[House Report 114-159]
[From the U.S. Government Publishing Office]
114th Congress } { Rept. 114-159
HOUSE OF REPRESENTATIVES
1st Session } { Part 1
======================================================================
INCREASING REGULATORY FAIRNESS ACT OF 2015
_______
June 16, 2015.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Ryan of Wisconsin, from the Committee on Ways and Means, submitted
the following
R E P O R T
[To accompany H.R. 2507]
[Including cost estimate of the Congressional Budget Office]
The Committee on Ways and Means, to whom was referred the
bill (H.R. 2507) to amend title XVIII of the Social Security
Act to establish an annual rulemaking schedule for payment
rates under Medicare Advantage, having considered the same,
report favorably thereon with an amendment and recommend that
the bill as amended do pass.
CONTENTS
Page
I SUMMARY AND BACKGROUND............................................2
A. PURPOSE AND SUMMARY................................... 2
B. BACKGROUND AND NEED FOR LEGISLATION................... 2
C. LEGISLATIVE HISTORY................................... 3
II. EXPLANATION OF THE BILL...........................................3
III.VOTES OF THE COMMITTEE............................................4
IV. BUDGET EFFECTS OF THE BILL........................................4
A. Committee Estimate of Budgetary Effects............... 4
B. Statement Regarding New Budget Authority and Tax
Expenditures Budget Authority........................ 4
C. Cost Estimate Prepared by the Congressional Budget
Office............................................... 4
V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE........5
A. Committee Oversight Findings and Recommendations...... 5
B. Statement of General Performance Goals and Objectives. 5
C. Information Relating to Unfunded Mandates............. 5
D. Congressional Earmarks, Limited Tax Benefits, and
Limited Tariff Benefits.............................. 6
E. Duplication of Federal Programs....................... 6
F. Disclosure of Directed Rule Makings................... 6
VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED.............6
A. Text of Existing Law Amended or Repealed by the Bill,
as Reported.......................................... 6
B. Changes in Existing Law Proposed by the Bill, as
Reported............................................. 37
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Increasing Regulatory Fairness Act of
2015''.
SEC. 2. ESTABLISHING AN ANNUAL RULEMAKING SCHEDULE FOR PAYMENT RATES
UNDER MEDICARE ADVANTAGE.
Section 1853(b) of the Social Security Act (42 U.S.C. 1395w-23(b)) is
amended--
(1) in the subsection heading, by inserting ``, Annual
Rulemaking Schedule for Payment Rates for 2017 and Subsequent
Years'' after ``Rates'';
(2) in paragraph (1)--
(A) in subparagraph (B)--
(i) in the subparagraph heading, by inserting
``before 2017'' after ``years''; and
(ii) in the matter preceding clause (i), by
inserting ``and before 2017'' after ``2005'';
and
(B) by adding at the end the following new
subparagraph:
``(C) Annual rulemaking schedule for payment rates
for 2017 and subsequent years.--For 2017 and each
subsequent year, before April 1 of the preceding year,
the Secretary shall, by regulation and in accordance
with the notice and public comment periods required
under paragraph (2) for such a year, annually determine
and announce the following:
``(i) The annual MA capitation rate for each
MA payment area for such year.
``(ii) The risk and other factors to be used
in adjusting such rates under subsection
(a)(1)(A) for payments for months in such year.
``(iii) With respect to each MA region and
each MA regional plan for which a bid was
submitted under section 1854, the MA region-
specific non-drug monthly benchmark amount for
that region for the year involved.
``(iv) The major policy changes to the risk
adjustment model, and the 5-star rating system
established under subsection (o), that are
determined to have an economic impact.''; and
(3) in paragraph (2)--
(A) by inserting ``(or, for 2017 and each subsequent
year, at least 60 days)'' after ``45 days''; and
(B) by inserting ``(for 2017 and each subsequent
year, of no less than 30 days)'' after ``opportunity''.
I. SUMMARY AND BACKGROUND
A. Purpose and Summary
The bill, H.R. 2507, as reported by the Committee on Ways
and Means on June 2, 2015, expands the timeline for comment
during the regulatory process and provides greater transparency
in the Medicare Advantage program.
B. Background and Need for Legislation
On May 21, 2015, Representative Kevin Brady (R-TX),
Chairman of the Committee on Ways and Means Subcommittee on
Health, Representative Joe Pitts (R-PA), Chairman of the
Committee on Energy and Commerce Subcommittee on Health, and
Representative Mike Thompson (D-CA) introduced H.R. 2507, which
increases the time Medicare Advantage and Part D stakeholders
have to comment on annual regulatory notices.
C. Legislative History
Background
H.R. 2507 was introduced on May 21, 2015, and was referred
to the Committee on Ways and Means and subsequently to the
Committee on Energy and Commerce.
Committee hearings
On July 24, 2014, the Committee on Ways and Means
Subcommittee on Health held a hearing on the status of the
Medicare Advantage program.
The panel of witnesses included the following:
Chris Wing, Chief Executive Officer, SCAN Health Plans
Jeff Burnich, M.D., Senior Vice President & Executive Officer,
Sutter Medical Network, (Sacramento, CA) on behalf of
CAPG
Robert Book, PhD, Senior Research Director, Health Systems
Innovation Network, LLC, Outside Healthcare and
Economics Expert, American Action Forum
Joe Baker, President, Medicare Rights Center
Committee action
The Committee on Ways and Means marked up H.R. 2507, the
Increasing Regulatory Fairness Act of 2015, on June 2, 2015,
and ordered the bill favorably reported to the House of
Representatives as amended by a voice vote (with a quorum being
present).
II. EXPLANATION OF THE BILL
Increasing Regulatory Fairness Act of 2015
PRESENT LAW
Section 1853(b) of the Social Security Act requires the
Centers for Medicare and Medicaid Services (CMS) to release a
proposal detailing any rate and policy changes associated with
Medicare Advantage and Part D for 45 days, which provides
stakeholders an established time frame to comment.
REASONS FOR CHANGE
The CMS annual Call Letter and Rate Notice has
substantially increased from less than 20 pages in 2006 to well
over a hundred pages at present becoming increasingly more
complex each year. In order to ensure fairness for all
stakeholders (as with the longer comment periods for all other
payment regulations), the Committee believes legislation is
needed to increase the allotted time for interested parties to
read and remark on proposals affecting the industry,
stakeholders, and beneficiaries through changes in policy and
payment rates. Establishing a minimum 30-day time frame for
comment is a reasonable, fair adjustment, increasing
transparency in the Medicare Advantage programs.
EXPLANATION OF PROVISIONS
The Increasing Regulatory Fairness Act of 2015 would expand
the annual regulatory schedule for Medicare Advantage payment
rates and policies. The schedule affords stakeholders and
Congress more time to provide constructive feedback on the new
proposals by effectively doubling the time currently provided
for proposed Call Letter and Rate Notice comment.
EFFECTIVE DATE
The bill would take effect beginning on January 1, 2017.
III. VOTES OF THE COMMITTEE
In compliance with clause 3(b) of rule XIII of the Rules of
the House of Representatives, the following statement is made
concerning the vote of the Committee on Ways and Means in its
consideration of H.R. 2507, Increasing Regulatory Fairness Act
of 2015, on June 2, 2015.
The bill, H.R. 2507, was ordered favorably reported to the
House of Representatives as amended by a voice vote (with a
quorum being present).
IV. BUDGET EFFECTS OF THE BILL
A. Committee Estimate of Budgetary Effects
In compliance with clause 3(d) of rule XIII of the Rules of
the House of Representatives, the following statement is made
concerning the effects on the budget of the bill, H.R. 2507, as
reported. The Committee agrees with the estimate prepared by
the Congressional Budget Office (CBO), which is included below
as Insert A.
B. Statement Regarding New Budget Authority and Tax Expenditures Budget
Authority
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee states that the
bill involves no new or increased budget authority. The
Committee states further that the bill involves no new or
increased tax expenditures.
C. Cost Estimate Prepared by the Congressional Budget Office
In compliance with clause 3(c)(3) of rule XIII of the Rules
of the House of Representatives, requiring a cost estimate
prepared by the CBO, the following statement by CBO is
provided.
U.S. Congress,
Congressional Budget Office,
Washington, DC, June 12, 2015.
Hon. Paul Ryan,
Chairman, Committee on Ways and Means,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 2507, the
Increasing Regulatory Fairness Act of 2015.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Paul Masi.
Sincerely,
Keith Hall.
Enclosure.
H.R. 2507--Increasing Regulatory Fairness Act of 2015
H.R. 2507 would change the schedule by which the Secretary
of Health and Human Services announces proposed and final
updates to program rules for the Medicare Advantage and
Medicare Part D programs. Under current law, the Secretary is
required to announce final program rules for the following
calendar year not later than the first Monday in April. The
Secretary also is required to issue an advance notice of
proposed changes at least 45 days before making the final
announcement.
Beginning in 2017, H.R. 2507 would require the Secretary to
announce payment changes before April 1 for the upcoming year
and to issue the advance notice of those changes at least 60
days before making the final announcement. Additionally,
beginning in 2017, the legislation would provide for a period
of at least 30 days during which stakeholders could comment on
proposed changes included in the advance notice.
Changing the schedule by which the Secretary announces
program rules would not change the calculations used to
determine payments to insurance plans participating in Medicare
Advantage and Medicare Part D. Thus, CBO estimates that
enacting H.R. 2507 would not have a significant budgetary
effect. Because enacting the bill would not affect direct
spending or revenues, pay-as-you-go procedures do not apply.
H.R. 2507 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act and
would not affect the budgets of state, local or tribal
governments.
The CBO staff contact for this estimate is Paul Masi. The
estimate was approved by Holly Harvey, Deputy Assistant
Director for Budget Analysis.
V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE
A. Committee Oversight Findings and Recommendations
With respect to clause 3(c)(1) of rule XIII of the Rules of
the House of Representatives (relating to oversight findings),
the Committee advises that it was as a result of the
Committee's review of the provisions of H.R. 2507 that the
Committee concluded that it is appropriate to report the bill,
as amended, favorably to the House of Representatives with the
recommendation that the bill do pass.
B. Statement of General Performance Goals and Objectives
With respect to clause 3(c)(4) of rule XIII of the Rules of
the House of Representatives, the Committee advises that the
bill contains no measure that authorizes funding, so no
statement of general performance goals and objectives for which
any measure authorizes funding is required.
C. Information Relating to Unfunded Mandates
This information is provided in accordance with section 423
of the Unfunded Mandates Reform Act of 1995 (Pub. L. No. 104-
4).
The Committee has determined that the bill does not contain
Federal mandates on the private sector. The Committee has
determined that the bill does not impose a Federal
intergovernmental mandate on State, local, or tribal
governments.
D. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff
Benefits
With respect to clause 9 of rule XXI of the Rules of the
House of Representatives, the Committee has carefully reviewed
the provisions of the bill, and states that the provisions of
the bill do not contain any congressional earmarks, limited tax
benefits, or limited tariff benefits within the meaning of the
rule.
E. Duplication of Federal Programs
In compliance with Sec. 3(g)(2) of H. Res. 5 (114th
Congress), the Committee states that no provision of the bill
establishes or reauthorizes: (1) a program of the Federal
Government known to be duplicative of another Federal program;
(2) a program included in any report from the Government
Accountability Office to Congress pursuant to section 21 of
Public Law 111-139; or (3) a program related to a program
identified in the most recent Catalog of Federal Domestic
Assistance, published pursuant to the Federal Program
Information Act (Pub. L. No. 95-220, as amended by Pub. L. No.
98-169).
F. Disclosure of Directed Rule Makings
In compliance with Sec. 3(i) of H. Res. 5 (114th Congress),
the following statement is made concerning directed rule
makings: The Committee estimates that the bill requires no
directed rule makings within the meaning of such section.
VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED
A. Text of Existing Law Amended or Repealed by the Bill, as Reported
In compliance with clause 3(e)(1)(A) of rule XIII of the
Rules of the House of Representatives, the text of each section
proposed to be amended or repealed by the bill, as reported, is
shown below:
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e)(1)(A) of rule XIII of the
Rules of the House of Representatives, the text of each section
proposed to be amended or repealed by the bill, as reported, is
shown below:
SOCIAL SECURITY ACT
* * * * * * *
TITLE XVIII--HEALTH INSURANCE FOR THE AGED AND DISABLED
* * * * * * *
Part C--Medicare+Choice Program
* * * * * * *
payments to medicare+choice organizations
Sec. 1853. (a) Payments to Organizations.--
(1) Monthly payments.--
(A) In general.--Under a contract under
section 1857 and subject to subsections (e),
(g), (i), and (l) and section 1859(e)(4), the
Secretary shall make monthly payments under
this section in advance to each Medicare+Choice
organization, with respect to coverage of an
individual under this part in a Medicare+Choice
payment area for a month, in an amount
determined as follows:
(i) Payment before 2006.--For years
before 2006, the payment amount shall
be equal to \1/12\ of the annual MA
capitation rate (as calculated under
subsection (c)(1)) with respect to that
individual for that area, adjusted
under subparagraph (C) and reduced by
the amount of any reduction elected
under section 1854(f)(1)(E).
(ii) Payment for original fee-for-
service benefits beginning with 2006.--
For years beginning with 2006, the
amount specified in subparagraph (B).
(B) Payment amount for original fee-for-
service benefits beginning with 2006.--
(i) Payment of bid for plans with
bids below benchmark.--In the case of a
plan for which there are average per
capita monthly savings described in
section 1854(b)(3)(C) or 1854(b)(4)(C),
as the case may be, the amount
specified in this subparagraph is equal
to the unadjusted MA statutory non-drug
monthly bid amount, adjusted under
subparagraph (C) and (if applicable)
under subparagraphs (F) and (G), plus
the amount (if any) of any rebate under
subparagraph (E).
(ii) Payment of benchmark for plans
with bids at or above benchmark.--In
the case of a plan for which there are
no average per capita monthly savings
described in section 1854(b)(3)(C) or
1854(b)(4)(C), as the case may be, the
amount specified in this subparagraph
is equal to the MA area-specific non-
drug monthly benchmark amount, adjusted
under subparagraph (C) and (if
applicable) under subparagraphs (F) and
(G).
(iii) Payment of benchmark for msa
plans.--Notwithstanding clauses (i) and
(ii), in the case of an MSA plan, the
amount specified in this subparagraph
is equal to the MA area-specific non-
drug monthly benchmark amount, adjusted
under subparagraph (C).
(iv) Authority to apply frailty
adjustment under pace payment rules for
certain specialized ma plans for
special needs individuals.--
(I) In general.--
Notwithstanding the preceding
provisions of this paragraph,
for plan year 2011 and
subsequent plan years, in the
case of a plan described in
subclause (II), the Secretary
may apply the payment rules
under section 1894(d) (other
than paragraph (3) of such
section) rather than the
payment rules that would
otherwise apply under this
part, but only to the extent
necessary to reflect the costs
of treating high concentrations
of frail individuals.
(II) Plan described.--A plan
described in this subclause is
a specialized MA plan for
special needs individuals
described in section
1859(b)(6)(B)(ii) that is fully
integrated with capitated
contracts with States for
Medicaid benefits, including
long-term care, and that have
similar average levels of
frailty (as determined by the
Secretary) as the PACE program.
(C) Demographic adjustment, including
adjustment for health status.--
(i) In general.--The Secretary shall
adjust the payment amount under
subparagraph (A)(i) and the amount
specified under subparagraph (B)(i),
(B)(ii), and (B)(iii) for such risk
factors as age, disability status,
gender, institutional status, and such
other factors as the Secretary
determines to be appropriate, including
adjustment for health status under
paragraph (3), so as to ensure
actuarial equivalence. The Secretary
may add to, modify, or substitute for
such adjustment factors if such changes
will improve the determination of
actuarial equivalence.
(ii) Application of coding
adjustment.--For 2006 and each
subsequent year:
(I) In applying the
adjustment under clause (i) for
health status to payment
amounts, the Secretary shall
ensure that such adjustment
reflects changes in treatment
and coding practices in the
fee-for-service sector and
reflects differences in coding
patterns between Medicare
Advantage plans and providers
under part A and B to the
extent that the Secretary has
identified such differences.
(II) In order to ensure
payment accuracy, the Secretary
shall annually conduct an
analysis of the differences
described in subclause (I). The
Secretary shall complete such
analysis by a date necessary to
ensure that the results of such
analysis are incorporated on a
timely basis into the risk
scores for 2008 and subsequent
years. In conducting such
analysis, the Secretary shall
use data submitted with respect
to 2004 and subsequent years,
as available and updated as
appropriate.
(III) In calculating each
year's adjustment, the
adjustment factor shall be for
2014, not less than the
adjustment factor applied for
2010, plus 1.5 percentage
points; for each of years 2015
through 2018, not less than the
adjustment factor applied for
the previous year, plus 0.25
percentage point; and for 2019
and each subsequent year, not
less than 5.9 percent.
(IV) Such adjustment shall be
applied to risk scores until
the Secretary implements risk
adjustment using Medicare
Advantage diagnostic, cost, and
use data.
(iii) Improvements to risk adjustment
for special needs individuals with
chronic health conditions.--
(I) In general.--For 2011 and
subsequent years, for purposes
of the adjustment under clause
(i) with respect to individuals
described in subclause (II),
the Secretary shall use a risk
score that reflects the known
underlying risk profile and
chronic health status of
similar individuals. Such risk
score shall be used instead of
the default risk score for new
enrollees in Medicare Advantage
plans that are not specialized
MA plans for special needs
individuals (as defined in
section 1859(b)(6)).
(II) Individuals described.--
An individual described in this
subclause is a special needs
individual described in
subsection (b)(6)(B)(iii) who
enrolls in a specialized MA
plan for special needs
individuals on or after January
1, 2011.
(III) Evaluation.--For 2011
and periodically thereafter,
the Secretary shall evaluate
and revise the risk adjustment
system under this subparagraph
in order to, as accurately as
possible, account for higher
medical and care coordination
costs associated with frailty,
individuals with multiple,
comorbid chronic conditions,
and individuals with a
diagnosis of mental illness,
and also to account for costs
that may be associated with
higher concentrations of
beneficiaries with those
conditions.
(IV) Publication of
evaluation and revisions.--The
Secretary shall publish, as
part of an announcement under
subsection (b), a description
of any evaluation conducted
under subclause (III) during
the preceding year and any
revisions made under such
subclause as a result of such
evaluation.
(D) Separate payment for federal drug
subsidies.--In the case of an enrollee in an
MA-PD plan, the MA organization offering such
plan also receives--
(i) subsidies under section 1860D-15
(other than under subsection (g)); and
(ii) reimbursement for premium and
cost-sharing reductions for low-income
individuals under section 1860D-
14(c)(1)(C).
(E) Payment of rebate for plans with bids
below benchmark.--In the case of a plan for
which there are average per capita monthly
savings described in section 1854(b)(3)(C) or
1854(b)(4)(C), as the case may be, the amount
specified in this subparagraph is the amount of
the monthly rebate computed under section
1854(b)(1)(C)(i) for that plan and year (as
reduced by the amount of any credit provided
under section 1854(b)(1)(C)(iv)).
(F) Adjustment for intra-area variations.--
(i) Intra-regional variations.--In
the case of payment with respect to an
MA regional plan for an MA region, the
Secretary shall also adjust the amounts
specified under subparagraphs (B)(i)
and (B)(ii) in a manner to take into
account variations in MA local payment
rates under this part among the
different MA local areas included in
such region.
(ii) Intra-service area variations.--
In the case of payment with respect to
an MA local plan for a service area
that covers more than one MA local
area, the Secretary shall also adjust
the amounts specified under
subparagraphs (B)(i) and (B)(ii) in a
manner to take into account variations
in MA local payment rates under this
part among the different MA local areas
included in such service area.
(G) Adjustment relating to risk adjustment.--
The Secretary shall adjust payments with
respect to MA plans as necessary to ensure
that--
(i) the sum of--
(I) the monthly payment made
under subparagraph (A)(ii); and
(II) the MA monthly basic
beneficiary premium under
section 1854(b)(2)(A); equals
(ii) the unadjusted MA statutory non-
drug monthly bid amount, adjusted in
the manner described in subparagraph
(C) and, for an MA regional plan,
subparagraph (F).
(H) Special rule for end-stage renal
disease.--The Secretary shall establish
separate rates of payment to a Medicare+Choice
organization with respect to classes of
individuals determined to have end-stage renal
disease and enrolled in a Medicare+Choice plan
of the organization. Such rates of payment
shall be actuarially equivalent to rates that
would have been paid with respect to other
enrollees in the MA payment area (or such other
area as specified by the Secretary) under the
provisions of this section as in effect before
the date of the enactment of the Medicare
Prescription Drug, Improvement, and
Modernization Act of 2003. In accordance with
regulations, the Secretary shall provide for
the application of the seventh sentence of
section 1881(b)(7) to payments under this
section covering the provision of renal
dialysis treatment in the same manner as such
sentence applies to composite rate payments
described in such sentence. In establishing
such rates, the Secretary shall provide for
appropriate adjustments to increase each rate
to reflect the demonstration rate (including
the risk adjustment methodology associated with
such rate) of the social health maintenance
organization end-stage renal disease capitation
demonstrations (established by section 2355 of
the Deficit Reduction Act of 1984, as amended
by section 13567(b) of the Omnibus Budget
Reconciliation Act of 1993), and shall compute
such rates by taking into account such factors
as renal treatment modality, age, and the
underlying cause of the end-stage renal
disease. The Secretary may apply the
competitive bidding methodology provided for in
this section, with appropriate adjustments to
account for the risk adjustment methodology
applied to end stage renal disease payments.
(2) Adjustment to reflect number of enrollees.--
(A) In general.--The amount of payment under
this subsection may be retroactively adjusted
to take into account any difference between 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 advance payment.
(B) Special rule for certain enrollees.--
(i) In general.--Subject to clause
(ii), the Secretary may make
retroactive adjustments under
subparagraph (A) to take into account
individuals enrolled during the period
beginning on the date on which the
individual enrolls with a
Medicare+Choice organization under a
plan operated, sponsored, or
contributed to by the individual's
employer or former employer (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 retroactive adjustments
under this subparagraph, 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.
(3) Establishment of risk adjustment factors.--
(A) Report.--The Secretary shall develop, and
submit to Congress by not later than March 1,
1999, a report on the method of risk adjustment
of payment rates under this section, to be
implemented under subparagraph (C), that
accounts for variations in per capita costs
based on health status. Such report shall
include an evaluation of such method by an
outside, independent actuary of the actuarial
soundness of the proposal.
(B) Data collection.--In order to carry out
this paragraph, the Secretary shall require
Medicare+Choice organizations (and eligible
organizations with risk-sharing contracts under
section 1876) to submit data regarding
inpatient hospital services for periods
beginning on or after July 1, 1997, and data
regarding other services and other information
as the Secretary deems necessary for periods
beginning on or after July 1, 1998. The
Secretary may not require an organization to
submit such data before January 1, 1998.
(C) Initial implementation.--
(i) In general.--The Secretary shall
first provide for implementation of a
risk adjustment methodology that
accounts for variations in per capita
costs based on health status and other
demographic factors for payments by no
later than January 1, 2000.
(ii) Phase-in.--Except as provided in
clause (iv), such risk adjustment
methodology shall be implemented in a
phased-in manner so that the
methodology insofar as it makes
adjustments to capitation rates for
health status applies to--
(I) 10 percent of \1/12\ of
the annual Medicare+Choice
capitation rate in 2000 and
each succeeding year through
2003;
(II) 30 percent of such
capitation rate in 2004;
(III) 50 percent of such
capitation rate in 2005;
(IV) 75 percent of such
capitation rate in 2006; and
(V) 100 percent of such
capitation rate in 2007 and
succeeding years.
(iii) Data for risk adjustment
methodology.--Such risk adjustment
methodology for 2004 and each
succeeding year, shall be based on data
from inpatient hospital and ambulatory
settings.
(iv) Full implementation of risk
adjustment for congestive heart failure
enrollees for 2001.--
(I) Exemption from phase-
in.--Subject to subclause (II),
the Secretary shall fully
implement the risk adjustment
methodology described in clause
(i) with respect to each
individual who has had a
qualifying congestive heart
failure inpatient diagnosis (as
determined by the Secretary
under such risk adjustment
methodology) during the period
beginning on July 1, 1999, and
ending on June 30, 2000, and
who is enrolled in a
coordinated care plan that is
the only coordinated care plan
offered on January 1, 2001, in
the service area of the
individual.
(II) Period of application.--
Subclause (I) shall only apply
during the 1-year period
beginning on January 1, 2001.
(D) Uniform application to all types of
plans.--Subject to section 1859(e)(4), the
methodology shall be applied uniformly without
regard to the type of plan.
(4) Payment rule for federally qualified health center
services.--If an individual who is enrolled with an MA plan
under this part receives a service from a federally qualified
health center that has a written agreement with the MA
organization that offers such plan for providing such a service
(including any agreement required under section 1857(e)(3))--
(A) the Secretary shall pay the amount determined
under section 1833(a)(3)(B) directly to the federally
qualified health center not less frequently than
quarterly; and
(B) the Secretary shall not reduce the amount of the
monthly payments under this subsection as a result of
the application of subparagraph (A).
(b) Annual Announcement of Payment Rates.--
(1) Annual announcements.--
(A) For 2005.--The Secretary shall determine,
and shall announce (in a manner intended to
provide notice to interested parties), not
later than the second Monday in May of 2004,
with respect to each MA payment area, the
following:
(i) MA capitation rates.--The annual
MA capitation rate for each MA payment
area for 2005.
(ii) Adjustment factors.--The risk
and other factors to be used in
adjusting such rates under subsection
(a)(1)(C) for payments for months in
2005.
(B) For 2006 and subsequent years.--For a
year after 2005 --
(i) Initial announcement.--The
Secretary shall determine, and shall
announce (in a manner intended to
provide notice to interested parties),
not later than the first Monday in
April before the calendar year
concerned, with respect to each MA
payment area, the following:
(I) MA capitation rates; ma
local area benchmark.--The
annual MA capitation rate for
each MA payment area for the
year.
(II) Adjustment factors.--The
risk and other factors to be
used in adjusting such rates
under subsection (a)(1)(C) for
payments for months in such
year.
(ii) Regional benchmark
announcement.--The Secretary shall
determine, and shall announce (in a
manner intended to provide notice to
interested parties), on a timely basis
before the calendar year concerned,
with respect to each MA region and each
MA regional plan for which a bid was
submitted under section 1854, the MA
region-specific non-drug monthly
benchmark amount for that region for
the year involved.
(iii) Benchmark announcement for cca
local areas.--The Secretary shall
determine, and shall announce (in a
manner intended to provide notice to
interested parties), on a timely basis
before the calendar year concerned,
with respect to each CCA area (as
defined in section 1860C-1(b)(1)(A)),
the CCA non-drug monthly benchmark
amount under section 1860C-1(e)(1) for
that area for the year involved.
(2) Advance notice of methodological changes.--At
least 45 days before making the announcement under
paragraph (1) for a year, the Secretary shall provide
for notice to Medicare+Choice organizations of proposed
changes to be made in the methodology from the
methodology and assumptions used in the previous
announcement and shall provide such organizations an
opportunity to comment on such proposed changes.
(3) Explanation of assumptions.--In each announcement
made under paragraph (1), the Secretary shall include
an explanation of the assumptions and changes in
methodology used in such announcement.
(4) Continued computation and publication of county-
specific per capita fee-for-service expenditure
information.--The Secretary, through the Chief Actuary
of the Centers for Medicare & Medicaid Services, shall
provide for the computation and publication, on an
annual basis beginning with 2001 at the time of
publication of the annual Medicare+Choice capitation
rates under paragraph (1), of the following information
for the original medicare fee-for-service program under
parts A and B (exclusive of individuals eligible for
coverage under section 226A) for each Medicare+Choice
payment area for the second calendar year ending before
the date of publication:
(A) Total expenditures per capita per month,
computed separately for part A and for part B.
(B) The expenditures described in
subparagraph (A) reduced by the best estimate
of the expenditures (such as graduate medical
education and disproportionate share hospital
payments) not related to the payment of claims.
(C) The average risk factor for the covered
population based on diagnoses reported for
medicare inpatient services, using the same
methodology as is expected to be applied in
making payments under subsection (a).
(D) Such average risk factor based on
diagnoses for inpatient and other sites of
service, using the same methodology as is
expected to be applied in making payments under
subsection (a).
(c) Calculation of Annual Medicare+Choice Capitation Rates.--
(1) In general.--For purposes of this part, subject
to paragraphs (6)(C) and (7), each annual
Medicare+Choice capitation rate, for a Medicare+Choice
payment area that is an MA local area for a contract
year consisting of a calendar year, is equal to the
largest of the amounts specified in the following
subparagraph (A), (B), (C), or (D):
(A) Blended capitation rate.--For a year
before 2005, 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
Medicare+Choice payment area, as
determined under paragraph (3) for the
year, and
(ii) the national percentage (as
specified under paragraph (2) for the
year) of the input-price-adjusted
annual national Medicare+Choice
capitation rate, as determined under
paragraph (4) for the year,
multiplied (for a year other than 2004) 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
exceed, 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 section 1876(a)(1)(C)
for the area).
(ii) For 1999 and 2000, the minimum
amount determined under clause (i) or
this clause, respectively, for the
preceding 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 Statistical Area with a
population of more than 250,000, $525,
and for any other area $475.
(II) In the case of an area outside
the 50 States and the District of
Columbia, 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, 2003, and 2004, the
minimum amount specified in this clause
(or clause (iii)) for the preceding
year increased by the national per
capita Medicare+Choice growth
percentage, described in paragraph
(6)(A) for that succeeding year.
(C) Minimum percentage increase.--
(i) For 1998, 102 percent of the
annual per capita rate of payment for
1997 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 2003, 102 percent
of the annual Medicare+Choice
capitation rate under this paragraph
for the area for the previous year.
(v) For 2004 and each succeeding
year, the greater of--
(I) 102 percent of the annual
MA capitation rate under this
paragraph for the area for the
previous year; or
(II) the annual MA capitation
rate under this paragraph for
the area for the previous year
increased by the national per
capita MA growth percentage,
described in paragraph (6) for
that succeeding year, but not
taking into account any
adjustment under paragraph
(6)(C) for a year before 2004.
(D) 100 percent of fee-for-service costs.--
(i) In general.--For each year
specified in clause (ii), the adjusted
average per capita cost for the year
involved, determined under section
1876(a)(4) and adjusted as appropriate
for the purpose of risk adjustment, for
the MA payment area for individuals who
are not enrolled in an MA plan under
this part for the year, but adjusted to
exclude costs attributable to payments
under sections, 1848(o), and 1886(n)
and 1886(h).
(ii) Periodic rebasing.--The
provisions of clause (i) shall apply
for 2004 and for subsequent years as
the Secretary shall specify (but not
less than once every 3 years).
(iii) Inclusion of costs of va and
dod military facility services to
medicare-eligible beneficiaries.--In
determining the adjusted average per
capita cost under clause (i) for a
year, such cost shall be adjusted to
include the Secretary's estimate, on a
per capita 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.
(2) Area-specific and national percentages.--For
purposes of paragraph (1)(A)--
(A) for 1998, the ``area-specific
percentage'' is 90 percent and the ``national
percentage'' is 10 percent,
(B) for 1999, the ``area-specific
percentage'' is 82 percent and the ``national
percentage'' is 18 percent,
(C) for 2000, the ``area-specific
percentage'' is 74 percent and the ``national
percentage'' is 26 percent,
(D) for 2001, the ``area-specific
percentage'' is 66 percent and the ``national
percentage'' is 34 percent,
(E) for 2002, the ``area-specific
percentage'' is 58 percent and the ``national
percentage'' is 42 percent, and
(F) for a year after 2002, the ``area-
specific 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 paragraph
(1)(A), subject to subparagraphs (B) and (E),
the annual area-specific Medicare+Choice
capitation rate for a Medicare+Choice payment
area--
(i) for 1998 is, subject to
subparagraph (D), the annual per capita
rate of payment for 1997 determined
under section 1876(a)(1)(C) for the
area, increased by the national per
capita Medicare+Choice growth
percentage for 1998 (described in
paragraph (6)(A)); or
(ii) for a subsequent year is the
annual area-specific Medicare+Choice
capitation rate for the previous year
determined under this paragraph for the
area, increased 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
capitation rate under subparagraph (A)
for a year (beginning with 1998), the
annual per capita rate of payment for
1997 determined under section
1876(a)(1)(C) shall be adjusted to
exclude from the rate the applicable
percent (specified in clause (ii)) of
the payment adjustments described in
subparagraph (C).
(ii) Applicable percent.--For
purposes of clause (i), the applicable
percent for--
(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
adjustments which the Secretary
estimates were payable during 1997--
(I) for the indirect costs of
medical education under section
1886(d)(5)(B), and
(II) for direct graduate
medical education costs under
section 1886(h).
(ii) Treatment of payments covered
under state hospital reimbursement
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 Secretary shall
estimate a payment adjustment 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.
(E) Inclusion of costs of dod and va military
facility services to medicare-eligible
beneficiaries.--In determining the area-
specific MA capitation rate under subparagraph
(A) for a year (beginning with 2004), the
annual per capita rate of payment for 1997
determined under section 1876(a)(1)(C) shall be
adjusted to include in the rate the Secretary's
estimate, on a per capita 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.
(4) Input-price-adjusted annual national
medicare+choice capitation rate.--
(A) In general.--For purposes of paragraph
(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--
(i) the national standardized annual
Medicare+Choice capitation rate
(determined 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,
subject 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--
(I) the annual area-specific
Medicare+Choice capitation rate
for that year for the area
under paragraph (3), and
(II) the average number of
medicare beneficiaries residing
in that area in the year,
multiplied by the average 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
described in clause (i)(II) for all
areas for that year.
(C) Special rules for 1998.--In applying this
paragraph for 1998--
(i) medicare services shall be
divided into 2 types of services: part
A services and part B services;
(ii) the proportions described in
subparagraph (A)(ii)--
(I) for part A services shall
be the ratio (expressed as a
percentage) of the national
average annual per capita rate
of payment for part A for 1997
to the total national average
annual per capita rate of
payment for parts A and B for
1997, and
(II) for part B services
shall be 100 percent minus the
ratio described in subclause
(I);
(iii) for part A services, 70 percent
of payments attributable to such
services shall be adjusted by the index
used under section 1886(d)(3)(E) to
adjust payment rates for relative
hospital wage levels for hospitals
located in the payment area involved;
(iv) for part B services--
(I) 66 percent of payments
attributable to such services
shall be adjusted by the index
of the geographic area factors
under section 1848(e) used to
adjust payment rates for
physicians' services furnished
in the payment area, and
(II) of the remaining 34
percent of the amount of such
payments, 40 percent shall be
adjusted by the index described
in clause (iii); and
(v) the index values shall be
computed based only on the beneficiary
population who are 65 years of age or
older and who are not determined to
have end stage renal disease.
The Secretary may continue to apply the rules
described in this subparagraph (or similar
rules) for 1999.
(5) Payment adjustment budget neutrality factor.--For
purposes of paragraph (1)(A), for each year (other than
2004), 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)(iv), (a)(4), 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.--
(A) In general.--In this part, the ``national
per capita Medicare+Choice growth percentage''
for a year is the percentage determined by the
Secretary, by March 1st before the beginning of
the year involved, to reflect the Secretary's
estimate of the projected per capita rate of
growth in expenditures under this title for an
individual entitled to benefits under part A
and enrolled under part B, excluding
expenditures attributable to subsections (a)(7)
and (o) of section 1848 and subsections
(b)(3)(B)(ix) and (n) of section 1886, reduced
by the number of percentage points specified in
subparagraph (B) for the year. Separate
determinations may be made for aged enrollees,
disabled enrollees, and enrollees with end-
stage renal disease.
(B) Adjustment.--The number of percentage
points specified in this subparagraph is--
(i) for 1998, 0.8 percentage points,
(ii) for 1999, 0.5 percentage points,
(iii) for 2000, 0.5 percentage
points,
(iv) for 2001, 0.5 percentage points,
(v) for 2002, 0.3 percentage points,
and
(vi) for a year after 2002, 0
percentage points.
(C) Adjustment for over or under projection
of national per capita medicare+choice growth
percentage.--Beginning with rates calculated
for 1999, before 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 national per capita
Medicare+Choice growth percentage for that year
and previous years and the current estimate of
such percentage for such years, except that for
purposes of paragraph (1)(C)(v)(II), no such
adjustment shall be made for a year before
2004.
(7) 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 significant increase in the costs to
Medicare+Choice of providing benefits under contracts
under this part (for periods after any period described
in section 1852(a)(5)), the Secretary shall adjust
appropriately the payments to such organizations under
this part. Such projection and adjustment shall be
based on an analysis by the Chief Actuary of the
Centers for Medicare & Medicaid Services of the
actuarial costs associated with the new benefits.
(d) MA Payment Area; MA Local Area; MA Region Defined.--
(1) MA payment area.--In this part, except as
provided in this subsection, the term ``MA payment
area'' means--
(A) with respect to an MA local plan, an MA
local area (as defined in paragraph (2)); and
(B) with respect to an MA regional plan, an
MA region (as established under section
1858(a)(2)).
(2) MA local area.--The term ``MA local area'' means
a county or equivalent area specified by the Secretary.
(3) Rule for esrd beneficiaries.--In the case of
individuals who are determined to have end stage renal
disease, the Medicare+Choice payment area shall be a
State or such other payment area as the Secretary
specifies.
(4) Geographic adjustment.--
(A) In general.--Upon written request of the
chief executive officer of a State for a
contract year (beginning after 1998) made by
not later than February 1 of the previous year,
the Secretary shall make a geographic
adjustment to a Medicare+Choice payment area in
the State otherwise determined under paragraph
(1) for MA local plans--
(i) to a single statewide
Medicare+Choice payment area,
(ii) to the metropolitan based system
described in subparagraph (C), or
(iii) to consolidating into a single
Medicare+Choice payment area
noncontiguous counties (or equivalent
areas described inparagraph (1)(A))
within a State.
Such adjustment shall be effective for payments
for months beginning with January of the year
following the year in which the request is
received.
(B) Budget neutrality adjustment.--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
with respect to MA local plans for
Medicare+Choice payment areas in the State in a
manner so that the aggregate of the payments
under this section for such plans in the State
shall not exceed the aggregate payments that
would have been made under this section for
such plans for Medicare+Choice 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
metropolitan statistical area in the
State or in the case of a consolidated
metropolitan statistical area, all of
the portions of each primary
metropolitan statistical area within
the consolidated area within the State,
are treated as a single Medicare+Choice
payment area, and
(ii) all areas in the State that do
not fall within a metropolitan
statistical area are treated as a
single Medicare+Choice payment area.
(D) Areas.--In subparagraph (C), the terms
``metropolitan statistical area'',
``consolidated metropolitan statistical area'',
and ``primary metropolitan statistical area''
mean any area designated as such by the
Secretary of Commerce.
(e) Special Rules for Individuals Electing MSA Plans.--
(1) In general.--If the amount of the Medicare+Choice
monthly MSA premium (as defined in section
1854(b)(2)(C)) 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 Medicare+Choice
MSA established (and, if applicable, designated) by the
individual under paragraph (2).
(2) Establishment and designation of medicare+choice
medical savings account as requirement for payment of
contribution.--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 Medicare+Choice MSA
(as defined in section 138(b)(2) of the
Internal Revenue Code of 1986), and
(B) if the individual has established more
than one such Medicare+Choice MSA, has
designated one of such accounts as the
individual's Medicare+Choice 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 individual electing an
MSA plan effective beginning with a month in a year,
the amount of the contribution to the Medicare+Choice
MSA on behalf of the individual 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 deposits attributable to the remaining
months in the year.
(f) Payments From Trust Funds.--The payment to a
Medicare+Choice organization under this section for individuals
enrolled under this part with the organization and for payments
under subsection (l) and subsection (m) and payments to a
Medicare+Choice MSA under subsection (e)(1) shall be made from
the Federal Hospital Insurance Trust Fund and the Federal
Supplementary Medical Insurance Trust Fund in such proportion
as the Secretary 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.
Payments to MA organizations for statutory drug benefits
provided under this title are made from the Medicare
Prescription Drug Account in the Federal Supplementary Medical
Insurance Trust Fund. Monthly payments 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 under this section for October 2006 shall be paid on
the first business day of October 2006.
(g) Special Rule for Certain Inpatient Hospital Stays.--In
the case of an individual who is receiving inpatient hospital
services from a subsection (d) hospital (as defined in section
1886(d)(1)(B)), a rehabilitation hospital described in section
1886(d)(1)(B)(ii) or a distinct part rehabilitation unit
described in the matter following clause (v) of section
1886(d)(1)(B), or a long-term care hospital (described in
section 1886(d)(1)(B)(iv)) as of the effective date of the
individual's--
(1) election under this part of a Medicare+Choice
plan offered by a Medicare+Choice organization--
(A) payment for such services until the date
of the individual's discharge shall be made
under this title through the Medicare+Choice
plan or the original medicare fee-for-service
program option described in section
1851(a)(1)(A) (as the case may be) elected
before 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
individual'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
Medicare+Choice organization under this part--
(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
other payment provision under this title for
inpatient services for the type of facility,
hospital, or unit involved, described in the
matter preceding paragraph (1), as the case may
be, or by any succeeding Medicare+Choice
organization, and
(C) the terminated organization shall not
receive any payment with respect to the
individual under this part during the period
the individual is not enrolled.
(h) Special Rule for Hospice Care.--
(1) Information.--A contract under this part shall
require the Medicare+Choice organization to inform each
individual enrolled under this part with a
Medicare+Choice plan offered by the organization about
the availability of hospice care if--
(A) a hospice program participating under
this title is located within the organization's
service area; or
(B) it is common practice to refer patients
to hospice programs outside such service area.
(2) Payment.--If an individual who is enrolled with a
Medicare+Choice organization under this part makes an
election under section 1812(d)(1) to receive hospice
care from a particular hospice program--
(A) payment for the hospice care furnished 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
individual'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
Medicare+Choice organization 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 Medicare+Choice
organization in an amount equal to the value of
the additional benefits required under section
1854(f)(1)(A).
(i) New Entry Bonus.--
(1) In general.--Subject to paragraphs (2) and (3),
in the case of Medicare+Choice payment area in which a
Medicare+Choice plan has not been offered since 1997
(or in which all organizations that offered a plan
since such date have filed notice with the Secretary,
as of October 13, 1999, that they will not be offering
such a plan as of January 1, 2000, or filed notice with
the Secretary as of October 3, 2000, that they will not
be offering such a plan as of January 1, 2001), the
amount of the monthly payment otherwise made under this
section shall be increased--
(A) only for the first 12 months in which any
Medicare+Choice plan is offered in the area, by
5 percent of the total monthly payment
otherwise computed for such payment area; and
(B) only for the subsequent 12 months, by 3
percent of the total monthly payment otherwise
computed for such payment area.
(2) Period of application.--Paragraph (1) shall only
apply to payment for Medicare+Choice plans which are
first offered in a Medicare+Choice payment area during
the 2-year period beginning on January 1, 2000.
(3) Limitation to organization offering first plan in
an area.--Paragraph (1) shall only apply to payment to
the first Medicare+Choice organization that offers a
Medicare+Choice plan in each Medicare+Choice payment
area, except that if more than one such organization
first offers such a plan in an area on the same date,
paragraph (1) shall apply to payment for such
organizations.
(4) Construction.--Nothing in paragraph (1) shall be
construed as affecting the calculation of the annual
Medicare+Choice capitation rate under subsection (c)
for any payment area or as applying to payment for any
period not described in such paragraph and paragraph
(2).
(5) Offered defined.--In this subsection, the term
``offered'' means, with respect to a Medicare+Choice
plan as of a date, that a Medicare+Choice eligible
individual may enroll with the plan on that date,
regardless of when the enrollment takes effect or when
the individual obtains benefits under the plan.
(j) Computation of Benchmark Amounts.--For purposes of this
part, subject to subsection (o), the term ``MA area-specific
non-drug monthly benchmark amount'' means for a month in a
year--
(1) with respect to--
(A) a service area that is entirely within an
MA local area, subject to section 1860C-
1(d)(2)(A), an amount equal to \1/12\ of the
annual MA capitation rate under section
1853(c)(1) for the area for the year (or, for
2007, 2008, 2009, and 2010, \1/12\ of the
applicable amount determined under subsection
(k)(1) for the area for the year; for 2011, \1/
12\ of the applicable amount determined under
subsection (k)(1) for the area for 2010; and,
beginning with 2012, \1/12\ of the blended
benchmark amount determined under subsection
(n)(1) for the area for the year), adjusted as
appropriate (for years before 2007) for the
purpose of risk adjustment; or
(B) a service area that includes more than
one MA local area, an amount equal to the
average of the amounts described in
subparagraph (A) for each such local MA area,
weighted by the projected number of enrollees
in the plan residing in the respective local MA
areas (as used by the plan for purposes of the
bid and disclosed to the Secretary under
section 1854(a)(6)(A)(iii)), adjusted as
appropriate (for years before 2007) for the
purpose of risk adjustment; or
(2) with respect to an MA region for a month in a
year, the MA region-specific non-drug monthly benchmark
amount, as defined in section 1858(f) for the region
for the year.
(k) Determination of Applicable Amount for Purposes of
Calculating the Benchmark Amounts.--
(1) Applicable amount defined.--For purposes of
subsection (j), subject to paragraphs (2) and (4), the
term ``applicable amount'' means for an area--
(A) for 2007--
(i) if such year is not specified
under subsection (c)(1)(D)(ii), an
amount equal to the amount specified in
subsection (c)(1)(C) for the area for
2006--
(I) first adjusted by the
rescaling factor for 2006 for
the area (as made available by
the Secretary in the
announcement of the rates on
April 4, 2005, under subsection
(b)(1), but excluding any
national adjustment factors for
coding intensity and risk
adjustment budget neutrality
that were included in such
factor); and
(II) then increased by the
national per capita MA growth
percentage, described in
subsection (c)(6) for 2007, but
not taking into account any
adjustment under subparagraph
(C) of such subsection for a
year before 2004;
(ii) if such year is specified under
subsection (c)(1)(D)(ii), an amount
equal to the greater of--
(I) the amount determined
under clause (i) for the area
for the year; or
(II) the amount specified in
subsection (c)(1)(D) for the
area for the year; and
(B) for a subsequent year--
(i) if such year is not specified
under subsection (c)(1)(D)(ii), an
amount equal to the amount determined
under this paragraph for the area for
the previous year (determined without
regard to paragraphs (2) and (4)),
increased by the national per capita MA
growth percentage, described in
subsection (c)(6) for that succeeding
year, but not taking into account any
adjustment under subparagraph (C) of
such subsection for a year before 2004;
and
(ii) if such year is specified under
subsection (c)(1)(D)(ii), an amount
equal to the greater of--
(I) the amount determined
under clause (i) for the area
for the year; or
(II) the amount specified in
subsection (c)(1)(D) for the
area for the year.
(2) Phase-out of budget neutrality factor.--
(A) In general.--Except as provided in
subparagraph (D), in the case of 2007 through
2010, the applicable amount determined under
paragraph (1) shall be multiplied by a factor
equal to 1 plus the product of--
(i) the percent determined under
subparagraph (B) for the year; and
(ii) the applicable phase-out factor
for the year under subparagraph (C).
(B) Percent determined.--
(i) In general.--For purposes of
subparagraph (A)(i), subject to clause
(iv), the percent determined under this
subparagraph for a year is a percent
equal to a fraction the numerator of
which is described in clause (ii) and
the denominator of which is described
in clause (iii).
(ii) Numerator based on difference
between demographic rate and risk
rate.--
(I) In general.--The
numerator described in this
clause is an amount equal to
the amount by which the
demographic rate described in
subclause (II) exceeds the risk
rate described in subclause
(III).
(II) Demographic rate.--The
demographic rate described in
this subclause is the
Secretary's estimate of the
total payments that would have
been made under this part in
the year if all the monthly
payment amounts for all MA
plans were equal to \1/12\ of
the annual MA capitation rate
under subsection (c)(1) for the
area and year, adjusted
pursuant to subsection
(a)(1)(C).
(III) Risk rate.--The risk
rate described in this
subclause is the Secretary's
estimate of the total payments
that would have been made under
this part in the year if all
the monthly payment amounts for
all MA plans were equal to the
amount described in subsection
(j)(1)(A) (determined as if
this paragraph had not applied)
under subsection (j) for the
area and year, adjusted
pursuant to subsection
(a)(1)(C).
(iii) Denominator based on risk
rate.--The denominator described in
this clause is equal to the total
amount estimated for the year under
clause (ii)(III).
(iv) Requirements.--In estimating the
amounts under the previous clauses, the
Secretary shall--
(I) use a complete set of the
most recent and representative
Medicare Advantage risk scores
under subsection (a)(3) that
are available from the risk
adjustment model announced for
the year;
(II) adjust the risk scores
to reflect changes in treatment
and coding practices in the
fee-for-service sector;
(III) adjust the risk scores
for differences in coding
patterns between Medicare
Advantage plans and providers
under the original Medicare
fee-for-service program under
parts A and B to the extent
that the Secretary has
identified such differences, as
required in subsection
(a)(1)(C);
(IV) as necessary, adjust the
risk scores for late data
submitted by Medicare Advantage
organizations;
(V) as necessary, adjust the
risk scores for lagged cohorts;
and
(VI) as necessary, adjust the
risk scores for changes in
enrollment in Medicare
Advantage plans during the
year.
(v) Authority.--In computing such
amounts the Secretary may take into
account the estimated health risk of
enrollees in preferred provider
organization plans (including MA
regional plans) for the year.
(C) Applicable phase-out factor.--For
purposes of subparagraph (A)(ii), the term
``applicable phase-out factor'' means--
(i) for 2007, 0.55;
(ii) for 2008, 0.40;
(iii) for 2009, 0.25; and
(iv) for 2010, 0.05.
(D) Termination of application.--Subparagraph
(A) shall not apply in a year if the amount
estimated under subparagraph (B)(ii)(III) for
the year is equal to or greater than the amount
estimated under subparagraph (B)(ii)(II) for
the year.
(3) No revision in percent.--
(A) In general.--The Secretary may not make
any adjustment to the percent determined under
paragraph (2)(B) for any year.
(B) Rule of construction.--Nothing in this
subsection shall be construed to limit the
authority of the Secretary to make adjustments
to the applicable amounts determined under
paragraph (1) as appropriate for purposes of
updating data or for purposes of adopting an
improved risk adjustment methodology.
(4) Phase-out of the indirect costs of medical
education from capitation rates.--
(A) In general.--After determining the
applicable amount for an area for a year under
paragraph (1) (beginning with 2010), the
Secretary shall adjust such applicable amount
to exclude from such applicable amount the
phase-in percentage (as defined in subparagraph
(B)(i)) for the year of the Secretary's
estimate of the standardized costs for payments
under section 1886(d)(5)(B) in the area for the
year. Any adjustment under the preceding
sentence shall be made prior to the application
of paragraph (2).
(B) Percentages defined.--For purposes of
this paragraph:
(i) Phase-in percentage.--The term
``phase-in percentage'' means, for an
area for a year, the ratio (expressed
as a percentage, but in no case greater
than 100 percent) of--
(I) the maximum cumulative
adjustment percentage for the
year (as defined in clause
(ii)); to
(II) the standardized IME
cost percentage (as defined in
clause (iii)) for the area and
year.
(ii) Maximum cumulative adjustment
percentage.--The term ``maximum
cumulative adjustment percentage''
means, for--
(I) 2010, 0.60 percent; and
(II) a subsequent year, the
maximum cumulative adjustment
percentage for the previous
year increased by 0.60
percentage points.
(iii) Standardized ime cost
percentage.--The term ``standardized
IME cost percentage'' means, for an
area for a year, the per capita costs
for payments under section
1886(d)(5)(B) (expressed as a
percentage of the fee-for-service
amount specified in subparagraph (C))
for the area and the year.
(C) Fee-for-service amount.--The fee-for-
service amount specified in this subparagraph
for an area for a year is the amount specified
under subsection (c)(1)(D) for the area and the
year.
(l) Application of Eligible Professional Incentives for
Certain MA Organizations for Adoption and Meaningful Use of
Certified EHR Technology.--
(1) In general.--Subject to paragraphs (3) and (4),
in the case of a qualifying MA organization, the
provisions of sections 1848(o) and 1848(a)(7) shall
apply with respect to eligible professionals described
in paragraph (2) of the organization who the
organization attests under paragraph (6) to be
meaningful EHR users in a similar manner as they apply
to eligible professionals under such sections.
Incentive payments under paragraph (3) shall be made to
and payment adjustments under paragraph (4) shall apply
to such qualifying organizations.
(2) Eligible professional described.--With respect to
a qualifying MA organization, an eligible professional
described in this paragraph is an eligible professional
(as defined for purposes of section 1848(o)) who--
(A)(i) is employed by the organization; or
(ii)(I) is employed by, or is a partner of,
an entity that through contract with the
organization furnishes at least 80 percent of
the entity's Medicare patient care services to
enrollees of such organization; and
(II) furnishes at least 80 percent of the
professional services of the eligible
professional covered under this title to
enrollees of the organization; and
(B) furnishes, on average, at least 20 hours
per week of patient care services.
(3) Eligible professional incentive payments.--
(A) In general.--In applying section 1848(o)
under paragraph (1), instead of the additional
payment amount under section 1848(o)(1)(A) and
subject to subparagraph (B), the Secretary may
substitute an amount determined by the
Secretary to the extent feasible and practical
to be similar to the estimated amount in the
aggregate that would be payable if payment for
services furnished by such professionals was
payable under part B instead of this part.
(B) Avoiding duplication of payments.--
(i) In general.--In the case of an
eligible professional described in
paragraph (2)--
(I) that is eligible for the
maximum incentive payment under
section 1848(o)(1)(A) for the
same payment period, the
payment incentive shall be made
only under such section and not
under this subsection; and
(II) that is eligible for
less than such maximum
incentive payment for the same
payment period, the payment
incentive shall be made only
under this subsection and not
under section 1848(o)(1)(A).
(ii) Methods.--In the case of an
eligible professional described in
paragraph (2) who is eligible for an
incentive payment under section
1848(o)(1)(A) but is not described in
clause (i) for the same payment period,
the Secretary shall develop a process--
(I) to ensure that duplicate
payments are not made with
respect to an eligible
professional both under this
subsection and under section
1848(o)(1)(A); and
(II) to collect data from
Medicare Advantage
organizations to ensure against
such duplicate payments.
(C) Fixed schedule for application of
limitation on incentive payments for all
eligible professionals.--In applying section
1848(o)(1)(B)(ii) under subparagraph (A), in
accordance with rules specified by the
Secretary, a qualifying MA organization shall
specify a year (not earlier than 2011) that
shall be treated as the first payment year for
all eligible professionals with respect to such
organization.
(4) Payment adjustment.--
(A) In general.--In applying section
1848(a)(7) under paragraph (1), instead of the
payment adjustment being an applicable percent
of the fee schedule amount for a year under
such section, subject to subparagraph (D), the
payment adjustment under paragraph (1) shall be
equal to the percent specified in subparagraph
(B) for such year of the payment amount
otherwise provided under this section for such
year.
(B) Specified percent.--The percent specified
under this subparagraph for a year is 100
percent minus a number of percentage points
equal to the product of--
(i) the number of percentage points
by which the applicable percent (under
section 1848(a)(7)(A)(ii)) for the year
is less than 100 percent; and
(ii) the Medicare physician
expenditure proportion specified in
subparagraph (C) for the year.
(C) Medicare physician expenditure
proportion.--The Medicare physician expenditure
proportion under this subparagraph for a year
is the Secretary's estimate of the proportion,
of the expenditures under parts A and B that
are not attributable to this part, that are
attributable to expenditures for physicians'
services.
(D) Application of payment adjustment.--In
the case that a qualifying MA organization
attests that not all eligible professionals of
the organization are meaningful EHR users with
respect to a year, the Secretary shall apply
the payment adjustment under this paragraph
based on the proportion of all such eligible
professionals of the organization that are not
meaningful EHR users for such year.
(5) Qualifying ma organization defined.--In this
subsection and subsection (m), the term ``qualifying MA
organization'' means a Medicare Advantage organization
that is organized as a health maintenance organization
(as defined in section 2791(b)(3) of the Public Health
Service Act).
(6) Meaningful ehr user attestation.--For purposes of
this subsection and subsection (m), a qualifying MA
organization shall submit an attestation, in a form and
manner specified by the Secretary which may include the
submission of such attestation as part of submission of
the initial bid under section 1854(a)(1)(A)(iv),
identifying--
(A) whether each eligible professional
described in paragraph (2), with respect to
such organization is a meaningful EHR user (as
defined in section 1848(o)(2)) for a year
specified by the Secretary; and
(B) whether each eligible hospital described
in subsection (m)(1), with respect to such
organization, is a meaningful EHR user (as
defined in section 1886(n)(3)) for an
applicable period specified by the Secretary.
(7) Posting on website.--The Secretary shall post on
the Internet website of the Centers for Medicare &
Medicaid Services, in an easily understandable format,
a list of the names, business addresses, and business
phone numbers of--
(A) each qualifying MA organization receiving
an incentive payment under this subsection for
eligible professionals of the organization; and
(B) the eligible professionals of such
organization for which such incentive payment
is based.
(8) Limitation on review.--There shall be no
administrative or judicial review under section 1869,
section 1878, or otherwise, of--
(A) the methodology and standards for
determining payment amounts and payment
adjustments under this subsection, including
avoiding duplication of payments under
paragraph (3)(B) and the specification of rules
for the fixed schedule for application of
limitation on incentive payments for all
eligible professionals under paragraph (3)(C);
(B) the methodology and standards for
determining eligible professionals under
paragraph (2); and
(C) the methodology and standards for
determining a meaningful EHR user under section
1848(o)(2), including specification of the
means of demonstrating meaningful EHR use under
section 1848(o)(3)(C) and selection of measures
under section 1848(o)(3)(B).
(m) Application of Eligible Hospital Incentives for Certain
MA Organizations for Adoption and Meaningful Use of Certified
EHR Technology.--
(1) Application.--Subject to paragraphs (3) and (4),
in the case of a qualifying MA organization, the
provisions of sections 1886(n) and 1886(b)(3)(B)(ix)
shall apply with respect to eligible hospitals
described in paragraph (2) of the organization which
the organization attests under subsection (l)(6) to be
meaningful EHR users in a similar manner as they apply
to eligible hospitals under such sections. Incentive
payments under paragraph (3) shall be made to and
payment adjustments under paragraph (4) shall apply to
such qualifying organizations.
(2) Eligible hospital described.--With respect to a
qualifying MA organization, an eligible hospital
described in this paragraph is an eligible hospital (as
defined in section 1886(n)(6)(A)) that is under common
corporate governance with such organization and serves
individuals enrolled under an MA plan offered by such
organization.
(3) Eligible hospital incentive payments.--
(A) In general.--In applying section
1886(n)(2) under paragraph (1), instead of the
additional payment amount under section
1886(n)(2), there shall be substituted an
amount determined by the Secretary to be
similar to the estimated amount in the
aggregate that would be payable if payment for
services furnished by such hospitals was
payable under part A instead of this part. In
implementing the previous sentence, the
Secretary--
(i) shall, insofar as data to
determine the discharge related amount
under section 1886(n)(2)(C) for an
eligible hospital are not available to
the Secretary, use such alternative
data and methodology to estimate such
discharge related amount as the
Secretary determines appropriate; and
(ii) shall, insofar as data to
determine the medicare share described
in section 1886(n)(2)(D) for an
eligible hospital are not available to
the Secretary, use such alternative
data and methodology to estimate such
share, which data and methodology may
include use of the inpatient-bed-days
(or discharges) with respect to an
eligible hospital during the
appropriate period which are
attributable to both individuals for
whom payment may be made under part A
or individuals enrolled in an MA plan
under a Medicare Advantage organization
under this part as a proportion of the
estimated total number of patient-bed-
days (or discharges) with respect to
such hospital during such period.
(B) Avoiding duplication of payments.--
(i) In general.--In the case of a
hospital that for a payment year is an
eligible hospital described in
paragraph (2) and for which at least
one-third of their discharges (or bed-
days) of Medicare patients for the year
are covered under part A, payment for
the payment year shall be made only
under section 1886(n) and not under
this subsection.
(ii) Methods.--In the case of a
hospital that is an eligible hospital
described in paragraph (2) and also is
eligible for an incentive payment under
section 1886(n) but is not described in
clause (i) for the same payment period,
the Secretary shall develop a process--
(I) to ensure that duplicate
payments are not made with
respect to an eligible hospital
both under this subsection and
under section 1886(n); and
(II) to collect data from
Medicare Advantage
organizations to ensure against
such duplicate payments.
(4) Payment adjustment.--
(A) Subject to paragraph (3), in the case of
a qualifying MA organization (as defined in
section 1853(l)(5)), if, according to the
attestation of the organization submitted under
subsection (l)(6) for an applicable period, one
or more eligible hospitals (as defined in
section 1886(n)(6)(A)) that are under common
corporate governance with such organization and
that serve individuals enrolled under a plan
offered by such organization are not meaningful
EHR users (as defined in section 1886(n)(3))
with respect to a period, the payment amount
payable under this section for such
organization for such period shall be the
percent specified in subparagraph (B) for such
period of the payment amount otherwise provided
under this section for such period.
(B) Specified percent.--The percent specified
under this subparagraph for a year is 100
percent minus a number of percentage points
equal to the product of--
(i) the number of the percentage
point reduction effected under section
1886(b)(3)(B)(ix)(I) for the period;
and
(ii) the Medicare hospital
expenditure proportion specified in
subparagraph (C) for the year.
(C) Medicare hospital expenditure
proportion.--The Medicare hospital expenditure
proportion under this subparagraph for a year
is the Secretary's estimate of the proportion,
of the expenditures under parts A and B that
are not attributable to this part, that are
attributable to expenditures for inpatient
hospital services.
(D) Application of payment adjustment.--In
the case that a qualifying MA organization
attests that not all eligible hospitals are
meaningful EHR users with respect to an
applicable period, the Secretary shall apply
the payment adjustment under this paragraph
based on a methodology specified by the
Secretary, taking into account the proportion
of such eligible hospitals, or discharges from
such hospitals, that are not meaningful EHR
users for such period.
(5) Posting on website.--The Secretary shall post on
the Internet website of the Centers for Medicare &
Medicaid Services, in an easily understandable format--
(A) a list of the names, business addresses,
and business phone numbers of each qualifying
MA organization receiving an incentive payment
under this subsection for eligible hospitals
described in paragraph (2); and
(B) a list of the names of the eligible
hospitals for which such incentive payment is
based.
(6) Limitations on review.--There shall be no
administrative or judicial review under section 1869,
section 1878, or otherwise, of--
(A) the methodology and standards for
determining payment amounts and payment
adjustments under this subsection, including
avoiding duplication of payments under
paragraph (3)(B);
(B) the methodology and standards for
determining eligible hospitals under paragraph
(2); and
(C) the methodology and standards for
determining a meaningful EHR user under section
1886(n)(3), including specification of the
means of demonstrating meaningful EHR use under
subparagraph (C) of such section and selection
of measures under subparagraph (B) of such
section.
(n) Determination of Blended Benchmark Amount.--
(1) In general.--For purposes of subsection (j),
subject to paragraphs (3), (4), and (5), the term
``blended benchmark amount'' means for an area--
(A) for 2012 the sum of--
(i) \1/2\ of the applicable amount
for the area and year; and
(ii) \1/2\ of the amount specified in
paragraph (2)(A) for the area and year;
and
(B) for a subsequent year the amount
specified in paragraph (2)(A) for the area and
year.
(2) Specified amount.--
(A) In general.--The amount specified in this
subparagraph for an area and year is the
product of--
(i) the base payment amount specified
in subparagraph (E) for the area and
year adjusted to take into account the
phase-out in the indirect costs of
medical education from capitation rates
described in subsection (k)(4); and
(ii) the applicable percentage for
the area for the year specified under
subparagraph (B).
(B) Applicable percentage.--Subject to
subparagraph (D), the applicable percentage
specified in this subparagraph for an area for
a year in the case of an area that is ranked--
(i) in the highest quartile under
subparagraph (C) for the previous year
is 95 percent;
(ii) in the second highest quartile
under such subparagraph for the
previous year is 100 percent;
(iii) in the third highest quartile
under such subparagraph for the
previous year is 107.5 percent; or
(iv) in the lowest quartile under
such subparagraph for the previous year
is 115 percent.
(C) Periodic ranking.--For purposes of this
paragraph in the case of an area located--
(i) in 1 of the 50 States or the
District of Columbia, the Secretary
shall rank such area in each year
specified under subsection
(c)(1)(D)(ii) based upon the level of
the amount specified in subparagraph
(A)(i) for such areas; or
(ii) in a territory, the Secretary
shall rank such areas in each such year
based upon the level of the amount
specified in subparagraph (A)(i) for
such area relative to quartile rankings
computed under clause (i).
(D) 1-year transition for changes in
applicable percentage.--If, for a year after
2012, there is a change in the quartile in
which an area is ranked compared to the
previous year, the applicable percentage for
the area in the year shall be the average of--
(i) the applicable percentage for the
area for the previous year; and
(ii) the applicable percentage that
would otherwise apply for the area for
the year.
(E) Base payment amount.--Subject to
subparagraph (F), the base payment amount
specified in this subparagraph--
(i) for 2012 is the amount specified
in subsection (c)(1)(D) for the area
for the year; or
(ii) for a subsequent year that--
(I) is not specified under
subsection (c)(1)(D)(ii), is
the base amount specified in
this subparagraph for the area
for the previous year,
increased by the national per
capita MA growth percentage,
described in subsection (c)(6)
for that succeeding year, but
not taking into account any
adjustment under subparagraph
(C) of such subsection for a
year before 2004; and
(II) is specified under
subsection (c)(1)(D)(ii), is
the amount specified in
subsection (c)(1)(D) for the
area for the year.
(F) Application of indirect medical education
phase-out.--The base payment amount specified
in subparagraph (E) for a year shall be
adjusted in the same manner under paragraph (4)
of subsection (k) as the applicable amount is
adjusted under such subsection.
(3) Alternative phase-ins.--
(A) 4-year phase-in for certain areas.--If
the difference between the applicable amount
(as defined in subsection (k)) for an area for
2010 and the projected 2010 benchmark amount
(as defined in subparagraph (C)) for the area
is at least $30 but less than $50, the blended
benchmark amount for the area is--
(i) for 2012 the sum of--
(I) \3/4\ of the applicable
amount for the area and year;
and
(II) \1/4\ of the amount
specified in paragraph (2)(A)
for the area and year;
(ii) for 2013 the sum of--
(I) \1/2\ of the applicable
amount for the area and year;
and
(II) \1/2\ of the amount
specified in paragraph (2)(A)
for the area and year;
(iii) for 2014 the sum of--
(I) \1/4\ of the applicable
amount for the area and year;
and
(II) \3/4\ of the amount
specified in paragraph (2)(A)
for the area and year; and
(iv) for a subsequent year the amount
specified in paragraph (2)(A) for the
area and year.
(B) 6-year phase-in for certain areas.--If
the difference between the applicable amount
(as defined in subsection (k)) for an area for
2010 and the projected 2010 benchmark amount
(as defined in subparagraph (C)) for the area
is at least $50, the blended benchmark amount
for the area is--
(i) for 2012 the sum of--
(I) \5/6\ of the applicable
amount for the area and year;
and
(II) \1/6\ of the amount
specified in paragraph (2)(A)
for the area and year;
(ii) for 2013 the sum of--
(I) \2/3\ of the applicable
amount for the area and year;
and
(II) \1/3\ of the amount
specified in paragraph (2)(A)
for the area and year;
(iii) for 2014 the sum of--
(I) \1/2\ of the applicable
amount for the area and year;
and
(II) \1/2\ of the amount
specified in paragraph (2)(A)
for the area and year;
(iv) for 2015 the sum of--
(I) \1/3\ of the applicable
amount for the area and year;
and
(II) \2/3\ of the amount
specified in paragraph (2)(A)
for the area and year; and
(v) for 2016 the sum of--
(I) \1/6\ of the applicable
amount for the area and year;
and
(II) \5/6\ of the amount
specified in paragraph (2)(A)
for the area and year; and
(vi) for a subsequent year the amount
specified in paragraph (2)(A) for the
area and year.
(C) Projected 2010 benchmark amount.--The
projected 2010 benchmark amount described in
this subparagraph for an area is equal to the
sum of--
(i) \1/2\ of the applicable amount
(as defined in subsection (k)) for the
area for 2010; and
(ii) \1/2\ of the amount specified in
paragraph (2)(A) for the area for 2010
but determined as if there were
substituted for the applicable
percentage specified in clause (ii) of
such paragraph the sum of--
(I) the applicable percent
that would be specified under
subparagraph (B) of paragraph
(2) (determined without regard
to subparagraph (D) of such
paragraph) for the area for
2010 if any reference in such
paragraph to ``the previous
year'' were deemed a reference
to 2010; and
(II) the applicable
percentage increase that would
apply to a qualifying plan in
the area under subsection (o)
as if any reference in such
subsection to 2012 were deemed
a reference to 2010 and as if
the determination of a
qualifying county under
paragraph (3)(B) of such
subsection were made for 2010.
(4) Cap on benchmark amount.--In no case shall the
blended benchmark amount for an area for a year
(determined taking into account subsection (o)) be
greater than the applicable amount that would (but for
the application of this subsection) be determined under
subsection (k)(1) for the area for the year.
(5) Non-application to pace plans.--This subsection
shall not apply to payments to a PACE program under
section 1894.
(o) Applicable Percentage Quality Increases.--
(1) In general.--Subject to the succeeding
paragraphs, in the case of a qualifying plan with
respect to a year beginning with 2012, the applicable
percentage under subsection (n)(2)(B) shall be
increased on a plan or contract level, as determined by
the Secretary--
(A) for 2012, by 1.5 percentage points;
(B) for 2013, by 3.0 percentage points; and
(C) for 2014 or a subsequent year, by 5.0
percentage points.
(2) Increase for qualifying plans in qualifying
counties.--The increase applied under paragraph (1) for
a qualifying plan located in a qualifying county for a
year shall be doubled.
(3) Qualifying plans and qualifying county defined;
application of increases to low enrollment and new
plans.--For purposes of this subsection:
(A) Qualifying plan.--
(i) In general.--The term
``qualifying plan'' means, for a year
and subject to paragraph (4), a plan
that had a quality rating under
paragraph (4) of 4 stars or higher
based on the most recent data available
for such year.
(ii) Application of increases to low
enrollment plans.--
(I) 2012.--For 2012, the term
``qualifying plan'' includes an
MA plan that the Secretary
determines is not able to have
a quality rating under
paragraph (4) because of low
enrollment.
(II) 2013 and subsequent
years.--For 2013 and subsequent
years, for purposes of
determining whether an MA plan
with low enrollment (as defined
by the Secretary) is included
as a qualifying plan, the
Secretary shall establish a
method to apply to MA plans
with low enrollment (as defined
by the Secretary) the
computation of quality rating
and the rating system under
paragraph (4).
(iii) Application of increases to new
plans.--
(I) In general.--A new MA
plan that meets criteria
specified by the Secretary
shall be treated as a
qualifying plan, except that in
applying paragraph (1), the
applicable percentage under
subsection (n)(2)(B) shall be
increased--
(aa) for 2012, by 1.5
percentage points;
(bb) for 2013, by 2.5
percentage points; and
(cc) for 2014 or a
subsequent year, by 3.5
percentage points.
(II) New ma plan defined.--
The term ``new MA plan'' means,
with respect to a year, a plan
offered by an organization or
sponsor that has not had a
contract as a Medicare
Advantage organization in the
preceding 3-year period.
(B) Qualifying county.--The term ``qualifying
county'' means, for a year, a county--
(i) that has an MA capitation rate
that, in 2004, was based on the amount
specified in subsection (c)(1)(B) for a
Metropolitan Statistical Area with a
population of more than 250,000;
(ii) for which, as of December 2009,
of the Medicare Advantage eligible
individuals residing in the county at
least 25 percent of such individuals
were enrolled in Medicare Advantage
plans; and
(iii) that has per capita fee-for-
service spending that is lower than the
national monthly per capita cost for
expenditures for individuals enrolled
under the original medicare fee-for-
service program for the year.
(4) Quality determinations for application of
increase.--
(A) Quality determination.--The quality
rating for a plan shall be determined according
to a 5-star rating system (based on the data
collected under section 1852(e)).
(B) Plans that failed to report.--An MA plan
which does not report data that enables the
Secretary to rate the plan for purposes of this
paragraph shall be counted as having a rating
of fewer than 3.5 stars.
(C) Special rule for first 3 plan years for
plans that were converted from a reasonable
cost reimbursement contract.--For purposes of
applying paragraph (1) and section
1854(b)(1)(C) for the first 3 plan years under
this part in the case of an MA plan to which
deemed enrollment applies under section
1851(c)(4)--
(i) such plan shall not be treated as
a new MA plan (as defined in paragraph
(3)(A)(iii)(II)); and
(ii) in determining the star rating
of the plan under subparagraph (A), to
the extent that Medicare Advantage data
for such plan is not available for a
measure used to determine such star
rating, the Secretary shall use data
from the period in which such plan was
a reasonable cost reimbursement
contract.
(5) Exception for pace plans.--This subsection shall
not apply to payments to a PACE program under section
1894.
* * * * * * *
B. Changes in Existing Law Proposed by the Bill, as Reported
In compliance with clause 3(e)(1)(B) of rule XIII of the
Rules of the House of Representatives, changes in existing law
proposed by the bill, as reported, are shown as follows
(existing law proposed to be omitted is enclosed in black
brackets, new matter is printed in italic, existing law in
which no change is proposed is shown in roman):
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e)(1)(B) of rule XIII of the
Rules of the House of Representatives, changes in existing law
made by the bill, as reported, are shown as follows (existing
law proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, and existing law in which no
change is proposed is shown in roman):
SOCIAL SECURITY ACT
* * * * * * *
TITLE XVIII--HEALTH INSURANCE FOR THE AGED AND DISABLED
* * * * * * *
Part C--Medicare+Choice Program
* * * * * * *
payments to medicare+choice organizations
Sec. 1853. (a) Payments to Organizations.--
(1) Monthly payments.--
(A) In general.--Under a contract under
section 1857 and subject to subsections (e),
(g), (i), and (l) and section 1859(e)(4), the
Secretary shall make monthly payments under
this section in advance to each Medicare+Choice
organization, with respect to coverage of an
individual under this part in a Medicare+Choice
payment area for a month, in an amount
determined as follows:
(i) Payment before 2006.--For years
before 2006, the payment amount shall
be equal to \1/12\ of the annual MA
capitation rate (as calculated under
subsection (c)(1)) with respect to that
individual for that area, adjusted
under subparagraph (C) and reduced by
the amount of any reduction elected
under section 1854(f)(1)(E).
(ii) Payment for original fee-for-
service benefits beginning with 2006.--
For years beginning with 2006, the
amount specified in subparagraph (B).
(B) Payment amount for original fee-for-
service benefits beginning with 2006.--
(i) Payment of bid for plans with
bids below benchmark.--In the case of a
plan for which there are average per
capita monthly savings described in
section 1854(b)(3)(C) or 1854(b)(4)(C),
as the case may be, the amount
specified in this subparagraph is equal
to the unadjusted MA statutory non-drug
monthly bid amount, adjusted under
subparagraph (C) and (if applicable)
under subparagraphs (F) and (G), plus
the amount (if any) of any rebate under
subparagraph (E).
(ii) Payment of benchmark for plans
with bids at or above benchmark.--In
the case of a plan for which there are
no average per capita monthly savings
described in section 1854(b)(3)(C) or
1854(b)(4)(C), as the case may be, the
amount specified in this subparagraph
is equal to the MA area-specific non-
drug monthly benchmark amount, adjusted
under subparagraph (C) and (if
applicable) under subparagraphs (F) and
(G).
(iii) Payment of benchmark for msa
plans.--Notwithstanding clauses (i) and
(ii), in the case of an MSA plan, the
amount specified in this subparagraph
is equal to the MA area-specific non-
drug monthly benchmark amount, adjusted
under subparagraph (C).
(iv) Authority to apply frailty
adjustment under pace payment rules for
certain specialized ma plans for
special needs individuals.--
(I) In general.--
Notwithstanding the preceding
provisions of this paragraph,
for plan year 2011 and
subsequent plan years, in the
case of a plan described in
subclause (II), the Secretary
may apply the payment rules
under section 1894(d) (other
than paragraph (3) of such
section) rather than the
payment rules that would
otherwise apply under this
part, but only to the extent
necessary to reflect the costs
of treating high concentrations
of frail individuals.
(II) Plan described.--A plan
described in this subclause is
a specialized MA plan for
special needs individuals
described in section
1859(b)(6)(B)(ii) that is fully
integrated with capitated
contracts with States for
Medicaid benefits, including
long-term care, and that have
similar average levels of
frailty (as determined by the
Secretary) as the PACE program.
(C) Demographic adjustment, including
adjustment for health status.--
(i) In general.--The Secretary shall
adjust the payment amount under
subparagraph (A)(i) and the amount
specified under subparagraph (B)(i),
(B)(ii), and (B)(iii) for such risk
factors as age, disability status,
gender, institutional status, and such
other factors as the Secretary
determines to be appropriate, including
adjustment for health status under
paragraph (3), so as to ensure
actuarial equivalence. The Secretary
may add to, modify, or substitute for
such adjustment factors if such changes
will improve the determination of
actuarial equivalence.
(ii) Application of coding
adjustment.--For 2006 and each
subsequent year:
(I) In applying the
adjustment under clause (i) for
health status to payment
amounts, the Secretary shall
ensure that such adjustment
reflects changes in treatment
and coding practices in the
fee-for-service sector and
reflects differences in coding
patterns between Medicare
Advantage plans and providers
under part A and B to the
extent that the Secretary has
identified such differences.
(II) In order to ensure
payment accuracy, the Secretary
shall annually conduct an
analysis of the differences
described in subclause (I). The
Secretary shall complete such
analysis by a date necessary to
ensure that the results of such
analysis are incorporated on a
timely basis into the risk
scores for 2008 and subsequent
years. In conducting such
analysis, the Secretary shall
use data submitted with respect
to 2004 and subsequent years,
as available and updated as
appropriate.
(III) In calculating each
year's adjustment, the
adjustment factor shall be for
2014, not less than the
adjustment factor applied for
2010, plus 1.5 percentage
points; for each of years 2015
through 2018, not less than the
adjustment factor applied for
the previous year, plus 0.25
percentage point; and for 2019
and each subsequent year, not
less than 5.9 percent.
(IV) Such adjustment shall be
applied to risk scores until
the Secretary implements risk
adjustment using Medicare
Advantage diagnostic, cost, and
use data.
(iii) Improvements to risk adjustment
for special needs individuals with
chronic health conditions.--
(I) In general.--For 2011 and
subsequent years, for purposes
of the adjustment under clause
(i) with respect to individuals
described in subclause (II),
the Secretary shall use a risk
score that reflects the known
underlying risk profile and
chronic health status of
similar individuals. Such risk
score shall be used instead of
the default risk score for new
enrollees in Medicare Advantage
plans that are not specialized
MA plans for special needs
individuals (as defined in
section 1859(b)(6)).
(II) Individuals described.--
An individual described in this
subclause is a special needs
individual described in
subsection (b)(6)(B)(iii) who
enrolls in a specialized MA
plan for special needs
individuals on or after January
1, 2011.
(III) Evaluation.--For 2011
and periodically thereafter,
the Secretary shall evaluate
and revise the risk adjustment
system under this subparagraph
in order to, as accurately as
possible, account for higher
medical and care coordination
costs associated with frailty,
individuals with multiple,
comorbid chronic conditions,
and individuals with a
diagnosis of mental illness,
and also to account for costs
that may be associated with
higher concentrations of
beneficiaries with those
conditions.
(IV) Publication of
evaluation and revisions.--The
Secretary shall publish, as
part of an announcement under
subsection (b), a description
of any evaluation conducted
under subclause (III) during
the preceding year and any
revisions made under such
subclause as a result of such
evaluation.
(D) Separate payment for federal drug
subsidies.--In the case of an enrollee in an
MA-PD plan, the MA organization offering such
plan also receives--
(i) subsidies under section 1860D-15
(other than under subsection (g)); and
(ii) reimbursement for premium and
cost-sharing reductions for low-income
individuals under section 1860D-
14(c)(1)(C).
(E) Payment of rebate for plans with bids
below benchmark.--In the case of a plan for
which there are average per capita monthly
savings described in section 1854(b)(3)(C) or
1854(b)(4)(C), as the case may be, the amount
specified in this subparagraph is the amount of
the monthly rebate computed under section
1854(b)(1)(C)(i) for that plan and year (as
reduced by the amount of any credit provided
under section 1854(b)(1)(C)(iv)).
(F) Adjustment for intra-area variations.--
(i) Intra-regional variations.--In
the case of payment with respect to an
MA regional plan for an MA region, the
Secretary shall also adjust the amounts
specified under subparagraphs (B)(i)
and (B)(ii) in a manner to take into
account variations in MA local payment
rates under this part among the
different MA local areas included in
such region.
(ii) Intra-service area variations.--
In the case of payment with respect to
an MA local plan for a service area
that covers more than one MA local
area, the Secretary shall also adjust
the amounts specified under
subparagraphs (B)(i) and (B)(ii) in a
manner to take into account variations
in MA local payment rates under this
part among the different MA local areas
included in such service area.
(G) Adjustment relating to risk adjustment.--
The Secretary shall adjust payments with
respect to MA plans as necessary to ensure
that--
(i) the sum of--
(I) the monthly payment made
under subparagraph (A)(ii); and
(II) the MA monthly basic
beneficiary premium under
section 1854(b)(2)(A); equals
(ii) the unadjusted MA statutory non-
drug monthly bid amount, adjusted in
the manner described in subparagraph
(C) and, for an MA regional plan,
subparagraph (F).
(H) Special rule for end-stage renal
disease.--The Secretary shall establish
separate rates of payment to a Medicare+Choice
organization with respect to classes of
individuals determined to have end-stage renal
disease and enrolled in a Medicare+Choice plan
of the organization. Such rates of payment
shall be actuarially equivalent to rates that
would have been paid with respect to other
enrollees in the MA payment area (or such other
area as specified by the Secretary) under the
provisions of this section as in effect before
the date of the enactment of the Medicare
Prescription Drug, Improvement, and
Modernization Act of 2003. In accordance with
regulations, the Secretary shall provide for
the application of the seventh sentence of
section 1881(b)(7) to payments under this
section covering the provision of renal
dialysis treatment in the same manner as such
sentence applies to composite rate payments
described in such sentence. In establishing
such rates, the Secretary shall provide for
appropriate adjustments to increase each rate
to reflect the demonstration rate (including
the risk adjustment methodology associated with
such rate) of the social health maintenance
organization end-stage renal disease capitation
demonstrations (established by section 2355 of
the Deficit Reduction Act of 1984, as amended
by section 13567(b) of the Omnibus Budget
Reconciliation Act of 1993), and shall compute
such rates by taking into account such factors
as renal treatment modality, age, and the
underlying cause of the end-stage renal
disease. The Secretary may apply the
competitive bidding methodology provided for in
this section, with appropriate adjustments to
account for the risk adjustment methodology
applied to end stage renal disease payments.
(2) Adjustment to reflect number of enrollees.--
(A) In general.--The amount of payment under
this subsection may be retroactively adjusted
to take into account any difference between 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 advance payment.
(B) Special rule for certain enrollees.--
(i) In general.--Subject to clause
(ii), the Secretary may make
retroactive adjustments under
subparagraph (A) to take into account
individuals enrolled during the period
beginning on the date on which the
individual enrolls with a
Medicare+Choice organization under a
plan operated, sponsored, or
contributed to by the individual's
employer or former employer (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 retroactive adjustments
under this subparagraph, 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.
(3) Establishment of risk adjustment factors.--
(A) Report.--The Secretary shall develop, and
submit to Congress by not later than March 1,
1999, a report on the method of risk adjustment
of payment rates under this section, to be
implemented under subparagraph (C), that
accounts for variations in per capita costs
based on health status. Such report shall
include an evaluation of such method by an
outside, independent actuary of the actuarial
soundness of the proposal.
(B) Data collection.--In order to carry out
this paragraph, the Secretary shall require
Medicare+Choice organizations (and eligible
organizations with risk-sharing contracts under
section 1876) to submit data regarding
inpatient hospital services for periods
beginning on or after July 1, 1997, and data
regarding other services and other information
as the Secretary deems necessary for periods
beginning on or after July 1, 1998. The
Secretary may not require an organization to
submit such data before January 1, 1998.
(C) Initial implementation.--
(i) In general.--The Secretary shall
first provide for implementation of a
risk adjustment methodology that
accounts for variations in per capita
costs based on health status and other
demographic factors for payments by no
later than January 1, 2000.
(ii) Phase-in.--Except as provided in
clause (iv), such risk adjustment
methodology shall be implemented in a
phased-in manner so that the
methodology insofar as it makes
adjustments to capitation rates for
health status applies to--
(I) 10 percent of \1/12\ of
the annual Medicare+Choice
capitation rate in 2000 and
each succeeding year through
2003;
(II) 30 percent of such
capitation rate in 2004;
(III) 50 percent of such
capitation rate in 2005;
(IV) 75 percent of such
capitation rate in 2006; and
(V) 100 percent of such
capitation rate in 2007 and
succeeding years.
(iii) Data for risk adjustment
methodology.--Such risk adjustment
methodology for 2004 and each
succeeding year, shall be based on data
from inpatient hospital and ambulatory
settings.
(iv) Full implementation of risk
adjustment for congestive heart failure
enrollees for 2001.--
(I) Exemption from phase-
in.--Subject to subclause (II),
the Secretary shall fully
implement the risk adjustment
methodology described in clause
(i) with respect to each
individual who has had a
qualifying congestive heart
failure inpatient diagnosis (as
determined by the Secretary
under such risk adjustment
methodology) during the period
beginning on July 1, 1999, and
ending on June 30, 2000, and
who is enrolled in a
coordinated care plan that is
the only coordinated care plan
offered on January 1, 2001, in
the service area of the
individual.
(II) Period of application.--
Subclause (I) shall only apply
during the 1-year period
beginning on January 1, 2001.
(D) Uniform application to all types of
plans.--Subject to section 1859(e)(4), the
methodology shall be applied uniformly without
regard to the type of plan.
(4) Payment rule for federally qualified health center
services.--If an individual who is enrolled with an MA plan
under this part receives a service from a federally qualified
health center that has a written agreement with the MA
organization that offers such plan for providing such a service
(including any agreement required under section 1857(e)(3))--
(A) the Secretary shall pay the amount determined
under section 1833(a)(3)(B) directly to the federally
qualified health center not less frequently than
quarterly; and
(B) the Secretary shall not reduce the amount of the
monthly payments under this subsection as a result of
the application of subparagraph (A).
(b) Annual Announcement of Payment Rates, Annual Rulemaking
Schedule for Payment Rates for 2017 and Subsequent Years.--
(1) Annual announcements.--
(A) For 2005.--The Secretary shall determine,
and shall announce (in a manner intended to
provide notice to interested parties), not
later than the second Monday in May of 2004,
with respect to each MA payment area, the
following:
(i) MA capitation rates.--The annual
MA capitation rate for each MA payment
area for 2005.
(ii) Adjustment factors.--The risk
and other factors to be used in
adjusting such rates under subsection
(a)(1)(C) for payments for months in
2005.
(B) For 2006 and subsequent years before
2017.--For a year after 2005 and before 2017--
(i) Initial announcement.--The
Secretary shall determine, and shall
announce (in a manner intended to
provide notice to interested parties),
not later than the first Monday in
April before the calendar year
concerned, with respect to each MA
payment area, the following:
(I) MA capitation rates; ma
local area benchmark.--The
annual MA capitation rate for
each MA payment area for the
year.
(II) Adjustment factors.--The
risk and other factors to be
used in adjusting such rates
under subsection (a)(1)(C) for
payments for months in such
year.
(ii) Regional benchmark
announcement.--The Secretary shall
determine, and shall announce (in a
manner intended to provide notice to
interested parties), on a timely basis
before the calendar year concerned,
with respect to each MA region and each
MA regional plan for which a bid was
submitted under section 1854, the MA
region-specific non-drug monthly
benchmark amount for that region for
the year involved.
(iii) Benchmark announcement for cca
local areas.--The Secretary shall
determine, and shall announce (in a
manner intended to provide notice to
interested parties), on a timely basis
before the calendar year concerned,
with respect to each CCA area (as
defined in section 1860C-1(b)(1)(A)),
the CCA non-drug monthly benchmark
amount under section 1860C-1(e)(1) for
that area for the year involved.
(C) Annual rulemaking schedule for payment
rates for 2017 and subsequent years.--For 2017
and each subsequent year, before April 1 of the
preceding year, the Secretary shall, by
regulation and in accordance with the notice
and public comment periods required under
paragraph (2) for such a year, annually
determine and announce the following:
(i) The annual MA capitation rate for
each MA payment area for such year.
(ii) The risk and other factors to be
used in adjusting such rates under
subsection (a)(1)(A) for payments for
months in such year.
(iii) With respect to each MA region
and each MA regional plan for which a
bid was submitted under section 1854,
the MA region-specific non-drug monthly
benchmark amount for that region for
the year involved.
(iv) The major policy changes to the
risk adjustment model, and the 5-star
rating system established under
subsection (o), that are determined to
have an economic impact.
(2) Advance notice of methodological changes.--At
least 45 days (or, for 2017 and each subsequent year,
at least 60 days) before making the announcement under
paragraph (1) for a year, the Secretary shall provide
for notice to Medicare+Choice organizations of proposed
changes to be made in the methodology from the
methodology and assumptions used in the previous
announcement and shall provide such organizations an
opportunity (for 2017 and each subsequent year, of no
less than 30 days) to comment on such proposed changes.
(3) Explanation of assumptions.--In each announcement
made under paragraph (1), the Secretary shall include
an explanation of the assumptions and changes in
methodology used in such announcement.
(4) Continued computation and publication of county-
specific per capita fee-for-service expenditure
information.--The Secretary, through the Chief Actuary
of the Centers for Medicare & Medicaid Services, shall
provide for the computation and publication, on an
annual basis beginning with 2001 at the time of
publication of the annual Medicare+Choice capitation
rates under paragraph (1), of the following information
for the original medicare fee-for-service program under
parts A and B (exclusive of individuals eligible for
coverage under section 226A) for each Medicare+Choice
payment area for the second calendar year ending before
the date of publication:
(A) Total expenditures per capita per month,
computed separately for part A and for part B.
(B) The expenditures described in
subparagraph (A) reduced by the best estimate
of the expenditures (such as graduate medical
education and disproportionate share hospital
payments) not related to the payment of claims.
(C) The average risk factor for the covered
population based on diagnoses reported for
medicare inpatient services, using the same
methodology as is expected to be applied in
making payments under subsection (a).
(D) Such average risk factor based on
diagnoses for inpatient and other sites of
service, using the same methodology as is
expected to be applied in making payments under
subsection (a).
(c) Calculation of Annual Medicare+Choice Capitation Rates.--
(1) In general.--For purposes of this part, subject
to paragraphs (6)(C) and (7), each annual
Medicare+Choice capitation rate, for a Medicare+Choice
payment area that is an MA local area for a contract
year consisting of a calendar year, is equal to the
largest of the amounts specified in the following
subparagraph (A), (B), (C), or (D):
(A) Blended capitation rate.--For a year
before 2005, 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
Medicare+Choice payment area, as
determined under paragraph (3) for the
year, and
(ii) the national percentage (as
specified under paragraph (2) for the
year) of the input-price-adjusted
annual national Medicare+Choice
capitation rate, as determined under
paragraph (4) for the year,
multiplied (for a year other than 2004) 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
exceed, 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 section 1876(a)(1)(C)
for the area).
(ii) For 1999 and 2000, the minimum
amount determined under clause (i) or
this clause, respectively, for the
preceding 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 Statistical Area with a
population of more than 250,000, $525,
and for any other area $475.
(II) In the case of an area outside
the 50 States and the District of
Columbia, 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, 2003, and 2004, the
minimum amount specified in this clause
(or clause (iii)) for the preceding
year increased by the national per
capita Medicare+Choice growth
percentage, described in paragraph
(6)(A) for that succeeding year.
(C) Minimum percentage increase.--
(i) For 1998, 102 percent of the
annual per capita rate of payment for
1997 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 2003, 102 percent
of the annual Medicare+Choice
capitation rate under this paragraph
for the area for the previous year.
(v) For 2004 and each succeeding
year, the greater of--
(I) 102 percent of the annual
MA capitation rate under this
paragraph for the area for the
previous year; or
(II) the annual MA capitation
rate under this paragraph for
the area for the previous year
increased by the national per
capita MA growth percentage,
described in paragraph (6) for
that succeeding year, but not
taking into account any
adjustment under paragraph
(6)(C) for a year before 2004.
(D) 100 percent of fee-for-service costs.--
(i) In general.--For each year
specified in clause (ii), the adjusted
average per capita cost for the year
involved, determined under section
1876(a)(4) and adjusted as appropriate
for the purpose of risk adjustment, for
the MA payment area for individuals who
are not enrolled in an MA plan under
this part for the year, but adjusted to
exclude costs attributable to payments
under sections, 1848(o), and 1886(n)
and 1886(h).
(ii) Periodic rebasing.--The
provisions of clause (i) shall apply
for 2004 and for subsequent years as
the Secretary shall specify (but not
less than once every 3 years).
(iii) Inclusion of costs of va and
dod military facility services to
medicare-eligible beneficiaries.--In
determining the adjusted average per
capita cost under clause (i) for a
year, such cost shall be adjusted to
include the Secretary's estimate, on a
per capita 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.
(2) Area-specific and national percentages.--For
purposes of paragraph (1)(A)--
(A) for 1998, the ``area-specific
percentage'' is 90 percent and the ``national
percentage'' is 10 percent,
(B) for 1999, the ``area-specific
percentage'' is 82 percent and the ``national
percentage'' is 18 percent,
(C) for 2000, the ``area-specific
percentage'' is 74 percent and the ``national
percentage'' is 26 percent,
(D) for 2001, the ``area-specific
percentage'' is 66 percent and the ``national
percentage'' is 34 percent,
(E) for 2002, the ``area-specific
percentage'' is 58 percent and the ``national
percentage'' is 42 percent, and
(F) for a year after 2002, the ``area-
specific 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 paragraph
(1)(A), subject to subparagraphs (B) and (E),
the annual area-specific Medicare+Choice
capitation rate for a Medicare+Choice payment
area--
(i) for 1998 is, subject to
subparagraph (D), the annual per capita
rate of payment for 1997 determined
under section 1876(a)(1)(C) for the
area, increased by the national per
capita Medicare+Choice growth
percentage for 1998 (described in
paragraph (6)(A)); or
(ii) for a subsequent year is the
annual area-specific Medicare+Choice
capitation rate for the previous year
determined under this paragraph for the
area, increased 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
capitation rate under subparagraph (A)
for a year (beginning with 1998), the
annual per capita rate of payment for
1997 determined under section
1876(a)(1)(C) shall be adjusted to
exclude from the rate the applicable
percent (specified in clause (ii)) of
the payment adjustments described in
subparagraph (C).
(ii) Applicable percent.--For
purposes of clause (i), the applicable
percent for--
(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
adjustments which the Secretary
estimates were payable during 1997--
(I) for the indirect costs of
medical education under section
1886(d)(5)(B), and
(II) for direct graduate
medical education costs under
section 1886(h).
(ii) Treatment of payments covered
under state hospital reimbursement
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 Secretary shall
estimate a payment adjustment 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.
(E) Inclusion of costs of dod and va military
facility services to medicare-eligible
beneficiaries.--In determining the area-
specific MA capitation rate under subparagraph
(A) for a year (beginning with 2004), the
annual per capita rate of payment for 1997
determined under section 1876(a)(1)(C) shall be
adjusted to include in the rate the Secretary's
estimate, on a per capita 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.
(4) Input-price-adjusted annual national
medicare+choice capitation rate.--
(A) In general.--For purposes of paragraph
(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--
(i) the national standardized annual
Medicare+Choice capitation rate
(determined 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,
subject 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--
(I) the annual area-specific
Medicare+Choice capitation rate
for that year for the area
under paragraph (3), and
(II) the average number of
medicare beneficiaries residing
in that area in the year,
multiplied by the average 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
described in clause (i)(II) for all
areas for that year.
(C) Special rules for 1998.--In applying this
paragraph for 1998--
(i) medicare services shall be
divided into 2 types of services: part
A services and part B services;
(ii) the proportions described in
subparagraph (A)(ii)--
(I) for part A services shall
be the ratio (expressed as a
percentage) of the national
average annual per capita rate
of payment for part A for 1997
to the total national average
annual per capita rate of
payment for parts A and B for
1997, and
(II) for part B services
shall be 100 percent minus the
ratio described in subclause
(I);
(iii) for part A services, 70 percent
of payments attributable to such
services shall be adjusted by the index
used under section 1886(d)(3)(E) to
adjust payment rates for relative
hospital wage levels for hospitals
located in the payment area involved;
(iv) for part B services--
(I) 66 percent of payments
attributable to such services
shall be adjusted by the index
of the geographic area factors
under section 1848(e) used to
adjust payment rates for
physicians' services furnished
in the payment area, and
(II) of the remaining 34
percent of the amount of such
payments, 40 percent shall be
adjusted by the index described
in clause (iii); and
(v) the index values shall be
computed based only on the beneficiary
population who are 65 years of age or
older and who are not determined to
have end stage renal disease.
The Secretary may continue to apply the rules
described in this subparagraph (or similar
rules) for 1999.
(5) Payment adjustment budget neutrality factor.--For
purposes of paragraph (1)(A), for each year (other than
2004), 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)(iv), (a)(4), 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.--
(A) In general.--In this part, the ``national
per capita Medicare+Choice growth percentage''
for a year is the percentage determined by the
Secretary, by March 1st before the beginning of
the year involved, to reflect the Secretary's
estimate of the projected per capita rate of
growth in expenditures under this title for an
individual entitled to benefits under part A
and enrolled under part B, excluding
expenditures attributable to subsections (a)(7)
and (o) of section 1848 and subsections
(b)(3)(B)(ix) and (n) of section 1886, reduced
by the number of percentage points specified in
subparagraph (B) for the year. Separate
determinations may be made for aged enrollees,
disabled enrollees, and enrollees with end-
stage renal disease.
(B) Adjustment.--The number of percentage
points specified in this subparagraph is--
(i) for 1998, 0.8 percentage points,
(ii) for 1999, 0.5 percentage points,
(iii) for 2000, 0.5 percentage
points,
(iv) for 2001, 0.5 percentage points,
(v) for 2002, 0.3 percentage points,
and
(vi) for a year after 2002, 0
percentage points.
(C) Adjustment for over or under projection
of national per capita medicare+choice growth
percentage.--Beginning with rates calculated
for 1999, before 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 national per capita
Medicare+Choice growth percentage for that year
and previous years and the current estimate of
such percentage for such years, except that for
purposes of paragraph (1)(C)(v)(II), no such
adjustment shall be made for a year before
2004.
(7) 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 significant increase in the costs to
Medicare+Choice of providing benefits under contracts
under this part (for periods after any period described
in section 1852(a)(5)), the Secretary shall adjust
appropriately the payments to such organizations under
this part. Such projection and adjustment shall be
based on an analysis by the Chief Actuary of the
Centers for Medicare & Medicaid Services of the
actuarial costs associated with the new benefits.
(d) MA Payment Area; MA Local Area; MA Region Defined.--
(1) MA payment area.--In this part, except as
provided in this subsection, the term ``MA payment
area'' means--
(A) with respect to an MA local plan, an MA
local area (as defined in paragraph (2)); and
(B) with respect to an MA regional plan, an
MA region (as established under section
1858(a)(2)).
(2) MA local area.--The term ``MA local area'' means
a county or equivalent area specified by the Secretary.
(3) Rule for esrd beneficiaries.--In the case of
individuals who are determined to have end stage renal
disease, the Medicare+Choice payment area shall be a
State or such other payment area as the Secretary
specifies.
(4) Geographic adjustment.--
(A) In general.--Upon written request of the
chief executive officer of a State for a
contract year (beginning after 1998) made by
not later than February 1 of the previous year,
the Secretary shall make a geographic
adjustment to a Medicare+Choice payment area in
the State otherwise determined under paragraph
(1) for MA local plans--
(i) to a single statewide
Medicare+Choice payment area,
(ii) to the metropolitan based system
described in subparagraph (C), or
(iii) to consolidating into a single
Medicare+Choice payment area
noncontiguous counties (or equivalent
areas described inparagraph (1)(A))
within a State.
Such adjustment shall be effective for payments
for months beginning with January of the year
following the year in which the request is
received.
(B) Budget neutrality adjustment.--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
with respect to MA local plans for
Medicare+Choice payment areas in the State in a
manner so that the aggregate of the payments
under this section for such plans in the State
shall not exceed the aggregate payments that
would have been made under this section for
such plans for Medicare+Choice 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
metropolitan statistical area in the
State or in the case of a consolidated
metropolitan statistical area, all of
the portions of each primary
metropolitan statistical area within
the consolidated area within the State,
are treated as a single Medicare+Choice
payment area, and
(ii) all areas in the State that do
not fall within a metropolitan
statistical area are treated as a
single Medicare+Choice payment area.
(D) Areas.--In subparagraph (C), the terms
``metropolitan statistical area'',
``consolidated metropolitan statistical area'',
and ``primary metropolitan statistical area''
mean any area designated as such by the
Secretary of Commerce.
(e) Special Rules for Individuals Electing MSA Plans.--
(1) In general.--If the amount of the Medicare+Choice
monthly MSA premium (as defined in section
1854(b)(2)(C)) 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 Medicare+Choice
MSA established (and, if applicable, designated) by the
individual under paragraph (2).
(2) Establishment and designation of medicare+choice
medical savings account as requirement for payment of
contribution.--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 Medicare+Choice MSA
(as defined in section 138(b)(2) of the
Internal Revenue Code of 1986), and
(B) if the individual has established more
than one such Medicare+Choice MSA, has
designated one of such accounts as the
individual's Medicare+Choice 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 individual electing an
MSA plan effective beginning with a month in a year,
the amount of the contribution to the Medicare+Choice
MSA on behalf of the individual 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 deposits attributable to the remaining
months in the year.
(f) Payments From Trust Funds.--The payment to a
Medicare+Choice organization under this section for individuals
enrolled under this part with the organization and for payments
under subsection (l) and subsection (m) and payments to a
Medicare+Choice MSA under subsection (e)(1) shall be made from
the Federal Hospital Insurance Trust Fund and the Federal
Supplementary Medical Insurance Trust Fund in such proportion
as the Secretary 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.
Payments to MA organizations for statutory drug benefits
provided under this title are made from the Medicare
Prescription Drug Account in the Federal Supplementary Medical
Insurance Trust Fund. Monthly payments 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 under this section for October 2006 shall be paid on
the first business day of October 2006.
(g) Special Rule for Certain Inpatient Hospital Stays.--In
the case of an individual who is receiving inpatient hospital
services from a subsection (d) hospital (as defined in section
1886(d)(1)(B)), a rehabilitation hospital described in section
1886(d)(1)(B)(ii) or a distinct part rehabilitation unit
described in the matter following clause (v) of section
1886(d)(1)(B), or a long-term care hospital (described in
section 1886(d)(1)(B)(iv)) as of the effective date of the
individual's--
(1) election under this part of a Medicare+Choice
plan offered by a Medicare+Choice organization--
(A) payment for such services until the date
of the individual's discharge shall be made
under this title through the Medicare+Choice
plan or the original medicare fee-for-service
program option described in section
1851(a)(1)(A) (as the case may be) elected
before 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
individual'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
Medicare+Choice organization under this part--
(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
other payment provision under this title for
inpatient services for the type of facility,
hospital, or unit involved, described in the
matter preceding paragraph (1), as the case may
be, or by any succeeding Medicare+Choice
organization, and
(C) the terminated organization shall not
receive any payment with respect to the
individual under this part during the period
the individual is not enrolled.
(h) Special Rule for Hospice Care.--
(1) Information.--A contract under this part shall
require the Medicare+Choice organization to inform each
individual enrolled under this part with a
Medicare+Choice plan offered by the organization about
the availability of hospice care if--
(A) a hospice program participating under
this title is located within the organization's
service area; or
(B) it is common practice to refer patients
to hospice programs outside such service area.
(2) Payment.--If an individual who is enrolled with a
Medicare+Choice organization under this part makes an
election under section 1812(d)(1) to receive hospice
care from a particular hospice program--
(A) payment for the hospice care furnished 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
individual'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
Medicare+Choice organization 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 Medicare+Choice
organization in an amount equal to the value of
the additional benefits required under section
1854(f)(1)(A).
(i) New Entry Bonus.--
(1) In general.--Subject to paragraphs (2) and (3),
in the case of Medicare+Choice payment area in which a
Medicare+Choice plan has not been offered since 1997
(or in which all organizations that offered a plan
since such date have filed notice with the Secretary,
as of October 13, 1999, that they will not be offering
such a plan as of January 1, 2000, or filed notice with
the Secretary as of October 3, 2000, that they will not
be offering such a plan as of January 1, 2001), the
amount of the monthly payment otherwise made under this
section shall be increased--
(A) only for the first 12 months in which any
Medicare+Choice plan is offered in the area, by
5 percent of the total monthly payment
otherwise computed for such payment area; and
(B) only for the subsequent 12 months, by 3
percent of the total monthly payment otherwise
computed for such payment area.
(2) Period of application.--Paragraph (1) shall only
apply to payment for Medicare+Choice plans which are
first offered in a Medicare+Choice payment area during
the 2-year period beginning on January 1, 2000.
(3) Limitation to organization offering first plan in
an area.--Paragraph (1) shall only apply to payment to
the first Medicare+Choice organization that offers a
Medicare+Choice plan in each Medicare+Choice payment
area, except that if more than one such organization
first offers such a plan in an area on the same date,
paragraph (1) shall apply to payment for such
organizations.
(4) Construction.--Nothing in paragraph (1) shall be
construed as affecting the calculation of the annual
Medicare+Choice capitation rate under subsection (c)
for any payment area or as applying to payment for any
period not described in such paragraph and paragraph
(2).
(5) Offered defined.--In this subsection, the term
``offered'' means, with respect to a Medicare+Choice
plan as of a date, that a Medicare+Choice eligible
individual may enroll with the plan on that date,
regardless of when the enrollment takes effect or when
the individual obtains benefits under the plan.
(j) Computation of Benchmark Amounts.--For purposes of this
part, subject to subsection (o), the term ``MA area-specific
non-drug monthly benchmark amount'' means for a month in a
year--
(1) with respect to--
(A) a service area that is entirely within an
MA local area, subject to section 1860C-
1(d)(2)(A), an amount equal to \1/12\ of the
annual MA capitation rate under section
1853(c)(1) for the area for the year (or, for
2007, 2008, 2009, and 2010, \1/12\ of the
applicable amount determined under subsection
(k)(1) for the area for the year; for 2011, \1/
12\ of the applicable amount determined under
subsection (k)(1) for the area for 2010; and,
beginning with 2012, \1/12\ of the blended
benchmark amount determined under subsection
(n)(1) for the area for the year), adjusted as
appropriate (for years before 2007) for the
purpose of risk adjustment; or
(B) a service area that includes more than
one MA local area, an amount equal to the
average of the amounts described in
subparagraph (A) for each such local MA area,
weighted by the projected number of enrollees
in the plan residing in the respective local MA
areas (as used by the plan for purposes of the
bid and disclosed to the Secretary under
section 1854(a)(6)(A)(iii)), adjusted as
appropriate (for years before 2007) for the
purpose of risk adjustment; or
(2) with respect to an MA region for a month in a
year, the MA region-specific non-drug monthly benchmark
amount, as defined in section 1858(f) for the region
for the year.
(k) Determination of Applicable Amount for Purposes of
Calculating the Benchmark Amounts.--
(1) Applicable amount defined.--For purposes of
subsection (j), subject to paragraphs (2) and (4), the
term ``applicable amount'' means for an area--
(A) for 2007--
(i) if such year is not specified
under subsection (c)(1)(D)(ii), an
amount equal to the amount specified in
subsection (c)(1)(C) for the area for
2006--
(I) first adjusted by the
rescaling factor for 2006 for
the area (as made available by
the Secretary in the
announcement of the rates on
April 4, 2005, under subsection
(b)(1), but excluding any
national adjustment factors for
coding intensity and risk
adjustment budget neutrality
that were included in such
factor); and
(II) then increased by the
national per capita MA growth
percentage, described in
subsection (c)(6) for 2007, but
not taking into account any
adjustment under subparagraph
(C) of such subsection for a
year before 2004;
(ii) if such year is specified under
subsection (c)(1)(D)(ii), an amount
equal to the greater of--
(I) the amount determined
under clause (i) for the area
for the year; or
(II) the amount specified in
subsection (c)(1)(D) for the
area for the year; and
(B) for a subsequent year--
(i) if such year is not specified
under subsection (c)(1)(D)(ii), an
amount equal to the amount determined
under this paragraph for the area for
the previous year (determined without
regard to paragraphs (2) and (4)),
increased by the national per capita MA
growth percentage, described in
subsection (c)(6) for that succeeding
year, but not taking into account any
adjustment under subparagraph (C) of
such subsection for a year before 2004;
and
(ii) if such year is specified under
subsection (c)(1)(D)(ii), an amount
equal to the greater of--
(I) the amount determined
under clause (i) for the area
for the year; or
(II) the amount specified in
subsection (c)(1)(D) for the
area for the year.
(2) Phase-out of budget neutrality factor.--
(A) In general.--Except as provided in
subparagraph (D), in the case of 2007 through
2010, the applicable amount determined under
paragraph (1) shall be multiplied by a factor
equal to 1 plus the product of--
(i) the percent determined under
subparagraph (B) for the year; and
(ii) the applicable phase-out factor
for the year under subparagraph (C).
(B) Percent determined.--
(i) In general.--For purposes of
subparagraph (A)(i), subject to clause
(iv), the percent determined under this
subparagraph for a year is a percent
equal to a fraction the numerator of
which is described in clause (ii) and
the denominator of which is described
in clause (iii).
(ii) Numerator based on difference
between demographic rate and risk
rate.--
(I) In general.--The
numerator described in this
clause is an amount equal to
the amount by which the
demographic rate described in
subclause (II) exceeds the risk
rate described in subclause
(III).
(II) Demographic rate.--The
demographic rate described in
this subclause is the
Secretary's estimate of the
total payments that would have
been made under this part in
the year if all the monthly
payment amounts for all MA
plans were equal to \1/12\ of
the annual MA capitation rate
under subsection (c)(1) for the
area and year, adjusted
pursuant to subsection
(a)(1)(C).
(III) Risk rate.--The risk
rate described in this
subclause is the Secretary's
estimate of the total payments
that would have been made under
this part in the year if all
the monthly payment amounts for
all MA plans were equal to the
amount described in subsection
(j)(1)(A) (determined as if
this paragraph had not applied)
under subsection (j) for the
area and year, adjusted
pursuant to subsection
(a)(1)(C).
(iii) Denominator based on risk
rate.--The denominator described in
this clause is equal to the total
amount estimated for the year under
clause (ii)(III).
(iv) Requirements.--In estimating the
amounts under the previous clauses, the
Secretary shall--
(I) use a complete set of the
most recent and representative
Medicare Advantage risk scores
under subsection (a)(3) that
are available from the risk
adjustment model announced for
the year;
(II) adjust the risk scores
to reflect changes in treatment
and coding practices in the
fee-for-service sector;
(III) adjust the risk scores
for differences in coding
patterns between Medicare
Advantage plans and providers
under the original Medicare
fee-for-service program under
parts A and B to the extent
that the Secretary has
identified such differences, as
required in subsection
(a)(1)(C);
(IV) as necessary, adjust the
risk scores for late data
submitted by Medicare Advantage
organizations;
(V) as necessary, adjust the
risk scores for lagged cohorts;
and
(VI) as necessary, adjust the
risk scores for changes in
enrollment in Medicare
Advantage plans during the
year.
(v) Authority.--In computing such
amounts the Secretary may take into
account the estimated health risk of
enrollees in preferred provider
organization plans (including MA
regional plans) for the year.
(C) Applicable phase-out factor.--For
purposes of subparagraph (A)(ii), the term
``applicable phase-out factor'' means--
(i) for 2007, 0.55;
(ii) for 2008, 0.40;
(iii) for 2009, 0.25; and
(iv) for 2010, 0.05.
(D) Termination of application.--Subparagraph
(A) shall not apply in a year if the amount
estimated under subparagraph (B)(ii)(III) for
the year is equal to or greater than the amount
estimated under subparagraph (B)(ii)(II) for
the year.
(3) No revision in percent.--
(A) In general.--The Secretary may not make
any adjustment to the percent determined under
paragraph (2)(B) for any year.
(B) Rule of construction.--Nothing in this
subsection shall be construed to limit the
authority of the Secretary to make adjustments
to the applicable amounts determined under
paragraph (1) as appropriate for purposes of
updating data or for purposes of adopting an
improved risk adjustment methodology.
(4) Phase-out of the indirect costs of medical
education from capitation rates.--
(A) In general.--After determining the
applicable amount for an area for a year under
paragraph (1) (beginning with 2010), the
Secretary shall adjust such applicable amount
to exclude from such applicable amount the
phase-in percentage (as defined in subparagraph
(B)(i)) for the year of the Secretary's
estimate of the standardized costs for payments
under section 1886(d)(5)(B) in the area for the
year. Any adjustment under the preceding
sentence shall be made prior to the application
of paragraph (2).
(B) Percentages defined.--For purposes of
this paragraph:
(i) Phase-in percentage.--The term
``phase-in percentage'' means, for an
area for a year, the ratio (expressed
as a percentage, but in no case greater
than 100 percent) of--
(I) the maximum cumulative
adjustment percentage for the
year (as defined in clause
(ii)); to
(II) the standardized IME
cost percentage (as defined in
clause (iii)) for the area and
year.
(ii) Maximum cumulative adjustment
percentage.--The term ``maximum
cumulative adjustment percentage''
means, for--
(I) 2010, 0.60 percent; and
(II) a subsequent year, the
maximum cumulative adjustment
percentage for the previous
year increased by 0.60
percentage points.
(iii) Standardized ime cost
percentage.--The term ``standardized
IME cost percentage'' means, for an
area for a year, the per capita costs
for payments under section
1886(d)(5)(B) (expressed as a
percentage of the fee-for-service
amount specified in subparagraph (C))
for the area and the year.
(C) Fee-for-service amount.--The fee-for-
service amount specified in this subparagraph
for an area for a year is the amount specified
under subsection (c)(1)(D) for the area and the
year.
(l) Application of Eligible Professional Incentives for
Certain MA Organizations for Adoption and Meaningful Use of
Certified EHR Technology.--
(1) In general.--Subject to paragraphs (3) and (4),
in the case of a qualifying MA organization, the
provisions of sections 1848(o) and 1848(a)(7) shall
apply with respect to eligible professionals described
in paragraph (2) of the organization who the
organization attests under paragraph (6) to be
meaningful EHR users in a similar manner as they apply
to eligible professionals under such sections.
Incentive payments under paragraph (3) shall be made to
and payment adjustments under paragraph (4) shall apply
to such qualifying organizations.
(2) Eligible professional described.--With respect to
a qualifying MA organization, an eligible professional
described in this paragraph is an eligible professional
(as defined for purposes of section 1848(o)) who--
(A)(i) is employed by the organization; or
(ii)(I) is employed by, or is a partner of,
an entity that through contract with the
organization furnishes at least 80 percent of
the entity's Medicare patient care services to
enrollees of such organization; and
(II) furnishes at least 80 percent of the
professional services of the eligible
professional covered under this title to
enrollees of the organization; and
(B) furnishes, on average, at least 20 hours
per week of patient care services.
(3) Eligible professional incentive payments.--
(A) In general.--In applying section 1848(o)
under paragraph (1), instead of the additional
payment amount under section 1848(o)(1)(A) and
subject to subparagraph (B), the Secretary may
substitute an amount determined by the
Secretary to the extent feasible and practical
to be similar to the estimated amount in the
aggregate that would be payable if payment for
services furnished by such professionals was
payable under part B instead of this part.
(B) Avoiding duplication of payments.--
(i) In general.--In the case of an
eligible professional described in
paragraph (2)--
(I) that is eligible for the
maximum incentive payment under
section 1848(o)(1)(A) for the
same payment period, the
payment incentive shall be made
only under such section and not
under this subsection; and
(II) that is eligible for
less than such maximum
incentive payment for the same
payment period, the payment
incentive shall be made only
under this subsection and not
under section 1848(o)(1)(A).
(ii) Methods.--In the case of an
eligible professional described in
paragraph (2) who is eligible for an
incentive payment under section
1848(o)(1)(A) but is not described in
clause (i) for the same payment period,
the Secretary shall develop a process--
(I) to ensure that duplicate
payments are not made with
respect to an eligible
professional both under this
subsection and under section
1848(o)(1)(A); and
(II) to collect data from
Medicare Advantage
organizations to ensure against
such duplicate payments.
(C) Fixed schedule for application of
limitation on incentive payments for all
eligible professionals.--In applying section
1848(o)(1)(B)(ii) under subparagraph (A), in
accordance with rules specified by the
Secretary, a qualifying MA organization shall
specify a year (not earlier than 2011) that
shall be treated as the first payment year for
all eligible professionals with respect to such
organization.
(4) Payment adjustment.--
(A) In general.--In applying section
1848(a)(7) under paragraph (1), instead of the
payment adjustment being an applicable percent
of the fee schedule amount for a year under
such section, subject to subparagraph (D), the
payment adjustment under paragraph (1) shall be
equal to the percent specified in subparagraph
(B) for such year of the payment amount
otherwise provided under this section for such
year.
(B) Specified percent.--The percent specified
under this subparagraph for a year is 100
percent minus a number of percentage points
equal to the product of--
(i) the number of percentage points
by which the applicable percent (under
section 1848(a)(7)(A)(ii)) for the year
is less than 100 percent; and
(ii) the Medicare physician
expenditure proportion specified in
subparagraph (C) for the year.
(C) Medicare physician expenditure
proportion.--The Medicare physician expenditure
proportion under this subparagraph for a year
is the Secretary's estimate of the proportion,
of the expenditures under parts A and B that
are not attributable to this part, that are
attributable to expenditures for physicians'
services.
(D) Application of payment adjustment.--In
the case that a qualifying MA organization
attests that not all eligible professionals of
the organization are meaningful EHR users with
respect to a year, the Secretary shall apply
the payment adjustment under this paragraph
based on the proportion of all such eligible
professionals of the organization that are not
meaningful EHR users for such year.
(5) Qualifying ma organization defined.--In this
subsection and subsection (m), the term ``qualifying MA
organization'' means a Medicare Advantage organization
that is organized as a health maintenance organization
(as defined in section 2791(b)(3) of the Public Health
Service Act).
(6) Meaningful ehr user attestation.--For purposes of
this subsection and subsection (m), a qualifying MA
organization shall submit an attestation, in a form and
manner specified by the Secretary which may include the
submission of such attestation as part of submission of
the initial bid under section 1854(a)(1)(A)(iv),
identifying--
(A) whether each eligible professional
described in paragraph (2), with respect to
such organization is a meaningful EHR user (as
defined in section 1848(o)(2)) for a year
specified by the Secretary; and
(B) whether each eligible hospital described
in subsection (m)(1), with respect to such
organization, is a meaningful EHR user (as
defined in section 1886(n)(3)) for an
applicable period specified by the Secretary.
(7) Posting on website.--The Secretary shall post on
the Internet website of the Centers for Medicare &
Medicaid Services, in an easily understandable format,
a list of the names, business addresses, and business
phone numbers of--
(A) each qualifying MA organization receiving
an incentive payment under this subsection for
eligible professionals of the organization; and
(B) the eligible professionals of such
organization for which such incentive payment
is based.
(8) Limitation on review.--There shall be no
administrative or judicial review under section 1869,
section 1878, or otherwise, of--
(A) the methodology and standards for
determining payment amounts and payment
adjustments under this subsection, including
avoiding duplication of payments under
paragraph (3)(B) and the specification of rules
for the fixed schedule for application of
limitation on incentive payments for all
eligible professionals under paragraph (3)(C);
(B) the methodology and standards for
determining eligible professionals under
paragraph (2); and
(C) the methodology and standards for
determining a meaningful EHR user under section
1848(o)(2), including specification of the
means of demonstrating meaningful EHR use under
section 1848(o)(3)(C) and selection of measures
under section 1848(o)(3)(B).
(m) Application of Eligible Hospital Incentives for Certain
MA Organizations for Adoption and Meaningful Use of Certified
EHR Technology.--
(1) Application.--Subject to paragraphs (3) and (4),
in the case of a qualifying MA organization, the
provisions of sections 1886(n) and 1886(b)(3)(B)(ix)
shall apply with respect to eligible hospitals
described in paragraph (2) of the organization which
the organization attests under subsection (l)(6) to be
meaningful EHR users in a similar manner as they apply
to eligible hospitals under such sections. Incentive
payments under paragraph (3) shall be made to and
payment adjustments under paragraph (4) shall apply to
such qualifying organizations.
(2) Eligible hospital described.--With respect to a
qualifying MA organization, an eligible hospital
described in this paragraph is an eligible hospital (as
defined in section 1886(n)(6)(A)) that is under common
corporate governance with such organization and serves
individuals enrolled under an MA plan offered by such
organization.
(3) Eligible hospital incentive payments.--
(A) In general.--In applying section
1886(n)(2) under paragraph (1), instead of the
additional payment amount under section
1886(n)(2), there shall be substituted an
amount determined by the Secretary to be
similar to the estimated amount in the
aggregate that would be payable if payment for
services furnished by such hospitals was
payable under part A instead of this part. In
implementing the previous sentence, the
Secretary--
(i) shall, insofar as data to
determine the discharge related amount
under section 1886(n)(2)(C) for an
eligible hospital are not available to
the Secretary, use such alternative
data and methodology to estimate such
discharge related amount as the
Secretary determines appropriate; and
(ii) shall, insofar as data to
determine the medicare share described
in section 1886(n)(2)(D) for an
eligible hospital are not available to
the Secretary, use such alternative
data and methodology to estimate such
share, which data and methodology may
include use of the inpatient-bed-days
(or discharges) with respect to an
eligible hospital during the
appropriate period which are
attributable to both individuals for
whom payment may be made under part A
or individuals enrolled in an MA plan
under a Medicare Advantage organization
under this part as a proportion of the
estimated total number of patient-bed-
days (or discharges) with respect to
such hospital during such period.
(B) Avoiding duplication of payments.--
(i) In general.--In the case of a
hospital that for a payment year is an
eligible hospital described in
paragraph (2) and for which at least
one-third of their discharges (or bed-
days) of Medicare patients for the year
are covered under part A, payment for
the payment year shall be made only
under section 1886(n) and not under
this subsection.
(ii) Methods.--In the case of a
hospital that is an eligible hospital
described in paragraph (2) and also is
eligible for an incentive payment under
section 1886(n) but is not described in
clause (i) for the same payment period,
the Secretary shall develop a process--
(I) to ensure that duplicate
payments are not made with
respect to an eligible hospital
both under this subsection and
under section 1886(n); and
(II) to collect data from
Medicare Advantage
organizations to ensure against
such duplicate payments.
(4) Payment adjustment.--
(A) Subject to paragraph (3), in the case of
a qualifying MA organization (as defined in
section 1853(l)(5)), if, according to the
attestation of the organization submitted under
subsection (l)(6) for an applicable period, one
or more eligible hospitals (as defined in
section 1886(n)(6)(A)) that are under common
corporate governance with such organization and
that serve individuals enrolled under a plan
offered by such organization are not meaningful
EHR users (as defined in section 1886(n)(3))
with respect to a period, the payment amount
payable under this section for such
organization for such period shall be the
percent specified in subparagraph (B) for such
period of the payment amount otherwise provided
under this section for such period.
(B) Specified percent.--The percent specified
under this subparagraph for a year is 100
percent minus a number of percentage points
equal to the product of--
(i) the number of the percentage
point reduction effected under section
1886(b)(3)(B)(ix)(I) for the period;
and
(ii) the Medicare hospital
expenditure proportion specified in
subparagraph (C) for the year.
(C) Medicare hospital expenditure
proportion.--The Medicare hospital expenditure
proportion under this subparagraph for a year
is the Secretary's estimate of the proportion,
of the expenditures under parts A and B that
are not attributable to this part, that are
attributable to expenditures for inpatient
hospital services.
(D) Application of payment adjustment.--In
the case that a qualifying MA organization
attests that not all eligible hospitals are
meaningful EHR users with respect to an
applicable period, the Secretary shall apply
the payment adjustment under this paragraph
based on a methodology specified by the
Secretary, taking into account the proportion
of such eligible hospitals, or discharges from
such hospitals, that are not meaningful EHR
users for such period.
(5) Posting on website.--The Secretary shall post on
the Internet website of the Centers for Medicare &
Medicaid Services, in an easily understandable format--
(A) a list of the names, business addresses,
and business phone numbers of each qualifying
MA organization receiving an incentive payment
under this subsection for eligible hospitals
described in paragraph (2); and
(B) a list of the names of the eligible
hospitals for which such incentive payment is
based.
(6) Limitations on review.--There shall be no
administrative or judicial review under section 1869,
section 1878, or otherwise, of--
(A) the methodology and standards for
determining payment amounts and payment
adjustments under this subsection, including
avoiding duplication of payments under
paragraph (3)(B);
(B) the methodology and standards for
determining eligible hospitals under paragraph
(2); and
(C) the methodology and standards for
determining a meaningful EHR user under section
1886(n)(3), including specification of the
means of demonstrating meaningful EHR use under
subparagraph (C) of such section and selection
of measures under subparagraph (B) of such
section.
(n) Determination of Blended Benchmark Amount.--
(1) In general.--For purposes of subsection (j),
subject to paragraphs (3), (4), and (5), the term
``blended benchmark amount'' means for an area--
(A) for 2012 the sum of--
(i) \1/2\ of the applicable amount
for the area and year; and
(ii) \1/2\ of the amount specified in
paragraph (2)(A) for the area and year;
and
(B) for a subsequent year the amount
specified in paragraph (2)(A) for the area and
year.
(2) Specified amount.--
(A) In general.--The amount specified in this
subparagraph for an area and year is the
product of--
(i) the base payment amount specified
in subparagraph (E) for the area and
year adjusted to take into account the
phase-out in the indirect costs of
medical education from capitation rates
described in subsection (k)(4); and
(ii) the applicable percentage for
the area for the year specified under
subparagraph (B).
(B) Applicable percentage.--Subject to
subparagraph (D), the applicable percentage
specified in this subparagraph for an area for
a year in the case of an area that is ranked--
(i) in the highest quartile under
subparagraph (C) for the previous year
is 95 percent;
(ii) in the second highest quartile
under such subparagraph for the
previous year is 100 percent;
(iii) in the third highest quartile
under such subparagraph for the
previous year is 107.5 percent; or
(iv) in the lowest quartile under
such subparagraph for the previous year
is 115 percent.
(C) Periodic ranking.--For purposes of this
paragraph in the case of an area located--
(i) in 1 of the 50 States or the
District of Columbia, the Secretary
shall rank such area in each year
specified under subsection
(c)(1)(D)(ii) based upon the level of
the amount specified in subparagraph
(A)(i) for such areas; or
(ii) in a territory, the Secretary
shall rank such areas in each such year
based upon the level of the amount
specified in subparagraph (A)(i) for
such area relative to quartile rankings
computed under clause (i).
(D) 1-year transition for changes in
applicable percentage.--If, for a year after
2012, there is a change in the quartile in
which an area is ranked compared to the
previous year, the applicable percentage for
the area in the year shall be the average of--
(i) the applicable percentage for the
area for the previous year; and
(ii) the applicable percentage that
would otherwise apply for the area for
the year.
(E) Base payment amount.--Subject to
subparagraph (F), the base payment amount
specified in this subparagraph--
(i) for 2012 is the amount specified
in subsection (c)(1)(D) for the area
for the year; or
(ii) for a subsequent year that--
(I) is not specified under
subsection (c)(1)(D)(ii), is
the base amount specified in
this subparagraph for the area
for the previous year,
increased by the national per
capita MA growth percentage,
described in subsection (c)(6)
for that succeeding year, but
not taking into account any
adjustment under subparagraph
(C) of such subsection for a
year before 2004; and
(II) is specified under
subsection (c)(1)(D)(ii), is
the amount specified in
subsection (c)(1)(D) for the
area for the year.
(F) Application of indirect medical education
phase-out.--The base payment amount specified
in subparagraph (E) for a year shall be
adjusted in the same manner under paragraph (4)
of subsection (k) as the applicable amount is
adjusted under such subsection.
(3) Alternative phase-ins.--
(A) 4-year phase-in for certain areas.--If
the difference between the applicable amount
(as defined in subsection (k)) for an area for
2010 and the projected 2010 benchmark amount
(as defined in subparagraph (C)) for the area
is at least $30 but less than $50, the blended
benchmark amount for the area is--
(i) for 2012 the sum of--
(I) \3/4\ of the applicable
amount for the area and year;
and
(II) \1/4\ of the amount
specified in paragraph (2)(A)
for the area and year;
(ii) for 2013 the sum of--
(I) \1/2\ of the applicable
amount for the area and year;
and
(II) \1/2\ of the amount
specified in paragraph (2)(A)
for the area and year;
(iii) for 2014 the sum of--
(I) \1/4\ of the applicable
amount for the area and year;
and
(II) \3/4\ of the amount
specified in paragraph (2)(A)
for the area and year; and
(iv) for a subsequent year the amount
specified in paragraph (2)(A) for the
area and year.
(B) 6-year phase-in for certain areas.--If
the difference between the applicable amount
(as defined in subsection (k)) for an area for
2010 and the projected 2010 benchmark amount
(as defined in subparagraph (C)) for the area
is at least $50, the blended benchmark amount
for the area is--
(i) for 2012 the sum of--
(I) \5/6\ of the applicable
amount for the area and year;
and
(II) \1/6\ of the amount
specified in paragraph (2)(A)
for the area and year;
(ii) for 2013 the sum of--
(I) \2/3\ of the applicable
amount for the area and year;
and
(II) \1/3\ of the amount
specified in paragraph (2)(A)
for the area and year;
(iii) for 2014 the sum of--
(I) \1/2\ of the applicable
amount for the area and year;
and
(II) \1/2\ of the amount
specified in paragraph (2)(A)
for the area and year;
(iv) for 2015 the sum of--
(I) \1/3\ of the applicable
amount for the area and year;
and
(II) \2/3\ of the amount
specified in paragraph (2)(A)
for the area and year; and
(v) for 2016 the sum of--
(I) \1/6\ of the applicable
amount for the area and year;
and
(II) \5/6\ of the amount
specified in paragraph (2)(A)
for the area and year; and
(vi) for a subsequent year the amount
specified in paragraph (2)(A) for the
area and year.
(C) Projected 2010 benchmark amount.--The
projected 2010 benchmark amount described in
this subparagraph for an area is equal to the
sum of--
(i) \1/2\ of the applicable amount
(as defined in subsection (k)) for the
area for 2010; and
(ii) \1/2\ of the amount specified in
paragraph (2)(A) for the area for 2010
but determined as if there were
substituted for the applicable
percentage specified in clause (ii) of
such paragraph the sum of--
(I) the applicable percent
that would be specified under
subparagraph (B) of paragraph
(2) (determined without regard
to subparagraph (D) of such
paragraph) for the area for
2010 if any reference in such
paragraph to ``the previous
year'' were deemed a reference
to 2010; and
(II) the applicable
percentage increase that would
apply to a qualifying plan in
the area under subsection (o)
as if any reference in such
subsection to 2012 were deemed
a reference to 2010 and as if
the determination of a
qualifying county under
paragraph (3)(B) of such
subsection were made for 2010.
(4) Cap on benchmark amount.--In no case shall the
blended benchmark amount for an area for a year
(determined taking into account subsection (o)) be
greater than the applicable amount that would (but for
the application of this subsection) be determined under
subsection (k)(1) for the area for the year.
(5) Non-application to pace plans.--This subsection
shall not apply to payments to a PACE program under
section 1894.
(o) Applicable Percentage Quality Increases.--
(1) In general.--Subject to the succeeding
paragraphs, in the case of a qualifying plan with
respect to a year beginning with 2012, the applicable
percentage under subsection (n)(2)(B) shall be
increased on a plan or contract level, as determined by
the Secretary--
(A) for 2012, by 1.5 percentage points;
(B) for 2013, by 3.0 percentage points; and
(C) for 2014 or a subsequent year, by 5.0
percentage points.
(2) Increase for qualifying plans in qualifying
counties.--The increase applied under paragraph (1) for
a qualifying plan located in a qualifying county for a
year shall be doubled.
(3) Qualifying plans and qualifying county defined;
application of increases to low enrollment and new
plans.--For purposes of this subsection:
(A) Qualifying plan.--
(i) In general.--The term
``qualifying plan'' means, for a year
and subject to paragraph (4), a plan
that had a quality rating under
paragraph (4) of 4 stars or higher
based on the most recent data available
for such year.
(ii) Application of increases to low
enrollment plans.--
(I) 2012.--For 2012, the term
``qualifying plan'' includes an
MA plan that the Secretary
determines is not able to have
a quality rating under
paragraph (4) because of low
enrollment.
(II) 2013 and subsequent
years.--For 2013 and subsequent
years, for purposes of
determining whether an MA plan
with low enrollment (as defined
by the Secretary) is included
as a qualifying plan, the
Secretary shall establish a
method to apply to MA plans
with low enrollment (as defined
by the Secretary) the
computation of quality rating
and the rating system under
paragraph (4).
(iii) Application of increases to new
plans.--
(I) In general.--A new MA
plan that meets criteria
specified by the Secretary
shall be treated as a
qualifying plan, except that in
applying paragraph (1), the
applicable percentage under
subsection (n)(2)(B) shall be
increased--
(aa) for 2012, by 1.5
percentage points;
(bb) for 2013, by 2.5
percentage points; and
(cc) for 2014 or a
subsequent year, by 3.5
percentage points.
(II) New ma plan defined.--
The term ``new MA plan'' means,
with respect to a year, a plan
offered by an organization or
sponsor that has not had a
contract as a Medicare
Advantage organization in the
preceding 3-year period.
(B) Qualifying county.--The term ``qualifying
county'' means, for a year, a county--
(i) that has an MA capitation rate
that, in 2004, was based on the amount
specified in subsection (c)(1)(B) for a
Metropolitan Statistical Area with a
population of more than 250,000;
(ii) for which, as of December 2009,
of the Medicare Advantage eligible
individuals residing in the county at
least 25 percent of such individuals
were enrolled in Medicare Advantage
plans; and
(iii) that has per capita fee-for-
service spending that is lower than the
national monthly per capita cost for
expenditures for individuals enrolled
under the original medicare fee-for-
service program for the year.
(4) Quality determinations for application of
increase.--
(A) Quality determination.--The quality
rating for a plan shall be determined according
to a 5-star rating system (based on the data
collected under section 1852(e)).
(B) Plans that failed to report.--An MA plan
which does not report data that enables the
Secretary to rate the plan for purposes of this
paragraph shall be counted as having a rating
of fewer than 3.5 stars.
(C) Special rule for first 3 plan years for
plans that were converted from a reasonable
cost reimbursement contract.--For purposes of
applying paragraph (1) and section
1854(b)(1)(C) for the first 3 plan years under
this part in the case of an MA plan to which
deemed enrollment applies under section
1851(c)(4)--
(i) such plan shall not be treated as
a new MA plan (as defined in paragraph
(3)(A)(iii)(II)); and
(ii) in determining the star rating
of the plan under subparagraph (A), to
the extent that Medicare Advantage data
for such plan is not available for a
measure used to determine such star
rating, the Secretary shall use data
from the period in which such plan was
a reasonable cost reimbursement
contract.
(5) Exception for pace plans.--This subsection shall
not apply to payments to a PACE program under section
1894.
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