Overview of the Medicare Prescription Drug and Reform Conference Agreement, H.R. 1 Page: 4 of 28
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Overview of the Medicare
Prescription Drug and Reform
Conference Agreement, H.R. 1
On November 22, the House of Representatives voted 220 to 215 to approve
H.R. 1, the Medicare prescription drug and modernization conference agreement.
The Senate voted 54 to 44 to approve the conference agreement on November 25.
Earlier, the conferees of the Medicare prescription drug and modernization legislation
announced an agreement on November 16 and the legislative text was released
November 20. The legislative language can be downloaded from the House
Committee on Ways and Means website at: [http://waysandmeans.house.gov/].
The conference agreement, adds a prescription drug benefit and replaces the
existing Medicare+Choice program with a new program, called the Medicare
Advantage program. The prescription drug benefit, which begins in 2006, is
voluntary and beneficiaries would pay a monthly premium after enrolling. Until that
time, beneficiaries would have access to a drug discount card to obtain discounts on
their drug purchases.
Medicare Advantage establishes payments based on a system of bids and
benchmarks. One area of major difference during the conference was the so-called
"premium support" provisions of H.R. 1 whereby the original Medicare fee-for-
service program would be required to compete against the new Medicare Advantage
program. The conference agreement creates a 6-year Comparative Cost Adjustment
program in which the concept of premium support would be applied in a limited
number of Metropolitan Statistical areas (MSAs). The conference agreement also
provides a stabilization fund to create incentive for plans to enter into and remain in
the Medicare Advantage program.
The conference agreement includes a measure that would require congressional
consideration of legislation if general revenue funding for the entire Medicare
program exceeds 45%. In addition, the Medicare Part B premium would be increased
for high-income beneficiaries beginning in 2007 and phased in over 5 years and the
Part B deductible would increase to $110 in 2005 and be indexed beginning in 2006.
The conference agreement contains numerous provisions that would generally
increase fee-for-service Medicare payments, especially for rural health care providers,
and would modify numerous regulatory and administrative practices.
Earlier this year, $400 billion was reserved for Medicare modernization,
creation of a prescription drug benefit, and, in the Senate, to promote geographic
equity payment, under Congress' FY2004 budget resolution. The Congressional
Budget Office (CBO) has estimated that the conference agreement for H.R. 1 would
increase direct (or mandatory) spending by $394.3 billion from FY2004 through
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O'Sullivan, Jennifer; Chaikind, Hinda; Tilson, Sibyl; Boulanger, Jennifer & Morgan, Paulette C. Overview of the Medicare Prescription Drug and Reform Conference Agreement, H.R. 1, report, December 4, 2003; Washington D.C.. (https://digital.library.unt.edu/ark:/67531/metadc812225/m1/4/: accessed April 19, 2024), University of North Texas Libraries, UNT Digital Library, https://digital.library.unt.edu; crediting UNT Libraries Government Documents Department.