For other versions of this document, see http://wikileaks.org/wiki/CRS-RL32039 ------------------------------------------------------------------------------ Order Code RL32039 CRS Report for Congress Received through the CRS Web Medicare Managed Care Provisions of Title II of S. 1, as Passed by the Senate, and H.R. 1, as Passed by the House August 8, 2003 Hinda Ripps Chaikind, Jennifer Boulanger, Sibyl Tilson Specialists in Social Legislation Domestic Social Policy Division Paulette Morgan Analyst in Social Legislation Domestic Social Policy Division Congressional Research Service ~ The Library of Congress Medicare Managed Care Provisions of Title II of S. 1, as Passed by the Senate, and H.R. 1, as Passed by the House Summary On June 27, 2003, the Senate passed the Prescription Drug and Medicare Improvement Act of 2003 (S. 1) and the House passed the Medicare Prescription Drug and Modernization Act of 2003 (H.R. 1). Title II of each bill would establish a new Medicare managed care program to replace the current Medicare+Choice program. Under S. 1, Title II would establish the MedicareAdvantage (MA) program to replace the M+C program. The MA program would continue to offer coordinated care and other plans on a county-wide basis as under current law. The bill would also establish regional Preferred Provider Organizations (PPOs), to be offered in regions. Beginning in 2008, the bill would establish a limited competition program, in designated highly competitive areas. Under H.R. 1, Title II would establish the Medicare Advantage (MA) program to replace the M+C program, which would also continue to offer coordinated care and other plans on a county-wide basis as under current law. The bill would establish the Medicare Enhanced Fee-for-Service (EFFS) program, under which Medicare beneficiaries would be provided access to a range of regional EFFS plans that could include preferred provider networks. Beginning in 2010, it would also use competitive bidding, in the same style of the Federal Employees Health Benefits program (FEHBP) for certain EFFS plans and MA plans. There are considerable differences in the specifics of the MA provisions in S. 1 and H.R. 1. These differences are at issue in a pending conference between the two Houses. This report provides a side-by-side comparison of the Title II provisions of both bills, and will be updated as necessary. Contents Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Side by Side Comparison of S. 1 and H.R. 1, Title II MedicareAdvantage (S. 1) or Medicare Advantage (H.R. 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Overview of Title II Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Medicare Advantage or MedicareAdvantage . . . . . . . . . . . . . . . . . . . . . . . . . 2 Regional Preferred Provider Organizations/EFFS . . . . . . . . . . . . . . . . . . . . . . . . 17 Other Managed Care Reforms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Alternative Payment or Competition Reforms . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Medicare Managed Care Provisions of Title II of S. 1, as Passed by the Senate, and H.R. 1, as Passed by the House Introduction On June 27, 2003, the Senate passed the Prescription Drug and Medicare Improvement Act of 2003 (S. 1) and the House passed the Medicare Prescription Drug and Modernization Act of 2003 (H.R. 1). Title II of each bill would establish a new Medicare managed care program to replace the current Medicare+Choice program. Under S. 1, Title II would establish the MedicareAdvantage (MA) program to replace the M+C program. The MA program would continue to offer coordinated care and other plans on a county-wide basis as under current law. The bill would also establish regional Preferred Provider Organizations (PPOs), to be offered in regions. Beginning in 2008, the bill would establish a limited competition program, in designated "highly competitive" areas. Under H.R. 1, Title II would establish the Medicare Advantage (MA) program to replace the M+C program, which would also continue to offer coordinated care and other plans on a county-wide basis as under current law. The bill would establish the Medicare Enhanced Fee-for-Service (EFFS) program, under which Medicare beneficiaries would be provided access to a regional EFFS plans that could include preferred provider networks. Beginning in 2010, it would also use competitive bidding, similar to the Federal Employees Health Benefits program (FEHBP), for certain EFFS plans and MA plans. The Congressional Budget Office (CBO) has estimated the costs of Title II, for both the House and Senate bills. Title II of H.R. 1 is estimated to cost $7.5 billion over the 10-year period (2004-2013) and Title II of S. 1 is estimated to cost $18.3 billion over the same time period. There are considerable differences in the specifics of the MA provisions in S. 1 and H.R. 1. These differences are at issue in a pending conference between the two Houses. This report provides a side-by-side comparison of the Title II provisions of both bills, and will be updated as necessary. CRS-2 Side by Side Comparison of S. 1 and H.R. 1, Title II MedicareAdvantage (S. 1) or Medicare Advantage (H.R. 1) Overview of Title II Provisions Provisions Current Law S. 1 H.R. 1 Summary Health maintenance organizations (HMOs) and Title II would establish the MedicareAdvantage Title II would establish, upon enactment, the other types of managed care plans have (MA) program which would replace the M+C Medicare Advantage (MA) program to replace participated in the Medicare program, beginning program, beginning in 2006. The MA program the M+C program, which would continue to offer with private health plan contracts in the 1970s and would continue to offer coordinated care and other coordinated care and other plans on a county- the Medicare risk contract program in the 1980s. plans on a county-wide basis as under current law. wide basis as under current law. It would In 1997, Congress passed the Balanced Budget It would also establish regional PPOs, to be establish the Medicare Enhanced Fee-for-Service Act of 1997 (BBA 1997, P.L. 105-33), which offered in regions. Beginning in 2008, it would (EFFS) program, under which Medicare replaced the risk contract program with the establish a limited competition program, in areas beneficiaries would be provided access to a range Medicare+Choice (M+C) program. M+C plans designated as "highly competitive". of regional EFFS plans that could include include coordinated care plans (HMOs, preferred preferred provider networks, beginning in 2006. provider organizations or PPOs, and provider- Beginning in 2010, it would also use competitive sponsored organizations or PSOs), private fee for bidding, in the same style as the Federal service (PFFS) plans, and, on a temporary basis, Employees Health Benefits program (FEHBP) medical savings accounts (MSAs). for certain EFFS plans and MA plans. Medicare Advantage or MedicareAdvantage Provisions Current Law S. 1 H.R. 1 Beneficiary Eligibility, Information Requirements, Beneficiary Elections and Enrollment Periods Beneficiary Medicare beneficiaries who are entitled to Part A Section 201. [1851(a)(3)] of the Social Security Current law would not change. Enrollment in eligibility of Medicare and enrolled in Part B may receive Act]. In addition to current law requirements, Part D would not be mandatory in order to enroll Medicare benefits through the original Medicare Medicare beneficiaries would also be required to in MA or EFFS, as long as there was at least one fee-for-service (FFS) program or they may enroll be enrolled in the new Part D (drug program) in MA plan with prescription drug coverage or at in a Medicare+Choice (M+C) plan. order to enroll in MA (except for PFFS). least one EFFS plan with prescription drug coverage available to the beneficiary. Provision of The Secretary must provide information to Section 201. [1851(d)]. In addition to the Section 231(d). In addition to the information information on Medicare beneficiaries and prospective information dissemination required under current dissemination required under current law, the coverage options beneficiaries on the coverage options provided law, the Secretary would be required to provide: Secretary would be required to provide and open season under the M+C program, including open season (1) the MA monthly basic beneficiary premium, beneficiaries with a list of plans that are or would CRS-3 Provisions Current Law S. 1 H.R. 1 notification, a list of plans and other general (2) the monthly beneficiary premium for any be available in an area, to the extent the information. enhanced medical benefits, (3) the MA monthly information was available at the time the beneficiary obligation for qualified prescription materials were prepared for mailing. drug coverage, (4) the catastrophic coverage amount (including the maximum limitation on out- of-pocket expenses) and unified deductible for the plan, (5) the outpatient prescription drug coverage benefits, (6) any beneficiary cost-sharing, including information on the unified deductible, (7) comparative information relating to prescription drug coverage, (8) if applicable, any reduction in the Medicare Part B premium, (9) whether the MA monthly premium for enhanced benefits was optional or mandatory, and (10) quality and performance indicators for prescription drug coverage, including a comparison with FFS Medicare. [§851(e)(3)]. Additionally, the Secretary would conduct a special information campaign to inform MA eligible beneficiaries about plans beginning on November 15, 2005 and ending on December 31, 2005. Beneficiary Since the beginning of the M+C program, Section 201. [§1851(e)]. Medicare beneficiaries Section 231(b). H.R. 1 would retain the current elections and beneficiaries have been able to make and change would retain their ability to make and change law schedule for making and changing elections enrollment election to an M+C plan on an ongoing basis. elections to an M+C plan through 2005. The to plans. The annual coordinated election period periods Beginning in 2005, elections and changes to current law limitation on changing elections that would be permanently changed to November 15 elections will be available on a more limited basis. begins in 2005, would be delayed until 2006. through December 31. Beneficiaries can make or change elections during Further, the annual coordinated election period for the annual coordinated election period (November 2003 through 2006 would begin on November 15 15 through December 31 for 2003 and 2004, and and end on December 31. Beginning in 2007, the the month of November, thereafter). Current annual coordinated election period would be Medicare beneficiaries may also change their during the month of November. election at any time during the first 6 months of 2005 (or first 3 months of any subsequent year). Additionally, there are special enrollment rules for newly eligible aged beneficiaries as well as special CRS-4 Provisions Current Law S. 1 H.R. 1 enrollment periods for all enrollees under limited situations, such as an enrollee who changes place of residence. Required Benefits and Beneficiary Protections Required M+C plans are required to include all Medicare- Section 202. [§1852(a)]. In addition to offering Title I, Section 102. In addition to offering additional benefits covered services ( Parts A and B benefits, except Medicare Parts A and B benefits (except hospice) Medicare Parts A and B benefits (except hospice care). In some circumstances, plans may and any additional required benefits, each MA hospice), at least one plan offered by each MA also be required to offer additional benefits or plan (except an MSA, and in the case of organization in an MA area would be required to reduced cost-sharing to their beneficiaries. The prescription drug coverage, PFFS plans) would be offer qualified drug coverage under Part D. MA basic benefit package includes all of the Medicare- required to offer: 1) qualified prescription drug plans would be required to pay rebates to covered benefits (except hospice services) as well coverage under Part D to beneficiaries residing in beneficiaries to the extent that program payments as the additional benefits, as determined by a the area, and 2) a maximum limitation on out-of- to MA plans exceeded bid amounts. MA plans formula which is set in law. The adjusted pocket expenses and a unified deductible. would also be able to offer supplemental benefits community rate (ACR) mechanism is the process for additional premiums. [Plans would no longer through which health plans determine the [§1852(a)(7)]. The unified deductible would be be required to offer additional benefits, as these minimum amount of additional benefits, if any, defined as an annual deductible amount applied in would be replaced by the rebates discussed they are required to provide to Medicare enrollees lieu of the inpatient hospital deductible and the below.] and the cost-sharing they are permitted to charge Part B deductible. This would not prevent an MA for those benefits. Medicare does not have a organization from requiring coinsurance or a Also under Title I, Section 102 (a), there would catastrophic limit on beneficiary out-of-pocket copayment for inpatient hospital services, after the be exceptions for the prescription drug coverage expenses although some plans offer an out-of- unified deductible was satisfied, subject to offered by PFFS plans. PFFS plans would not be pocket limit as an added benefit. Also there is a statutory limitations. required to negotiate prices or discounts; Part B deductible and a separate Part A deductible however, to the extent a plan did so, it would be for inpatient hospital stays. [§1852(a)(2)(D)]. A PFFS plan could choose not required to meet related Part D requirements. to offer qualified prescription drug coverage under part D. Beneficiaries enrolling in such a PFFS plan could choose to enroll in an eligible entity under part D to receive their prescription drug coverage. [§1852(d)(4)]. A PFFS plan entirely meeting the access requirement for a category of providers through contracts or agreements (other than deemed contracts) could require higher beneficiary co-payments for providers who did not have such contracts or agreements. CRS-5 Provisions Current Law S. 1 H.R. 1 Enhanced benefits M+C plans may offer supplemental benefits in Section 202. [§1852(a)(3)]. MA plans could Section 221 (a). Plans could include addition to any required benefits under Parts A choose to provide beneficiaries with enhanced supplemental benefits in their bids. The and B of Medicare and any additional required medical benefits that the Secretary could approve. Secretary's authority to negotiate bids would benefits. The Secretary could deny any submission for include these supplemental benefits. enhanced benefits believed to discourage enrollment by MA eligible individuals. The Secretary could not approve any enhanced medical benefit that provided for the coverage of any prescription drug, other than those relating to covered prescription drugs under Part D. Plan disclosure An M+C organization must disclose, in clear, Section 202. [§1852(c)]. In addition to Title VII, Section 722. In addition to requirements accurate and standardized form to each new information that plans must disseminate under information that plans must disseminate under enrollee and at least annually thereafter, certain current law, they would also be required to current law, plans would also be required to information regarding the plan. The information provide the following information: (1) the disseminate information about their chronic care includes service area, benefits, access, out-of-area maximum limitation on out-of-pocket expenses improvement program. coverage, emergency coverage, supplemental and the unified deductible, (2) qualified benefits, prior authorization rules, grievance and prescription drug coverage under Part D, and (3) appeals procedures, a description of the quality benefits under FFS Medicare. assurance program, and other information upon request. Quality assurance M+C plans must have a quality assurance program Section 202. [§1852(e)]. In addition to current Section 234(a). The requirement that MSAs requirements that: (1) stresses health outcomes and provides law requirements for quality assurance, the quality have an ongoing quality assurance program data permitting measurement of outcomes and assurance programs of an organization would also would be eliminated. other indices of quality; (2) monitors and evaluates be required to provide access to disease high volume and high risk services and the care of management and chronic care services and to Title VII, Section 722. One year after acute and chronic conditions; (3) evaluates the provide access to preventive benefits and enactment, the quality assurance program continuity and coordination of care that enrollees information for enrollees on such benefits. requirement would be replaced with a receive; (4) is evaluated on an ongoing basis as to requirement for chronic care improvement its effectiveness; (5) includes measures of programs designed to manage the needs of consumer satisfaction, and (6) provides the enrollees with multiple severe chronic conditions. Secretary with certain information to monitor and evaluate the plan's quality. Only certain coordinated care plans (not PFFS or PPO plans) have to comply with other quality assurance requirements, such as providing for internal peer review, establishing written protocols CRS-6 Provisions Current Law S. 1 H.R. 1 for utilization review, establishing mechanisms to detect under and over utilization, establishing or altering practice patterns based on identified areas for improvement, taking action to improve quality, and making quality information available to beneficiaries. Payments to MA Organizations General In general, the Secretary makes monthly payments Section 203. [§1853(a)]. Each MA organization Section 221(c). For payments before 2006, the to each M+C organization for enrollees, based on would receive a separate monthly payment for: (1) monthly payment amount would equal 1/12 of 1/12 of the annual capitation rate, reduced by any benefits under FFS Medicare Parts A and B, and the annual MA capitation rate, for an enrollee for Part B premium reduction, and adjusted for risk. (2) benefits under the prescription drug program, that area, reduced by any Part B premium The Secretary will announce the M+C payment Part D. The Secretary would ensure that payments reduction and adjusted for demographics rates no later than the 2nd Monday in May through for each enrollee would equal the MA benchmark including an adjustment for health status. 2004, and by March 1, thereafter. amount for the payment area, as adjusted. The adjustments would include both a risk adjustment Section 221(e). Beginning in 2006, the Secretary and an adjustment based on the ratio of the would also announce yearly and no later than the payment amount to the weighted service area 2nd Monday in May, the MA area-specific non- benchmark. drug benchmark and the adjustment factors relating to demographics, end stage renal disease Beginning April 15, 2005 (at the same time as risk (ESRD), and health status in each MA plan in the adjusters for prescription drug coverage were area. announced), the Secretary would annually announce the benchmark for each MA payment Section 241(b). Beginning in 2010, the area, and the risk adjustment factors. Secretary would also announce, as applicable: (1)the competitive MA non-drug benchmark for the year and the competitive MA area involved, (2) the national FFS market share, (3) the FFS area-specific non drug amount, (4) the MA area- wide non-drug amount, and (5) the number of enrollees in each MA plan in the area. Payment rate Under current law, Medicare+Choice (M+C) plans Section 203. [§1853(c)]. For payments before Section 212(a). For 2004, a 4th payment modifications are paid an administered monthly payment, called 2006, the payment would be calculated in the mechanism would be added and plans would the M+C payment rate, for each enrollee. The per same manner as under current law -- the highest receive the highest of the four payment capita rate for a payment area is set at the highest of the blend, minimum amount (floor), or calculations (the floor, minimum percentage of one of three amounts: (1) a minimum payment minimum update. However the calculation of the increase, blend or the new amount). The new (or floor) rate, (2) a rate calculated as a blend of an minimum percentage increase would change for payment amount would be 100% of fee-for- CRS-7 Provisions Current Law S. 1 H.R. 1 area-specific (local) rate and a national rate, or (3) 2005. The minimum percentage increase for service (FFS). The FFS payment would be based a rate reflecting a minimum increase from the 2005 would be a 3% increase over the rate for the on the adjusted average per capita cost for the previous year's rate (currently 2%). area for 2003. For 2006 and subsequent years, it year, for an MA payment area, for services would be a 2% increase over the previous year covered under Parts A and B for beneficiaries A budget neutrality adjustment is made so that (but calculated as though the increase in 2005 was entitled to benefits under Part A, enrolled under estimated total M+C payments in a given year will 2%.). Additionally, beginning in 2014, the Part B and not enrolled in an MA plan. This be equal to the total payments that would be made minimum amount (floor) would be increased by payment would be adjusted to remove payments if payments were based solely on area-specific the percentage increase in the CPI for all for direct medical education costs and to include rates. The budget neutrality adjustment may only consumers, for the 12-month period ending in the additional payments that would have been be applied to the blended rates because rates June of the previous year. made if Medicare beneficiaries entitled to cannot be reduced below the floor or minimum benefits from facilities of the Department of increase amounts. The blend payment is also Section 210. The costs of DOD and VA military Veteran Affairs (VA) and the Department of adjusted to remove the direct and indirect costs of facility services would be included in the area Defense (DOD) had not used those services graduate medical education. The blend payment specific M+C payment and the local fee for (VA/DOD adjustment). amount is based on a weighted average of local service rates beginning in 2006. and national rates for all Medicare beneficiaries. Section 212. Additionally, changes would be Each year, the three payment amounts are updated made to the blend calculations for 2004. Section by formulas set in statute. Both the floor and the 212(b). No adjustment would be made for blend are updated each year by a measure of budget neutrality, which would fund the blend growth in program spending, the national growth for 2004. Section 212(d). The area-specific MA percentage. The minimum increase provides for capitation rate (the local component of the blend) an increase of at least 2% over the previous year's would be adjusted to include the VA/DOD amount. adjustment. Section 212(c). The calculation of the minimum percentage increase would also be revised. For 2004 and beyond, the minimum percentage increase would be the greater of: (1) a 2% increase over the previous year's payment rate (as under current law); or (2) the previous year's payment increased by the national per capita MA growth percentage. For purposes of calculating the minimum percentage increase, there would be no adjustment to the national growth percentage for prior years errors before 2004. CRS-8 Provisions Current Law S. 1 H.R. 1 In 2005, the payments to all plans would be based on their 2004 rate increased each subsequent year by the revised minimum percentage increase. Section 212(e). Beginning January 1, 2004, the payment rule for beneficiaries in a short-term general hospital at the time they either elected to enroll in or to terminate their enrollment in an M+C plan, would be extended to a beneficiary in an inpatient rehabilitation facility. Section 212(h). The Secretary would calculate and announce the new MA capitation rates within 6 weeks of enactment of this legislation. Payments to MA See description of payments under Payment Section 203. [§1853(c&d)]. Beginning in 2006, Section 221. Beginning in 2006, MA payment organizations modifications. payments to MA plans would be determined rates would be determined by the Administrator beginning in 2006 differently, based on a comparison between plan by comparing plan bids to the benchmark. Bids -- Payment bids and the weighted service area benchmark. would be submitted by the plans, reflecting the calculations The Secretary would however, continue to dollar amount and actuarial basis for the calculate the annual M+C capitation rates. provision of: (1) all statutory Part A and B services, (2) statutory prescription drug services, Plans would submit bids to the Secretary by the and (3) any non-statutory benefits. Benchmarks second Monday in September. would equal one-twelfth of the annual MA capitation rate for an enrollee in that area, and The Secretary would calculate the benchmark would be calculated by updating the previous amounts as the greater of the minimum amount year's capitation rate by the annual increase in (floor) or the local FFS rate for the area. The local the minimum percentage increase (as defined FFS rate would be calculated similarly to the above). adjusted average per capita cost (AAPCC), adjusted to remove the costs of indirect and direct Section 221 (c). For plans with bids below the graduate medical education. benchmark (for the provision of non-drug benefits), the payment would equal the unadjusted MA statutory non-drug monthly bid The Secretary would calculate the weighted amount, with adjustments for demographic service area benchmark amount equal to the factors (including age, disability, gender, and weighted average of the benchmark amounts for health status) and the monthly rebate. CRS-9 Provisions Current Law S. 1 H.R. 1 required services for the payment areas included in Conversely, for plans with bids at or above the the service area of the plan. benchmark, the payment amount would equal the MA area-specific non-drug monthly benchmark The Secretary would determine the difference amount, with the demographic and health status between each plan's bid and the weighted service adjustments. area benchmark amount. For plan bids that equal or exceed the weighted service area benchmark, Additionally, for an MA enrollee who enrolled in the MA organization would be paid the weighted Part D and elected prescription drug coverage service area benchmark amount. For plan bids through the plan, the plan's payment would below the weighted service area benchmark, the include a direct and a reinsurance subsidy plan would be paid the weighted service area payment and reimbursement for premiums and benchmark reduced by the amount of any cost-sharing reductions for certain low-income premium reduction elected by the plan. The beneficiaries. Secretary would adjust payments using the comprehensive risk adjustment methodology. The MA monthly bid amount, the MA monthly basic, prescription drug, and the supplemental Section 205. This provision would establish the beneficiary premium would not vary among additional payments that would be made to the enrollees in the plan. Additionally, the MA MA plans for the prescription drug coverage under monthly MSA premium would not vary within an Part D. MSA plan. Section 204. The provision would establish the requirement that the MA monthly basic beneficiary premium, the MA monthly beneficiary obligation for qualified prescription drug coverage, and the MA monthly beneficiary premium for enhanced medical benefits could not vary among beneficiaries enrolled in the plan. Also, the MA MSA premium would not vary among beneficiaries enrolled in the MSA plan. Risk adjustment M+C payments are risk-adjusted to reflect Section 203. [§1853(a]. The Secretary would In addition to the current law requirements for variations in the cost of providing health care apply the comprehensive risk adjustment risk adjustments for individual enrollees, both among Medicare beneficiaries. Currently a risk methodology to 100% of the amount of payments bids and benchmarks would also be risk adjusted, adjustment system is being phased-in that adjusts to plans beginning in 2006. This would apply to based on the following methodology. payments based on inpatient data using the 15 all types of plans. Organizations would be principal inpatient diagnostic cost groups (PIP- required to submit data and other information, in Section 221. Beginning in 2006 (at the same time DCGs) adjuster and demographic factors, so that order to carry out risk adjustment. The Secretary the payment rates are promulgated), the CRS-10 Provisions Current Law S. 1 H.R. 1 this system accounts for both demographic and could revise the comprehensive risk adjustment Administrator would determine, for each state, health-status variations. Under this mechanism, methodology from time to time to improve the average of the risk adjustment factors the per capita payment made to a plan for an payment accuracy. (including age, disability status, gender, enrollee is adjusted if that enrollee had an institutional status, health status, and other inpatient stay during the previous year. Separate factors the Administrator determines to be demographically-based payments are used for appropriate) to be applied to enrollees in that enrollees without a prior hospitalization, newly state. In the case of a state in which a plan was eligible aged persons, newly eligible disabled offered in the previous year, the Administrator Medicare enrollees, and others without a medical could compute the average based on factors used history. This system will be replaced with a more in the previous year. If no MA plan was offered comprehensive risk adjustment methodology that in a state in the previous year, the Administrator uses data from inpatient hospitals and ambulatory would estimate the average and could use settings, beginning in 2004. Capitation rates will average risk adjustment factors applied to be risk-adjusted using this new method, on a comparable states or applied on a national basis. phased-in basis, at the rate of 30% in 2004, 50% in 2005, and 75% in 2006. Beginning in 2007, The Administrator would apply the average risk capitation rates will be 100% risk adjusted. adjustors to the MA area-specific non-drug monthly benchmark amount and the unadjusted MA statutory non-drug monthly bid amount. The Administrator could determine and apply risk adjustment factors on the basis of areas other than states. Bids and Premiums Submission of bids The Public Health Security and Bioterrorism Section 204. [§1854(a)]. Each MA organization Section 231. This provision would permanently and associated Preparedness and Response Act of 2002, P.L. 107- would be required to submit information by the move the plan deadline for submitting deadlines 188, made temporary changes to reporting dates second Monday in September, including: (1) information to no later than the second Monday and deadlines including the plan deadline for notice of intent and information on the service in September. submitting ACRs and other information. This area of the plan, (2) the plan type for each plan, deadline moved from no later than July 1 to no (3) specific information for coordinated care and Section 221(a)(3). Each year, beginning in later than the second Monday in September for PFFS plans, (4) enrollment capacity, (5) the 2006, an MA organization would be required to 2002, 2003, and 2004. expected mix of enrollees, by health status, and (6) provide the following information: (1) the bid other information specified by the Secretary. For amount for the provision of all required items coordinated care plans and PFFS plans, the plans and services, based on average costs for a typical would be required to submit the plan bid (the total enrollee residing in the area and the actuarial amount that the plan was willing to accept for bases for determining such amount; (2) the required Parts A and B benefits not taking into proportion of the bid attributed to the provision CRS-11 Provisions Current Law S. 1 H.R. 1 account the application of comprehensive risk of statutory non-drug benefits, and non-statutory adjustment), the assumptions used in preparing the benefits (including the actuarial basis for bid with respect to the number of enrollees in each determining these proportions); and (3) payment area and the mix by health status, and additional information as the Administrator may any required information for prescription drug require. coverage. The plan bid would also have to be based on actuarial equivalence (see description below in Limitation on Enrollee Liability). For any enhanced medical benefit package a plan chooses to offer, it would be required to provide the following information: 1) the ACR, 2) the portion of the actuarial value of such benefits package (if any) that would be applied toward satisfying the requirement for additional benefits, 3) the MA monthly beneficiary premium for enhanced benefits, 4) cost-sharing requirements, 5) the description of whether the unified deductible had been lowered or if the maximum out-of-pocket limitation had been decreased, and 6) other information required by the Secretary. [§1854(a)(5)]. Each plan bid would be required to reasonably and equitably reflect the cost of benefits provided under that plan. Authority to Each year an M+C organization submits an Section 204. [§1854(a)]. The Secretary could Section 221(a)(3)(C). The Administrator would negotiate and adjusted community rate (ACR) proposal, disapprove a plan bid if he or she determined that have the same authority to negotiate bid amounts reject bid estimating their proposed cost of serving Medicare the deductibles, coinsurance or copayments that the Director of the Office of Personnel submissions beneficiaries for the following contract year. The discouraged access to covered services or were Management has with respect to the Federal ACR process is a mechanism through which likely to result in favorable selection of MA Employee Health Benefits Plan. The health plans determine the minimum amount of eligible beneficiaries. Administrator could negotiate the bid amount and additional benefits they are required to provide to could also reject a bid amount or proportion of Medicare enrollees and the cost-sharing they are the bid, if it was not supported by the actuarial planning to charge for those benefits, within basis. PFFS plans would be exempt from this statutory limitations. Under Medicare's rules, a negotiation. Section 221(d). The Administrator plan may not earn a higher return from its would not approve a plan if benefits were CRS-12 Provisions Current Law S. 1 H.R. 1 Medicare business than it does in the commercial designed to substantially discourage enrollment market. The Secretary reviews this information by certain MA eligible individuals. and approves or disapproves the premiums, cost- sharing amounts, and benefits. The Secretary does not have the authority to review the premiums for either MSA plans or PFFS plans. Beneficiary Beneficiaries share in any projected cost savings Section 204. [§1854(b)]. The monthly amount of Section 221(d). For plans with a bid amount premiums and between Medicare's per capita payment to a plan the premium, if any, charged to an MA enrollee below the benchmark, the basic premium would rebates and what it would cost the plan to provide would be the sum of any MA monthly basic be zero. For plans with bids above the Medicare benefits to its commercial enrollees. To beneficiary premium, any premium for enhanced benchmark, the basic premium would be equal to accomplish this, plans must provide either reduced medical benefits and any obligation for the amount the bid exceeded the benchmark. cost-sharing or additional benefits to their prescription drug coverage. Medicare enrollees that are valued at 100% of the Section 221(b). An MA plan would be required difference between the projected cost of providing [§1854(c)]. If the weighted service area to provide an enrollee a monthly rebate that Medicare-covered services and the expected benchmark exceeded the plan bid, the Secretary equaled 75% of any average per capita savings revenue for Medicare enrollees. Additionally, would require the plan to provide additional (the amount by which the risk-adjusted beginning in 2003, plans may also reduce the benefits, and if the plan bid exceeded the weighted benchmark exceeded the risk adjusted bid). The Medicare Part B premium. Plans can choose service area benchmark, the plan could charge an rebate could be credited toward the MA monthly which additional benefits to offer, however, the MA monthly basic beneficiary premium equal to supplemental beneficiary premium or the total cost of these benefits must at least equal the the amount the bid exceeded the benchmark. prescription drug premium; could be paid "savings" from Medicare-covered services. Plans directly to the beneficiary; could be provided by may also place the additional funds in a Section 204. [§1854(g)]. If the plan bid was another means approved by the Administrator; or stabilization fund or return funds to the Treasury. lower than the weighted service area benchmark, any combination of the above. The remaining the plan could, in addition to benefits allowed 25% of the average per capita savings would be Alternatively, under the ACR process, plans may under current law, also lower the amount of the retained by the federal government. also charge a premium if they demonstrate higher unified deductible and decrease the maximum costs rather than savings for providing the basic limitation on out-of-pocket expenses. However, Section 221(e). This provision would repeal benefit package. plans would be restricted from specifying any §1854(e) - relating to required additional benefits additional benefits that provided for the coverage and ACRs. [Required beneficiary rebates would of any prescription drug, other than that relating to replace the requirement for additional benefits.] covered drugs under Part D. CRS-13 Provisions Current Law S. 1 H.R. 1 Limitation on The actuarial value of deductibles, coinsurance, Section 204. [§1854(f)]. The monthly basic Section 221(e). This provision would repeal enrollee liability and copayments applicable on average to enrollees beneficiary premium and the actuarial value of the §1854(e) -- relating to the limitation on enrollee in an M+C plan for required services may not deductibles, coinsurance and copayments, liability. [The information collected by the exceed the actuarial value of deductibles, (calculated in the same manner as the plan bid and Secretary in Section 221(a)(3) would require the coinsurance, and copayments on average for applicable on average to enrollees in an MA plan), MA organization to submit the actuarial basis for beneficiaries in traditional Medicare. However, would have to be equal to the actuarial value of determining the bid, as well as the proportion of this average may be achieved by having higher the deductibles, coinsurance and copayments the bid attributed to the provision of statutory copayments for some M+C services and lower for applicable on average to FFS beneficiaries non-drug benefits, statutory prescription drug other services. (adjusted to account for geographic differences benefits, and non-statutory benefits.] and for the plan cost and utilization differences). Similarly, for enhanced medical benefits, the sum of the MA monthly beneficiary premium for enhanced medical benefits and the actuarial value of the deductibles, coinsurance, and copayments, must equal the ACR for such benefits for the year minus the actuarial value of any required additional benefits. Premium payment Under current law, Medicare beneficiaries can No provision. Section 221(b). Enrollees would be permitted to have their Part B premium deducted from their have their MA premiums deducted directly from monthly Social Security benefit. their Social Security benefits or through an electronic funds transfer. The Administrator would be required to provide a mechanism whereby a beneficiary who joined an MA plan and elected Part D coverage through the plan would be able to pay one consolidated premium amount. Adjusted Each year an M+C organization submits an ACR No provision, thus no change in the ACR process. Section 221. This provision would repeal community rates proposal, estimating their proposed cost of serving §1854(e) - relating to required additional benefits (ACR) Medicare beneficiaries for the following contract and ACRs. Plans would not be required to year. The ACR process is a mechanism through submit ACRs beginning in 2006. [Plan bids which health plans determine the minimum would replace ACRs.] amount of additional benefits they are required to provide to Medicare enrollees and the cost-sharing they are permitted to charge for those benefits. CRS-14 Provisions Current Law S. 1 H.R. 1 Required No provision. Section 204(b). The Secretary would conduct a Section 212(f). No later than 18 months after studies/reports study to determine the extent to which M+C cost- enactment of this legislation, the Medicare beneficiary cost- sharing discourages access to covered services or Payment Advisory Commission would report to sharing discriminates based on the health status of M+C Congress providing an assessment of the method eligible beneficiaries. The Secretary would used for determining the adjusted average per submit a report to Congress, providing capita cost (AAPCC). The report would examine recommendations for legislatio n and the variation in costs between different areas, administrative action, no later than December 31, including differences in input prices, utilization 2004. and practice patterns; the appropriate geographic area for payment; and the accuracy of the risk adjustment methods in reflecting differences in the cost of providing care. Section 212(g). No later than July 1, 2006, the Administrator would submit a report to Congress that described the impact of additional financing provided under the Act and other Acts, (including the Balanced Budget Refinement Act of 1999 -- BBRA and Benefits Improvement and Protection Act of 2000 -BIPA) on the availability of MA plans in different areas and the impact on lowering premiums and increasing benefits under such plans. Other MA Provisions Special rules for No provision. Section 205. Beginning on January 1, 2006, MA Title I, Section 102. Beginning January 1, 2006, prescription drug plans, other than PFFS and MSA plans, would be at least one MA plan offered by an MA benefits required to offer each enrollee qualified organization in an area would be required to offer prescription drug coverage that met the qualified drug coverage under Part D; meet the requirements for such coverage under the MA beneficiary protections outlined in the new program and under Part D of Medicare. An MA Section 1860D-3, including requirements relating plan could offer qualified prescription drug to information dissemination as well as grievance coverage that exceeded the coverage required and appeals; and provide the same information under Part D, as long as it also offered an MA plan required from prescription drug plan sponsors in the area that provided only the required when submitting a bid unless waived by the coverage. This provision would also establish Administrator. MA organizations providing payments to each MA organization offering an qualified drug coverage would receive low- CRS-15 Provisions Current Law S. 1 H.R. 1 MA plan that provided qualified prescription drug income subsidy payments and direct and coverage, including a low-income drug subsidy. reinsurance subsidies. A single premium would be established for drug and non-drug coverage. Facilitating Employers may sponsor an M+C plan or pay Section 206. The Administrator could permit an No provision. employer premiums for retirees who enroll in an M+C plan. MA plan to establish a separate premium amount participation If an M+C plan contracts with an employer group for enrollees in an employer or other group health health plan (EGHP) that covers enrollees in an plan that provides employment-based retiree M+C plan, the enrollees must be provided the health coverage. This provision would also apply same benefits as all other enrollees in the M+C the current law requirements to regional PPOs. plan, with the EGHP benefits supplementing the M+C plan benefits. The Secretary may waive or modify requirements that hinder the ability of employer or union group health plans from offering a M+C plan option. Administration The M+C program is currently administered by Section 207. Beginning January 1, 2006, the MA Title VIII. The Medicare Benefits the Centers for Medicare and Medicaid Services program and the Part D prescription drug program Administration (MBA), would be established to (CMS). would be administered by the Center for Medicare administer MA, EFFS, and the new Medicare Choices, and each reference to the Secretary prescription drug benefit. would be deemed to be a reference to the Administrator of the Center for Medicare Choices. [Related program administration provisions are in Title III addressing the Center for Medicare Choices.] Conforming Amendments Cause for The Secretary is authorized to carry out specific Section 208. In addition to specifications No comparable provision. intermediate remedies in the event that an M+C organization: included in current law, the Secretary could also sanctions (1)fails substantially to provide medically carry out remedies if an organization charged any necessary items and services required to be Medicare enrollee an amount in excess of the MA provided, if the failure adversely affects the monthly beneficiary obligation for qualified Medicare enrollee; (2)imposes premiums on prescription drug coverage, provided coverage that enrollees that are in excess of those allowed; was not qualified prescription drug coverage, (3)acts to expel or refuses to reenroll an enrollee in offered prescription drug coverage but did not violation of Federal requirements; (4)engages in make standard prescription drug coverage any practice that would have the effect of denying available, or provided coverage for drugs other or discouraging enrollment (except as permitted than that relating to prescription drugs covered by law) of eligible beneficiaries whose medical under Part D, as an enhanced or additional benefit. CRS-16 Provisions Current Law S. 1 H.R. 1 condition or history indicates a need for substantial future medical services; (5) misrepresents or falsifies information to the Secretary or others; (6)fails to comply with rules regarding physician participation; or (7)employs or contracts with any individual or entity that has been excluded from participation in Medicare. Medicare Medical BBA1997 authorized a demonstration for M+C Section 201. The deadline for enrollment in an Section 234. The Medicare MSA demonstration Savings Accounts MSAs. The M+C option combined a high- MSA would be extended until December 31, would be made a permanent option, the capacity (MSAs) deductible health insurance plan with an M+C 2003. limit would be removed and the deadline for MSA. New enrollment is not allowed after enrollment would be eliminated. For enrollees in January 1, 2003 or after the number of enrollees MSA plans, physicians or other entities (other reaches 390,000. No private plans have than providers of services, such as hospitals) established an M+C MSA for Medicare would be required to accept the Medicare fee-for beneficiaries. M+C plans (including MSAs) must service payment as a payment in full (no balance have an ongoing quality assurance program for billing would be permitted). The quality health care services provided to Medicare assurance requirements for MSAs would be beneficiaries. The required elements of the removed. program are specified in statute. Effective date No provision. Section 209. Generally effective January 1, 2006. Section 211(e). The MA program would be However, the Secretary would apply payment and effective January 1, 2004. Section 221 (g). The other rules for MSA plans, as if this title had not competition program would be effective January been enacted. 1, 2006. CRS-17 Regional Preferred Provider Organizations/EFFS Provisions Current Law S. 1 H.R. 1 General PPOs are permitted to be offered as coordinated care Section 211. [§1858(a)]. Beginning January 1, Section 201(a). Beginning January 1, 2006, plans under the Medicare+Choice program. 2006, a preferred provider organization (PPO) the Administrator would establish the EFFS plan would be offered to MA eligible individuals program offering plans on a regional basis. in preferred provider regions. A PPO would be [§1860E-1(b)(2)]. EFFS plans would be an entity with a contract that met other required to provide either FFS or preferred requirements of this Act. A PPO would have a provider coverage. Under FFS coverage, plans network of providers that agreed to contractually would: (1) pay hospitals, physicians and other specified reimbursements for covered benefits providers at a rate determined by the plan on a under Parts A and B. The PPO would pay for all FFS basis, without placing providers at risk, (2) covered services an enrollee received, whether not vary rates based on the provider's provided in or out of network. utilization, and (3) not restrict the selection of providers from among those who were lawfully Each plan would be offered to any MA eligible authorized to provide covered services and individual residing in the service area. agreed to accept the plan's terms and conditions. Under preferred provider coverage, plans would: (1)have a network of providers who agreed to a contractually-specified payment for covered benefits with the organization, and (2) provide for payment for all covered benefits regardless of whether they were provided within the network. Each plan would be offered to any EFFS eligible beneficiary residing in the EFFS region. Establishing Enrollment in any individual M+C plan is open only Section 211. [§1858(a)(3)]. There would be at Section 201(a). [§1860E-1(a)(1 and 2)]. Plans regions to those beneficiaries living in a specific service area. least 10 regions. Each region would have to would be offered on a regional basis, in at least Plans define a service area as a set of counties and include at least one state, and could be the entire 10 regions established by the Administrator. county parts, identified at the zip code level. At a United States. The Secretary could not divide Before establishing the regions, the state's option, the service area could be defined as the states so that portions of the state were in different Administrator would conduct a market survey entire state; however, to date, no state has done so. regions. To the extent possible, the Secretary and analysis, including an examination of would include multi-state metropolitan statistical current insurance markets, to determine how areas (MSAs) in a single region, except that he or the regions should be established. Regions she could divide an MSA where necessary to would be established to take into consideration CRS-18 Provisions Current Law S. 1 H.R. 1 establish a region of such size and geography to maximizing full access for all EFFS-eligible maximize the participation of PPOs. The individuals, especially those residing in rural Secretary could use the same regions established areas. for the prescription drug program, under Part D. The service area of a PPO would be the region. Required number No provision. Section 211. [§1858(d)]. If there were bids for Section 201(a). [§1860E-3(a)(3)(D)]. The of plans and more than three plans in a preferred provider Administrator could enter into contracts for up benefits in each region, the Secretary would limit the number of to 3 EFFS organizations in any region. region plans to the three lowest-cost credible plans that [§1860E-2]. EFFS plans could only be offered met or exceeded the quality or minimum in a region, if the plan: (1)was available to all standards. EFFS eligible individuals in an entire region, (2) complied with statutory access requirements, (3) uniformly provided all required Parts A and B benefits, (4) included a single deductible for benefits under Parts A and B, and a catastrophic limit on out-of-pocket expenses, and (5) provided prescription drug coverage for each enrollee electing Part D drug coverage. An EFFS would also be able to offer supplemental benefits. Title VII, Section 722(b). EFFS plans would have to offer chronic care management plans to enrollees with multiple or sufficiently severe chronic conditions. Access Both M+C and PFFS plans must demonstrate to the Section 211. [§1858(b)].PPOs would be required Section 201(a). [§1860E-2(b)(2)]. EFFS plans Secretary a sufficient number and range of health care to establish a sufficient number and range of would have to comply with the statutory providers who agree to the plan's terms. For PFFS health care professionals and providers willing to requirements in §1852(d)(4) that currently plans this requirement is considered to be met if the provide services under the plan's terms. The apply only to PFFS plans. The requirement for plan establishes payment rates for covered services Secretary would consider this requirement to be establishing a sufficient number of contracts, that are not less than Medicare's fee-for-service rates, met if the organization had a sufficient number of and not restricting enrollee access to other or if the plan has contracts or agreements with a contracts and agreements with a sufficient number providers is similar to provisions in S. 1. sufficient number and range of providers. These and range of providers. These arrangements requirements do not restrict enrollees access to other would not restrict enrollee access to other providers for covered services. providers for covered services. Additionally, if the plan was in a state where 25% or more of the CRS-19 Provisions Current Law S. 1 H.R. 1 population resided in a health professional shortage area, these arrangements would also not restrict the categories of licensed health professionals or providers from whom the enrollee could obtain covered benefits. Prescription drug No provision. Same requirements as under the MA program. Title I, Section 102. An EFFS organization in benefits a region would have to offer a least one plan that included qualified prescription drug coverage under Part D (i.e., if the organization offered several plans, only one would have to include Part D). An EFFS organization could not offer prescription drug coverage (other than the existing drug benefit under Parts A and B) to an enrollee unless such coverage was qualified prescription drug coverage under Part D. Payments to Regional Organizations Monthly payments See similar description under Payments to MA Section 211. [§1858(c)]. The Secretary would Section 201. [§1860E-3(c)]. The Administrator organization section above (Payment rate make separate monthly payments with respect to would make monthly payments to each EFFS modifications). required benefits under Parts A and B and organization with respect to coverage of an benefits under the voluntary prescription drug enrollee in an EFFS region. program under Part D. The Secretary would also establish a methodology for adjusting spending variations within a region, similar to the method for equalizing the federal contribution under Section 203 of this legislation. CRS-20 Provisions Current Law S. 1 H.R. 1 Region- specific See similar description under Payments to MA Section 211. [§1858(c)(2)]. Beginning in 2006, Section 201. [§1860E-3(b)(3)]. Similar to S. 1. benchmarks organization section above (Payment rate the Secretary would calculate a benchmark The EFFS region-specific non-drug monthly modifications). amount for required services for each region benchmark amount would be an amount equal equal to the average of each benchmark amount to one-twelfth of the average (weighted by the for each MA payment area within the region, number of EFFS eligible individuals in each weighted by the number of MA eligible payment area) of the annual MA capitation rate individuals residing in the payment area for the calculated for that area. The capitation rate year. Each year, beginning in 2005, the Secretary would be calculated by increasing the previous would publish (at the time of publication of the year payment rate by the revised minimum risk adjustors under Part D -- no later than April percentage increase. (See Section 212.) 15) the benchmark amount for each region, factors to be used for adjusting payments under Section 231. The announcement of payment the comprehensive risk adjustment methodology rates, including rates for EFFS plans, would be and methodology used for adjustments for permanently moved to no later than the second geographic variations within a region. Monday in May. Payments to plans No provision. Section 211. [§1858(c)(4)]. The Secretary would Section 201(a). [§1860E-3(c)]. The based on bids pay plans as follows. Non-drug benefits: For Administrator would pay plans as follows. plans with bids below the regional benchmark, the Non-drug benefits: For plans with bids below plan would receive the regional benchmark the benchmark, the payment would equal the reduced by the amount of any Part B premium unadjusted EFFS statutory non-drug monthly reduction elected by the plan. For bids at or bid amount, with adjustments for demographics above the regional benchmark (adjusted using the (including health status) as well as intra- plan's assumptions with respect to the numbers of regional geographic variations and the monthly enrollees), the plan would receive the regional rebate. For plans with bids at or above the benchmark amount. Payments would be adjusted benchmark, the payment amount would equal for risk and geographic variation. the EFFS region-specific non-drug monthly benchmark amount, with the demographic (including health status) as well as intra- regional geographic adjustments. Drug benefits: The same methodology for Drug benefits: Additionally, for an EFFS calculating prescription drug payments for MA enrollee who enrolled in Part D and elected plans would be used for regional PPOs. prescription drug coverage through the plan, the plan's payment would include a direct and a reinsurance subsidy payment and reimbursement for premiums and cost-sharing reductions for certain low-income beneficiaries. CRS-21 Provisions Current Law S. 1 H.R. 1 Risk adjustment See similar description under Payments to MA Section 211. [§1858(c)]. The Secretary would In addition to the current law requirements for organizations section above (Risk Adjustment). apply the comprehensive risk adjustment risk adjustments for individual enrollees, both methodology to 100% of the plan payment. bids and benchmarks would also be risk adjusted, based on the following methodology. [§1860E-4]. Beginning in 2006, the Administrator would determine (no later than the second Monday in September), for each EFFS region, the average of the risk adjustment factors (including age, disability status, gender, institutional status, health status, and other factors the Administrator determined to be appropriate) to be applied to enrollees in that region. In the case of an EFFS region in which a plan was offered in the previous year, the Administrator could compute the average based on factors used in the previous year. In a case of a region in which no EFFS plan was offered in the previous year, the Administrator would estimate the average and could use average risk adjustment factors applied to comparable regions or applied on a national basis. The Administrator would apply the average risk adjustors to the EFFS region-specific non-drug monthly benchmark amount and the unadjusted EFFS statutory non-drug monthly bid amount. Bids, Premiums and Risk Sharing Submission of bids See similar description under Bids and Premiums in Section 211.[§1858(d)]. Each plan would submit Section 201(a). [§1860E-3(a)]. Each year, and associated the MA section above (Submission of bids and a bid for coverage of required benefits, with beginning in 2006, an EFFS organization would deadlines associated deadlines). assumptions about the number of enrollees. No submit a monthly bid amount for each plan in later than the second Monday in September, a each region, referred to as the "EFFS monthly PPO would have to submit notice of intent, bid amount," in a form, manner, and time information on which region the plan is bidding, specified by the Administrator. The bid could and information similarly required for other MA not vary among EFFS eligible individuals in the plans. EFFS region involved. The EFFS organization CRS-22 Provisions Current Law S. 1 H.R. 1 The same rules for providing additional benefits would be required to provide the following in MA plans would also apply to the PPOs. If the information: (1) the bid amount for the regional benchmark exceeded the bid, the PPO provision of all required items and services, plan would be required to provide additional based on average costs for a typical beneficiary benefits in the same manner as required in the residing in the region and the actuarial basis for MA program. determining such amount; (2) the proportion of the bid attributed to the provision of statutory Unlike other MA plans, PPOs would not be non-drug benefits (the "unadjusted EFFS permitted to segment a region. statutory non-drug monthly bid amount"), statutory prescription drug benefits, and non- statutory benefits (including the actuarial basis for determining these proportions); and (3) additional information as the Administrator may require. Authority to See similar description under Bids and Premiums in Section 211. [§1858(d)]. The Secretary would Section 201(a). [§1860E-2(c)(2)]. The negotiate and the MA section above (Authority to negotiate and review the adjusted community rates, the amounts Administrator would not approve an EFFS plan reject bid reject bid submission). of the MA monthly basic premium and the MA if benefits were designed to substantially submissions monthly beneficiary premium for enhanced discourage enrollment by certain eligible medical benefits and could approve or disapprove individuals. these amounts. Section 201(a). [§1860E-3(a)]. The [§1858(b)]. The Secretary could disapprove any Administrator would have the authority to PPO believed to attract a population that is negotiate bid amounts that the Director of the healthier than the average population of the Office of Personnel Management has with region serviced by the plan. respect to the Federal Employee Health Benefits Plan. The Administrator could negotiate the bid amount and could also reject a bid amount or proportion, if it was not supported by the actuarial basis. CRS-23 Provisions Current Law S. 1 H.R. 1 Beneficiary See similar description under Bids and Premiums in Section 211. [§1858(d)]. The monthly premium Section 201(a). [§1860E-4(a)]. The premiums and the MA section above (Beneficiary premiums and charged to an enrollee would equal the sum of beneficiary monthly premium would be zero rebates rebates). any MA monthly basic beneficiary premium, any for plans providing rebates (explained below). MA monthly beneficiary premium for enhanced For other plans it would be the amount, if any, medical benefits, and any MA monthly obligation by which the unadjusted EFFS statutory non- for qualified prescription drug coverage. drug monthly bid amount exceeded the EFFS Premiums could not vary among MA eligibles in region-specific non-drug monthly benchmark a region. amount. [§1860E-3(b)]. The EFFS plan would provide the enrollee a monthly rebate equal to 75% of the average per capita saving, if any. The average per capita monthly savings would equal the amount by which the risk-adjusted benchmark exceeded the risk-adjusted bid. The remaining 25% of the average per capita savings would be retained by the federal government. The rebate could be in the form of any combination of a credit towards the EFFS monthly prescription drug premium, the EFFS monthly supplemental beneficiary premium, a direct monthly payment, or other means approved by the Administrator, or a combination of the above. Risk -sharing No provision. Section 211. [§1858(e)]. The PPO would notify No provision. arrangements the Secretary of the total amount of costs incurred during 2007 and 2008 in providing covered benefits under Part A and B of Medicare, except that certain expenses would not be included (administrative expenses over the amount determined appropriate by the Administrator and amounts expended for enhanced medical benefits). The Secretary would be required to establish risk corridors for the regional PPO plans for 2006 and CRS-24 Provisions Current Law S. 1 H.R. 1 2007. Medicare would share risk with PPO organizations after costs fell above or below a risk corridor of 5% as follows: 1)Medicare would share 50% of the losses or profits between 105% and 110% of a target which consists of Medicare's MA payment plus the beneficiaries' contributions; and 2)Medicare would share 90% of the losses or profits above 110% of the target. PPOs would be at full risk for all enhanced medical benefits. A beneficiary's liability would not be affected by these risk corridors in the given years. Beneficiary M+C plans cannot offer cash or monetary rebates as No provision. Section 201(a). [§1860-1(c)]. EFFS plans incentives an inducement for enrollment. would have to comply with existing eligibility, election, and enrollment provisions (under §1851) including guaranteed issue and renewal, but could offer cash or monetary rebates as an inducement for enrollment. Section 221(e). For MA plans, the ability to offer cash or monetary rebates would be limited to the rebates (based on the calculation of average per capita monthly savings) established under this bill. CRS-25 Other Managed Care Reforms Provisions Current Law S. 1 H.R. 1 Extend reasonable Cost-based plans are those plans that are reimbursed Section 221. Reasonable cost contracts could be Section 235. Reasonable cost contracts could be cost contracts by Medicare for the actual cost of furnishing extended or renewed until December 31, 2009. extended or renewed through 2007. Beginning covered services to Medicare beneficiaries, less the Beginning in 2004, these plans would have to January 1, 2008, cost contracts could continue estimated value of beneficiary cost-sharing. The comply with certain requirements of the M+C unless during the entire previous year, the service Secretary can not extend or renew a reasonable cost program (and beginning in 2006 the MA area had two or more coordinated care MA plans reimbursement contract for any period beyond program), including ongoing quality assurance or two or more EFFS plans, each of which met the December 31, 2004. programs, physician incentive plan limitations, following minimum enrollment requirements: 1) uniform premium amount requirements, premium at least 5, 000 enrollees for the portion of the area tax restrictions, federal preemption, authority of that is within a metropolitan statistical area having an organization to include supplemental health more than 250,000 people and counties care benefits, benefit filling deadlines, contract contiguous to such an area, and 2) at least 1,500 renewals and beneficiary notifications, and enrollees for any other portion of such area. proposed cost-sharing subject to the Secretary's review. The Secretary would be required to approve a new application for a group practice HMO to enter into a reasonable cost contract if the group met certain requirements of the Public Health Service Act. The requirements would be that the group practice HMO, as of January 1, 2004, provided at least 85% of the services of a physician (which are provided as basic health services) through a medical group (or groups), and met other requirements for such entities specified in statute. CRS-26 Provisions Current Law S. 1 H.R. 1 Establish One model for providing a specialized M+C plan, Section 222. A new M+C option would be Section 233. Substantially the same provision, specialized EverCare, operates as a demonstration program. established -- specialized M+C plans for special but these specialized plans would be established Medicare EverCare is designed to study the effectiveness of needs beneficiaries (such as the EverCare as new MA plans. Also, the Secretary would be Advantage plans managing acute-care needs of nursing home demonstration). Special needs beneficiaries are permitted to offer specialized MA plans for plans for beneficiaries residents by pairing physicians and geriatric nurse defined as those M+C eligible beneficiaries who that disproportionately serve beneficiaries with with special needs practitioners. EverCare receives a fixed capitated were institutionalized, entitled to Medicaid, or special needs who are the frail elderly. payment, based on a percentage of the AAPCC, for met requirements determined by the Secretary. Enrollment could be limited to special needs all nursing home resident Medicare enrollees. Enrollment in specialized M+C plans could be beneficiaries until January 1, 2007. Interim limited to special needs beneficiaries until January regulations would be required within 6 months of 1, 2008. No later than December 31, 2006, the enactment. The required study would be due no Secretary would be required to submit a report to later than December 31, 2005. Congress that assessed the impact of specialized M+C plans for special needs beneficiaries on the cost and quality of services provided to enrollees. No later than 1 year after enactment of this Act, the Secretary would be required to issue final regulations to establish requirements for special needs beneficiaries. Payment by PACE was created as a demonstration project in the Section 223. For the Medicare program, No provision. Program of All- Omnibus Budget Reconciliation Act (OBRA 86). protections against balance billing to PACE Inclusive Care for The Secretary was required to grant waivers of providers and beneficiaries enrolled with such the Elderly certain Medicare and Medicaid requirements to a PACE providers would apply in the same manner (PACE) providers maximum of 10 (expanded to 15 in OBRA90) as applies to M+C. For the Medicaid program, for Medicare and community-based organizations to provide health with respect to services covered under the State Medicaid services and long-term care services on a capitated basis to plan (but not under Medicare) that were furnished furnished by non- frail elderly persons at risk of being to beneficiary enrolled in a PACE program, the contract providers institutionalized. Balanced Budget Act 97 (BBA97) PACE program would not be required to pay a made PACE a permanent part of Medicare and a provider an amount greater than required under state option for the Medicaid program. the state plan. Require Institute of No provision. Section 224. Within 2 months of enactment, the Section 237. The Secretary would request that Medicine (IOM) Secretary would be required to enter into an the IOM conduct a study to review and evaluate study on health arrangement with IOM to evaluate leading health public and private sector experiences in: 1) care performance care performance measures and options to establishing performance measures and payment measures implement policies that align performance with incentives under the Medicare program, and 2) payment under the Medicare program. The linking performance to payment. The Secretary information that would be catalogued, reviewed would also request that no later than 18 months CRS-27 Provisions Current Law S. 1 H.R. 1 and evaluated by IOM would be specified in after enactment, the Institute submit a report to statute. A report would be due to the Secretary the Secretary and the Congress that included a and the congressional committees of jurisdiction review and evaluation of incentives to encourage within 18 months of enactment. There would be quality performance, as specified in the statute. $1 million authorized to be appropriated to The study would also examine how these conduct the evaluation and prepare the report. measures and incentives might be applied in the Medicare MA, EFFS, and FFS programs. The report would include recommendations regarding appropriate performance measures for use in assessing and paying for quality and would identify options for updating performance measures. Expand the work QIOs, formerly known as Peer Review Section 225. The responsibilities of the QIOs No provision. of Medicare Organizations (PROs), are responsible for working would be expanded to include M+C and MA Quality with consumers, physicians, hospitals, and other organizations, prescription drug card sponsors, Improvement care-givers to refine care delivery . and eligible entities beginning January 1, 2004. Organizations Quality improvement assistance relating to (QIOs) to include prescription drug therapy would be provided to Parts C and D providers, practitioners, prescription drug card sponsors, eligible entities under Part D, M+C plans, and MA plans beginning January 1, 2004. Extend Medicare beneficiaries with ESRD cannot enroll in Section 226. The Secretary would be required to No provision. demonstration a managed care plan. If they develop ESRD while extend the demonstration project for ESRD project for end- a member of a plan they can continue their managed care through December 31, 2007. The stage renal disease enrollment in the plan. The Deficit Reduction Act terms and conditions in place during 2002 would (ESRD) managed of 1984 established a demonstration project for apply. The monthly capitation rate for enrollees care ESRD managed care, which was subsequently would be set based on the reasonable medical and extended by the Omnibus Budget Reconciliation direct administrative costs of providing the Act of 1993. benefits to participants. Avoid duplicative Medicare law currently preempts state law or No provision. Section 232. Federal standards established by state regulations regulation from applying to M+C plans to the extent this legislation would supersede any state law or they are inconsistent with federal requirements regulation (other than state licensure laws and imposed on M+C plans, and specifically, relating to state laws relating to plan solvency), with respect benefit requirements, the inclusion or treatment of to MA plans offered by MA organizations. providers, and coverage determinations (including related appeals and grievance processes). CRS-28 Provisions Current Law S. 1 H.R. 1 Extend Municipal Under the Consolidated Omnibus Budget Section 618. Demonstration projects would be Section 236. Same provision but would extend Health Service Reconciliation Act of 1985, as amended, the extended through December 31, 2006, for the demonstration through December 31, 2009. demonstration Municipal Health Service demonstration project will beneficiaries who reside in the city in which the project expire on December 31, 2004. The project is a project is operated. multi-site demonstration intended to improve access to primary care services in underserved urban areas and to reduce the cost of health care. BBA97 authorized the Secretary to extend the project through December 31, 2000, but only with respect to persons who had received at least one service for the period of January 1, 1996-August 7, 1997 (the enactment date of BBA97). Sites that wanted the demonstration project extended were required to submit plans for the orderly transition of participants to a non-demonstration health care delivery system. Subsequent legislation extended the project through December 31, 2004. Evaluate fee-for- No provision. Section 232. The Secretary would be required to No explicit provision. H.R. 1 would establish service review the results of the demonstrations required chronic care improvement benefits under fee-for- modernization under Sections 442, 443, and 444 of this bill and service (Section 721) and under MA and EFFS projects report to Congress by January 1, 2008. [These (Section 722). demonstrations are the Medicare health care quality demonstration, the Medicare complex clinical care management payment demonstration, and the Medicare fee-for-service care coordination demonstration.] Beginning in 2009, the Secretary would be required to establish projects to provide Medicare beneficiaries in traditional Medicare coverage of enhanced benefits or services (preventive services not already covered under Medicare, chronic care coordination services, disease management services or other benefits determined by the Secretary). The purpose of the projects would be to evaluate whether the enhanced benefits or services improved the quality of care, improved CRS-29 Provisions Current Law S. 1 H.R. 1 health care delivery systems, and reduced expenditures under the Medicare program. The projects would be conducted in regions comparable to the regions designated as "highly competitive." The Secretary would be required to submit annual reports to Congress and the GAO beginning no later than April 1, 2010. The GAO would be required to report by January 1, 2011 and biennially thereafter for as long as the projects were being conducted. Establish MA No provision. Section 241. This provision would establish an No provision. enrollment goal MA enrollment goal of at least 15% of Medicare beneficiaries by January 1, 2010. If the goal were not met, a bipartisan commission would be established as provided for in Section 242. Establish national No provision. Section 242. If the enrollment goal described in No provision. bipartisan Section 241 were not met, the National Bipartisan commission on Commission on Medicare Reform would be Medicare reform established. The Commission would review and analyze the long-term financial condition of the Medicare program; identify problems that threaten the financial integrity of the Medicare Trust Funds; and analyze potential solutions to the identified problems. The Commission would be required to make recommendations, including issues facing Medicare, such as solvency, financing of the Medicare Trust Funds, and benefits. The Commission would have 17 members -- four appointed by the President, 12 appointed by Congressional leaders, and one appointed jointly by the President and Congressional leaders to serve as Chairperson. The Commission would be required to submit a report and an implementation bill to the President and Congress no later than April 1, 2014. CRS-30 Provisions Current Law S. 1 H.R. 1 Establish No provision. Section 243. Congressional leaders would be No provision. congressional required to introduce the implementation bill consideration of required by Section 242. Hearings would be reform proposals required by appropriate committees as well as floor consideration. Authorize No provision. Section 244. Appropriations would be authorized No provision. appropriations for such sums as necessary to carry out the provisions regarding the National Bipartisan Commission on Medicare Reform for fiscal years 2012 through 2013. Alternative Payment or Competition Reforms Provisions Current Law S. 1 H.R. 1 General No provision. Section 231. [§1851 (i)]. Beginning in 2008, the Section 241. Beginning in 2010, competitive Secretary would establish a limited program in bidding would be introduced for designated highly competitive areas, in which payments to highly competitive areas or regions. All plans is based on bids in place of benchmarks. Medicare beneficiaries residing in competitive areas, including those remaining in FFS, could have their Part B premium payment adjusted, either up or down. Eligible areas Under existing minimum enrollment requirements, Section 231. In 2008, the Secretary would be Section 241. Beginning in 2010, this provision an M+C organization must provide health care required to designate a limited number, but not less would provide for a new payment in a benefits to at least 5,000 individuals; a provider- than 1, of preferred provider regions as "highly "competitive EFFS region" and in a sponsored organization (PSO) must provide health competitive." For each subsequent year, the "competitive MA area" (CMA) defined as a care benefits to 1,500 individuals. M+C Secretary could designate a limited number of region (or in the case of a MA, an area) that, organizations that primarily serve individuals additional regions as highly competitive. during open season, offered at least 2 EFFS residing outside of urban areas must provide health plans (or in the case of a CMA, at least 2 MA care benefits to 1,500 individuals; such a PSO must In determining which regions to designate as highly plans) by different organizations, each meeting provide benefits to 500 individuals. competitive, the Secretary would consider whether: the current law minimum enrollment (1) the designation would enhance participation of requirements for a plan, as of March of the PPO plans in the region, (2) three bids would be previous year. Additionally, there would be a likely, (3) MA eligible individuals would elect minimum percentage enrollment requirement for PPO plans if the area was designated, and EFFS eligible individuals (or MA eligible CRS-31 Provisions Current Law S. 1 H.R. 1 (4)designation would permit compliance with the individuals) in the region (or area) -- the lessor funding limitation ($6 billion in addition to what of 20% enrollment or the percentage enrolled would have been expended under this Title if this for EFFS and MA plans nationwide, as of March subsection had not been enacted, for 2009 through of the previous year. For an EFFS region (or for 2013). Beginning in 2014, there would be no a MA area) that was competitive in the previous additional funding, beyond the total amount that year, the Administrator could continue to treat would have been expended if this subsection of the the region or area as meeting the requirement for bill were not enacted. being competitive if there was only a de minimis reduction. The Secretary would be required to give special consideration to regions where no bids had been submitted in the previous year. Benchmark rate No provision. Section 231. If an area was designated as highly Section 241(a)(2). For EFFS regions, the for competitive competitive, benchmarks would not apply. Instead, competitive EFFS non-drug monthly benchmark regions a plan would bid the total payment it was willing to amount would be equal to the sum o the EFFS accept (not taking into account risk adjustment) for component and the FFS component. providing required Parts A and B benefits to plan enrollees residing in the service area. The The EFFS component would be based on the Secretary would substitute the second lowest bid weighted average of the EFFS plan bids, for the benchmark. If there were fewer than three multiplied by one minus the FFS market bids, the Secretary would be required to substitute percentage. (The weighted average of plan bids the lowest bid for the benchmark. would equal the unadjusted EFFS statutory non- drug monthly bid multiplied by percentage enrollment of EFFS enrollees in the plan during March of the previous year. The one minus the FFS market share component of this calculation would be the proportion of EFFS eligible individuals enrolled in an EFFS or MA plan in the region, or nationwide, if greater.) The FFS component would be based on the adjusted average per capita cost (AAPCC) multiplied by the FFS market share percentage. (The AAPCC would include services covered under Parts A and B of Medicare for individuals entitled to Part A, enrolled in Part B, who were not enrolled in an EFFS or MA plan. This CRS-32 Provisions Current Law S. 1 H.R. 1 amount would be adjusted to: (1)exclude direct graduate medical education costs, (2) fully take into account demographic and health status risk factors to reflect average costs for a typical beneficiary residing in the region, and (3) include the VA/DOD adjustment. The FFS market percentage would equal the percent of beneficiaries not enrolled in MA or EFFS plans in the region, or nationwide if higher.) Benchmark rate No provision. No provision, because an alternative payment Section 241(b)(1). For CMAs, the CMA non- for competitive system is used for these plans. drug benchmark amount would be equal to the areas sum of the MA component and the FFS component. The MA component would be based on the weighted average of the MA plan bids for the area and year multiplied by one minus the FFS market percentage. (The weighted average of plan bids would equal the unadjusted MA statutory non-drug monthly bid multiplied by percentage enrollment of MA enrollees in the plan during March of the previous year. The one minus the FFS market share component of this calculation would be the proportion of MA eligible individuals enrolled in an EFFS or MA plan, or nationwide, if greater.) The FFS component would be based on the AAPCC (adjusted in the same manner as the AAPCC is adjusted for the EFFS FFS component), multiplied by the FFS market share percentage. The FFS market percentage would equal the percent of MA eligible individuals who were not enrolled in MA or EFFS plans in the region, or nationwide if higher.) CRS-33 Provisions Current Law S. 1 H.R. 1 Beneficiary M+C enrollees share in any projected cost savings No specific provision, so that current law Section 241. For plans with a bid below the premiums and between Medicare's per capita payment to a plan calculation of premiums (or rebates) would benchmark, the beneficiary premium would be rebates and what it would cost the plan to provide Medicare continue to remain in effect. zero. Similar to the premium rebate under the benefits to its commercial enrollees. To accomplish MA or EFFS programs for non-competitive this, plans must provide either reduced cost-sharing areas/regions, enrollees in competitive or additional benefits to their Medicare enrollees areas/regions would receive a rebate equal to that are valued at 100% of the difference between 75% of the average per capita monthly savings the projected cost of providing Medicare-covered if the plan bid were below the benchmark. The services and the expected revenue for Medicare remaining 25% of the average per capita savings enrollees. Additionally, beginning in 2003, plans would be retained by the federal government. may also reduce the Medicare Part B premium. For plans with bids above the benchmark, the Plans can choose which additional benefits to offer, premium would be equal to the full amount the however, the total cost of these benefits must at least bid exceeded the benchmark. equal the "savings" from Medicare-covered services. Plans may also place the additional funds A beneficiary residing in a competitive area or in a stabilization fund or return funds to the region who was covered under FFS Medicare, Treasury. could also have an adjustment to their Part B premium, either as an increase or a decrease. For competitive areas or regions, if the FFS area/region-specific non-drug amount for the month did not exceed the benchmark for the competitive area/region, the Part B premium would be reduced by 75% of the difference. If the FFS area/region specific non-drug amount for the month exceeded the benchmark for the competitive area/region, the Medicare beneficiary's Medicare Part B premium would increase by the full amount of the difference. Phase-in of No provision. No provision. Section 241. The competitive programs would competitive be phased-in so that if an area (or region) had program not been designated as competitive for each of the last 4 years, the benchmark for plans would be calculated based on a phased-in benchmark. During the first year of the phase-in, the benchmark would be one-fifth competitive benchmark and four-fifth non-competitive, benchmark, increasing the competitive share by CRS-34 Provisions Current Law S. 1 H.R. 1 another one-fifth each year until the benchmark was 100% competitive. Part B premium adjustments for Medicare beneficiaries covered under FFS would also be phased-in similarly over a 5-year period. Other No provision. No provision. The Administrator would transmit the name, requirements Social Security number and Part B premium adjustment to the Commissioner of Social Security at the beginning of each year and periodically throughout the year, effective January 1, 2010. Reports No provision. Section 231. The Secretary would be required to No provision. report to Congress and the Comptroller General no later than April 1 of each year, beginning 2010. The report would include a description of (and certification of reasonableness and accuracy by the Chief Actuary for CMS) of the total amount expended under this provision compared with what otherwise would have been expended, the projection of the total amount that will be expended compared to the total that would otherwise be expended, the amounts remaining of the $6 billion limitation, and the steps the Secretary would take to ensure expenditures would not exceed the amount specified. The GAO would be required to submit to the Secretary and the Congress a report on the designation of highly competitive regions no later than January 1, 2011 and biennially thereafter. The report would be required to include an evaluation of: the quality of care provided to beneficiaries enrolled in an MA plan in a highly competitive region; the satisfaction of beneficiaries with benefits under the plan; the costs to the Medicare CRS-35 Provisions Current Law S. 1 H.R. 1 program for payments made to the plans; any improvement in the delivery of health care services under a plan; and other information. The Secretary would be required to report to Congress if she or he intends to designate one or more regions as highly competitive in 2014 or subsequent years. The report would be required by April 1 of the year prior to the designation, and would include the steps the Secretary would take to ensure that funding would not exceed the amount specified and would contain a certification from the Chief Actuary of CMS that the steps described would meet statutory requirements. ------------------------------------------------------------------------------ For other versions of this document, see http://wikileaks.org/wiki/CRS-RL32039