Outlines provisions for monthly deductible and payment amounts, with the waiver of deductible for low-income individuals.
Details provisions on participating pharmacies.
Directs the Secretary of Health and Human Services (HHS) to establish, by January 1, 2001, a point-of-sale electronic system for use by carriers and participating pharmacies in the submission of information respecting covered outpatient drugs dispensed to Medicare part B beneficiaries.
Amends Medicare part B to require the Director of the Congressional Office of Technology Assessment (sic) to provide for the appointment of a Prescription Drug Payment Review Commission to be composed of individuals with expertise in the provision and financing of covered outpatient drugs approved by the Director.
Directs the Secretary to: (1) provide to the Commission, from amounts appropriated to HHS, necessary sums to carry out its duties, while prohibiting the payment of such sums from amounts appropriated to the Medicare trust funds; and (2) develop a standard claims form, and a standard electronic claims format, to be used in requests for payment for covered outpatient drugs under the Medicare program and other third-party payors, and distribute official sample copies of such form and format to pharmacies and other interested parties.
Amends SSA title XI to provide for civil monetary penalties for excessive charges for nonparticipating pharmacies and for other specified violations of this Act.
[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 1535 Introduced in Senate (IS)]
106th CONGRESS
1st Session
S. 1535
To amend title XVIII of the Social Security Act to provide for coverage
of outpatient prescription drugs under part B of the Medicare Program,
and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
August 5, 1999
Mr. Grams 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 for coverage
of outpatient prescription drugs under part B of the Medicare Program,
and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Medicare Ensuring Prescription Drugs
for Seniors Act of 1999''.
SEC. 2. MEDICARE COVERAGE OF OUTPATIENT PRESCRIPTION DRUGS.
(a) Description of Covered Outpatient Drugs.--
(1) Coverage.--Section 1861(s)(2)(J) of the Social Security
Act (42 U.S.C. 1395x(s)(2)(J)) is amended to read as follows:
``(J) covered outpatient drugs;''.
(2) Drugs described.--Section 1861(t) of the Social
Security Act (42 U.S.C. 1395x(t)) is amended--
(A) in the heading, by adding at the end the
following: ``; Covered Outpatient Drugs'';
(B) in paragraph (1), by striking ``paragraph (2)''
and inserting ``the succeeding paragraphs of this
subsection''; and
(C) by striking paragraph (2) and inserting the
following:
``(2) Subject to paragraph (3), the term `covered outpatient drug'
means--
``(A) 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)(I) which was commercially used or sold in
the United States before the date of the 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 (II) 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)(I) 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 (II) 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;
``(B) 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; and
``(C) insulin approved under appropriate Federal law.
``(3) The term `covered outpatient drug' does not include--
``(A) any drug, biological product, or insulin when
furnished as part of, or as incident to, a diagnostic service
or any other item or service for which payment may be made
under this title (other than physicians' services or services
which would be physicians' services if furnished by a
physician); or
``(B) any drug that is intravenously administered in a home
setting.''.
(3) Conforming amendments repealing separate coverage of
certain drugs and products.--(A) Effective January 1, 2001,
section 1861(s)(2) of the Social Security Act (42 U.S.C.
1395x(s)(2)) is amended--
(i) in each of subparagraphs (A) and (B), by
striking ``(including drugs'' and all that follows
through ``self-administered)'';
(ii) by striking subparagraphs (G), (I), (O), (Q),
and (T);
(iii) in subparagraph (R), by adding ``and'' at the
end; and
(iv) in subparagraph (S), by striking ``; and'' at
the end.
(B) Effective January 1, 2001, section 1861 of the Social
Security Act (42 U.S.C. 1395x) is amended by striking
subsection (kk).
(C) Effective January 1, 2001, section 1881(b) of the
Social Security Act (42 U.S.C. 1395rr(b)) is amended--
(i) in the first sentence of paragraph (1)--
(I) by striking ``, (B)'' and inserting ``,
and (B)''; and
(II) by striking ``, and (C)'' and all that
follows and inserting a period; and
(ii) in paragraph (11)--
(I) by striking ``(11)(A)'' and inserting
``(11)''; and
(II) by striking subparagraphs (B) and (C).
(b) Deductible and Payment Amounts.--(1) Section 1833(a)(1)(S) of
the Social Security Act (42 U.S.C. 1395l(a)(1)(S)) is amended to read
as follows: ``(S) with respect to expenses incurred for covered
outpatient drugs, the amounts paid shall be the amounts determined
under section 1834(e)(2);''.
(2) Section 1833(a)(2) of the Social Security Act (42 U.S.C.
1395l(a)(2)) is amended in the matter preceding subparagraph (A) by
inserting ``(other than covered outpatient drugs)'' after ``(2) in the
case of services''.
(3) Section 1833(b) of the Social Security Act (42 U.S.C. 1395l(b))
is amended--
(A) in paragraph (1), by inserting ``or for covered
outpatient drugs'' after ``1861(s)(10)(A)''; and
(B) in paragraph (2), by striking ``osteoporosis drug (as
defined in section 1861(kk))'' and inserting ``covered
outpatient drug (as defined in section 1861(t))''.
(4) Section 1834 of the Social Security Act (42 U.S.C. 1395m) is
amended by inserting after subsection (d) the following:
``(e) Payment for Covered Outpatient Drugs.--
``(1) Deductible.--
``(A) Application.--
``(i) In general.--Except as provided in
clause (ii), payment shall be made under
paragraph (2) only with respect to expenses
incurred by an individual for covered
outpatient drugs during a month on or after
such date in the month as the Secretary
determines that the individual has incurred
expenses in the month for covered outpatient
drugs (during a period in which the individual
is entitled to benefits under this part) equal
to the amount of the prescription drug
deductible specified in subparagraph (C) for
that month.
``(ii) Waiver of deductible for low-income
individuals.--The prescription drug deductible
established under this paragraph shall not
apply to an individual whose income is not
greater than 135 percent of the income official
poverty line (as defined by the Office of
Management and Budget, and revised annually in
accordance with section 673(2) of the Omnibus
Budget Reconciliation Act of 1981) applicable
to a family of the size involved.
``(B) Response to application.--If the system
described in section 1842(o)(4) has not been
established and an individual applies to the Secretary
to establish that the individual has met the
requirement of subparagraph (A), the Secretary shall
promptly notify the individual (and, if the application
was submitted by or through a participating pharmacy,
the pharmacy) as to the date (if any) as of which the
individual has met such requirement.
``(C) Prescription drug deductible amount.--The
prescription drug deductible specified in this
subparagraph for each month--
``(i) in 2001, is $150 for an individual
(or $300 for a married couple, both of whom
enrolled under this part); and
``(ii) in any succeeding year, is the
prescription drug deductible for a month in the
preceding year, increased by the percentage by
which the monthly premium under section 1839
for months during the year exceeds the monthly
premium under such section for months during
the preceding year.
``(2) Payment amount.--Subject to the prescription drug
deductible established under paragraph (1)(A), the amount
payable under this part with respect to a covered outpatient
drug is equal to 75 percent of the lesser of--
``(A) the actual charge for the drug; or
``(B) the average wholesale price for the drug.
``(3) Prohibition of formulary.--Nothing in this title
(other than section 1862(c)) shall be construed as authorizing
the Secretary to exclude from coverage or to deny payment--
``(A) for any specific covered outpatient drug, or
specific class of covered outpatient drug; or
``(B) for any specific use of such a drug for a
specific indication unless such exclusion is pursuant
to section 1862(a)(1) based on a finding by the
Secretary that such use is not safe or is not
effective.
``(4) Reports on utilization and effects on prices.--
``(A) Compilation of information.--The Secretary
shall compile information on--
``(i) manufacturers' prices for covered
outpatient drugs, and on charges of pharmacists
for covered outpatient drugs; and
``(ii) the use of covered outpatient drugs
by individuals entitled to benefits under this
part.
``(B) Reports.--The Secretary shall submit to the
Committees on Ways and Means and Commerce of the House
of Representatives and the Committee on Finance of the
Senate a report, in May and November of 2000 and 2001
and in May of each succeeding year, providing the
information compiled under subparagraph (A). Each
report submitted after 2002 shall include an
explanation of the extent to which the increases in
outlays for covered outpatient drugs under this part
are due to the factors described in clauses (i) and
(ii) of subparagraph (A).''.
(c) Participating Pharmacies; Civil Money Penalties.--
(1) Participating pharmacies.--Section 1842 of the Social
Security Act (42 U.S.C. 1395t) is amended--
(A) in subsection (h)--
(i) in paragraph (1), by inserting before
the period at the end of the second sentence
the following: ``, except that, with respect to
a supplier of covered outpatient drugs, the
term `participating supplier' means a
participating pharmacy (as defined in
subsection (o)(1))''; and
(ii) in paragraph (4), by adding at the end
the following: ``In publishing directories
under this paragraph, the Secretary shall
provide for separate directories (wherever
appropriate) for participating pharmacies.'';
and
(B) by striking subsection (o) and inserting the
following:
``(o)(1) For purposes of this section, the term `participating
pharmacy' means, with respect to covered outpatient drugs dispensed on
or after January 1, 2001, an entity which is authorized under State law
to dispense covered outpatient drugs and which has entered into an
agreement with the Secretary, providing at least the following:
``(A) The entity agrees to accept payment under this part
on an assignment-related basis for all covered outpatient drugs
dispensed to an individual entitled to benefits under this part
(in this subsection referred to as a `Medicare beneficiary')
during a year after--
``(i) the Secretary has notified the entity,
through the electronic system described in paragraph
(4); or
``(ii) in the absence of such a system, the entity
is otherwise notified that the Secretary has
determined,
that the individual has met the prescription drug deductible
with respect to such drugs under section 1834(e)(1) for the
year.
``(B) The entity agrees--
``(i) not to refuse to dispense covered outpatient
drugs stocked by the entity to any medicare
beneficiary; and
``(ii) not to charge any Medicare beneficiary
(regardless of whether or not the beneficiary is
enrolled in a Medicare+Choice plan offered by a
Medicare+Choice organization under part C) more for
such drugs than the amount such entity charges to the
general public (as determined by the Secretary in
regulations).
``(C) The entity agrees to keep patient records (including
records on expenses) for all covered outpatient drugs dispensed
to all Medicare beneficiaries.
``(D) The entity agrees to submit information (in a manner
specified by the Secretary to be necessary to administer this
title) on all purchases of covered outpatient drugs dispensed
to Medicare beneficiaries.
``(E) The entity agrees--
``(i) to offer to counsel, or to offer to provide
information (consistent with State law respecting the
provision of such information) to, each Medicare
beneficiary on the appropriate use of a drug to be
dispensed and whether there are potential interactions
between the drug and other drugs dispensed to the
beneficiary; and
``(ii) to advise the beneficiary on the
availability (consistent with State laws respecting
substitution of drugs) of therapeutically equivalent
covered outpatient drugs.
Nothing in this paragraph shall be construed as requiring a pharmacy
operated by a Medicare+Choice organization under part C for the
exclusive benefit of its members to dispense covered outpatient drugs
to individuals who are not members of the organization.
``(2) The Secretary shall provide to each participating pharmacy--
``(A) a distinctive emblem (suitable for display to the
public) indicating that the pharmacy is a participating
pharmacy; and
``(B) upon request, such electronic equipment and technical
assistance (other than the costs of obtaining, maintaining, or
expanding telephone service) as the Secretary determines may be
necessary for the pharmacy to submit claims using the
electronic system established under paragraph (4).
``(3) The Secretary shall provide for periodic audits of
participating pharmacies to ensure--
``(A) compliance with the requirements for participation
under this title; and
``(B) the accuracy of information submitted by the
pharmacies under this title.
``(4) The Secretary shall establish, by not later than January 1,
2001, a point-of-sale electronic system for use by carriers and
participating pharmacies in the submission of information respecting
covered outpatient drugs dispensed to Medicare beneficiaries under this
part.
``(5) Notwithstanding subsection (b)(3)(B), payment for covered
outpatient drugs may be made on the basis of an assignment described in
clause (ii) of that subsection only to a participating pharmacy.''.
(2) Civil money penalties for violation of participation
agreement, for excessive charges for nonparticipating
pharmacies, and for failure to provide survey information.--
Section 1128A(a) of the Social Security Act (42 U.S.C. 1320a-
7a(a)) is amended--
(A) in paragraph (2)(C), by inserting ``or to be a
participating pharmacy under section 1842(o)'' after
``1842(h)(1)'';
(B) in paragraph (6), by striking ``, or'' at the
end;
(C) in paragraph (7), by adding ``or'' at the end;
and
(D) by inserting after paragraph (7) the following:
``(8) in the case of a participating or nonparticipating
pharmacy (as defined for purposes of part B of title XVIII),
presents or causes to be presented to any person a request for
payment for covered outpatient drugs dispensed to an individual
entitled to benefits under part B of title XVIII and for which
the amount charged by the pharmacy is greater than the amount
the pharmacy charges the general public (as determined by the
Secretary in regulations);''.
(d) Limitation on Length of Prescription.--Section 1862(c) of the
Social Security Act (42 U.S.C. 1395y(c)) is amended--
(1) by redesignating subparagraphs (A) through (D) of
paragraph (1) as clauses (i) through (iv), respectively;
(2) in paragraph (2)(A), by striking ``paragraph (1)'' and
inserting ``subparagraph (A)'';
(3) by redesignating subparagraphs (A) and (B) of paragraph
(2) as clauses (i) and (ii), respectively;
(4) by redesignating paragraphs (1) and (2) as
subparagraphs (A) and (B), respectively;
(5) by inserting ``(1)'' after ``(c)''; and
(6) by adding at the end the following:
``(2) No payment may be made under part B for any expense incurred
for a covered outpatient drug if the drug is dispensed in a quantity
exceeding a supply of 30 days or such longer period of time (not to
exceed 90 days, except in exceptional circumstances) as the Secretary
may authorize.''.
(e) Use of Carriers, Fiscal Intermediaries, and Other Entities in
Administration.--
(1) Authorizing use of other entities in electronic claims
system.--Section 1842(f) of the Social Security Act (42 U.S.C.
1395u(f)) is amended--
(A) in paragraph (1), by striking ``and'' at the
end;
(B) in paragraph (2), by striking the period at the
end and inserting ``; and''; and
(C) by adding at the end the following:
``(3) with respect to implementation and operation (and
related functions) of the electronic system established under
subsection (o)(4), a voluntary association, corporation,
partnership, or other nongovernmental organization, which the
Secretary determines to be qualified to conduct such
activities.''.
(2) Additional functions of carriers.--Section 1842(b)(3)
of the Social Security Act (42 U.S.C. 1395u(b)(3)) is amended--
(A) in subparagraph (I), by striking ``and'' at the
end;
(B) by redesignating subparagraph (L) as
subparagraph (J); and
(C) by inserting after subparagraph (J) (as so
redesignated) the following:
``(K) if such carrier makes determinations or payments with
respect to covered outpatient drugs, will--
``(i) receive information transmitted under the
electronic system established under subsection (o)(4);
and
``(ii) respond to requests by participating
pharmacies (and any individual entitled to benefits
under this part) as to whether or not such an
individual has met the prescription drug deductible
established under section 1834(e)(1) for the month; and
``(L) will enter into such contracts with organizations
described in subsection (f)(3) as the Secretary determines may
be necessary to implement and operate (and for related
functions with respect to) the electronic system established
under subsection (o)(4) for covered outpatient drugs under this
part.''.
(3) Special contract provisions for electronic claims
system.--
(A) Payment on other than a cost basis.--Section
1842(c)(1) of the Social Security Act (42 U.S.C.
1395u(c)(1)) is amended--
(i) by inserting ``(A)'' after ``(c)(1)'';
(ii) in the first sentence, by inserting
``, except as provided in subparagraph (B),''
after ``under this part, and''; and
(iii) by adding at the end the following:
``(B) To the extent that a contract under this section provides for
implementation and operation (and related functions) of the electronic
system established under subsection (o)(4) for covered outpatient
drugs, the Secretary may provide for payment for such activities based
on any method of payment determined by the Secretary to be
appropriate.''.
(B) Application of different performance
standards.--The Secretary of Health and Human Services,
before entering into contracts under section 1842 of
the Social Security Act with respect to the
implementation and operation (and related functions) of
an electronic system for covered outpatient drugs,
shall establish standards with respect to performance
with respect to activities relating to such system. The
provisions of section 1153(e)(2) and paragraphs (1) and (2) of section
1153(h) of such Act shall apply to such activities in the same manner
as they apply to contracts with peer review organizations, instead of
the requirements of the second and third sentences of section
1842(b)(2)(A) of such Act.
(C) Use of regional carriers.--Section
1842(b)(2)(A) of the Social Security Act (42 U.S.C.
1395u(b)(2)(A)) is amended by adding at the end the
following: ``With respect to activities relating to
implementation and operation (and related functions) of
the electronic system established under subsection
(o)(4), the Secretary may enter into contracts with
carriers under this section to perform such activities
on a regional basis.''.
(4) Delay in application of coordinated benefits with
medigap.--The provisions of subparagraph (B) of section
1842(h)(3) of the Social Security Act shall not apply to
covered outpatient drugs (other than drugs described in section
1861(s)(2)(J) of such Act as in effect on the day before the
date of the enactment of this Act) dispensed before January 1,
2002.
(5) Batch prompt processing of claims.--Section 1842(c) of
the Social Security Act (42 U.S.C. 1395u(c)), is amended--
(A) by redesignating paragraph (6) as paragraph
(7);
(B) in paragraphs (2)(A) and (3)(A), by striking
``Each'' and inserting ``Except as provided in
paragraph (6), each''; and
(C) by inserting after paragraph (5) the following:
``(6)(A) Each contract under this section which provides for the
disbursement of funds, as described in subsection (a)(1)(B), with
respect to claims for payment for covered outpatient drugs shall
provide for a payment cycle under which each carrier will, on a monthly
basis, make a payment with respect to all claims which were received
and approved for payment in the period since the most recent date on
which such a payment was made with respect to the participating
pharmacy or individual submitting the claim.
``(B) If payment is not issued, mailed, or otherwise transmitted
within 5 days of when such a payment is required to be made under
subparagraph (A), interest shall be paid at the rate used for purposes
of section 3902(a) of title 31, United States Code (relating to
interest penalties for failure to make prompt payments) for the period
beginning on the day after such 5-day period and ending on the date on
which payment is made.''.
(f) Conforming Amendments.--
(1) The first sentence of section 1866(a)(2)(A) (42 U.S.C.
1395cc(a)(2)(A)) is amended by inserting ``1834(e),'' after
``1833(b),''.
(2) Section 1903(i)(5) (42 U.S.C. 1396b(i)(5)) is amended
by striking ``section 1862(c)'' and inserting ``section
1862(c)(1)''.
(g) Prescription Drug Payment Review Commission.--Part B is amended
by inserting after section 1844 the following:
``prescription drug payment review commission
``Sec. 1845. (a) Establishment.--
``(1) In general.--The Director of the Congressional Office
of Technology Assessment (in this section referred to as the
`Director' and the `Office', respectively) shall provide for
the appointment of a Prescription Drug Payment Review
Commission (in this section referred to as the `Commission'),
to be composed of individuals with expertise in the provision
and financing of covered outpatient drugs appointed by the
Director (without regard to the provisions of title 5, United
States Code, governing appointments in the competitive
service).
``(2) Membership and terms.--The Commission shall consist
of 11 individuals. Members of the Commission shall first be
appointed by not later than January 1, 2000, for a term of 3
years, except that the Director may provide initially for such
shorter terms as will ensure that (on a continuing basis) the
terms of not more than 4 members expire in any 1 year.
``(3) Qualifications.--The membership of the Commission
shall include--
``(A) recognized experts in the fields of health
care economics, medicine, pharmacology, pharmacy, and
prescription drug reimbursement;
``(B) representatives of the prescription drug
manufacturing industry; and
``(C) at least 1 individual who is a beneficiary
under this title.
``(b) Reports.--
``(1) In general.--Not later than May 1 of each year
(beginning in 2001), the Commission shall submit an annual
report to Congress concerning methods of determining payment
for covered outpatient drugs under this part.
``(2) Contents.--Beginning with the annual report required
to be submitted in 2002, such report shall include, with
respect to the previous year, information on--
``(A) increases in manufacturers' prices for
covered outpatient drugs and in charges of pharmacists
for covered outpatient drugs;
``(B) the level of utilization of covered
outpatient drugs by medicare beneficiaries; and
``(C) administrative costs relating to covered
outpatient drugs.
``(c) Application of MedPAC Provisions.--The following provisions
of section 1805 shall apply to the Commission in the same manner as
they apply to the Medicare Payment Advisory Commission:
``(1) Subsection (c)(4) (relating to compensation of
members).
``(2) Subsection (d) (relating to staffing and
administration).
``(3) Subsection (e) (relating to powers of the Commission
generally).
``(4) Subsection (f)(1) (relating to requests for
appropriations).
``(d) Funding.--The Secretary shall provide to the Commission, from
amounts appropriated to the Department of Health and Human Services,
such sums as may be necessary to carry out the provisions of this
section. Such sums shall not be payable from amounts appropriated to
the Federal Hospital Insurance Trust Fund or the Federal Supplementary
Medical Insurance Trust Fund.''.
(h) Development of Standard Medicare Claims Form.--
(1) In general.--The Secretary of Health and Human Services
shall develop, in consultation with representatives of
pharmacies and other interested individuals, a 1-page standard
claims form (and a standard electronic claims format) to be
used in requests for payment for covered outpatient drugs under
the medicare program and other third-party payors.
(2) Distribution.--Not later than October 1, 2000, the
Secretary of Health and Human Services shall distribute
official sample copies of the form and format developed under
paragraph (1) to pharmacies and other interested parties.
(i) Effective Dates.--
(1) In general.--Except as otherwise provided, the
amendments made by this section shall apply to items dispensed
on or after January 1, 2001.
(2) Carriers.--The amendments made by subsection (e) shall
take effect on the date of enactment of this Act, except that
the amendments made by subsection (e)(5) shall take effect on
January 1, 2002, but shall not be construed as requiring
payment before February 1, 2002.
<all>
Introduced in Senate
Sponsor introductory remarks on measure. (CR S10441)
Read twice and referred to the Committee on Finance.
Sponsor introductory remarks on measure. (CR S6253)
Sponsor introductory remarks on measure. (CR S9835-9839)
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