.C. 1395w–27(e)) is amended by adding at 
the end the following new paragraph: 
‘‘(4) REQUIREMENT FOR MINIMUM MED-
ICAL LOSS RATIO.—If the Secretary deter-
mines for a contract year (beginning with 
2014) that an MA plan has failed to have 
a medical loss ratio (as defined in section 
1851(p)(4)) of at least .85— 
‘‘(A) the Secretary shall require 
the Medicare Advantage organization 
offering the plan to give enrollees a 
rebate (in the second succeeding con-
tract year) of premiums under this 
part (or part B or part D, if applica-
ble) by such amount as would provide 
for a benefits ratio of at least .85; 
‘‘(B) for 3 consecutive contract 
years, the Secretary shall not permit 
the 
enrollment 
of 
new 
enrollees 
under the plan for coverage during 
the second succeeding contract year; 
and 
‘‘(C) the Secretary shall terminate 
the plan contract if the plan fails to 
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have such a medical loss ratio for 5 
consecutive contract years.’’. 
SEC. 1174. STRENGTHENING AUDIT AUTHORITY. 
(a) FOR PART C PAYMENTS RISK ADJUST-
MENT.—Section 1857(d)(1) of the Social Secu-
rity Act (42 U.S.C. 1395w–27(d)(1)) is amended 
by inserting after ‘‘section 1858(c))’’ the fol-
lowing: ‘‘, and data submitted with respect to 
risk adjustment under section 1853(a)(3)’’. 
(b) ENFORCEMENT
OF AUDITS
AND DEFI-
CIENCIES.— 
(1) IN
GENERAL.—Section 1857(e) of 
such Act, as amended by section 1173, is 
amended by adding at the end the fol-
lowing new paragraph: 
‘‘(5) ENFORCEMENT OF AUDITS AND DEFI-
CIENCIES.— 
‘‘(A) INFORMATION
IN
CONTRACT.— 
The Secretary shall require that each 
contract with an MA organization 
under this section shall include terms 
that inform the organization of the 
provisions in subsection (d). 
‘‘(B) ENFORCEMENT
AUTHORITY.— 
The Secretary is authorized, in con-
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nection with conducting audits and 
other activities under subsection (d), 
to take such actions, including pur-
suit of financial recoveries, necessary 
to address deficiencies identified in 
such audits or other activities.’’. 
(2) APPLICATION
UNDER
PART
D.—For 
provision applying the amendment made 
by paragraph (1) to prescription drug 
plans under part D, see section 1860D– 
12(b)(3)(D) of the Social Security Act. 
(c) EFFECTIVE
DATE.—The amendments 
made by this section shall take effect on the 
date of the enactment of this Act and shall 
apply to audits and activities conducted for 
contract years beginning on or after January 
1, 2011. 
SEC. 1175. AUTHORITY TO DENY PLAN BIDS. 
(a) IN GENERAL.—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: 
‘‘(C) REJECTION OF BIDS.—Nothing 
in this section shall be construed as 
requiring the Secretary to accept any 
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or every bid by an MA organization 
under this subsection.’’. 
(b) APPLICATION UNDER PART D.—Section 
1860D–11(d) of such Act (42 U.S.C. 1395w– 
111(d)) is amended by adding at the end the 
following new paragraph: 
‘‘(3) REJECTION
OF
BIDS.—Paragraph 
(5)(C) of section 1854(a) shall apply with 
respect to bids under this section in the 
same manner as it applies to bids by an 
MA organization under such section.’’. 
(c) EFFECTIVE
DATE.—The amendments 
made by this section shall apply to bids for 
contract years beginning on or after January 
1, 2011. 
PART 3—TREATMENT OF SPECIAL NEEDS PLANS 
SEC. 1176. LIMITATION ON ENROLLMENT OUTSIDE OPEN 
ENROLLMENT PERIOD OF INDIVIDUALS INTO 
CHRONIC CARE SPECIALIZED MA PLANS FOR 
SPECIAL NEEDS INDIVIDUALS. 
Section 1859(f)(4) of the Social Security 
Act (42 U.S.C. 1395w–28(f)(4)) is amended by 
adding at the end the following new subpara-
graph: 
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‘‘(C) The plan does not enroll an 
individual on or after January 1, 
2011, other than during an annual, 
coordinated open enrollment period 
or when at the time of the diagnosis 
of the disease or condition that quali-
fies the individual as an individual 
described in subsection (b)(6)(B)(iii).’’. 
SEC. 1177. EXTENSION OF AUTHORITY OF SPECIAL NEEDS 
PLANS TO RESTRICT ENROLLMENT. 
(a) IN GENERAL.—Section 1859(f)(1) of the 
Social Security Act (42 U.S.C. 1395w–28(f)(1)) 
is amended by striking ‘‘January 1, 2011’’ and 
inserting ‘‘January 1, 2013 (or January 1, 2016, 
in the case of a plan described in section 
1177(b)(1) of the America’s Affordable Health 
Choices Act of 2009)’’. 
(b) GRANDFATHERING OF CERTAIN PLANS.— 
(1) PLANS DESCRIBED.—For purposes of 
section 1859(f)(1) of the Social Security 
Act (42 U.S.C. 1395w–28(f)(1)), a plan de-
scribed in this paragraph is a plan that 
had a contract with a State that had a 
State program to operate an integrated 
Medicaid-Medicare 
program 
that 
had 
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been approved by the Centers for Medi-
care & Medicaid Services as of January 1, 
2004. 
(2) ANALYSIS; REPORT.—The Secretary 
of Health and Human Services shall pro-
vide, through a contract with an inde-
pendent health services evaluation orga-
nization, for an analysis of the plans de-
scribed in paragraph (1) with regard to 
the impact of such plans on cost, quality 
of care, patient satisfaction, and other 
subjects as specified by the Secretary. 
Not later than December 31, 2011, the 
Secretary shall submit to Congress a re-
port on such analysis and shall include in 
such report such recommendations with 
regard to the treatment of such plans as 
the Secretary deems appropriate. 
Subtitle E—Improvements to 
Medicare Part D 
SEC. 1181. ELIMINATION OF COVERAGE GAP. 
(a) IN GENERAL.—Section 1860D–2(b) of 
such Act (42 U.S.C. 1395w–102(b)) is amend-
ed— 
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(1) in paragraph (3)(A), by striking 
‘‘paragraph (4)’’ and inserting ‘‘para-
graphs (4) and (7)’’; 
(2) in paragraph (4)(B)(i), by inserting 
‘‘subject to paragraph (7)’’ after ‘‘purposes 
of this part’’; and 
(3) by adding at the end the following 
new paragraph: 
‘‘(7) PHASED-IN
ELIMINATION
OF
COV-
ERAGE GAP.— 
‘‘(A) IN
GENERAL.—For each year 
beginning with 2011, the Secretary 
shall consistent with this paragraph 
progressively increase the initial cov-
erage limit (described in subsection 
(b)(3)) and decrease the annual out- 
of-pocket threshold from the amounts 
otherwise computed until there is a 
continuation of coverage from the ini-
tial coverage limit for expenditures 
incurred through the total amount of 
expenditures at which benefits are 
available under paragraph (4). 
‘‘(B) INCREASE IN INITIAL COVERAGE 
LIMIT.—For a year beginning with 
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2011, the initial coverage limit other-
wise computed without regard to this 
paragraph shall be increased by 1⁄2 of 
the cumulative phase-in percentage 
(as defined in subparagraph (D)(ii) 
for the year) times the out-of-pocket 
gap amount (as defined in subpara-
graph (E)) for the year. 
‘‘(C) DECREASE IN ANNUAL OUT-OF- 
POCKET THRESHOLD.—For a year begin-
ning with 2011, the annual out-of- 
pocket threshold otherwise computed 
without regard to this paragraph 
shall be decreased by 1⁄2 of the cumu-
lative phase-in percentage of the out- 
of-pocket gap amount for the year 
multiplied by 1.75. 
‘‘(D) PHASE–IN.—For purposes of 
this paragraph: 
‘‘(i) ANNUAL PHASE-IN PERCENT-
AGE.—The term ‘annual phase-in 
percentage’ means— 
‘‘(I) for 2011, 13 percent; 
‘‘(II) for 2012, 2013, 2014, 
and 2015, 5 percent; 
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‘‘(III) 
for 
2016 
through 
2018, 7.5 percent; and 
‘‘(IV) for 2019 and each 
subsequent year, 10 percent. 
‘‘(ii) CUMULATIVE PHASE-IN PER-
CENTAGE.—The term ‘cumulative 
phase-in percentage’ means for a 
year the sum of the annual phase- 
in percentage for the year and the 
annual phase-in percentages for 
each 
previous 
year 
beginning 
with 2011, but in no case more 
than 100 percent. 
‘‘(E) OUT-OF-POCKET GAP AMOUNT.— 
For purposes of this paragraph, the 
term 
‘out-of-pocket 
gap 
amount’ 
means for a year the amount by 
which— 
‘‘(i) the annual out-of-pocket 
threshold specified in paragraph 
(4)(B) for the year (as determined 
as if this paragraph did not 
apply), exceeds 
‘‘(ii) the sum of— 
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‘‘(I) the annual deductible 
under paragraph (1) for the 
year; and 
‘‘(II) 1⁄4 of the amount by 
which 
the 
initial 
coverage 
limit under paragraph (3) for 
the year (as determined as if 
this paragraph did not apply) 
exceeds such annual deduct-
ible.’’. 
(b) REQUIRING DRUG MANUFACTURERS
TO 
PROVIDE
DRUG
REBATES
FOR
FULL-BENEFIT 
DUAL ELIGIBLES.— 
(1) IN
GENERAL.—Section 1860D–2 of 
the Social Security Act (42 U.S.C. 1396r–8) 
is amended— 
(A) in subsection (e)(1), in the 
matter before subparagraph (A), by 
inserting ‘‘and subsection (f)’’ after 
‘‘this subsection’’; and 
(B) by adding at the end the fol-
lowing new subsection: 
‘‘(f) PRESCRIPTION DRUG REBATE AGREE-
MENT FOR FULL-BENEFIT DUAL ELIGIBLE INDI-
VIDUALS.— 
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