I
106TH CONGRESS
2D SESSION
H. R. 4236
To amend part C of title XVIII of the Social Security Act to improve
payments under the Medicare+Choice Program.
IN THE HOUSE OF REPRESENTATIVES
APRIL 11, 2000
Mr. FOLEY (for himself, Mrs. KELLY, Mr. COOK, Mr. BASS, and Mr. CANADY
of Florida) introduced the following bill; which was referred to the Com-
mittee on Ways and Means, and in addition to the Committee on Com-
merce, for a period to be subsequently determined by the Speaker, in
each case for consideration of such provisions as fall within the jurisdic-
tion of the committee concerned
A BILL
To amend part C of title XVIII of the Social Security Act
to improve payments under the Medicare+Choice Program.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Seniors Health Choice
Preservation Act of 2000’’.
SEC. 2. APPLICATION OF BUDGET NEUTRALITY PRINCIPLE
TO THE NEW MEDICARE+CHOICE RISK AD-
JUSTMENT METHODOLOGY.
(a) IN GENERAL.—Section 1853(a)(3) of the Social
Security Act (42 U.S.C. 1395w–23(a)(3)) is amended by
adding at the end the following new subparagraph:
‘‘(E) IMPLEMENTATION IN A BUDGET NEU-
TRAL
MANNER.—The methodology under this
paragraph shall be designed and implemented
in a manner so that it does not result in any
material change in the aggregate level of ex-
penditures under this title compared to the level
that would have occurred if such methodology
had not been implemented (and if the previous
risk adjustment methodology used in 1998 had
continued to be implemented).’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) takes effect on the date of the enactment
of this Act and applies to payments for months beginning
on or after January 2001.
SEC. 3. CHANGES TO HEALTH-STATUS RISK ADJUSTMENT.
(a) IMPLEMENTATION OF HEALTH-STATUS RISK AD-
JUSTMENT THROUGH NEGOTIATED RULEMAKING.—Sec-
tion 1853(c) of the Social Security Act (42 U.S.C. 1395w–
23(c)) is further amended by adding at the end the fol-
lowing new paragraph:
‘‘(4) IMPLEMENTATION
OF
HEALTH-STATUS
RISK
ADJUSTMENT
THROUGH
NEGOTIATED
RULE-
MAKING.—
‘‘(A) IN
GENERAL.—The Secretary shall
establish, using a negotiated rulemaking process
under subchapter III of chapter 5 of title 5,
United States Code, and on an expedited basis,
health-status related risk adjustors described in
paragraph (3).
‘‘(B) APPOINTMENT
OF
COMMITTEE.—In
appointing negotiated rulemaking committee
under section 565(a) of such title, the Secretary
shall 
include 
representatives 
of
Medicare+Choice organizations, providers, the
Medicare Payment Advisory Commission, the
Academy of Actuaries, the Department of
Health and Human Services, and representa-
tives of organizations with expertise in data pri-
vacy issues.
‘‘(C) FACTORS TO CONSIDER.—The health
status risk adjustment methodology shall be
based on the health status of Medicare+Choice
enrollees. In evaluating alternative approaches,
the committee and the Secretary shall weigh the
costs of implementing risk adjustment methods
against their benefits in terms of predictive
power.
‘‘(D) DEADLINES.—
‘‘(i) COMMITTEE APPOINTMENT.—The
Secretary shall provide for the appoint-
ment of the negotiated rulemaking com-
mittee under subparagraph (B) by not
later than 6 months after the date of the
enactment of this paragraph.
‘‘(ii) 
REPORTING
DEADLINE.—The
committee shall submit its recommenda-
tions to the Secretary by not later than
December 31, 2001.
‘‘(E) SUPERSEDING OTHER PROVISIONS.—
Regulations promulgated by the Secretary pur-
suant to recommendations of the committee
shall supersede the regulations implemented
under paragraph (3).’’.
(b) LIMITING PHASE-IN OF CURRENT HEALTH-STA-
TUS
RISK
ADJUSTMENT
METHODOLOGY.—Section
1853(a)(3)(C)(ii)(II) of such Act (42 U.S.C. 1395w–
23(a)(3)(C)(ii)(II)), as amended by section 511(a) of the
Medicare, Medicaid, and SCHIP Balanced Budget Refine-
ment Act of 1999 (113 Stat. 1501A–380), as enacted into
law by section 1000(a)(6) of Public Law 106–113, is
amended by striking ‘‘not more than 20 percent of such
capitation rate in 2002’’ and inserting ‘‘not more than 10
percentage points more than the percent of 1⁄12 of the an-
nual Medicare+Choice capitation rate that it applied to
in the previous year, except as may be provided for under
paragraph (4)’’.
(c) ELIMINATION OF REQUIREMENT TO REPORT EN-
COUNTER DATA.—The Secretary of Health and Human
Services shall immediately discontinue all activity related
to requiring Medicare+Choice organizations, under part
C of title XVIII of the Social Security Act, to submit en-
counter data for sites other than hospital inpatient depart-
ments, before final regulations are promulgated imple-
menting the health-status risk adjustment methodology
developed under the amendment made by subsection (a).
SEC. 4. ADDITIONAL FLOOR FOR ANNUAL INCREASE IN
MEDICARE+CHOICE CAPITATION RATES.
Section 1853(c)(3)(C) of the Social Security Act (42
U.S.C. 1395w–23(c)(3)(C)) is amended—
(1) in clause (ii), by inserting ‘‘(before 2002)’’
after ‘‘For a subsequent year’’; and
(2) by adding at the end the following new
clause:
‘‘(iii) For 2002 and each subsequent
year, the greater of (I) 102 percent of the
annual Medicare+Choice capitation rate
under this paragraph for the area for the
previous year, or (II) such rate for the pre-
vious year increased by the national per
capita Medicare+Choice growth percent-
age, described in paragraph (6)(A) for the
succeeding year.’’.
SEC. 5. PAYMENT OF ADDITIONAL DRUG INFLATION DIF-
FERENTIAL FOR MEDICARE+CHOICE PLANS
OFFERING QUALIFIED PRESCRIPTION DRUG
COVERAGE.
(a) IN GENERAL.—Section 1853 of the Social Secu-
rity Act (42 U.S.C. 1395w–23) is amended—
(1) in subsection (a)(1)(A), by striking ‘‘and
(i)’’ and inserting ‘‘(i), and (j)’’; and
(2) by adding at the end the following new sub-
section:
‘‘(j) PAYMENT
OF ADDITIONAL DRUG INFLATION
DIFFERENTIAL FOR MEDICARE+CHOICE PLANS OFFER-
ING QUALIFIED PRESCRIPTION DRUG COVERAGE.—
‘‘(1) 
IN
GENERAL.—In 
the 
case 
of 
a
Medicare+Choice plan that offers qualified prescrip-
tion drug coverage (as defined in paragraph (2))) in
a year and that meets the conditions described in
paragraph (3), the annual Medicare+Choice capita-
tion rate otherwise applied under this section shall
be increased by the percentage specified in para-
graph (4).
‘‘(2) QUALIFIED
PRESCRIPTION
DRUG
COV-
ERAGE
DEFINED.—In this subsection, the term
‘qualified prescription drug coverage’ means cov-
erage for outpatient prescription drugs under
which—
‘‘(A) there is no deductible applicable; and
‘‘(B) there is either no limitation to the
amount of benefits available in a year or any
such limitation is not less than $1,500.
Nothing in this paragraph shall be construed as pre-
venting a Medicare+Choice plan offering qualified
prescription drug coverage from imposing a copay-
ment or other cost-sharing, other than a deductible.
‘‘(3) CONDITIONS.—The conditions described in
this paragraph with respect to a Medicare+Choice
plan for months in a year are as follows:
‘‘(A) NO SEPARATE PREMIUM.—There is
no separate premium established for qualified
prescription drug coverage under the plan.
‘‘(B) LIMIT ON PREMIUMS.—The adjusted
community rate proposal shall include a certifi-
cation that the percentage increase in the cost
of drug benefits does not exceed 150 percent of
the Secretary’s estimate of the percentage spec-
ified in paragraph (4), adjusted to fairly reflect
changes in the benefits provided.
‘‘(4) DIFFERENTIAL
PERCENTAGE.—The per-
centage 
specified 
in 
this 
paragraph 
for 
a
Medicare+Choice plan for months in a year is equal
to the product of the following:
‘‘(A) DRUG INFLATION DIFFERENTIAL.—
The number of percentage points by which—
‘‘(i) the annual rate of inflation for
prescription 
drug 
coverage 
under
Medicare+Choice plans (as estimated by
the Secretary for the year), exceeds
‘‘(ii) the percentage increase in the
annual Medicare+Choice capitation rate
applicable to the plan under subsection (a)
(not taking into account this subsection)
for the year involved.
‘‘(B) PROPORTION OF TOTAL VALUE REP-
RESENTED
BY
DRUG
COVERAGE.—The ratio
of—
‘‘(i) the average per capita actuarial
value of the qualified prescription drug
coverage under the plan for the year; to
‘‘(ii) the actuarial value of all benefits
under the plan for the year.
In no case shall the percentage under this paragraph
be less than 0.
‘‘(5) TREATMENT.—The percentage increase in
payment effected under this subsection shall be
taken into account in applying section 1854(f) (re-
lating to additional benefits) and such payment in-
crease is subject to adjustment for risk factors
under subsection (a) in the same manner as the pay-
ment described in such subsection.
‘‘(6) CONSTRUCTION.—Nothing in this sub-
section 
shall 
be 
construed 
as 
requiring 
a
Medicare+Choice plan to provide qualified or other
prescription drug coverage.’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) apply to payment for months beginning
with January 2002.
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