[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6645 Introduced in House (IH)]

112th CONGRESS
  2d Session
                                H. R. 6645

To amend title XVIII of the Social Security Act to save and strengthen 
                         the Medicare program.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           December 11, 2012

  Mr. Herger introduced the following bill; which was referred to the 
   Committee on Ways and Means, and in addition to the Committees on 
    Energy and Commerce and Rules, for a period to be subsequently 
   determined by the Speaker, in each case for consideration of such 
 provisions as fall within the jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL


 
To amend title XVIII of the Social Security Act to save and strengthen 
                         the Medicare program.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Save and 
Strengthen Medicare Act of 2012''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
   TITLE I--IMPROVED AND UNIFIED MEDICARE PROGRAM THROUGH CHOICE AND 
                              COMPETITION

Sec. 101. New unified eligibility and enrollment rules.
         ``Part E--Unified Medicare With Choice and Competition

                  ``subpart 1--eligibility; enrollment

        ``Sec. 1860E-11. Unified eligibility and enrollment under parts 
                            A and B.
        ``Sec. 1860E-12. Coordination with part D.
        ``Sec. 1944. Maintenance of effort options for full-benefit 
                            dual eligible individuals.
Sec. 102. Incentivized Medicare eligibility at increased age.
Sec. 103. New benefit structure under unified Medicare.
                         ``subpart 2--benefits

        ``Sec. 1860E-21. Unified part A and B deductible.
        ``Sec. 1860E-22. Uniform coinsurance.
        ``Sec. 1860E-23. Out-of-pocket limit.
        ``Sec. 1860E-24. Offering of tiered cost-sharing coverage 
                            levels instead of medigap.
        ``Sec. 1860E-25. Contributions into health individual 
                            retirement accounts.
        ``Sec. 1860E-26. Requiring MA plans to offer prescription drug 
                            coverage.
Sec. 104. Late enrollment penalty not to apply for months of any health 
                            coverage.
Sec. 105. Competitive bidding and premiums under unified Medicare.
             ``subpart 3--competitive bidding and premiums

        ``Sec. 1860E-31. Application of competitive bidding and changes 
                            in premiums.
        ``Sec. 1860E-32. Application of competitive bidding to Medicare 
                            fee-for-service.
        ``Sec. 1860E-33. Ensuring a level playing field.
Sec. 106. Separate Medicare FFS accounts and other financing under 
                            unified Medicare.
                         ``subpart 4--subsidies

        ``Sec. 1860E-41. Changes in subsidies.
Sec. 107. Medicare Choices Commission; general provisions; effective 
                            date.
                ``subpart 5--medicare choices commission

        ``Sec. 1860E-51. Medicare Choices Commission.
        ``Sec. 1860E-52. Duties of the Commission.
        ``Sec. 1860E-53. Powers of Commission.
        ``Sec. 1860E-54. Commission personnel matters.
        ``Sec. 1860E-55. Reports; communications with Congress.
        ``Sec. 1860E-56. Funding of the Commission.
                    ``subpart 6--general provisions

        ``Sec. 1860E-61. Applicability; definitions.
        ``Sec. 1860E-62. General effective date.
            TITLE II--HEALTH INDIVIDUAL RETIREMENT ACCOUNTS

                 Subtitle A--Establishment of Accounts

Sec. 201. Definitions.
Sec. 202. Health Individual Retirement Account Fund.
Sec. 203. Establishment of health individual retirement accounts.
Sec. 204. Transfer of HIRA contributions to HIRA Fund.
Sec. 205. Operation of HIRA Fund.
Sec. 206. Health individual retirement account distributions.
                       Subtitle B--Tax Treatment

Sec. 211. Tax treatment of accounts.
        ``Part IX--Health Individual Retirement Account Program

        ``Sec. 530A. Health Individual Retirement Account Program.
Sec. 212. HIRA contributions.
Sec. 213. Contributions eligible for saver's credit.
Sec. 214. Exclusion of certain HIRA transfers.
        ``Sec. 139F. Government HIRA subsidies.
                    Subtitle C--Other Tax Provisions

Sec. 221. Health Savings Accounts available to individuals eligible for 
                            Medicare.
Sec. 222. Reduction in Medicare portion of payroll tax to incentivize 
                            late retirement.
Sec. 223. 15-percent excise tax on employer-sponsored Medicare 
                            supplemental coverage.
        ``Sec. 4980J. Employer-sponsored Medicare supplemental 
                            coverage.
                   TITLE III--OTHER HEALTH PROVISIONS

           Subtitle A--Transparency, Outreach, and Education

Sec. 301. Public outreach and education initiatives.
Sec. 302. Annual Medicare beneficiary contributions and benefits 
                            statements.
        ``Sec. 1143A. Annual Medicare beneficiary contributions and 
                            benefits statements.
                       Subtitle B--Miscellaneous

Sec. 311. Repeal of IPAB.
Sec. 312. Repeal of Medicare payment productivity adjustments after 
                            2020.
Sec. 313. Graduate medical education grant program.
        ``Sec. 1899B. Graduate medical education grant program.
        ``Sec. 9512. Graduate Medical Education Trust Fund.
Sec. 314. Report on transitioning payments under Medicare for 
                            disproportionate share hospitals into a 
                            grant program.
Sec. 315. One-year freeze for physician payment update; Sense of 
                            Congress relating to the sustainable growth 
                            rate (SGR).
Sec. 316. Improvements to MSA plans; permitting offering of 
                            catastrophic plan with high deductible and 
                            contribution to MSA, HSA, or HIRA.
Sec. 317. Extension for specialized MA plans for special needs 
                            individuals.
Sec. 318. Conscience protections.
        ``Sec. 1899C. Conscience protections; Prohibition against 
                            discrimination on assisted suicide and 
                            abortion services.
        ``Sec. 1899D. Prohibition against discrimination on assisted 
                            suicide and abortions.

   TITLE I--IMPROVED AND UNIFIED MEDICARE PROGRAM THROUGH CHOICE AND 
                              COMPETITION

SEC. 101. NEW UNIFIED ELIGIBILITY AND ENROLLMENT RULES.

    (a) In General.--Title XVIII of the Social Security Act is 
amended--
            (1) by redesignating part E as part F; and
            (2) by inserting after part D the following new part:

         ``PART E--UNIFIED MEDICARE WITH CHOICE AND COMPETITION

                  ``Subpart 1--Eligibility; Enrollment

``SEC. 1860E-11. UNIFIED ELIGIBILITY AND ENROLLMENT UNDER PARTS A AND 
              B.

    ``(a) Requiring Coverage Under Both Parts A and B.--
            ``(1) In general.--Effective as of the general effective 
        date (as specified in section 1860E-62), except as provided 
        under paragraph (3), no benefits shall be covered under part A 
        or part B for an individual unless the individual is both--
                    ``(A) entitled (or enrolled) for benefits under 
                part A; and
                    ``(B) enrolled under part B.
            ``(2) Clarification of part a enrollment required to obtain 
        part b benefits.--Effective as of the general effective date, 
        except as provided under paragraph (3), an individual who is 
        enrolled under part B and is not entitled to hospital insurance 
        benefits under part A shall be entitled to benefits under part 
        B only if the individual enrolls under part A pursuant to 
        section 1818 or 1818A.
            ``(3) Exceptions.--
                    ``(A) Continuation of treatment of working 
                beneficiaries.--Paragraphs (1) and (2) shall not apply 
                to an individual with respect to whom the provisions of 
                section 1862(b) apply because of enrollment in a 
                primary plan (as defined for purposes of such section).
                    ``(B) Grandfathered for current part b only 
                enrollees.--
                            ``(i) In general.--Paragraphs (1) and (2) 
                        shall not apply to an individual who as of the 
                        general effective date is enrolled under part B 
                        but is not entitled to benefits (or otherwise 
                        enrolled) under part A, so long as the 
                        individual does not terminate enrollment under 
                        part B or enroll under part A.
                            ``(ii) New cost-sharing applies.--
                                    ``(I) In general.--Nothing in 
                                clause (i) shall be construed to exempt 
                                an individual described in such clause 
                                from the application of the provisions 
                                of subpart 2 (relating to cost-
                                sharing), except that the total amount 
                                of expenses incurred by the individual 
                                during a year which would constitute 
                                incurred expenses for which benefits 
                                payable under section 1833(a) are 
                                determinable shall be reduced by the 
                                deductible described in subclause (II) 
                                for such year instead of the deductible 
                                described in section 1860E-21.
                                    ``(II) Applicable deductible.--The 
                                deductible described in this subclause 
                                for 2016, is the deductible that would 
                                be applied under section 1833(b) (but 
                                for the application of this section and 
                                subpart 2) for such year, adjusted by 
                                the Secretary to take into account any 
                                change in the monthly actuarial rate 
                                under section 1839(a)(1) because of the 
                                application of the out-of-pocket limit 
                                under section 1860E-23, and for a 
                                subsequent year the amount of such 
                                deductible for the previous year 
                                increased by the annual percentage 
                                increase in the monthly actuarial rate 
                                under section 1839(a)(1) (taking into 
                                account the application of the out-of-
                                pocket limit under section 1860E-23) 
                                ending with such subsequent year 
                                (rounded to the nearest $1).
                            ``(iii) Premium.--In the case of an 
                        individual described in clause (i), for 2016 or 
                        a subsequent year, instead of the combined 
                        monthly premium under section 1860E-32(c), 
                        there shall be applied to such individual the 
                        monthly premium that would be determined under 
                        section 1839 for such year.
    ``(b) Permitting Individuals To Opt Out of Part A Coverage Without 
Losing Social Security Benefits.--
            ``(1) In general.--The Medicare Choices Commission shall 
        establish--
                    ``(A) a process by which an individual otherwise 
                entitled to benefits under part A may elect (at a time 
                and in a manner specified under the process) to waive 
                such entitlement; and
                    ``(B) a process by which an individual who elects 
                to waive such entitlement may revoke (at a time and in 
                a manner specified under the process) such waiver.
        The process under subparagraph (B) shall be coordinated with 
        the enrollment process under section 1837 for part B.
            ``(2) Application of late enrollment penalty.--An 
        individual who revokes a waiver under paragraph (1)(B) shall be 
        subject to a late enrollment penalty as applied under section 
        1860E-32(c)(2)(C).
            ``(3) No impact on title ii benefits.--Notwithstanding any 
        other provision of law, an election of an individual to waive 
        entitlement to benefits under part A under paragraph (1)(A) 
        shall not result in any loss of benefits under title II.
            ``(4) Deemed opt out.--
                    ``(A) An election of an individual to waive 
                entitlement to benefits under part A under paragraph 
                (1)(A) is also deemed the filing of a notice of 
                termination of benefits under part B pursuant to 
                section 1838(b)(1).
                    ``(B) The termination of benefits under part B 
                pursuant to section 1838(b) is also deemed to be a 
                waiver of any entitlement to benefits under part A.
    ``(c) Special Open Enrollment Period Without Late Enrollment 
Penalty for Current Part A Only or Part B Only Enrollees.--
Notwithstanding any other provision of law, in the case of an 
individual who as of the general effective date, is entitled to 
benefits under part A but not enrolled under part B, or who is enrolled 
under part B but not entitled to benefits (or enrolled) under part A, 
beginning as of such date, such individual shall be deemed to be 
enrolled under part B or part A, respectively, unless such individual 
elects to be enrolled (or entitled to benefits) under neither of such 
parts during a special open enrollment period specified by the Medicare 
Choices Commission. No increase in the monthly premium of an individual 
pursuant to section 1839(b) or section 1818(c) shall be effected in the 
case of any such individual who is deemed enrolled under part B or part 
A pursuant to the previous sentence with respect to any period prior to 
the date of such enrollment.
    ``(d) Auto Enrollment of Dual Eligible Individuals Under Medicare 
Advantage Plans.--
            ``(1) In general.--Except in the case of a State that has 
        elected the maintenance of effort option described in section 
        1944(b)(2), in the case of an individual described in 
        subparagraph (A)(ii) of section 1935(c)(6) (taking into account 
        the application of subparagraph (B) of such section), the 
        Medicare Choices Commission shall establish a process for the 
        enrollment in an MA-PD plan that is a managed care plan under 
        part C that has a monthly beneficiary premium that does not 
        exceed the premium assistance available under section 1860E-
        41(b)(1)(A). If there is more than one such plan available, the 
        Medicare Choices Commission shall enroll such an individual on 
        a random basis among all such plans in the PDP region.
            ``(2) Right to disenroll.--Nothing in paragraph (1) shall 
        prevent such an individual from declining enrollment in any 
        such plan (and thereby obtaining coverage under Medicare fee-
        for-service) or from changing enrollment in such a plan to 
        another MA-PD plan.

``SEC. 1860E-12. COORDINATION WITH PART D.

    ``(a) Deemed Enrollment Under Part D.--
            ``(1) In general.--The Medicare Choices Commission shall 
        establish a process that, beginning as of the general effective 
        date, provides for the enrollment in a prescription drug plan 
        that has a monthly base beneficiary premium that does not 
        exceed the weighted average of premiums for such plans that 
        provide standard prescription drug coverage (as defined in 
        section 1860D-2(b)) with respect to the area involved (on a 
        random basis among all such plans in the applicable PDP region) 
        of each Medicare enrollee (as defined in section 1860E-51) 
        who--
                    ``(A) failed to enroll in such a prescription drug 
                plan during the applicable enrollment or coverage 
                election period under section 1860D-1(b); and
                    ``(B) failed to elect not to enroll in such a 
                prescription drug plan during an applicable opt out 
                period described in paragraph (2).
        Nothing in the previous sentence shall prevent such an 
        individual from declining or changing such enrollment. Such 
        process shall be carried out in the same manner as the process 
        described in section 1860D-1(b)(1)(C).
            ``(2) Opt out periods.--The process under paragraph (1) 
        shall provide for the opportunity to make an election described 
        in subparagraph (B) of such paragraph during an opt out period 
        that is coordinated with the relevant enrollment or coverage 
        election period under section 1860D-1.
            ``(3) Late enrollment penalties.--In the case of an 
        individual who makes an election described in paragraph (1)(B) 
        and then enrolls in a prescription drug plan, the late 
        enrollment penalty under section 1860D-13(b) shall apply to the 
        monthly beneficiary premium of such individual, except that in 
        applying such section, any reference to the initial enrollment 
        period of such individual shall be deemed to be a reference to 
        the opt out period under paragraph (2) during which the 
        individual elected not to enroll in a prescription drug plan.
            ``(4) No late enrollment penalty for current fee-for-
        service beneficiaries without drug coverage.--In the case of an 
        individual who is a Medicare enrollee before the date of 
        enactment of this section and who was not enrolled under a 
        prescription drug plan before being enrolled under such a plan 
        pursuant to paragraph (1), there shall be no increase in the 
        base beneficiary premium of an individual under section 1860D-
        13 by a late enrollment penalty under subsection (b) of such 
        section with respect to any period prior to the date of such 
        enrollment.
    ``(b) Reference to Required Prescription Drug Coverage Under Part 
C.--For provision requiring coverage under MA plans to include 
prescription drug coverage, see section 1860E-26.''.
    (b) Limitation on Medicaid Benefits for Full-Benefit Dual Eligible 
Individuals.--Section 1902 of the Social Security Act (42 U.S.C. 1396a) 
is amended by adding at the end the following new subsection:
    ``(ll) Limitation on Benefits for Full-Benefit Dual Eligible 
Individuals.--Effective as of the general effective date (as specified 
in section 1860E-62), except in the case of a State which has elected 
the option described in section 1944(b)(2), in the case of an 
individual described in subparagraph (A)(ii) of section 1935(c)(6) 
(taking into account the application of subparagraph (B) of such 
section), notwithstanding any other provision of law, medical 
assistance shall not be available under this title for any items and 
services for which payment may be made under title XVIII.''.
    (c) Medicaid Maintenance of Effort and Alternatives.--Title XIX of 
the Social Security Act is amended by inserting after section 1943 the 
following new section:

    ``maintenance of effort options for full-benefit dual eligible 
                              individuals

    ``Sec. 1944.  (a) In General.--Effective as of the general 
effective date (as specified in section 1860E-62), a State shall elect, 
in a form and manner specified by the Secretary, a maintenance of 
effort option described in subsection (b). In the case of a State that 
fails to make such an election, the State shall be deemed to have 
elected the option described in subsection (b)(3).
    ``(b) Maintenance of Effort Options Described.--The following are 
maintenance of effort options described in this subsection for a State, 
which shall apply to all individuals described in subparagraph (A)(ii) 
of section 1935(c)(6) (taking into account the application of 
subparagraph (B) of such section) for such State:
            ``(1) Contribution towards out-of-pocket expenses under a 
        tier 3 medicare plan.--The State establishes a program under 
        which the State makes a contribution to a health investment 
        retirement account established under section 503(b) of the Save 
        and Strengthen Medicare Act of 2012 for each such individual in 
        an amount which--
                    ``(A) is calculated, on an average actuarial basis, 
                to cover at least the remaining expenses under a plan 
                with a tier 3 benefit level under section 1860E-24(b); 
                and
                    ``(B) is risk-adjusted based upon the actuarial 
                characteristics of the individual involved.
            ``(2) Enrollment of dual eligibles in comprehensive 
        medicaid managed care plan.--
                    ``(A) In general.--The State enrolls all such 
                individuals in a comprehensive Medicaid managed care 
                plan offered by a managed care entity under section 
                1932.
                    ``(B) Payment of subsidy amount to state.--In the 
                case of a State that elects the option under this 
                paragraph with respect to an individual, the Medicare 
                Choices Commission established under section 1860E-51 
                shall pay to the State the same amount that the 
                individual would be entitled to have paid as an income-
                related premium subsidy under section 1860E-41(b)(1)(A) 
                plus the amount that the Medicare Choices Commission 
                estimates would have been paid with respect to the 
                individual under part D (including the actuarial value 
                of subsidy payments under sections 1860D-13 and 1860D-
                14). Such payment shall be made in appropriate part 
                from the Federal Hospital Insurance Trust Fund under 
                section 1817 and the Federal Supplementary Medical 
                Insurance Trust Fund under section 1841.
                    ``(C) Relation to part d rules.--In the case of a 
                State that has elected the option under this paragraph, 
                notwithstanding any other provision of law--
                            ``(i) the coverage provided under this 
                        option shall be in lieu of any coverage that 
                        may otherwise be provided under part D; and
                            ``(ii) the payment to the State under 
                        subparagraph (B) shall be in lieu of any 
                        payments otherwise made with respect to such 
                        individual under such part.
            ``(3) State contribution amount and federal contributions 
        to hiras.--
                    ``(A) In general.--The State provides for payment 
                to the Secretary for each month in an amount determined 
                under subparagraph (B)(i) and the Secretary makes a 
                contribution to a health investment retirement account 
                established under section 503(b) of the Save and 
                Strengthen Medicare Act of 2012 for each such 
                individual in an amount described in subparagraph (C).
                    ``(B) State contribution amount.--
                            ``(i) In general.--Subject to clause (iii), 
                        the amount determined under this clause for a 
                        State for a month in a year is equal to the 
                        product described in subparagraph (A) of 
                        section 1935(c)(1) for the State for the month.
                            ``(ii) Form and manner of payment.--The 
                        provisions of subparagraphs (B) through (D) of 
                        section 1935(c)(1) shall apply to payment by a 
                        State to the Secretary under this paragraph in 
                        the same manner as such subparagraphs apply to 
                        payment under section 1935(c)(1)(A).
                            ``(iii) Application of different factors.--
                        In applying clause (i), the following shall be 
                        substituted under paragraphs (2) and (3) of 
                        section 1935(c):
                                    ``(I) The base year State Medicaid 
                                per capita expenditures for covered 
                                part D drugs described in subparagraph 
                                (A)(i)(I) of such paragraph (2) shall 
                                be deemed to be the per capita 
                                expenditures for Medicare cost-sharing 
                                that would apply, with respect to an 
                                individual described in subparagraph 
                                (A)(ii) of section 1935(c)(6) (taking 
                                into account the application of 
                                subparagraph (B) of such section) and 
                                the State involved, if such an 
                                individual received benefits only under 
                                title XVIII (and not the State plan 
                                under this title).
                                    ``(II) Any reference to 
                                expenditures for covered part D drugs 
                                or for prescription drug benefits shall 
                                be deemed a reference to the 
                                expenditures for Medicare cost-sharing 
                                described in subclause (I).
                                    ``(III) Any reference to 2003 or 
                                2004 shall be deemed a reference to 
                                2014 or 2015, respectively.
                                    ``(IV) Any reference to a full-
                                benefit-dual-eligible individual shall 
                                be deemed a reference to an individual 
                                described in subparagraph (A)(ii) of 
                                section 1935(c)(6) (taking into account 
                                the application of subparagraph (B) of 
                                such section).
                                    ``(V) The applicable growth factor 
                                under section 1935(c)(4) for a year, 
                                with respect to a State, shall be the 
                                average annual percentage change (to 
                                that year from the previous year) of 
                                the expenditures of the State under the 
                                State plan under title XIX.
                                    ``(VI) The factor described in 
                                section 1935(c)(5) is deemed to be 90 
                                percent.
                    ``(C) Federal contributions to hiras.--For purposes 
                of subparagraph (A), the amount described in this 
                subparagraph, with respect to each such individual 
                described in subparagraph (A), is an amount which--
                            ``(i) is calculated, on an average 
                        actuarial basis, to cover the remaining 
                        expenses under a plan with a tier 3 benefit 
                        level under section 1860E-24(b); and
                            ``(ii) is risk-adjusted based upon the 
                        actuarial characteristics of the individual.
            ``(4) Other innovative alternatives.--
                    ``(A) In general.--The State submits to the 
                Secretary, and has approved by the Secretary, an 
                innovative alternative proposal relating to 
                coordinating coverage of such individuals under 
                Medicare and the State plan under title XIX.
                    ``(B) Process for review.--With respect to 
                proposals submitted to the Secretary under subparagraph 
                (A), the Secretary shall approve such a proposal if the 
                State demonstrates with respect to the proposal that--
                            ``(i) there would be no increased cost to 
                        the Federal Government if it were approved; and
                            ``(ii) there would be no reduction in the 
                        quality of care provided to such individuals if 
                        the proposal were approved.''.
    (d) Conforming Amendments.--
            (1) Section 226.--Section 226 of the Social Security Act 
        (42 U.S.C. 426) is amended--
                    (A) in subsection (a), in the matter preceding 
                paragraph (1), by inserting ``, subject to section 
                1860E-11(b)'' after ``individual who'';
                    (B) in subsection (b), in the matter preceding 
                paragraph (1), by inserting ``, subject to section 
                1860E-11(b)'' after ``individual who''; and
                    (C) in subsection (c), in the matter preceding 
                paragraph (1), by inserting ``, subject to section 
                1860E-11(a)'' after ``subsection (a)''.
            (2) Section 226A.--Section 226A(a) of such Act (42 U.S.C. 
        426-1(a)) is amended, in the matter preceding paragraph (1), by 
        inserting ``and subject to section 1860E-11(b)'' after ``or 
        title XVIII''.
            (3) Section 1818A.--Section 1818A(a) of such Act (42 U.S.C. 
        1395i-2a(a)) is amended, in the matter preceding paragraph (1), 
        by inserting ``, subject to section 1860E-11(a)'' after 
        ``individual who''.
            (4) Section 1836.--Section 1836 of such Act is amended, in 
        the matter preceding paragraph (1), by inserting ``, subject to 
        section 1860E-11(a)'' after ``individual who''.
            (5) Section 1932.--Section 1932(a)(2)(B) of the Social 
        Security Act (42 U.S.C. 1396u-2(a)(2)(B)) is amended by 
        striking ``A State'' and inserting ``Except in the case of a 
        State that has elected the maintenance of effort option 
        described in section 1944(b)(2), a State''.

SEC. 102. INCENTIVIZED MEDICARE ELIGIBILITY AT INCREASED AGE.

    (a) In General.--Section 216 of the Social Security Act (42 U.S.C. 
426) is amended by adding at the end the following new subsection:
    ``(m) Medicare Eligibility Age Defined.--
            ``(1) In general.--In this Act, the term `Medicare 
        eligibility age' means, in accordance with paragraph (2), 65 
        years of age, the preferred Medicare age, or any age between 65 
        years of age and the preferred Medicare age.
            ``(2) Choice.--
                    ``(A) In general.--Unless an individual elects 
                otherwise (in a manner specified by the Medicare 
                Choices Commission) the Medicare eligibility age shall 
                be the preferred Medicare age described in subparagraph 
                (B) applicable to such individual.
                    ``(B) Preferred medicare age.--
                            ``(i) In general.--The preferred Medicare 
                        age with respect to an individual--
                                    ``(I) who attains the age of 65 
                                before January 1, 2016, is 65 years of 
                                age;
                                    ``(II) who attains the age of 65 
                                after December 31, 2015, and before 
                                January 1, 2026, is 65 years of age 
                                plus the number of months specified by 
                                the Medicare Choices Commission for the 
                                preferred age phase-in factor under 
                                clause (ii) for the calendar year in 
                                which the individual attains the age of 
                                65; and
                                    ``(III) who attains the age of 65 
                                during a 10-year period (with the first 
                                such period beginning on January 1, 
                                2026), 67 years of age increased by the 
                                life expectancy increase factor 
                                described in clause (iii) for such 10-
                                year period.
                            ``(ii) Preferred age phase-in factor.--For 
                        each year during the 10-year period beginning 
                        with 2016, the Medicare Choices Commission 
                        shall specify the preferred age phase-in factor 
                        as either 2 or 3 months to be applied under 
                        clause (i)(II) for individuals attaining 65 
                        years of age during such year in a manner that 
                        results in the preferred Medicare age being 
                        increased over such 10-year period in as 
                        equivalent increments as possible such that for 
                        individuals attaining the age of 65 as of 
                        December 31, 2025, such preferred Medicare age 
                        will be 67 years of age.
                            ``(iii) Life expectancy increase factor.--
                        The life expectancy increase factor under this 
                        clause for a 10-year period is the age, rounded 
                        to the nearest month, at which (as estimated by 
                        the Medicare Choices Commission based on the 
                        most recent information available from the 
                        National Center for Health Statistics for the 
                        3rd year beginning before such 10-year period) 
                        the average life expectancy of an individual 
                        who is eligible to enroll under this title and 
                        who has attained 67 years of age is 18 years, 
                        except that the application of this clause may 
                        not result in a year-to-year increase of more 
                        than 2 months or in the preferred Medicare age 
                        being less than 67 years of age.
                    ``(C) Enrollment options.--The Medicare Choices 
                Commission shall specify a manner and process in which 
                an individual may make an election described in 
                subparagraph (A) to have the Medicare eligibility age 
                applicable to such individual be an age described in 
                paragraph (1) other than the preferred Medicare age so 
                that such election takes effect in the month in which 
                the individuals attains such age. Such process shall 
                provide for an initial election period and subsequent 
                annual election periods for each age that may be 
                elected for the Medicare eligibility age.
                    ``(D) Notification.--The Medicare Choices 
                Commission shall provide for notification of each 
                individual who will be eligible for benefits under 
                title XVIII that the Medicare eligibility age of such 
                individual will be the preferred Medicare age unless 
                the individual elects under subparagraph (C) an earlier 
                age described in paragraph (1).
            ``(3) Premium.--For provisions relating to premium 
        incentives for deferred Medicare eligibility until the 
        preferred Medicare age see section 1860E-32(c).''.
    (b) Conforming Amendments.--
            (1) Social security act.--
                    (A) Entitlement to hospital insurance benefits.--
                Section 226 of such Act (42 U.S.C. 426) is amended by 
                striking ``age 65'' each place such term appears and 
                inserting ``medicare eligibility age (as such term is 
                defined in section 216(m))''.
                    (B) Hospital insurance benefits for the aged.--
                Section 1811 of such Act (42 U.S.C. 1395c) is amended 
                by striking ``age 65'' each place such term appears and 
                inserting ``medicare eligibility age (as such term is 
                defined in section 216(m))''.
                    (C) Hospital insurance benefits for uninsured 
                elderly individuals not otherwise eligible.--Section 
                1818 of such Act (42 U.S.C. 1395i-2) is amended--
                            (i) in subsection (a)(1), by striking ``age 
                        of 65'' and inserting ``medicare eligibility 
                        age (as such term is defined in section 
                        216(m))'';
                            (ii) in subsection (d)(1), by striking 
                        ``age 65'' and inserting ``medicare eligibility 
                        age (as such term is defined in section 
                        216(m))''; and
                            (iii) in subsection (d)(3), by striking 
                        ``65'' and inserting ``medicare eligibility age 
                        (as such term is defined in section 216(m))''.
                    (D) Hospital insurance benefits for disabled 
                individuals who have exhausted other entitlement.--
                Section 1818A(a)(1) of such Act (42 U.S.C. 1395i-
                2a(a)(1)) is amended by striking ``the age of 65'' and 
                inserting ``medicare eligibility age (as such term is 
                defined in section 216(m))''.
                    (E) Eligibility for part b benefits.--
                            (i) In general.--Section 1836 of such Act 
                        (42 U.S.C. 1395o) is amended by striking ``age 
                        65'' each place such term appears and inserting 
                        ``medicare eligibility age (as such term is 
                        defined in section 216(m))''.
                            (ii) Enrollment periods.--Section 1837 of 
                        such Act (42 U.S.C. 1395p) is amended by 
                        striking ``age 65'' and ``the age of 65'' each 
                        place such terms appear and inserting 
                        ``medicare eligibility age (as such term is 
                        defined in section 216(m))''.
                            (iii) Coverage period.--Section 1838 of 
                        such Act (42 U.S.C. 1395q) is amended--
                                    (I) in subsection (a), by striking 
                                ``age 65'' and inserting ``medicare 
                                eligibility age (as such term is 
                                defined in section 216(m))''.
                                    (II) in subsection (c), by striking 
                                ``the age of 65'' and inserting 
                                ``medicare eligibility age (as such 
                                term is defined in section 216(m))''.
                            (iv) Amounts of premiums.--Section 1839 of 
                        such Act (42 U.S.C. 1395r) is amended by 
                        striking ``age 65'' and ``the age of 65'' each 
                        place such terms appear and inserting 
                        ``medicare eligibility age (as such term is 
                        defined in section 216(m))''.
                    (F) Appropriations to cover government 
                contributions and contingency reserve.--Section 
                1844(a)(1) of such Act (42 U.S.C. 1395w) is amended by 
                striking ``age 65'' each place such term appears and 
                inserting ``medicare eligibility age (as such term is 
                defined in section 216(m))''.
                    (G) Eligibility, election, and enrollment.--The 
                matter following subparagraph (D) of section 1851(e)(4) 
                of such Act (42 U.S.C. 1395w-21(e)(4)) is amended by 
                striking ``age 65'' and inserting ``medicare 
                eligibility age (as such term is defined in section 
                216(m))''.
                    (H) Payments to medicare+choice organizations.--
                Section 1853(c)(4)(C)(v) of such Act (42 U.S.C. 1395w-
                23(c)(4)(C)(v)) is amended by striking ``65 years of 
                age'' and inserting ``medicare eligibility age (as such 
                term is defined in section 216(m))''.
                    (I) Part d premiums and late enrollment penalty.--
                Section 1860D-13(b)(7)(B)(i) of such Act (42 U.S.C. 
                1395w-113(b)(7)(B)(i)) is amended by striking ``age 
                65'' and inserting ``the medicare eligibility age (as 
                such term is defined in section 216(m))''.
                    (J) Medicare secondary payer.--Section 1862(b) of 
                such Act (42 U.S.C. 1395y(b)) is amended by striking 
                ``age 65'' each place such term appears and inserting 
                ``medicare eligibility age (as such term is defined in 
                section 216(m))''.
                    (K) Certification of medicare supplemental health 
                insurance policies.--Section 1882(s) of such Act (42 
                U.S.C. 1395ss(s)) is amended--
                            (i) in paragraph (2)(A) by striking ``65 
                        years of age'' and inserting ``medicare 
                        eligibility age (as such term is defined in 
                        section 216(m))'';
                            (ii) in paragraph (2)(D) by striking ``65 
                        years of age'' and inserting ``medicare 
                        eligibility age (as such term is defined in 
                        section 216(m))''; and
                            (iii) in paragraph (3)(B)(vi) by striking 
                        ``age 65'' and inserting ``medicare eligibility 
                        age (as such term is defined in section 
                        216(m))''.
                    (L) Medicare subvention demonstration project for 
                military retirees.--Section 1896(a)(5)(D) of such Act 
                (42 U.S.C. 1395ggg(a)(5)(D)) is amended by striking 
                ``age 65'' and inserting ``medicare eligibility age (as 
                such term is defined in section 216(m))''.
                    (M) Medicaid state plan provisions.--Section 1902 
                of the Social Security Act (42 U.S.C. 1396a) is 
                amended--
                            (i) in subsection (a)(10)(A)--
                                    (I) in clause (i)(VIII), by 
                                striking ``65 years of age'' and 
                                inserting ``the medicare eligibility 
                                age (as such term is defined in section 
                                216(m))'';
                                    (II) in clause (ii)(XV), by 
                                striking ``at least 16, but less than 
                                65, years of age'' and inserting ``at 
                                least 16 years of age but less than the 
                                medicare eligibility age (as such term 
                                is defined in section 216(m))''; and
                                    (III) in clause (ii)(XX), by 
                                striking ``65 years of age'' and 
                                inserting ``the medicare eligibility 
                                age (as such term is defined in section 
                                216(m))'';
                            (ii) in subsection (e)(14)(D)(i)(II), by 
                        striking ``age 65'' and inserting ``the 
                        medicare eligibility age (as such term is 
                        defined in section 216(m))'';
                            (iii) in subsection (m)(1), by striking 
                        ``65 years of age'' and inserting ``the 
                        medicare eligibility age (as such term is 
                        defined in section 216(m))''; and
                            (iv) in subsection (aa)(2), by striking 
                        ``age 65'' and inserting ``the medicare 
                        eligibility age (as such term is defined in 
                        section 216(m))''.
                    (N) Medicaid medical assistance definition.--
                Section 1905(a) of the Social Security Act (42 U.S.C. 
                1396d(a)) is amended--
                            (i) in clause (iii), by striking ``65 years 
                        of age'' and inserting ``the medicare 
                        eligibility age (as such term is defined in 
                        section 216(m))''; and
                            (ii) in the matter following paragraph 
                        (29)(B), by striking ``65 years of age'' and 
                        inserting ``of medicare eligibility age (as 
                        such term is defined in section 216(m))''.
                    (O) Qualified medicare beneficiary definition.--
                Section 1905(p)(2)(C) of the Social Security Act (42 
                U.S.C. 1396d(p)(2)(C)) is amended by striking ``age 
                65'' and inserting ``who are the medicare eligibility 
                age (as such term is defined in section 216(m))''.
                    (P) Medicaid definition for qualified severely 
                impaired individual.--Section 1905(q) of the Social 
                Security Act (42 U.S.C. 1396d(q)) is amended by 
                striking ``age 65'' and inserting ``the medicare 
                eligibility age (as such term is defined in section 
                216(m))''.
                    (Q) Medicaid definition for employed individual 
                with a medically improved disability.--Section 
                1905(v)(1)(A) of the Social Security Act (42 U.S.C. 
                1396d(v)(1)(A)) is amended by striking ``16, but less 
                than 65, years of age'' and inserting ``16 years of 
                age, but less than the medicare eligibility age (as 
                such term is defined in section 216(m))''.
                    (R) Liens, adjustments and recoveries, and 
                transfers of assets under medicaid.--Section 1917(c) of 
                the Social Security Act (42 U.S.C. 1396p(c)) is 
                amended--
                            (i) in paragraph (2)(B)(iv), by striking 
                        ``65 years of age'' and inserting ``the 
                        medicare eligibility age (as such term is 
                        defined in section 216(m))''; and
                            (ii) in paragraph (4)(A), by striking ``age 
                        65'' and inserting ``the medicare eligibility 
                        age (as such term is defined in section 
                        216(m))''.
            (2) Other provisions of law.--
                    (A) Contracts for health benefits for certain 
                members of uniformed services, former members, and 
                dependents.--Section 1086(d)(2)(B) of title 10, United 
                States Code, is amended by striking ``under 65 years of 
                age'' and inserting ``under the medicare eligibility 
                age (as such term is defined in section 216(m) of the 
                Social Security Act)''.
                    (B) Eligible individual definition for earned 
                income.--Section 32(c)(1)(A)(ii)(II) of the Internal 
                Revenue Code is amended by striking ``age 65'' and 
                inserting ``the preferred Medicare age (as such term is 
                described in section 216(m) of the Social Security 
                Act)''.
                    (C) Tax treatment of blue cross and blue shield 
                organizations.--Section 833(c)(3)(A)(iv) of the 
                Internal Revenue Code is amended by striking ``age 65'' 
                and inserting ``the medicare eligibility age (as such 
                term is defined in section 216(m) of the Social 
                Security Act)''.
                    (D) Community-based prevention and wellness 
                programs.--Section 4202 of the Patient Protection and 
                Affordable Care Act (42 U.S.C. 300u-14) is amended--
                            (i) in subsection (a)--
                                    (I) in paragraph (1), by striking 
                                ``who are between 55 and 64 years of 
                                age'' and inserting ``who are at least 
                                55 years of age but less than the 
                                medicare eligibility age (as such term 
                                is defined in section 216(m) of the 
                                Social Security Act)'';
                                    (II) in paragraph (2)(C), by 
                                striking ``the 55-to-64 year-old 
                                population'' and inserting ``the 
                                population of individuals who are at 
                                least 55 years of age but less than the 
                                medicare eligibility age (as such term 
                                is defined in section 216(m) of the 
                                Social Security Act)'';
                                    (III) in paragraph (3)(A), by 
                                striking ``who are between 55 and 64 
                                years of age'' and inserting ``who are 
                                at least 55 years of age but less than 
                                the medicare eligibility age (as such 
                                term is so defined)'';
                                    (IV) in paragraph (3)(C)(i), by 
                                striking ``who are between 55 and 64 
                                years of age'' and inserting ``who are 
                                at least 55 years of age but less than 
                                the medicare eligibility age (as such 
                                term is so defined)''; and
                                    (V) in paragraph (3)(D), by 
                                striking ``between 55 and 64 years of 
                                age'' and inserting ``at least 55 years 
                                of age but less than the medicare 
                                eligibility age (as such term is so 
                                defined)''; and
                            (ii) in subsection (b)(2)(A), by striking 
                        ``65 years of age'' and inserting ``the 
                        medicare eligibility age (as such term is 
                        defined in section 216(m) of the Social 
                        Security Act)''.

SEC. 103. NEW BENEFIT STRUCTURE UNDER UNIFIED MEDICARE.

    (a) In General.--Part E of title XVIII of the Social Security Act, 
as added by section 101, is amended by adding at the end the following:

                         ``Subpart 2--Benefits

``SEC. 1860E-21. UNIFIED PART A AND B DEDUCTIBLE.

    ``(a) In General.--Effective as of the general effective date, in 
the case of a Medicare enrollee--
            ``(1) the amount otherwise payable under part A and the 
        total amount of expenses incurred by the enrollee during a year 
        which would (except for this section) constitute incurred 
        expenses for which benefits payable under section 1833(a) are 
        determinable, shall be reduced under sections 1813(b) and 
        1833(b) by the amount of the unified deductible under 
        subsection (b); and
            ``(2) the enrollee shall be responsible for payment of such 
        amount.
    ``(b) Amount of Unified Deductible.--
            ``(1) In general.--The amount of the unified deductible 
        under this subsection shall be--
                    ``(A) for 2016, $550; or
                    ``(B) for a subsequent year, the amount specified 
                in this subsection for the preceding year increased by 
                the percentage increase in the per capita actuarial 
                value of benefits under parts A and B for such 
                subsequent year.
            ``(2) Rounding.--If any amount determined under paragraph 
        (1) is not a multiple of $10, such amount shall be rounded to 
        the nearest multiple of $10.
    ``(c) Application.--The unified deductible under this section for a 
year shall be applied, with respect to a Medicare enrollee--
            ``(1) with respect to benefits under part A, on the basis 
        of the amount that is payable for such benefits without regard 
        to any other copayments or coinsurance and before the 
        application of any such copayments or coinsurance;
            ``(2) with respect to benefits under part B, on the basis 
        of the total amount of the expenses incurred by the enrollee 
        during a year which would, except for the application of the 
        deductible, constitute incurred expenses from which benefits 
        payable under section 1833(a) are determinable, without regard 
        to any other copayments or coinsurance and before the 
        application of any such copayments or coinsurance;
            ``(3) instead of the deductibles described in sections 
        1813(b) and 1833(b); and
            ``(4) with respect to all items and services under parts A 
        and B.

``SEC. 1860E-22. UNIFORM COINSURANCE.

    ``(a) In General.--Subject to subsection (c) and section 1860E-23, 
with respect to a year (beginning with 2016), in the case of a Medicare 
enrollee (as defined in section 1860E-61(b))--
            ``(1) the amount otherwise payable under part A and the 
        total amount of expenses incurred by the enrollee during the 
        year which would (except for this section) constitute incurred 
        expenses for which benefits payable under section 1833(a) are 
        determinable, shall be reduced by a uniform coinsurance of 20 
        percent of such amount; and
            ``(2) the individual shall be responsible for payment of 
        the amount of such uniform coinsurance.
    ``(b) Application to All Items and Services.--The uniform 
coinsurance under this subsection for a year shall, subject to 
subsection (d)--
            ``(1) be applied with respect to items and services under 
        part A on the basis of the amount that is payable for such 
        items and services and in lieu of any other copayments or 
        coinsurance under such part;
            ``(2) be applied with respect to items and services under 
        part B on the basis of the total amount of the expenses 
        incurred by the individual during the year which would, except 
        for the application of the deductible, constitute incurred 
        expenses from which items and services payable under section 
        1833(a) are determinable, and in lieu of any other copayments 
        or coinsurance.
    ``(c) Application of Deductible.--Before applying subsection (a), 
with respect to payment under part A or B for items and services 
furnished to an individual, such individual shall be required to meet 
the unified deductible under section 1860E-21.
    ``(d) Authority To Apply Actuarially Equivalent Copayment.--
            ``(1) In general.--Subject to paragraph (2), the Secretary 
        may provide for the application of a copayment amount instead 
        of the coinsurance under this section in cases for which the 
        coinsurance cannot be readily computed at the time of provision 
        of the items or services involved or the imposition of a 
        copayment amount would simplify the administration of this 
        title.
            ``(2) Actuarial equivalence.--In applying paragraph (1), 
        the amount of any copayment established under such paragraph 
        with respect to a type of item or service shall be calculated 
        to provide, in the aggregate and taking into account the 
        application of this section, for cost-sharing that is 
        actuarially equivalent to the cost-sharing that would be 
        imposed under this section if this subsection did not apply.

``SEC. 1860E-23. OUT-OF-POCKET LIMIT.

    ``(a) In General.--Beginning with 2016, in the case of a Medicare 
enrollee, if the amount of the out-of-pocket cost-sharing of such 
enrollee for a calendar year equals or exceeds the catastrophic limit 
under subsection (b) for that year--
            ``(1) the enrollee shall not be responsible for additional 
        out-of-pocket cost-sharing incurred during that year; and
            ``(2) the Secretary shall establish procedures under which 
        the Secretary shall, in appropriate part from the Part A 
        Medicare FFS Account under section 1817 and the Part B Medicare 
        FFS Account under section 1841--
                    ``(A) pay on behalf of the enrollee the amount of 
                the additional out-of-pocket cost-sharing described in 
                paragraph (1) attributable to deductibles and 
                coinsurance described in subsection (c)(1); and
                    ``(B) reimburse the enrollee the amount of the 
                additional out-of-pocket cost-sharing described in 
                paragraph (1) attributable to deductibles and 
                coinsurance described in subsection (c)(2).
    ``(b) Catastrophic Limit.--The amount of the catastrophic limit 
under this subsection for a year shall be the dollar amount in effect 
under section 223(c)(2)(A)(ii) of the Internal Revenue Code of 1986 for 
self-only coverage for taxable years beginning in such year.
    ``(c) Out-of-Pocket Cost-Sharing Defined.--In this section, the 
term `out-of-pocket cost-sharing' means, with respect to an individual, 
the amount of costs incurred by the individual that are attributable 
to--
            ``(1) deductibles and coinsurance imposed under sections 
        1860E-21 and 1860E-22; and
            ``(2) deductibles and coinsurance imposed under standard 
        prescription drug coverage pursuant to section 1860D-2(b) or 
        alternative prescription drug coverage pursuant to section 
        1860D-2(c) offered by a prescription drug plan.

``SEC. 1860E-24. OFFERING OF TIERED COST-SHARING COVERAGE LEVELS 
              INSTEAD OF MEDIGAP.

    ``(a) Recognition of 3 Tiers of Cost-Sharing Coverage.--For plans 
years beginning on or after the general effective date, MA plans shall 
be classified based upon the following 3 tiers of cost-sharing coverage 
(each in this part referred to as a `tier of cost-sharing coverage'):
            ``(1) Tier 1.--A tier 1 level (in this part referred to as 
        `tier 1') for Medicare Advantage plans with cost-sharing 
        designed to provide benefits that are actuarially equivalent to 
        that provided under Medicare fee-for-service.
            ``(2) Tier 2.--A tier 2 level (in this part referred to as 
        `tier 2') for Medicare Advantage plans with cost-sharing 
        designed to provide benefits that would provide a level of 
        coverage of at least 85 percent of the expenses under Medicare 
        fee-for-service for the average Medicare enrollee.
            ``(3) Tier 3.--A tier 3 level (in this part referred to as 
        `tier 3') for Medicare Advantage plans with cost-sharing 
        designed to provide benefits that would provide a level of 
        coverage of at least 95 percent of the expenses under Medicare 
        fee-for-service for the average Medicare enrollee.
For purposes of this Act, Medicare fee-for-service shall be included in 
tier 1.
    ``(b) Assuring Access to a Choice of Coverage.--
            ``(1) Choice of at least two plans in each area and tier.--
                    ``(A) In general.--The Medicare Choices Commission 
                shall ensure that there is available, consistent with 
                subparagraph (B), a choice of enrollment in at least 2 
                qualifying plans (as defined in paragraph (3)) for each 
                tier of cost-sharing coverage and each MA region.
                    ``(B) Requirement for different plan sponsors.--The 
                requirement in subparagraph (A) is not satisfied with 
                respect to a region if only one entity offers all the 
                qualifying plans in the region.
                    ``(C) Qualifying plan defined.--For purposes of 
                this section, the term `qualifying plan' means--
                            ``(i) with respect to tier 1, Medicare fee-
                        for-service or any MA-PD plan that is not 
                        classified under tier 2 or tier 3; or
                            ``(ii) with respect to any other tier, an 
                        MA-PD plan that is classified under the 
                        respective tier.
            ``(2) Fallback plan.--In order to ensure access pursuant to 
        paragraph (1) in an MA region, with respect to the offering of 
        plans in a tier, if such access is not provided in such region, 
        the Medicare Choices Commission shall direct the Secretary to 
        provide for the offering of a fallback plan in such tier for 
        that region in a similar manner that the Secretary provides for 
        the offering of a fallback prescription drug plan under section 
        1860D-11(g) in an area that does not provide access described 
        in section 1860D-3(a).
    ``(c) Medigap.--
            ``(1) Limitation on new enrollment.--Subject to paragraph 
        (2), a health insurance issuer that offers a Medicare 
        supplemental health insurance policy (as defined in section 
        1882(g)(1)) may not enroll an individual under such policy on 
        or after the general effective date.
            ``(2) Treatment of current medigap enrollees.--
                    ``(A) Permitted to continue under medigap.--In the 
                case of an individual who, as of the day before the 
                general effective date is entitled to benefits under 
                part A or enrolled under part B and is enrolled under a 
                Medicare supplemental health insurance policy certified 
                under section 1882, such individual may choose to 
                remain enrolled under such policy or disenroll and 
                change enrollment to a different policy so certified 
                during a period and in accordance with a process 
                specified by the Secretary.
                    ``(B) Treatment of medigap policies.--
                            ``(i) In general.--With respect to plan 
                        years beginning on or after January 1, 2016, a 
                        Medicare supplemental health insurance policy 
                        shall be certified under section 1882 only with 
                        respect to individuals described in 
                        subparagraph (A) and only if such policy is 
                        modified to be in accordance with standards 
                        revised pursuant to clause (ii).
                            ``(ii) New standards.--The Secretary shall 
                        request the National Association of Insurance 
                        Commissioners to revise the standards for all 
                        benefit packages for Medicare supplemental 
                        health insurance policies under section 1882(p) 
                        to be in accordance with the cost-sharing 
                        provisions established by this subpart.
                    ``(C) Availability of substitute policies with 
                guaranteed issue.--
                            ``(i) In general.--The issuer of a medicare 
                        supplemental policy--
                                    ``(I) may not deny or condition the 
                                issuance or effectiveness of a medicare 
                                supplemental policy that is offered and 
                                is available for issuance to new 
                                enrollees by such issuer;
                                    ``(II) may not discriminate in the 
                                pricing of such policy, because of 
                                health status, claims experience, 
                                receipt of health care, or medical 
                                condition; and
                                    ``(III) may not impose an exclusion 
                                of benefits based on a pre-existing 
                                condition under such policy, in the 
                                case of an individual described in 
                                clause (ii) who seeks to enroll under 
                                the policy during a period described in 
                                subparagraph (A).
                            ``(ii) Individual covered.--An individual 
                        described in this subparagraph with respect to 
                        the issuer of a medicare supplemental policy is 
                        an individual who--
                                    ``(I) is described in subparagraph 
                                (A) and, as of the date described in 
                                such subparagraph, is enrolled under a 
                                medicare supplemental policy; and
                                    ``(II) terminates enrollment in 
                                such policy and submits evidence of 
                                such termination along with the 
                                application for the policy under 
                                subparagraph (A) during the period 
                                described in such subparagraph.
                            ``(iii) Limitation.--Subclause (i) shall 
                        apply to an issuer of a medicare supplemental 
                        policy, with respect to an individual, only in 
                        the case the actuarial value of the benefits 
                        under such policy does not substantially exceed 
                        the actuarial value of the policy described in 
                        clause (ii)(II) with respect to which the 
                        individual terminated enrollment.

``SEC. 1860E-25. CONTRIBUTIONS INTO HEALTH INDIVIDUAL RETIREMENT 
              ACCOUNTS.

    ``(a) Contributions.--The Secretary shall establish procedures to 
ensure that, for each year (beginning with 2016), the Secretary shall 
deposit in the health individual retirement account (as defined in 
section 201(1) of the Save and Strengthen Medicare Act of 2012) of an 
account holder (as defined in section 201(2) of such Act) who is a 
Medicare fee-for-service enrollee the per capita Medicare preventive 
benefit amount under subsection (b) for such year. In no case shall a 
deposit be made under the previous sentence in the case of an 
individual described in subparagraph (A)(ii) of section 1935(c)(6) 
(taking into account the application of subparagraph (B) of such 
section) in a State that has elected the maintenance of effort option 
described in section 1944(b)(2).
    ``(b) Per Capita Medicare Preventive Benefit Amount.--
            ``(1) In general.--For purposes of subsection (b), the per 
        capita Medicare preventive benefit amount is equal to--
                    ``(A) with respect to 2016, the amount by which--
                            ``(i) the average per capita amount 
                        estimated to have been expended under Medicare 
                        fee-for-service for preventive services during 
                        the previous year; exceeds
                            ``(ii) the average per capita amount that 
                        would have been expended under Medicare fee-
                        for-service for such services during such 
                        previous year if payment under Medicare fee-
                        for-service for such services had been subject 
                        to the deductible and cost-sharing provisions 
                        of section 1833;
                    ``(B) with respect to 2017, the amount by which--
                            ``(i) the actual average per capita amount 
                        expended under Medicare fee-for-service for 
                        preventive services during 2015; exceeds
                            ``(ii) the average per capita amount that 
                        would have been expended under Medicare fee-
                        for-service for such services during such year 
                        if payment under Medicare fee-for-service for 
                        such services had been subject to the 
                        deductible and cost-sharing provisions of 
                        section 1833;
                increased by the annual percentage increase in the 
                consumer price index (all items; U.S. city average) as 
                of September of such previous year; and
                    ``(C) with respect to a subsequent year, the amount 
                determined under this paragraph for the previous year, 
                increased by the annual percentage increase in the 
                consumer price index (all items; U.S. city average) as 
                of September of such previous year.
            ``(2) Preventive services.--For purposes of this section, 
        the term `preventive services' means preventive services that 
        are exempt from coinsurance under section 1833(a)(1)(Y) for 
        2015.
    ``(c) Payment.--
            ``(1) From cms operating account.--Payment of each per 
        capita Medicare preventive benefit amount shall be made in 
        appropriate part from the Part A Medicare FFS Account under 
        section 1817 and the Part B Medicare FFS Account under section 
        1841.
            ``(2) Availability.--Payment of a per capita Medicare 
        preventive benefit amount for a year to the health individual 
        retirement account of an individual shall be made available to 
        such account only for such year. If, by December 31 of such 
        year, the amount of the per capita Medicare preventive benefit 
        amount deposited for such year exceeds the amount distributed 
        from the account of the individual (in accordance with section 
        206(a) of the Save and Strengthen Medicare Act of 2012) during 
        such year, such excess shall be returned to the Medicare FFS 
        Account in accordance with procedures established under 
        subsection (e).

``SEC. 1860E-26. REQUIRING MA PLANS TO OFFER PRESCRIPTION DRUG 
              COVERAGE.

    ``Beginning for plan years beginning on or after the general 
effective date, the only MA plans that may be offered under part C are 
MA-PD plans.''.
    (b) Application of Out-of-Pocket Limit to MA-PD Plans.--
            (1) In general.--Section 1852(a)(1)(B) of the Social 
        Security Act (42 U.S.C. 1395w-22(a)(1)(B)) is amended--
                    (A) in clause (i), by striking ``clause (iii)'' and 
                inserting ``clauses (iii) and (vi)''; and
                    (B) by adding at the end the following new clause:
                            ``(vi) Out-of-pocket limit.--The provisions 
                        of section 1860E-23--
                                    ``(I) shall apply to individuals 
                                enrolled under an MA-PD plan in the 
                                same manner as such provisions apply to 
                                Medicare enrollees under such section, 
                                except that in lieu of the application 
                                of subsection (a)(2) of such section 
                                the MA-PD plan shall establish 
                                procedures to provide for payment of 
                                any additional out-of-pocket cost-
                                sharing described in subsection (a)(1) 
                                of such section incurred by individuals 
                                enrolled under the MA-PD plan; and
                                    ``(II) as applied under subclause 
                                (I), may not be waived by application 
                                of this subparagraph.
                        In applying subsection (b) of section 1860E-23 
                        pursuant to the previous sentence, an MA-PD 
                        plan may substitute a dollar amount that is 
                        less than the dollar amount specified under 
                        such subsection.''.
            (2) Exempting ma-pd plans offering alternative prescription 
        drug coverage from part d deductible and out-of-pocket limit 
        requirements.--Section 1860D-2(c) of the Social Security Act 
        (42 U.S.C. 1395w-102(c)) is amended--
                    (A) in paragraph (2), by striking ``The 
                deductible'' and inserting ``In the case of a 
                prescription drug plan, the deductible''; and
                    (B) in paragraph (3), by striking ``The coverage 
                provides'' and inserting ``In the case of a 
                prescription drug plan, the coverage provides''.
    (c) Prescription Drug Plans Required To Report Enrollees' Out-of-
Pocket Cost-Sharing.--Section 1860D-12(b) of the Social Security Act 
(42 U.S.C. 1395w-112(b)) is amended by adding at the end the following 
new paragraph:
            ``(7) Out-of-pocket cost-sharing reports.--Each contract 
        entered into with a PDP sponsor under this part with respect to 
        a prescription drug plan offered by such sponsor shall require 
        that, with respect to each claim submitted for items or 
        services furnished to an individual enrolled under the plan 
        pursuant to the contract, the sponsor submits to the Secretary 
        information on the amount of out-of-pocket cost-sharing (as 
        defined in section 1860E-23(c)) applicable to such enrollee for 
        such items or services.''.
    (d) Conforming Amendments.--
            (1) Section 1813 of the Social Security Act (42 U.S.C. 
        1395e) is amended--
                    (A) in subsection (a), by inserting ``Subject to 
                subpart 2 of part E:'' before paragraph (1); and
                    (B) in subsection (b), by inserting ``Subject to 
                subpart 2 of part E:'' before paragraph (1).
            (2) Section 1833 of such Act (42 U.S.C. 1395l) is amended--
                    (A) in subsection (a), in the matter preceding 
                paragraph (1), by inserting ``and subpart 2 of part E'' 
                after ``succeeding provisions of this section'';
                    (B) in subsection (b), in the first sentence, by 
                striking ``Before applying'' and inserting ``Subject to 
                subpart 2 of part E, before applying'';
                    (C) in subsection (c)(1), in the matter preceding 
                subparagraph (A), by inserting ``subject to subpart 2 
                of part E,'' after ``this part,'';
                    (D) in subsection (f), by striking ``In 
                establishing'' and inserting ``Subject to subpart 2 of 
                part E, in establishing''; and
                    (E) in subsection (g)(1), by inserting ``and 
                subpart 2 of part E'' and ``paragraphs (4) and (5)''.
            (3) Section 1882(a)(2) of such Act is amended by striking 
        ``No medicare'' and inserting ``Subject to section 1860E-24(c), 
        no medicare''.

SEC. 104. LATE ENROLLMENT PENALTY NOT TO APPLY FOR MONTHS OF ANY HEALTH 
              COVERAGE.

    (a) In General.--Section 1839(b) of the Social Security Act (42 
U.S.C. 1395r) is amended in the second sentence, by inserting before 
the period at the end the following: ``or months during which the 
individual has any other health coverage''.
    (b) Effective Date.--The amendment made by paragraph (1) shall 
apply for months of coverage beginning after the date of the enactment 
of this Act.

SEC. 105. COMPETITIVE BIDDING AND PREMIUMS UNDER UNIFIED MEDICARE.

    (a) In General.--Part E of title XVIII of the Social Security Act, 
as added by section 101 and amended by section 103, is further amended 
by adding at the end the following:

             ``Subpart 3--Competitive Bidding and Premiums

``SEC. 1860E-31. APPLICATION OF COMPETITIVE BIDDING AND CHANGES IN 
              PREMIUMS.

    ``(a) Competitive Bidding Based on Levels of Coverage and MA 
Regions.--In applying section 1854 for plan years beginning on or after 
the general effective date the following rules shall apply:
            ``(1) Separate bids for each tier of cost-sharing 
        coverage.--A Medicare Advantage organization shall submit a 
        separate bid for each tier of cost-sharing coverage for each 
        MA-PD plan offered by such organization.
            ``(2) Bids.--Any bid submitted by a Medicare Advantage 
        organization under such section--
                    ``(A) with respect to an MA region, shall provide 
                for the offering of an MA-PD plan in each county within 
                such region; and
                    ``(B) with respect to an MA local area, shall 
                provide for the offering of an MA-PD plan in each 
                county within such area.
            ``(3) Uniform bids for all areas within an ma region.--Any 
        bid submitted by a Medicare Advantage organization under such 
        section shall, as specified by the organization, be uniform 
        for--
                    ``(A) all plans offered in any MA local area within 
                an MA region; or
                    ``(B) subject to paragraph (4), all plans offered 
                within a county; and
        section 1854(h) shall apply.
            ``(4) Authority of medicare choices commission to reject 
        bids.--In the case that the Medicare Choices Commission 
        determines that a Medicare Advantage organization is submitting 
        bids in accordance with paragraph (3)(B) in a manner that 
        demonstrates a disproportionate change in the amounts of the 
        bids for such areas compared to the actual costs for providing 
        benefits in such areas, the Commission may reject such bids.
            ``(5) Acceptance of bid.--
                    ``(A) In general.--A Medicare Advantage 
                organization shall not be eligible to submit a bid 
                under such section unless the organization provides 
                assurances satisfactory to the Medicare Choices 
                Commission that the organization will accept an award 
                of a contract under this part pursuant to such bid.
                    ``(B) Certain modifications permitted.--Nothing in 
                subparagraph (A) shall be construed as preventing a 
                Medicare Advantage organization that submits a bid 
                under such section from withdrawing or modifying the 
                bid before the date on which the risk-adjusted 
                benchmark amount under paragraph (3)(B)(i) or 
                (4)(B)(i), as appropriate, of section 1854(b) is 
                calculated for the area and year involved.
    ``(b) Adjustment in Payment to MA Plans.--
            ``(1) In general.--In applying section 1853 for plans years 
        beginning on or after the general effective date, the amount 
        specified in subparagraph (B) of section 1853(a)(1) shall be 
        \1/12\ of 88 percent of the revised benchmark for the region 
        and year involved.
            ``(2) Revised benchmark.--
                    ``(A) In general.--The Medicare Choices Commission 
                shall compute a revised benchmark for each plan year 
                and each MA region.
                    ``(B) Revised benchmark.--Subject to the succeeding 
                provisions of this paragraph, the revised benchmark for 
                a plan year and MA region is equal to the sum of--
                            ``(i) the phase-out percentage (as 
                        specified in subparagraph (C)) of the average 
                        of the lowest and third lowest bid amount 
                        submitted for such year and region for the tier 
                        1 level of cost-sharing coverage under section 
                        1860E-24(b), taking into account section 1860E-
                        32(b); and
                            ``(ii) the phase-in percentage (as 
                        specified in subparagraph (C)) of the lowest 
                        bid amount so submitted.
                    ``(C) Phase out and phase-in percentages.--In 
                subparagraph (B), with respect--
                            ``(i) to the first plan year in which this 
                        section applies, the phase-out percentage shall 
                        be 100 percent and the phase-in percentage 
                        shall be 0 percent; and
                            ``(ii) each succeeding plan year the phase-
                        out percentage shall be the phase-out 
                        percentage for the previous year decreased by 
                        20 percentage points (but not below 0 percent) 
                        and the phase-in percentage shall be 100 
                        percent minus the phase-out percentage for the 
                        year.
                    ``(D) Limitation.--In no case shall the revised 
                benchmark for a plan year and MA region be lower than 
                the lowest bid amount submitted for such year and 
                region that when combined with all bids below such bid 
                amount would result in the capacity to provide coverage 
                to all Medicare enrollees in such region.
            ``(3) Review and revisions of risk adjustment.--
                    ``(A) In general.--The Medicare Choices Commission 
                shall review and, as the Commission determines 
                appropriate, revise the risk adjustments payment 
                mechanism under section 1853(a)(1)(C) for purposes of 
                applying such mechanism under this section and under 
                section 1860E-32, including pursuant to section 1860E-
                33(a).
                    ``(B) Requirements for revisions.--In making the 
                revisions under subparagraph (A) to the risk 
                adjustments payment mechanism described in such 
                subparagraph, the following shall apply:
                            ``(i) Incorporating private health 
                        insurance data.--The Medicare Choices 
                        Commission shall incorporate data on the cost 
                        and utilization of services by individuals 
                        receiving benefits under a group health plan or 
                        health insurance coverage offered in the 
                        individual or group market who have the same 
                        case characteristics (such as conditions or 
                        combinations of conditions) as such 
                        characteristics that are to be used under such 
                        mechanism for risk adjusting payment amounts to 
                        Medicare Advantage organizations under part C 
                        and Medicare fee-for-service under section 
                        1860E-32, including pursuant to section 1860E-
                        33(a).
                            ``(ii) Inclusion of number of conditions.--
                        The Medicare Choices Commission shall provide 
                        that a risk score under such mechanism, with 
                        respect to an individual, includes an indicator 
                        for the number of chronic conditions with which 
                        the individual has been diagnosed.
                            ``(iii) Use of 2 years of diagnosis data.--
                        The Medicare Choices Commission shall ensure 
                        that a risk score under such mechanism, with 
                        respect to an individual, shall reflect two 
                        years of diagnosis data, to the extent 
                        available.
                    ``(C) Evaluating addition of retrospective risk 
                transfer pool.--In conducting the review under 
                subparagraph (A) of the risk adjustments payment 
                mechanism described in such subparagraph, the Medicare 
                Choices Commission shall evaluate the extent to which 
                it would be appropriate to establish, in addition to 
                such risk adjustments payment mechanism, a 
                retrospective risk transfer pool--
                            ``(i) that would enable MA organizations, 
                        with respect to MA-PD plans offered by such 
                        organization, and the Secretary, with respect 
                        to Medicare fee-for-service, to collectively 
                        devise and administer procedures for adjusting 
                        for enrollee selection effects that are not, in 
                        the judgment of the organizations, with respect 
                        to such plans, and the Secretary, with respect 
                        to Medicare fee-for-service, adequately 
                        addressed by the risk adjustments payment 
                        mechanism;
                            ``(ii) under which each MA-PD plan and 
                        Medicare fee-for-service must participate;
                            ``(iii) which shall be operated by the MA 
                        organizations offering such MA-PD plans and the 
                        Secretary under the supervision of the Medicare 
                        Choices Commission; and
                            ``(iv) which would be funded entirely out 
                        of premiums and assessments on such plans and 
                        Medicare fee-for-service.
            ``(4) Application on a regional basis.--In applying 
        sections 1853 and 1854, the revised benchmark under this 
        subsection for each MA local area within an MA region shall be 
        the revised benchmark for such region.
    ``(c) Premiums Under MA Plans.--
            ``(1) In general.--For plans years beginning on or after 
        the general effective date, sections 1853 and 1854 shall be 
        applied--
                    ``(A) by substituting the modified monthly basic 
                beneficiary premium described in paragraph (2)(A) for 
                the MA monthly basic beneficiary premium defined in 
                section 1854(b)(2)(A); and
                    ``(B) by substituting the revised benchmark under 
                subsection (b) for the unadjusted MA area specific non-
                drug monthly benchmark amount (as defined in section 
                1853(j)).
            ``(2) Modified monthly basic beneficiary premium.--
                    ``(A) In general.--The modified monthly basic 
                beneficiary premium described in this paragraph, with 
                respect to a month in a year and an MA plan offered in 
                a tier of cost-sharing coverage in an MA region, is the 
                amount (if any) by which the MA non-drug bid described 
                in subparagraph (B) for such plan exceeds \1/12\ of the 
                revised benchmark described in subsection (b) for the 
                year and region.
                    ``(B) MA non-drug bid.--The MA non-drug bid 
                described in this subparagraph is, with respect to a 
                month and an MA plan offered in a tier of cost-sharing 
                coverage, the portion of the bid amount submitted under 
                clause (i) of section 1854(a)(6)(A) for the tier 
                benefit level, MA region, and year involved that is 
                attributable under clause (ii)(I) of such section to 
                the provision of benefits under Medicare fee-for-
                service.
            ``(3) Application on a regional basis.--In applying 
        sections 1853 and 1854, the average per capita monthly savings 
        under section 1854(b)(3) shall be computed by substituting each 
        region for a State and all plans within the region for MA local 
        plans within a State.
            ``(4) Treatment of beneficiary rebate rule.--Section 
        1854(b)(1)(C) shall not apply to the modified monthly basic 
        beneficiary premium applied under this subsection.
            ``(5) Treatment of individuals electing earlier benefit 
        coverage.--Section 1860E-32(c)(3) shall apply to an MA 
        organization and the premium charged under section 1854(b)(1) 
        to an individual enrolled in an MA plan offered by such 
        organization who makes an election described in such section 
        1860E-32(c)(3) in the same manner as such section applies to 
        the Secretary and an individual enrolled under Medicare fee-
        for-service who makes such an election.
    ``(d) Annual Report.--Beginning for 2016, the Medicare Choices 
Commission shall submit to Congress an annual report on any 
questionable activities or irregularities that have arisen in the 
bidding process under part C, as modified by this section, during such 
year.

``SEC. 1860E-32. APPLICATION OF COMPETITIVE BIDDING TO MEDICARE FEE-
              FOR-SERVICE.

    ``(a) Submission of Bid.--
            ``(1) In general.--The Secretary shall submit a bid for 
        Medicare fee-for-service (in this part referred to as a 
        `Medicare FFS bid') offered for each MA region in the same 
        manner as a bid submitted by a Medicare Advantage organization 
        under section 1854 for offering an MA plan under such tier.
            ``(2) Basis for bid.--In applying paragraph (1) in 
        computing the average revenue requirements under section 
        1854(a)(6)(A)(i) for a plan year, the Secretary shall base such 
        requirements on--
                    ``(A) adjusted average per capita costs payable 
                during the previous plan year under parts A and B 
                attributable to all individuals enrolled under Medicare 
                fee-for-service in such region, including 
                administrative costs attributable to such individuals 
                and costs attributable to such individuals with respect 
                to per capita Medicare preventive benefit amounts 
                contributed under section 1860E-25 into health 
                individual retirement accounts, (as estimated by the 
                Secretary), increased by
                    ``(B) the Secretary's estimate of the percentage 
                increase in the per capita actuarial value of benefits 
                under such parts for the plan year involved.
            ``(3) Modification.--In applying this subsection, clause 
        (iii) of section 1854(a)(6)(B) shall not be construed as 
        applying to Medicare fee-for-service.
    ``(b) Treatment of Bid as a Tier 1 Bid Under Part C.--Any bid under 
subsection (a) for a region shall be considered as a bid for an MA plan 
offered in the region with tier 1 cost-sharing coverage for purposes of 
this part and sections 1853 and 1854.
    ``(c) Premiums Adjustment.--
            ``(1) In general.--Beginning for months beginning on or 
        after the general effective date--
                    ``(A) there shall be a combined monthly premium 
                amount described in paragraph (2) charged to a Medicare 
                enrollee, with respect to coverage under Medicare fee-
                for-service;
                    ``(B) such premium amount under subparagraph (A) 
                shall be instead of the part B monthly premium under 
                section 1839; and
                    ``(C) such premium shall be separate from (and in 
                addition to) any monthly beneficiary premium that may 
                apply to the individual with respect to a prescription 
                drug plan under part D.
            ``(2) Combined monthly premium.--
                    ``(A) In general.--The combined monthly premium 
                amount under this paragraph for a Medicare enrollee in 
                an MA region shall be, subject to subparagraph (D) and 
                section 1860E-41(b), equal to the combined monthly base 
                amount under subparagraph (B), adjusted in accordance 
                with subparagraphs (C) and (D).
                    ``(B) Combined monthly base amount.--The combined 
                monthly base amount shall be an amount calculated in a 
                manner similar to the manner in which the part B 
                monthly premium is calculated under subsections (a) and 
                (c) of section 1839, in effect as of December 31, 2015, 
                except that in applying such section--
                            ``(i) the actuarial rate determined under 
                        the second sentence of subsection (a)(1) of 
                        such section shall be an amount the Secretary 
                        estimates to be necessary so that the aggregate 
                        amount for the calendar year involved with 
                        respect to all Medicare enrollees will equal 
                        the total of the benefits and administrative 
                        costs which the Secretary estimates will be 
                        payable from the Federal Hospital Insurance 
                        Trust Fund under section 1817 and the Federal 
                        Supplementary Medical Insurance Trust Fund 
                        under section 1841 for services performed and 
                        related administrative costs incurred in such 
                        calendar year with respect to such enrollees 
                        under parts A and B; and
                            ``(ii) by substituting `24 percent' for `50 
                        percent' in subsection (a)(3) of such section.
                    ``(C) Application of other provisions.--The 
                combined monthly base amount shall be subject to 
                adjustment in the same manner as the part B monthly 
                premium calculated under section 1839(a) is subject to 
                adjustment under subsections (b) and (i) of such 
                section, except that--
                            ``(i) in applying the late enrollment 
                        penalty under subsection (b) of such section, 
                        the initial enrollment period of the individual 
                        shall be the enrollment period specified by the 
                        Secretary pursuant to subpart 1 instead of the 
                        initial enrollment period described in such 
                        section 1839(b); and
                            ``(ii) the income reduction under 
                        subsection (i) of such section shall be applied 
                        in accordance with section 1860E-41(a).
                Adjustments under this subparagraph shall be made 
                without regard to any adjustment under subparagraph 
                (D).
                    ``(D) Amount of adjustment for non-ma enrollees.--
                Under this subparagraph, with respect to a Medicare 
                fee-for-service enrollee for a month who resides in an 
                MA region, if the Medicare FFS bid under subsection (a) 
                for the region and month exceeds such revised 
                benchmark, the amount of the combined monthly base 
                amount for the enrollee for the month (without regard 
                to any adjustment under subparagraph (C)) shall be 
                increased, subject to subparagraph (E), by the amount 
                by which such bid exceeds such benchmark.
                    ``(E) Transition for current traditional ffs 
                medicare beneficiaries.--In the case of an individual 
                who, as of December 31, 2015, is entitled to (or 
                enrolled for) benefits under part A or enrolled under 
                part B but is not enrolled in an MA plan--
                            ``(i) with respect to months in 2016, the 
                        adjustment under subparagraph (D) for such 
                        individual for such months may in no case 
                        exceed 20 percent of the part B monthly premium 
                        amount under section 1839 that was applicable 
                        to such individual for months in the previous 
                        year; and
                            ``(ii) with respect to months in a 
                        subsequent year (before 2026), such adjustment 
                        for such months may in no case exceed 20 
                        percent of the combined monthly premium amount 
                        applicable to such individual (not taking into 
                        account subparagraph (C)) for months in the 
                        previous year.
            ``(3) Treatment of individuals electing earlier benefit 
        coverage.--In the case of an individual who elects under 
        section 216(m) a Medicare eligibility age of at least 65 but 
        less than the preferred Medicare age applicable to such 
        individual under paragraph (2)(B) of such section, the 
        Secretary shall adjust the premium otherwise computed for 
        individuals with a Medicare eligibility age of the preferred 
        Medicare age in a manner so that, on an actuarial basis over 
        the lifetime of individuals making such an election (taking 
        into account the relevant risk characteristics of individuals 
        who as a class have selected the respective age compared to 
        those who have not made the election), the actuarial value of 
        the benefits (net of premiums) is equal among such groups.
            ``(4) Payment of premiums.--The provisions of section 
        1854(d)(2) shall apply to the payment and collection of 
        combined monthly premium amounts under this subsection in a 
        similar manner as such provisions apply to the payment to and 
        collection by an MA organization of monthly premiums under part 
        C.

``SEC. 1860E-33. ENSURING A LEVEL PLAYING FIELD.

    ``(a) In General.--Except as specified otherwise in this part, the 
Secretary and Medicare fee-for-service shall be subject to requirements 
that are applicable under this title to an MA organization and Medicare 
Advantage plan, and payments shall be made to the Secretary, with 
respect to coverage of an individual under Medicare fee-for-service in 
the same manner as payments are made under section 1853(a)(1) to an MA 
organization, with respect to coverage of an individual under a 
Medicare Advantage plan offered by such organization.
    ``(b) Ensuring Collection of Quality and Risk Data.--The Medicare 
Choices Commission shall establish procedures to ensure that quality 
data and data on risk factors of Medicare enrollees are collected and 
reported with respect to Medicare fee-for-service in the same manner as 
such data are collected and reported with respect to Medicare Advantage 
plans.
    ``(c) Noninterference Rules.--
            ``(1) Negotiations between ma plans and providers.--In 
        order to promote competition under this title and in carrying 
        out this title, neither the Secretary nor the Medicare Choices 
        Commission may interfere with the negotiations between any MA 
        organization and a hospital, physician, or other provider of 
        services or supplier.
            ``(2) Bidding process.--The Medicare Choices Commission may 
        not reject a bid submitted by an MA organization for the 
        offering of an MA-PD plan based on the amount of such bid. 
        Nothing in the previous sentence shall be construed as 
        affecting the regulatory authority of the Commission or as 
        affecting the authority of the Commission to reject a bid 
        pursuant to section 1860E-31(a)(3).
            ``(3) Treatment of regulatory functions.--
                    ``(A) In general.--The Secretary, through the 
                Centers of Medicare & Medicaid Services, shall maintain 
                regulatory functions associated with conditions of 
                participation applicable to participation of providers 
                of services and suppliers in Medicare fee-for-service.
                    ``(B) No application to providers with respect to 
                ma plans.--Beginning on the general effective date, the 
                Secretary shall not have the authority to apply any 
                conditions of participation or similar requirements on 
                providers of services and suppliers insofar as they are 
                not related to Medicare fee-for-service.
                    ``(C) GAO report.--By not later than January 31, 
                2015, the Comptroller General of the United States 
                shall submit to Congress a report containing 
                recommendations on the extent to which any condition of 
                participation or requirement described in paragraph (2) 
                should be applied to providers of services and 
                suppliers furnishing items and services under this 
                title under arrangements with Medicare Advantage plans.
    ``(d) Report.--
            ``(1) Initial report.--Not later than September 30, 2014, 
        the Medicare Choices Commission shall submit to Congress a 
        report that--
                    ``(A) identifies all the requirements that are 
                applicable to MA organizations and Medicare Advantage 
                plans and the extent to which such requirements are 
                also applicable to the Secretary and Medicare fee-for-
                service; and
                    ``(B) includes a plan for achieving the requirement 
                described in subsection (a).
            ``(2) GAO reports.--Not later than January 1, 2016, and 
        every 3 years thereafter, the Comptroller General of the United 
        States shall submit to Congress a report on the extent to which 
        the Secretary and Medicare fee-for-service are in compliance 
        with subsection (a) and the plan described in paragraph 
        (1)(B).''.
    (b) Conforming Amendments.--
            (1) Section 1839(a) of the Social Security Act is amended 
        by inserting after the subsection enumerator the following: 
        ``Subject to section 1860E-32:''.
            (2) Section 1839(i)(1) of the Social Security Act is 
        amended by striking ``In the case'' and inserting ``Subject to 
        sections 1860E-32 and 1860E-41, in the case''.
            (3) Section 1853(a)(1)(A) of the Social Security Act is 
        amended by striking ``and section 1859(e)(4)'' and inserting 
        ``, section 1859(e)(4), and subpart 3 of part E''.
            (4) Section 1853(j) of such Act is amended by inserting 
        ``and subpart 3 of part E'' after ``subsection (o)''.
            (5) Section 1854 of such Act is amended--
                    (A) in subsection (a), after the heading, by 
                inserting ``Subject to subpart 3 of part E:'';
                    (B) in subsection (b), after the heading, by 
                inserting ``Subject to subpart 3 of part E:'';
                    (C) in subsection (d), after the heading, by 
                inserting ``Subject to subpart 3 of part E:''; and
                    (D) in subsection (e), after the heading, by 
                inserting ``Subject to subpart 3 of part E:''.

SEC. 106. SEPARATE MEDICARE FFS ACCOUNTS AND OTHER FINANCING UNDER 
              UNIFIED MEDICARE.

    (a) Separate Medicare FFS Accounts.--
            (1) Under federal hospital insurance trust fund.--Section 
        1817 of the Social Security Act (42 U.S.C. 1395i) is amended by 
        adding at the end the following new subsection:
    ``(l) Part A Medicare FFS Account.--
            ``(1) Establishment.--There is hereby established within 
        the Trust Fund an account to be known as the `Part A Medicare 
        FFS account' for the receipts and disbursements attributable to 
        the operation of Medicare fee-for-service (as defined in 
        section 1860E-61(b)) insofar as it relates to the program under 
        this part, as modified under part E, including the transition 
        funding under paragraph (2)(B). Section 1854(g) shall apply to 
        receipts described in the previous sentence in the same manner 
        as such section applies to payments or premiums described in 
        such section.
            ``(2) Funding.--
                    ``(A) In general.--The Part A Medicare FFS Account 
                shall consist of such gifts and bequests as may be made 
                as provided in section 201(i)(1), as applied under this 
                section, accrued interest on balances in the Part A 
                Medicare FFS Account, and such amounts as may be 
                deposited in, or appropriated to, such Part A Medicare 
                FFS Account as provided in this subsection.
                    ``(B) Transition funding.--
                            ``(i) In general.--In order to provide for 
                        funding relating to transitional costs for 
                        carrying out Medicare fee-for-service insofar 
                        as it relates to the program under this part, 
                        as modified under part E, as of the general 
                        effective date (as defined in section 1860E-
                        62), there shall be transferred from the Trust 
                        Fund to the Part A Medicare FFS Account such 
                        sums as specified necessary by the Medicare 
                        Choices Commission. In order to provide for 
                        initial claims reserves before the collection 
                        of premiums, there shall be transferred from 
                        the Trust Fund to the Part A Medicare FFS 
                        Account such sums as necessary to cover 90 days 
                        worth of claims reserves based on projected 
                        enrollment.
                            ``(ii) Amortization of transition 
                        funding.--The Secretary shall provide for the 
                        repayment to the Trust Fund of the funding 
                        transferred under clause (i) in an amortized 
                        manner over the 10-year period beginning with 
                        the first plan year beginning on or after the 
                        general effective date (as defined in section 
                        1860E-62).
                            ``(iii) Limitation on funding.--Nothing in 
                        this paragraph shall be construed as 
                        authorizing any additional transfers to the 
                        Part A Medicare FFS Account, other than such 
                        amounts as are otherwise provided with respect 
                        to Medicare Advantage plans.
            ``(3) Separate from rest of trust fund.--Funds provided 
        under this subsection to the Part A Medicare FFS Account 
        shall--
                    ``(A) be kept separate from all other funds within 
                the Trust Fund, but shall be invested, and such 
                investments redeemed, in the same manner as all other 
                funds and investments within the Trust Fund; and
                    ``(B) notwithstanding the previous subsections of 
                this section, be managed and administered by the 
                Administrator of the Centers for Medicare & Medicaid 
                Services.''.
            (2) Under supplementary medical insurance trust fund.--
        Section 1841 of the Social Security Act (42 U.S.C. 1395t) is 
        amended by adding at the end the following new subsection:
    ``(j) Part B Medicare FFS Account.--
            ``(1) Establishment.--There is hereby established within 
        the Trust Fund an account to be known as the `Part B Medicare 
        FFS account' for the receipts and disbursements attributable to 
        the operation of Medicare fee-for-service (as defined in 
        section 1860E-61(b)) insofar as it relates to the program under 
        this part, as modified under part E, including the transition 
        funding under paragraph (2)(B). Section 1854(g) shall apply to 
        receipts described in the previous sentence in the same manner 
        as such section applies to payments or premiums described in 
        such section.
            ``(2) Funding.--
                    ``(A) In general.--The Part B Medicare FFS Account 
                shall consist of such gifts and bequests as may be made 
                as provided in section 201(i)(1), as applied pursuant 
                to this section, accrued interest on balances in the 
                Part B Medicare FFS Account, and such amounts as may be 
                deposited in, or appropriated to, the Part B Medicare 
                FFS Account as provided in this subsection.
                    ``(B) Transition funding.--
                            ``(i) In general.--In order to provide for 
                        funding relating to transitional costs for 
                        carrying out Medicare fee-for-service insofar 
                        as it relates to the program under this part, 
                        as modified under part E, as of the general 
                        effective date (as defined in section 1860E-
                        62), there shall be transferred from the Trust 
                        Fund to the Part B Medicare FFS Account such 
                        sums as specified necessary by the Medicare 
                        Choices Commission. In order to provide for 
                        initial claims reserves before the collection 
                        of premiums, there shall be transferred from 
                        the Trust Fund to the Part B Medicare FFS 
                        Account such sums as necessary to cover 90 days 
                        worth of claims reserves based on projected 
                        enrollment.
                            ``(ii) Amortization of transition 
                        funding.--The Secretary shall provide for the 
                        repayment to the Trust Fund of the funding 
                        transferred under clause (i) in an amortized 
                        manner over the 10-year period beginning with 
                        the first plan year beginning on or after the 
                        general effective date (as defined in section 
                        1860E-62).
                            ``(iii) Limitation on funding.--Nothing in 
                        this paragraph shall be construed as 
                        authorizing any additional transfers to the 
                        Part B Medicare FFS Account, other than such 
                        amounts as are otherwise provided with respect 
                        to Medicare Advantage plans.
            ``(3) Separate from rest of trust fund.--Funds provided 
        under this subsection to the Part B Medicare FFS Account 
        shall--
                    ``(A) be kept separate from all other funds within 
                the Trust Fund, but shall be invested, and such 
                investments redeemed, in the same manner as all other 
                funds and investments within the Trust Fund; and
                    ``(B) notwithstanding the previous subsections of 
                this section, be managed and administered by the the 
                Administrator of the Centers for Medicare & Medicaid 
                Services.''.
    (b) Chairperson of Medicare Choices Commission To Replace 
Administrator of CMS on as Secretary of Board of Trustees of HI and SMI 
Trust Funds.--
            (1) HI trust fund.--Section 1817(b) of the Social Security 
        Act (42 U.S.C. 1395i(b)) is amended by striking ``The 
        Administrator of the Centers for Medicare & Medicaid Services 
        shall serve as the Secretary of the Board of Trustees.'' and 
        inserting ``Before the general effective date defined under 
        section 1860E-62, the Administrator of the Centers for Medicare 
        & Medicaid Services shall serve as the Secretary of the Board 
        of Trustees. On and after such general effective date such 
        Administrator shall not serve as the Secretary of such Board 
        and instead the Chairperson of the Medicare Choices Commission 
        established under section 1860E-51 shall serve as the Secretary 
        of such Board.''.
            (2) SMI trust fund.--Section 1841(b) of the Social Security 
        Act (42 U.S.C. 1395t(b)) is amended by striking ``The 
        Administrator of the Centers for Medicare & Medicaid Services 
        shall serve as the Secretary of the Board of Trustees.'' and 
        inserting ``Before the general effective date defined under 
        section 1860E-62, the Administrator of the Centers for Medicare 
        & Medicaid Services shall serve as the Secretary of the Board 
        of Trustees. On and after such general effective date such 
        Administrator shall not serve as the Secretary of such Board 
        and instead the Chairperson of the Medicare Choices Commission 
        established under section 1860E-51 shall serve as the Secretary 
        of such Board.''.
    (c) Subsidies.--Part E of title XVIII of the Social Security Act, 
as added by section 101 and amended by sections 103 and 105, is further 
amended by adding at the end the following:

                         ``Subpart 4--Subsidies

``SEC. 1860E-41. CHANGES IN SUBSIDIES.

    ``(a) Reduced Government Contribution for High-Income Seniors.--
            ``(1) In general.--For purposes of determining the combined 
        monthly base amount under section 1860E-32(c)(2)(B) for an 
        individual, in applying section 1839(i) under such section, the 
        following shall apply:
                    ``(A) 2016.--For 2016, notwithstanding paragraph 
                (6) of such section 1839(i), subject to paragraph (3)--
                            ``(i) the threshold amount otherwise 
                        applicable under paragraph (2)(A) of such 
                        section for individuals shall be equal to 
                        $50,000 (or couples, $100,000); and
                            ``(ii) instead of the sliding scale 
                        percentage specified in paragraph (3)(A)(i) of 
                        such section (and instead of the amount which 
                        would be applied in the case of a joint return 
                        described in paragraph (3)(C)(ii) of such 
                        section), the sliding scale percentage shall be 
                        determined so that for individuals (or couples) 
                        whose modified adjusted gross income is within 
                        an income tier specified in the table described 
                        in paragraph (2) the sliding scale percentage 
                        shall increase, on a sliding scale in a linear 
                        manner, from the initial premium percentage to 
                        the final premium percentage as specified in 
                        such table for such income tier for such 
                        individuals (or couples, respectively).
                    ``(B) Subsequent years.--For each subsequent year, 
                such section 1839(i) shall be applied, as modified by 
                subparagraph (A) and subject to paragraphs (3) and (4), 
                without taking into account paragraph (5) or (6) of 
                such section.
            ``(2) Table.--The table specified in this paragraph is as 
        follows:


------------------------------------------------------------------------
   ``Initial Income      Final Income Level
  Level within  Tier      within  Tier for       Initial        Final
 for Individual  (or      Individual  (or        Premium       Premium
       Couple)                Couple)          Percentage    Percentage
------------------------------------------------------------------------
 $50,000 ($100,000)     $85,000 ($150,000)    12 percent    20 percent
 $85,001 ($150,001)    $130,000 ($214,000)    20 percent    32 percent
$130,001 ($214,001)    $190,000 ($300,000)    32 percent    50 percent
$190,001 ($300,001)                    No Limi50 percent    50 percent.
------------------------------------------------------------------------

            ``(3) Transition for certain seniors.--
                    ``(A) In general.--In the case of individuals and 
                couples with an income level that is below the minimum 
                level for which section 1839(i) would otherwise apply 
                (as in effect as of the date of enactment of this 
                section), the premium to be applied shall be the sum 
                of--
                            ``(i) the premium otherwise applicable to 
                        individuals whose income is $1 below the 
                        applicable threshold amount under subsection 
                        (a)(1); and
                            ``(ii) the transition percentage of the 
                        amount by which the premium that would 
                        otherwise apply (but for this paragraph) under 
                        this subsection exceeds the premium described 
                        in clause (i).
                    ``(B) Transition percentage.--The transition 
                percentage specified in this subparagraph--
                            ``(i) for fiscal year 2016, is 20 percent;
                            ``(ii) for fiscal year 2017, is 40 percent;
                            ``(iii) for fiscal year 2018, is 60 
                        percent;
                            ``(iv) for fiscal year 2019, is 80 percent; 
                        and
                            ``(v) for any succeeding fiscal year, is 
                        100 percent.
            ``(4) Inflation adjustment.--
                    ``(A) In general.--In the case of any calendar year 
                beginning after such date that the minimum income level 
                for which section 1839(i) applies pursuant to paragraph 
                (1)(A)(i) is not greater than 150 percent of the 
                poverty line, each dollar amount in paragraph (1)(A) or 
                (2) shall be increased by an amount equal to--
                            ``(i) such dollar amount, multiplied by
                            ``(ii) the percentage (if any) by which the 
                        average of the Consumer Price Index for all 
                        urban consumers (United States city average) 
                        for the 12-month period ending with August of 
                        the preceding calendar year exceeds such 
                        average for the 12-month period ending with 
                        August of the calendar year preceding the first 
                        calendar year beginning after such date.
                    ``(B) Rounding.--If any dollar amount after being 
                increased under subparagraph (A) is not a multiple of 
                $1,000, such dollar amount shall be rounded to the 
                nearest multiple of $1,000.
    ``(b) Enhanced Subsidies to Low-Income Seniors.--
            ``(1) In general.--Beginning with 2016, in lieu of any 
        medical assistance available for medicare cost sharing 
        described in section 1905(p)(3), the following shall apply:
                    ``(A) Individuals with income below 100 percent of 
                poverty line (qualified medicare beneficiaries) and 
                full-benefit dual eligible individuals.--In the case of 
                an individual described in section 1902(a)(10)(E)(i) or 
                subparagraph (A)(ii) of section 1935(c)(6) (taking into 
                account the application of subparagraph (B) of such 
                section), the individual is entitled under this section 
                to an income-related premium subsidy equal to 100 
                percent of the modified monthly basic beneficiary 
                premium under section 1860E-31(c)(2) for the MA-PD plan 
                with the lowest bid under the tier 3 benefit level 
                under section 1860E-24(a)(3).
                    ``(B) Individuals with income between 100 percent 
                and 120 percent of poverty line (specified low-income 
                beneficiaries).--In the case of an individual described 
                in section 1902(a)(10)(E)(iii), the individual is 
                entitled under this section to an income-related 
                premium subsidy equal to 100 percent of the modified 
                monthly basic beneficiary premium under section 1860E-
                31(c)(2) for the MA-PD plan with the lowest bid under 
                the tier 2 benefit level under section 1860E-24(b).
                    ``(C) Other individuals with income below 135 
                percent of poverty line (qualifying individuals).--In 
                the case of an individual described in section 
                1902(a)(10)(E)(iv), the individual is entitled under 
                this section to an income-related premium subsidy equal 
                to 100 percent of the modified monthly basic 
                beneficiary premium under section 1860E-31(c)(2) for 
                the MA-PD plan with the lowest bid under the tier 1 
                benefit level under section 1860E-24(b). In no case 
                shall an individual described in this subparagraph be 
                subject to a late enrollment penalty, which would 
                otherwise be applied under section 1860E-32(c).
            ``(2) Flexibility in use of subsidies.--An individual 
        entitled to an amount of an income-related premium subsidy 
        under paragraph (1) may use the amount of such subsidy toward 
        the premium applied under Medicare fee-for-service or any MA-PD 
        plan offered under any tier benefit level.
            ``(3) Deposit of excess into health iras.--In the case of 
        such an individual who is an account holder (as defined in 
        section 201(2) of the Save and Strengthen Medicare Act of 2012) 
        and for whom the subsidy amount under this subsection exceeds 
        the premium amount which is applicable to the individual, the 
        Medicare Choices Commission shall provide for the deposit of 
        such excess amount into the health individual retirement 
        account (as defined in section 201(1) of such Act) of such 
        account holder.''.
    (d) Application of Revised Income Thresholds to Part D.--Section 
1860D-13(a)(7) of the Social Security Act (42 U.S.C. 1395w-113(a)(7)) 
is amended--
            (1) in subparagraph (A), by inserting ``(or, for a calendar 
        year after 2015, the threshold amount applicable under 
        paragraph (1) of section 1860E-41(a) (including application of 
        paragraph (4) of such section) for the calendar year)'' after 
        ``for the calendar year'';
            (2) in subparagraph (B)--
                    (A) in the matter preceding clause (i), by striking 
                ``The monthly'' and inserting ``Subject to subparagraph 
                (H), the monthly''; and
                    (B) in clause (i)(I), by inserting ``(or, for a 
                calendar year after 2015, the applicable percentage 
                that would be determined under paragraph (2) of section 
                1860E-41(a) (including application of paragraph (4) of 
                such section) for the individual for the calendar year 
                if the table specified in subparagraph (G) were 
                substituted for the table specified in the table under 
                such paragraph (2))'' after ``for the calendar year'';
            (3) in subparagraph (E)(ii)--
                    (A) in subclause (I), by inserting ``or, for a year 
                after 2015, the modified adjusted gross income 
                threshold amount applicable under paragraph (1) of 
                section 1860E-41(a) (including application of paragraph 
                (4) of such section)'' before the period at the end; 
                and
                    (B) in subclause (II), by inserting ``or, for a 
                year after 2015, the applicable percentage that would 
                be determined under paragraph (2) of section 1860E-
                41(a) (including application of paragraph (4) of such 
                section) if the table specified in subparagraph (G) 
                were substituted for the table specified in the table 
                under such paragraph (2))'' before the period at the 
                end; and
            (4) by adding at the end the following new subparagraphs:
                    ``(G) Table.--For purposes of subparagraph 
                (B)(i)(I), the table specified in this subparagraph is 
                as follows:


------------------------------------------------------------------------
   ``Initial Income      Final Income Level
  Level within  Tier      within  Tier for       Initial        Final
 for Individual  (or      Individual  (or        Premium       Premium
       Couple)                Couple)          Percentage    Percentage
------------------------------------------------------------------------
 $50,000 ($100,000)     $85,000 ($150,000)    25 percent    35 percent
 $85,001 ($150,001)    $130,000 ($214,000)    35 percent    50 percent
$130,001 ($214,001)    $190,000 ($300,000)    50 percent    80 percent
$190,001 ($300,001)                    No Limi80 percent    80 percent.
------------------------------------------------------------------------

                    ``(H) Transition for certain seniors.--In the case 
                of individuals and couples with an income level that is 
                below the minimum level for which section 1839(i) (as 
                in effect as of the date of enactment of this 
                subparagraph) would otherwise apply before application 
                of the amendments made by section 106(b) of the Save 
                and Strengthen Medicare Act of 2012, the monthly 
                adjustment amount to be applied under subparagraph (B) 
                for such an individual for a month in a fiscal year 
                shall be the transition percentage specified in section 
                1860E-41(a)(3)(B) for such fiscal year of the monthly 
                adjustment amount otherwise specified under such 
                subparagraph.''.

SEC. 107. MEDICARE CHOICES COMMISSION; GENERAL PROVISIONS; EFFECTIVE 
              DATE.

    Part E of title XVIII of the Social Security Act, as inserted by 
section 101(a)(2) and as previously amended, is further amended by 
adding at the end the following new subpart:

                ``Subpart 5--Medicare Choices Commission

``SEC. 1860E-51. MEDICARE CHOICES COMMISSION.

    ``(a) Establishment.--Subject to subsection (d), there is 
established as an independent agency of the United States a Medicare 
Commission (in this part referred to as the `Medicare Choices 
Commission').
    ``(b) Membership.--
            ``(1) Number and appointment.--The Medicare Choices 
        Commission shall be composed of 7 members appointed by the 
        President, by and with the advice and consent of the Senate.
            ``(2) Deadline for initial appointment.--The initial 
        members of the Commission shall be nominated for appointment by 
        not later than 6 months after the date of enactment of this 
        title.
            ``(3) Terms.--
                    ``(A) In general.--The terms of members of the 
                Commission shall be for 7 years, except that of the 
                members first appointed--
                            ``(i) 3 shall be appointed for terms of 3 
                        years;
                            ``(ii) 2 shall be appointed for terms of 5 
                        years; and
                            ``(iii) 2 shall be appointed for terms of 7 
                        years.
                    ``(B) Vacancies.--Any member appointed to fill a 
                vacancy occurring before the expiration of the term for 
                which the member's predecessor was appointed shall be 
                appointed only for the remainder of that term. A member 
                may serve after the expiration of that member's term 
                until a successor has taken office.
                    ``(C) Limitation on number of terms.--Any person 
                appointed as a member of the Commission shall not be 
                eligible for reappointment to the Commission after 
                having served 2 terms.
            ``(4) Chairperson and other officers.--The Commission shall 
        elect a chairperson and such officers as the Commission 
        determines appropriate.
    ``(c) Operation of the Board.--
            ``(1) Meetings.--The Commission shall meet at the call of 
        its chairperson or a majority of its members.
            ``(2) Quorum.--A quorum shall consist of 4 members of the 
        Commission, except that the Commission may establish a lesser 
        quorum to conduct a hearing under section 2243(a).
    ``(d) Assuring Timely Implementation of Commission.--If, by not 
later than one year after the date of the enactment of this subpart, 
the Senate has not consented to a quorum of initial members of the 
Commission under subsection (b), the duties and powers of the 
Commission under this part shall be carried out by the Office of the 
Actuary of the Centers for Medicare & Medicaid Services.

``SEC. 1860E-52. DUTIES OF THE COMMISSION.

    ``(a) In General.--Except as otherwise provided in this title and 
effective with respect to benefits furnished on or after January 1, 
2015, the Medicare Choices Commission shall--
            ``(1) coordinate determinations of beneficiary eligibility 
        and enrollment under title XVIII with the Administrator of 
        Social Security;
            ``(2) oversee and administer the competitive bidding under 
        subpart 3;
            ``(3) oversee and administer the provisions of part C;
            ``(4) oversee and administer the provisions of part D;
            ``(5) distribute funds in appropriate part from the Federal 
        Hospital Insurance Trust Fund under section 1817 and the 
        Federal Supplementary Medical Insurance Trust Fund under 
        section 1841;
            ``(6) oversee and enforce the provisions of section 1851(g) 
        (relating to guaranteed issue and renewal), as applied through 
        this part, including to ensure a Medicare Advantage 
        organization offering an MA-PD plan does not impose under such 
        plan an exclusion of benefits based on a pre-existing 
        condition;
            ``(7) disseminate to Medicare enrollees information with 
        respect to benefits and limitations on payment under Medicare 
        fee-for-service and Medicare Advantage plans, including a 
        comparative analysis of Medicare plans and the quality of such 
        plans in the area in which the Medicare beneficiary resides;
            ``(8) establish a Medicare enrollee education program to 
        provide timely, readable, accurate, and understandable 
        information to Medicare enrollees regarding Medicare fee-for-
        service and Medicare Advantage plan options;
            ``(9) coordinate and maintain the Medicare.gov Internet Web 
        site; and
            ``(10) conduct public outreach and education efforts in 
        accordance with section 301 of the Save and Strengthen Medicare 
        Act of 2012.
    ``(b) Relation to Medicare Fee-for-Service.--The Commission shall 
not be responsible for the operation of Medicare fee-for-service, but 
shall have oversight authority over Medicare fee-for-service in a 
similar manner to that provided with respect to Medicare Advantage 
plans.
    ``(c) Transition Provisions.--The Secretary and the Commission 
shall cooperate to establish an appropriate transition of 
responsibility for the administration of title XVIII and other related 
laws, from the Secretary to the Commission as is appropriate to carry 
out the purposes of this part and as is consistent with the duties of 
the Commission described in subsection (a). Insofar as a responsibility 
is transferred to the Commission under this subsection, any reference 
to the Secretary or the Centers of Medicare & Medicaid Services in 
title XVIII or other provision of law with respect to such 
responsibility is deemed to be a reference to the Commission.

``SEC. 1860E-53. POWERS OF COMMISSION.

    ``(a) In General.--The Medicare Choices Commission may, for the 
purpose of carrying out its duties, promulgate regulations, hold 
hearings, sit and act at times and places, take testimony, and receive 
evidence as the Commission considers appropriate.
    ``(b) Contract Authority.--The Commission may contract with, and 
compensate, government and private agencies or persons for items and 
services, without regard to section 3709 of the Revised Statutes (41 
U.S.C. 5).
    ``(c) Commission Authority To Permit Flexibility in Requirements.--
In promulgating regulations under subsection (a) to carry out the 
requirements of part C of title XVIII, the Commission may modify the 
regulations previously promulgated by the Secretary to carry out such 
requirements (other than those relating to benefits or beneficiary 
protections) as may be appropriate to better meet the needs of Medicare 
enrollees and promote fair and open competition among Medicare fee-for-
service and Medicare Advantage plans.
    ``(d) Overseeing Solvency of Medicare Fee-for-Service.--The 
Commission shall monitor and oversee the financial solvency of Medicare 
fee-for-service in a manner similar to the manner in which State 
insurance commissioners monitor and oversee the solvency of health 
insurance issuers in the States. The Commission shall include in its 
periodic reports to Congress an analysis of the solvency of Medicare 
fee-for-service.

``SEC. 1860E-54. COMMISSION PERSONNEL MATTERS.

    ``(a) Members.--
            ``(1) Compensation.--Members of the Medicare Choices 
        Commission shall devote their entire time to the business of 
        the Commission, and each member shall be compensated at a rate 
        equal to the per diem equivalent of the rate provided for level 
        II of the Executive Schedule under section 5315 of title 5, 
        United States Code.
            ``(2) Travel expenses.--The members of the Commission shall 
        be allowed travel expenses, including per diem in lieu of 
        subsistence, at rates authorized for employees of agencies 
        under subchapter I of chapter 57 of title 5, United States 
        Code, while away from their homes or regular places of business 
        in the performance of service for the Commission.
            ``(3) Removal.--The President may remove a member of the 
        Commission only for neglect of duty or malfeasance in office.
    ``(b) Staff and Support Services.--
            ``(1) Executive director.--The chairperson shall appoint an 
        executive director of the Commission who shall be paid at a 
        rate specified by the Commission.
            ``(2) Staff.--With the approval of the Commission, the 
        executive director may appoint such personnel as the executive 
        director considers appropriate.
            ``(3) Inapplicability of civil service laws.--The staff of 
        the Commission shall be appointed without regard to the 
        provisions of title 5, United States Code, governing 
        appointments in the competitive service, and shall be paid 
        without regard to the provisions of chapter 51 and subchapter 
        III of chapter 53 of such title (relating to classification and 
        General Schedule pay rates).
            ``(4) Experts and consultants.--With the approval of the 
        Commission, the executive director may procure temporary and 
        intermittent services under section 3109(b) of title 5, United 
        States Code.
    ``(c) Transfer of Personnel, Assets, etc.--For purposes of the 
Commission carrying out its duties, the Secretary and the Commission 
may provide for the transfer to the Commission of such civil service 
personnel employed by the Department of Health and Human Services, and 
such resources and assets of the Department used in carrying out title 
XVIII, as the Commission requires.

``SEC. 1860E-55. REPORTS; COMMUNICATIONS WITH CONGRESS.

    ``(a) Report on Medicare Program.--Not less frequently than 
annually, the Medicare Choices Commission shall submit to Congress such 
reports describing the Medicare program under title XVIII as the 
Commission determines appropriate.
    ``(b) Maintaining Independence of Commission in Communications With 
Congress.--The Commission may directly submit to Congress reports, 
legislative recommendations, testimony, or comments on legislation. No 
officer or agency of the United States may require the Commission to 
submit to any officer or agency of the United States for approval, 
comments, or review, prior to the submission to Congress of such 
reports, recommendations, testimony, or comments.

``SEC. 1860E-56. FUNDING OF THE COMMISSION.

    ``There is authorized to be appropriated to the Medicare Choices 
Commission (in appropriate part from the Federal Hospital Insurance 
Trust Fund under section 1817 and the Federal Supplementary Medical 
Insurance Trust Fund under section 1841) such sums as are necessary for 
the Commission to carry out its duties for each fiscal year beginning 
with fiscal year 2014.

                    ``Subpart 6--General Provisions

``SEC. 1860E-61. APPLICABILITY; DEFINITIONS.

    ``(a) In General.--The provisions of this Act are superseded to the 
extent inconsistent with the provisions of this part.
    ``(b) Terminology.--For purposes of this part:
            ``(1) Medicare enrollee.--
                    ``(A) In general.--The term `Medicare enrollee' 
                means--
                            ``(i) an individual entitled to (or 
                        enrolled for benefits) under part A and 
                        enrolled under part B; and
                            ``(ii) except as otherwise specified, an 
                        individual described in section 1860E-11(a)(3).
                    ``(B) Treatment.--Any reference in this Act (or any 
                other Act) in effect before the date of the enactment 
                of this part, to an individual entitled to benefits 
                under part A or enrolled under part B shall be deemed a 
                reference to a Medicare enrollee.
            ``(2) Medicare fee-for-service.--The term `Medicare fee-
        for-service' means the original Medicare fee-for-service 
        program under parts A and B, as modified by this part, and does 
        not include part C or part D.
            ``(3) Medicare fee-for-service enrollee.--The term 
        `Medicare fee-for-service enrollee' means a Medicare enrollee 
        who is not enrolled under a Medicare Advantage plan under part 
        C.

``SEC. 1860E-62. GENERAL EFFECTIVE DATE.

    ``Except as otherwise specified, the provisions of this part shall 
apply to items and services furnished on or after January 1, 2016, and 
to plan years beginning on or after such date (referred to in this 
title as the `general effective date').''.

            TITLE II--HEALTH INDIVIDUAL RETIREMENT ACCOUNTS

                 Subtitle A--Establishment of Accounts

SEC. 201. DEFINITIONS.

    For purposes of this subtitle--
            (1) Health individual retirement account.--The term 
        ``health individual retirement account'' means an account 
        established under section 203.
            (2) Account holder.--The term ``account holder'' means any 
        individual for whom an account is established under section 
        203.
            (3) HIRA fund.--The term ``HIRA Fund'' means the Health 
        Individual Retirement Account Fund established under section 
        202.

SEC. 202. HEALTH INDIVIDUAL RETIREMENT ACCOUNT FUND.

    (a) Establishment of Fund.--
            (1) Establishment.--There is established in the Treasury of 
        the United States a trust fund to be known as the Health 
        Individual Retirement Account Fund.
            (2) Amounts in fund.--The HIRA Fund shall consist of all 
        amounts contributed to the HIRA Fund under section 204, 
        increased by the total net earnings from investments of sums in 
        the HIRA Fund attributable to such contributed amounts, and 
        reduced by the total net losses from investments of such sums.
            (3) Trustees.--The Commissioner of Social Security shall 
        serve as trustee of the HIRA Fund.
            (4) Budget authority; appropriation.--This subtitle 
        constitutes budget authority in advance of appropriations Acts 
        and represents the obligation of the Commissioner to provide 
        for the payment of amounts provided under this subtitle. The 
        amounts held in the HIRA Fund are appropriated and shall remain 
        available without fiscal year limitation.
    (b) Availability.--The sums in the HIRA Fund are appropriated and 
shall remain available without fiscal year limitation--
            (1) to invest funds in the HIRA Fund under section 205;
            (2) to make distributions in accordance with section 206; 
        and
            (3) to pay the administrative expenses of the Board in 
        accordance with subsection (d).
    (c) Limitations on Use of Funds.--
            (1) In general.--Sums in the HIRA Fund credited to a 
        account holder's health individual retirement account under 
        section 205(a)(1)(2) may not be used for, or diverted to, 
        purposes other than for the exclusive benefit of the account 
        holder or the account holder's beneficiaries under this 
        subtitle.
            (2) Assignments.--Sums in the HIRA Fund may not be assigned 
        or alienated and are not subject to execution, levy, 
        attachment, garnishment, or other legal process.
    (d) Payment of Administrative Expenses.--Administrative expenses 
incurred to carry out this subtitle shall be paid out of net earnings 
in the HIRA Fund in conjunction with the allocation of investment 
earnings and losses under section 203(d).
    (e) Limitation.--The sums in the HIRA Fund shall not be 
appropriated for any purpose other than the purposes specified in this 
part and may not be used for any other purpose.

SEC. 203. ESTABLISHMENT OF HEALTH INDIVIDUAL RETIREMENT ACCOUNTS.

    (a) Establishment of Publicly Administered System of Health 
Individual Retirement Accounts.--The Commissioner shall establish a 
health individual account for each individual who--
            (1) receives wages in any calendar year after December 31, 
        2015, subject to the contribution requirement of section 
        3101(a) of the Internal Revenue Code of 1986;
            (2) derives self-employment income for a taxable year 
        beginning after December 31, 2015, subject to the contribution 
        requirement of section 1401(a) of such Code; or
            (3) is a Medicare enrollee (as defined in section 1860E-
        61(b) of the Social Security Act).
    (b) Management of Accounts.--Such account shall be the means by 
which amounts contributed to, and held in, the HIRA Fund under section 
204 are credited to the account holder, under procedures which shall be 
established by the Commissioner by regulation. Each account shall be 
identified to the account holder by means of the account holder's 
social security account number. The Commissioner shall take such steps 
as are necessary to protect account holders' social security numbers, 
including not using complete social security numbers on any statements 
or identification or payment cards.
    (c) Account Balance.--The balance in an account holder's account at 
any time is the excess of--
            (1) all deposits in the HIRA Fund credited to such account 
        holder's health individual retirement account, subject to such 
        increases and reductions as may result from allocations made to 
        and reductions made in the account pursuant to subsection (d); 
        over
            (2) amounts paid out of the HIRA Fund in connection with 
        amounts credited to such account holder's account.
    (d) Allocation of Earnings and Losses.--Pursuant to regulations 
which shall be prescribed by the Commissioner, the Commissioner shall 
allocate to each health individual retirement account an amount equal 
to the net earnings and net losses from each investment of sums in the 
HIRA Fund which are attributable to sums credited to such account 
reduced by an appropriate share of the administrative expenses paid out 
of the net earnings, as determined by the Commissioner.

SEC. 204. TRANSFER OF HIRA CONTRIBUTIONS TO HIRA FUND.

    (a) In General.--There is hereby appropriated to the HIRA Fund, out 
of moneys in the Treasury not otherwise appropriated, amounts 
equivalent to 100 percent of amounts contributed under sections 3101(d) 
and 1401(d) of the Internal Revenue Code of 1986. The Secretary of the 
Treasury shall from time to time transfer such amounts from the general 
fund in the Treasury to the HIRA Fund.
    (b) Contributions From HHS.--The Commissioner shall accept any 
contributions with respect to an account holder's account, including 
contributions from the Secretary of Health and Human Services under 
sections 1860E-25 and 1860E-41(b)(3) of the Social Security Act and any 
contribution from a State under section 1944(b) of such Act.
    (c) Coordination With Social Security Trust Funds.--The amounts 
contributed under sections 3101(d) and 1401(d) of such Code shall not 
be taken into account in determining the amounts appropriated and 
transferred under section 201 of the Social Security Act.

SEC. 205. OPERATION OF HIRA FUND.

    (a) Separate Crediting to Health Individual Retirement Accounts.--
            (1) In general.--Subject to this subsection, the 
        Commissioner shall provide for prompt, separate crediting of 
        the amounts deposited in the HIRA Fund to each account holder's 
        health individual savings account to the extent such amount 
        consists of contributions made to the HIRA Fund under section 
        204 with respect to such account holder, together with any 
        increases or decreases therein so as to reflect the net returns 
        and losses from investment thereof while held in the Fund.
            (2) Use of funds.--The amounts held in the Fund are 
        appropriated and shall remain available without fiscal year 
        limitation--
                    (A) to be held for investment under subsection (b), 
                and
                    (B) to pay the administrative expenses related to 
                the HIRA Fund.
    (b) Investment Guidelines.--
            (1) In general.--For purposes of investment of amounts 
        credited to each health individual retirement account, the 
        Commissioner shall provide by regulation for investment options 
        similar to investment options available under the Thrift 
        Savings Fund under section 8438 of title 5, United States Code.
            (2) Elections among investment options.--Pursuant to any 
        individual's election filed in accordance with regulations of 
        the Commissioner, the Commissioner shall, in accordance with 
        such regulations, provide for disinvestment and reinvestment of 
        amounts credited to the account holder's health individual 
        retirement account and held in the HIRA Fund under any of the 
        investment options described in paragraph (1).
            (3) Special rule for investing certain amounts contributed 
        from hhs.--Amounts contributed to any account by the Secretary 
        of Health and Human Services under section 1860E-25 of the 
        Social Security Act may be invested only in the investment 
        option established under paragraph (1) that is the equivalent 
        to the Government Securities Investment Fund (as defined under 
        section 8438(a)(4) of title 5, United States Code).
    (c) Annual Description of Investment Options and Disclosure of 
Administrative Costs.--The Commissioner shall provide annually to each 
account holder--
            (1) a description of the investment options available with 
        respect to amounts held in the HIRA Fund and the procedures for 
        selecting such options; and
            (2) a disclosure of the rate of administrative costs 
        chargeable with respect to each investment option.
Descriptions and disclosures required under this subsection shall be 
written in a manner calculated to be understood by the average account 
holder.
    (d) Account Information.--The Commissioner shall create an online 
portal that enables account holders to view their account information, 
modify investment allocations, and request quarterly paper account 
statements.
    (e) Treatment of Amounts Held in HIRA Fund.--Subject to this 
subtitle and to the extent provided in section 1860E-25(c)(2) of the 
Social Security Act with respect to amounts contributed under such 
section, amounts deposited into, and held and accounted for in, the 
HIRA Fund with respect to any account holder shall be treated as 
property of such account holder, held in trust for such account holder 
in the Fund.

SEC. 206. HEALTH INDIVIDUAL RETIREMENT ACCOUNT DISTRIBUTIONS.

    (a) In General.--The Commissioner may distribute amounts from an 
account holder's health individual retirement account only--
            (1) for qualified medical expenses (as defined in section 
        530A(d)(1) of the Internal Revenue Code of 1986);
            (2) to an individual's spouse or former spouse under a 
        divorce or separation instrument described in subparagraph (A) 
        of section 71(b)(2) of such Code;
            (3) by a transfer at the death of the account holder as 
        provided under subsection (b); or
            (4) as provided in section 1860E-25(c)(2) of the Social 
        Security Act.
    (b) Special Accounting Rule for Certain Amounts.--Each calendar 
year, any distributions from an account shall be treated as--
            (1) first from any amounts contributed to the account for 
        such calendar year by the Secretary of Health and Human 
        Services under section 1860E-25 of the Social Security Act, and
            (2) then from all other amounts credited to the account.
    (c) Treatment at Death.--If the account holder dies before all 
amounts which are held in the HIRA Fund which are credited to the 
health individual retirement account of the individual are otherwise 
distributed in accordance with this section, such amounts shall be 
distributed, under regulations which shall be prescribed by the 
Commissioner--
            (1) in any case in which one or more beneficiaries have 
        been designated in advance, to such beneficiaries in accordance 
        with such designation as provided in such regulations; and
            (2) in the case of any amount not distributed as described 
        in paragraph (1), to such individual's estate.

                       Subtitle B--Tax Treatment

SEC. 211. TAX TREATMENT OF ACCOUNTS.

    (a) In General.--Subchapter F of chapter 1 of the Internal Revenue 
Code of 1986 (relating to exempt organizations) is amended by adding at 
the end the following new part:

        ``PART IX--HEALTH INDIVIDUAL RETIREMENT ACCOUNT PROGRAM

``Sec. 530A. Health Individual Retirement Account Program.

``SEC. 530A. HEALTH INDIVIDUAL RETIREMENT ACCOUNT PROGRAM.

    ``(a) Tax Treatment of Accounts.--The Health Individual Retirement 
Account Fund is exempt from taxation under this subtitle.
    ``(b) Treatment of Distributions.--
            ``(1) Exclusion of amounts used for qualified medical 
        expenses.--Any amount paid or distributed out of a health 
        individual retirement account which is used exclusively to pay 
        qualified medical expenses of the account beneficiary shall not 
        be includible in gross income.
            ``(2) Inclusion of amounts not used for qualified medical 
        expenses.--Any amount paid or distributed out of a health 
        individual retirement account which is used other than as 
        described in paragraph (1) shall be included in the gross 
        income of the account beneficiary.
            ``(3) Additional tax on distributions not used for 
        qualified medical expenses.--The tax imposed by this chapter on 
        the account beneficiary for any taxable year in which there is 
        a payment or distribution from a health savings account of such 
        beneficiary which is includible in gross income under paragraph 
        (2) shall be increased by 10 percent of the amount which is so 
        includible.
            ``(4) Coordination with medical expense deduction.--For 
        purposes of determining the amount of the deduction under 
        section 213, any payment or distribution out of a health 
        individual retirement account for qualified medical expenses 
        shall not be treated as an expense paid for medical care.
            ``(5) Transfer of account incident to divorce.--The 
        transfer of an individual's interest in a health individual 
        retirement account to an individual's spouse or former spouse 
        under a divorce or separation instrument described in 
        subparagraph (A) of section 71(b)(2) shall not be considered a 
        taxable transfer made by such individual notwithstanding any 
        other provision of this subtitle, and such interest shall, 
        after such transfer, be treated as a health individual 
        retirement account with respect to which such spouse is the 
        account beneficiary.
            ``(6) Treatment after death of account beneficiary.--
                    ``(A) In general.--The transfer of an account 
                beneficiary's interest in a health individual 
                retirement account to another individual by reason of 
                being the designated beneficiary of such account at the 
                death of the account beneficiary shall not be 
                considered a taxable transfer made by such individual 
                notwithstanding any other provision of this title.
                    ``(B) Other cases.--In the case of any other 
                transfer or acquisition of account beneficiary's 
                interest at the death of the account beneficiary, an 
                amount equal to the fair market value of the assets in 
                such account as of the date of death shall be 
                includible in such beneficiary's gross income for the 
                last taxable year of such beneficiary.
    ``(c) Estate Tax Treatment.--No amount shall be includible in the 
gross estate of any individual for purposes of chapter 11 by reason of 
an interest in a health individual retirement account of the 
individual.
    ``(d) Definitions.--For purposes of this section--
            ``(1) Qualified medical expenses.--The term `qualified 
        medical expenses' means, with respect to an account 
        beneficiary, amounts paid for medical care (as defined in 
        section 213(d)) for such individual, the individual's spouse, 
        and any dependent (as defined in section 152, determined 
        without regard to subsections (b)(1), (b)(2), and (d)(1)(B) 
        thereof) of the individual, but only to the extent such amounts 
        are not compensated for by insurance or otherwise and only if 
        the individual, spouse, or dependent with respect to whom the 
        amount is paid is entitled, at the time the amount is paid, to 
        a monthly benefit under title II of the Social Security Act or 
        a tier 1 railroad retirement benefit.
            ``(2) Abortion and euthanasia excluded.--
                    ``(A) In general.--Such term shall not include any 
                amount paid for an abortion or for the purposeful 
                causing of, or the purposeful assisting in causing, the 
                death of any individual, such as by assisted suicide, 
                euthanasia, or mercy killing.
                    ``(B) Exceptions.--Subparagraph (A) shall not apply 
                to--
                            ``(i) an abortion--
                                    ``(I) in the case of a pregnancy 
                                that is the result of an act of rape or 
                                incest, or
                                    ``(II) in the case where a woman 
                                suffers from a physical disorder, 
                                physical injury, or physical illness 
                                that would, as certified by a 
                                physician, place the woman in danger of 
                                death unless an abortion is performed, 
                                including a life-endangering physical 
                                condition caused by or arising from the 
                                pregnancy, and
                            ``(ii) the treatment of any infection, 
                        injury, disease, or disorder that has been 
                        caused by or exacerbated by the performance of 
                        an abortion.
            ``(3) Account beneficiary.--The term `account beneficiary' 
        means the account holder (as defined in section 201 of the Save 
        and Strengthen Medicare Act of 2012) on whose behalf the health 
        individual retirement account is held.
            ``(4) Health individual retirement account.--The term 
        `health individual retirement account' means an account 
        established under section 203(b) of the Save and Strengthen 
        Medicare Act of 2012.
            ``(5) Health individual retirement account fund.--The term 
        `Health Individual Retirement Account Fund' means the Fund 
        established under section 202 of the Save and Strengthen 
        Medicare Act of 2012.''.
    (b) Clerical Amendment.--The table of parts for subchapter F of 
chapter 1 of such Code is amended by adding at the end the following 
new item:

       ``Part IX. Health Individual Retirement Account Program''.

    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2015.

SEC. 212. HIRA CONTRIBUTIONS.

    (a) Employment.--
            (1) In general.--Section 3101 of the Internal Revenue Code 
        of 1986 is amended by adding at the end the following new 
        subsection:
    ``(d) Health Individual Retirement Accounts.--
            ``(1) In general.--In addition to the taxes imposed by 
        subsections (a) and (b), there shall be deducted and withheld 
        from the income of every individual an amount equal to the 
        applicable percentage of wages (as defined in section 3121(a)) 
        received by him with respect to employment during any taxable 
        year.
            ``(2) Limitation.--The amount deducted and withheld under 
        paragraph (1) shall not exceed $2,500 ($5,000 in the case of a 
        married couple filing jointly) for any taxable year.
            ``(3) Applicable percentage.--For purposes of this 
        subsection, the applicable percentage shall be 2 percent, or 
        such other percentage (including zero) as the individual elects 
        in such form and manner as the Secretary shall prescribe.
            ``(4) Inflation adjustment.--
                    ``(A) In general.--In the case of any taxable year 
                beginning after 2016, the dollar amounts under the 
                third sentence of subsection (a) shall be increased by 
                an amount equal to--
                            ``(i) such dollar amount, multiplied by
                            ``(ii) the cost-of-living adjustment 
                        determined under section 1(f)(3) for the 
                        calendar year in which the taxable year begins, 
                        determined by substituting `2015' for `1992' in 
                        subparagraph (B) thereof.
                    ``(B) Rounding.--If any amount as adjusted under 
                subparagraph (A) is not a multiple of $100, such amount 
                shall be rounded to the nearest multiple of $100.''.
            (2) Contributions pre-tax.--Subsection (a) of section 3401 
        of such Code is amended by adding at the end the following new 
        sentence: ``Such term shall not include so much of any amounts 
        deducted and withheld from such remuneration under section 
        3101(d) for any taxable year as does not exceed $2,500 ($5,000 
        in the case of a married couple filing jointly).''.
    (b) Self-Employment.--
            (1) In general.--Section 1401 of such Code is amended by 
        adding at the end the following new subsection:
    ``(d) Health Individual Retirement Accounts.--
            ``(1) In general.--In addition to the taxes imposed by the 
        preceding subsections, in the case of an individual with self-
        employment income for the taxable year, such individual shall 
        contribute for such taxable year an amount equal to the 
        applicable percentage of such self employment income.
            ``(2) Applicable percentage.--For purposes of this 
        subsection, the applicable percentage shall be 2 percent, or 
        such other percentage (including zero) as the individual 
        elects, in such form and manner as the Secretary shall 
        prescribe.
            ``(3) Inflation adjustment.--
                    ``(A) In general.--In the case of any taxable year 
                beginning after 2016, the dollar amounts under 
                subsection (a)(18) shall be increased by an amount 
                equal to--
                            ``(i) such dollar amount, multiplied by
                            ``(ii) the cost-of-living adjustment 
                        determined under section 1(f)(3) for the 
                        calendar year in which the taxable year begins, 
                        determined by substituting `2015' for `1992' in 
                        subparagraph (B) thereof.
                    ``(B) Rounding.--If any amount as adjusted under 
                subparagraph (A) is not a multiple of $100, such amount 
                shall be rounded to the nearest multiple of $100.''.
            (2) Deduction for self-employment amounts contributed to 
        hira.--Subsection (a) of section 1401 of such Code is amended 
        by striking ``and'' at the end of paragraph (16), but striking 
        the period at the end of paragraph (17) and inserting ``; 
        and'', and by inserting after paragraph (17) the following new 
        paragraph:
            ``(18) there shall be excluded so much of any amounts 
        contributed by the individual for such taxable year under 
        1401(d) as does not exceed $2,500 ($5,000 in the case of a 
        married couple filing jointly) reduced (but not below zero) by 
        the amount of contributions for the taxable year with respect 
        to the individual under section 3101.''.
    (c) Procedure for Reconciliation.--The Secretary of the Treasury 
shall, in consultation with the Commission of Social Security, 
prescribe such regulations and guidance as are necessary to--
            (1) allow the taxpayer to make additional contributions in 
        any case in which contributions for the taxable year are less 
        than the applicable limitations for the taxable year under 
        sections 3101(d) and 1401(d) with respect to the taxpayer, and
            (2) provide for adding to gross income of the taxpayer for 
        the taxable year amounts equal to any contributions in excess 
        of such applicable limitations.
    (d) Election Coordination.--The Secretary of the Treasury and the 
Commissioner of Social Security shall consult and cooperate in 
prescribing the time, form, and manner of elections under sections 
3101(d) and 1401(d) of the Internal Revenue Code of 1986 and section 
203(a) this Act so as to reduce unnecessary paperwork and duplication.

SEC. 213. CONTRIBUTIONS ELIGIBLE FOR SAVER'S CREDIT.

    (a) In General.--Paragraph (1) of section 25B(d) of the Internal 
Revenue Code of 1986 is amended by striking ``and'' at the end of 
subparagraph (B), by striking the period at the end of subparagraph (C) 
and inserting ``, and'', and by adding at the end the following new 
subparagraph:
                    ``(D) the amount of contributions with respect to 
                the individual pursuant to sections 3101(d) and 1401(d) 
                (reduced or increased, as the case may be, to account 
                for any reconciliation under section 212(d) of the Save 
                and Strengthen Medicare Act of 2012).''.
    (b) Portion of Credit Made Refundable.--Section 25B of such Code is 
amended by adding at the end the following new subsection:
    ``(h) Portion of Credit Refundable.--
            ``(1) In general.--The aggregate credits allowed to a 
        taxpayer under subpart C shall be increased by the lesser of--
                    ``(A) the credit which would be allowed under this 
                section without regard to this subsection and the 
                limitation under section 26(a)(2) or subsection (g), as 
                the case may be, or
                    ``(B) the amount by which the aggregate amount of 
                credits allowed by this subpart (determined without 
                regard to this subsection) would be increased if the 
                limitation imposed by section 26(a)(2) or subsection 
                (g), as the case may be, were increased by an amount 
                equal to the taxpayer's hospital insurance taxes for 
                the taxable year.
        The amount of the credit allowed under this subsection shall 
        not be treated as a credit allowed under this subpart and shall 
        reduce the amount of credit otherwise allowable under 
        subsection (a) without regard to section 26(a)(2) or subsection 
        (g), as the case may be.
            ``(2) Hospital insurance tax.--
                    ``(A) In general.--The term `hospital insurance 
                taxes' means, with respect to any taxpayer for any 
                taxable year--
                            ``(i) the amount of the taxes imposed by 
                        sections 3101(b) and 3201(a) (to the extent 
                        attributable to the rate in effect under 
                        section 3101(b)) on amounts received by the 
                        taxpayer during the calendar year in which the 
                        taxable year begins,
                            ``(ii) the amount of the taxes imposed by 
                        sections 3111(b) and 3221(a) (to the extent 
                        attributable to the rate in effect under 
                        section 3111(b)) on amounts paid by the 
                        employer to the taxpayer with respect to 
                        employment during the calendar year in which 
                        the taxable year begins,
                            ``(iii) the amount of the taxes imposed by 
                        section 1401(b) on the self-employment income 
                        of the taxpayer for the taxable year, and
                            ``(iv) the amount of the taxes imposed by 
                        section 3211(a) (to the extent attributable to 
                        the rate in effect under sections 3101(b) and 
                        3111(b)) on amounts received by the taxpayer 
                        during the calendar year in which the taxable 
                        year begins.
                    ``(B) Coordination with special refund of tax.--The 
                term `hospital insurance taxes' shall not include any 
                taxes to the extent the taxpayer is entitled to a 
                special refund of such taxes under section 6413(c).
                    ``(C) Special rule.--Any amounts paid pursuant to 
                an agreement under section 3121(l) (relating to 
                agreements entered into by American employers with 
                respect to foreign affiliates) which are equivalent to 
                the taxes referred to in subparagraph (A)(i) shall be 
                treated as taxes referred to in such subparagraph.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2015.

SEC. 214. EXCLUSION OF CERTAIN HIRA TRANSFERS.

    (a) In General.--Part II of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 is amended by inserting before section 
140 the following new section:

``SEC. 139F. GOVERNMENT HIRA SUBSIDIES.

    ``Gross income shall not include any payment to the health 
individual retirement account (as defined in section 530A(d)(3)) of an 
individual by the Secretary of Health and Human Services under part E 
of title XVIII of the Social Security Act.''.

                    Subtitle C--Other Tax Provisions

SEC. 221. HEALTH SAVINGS ACCOUNTS AVAILABLE TO INDIVIDUALS ELIGIBLE FOR 
              MEDICARE.

    (a) In General.--Subsection (b) of section 223 of the Internal 
Revenue Code of 1986 is amended by striking paragraph (7) and by 
redesignating paragraph (8) as paragraph (7).
    (b) Elimination of Medicare Eligibility Exception to Nonqualified 
Withdrawal Penalty.--Paragraph (4) of section 223(f) of such Code is 
amended by striking subparagraph (C).
    (c) Conforming Amendment.--Subparagraph (S) of section 26(b)(2) of 
such Code is amended by striking ``223(b)(8)(B)(i)(II)'' and inserting 
``223(b)(7)(B)(i)(II)''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2015.

SEC. 222. REDUCTION IN MEDICARE PORTION OF PAYROLL TAX TO INCENTIVIZE 
              LATE RETIREMENT.

    (a) Employees.--Section 3101 of the Internal Revenue Code of 1986, 
as amended by this Act, is amended by adding at the end the following 
new subsection:
    ``(e) Exception for Individuals 65 and Older.--
            ``(1) In general.--In the case of an individual who has 
        attained the age of 65, the rate of tax otherwise in effect 
        under subsection (b)--
                    ``(A) shall be \1/2\ such rate, if such individual 
                has not attained the applicable age, and
                    ``(B) shall be zero, if such individual has 
                attainted the applicable age.
            ``(2) Applicable age.--For purposes of this subsection--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the applicable age shall be 67.
                    ``(B) Preferred medicare age.--In the case of wages 
                received after December 31, 2025, the applicable age 
                shall be the preferred Medicare age (within the meaning 
                of section 216(m)(2)(B) of the Social Security Act).''.
    (b) Employers.--Section 3111 of such Code is amended by adding at 
the end the following new subsection:
    ``(d) Exception for Individuals 65 and Older.--In the case of an 
individual who has attained the age of 65, the rate of tax otherwise in 
effect under subsection (b)--
            ``(1) shall be \1/2\ such rate, if such individual has not 
        attained the applicable age (within the meaning of section 
        3101(e)(2)), and
            ``(2) shall be zero, if such individual has attained such 
        age.''.
    (c) Self-Employment.--Section 1401 of such Code, as amended by this 
Act, is amended by adding at the end the following new subsection:
    ``(e) Exception for Individuals 65 and Older.--
            ``(1) In general.--In the case of an individual who has 
        attained the age of 65, the rate of tax otherwise in effect 
        under subsection (b) for the taxable year--
                    ``(A) shall be \1/2\ such rate, if such individual 
                has not attained the applicable age before the end of 
                such taxable year, and
                    ``(B) shall be zero, if such individual has 
                attained such age before the end of such taxable year.
            ``(2) Applicable age.--For purposes of this subsection--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the applicable age shall be 67.
                    ``(B) Preferred medicare age.--In the case of 
                taxable years beginning after December 31, 2025, the 
                applicable age shall be the preferred Medicare age 
                (within the meaning of section 216(m)(2)(B) of the 
                Social Security Act).''.
    (d) Effective Dates.--
            (1) Subsections (a) and (b).--The amendments made by 
        subsections (a) and (b) shall apply to wages paid after 
        December 31, 2015.
            (2) Subsection (c).--The amendments made by subsection (c) 
        shall apply to remuneration paid in taxable years ending after 
        December 31, 2015.

SEC. 223. 15-PERCENT EXCISE TAX ON EMPLOYER-SPONSORED MEDICARE 
              SUPPLEMENTAL COVERAGE.

    (a) In General.--Chapter 43 of the Internal Revenue Code of 1986 is 
amended by adding at the end the following new section:

``SEC. 4980J. EMPLOYER-SPONSORED MEDICARE SUPPLEMENTAL COVERAGE.

    ``(a) Imposition of Tax.--In the case of any employee who--
            ``(1) becomes a Medicare enrollee (as defined in section 
        1860E-61(b) of the Social Security Act) after December 31, 
        2015, and
            ``(2) is covered for any period during a calendar year 
        beginning after such date under applicable employer-sponsored 
        supplemental coverage,
there is hereby imposed a tax equal to 15 percent of the aggregate cost 
(determined under rules similar to the rules of section 4980B(f)(4)) of 
such coverage of the employee for such period.
    ``(b) Liability To Pay Tax.--The coverage provider (as defined in 
section 4980I(c)(1)) shall pay the tax imposed by subsection (a).
    ``(c) Applicable Employer-Sponsored Supplemental Coverage.--For 
purposes of this section--
            ``(1) In general.--The term `applicable employer-sponsored 
        supplemental coverage' means, with respect to any employee, any 
        first-dollar coverage made available by an employer to an 
        employee during the calendar year.
            ``(2) First-dollar insurance coverage.--The term `first-
        dollar insurance coverage' means coverage for--
                    ``(A) the amount of the unified deductible for the 
                calendar year under section 1860E-21(b) of the Social 
                Security Act, and
                    ``(B) the first $500 of coinsurance for the 
                calendar year under section 1860E-22 of such Act.
            ``(3) Coverage includes employee paid portion.--Coverage 
        shall be treated as applicable employer-sponsored supplemental 
        coverage without regard to whether the employer or employee 
        pays for the coverage.
            ``(4) Self-employed individual.--In the case of an 
        individual who is an employee within the meaning of section 
        401(c)(1), coverage under any group health plan providing 
        health insurance coverage shall be treated as applicable 
        employer-sponsored coverage if a deduction is allowable under 
        section 162(l) with respect to all or any portion of the cost 
        of the coverage.
            ``(5) Employee.--The term `employee' includes any former 
        employee, surviving spouse, or other primary insured adult.
            ``(6) Governmental plans included.--Applicable employer-
        sponsored coverage shall include coverage under any group 
        health plan established and maintained primarily for its 
        civilian employees by the Government of the United States, by 
        the government of any State or political subdivision thereof, 
        or by any agency or instrumentality of any such government.
            ``(7) Not applicable to certain accounts.--The term `first-
        dollar coverage' does not include coverage under a flexible 
        spending arrangement (as defined in section 106(c)(2)), 
        coverage under an arrangement under which the employer makes 
        contributions described in subsection (b) or (d) of section 
        106, a health reimbursement arrangement treated as employer 
        coverage under an accident or health plan for purposes of 
        section 106, or coverage under a health individual retirement 
        account (as defined in section 530A(d)(3)).
            ``(8) Denial of deduction.--For denial of deduction for the 
        tax imposed by this section, see section 275(a)(6).
    ``(d) Regulations.--The Secretary shall prescribe such regulations 
as may be necessary to carry out this section.''.
    (b) Clerical Amendment.--The table of sections for chapter 43 of 
such Code is amended by adding at the end the following new item:

``Sec. 4980J. Employer-sponsored Medicare supplemental coverage.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to periods after December 31, 2015.

                   TITLE III--OTHER HEALTH PROVISIONS

           Subtitle A--Transparency, Outreach, and Education

SEC. 301. PUBLIC OUTREACH AND EDUCATION INITIATIVES.

    Beginning not later than January 1, 2015, the Medicare Choices 
Commission shall conduct public outreach and education efforts, through 
a variety of media and forums, to provide information to Medicare 
enrollees (as defined in section 1860E-51 of the Social Security Act), 
providers of services and suppliers (as such terms are defined in 
section 1861 of such Act), health insurance plans, and other 
appropriate individuals and entities on the modifications made by the 
provisions of, including amendments made by, this Act to Medicare under 
title XVIII of the Social Security Act. Such efforts shall include at 
least the following:
            (1) Interactive Web sites for Medicare enrollees.
            (2) Opportunities for Medicare enrollees to sign up for 
        informational emails from the Centers of Medicare & Medicaid 
        Services.
            (3) Social media pages to provide basic facts to Medicare 
        enrollees and family members of such enrollees.
            (4) National town hall meetings.
            (5) Educational materials for hospitals, medical schools, 
        and other providers of services and suppliers.
            (6) Resources for physicians, home nurses, and other 
        medical professionals to provide to patients.
            (7) Coordination with a broad range of community partners, 
        including community centers, retirement centers, assisted 
        living communities, and faith-based organizations.
            (8) Coordination with health plans.

SEC. 302. ANNUAL MEDICARE BENEFICIARY CONTRIBUTIONS AND BENEFITS 
              STATEMENTS.

    (a) In General.--Part A of title XI of the Social Security Act is 
amended by inserting after section 1143 (42 U.S.C. 1320b-13) the 
following new section:

``SEC. 1143A. ANNUAL MEDICARE BENEFICIARY CONTRIBUTIONS AND BENEFITS 
              STATEMENTS.

    ``(a) Provision.--
            ``(1) In general.--Beginning not later than 2 years after 
        the date of the enactment of this section, the Medicare Choices 
        Commission established under section 1860E-51, in coordination 
        with the Commissioner of Social Security, shall provide a 
        statement described in subsection (b) (in this section referred 
        to as an `annual Medicare information statement') on an annual 
        basis to each eligible individual (as defined in subsection 
        (d)) for whom a current mailing address can be determined 
        through such methods as the Medicare Choices Commission 
        determines to be appropriate.
            ``(2) Coordination in single mailing with social security 
        account statements.--In order to avoid sending separate 
        statements under this section and section 1143 in the case of 
        an individual for whom a social security account statement is 
        provided under section 1143 and a separate annual Medicare 
        information statement would otherwise be provided under this 
        section, the Medicare Choices Commission shall coordinate with 
        the Commissioner of Social Security, whether through 
        transmittal of data or otherwise, in a manner so that the 
        annual Medicare information statement is included and sent with 
        such social security account statement.
            ``(3) Methodology.--
                    ``(A) In general.--The Medicare Choices Commission, 
                in consultation with the Commissioner of Social 
                Security and the Secretary of the Treasury, shall 
                specify the methodology to be used in estimating 
                lifetime contributions and lifetime benefits with 
                respect to annual Medicare information statements. Such 
                methodology for computing the lifespan of an individual 
                shall be the same methodology used for purposes of the 
                social security account statement under section 1143.
                    ``(B) Inclusion of description in statement.--The 
                Medicare Choices Commission shall include a brief 
                description of the key assumptions used in such 
                methodology in the annual Medicare information 
                statements.
            ``(4) Summary of medicare program.--Each annual Medicare 
        information statement shall include a summary of the Medicare 
        programs under title XVIII, including a summary description of 
        the status of the Federal Hospital Insurance Trust Fund under 
        section 1817 and the Federal Supplementary Medical Insurance 
        Trust Fund under section 1841, using information from the most 
        recent report of the Board of Trustees of such Fund. Such 
        summary shall also include a summary description of benefits 
        and enrollment options under parts C and D of such title, but 
        shall indicate that the information described in subsection (b) 
        does not include information related to contributions and 
        benefits under those parts.
    ``(b) Medicare Information Statement Described.--In addition to the 
information described in paragraphs (3)(B) and (4) of subsection (a), 
each annual Medicare information statement for an eligible individual 
shall contain the following:
            ``(1) HI employee contributions.--The total contributions 
        described in section 1143(a)(2)(C) for the individual--
                    ``(A) for the most recent year for which data are 
                available;
                    ``(B) to the extent feasible, for previous periods 
                through the end of such year; and
                    ``(C) as projected for the individual during the 
                individual's lifetime.
        To the extent feasible, of such total contributions the portion 
        that is attributable to employer, employee, and self-employment 
        contributions.
            ``(2) Medicare benefits.--In the case of an eligible 
        individual--
                    ``(A) an estimate of the actuarial value of the 
                expected benefits under such parts for the individual 
                during the individual's lifetime, including (but stated 
                separately) any benefits described in subparagraph (A); 
                and
                    ``(B) if, for such most recent year, such 
                individual was a Medicare enrollee (as defined in 
                section 1860E-61(b)), the total value of such benefits 
                provided to the individual under such parts as of the 
                end of such year and, to the extent feasible, the total 
                value of such benefits for such individual for previous 
                periods through the end of such year.
            ``(3) Comparison.--An appropriate comparison of such 
        contributions with such benefits.
    ``(c) Records Retention.--The Medicare Choices Commission shall 
provide for the indefinite retention of information that--
            ``(1) is described in subsection (b), including benefits 
        described in subsection (b)(2); and
            ``(2) the Medicare Choices Commission has not discarded as 
        of the date of the enactment of this section.
    ``(d) Eligible Individual Defined.--In this section, the term 
`eligible individual' means an individual--
            ``(1) who has a social security account number;
            ``(2) who has attained age 25 or over; and
            ``(3) who is a Medicare enrollee (as defined in section 
        1860E-61(b)) or who, as of the end of the most recent year 
        referred to in subsection (b)(1)(A), has had any contributions 
        described in subsection (b)(1) made with respect to the 
        individual during such year or a previous year.''.
    (b) Inclusion of Social Security Account Statement for Those 
Receiving Annual Medicare Information Statement.--Section 1143(a)(3) of 
such Act (42 U.S.C. 1320b-13(a)(3)) is amended by adding at the end the 
following:
    ``Such term includes an individual not described in the previous 
sentence who is an eligible individual (as defined in subsection (d) of 
section 1143A) for whom an annual Medicare information statement is 
provided under such section.''.

                       Subtitle B--Miscellaneous

SEC. 311. REPEAL OF IPAB.

    Effective as if included in the enactment of the Patient Protection 
and Affordable Care Act (Public Law 111-148), the provisions of, and 
amendments made by, sections 3403 and 10320 of such Act (other than 
subsection (d) of section 1899A of the Social Security Act, as added 
and amended by such sections) are repealed.

SEC. 312. REPEAL OF MEDICARE PAYMENT PRODUCTIVITY ADJUSTMENTS AFTER 
              2020.

    The provisions of, and amendments made by, section 3401 of the 
Patient Protection and Affordable Care Act (Public Law 111-148), as 
amended by title X of such Act and section 1105 of the Health Care and 
Education Reconciliation Act of 2010, insofar as such provisions (and 
amendments) relate to a productivity adjustment, shall not apply with 
respect to payments for items or services furnished during any year 
after fiscal year 2020 or calendar year 2020, as applicable.

SEC. 313. GRADUATE MEDICAL EDUCATION GRANT PROGRAM.

    (a) In General.--Title XVIII of the Social Security Act is amended 
by adding at the end the following new section:

``SEC. 1899B. GRADUATE MEDICAL EDUCATION GRANT PROGRAM.

    ``(a) Establishment.--For cost reporting periods occurring during 
fiscal year 2015 or a subsequent fiscal year, the Secretary shall carry 
out a grant program under which the Secretary shall provide to each 
hospital with an approved medical residency training program a grant in 
accordance with the subsequent provisions of this section for costs of 
such hospital for indirect and direct graduate medical education. Such 
grants are instead of any payment under subsection (d)(5)(B) or (h) of 
section 1886, payments for direct or indirect medical education costs 
under title XIX, or section 340E of the Public Health Service Act for 
such costs during such fiscal year.
    ``(b) Grant Amount.--Subject to subsections (c) and (d), the amount 
of a grant to a hospital under subsection (a) for a cost reporting 
period occurring during a fiscal year shall be equal to--
            ``(1) in the case of a subsection (d) hospital, the sum 
        of--
                    ``(A) the payment amount the hospital would have 
                received under section 1886(h)(3), without application 
                of this section or the last sentence of section 
                1886(h)(1), for such cost reporting period; and
                    ``(B) 72 percent of the additional payment amount 
                the hospital would have received under section 
                1886(d)(5)(B), without application of this section or 
                clause (xii) of such section 1886(d)(5)(B), for such 
                cost reporting period;
            ``(2) in the case of a hospital in a State, an amount 
        determined in accordance with a methodology specified by the 
        Secretary, which shall be in lieu of any amount that the 
        hospital otherwise would, without application of this section 
        or section 1903(i)(27), have received under the State plan 
        under title XIX for expenses of such hospital attributable to 
        the costs of direct and indirect graduate medical education; 
        and
            ``(3) in the case of a children's hospital (as defined in 
        subsection (g) of section 340E of the Public Health Service 
        Act), the sum of--
                    ``(A) the amount that would be determined under 
                subsection (c) of such section for such hospital for 
                direct expenses associated with operating approved 
                graduate medical residency training programs for such 
                period, without application of this section or 
                subsection (h) of such section 340E; and
                    ``(B) the amount that would be determined under 
                subsection (d) of such section for such hospital for 
                indirect expenses associated with the treatment of more 
                severely ill patients and the additional costs relating 
                to teaching residents in such programs for such period, 
                without application of this section or subsection (h) 
                of such section 340E.
    ``(c) Modification.--Subject to subsection (d)(1), the Secretary 
may modify the grant amounts under subsection (b), including after 
application of subsection (d)(2), based on factors such as the number 
of residents of approved medical residency training programs, the 
extent to which such programs provide for primary care training, the 
curriculum of such programs, and the quality of care provided through 
such programs.
    ``(d) Limitation.--
            ``(1) In general.--In no case may the aggregate amount of 
        grants awarded under subsection (a) for a fiscal year exceed 
        the amount made available under subsection (e)(1) for such 
        fiscal year for carrying out this section.
            ``(2) Pro-ration.--In the case of a fiscal year for which 
        the aggregate amount of grants under this section is projected 
        to exceed the amount made available under subsection (e)(1) for 
        such fiscal year for carrying out this section, the Secretary 
        shall reduce the amount of each grant awarded under this 
        section for such fiscal year by a prorated amount. Subject to 
        paragraph (1), the Secretary may modify such a prorated amount 
        in accordance with subsection (c).
    ``(e) Funding.--
            ``(1) In general.--For fiscal year 2015 and each subsequent 
        fiscal year, amounts in the Graduate Medical Education Trust 
        Fund under section 9512 of the Internal Revenue Code of 1986 
        shall be available, without further appropriation, to the 
        Secretary to carry out this section.
            ``(2) Transfers to gme trust fund.--There shall be provided 
        for the transfer to the Graduate Medical Education Trust Fund 
        by the Medicare Choices Commission in appropriate part from the 
        Federal Hospital Insurance Trust Fund under section 1817 and 
        the Federal Supplementary Medical Insurance Trust Fund under 
        section 1841 of the following:
                    ``(A) For fiscal year 2015, an amount equal to the 
                aggregate amount that would have been calculated under 
                subsection (b)(1) for such fiscal year for all 
                hospitals with approved medical residency training 
                programs if the percentage described in paragraph 
                (1)(B) of such subsection were 82 percent.
                    ``(B) For fiscal year 2016 and each subsequent 
                fiscal year, the amount transferred under this 
                paragraph for the previous fiscal year increased by the 
                annual percentage increase in the medical component of 
                the Consumer Price Index for All Urban Consumers (all 
                items; United States city average) as of June of the 
                previous fiscal year.
    ``(f) Definitions.--The terms `approved medical residency training 
program' and `direct graduate medical education costs' have the 
meanings given such terms under section 1886(h)(5).''.
    (b) GME Trust Fund.--
            (1) In general.--Subchapter A of chapter 98 of the Internal 
        Revenue Code of 1986 is amended by adding at the end the 
        following new section:

``SEC. 9512. GRADUATE MEDICAL EDUCATION TRUST FUND.

    ``(a) In General.--There is established in the Treasury of the 
United States a trust fund to be known as the `Graduate Medical 
Education Trust Fund' (hereafter in this section referred to as the 
`GME Trust Fund'), consisting of such amounts as may be appropriated or 
credited to such Trust Fund as provided in this section and section 
9602(b).
    ``(b) Transfers to Fund.--
            ``(1) Trust fund transfers.--There shall be credited to the 
        GME Trust Fund for fiscal year 2015 and each subsequent fiscal 
        year--
                    ``(A) the amounts transferred under section 1899B 
                of the Social Security Act; and
                    ``(B) the amounts transferred from the Patient-
                Centered Outcomes Research Trust Fund under section 
                9511(g).
            ``(2) Appropriation.--There are hereby appropriated to the 
        GME Trust Fund for fiscal year 2015 and each subsequent fiscal 
        year an amount equal to the aggregate payment amounts 
        determined for such fiscal year under section 1899B(b)(2) of 
        the Social Security Act.
            ``(3) Authorization of appropriations.--In addition to 
        amounts credited to the GME Trust Fund under paragraph (1) for 
        a fiscal year, there are authorized to be appropriated to the 
        Trust Fund--
                    ``(A) for each of fiscal years 2015 and 2016, 
                $200,000,000; and
                    ``(B) for each of fiscal years 2017 and 2018, 
                $100,000,000.
    ``(c) Expenditures From Fund.--Amounts in the GME Trust Fund are 
available, without further appropriation, to the Secretary for carrying 
out section 1899B of the Social Security Act.''.
            (2) Clerical amendment.--The table of sections for 
        subchapter A of chapter 98 of such Code is amended by adding at 
        the end the following new item:

``Sec. 9512. Graduate Medical Education Trust Fund.''.
    (c) Conforming Amendments.--
            (1) Sunset medicare gme.--Section 1886 of the Social 
        Security Act (42 U.S.C. 1395ww) is amended--
                    (A) in subsection (d)(5)(B)--
                            (i) by redesignating the second clause (x) 
                        as clause (xi); and
                            (ii) by adding at the end the following new 
                        clause:
                    ``(xii) For cost reporting periods beginning on or 
                after October 1, 2014, no additional payment amount for 
                subsection (d) hospitals with indirect costs of medical 
                education shall be made under this subparagraph and 
                instead payments for such costs shall be made in 
                accordance with section 1899B.''; and
                    (B) in subsection (h)(1), by adding at the end the 
                following new sentence: ``For cost reporting periods 
                beginning on or after October 1, 2014, no payments for 
                direct graduate medical education costs shall be made 
                under this subsection and instead payments for such 
                costs shall be made in accordance with section 
                1899B.''.
            (2) Sunset medicaid gme.--Section 1903(i) of the Social 
        Security Act (42 U.S.C. 1396b(i)) is amended--
                    (A) in paragraph (25), by striking ``or'' at the 
                end;
                    (B) in paragraph (26), by striking the period at 
                the end and inserting ``; or''; and
                    (C) by inserting after paragraph (26) the following 
                new paragraph:
            ``(27) with respect to any amounts expended on or after 
        October 1, 2014, for payments to hospitals for direct or 
        indirect costs of graduate medical education.''.
            (3) Sunset phsa children's hospital gme.--Section 340E of 
        the Public Health Service Act (42 U.S.C. 256e) is amended--
                    (A) in the first sentence of subsection (a), by 
                striking ``The Secretary'' and inserting ``Subject to 
                subsection (h), the Secretary''; and
                    (B) by adding at the end the following new 
                subsection:
    ``(h) Sunset.--For fiscal year 2015 and each subsequent fiscal 
year, no payments shall be made under this section to a children's 
hospital for the direct expenses and the indirect expenses associated 
with operating approved graduate medical residency training programs 
and instead payments for such expenses shall be made to such hospital 
in accordance with section 1899B of the Social Security Act.''.
            (4) Transfer of pcori funds.--
                    (A) Medicare transfer.--Section 1183 of the Social 
                Security Act is amended--
                            (i) in the heading, by striking ``patient-
                        centered outcomes research trust fund'' and 
                        inserting ``graduate medical education trust 
                        fund''; and
                            (ii) in subsection (a), by striking ``to 
                        the Patient-Centered Outcomes Research Trust 
                        Fund (referred to in this section as the 
                        `PCORTF') under section 9511 of the Internal 
                        Revenue Code of 1986'' and inserting ``to the 
                        Graduate Medical Education Trust Fund under 
                        section 9512 of the Internal Revenue Code of 
                        1986''.
                    (B) PCORI trust fund.--Section 9511 of the Internal 
                Revenue Code of 1986 is amended--
                            (i) in subsection (d)(1), by inserting 
                        ``and subsection (g)'' after ``paragraph (2)''; 
                        and
                            (ii) by adding at the end the following new 
                        subsection:
    ``(g) Transfer to Graduate Medical Education Trust Fund.--The 
Secretary of the Treasury shall transfer to the Graduate Medical 
Education Trust Fund under section 9512 all funds made available, 
appropriated, or transferred to the trust fund under this section on or 
after October 1, 2014.''.

SEC. 314. REPORT ON TRANSITIONING PAYMENTS UNDER MEDICARE FOR 
              DISPROPORTIONATE SHARE HOSPITALS INTO A GRANT PROGRAM.

    Not later than December 31, 2017, the Secretary of Health and Human 
Services shall submit to Congress a report containing recommendations 
on the extent to which--
            (1) adjustments in payments under section 1886(d)(5)(F) of 
        the Social Security Act for inpatient hospital services 
        furnished by disproportionate share hospitals should be 
        terminated; and
            (2) instead of such adjustments described in paragraph (1) 
        there should be established a grant program (separate from the 
        Medicare programs under title XVIII of the Social Security Act) 
        to provide disproportionate care hospitals funding for 
        providing such services.

SEC. 315. ONE-YEAR FREEZE FOR PHYSICIAN PAYMENT UPDATE; SENSE OF 
              CONGRESS RELATING TO THE SUSTAINABLE GROWTH RATE (SGR).

    (a) One-Year Freeze for Physician Payment Update.--Section 1848(d) 
of the Social Security Act (42 U.S.C. 1395w-4(d)) is amended by adding 
at the end the following new paragraph:
            ``(14) Update for 2013.--
                    ``(A) In general.--Subject to paragraphs (7)(B), 
                (8)(B), (9)(B), (10)(B), (11)(B), (12)(B), and (13)(B), 
                in lieu of the update to the single conversion factor 
                established in paragraph (1)(C) that would otherwise 
                apply for 2013, the update to the single conversion 
                factor shall be zero percent.
                    ``(B) No effect on computation of conversion factor 
                for 2014 and subsequent years.--The conversion factor 
                under this subsection shall be computed under paragraph 
                (1)(A) for 2014 and subsequent years as if subparagraph 
                (A) had never applied.''.
    (b) Sense of Congress Relating to the Sustainable Growth Rate 
(SGR).--It is the Sense of Congress that the sustainable growth rate 
(SGR) formula under the Medicare physician fee schedule under section 
1848 of the Social Security Act (42 U.S.C. 1395w-4(d) is fundamentally 
flawed and that replacing such formula with a payment system that 
protects the access of seniors to high-quality physician care should be 
an urgent priority.

SEC. 316. IMPROVEMENTS TO MSA PLANS; PERMITTING OFFERING OF 
              CATASTROPHIC PLAN WITH HIGH DEDUCTIBLE AND CONTRIBUTION 
              TO MSA, HSA, OR HIRA.

    (a) MSA Plan May Choose To Not Apply Deductible to Preventive 
Services.--Section 1859(b)(3) of the Social Security Act is amended--
            (1) in subparagraph (A), by inserting ``, subject to 
        subparagraph (C)'' after ``plan that''; and
            (2) by adding at the end the following new subparagraph:
                    ``(C) Deductible not applicable to preventive 
                services.--With respect to expenses incurred during the 
                first plan year beginning on or after the date of the 
                enactment of this subparagraph or a subsequent plan 
                year, a Medicare Advantage organization offering an MSA 
                plan may waive application of the deductible under this 
                paragraph with respect to preventive care (within the 
                meaning of section 1871) under such plan and such 
                waiver shall not affect the plan satisfying the 
                definition under subparagraph (A).''.
    (b) MA and MSA Plans Allowed To Make Medicare Advantage MSA 
Contributions.--Section 138(b)(2) of the Internal Revenue Code of 1986 
is amended--
            (1) in subparagraph (A), by striking at the end ``or'';
            (2) in subparagraph (B), by adding at the end ``or''; and
            (3) by adding at the end the following new subparagraph:
                    ``(C) a contribution made by a Medicare Advantage 
                plan or MSA plan under part C of title XVIII of the 
                Social Security Act pursuant to subparagraph (B) or (D) 
                of section 1851(a)(2) of such Act,''.
    (c) MA Plans Offered May Include Catastrophic Plan With High 
Deductible and MSA, HSA, or HIRA Contribution.--Section 1851(a)(2) of 
the Social Security Act (42 U.S.C. 1395w-21(a)(2)) is amended by adding 
at the end the following new subparagraph:
                    ``(D) Combination catastrophic high deductible plan 
                with msa, hsa, or hira contribution.--A plan offering 
                catastrophic coverage with a high deductible feature 
                (as described in section 1882(p)(11)(B)), and a 
                contribution by such plan into a Medicare Advantage 
                medical savings account (MSA) (as defined in section 
                138(b)(2) of the Internal Revenue Code of 1986), a 
                health savings account (as defined in section 223(d) of 
                the Internal Revenue Code of 1986), or a health 
                individual retirement account established under section 
                503(b) of the Save and Strengthen Medicare Act of 
                2012.''.

SEC. 317. EXTENSION FOR SPECIALIZED MA PLANS FOR SPECIAL NEEDS 
              INDIVIDUALS.

    (a) No Period Limitation Applied for Restricted Enrollments.--
Section 1859(f)(1) of the Social Security Act (42 U.S.C. 1395w-
28(f)(1)) is amended by striking ``and for periods before January 1, 
2014''.
    (b) Period for Meeting Applicable Requirements Extended.--Section 
1859(b)(6)(A) of the Social Security Act (42 U.S.C. 1395w-28(b)(6)(A)) 
is amended by striking ``, as of January 1, 2010,''.
    (c) Extension of Authority To Operate but No Service Area Expansion 
for Dual Special Needs Plans That Do Not Meet Certain Requirements.--
Section 164(c)(2) of the Medicare Improvements for Patients and 
Providers Act of 2008 (Public Law 110-275), as amended by section 
3205(d) of the Patient Protection and Affordable Care Act (Public Law 
111-148), is amended by striking ``December 31, 2012'' and inserting 
``December 31, 2015''.

SEC. 318. CONSCIENCE PROTECTIONS.

    Part F of title XVIII of the Social Security Act, as redesignated 
by section 101(a)(1) and amended by section 313, is further amended by 
adding at the end the following new sections:

``SEC. 1899C. CONSCIENCE PROTECTIONS; PROHIBITION AGAINST 
              DISCRIMINATION ON ASSISTED SUICIDE AND ABORTION SERVICES.

    ``(a) Prohibition on Funding for Abortions.--No payment may be made 
under this title for any expenses incurred for any abortion.
    ``(b) Prohibition on Funding for Health Benefits Plans That Cover 
Abortion.--No payment may be made under this title for any expenses for 
coverage under an MA plan or prescription drug plan that includes 
coverage of any abortion.
    ``(c) Treatment of Abortions Related to Rape, Incest, or Preserving 
the Life of the Mother.--The limitations established in the previous 
subsections shall not apply to an abortion--
            ``(1) if the pregnancy is the result of an act of rape or 
        incest; or
            ``(2) in the case where a woman suffers from a physical 
        disorder, physical injury, or physical illness that would, as 
        certified by a physician, place the woman in danger of death 
        unless an abortion is performed, including a life-endangering 
        physical condition caused by or arising from the pregnancy 
        itself.

``SEC. 1899D. PROHIBITION AGAINST DISCRIMINATION ON ASSISTED SUICIDE 
              AND ABORTIONS.

    ``(a) In General.--The Federal Government, any MA plan or 
prescription drug plan that receives payment under this title, and any 
provider of services or supplier that receives payment under this title 
with respect to Medicare fee-for-service (as defined in section 1860E-
61(b)) may not subject an individual or institutional health care 
entity to discrimination on the basis that the entity does not 
provide--
            ``(1) any health care item or service furnished for the 
        purpose of causing, or for the purpose of assisting in causing, 
        the death of any individual, such as by assisted suicide, 
        euthanasia, or mercy killing; or
            ``(2) abortions.
    ``(b) Definition.--In this section, the term `health care entity' 
includes an individual physician or other health care professional, a 
hospital, a provider-sponsored organization, a health maintenance 
organization, a health insurance plan, or any other kind of health care 
facility, organization, or plan.
    ``(c) Construction and Treatment of Certain Services in the Case of 
Assisted Suicide.--Nothing in subsection (a)(1) shall be construed to 
apply to, or to affect, any limitation relating to--
            ``(1) the withholding or withdrawing of medical treatment 
        or medical care;
            ``(2) the withholding or withdrawing of nutrition or 
        hydration; or
            ``(3) the use of an item, good, benefit, or service 
        furnished for the purpose of alleviating pain or discomfort, 
        even if such use may increase the risk of death, so long as 
        such item, good, benefit, or service is not also furnished for 
        the purpose of causing, or the purpose of assisting in causing, 
        death, for any reason.
    ``(d) Administration.--The Office for Civil Rights of the 
Department of Health and Human Services is designated to receive 
complaints of discrimination based on this section. Any such complaint 
shall, by not later than 180 days after receipt by the Office of such 
complaint, be reviewed by the Office and, as appropriate, referred to 
the Medicare Choices Commission or Centers for Medicare & Medicaid 
Services for purposes of subsection (e).
    ``(e) Enforcement.--
            ``(1) MA plans and prescription drug plans.--In the case of 
        an MA plan or prescription drug plan that is in violation of 
        subsection (a), the Medicare Choices Commission may, as 
        determined appropriate by the Commission--
                    ``(A) apply against the MA organization offering 
                the MA plan or the PDP sponsor offering the 
                prescription drug plan a civil monetary penalty or 
                assessment in the same manner as such a penalty or 
                assessment is authorized under section 1128A(a);
                    ``(B) exclude the plan from participation under 
                this title, in accordance with the procedures of 
                subsections (c), (f), and (g) of section 1128; or
                    ``(C) apply both subparagraphs (A) and (B) with 
                respect to the plan.
            ``(2) Medicare fee-for-service providers of services and 
        suppliers.--In the case of a provider of services or supplier 
        described in subsection (a) that is in violation of such 
        subsection, the Secretary, through the Administrator of the 
        Centers for Medicare & Medicaid Services, may, as determined 
        appropriate by the Secretary--
                    ``(A) apply against the provider of services or 
                supplier a civil monetary penalty or assessment in the 
                same manner as such a penalty or assessment is 
                authorized under section 1128A(a);
                    ``(B) exclude the provider of services or supplier 
                from participation under this title, in accordance with 
                the procedures of subsections (c), (f), and (g) of 
                section 1128; or
                    ``(C) apply both subparagraphs (A) and (B) with 
                respect to the provider of services or supplier.
            ``(3) Administration.--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 paragraph (1) or (2) 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 paragraph (1)(B) or (2)(B), 
        respectively.''.
                                 <all>