To amend part D of title XVIII of the Social Security Act to improve the coordination of prescription drug coverage provided under retiree plans and State pharmaceutical assistance programs with the prescription drug benefit provided under the Medicare Program, and for other purposes.

January 4, 2005

Mr. MENENDEZ 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

To amend part D of title XVIII of the Social Security Act to improve the coordination of prescription drug coverage provided under retiree plans and State pharmaceutical assistance programs with the prescription drug benefit provided under the Medicare Program, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `Preserving Access to Affordable Drugs Act of 2005'.

SEC. 2. ELIMINATION OF DISCRIMINATORY TREATMENT OF EMPLOYER PLANS.

(a) Elimination of True Out-Of-Pocket Limitation- Section 1860D-2(b)(4)(C) of the Social Security Act (42 U.S.C. 1395w-102(b)(4)(C)) is amended to read as follows:

`(C) APPLICATION- In applying subparagraph (A), incurred costs shall only include costs incurred with respect to covered part D drugs for the annual deductible described in paragraph (1), for cost-sharing described in paragraph (2), and for amounts for which benefits are not provided because of the application of the initial coverage limit described in paragraph (3).'.

(b) Equalization of Subsidies- Notwithstanding any other provision of law, the Secretary of Health and Human Services shall provide for such increase in the special subsidy payment amounts under section 1860D-22(a)(3) of the Social Security Act (42 U.S.C. 1395w-132(a)(3)) as may be appropriate to provide for payments in the aggregate equivalent to the payments that would have been made under section 1860D-15 of such Act if the individuals were not enrolled in a qualified retiree prescription drug plan. In making such computation, the Secretary shall not take into account the application of the amendments made by section 1202 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (Public Law 108-173; 117 Stat. 2480).

SEC. 3. DIRECT SUBSIDY FOR CERTAIN STATE PHARMACEUTICAL ASSISTANCE PROGRAMS.

Part D of title XVIII of the Social Security Act (42 U.S.C. 1395w-101 et seq.) is amended by inserting after section 1860D-23 the following new section:

`DIRECT SUBSIDIES FOR CERTAIN STATE PHARMACEUTICAL ASSISTANCE PROGRAMS

`SEC. 1860D-23A. (a) Direct Subsidy-

`(1) IN GENERAL- The Secretary shall provide for the payment to a State offering a State pharmaceutical assistance program described in section 1860D-23(b)(1) for each individual who is eligible for, but not enrolled in, a prescription drug plan or MA-PD plan under this part, and who is enrolled in such program for each month for which such individual is so enrolled.

`(2) AMOUNT OF PAYMENT- The amount of the payment under paragraph (1) shall be an amount equal to the special subsidy payment amount determined under section 1860D-22(a)(3) for a qualifying covered retiree for a coverage year enrolled with the sponsor of a qualified retiree prescription drug plan.

`(b) Additional Subsidy-

`(1) IN GENERAL- The Secretary shall provide for the payment to a State offering a State pharmaceutical assistance program described in section 1860D-23(b)(1) for each applicable low-income individual enrolled in the program for each month for which such individual is so enrolled.

`(2) AMOUNT OF PAYMENT-

`(A) IN GENERAL- The amount of the payment under paragraph (1) shall be the amount the Secretary estimates would have been made to a prescription drug plan or MA-PD plan under section 1860D-14 with respect to the applicable low-income individual if such individual was enrolled in such a plan.

`(B) MAXIMUM PAYMENTS- In no case may the amount of the payment determined under subparagraph (A) with respect to an applicable low-income individual exceed, as estimated by the Secretary, the average amount paid in a year under section 1860D-14 on behalf of a subsidy eligible individual (as defined in section 1860D-14(a)(3)(A)) with income that is the same as the income of the applicable low-income individual.

`(3) APPLICABLE LOW-INCOME INDIVIDUAL- For purposes of this subsection, the term `applicable low-income individual' means an individual who--

`(A) is eligible for, but not enrolled in, a prescription drug plan or MA-PD plan under this part, and who is enrolled in a State pharmaceutical assistance program described in section 1860D-23(b)(1); and

`(B) would be a subsidy eligible individual (as defined in section 1860D-14(a)(3)(A)) if the individual were enrolled in such a plan.

`(c) Payment Methods-

`(1) IN GENERAL- Payments under this section shall be based on such a method as the Secretary determines. The Secretary may establish a payment method by which interim payments of amounts under this section are made during a year based on the Secretary's best estimate of amounts that will be payable after obtaining all of the information.

`(2) SOURCE OF PAYMENTS- Payments under this section shall be made from the Medicare Prescription Drug Account.

`(d) Construction- Nothing in this section, section 1860D-23, or section 1860D-24 shall be construed as requiring a prescription drug plan or MA-PD plan to coordinate coverage provided under such plan with coverage provided under a State pharmaceutical assistance program described in section 1860D-23(b)(1) that is operated by a State which receives a payment under this section.'.

SEC. 4. FACILITATION OF COORDINATION.

Section 1860D-24(c)(1) of the Social Security Act (42 U.S.C. 1395w-134(c)(1)) is amended by striking `all methods of operation' and inserting `its own methods of operation, except that a PDP sponsor or MA organization may not require a State Pharmaceutical Assistance Program or an RX plan described in subsection (b) to apply such tools when coordinating benefits'.

SEC. 5. ALLOWING MEDICAID WRAP.

Section 1935 of the Social Security Act (42 U.S.C. 1396u-5) is amended by striking subsection (d).

SEC. 6. REPEAL OF COMPARATIVE COST ADJUSTMENT PROGRAM.

Subtitle E of title II of of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (Public Law 108-173) is repealed and any provisions of law amended by such subtitle are restored as if such subtitle had not been enacted.

SEC. 7. PROVISION OF WRAP-AROUND PRESCRIPTION DRUG COVERAGE THROUGH MEDIGAP.

Section 1882(v) of the Social Security Act (42 U.S.C. 1395ss(v)) is amended as follows:

(1) In paragraph (1)(A), by inserting `, other than such a policy that provides wrap-around prescription drug coverage included within a range of such coverage approved under subparagraph (D)(ii),' after `paragraph (6)(A))'.

(2) Add at the end of paragraph (1) the following new subparagraph:

`(D) WRAP-AROUND PRESCRIPTION DRUG COVERAGE-

`(i) IN GENERAL- Notwithstanding any other provision of this subsection, a medigap Rx policy that provides wrap-around prescription drug coverage included within a range of such coverage approved by the Secretary under clause (ii) may be offered to part D enrollees.

`(ii) DEVELOPMENT OF STANDARDS- The Secretary shall approve a range of wrap-around prescription drug coverage that may be offered under this subparagraph to part D enrollees.'.

SEC. 8. EFFECTIVE DATE.

The amendments made by this Act, and the repeal made by section 6, shall take effect as if included in the enactment of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (Public Law 108-173).

END