S 2625 IS
107th CONGRESS
2d Session
S. 2625
To amend title XVIII of the Social Security Act to provide coverage
of outpatient prescription drugs under the medicare program.
IN THE SENATE OF THE UNITED STATES
June 14, 2002
Mr. GRAHAM (for himself, Mr. MILLER, Mr. KENNEDY, Mr. ROCKEFELLER, Mr.
DASCHLE, Mr. CLELAND, Mr. INOUYE, Mr. REID, Ms. MIKULSKI, Mr. JOHNSON, Mr.
LEAHY, Mrs. CLINTON, Mr. NELSON of Florida, Mr. SARBANES, Mr. BINGAMAN, Ms.
STABENOW, Mr. WELLSTONE, Mr. HOLLINGS, Mrs. MURRAY, Mr. SCHUMER, Mr. AKAKA, Mrs.
BOXER, Mr. REED, Mr. DODD, Mr. LEVIN, Mrs. CARNAHAN, Ms. CANTWELL, Mr. DURBIN,
and Mr. DAYTON) introduced the following bill; which was read twice and referred
to the Committee on Finance
A BILL
To amend title XVIII of the Social Security Act to provide coverage
of outpatient prescription drugs under 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 `Medicare Outpatient
Prescription Drug Act of 2002'.
(b) TABLE OF CONTENTS- The table of contents of this Act is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Medicare outpatient prescription drug benefit program.
`Part D--Outpatient Prescription Drug Benefit Program
`Sec. 1860A. Establishment of outpatient prescription drug benefit
program.
`Sec. 1860B. Enrollment under program.
`Sec. 1860C. Enrollment in a plan.
`Sec. 1860D. Providing information to beneficiaries.
`Sec. 1860F. Outpatient prescription drug benefits.
`Sec. 1860G. Entities eligible to provide outpatient drug benefit.
`Sec. 1860H. Minimum standards for eligible entities.
`Sec. 1860J. Employer incentive program for employment-based retiree
drug coverage.
`Sec. 1860K. Prescription Drug Account in the Federal Supplementary
Medical Insurance Trust Fund.
`Sec. 1860L. Medicare Prescription Drug Advisory Committee.'.
Sec. 3. Part D benefits under Medicare+Choice plans.
Sec. 4. Additional assistance for low-income beneficiaries.
Sec. 5. Medigap revisions.
Sec. 6. HHS studies and report on uniform pharmacy benefit cards and
systems for transferring prescriptions electronically.
Sec. 7. GAO study and biennial reports on competition and savings.
Sec. 8. Expansion of membership and duties of Medicare Payment Advisory
Commission (MedPAC).
SEC. 2. MEDICARE OUTPATIENT PRESCRIPTION DRUG BENEFIT PROGRAM.
(a) ESTABLISHMENT- Title XVIII of the Social Security Act (42 U.S.C. 1395
et seq.) is amended by redesignating part D as part E and by inserting after
part C the following new part:
`Part D--Outpatient Prescription Drug Benefit Program
`DEFINITIONS
`SEC. 1860. In this part:
`(1) COVERED OUTPATIENT DRUG-
`(A) IN GENERAL- Except as provided in subparagraph (B), the term
`covered outpatient drug' means any of the following products:
`(i) A drug which may be dispensed only upon prescription,
and--
`(I) which is approved for safety and effectiveness as a
prescription drug under section 505 of the Federal Food, Drug, and
Cosmetic Act;
`(II)(aa) which was commercially used or sold in the United States
before the date of enactment of the Drug Amendments of 1962 or which
is identical, similar, or related (within the meaning of section
310.6(b)(1) of title 21 of the Code of Federal Regulations) to such a
drug, and (bb) which has not been the subject of a final determination
by the Secretary that it is a `new drug' (within the meaning of
section 201(p) of the Federal Food, Drug, and Cosmetic Act) or an
action brought by the Secretary under section 301, 302(a), or 304(a)
of such Act to enforce section 502(f) or 505(a) of such Act;
or
`(III)(aa) which is described in section 107(c)(3) of the Drug
Amendments of 1962 and for which the Secretary has determined there is
a compelling justification for its medical need, or is identical,
similar, or related (within the meaning of section 310.6(b)(1) of
title 21 of the Code of Federal Regulations) to such a drug, and (bb)
for which the Secretary has not issued a notice of an opportunity for
a hearing under section 505(e) of the Federal Food, Drug, and Cosmetic
Act on a proposed order of the Secretary to withdraw approval of an
application for such drug under such section because the Secretary has
determined that the drug is less than effective for all conditions of
use prescribed, recommended, or suggested in its
labeling.
`(ii) A biological product which--
`(I) may only be dispensed upon prescription;
`(II) is licensed under section 351 of the Public Health Service
Act; and
`(III) is produced at an establishment licensed under such section
to produce such product.
`(iii) Insulin approved under appropriate Federal law, including
needles, syringes, and disposable pumps for the administration of such
insulin.
`(iv) A prescribed drug or biological product that would meet the
requirements of clause (i) or (ii) except that it is available
over-the-counter in addition to being available upon
prescription.
`(B) EXCLUSION- The term `covered outpatient drug' does not include
any product--
`(i) except as provided in subparagraph (A)(iv), which may be
distributed to individuals without a prescription;
`(ii) for which payment is available under part A or B or would be
available under part B but for the application of a deductible under
such part (unless payment for such product is not available because
benefits under part A or B have been exhausted), determined, except as
provided in subparagraph (C), without regard to whether the beneficiary
involved is entitled to benefits under part A or enrolled under part B;
or
`(iii) except for agents used to promote smoking cessation and
agents used for the treatment of obesity, for which coverage may be
excluded or restricted under section 1927(d)(2).
`(C) CLARIFICATION REGARDING IMMUNOSUPPRESSIVE DRUGS- In the case of a
beneficiary who is not eligible for any coverage under part B of drugs
described in section 1861(s)(2)(J) because of the requirements under such
section (and would not be so eligible if the individual were enrolled
under such part), the term `covered outpatient drug' shall include such
drugs if the drugs would otherwise be described in subparagraph
(A).
`(2) ELIGIBLE BENEFICIARY- The term `eligible beneficiary' means an
individual that is entitled to benefits under part A or enrolled under part
B.
`(3) ELIGIBLE ENTITY- The term `eligible entity' means any entity that
the Secretary determines to be appropriate to provide eligible beneficiaries
with covered outpatient drugs under a plan under this part,
including--
`(A) a pharmacy benefit management company;
`(B) a retail pharmacy delivery system;
`(C) a health plan or insurer;
`(D) a State (through mechanisms established under a State plan under
title XIX);
`(E) any other entity approved by the Secretary; or
`(F) any combination of the entities described in subparagraphs (A)
through (E) if the Secretary determines that such combination--
`(i) increases the scope or efficiency of the provision of benefits
under this part; and
`(ii) is not anticompetitive.
`(4) MEDICARE+CHOICE ORGANIZATION; MEDICARE+CHOICE PLAN- The terms
`Medicare+Choice organization' and `Medicare+Choice plan' have the meanings
given such terms in subsections (a)(1) and (b)(1), respectively, of section
1859 (relating to definitions relating to Medicare+Choice
organizations).
`(5) PRESCRIPTION DRUG ACCOUNT- The term `Prescription Drug Account'
means the Prescription Drug Account (as established under section 1860K) in
the Federal Supplementary Medical Insurance Trust Fund under section
1841.
`ESTABLISHMENT OF OUTPATIENT PRESCRIPTION DRUG BENEFIT PROGRAM
`SEC. 1860A. (a) PROVISION OF BENEFIT-
`(1) IN GENERAL- Beginning in 2004, the Secretary shall provide for and
administer an outpatient prescription drug benefit program under which each
eligible beneficiary enrolled under this part shall be provided with
coverage of covered outpatient drugs as follows:
`(A) MEDICARE+CHOICE PLAN- If the eligible beneficiary is eligible to
enroll in a Medicare+Choice plan, the beneficiary--
`(i) may enroll in such a plan; and
`(ii) if so enrolled, shall obtain coverage of covered outpatient
drugs through such plan.
`(B) MEDICARE PRESCRIPTION DRUG PLAN- If the eligible beneficiary is
not enrolled in a Medicare+Choice plan, the beneficiary shall obtain
coverage of covered outpatient drugs through enrollment in a plan offered
by an eligible entity with a contract under this part.
`(2) VOLUNTARY NATURE OF PROGRAM- Nothing in this part shall be
construed as requiring an eligible beneficiary to enroll in the program
established under this part.
`(3) SCOPE OF BENEFITS- The program established under this part shall
provide for coverage of all therapeutic classes of covered outpatient
drugs.
`(b) ACCESS TO ALTERNATIVE PRESCRIPTION DRUG COVERAGE- In the case of an
eligible beneficiary who has creditable prescription drug coverage (as defined
in section 1860B(b)(1)(F)), such beneficiary--
`(1) may continue to receive such coverage and not enroll under this
part; and
`(2) pursuant to section 1860B(b)(1)(C), is permitted to subsequently
enroll under this part without any penalty and obtain coverage of covered
outpatient drugs in the manner described in subsection (a) if the
beneficiary involuntarily loses such coverage.
`(c) FINANCING- The costs of providing benefits under this part shall be
payable from the Prescription Drug Account.
`ENROLLMENT UNDER PROGRAM
`SEC. 1860B. (a) ESTABLISHMENT OF PROCESS-
`(1) PROCESS SIMILAR TO ENROLLMENT UNDER PART B- The Secretary shall
establish a process through which an eligible beneficiary (including an
eligible beneficiary enrolled in a Medicare+Choice plan offered by a
Medicare+Choice organization) may make an election to enroll under this
part. Such process shall be similar to the process for enrollment in part B
under section 1837, including the deeming provisions of such section.
`(2) REQUIREMENT OF ENROLLMENT- An eligible beneficiary must enroll
under this part in order to be eligible to receive covered outpatient drugs
under this title.
`(b) SPECIAL ENROLLMENT PROCEDURES-
`(1) LATE ENROLLMENT PENALTY-
`(A) INCREASE IN PREMIUM- Subject to the succeeding provisions of this
paragraph, in the case of an eligible beneficiary whose coverage period
under this part began pursuant to an enrollment after the beneficiary's
initial enrollment period under part B (determined pursuant to section
1837(d)) and not pursuant to the open enrollment period described in
paragraph (2), the Secretary shall establish procedures for increasing the
amount of the monthly part D premium under section 1860E(a) applicable to
such beneficiary--
`(i) by an amount that is equal to 10 percent of such premium for
each full 12-month period (in the same continuous period of eligibility)
in which the eligible beneficiary could have been enrolled under this
part but was not so enrolled; or
`(ii) if determined appropriate by the Secretary, by an amount that
the Secretary determines is actuarily sound for each such
period.
`(B) PERIODS TAKEN INTO ACCOUNT- For purposes of calculating any
12-month period under subparagraph (A), there shall be taken into
account--
`(i) the months which elapsed between the close of the eligible
beneficiary's initial enrollment period and the close of the enrollment
period in which the beneficiary enrolled; and
`(ii) in the case of an eligible beneficiary who reenrolls under
this part, the months which elapsed between the date of termination of a
previous coverage period and the close of the enrollment period in which
the beneficiary reenrolled.
`(C) PERIODS NOT TAKEN INTO ACCOUNT-
`(i) IN GENERAL- For purposes of calculating any 12-month period
under subparagraph (A), subject to clause (ii), there shall not be taken
into account months for which the eligible beneficiary can demonstrate
that the beneficiary had creditable prescription drug coverage (as
defined in subparagraph (F)).
`(ii) APPLICATION- This subparagraph shall only apply with respect
to a coverage period the enrollment for which occurs before the end of
the 60-day period that begins on the first day of the month which
includes--
`(I) in the case of a beneficiary with coverage described in
clause (ii) of subparagraph (F), the date on which the plan
terminates, ceases to provide, or reduces the value of the
prescription drug coverage under such plan to below the actuarial
value of the coverage provided under the program under this part;
or
`(II) in the case of a beneficiary with coverage described in
clause (i), (iii), or (iv) of subparagraph (F), the date on which the
beneficiary loses eligibility for such coverage.
`(D) PERIODS TREATED SEPARATELY- Any increase in an eligible
beneficiary's monthly part D premium under subparagraph (A) with respect
to a particular continuous period of eligibility shall not be applicable
with respect to any other continuous period of eligibility which the
beneficiary may have.
`(E) CONTINUOUS PERIOD OF ELIGIBILITY-
`(i) IN GENERAL- Subject to clause (ii), for purposes of this
paragraph, an eligible beneficiary's `continuous period of eligibility'
is the period that begins with the first day on which the beneficiary is
eligible to enroll under section 1836 and ends with the beneficiary's
death.
`(ii) SEPARATE PERIOD- Any period during all of which an eligible
beneficiary satisfied paragraph (1) of section 1836 and which terminated
in or before the month preceding the month in which the beneficiary
attained age 65 shall be a separate `continuous period of eligibility'
with respect to the beneficiary (and each such period which terminates
shall be deemed not to have existed for purposes of subsequently
applying this paragraph).
`(F) CREDITABLE PRESCRIPTION DRUG COVERAGE DEFINED- For purposes of
this part, the term `creditable prescription drug coverage' means any of
the following:
`(i) MEDICAID PRESCRIPTION DRUG COVERAGE- Prescription drug coverage
under a medicaid plan under title XIX, including through the Program of
All-inclusive Care for the Elderly (PACE) under section 1934 and through
a social health maintenance organization (referred to in section 4104(c)
of the Balanced Budget Act of 1997).
`(ii) PRESCRIPTION DRUG COVERAGE UNDER A GROUP HEALTH PLAN-
Prescription drug coverage under a group health plan, including a health
benefits plan under the Federal Employees Health Benefit Program under
chapter 89 of title 5, United States Code, and a qualified retiree
prescription drug plan (as defined in section 1860J(e)(3)), that
provides coverage of the cost of prescription drugs the actuarial value
of which (as defined by the Secretary) to the beneficiary equals or
exceeds the actuarial value of the benefits provided to an individual
enrolled in the outpatient prescription drug benefit program under this
part.
`(iii) STATE PHARMACEUTICAL ASSISTANCE PROGRAM- Coverage of
prescription drugs under a State pharmaceutical assistance
program.
`(iv) VETERANS' COVERAGE OF PRESCRIPTION DRUGS- Coverage of
prescription drugs for veterans, and survivors and dependents of
veterans, under chapter 17 of title 38, United States Code.
`(2) OPEN ENROLLMENT PERIOD FOR CURRENT BENEFICIARIES IN WHICH LATE
ENROLLMENT PROCEDURES DO NOT APPLY-
`(A) IN GENERAL- The Secretary shall establish an applicable period,
which shall begin on the date on which the Secretary first begins to
accept elections for enrollment under this part, during which any eligible
beneficiary may enroll under this part without the application of the late
enrollment procedures established under paragraph (1)(A).
`(B) OPEN ENROLLMENT PERIOD TO BEGIN PRIOR TO JANUARY 1, 2004- The
Secretary shall ensure that eligible beneficiaries are permitted to enroll
under this part prior to January 1, 2004, in order to ensure that coverage
under this part is effective as of such date.
`(3) SPECIAL ENROLLMENT PERIOD FOR BENEFICIARIES WHO INVOLUNTARILY LOSE
CREDITABLE PRESCRIPTION DRUG COVERAGE- The Secretary shall establish a
special open enrollment period for an eligible beneficiary that loses
creditable prescription drug coverage.
`(1) IN GENERAL- Except as provided in paragraph (2) and subject to
paragraph (3), an eligible beneficiary's coverage under the program under
this part shall be effective for the period provided in section 1838, as if
that section applied to the program under this part.
`(2) OPEN AND SPECIAL ENROLLMENT- Subject to paragraph (3), an eligible
beneficiary who enrolls under the program under this part pursuant to
paragraph (2) or (3) of subsection (b) shall be entitled to the benefits
under this part beginning on the first day of the month following the month
in which such enrollment occurs.
`(3) LIMITATION- Coverage under this part shall not begin prior to
January 1, 2004.
`(1) IN GENERAL- The causes of termination specified in section 1838
shall apply to this part in the same manner as such causes apply to part
B.
`(2) COVERAGE TERMINATED BY TERMINATION OF COVERAGE UNDER PARTS A AND
B-
`(A) IN GENERAL- In addition to the causes of termination specified in
paragraph (1), the Secretary shall terminate an individual's coverage
under this part if the individual is no longer enrolled in either part A
or B.
`(B) EFFECTIVE DATE- The termination described in subparagraph (A)
shall be effective on the effective date of termination of coverage under
part A or (if later) under part B.
`(3) PROCEDURES REGARDING TERMINATION OF A BENEFICIARY UNDER A PLAN- The
Secretary shall establish procedures for determining the status of an
eligible beneficiary's enrollment under this part if the beneficiary's
enrollment in a plan offered by an eligible entity under this part is
terminated by the entity for cause (pursuant to procedures established by
the Secretary under section 1860C(a)(1)).
`ENROLLMENT IN A PLAN
`SEC. 1860C. (a) PROCESS-
`(A) IN GENERAL- The Secretary shall establish a process through which
an eligible beneficiary who is enrolled under this part but not enrolled
in a Medicare+Choice plan offered by a Medicare+Choice organization shall
make an annual election to enroll in any plan offered
by an eligible entity that has been awarded a contract under this part and
serves the geographic area in which the beneficiary resides. Such process shall
include for the default enrollment in such a plan in the case of an eligible
beneficiary who is enrolled under this part but who has failed to make an
election of such a plan.
`(B) RULES- In establishing the process under subparagraph (A), the
Secretary shall--
`(i) use rules similar to the rules for enrollment, disenrollment,
and termination of enrollment with a Medicare+Choice plan under section
1851, including--
`(I) the establishment of special election periods under
subsection (e)(4) of such section; and
`(II) the application of the guaranteed issue and renewal
provisions of subsection (g) of such section (other than paragraph
(3)(C)(i), relating to default enrollment); and
`(ii) coordinate enrollments, disenrollments, and terminations of
enrollment under part C with enrollments, disenrollments, and
terminations of enrollment under this part.
`(2) FIRST ENROLLMENT PERIOD FOR PLAN ENROLLMENT- The process developed
under paragraph (1) shall--
`(A) ensure that eligible beneficiaries who choose to enroll under
this part are permitted to enroll with an eligible entity prior to January
1, 2004, in order to ensure that coverage under this part is effective as
of such date; and
`(B) be coordinated with the open enrollment period under section
1860B(b)(2)(A).
`(b) MEDICARE+CHOICE ENROLLEES-
`(1) IN GENERAL- An eligible beneficiary who is enrolled under this part
and enrolled in a Medicare+Choice plan offered by a Medicare+Choice
organization shall receive coverage of covered outpatient drugs under this
part through such plan.
`(2) RULES- Enrollment in a Medicare+Choice plan is subject to the rules
for enrollment in such a plan under section 1851.
`PROVIDING INFORMATION TO BENEFICIARIES
`SEC. 1860D. (a) ACTIVITIES-
`(1) IN GENERAL- The Secretary shall conduct activities that are
designed to broadly disseminate information to eligible beneficiaries (and
prospective eligible beneficiaries) regarding the coverage provided under
this part.
`(2) SPECIAL RULE FOR FIRST ENROLLMENT UNDER THE PROGRAM- To the extent
practicable, the activities described in paragraph (1) shall ensure that
eligible beneficiaries are provided with such information at least 30 days
prior to the open enrollment period described in section
1860B(b)(2)(A).
`(1) IN GENERAL- The activities described in subsection (a)
shall--
`(A) be similar to the activities performed by the Secretary under
section 1851(d);
`(B) be coordinated with the activities performed by the Secretary
under such section and under section 1804; and
`(C) provide for the dissemination of information comparing the plans
offered by eligible entities under this part that are available to
eligible beneficiaries residing in an area.
`(2) COMPARATIVE INFORMATION- The comparative information described in
paragraph (1)(C) shall include a comparison of the following:
`(A) BENEFITS- The benefits provided under the plan, including the
prices beneficiaries will be charged for covered outpatient drugs, any
preferred pharmacy networks used by the eligible entity under the plan,
and the formularies and appeals processes under the plan.
`(B) QUALITY AND PERFORMANCE- To the extent available, the quality and
performance of the eligible entity offering the plan.
`(C) BENEFICIARY COST-SHARING- The cost-sharing required of eligible
beneficiaries under the plan.
`(D) CONSUMER SATISFACTION SURVEYS- To the extent available, the
results of consumer satisfaction surveys regarding the plan and the
eligible entity offering such plan.
`(E) ADDITIONAL INFORMATION- Such additional information as the
Secretary may prescribe.
`(3) INFORMATION STANDARDS- The Secretary shall develop standards to
ensure that the information provided to eligible beneficiaries under this
part is complete, accurate, and uniform.
`(c) USE OF MEDICARE CONSUMER COALITIONS TO PROVIDE INFORMATION-
`(1) IN GENERAL- The Secretary may contract with Medicare Consumer
Coalitions to conduct the informational activities under--
`(B) section 1851(d); and
`(2) SELECTION OF COALITIONS- If the Secretary determines the use of
Medicare Consumer Coalitions to be appropriate, the Secretary shall--
`(A) develop and disseminate, in such areas as the Secretary
determines appropriate, a request for proposals for Medicare Consumer
Coalitions to contract with the Secretary in order to conduct any of the
informational activities described in paragraph (1); and
`(B) select a proposal of a Medicare Consumer Coalition to conduct the
informational activities in each such area, with a preference for broad
participation by organizations with experience in providing information to
beneficiaries under this title.
`(3) PAYMENT TO MEDICARE CONSUMER COALITIONS- The Secretary shall make
payments to
Medicare Consumer Coalitions contracting under this subsection in such
amounts and in such manner as the Secretary determines appropriate.
`(4) AUTHORIZATION OF APPROPRIATIONS- There are authorized to be
appropriated to the Secretary such sums as may be necessary to contract with
Medicare Consumer Coalitions under this section.
`(5) MEDICARE CONSUMER COALITION DEFINED- In this subsection, the term
`Medicare Consumer Coalition' means an entity that is a nonprofit
organization operated under the direction of a board of directors that is
primarily composed of beneficiaries under this title.
`PREMIUMS
`SEC. 1860E. (a) ANNUAL ESTABLISHMENT OF MONTHLY PART D PREMIUM RATES-
`(1) IN GENERAL- The Secretary shall, during September of each year
(beginning in 2003), determine and promulgate a monthly part D premium rate
for the succeeding year.
`(2) AMOUNT- The Secretary shall determine the monthly part D premium
rate for the succeeding year as follows:
`(A) PREMIUM FOR 2004- The monthly part D premium rate for 2004 shall
be $25.
`(B) INFLATION ADJUSTMENT OF PREMIUM FOR 2005 AND SUBSEQUENT
YEARS-
`(i) IN GENERAL- Subject to clause (ii), in the case of any calendar
year beginning after 2004, the monthly part D premium rate for the year
shall be the amount described in subparagraph (A) increased by an amount
equal to--
`(I) such dollar amount, multiplied by
`(II) the percentage (if any) by which the amount of the average
annual per capita aggregate expenditures payable from the Prescription
Drug Account for the year (as estimated under section 1860J(c)(2)(C))
exceeds the amount of such expenditures in 2004.
`(ii) ROUNDING- If the monthly part D premium rate determined under
clause (i) is not a multiple of $1, such rate shall be rounded to the
nearest multiple of $1.
`(b) COLLECTION OF PART D PREMIUM- The monthly part D premium applicable
to an eligible beneficiary under this part (after application of any increase
under section 1860B(b)(1)) shall be collected and credited to the Prescription
Drug Account in the same manner as the monthly premium determined under
section 1839 is collected and credited to the Federal Supplementary Medical
Insurance Trust Fund under section 1840.
`OUTPATIENT PRESCRIPTION DRUG BENEFITS
`SEC. 1860F. (a) REQUIREMENT- A plan offered by an eligible entity under
this part shall provide eligible beneficiaries enrolled in such plan with--
`(1) coverage of covered outpatient drugs--
`(A) without the application of any deductible; and
`(B) with the cost-sharing described in subsection (b); and
`(2) access to negotiated prices for such drugs under subsection
(c).
`(1) THREE-TIERED COPAYMENT STRUCTURE FOR DRUGS INCLUDED IN THE
FORMULARY-
`(A) IN GENERAL- Subject to the succeeding provisions of this
subsection, in the case of a covered outpatient drug that is dispensed in
a year to an eligible beneficiary and that is included in the formulary
established by the eligible entity (pursuant to section 1860H(c)) for the
plan, the beneficiary shall be responsible for a copayment for the drug in
an amount equal to the following:
`(i) GENERIC DRUGS- In the case of a generic covered outpatient
drug, $10 for each prescription (as defined by the Secretary in
consultation with the Medicare Prescription Drug Advisory Committee
established under section 1860L) of such drug.
`(ii) PREFERRED BRAND NAME DRUGS- In the case of a preferred brand
name covered outpatient drug (including a drug treated as a preferred
brand name drug under subparagraph (C)), $40 for each prescription (as
so defined) of such drug.
`(iii) NONPREFERRED BRAND NAME DRUG- In the case of a nonpreferred
brand name covered outpatient drug (that is not treated as a preferred
brand name drug under subparagraph (C)), $60 for each prescription (as
so defined) of such drug.
`(B) REDUCTION BY ELIGIBLE ENTITY- An eligible entity offering a plan
under this part may reduce the applicable copayment amount that an
eligible beneficiary enrolled in the plan is subject to under subparagraph
(A) if the Secretary determines that such reduction--
`(i) is tied to the performance requirements described in section
1860I(b)(1)(C); and
`(ii) will not result in an increase in the expenditures made from
the Prescription Drug Account.
`(C) TREATMENT OF MEDICALLY NECESSARY NONPREFERRED AND NONFORMULARY
DRUGS- The eligible entity shall treat a nonpreferred brand name drug and
a nonformulary drug as a preferred brand name drug under subparagraph
(A)(ii) if such nonpreferred or nonformulary drug, as the case may be, is
determined (pursuant to subparagraph (D) or (E) of section 1860H(a)(3)) to
be medically necessary.
`(2) AUTHORITY FOR INCREASED COST-SHARING FOR NONFORMULARY DRUGS-
Pursuant to section 1860H(c)(3)(A), an eligible entity offering a plan under
this part may require cost-sharing for a nonformulary drug that is higher
than the copayment amount described in paragraph (1)(A)(iii).
`(3) COST-SHARING MAY NOT EXCEED NEGOTIATED PRICE-
`(A) IN GENERAL- If the amount of cost-sharing for a covered
outpatient drug that would otherwise be required under this subsection
(but for this paragraph) is greater than the applicable amount, then the
amount of such cost-sharing shall be reduced to an amount equal to such
applicable amount.
`(B) APPLICABLE AMOUNT DEFINED- For purposes of subparagraph (A), the
term `applicable amount' means an amount equal to--
`(i) in the case of generic drugs and preferred brand name drugs,
the negotiated price for the drug (as reported to the Secretary pursuant
to section 1860H(a)(5)(A)) less $5; and
`(ii) in the case of nonpreferred brand name drugs and nonformulary
drugs, the negotiated price for the drug (as so reported).
`(4) NO COST-SHARING ONCE EXPENSES EQUAL ANNUAL OUT-OF-POCKET
LIMIT-
`(A) IN GENERAL- An eligible entity offering a plan under this part
shall provide coverage of covered outpatient drugs without any
cost-sharing if the individual has incurred costs (as described in
subparagraph (C)) for covered outpatient drugs in a year equal to the
annual out-of-pocket limit specified in subparagraph (B).
`(B) ANNUAL OUT-OF-POCKET LIMIT- Subject to paragraph (5), for
purposes of this part, the `annual out-of-pocket limit' specified in this
subparagraph is equal to $4,000.
`(C) APPLICATION- In applying subparagraph (A)--
`(i) incurred costs shall only include costs incurred for the
cost-sharing described in this subsection; but
`(ii) such costs shall be treated as incurred without regard to
whether the individual or another person, including a State program or
other third-party coverage, has paid for such costs.
`(5) INFLATION ADJUSTMENT FOR COPAYMENT AMOUNTS AND ANNUAL OUT-OF-POCKET
LIMIT-
`(A) IN GENERAL- For any year after 2005--
`(i) the copayment amounts described in clauses (i), (ii), and (iii)
of paragraph (1)(A) are equal to the copayment amounts determined under
such paragraph (or this paragraph) for the previous year increased by
the annual percentage increase described in subparagraph (B);
and
`(ii) the annual out-of-pocket limit specified in paragraph (4)(B)
is equal to the annual out-of-pocket limit determined under such
paragraph (or this paragraph) for the previous year increased by the
annual percentage increase described in subparagraph (B).
`(B) ANNUAL PERCENTAGE INCREASE- The annual percentage increase
specified in this subparagraph for a year is equal to the annual
percentage increase in the prices of covered outpatient drugs (including
both price inflation and price changes due to changes in therapeutic mix),
as determined by the Secretary for the 12-month period ending in July of
the previous year.
`(C) ROUNDING- If any amount determined under subparagraph (A) is not
a multiple of $1, such amount shall be rounded to the nearest multiple of
$1.
`(c) ACCESS TO NEGOTIATED PRICES- Under a plan offered by an eligible
entity with a contract under this part, the eligible entity offering such plan
shall provide eligible beneficiaries enrolled in such plan with access to
negotiated prices (including applicable discounts) used for payment for
covered outpatient drugs, regardless of the fact that only partial benefits
may be payable under the coverage with respect to such drugs because of the
application of the cost-sharing under subsection (b).
`ENTITIES ELIGIBLE TO PROVIDE OUTPATIENT DRUG BENEFIT
`SEC. 1860G. (a) ESTABLISHMENT OF PANELS OF PLANS AVAILABLE IN AN AREA-
`(1) IN GENERAL- The Secretary shall establish procedures under which
the Secretary--
`(A) accepts bids submitted by eligible entities for the plans which
such entities intend to offer in an area established under subsection (b);
and
`(B) awards contracts to such entities to provide such plans to
eligible beneficiaries in the area.
`(2) COMPETITIVE PROCEDURES- Competitive procedures (as defined in
section 4(5) of the Office of Federal Procurement Policy Act (41 U.S.C.
403(5))) shall be used to enter into contracts under this part.
`(A) IN GENERAL- Except as provided in subparagraph (B) and subject to
paragraph (2), the contract entered into between the Secretary and an
eligible entity with respect to a plan shall require the eligible entity
to provide coverage of covered outpatient drugs under the plan in a region
determined by the Secretary under paragraph (2).
`(B) PARTIAL REGIONAL BASIS-
`(i) IN GENERAL- If determined appropriate by the Secretary, the
Secretary may permit the coverage described in subparagraph (A) to be
provided in a partial region determined appropriate by the
Secretary.
`(ii) REQUIREMENTS- If the Secretary permits coverage pursuant to
clause (i), the Secretary shall ensure that the partial region in which
coverage is provided is--
`(I) at least the size of the commercial service area of the
eligible entity for that area; and
`(II) not smaller than a State.
`(A) IN GENERAL- In determining regions for contracts under this part,
the Secretary shall--
`(i) take into account the number of eligible beneficiaries in an
area in order to encourage participation by eligible entities;
and
`(ii) ensure that there are at least 10 different regions in the
United States.
`(B) NO ADMINISTRATIVE OR JUDICIAL REVIEW- The determination of
coverage areas under this part shall not be subject to administrative or
judicial review.
`(A) IN GENERAL- Subject to subparagraph (B), each eligible entity
desiring to offer a plan under this part in an area shall submit a bid
with respect to such plan to the Secretary at such time, in such manner,
and accompanied by such information as the Secretary may reasonably
require.
`(B) BID THAT COVERS MULTIPLE AREAS- The Secretary shall permit an
eligible entity to submit a single bid for multiple areas if the bid is
applicable to all such areas.
`(2) REQUIRED INFORMATION- The bids described in paragraph (1) shall
include--
`(A) a proposal for the estimated prices of covered outpatient drugs
and the projected annual increases in such prices, including differentials
between formulary and nonformulary prices, if applicable;
`(B) a statement regarding the amount that the entity will charge the
Secretary for managing, administering, and delivering the benefits under
the contract;
`(C) a statement regarding whether the entity will reduce the
applicable cost-sharing amount pursuant to section 1860F(b)(1)(B)
and if so, the amount of such reduction and how such reduction is tied to the
performance requirements described in section 1860I(b)(1)(C);
`(D) a detailed description of the performance requirements for which
the payments to the entity will be subject to risk pursuant to section
1860I(b)(1)(C);
`(E) a detailed description of access to pharmacy services provided
under the plan, including information regarding--
`(i) whether the entity will use a preferred pharmacy network under
the plan; and
`(ii) if a preferred pharmacy network is used, whether the entity
will offer access to pharmacies that are outside such network and if
such access is provided, rules for accessing such
pharmacies;
`(F) with respect to the formulary used by the entity, a detailed
description of the procedures and standards the entity will use
for--
`(i) adding new drugs to a therapeutic class within the formulary;
and
`(ii) determining when and how often the formulary should be
modified;
`(G) a detailed description of any ownership or shared financial
interests with other entities involved in the delivery of the benefit as
proposed under the plan;
`(H) a detailed description of the entity's estimated marketing and
advertising expenditures related to enrolling eligible beneficiaries under
the plan and retaining such enrollment; and
`(I) such other information that the Secretary determines is necessary
in order to carry out this part, including information relating to the
bidding process under this part.
`(d) ACCESS TO BENEFITS IN CERTAIN AREAS-
`(1) AREAS NOT COVERED BY CONTRACTS- The Secretary shall develop
procedures for the provision of covered outpatient drugs under this part to
each eligible beneficiary enrolled under this part that resides in an area
that is not covered by any contract under this part.
`(2) BENEFICIARIES RESIDING IN DIFFERENT LOCATIONS- The Secretary shall
develop procedures to ensure that each eligible beneficiary enrolled under
this part that resides in different areas in a year is provided the benefits
under this part throughout the entire year.
`(e) AWARDING OF CONTRACTS-
`(1) NUMBER OF CONTRACTS- The Secretary shall, consistent with the
requirements of this part and the goal of containing costs under this title,
award in a competitive manner at least 2 contracts to offer a plan in an
area, unless only 1 bidding entity (and the plan offered by the entity)
meets the minimum standards specified under this part and by the
Secretary.
`(2) DETERMINATION- In determining which of the eligible entities that
submitted bids that meet the minimum standards specified under this part and
by the Secretary to award a contract, the Secretary shall consider the
comparative merits of each bid, as determined on the basis of the past
performance of the entity and other relevant factors, with respect
to--
`(A) how well the entity (and the plan offered by the entity) meet
such minimum standards;
`(B) the amount that the entity will charge the Secretary for
managing, administering, and delivering the benefits under the
contract;
`(C) the performance requirements for which the payments to the entity
will be subject to risk pursuant to section 1860I(b)(1)(C);
`(D) the proposed negotiated prices of covered outpatient drugs and
annual increases in such prices;
`(E) the factors described in section 1860D(b)(2);
`(F) prior experience of the entity in managing, administering, and
delivering a prescription drug benefit program;
`(G) effectiveness of the entity and plan in containing costs through
pricing incentives and utilization management; and
`(H) such other factors as the Secretary deems necessary to evaluate
the merits of each bid.
`(3) EXCEPTION TO CONFLICT OF INTEREST RULES- In awarding contracts
under this part, the Secretary may waive conflict of interest laws generally
applicable to Federal acquisitions (subject to such safeguards as the
Secretary may find necessary to impose) in circumstances where the Secretary
finds that such waiver--
`(A) is not inconsistent with the--
`(i) purposes of the programs under this title; or
`(ii) best interests of beneficiaries enrolled under this part;
and
`(B) permits a sufficient level of competition for such contracts,
promotes efficiency of benefits administration, or otherwise serves the
objectives of the program under this part.
`(4) NO ADMINISTRATIVE OR JUDICIAL REVIEW- The determination of the
Secretary to award or not award a contract to an eligible entity with
respect to a plan under this part shall not be subject to administrative or
judicial review.
`(f) APPROVAL OF MARKETING MATERIAL AND APPLICATION FORMS- The provisions
of section 1851(h) shall apply to marketing material and application forms
under this part in the same manner as such provisions apply to marketing
material and application forms under part C.
`(g) DURATION OF CONTRACTS- Each contract awarded under this part shall be
for a term of at least 2 years but not more than 5 years, as determined by the
Secretary.
`MINIMUM STANDARDS FOR ELIGIBLE ENTITIES
`SEC. 1860H. (a) IN GENERAL- The Secretary shall not award a contract to
an eligible entity under this part unless the Secretary finds that the
eligible entity agrees to comply with such terms and conditions as the
Secretary shall specify, including the following:
`(1) QUALITY AND FINANCIAL STANDARDS- The eligible entity meets the
quality and financial standards specified by the Secretary.
`(2) PROCEDURES TO ENSURE PROPER UTILIZATION, COMPLIANCE, AND AVOIDANCE
OF ADVERSE DRUG REACTIONS-
`(A) IN GENERAL- The eligible entity has in place drug utilization
review procedures to ensure--
`(i) the appropriate utilization by eligible beneficiaries enrolled
in the plan covered by the contract of the benefits to be provided under
the plan;
`(ii) the avoidance of adverse drug reactions among such
beneficiaries, including problems due to therapeutic duplication,
drug-disease contraindications, drug-drug interactions (including
serious interactions
with nonprescription or over-the-counter drugs), incorrect drug dosage or
duration of drug treatment, drug-allergy interactions, and clinical abuse and
misuse; and
`(iii) the reasonable application of peer-reviewed medical
literature pertaining to improvements in pharmaceutical safety and
appropriate use of drugs.
`(B) AUTHORITY TO USE CERTAIN COMPENDIA AND LITERATURE- The eligible
entity may use the compendia and literature referred to in clauses (i) and
(ii), respectively, of section 1927(g)(1)(B) as a source for the
utilization review under subparagraph (A).
`(3) PATIENT PROTECTIONS-
`(i) IN GENERAL- The eligible entity ensures that the covered
outpatient drugs are accessible and convenient to eligible beneficiaries
enrolled in the plan covered by the contract, including by offering the
services 24 hours a day and 7 days a week for emergencies.
`(ii) AGREEMENTS WITH PHARMACIES- The eligible entity shall enter
into a participation agreement with any pharmacy that meets the
requirements of subsection (d) to furnish covered prescription drugs to
eligible beneficiaries under this part. Such agreements shall include
the payment of a reasonable dispensing fee for covered outpatient drugs
dispensed to a beneficiary under the agreement.
`(iii) PREFERRED PHARMACY NETWORKS- If the eligible entity utilizes
a preferred pharmacy network, the network complies with the standards
under subsection (e).
`(B) ENSURING THAT BENEFICIARIES ARE NOT OVERCHARGED- The eligible
entity has procedures in place to ensure that each pharmacy with a
participation agreement under this part with the entity complies with the
requirements under subsection (d)(1)(C) (relating to adherence to
negotiated prices).
`(i) IN GENERAL- The eligible entity ensures that, in the case of an
eligible beneficiary who loses coverage under this part with such entity
under circumstances that would permit a special election period (as
established by the Secretary under section 1860C(a)(1)), the entity will
continue to provide coverage under this part to such beneficiary until
the beneficiary enrolls and receives such coverage with another eligible
entity under this part or, if eligible, with a Medicare+Choice
organization.
`(ii) LIMITED PERIOD- In no event shall an eligible entity be
required to provide the extended coverage required under clause (i)
beyond the date which is 30 days after the coverage with such entity
would have terminated but for this subparagraph.
`(D) PROCEDURES REGARDING THE DETERMINATION OF DRUGS THAT ARE
MEDICALLY NECESSARY-
`(i) IN GENERAL- The eligible entity has in place procedures on a
case-by-case basis to treat a nonpreferred brand name drug as a
preferred brand name drug and a nonformulary drug as a preferred brand
name drug under this part if the nonpreferred brand name drug or the
nonformulary drug, as the case may be, is determined--
`(I) to be not as effective for the enrollee in preventing or
slowing the deterioration of, or improving or maintaining, the health
of the enrollee; or
`(II) to have a significant adverse effect on the
enrollee.
`(ii) REQUIREMENT- The procedures under clause (i) shall require
that determinations under such clause are based on professional medical
judgment, the medical condition of the enrollee, and other medical
evidence.
`(E) PROCEDURES REGARDING APPEAL RIGHTS WITH RESPECT TO DENIALS OF
CARE- The eligible entity has in place procedures to ensure--
`(i) a timely internal review for resolution of denials of coverage
(in whole or in part and including those regarding the coverage of
nonpreferred brand name drugs and nonformulary drugs as preferred brand
name drugs) in accordance with the medical exigencies of the case and a
timely resolution of complaints, by enrollees in the plan, or by
providers, pharmacists, and other individuals acting on behalf of each
such enrollee (with the enrollee's consent) in accordance with
requirements (as established by the Secretary) that are comparable to
such requirements for Medicare+Choice organizations under part C (and
are not less favorable to the enrollee than such requirements under such
part as in effect on the date of enactment of the Medicare Outpatient
Prescription Drug Act of 2002);
`(ii) that the entity complies in a timely manner with requirements
established by the Secretary that (I) provide for an external review by
an independent entity selected by the Secretary of denials of coverage
described in clause (i) not resolved in the favor of the beneficiary (or
other complainant) under the process described in such clause, and (II)
are comparable to the external review requirements established for
Medicare+Choice organizations under part C (and are not less favorable
to the enrollee than such requirements under such part as in effect on
the date of enactment of the Medicare Outpatient Prescription Drug Act
of 2002); and
`(iii) that enrollees are provided with information regarding the
appeals procedures under this part at the time of enrollment with the
entity and upon request thereafter.
`(F) PROCEDURES REGARDING PATIENT CONFIDENTIALITY- Insofar as an
eligible entity maintains individually identifiable medical records or
other health information regarding eligible beneficiaries enrolled in the
plan that is covered by the contract, the entity has in place procedures
to--
`(i) safeguard the privacy of any individually identifiable
beneficiary information;
`(ii) maintain such records and information in a manner that is
accurate and timely;
`(iii) ensure timely access by such beneficiaries to such records
and information; and
`(iv) otherwise comply with applicable laws relating to patient
confidentiality.
`(G) PROCEDURES REGARDING TRANSFER OF MEDICAL RECORDS-
`(i) IN GENERAL- The eligible entity has in place procedures for the
timely transfer of records and information described in subparagraph (F)
(with respect to a beneficiary who loses coverage under this part with
the entity and enrolls with another entity (including a Medicare+Choice
organization) under this part) to such other entity.
`(ii) PATIENT CONFIDENTIALITY- The procedures described in clause
(i) shall comply with the patient confidentiality procedures described
in subparagraph (F).
`(H) PROCEDURES REGARDING MEDICAL ERRORS- The eligible entity has in
place procedures for--
`(i) working with the Secretary to deter medical errors related to
the provision of covered outpatient drugs; and
`(ii) ensuring that pharmacies with a contract with the entity have
in place procedures to deter medical errors related to the provision of
covered outpatient drugs.
`(4) PROCEDURES TO CONTROL FRAUD, ABUSE, AND WASTE- The eligible entity
has in place procedures to control fraud, abuse, and waste.
`(5) REPORTING REQUIREMENTS-
`(A) IN GENERAL- The eligible entity provides the Secretary with
reports containing information regarding the following:
`(i) The negotiated prices that the eligible entity is paying for
covered outpatient drugs.
`(ii) The prices that eligible beneficiaries enrolled in the plan
that is covered by the contract will be charged for covered outpatient
drugs.
`(iii) The management costs of providing such benefits.
`(iv) Utilization of such benefits.
`(v) Marketing and advertising expenditures related to enrolling and
retaining eligible beneficiaries.
`(B) TIMEFRAME FOR SUBMITTING REPORTS-
`(i) IN GENERAL- The eligible entity shall submit a report described
in subparagraph (A) to the Secretary within 3 months after the end of
each 12-month period in which the eligible entity has a contract under
this part. Such report shall contain information concerning the benefits
provided during such 12-month period.
`(ii) LAST YEAR OF CONTRACT- In the case of the last year of a
contract under this part, the Secretary may require that a report
described in subparagraph (A) be submitted 3 months prior to the end of
the contract. Such report shall contain information concerning the
benefits provided between the period covered by the most recent report
under this subparagraph and the date that a report is submitted under
this clause.
`(C) CONFIDENTIALITY OF INFORMATION-
`(i) IN GENERAL- Notwithstanding any other provision of law and
subject to clause (ii), information disclosed by an eligible entity
pursuant to subparagraph (A) (except for information described in clause
(ii) of such subparagraph) is confidential and shall only be used by the
Secretary for the purposes of, and to the extent necessary, to carry out
this part.
`(ii) UTILIZATION DATA- Subject to patient confidentiality laws, the
Secretary shall make information disclosed by an eligible entity
pursuant to subparagraph (A)(iv) (regarding utilization data) available
for research purposes. The Secretary may charge a reasonable fee for
making such information available.
`(6) APPROVAL OF MARKETING MATERIAL AND APPLICATION FORMS- The eligible
entity complies with the requirements described in section 1860G(f).
`(7) RECORDS AND AUDITS- The eligible entity maintains adequate records
related to the administration of the benefits under this part and affords
the Secretary access to such records for auditing purposes.
`(b) SPECIAL RULES REGARDING COST-EFFECTIVE PROVISION OF BENEFITS- In
providing the benefits under a contract under this part, an eligible entity
shall--
`(1) employ mechanisms to provide the benefits economically, such as
through the use of--
`(A) alternative methods of distribution;
`(B) preferred pharmacy networks (pursuant to subsection (e));
and
`(C) generic drug substitution;
`(2) use mechanisms to encourage eligible beneficiaries to select
cost-effective drugs or less costly means of receiving drugs, such as
through the use of--
`(A) pharmacy incentive programs;
`(B) therapeutic interchange programs; and
`(C) disease management programs;
`(3) encourage pharmacy providers to--
`(A) inform beneficiaries of the differentials in price between
generic and brand name drug equivalents; and
`(B) provide medication therapy management programs in order to
enhance beneficiaries' understanding of the appropriate use of medications
and to reduce the risk of potential adverse events associated with
medications; and
`(4) develop and implement a formulary in accordance with subsection
(c).
`(c) REQUIREMENTS FOR FORMULARIES-
`(1) IN GENERAL- The formulary developed and implemented by the eligible
entity shall comply with standards established by the Secretary in
consultation with the Medicare Prescription Drug Advisory Committee
established under section 1860L.
`(2) REQUIREMENTS FOR STANDARDS- The standards established under
paragraph (1) shall require that the eligible entity--
`(A) use a pharmacy and therapeutic committee (that meets the
standards for a pharmacy and therapeutic committee established by the
Secretary in consultation with such Medicare Prescription Drug Advisory
Committee) to develop and implement the formulary;
`(B) assign all brand name drugs included in the formulary to either
the preferred category or nonpreferred category of drugs;
`(i) all generic covered outpatient drugs in the
formulary;
`(ii) at least 1 brand name covered outpatient drug from each
therapeutic class (as defined by the Secretary in consultation with such
Medicare Prescription Drug Advisory Committee) as a preferred brand name
drug in the formulary; and
`(iii) if there is more than 1 brand name covered outpatient drug
available in a therapeutic class, at least 1 such drug as a preferred
brand name drug in the formulary and at least 1 such drug as a
nonpreferred brand name drug in the formulary;
`(D) develop procedures for the modification of the formulary,
including for the addition of new drugs to an existing therapeutic
class;
`(E) pursuant to section 1860F(b)(1)(C), provide for coverage of
nonpreferred brand name drugs and nonformulary drugs at the preferred rate
when determined under subparagraph (D) or (E) of subsection (a)(3) to be
medically necessary;
`(F) disclose to current and prospective beneficiaries and to
providers in the service area the nature of the formulary restrictions,
including information regarding the drugs included in the formulary and
any difference in the cost-sharing for--
`(i) drugs included in the formulary; and
`(ii) for drugs not included in the formulary; and
`(G) provide a reasonable amount of notice to beneficiaries enrolled
in the plan that is covered by the contract under this part of any change
in the formulary.
`(3) CONSTRUCTION- Nothing in this part shall be construed as precluding
an eligible entity from--
`(A) except as provided in section 1860F(b)(1)(C) (relating to the
coverage of medically necessary drugs at the preferred rate), requiring
cost-sharing for nonformulary drugs that is higher than the copayment
amount established in section 1860F(b)(1)(A)(iii);
`(B) educating prescribing providers, pharmacists, and beneficiaries
about the medical and cost benefits of drugs included in the formulary
(including generic drugs); or
`(C) requesting prescribing providers to consider a drug included in
the formulary prior to dispensing of a drug not so included or a preferred
brand name drug prior to dispensing of a nonpreferred brand name drug, as
long as such a request does not unduly delay the provision of the
drug.
`(d) TERMS OF PARTICIPATION AGREEMENT WITH PHARMACIES-
`(1) IN GENERAL- A participation agreement between an eligible entity
and a pharmacy under this part (pursuant to subsection (a)(3)(A)(ii)) shall
include the following terms and conditions:
`(A) APPLICABLE REQUIREMENTS- The pharmacy shall meet (and throughout
the contract period continue to meet) all applicable Federal requirements
and State and local licensing requirements.
`(B) ACCESS AND QUALITY STANDARDS- The pharmacy shall comply with such
standards as the Secretary (and the eligible entity) shall establish
concerning the quality of, and enrolled beneficiaries' access to, pharmacy
services under this part. Such standards shall require the
pharmacy--
`(i) not to refuse to dispense covered outpatient drugs to any
eligible beneficiary enrolled under this part;
`(ii) to keep patient records (including records on expenses) for
all covered outpatient drugs dispensed to such enrolled
beneficiaries;
`(iii) to submit information (in a manner specified by the Secretary
to be necessary to administer this part) on all purchases of such drugs
dispensed to such enrolled beneficiaries; and
`(iv) to comply with periodic audits to assure compliance with the
requirements of this part and the accuracy of information
submitted.
`(C) ENSURING THAT BENEFICIARIES ARE NOT OVERCHARGED-
`(i) ADHERENCE TO NEGOTIATED PRICES- The total charge for each
covered outpatient drug dispensed by the pharmacy to a beneficiary
enrolled in the plan, without regard to whether the individual is
financially responsible for any or all of such charge, shall not exceed
the negotiated price for the drug (as reported to the Secretary pursuant
to subsection (a)(5)(A)).
`(ii) ADHERENCE TO BENEFICIARY OBLIGATION- The pharmacy may not
charge (or collect from) such beneficiary an amount that exceed's the
cost-sharing that the beneficiary is responsible for under this part (as
determined under section 1860F(b) using the negotiated price of the
drug).
`(D) ADDITIONAL REQUIREMENTS- The pharmacy shall meet such additional
contract requirements as the eligible entity specifies under this
section.
`(2) APPLICABILITY OF FRAUD AND ABUSE PROVISIONS- The provisions of
section 1128 through 1128C (relating to fraud and abuse) apply to pharmacies
participating in the program under this part.
`(e) PREFERRED PHARMACY NETWORKS-
`(1) IN GENERAL- If an eligible entity uses a preferred pharmacy network
to deliver benefits under this part, such network shall meet minimum access
standards established by the Secretary.
`(2) STANDARDS- In establishing standards under paragraph (1), the
Secretary shall take into account reasonable distances to pharmacy services
in both urban and rural areas.
`PAYMENTS
`SEC. 1860I. (a) PROCEDURES FOR PAYMENTS TO ELIGIBLE ENTITIES- The
Secretary shall establish procedures for making payments to each eligible
entity with a contract under this part for the management, administration, and
delivery of the benefits under this part.
`(b) REQUIREMENTS FOR PROCEDURES-
`(1) IN GENERAL- The procedures established under subsection (a) shall
provide for the following:
`(A) MANAGEMENT PAYMENT- Payment for the management, administration,
and delivery of the benefits under this part.
`(B) REIMBURSEMENT FOR NEGOTIATED COSTS OF DRUGS PROVIDED- Payments
for the negotiated costs of covered outpatient drugs provided to eligible
beneficiaries enrolled under this part and in a plan offered by the
eligible
entity, reduced by any applicable cost-sharing under section 1860F(b).
`(C) RISK REQUIREMENT TO ENSURE PURSUIT OF PERFORMANCE REQUIREMENTS-
An adjustment of a percentage (as determined under paragraph (2)) of the
payments made to an entity under subparagraph (A) to ensure that the
entity, in managing, administering, and delivering the benefits under this
part, pursues performance requirements established by the Secretary,
including the following:
`(i) CONTROL OF MEDICARE AND BENEFICIARY COSTS- The entity contains
costs to the Prescription Drug Account and to eligible beneficiaries
enrolled under this part and in the plan offered by the entity, as
measured by generic substitution rates, price discounts, and other
factors determined appropriate by the Secretary that do not reduce the
access of such beneficiaries to medically necessary covered outpatient
drugs.
`(ii) QUALITY CLINICAL CARE- The entity provides such beneficiaries
with quality clinical care, as measured by such factors as--
`(I) the level of adverse drug reactions and medical errors among
such beneficiaries; and
`(II) providing specific clinical suggestions to improve health
and patient and prescriber education as appropriate.
`(iii) QUALITY SERVICE- The entity provides such beneficiaries with
quality services, as measured by such factors as sustained pharmacy
network access, timeliness and accuracy of service delivery in claims
processing and card production, pharmacy and member service support
access, response time in mail delivery service, and timely action with
regard to appeals and current beneficiary service surveys.
`(2) PERCENTAGE OF PAYMENT TIED TO RISK-
`(A) IN GENERAL- Subject to subparagraph (B), the Secretary shall
determine the percentage (which may be up to 100 percent) of the payments
made to an entity under subparagraph (A) that will be tied to the
performance requirements described in paragraph (1)(C).
`(B) LIMITATION ON RISK TO ENSURE PROGRAM STABILITY- In order to
provide for program stability, the Secretary may not establish a
percentage to be adjusted under this subsection at a level that
jeopardizes the ability of an eligible entity to administer and deliver
the benefits under this part or administer and deliver such benefits in a
quality manner.
`(3) RISK ADJUSTMENT OF PAYMENTS BASED ON ENROLLEES IN PLAN- To the
extent that an eligible entity is at risk under this subsection, the
procedures established under subsection (a) may include a methodology for
risk adjusting the payments made to such entity based on the differences in
actuarial risk of different enrollees being served if the Secretary
determines such adjustments to be necessary and appropriate.
`(4) PASS-THROUGH OF REBATES AND PRICE CONCESSIONS OBTAINED BY THE
ELIGIBLE ENTITY- The Secretary, if determined by the Secretary to be in the
best interests of the medicare program or eligible beneficiaries, may
establish procedures for reducing the amount of payments to an eligible
entity under subsection (a) to take into account any rebates or price
concessions obtained by the entity from manufacturers of covered outpatient
drugs.
`(c) PAYMENTS TO MEDICARE+CHOICE ORGANIZATIONS- For provisions related to
payments to Medicare+Choice organizations for the administration and delivery
of benefits under this part to eligible beneficiaries enrolled in a
Medicare+Choice plan offered by the organization, see section 1853(c)(8).
`(d) SECONDARY PAYER PROVISIONS- The provisions of section 1862(b) shall
apply to the benefits provided under this part.
`EMPLOYER INCENTIVE PROGRAM FOR EMPLOYMENT-BASED RETIREE DRUG COVERAGE
`SEC. 1860J. (a) PROGRAM AUTHORITY- The Secretary is authorized to develop
and implement a program under this section to be known as the `Employer
Incentive Program' that encourages employers and other sponsors of
employment-based health care coverage to provide adequate prescription drug
benefits to retired individuals by subsidizing, in part, the sponsor's cost of
providing coverage under qualifying plans.
`(b) SPONSOR REQUIREMENTS- In order to be eligible to receive an incentive
payment under this section with respect to coverage of an individual under a
qualified retiree prescription drug plan (as defined in subsection (e)(3)), a
sponsor shall meet the following requirements:
`(1) ASSURANCES- The sponsor shall--
`(A) annually attest, and provide such assurances as the Secretary may
require, that the coverage offered by the sponsor is a qualified retiree
prescription drug plan, and will remain such a plan for the duration of
the sponsor's participation in the program under this section;
and
`(B) guarantee that it will give notice to the Secretary and covered
retirees--
`(i) at least 120 days before terminating its plan; and
`(ii) immediately upon determining that the actuarial value of the
prescription drug benefit under the plan falls below the actuarial value
of the outpatient prescription drug benefit under this part.
`(2) BENEFICIARY INFORMATION- The sponsor shall report to the Secretary,
for each calendar quarter for which it seeks an incentive payment under this
section, the names and social security numbers of all retirees (and their
spouses and dependents) covered under such plan during such
quarter and the dates (if less than the full quarter) during which each such
individual was covered.
`(3) AUDITS- The sponsor and the employment-based retiree health
coverage plan seeking incentive payments under this section shall agree to
maintain, and to afford the Secretary access to, such records as the
Secretary may require for purposes of audits and other oversight activities
necessary to ensure the adequacy of prescription drug coverage, the accuracy
of incentive payments made, and such other matters as may be
appropriate.
`(4) OTHER REQUIREMENTS- The sponsor shall provide such other
information, and comply with such other requirements, as the Secretary may
find necessary to administer the program under this section.
`(1) IN GENERAL- A sponsor that meets the requirements of subsection (b)
with respect to a quarter in a calendar year shall be entitled to have
payment made by the Secretary on a quarterly basis (to the sponsor or, at
the sponsor's direction, to the appropriate employment-based health plan) of
an incentive payment, in the amount determined in paragraph (2), for each
retired individual (or spouse or dependent) who--
`(A) was covered under the sponsor's qualified retiree prescription
drug plan during such quarter; and
`(B) was eligible for, but was not enrolled in, the outpatient
prescription drug benefit program under this part.
`(A) IN GENERAL- The amount of the payment for a quarter shall be, for
each individual described in paragraph (1), 2/3 of the sum of the monthly
Government contribution amounts (computed under subparagraph (B)) for each
of the 3 months in the quarter.
`(B) COMPUTATION OF MONTHLY GOVERNMENT CONTRIBUTION AMOUNT- For
purposes of subparagraph (A), the monthly Government contribution amount
for a month in a year is equal to the amount by which--
`(i) 1/12 of the amount estimated under subparagraph (C) for the
year involved; exceeds
`(ii) the monthly Part D premium under section 1860E(a) (determined
without regard to any increase under section 1860B(b)(1)) for the month
involved.
`(C) ESTIMATE OF AVERAGE ANNUAL PER CAPITA AGGREGATE
EXPENDITURES-
`(i) IN GENERAL- The Secretary shall for each year after 2003
estimate for that year an amount equal to average annual per capita
aggregate expenditures payable from the Prescription Drug Account for
that year.
`(ii) TIMEFRAME FOR ESTIMATION- The Secretary shall make the
estimate described in clause (i) for a year before the beginning of that
year.
`(3) PAYMENT DATE- The payment under this section with respect to a
calendar quarter shall be payable as of the end of the next succeeding
calendar quarter.
`(d) CIVIL MONEY PENALTIES- A sponsor, health plan, or other entity that
the Secretary determines has, directly or through its agent, provided
information in connection with a request for an incentive payment under this
section that the entity knew or should have known to be false shall be subject
to a civil monetary penalty in an amount up to 3 times the total incentive
amounts under subsection (c) that were paid (or would have been payable) on
the basis of such information.
`(e) DEFINITIONS- In this section:
`(1) EMPLOYMENT-BASED RETIREE HEALTH COVERAGE- The term
`employment-based retiree health coverage' means health insurance or other
coverage, whether provided by voluntary insurance coverage or pursuant to
statutory or contractual obligation, of health care costs for retired
individuals (or for such individuals and their spouses and dependents) based
on their status as former employees or labor union members.
`(2) EMPLOYER- The term `employer' has the meaning given the term in
section 3(5) of the Employee Retirement Income Security Act of 1974 (except
that such term shall include only employers of 2 or more employees).
`(3) QUALIFIED RETIREE PRESCRIPTION DRUG PLAN- The term `qualified
retiree prescription drug plan' means health insurance coverage included in
employment-based retiree health coverage that--
`(A) provides coverage of the cost of prescription drugs with an
actuarial value (as defined by the Secretary) to each retired beneficiary
that equals or exceeds the actuarial value of the benefits provided to an
individual enrolled in the outpatient prescription drug benefit program
under this part; and
`(B) does not deny, limit, or condition the coverage or provision of
prescription drug benefits for retired individuals based on age or any
health status-related factor described in section 2702(a)(1) of the Public
Health Service Act.
`(4) SPONSOR- The term `sponsor' has the meaning given the term `plan
sponsor' in section 3(16)(B) of the Employer Retirement Income Security Act
of 1974.
`(f) AUTHORIZATION OF APPROPRIATIONS- There are authorized to be
appropriated from time to time, out of any moneys in the Treasury not
otherwise appropriated, such sums as may be necessary to carry out the program
under this section.
`PRESCRIPTION DRUG ACCOUNT IN THE FEDERAL SUPPLEMENTARY MEDICAL INSURANCE
TRUST FUND
`SEC. 1860K. (a) ESTABLISHMENT-
`(1) IN GENERAL- There is created within the Federal Supplementary
Medical Insurance Trust Fund established by section 1841 an account to be
known as the `Prescription Drug Account' (in this section referred to as the
`Account').
`(2) FUNDS- The Account shall consist of such gifts and bequests as may
be made as provided in section 201(i)(1), and such amounts as may be
deposited in, or appropriated to, the account as provided in this
part.
`(3) SEPARATE FROM REST OF TRUST FUND- Funds provided under this part to
the Account shall be kept separate from all other funds within the Federal
Supplementary Medical Insurance Trust Fund.
`(b) PAYMENTS FROM ACCOUNT-
`(1) IN GENERAL- The Managing Trustee shall pay from time to time from
the Account such amounts as the Secretary certifies are necessary to make
payments to operate the program under this part, including payments to
eligible entities under section 1860I, payments to Medicare+Choice
organizations under section 1853(c)(8), and payments with respect to
administrative expenses under this part in accordance with section
201(g).
`(2) TREATMENT IN RELATION TO PART B PREMIUM- Amounts payable from the
Account shall not be taken into account in computing actuarial rates or
premium amounts under section 1839.
`(c) APPROPRIATIONS TO COVER BENEFITS AND ADMINISTRATIVE COSTS-
`(1) IN GENERAL- Subject to paragraph (2), there are appropriated to the
Account in a fiscal year, out of any moneys in the Treasury not otherwise
appropriated, an amount equal to the amount by which the benefits and
administrative costs of providing the benefits under this part in the year
exceed the premiums collected under section 1860E(b) for the year.
`(2) LIMITATION- No amounts shall be appropriated, and no amounts
expended, for expenses incurred for providing coverage of covered outpatient
drugs after January 1, 2011. The Secretary may make payments on or after
such date for expenses incurred to the extent such expenses were incurred
for providing coverage of covered outpatient drugs prior to such date.
`MEDICARE PRESCRIPTION DRUG ADVISORY COMMITTEE
`SEC. 1860L. (a) ESTABLISHMENT OF COMMITTEE- There is established a
Medicare Prescription Drug Advisory Committee (in this section referred to as
the `Committee').
`(b) FUNCTIONS OF COMMITTEE- On and after March 1, 2003, the Committee
shall advise the Secretary on policies related to--
`(1) the development of guidelines for the implementation and
administration of the outpatient prescription drug benefit program under
this part; and
`(2) the development of--
`(A) standards for a pharmacy and therapeutics committee required of
eligible entities under section 1860H(c)(2)(A);
`(B) standards required under subparagraphs (D) and (E) of section
1860H(a)(3) for determining if a drug is medically necessary;
`(i) establishing therapeutic classes;
`(ii) adding new therapeutic classes to a formulary; and
`(iii) defining a prescription of covered outpatient drugs for
purposes of applying cost-sharing under section 1860F(b);
`(D) procedures to evaluate the bids submitted by eligible entities
under this part; and
`(E) procedures to ensure that eligible entities with a contract under
this part are in compliance with the requirements under this
part.
`(c) STRUCTURE AND MEMBERSHIP OF THE COMMITTEE-
`(1) STRUCTURE- The Committee shall be composed of 19 members who shall
be appointed by the Secretary.
`(A) IN GENERAL- The members of the Committee shall be chosen on the
basis of their integrity, impartiality, and good judgment, and shall be
individuals who are, by reason of their education, experience,
attainments, and understanding of pharmaceutical cost control and quality
enhancement, exceptionally qualified to perform the duties of members of
the Committee.
`(B) SPECIFIC MEMBERS- Of the members appointed under paragraph
(1)--
`(i) five shall be chosen to represent physicians, 2 of whom shall
be geriatricians;
`(ii) two shall be chosen to represent nurse
practitioners;
`(iii) four shall be chosen to represent pharmacists;
`(iv) one shall be chosen to represent the Centers for Medicare
& Medicaid Services;
`(v) four shall be chosen to represent actuaries,
pharmacoeconomists, researchers, and other appropriate
experts;
`(vi) one shall be chosen to represent emerging drug
technologies;
`(vii) one shall be closed to represent the Food and Drug
Administration; and
`(viii) one shall be chosen to represent individuals enrolled under
this part.
`(d) TERMS OF APPOINTMENT- Each member of the Committee shall serve for a
term determined appropriate by the Secretary. The terms of service of the
members initially appointed shall begin on January 1, 2003.
`(e) CHAIRPERSON- The Secretary shall designate a member of the Committee
as Chairperson. The term as Chairperson shall be for a 1-year period.
`(f) COMMITTEE PERSONNEL MATTERS-
`(A) COMPENSATION- Each member of the Committee who is not an officer
or employee of the Federal Government shall be compensated at a rate equal
to the daily equivalent
of the annual rate of basic pay prescribed for level IV of the Executive
Schedule under section 5315 of title 5, United States Code, for each day
(including travel time) during which such member is engaged in the performance
of the duties of the Committee. All members of the Committee who are officers or
employees of the United States shall serve without compensation in addition to
that received for their services as officers or employees of the United States.
`(B) TRAVEL EXPENSES- The members of the Committee 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 services for the Committee.
`(2) STAFF- The Committee may appoint such personnel as the Committee
considers appropriate.
`(g) OPERATION OF THE COMMITTEE-
`(1) MEETINGS- The Committee shall meet at the call of the Chairperson
(after consultation with the other members of the Committee) not less often
than quarterly to consider a specific agenda of issues, as determined by the
Chairperson after such consultation.
`(2) QUORUM- Ten members of the Committee shall constitute a quorum for
purposes of conducting business.
`(h) FEDERAL ADVISORY COMMITTEE ACT- Section 14 of the Federal Advisory
Committee Act (5 U.S.C. App.) shall not apply to the Committee.
`(i) TRANSFER OF PERSONNEL, RESOURCES, AND ASSETS- For purposes of
carrying out its duties, the Secretary and the Committee may provide for the
transfer to the Committee of such civil service personnel in the employ of the
Department of Health and Human Services (including the Centers for Medicare
& Medicaid Services), and such resources and assets of the Department used
in carrying out this title, as the Committee requires.
`(j) AUTHORIZATION OF APPROPRIATIONS- There are authorized to be
appropriated such sums as may be necessary to carry out the purposes of this
section.'.
(b) EXCLUSIONS FROM COVERAGE-
(1) APPLICATION TO PART D- Section 1862(a) of the Social Security Act
(42 U.S.C. 1395y(a)) is amended in the matter preceding paragraph (1) by
striking `part A or part B' and inserting `part A, B, or D'.
(2) PRESCRIPTION DRUGS NOT EXCLUDED FROM COVERAGE IF REASONABLE AND
NECESSARY- Section 1862(a)(1) of the Social Security Act (42 U.S.C.
1395y(a)(1)) is amended--
(A) in subparagraph (H), by striking `and' at the end;
(B) in subparagraph (I), by striking the semicolon at the end and
inserting `, and'; and
(C) by adding at the end the following new subparagraph:
`(J) in the case of prescription drugs covered under part D, which are
not reasonable and necessary to prevent or slow the deterioration of, or
improve or maintain, the health of eligible beneficiaries;'.
(c) CONFORMING AMENDMENTS TO FEDERAL SUPPLEMENTARY MEDICAL INSURANCE TRUST
FUND- Section 1841 of the Social Security Act (42 U.S.C. 1395t) is
amended--
(1) in the last sentence of subsection (a)--
(A) by striking `and' before `such amounts'; and
(B) by inserting before the period the following: `, and such amounts
as may be deposited in, or appropriated to, the Prescription Drug Account
established by section 1860K';
(2) in subsection (g), by inserting after `by this part,' the following:
`the payments provided for under part D (in which case the payments shall be
made from the Prescription Drug Account in the Trust Fund),';
(3) in subsection (h), by inserting after `1840(d)' the following: `and
section 1860E(b) (in which case the payments shall be made from the
Prescription Drug Account in the Trust Fund)'; and
(4) in subsection (i), by inserting after `section 1840(b)(1)' the
following: `, section 1860E(b) (in which case the payments shall be made
from the Prescription Drug Account in the Trust Fund),'.
(d) CONFORMING REFERENCES TO PREVIOUS PART D-
(1) IN GENERAL- Any reference in law (in effect before the date of
enactment of this Act) to part D of title XVIII of the Social Security Act
is deemed a reference to part E of such title (as in effect after such
date).
(2) SECRETARIAL SUBMISSION OF LEGISLATIVE PROPOSAL- Not later than 6
months after the date of enactment of this Act, the Secretary of Health and
Human Services shall submit to Congress a legislative proposal providing for
such technical and conforming amendments in the law as are required by the
provisions of this Act.
SEC. 3. PART D BENEFITS UNDER MEDICARE+CHOICE PLANS.
(a) ELIGIBILITY, ELECTION, AND ENROLLMENT- Section 1851 of the Social
Security Act (42 U.S.C. 1395w-21) is amended--
(1) in subsection (a)(1)(A), by striking `parts A and B' and inserting
`parts A, B, and D'; and
(2) in subsection (i)(1), by striking `parts A and B' and inserting
`parts A, B, and D'.
(b) VOLUNTARY BENEFICIARY ENROLLMENT FOR DRUG COVERAGE- Section
1852(a)(1)(A) of the Social Security Act (42 U.S.C. 1395w-22(a)(1)(A)) is
amended by inserting `(and under part D to individuals also enrolled under
that part)' after `parts A and B'.
(c) ACCESS TO SERVICES- Section 1852(d)(1) of the Social Security Act (42
U.S.C. 1395w-22(d)(1)) is amended--
(1) in subparagraph (D), by striking `and' at the end;
(2) in subparagraph (E), by striking the period at the end and inserting
`; and'; and
(3) by adding at the end the following new subparagraph:
`(F) in the case of covered outpatient drugs (as defined in section
1860(1)) provided to individuals enrolled under part D, the organization
complies with the access requirements applicable under part D.'.
(d) PAYMENTS TO ORGANIZATIONS FOR PART D BENEFITS-
(1) IN GENERAL- Section 1853(a)(1)(A) of the Social Security Act (42
U.S.C. 1395w-23(a)(1)(A)) is amended--
(A) by inserting `determined separately for the benefits under parts A
and B and under part D (for individuals enrolled under that part)' after
`as calculated under subsection (c)';
(B) by striking `that area, adjusted for such risk factors' and
inserting `that area. In the case of payment for the benefits under parts
A and B, such payment shall be adjusted for such risk factors as';
and
(C) by inserting before the last sentence the following: `In the case
of the payments under subsection (c)(8) for the provision of coverage of
covered outpatient drugs to individuals enrolled under part D, such
payment shall be adjusted for the risk factors of each enrollee as the
Secretary determines to be feasible and appropriate to ensure actuarial
equivalence.'.
(2) AMOUNT- Section 1853(c) of the Social Security Act (42 U.S.C.
1395w-23(c)) is amended--
(A) in paragraph (1), in the matter preceding subparagraph (A), by
inserting `for benefits under parts A and B' after `capitation rate';
and
(B) by adding at the end the following new paragraph:
`(8) CAPITATION RATE FOR PART D BENEFITS-
`(A) IN GENERAL- In the case of a Medicare+Choice plan that provides
coverage of covered outpatient drugs to an individual enrolled under part
D, the capitation rate for such coverage shall be the amount described in
subparagraph (B). Such payments shall be made in the same manner and at
the same time as the payments to the Medicare+Choice organization offering
the plan for benefits under parts A and B are otherwise made, but such
payments shall be payable from the Prescription Drug Account in the
Federal Supplementary Medical Insurance Trust Fund under section
1841.
`(B) AMOUNT- The amount described in this paragraph is an amount equal
to 1/12 of the average annual per capita aggregate expenditures payable
from the Prescription Drug Account for the year (as estimated under
section 1860J(c)(2)(C)).'.
(e) LIMITATION ON ENROLLEE LIABILITY- Section 1854(e) of the Social
Security Act (42 U.S.C. 1395w-24(e)) is amended by adding at the end the
following new paragraph:
`(5) SPECIAL RULE FOR PART D BENEFITS- With respect to outpatient
prescription drug benefits under part D, a Medicare+Choice organization may
not require that an enrollee pay any deductible or pay a cost-sharing amount
that exceeds the amount of cost-sharing applicable for such benefits for an
eligible beneficiary under part D.'.
(f) REQUIREMENT FOR ADDITIONAL BENEFITS- Section 1854(f)(1) of the Social
Security Act (42 U.S.C. 1395w-24(f)(1)) is amended by adding at the end the
following new sentence: `Such determination shall be made separately for the
benefits under parts A and B and for prescription drug benefits under part
D.'.
(g) EFFECTIVE DATE- The amendments made by this section shall apply to
items and services provided under a Medicare+Choice plan on or after January
1, 2004.
SEC. 4. ADDITIONAL ASSISTANCE FOR LOW-INCOME BENEFICIARIES.
(a) INCLUSION IN MEDICARE COST-SHARING- Section 1905(p)(3) of the Social
Security Act (42 U.S.C. 1396d(p)(3)) is amended--
(1) in subparagraph (A)--
(A) in clause (i), by striking `and' at the end;
(B) in clause (ii), by inserting `and' at the end; and
(C) by adding at the end the following new clause:
`(iii) premiums under section 1860E(a).'; and
(2) in subparagraph (B), by inserting `and cost-sharing described in
section 1860F(b)' after `section 1813'.
(b) EXPANSION OF MEDICAL ASSISTANCE- Section 1902(a)(10)(E) of the Social
Security Act (42 U.S.C. 1396a(a)(10)(E)) is amended--
(A) by striking `section 1905(p)(3)(A)(ii)' and inserting `clauses
(ii) and (iii) of section 1905(p)(3)(A) and for medicare cost-sharing
described in section 1905(p)(3)(B) (but only insofar as it relates to
benefits provided under part D of title XVIII),'; and
(B) by striking `and' at the end;
(2) by redesignating clause (iv) as clause (vi); and
(3) by inserting after clause (iii) the following new clauses:
`(iv) for making medical assistance available for medicare
cost-sharing described in section 1905(p)(3)(A)(iii) and for medicare
cost-sharing described in section 1905(p)(3)(B) (but only insofar as it
relates to benefits provided under part D of title XVIII) for individuals
who would be qualified medicare beneficiaries described in section
1905(p)(1) but for the fact that their income exceeds 120 percent but does
not exceed 135 percent of such official poverty line for a family of the
size involved;
`(v) for making medical assistance available for medicare cost-sharing
described in section 1905(p)(3)(A)(iii) on a linear sliding scale based on
the income of such individuals for individuals who would be qualified
medicare beneficiaries described in section 1905(p)(1) but for the fact
that their income exceeds 135 percent but does not exceed 150 percent of
such official poverty line for a family of the size involved;
and'.
(c) NONAPPLICABILITY OF RESOURCE REQUIREMENTS TO MEDICARE PART D
COST-SHARING- Section 1905(p)(1) of the Social Security Act (42 U.S.C.
1396d(p)(1)) is amended by adding at the end the following flush sentence:
`In determining if an individual is a qualified medicare beneficiary under
this paragraph, subparagraph (C) shall not be applied for purposes of
providing the individual with medicare cost-sharing described in section
1905(p)(3)(A)(iii) or for medicare cost-sharing described
in section 1905(p)(3)(B) (but only insofar as it relates to benefits provided
under part D of title XVIII).'.
(d) NONAPPLICABILITY OF PAYMENT DIFFERENTIAL REQUIREMENTS TO MEDICARE PART
D COST-SHARING- Section 1902(n)(2) of the Social Security Act (42 U.S.C.
1396a(n)(2)) is amended by adding at the end the following new sentence: `The
preceding sentence shall not apply to the cost-sharing described in section
1860F(b).'.
(e) 100 PERCENT FEDERAL MEDICAL ASSISTANCE PERCENTAGE- The first sentence
of section 1905(b) of the Social Security Act (42 U.S.C. 1396d(b)) is
amended--
(1) by striking `and' before `(4)'; and
(2) by inserting before the period at the end the following: `, and (5)
the Federal medical assistance percentage shall be 100 percent with respect
to medical assistance provided under clauses (iv) and (v) of section
1902(a)(10)(E)'.
(f) TREATMENT OF TERRITORIES- Section 1108(g) of the Social Security Act
(42 U.S.C. 1308(g)) is amended by adding at the end the following new
paragraph:
`(3) Notwithstanding the preceding provisions of this subsection, with
respect to fiscal year 2004 and any fiscal year thereafter, the amount
otherwise determined under this subsection (and subsection (f)) for the fiscal
year for a Commonwealth or territory shall be increased by the ratio (as
estimated by the Secretary) of--
`(A) the aggregate amount of payments made to the 50 States and the
District of Columbia for the fiscal year under title XIX that are
attributable to making medical assistance available for individuals
described in clauses (i), (iii), (iv), and (v) of section 1902(a)(10)(E) for
payment of medicare cost-sharing described in section 1905(p)(3)(A)(iii) and
for medicare cost-sharing described in section 1905(p)(3)(B) (but only
insofar as it relates to benefits provided under part D of title XVIII);
to
`(B) the aggregate amount of total payments made to such States and
District for the fiscal year under such title.'.
(g) CONFORMING AMENDMENTS- Section 1933 of the Social Security Act (42
U.S.C. 1396u-3) is amended--
(1) in subsection (a), by striking `section 1902(a)(10)(E)(iv)' and
inserting `section 1902(a)(10)(E)(vi)';
(2) in subsection (c)(2)(A)--
(A) in clause (i), by striking `section 1902(a)(10)(E)(iv)(I)' and
inserting `section 1902(a)(10)(E)(vi)(I)'; and
(B) in clause (ii), by striking `section 1902(a)(10)(E)(iv)(II)' and
inserting `section 1902(a)(10)(E)(vi)(II)';
(3) in subsection (d), by striking `section 1902(a)(10)(E)(iv)' and
inserting `section 1902(a)(10)(E)(vi)'; and
(4) in subsection (e), by striking `section 1902(a)(10)(E)(iv)' and
inserting `section 1902(a)(10)(E)(vi)'.
(h) EFFECTIVE DATE- The amendments made by this section shall apply for
medical assistance provided under section 1902(a)(10)(E) of the Social
Security Act (42 U.S.C. 1396a(a)(10)(E)) on and after January 1, 2004.
SEC. 5. MEDIGAP REVISIONS.
Section 1882 of the Social Security Act (42 U.S.C. 1395ss) is amended by
adding at the end the following new subsection:
`(v) MODERNIZED BENEFIT PACKAGES FOR MEDICARE SUPPLEMENTAL POLICIES-
`(1) REVISION OF BENEFIT PACKAGES-
`(A) IN GENERAL- Notwithstanding subsection (p), the benefit packages
classified as `H', `I', and `J' under the standards established by
subsection (p)(2) (including the benefit package classified as `J' with a
high deductible feature, as described in subsection (p)(11)) shall be
revised so that--
`(i) the coverage of outpatient prescription drugs available under
such benefit packages is replaced with coverage of outpatient
prescription drugs that complements but does not duplicate the coverage
of outpatient prescription drugs that is otherwise available under this
title;
`(ii) the revised benefit packages provide a range of coverage
options for outpatient prescription drugs for beneficiaries, but do not
provide coverage for more than 90 percent of the cost-sharing amount
applicable to an individual under section 1860F(b);
`(iii) uniform language and definitions are used with respect to
such revised benefits;
`(iv) uniform format is used in the policy with respect to such
revised benefits;
`(v) such revised standards meet any additional requirements imposed
by the amendments made by the Medicare Outpatient Prescription Drug Act
of 2002; and
`(vi) except as revised under the preceding clauses or as provided
under subsection (p)(1)(E), the benefit packages are identical to the
benefit packages that were available on the date of enactment of the
Medicare Outpatient Prescription Drug Act of 2002.
`(B) MANNER OF REVISION- The benefit packages revised under this
section shall be revised in the manner described in subparagraph (E) of
subsection (p)(1), except that for purposes of subparagraph (C) of such
subsection, the standards established under this subsection shall take
effect not later than January 1, 2004.
`(2) CONSTRUCTION OF BENEFITS IN OTHER MEDICARE SUPPLEMENTAL POLICIES-
Nothing in the benefit packages classified as `A' through `G' under the
standards established by subsection (p)(2) (including the benefit package
classified as `F' with a high deductible feature, as described in subsection
(p)(11)) shall be construed as providing coverage for benefits for which
payment may be made under part D.
`(3) GUARANTEED ISSUANCE AND RENEWAL OF REVISED POLICIES- The provisions
of subsections (q) and (s), including provisions of subsection (s)(3)
(relating to special enrollment periods in cases of termination or
disenrollment), shall apply to medicare supplemental policies revised under
this subsection in the same manner as such provisions apply to medicare
supplemental policies issued under the standards established under
subsection (p).
`(4) OPPORTUNITY OF CURRENT POLICYHOLDERS TO PURCHASE REVISED
POLICIES-
`(A) IN GENERAL- No medicare supplemental policy of an issuer with a
benefit package that is revised under paragraph (1) shall be deemed to
meet the standards in subsection (c) unless the issuer--
`(i) provides written notice during the 60-day period immediately
preceding the period established for the open enrollment period
established under section 1860B(b)(2)(A), to each individual who is a
policyholder or certificate holder of a medicare supplemental policy
issued by
that issuer (at the most recent available address of that individual) of the
offer described in clause (ii) and of the fact that such individual will no
longer be covered under such policy as of January 1, 2004; and
`(ii) offers the policyholder or certificate holder under the terms
described in subparagraph (B), during at least the period established
under section 1860B(b)(2)(A), a medicare supplemental policy with the
benefit package that the Secretary determines is most comparable to the
policy in which the individual is enrolled with coverage effective as of
the date on which the individual is first entitled to benefits under
part D.
`(B) TERMS OF OFFER DESCRIBED- The terms described in this
subparagraph are terms which do not--
`(i) deny or condition the issuance or effectiveness of a medicare
supplemental policy described in subparagraph (A)(ii) that is offered
and is available for issuance to new enrollees by such
issuer;
`(ii) discriminate in the pricing of such policy because of health
status, claims experience, receipt of health care, or medical condition;
or
`(iii) impose an exclusion of benefits based on a preexisting
condition under such policy.
`(5) ELIMINATION OF OBSOLETE POLICIES WITH NO GRANDFATHERING- No person
may sell, issue, or renew a medicare supplemental policy with a benefit
package that is classified as `H', `I', or `J' (or with a benefit package
classified as `J' with a high deductible feature) that has not been revised
under this subsection on or after January 1, 2004.
`(6) PENALTIES- Each penalty under this section shall apply with respect
to policies revised under this subsection as if such policies were issued
under the standards established under subsection (p), including the
penalties under subsections (a), (d), (p)(8), (p)(9), (q)(5), (r)(6)(A),
(s)(4), and (t)(2)(D).'.
SEC. 6. HHS STUDIES AND REPORT ON UNIFORM PHARMACY BENEFIT CARDS AND SYSTEMS
FOR TRANSFERRING PRESCRIPTIONS ELECTRONICALLY.
(a) STUDIES- The Secretary of Health and Human Services shall conduct a
study to determine the feasibility and advisability of--
(1) establishing a uniform format for pharmacy benefit cards provided to
beneficiaries by eligible entities under the outpatient prescription drug
benefit program under part D of title XVIII of the Social Security Act (as
added by section 2); and
(2) developing systems to electronically transfer prescriptions under
such program from the prescriber to the pharmacist.
(b) REPORT- Not later than 2 years after the date of enactment of this
Act, the Secretary of Health and Human Services shall submit to Congress a
report on the results of the studies conducted under subsection (a) together
with any recommendations for legislation that the Secretary determines to be
appropriate as a result of such studies.
SEC. 7. GAO STUDY AND BIENNIAL REPORTS ON COMPETITION AND SAVINGS.
(a) ONGOING STUDY- The Comptroller General of the United States shall
conduct an ongoing study and analysis of the outpatient prescription drug
benefit program under part D of title XVIII of the Social Security Act (as
added by section 2), including an analysis of--
(1) the extent to which the competitive bidding process under such
program fosters maximum competition and efficiency; and
(2) the savings to the medicare program resulting from such outpatient
prescription drug benefit program, including the reduction in the number or
length of hospital visits.
(b) INITIAL REPORT ON COMPETITIVE BIDDING PROCESS- Not later than 9 months
after the date of enactment of this Act, the Comptroller General of the United
States shall submit to Congress a report on the results of the portion of the
study conducted pursuant to subsection (a)(1).
(c) BIENNIAL REPORTS- Not later than January 1, 2005, and biennially
thereafter, the Comptroller General of the United States shall submit to
Congress a report on the results of the study conducted under subsection (a)
together with such recommendations for legislation and administrative action
as the Comptroller General determines appropriate.
SEC. 8. EXPANSION OF MEMBERSHIP AND DUTIES OF MEDICARE PAYMENT ADVISORY
COMMISSION (MEDPAC).
(a) EXPANSION OF MEMBERSHIP-
(1) IN GENERAL- Section 1805(c) of the Social Security Act (42 U.S.C.
1395b-6(c)) is amended--
(A) in paragraph (1), by striking `17' and inserting `19';
and
(B) in paragraph (2)(B), by inserting `experts in the area of
pharmacology and prescription drug benefit programs,' after `other health
professionals,'.
(2) INITIAL TERMS OF ADDITIONAL MEMBERS-
(A) IN GENERAL- For purposes of staggering the initial terms of
members of the Medicare Payment Advisory Commission under section
1805(c)(3) of the Social Security Act (42 U.S.C. 1395b-6(c)(3)), the
initial terms of the 2 additional members of the Commission provided for
by the amendment under paragraph (1)(A) are as follows:
(i) One member shall be appointed for 1 year.
(ii) One member shall be appointed for 2 years.
(B) COMMENCEMENT OF TERMS- Such terms shall begin on January 1,
2003.
(b) EXPANSION OF DUTIES- Section 1805(b)(2) of the Social Security Act (42
U.S.C. 1395b-6(b)(2)) is amended by adding at the end the following new
subparagraph:
`(D) PRESCRIPTION MEDICINE BENEFIT PROGRAM- Specifically, the
Commission shall review, with respect to the outpatient prescription drug
benefit program under part D, the impact of such program on--
`(i) the pharmaceutical market, including costs and pricing of
pharmaceuticals, beneficiary access to such pharmaceuticals, and trends
in research and development;
`(ii) franchise, independent, and rural pharmacies; and
`(iii) beneficiary access to outpatient prescription drugs,
including an assessment of out-of-pocket spending, generic and brand
name drug utilization, and pharmacists' services.'.
END