(a) Establishment of program

(1) In general

The Secretary shall establish a program under this section (in this section referred to as the “CCA program”) for the application of comparative cost adjustment in CCA areas selected under this section.

(2) Duration

The CCA program shall begin January 1, 2010, and shall extend over a period of 6 years, and end on December 31, 2015.

(3) Report

Upon the completion of the CCA program, the Secretary shall submit a report to Congress. Such report shall include the following, with respect to both this part and the original medicare fee-for-service program:

(A) An evaluation of the financial impact of the CCA program.

(B) An evaluation of changes in access to physicians and other health care providers.

(D) Recommendations regarding any extension or expansion of the CCA program.

(b) Requirements for selection of CCA areas

(1) CCA area defined

(A) In general

For purposes of this section, the term “CCA area” means an MSA that meets the requirements of paragraph (2) and is selected by the Secretary under subsection (c) of this section.

(B) MSA defined

For purposes of this section, the term “MSA” means a Metropolitan Statistical Area (or such similar area as the Secretary recognizes).

(2) Requirements for CCA areas

The requirements of this paragraph for an MSA to be a CCA area are as follows:

(A) MA enrollment requirement

For the reference month (as defined under section 1395w–27a(f)(4)(B) of this title) with respect to 2010, at least 25 percent of the total number of MA eligible individuals who reside in the MSA were enrolled in an MA local plan described in section 1395w–21(a)(2)(A)(i) of this title.

(B) 2 plan requirement

There will be offered in the MSA during the annual, coordinated election period under section 1395w–21(e)(3)(B) of this title before the beginning of 2010 at least 2 MA local plans described in section 1395w–21(a)(2)(A)(i) of this title (in addition to the fee-for-service program under parts A and B of this subchapter), each offered by a different MA organization and each of which met the minimum enrollment requirements of paragraph (1) of section 1395w–27(b) of this title (as applied without regard to paragraph (3) thereof) as of the reference month.

(1) General selection criteria

The Secretary shall select CCA areas from among those MSAs qualifying under subsection (b) of this section in a manner that—

(A) seeks to maximize the opportunity to test the application of comparative cost adjustment under this subchapter;

(B) does not seek to maximize the number of MA eligible individuals who reside in such areas; and

(2) Selection criteria

With respect to the selection of MSAs that qualify to be CCA areas under subsection (b) of this section, the following rules apply, to the maximum extent feasible:

(A) Maximum number

The number of such MSAs selected may not exceed the lesser of (i) 6, or (ii) 25 percent of the number of MSAs that meet the requirement of subsection (b)(2)(A) of this section.

(B) One of 4 largest areas by population

At least one such qualifying MSA shall be selected from among the 4 such qualifying MSAs with the largest total population of MA eligible individuals.

At least one such qualifying MSA shall be selected from among the 4 such qualifying MSAs with the lowest population density (as measured by residents per square mile or similar measure of density).

(D) Multistate area

At least one such qualifying MSA shall be selected that includes a multi-State area. Such an MSA may be an MSA described in subparagraph (B) or (C).

(E) Limitation within same geographic region

No more than 2 such MSAs shall be selected that are, in whole or in part, within the same geographic region (as specified by the Secretary) of the United States.

(F) Priority to areas not within certain demonstration projects

Priority shall be provided for those qualifying MSAs that do not have a demonstration project in effect as of December 8, 2003, for medicare preferred provider organization plans under this part.

(d) Application of comparative cost adjustment

(1) In general

In the case of a CCA area for a year—

(A) for purposes of applying this part with respect to payment for MA local plans, any reference to an MA area-specific non-drug monthly benchmark amount shall be treated as a reference to such benchmark computed as if the CCA area-specific non-drug monthly benchmark amount (as defined in subsection (e)(1) of this section) were substituted for the amount described in section 1395w–23(j)(1)(A) of this title for the CCA area and year involved, as phased in under paragraph (3); and

(B) with respect to months in the year for individuals residing in the CCA area who are not enrolled in an MA plan, the amount of the monthly premium under section 1395r of this title is subject to adjustment under subsection (f) of this section.

(2) Exclusion of MA local areas with fewer than 2 organizations offering MA plans

(A) In general

In no case shall an MA local area that is within an MSA be included as part of a CCA area unless for 2010 (and, except as provided in subparagraph (B), for a subsequent year) there is offered in each part of such MA local area at least 2 MA local plans described in section 1395w–21(a)(2)(A)(i) of this title each of which is offered by a different MA organization.

(B) Continuation

If an MA local area meets the requirement of subparagraph (A) and is included in a CCA area for 2010, such local area shall continue to be included in such CCA area for a subsequent year notwithstanding that it no longer meets such requirement so long as there is at least one MA local plan described in section 1395w–21(a)(2)(A)(i) of this title that is offered in such local area.

(3) Phase-in of CCA benchmark

(A) In general

In applying this section for a year before 2013, paragraph (1)(A) shall be applied as if the phase-in fraction under subparagraph (B) of the CCA non-drug monthly benchmark amount for the year were substituted for such fraction of the MA area-specific non-drug monthly benchmark amount.

(B) Phase-in fraction

The phase-in fraction under this subparagraph is—

(i) for 2010 1/4; and

(ii) for a subsequent year is the phase-in fraction under this subparagraph for the previous year increased by 1/4, but in no case more than 1.

(e) Computation of CCA benchmark amount

(1) CCA non-drug monthly benchmark amount

For purposes of this section, the term “CCA non-drug monthly benchmark amount” means, with respect to a CCA area for a month in a year, the sum of the 2 components described in paragraph (2) for the area and year. The Secretary shall compute such benchmark amount for each such CCA area before the beginning of each annual, coordinated election period under section 1395w–21(e)(3)(B) of this title for each year (beginning with 2010) in which the CCA area is so selected.

(2) 2 components

For purposes of paragraph (1), the 2 components described in this paragraph for a CCA area and a year are the following:

(A) MA local component

The product of the following:

(i) Weighted average of medicare advantage plan bids in area

The weighted average of the plan bids for the area and year (as determined under paragraph (3)(A)).

(ii) Non-FFS market share

One minus the fee-for-service market share percentage, determined under paragraph (4) for the area and year.

(B) Fee-for-service component

The product of the following:

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

The fee-for-service area-specific non-drug amount (as defined in paragraph (5)) for the area and year.

(ii) Fee-for-service market share

The fee-for-service market share percentage, determined under paragraph (4) for the area and year.

(3) Determination of weighted average MA bids for a CCA area

(A) In general

For purposes of paragraph (2)(A)(i), the weighted average of plan bids for a CCA area and a year is, subject to subparagraph (D), the sum of the following products for MA local plans described in subparagraph (C) in the area and year:

(i) Monthly medicare advantage statutory non-drug bid amount

The accepted unadjusted MA statutory non-drug monthly bid amount.

(ii) Plan's share of medicare advantage enrollment in area

The number of individuals described in subparagraph (B), divided by the total number of such individuals for all MA plans described in subparagraph (C) for that area and year.

(B) Counting of individuals

The Secretary shall count, for each MA local plan described in subparagraph (C) for an area and year, the number of individuals who reside in the area and who were enrolled under such plan under this part during the reference month for that year.

For an area and year, the MA local plans described in this subparagraph are MA local plans described in section 1395w–21(a)(2)(A)(i) of this title that are offered in the area and year and were offered in the CCA area in the reference month.

(D) Computation of weighted average of plan bids

In calculating the weighted average of plan bids for a CCA area under subparagraph (A)—

(i) in the case of an MA local plan that has a service area only part of which is within such CCA area, the MA organization offering such plan shall submit a separate bid for such plan for the portion within such CCA area; and

(ii) the Secretary shall adjust such separate bid (or, in the case of an MA local plan that has a service area entirely within such CCA area, the plan bid) as may be necessary to take into account differences between the service area of such plan within the CCA area and the entire CCA area and the distribution of plan enrollees of all MA local plans offered within the CCA area.

(4) Computation of fee-for-service market share percentage

The Secretary shall determine, for a year and a CCA area, the proportion (in this subsection referred to as the “fee-for-service market share percentage”) equal to—

(A) the total number of MA eligible individuals residing in such area who during the reference month for the year were not enrolled in any MA plan; divided by

(B) the sum of such number and the total number of MA eligible individuals residing in such area who during such reference month were enrolled in an MA local plan described in section 1395w–21(a)(2)(A)(i) of this title,

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

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

(A) In general

For purposes of paragraph (2)(B)(i) and subsection (f)(2)(A) of this section, subject to subparagraph (C), the term “fee-for-service area-specific non-drug amount” means, for a CCA area and a year, the adjusted average per capita cost for such area and year involved, determined under section 1395mm(a)(4) of this title and adjusted as appropriate for the purpose of risk adjustment for benefits under the original medicare fee-for-service program option for individuals entitled to benefits under part A of this subchapter and enrolled under part B of this subchapter who are not enrolled in an MA plan for the year, but adjusted to exclude costs attributable to payments under section 1395ww(h) of this title.

(B) Use of full risk adjustment to standardize fee-for-service costs to typical beneficiary

In determining the adjusted average per capita cost for an area and year under subparagraph (A), such costs shall be adjusted to fully take into account the demographic and health status risk factors established under section 1395w–23(a)(1)(A)(iv) of this title 1 so that such per capita costs reflect the average costs for a typical beneficiary residing in the CCA area.

In determining the adjusted average per capita cost under subparagraph (A) for a year, such cost shall be adjusted to include the Secretary's estimate, on a per capita basis, of the amount of additional payments that would have been made in the area involved under this subchapter if individuals entitled to benefits under this subchapter had not received services from facilities of the Department of Veterans Affairs or the Department of Defense.

(f) Premium adjustment

(1) Application

(A) In general

Except as provided in subparagraph (B), in the case of an individual who is enrolled under part B of this subchapter, who resides in a CCA area, and who is not enrolled in an MA plan under this part, the monthly premium otherwise applied under part B of this subchapter (determined without regard to subsections (b), (f), and (i) of section 1395r of this title or any adjustment under this subsection) shall be adjusted in accordance with paragraph (2), but only in the case of premiums for months during the period in which the CCA program under this section for such area is in effect.

(B) No premium adjustment for subsidy eligible beneficiaries

No premium adjustment shall be made under this subsection for a premium for a month if the individual is determined to be a subsidy eligible individual (as defined in section 1395w–114(a)(3)(A) of this title) for the month.

(2) Amount of adjustment

(A) In general

Under this paragraph, subject to the exemption under paragraph (1)(B) and the limitation under subparagraph (B), if the fee-for-service area-specific non-drug amount (as defined in section 2 (e)(5)) for a CCA area in which an individual resides for a month—

(i) does not exceed the CCA non-drug monthly benchmark amount (as determined under subsection (e)(1) of this section) for such area and month, the amount of the premium for the individual for the month shall be reduced, by an amount equal to 75 percent of the amount by which such CCA benchmark exceeds such fee-for-service area-specific non-drug amount; or

(ii) exceeds such CCA non-drug benchmark, the amount of the premium for the individual for the month shall be adjusted to ensure, that—

(I) the sum of the amount of the adjusted premium and the CCA non-drug benchmark for the area; is equal to

(II) the sum of the unadjusted premium plus the amount of such fee-for-service area-specific non-drug amount for the area.

(B) Limitation

In no case shall the actual amount of an adjustment under subparagraph (A) for an area and month in a year result in an adjustment that exceeds the maximum adjustment permitted under subparagraph (C) for the area and year, or, if less, the maximum annual adjustment permitted under subparagraph (D) for the area and year.

The amount of an adjustment under subparagraph (A) for a CCA area and year may not exceed the product of the phase-in fraction for the year under subsection (d)(3)(B) of this section multiplied by the amount of the adjustment otherwise computed under subparagraph (A) for the area and year, determined without regard to this subparagraph and subparagraph (D).

(D) 5-percent limitation on adjustment

The amount of the adjustment under this subsection for months in a year shall not exceed 5 percent of the amount of the monthly premium amount determined for months in the year under section 1395r of this title without regard to subsections (b), (f), and (i) of such section and this subsection.