[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4903 Introduced in House (IH)]
108th CONGRESS
2d Session
H. R. 4903
To amend title XVIII of the Social Security Act to provide for improved
accountability in the Medicare Advantage and prescription drug
programs.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
July 22, 2004
Mr. Brown of Ohio (for himself, Mr. Dingell, Mr. Rangel, Mr. Stark, and
Mr. Waxman) introduced the following bill; which was referred to the
Committee on Ways and Means, and in addition to the Committee on Energy
and Commerce, for a period to be subsequently determined by the
Speaker, in each case for consideration of such provisions as fall
within the jurisdiction of the committee concerned
_______________________________________________________________________
A BILL
To amend title XVIII of the Social Security Act to provide for improved
accountability in the Medicare Advantage and prescription drug
programs.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Medicare Advantage
and Prescription Drug Accountability Act of 2004''.
(b) Table of Contents.--The table of contents of this Act is as
follows:
Sec. 1. Short title; table of contents.
Sec. 2. Requirement for reasonable return of benefits.
Sec. 3. Financial transparency.
Sec. 4. Beneficiary sign-off.
Sec. 5. Annual accountability reports.
Sec. 6. Auditing of actuarial equivalency.
Sec. 7. Report comparing costs and benefits under Medicare Advantage
plans, medicare supplemental policies, and
fee-for-service medicare.
SEC. 2. REQUIREMENT FOR REASONABLE RETURN OF BENEFITS.
(a) Medicare Advantage Plans.--Section 1857(e) of the Social
Security Act (42 U.S.C. 1395w-27(e)) is amended by adding at the end
the following new paragraph:
``(4) Negotiation for loss and administrative cost
ratios.--
``(A) In general.--The contract with an MA
organization under this part shall provide for the
following:
``(i) Minimum loss ratio.--Aggregate
average benefits that are at least a minimum
ratio of the aggregate average revenues
collected under the contract.
``(ii) Maximum administrative cost ratio.--
Aggregate average administrative costs that do
not exceed a maximum ratio of the aggregate
average revenues collected under the contract.
``(B) Establishment of ratios.--The ratios under
clauses (i) and (ii) of subparagraph (A) shall be
established by the Secretary. In establishing such
ratios, the Secretary shall take into account, at a
minimum, ratios typical of those--
``(i) under private health insurance plans;
``(ii) under parts A and B of this title;
and
``(iii) under health benefits plans offered
under chapter 89 of title 5, United States Code
(relating to the Federal Employees Health
Benefits Program).''.
(b) Audit of Administrative Costs and Compliance With the Federal
Acquisition Regulation.--Section 1857(d)(2)(B) of such Act (42 U.S.C.
1395w-27(d)(2)(B)) is amended--
(1) by striking ``or (ii)'' and inserting ``(ii)''; and
(2) by inserting before the period at the end the
following: ``, or (iii) to compliance with the requirements of
subsection (e)(4)(A) and the extent to which administrative
costs comply with the applicable requirements for such costs
under the Federal Acquisition Regulation''.
(c) Application to Prescription Drug Plans.--The amendments made by
subsections (a) and (b) apply, pursuant to section 1860D-12(b)(3) of
the Social Security Act (42 U.S.C. 1395w-112(b)(3)), to contracts with
prescription drug sponsors under part D of title XVIII of such Act.
(d) Effective Date.--The amendments made by this section shall
apply for contract years beginning after the date of the enactment of
this Act.
SEC. 3. FINANCIAL TRANSPARENCY.
(a) Medicare Advantage Plans.--Section 1851(d) of the Social
Security Act (42 U.S.C. 1395w-21(d)) is amended by adding at the end
the following new paragraph:
``(8) Financial transparency.--
``(A) In general.--Each MA organization shall
provide annually to the Secretary (in a form and manner
specified by the Secretary), with respect to each MA
plan it offers and not later than 6 months after the
end of each contract year, information describing the
organization's compliance with the requirements of
section 1857(e)(4) and a functional listing of the
organization's administrative costs (by category of
such costs, including, at a minimum, marketing costs
and claims processing costs), profits, and investment
income (as defined by the Secretary), as a ratio of
aggregate average revenues collected under the contract
for that year.
``(B) Publication.--The Secretary shall publish the
information provided under subparagraph (A) for each MA
plan.''.
(b) Conforming Application to Prescription Drug Plans.--Section
1860D-11(b)(2) of the Social Security Act (42 U.S.C. 1395w-111(b)(2))
is amended by redesignating subparagraph (F) as subparagraph (G) and by
inserting after subparagraph (E) the following new subparagraph:
``(F) Periodic auditing.--Information with respect
to the prescription drug plan of the type described in
section 1851(d)(8) with respect to an MA plan.''.
(c) Effective Date.--The amendments made by this section shall
apply to reporting of information for contract years to which the
amendments made by section 2 apply.
SEC. 4. BENEFICIARY SIGN-OFF.
(a) Medicare Advantage Plans.--Section 1851(c)(2) of the Social
Security Act (42 U.S.C. 1395w-21(c)(2)) is amended by adding at the end
the following new subparagraph:
``(C) Beneficiary sign-off in election process.--An
election to enroll with an MA plan shall not be
effective unless the election form is signed by the
individual and specifically acknowledges each of the
following:
``(i) The premiums, cost-sharing
requirements, and benefits under the plan may
change at the beginning of each 12-month
contract period.
``(ii) The individual may lose coverage of
the individual's physician or other provider at
the beginning of each such period.
``(iii) The plan may be terminated at the
beginning of any such period.
``(iv) Premiums and benefits under the plan
may vary based on the county or other MA area
in which the plan is offered.''.
(b) Application to Prescription Drug Plans.--The amendment made by
subsection (a) applies, pursuant to section 1860D-1(b)(1)(B)(ii) of the
Social Security Act (42 U.S.C. 1395w-101(b)(1)(B)(ii)), to prescription
drug plans under part D of title XVIII of such Act.
(c) Effective Date.--The amendment made by subsection (a) shall
apply to elections made on or after the date specified by the Secretary
of Health and Human Services, but in no case later than 60 days after
the date of the enactment of this Act.
SEC. 5. ANNUAL ACCOUNTABILITY REPORTS.
(a) Medicare Advantage Accountability Report.--Section 1856 of the
Social Security Act (42 U.S.C. 1395w-26) is amended--
(1) by amending the heading to read as follows:
``establishment of standards; annual accountability report'';
and
(2) by adding at the end the following new subsection:
``(c) Annual Accountability Report.--
``(1) In general.--The Secretary shall compile, and
transmit to Congress, at the end of each year (beginning with
2004), an annual Medicare Advantage accountability report.
``(2) Contents.--Each annual accountability report shall
include the following:
``(A) A detailed analysis of geographic variation
in cost-sharing and premiums among MA plans.
``(B) A comparison of the use of amounts paid to MA
plans for benefit payments, administrative costs, and
profits with the amounts expended under the fee-for-
service programs under parts A and B for benefit
payments and administrative expenses.
``(C) Recommendations for legislative changes to
the Medicare Advantage program, or the fee-for-service
programs under parts A and B, to assure that medicare
beneficiaries under both programs have access to
comparable benefits at comparable cost and that
Government subsidies under the two programs are
equivalent.
``(D) The results of audits conducted under section
1857(d) and enforcement actions taken in response to
findings of inappropriate expenditures of funds under
this part.''.
(b) Prescription Drug Accountability Report.--Section 1860D-12 of
such Act (42 U.S.C. 1395w-112) is amended by adding at the end the
following new subsection:
``(h) Annual Accountability Report.--
``(1) In general.--The Secretary shall compile, and
transmit to Congress, at the end of each year (beginning with
2006), an annual prescription drug accountability report.
``(2) Contents.--Each annual accountability report shall
include the same types of information (as specified by the
Secretary) with respect to prescription drug plans as are
provided under subparagraphs (A), (B), and (D) of section
1856(c)(2) with respect to MA plans.''.
SEC. 6. AUDITING OF ACTUARIAL EQUIVALENCY.
(a) Medicare Advantage Plans.--Section 1854(a)(5) of the Social
Security Act (42 U.S.C. 1395w-24(a)(5)) is amended by adding at the end
the following new subparagraph:
``(B) Periodic audits of actuarial equivalency
determinations.--In the case of MA plans that provide
for an actuarially equivalent level of benefits under
this part, the Inspector General of the Department of
Health and Human Services shall periodically audit a
representative sample of the determinations made by the
Secretary regarding such actuarial equivalency to
ensure that the Secretary is only approving plans with
benefits that are actuarially equivalent.''.
(b) Application to Prescription Drug Plans.--Section 1860D-11(e) of
the Social Security Act (42 U.S.C. 1395w-111(e)) is amended by adding
at the end the following new paragraph:
``(3) Periodic auditing of actuarial equivalency
determinations.--The provisions of section 1854(a)(5)(B) shall
apply with respect to determinations of actuarial equivalence
of benefits under prescription drug plans in the same manner as
they apply to determinations of actuarial equivalence of
benefits under MA plans.''.
SEC. 7. REPORT COMPARING COSTS AND BENEFITS UNDER MEDICARE ADVANTAGE
PLANS, MEDICARE SUPPLEMENTAL POLICIES, AND FEE-FOR-
SERVICE MEDICARE.
Not later than 1 year after the date of the enactment of this Act,
the Secretary of Health and Human Services shall submit to Congress a
report that compares the average benefit payments, administrative
costs, profits, and investment income (expressed as a percentage of
revenues collected) for MA plans with such average for the fee-for-
service programs under parts A and B and for group and individual
medicare supplemental policies.
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