Establishes a Medicare Competition and Prescription Drug Advisory Board.
Amends SSA title XVIII part B (Supplementary Medical Insurance) to provide for the exclusion of new part D costs from the determination of the Medicare part B monthly premium.
Revises Medicare supplemental health insurance (Medigap) requirements with respect to revision of the 1991 National Association of Insurance Commissioners Model Regulation to accord with this Act.
[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2632 Introduced in House (IH)]
107th CONGRESS
1st Session
H. R. 2632
To amend title XVIII of the Social Security Act to provide Medicare
beneficiaries with access to affordable outpatient prescription drugs.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
July 25, 2001
Mr. Foley (for himself, Mrs. Capito, and Mr. Terry) introduced the
following bill; which was referred to the Committee on Energy and
Commerce, and in addition to the Committee on Ways and Means, for a
period to be subsequently determined by the Speaker, in each case for
consideration of such provisions as fall within the jurisdiction of the
committee concerned
_______________________________________________________________________
A BILL
To amend title XVIII of the Social Security Act to provide Medicare
beneficiaries with access to affordable outpatient prescription drugs.
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 Rx Drug
Discount and Security Act of 2001''.
(b) Table of Contents.--The table of contents of this Act is as
follows:
Sec. 1. Short title; table of contents.
Sec. 2. Voluntary Medicare Outpatient Prescription Drug Discount and
Security Program.
``Part D--Voluntary Medicare Outpatient Prescription Drug Discount and
Security Program
``Sec. 1860. Definitions.
``Subpart 1--Establishment of Voluntary Medicare Outpatient
Prescription Drug Discount and Security Program
``Sec. 1860A. Establishment of program.
``Sec. 1860B. Enrollment.
``Sec. 1860C. Providing enrollment and coverage information to
beneficiaries.
``Sec. 1860D. Enrollee protections.
``Sec. 1860E. Annual enrollment fee.
``Sec. 1860F. Benefits under the program.
``Sec. 1860G. Selection of entities to provide prescription
drug coverage.
``Sec. 1860H. Payments to eligible entities for administering
the catastrophic benefit.
``Sec. 1860I. Determination of income levels.
``Sec. 1860J. Appropriations.
``Subpart 2--Establishment of the Medicare Prescription Drug Agency
``Sec. 1860S. Medicare Prescription Drug Agency.
``Sec. 1860T. Commissioner; Deputy Commissioner; other
officers.
``Sec. 1860U. Administrative duties of the Commissioner.
``Sec. 1860V. Medicare Competition and Prescription Drug
Advisory Board.''.
Sec. 3. Commissioner as member of the board of trustees of the medicare
trust funds.
Sec. 4. Exclusion of part D costs from determination of part B monthly
premium.
Sec. 5. Medigap revisions.
SEC. 2. VOLUNTARY MEDICARE OUTPATIENT PRESCRIPTION DRUG DISCOUNT AND
SECURITY PROGRAM.
(a) Establishment of Program.--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--Voluntary Medicare Outpatient Prescription Drug Discount and
Security Program
``definitions
``Sec. 1860. In this part:
``(1) Commissioner.--The term `Commissioner' means the
Commissioner of Medicare Prescription Drugs appointed under
section 1860S(a).
``(2) Covered outpatient drug.--
``(A) In general.--Except as provided in
subparagraph (B), the term `covered outpatient drug'
means--
``(i) a drug that may be dispensed only
upon a prescription and that is described in
clause (i) or (ii) of subparagraph (A) of
section 1927(k)(2); or
``(ii) a biological product or insulin
described in subparagraph (B) or (C) of such
section.
``(B) Exclusions.--
``(i) In general.--The term `covered
outpatient drug' does not include drugs or
classes of drugs, or their medical uses, which
may be excluded from coverage or otherwise restricted under section
1927(d)(2), other than those restricted under subparagraph (E) of such
section (relating to smoking cessation agents).
``(ii) Avoidance of duplicate coverage.--A
drug prescribed for an individual that would
otherwise be a covered outpatient drug under
this part shall not be considered to be such a
drug if payment for the drug is available under
part A or B (but such drug shall be so
considered if such payment is not available
because the eligible beneficiary has exhausted
benefits under part A or B), without regard to
whether the individual is entitled to benefits
under part A or enrolled under part B.
``(3) Eligible beneficiary.--The term `eligible
beneficiary' means an individual who is--
``(A) eligible for benefits under part A or
enrolled under part B; and
``(B) not eligible for prescription drug coverage
under a medicaid plan under title XIX.
``(4) Eligible entity.--The term `eligible entity' means
any entity that the Commissioner determines to be appropriate
to provide the benefits under this part, including--
``(A) pharmaceutical benefit management companies;
``(B) wholesale and retail pharmacy delivery
systems;
``(C) insurers;
``(D) Medicare+Choice organizations;
``(E) other entities; or
``(F) any combination of the entities described in
subparagraphs (A) through (E).
``(5) Poverty line.--The term `poverty line' means 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.
``Subpart 1--Establishment of Voluntary Medicare Outpatient
Prescription Drug Discount and Security Program
``establishment of program
``Sec. 1860A. (a) Provision of Benefit.--The Commissioner shall
establish a Medicare Outpatient Prescription Drug Discount and Security
Program under which an eligible beneficiary may voluntarily enroll and
receive benefits under this part through enrollment with an eligible
entity with a contract under this part.
``(b) Program To Begin in 2003.--The Commissioner shall establish
the program under this part in a manner so that benefits are first
provided for months beginning with January 2003.
``(c) Voluntary Nature of Program.--Nothing in this part shall be
construed as requiring an eligible beneficiary to enroll in the program
under this part.
``(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 Commissioner 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. Except as otherwise provided in this subsection,
such process shall be similar to the process for
enrollment under part B under section 1837.
``(B) Requirement of enrollment.--An eligible
beneficiary must enroll under this part in order to be
eligible to receive the benefits under this part.
``(2) Enrollment periods.--
``(A) In general.--Except as provided under
subparagraph (B) or (C), an eligible beneficiary may
not enroll in the program under this part during any
period after the beneficiary's initial enrollment
period under part B (as determined under section 1837).
``(B) Special enrollment period.--In the case of
eligible beneficiaries that have recently lost
eligibility for prescription drug coverage under a
medicaid plan under title XIX, the Commissioner shall
establish a special enrollment period in which such
beneficiaries may enroll under this part.
``(C) Open enrollment period in 2003 for current
beneficiaries.--The Commissioner shall establish a
period, which shall begin on the date on which the
Commissioner first begins to accept elections for
enrollment under this part and shall end on December
31, 2003, during which any eligible beneficiary may--
``(i) enroll under this part; or
``(ii) enroll or re-enroll under this part
after having previously declined or terminated
such enrollment.
``(3) Period of coverage.--
``(A) In general.--Except as provided in
subparagraph (B) and subject to subparagraph (C), an
eligible beneficiary's coverage under the program under
this part shall be effective for the period provided
under section 1838, as if that section applied to the
program under this part.
``(B) Enrollment during open and special
enrollment.--Subject to subparagraph (C), an eligible
beneficiary who enrolls under the program under this
part under subparagraph (B) or (C) of paragraph (2)
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, 2003.
``(4) Part d coverage terminated by termination of coverage
under parts a and b or eligibility for medical assistance.--
``(A) In general.--In addition to the causes of
termination specified in section 1838, the Commissioner
shall terminate an individual's coverage under this
part if the individual is--
``(i) no longer enrolled in part A or B; or
``(ii) eligible for prescription drug
coverage under a medicaid plan under title XIX.
``(B) Effective date.--The termination described in
subparagraph (A) shall be effective on the effective
date of--
``(i) the termination of coverage under
part A or (if later) under part B; or
``(ii) the coverage under title XIX.
``(b) Enrollment With Eligible Entity.--
``(1) Process.--
``(A) In general.--The Commissioner shall establish
a process through which an eligible beneficiary who is
enrolled under this part 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 Commissioner shall use rules
similar to the rules for enrollment and disenrollment
with a Medicare+Choice plan under section 1851
(including the 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
must enroll with an eligible entity in order to receive
benefits under this part. The beneficiary may elect to receive
such benefits from the Medicare+Choice organization in which
the beneficiary is enrolled if the organization has been
awarded a contract under this part.
``(3) Competition.--Eligible entities with a contract under
this part shall compete for beneficiaries on the basis of
discounts, formularies, pharmacy networks, and other services
provided for under the contract.
``(c) Enrollment Period for Benefits in 2003.--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, 2003, in order to ensure that
coverage under this part is effective as of such date.
``providing enrollment and coverage information to beneficiaries
``Sec. 1860C. (a) Activities.--The Commissioner shall provide for
activities under this part to broadly disseminate information to
eligible beneficiaries (and prospective eligible beneficiaries)
regarding enrollment under this part and the prescription drug coverage
made available by eligible entities with a contract under this part.
``(b) Special Rule for First Enrollment Under the Program.--To the
extent practicable, the activities described in subsection (a) shall
ensure that eligible beneficiaries are provided with such information
at least 60 days prior to the first enrollment period described in
section 1860B(c).
``enrollee protections
``Sec. 1860D. (a) Guaranteed Issue and Nondiscrimination.--
``(1) Guaranteed issue.--
``(A) In general.--An eligible beneficiary who is
eligible to enroll with an eligible entity under
section 1860B(b) for prescription drug coverage under
this part at a time during which elections are accepted
under this part with respect to the coverage shall not
be denied enrollment based on any health status-related
factor (described in section 2702(a)(1) of the Public
Health Service Act) or any other factor.
``(B) Medicare+choice limitations permitted.--The
provisions of paragraphs (2) and (3) (other than
subparagraph (C)(i), relating to default enrollment) of
section 1851(g) (relating to priority and limitation on
termination of election) shall apply to eligible
entities under this subsection.
``(2) Nondiscrimination.--An eligible entity offering
prescription drug coverage under this part shall not establish
a service area in a manner that would discriminate based on
health or economic status of potential enrollees.
``(b) Dissemination of Information.--
``(1) General information.--An eligible entity with a
contract under this part shall disclose, in a clear, accurate,
and standardized form to each eligible beneficiary enrolled for
prescription drug coverage with such entity under this part at
the time of enrollment and at least annually thereafter, the
information described in section 1852(c)(1) relating to such
prescription drug coverage. Such information includes the
following:
``(A) Access to covered outpatient drugs, including
access through pharmacy networks.
``(B) How any formulary used by the eligible entity
functions.
``(C) Grievance and appeals procedures.
``(2) Disclosure upon request of general coverage,
utilization, and grievance information.--Upon request of an
eligible beneficiary, the eligible entity shall provide the
information described in section 1852(c)(2) (other than
subparagraph (D)) to such beneficiary.
``(3) Response to beneficiary questions.--Each eligible
entity offering prescription drug coverage under this part
shall have a mechanism for providing specific information to
enrollees upon request. The entity shall make available,
through an Internet website and in writing upon request,
information on specific changes in its formulary.
``(c) Access to Covered Benefits.--
``(1) Ensuring pharmacy access.--
``(A) In general.--Each eligible entity with a
contract under this part shall permit any pharmacy
located in the area covered by such contract to
participate in the pharmacy network of the eligible
entity if the pharmacy agrees to accept such operating
terms as the eligible entity may specify, including any fee schedule,
requirements relating to covered expenses, and quality standards
relating to the provision of prescription drug coverage.
``(B) Construction.--Nothing in this paragraph
shall be construed as requiring a pharmacy to
participate in a pharmacy network of an eligible entity
with a contract under this part to participate in any
other coverage program of the eligible entity.
``(2) Access to negotiated prices for prescription drugs.--
For requirements relating to the access of an eligible
beneficiary to negotiated prices (including applicable
discounts), see section 1860F(a).
``(3) Requirements on development and application of
formularies.--Insofar as an eligible entity with a contract
under this part uses a formulary, the following requirements
must be met:
``(A) Formulary committee.--The eligible entity
must establish a pharmaceutical and therapeutic
committee that develops the formulary. Such committee
shall include at least 1 physician and at least 1
pharmacist.
``(B) Inclusion of drugs in all therapeutic
categories.--The formulary must include drugs within
all therapeutic categories and classes of covered
outpatient drugs (although not necessarily for all
drugs within such categories and classes).
``(C) Appeals and exceptions to application.--The
entity must have, as part of the appeals process under
subsection (f)(2), a process for appeals for denials of
coverage based on such application of the formulary.
``(d) Cost and Utilization Management; Quality Assurance;
Medication Therapy Management Program.--
``(1) In general.--For purposes of providing access to
negotiated benefits under section 1860F(a) and the catastrophic
benefit described in section 1860F(b), the eligible entity
shall have in place--
``(A) an effective cost and drug utilization
management program, including appropriate incentives to
use generic drugs, when appropriate;
``(B) quality assurance measures and systems to
reduce medical errors and adverse drug interactions,
including a medication therapy management program
described in paragraph (2); and
``(C) a program to control fraud, abuse, and waste.
``(2) Medication therapy management program.--
``(A) In general.--A medication therapy management
program described in this paragraph is a program of
drug therapy management and medication administration
provided by a community-based pharmacy that is designed
to ensure that prescription drugs made available under
this part are appropriately used to achieve therapeutic
goals and reduce the risk of adverse events, including
adverse drug interactions.
``(B) Elements.--Such program shall include--
``(i) enhanced beneficiary understanding of
such appropriate use through beneficiary
education, counseling, and other appropriate
means; and
``(ii) increased beneficiary adherence with
prescription medication regimens through
medication refill reminders, special packaging,
and other appropriate means.
``(C) Development of program in cooperation with
licensed pharmacists.--The program shall be developed
in cooperation with licensed pharmacists and
physicians.
``(D) Considerations in pharmacy fees.--An eligible
entity with a contract under this part shall establish
fees for pharmacists, pharmacies, and others providing
services under the medication therapy management
program that take into account the resources and time
used in implementing the program.
``(3) Treatment of accreditation.--Section 1852(e)(4)
(relating to treatment of accreditation) shall apply to
prescription drug coverage provided under this part with
respect to the following requirements, in the same manner as
they apply to Medicare+Choice plans under part C with respect
to the requirements described in a clause of section
1852(e)(4)(B):
``(A) Subsection (c)(1) (relating to access to
covered benefits).
``(B) Subsection (g) (relating to confidentiality
and accuracy of enrollee records).
``(e) Grievance Mechanism.--Each eligible entity shall provide
meaningful procedures for hearing and resolving grievances between the
organization (including any entity or individual through which the
eligible entity provides covered benefits) and eligible beneficiaries
enrolled with the entity under this part in accordance with section
1852(f).
``(f) Coverage Determinations, Reconsiderations, and Appeals.--
``(1) In general.--An eligible entity shall meet the
requirements of section 1852(g) with respect to covered
benefits under the prescription drug coverage it offers under
this part in the same manner as such requirements apply to a
Medicare+Choice organization with respect to benefits it offers
under a Medicare+Choice plan under part C.
``(2) Appeals of formulary determinations.--Under the
appeals process under paragraph (1) an individual who is
enrolled with an eligible entity with a contract under this
part for prescription drug coverage may appeal any denial of
coverage of a prescription drug to obtain coverage for a
medically necessary covered outpatient drug that is not on the
formulary of the eligible entity (established under subsection
(c)) if the prescribing physician determines that the therapeutically
similar drug that is on the formulary is not effective for the enrollee
or has significant adverse effects for the enrollee.
``(g) Confidentiality and Accuracy of Enrollee Records.--An
eligible entity shall meet the requirements of section 1852(h) with
respect to enrollees under this part in the same manner as such
requirements apply to a Medicare+Choice organization with respect to
enrollees under part C.
``annual enrollment fee
``Sec. 1860E. (a) Amount.--
``(1) In general.--Except as provided in subsection (c),
enrollment under the program under this part is conditioned
upon payment of an annual enrollment fee of $25.
``(2) Annual percentage increase.--
``(A) In general.--In the case of any calendar year
beginning after 2003, the dollar amount in paragraph
(1) shall be increased by an amount equal to--
``(i) such dollar amount; multiplied by
``(ii) the inflation adjustment.
``(B) Inflation adjustment.--For purposes of
subparagraph (A)(ii), the inflation adjustment for any
calendar year is the percentage (if any) by which--
``(i) the average per capita aggregate
expenditures for covered outpatient drugs in
the United States for medicare beneficiaries,
as determined by the Commissioner for the 12-
month period ending in July of the previous
year; exceeds
``(ii) such aggregate expenditures for the
12-month period ending with July 2003.
``(C) Rounding.--If any increase determined under
clause (ii) is not a multiple of $1, such increase
shall be rounded to the nearest multiple of $1.
``(b) Collection of Annual Enrollment Fee.--
``(1) In general.--Unless the eligible beneficiary makes an
election under paragraph (2), the annual enrollment fee
described in subsection (a) 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.
``(2) Direct payment.--An eligible beneficiary may elect to
pay the annual enrollment fee directly or in any other manner
approved by the Commissioner. The Commissioner shall establish
procedures for making such an election.
``(c) Waiver.--The Commissioner shall waive the enrollment fee
described in subsection (a) in the case of an eligible beneficiary
whose income is below 200 percent of the poverty line.
``benefits under the program
``Sec. 1860F. (a) Access to Negotiated Prices.--
``(1) Negotiated prices.--
``(A) In general.--Subject to subparagraph (B),
each eligible entity with a contract under this part
shall provide each eligible beneficiary enrolled with
the entity with access to negotiated prices (including
applicable discounts) for such prescription drugs as
the eligible entity determines appropriate. If such a
beneficiary becomes eligible for the catastrophic
benefit under subsection (b), the negotiated prices
(including applicable discounts) shall continue to be
available to the beneficiary for those prescription
drugs for which payment may not be made under section
1860H(b). For purposes of this subparagraph, the term
`prescription drugs' is not limited to covered
outpatient drugs, but does not include any over-the-
counter drug that is not a covered outpatient drug.
``(B) Limitations.--
``(i) Formulary restrictions.--Insofar as
an eligible entity with a contract under this
part uses a formulary, the negotiated prices
(including applicable discounts) for
prescription drugs shall only be available for
drugs included in such formulary.
``(ii) Avoidance of duplicate coverage.--
The negotiated prices (including applicable
discounts) for prescription drugs shall not be
available for any drug prescribed for an
eligible beneficiary if payment for the drug is
available under part A or B (but such
negotiated prices shall be available if payment
under part A or B is not available because the
beneficiary has not met the deductible or has
exhausted benefits under part A or B).
``(2) Discount card.--The Commissioner shall develop a
uniform standard card format to be issued by each eligible
entity that may be used by an enrolled beneficiary to ensure
the access of such beneficiary to negotiated prices under
paragraph (1).
``(3) Ensuring discounts in all areas.--The Commissioner
shall develop procedures that ensure that each eligible
beneficiary that resides in an area where no eligible entity
has been awarded a contract under this part is provided with
access to negotiated prices for prescription drugs (including
applicable discounts).
``(b) Catastrophic Benefit.--
``(1) In general.--Subject to paragraph (4) (relating to
eligibility for the catastrophic benefit) and any formulary
used by the eligible entity with which the eligible beneficiary
is enrolled, the catastrophic benefit shall be administered as
follows:
``(A) Beneficiaries with annual incomes below 200
percent of the poverty line.--In the case of an
eligible beneficiary whose modified adjusted gross
income (as defined in paragraph (4)(E)) is below 200
percent of the poverty line, the beneficiary shall not
be responsible for making a payment for a
covered outpatient drug provided to the beneficiary in a year to the
extent that 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, exceed
$1,200.
``(B) Beneficiaries with annual incomes between 200
and 400 percent of the poverty line.--In the case of an
eligible beneficiary whose modified adjusted gross
income (as so defined) exceeds 200 percent, but does
not exceed 400 percent, of the poverty line, the
beneficiary shall not be responsible for making a
payment for a covered outpatient drug provided to the
beneficiary in a year to the extent that 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, exceed $2,500.
``(C) Beneficiaries with annual incomes above 400
percent of the poverty line.--In the case of an
eligible beneficiary whose modified adjusted gross
income (as so defined) exceeds 400 percent of the
poverty line, the beneficiary shall not be responsible
for making a payment for a covered outpatient drug
provided to the beneficiary in a year to the extent
that 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, exceed $5,000.
``(2) Annual percentage increase.--
``(A) In general.--In the case of any calendar year
after 2003, the dollar amounts in paragraph (1) shall
be increased by an amount equal to--
``(i) such dollar amount; multiplied by
``(ii) the inflation adjustment determined
under section 1860E(a)(2)(B) for such calendar
year.
``(B) Rounding.--If any increase determined under
subparagraph (A) is not a multiple of $1, such increase
shall be rounded to the nearest multiple of $1.
``(3) Eligible entity not at risk for catastrophic
benefit.--
``(A) In general.--The Commissioner, and not the
eligible entity, shall be at risk for the provision of
the catastrophic benefit under this subsection.
``(B) Provisions relating to payments to eligible
entities.--For provisions relating to payments to
eligible entities for administering the catastrophic
benefit under this subsection, see section 1860H.
``(4) Catastrophic benefit not available to certain high
income individuals.--
``(A) In general.--An eligible beneficiary enrolled
under this part whose modified adjusted gross income
for a taxable year exceeds 600 percent of the poverty
line shall not be eligible for the catastrophic benefit
under this subsection.
``(B) Beneficiary still eligible for discount
benefit.--Nothing in subparagraph (A) shall be
construed as affecting the eligibility of a beneficiary
described in such subparagraph for the benefits under
subsection (a).
``(C) Procedures for determining modified adjusted
gross income.--
``(i) In general.--The Commissioner shall
establish procedures for determining the
modified adjusted gross income of eligible
beneficiaries enrolled under this part.
``(ii) Consultation.--The Commissioner
shall consult with the Secretary of the
Treasury in making the determinations described
in clause (i).
``(iii) Disclosure of information.--
Notwithstanding section 6103(a) of the Internal
Revenue Code of 1986, the Secretary of the
Treasury may, upon written request from the
Commissioner, disclose to officers and
employees of the Medicare Prescription Drug
Agency such return information as is necessary
to make the determinations described in clause
(i). Return information disclosed under the
preceding sentence may be used by officers and
employees of the Medicare Prescription Drug
Agency only for the purposes of, and to the
extent necessary in, making such
determinations.
``(D) Definition of modified adjusted gross
income.--In this paragraph, the term `modified adjusted
gross income' means adjusted gross income (as defined
in section 62 of the Internal Revenue Code of 1986)--
``(i) determined without regard to sections
135, 911, 931, and 933 of such Code; and
``(ii) increased by the amount of interest
received or accrued by the taxpayer during the
taxable year which is exempt from tax under
such Code.
``(5) Ensuring catastrophic benefit in all areas.--The
Commissioner shall develop procedures for the provision of the
catastrophic benefit under this subsection to each eligible
beneficiary that resides in an area where there are no eligible
entities that have been awarded a contract under this part.
``selection of entities to provide prescription drug coverage
``Sec. 1860G. (a) Establishment of Bidding Process.--The
Commissioner shall establish a process under which the Commissioner
accepts bids from eligible entities and awards contracts to the
entities to provide the benefits under this part to eligible
beneficiaries in an area.
``(b) Submission of Bids.--Each eligible entity desiring to enter
into a contract under this part shall submit a bid to the Commissioner
at such time, in such manner, and accompanied by such information as
the Commissioner may reasonably require.
``(c) Awarding of Contracts.--
``(1) In general.--The Commissioner shall, consistent with
the requirements of this part and the goal of containing
medicare program costs, award at least 2 contracts in each
area, unless only 1 bidding entity meets the terms and
conditions specified by the Commissioner under paragraph (2).
``(2) Terms and conditions.--The Commissioner shall not
award a contract to an eligible entity under this section
unless the Commissioner finds that the eligible entity is in
compliance with such terms and conditions as the Commissioner
shall specify.
``(3) Comparative merits.--In determining which of the
eligible entities that submitted bids that meet the terms and
conditions specified by the Commissioner under paragraph (2) to
award a contract, the Commissioner shall consider the
comparative merits of each of the bids.
``payments to eligible entities for administering the catastrophic
benefit
``Sec. 1860H. (a) In General.--The Commissioner shall establish
procedures for making payments to an eligible entity under a contract
entered into under this part for--
``(1) providing covered outpatient prescription drugs to
beneficiaries eligible for the catastrophic benefit in
accordance with subsection (b); and
``(2) costs incurred by the entity in administering the
catastrophic benefit in accordance with subsection (c).
``(b) Payment for Covered Outpatient Prescription Drugs.--
``(1) In general.--Except as provided in subsection (c) and
subject to paragraph (2), the Commissioner may only pay an
eligible entity for covered outpatient drugs furnished by the
eligible entity to an eligible beneficiary enrolled with such
entity under this part that is eligible for the catastrophic
benefit under section 1860F(b).
``(2) Limitations.--
``(A) Formulary restrictions.--Insofar as an
eligible entity with a contract under this part uses a
formulary, the Commissioner may not make any payment
for a covered outpatient drug that is not included in
such formulary.
``(B) Negotiated prices.--The Commissioner may not
pay an amount for a covered outpatient drug furnished
to an eligible beneficiary that exceeds the negotiated
price (including applicable discounts) that the
beneficiary would have been responsible for under
section 1860F(a).
``(c) Payment for Administrative Costs.--
``(1) Procedures.--The procedures established under
subsection (a)(1) shall provide for payment to the eligible
entity of an administrative fee for each prescription filled by
the entity for an eligible beneficiary--
``(A) who is enrolled with the entity; and
``(B) to whom subparagraph (A), (B), or (C) of
section 1860F(b)(1) applies with respect to a covered
outpatient drug.
``(2) Amount.--The fee described in paragraph (1) shall
be--
``(A) negotiated by the Commissioner; and
``(B) consistent with such fees paid under private
sector pharmaceutical benefit contracts.
``(d) Secondary Payer Provisions.--The provisions of section
1862(b) shall apply to the benefits provided under this part.
``determination of income levels
``Sec. 1860I. (a) Procedures.--The Commissioner shall establish
procedures for determining the income levels of eligible beneficiaries
for purposes of sections 1860E(c) and 1860F(b).
``(b) Periodic Redeterminations.--Such income determinations shall
be valid for a period (of not less than 1 year) specified by the
Commissioner.
``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 enrollment fees collected under section 1860E.
``Subpart 2--Establishment of the Medicare Prescription Drug Agency
``medicare prescription drug agency
``Sec. 1860S. (a) Establishment.--There is established, as an
independent agency in the executive branch of the Government, a
Medicare Prescription Drug Agency (in this part referred to as the
`Agency').
``(b) Duty.--It shall be the duty of the Agency to administer the
Medicare Outpatient Prescription Drug Discount and Security Program
under subpart 1.
``commissioner; deputy commissioner; other officers
``Sec. 1860T. (a) Commissioner of Medicare Prescription Drugs.--
``(1) Appointment.--There shall be in the Agency a
Commissioner of Medicare Prescription Drugs (in this subpart
referred to as the `Commissioner') who shall be appointed by
the President, by and with the advice and consent of the
Senate.
``(2) Compensation.--The Commissioner shall be compensated
at the rate provided for level I of the Executive Schedule.
``(3) Term.--
``(A) In general.--The Commissioner shall be
appointed for a term of 6 years.
``(B) Continuance in office.--In any case in which
a successor does not take office at the end of a
Commissioner's term of office, such Commissioner may
continue in office until the appointment of a
successor.
``(C) Delayed appointments.--A Commissioner
appointed to a term of office after the commencement of
such term may serve under such appointment only for the
remainder of such term.
``(D) Removal.--An individual serving in the office
of Commissioner may be removed from office only under a
finding by the President of neglect of duty or
malfeasance in office.
``(4) Responsibilities.--The Commissioner shall be
responsible for the exercise of all powers and the discharge of
all duties of the Agency, and shall have authority and control
over all personnel and activities thereof.
``(5) Promulgation of rules and regulations.--
``(A) In general.--The Commissioner may prescribe
such rules and regulations as the Commissioner
determines necessary or appropriate to carry out the
functions of the Agency.
``(B) Rulemaking.--The regulations prescribed by
the Commissioner shall be subject to the rulemaking
procedures established under section 553 of title 5,
United States Code.
``(6) Delegation of authority.--
``(A) In general.--The Commissioner may assign
duties, and delegate, or authorize successive
redelegations of, authority to act and to render
decisions, to such officers and employees of the Agency
as the Commissioner may find necessary.
``(B) Effect of delegation.--Within the limitations
of such delegations, redelegations, or assignments, all
official acts and decisions of such officers and
employees shall have the same force and effect as
though performed or rendered by the Commissioner.
``(7) Consultation with secretary of health and human
services.--The Commissioner and the Secretary shall consult, on
an ongoing basis, to ensure the coordination of the programs
administered by the Commissioner with the programs administered
by the Secretary under this title and under title XIX.
``(b) Deputy Commissioner of Medicare Prescription Drugs.--
``(1) Appointment.--There shall be in the Agency a Deputy
Commissioner of Medicare Prescription Drugs (in this subpart
referred to as the `Deputy Commissioner') who shall be
appointed by the President, by and with the advice and consent
of the Senate.
``(2) Term.--
``(A) In general.--The Deputy Commissioner shall be
appointed for a term of 6 years.
``(B) Continuance in office.--In any case in which
a successor does not take office at the end of a Deputy
Commissioner's term of office, such Deputy Commissioner
may continue in office until the entry upon office of
such a successor.
``(C) Delayed appointment.--A Deputy Commissioner
appointed to a term of office after the commencement of
such term may serve under such appointment only for the
remainder of such term.
``(3) Compensation.--The Deputy Commissioner shall be
compensated at the rate provided for level II of the Executive
Schedule.
``(4) Duties.--
``(A) In general.--The Deputy Commissioner shall
perform such duties and exercise such powers as the
Commissioner shall from time to time assign or
delegate.
``(B) Acting commissioner.--The Deputy Commissioner
shall be Acting Commissioner of the Agency during the
absence or disability of the Commissioner, unless the
President designates another officer of the Government
as Acting Commissioner, in the event of a vacancy in
the office of the Commissioner.
``(c) Chief Actuary.--
``(1) Appointment.--
``(A) In general.--There shall be in the Agency a
Chief Actuary, who shall be appointed by, and in direct
line of authority to, the Commissioner.
``(B) Qualifications.--The Chief Actuary shall be
appointed from individuals who have demonstrated, by
their education and experience, superior expertise in
the actuarial sciences.
``(C) Duties.--The Chief Actuary shall serve as the
chief actuarial officer of the Agency, and shall
exercise such duties as are appropriate for the office
of the Chief Actuary and in accordance with
professional standards of actuarial independence.
``(2) Compensation.--The Chief Actuary shall be compensated
at the highest rate of basic pay for the Senior Executive
Service under section 5382(b) of title 5, United States Code.
``administrative duties of the commissioner
``Sec. 1860U. (a) Personnel.--
``(1) In general.--The Commissioner may employ, without
regard to chapter 31 of title 5, United States Code, such
officers and employees as are necessary to administer the
activities to be carried out through the Medicare Prescription
Drug Agency.
``(2) Flexibility with respect to civil service laws.--
``(A) In general.--The staff of the Medicare
Prescription Drug Agency shall be appointed without
regard to the provisions of title 5, United States
Code, governing appointments in the competitive
service, and, subject to subparagraph (B), shall be
paid without regard to the provisions of chapters 51
and 53 of such title (relating to classification and
schedule pay rates).
``(B) Maximum rate.--In no case may the rate of
compensation determined under subparagraph (A) exceed
the rate of basic pay payable for level IV of the
Executive Schedule under section 5315 of title 5,
United States Code.
``(b) Budgetary Matters.--
``(1) Submission of annual budget.--The Commissioner shall
prepare an annual budget for the Agency, which shall be
submitted by the President to Congress without revision,
together with the President's annual budget for the Agency.
``(2) Appropriations requests.--
``(A) Staffing and personnel.--Appropriations
requests for staffing and personnel of the Agency shall
be based upon a comprehensive workforce plan, which
shall be established and revised from time to time by
the Commissioner.
``(B) Administrative expenses.--Appropriations for
administrative expenses of the Agency are authorized to
be provided on a biennial basis.
``(c) Seal of Office.--
``(1) In general.--The Commissioner shall cause a Seal of
Office to be made for the Agency of such design as the
Commissioner shall approve.
``(2) Judicial notice.--Judicial notice shall be taken of
the seal made under paragraph (1).
``(d) Data Exchanges.--
``(1) Disclosure of records and other information.--
Notwithstanding any other provision of law (including
subsections (b), (o), (p), (q), (r), and (u) of section 552a of
title 5, United States Code)--
``(A) the Secretary shall disclose to the
Commissioner any record or information requested in
writing by the Commissioner for the purpose of
administering any program administered by the
Commissioner, if records or information of such type
were disclosed to the Administrator of the Health Care
Financing Administration in the Department of Health
and Human Services under applicable rules, regulations,
and procedures in effect before the date of enactment
of the Medicare Rx Drug Discount and Security Act of
2001; and
``(B) the Commissioner shall disclose to the
Secretary or to any State any record or information
requested in writing by the Secretary to be so
disclosed for the purpose of administering any program
administered by the Secretary, if records or
information of such type were so disclosed under
applicable rules, regulations, and procedures in effect
before the date of enactment of the Medicare Rx Drug
Discount and Security Act of 2001.
``(2) Exchange of other data.--The Commissioner and the
Secretary shall periodically review the need for exchanges of
information not referred to in paragraph (1) and shall enter
into such agreements as may be necessary and appropriate to
provide information to each other or to States in order to meet
the programmatic needs of the requesting agencies.
``(3) Routine use.--
``(A) In general.--Any disclosure from a system of
records (as defined in section 552a(a)(5) of title 5,
United States Code) pursuant to this subsection shall
be made as a routine use under subsection (b)(3) of
section 552a of such title (unless otherwise authorized
under such section 552a).
``(B) Computerized comparison.--Any computerized
comparison of records, including matching programs,
between the Commissioner and the Secretary shall be
conducted in accordance with subsections (o), (p), (q),
(r), and (u) of section 552a of title 5, United States
Code.
``(4) Timely action.--The Commissioner and the Secretary
shall each ensure that timely action is taken to establish any
necessary routine uses for disclosures required under paragraph
(1) or agreed to under paragraph (2).
``medicare competition and prescription drug advisory board
``Sec. 1860V. (a) Establishment of Board.--There is established a
Medicare Prescription Drug Advisory Board (in this section referred to
as the `Board').
``(b) Advice on Policies; Reports.--
``(1) Advice on policies.--On and after the date the
Commissioner takes office, the Board shall advise the
Commissioner on policies relating to the Medicare Outpatient
Prescription Drug Discount and Security Program under subpart
1.
``(2) Reports.--
``(A) In general.--With respect to matters of the
administration of subpart 1, the Board shall submit to
Congress and to the Commissioner of Medicare
Prescription Drugs such reports as the Board determines
appropriate. Each such report may contain such
recommendations as the Board determines appropriate for
legislative or administrative changes to improve the
administration of such subpart. Each such report shall
be published in the Federal Register.
``(B) Maintaining independence of board.--The Board
shall directly submit to Congress reports required
under subparagraph (A). No officer or agency of the
United States may require the Board to submit to any
officer or agency of the United States for approval,
comments, or review, prior to the submission to
Congress of such reports.
``(c) Structure and Membership of the Board.--
``(1) Membership.--The Board shall be composed of 7 members
who shall be appointed as follows:
``(A) Presidential appointments.--
``(i) In general.--Three members shall be
appointed by the President, by and with the
advice and consent of the Senate.
``(ii) Limitation.--Not more than 2 such
members may be from the same political party.
``(B) Senatorial appointments.--Two members (each
member from a different political party) shall be
appointed by the President pro tempore of the Senate
with the advice of the Chairman and the Ranking
Minority Member of the Committee on Finance of the Senate.
``(C) Congressional appointments.--Two members
(each member from a different political party) shall be
appointed by the Speaker of the House of
Representatives, with the advice of the Chairman and
the Ranking Minority Member of the Committee on Ways
and Means of the House of Representatives.
``(2) Qualifications.--The members 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 Board.
``(d) Terms of Appointment.--
``(1) In general.--Subject to paragraph (2), each member of
the Board shall serve for a term of 6 years.
``(2) Continuance in office and staggered terms.--
``(A) Continuance in office.--A member appointed to
a term of office after the commencement of such term
may serve under such appointment only for the remainder
of such term.
``(B) Staggered terms.--The terms of service of the
members initially appointed under this section shall
begin on January 1, 2002, and expire as follows:
``(i) Presidential appointments.--The terms
of service of the members initially appointed
by the President shall expire as designated by
the President at the time of nomination, 1 each
at the end of--
``(I) 2 years;
``(II) 4 years; and
``(III) 6 years.
``(ii) Senatorial appointments.--The terms
of service of members initially appointed by
the President pro tempore of the Senate shall
expire as designated by the President pro
tempore of the Senate at the time of
nomination, 1 each at the end of--
``(I) 3 years; and
``(II) 6 years.
``(iii) Congressional appointments.--The
terms of service of members initially appointed
by the Speaker of the House of Representatives
shall expire as designated by the Speaker of
the House of Representatives at the time of
nomination, 1 each at the end of--
``(I) 4 years; and
``(II) 5 years.
``(C) Reappointments.--Any person appointed as a
member of the Board may not serve for more than 8
years.
``(D) Vacancies.--Any member appointed to fill a
vacancy occurring before the expiration of the term for
which the member's predecessor was appointed shall be
appointed only for the remainder of that term. A member
may serve after the expiration of that member's term
until a successor has taken office. A vacancy in the
Board shall be filled in the manner in which the
original appointment was made.
``(e) Chairperson.--A member of the Board shall be designated by
the President to serve as Chairperson for a term of 4 years, coincident
with the term of the President, or until the designation of a
successor.
``(f) Expenses and Per Diem.--Members of the Board shall serve
without compensation, except that, while serving on business of the
Board away from their homes or regular places of business, members may
be allowed travel expenses, including per diem in lieu of subsistence,
as authorized by section 5703 of title 5, United States Code, for
persons in the Government employed intermittently.
``(g) Meeting.--
``(1) In general.--The Board shall meet at the call of the
Chairperson (in consultation with the other members of the
Board) not less than 4 times each year to consider a specific
agenda of issues, as determined by the Chairperson in
consultation with the other members of the Board.
``(2) Quorum.--Four members of the Board (not more than 3
of whom may be of the same political party) shall constitute a
quorum for purposes of conducting business.
``(h) Federal Advisory Committee Act.--The Board shall be exempt
from the provisions of the Federal Advisory Committee Act (5 U.S.C.
App.).
``(i) Personnel.--
``(1) Staff director.--The Board shall, without regard to
the provisions of title 5, United States Code, relating to the
competitive service, appoint a Staff Director who shall be paid
at a rate equivalent to a rate established for the Senior
Executive Service under section 5382 of title 5, United States
Code.
``(2) Staff.--
``(A) In general.--The Board may employ, without
regard to chapter 31 of title 5, United States Code,
such officers and employees as are necessary to
administer the activities to be carried out by the
Board.
``(B) Flexibility with respect to civil service
laws.--
``(i) In general.--The staff of the Board
shall be appointed without regard to the
provisions of title 5, United States Code,
governing appointments in the competitive
service, and, subject to clause (ii), shall be
paid without regard to the provisions of
chapters 51 and 53 of such title (relating to
classification and schedule pay rates).
``(ii) Maximum rate.--In no case may the
rate of compensation determined under clause
(i) exceed the rate of basic pay payable for
level IV of the Executive Schedule under
section 5315 of title 5, United States Code.
``(j) Authorization of Appropriations.--There are authorized to be
appropriated, out of the Federal Supplemental Medical Insurance Trust
Fund established under section 1841, and the general fund of the
Treasury, such sums as are necessary to carry out the purposes of this
section.''.
(b) 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
section, 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 section.
(c) Effective Date.--
(1) In general.--The amendment made by subsection (a) shall
take effect on the date of enactment of this Act.
(2) Timing of initial appointments.--The Commissioner and
Deputy Commissioner of Medicare Prescription Drugs may not be
appointed before March 1, 2002.
SEC. 3. COMMISSIONER AS MEMBER OF THE BOARD OF TRUSTEES OF THE MEDICARE
TRUST FUNDS.
(a) In General.--Section 1841(b) of the Social Security Act (42
U.S.C. 1395t(b)) is amended by striking ``and the Secretary of Health
and Human Services, all ex officio,'' and inserting ``, the Secretary
of Health and Human Services, and the Commissioner of Medicare
Prescription Drugs, all ex officio,''.
(b) Effective Date.--The amendment made by this subsection shall
take effect on March 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 Voluntary Medicare Outpatient Prescription Drug
Discount and Security Program under part D.''.
SEC. 5. MEDIGAP REVISIONS.
Section 1882 of the Social Security Act (42 U.S.C. 1395ss) is
amended by adding at the end the following new subsection:
``(v) Modernization of Medicare Supplemental Policies.--
``(1) Promulgation of model regulation.--
``(A) NAIC model regulation.--If, within 9 months
after the date of enactment of the Medicare Rx Drug
Discount and Security Act of 2001, 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 package classified as `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
package is replaced with coverage for
outpatient prescription drugs that complements
but does not duplicate the benefits for
outpatient prescription drugs that
beneficiaries are otherwise entitled to under
this title;
``(ii) a uniform format is used in the
policy with respect to such revised benefits;
and
``(iii) such revised standards meet any
additional requirements imposed by the Medicare
Rx Drug Discount and Security Act of 2001;
subsection (g)(2)(A) shall be applied in each State,
effective for policies issued to policy holders on and
after January 1, 2003, 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 `2003 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, 2003, 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 `2003 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 under part D of this
title are changed and the Secretary determines, in
consultation with the NAIC, that changes in the 2003 NAIC Model
Regulation or 2003 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 `I' 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 2003
NAIC Model Regulation or 2003 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.''.
<all>
Introduced in House
Introduced in House
Referred to the Committee on Energy and Commerce, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Referred to the Committee on Energy and Commerce, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Referred to the Committee on Energy and Commerce, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Referred to the Subcommittee on Health.
Referred to the Subcommittee on Health.
Sponsor introductory remarks on measure. (CR H6413-6414)
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