ADJUSTMENT IN MEDICARE PART B PREMIUM.

SEC. 211. ADJUSTMENT IN MEDICARE PART B PREMIUM. (a) In General.— Section 1839 (42 U.S.C. 1395r) is amended by adding at the end the following new subsection: “(g) (1) (A) Except as provided in this paragraph, paragraphs (4) and (5), and subsections (b) and (f), the monthly premium for each individual enrolled under this part otherwise determined, without regard to this subsection, shall be increased by the sum of the catastrophic coverage monthly premium and the prescription drug monthly premium for months in the year determined under the following table (for months occurring in 1989 through 1993) or determined in accordance with paragraphs (2) and (3) (for months after December 1993): In the case of: The catastrophic coverage monthly premium is: The prescription drug monthly premium is: 1989 $4.00 0 1990 $4.90 0 1991 $5.46 $1.94 1992 $6.76 $2.45 1993 $7.18 $3.02. “(B) (i) Except as provided in subparagraph (C), if the amount of the supplemental premium rate otherwise determined under section 59B of the Internal Revenue Code of 1986 for taxable years beginning in a calendar year is increased as a result of subsection (e)(2)(A)(i) of such section or is reduced as a result of subsection (e)(2)(A)(ii) of such section, the monthly premium increase otherwise determined under this paragraph shall be reduced or increased, respectively, by an amount equal to— “(I) 1/12th of the excess or shortfall, respectively, determined under clause (ii) for the year, as adjusted under clause (iv), divided by “(II) the average number of individuals covered under this part during the preceding year. “(ii) The excess or shortfall determined under this clause for a year is the excess or shortfall, determined by the Secretary of the Treasury, of— 102 STAT. 734 “(I) the total amount of the supplemental premiums imposed under section 59B of the Internal Revenue Code of 1986 in the 2nd preceding year, over “(II) the total amount of such premiums which would have been imposed in such year if the supplemental premium rate under such section had been increased by the shortfall rate, or decreased by the excess rate, described in clause (iii). “(iii) The excess rate or shortfall rate under this clause for a year is the excess or shortfall of— “(I) the supplemental premium rate established under section 59B of the Internal Revenue Code of 1986 for taxable years beginning in the year, and “(II) the amount of such supplemental rate if determined without regard to subsection (e)(2)(A) of such section. “(iv) The amount determined under clause (i)(I) for a year shall be increased by the percentage by which the per capita catastrophic coverage premium liability (as determined in section 59B(e)(3)(D)(ii) of the Internal Revenue Code of 1986) for the second preceding year exceeds such liability for the fourth preceding year (determined as if the catastrophic coverage premium rate for the second preceding calendar year were the same as the rate in effect for the fourth preceding calendar year). “(C) In no event shall the monthly premium increase in effect under this paragraph for months in a year after 1993 be less than the monthly premium increase in effect under this paragraph for months in the preceding year. “(D) If subparagraph (B) or subparagraph (C), or both, affects the increase in the monthly premium determined under this paragraph for a year, the increase in the monthly premium determined after the application of such subparagraph or subparagraphs shall be allocated between the catastrophic coverage monthly premium and the prescription drug monthly premium on the basis of the respective amounts of such premiums without regard to the application of either such subparagraph. “(2) (A) In the case of months in a year after 1993, the catastrophic coverage monthly premium is the catastrophic coverage monthly premium (in effect under paragraph (1) or this paragraph for months in the preceding year, determined without regard to paragraph (1)(B) or (1)(0) adjusted by the percentage determined under subparagraph (B) for the year. “(B) The percentage determined under this subparagraph for a year shall be the sum of— “(i) the outlay-premium percentage, and “(ii) the reserve account percentage. For purposes of the preceding sentence, negative percentages shall be taken into account as negatives. “(C) (i) Except as provided in clause (ii), the outlay-premium percentage for any year is the percentage by which— “(I) the per capita catastrophic outlays in the 2nd preceding year exceeds. “(II) such outlays in the 3rd preceding calendar year. If there is no excess, this clause shall be applied by substituting ‘is less than’ for ‘exceeds’ and the percentage determined with such substitution shall be taken into account as a negative percentage. “(ii) If— 102 STAT. 735 “(I) the percentage increase in the CPI for the 12-month period ending with May of the preceding calendar year, exceeds (or is less than) “(II) such increase for the 12-month period ending with May of the 2nd preceding calendar year, by at least 1 percentage point, the percentage determined under clause (i) for any year shall be adjusted up (or down, respectively) by ½ of the amount by which such excess (or shortage, respectively) exceeds 1 percent. “(D) (i) The reserve account percentage for any calendar year is the percentage which the premium change determined under clause (ii) is of the catastrophic coverage monthly premium in effect under paragraph (1) or this paragraph for the preceding year (determined without regard to paragraph (1)(B) or (1)(C)). If there is an excess determined under clause (iii), the percentage determined under the preceding sentence shall be taken into account as a negative percentage. “(ii) The premium change determined under this clause for any year is the adjustment in the catastrophic coverage monthly premium (otherwise in effect for the 2nd preceding year) which the Secretary determines would have resulted in an aggregate increase (or decrease) in the premiums imposed by this subsection for such year equal to 37 percent of the shortfall or excess determined under clause (iii) for the calendar year. “(iii) The shortfall (or excess) determined under this clause for any year is the amount by which— “(I) 20 percent of the outlays during the 2nd preceding calendar year from the Medicare Catastrophic Coverage Account created under section 184 IB, exceeds (or is less than) “(II) the balance in such Account as of the close of such 2nd preceding calendar year (determined by taking into account previous premium increases by reason of the reserve account percentage under this paragraph or section 59B(e) of the Internal Revenue Code of 1986 which have not been credited into such Account). “(3) In the case of months in a year after 1993, the prescription drug monthly premium shall be determined under rules similar to the rules of paragraph (2); except that— “(A) in determining the prescription drug monthly premium for any month in a year before 1998, the following percentages shall be substituted for 20 percent in paragraph (2)(D)(iii)(I): “In the case of year: The percentage is: 1994 75 1995 50 1996 25 1997 25; “(B) no adjustment by reason of the outlay-premium percentage shall be made for any calendar year before 1998; “(C) any reference to the Medicare Catastrophic Coverage Account shall be treated as a reference to the Federal Catastrophic Drug Insurance Trust Fund; and “(D) any reference to the catastrophic coverage monthly premium shall be treated as a reference to the prescription drug monthly premium. “(4) (A) In the case of an individual who is a resident of Puerto Rico or who is a resident of another U.S. commonwealth or territory during a month, instead of the premium increase provided under 102 STAT. 736paragraph (1), subject to subsection (b), the monthly premium for each individual enrolled under this part otherwise determined, without regard to this subsection, shall be increased by the sum of— “(i) the catastrophic coverage monthly premium determined under subparagraph (B) for such resident for the year, and “(ii) the prescription drug monthly premium determined under subparagraph (C) for the resident for the year. “(B) The catastrophic coverage monthly premium for months— “(i) in 1989 is $1.30 for a resident of Puerto Rico and $2.10 for a resident of another U.S. commonwealth or territory; “(ii) in 1990 is $3.56 for a resident of Puerto Rico and $5.78 for a resident of another U.S. commonwealth or territory; and “(iii) in a subsequent year, with respect to a resident of Puerto Rico or a resident of another U.S. commonwealth or territory, is the catastrophic coverage monthly premium established under this subparagraph for the preceding year with respect to such a resident increased by the same percentage (estimated by the Secretary in September of that preceding year) by which— “(I) the per capita catastrophic outlays for the year, will exceed “(II) the per capita catastrophic outlays for that preceding year. “(C) The prescription drug monthly premium for months— “(i) in 1990 is $0.14 for a resident of Puerto Rico and $0.22 for a resident of another U.S. commonwealth or territory; “(ii) in 1991 is $1.21 for a resident of Puerto Rico and $1.93 for a resident of another U.S. commonwealth or territory; and “(iii) in a subsequent year, with respect to a resident of Puerto Rico or a resident of another U.S. commonwealth or territory, is the prescription drug monthly premium established under this subparagraph for the preceding year with respect to such a resident increased by the same percentage (estimated by the Secretary in September of that preceding year) by which— “(I) the per capita prescription drug outlays for the year, will exceed “(II) the per capita prescription drug outlays for that preceding year. “(5) (A) In the case of a part B only individual (as defined in paragraph (8)(F)) during a month, instead of the premium increase provided under paragraph (1), subject to subsection (b), the monthly premium otherwise determined, without regard to this subsection, shall be increased by the sum of— “(i) the catastrophic coverage monthly premium determined under subparagraph (B) for the year, and “(ii) the prescription drug monthly premium determined under subparagraph (C) for the year. “(B) The catastrophic coverage monthly premium for months— “(i) in 1990 is $8.57, and “(ii) in a subsequent year is 1/12th of the average actuarial expenses that the Secretary estimates (during September before the year) will be incurred during the year for benefits and administration costs (other than benefits and costs attributable to part A) for which outlays may be made from the Medicare Catastrophic Coverage Account. “(C) The prescription drug monthly premium for months— “(i) in 1990 is $0.53, “(ii) in 1991 is $4.61, and 102 STAT. 737 “(iii) a subsequent year is 1/12th of the average actuarial expenses that the Secretary estimates (during September before the year) will be incurred during the year for benefits and administration costs for which outlays may be made from the Federal Catastrophic Drug Insurance Trust Fund. “(6) (A) If any premium increase for a month under this subsection is not a multiple of 10 cents, the Secretary shall round the increase to the nearest multiple of 10 cents. “(B) If the Secretary so rounds the premium increase, the amount of such increase shall be allocated between the catastrophic coverage monthly premium and the prescription drug monthly premium on the basis of the respective amounts of such premiums without regard to the application of subparagraph (A). “(7) (A) The Secretary and the Secretary of the Treasury shall jointly— “(i) publish in the Federal Register by not later than July 1 of each year (beginning with 1993) a proposed regulation to establish premium increases under this subsection for months in the following year, “(ii) report to Congress, by not later than September 1 of such year, on the final premiums to be published under clause (iii), and “(iii) publish in the Federal Register, during the last 3 days of September of each such year, a final regulation establishing monthly premiums under this subsection for months in the following year. “(B) The Secretary shall report to Congress, in 1993, respecting the appropriateness of the level of premium increases established under paragraph (4) for residents of Puerto Rico and of other U.S. commonwealths and territories. “(8) For purposes of this subsection: “(A) The term ‘per capita catastrophic outlays’ means, with respect to any year, the amount (as determined by the Secretary) equal to— “(i) the outlays during such year from the Medicare Catastrophic Coverage Account, divided by “(ii) the average number of individuals entitled to receive benefits under part A during such year. “(B) The term ‘per capita prescription drug outlays’ means, with respect to any year, the amount (as determined by the Secretary) equal to— “(i) the outlays during such year from the Federal Catastrophic Drug Insurance Trust Fund, divided by “(ii) the average number of individuals entitled to receive benefits under part A during such year. “(C) The percentage increase in the CPI for any 12-month period shall be the percentage by which the Consumer Price Index (as defined in section 1(f)(5) of the Internal Revenue Code of 1986) for the last month of such period exceeds such Index for the last month of the preceding 12-month period. “(D) The term ‘Medicare Catastrophic Coverage Account’ refers to such Account as created under section 1841B. “(E) The term ‘U.S. commonwealth or territory’ means Puerto Rico, the United States Virgin Islands, Guam, American Samoa, or the Northern Mariana Islands. “(F) The term ‘part B only individual’ means, with respect to a month, an individual who— 102 STAT. 738 “(i) is not a resident of a U.S. commonwealth or territory (as defined in subparagraph (E)) during the month, “(ii) is entitled to benefits under this part, and “(iii) is not entitled to (or, on application without payment of an additional premium, would not be entitled to) benefits under part A or is entitled to benefits under such part only because of payment of a premium under section 1818.”. (b) Extension of Hold-Harmless Provision.—Subsection (f) of section 1839 (42 U.S.C. 1395r) is amended to read as follows: “(f) For any calendar year after 1988, if an individual is entitled to monthly benefits under section 202 or 223 or to a monthly annuity under section 3(a), 4(a), or 4(f) of the Railroad Retirement Act of 1974 for November and December of the preceding year, and if the monthly premium of the individual under this section for December and for January is deducted from those benefits under section 1840(a)(1) or section 1840(b)(1), the monthly premium otherwise determined under this section for an individual for that year shall not be increased, pursuant to this subsection, to the extent that such increase would reduce the amount of benefits payable to that individual for that January below the amount of benefits payable to that individual for that December (after the deduction of the premium under this section). For purposes of this subsection, retro-active adjustments or payments and deductions on account of work shall not be taken into account in determining the monthly benefits to which an individual is entitled under section 202 or 223 or under the Railroad Retirement Act of 1974.”. (c) Conforming Amendments.— (1) Section 1839 (42 U.S.C. 1395r) is amended— (A) in the second sentence of subsections (a)(1) and (a)(4), by inserting “(other than costs relating to the amendments made by the Medicare Catastrophic Coverage Act of 1988)” before the period; (B) by inserting before the period at the end of the last sentence of subsections (a)(1) and (a)(4) the following: “, but shall not take into account any amounts in the Trust Fund that may be attributable to receipts or outlays relating to the Medicare Catastrophic Coverage Account”; (C) in subsection (a)(2), by striking “and (e)” and inserting “, (e), and (g)”; (D) in subsection (a)(3), by striking “subsection (e)” and inserting “subsections (e) and (g)”; (E) in subsection (b), by striking “determined under subsection (a) or (e)” and inserting “otherwise determined under this section (without regard to subsections (f) and (g)(6))”; and (F) in subsection (e)(1), by inserting “except as provided in subsection (g),” after “subsection (a).” (2) Section 1844(a) (42 U.S.C. 1395w(a)) is amended by adding at the end the following: “In computing the amount of aggregate premiums and premiums per enrollee under paragraph (1), there shall not be taken into account premiums attributable to section 1839(g) or section 59B of the Internal Revenue Code of 1986.”. (3) Section 1876(a)(5) (42 U.S.C. 1395ff(a)(5)) is amended— (A) by striking “and the Federal Supplementary Medical Insurance Trust Fund” and inserting “, the Federal Supple-102 STAT. 739 mentary Medical Insurance Trust Fund, and the Federal Catastrophic Drug Insurance Trust Fund”, and (B) by amending the second sentence to read as follows: “The portion of that payment to the organization for a month to be paid by each trust fund shall be determined as follows: “(A) In regard to expenditures by eligible organizations having risk-sharing contracts, the allocation shall be determined each year by the Secretary based on the relative weight that benefits from each fund contribute to the adjusted average per capita cost. “(B) In regard to expenditures by eligible organizations operating under a reasonable cost reimbursement contract, the initial allocation shall be based on the plan’s most recent budget, such allocation to be adjusted, as needed, after cost settlement to reflect the distribution of actual expenditures.”. (d) Effective Date.—The amendments made by this section shall apply (except as otherwise specified in such amendments) to monthly premiums for months beginning with January 1989.