Part C - Medicare+Choice Program

42 USC 1395w21 - Eligibility, election, and enrollment

(a) Choice of medicare benefits through Medicare+Choice plans 

(1) In general 
Subject to the provisions of this section, each Medicare+Choice eligible individual (as defined in paragraph (3)) is entitled to elect to receive benefits (other than qualified prescription drug benefits) under this subchapter
(A) through the original medicare fee-for-service program under parts A and B of this subchapter, or
(B) through enrollment in a Medicare+Choice plan under this part,

and may elect qualified prescription drug coverage in accordance with section 1395w–101 of this title.

(2) Types of Medicare+Choice plans that may be available 
A Medicare+Choice plan may be any of the following types of plans of health insurance:
(A) Coordinated care plans (including regional plans) 

(i) In general Coordinated care plans which provide health care services, including but not limited to health maintenance organization plans (with or without point of service options), plans offered by provider-sponsored organizations (as defined in section 1395w–25 (d) of this title), and regional or local preferred provider organization plans (including MA regional plans).
(ii) Specialized MA plans for special needs individuals Specialized MA plans for special needs individuals (as defined in section 1395w–28 (b)(6) of this title) may be any type of coordinated care plan.
(B) Combination of MSA plan and contributions to Medicare+Choice MSA 
An MSA plan, as defined in section 1395w–28 (b)(3) of this title, and a contribution into a Medicare+Choice medical savings account (MSA).
(C) Private fee-for-service plans 
A Medicare+Choice private fee-for-service plan, as defined in section 1395w–28 (b)(2) of this title.
(3) Medicare+Choice eligible individual 

(A) In general 
In this subchapter, subject to subparagraph (B), the term Medicare+Choice eligible individual means an individual who is entitled to benefits under part A of this subchapter and enrolled under part B of this subchapter.
(B) Special rule for end-stage renal disease 
Such term shall not include an individual medically determined to have end-stage renal disease, except that
(i) an individual who develops end-stage renal disease while enrolled in a Medicare+Choice plan may continue to be enrolled in that plan; and
(ii) in the case of such an individual who is enrolled in a Medicare+Choice plan under clause (i) (or subsequently under this clause), if the enrollment is discontinued under circumstances described in subsection (e)(4)(A) of this section, then the individual will be treated as a Medicare+Choice eligible individual for purposes of electing to continue enrollment in another Medicare+Choice plan.
(b) Special rules 

(1) Residence requirement 

(A) In general 
Except as the Secretary may otherwise provide and except as provided in subparagraph (C), an individual is eligible to elect a Medicare+Choice plan offered by a Medicare+Choice organization only if the plan serves the geographic area in which the individual resides.
(B) Continuation of enrollment permitted 
Pursuant to rules specified by the Secretary, the Secretary shall provide that an MA local plan may offer to all individuals residing in a geographic area the option to continue enrollment in the plan, notwithstanding that the individual no longer resides in the service area of the plan, so long as the plan provides that individuals exercising this option have, as part of the benefits under the original medicare fee-for-service program option, reasonable access within that geographic area to the full range of basic benefits, subject to reasonable cost sharing liability in obtaining such benefits.
(C) Continuation of enrollment permitted where service changed 
Notwithstanding subparagraph (A) and in addition to subparagraph (B), if a Medicare+Choice organization eliminates from its service area a Medicare+Choice payment area that was previously within its service area, the organization may elect to offer individuals residing in all or portions of the affected area who would otherwise be ineligible to continue enrollment the option to continue enrollment in an MA local plan it offers so long as
(i) the enrollee agrees to receive the full range of basic benefits (excluding emergency and urgently needed care) exclusively at facilities designated by the organization within the plan service area; and
(ii) there is no other Medicare+Choice plan offered in the area in which the enrollee resides at the time of the organizations election.
(2) Special rule for certain individuals covered under FEHBP or eligible for veterans or military health benefits 

(A) FEHBP 
An individual who is enrolled in a health benefit plan under chapter 89 of title 5 is not eligible to enroll in an MSA plan until such time as the Director of the Office of Management and Budget certifies to the Secretary that the Office of Personnel Management has adopted policies which will ensure that the enrollment of such individuals in such plans will not result in increased expenditures for the Federal Government for health benefit plans under such chapter.
(B) VA and DOD 
The Secretary may apply rules similar to the rules described in subparagraph (A) in the case of individuals who are eligible for health care benefits under chapter 55 of title 10 or under chapter 17 of title 38.
(3) Limitation on eligibility of qualified medicare beneficiaries and other medicaid beneficiaries to enroll in an MSA plan 
An individual who is a qualified medicare beneficiary (as defined in section 1396d (p)(1) of this title), a qualified disabled and working individual (described in section 1396d (s) of this title), an individual described in section 1396a (a)(10)(E)(iii) of this title, or otherwise entitled to medicare cost-sharing under a State plan under subchapter XIX of this chapter is not eligible to enroll in an MSA plan.
(4) Coverage under MSA plans 

(A) In general 
Under rules established by the Secretary, an individual is not eligible to enroll (or continue enrollment) in an MSA plan for a year unless the individual provides assurances satisfactory to the Secretary that the individual will reside in the United States for at least 183 days during the year.
(B) Evaluation 
The Secretary shall regularly evaluate the impact of permitting enrollment in MSA plans under this part on selection (including adverse selection), use of preventive care, access to care, and the financial status of the Trust Funds under this subchapter.
(C) Reports 
The Secretary shall submit to Congress periodic reports on the numbers of individuals enrolled in such plans and on the evaluation being conducted under subparagraph (B).
(c) Process for exercising choice 

(1) In general 
The Secretary shall establish a process through which elections described in subsection (a) of this section are made and changed, including the form and manner in which such elections are made and changed. Such elections shall be made or changed only during coverage election periods specified under subsection (e) of this section and shall become effective as provided in subsection (f) of this section.
(2) Coordination through Medicare+Choice organizations 

(A) Enrollment 
Such process shall permit an individual who wishes to elect a Medicare+Choice plan offered by a Medicare+Choice organization to make such election through the filing of an appropriate election form with the organization.
(B) Disenrollment 
Such process shall permit an individual, who has elected a Medicare+Choice plan offered by a Medicare+Choice organization and who wishes to terminate such election, to terminate such election through the filing of an appropriate election form with the organization.
(3) Default 

(A) Initial election 

(i) In general Subject to clause (ii), an individual who fails to make an election during an initial election period under subsection (e)(1) of this section is deemed to have chosen the original medicare fee-for-service program option.
(ii) Seamless continuation of coverage The Secretary may establish procedures under which an individual who is enrolled in a health plan (other than Medicare+Choice plan) offered by a Medicare+Choice organization at the time of the initial election period and who fails to elect to receive coverage other than through the organization is deemed to have elected the Medicare+Choice plan offered by the organization (or, if the organization offers more than one such plan, such plan or plans as the Secretary identifies under such procedures).
(B) Continuing periods 
An individual who has made (or is deemed to have made) an election under this section is considered to have continued to make such election until such time as
(i) the individual changes the election under this section, or
(ii) the Medicare+Choice plan with respect to which such election is in effect is discontinued or, subject to subsection (b)(1)(B) of this section, no longer serves the area in which the individual resides.
(d) Providing information to promote informed choice 

(1) In general 
The Secretary shall provide for activities under this subsection to broadly disseminate information to medicare beneficiaries (and prospective medicare beneficiaries) on the coverage options provided under this section in order to promote an active, informed selection among such options.
(2) Provision of notice 

(A) Open season notification 
At least 15 days before the beginning of each annual, coordinated election period (as defined in subsection (e)(3)(B) of this section), the Secretary shall mail to each Medicare+Choice eligible individual residing in an area the following:
(i) General information The general information described in paragraph (3).
(ii) List of plans and comparison of plan options A list identifying the Medicare+Choice plans that are (or will be) available to residents of the area and information described in paragraph (4) concerning such plans. Such information shall be presented in a comparative form.
(iii) Additional information Any other information that the Secretary determines will assist the individual in making the election under this section.

The mailing of such information shall be coordinated, to the extent practicable, with the mailing of any annual notice under section 1395b–2 of this title.

(B) Notification to newly eligible Medicare+Choice eligible individuals 
To the extent practicable, the Secretary shall, not later than 30 days before the beginning of the initial Medicare+Choice enrollment period for an individual described in subsection (e)(1) of this section, mail to the individual the information described in subparagraph (A).
(C) Form 
The information disseminated under this paragraph shall be written and formatted using language that is easily understandable by medicare beneficiaries.
(D) Periodic updating 
The information described in subparagraph (A) shall be updated on at least an annual basis to reflect changes in the availability of Medicare+Choice plans and the benefits and Medicare+Choice monthly basic and supplemental beneficiary premiums for such plans.
(3) General information 
General information under this paragraph, with respect to coverage under this part during a year, shall include the following:
(A) Benefits under original medicare fee-for-service program option 
A general description of the benefits covered under the original medicare fee-for-service program under parts A and B of this subchapter, including
(i) covered items and services,
(ii) beneficiary cost sharing, such as deductibles, coinsurance, and copayment amounts, and
(iii) any beneficiary liability for balance billing.
(B) Election procedures 
Information and instructions on how to exercise election options under this section.
(C) Rights 
A general description of procedural rights (including grievance and appeals procedures) of beneficiaries under the original medicare fee-for-service program and the Medicare+Choice program and the right to be protected against discrimination based on health status-related factors under section 1395w–22 (b) of this title.
(D) Information on medigap and medicare select 
A general description of the benefits, enrollment rights, and other requirements applicable to medicare supplemental policies under section 1395ss of this title and provisions relating to medicare select policies described in section 1395ss (t) of this title.
(E) Potential for contract termination 
The fact that a Medicare+Choice organization may terminate its contract, refuse to renew its contract, or reduce the service area included in its contract, under this part, and the effect of such a termination, nonrenewal, or service area reduction may have on individuals enrolled with the Medicare+Choice plan under this part.
(F) Catastrophic coverage and single deductible 
In the case of an MA regional plan, a description of the catastrophic coverage and single deductible applicable under the plan.
(4) Information comparing plan options 
Information under this paragraph, with respect to a Medicare+Choice plan for a year, shall include the following:
(A) Benefits 
The benefits covered under the plan, including the following:
(i) Covered items and services beyond those provided under the original medicare fee-for-service program.
(ii) Any beneficiary cost sharing, including information on the single deductible (if applicable) under section 1395w–27a (b)(1) of this title.
(iii) Any maximum limitations on out-of-pocket expenses.
(iv) In the case of an MSA plan, differences in cost sharing, premiums, and balance billing under such a plan compared to under other Medicare+Choice plans.
(v) In the case of a Medicare+Choice private fee-for-service plan, differences in cost sharing, premiums, and balance billing under such a plan compared to under other Medicare+Choice plans.
(vi) The extent to which an enrollee may obtain benefits through out-of-network health care providers.
(vii) The extent to which an enrollee may select among in-network providers and the types of providers participating in the plans network.
(viii) The organizations coverage of emergency and urgently needed care.
(B) Premiums 

(i) In general The monthly amount of the premium charged to an individual.
(ii) Reductions The reduction in part B premiums, if any.
(C) Service area 
The service area of the plan.
(D) Quality and performance 
To the extent available, plan quality and performance indicators for the benefits under the plan (and how they compare to such indicators under the original medicare fee-for-service program under parts A and B of this subchapter in the area involved), including
(i) disenrollment rates for medicare enrollees electing to receive benefits through the plan for the previous 2 years (excluding disenrollment due to death or moving outside the plans service area),
(ii) information on medicare enrollee satisfaction,
(iii) information on health outcomes, and
(iv) the recent record regarding compliance of the plan with requirements of this part (as determined by the Secretary).
(E) Supplemental benefits 
Supplemental health care benefits, including any reductions in cost-sharing under section 1395w–22 (a)(3) of this title and the terms and conditions (including premiums) for such benefits.
(5) Maintaining a toll-free number and Internet site 
The Secretary shall maintain a toll-free number for inquiries regarding Medicare+Choice options and the operation of this part in all areas in which Medicare+Choice plans are offered and an Internet site through which individuals may electronically obtain information on such options and Medicare+Choice plans.
(6) Use of non-Federal entities 
The Secretary may enter into contracts with non-Federal entities to carry out activities under this subsection.
(7) Provision of information 
A Medicare+Choice organization shall provide the Secretary with such information on the organization and each Medicare+Choice plan it offers as may be required for the preparation of the information referred to in paragraph (2)(A).
(e) Coverage election periods 

(1) Initial choice upon eligibility to make election if Medicare+Choice plans available to individual 
If, at the time an individual first becomes entitled to benefits under part A of this subchapter and enrolled under part B of this subchapter, there is one or more Medicare+Choice plans offered in the area in which the individual resides, the individual shall make the election under this section during a period specified by the Secretary such that if the individual elects a Medicare+Choice plan during the period, coverage under the plan becomes effective as of the first date on which the individual may receive such coverage. If any portion of an individuals initial enrollment period under part B of this subchapter occurs after the end of the annual, coordinated election period described in paragraph (3)(B)(iii), the initial enrollment period under this part shall further extend through the end of the individuals initial enrollment period under part B of this subchapter.
(2) Open enrollment and disenrollment opportunities 
Subject to paragraph (5)
(A) Continuous open enrollment and disenrollment through 2005 
At any time during the period beginning January 1, 1998, and ending on December 31, 2005, a Medicare+Choice eligible individual may change the election under subsection (a)(1) of this section.
(B) Continuous open enrollment and disenrollment for first 6 months during 2006 

(i) In general Subject to clause (ii), subparagraph (C)(iii), and subparagraph (D), at any time during the first 6 months of 2006, or, if the individual first becomes a Medicare+Choice eligible individual during 2006, during the first 6 months during 2006 in which the individual is a Medicare+Choice eligible individual, a Medicare+Choice eligible individual may change the election under subsection (a)(1) of this section.
(ii) Limitation of one change An individual may exercise the right under clause (i) only once. The limitation under this clause shall not apply to changes in elections effected during an annual, coordinated election period under paragraph (3) or during a special enrollment period under the first sentence of paragraph (4).
(C) Continuous open enrollment and disenrollment for first 3 months in subsequent years 

(i) In general Subject to clauses (ii) and (iii) and subparagraph (D), at any time during the first 3 months of a year after 2006, or, if the individual first becomes a Medicare+Choice eligible individual during a year after 2006, during the first 3 months of such year in which the individual is a Medicare+Choice eligible individual, a Medicare+Choice eligible individual may change the election under subsection (a)(1) of this section.
(ii) Limitation of one change during open enrollment period each year An individual may exercise the right under clause (i) only once during the applicable 3-month period described in such clause in each year. The limitation under this clause shall not apply to changes in elections effected during an annual, coordinated election period under paragraph (3) or during a special enrollment period under paragraph (4).
(iii) Limitation on exercise of right with respect to prescription drug coverage Effective for plan years beginning on or after January 1, 2006, in applying clause (i) (and clause (i) of subparagraph (B)) in the case of an individual who
(I) is enrolled in an MA plan that does provide qualified prescription drug coverage, the individual may exercise the right under such clause only with respect to coverage under the original fee-for-service plan or coverage under another MA plan that does not provide such coverage and may not exercise such right to obtain coverage under an MAPD plan or under a prescription drug plan under part D of this subchapter; or
(II) is enrolled in an MAPD plan, the individual may exercise the right under such clause only with respect to coverage under another MAPD plan (and not an MA plan that does not provide qualified prescription drug coverage) or under the original fee-for-service plan and coverage under a prescription drug plan under part D of this subchapter.
(D) Continuous open enrollment for institutionalized individuals 
At any time after 2005 in the case of a Medicare+Choice eligible individual who is institutionalized (as defined by the Secretary), the individual may elect under subsection (a)(1) of this section
(i) to enroll in a Medicare+Choice plan; or
(ii) to change the Medicare+Choice plan in which the individual is enrolled.
(E) Limited continuous open enrollment of original fee-for-service enrollees in medicare advantage non-prescription drug plans 

(i) In general On any date during the period beginning on January 1, 2007, and ending on July 31, 2007, on which a Medicare Advantage eligible individual is an unenrolled fee-for-service individual (as defined in clause (ii)), the individual may elect under subsection (a)(1) to enroll in a Medicare Advantage plan that is not an MAPD plan.
(ii) Unenrolled fee-for-service individual defined In this subparagraph, the term unenrolled fee-for-service individual means, with respect to a date, a Medicare Advantage eligible individual who
(I) is receiving benefits under this subchapter through enrollment in the original medicare fee-for-service program under parts A and B;
(II) is not enrolled in an MA plan on such date; and
(III) as of such date is not otherwise eligible to elect to enroll in an MA plan.
(iii) Limitation of one change during the applicable period An individual may exercise the right under clause (i) only once during the period described in such clause.
(iv) No effect on coverage under a prescription drug plan Nothing in this subparagraph shall be construed as permitting an individual exercising the right under clause (i)
(I) who is enrolled in a prescription drug plan under part D, to disenroll from such plan or to enroll in a different prescription drug plan; or
(II) who is not enrolled in a prescription drug plan, to enroll in such a plan.
(3) Annual, coordinated election period 

(A) In general 
Subject to paragraph (5), each individual who is eligible to make an election under this section may change such election during an annual, coordinated election period.
(B) Annual, coordinated election period 
For purposes of this section, the term annual, coordinated election period means
(i) with respect to a year before 2002, the month of November before such year;
(ii) with respect to 2002, 2003, 2004, and 2005, the period beginning on November 15 and ending on December 31 of the year before such year;
(iii) with respect to 2006, the period beginning on November 15, 2005, and ending on May 15, 2006; and
(iv) with respect to 2007 and succeeding years, the period beginning on November 15 and ending on December 31 of the year before such year.
(C) Medicare+Choice health information fairs 
During the fall season of each year (beginning with 1999) and during the period described in subparagraph (B)(iii), in conjunction with the annual coordinated election period defined in subparagraph (B), the Secretary shall provide for a nationally coordinated educational and publicity campaign to inform Medicare+Choice eligible individuals about Medicare+Choice plans and the election process provided under this section.
(D) Special information campaigns 
During November 1998 the Secretary shall provide for an educational and publicity campaign to inform Medicare+Choice eligible individuals about the availability of Medicare+Choice plans, and eligible organizations with risk-sharing contracts under section 1395mm of this title, offered in different areas and the election process provided under this section. During the period described in subparagraph (B)(iii), the Secretary shall provide for an educational and publicity campaign to inform MA eligible individuals about the availability of MA plans (including MAPD plans) offered in different areas and the election process provided under this section.
(4) Special election periods 
Effective as of January 1, 2006, an individual may discontinue an election of a Medicare+Choice plan offered by a Medicare+Choice organization other than during an annual, coordinated election period and make a new election under this section if
(A) 
(i) the certification of the organization or plan under this part has been terminated, or the organization or plan has notified the individual of an impending termination of such certification; or
(ii) the organization has terminated or otherwise discontinued providing the plan in the area in which the individual resides, or has notified the individual of an impending termination or discontinuation of such plan;
(B) the individual is no longer eligible to elect the plan because of a change in the individuals place of residence or other change in circumstances (specified by the Secretary, but not including termination of the individuals enrollment on the basis described in clause (i) or (ii) of subsection (g)(3)(B) of this section);
(C) the individual demonstrates (in accordance with guidelines established by the Secretary) that
(i) the organization offering the plan substantially violated a material provision of the organizations contract under this part in relation to the individual (including the failure to provide an enrollee on a timely basis medically necessary care for which benefits are available under the plan or the failure to provide such covered care in accordance with applicable quality standards); or
(ii) the organization (or an agent or other entity acting on the organizations behalf) materially misrepresented the plans provisions in marketing the plan to the individual; or
(D) the individual meets such other exceptional conditions as the Secretary may provide.

Effective as of January 1, 2006, an individual who, upon first becoming eligible for benefits under part A of this subchapter at age 65, enrolls in a Medicare+Choice plan under this part, the individual may discontinue the election of such plan, and elect coverage under the original fee-for-service plan, at any time during the 12-month period beginning on the effective date of such enrollment.

(5) Special rules for MSA plans 
Notwithstanding the preceding provisions of this subsection, an individual
(A) may elect an MSA plan only during
(i) an initial open enrollment period described in paragraph (1), or
(ii) an annual, coordinated election period described in paragraph (3)(B);
(B) subject to subparagraph (C), may not discontinue an election of an MSA plan except during the periods described in clause (ii) or (iii) of subparagraph (A) and under the first sentence of paragraph (4); and
(C) who elects an MSA plan during an annual, coordinated election period, and who never previously had elected such a plan, may revoke such election, in a manner determined by the Secretary, by not later than December 15 following the date of the election.
(6) Open enrollment periods 
Subject to paragraph (5), a Medicare+Choice organization
(A) shall accept elections or changes to elections during the initial enrollment periods described in paragraph (1), during the month of November 1998 and during the annual, coordinated election period under paragraph (3) for each subsequent year, and during special election periods described in the first sentence of paragraph (4); and
(B) may accept other changes to elections at such other times as the organization provides.
(f) Effectiveness of elections and changes of elections 

(1) During initial coverage election period 
An election of coverage made during the initial coverage election period under subsection (e)(1) of this section shall take effect upon the date the individual becomes entitled to benefits under part A of this subchapter and enrolled under part B of this subchapter, except as the Secretary may provide (consistent with section 1395q of this title) in order to prevent retroactive coverage.
(2) During continuous open enrollment periods 
An election or change of coverage made under subsection (e)(2) of this section shall take effect with the first day of the first calendar month following the date on which the election or change is made.
(3) Annual, coordinated election period 
An election or change of coverage made during an annual, coordinated election period (as defined in subsection (e)(3)(B) of this section, other than the period described in clause (iii) of such subsection) in a year shall take effect as of the first day of the following year.
(4) Other periods 
An election or change of coverage made during any other period under subsection (e)(4) of this section shall take effect in such manner as the Secretary provides in a manner consistent (to the extent practicable) with protecting continuity of health benefit coverage.
(g) Guaranteed issue and renewal 

(1) In general 
Except as provided in this subsection, a Medicare+Choice organization shall provide that at any time during which elections are accepted under this section with respect to a Medicare+Choice plan offered by the organization, the organization will accept without restrictions individuals who are eligible to make such election.
(2) Priority 
If the Secretary determines that a Medicare+Choice organization, in relation to a Medicare+Choice plan it offers, has a capacity limit and the number of Medicare+Choice eligible individuals who elect the plan under this section exceeds the capacity limit, the organization may limit the election of individuals of the plan under this section but only if priority in election is provided
(A) first to such individuals as have elected the plan at the time of the determination, and
(B) then to other such individuals in such a manner that does not discriminate, on a basis described in section 1395w–22 (b) of this title, among the individuals (who seek to elect the plan).

The preceding sentence shall not apply if it would result in the enrollment of enrollees substantially nonrepresentative, as determined in accordance with regulations of the Secretary, of the medicare population in the service area of the plan.

(3) Limitation on termination of election 

(A) In general 
Subject to subparagraph (B), a Medicare+Choice organization may not for any reason terminate the election of any individual under this section for a Medicare+Choice plan it offers.
(B) Basis for termination of election 
A Medicare+Choice organization may terminate an individuals election under this section with respect to a Medicare+Choice plan it offers if
(i) any Medicare+Choice monthly basic and supplemental beneficiary premiums required with respect to such plan are not paid on a timely basis (consistent with standards under section 1395w–26 of this title that provide for a grace period for late payment of such premiums),
(ii) the individual has engaged in disruptive behavior (as specified in such standards), or
(iii) the plan is terminated with respect to all individuals under this part in the area in which the individual resides.
(C) Consequence of termination 

(i) Terminations for cause Any individual whose election is terminated under clause (i) or (ii) of subparagraph (B) is deemed to have elected the original medicare fee-for-service program option described in subsection (a)(1)(A) of this section.
(ii) Termination based on plan termination or service area reduction Any individual whose election is terminated under subparagraph (B)(iii) shall have a special election period under subsection (e)(4)(A) of this section in which to change coverage to coverage under another Medicare+Choice plan. Such an individual who fails to make an election during such period is deemed to have chosen to change coverage to the original medicare fee-for-service program option described in subsection (a)(1)(A) of this section.
(D) Organization obligation with respect to election forms 
Pursuant to a contract under section 1395w–27 of this title, each Medicare+Choice organization receiving an election form under subsection (c)(2) of this section shall transmit to the Secretary (at such time and in such manner as the Secretary may specify) a copy of such form or such other information respecting the election as the Secretary may specify.
(h) Approval of marketing material and application forms 

(1) Submission 
No marketing material or application form may be distributed by a Medicare+Choice organization to (or for the use of) Medicare+Choice eligible individuals unless
(A) at least 45 days (or 10 days in the case described in paragraph (5)) before the date of distribution the organization has submitted the material or form to the Secretary for review, and
(B) the Secretary has not disapproved the distribution of such material or form.
(2) Review 
The standards established under section 1395w–26 of this title shall include guidelines for the review of any material or form submitted and under such guidelines the Secretary shall disapprove (or later require the correction of) such material or form if the material or form is materially inaccurate or misleading or otherwise makes a material misrepresentation.
(3) Deemed approval (1-stop shopping) 
In the case of material or form that is submitted under paragraph (1)(A) to the Secretary or a regional office of the Department of Health and Human Services and the Secretary or the office has not disapproved the distribution of marketing material or form under paragraph (1)(B) with respect to a Medicare+Choice plan in an area, the Secretary is deemed not to have disapproved such distribution in all other areas covered by the plan and organization except with regard to that portion of such material or form that is specific only to an area involved.
(4) Prohibition of certain marketing practices 
Each Medicare+Choice organization shall conform to fair marketing standards, in relation to Medicare+Choice plans offered under this part, included in the standards established under section 1395w–26 of this title. Such standards
(A) shall not permit a Medicare+Choice organization to provide for cash or other monetary rebates as an inducement for enrollment or otherwise, and
(B) may include a prohibition against a Medicare+Choice organization (or agent of such an organization) completing any portion of any election form used to carry out elections under this section on behalf of any individual.
(5) Special treatment of marketing material following model marketing language 
In the case of marketing material of an organization that uses, without modification, proposed model language specified by the Secretary, the period specified in paragraph (1)(A) shall be reduced from 45 days to 10 days.
(i) Effect of election of Medicare+Choice plan option 

(1) Payments to organizations 
Subject to sections 1395w–22 (a)(5), 1395w–23 (a)(4), 1395w–23 (g), 1395w–23 (h), 1395ww (d)(11), and 1395ww (h)(3)(D) of this title, payments under a contract with a Medicare+Choice organization under section 1395w–23 (a) of this title with respect to an individual electing a Medicare+Choice plan offered by the organization shall be instead of the amounts which (in the absence of the contract) would otherwise be payable under parts A and B of this subchapter for items and services furnished to the individual.
(2) Only organization entitled to payment 
Subject to sections 1395w–23 (a)(4), 1395w–23 (e), 1395w–23 (g), 1395w–23 (h), 1395w–27 (f)(2), 1395w–27a (h), 1395ww (d)(11), and 1395ww (h)(3)(D) of this title, only the Medicare+Choice organization shall be entitled to receive payments from the Secretary under this subchapter for services furnished to the individual.

42 USC 1395w22 - Benefits and beneficiary protections

(a) Basic benefits 

(1) Requirement 

(A) In general 
Except as provided in section 1395w–28 (b)(3) of this title for MSA plans and except as provided in paragraph (6) for MA regional plans, each Medicare+Choice plan shall provide to members enrolled under this part, through providers and other persons that meet the applicable requirements of this subchapter and part A of subchapter XI of this chapter, benefits under the original medicare fee-for-service program option (and, for plan years before 2006, additional benefits required under section 1395w–24 (f)(1)(A) of this title).
(B) Benefits under the original medicare fee-for-service program option defined 

(i) In general For purposes of this part, the term benefits under the original medicare fee-for-service program option means those items and services (other than hospice care) for which benefits are available under parts A and B of this subchapter to individuals entitled to benefits under part A of this subchapter and enrolled under part B of this subchapter, with cost-sharing for those services as required under parts A and B of this subchapter or an actuarially equivalent level of cost-sharing as determined in this part.
(ii) Special rule for regional plans In the case of an MA regional plan in determining an actuarially equivalent level of cost-sharing with respect to benefits under the original medicare fee-for-service program option, there shall only be taken into account, with respect to the application of section 1395w–27a (b)(2) of this title, such expenses only with respect to subparagraph (A) of such section.
(2) Satisfaction of requirement 

(A) In general 
A Medicare+Choice plan (other than an MSA plan) offered by a Medicare+Choice organization satisfies paragraph (1)(A), with respect to benefits for items and services furnished other than through a provider or other person that has a contract with the organization offering the plan, if the plan provides payment in an amount so that
(i) the sum of such payment amount and any cost sharing provided for under the plan, is equal to at least
(ii) the total dollar amount of payment for such items and services as would otherwise be authorized under parts A and B of this subchapter (including any balance billing permitted under such parts).
(B) Reference to related provisions 
For provision relating to
(i) limitations on balance billing against Medicare+Choice organizations for non-contract providers, see subsection (k) of this section and section 1395cc (a)(1)(O) of this title, and
(ii) limiting actuarial value of enrollee liability for covered benefits, see section 1395w–24 (e) of this title.
(C) Election of uniform coverage determination 
In the case of a Medicare+Choice organization that offers a Medicare+Choice plan in an area in which more than one local coverage determination is applied with respect to different parts of the area, the organization may elect to have the local coverage determination for the part of the area that is most beneficial to Medicare+Choice enrollees (as identified by the Secretary) apply with respect to all Medicare+Choice enrollees enrolled in the plan.
(3) Supplemental benefits 

(A) Benefits included subject to Secretary’s approval 
Each Medicare+Choice organization may provide to individuals enrolled under this part, other than under an MSA plan (without affording those individuals an option to decline the coverage), supplemental health care benefits that the Secretary may approve. The Secretary shall approve any such supplemental benefits unless the Secretary determines that including such supplemental benefits would substantially discourage enrollment by Medicare+Choice eligible individuals with the organization.
(B) At enrollees’ option 

(i) In general Subject to clause (ii), a Medicare+Choice organization may provide to individuals enrolled under this part supplemental health care benefits that the individuals may elect, at their option, to have covered.
(ii) Special rule for MSA plans A Medicare+Choice organization may not provide, under an MSA plan, supplemental health care benefits that cover the deductible described in section 1395w–28 (b)(2)(B) of this title. In applying the previous sentence, health benefits described in section 1395ss (u)(2)(B) of this title shall not be treated as covering such deductible.
(C) Application to Medicare+Choice private fee-for-service plans 
Nothing in this paragraph shall be construed as preventing a Medicare+Choice private fee-for-service plan from offering supplemental benefits that include payment for some or all of the balance billing amounts permitted consistent with subsection (k) of this section and coverage of additional services that the plan finds to be medically necessary. Such benefits may include reductions in cost-sharing below the actuarial value specified in section 1395w–24 (e)(4)(B) of this title.
(4) Organization as secondary payer 
Notwithstanding any other provision of law, a Medicare+Choice organization may (in the case of the provision of items and services to an individual under a Medicare+Choice plan under circumstances in which payment under this subchapter is made secondary pursuant to section 1395y (b)(2) of this title) charge or authorize the provider of such services to charge, in accordance with the charges allowed under a law, plan, or policy described in such section
(A) the insurance carrier, employer, or other entity which under such law, plan, or policy is to pay for the provision of such services, or
(B) such individual to the extent that the individual has been paid under such law, plan, or policy for such services.
(5) National coverage determinations and legislative changes in benefits 
If there is a national coverage determination or legislative change in benefits required to be provided under this part made in the period beginning on the date of an announcement under section 1395w–23 (b) of this title and ending on the date of the next announcement under such section and the Secretary projects that the determination will result in a significant change in the costs to a Medicare+Choice organization of providing the benefits that are the subject of such national coverage determination and that such change in costs was not incorporated in the determination of the annual Medicare+Choice capitation rate under section 1395w–23 of this title included in the announcement made at the beginning of such period, then, unless otherwise required by law
(A) such determination or legislative change in benefits shall not apply to contracts under this part until the first contract year that begins after the end of such period, and
(B) if such coverage determination or legislative change provides for coverage of additional benefits or coverage under additional circumstances, section 1395w–21 (i)(1) of this title shall not apply to payment for such additional benefits or benefits provided under such additional circumstances until the first contract year that begins after the end of such period.

The projection under the previous sentence shall be based on an analysis by the Chief Actuary of the Centers for Medicare & Medicaid Services of the actuarial costs associated with the coverage determination or legislative change in benefits.

(6) Special benefit rules for regional plans 
In the case of an MA plan that is an MA regional plan, benefits under the plan shall include the benefits described in paragraphs (1) and (2) of section 1395w–27a (b) of this title.
(b) Antidiscrimination 

(1) Beneficiaries 

(A) In general 
A Medicare+Choice organization may not deny, limit, or condition the coverage or provision of benefits under this part, for individuals permitted to be enrolled with the organization under this part, based on any health status-related factor described in section 300gg–1 (a)(1) of this title. The Secretary shall not approve a plan of an organization if the Secretary determines that the design of the plan and its benefits are likely to substantially discourage enrollment by certain MA eligible individuals with the organization.
(B) Construction 
Subparagraph (A) shall not be construed as requiring a Medicare+Choice organization to enroll individuals who are determined to have end-stage renal disease, except as provided under section 1395w–21 (a)(3)(B) of this title.
(2) Providers 
A Medicare+Choice organization shall not discriminate with respect to participation, reimbursement, or indemnification as to any provider who is acting within the scope of the providers license or certification under applicable State law, solely on the basis of such license or certification. This paragraph shall not be construed to prohibit a plan from including providers only to the extent necessary to meet the needs of the plans enrollees or from establishing any measure designed to maintain quality and control costs consistent with the responsibilities of the plan.
(c) Disclosure requirements 

(1) Detailed description of plan provisions 
A Medicare+Choice organization shall disclose, in clear, accurate, and standardized form to each enrollee with a Medicare+Choice plan offered by the organization under this part at the time of enrollment and at least annually thereafter, the following information regarding such plan:
(A) Service area 
The plans service area.
(B) Benefits 
Benefits offered under the plan, including information described in section 1395w–21 (d)(3)(A) of this title and exclusions from coverage and, if it is an MSA plan, a comparison of benefits under such a plan with benefits under other Medicare+Choice plans.
(C) Access 
The number, mix, and distribution of plan providers, out-of-network coverage (if any) provided by the plan, and any point-of-service option (including the supplemental premium for such option).
(D) Out-of-area coverage 
Out-of-area coverage provided by the plan.
(E) Emergency coverage 
Coverage of emergency services, including
(i) the appropriate use of emergency services, including use of the 911 telephone system or its local equivalent in emergency situations and an explanation of what constitutes an emergency situation;
(ii) the process and procedures of the plan for obtaining emergency services; and
(iii) the locations of
(I)  emergency departments, and
(II)  other settings, in which plan physicians and hospitals provide emergency services and post-stabilization care.
(F) Supplemental benefits 
Supplemental benefits available from the organization offering the plan, including
(i) whether the supplemental benefits are optional,
(ii) the supplemental benefits covered, and
(iii) the Medicare+Choice monthly supplemental beneficiary premium for the supplemental benefits.
(G) Prior authorization rules 
Rules regarding prior authorization or other review requirements that could result in nonpayment.
(H) Plan grievance and appeals procedures 
All plan appeal or grievance rights and procedures.
(I) Quality improvement program 
A description of the organizations quality improvement program under subsection (e) of this section.
(2) Disclosure upon request 
Upon request of a Medicare+Choice eligible individual, a Medicare+Choice organization must provide the following information to such individual:
(A) The general coverage information and general comparative plan information made available under clauses (i) and (ii) of section 1395w–21 (d)(2)(A) of this title.
(B) Information on procedures used by the organization to control utilization of services and expenditures.
(C) Information on the number of grievances, redeterminations, and appeals and on the disposition in the aggregate of such matters.
(D) An overall summary description as to the method of compensation of participating physicians.
(d) Access to services 

(1) In general 
A Medicare+Choice organization offering a Medicare+Choice plan may select the providers from whom the benefits under the plan are provided so long as
(A) the organization makes such benefits available and accessible to each individual electing the plan within the plan service area with reasonable promptness and in a manner which assures continuity in the provision of benefits;
(B) when medically necessary the organization makes such benefits available and accessible 24 hours a day and 7 days a week;
(C) the plan provides for reimbursement with respect to services which are covered under subparagraphs (A) and (B) and which are provided to such an individual other than through the organization, if
(i) the services were not emergency services (as defined in paragraph (3)), but
(I)  the services were medically necessary and immediately required because of an unforeseen illness, injury, or condition, and
(II)  it was not reasonable given the circumstances to obtain the services through the organization,
(ii) the services were renal dialysis services and were provided other than through the organization because the individual was temporarily out of the plans service area, or
(iii) the services are maintenance care or post-stabilization care covered under the guidelines established under paragraph (2);
(D) the organization provides access to appropriate providers, including credentialed specialists, for medically necessary treatment and services; and
(E) coverage is provided for emergency services (as defined in paragraph (3)) without regard to prior authorization or the emergency care providers contractual relationship with the organization.
(2) Guidelines respecting coordination of post-stabilization care 
A Medicare+Choice plan shall comply with such guidelines as the Secretary may prescribe relating to promoting efficient and timely coordination of appropriate maintenance and post-stabilization care of an enrollee after the enrollee has been determined to be stable under section 1395dd of this title.
(3) “Emergency services” defined 
In this subsection
(A) In general 
The term emergency services means, with respect to an individual enrolled with an organization, covered inpatient and outpatient services that
(i) are furnished by a provider that is qualified to furnish such services under this subchapter, and
(ii) are needed to evaluate or stabilize an emergency medical condition (as defined in subparagraph (B)).
(B) Emergency medical condition based on prudent layperson 
The term emergency medical condition means a medical condition manifesting itself by acute symptoms of sufficient severity (including severe pain) such that a prudent layperson, who possesses an average knowledge of health and medicine, could reasonably expect the absence of immediate medical attention to result in
(i) placing the health of the individual (or, with respect to a pregnant woman, the health of the woman or her unborn child) in serious jeopardy,
(ii) serious impairment to bodily functions, or
(iii) serious dysfunction of any bodily organ or part.
(4) Assuring access to services in Medicare+Choice private fee-for-service plans 
In addition to any other requirements under this part, in the case of a Medicare+Choice private fee-for-service plan, the organization offering the plan must demonstrate to the Secretary that the organization has sufficient number and range of health care professionals and providers willing to provide services under the terms of the plan. The Secretary shall find that an organization has met such requirement with respect to any category of health care professional or provider if, with respect to that category of provider
(A) the plan has established payment rates for covered services furnished by that category of provider that are not less than the payment rates provided for under part A of this subchapter, part B of this subchapter, or both, for such services, or
(B) the plan has contracts or agreements (other than deemed contracts or agreements under subsection (j)(6) of this section) with a sufficient number and range of providers within such category to provide covered services under the terms of the plan,

or a combination of both. The previous sentence shall not be construed as restricting the persons from whom enrollees under such a plan may obtain covered benefits, except that, if a plan entirely meets such requirement with respect to a category of health care professional or provider on the basis of subparagraph (B), it may provide for a higher beneficiary copayment in the case of health care professionals and providers of that category who do not have contracts or agreements (other than deemed contracts or agreements under subsection (j)(6) of this section) to provide covered services under the terms of the plan.

(e) Quality improvement program 

(1) In general 
Each MA organization shall have an ongoing quality improvement program for the purpose of improving the quality of care provided to enrollees in each MA plan offered by such organization (other than an MA private fee-for-service plan or an MSA plan).
(2) Chronic care improvement programs 
As part of the quality improvement program under paragraph (1), each MA organization shall have a chronic care improvement program. Each chronic care improvement program shall have a method for monitoring and identifying enrollees with multiple or sufficiently severe chronic conditions that meet criteria established by the organization for participation under the program.
(3) Data 

(A) Collection, analysis, and reporting 

(i) In general Except as provided in clauses (ii) and (iii) with respect to plans described in such clauses and subject to subparagraph (B), as part of the quality improvement program under paragraph (1), each MA organization shall provide for the collection, analysis, and reporting of data that permits the measurement of health outcomes and other indices of quality.
(ii) Application to MA regional plans The Secretary shall establish as appropriate by regulation requirements for the collection, analysis, and reporting of data that permits the measurement of health outcomes and other indices of quality for MA organizations with respect to MA regional plans. Such requirements may not exceed the requirements under this subparagraph with respect to MA local plans that are preferred provider organization plans.
(iii) Application to preferred provider organizations Clause (i) shall apply to MA organizations with respect to MA local plans that are preferred provider organization plans only insofar as services are furnished by providers or services, physicians, and other health care practitioners and suppliers that have contracts with such organization to furnish services under such plans.
(iv) Definition of preferred provider organization plan In this subparagraph, the term preferred provider organization plan means an MA plan that
(I) has a network of providers that have agreed to a contractually specified reimbursement for covered benefits with the organization offering the plan;
(II) provides for reimbursement for all covered benefits regardless of whether such benefits are provided within such network of providers; and
(III) is offered by an organization that is not licensed or organized under State law as a health maintenance organization.
(B) Limitations 

(i) Types of data The Secretary shall not collect under subparagraph (A) data on quality, outcomes, and beneficiary satisfaction to facilitate consumer choice and program administration other than the types of data that were collected by the Secretary as of November 1, 2003.
(ii) Changes in types of data Subject to subclause (iii), the Secretary may only change the types of data that are required to be submitted under subparagraph (A) after submitting to Congress a report on the reasons for such changes that was prepared in consultation with MA organizations and private accrediting bodies.
(iii) Construction Nothing in the[1] subsection shall be construed as restricting the ability of the Secretary to carry out the duties under section 1395w–21 (d)(4)(D) of this title.
(4) Treatment of accreditation 

(A) In general 
The Secretary shall provide that a Medicare+Choice organization is deemed to meet all the requirements described in any specific clause of subparagraph (B) if the organization is accredited (and periodically reaccredited) by a private accrediting organization under a process that the Secretary has determined assures that the accrediting organization applies and enforces standards that meet or exceed the standards established under section 1395w–26 of this title to carry out the requirements in such clause.
(B) Requirements described 
The provisions described in this subparagraph are the following:
(i) Paragraphs (1) through (3) of this subsection (relating to quality improvement programs).
(ii) Subsection (b) of this section (relating to antidiscrimination).
(iii) Subsection (d) of this section (relating to access to services).
(iv) Subsection (h) of this section (relating to confidentiality and accuracy of enrollee records).
(v) Subsection (i) of this section (relating to information on advance directives).
(vi) Subsection (j) of this section (relating to provider participation rules).
(vii) The requirements described in section 1395w–104 (j) of this title, to the extent such requirements apply under section 1395w–131 (c) of this title.
(C) Timely action on applications 
The Secretary shall determine, within 210 days after the date the Secretary receives an application by a private accrediting organization and using the criteria specified in section 1395bb (b)(2) of this title, whether the process of the private accrediting organization meets the requirements with respect to any specific clause in subparagraph (B) with respect to which the application is made. The Secretary may not deny such an application on the basis that it seeks to meet the requirements with respect to only one, or more than one, such specific clause.
(D) Construction 
Nothing in this paragraph shall be construed as limiting the authority of the Secretary under section 1395w–27 of this title, including the authority to terminate contracts with Medicare+Choice organizations under subsection (c)(2) of such section.
(f) Grievance mechanism 
Each Medicare+Choice organization must provide meaningful procedures for hearing and resolving grievances between the organization (including any entity or individual through which the organization provides health care services) and enrollees with Medicare+Choice plans of the organization under this part.
(g) Coverage determinations, reconsiderations, and appeals 

(1) Determinations by organization 

(A) In general 
A Medicare+Choice organization shall have a procedure for making determinations regarding whether an individual enrolled with the plan of the organization under this part is entitled to receive a health service under this section and the amount (if any) that the individual is required to pay with respect to such service. Subject to paragraph (3), such procedures shall provide for such determination to be made on a timely basis.
(B) Explanation of determination 
Such a determination that denies coverage, in whole or in part, shall be in writing and shall include a statement in understandable language of the reasons for the denial and a description of the reconsideration and appeals processes.
(2) Reconsiderations 

(A) In general 
The organization shall provide for reconsideration of a determination described in paragraph (1)(B) upon request by the enrollee involved. The reconsideration shall be within a time period specified by the Secretary, but shall be made, subject to paragraph (3), not later than 60 days after the date of the receipt of the request for reconsideration.
(B) Physician decision on certain reconsiderations 
A reconsideration relating to a determination to deny coverage based on a lack of medical necessity shall be made only by a physician with appropriate expertise in the field of medicine which necessitates treatment who is other than a physician involved in the initial determination.
(3) Expedited determinations and reconsiderations 

(A) Receipt of requests 

(i) Enrollee requests An enrollee in a Medicare+Choice plan may request, either in writing or orally, an expedited determination under paragraph (1) or an expedited reconsideration under paragraph (2) by the Medicare+Choice organization.
(ii) Physician requests A physician, regardless whether the physician is affiliated with the organization or not, may request, either in writing or orally, such an expedited determination or reconsideration.
(B) Organization procedures 

(i) In general The Medicare+Choice organization shall maintain procedures for expediting organization determinations and reconsiderations when, upon request of an enrollee, the organization determines that the application of the normal time frame for making a determination (or a reconsideration involving a determination) could seriously jeopardize the life or health of the enrollee or the enrollees ability to regain maximum function.
(ii) Expedition required for physician requests In the case of a request for an expedited determination or reconsideration made under subparagraph (A)(ii), the organization shall expedite the determination or reconsideration if the request indicates that the application of the normal time frame for making a determination (or a reconsideration involving a determination) could seriously jeopardize the life or health of the enrollee or the enrollees ability to regain maximum function.
(iii) Timely response In cases described in clauses (i) and (ii), the organization shall notify the enrollee (and the physician involved, as appropriate) of the determination or reconsideration under time limitations established by the Secretary, but not later than 72 hours of the time of receipt of the request for the determination or reconsideration (or receipt of the information necessary to make the determination or reconsideration), or such longer period as the Secretary may permit in specified cases.
(4) Independent review of certain coverage denials 
The Secretary shall contract with an independent, outside entity to review and resolve in a timely manner reconsiderations that affirm denial of coverage, in whole or in part. The provisions of section 1395ff (c)(5) of this title shall apply to independent outside entities under contract with the Secretary under this paragraph.
(5) Appeals 
An enrollee with a Medicare+Choice plan of a Medicare+Choice organization under this part who is dissatisfied by reason of the enrollees failure to receive any health service to which the enrollee believes the enrollee is entitled and at no greater charge than the enrollee believes the enrollee is required to pay is entitled, if the amount in controversy is $100 or more, to a hearing before the Secretary to the same extent as is provided in section 405 (b) of this title, and in any such hearing the Secretary shall make the organization a party. If the amount in controversy is $1,000 or more, the individual or organization shall, upon notifying the other party, be entitled to judicial review of the Secretarys final decision as provided in section 405 (g) of this title, and both the individual and the organization shall be entitled to be parties to that judicial review. In applying subsections (b) and (g) of section 405 of this title as provided in this paragraph, and in applying section 405 (l) of this title thereto, any reference therein to the Commissioner of Social Security or the Social Security Administration shall be considered a reference to the Secretary or the Department of Health and Human Services, respectively. The provisions of section 1395ff (b)(1)(E)(iii) of this title shall apply with respect to dollar amounts specified in the first 2 sentences of this paragraph in the same manner as they apply to the dollar amounts specified in section 1395ff (b)(1)(E)(i) of this title.
(h) Confidentiality and accuracy of enrollee records 
Insofar as a Medicare+Choice organization maintains medical records or other health information regarding enrollees under this part, the Medicare+Choice organization shall establish procedures
(1) to safeguard the privacy of any individually identifiable enrollee information;
(2) to maintain such records and information in a manner that is accurate and timely; and
(3) to assure timely access of enrollees to such records and information.
(i) Information on advance directives 
Each Medicare+Choice organization shall meet the requirement of section 1395cc (f) of this title (relating to maintaining written policies and procedures respecting advance directives).
(j) Rules regarding provider participation 

(1) Procedures 
Insofar as a Medicare+Choice organization offers benefits under a Medicare+Choice plan through agreements with physicians, the organization shall establish reasonable procedures relating to the participation (under an agreement between a physician and the organization) of physicians under such a plan. Such procedures shall include
(A) providing notice of the rules regarding participation,
(B) providing written notice of participation decisions that are adverse to physicians, and
(C) providing a process within the organization for appealing such adverse decisions, including the presentation of information and views of the physician regarding such decision.
(2) Consultation in medical policies 
A Medicare+Choice organization shall consult with physicians who have entered into participation agreements with the organization regarding the organizations medical policy, quality, and medical management procedures.
(3) Prohibiting interference with provider advice to enrollees 

(A) In general 
Subject to subparagraphs (B) and (C), a Medicare+Choice organization (in relation to an individual enrolled under a Medicare+Choice plan offered by the organization under this part) shall not prohibit or otherwise restrict a covered health care professional (as defined in subparagraph (D)) from advising such an individual who is a patient of the professional about the health status of the individual or medical care or treatment for the individuals condition or disease, regardless of whether benefits for such care or treatment are provided under the plan, if the professional is acting within the lawful scope of practice.
(B) Conscience protection 
Subparagraph (A) shall not be construed as requiring a Medicare+Choice plan to provide, reimburse for, or provide coverage of a counseling or referral service if the Medicare+Choice organization offering the plan
(i) objects to the provision of such service on moral or religious grounds; and
(ii) in the manner and through the written instrumentalities such Medicare+Choice organization deems appropriate, makes available information on its policies regarding such service to prospective enrollees before or during enrollment and to enrollees within 90 days after the date that the organization or plan adopts a change in policy regarding such a counseling or referral service.
(C) Construction 
Nothing in subparagraph (B) shall be construed to affect disclosure requirements under State law or under the Employee Retirement Income Security Act of 1974 [29 U.S.C. 1001 et seq.].
(D) “Health care professional” defined 
For purposes of this paragraph, the term health care professional means a physician (as defined in section 1395x (r) of this title) or other health care professional if coverage for the professionals services is provided under the Medicare+Choice plan for the services of the professional. Such term includes a podiatrist, optometrist, chiropractor, psychologist, dentist, physician assistant, physical or occupational therapist and therapy assistant, speech-language pathologist, audiologist, registered or licensed practical nurse (including nurse practitioner, clinical nurse specialist, certified registered nurse anesthetist, and certified nurse-midwife), licensed certified social worker, registered respiratory therapist, and certified respiratory therapy technician.
(4) Limitations on physician incentive plans 

(A) In general 
No Medicare+Choice organization may operate any physician incentive plan (as defined in subparagraph (B)) unless the organization provides assurances satisfactory to the Secretary that the following requirements are met:
(i) No specific payment is made directly or indirectly under the plan to a physician or physician group as an inducement to reduce or limit medically necessary services provided with respect to a specific individual enrolled with the organization.
(ii) If the plan places a physician or physician group at substantial financial risk (as determined by the Secretary) for services not provided by the physician or physician group, the organization provides stop-loss protection for the physician or group that is adequate and appropriate, based on standards developed by the Secretary that take into account the number of physicians placed at such substantial financial risk in the group or under the plan and the number of individuals enrolled with the organization who receive services from the physician or group.
(B) “Physician incentive plan” defined 
In this paragraph, the term physician incentive plan means any compensation arrangement between a Medicare+Choice organization and a physician or physician group that may directly or indirectly have the effect of reducing or limiting services provided with respect to individuals enrolled with the organization under this part.
(5) Limitation on provider indemnification 
A Medicare+Choice organization may not provide (directly or indirectly) for a health care professional, provider of services, or other entity providing health care services (or group of such professionals, providers, or entities) to indemnify the organization against any liability resulting from a civil action brought for any damage caused to an enrollee with a Medicare+Choice plan of the organization under this part by the organizations denial of medically necessary care.
(6) Special rules for Medicare+Choice private fee-for-service plans 
For purposes of applying this part (including subsection (k)(1) of this section) and section 1395cc (a)(1)(O) of this title, a hospital (or other provider of services), a physician or other health care professional, or other entity furnishing health care services is treated as having an agreement or contract in effect with a Medicare+Choice organization (with respect to an individual enrolled in a Medicare+Choice private fee-for-service plan it offers), if
(A) the provider, professional, or other entity furnishes services that are covered under the plan to such an enrollee; and
(B) before providing such services, the provider, professional, or other entity
(i) has been informed of the individuals enrollment under the plan, and
(ii) either
(I) has been informed of the terms and conditions of payment for such services under the plan, or
(II) is given a reasonable opportunity to obtain information concerning such terms and conditions, in a manner reasonably designed to effect informed agreement by a provider.

The previous sentence shall only apply in the absence of an explicit agreement between such a provider, professional, or other entity and the Medicare+Choice organization.

(7) Promotion of e-prescribing by MA plans 

(A) In general 
An MAPD plan may provide for a separate payment or otherwise provide for a differential payment for a participating physician that prescribes covered part D drugs in accordance with an electronic prescription drug program that meets standards established under section 1395w–104 (e) of this title.
(B) Considerations 
Such payment may take into consideration the costs of the physician in implementing such a program and may also be increased for those participating physicians who significantly increase
(i) formulary compliance;
(ii) lower cost, therapeutically equivalent alternatives;
(iii) reductions in adverse drug interactions; and
(iv) efficiencies in filing prescriptions through reduced administrative costs.
(C) Structure 
Additional or increased payments under this subsection may be structured in the same manner as medication therapy management fees are structured under section 1395w–104 (c)(2)(E) of this title.
(k) Treatment of services furnished by certain providers 

(1) In general 
Except as provided in paragraph (2), a physician or other entity (other than a provider of services) that does not have a contract establishing payment amounts for services furnished to an individual enrolled under this part with a Medicare+Choice organization described in section 1395w–21 (a)(2)(A) of this title or with an organization offering an MSA plan shall accept as payment in full for covered services under this subchapter that are furnished to such an individual the amounts that the physician or other entity could collect if the individual were not so enrolled. Any penalty or other provision of law that applies to such a payment with respect to an individual entitled to benefits under this subchapter (but not enrolled with a Medicare+Choice organization under this part) also applies with respect to an individual so enrolled.
(2) Application to Medicare+Choice private fee-for-service plans 

(A) Balance billing limits under Medicare+Choice private fee-for-service plans in case of contract providers 

(i) In general In the case of an individual enrolled in a Medicare+Choice private fee-for-service plan under this part, a physician, provider of services, or other entity that has a contract (including through the operation of subsection (j)(6) of this section) establishing a payment rate for services furnished to the enrollee shall accept as payment in full for covered services under this subchapter that are furnished to such an individual an amount not to exceed (including any deductibles, coinsurance, copayments, or balance billing otherwise permitted under the plan) an amount equal to 115 percent of such payment rate.
(ii) Procedures to enforce limits The Medicare+Choice organization that offers such a plan shall establish procedures, similar to the procedures described in section 1395w–4 (g)(1)(A) of this title, in order to carry out the previous sentence.
(iii) Assuring enforcement If the Medicare+Choice organization fails to establish and enforce procedures required under clause (ii), the organization is subject to intermediate sanctions under section 1395w–27 (g) of this title.
(B) Enrollee liability for noncontract providers 
For provision
(i) establishing minimum payment rate in the case of noncontract providers under a Medicare+Choice private fee-for-service plan, see subsection (a)(2) of this section; or
(ii) limiting enrollee liability in the case of covered services furnished by such providers, see paragraph (1) and section 1395cc (a)(1)(O) of this title.
(C) Information on beneficiary liability 

(i) In general Each Medicare+Choice organization that offers a Medicare+Choice private fee-for-service plan shall provide that enrollees under the plan who are furnished services for which payment is sought under the plan are provided an appropriate explanation of benefits (consistent with that provided under parts A and B of this subchapter and, if applicable, under medicare supplemental policies) that includes a clear statement of the amount of the enrollees liability (including any liability for balance billing consistent with this subsection) with respect to payments for such services.
(ii) Advance notice before receipt of inpatient hospital services and certain other services In addition, such organization shall, in its terms and conditions of payments to hospitals for inpatient hospital services and for other services identified by the Secretary for which the amount of the balance billing under subparagraph (A) could be substantial, require the hospital to provide to the enrollee, before furnishing such services and if the hospital imposes balance billing under subparagraph (A)
(I) notice of the fact that balance billing is permitted under such subparagraph for such services, and
(II) a good faith estimate of the likely amount of such balance billing (if any), with respect to such services, based upon the presenting condition of the enrollee.
(l) Return to home skilled nursing facilities for covered post-hospital extended care services 

(1) Ensuring return to home SNF 

(A) In general 
In providing coverage of post-hospital extended care services, a Medicare+Choice plan shall provide for such coverage through a home skilled nursing facility if the following conditions are met:
(i) Enrollee election The enrollee elects to receive such coverage through such facility.
(ii) SNF agreement The facility has a contract with the Medicare+Choice organization for the provision of such services, or the facility agrees to accept substantially similar payment under the same terms and conditions that apply to similarly situated skilled nursing facilities that are under contract with the Medicare+Choice organization for the provision of such services and through which the enrollee would otherwise receive such services.
(B) Manner of payment to home SNF 
The organization shall provide payment to the home skilled nursing facility consistent with the contract or the agreement described in subparagraph (A)(ii), as the case may be.
(2) No less favorable coverage 
The coverage provided under paragraph (1) (including scope of services, cost-sharing, and other criteria of coverage) shall be no less favorable to the enrollee than the coverage that would be provided to the enrollee with respect to a skilled nursing facility the post-hospital extended care services of which are otherwise covered under the Medicare+Choice plan.
(3) Rule of construction 
Nothing in this subsection shall be construed to do the following:
(A) To require coverage through a skilled nursing facility that is not otherwise qualified to provide benefits under part A of this subchapter for medicare beneficiaries not enrolled in a Medicare+Choice plan.
(B) To prevent a skilled nursing facility from refusing to accept, or imposing conditions upon the acceptance of, an enrollee for the receipt of post-hospital extended care services.
(4) Definitions 
In this subsection:
(A) Home skilled nursing facility 
The term home skilled nursing facility means, with respect to an enrollee who is entitled to receive post-hospital extended care services under a Medicare+Choice plan, any of the following skilled nursing facilities:
(i) SNF residence at time of admission The skilled nursing facility in which the enrollee resided at the time of admission to the hospital preceding the receipt of such post-hospital extended care services.
(ii) SNF in continuing care retirement community A skilled nursing facility that is providing such services through a continuing care retirement community (as defined in subparagraph (B)) which provided residence to the enrollee at the time of such admission.
(iii) SNF residence of spouse at time of discharge The skilled nursing facility in which the spouse of the enrollee is residing at the time of discharge from such hospital.
(B) Continuing care retirement community 
The term continuing care retirement community means, with respect to an enrollee in a Medicare+Choice plan, an arrangement under which housing and health-related services are provided (or arranged) through an organization for the enrollee under an agreement that is effective for the life of the enrollee or for a specified period.
[1] So in original. Probably should be “this”.

42 USC 1395w23 - Payments to Medicare+Choice organizations

(a) Payments to organizations 

(1) Monthly payments 

(A) In general 
Under a contract under section 1395w–27 of this title and subject to subsections (e), (g), and (i) of this section and section 1395w–28 (e)(4) of this title, the Secretary shall make monthly payments under this section in advance to each Medicare+Choice organization, with respect to coverage of an individual under this part in a Medicare+Choice payment area for a month, in an amount determined as follows:
(i) Payment before 2006 For years before 2006, the payment amount shall be equal to 1/12 of the annual MA capitation rate (as calculated under subsection (c)(1) of this section) with respect to that individual for that area, adjusted under subparagraph (C) and reduced by the amount of any reduction elected under section 1395w–24 (f)(1)(E) of this title.
(ii) Payment for original fee-for-service benefits beginning with 2006 For years beginning with 2006, the amount specified in subparagraph (B).
(B) Payment amount for original fee-for-service benefits beginning with 2006 

(i) Payment of bid for plans with bids below benchmark In the case of a plan for which there are average per capita monthly savings described in section 1395w–24 (b)(3)(C) or 1395w–24 (b)(4)(C) of this title, as the case may be, the amount specified in this subparagraph is equal to the unadjusted MA statutory non-drug monthly bid amount, adjusted under subparagraph (C) and (if applicable) under subparagraphs (F) and (G), plus the amount (if any) of any rebate under subparagraph (E).
(ii) Payment of benchmark for plans with bids at or above benchmark In the case of a plan for which there are no average per capita monthly savings described in section 1395w–24 (b)(3)(C) or 1395w–24 (b)(4)(C) of this title, as the case may be, the amount specified in this subparagraph is equal to the MA area-specific non-drug monthly benchmark amount, adjusted under subparagraph (C) and (if applicable) under subparagraphs (F) and (G).
(iii) Payment of benchmark for MSA plans Notwithstanding clauses (i) and (ii), in the case of an MSA plan, the amount specified in this subparagraph is equal to the MA area-specific non-drug monthly benchmark amount, adjusted under subparagraph (C).
(C) Demographic adjustment, including adjustment for health status 

(i) In general The Secretary shall adjust the payment amount under subparagraph (A)(i) and the amount specified under subparagraph (B)(i), (B)(ii), and (B)(iii) for such risk factors as age, disability status, gender, institutional status, and such other factors as the Secretary determines to be appropriate, including adjustment for health status under paragraph (3), so as to ensure actuarial equivalence. The Secretary may add to, modify, or substitute for such adjustment factors if such changes will improve the determination of actuarial equivalence.
(ii) Application during phase-out of budget neutrality factor For 2006 through 2010:
(I) In applying the adjustment under clause (i) for health status to payment amounts, the Secretary shall ensure that such adjustment reflects changes in treatment and coding practices in the fee-for-service sector and reflects differences in coding patterns between Medicare Advantage plans and providers under part[1] A and B to the extent that the Secretary has identified such differences.
(II) In order to ensure payment accuracy, the Secretary shall conduct an analysis of the differences described in subclause (I). The Secretary shall complete such analysis by a date necessary to ensure that the results of such analysis are incorporated into the risk scores only for 2008, 2009, and 2010. In conducting such analysis, the Secretary shall use data submitted with respect to 2004 and subsequent years, as available.
(D) Separate payment for Federal drug subsidies 
In the case of an enrollee in an MAPD plan, the MA organization offering such plan also receives
(i) subsidies under section 1395w–115 of this title (other than under subsection (g)); and
(ii) reimbursement for premium and cost-sharing reductions for low-income individuals under section 1395w–114 (c)(1)(C) of this title.
(E) Payment of rebate for plans with bids below benchmark 
In the case of a plan for which there are average per capita monthly savings described in section 1395w–24 (b)(3)(C) or 1395w–24 (b)(4)(C) of this title, as the case may be, the amount specified in this subparagraph is the amount of the monthly rebate computed under section 1395w–24 (b)(1)(C)(i) of this title for that plan and year (as reduced by the amount of any credit provided under section 1395w–24 (b)(1)(C)(iv) of this title).
(F) Adjustment for intra-area variations 

(i) Intra-regional variations In the case of payment with respect to an MA regional plan for an MA region, the Secretary shall also adjust the amounts specified under subparagraphs (B)(i) and (B)(ii) in a manner to take into account variations in MA local payment rates under this part among the different MA local areas included in such region.
(ii) Intra-service area variations In the case of payment with respect to an MA local plan for a service area that covers more than one MA local area, the Secretary shall also adjust the amounts specified under subparagraphs (B)(i) and (B)(ii) in a manner to take into account variations in MA local payment rates under this part among the different MA local areas included in such service area.
(G) Adjustment relating to risk adjustment 
The Secretary shall adjust payments with respect to MA plans as necessary to ensure that
(i) the sum of
(I) the monthly payment made under subparagraph (A)(ii); and
(II) the MA monthly basic beneficiary premium under section 1395w–24 (b)(2)(A) of this title; equals
(ii) the unadjusted MA statutory non-drug monthly bid amount, adjusted in the manner described in subparagraph (C) and, for an MA regional plan, subparagraph (F).
(H) Special rule for end-stage renal disease 
The Secretary shall establish separate rates of payment to a Medicare+Choice organization with respect to classes of individuals determined to have end-stage renal disease and enrolled in a Medicare+Choice plan of the organization. Such rates of payment shall be actuarially equivalent to rates that would have been paid with respect to other enrollees in the MA payment area (or such other area as specified by the Secretary) under the provisions of this section as in effect before December 8, 2003. In accordance with regulations, the Secretary shall provide for the application of the seventh sentence of section 1395rr (b)(7) of this title to payments under this section covering the provision of renal dialysis treatment in the same manner as such sentence applies to composite rate payments described in such sentence. In establishing such rates, the Secretary shall provide for appropriate adjustments to increase each rate to reflect the demonstration rate (including the risk adjustment methodology associated with such rate) of the social health maintenance organization end-stage renal disease capitation demonstrations (established by section 2355 of the Deficit Reduction Act of 1984, as amended by section 13567(b) of the Omnibus Budget Reconciliation Act of 1993), and shall compute such rates by taking into account such factors as renal treatment modality, age, and the underlying cause of the end-stage renal disease. The Secretary may apply the competitive bidding methodology provided for in this section, with appropriate adjustments to account for the risk adjustment methodology applied to end stage renal disease payments.
(2) Adjustment to reflect number of enrollees 

(A) In general 
The amount of payment under this subsection may be retroactively adjusted to take into account any difference between the actual number of individuals enrolled with an organization under this part and the number of such individuals estimated to be so enrolled in determining the amount of the advance payment.
(B) Special rule for certain enrollees 

(i) In general Subject to clause (ii), the Secretary may make retroactive adjustments under subparagraph (A) to take into account individuals enrolled during the period beginning on the date on which the individual enrolls with a Medicare+Choice organization under a plan operated, sponsored, or contributed to by the individuals employer or former employer (or the employer or former employer of the individuals spouse) and ending on the date on which the individual is enrolled in the organization under this part, except that for purposes of making such retroactive adjustments under this subparagraph, such period may not exceed 90 days.
(ii) Exception No adjustment may be made under clause (i) with respect to any individual who does not certify that the organization provided the individual with the disclosure statement described in section 1395w–22 (c) of this title at the time the individual enrolled with the organization.
(3) Establishment of risk adjustment factors 

(A) Report 
The Secretary shall develop, and submit to Congress by not later than March 1, 1999, a report on the method of risk adjustment of payment rates under this section, to be implemented under subparagraph (C), that accounts for variations in per capita costs based on health status. Such report shall include an evaluation of such method by an outside, independent actuary of the actuarial soundness of the proposal.
(B) Data collection 
In order to carry out this paragraph, the Secretary shall require Medicare+Choice organizations (and eligible organizations with risk-sharing contracts under section 1395mm of this title) to submit data regarding inpatient hospital services for periods beginning on or after July 1, 1997, and data regarding other services and other information as the Secretary deems necessary for periods beginning on or after July 1, 1998. The Secretary may not require an organization to submit such data before January 1, 1998.
(C) Initial implementation 

(i) In general The Secretary shall first provide for implementation of a risk adjustment methodology that accounts for variations in per capita costs based on health status and other demographic factors for payments by no later than January 1, 2000.
(ii) Phase-in Except as provided in clause (iv), such risk adjustment methodology shall be implemented in a phased-in manner so that the methodology insofar as it makes adjustments to capitation rates for health status applies to
(I) 10 percent of 1/12 of the annual Medicare+Choice capitation rate in 2000 and each succeeding year through 2003;
(II) 30 percent of such capitation rate in 2004;
(III) 50 percent of such capitation rate in 2005;
(IV) 75 percent of such capitation rate in 2006; and
(V) 100 percent of such capitation rate in 2007 and succeeding years.
(iii) Data for risk adjustment methodology Such risk adjustment methodology for 2004 and each succeeding year, shall be based on data from inpatient hospital and ambulatory settings.
(iv) Full implementation of risk adjustment for congestive heart failure enrollees for 2001
(I) Exemption from phase-in Subject to subclause (II), the Secretary shall fully implement the risk adjustment methodology described in clause (i) with respect to each individual who has had a qualifying congestive heart failure inpatient diagnosis (as determined by the Secretary under such risk adjustment methodology) during the period beginning on July 1, 1999, and ending on June 30, 2000, and who is enrolled in a coordinated care plan that is the only coordinated care plan offered on January 1, 2001, in the service area of the individual.
(II) Period of application Subclause (I) shall only apply during the 1-year period beginning on January 1, 2001.
(D) Uniform application to all types of plans 
Subject to section 1395w–28 (e)(4) of this title, the methodology shall be applied uniformly without regard to the type of plan.
(4) Payment rule for federally qualified health center services 
If an individual who is enrolled with an MA plan under this part receives a service from a federally qualified health center that has a written agreement with the MA organization that offers such plan for providing such a service (including any agreement required under section 1395w–27 (e)(3) of this title)
(A) the Secretary shall pay the amount determined under section 1395l (a)(3)(B) of this title directly to the federally qualified health center not less frequently than quarterly; and
(B) the Secretary shall not reduce the amount of the monthly payments under this subsection as a result of the application of subparagraph (A).
(b) Annual announcement of payment rates 

(1) Annual announcements 

(A) For 2005 
The Secretary shall determine, and shall announce (in a manner intended to provide notice to interested parties), not later than the second Monday in May of 2004, with respect to each MA payment area, the following:
(i) MA capitation rates The annual MA capitation rate for each MA payment area for 2005.
(ii) Adjustment factors The risk and other factors to be used in adjusting such rates under subsection (a)(1)(C) of this section for payments for months in 2005.
(B) For 2006 and subsequent years 
For a year after 2005
(i) Initial announcement The Secretary shall determine, and shall announce (in a manner intended to provide notice to interested parties), not later than the first Monday in April before the calendar year concerned, with respect to each MA payment area, the following:
(I) MA capitation rates; MA local area benchmark The annual MA capitation rate for each MA payment area for the year.
(II) Adjustment factors The risk and other factors to be used in adjusting such rates under subsection (a)(1)(C) of this section for payments for months in such year.
(ii) Regional benchmark announcement The Secretary shall determine, and shall announce (in a manner intended to provide notice to interested parties), on a timely basis before the calendar year concerned, with respect to each MA region and each MA regional plan for which a bid was submitted under section 1395w–24 of this title, the MA region-specific non-drug monthly benchmark amount for that region for the year involved.
(iii) Benchmark announcement for CCA local areas The Secretary shall determine, and shall announce (in a manner intended to provide notice to interested parties), on a timely basis before the calendar year concerned, with respect to each CCA area (as defined in section 1395w–29 (b)(1)(A) of this title), the CCA non-drug monthly benchmark amount under section 1395w–29 (e)(1) of this title for that area for the year involved.
(2) Advance notice of methodological changes 
At least 45 days before making the announcement under paragraph (1) for a year, the Secretary shall provide for notice to Medicare+Choice organizations of proposed changes to be made in the methodology from the methodology and assumptions used in the previous announcement and shall provide such organizations an opportunity to comment on such proposed changes.
(3) Explanation of assumptions 
In each announcement made under paragraph (1), the Secretary shall include an explanation of the assumptions and changes in methodology used in such announcement.
(4) Continued computation and publication of county-specific per capita fee-for-service expenditure information 
The Secretary, through the Chief Actuary of the Centers for Medicare & Medicaid Services, shall provide for the computation and publication, on an annual basis beginning with 2001 at the time of publication of the annual Medicare+Choice capitation rates under paragraph (1), of the following information for the original medicare fee-for-service program under parts A and B of this subchapter (exclusive of individuals eligible for coverage under section 426–1 of this title) for each Medicare+Choice payment area for the second calendar year ending before the date of publication:
(A) Total expenditures per capita per month, computed separately for part A of this subchapter and for part B of this subchapter.
(B) The expenditures described in subparagraph (A) reduced by the best estimate of the expenditures (such as graduate medical education and disproportionate share hospital payments) not related to the payment of claims.
(C) The average risk factor for the covered population based on diagnoses reported for medicare inpatient services, using the same methodology as is expected to be applied in making payments under subsection (a) of this section.
(D) Such average risk factor based on diagnoses for inpatient and other sites of service, using the same methodology as is expected to be applied in making payments under subsection (a) of this section.
(c) Calculation of annual Medicare+Choice capitation rates 

(1) In general 
For purposes of this part, subject to paragraphs (6)(C) and (7), each annual Medicare+Choice capitation rate, for a Medicare+Choice payment area that is an MA local area for a contract year consisting of a calendar year, is equal to the largest of the amounts specified in the following subparagraph (A), (B), (C), or (D):
(A) Blended capitation rate 
For a year before 2005, the sum of
(i) the area-specific percentage (as specified under paragraph (2) for the year) of the annual area-specific Medicare+Choice capitation rate for the Medicare+Choice payment area, as determined under paragraph (3) for the year, and
(ii) the national percentage (as specified under paragraph (2) for the year) of the input-price-adjusted annual national Medicare+Choice capitation rate, as determined under paragraph (4) for the year,

multiplied (for a year other than 2004) by the budget neutrality adjustment factor determined under paragraph (5).

(B) Minimum amount 
12 multiplied by the following amount:
(i) For 1998, $367 (but not to exceed, in the case of an area outside the 50 States and the District of Columbia, 150 percent of the annual per capita rate of payment for 1997 determined under section 1395mm (a)(1)(C) of this title for the area).
(ii) For 1999 and 2000, the minimum amount determined under clause (i) or this clause, respectively, for the preceding year, increased by the national per capita Medicare+Choice growth percentage described in paragraph (6)(A) applicable to 1999 or 2000, respectively.
(iii) 
(I) Subject to subclause (II), for 2001, for any area in a Metropolitan Statistical Area with a population of more than 250,000, $525, and for any other area $475.
(II) In the case of an area outside the 50 States and the District of Columbia, the amount specified in this clause shall not exceed 120 percent of the amount determined under clause (ii) for such area for 2000.
(iv) For 2002, 2003, and 2004, the minimum amount specified in this clause (or clause (iii)) for the preceding year increased by the national per capita Medicare+Choice growth percentage, described in paragraph (6)(A) for that succeeding year.
(C) Minimum percentage increase 

(i) For 1998, 102 percent of the annual per capita rate of payment for 1997 determined under section 1395mm (a)(1)(C) of this title for the Medicare+Choice payment area.
(ii) For 1999 and 2000, 102 percent of the annual Medicare+Choice capitation rate under this paragraph for the area for the previous year.
(iii) For 2001, 103 percent of the annual Medicare+Choice capitation rate under this paragraph for the area for 2000.
(iv) For 2002 and 2003, 102 percent of the annual Medicare+Choice capitation rate under this paragraph for the area for the previous year.
(v) For 2004 and each succeeding year, the greater of
(I) 102 percent of the annual MA capitation rate under this paragraph for the area for the previous year; or
(II) the annual MA capitation rate under this paragraph for the area for the previous year increased by the national per capita MA growth percentage, described in paragraph (6) for that succeeding year, but not taking into account any adjustment under paragraph (6)(C) for a year before 2004.
(D) 100 percent of fee-for-service costs 

(i) In general For each year specified in clause (ii), the adjusted average per capita cost for the year involved, determined under section 1395mm (a)(4) of this title and adjusted as appropriate for the purpose of risk adjustment, for the MA payment area for individuals who are not enrolled in an MA plan under this part for the year, but adjusted to exclude costs attributable to payments under section 1395ww (h) of this title.
(ii) Periodic rebasing The provisions of clause (i) shall apply for 2004 and for subsequent years as the Secretary shall specify (but not less than once every 3 years).
(iii) Inclusion of costs of VA and DOD military facility services to medicare-eligible beneficiaries In determining the adjusted average per capita cost under clause (i) for a year, such cost shall be adjusted to include the Secretarys estimate, on a per capita basis, of the amount of additional payments that would have been made in the area involved under this subchapter if individuals entitled to benefits under this subchapter had not received services from facilities of the Department of Defense or the Department of Veterans Affairs.
(2) Area-specific and national percentages 
For purposes of paragraph (1)(A)
(A) for 1998, the area-specific percentage is 90 percent and the national percentage is 10 percent,
(B) for 1999, the area-specific percentage is 82 percent and the national percentage is 18 percent,
(C) for 2000, the area-specific percentage is 74 percent and the national percentage is 26 percent,
(D) for 2001, the area-specific percentage is 66 percent and the national percentage is 34 percent,
(E) for 2002, the area-specific percentage is 58 percent and the national percentage is 42 percent, and
(F) for a year after 2002, the area-specific percentage is 50 percent and the national percentage is 50 percent.
(3) Annual area-specific Medicare+Choice capitation rate 

(A) In general 
For purposes of paragraph (1)(A), subject to subparagraphs (B) and (E), the annual area-specific Medicare+Choice capitation rate for a Medicare+Choice payment area
(i) for 1998 is, subject to subparagraph (D), the annual per capita rate of payment for 1997 determined under section 1395mm (a)(1)(C) of this title for the area, increased by the national per capita Medicare+Choice growth percentage for 1998 (described in paragraph (6)(A)); or
(ii) for a subsequent year is the annual area-specific Medicare+Choice capitation rate for the previous year determined under this paragraph for the area, increased by the national per capita Medicare+Choice growth percentage for such subsequent year.
(B) Removal of medical education from calculation of adjusted average per capita cost 

(i) In general In determining the area-specific Medicare+Choice capitation rate under subparagraph (A) for a year (beginning with 1998), the annual per capita rate of payment for 1997 determined under section 1395mm (a)(1)(C) of this title shall be adjusted to exclude from the rate the applicable percent (specified in clause (ii)) of the payment adjustments described in subparagraph (C).
(ii) Applicable percent For purposes of clause (i), the applicable percent for
(I) 1998 is 20 percent,
(II) 1999 is 40 percent,
(III) 2000 is 60 percent,
(IV) 2001 is 80 percent, and
(V) a succeeding year is 100 percent.
(C) Payment adjustment 

(i) In general Subject to clause (ii), the payment adjustments described in this subparagraph are payment adjustments which the Secretary estimates were payable during 1997
(I) for the indirect costs of medical education under section 1395ww (d)(5)(B) of this title, and
(II) for direct graduate medical education costs under section 1395ww (h) of this title.
(ii) Treatment of payments covered under State hospital reimbursement system To the extent that the Secretary estimates that an annual per capita rate of payment for 1997 described in clause (i) reflects payments to hospitals reimbursed under section 1395f (b)(3) of this title, the Secretary shall estimate a payment adjustment that is comparable to the payment adjustment that would have been made under clause (i) if the hospitals had not been reimbursed under such section.
(D) Treatment of areas with highly variable payment rates 
In the case of a Medicare+Choice payment area for which the annual per capita rate of payment determined under section 1395mm (a)(1)(C) of this title for 1997 varies by more than 20 percent from such rate for 1996, for purposes of this subsection the Secretary may substitute for such rate for 1997 a rate that is more representative of the costs of the enrollees in the area.
(E) Inclusion of costs of DOD and VA military facility services to Medicare-eligible beneficiaries 
In determining the area-specific MA capitation rate under subparagraph (A) for a year (beginning with 2004), the annual per capita rate of payment for 1997 determined under section 1395mm (a)(1)(C) of this title shall be adjusted to include in the rate the Secretarys estimate, on a per capita basis, of the amount of additional payments that would have been made in the area involved under this subchapter if individuals entitled to benefits under this subchapter had not received services from facilities of the Department of Defense or the Department of Veterans Affairs.
(4) Input-price-adjusted annual national Medicare+Choice capitation rate 

(A) In general 
For purposes of paragraph (1)(A), the input-price-adjusted annual national Medicare+Choice capitation rate for a Medicare+Choice payment area for a year is equal to the sum, for all the types of medicare services (as classified by the Secretary), of the product (for each such type of service) of
(i) the national standardized annual Medicare+Choice capitation rate (determined under subparagraph (B)) for the year,
(ii) the proportion of such rate for the year which is attributable to such type of services, and
(iii) an index that reflects (for that year and that type of services) the relative input price of such services in the area compared to the national average input price of such services.

In applying clause (iii), the Secretary may, subject to subparagraph (C), apply those indices under this subchapter that are used in applying (or updating) national payment rates for specific areas and localities.

(B) National standardized annual Medicare+Choice capitation rate 
In subparagraph (A)(i), the national standardized annual Medicare+Choice capitation rate for a year is equal to
(i) the sum (for all Medicare+Choice payment areas) of the product of
(I) the annual area-specific Medicare+Choice capitation rate for that year for the area under paragraph (3), and
(II) the average number of medicare beneficiaries residing in that area in the year, multiplied by the average of the risk factor weights used to adjust payments under subsection (a)(1)(A) of this section for such beneficiaries in such area; divided by
(ii) the sum of the products described in clause (i)(II) for all areas for that year.
(C) Special rules for 1998 
In applying this paragraph for 1998
(i) medicare services shall be divided into 2 types of services: part A services and part B services;
(ii) the proportions described in subparagraph (A)(ii)
(I) for part A services shall be the ratio (expressed as a percentage) of the national average annual per capita rate of payment for part A of this subchapter for 1997 to the total national average annual per capita rate of payment for parts A and B of this subchapter for 1997, and
(II) for part B services shall be 100 percent minus the ratio described in subclause (I);
(iii) for part A services, 70 percent of payments attributable to such services shall be adjusted by the index used under section 1395ww (d)(3)(E) of this title to adjust payment rates for relative hospital wage levels for hospitals located in the payment area involved;
(iv) for part B services
(I) 66 percent of payments attributable to such services shall be adjusted by the index of the geographic area factors under section 1395w–4 (e) of this title used to adjust payment rates for physicians services furnished in the payment area, and
(II) of the remaining 34 percent of the amount of such payments, 40 percent shall be adjusted by the index described in clause (iii); and
(v) the index values shall be computed based only on the beneficiary population who are 65 years of age or older and who are not determined to have end stage renal disease.

The Secretary may continue to apply the rules described in this subparagraph (or similar rules) for 1999.

(5) Payment adjustment budget neutrality factor 
For purposes of paragraph (1)(A), for each year (other than 2004), the Secretary shall determine a budget neutrality adjustment factor so that the aggregate of the payments under this part (other than those attributable to subsections (a)(3)(C)(iv), (a)(4), and (i) of this section) shall equal the aggregate payments that would have been made under this part if payment were based entirely on area-specific capitation rates.
(6) “National per capita Medicare+Choice growth percentage” defined 

(A) In general 
In this part, the national per capita Medicare+Choice growth percentage for a year is the percentage determined by the Secretary, by March 1st before the beginning of the year involved, to reflect the Secretarys estimate of the projected per capita rate of growth in expenditures under this subchapter for an individual entitled to benefits under part A of this subchapter and enrolled under part B of this subchapter, reduced by the number of percentage points specified in subparagraph (B) for the year. Separate determinations may be made for aged enrollees, disabled enrollees, and enrollees with end-stage renal disease.
(B) Adjustment 
The number of percentage points specified in this subparagraph is
(i) for 1998, 0.8 percentage points,
(ii) for 1999, 0.5 percentage points,
(iii) for 2000, 0.5 percentage points,
(iv) for 2001, 0.5 percentage points,
(v) for 2002, 0.3 percentage points, and
(vi) for a year after 2002, 0 percentage points.
(C) Adjustment for over or under projection of national per capita Medicare+Choice growth percentage 
Beginning with rates calculated for 1999, before computing rates for a year as described in paragraph (1), the Secretary shall adjust all area-specific and national Medicare+Choice capitation rates (and beginning in 2000, the minimum amount) for the previous year for the differences between the projections of the national per capita Medicare+Choice growth percentage for that year and previous years and the current estimate of such percentage for such years, except that for purposes of paragraph (1)(C)(v)(II), no such adjustment shall be made for a year before 2004.
(7) Adjustment for national coverage determinations and legislative changes in benefits 
If the Secretary makes a determination with respect to coverage under this subchapter or there is a change in benefits required to be provided under this part that the Secretary projects will result in a significant increase in the costs to Medicare+Choice of providing benefits under contracts under this part (for periods after any period described in section 1395w–22 (a)(5) of this title), the Secretary shall adjust appropriately the payments to such organizations under this part. Such projection and adjustment shall be based on an analysis by the Chief Actuary of the Centers for Medicare & Medicaid Services of the actuarial costs associated with the new benefits.
(d) MA payment area; MA local area; MA region defined 

(1) MA payment area 
In this part, except as provided in this subsection, the term MA payment area means
(A) with respect to an MA local plan, an MA local area (as defined in paragraph (2)); and
(B) with respect to an MA regional plan, an MA region (as established under section 1395w–27a (a)(2) of this title).
(2) MA local area 
The term MA local area means a county or equivalent area specified by the Secretary.
(3) Rule for ESRD beneficiaries 
In the case of individuals who are determined to have end stage renal disease, the Medicare+Choice payment area shall be a State or such other payment area as the Secretary specifies.
(4) Geographic adjustment 

(A) In general 
Upon written request of the chief executive officer of a State for a contract year (beginning after 1998) made by not later than February 1 of the previous year, the Secretary shall make a geographic adjustment to a Medicare+Choice payment area in the State otherwise determined under paragraph (1) for MA local plans
(i) to a single statewide Medicare+Choice payment area,
(ii) to the metropolitan based system described in subparagraph (C), or
(iii) to consolidating into a single Medicare+Choice payment area noncontiguous counties (or equivalent areas described in paragraph (1)(A)) within a State.

Such adjustment shall be effective for payments for months beginning with January of the year following the year in which the request is received.

(B) Budget neutrality adjustment 
In the case of a State requesting an adjustment under this paragraph, the Secretary shall initially (and annually thereafter) adjust the payment rates otherwise established under this section with respect to MA local plans for Medicare+Choice payment areas in the State in a manner so that the aggregate of the payments under this section for such plans in the State shall not exceed the aggregate payments that would have been made under this section for such plans for Medicare+Choice payment areas in the State in the absence of the adjustment under this paragraph.
(C) Metropolitan based system 
The metropolitan based system described in this subparagraph is one in which
(i) all the portions of each metropolitan statistical area in the State or in the case of a consolidated metropolitan statistical area, all of the portions of each primary metropolitan statistical area within the consolidated area within the State, are treated as a single Medicare+Choice payment area, and
(ii) all areas in the State that do not fall within a metropolitan statistical area are treated as a single Medicare+Choice payment area.
(D) Areas 
In subparagraph (C), the terms metropolitan statistical area, consolidated metropolitan statistical area, and primary metropolitan statistical area mean any area designated as such by the Secretary of Commerce.
(e) Special rules for individuals electing MSA plans 

(1) In general 
If the amount of the Medicare+Choice monthly MSA premium (as defined in section 1395w–24 (b)(2)(C) of this title) for an MSA plan for a year is less than 1/12 of the annual Medicare+Choice capitation rate applied under this section for the area and year involved, the Secretary shall deposit an amount equal to 100 percent of such difference in a Medicare+Choice MSA established (and, if applicable, designated) by the individual under paragraph (2).
(2) Establishment and designation of Medicare+Choice medical savings account as requirement for payment of contribution 
In the case of an individual who has elected coverage under an MSA plan, no payment shall be made under paragraph (1) on behalf of an individual for a month unless the individual
(A) has established before the beginning of the month (or by such other deadline as the Secretary may specify) a Medicare+Choice MSA (as defined in section 138(b)(2) of the Internal Revenue Code of 1986), and
(B) if the individual has established more than one such Medicare+Choice MSA, has designated one of such accounts as the individuals Medicare+Choice MSA for purposes of this part.

Under rules under this section, such an individual may change the designation of such account under subparagraph (B) for purposes of this part.

(3) Lump-sum deposit of medical savings account contribution 
In the case of an individual electing an MSA plan effective beginning with a month in a year, the amount of the contribution to the Medicare+Choice MSA on behalf of the individual for that month and all successive months in the year shall be deposited during that first month. In the case of a termination of such an election as of a month before the end of a year, the Secretary shall provide for a procedure for the recovery of deposits attributable to the remaining months in the year.
(f) Payments from Trust Funds 
The payment to a Medicare+Choice organization under this section for individuals enrolled under this part with the organization and payments to a Medicare+Choice MSA under subsection (e)(1) of this section shall be made from the Federal Hospital Insurance Trust Fund and the Federal Supplementary Medical Insurance Trust Fund in such proportion as the Secretary determines reflects the relative weight that benefits under part A of this subchapter and under part B of this subchapter represents of the actuarial value of the total benefits under this subchapter. Payments to MA organizations for statutory drug benefits provided under this subchapter are made from the Medicare Prescription Drug Account in the Federal Supplementary Medical Insurance Trust Fund. Monthly payments otherwise payable under this section for October 2000 shall be paid on the first business day of such month. Monthly payments otherwise payable under this section for October 2001 shall be paid on the last business day of September 2001. Monthly payments otherwise payable under this section for October 2006 shall be paid on the first business day of October 2006.
(g) Special rule for certain inpatient hospital stays 
In the case of an individual who is receiving inpatient hospital services from a subsection (d) hospital (as defined in section 1395ww (d)(1)(B) of this title), a rehabilitation hospital described in section 1395ww (d)(1)(B)(ii) of this title or a distinct part rehabilitation unit described in the matter following clause (v) of section 1395ww (d)(1)(B) of this title, or a long-term care hospital (described in section 1395ww (d)(1)(B)(iv) of this title) as of the effective date of the individuals
(1) election under this part of a Medicare+Choice plan offered by a Medicare+Choice organization
(A) payment for such services until the date of the individuals discharge shall be made under this subchapter through the Medicare+Choice plan or the original medicare fee-for-service program option described in section 1395w–21 (a)(1)(A) of this title (as the case may be) elected before the election with such organization,
(B) the elected organization shall not be financially responsible for payment for such services until the date after the date of the individuals discharge, and
(C) the organization shall nonetheless be paid the full amount otherwise payable to the organization under this part; or
(2) termination of election with respect to a Medicare+Choice organization under this part
(A) the organization shall be financially responsible for payment for such services after such date and until the date of the individuals discharge,
(B) payment for such services during the stay shall not be made under section 1395ww (d) of this title or other payment provision under this subchapter for inpatient services for the type of facility, hospital, or unit involved, described in the matter preceding paragraph (1), as the case may be, or by any succeeding Medicare+Choice organization, and
(C) the terminated organization shall not receive any payment with respect to the individual under this part during the period the individual is not enrolled.
(h) Special rule for hospice care 

(1) Information 
A contract under this part shall require the Medicare+Choice organization to inform each individual enrolled under this part with a Medicare+Choice plan offered by the organization about the availability of hospice care if
(A) a hospice program participating under this subchapter is located within the organizations service area; or
(B) it is common practice to refer patients to hospice programs outside such service area.
(2) Payment 
If an individual who is enrolled with a Medicare+Choice organization under this part makes an election under section 1395d (d)(1) of this title to receive hospice care from a particular hospice program
(A) payment for the hospice care furnished to the individual shall be made to the hospice program elected by the individual by the Secretary;
(B) payment for other services for which the individual is eligible notwithstanding the individuals election of hospice care under section 1395d (d)(1) of this title, including services not related to the individuals terminal illness, shall be made by the Secretary to the Medicare+Choice organization or the provider or supplier of the service instead of payments calculated under subsection (a) of this section; and
(C) the Secretary shall continue to make monthly payments to the Medicare+Choice organization in an amount equal to the value of the additional benefits required under section 1395w–24 (f)(1)(A) of this title.
(i) New entry bonus 

(1) In general 
Subject to paragraphs (2) and (3), in the case of Medicare+Choice payment area in which a Medicare+Choice plan has not been offered since 1997 (or in which all organizations that offered a plan since such date have filed notice with the Secretary, as of October 13, 1999, that they will not be offering such a plan as of January 1, 2000, or filed notice with the Secretary as of October 3, 2000, that they will not be offering such a plan as of January 1, 2001), the amount of the monthly payment otherwise made under this section shall be increased
(A) only for the first 12 months in which any Medicare+Choice plan is offered in the area, by 5 percent of the total monthly payment otherwise computed for such payment area; and
(B) only for the subsequent 12 months, by 3 percent of the total monthly payment otherwise computed for such payment area.
(2) Period of application 
Paragraph (1) shall only apply to payment for Medicare+Choice plans which are first offered in a Medicare+Choice payment area during the 2-year period beginning on January 1, 2000.
(3) Limitation to organization offering first plan in an area 
Paragraph (1) shall only apply to payment to the first Medicare+Choice organization that offers a Medicare+Choice plan in each Medicare+Choice payment area, except that if more than one such organization first offers such a plan in an area on the same date, paragraph (1) shall apply to payment for such organizations.
(4) Construction 
Nothing in paragraph (1) shall be construed as affecting the calculation of the annual Medicare+Choice capitation rate under subsection (c) of this section for any payment area or as applying to payment for any period not described in such paragraph and paragraph (2).
(5) Offered defined 
In this subsection, the term offered means, with respect to a Medicare+Choice plan as of a date, that a Medicare+Choice eligible individual may enroll with the plan on that date, regardless of when the enrollment takes effect or when the individual obtains benefits under the plan.
(j) Computation of benchmark amounts 
For purposes of this part, the term MA area-specific non-drug monthly benchmark amount means for a month in a year
(1) with respect to
(A) a service area that is entirely within an MA local area, subject to section 1395w–29 (d)(2)(A) of this title, an amount equal to 1/12 of the annual MA capitation rate under subsection (c)(1) (or, beginning with 2007, 1/12 of the applicable amount determined under subsection (k)(1)) for the area for the year, adjusted as appropriate (for years before 2007) for the purpose of risk adjustment; or
(B) a service area that includes more than one MA local area, an amount equal to the average of the amounts described in subparagraph (A) for each such local MA area, weighted by the projected number of enrollees in the plan residing in the respective local MA areas (as used by the plan for purposes of the bid and disclosed to the Secretary under section 1395w–24 (a)(6)(A)(iii) of this title), adjusted as appropriate (for years before 2007) for the purpose of risk adjustment; or
(2) with respect to an MA region for a month in a year, the MA region-specific non-drug monthly benchmark amount, as defined in section 1395w–27a (f) of this title for the region for the year.
(k) Determination of applicable amount for purposes of calculating the benchmark amounts 

(1) Applicable amount defined 
For purposes of subsection (j), subject to paragraph (2), the term applicable amount means for an area
(A) for 2007
(i) if such year is not specified under subsection (c)(1)(D)(ii), an amount equal to the amount specified in subsection (c)(1)(C) for the area for 2006
(I) first adjusted by the rescaling factor for 2006 for the area (as made available by the Secretary in the announcement of the rates on April 4, 2005, under subsection (b)(1), but excluding any national adjustment factors for coding intensity and risk adjustment budget neutrality that were included in such factor); and
(II) then increased by the national per capita MA growth percentage, described in subsection (c)(6) for 2007, but not taking into account any adjustment under subparagraph (C) of such subsection for a year before 2004;
(ii) if such year is specified under subsection (c)(1)(D)(ii), an amount equal to the greater of
(I) the amount determined under clause (i) for the area for the year; or
(II) the amount specified in subsection (c)(1)(D) for the area for the year; and
(B) for a subsequent year
(i) if such year is not specified under subsection (c)(1)(D)(ii), an amount equal to the amount determined under this paragraph for the area for the previous year (determined without regard to paragraph (2)), increased by the national per capita MA growth percentage, described in subsection (c)(6) for that succeeding year, but not taking into account any adjustment under subparagraph (C) of such subsection for a year before 2004; and
(ii) if such year is specified under subsection (c)(1)(D)(ii), an amount equal to the greater of
(I) the amount determined under clause (i) for the area for the year; or
(II) the amount specified in subsection (c)(1)(D) for the area for the year.
(2) Phase-out of budget neutrality factor 

(A) In general 
Except as provided in subparagraph (D), in the case of 2007 through 2010, the applicable amount determined under paragraph (1) shall be multiplied by a factor equal to 1 plus the product of
(i) the percent determined under subparagraph (B) for the year; and
(ii) the applicable phase-out factor for the year under subparagraph (C).
(B) Percent determined 

(i) In general For purposes of subparagraph (A)(i), subject to clause (iv), the percent determined under this subparagraph for a year is a percent equal to a fraction the numerator of which is described in clause (ii) and the denominator of which is described in clause (iii).
(ii) Numerator based on difference between demographic rate and risk rate
(I) In general The numerator described in this clause is an amount equal to the amount by which the demographic rate described in subclause (II) exceeds the risk rate described in subclause (III).
(II) Demographic rate The demographic rate described in this subclause is the Secretarys estimate of the total payments that would have been made under this part in the year if all the monthly payment amounts for all MA plans were equal to 1/12 of the annual MA capitation rate under subsection (c)(1) for the area and year, adjusted pursuant to subsection (a)(1)(C).
(III) Risk rate The risk rate described in this subclause is the Secretarys estimate of the total payments that would have been made under this part in the year if all the monthly payment amounts for all MA plans were equal to the amount described in subsection (j)(1)(A) (determined as if this paragraph had not applied) under subsection (j) for the area and year, adjusted pursuant to subsection (a)(1)(C).
(iii) Denominator based on risk rate The denominator described in this clause is equal to the total amount estimated for the year under clause (ii)(III).
(iv) Requirements In estimating the amounts under the previous clauses, the Secretary shall
(I) use a complete set of the most recent and representative Medicare Advantage risk scores under subsection (a)(3) that are available from the risk adjustment model announced for the year;
(II) adjust the risk scores to reflect changes in treatment and coding practices in the fee-for-service sector;
(III) adjust the risk scores for differences in coding patterns between Medicare Advantage plans and providers under the original Medicare fee-for-service program under parts A and B to the extent that the Secretary has identified such differences, as required in subsection (a)(1)(C);
(IV) as necessary, adjust the risk scores for late data submitted by Medicare Advantage organizations;
(V) as necessary, adjust the risk scores for lagged cohorts; and
(VI) as necessary, adjust the risk scores for changes in enrollment in Medicare Advantage plans during the year.
(v) Authority In computing such amounts the Secretary may take into account the estimated health risk of enrollees in preferred provider organization plans (including MA regional plans) for the year.
(C) Applicable phase-out factor 
For purposes of subparagraph (A)(ii), the term applicable phase-out factor means
(i) for 2007, 0.55;
(ii) for 2008, 0.40;
(iii) for 2009, 0.25; and
(iv) for 2010, 0.05.
(D) Termination of application 
Subparagraph (A) shall not apply in a year if the amount estimated under subparagraph (B)(ii)(III) for the year is equal to or greater than the amount estimated under subparagraph (B)(ii)(II) for the year.
(3) No revision in percent 

(A) In general 
The Secretary may not make any adjustment to the percent determined under paragraph (2)(B) for any year.
(B) Rule of construction 
Nothing in this subsection shall be construed to limit the authority of the Secretary to make adjustments to the applicable amounts determined under paragraph (1) as appropriate for purposes of updating data or for purposes of adopting an improved risk adjustment methodology.
[1] So in original. Probably should be “parts”.

42 USC 1395w24 - Premiums and bid amounts

(a) Submission of proposed premiums, bid amounts, and related information 

(1) In general 

(A) Initial submission 
Not later than the second Monday in September of 2002, 2003, and 2004 (or the first Monday in June of each subsequent year), each MA organization shall submit to the Secretary, in a form and manner specified by the Secretary and for each MA plan for the service area (or segment of such an area if permitted under subsection (h) of this section) in which it intends to be offered in the following year the following:
(i) The information described in paragraph (2), (3), (4), or (6)(A) for the type of plan and year involved.
(ii) The plan type for each plan.
(iii) The enrollment capacity (if any) in relation to the plan and area.
(B) Beneficiary rebate information 
In the case of a plan required to provide a monthly rebate under subsection (b)(1)(C) of this section for a year, the MA organization offering the plan shall submit to the Secretary, in such form and manner and at such time as the Secretary specifies, information on
(i) the manner in which such rebate will be provided under clause (ii) of such subsection; and
(ii) the MA monthly prescription drug beneficiary premium (if any) and the MA monthly supplemental beneficiary premium (if any).
(C) Paperwork reduction for offering of MA regional plans nationally or in multi-region areas 
The Secretary shall establish requirements for information submission under this subsection in a manner that promotes the offering of MA regional plans in more than one region (including all regions) through the filing of consolidated information.
(2) Information required for coordinated care plans before 2006 
For a Medicare+Choice plan described in section 1395w–21 (a)(2)(A) of this title for a year before 2006, the information described in this paragraph is as follows:
(A) Basic (and additional) benefits 
For benefits described in section 1395w–22 (a)(1)(A) of this title
(i) the adjusted community rate (as defined in subsection (f)(3) of this section);
(ii) the Medicare+Choice monthly basic beneficiary premium (as defined in subsection (b)(2)(A) of this section);
(iii) a description of deductibles, coinsurance, and copayments applicable under the plan and the actuarial value of such deductibles, coinsurance, and copayments, described in subsection (e)(1)(A) of this section; and
(iv) if required under subsection (f)(1) of this section, a description of the additional benefits to be provided pursuant to such subsection and the value determined for such proposed benefits under such subsection.
(B) Supplemental benefits 
For benefits described in section 1395w–22 (a)(3) of this title
(i) the adjusted community rate (as defined in subsection (f)(3) of this section);
(ii) the Medicare+Choice monthly supplemental beneficiary premium (as defined in subsection (b)(2)(B) of this section); and
(iii) a description of deductibles, coinsurance, and copayments applicable under the plan and the actuarial value of such deductibles, coinsurance, and copayments, described in subsection (e)(2) of this section.
(3) Requirements for MSA plans 
For an MSA plan for any year, the information described in this paragraph is as follows:
(A) Basic (and additional) benefits 
For benefits described in section 1395w–22 (a)(1)(A) of this title, the amount of the Medicare+Choice monthly MSA premium.
(B) Supplemental benefits 
For benefits described in section 1395w–22 (a)(3) of this title, the amount of the Medicare+Choice monthly supplementary beneficiary premium.
(4) Requirements for private fee-for-service plans before 2006 
For a Medicare+Choice plan described in section 1395w–21 (a)(2)(C) of this title for benefits described in section 1395w–22 (a)(1)(A) of this title for a year before 2006, the information described in this paragraph is as follows:
(A) Basic (and additional) benefits 
For benefits described in section 1395w–22 (a)(1)(A) of this title
(i) the adjusted community rate (as defined in subsection (f)(3) of this section);
(ii) the amount of the Medicare+Choice monthly basic beneficiary premium;
(iii) a description of the deductibles, coinsurance, and copayments applicable under the plan, and the actuarial value of such deductibles, coinsurance, and copayments, as described in subsection (e)(4)(A) of this section; and
(iv) if required under subsection (f)(1) of this section, a description of the additional benefits to be provided pursuant to such subsection and the value determined for such proposed benefits under such subsection.
(B) Supplemental benefits 
For benefits described in section 1395w–22 (a)(3) of this title, the amount of the Medicare+Choice monthly supplemental beneficiary premium (as defined in subsection (b)(2)(B) of this section).
(5) Review 

(A) In general 
Subject to subparagraph (B), the Secretary shall review the adjusted community rates, the amounts of the basic and supplemental premiums, and values filed under paragraphs (2) and (4) of this subsection and shall approve or disapprove such rates, amounts, and values so submitted. The Chief Actuary of the Centers for Medicare & Medicaid Services shall review the actuarial assumptions and data used by the Medicare+Choice organization with respect to such rates, amounts, and values so submitted to determine the appropriateness of such assumptions and data.
(B) Exception 
The Secretary shall not review, approve, or disapprove the amounts submitted under paragraph (3) or, in the case of an MA private fee-for-service plan, subparagraphs (A)(ii) and (B) of paragraph (4).
(6) Submission of bid amounts by MA organizations beginning in 2006 

(A) Information to be submitted 
For an MA plan (other than an MSA plan) for a plan year beginning on or after January 1, 2006, the information described in this subparagraph is as follows:
(i) The monthly aggregate bid amount for the provision of all items and services under the plan, which amount shall be based on average revenue requirements (as used for purposes of section 300e–1 (8) of this title) in the payment area for an enrollee with a national average risk profile for the factors described in section 1395w–23 (a)(1)(C) of this title (as specified by the Secretary).
(ii) The proportions of such bid amount that are attributable to
(I) the provision of benefits under the original medicare fee-for-service program option (as defined in section 1395w–22 (a)(1)(B) of this title);
(II) the provision of basic prescription drug coverage; and
(III) the provision of supplemental health care benefits.
(iii) The actuarial basis for determining the amount under clause (i) and the proportions described in clause (ii) and such additional information as the Secretary may require to verify such actuarial bases and the projected number of enrollees in each MA local area.
(iv) A description of deductibles, coinsurance, and copayments applicable under the plan and the actuarial value of such deductibles, coinsurance, and copayments, described in subsection (e)(4)(A) of this section.
(v) With respect to qualified prescription drug coverage, the information required under section 1395w–104 of this title, as incorporated under section 1395w–111 (b)(2) of this title, with respect to such coverage.

In the case of a specialized MA plan for special needs individuals, the information described in this subparagraph is such information as the Secretary shall specify.

(B) Acceptance and negotiation of bid amounts 

(i) Authority Subject to clauses (iii) and (iv), the Secretary has the authority to negotiate regarding monthly bid amounts submitted under subparagraph (A) (and the proportions described in subparagraph (A)(ii)), including supplemental benefits provided under subsection (b)(1)(C)(ii)(I) of this section and in exercising such authority the Secretary shall have authority similar to the authority of the Director of the Office of Personnel Management with respect to health benefits plans under chapter 89 of title 5.
(ii) Application of FEHBP standard Subject to clause (iv), the Secretary may only accept such a bid amount or proportion if the Secretary determines that such amount and proportions are supported by the actuarial bases provided under subparagraph (A) and reasonably and equitably reflects the revenue requirements (as used for purposes of section 300e–1 (8) of this title) of benefits provided under that plan.
(iii) Noninterference In order to promote competition under this part and part D of this subchapter and in carrying out such parts, the Secretary may not require any MA organization to contract with a particular hospital, physician, or other entity or individual to furnish items and services under this subchapter or require a particular price structure for payment under such a contract to the extent consistent with the Secretarys authority under this part.
(iv) Exception In the case of a plan described in section 1395w–21 (a)(2)(C) of this title, the provisions of clauses (i) and (ii) shall not apply and the provisions of paragraph (5)(B), prohibiting the review, approval, or disapproval of amounts described in such paragraph, shall apply to the negotiation and rejection of the monthly bid amounts and the proportions referred to in subparagraph (A).
(b) Monthly premium charged 

(1) In general 

(A) Rule for other than MSA plans 
Subject to the rebate under subparagraph (C), the monthly amount (if any) of the premium charged to an individual enrolled in a Medicare+Choice plan (other than an MSA plan) offered by a Medicare+Choice organization shall be equal to the sum of the Medicare+Choice monthly basic beneficiary premium, the Medicare+Choice monthly supplementary beneficiary premium (if any), and, if the plan provides qualified prescription drug coverage, the MA monthly prescription drug beneficiary premium.
(B) MSA plans 
The monthly amount of the premium charged to an individual enrolled in an MSA plan offered by a Medicare+Choice organization shall be equal to the Medicare+Choice monthly supplemental beneficiary premium (if any).
(C) Beneficiary rebate rule 

(i) Requirement The MA plan shall provide to the enrollee a monthly rebate equal to 75 percent of the average per capita savings (if any) described in paragraph (3)(C) or (4)(C), as applicable to the plan and year involved.
(ii) Form of rebate A rebate required under this subparagraph shall be provided through the application of the amount of the rebate toward one or more of the following:
(I) Provision of supplemental health care benefits and payment for premium for supplemental benefits The provision of supplemental health care benefits described in section 1395w–22 (a)(3) of this title in a manner specified under the plan, which may include the reduction of cost-sharing otherwise applicable as well as additional health care benefits which are not benefits under the original medicare fee-for-service program option, or crediting toward an MA monthly supplemental beneficiary premium (if any).
(II) Payment for premium for prescription drug coverage Crediting toward the MA monthly prescription drug beneficiary premium.
(III) Payment toward part B premium Crediting toward the premium imposed under part B of this subchapter (determined without regard to the application of subsections (b), (h), and (i) of section 1395r of this title).
(iii) Disclosure relating to rebates The plan shall disclose to the Secretary information on the form and amount of the rebate provided under this subparagraph or the actuarial value in the case of supplemental health care benefits.
(iv) Application of part B premium reduction Insofar as an MA organization elects to provide a rebate under this subparagraph under a plan as a credit toward the part B premium under clause (ii)(III), the Secretary shall apply such credit to reduce the premium under section 1395r of this title of each enrollee in such plan as provided in section 1395s (i) of this title.
(2) Premium and bid terminology defined 
For purposes of this part:
(A) MA monthly basic beneficiary premium 
The term MA monthly basic beneficiary premium means, with respect to an MA plan
(i) described in section 1395w–23 (a)(1)(B)(i) of this title (relating to plans providing rebates), zero; or
(ii) described in section 1395w–23 (a)(1)(B)(ii) of this title, the amount (if any) by which the unadjusted MA statutory non-drug monthly bid amount (as defined in subparagraph (E)) exceeds the applicable unadjusted MA area-specific non-drug monthly benchmark amount (as defined in section 1395w–23 (j) of this title).
(B) MA monthly prescription drug beneficiary premium 
The term MA monthly prescription drug beneficiary premium means, with respect to an MA plan, the base beneficiary premium (as determined under section 1395w–113 (a)(2) of this title and as adjusted under section 1395w–113 (a)(1)(B) of this title), less the amount of rebate credited toward such amount under subsection (b)(1)(C)(ii)(II) of this section.
(C) MA monthly supplemental beneficiary premium 
The term MA monthly supplemental beneficiary premium means, with respect to an MA plan, the portion of the aggregate monthly bid amount submitted under clause (i) of subsection (a)(6)(A) of this section for the year that is attributable under clause (ii)(III) of such subsection to the provision of supplemental health care benefits, less the amount of rebate credited toward such portion under subsection (b)(1)(C)(ii)(I) of this section.
(D) Medicare+Choice monthly MSA premium 
The term Medicare+Choice monthly MSA premium means, with respect to a Medicare+Choice plan, the amount of such premium filed under subsection (a)(3)(A) of this section for the plan.
(E) Unadjusted MA statutory non-drug monthly bid amount 
The term unadjusted MA statutory non-drug monthly bid amount means the portion of the bid amount submitted under clause (i) of subsection (a)(6)(A) of this section for the year that is attributable under clause (ii)(I) of such subsection to the provision of benefits under the original medicare fee-for-service program option (as defined in section 1395w–22 (a)(1)(B) of this title).
(3) Computation of average per capita monthly savings for local plans 
For purposes of paragraph (1)(C)(i), the average per capita monthly savings referred to in such paragraph for an MA local plan and year is computed as follows:
(A) Determination of statewide average risk adjustment for local plans 

(i) In general Subject to clause (iii), the Secretary shall determine, at the same time rates are promulgated under section 1395w–23 (b)(1) of this title (beginning with 2006) for each State, the average of the risk adjustment factors to be applied under section 1395w–23 (a)(1)(C) of this title to payment for enrollees in that State for MA local plans.
(ii) Treatment of States for first year in which local plan offered In the case of a State in which no MA local plan was offered in the previous year, the Secretary shall estimate such average. In making such estimate, the Secretary may use average risk adjustment factors applied to comparable States or applied on a national basis.
(iii) Authority to determine risk adjustment for areas other than States The Secretary may provide for the determination and application of risk adjustment factors under this subparagraph on the basis of areas other than States or on a plan-specific basis.
(B) Determination of risk adjusted benchmark and risk-adjusted bid for local plans 
For each MA plan offered in a local area in a State, the Secretary shall
(i) adjust the applicable MA area-specific non-drug monthly benchmark amount (as defined in section 1395w–23 (j)(1) of this title) for the area by the average risk adjustment factor computed under subparagraph (A); and
(ii) adjust the unadjusted MA statutory non-drug monthly bid amount by such applicable average risk adjustment factor.
(C) Determination of average per capita monthly savings 
The average per capita monthly savings described in this subparagraph for an MA local plan is equal to the amount (if any) by which
(i) the risk-adjusted benchmark amount computed under subparagraph (B)(i); exceeds
(ii) the risk-adjusted bid computed under subparagraph (B)(ii).
(4) Computation of average per capita monthly savings for regional plans 
For purposes of paragraph (1)(C)(i), the average per capita monthly savings referred to in such paragraph for an MA regional plan and year is computed as follows:
(A) Determination of regionwide average risk adjustment for regional plans 

(i) In general The Secretary shall determine, at the same time rates are promulgated under section 1395w–23 (b)(1) of this title (beginning with 2006) for each MA region the average of the risk adjustment factors to be applied under section 1395w–23 (a)(1)(C) of this title to payment for enrollees in that region for MA regional plans.
(ii) Treatment of regions for first year in which regional plan offered In the case of an MA region in which no MA regional plan was offered in the previous year, the Secretary shall estimate such average. In making such estimate, the Secretary may use average risk adjustment factors applied to comparable regions or applied on a national basis.
(iii) Authority to determine risk adjustment for areas other than regions The Secretary may provide for the determination and application of risk adjustment factors under this subparagraph on the basis of areas other than MA regions or on a plan-specific basis.
(B) Determination of risk-adjusted benchmark and risk-adjusted bid for regional plans 
For each MA regional plan offered in a region, the Secretary shall
(i) adjust the applicable MA area-specific non-drug monthly benchmark amount (as defined in section 1395w–23 (j)(2) of this title) for the region by the average risk adjustment factor computed under subparagraph (A); and
(ii) adjust the unadjusted MA statutory non-drug monthly bid amount by such applicable average risk adjustment factor.
(C) Determination of average per capita monthly savings 
The average per capita monthly savings described in this subparagraph for an MA regional plan is equal to the amount (if any) by which
(i) the risk-adjusted benchmark amount computed under subparagraph (B)(i); exceeds
(ii) the risk-adjusted bid computed under subparagraph (B)(ii).
(c) Uniform premium and bid amounts 
Except as permitted under section 1395w–27 (i) of this title, the MA monthly bid amount submitted under subsection (a)(6) of this section, the amounts of the MA monthly basic, prescription drug, and supplemental beneficiary premiums, and the MA monthly MSA premium charged under subsection (b) of this section of an MA organization under this part may not vary among individuals enrolled in the plan.
(d) Terms and conditions of imposing premiums 

(1) In general 
Each Medicare+Choice organization shall permit the payment of Medicare+Choice monthly basic, prescription drug, and supplemental beneficiary premiums on a monthly basis, may terminate election of individuals for a Medicare+Choice plan for failure to make premium payments only in accordance with section 1395w–21 (g)(3)(B)(i) of this title, and may not provide for cash or other monetary rebates as an inducement for enrollment or otherwise.
(2) Beneficiary’s option of payment through withholding from social security payment or use of electronic funds transfer mechanism 
In accordance with regulations, an MA organization shall permit each enrollee, at the enrollees option, to make payment of premiums (if any) under this part to the organization through
(A) withholding from benefit payments in the manner provided under section 1395s of this title with respect to monthly premiums under section 1395r of this title;
(B) an electronic funds transfer mechanism (such as automatic charges of an account at a financial institution or a credit or debit card account); or
(C) such other means as the Secretary may specify, including payment by an employer or under employment-based retiree health coverage (as defined in section 1395w–132 (c)(1) of this title) on behalf of an employee or former employee (or dependent).

All premium payments that are withheld under subparagraph (A) shall be credited to the appropriate Trust Fund (or Account thereof), as specified by the Secretary, under this subchapter and shall be paid to the MA organization involved. No charge may be imposed under an MA plan with respect to the election of the payment option described in subparagraph (A). The Secretary shall consult with the Commissioner of Social Security and the Secretary of the Treasury regarding methods for allocating premiums withheld under subparagraph (A) among the appropriate Trust Funds and Account.

(3) Information necessary for collection 
In order to carry out paragraph (2)(A) with respect to an enrollee who has elected such paragraph to apply, the Secretary shall transmit to the Commissioner of Social Security
(A) by the beginning of each year, the name, social security account number, consolidated monthly beneficiary premium described in paragraph (4) owed by such enrollee for each month during the year, and other information determined appropriate by the Secretary, in consultation with the Commissioner of Social Security; and
(B) periodically throughout the year, information to update the information previously transmitted under this paragraph for the year.
(4) Consolidated monthly beneficiary premium 
In the case of an enrollee in an MA plan, the Secretary shall provide a mechanism for the consolidation of
(A) the MA monthly basic beneficiary premium (if any);
(B) the MA monthly supplemental beneficiary premium (if any); and
(C) the MA monthly prescription drug beneficiary premium (if any).
(e) Limitation on enrollee liability 

(1) For basic and additional benefits before 2006 
For periods before 2006, in no event may
(A) the Medicare+Choice monthly basic beneficiary premium (multiplied by 12) and the actuarial value of the deductibles, coinsurance, and copayments applicable on average to individuals enrolled under this part with a Medicare+Choice plan described in section 1395w–21 (a)(2)(A) of this title of an organization with respect to required benefits described in section 1395w–22 (a)(1)(A) of this title and additional benefits (if any) required under subsection (f)(1)(A) of this section for a year, exceed
(B) the actuarial value of the deductibles, coinsurance, and copayments that would be applicable on average to individuals entitled to benefits under part A of this subchapter and enrolled under part B of this subchapter if they were not members of a Medicare+Choice organization for the year.
(2) For supplemental benefits before 2006 
For periods before 2006, if the Medicare+Choice organization provides to its members enrolled under this part in a Medicare+Choice plan described in section 1395w–21 (a)(2)(A) of this title with respect to supplemental benefits described in section 1395w–22 (a)(3) of this title, the sum of the Medicare+Choice monthly supplemental beneficiary premium (multiplied by 12) charged and the actuarial value of its deductibles, coinsurance, and copayments charged with respect to such benefits may not exceed the adjusted community rate for such benefits (as defined in subsection (f)(3) of this section).
(3) Determination on other basis 
If the Secretary determines that adequate data are not available to determine the actuarial value under paragraph (1)(A), (2), or (4), the Secretary may determine such amount with respect to all individuals in same geographic area, the State, or in the United States, eligible to enroll in the Medicare+Choice plan involved under this part or on the basis of other appropriate data.
(4) Special rule for private fee-for-service plans and for basic benefits beginning in 2006 
With respect to a Medicare+Choice private fee-for-service plan (other than a plan that is an MSA plan) and for periods beginning with 2006, with respect to an MA plan described in section 1395w–21 (a)(2)(A) of this title, in no event may
(A) the actuarial value of the deductibles, coinsurance, and copayments applicable on average to individuals enrolled under this part with such a plan of an organization with respect to benefits under the original medicare fee-for-service program option, exceed
(B) the actuarial value of the deductibles, coinsurance, and copayments that would be applicable with respect to such benefits on average to individuals entitled to benefits under part A of this subchapter and enrolled under part B of this subchapter if they were not members of a Medicare+Choice organization for the year.
(f) Requirement for additional benefits before 2006 

(1) Requirement 

(A) In general 
For years before 2006, each Medicare+Choice organization (in relation to a Medicare+Choice plan, other than an MSA plan, it offers) shall provide that if there is an excess amount (as defined in subparagraph (B)) for the plan for a contract year, subject to the succeeding provisions of this subsection, the organization shall provide to individuals such additional benefits (as the organization may specify) in a value which the Secretary determines is at least equal to the adjusted excess amount (as defined in subparagraph (C)).
(B) Excess amount 
For purposes of this paragraph, the excess amount, for an organization for a plan, is the amount (if any) by which
(i) the average of the capitation payments made to the organization under section 1395w–23 of this title for the plan at the beginning of contract year, exceeds
(ii) the actuarial value of the required benefits described in section 1395w–22 (a)(1)(A) of this title under the plan for individuals under this part, as determined based upon an adjusted community rate described in paragraph (3) (as reduced for the actuarial value of the coinsurance, copayments, and deductibles under parts A and B of this subchapter).
(C) Adjusted excess amount 
For purposes of this paragraph, the adjusted excess amount, for an organization for a plan, is the excess amount reduced to reflect any amount withheld and reserved for the organization for the year under paragraph (2).
(D) Uniform application 
This paragraph shall be applied uniformly for all enrollees for a plan.
(E) Premium reductions 

(i) In general Subject to clause (ii), as part of providing any additional benefits required under subparagraph (A), a Medicare+Choice organization may elect a reduction in its payments under section 1395w–23 (a)(1)(A) of this title with respect to a Medicare+Choice plan and the Secretary shall apply such reduction to reduce the premium under section 1395r of this title of each enrollee in such plan as provided in section 1395s (i) of this title.
(ii) Amount of reduction The amount of the reduction under clause (i) with respect to any enrollee in a Medicare+Choice plan
(I) may not exceed 125 percent of the premium described under section 1395r (a)(3) of this title; and
(II) shall apply uniformly to each enrollee of the Medicare+Choice plan to which such reduction applies.
(F) Construction 
Nothing in this subsection shall be construed as preventing a Medicare+Choice organization from providing supplemental benefits (described in section 1395w–22 (a)(3) of this title) that are in addition to the health care benefits otherwise required to be provided under this paragraph and from imposing a premium for such supplemental benefits.
(2) Stabilization fund 
A Medicare+Choice organization may provide that a part of the value of an excess amount described in paragraph (1) be withheld and reserved in the Federal Hospital Insurance Trust Fund and in the Federal Supplementary Medical Insurance Trust Fund (in such proportions as the Secretary determines to be appropriate) by the Secretary for subsequent annual contract periods, to the extent required to stabilize and prevent undue fluctuations in the additional benefits offered in those subsequent periods by the organization in accordance with such paragraph. Any of such value of the amount reserved which is not provided as additional benefits described in paragraph (1)(A) to individuals electing the Medicare+Choice plan of the organization in accordance with such paragraph prior to the end of such periods, shall revert for the use of such trust funds.
(3) Adjusted community rate 
For purposes of this subsection, subject to paragraph (4), the term adjusted community rate for a service or services means, at the election of a Medicare+Choice organization, either
(A) the rate of payment for that service or services which the Secretary annually determines would apply to an individual electing a Medicare+Choice plan under this part if the rate of payment were determined under a community rating system (as defined in section 300e–1 (8) of this title, other than subparagraph (C)), or
(B) such portion of the weighted aggregate premium, which the Secretary annually estimates would apply to such an individual, as the Secretary annually estimates is attributable to that service or services,

but adjusted for differences between the utilization characteristics of the individuals electing coverage under this part and the utilization characteristics of the other enrollees with the plan (or, if the Secretary finds that adequate data are not available to adjust for those differences, the differences between the utilization characteristics of individuals selecting other Medicare+Choice coverage, or Medicare+Choice eligible individuals in the area, in the State, or in the United States, eligible to elect Medicare+Choice coverage under this part and the utilization characteristics of the rest of the population in the area, in the State, or in the United States, respectively).

(4) Determination based on insufficient data 
For purposes of this subsection, if the Secretary finds that there is insufficient enrollment experience to determine an average of the capitation payments to be made under this part at the beginning of a contract period or to determine (in the case of a newly operated provider-sponsored organization or other new organization) the adjusted community rate for the organization, the Secretary may determine such an average based on the enrollment experience of other contracts entered into under this part and may determine such a rate using data in the general commercial marketplace.
(g) Prohibition of State imposition of premium taxes 
No State may impose a premium tax or similar tax with respect to payments to Medicare+Choice organizations under section 1395w–23 of this title or premiums paid to such organizations under this part.
(h) Permitting use of segments of service areas 
The Secretary shall permit a Medicare+Choice organization to elect to apply the provisions of this section uniformly to separate segments of a service area (rather than uniformly to an entire service area) as long as such segments are composed of one or more Medicare+Choice payment areas.

42 USC 1395w25 - Organizational and financial requirements for Medicare+Choice organizations; provider-sponsored organizations

(a) Organized and licensed under State law 

(1) In general 
Subject to paragraphs (2) and (3), a Medicare+Choice organization shall be organized and licensed under State law as a risk-bearing entity eligible to offer health insurance or health benefits coverage in each State in which it offers a Medicare+Choice plan.
(2) Special exception for provider-sponsored organizations 

(A) In general 
In the case of a provider-sponsored organization that seeks to offer a Medicare+Choice plan in a State, the Secretary shall waive the requirement of paragraph (1) that the organization be licensed in that State if
(i) the organization files an application for such waiver with the Secretary by not later than November 1, 2002, and
(ii) the Secretary determines, based on the application and other evidence presented to the Secretary, that any of the grounds for approval of the application described in subparagraph (B), (C), or (D) has been met.
(B) Failure to act on licensure application on a timely basis 
The ground for approval of such a waiver application described in this subparagraph is that the State has failed to complete action on a licensing application of the organization within 90 days of the date of the States receipt of a substantially complete application. No period before August 5, 1997, shall be included in determining such 90-day period.
(C) Denial of application based on discriminatory treatment 
The ground for approval of such a waiver application described in this subparagraph is that the State has denied such a licensing application and
(i) the standards or review process imposed by the State as a condition of approval of the license imposes any material requirements, procedures, or standards (other than solvency requirements) to such organizations that are not generally applicable to other entities engaged in a substantially similar business, or
(ii) the State requires the organization, as a condition of licensure, to offer any product or plan other than a Medicare+Choice plan.
(D) Denial of application based on application of solvency requirements 
With respect to waiver applications filed on or after the date of publication of solvency standards under section 1395w–26 (a) of this title, the ground for approval of such a waiver application described in this subparagraph is that the State has denied such a licensing application based (in whole or in part) on the organizations failure to meet applicable solvency requirements and
(i) such requirements are not the same as the solvency standards established under section 1395w–26 (a) of this title; or
(ii) the State has imposed as a condition of approval of the license documentation or information requirements relating to solvency or other material requirements, procedures, or standards relating to solvency that are different from the requirements, procedures, and standards applied by the Secretary under subsection (d)(2) of this section.

For purposes of this paragraph, the term solvency requirements means requirements relating to solvency and other matters covered under the standards established under section 1395w–26 (a) of this title.

(E) Treatment of waiver 
In the case of a waiver granted under this paragraph for a provider-sponsored organization with respect to a State
(i) Limitation to State The waiver shall be effective only with respect to that State and does not apply to any other State.
(ii) Limitation to 36-month period The waiver shall be effective only for a 36-month period and may not be renewed.
(iii) Conditioned on compliance with consumer protection and quality standards The continuation of the waiver is conditioned upon the organizations compliance with the requirements described in subparagraph (G).
(iv) Preemption of State law Any provisions of law of that State which relate to the licensing of the organization and which prohibit the organization from providing coverage pursuant to a contract under this part shall be superseded.
(F) Prompt action on application 
The Secretary shall grant or deny such a waiver application within 60 days after the date the Secretary determines that a substantially complete waiver application has been filed. Nothing in this section shall be construed as preventing an organization which has had such a waiver application denied from submitting a subsequent waiver application.
(G) Application and enforcement of State consumer protection and quality standards 

(i) In general A waiver granted under this paragraph to an organization with respect to licensing under State law is conditioned upon the organizations compliance with all consumer protection and quality standards insofar as such standards
(I) would apply in the State to the organization if it were licensed under State law;
(II) are generally applicable to other Medicare+Choice organizations and plans in the State; and
(III) are consistent with the standards established under this part.

Such standards shall not include any standard preempted under section 1395w–26 (b)(3)(B) of this title.

(ii) Incorporation into contract In the case of such a waiver granted to an organization with respect to a State, the Secretary shall incorporate the requirement that the organization (and Medicare+Choice plans it offers) comply with standards under clause (i) as part of the contract between the Secretary and the organization under section 1395w–27 of this title.
(iii) Enforcement In the case of such a waiver granted to an organization with respect to a State, the Secretary may enter into an agreement with the State under which the State agrees to provide for monitoring and enforcement activities with respect to compliance of such an organization and its Medicare+Choice plans with such standards. Such monitoring and enforcement shall be conducted by the State in the same manner as the State enforces such standards with respect to other Medicare+Choice organizations and plans, without discrimination based on the type of organization to which the standards apply. Such an agreement shall specify or establish mechanisms by which compliance activities are undertaken, while not lengthening the time required to review and process applications for waivers under this paragraph.
(H) Report 
By not later than December 31, 2001, the Secretary shall submit to the Committee on Ways and Means and the Committee on Commerce of the House of Representatives and the Committee on Finance of the Senate a report regarding whether the waiver process under this paragraph should be continued after December 31, 2002. In making such recommendation, the Secretary shall consider, among other factors, the impact of such process on beneficiaries and on the long-term solvency of the program under this subchapter.
(3) Licensure does not substitute for or constitute certification 
The fact that an organization is licensed in accordance with paragraph (1) does not deem the organization to meet other requirements imposed under this part.
(b) Assumption of full financial risk 
The Medicare+Choice organization shall assume full financial risk on a prospective basis for the provision of the health care services for which benefits are required to be provided under section 1395w–22 (a)(1) of this title, except that the organization
(1) may obtain insurance or make other arrangements for the cost of providing to any enrolled member such services the aggregate value of which exceeds such aggregate level as the Secretary specifies from time to time,
(2) may obtain insurance or make other arrangements for the cost of such services provided to its enrolled members other than through the organization because medical necessity required their provision before they could be secured through the organization,
(3) may obtain insurance or make other arrangements for not more than 90 percent of the amount by which its costs for any of its fiscal years exceed 115 percent of its income for such fiscal year, and
(4) may make arrangements with physicians or other health care professionals, health care institutions, or any combination of such individuals or institutions to assume all or part of the financial risk on a prospective basis for the provision of basic health services by the physicians or other health professionals or through the institutions.
(c) Certification of provision against risk of insolvency for unlicensed PSOs 

(1) In general 
Each Medicare+Choice organization that is a provider-sponsored organization, that is not licensed by a State under subsection (a) of this section, and for which a waiver application has been approved under subsection (a)(2) of this section, shall meet standards established under section 1395w–26 (a) of this title relating to the financial solvency and capital adequacy of the organization.
(2) Certification process for solvency standards for PSOs 
The Secretary shall establish a process for the receipt and approval of applications of a provider-sponsored organization described in paragraph (1) for certification (and periodic recertification) of the organization as meeting such solvency standards. Under such process, the Secretary shall act upon such a certification application not later than 60 days after the date the application has been received.
(d) “Provider-sponsored organization” defined 

(1) In general 
In this part, the term provider-sponsored organization means a public or private entity
(A) that is established or organized, and operated, by a health care provider, or group of affiliated health care providers,
(B) that provides a substantial proportion (as defined by the Secretary in accordance with paragraph (2)) of the health care items and services under the contract under this part directly through the provider or affiliated group of providers, and
(C) with respect to which the affiliated providers share, directly or indirectly, substantial financial risk with respect to the provision of such items and services and have at least a majority financial interest in the entity.
(2) Substantial proportion 
In defining what is a substantial proportion for purposes of paragraph (1)(B), the Secretary
(A) shall take into account the need for such an organization to assume responsibility for providing
(i) significantly more than the majority of the items and services under the contract under this section through its own affiliated providers; and
(ii) most of the remainder of the items and services under the contract through providers with which the organization has an agreement to provide such items and services,

in order to assure financial stability and to address the practical considerations involved in integrating the delivery of a wide range of service providers;

(B) shall take into account the need for such an organization to provide a limited proportion of the items and services under the contract through providers that are neither affiliated with nor have an agreement with the organization; and
(C) may allow for variation in the definition of substantial proportion among such organizations based on relevant differences among the organizations, such as their location in an urban or rural area.
(3) Affiliation 
For purposes of this subsection, a provider is affiliated with another provider if, through contract, ownership, or otherwise
(A) one provider, directly or indirectly, controls, is controlled by, or is under common control with the other,
(B) both providers are part of a controlled group of corporations under section 1563 of the Internal Revenue Code of 1986,
(C) each provider is a participant in a lawful combination under which each provider shares substantial financial risk in connection with the organizations operations, or
(D) both providers are part of an affiliated service group under section 414 of such Code.
(4) Control 
For purposes of paragraph (3), control is presumed to exist if one party, directly or indirectly, owns, controls, or holds the power to vote, or proxies for, not less than 51 percent of the voting rights or governance rights of another.
(5) “Health care provider” defined 
In this subsection, the term health care provider means
(A) any individual who is engaged in the delivery of health care services in a State and who is required by State law or regulation to be licensed or certified by the State to engage in the delivery of such services in the State, and
(B) any entity that is engaged in the delivery of health care services in a State and that, if it is required by State law or regulation to be licensed or certified by the State to engage in the delivery of such services in the State, is so licensed.
(6) Regulations 
The Secretary shall issue regulations to carry out this subsection.

42 USC 1395w26 - Establishment of standards

(a) Establishment of solvency standards for provider-sponsored organizations 

(1) Establishment 

(A) In general 
The Secretary shall establish, on an expedited basis and using a negotiated rulemaking process under subchapter III of chapter 5 of title 5, standards described in section 1395w–25 (c)(1) of this title (relating to the financial solvency and capital adequacy of the organization) that entities must meet to qualify as provider-sponsored organizations under this part.
(B) Factors to consider for solvency standards 
In establishing solvency standards under subparagraph (A) for provider-sponsored organizations, the Secretary shall consult with interested parties and shall take into account
(i) the delivery system assets of such an organization and ability of such an organization to provide services directly to enrollees through affiliated providers,
(ii) alternative means of protecting against insolvency, including reinsurance, unrestricted surplus, letters of credit, guarantees, organizational insurance coverage, partnerships with other licensed entities, and valuation attributable to the ability of such an organization to meet its service obligations through direct delivery of care, and
(iii) any standards developed by the National Association of Insurance Commissioners specifically for risk-based health care delivery organizations.
(C) Enrollee protection against insolvency 
Such standards shall include provisions to prevent enrollees from being held liable to any person or entity for the Medicare+Choice organizations debts in the event of the organizations insolvency.
(2) Publication of notice 
In carrying out the rulemaking process under this subsection, the Secretary, after consultation with the National Association of Insurance Commissioners, the American Academy of Actuaries, organizations representative of medicare beneficiaries, and other interested parties, shall publish the notice provided for under section 564 (a) of title 5 by not later than 45 days after August 5, 1997.
(3) Target date for publication of rule 
As part of the notice under paragraph (2), and for purposes of this subsection, the target date for publication (referred to in section 564(a)(5) of such title) shall be April 1, 1998.
(4) Abbreviated period for submission of comments 
In applying section 564(c) of such title under this subsection, 15 days shall be substituted for 30 days.
(5) Appointment of negotiated rulemaking committee and facilitator 
The Secretary shall provide for
(A) the appointment of a negotiated rulemaking committee under section 565(a) of such title by not later than 30 days after the end of the comment period provided for under section 564(c) of such title (as shortened under paragraph (4)), and
(B) the nomination of a facilitator under section 566(c) of such title by not later than 10 days after the date of appointment of the committee.
(6) Preliminary committee report 
The negotiated rulemaking committee appointed under paragraph (5) shall report to the Secretary, by not later than January 1, 1998, regarding the committees progress on achieving a consensus with regard to the rulemaking proceeding and whether such consensus is likely to occur before 1 month before the target date for publication of the rule. If the committee reports that the committee has failed to make significant progress towards such consensus or is unlikely to reach such consensus by the target date, the Secretary may terminate such process and provide for the publication of a rule under this subsection through such other methods as the Secretary may provide.
(7) Final committee report 
If the committee is not terminated under paragraph (6), the rulemaking committee shall submit a report containing a proposed rule by not later than 1 month before the target date of publication.
(8) Interim, final effect 
The Secretary shall publish a rule under this subsection in the Federal Register by not later than the target date of publication. Such rule shall be effective and final immediately on an interim basis, but is subject to change and revision after public notice and opportunity for a period (of not less than 60 days) for public comment. In connection with such rule, the Secretary shall specify the process for the timely review and approval of applications of entities to be certified as provider-sponsored organizations pursuant to such rules and consistent with this subsection.
(9) Publication of rule after public comment 
The Secretary shall provide for consideration of such comments and republication of such rule by not later than 1 year after the target date of publication.
(b) Establishment of other standards 

(1) In general 
The Secretary shall establish by regulation other standards (not described in subsection (a) of this section) for Medicare+Choice organizations and plans consistent with, and to carry out, this part. The Secretary shall publish such regulations by June 1, 1998. In order to carry out this requirement in a timely manner, the Secretary may promulgate regulations that take effect on an interim basis, after notice and pending opportunity for public comment.
(2) Use of current standards 
Consistent with the requirements of this part, standards established under this subsection shall be based on standards established under section 1395mm of this title to carry out analogous provisions of such section.
(3) Relation to State laws 
The standards established under this part shall supersede any State law or regulation (other than State licensing laws or State laws relating to plan solvency) with respect to MA plans which are offered by MA organizations under this part.
(4) Prohibition of midyear implementation of significant new regulatory requirements 
The Secretary may not implement, other than at the beginning of a calendar year, regulations under this section that impose new, significant regulatory requirements on a Medicare+Choice organization or plan.

42 USC 1395w27 - Contracts with Medicare+Choice organizations

(a) In general 
The Secretary shall not permit the election under section 1395w–21 of this title of a Medicare+Choice plan offered by a Medicare+Choice organization under this part, and no payment shall be made under section 1395w–23 of this title to an organization, unless the Secretary has entered into a contract under this section with the organization with respect to the offering of such plan. Such a contract with an organization may cover more than 1 Medicare+Choice plan. Such contract shall provide that the organization agrees to comply with the applicable requirements and standards of this part and the terms and conditions of payment as provided for in this part.
(b) Minimum enrollment requirements 

(1) In general 
Subject to paragraph (2), the Secretary may not enter into a contract under this section with a Medicare+Choice organization unless the organization has
(A) at least 5,000 individuals (or 1,500 individuals in the case of an organization that is a provider-sponsored organization) who are receiving health benefits through the organization, or
(B) at least 1,500 individuals (or 500 individuals in the case of an organization that is a provider-sponsored organization) who are receiving health benefits through the organization if the organization primarily serves individuals residing outside of urbanized areas.
(2) Application to MSA plans 
In applying paragraph (1) in the case of a Medicare+Choice organization that is offering an MSA plan, paragraph (1) shall be applied by substituting covered lives for individuals.
(3) Allowing transition 
The Secretary may waive the requirement of paragraph (1) during the first 3 contract years with respect to an organization.
(c) Contract period and effectiveness 

(1) Period 
Each contract under this section shall be for a term of at least 1 year, as determined by the Secretary, and may be made automatically renewable from term to term in the absence of notice by either party of intention to terminate at the end of the current term.
(2) Termination authority 
In accordance with procedures established under subsection (h) of this section, the Secretary may at any time terminate any such contract if the Secretary determines that the organization
(A) has failed substantially to carry out the contract;
(B) is carrying out the contract in a manner inconsistent with the efficient and effective administration of this part; or
(C) no longer substantially meets the applicable conditions of this part.
(3) Effective date of contracts 
The effective date of any contract executed pursuant to this section shall be specified in the contract, except that in no case shall a contract under this section which provides for coverage under an MSA plan be effective before January 1999 with respect to such coverage.
(4) Previous terminations 

(A) In general 
The Secretary may not enter into a contract with a Medicare+Choice organization if a previous contract with that organization under this section was terminated at the request of the organization within the preceding 2-year period, except as provided in subparagraph (B) and except in such other circumstances which warrant special consideration, as determined by the Secretary.
(B) Earlier re-entry permitted where change in payment policy 
Subparagraph (A) shall not apply with respect to the offering by a Medicare+Choice organization of a Medicare+Choice plan in a Medicare+Choice payment area if during the 6-month period beginning on the date the organization notified the Secretary of the intention to terminate the most recent previous contract, there was a legislative change enacted (or a regulatory change adopted) that has the effect of increasing payment amounts under section 1395w–23 of this title for that Medicare+Choice payment area.
(5) Contracting authority 
The authority vested in the Secretary by this part may be performed without regard to such provisions of law or regulations relating to the making, performance, amendment, or modification of contracts of the United States as the Secretary may determine to be inconsistent with the furtherance of the purpose of this subchapter.
(d) Protections against fraud and beneficiary protections 

(1) Periodic auditing 
The Secretary shall provide for the annual auditing of the financial records (including data relating to medicare utilization and costs, including allowable costs under section 1395w–27a (c) of this title) of at least one-third of the Medicare+Choice organizations offering Medicare+Choice plans under this part. The Comptroller General shall monitor auditing activities conducted under this subsection.
(2) Inspection and audit 
Each contract under this section shall provide that the Secretary, or any person or organization designated by the Secretary
(A) shall have the right to inspect or otherwise evaluate
(i)  the quality, appropriateness, and timeliness of services performed under the contract, and
(ii)  the facilities of the organization when there is reasonable evidence of some need for such inspection, and
(B) shall have the right to audit and inspect any books and records of the Medicare+Choice organization that pertain
(i)  to the ability of the organization to bear the risk of potential financial losses, or
(ii)  to services performed or determinations of amounts payable under the contract.
(3) Enrollee notice at time of termination 
Each contract under this section shall require the organization to provide (and pay for) written notice in advance of the contracts termination, as well as a description of alternatives for obtaining benefits under this subchapter, to each individual enrolled with the organization under this part.
(4) Disclosure 

(A) In general 
Each Medicare+Choice organization shall, in accordance with regulations of the Secretary, report to the Secretary financial information which shall include the following:
(i) Such information as the Secretary may require demonstrating that the organization has a fiscally sound operation.
(ii) A copy of the report, if any, filed with the Secretary containing the information required to be reported under section 1320a–3 of this title by disclosing entities.
(iii) A description of transactions, as specified by the Secretary, between the organization and a party in interest. Such transactions shall include
(I) any sale or exchange, or leasing of any property between the organization and a party in interest;
(II) any furnishing for consideration of goods, services (including management services), or facilities between the organization and a party in interest, but not including salaries paid to employees for services provided in the normal course of their employment and health services provided to members by hospitals and other providers and by staff, medical group (or groups), individual practice association (or associations), or any combination thereof; and
(III) any lending of money or other extension of credit between an organization and a party in interest.

The Secretary may require that information reported respecting an organization which controls, is controlled by, or is under common control with, another entity be in the form of a consolidated financial statement for the organization and such entity.

(B) “Party in interest” defined 
For the purposes of this paragraph, the term party in interest means
(i) any director, officer, partner, or employee responsible for management or administration of a Medicare+Choice organization, any person who is directly or indirectly the beneficial owner of more than 5 percent of the equity of the organization, any person who is the beneficial owner of a mortgage, deed of trust, note, or other interest secured by, and valuing more than 5 percent of the organization, and, in the case of a Medicare+Choice organization organized as a nonprofit">nonprofit corporation, an incorporator or member of such corporation under applicable State corporation law;
(ii) any entity in which a person described in clause (i)
(I) is an officer or director;
(II) is a partner (if such entity is organized as a partnership);
(III) has directly or indirectly a beneficial interest of more than 5 percent of the equity; or
(IV) has a mortgage, deed of trust, note, or other interest valuing more than 5 percent of the assets of such entity;
(iii) any person directly or indirectly controlling, controlled by, or under common control with an organization; and
(iv) any spouse, child, or parent of an individual described in clause (i).
(C) Access to information 
Each Medicare+Choice organization shall make the information reported pursuant to subparagraph (A) available to its enrollees upon reasonable request.
(5) Loan information 
The contract shall require the organization to notify the Secretary of loans and other special financial arrangements which are made between the organization and subcontractors, affiliates, and related parties.
(e) Additional contract terms 

(1) In general 
The contract shall contain such other terms and conditions not inconsistent with this part (including requiring the organization to provide the Secretary with such information) as the Secretary may find necessary and appropriate.
(2) Cost-sharing in enrollment-related costs 

(A) In general 
A Medicare+Choice organization and a PDP sponsor under part D of this subchapter shall pay the fee established by the Secretary under subparagraph (B).
(B) Authorization 
The Secretary is authorized to charge a fee to each Medicare+Choice organization with a contract under this part and each PDP sponsor with a contract under part D of this subchapter that is equal to the organizations or sponsors pro rata share (as determined by the Secretary) of the aggregate amount of fees which the Secretary is directed to collect in a fiscal year. Any amounts collected shall be available without further appropriation to the Secretary for the purpose of carrying out section 1395w–21 of this title (relating to enrollment and dissemination of information), section 1395w–101 (c) of this title, and section 1395b–4 of this title (relating to the health insurance counseling and assistance program).
(C) Authorization of appropriations 
There are authorized to be appropriated for the purposes described in subparagraph (B) for each fiscal year beginning with fiscal year 2001 and ending with fiscal year 2005 an amount equal to $100,000,000, and for each fiscal year beginning with fiscal year 2006 an amount equal to $200,000,000, reduced by the amount of fees authorized to be collected under this paragraph and section 1395w–112 (b)(3)(D) of this title for the fiscal year.
(D) Limitation 
In any fiscal year the fees collected by the Secretary under subparagraph (B) shall not exceed the lesser of
(i) the estimated costs to be incurred by the Secretary in the fiscal year in carrying out the activities described in section 1395w–21 of this title and section 1395w–101 (c) of this title and section 1395b–4 of this title; or
(ii) 
(I) $200,000,000 in fiscal year 1998;
(II) $150,000,000 in fiscal year 1999;
(III) $100,000,000 in fiscal year 2000;
(IV) the Medicare+Choice portion (as defined in subparagraph (E)) of $100,000,000 in fiscal year 2001 and each succeeding fiscal year before fiscal year 2006; and
(V) the applicable portion (as defined in subparagraph (F)) of $200,000,000 in fiscal year 2006 and each succeeding fiscal year.
(E) Medicare+Choice portion defined 
In this paragraph, the term Medicare+Choice portion means, for a fiscal year, the ratio, as estimated by the Secretary, of
(i) the average number of individuals enrolled in Medicare+Choice plans during the fiscal year, to
(ii) the average number of individuals entitled to benefits under part A of this subchapter, and enrolled under part B of this subchapter, during the fiscal year.
(F) Applicable portion defined 
In this paragraph, the term applicable portion means, for a fiscal year
(i) with respect to MA organizations, the Secretarys estimate of the total proportion of expenditures under this subchapter that are attributable to expenditures made under this part (including payments under part D of this subchapter that are made to such organizations); or
(ii) with respect to PDP sponsors, the Secretarys estimate of the total proportion of expenditures under this subchapter that are attributable to expenditures made to such sponsors under part D of this subchapter.
(3) Agreements with federally qualified health centers 

(A) Payment levels and amounts 
A contract under this section with an MA organization shall require the organization to provide, in any written agreement described in section 1395w–23 (a)(4) of this title between the organization and a federally qualified health center, for a level and amount of payment to the federally qualified health center for services provided by such health center that is not less than the level and amount of payment that the plan would make for such services if the services had been furnished by a entity providing similar services that was not a federally qualified health center.
(B) Cost-sharing 
Under the written agreement referred to in subparagraph (A), a federally qualified health center must accept the payment amount referred to in such subparagraph plus the Federal payment provided for in section 1395l (a)(3)(B) of this title as payment in full for services covered by the agreement, except that such a health center may collect any amount of cost-sharing permitted under the contract under this section, so long as the amounts of any deductible, coinsurance, or copayment comply with the requirements under section 1395w–24 (e) of this title.
(f) Prompt payment by Medicare+Choice organization 

(1) Requirement 
A contract under this part shall require a Medicare+Choice organization to provide prompt payment (consistent with the provisions of sections 1395h (c)(2) and 1395u (c)(2) of this title) of claims submitted for services and supplies furnished to enrollees pursuant to the contract, if the services or supplies are not furnished under a contract between the organization and the provider or supplier (or in the case of a Medicare+Choice private fee-for-service plan, if a claim is submitted to such organization by an enrollee).
(2) Secretary’s option to bypass noncomplying organization 
In the case of a Medicare+Choice eligible organization which the Secretary determines, after notice and opportunity for a hearing, has failed to make payments of amounts in compliance with paragraph (1), the Secretary may provide for direct payment of the amounts owed to providers and suppliers (or, in the case of a Medicare+Choice private fee-for-service plan, amounts owed to the enrollees) for covered services and supplies furnished to individuals enrolled under this part under the contract. If the Secretary provides for the direct payments, the Secretary shall provide for an appropriate reduction in the amount of payments otherwise made to the organization under this part to reflect the amount of the Secretarys payments (and the Secretarys costs in making the payments).
(g) Intermediate sanctions 

(1) In general 
If the Secretary determines that a Medicare+Choice organization with a contract under this section
(A) fails substantially to provide medically necessary items and services that are required (under law or under the contract) to be provided to an individual covered under the contract, if the failure has adversely affected (or has substantial likelihood of adversely affecting) the individual;
(B) imposes premiums on individuals enrolled under this part in excess of the amount of the Medicare+Choice monthly basic and supplemental beneficiary premiums permitted under section 1395w–24 of this title;
(C) acts to expel or to refuse to re-enroll an individual in violation of the provisions of this part;
(D) engages in any practice that would reasonably be expected to have the effect of denying or discouraging enrollment (except as permitted by this part) by eligible individuals with the organization whose medical condition or history indicates a need for substantial future medical services;
(E) misrepresents or falsifies information that is furnished
(i) to the Secretary under this part, or
(ii) to an individual or to any other entity under this part;
(F) fails to comply with the applicable requirements of section 1395w–22 (j)(3) or 1395w–22 (k)(2)(A)(ii) of this title; or
(G) employs or contracts with any individual or entity that is excluded from participation under this subchapter under section 1320a–7 or 1320a–7a of this title for the provision of health care, utilization review, medical social work, or administrative services or employs or contracts with any entity for the provision (directly or indirectly) through such an excluded individual or entity of such services;

the Secretary may provide, in addition to any other remedies authorized by law, for any of the remedies described in paragraph (2).

(2) Remedies 
The remedies described in this paragraph are
(A) civil money penalties of not more than $25,000 for each determination under paragraph (1) or, with respect to a determination under subparagraph (D) or (E)(i) of such paragraph, of not more than $100,000 for each such determination, plus, with respect to a determination under paragraph (1)(B), double the excess amount charged in violation of such paragraph (and the excess amount charged shall be deducted from the penalty and returned to the individual concerned), and plus, with respect to a determination under paragraph (1)(D), $15,000 for each individual not enrolled as a result of the practice involved,
(B) suspension of enrollment of individuals under this part after the date the Secretary notifies the organization of a determination under paragraph (1) and until the Secretary is satisfied that the basis for such determination has been corrected and is not likely to recur, or
(C) suspension of payment to the organization under this part for individuals enrolled after the date the Secretary notifies the organization of a determination under paragraph (1) and until the Secretary is satisfied that the basis for such determination has been corrected and is not likely to recur.
(3) Other intermediate sanctions 
In the case of a Medicare+Choice organization for which the Secretary makes a determination under subsection (c)(2) of this section the basis of which is not described in paragraph (1), the Secretary may apply the following intermediate sanctions:
(A) Civil money penalties of not more than $25,000 for each determination under subsection (c)(2) of this section if the deficiency that is the basis of the determination has directly adversely affected (or has the substantial likelihood of adversely affecting) an individual covered under the organizations contract.
(B) Civil money penalties of not more than $10,000 for each week beginning after the initiation of civil money penalty procedures by the Secretary during which the deficiency that is the basis of a determination under subsection (c)(2) of this section exists.
(C) Suspension of enrollment of individuals under this part after the date the Secretary notifies the organization of a determination under subsection (c)(2) of this section and until the Secretary is satisfied that the deficiency that is the basis for the determination has been corrected and is not likely to recur.
(D) Civil monetary penalties of not more than $100,000, or such higher amount as the Secretary may establish by regulation, where the finding under subsection (c)(2)(A) of this section is based on the organizations termination of its contract under this section other than at a time and in a manner provided for under subsection (a) of this section.
(4) Civil money penalties 
The provisions of section 1320a–7a (other than subsections (a) and (b)) of this title shall apply to a civil money penalty under paragraph (2) or (3) in the same manner as they apply to a civil money penalty or proceeding under section 1320a–7a (a) of this title.
(h) Procedures for termination 

(1) In general 
The Secretary may terminate a contract with a Medicare+Choice organization under this section in accordance with formal investigation and compliance procedures established by the Secretary under which
(A) the Secretary provides the organization with the reasonable opportunity to develop and implement a corrective action plan to correct the deficiencies that were the basis of the Secretarys determination under subsection (c)(2) of this section; and
(B) the Secretary provides the organization with reasonable notice and opportunity for hearing (including the right to appeal an initial decision) before terminating the contract.
(2) Exception for imminent and serious risk to health 
Paragraph (1) shall not apply if the Secretary determines that a delay in termination, resulting from compliance with the procedures specified in such paragraph prior to termination, would pose an imminent and serious risk to the health of individuals enrolled under this part with the organization.
(i) Medicare+Choice program compatibility with employer or union group health plans 

(1) Contracts with MA organizations 
To facilitate the offering of Medicare+Choice plans under contracts between Medicare+Choice organizations and employers, labor organizations, or the trustees of a fund established by one or more employers or labor organizations (or combination thereof) to furnish benefits to the entitys employees, former employees (or combination thereof) or members or former members (or combination thereof) of the labor organizations, the Secretary may waive or modify requirements that hinder the design of, the offering of, or the enrollment in such Medicare+Choice plans.
(2) Employer sponsored MA plans 
To facilitate the offering of MA plans by employers, labor organizations, or the trustees of a fund established by one or more employers or labor organizations (or combination thereof) to furnish benefits to the entitys employees, former employees (or combination thereof) or members or former members (or combination thereof) of the labor organizations, the Secretary may waive or modify requirements that hinder the design of, the offering of, or the enrollment in such MA plans. Notwithstanding section 1395w–21 (g) of this title, an MA plan described in the previous sentence may restrict the enrollment of individuals under this part to individuals who are beneficiaries and participants in such plan.

42 USC 1395w27a - Special rules for MA regional plans

(a) Regional service area; establishment of MA regions 

(1) Coverage of entire MA region 
The service area for an MA regional plan shall consist of an entire MA region established under paragraph (2) and the provisions of section 1395w–24 (h) of this title shall not apply to such a plan.
(2) Establishment of MA regions 

(A) MA region 
For purposes of this subchapter, the term MA region means such a region within the 50 States and the District of Columbia as established by the Secretary under this paragraph.
(B) Establishment 

(i) Initial establishment Not later than January 1, 2005, the Secretary shall first establish and publish MA regions.
(ii) Periodic review and revision of service areas The Secretary may periodically review MA regions under this paragraph and, based on such review, may revise such regions if the Secretary determines such revision to be appropriate.
(C) Requirements for MA regions 
The Secretary shall establish, and may revise, MA regions under this paragraph in a manner consistent with the following:
(i) Number of regions There shall be no fewer than 10 regions, and no more than 50 regions.
(ii) Maximizing availability of plans The regions shall maximize the availability of MA regional plans to all MA eligible individuals without regard to health status, especially those residing in rural areas.
(D) Market survey and analysis 
Before establishing MA regions, the Secretary shall conduct a market survey and analysis, including an examination of current insurance markets, to determine how the regions should be established.
(3) National plan 
Nothing in this subsection shall be construed as preventing an MA regional plan from being offered in more than one MA region (including all regions).
(b) Application of single deductible and catastrophic limit on out-of-pocket expenses 
An MA regional plan shall include the following:
(1) Single deductible 
Any deductible for benefits under the original medicare fee-for-service program option shall be a single deductible (instead of a separate inpatient hospital deductible and a part B deductible) and may be applied differentially for in-network services and may be waived for preventive or other items and services.
(2) Catastrophic limit 

(A) In-network 
A catastrophic limit on out-of-pocket expenditures for in-network benefits under the original medicare fee-for-service program option.
(B) Total 
A catastrophic limit on out-of-pocket expenditures for all benefits under the original medicare fee-for-service program option.
(c) Portion of total payments to an organization subject to risk for 2006 and 2007 

(1) Application of risk corridors 

(A) In general 
This subsection shall only apply to MA regional plans offered during 2006 or 2007.
(B) Notification of allowable costs under the plan 
In the case of an MA organization that offers an MA regional plan in an MA region in 2006 or 2007, the organization shall notify the Secretary, before such date in the succeeding year as the Secretary specifies, of
(i) its total amount of costs that the organization incurred in providing benefits covered under the original medicare fee-for-service program option for all enrollees under the plan in the region in the year and the portion of such costs that is attributable to administrative expenses described in subparagraph (C); and
(ii) its total amount of costs that the organization incurred in providing rebatable integrated benefits (as defined in subparagraph (D)) and with respect to such benefits the portion of such costs that is attributable to administrative expenses described in subparagraph (C) and not described in clause (i) of this subparagraph.
(C) Allowable costs defined 
For purposes of this subsection, the term allowable costs means, with respect to an MA regional plan for a year, the total amount of costs described in subparagraph (B) for the plan and year, reduced by the portion of such costs attributable to administrative expenses incurred in providing the benefits described in such subparagraph.
(D) Rebatable integrated benefits 
For purposes of this subsection, the term rebatable integrated benefits means such non-drug supplemental benefits under subclause (I) of section 1395w–24 (b)(1)(C)(ii) of this title pursuant to a rebate under such section that the Secretary determines are integrated with the benefits described in subparagraph (B)(i).
(2) Adjustment of payment 

(A) No adjustment if allowable costs within 3 percent of target amount 
If the allowable costs for the plan for the year are at least 97 percent, but do not exceed 103 percent, of the target amount for the plan and year, there shall be no payment adjustment under this subsection for the plan and year.
(B) Increase in payment if allowable costs above 103 percent of target amount 

(i) Costs between 103 and 108 percent of target amount If the allowable costs for the plan for the year are greater than 103 percent, but not greater than 108 percent, of the target amount for the plan and year, the Secretary shall increase the total of the monthly payments made to the organization offering the plan for the year under section 1395w–23 (a) of this title by an amount equal to 50 percent of the difference between such allowable costs and 103 percent of such target amount.
(ii) Costs above 108 percent of target amount If the allowable costs for the plan for the year are greater than 108 percent of the target amount for the plan and year, the Secretary shall increase the total of the monthly payments made to the organization offering the plan for the year under section 1395w–23 (a) of this title by an amount equal to the sum of
(I) 2.5 percent of such target amount; and
(II) 80 percent of the difference between such allowable costs and 108 percent of such target amount.
(C) Reduction in payment if allowable costs below 97 percent of target amount 

(i) Costs between 92 and 97 percent of target amount If the allowable costs for the plan for the year are less than 97 percent, but greater than or equal to 92 percent, of the target amount for the plan and year, the Secretary shall reduce the total of the monthly payments made to the organization offering the plan for the year under section 1395w–23 (a) of this title by an amount (or otherwise recover from the plan an amount) equal to 50 percent of the difference between 97 percent of the target amount and such allowable costs.
(ii) Costs below 92 percent of target amount If the allowable costs for the plan for the year are less than 92 percent of the target amount for the plan and year, the Secretary shall reduce the total of the monthly payments made to the organization offering the plan for the year under section 1395w–23 (a) of this title by an amount (or otherwise recover from the plan an amount) equal to the sum of
(I) 2.5 percent of such target amount; and
(II) 80 percent of the difference between 92 percent of such target amount and such allowable costs.
(D) Target amount described 
For purposes of this paragraph, the term target amount means, with respect to an MA regional plan offered by an organization in a year, an amount equal to
(i) the sum of
(I) the total monthly payments made to the organization for enrollees in the plan for the year that are attributable to benefits under the original medicare fee-for-service program option (as defined in section 1395w–22 (a)(1)(B) of this title);
(II) the total of the MA monthly basic beneficiary premium collectable for such enrollees for the year; and
(III) the total amount of the rebates under section 1395w–24 (b)(1)(C)(ii) of this title that are attributable to rebatable integrated benefits; reduced by
(ii) the amount of administrative expenses assumed in the bid insofar as the bid is attributable to benefits described in clause (i)(I) or (i)(III).
(3) Disclosure of information 

(A) In general 
Each contract under this part shall provide
(i) that an MA organization offering an MA regional plan shall provide the Secretary with such information as the Secretary determines is necessary to carry out this subsection; and
(ii) that, pursuant to section 1395w–27 (d)(2)(B) of this title, the Secretary has the right to inspect and audit any books and records of the organization that pertain to the information regarding costs provided to the Secretary under paragraph (1)(B).
(B) Restriction on use of information 
Information disclosed or obtained pursuant to the provisions of this subsection may be used by officers, employees, and contractors of the Department of Health and Human Services only for the purposes of, and to the extent necessary in, carrying out this subsection.
(d) Organizational and financial requirements 

(1) In general 
In the case of an MA organization that is offering an MA regional plan in an MA region and
(A) meets the requirements of section 1395w–25 (a)(1) of this title with respect to at least one such State in such region; and
(B) with respect to each other State in such region in which it does not meet requirements, it demonstrates to the satisfaction of the Secretary that it has filed the necessary application to meet such requirements,

the Secretary may waive such requirement with respect to each State described in subparagraph (B) for such period of time as the Secretary determines appropriate for the timely processing of such an application by the State (and, if such application is denied, through the end of such plan year as the Secretary determines appropriate to provide for a transition).

(2) Selection of appropriate State 
In applying paragraph (1) in the case of an MA organization that meets the requirements of section 1395w–25 (a)(1) of this title with respect to more than one State in a region, the organization shall select, in a manner specified by the Secretary among such States, one State the rules of which shall apply in the case of the States described in paragraph (1)(B).
(e) Stabilization Fund 

(1) Establishment 
The Secretary shall establish under this subsection an MA Regional Plan Stabilization Fund (in this subsection referred to as the Fund) which shall be available for two purposes:
(A) Plan entry 
To provide incentives to have MA regional plans offered in each MA region under paragraph (3).
(B) Plan retention 
To provide incentives to retain MA regional plans in certain MA regions with below-national-average MA market penetration under paragraph (4).
(2) Funding 

(A) Initial funding 

(i) In general There shall be available to the Fund, for expenditures from the Fund during 2013, $1,790,000,000.
(ii) Payment from trust funds Such amount shall be available to the Fund, as expenditures are made from the Fund, from the Federal Hospital Insurance Trust Fund and the Federal Supplementary Medical Insurance Trust Fund in the proportion specified in section 1395w–23 (f) of this title.
(B) Additional funding from savings 

(i) In general There shall also be made available to the Fund, 50 percent of savings described in clause (ii).
(ii) Savings The savings described in this clause are 25 percent of the average per capita savings described in section 1395w–24 (b)(4)(C) of this title for which monthly rebates are provided under section 1395w–24 (b)(1)(C) of this title in the fiscal year involved that are attributable to MA regional plans.
(iii) Availability Funds made available under this subparagraph shall be transferred into a special account in the Treasury from the Federal Hospital Insurance Trust Fund and the Federal Supplementary Medical Insurance Trust Fund in the proportion specified in section 1395w–23 (f) of this title on a monthly basis.
(C) Obligations 
Amounts in the Fund shall be available in advance of appropriations to MA regional plans in qualifying MA regions only in accordance with paragraph (5).
(D) Ordering 
Expenditures from the Fund shall first be made from amounts made available under subparagraph (A).
(3) Plan entry funding 

(A) In general 
Funding is available under this paragraph for a year only as follows:
(i) National plan For a national bonus payment described in subparagraph (B) for the offering by a single MA organization of an MA regional plan in each MA region in the year, but only if there was not such a plan offered in each such region in the previous year. Funding under this clause is only available with respect to any individual MA organization for a single year, but may be made available to more than one such organization in the same year.
(ii) Regional plans Subject to clause (iii), for an increased amount under subparagraph (C) for an MA regional plan offered in an MA region which did not have any MA regional plan offered in the prior year.
(iii) Limitation on regional plan funding in case of national plan In no case shall there be any payment adjustment under subparagraph (C) for a year for which a national payment adjustment is made under subparagraph (B).
(B) National bonus payment 
The national bonus payment under this subparagraph shall
(i) be available to an MA organization only if the organization offers MA regional plans in every MA region;
(ii) be available with respect to all MA regional plans of the organization regardless of whether any other MA regional plan is offered in any region; and
(iii) subject to amounts available under paragraph (5) for a year, be equal to 3 percent of the benchmark amount otherwise applicable for each MA regional plan offered by the organization.
(C) Regional payment adjustment 

(i) In general The increased amount under this subparagraph for an MA regional plan in an MA region for a year shall be an amount, determined by the Secretary, based on the bid submitted for such plan (or plans) and shall be available to all MA regional plans offered in such region and year. Such amount may be based on the mean, mode, or median, or other measure of such bids and may vary from region to region. The Secretary may not limit the number of plans or bids in a region.
(ii) Multi-year funding
(I) In general Subject to amounts available under paragraph (5), funding under this subparagraph shall be available for a period determined by the Secretary.
(II) Report If the Secretary determines that funding will be provided for a second consecutive year with respect to an MA region, the Secretary shall submit to the Congress a report that describes the underlying market dynamics in the region and that includes recommendations concerning changes in the payment methodology otherwise provided for MA regional plans under this part.
(iii) Application to all plans in a region Funding under this subparagraph with respect to an MA region shall be made available with respect to all MA regional plans offered in the region.
(iv) Limitation on availability of plan retention funding in next year If an increased amount is made available under this subparagraph with respect to an MA region for a period determined by the Secretary under clause (ii)(I), in no case shall funding be available under paragraph (4) with respect to MA regional plans offered in the region in the year following such period.
(D) Application 
Any additional payment under this paragraph provided for an MA regional plan for a year shall be treated as if it were an addition to the benchmark amount otherwise applicable to such plan and year, but shall not be taken into account in the computation of any benchmark amount for any subsequent year.
(4) Plan retention funding 

(A) In general 
Funding is available under this paragraph for a year with respect to MA regional plans offered in an MA region for the increased amount specified in subparagraph (B) but only if the region meets the requirements of subparagraphs (C) and (E).
(B) Payment increase 
The increased amount under this subparagraph for an MA regional plan in an MA region for a year shall be an amount, determined by the Secretary, that does not exceed the greater of
(i) 3 percent of the benchmark amount applicable in the region; or
(ii) such amount as (when added to the benchmark amount applicable to the region) will result in the ratio of
(I) such additional amount plus the benchmark amount computed under section 1395w–24 (b)(4)(B)(i) of this title for the region and year, to the adjusted average per capita cost for the region and year, as estimated by the Secretary under section 1395mm (a)(4) of this title and adjusted as appropriate for the purpose of risk adjustment; being equal to
(II) the weighted average of such benchmark amounts for all the regions and such year, to the average per capita cost for the United States and such year, as estimated by the Secretary under section 1395mm (a)(4) of this title and adjusted as appropriate for the purpose of risk adjustment.
(C) Regional requirements 
The requirements of this subparagraph for an MA region for a year are as follows:
(i) Notification of plan exit The Secretary has received notice (in such form and manner as the Secretary specifies) before a year that one or more MA regional plans that were offered in the region in the previous year will not be offered in the succeeding year.
(ii) Regional plans available from fewer than 2 MA organizations in the region The Secretary determines that if the plans referred to in clause (i) are not offered in the year, fewer than 2 MA organizations will be offering MA regional plans in the region in the year involved.
(iii) Percentage enrollment in MA regional plans below national average For the previous year, the Secretary determines that the average percentage of MA eligible individuals residing in the region who are enrolled in MA regional plans is less than the average percentage of such individuals in the United States enrolled in such plans.
(D) Application 
Any additional payment under this paragraph provided for an MA regional plan for a year shall be treated as if it were an addition to the benchmark amount otherwise applicable to such plan and year, but shall not be taken into account in the computation of any benchmark amount for any subsequent year.
(E) 2-consecutive-year limitation 

(i) In general In no case shall any funding be available under this paragraph in an MA region in a period of consecutive years that exceeds 2 years.
(ii) Report If the Secretary determines that funding will be provided under this paragraph for a second consecutive year with respect to an MA region, the Secretary shall submit to the Congress a report that describes the underlying market dynamics in the region and that includes recommendations concerning changes in the payment methodology otherwise provided for MA regional plans under this part.
(5) Funding limitation 

(A) In general 
The total amount expended from the Fund as a result of the application of this subsection through the end of a calendar year may not exceed the amount available to the Fund as of the first day of such year. For purposes of this subsection, amounts that are expended under this subchapter insofar as such amounts would not have been expended but for the application of this subsection shall be counted as amounts expended as a result of such application.
(B) Application of limitation 
The Secretary may obligate funds from the Fund for a year only if the Secretary determines (and the Chief Actuary of the Centers for Medicare & Medicaid Services and the appropriate budget officer certify) that there are available in the Fund at the beginning of the year sufficient amounts to cover all such obligations incurred during the year consistent with subparagraph (A). The Secretary shall take such steps, in connection with computing additional payment amounts under paragraphs (3) and (4) and including limitations on enrollment in MA regional plans receiving such payments, as will ensure that sufficient funds are available to make such payments for the entire year. Funds shall only be made available from the Fund pursuant to an apportionment made in accordance with applicable procedures.
(6) Secretary reports 
Not later than April 1 of each year (beginning in 2008), the Secretary shall submit a report to Congress and the Comptroller General of the United States that includes
(A) a detailed description of
(i) the total amount expended as a result of the application of this subsection in the previous year compared to the total amount that would have been expended under this subchapter in the year if this subsection had not been enacted;
(ii) the projections of the total amount that will be expended as a result of the application of this subsection in the year in which the report is submitted compared to the total amount that would have been expended under this subchapter in the year if this subsection had not been enacted;
(iii) amounts remaining within the funding limitation specified in paragraph (5); and
(iv) the steps that the Secretary will take under paragraph (5)(B) to ensure that the application of this subsection will not cause expenditures to exceed the amount available in the Fund; and
(B) a certification from the Chief Actuary of the Centers for Medicare & Medicaid Services that the description provided under subparagraph (A) is reasonable, accurate, and based on generally accepted actuarial principles and methodologies.
(7) Biennial GAO reports 
Not later than January 1 of 2009, 2011, 2013, and 2015, the Comptroller General of the United States shall submit to the Secretary and Congress a report on the application of additional payments under this subsection. Each report shall include
(A) an evaluation of
(i) the quality of care provided to individuals enrolled in MA regional plans for which additional payments were made under this subsection;
(ii) the satisfaction of such individuals with benefits under such a plan;
(iii) the costs to the medicare program for payments made to such plans; and
(iv) any improvements in the delivery of health care services under such a plan;
(B) a comparative analysis of the performance of MA regional plans receiving payments under this subsection with MA regional plans not receiving such payments; and
(C) recommendations for such legislation or administrative action as the Comptroller General determines to be appropriate.
(f) Computation of applicable MA region-specific non-drug monthly benchmark amounts 

(1) Computation for regions 
For purposes of section 1395w–23 (j)(2) of this title and this section, subject to subsection (e) of this section, the term MA region-specific non-drug monthly benchmark amount means, with respect to an MA region for a month in a year, the sum of the 2 components described in paragraph (2) for the region and year. The Secretary shall compute such benchmark amount for each MA region before the beginning of each annual, coordinated election period under section 1395w–21 (e)(3)(B) of this title for each year (beginning with 2006).
(2) 2 components 
For purposes of paragraph (1), the 2 components described in this paragraph for an MA region and a year are the following:
(A) Statutory component 
The product of the following:
(i) Statutory region-specific non-drug amount The statutory region-specific non-drug amount (as defined in paragraph (3)) for the region and year.
(ii) Statutory national market share The statutory national market share percentage, determined under paragraph (4) for the year.
(B) Plan-bid component 
The product of the following:
(i) Weighted average of MA plan bids in region The weighted average of the plan bids for the region and year (as determined under paragraph (5)(A)).
(ii) Non-statutory market share 1 minus the statutory national market share percentage, determined under paragraph (4) for the year.
(3) Statutory region-specific non-drug amount 
For purposes of paragraph (2)(A)(i), the term statutory region-specific non-drug amount means, for an MA region and year, an amount equal the sum (for each MA local area within the region) of the product of
(A) MA area-specific non-drug monthly benchmark amount under section 1395w–23 (j)(1)(A) of this title for that area and year; and
(B) the number of MA eligible individuals residing in the local area, divided by the total number of MA eligible individuals residing in the region.
(4) Computation of statutory market share percentage 

(A) In general 
The Secretary shall determine for each year a statutory national market share percentage that is equal to the proportion of MA eligible individuals nationally who were not enrolled in an MA plan during the reference month.
(B) Reference month defined 
For purposes of this part, the term reference month means, with respect to a year, the most recent month during the previous year for which the Secretary determines that data are available to compute the percentage specified in subparagraph (A) and other relevant percentages under this part.
(5) Determination of weighted average MA bids for a region 

(A) In general 
For purposes of paragraph (2)(B)(i), the weighted average of plan bids for an MA region and a year is the sum, for MA regional plans described in subparagraph (D) in the region and year, of the products (for each such plan) of the following:
(i) Monthly MA statutory non-drug bid amount The unadjusted MA statutory non-drug monthly bid amount for the plan.
(ii) Plans share of MA enrollment in region The factor described in subparagraph (B) for the plan.
(B) Plan’s share of MA enrollment in region 

(i) In general Subject to the succeeding provisions of this subparagraph, the factor described in this subparagraph for a plan is equal to the number of individuals described in subparagraph (C) for such plan, divided by the total number of such individuals for all MA regional plans described in subparagraph (D) for that region and year.
(ii) Single plan rule In the case of an MA region in which only a single MA regional plan is being offered, the factor described in this subparagraph shall be equal to 1.
(iii) Equal division among multiple plans in year in which plans are first available In the case of an MA region in the first year in which any MA regional plan is offered, if more than one MA regional plan is offered in such year, the factor described in this subparagraph for a plan shall (as specified by the Secretary) be equal to
(I) 1 divided by the number of such plans offered in such year; or
(II) a factor for such plan that is based upon the organizations estimate of projected enrollment, as reviewed and adjusted by the Secretary to ensure reasonableness and as is certified by the Chief Actuary of the Centers for Medicare & Medicaid Services.
(C) Counting of individuals 
For purposes of subparagraph (B)(i), the Secretary shall count for each MA regional plan described in subparagraph (D) for an MA region and year, the number of individuals who reside in the region and who were enrolled under such plan under this part during the reference month.
(D) Plans covered 
For an MA region and year, an MA regional plan described in this subparagraph is an MA regional plan that is offered in the region and year and was offered in the region in the reference month.
(g) Election of uniform coverage determination 
Instead of applying section 1395w–22 (a)(2)(C) of this title with respect to an MA regional plan, the organization offering the plan may elect to have a local coverage determination for the entire MA region be the local coverage determination applied for any part of such region (as selected by the organization).
(h) Assuring network adequacy 

(1) In general 
For purposes of enabling MA organizations that offer MA regional plans to meet applicable provider access requirements under section 1395w–22 of this title with respect to such plans, the Secretary may provide for payment under this section to an essential hospital that provides inpatient hospital services to enrollees in such a plan where the MA organization offering the plan certifies to the Secretary that the organization was unable to reach an agreement between the hospital and the organization regarding provision of such services under the plan. Such payment shall be available only if
(A) the organization provides assurances satisfactory to the Secretary that the organization will make payment to the hospital for inpatient hospital services of an amount that is not less than the amount that would be payable to the hospital under section 1395ww of this title with respect to such services; and
(B) with respect to specific inpatient hospital services provided to an enrollee, the hospital demonstrates to the satisfaction of the Secretary that the hospitals costs of such services exceed the payment amount described in subparagraph (A).
(2) Payment amounts 
The payment amount under this subsection for inpatient hospital services provided by a subsection (d) hospital to an enrollee in an MA regional plan shall be, subject to the limitation of funds under paragraph (3), the amount (if any) by which
(A) the amount of payment that would have been paid for such services under this subchapter if the enrollees were covered under the original medicare fee-for-service program option and the hospital were a critical access hospital; exceeds
(B) the amount of payment made for such services under paragraph (1)(A).
(3) Available amounts 
There shall be available for payments under this subsection
(A) in 2006, $25,000,000; and
(B) in each succeeding year the amount specified in this paragraph for the preceding year increased by the market basket percentage increase (as defined in section 1395ww (b)(3)(B)(iii) of this title) for the fiscal year ending in such succeeding year.

Payments under this subsection shall be made from the Federal Hospital Insurance Trust Fund.

(4) Essential hospital 
In this subsection, the term essential hospital means, with respect to an MA regional plan offered by an MA organization, a subsection (d) hospital (as defined in section 1395ww (d) of this title) that the Secretary determines, based upon an application filed by the organization with the Secretary, is necessary to meet the requirements referred to in paragraph (1) for such plan.

42 USC 1395w28 - Definitions; miscellaneous provisions

(a) Definitions relating to Medicare+Choice organizations 
In this part
(1) Medicare+Choice organization 
The term Medicare+Choice organization means a public or private entity that is certified under section 1395w–26 of this title as meeting the requirements and standards of this part for such an organization.
(2) Provider-sponsored organization 
The term provider-sponsored organization is defined in section 1395w–25 (d)(1) of this title.
(b) Definitions relating to Medicare+Choice plans 

(1) Medicare+Choice plan 
The term Medicare+Choice plan means health benefits coverage offered under a policy, contract, or plan by a Medicare+Choice organization pursuant to and in accordance with a contract under section 1395w–27 of this title.
(2) Medicare+Choice private fee-for-service plan 
The term Medicare+Choice private fee-for-service plan means a Medicare+Choice plan that
(A) reimburses hospitals, physicians, and other providers at a rate determined by the plan on a fee-for-service basis without placing the provider at financial risk;
(B) does not vary such rates for such a provider based on utilization relating to such provider; and
(C) does not restrict the selection of providers among those who are lawfully authorized to provide the covered services and agree to accept the terms and conditions of payment established by the plan.
(3) MSA plan 

(A) In general 
The term MSA plan means a Medicare+Choice plan that
(i) provides reimbursement for at least the items and services described in section 1395w–22 (a)(1) of this title in a year but only after the enrollee incurs countable expenses (as specified under the plan) equal to the amount of an annual deductible (described in subparagraph (B));
(ii) counts as such expenses (for purposes of such deductible) at least all amounts that would have been payable under parts A and B of this subchapter, and that would have been payable by the enrollee as deductibles, coinsurance, or copayments, if the enrollee had elected to receive benefits through the provisions of such parts; and
(iii) provides, after such deductible is met for a year and for all subsequent expenses for items and services referred to in clause (i) in the year, for a level of reimbursement that is not less than
(I) 100 percent of such expenses, or
(II) 100 percent of the amounts that would have been paid (without regard to any deductibles or coinsurance) under parts A and B of this subchapter with respect to such expenses,

whichever is less.

(B) Deductible 
The amount of annual deductible under an MSA plan
(i) for contract year 1999 shall be not more than $6,000; and
(ii) for a subsequent contract year shall be not more than the maximum amount of such deductible for the previous contract year under this subparagraph increased by the national per capita Medicare+Choice growth percentage under section 1395w–23 (c)(6) of this title for the year.

If the amount of the deductible under clause (ii) is not a multiple of $50, the amount shall be rounded to the nearest multiple of $50.

(4) MA regional plan 
The term MA regional plan means an MA plan described in section 1395w–21 (a)(2)(A)(i) of this title
(A) that has a network of providers that have agreed to a contractually specified reimbursement for covered benefits with the organization offering the plan;
(B) that provides for reimbursement for all covered benefits regardless of whether such benefits are provided within such network of providers; and
(C) the service area of which is one or more entire MA regions.
(5) MA local plan 
The term MA local plan means an MA plan that is not an MA regional plan.
(6) Specialized MA plans for special needs individuals 

(A) In general 
The term specialized MA plan for special needs individuals means an MA plan that exclusively serves special needs individuals (as defined in subparagraph (B)).
(B) Special needs individual 
The term special needs individual means an MA eligible individual who
(i) is institutionalized (as defined by the Secretary);
(ii) is entitled to medical assistance under a State plan under subchapter XIX of this chapter; or
(iii) meets such requirements as the Secretary may determine would benefit from enrollment in such a specialized MA plan described in subparagraph (A) for individuals with severe or disabling chronic conditions.

The Secretary may waive application of section 1395w–21 (a)(3)(B) of this title in the case of an individual described in clause (i), (ii), or (iii) of this subparagraph and may apply rules similar to the rules of section 1395eee (c)(4) of this title for continued eligibility of special needs individuals.

(c) Other references to other terms 

(1) Medicare+Choice eligible individual 
The term Medicare+Choice eligible individual is defined in section 1395w–21 (a)(3) of this title.
(2) Medicare+Choice payment area 
The term Medicare+Choice payment area is defined in section 1395w–23 (d) of this title.
(3) National per capita Medicare+Choice growth percentage 
The national per capita Medicare+Choice growth percentage is defined in section 1395w–23 (c)(6) of this title.
(4) Medicare+Choice monthly basic beneficiary premium; Medicare+Choice monthly supplemental beneficiary premium 
The terms Medicare+Choice monthly basic beneficiary premium and Medicare+Choice monthly supplemental beneficiary premium are defined in section 1395w–24 (a)(2) of this title.
(5) MA local area 
The term MA local area is defined in section 1395w–23 (d)(2) of this title.
(d) Coordinated acute and long-term care benefits under Medicare+Choice plan 
Nothing in this part shall be construed as preventing a State from coordinating benefits under a medicaid plan under subchapter XIX of this chapter with those provided under a Medicare+Choice plan in a manner that assures continuity of a full-range of acute care and long-term care services to poor elderly or disabled individuals eligible for benefits under this subchapter and under such plan.
(e) Restriction on enrollment for certain Medicare+Choice plans 

(1) In general 
In the case of a Medicare+Choice religious fraternal benefit society plan described in paragraph (2), notwithstanding any other provision of this part to the contrary and in accordance with regulations of the Secretary, the society offering the plan may restrict the enrollment of individuals under this part to individuals who are members of the church, convention, or group described in paragraph (3)(B) with which the society is affiliated.
(2) Medicare+Choice religious fraternal benefit society plan described 
For purposes of this subsection, a Medicare+Choice religious fraternal benefit society plan described in this paragraph is a Medicare+Choice plan described in section 1395w–21 (a)(2) of this title that
(A) is offered by a religious fraternal benefit society described in paragraph (3) only to members of the church, convention, or group described in paragraph (3)(B); and
(B) permits all such members to enroll under the plan without regard to health status-related factors.

Nothing in this subsection shall be construed as waiving any plan requirements relating to financial solvency.

(3) “Religious fraternal benefit society” defined 
For purposes of paragraph (2)(A), a religious fraternal benefit society described in this section is an organization that
(A) is described in section 501(c)(8) of the Internal Revenue Code of 1986 and is exempt from taxation under section 501(a) of such Act;
(B) is affiliated with, carries out the tenets of, and shares a religious bond with, a church or convention or association of churches or an affiliated group of churches;
(C) offers, in addition to a Medicare+Choice religious fraternal benefit society plan, health coverage to individuals not entitled to benefits under this subchapter who are members of such church, convention, or group; and
(D) does not impose any limitation on membership in the society based on any health status-related factor.
(4) Payment adjustment 
Under regulations of the Secretary, in the case of individuals enrolled under this part under a Medicare+Choice religious fraternal benefit society plan described in paragraph (2), the Secretary shall provide for such adjustment to the payment amounts otherwise established under section 1395w–24 of this title as may be appropriate to assure an appropriate payment level, taking into account the actuarial characteristics and experience of such individuals.
(f) Restriction on enrollment for specialized MA plans for special needs individuals 
In the case of a specialized MA plan for special needs individuals (as defined in subsection (b)(6) of this section), notwithstanding any other provision of this part and in accordance with regulations of the Secretary and for periods before January 1, 2010, the plan may restrict the enrollment of individuals under the plan to individuals who are within one or more classes of special needs individuals.

42 USC 1395w29 - Comparative cost adjustment (CCA) program

(a) Establishment of program 

(1) In general 
The Secretary shall establish a program under this section (in this section referred to as the CCA program) for the application of comparative cost adjustment in CCA areas selected under this section.
(2) Duration 
The CCA program shall begin January 1, 2010, and shall extend over a period of 6 years, and end on December 31, 2015.
(3) Report 
Upon the completion of the CCA program, the Secretary shall submit a report to Congress. Such report shall include the following, with respect to both this part and the original medicare fee-for-service program:
(A) An evaluation of the financial impact of the CCA program.
(B) An evaluation of changes in access to physicians and other health care providers.
(C) Beneficiary satisfaction.
(D) Recommendations regarding any extension or expansion of the CCA program.
(b) Requirements for selection of CCA areas 

(1) CCA area defined 

(A) In general 
For purposes of this section, the term CCA area means an MSA that meets the requirements of paragraph (2) and is selected by the Secretary under subsection (c) of this section.
(B) MSA defined 
For purposes of this section, the term MSA means a Metropolitan Statistical Area (or such similar area as the Secretary recognizes).
(2) Requirements for CCA areas 
The requirements of this paragraph for an MSA to be a CCA area are as follows:
(A) MA enrollment requirement 
For the reference month (as defined under section 1395w–27a (f)(4)(B) of this title) with respect to 2010, at least 25 percent of the total number of MA eligible individuals who reside in the MSA were enrolled in an MA local plan described in section 1395w–21 (a)(2)(A)(i) of this title.
(B) 2 plan requirement 
There will be offered in the MSA during the annual, coordinated election period under section 1395w–21 (e)(3)(B) of this title before the beginning of 2010 at least 2 MA local plans described in section 1395w–21 (a)(2)(A)(i) of this title (in addition to the fee-for-service program under parts A and B of this subchapter), each offered by a different MA organization and each of which met the minimum enrollment requirements of paragraph (1) of section 1395w–27 (b) of this title (as applied without regard to paragraph (3) thereof) as of the reference month.
(c) Selection of CCA areas 

(1) General selection criteria 
The Secretary shall select CCA areas from among those MSAs qualifying under subsection (b) of this section in a manner that
(A) seeks to maximize the opportunity to test the application of comparative cost adjustment under this subchapter;
(B) does not seek to maximize the number of MA eligible individuals who reside in such areas; and
(C) provides for geographic diversity consistent with the criteria specified in paragraph (2).
(2) Selection criteria 
With respect to the selection of MSAs that qualify to be CCA areas under subsection (b) of this section, the following rules apply, to the maximum extent feasible:
(A) Maximum number 
The number of such MSAs selected may not exceed the lesser of
(i)  6, or
(ii)  25 percent of the number of MSAs that meet the requirement of subsection (b)(2)(A) of this section.
(B) One of 4 largest areas by population 
At least one such qualifying MSA shall be selected from among the 4 such qualifying MSAs with the largest total population of MA eligible individuals.
(C) One of 4 areas with lowest population density 
At least one such qualifying MSA shall be selected from among the 4 such qualifying MSAs with the lowest population density (as measured by residents per square mile or similar measure of density).
(D) Multistate area 
At least one such qualifying MSA shall be selected that includes a multi-State area. Such an MSA may be an MSA described in subparagraph (B) or (C).
(E) Limitation within same geographic region 
No more than 2 such MSAs shall be selected that are, in whole or in part, within the same geographic region (as specified by the Secretary) of the United States.
(F) Priority to areas not within certain demonstration projects 
Priority shall be provided for those qualifying MSAs that do not have a demonstration project in effect as of December 8, 2003, for medicare preferred provider organization plans under this part.
(d) Application of comparative cost adjustment 

(1) In general 
In the case of a CCA area for a year
(A) for purposes of applying this part with respect to payment for MA local plans, any reference to an MA area-specific non-drug monthly benchmark amount shall be treated as a reference to such benchmark computed as if the CCA area-specific non-drug monthly benchmark amount (as defined in subsection (e)(1) of this section) were substituted for the amount described in section 1395w–23 (j)(1)(A) of this title for the CCA area and year involved, as phased in under paragraph (3); and
(B) with respect to months in the year for individuals residing in the CCA area who are not enrolled in an MA plan, the amount of the monthly premium under section 1395r of this title is subject to adjustment under subsection (f) of this section.
(2) Exclusion of MA local areas with fewer than 2 organizations offering MA plans 

(A) In general 
In no case shall an MA local area that is within an MSA be included as part of a CCA area unless for 2010 (and, except as provided in subparagraph (B), for a subsequent year) there is offered in each part of such MA local area at least 2 MA local plans described in section 1395w–21 (a)(2)(A)(i) of this title each of which is offered by a different MA organization.
(B) Continuation 
If an MA local area meets the requirement of subparagraph (A) and is included in a CCA area for 2010, such local area shall continue to be included in such CCA area for a subsequent year notwithstanding that it no longer meets such requirement so long as there is at least one MA local plan described in section 1395w–21 (a)(2)(A)(i) of this title that is offered in such local area.
(3) Phase-in of CCA benchmark 

(A) In general 
In applying this section for a year before 2013, paragraph (1)(A) shall be applied as if the phase-in fraction under subparagraph (B) of the CCA non-drug monthly benchmark amount for the year were substituted for such fraction of the MA area-specific non-drug monthly benchmark amount.
(B) Phase-in fraction 
The phase-in fraction under this subparagraph is
(i) for 2010 1/4; and
(ii) for a subsequent year is the phase-in fraction under this subparagraph for the previous year increased by 1/4, but in no case more than 1.
(e) Computation of CCA benchmark amount 

(1) CCA non-drug monthly benchmark amount 
For purposes of this section, the term CCA non-drug monthly benchmark amount means, with respect to a CCA area for a month in a year, the sum of the 2 components described in paragraph (2) for the area and year. The Secretary shall compute such benchmark amount for each such CCA area before the beginning of each annual, coordinated election period under section 1395w–21 (e)(3)(B) of this title for each year (beginning with 2010) in which the CCA area is so selected.
(2) 2 components 
For purposes of paragraph (1), the 2 components described in this paragraph for a CCA area and a year are the following:
(A) MA local component 
The product of the following:
(i) Weighted average of medicare advantage plan bids in area The weighted average of the plan bids for the area and year (as determined under paragraph (3)(A)).
(ii) Non-FFS market share One minus the fee-for-service market share percentage, determined under paragraph (4) for the area and year.
(B) Fee-for-service component 
The product of the following:
(i) Fee-for-service area-specific non-drug amount The fee-for-service area-specific non-drug amount (as defined in paragraph (5)) for the area and year.
(ii) Fee-for-service market share The fee-for-service market share percentage, determined under paragraph (4) for the area and year.
(3) Determination of weighted average MA bids for a CCA area 

(A) In general 
For purposes of paragraph (2)(A)(i), the weighted average of plan bids for a CCA area and a year is, subject to subparagraph (D), the sum of the following products for MA local plans described in subparagraph (C) in the area and year:
(i) Monthly medicare advantage statutory non-drug bid amount The accepted unadjusted MA statutory non-drug monthly bid amount.
(ii) Plans share of medicare advantage enrollment in area The number of individuals described in subparagraph (B), divided by the total number of such individuals for all MA plans described in subparagraph (C) for that area and year.
(B) Counting of individuals 
The Secretary shall count, for each MA local plan described in subparagraph (C) for an area and year, the number of individuals who reside in the area and who were enrolled under such plan under this part during the reference month for that year.
(C) Exclusion of plans not offered in previous year 
For an area and year, the MA local plans described in this subparagraph are MA local plans described in section 1395w–21 (a)(2)(A)(i) of this title that are offered in the area and year and were offered in the CCA area in the reference month.
(D) Computation of weighted average of plan bids 
In calculating the weighted average of plan bids for a CCA area under subparagraph (A)
(i) in the case of an MA local plan that has a service area only part of which is within such CCA area, the MA organization offering such plan shall submit a separate bid for such plan for the portion within such CCA area; and
(ii) the Secretary shall adjust such separate bid (or, in the case of an MA local plan that has a service area entirely within such CCA area, the plan bid) as may be necessary to take into account differences between the service area of such plan within the CCA area and the entire CCA area and the distribution of plan enrollees of all MA local plans offered within the CCA area.
(4) Computation of fee-for-service market share percentage 
The Secretary shall determine, for a year and a CCA area, the proportion (in this subsection referred to as the fee-for-service market share percentage) equal to
(A) the total number of MA eligible individuals residing in such area who during the reference month for the year were not enrolled in any MA plan; divided by
(B) the sum of such number and the total number of MA eligible individuals residing in such area who during such reference month were enrolled in an MA local plan described in section 1395w–21 (a)(2)(A)(i) of this title,

or, if greater, such proportion determined for individuals nationally.

(5) Fee-for-service area-specific non-drug amount 

(A) In general 
For purposes of paragraph (2)(B)(i) and subsection (f)(2)(A) of this section, subject to subparagraph (C), the term fee-for-service area-specific non-drug amount means, for a CCA area and a year, the adjusted average per capita cost for such area and year involved, determined under section 1395mm (a)(4) of this title and adjusted as appropriate for the purpose of risk adjustment for benefits under the original medicare fee-for-service program option for individuals entitled to benefits under part A of this subchapter and enrolled under part B of this subchapter who are not enrolled in an MA plan for the year, but adjusted to exclude costs attributable to payments under section 1395ww (h) of this title.
(B) Use of full risk adjustment to standardize fee-for-service costs to typical beneficiary 
In determining the adjusted average per capita cost for an area and year under subparagraph (A), such costs shall be adjusted to fully take into account the demographic and health status risk factors established under section 1395w–23 (a)(1)(A)(iv) of this title[1] so that such per capita costs reflect the average costs for a typical beneficiary residing in the CCA area.
(C) Inclusion of costs of VA and DOD military facility services to medicare-eligible beneficiaries 
In determining the adjusted average per capita cost under subparagraph (A) for a year, such cost shall be adjusted to include the Secretarys estimate, on a per capita basis, of the amount of additional payments that would have been made in the area involved under this subchapter if individuals entitled to benefits under this subchapter had not received services from facilities of the Department of Veterans Affairs or the Department of Defense.
(f) Premium adjustment 

(1) Application 

(A) In general 
Except as provided in subparagraph (B), in the case of an individual who is enrolled under part B of this subchapter, who resides in a CCA area, and who is not enrolled in an MA plan under this part, the monthly premium otherwise applied under part B of this subchapter (determined without regard to subsections (b), (f), and (i) of section 1395r of this title or any adjustment under this subsection) shall be adjusted in accordance with paragraph (2), but only in the case of premiums for months during the period in which the CCA program under this section for such area is in effect.
(B) No premium adjustment for subsidy eligible beneficiaries 
No premium adjustment shall be made under this subsection for a premium for a month if the individual is determined to be a subsidy eligible individual (as defined in section 1395w–114 (a)(3)(A) of this title) for the month.
(2) Amount of adjustment 

(A) In general 
Under this paragraph, subject to the exemption under paragraph (1)(B) and the limitation under subparagraph (B), if the fee-for-service area-specific non-drug amount (as defined in section[2] (e)(5)) for a CCA area in which an individual resides for a month
(i) does not exceed the CCA non-drug monthly benchmark amount (as determined under subsection (e)(1) of this section) for such area and month, the amount of the premium for the individual for the month shall be reduced, by an amount equal to 75 percent of the amount by which such CCA benchmark exceeds such fee-for-service area-specific non-drug amount; or
(ii) exceeds such CCA non-drug benchmark, the amount of the premium for the individual for the month shall be adjusted to ensure, that
(I) the sum of the amount of the adjusted premium and the CCA non-drug benchmark for the area; is equal to
(II) the sum of the unadjusted premium plus the amount of such fee-for-service area-specific non-drug amount for the area.
(B) Limitation 
In no case shall the actual amount of an adjustment under subparagraph (A) for an area and month in a year result in an adjustment that exceeds the maximum adjustment permitted under subparagraph (C) for the area and year, or, if less, the maximum annual adjustment permitted under subparagraph (D) for the area and year.
(C) Phase-in of adjustment 
The amount of an adjustment under subparagraph (A) for a CCA area and year may not exceed the product of the phase-in fraction for the year under subsection (d)(3)(B) of this section multiplied by the amount of the adjustment otherwise computed under subparagraph (A) for the area and year, determined without regard to this subparagraph and subparagraph (D).
(D) 5-percent limitation on adjustment 
The amount of the adjustment under this subsection for months in a year shall not exceed 5 percent of the amount of the monthly premium amount determined for months in the year under section 1395r of this title without regard to subsections (b), (f), and (i) of such section and this subsection.
[1] See References in Text note below.
[2] So in original. Probably should be “subsection”.