I 
112TH CONGRESS 
2D SESSION 
H. R. 6645 
To amend title XVIII of the Social Security Act to save and strengthen 
the Medicare program. 
IN THE HOUSE OF REPRESENTATIVES 
DECEMBER 11, 2012 
Mr. HERGER introduced the following bill; which was referred to the Com-
mittee on Ways and Means, and in addition to the Committees on Energy 
and Commerce and Rules, 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 save 
and strengthen the Medicare program. 
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 
‘‘Save and Strengthen Medicare Act of 2012’’. 
(b) TABLE OF CONTENTS.—The table of contents of 
this Act is as follows: 
Sec. 1. Short title; table of contents. 
TITLE I—IMPROVED AND UNIFIED MEDICARE PROGRAM 
THROUGH CHOICE AND COMPETITION 
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Sec. 101. New unified eligibility and enrollment rules. 
‘‘PART E—UNIFIED MEDICARE WITH CHOICE AND COMPETITION 
‘‘SUBPART 1—ELIGIBILITY; ENROLLMENT 
‘‘Sec. 1860E–11. Unified eligibility and enrollment under parts A and B. 
‘‘Sec. 1860E–12. Coordination with part D. 
‘‘Sec. 1944. Maintenance of effort options for full-benefit dual eligible indi-
viduals. 
Sec. 102. Incentivized Medicare eligibility at increased age. 
Sec. 103. New benefit structure under unified Medicare. 
‘‘SUBPART 2—BENEFITS 
‘‘Sec. 1860E–21. Unified part A and B deductible. 
‘‘Sec. 1860E–22. Uniform coinsurance. 
‘‘Sec. 1860E–23. Out-of-pocket limit. 
‘‘Sec. 1860E–24. Offering of tiered cost-sharing coverage levels instead of 
medigap. 
‘‘Sec. 1860E–25. Contributions into health individual retirement accounts. 
‘‘Sec. 1860E–26. Requiring MA plans to offer prescription drug coverage. 
Sec. 104. Late enrollment penalty not to apply for months of any health cov-
erage. 
Sec. 105. Competitive bidding and premiums under unified Medicare. 
‘‘SUBPART 3—COMPETITIVE BIDDING AND PREMIUMS 
‘‘Sec. 1860E–31. Application of competitive bidding and changes in pre-
miums. 
‘‘Sec. 1860E–32. Application of competitive bidding to Medicare fee-for- 
service. 
‘‘Sec. 1860E–33. Ensuring a level playing field. 
Sec. 106. Separate Medicare FFS accounts and other financing under unified 
Medicare. 
‘‘SUBPART 4—SUBSIDIES 
‘‘Sec. 1860E–41. Changes in subsidies. 
Sec. 107. Medicare Choices Commission; general provisions; effective date. 
‘‘SUBPART 5—MEDICARE CHOICES COMMISSION 
‘‘Sec. 1860E–51. Medicare Choices Commission. 
‘‘Sec. 1860E–52. Duties of the Commission. 
‘‘Sec. 1860E–53. Powers of Commission. 
‘‘Sec. 1860E–54. Commission personnel matters. 
‘‘Sec. 1860E–55. Reports; communications with Congress. 
‘‘Sec. 1860E–56. Funding of the Commission. 
‘‘SUBPART 6—GENERAL PROVISIONS 
‘‘Sec. 1860E–61. Applicability; definitions. 
‘‘Sec. 1860E–62. General effective date. 
TITLE II—HEALTH INDIVIDUAL RETIREMENT ACCOUNTS 
Subtitle A—Establishment of Accounts 
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to the previous sentence with respect to any period prior 
to the date of such enrollment. 
‘‘(d) AUTO ENROLLMENT OF DUAL ELIGIBLE INDI-
VIDUALS UNDER MEDICARE ADVANTAGE PLANS.— 
‘‘(1) IN GENERAL.—Except in the case of a 
State that has elected the maintenance of effort op-
tion described in section 1944(b)(2), in the case of 
an individual described in subparagraph (A)(ii) of 
section 1935(c)(6) (taking into account the applica-
tion of subparagraph (B) of such section), the Medi-
care Choices Commission shall establish a process 
for the enrollment in an MA–PD plan that is a man-
aged care plan under part C that has a monthly 
beneficiary premium that does not exceed the pre-
mium assistance available under section 1860E– 
41(b)(1)(A). If there is more than one such plan 
available, the Medicare Choices Commission shall en-
roll such an individual on a random basis among all 
such plans in the PDP region. 
‘‘(2) RIGHT TO DISENROLL.—Nothing in para-
graph (1) shall prevent such an individual from de-
clining enrollment in any such plan (and thereby ob-
taining coverage under Medicare fee-for-service) or 
from changing enrollment in such a plan to another 
MA–PD plan. 
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‘‘SEC. 1860E–12. COORDINATION WITH PART D. 
‘‘(a) DEEMED ENROLLMENT UNDER PART D.— 
‘‘(1) IN
GENERAL.—The Medicare Choices 
Commission shall establish a process that, beginning 
as of the general effective date, provides for the en-
rollment in a prescription drug plan that has a 
monthly base beneficiary premium that does not ex-
ceed the weighted average of premiums for such 
plans that provide standard prescription drug cov-
erage (as defined in section 1860D–2(b)) with re-
spect to the area involved (on a random basis among 
all such plans in the applicable PDP region) of each 
Medicare enrollee (as defined in section 1860E–51) 
who— 
‘‘(A) failed to enroll in such a prescription 
drug plan during the applicable enrollment or 
coverage election period under section 1860D– 
1(b); and 
‘‘(B) failed to elect not to enroll in such a 
prescription drug plan during an applicable opt 
out period described in paragraph (2). 
Nothing in the previous sentence shall prevent such 
an individual from declining or changing such enroll-
ment. Such process shall be carried out in the same 
manner as the process described in section 1860D– 
1(b)(1)(C). 
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‘‘(2) OPT OUT PERIODS.—The process under 
paragraph (1) shall provide for the opportunity to 
make an election described in subparagraph (B) of 
such paragraph during an opt out period that is co-
ordinated with the relevant enrollment or coverage 
election period under section 1860D–1. 
‘‘(3) LATE ENROLLMENT PENALTIES.—In the 
case of an individual who makes an election de-
scribed in paragraph (1)(B) and then enrolls in a 
prescription drug plan, the late enrollment penalty 
under section 1860D–13(b) shall apply to the 
monthly beneficiary premium of such individual, ex-
cept that in applying such section, any reference to 
the initial enrollment period of such individual shall 
be deemed to be a reference to the opt out period 
under paragraph (2) during which the individual 
elected not to enroll in a prescription drug plan. 
‘‘(4) NO
LATE
ENROLLMENT
PENALTY
FOR 
CURRENT
FEE-FOR-SERVICE
BENEFICIARIES
WITH-
OUT DRUG COVERAGE.—In the case of an individual 
who is a Medicare enrollee before the date of enact-
ment of this section and who was not enrolled under 
a prescription drug plan before being enrolled under 
such a plan pursuant to paragraph (1), there shall 
be no increase in the base beneficiary premium of an 
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individual under section 1860D–13 by a late enroll-
ment penalty under subsection (b) of such section 
with respect to any period prior to the date of such 
enrollment. 
‘‘(b) REFERENCE
TO
REQUIRED
PRESCRIPTION 
DRUG COVERAGE UNDER PART C.—For provision requir-
ing coverage under MA plans to include prescription drug 
coverage, see section 1860E–26.’’. 
(b) LIMITATION ON MEDICAID BENEFITS FOR FULL- 
BENEFIT DUAL ELIGIBLE INDIVIDUALS.—Section 1902 
of the Social Security Act (42 U.S.C. 1396a) is amended 
by adding at the end the following new subsection: 
‘‘(ll) LIMITATION ON BENEFITS FOR FULL-BENEFIT 
DUAL ELIGIBLE INDIVIDUALS.—Effective as of the gen-
eral effective date (as specified in section 1860E–62), ex-
cept in the case of a State which has elected the option 
described in section 1944(b)(2), in the case of an indi-
vidual described in subparagraph (A)(ii) of section 
1935(c)(6) (taking into account the application of sub-
paragraph (B) of such section), notwithstanding any other 
provision of law, medical assistance shall not be available 
under this title for any items and services for which pay-
ment may be made under title XVIII.’’. 
(c) MEDICAID MAINTENANCE OF EFFORT AND AL-
TERNATIVES.—Title XIX of the Social Security Act is 
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amended by inserting after section 1943 the following new 
section: 
‘‘MAINTENANCE OF EFFORT OPTIONS FOR FULL-BENEFIT 
DUAL ELIGIBLE INDIVIDUALS 
‘‘SEC. 1944. (a) IN GENERAL.—Effective as of the 
general effective date (as specified in section 1860E–62), 
a State shall elect, in a form and manner specified by the 
Secretary, a maintenance of effort option described in sub-
section (b). In the case of a State that fails to make such 
an election, the State shall be deemed to have elected the 
option described in subsection (b)(3). 
‘‘(b) MAINTENANCE
OF
EFFORT
OPTIONS
DE-
SCRIBED.—The following are maintenance of effort op-
tions described in this subsection for a State, which shall 
apply to all individuals described in subparagraph (A)(ii) 
of section 1935(c)(6) (taking into account the application 
of subparagraph (B) of such section) for such State: 
‘‘(1) CONTRIBUTION TOWARDS OUT-OF-POCKET 
EXPENSES UNDER A TIER 3 MEDICARE PLAN.—The 
State establishes a program under which the State 
makes a contribution to a health investment retire-
ment account established under section 503(b) of 
the Save and Strengthen Medicare Act of 2012 for 
each such individual in an amount which— 
‘‘(A) is calculated, on an average actuarial 
basis, to cover at least the remaining expenses 
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Insurance Trust Fund under section 1817 and 
the Federal Supplementary Medical Insurance 
Trust Fund under section 1841. 
‘‘(C) RELATION
TO
PART
D
RULES.—In 
the case of a State that has elected the option 
under this paragraph, notwithstanding any 
other provision of law— 
‘‘(i) the coverage provided under this 
option shall be in lieu of any coverage that 
may otherwise be provided under part D; 
and 
‘‘(ii) the payment to the State under 
subparagraph (B) shall be in lieu of any 
payments otherwise made with respect to 
such individual under such part. 
‘‘(3) STATE CONTRIBUTION AMOUNT AND FED-
ERAL CONTRIBUTIONS TO HIRAS.— 
‘‘(A) IN GENERAL.—The State provides for 
payment to the Secretary for each month in an 
amount determined under subparagraph (B)(i) 
and the Secretary makes a contribution to a 
health investment retirement account estab-
lished under section 503(b) of the Save and 
Strengthen Medicare Act of 2012 for each such 
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individual in an amount described in subpara-
graph (C). 
‘‘(B) STATE CONTRIBUTION AMOUNT.— 
‘‘(i) IN GENERAL.—Subject to clause 
(iii), the amount determined under this 
clause for a State for a month in a year 
is equal to the product described in sub-
paragraph (A) of section 1935(c)(1) for 
the State for the month. 
‘‘(ii) FORM
AND
MANNER
OF
PAY-
MENT.—The provisions of subparagraphs 
(B) through (D) of section 1935(c)(1) 
shall apply to payment by a State to the 
Secretary under this paragraph in the 
same manner as such subparagraphs apply 
to payment under section 1935(c)(1)(A). 
‘‘(iii) APPLICATION
OF
DIFFERENT 
FACTORS.—In applying clause (i), the fol-
lowing shall be substituted under para-
graphs (2) and (3) of section 1935(c): 
‘‘(I) The base year State Med-
icaid per capita expenditures for cov-
ered part D drugs described in sub-
paragraph (A)(i)(I) of such paragraph 
(2) shall be deemed to be the per cap-
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ita expenditures for Medicare cost- 
sharing that would apply, with respect 
to an individual described in subpara-
graph (A)(ii) of section 1935(c)(6) 
(taking into account the application of 
subparagraph (B) of such section) 
and the State involved, if such an in-
dividual received benefits only under 
title XVIII (and not the State plan 
under this title). 
‘‘(II) Any reference to expendi-
tures for covered part D drugs or for 
prescription drug benefits shall be 
deemed a reference to the expendi-
tures for Medicare cost-sharing de-
scribed in subclause (I). 
‘‘(III) Any reference to 2003 or 
2004 shall be deemed a reference to 
2014 or 2015, respectively. 
‘‘(IV) Any reference to a full-ben-
efit-dual-eligible individual shall be 
deemed a reference to an individual 
described in subparagraph (A)(ii) of 
section 1935(c)(6) (taking into ac-
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count the application of subparagraph 
(B) of such section). 
‘‘(V) The applicable growth fac-
tor under section 1935(c)(4) for a 
year, with respect to a State, shall be 
the average annual percentage change 
(to that year from the previous year) 
of the expenditures of the State under 
the State plan under title XIX. 
‘‘(VI) The factor described in 
section 1935(c)(5) is deemed to be 90 
percent. 
‘‘(C) 
FEDERAL
CONTRIBUTIONS
TO 
HIRAS.—For purposes of subparagraph (A), the 
amount described in this subparagraph, with re-
spect to each such individual described in sub-
paragraph (A), is an amount which— 
‘‘(i) is calculated, on an average actu-
arial basis, to cover the remaining expenses 
under a plan with a tier 3 benefit level 
under section 1860E–24(b); and 
‘‘(ii) is risk-adjusted based upon the 
actuarial characteristics of the individual. 
‘‘(4) OTHER INNOVATIVE ALTERNATIVES.— 
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‘‘(A) IN GENERAL.—The State submits to 
the Secretary, and has approved by the Sec-
retary, an innovative alternative proposal relat-
ing to coordinating coverage of such individuals 
under Medicare and the State plan under title 
XIX. 
‘‘(B) PROCESS
FOR
REVIEW.—With re-
spect to proposals submitted to the Secretary 
under subparagraph (A), the Secretary shall ap-
prove such a proposal if the State demonstrates 
with respect to the proposal that— 
‘‘(i) there would be no increased cost 
to the Federal Government if it were ap-
proved; and 
‘‘(ii) there would be no reduction in 
the quality of care provided to such indi-
viduals if the proposal were approved.’’. 
(d) CONFORMING AMENDMENTS.— 
(1) SECTION 226.—Section 226 of the Social 
Security Act (42 U.S.C. 426) is amended— 
(A) in subsection (a), in the matter pre-
ceding paragraph (1), by inserting ‘‘, subject to 
section 1860E–11(b)’’ after ‘‘individual who’’; 
(B) in subsection (b), in the matter pre-
ceding paragraph (1), by inserting ‘‘, subject to 
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section 1860E–11(b)’’ after ‘‘individual who’’; 
and 
(C) in subsection (c), in the matter pre-
ceding paragraph (1), by inserting ‘‘, subject to 
section 1860E–11(a)’’ after ‘‘subsection (a)’’. 
(2) SECTION 226A.—Section 226A(a) of such 
Act (42 U.S.C. 426–1(a)) is amended, in the matter 
preceding paragraph (1), by inserting ‘‘and subject 
to section 1860E–11(b)’’ after ‘‘or title XVIII’’. 
(3) SECTION
1818A.—Section 1818A(a) of 
such Act (42 U.S.C. 1395i–2a(a)) is amended, in 
the matter preceding paragraph (1), by inserting ‘‘, 
subject to section 1860E–11(a)’’ after ‘‘individual 
who’’. 
(4) SECTION 1836.—Section 1836 of such Act 
is amended, in the matter preceding paragraph (1), 
by inserting ‘‘, subject to section 1860E–11(a)’’ 
after ‘‘individual who’’. 
(5) SECTION 1932.—Section 1932(a)(2)(B) of 
the Social Security Act (42 U.S.C. 1396u– 
2(a)(2)(B)) is amended by striking ‘‘A State’’ and 
inserting ‘‘Except in the case of a State that has 
elected the maintenance of effort option described in 
section 1944(b)(2), a State’’. 
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SEC. 102. INCENTIVIZED MEDICARE ELIGIBILITY AT IN-
CREASED AGE. 
(a) IN GENERAL.—Section 216 of the Social Security 
Act (42 U.S.C. 426) is amended by adding at the end the 
following new subsection: 
‘‘(m) MEDICARE ELIGIBILITY AGE DEFINED.— 
‘‘(1) IN
GENERAL.—In this Act, the term 
‘Medicare eligibility age’ means, in accordance with 
paragraph (2), 65 years of age, the preferred Medi-
care age, or any age between 65 years of age and 
the preferred Medicare age. 
‘‘(2) CHOICE.— 
‘‘(A) IN GENERAL.—Unless an individual 
elects otherwise (in a manner specified by the 
Medicare Choices Commission) the Medicare 
eligibility age shall be the preferred Medicare 
age described in subparagraph (B) applicable to 
such individual. 
‘‘(B) PREFERRED MEDICARE AGE.— 
‘‘(i) IN
GENERAL.—The preferred 
Medicare age with respect to an indi-
vidual— 
‘‘(I) who attains the age of 65 
before January 1, 2016, is 65 years of 
age; 
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creased over such 10-year period in as 
equivalent increments as possible such that 
for individuals attaining the age of 65 as 
of December 31, 2025, such preferred 
Medicare age will be 67 years of age. 
‘‘(iii) LIFE
EXPECTANCY
INCREASE 
FACTOR.—The life expectancy increase fac-
tor under this clause for a 10-year period 
is the age, rounded to the nearest month, 
at which (as estimated by the Medicare 
Choices Commission based on the most re-
cent information available from the Na-
tional Center for Health Statistics for the 
3rd year beginning before such 10-year pe-
riod) the average life expectancy of an in-
dividual who is eligible to enroll under this 
title and who has attained 67 years of age 
is 18 years, except that the application of 
this clause may not result in a year-to-year 
increase of more than 2 months or in the 
preferred Medicare age being less than 67 
years of age. 
‘‘(C) ENROLLMENT OPTIONS.—The Medi-
care Choices Commission shall specify a manner 
and process in which an individual may make 
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an election described in subparagraph (A) to 
have the Medicare eligibility age applicable to 
such individual be an age described in para-
graph (1) other than the preferred Medicare 
age so that such election takes effect in the 
month in which the individuals attains such 
age. Such process shall provide for an initial 
election period and subsequent annual election 
periods for each age that may be elected for the 
Medicare eligibility age. 
‘‘(D) 
NOTIFICATION.—The 
Medicare 
Choices Commission shall provide for notifica-
tion of each individual who will be eligible for 
benefits under title XVIII that the Medicare eli-
gibility age of such individual will be the pre-
ferred Medicare age unless the individual elects 
under subparagraph (C) an earlier age de-
scribed in paragraph (1). 
‘‘(3) PREMIUM.—For provisions relating to pre-
mium incentives for deferred Medicare eligibility 
until the preferred Medicare age see section 1860E– 
32(c).’’. 
(b) CONFORMING AMENDMENTS.— 
(1) SOCIAL SECURITY ACT.— 
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(A) ENTITLEMENT
TO
HOSPITAL
INSUR-
ANCE BENEFITS.—Section 226 of such Act (42 
U.S.C. 426) is amended by striking ‘‘age 65’’ 
each place such term appears and inserting 
‘‘medicare eligibility age (as such term is de-
fined in section 216(m))’’. 
(B) HOSPITAL INSURANCE BENEFITS FOR 
THE
AGED.—Section 1811 of such Act (42 
U.S.C. 1395c) is amended by striking ‘‘age 65’’ 
each place such term appears and inserting 
‘‘medicare eligibility age (as such term is de-
fined in section 216(m))’’. 
(C) HOSPITAL INSURANCE BENEFITS FOR 
UNINSURED ELDERLY INDIVIDUALS NOT OTH-
ERWISE ELIGIBLE.—Section 1818 of such Act 
(42 U.S.C. 1395i–2) is amended— 
(i) in subsection (a)(1), by striking 
‘‘age of 65’’ and inserting ‘‘medicare eligi-
bility age (as such term is defined in sec-
tion 216(m))’’; 
(ii) in subsection (d)(1), by striking 
‘‘age 65’’ and inserting ‘‘medicare eligi-
bility age (as such term is defined in sec-
tion 216(m))’’; and 
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(iii) in subsection (d)(3), by striking 
‘‘65’’ and inserting ‘‘medicare eligibility 
age (as such term is defined in section 
216(m))’’. 
(D) HOSPITAL INSURANCE BENEFITS FOR 
DISABLED INDIVIDUALS WHO HAVE EXHAUSTED 
OTHER ENTITLEMENT.—Section 1818A(a)(1) of 
such Act (42 U.S.C. 1395i–2a(a)(1)) is amend-
ed by striking ‘‘the age of 65’’ and inserting 
‘‘medicare eligibility age (as such term is de-
fined in section 216(m))’’. 
(E) ELIGIBILITY FOR PART B BENEFITS.— 
(i) IN
GENERAL.—Section 1836 of 
such Act (42 U.S.C. 1395o) is amended by 
striking ‘‘age 65’’ each place such term ap-
pears and inserting ‘‘medicare eligibility 
age (as such term is defined in section 
216(m))’’. 
(ii) ENROLLMENT PERIODS.—Section 
1837 of such Act (42 U.S.C. 1395p) is 
amended by striking ‘‘age 65’’ and ‘‘the 
age of 65’’ each place such terms appear 
and inserting ‘‘medicare eligibility age (as 
such term is defined in section 216(m))’’. 
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(iii) 
COVERAGE
PERIOD.—Section 
1838 of such Act (42 U.S.C. 1395q) is 
amended— 
(I) in subsection (a), by striking 
‘‘age 65’’ and inserting ‘‘medicare eli-
gibility age (as such term is defined in 
section 216(m))’’. 
(II) in subsection (c), by striking 
‘‘the age of 65’’ and inserting ‘‘medi-
care eligibility age (as such term is 
defined in section 216(m))’’. 
(iv) AMOUNTS
OF
PREMIUMS.—Sec-
tion 1839 of such Act (42 U.S.C. 1395r) 
is amended by striking ‘‘age 65’’ and ‘‘the 
age of 65’’ each place such terms appear 
and inserting ‘‘medicare eligibility age (as 
such term is defined in section 216(m))’’. 
(F) APPROPRIATIONS TO COVER GOVERN-
MENT CONTRIBUTIONS AND CONTINGENCY RE-
SERVE.—Section 1844(a)(1) of such Act (42 
U.S.C. 1395w) is amended by striking ‘‘age 65’’ 
each place such term appears and inserting 
‘‘medicare eligibility age (as such term is de-
fined in section 216(m))’’. 
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(G) ELIGIBILITY, ELECTION, AND ENROLL-
MENT.—The matter following subparagraph 
(D) of section 1851(e)(4) of such Act (42 
U.S.C. 1395w–21(e)(4)) is amended by striking 
‘‘age 65’’ and inserting ‘‘medicare eligibility age 
(as such term is defined in section 216(m))’’. 
(H) PAYMENTS
TO
MEDICARE+CHOICE 
ORGANIZATIONS.—Section 1853(c)(4)(C)(v) of 
such Act (42 U.S.C. 1395w–23(c)(4)(C)(v)) is 
amended by striking ‘‘65 years of age’’ and in-
serting ‘‘medicare eligibility age (as such term 
is defined in section 216(m))’’. 
(I) PART D PREMIUMS AND LATE ENROLL-
MENT
PENALTY.—Section 
1860D– 
13(b)(7)(B)(i) of such Act (42 U.S.C. 1395w– 
113(b)(7)(B)(i)) is amended by striking ‘‘age 
65’’ and inserting ‘‘the medicare eligibility age 
(as such term is defined in section 216(m))’’. 
(J) MEDICARE SECONDARY PAYER.—Sec-
tion 1862(b) of such Act (42 U.S.C. 1395y(b)) 
is amended by striking ‘‘age 65’’ each place 
such term appears and inserting ‘‘medicare eli-
gibility age (as such term is defined in section 
216(m))’’. 
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(K) CERTIFICATION
OF
MEDICARE
SUP-
PLEMENTAL
HEALTH
INSURANCE
POLICIES.— 
Section 1882(s) of such Act (42 U.S.C. 
1395ss(s)) is amended— 
(i) in paragraph (2)(A) by striking 
‘‘65 years of age’’ and inserting ‘‘medicare 
eligibility age (as such term is defined in 
section 216(m))’’; 
(ii) in paragraph (2)(D) by striking 
‘‘65 years of age’’ and inserting ‘‘medicare 
eligibility age (as such term is defined in 
section 216(m))’’; and 
(iii) in paragraph (3)(B)(vi) by strik-
ing ‘‘age 65’’ and inserting ‘‘medicare eli-
gibility age (as such term is defined in sec-
tion 216(m))’’. 
(L) MEDICARE SUBVENTION DEMONSTRA-
TION PROJECT FOR MILITARY RETIREES.—Sec-
tion 1896(a)(5)(D) of such Act (42 U.S.C. 
1395ggg(a)(5)(D)) is amended by striking ‘‘age 
65’’ and inserting ‘‘medicare eligibility age (as 
such term is defined in section 216(m))’’. 
(M) MEDICAID STATE PLAN PROVISIONS.— 
Section 1902 of the Social Security Act (42 
U.S.C. 1396a) is amended— 
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(i) in subsection (a)(10)(A)— 
(I) in clause (i)(VIII), by striking 
‘‘65 years of age’’ and inserting ‘‘the 
medicare eligibility age (as such term 
is defined in section 216(m))’’; 
(II) in clause (ii)(XV), by strik-
ing ‘‘at least 16, but less than 65, 
years of age’’ and inserting ‘‘at least 
16 years of age but less than the 
medicare eligibility age (as such term 
is defined in section 216(m))’’; and 
(III) in clause (ii)(XX), by strik-
ing ‘‘65 years of age’’ and inserting 
‘‘the medicare eligibility age (as such 
term is defined in section 216(m))’’; 
(ii) in subsection (e)(14)(D)(i)(II), by 
striking ‘‘age 65’’ and inserting ‘‘the medi-
care eligibility age (as such term is defined 
in section 216(m))’’; 
(iii) in subsection (m)(1), by striking 
‘‘65 years of age’’ and inserting ‘‘the medi-
care eligibility age (as such term is defined 
in section 216(m))’’; and 
(iv) in subsection (aa)(2), by striking 
‘‘age 65’’ and inserting ‘‘the medicare eli-
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gibility age (as such term is defined in sec-
tion 216(m))’’. 
(N) MEDICAID MEDICAL ASSISTANCE DEFI-
NITION.—Section 1905(a) of the Social Security 
Act (42 U.S.C. 1396d(a)) is amended— 
(i) in clause (iii), by striking ‘‘65 
years of age’’ and inserting ‘‘the medicare 
eligibility age (as such term is defined in 
section 216(m))’’; and 
(ii) in the matter following paragraph 
(29)(B), by striking ‘‘65 years of age’’ and 
inserting ‘‘of medicare eligibility age (as 
such term is defined in section 216(m))’’. 
(O) QUALIFIED
MEDICARE
BENEFICIARY 
DEFINITION.—Section 1905(p)(2)(C) of the So-
cial Security Act (42 U.S.C. 1396d(p)(2)(C)) is 
amended by striking ‘‘age 65’’ and inserting 
‘‘who are the medicare eligibility age (as such 
term is defined in section 216(m))’’. 
(P) MEDICAID DEFINITION FOR QUALIFIED 
SEVERELY
IMPAIRED
INDIVIDUAL.—Section 
1905(q) of the Social Security Act (42 U.S.C. 
1396d(q)) is amended by striking ‘‘age 65’’ and 
inserting ‘‘the medicare eligibility age (as such 
term is defined in section 216(m))’’. 
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(Q) 
MEDICAID
DEFINITION
FOR
EM-
PLOYED
INDIVIDUAL
WITH
A
MEDICALLY
IM-
PROVED DISABILITY.—Section 1905(v)(1)(A) of 
the 
Social 
Security 
Act 
(42 
U.S.C. 
1396d(v)(1)(A)) is amended by striking ‘‘16, 
but less than 65, years of age’’ and inserting 
‘‘16 years of age, but less than the medicare eli-
gibility age (as such term is defined in section 
216(m))’’. 
(R) LIENS, ADJUSTMENTS
AND
RECOV-
ERIES, AND
TRANSFERS
OF
ASSETS
UNDER 
MEDICAID.—Section 1917(c) of the Social Secu-
rity Act (42 U.S.C. 1396p(c)) is amended— 
(i) in paragraph (2)(B)(iv), by strik-
ing ‘‘65 years of age’’ and inserting ‘‘the 
medicare eligibility age (as such term is 
defined in section 216(m))’’; and 
(ii) in paragraph (4)(A), by striking 
‘‘age 65’’ and inserting ‘‘the medicare eli-
gibility age (as such term is defined in sec-
tion 216(m))’’. 
(2) OTHER PROVISIONS OF LAW.— 
(A) CONTRACTS
FOR
HEALTH
BENEFITS 
FOR CERTAIN MEMBERS OF UNIFORMED SERV-
ICES, FORMER MEMBERS, AND DEPENDENTS.— 
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Section 1086(d)(2)(B) of title 10, United 
States Code, is amended by striking ‘‘under 65 
years of age’’ and inserting ‘‘under the medi-
care eligibility age (as such term is defined in 
section 216(m) of the Social Security Act)’’. 
(B) ELIGIBLE
INDIVIDUAL
DEFINITION 
FOR
EARNED
INCOME.—Section 
32(c)(1)(A)(ii)(II) of the Internal Revenue Code 
is amended by striking ‘‘age 65’’ and inserting 
‘‘the preferred Medicare age (as such term is 
described in section 216(m) of the Social Secu-
rity Act)’’. 
(C) TAX TREATMENT OF BLUE CROSS AND 
BLUE
SHIELD
ORGANIZATIONS.—Section 
833(c)(3)(A)(iv) of the Internal Revenue Code 
is amended by striking ‘‘age 65’’ and inserting 
‘‘the medicare eligibility age (as such term is 
defined in section 216(m) of the Social Security 
Act)’’. 
(D) COMMUNITY-BASED PREVENTION AND 
WELLNESS
PROGRAMS.—Section 4202 of the 
Patient Protection and Affordable Care Act (42 
U.S.C. 300u–14) is amended— 
(i) in subsection (a)— 
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(I) in paragraph (1), by striking 
‘‘who are between 55 and 64 years of 
age’’ and inserting ‘‘who are at least 
55 years of age but less than the 
medicare eligibility age (as such term 
is defined in section 216(m) of the So-
cial Security Act)’’; 
(II) in paragraph (2)(C), by 
striking ‘‘the 55-to-64 year-old popu-
lation’’ and inserting ‘‘the population 
of individuals who are at least 55 
years of age but less than the medi-
care eligibility age (as such term is 
defined in section 216(m) of the So-
cial Security Act)’’; 
(III) in paragraph (3)(A), by 
striking ‘‘who are between 55 and 64 
years of age’’ and inserting ‘‘who are 
at least 55 years of age but less than 
the medicare eligibility age (as such 
term is so defined)’’; 
(IV) in paragraph (3)(C)(i), by 
striking ‘‘who are between 55 and 64 
years of age’’ and inserting ‘‘who are 
at least 55 years of age but less than 
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the medicare eligibility age (as such 
term is so defined)’’; and 
(V) in paragraph (3)(D), by 
striking ‘‘between 55 and 64 years of 
age’’ and inserting ‘‘at least 55 years 
of age but less than the medicare eli-
gibility age (as such term is so de-
fined)’’; and 
(ii) in subsection (b)(2)(A), by strik-
ing ‘‘65 years of age’’ and inserting ‘‘the 
medicare eligibility age (as such term is 
defined in section 216(m) of the Social Se-
curity Act)’’. 
SEC. 103. NEW BENEFIT STRUCTURE UNDER UNIFIED 
MEDICARE. 
(a) IN GENERAL.—Part E of title XVIII of the Social 
Security Act, as added by section 101, is amended by add-
ing at the end the following: 
‘‘Subpart 2—Benefits 
‘‘SEC. 1860E–21. UNIFIED PART A AND B DEDUCTIBLE. 
‘‘(a) IN GENERAL.—Effective as of the general effec-
tive date, in the case of a Medicare enrollee— 
‘‘(1) the amount otherwise payable under part 
A and the total amount of expenses incurred by the 
enrollee during a year which would (except for this 
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such individual shall be required to meet the unified de-
ductible under section 1860E–21. 
‘‘(d) AUTHORITY TO APPLY ACTUARIALLY EQUIVA-
LENT COPAYMENT.— 
‘‘(1) IN GENERAL.—Subject to paragraph (2), 
the Secretary may provide for the application of a 
copayment amount instead of the coinsurance under 
this section in cases for which the coinsurance can-
not be readily computed at the time of provision of 
the items or services involved or the imposition of a 
copayment amount would simplify the administra-
tion of this title. 
‘‘(2) ACTUARIAL
EQUIVALENCE.—In applying 
paragraph (1), the amount of any copayment estab-
lished under such paragraph with respect to a type 
of item or service shall be calculated to provide, in 
the aggregate and taking into account the applica-
tion of this section, for cost-sharing that is actuari-
ally equivalent to the cost-sharing that would be im-
posed under this section if this subsection did not 
apply. 
‘‘SEC. 1860E–23. OUT-OF-POCKET LIMIT. 
‘‘(a) IN GENERAL.—Beginning with 2016, in the case 
of a Medicare enrollee, if the amount of the out-of-pocket 
cost-sharing of such enrollee for a calendar year equals 
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or exceeds the catastrophic limit under subsection (b) for 
that year— 
‘‘(1) the enrollee shall not be responsible for ad-
ditional out-of-pocket cost-sharing incurred during 
that year; and 
‘‘(2) the Secretary shall establish procedures 
under which the Secretary shall, in appropriate part 
from the Part A Medicare FFS Account under sec-
tion 1817 and the Part B Medicare FFS Account 
under section 1841— 
‘‘(A) pay on behalf of the enrollee the 
amount of the additional out-of-pocket cost- 
sharing described in paragraph (1) attributable 
to deductibles and coinsurance described in sub-
section (c)(1); and 
‘‘(B) reimburse the enrollee the amount of 
the additional out-of-pocket cost-sharing de-
scribed in paragraph (1) attributable to 
deductibles and coinsurance described in sub-
section (c)(2). 
‘‘(b) CATASTROPHIC LIMIT.—The amount of the cat-
astrophic limit under this subsection for a year shall be 
the dollar amount in effect under section 223(c)(2)(A)(ii) 
of the Internal Revenue Code of 1986 for self-only cov-
erage for taxable years beginning in such year. 
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‘‘(c) OUT-OF-POCKET COST-SHARING DEFINED.—In 
this section, the term ‘out-of-pocket cost-sharing’ means, 
with respect to an individual, the amount of costs incurred 
by the individual that are attributable to— 
‘‘(1) deductibles and coinsurance imposed under 
sections 1860E–21 and 1860E–22; and 
‘‘(2) deductibles and coinsurance imposed under 
standard prescription drug coverage pursuant to sec-
tion 1860D–2(b) or alternative prescription drug 
coverage pursuant to section 1860D–2(c) offered by 
a prescription drug plan. 
‘‘SEC. 1860E–24. OFFERING OF TIERED COST-SHARING COV-
ERAGE LEVELS INSTEAD OF MEDIGAP. 
‘‘(a) RECOGNITION OF 3 TIERS OF COST-SHARING 
COVERAGE.—For plans years beginning on or after the 
general effective date, MA plans shall be classified based 
upon the following 3 tiers of cost-sharing coverage (each 
in this part referred to as a ‘tier of cost-sharing coverage’): 
‘‘(1) TIER 1.—A tier 1 level (in this part re-
ferred to as ‘tier 1’) for Medicare Advantage plans 
with cost-sharing designed to provide benefits that 
are actuarially equivalent to that provided under 
Medicare fee-for-service. 
‘‘(2) TIER 2.—A tier 2 level (in this part re-
ferred to as ‘tier 2’) for Medicare Advantage plans 
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with cost-sharing designed to provide benefits that 
would provide a level of coverage of at least 85 per-
cent of the expenses under Medicare fee-for-service 
for the average Medicare enrollee. 
‘‘(3) TIER 3.—A tier 3 level (in this part re-
ferred to as ‘tier 3’) for Medicare Advantage plans 
with cost-sharing designed to provide benefits that 
would provide a level of coverage of at least 95 per-
cent of the expenses under Medicare fee-for-service 
for the average Medicare enrollee. 
For purposes of this Act, Medicare fee-for-service shall be 
included in tier 1. 
‘‘(b) ASSURING ACCESS
TO
A CHOICE
OF COV-
ERAGE.— 
‘‘(1) CHOICE OF AT LEAST TWO PLANS IN EACH 
AREA AND TIER.— 
‘‘(A) IN GENERAL.—The Medicare Choices 
Commission shall ensure that there is available, 
consistent with subparagraph (B), a choice of 
enrollment in at least 2 qualifying plans (as de-
fined in paragraph (3)) for each tier of cost- 
sharing coverage and each MA region. 
‘‘(B) 
REQUIREMENT
FOR
DIFFERENT 
PLAN SPONSORS.—The requirement in subpara-
graph (A) is not satisfied with respect to a re-
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gion if only one entity offers all the qualifying 
plans in the region. 
‘‘(C) QUALIFYING
PLAN
DEFINED.—For 
purposes of this section, the term ‘qualifying 
plan’ means— 
‘‘(i) with respect to tier 1, Medicare 
fee-for-service or any MA–PD plan that is 
not classified under tier 2 or tier 3; or 
‘‘(ii) with respect to any other tier, an 
MA–PD plan that is classified under the 
respective tier. 
‘‘(2) FALLBACK PLAN.—In order to ensure ac-
cess pursuant to paragraph (1) in an MA region, 
with respect to the offering of plans in a tier, if such 
access is not provided in such region, the Medicare 
Choices Commission shall direct the Secretary to 
provide for the offering of a fallback plan in such 
tier for that region in a similar manner that the Sec-
retary provides for the offering of a fallback pre-
scription drug plan under section 1860D–11(g) in 
an area that does not provide access described in 
section 1860D–3(a). 
‘‘(c) MEDIGAP.— 
‘‘(1) LIMITATION ON NEW ENROLLMENT.—Sub-
ject to paragraph (2), a health insurance issuer that 
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offers a Medicare supplemental health insurance pol-
icy (as defined in section 1882(g)(1)) may not enroll 
an individual under such policy on or after the gen-
eral effective date. 
‘‘(2) TREATMENT OF CURRENT MEDIGAP EN-
ROLLEES.— 
‘‘(A) PERMITTED
TO
CONTINUE
UNDER 
MEDIGAP.—In the case of an individual who, as 
of the day before the general effective date is 
entitled to benefits under part A or enrolled 
under part B and is enrolled under a Medicare 
supplemental health insurance policy certified 
under section 1882, such individual may choose 
to remain enrolled under such policy or 
disenroll and change enrollment to a different 
policy so certified during a period and in ac-
cordance with a process specified by the Sec-
retary. 
‘‘(B) TREATMENT
OF
MEDIGAP
POLI-
CIES.— 
‘‘(i) IN
GENERAL.—With respect to 
plan years beginning on or after January 
1, 2016, a Medicare supplemental health 
insurance policy shall be certified under 
section 1882 only with respect to individ-
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uals described in subparagraph (A) and 
only if such policy is modified to be in ac-
cordance with standards revised pursuant 
to clause (ii). 
‘‘(ii) NEW
STANDARDS.—The Sec-
retary shall request the National Associa-
tion of Insurance Commissioners to revise 
the standards for all benefit packages for 
Medicare supplemental health insurance 
policies under section 1882(p) to be in ac-
cordance with the cost-sharing provisions 
established by this subpart. 
‘‘(C) AVAILABILITY OF SUBSTITUTE POLI-
CIES WITH GUARANTEED ISSUE.— 
‘‘(i) IN
GENERAL.—The issuer of a 
medicare supplemental policy— 
‘‘(I) may not deny or condition 
the issuance or effectiveness of a 
medicare supplemental policy that is 
offered and is available for issuance to 
new enrollees by such issuer; 
‘‘(II) may not discriminate in the 
pricing of such policy, because of 
health status, claims experience, re-
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plemental policy, with respect to an indi-
vidual, only in the case the actuarial value 
of the benefits under such policy does not 
substantially exceed the actuarial value of 
the policy described in clause (ii)(II) with 
respect to which the individual terminated 
enrollment. 
‘‘SEC. 1860E–25. CONTRIBUTIONS INTO HEALTH INDIVIDUAL 
RETIREMENT ACCOUNTS. 
‘‘(a) CONTRIBUTIONS.—The Secretary shall establish 
procedures to ensure that, for each year (beginning with 
2016), the Secretary shall deposit in the health individual 
retirement account (as defined in section 201(1) of the 
Save and Strengthen Medicare Act of 2012) of an account 
holder (as defined in section 201(2) of such Act) who is 
a Medicare fee-for-service enrollee the per capita Medicare 
preventive benefit amount under subsection (b) for such 
year. In no case shall a deposit be made under the pre-
vious sentence in the case of an individual described in 
subparagraph (A)(ii) of section 1935(c)(6) (taking into ac-
count the application of subparagraph (B) of such section) 
in a State that has elected the maintenance of effort op-
tion described in section 1944(b)(2). 
‘‘(b) PER CAPITA MEDICARE PREVENTIVE BENEFIT 
AMOUNT.— 
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‘‘(1) IN GENERAL.—For purposes of subsection 
(b), the per capita Medicare preventive benefit 
amount is equal to— 
‘‘(A) with respect to 2016, the amount by 
which— 
‘‘(i) the average per capita amount es-
timated to have been expended under 
Medicare 
fee-for-service 
for 
preventive 
services during the previous year; exceeds 
‘‘(ii) the average per capita amount 
that would have been expended under 
Medicare fee-for-service for such services 
during such previous year if payment 
under Medicare fee-for-service for such 
services had been subject to the deductible 
and cost-sharing provisions of section 
1833; 
‘‘(B) with respect to 2017, the amount by 
which— 
‘‘(i) the actual average per capita 
amount expended under Medicare fee-for- 
service for preventive services during 2015; 
exceeds 
‘‘(ii) the average per capita amount 
that would have been expended under 
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Medicare fee-for-service for such services 
during such year if payment under Medi-
care fee-for-service for such services had 
been subject to the deductible and cost- 
sharing provisions of section 1833; 
increased by the annual percentage increase in 
the consumer price index (all items; U.S. city 
average) as of September of such previous year; 
and 
‘‘(C) with respect to a subsequent year, the 
amount determined under this paragraph for 
the previous year, increased by the annual per-
centage increase in the consumer price index 
(all items; U.S. city average) as of September 
of such previous year. 
‘‘(2) PREVENTIVE SERVICES.—For purposes of 
this section, the term ‘preventive services’ means 
preventive services that are exempt from coinsurance 
under section 1833(a)(1)(Y) for 2015. 
‘‘(c) PAYMENT.— 
‘‘(1) FROM
CMS
OPERATING
ACCOUNT.—Pay-
ment of each per capita Medicare preventive benefit 
amount shall be made in appropriate part from the 
Part A Medicare FFS Account under section 1817 
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and the Part B Medicare FFS Account under sec-
tion 1841. 
‘‘(2) AVAILABILITY.—Payment of a per capita 
Medicare preventive benefit amount for a year to the 
health individual retirement account of an individual 
shall be made available to such account only for 
such year. If, by December 31 of such year, the 
amount of the per capita Medicare preventive benefit 
amount deposited for such year exceeds the amount 
distributed from the account of the individual (in ac-
cordance with section 206(a) of the Save and 
Strengthen Medicare Act of 2012) during such year, 
such excess shall be returned to the Medicare FFS 
Account in accordance with procedures established 
under subsection (e). 
‘‘SEC. 1860E–26. REQUIRING MA PLANS TO OFFER PRE-
SCRIPTION DRUG COVERAGE. 
‘‘Beginning for plan years beginning on or after the 
general effective date, the only MA plans that may be of-
fered under part C are MA–PD plans.’’. 
(b) APPLICATION OF OUT-OF-POCKET LIMIT TO MA– 
PD PLANS.— 
(1) IN GENERAL.—Section 1852(a)(1)(B) of the 
Social Security Act (42 U.S.C. 1395w–22(a)(1)(B)) 
is amended— 
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(A) in clause (i), by striking ‘‘clause (iii)’’ 
and inserting ‘‘clauses (iii) and (vi)’’; and 
(B) by adding at the end the following new 
clause: 
‘‘(vi) OUT-OF-POCKET
LIMIT.—The 
provisions of section 1860E–23— 
‘‘(I) shall apply to individuals en-
rolled under an MA–PD plan in the 
same manner as such provisions apply 
to Medicare enrollees under such sec-
tion, except that in lieu of the applica-
tion of subsection (a)(2) of such sec-
tion the MA–PD plan shall establish 
procedures to provide for payment of 
any additional out-of-pocket cost-shar-
ing described in subsection (a)(1) of 
such section incurred by individuals 
enrolled under the MA–PD plan; and 
‘‘(II) as applied under subclause 
(I), may not be waived by application 
of this subparagraph. 
In applying subsection (b) of section 
1860E–23 pursuant to the previous sen-
tence, an MA–PD plan may substitute a 
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dollar amount that is less than the dollar 
amount specified under such subsection.’’. 
(2) EXEMPTING MA–PD PLANS OFFERING AL-
TERNATIVE PRESCRIPTION DRUG COVERAGE FROM 
PART
D
DEDUCTIBLE
AND
OUT-OF-POCKET
LIMIT 
REQUIREMENTS.—Section 1860D–2(c) of the Social 
Security Act (42 U.S.C. 1395w–102(c)) is amend-
ed— 
(A) in paragraph (2), by striking ‘‘The de-
ductible’’ and inserting ‘‘In the case of a pre-
scription drug plan, the deductible’’; and 
(B) in paragraph (3), by striking ‘‘The 
coverage provides’’ and inserting ‘‘In the case 
of a prescription drug plan, the coverage pro-
vides’’. 
(c) PRESCRIPTION DRUG PLANS REQUIRED TO RE-
PORT ENROLLEES’ OUT-OF-POCKET COST-SHARING.— 
Section 1860D–12(b) of the Social Security Act (42 
U.S.C. 1395w–112(b)) is amended by adding at the end 
the following new paragraph: 
‘‘(7) 
OUT-OF-POCKET
COST-SHARING
RE-
PORTS.—Each contract entered into with a PDP 
sponsor under this part with respect to a prescrip-
tion drug plan offered by such sponsor shall require 
that, with respect to each claim submitted for items 
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or services furnished to an individual enrolled under 
the plan pursuant to the contract, the sponsor sub-
mits to the Secretary information on the amount of 
out-of-pocket cost-sharing (as defined in section 
1860E–23(c)) applicable to such enrollee for such 
items or services.’’. 
(d) CONFORMING AMENDMENTS.— 
(1) Section 1813 of the Social Security Act (42 
U.S.C. 1395e) is amended— 
(A) in subsection (a), by inserting ‘‘Subject 
to subpart 2 of part E:’’ before paragraph (1); 
and 
(B) in subsection (b), by inserting ‘‘Sub-
ject to subpart 2 of part E:’’ before paragraph 
(1). 
(2) Section 1833 of such Act (42 U.S.C. 1395l) 
is amended— 
(A) in subsection (a), in the matter pre-
ceding paragraph (1), by inserting ‘‘and sub-
part 2 of part E’’ after ‘‘succeeding provisions 
of this section’’; 
(B) in subsection (b), in the first sentence, 
by striking ‘‘Before applying’’ and inserting 
‘‘Subject to subpart 2 of part E, before apply-
ing’’; 
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(C) in subsection (c)(1), in the matter pre-
ceding subparagraph (A), by inserting ‘‘subject 
to subpart 2 of part E,’’ after ‘‘this part,’’; 
(D) in subsection (f), by striking ‘‘In es-
tablishing’’ and inserting ‘‘Subject to subpart 2 
of part E, in establishing’’; and 
(E) in subsection (g)(1), by inserting ‘‘and 
subpart 2 of part E’’ and ‘‘paragraphs (4) and 
(5)’’. 
(3) Section 1882(a)(2) of such Act is amended 
by striking ‘‘No medicare’’ and inserting ‘‘Subject to 
section 1860E–24(c), no medicare’’. 
SEC. 104. LATE ENROLLMENT PENALTY NOT TO APPLY FOR 
MONTHS OF ANY HEALTH COVERAGE. 
(a) IN GENERAL.—Section 1839(b) of the Social Se-
curity Act (42 U.S.C. 1395r) is amended in the second 
sentence, by inserting before the period at the end the fol-
lowing: ‘‘or months during which the individual has any 
other health coverage’’. 
(b) EFFECTIVE DATE.—The amendment made by 
paragraph (1) shall apply for months of coverage begin-
ning after the date of the enactment of this Act. 
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SEC. 105. COMPETITIVE BIDDING AND PREMIUMS UNDER 
UNIFIED MEDICARE. 
(a) IN GENERAL.—Part E of title XVIII of the Social 
Security Act, as added by section 101 and amended by 
section 103, is further amended by adding at the end the 
following: 
‘‘Subpart 3—Competitive Bidding and Premiums 
‘‘SEC. 1860E–31. APPLICATION OF COMPETITIVE BIDDING 
AND CHANGES IN PREMIUMS. 
‘‘(a) COMPETITIVE BIDDING BASED ON LEVELS OF 
COVERAGE AND MA REGIONS.—In applying section 1854 
for plan years beginning on or after the general effective 
date the following rules shall apply: 
‘‘(1) SEPARATE BIDS FOR EACH TIER OF COST- 
SHARING COVERAGE.—A Medicare Advantage orga-
nization shall submit a separate bid for each tier of 
cost-sharing coverage for each MA–PD plan offered 
by such organization. 
‘‘(2) BIDS.—Any bid submitted by a Medicare 
Advantage organization under such section— 
‘‘(A) with respect to an MA region, shall 
provide for the offering of an MA–PD plan in 
each county within such region; and 
‘‘(B) with respect to an MA local area, 
shall provide for the offering of an MA–PD 
plan in each county within such area. 
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‘‘(3) UNIFORM BIDS FOR ALL AREAS WITHIN 
AN MA REGION.—Any bid submitted by a Medicare 
Advantage organization under such section shall, as 
specified by the organization, be uniform for— 
‘‘(A) all plans offered in any MA local area 
within an MA region; or 
‘‘(B) subject to paragraph (4), all plans of-
fered within a county; and 
section 1854(h) shall apply. 
‘‘(4) AUTHORITY OF MEDICARE CHOICES COM-
MISSION TO REJECT BIDS.—In the case that the 
Medicare Choices Commission determines that a 
Medicare Advantage organization is submitting bids 
in accordance with paragraph (3)(B) in a manner 
that demonstrates a disproportionate change in the 
amounts of the bids for such areas compared to the 
actual costs for providing benefits in such areas, the 
Commission may reject such bids. 
‘‘(5) ACCEPTANCE OF BID.— 
‘‘(A) IN
GENERAL.—A Medicare Advan-
tage organization shall not be eligible to submit 
a bid under such section unless the organization 
provides assurances satisfactory to the Medicare 
Choices Commission that the organization will 
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accept an award of a contract under this part 
pursuant to such bid. 
‘‘(B) 
CERTAIN
MODIFICATIONS
PER-
MITTED.—Nothing in subparagraph (A) shall 
be construed as preventing a Medicare Advan-
tage organization that submits a bid under such 
section from withdrawing or modifying the bid 
before the date on which the risk-adjusted 
benchmark amount under paragraph (3)(B)(i) 
or (4)(B)(i), as appropriate, of section 1854(b) 
is calculated for the area and year involved. 
‘‘(b) ADJUSTMENT IN PAYMENT TO MA PLANS.— 
‘‘(1) IN GENERAL.—In applying section 1853 
for plans years beginning on or after the general ef-
fective date, the amount specified in subparagraph 
(B) of section 1853(a)(1) shall be 1⁄12 of 88 percent 
of the revised benchmark for the region and year in-
volved. 
‘‘(2) REVISED BENCHMARK.— 
‘‘(A) IN GENERAL.—The Medicare Choices 
Commission shall compute a revised benchmark 
for each plan year and each MA region. 
‘‘(B) REVISED
BENCHMARK.—Subject to 
the succeeding provisions of this paragraph, the 
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‘‘(D) LIMITATION.—In no case shall the 
revised benchmark for a plan year and MA re-
gion be lower than the lowest bid amount sub-
mitted for such year and region that when com-
bined with all bids below such bid amount 
would result in the capacity to provide coverage 
to all Medicare enrollees in such region. 
‘‘(3) REVIEW AND REVISIONS OF RISK ADJUST-
MENT.— 
‘‘(A) IN GENERAL.—The Medicare Choices 
Commission shall review and, as the Commis-
sion determines appropriate, revise the risk ad-
justments payment mechanism under section 
1853(a)(1)(C) for purposes of applying such 
mechanism under this section and under section 
1860E–32, 
including 
pursuant 
to 
section 
1860E–33(a). 
‘‘(B) REQUIREMENTS FOR REVISIONS.—In 
making the revisions under subparagraph (A) 
to the risk adjustments payment mechanism de-
scribed in such subparagraph, the following 
shall apply: 
‘‘(i) 
INCORPORATING
PRIVATE 
HEALTH INSURANCE DATA.—The Medicare 
Choices Commission shall incorporate data 
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on the cost and utilization of services by 
individuals receiving benefits under a 
group health plan or health insurance cov-
erage offered in the individual or group 
market who have the same case character-
istics (such as conditions or combinations 
of conditions) as such characteristics that 
are to be used under such mechanism for 
risk adjusting payment amounts to Medi-
care Advantage organizations under part C 
and Medicare fee-for-service under section 
1860E–32, including pursuant to section 
1860E–33(a). 
‘‘(ii) INCLUSION OF NUMBER OF CON-
DITIONS.—The Medicare Choices Commis-
sion shall provide that a risk score under 
such mechanism, with respect to an indi-
vidual, includes an indicator for the num-
ber of chronic conditions with which the in-
dividual has been diagnosed. 
‘‘(iii) USE OF 2 YEARS OF DIAGNOSIS 
DATA.—The Medicare Choices Commission 
shall ensure that a risk score under such 
mechanism, with respect to an individual, 
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shall reflect two years of diagnosis data, to 
the extent available. 
‘‘(C) EVALUATING
ADDITION
OF
RETRO-
SPECTIVE
RISK
TRANSFER
POOL.—In con-
ducting the review under subparagraph (A) of 
the risk adjustments payment mechanism de-
scribed in such subparagraph, the Medicare 
Choices Commission shall evaluate the extent to 
which it would be appropriate to establish, in 
addition to such risk adjustments payment 
mechanism, a retrospective risk transfer pool— 
‘‘(i) that would enable MA organiza-
tions, with respect to MA–PD plans of-
fered by such organization, and the Sec-
retary, with respect to Medicare fee-for- 
service, to collectively devise and admin-
ister procedures for adjusting for enrollee 
selection effects that are not, in the judg-
ment of the organizations, with respect to 
such plans, and the Secretary, with respect 
to Medicare fee-for-service, adequately ad-
dressed by the risk adjustments payment 
mechanism; 
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‘‘(ii) under which each MA–PD plan 
and Medicare fee-for-service must partici-
pate; 
‘‘(iii) which shall be operated by the 
MA organizations offering such MA–PD 
plans and the Secretary under the super-
vision of the Medicare Choices Commis-
sion; and 
‘‘(iv) which would be funded entirely 
out of premiums and assessments on such 
plans and Medicare fee-for-service. 
‘‘(4) APPLICATION ON A REGIONAL BASIS.—In 
applying sections 1853 and 1854, the revised bench-
mark under this subsection for each MA local area 
within an MA region shall be the revised benchmark 
for such region. 
‘‘(c) PREMIUMS UNDER MA PLANS.— 
‘‘(1) IN GENERAL.—For plans years beginning 
on or after the general effective date, sections 1853 
and 1854 shall be applied— 
‘‘(A) by substituting the modified monthly 
basic beneficiary premium described in para-
graph (2)(A) for the MA monthly basic bene-
ficiary 
premium 
defined 
in 
section 
1854(b)(2)(A); and 
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‘‘(B) by substituting the revised bench-
mark under subsection (b) for the unadjusted 
MA area specific non-drug monthly benchmark 
amount (as defined in section 1853(j)). 
‘‘(2) MODIFIED MONTHLY BASIC BENEFICIARY 
PREMIUM.— 
‘‘(A) IN GENERAL.—The modified monthly 
basic beneficiary premium described in this 
paragraph, with respect to a month in a year 
and an MA plan offered in a tier of cost-shar-
ing coverage in an MA region, is the amount (if 
any) by which the MA non-drug bid described 
in subparagraph (B) for such plan exceeds 1⁄12 
of the revised benchmark described in sub-
section (b) for the year and region. 
‘‘(B) MA NON-DRUG BID.—The MA non- 
drug bid described in this subparagraph is, with 
respect to a month and an MA plan offered in 
a tier of cost-sharing coverage, the portion of 
the bid amount submitted under clause (i) of 
section 1854(a)(6)(A) for the tier benefit level, 
MA region, and year involved that is attrib-
utable under clause (ii)(I) of such section to the 
provision of benefits under Medicare fee-for- 
service. 
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‘‘(3) APPLICATION ON A REGIONAL BASIS.—In 
applying sections 1853 and 1854, the average per 
capita monthly savings under section 1854(b)(3) 
shall be computed by substituting each region for a 
State and all plans within the region for MA local 
plans within a State. 
‘‘(4) TREATMENT
OF
BENEFICIARY
REBATE 
RULE.—Section 1854(b)(1)(C) shall not apply to the 
modified monthly basic beneficiary premium applied 
under this subsection. 
‘‘(5) TREATMENT OF INDIVIDUALS ELECTING 
EARLIER
BENEFIT
COVERAGE.—Section 1860E– 
32(c)(3) shall apply to an MA organization and the 
premium charged under section 1854(b)(1) to an in-
dividual enrolled in an MA plan offered by such or-
ganization who makes an election described in such 
section 1860E–32(c)(3) in the same manner as such 
section applies to the Secretary and an individual 
enrolled under Medicare fee-for-service who makes 
such an election. 
‘‘(d) ANNUAL REPORT.—Beginning for 2016, the 
Medicare Choices Commission shall submit to Congress an 
annual report on any questionable activities or irregular-
ities that have arisen in the bidding process under part 
C, as modified by this section, during such year. 
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‘‘SEC. 1860E–32. APPLICATION OF COMPETITIVE BIDDING 
TO MEDICARE FEE-FOR-SERVICE. 
‘‘(a) SUBMISSION OF BID.— 
‘‘(1) IN GENERAL.—The Secretary shall submit 
a bid for Medicare fee-for-service (in this part re-
ferred to as a ‘Medicare FFS bid’) offered for each 
MA region in the same manner as a bid submitted 
by a Medicare Advantage organization under section 
1854 for offering an MA plan under such tier. 
‘‘(2) BASIS FOR BID.—In applying paragraph 
(1) in computing the average revenue requirements 
under section 1854(a)(6)(A)(i) for a plan year, the 
Secretary shall base such requirements on— 
‘‘(A) adjusted average per capita costs 
payable during the previous plan year under 
parts A and B attributable to all individuals en-
rolled under Medicare fee-for-service in such re-
gion, including administrative costs attributable 
to such individuals and costs attributable to 
such individuals with respect to per capita 
Medicare preventive benefit amounts contrib-
uted under section 1860E–25 into health indi-
vidual retirement accounts, (as estimated by the 
Secretary), increased by 
‘‘(B) the Secretary’s estimate of the per-
centage increase in the per capita actuarial 
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value of benefits under such parts for the plan 
year involved. 
‘‘(3) MODIFICATION.—In applying this sub-
section, clause (iii) of section 1854(a)(6)(B) shall 
not be construed as applying to Medicare fee-for- 
service. 
‘‘(b) TREATMENT OF BID AS A TIER 1 BID UNDER 
PART C.—Any bid under subsection (a) for a region shall 
be considered as a bid for an MA plan offered in the region 
with tier 1 cost-sharing coverage for purposes of this part 
and sections 1853 and 1854. 
‘‘(c) PREMIUMS ADJUSTMENT.— 
‘‘(1) IN GENERAL.—Beginning for months be-
ginning on or after the general effective date— 
‘‘(A) there shall be a combined monthly 
premium amount described in paragraph (2) 
charged to a Medicare enrollee, with respect to 
coverage under Medicare fee-for-service; 
‘‘(B) such premium amount under sub-
paragraph (A) shall be instead of the part B 
monthly premium under section 1839; and 
‘‘(C) such premium shall be separate from 
(and in addition to) any monthly beneficiary 
premium that may apply to the individual with 
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respect to a prescription drug plan under part 
D. 
‘‘(2) COMBINED MONTHLY PREMIUM.— 
‘‘(A) IN GENERAL.—The combined month-
ly premium amount under this paragraph for a 
Medicare enrollee in an MA region shall be, 
subject to subparagraph (D) and section 
1860E–41(b), equal to the combined monthly 
base amount under subparagraph (B), adjusted 
in accordance with subparagraphs (C) and (D). 
‘‘(B) 
COMBINED
MONTHLY
BASE 
AMOUNT.—The combined monthly base amount 
shall be an amount calculated in a manner 
similar to the manner in which the part B 
monthly premium is calculated under sub-
sections (a) and (c) of section 1839, in effect as 
of December 31, 2015, except that in applying 
such section— 
‘‘(i) the actuarial rate determined 
under the second sentence of subsection 
(a)(1) of such section shall be an amount 
the Secretary estimates to be necessary so 
that the aggregate amount for the calendar 
year involved with respect to all Medicare 
enrollees will equal the total of the benefits 
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and administrative costs which the Sec-
retary estimates will be payable from the 
Federal Hospital Insurance Trust Fund 
under section 1817 and the Federal Sup-
plementary Medical Insurance Trust Fund 
under section 1841 for services performed 
and related administrative costs incurred 
in such calendar year with respect to such 
enrollees under parts A and B; and 
‘‘(ii) by substituting ‘24 percent’ for 
‘50 percent’ in subsection (a)(3) of such 
section. 
‘‘(C) APPLICATION
OF
OTHER
PROVI-
SIONS.—The combined monthly base amount 
shall be subject to adjustment in the same man-
ner as the part B monthly premium calculated 
under section 1839(a) is subject to adjustment 
under subsections (b) and (i) of such section, 
except that— 
‘‘(i) in applying the late enrollment 
penalty under subsection (b) of such sec-
tion, the initial enrollment period of the in-
dividual shall be the enrollment period 
specified by the Secretary pursuant to sub-
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part 1 instead of the initial enrollment pe-
riod described in such section 1839(b); and 
‘‘(ii) the income reduction under sub-
section (i) of such section shall be applied 
in accordance with section 1860E–41(a). 
Adjustments under this subparagraph shall be 
made without regard to any adjustment under 
subparagraph (D). 
‘‘(D) AMOUNT OF ADJUSTMENT FOR NON- 
MA
ENROLLEES.—Under this subparagraph, 
with respect to a Medicare fee-for-service en-
rollee for a month who resides in an MA region, 
if the Medicare FFS bid under subsection (a) 
for the region and month exceeds such revised 
benchmark, the amount of the combined month-
ly base amount for the enrollee for the month 
(without regard to any adjustment under sub-
paragraph (C)) shall be increased, subject to 
subparagraph (E), by the amount by which 
such bid exceeds such benchmark. 
‘‘(E) TRANSITION
FOR
CURRENT
TRADI-
TIONAL FFS MEDICARE BENEFICIARIES.—In the 
case of an individual who, as of December 31, 
2015, is entitled to (or enrolled for) benefits 
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under part A or enrolled under part B but is 
not enrolled in an MA plan— 
‘‘(i) with respect to months in 2016, 
the adjustment under subparagraph (D) 
for such individual for such months may in 
no case exceed 20 percent of the part B 
monthly premium amount under section 
1839 that was applicable to such individual 
for months in the previous year; and 
‘‘(ii) with respect to months in a sub-
sequent year (before 2026), such adjust-
ment for such months may in no case ex-
ceed 20 percent of the combined monthly 
premium amount applicable to such indi-
vidual (not taking into account subpara-
graph (C)) for months in the previous 
year. 
‘‘(3) TREATMENT OF INDIVIDUALS ELECTING 
EARLIER BENEFIT COVERAGE.—In the case of an in-
dividual who elects under section 216(m) a Medicare 
eligibility age of at least 65 but less than the pre-
ferred Medicare age applicable to such individual 
under paragraph (2)(B) of such section, the Sec-
retary shall adjust the premium otherwise computed 
for individuals with a Medicare eligibility age of the 
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preferred Medicare age in a manner so that, on an 
actuarial basis over the lifetime of individuals mak-
ing such an election (taking into account the rel-
evant risk characteristics of individuals who as a 
class have selected the respective age compared to 
those who have not made the election), the actuarial 
value of the benefits (net of premiums) is equal 
among such groups. 
‘‘(4) PAYMENT OF PREMIUMS.—The provisions 
of section 1854(d)(2) shall apply to the payment and 
collection of combined monthly premium amounts 
under this subsection in a similar manner as such 
provisions apply to the payment to and collection by 
an MA organization of monthly premiums under 
part C. 
‘‘SEC. 1860E–33. ENSURING A LEVEL PLAYING FIELD. 
‘‘(a) IN GENERAL.—Except as specified otherwise in 
this part, the Secretary and Medicare fee-for-service shall 
be subject to requirements that are applicable under this 
title to an MA organization and Medicare Advantage plan, 
and payments shall be made to the Secretary, with respect 
to coverage of an individual under Medicare fee-for-service 
in the same manner as payments are made under section 
1853(a)(1) to an MA organization, with respect to cov-
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erage of an individual under a Medicare Advantage plan 
offered by such organization. 
‘‘(b) ENSURING COLLECTION OF QUALITY AND RISK 
DATA.—The Medicare Choices Commission shall establish 
procedures to ensure that quality data and data on risk 
factors of Medicare enrollees are collected and reported 
with respect to Medicare fee-for-service in the same man-
ner as such data are collected and reported with respect 
to Medicare Advantage plans. 
‘‘(c) NONINTERFERENCE RULES.— 
‘‘(1) NEGOTIATIONS BETWEEN MA PLANS AND 
PROVIDERS.—In order to promote competition under 
this title and in carrying out this title, neither the 
Secretary nor the Medicare Choices Commission may 
interfere with the negotiations between any MA or-
ganization and a hospital, physician, or other pro-
vider of services or supplier. 
‘‘(2) 
BIDDING
PROCESS.—The 
Medicare 
Choices Commission may not reject a bid submitted 
by an MA organization for the offering of an MA– 
PD plan based on the amount of such bid. Nothing 
in the previous sentence shall be construed as affect-
ing the regulatory authority of the Commission or as 
affecting the authority of the Commission to reject 
a bid pursuant to section 1860E–31(a)(3). 
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‘‘(3) TREATMENT
OF
REGULATORY
FUNC-
TIONS.— 
‘‘(A) 
IN
GENERAL.—The 
Secretary, 
through the Centers of Medicare & Medicaid 
Services, shall maintain regulatory functions as-
sociated with conditions of participation appli-
cable to participation of providers of services 
and suppliers in Medicare fee-for-service. 
‘‘(B) NO
APPLICATION
TO
PROVIDERS 
WITH RESPECT TO MA PLANS.—Beginning on 
the general effective date, the Secretary shall 
not have the authority to apply any conditions 
of participation or similar requirements on pro-
viders of services and suppliers insofar as they 
are not related to Medicare fee-for-service. 
‘‘(C) GAO REPORT.—By not later than 
January 31, 2015, the Comptroller General of 
the United States shall submit to Congress a 
report containing recommendations on the ex-
tent to which any condition of participation or 
requirement described in paragraph (2) should 
be applied to providers of services and suppliers 
furnishing items and services under this title 
under arrangements with Medicare Advantage 
plans. 
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‘‘(d) REPORT.— 
‘‘(1) INITIAL
REPORT.—Not later than Sep-
tember 30, 2014, the Medicare Choices Commission 
shall submit to Congress a report that— 
‘‘(A) identifies all the requirements that 
are applicable to MA organizations and Medi-
care Advantage plans and the extent to which 
such requirements are also applicable to the 
Secretary and Medicare fee-for-service; and 
‘‘(B) includes a plan for achieving the re-
quirement described in subsection (a). 
‘‘(2) GAO REPORTS.—Not later than January 
1, 2016, and every 3 years thereafter, the Comp-
troller General of the United States shall submit to 
Congress a report on the extent to which the Sec-
retary and Medicare fee-for-service are in compliance 
with subsection (a) and the plan described in para-
graph (1)(B).’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 1839(a) of the Social Security Act 
is amended by inserting after the subsection enu-
merator the following: ‘‘Subject to section 1860E– 
32:’’. 
(2) Section 1839(i)(1) of the Social Security 
Act is amended by striking ‘‘In the case’’ and insert-
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ing ‘‘Subject to sections 1860E–32 and 1860E–41, 
in the case’’. 
(3) Section 1853(a)(1)(A) of the Social Security 
Act is amended by striking ‘‘and section 1859(e)(4)’’ 
and inserting ‘‘, section 1859(e)(4), and subpart 3 
of part E’’. 
(4) Section 1853(j) of such Act is amended by 
inserting ‘‘and subpart 3 of part E’’ after ‘‘sub-
section (o)’’. 
(5) Section 1854 of such Act is amended— 
(A) in subsection (a), after the heading, by 
inserting ‘‘Subject to subpart 3 of part E:’’; 
(B) in subsection (b), after the heading, by 
inserting ‘‘Subject to subpart 3 of part E:’’; 
(C) in subsection (d), after the heading, by 
inserting ‘‘Subject to subpart 3 of part E:’’; 
and 
(D) in subsection (e), after the heading, by 
inserting ‘‘Subject to subpart 3 of part E:’’. 
SEC. 106. SEPARATE MEDICARE FFS ACCOUNTS AND 
OTHER FINANCING UNDER UNIFIED MEDI-
CARE. 
(a) SEPARATE MEDICARE FFS ACCOUNTS.— 
(1) UNDER
FEDERAL
HOSPITAL
INSURANCE 
TRUST FUND.—Section 1817 of the Social Security 
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Act (42 U.S.C. 1395i) is amended by adding at the 
end the following new subsection: 
‘‘(l) PART A MEDICARE FFS ACCOUNT.— 
‘‘(1) ESTABLISHMENT.—There is hereby estab-
lished within the Trust Fund an account to be 
known as the ‘Part A Medicare FFS account’ for 
the receipts and disbursements attributable to the 
operation of Medicare fee-for-service (as defined in 
section 1860E–61(b)) insofar as it relates to the 
program under this part, as modified under part E, 
including the transition funding under paragraph 
(2)(B). Section 1854(g) shall apply to receipts de-
scribed in the previous sentence in the same manner 
as such section applies to payments or premiums de-
scribed in such section. 
‘‘(2) FUNDING.— 
‘‘(A) IN GENERAL.—The Part A Medicare 
FFS Account shall consist of such gifts and be-
quests as may be made as provided in section 
201(i)(1), as applied under this section, accrued 
interest on balances in the Part A Medicare 
FFS Account, and such amounts as may be de-
posited in, or appropriated to, such Part A 
Medicare FFS Account as provided in this sub-
section. 
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‘‘(B) TRANSITION FUNDING.— 
‘‘(i) IN GENERAL.—In order to pro-
vide for funding relating to transitional 
costs for carrying out Medicare fee-for- 
service insofar as it relates to the program 
under this part, as modified under part E, 
as of the general effective date (as defined 
in section 1860E–62), there shall be trans-
ferred from the Trust Fund to the Part A 
Medicare FFS Account such sums as spec-
ified necessary by the Medicare Choices 
Commission. In order to provide for initial 
claims reserves before the collection of pre-
miums, there shall be transferred from the 
Trust Fund to the Part A Medicare FFS 
Account such sums as necessary to cover 
90 days worth of claims reserves based on 
projected enrollment. 
‘‘(ii) AMORTIZATION
OF
TRANSITION 
FUNDING.—The Secretary shall provide for 
the repayment to the Trust Fund of the 
funding transferred under clause (i) in an 
amortized manner over the 10-year period 
beginning with the first plan year begin-
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ning on or after the general effective date 
(as defined in section 1860E–62). 
‘‘(iii) LIMITATION
ON
FUNDING.— 
Nothing in this paragraph shall be con-
strued as authorizing any additional trans-
fers to the Part A Medicare FFS Account, 
other than such amounts as are otherwise 
provided with respect to Medicare Advan-
tage plans. 
‘‘(3) SEPARATE FROM REST OF TRUST FUND.— 
Funds provided under this subsection to the Part A 
Medicare FFS Account shall— 
‘‘(A) be kept separate from all other funds 
within the Trust Fund, but shall be invested, 
and such investments redeemed, in the same 
manner as all other funds and investments 
within the Trust Fund; and 
‘‘(B) notwithstanding the previous sub-
sections of this section, be managed and admin-
istered by the Administrator of the Centers for 
Medicare & Medicaid Services.’’. 
(2) UNDER SUPPLEMENTARY MEDICAL INSUR-
ANCE TRUST FUND.—Section 1841 of the Social Se-
curity Act (42 U.S.C. 1395t) is amended by adding 
at the end the following new subsection: 
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‘‘(j) PART B MEDICARE FFS ACCOUNT.— 
‘‘(1) ESTABLISHMENT.—There is hereby estab-
lished within the Trust Fund an account to be 
known as the ‘Part B Medicare FFS account’ for 
the receipts and disbursements attributable to the 
operation of Medicare fee-for-service (as defined in 
section 1860E–61(b)) insofar as it relates to the 
program under this part, as modified under part E, 
including the transition funding under paragraph 
(2)(B). Section 1854(g) shall apply to receipts de-
scribed in the previous sentence in the same manner 
as such section applies to payments or premiums de-
scribed in such section. 
‘‘(2) FUNDING.— 
‘‘(A) IN GENERAL.—The Part B Medicare 
FFS Account shall consist of such gifts and be-
quests as may be made as provided in section 
201(i)(1), as applied pursuant to this section, 
accrued interest on balances in the Part B 
Medicare FFS Account, and such amounts as 
may be deposited in, or appropriated to, the 
Part B Medicare FFS Account as provided in 
this subsection. 
‘‘(B) TRANSITION FUNDING.— 
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‘‘(i) IN GENERAL.—In order to pro-
vide for funding relating to transitional 
costs for carrying out Medicare fee-for- 
service insofar as it relates to the program 
under this part, as modified under part E, 
as of the general effective date (as defined 
in section 1860E–62), there shall be trans-
ferred from the Trust Fund to the Part B 
Medicare FFS Account such sums as spec-
ified necessary by the Medicare Choices 
Commission. In order to provide for initial 
claims reserves before the collection of pre-
miums, there shall be transferred from the 
Trust Fund to the Part B Medicare FFS 
Account such sums as necessary to cover 
90 days worth of claims reserves based on 
projected enrollment. 
‘‘(ii) AMORTIZATION
OF
TRANSITION 
FUNDING.—The Secretary shall provide for 
the repayment to the Trust Fund of the 
funding transferred under clause (i) in an 
amortized manner over the 10-year period 
beginning with the first plan year begin-
ning on or after the general effective date 
(as defined in section 1860E–62). 
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‘‘(iii) LIMITATION
ON
FUNDING.— 
Nothing in this paragraph shall be con-
strued as authorizing any additional trans-
fers to the Part B Medicare FFS Account, 
other than such amounts as are otherwise 
provided with respect to Medicare Advan-
tage plans. 
‘‘(3) SEPARATE FROM REST OF TRUST FUND.— 
Funds provided under this subsection to the Part B 
Medicare FFS Account shall— 
‘‘(A) be kept separate from all other funds 
within the Trust Fund, but shall be invested, 
and such investments redeemed, in the same 
manner as all other funds and investments 
within the Trust Fund; and 
‘‘(B) notwithstanding the previous sub-
sections of this section, be managed and admin-
istered by the the Administrator of the Centers 
for Medicare & Medicaid Services.’’. 
(b) CHAIRPERSON OF MEDICARE CHOICES COMMIS-
SION TO REPLACE ADMINISTRATOR OF CMS ON AS SEC-
RETARY OF BOARD OF TRUSTEES OF HI AND SMI TRUST 
FUNDS.— 
(1) HI TRUST FUND.—Section 1817(b) of the 
Social Security Act (42 U.S.C. 1395i(b)) is amended 
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by striking ‘‘The Administrator of the Centers for 
Medicare & Medicaid Services shall serve as the Sec-
retary of the Board of Trustees.’’ and inserting ‘‘Be-
fore the general effective date defined under section 
1860E–62, the Administrator of the Centers for 
Medicare & Medicaid Services shall serve as the Sec-
retary of the Board of Trustees. On and after such 
general effective date such Administrator shall not 
serve as the Secretary of such Board and instead the 
Chairperson of the Medicare Choices Commission es-
tablished under section 1860E–51 shall serve as the 
Secretary of such Board.’’. 
(2) SMI TRUST FUND.—Section 1841(b) of the 
Social Security Act (42 U.S.C. 1395t(b)) is amended 
by striking ‘‘The Administrator of the Centers for 
Medicare & Medicaid Services shall serve as the Sec-
retary of the Board of Trustees.’’ and inserting ‘‘Be-
fore the general effective date defined under section 
1860E–62, the Administrator of the Centers for 
Medicare & Medicaid Services shall serve as the Sec-
retary of the Board of Trustees. On and after such 
general effective date such Administrator shall not 
serve as the Secretary of such Board and instead the 
Chairperson of the Medicare Choices Commission es-
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tablished under section 1860E–51 shall serve as the 
Secretary of such Board.’’. 
(c) SUBSIDIES.—Part E of title XVIII of the Social 
Security Act, as added by section 101 and amended by 
sections 103 and 105, is further amended by adding at 
the end the following: 
‘‘Subpart 4—Subsidies 
‘‘SEC. 1860E–41. CHANGES IN SUBSIDIES. 
‘‘(a) REDUCED GOVERNMENT CONTRIBUTION FOR 
HIGH-INCOME SENIORS.— 
‘‘(1) IN
GENERAL.—For purposes of deter-
mining the combined monthly base amount under 
section 1860E–32(c)(2)(B) for an individual, in ap-
plying section 1839(i) under such section, the fol-
lowing shall apply: 
‘‘(A) 2016.—For 2016, notwithstanding 
paragraph (6) of such section 1839(i), subject 
to paragraph (3)— 
‘‘(i) the threshold amount otherwise 
applicable under paragraph (2)(A) of such 
section for individuals shall be equal to 
$50,000 (or couples, $100,000); and 
‘‘(ii) instead of the sliding scale per-
centage specified in paragraph (3)(A)(i) of 
such section (and instead of the amount 
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which would be applied in the case of a 
joint 
return 
described 
in 
paragraph 
(3)(C)(ii) of such section), the sliding scale 
percentage shall be determined so that for 
individuals (or couples) whose modified ad-
justed gross income is within an income 
tier specified in the table described in 
paragraph (2) the sliding scale percentage 
shall increase, on a sliding scale in a linear 
manner, from the initial premium percent-
age to the final premium percentage as 
specified in such table for such income tier 
for such individuals (or couples, respec-
tively). 
‘‘(B) SUBSEQUENT YEARS.—For each sub-
sequent year, such section 1839(i) shall be ap-
plied, as modified by subparagraph (A) and 
subject to paragraphs (3) and (4), without tak-
ing into account paragraph (5) or (6) of such 
section. 
‘‘(2) TABLE.—The table specified in this para-
graph is as follows: 
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‘‘Initial Income Level 
within 
Tier for Individual 
(or Couple) 
Final Income Level 
within 
Tier for Individual 
(or Couple) 
Initial 
Premium 
Percentage 
Final 
Premium 
Percentage 
$50,000 ($100,000) 
$85,000 ($150,000)
12 percent 
20 percent
$85,001 ($150,001) 
$130,000 ($214,000) 
20 percent 
32 percent
$130,001 ($214,001) 
$190,000 ($300,000) 
32 percent 
50 percent
$190,001 ($300,001) 
No Limit ...................
50 percent 
50 percent. 
‘‘(3) TRANSITION FOR CERTAIN SENIORS.— 
‘‘(A) IN GENERAL.—In the case of individ-
uals and couples with an income level that is 
below the minimum level for which section 
1839(i) would otherwise apply (as in effect as 
of the date of enactment of this section), the 
premium to be applied shall be the sum of— 
‘‘(i) the premium otherwise applicable 
to individuals whose income is $1 below 
the applicable threshold amount under sub-
section (a)(1); and 
‘‘(ii) the transition percentage of the 
amount by which the premium that would 
otherwise apply (but for this paragraph) 
under this subsection exceeds the premium 
described in clause (i). 
‘‘(B) 
TRANSITION
PERCENTAGE.—The 
transition percentage specified in this subpara-
graph— 
‘‘(i) for fiscal year 2016, is 20 per-
cent; 
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‘‘(ii) for fiscal year 2017, is 40 per-
cent; 
‘‘(iii) for fiscal year 2018, is 60 per-
cent; 
‘‘(iv) for fiscal year 2019, is 80 per-
cent; and 
‘‘(v) for any succeeding fiscal year, is 
100 percent. 
‘‘(4) INFLATION ADJUSTMENT.— 
‘‘(A) IN GENERAL.—In the case of any cal-
endar year beginning after such date that the 
minimum income level for which section 1839(i) 
applies pursuant to paragraph (1)(A)(i) is not 
greater than 150 percent of the poverty line, 
each dollar amount in paragraph (1)(A) or (2) 
shall be increased by an amount equal to— 
‘‘(i) such dollar amount, multiplied by 
‘‘(ii) the percentage (if any) by which 
the average of the Consumer Price Index 
for all urban consumers (United States 
city average) for the 12-month period end-
ing with August of the preceding calendar 
year exceeds such average for the 12- 
month period ending with August of the 
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calendar year preceding the first calendar 
year beginning after such date. 
‘‘(B) ROUNDING.—If any dollar amount 
after being increased under subparagraph (A) is 
not a multiple of $1,000, such dollar amount 
shall be rounded to the nearest multiple of 
$1,000. 
‘‘(b) ENHANCED SUBSIDIES TO LOW-INCOME SEN-
IORS.— 
‘‘(1) IN GENERAL.—Beginning with 2016, in 
lieu of any medical assistance available for medicare 
cost sharing described in section 1905(p)(3), the fol-
lowing shall apply: 
‘‘(A) INDIVIDUALS WITH INCOME BELOW 
100
PERCENT
OF
POVERTY
LINE
(QUALIFIED 
MEDICARE BENEFICIARIES) AND FULL-BENEFIT 
DUAL ELIGIBLE INDIVIDUALS.—In the case of 
an 
individual 
described 
in 
section 
1902(a)(10)(E)(i) or subparagraph (A)(ii) of 
section 1935(c)(6) (taking into account the ap-
plication of subparagraph (B) of such section), 
the individual is entitled under this section to 
an income-related premium subsidy equal to 
100 percent of the modified monthly basic bene-
ficiary premium under section 1860E–31(c)(2) 
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for the MA–PD plan with the lowest bid under 
the tier 3 benefit level under section 1860E– 
24(a)(3). 
‘‘(B) INDIVIDUALS
WITH
INCOME
BE-
TWEEN
100
PERCENT
AND
120
PERCENT
OF 
POVERTY LINE (SPECIFIED LOW-INCOME BENE-
FICIARIES).—In the case of an individual de-
scribed in section 1902(a)(10)(E)(iii), the indi-
vidual is entitled under this section to an in-
come-related premium subsidy equal to 100 per-
cent of the modified monthly basic beneficiary 
premium under section 1860E–31(c)(2) for the 
MA–PD plan with the lowest bid under the tier 
2 benefit level under section 1860E–24(b). 
‘‘(C) OTHER INDIVIDUALS WITH INCOME 
BELOW 135 PERCENT OF POVERTY LINE (QUALI-
FYING INDIVIDUALS).—In the case of an indi-
vidual described in section 1902(a)(10)(E)(iv), 
the individual is entitled under this section to 
an income-related premium subsidy equal to 
100 percent of the modified monthly basic bene-
ficiary premium under section 1860E–31(c)(2) 
for the MA–PD plan with the lowest bid under 
the tier 1 benefit level under section 1860E– 
24(b). In no case shall an individual described 
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