SEC. 2. MEDICARE AND MEDICAID CHOICE. 
(a) IN GENERAL.—Notwithstanding any other provi-
sion of law, the Secretary of Health and Human Services 
(referred to in this Act as the ‘‘Secretary’’) shall establish 
a demonstration program (referred to in this Act as the 
‘‘demonstration program’’) under which Medicare and 
Medicaid eligible beneficiaries (as defined in section 4) are 
provided— 
(1) the option of purchasing qualifying health 
benefits coverage; and 
(2) access to a debit style card (referred to in 
this Act as a ‘‘Medi-Choice card’’) for the purpose 
of purchasing health benefits coverage in accordance 
with the demonstration program and for paying cer-
tain other out-of-pocket health care expenditures. 
(b) QUALIFYING HEALTH BENEFITS COVERAGE.—In 
this Act, the term ‘‘qualifying health benefits coverage’’ 
means health benefits coverage that meets the following 
requirements: 
(1) BENEFITS COVERAGE.—In the case of— 
(A) a dual eligible beneficiary, the coverage 
provides benefits that are at least as com-
prehensive as the benefits provided, as of the 
date of the enactment of this Act, under parts 
A, B, and D of title XVIII of the Social Secu-
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rity Act and under the State Medicaid plan 
under title XIX of such Act in California; 
(B) a Medicare eligible beneficiary who is 
not a dual eligible beneficiary, the coverage pro-
vides benefits that are at least as comprehen-
sive as the benefits provided, as of the date of 
the enactment of this Act, under parts A, B, 
and D of title XVIII of the Social Security Act; 
and 
(C) a Medicaid eligible beneficiary who is 
not a dual eligible beneficiary, the coverage pro-
vides benefits that are at least as comprehen-
sive as the benefits provided, as of the date of 
the enactment of this Act, under the State 
Medicaid plan under title XIX of the Social Se-
curity Act in California. 
(2) GUARANTEE ISSUE; NO PREEXISTING CON-
DITION EXCLUSIONS.—The coverage is offered and 
available under the demonstration program on a 
guaranteed issue basis without regard to health sta-
tus and does not apply any preexisting condition ex-
clusion (as defined in section 2701(b)(1)(A) of the 
Public Health Service Act). 
(3) COMMUNITY
RATING.—Premiums for the 
coverage are uniform and do not vary by age, health 
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status, geographic area, or other characteristics of 
the enrolled individual. 
SEC. 3. MEDI-CHOICE CARD. 
(a) PROVISION.—The Secretary shall enter into a 
contract with a major credit card provider or financial in-
stitution for the purpose of issuing Medi-Choice cards 
under the demonstration program. 
(b) USE.— 
(1) TOWARD PURCHASING QUALIFYING BENE-
FITS COVERAGE.—Medi-Choice cards shall be used 
to purchase qualifying health benefits coverage for 
eligible beneficiaries enrolled in the demonstration 
program. 
(2) TOWARD OUT OF POCKET COSTS.—Amounts 
remaining on such a card after the application of 
paragraph (1) may be used— 
(A) to pay copayments or deductibles and 
other cost sharing on behalf of enrolled eligible 
beneficiaries; and 
(B) for other qualified medical expenses 
(as defined in section 223(d)(2) of the Internal 
Revenue Code of 1986) of such beneficiaries. 
(3) UNUSED AMOUNT.—Amounts on a Medi- 
Choice card not otherwise used under this paragraph 
shall remain available under the card until expended 
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by or on behalf of an enrolled eligible beneficiary 
during the period of participation in the demonstra-
tion program. 
SEC. 4. ELIGIBLE BENEFICIARIES. 
(a) IN GENERAL.—In this Act, the term ‘‘eligible 
beneficiary’’ means an individual— 
(1) who is a legal permanent resident of the 
United States residing within the area covered by 
the demonstration program; and 
(2)(A) who is eligible for medical assistance for 
full benefits under the State plan under title XIX of 
the Social Security Act for California as of the date 
of the enactment of this Act; or 
(B) who is entitled to benefits under part A of 
title XVIII of the Social Security Act. 
(b) EXCLUSION.—The term ‘‘eligible beneficiary’’ 
does not include any individual for a month if the indi-
vidual, as of the first day of the month is— 
(1) enrolled by reason of disability in the pro-
gram under title XIX of the Social Security Act; 
(2) entitled to benefits under chapter 55 of title 
10, United States Code, including under the 
TRICARE program (as defined in section 1072(7) 
of such title); 
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(3) imprisoned under Federal, State, or local 
authority; or 
(4) an alien who is not a lawful permanent resi-
dent of the United States. 
(c) REFERENCES.—In this Act: 
(1) MEDICARE
ELIGIBLE
BENEFICIARY.—The 
term ‘‘Medicare eligible beneficiary’’ means an eligi-
ble beneficiary described in subsection (a)(2)(B). 
(2) MEDICAID
ELIGIBLE
BENEFICIARY.—The 
term ‘‘Medicaid eligible beneficiary’’ means an eligi-
ble beneficiary described in subsection (a)(2)(A). 
(3) DUAL ELIGIBLE BENEFICIARY.—The term 
‘‘dual eligible beneficiary’’ means an eligible bene-
ficiary who is both a Medicare eligible beneficiary 
and a Medicaid eligible beneficiary. 
SEC. 5. FUNDING OF MEDI-CHOICE CARDS. 
(a) AMOUNTS.—Under the demonstration program, 
subject to the succeeding subsections, the Secretary shall 
make funds available through the Medi-Choice card as fol-
lows: 
(1) DUAL
ELIGIBLE
BENEFICIARIES.—For a 
dual eligible beneficiary the annual amount of the 
deposit— 
(A) for 2012 is equal to the sum of— 
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(i) the United States average nominal 
dollar value of medical assistance under 
title XIX of the Social Security Act; and 
(ii) the United States average nominal 
dollar value of the benefits under parts A, 
B, and D of title XVIII of such Act; 
(B) for any subsequent year is equal to the 
annual amount specified in this paragraph for 
the preceding year increased by the annual in-
flation adjustment described in subsection (d) 
for such subsequent year. 
(2) 
OTHER
MEDICAID
ELIGIBLE
BENE-
FICIARIES.—For a Medicaid eligible beneficiary who 
is not a dual eligible beneficiary, the annual amount 
of the deposit— 
(A) for 2012 is equal to the United States 
average nominal dollar value of medical assist-
ance under title XIX of the Social Security Act; 
and 
(B) for any subsequent year is equal to the 
annual amount specified in this paragraph for 
the preceding year increased by the annual in-
flation adjustment described in subsection (d) 
for such subsequent year. 
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(3) 
OTHER
MEDICARE
ELIGIBLE
BENE-
FICIARIES.—For a Medicare eligible beneficiary who 
is not a dual eligible beneficiary, the annual amount 
of the deposit shall— 
(A) for 2012 be equal to the United States 
average nominal dollar value of the benefits 
under parts A, B, and D of title XVIII of the 
Social Security Act; and 
(B) for any subsequent year is equal to the 
annual amount specified in this paragraph for 
the preceding year increased by the annual in-
flation adjustment described in subsection (d) 
for such subsequent year. 
(4) ROUNDING.—Any amount computed under 
paragraph (1)(B), (2)(B), or (3)(B) that is not a 
multiple of $12 shall be rounded to the nearest mul-
tiple of $12. 
(b) RISK
ADJUSTMENT.—The payment amounts 
under subsection (a) for an individual shall be adjusted, 
using a methodology specified by the Secretary, in a man-
ner that takes into account the relative risk factors (such 
as those described in section 1853(a)(1)(C)(i) of the Social 
Security Act) associated with such individual. Such ad-
justment shall be made in such a manner as not to change 
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the total amount of payments made under this section as 
a result of such adjustment. 
(c) MEDI-CHOICE REDUCTIONS
FOR HIGHER-IN-
COME INDIVIDUALS.—In the case of an individual whose 
modified adjusted gross income (as defined in paragraph 
(4) of section 1839(i)(4) of the Social Security Act), ex-
ceeds the threshold amount specified in paragraph (2) of 
such section, as adjusted under paragraph (5) of such sec-
tion, the annual amount under subsection (a)(2) shall be 
reduced by one percent for each percent of such excess, 
but not to exceed a reduction of 50 percentage points. 
(d) ANNUAL INFLATION ADJUSTMENT.—The annual 
inflation adjustment under paragraphs (1)(B) and (2)(B) 
for a year is equal to the average of— 
(1) the annual rate of increase in the consumer 
price index for urban consumers (all items; United 
States city average) for the year, as projected by the 
Secretary in consultation with the Bureau of Labor 
Statistics before the beginning of the year; and 
(2) the annual rate of increase in the medical 
care component of the consumer price index for all 
urban consumers (United States city average) for 
the year, as projected by the Secretary in consulta-
tion with the Bureau of Labor Statistics before the 
beginning of the year. 
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(e) MONTHLY DEPOSITS.—Deposits of amounts to 
Medi-Choice cards under this section shall be credited on 
a monthly basis and prorated for partial months of pro-
gram enrollment. 
SEC. 6. SCOPE OF DEMONSTRATION PROGRAM. 
(a) AREA.—The demonstration program shall be con-
ducted in the counties of Kern, Tulare, Kings, Fresno, 
Merced, Madera, Stanislaus, and San Joaquin in Cali-
fornia. 
(b) PERIOD OF DEMONSTRATION PROJECT.— 
(1) DURATION.—The demonstration program 
shall be conducted for a period of 10 years. 
(2) 
INITIAL
ENROLLMENT.—Eligible 
bene-
ficiaries shall be permitted to enroll in the dem-
onstration program beginning on June 1, 2013. 
(c) 
NUMERICAL
LIMITATION.—No 
more 
than 
100,000 eligible beneficiaries may be enrolled in the dem-
onstration program at any time. 
SEC. 7. PAYMENT OF COSTS. 
(a) IN GENERAL.—The Secretary shall be responsible 
for the cost of operating the demonstration program, in-
cluding all amounts deposited onto Medi-Choice cards. 
The cost of operation of the program insofar as they are 
attributable (as determined by the Secretary) to— 
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(1) Medicare eligible beneficiaries and benefits 
under part A, part B, or part D of title XVIII of 
the Social Security Act shall be payable from the re-
spective trust fund or account under the respective 
part, and the amounts in such trust funds or ac-
count shall be available to make such payments; or 
(2) Medicaid eligible beneficiaries and benefits 
under title XIX of such Act shall be payable from 
amounts appropriated to carry out such title and the 
amounts so appropriated shall be available to make 
such payments. 
(b) NO DUPLICATE PAYMENTS.—Except as provided 
in section 8(d)(2), no amounts shall be payable under title 
XVIII or XIX of the Social Security Act for benefits or 
medical assistance for an eligible beneficiary participating 
in the demonstration program. 
SEC. 8. MISCELLANEOUS. 
(a) ASSISTANCE IN ENROLLMENT.—The Secretary 
shall maintain a toll free phone number to assist eligible 
beneficiaries with enrollment under the demonstration 
program and shall make information available to eligible 
beneficiaries in the demonstration area describing the op-
tions available, which shall include a comparison of plan 
costs and benefits. 
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(b) NOT TREATED AS INCOME.—Amounts paid into 
a Medi-Choice card shall not be treated as income for pur-
poses of the Internal Revenue Code of 1986 or for pur-
poses of determining eligibility for any Federal program. 
(c) PREMIUM OBLIGATIONS.—An individual partici-
pating in the demonstration— 
(1) is not responsible for payment of any pre-
mium otherwise applicable under part B or D of title 
XVIII or under title XIX of the Social Security Act; 
but 
(2) shall use benefits applied to the Medi- 
Choice card for the purpose of purchasing qualifying 
health benefits coverage. 
(d) RELATION TO MEDICAID BENEFITS.— 
(1) IN GENERAL.—In the case of an individual 
who participates in the demonstration program, the 
individual is not entitled to any payment under a 
State plan under title XIX of the Social Security Act 
with respect to any benefits relating to items and 
services for which coverage is provided under this 
title. 
(2) CONTINUATION
OF
MEDICAL
ASSISTANCE 
FOR NONCOVERED ITEMS AND SERVICES.—Nothing 
in this Act shall affect the continued provision of 
medical assistance under title XIX of such Act for 
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items and services, such as dental, vision, or long- 
term care facility services, for which benefits are not 
provided under this Act regardless of medical neces-
sity. 
Æ 
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