I 
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 with-
in 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 Representa-
tives 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 Account-
ability 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 BEN-
EFITS. 
(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 ADMINISTRA-
TIVE COST RATIOS.—
‘‘(A) IN GENERAL.—The contract with an 
MA organization under this part shall provide 
for the following: 
‘‘(i) MINIMUM
LOSS
RATIO.—Aggre-
gate 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 subpara-
graph (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 of-
fered under chapter 89 of title 5, United 
States Code (relating to the Federal Em-
ployees Health Benefits Program).’’. 
(b) AUDIT OF ADMINISTRATIVE COSTS AND COMPLI-
ANCE 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 require-
ments of subsection (e)(4)(A) and the extent to 
which administrative costs comply with the applica-
ble 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 pre-
scription 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 con-
tract year, information describing the organiza-
tion’s compliance with the requirements of sec-
tion 1857(e)(4) and a functional listing of the
organization’s administrative costs (by category 
of such costs, including, at a minimum, mar-
keting costs and claims processing costs), prof-
its, and investment income (as defined by the 
Secretary), as a ratio of aggregate average reve-
nues collected under the contract for that year. 
‘‘(B) PUBLICATION.—The Secretary shall 
publish the information provided under sub-
paragraph (A) for each MA plan.’’. 
(b) CONFORMING APPLICATION
TO PRESCRIPTION 
DRUG PLANS.—Section 1860D–11(b)(2) of the Social Se-
curity 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 re-
spect to an MA plan.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to reporting of information for con-
tract years to which the amendments made by section 2 
apply.