I 
108TH CONGRESS 
1ST SESSION H. R. 2033
To amend title XVIII of the Social Security Act to increase the minimum 
percentage increase under the Medicare+Choice program, and for other 
purposes. 
IN THE HOUSE OF REPRESENTATIVES 
MAY 8, 2003
Ms. DUNN (for herself, Mr. MCDERMOTT, and Mr. RUSH) introduced the fol-
lowing bill; which was referred to the Committee on Ways and Means, 
and in addition to the Committee on Energy and Commerce, for a period 
to be subsequently determined by the Speaker, in each case for consider-
ation of such provisions as fall within the jurisdiction of the committee 
concerned 
A BILL 
To amend title XVIII of the Social Security Act to increase 
the 
minimum 
percentage 
increase 
under 
the 
Medicare+Choice program, and for other purposes.
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 ‘‘Medicare Equity and 
Access Act’’.
SEC. 2. 2-YEAR INCREASE IN MINIMUM PERCENTAGE IN-
CREASE. 
Section 1853(c)(1)(C) of the Social Security Act (42 
U.S.C. 1395w–23(c)(1)(C)) is amended—
(1) in clause (iv), by striking ‘‘and each suc-
ceeding year’’ and inserting ‘‘and 2003’’; and 
(2) by inserting at the end the following new 
clauses: 
‘‘(v) For 2004 and 2005, 106.5 per-
cent of the annual Medicare+Choice capi-
tation rate under this paragraph for the 
area for the previous year. 
‘‘(vi) For 2006 and each succeeding 
year, 
102 
percent 
of 
the 
annual 
Medicare+Choice capitation rate under 
this paragraph for the area for the pre-
vious year.’’. 
SEC. 3. INCLUSION OF COSTS OF DOD AND VA MILITARY 
FACILITY SERVICES TO MEDICARE-ELIGIBLE 
BENEFICIARIES 
IN 
CALCULATION 
OF 
MEDICARE+CHOICE PAYMENT RATES. 
Section 1853(c)(3) of the Social Security Act (42 
U.S.C. 1395w–23(c)(3)) is amended—
(1) in subparagraph (A), by striking ‘‘subpara-
graph (B)’’ and inserting ‘‘subparagraphs (B) and 
(E)’’, and
(2) by adding at the end the following new sub-
paragraph: 
‘‘(E) INCLUSION OF COSTS OF DOD AND 
VA MILITARY FACILITY SERVICES TO MEDICARE-
ELIGIBLE BENEFICIARIES.—In determining the 
area-specific Medicare+Choice capitation rate 
under subparagraph (A) for a year (beginning 
with 2004), the annual per capita rate of pay-
ment for 1997 determined under section 
1876(a)(1)(C) shall be adjusted to include in 
the rate the Secretary’s estimate, on a per cap-
ita basis, of the amount of additional payments 
that would have been made in the area involved 
under this title if individuals entitled to benefits 
under this title had not received services from 
facilities of the Department of Defense or the 
Department of Veterans Affairs.’’. 
SEC. 4. AVOIDING DUPLICATIVE STATE REGULATION. 
(a) IN GENERAL.—Section 1856(b)(3) of the Social 
Security Act (42 U.S.C. 1395w–26(b)(3)) is amended to 
read as follows: 
‘‘(3) RELATION TO STATE LAWS.—The stand-
ards established under this subsection shall super-
sede any State law or regulation (other than State 
licensing laws or State laws relating to plan sol-
vency) with respect to Medicare+Choice plans which 
are offered by Medicare+Choice organizations under 
this part.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall take effect on the date of the enact-
ment of this Act. 
SEC. 5. MEDICARE+CHOICE QUALITY PERFORMANCE PAY-
MENT INCENTIVE PROGRAM. 
(a) ESTABLISHMENT OF PROGRAM.—
(1) IN GENERAL.—The Secretary of Health and 
Human Services shall establish a program to provide 
financial incentive awards to Medicare+Choice orga-
nizations offering Medicare+Choice plans under 
part C of title XVIII of the Social Security Act that 
demonstrate the provision of superior quality health 
care to enrollees under the plan. 
(2) PERIOD OF PROGRAM.—Awards under the 
program shall be made during 2005 and 2006, and 
shall be based upon the most recent available quality 
data. 
(b) AWARDS.—
(1) IN GENERAL.—Of the amounts provided for 
the program under subsection (f) in each year, the 
Secretary shall allocate—
(A) 75 percent of such amounts for Na-
tional Performance Quality Awards (described 
in subsection (c)), and 
(B) 25 percent of such amounts for State 
Performance Quality Awards (described in sub-
section (d)). 
(2) 
LIMITATIONS
ON
AWARDS.—A 
Medicare+Choice 
organization 
offering 
a 
Medicare+Choice plan may not receive both a Na-
tional and State Performance Quality Award in a 
year. No Medicare+Choice organization offering a 
Medicare+Choice plan is eligible for an award under 
this section unless it offers benefits throughout the 
year in which the award is paid. 
(3) AMOUNT OF AWARD.—The amount of an 
award to a Medicare+Choice organization offering a 
Medicare+Choice plan eligible for the award shall be 
determined by multiplying the number of bene-
ficiaries enrolled under the plan on the first day of 
the year for which the award is paid times a uniform 
dollar amount established by the Secretary. In no 
case may the uniform dollar amount for a State Per-
formance Quality Award exceed the dollar amount 
for a National Performance Quality Award for the 
year involved.
(D) Patient self-management education 
which may include primary prevention, behavior 
modification programs, and compliance and sur-
veillance. 
(E) Process and outcome measurement, 
evaluation, and management. 
(F) Routine reporting among health care 
providers concerned and procedures for feed-
back. 
(G) Such other components that the Sec-
retary determines reasonably improve health 
care outcomes. 
(c) NATIONAL PERFORMANCE QUALITY AWARDS.—
(1) IN
GENERAL.—The Secretary shall only 
award a National Performance Quality Award to 
Medicare+Choice organizations with respect to the 
Medicare+Choice plans offered by the organizations 
that demonstrate superior quality in the health care 
furnished to its enrollees. 
(2) MANDATORY AWARDS.—National Perform-
ance Quality Awards shall be given to the 
Medicare+Choice organizations with respect to the 
Medicare+Choice plans that receive ratings in the 
top 25th percentile of all plans rated by the Sec-
retary pursuant to subsection (e).
(d) STATE PERFORMANCE QUALITY AWARDS.—
(1) IN
GENERAL.—The Secretary shall only 
award a State Performance Quality Award to 
Medicare+Choice organizations with respect to the 
Medicare+Choice plans offered by the organizations 
in that State that demonstrate the highest quality in 
the health care furnished to its enrollees. 
(2) REQUIREMENT FOR 2 PLANS.—A State Per-
formance Quality Award may not be awarded in a 
State that has less than two Medicare+Choice orga-
nizations offering Medicare+Choice plans. 
(3) MINIMUM
RATING
REQUIRED.—A State 
Performance Quality Award shall be awarded to 
Medicare+Choice 
organizations 
offering 
Medicare+Choice plans in a State that receive a rat-
ing by the Secretary pursuant to subsection (e) in 
the 60th percentile, or higher, of the national rank-
ing of all eligible plans. 
(4) SPECIAL CONSIDERATION.—The Secretary 
may 
provide 
special 
consideration 
to 
Medicare+Choice 
organizations 
offering 
Medicare+Choice plans that serve predominantly 
rural areas or that demonstrate significant quality 
care improvements.
(e) RATING METHODOLOGY.—In determining which 
Medicare+Choice organization offering Medicare+Choice 
plans qualify for an award under this section, the Sec-
retary shall develop a scoring and ranking system using—
(1) the 2003 MCO standards and guideline 
methodology of the National Committee for Quality 
Assurance for awarding total HEDIS points (based 
on HEDIS and CAHPS measures) with an adjust-
ment to incorporate the following three HEDIS out-
come measures—
(A) cholesterol control after acute cardio-
vascular events, 
(B) HbA1c control for comprehensive dia-
betes care, and 
(C) cholesterol control for comprehensive 
diabetes care), and 
(2) audited HEDIS outcomes and process 
measures and CAHPS data as reported to the De-
partment of Health and Human Services. 
(f) PAYMENT FROM MEDICARE TRUST FUNDS.—The 
Secretary shall provide for the transfer from the Federal 
Hospital Insurance Trust Fund and the Federal Supple-
mentary Insurance Trust Fund under title XVIII of the 
Social Security Act (42 U.S.C. 1395i, 1395t), in such pro-
portions as the Secretary determines to be appropriate,
of $500,000,000 for each of 2005 and 2006 for the costs 
of carrying out the project under this section. 
SEC. 6. INSTITUTE OF MEDICINE REPORT ON PAYMENT IN-
CENTIVES AND PERFORMANCE UNDER THE 
MEDICARE+CHOICE PROGRAM. 
(a) STUDY.—The Secretary of Health and Human 
Services shall enter into an arrangement with the Institute 
of Medicine of the National Academy of Sciences under 
which the Institute shall conduct a study on clinical out-
comes, performance, and quality of care under the 
Medicare+Choice program under part C of title XVIII of 
the Social Security Act. 
(b) MATTERS STUDIED.—
(1) IN
GENERAL.—In conducting the study 
under subsection (a), the Institute shall review and 
evaluate the public and private sector experience re-
lated to the establishment of performance measures 
and payment incentives. The review shall include an 
evaluation of the success, efficiency, and utility of 
structural process and performance measurements, 
and different methodologies that link performance to 
payment incentives. The review shall include the use 
of incentives—
(A) aimed at plans and their enrollees; 
(B) aimed at providers and their patients;
(C) to encourage consumers to purchase 
based on quality and value; and 
(D) to encourage multiple purchasers, pro-
viders, beneficiaries, and plans within a commu-
nity to work together to improve performance. 
(2) IDENTIFICATION OF OPTIONS.—As part of 
the study, the Institute shall identify options for 
providing incentives and rewarding performance, im-
prove quality, outcomes, and efficiency in the deliv-
ery 
of 
programs 
and 
services 
under 
the 
Medicare+Choice program, including—
(A) periodic updates of performance meas-
urements to continue rewarding outstanding 
performance and encourage improvements; 
(B) payments that vary by type of plan, 
such as preferred provider organization plans 
and MSA plans; 
(C) 
extension 
of 
incentives 
in 
the 
Medicare+Choice program to the fee for service 
program under title XVIII of the Social Secu-
rity Act; and 
(D) performance measures needed to im-
plement alternative methodologies to align pay-
ments with performance.
(c) REPORT.—Not later than 18 months after the 
date of the enactment of this Act, the Institute shall sub-
mit to Congress and the Secretary a report on the study 
conducted under subsection (a).
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