(Sec. 2) Directs the Secretary of Health and Human Services to provide for an outpatient prescription drug benefit program for eligible Medicare beneficiaries.
Makes the cost of providing benefits under this part payable from the Federal Supplementary Medical Insurance Trust Fund.
Directs the Secretary to establish a process for an eligible Medicare beneficiary (including one enrolled in a Medicare+Choice plan under Medicare part C (Medicare+Choice)) to elect to enroll under new SSA title XVIII part D. Requires an eligible Medicare beneficiary to enroll under new SSA title XVIII part D in order to be eligible for covered outpatient drugs under Medicare.
Directs the Secretary to disseminate information to eligible and prospective eligible beneficiaries. Authorizes appropriations.
Directs the Secretary to determine and promulgate a monthly premium rate for the succeeding year in accordance with specified guidelines. Requires monthly premiums to be credited to the Federal Supplementary Medical Insurance Trust Fund.
Outlines cost-sharing provisions, including those for a $250 deductible waivable for generic drugs, coinsurance payments for the drug in an amount equal to the applicable percentage of the cost of the drug, and inflation adjustment.
Directs the Secretary to establish procedures for accepting bids and awarding competitive contracts for benefit administration. Sets out patient protections. Provides for: (1) accessibility of outpatient drugs; (2) continuity of care; (3) medically necessary drugs; (4) denials of care; (5) procedures to ensure a timely internal and external review and resolution of denials of coverage and complaints regarding the use of formularies; (6) confidentiality; (7) transfer of medical records; and (8) medical errors. Requires the eligible entity, among other things, to have in place procedures to control fraud, abuse, and waste.
Authorizes the Secretary to develop and implement an Employer Incentive Program, including incentive payments, 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. Outlines sponsor requirements. Authorizes appropriations.
Establishes a Medicare Pharmacy and Therapeutics Advisory Committee for development of: (1) guidelines for administration of the outpatient prescription drug benefit program; (2) standards for required pharmacy and therapeutics committees of eligible entities; (3) procedures for determining if a drug is medically necessary to prevent or to slow the deterioration of, or improve or maintain, the health of an eligible beneficiary; (4) standards for defining therapeutic classes and other specified matters; (5) procedures to evaluate the bids submitted by eligible entities under SSA title XVIII part D; and (6) procedures to ensure that eligible entities under contract are in compliance with requirements. Authorizes appropriations.
Applies to SSA title XVIII part D the coverage exclusions under Medicare parts A or B for any expenses incurred for certain items or services. Provides that prescription drugs are not excluded from such coverage if reasonable and necessary.
(Sec. 3) Amends SSA title XVIII part C to: (1) require each Medicare+Choice plan, with specified exceptions, to provide enrolled members items and services for which benefits are available under part D; (2) permit a Medicare+Choice organization offering a Medicare+Choice plan to elect a benefit provider as long as the organization complies with outpatient drug access requirements; (3) require the Secretary to determine a Medicare+Choice capitation rate for outpatient drug benefits for enrollees in accordance with specified payment rules; and (4) prohibit a Medicare+Choice organization from requiring an enrollee to pay an outpatient prescription drug benefit deductible or a coinsurance percentage exceeding the applicable amount.
(Sec. 4) Amends SSA title XVIII part D to exclude Medicare part D costs from determination of the part B monthly premium.
(Sec. 5) Amends SSA title XIX (Medicaid) to: (1) include in Medicare cost-sharing for qualified Medicare beneficiaries premiums under the Outpatient Prescription Drug Benefit Program; and (2) provide for expanding medical assistance with regard to the coinsurance and deductible under such Program. Sets at 100 percent the Federal Medicaid percentage with respect to such medical assistance. Provides for the nonapplicability of payment differential requirements to SSA title XVIII part D cost-sharing.
Amends SSA title XI to increase according to a certain formula Medicaid payments to territories for FY 2002 and thereafter.
(Sec. 6) Amends SSA title XVIII to revise requirements for benefit packages for Medicare supplemental (Medigap) policies.
(Sec. 7) Directs the Secretary to study and report to Congress on 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; and (2) developing systems to transfer prescriptions electronically under such program from the prescriber to the pharmacist.
(Sec. 8) Authorizes appropriations.
[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 3107 Introduced in Senate (IS)]
106th CONGRESS
2d Session
S. 3107
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
September 26 (legislative day, September 22), 2000
Mr. Graham (for himself, Mr. Bryan, Mr. Kennedy, Mr. Rockefeller, and
Mr. Robb) introduced the following bill; which was read the first time
_______________________________________________________________________
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
Prescription Drug Coverage Act of 2000''.
(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. 1860. Definitions.
``Subpart 1--Establishment of Outpatient Prescription Drug Benefit
Program
``Sec. 1860A. Establishment of outpatient prescription drug
benefit program.
``Sec. 1860B. Enrollment.
``Sec. 1860C. Providing information to beneficiaries.
``Sec. 1860D. Premiums.
``Sec. 1860E. Cost-sharing.
``Sec. 1860F. Selection of entities to provide outpatient drug
benefit.
``Sec. 1860G. Conditions for awarding contract.
``Sec. 1860H. Payments.
``Sec. 1860I. Employer incentive program for employment-based
retiree drug coverage.
``Sec. 1860J. Appropriations.
``Subpart 2--Medicare Pharmacy and Therapeutics (P&T) Advisory
Committee
``Sec. 1860M. Medicare Pharmacy and Therapeutics (P&T) Advisory
Committee.''.
Sec. 3. Part D benefits under Medicare+Choice plans.
Sec. 4. Exclusion of part D costs from determination of part B monthly
premium.
Sec. 5. Additional assistance for low-income beneficiaries.
Sec. 6. Medigap revisions.
Sec. 7. HHS studies and report to Congress.
Sec. 8. Appropriations.
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) but 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) that is covered under part A or B
(unless coverage of such product is not
available because benefits under part A or B
have been exhausted); or
``(iii) except for agents used to promote
smoking cessation, for which coverage may be
excluded or restricted under section
1927(d)(2).
``(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 contract entered into 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.
``Subpart 1--Establishment of Outpatient Prescription Drug Benefit
Program
``establishment of outpatient prescription drug benefit program
``Sec. 1860A. (a) Provision of Benefit.--Beginning in 2002, the
Secretary shall provide for an outpatient prescription drug benefit
program under which an eligible beneficiary shall be provided covered
outpatient drugs.
``(b) 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.
``(c) Scope of Benefits.--The program established under this part
shall provide for coverage of all therapeutic classes of covered
outpatient drugs.
``(d) Financing.--The costs of providing benefits under this part
shall be payable from the Federal Supplementary Medical Insurance Trust
Fund established under section 1841.
``enrollment
``Sec. 1860B. (a) Enrollment Under Part D.--
``(1) Establishment of process.--
``(A) In general.--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.
``(B) Requirement of enrollment.--An eligible
beneficiary must enroll under this part in order to be
eligible to receive covered outpatient drugs under this
title.
``(2) Enrollment procedures.--
``(A) Late enrollment penalty.--
``(i) In general.--Subject to the
succeeding provisions of this subparagraph, 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 subparagraph (B), the Secretary
shall establish procedures for increasing the
amount of the monthly premium under section
1860D 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.
``(ii) Periods taken into account.--For
purposes of calculating any 12-month period
under clause (i), 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.
``(iii) Periods not taken into account.--
``(I) In general.--For purposes of
calculating any 12-month period under
clause (i), subject to subclause (II),
there shall not be taken into account
months for which the eligible
beneficiary can demonstrate that the
beneficiary was covered under a group
health plan, including a qualified
retiree prescription drug plan (as
defined in section 1860I(e)(3)) for
which an incentive payment was paid
under section 1860I, that provides
coverage of the cost of prescription
drugs whose actuarial value (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.
``(II) Application.--This clause
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 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 value of the coverage
provided under the program under this
part.
``(iv) Periods treated separately.--Any
increase in an eligible beneficiary's monthly
premium under clause (i) 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.
``(v) Continuous period of eligibility.--
``(I) In general.--Subject to
subclause (II), for purposes of this
subparagraph, 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 subparagraph).
``(B) Open enrollment period for current
beneficiaries in which late enrollment procedures do
not apply.--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 subparagraph (A)(i).
``(3) Period of coverage.--
``(A) In general.--Except as provided in
subparagraph (B), 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.
``(B) Open enrollment.--An eligible beneficiary who
enrolls under the program under this part pursuant to
paragraph (2)(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.
``(C) Limitation.--Coverage under this part shall
not begin prior to January 1, 2002.
``(4) Part d coverage terminated by termination of coverage
under parts a and b.--
``(A) In general.--In addition to the causes of
termination specified in section 1838, the Secretary
shall terminate an individual's coverage under this
part if the individual is no longer enrolled in either
part A or part 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.
``(b) Enrollment With Eligible Entity.--
``(1) 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
with any eligible entity that has been awarded a
contract under this part and serves the geographic area
in which the beneficiary resides.
``(B) Rules.--In establishing the process under
subparagraph (A), the Secretary shall use rules similar
to the rules for enrollment and disenrollment with a
Medicare+Choice plan under section 1851 (including
special election periods under subsection (e)(4) of
such section).
``(2) Medicare+choice enrollees.--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.
``(c) First Enrollment Period.--The processes developed under
subsections (a) and (b) shall ensure that eligible beneficiaries are
permitted to enroll under this part and with an eligible entity prior
to January 1, 2002, in order to ensure that coverage under this part is
effective as of such date.
``providing information to beneficiaries
``Sec. 1860C. (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
first enrollment period described in section 1860B(c).
``(b) Requirements.--
``(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 eligible entities that are available to
eligible beneficiaries residing in an area under this
part.
``(2) Comparative information.--The comparative information
described in paragraph (1)(B) shall include the following:
``(A) Benefits.--A comparison of the benefits
provided by each eligible entity, including a
comparison of the pharmacy networks used by each
eligible entity and the formularies and appeals
processes implemented by each entity.
``(B) Quality and performance.--To the extent
available, the quality and performance of each eligible
entity.
``(C) Beneficiary costs.--The cost-sharing required
of eligible beneficiaries enrolled in each eligible
entity.
``(D) Consumer satisfaction surveys.--To the extent
available, the results of consumer satisfaction surveys
regarding each eligible entity.
``(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--
``(A) under this section;
``(B) under section 1851(d); and
``(C) under section 1804.
``(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. 1860D. (a) Annual Establishment of Monthly Premium Rates.--
``(1) In general.--The Secretary shall, during September of
each year (beginning in 2001), determine and promulgate a
monthly premium rate for the succeeding year in accordance with
the provisions of this subsection.
``(2) Actuarial determinations.--
``(A) Determination of annual benefit and
administrative costs.--The Secretary shall estimate
annually for the succeeding year the amount equal to
the total of the benefits and administrative costs that
will be payable from the Federal Supplementary Medical
Insurance Trust Fund for providing covered outpatient
drugs in such calendar year with respect to enrollees
in the program under this part.
``(B) Determination of monthly premium rates.--
``(i) In general.--The Secretary shall
determine the monthly premium rate with respect
to such enrollees for such succeeding year,
which shall be \1/12\ of the applicable share
of the amount determined under subparagraph
(A), divided by the total number of such
enrollees, and rounded (if such rate is not a
multiple of 10 cents) to the nearest multiple
of 10 cents.
``(ii) Definition of applicable share.--For
purposes of clause (i), the term `applicable
share' means--
``(I) one-half, in the case of
premiums paid by an eligible
beneficiary enrolled in the program
under this part; and
``(II) two-thirds, in the case of
premiums paid for such a beneficiary by
an employer (as defined in section
1860I(e)(2)) that the beneficiary
formerly worked for.
``(3) Publication of assumptions.--The Secretary shall
publish, together with the promulgation of the monthly premium
rates for the succeeding year, a statement setting forth the actuarial
assumptions and bases employed in arriving at the amounts and rates
determined under paragraphs (1) and (2).
``(b) Collection of Premium.--The monthly premium applicable to an
eligible beneficiary under this part shall be collected and credited to
the Federal Supplementary Medical Insurance Trust Fund in the same
manner as the monthly premium determined under section 1839 is
collected and credited to such Trust Fund under section 1840.
``cost-sharing
``Sec. 1860E. (a) Deductible.--
``(1) In general.--Subject to paragraph (2), no payments
shall be made under this part on behalf of an eligible
beneficiary until the beneficiary has met a $250 deductible.
``(2) Waiver of deductible for generic drugs.--
``(A) In general.--An eligible entity may provide
that generic drugs are not subject to the deductible
described in paragraph (1) if the Secretary determines
that the waiver of the deductible--
``(i) is tied to the performance measures
and other incentives applicable to the entity
pursuant to section 1860H(a); and
``(ii) will not result in an increase in
the expenditures made from the Federal
Supplementary Medical Insurance Trust Fund.
``(B) Credit for amounts paid.--If the deductible
is waived pursuant to subparagraph (A), any coinsurance
paid by an eligible beneficiary for the generic drug
shall be credited toward the annual deductible.
``(b) Coinsurance.--
``(1) Establishment.--
``(A) In general.--Subject to paragraph (2), if any
covered outpatient drug is provided to an eligible
beneficiary in a year after the beneficiary has met any
deductible requirement under subsection (a) for the
year, the beneficiary shall be responsible for making
payments for the drug in an amount equal to the
applicable percentage of the cost of the drug.
``(B) Applicable percentage defined.--For purposes
of subparagraph (A), the `applicable percentage' means,
with respect to any covered outpatient drug provided to
an eligible beneficiary in a year--
``(i) 50 percent to the extent the out-of-
pocket expenses of the beneficiary for such
drug, when added to the out-of-pocket expenses
of the beneficiary for covered outpatient drugs
previously provided in the year, do not exceed
$3,500;
``(ii) 25 percent to the extent such
expenses, when so added, exceed $3,500 but do
not exceed $4,000; and
``(iii) 0 percent to the extent such
expenses, when so added, would exceed $4,000.
``(C) Out-of-pocket expenses defined.--For purposes
of subparagraph (B), the term `out-of-pocket expenses'
means expenses incurred as a result of the application
of the deductible under subsection (a) and the
coinsurance required under this subsection.
``(2) Reduction by eligible entity.--An eligible entity may
reduce the applicable percentage that an eligible beneficiary
is subject to under paragraph (1) if the Secretary determines
that such reduction--
``(A) is tied to the performance measures and other
incentives applicable to the entity pursuant to section
1860H(a); and
``(B) will not result in an increase in the
expenditures made from the Federal Supplementary
Medical Insurance Trust Fund.
``(c) Inflation Adjustment.--
``(1) In general.--In the case of any calendar year
beginning after 2003, each of the dollar amounts in subsections
(a)(1) and (b)(1)(B) shall be increased by an amount equal to--
``(A) such dollar amount, multiplied by
``(B) the percentage (if any) by which the amount
of average per capita expenditures under this part in
the preceding calendar year exceeds the amount of such
expenditures in 2002.
``(2) Rounding.--If any dollar amount after being increased
under paragraph (1) is not a multiple of $5, such dollar amount
shall be rounded to the nearest multiple of $5.
``selection of entities to provide outpatient drug benefit
``Sec. 1860F. (a) Establishment of Bidding Process.--
``(1) In general.--The Secretary shall establish procedures
under which the Secretary accepts bids submitted by eligible
entities and awards contracts to such entities in order to
administer and deliver the benefits provided under this part to
eligible beneficiaries in an 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.
``(b) Area for Contracts.--
``(1) Regional basis.--
``(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 shall require the eligible entity to
provide covered outpatient drugs on a regional basis.
``(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 on a partial regional basis.
``(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.
``(2) Determination.--
``(A) In general.--In determining coverage areas
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 coverage areas 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.
``(c) Submission of Bids.--
``(1) In general.--Each eligible entity desiring to provide
covered outpatient drugs under this part shall submit a bid to
the Secretary at such time, in such manner, and accompanied by
such information as the Secretary may reasonably require.
``(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) the amount that the entity will charge the
Secretary for administering and delivering the benefits
under such contract;
``(C) a statement regarding whether the entity will
waive the deductible for generic drugs pursuant to
section 1860E(a)(2);
``(D) a statement regarding whether the entity will
reduce the applicable coinsurance percentage pursuant
to section 1860E(b)(2) and if so, the amount of such
reduction;
``(E) a detailed description of--
``(i) the risk corridors tied to
performance measures and other incentives that
the entity will accept under the contract; and
``(ii) how the entity will meet such
measures and incentives;
``(F) a detailed description of any ownership or
shared financial interests with other entities involved
in the delivery of the benefit as proposed;
``(G) a detailed description of the entity's
estimated marketing and advertising expenditures
related to enrolling and retaining eligible
beneficiaries; and
``(H) 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.--
``(1) In general.--The Secretary shall ensure that an
eligible entity--
``(A) complies with the access requirements
described in section 1860G(4)(A); and
``(B) makes available to each beneficiary covered
under the contract the full scope of the benefits
required under this part.
``(2) Areas not covered by contracts.--The Secretary shall
develop procedures for the provision of covered outpatient
drugs under this part to each eligible beneficiary that resides
in an area that is not covered by any contract under this part.
``(3) Beneficiaries residing in different locations.--The
Secretary shall develop procedures to ensure that each eligible
beneficiary 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 in an area, unless only 1 bidding 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 (including the
terms and conditions described in section 1860G) 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 meets such minimum
standards;
``(B) the amount that the entity will charge the
Secretary for administering and delivering the benefits
under the contract;
``(C) the proposed prices of covered outpatient
drugs and annual increases in such prices;
``(D) the proposed risk corridors tied to
performance measures and other incentives that the
entity will be subject to under the contract;
``(E) the factors described in section 1860C(b)(2);
``(F) prior experience in administering a
prescription drug benefit program;
``(G) effectiveness 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 enrolled
individuals; 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 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 under this part shall
be for a term of at least 2 years but not more than 5 years, as
determined by the Secretary.
``conditions for awarding contract
``Sec. 1860G. 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.--The eligible entity
has in place drug utilization review procedures to ensure--
``(A) the appropriate utilization by eligible
beneficiaries of the benefits to be provided under the
contract; and
``(B) the avoidance of adverse drug reactions among
eligible beneficiaries enrolled with the entity,
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.
``(3) Cost-effective provision of benefits.--
``(A) In general.--In providing the benefits under
a contract under this part, an eligible entity may--
``(i) employ mechanisms to provide the
benefits economically, including the use of--
``(I) formularies (pursuant to
subparagraph (B));
``(II) alternative methods of
distribution; and
``(III) generic drug substitution;
``(ii) use mechanisms to encourage eligible
beneficiaries to select cost-effective drugs or
less costly means of receiving drugs, including
the use of pharmacy incentive programs,
therapeutic interchange programs, and disease
management programs; and
``(iii) encourage pharmacy providers to--
``(I) inform beneficiaries of the
differentials in price between generic
and nongeneric drug equivalents; and
``(II) 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.
``(B) Formularies.--If an eligible entity uses a
formulary under this part, such formulary shall comply
with standards established by the Secretary in
consultation with the Medicare Pharmacy and
Therapeutics Advisory Committee established under
section 1860M. Such standards shall require that the
eligible entity--
``(i) use a pharmacy and therapeutic
committee (that meets the standards for a
pharmacy and therapeutic committee established
by the Secretary in consultation with the
Medicare Pharmacy and Therapeutics Advisory
Committee established under section 1860M) to
develop and implement the formulary;
``(ii) include in the formulary--
``(I) at least 1 drug from each
therapeutic class (as defined by the
entity's pharmacy and therapeutic
committee in accordance with standards
established by the Secretary in
consultation with the Medicare Pharmacy
and Therapeutics Advisory Committee
established under section 1860M);
``(II) if there is more than 1 drug
available in a therapeutic class, at
least 2 drugs from such class; and
``(III) if there is more than 2
drugs available in a therapeutic class,
at least 2 drugs from such class and a
generic drug substitute if available;
``(iii) develop procedures for the--
``(I) addition of new therapeutic
classes to the formulary;
``(II) addition of new drugs to an
existing therapeutic class; and
``(III) modification of the
formulary;
``(iv) provide for coverage of nonformulary
drugs when determined (pursuant to subparagraph
(C) or (D)(i) of paragraph (4)) to be medically
necessary to prevent or slow the deterioration
of, or improve or maintain, the health of an
eligible beneficiary; and
``(v) 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, coinsurance, and any
difference in the cost-sharing for different
types of drugs.
``(C) Construction.--Nothing in this paragraph
shall be construed as precluding an eligible entity
from--
``(i) requiring cost-sharing for
nonformulary drugs that is higher than the
cost-sharing established in section 1860E(b),
except that such entity shall provide for
coverage of a nonformulary drug at the same
cost-sharing level as a drug within the
formulary if such nonformulary drug is determined (pursuant to
subparagraph (C) or (D)(i) of paragraph (4)) to be medically necessary
to prevent or slow the deterioration of, or improve or maintain, the
health of an eligible beneficiary;
``(ii) educating prescribing providers,
pharmacists, and beneficiaries about the
medical and cost benefits of formulary drugs
(including generic drugs); or
``(iii) requesting prescribing providers to
consider a formulary drug prior to dispensing
of a nonformulary drug, as long as such request
does not unduly delay the provision of the
drug.
``(4) Patient protections.--
``(A) Access.--The eligible entity ensures that the
covered outpatient drugs are accessible and convenient
to eligible beneficiaries covered under the contract,
including by offering the services in the following
manner:
``(i) Services during emergencies.--The
offering of services 24 hours a day and 7 days
a week for emergencies.
``(ii) Contracts with retail pharmacies.--
The offering of services--
``(I) at a sufficient number (as
determined by the Secretary) of retail
pharmacies;
``(II) to the extent feasible, at
retail pharmacies located throughout
the eligible entity's service area to
ensure reasonable geographic access (as
determined by the Secretary) to such
services; and
``(III) such that--
``(aa) the total charge for
each covered outpatient drug
dispensed to an eligible
beneficiary enrolled with the
entity does not exceed the
negotiated price for the drug
(as reported to the Secretary
pursuant to paragraph (6)(A));
and
``(bb) the retail pharmacy
dispensing the drug does not
charge (or collect from) such
beneficiary an amount that
exceeds the beneficiary's
obligation (as determined in
accordance with the provisions of this part) of the negotiated price.
``(B) Continuity of care.--
``(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
1860B(b)), 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.
``(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.
``(C) Procedures regarding the determination of
drugs that are medically necessary.--The eligible
entity has in place procedures to determine if a drug
is medically necessary to prevent or slow the
deterioration of, or improve or maintain, the health of
an eligible beneficiary. Such procedures shall require
that such determinations are based on professional
medical judgment, the medical condition of the
beneficiary, and other medical evidence.
``(D) Procedures regarding denials of care.--The
eligible entity has in place procedures to ensure--
``(i) a timely internal and external review
and resolution of denials of coverage (in whole
or in part) and complaints (including those
regarding the use of formularies under
paragraph (3)) by eligible beneficiaries, or by
providers, pharmacists, and other individuals
acting on behalf of each such beneficiary (with
the beneficiary'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
``(ii) that beneficiaries are provided with
information regarding the appeals procedures
under this part at the time of enrollment.
``(E) Procedures regarding patient
confidentiality.--Insofar as an eligible entity
maintains individually identifiable medical records or
other health information regarding eligible
beneficiaries under a contract entered into under this
part, 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.
``(F) 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 (E) (with respect to a beneficiary
who loses coverage under this part with the
entity and enrolls with another entity 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 (E).
``(G) Procedures regarding medical errors.--The
eligible entity has in place procedures for working
with the Secretary to deter medical errors related to
the provision of covered outpatient drugs.
``(5) Procedures to control fraud, abuse, and waste.--The
eligible entity has in place procedures to control fraud,
abuse, and waste.
``(6) Reporting requirements.--
``(A) In general.--The eligible entity provides the
Secretary with reports containing information regarding
the following:
``(i) The prices that the eligible entity
is paying for covered outpatient drugs.
``(ii) The prices that eligible
beneficiaries enrolled with the entity will be
charged for covered outpatient drugs.
``(iii) The administrative 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
section, 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) 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.
``(7) Approval of marketing material and application
forms.--The eligible entity will comply with the requirements
described in section 1860F(f).
``(8) Records and audits.--The eligible entity maintains
adequate records related to the administration of the benefit
under this part and affords the Secretary access to such
records for auditing purposes.
``payments
``Sec. 1860H. (a) Payments to Eligible Entities.--
``(1) Procedures.--
``(A) In general.--The Secretary shall establish
procedures for making payments to an eligible entity
under a contract entered into under this part for the
administration and delivery of the benefits under this
part.
``(B) Entities only subject to limited risk.--Under
the procedures established under subparagraph (A), an
eligible entity shall only be at risk to the extent
that the entity is at risk under paragraph (2).
``(2) Risk corridors tied to performance measures and other
incentives.--
``(A) In general.--The procedures established under
paragraph (1) may include the use of--
``(i) risk corridors tied to performance
measures that have been agreed to between the
eligible entity and the Secretary under the
contract; and
``(ii) any other incentives that the
Secretary determines appropriate.
``(B) Phase-in of risk corridors tied to
performance measures.--The Secretary may phase-in the
use of risk corridors tied to performance measures if
the Secretary determines such phase-in to be
appropriate.
``(C) Payments subject to incentives.--If a
contract under this part includes the use of risk
corridors tied to performance measures or other
incentives pursuant to subparagraph (A), payments to
eligible entities under such contract shall be subject
to such risk corridors tied to performance measures and
other incentives.
``(3) Risk adjustment.--To the extent that eligible
entities are at risk because of the risk corridors or other
incentives described in paragraph (2)(A), the procedures
established under paragraph (1) may include a methodology for
adjusting the payments made to such entities based on the
differences in actuarial risk of different enrollees being
served if the Secretary determines such adjustments to be
necessary and appropriate.
``(b) 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. 1860I. (a) Program Authority.--The Secretary is authorized
to develop and implement a program under this section called 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 (f)(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.
``(c) Incentive Payments.--
``(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) 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.
``(2) Amount of incentive.--The payment under this section
with respect to each individual described in paragraph (1) for
a month shall be equal to \2/3\ of the monthly premium amount
payable by an eligible beneficiary enrolled under this part, as
set for the calendar year pursuant to section 1860D(a)(2).
``(3) Payment date.--The incentive 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 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 whose actuarial value (as defined by the
Secretary) to each retired 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; 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.
``appropriations
``Sec. 1860J. There are authorized to be appropriated from time to
time, out of any moneys in the Treasury not otherwise appropriated, to
the Federal Supplementary Medical Insurance Trust Fund established
under section 1841, an amount equal to the amount by which the benefits
and administrative costs of providing the benefits under this part
exceed the premiums collected under section 1860D.
``Subpart 2--Medicare Pharmacy and Therapeutics (P&T) Advisory
Committee
``medicare pharmacy and therapeutics (p&t) advisory committee
``Sec. 1860M. (a) Establishment of Committee.--There is established
a Medicare Pharmacy and Therapeutics Advisory Committee (in this
section referred to as the `Committee').
``(b) Functions of Committee.--On and after January 1, 2001, 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
1860G(3)(B)(i);
``(B) procedures required of eligible entities
under subparagraphs (C) and (D) of section 1860G(4) for
determining if a drug is medically necessary to prevent
or slow the deterioration of, or improve or maintain,
the health of an eligible beneficiary;
``(C) standards for--
``(i) defining therapeutic classes;
``(ii) adding new therapeutic classes to a
formulary;
``(iii) adding new drugs to a therapeutic
class within a formulary; and
``(iv) when and how often a formulary
should be modified;
``(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.
``(2) Membership.--
``(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, and attainments, exceptionally qualified to
perform the duties of members of the Committee.
``(B) Specific members.--Of the members appointed
under paragraph (1)--
``(i) eleven shall be chosen to represent
physicians;
``(ii) four shall be chosen to represent
pharmacists;
``(iii) one shall be chosen to represent
the Health Care Financing Administration;
``(iv) two shall be chosen to represent
actuaries and pharmacoeconomists; and
``(v) one shall be chosen to represent
emerging drug technologies.
``(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,
2001.
``(e) Chairman.--The Secretary shall designate a member of the
Committee as Chairman. The term as Chairman shall be for a 1-year
period.
``(f) Compensation and Travel Expenses.--
``(1) Compensation of members.--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.
``(2) 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.
``(g) Operation of the Committee.--
``(1) Meetings.--The Committee shall meet at the call of
the Chairman (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 Chairman 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, 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 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 the
appropriate committees of 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 such 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 such 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
provided to individuals enrolled under part D (as
defined in section 1860(1)), the organization complies
with the access requirements applicable under part
D.''.
(d) Payments to Organizations.--Section 1853(a)(1)(A) of such Act
(42 U.S.C. 1395w-23(a)(1)(A)) is amended--
(1) 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)'';
(2) 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
(3) by inserting before the last sentence the following:
``In the case of the payments for the benefits under part D,
such payment shall initially be adjusted for the risk factors
of each enrollee as the Secretary determines to be feasible and
appropriate to ensure actuarial equivalence. By 2005, the
adjustments to payments for benefits under part D shall be for
the same risk factors used to adjust payments for the benefits
under parts A and B.''.
(e) Calculation of Annual Medicare+Choice Capitation Rates.--
Section 1853(c) of such Act (42 U.S.C. 1395w-23(c)) is amended--
(1) in paragraph (1), in the matter preceding subparagraph
(A), by inserting ``for benefits under parts A and B'' after
``capitation rate''; and
(2) by adding at the end the following new paragraph:
``(8) Payment for part d benefits.--The Secretary shall
determine a capitation rate for part D benefits (for
individuals enrolled under such part) as follows:
``(A) Drugs dispensed in 2002.--In the case of
prescription drugs dispensed in 2002, the capitation
rate shall be based on the projected national per
capita costs for prescription drug benefits under part
D and associated claims processing costs for
beneficiaries enrolled under part D and not enrolled
with a Medicare+Choice organization under this part.
``(B) Drugs dispensed in subsequent years.--In the
case of prescription drugs dispensed in a subsequent
year, the capitation rate shall be equal to the
capitation rate for the preceding year increased by the
Secretary's estimate of the projected per capita rate
of growth in expenditures under this title for an
individual enrolled under part D for such subsequent
year.''.
(f) Limitation on Enrollee Liability.--Section 1854(e) of such 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 a deductible or a coinsurance percentage that exceeds the
deductible or coinsurance percentage applicable for such
benefits for an eligible beneficiary under part D.''.
(g) Requirement for Additional Benefits.--Section 1854(f)(1) of
such 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.''.
(h) 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, 2002.
SEC. 4. EXCLUSION OF PART D COSTS FROM DETERMINATION OF PART B MONTHLY
PREMIUM.
Section 1839(g) of the Social Security Act (42 U.S.C. 1395r(g)) is
amended--
(1) by striking ``attributable to the application of
section'' and inserting ``attributable to--
``(1) the application of section'';
(2) by striking the period and inserting ``; and''; and
(3) by adding at the end the following new paragraph:
``(2) the program under part D providing payment for
covered outpatient drugs (including costs associated with
making payments to employers and other sponsors of employment-
based health care coverage under the Employer Incentive Program
under section 1860I).''.
SEC. 5. 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 1860D.'';
(2) in subparagraph (B), by striking ``section 1813'' and
inserting ``sections 1813 and 1860E(b)''; and
(3) in subparagraph (C), by striking ``section 1813 and
section 1833(b)'' and inserting ``sections 1813, 1833(b), and
1860E(a)''.
(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--
(1) in clause (iii)--
(A) by striking ``section 1905(p)(3)(A)(ii)'' and
inserting ``clauses (ii) and (iii) of section
1905(p)(3)(A), for the coinsurance described in section
1860E(b), and for the deductible described in section
1860E(a)''; 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), for the coinsurance described in
section 1860E(b), and for the deductible described in
section 1860E(a) 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 175 percent of
such official poverty line for a family of the size
involved; and''.
(c) 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
coinsurance described in section 1860E(b) or deductibles described in
section 1860E(a).''.
(d) 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 ``(3)''; and
(2) by inserting before the period at the end the
following: ``, and (4) 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)''.
(e) Treatment of Territories.--Section 1108(g) of such 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 2002 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 that consists of premiums under section 1860D,
coinsurance described in section 1860E(b), or deductibles
described in section 1860E(a); to
``(B) the aggregate amount of total payments made to such
States and District for the fiscal year under such title.''.
(f) 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)''.
(g) 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, 2002.
SEC. 6. 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) Promulgation of model regulation.--
``(A) NAIC model regulation.--If, within 9 months
after the date of enactment of the Medicare Outpatient
Drug Act of 2000, the National Association of Insurance
Commissioners (in this subsection referred to as the
`NAIC') changes the 1991 NAIC Model Regulation
(described in subsection (p)) to revise 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))
so that--
``(i) the coverage for outpatient
prescription drugs available under such benefit
packages is replaced with coverage for
outpatient prescription drugs that compliments
but does not duplicate the benefits for
outpatient prescription drugs that
beneficiaries are otherwise entitled to 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--
``(I) the deductible under section
1860E(a); or
``(II) more than 90 percent of the
coinsurance applicable to an individual
under section 1860E(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; and
``(v) such revised standards meet any
additional requirements imposed by the Medicare
Outpatient Drug Act of 2000;
subsection (g)(2)(A) shall be applied in each State,
effective for policies issued to policy holders on and
after January 1, 2002, as if the reference to the Model
Regulation adopted on June 6, 1979, were a reference to
the 1991 NAIC Model Regulation as changed under this
subparagraph (such changed regulation referred to in
this section as the `2002 NAIC Model Regulation').
``(B) Regulation by the secretary.--If the NAIC
does not make the changes in the 1991 NAIC Model
Regulation within the 9-month period specified in
subparagraph (A), the Secretary shall promulgate, not
later than 9 months after the end of such period, a
regulation and subsection (g)(2)(A) shall be applied in
each State, effective for policies issued to policy
holders on and after January 1, 2002, as if the
reference to the Model Regulation adopted on June 6,
1979, were a reference to the 1991 NAIC Model
Regulation as changed by the Secretary under this
subparagraph (such changed regulation referred to in
this section as the `2002 Federal Regulation').
``(C) Consultation with working group.--In
promulgating standards under this paragraph, the NAIC
or Secretary shall consult with a working group similar
to the working group described in subsection (p)(1)(D).
``(D) Modification of standards if medicare
benefits change.--If benefits (including deductibles
and coinsurance) under part D of this title are changed
and the Secretary determines, in consultation with the
NAIC, that changes in the 2002 NAIC Model Regulation or
2002 Federal Regulation are needed to reflect such
changes, the preceding provisions of this paragraph
shall apply to the modification of standards previously
established in the same manner as they applied to the
original establishment of such standards.
``(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) Application of provisions and conforming
references.--
``(A) Application of provisions.--The provisions of
paragraphs (4) through (10) of subsection (p) shall
apply under this section, except that--
``(i) any reference to the model regulation
applicable under that subsection shall be
deemed to be a reference to the applicable 2002
NAIC Model Regulation or 2002 Federal
Regulation; and
``(ii) any reference to a date under such
paragraphs of subsection (p) shall be deemed to
be a reference to the appropriate date under
this subsection.
``(B) Other references.--Any reference to a
provision of subsection (p) or a date applicable under
such subsection shall also be considered to be a
reference to the appropriate provision or date under
this subsection.''.
SEC. 7. HHS STUDIES AND REPORT TO CONGRESS.
(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. 8. APPROPRIATIONS.
In addition to amounts otherwise appropriated to the Secretary of
Health and Human Services, there are authorized to be appropriated to
the Secretary for fiscal year 2001 and each subsequent fiscal year such
sums as may be necessary to administer the outpatient prescription drug
benefit program under part D of title XVIII of the Social Security Act
(as added by section 2).
<all>
Introduced in Senate
Introduced in the Senate. Read the first time. Placed on Senate Legislative Calendar under Read the First Time.
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