applicable phase-out factor
(2) Phase-out of budget neutrality factor (A) In general Except as provided in subparagraph (D), in the case of 2007 through 2010, the applicable amount determined under paragraph (1) shall be multiplied by a factor equal to 1 plus the product of— (i) the percent determined under subparagraph (B) for the year; and (ii) the applicable phase-out factor for the year under subparagraph (C). (B) Percent determined (i) In general For purposes of subparagraph (A)(i), subject to clause (iv), the percent determined under this subparagraph for a year is a percent equal to a fraction the numerator of which is described in clause (ii) and the denominator of which is described in clause (iii). (ii) Numerator based on difference between demographic rate and risk rate (I) In general The numerator described in this clause is an amount equal to the amount by which the demographic rate described in subclause (II) exceeds the risk rate described in subclause (III). (II) Demographic rate The demographic rate described in this subclause is the Secretary’s estimate of the total payments that would have been made under this part in the year if all the monthly payment amounts for all MA plans were equal to 1 ⁄ 12 of the annual MA capitation rate under subsection (c)(1) for the area and year, adjusted pursuant to subsection (a)(1)(C). (III) Risk rate The risk rate described in this subclause is the Secretary’s estimate of the total payments that would have been made under this part in the year if all the monthly payment amounts for all MA plans were equal to the amount described in subsection (j)(1)(A) (determined as if this paragraph had not applied) under subsection (j) for the area and year, adjusted pursuant to subsection (a)(1)(C). (iii) Denominator based on risk rate The denominator described in this clause is equal to the total amount estimated for the year under clause (ii)(III). (iv) Requirements In estimating the amounts under the previous clauses, the Secretary shall— (I) use a complete set of the most recent and representative Medicare Advantage risk scores under subsection (a)(3) that are available from the risk adjustment model announced for the year; (II) adjust the risk scores to reflect changes in treatment and coding practices in the fee-for-service sector; (III) adjust the risk scores for differences in coding patterns between Medicare Advantage plans and providers under the original Medicare fee-for-service program under parts A and B to the extent that the Secretary has identified such differences, as required in subsection (a)(1)(C); (IV) as necessary, adjust the risk scores for late data submitted by Medicare Advantage organizations; (V) as necessary, adjust the risk scores for lagged cohorts; and (VI) as necessary, adjust the risk scores for changes in enrollment in Medicare Advantage plans during the year. (v) Authority In computing such amounts the Secretary may take into account the estimated health risk of enrollees in preferred provider organization plans (including MA regional plans) for the year. (C) Applicable phase-out factor For purposes of subparagraph (A)(ii), the term “applicable phase-out factor” means— (i) for 2007, 0.55; (ii) for 2008, 0.40; (iii) for 2009, 0.25; and (iv) for 2010, 0.05. (D) Termination of application Subparagraph (A) shall not apply in a year if the amount estimated under subparagraph (B)(ii)(III) for the year is equal to or greater than the amount estimated under subparagraph (B)(ii)(II) for the year.
42 USC § 1395w-23(k)(2)
None identified, default scope is assumed to be the parent (part C) of this section.