196
‘‘(ii) EXCEPTIONS.—The standards 
shall not require a prescription to be writ-
ten and transmitted electronically—
‘‘(I) in emergency cases and 
other exceptional circumstances recog-
nized by the Administrator; or 
‘‘(II) if the patient requests that 
the prescription not be transmitted 
electronically. 
If a patient makes a request under sub-
clause (II), no additional charges may be 
imposed on the patient for making such re-
quest.
‘‘(B) PATIENT-SPECIFIC MEDICATION HIS-
TORY, ELIGIBILITY, BENEFIT, AND OTHER PRE-
SCRIPTION INFORMATION.—
‘‘(i) IN
GENERAL.—The standards 
shall accommodate electronic transmittal of 
patient-specific medication history, eligi-
bility, benefit, and other prescription infor-
mation among prescribing and dispensing 
professionals at the point of care. 
‘‘(ii) REQUIRED INFORMATION.—The 
information described in clause (i) shall in-
clude the following:
197
‘‘(I) Information (to the extent 
available and feasible) on the drugs 
being prescribed for that patient and 
other information relating to the 
medication history of the patient that 
may be relevant to the appropriate 
prescription for that patient. 
‘‘(II) Cost-effective alternatives 
(if any) to the drug prescribed. 
‘‘(III) Information on eligibility 
and benefits, including the drugs in-
cluded in the applicable formulary and 
any requirements for prior authoriza-
tion. 
‘‘(IV) Information on potential 
interactions with drugs listed on the 
medication history, graded by severity 
of the potential interaction. 
‘‘(V) Other information to im-
prove the quality of patient care and 
to reduce medical errors. 
‘‘(C) UNDUE
BURDEN.—The standards 
shall be designed so that, to the extent prac-
ticable, the standards do not impose an undue
198
administrative burden on the practice of medi-
cine, pharmacy, or other health professions. 
‘‘(D) COMPATIBILITY
WITH
ADMINISTRA-
TIVE
SIMPLIFICATION
AND
PRIVACY
LAWS.—
The standards shall be—
‘‘(i) consistent with the Federal regu-
lations (concerning the privacy of individ-
ually identifiable health information) pro-
mulgated under section 264(c) of the 
Health Insurance Portability and Account-
ability Act of 1996; and 
‘‘(ii) compatible with the standards 
adopted under part C. 
‘‘(4) TRANSFER OF INFORMATION.—The Sec-
retary shall develop and adopt standards for trans-
ferring among prescribing and insurance entities and 
other necessary entities appropriate standard data 
elements needed for the electronic exchange of medi-
cation history, eligibility, benefit, and other prescrip-
tion drug information and other health information 
determined appropriate in compliance with the 
standards adopted or modified under this part. 
‘‘(b) TIMETABLE FOR ADOPTION OF STANDARDS.—
‘‘(1) IN GENERAL.—The Secretary shall adopt 
the standards under this part by January 1, 2006.
199
‘‘(2) 
ADDITIONS
AND
MODIFICATIONS
TO 
STANDARDS.—The Secretary shall, in consultation 
with appropriate representatives of interested par-
ties, review the standards developed or adopted 
under this part and adopt modifications to the 
standards (including additions to the standards), as 
determined appropriate. Any addition or modifica-
tion to such standards shall be completed in a man-
ner which minimizes the disruption and cost of com-
pliance. 
‘‘(c) COMPLIANCE WITH STANDARDS.—
‘‘(1) REQUIREMENT FOR ALL INDIVIDUALS AND 
ENTITIES THAT TRANSMIT OR RECEIVE PRESCRIP-
TIONS ELECTRONICALLY.—
‘‘(A) IN GENERAL.—Individuals or entities 
that transmit or receive electronic medication 
history, eligibility, benefit and prescription in-
formation, shall comply with the standards 
adopted or modified under this part. 
‘‘(B) RELATION
TO
STATE
LAWS.—The 
standards adopted or modified under this part 
shall supersede any State law or regulations 
pertaining to the electronic transmission of 
medication history, eligibility, benefit and pre-
scription information.
200
‘‘(2) TIMETABLE FOR COMPLIANCE.—
‘‘(A) INITIAL COMPLIANCE.—
‘‘(i) IN GENERAL.—Not later than 24 
months after the date on which an initial 
standard is adopted under this part, each 
individual or entity to whom the standard 
applies shall comply with the standard. 
‘‘(ii) SPECIAL
RULE
FOR
SMALL 
HEALTH PLANS.—In the case of a small 
health plan, as defined by the Secretary for 
purposes of section 1175(b)(1)(B), clause 
(i) shall be applied by substituting ‘36 
months’ for ‘24 months’. 
‘‘(d) CONSULTATION WITH ATTORNEY GENERAL.—
The Secretary shall consult with the Attorney General be-
fore developing, adopting, or modifying a standard under 
this part to ensure that the standard accommodates secure 
electronic transmission of prescriptions for controlled sub-
stances in a manner that minimizes the possibility of viola-
tions under the Comprehensive Drug Abuse Prevention 
and Control Act of 1970 and related Federal laws. 
‘‘GRANTS TO HEALTH CARE PROVIDERS TO IMPLEMENT 
ELECTRONIC PRESCRIPTION PROGRAMS 
‘‘SEC. 1180A. (a) IN GENERAL.—The Secretary is 
authorized to make grants to health care providers for the 
purpose of assisting such entities to implement electronic
201
prescription programs that comply with the standards 
adopted or modified under this part. 
‘‘(b) APPLICATION.—No grant may be made under 
this section except pursuant to a grant application that 
is submitted in a time, manner, and form approved by the 
Secretary.
‘‘(c) AUTHORIZATION OF APPROPRIATIONS.—There 
are authorized to be appropriated for each of fiscal years 
2006, 2007, and 2008, such sums as may be necessary 
to carry out this section.’’.
Subtitle D—Other Provisions 
SEC. 131. ADDITIONAL REQUIREMENTS FOR ANNUAL FI-
NANCIAL REPORT AND OVERSIGHT ON MEDI-
CARE PROGRAM. 
(a) IN GENERAL.—Section 1817 (42 U.S.C. 1395i) 
is amended by adding at the end the following new sub-
section: 
‘‘(l) COMBINED REPORT ON OPERATION AND STATUS 
OF
THE TRUST FUND
AND
THE FEDERAL SUPPLE-
MENTARY MEDICAL INSURANCE TRUST FUND (INCLUD-
ING THE PRESCRIPTION DRUG ACCOUNT).—In addition 
to the duty of the Board of Trustees to report to Congress 
under subsection (b), on the date the Board submits the 
report required under subsection (b)(2), the Board shall 
submit to Congress a report on the operation and status
202
of the Trust Fund and the Federal Supplementary Med-
ical Insurance Trust Fund established under section 1841 
(including the Prescription Drug Account within such 
Trust Fund), in this subsection referred to as the ‘Trust 
Funds’. Such report shall include the following informa-
tion: 
‘‘(1) OVERALL SPENDING FROM THE GENERAL 
FUND
OF
THE
TREASURY.—A statement of total 
amounts obligated during the preceding fiscal year 
from the General Revenues of the Treasury to the 
Trust Funds, separately stated in terms of the total 
amount and in terms of the percentage such amount 
bears to all other amounts obligated from such Gen-
eral Revenues during such fiscal year, for each of 
the following amounts: 
‘‘(A) MEDICARE BENEFITS.—The amount 
expended for payment of benefits covered under 
this title. 
‘‘(B) ADMINISTRATIVE
AND
OTHER
EX-
PENSES.—The amount expended for payments 
not related to the benefits described in subpara-
graph (A). 
‘‘(2) HISTORICAL OVERVIEW OF SPENDING.—
From the date of the inception of the program of in-
surance under this title through the fiscal year in-
203
volved, a statement of the total amounts referred to 
in paragraph (1), separately stated for the amounts 
described in subparagraphs (A) and (B) of such 
paragraph. 
‘‘(3) 10-YEAR AND 50-YEAR PROJECTIONS.—An 
estimate of total amounts referred to in paragraph 
(1), separately stated for the amounts described in 
subparagraphs (A) and (B) of such paragraph, re-
quired to be obligated for payment for benefits cov-
ered under this title for each of the 10 fiscal years 
succeeding the fiscal year involved and for the 50-
year period beginning with the succeeding fiscal 
year. 
‘‘(4) RELATION
TO
OTHER
MEASURES
OF 
GROWTH.—A comparison of the rate of growth of 
the total amounts referred to in paragraph (1), sepa-
rately stated for the amounts described in subpara-
graphs (A) and (B) of such paragraph, to the rate 
of growth for the same period in—
‘‘(A) the gross domestic product; 
‘‘(B) health insurance costs in the private 
sector; 
‘‘(C) employment-based health insurance 
costs in the public and private sectors; and
204
‘‘(D) other areas as determined appro-
priate by the Board of Trustees.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply with respect to fiscal years be-
ginning on or after the date of enactment of this Act. 
(c) CONGRESSIONAL HEARINGS.—It is the sense of 
Congress that the committees of jurisdiction of Congress 
shall hold hearings on the reports submitted under section 
1817(l) of the Social Security Act (as added by subsection 
(a)). 
SEC. 132. TRUSTEES’ REPORT ON MEDICARE’S UNFUNDED 
OBLIGATIONS. 
(a) REPORT.—The report submitted under sections 
1817(b)(2) and 1841(b)(2) of the Social Security Act (42 
U.S.C. 1395i(b)(2) and 1395t(b)(2)) during 2004 shall in-
clude an analysis of the total amount of the unfunded obli-
gations of the Medicare program under title XVIII of the 
Social Security Act. 
(b) MATTERS ANALYZED.—The analysis described in 
subsection (A) shall compare the long-term obligations of 
the Medicare program to the dedicated funding sources 
for that program (other than general revenue transfers), 
including the combined obligations of the Federal Hospital 
Insurance Trust Fund established under section 1817 of 
such Act (42 U.S.C. 1395i) and the Federal Supple-
205
mentary Medical Insurance Trust Fund established under 
section 1841 of such Act (42 U.S.C. 1395t).
TITLE II—
MEDICAREADVANTAGE 
Subtitle A—MedicareAdvantage 
Competition 
SEC. 201. ELIGIBILITY, ELECTION, AND ENROLLMENT. 
Section 1851 (42 U.S.C. 1395w–21) is amended to 
read as follows: 
‘‘ELIGIBILITY, ELECTION, AND ENROLLMENT 
‘‘SEC. 1851. (a) CHOICE OF MEDICARE BENEFITS 
THROUGH MEDICAREADVANTAGE PLANS.—
‘‘(1) IN GENERAL.—Subject to the provisions of 
this section, each MedicareAdvantage eligible indi-
vidual (as defined in paragraph (3)) is entitled to 
elect to receive benefits under this title—
‘‘(A) through—
‘‘(i) the original Medicare fee-for-serv-
ice program under parts A and B; and 
‘‘(ii) the voluntary prescription drug 
delivery program under part D; or 
‘‘(B) 
through 
enrollment 
in 
a 
MedicareAdvantage plan under this part. 
‘‘(2) TYPES
OF
MEDICAREADVANTAGE
PLANS 
THAT MAY BE AVAILABLE.—A MedicareAdvantage
206
plan may be any of the following types of plans of 
health insurance: 
‘‘(A) COORDINATED CARE PLANS.—Coordi-
nated care plans which provide health care serv-
ices, including health maintenance organization 
plans (with or without point of service options) 
and plans offered by provider-sponsored organi-
zations (as defined in section 1855(d)). 
‘‘(B) COMBINATION
OF
MSA
PLAN
AND 
CONTRIBUTIONS
TO
MEDICAREADVANTAGE 
MSA.—An MSA plan, as defined in section 
1859(b)(3), 
and 
a 
contribution 
into 
a 
MedicareAdvantage medical savings account 
(MSA). 
‘‘(C) PRIVATE FEE-FOR-SERVICE PLANS.—
A MedicareAdvantage private fee-for-service 
plan, as defined in section 1859(b)(2).
‘‘(3) MEDICAREADVANTAGE
ELIGIBLE
INDI-
VIDUAL.—
‘‘(A) IN
GENERAL.—Subject to subpara-
graph 
(B), 
in 
this 
title, 
the 
term 
‘MedicareAdvantage eligible individual’ means 
an individual who is entitled to (or enrolled for) 
benefits under part A, enrolled under part B, 
and enrolled under part D.
207
‘‘(B) SPECIAL
RULE
FOR
END-STAGE 
RENAL DISEASE.—Such term shall not include 
an individual medically determined to have end-
stage renal disease, except that—
‘‘(i) an individual who develops end-
stage renal disease while enrolled in a 
Medicare+Choice or a MedicareAdvantage 
plan may continue to be enrolled in that 
plan; and 
‘‘(ii) in the case of such an individual 
who is enrolled in a Medicare+Choice plan 
or a MedicareAdvantage plan under clause 
(i) (or subsequently under this clause), if 
the enrollment is discontinued under cir-
cumstances 
described 
in 
section 
1851(e)(4)(A), then the individual will be 
treated as a ‘MedicareAdvantage eligible 
individual’ for purposes of electing to con-
tinue 
enrollment 
in 
another 
MedicareAdvantage plan. 
‘‘(b) SPECIAL RULES.—
‘‘(1) RESIDENCE REQUIREMENT.—
‘‘(A) IN
GENERAL.—Except as the Sec-
retary may otherwise provide and except as pro-
vided in subparagraph (C), an individual is eli-
208
gible to elect a MedicareAdvantage plan offered 
by a MedicareAdvantage organization only if 
the plan serves the geographic area in which 
the individual resides. 
‘‘(B) CONTINUATION
OF
ENROLLMENT 
PERMITTED.—Pursuant to rules specified by 
the Secretary, the Secretary shall provide that 
a plan may offer to all individuals residing in 
a geographic area the option to continue enroll-
ment in the plan, notwithstanding that the indi-
vidual no longer resides in the service area of 
the plan, so long as the plan provides that indi-
viduals exercising this option have, as part of 
the 
basic 
benefits 
described 
in 
section 
1852(a)(1)(A), reasonable access within that 
geographic area to the full range of basic bene-
fits, subject to reasonable cost-sharing liability 
in obtaining such benefits. 
‘‘(C) CONTINUATION
OF
ENROLLMENT 
PERMITTED WHERE SERVICE CHANGED.—Not-
withstanding subparagraph (A) and in addition 
to subparagraph (B), if a MedicareAdvantage 
organization eliminates from its service area a 
MedicareAdvantage payment area that was pre-
viously within its service area, the organization
209
may elect to offer individuals residing in all or 
portions of the affected area who would other-
wise be ineligible to continue enrollment the op-
tion 
to 
continue 
enrollment 
in 
a 
MedicareAdvantage plan it offers so long as—
‘‘(i) the enrollee agrees to receive the 
full range of basic benefits (excluding 
emergency and urgently needed care) ex-
clusively at facilities designated by the or-
ganization within the plan service area; 
and 
‘‘(ii) 
there 
is 
no 
other 
MedicareAdvantage plan offered in the 
area in which the enrollee resides at the 
time of the organization’s election. 
‘‘(2) SPECIAL RULE FOR CERTAIN INDIVIDUALS 
COVERED
UNDER
FEHBP
OR
ELIGIBLE
FOR
VET-
ERANS OR MILITARY HEALTH BENEFITS.—
‘‘(A) FEHBP.—An individual who is en-
rolled in a health benefit plan under chapter 89 
of title 5, United States Code, is not eligible to 
enroll in an MSA plan until such time as the 
Director of the Office of Management and 
Budget certifies to the Secretary that the Office 
of Personnel Management has adopted policies
210
which will ensure that the enrollment of such 
individuals in such plans will not result in in-
creased expenditures for the Federal Govern-
ment for health benefit plans under such chap-
ter. 
‘‘(B) VA AND DOD.—The Secretary may 
apply rules similar to the rules described in 
subparagraph (A) in the case of individuals who 
are eligible for health care benefits under chap-
ter 55 of title 10, United States Code, or under 
chapter 17 of title 38 of such Code. 
‘‘(3) LIMITATION
ON
ELIGIBILITY
OF
QUALI-
FIED MEDICARE BENEFICIARIES AND OTHER MED-
ICAID
BENEFICIARIES
TO
ENROLL
IN
AN
MSA 
PLAN.—An individual who is a qualified medicare 
beneficiary (as defined in section 1905(p)(1)), a 
qualified disabled and working individual (described 
in section 1905(s)), an individual described in sec-
tion 1902(a)(10)(E)(iii), or otherwise entitled to 
medicare cost-sharing under a State plan under title 
XIX is not eligible to enroll in an MSA plan. 
‘‘(4) COVERAGE UNDER MSA PLANS ON A DEM-
ONSTRATION BASIS.—
211
‘‘(A) IN GENERAL.—An individual is not 
eligible to enroll in an MSA plan under this 
part—
‘‘(i) on or after January 1, 2004, un-
less the enrollment is the continuation of 
such an enrollment in effect as of such 
date; or
‘‘(ii) as of any date if the number of 
such individuals so enrolled as of such date 
has reached 390,000. 
Under rules established by the Secretary, an in-
dividual is not eligible to enroll (or continue en-
rollment) in an MSA plan for a year unless the 
individual provides assurances satisfactory to 
the Secretary that the individual will reside in 
the United States for at least 183 days during 
the year. 
‘‘(B) EVALUATION.—The Secretary shall 
regularly evaluate the impact of permitting en-
rollment in MSA plans under this part on selec-
tion (including adverse selection), use of preven-
tive care, access to care, and the financial sta-
tus of the Trust Funds under this title. 
‘‘(C) REPORTS.—The Secretary shall sub-
mit to Congress periodic reports on the num-
212
bers of individuals enrolled in such plans and 
on the evaluation being conducted under sub-
paragraph (B). 
‘‘(c) PROCESS FOR EXERCISING CHOICE.—
‘‘(1) IN GENERAL.—The Secretary shall estab-
lish a process through which elections described in 
subsection (a) are made and changed, including the 
form and manner in which such elections are made 
and changed. Such elections shall be made or 
changed only during coverage election periods speci-
fied under subsection (e) and shall become effective 
as provided in subsection (f). 
‘‘(2) 
COORDINATION
THROUGH 
MEDICAREADVANTAGE ORGANIZATIONS.—
‘‘(A) ENROLLMENT.—Such process shall 
permit an individual who wishes to elect a 
MedicareAdvantage 
plan 
offered 
by 
a 
MedicareAdvantage organization to make such 
election through the filing of an appropriate 
election form with the organization.
‘‘(B) 
DISENROLLMENT.—Such 
process 
shall permit an individual, who has elected a 
MedicareAdvantage 
plan 
offered 
by 
a 
MedicareAdvantage organization and who wish-
es to terminate such election, to terminate such
213
election through the filing of an appropriate 
election form with the organization. 
‘‘(3) DEFAULT.—
‘‘(A) INITIAL ELECTION.—
‘‘(i) IN GENERAL.—Subject to clause 
(ii), an individual who fails to make an 
election during an initial election period 
under subsection (e)(1) is deemed to have 
chosen the original medicare fee-for-service 
program option. 
‘‘(ii) SEAMLESS
CONTINUATION
OF 
COVERAGE.—The Secretary may establish 
procedures under which an individual who 
is enrolled in a Medicare+Choice plan or 
another 
health 
plan 
(other 
than 
a 
MedicareAdvantage plan) offered by a 
MedicareAdvantage organization at the 
time of the initial election period and who 
fails to elect to receive coverage other than 
through the organization is deemed to have 
elected the MedicareAdvantage plan of-
fered by the organization (or, if the organi-
zation offers more than 1 such plan, such 
plan or plans as the Secretary identifies 
under such procedures).
214
‘‘(B) CONTINUING
PERIODS.—An indi-
vidual who has made (or is deemed to have 
made) an election under this section is consid-
ered to have continued to make such election 
until such time as—
‘‘(i) the individual changes the elec-
tion under this section; or 
‘‘(ii) the MedicareAdvantage plan with 
respect to which such election is in effect 
is discontinued or, subject to subsection 
(b)(1)(B), no longer serves the area in 
which the individual resides. 
‘‘(d) PROVIDING INFORMATION TO PROMOTE IN-
FORMED CHOICE.—
‘‘(1) IN GENERAL.—The Secretary shall provide 
for activities under this subsection to broadly dis-
seminate information to medicare beneficiaries (and 
prospective medicare beneficiaries) on the coverage 
options provided under this section in order to pro-
mote an active, informed selection among such op-
tions. 
‘‘(2) PROVISION OF NOTICE.—
‘‘(A) OPEN
SEASON
NOTIFICATION.—At 
least 15 days before the beginning of each an-
nual, coordinated election period (as defined in
215
subsection (e)(3)(B)), the Secretary shall mail 
to each MedicareAdvantage eligible individual 
residing in an area the following: 
‘‘(i) GENERAL
INFORMATION.—The 
general information described in paragraph 
(3). 
‘‘(ii) LIST OF PLANS AND COMPARI-
SON OF PLAN OPTIONS.—A list identifying 
the MedicareAdvantage plans that are (or 
will be) available to residents of the area 
and information described in paragraph 
(4) concerning such plans. Such informa-
tion shall be presented in a comparative 
form. 
‘‘(iii) ADDITIONAL
INFORMATION.—
Any other information that the Secretary 
determines will assist the individual in 
making the election under this section. 
The mailing of such information shall be coordi-
nated, to the extent practicable, with the mail-
ing of any annual notice under section 1804. 
‘‘(B) NOTIFICATION TO NEWLY ELIGIBLE 
MEDICAREADVANTAGE
ELIGIBLE
INDIVID-
UALS.—To the extent practicable, the Secretary 
shall, not later than 30 days before the begin-
216
ning of the initial MedicareAdvantage enroll-
ment period for an individual described in sub-
section (e)(1), mail to the individual the infor-
mation described in subparagraph (A). 
‘‘(C) FORM.—The information dissemi-
nated under this paragraph shall be written and 
formatted using language that is easily under-
standable by medicare beneficiaries.
‘‘(D) PERIODIC UPDATING.—The informa-
tion described in subparagraph (A) shall be up-
dated on at least an annual basis to reflect 
changes 
in 
the 
availability 
of 
MedicareAdvantage plans, the benefits under 
such plans, and the MedicareAdvantage month-
ly 
basic 
beneficiary 
premium, 
MedicareAdvantage monthly beneficiary pre-
mium for enhanced medical benefits, and 
MedicareAdvantage monthly beneficiary obliga-
tion for qualified prescription drug coverage for 
such plans. 
‘‘(3) GENERAL INFORMATION.—General infor-
mation under this paragraph, with respect to cov-
erage under this part during a year, shall include 
the following:
217
‘‘(A) BENEFITS
UNDER
THE
ORIGINAL 
MEDICARE
FEE-FOR-SERVICE
PROGRAM
OP-
TION.—A general description of the benefits 
covered under parts A and B of the original 
medicare fee-for-service program, including—
‘‘(i) covered items and services; 
‘‘(ii) beneficiary cost-sharing, such as 
deductibles, coinsurance, and copayment 
amounts; and 
‘‘(iii) any beneficiary liability for bal-
ance billing. 
‘‘(B) CATASTROPHIC COVERAGE AND COM-
BINED DEDUCTIBLE.—A description of the cat-
astrophic coverage and unified deductible appli-
cable under the plan. 
‘‘(C) OUTPATIENT
PRESCRIPTION
DRUG 
COVERAGE
BENEFITS.—The information re-
quired under section 1860D–4 with respect to 
coverage for prescription drugs under the plan. 
‘‘(D) ELECTION
PROCEDURES.—Informa-
tion and instructions on how to exercise election 
options under this section.
‘‘(E) RIGHTS.—A general description of 
procedural rights (including grievance and ap-
peals procedures) of beneficiaries under the
218
original medicare fee-for-service program (in-
cluding such rights under part D) and the 
MedicareAdvantage program and the right to 
be protected against discrimination based on 
health status-related factors under section 
1852(b). 
‘‘(F) INFORMATION
ON
MEDIGAP
AND 
MEDICARE SELECT.—A general description of 
the benefits, enrollment rights, and other re-
quirements applicable to medicare supplemental 
policies under section 1882 and provisions relat-
ing to medicare select policies described in sec-
tion 1882(t). 
‘‘(G) POTENTIAL FOR CONTRACT TERMI-
NATION.—The fact that a MedicareAdvantage 
organization may terminate its contract, refuse 
to renew its contract, or reduce the service area 
included in its contract, under this part, and 
the effect of such a termination, nonrenewal, or 
service area reduction may have on individuals 
enrolled with the MedicareAdvantage plan 
under this part. 
‘‘(4) INFORMATION
COMPARING
PLAN
OP-
TIONS.—Information under this paragraph, with re-
219
spect to a MedicareAdvantage plan for a year, shall 
include the following: 
‘‘(A) BENEFITS.—The benefits covered 
under the plan, including the following: 
‘‘(i) Covered items and services be-
yond those provided under the original 
medicare fee-for-service program option. 
‘‘(ii) Beneficiary cost-sharing for any 
items and services described in clause (i) 
and paragraph (3)(A)(i), including infor-
mation on the unified deductible under sec-
tion 1852(a)(1)(C). 
‘‘(iii) The maximum limitations on 
out-of-pocket 
expenses 
under 
section 
1852(a)(1)(C). 
‘‘(iv) In the case of an MSA plan, dif-
ferences in cost-sharing, premiums, and 
balance billing under such a plan compared 
to under other MedicareAdvantage plans.
‘‘(v) 
In 
the 
case 
of 
a 
MedicareAdvantage private fee-for-service 
plan, differences in cost-sharing, pre-
miums, and balance billing under such a 
plan 
compared 
to 
under 
other 
MedicareAdvantage plans.
220
‘‘(vi) The extent to which an enrollee 
may obtain benefits through out-of-net-
work health care providers. 
‘‘(vii) The extent to which an enrollee 
may select among in-network providers and 
the types of providers participating in the 
plan’s network. 
‘‘(viii) The organization’s coverage of 
emergency and urgently needed care. 
‘‘(ix) The comparative information de-
scribed in section 1860D–4(b)(2) relating 
to prescription drug coverage under the 
plan. 
‘‘(B) PREMIUMS.—
‘‘(i) 
IN
GENERAL.—The 
MedicareAdvantage monthly basic bene-
ficiary premium and MedicareAdvantage 
monthly beneficiary premium for enhanced 
medical benefits, if any, for the plan or, in 
the 
case 
of 
an 
MSA 
plan, 
the 
MedicareAdvantage monthly MSA pre-
mium. 
‘‘(ii) REDUCTIONS.—The reduction in 
part B premiums, if any.
221
‘‘(iii) NATURE OF THE PREMIUM FOR 
ENHANCED MEDICAL BENEFITS.—Whether 
the MedicareAdvantage monthly premium 
for enhanced benefits is optional or manda-
tory. 
‘‘(C) SERVICE AREA.—The service area of 
the plan. 
‘‘(D) QUALITY AND PERFORMANCE.—Plan 
quality and performance indicators for the ben-
efits under the plan (and how such indicators 
compare to quality and performance indicators 
under the original medicare fee-for-service pro-
gram under parts A and B and under the vol-
untary prescription drug delivery program 
under part D in the area involved), including—
‘‘(i) disenrollment rates for medicare 
enrollees 
electing 
to 
receive 
benefits 
through the plan for the previous 2 years 
(excluding disenrollment due to death or 
moving outside the plan’s service area); 
‘‘(ii) information on medicare enrollee 
satisfaction; 
‘‘(iii) information on health outcomes; 
and
222
‘‘(iv) the recent record regarding com-
pliance of the plan with requirements of 
this part (as determined by the Secretary). 
‘‘(5) MAINTAINING A TOLL-FREE NUMBER AND 
INTERNET
SITE.—The Secretary shall maintain a 
toll-free 
number 
for 
inquiries 
regarding 
MedicareAdvantage options and the operation of this 
part in all areas in which MedicareAdvantage plans 
are offered and an Internet site through which indi-
viduals may electronically obtain information on 
such options and MedicareAdvantage plans. 
‘‘(6) USE
OF
NON-FEDERAL
ENTITIES.—The 
Secretary may enter into contracts with non-Federal 
entities to carry out activities under this subsection. 
‘‘(7) 
PROVISION
OF
INFORMATION.—A 
MedicareAdvantage organization shall provide the 
Secretary with such information on the organization 
and each MedicareAdvantage plan it offers as may 
be required for the preparation of the information 
referred to in paragraph (2)(A). 
‘‘(e) COVERAGE ELECTION PERIODS.—
‘‘(1) INITIAL
CHOICE
UPON
ELIGIBILITY
TO 
MAKE
ELECTION
IF
MEDICAREADVANTAGE
PLANS 
AVAILABLE TO INDIVIDUAL.—If, at the time an indi-
vidual first becomes eligible to elect to receive bene-
223
fits under part B or D (whichever is later), there is 
1 or more MedicareAdvantage plans offered in the 
area in which the individual resides, the individual 
shall make the election under this section during a 
period specified by the Secretary such that if the in-
dividual elects a MedicareAdvantage plan during the 
period, coverage under the plan becomes effective as 
of the first date on which the individual may receive 
such coverage. 
‘‘(2) OPEN ENROLLMENT AND DISENROLLMENT 
OPPORTUNITIES.—Subject to paragraph (5), the fol-
lowing rules shall apply: 
‘‘(A) CONTINUOUS
OPEN
ENROLLMENT 
AND DISENROLLMENT THROUGH 2005.—At any 
time during the period beginning January 1, 
1998, and ending on December 31, 2005, a 
Medicare+Choice eligible individual may change 
the election under subsection (a)(1). 
‘‘(B) CONTINUOUS
OPEN
ENROLLMENT 
AND
DISENROLLMENT
FOR
FIRST
MONTHS 
DURING 2006.—
‘‘(i) IN GENERAL.—Subject to clause 
(ii) and subparagraph (D), at any time 
during the first 6 months of 2006, or, if 
the 
individual 
first 
becomes 
a
224
MedicareAdvantage eligible individual dur-
ing 2006, during the first 6 months during 
2006 
in 
which 
the 
individual 
is 
a 
MedicareAdvantage eligible individual, a 
MedicareAdvantage eligible individual may 
change the election under subsection 
(a)(1). 
‘‘(ii) LIMITATION OF 1 CHANGE.—An 
individual may exercise the right under 
clause (i) only once. The limitation under 
this clause shall not apply to changes in 
elections effected during an annual, coordi-
nated election period under paragraph (3) 
or during a special enrollment period under 
the first sentence of paragraph (4). 
‘‘(C) CONTINUOUS
OPEN
ENROLLMENT 
AND DISENROLLMENT FOR FIRST 3 MONTHS IN 
SUBSEQUENT YEARS.—
‘‘(i) IN GENERAL.—Subject to clause 
(ii) and subparagraph (D), at any time 
during the first 3 months of 2007 and 
each subsequent year, or, if the individual 
first becomes a MedicareAdvantage eligible 
individual during 2007 or any subsequent 
year, during the first 3 months of such
225
year 
in 
which 
the 
individual 
is 
a 
MedicareAdvantage eligible individual, a 
MedicareAdvantage eligible individual may 
change the election under subsection 
(a)(1). 
‘‘(ii) LIMITATION OF 1 CHANGE DUR-
ING
OPEN
ENROLLMENT
PERIOD
EACH 
YEAR.—An individual may exercise the 
right under clause (i) only once during the 
applicable 3-month period described in 
such clause in each year. The limitation 
under this clause shall not apply to 
changes in elections effected during an an-
nual, coordinated election period under 
paragraph (3) or during a special enroll-
ment period under paragraph (4). 
‘‘(D) CONTINUOUS
OPEN
ENROLLMENT 
FOR
INSTITUTIONALIZED
INDIVIDUALS.—At 
any time during 2006 or any subsequent year, 
in the case of a MedicareAdvantage eligible in-
dividual who is institutionalized (as defined by 
the Secretary), the individual may elect under 
subsection (a)(1)—
‘‘(i) to enroll in a MedicareAdvantage 
plan; or
226
‘‘(ii) 
to 
change 
the 
MedicareAdvantage plan in which the indi-
vidual is enrolled. 
‘‘(3) ANNUAL, COORDINATED
ELECTION
PE-
RIOD.—
‘‘(A) IN GENERAL.—Subject to paragraph 
(5), each individual who is eligible to make an 
election under this section may change such 
election during an annual, coordinated election 
period. 
‘‘(B) ANNUAL, COORDINATED
ELECTION 
PERIOD.—For purposes of this section, the 
term ‘annual, coordinated election period’ 
means, with respect to a year before 2003 and 
after 2006, the month of November before such 
year and with respect to 2003, 2004, 2005, and 
2006, the period beginning on November 15 
and ending on December 31 of the year before 
such year. 
‘‘(C) MEDICAREADVANTAGE
HEALTH
IN-
FORMATION FAIRS.—During the fall season of 
each year (beginning with 2006), in conjunction 
with the annual coordinated election period de-
fined in subparagraph (B), the Secretary shall 
provide for a nationally coordinated educational
227
and 
publicity 
campaign 
to 
inform 
MedicareAdvantage eligible individuals about 
MedicareAdvantage plans and the election proc-
ess provided under this section.
‘‘(D) SPECIAL INFORMATION CAMPAIGN IN 
2005.—During the period beginning on Novem-
ber 15, 2005, and ending on December 31, 
2005, the Secretary shall provide for an edu-
cational and publicity campaign to inform 
MedicareAdvantage eligible individuals about 
the availability of MedicareAdvantage plans, 
and eligible organizations with risk-sharing con-
tracts under section 1876, offered in different 
areas and the election process provided under 
this section. 
‘‘(4) SPECIAL
ELECTION
PERIODS.—Effective 
on and after January 1, 2006, an individual may 
discontinue an election of a MedicareAdvantage plan 
offered by a MedicareAdvantage organization other 
than during an annual, coordinated election period 
and make a new election under this section if—
‘‘(A)(i) the certification of the organization 
or plan under this part has been terminated, or 
the organization or plan has notified the indi-
228
vidual of an impending termination of such cer-
tification; or 
‘‘(ii) the organization has terminated or 
otherwise discontinued providing the plan in the 
area in which the individual resides, or has no-
tified the individual of an impending termi-
nation or discontinuation of such plan; 
‘‘(B) the individual is no longer eligible to 
elect the plan because of a change in the indi-
vidual’s place of residence or other change in 
circumstances (specified by the Secretary, but 
not including termination of the individual’s en-
rollment on the basis described in clause (i) or 
(ii) of subsection (g)(3)(B));
‘‘(C) the individual demonstrates (in ac-
cordance with guidelines established by the Sec-
retary) that—
‘‘(i) the organization offering the plan 
substantially violated a material provision 
of the organization’s contract under this 
part in relation to the individual (including 
the failure to provide an enrollee on a 
timely basis medically necessary care for 
which benefits are available under the plan 
or the failure to provide such covered care
229
in accordance with applicable quality 
standards); or 
‘‘(ii) the organization (or an agent or 
other entity acting on the organization’s 
behalf) 
materially 
misrepresented 
the 
plan’s provisions in marketing the plan to 
the individual; or 
‘‘(D) the individual meets such other ex-
ceptional conditions as the Secretary may pro-
vide. 
Effective on and after January 1, 2006, an indi-
vidual who, upon first becoming eligible for benefits 
under 
part 
A 
at 
age 
65, 
enrolls 
in 
a 
MedicareAdvantage plan under this part, the indi-
vidual may discontinue the election of such plan, and 
elect coverage under the original fee-for-service plan, 
at any time during the 12-month period beginning 
on the effective date of such enrollment. 
‘‘(5) SPECIAL RULES FOR MSA PLANS.—Not-
withstanding the preceding provisions of this sub-
section, an individual—
‘‘(A) may elect an MSA plan only during—
‘‘(i) an initial open enrollment period 
described in paragraph (1);
230
‘‘(ii) an annual, coordinated election 
period described in paragraph (3)(B); or 
‘‘(iii) the month of November 1998; 
‘‘(B) subject to subparagraph (C), may not 
discontinue an election of an MSA plan except 
during the periods described in clause (ii) or 
(iii) of subparagraph (A) and under the first 
sentence of paragraph (4); and 
‘‘(C) who elects an MSA plan during an 
annual, coordinated election period, and who 
never previously had elected such a plan, may 
revoke such election, in a manner determined 
by the Secretary, by not later than December 
15 following the date of the election. 
‘‘(6) OPEN ENROLLMENT PERIODS.—Subject to 
paragraph (5), a MedicareAdvantage organization—
‘‘(A) shall accept elections or changes to 
elections during the initial enrollment periods 
described in paragraph (1), during the period 
beginning on November 15, 2005, and ending 
on December 31, 2005, and during the annual, 
coordinated election period under paragraph (3) 
for each subsequent year, and during special 
election periods described in the first sentence 
of paragraph (4); and
231
‘‘(B) may accept other changes to elections 
at such other times as the organization pro-
vides. 
‘‘(f) EFFECTIVENESS OF ELECTIONS AND CHANGES 
OF ELECTIONS.—
‘‘(1) DURING INITIAL COVERAGE ELECTION PE-
RIOD.—An election of coverage made during the ini-
tial coverage election period under subsection 
(e)(1)(A) shall take effect upon the date the indi-
vidual becomes entitled to (or enrolled for) benefits 
under part A, enrolled under part B, and enrolled 
under part D, except as the Secretary may provide 
(consistent with sections 1838 and 1860D–2)) in 
order to prevent retroactive coverage. 
‘‘(2) DURING CONTINUOUS OPEN ENROLLMENT 
PERIODS.—An election or change of coverage made 
under subsection (e)(2) shall take effect with the 
first day of the first calendar month following the 
date on which the election or change is made. 
‘‘(3) ANNUAL, COORDINATED
ELECTION
PE-
RIOD.—An election or change of coverage made dur-
ing an annual, coordinated election period (as de-
fined in subsection (e)(3)(B)) in a year shall take ef-
fect as of the first day of the following year.
232
‘‘(4) OTHER PERIODS.—An election or change 
of coverage made during any other period under 
subsection (e)(4) shall take effect in such manner as 
the Secretary provides in a manner consistent (to 
the extent practicable) with protecting continuity of 
health benefit coverage. 
‘‘(g) GUARANTEED ISSUE AND RENEWAL.—
‘‘(1) IN GENERAL.—Except as provided in this 
subsection, a MedicareAdvantage organization shall 
provide that at any time during which elections are 
accepted under this section with respect to a 
MedicareAdvantage plan offered by the organization, 
the organization will accept without restrictions indi-
viduals who are eligible to make such election. 
‘‘(2) PRIORITY.—If the Secretary determines 
that a MedicareAdvantage organization, in relation 
to a MedicareAdvantage plan it offers, has a capac-
ity limit and the number of MedicareAdvantage eli-
gible individuals who elect the plan under this sec-
tion exceeds the capacity limit, the organization may 
limit the election of individuals of the plan under 
this section but only if priority in election is pro-
vided—
233
‘‘(A) first to such individuals as have elect-
ed the plan at the time of the determination; 
and 
‘‘(B) then to other such individuals in such 
a manner that does not discriminate, on a basis 
described in section 1852(b), among the individ-
uals (who seek to elect the plan). 
The preceding sentence shall not apply if it would 
result in the enrollment of enrollees substantially 
nonrepresentative, as determined in accordance with 
regulations of the Secretary, of the medicare popu-
lation in the service area of the plan. 
‘‘(3) LIMITATION ON TERMINATION OF ELEC-
TION.—
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), a MedicareAdvantage organization 
may not for any reason terminate the election 
of any individual under this section for a 
MedicareAdvantage plan it offers. 
‘‘(B) BASIS FOR TERMINATION OF ELEC-
TION.—A MedicareAdvantage organization may 
terminate an individual’s election under this 
section with respect to a MedicareAdvantage 
plan it offers if—
234
‘‘(i) any MedicareAdvantage monthly 
basic 
beneficiary 
premium, 
MedicareAdvantage 
monthly 
beneficiary 
obligation for qualified prescription drug 
coverage, or MedicareAdvantage monthly 
beneficiary premium for required or op-
tional enhanced medical benefits required 
with respect to such plan are not paid on 
a timely basis (consistent with standards 
under section 1856 that provide for a 
grace period for late payment of such pre-
miums); 
‘‘(ii) the individual has engaged in 
disruptive behavior (as specified in such 
standards); or 
‘‘(iii) the plan is terminated with re-
spect to all individuals under this part in 
the area in which the individual resides. 
‘‘(C) CONSEQUENCE OF TERMINATION.—
‘‘(i) TERMINATIONS
FOR
CAUSE.—
Any individual whose election is terminated 
under clause (i) or (ii) of subparagraph 
(B) is deemed to have elected to receive 
benefits under the original medicare fee-
for-service program option.
235
‘‘(ii) TERMINATION BASED ON PLAN 
TERMINATION OR SERVICE AREA REDUC-
TION.—Any individual whose election is 
terminated under subparagraph (B)(iii) 
shall have a special election period under 
subsection (e)(4)(A) in which to change 
coverage 
to 
coverage 
under 
another 
MedicareAdvantage plan. Such an indi-
vidual who fails to make an election during 
such period is deemed to have chosen to 
change coverage to the original medicare 
fee-for-service program option.
‘‘(D) ORGANIZATION
OBLIGATION
WITH 
RESPECT TO ELECTION FORMS.—Pursuant to a 
contract 
under 
section 
1857858, 
each 
MedicareAdvantage organization receiving an 
election form under subsection (c)(2) shall 
transmit to the Secretary (at such time and in 
such manner as the Secretary may specify) a 
copy of such form or such other information re-
specting the election as the Secretary may 
specify. 
‘‘(h) APPROVAL OF MARKETING MATERIAL AND AP-
PLICATION FORMS.—
236
‘‘(1) SUBMISSION.—No marketing material or 
application 
form 
may 
be 
distributed 
by 
a 
MedicareAdvantage organization to (or for the use 
of) MedicareAdvantage eligible individuals unless—
‘‘(A) at least 45 days (or 10 days in the 
case described in paragraph (5)) before the date 
of distribution the organization has submitted 
the material or form to the Secretary for re-
view; and 
‘‘(B) the Secretary has not disapproved the 
distribution of such material or form. 
‘‘(2) 
REVIEW.—The 
standards 
established 
under section 1856 shall include guidelines for the 
review of any material or form submitted and under 
such guidelines the Secretary shall disapprove (or 
later require the correction of) such material or form 
if the material or form is materially inaccurate or 
misleading or otherwise makes a material misrepre-
sentation. 
‘‘(3) DEEMED APPROVAL (1-STOP SHOPPING).—
In the case of material or form that is submitted 
under paragraph (1)(A) to the Secretary or a re-
gional office of the Department of Health and 
Human Services and the Secretary or the office has 
not disapproved the distribution of marketing mate-
237
rial or form under paragraph (1)(B) with respect to 
a MedicareAdvantage plan in an area, the Secretary 
is deemed not to have disapproved such distribution 
in all other areas covered by the plan and organiza-
tion except with regard to that portion of such mate-
rial or form that is specific only to an area involved. 
‘‘(4) PROHIBITION
OF
CERTAIN
MARKETING 
PRACTICES.—Each MedicareAdvantage organization 
shall conform to fair marketing standards, in rela-
tion to MedicareAdvantage plans offered under this 
part, included in the standards established under 
section 1856. Such standards—
‘‘(A) shall not permit a MedicareAdvantage 
organization to provide for cash or other mone-
tary rebates as an inducement for enrollment or 
otherwise (other than as an additional benefit 
described in section 1854(g)(1)(C)(i)); and 
‘‘(B) may include a prohibition against a 
MedicareAdvantage organization (or agent of 
such an organization) completing any portion of 
any election form used to carry out elections 
under this section on behalf of any individual. 
‘‘(5) SPECIAL TREATMENT OF MARKETING MA-
TERIAL
FOLLOWING
MODEL
MARKETING
LAN-
GUAGE.—In the case of marketing material of an or-
238
ganization that uses, without modification, proposed 
model language specified by the Secretary, the pe-
riod specified in paragraph (1)(A) shall be reduced 
from 45 days to 10 days. 
‘‘(i) 
EFFECT
OF
ELECTION
OF 
MEDICAREADVANTAGE PLAN OPTION.—
‘‘(1) PAYMENTS TO ORGANIZATIONS.—Subject 
to 
sections 
1852(a)(5), 
1853(h), 
1853(i), 
1886(d)(11), and 1886(h)(3)(D), payments under a 
contract with a MedicareAdvantage organization 
under section 1853(a) with respect to an individual 
electing a MedicareAdvantage plan offered by the or-
ganization shall be instead of the amounts which (in 
the absence of the contract) would otherwise be pay-
able under parts A, B, and D for items and services 
furnished to the individual. 
‘‘(2) ONLY ORGANIZATION ENTITLED TO PAY-
MENT.—Subject 
to 
sections 
1853(f), 
1853(h), 
1853(i), 
1857(f)(2), 
1886(d)(11), 
and 
1886(h)(3)(D), only the MedicareAdvantage organi-
zation shall be entitled to receive payments from the 
Secretary under this title for services furnished to 
the individual.’’.
239
SEC. 202. BENEFITS AND BENEFICIARY PROTECTIONS. 
Section 1852 (42 U.S.C. 1395w–22) is amended to 
read as follows: 
‘‘BENEFITS AND BENEFICIARY PROTECTIONS 
‘‘SEC. 1852. (a) BASIC BENEFITS.—
‘‘(1) IN GENERAL.—Except as provided in sec-
tion 
1859(b)(3) 
for 
MSA 
plans, 
each 
MedicareAdvantage plan shall provide to members 
enrolled under this part, through providers and 
other persons that meet the applicable requirements 
of this title and part A of title XI—
‘‘(A) those items and services (other than 
hospice care) for which benefits are available 
under parts A and B to individuals residing in 
the area served by the plan; 
‘‘(B) except as provided in paragraph 
(2)(D), qualified prescription drug coverage 
under part D to individuals residing in the area 
served by the plan; 
‘‘(C) a maximum limitation on out-of-pock-
et expenses and a unified deductible; and 
‘‘(D) additional benefits required under 
section 1854(d)(1). 
‘‘(2) SATISFACTION OF REQUIREMENT.—
‘‘(A) IN GENERAL.—A MedicareAdvantage 
plan (other than an MSA plan) offered by a
240
MedicareAdvantage organization satisfies para-
graph (1)(A), with respect to benefits for items 
and services furnished other than through a 
provider or other person that has a contract 
with the organization offering the plan, if the 
plan provides payment in an amount so that—
‘‘(i) the sum of such payment amount 
and any cost-sharing provided for under 
the plan; is equal to at least 
‘‘(ii) the total dollar amount of pay-
ment for such items and services as would 
otherwise be authorized under parts A and 
B (including any balance billing permitted 
under such parts). 
‘‘(B) REFERENCE
TO
RELATED
PROVI-
SIONS.—For provisions relating to—
‘‘(i) limitations on balance billing 
against MedicareAdvantage organizations 
for noncontract providers, see sections 
1852(k) and 1866(a)(1)(O); and 
‘‘(ii) limiting actuarial value of en-
rollee liability for covered benefits, see sec-
tion 1854(f). 
‘‘(C) ELECTION
OF
UNIFORM
COVERAGE 
POLICY.—In the case of a MedicareAdvantage
241
organization that offers a MedicareAdvantage 
plan in an area in which more than 1 local cov-
erage policy is applied with respect to different 
parts of the area, the organization may elect to 
have the local coverage policy for the part of 
the 
area 
that 
is 
most 
beneficial 
to 
MedicareAdvantage enrollees (as identified by 
the Secretary) apply with respect to all 
MedicareAdvantage enrollees enrolled in the 
plan. 
‘‘(D) SPECIAL
RULE
FOR
PRIVATE
FEE-
FOR-SERVICE PLANS.—
‘‘(i) IN GENERAL.—A private fee-for-
service plan may elect not to provide quali-
fied prescription drug coverage under part 
D to individuals residing in the area served 
by the plan. 
‘‘(ii) AVAILABILITY
OF
DRUG
COV-
ERAGE FOR ENROLLEES.—If a beneficiary 
enrolls in a plan making the election de-
scribed in clause (i), the beneficiary may 
enroll for drug coverage under part D with 
an eligible entity under such part. 
‘‘(3) ENHANCED MEDICAL BENEFITS.—
242
‘‘(A) BENEFITS
INCLUDED
SUBJECT
TO 
SECRETARY’S
APPROVAL.—Each 
MedicareAdvantage organization may provide to 
individuals enrolled under this part, other than 
under an MSA plan (without affording those in-
dividuals an option to decline the coverage), en-
hanced medical benefits that the Secretary may 
approve. The Secretary shall approve any such 
enhanced medical benefits unless the Secretary 
determines that including such enhanced med-
ical benefits would substantially discourage en-
rollment by MedicareAdvantage eligible individ-
uals with the organization. 
‘‘(B) 
AT
ENROLLEES’ 
OPTION.—A 
MedicareAdvantage organization may not pro-
vide, under an MSA plan, enhanced medical 
benefits that cover the deductible described in 
section 1859(b)(2)(B). In applying the previous 
sentence, health benefits described in section 
1882(u)(2)(B) shall not be treated as covering 
such deductible. 
‘‘(C) 
APPLICATION
TO 
MEDICAREADVANTAGE PRIVATE FEE-FOR-SERV-
ICE PLANS.—Nothing in this paragraph shall be 
construed as preventing a MedicareAdvantage
243
private fee-for-service plan from offering en-
hanced medical benefits that include payment 
for some or all of the balance billing amounts 
permitted consistent with section 1852(k) and 
coverage of additional services that the plan 
finds to be medically necessary. 
‘‘(D) RULE FOR APPROVAL OF MEDICAL 
AND PRESCRIPTION DRUG BENEFITS.—Notwith-
standing the preceding provisions of this para-
graph, the Secretary may not approve any en-
hanced medical benefit that provides for the 
coverage of any prescription drug (other than 
that relating to prescription drugs covered 
under the original medicare fee-for-service pro-
gram option). 
‘‘(4) ORGANIZATION AS SECONDARY PAYER.—
Notwithstanding any other provision of law, a 
MedicareAdvantage organization may (in the case of 
the provision of items and services to an individual 
under 
a 
MedicareAdvantage 
plan 
under 
cir-
cumstances in which payment under this title is 
made secondary pursuant to section 1862(b)(2)) 
charge or authorize the provider of such services to 
charge, in accordance with the charges allowed
244
under a law, plan, or policy described in such sec-
tion—
‘‘(A) the insurance carrier, employer, or 
other entity which under such law, plan, or pol-
icy is to pay for the provision of such services; 
or 
‘‘(B) such individual to the extent that the 
individual has been paid under such law, plan, 
or policy for such services. 
‘‘(5) NATIONAL
COVERAGE
DETERMINATIONS 
AND LEGISLATIVE CHANGES IN BENEFITS.—If there 
is a national coverage determination or legislative 
change in benefits required to be provided under this 
part made in the period beginning on the date of an 
announcement under section 1853(b) and ending on 
the date of the next announcement under such sec-
tion and the Secretary projects that the determina-
tion will result in a significant change in the costs 
to a MedicareAdvantage organization of providing 
the benefits that are the subject of such national 
coverage determination and that such change in 
costs was not incorporated in the determination of 
the benchmark amount announced under section 
1853(b)(1)(A) at the beginning of such period, then, 
unless otherwise required by law—
245
‘‘(A) such determination or legislative 
change in benefits shall not apply to contracts 
under this part until the first contract year that 
begins after the end of such period; and 
‘‘(B) if such coverage determination or leg-
islative change provides for coverage of addi-
tional benefits or coverage under additional cir-
cumstances, section 1851(i)(1) shall not apply 
to payment for such additional benefits or bene-
fits 
provided 
under 
such 
additional 
cir-
cumstances until the first contract year that be-
gins after the end of such period. 
The projection under the previous sentence shall be 
based on an analysis by the Secretary of the actu-
arial costs associated with the coverage determina-
tion or legislative change in benefits. 
‘‘(6) AUTHORITY
TO
PROHIBIT
RISK
SELEC-
TION.—The Secretary shall have the authority to 
disapprove any MedicareAdvantage plan that the 
Secretary determines is designed to attract a popu-
lation that is healthier than the average population 
residing in the service area of the plan. 
‘‘(7) UNIFIED DEDUCTIBLE DEFINED.—In this 
part, the term ‘unified deductible’ means an annual 
deductible amount that is applied in lieu of the inpa-
246
tient hospital deductible under section 1813(b)(1) 
and the deductible under section 1833(b). Nothing 
in this part shall be construed as preventing a 
MedicareAdvantage organization from requiring co-
insurance or a copayment for inpatient hospital serv-
ices after the unified deductible is satisfied, subject 
to the limitation on enrollee liability under section 
1854(f). 
‘‘(b) ANTIDISCRIMINATION.—
‘‘(1) BENEFICIARIES.—
‘‘(A) IN GENERAL.—A MedicareAdvantage 
organization may not deny, limit, or condition 
the coverage or provision of benefits under this 
part, for individuals permitted to be enrolled 
with the organization under this part, based on 
any health status-related factor described in 
section 2702(a)(1) of the Public Health Service 
Act. 
‘‘(B) CONSTRUCTION.—Except as provided 
under section 1851(a)(3)(B), subparagraph (A) 
shall 
not 
be 
construed 
as 
requiring 
a 
MedicareAdvantage organization to enroll indi-
viduals who are determined to have end-stage 
renal disease.
247
‘‘(2) PROVIDERS.—A MedicareAdvantage orga-
nization shall not discriminate with respect to par-
ticipation, reimbursement, or indemnification as to 
any provider who is acting within the scope of the 
provider’s license or certification under applicable 
State law, solely on the basis of such license or cer-
tification. This paragraph shall not be construed to 
prohibit a plan from including providers only to the 
extent necessary to meet the needs of the plan’s en-
rollees or from establishing any measure designed to 
maintain quality and control costs consistent with 
the responsibilities of the plan. 
‘‘(c) DISCLOSURE REQUIREMENTS.—
‘‘(1) DETAILED DESCRIPTION OF PLAN PROVI-
SIONS.—A MedicareAdvantage organization shall 
disclose, in clear, accurate, and standardized form to 
each enrollee with a MedicareAdvantage plan offered 
by the organization under this part at the time of 
enrollment and at least annually thereafter, the fol-
lowing information regarding such plan: 
‘‘(A) SERVICE AREA.—The plan’s service 
area. 
‘‘(B) BENEFITS.—Benefits offered under 
the plan, including information described sec-
tion 1852(a)(1) (relating to benefits under the
248
original medicare fee-for-service program op-
tion, the maximum limitation in out-of-pocket 
expenses and the unified deductible, and quali-
fied prescription drug coverage under part D, 
respectively) and exclusions from coverage and, 
if it is an MSA plan, a comparison of benefits 
under such a plan with benefits under other 
MedicareAdvantage plans. 
‘‘(C) ACCESS.—The number, mix, and dis-
tribution of plan providers, out-of-network cov-
erage (if any) provided by the plan, and any 
point-of-service 
option 
(including 
the 
MedicareAdvantage monthly beneficiary pre-
mium for enhanced medical benefits for such 
option). 
‘‘(D) OUT-OF-AREA
COVERAGE.—Out-of-
area coverage provided by the plan. 
‘‘(E) EMERGENCY
COVERAGE.—Coverage 
of emergency services, including—
‘‘(i) the appropriate use of emergency 
services, including use of the 911 telephone 
system or its local equivalent in emergency 
situations and an explanation of what con-
stitutes an emergency situation;
249
‘‘(ii) the process and procedures of the 
plan for obtaining emergency services; and 
‘‘(iii) the locations of—
‘‘(I) emergency departments; and
‘‘(II) other settings, in which 
plan physicians and hospitals provide 
emergency services and post-stabiliza-
tion care. 
‘‘(F) ENHANCED
MEDICAL
BENEFITS.—
Enhanced medical benefits available from the 
organization offering the plan, including—
‘‘(i) whether the enhanced medical 
benefits are optional; 
‘‘(ii) the enhanced medical benefits 
covered; and 
‘‘(iii) the MedicareAdvantage monthly 
beneficiary premium for enhanced medical 
benefits. 
‘‘(G) PRIOR
AUTHORIZATION
RULES.—
Rules regarding prior authorization or other re-
view requirements that could result in non-
payment.
‘‘(H) PLAN GRIEVANCE AND APPEALS PRO-
CEDURES.—All plan appeal or grievance rights 
and procedures.
250
‘‘(I) QUALITY
ASSURANCE
PROGRAM.—A 
description of the organization’s quality assur-
ance program under subsection (e). 
‘‘(2) DISCLOSURE UPON REQUEST.—Upon re-
quest of a MedicareAdvantage eligible individual, a 
MedicareAdvantage organization must provide the 
following information to such individual: 
‘‘(A) The general coverage information and 
general comparative plan information made 
available under clauses (i) and (ii) of section 
1851(d)(2)(A). 
‘‘(B) Information on procedures used by 
the organization to control utilization of serv-
ices and expenditures. 
‘‘(C) Information on the number of griev-
ances, reconsiderations, and appeals and on the 
disposition in the aggregate of such matters. 
‘‘(D) An overall summary description as to 
the method of compensation of participating 
physicians. 
‘‘(E) The information described in sub-
paragraphs (A) through (C) in relation to the 
qualified prescription drug coverage provided by 
the organization. 
‘‘(d) ACCESS TO SERVICES.—
251
‘‘(1) IN GENERAL.—A MedicareAdvantage or-
ganization offering a MedicareAdvantage plan may 
select the providers from whom the benefits under 
the plan are provided so long as—
‘‘(A) the organization makes such benefits 
available and accessible to each individual elect-
ing the plan within the plan service area with 
reasonable promptness and in a manner which 
assures continuity in the provision of benefits; 
‘‘(B) when medically necessary the organi-
zation makes such benefits available and acces-
sible 24 hours a day and 7 days a week; 
‘‘(C) the plan provides for reimbursement 
with respect to services which are covered under 
subparagraphs (A) and (B) and which are pro-
vided to such an individual other than through 
the organization, if—
‘‘(i) the services were not emergency 
services (as defined in paragraph (3)), 
but—
‘‘(I) the services were medically 
necessary and immediately required 
because of an unforeseen illness, in-
jury, or condition; and
252
‘‘(II) it was not reasonable given 
the circumstances to obtain the serv-
ices through the organization; 
‘‘(ii) the services were renal dialysis 
services and were provided other than 
through the organization because the indi-
vidual was temporarily out of the plan’s 
service area; or 
‘‘(iii) the services are maintenance 
care or post-stabilization care covered 
under the guidelines established under 
paragraph (2);
‘‘(D) the organization provides access to 
appropriate providers, including credentialed 
specialists, for medically necessary treatment 
and services; and 
‘‘(E) coverage is provided for emergency 
services (as defined in paragraph (3)) without 
regard to prior authorization or the emergency 
care provider’s contractual relationship with the 
organization. 
‘‘(2) GUIDELINES RESPECTING COORDINATION 
OF
POST-STABILIZATION
CARE.—A 
MedicareAdvantage plan shall comply with such 
guidelines as the Secretary may prescribe relating to
253
promoting efficient and timely coordination of appro-
priate maintenance and post-stabilization care of an 
enrollee after the enrollee has been determined to be 
stable under section 1867. 
‘‘(3) DEFINITION OF EMERGENCY SERVICES.—
In this subsection—
‘‘(A) IN GENERAL.—The term ‘emergency 
services’ means, with respect to an individual 
enrolled with an organization, covered inpatient 
and outpatient services that—
‘‘(i) are furnished by a provider that 
is qualified to furnish such services under 
this title; and 
‘‘(ii) are needed to evaluate or sta-
bilize an emergency medical condition (as 
defined in subparagraph (B)). 
‘‘(B) EMERGENCY
MEDICAL
CONDITION 
BASED
ON
PRUDENT
LAYPERSON.—The term 
‘emergency medical condition’ means a medical 
condition manifesting itself by acute symptoms 
of sufficient severity (including severe pain) 
such that a prudent layperson, who possesses 
an average knowledge of health and medicine, 
could reasonably expect the absence of imme-
diate medical attention to result in—
254
‘‘(i) placing the health of the indi-
vidual (or, with respect to a pregnant 
woman, the health of the woman or her 
unborn child) in serious jeopardy; 
‘‘(ii) serious impairment to bodily 
functions; or 
‘‘(iii) serious dysfunction of any bodily 
organ or part. 
‘‘(4) ASSURING ACCESS TO SERVICES IN 
MEDICAREADVANTAGE PRIVATE FEE-FOR-SERV-
ICE PLANS.—In addition to any other require-
ments under this part, in the case of a 
MedicareAdvantage private fee-for-service plan, 
the organization offering the plan must dem-
onstrate to the Secretary that the organization 
has sufficient number and range of health care 
professionals and providers willing to provide 
services under the terms of the plan. The Sec-
retary shall find that an organization has met 
such requirement with respect to any category 
of health care professional or provider if, with 
respect to that category of provider—
‘‘(A) the plan has established payment 
rates for covered services furnished by that 
category of provider that are not less than
255
the payment rates provided for under part 
A, B, or D for such services; or 
‘‘(B) the plan has contracts or agree-
ments with a sufficient number and range 
of providers within such category to pro-
vide covered services under the terms of 
the plan, 
or a combination of both. The previous sentence 
shall not be construed as restricting the persons 
from whom enrollees under such a plan may ob-
tain covered benefits. 
‘‘(e) QUALITY ASSURANCE PROGRAM.—
‘‘(1) IN
GENERAL.—Each MedicareAdvantage 
organization must have arrangements, consistent 
with any regulation, for an ongoing quality assur-
ance program for health care services it provides to 
individuals enrolled with MedicareAdvantage plans 
of the organization. 
‘‘(2) ELEMENTS OF PROGRAM.—
‘‘(A) IN GENERAL.—The quality assurance 
program of an organization with respect to a
MedicareAdvantage 
plan 
(other 
than 
a 
MedicareAdvantage private fee-for-service plan 
or a nonnetwork MSA plan) it offers shall—
256
‘‘(i) stress health outcomes and pro-
vide for the collection, analysis, and report-
ing of data (in accordance with a quality 
measurement system that the Secretary 
recognizes) that will permit measurement 
of outcomes and other indices of the qual-
ity of MedicareAdvantage plans and orga-
nizations; 
‘‘(ii) monitor and evaluate high vol-
ume and high risk services and the care of 
acute and chronic conditions; 
‘‘(iii) provide access to disease man-
agement and chronic care services; 
‘‘(iv) provide access to preventive ben-
efits and information for enrollees on such 
benefits; 
‘‘(v) evaluate the continuity and co-
ordination of care that enrollees receive; 
‘‘(vi) be evaluated on an ongoing basis 
as to its effectiveness; 
‘‘(vii) include measures of consumer 
satisfaction; 
‘‘(viii) provide the Secretary with such 
access to information collected as may be
257
appropriate to monitor and ensure the 
quality of care provided under this part; 
‘‘(ix) provide review by physicians and 
other health care professionals of the proc-
ess followed in the provision of such health 
care services; 
‘‘(x) provide for the establishment of 
written protocols for utilization review, 
based on current standards of medical 
practice; 
‘‘(xi) have mechanisms to detect both 
underutilization and overutilization of serv-
ices; 
‘‘(xii) after identifying areas for im-
provement, establish or alter practice pa-
rameters; 
‘‘(xiii) take action to improve quality 
and assesses the effectiveness of such ac-
tion through systematic followup; and 
‘‘(xiv) make available information on 
quality and outcomes measures to facilitate 
beneficiary comparison and choice of 
health coverage options (in such form and 
on such quality and outcomes measures as
258
the Secretary determines to be appro-
priate). 
Such program shall include a separate focus 
(with respect to all the elements described in 
this subparagraph) on racial and ethnic minori-
ties. 
‘‘(B) ELEMENTS OF PROGRAM FOR ORGA-
NIZATIONS
OFFERING
MEDICAREADVANTAGE 
PRIVATE FEE-FOR-SERVICE PLANS, AND NON-
NETWORK MSA PLANS.—The quality assurance 
program of an organization with respect to a 
MedicareAdvantage private fee-for-service plan 
or a nonnetwork MSA plan it offers shall—
‘‘(i) meet the requirements of clauses 
(i) through (viii) of subparagraph (A); 
‘‘(ii) insofar as it provides for the es-
tablishment of written protocols for utiliza-
tion review, base such protocols on current 
standards of medical practice; and 
‘‘(iii) have mechanisms to evaluate 
utilization of services and inform providers 
and enrollees of the results of such evalua-
tion. 
Such program shall include a separate focus 
(with respect to all the elements described in
259
this subparagraph) on racial and ethnic minori-
ties.
‘‘(C) DEFINITION OF NONNETWORK MSA 
PLAN.—In this subsection, the term ‘nonnet-
work MSA plan’ means an MSA plan offered by 
a MedicareAdvantage organization that does 
not provide benefits required to be provided by 
this part, in whole or in part, through a defined 
set of providers under contract, or under an-
other arrangement, with the organization.
‘‘(3) EXTERNAL REVIEW.—
‘‘(A) IN GENERAL.—Each MedicareAdvan-
tage 
organization 
shall, 
for 
each 
MedicareAdvantage plan it operates, have an 
agreement with an independent quality review 
and improvement organization approved by the 
Secretary to perform functions of the type de-
scribed in paragraphs (4)(B) and (14) of sec-
tion 1154(a) with respect to services furnished 
by MedicareAdvantage plans for which payment 
is made under this title. The previous sentence 
shall not apply to a MedicareAdvantage private 
fee-for-service plan or a nonnetwork MSA plan 
that does not employ utilization review.
260
‘‘(B) NONDUPLICATION
OF
ACCREDITA-
TION.—Except in the case of the review of qual-
ity complaints, and consistent with subpara-
graph (C), the Secretary shall ensure that the 
external review activities conducted under sub-
paragraph (A) are not duplicative of review ac-
tivities conducted as part of the accreditation 
process. 
‘‘(C) WAIVER AUTHORITY.—The Secretary 
may waive the requirement described in sub-
paragraph (A) in the case of an organization if 
the Secretary determines that the organization 
has consistently maintained an excellent record 
of quality assurance and compliance with other 
requirements under this part. 
‘‘(4) TREATMENT OF ACCREDITATION.—
‘‘(A) IN
GENERAL.—The Secretary shall 
provide that a MedicareAdvantage organization 
is deemed to meet all the requirements de-
scribed in any specific clause of subparagraph 
(B) if the organization is accredited (and peri-
odically reaccredited) by a private accrediting 
organization under a process that the Secretary 
has determined assures that the accrediting or-
ganization applies and enforces standards that
261
meet or exceed the standards established under 
section 1856 to carry out the requirements in 
such clause. 
‘‘(B) REQUIREMENTS
DESCRIBED.—The 
provisions described in this subparagraph are 
the following: 
‘‘(i) Paragraphs (1) and (2) of this 
subsection (relating to quality assurance 
programs). 
‘‘(ii) Subsection (b) (relating to anti-
discrimination). 
‘‘(iii) Subsection (d) (relating to ac-
cess to services). 
‘‘(iv) Subsection (h) (relating to con-
fidentiality 
and 
accuracy 
of 
enrollee 
records). 
‘‘(v) Subsection (i) (relating to infor-
mation on advance directives). 
‘‘(vi) Subsection (j) (relating to pro-
vider participation rules). 
‘‘(C) TIMELY ACTION ON APPLICATIONS.—
The Secretary shall determine, within 210 days 
after the date the Secretary receives an applica-
tion by a private accrediting organization and 
using 
the 
criteria 
specified 
in 
section
262
1865(b)(2), whether the process of the private 
accrediting organization meets the requirements 
with respect to any specific clause in subpara-
graph (B) with respect to which the application 
is made. The Secretary may not deny such an 
application on the basis that it seeks to meet 
the requirements with respect to only one, or 
more than one, such specific clause. 
‘‘(D) CONSTRUCTION.—Nothing in this 
paragraph shall be construed as limiting the au-
thority of the Secretary under section 1857, in-
cluding the authority to terminate contracts 
with MedicareAdvantage organizations under 
subsection (c)(2) of such section. 
‘‘(5) REPORT TO CONGRESS.—
‘‘(A) IN
GENERAL.—The Secretary shall 
submit to Congress a biennial report regarding 
how quality assurance programs conducted 
under this subsection focus on racial and ethnic 
minorities. 
‘‘(B) CONTENTS OF REPORT.—Each such 
report shall include the following:
‘‘(i) A description of the means by 
which such programs focus on such racial 
and ethnic minorities.
263
‘‘(ii) An evaluation of the impact of 
such programs on eliminating health dis-
parities and on improving health outcomes, 
continuity and coordination of care, man-
agement of chronic conditions, and con-
sumer satisfaction. 
‘‘(iii) Recommendations on ways to re-
duce clinical outcome disparities among ra-
cial and ethnic minorities. 
‘‘(f) 
GRIEVANCE
MECHANISM.—Each 
MedicareAdvantage organization must provide meaningful 
procedures for hearing and resolving grievances between 
the organization (including any entity or individual 
through which the organization provides health care serv-
ices) and enrollees with MedicareAdvantage plans of the 
organization under this part. 
‘‘(g) COVERAGE DETERMINATIONS, RECONSIDER-
ATIONS, AND APPEALS.—
‘‘(1) DETERMINATIONS BY ORGANIZATION.—
‘‘(A) IN GENERAL.—A MedicareAdvantage 
organization shall have a procedure for making 
determinations regarding whether an individual 
enrolled with the plan of the organization under 
this part is entitled to receive a health service 
under this section and the amount (if any) that
264
the individual is required to pay with respect to 
such service. Subject to paragraph (3), such 
procedures shall provide for such determination 
to be made on a timely basis. 
‘‘(B) 
EXPLANATION
OF
DETERMINA-
TION.—Such a determination that denies cov-
erage, in whole or in part, shall be in writing 
and shall include a statement in understandable 
language of the reasons for the denial and a de-
scription of the reconsideration and appeals 
processes. 
‘‘(2) RECONSIDERATIONS.—
‘‘(A) IN GENERAL.—The organization shall 
provide for reconsideration of a determination 
described in paragraph (1)(B) upon request by 
the enrollee involved. The reconsideration shall 
be within a time period specified by the Sec-
retary, but shall be made, subject to paragraph 
(3), not later than 60 days after the date of the 
receipt of the request for reconsideration. 
‘‘(B) PHYSICIAN
DECISION
ON
CERTAIN 
RECONSIDERATIONS.—A reconsideration relat-
ing to a determination to deny coverage based 
on a lack of medical necessity shall be made 
only by a physician with appropriate expertise
265
in the field of medicine which necessitates treat-
ment who is other than a physician involved in 
the initial determination.
‘‘(3) EXPEDITED
DETERMINATIONS
AND
RE-
CONSIDERATIONS.—
‘‘(A) RECEIPT OF REQUESTS.—
‘‘(i) ENROLLEE
REQUESTS.—An en-
rollee in a MedicareAdvantage plan may 
request, either in writing or orally, an ex-
pedited determination under paragraph (1) 
or an expedited reconsideration under 
paragraph (2) by the MedicareAdvantage 
organization. 
‘‘(ii) PHYSICIAN REQUESTS.—A physi-
cian, regardless whether the physician is 
affiliated with the organization or not, may 
request, either in writing or orally, such an 
expedited determination or reconsideration. 
‘‘(B) ORGANIZATION PROCEDURES.—
‘‘(i) 
IN
GENERAL.—The 
MedicareAdvantage 
organization 
shall 
maintain procedures for expediting organi-
zation determinations and reconsiderations 
when, upon request of an enrollee, the or-
ganization determines that the application
266
of the normal timeframe for making a de-
termination (or a reconsideration involving 
a determination) could seriously jeopardize 
the life or health of the enrollee or the en-
rollee’s ability to regain maximum func-
tion. 
‘‘(ii) EXPEDITION
REQUIRED
FOR 
PHYSICIAN REQUESTS.—In the case of a 
request for an expedited determination or 
reconsideration made under subparagraph 
(A)(ii), the organization shall expedite the 
determination or reconsideration if the re-
quest indicates that the application of the 
normal timeframe for making a determina-
tion (or a reconsideration involving a de-
termination) could seriously jeopardize the 
life or health of the enrollee or the enroll-
ee’s ability to regain maximum function. 
‘‘(iii) TIMELY
RESPONSE.—In cases 
described in clauses (i) and (ii), the organi-
zation shall notify the enrollee (and the 
physician involved, as appropriate) of the 
determination or reconsideration under 
time limitations established by the Sec-
retary, but not later than 72 hours of the
267
time of receipt of the request for the deter-
mination or reconsideration (or receipt of 
the information necessary to make the de-
termination or reconsideration), or such 
longer period as the Secretary may permit 
in specified cases. 
‘‘(4) INDEPENDENT REVIEW OF CERTAIN COV-
ERAGE DENIALS.—The Secretary shall contract with 
an independent, outside entity to review and resolve 
in a timely manner reconsiderations that affirm de-
nial of coverage, in whole or in part. The provisions 
of section 1869(c)(5) shall apply to independent out-
side entities under contract with the Secretary under 
this paragraph. 
‘‘(5) 
APPEALS.—An 
enrollee 
with 
a 
MedicareAdvantage plan of a MedicareAdvantage or-
ganization under this part who is dissatisfied by rea-
son of the enrollee’s failure to receive any health 
service to which the enrollee believes the enrollee is 
entitled and at no greater charge than the enrollee 
believes the enrollee is required to pay is entitled, if 
the amount in controversy is $100 or more, to a 
hearing before the Secretary to the same extent as 
is provided in section 205(b), and in any such hear-
ing the Secretary shall make the organization a
268
party. If the amount in controversy is $1,000 or 
more, the individual or organization shall, upon noti-
fying the other party, be entitled to judicial review 
of the Secretary’s final decision as provided in sec-
tion 205(g), and both the individual and the organi-
zation shall be entitled to be parties to that judicial 
review. In applying subsections (b) and (g) of section 
205 as provided in this paragraph, and in applying 
section 205(l) thereto, any reference therein to the 
Commissioner of Social Security or the Social Secu-
rity Administration shall be considered a reference 
to the Secretary or the Department of Health and 
Human Services, respectively. 
‘‘(h) CONFIDENTIALITY
AND ACCURACY
OF EN-
ROLLEE RECORDS.—Insofar as a MedicareAdvantage or-
ganization maintains medical records or other health in-
formation regarding enrollees under this part, the 
MedicareAdvantage organization shall establish proce-
dures—
‘‘(1) to safeguard the privacy of any individ-
ually identifiable enrollee information; 
‘‘(2) to maintain such records and information 
in a manner that is accurate and timely; and 
‘‘(3) to assure timely access of enrollees to such 
records and information.
269
‘‘(i) INFORMATION ON ADVANCE DIRECTIVES.—Each 
MedicareAdvantage organization shall meet the require-
ment of section 1866(f) (relating to maintaining written 
policies and procedures respecting advance directives). 
‘‘(j) RULES
REGARDING
PROVIDER
PARTICIPA-
TION.—
‘‘(1) 
PROCEDURES.—Insofar 
as 
a 
MedicareAdvantage 
organization 
offers 
benefits 
under a MedicareAdvantage plan through agree-
ments with physicians, the organization shall estab-
lish reasonable procedures relating to the participa-
tion (under an agreement between a physician and 
the organization) of physicians under such a plan. 
Such procedures shall include—
‘‘(A) providing notice of the rules regard-
ing participation; 
‘‘(B) providing written notice of participa-
tion decisions that are adverse to physicians; 
and 
‘‘(C) providing a process within the organi-
zation for appealing such adverse decisions, in-
cluding the presentation of information and 
views of the physician regarding such decision. 
‘‘(2) CONSULTATION IN MEDICAL POLICIES.—A 
MedicareAdvantage organization shall consult with
270
physicians who have entered into participation 
agreements with the organization regarding the or-
ganization’s medical policy, quality, and medical 
management procedures. 
‘‘(3) PROHIBITING INTERFERENCE WITH PRO-
VIDER ADVICE TO ENROLLEES.—
‘‘(A) IN
GENERAL.—Subject to subpara-
graphs (B) and (C), a MedicareAdvantage orga-
nization (in relation to an individual enrolled 
under a MedicareAdvantage plan offered by the 
organization under this part) shall not prohibit 
or otherwise restrict a covered health care pro-
fessional (as defined in subparagraph (D)) from 
advising such an individual who is a patient of 
the professional about the health status of the 
individual or medical care or treatment for the 
individual’s condition or disease, regardless of 
whether benefits for such care or treatment are 
provided under the plan, if the professional is 
acting within the lawful scope of practice. 
‘‘(B) 
CONSCIENCE
PROTECTION.—Sub-
paragraph (A) shall not be construed as requir-
ing a MedicareAdvantage plan to provide, reim-
burse for, or provide coverage of a counseling or
271
referral service if the MedicareAdvantage orga-
nization offering the plan—
‘‘(i) objects to the provision of such 
service on moral or religious grounds; and 
‘‘(ii) in the manner and through the 
written 
instrumentalities 
such 
MedicareAdvantage organization deems ap-
propriate, makes available information on 
its policies regarding such service to pro-
spective enrollees before or during enroll-
ment and to enrollees within 90 days after 
the date that the organization or plan 
adopts a change in policy regarding such a 
counseling or referral service. 
‘‘(C) CONSTRUCTION.—Nothing in sub-
paragraph (B) shall be construed to affect dis-
closure requirements under State law or under 
the Employee Retirement Income Security Act 
of 1974. 
‘‘(D) HEALTH
CARE
PROFESSIONAL
DE-
FINED.—For purposes of this paragraph, the 
term ‘health care professional’ means a physi-
cian (as defined in section 1861(r)) or other 
health care professional if coverage for the pro-
fessional’s services is provided under the
272
MedicareAdvantage plan for the services of the 
professional. Such term includes a podiatrist, 
optometrist, chiropractor, psychologist, dentist, 
licensed pharmacist, physician assistant, phys-
ical or occupational therapist and therapy as-
sistant, speech-language pathologist, audiol-
ogist, registered or licensed practical nurse (in-
cluding nurse practitioner, clinical nurse spe-
cialist, certified registered nurse anesthetist, 
and certified nurse-midwife), licensed certified 
social worker, registered respiratory therapist, 
and certified respiratory therapy technician. 
‘‘(4) LIMITATIONS
ON
PHYSICIAN
INCENTIVE 
PLANS.—
‘‘(A) IN
GENERAL.—No MedicareAdvan-
tage organization may operate any physician in-
centive plan (as defined in subparagraph (B)) 
unless the following requirements are met: 
‘‘(i) No specific payment is made di-
rectly or indirectly under the plan to a 
physician or physician group as an induce-
ment to reduce or limit medically necessary 
services provided with respect to a specific 
individual enrolled with the organization.
273
‘‘(ii) If the plan places a physician or 
physician group at substantial financial 
risk (as determined by the Secretary) for 
services not provided by the physician or 
physician group, the organization—
‘‘(I) provides stop-loss protection 
for the physician or group that is ade-
quate and appropriate, based on 
standards developed by the Secretary 
that take into account the number of 
physicians placed at such substantial 
financial risk in the group or under 
the plan and the number of individ-
uals enrolled with the organization 
who receive services from the physi-
cian or group; and 
‘‘(II) conducts periodic surveys of 
both individuals enrolled and individ-
uals previously enrolled with the orga-
nization to determine the degree of 
access of such individuals to services 
provided by the organization and sat-
isfaction with the quality of such serv-
ices.
274
‘‘(iii) The organization provides the 
Secretary with descriptive information re-
garding the plan, sufficient to permit the 
Secretary to determine whether the plan is 
in compliance with the requirements of this 
subparagraph. 
‘‘(B) PHYSICIAN
INCENTIVE
PLAN
DE-
FINED.—In this paragraph, the term ‘physician 
incentive plan’ means any compensation ar-
rangement between a MedicareAdvantage orga-
nization and a physician or physician group 
that may directly or indirectly have the effect of 
reducing or limiting services provided with re-
spect to individuals enrolled with the organiza-
tion under this part. 
‘‘(5) LIMITATION ON PROVIDER INDEMNIFICA-
TION.—A MedicareAdvantage organization may not 
provide (directly or indirectly) for a health care pro-
fessional, provider of services, or other entity pro-
viding health care services (or group of such profes-
sionals, providers, or entities) to indemnify the orga-
nization against any liability resulting from a civil 
action brought for any damage caused to an enrollee 
with a MedicareAdvantage plan of the organization
275
under this part by the organization’s denial of medi-
cally necessary care. 
‘‘(6) SPECIAL
RULES
FOR
MEDICAREADVAN-
TAGE PRIVATE FEE-FOR-SERVICE PLANS.—For pur-
poses of applying this part (including subsection 
(k)(1)) and section 1866(a)(1)(O), a hospital (or 
other provider of services), a physician or other 
health care professional, or other entity furnishing 
health care services is treated as having an agree-
ment or contract in effect with a MedicareAdvantage 
organization (with respect to an individual enrolled 
in a MedicareAdvantage private fee-for-service plan 
it offers), if—
‘‘(A) the provider, professional, or other 
entity furnishes services that are covered under 
the plan to such an enrollee; and 
‘‘(B) before providing such services, the 
provider, professional, or other entity—
‘‘(i) has been informed of the individ-
ual’s enrollment under the plan; and 
‘‘(ii) either—
‘‘(I) has been informed of the 
terms and conditions of payment for 
such services under the plan; or
276
‘‘(II) is given a reasonable oppor-
tunity to obtain information con-
cerning such terms and conditions, 
in a manner reasonably designed to effect 
informed agreement by a provider. 
The previous sentence shall only apply in the ab-
sence of an explicit agreement between such a pro-
vider, 
professional, 
or 
other 
entity 
and 
the 
MedicareAdvantage organization. 
‘‘(k) TREATMENT OF SERVICES FURNISHED BY CER-
TAIN PROVIDERS.—
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), a physician or other entity (other than a 
provider of services) that does not have a contract 
establishing payment amounts for services furnished 
to an individual enrolled under this part with a 
MedicareAdvantage organization described in section 
1851(a)(2)(A) shall accept as payment in full for 
covered services under this title that are furnished to 
such an individual the amounts that the physician or 
other entity could collect if the individual were not 
so enrolled. Any penalty or other provision of law 
that applies to such a payment with respect to an 
individual entitled to benefits under this title (but 
not enrolled with a MedicareAdvantage organization
277
under this part) also applies with respect to an indi-
vidual so enrolled. 
‘‘(2) APPLICATION
TO
MEDICAREADVANTAGE 
PRIVATE FEE-FOR-SERVICE PLANS.—
‘‘(A) BALANCE
BILLING
LIMITS
UNDER 
MEDICAREADVANTAGE PRIVATE FEE-FOR-SERV-
ICE
PLANS
IN
CASE
OF
CONTRACT
PRO-
VIDERS.—
‘‘(i) IN GENERAL.—In the case of an 
individual enrolled in a MedicareAdvantage 
private fee-for-service plan under this part, 
a physician, provider of services, or other 
entity that has a contract (including 
through the operation of subsection (j)(6)) 
establishing a payment rate for services 
furnished to the enrollee shall accept as 
payment in full for covered services under 
this title that are furnished to such an in-
dividual an amount not to exceed (includ-
ing any deductibles, coinsurance, copay-
ments, or balance billing otherwise per-
mitted under the plan) an amount equal to 
115 percent of such payment rate. 
‘‘(ii) PROCEDURES TO ENFORCE LIM-
ITS.—The MedicareAdvantage organization
278
that offers such a plan shall establish pro-
cedures, similar to the procedures de-
scribed in section 1848(g)(1)(A), in order 
to carry out clause (i). 
‘‘(iii) ASSURING
ENFORCEMENT.—If 
the MedicareAdvantage organization fails 
to establish and enforce procedures re-
quired under clause (ii), the organization is 
subject to intermediate sanctions under 
section 1857(g). 
‘‘(B) ENROLLEE LIABILITY FOR NONCON-
TRACT PROVIDERS.—For provisions—
‘‘(i) establishing a minimum payment 
rate in the case of noncontract providers 
under a MedicareAdvantage private fee-
for-service plan, see section 1852(a)(2); or 
‘‘(ii) limiting enrollee liability in the 
case of covered services furnished by such 
providers, see paragraph (1) and section 
1866(a)(1)(O). 
‘‘(C) INFORMATION ON BENEFICIARY LI-
ABILITY.—
‘‘(i) 
IN
GENERAL.—Each 
MedicareAdvantage organization that of-
fers a MedicareAdvantage private fee-for-
279
service plan shall provide that enrollees 
under the plan who are furnished services 
for which payment is sought under the 
plan are provided an appropriate expla-
nation of benefits (consistent with that 
provided under parts A, B, and D, and, if 
applicable, under medicare supplemental 
policies) that includes a clear statement of 
the amount of the enrollee’s liability (in-
cluding any liability for balance billing con-
sistent with this subsection) with respect to 
payments for such services. 
‘‘(ii) ADVANCE NOTICE BEFORE RE-
CEIPT OF INPATIENT HOSPITAL SERVICES 
AND CERTAIN OTHER SERVICES.—In addi-
tion, such organization shall, in its terms 
and conditions of payments to hospitals for 
inpatient hospital services and for other 
services identified by the Secretary for 
which the amount of the balance billing 
under subparagraph (A) could be substan-
tial, require the hospital to provide to the 
enrollee, before furnishing such services 
and if the hospital imposes balance billing 
under subparagraph (A)—
280
‘‘(I) notice of the fact that bal-
ance billing is permitted under such 
subparagraph for such services; and 
‘‘(II) a good faith estimate of the 
likely amount of such balance billing 
(if any), with respect to such services, 
based upon the presenting condition 
of the enrollee. 
‘‘(l) RETURN TO HOME SKILLED NURSING FACILI-
TIES FOR COVERED POST-HOSPITAL EXTENDED CARE 
SERVICES.—
‘‘(1) ENSURING RETURN TO HOME SNF.—
‘‘(A) IN GENERAL.—In providing coverage 
of post-hospital extended care services, a
MedicareAdvantage plan shall provide for such 
coverage through a home skilled nursing facility 
if the following conditions are met: 
‘‘(i) ENROLLEE ELECTION.—The en-
rollee elects to receive such coverage 
through such facility. 
‘‘(ii) SNF AGREEMENT.—The facility 
has a contract with the MedicareAdvantage 
organization for the provision of such serv-
ices, or the facility agrees to accept sub-
stantially similar payment under the same
281
terms and conditions that apply to simi-
larly situated skilled nursing facilities that 
are 
under 
contract 
with 
the 
MedicareAdvantage organization for the 
provision of such services and through 
which the enrollee would otherwise receive 
such services. 
‘‘(B) MANNER
OF
PAYMENT
TO
HOME 
SNF.—The organization shall provide payment 
to the home skilled nursing facility consistent 
with the contract or the agreement described in 
subparagraph (A)(ii), as the case may be. 
‘‘(2) NO
LESS
FAVORABLE
COVERAGE.—The 
coverage provided under paragraph (1) (including 
scope of services, cost-sharing, and other criteria of 
coverage) shall be no less favorable to the enrollee 
than the coverage that would be provided to the en-
rollee with respect to a skilled nursing facility the 
post-hospital extended care services of which are 
otherwise covered under the MedicareAdvantage 
plan. 
‘‘(3) RULE
OF
CONSTRUCTION.—Nothing in 
this subsection shall be construed to do the fol-
lowing:
282
‘‘(A) To require coverage through a skilled 
nursing facility that is not otherwise qualified 
to provide benefits under part A for medicare 
beneficiaries 
not 
enrolled 
in 
a 
MedicareAdvantage plan. 
‘‘(B) To prevent a skilled nursing facility 
from refusing to accept, or imposing conditions 
upon the acceptance of, an enrollee for the re-
ceipt of post-hospital extended care services. 
‘‘(4) DEFINITIONS.—In this subsection: 
‘‘(A) HOME
SKILLED
NURSING
FACIL-
ITY.—The term ‘home skilled nursing facility’ 
means, with respect to an enrollee who is enti-
tled to receive post-hospital extended care serv-
ices under a MedicareAdvantage plan, any of 
the following skilled nursing facilities: 
‘‘(i) SNF RESIDENCE AT TIME OF AD-
MISSION.—The skilled nursing facility in 
which the enrollee resided at the time of 
admission to the hospital preceding the re-
ceipt of such post-hospital extended care 
services. 
‘‘(ii) SNF IN CONTINUING CARE RE-
TIREMENT COMMUNITY.—A skilled nursing 
facility that is providing such services
283
through a continuing care retirement com-
munity (as defined in subparagraph (B)) 
which provided residence to the enrollee at 
the time of such admission. 
‘‘(iii) SNF RESIDENCE OF SPOUSE AT 
TIME OF DISCHARGE.—The skilled nursing 
facility in which the spouse of the enrollee 
is residing at the time of discharge from 
such hospital. 
‘‘(B) 
CONTINUING
CARE
RETIREMENT 
COMMUNITY.—The term ‘continuing care retire-
ment community’ means, with respect to an en-
rollee in a MedicareAdvantage plan, an arrange-
ment under which housing and health-related 
services are provided (or arranged) through an 
organization for the enrollee under an agree-
ment that is effective for the life of the enrollee 
or for a specified period.’’. 
SEC. 203. PAYMENTS TO MEDICAREADVANTAGE ORGANIZA-
TIONS. 
Section 1853 (42 U.S.C. 1395w–23) is amended to 
read as follows: 
‘‘PAYMENTS TO MEDICAREADVANTAGE ORGANIZATIONS 
‘‘SEC. 1853. (a) PAYMENTS TO ORGANIZATIONS.—
‘‘(1) MONTHLY PAYMENTS.—
284
‘‘(A) IN
GENERAL.—Under a contract 
under section 1857 and subject to subsections 
(f), (h), and (j) and section 1859(e)(4), the Sec-
retary shall make, to each MedicareAdvantage 
organization, with respect to coverage of an in-
dividual for a month under this part in a 
MedicareAdvantage payment area, separate 
monthly payments with respect to— 
‘‘(i) benefits under the original medi-
care fee-for-service program under parts A 
and B in accordance with subsection (d); 
and 
‘‘(ii) benefits under the voluntary pre-
scription drug program under part D in 
accordance with section 1858A and the 
other provisions of this part.
‘‘(B) SPECIAL
RULE
FOR
END-STAGE 
RENAL DISEASE.—The Secretary shall establish 
separate 
rates 
of 
payment 
to 
a 
MedicareAdvantage organization with respect to 
classes of individuals determined to have end-
stage 
renal 
disease 
and 
enrolled 
in 
a 
MedicareAdvantage plan of the organization. 
Such rates of payment shall be actuarially 
equivalent to rates paid to other enrollees in the
285
MedicareAdvantage payment area (or such 
other area as specified by the Secretary). In ac-
cordance with regulations, the Secretary shall 
provide for the application of the seventh sen-
tence of section 1881(b)(7) to payments under 
this section covering the provision of renal di-
alysis treatment in the same manner as such 
sentence applies to composite rate payments de-
scribed in such sentence. In establishing such 
rates, the Secretary shall provide for appro-
priate adjustments to increase each rate to re-
flect the demonstration rate (including the risk 
adjustment methodology associated with such 
rate) of the social health maintenance organiza-
tion end-stage renal disease capitation dem-
onstrations (established by section 2355 of the 
Deficit Reduction Act of 1984, as amended by 
section 13567(b) of the Omnibus Budget Rec-
onciliation Act of 1993), and shall compute 
such rates by taking into account such factors 
as renal treatment modality, age, and the un-
derlying cause of the end-stage renal disease. 
‘‘(2) ADJUSTMENT
TO
REFLECT
NUMBER
OF 
ENROLLEES.—
286
‘‘(A) IN GENERAL.—The amount of pay-
ment under this subsection may be retroactively 
adjusted to take into account any difference be-
tween the actual number of individuals enrolled 
with an organization under this part and the 
number of such individuals estimated to be so 
enrolled in determining the amount of the ad-
vance payment. 
‘‘(B) SPECIAL
RULE
FOR
CERTAIN
EN-
ROLLEES.—
‘‘(i) IN GENERAL.—Subject to clause 
(ii), the Secretary may make retroactive 
adjustments under subparagraph (A) to 
take into account individuals enrolled dur-
ing the period beginning on the date on 
which 
the 
individual 
enrolls 
with 
a 
MedicareAdvantage organization under a 
plan operated, sponsored, or contributed to 
by the individual’s employer or former em-
ployer (or the employer or former employer 
of the individual’s spouse) and ending on 
the date on which the individual is enrolled 
in the organization under this part, except 
that for purposes of making such retro-
active adjustments under this subpara-
287
graph, such period may not exceed 90 
days. 
‘‘(ii) 
EXCEPTION.—No 
adjustment 
may be made under clause (i) with respect 
to any individual who does not certify that 
the organization provided the individual 
with the disclosure statement described in 
section 1852(c) at the time the individual 
enrolled with the organization. 
‘‘(C) EQUALIZATION
OF
FEDERAL
CON-
TRIBUTION.—In applying subparagraph (A), 
the Secretary shall ensure that the payment to 
the MedicareAdvantage organization for each 
individual enrolled with the organization shall 
equal 
the 
MedicareAdvantage 
benchmark 
amount for the payment area in which that in-
dividual resides (as determined under para-
graph (4)), as adjusted—
‘‘(i) by multiplying the benchmark 
amount for that payment area by the ratio 
of—
‘‘(I) the payment amount deter-
mined under subsection (d)(4); to
288
‘‘(II) the weighted service area 
benchmark amount determined under 
subsection (d)(2); and 
‘‘(ii) using such risk adjustment fac-
tor as specified by the Secretary under 
subsection (b)(1)(B). 
‘‘(3) 
COMPREHENSIVE
RISK
ADJUSTMENT 
METHODOLOGY.—
‘‘(A) APPLICATION
OF
METHODOLOGY.—
The Secretary shall apply the comprehensive 
risk adjustment methodology described in sub-
paragraph (B) to 100 percent of the amount of 
payments to plans under subsection (d)(4)(B). 
‘‘(B) COMPREHENSIVE RISK ADJUSTMENT 
METHODOLOGY
DESCRIBED.—The comprehen-
sive risk adjustment methodology described in 
this subparagraph is the risk adjustment meth-
odology that would apply with respect to 
MedicareAdvantage 
plans 
offered 
by 
MedicareAdvantage organizations in 2005, ex-
cept that if such methodology does not apply 
to groups of beneficiaries who are aged or dis-
abled and groups of beneficiaries who have end-
stage renal disease, the Secretary shall revise 
such methodology to apply to such groups.
289
‘‘(C) UNIFORM
APPLICATION
TO
ALL 
TYPES
OF
PLANS.—Subject 
to 
section 
1859(e)(4), the comprehensive risk adjustment 
methodology established under this paragraph 
shall be applied uniformly without regard to the 
type of plan. 
‘‘(D) DATA
COLLECTION.—In order to 
carry out this paragraph, the Secretary shall re-
quire MedicareAdvantage organizations to sub-
mit such data and other information as the Sec-
retary deems necessary. 
‘‘(E) IMPROVEMENT
OF
PAYMENT
ACCU-
RACY.—Notwithstanding any other provision of 
this paragraph, the Secretary may revise the 
comprehensive risk adjustment methodology de-
scribed in subparagraph (B) from time to time 
to improve payment accuracy. 
‘‘(4) ANNUAL
CALCULATION
OF
BENCHMARK 
AMOUNTS.—For each year, the Secretary shall cal-
culate 
a 
benchmark 
amount 
for 
each 
MedicareAdvantage payment area for each month 
for such year with respect to coverage of the benefits 
available under the original medicare fee-for-service 
program option equal to the greater of the following 
amounts (adjusted as appropriate for the application
290
of the risk adjustment methodology under paragraph 
(3)): 
‘‘(A) MINIMUM AMOUNT.—1⁄12 of the an-
nual Medicare+Choice capitation rate deter-
mined under subsection (c)(1)(B) for the pay-
ment area for the year. 
‘‘(B) LOCAL
FEE-FOR-SERVICE
RATE.—
The local fee-for-service rate for such area for 
the year (as calculated under paragraph (5)). 
‘‘(5) ANNUAL
CALCULATION
OF
LOCAL
FEE-
FOR-SERVICE RATES.—
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), the term ‘local fee-for-service rate’ 
means the amount of payment for a month in 
a MedicareAdvantage payment area for benefits 
under this title and associated claims processing 
costs for an individual who has elected to re-
ceive benefits under the original medicare fee-
for-service program option and not enrolled in 
a MedicareAdvantage plan under this part. The 
Secretary shall annually calculate such amount 
in a manner similar to the manner in which the 
Secretary calculated the adjusted average per 
capita cost under section 1876.
291
‘‘(B) REMOVAL OF MEDICAL EDUCATION 
COSTS FROM CALCULATION OF LOCAL FEE-FOR-
SERVICE RATE.—
‘‘(i) IN GENERAL.—In calculating the 
local fee-for-service rate under subpara-
graph (A) for a year, the amount of pay-
ment described in such subparagraph shall 
be adjusted to exclude from such payment 
the payment adjustments described in 
clause (ii). 
‘‘(ii) PAYMENT
ADJUSTMENTS
DE-
SCRIBED.—
‘‘(I) IN
GENERAL.—Subject to 
subclause (II), the payment adjust-
ments described in this subparagraph 
are payment adjustments which the 
Secretary estimates are payable dur-
ing the year—
‘‘(aa) for the indirect costs 
of medical education under sec-
tion 1886(d)(5)(B); and 
‘‘(bb) for direct graduate 
medical education costs under 
section 1886(h).
292
‘‘(II) TREATMENT OF PAYMENTS 
COVERED
UNDER
STATE
HOSPITAL 
REIMBURSEMENT
SYSTEM.—To the 
extent that the Secretary estimates 
that the amount of the local fee-for-
service rates reflects payments to hos-
pitals 
reimbursed 
under 
section 
1814(b)(3), the Secretary shall esti-
mate a payment adjustment that is 
comparable to the payment adjust-
ment that would have been made 
under clause (i) if the hospitals had 
not been reimbursed under such sec-
tion. 
‘‘(b) ANNUAL ANNOUNCEMENT OF PAYMENT FAC-
TORS.—
‘‘(1) ANNUAL ANNOUNCEMENT.—Beginning in 
2005, at the same time as the Secretary publishes 
the risk adjusters under section 1860D–11, the Sec-
retary shall annually announce (in a manner in-
tended to provide notice to interested parties) the 
following payment factors: 
‘‘(A) The benchmark amount for each 
MedicareAdvantage payment area (as calculated 
under subsection (a)(4)) for the year.
293
‘‘(B) The factors to be used for adjusting 
payments under the comprehensive risk adjust-
ment methodology described in subsection 
(a)(3)(B) 
with 
respect 
to 
each 
MedicareAdvantage payment area for the year. 
‘‘(2) ADVANCE
NOTICE
OF
METHODOLOGICAL 
CHANGES.—At least 45 days before making the an-
nouncement under paragraph (1) for a year, the 
Secretary shall—
‘‘(A) 
provide 
for 
notice 
to 
MedicareAdvantage organizations of proposed 
changes to be made in the methodology from 
the methodology and assumptions used in the 
previous announcement; and 
‘‘(B) provide such organizations with an 
opportunity to comment on such proposed 
changes. 
‘‘(3) EXPLANATION OF ASSUMPTIONS.—In each 
announcement made under paragraph (1), the Sec-
retary shall include an explanation of the assump-
tions and changes in methodology used in the an-
nouncement 
in 
sufficient 
detail 
so 
that 
MedicareAdvantage organizations can compute each 
payment factor described in paragraph (1).
294
‘‘(c) CALCULATION OF ANNUAL MEDICARE+CHOICE 
CAPITATION RATES.—
‘‘(1) IN
GENERAL.—For purposes of making 
payments under this part for years before 2006 and 
for 
purposes 
of 
calculating 
the 
annual 
Medicare+Choice capitation rates under paragraph 
(7) beginning with such year, subject to paragraph 
(6)(C), each annual Medicare+Choice capitation 
rate, for a Medicare+Choice payment area before 
2006 or a MedicareAdvantage payment area begin-
ning with such year for a contract year consisting of 
a calendar year, is equal to the largest of the 
amounts specified in the following subparagraph (A), 
(B), or (C): 
‘‘(A) BLENDED
CAPITATION
RATE.—The 
sum of—
‘‘(i) the area-specific percentage (as 
specified under paragraph (2) for the year) 
of 
the 
annual 
area-specific 
Medicare+Choice capitation rate for the 
MedicareAdvantage payment area, as de-
termined under paragraph (3) for the year; 
and
‘‘(ii) the national percentage (as speci-
fied under paragraph (2) for the year) of
295
the input-price-adjusted annual national 
Medicare+Choice capitation rate, as deter-
mined under paragraph (4) for the year, 
multiplied by the budget neutrality adjustment 
factor determined under paragraph (5). 
‘‘(B) MINIMUM
AMOUNT.—12 multiplied 
by the following amount: 
‘‘(i) For 1998, $367 (but not to ex-
ceed, in the case of an area outside the 50 
States and the District of Columbia, 150 
percent of the annual per capita rate of 
payment for 1997 determined under sec-
tion 1876(a)(1)(C) for the area). 
‘‘(ii) For 1999 and 2000, the min-
imum amount determined under clause (i) 
or this clause, respectively, for the pre-
ceding year, increased by the national per 
capita Medicare+Choice growth percentage 
described in paragraph (6)(A) applicable to 
1999 or 2000, respectively. 
‘‘(iii)(I) Subject to subclause (II), for 
2001, for any area in a Metropolitan Sta-
tistical Area with a population of more 
than 250,000, $525, and for any other 
area $475.
296
‘‘(II) In the case of an area outside 
the 50 States and the District of Colum-
bia, the amount specified in this clause 
shall not exceed 120 percent of the amount 
determined under clause (ii) for such area 
for 2000. 
‘‘(iv) For 2002 through 2013, the 
minimum amount specified in this clause 
(or clause (iii)) for the preceding year in-
creased 
by 
the 
national 
per 
capita 
Medicare+Choice growth percentage, de-
scribed in paragraph (6)(A) for that suc-
ceeding year. 
‘‘(v) For 2014 and each succeeding 
year, the minimum amount specified in 
this clause (or clause (iv)) for the pre-
ceding year increased by the percentage in-
crease in the Consumer Price Index for all 
urban consumers (U.S. urban average) for 
the 12-month period ending with June of 
the previous year. 
‘‘(C) MINIMUM PERCENTAGE INCREASE.—
‘‘(i) For 1998, 102 percent of the an-
nual per capita rate of payment for 1997
297
determined under section 1876(a)(1)(C) 
for the Medicare+Choice payment area. 
‘‘(ii) For 1999 and 2000, 102 percent 
of the annual Medicare+Choice capitation 
rate under this paragraph for the area for 
the previous year. 
‘‘(iii) For 2001, 103 percent of the 
annual Medicare+Choice capitation rate 
under this paragraph for the area for 
2000. 
‘‘(iv) For 2002 and each succeeding 
year, 
102 
percent 
of 
the 
annual 
Medicare+Choice capitation rate under 
this paragraph for the area for the pre-
vious year.
‘‘(2) AREA-SPECIFIC AND NATIONAL PERCENT-
AGES.—For purposes of paragraph (1)(A)—
‘‘(A) for 1998, the ‘area-specific percent-
age’ is 90 percent and the ‘national percentage’ 
is 10 percent; 
‘‘(B) for 1999, the ‘area-specific percent-
age’ is 82 percent and the ‘national percentage’ 
is 18 percent;
298
‘‘(C) for 2000, the ‘area-specific percent-
age’ is 74 percent and the ‘national percentage’ 
is 26 percent; 
‘‘(D) for 2001, the ‘area-specific percent-
age’ is 66 percent and the ‘national percentage’ 
is 34 percent; 
‘‘(E) for 2002, the ‘area-specific percent-
age’ is 58 percent and the ‘national percentage’ 
is 42 percent; and 
‘‘(F) for a year after 2002, the ‘area-spe-
cific percentage’ is 50 percent and the ‘national 
percentage’ is 50 percent. 
‘‘(3) 
ANNUAL
AREA-SPECIFIC
MEDICARE+ 
CHOICE CAPITATION RATE.—
‘‘(A) IN GENERAL.—For purposes of para-
graph (1)(A), subject to subparagraph (B), the 
annual area-specific Medicare+Choice capita-
tion rate for a Medicare+Choice payment 
area—
‘‘(i) for 1998 is, subject to subpara-
graph (D), the annual per capita rate of 
payment for 1997 determined under sec-
tion 1876(a)(1)(C) for the area, increased 
by 
the 
national 
per 
capita
299
Medicare+Choice growth percentage for 
1998 (described in paragraph (6)(A)); or 
‘‘(ii) for a subsequent year is the an-
nual area-specific Medicare+Choice capita-
tion rate for the previous year determined 
under this paragraph for the area, in-
creased 
by 
the 
national 
per 
capita 
Medicare+Choice growth percentage for 
such subsequent year. 
‘‘(B) REMOVAL OF MEDICAL EDUCATION 
FROM
CALCULATION
OF
ADJUSTED
AVERAGE 
PER CAPITA COST.—
‘‘(i) IN
GENERAL.—In determining 
the area-specific Medicare+Choice capita-
tion rate under subparagraph (A) for a 
year (beginning with 1998), the annual per 
capita rate of payment for 1997 deter-
mined under section 1876(a)(1)(C) shall be 
adjusted to exclude from the rate the ap-
plicable percent (specified in clause (ii)) of 
the payment adjustments described in sub-
paragraph (C). 
‘‘(ii) 
APPLICABLE
PERCENT.—For 
purposes of clause (i), the applicable per-
cent for—
300
‘‘(I) 1998 is 20 percent; 
‘‘(II) 1999 is 40 percent; 
‘‘(III) 2000 is 60 percent; 
‘‘(IV) 2001 is 80 percent; and 
‘‘(V) a succeeding year is 100 
percent. 
‘‘(C) PAYMENT ADJUSTMENT.—
‘‘(i) IN GENERAL.—Subject to clause 
(ii), the payment adjustments described in 
this subparagraph are payment adjust-
ments which the Secretary estimates were 
payable during 1997—
‘‘(I) for the indirect costs of med-
ical 
education 
under 
section 
1886(d)(5)(B); and 
‘‘(II) for direct graduate medical 
education 
costs 
under 
section 
1886(h). 
‘‘(ii) TREATMENT OF PAYMENTS COV-
ERED
UNDER
STATE
HOSPITAL
REIM-
BURSEMENT SYSTEM.—To the extent that 
the Secretary estimates that an annual per 
capita rate of payment for 1997 described 
in clause (i) reflects payments to hospitals 
reimbursed under section 1814(b)(3), the
301
Secretary shall estimate a payment adjust-
ment that is comparable to the payment 
adjustment that would have been made 
under clause (i) if the hospitals had not 
been reimbursed under such section. 
‘‘(D) TREATMENT OF AREAS WITH HIGHLY 
VARIABLE PAYMENT RATES.—In the case of a 
Medicare+Choice payment area for which the 
annual per capita rate of payment determined 
under section 1876(a)(1)(C) for 1997 varies by 
more than 20 percent from such rate for 1996, 
for purposes of this subsection the Secretary 
may substitute for such rate for 1997 a rate 
that is more representative of the costs of the 
enrollees in the area. 
‘‘(4) 
INPUT-PRICE-ADJUSTED
ANNUAL
NA-
TIONAL MEDICARE+CHOICE CAPITATION RATE.—
‘‘(A) IN GENERAL.—For purposes of para-
graph (1)(A), the input-price-adjusted annual 
national Medicare+Choice capitation rate for a 
Medicare+Choice payment area for a year is 
equal to the sum, for all the types of medicare 
services (as classified by the Secretary), of the 
product (for each such type of service) of—
302
‘‘(i) the national standardized annual 
Medicare+Choice capitation rate (deter-
mined under subparagraph (B)) for the 
year; 
‘‘(ii) the proportion of such rate for 
the year which is attributable to such type 
of services; and 
‘‘(iii) an index that reflects (for that 
year and that type of services) the relative 
input price of such services in the area 
compared to the national average input 
price of such services. 
In applying clause (iii), the Secretary may, sub-
ject to subparagraph (C), apply those indices 
under this title that are used in applying (or 
updating) national payment rates for specific 
areas and localities. 
‘‘(B) NATIONAL
STANDARDIZED
ANNUAL 
MEDICARE+CHOICE
CAPITATION
RATE.—In 
subparagraph (A)(i), the ‘national standardized 
annual Medicare+Choice capitation rate’ for a 
year is equal to—
‘‘(i) the sum (for all Medicare+Choice 
payment areas) of the product of—
303
‘‘(I) 
the 
annual 
area-specific 
Medicare+Choice capitation rate for 
that year for the area under para-
graph (3); and 
‘‘(II) the average number of 
medicare beneficiaries residing in that 
area in the year, multiplied by the av-
erage of the risk factor weights used 
to adjust payments under subsection 
(a)(1)(A) for such beneficiaries in 
such area; divided by 
‘‘(ii) the sum of the products de-
scribed in clause (i)(II) for all areas for 
that year. 
‘‘(5) PAYMENT
ADJUSTMENT
BUDGET
NEU-
TRALITY
FACTOR.—For purposes of paragraph 
(1)(A), for each year, the Secretary shall determine 
a budget neutrality adjustment factor so that the 
aggregate of the payments under this part (other 
than those attributable to subsections (a)(3)(C)(iii) 
and (i)) shall equal the aggregate payments that 
would have been made under this part if payment 
were based entirely on area-specific capitation rates. 
‘‘(6) 
NATIONAL
PER
CAPITA
MEDICARE+ 
CHOICE GROWTH PERCENTAGE DEFINED.—
305
‘‘(C) ADJUSTMENT FOR OVER OR UNDER 
PROJECTION
OF
NATIONAL
PER
CAPITA 
MEDICARE+CHOICE
GROWTH
PERCENTAGE.—
Beginning with rates calculated for 1999, be-
fore computing rates for a year as described in 
paragraph (1), the Secretary shall adjust all 
area-specific and national Medicare+Choice 
capitation rates (and beginning in 2000, the 
minimum amount) for the previous year for the 
differences between the projections of the na-
tional per capita Medicare+Choice growth per-
centage for that year and previous years and 
the current estimate of such percentage for 
such years. 
‘‘(7) TRANSITION
TO
MEDICAREADVANTAGE 
COMPETITION.—
‘‘(A) IN GENERAL.—For each year (begin-
ning 
with 
2006) 
payments 
to 
MedicareAdvantage plans shall not be computed 
under this subsection, but instead shall be 
based on the payment amount determined 
under subsection (d). 
‘‘(B) CONTINUED CALCULATION OF CAPI-
TATION RATES.—For each year (beginning with 
2006) the Secretary shall calculate and publish
306
the annual Medicare+Choice capitation rates 
under this subsection and shall use the annual 
Medicare+Choice capitation rate determined 
under subsection (c)(1) for purposes of deter-
mining the benchmark amount under subsection 
(a)(4).
‘‘(d) SECRETARY’S DETERMINATION OF PAYMENT 
AMOUNT.—
‘‘(1) REVIEW OF PLAN BIDS.—The Secretary 
shall review each plan bid submitted under section 
1854(a) for the coverage of benefits under the origi-
nal medicare fee-for-service program option to en-
sure that such bids are consistent with the require-
ments under this part an are based on the assump-
tions described in section 1854(a)(2)(A)(iii). 
‘‘(2) DETERMINATION OF WEIGHTED SERVICE 
AREA BENCHMARK AMOUNTS.—The Secretary shall 
calculate a weighted service area benchmark amount 
for the benefits under the original medicare fee-for-
service program option for each plan equal to the 
weighted average of the benchmark amounts for 
benefits under such original medicare fee-for-service 
program option for the payment areas included in 
the service area of the plan using the assumptions 
described in section 1854(a)(2)(A)(iii).
307
‘‘(3) COMPARISON TO BENCHMARK.—The Sec-
retary shall determine the difference between each 
plan bid (as adjusted under paragraph (1)) and the 
weighted service area benchmark amount (as deter-
mined under paragraph (2)) for purposes of deter-
mining—
‘‘(A) the payment amount under para-
graph (4); and 
‘‘(B) the additional benefits required and 
MedicareAdvantage monthly basic beneficiary 
premiums. 
‘‘(4) DETERMINATION
OF
PAYMENT
AMOUNT 
FOR ORIGINAL MEDICARE FEE-FOR-SERVICE BENE-
FITS.—
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), the Secretary shall determine the 
payment amount for MedicareAdvantage plans 
for the benefits under the original medicare fee-
for-service program option as follows: 
‘‘(i) BIDS THAT EQUAL OR EXCEED 
THE BENCHMARK.—In the case of a plan 
bid that equals or exceeds the weighted 
service 
area 
benchmark 
amount, 
the 
amount of each monthly payment to a 
MedicareAdvantage organization with re-
308
spect to each individual enrolled in a plan 
shall be the weighted service area bench-
mark amount.
‘‘(ii) 
BIDS
BELOW
THE
BENCH-
MARK.—In the case of a plan bid that is 
less than the weighted service area bench-
mark amount, the amount of each monthly 
payment to a MedicareAdvantage organiza-
tion with respect to each individual en-
rolled in a plan shall be the weighted serv-
ice area benchmark amount reduced by the 
amount of any premium reduction elected 
by the plan under section 1854(d)(1)(A)(i). 
‘‘(B) APPLICATION
OF
COMPREHENSIVE 
RISK ADJUSTMENT METHODOLOGY.—The Sec-
retary shall adjust the amounts determined 
under subparagraph (A) using the comprehen-
sive risk adjustment methodology applicable 
under subsection (a)(3). 
‘‘(6) ADJUSTMENT FOR NATIONAL COVERAGE 
DETERMINATIONS
AND
LEGISLATIVE
CHANGES
IN 
BENEFITS.—If the Secretary makes a determination 
with respect to coverage under this title or there is 
a change in benefits required to be provided under 
this part that the Secretary projects will result in a
309
significant 
increase 
in 
the 
costs 
to 
MedicareAdvantage organizations of providing bene-
fits under contracts under this part (for periods 
after any period described in section 1852(a)(5)), 
the Secretary shall appropriately adjust the bench-
mark amounts or payment amounts (as determined 
by the Secretary). Such projection and adjustment 
shall be based on an analysis by the Secretary of the 
actuarial costs associated with the new benefits. 
‘‘(7) BENEFITS UNDER THE ORIGINAL MEDI-
CARE
FEE-FOR-SERVICE
PROGRAM
OPTION
DE-
FINED.—For purposes of this part, the term ‘bene-
fits under the original medicare fee-for-service pro-
gram option’ means those items and services (other 
than hospice care) for which benefits are available 
under parts A and B to individuals entitled to, or 
enrolled for, benefits under part A and enrolled 
under part B, with cost-sharing for those services as 
required under parts A and B or an actuarially 
equivalent level of cost-sharing as determined in this 
part. 
‘‘(e) MEDICAREADVANTAGE PAYMENT AREA DE-
FINED.—
‘‘(1) IN GENERAL.—In this part, except as pro-
vided 
in 
paragraph 
(3), 
the 
term
310
‘MedicareAdvantage payment area’ means a county, 
or equivalent area specified by the Secretary. 
‘‘(2) RULE FOR ESRD BENEFICIARIES.—In the 
case of individuals who are determined to have end 
stage renal disease, the MedicareAdvantage payment 
area shall be a State or such other payment area as 
the Secretary specifies. 
‘‘(3) GEOGRAPHIC ADJUSTMENT.—
‘‘(A) IN GENERAL.—Upon written request 
of the chief executive officer of a State for a 
contract year (beginning after 2005) made by 
not later than February 1 of the previous year, 
the Secretary shall make a geographic adjust-
ment to a MedicareAdvantage payment area in 
the State otherwise determined under para-
graph (1)—
‘‘(i) 
to 
a 
single 
statewide 
MedicareAdvantage payment area; 
‘‘(ii) to the metropolitan based system 
described in subparagraph (C); or 
‘‘(iii) to consolidating into a single 
MedicareAdvantage payment area non-
contiguous counties (or equivalent areas 
described in paragraph (1)) within a State.
311
Such adjustment shall be effective for payments 
for months beginning with January of the year 
following the year in which the request is re-
ceived. 
‘‘(B) 
BUDGET
NEUTRALITY
ADJUST-
MENT.—In the case of a State requesting an 
adjustment under this paragraph, the Secretary 
shall initially (and annually thereafter) adjust 
the payment rates otherwise established under 
this section for MedicareAdvantage payment 
areas in the State in a manner so that the ag-
gregate of the payments under this section in 
the State shall not exceed the aggregate pay-
ments that would have been made under this 
section for MedicareAdvantage payment areas 
in the State in the absence of the adjustment 
under this paragraph. 
‘‘(C) METROPOLITAN
BASED
SYSTEM.—
The metropolitan based system described in this 
subparagraph is one in which—
‘‘(i) all the portions of each metropoli-
tan statistical area in the State or in the 
case of a consolidated metropolitan statis-
tical area, all of the portions of each pri-
mary metropolitan statistical area within
312
the consolidated area within the State, are 
treated as a single MedicareAdvantage 
payment area; and 
‘‘(ii) all areas in the State that do not 
fall within a metropolitan statistical area 
are treated as a single MedicareAdvantage 
payment area. 
‘‘(D) AREAS.—In subparagraph (C), the 
terms ‘metropolitan statistical area’, ‘consoli-
dated metropolitan statistical area’, and ‘pri-
mary metropolitan statistical area’ mean any 
area designated as such by the Secretary of 
Commerce. 
‘‘(f) SPECIAL RULES FOR INDIVIDUALS ELECTING 
MSA PLANS.—
‘‘(1) IN
GENERAL.—If the amount of the 
MedicareAdvantage monthly MSA premium (as de-
fined in section 1854(b)(2)(D)) for an MSA plan for 
a 
year 
is 
less 
than 
1⁄12
of 
the 
annual 
Medicare+Choice capitation rate applied under this 
section for the area and year involved, the Secretary 
shall deposit an amount equal to 100 percent of 
such difference in a MedicareAdvantage MSA estab-
lished (and, if applicable, designated) by the indi-
vidual under paragraph (2).
313
‘‘(2) ESTABLISHMENT
AND
DESIGNATION
OF 
MEDICAREADVANTAGE MEDICAL SAVINGS ACCOUNT 
AS
REQUIREMENT
FOR
PAYMENT
OF
CONTRIBU-
TION.—In the case of an individual who has elected 
coverage under an MSA plan, no payment shall be 
made under paragraph (1) on behalf of an individual 
for a month unless the individual—
‘‘(A) has established before the beginning 
of the month (or by such other deadline as the 
Secretary may specify) a MedicareAdvantage 
MSA (as defined in section 138(b)(2) of the In-
ternal Revenue Code of 1986); and 
‘‘(B) if the individual has established more 
than 1 such MedicareAdvantage MSA, has des-
ignated 1 of such accounts as the individual’s 
MedicareAdvantage MSA for purposes of this 
part. 
Under rules under this section, such an individual 
may change the designation of such account under 
subparagraph (B) for purposes of this part. 
‘‘(3) LUMP-SUM DEPOSIT OF MEDICAL SAVINGS 
ACCOUNT CONTRIBUTION.—In the case of an indi-
vidual electing an MSA plan effective beginning with 
a month in a year, the amount of the contribution 
to the MedicareAdvantage MSA on behalf of the in-
314
dividual for that month and all successive months in 
the year shall be deposited during that first month. 
In the case of a termination of such an election as 
of a month before the end of a year, the Secretary 
shall provide for a procedure for the recovery of de-
posits attributable to the remaining months in the 
year. 
‘‘(g) PAYMENTS FROM TRUST FUNDS.—Except as 
provided in section 1858A(c) (relating to payments for 
qualified prescription drug coverage), the payment to a 
MedicareAdvantage organization under this section for in-
dividuals enrolled under this part with the organization 
and payments to a MedicareAdvantage MSA under sub-
section (e)(1) shall be made from the Federal Hospital In-
surance Trust Fund and the Federal Supplementary Med-
ical Insurance Trust Fund in such proportion as the Sec-
retary determines reflects the relative weight that benefits 
under part A and under part B represents of the actuarial 
value of the total benefits under this title. Monthly pay-
ments otherwise payable under this section for October 
2000 shall be paid on the first business day of such month. 
Monthly payments otherwise payable under this section 
for October 2001 shall be paid on the last business day 
of September 2001. Monthly payments otherwise payable
315
under this section for October 2006 shall be paid on the 
first business day of October 2006. 
‘‘(h) SPECIAL RULE FOR CERTAIN INPATIENT HOS-
PITAL STAYS.—In the case of an individual who is receiv-
ing inpatient hospital services from a subsection (d) hos-
pital (as defined in section 1886(d)(1)(B)) as of the effec-
tive date of the individual’s—
‘‘(1) 
election 
under 
this 
part 
of 
a 
MedicareAdvantage 
plan 
offered 
by 
a 
MedicareAdvantage organization—
‘‘(A) payment for such services until the 
date of the individual’s discharge shall be made 
under this title through the MedicareAdvantage 
plan or the original medicare fee-for-service 
program option (as the case may be) elected be-
fore the election with such organization, 
‘‘(B) the elected organization shall not be 
financially responsible for payment for such 
services until the date after the date of the indi-
vidual’s discharge; and 
‘‘(C) the organization shall nonetheless be 
paid the full amount otherwise payable to the 
organization under this part; or 
‘‘(2) termination of election with respect to a 
MedicareAdvantage organization under this part—
316
‘‘(A) the organization shall be financially 
responsible for payment for such services after 
such date and until the date of the individual’s 
discharge; 
‘‘(B) payment for such services during the 
stay shall not be made under section 1886(d) or 
by any succeeding MedicareAdvantage organiza-
tion; and 
‘‘(C) the terminated organization shall not 
receive any payment with respect to the indi-
vidual under this part during the period the in-
dividual is not enrolled.
‘‘(i) SPECIAL RULE FOR HOSPICE CARE.—
‘‘(1) INFORMATION.—A contract under this 
part shall require the MedicareAdvantage organiza-
tion to inform each individual enrolled under this 
part with a MedicareAdvantage plan offered by the 
organization about the availability of hospice care 
if—
‘‘(A) a hospice program participating 
under this title is located within the organiza-
tion’s service area; or 
‘‘(B) it is common practice to refer pa-
tients to hospice programs outside such service 
area.
317
‘‘(2) PAYMENT.—If an individual who is en-
rolled with a MedicareAdvantage organization under 
this part makes an election under section 1812(d)(1) 
to receive hospice care from a particular hospice pro-
gram—
‘‘(A) payment for the hospice care fur-
nished to the individual shall be made to the 
hospice program elected by the individual by 
the Secretary; 
‘‘(B) payment for other services for which 
the individual is eligible notwithstanding the in-
dividual’s election of hospice care under section 
1812(d)(1), including services not related to the 
individual’s terminal illness, shall be made by 
the Secretary to the MedicareAdvantage organi-
zation or the provider or supplier of the service 
instead of payments calculated under subsection 
(a); and 
‘‘(C) the Secretary shall continue to make 
monthly payments to the MedicareAdvantage 
organization in an amount equal to the value of 
the additional benefits required under section 
1854(f)(1)(A).’’.
318
SEC. 204. SUBMISSION OF BIDS; PREMIUMS. 
Section 1854 (42 U.S.C. 1395w–24) is amended to 
read as follows:
‘‘SUBMISSION OF BIDS; PREMIUMS 
‘‘SEC. 
1854. 
(a) 
SUBMISSION
OF
BIDS
BY 
MEDICAREADVANTAGE ORGANIZATIONS.—
‘‘(1) IN GENERAL.—Not later than the second 
Monday in September and except as provided in 
paragraph (3), each MedicareAdvantage organiza-
tion shall submit to the Secretary, in such form and 
manner as the Secretary may specify, for each 
MedicareAdvantage plan that the organization in-
tends to offer in a service area in the following 
year—
‘‘(A) notice of such intent and information 
on the service area of the plan; 
‘‘(B) the plan type for each plan; 
‘‘(C) if the MedicareAdvantage plan is a 
coordinated care plan (as described in section 
1851(a)(2)(A)) or a private fee-for-service plan 
(as described in section 1851(a)(2)(C)), the in-
formation described in paragraph (2) with re-
spect to each payment area; 
‘‘(D) the enrollment capacity (if any) in re-
lation to the plan and each payment area;
319
‘‘(E) the expected mix, by health status, of 
enrolled individuals; and 
‘‘(F) such other information as the Sec-
retary may specify. 
‘‘(2) INFORMATION
REQUIRED
FOR
COORDI-
NATED CARE PLANS AND PRIVATE FEE-FOR-SERVICE 
PLANS.—For a MedicareAdvantage plan that is a 
coordinated care plan (as described in section 
1851(a)(2)(A)) or a private fee-for-service plan (as 
described in section 1851(a)(2)(C)), the information 
described in this paragraph is as follows: 
‘‘(A) INFORMATION REQUIRED WITH RE-
SPECT
TO
BENEFITS
UNDER
THE
ORIGINAL 
MEDICARE
FEE-FOR-SERVICE
PROGRAM
OP-
TION.—Information relating to the coverage of 
benefits under the original medicare fee-for-
service program option as follows: 
‘‘(i) The plan bid, which shall consist 
of a dollar amount that represents the 
total amount that the plan is willing to ac-
cept (not taking into account the applica-
tion of the comprehensive risk adjustment 
methodology under section 1853(a)(3)) for 
providing coverage of the benefits under 
the original medicare fee-for-service pro-
320
gram option to an individual enrolled in 
the plan that resides in the service area of 
the plan for a month. 
‘‘(ii) For the enhanced medical bene-
fits package offered—
‘‘(I) the adjusted community rate 
(as defined in subsection (g)(3)) of 
the package; 
‘‘(II) the portion of the actuarial 
value of such benefits package (if any) 
that will be applied toward satisfying 
the requirement for additional benefits 
under subsection (g); 
‘‘(III) 
the 
MedicareAdvantage 
monthly beneficiary premium for en-
hanced medical benefits (as defined in 
subsection (b)(2)(C));
‘‘(IV) a description of any cost-
sharing; 
‘‘(V) a description of whether the 
amount of the unified deductible has 
been lowered or the maximum limita-
tions on out-of-pocket expenses have 
been decreased (relative to the levels 
used in calculating the plan bid); and
321
‘‘(VI) such other information as 
the Secretary considers necessary. 
‘‘(iii) 
The 
assumptions 
that 
the 
MedicareAdvantage organization used in 
preparing the plan bid with respect to 
numbers, in each payment area, of enrolled 
individuals and the mix, by health status, 
of such individuals. 
‘‘(B) INFORMATION REQUIRED WITH RE-
SPECT TO PART D.—The information required 
to be submitted by an eligible entity under sec-
tion 1860D–12, including the monthly pre-
miums for standard coverage and any other 
qualified prescription drug coverage available to 
individuals enrolled under part D.
‘‘(C) 
DETERMINING
PLAN
COSTS
IN-
CLUDED IN PLAN BID.—For purposes of sub-
mitting its plan bid under subparagraph (A)(i) 
a 
MedicareAdvantage 
plan 
offered 
by 
a 
MedicareAdvantage organization satisfies sub-
paragraphs (A) and (C) of section 1852(a)(1) if 
the actuarial value of the deductibles, coinsur-
ance, and copayments applicable on average to 
individuals enrolled in such plan under this part 
with respect to benefits under the original medi-
322
care fee-for-service program option on which 
that bid is based (ignoring any reduction in 
cost-sharing offered by such plan as enhanced 
medical benefits under paragraph (2)(A)(ii) or 
required under clause (ii) or (iii) of subsection 
(g)(1)(C)) equals the amount specified in sub-
section (f)(1)(B). 
‘‘(3) REQUIREMENTS FOR MSA PLANS.—For an 
MSA plan described in section 1851(a)(2)(B), the 
information described in this paragraph is the infor-
mation that such a plan would have been required 
to submit under this part if the Prescription Drug 
and Medicare Improvements Act of 2003 had not 
been enacted. 
‘‘(4) REVIEW.—
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), the Secretary shall review the ad-
justed community rates (as defined in section 
1854(g)(3)), 
the 
amounts 
of 
the 
MedicareAdvantage monthly basic premium and 
the MedicareAdvantage monthly beneficiary 
premium for enhanced medical benefits filed 
under this subsection and shall approve or dis-
approve such rates and amounts so submitted. 
The Secretary shall review the actuarial as-
323
sumptions 
and 
data 
used 
by 
the 
MedicareAdvantage organization with respect to 
such rates and amounts so submitted to deter-
mine the appropriateness of such assumptions 
and data. 
‘‘(B) MSA EXCEPTION.—The Secretary 
shall not review, approve, or disapprove the 
amounts submitted under paragraph (3). 
‘‘(C) CLARIFICATION OF AUTHORITY RE-
GARDING
DISAPPROVAL
OF
UNREASONABLE 
BENEFICIARY
COST-SHARING.—Under the au-
thority under subparagraph (A), the Secretary 
may disapprove the bid if the Secretary deter-
mines that the deductibles, coinsurance, or co-
payments applicable under the plan discourage 
access to covered services or are likely to result 
in favorable selection of MedicareAdvantage eli-
gible individuals. 
‘‘(5) APPLICATION OF FEHBP STANDARD; PRO-
HIBITION
ON
PRICE
GOUGING.—Each bid amount 
submitted 
under 
paragraph 
(1) 
for 
a 
MedicareAdvantage plan must reasonably and equi-
tably reflect the cost of benefits provided under that 
plan. 
‘‘(b) MONTHLY PREMIUMS CHARGED.—
324
‘‘(1) IN GENERAL.—
‘‘(A) COORDINATED
CARE
AND
PRIVATE 
FEE-FOR-SERVICE
PLANS.—The 
monthly 
amount of the premium charged to an indi-
vidual enrolled in a MedicareAdvantage plan 
(other than an MSA plan) offered by a 
MedicareAdvantage organization shall be equal 
to the sum of the following: 
‘‘(i) The MedicareAdvantage monthly 
basic beneficiary premium (if any). 
‘‘(ii) The MedicareAdvantage monthly 
beneficiary premium for enhanced medical 
benefits (if any). 
‘‘(iii) The MedicareAdvantage monthly 
obligation for qualified prescription drug 
coverage (if any). 
‘‘(B) MSA PLANS.—The rules under this 
section that would have applied with respect to 
an MSA plan if the Prescription Drug and 
Medicare Improvements Act of 2003 had not 
been enacted shall continue to apply to MSA 
plans after the date of enactment of such Act. 
‘‘(2) PREMIUM
TERMINOLOGY.—For purposes 
of this part:
325
‘‘(A) 
MEDICAREADVANTAGE
MONTHLY 
BASIC
BENEFICIARY
PREMIUM.—The 
term 
‘MedicareAdvantage monthly basic beneficiary 
premium’ 
means, 
with 
respect 
to 
a 
MedicareAdvantage plan, the amount required 
to be charged under subsection (d)(2) for the 
plan. 
‘‘(B) 
MEDICAREADVANTAGE
MONTHLY 
BENEFICIARY OBLIGATION FOR QUALIFIED PRE-
SCRIPTION
DRUG
COVERAGE.—The 
term 
‘MedicareAdvantage monthly beneficiary obliga-
tion for qualified prescription drug coverage’ 
means, with respect to a MedicareAdvantage 
plan, the amount determined under section 
1858A(d). 
‘‘(C) 
MEDICAREADVANTAGE
MONTHLY 
BENEFICIARY PREMIUM FOR ENHANCED MED-
ICAL
BENEFITS.—The term ‘MedicareAdvan-
tage monthly beneficiary premium for enhanced 
medical benefits’ means, with respect to a 
MedicareAdvantage plan, the amount required 
to be charged under subsection (f)(2) for the 
plan, or, in the case of an MSA plan, the 
amount filed under subsection (a)(3).
326
‘‘(D) 
MEDICAREADVANTAGE
MONTHLY 
MSA PREMIUM.—The term ‘MedicareAdvantage 
monthly MSA premium’ means, with respect to 
a MedicareAdvantage plan, the amount of such 
premium filed under subsection (a)(3) for the 
plan. 
‘‘(c) UNIFORM PREMIUM.—The MedicareAdvantage 
monthly 
basic 
beneficiary 
premium, 
the 
MedicareAdvantage monthly beneficiary obligation for 
qualified 
prescription 
drug 
coverage, 
the 
MedicareAdvantage monthly beneficiary premium for en-
hanced medical benefits, and the MedicareAdvantage 
monthly MSA premium charged under subsection (b) of 
a MedicareAdvantage organization under this part may 
not vary among individuals enrolled in the plan. 
‘‘(d) DETERMINATION OF PREMIUM REDUCTIONS, 
REDUCED COST-SHARING, ADDITIONAL BENEFITS, AND 
BENEFICIARY PREMIUMS.—
‘‘(1) BIDS BELOW THE BENCHMARK.—If the 
Secretary determines under section 1853(d)(3) that 
the weighted service area benchmark amount ex-
ceeds the plan bid, the Secretary shall require the 
plan to provide additional benefits in accordance 
with subsection (g).
327
‘‘(2) BIDS
ABOVE
THE
BENCHMARK.—If the 
Secretary determines under section 1853(d)(3) that 
the plan bid exceeds the weighted service area 
benchmark 
amount 
(determined 
under 
section 
1853(d)(2)), the amount of such excess shall be the 
MedicareAdvantage monthly basic beneficiary pre-
mium (as defined in section 1854(b)(2)(A)). 
‘‘(e) TERMS AND CONDITIONS OF IMPOSING PRE-
MIUMS.—Each MedicareAdvantage organization shall per-
mit the payment of any MedicareAdvantage monthly basic 
premium, the MedicareAdvantage monthly beneficiary ob-
ligation for qualified prescription drug coverage, and the 
MedicareAdvantage monthly beneficiary premium for en-
hanced medical benefits on a monthly basis, may termi-
nate election of individuals for a MedicareAdvantage plan 
for failure to make premium payments only in accordance 
with section 1851(g)(3)(B)(i), and may not provide for 
cash or other monetary rebates as an inducement for en-
rollment or otherwise (other than as an additional benefit 
described in subsection (g)(1)(C)(i)). 
‘‘(f) LIMITATION ON ENROLLEE LIABILITY.—
‘‘(1) FOR
BENEFITS
UNDER
THE
ORIGINAL 
MEDICARE
FEE-FOR-SERVICE
PROGRAM
OPTION.—
The sum of—
328
‘‘(A) the MedicareAdvantage monthly basic 
beneficiary premium (multiplied by 12) and the 
actuarial value of the deductibles, coinsurance, 
and copayments (determined on the same basis 
as used in determining the plan’s bid under 
paragraph (2)(C)) applicable on average to indi-
viduals enrolled under this part with a 
MedicareAdvantage plan described in subpara-
graph (A) or (C) of section 1851(a)(2) of an or-
ganization with respect to required benefits de-
scribed in section 1852(a)(1)(A); must equal
‘‘(B) the actuarial value of the deductibles, 
coinsurance, and copayments that would be ap-
plicable on average to individuals who have 
elected to receive benefits under the original 
medicare fee-for-service program option if such 
individuals 
were 
not 
members 
of 
a 
MedicareAdvantage organization for the year 
(adjusted as determined appropriate by the Sec-
retary to account for geographic differences and 
for plan cost and utilization differences). 
‘‘(2) FOR ENHANCED MEDICAL BENEFITS.—If 
the MedicareAdvantage organization provides to its 
members 
enrolled 
under 
this 
part 
in 
a 
MedicareAdvantage plan described in subparagraph
329
(A) or (C) of section 1851(a)(2) with respect to en-
hanced medical benefits relating to benefits under 
the original medicare fee-for-service program option, 
the sum of the MedicareAdvantage monthly bene-
ficiary premium for enhanced medical benefits (mul-
tiplied by 12) charged and the actuarial value of its 
deductibles, coinsurance, and copayments charged 
with respect to such benefits for a year must equal 
the adjusted community rate (as defined in sub-
section (g)(3)) for such benefits for the year minus 
the actuarial value of any additional benefits pursu-
ant to clause (ii), (iii), or (iv) of subsection (g)(2)(C) 
that the plan specified under subsection (a)(2)(i)(II). 
‘‘(3) DETERMINATION ON OTHER BASIS.—If the 
Secretary determines that adequate data are not 
available to determine the actuarial value under 
paragraph (1)(A) or (2), the Secretary may deter-
mine such amount with respect to all individuals in 
the same geographic area, the State, or in the 
United 
States, 
eligible 
to 
enroll 
in 
the 
MedicareAdvantage plan involved under this part or 
on the basis of other appropriate data. 
‘‘(4) SPECIAL
RULE
FOR
PRIVATE
FEE-FOR-
SERVICE
PLANS.—With 
respect 
to 
a 
MedicareAdvantage 
private 
fee-for-service 
plan
330
(other than a plan that is an MSA plan), in no event 
may—
‘‘(A) the actuarial value of the deductibles, 
coinsurance, and copayments applicable on av-
erage to individuals enrolled under this part 
with such a plan of an organization with re-
spect to required benefits described in subpara-
graphs (A), (C), and (D) of section 1852(a)(1); 
exceed 
‘‘(B) the actuarial value of the deductibles, 
coinsurance, and copayments that would be ap-
plicable on average to individuals entitled to (or 
enrolled for) benefits under part A and enrolled 
under part B if they were not members of a 
MedicareAdvantage organization for the year. 
‘‘(g) REQUIREMENT FOR ADDITIONAL BENEFITS.—
‘‘(1) REQUIREMENT.—
‘‘(A) 
IN
GENERAL.—Each 
MedicareAdvantage organization (in relation to 
a MedicareAdvantage plan, other than an MSA 
plan, it offers) shall provide that if there is an 
excess amount (as defined in subparagraph (B)) 
for the plan for a contract year, subject to the 
succeeding provisions of this subsection, the or-
ganization shall provide to individuals such ad-
331
ditional benefits described in subparagraph (C) 
as the organization may specify in a value 
which the Secretary determines is at least equal 
to the adjusted excess amount (as defined in 
subparagraph (D)). 
‘‘(B) EXCESS AMOUNT.—For purposes of 
this paragraph, the term ‘excess amount’ 
means, for an organization for a plan, is 100 
percent of the amount (if any) by which the 
weighted service area benchmark amount (de-
termined under section 1853(d)(2)) exceeds the 
plan 
bid 
(as 
adjusted 
under 
section 
1853(d)(1)). 
‘‘(C) 
ADDITIONAL
BENEFITS
DE-
SCRIBED.—The additional benefits described in 
this subparagraph are as follows: 
‘‘(i) Subject to subparagraph (F), a 
monthly part B premium reduction for in-
dividuals enrolled in the plan.
‘‘(ii) Lowering the amount of the uni-
fied deductible and decreasing the max-
imum limitations on out-of-pocket expenses 
for individuals enrolled in the plan.
332
‘‘(iii) A reduction in the actuarial 
value of plan cost-sharing for plan enroll-
ees. 
‘‘(iv) Subject to subparagraph (E), 
such additional benefits as the organization 
may specify. 
‘‘(v) Contributing to the stabilization 
fund under paragraph (2). 
‘‘(vi) Any combination of the reduc-
tions and benefits described in clauses (i) 
through (v). 
‘‘(D) ADJUSTED
EXCESS
AMOUNT.—For 
purposes of this paragraph, the term ‘adjusted 
excess amount’ means, for an organization for 
a plan, is the excess amount reduced to reflect 
any amount withheld and reserved for the orga-
nization for the year under paragraph (2). 
‘‘(E) RULE FOR APPROVAL OF MEDICAL 
AND PRESCRIPTION DRUG BENEFITS.—An orga-
nization may not specify any additional benefit 
that provides for the coverage of any prescrip-
tion drug (other than that relating to prescrip-
tion drugs covered under the original medicare 
fee-for-service program option). 
‘‘(F) PREMIUM REDUCTIONS.—
333
‘‘(i) IN GENERAL.—Subject to clause 
(ii), as part of providing any additional 
benefits required under subparagraph (A), 
a MedicareAdvantage organization may 
elect a reduction in its payments under 
section 1853(a)(1)(A)(i) with respect to a 
MedicareAdvantage plan and the Secretary 
shall apply such reduction to reduce the 
premium under section 1839 of each en-
rollee in such plan as provided in section 
1840(i). 
‘‘(ii) AMOUNT
OF
REDUCTION.—The 
amount of the reduction under clause (i) 
with 
respect 
to 
any 
enrollee 
in 
a 
MedicareAdvantage plan—
‘‘(I) may not exceed 125 percent 
of the premium described under sec-
tion 1839(a)(3); and 
‘‘(II) shall apply uniformly to 
each 
enrollee 
of 
the 
MedicareAdvantage plan to which 
such reduction applies. 
‘‘(G) UNIFORM APPLICATION.—This para-
graph shall be applied uniformly for all enroll-
ees for a plan.
334
‘‘(H) CONSTRUCTION.—Nothing in this 
subsection shall be construed as preventing a 
MedicareAdvantage organization from providing 
enhanced medical benefits (described in section 
1852(a)(3)) that are in addition to the health 
care benefits otherwise required to be provided 
under this paragraph and from imposing a pre-
mium for such enhanced medical benefits. 
‘‘(2) STABILIZATION FUND.—A MedicareAdvan-
tage organization may provide that a part of the 
value of an excess amount described in paragraph 
(1) be withheld and reserved in the Federal Hospital 
Insurance Trust Fund and in the Federal Supple-
mentary Medical Insurance Trust Fund (in such 
proportions as the Secretary determines to be appro-
priate) by the Secretary for subsequent annual con-
tract periods, to the extent required to prevent 
undue fluctuations in the additional benefits offered 
in those subsequent periods by the organization in 
accordance with such paragraph. Any of such value 
of the amount reserved which is not provided as ad-
ditional benefits described in paragraph (1)(A) to in-
dividuals electing the MedicareAdvantage plan of the 
organization in accordance with such paragraph
335
prior to the end of such periods, shall revert for the 
use of such Trust Funds. 
‘‘(3) ADJUSTED COMMUNITY RATE.—For pur-
poses of this subsection, subject to paragraph (4), 
the term ‘adjusted community rate’ for a service or 
services 
means, 
at 
the 
election 
of 
a 
MedicareAdvantage organization, either—
‘‘(A) the rate of payment for that service 
or services which the Secretary annually deter-
mines would apply to an individual electing a 
MedicareAdvantage plan under this part if the 
rate of payment were determined under a ‘com-
munity rating system’ (as defined in section 
1302(8) of the Public Health Service Act, other 
than subparagraph (C)); or 
‘‘(B) such portion of the weighted aggre-
gate premium, which the Secretary annually es-
timates would apply to such an individual, as 
the Secretary annually estimates is attributable 
to that service or services, 
but adjusted for differences between the utilization 
characteristics of the individuals electing coverage 
under this part and the utilization characteristics of 
the other enrollees with the plan (or, if the Secretary 
finds that adequate data are not available to adjust
336
for those differences, the differences between the uti-
lization characteristics of individuals selecting other 
MedicareAdvantage coverage, or MedicareAdvantage 
eligible individuals in the area, in the State, or in 
the 
United 
States, 
eligible 
to 
elect 
MedicareAdvantage coverage under this part and the 
utilization characteristics of the rest of the popu-
lation in the area, in the State, or in the United 
States, respectively). 
‘‘(4) DETERMINATION BASED ON INSUFFICIENT 
DATA.—For purposes of this subsection, if the Sec-
retary finds that there is insufficient enrollment ex-
perience to determine the average amount of pay-
ments to be made under this part at the beginning 
of a contract period or to determine (in the case of 
a newly operated provider-sponsored organization or 
other new organization) the adjusted community 
rate for the organization, the Secretary may deter-
mine such an average based on the enrollment expe-
rience of other contracts entered into under this part 
and may determine such a rate using data in the 
general commercial marketplace. 
‘‘(h) PROHIBITION OF STATE IMPOSITION OF PRE-
MIUM TAXES.—No State may impose a premium tax or
337
similar 
tax 
with 
respect 
to 
payments 
to 
MedicareAdvantage organizations under section 1853.
‘‘(i) PERMITTING USE OF SEGMENTS OF SERVICE 
AREAS.—The Secretary shall permit a MedicareAdvantage 
organization to elect to apply the provisions of this section 
uniformly to separate segments of a service area (rather 
than uniformly to an entire service area) as long as such 
segments are composed of 1 or more MedicareAdvantage 
payment areas.’’. 
(b) STUDY AND REPORT ON CLARIFICATION OF AU-
THORITY REGARDING DISAPPROVAL OF UNREASONABLE 
BENEFICIARY COST-SHARING.—
(1) STUDY.—The Secretary, in consultation 
with beneficiaries, consumer groups, employers, and 
Medicare+Choice organizations, shall conduct a 
study to determine the extent to which the cost-shar-
ing structures under Medicare+Choice plans under 
part C of title XVIII of the Social Security Act dis-
courage access to covered services or discriminate 
based on the health status of Medicare+Choice eligi-
ble individuals (as defined in section 1851(a)(3) of 
the Social Security Act (42 U.S.C. 1395w–
21(a)(3))). 
(2) REPORT.—Not later than December 31, 
2004, the Secretary shall submit a report to Con-
338
gress on the study conducted under paragraph (1) 
together with recommendations for such legislation 
and administrative actions as the Secretary con-
siders appropriate. 
SEC. 205. SPECIAL RULES FOR PRESCRIPTION DRUG BENE-
FITS. 
(a) Part C of title XVIII (42 U.S.C. 1395w–21 et 
seq.) is amended by inserting after section 1857 the fol-
lowing new section: 
‘‘SPECIAL RULES FOR PRESCRIPTION DRUG BENEFITS 
‘‘SEC. 1858A. (a) AVAILABILITY.—
‘‘(1) PLANS REQUIRED TO PROVIDE QUALIFIED 
PRESCRIPTION DRUG COVERAGE TO ENROLLEES.—
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), on and after January 1, 
2006, a MedicareAdvantage organization offer-
ing a MedicareAdvantage plan (except for an 
MSA plan) shall make available qualified pre-
scription drug coverage that meets the require-
ments for such coverage under this part and 
part D to each enrollee of the plan. 
‘‘(B) PRIVATE
FEE-FOR-SERVICE
PLANS 
MAY, BUT
ARE
NOT
REQUIRED
TO, PROVIDE 
QUALIFIED PRESCRIPTION DRUG COVERAGE.—
Pursuant to section 1852(a)(2)(D), a private 
fee-for-service plan may elect not to provide
339
qualified prescription drug coverage under part 
D to individuals residing in the area served by 
the plan. 
‘‘(2) REFERENCE
TO
PROVISION
PERMITTING 
ADDITIONAL PRESCRIPTION DRUG COVERAGE.—For 
the provisions of part D, made applicable to this 
part pursuant to paragraph (1), that permit a plan 
to make available qualified prescription drug cov-
erage that includes coverage of covered drugs that 
exceeds the coverage required under paragraph (1) 
of section 1860D–6 in an area, but only if the 
MedicareAdvantage organization offering the plan 
also offers a MedicareAdvantage plan in the area 
that only provides the coverage that is required 
under such paragraph (1), see paragraph (2) of such 
section. 
‘‘(3) RULE FOR APPROVAL OF MEDICAL AND 
PRESCRIPTION DRUG BENEFITS.—Pursuant to sec-
tions 
1854(g)(1)(F) 
and 
1852(a)(3)(D), 
a 
MedicareAdvantage 
organization 
offering 
a 
MedicareAdvantage plan that provides qualified pre-
scription drug coverage may not make available cov-
erage of any prescription drugs (other than that re-
lating to prescription drugs covered under the origi-
nal medicare fee-for-service program option) to an
340
enrollee as an additional benefit or as an enhanced 
medical benefit. 
‘‘(b) COMPLIANCE WITH ADDITIONAL BENEFICIARY 
PROTECTIONS.—With respect to the offering of qualified 
prescription drug coverage by a MedicareAdvantage orga-
nization under a MedicareAdvantage plan, the organiza-
tion and plan shall meet the requirements of section 
1860D–5, including requirements relating to information 
dissemination and grievance and appeals, and such other 
requirements under part D that the Secretary determines 
appropriate in the same manner as such requirements 
apply to an eligible entity and a Medicare Prescription 
Drug plan under part D. The Secretary shall waive such 
requirements to the extent the Secretary determines that 
such requirements duplicate requirements otherwise appli-
cable to the organization or the plan under this part. 
‘‘(c) PAYMENTS FOR PRESCRIPTION DRUGS.—
‘‘(1) PAYMENT OF FULL AMOUNT OF PREMIUM 
TO ORGANIZATIONS FOR QUALIFIED PRESCRIPTION 
DRUG COVERAGE.—
‘‘(A) IN GENERAL.—For each year (begin-
ning with 2006), the Secretary shall pay to 
each MedicareAdvantage organization offering a 
MedicareAdvantage plan that provides qualified 
prescription drug coverage, an amount equal to
341
the full amount of the monthly premium sub-
mitted under section 1854(a)(2)(B) for the 
year, as adjusted using the risk adjusters that 
apply to the standard prescription drug cov-
erage published under section 1860D–11. 
‘‘(B) APPLICATION OF PART D RISK COR-
RIDOR, STABILIZATION
RESERVE
FUND, AND 
ADMINISTRATIVE EXPENSES PROVISIONS.—The 
provisions of subsections (b), (c), and (d) of 
section 
1860D–16 
shall 
apply 
to 
a 
MedicareAdvantage 
organization 
offering 
a 
MedicareAdvantage plan that provides qualified 
prescription drug coverage and payments made 
to such organization under subparagraph (A) in 
the same manner as such provisions apply to an 
eligible entity offering a Medicare Prescription 
Drug plan and payments made to such entity 
under subsection (a) of section 1860D–16. 
‘‘(2) PAYMENT FROM PRESCRIPTION DRUG AC-
COUNT.—Payment made to MedicareAdvantage or-
ganizations under this subsection shall be made from 
the Prescription Drug Account in the Federal Sup-
plementary Medical Insurance Trust Fund under 
section 1841.
342
‘‘(d) 
COMPUTATION
OF
MEDICAREADVANTAGE 
MONTHLY BENEFICIARY OBLIGATION
FOR QUALIFIED 
PRESCRIPTION DRUG COVERAGE.—In the case of a 
MedicareAdvantage eligible individual receiving qualified
prescription drug coverage under a MedicareAdvantage 
plan during a year after 2005, the MedicareAdvantage 
monthly beneficiary obligation for qualified prescription 
drug coverage of such individual in the year shall be deter-
mined in the same manner as the monthly beneficiary obli-
gation is determined under section 1860D–17 for eligible 
beneficiaries enrolled in a Medicare Prescription Drug 
plan, except that, for purposes of this subparagraph, any 
reference to the monthly plan premium approved by the 
Secretary under section 1860D–13 shall be treated as a 
reference to the monthly premium for qualified prescrip-
tion drug coverage submitted by the MedicareAdvantage 
organization 
offering 
the 
plan 
under 
section 
1854(a)(2)(A) and approved by the Secretary. 
‘‘(e) 
COLLECTION
OF
MEDICAREADVANTAGE 
MONTHLY BENEFICIARY OBLIGATION
FOR QUALIFIED 
PRESCRIPTION DRUG COVERAGE.—The provisions of sec-
tion 1860D–18, including subsection (b) of such section, 
shall apply to the amount of the MedicareAdvantage 
monthly beneficiary obligation for qualified prescription 
drug coverage (as determined under subsection (d)) re-
343
quired to be paid by a MedicareAdvantage eligible indi-
vidual enrolled in a MedicareAdvantage plan in the same 
manner as such provisions apply to the amount of the 
monthly beneficiary obligation required to be paid by an 
eligible beneficiary enrolled in a Medicare Prescription 
Drug plan under part D. 
‘‘(f) AVAILABILITY OF PREMIUM SUBSIDY AND COST-
SHARING REDUCTIONS
FOR LOW-INCOME ENROLLEES 
AND REINSURANCE PAYMENTS.—For provisions—
‘‘(1) providing premium subsidies and cost-
sharing reductions for low-income individuals receiv-
ing qualified prescription drug coverage through a 
MedicareAdvantage plan, see section 1860D–19; and 
‘‘(2) providing a MedicareAdvantage organiza-
tion with reinsurance payments for certain expenses 
incurred in providing qualified prescription drug cov-
erage through a MedicareAdvantage plan, see sec-
tion 1860D–20.’’. 
(b) TREATMENT OF REDUCTION FOR PURPOSES OF 
DETERMINING
GOVERNMENT
CONTRIBUTION
UNDER 
PART B.—Section 1844(c) (42 U.S.C. 1395w) is amended 
by striking ‘‘section 1854(f)(1)(E)’’ and inserting ‘‘section 
1854(d)(1)(A)(i)’’.
344
SEC. 206. FACILITATING EMPLOYER PARTICIPATION. 
Section 1858(h) (as added by section 211) is amend-
ed by inserting ‘‘(including subsection (i) of such section)’’ 
after ‘‘section 1857’’. 
SEC. 207. ADMINISTRATION BY THE CENTER FOR MEDI-
CARE CHOICES. 
On 
and 
after 
January 
1, 
2006, 
the 
MedicareAdvantage program under part C of title XVIII 
of the Social Security Act shall be administered by the 
Center for Medicare Choices established under section 
1808 such title (as added by section 301), and each ref-
erence to the Secretary made in such part shall be deemed 
to be a reference to the Administrator of the Center for 
Medicare Choices. 
SEC. 208. CONFORMING AMENDMENTS. 
(a) ORGANIZATIONAL
AND FINANCIAL REQUIRE-
MENTS
FOR
MEDICAREADVANTAGE
ORGANIZATIONS; 
PROVIDER-SPONSORED ORGANIZATIONS.—Section 1855 
(42 U.S.C. 1395w–25) is amended—
(1) in subsection (b), in the matter preceding 
paragraph (1), by inserting ‘‘subparagraphs (A), 
(B), and (D) of’’ before ‘‘section 1852(A)(1)’’; and 
(2) by striking ‘‘Medicare+Choice’’ and insert-
ing ‘‘MedicareAdvantage’’ each place it appears. 
(b) ESTABLISHMENT OF PSO STANDARDS.—Section 
1856 (42 U.S.C. 1395w–26) is amended by striking
345
‘‘Medicare+Choice’’ and inserting ‘‘MedicareAdvantage’’ 
each place it appears. 
(c) CONTRACTS WITH MEDICAREADVANTAGE ORGA-
NIZATIONS.—Section 1857 (42 U.S.C. 1395w–27) is 
amended—
(1) in subsection (g)(1)—
(A) in subparagraph (B), by striking 
‘‘amount of the Medicare+Choice monthly basic 
and supplemental beneficiary premiums’’ and 
inserting ‘‘amounts of the MedicareAdvantage 
monthly basic premium and MedicareAdvantage 
monthly beneficiary premium for enhanced 
medical benefits’’; 
(B) in subparagraph (F), by striking ‘‘or’’ 
after the semicolon at the end; 
(C) in subparagraph (G), by adding ‘‘or’’ 
after the semicolon at the end; and 
(D) by inserting after subparagraph (G) 
the following new subparagraph: 
‘‘(H)(i) charges any individual an amount 
in excess of the MedicareAdvantage monthly 
beneficiary obligation for qualified prescription 
drug coverage under section 1858A(d);
346
‘‘(ii) provides coverage for prescription 
drugs that is not qualified prescription drug 
coverage; 
‘‘(iii) offers prescription drug coverage, but 
does not make standard prescription drug cov-
erage available; or
‘‘(iv) provides coverage for prescription 
drugs (other than that relating to prescription 
drugs covered under the original medicare fee-
for-service program option described in section 
1851(a)(1)(A)(i)) as an enhanced medical ben-
efit under section 1852(a)(3)(D) or as an addi-
tional benefit under section 1854(g)(1)(F),’’; 
and 
(2) by striking ‘‘Medicare+Choice’’ and insert-
ing ‘‘MedicareAdvantage’’ each place it appears. 
(d) DEFINITIONS; MISCELLANEOUS PROVISIONS.—
Section 1859 (42 U.S.C. 1395w–28) is amended—
(1) by striking subsection (c) and inserting the 
following new subsection: 
‘‘(c) OTHER REFERENCES TO OTHER TERMS.—
‘‘(1) ENHANCED
MEDICAL
BENEFITS.—The 
term ‘enhanced medical benefits’ is defined in sec-
tion 1852(a)(3)(E).
347
‘‘(2) MEDICAREADVANTAGE
ELIGIBLE
INDI-
VIDUAL.—The term ‘MedicareAdvantage eligible in-
dividual’ is defined in section 1851(a)(3). 
‘‘(3) MEDICAREADVANTAGE PAYMENT AREA.—
The term ‘MedicareAdvantage payment area’ is de-
fined in section 1853(d). 
‘‘(4) 
NATIONAL
PER
CAPITA 
MEDICARE+CHOICE
GROWTH
PERCENTAGE.—The 
‘national per capita Medicare+Choice growth per-
centage’ is defined in section 1853(c)(6). 
‘‘(5) MEDICAREADVANTAGE
MONTHLY
BASIC 
BENEFICIARY
PREMIUM; 
MEDICAREADVANTAGE 
MONTHLY
BENEFICIARY
OBLIGATION
FOR
QUALI-
FIED
PRESCRIPTION
DRUG
COVERAGE; 
MEDICAREADVANTAGE MONTHLY BENEFICIARY PRE-
MIUM
FOR
ENHANCED
MEDICAL
BENEFITS.—The 
terms ‘MedicareAdvantage monthly basic beneficiary 
premium’, ‘MedicareAdvantage monthly beneficiary 
obligation for qualified prescription drug coverage’, 
and ‘MedicareAdvantage monthly beneficiary pre-
mium for enhanced medical benefits’ are defined in 
section 1854(b)(2). 
‘‘(6) QUALIFIED
PRESCRIPTION
DRUG
COV-
ERAGE.—The term ‘qualified prescription drug cov-
348
erage’ has the meaning given such term in section 
1860D(9). 
‘‘(7) STANDARD
PRESCRIPTION
DRUG
COV-
ERAGE.—The term ‘standard prescription drug cov-
erage’ has the meaning given such term in section 
1860D(10).’’; and 
(2) by striking ‘‘Medicare+Choice’’ and insert-
ing ‘‘MedicareAdvantage’’ each place it appears. 
(e) CONFORMING AMENDMENTS EFFECTIVE BEFORE 
2006.—
(1) EXTENSION OF MSAS.—Section 1851(b)(4) 
(42 U.S.C. 1395w–21(b)(4)) is amended by striking 
‘‘January 1, 2003’’ and inserting ‘‘January 1, 
2004’’.
(2) CONTINUOUS
OPEN
ENROLLMENT
AND 
DISENROLLMENT THROUGH 2005.—Section 1851(e) 
of the Social Security Act (42 U.S.C. 1395w–21(e)) 
is amended—
(A) in paragraph (2)(A), by striking 
‘‘THROUGH
2004’’ and ‘‘December 31, 2004’’ 
and inserting ‘‘THROUGH 2005’’ and ‘‘December 
31, 2005’’, respectively; 
(B) in the heading of paragraph (2)(B), by 
striking ‘‘DURING 2005’’ and inserting ‘‘DURING 
2006’’;
349
(C) in paragraphs (2)(B)(i) and (2)(C)(i), 
by striking ‘‘2005’’ and inserting ‘‘2006’’ each 
place it appears; 
(D) in paragraph (2)(D), by striking 
‘‘2004’’ and inserting ‘‘2005’’; and 
(E) in paragraph (4), by striking ‘‘2005’’ 
and inserting ‘‘2006’’ each place it appears. 
(3) EFFECTIVE DATE.—The amendments made 
by this subsection shall take effect on the date of en-
actment of this Act. 
(f) OTHER CONFORMING AMENDMENTS.—
(1) 
CONFORMING
MEDICARE
CROSS-REF-
ERENCES.—
(A) 
Section 
1839(a)(2) 
(42 
U.S.C. 
1395r(a)(2)) is amended by striking ‘‘section 
1854(f)(1)(E)’’ 
and 
inserting 
‘‘section 
1854(g)(1)(C)(i)’’. 
(B) Section 1840(i) (42 U.S.C. 1395s(i)) 
is amended by striking ‘‘section 1854(f)(1)(E)’’ 
and inserting ‘‘section 1854(g)(1)(C)(i)’’. 
(C) Section 1844(c) (42 U.S.C. 1395w(c)) 
is amended by striking ‘‘section 1854(f)(1)(E)’’ 
and inserting ‘‘section 1854(g)(1)(C)(i)’’. 
(D) Section 1876(k)(3)(A) (42 U.S.C. 
1395mm(k)(3)(A)) is amended by inserting
350
‘‘(as in effect immediately before the enactment 
of the Prescription Drug and Medicare Im-
provements 
Act 
of 
2003)’’ 
after 
section 
1853(a). 
(E) 
Section 
1876(k)(4) 
(42 
U.S.C. 
1395mm(k)(4)(A)) is amended—
(i) in subparagraph (A), by striking 
‘‘section 1853(a)(3)(B)’’ and inserting 
‘‘section 1853(a)(3)(D)’’; and 
(ii) in subparagraph (B), by striking 
‘‘section 1854(g)’’ and inserting ‘‘section 
1854(h)’’.
(F) Section 1876(k)(4)(C) (42 U.S.C. 
1395mm(k)(4)(C)) is amended by inserting 
‘‘(as in effect immediately before the enactment 
of the Prescription Drug and Medicare Im-
provements Act of 2003)’’ after ‘‘section 
1851(e)(6)’’. 
(G) 
Section 
1894(d) 
(42 
U.S.C. 
1395eee(d)) is amended by adding at the end 
the following new paragraph: 
‘‘(3) APPLICATION OF PROVISIONS.—For pur-
poses of paragraphs (1) and (2), the references to 
section 1853 and subsection (a)(2) of such section in 
such paragraphs shall be deemed to be references to
351
those provisions as in effect immediately before the 
enactment of the Prescription Drug and Medicare 
Improvements Act of 2003.’’. 
(2) CONFORMING MEDICARE TERMINOLOGY.—
Title XVIII (42 U.S.C. 1395 et seq.), except for 
part C of such title (42 U.S.C. 1395w–21 et seq.), 
and title XIX (42 U.S.C. 1396 et seq.) are each 
amended by striking ‘‘Medicare+Choice’’ and insert-
ing ‘‘MedicareAdvantage’’ each place it appears. 
SEC. 209. EFFECTIVE DATE. 
(a) IN GENERAL.—Except as provided in section 
208(d)(3) and subsection (b), the amendments made by 
this title shall apply with respect to plan years beginning 
on and after January 1, 2006. 
(b) MEDICAREADVANTAGE MSA PLANS.—Notwith-
standing any provision of this title, the Secretary shall 
apply the payment and other rules that apply with respect 
to an MSA plan described in section 1851(a)(2)(B) of the 
Social Security Act (42 U.S.C. 1395w–21(a)(2)(B)) as if 
this title had not been enacted.
352
Subtitle B—Preferred Provider 
Organizations 
SEC. 211. ESTABLISHMENT OF MEDICAREADVANTAGE PRE-
FERRED PROVIDER PROGRAM OPTION. 
(a) ESTABLISHMENT
OF
PREFERRED
PROVIDER 
PROGRAM OPTION.—Section 1851(a)(2) is amended by 
adding at the end the following new subparagraph: 
‘‘(D) PREFERRED
PROVIDER
ORGANIZA-
TION PLANS.—A MedicareAdvantage preferred 
provider organization plan under the program 
established under section 1858.’’. 
(b) PROGRAM
SPECIFICATIONS.—Part C of title 
XVIII (42 U.S.C. 1395w–21 et seq.) is amended by insert-
ing after section 1857 the following new section: 
‘‘PREFERRED PROVIDER ORGANIZATIONS 
‘‘SEC. 1858. (a) ESTABLISHMENT OF PROGRAM.—
‘‘(1) IN GENERAL.—Beginning on January 1, 
2006, there is established a preferred provider pro-
gram under which preferred provider organization 
plans offered by preferred provider organizations are 
offered to MedicareAdvantage eligible individuals in 
preferred provider regions. 
‘‘(2) DEFINITIONS.—
‘‘(A) PREFERRED
PROVIDER
ORGANIZA-
TION.—The term ‘preferred provider organiza-
353
tion’ means an entity with a contract under sec-
tion 1857 that meets the requirements of this 
section applicable with respect to preferred pro-
vider organizations. 
‘‘(B) PREFERRED
PROVIDER
ORGANIZA-
TION PLAN.—The term ‘preferred provider or-
ganization plan’ means a MedicareAdvantage 
plan that—
‘‘(i) has a network of providers that 
have agreed to a contractually specified re-
imbursement for covered benefits with the 
organization offering the plan; 
‘‘(ii) provides for reimbursement for 
all covered benefits regardless of whether 
such benefits are provided within such net-
work of providers; and 
‘‘(iii) is offered by a preferred pro-
vider organization. 
‘‘(C) PREFERRED
PROVIDER
REGION.—
The term ‘preferred provider region’ means—
‘‘(i) a region established under para-
graph (3); and 
‘‘(ii) a region that consists of the en-
tire United States.
354
‘‘(3) PREFERRED
PROVIDER
REGIONS.—For 
purposes of this part the Secretary shall establish 
preferred provider regions as follows: 
‘‘(A) There shall be at least 10 regions. 
‘‘(B) Each region must include at least 1 
State. 
‘‘(C) The Secretary may not divide States 
so that portions of the State are in different re-
gions. 
‘‘(D) To the extent possible, the Secretary 
shall include multistate metropolitan statistical 
areas in a single region. The Secretary may di-
vide metropolitan statistical areas where it is 
necessary to establish regions of such size and 
geography as to maximize the participation of 
preferred provider organization plans. 
‘‘(E) The Secretary may conform the pre-
ferred provider regions to the service areas es-
tablished under section 1860D–10.
‘‘(b) ELIGIBILITY, ELECTION, AND ENROLLMENT; 
BENEFITS AND BENEFICIARY PROTECTIONS.—
‘‘(1) IN GENERAL.—Except as provided in the 
succeeding provisions of this subsection, the provi-
sions of sections 1851 and 1852 that apply with re-
spect to coordinated care plans shall apply to pre-
355
ferred provider organization plans offered by a pre-
ferred provider organization. 
‘‘(2) SERVICE
AREA.—The service area of a 
preferred provider organization plan shall be a pre-
ferred provider region.
‘‘(3) AVAILABILITY.—Each preferred provider 
organization 
plan 
must 
be 
offered 
to 
each 
MedicareAdvantage eligible individual who resides in 
the service area of the plan. 
‘‘(4) AUTHORITY
TO
PROHIBIT
RISK
SELEC-
TION.—The provisions of section 1852(a)(6) shall 
apply to preferred provider organization plans. 
‘‘(5) ASSURING ACCESS TO SERVICES IN PRE-
FERRED PROVIDER ORGANIZATION PLANS.—
‘‘(A) IN
GENERAL.—In addition to any 
other requirements under this section, in the 
case of a preferred provider organization plan, 
the organization offering the plan must dem-
onstrate to the Secretary that the organization 
has sufficient number and range of health care 
professionals and providers willing to provide 
services under the terms of the plan. 
‘‘(B) DETERMINATION OF SUFFICIENT AC-
CESS.—The Secretary shall find that an organi-
zation has met the requirement under subpara-
356
graph (A) with respect to any category of 
health care professional or provider if, with re-
spect to that category of provider the plan has 
contracts or agreements with a sufficient num-
ber and range of providers within such category 
to provide covered services under the terms of 
the plan. 
‘‘(C) CONSTRUCTION.—Subparagraph (B) 
shall not be construed as restricting the persons 
from whom enrollees under such a plan may ob-
tain covered benefits. 
‘‘(c) PAYMENTS TO PREFERRED PROVIDER ORGANI-
ZATIONS.—
‘‘(1) PAYMENTS TO ORGANIZATIONS.—
‘‘(A) MONTHLY PAYMENTS.—
‘‘(i) IN GENERAL.—Under a contract 
under section 1857 and subject to para-
graph (5), subsection (e), and section 
1859(e)(4), the Secretary shall make, to 
each preferred provider organization, with 
respect to coverage of an individual for a 
month under this part in a preferred pro-
vider region, separate monthly payments 
with respect to—
357
‘‘(I) benefits under the original 
medicare 
fee-for-service 
program 
under parts A and B in accordance 
with paragraph (4); and 
‘‘(II) benefits under the vol-
untary prescription drug program 
under part D in accordance with sec-
tion 1858A and the other provisions 
of this part. 
‘‘(ii) SPECIAL RULE FOR END-STAGE 
RENAL DISEASE.—The Secretary shall es-
tablish separate rates of payment applica-
ble with respect to classes of individuals 
determined to have end-stage renal disease 
and enrolled in a preferred provider orga-
nization plan under this clause that are 
similar to the separate rates of payment 
described in section 1853(a)(1)(B). 
‘‘(B) ADJUSTMENT TO REFLECT NUMBER 
OF
ENROLLEES.—The Secretary may retro-
actively adjust the amount of payment under 
this paragraph in a manner that is similar to 
the manner in which payment amounts may be 
retroactively adjusted under section 1853(a)(2).
358
‘‘(C) COMPREHENSIVE RISK ADJUSTMENT 
METHODOLOGY.—The Secretary shall apply the 
comprehensive risk adjustment methodology de-
scribed in section 1853(a)(3)(B) to 100 percent 
of the amount of payments to plans under para-
graph (4)(D)(ii). 
‘‘(D) ADJUSTMENT FOR SPENDING VARI-
ATIONS
WITHIN
A
REGION.—The Secretary 
shall establish a methodology for adjusting the 
amount of payments to plans under paragraph 
(4)(D)(ii) that achieves the same objective as 
the 
adjustment 
described 
in 
paragraph 
1853(a)(2)(C). 
‘‘(2) ANNUAL
CALCULATION
OF
BENCHMARK 
AMOUNTS FOR PREFERRED PROVIDER REGIONS.—
For each year (beginning in 2006), the Secretary 
shall calculate a benchmark amount for each pre-
ferred provider region for each month for such year 
with respect to coverage of the benefits available 
under the original medicare fee-for-service program 
option equal to the average of each benchmark 
amount calculated under section 1853(a)(4) for each 
MedicareAdvantage payment area for the year with-
in such region, weighted by the number of
359
MedicareAdvantage eligible individuals residing in 
each such payment area for the year. 
‘‘(3) ANNUAL
ANNOUNCEMENT
OF
PAYMENT 
FACTORS.—
‘‘(A) ANNUAL
ANNOUNCEMENT.—Begin-
ning in 2005, at the same time as the Secretary 
publishes the risk adjusters under section 
1860D–11, the Secretary shall annually an-
nounce (in a manner intended to provide notice 
to interested parties) the following payment fac-
tors: 
‘‘(i) The benchmark amount for each 
preferred provider region (as calculated 
under paragraph (2)(A)) for the year. 
‘‘(ii) The factors to be used for ad-
justing payments described under—
‘‘(I) the comprehensive risk ad-
justment methodology described in 
paragraph (1)(C) with respect to each 
preferred provider region for the year; 
and 
‘‘(II) the methodology used for 
adjustment for geographic variations 
within such region established under 
paragraph (1)(D).
360
‘‘(B) ADVANCE
NOTICE
OF
METHODO-
LOGICAL
CHANGES.—At least 45 days before 
making the announcement under subparagraph 
(A) for a year, the Secretary shall—
‘‘(i) provide for notice to preferred 
provider organizations of proposed changes 
to be made in the methodology from the 
methodology and assumptions used in the 
previous announcement; and 
‘‘(ii) provide such organizations with 
an opportunity to comment on such pro-
posed changes. 
‘‘(C) EXPLANATION OF ASSUMPTIONS.—In 
each announcement made under subparagraph 
(A), the Secretary shall include an explanation 
of the assumptions and changes in methodology 
used in the announcement in sufficient detail so 
that preferred provider organizations can com-
pute each payment factor described in such 
subparagraph. 
‘‘(4) SECRETARY’S
DETERMINATION
OF
PAY-
MENT AMOUNT FOR BENEFITS UNDER THE ORIGI-
NAL
MEDICARE
FEE-FOR-SERVICE
PROGRAM.—The 
Secretary shall determine the payment amount for 
plans as follows:
361
‘‘(A) REVIEW OF PLAN BIDS.—The Sec-
retary shall review each plan bid submitted 
under subsection (d)(1) for the coverage of ben-
efits under the original medicare fee-for-service 
program option to ensure that such bids are 
consistent with the requirements under this 
part and are based on the assumptions de-
scribed in section 1854(a)(2)(A)(iii) that the 
plan used with respect to numbers of enrolled 
individuals. 
‘‘(B) DETERMINATION
OF
PREFERRED 
PROVIDER REGIONAL BENCHMARK AMOUNTS.—
The Secretary shall calculate a preferred pro-
vider regional benchmark amount for that plan 
for the benefits under the original medicare fee-
for-service program option for each plan equal 
to the regional benchmark adjusted by using 
the 
assumptions 
described 
in 
section 
1854(a)(2)(A)(iii) that the plan used with re-
spect to numbers of enrolled individuals. 
‘‘(C) COMPARISON TO BENCHMARK.—The 
Secretary shall determine the difference be-
tween each plan bid (as adjusted under sub-
paragraph (A)) and the preferred provider re-
gional benchmark amount (as determined under