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114th Congress    }                                  {   Rept. 114-161
                        HOUSE OF REPRESENTATIVES
 1st Session      }                                  {          Part 1

======================================================================



 
  PRESERVATION OF ACCESS FOR SENIORS IN MEDICARE ADVANTAGE ACT OF 2015

                                _______
                                

 June 16, 2015.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

Mr. Ryan of Wisconsin, from the Committee on Ways and Means, submitted 
                             the following

                              R E P O R T

                        [To accompany H.R. 2581]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Ways and Means, to whom was referred the 
bill (H.R. 2581) to amend title XVIII of the Social Security 
Act to establish a 3-year demonstration program to test the use 
of value-based insurance design methodologies under eligible 
Medicare Advantage plans, to preserve Medicare beneficiary 
choice under Medicare Advantage, to revise the treatment under 
the Medicare program of infusion drugs furnished through 
durable medical equipment, and for other purposes, having 
considered the same, report favorably thereon with an amendment 
and recommend that the bill as amended do pass.

                                CONTENTS

                                                                   Page
 I. SUMMARY AND BACKGROUND............................................6
        A. PURPOSE AND SUMMARY...................................     6
        B. BACKGROUND AND NEED FOR LEGISLATION...................     6
        C. LEGISLATIVE HISTORY...................................     6
II. EXPLANATION OF THE BILL...........................................7
III.VOTES OF THE COMMITTEE............................................8

IV. BUDGET EFFECTS OF THE BILL........................................8
        A. Committee Estimate of Budgetary Effects...............     8
        B. Statement Regarding New Budget Authority and Tax 
            Expenditures Budget Authority........................     9
        C. Cost Estimate Prepared by the Congressional Budget 
            Office...............................................     9
 V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE.......13
        A. Committee Oversight Findings and Recommendations......    13
        B. Statement of General Performance Goals and Objectives.    13
        C. Information Relating to Unfunded Mandates.............    13
        D. Congressional Earmarks, Limited Tax Benefits, and 
            Limited Tariff Benefits..............................    13
        E. Duplication of Federal Programs.......................    13
        F. Disclosure of Directed Rule Makings...................    14
VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED............14
        A. Text of Existing Law Amended or Repealed by the Bill, 
            as Reported..........................................    14
        B. Changes in Existing Law Proposed by the Bill, as 
            Reported.............................................    60

    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Preservation of Access for Seniors in 
Medicare Advantage Act of 2015''.

SEC. 2. DEMONSTRATION PROGRAM.

  (a) In General.--The Secretary of Health and Human Services (in this 
section referred to as the ``Secretary'') shall establish a 3-year 
demonstration program to test the use of value-based insurance design 
methodologies (as defined in subsection (c)(1)) under eligible Medicare 
Advantage plans offered by Medicare Advantage organizations under part 
C of title XVIII of the Social Security Act (42 U.S.C. 1395w-21 et 
seq.). The Secretary may extend the program to a duration of 4 or 5 
years, as determined necessary by the Secretary in coordination with 
the Centers for Medicare and Medicaid Innovation.
  (b) Demonstration Program Design.--
          (1) Selection of medicare advantage sites and eligible 
        medicare advantage plans.--Not later than two years after the 
        date of the enactment of this Act, the Secretary shall--
                  (A) select at least two Medicare Advantage sites with 
                respect to which to conduct the demonstration program 
                under this section; and
                  (B) approve eligible Medicare Advantage plans to 
                participate in such demonstration program.
        In selecting Medicare Advantage sites under subparagraph (A), 
        the Secretary shall take into account area differences as well 
        as the availability of health maintenance organization plans 
        and preferred provider organization plans offered in such 
        sites.
          (2) Start of demonstration.--The demonstration program shall 
        begin not later than the third plan year beginning after the 
        date of the enactment of this Act.
          (3) Eligible medicare advantage plans.--For purposes of this 
        section, the term ``eligible Medicare Advantage plan'' means a 
        Medicare Advantage plan under part C of title XVIII of the 
        Social Security Act (42 U.S.C. 1395w-21 et seq.) that meets the 
        following requirements:
                  (A) The plan is an Medicare Advantage regional plan 
                (as defined in paragraph (4) of section 1859(b) of such 
                Act (42 U.S.C. 1395w-28(b))) or Medicare Advantage 
                local plan (as defined in paragraph (5) of such 
                section) offered in the Medicare Advantage region 
                selected under paragraph (1)(A).
                  (B) The plan has--
                          (i)(I) a quality rating under section 1853(o) 
                        of such Act (42 U.S.C. 1395w-23(o)) of 4 stars 
                        or higher based on the most recent data 
                        available for such year, or (II) in the case of 
                        a specialized Medicare Advantage plan for 
                        special needs individuals, as defined in 
                        section 1859(b)(6)(A) of such Act (42 U.S.C. 
                        1395w-28(b)(6)(A)), a quality rating under 
                        section 1853(o) of such Act (42 U.S.C. 1395w-
                        23(o)) equal to or higher than the national 
                        average for special needs plans (excluding 
                        Institutional-Special needs plans) based on the 
                        most recent data available for such year; and
                          (ii) at least 20 percent of the population to 
                        whom the plan is offered in a service area 
                        consists of subsidy eligible individuals (as 
                        defined in section 1860D-14(a)(3)(A) of the 
                        Social Security Act (42 U.S.C. 1395w-
                        114(a)(3)(A))).
          (4) Disclosure to beneficiaries.--The Secretary shall provide 
        to each individual eligible to enroll under a Medicare 
        Advantage plan approved to participate under the demonstration 
        program during a plan year for which the plan is so selected--
                  (A) notification that the plan is participating in 
                such demonstration program;
                  (B) background information on the demonstration 
                program;
                  (C) clinical data derived from the studies resulting 
                from the demonstration program; and
                  (D) notification of the potential benefits that the 
                individual will receive, and of the other potential 
                impacts that the individual will experience, on account 
                of the participation of the plan in the demonstration 
                program.
  (c) Value-Based Insurance Design Methodologies.--
          (1) Definition.--For purposes of this section, the term 
        ``value-based insurance design methodology'' means a 
        methodology for identifying specific prescription medications, 
        and clinical services that are payable under title XVIII of the 
        Social Security Act, for which the reduction of copayments, 
        coinsurance, or both, would improve the management of specific 
        chronic clinical conditions because of the high value and 
        effectiveness of such medications and services for such 
        specific chronic clinical conditions, as approved by the 
        Secretary.
          (2) Use of methodologies to reduce copayments and 
        coinsurance.--A Medicare Advantage organization offering an 
        eligible Medicare Advantage plan approved to participate under 
        the demonstration program, for each plan year for which the 
        plan is so selected and using value-based insurance design 
        methodologies--
                  (A) shall identify each prescription medication and 
                clinical service covered under such plan for which the 
                plan proposes to reduce or eliminate the copayment or 
                coinsurance, with respect to the management of specific 
                chronic clinical conditions (as specified by the 
                Secretary) of Medicare Advantage eligible individuals 
                (as defined in section 1851(a)(3) of the Social 
                Security Act (42 U.S.C. 1395w-21(a)(3))) enrolled under 
                such plans, for such plan year;
                  (B) may, for such plan year, reduce or eliminate 
                copayments, coinsurance, or both for such prescription 
                medication and clinical services so identified with 
                respect to the management of such conditions of such 
                individuals--
                          (i) if such reduction or elimination is 
                        evidence-based and for the purpose of 
                        encouraging such individuals in such plan to 
                        use such prescription medications and clinical 
                        services (such as preventive care, primary 
                        care, specialty visits, diagnostic tests, 
                        procedures, and durable medical equipment) with 
                        respect to such conditions; and
                          (ii) for the purpose of encouraging such 
                        individuals in such plan to use health care 
                        providers that such organization has identified 
                        with respect to such plan year as being high 
                        value providers; and
                  (C) if a reduction or elimination is applied pursuant 
                to subparagraph (B), with respect to such medication 
                and clinical services, shall, for such plan year, count 
                toward the deductible applicable to such individual 
                under such plan amounts that would have been payable by 
                the individual as copayment or coinsurance for such 
                medication and services if the reduction or elimination 
                had not been applied.
          (3) Prohibition of increases of copayments and coinsurance.--
        In no case may any Medicare Advantage plan participating in the 
        demonstration program increase, for any plan year for which the 
        plan is so participating, the amount of copayments or 
        coinsurance for any item or service covered under such plan for 
        purposes of discouraging the use of such item or service.
  (d) Report on Implementation.--
          (1) In general.--Not later than 1 year after the date on 
        which the demonstration program under this section begins under 
        subsection (b)(2), the Secretary shall submit to Congress a 
        report on the status of the implementation of the demonstration 
        program.
          (2) Elements.--The report required by paragraph (1) shall, 
        with respect to eligible Medicare Advantage plans participating 
        in the demonstration program for the first plan year of such 
        program, include the following:
                  (A) A list of each medication and service identified 
                pursuant to subsection (c)(2)(A) for such plan with 
                respect to such plan year.
                  (B) For each such medication or service so 
                identified, the amount of the copayment or coinsurance 
                required under such plan with respect to such plan year 
                for such medication or service and the amount of the 
                reduction of such copayment or coinsurance from a 
                previous plan year.
                  (C) For each provider identified pursuant to 
                subsection (c)(2)(B)(ii) for such plan with respect to 
                such plan year, a statement of the amount of the 
                copayment or coinsurance required under such plan with 
                respect to such plan year and the amount of the 
                reduction of such copayment or coinsurance from the 
                previous plan year.
  (e) Review and Assessment of Utilization of Value-Based Insurance 
Design Methodologies.--
          (1) In general.--The Secretary shall enter into a contract or 
        agreement with an independent entity to review and assess the 
        implementation of the demonstration program under this section. 
        The review and assessment shall include the following:
                  (A) An assessment of the utilization of value-based 
                insurance design methodologies by Medicare Advantage 
                plans participating under such program.
                  (B) An analysis of whether reducing or eliminating 
                the copayment or coinsurance for each medication and 
                clinical service identified pursuant to subsection 
                (c)(2)(A) resulted in increased adherence to medication 
                regimens, increased service utilization, improvement in 
                quality metrics, better health outcomes, and enhanced 
                beneficiary experience.
                  (C) An analysis of the extent to which costs to 
                Medicare Advantage plans under part C of title XVIII of 
                the Social Security Act participating in the 
                demonstration program is less than costs to Medicare 
                Advantage plans under such part that are not 
                participating in the demonstration program.
                  (D) An analysis of whether reducing or eliminating 
                the copayment or coinsurance for providers identified 
                pursuant to subsection (c)(2)(B)(ii) resulted in 
                improvement in quality metrics, better health outcomes, 
                and enhanced beneficiary experience.
                  (E) An analysis, for each provider so identified, the 
                extent to which costs to Medicare Advantage plans under 
                part C of title XVIII of the Social Security Act 
                participating in the demonstration program is less than 
                costs to Medicare Advantage plans under such part that 
                are not participating in the demonstration program.
                  (F) Such other matters as the Secretary considers 
                appropriate.
          (2) Report.--The contract or agreement entered into under 
        paragraph (1) shall require such entity to submit to the 
        Secretary a report on the review and assessment conducted by 
        the entity under such paragraph in time for the inclusion of 
        the results of such report in the report required by paragraph 
        (3). Such report shall include a description, in clear 
        language, of the manner in which the entity conducted the 
        review and assessment.
          (3) Report to congress.--Not later than 4 years after the 
        date on which the demonstration program begins under subsection 
        (b)(2), the Secretary shall submit to Congress a report on the 
        review and assessment of the demonstration program conducted 
        under this subsection. The report shall include the following:
                  (A) A description of the results of the review and 
                assessment included in the report submitted pursuant to 
                paragraph (2).
                  (B) Such recommendations as the Secretary considers 
                appropriate for enhancing the utilization of the 
                methodologies applied under the demonstration program 
                to all Medicare Advantage plans under part C of title 
                XVIII of the Social Security Act so as to reduce 
                copayments and coinsurance under such plans paid by 
                Medicare beneficiaries for high-value prescription 
                medications and clinical services for which coverage is 
                provided under such plans and to otherwise improve the 
                quality of health care provided under such plans.
          (4) Oversight report.--Not later than three years after the 
        date of the enactment of this Act, the Comptroller General of 
        the United States shall submit to Congress a report on the 
        demonstration program that includes an assessment, with respect 
        to individuals enrolled under Medicare Advantage plans approved 
        to participate under the demonstration program, of the impact 
        that the age, co-morbidities, and geographic regions of such 
        individuals had upon the implementation of the demonstration 
        program by the plans with respect to such individuals.
  (f) Savings.--In no case may any reduction in beneficiary copayments 
or coinsurance resulting from the implementation of the demonstration 
program under this section result in expenditures under parts A, B, and 
D of the title XVIII of the Social Security Act that are greater than 
such expenditures without application of this section.
  (g) Expansion of Demonstration Program.--Taking into account the 
review and assessment conducted under subsection (e), the Secretary 
may, through notice and comment rulemaking, expand (including 
implementation on a nationwide basis) the duration and scope of the 
demonstration program under title XVIII of the Social Security Act, 
other than under the original medicare fee-for-service program under 
parts A and B of such title, to the extent determined appropriate by 
the Secretary, if the requirements of paragraphs (1), (2) and (3) of 
subsection (c) of section 1115A of the Social Security Act (42 U.S.C. 
1315a), as applied to the testing of a model under subsection (b) of 
such section, applied to the demonstration under this section.
  (h) Waiver Authority.--The Secretary may waive such provisions of 
titles XI and XVIII of the Social Security Act as may be necessary to 
carry out the demonstration program under this section.
  (i) Implementation Funding.--For purposes of carrying out the 
demonstration program under this section, the Secretary shall provide 
for the transfer from the Federal Hospital Insurance Trust Fund under 
section 1817 of the Social Security Act (42 U.S.C. 1395i) and the 
Federal Supplementary Insurance Trust Fund under section 1841 of the 
Social Security Act (42 U.S.C. 1395t), including the Medicare 
Prescription Drug Account in such Trust Fund, in such proportion as 
determined appropriate by the Secretary, of such sums as may be 
necessary.

SEC. 3. PRESERVATION OF MEDICARE BENEFICIARY CHOICE UNDER MEDICARE 
                    ADVANTAGE.

  Section 1851(e)(2) of the Social Security Act (42 U.S.C. 1395w-
21(e)(2)) is amended--
          (1) in subparagraph (C)--
                  (A) in the heading, by inserting ``from 2011 through 
                2015'' after ``45-day period''; and
                  (B) by inserting ``and ending with 2015'' after 
                ``beginning with 2011''; and
          (2) by adding at the end the following new subparagraph:
                  ``(G) Continuous open enrollment and disenrollment 
                for first 3 months in 2016 and subsequent years.--
                          ``(i) In general.--Subject to clause (ii) and 
                        subparagraph (D)--
                                  ``(I) in the case of an MA eligible 
                                individual who is enrolled in an MA 
                                plan, at any time during the first 3 
                                months of a year (beginning with 2016); 
                                or
                                  ``(II) in the case of an individual 
                                who first becomes an MA eligible 
                                individual during a year (beginning 
                                with 2016) and enrolls in an MA plan, 
                                during the first 3 months during such 
                                year in which the individual is an MA 
                                eligible individual;
                        such MA eligible individual may change the 
                        election under subsection (a)(1).
                          ``(ii) Limitation of one change during open 
                        enrollment period each year.--An individual may 
                        change the election pursuant to 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) Limited application to part d.--
                        Clauses (i) and (ii) of this subparagraph shall 
                        only apply with respect to changes in 
                        enrollment in a prescription drug plan under 
                        part D in the case of an individual who, 
                        previous to such change in enrollment, is 
                        enrolled in a Medicare Advantage plan.
                          ``(iv) Limitations on marketing.-- Pursuant 
                        to subsection (j), no unsolicited marketing or 
                        marketing materials may be sent to an 
                        individual described in clause (i) during the 
                        continuous open enrollment and disenrollment 
                        period established for the individual under 
                        such clause, notwithstanding marketing 
                        guidelines established by the Centers for 
                        Medicare & Medicaid Services.''.

SEC. 4. TREATMENT OF INFUSION DRUGS FURNISHED THROUGH DURABLE MEDICAL 
                    EQUIPMENT.

  Section 1842(o)(1) of the Social Security Act (42 U.S.C. 1395u(o)(1)) 
is amended--
          (1) in subparagraph (C), by inserting ``(and including a drug 
        or biological described in subparagraph (D)(i) furnished on or 
        after January 1, 2017)'' after ``2005''; and
          (2) in subparagraph (D)--
                  (A) by striking ``infusion drugs'' and inserting 
                ``infusion drugs or biologicals'' each place it 
                appears; and
                  (B) in clause (i)--
                          (i) by striking ``2004'' and inserting 
                        ``2004, and before January 1, 2017''; and
                          (ii) by striking ``for such drug''.

SEC. 5. SENSE OF CONGRESS REGARDING THE IMPLEMENTATION AND DISTRIBUTION 
                    OF QUALITY INCENTIVE PAYMENTS TO MEDICARE ADVANTAGE 
                    PLANS.

  It is the sense of Congress that--
          (1) the Secretary of Health and Human Services has 
        incorrectly interpreted subsection (n) of section 1853 of the 
        Social Security Act (42 U.S.C. 1395w-23) as prohibiting the 
        provision of any Medicare quality incentive payments under 
        subsection (o) of such section with respect to Medicare 
        Advantage plans that exceed the payment benchmark cap under 
        such subsection (n) for the area served by such plans; and
          (2) the Secretary should immediately apply quality incentive 
        payments under such subsection (o) with respect to such 
        Medicare Advantage plans without regard to the limits set forth 
        in such subsection (n).

                       I. SUMMARY AND BACKGROUND


                         A. Purpose and Summary

    The bill, H.R. 2581, as reported by the Committee on Ways 
and Means on June 2, 2015, establishes a demonstration program 
requiring the use of Value-Based Insurance Designs to 
demonstrate how a reduction in copayments or coinsurance 
charges to Medicare beneficiaries, when selecting high-value 
prescription medications and clinical services, can increase 
utilization and ultimately improve clinical outcomes and lower 
health care costs. The second section of the legislation 
further preserves beneficiary choice under Medicare Advantage 
by reinstating, with modifications, a second enrollment period 
for Medicare Advantage beneficiaries who need to change their 
plan. The bill also changes the payment methodology for drugs 
paid under Part B of the Medicare Program that are infused 
through durable medical equipment.

                 B. Background and Need for Legislation

    On May 29, 2015, Representative Brady (R-TX), Chairman of 
Ways and Means Health Subcommittee, introduced H.R. 2581. H.R. 
2581 establishes a demonstration program that provides Medicare 
beneficiaries with reduced copayments and coinsurance for 
Medicare beneficiaries to improve such a plans' ability to 
serve a varying beneficiary pool without running afoul of Anti-
Discrimination Act concerns. H.R. 2581 reopens the Medicare 
Advantage second open enrollment period previously closed by 
the Patient Protection and Affordable Care Act due to concerns 
about plan churn and its impact on beneficiaries. With recent 
cuts to the Medicare Advantage program resulting in a narrowing 
of networks in certain service areas, the likelihood that 
beneficiaries would allow themselves to auto-enroll into a plan 
they have come to like unbeknownst to network changes. The 
Committee believes this legislation is necessary in order to 
protect seniors' ability to see the providers they choose and. 
The increased spending that result from these policies is 
offset by adjusting the payment methodology for Part B drugs 
that are infused through durable medical equipment from the 95% 
of the Average Wholesale Price (AWP) that was in effect on 
October 1, 2003 to the Average Sales Price plus six (ASP+6) 
methodology. The Department of Health and Human Services Office 
of the Inspector General, documenting that many DME infused 
drugs are overpaid under the AWP-based methodology, recommended 
this change starting in 2013.

                         C. Legislative History


Background

    H.R. 2581 was introduced on May 29, 2015, and was referred 
to the Committee on Ways and Means and subsequently to the 
Committee on Energy and Commerce.

Committee hearings

    On July 24, 2014, the Committee on Ways and Means 
Subcommittee on Health held a hearing on the status of the 
Medicare Advantage program.
    The panel of witnesses included the following:

Chris Wing, Chief Executive Officer, SCAN Health Plans
Jeff Burnich, M.D., Senior Vice President & Executive Officer, 
        Sutter Medical Network, (Sacramento, CA) on behalf of 
        CAPG
Robert Book, PhD, Senior Research Director, Health Systems 
        Innovation Network, LLC, Outside Healthcare and 
        Economics Expert, American Action Forum
Joe Baker, President, Medicare Rights Center

Committee action

    The Committee on Ways and Means marked up H.R. 2581, 
Preservation of Access for Seniors in Medicare Advantage Act of 
2015, on June 2, 2015 and ordered the bill favorably reported 
to the House of Representatives, as amended by a voice-vote 
(with a quorum being present).

                      II. EXPLANATION OF THE BILL


  Preservation of Access for Seniors in Medicare Advantage Act of 2015


                              PRESENT LAW

    This bill creates a new statutory demonstration program to 
be added to the Social Security Act (42 U.S.C. 1395w-21). No 
such program exists, nor is it prohibited.
    Section 1851(e)(2) of the Social Security Act restricts 
disenrollment from Medicare Advantage plans to the first 45 
days of the year and strictly prohibits open enrollment after 
initial selection of plans when an individual is Medicare 
eligible. Current legislation also disallows for changing of 
election of enrollment.
    Section 1842(o)(1) of the Social Security Act currently 
states that payment for durable medical equipment related 
infused drugs is set at 95% of AWP in effect on October 1, 
2003.

                           REASONS FOR CHANGE

    The Committee believes that Congress has found certain 
Medicare beneficiaries do not utilize important aspects of 
their benefits, opting to ignore potential health issues 
(including use high value clinical services), due to associated 
high out-of-pocket costs. Studies have found that the use of 
such high value services can decrease hospitalization and 
emergency room visits. Due to the `one-size fits all' necessity 
in Medicare Advantage to align with Anti-Discrimination Act 
concerns, plans must find a benefit structure that can be 
offered to all beneficiaries they enroll. This creates the need 
for Chronic Special Needs Plans (C-SNPs), instead of allowing 
plans flexibility to serve a varying beneficiary pool to their 
specific needs.
    The Committee also believes that seniors should have the 
option to choose whether to enroll or withdraw from Medicare 
Advantage if their choice during the original enrollment period 
is not one that meets their needs, as many satisfied Medicare 
Advantage beneficiaries regularly auto-enroll into the same 
plan without regard to whether their networks may have 
narrowed. However, current statute does not allow an individual 
to change their mind after enrolling, and the Committee 
believes that beneficiary choice should be restored in a 
modified fashion.
    The HHS Office of Inspector has pointed out that AWP does 
not represent actual transaction prices and that use of the 
AWP-based methodology results in overpayment of many DME 
infused drugs in relation to the ASP. Paying for DME infused 
drugs at ASP +6% ensures payments reflect recent transaction 
prices, reduces total Medicare spending on these drugs, and 
lowers total beneficiary cost sharing for these drugs.

                       EXPLANATION OF PROVISIONS

    Section 1. The Value Based Insurance Design for Better Care 
Act of 2015 establishes a demonstration program that allows for 
varying benefit structures under a plan's bid for the purpose 
of reducing out-of-pocket costs for seniors in Medicare 
Advantage that are accepted to participate, while specifically 
prohibiting increases to copayments and coinsurance of these 
sites. The demonstration is authorized for 3-5 years, depending 
on analysis by the Secretary in conjunction with the Center for 
Medicare and Medicaid Innovation, and once the demonstration is 
complete, Congress will receive a final analysis from the 
Secretary of Health and Human Services.
    Section 2. The Medicare Beneficiary Preservation of Choice 
Act of 2015 allows for a modified second Medicare open 
enrollment period. It allows for one change during each year 
during the second enrollment period, January 1 to March 1, and 
also prohibits the use of unsolicited materials in marketing 
for this period.
    Section 3. This section establishes the payment methodology 
for Part B DME infused drugs at ASP +6%.

                             EFFECTIVE DATE

    Section 1 of this bill would take effect no more than two 
years after enactment.
    Section 2 takes effect beginning of January 1, 2016.
    Section 3 takes effect beginning of January 1, 2017.

                      III. VOTES OF THE COMMITTEE

    In compliance with clause 3(b) of rule XIII of the Rules of 
the House of Representatives, the following statement is made 
concerning the vote of the Committee on Ways and Means in its 
consideration of H.R. 2581, Preservation of Access for Seniors 
in Medicare Advantage Act of 2015, on June 2, 2015.
    The bill, H.R. 2581, was ordered favorably reported to the 
House of Representatives as amended by a voice vote (with a 
quorum being present).

                     IV. BUDGET EFFECTS OF THE BILL


               A. Committee Estimate of Budgetary Effects

    In compliance with clause 3(d) of rule XIII of the Rules of 
the House of Representatives, the following statement is made 
concerning the effects on the budget of the bill, H.R. 2581, as 
reported. The Committee agrees with the estimate prepared by 
the Congressional Budget Office (CBO), which is included below.

B. Statement Regarding New Budget Authority and Tax Expenditures Budget 
                               Authority

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee states that the 
bill involves no new increased budget authority. The Committee 
states further that the bill involves no new or increased tax 
expenditures.

      C. Cost Estimate Prepared by the Congressional Budget Office

    In compliance with clause 3(c)(3) of rule XIII of the Rules 
of the House of Representatives, requiring a cost estimate 
prepared by the CBO, the following statement by CBO is 
provided.

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, June 15, 2015.
Hon. Paul Ryan,
Chairman, Committee on Ways and Means,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 2581, the 
Preservation of Access for Seniors in Medicare Advantage Act of 
2015.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Paul Masi.
            Sincerely,
                                                Keith Hall,
                                                          Director.
    Enclosure.

H.R. 2581--Preservation of Access for Seniors in Medicare Advantage Act 
        of 2015

    Summary: H.R. 2581 would establish a demonstration program 
in the Medicare Advantage (MA) program, modify the open 
enrollment period for that program, and change payment rates 
for prescription drugs that are administered through items of 
durable medical equipment (DME).
    CBO estimates that enacting H.R. 2581 would decrease direct 
spending relative to current law by $225 million over the 2016-
2025 period. Pay-as-you-go procedures apply because the bill 
would affect direct spending. Enacting the bill would not 
affect revenues.
    H.R. 2581 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA).
    Estimated cost to the Federal Government: The estimated 
budgetary effect of H.R. 2581 is shown in the following table. 
The costs of this legislation fall within budget function 570 
(Medicare).

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                  By fiscal year, in millions of dollars--
                                                   -----------------------------------------------------------------------------------------------------
                                                     2016    2017    2018    2019    2020    2021    2022    2023    2024    2025   2016-2020  2016-2025
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                         CHANGES IN DIRECT SPENDING (Outlays\a\)
 
Value-Based Insurance Design Demonstration Program       0       0      20      20      20      20      20      30      40      40         60        210
Medicare Advantage Open Enrollment Period.........       0       5      10      10      10      10      15      15      15      15         35        105
Durable Medical Equipment Drugs...................       0     -55     -75     -80     -55     -50     -55     -55     -55     -60       -265       -540
 
                                               NET DECREASE IN THE DEFICIT FROM CHANGES IN DIRECT SPENDING
 
Impact on the Deficit.............................       0     -50     -45     -50     -25     -20     -20     -10       0      -5       -170      -225
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\Budget authority is equal to outlays.

    Basis of estimate: H.R. 2581 would require the Secretary of 
Health and Human Services to conduct a demonstration program, 
modify the open enrollment period for the Medicare Advantage 
program, and change how payment rates for certain prescription 
drugs are set. In aggregate, CBO estimates those changes would 
reduce direct spending for Medicare by $225 million over the 
2016-2025 period.

Value-based insurance design demonstration program

    The legislation would require the Secretary to conduct a 
demonstration program to test the effectiveness of permitting 
private health insurance plans participating in the Medicare 
Advantage program to vary cost-sharing for Medicare 
beneficiaries with certain conditions in order to encourage the 
use of certain services and providers. As with models tested 
through the Center for Medicare and Medicaid Innovation (CMMI), 
the Secretary would be permitted to expand the program if, 
after evaluation of the results of the demonstration program, 
the Chief Actuary of the Centers for Medicare and Medicaid 
Services certifies that expansion would not increase Medicare 
spending and the Secretary determines that the expansion would 
not reduce quality of care.
    Based on the priority areas announced by the CMMI program 
and information provided by stakeholders, CBO expects that CMMI 
will conduct a demonstration program under current law that is 
substantially similar to the program proposed under the 
legislation. The CMMI program has considerable flexibility in 
designing the models it tests, and to modify those models 
during the testing process. That flexibility increases the 
likelihood that a model tested by CMMI will be successful in 
either reducing spending without harming quality of care or 
improving quality of care without increasing spending.
    In contrast, the legislation would codify several features 
of the demonstration program that the Secretary would be 
required to conduct. In CBO's judgment, that codification would 
have the effect of limiting the Secretary's flexibility in 
designing and modifying the demonstration, and could result in 
a model that is less successful in achieving the cost-reducing 
objective of the CMMI program. CBO expects that limiting that 
flexibility would be unlikely to result in greater cost savings 
than a similar model designed and refined under the existing 
CMMI program. Based on that one-sided effect on potential 
savings, CBO concludes that the middle of the range of expected 
outcomes would be an increase in Medicare spending. CBO 
estimates that replacing the CMMI model with the demonstration 
program would increase Medicare spending by about $20 million a 
year during the testing period, rising to about $40 million a 
year during years when a successful model would be expanded. In 
particular, CBO estimates that the projected savings for the 
cohort of projects beginning in 2017 would be reduced by around 
5 percent under the legislation. In total, CBO estimates the 
demonstration program required by H.R. 2581 would increase 
direct spending for Medicare by $210 million over the 2016-2025 
period.

Medicare advantage open enrollment period:

    H.R. 2581 would establish an additional open enrollment 
period annually for beneficiaries already enrolled in a 
Medicare Advantage plan, beginning in 2016. Those beneficiaries 
would be permitted to enroll in a different plan during January 
through March of each year. CBO expects that the opportunity to 
switch plans would result in slightly more beneficiaries 
selecting plans that receive quality-bonus payments, increasing 
Medicare's costs for those beneficiaries by around 3 percent. 
That assessment reflects CBO's observation that beneficiaries 
tend to choose plans with higher quality ratings when given an 
opportunity to do so. CBO estimates that the additional 
enrollment period would increase direct spending for Medicare 
by $105 million over the 2016-2025 period.

Durable medical equipment drugs

    Under current law, Medicare's payment rate for prescription 
drugs delivered through an item of durable medical equipment 
(such as an infusion pump) is 95 percent of the average 
wholesale price (AWP) that was in effect as of October 1, 2003. 
As of January 1, 2017, the bill would base payment for those 
drugs on the Average Sales Price (ASP), which reflects actual 
transaction prices paid to manufacturers. CBO estimates that 
Medicare spent more than $700 million for these drugs in FY 
2014 and, absent the change in law, CBO projects that Medicare 
will spend more than $1 billion annually on these drugs by 
2025. For some drugs, the new payment rate would be higher than 
under current law, but the new payment rate would be lower for 
the majority of drugs. CBO estimates that this provision would 
reduce direct spending for Medicare by about $540 million over 
the 2016-2025 period.
    Pay-as-you-go considerations: The Statutory Pay-As-You-Go 
Act of 2010 establishes budget-reporting and enforcement 
procedures for legislation affecting direct spending or 
revenues. The net changes in outlays that are subject to those 
pay-as-you-go procedures are shown in the following table.

            CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 2581, AS ORDERED REPORTED BY THE HOUSE COMMITTEE ON WAYS AND MEANS ON JUNE 2, 2015
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                By fiscal year, in millions of dollars
                                             -----------------------------------------------------------------------------------------------------------
                                               2015   2016   2017    2018    2019    2020    2021    2022    2023    2024    2025   2016-2020  2016-2025
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             NET DECREASE (-) IN THE DEFICIT
 
Statutory Pay-As-You-Go Impact..............      0      0     -50     -45     -50     -25     -20     -20     -10       0      -5      -170       -225
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Intergovernmental and private-sector impact: H.R. 2581 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would impose no costs on state, local or 
tribal governments.
    Estimate prepared by: Federal Costs: Paul Masi and Lara 
Robillard; Impact on State, Local, and Tribal Governments: 
J'nell Blanco Suchy; Impact on the Private Sector: Amy Petz.
    Estimate approved by: Holly Harvey, Deputy Assistant 
Director for Budget Analysis.

     V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE


          A. Committee Oversight Findings and Recommendations

    With respect to clause 3(c)(1) of rule XIII of the Rules of 
the House of Representatives (relating to oversight findings), 
the Committee advises that it was as a result of the 
Committee's review of the provisions of H.R. 2581 that the 
Committee concluded that it is appropriate to report the bill, 
as amended, favorably to the House of Representatives with the 
recommendation that the bill do pass.

        B. Statement of General Performance Goals and Objectives

    With respect to clause 3(c)(4) of rule XIII of the Rules of 
the House of Representatives, the Committee advises that the 
bill contains no measure that authorizes funding, so no 
statement of general performance goals and objectives for which 
any measure authorizes funding is required.

              C. Information Relating to Unfunded Mandates

    This information is provided in accordance with section 423 
of the Unfunded Mandates Reform Act of 1995 (Pub. L. No. 104-
4).
    The Committee has determined that the bill does not contain 
Federal mandates on the private sector. The Committee has 
determined that the bill does not impose a Federal 
intergovernmental mandate on State, local, or tribal 
governments.

  D. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff 
                                Benefits

    With respect to clause 9 of rule XXI of the Rules of the 
House of Representatives, the Committee has carefully reviewed 
the provisions of the bill, and states that the provisions of 
the bill do not contain any congressional earmarks, limited tax 
benefits, or limited tariff benefits within the meaning of the 
rule.

                   E. Duplication of Federal Programs

    In compliance with Sec. 3(g)(2) of H. Res. 5 (114th 
Congress), the Committee states that no provision of the bill 
establishes or reauthorizes: (1) a program of the Federal 
Government known to be duplicative of another Federal program; 
(2) a program included in any report from the Government 
Accountability Office to Congress pursuant to section 21 of 
Public Law 111-139; or (3) a program related to a program 
identified in the most recent Catalog of Federal Domestic 
Assistance, published pursuant to the Federal Program 
Information Act (Pub. L. No. 95-220, as amended by Pub. L. No. 
98-169).

                 F. Disclosure of Directed Rule Makings

    In compliance with Sec. 3(i) of H. Res. 5 (114th Congress), 
the following statement is made concerning directed rule 
makings: The Committee estimates that the bill requires no 
directed rule makings within the meaning of such section.

       VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED


  A. Text of Existing Law Amended or Repealed by the Bill, as Reported

    In compliance with clause 3(e)(1)(A) of rule XIII of the 
Rules of the House of Representatives, the text of each section 
proposed to be amended or repealed by the bill, as reported, is 
shown below:

                          SOCIAL SECURITY ACT




           *       *       *       *       *       *       *
TITLE XVIII--HEALTH INSURANCE FOR THE AGED AND DISABLED

           *       *       *       *       *       *       *



   Part B--Supplementary Medical Insurance Benefits for the Aged and 
Disabled

           *       *       *       *       *       *       *



          provisions relating to the administration of part b

  Sec. 1842. (a) The administration of this part shall be 
conducted through contracts with medicare administrative 
contractors under section 1874A.
  (b)
          (2)
  (C) In the case of residents of nursing facilities who 
receive services described in clause (i) or (ii) of section 
1861(s)(2)(K) performed by a member of a team, the Secretary 
shall instruct medicare administrative contractors to develop 
mechanisms which permit routine payment under this part for up 
to 1.5 visits per month per resident. In the previous sentence, 
the term ``team'' refers to a physician and includes a 
physician assistant acting under the supervision of the 
physician or a nurse practitioner working in collaboration with 
that physician, or both.
  (3) The Secretary--
          (A) shall take such action as may be necessary to 
        assure that, where payment under this part for a 
        service is on a cost basis, the cost is reasonable cost 
        (as determined under section 1861(v));
          (B) shall take such action as may be necessary to 
        assure that, where payment under this part for a 
        service is on a charge basis, such charge will be 
        reasonable and not higher than the charge applicable, 
        for a comparable service and under comparable 
        circumstances, to the policyholders and subscribers of 
        the medicare administrative contractor, and such 
        payment will (except as otherwise provided in section 
        1870(f)) be made--
                  (i) on the basis of an itemized bill; or
                  (ii) on the basis of an assignment under the 
                terms of which (I) the reasonable charge is the 
                full charge for the service, (II) the physician 
                or other person furnishing such service agrees 
                not to charge (and to refund amounts already 
                collected) for services for which payment under 
                this title is denied under section 1154(a)(2) 
                by reason of a determination under section 
                1154(a)(1)(B), and (III) the physician or other 
                person furnishing such service agrees not to 
                charge (and to refund amounts already 
                collected) for such service if payment may not 
                be made therefor by reason of the provisions of 
                paragraph (1) of section 1862(a), and if the 
                individual to whom such service was furnished 
                was without fault in incurring the expenses of 
                such service, and if the Secretary's 
                determination that payment (pursuant to such 
                assignment) was incorrect and was made 
                subsequent to the third year following the year 
                in which notice of such payment was sent to 
                such individual; except that the Secretary may 
                reduce such three-year period to not less than 
                one year if he finds such reduction is 
                consistent with the objectives of this title 
                (except in the case of physicians' services and 
                ambulance service furnished as described in 
                section 1862(a)(4), other than for purposes of 
                section 1870(f));
        but (in the case of bills submitted, or requests for 
        payment made, after March 1968) only if the bill is 
        submitted, or a written request for payment is made in 
        such other form as may be permitted under regulations, 
        no later than the period ending 1 calendar year after 
        the date of service;
          (F) shall take such action as may be necessary to 
        assure that where payment under this part for a service 
        rendered is on a charge basis, such payment shall be 
        determined on the basis of the charge that is 
        determined in accordance with this section on the basis 
        of customary and prevailing charge levels in effect at 
        the time the service was rendered or, in the case of 
        services rendered more than 12 months before the year 
        in which the bill is submitted or request for payment 
        is made, on the basis of such levels in effect for the 
        12-month period preceding such year;
          (G) shall, for a service that is furnished with 
        respect to an individual enrolled under this part, that 
        is not paid on an assignment-related basis, and that is 
        subject to a limiting charge under section 1848(g)--
                  (i) determine, prior to making payment, 
                whether the amount billed for such service 
                exceeds the limiting charge applicable under 
                section 1848(g)(2);
                  (ii) notify the physician, supplier, or other 
                person periodically (but not less often than 
                once every 30 days) of determinations that 
                amounts billed exceeded such applicable 
                limiting charges; and
                  (iii) provide for prompt response to 
                inquiries of physicians, suppliers, and other 
                persons concerning the accuracy of such 
                limiting charges for their services;
          (H) shall implement--
                  (i) programs to recruit and retain physicians 
                as participating physicians in the area served 
                by themedicare administrative contractor, 
                including educational and outreach activities 
                and the use of professional relations personnel 
                to handle billing and other problems relating 
                to payment of claims of participating 
                physicians; and
                  (ii) programs to familiarize beneficiaries 
                with the participating physician program and to 
                assist such beneficiaries in locating 
                participating physicians;
          (L) shall monitor and profile physicians' billing 
        patterns within each area or locality and provide 
        comparative data to physicians whose utilization 
        patterns vary significantly from other physicians in 
        the same payment area or locality.
In determining the reasonable charge for services for purposes 
of this paragraph, there shall be taken into consideration the 
customary charges for similar services generally made by the 
physician or other person furnishing such services, as well as 
the prevailing charges in the locality for similar services. No 
charge may be determined to be reasonable in the case of bills 
submitted or requests for payment made under this part after 
December 31, 1970, if it exceeds the higher of (i) the 
prevailing charge recognized by the carrier and found 
acceptable by the Secretary for similar services in the same 
locality in administering this part on December 31, 1970, or 
(ii) the prevailing charge level that, on the basis of 
statistical data and methodology acceptable to the Secretary, 
would cover 75 percent of the customary charges made for 
similar services in the same locality during the 12-month 
period ending on the June 30 last preceding the start of the 
calendar year in which the service is rendered. In the case of 
physicians' services the prevailing charge level determined for 
purposes of clause (ii) of the preceding sentence for any 
twelve-month period (beginning after June 30, 1973) specified 
in clause (ii) of such sentence may not exceed (in the 
aggregate) the level determined under such clause for the 
fiscal year ending June 30, 1973, or (with respect to 
physicians' services furnished in a year after 1987) the level 
determined under this sentence (or under any other provision of 
law affecting the prevailing charge level) for the previous 
year except to the extent that the Secretary finds, on the 
basis of appropriate economic index data, that such higher 
level is justified by year-to-year economic changes. With 
respect to power-operated wheelchairs for which payment may be 
made in accordance with section 1861(s)(6), charges determined 
to be reasonable may not exceed the lowest charge at which 
power-operated wheelchairs are available in the locality. In 
the case of medical services, supplies, and equipment 
(including equipment servicing) that, in the judgment of the 
Secretary, do not generally vary significantly in quality from 
one supplier to another, the charges incurred after December 
31, 1972, determined to be reasonable may not exceed the lowest 
charge levels at which such services, supplies, and equipment 
are widely and consistently available in a locality except to 
the extent and under the circumstances specified by the 
Secretary. The requirement in subparagraph (B) that a bill be 
submitted or request for payment be made by the close of the 
following calendar year shall not apply if (I) failure to 
submit the bill or request the payment by the close of such 
year is due to the error or misrepresentation of an officer, 
employee, fiscal intermediary, carrier, medicare administrative 
contractor, or agent of the Department of Health and Human 
Services performing functions under this title and acting 
within the scope of his or its authority, and (II) the bill is 
submitted or the payment is requested promptly after such error 
or misrepresentation is eliminated or corrected. 
Notwithstanding the provisions of the third and fourth 
sentences preceding this sentence, the prevailing charge level 
in the case of a physician service in a particular locality 
determined pursuant to such third and fourth sentences for any 
calendar year after 1974 shall, if lower than the prevailing 
charge level for the fiscal year ending June 30, 1975, in the 
case of a similar physician service in the same locality by 
reason of the application of economic index data, be raised to 
such prevailing charge level for the fiscal year ending June 
30, 1975, and shall remain at such prevailing charge level 
until the prevailing charge for a year (as adjusted by economic 
index data) equals or exceeds such prevailing charge level. The 
amount of any charges for outpatient services which shall be 
considered reasonable shall be subject to the limitations 
established by regulations issued by the Secretary pursuant to 
section 1861(v)(1)(K), and in determining the reasonable charge 
for such services, the Secretary may limit such reasonable 
charge to a percentage of the amount of the prevailing charge 
for similar services furnished in a physician's office, taking 
into account the extent to which overhead costs associated with 
such outpatient services have been included in the reasonable 
cost or charge of the facility. In applying subparagraph (B), 
the Secretary may specify exceptions to the 1 calendar year 
period specified in such subparagraph.
  (4)(A)(i) In determining the prevailing charge levels under 
the third and fourth sentences of paragraph (3) for physicians' 
services furnished during the 15-month period beginning July 1, 
1984, the Secretary shall not set any level higher than the 
same level as was set for the 12-month period beginning July 1, 
1983.
  (ii)(I) In determining the prevailing charge levels under the 
third and fourth sentences of paragraph (3) for physicians' 
services furnished during the 8-month period beginning May 1, 
1986, by a physician who is not a participating physician (as 
defined in subsection (h)(1)) at the time of furnishing the 
services, the Secretary shall not set any level higher than the 
same level as was set for the 12-month period beginning July 1, 
1983.
  (II) In determining the prevailing charge levels under the 
fourth sentence of paragraph (3) for physicians' services 
furnished during the 8-month period beginning May 1, 1986, by a 
physician who is a participating physician (as defined in 
subsection (h)(1)) at the time of furnishing the services, the 
Secretary shall permit an additional one percentage point 
increase in the increase otherwise permitted under that 
sentence.
  (iii) In determining the maximum allowable prevailing charges 
which may be recognized consistent with the index described in 
the fourth sentence of paragraph (3) for physicians' services 
furnished on or after January 1, 1987, by participating 
physicians, the Secretary shall treat the maximum allowable 
prevailing charges recognized as of December 31, 1986, under 
such sentence with respect to participating physicians as 
having been justified by economic changes.
  (iv) The reasonable charge for physicians' services furnished 
on or after January 1, 1987, and before January 1, 1992, by a 
nonparticipating physician shall be no greater than the 
applicable percent of the prevailing charge levels established 
under the third and fourth sentences of paragraph (3) (or under 
any other applicable provision of law affecting the prevailing 
charge level). In the previous sentence, the term ``applicable 
percent'' means for services furnished (I) on or after January 
1, 1987, and before April 1, 1988, 96 percent, (II) on or after 
April 1, 1988, and before January 1, 1989, 95.5 percent, and 
(III) on or after January 1, 1989, 95 percent.
  (v) In determining the prevailing charge levels under the 
third and fourth sentences of paragraph (3) for physicians' 
services furnished during the 3-month period beginning January 
1, 1988, the Secretary shall not set any level higher than the 
same level as was set for the 12-month period beginning January 
1, 1987.
  (vi) Before each year (beginning with 1989), the Secretary 
shall establish a prevailing charge floor for primary care 
services (as defined in subsection (i)(4)) equal to 60 percent 
of the estimated average prevailing charge levels based on the 
best available data (determined, under the third and fourth 
sentences of paragraph (3) and under paragraph (4), without 
regard to this clause and without regard to physician 
specialty) for such service for all localities in the United 
States (weighted by the relative frequency of the service in 
each locality) for the year.
  (vii) Beginning with 1987, the percentage increase in the MEI 
(as defined in subsection (i)(3)) for each year shall be the 
same for nonparticipating physicians as for participating 
physicians.
  (B)(i) In determining the reasonable charge under paragraph 
(3) for physicians' services furnished during the 15-month 
period beginning July 1, 1984, the customary charges shall be 
the same customary charges as were recognized under this 
section for the 12-month period beginning July 1, 1983.
  (ii) In determining the reasonable charge under paragraph (3) 
for physicians' services furnished during the 8-month period 
beginning May 1, 1986, by a physician who is not a 
participating physician (as defined in subsection (h)(1)) at 
the time of furnishing the services--
          (I) if the physician was not a participating 
        physician at any time during the 12-month period 
        beginning on October 1, 1984, the customary charges 
        shall be the same customary charges as were recognized 
        under this section for the 12-month period beginning 
        July 1, 1983, and
          (II) if the physician was a participating physician 
        at any time during the 12-month period beginning on 
        October 1, 1984, the physician's customary charges 
        shall be determined based upon the physician's actual 
        charges billed during the 12-month period ending on 
        March 31, 1985.
  (iii) In determining the reasonable charge under paragraph 
(3) for physicians' services furnished during the 3-month 
period beginning January 1, 1988, the customary charges shall 
be the same customary charges as were recognized under this 
section for the 12-month period beginning January 1, 1987.
  (iv) In determining the reasonable charge under paragraph (3) 
for physicians' services (other than primary care services, as 
defined in subsection (i)(4)) furnished during 1991, the 
customary charges shall be the same customary charges as were 
recognized under this section for the 9-month period beginning 
April 1, 1990. In a case in which subparagraph (F) applies 
(relating to new physicians) so as to limit the customary 
charges of a physician during 1990 to a percent of prevailing 
charges, the previous sentence shall not prevent such limit on 
customary charges under such subparagraph from increasing in 
1991 to a higher percent of such prevailing charges.
  (C) In determining the prevailing charge levels under the 
third and fourth sentences of paragraph (3) for physicians' 
services furnished during periods beginning after September 30, 
1985, the Secretary shall treat the level as set under 
subparagraph (A)(i) as having fully provided for the economic 
changes which would have been taken into account but for the 
limitations contained in subparagraph (A)(i).
  (D)(i) In determining the customary charges for physicians' 
services furnished during the 8-month period beginning May 1, 
1986, or the 12-month period beginning January 1, 1987, by a 
physician who was not a participating physician (as defined in 
subsection (h)(1)) on September 30, 1985, the Secretary shall 
not recognize increases in actual charges for services 
furnished during the 15- month period beginning on July 1, 
1984, above the level of the physician's actual charges billed 
in the 3-month period ending on June 30, 1984.
  (ii) In determining the customary charges for physicians' 
services furnished during the 12-month period beginning January 
1, 1987, by a physician who is not a participating physician 
(as defined in subsection (h)(1)) on April 30, 1986, the 
Secretary shall not recognize increases in actual charges for 
services furnished during the 7-month period beginning on 
October 1, 1985, above the level of the physician's actual 
charges billed during the 3-month period ending on June 30, 
1984.
  (iii) In determining the customary charges for physicians' 
services furnished during the 12-month period beginning January 
1, 1987, or January 1, 1988, by a physician who is not a 
participating physician (as defined in subsection (h)(1)) on 
December 31, 1986, the Secretary shall not recognize increases 
in actual charges for services furnished during the 8-month 
period beginning on May 1, 1986, above the level of the 
physician's actual charges billed during the 3-month period 
ending on June 30, 1984.
  (iv) In determining the customary charges for a physicians' 
service furnished on or after January 1, 1988, if a physician 
was a nonparticipating physician in a previous year (beginning 
with 1987), the Secretary shall not recognize any amount of 
such actual charges (for that service furnished during such 
previous year) that exceeds the maximum allowable actual charge 
for such service established under subsection (j)(1)(C).
  (E)(i) For purposes of this part for physicians' services 
furnished in 1987, the percentage increase in the MEI is 3.2 
percent.
  (ii) For purposes of this part for physicians' services 
furnished in 1988, on or after April 1, the percentage increase 
in the MEI is--
          (I) 3.6 percent for primary care services (as defined 
        in subsection (i)(4)), and
          (II) 1 percent for other physicians' services.
  (iii) For purposes of this part for physicians' services 
furnished in 1989, the percentage increase in the MEI is--
          (I) 3.0 percent for primary care services, and
          (II) 1 percent for other physicians' services.
  (iv) For purposes of this part for items and services 
furnished in 1990, after March 31, 1990, the percentage 
increase in the MEI is--
          (I) 0 percent for radiology services, for anesthesia 
        services, and for other services specified in the list 
        referred to in paragraph (14)(C)(i),
          (II) 2 percent for other services (other than primary 
        care services), and
          (III) such percentage increase in the MEI (as defined 
        in subsection (i)(3)) as would be otherwise determined 
        for primary care services (as defined in subsection 
        (i)(4)).
  (v) For purposes of this part for items and services 
furnished in 1991, the percentage increase in the MEI is--
          (I) 0 percent for services (other than primary care 
        services), and
          (II) 2 percent for primary care services (as defined 
        in subsection (i)(4)).
  (6) No payment under this part for a service provided to any 
individual shall (except as provided in section 1870) be made 
to anyone other than such individual or (pursuant to an 
assignment described in subparagraph (B)(ii) of paragraph (3)) 
the physician or other person who provided the service, except 
that (A) payment may be made (i) to the employer of such 
physician or other person if such physician or other person is 
required as a condition of his employment to turn over his fee 
for such service to his employer, or (ii) where the service was 
provided under a contractual arrangement between such physician 
or other person and an entity, to the entity if, under the 
contractual arrangement, the entity submits the bill for the 
service and the contractual arrangement meets such program 
integrity and other safeguards as the Secretary may determine 
to be appropriate, (B) payment may be made to an entity (i) 
which provides coverage of the services under a health benefits 
plan, but only to the extent that payment is not made under 
this part, (ii) which has paid the person who provided the 
service an amount (including the amount payable under this 
part) which that person has accepted as payment in full for the 
service, and (iii) to which the individual has agreed in 
writing that payment may be made under this part, (C) in the 
case of services described in clause (i) of section 
1861(s)(2)(K), payment shall be made to either (i) the employer 
of the physician assistant involved, or (ii) with respect to a 
physician assistant who was the owner of a rural health clinic 
(as described in section 1861(aa)(2)) for a continuous period 
beginning prior to the date of the enactment of the Balanced 
Budget Act of 1997 and ending on the date that the Secretary 
determines such rural health clinic no longer meets the 
requirements of section 1861(aa)(2), payment may be made 
directly to the physician assistant, (D) payment may be made to 
a physician for physicians' services (and services furnished 
incident to such services) furnished by a second physician to 
patients of the first physician if (i) the first physician is 
unavailable to provide the services; (ii) the services are 
furnished pursuant to an arrangement between the two physicians 
that (I) is informal and reciprocal, or (II) involves per diem 
or other fee-for-time compensation for such services; (iii) the 
services are not provided by the second physician over a 
continuous period of more than 60 days or are provided over a 
longer continuous period during all of which the first 
physician has been called or ordered to active duty as a member 
of a reserve component of the Armed Forces; and (iv) the claim 
form submitted to the medicare administrative contractor for 
such services includes the second physician's unique identifier 
(provided under the system established under subsection (r)) 
and indicates that the claim meets the requirements of this 
subparagraph for payment to the first physician, (E) in the 
case of an item or service (other than services described in 
section 1888(e)(2)(A)(ii)) furnished by, or under arrangements 
made by, a skilled nursing facility to an individual who (at 
the time the item or service is furnished) is a resident of a 
skilled nursing facility, payment shall be made to the 
facility, (F) in the case of home health services (including 
medical supplies described in section 1861(m)(5), but excluding 
durable medical equipment to the extent provided for in such 
section) furnished to an individual who (at the time the item 
or service is furnished) is under a plan of care of a home 
health agency, payment shall be made to the agency (without 
regard to whether or not the item or service was furnished by 
the agency, by others under arrangement with them made by the 
agency, or when any other contracting or consulting 
arrangement, or otherwise), (G) in the case of services in a 
hospital or clinic to which section 1880(e) applies, payment 
shall be made to such hospital or clinic, and (H) in the case 
of services described in section 1861(aa)(3) that are furnished 
by a health care professional under contract with a Federally 
qualified health center, payment shall be made to the center. 
No payment which under the preceding sentence may be made 
directly to the physician or other person providing the service 
involved (pursuant to an assignment described in subparagraph 
(B)(ii) of paragraph (3)) shall be made to anyone else under a 
reassignment or power of attorney (except to an employer or 
entity as described in subparagraph (A) of such sentence); but 
nothing in this subsection shall be construed (i) to prevent 
the making of such a payment in accordance with an assignment 
from the individual to whom the service was provided or a 
reassignment from the physician or other person providing such 
service if such assignment or reassignment is made to a 
governmental agency or entity or is established by or pursuant 
to the order of a court of competent jurisdiction, or (ii) to 
preclude an agent of the physician or other person providing 
the service from receiving any such payment if (but only if) 
such agent does so pursuant to an agency agreement under which 
the compensation to be paid to the agent for his services for 
or in connection with the billing or collection of payments due 
such physician or other person under this title is unrelated 
(directly or indirectly) to the amount of such payments or the 
billings therefor, and is not dependent upon the actual 
collection of any such payment. For purposes of subparagraph 
(C) of the first sentence of this paragraph, an employment 
relationship may include any independent contractor 
arrangement, and employer status shall be determined in 
accordance with the law of the State in which the services 
described in such clause are performed.
  (7)(A) In the case of physicians' services furnished to a 
patient in a hospital with a teaching program approved as 
specified in section 1861(b)(6) but which does not meet the 
conditions described in section 1861(b)(7), the Secretary shall 
not provide (except on the basis described in subparagraph (C)) 
for payment for such services under this part--
          (i) unless--
                  (I) the physician renders sufficient personal 
                and identifiable physicians' services to the 
                patient to exercise full, personal control over 
                the management of the portion of the case for 
                which the payment is sought,
                  (II) the services are of the same character 
                as the services the physician furnishes to 
                patients not entitled to benefits under this 
                title, and
                  (III) at least 25 percent of the hospital's 
                patients (during a representative past period, 
                as determined by the Secretary) who were not 
                entitled to benefits under this title and who 
                were furnished services described in subclauses 
                (I) and (II) paid all or a substantial part of 
                charges (other than nominal charges) imposed 
                for such services; and
          (ii) to the extent that the payment is based upon a 
        reasonable charge for the services in excess of the 
        customary charge as determined in accordance with 
        subparagraph (B).
  (B) The customary charge for such services in a hospital 
shall be determined in accordance with regulations issued by 
the Secretary and taking into account the following factors:
          (i) In the case of a physician who is not a teaching 
        physician (as defined by the Secretary), the Secretary 
        shall take into account the amounts the physician 
        charges for similar services in the physician's 
        practice outside the teaching setting.
          (ii) In the case of a teaching physician, if the 
        hospital, its physicians, or other appropriate billing 
        entity has established one or more schedules of charges 
        which are collected for medical and surgical services, 
        the Secretary shall base payment under this title on 
        the greatest of--
                  (I) the charges (other than nominal charges) 
                which are most frequently collected in full or 
                substantial part with respect to patients who 
                were not entitled to benefits under this title 
                and who were furnished services described in 
                subclauses (I) and (II) of subparagraph (A)(i),
                  (II) the mean of the charges (other than 
                nominal charges) which were collected in full 
                or substantial part with respect to such 
                patients, or
                  (III) 85 percent of the prevailing charges 
                paid for similar services in the same locality.
          (iii) If all the teaching physicians in a hospital 
        agree to have payment made for all of their physicians' 
        services under this part furnished to patients in such 
        hospital on an assignment-related basis, the customary 
        charge for such services shall be equal to 90 percent 
        of the prevailing charges paid for similar services in 
        the same locality.
  (C) In the case of physicians' services furnished to a 
patient in a hospital with a teaching program approved as 
specified in section 1861(b)(6) but which does not meet the 
conditions described in section 1861(b)(7), if the conditions 
described in subclauses (I) and (II) of subparagraph (A)(i) are 
met and if the physician elects payment to be determined under 
this subparagraph, the Secretary shall provide for payment for 
such services under this part on the basis of regulations of 
the Secretary governing reimbursement for the services of 
hospital-based physicians (and not on any other basis).
  (D)(i) In the case of physicians' services furnished to a 
patient in a hospital with a teaching program approved as 
specified in section 1861(b)(6) but which does not meet the 
conditions described in section 1861(b)(7), no payment shall be 
made under this part for services of assistants at surgery with 
respect to a surgical procedure if such hospital has a training 
program relating to the medical specialty required for such 
surgical procedure and a qualified individual on the staff of 
the hospital is available to provide such services; except that 
payment may be made under this part for such services, to the 
extent that such payment is otherwise allowed under this 
paragraph, if such services, as determined under regulations of 
the Secretary--
          (I) are required due to exceptional medical 
        circumstances,
          (II) are performed by team physicians needed to 
        perform complex medical procedures, or
          (III) constitute concurrent medical care relating to 
        a medical condition which requires the presence of, and 
        active care by, a physician of another specialty during 
        surgery,
and under such other circumstances as the Secretary determines 
by regulation to be appropriate.
  (ii) For purposes of this subparagraph, the term ``assistant 
at surgery'' means a physician who actively assists the 
physician in charge of a case in performing a surgical 
procedure.
  (iii) The Secretary shall determine appropriate methods of 
reimbursement of assistants at surgery where such services are 
reimbursable under this part.
  (8)(A)(i) The Secretary shall by regulation--
          (I) describe the factors to be used in determining 
        the cases (of particular items or services) in which 
        the application of this title to payment under this 
        part (other than to physicians' services paid under 
        section 1848) results in the determination of an amount 
        that, because of its being grossly excessive or grossly 
        deficient, is not inherently reasonable, and
          (II) provide in those cases for the factors to be 
        considered in determining an amount that is realistic 
        and equitable.
  (ii) Notwithstanding the determination made in clause (i), 
the Secretary may not apply factors that would increase or 
decrease the payment under this part during any year for any 
particular item or service by more than 15 percent from such 
payment during the preceding year except as provided in 
subparagraph (B).
  (B) The Secretary may make a determination under this 
subparagraph that would result in an increase or decrease under 
subparagraph (A) of more than 15 percent of the payment amount 
for a year, but only if--
          (i) the Secretary's determination takes into account 
        the factors described in subparagraph (C) and any 
        additional factors the Secretary determines 
        appropriate,
          (ii) the Secretary's determination takes into account 
        the potential impacts described in subparagraph (D), 
        and
          (iii) the Secretary complies with the procedural 
        requirements of paragraph (9).
  (C) The factors described in this subparagraph are as 
follows:
          (i) The programs established under this title and 
        title XIX are the sole or primary sources of payment 
        for an item or service.
          (ii) The payment amount does not reflect changing 
        technology, increased facility with that technology, or 
        reductions in acquisition or production costs.
          (iii) The payment amount for an item or service under 
        this part is substantially higher or lower than the 
        payment made for the item or service by other 
        purchasers.
  (D) The potential impacts of a determination under 
subparagraph (B) on quality, access, and beneficiary liability, 
including the likely effects on assignment rates and 
participation rates.
  (9)(A) The Secretary shall consult with representatives of 
suppliers or other individuals who furnish an item or service 
before making a determination under paragraph (8)(B) with 
regard to that item or service.
  (B) The Secretary shall publish notice of a proposed 
determination under paragraph (8)(B) in the Federal Register--
          (i) specifying the payment amount proposed to be 
        established with respect to an item or service,
          (ii) explaining the factors and data that the 
        Secretary took into account in determining the payment 
        amount so specified, and
          (iii) explaining the potential impacts described in 
        paragraph (8)(D).
  (C) After publication of the notice required by subparagraph 
(B), the Secretary shall allow not less than 60 days for public 
comment on the proposed determination.
  (D)(i) Taking into consideration the comments made by the 
public, the Secretary shall publish in the Federal Register a 
final determination under paragraph (8)(B) with respect to the 
payment amount to be established with respect to the item or 
service.
  (ii) A final determination published pursuant to clause (i) 
shall explain the factors and data that the Secretary took into 
consideration in making the final determination.
  (10)(A)(i) In determining the reasonable charge for 
procedures described in subparagraph (B) and performed during 
the 9-month period beginning on April 1, 1988, the prevailing 
charge for such procedure shall be the prevailing charge 
otherwise recognized for such procedure for 1987--
          (I) subject to clause (iii), reduced by 2.0 percent, 
        and
          (II) further reduced by the applicable percentage 
        specified in clause (ii).
  (ii) For purposes of clause (i), the applicable percentage 
specified in this clause is--
          (I) 15 percent, in the case of a prevailing charge 
        otherwise recognized (without regard to this paragraph 
        and determined without regard to physician specialty) 
        that is at least 150 percent of the weighted national 
        average (as determined by the Secretary) of such 
        prevailing charges for such procedure for all 
        localities in the United States for 1987;
          (II) 0 percent, in the case of a prevailing charge 
        that does not exceed 85 percent of such weighted 
        national average; and
          (III) in the case of any other prevailing charge, a 
        percent determined on the basis of a straight line 
        sliding scale, equal to 3\1/3\ of a percentage point 
        for each percent by which the prevailing charge exceeds 
        85 percent of such weighted national average.
  (iii) In no case shall the reduction under clause (i) for a 
procedure result in a prevailing charge in a locality for 1988 
which is less than 85 percent of the Secretary's estimate of 
the weighted national average of such prevailing charges for 
such procedure for all localities in the United States for 1987 
(based upon the best available data and determined without 
regard to physician specialty) after making the reduction 
described in clause (i)(I).
  (B) The procedures described in this subparagraph are as 
follows: bronchoscopy, carpal tunnel repair, cataract surgery 
(including subsequent insertion of an intraocular lens), 
coronary artery bypass surgery, diagnostic and/or therapeutic 
dilation and curettage, knee arthroscopy, knee arthroplasty, 
pacemaker implantation surgery, total hip replacement, 
suprapubic prostatectomy, transurethral resection of the 
prostate, and upper gastrointestinal endoscopy.
  (C) In the case of a reduction in the reasonable charge for a 
physicians' service under subparagraph (A), if a 
nonparticipating physician furnishes the service to an 
individual entitled to benefits under this part, after the 
effective date of such reduction, the physician's actual charge 
is subject to a limit under subsection (j)(1)(D).
  (D) There shall be no administrative or judicial review under 
section 1869 or otherwise of any determination under 
subparagraph (A) or under paragraph (11)(B)(ii).
  (11)(A) In providing payment for cataract eyeglasses and 
cataract contact lenses, and professional services relating to 
them, under this part, each carrier shall--
          (i) provide for separate determinations of the 
        payment amount for the eyeglasses and lenses and of the 
        payment amount for the professional services of a 
        physician (as defined in section 1861(r)), and
          (ii) not recognize as reasonable for such eyeglasses 
        and lenses more than such amount as the Secretary 
        establishes in guidelines relating to the inherent 
        reasonableness of charges for such eyeglasses and 
        lenses.
  (B)(i) In determining the reasonable charge under paragraph 
(3) for a cataract surgical procedure, subject to clause (ii), 
the prevailing charge for such procedure otherwise recognized 
for participating and nonparticipating physicians shall be 
reduced by 10 percent with respect to procedures performed in 
1987.
  (ii) In no case shall the reduction under clause (i) for a 
surgical procedure result in a prevailing charge in a locality 
for a year which is less than 75 percent of the weighted 
national average of such prevailing charges for such procedure 
for all the localities in the United States for 1986.
  (C)(i) The prevailing charge level determined with respect to 
A-mode ophthalmic ultrasound procedures may not exceed 5 
percent of the prevailing charge level established with respect 
to extracapsular cataract removal with lens insertion.
  (ii) The reasonable charge for an intraocular lens inserted 
during or subsequent to cataract surgery in a physician's 
office may not exceed the actual acquisition cost for the lens 
(taking into account any discount) plus a handling fee (not to 
exceed 5 percent of such actual acquisition cost).
  (D) In the case of a reduction in the reasonable charge for a 
physicians' service or item under subparagraph (B) or (C), if a 
nonparticipating physician furnishes the service or item to an 
individual entitled to benefits under this part after the 
effective date of such reduction, the physician's actual charge 
is subject to a limit under subsection (j)(1)(D).
  (13)(A) In determining payments under section 1833(l) and 
section 1848 for anesthesia services furnished on or after 
January 1, 1994, the methodology for determining the base and 
time units used shall be the same for services furnished by 
physicians, for medical direction by physicians of two, three, 
or four certified registered nurse anesthetists, or for 
services furnished by a certified registered nurse anesthetist 
(whether or not medically directed) and shall be based on the 
methodology in effect, for anesthesia services furnished by 
physicians, as of the date of the enactment of the Omnibus 
Budget Reconciliation Act of 1993.
  (B) The Secretary shall require claims for physicians' 
services for medical direction of nurse anesthetists during the 
periods in which the provisions of subparagraph (A) apply to 
indicate the number of such anesthetists being medically 
directed concurrently at any time during the procedure, the 
name of each nurse anesthetist being directed, and the type of 
procedure for which the services are provided.
  (14)(A)(i) In determining the reasonable charge for a 
physicians' service specified in subparagraph (C)(i) and 
furnished during the 9-month period beginning on April 1, 1990, 
the prevailing charge for such service shall be the prevailing 
charge otherwise recognized for such service for 1989 reduced 
by 15 percent or, if less, \1/3\ of the percent (if any) by 
which the prevailing charge otherwise applied in the locality 
in 1989 exceeds the locally-adjusted reduced prevailing amount 
(as determined under subparagraph (B)(i)) for the service.
  (ii) In determining the reasonable charge for a physicians' 
service specified in subparagraph (C)(i) and furnished during 
1991, the prevailing charge for such service shall be the 
prevailing charge otherwise recognized for such service for the 
period during 1990 beginning on April 1, reduced by the same 
amount as the amount of the reduction effected under this 
paragraph (as amended by the Omnibus Budget Reconciliation Act 
of 1990) for such service during such period.
  (B) For purposes of this paragraph:
          (i) The ``locally-adjusted reduced prevailing 
        amount'' for a locality for a physicians' service is 
        equal to the product of--
                  (I) the reduced national weighted average 
                prevailing charge for the service (specified 
                under clause (ii)), and
                  (II) the adjustment factor (specified under 
                clause (iii)) for the locality.
          (ii) The ``reduced national weighted average 
        prevailing charge'' for a physicians' service is equal 
        to the national weighted average prevailing charge for 
        the service (specified in subparagraph (C)(ii)) reduced 
        by the percentage change (specified in subparagraph 
        (C)(iii)) for the service.
          (iii) The ``adjustment factor'', for a physicians' 
        service for a locality, is the sum of--
                  (I) the practice expense component (percent), 
                divided by 100, specified in appendix A (pages 
                187 through 194) of the Report of the Medicare 
                and Medicaid Health Budget Reconciliation 
                Amendments of 1989, prepared by the 
                Subcommittee on Health and the Environment of 
                the Committee on Energy and Commerce, House of 
                Representatives, (Committee Print 101-M, 101st 
                Congress, 1st Session) for the service, 
                multiplied by the geographic practice cost 
                index value (specified in subparagraph (C)(iv)) 
                for the locality, and
                  (II) 1 minus the practice expense component 
                (percent), divided by 100.
          (C) For purposes of this paragraph:
                  (i) The physicians' services specified in 
                this clause are the procedures specified (by 
                code and description) in the Overvalued 
                Procedures List for Finance Committee, Revised 
                September 20, 1989, prepared by the Physician 
                Payment Review Commission which specification 
                is of physicians' services that have been 
                identified as overvalued by at least 10 percent 
                based on a comparison of payments for such 
                services under a resource- based relative value 
                scale and of the national average prevailing 
                charges under this part.
                  (ii) The ``national weighted average 
                prevailing charge'' specified in this clause, 
                for a physicians' service specified in clause 
                (i), is the national weighted average 
                prevailing charge for the service in 1989 as 
                determined by the Secretary using the best data 
                available.
                  (iii) The ``percentage change'' specified in 
                this clause, for a physicians' service 
                specified in clause (i), is the percent 
                difference (but expressed as a positive number) 
                specified for the service in the list referred 
                to in clause (i).
                  (iv) The geographic practice cost index value 
                specified in this clause for a locality is the 
                Geographic Overhead Costs Index specified for 
                the locality in table 1 of the September 1989 
                Supplement to the Geographic Medicare Economic 
                Index: Alternative Approaches (prepared by the 
                Urban Institute and the Center for Health 
                Economics Research).
          (D) In the case of a reduction in the prevailing 
        charge for a physicians' service under subparagraph 
        (A), if a nonparticipating physician furnishes the 
        service to an individual entitled to benefits under 
        this part, after the effective date of such reduction, 
        the physician's actual charge is subject to a limit 
        under subsection (j)(1)(D).
  (15)(A) In determining the reasonable charge for surgery, 
radiology, and diagnostic physicians' services which the 
Secretary shall designate (based on their high volume of 
expenditures under this part) and for which the prevailing 
charge (but for this paragraph) differs by physician specialty, 
the prevailing charge for such a service may not exceed the 
prevailing charge or fee schedule amount for that specialty of 
physicians that furnish the service most frequently nationally.
  (B) In the case of a reduction in the prevailing charge for a 
physician's service under subparagraph (A), if a 
nonparticipating physician furnishes the service to an 
individual entitled to benefits under this part, after the 
effective date of the reduction, the physician's actual charge 
is subject to a limit under subsection (j)(1)(D).
  (16)(A) In determining the reasonable charge for all 
physicians' services other than physicians' services specified 
in subparagraph (B) furnished during 1991, the prevailing 
charge for a locality shall be 6.5 percent below the prevailing 
charges used in the locality under this part in 1990 after 
March 31.
  (B) For purposes of subparagraph (A), the physicians' 
services specified in this subparagraph are as follows:
          (i) Radiology, anesthesia and physician pathology 
        services, the technical components of diagnostic tests 
        specified in paragraph (17) and physicians' services 
        specified in paragraph (14)(C)(i).
          (ii) Primary care services specified in subsection 
        (i)(4), hospital inpatient medical services, 
        consultations, other visits, preventive medicine 
        visits, psychiatric services, emergency care facility 
        services, and critical care services.
          (iii) Partial mastectomy; tendon sheath injections 
        and small joint arthrocentesis; femoral fracture and 
        trochanteric fracture treatments; endotracheal 
        intubation; thoracentesis; thoracostomy; aneurysm 
        repair; cystourethroscopy; transurethral fulguration 
        and resection; tympanoplasty with mastoidectomy; and 
        ophthalmoscopy.
  (17) With respect to payment under this part for the 
technical (as distinct from professional) component of 
diagnostic tests (other than clinical diagnostic laboratory 
tests, tests specified in paragraph (14)(C)(i), and radiology 
services, including portable X-ray services) which the 
Secretary shall designate (based on their high volume of 
expenditures under this part), the reasonable charge for such 
technical component (including the applicable portion of a 
global service) may not exceed the national median of such 
charges for all localities, as estimated by the Secretary using 
the best available data.
  (18)(A) Payment for any service furnished by a practitioner 
described in subparagraph (C) and for which payment may be made 
under this part on a reasonable charge or fee schedule basis 
may only be made under this part on an assignment-related 
basis.
  (B) A practitioner described in subparagraph (C) or other 
person may not bill (or collect any amount from) the individual 
or another person for any service described in subparagraph 
(A), except for deductible and coinsurance amounts applicable 
under this part. No person is liable for payment of any amounts 
billed for such a service in violation of the previous 
sentence. If a practitioner or other person knowingly and 
willfully bills (or collects an amount) for such a service in 
violation of such sentence, the Secretary may apply sanctions 
against the practitioner or other person in the same manner as 
the Secretary may apply sanctions against a physician in 
accordance with subsection (j)(2) in the same manner as such 
section applies with respect to a physician. Paragraph (4) of 
subsection (j) shall apply in this subparagraph in the same 
manner as such paragraph applies to such section.
  (C) A practitioner described in this subparagraph is any of 
the following:
          (i) A physician assistant, nurse practitioner, or 
        clinical nurse specialist (as defined in section 
        1861(aa)(5)).
          (ii) A certified registered nurse anesthetist (as 
        defined in section 1861(bb)(2)).
          (iii) A certified nurse-midwife (as defined in 
        section 1861(gg)(2)).
          (iv) A clinical social worker (as defined in section 
        1861(hh)(1)).
          (v) A clinical psychologist (as defined by the 
        Secretary for purposes of section 1861(ii)).
          (vi) A registered dietitian or nutrition 
        professional.
  (D) For purposes of this paragraph, a service furnished by a 
practitioner described in subparagraph (C) includes any 
services and supplies furnished as incident to the service as 
would otherwise be covered under this part if furnished by a 
physician or as incident to a physician's service.
  (19) For purposes of section 1833(a)(1), the reasonable 
charge for ambulance services (as described in section 
1861(s)(7)) provided during calendar year 1998 and calendar 
year 1999 may not exceed the reasonable charge for such 
services provided during the previous calendar year (after 
application of this paragraph), increased by the percentage 
increase in the consumer price index for all urban consumers 
(U.S. city average) as estimated by the Secretary for the 12-
month period ending with the midpoint of the year involved 
reduced by 1.0 percentage point.
  (c)
  (2)(A) Each contract under section 1874A that provides for 
making payments under this part shall provide that payment 
shall be issued, mailed, or otherwise transmitted with respect 
to not less than 95 percent of all claims submitted under this 
part--
          (i) which are clean claims, and
          (ii) for which payment is not made on a periodic 
        interim payment basis,
within the applicable number of calendar days after the date on 
which the claim is received.
  (B) In this paragraph:
          (i) The term ``clean claim'' means a claim that has 
        no defect or impropriety (including any lack of any 
        required substantiating documentation) or particular 
        circumstance requiring special treatment that prevents 
        timely payment from being made on the claim under this 
        part.
          (ii) The term ``applicable number of calendar days'' 
        means--
                  (I) with respect to claims received in the 
                12-month period beginning October 1, 1986, 30 
                calendar days,
                  (II) with respect to claims received in the 
                12-month period beginning October 1, 1987, 26 
                calendar days (or 19 calendar days with respect 
                to claims submitted by participating 
                physicians),
                  (III) with respect to claims received in the 
                12-month period beginning October 1, 1988, 25 
                calendar days (or 18 calendar days with respect 
                to claims submitted by participating 
                physicians),
                  (IV) with respect to claims received in the 
                12-month period beginning October 1, 1989, and 
                claims received in any succeeding 12-month 
                period ending on or before September 30, 1993, 
                24 calendar days (or 17 calendar days with 
                respect to claims submitted by participating 
                physicians), and
                  (V) with respect to claims received in the 
                12-month period beginning October 1, 1993, and 
                claims received in any succeeding 12-month 
                period, 30 calendar days.
  (C) If payment is not issued, mailed, or otherwise 
transmitted within the applicable number of calendar days (as 
defined in clause (ii) of subparagraph (B)) after a clean claim 
(as defined in clause (i) of such subparagraph) is received, 
interest shall be paid at the rate used for purposes of section 
3902(a) of title 31, United States Code (relating to interest 
penalties for failure to make prompt payments) for the period 
beginning on the day after the required payment date and ending 
on the date on which payment is made.
  (3)(A) Each contract under this section which provides for 
the disbursement of funds, as described in section 
1874A(a)(3)(B), shall provide that no payment shall be issued, 
mailed, or otherwise transmitted with respect to any claim 
submitted under this title within the applicable number of 
calendar days after the date on which the claim is received.
  (B) In this paragraph, the term ``applicable number of 
calendar days'' means--
          (i) with respect to claims submitted electronically 
        as prescribed by the Secretary, 13 days, and
          (ii) with respect to claims submitted otherwise, 28 
        days.
  (4) Neither a medicare administrative contractor nor the 
Secretary may impose a fee under this title--
          (A) for the filing of claims related to physicians' 
        services,
          (B) for an error in filing a claim relating to 
        physicians' services or for such a claim which is 
        denied,
          (C) for any appeal under this title with respect to 
        physicians' services,
          (D) for applying for (or obtaining) a unique 
        identifier under subsection (r), or
          (E) for responding to inquiries respecting 
        physicians' services or for providing information with 
        respect to medical review of such services.
  (g) The Railroad Retirement Board shall, in accordance with 
such regulations as the Secretary may prescribe, contract with 
a medicare administrative contractor or contractors to perform 
the functions set out in this section with respect to 
individuals entitled to benefits as qualified railroad 
retirement beneficiaries pursuant to section 226(a) of this Act 
and section 7(d) of the Railroad Retirement Act of 1974.
  (h)(1) Any physician or supplier may voluntarily enter into 
an agreement with the Secretary to become a participating 
physician or supplier. For purposes of this section, the term 
``participating physician or supplier'' means a physician or 
supplier (excluding any provider of services) who, before the 
beginning of any year beginning with 1984, enters into an 
agreement with the Secretary which provides that such physician 
or supplier will accept payment under this part on an 
assignment-related basis for all items and services furnished 
to individuals enrolled under this part during such year. In 
the case of a newly licensed physician or a physician who 
begins a practice in a new area, or in the case of a new 
supplier who begins a new business, or in such similar cases as 
the Secretary may specify, such physician or supplier may enter 
into such an agreement after the beginning of a year, for items 
and services furnished during the remainder of the year.
  (2) The Secretary shall maintain a toll-free telephone number 
or numbers at which individuals enrolled under this part may 
obtain the names, addresses, specialty, and telephone numbers 
of participating physicians and suppliers and may request a 
copy of an appropriate directory published under paragraph (4). 
The Secretary shall, without charge, mail a copy of such 
directory upon such a request.
  (3)(A) In any case in which medicare administrative 
contractor having a contract under section 1874A that provides 
for making payments under this part is able to develop a system 
for the electronic transmission to such contractor of bills for 
services, such carrier shall establish direct lines for the 
electronic receipt of claims from participating physicians and 
suppliers.
  (B) The Secretary shall establish a procedure whereby an 
individual enrolled under this part may assign, in an 
appropriate manner on the form claiming a benefit under this 
part for an item or service furnished by a participating 
physician or supplier, the individual's rights of payment under 
a medicare supplemental policy (described in section 
1882(g)(1)) in which the individual is enrolled. In the case 
such an assignment is properly executed and a payment 
determination is made by a medicare administrative contractor 
with a contract under this section, the contractor shall 
transmit to the private entity issuing the medicare 
supplemental policy notice of such fact and shall include an 
explanation of benefits and any additional information that the 
Secretary may determine to be appropriate in order to enable 
the entity to decide whether (and the amount of) any payment is 
due under the policy. The Secretary may enter into agreements 
for the transmittal of such information to entities 
electronically. The Secretary shall impose user fees for the 
transmittal of information under this subparagraph by a 
medicare administrative contractor, whether electronically or 
otherwise, and such user fees shall be collected and retained 
by the contractor.
  (4) At the beginning of each year the Secretary shall publish 
directories (for appropriate local geographic areas) containing 
the name, address, and specialty of all participating 
physicians and suppliers (as defined in paragraph (1)) for that 
area for that year. Each directory shall be organized to make 
the most useful presentation of the information (as determined 
by the Secretary) for individuals enrolled under this part. 
Each participating physician directory for an area shall 
provide an alphabetical listing of all participating physicians 
practicing in the area and an alphabetical listing by locality 
and specialty of such physicians.
  (5)(A) The Secretary shall promptly notify individuals 
enrolled under this part through an annual mailing of the 
participation program under this subsection and the publication 
and availability of the directories and shall make the 
appropriate area directory or directories available in each 
district and branch office of the Social Security 
Administration, in the offices of medicare administrative 
contractors, and to senior citizen organizations.
  (B) The annual notice provided under subparagraph (A) shall 
include--
          (i) a description of the participation program,
          (ii) an explanation of the advantages to 
        beneficiaries of obtaining covered services through a 
        participating physician or supplier,
          (iii) an explanation of the assistance offered by 
        medicare administrative contractors in obtaining the 
        names of participating physicians and suppliers, and
          (iv) the toll-free telephone number under paragraph 
        (2)(A) for inquiries concerning the program and for 
        requests for free copies of appropriate directories.
  (6) The Secretary shall provide that the directories shall be 
available for purchase by the public. The Secretary shall 
provide that each appropriate area directory is sent to each 
participating physician located in that area and that an 
appropriate number of copies of each such directory is sent to 
hospitals located in the area. Such copies shall be sent free 
of charge.
  (7) The Secretary shall provide that each explanation of 
benefits provided under this part for services furnished in the 
United States, in conjunction with the payment of claims under 
section 1833(a)(1) (made other than on an assignment-related 
basis), shall include--
          (A) a prominent reminder of the participating 
        physician and supplier program established under this 
        subsection (including the limitation on charges that 
        may be imposed by such physicians and suppliers and a 
        clear statement of any amounts charged for the 
        particular items or services on the claim involved 
        above the amount recognized under this part),
          (B) the toll-free telephone number or numbers, 
        maintained under paragraph (2), at which an individual 
        enrolled under this part may obtain information on 
        participating physicians and suppliers,
          (C)(i) an offer of assistance to such an individual 
        in obtaining the names of participating physicians of 
        appropriate specialty and (ii) an offer to provide a 
        free copy of the appropriate participating physician 
        directory, and
          (D) in the case of services for which the billed 
        amount exceeds the limiting charge imposed under 
        section 1848(g), information regarding such applicable 
        limiting charge (including information concerning the 
        right to a refund under section 1848(g)(1)(A)(iv)).
  (8) The Secretary may refuse to enter into an agreement with 
a physician or supplier under this subsection, or may terminate 
or refuse to renew such agreement, in the event that such 
physician or supplier has been convicted of a felony under 
Federal or State law for an offense which the Secretary 
determines is detrimental to the best interests of the program 
or program beneficiaries.
  (9) The Secretary may revoke enrollment, for a period of not 
more than one year for each act, for a physician or supplier 
under section 1866(j) if such physician or supplier fails to 
maintain and, upon request of the Secretary, provide access to 
documentation relating to written orders or requests for 
payment for durable medical equipment, certifications for home 
health services, or referrals for other items or services 
written or ordered by such physician or supplier under this 
title, as specified by the Secretary.
  (i) For purposes of this title:
          (1) A claim is considered to be paid on an 
        ``assignment-related basis'' if the claim is paid on 
        the basis of an assignment described in subsection 
        (b)(3)(B)(ii), in accordance with subsection (b)(6)(B), 
        or under the procedure described in section 1870(f)(1).
          (2) The term ``participating physician'' refers, with 
        respect to the furnishing of services, to a physician 
        who at the time of furnishing the services is a 
        participating physician (under subsection (h)(1)); the 
        term ``nonparticipating physician'' refers, with 
        respect to the furnishing of services, to a physician 
        who at the time of furnishing the services is not a 
        participating physician; and the term 
        ``nonparticipating supplier or other person'' means a 
        supplier or other person (excluding a provider of 
        services) that is not a participating physician or 
        supplier (as defined in subsection (h)(1)).
          (3) The term ``percentage increase in the MEI'' 
        means, with respect to physicians' services furnished 
        in a year, the percentage increase in the medicare 
        economic index (referred to in the fourth sentence of 
        subsection (b)(3)) applicable to such services 
        furnished as of the first day of that year.
          (4) The term ``primary care services'' means 
        physicians' services which constitute office medical 
        services, emergency department services, home medical 
        services, skilled nursing, intermediate care, and long-
        term care medical services, or nursing home, boarding 
        home, domiciliary, or custodial care medical services.
  (j)(1)(A) In the case of a physician who is not a 
participating physician for items and services furnished during 
a portion of the 30-month period beginning July 1, 1984, the 
Secretary shall monitor the physician's actual charges to 
individuals enrolled under this part for physicians' services 
during that portion of that period. If such physician knowingly 
and willfully bills individuals enrolled under this part for 
actual charges in excess of such physician's actual charges for 
the calendar quarter beginning on April 1, 1984, the Secretary 
may apply sanctions against such physician in accordance with 
paragraph (2).
  (B)(i) During any period (on or after January 1, 1987, and 
before the date specified in clause (ii)), during which a 
physician is a nonparticipating physician, the Secretary shall 
monitor the actual charges of each such physician for 
physicians' services furnished to individuals enrolled under 
this part. If such physician knowingly and willfully bills on a 
repeated basis for such a service an actual charge in excess of 
the maximum allowable actual charge determined under 
subparagraph (C) for that service, the Secretary may apply 
sanctions against such physician in accordance with paragraph 
(2).
  (ii) Clause (i) shall not apply to services furnished after 
December 31, 1990.
  (C)(i) For a particular physicians' service furnished by a 
nonparticipating physician to individuals enrolled under this 
part during a year, for purposes of subparagraph (B), the 
maximum allowable actual charge is determined as follows: If 
the physician's maximum allowable actual charge for that 
service in the previous year was--
          (I) less than 115 percent of the applicable percent 
        (as defined in subsection (b)(4)(A)(iv)) of the 
        prevailing charge for the year and service involved, 
        the maximum allowable actual charge for the year 
        involved is the greater of the maximum allowable actual 
        charge described in subclause (II) or the charge 
        described in clause (ii), or
          (II) equal to, or greater than, 115 percent of the 
        applicable percent (as defined in subsection 
        (b)(4)(A)(iv)) of the prevailing charge for the year 
        and service involved, the maximum allowable actual 
        charge is 101 percent of the physician's maximum 
        allowable actual charge for the service for the 
        previous year.
  (ii) For purposes of clause (i)(I), the charge described in 
this clause for a particular physicians' service furnished in a 
year is the maximum allowable actual charge for the service of 
the physician for the previous year plus the product of (I) the 
applicable fraction (as defined in clause (iii)) and (II) the 
amount by which 115 percent of the prevailing charge for the 
year involved for such service furnished by nonparticipating 
physicians, exceeds the physician's maximum allowable actual 
charge for the service for the previous year.
  (iii) In clause (ii), the ``applicable fraction'' is--
          (I) for 1987, \1/4\,
          (II) for 1988, \1/3\,
          (III) for 1989, \1/2\, and
          (IV) for any subsequent year, 1.
  (iv) For purposes of determining the maximum allowable actual 
charge under clauses (i) and (ii) for 1987, in the case of a 
physicians' service for which the physician has actual charges 
for the calendar quarter beginning on April 1, 1984, the 
``maximum allowable actual charge'' for 1986 is the physician's 
actual charge for such service furnished during such quarter.
  (v) For purposes of determining the maximum allowable actual 
charge under clauses (i) and (ii) for a year after 1986, in the 
case of a physicians' service for which the physician has no 
actual charges for the calendar quarter beginning on April 1, 
1984, and for which a maximum allowable actual charge has not 
been previously established under this clause, the ``maximum 
allowable actual charge'' for the previous year shall be the 
50th percentile of the customary charges for the service 
(weighted by frequency of the service) performed by 
nonparticipating physicians in the locality during the 12-month 
period ending June 30 of that previous year.
  (vi) For purposes of this subparagraph, a ``physician's 
actual charge'' for a physicians' service furnished in a year 
or other period is the weighted average (or, at the option of 
the Secretary for a service furnished in the calendar quarter 
beginning April 1, 1984, the median) of the physician's charges 
for such service furnished in the year or other period.
  (vii) In the case of a nonparticipating physician who was a 
participating physician during a previous period, for the 
purpose of computing the physician's maximum allowable actual 
charge during the physician's period of nonparticipation, the 
physician shall be deemed to have had a maximum allowable 
actual charge during the period of participation, and such 
deemed maximum allowable actual charge shall be determined 
according to clauses (i) through (vi).
  (viii) Notwithstanding any other provision of this 
subparagraph, the maximum allowable actual charge for a 
particular physician's service furnished by a nonparticipating 
physician to individuals enrolled under this part during the 3-
month period beginning on January 1, 1988, shall be the amount 
determined under this subparagraph for 1987. The maximum 
allowable actual charge for any such service otherwise 
determined under this subparagraph for 1988 shall take effect 
on April 1, 1988.
  (ix) If there is a reduction under subsection (b)(13) in the 
reasonable charge for medical direction furnished by a 
nonparticipating physician, the maximum allowable actual charge 
otherwise permitted under this subsection for such services 
shall be reduced in the same manner and in the same percentage 
as the reduction in such reasonable charge.
  (D)(i) If an action described in clause (ii) results in a 
reduction in a reasonable charge for a physicians' service or 
item and a nonparticipating physician furnishes the service or 
item to an individual entitled to benefits under this part 
after the effective date of such action, the physician may not 
charge the individual more than 125 percent of the reduced 
payment allowance (as defined in clause (iii)) plus (for 
services or items furnished during the 12-month period (or 9-
month period in the case of an action described in clause 
(ii)(II)) beginning on the effective date of the action) \1/2\ 
of the amount by which the physician's maximum allowable actual 
charge for the service or item for the previous 12- month 
period exceeds such 125 percent level.
  (ii) The first sentence of clause (i) shall apply to--
          (I) an adjustment under subsection (b)(8)(B) 
        (relating to inherent reasonableness),
          (II) a reduction under subsection (b)(10)(A) or 
        (b)(14)(A) (relating to certain overpriced procedures),
          (III) a reduction under subsection (b)(11)(B) 
        (relating to certain cataract procedures),
          (IV) a prevailing charge limit established under 
        subsection (b)(11)(C)(i) or (b)(15)(A),
          (V) a reasonable charge limit established under 
        subsection (b)(11)(C)(ii), and
          (VI) an adjustment under section 1833(l)(3)(B) 
        (relating to physician supervision of certified 
        registered nurse anesthetists).
  (iii) In clause (i), the term ``reduced payment allowance'' 
means, with respect to an action--
          (I) under subsection (b)(8)(B), the inherently 
        reasonable charge established under subsection (b)(8);
          (II) under subsection (b)(10)(A), (b)(11)(B), 
        (b)(11)(C)(i), (b)(14)(A), or (b)(15)(A) or under 
        section 1833(l)(3)(B), the prevailing charge for the 
        service after the action; or
          (III) under subsection (b)(11)(C)(ii), the payment 
        allowance established under such subsection.
  (iv) If a physician knowingly and willfully bills in 
violation of clause (i) (whether or not such charge violates 
subparagraph (B)), the Secretary may apply sanctions against 
such physician in accordance with paragraph (2).
  (v) Clause (i) shall not apply to items and services 
furnished after December 31, 1990.
  (2) Subject to paragraph (3), the sanctions which the 
Secretary may apply under this paragraph are--
          (A) excluding a physician from participation in the 
        programs under this Act for a period not to exceed 5 
        years, in accordance with the procedures of subsections 
        (c), (f), and (g) of section 1128, or
          (B) civil monetary penalties and assessments, in the 
        same manner as such penalties and assessments are 
        authorized under section 1128A(a),
or both. The provisions of section 1128A (other than the first 
2 sentences of subsection (a) and other than subsection (b)) 
shall apply to a civil money penalty and assessment under 
subparagraph (B) in the same manner as such provisions apply to 
a penalty, assessment, or proceeding under section 1128A(a), 
except to the extent such provisions are inconsistent with 
subparagraph (A) or paragraph (3).
  (3)(A) The Secretary may not exclude a physician pursuant to 
paragraph (2)(A) if such physician is a sole community 
physician or sole source of essential specialized services in a 
community.
  (B) The Secretary shall take into account access of 
beneficiaries to physicians' services for which payment may be 
made under this part in determining whether to bar a physician 
from participation under paragraph (2)(A).
  (4) The Secretary may, out of any civil monetary penalty or 
assessment collected from a physician pursuant to this 
subsection, make a payment to a beneficiary enrolled under this 
part in the nature of restitution for amounts paid by such 
beneficiary to such physician which was determined to be an 
excess charge under paragraph (1).
  (k)(1) If a physician knowingly and willfully presents or 
causes to be presented a claim or bills an individual enrolled 
under this part for charges for services as an assistant at 
surgery for which payment may not be made by reason of section 
1862(a)(15), the Secretary may apply sanctions against such 
physician in accordance with subsection (j)(2) in the case of 
surgery performed on or after March 1, 1987.
  (2) If a physician knowingly and willfully presents or causes 
to be presented a claim or bills an individual enrolled under 
this part for charges that includes a charge for an assistant 
at surgery for which payment may not be made by reason of 
section 1862(a)(15), the Secretary may apply sanctions against 
such physician in accordance with subsection (j)(2) in the case 
of surgery performed on or after March 1, 1987.
  (l)(1)(A) Subject to subparagraph (C), if--
          (i) a nonparticipating physician furnishes services 
        to an individual enrolled for benefits under this part,
          (ii) payment for such services is not accepted on an 
        assignment-related basis,
          (iii)(I) a medicare administrative contractor 
        determines under this part or a quality improvement 
        organization determines under part B of title XI that 
        payment may not be made by reason of section 1862(a)(1) 
        because a service otherwise covered under this title is 
        not reasonable and necessary under the standards 
        described in that section or (II) payment under this 
        title for such services is denied under section 
        1154(a)(2) by reason of a determination under section 
        1154(a)(1)(B), and
          (iv) the physician has collected any amounts for such 
        services,
the physician shall refund on a timely basis to the individual 
(and shall be liable to the individual for) any amounts so 
collected.
  (B) A refund under subparagraph (A) is considered to be on a 
timely basis only if--
          (i) in the case of a physician who does not request 
        reconsideration or seek appeal on a timely basis, the 
        refund is made within 30 days after the date the 
        physician receives a denial notice under paragraph (2), 
        or
          (ii) in the case in which such a reconsideration or 
        appeal is taken, the refund is made within 15 days 
        after the date the physician receives notice of an 
        adverse determination on reconsideration or appeal.
  (C) Subparagraph (A) shall not apply to the furnishing of a 
service by a physician to an individual in the case described 
in subparagraph (A)(iii)(I) if--
          (i) the physician establishes that the physician did 
        not know and could not reasonably have been expected to 
        know that payment may not be made for the service by 
        reason of section 1862(a)(1), or
          (ii) before the service was provided, the individual 
        was informed that payment under this part may not be 
        made for the specific service and the individual has 
        agreed to pay for that service.
  (2) Each medicare administrative contractor with a contract 
in effect under this section with respect to physicians and 
each quality improvement organization with a contract under 
part B of title XI shall send any notice of denial of payment 
for physicians' services based on section 1862(a)(1) and for 
which payment is not requested on an assignment-related basis 
to the physician and the individual involved.
  (3) If a physician knowingly and willfully fails to make 
refunds in violation of paragraph (1)(A), the Secretary may 
apply sanctions against such physician in accordance with 
subsection (j)(2).
  (m)(1) In the case of a nonparticipating physician who--
          (A) performs an elective surgical procedure for an 
        individual enrolled for benefits under this part and 
        for which the physician's actual charge is at least 
        $500, and
          (B) does not accept payment for such procedure on an 
        assignment-related basis,
the physician must disclose to the individual, in writing and 
in a form approved by the Secretary, the physician's estimated 
actual charge for the procedure, the estimated approved charge 
under this part for the procedure, the excess of the 
physician's actual charge over the approved charge, and the 
coinsurance amount applicable to the procedure. The written 
estimate may not be used as the basis for, or evidence in, a 
civil suit.
  (2) A physician who fails to make a disclosure required under 
paragraph (1) with respect to a procedure shall refund on a 
timely basis to the individual (and shall be liable to the 
individual for) any amounts collected for the procedure in 
excess of the charges recognized and approved under this part.
  (3) If a physician knowingly and willfully fails to comply 
with paragraph (2), the Secretary may apply sanctions against 
such physician in accordance with subsection (j)(2).
  (4) The Secretary shall provide for such monitoring of 
requests for payment for physicians' services to which 
paragraph (1) applies as is necessary to assure compliance with 
paragraph (2).
  (n)(1) If a physician's bill or a request for payment for 
services billed by a physician includes a charge for a 
diagnostic test described in section 1861(s)(3) (other than a 
clinical diagnostic laboratory test) for which the bill or 
request for payment does not indicate that the billing 
physician personally performed or supervised the performance of 
the test or that another physician with whom the physician who 
shares a practice personally performed or supervised the 
performance of the test, the amount payable with respect to the 
test shall be determined as follows:
          (A) If the bill or request for payment indicates that 
        the test was performed by a supplier, identifies the 
        supplier, and indicates the amount the supplier charged 
        the billing physician, payment for the test (less the 
        applicable deductible and coinsurance amounts) shall be 
        the actual acquisition costs (net of any discounts) or, 
        if lower, the supplier's reasonable charge (or other 
        applicable limit) for the test.
          (B) If the bill or request for payment (i) does not 
        indicate who performed the test, or (ii) indicates that 
        the test was performed by a supplier but does not 
        identify the supplier or include the amount charged by 
        the supplier, no payment shall be made under this part.
  (2) A physician may not bill an individual enrolled under 
this part--
          (A) any amount other than the payment amount 
        specified in paragraph (1)(A) and any applicable 
        deductible and coinsurance for a diagnostic test for 
        which payment is made pursuant to paragraph (1)(A), or
          (B) any amount for a diagnostic test for which 
        payment may not be made pursuant to paragraph (1)(B).
  (3) If a physician knowingly and willfully in repeated cases 
bills one or more individuals in violation of paragraph (2), 
the Secretary may apply sanctions against such physician in 
accordance with section 1842(j)(2).
  (o)(1) If a physician's, supplier's, or any other person's 
bill or request for payment for services includes a charge for 
a drug or biological for which payment may be made under this 
part and the drug or biological is not paid on a cost or 
prospective payment basis as otherwise provided in this part, 
the amount payable for the drug or biological is equal to the 
following:
          (A) In the case of any of the following drugs or 
        biologicals, 95 percent of the average wholesale price:
                  (i) A drug or biological furnished before 
                January 1, 2004.
                  (ii) Blood clotting factors furnished during 
                2004.
                  (iii) A drug or biological furnished during 
                2004 that was not available for payment under 
                this part as of April 1, 2003.
                  (iv) A vaccine described in subparagraph (A) 
                or (B) of section 1861(s)(10) furnished on or 
                after January 1, 2004.
                  (v) A drug or biological furnished during 
                2004 in connection with the furnishing of renal 
                dialysis services if separately billed by renal 
                dialysis facilities.
          (B) In the case of a drug or biological furnished 
        during 2004 that is not described in--
                  (i) clause (ii), (iii), (iv), or (v) of 
                subparagraph (A),
                  (ii) subparagraph (D)(i), or
                  (iii) subparagraph (F),
        the amount determined under paragraph (4).
          (C) In the case of a drug or biological that is not 
        described in subparagraph (A)(iv), (D)(i), or (F) 
        furnished on or after January 1, 2005, the amount 
        provided under section 1847, section 1847A, section 
        1847B, or section 1881(b)(13), as the case may be for 
        the drug or biological.
          (D)(i) Except as provided in clause (ii), in the case 
        of infusion drugs furnished through an item of durable 
        medical equipment covered under section 1861(n) on or 
        after January 1, 2004, 95 percent of the average 
        wholesale price for such drug in effect on October 1, 
        2003.
          (ii) In the case of such infusion drugs furnished in 
        a competitive acquisition area under section 1847 on or 
        after January 1, 2007, the amount provided under 
        section 1847.
          (E) In the case of a drug or biological, consisting 
        of intravenous immune globulin, furnished--
                  (i) in 2004, the amount of payment provided 
                under paragraph (4); and
                  (ii) in 2005 and subsequent years, the amount 
                of payment provided under section 1847A.
          (F) In the case of blood and blood products (other 
        than blood clotting factors), the amount of payment 
        shall be determined in the same manner as such amount 
        of payment was determined on October 1, 2003.
          (G) In the case of inhalation drugs or biologicals 
        furnished through durable medical equipment covered 
        under section 1861(n) that are furnished--
                  (i) in 2004, the amount provided under 
                paragraph (4) for the drug or biological; and
                  (ii) in 2005 and subsequent years, the amount 
                provided under section 1847A for the drug or 
                biological.
  (2) If payment for a drug or biological is made to a licensed 
pharmacy approved to dispense drugs or biologicals under this 
part, the Secretary may pay a dispensing fee (less the 
applicable deductible and coinsurance amounts) to the pharmacy. 
This paragraph shall not apply in the case of payment under 
paragraph (1)(C).
  (3)(A) Payment for a charge for any drug or biological for 
which payment may be made under this part may be made only on 
an assignment-related basis.
  (B) The provisions of subsection (b)(18)(B) shall apply to 
charges for such drugs or biologicals in the same manner as 
they apply to services furnished by a practitioner described in 
subsection (b)(18)(C).
  (4)(A) Subject to the succeeding provisions of this 
paragraph, the amount of payment for a drug or biological under 
this paragraph furnished in 2004 is equal to 85 percent of the 
average wholesale price (determined as of April 1, 2003) for 
the drug or biological.
  (B) The Secretary shall substitute for the percentage under 
subparagraph (A) for a drug or biological the percentage that 
would apply to the drug or biological under the column entitled 
``Average of GAO and OIG data (percent)'' in the table entitled 
``Table 3.--Medicare Part B Drugs in the Most Recent GAO and 
OIG Studies'' published on August 20, 2003, in the Federal 
Register (68 Fed. Reg. 50445).
  (C)(i) The Secretary may substitute for the percentage under 
subparagraph (A) a percentage that is based on data and 
information submitted by the manufacturer of the drug or 
biological by October 15, 2003.
  (ii) The Secretary may substitute for the percentage under 
subparagraph (A) with respect to drugs and biologicals 
furnished during 2004 on or after April 1, 2004, a percentage 
that is based on data and information submitted by the 
manufacturer of the drug or biological after October 15, 2003, 
and before January 1, 2004.
  (D) In no case may the percentage substituted under 
subparagraph (B) or (C) be less than 80 percent.
  (5)(A) Subject to subparagraph (B), in the case of clotting 
factors furnished on or after January 1, 2005, the Secretary 
shall, after reviewing the January 2003 report to Congress by 
the Comptroller General of the United States entitled ``Payment 
for Blood Clotting Factor Exceeds Providers Acquisition Cost'', 
provide for a separate payment, to the entity which furnishes 
to the patient blood clotting factors, for items and services 
related to the furnishing of such factors in an amount that the 
Secretary determines to be appropriate. Such payment amount may 
take into account any or all of the following:
          (i) The mixing (if appropriate) and delivery of 
        factors to an individual, including special inventory 
        management and storage requirements.
          (ii) Ancillary supplies and patient training 
        necessary for the self-administration of such factors.
  (B) In determining the separate payment amount under 
subparagraph (A) for blood clotting factors furnished in 2005, 
the Secretary shall ensure that the total amount of payments 
under this part (as estimated by the Secretary) for such 
factors under paragraph (1)(C) and such separate payments for 
such factors does not exceed the total amount of payments that 
would have been made for such factors under this part (as 
estimated by the Secretary) if the amendments made by section 
303 of the Medicare Prescription Drug, Improvement, and 
Modernization Act of 2003 had not been enacted.
  (C) The separate payment amount under this subparagraph for 
blood clotting factors furnished in 2006 or a subsequent year 
shall be equal to the separate payment amount determined under 
this paragraph for the previous year increased by the 
percentage increase in the consumer price index for medical 
care for the 12-month period ending with June of the previous 
year.
  (6) In the case of an immunosuppressive drug described in 
subparagraph (J) of section 1861(s)(2) and an oral drug 
described in subparagraph (Q) or (T) of such section, the 
Secretary shall pay to the pharmacy a supplying fee for such a 
drug determined appropriate by the Secretary (less the 
applicable deductible and coinsurance amounts).
  (7) There shall be no administrative or judicial review under 
section 1869, section 1878, or otherwise, of determinations of 
payment amounts, methods, or adjustments under paragraphs (4) 
through (6).
  (p)(1) Each request for payment, or bill submitted, for an 
item or service furnished by a physician or practitioner 
specified in subsection (b)(18)(C) for which payment may be 
made under this part shall include the appropriate diagnosis 
code (or codes) as established by the Secretary for such item 
or service.
  (2) In the case of a request for payment for an item or 
service furnished by a physician or practitioner specified in 
subsection (b)(18)(C) on an assignment-related basis which does 
not include the code (or codes) required under paragraph (1), 
payment may be denied under this part.
  (3) In the case of a request for payment for an item or 
service furnished by a physician not submitted on an 
assignment-related basis and which does not include the code 
(or codes) required under paragraph (1)--
          (A) if the physician knowingly and willfully fails to 
        provide the code (or codes) promptly upon request of 
        the Secretary or a medicare administrative contractor, 
        the physician may be subject to a civil money penalty 
        in an amount not to exceed $2,000, and
          (B) if the physician knowingly, willfully, and in 
        repeated cases fails, after being notified by the 
        Secretary of the obligations and requirements of this 
        subsection, to include the code (or codes) required 
        under paragraph (1), the physician may be subject to 
        the sanction described in section 1842(j)(2)(A).
The provisions of section 1128A (other than subsections (a) and 
(b)) shall apply to civil money penalties under subparagraph 
(A) in the same manner as they apply to a penalty or proceeding 
under section 1128A(a).
  (4) In the case of an item or service defined in paragraph 
(3), (6), (8), or (9) of subsection 1861(s) ordered by a 
physician or a practitioner specified in subsection (b)(18)(C), 
but furnished by another entity, if the Secretary (or fiscal 
agent of the Secretary) requires the entity furnishing the item 
or service to provide diagnostic or other medical information 
in order for payment to be made to the entity, the physician or 
practitioner shall provide that information to the entity at 
the time that the item or service is ordered by the physician 
or practitioner.
  (q)(1)(A) The Secretary, in consultation with groups 
representing physicians who furnish anesthesia services, shall 
establish by regulation a relative value guide for use in all 
localities in making payment for physician anesthesia services 
furnished under this part. Such guide shall be designed so as 
to result in expenditures under this title for such services in 
an amount that would not exceed the amount of such expenditures 
which would otherwise occur.
  (B) For physician anesthesia services furnished under this 
part during 1991, the prevailing charge conversion factor used 
in a locality under this subsection shall, subject to clause 
(iv), be reduced to the adjusted prevailing charge conversion 
factor for the locality determined as follows:
          (i) The Secretary shall estimate the national 
        weighted average of the prevailing charge conversion 
        factors used under this subsection for services 
        furnished during 1990 after March 31, using the best 
        available data.
          (ii) The national weighted average estimated under 
        clause (i) shall be reduced by 7 percent.
          (iii) The adjusted prevailing charge conversion 
        factor for a locality is the sum of--
                  (I) the product of (a) the portion of the 
                reduced national weighted average prevailing 
                charge conversion factor computed under clause 
                (ii) which is attributable to physician work 
                and (b) the geographic work index value for the 
                locality (specified in Addendum C to the Model 
                Fee Schedule for Physician Services (published 
                on September 4, 1990, 55 Federal Register pp. 
                36238-36243)); and
                  (II) the product of (a) the remaining portion 
                of the reduced national weighted average 
                prevailing charge conversion factor computed 
                under clause (ii) and (b) the geographic 
                practice cost index value specified in section 
                1842(b)(14)(C)(iv) for the locality.
        In applying this clause, 70 percent of the prevailing 
        charge conversion factor shall be considered to be 
        attributable to physician work.
          (iv) The prevailing charge conversion factor to be 
        applied to a locality under this subparagraph shall not 
        be reduced by more than 15 percent below the prevailing 
        charge conversion factor applied in the locality for 
        the period during 1990 after March 31, but in no case 
        shall the prevailing charge conversion factor be less 
        than 60 percent of the national weighted average of the 
        prevailing charge conversion factors (computed under 
        clause (i)).
  (2) For purposes of payment for anesthesia services (whether 
furnished by physicians or by certified registered nurse 
anesthetists) under this part, the time units shall be counted 
based on actual time rather than rounded to full time units.
  (r) The Secretary shall establish a system which provides for 
a unique identifier for each physician who furnishes services 
for which payment may be made under this title. Under such 
system, the Secretary may impose appropriate fees on such 
physicians to cover the costs of investigation and 
recertification activities with respect to the issuance of the 
identifiers.
  (s)(1)(A) Subject to paragraph (3), the Secretary may 
implement a statewide or other areawide fee schedule to be used 
for payment of any item or service described in paragraph (2) 
which is paid on a reasonable charge basis.
                  (B) Any fee schedule established under this 
                paragraph for such item or service shall be 
                updated--
                          (i) for years before 2011--
                                  (I) subject to subclause 
                                (II), by the percentage 
                                increase in the consumer price 
                                index for all urban consumers 
                                (United States city average) 
                                for the 12-month period ending 
                                with June of the preceding 
                                year; and
                                  (II) for items and services 
                                described in paragraph (2)(D) 
                                for 2009, section 
                                1834(a)(14)(J) shall apply 
                                under this paragraph instead of 
                                the percentage increase 
                                otherwise applicable; and
                          (ii) for 2011 and subsequent years--
                                  (I) the percentage increase 
                                in the consumer price index for 
                                all urban consumers (United 
                                States city average) for the 
                                12-month period ending with 
                                June of the previous year, 
                                reduced by--
                                  (II) the productivity 
                                adjustment described in section 
                                1886(b)(3)(B)(xi)(II).
        The application of subparagraph (B)(ii)(II) may result 
        in the update under this paragraph being less than 0.0 
        for a year, and may result in payment rates under any 
        fee schedule established under this paragraph for a 
        year being less than such payment rates for the 
        preceding year.
  (2) The items and services described in this paragraph are as 
follows:
          (A) Medical supplies.
          (B) Home dialysis supplies and equipment (as defined 
        in section 1881(b)(8)).
          (D) Parenteral and enteral nutrients, equipment, and 
        supplies.
          (E) Electromyogram devices.
          (F) Salivation devices.
          (G) Blood products.
          (H) Transfusion medicine.
  (3) In the case of items and services described in paragraph 
(2)(D) that are included in a competitive acquisition program 
in a competitive acquisition area under section 1847(a)--
          (A) the payment basis under this subsection for such 
        items and services furnished in such area shall be the 
        payment basis determined under such competitive 
        acquisition program; and
          (B) the Secretary may use information on the payment 
        determined under such competitive acquisition programs 
        to adjust the payment amount otherwise applicable under 
        paragraph (1) for an area that is not a competitive 
        acquisition area under section 1847, and in the case of 
        such adjustment, paragraphs (8) and (9) of section 
        1842(b) shall not be applied.
  (t)(1) Each request for payment, or bill submitted, for an 
item or service furnished to an individual who is a resident of 
a skilled nursing facility for which payment may be made under 
this part shall include the facility's medicare provider 
number.
  (2) Each request for payment, or bill submitted, for therapy 
services described in paragraph (1) or (3) of section 1833(g), 
including services described in section 1833(a)(8)(B), 
furnished on or after October 1, 2012, for which payment may be 
made under this part shall include the national provider 
identifier of the physician who periodically reviews the plan 
for such services under section 1861(p)(2).
  (u) Each request for payment, or bill submitted, for a drug 
furnished to an individual for the treatment of anemia in 
connection with the treatment of cancer shall include (in a 
form and manner specified by the Secretary) information on the 
hemoglobin or hematocrit levels for the individual.

           *       *       *       *       *       *       *


                    Part C--Medicare+Choice Program


                 eligibility, election, and enrollment

  Sec. 1851. (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 title--
                  (A) through the original medicare fee-for-
                service program under parts A and B, or
                  (B) through enrollment in a Medicare+Choice 
                plan under this part,
        and may elect qualified prescription drug coverage in 
        accordance with section 1860D-1.
          (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 1855(d)), 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 1859(b)(6)) 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 1859(b)(3), 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 1859(b)(2).
          (3) Medicare+choice eligible individual.--
                  (A) In general.--In this title, subject to 
                subparagraph (B), the term ``Medicare+Choice 
                eligible individual'' means an individual who 
                is entitled to benefits under part A and 
                enrolled under part B.
                  (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), then the individual will be 
                        treated as a ``Medicare+Choice eligible 
                        individual'' for purposes of electing 
                        to continue enrollment in another 
                        Medicare+Choice plan.
                An individual who develops end-stage renal 
                disease while enrolled in a reasonable cost 
                reimbursement contract under section 1876(h) 
                shall be treated as an MA eligible individual 
                for purposes of applying the deemed enrollment 
                under subsection (c)(4).
  (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 thatan 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 organization's 
                        election.
          (2) Special rule for certain individuals covered 
        under fehbp or eligible for veterans or military health 
        benefits, veterans.--
                  (A) FEHBP.--An individual who is enrolled in 
                a health benefit plan under chapter 89 of title 
                5, United States Code, 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, United States Code, or 
                under chapter 17 of title 38 of such Code.
          (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 
        1905(p)(1)), a qualified disabled and working 
        individual (described in section 1905(s)), an 
        individual described in section 1902(a)(10)(E)(iii), or 
        otherwise entitled to medicare cost-sharing under a 
        State plan under title XIX 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 
                title.
                  (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) are made and changed, including the form and manner 
        in which such elections are made and changed. Subject 
        to paragraph (4), such elections shall be made or 
        changed only during coverage election periods specified 
        under subsection (e) and shall become effective as 
        provided in subsection (f).
          (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) 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), no longer serves 
                        the area in which the individual 
                        resides.
          (4) Deemed enrollment relating to converted 
        reasonable cost reimbursement contracts.--
                  (A) In general.--On the first day of the 
                annual, coordinated election period under 
                subsection (e)(3) for plan years beginning on 
                or after January 1, 2017, an MA eligible 
                individual described in clause (i) or (ii) of 
                subparagraph (B) is deemed, unless the 
                individual elects otherwise, to have elected to 
                receive benefits under this title through an 
                applicable MA plan (and shall be enrolled in 
                such plan) beginning with such plan year, if--
                          (i) the individual is enrolled in a 
                        reasonable cost reimbursement contract 
                        under section 1876(h) in the previous 
                        plan year;
                          (ii) such reasonable cost 
                        reimbursement contract was extended or 
                        renewed for the last reasonable cost 
                        reimbursement contract year of the 
                        contract (as described in subclause (I) 
                        of section 1876(h)(5)(C)(iv)) pursuant 
                        to such section;
                          (iii) the eligible organization that 
                        is offering such reasonable cost 
                        reimbursement contract provided the 
                        notice described in subclause (III) of 
                        such section that the contract was to 
                        be converted;
                          (iv) the applicable MA plan--
                                  (I) is the plan that was 
                                converted from the reasonable 
                                cost reimbursement contract 
                                described in clause (iii);
                                  (II) is offered by the same 
                                entity (or an organization 
                                affiliated with such entity 
                                that has a common ownership 
                                interest of control) that 
                                entered into such contract; and
                                  (III) is offered in the 
                                service area where the 
                                individual resides;
                          (v) in the case of reasonable cost 
                        reimbursement contracts that provide 
                        coverage under parts A and B (and, to 
                        the extent the Secretary determines it 
                        to be feasible, contracts that provide 
                        only part B coverage), the difference 
                        between the estimated individual costs 
                        (as determined applicable by the 
                        Secretary) for the applicable MA plan 
                        and such costs for the predecessor cost 
                        plan does not exceed a threshold 
                        established by the Secretary; and
                          (vi) the applicable MA plan--
                                  (I) provides coverage for 
                                enrollees transitioning from 
                                the converted reasonable cost 
                                reimbursement contract to such 
                                plan to maintain current 
                                providers of services and 
                                suppliers and course of 
                                treatment at the time of 
                                enrollment for a period of at 
                                least 90 days after enrollment; 
                                and
                                  (II) during such period, pays 
                                such providers of services and 
                                suppliers for items and 
                                services furnished to the 
                                enrollee an amount that is not 
                                less than the amount of payment 
                                applicable for such items and 
                                services under the original 
                                Medicare fee-for-service 
                                program under parts A and B.
                  (B) MA eligible individuals described.--
                          (i) Without prescription drug 
                        coverage.--An MA eligible individual 
                        described in this clause, with respect 
                        to a plan year, is an MA eligible 
                        individual who is enrolled in a 
                        reasonable cost reimbursement contract 
                        under section 1876(h) in the previous 
                        plan year and who is not, for such 
                        previous plan year, enrolled in a 
                        prescription drug plan under part D, 
                        including coverage under section 1860D-
                        22.
                          (ii) With prescription drug 
                        coverage.--An MA eligible individual 
                        described in this clause, with respect 
                        to a plan year, is an MA eligible 
                        individual who is enrolled in a 
                        reasonable cost reimbursement contract 
                        under section 1876(h) in the previous 
                        plan year and who, for such previous 
                        plan year, is enrolled in a 
                        prescription drug plan under part D--
                                  (I) through such contract; or
                                  (II) through a prescription 
                                drug plan, if the sponsor of 
                                such plan is the same entity 
                                (or an organization affiliated 
                                with such entity) that entered 
                                into such contract.
                  (C) Applicable ma plan defined.--In this 
                paragraph, the term ``applicable MA plan'' 
                means, in the case of an individual described 
                in--
                          (i) subparagraph (B)(i), an MA plan 
                        that is not an MA-PD plan; and
                          (ii) subparagraph (B)(ii), an MA-PD 
                        plan.
                  (D) Identification and notification of deemed 
                individuals.--Not later than 45 days before the 
                first day of the annual, coordinated election 
                period under subsection (e)(3) for plan years 
                beginning on or after January 1, 2017, the 
                Secretary shall identify and notify the 
                individuals who will be subject to deemed 
                elections under subparagraph (A) on the first 
                day of such period.
  (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)), 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 
                1804.
                  (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), 
                mail to the individual the information 
                described in subparagraph (A).
                          (ii) Notification related to certain 
                        deemed elections.--The Secretary shall 
                        require a Medicare Advantage 
                        organization that is offering a 
                        Medicare Advantage plan that has been 
                        converted from a reasonable cost 
                        reimbursement contract pursuant to 
                        section 1876(h)(5)(C)(iv) to mail, not 
                        later than 30 days prior to the first 
                        day of the annual, coordinated election 
                        period under subsection (e)(3) of a 
                        year, to any individual enrolled under 
                        such contract and identified by the 
                        Secretary under subsection (c)(4)(D) 
                        for such year--
                                  (I) a notification that such 
                                individual will, on such day, 
                                be deemed to have made an 
                                election with respect to such 
                                plan to receive benefits under 
                                this title through an MA plan 
                                or MA-PD plan (and shall be 
                                enrolled in such plan) for the 
                                next plan year under subsection 
                                (c)(4)(A), but that the 
                                individual may make a different 
                                election during the annual, 
                                coordinated election period for 
                                such year;
                                  (II) the information 
                                described in subparagraph (A);
                                  (III) a description of the 
                                differences between such MA 
                                plan or MA-PD plan and the 
                                reasonable cost reimbursement 
                                contract in which the 
                                individual was most recently 
                                enrolled with respect to 
                                benefits covered under such 
                                plans, including cost-sharing, 
                                premiums, drug coverage, and 
                                provider networks;
                                  (IV) information about the 
                                special period for elections 
                                under subsection (e)(2)(F); and
                                  (V) other information the 
                                Secretary may specify.
                  (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, 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 
                1852(b).
                  (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 1882 and provisions relating to 
                medicare select policies described in section 
                1882(t).
                  (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 1858(b)(1).
                          (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 plan's network.
                          (viii) The organization's 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 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 plan's 
                        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 1852(a)(3) 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 and enrolled under part B, 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 individual's initial 
        enrollment period under part B 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 individual's initial enrollment period under part 
        B.
          (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).
                  (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).
                          (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) Annual 45-day period from 2011 through 
                2015 for disenrollment from ma plans to elect 
                to receive benefits under the original medicare 
                fee-for-service program.--Subject to 
                subparagraph (D), at any time during the first 
                45 days of a year (beginning with 2011 and 
                ending with 2015), an individual who is 
                enrolled in a Medicare Advantage plan may 
                change the election under subsection (a)(1), 
                but only with respect to coverage under the 
                original medicare fee-for-service program under 
                parts A and B, and may elect qualified 
                prescription drug coverage in accordance with 
                section 1860D-1.
                  (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)--
                          (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 
                        MA-PD 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 title 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.
                  (F) Special period for certain deemed 
                elections.--
                          (i) In general.--At any time during 
                        the period beginning after the last day 
                        of the annual, coordinated election 
                        period under paragraph (3) in which an 
                        individual is deemed to have elected to 
                        enroll in an MA plan or MA-PD plan 
                        under subsection (c)(4) and ending on 
                        the last day of February of the first 
                        plan year for which the individual is 
                        enrolled in such plan, such individual 
                        may change the election under 
                        subsection (a)(1) (including changing 
                        the MA plan or MA-PD plan in which the 
                        individual is enrolled).
                          (ii) Limitation of one change.--An 
                        individual may exercise the right under 
                        clause (i) only once during the 
                        applicable period described in such 
                        clause. 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).
          (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;
                          (iv) with respect to 2007, 2008, 
                        2009, and 2010, the period beginning on 
                        November 15 and ending on December 31 
                        of the year before such year; and
                          (v) with respect to 2012 and 
                        succeeding years, the period beginning 
                        on October 15 and ending on December 7 
                        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 1876, 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 MA-PD 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 
                individual's place of residence or other change 
                in circumstances (specified by the Secretary, 
                but not including termination of the 
                individual's enrollment on the basis described 
                in clause (i) or (ii) of subsection (g)(3)(B));
                  (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 organization's 
                        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 
                        organization's behalf) materially 
                        misrepresented the plan's 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 
        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 period 
                described in paragraph (2)(F), 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) subsection 
        (e)(1) shall take effect upon the date the individual 
        becomes entitled to benefits under part A and enrolled 
        under part B, except as the Secretary may provide 
        (consistent with section 1838) in order to prevent 
        retroactive coverage.
          (2) During continuous open enrollment periods.--An 
        election or change of coverage made under subsection 
        (e)(2) 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), 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) 
        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 1852(b), 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 
                individual's 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 1856 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).
                          (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) 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).
                  (D) Organization obligation with respect to 
                election forms.--Pursuant to a contract under 
                section 1857, each Medicare+Choice organization 
                receiving an election form under subsection 
                (c)(2) 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 
        1856 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 1856. Such 
        standards--
                  (A) shall not permit a Medicare+Choice 
                organization to provide for, subject to 
                subsection (j)(2)(C), cash, gifts, prizes, or 
                other monetary rebates as an inducement for 
                enrollment or otherwise;
                  (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;
                  (C) shall not permit a Medicare Advantage 
                organization (or the agents, brokers, and other 
                third parties representing such organization) 
                to conduct the prohibited activities described 
                in subsection (j)(1); and
                  (D) shall only permit a Medicare Advantage 
                organization (and the agents, brokers, and 
                other third parties representing such 
                organization) to conduct the activities 
                described in subsection (j)(2) in accordance 
                with the limitations established under such 
                subsection.
          (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.
          (6) Required inclusion of plan type in plan name.--
        For plan years beginning on or after January 1, 2010, a 
        Medicare Advantage organization must ensure that the 
        name of each Medicare Advantage plan offered by the 
        Medicare Advantage organization includes the plan type 
        of the plan (using standard terminology developed by 
        the Secretary).
          (7) Strengthening the ability of states to act in 
        collaboration with the secretary to address fraudulent 
        or inappropriate marketing practices.--
                  (A) Appointment of agents and brokers.--Each 
                Medicare Advantage organization shall--
                          (i) only use agents and brokers who 
                        have been licensed under State law to 
                        sell Medicare Advantage plans offered 
                        by the Medicare Advantage organization;
                          (ii) in the case where a State has a 
                        State appointment law, abide by such 
                        law; and
                          (iii) report to the applicable State 
                        the termination of any such agent or 
                        broker, including the reasons for such 
                        termination (as required under 
                        applicable State law).
                  (B) Compliance with state information 
                requests.--Each Medicare Advantage organization 
                shall comply in a timely manner with any 
                request by a State for information regarding 
                the performance of a licensed agent, broker, or 
                other third party representing the Medicare 
                Advantage organization as part of an 
                investigation by the State into the conduct of 
                the agent, broker, or other third party.
  (i) Effect of Election of Medicare+Choice Plan Option.--
          (1) Payments to organizations.--Subject to sections 
        1852(a)(5), 1853(a)(4), 1853(g), 1853(h), 1886(d)(11), 
        1886(h)(3)(D), and 1853(m), payments under a contract 
        with a Medicare+Choice organization under section 
        1853(a) 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 for items and services furnished to the individual.
          (2) Only organization entitled to payment.--Subject 
        to sections 1853(a)(4), 1853(e), 1853(g), 1853(h), 
        1857(f)(2), 1858(h), 1886(d)(11), and 1886(h)(3)(D), 
        only the Medicare+Choice organization shall be entitled 
        to receive payments from the Secretary under this title 
        for services furnished to the individual.
  (j) Prohibited Activities Described and Limitations on the 
Conduct of Certain Other Activities.--
          (1) Prohibited activities described.--The following 
        prohibited activities are described in this paragraph:
                  (A) Unsolicited means of direct contact.--Any 
                unsolicited means of direct contact of 
                prospective enrollees, including soliciting 
                door-to-door or any outbound telemarketing 
                without the prospective enrollee initiating 
                contact.
                  (B) Cross-selling.--The sale of other non-
                health related products (such as annuities and 
                life insurance) during any sales or marketing 
                activity or presentation conducted with respect 
                to a Medicare Advantage plan.
                  (C) Meals.--The provision of meals of any 
                sort, regardless of value, to prospective 
                enrollees at promotional and sales activities.
                  (D) Sales and marketing in health care 
                settings and at educational events.--Sales and 
                marketing activities for the enrollment of 
                individuals in Medicare Advantage plans that 
                are conducted--
                          (i) in health care settings in areas 
                        where health care is delivered to 
                        individuals (such as physician offices 
                        and pharmacies), except in the case 
                        where such activities are conducted in 
                        common areas in health care settings; 
                        and
                          (ii) at educational events.
          (2) Limitations.--The Secretary shall establish 
        limitations with respect to at least the following:
                  (A) Scope of marketing appointments.--The 
                scope of any appointment with respect to the 
                marketing of a Medicare Advantage plan. Such 
                limitation shall require advance agreement with 
                a prospective enrollee on the scope of the 
                marketing appointment and documentation of such 
                agreement by the Medicare Advantage 
                organization. In the case where the marketing 
                appointment is in person, such documentation 
                shall be in writing.
                  (B) Co-branding.--The use of the name or logo 
                of a co-branded network provider on Medicare 
                Advantage plan membership and marketing 
                materials.
                  (C) Limitation of gifts to nominal dollar 
                value.--The offering of gifts and other 
                promotional items other than those that are of 
                nominal value (as determined by the Secretary) 
                to prospective enrollees at promotional 
                activities.
                  (D) Compensation.--The use of compensation 
                other than as provided under guidelines 
                established by the Secretary. Such guidelines 
                shall ensure that the use of compensation 
                creates incentives for agents and brokers to 
                enroll individuals in the Medicare Advantage 
                plan that is intended to best meet their health 
                care needs.
                  (E) Required training, annual retraining, and 
                testing of agents, brokers, and other third 
                parties.--The use by a Medicare Advantage 
                organization of any individual as an agent, 
                broker, or other third party representing the 
                organization that has not completed an initial 
                training and testing program and does not 
                complete an annual retraining and testing 
                program.

           *       *       *       *       *       *       *


      B. Changes in Existing Law Proposed by the Bill, as Reported

    In compliance with clause 3(e)(1)(B) of rule XIII of the 
Rules of the House of Representatives, changes in existing law 
proposed by the bill, as reported, are shown as follows 
(existing law proposed to be omitted is enclosed in black 
brackets, new matter is printed in italic, existing law in 
which no change is proposed is shown in roman):

                          SOCIAL SECURITY ACT




           *       *       *       *       *       *       *
TITLE XVIII--HEALTH INSURANCE FOR THE AGED AND DISABLED

           *       *       *       *       *       *       *



   Part B--Supplementary Medical Insurance Benefits for the Aged and 
Disabled

           *       *       *       *       *       *       *



          provisions relating to the administration of part b

  Sec. 1842. (a) The administration of this part shall be 
conducted through contracts with medicare administrative 
contractors under section 1874A.
  (b)
          (2)
  (C) In the case of residents of nursing facilities who 
receive services described in clause (i) or (ii) of section 
1861(s)(2)(K) performed by a member of a team, the Secretary 
shall instruct medicare administrative contractors to develop 
mechanisms which permit routine payment under this part for up 
to 1.5 visits per month per resident. In the previous sentence, 
the term ``team'' refers to a physician and includes a 
physician assistant acting under the supervision of the 
physician or a nurse practitioner working in collaboration with 
that physician, or both.
  (3) The Secretary--
          (A) shall take such action as may be necessary to 
        assure that, where payment under this part for a 
        service is on a cost basis, the cost is reasonable cost 
        (as determined under section 1861(v));
          (B) shall take such action as may be necessary to 
        assure that, where payment under this part for a 
        service is on a charge basis, such charge will be 
        reasonable and not higher than the charge applicable, 
        for a comparable service and under comparable 
        circumstances, to the policyholders and subscribers of 
        the medicare administrative contractor, and such 
        payment will (except as otherwise provided in section 
        1870(f)) be made--
                  (i) on the basis of an itemized bill; or
                  (ii) on the basis of an assignment under the 
                terms of which (I) the reasonable charge is the 
                full charge for the service, (II) the physician 
                or other person furnishing such service agrees 
                not to charge (and to refund amounts already 
                collected) for services for which payment under 
                this title is denied under section 1154(a)(2) 
                by reason of a determination under section 
                1154(a)(1)(B), and (III) the physician or other 
                person furnishing such service agrees not to 
                charge (and to refund amounts already 
                collected) for such service if payment may not 
                be made therefor by reason of the provisions of 
                paragraph (1) of section 1862(a), and if the 
                individual to whom such service was furnished 
                was without fault in incurring the expenses of 
                such service, and if the Secretary's 
                determination that payment (pursuant to such 
                assignment) was incorrect and was made 
                subsequent to the third year following the year 
                in which notice of such payment was sent to 
                such individual; except that the Secretary may 
                reduce such three-year period to not less than 
                one year if he finds such reduction is 
                consistent with the objectives of this title 
                (except in the case of physicians' services and 
                ambulance service furnished as described in 
                section 1862(a)(4), other than for purposes of 
                section 1870(f));
        but (in the case of bills submitted, or requests for 
        payment made, after March 1968) only if the bill is 
        submitted, or a written request for payment is made in 
        such other form as may be permitted under regulations, 
        no later than the period ending 1 calendar year after 
        the date of service;
          (F) shall take such action as may be necessary to 
        assure that where payment under this part for a service 
        rendered is on a charge basis, such payment shall be 
        determined on the basis of the charge that is 
        determined in accordance with this section on the basis 
        of customary and prevailing charge levels in effect at 
        the time the service was rendered or, in the case of 
        services rendered more than 12 months before the year 
        in which the bill is submitted or request for payment 
        is made, on the basis of such levels in effect for the 
        12-month period preceding such year;
          (G) shall, for a service that is furnished with 
        respect to an individual enrolled under this part, that 
        is not paid on an assignment-related basis, and that is 
        subject to a limiting charge under section 1848(g)--
                  (i) determine, prior to making payment, 
                whether the amount billed for such service 
                exceeds the limiting charge applicable under 
                section 1848(g)(2);
                  (ii) notify the physician, supplier, or other 
                person periodically (but not less often than 
                once every 30 days) of determinations that 
                amounts billed exceeded such applicable 
                limiting charges; and
                  (iii) provide for prompt response to 
                inquiries of physicians, suppliers, and other 
                persons concerning the accuracy of such 
                limiting charges for their services;
          (H) shall implement--
                  (i) programs to recruit and retain physicians 
                as participating physicians in the area served 
                by themedicare administrative contractor, 
                including educational and outreach activities 
                and the use of professional relations personnel 
                to handle billing and other problems relating 
                to payment of claims of participating 
                physicians; and
                  (ii) programs to familiarize beneficiaries 
                with the participating physician program and to 
                assist such beneficiaries in locating 
                participating physicians;
          (L) shall monitor and profile physicians' billing 
        patterns within each area or locality and provide 
        comparative data to physicians whose utilization 
        patterns vary significantly from other physicians in 
        the same payment area or locality.
In determining the reasonable charge for services for purposes 
of this paragraph, there shall be taken into consideration the 
customary charges for similar services generally made by the 
physician or other person furnishing such services, as well as 
the prevailing charges in the locality for similar services. No 
charge may be determined to be reasonable in the case of bills 
submitted or requests for payment made under this part after 
December 31, 1970, if it exceeds the higher of (i) the 
prevailing charge recognized by the carrier and found 
acceptable by the Secretary for similar services in the same 
locality in administering this part on December 31, 1970, or 
(ii) the prevailing charge level that, on the basis of 
statistical data and methodology acceptable to the Secretary, 
would cover 75 percent of the customary charges made for 
similar services in the same locality during the 12-month 
period ending on the June 30 last preceding the start of the 
calendar year in which the service is rendered. In the case of 
physicians' services the prevailing charge level determined for 
purposes of clause (ii) of the preceding sentence for any 
twelve-month period (beginning after June 30, 1973) specified 
in clause (ii) of such sentence may not exceed (in the 
aggregate) the level determined under such clause for the 
fiscal year ending June 30, 1973, or (with respect to 
physicians' services furnished in a year after 1987) the level 
determined under this sentence (or under any other provision of 
law affecting the prevailing charge level) for the previous 
year except to the extent that the Secretary finds, on the 
basis of appropriate economic index data, that such higher 
level is justified by year-to-year economic changes. With 
respect to power-operated wheelchairs for which payment may be 
made in accordance with section 1861(s)(6), charges determined 
to be reasonable may not exceed the lowest charge at which 
power-operated wheelchairs are available in the locality. In 
the case of medical services, supplies, and equipment 
(including equipment servicing) that, in the judgment of the 
Secretary, do not generally vary significantly in quality from 
one supplier to another, the charges incurred after December 
31, 1972, determined to be reasonable may not exceed the lowest 
charge levels at which such services, supplies, and equipment 
are widely and consistently available in a locality except to 
the extent and under the circumstances specified by the 
Secretary. The requirement in subparagraph (B) that a bill be 
submitted or request for payment be made by the close of the 
following calendar year shall not apply if (I) failure to 
submit the bill or request the payment by the close of such 
year is due to the error or misrepresentation of an officer, 
employee, fiscal intermediary, carrier, medicare administrative 
contractor, or agent of the Department of Health and Human 
Services performing functions under this title and acting 
within the scope of his or its authority, and (II) the bill is 
submitted or the payment is requested promptly after such error 
or misrepresentation is eliminated or corrected. 
Notwithstanding the provisions of the third and fourth 
sentences preceding this sentence, the prevailing charge level 
in the case of a physician service in a particular locality 
determined pursuant to such third and fourth sentences for any 
calendar year after 1974 shall, if lower than the prevailing 
charge level for the fiscal year ending June 30, 1975, in the 
case of a similar physician service in the same locality by 
reason of the application of economic index data, be raised to 
such prevailing charge level for the fiscal year ending June 
30, 1975, and shall remain at such prevailing charge level 
until the prevailing charge for a year (as adjusted by economic 
index data) equals or exceeds such prevailing charge level. The 
amount of any charges for outpatient services which shall be 
considered reasonable shall be subject to the limitations 
established by regulations issued by the Secretary pursuant to 
section 1861(v)(1)(K), and in determining the reasonable charge 
for such services, the Secretary may limit such reasonable 
charge to a percentage of the amount of the prevailing charge 
for similar services furnished in a physician's office, taking 
into account the extent to which overhead costs associated with 
such outpatient services have been included in the reasonable 
cost or charge of the facility. In applying subparagraph (B), 
the Secretary may specify exceptions to the 1 calendar year 
period specified in such subparagraph.
  (4)(A)(i) In determining the prevailing charge levels under 
the third and fourth sentences of paragraph (3) for physicians' 
services furnished during the 15-month period beginning July 1, 
1984, the Secretary shall not set any level higher than the 
same level as was set for the 12-month period beginning July 1, 
1983.
  (ii)(I) In determining the prevailing charge levels under the 
third and fourth sentences of paragraph (3) for physicians' 
services furnished during the 8-month period beginning May 1, 
1986, by a physician who is not a participating physician (as 
defined in subsection (h)(1)) at the time of furnishing the 
services, the Secretary shall not set any level higher than the 
same level as was set for the 12-month period beginning July 1, 
1983.
  (II) In determining the prevailing charge levels under the 
fourth sentence of paragraph (3) for physicians' services 
furnished during the 8-month period beginning May 1, 1986, by a 
physician who is a participating physician (as defined in 
subsection (h)(1)) at the time of furnishing the services, the 
Secretary shall permit an additional one percentage point 
increase in the increase otherwise permitted under that 
sentence.
  (iii) In determining the maximum allowable prevailing charges 
which may be recognized consistent with the index described in 
the fourth sentence of paragraph (3) for physicians' services 
furnished on or after January 1, 1987, by participating 
physicians, the Secretary shall treat the maximum allowable 
prevailing charges recognized as of December 31, 1986, under 
such sentence with respect to participating physicians as 
having been justified by economic changes.
  (iv) The reasonable charge for physicians' services furnished 
on or after January 1, 1987, and before January 1, 1992, by a 
nonparticipating physician shall be no greater than the 
applicable percent of the prevailing charge levels established 
under the third and fourth sentences of paragraph (3) (or under 
any other applicable provision of law affecting the prevailing 
charge level). In the previous sentence, the term ``applicable 
percent'' means for services furnished (I) on or after January 
1, 1987, and before April 1, 1988, 96 percent, (II) on or after 
April 1, 1988, and before January 1, 1989, 95.5 percent, and 
(III) on or after January 1, 1989, 95 percent.
  (v) In determining the prevailing charge levels under the 
third and fourth sentences of paragraph (3) for physicians' 
services furnished during the 3-month period beginning January 
1, 1988, the Secretary shall not set any level higher than the 
same level as was set for the 12-month period beginning January 
1, 1987.
  (vi) Before each year (beginning with 1989), the Secretary 
shall establish a prevailing charge floor for primary care 
services (as defined in subsection (i)(4)) equal to 60 percent 
of the estimated average prevailing charge levels based on the 
best available data (determined, under the third and fourth 
sentences of paragraph (3) and under paragraph (4), without 
regard to this clause and without regard to physician 
specialty) for such service for all localities in the United 
States (weighted by the relative frequency of the service in 
each locality) for the year.
  (vii) Beginning with 1987, the percentage increase in the MEI 
(as defined in subsection (i)(3)) for each year shall be the 
same for nonparticipating physicians as for participating 
physicians.
  (B)(i) In determining the reasonable charge under paragraph 
(3) for physicians' services furnished during the 15-month 
period beginning July 1, 1984, the customary charges shall be 
the same customary charges as were recognized under this 
section for the 12-month period beginning July 1, 1983.
  (ii) In determining the reasonable charge under paragraph (3) 
for physicians' services furnished during the 8-month period 
beginning May 1, 1986, by a physician who is not a 
participating physician (as defined in subsection (h)(1)) at 
the time of furnishing the services--
          (I) if the physician was not a participating 
        physician at any time during the 12-month period 
        beginning on October 1, 1984, the customary charges 
        shall be the same customary charges as were recognized 
        under this section for the 12-month period beginning 
        July 1, 1983, and
          (II) if the physician was a participating physician 
        at any time during the 12-month period beginning on 
        October 1, 1984, the physician's customary charges 
        shall be determined based upon the physician's actual 
        charges billed during the 12-month period ending on 
        March 31, 1985.
  (iii) In determining the reasonable charge under paragraph 
(3) for physicians' services furnished during the 3-month 
period beginning January 1, 1988, the customary charges shall 
be the same customary charges as were recognized under this 
section for the 12-month period beginning January 1, 1987.
  (iv) In determining the reasonable charge under paragraph (3) 
for physicians' services (other than primary care services, as 
defined in subsection (i)(4)) furnished during 1991, the 
customary charges shall be the same customary charges as were 
recognized under this section for the 9-month period beginning 
April 1, 1990. In a case in which subparagraph (F) applies 
(relating to new physicians) so as to limit the customary 
charges of a physician during 1990 to a percent of prevailing 
charges, the previous sentence shall not prevent such limit on 
customary charges under such subparagraph from increasing in 
1991 to a higher percent of such prevailing charges.
  (C) In determining the prevailing charge levels under the 
third and fourth sentences of paragraph (3) for physicians' 
services furnished during periods beginning after September 30, 
1985, the Secretary shall treat the level as set under 
subparagraph (A)(i) as having fully provided for the economic 
changes which would have been taken into account but for the 
limitations contained in subparagraph (A)(i).
  (D)(i) In determining the customary charges for physicians' 
services furnished during the 8-month period beginning May 1, 
1986, or the 12-month period beginning January 1, 1987, by a 
physician who was not a participating physician (as defined in 
subsection (h)(1)) on September 30, 1985, the Secretary shall 
not recognize increases in actual charges for services 
furnished during the 15- month period beginning on July 1, 
1984, above the level of the physician's actual charges billed 
in the 3-month period ending on June 30, 1984.
  (ii) In determining the customary charges for physicians' 
services furnished during the 12-month period beginning January 
1, 1987, by a physician who is not a participating physician 
(as defined in subsection (h)(1)) on April 30, 1986, the 
Secretary shall not recognize increases in actual charges for 
services furnished during the 7-month period beginning on 
October 1, 1985, above the level of the physician's actual 
charges billed during the 3-month period ending on June 30, 
1984.
  (iii) In determining the customary charges for physicians' 
services furnished during the 12-month period beginning January 
1, 1987, or January 1, 1988, by a physician who is not a 
participating physician (as defined in subsection (h)(1)) on 
December 31, 1986, the Secretary shall not recognize increases 
in actual charges for services furnished during the 8-month 
period beginning on May 1, 1986, above the level of the 
physician's actual charges billed during the 3-month period 
ending on June 30, 1984.
  (iv) In determining the customary charges for a physicians' 
service furnished on or after January 1, 1988, if a physician 
was a nonparticipating physician in a previous year (beginning 
with 1987), the Secretary shall not recognize any amount of 
such actual charges (for that service furnished during such 
previous year) that exceeds the maximum allowable actual charge 
for such service established under subsection (j)(1)(C).
  (E)(i) For purposes of this part for physicians' services 
furnished in 1987, the percentage increase in the MEI is 3.2 
percent.
  (ii) For purposes of this part for physicians' services 
furnished in 1988, on or after April 1, the percentage increase 
in the MEI is--
          (I) 3.6 percent for primary care services (as defined 
        in subsection (i)(4)), and
          (II) 1 percent for other physicians' services.
  (iii) For purposes of this part for physicians' services 
furnished in 1989, the percentage increase in the MEI is--
          (I) 3.0 percent for primary care services, and
          (II) 1 percent for other physicians' services.
  (iv) For purposes of this part for items and services 
furnished in 1990, after March 31, 1990, the percentage 
increase in the MEI is--
          (I) 0 percent for radiology services, for anesthesia 
        services, and for other services specified in the list 
        referred to in paragraph (14)(C)(i),
          (II) 2 percent for other services (other than primary 
        care services), and
          (III) such percentage increase in the MEI (as defined 
        in subsection (i)(3)) as would be otherwise determined 
        for primary care services (as defined in subsection 
        (i)(4)).
  (v) For purposes of this part for items and services 
furnished in 1991, the percentage increase in the MEI is--
          (I) 0 percent for services (other than primary care 
        services), and
          (II) 2 percent for primary care services (as defined 
        in subsection (i)(4)).
  (6) No payment under this part for a service provided to any 
individual shall (except as provided in section 1870) be made 
to anyone other than such individual or (pursuant to an 
assignment described in subparagraph (B)(ii) of paragraph (3)) 
the physician or other person who provided the service, except 
that (A) payment may be made (i) to the employer of such 
physician or other person if such physician or other person is 
required as a condition of his employment to turn over his fee 
for such service to his employer, or (ii) where the service was 
provided under a contractual arrangement between such physician 
or other person and an entity, to the entity if, under the 
contractual arrangement, the entity submits the bill for the 
service and the contractual arrangement meets such program 
integrity and other safeguards as the Secretary may determine 
to be appropriate, (B) payment may be made to an entity (i) 
which provides coverage of the services under a health benefits 
plan, but only to the extent that payment is not made under 
this part, (ii) which has paid the person who provided the 
service an amount (including the amount payable under this 
part) which that person has accepted as payment in full for the 
service, and (iii) to which the individual has agreed in 
writing that payment may be made under this part, (C) in the 
case of services described in clause (i) of section 
1861(s)(2)(K), payment shall be made to either (i) the employer 
of the physician assistant involved, or (ii) with respect to a 
physician assistant who was the owner of a rural health clinic 
(as described in section 1861(aa)(2)) for a continuous period 
beginning prior to the date of the enactment of the Balanced 
Budget Act of 1997 and ending on the date that the Secretary 
determines such rural health clinic no longer meets the 
requirements of section 1861(aa)(2), payment may be made 
directly to the physician assistant, (D) payment may be made to 
a physician for physicians' services (and services furnished 
incident to such services) furnished by a second physician to 
patients of the first physician if (i) the first physician is 
unavailable to provide the services; (ii) the services are 
furnished pursuant to an arrangement between the two physicians 
that (I) is informal and reciprocal, or (II) involves per diem 
or other fee-for-time compensation for such services; (iii) the 
services are not provided by the second physician over a 
continuous period of more than 60 days or are provided over a 
longer continuous period during all of which the first 
physician has been called or ordered to active duty as a member 
of a reserve component of the Armed Forces; and (iv) the claim 
form submitted to the medicare administrative contractor for 
such services includes the second physician's unique identifier 
(provided under the system established under subsection (r)) 
and indicates that the claim meets the requirements of this 
subparagraph for payment to the first physician, (E) in the 
case of an item or service (other than services described in 
section 1888(e)(2)(A)(ii)) furnished by, or under arrangements 
made by, a skilled nursing facility to an individual who (at 
the time the item or service is furnished) is a resident of a 
skilled nursing facility, payment shall be made to the 
facility, (F) in the case of home health services (including 
medical supplies described in section 1861(m)(5), but excluding 
durable medical equipment to the extent provided for in such 
section) furnished to an individual who (at the time the item 
or service is furnished) is under a plan of care of a home 
health agency, payment shall be made to the agency (without 
regard to whether or not the item or service was furnished by 
the agency, by others under arrangement with them made by the 
agency, or when any other contracting or consulting 
arrangement, or otherwise), (G) in the case of services in a 
hospital or clinic to which section 1880(e) applies, payment 
shall be made to such hospital or clinic, and (H) in the case 
of services described in section 1861(aa)(3) that are furnished 
by a health care professional under contract with a Federally 
qualified health center, payment shall be made to the center. 
No payment which under the preceding sentence may be made 
directly to the physician or other person providing the service 
involved (pursuant to an assignment described in subparagraph 
(B)(ii) of paragraph (3)) shall be made to anyone else under a 
reassignment or power of attorney (except to an employer or 
entity as described in subparagraph (A) of such sentence); but 
nothing in this subsection shall be construed (i) to prevent 
the making of such a payment in accordance with an assignment 
from the individual to whom the service was provided or a 
reassignment from the physician or other person providing such 
service if such assignment or reassignment is made to a 
governmental agency or entity or is established by or pursuant 
to the order of a court of competent jurisdiction, or (ii) to 
preclude an agent of the physician or other person providing 
the service from receiving any such payment if (but only if) 
such agent does so pursuant to an agency agreement under which 
the compensation to be paid to the agent for his services for 
or in connection with the billing or collection of payments due 
such physician or other person under this title is unrelated 
(directly or indirectly) to the amount of such payments or the 
billings therefor, and is not dependent upon the actual 
collection of any such payment. For purposes of subparagraph 
(C) of the first sentence of this paragraph, an employment 
relationship may include any independent contractor 
arrangement, and employer status shall be determined in 
accordance with the law of the State in which the services 
described in such clause are performed.
  (7)(A) In the case of physicians' services furnished to a 
patient in a hospital with a teaching program approved as 
specified in section 1861(b)(6) but which does not meet the 
conditions described in section 1861(b)(7), the Secretary shall 
not provide (except on the basis described in subparagraph (C)) 
for payment for such services under this part--
          (i) unless--
                  (I) the physician renders sufficient personal 
                and identifiable physicians' services to the 
                patient to exercise full, personal control over 
                the management of the portion of the case for 
                which the payment is sought,
                  (II) the services are of the same character 
                as the services the physician furnishes to 
                patients not entitled to benefits under this 
                title, and
                  (III) at least 25 percent of the hospital's 
                patients (during a representative past period, 
                as determined by the Secretary) who were not 
                entitled to benefits under this title and who 
                were furnished services described in subclauses 
                (I) and (II) paid all or a substantial part of 
                charges (other than nominal charges) imposed 
                for such services; and
          (ii) to the extent that the payment is based upon a 
        reasonable charge for the services in excess of the 
        customary charge as determined in accordance with 
        subparagraph (B).
  (B) The customary charge for such services in a hospital 
shall be determined in accordance with regulations issued by 
the Secretary and taking into account the following factors:
          (i) In the case of a physician who is not a teaching 
        physician (as defined by the Secretary), the Secretary 
        shall take into account the amounts the physician 
        charges for similar services in the physician's 
        practice outside the teaching setting.
          (ii) In the case of a teaching physician, if the 
        hospital, its physicians, or other appropriate billing 
        entity has established one or more schedules of charges 
        which are collected for medical and surgical services, 
        the Secretary shall base payment under this title on 
        the greatest of--
                  (I) the charges (other than nominal charges) 
                which are most frequently collected in full or 
                substantial part with respect to patients who 
                were not entitled to benefits under this title 
                and who were furnished services described in 
                subclauses (I) and (II) of subparagraph (A)(i),
                  (II) the mean of the charges (other than 
                nominal charges) which were collected in full 
                or substantial part with respect to such 
                patients, or
                  (III) 85 percent of the prevailing charges 
                paid for similar services in the same locality.
          (iii) If all the teaching physicians in a hospital 
        agree to have payment made for all of their physicians' 
        services under this part furnished to patients in such 
        hospital on an assignment-related basis, the customary 
        charge for such services shall be equal to 90 percent 
        of the prevailing charges paid for similar services in 
        the same locality.
  (C) In the case of physicians' services furnished to a 
patient in a hospital with a teaching program approved as 
specified in section 1861(b)(6) but which does not meet the 
conditions described in section 1861(b)(7), if the conditions 
described in subclauses (I) and (II) of subparagraph (A)(i) are 
met and if the physician elects payment to be determined under 
this subparagraph, the Secretary shall provide for payment for 
such services under this part on the basis of regulations of 
the Secretary governing reimbursement for the services of 
hospital-based physicians (and not on any other basis).
  (D)(i) In the case of physicians' services furnished to a 
patient in a hospital with a teaching program approved as 
specified in section 1861(b)(6) but which does not meet the 
conditions described in section 1861(b)(7), no payment shall be 
made under this part for services of assistants at surgery with 
respect to a surgical procedure if such hospital has a training 
program relating to the medical specialty required for such 
surgical procedure and a qualified individual on the staff of 
the hospital is available to provide such services; except that 
payment may be made under this part for such services, to the 
extent that such payment is otherwise allowed under this 
paragraph, if such services, as determined under regulations of 
the Secretary--
          (I) are required due to exceptional medical 
        circumstances,
          (II) are performed by team physicians needed to 
        perform complex medical procedures, or
          (III) constitute concurrent medical care relating to 
        a medical condition which requires the presence of, and 
        active care by, a physician of another specialty during 
        surgery,
and under such other circumstances as the Secretary determines 
by regulation to be appropriate.
  (ii) For purposes of this subparagraph, the term ``assistant 
at surgery'' means a physician who actively assists the 
physician in charge of a case in performing a surgical 
procedure.
  (iii) The Secretary shall determine appropriate methods of 
reimbursement of assistants at surgery where such services are 
reimbursable under this part.
  (8)(A)(i) The Secretary shall by regulation--
          (I) describe the factors to be used in determining 
        the cases (of particular items or services) in which 
        the application of this title to payment under this 
        part (other than to physicians' services paid under 
        section 1848) results in the determination of an amount 
        that, because of its being grossly excessive or grossly 
        deficient, is not inherently reasonable, and
          (II) provide in those cases for the factors to be 
        considered in determining an amount that is realistic 
        and equitable.
  (ii) Notwithstanding the determination made in clause (i), 
the Secretary may not apply factors that would increase or 
decrease the payment under this part during any year for any 
particular item or service by more than 15 percent from such 
payment during the preceding year except as provided in 
subparagraph (B).
  (B) The Secretary may make a determination under this 
subparagraph that would result in an increase or decrease under 
subparagraph (A) of more than 15 percent of the payment amount 
for a year, but only if--
          (i) the Secretary's determination takes into account 
        the factors described in subparagraph (C) and any 
        additional factors the Secretary determines 
        appropriate,
          (ii) the Secretary's determination takes into account 
        the potential impacts described in subparagraph (D), 
        and
          (iii) the Secretary complies with the procedural 
        requirements of paragraph (9).
  (C) The factors described in this subparagraph are as 
follows:
          (i) The programs established under this title and 
        title XIX are the sole or primary sources of payment 
        for an item or service.
          (ii) The payment amount does not reflect changing 
        technology, increased facility with that technology, or 
        reductions in acquisition or production costs.
          (iii) The payment amount for an item or service under 
        this part is substantially higher or lower than the 
        payment made for the item or service by other 
        purchasers.
  (D) The potential impacts of a determination under 
subparagraph (B) on quality, access, and beneficiary liability, 
including the likely effects on assignment rates and 
participation rates.
  (9)(A) The Secretary shall consult with representatives of 
suppliers or other individuals who furnish an item or service 
before making a determination under paragraph (8)(B) with 
regard to that item or service.
  (B) The Secretary shall publish notice of a proposed 
determination under paragraph (8)(B) in the Federal Register--
          (i) specifying the payment amount proposed to be 
        established with respect to an item or service,
          (ii) explaining the factors and data that the 
        Secretary took into account in determining the payment 
        amount so specified, and
          (iii) explaining the potential impacts described in 
        paragraph (8)(D).
  (C) After publication of the notice required by subparagraph 
(B), the Secretary shall allow not less than 60 days for public 
comment on the proposed determination.
  (D)(i) Taking into consideration the comments made by the 
public, the Secretary shall publish in the Federal Register a 
final determination under paragraph (8)(B) with respect to the 
payment amount to be established with respect to the item or 
service.
  (ii) A final determination published pursuant to clause (i) 
shall explain the factors and data that the Secretary took into 
consideration in making the final determination.
  (10)(A)(i) In determining the reasonable charge for 
procedures described in subparagraph (B) and performed during 
the 9-month period beginning on April 1, 1988, the prevailing 
charge for such procedure shall be the prevailing charge 
otherwise recognized for such procedure for 1987--
          (I) subject to clause (iii), reduced by 2.0 percent, 
        and
          (II) further reduced by the applicable percentage 
        specified in clause (ii).
  (ii) For purposes of clause (i), the applicable percentage 
specified in this clause is--
          (I) 15 percent, in the case of a prevailing charge 
        otherwise recognized (without regard to this paragraph 
        and determined without regard to physician specialty) 
        that is at least 150 percent of the weighted national 
        average (as determined by the Secretary) of such 
        prevailing charges for such procedure for all 
        localities in the United States for 1987;
          (II) 0 percent, in the case of a prevailing charge 
        that does not exceed 85 percent of such weighted 
        national average; and
          (III) in the case of any other prevailing charge, a 
        percent determined on the basis of a straight line 
        sliding scale, equal to 3\1/3\ of a percentage point 
        for each percent by which the prevailing charge exceeds 
        85 percent of such weighted national average.
  (iii) In no case shall the reduction under clause (i) for a 
procedure result in a prevailing charge in a locality for 1988 
which is less than 85 percent of the Secretary's estimate of 
the weighted national average of such prevailing charges for 
such procedure for all localities in the United States for 1987 
(based upon the best available data and determined without 
regard to physician specialty) after making the reduction 
described in clause (i)(I).
  (B) The procedures described in this subparagraph are as 
follows: bronchoscopy, carpal tunnel repair, cataract surgery 
(including subsequent insertion of an intraocular lens), 
coronary artery bypass surgery, diagnostic and/or therapeutic 
dilation and curettage, knee arthroscopy, knee arthroplasty, 
pacemaker implantation surgery, total hip replacement, 
suprapubic prostatectomy, transurethral resection of the 
prostate, and upper gastrointestinal endoscopy.
  (C) In the case of a reduction in the reasonable charge for a 
physicians' service under subparagraph (A), if a 
nonparticipating physician furnishes the service to an 
individual entitled to benefits under this part, after the 
effective date of such reduction, the physician's actual charge 
is subject to a limit under subsection (j)(1)(D).
  (D) There shall be no administrative or judicial review under 
section 1869 or otherwise of any determination under 
subparagraph (A) or under paragraph (11)(B)(ii).
  (11)(A) In providing payment for cataract eyeglasses and 
cataract contact lenses, and professional services relating to 
them, under this part, each carrier shall--
          (i) provide for separate determinations of the 
        payment amount for the eyeglasses and lenses and of the 
        payment amount for the professional services of a 
        physician (as defined in section 1861(r)), and
          (ii) not recognize as reasonable for such eyeglasses 
        and lenses more than such amount as the Secretary 
        establishes in guidelines relating to the inherent 
        reasonableness of charges for such eyeglasses and 
        lenses.
  (B)(i) In determining the reasonable charge under paragraph 
(3) for a cataract surgical procedure, subject to clause (ii), 
the prevailing charge for such procedure otherwise recognized 
for participating and nonparticipating physicians shall be 
reduced by 10 percent with respect to procedures performed in 
1987.
  (ii) In no case shall the reduction under clause (i) for a 
surgical procedure result in a prevailing charge in a locality 
for a year which is less than 75 percent of the weighted 
national average of such prevailing charges for such procedure 
for all the localities in the United States for 1986.
  (C)(i) The prevailing charge level determined with respect to 
A-mode ophthalmic ultrasound procedures may not exceed 5 
percent of the prevailing charge level established with respect 
to extracapsular cataract removal with lens insertion.
  (ii) The reasonable charge for an intraocular lens inserted 
during or subsequent to cataract surgery in a physician's 
office may not exceed the actual acquisition cost for the lens 
(taking into account any discount) plus a handling fee (not to 
exceed 5 percent of such actual acquisition cost).
  (D) In the case of a reduction in the reasonable charge for a 
physicians' service or item under subparagraph (B) or (C), if a 
nonparticipating physician furnishes the service or item to an 
individual entitled to benefits under this part after the 
effective date of such reduction, the physician's actual charge 
is subject to a limit under subsection (j)(1)(D).
  (13)(A) In determining payments under section 1833(l) and 
section 1848 for anesthesia services furnished on or after 
January 1, 1994, the methodology for determining the base and 
time units used shall be the same for services furnished by 
physicians, for medical direction by physicians of two, three, 
or four certified registered nurse anesthetists, or for 
services furnished by a certified registered nurse anesthetist 
(whether or not medically directed) and shall be based on the 
methodology in effect, for anesthesia services furnished by 
physicians, as of the date of the enactment of the Omnibus 
Budget Reconciliation Act of 1993.
  (B) The Secretary shall require claims for physicians' 
services for medical direction of nurse anesthetists during the 
periods in which the provisions of subparagraph (A) apply to 
indicate the number of such anesthetists being medically 
directed concurrently at any time during the procedure, the 
name of each nurse anesthetist being directed, and the type of 
procedure for which the services are provided.
  (14)(A)(i) In determining the reasonable charge for a 
physicians' service specified in subparagraph (C)(i) and 
furnished during the 9-month period beginning on April 1, 1990, 
the prevailing charge for such service shall be the prevailing 
charge otherwise recognized for such service for 1989 reduced 
by 15 percent or, if less, \1/3\ of the percent (if any) by 
which the prevailing charge otherwise applied in the locality 
in 1989 exceeds the locally-adjusted reduced prevailing amount 
(as determined under subparagraph (B)(i)) for the service.
  (ii) In determining the reasonable charge for a physicians' 
service specified in subparagraph (C)(i) and furnished during 
1991, the prevailing charge for such service shall be the 
prevailing charge otherwise recognized for such service for the 
period during 1990 beginning on April 1, reduced by the same 
amount as the amount of the reduction effected under this 
paragraph (as amended by the Omnibus Budget Reconciliation Act 
of 1990) for such service during such period.
  (B) For purposes of this paragraph:
          (i) The ``locally-adjusted reduced prevailing 
        amount'' for a locality for a physicians' service is 
        equal to the product of--
                  (I) the reduced national weighted average 
                prevailing charge for the service (specified 
                under clause (ii)), and
                  (II) the adjustment factor (specified under 
                clause (iii)) for the locality.
          (ii) The ``reduced national weighted average 
        prevailing charge'' for a physicians' service is equal 
        to the national weighted average prevailing charge for 
        the service (specified in subparagraph (C)(ii)) reduced 
        by the percentage change (specified in subparagraph 
        (C)(iii)) for the service.
          (iii) The ``adjustment factor'', for a physicians' 
        service for a locality, is the sum of--
                  (I) the practice expense component (percent), 
                divided by 100, specified in appendix A (pages 
                187 through 194) of the Report of the Medicare 
                and Medicaid Health Budget Reconciliation 
                Amendments of 1989, prepared by the 
                Subcommittee on Health and the Environment of 
                the Committee on Energy and Commerce, House of 
                Representatives, (Committee Print 101-M, 101st 
                Congress, 1st Session) for the service, 
                multiplied by the geographic practice cost 
                index value (specified in subparagraph (C)(iv)) 
                for the locality, and
                  (II) 1 minus the practice expense component 
                (percent), divided by 100.
          (C) For purposes of this paragraph:
                  (i) The physicians' services specified in 
                this clause are the procedures specified (by 
                code and description) in the Overvalued 
                Procedures List for Finance Committee, Revised 
                September 20, 1989, prepared by the Physician 
                Payment Review Commission which specification 
                is of physicians' services that have been 
                identified as overvalued by at least 10 percent 
                based on a comparison of payments for such 
                services under a resource- based relative value 
                scale and of the national average prevailing 
                charges under this part.
                  (ii) The ``national weighted average 
                prevailing charge'' specified in this clause, 
                for a physicians' service specified in clause 
                (i), is the national weighted average 
                prevailing charge for the service in 1989 as 
                determined by the Secretary using the best data 
                available.
                  (iii) The ``percentage change'' specified in 
                this clause, for a physicians' service 
                specified in clause (i), is the percent 
                difference (but expressed as a positive number) 
                specified for the service in the list referred 
                to in clause (i).
                  (iv) The geographic practice cost index value 
                specified in this clause for a locality is the 
                Geographic Overhead Costs Index specified for 
                the locality in table 1 of the September 1989 
                Supplement to the Geographic Medicare Economic 
                Index: Alternative Approaches (prepared by the 
                Urban Institute and the Center for Health 
                Economics Research).
          (D) In the case of a reduction in the prevailing 
        charge for a physicians' service under subparagraph 
        (A), if a nonparticipating physician furnishes the 
        service to an individual entitled to benefits under 
        this part, after the effective date of such reduction, 
        the physician's actual charge is subject to a limit 
        under subsection (j)(1)(D).
  (15)(A) In determining the reasonable charge for surgery, 
radiology, and diagnostic physicians' services which the 
Secretary shall designate (based on their high volume of 
expenditures under this part) and for which the prevailing 
charge (but for this paragraph) differs by physician specialty, 
the prevailing charge for such a service may not exceed the 
prevailing charge or fee schedule amount for that specialty of 
physicians that furnish the service most frequently nationally.
  (B) In the case of a reduction in the prevailing charge for a 
physician's service under subparagraph (A), if a 
nonparticipating physician furnishes the service to an 
individual entitled to benefits under this part, after the 
effective date of the reduction, the physician's actual charge 
is subject to a limit under subsection (j)(1)(D).
  (16)(A) In determining the reasonable charge for all 
physicians' services other than physicians' services specified 
in subparagraph (B) furnished during 1991, the prevailing 
charge for a locality shall be 6.5 percent below the prevailing 
charges used in the locality under this part in 1990 after 
March 31.
  (B) For purposes of subparagraph (A), the physicians' 
services specified in this subparagraph are as follows:
          (i) Radiology, anesthesia and physician pathology 
        services, the technical components of diagnostic tests 
        specified in paragraph (17) and physicians' services 
        specified in paragraph (14)(C)(i).
          (ii) Primary care services specified in subsection 
        (i)(4), hospital inpatient medical services, 
        consultations, other visits, preventive medicine 
        visits, psychiatric services, emergency care facility 
        services, and critical care services.
          (iii) Partial mastectomy; tendon sheath injections 
        and small joint arthrocentesis; femoral fracture and 
        trochanteric fracture treatments; endotracheal 
        intubation; thoracentesis; thoracostomy; aneurysm 
        repair; cystourethroscopy; transurethral fulguration 
        and resection; tympanoplasty with mastoidectomy; and 
        ophthalmoscopy.
  (17) With respect to payment under this part for the 
technical (as distinct from professional) component of 
diagnostic tests (other than clinical diagnostic laboratory 
tests, tests specified in paragraph (14)(C)(i), and radiology 
services, including portable X-ray services) which the 
Secretary shall designate (based on their high volume of 
expenditures under this part), the reasonable charge for such 
technical component (including the applicable portion of a 
global service) may not exceed the national median of such 
charges for all localities, as estimated by the Secretary using 
the best available data.
  (18)(A) Payment for any service furnished by a practitioner 
described in subparagraph (C) and for which payment may be made 
under this part on a reasonable charge or fee schedule basis 
may only be made under this part on an assignment-related 
basis.
  (B) A practitioner described in subparagraph (C) or other 
person may not bill (or collect any amount from) the individual 
or another person for any service described in subparagraph 
(A), except for deductible and coinsurance amounts applicable 
under this part. No person is liable for payment of any amounts 
billed for such a service in violation of the previous 
sentence. If a practitioner or other person knowingly and 
willfully bills (or collects an amount) for such a service in 
violation of such sentence, the Secretary may apply sanctions 
against the practitioner or other person in the same manner as 
the Secretary may apply sanctions against a physician in 
accordance with subsection (j)(2) in the same manner as such 
section applies with respect to a physician. Paragraph (4) of 
subsection (j) shall apply in this subparagraph in the same 
manner as such paragraph applies to such section.
  (C) A practitioner described in this subparagraph is any of 
the following:
          (i) A physician assistant, nurse practitioner, or 
        clinical nurse specialist (as defined in section 
        1861(aa)(5)).
          (ii) A certified registered nurse anesthetist (as 
        defined in section 1861(bb)(2)).
          (iii) A certified nurse-midwife (as defined in 
        section 1861(gg)(2)).
          (iv) A clinical social worker (as defined in section 
        1861(hh)(1)).
          (v) A clinical psychologist (as defined by the 
        Secretary for purposes of section 1861(ii)).
          (vi) A registered dietitian or nutrition 
        professional.
  (D) For purposes of this paragraph, a service furnished by a 
practitioner described in subparagraph (C) includes any 
services and supplies furnished as incident to the service as 
would otherwise be covered under this part if furnished by a 
physician or as incident to a physician's service.
  (19) For purposes of section 1833(a)(1), the reasonable 
charge for ambulance services (as described in section 
1861(s)(7)) provided during calendar year 1998 and calendar 
year 1999 may not exceed the reasonable charge for such 
services provided during the previous calendar year (after 
application of this paragraph), increased by the percentage 
increase in the consumer price index for all urban consumers 
(U.S. city average) as estimated by the Secretary for the 12-
month period ending with the midpoint of the year involved 
reduced by 1.0 percentage point.
  (c)
  (2)(A) Each contract under section 1874A that provides for 
making payments under this part shall provide that payment 
shall be issued, mailed, or otherwise transmitted with respect 
to not less than 95 percent of all claims submitted under this 
part--
          (i) which are clean claims, and
          (ii) for which payment is not made on a periodic 
        interim payment basis,
within the applicable number of calendar days after the date on 
which the claim is received.
  (B) In this paragraph:
          (i) The term ``clean claim'' means a claim that has 
        no defect or impropriety (including any lack of any 
        required substantiating documentation) or particular 
        circumstance requiring special treatment that prevents 
        timely payment from being made on the claim under this 
        part.
          (ii) The term ``applicable number of calendar days'' 
        means--
                  (I) with respect to claims received in the 
                12-month period beginning October 1, 1986, 30 
                calendar days,
                  (II) with respect to claims received in the 
                12-month period beginning October 1, 1987, 26 
                calendar days (or 19 calendar days with respect 
                to claims submitted by participating 
                physicians),
                  (III) with respect to claims received in the 
                12-month period beginning October 1, 1988, 25 
                calendar days (or 18 calendar days with respect 
                to claims submitted by participating 
                physicians),
                  (IV) with respect to claims received in the 
                12-month period beginning October 1, 1989, and 
                claims received in any succeeding 12-month 
                period ending on or before September 30, 1993, 
                24 calendar days (or 17 calendar days with 
                respect to claims submitted by participating 
                physicians), and
                  (V) with respect to claims received in the 
                12-month period beginning October 1, 1993, and 
                claims received in any succeeding 12-month 
                period, 30 calendar days.
  (C) If payment is not issued, mailed, or otherwise 
transmitted within the applicable number of calendar days (as 
defined in clause (ii) of subparagraph (B)) after a clean claim 
(as defined in clause (i) of such subparagraph) is received, 
interest shall be paid at the rate used for purposes of section 
3902(a) of title 31, United States Code (relating to interest 
penalties for failure to make prompt payments) for the period 
beginning on the day after the required payment date and ending 
on the date on which payment is made.
  (3)(A) Each contract under this section which provides for 
the disbursement of funds, as described in section 
1874A(a)(3)(B), shall provide that no payment shall be issued, 
mailed, or otherwise transmitted with respect to any claim 
submitted under this title within the applicable number of 
calendar days after the date on which the claim is received.
  (B) In this paragraph, the term ``applicable number of 
calendar days'' means--
          (i) with respect to claims submitted electronically 
        as prescribed by the Secretary, 13 days, and
          (ii) with respect to claims submitted otherwise, 28 
        days.
  (4) Neither a medicare administrative contractor nor the 
Secretary may impose a fee under this title--
          (A) for the filing of claims related to physicians' 
        services,
          (B) for an error in filing a claim relating to 
        physicians' services or for such a claim which is 
        denied,
          (C) for any appeal under this title with respect to 
        physicians' services,
          (D) for applying for (or obtaining) a unique 
        identifier under subsection (r), or
          (E) for responding to inquiries respecting 
        physicians' services or for providing information with 
        respect to medical review of such services.
  (g) The Railroad Retirement Board shall, in accordance with 
such regulations as the Secretary may prescribe, contract with 
a medicare administrative contractor or contractors to perform 
the functions set out in this section with respect to 
individuals entitled to benefits as qualified railroad 
retirement beneficiaries pursuant to section 226(a) of this Act 
and section 7(d) of the Railroad Retirement Act of 1974.
  (h)(1) Any physician or supplier may voluntarily enter into 
an agreement with the Secretary to become a participating 
physician or supplier. For purposes of this section, the term 
``participating physician or supplier'' means a physician or 
supplier (excluding any provider of services) who, before the 
beginning of any year beginning with 1984, enters into an 
agreement with the Secretary which provides that such physician 
or supplier will accept payment under this part on an 
assignment-related basis for all items and services furnished 
to individuals enrolled under this part during such year. In 
the case of a newly licensed physician or a physician who 
begins a practice in a new area, or in the case of a new 
supplier who begins a new business, or in such similar cases as 
the Secretary may specify, such physician or supplier may enter 
into such an agreement after the beginning of a year, for items 
and services furnished during the remainder of the year.
  (2) The Secretary shall maintain a toll-free telephone number 
or numbers at which individuals enrolled under this part may 
obtain the names, addresses, specialty, and telephone numbers 
of participating physicians and suppliers and may request a 
copy of an appropriate directory published under paragraph (4). 
The Secretary shall, without charge, mail a copy of such 
directory upon such a request.
  (3)(A) In any case in which medicare administrative 
contractor having a contract under section 1874A that provides 
for making payments under this part is able to develop a system 
for the electronic transmission to such contractor of bills for 
services, such carrier shall establish direct lines for the 
electronic receipt of claims from participating physicians and 
suppliers.
  (B) The Secretary shall establish a procedure whereby an 
individual enrolled under this part may assign, in an 
appropriate manner on the form claiming a benefit under this 
part for an item or service furnished by a participating 
physician or supplier, the individual's rights of payment under 
a medicare supplemental policy (described in section 
1882(g)(1)) in which the individual is enrolled. In the case 
such an assignment is properly executed and a payment 
determination is made by a medicare administrative contractor 
with a contract under this section, the contractor shall 
transmit to the private entity issuing the medicare 
supplemental policy notice of such fact and shall include an 
explanation of benefits and any additional information that the 
Secretary may determine to be appropriate in order to enable 
the entity to decide whether (and the amount of) any payment is 
due under the policy. The Secretary may enter into agreements 
for the transmittal of such information to entities 
electronically. The Secretary shall impose user fees for the 
transmittal of information under this subparagraph by a 
medicare administrative contractor, whether electronically or 
otherwise, and such user fees shall be collected and retained 
by the contractor.
  (4) At the beginning of each year the Secretary shall publish 
directories (for appropriate local geographic areas) containing 
the name, address, and specialty of all participating 
physicians and suppliers (as defined in paragraph (1)) for that 
area for that year. Each directory shall be organized to make 
the most useful presentation of the information (as determined 
by the Secretary) for individuals enrolled under this part. 
Each participating physician directory for an area shall 
provide an alphabetical listing of all participating physicians 
practicing in the area and an alphabetical listing by locality 
and specialty of such physicians.
  (5)(A) The Secretary shall promptly notify individuals 
enrolled under this part through an annual mailing of the 
participation program under this subsection and the publication 
and availability of the directories and shall make the 
appropriate area directory or directories available in each 
district and branch office of the Social Security 
Administration, in the offices of medicare administrative 
contractors, and to senior citizen organizations.
  (B) The annual notice provided under subparagraph (A) shall 
include--
          (i) a description of the participation program,
          (ii) an explanation of the advantages to 
        beneficiaries of obtaining covered services through a 
        participating physician or supplier,
          (iii) an explanation of the assistance offered by 
        medicare administrative contractors in obtaining the 
        names of participating physicians and suppliers, and
          (iv) the toll-free telephone number under paragraph 
        (2)(A) for inquiries concerning the program and for 
        requests for free copies of appropriate directories.
  (6) The Secretary shall provide that the directories shall be 
available for purchase by the public. The Secretary shall 
provide that each appropriate area directory is sent to each 
participating physician located in that area and that an 
appropriate number of copies of each such directory is sent to 
hospitals located in the area. Such copies shall be sent free 
of charge.
  (7) The Secretary shall provide that each explanation of 
benefits provided under this part for services furnished in the 
United States, in conjunction with the payment of claims under 
section 1833(a)(1) (made other than on an assignment-related 
basis), shall include--
          (A) a prominent reminder of the participating 
        physician and supplier program established under this 
        subsection (including the limitation on charges that 
        may be imposed by such physicians and suppliers and a 
        clear statement of any amounts charged for the 
        particular items or services on the claim involved 
        above the amount recognized under this part),
          (B) the toll-free telephone number or numbers, 
        maintained under paragraph (2), at which an individual 
        enrolled under this part may obtain information on 
        participating physicians and suppliers,
          (C)(i) an offer of assistance to such an individual 
        in obtaining the names of participating physicians of 
        appropriate specialty and (ii) an offer to provide a 
        free copy of the appropriate participating physician 
        directory, and
          (D) in the case of services for which the billed 
        amount exceeds the limiting charge imposed under 
        section 1848(g), information regarding such applicable 
        limiting charge (including information concerning the 
        right to a refund under section 1848(g)(1)(A)(iv)).
  (8) The Secretary may refuse to enter into an agreement with 
a physician or supplier under this subsection, or may terminate 
or refuse to renew such agreement, in the event that such 
physician or supplier has been convicted of a felony under 
Federal or State law for an offense which the Secretary 
determines is detrimental to the best interests of the program 
or program beneficiaries.
  (9) The Secretary may revoke enrollment, for a period of not 
more than one year for each act, for a physician or supplier 
under section 1866(j) if such physician or supplier fails to 
maintain and, upon request of the Secretary, provide access to 
documentation relating to written orders or requests for 
payment for durable medical equipment, certifications for home 
health services, or referrals for other items or services 
written or ordered by such physician or supplier under this 
title, as specified by the Secretary.
  (i) For purposes of this title:
          (1) A claim is considered to be paid on an 
        ``assignment-related basis'' if the claim is paid on 
        the basis of an assignment described in subsection 
        (b)(3)(B)(ii), in accordance with subsection (b)(6)(B), 
        or under the procedure described in section 1870(f)(1).
          (2) The term ``participating physician'' refers, with 
        respect to the furnishing of services, to a physician 
        who at the time of furnishing the services is a 
        participating physician (under subsection (h)(1)); the 
        term ``nonparticipating physician'' refers, with 
        respect to the furnishing of services, to a physician 
        who at the time of furnishing the services is not a 
        participating physician; and the term 
        ``nonparticipating supplier or other person'' means a 
        supplier or other person (excluding a provider of 
        services) that is not a participating physician or 
        supplier (as defined in subsection (h)(1)).
          (3) The term ``percentage increase in the MEI'' 
        means, with respect to physicians' services furnished 
        in a year, the percentage increase in the medicare 
        economic index (referred to in the fourth sentence of 
        subsection (b)(3)) applicable to such services 
        furnished as of the first day of that year.
          (4) The term ``primary care services'' means 
        physicians' services which constitute office medical 
        services, emergency department services, home medical 
        services, skilled nursing, intermediate care, and long-
        term care medical services, or nursing home, boarding 
        home, domiciliary, or custodial care medical services.
  (j)(1)(A) In the case of a physician who is not a 
participating physician for items and services furnished during 
a portion of the 30-month period beginning July 1, 1984, the 
Secretary shall monitor the physician's actual charges to 
individuals enrolled under this part for physicians' services 
during that portion of that period. If such physician knowingly 
and willfully bills individuals enrolled under this part for 
actual charges in excess of such physician's actual charges for 
the calendar quarter beginning on April 1, 1984, the Secretary 
may apply sanctions against such physician in accordance with 
paragraph (2).
  (B)(i) During any period (on or after January 1, 1987, and 
before the date specified in clause (ii)), during which a 
physician is a nonparticipating physician, the Secretary shall 
monitor the actual charges of each such physician for 
physicians' services furnished to individuals enrolled under 
this part. If such physician knowingly and willfully bills on a 
repeated basis for such a service an actual charge in excess of 
the maximum allowable actual charge determined under 
subparagraph (C) for that service, the Secretary may apply 
sanctions against such physician in accordance with paragraph 
(2).
  (ii) Clause (i) shall not apply to services furnished after 
December 31, 1990.
  (C)(i) For a particular physicians' service furnished by a 
nonparticipating physician to individuals enrolled under this 
part during a year, for purposes of subparagraph (B), the 
maximum allowable actual charge is determined as follows: If 
the physician's maximum allowable actual charge for that 
service in the previous year was--
          (I) less than 115 percent of the applicable percent 
        (as defined in subsection (b)(4)(A)(iv)) of the 
        prevailing charge for the year and service involved, 
        the maximum allowable actual charge for the year 
        involved is the greater of the maximum allowable actual 
        charge described in subclause (II) or the charge 
        described in clause (ii), or
          (II) equal to, or greater than, 115 percent of the 
        applicable percent (as defined in subsection 
        (b)(4)(A)(iv)) of the prevailing charge for the year 
        and service involved, the maximum allowable actual 
        charge is 101 percent of the physician's maximum 
        allowable actual charge for the service for the 
        previous year.
  (ii) For purposes of clause (i)(I), the charge described in 
this clause for a particular physicians' service furnished in a 
year is the maximum allowable actual charge for the service of 
the physician for the previous year plus the product of (I) the 
applicable fraction (as defined in clause (iii)) and (II) the 
amount by which 115 percent of the prevailing charge for the 
year involved for such service furnished by nonparticipating 
physicians, exceeds the physician's maximum allowable actual 
charge for the service for the previous year.
  (iii) In clause (ii), the ``applicable fraction'' is--
          (I) for 1987, \1/4\,
          (II) for 1988, \1/3\,
          (III) for 1989, \1/2\, and
          (IV) for any subsequent year, 1.
  (iv) For purposes of determining the maximum allowable actual 
charge under clauses (i) and (ii) for 1987, in the case of a 
physicians' service for which the physician has actual charges 
for the calendar quarter beginning on April 1, 1984, the 
``maximum allowable actual charge'' for 1986 is the physician's 
actual charge for such service furnished during such quarter.
  (v) For purposes of determining the maximum allowable actual 
charge under clauses (i) and (ii) for a year after 1986, in the 
case of a physicians' service for which the physician has no 
actual charges for the calendar quarter beginning on April 1, 
1984, and for which a maximum allowable actual charge has not 
been previously established under this clause, the ``maximum 
allowable actual charge'' for the previous year shall be the 
50th percentile of the customary charges for the service 
(weighted by frequency of the service) performed by 
nonparticipating physicians in the locality during the 12-month 
period ending June 30 of that previous year.
  (vi) For purposes of this subparagraph, a ``physician's 
actual charge'' for a physicians' service furnished in a year 
or other period is the weighted average (or, at the option of 
the Secretary for a service furnished in the calendar quarter 
beginning April 1, 1984, the median) of the physician's charges 
for such service furnished in the year or other period.
  (vii) In the case of a nonparticipating physician who was a 
participating physician during a previous period, for the 
purpose of computing the physician's maximum allowable actual 
charge during the physician's period of nonparticipation, the 
physician shall be deemed to have had a maximum allowable 
actual charge during the period of participation, and such 
deemed maximum allowable actual charge shall be determined 
according to clauses (i) through (vi).
  (viii) Notwithstanding any other provision of this 
subparagraph, the maximum allowable actual charge for a 
particular physician's service furnished by a nonparticipating 
physician to individuals enrolled under this part during the 3-
month period beginning on January 1, 1988, shall be the amount 
determined under this subparagraph for 1987. The maximum 
allowable actual charge for any such service otherwise 
determined under this subparagraph for 1988 shall take effect 
on April 1, 1988.
  (ix) If there is a reduction under subsection (b)(13) in the 
reasonable charge for medical direction furnished by a 
nonparticipating physician, the maximum allowable actual charge 
otherwise permitted under this subsection for such services 
shall be reduced in the same manner and in the same percentage 
as the reduction in such reasonable charge.
  (D)(i) If an action described in clause (ii) results in a 
reduction in a reasonable charge for a physicians' service or 
item and a nonparticipating physician furnishes the service or 
item to an individual entitled to benefits under this part 
after the effective date of such action, the physician may not 
charge the individual more than 125 percent of the reduced 
payment allowance (as defined in clause (iii)) plus (for 
services or items furnished during the 12-month period (or 9-
month period in the case of an action described in clause 
(ii)(II)) beginning on the effective date of the action) \1/2\ 
of the amount by which the physician's maximum allowable actual 
charge for the service or item for the previous 12- month 
period exceeds such 125 percent level.
  (ii) The first sentence of clause (i) shall apply to--
          (I) an adjustment under subsection (b)(8)(B) 
        (relating to inherent reasonableness),
          (II) a reduction under subsection (b)(10)(A) or 
        (b)(14)(A) (relating to certain overpriced procedures),
          (III) a reduction under subsection (b)(11)(B) 
        (relating to certain cataract procedures),
          (IV) a prevailing charge limit established under 
        subsection (b)(11)(C)(i) or (b)(15)(A),
          (V) a reasonable charge limit established under 
        subsection (b)(11)(C)(ii), and
          (VI) an adjustment under section 1833(l)(3)(B) 
        (relating to physician supervision of certified 
        registered nurse anesthetists).
  (iii) In clause (i), the term ``reduced payment allowance'' 
means, with respect to an action--
          (I) under subsection (b)(8)(B), the inherently 
        reasonable charge established under subsection (b)(8);
          (II) under subsection (b)(10)(A), (b)(11)(B), 
        (b)(11)(C)(i), (b)(14)(A), or (b)(15)(A) or under 
        section 1833(l)(3)(B), the prevailing charge for the 
        service after the action; or
          (III) under subsection (b)(11)(C)(ii), the payment 
        allowance established under such subsection.
  (iv) If a physician knowingly and willfully bills in 
violation of clause (i) (whether or not such charge violates 
subparagraph (B)), the Secretary may apply sanctions against 
such physician in accordance with paragraph (2).
  (v) Clause (i) shall not apply to items and services 
furnished after December 31, 1990.
  (2) Subject to paragraph (3), the sanctions which the 
Secretary may apply under this paragraph are--
          (A) excluding a physician from participation in the 
        programs under this Act for a period not to exceed 5 
        years, in accordance with the procedures of subsections 
        (c), (f), and (g) of section 1128, or
          (B) civil monetary penalties and assessments, in the 
        same manner as such penalties and assessments are 
        authorized under section 1128A(a),
or both. The provisions of section 1128A (other than the first 
2 sentences of subsection (a) and other than subsection (b)) 
shall apply to a civil money penalty and assessment under 
subparagraph (B) in the same manner as such provisions apply to 
a penalty, assessment, or proceeding under section 1128A(a), 
except to the extent such provisions are inconsistent with 
subparagraph (A) or paragraph (3).
  (3)(A) The Secretary may not exclude a physician pursuant to 
paragraph (2)(A) if such physician is a sole community 
physician or sole source of essential specialized services in a 
community.
  (B) The Secretary shall take into account access of 
beneficiaries to physicians' services for which payment may be 
made under this part in determining whether to bar a physician 
from participation under paragraph (2)(A).
  (4) The Secretary may, out of any civil monetary penalty or 
assessment collected from a physician pursuant to this 
subsection, make a payment to a beneficiary enrolled under this 
part in the nature of restitution for amounts paid by such 
beneficiary to such physician which was determined to be an 
excess charge under paragraph (1).
  (k)(1) If a physician knowingly and willfully presents or 
causes to be presented a claim or bills an individual enrolled 
under this part for charges for services as an assistant at 
surgery for which payment may not be made by reason of section 
1862(a)(15), the Secretary may apply sanctions against such 
physician in accordance with subsection (j)(2) in the case of 
surgery performed on or after March 1, 1987.
  (2) If a physician knowingly and willfully presents or causes 
to be presented a claim or bills an individual enrolled under 
this part for charges that includes a charge for an assistant 
at surgery for which payment may not be made by reason of 
section 1862(a)(15), the Secretary may apply sanctions against 
such physician in accordance with subsection (j)(2) in the case 
of surgery performed on or after March 1, 1987.
  (l)(1)(A) Subject to subparagraph (C), if--
          (i) a nonparticipating physician furnishes services 
        to an individual enrolled for benefits under this part,
          (ii) payment for such services is not accepted on an 
        assignment-related basis,
          (iii)(I) a medicare administrative contractor 
        determines under this part or a quality improvement 
        organization determines under part B of title XI that 
        payment may not be made by reason of section 1862(a)(1) 
        because a service otherwise covered under this title is 
        not reasonable and necessary under the standards 
        described in that section or (II) payment under this 
        title for such services is denied under section 
        1154(a)(2) by reason of a determination under section 
        1154(a)(1)(B), and
          (iv) the physician has collected any amounts for such 
        services,
the physician shall refund on a timely basis to the individual 
(and shall be liable to the individual for) any amounts so 
collected.
  (B) A refund under subparagraph (A) is considered to be on a 
timely basis only if--
          (i) in the case of a physician who does not request 
        reconsideration or seek appeal on a timely basis, the 
        refund is made within 30 days after the date the 
        physician receives a denial notice under paragraph (2), 
        or
          (ii) in the case in which such a reconsideration or 
        appeal is taken, the refund is made within 15 days 
        after the date the physician receives notice of an 
        adverse determination on reconsideration or appeal.
  (C) Subparagraph (A) shall not apply to the furnishing of a 
service by a physician to an individual in the case described 
in subparagraph (A)(iii)(I) if--
          (i) the physician establishes that the physician did 
        not know and could not reasonably have been expected to 
        know that payment may not be made for the service by 
        reason of section 1862(a)(1), or
          (ii) before the service was provided, the individual 
        was informed that payment under this part may not be 
        made for the specific service and the individual has 
        agreed to pay for that service.
  (2) Each medicare administrative contractor with a contract 
in effect under this section with respect to physicians and 
each quality improvement organization with a contract under 
part B of title XI shall send any notice of denial of payment 
for physicians' services based on section 1862(a)(1) and for 
which payment is not requested on an assignment-related basis 
to the physician and the individual involved.
  (3) If a physician knowingly and willfully fails to make 
refunds in violation of paragraph (1)(A), the Secretary may 
apply sanctions against such physician in accordance with 
subsection (j)(2).
  (m)(1) In the case of a nonparticipating physician who--
          (A) performs an elective surgical procedure for an 
        individual enrolled for benefits under this part and 
        for which the physician's actual charge is at least 
        $500, and
          (B) does not accept payment for such procedure on an 
        assignment-related basis,
the physician must disclose to the individual, in writing and 
in a form approved by the Secretary, the physician's estimated 
actual charge for the procedure, the estimated approved charge 
under this part for the procedure, the excess of the 
physician's actual charge over the approved charge, and the 
coinsurance amount applicable to the procedure. The written 
estimate may not be used as the basis for, or evidence in, a 
civil suit.
  (2) A physician who fails to make a disclosure required under 
paragraph (1) with respect to a procedure shall refund on a 
timely basis to the individual (and shall be liable to the 
individual for) any amounts collected for the procedure in 
excess of the charges recognized and approved under this part.
  (3) If a physician knowingly and willfully fails to comply 
with paragraph (2), the Secretary may apply sanctions against 
such physician in accordance with subsection (j)(2).
  (4) The Secretary shall provide for such monitoring of 
requests for payment for physicians' services to which 
paragraph (1) applies as is necessary to assure compliance with 
paragraph (2).
  (n)(1) If a physician's bill or a request for payment for 
services billed by a physician includes a charge for a 
diagnostic test described in section 1861(s)(3) (other than a 
clinical diagnostic laboratory test) for which the bill or 
request for payment does not indicate that the billing 
physician personally performed or supervised the performance of 
the test or that another physician with whom the physician who 
shares a practice personally performed or supervised the 
performance of the test, the amount payable with respect to the 
test shall be determined as follows:
          (A) If the bill or request for payment indicates that 
        the test was performed by a supplier, identifies the 
        supplier, and indicates the amount the supplier charged 
        the billing physician, payment for the test (less the 
        applicable deductible and coinsurance amounts) shall be 
        the actual acquisition costs (net of any discounts) or, 
        if lower, the supplier's reasonable charge (or other 
        applicable limit) for the test.
          (B) If the bill or request for payment (i) does not 
        indicate who performed the test, or (ii) indicates that 
        the test was performed by a supplier but does not 
        identify the supplier or include the amount charged by 
        the supplier, no payment shall be made under this part.
  (2) A physician may not bill an individual enrolled under 
this part--
          (A) any amount other than the payment amount 
        specified in paragraph (1)(A) and any applicable 
        deductible and coinsurance for a diagnostic test for 
        which payment is made pursuant to paragraph (1)(A), or
          (B) any amount for a diagnostic test for which 
        payment may not be made pursuant to paragraph (1)(B).
  (3) If a physician knowingly and willfully in repeated cases 
bills one or more individuals in violation of paragraph (2), 
the Secretary may apply sanctions against such physician in 
accordance with section 1842(j)(2).
  (o)(1) If a physician's, supplier's, or any other person's 
bill or request for payment for services includes a charge for 
a drug or biological for which payment may be made under this 
part and the drug or biological is not paid on a cost or 
prospective payment basis as otherwise provided in this part, 
the amount payable for the drug or biological is equal to the 
following:
          (A) In the case of any of the following drugs or 
        biologicals, 95 percent of the average wholesale price:
                  (i) A drug or biological furnished before 
                January 1, 2004.
                  (ii) Blood clotting factors furnished during 
                2004.
                  (iii) A drug or biological furnished during 
                2004 that was not available for payment under 
                this part as of April 1, 2003.
                  (iv) A vaccine described in subparagraph (A) 
                or (B) of section 1861(s)(10) furnished on or 
                after January 1, 2004.
                  (v) A drug or biological furnished during 
                2004 in connection with the furnishing of renal 
                dialysis services if separately billed by renal 
                dialysis facilities.
          (B) In the case of a drug or biological furnished 
        during 2004 that is not described in--
                  (i) clause (ii), (iii), (iv), or (v) of 
                subparagraph (A),
                  (ii) subparagraph (D)(i), or
                  (iii) subparagraph (F),
        the amount determined under paragraph (4).
          (C) In the case of a drug or biological that is not 
        described in subparagraph (A)(iv), (D)(i), or (F) 
        furnished on or after January 1, 2005 (and including a 
        drug or biological described in subparagraph (D)(i) 
        furnished on or after January 1, 2017), the amount 
        provided under section 1847, section 1847A, section 
        1847B, or section 1881(b)(13), as the case may be for 
        the drug or biological.
          (D)(i) Except as provided in clause (ii), in the case 
        of [infusion drugs] infusion drugs or biologicals 
        furnished through an item of durable medical equipment 
        covered under section 1861(n) on or after January 1, 
        [2004] 2004, and before January 1, 2017, 95 percent of 
        the average wholesale price [for such drug] in effect 
        on October 1, 2003.
          (ii) In the case of such [infusion drugs] infusion 
        drugs or biologicals furnished in a competitive 
        acquisition area under section 1847 on or after January 
        1, 2007, the amount provided under section 1847.
          (E) In the case of a drug or biological, consisting 
        of intravenous immune globulin, furnished--
                  (i) in 2004, the amount of payment provided 
                under paragraph (4); and
                  (ii) in 2005 and subsequent years, the amount 
                of payment provided under section 1847A.
          (F) In the case of blood and blood products (other 
        than blood clotting factors), the amount of payment 
        shall be determined in the same manner as such amount 
        of payment was determined on October 1, 2003.
          (G) In the case of inhalation drugs or biologicals 
        furnished through durable medical equipment covered 
        under section 1861(n) that are furnished--
                  (i) in 2004, the amount provided under 
                paragraph (4) for the drug or biological; and
                  (ii) in 2005 and subsequent years, the amount 
                provided under section 1847A for the drug or 
                biological.
  (2) If payment for a drug or biological is made to a licensed 
pharmacy approved to dispense drugs or biologicals under this 
part, the Secretary may pay a dispensing fee (less the 
applicable deductible and coinsurance amounts) to the pharmacy. 
This paragraph shall not apply in the case of payment under 
paragraph (1)(C).
  (3)(A) Payment for a charge for any drug or biological for 
which payment may be made under this part may be made only on 
an assignment-related basis.
  (B) The provisions of subsection (b)(18)(B) shall apply to 
charges for such drugs or biologicals in the same manner as 
they apply to services furnished by a practitioner described in 
subsection (b)(18)(C).
  (4)(A) Subject to the succeeding provisions of this 
paragraph, the amount of payment for a drug or biological under 
this paragraph furnished in 2004 is equal to 85 percent of the 
average wholesale price (determined as of April 1, 2003) for 
the drug or biological.
  (B) The Secretary shall substitute for the percentage under 
subparagraph (A) for a drug or biological the percentage that 
would apply to the drug or biological under the column entitled 
``Average of GAO and OIG data (percent)'' in the table entitled 
``Table 3.--Medicare Part B Drugs in the Most Recent GAO and 
OIG Studies'' published on August 20, 2003, in the Federal 
Register (68 Fed. Reg. 50445).
  (C)(i) The Secretary may substitute for the percentage under 
subparagraph (A) a percentage that is based on data and 
information submitted by the manufacturer of the drug or 
biological by October 15, 2003.
  (ii) The Secretary may substitute for the percentage under 
subparagraph (A) with respect to drugs and biologicals 
furnished during 2004 on or after April 1, 2004, a percentage 
that is based on data and information submitted by the 
manufacturer of the drug or biological after October 15, 2003, 
and before January 1, 2004.
  (D) In no case may the percentage substituted under 
subparagraph (B) or (C) be less than 80 percent.
  (5)(A) Subject to subparagraph (B), in the case of clotting 
factors furnished on or after January 1, 2005, the Secretary 
shall, after reviewing the January 2003 report to Congress by 
the Comptroller General of the United States entitled ``Payment 
for Blood Clotting Factor Exceeds Providers Acquisition Cost'', 
provide for a separate payment, to the entity which furnishes 
to the patient blood clotting factors, for items and services 
related to the furnishing of such factors in an amount that the 
Secretary determines to be appropriate. Such payment amount may 
take into account any or all of the following:
          (i) The mixing (if appropriate) and delivery of 
        factors to an individual, including special inventory 
        management and storage requirements.
          (ii) Ancillary supplies and patient training 
        necessary for the self-administration of such factors.
  (B) In determining the separate payment amount under 
subparagraph (A) for blood clotting factors furnished in 2005, 
the Secretary shall ensure that the total amount of payments 
under this part (as estimated by the Secretary) for such 
factors under paragraph (1)(C) and such separate payments for 
such factors does not exceed the total amount of payments that 
would have been made for such factors under this part (as 
estimated by the Secretary) if the amendments made by section 
303 of the Medicare Prescription Drug, Improvement, and 
Modernization Act of 2003 had not been enacted.
  (C) The separate payment amount under this subparagraph for 
blood clotting factors furnished in 2006 or a subsequent year 
shall be equal to the separate payment amount determined under 
this paragraph for the previous year increased by the 
percentage increase in the consumer price index for medical 
care for the 12-month period ending with June of the previous 
year.
  (6) In the case of an immunosuppressive drug described in 
subparagraph (J) of section 1861(s)(2) and an oral drug 
described in subparagraph (Q) or (T) of such section, the 
Secretary shall pay to the pharmacy a supplying fee for such a 
drug determined appropriate by the Secretary (less the 
applicable deductible and coinsurance amounts).
  (7) There shall be no administrative or judicial review under 
section 1869, section 1878, or otherwise, of determinations of 
payment amounts, methods, or adjustments under paragraphs (4) 
through (6).
  (p)(1) Each request for payment, or bill submitted, for an 
item or service furnished by a physician or practitioner 
specified in subsection (b)(18)(C) for which payment may be 
made under this part shall include the appropriate diagnosis 
code (or codes) as established by the Secretary for such item 
or service.
  (2) In the case of a request for payment for an item or 
service furnished by a physician or practitioner specified in 
subsection (b)(18)(C) on an assignment-related basis which does 
not include the code (or codes) required under paragraph (1), 
payment may be denied under this part.
  (3) In the case of a request for payment for an item or 
service furnished by a physician not submitted on an 
assignment-related basis and which does not include the code 
(or codes) required under paragraph (1)--
          (A) if the physician knowingly and willfully fails to 
        provide the code (or codes) promptly upon request of 
        the Secretary or a medicare administrative contractor, 
        the physician may be subject to a civil money penalty 
        in an amount not to exceed $2,000, and
          (B) if the physician knowingly, willfully, and in 
        repeated cases fails, after being notified by the 
        Secretary of the obligations and requirements of this 
        subsection, to include the code (or codes) required 
        under paragraph (1), the physician may be subject to 
        the sanction described in section 1842(j)(2)(A).
The provisions of section 1128A (other than subsections (a) and 
(b)) shall apply to civil money penalties under subparagraph 
(A) in the same manner as they apply to a penalty or proceeding 
under section 1128A(a).
  (4) In the case of an item or service defined in paragraph 
(3), (6), (8), or (9) of subsection 1861(s) ordered by a 
physician or a practitioner specified in subsection (b)(18)(C), 
but furnished by another entity, if the Secretary (or fiscal 
agent of the Secretary) requires the entity furnishing the item 
or service to provide diagnostic or other medical information 
in order for payment to be made to the entity, the physician or 
practitioner shall provide that information to the entity at 
the time that the item or service is ordered by the physician 
or practitioner.
  (q)(1)(A) The Secretary, in consultation with groups 
representing physicians who furnish anesthesia services, shall 
establish by regulation a relative value guide for use in all 
localities in making payment for physician anesthesia services 
furnished under this part. Such guide shall be designed so as 
to result in expenditures under this title for such services in 
an amount that would not exceed the amount of such expenditures 
which would otherwise occur.
  (B) For physician anesthesia services furnished under this 
part during 1991, the prevailing charge conversion factor used 
in a locality under this subsection shall, subject to clause 
(iv), be reduced to the adjusted prevailing charge conversion 
factor for the locality determined as follows:
          (i) The Secretary shall estimate the national 
        weighted average of the prevailing charge conversion 
        factors used under this subsection for services 
        furnished during 1990 after March 31, using the best 
        available data.
          (ii) The national weighted average estimated under 
        clause (i) shall be reduced by 7 percent.
          (iii) The adjusted prevailing charge conversion 
        factor for a locality is the sum of--
                  (I) the product of (a) the portion of the 
                reduced national weighted average prevailing 
                charge conversion factor computed under clause 
                (ii) which is attributable to physician work 
                and (b) the geographic work index value for the 
                locality (specified in Addendum C to the Model 
                Fee Schedule for Physician Services (published 
                on September 4, 1990, 55 Federal Register pp. 
                36238-36243)); and
                  (II) the product of (a) the remaining portion 
                of the reduced national weighted average 
                prevailing charge conversion factor computed 
                under clause (ii) and (b) the geographic 
                practice cost index value specified in section 
                1842(b)(14)(C)(iv) for the locality.
        In applying this clause, 70 percent of the prevailing 
        charge conversion factor shall be considered to be 
        attributable to physician work.
          (iv) The prevailing charge conversion factor to be 
        applied to a locality under this subparagraph shall not 
        be reduced by more than 15 percent below the prevailing 
        charge conversion factor applied in the locality for 
        the period during 1990 after March 31, but in no case 
        shall the prevailing charge conversion factor be less 
        than 60 percent of the national weighted average of the 
        prevailing charge conversion factors (computed under 
        clause (i)).
  (2) For purposes of payment for anesthesia services (whether 
furnished by physicians or by certified registered nurse 
anesthetists) under this part, the time units shall be counted 
based on actual time rather than rounded to full time units.
  (r) The Secretary shall establish a system which provides for 
a unique identifier for each physician who furnishes services 
for which payment may be made under this title. Under such 
system, the Secretary may impose appropriate fees on such 
physicians to cover the costs of investigation and 
recertification activities with respect to the issuance of the 
identifiers.
  (s)(1)(A) Subject to paragraph (3), the Secretary may 
implement a statewide or other areawide fee schedule to be used 
for payment of any item or service described in paragraph (2) 
which is paid on a reasonable charge basis.
                  (B) Any fee schedule established under this 
                paragraph for such item or service shall be 
                updated--
                          (i) for years before 2011--
                                  (I) subject to subclause 
                                (II), by the percentage 
                                increase in the consumer price 
                                index for all urban consumers 
                                (United States city average) 
                                for the 12-month period ending 
                                with June of the preceding 
                                year; and
                                  (II) for items and services 
                                described in paragraph (2)(D) 
                                for 2009, section 
                                1834(a)(14)(J) shall apply 
                                under this paragraph instead of 
                                the percentage increase 
                                otherwise applicable; and
                          (ii) for 2011 and subsequent years--
                                  (I) the percentage increase 
                                in the consumer price index for 
                                all urban consumers (United 
                                States city average) for the 
                                12-month period ending with 
                                June of the previous year, 
                                reduced by--
                                  (II) the productivity 
                                adjustment described in section 
                                1886(b)(3)(B)(xi)(II).
        The application of subparagraph (B)(ii)(II) may result 
        in the update under this paragraph being less than 0.0 
        for a year, and may result in payment rates under any 
        fee schedule established under this paragraph for a 
        year being less than such payment rates for the 
        preceding year.
  (2) The items and services described in this paragraph are as 
follows:
          (A) Medical supplies.
          (B) Home dialysis supplies and equipment (as defined 
        in section 1881(b)(8)).
          (D) Parenteral and enteral nutrients, equipment, and 
        supplies.
          (E) Electromyogram devices.
          (F) Salivation devices.
          (G) Blood products.
          (H) Transfusion medicine.
  (3) In the case of items and services described in paragraph 
(2)(D) that are included in a competitive acquisition program 
in a competitive acquisition area under section 1847(a)--
          (A) the payment basis under this subsection for such 
        items and services furnished in such area shall be the 
        payment basis determined under such competitive 
        acquisition program; and
          (B) the Secretary may use information on the payment 
        determined under such competitive acquisition programs 
        to adjust the payment amount otherwise applicable under 
        paragraph (1) for an area that is not a competitive 
        acquisition area under section 1847, and in the case of 
        such adjustment, paragraphs (8) and (9) of section 
        1842(b) shall not be applied.
  (t)(1) Each request for payment, or bill submitted, for an 
item or service furnished to an individual who is a resident of 
a skilled nursing facility for which payment may be made under 
this part shall include the facility's medicare provider 
number.
  (2) Each request for payment, or bill submitted, for therapy 
services described in paragraph (1) or (3) of section 1833(g), 
including services described in section 1833(a)(8)(B), 
furnished on or after October 1, 2012, for which payment may be 
made under this part shall include the national provider 
identifier of the physician who periodically reviews the plan 
for such services under section 1861(p)(2).
  (u) Each request for payment, or bill submitted, for a drug 
furnished to an individual for the treatment of anemia in 
connection with the treatment of cancer shall include (in a 
form and manner specified by the Secretary) information on the 
hemoglobin or hematocrit levels for the individual.

           *       *       *       *       *       *       *


                    Part C--Medicare+Choice Program


                 eligibility, election, and enrollment

  Sec. 1851. (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 title--
                  (A) through the original medicare fee-for-
                service program under parts A and B, or
                  (B) through enrollment in a Medicare+Choice 
                plan under this part,
        and may elect qualified prescription drug coverage in 
        accordance with section 1860D-1.
          (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 1855(d)), 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 1859(b)(6)) 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 1859(b)(3), 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 1859(b)(2).
          (3) Medicare+choice eligible individual.--
                  (A) In general.--In this title, subject to 
                subparagraph (B), the term ``Medicare+Choice 
                eligible individual'' means an individual who 
                is entitled to benefits under part A and 
                enrolled under part B.
                  (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), then the individual will be 
                        treated as a ``Medicare+Choice eligible 
                        individual'' for purposes of electing 
                        to continue enrollment in another 
                        Medicare+Choice plan.
                An individual who develops end-stage renal 
                disease while enrolled in a reasonable cost 
                reimbursement contract under section 1876(h) 
                shall be treated as an MA eligible individual 
                for purposes of applying the deemed enrollment 
                under subsection (c)(4).
  (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 thatan 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 organization's 
                        election.
          (2) Special rule for certain individuals covered 
        under fehbp or eligible for veterans or military health 
        benefits, veterans.--
                  (A) FEHBP.--An individual who is enrolled in 
                a health benefit plan under chapter 89 of title 
                5, United States Code, 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, United States Code, or 
                under chapter 17 of title 38 of such Code.
          (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 
        1905(p)(1)), a qualified disabled and working 
        individual (described in section 1905(s)), an 
        individual described in section 1902(a)(10)(E)(iii), or 
        otherwise entitled to medicare cost-sharing under a 
        State plan under title XIX 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 
                title.
                  (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) are made and changed, including the form and manner 
        in which such elections are made and changed. Subject 
        to paragraph (4), such elections shall be made or 
        changed only during coverage election periods specified 
        under subsection (e) and shall become effective as 
        provided in subsection (f).
          (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) 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), no longer serves 
                        the area in which the individual 
                        resides.
          (4) Deemed enrollment relating to converted 
        reasonable cost reimbursement contracts.--
                  (A) In general.--On the first day of the 
                annual, coordinated election period under 
                subsection (e)(3) for plan years beginning on 
                or after January 1, 2017, an MA eligible 
                individual described in clause (i) or (ii) of 
                subparagraph (B) is deemed, unless the 
                individual elects otherwise, to have elected to 
                receive benefits under this title through an 
                applicable MA plan (and shall be enrolled in 
                such plan) beginning with such plan year, if--
                          (i) the individual is enrolled in a 
                        reasonable cost reimbursement contract 
                        under section 1876(h) in the previous 
                        plan year;
                          (ii) such reasonable cost 
                        reimbursement contract was extended or 
                        renewed for the last reasonable cost 
                        reimbursement contract year of the 
                        contract (as described in subclause (I) 
                        of section 1876(h)(5)(C)(iv)) pursuant 
                        to such section;
                          (iii) the eligible organization that 
                        is offering such reasonable cost 
                        reimbursement contract provided the 
                        notice described in subclause (III) of 
                        such section that the contract was to 
                        be converted;
                          (iv) the applicable MA plan--
                                  (I) is the plan that was 
                                converted from the reasonable 
                                cost reimbursement contract 
                                described in clause (iii);
                                  (II) is offered by the same 
                                entity (or an organization 
                                affiliated with such entity 
                                that has a common ownership 
                                interest of control) that 
                                entered into such contract; and
                                  (III) is offered in the 
                                service area where the 
                                individual resides;
                          (v) in the case of reasonable cost 
                        reimbursement contracts that provide 
                        coverage under parts A and B (and, to 
                        the extent the Secretary determines it 
                        to be feasible, contracts that provide 
                        only part B coverage), the difference 
                        between the estimated individual costs 
                        (as determined applicable by the 
                        Secretary) for the applicable MA plan 
                        and such costs for the predecessor cost 
                        plan does not exceed a threshold 
                        established by the Secretary; and
                          (vi) the applicable MA plan--
                                  (I) provides coverage for 
                                enrollees transitioning from 
                                the converted reasonable cost 
                                reimbursement contract to such 
                                plan to maintain current 
                                providers of services and 
                                suppliers and course of 
                                treatment at the time of 
                                enrollment for a period of at 
                                least 90 days after enrollment; 
                                and
                                  (II) during such period, pays 
                                such providers of services and 
                                suppliers for items and 
                                services furnished to the 
                                enrollee an amount that is not 
                                less than the amount of payment 
                                applicable for such items and 
                                services under the original 
                                Medicare fee-for-service 
                                program under parts A and B.
                  (B) MA eligible individuals described.--
                          (i) Without prescription drug 
                        coverage.--An MA eligible individual 
                        described in this clause, with respect 
                        to a plan year, is an MA eligible 
                        individual who is enrolled in a 
                        reasonable cost reimbursement contract 
                        under section 1876(h) in the previous 
                        plan year and who is not, for such 
                        previous plan year, enrolled in a 
                        prescription drug plan under part D, 
                        including coverage under section 1860D-
                        22.
                          (ii) With prescription drug 
                        coverage.--An MA eligible individual 
                        described in this clause, with respect 
                        to a plan year, is an MA eligible 
                        individual who is enrolled in a 
                        reasonable cost reimbursement contract 
                        under section 1876(h) in the previous 
                        plan year and who, for such previous 
                        plan year, is enrolled in a 
                        prescription drug plan under part D--
                                  (I) through such contract; or
                                  (II) through a prescription 
                                drug plan, if the sponsor of 
                                such plan is the same entity 
                                (or an organization affiliated 
                                with such entity) that entered 
                                into such contract.
                  (C) Applicable ma plan defined.--In this 
                paragraph, the term ``applicable MA plan'' 
                means, in the case of an individual described 
                in--
                          (i) subparagraph (B)(i), an MA plan 
                        that is not an MA-PD plan; and
                          (ii) subparagraph (B)(ii), an MA-PD 
                        plan.
                  (D) Identification and notification of deemed 
                individuals.--Not later than 45 days before the 
                first day of the annual, coordinated election 
                period under subsection (e)(3) for plan years 
                beginning on or after January 1, 2017, the 
                Secretary shall identify and notify the 
                individuals who will be subject to deemed 
                elections under subparagraph (A) on the first 
                day of such period.
  (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)), 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 
                1804.
                  (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), 
                mail to the individual the information 
                described in subparagraph (A).
                          (ii) Notification related to certain 
                        deemed elections.--The Secretary shall 
                        require a Medicare Advantage 
                        organization that is offering a 
                        Medicare Advantage plan that has been 
                        converted from a reasonable cost 
                        reimbursement contract pursuant to 
                        section 1876(h)(5)(C)(iv) to mail, not 
                        later than 30 days prior to the first 
                        day of the annual, coordinated election 
                        period under subsection (e)(3) of a 
                        year, to any individual enrolled under 
                        such contract and identified by the 
                        Secretary under subsection (c)(4)(D) 
                        for such year--
                                  (I) a notification that such 
                                individual will, on such day, 
                                be deemed to have made an 
                                election with respect to such 
                                plan to receive benefits under 
                                this title through an MA plan 
                                or MA-PD plan (and shall be 
                                enrolled in such plan) for the 
                                next plan year under subsection 
                                (c)(4)(A), but that the 
                                individual may make a different 
                                election during the annual, 
                                coordinated election period for 
                                such year;
                                  (II) the information 
                                described in subparagraph (A);
                                  (III) a description of the 
                                differences between such MA 
                                plan or MA-PD plan and the 
                                reasonable cost reimbursement 
                                contract in which the 
                                individual was most recently 
                                enrolled with respect to 
                                benefits covered under such 
                                plans, including cost-sharing, 
                                premiums, drug coverage, and 
                                provider networks;
                                  (IV) information about the 
                                special period for elections 
                                under subsection (e)(2)(F); and
                                  (V) other information the 
                                Secretary may specify.
                  (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, 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 
                1852(b).
                  (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 1882 and provisions relating to 
                medicare select policies described in section 
                1882(t).
                  (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 1858(b)(1).
                          (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 plan's network.
                          (viii) The organization's 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 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 plan's 
                        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 1852(a)(3) 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 and enrolled under part B, 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 individual's initial 
        enrollment period under part B 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 individual's initial enrollment period under part 
        B.
          (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).
                  (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).
                          (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) Annual 45-day period  from 2011 through 
                2015 for disenrollment from ma plans to elect 
                to receive benefits under the original medicare 
                fee-for-service program.--Subject to 
                subparagraph (D), at any time during the first 
                45 days of a year (beginning with 2011 and 
                ending with 2015), an individual who is 
                enrolled in a Medicare Advantage plan may 
                change the election under subsection (a)(1), 
                but only with respect to coverage under the 
                original medicare fee-for-service program under 
                parts A and B, and may elect qualified 
                prescription drug coverage in accordance with 
                section 1860D-1.
                  (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)--
                          (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 
                        MA-PD 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 title 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.
                  (F) Special period for certain deemed 
                elections.--
                          (i) In general.--At any time during 
                        the period beginning after the last day 
                        of the annual, coordinated election 
                        period under paragraph (3) in which an 
                        individual is deemed to have elected to 
                        enroll in an MA plan or MA-PD plan 
                        under subsection (c)(4) and ending on 
                        the last day of February of the first 
                        plan year for which the individual is 
                        enrolled in such plan, such individual 
                        may change the election under 
                        subsection (a)(1) (including changing 
                        the MA plan or MA-PD plan in which the 
                        individual is enrolled).
                          (ii) Limitation of one change.--An 
                        individual may exercise the right under 
                        clause (i) only once during the 
                        applicable period described in such 
                        clause. 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).
                  (G) Continuous open enrollment and 
                disenrollment for first 3 months in 2016 and 
                subsequent years.--
                          (i) In general.--Subject to clause 
                        (ii) and subparagraph (D)--
                                  (I) in the case of an MA 
                                eligible individual who is 
                                enrolled in an MA plan, at any 
                                time during the first 3 months 
                                of a year (beginning with 
                                2016); or
                                  (II) in the case of an 
                                individual who first becomes an 
                                MA eligible individual during a 
                                year (beginning with 2016) and 
                                enrolls in an MA plan, during 
                                the first 3 months during such 
                                year in which the individual is 
                                an MA eligible individual;
                        such MA eligible individual may change 
                        the election under subsection (a)(1).
                          (ii) Limitation of one change during 
                        open enrollment period each year.--An 
                        individual may change the election 
                        pursuant to 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) Limited application to part 
                        d.--Clauses (i) and (ii) of this 
                        subparagraph shall only apply with 
                        respect to changes in enrollment in a 
                        prescription drug plan under part D in 
                        the case of an individual who, previous 
                        to such change in enrollment, is 
                        enrolled in a Medicare Advantage plan.
                          (iv) Limitations on marketing.--
                        Pursuant to subsection (j), no 
                        unsolicited marketing or marketing 
                        materials may be sent to an individual 
                        described in clause (i) during the 
                        continuous open enrollment and 
                        disenrollment period established for 
                        the individual under such clause, 
                        notwithstanding marketing guidelines 
                        established by the Centers for Medicare 
                        & Medicaid Services.
          (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;
                          (iv) with respect to 2007, 2008, 
                        2009, and 2010, the period beginning on 
                        November 15 and ending on December 31 
                        of the year before such year; and
                          (v) with respect to 2012 and 
                        succeeding years, the period beginning 
                        on October 15 and ending on December 7 
                        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 1876, 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 MA-PD 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 
                individual's place of residence or other change 
                in circumstances (specified by the Secretary, 
                but not including termination of the 
                individual's enrollment on the basis described 
                in clause (i) or (ii) of subsection (g)(3)(B));
                  (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 organization's 
                        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 
                        organization's behalf) materially 
                        misrepresented the plan's 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 
        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 period 
                described in paragraph (2)(F), 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) subsection 
        (e)(1) shall take effect upon the date the individual 
        becomes entitled to benefits under part A and enrolled 
        under part B, except as the Secretary may provide 
        (consistent with section 1838) in order to prevent 
        retroactive coverage.
          (2) During continuous open enrollment periods.--An 
        election or change of coverage made under subsection 
        (e)(2) 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), 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) 
        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 1852(b), 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 
                individual's 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 1856 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).
                          (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) 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).
                  (D) Organization obligation with respect to 
                election forms.--Pursuant to a contract under 
                section 1857, each Medicare+Choice organization 
                receiving an election form under subsection 
                (c)(2) 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 
        1856 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 1856. Such 
        standards--
                  (A) shall not permit a Medicare+Choice 
                organization to provide for, subject to 
                subsection (j)(2)(C), cash, gifts, prizes, or 
                other monetary rebates as an inducement for 
                enrollment or otherwise;
                  (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;
                  (C) shall not permit a Medicare Advantage 
                organization (or the agents, brokers, and other 
                third parties representing such organization) 
                to conduct the prohibited activities described 
                in subsection (j)(1); and
                  (D) shall only permit a Medicare Advantage 
                organization (and the agents, brokers, and 
                other third parties representing such 
                organization) to conduct the activities 
                described in subsection (j)(2) in accordance 
                with the limitations established under such 
                subsection.
          (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.
          (6) Required inclusion of plan type in plan name.--
        For plan years beginning on or after January 1, 2010, a 
        Medicare Advantage organization must ensure that the 
        name of each Medicare Advantage plan offered by the 
        Medicare Advantage organization includes the plan type 
        of the plan (using standard terminology developed by 
        the Secretary).
          (7) Strengthening the ability of states to act in 
        collaboration with the secretary to address fraudulent 
        or inappropriate marketing practices.--
                  (A) Appointment of agents and brokers.--Each 
                Medicare Advantage organization shall--
                          (i) only use agents and brokers who 
                        have been licensed under State law to 
                        sell Medicare Advantage plans offered 
                        by the Medicare Advantage organization;
                          (ii) in the case where a State has a 
                        State appointment law, abide by such 
                        law; and
                          (iii) report to the applicable State 
                        the termination of any such agent or 
                        broker, including the reasons for such 
                        termination (as required under 
                        applicable State law).
                  (B) Compliance with state information 
                requests.--Each Medicare Advantage organization 
                shall comply in a timely manner with any 
                request by a State for information regarding 
                the performance of a licensed agent, broker, or 
                other third party representing the Medicare 
                Advantage organization as part of an 
                investigation by the State into the conduct of 
                the agent, broker, or other third party.
  (i) Effect of Election of Medicare+Choice Plan Option.--
          (1) Payments to organizations.--Subject to sections 
        1852(a)(5), 1853(a)(4), 1853(g), 1853(h), 1886(d)(11), 
        1886(h)(3)(D), and 1853(m), payments under a contract 
        with a Medicare+Choice organization under section 
        1853(a) 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 for items and services furnished to the individual.
          (2) Only organization entitled to payment.--Subject 
        to sections 1853(a)(4), 1853(e), 1853(g), 1853(h), 
        1857(f)(2), 1858(h), 1886(d)(11), and 1886(h)(3)(D), 
        only the Medicare+Choice organization shall be entitled 
        to receive payments from the Secretary under this title 
        for services furnished to the individual.
  (j) Prohibited Activities Described and Limitations on the 
Conduct of Certain Other Activities.--
          (1) Prohibited activities described.--The following 
        prohibited activities are described in this paragraph:
                  (A) Unsolicited means of direct contact.--Any 
                unsolicited means of direct contact of 
                prospective enrollees, including soliciting 
                door-to-door or any outbound telemarketing 
                without the prospective enrollee initiating 
                contact.
                  (B) Cross-selling.--The sale of other non-
                health related products (such as annuities and 
                life insurance) during any sales or marketing 
                activity or presentation conducted with respect 
                to a Medicare Advantage plan.
                  (C) Meals.--The provision of meals of any 
                sort, regardless of value, to prospective 
                enrollees at promotional and sales activities.
                  (D) Sales and marketing in health care 
                settings and at educational events.--Sales and 
                marketing activities for the enrollment of 
                individuals in Medicare Advantage plans that 
                are conducted--
                          (i) in health care settings in areas 
                        where health care is delivered to 
                        individuals (such as physician offices 
                        and pharmacies), except in the case 
                        where such activities are conducted in 
                        common areas in health care settings; 
                        and
                          (ii) at educational events.
          (2) Limitations.--The Secretary shall establish 
        limitations with respect to at least the following:
                  (A) Scope of marketing appointments.--The 
                scope of any appointment with respect to the 
                marketing of a Medicare Advantage plan. Such 
                limitation shall require advance agreement with 
                a prospective enrollee on the scope of the 
                marketing appointment and documentation of such 
                agreement by the Medicare Advantage 
                organization. In the case where the marketing 
                appointment is in person, such documentation 
                shall be in writing.
                  (B) Co-branding.--The use of the name or logo 
                of a co-branded network provider on Medicare 
                Advantage plan membership and marketing 
                materials.
                  (C) Limitation of gifts to nominal dollar 
                value.--The offering of gifts and other 
                promotional items other than those that are of 
                nominal value (as determined by the Secretary) 
                to prospective enrollees at promotional 
                activities.
                  (D) Compensation.--The use of compensation 
                other than as provided under guidelines 
                established by the Secretary. Such guidelines 
                shall ensure that the use of compensation 
                creates incentives for agents and brokers to 
                enroll individuals in the Medicare Advantage 
                plan that is intended to best meet their health 
                care needs.
                  (E) Required training, annual retraining, and 
                testing of agents, brokers, and other third 
                parties.--The use by a Medicare Advantage 
                organization of any individual as an agent, 
                broker, or other third party representing the 
                organization that has not completed an initial 
                training and testing program and does not 
                complete an annual retraining and testing 
                program.

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