108th CONGRESS
1st Session
H. R. 38
To amend title XVIII of the Social Security Act to provide for a
voluntary outpatient prescription drug benefit program.
IN THE HOUSE OF REPRESENTATIVES
January 7, 2003
Mrs. CAPITO introduced the following bill; which was referred to the Committee
on the 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 for a
voluntary outpatient prescription drug benefit 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 `More Savings, More Choice Prescription
Drug Act of 2003'.
(b) TABLE OF CONTENTS- The table of contents of this Act is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Establishment of a medicare prescription drug benefit.
`Part D--Voluntary Prescription Drug Benefit Program
`Sec. 1860A. Benefits; eligibility; enrollment; and coverage period.
`Sec. 1860B. Requirements for qualified prescription drug coverage.
`Sec. 1860C. Beneficiary protections for qualified prescription drug coverage.
`Sec. 1860D. Requirements for prescription drug plan (PDP) sponsors; contracts;
establishment of standards.
`Sec. 1860E. Process for beneficiaries to select qualified prescription
drug coverage.
`Sec. 1860G. Premium and cost-sharing subsidies for low-income individuals.
`Sec. 1860H. Subsidies for all medicare beneficiaries through reinsurance
for qualified prescription drug coverage.
`Sec. 1860I. Medicare Prescription Drug Account in federal Supplementary
Medical Insurance Trust Fund.
`Sec. 1860J. Definitions; treatment of references to provisions in part
C.
`Sec. 1860K. Medicare Prescription Drug Advisory Committee.
Sec. 3. Offering of qualified prescription drug coverage under the Medicare+Choice
program.
Sec. 4. Medicaid amendments.
Sec. 5. Medigap transition provisions.
SEC. 2. ESTABLISHMENT OF A MEDICARE PRESCRIPTION DRUG BENEFIT.
(a) IN GENERAL- Title XVIII of the Social Security Act is amended--
(1) by redesignating part D as part E; and
(2) by inserting after part C the following new part:
`Part D--Voluntary Prescription Drug Benefit Program
`SEC. 1860A. BENEFITS; ELIGIBILITY; ENROLLMENT; AND COVERAGE PERIOD.
`(a) PROVISION OF QUALIFIED PRESCRIPTION DRUG COVERAGE THROUGH ENROLLMENT
IN PLANS- Subject to the succeeding provisions of this part, each individual
who is entitled to benefits under part A or is enrolled under part B is entitled
to obtain qualified prescription drug coverage (described in section 1860B(a))
as follows:
`(1) MEDICARE+CHOICE PLAN- If the individual is eligible to enroll in a
Medicare+Choice plan that provides qualified prescription drug coverage
under section 1851(j), the individual may enroll in the plan and obtain
coverage through such plan.
`(2) PRESCRIPTION DRUG PLAN- If the individual is not enrolled in a Medicare+Choice
plan that provides qualified prescription drug coverage, the individual
may enroll under this part in a prescription drug plan (as defined in section
1860C(a)).
Such individuals shall have a choice of such plans under section 1860E(d).
`(b) GENERAL ELECTION PROCEDURES-
`(1) IN GENERAL- An individual may elect to enroll in a prescription drug
plan under this part, or elect the option of qualified prescription drug
coverage under a Medicare+Choice plan under part C, and change such election
only in such manner and form as may be prescribed by regulations of the
Secretary and only during an election period prescribed in or under this
subsection.
`(A) IN GENERAL- Except as provided in this paragraph, the election periods
under this subsection shall be the same as the coverage election periods
under the Medicare+Choice program under section 1851(e), including--
`(i) annual coordinated election periods; and
`(ii) special election periods.
In applying the last sentence of section 1851(e)(4) (relating to discontinuance
of a Medicare+Choice election during the first year of eligibility) under
this subparagraph, in the case of an election described in such section
in which the individual had elected or is provided qualified prescription
drug coverage at the time of such first enrollment, the individual shall
be permitted to enroll in a prescription drug plan under this part at
the time of the election of coverage under the original fee-for-service
plan.
`(B) INITIAL ELECTION PERIODS-
`(i) INDIVIDUALS CURRENTLY COVERED- In the case of an individual who
is entitled to benefits under part A or enrolled under part B as of
November 1, 2005, there shall be an initial election period of 6 months
beginning on that date.
`(ii) INDIVIDUAL COVERED IN FUTURE- In the case of an individual who
is first entitled to benefits under part A or enrolled under part B
after November 1, 2005, there shall be an initial election period which
is the same as the initial enrollment period under section 1837(d).
`(C) ADDITIONAL SPECIAL ELECTION PERIODS- The Secretary shall establish
special election periods--
`(i) in cases of individuals who have and involuntarily lose prescription
drug coverage described in subsection (c)(2)(C);
`(ii) in cases described in section 1837(h) (relating to errors in enrollment),
in the same manner as such section applies to part B; and
`(iii) in the case of an individual who meets such exceptional conditions
(including conditions recognized under section 1851(d)(4)(D)) as the
Secretary may provide.
`(c) GUARANTEED ISSUE; COMMUNITY RATING; AND NONDISCRIMINATION-
`(A) IN GENERAL- An eligible individual who is eligible to elect qualified
prescription drug coverage under a prescription drug plan or Medicare+Choice
plan at a time during which elections are accepted under this part with
respect to the plan 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 PDP sponsors under this subsection.
`(2) COMMUNITY-RATED PREMIUM-
`(A) IN GENERAL- In the case of an individual who maintains (as determined
under subparagraph (C)) continuous prescription drug coverage since first
qualifying to elect prescription drug coverage under this part, a PDP
sponsor or Medicare+Choice organization offering a prescription drug plan
or Medicare+Choice plan that provides qualified prescription drug coverage
and in which the individual is enrolled may not deny, limit, or condition
the coverage or provision of covered prescription drug benefits or increase
the premium under the plan based on any health status-related factor described
in section 2702(a)(1) of the Public Health Service Act or any other factor.
`(B) LATE ENROLLMENT PENALTY- In the case of an individual who does not
maintain such continuous prescription drug coverage, a PDP sponsor or
Medicare+Choice organization may (notwithstanding any provision in this
title) increase the premium otherwise applicable or impose a pre-existing
condition exclusion with respect to qualified prescription drug coverage
in a manner that reflects additional actuarial risk involved. Such a risk
shall be established through an appropriate actuarial opinion of the type
described in subparagraphs (A) through (C) of section 2103(c)(4).
`(C) CONTINUOUS PRESCRIPTION DRUG COVERAGE- An individual is considered
for purposes of this part to be maintaining continuous prescription drug
coverage on and after a date if the individual establishes that there
is no period of 63 days or longer on and after such date (beginning not
earlier than January 1, 2006) during all of which the individual did not
have any of the following prescription drug coverage:
`(i) COVERAGE UNDER PRESCRIPTION DRUG PLAN OR MEDICARE+CHOICE PLAN-
Qualified prescription drug coverage under a prescription drug plan
or under a Medicare+Choice plan.
`(ii) MEDICAID PRESCRIPTION DRUG COVERAGE- Prescription drug coverage
under a medicaid plan under title XIX, including through the Program
of All-inclusive Care for the Elderly (PACE) under section 1934, through
a social health maintenance organization (referred to in section 4104(c)
of the Balanced Budget Act of 1997), or through a Medicare+Choice project
that demonstrates the application of capitation payment rates for frail
elderly medicare beneficiaries through the use of a interdisciplinary
team and through the provision of primary care services to such beneficiaries
by means of such a team at the nursing facility involved.
`(iii) PRESCRIPTION DRUG COVERAGE UNDER GROUP HEALTH PLAN- Any outpatient
prescription drug coverage under a group health plan, including a health
benefits plan under the Federal Employees Health Benefit Plan under
chapter 89 of title 5, United States Code, and a qualified retiree prescription
drug plan as defined in section 1860H(e)(1).
`(iv) PRESCRIPTION DRUG COVERAGE UNDER CERTAIN MEDIGAP POLICIES- Coverage
under a medicare supplemental policy under section 1882 that provides
benefits for prescription drugs (whether or not such coverage conforms
to the standards for packages of benefits under section 1882(p)(1)),
but only if the policy was in effect on January 1, 2006, and only until
the date such coverage is terminated.
`(v) STATE PHARMACEUTICAL ASSISTANCE PROGRAM- Coverage of prescription
drugs under a State pharmaceutical assistance program.
`(vi) VETERANS' COVERAGE OF PRESCRIPTION DRUGS- Coverage of prescription
drugs for veterans under chapter 17 of title 38, United States Code.
`(D) CERTIFICATION- For purposes of carrying out this paragraph, the certifications
of the type described in sections 2701(e) of the Public Health Service
Act and in section 9801(e) of the Internal Revenue Code shall also include
a statement for the period of coverage of whether the individual involved
had prescription drug coverage described in subparagraph (C).
`(E) CONSTRUCTION- Nothing in this section shall be construed as preventing
the disenrollment of an individual from a prescription drug plan or a
Medicare+Choice plan based on the termination of an election described
in section 1851(g)(3), including for non-payment of premiums or for other
reasons specified in subsection (d)(3), which takes into account a grace
period described in section 1851(g)(3)(B)(i).
`(3) NONDISCRIMINATION- A PDP sponsor offering a prescription drug plan
shall not establish a service area in a manner that would discriminate based
on health or economic status of potential enrollees.
`(d) EFFECTIVE DATE OF ELECTIONS-
`(1) IN GENERAL- Except as provided in this section, the Secretary shall
provide that elections under subsection (b) take effect at the same time
as the Secretary provides that similar elections under section 1851(e) take
effect under section 1851(f).
`(2) NO ELECTION EFFECTIVE BEFORE 2006- In no case shall any election take
effect before January 1, 2006.
`(3) TERMINATION- The Secretary shall provide for the termination of an
election in the case of--
`(A) termination of coverage under part B (in the case of an individual
not entitled to benefits under part A); and
`(B) termination of elections described in section 1851(g)(3) (including
failure to pay required premiums).
`SEC. 1860B. REQUIREMENTS FOR QUALIFIED PRESCRIPTION DRUG COVERAGE.
`(1) IN GENERAL- For purposes of this part and part C, the term `qualified
prescription drug coverage' means either of the following:
`(A) STANDARD COVERAGE WITH ACCESS TO NEGOTIATED PRICES- Standard coverage
(as defined in subsection (b)) and access to negotiated prices under subsection
(d).
`(B) ACTUARIALLY EQUIVALENT COVERAGE WITH ACCESS TO NEGOTIATED PRICES-
Coverage of covered outpatient drugs which meets the alternative coverage
requirements of subsection (c) and access to negotiated prices under subsection
(d).
`(2) PERMITTING ADDITIONAL OUTPATIENT PRESCRIPTION DRUG COVERAGE-
`(A) IN GENERAL- Subject to subparagraph (B), nothing in this part shall
be construed as preventing qualified prescription drug coverage from including
coverage of covered outpatient drugs that exceeds the coverage required
under paragraph (1), but any such additional coverage shall be limited
to coverage of covered outpatient drugs.
`(B) DISAPPROVAL AUTHORITY- The Secretary shall review the offering of
qualified prescription drug coverage under this part or part C. If the
Secretary finds that, in the case of a qualified prescription drug coverage
under a prescription drug plan or a Medicare+Choice plan, that the organization
or sponsor offering the coverage is purposefully engaged in activities
intended to result in favorable selection of those eligible medicare beneficiaries
obtaining coverage through the plan, the Secretary may terminate the contract
with the sponsor or organization under this part or part C.
`(3) APPLICATION OF SECONDARY PAYOR PROVISIONS- The provisions of section
1852(a)(4) shall apply under this part in the same manner as they apply
under part C.
`(b) STANDARD COVERAGE- For purposes of this part, the `standard coverage'
is coverage of covered outpatient drugs (as defined in subsection (f)) that
meets the following requirements:
`(1) DEDUCTIBLE- The coverage has an annual deductible that is equal to
$100.
`(2) LIMITS ON COST-SHARING- The coverage has cost-sharing (for incurred
costs above the annual deductible specified in paragraph (1))--
`(A) of 25 percent to the extent that the incurred expenses (including
incurred out-of-pocket expenses) for covered outpatient drugs under this
part in the year do not exceed $2,000;
`(B) of 50 percent to the extent such incurred expenses exceed $2,000
but the true out-of-pocket expenses do not exceed $5,000; and
`(C) of 0 percent to the extent such true out-of-pocket expenses exceed
$5,000.
`(3) OUT-OF-POCKET EXPENSES DEFINED- For purposes of paragraph (2), the
term `out-of-pocket expenses' means expenses incurred as a result of the
application of the deductible under paragraph (1) and the coinsurance required
under this subsection.
`(4) TRUE OUT-OF-POCKET EXPENSES DEFINED- For purposes of paragraph (2),
the term `true out-of-pocket expenses' means out-of-pocket expenses insofar
as there is no third party reimbursement made.
`(5) INFLATION ADJUSTMENT-
`(A) IN GENERAL- In the case of any calendar year beginning after 2006,
each of the dollar amounts in paragraphs (1) and (2) shall be increased
by an amount equal to--
`(i) such dollar amount, multiplied by
`(ii) 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 2006.
`(B) ROUNDING- Any amount determined under paragraph (1) or (2) that is
not a multiple of $5 or $25, respectively, shall be rounded to the nearest
multiple of $5 or $25, respectively.
`(c) ALTERNATIVE COVERAGE REQUIREMENTS- A prescription drug plan or Medicare+Choice
plan may provide a different prescription drug benefit design from the standard
coverage described in subsection (b) so long as the following requirements
are met:
`(1) ASSURING AT LEAST ACTUARIALLY EQUIVALENT COVERAGE-
`(A) ASSURING EQUIVALENT VALUE OF TOTAL COVERAGE- The actuarial value
of the total coverage (as determined under subsection (e)) is at least
equal to the actuarial value (as so determined) of standard coverage.
`(B) ASSURING EQUIVALENT UNSUBSIDIZED VALUE OF COVERAGE- The unsubsidized
value of the coverage is at least equal to the unsubsidized value of standard
coverage. For purposes of this subparagraph, the unsubsidized value of
coverage is the amount by which the actuarial value of the coverage (as
determined under subsection (e)) exceeds the actuarial value of the reinsurance
subsidy payments under section 1860H with respect to such coverage.
`(C) ASSURING STANDARD PAYMENT FOR COSTS IN INITIAL BENEFIT RANGE- The
coverage is designed, based upon an actuarially representative pattern
of utilization (as determined under subsection (e)), to provide for the
payment, with respect to costs incurred in the range described in subsection
(b)(2)(A), of an amount equal to at least 75 percent of the applicable
dollar amount under such subsection (as adjusted under subsection (b)(5)).
`(2) LIMITATION ON TRUE OUT-OF-POCKET EXPENDITURES BY BENEFICIARIES- The
coverage provides the limitation on true out-of-pocket expenditures by beneficiaries
described in subsection (b)(2)(C).
`(d) ACCESS TO NEGOTIATED PRICES- Under qualified prescription drug coverage
offered by a PDP sponsor or a Medicare+Choice organization, the sponsor or
organization shall provide beneficiaries with access to negotiated prices
(including applicable discounts) used for payment for covered outpatient drugs,
regardless of the fact that no benefits may be payable under the coverage
with respect to such drugs because of the application of cost-sharing or an
initial coverage limit (described in subsection (b)(3)). Insofar as a State
elects to provide medical assistance under title XIX for a drug based on the
prices negotiated by a prescription drug plan under this part, the requirements
of section 1927 shall not apply to such drugs.
`(e) ACTUARIAL VALUATION; DETERMINATION OF ANNUAL PERCENTAGE INCREASES-
`(1) PROCESSES- For purposes of this section, the Secretary shall establish
processes and methods--
`(A) for determining the actuarial valuation of prescription drug coverage,
including--
`(i) an actuarial valuation of standard coverage and of the reinsurance
subsidy payments under section 1860H;
`(ii) the use of generally accepted actuarial principles and methodologies;
and
`(iii) applying the same methodology for determinations of alternative
coverage under subsection (c) as is used with respect to determinations
of standard coverage under subsection (b); and
`(B) for determining annual percentage increases described in subsection
(b)(5).
`(2) USE OF OUTSIDE ACTUARIES- Under the processes under paragraph (1)(A),
PDP sponsors and Medicare+Choice organizations may use actuarial opinions
certified by independent, qualified actuaries to establish actuarial values.
`(f) COVERED OUTPATIENT DRUGS DEFINED-
`(1) IN GENERAL- Except as provided in this subsection, for purposes of
this part, the term `covered outpatient drug' means--
`(A) a drug that may be dispensed only upon a prescription and that is
described in subparagraph (A)(i) or (A)(ii) of section 1927(k)(2); or
`(B) a biological product described in clauses (i) through (iii) of subparagraph
(B) of such section or insulin described in subparagraph (C) of such section,
and such term includes any use of a covered outpatient drug for a medically
accepted indication (as defined in section 1927(k)(6)).
`(A) IN GENERAL- Such term 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 subparagraph (E) thereof
(relating to smoking cessation agents) and except to the extent otherwise
specifically provided by the Secretary with respect to a drug in any of
such classes.
`(B) AVOIDANCE OF DUPLICATE COVERAGE- A drug prescribed for an individual
that would otherwise be a covered outpatient drug under this part shall
not be so considered if payment for such drug is available under part
A or B (but shall be so considered if such payment is not available because
benefits under part A or B have been exhausted), without regard to whether
the individual is entitled to benefits under part A or enrolled under part
B.
`(3) APPLICATION OF FORMULARY RESTRICTIONS- A drug prescribed for an individual
that would otherwise be a covered outpatient drug under this part shall
not be so considered under a plan if the plan excludes the drug under a
formulary that meets the requirements of section 1860C(f)(2) (including
providing an appeal process).
`(4) APPLICATION OF GENERAL EXCLUSION PROVISIONS- A prescription drug plan
or Medicare+Choice plan may exclude from qualified prescription drug coverage
any covered outpatient drug--
`(A) for which payment would not be made if section 1862(a) applied to
part D; or
`(B) which are not prescribed in accordance with the plan or this part.
Such exclusions are determinations subject to reconsideration and appeal
pursuant to section 1860C(f).
`SEC. 1860C. BENEFICIARY PROTECTIONS FOR QUALIFIED PRESCRIPTION DRUG COVERAGE.
`(a) GUARANTEED ISSUE COMMUNITY-RELATED PREMIUMS AND NONDISCRIMINATION- For
provisions requiring guaranteed issue, community-rated premiums, and nondiscrimination,
see sections 1860A(c)(1), 1860A(c)(2), and 1860F(b).
`(b) DISSEMINATION OF INFORMATION-
`(1) GENERAL INFORMATION- A PDP sponsor shall disclose, in a clear, accurate,
and standardized form to each enrollee with a prescription drug plan offered
by the sponsor under this part at the time of enrollment and at least annually
thereafter, the information described in section 1852(c)(1) relating to
such plan. Such information includes the following:
`(A) Access to covered outpatient drugs, including access through pharmacy
networks.
`(B) How any formulary used by the sponsor functions.
`(C) Co-payments and deductible requirements.
`(D) Grievance and appeals procedures.
`(2) DISCLOSURE UPON REQUEST OF GENERAL COVERAGE, UTILIZATION, AND GRIEVANCE
INFORMATION- Upon request of an individual eligible to enroll under a prescription
drug plan, the PDP sponsor shall provide the information described in section
1852(c)(2) (other than subparagraph (D)) to such individual.
`(3) RESPONSE TO BENEFICIARY QUESTIONS- Each PDP sponsor offering a prescription
drug plan shall have a mechanism for providing specific information to enrollees
upon request. The sponsor shall make available, through an Internet website
and in writing upon request, information on specific changes in its formulary.
`(4) CLAIMS INFORMATION- Each PDP sponsor offering a prescription drug plan
must furnish to enrolled individuals in a form easily understandable to
such individuals an explanation of benefits (in accordance with section
1806(a) or in a comparable manner) and a notice of the benefits in relation
to initial coverage limit and annual out-of-pocket limit for the current
year, whenever prescription drug benefits are provided under this part (except
that such notice need not be provided more often than monthly).
`(c) ACCESS TO COVERED BENEFITS-
`(1) ASSURING PHARMACY ACCESS- The PDP sponsor of the prescription drug
plan shall secure the participation of sufficient numbers of pharmacies
(which may include mail order pharmacies) to ensure convenient access (including
adequate emergency access) for enrolled beneficiaries, in accordance with
standards established under section 1860D(e) that ensure such convenient
access. Nothing in this paragraph shall be construed as requiring the participation
of (or permitting the exclusion of) all pharmacies in any area under a plan.
`(2) PREFERRED PHARMACY NETWORKS-
`(A) IN GENERAL- If a PDP sponsor uses a preferred pharmacy network to
deliver benefits under this part, such network shall meet minimum access
standards established by the Secretary.
`(B) STANDARDS- In establishing standards under subparagraph (A), the
Secretary shall take into account reasonable distances to pharmacy services
in both urban and rural areas.
`(C) ASSURING PHARMACY ACCESS- Such standards shall require that each
PDP sponsor include in any preferred pharmacy network any pharmacy that
agrees to the terms and conditions established by the sponsor for such
participation in such network.
`(3) ACCESS TO NEGOTIATED PRICES FOR PRESCRIPTION DRUGS- The PDP sponsor
of a prescription drug plan shall issue such a card that may be used by
an enrolled beneficiary to assure access to negotiated prices under section
1860B(d) for the purchase of prescription drugs for which coverage is not
otherwise provided under the prescription drug plan.
`(4) REQUIREMENTS ON DEVELOPMENT AND APPLICATION OF FORMULARIES- Insofar
as a PDP sponsor of a prescription drug plan uses a formulary, the following
requirements must be met:
`(A) FORMULARY COMMITTEE- The sponsor must establish a pharmaceutical
and therapeutic committee that develops the formulary. Such committee
shall include at least one physician and at least one 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 PDP sponsor 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- The PDP sponsor 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 that is designed to assure that covered outpatient drugs
under the prescription drug plan are appropriately used to achieve therapeutic
goals and reduce the risk of adverse events, including adverse drug interactions.
`(B) ELEMENTS- Such program may 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- The PDP sponsor of a prescription
drug program shall take into account, in establishing fees for pharmacists
and others providing services under the medication therapy management
program, 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 plans 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) Paragraph (1) (including quality assurance), including medication
therapy management program under paragraph (2).
`(B) Subsection (c)(1) (relating to access to covered benefits).
`(C) Subsection (g) (relating to confidentiality and accuracy of enrollee
records).
`(4) PUBLIC DISCLOSURE OF PHARMACEUTICAL PRICES FOR GENERIC EQUIVALENT DRUGS-
Each PDP sponsor shall provide that each pharmacy or other dispenser that
arranges for the dispensing of a covered outpatient drug shall inform the
beneficiary at the time of purchase of the drug of any differential between
the price of the prescribed drug to the enrollee and the price of the lowest
cost generic drug that is therapeutically and pharmaceutically equivalent
and bioequivalent.
`(e) GRIEVANCE MECHANISM- Each PDP sponsor shall provide meaningful procedures
for hearing and resolving grievances between the organization (including any
entity or individual through which the sponsor provides covered benefits)
and enrollees with prescription drug plans of the sponsor under this part
in accordance with section 1852(f).
`(f) COVERAGE DETERMINATIONS, RECONSIDERATIONS, AND APPEALS-
`(1) IN GENERAL- A PDP sponsor shall meet the requirements of section 1852(g)
with respect to covered benefits under the prescription drug plan 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 in a prescription drug plan
offered by a PDP sponsor may appeal to obtain coverage for a covered outpatient
drug that is not on the formulary of the sponsor (established under subsection
(c)) if the prescribing physician determines that the therapeutically similar
drug that is on the formulary is not as effective for the enrollee or has
significant adverse effects for the enrollee.
`(g) CONFIDENTIALITY AND ACCURACY OF ENROLLEE RECORDS- A PDP sponsor 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.
`SEC. 1860D. REQUIREMENTS FOR PRESCRIPTION DRUG PLAN (PDP) SPONSORS; CONTRACTS;
ESTABLISHMENT OF STANDARDS.
`(a) GENERAL REQUIREMENTS- Each PDP sponsor of a prescription drug plan shall
meet the following requirements:
`(1) LICENSURE- Subject to subsection (c), the sponsor is organized and
licensed under State law as a risk-bearing entity eligible to offer health
insurance or health benefits coverage in each State in which it offers a
prescription drug plan.
`(2) ASSUMPTION OF FULL FINANCIAL RISK-
`(A) IN GENERAL- Subject to subparagraph (B) and section 1860E(d)(2),
the entity assumes full financial risk on a prospective basis for qualified
prescription drug coverage that it offers under a prescription drug plan
and that is not covered under reinsurance under section 1860H.
`(B) REINSURANCE PERMITTED- The entity may obtain insurance or make other
arrangements for the cost of coverage provided to any enrolled member
under this part.
`(3) SOLVENCY FOR UNLICENSED SPONSORS- In the case of a sponsor that is
not described in paragraph (1), the sponsor shall meet solvency standards
established by the Secretary under subsection (d).
`(b) CONTRACT REQUIREMENTS-
`(1) IN GENERAL- The Secretary shall not permit the election under section
1860A of a prescription drug plan offered by a PDP sponsor under this part,
and the sponsor shall not be eligible for payments under section 1860G or
1860H, unless the Secretary has entered into a contract under this subsection
with the sponsor with respect to the offering of such plan. Such a contract
with a sponsor may cover more than one prescription drug plan. Such contract
shall provide that the sponsor agrees to comply with the applicable requirements
and standards of this part and the terms and conditions of payment as provided
for in this part.
`(2) NEGOTIATION REGARDING TERMS AND CONDITIONS- The Secretary shall have
the same authority to negotiate the terms and conditions of prescription
drug plans under this part as the Director of the Office of Personnel Management
has with respect to health benefits plans under chapter 89 of title 5, United
States Code. In negotiating the terms and conditions regarding premiums
for which information is submitted under section 1860F(a)(2), the Secretary
shall take into account the reinsurance subsidy payments under section 1860H
and the adjusted community rate (as defined in section 1854(f)(3)) for the
benefits covered.
`(3) INCORPORATION OF CERTAIN MEDICARE+CHOICE CONTRACT REQUIREMENTS- The
following provisions of section 1857 shall apply, subject to subsection
(c)(5), to contracts under this section in the same manner as they apply
to contracts under section 1857(a):
`(A) MINIMUM ENROLLMENT- Paragraphs (1) and (3) of section 1857(b).
`(B) CONTRACT PERIOD AND EFFECTIVENESS- Paragraphs (1) through (3) and
(5) of section 1857(c).
`(C) PROTECTIONS AGAINST FRAUD AND BENEFICIARY PROTECTIONS- Section 1857(d).
`(D) ADDITIONAL CONTRACT TERMS- Section 1857(e); except that in applying
section 1857(e)(2) under this part--
`(i) such section shall be applied separately to costs relating to this
part (from costs under part C);
`(ii) in no case shall the amount of the fee established under this
subparagraph for a plan exceed 20 percent of the maximum amount of the
fee that may be established under subparagraph (B) of such section;
and
`(iii) no fees shall be applied under this subparagraph with respect
to Medicare+Choice plans.
`(E) INTERMEDIATE SANCTIONS- Section 1857(g).
`(F) PROCEDURES FOR TERMINATION- Section 1857(h).
`(4) RULES OF APPLICATION FOR INTERMEDIATE SANCTIONS- In applying paragraph
(3)(E)--
`(A) the reference in section 1857(g)(1)(B) to section 1854 is deemed
a reference to this part; and
`(B) the reference in section 1857(g)(1)(F) to section 1852(k)(2)(A)(ii)
shall not be applied.
`(c) WAIVER OF CERTAIN REQUIREMENTS TO EXPAND CHOICE-
`(1) IN GENERAL- In the case of an entity that seeks to offer a prescription
drug plan in a State, the Secretary shall waive the requirement of subsection
(a)(1) that the entity be licensed in that State if the Secretary determines,
based on the application and other evidence presented to the Secretary,
that any of the grounds for approval of the application described in paragraph
(2) has been met.
`(2) GROUNDS FOR APPROVAL- The grounds for approval under this paragraph
are the grounds for approval described in subparagraph (B), (C), and (D)
of section 1855(a)(2), and also include the application by a State of any
grounds other than those required under Federal law.
`(3) APPLICATION OF WAIVER PROCEDURES- With respect to an application for
a waiver (or a waiver granted) under this subsection, the provisions of
subparagraphs (E), (F), and (G) of section 1855(a)(2) shall apply.
`(4) LICENSURE DOES NOT SUBSTITUTE FOR OR CONSTITUTE CERTIFICATION- The
fact that an entity is licensed in accordance with subsection (a)(1) does
not deem the entity to meet other requirements imposed under this part for
a PDP sponsor.
`(5) REFERENCES TO CERTAIN PROVISIONS- For purposes of this subsection,
in applying provisions of section 1855(a)(2) under this subsection to prescription
drug plans and PDP sponsors--
`(A) any reference to a waiver application under section 1855 shall be
treated as a reference to a waiver application under paragraph (1); and
`(B) any reference to solvency standards shall be treated as a reference
to solvency standards established under subsection (d).
`(d) SOLVENCY STANDARDS FOR NON-LICENSED SPONSORS-
`(1) ESTABLISHMENT- The Secretary shall establish, by not later than October
1, 2004, financial solvency and capital adequacy standards that an entity
that does not meet the requirements of subsection (a)(1) must meet to qualify
as a PDP sponsor under this part.
`(2) COMPLIANCE WITH STANDARDS- Each PDP sponsor that is not licensed by
a State under subsection (a)(1) and for which a waiver application has been
approved under subsection (c) shall meet solvency and capital adequacy standards
established under paragraph (1). The Secretary shall establish certification
procedures for such PDP sponsors with respect to such solvency standards in
the manner described in section 1855(c)(2).
`(e) OTHER STANDARDS- The Secretary shall establish by regulation other standards
(not described in subsection (d)) for PDP sponsors and plans consistent with,
and to carry out, this part. The Secretary shall publish such regulations
by October 1, 2004. In order to carry out this requirement in a timely manner,
the Secretary may promulgate regulations that take effect on an interim basis,
after notice and pending opportunity for public comment.
`(f) RELATION TO STATE LAWS-
`(1) IN GENERAL- The standards established under this section shall supersede
any State law or regulation (including standards described in paragraph
(2)) with respect to prescription drug plans which are offered by PDP sponsors
under this part to the extent such law or regulation is inconsistent with
such standards.
`(2) STANDARDS SPECIFICALLY SUPERSEDED- State standards relating to the
following are superseded under this subsection:
`(A) Benefit requirements.
`(B) Requirements relating to inclusion or treatment of providers.
`(C) Coverage determinations (including related appeals and grievance
processes).
`(D) Establishment and regulation of premiums.
`(3) PROHIBITION OF STATE IMPOSITION OF PREMIUM TAXES- No State may impose
a premium tax or similar tax with respect to premiums paid to PDP sponsors
for prescription drug plans under this part, or with respect to any payments
made to such a sponsor by the Secretary under this part.
`SEC. 1860E. PROCESS FOR BENEFICIARIES TO SELECT QUALIFIED PRESCRIPTION
DRUG COVERAGE.
`(a) IN GENERAL- The Secretary shall establish, based upon and consistent
with the procedures used under part C (including section 1851), a process
for the selection of the prescription drug plan or Medicare+Choice plan which
offer qualified prescription drug coverage through which eligible individuals
elect qualified prescription drug coverage under this part.
`(b) ELEMENTS- Such process shall include the following:
`(1) Annual, coordinated election periods, in which such individuals can
change the qualifying plans through which they obtain coverage, in accordance
with section 1860A(b)(2).
`(2) Active dissemination of information to promote an informed selection
among qualifying plans based upon price, quality, and other features, in
the manner described in (and in coordination with) section 1851(d), including
the provision of annual comparative information, maintenance of a toll-free
hotline, and the use of non-Federal entities.
`(3) Coordination of elections through filing with a Medicare+Choice organization
or a PDP sponsor, in the manner described in (and in coordination with)
section 1851(c)(2).
`(c) MEDICARE+CHOICE ENROLLEE IN PLAN OFFERING PRESCRIPTION DRUG COVERAGE
MAY ONLY OBTAIN BENEFITS THROUGH THE PLAN- An individual who is enrolled under
a Medicare+Choice plan that offers qualified prescription drug coverage may
only elect to receive qualified prescription drug coverage under this part
through such plan.
`(d) ASSURING ACCESS TO A CHOICE OF QUALIFIED PRESCRIPTION DRUG COVERAGE-
`(1) CHOICE OF AT LEAST TWO PLANS IN EACH AREA-
`(A) IN GENERAL- The Secretary shall assure that each individual who is
entitled to benefits under part A or is enrolled under part B and who
is residing in an area has available, consistent with subparagraph (B),
a choice of enrollment in at least two qualifying plans (as defined in
paragraph (5)) in the area in which the individual resides, at least one
of which is a prescription drug plan.
`(B) REQUIREMENT FOR DIFFERENT PLAN SPONSORS- The requirement in subparagraph
(A) is not satisfied with respect to an area if only one PDP sponsor or
Medicare+Choice organization offers all the qualifying plans in the area.
`(2) GUARANTEEING ACCESS TO COVERAGE- In order to assure access under paragraph
(1) and consistent with paragraph (3), the Secretary may provide financial
incentives (including partial underwriting of risk) for a PDP sponsor to
expand the service area under an existing prescription drug plan to adjoining
or additional areas or to establish such a plan (including offering such
a plan on a regional or nationwide basis), but only so long as (and to the
extent) necessary to assure the access guaranteed under paragraph (1).
`(3) LIMITATION ON AUTHORITY- In exercising authority under this subsection,
the Secretary--
`(A) shall not provide for the full underwriting of financial risk for
any PDP sponsor;
`(B) shall not provide for any underwriting of financial risk for a public
PDP sponsor with respect to the offering of a nationwide prescription
drug plan; and
`(C) shall seek to maximize the assumption of financial risk by PDP sponsors
or Medicare+Choice organizations.
`(4) REPORTS- The Secretary shall, in each annual report to Congress under
section 1807(f), include information on the exercise of authority under
this subsection. The Secretary also shall include such recommendations as
may be appropriate to minimize the exercise of such authority, including
minimizing the assumption of financial risk.
`(5) QUALIFYING PLAN DEFINED- For purposes of this subsection, the term
`qualifying plan' means a prescription drug plan or a Medicare+Choice plan
that includes qualified prescription drug coverage.
`SEC. 1860F. PREMIUMS.
`(a) SUBMISSION OF PREMIUMS AND RELATED INFORMATION-
`(1) IN GENERAL- Each PDP sponsor shall submit to the Secretary information
of the type described in paragraph (2) in the same manner as information
is submitted by a Medicare+Choice organization under section 1854(a)(1).
`(2) TYPE OF INFORMATION- The information described in this paragraph is
the following:
`(A) Information on the qualified prescription drug coverage to be provided.
`(B) Information on the actuarial value of the coverage.
`(C) Information on the monthly premium to be charged for the coverage,
including an actuarial certification of--
`(i) the actuarial basis for such premium;
`(ii) the portion of such premium attributable to benefits in excess
of standard coverage; and
`(iii) the reduction in such premium resulting from the reinsurance
subsidy payments provided under section 1860H.
`(D) Such other information as the Secretary may require to carry out
this part.
`(3) REVIEW- The Secretary shall review the information filed under paragraph
(2) for the purpose of conducting negotiations under section 1860D(b)(2).
`(4) LIMITATIONS ON PREMIUMS-
`(A) $35 MONTHLY PREMIUM FOR 2006- In no case may the monthly premium
of a PDP plan for months in 2006 exceed $35.
`(B) MONTHLY PREMIUM LIMITATION FOR SUBSEQUENT YEARS- In no case may the
monthly premium of a PDP plan for months in a year after 2006 exceed the
dollar limitation specified in this paragraph for the preceding year adjusted
by the annual percentage change in the increase in the consumer price
index for all urban consumers (U.S. city average) as estimated by the
Secretary for the 12-month period ending with the midpoint of previous
year. If any dollar amount after being adjusted under this subparagraph
is not a multiple of $1, such dollar amount shall be rounded to the nearest
multiple of $1.
`(b) UNIFORM PREMIUM- The premium for a prescription drug plan charged under
this section may not vary among individuals enrolled in the plan in the same
service area, except as is permitted under section 1860A(c)(2)(B) (relating
to late enrollment penalties).
`(c) TERMS AND CONDITIONS FOR IMPOSING PREMIUMS- The provisions of section
1854(d) shall apply under this part in the same manner as they apply under
part C, and, for this purpose, the reference in such section to section 1851(g)(3)(B)(i)
is deemed a reference to section 1860A(d)(3)(B) (relating to failure to pay
premiums required under this part).
`(d) Acceptance of Reference Premium as Full Premium if No Standard (or Equivalent)
Coverage in an Area-
`(1) IN GENERAL- If there is no standard prescription drug coverage (as
defined in paragraph (2)) offered in an area, in the case of an individual
who is eligible for a premium subsidy under section 1860G and resides in
the area, the PDP sponsor of any prescription drug plan offered in the area
(and any Medicare+Choice organization that offers qualified prescription
drug coverage in the area) shall accept the reference premium under section
1860G(b)(2) as payment in full for the premium charge for qualified prescription
drug coverage.
`(2) STANDARD PRESCRIPTION DRUG COVERAGE DEFINED- For purposes of this subsection,
the term `standard prescription drug coverage' means qualified prescription
drug coverage that is standard coverage or that has an actuarial value equivalent
to the actuarial value for standard coverage.
`SEC. 1860G. PREMIUM AND COST-SHARING SUBSIDIES FOR LOW-INCOME INDIVIDUALS.
`(1) FULL PREMIUM SUBSIDY AND REDUCTION OF COST-SHARING FOR INDIVIDUALS
WITH INCOME BELOW 135 PERCENT OF FEDERAL POVERTY LEVEL- In the case of a
subsidy eligible individual (as defined in paragraph (4)) who is determined
to have income that does not exceed 150 percent of the Federal poverty level,
the individual is entitled under this section--
`(A) to a premium subsidy equal to 100 percent of the amount described
in subsection (b)(1); and
`(B) subject to subsection (c), to the substitution for the beneficiary
cost-sharing described in section 1860B(b)(2)) of amounts that are nominal.
`(2) PREMIUM SUBSIDY ONLY FOR INDIVIDUALS WITH INCOME ABOVE 150, BUT BELOW
175 PERCENT, OF FEDERAL POVERTY LEVEL- In the case of a subsidy eligible
individual who is determined to have income that exceeds 150 percent, but
does not exceed 175 percent, of the Federal poverty level, the individual
is entitled under this section to a premium subsidy equal to 100 percent
of the amount described in subsection (b)(1).
`(3) SLIDING SCALE PREMIUM SUBSIDY FOR INDIVIDUALS WITH INCOME ABOVE 175,
BUT BELOW 200 PERCENT, OF FEDERAL POVERTY LEVEL- In the case of a subsidy
eligible individual who is determined to have income that exceeds 175 percent,
but does not exceed 200 percent, of the Federal poverty level, the individual
is entitled under this section to a premium subsidy determined on a linear
sliding scale ranging from 100 percent of the amount described in
subsection (b)(1) for individuals with incomes at 175 percent of such level
to 0 percent of such amount for individuals with incomes at 200 percent of
such level.
`(4) DETERMINATION OF ELIGIBILITY-
`(A) SUBSIDY ELIGIBLE INDIVIDUAL DEFINED- For purposes of this section,
subject to subparagraph (D), the term `subsidy eligible individual' means
an individual who--
`(i) is eligible to elect, and has elected, to obtain qualified prescription
drug coverage under this part; and
`(ii) has income below 200 percent of the Federal poverty line.
`(B) DETERMINATIONS- The determination of whether an individual residing
in a State is a subsidy eligible individual and the amount of such individual's
income shall be determined under the State medicaid plan for the State
under section 1935(a). In the case of a State that does not operate such
a medicaid plan (either under title XIX or under a statewide waiver granted
under section 1115), such determination shall be made under arrangements
made by the Secretary.
`(C) INCOME DETERMINATIONS- For purposes of applying this section--
`(i) income shall be determined in the manner described in section 1905(p)(1)(B);
and
`(ii) the term `Federal poverty line' means the 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.
`(D) TREATMENT OF TERRITORIAL RESIDENTS- In the case of an individual
who is not a resident of the 50 States or the District of Columbia, the
individual is not eligible to be a subsidy eligible individual but may
be eligible for financial assistance with prescription drug expenses under
section 1935(e).
`(b) PREMIUM SUBSIDY AMOUNT-
`(1) IN GENERAL- The premium subsidy amount described in this subsection
for an individual residing in an area is the reference premium (as defined
in paragraph (2)) for qualified prescription drug coverage offered by the
prescription drug plan or the Medicare+Choice plan in which the individual
is enrolled.
`(2) REFERENCE PREMIUM DEFINED- For purposes of this subsection, the term
`reference premium' means, with respect to qualified prescription drug coverage
offered under--
`(A) a prescription drug plan that--
`(i) provides standard coverage (or alternative prescription drug coverage
the actuarial value is equivalent to that of standard coverage), the
premium imposed for enrollment under the plan under this part (determined
without regard to any subsidy under this section or any late enrollment
penalty under section 1860A(c)(2)(B)); or
`(ii) provides alternative prescription drug coverage the actuarial
value of which is greater than that of standard coverage, the premium
described in clause (i) multiplied by the ratio of (I) the actuarial
value of standard coverage, to (II) the actuarial value of the alternative
coverage; or
`(B) a Medicare+Choice plan, the standard premium computed under section
1851(j)(5)(A)(iii), determined without regard to any reduction effected
under section 1851(j)(5)(B).
`(c) RULES IN APPLYING COST-SHARING SUBSIDIES-
`(1) IN GENERAL- In applying subsection (a)(1)(B)--
`(A) the maximum amount of subsidy that may be provided with respect to
an enrollee for a year may not exceed 95 percent of the maximum cost-sharing
described in such subsection that may be incurred for standard coverage;
`(B) the Secretary shall determine what is `nominal' taking into account
the rules applied under section 1916(a)(3); and
`(C) nothing in this part shall be construed as preventing a plan or provider
from waiving or reducing the amount of cost-sharing otherwise applicable.
`(2) LIMITATION ON CHARGES- In the case of an individual receiving cost-sharing
subsidies under subsection (a)(1)(B), the PDP sponsor may not charge more
than a nominal amount in cases in which the cost-sharing subsidy is provided
under such subsection.
`(d) ADMINISTRATION OF SUBSIDY PROGRAM- The Secretary shall provide a process
whereby, in the case of an individual who is determined to be a subsidy eligible
individual and who is enrolled in prescription drug plan or is enrolled in
a Medicare+Choice plan under which qualified prescription drug coverage is
provided--
`(1) the Secretary provides for a notification of the PDP sponsor or Medicare+Choice
organization involved that the individual is eligible for a subsidy and
the amount of the subsidy under subsection (a);
`(2) the sponsor or organization involved reduces the premiums or cost-sharing
otherwise imposed by the amount of the applicable subsidy and submits to
the Secretary information on the amount of such reduction; and
`(3) the Secretary periodically and on a timely basis reimburses the sponsor
or organization for the amount of such reductions.
The reimbursement under paragraph (3) with respect to cost-sharing subsidies
may be computed on a capitated basis, taking into account the actuarial value
of the subsidies and with appropriate adjustments to reflect differences in
the risks actually involved.
`(e) RELATION TO MEDICAID PROGRAM-
`(1) IN GENERAL- For provisions providing for eligibility determinations,
and additional financing, under the medicaid program, see section 1935.
`(2) MEDICAID PROVIDING WRAP AROUND BENEFITS- The coverage provided under
this part is primary payor to benefits for prescribed drugs provided under
the medicaid program under title XIX.
`SEC. 1860H. SUBSIDIES FOR ALL MEDICARE BENEFICIARIES THROUGH REINSURANCE
FOR QUALIFIED PRESCRIPTION DRUG COVERAGE.
`(a) REINSURANCE SUBSIDY PAYMENT- In order to reduce premium levels applicable
to qualified prescription drug coverage for all medicare beneficiaries, to
reduce adverse selection among prescription drug plans and Medicare+Choice
plans that provide qualified prescription drug coverage, and to promote the
participation of PDP sponsors under this part, the Secretary shall provide
in accordance with this section for payment to a qualifying entity (as defined
in subsection (b)) of the reinsurance payment amount (as defined in subsection
(c)) for excess costs incurred in providing qualified prescription drug coverage--
`(1) for individuals enrolled with a prescription drug plan under this part;
`(2) for individuals enrolled with a Medicare+Choice plan that provides
qualified prescription drug coverage under part C; and
`(3) for medicare primary individuals (described in subsection (e)(3)(D))
who are enrolled in a qualified retiree prescription drug plan.
This section constitutes budget authority in advance of appropriations Acts
and represents the obligation of the Secretary to provide for the payment
of amounts provided under this section.
`(b) QUALIFYING ENTITY DEFINED- For purposes of this section, the term `qualifying
entity' means any of the following that has entered into an agreement with
the Secretary to provide the Secretary with such information as may be required
to carry out this section:
`(1) A PDP sponsor offering a prescription drug plan under this part.
`(2) A Medicare+Choice organization that provides qualified prescription
drug coverage under a Medicare+Choice plan under part C.
`(3) The sponsor of a qualified retiree prescription drug plan (as defined
in subsection (e)).
`(c) REINSURANCE PAYMENT AMOUNT-
`(1) IN GENERAL- Subject to paragraph (3), the reinsurance payment amount
under this subsection for a qualifying covered individual (as defined in
subsection (f)(1)) for a coverage year (as defined in subsection (f)(2))
is equal to such percentages, at such attachment points, as the Secretary
may specify in order to provide that the total of the payments made for
the year under this section is equal to 65 percent of the total payments
described in paragraph (2)(B) during the year. The Secretary shall adjust
such percentages and attachment points each year.
`(2) PAYMENT COMPUTATIONS- The Secretary shall estimate--
`(A) the total payments to be made (without regard to this subsection)
during a year under this section; and
`(B) the total payments to be made by qualifying entities for standard
coverage under plans described in subsection (b) during the year.
`(3) ADJUSTMENT OF PAYMENTS- In lieu of, or in addition to, the adjustment
made under paragraph (1), the Secretary may provide for such payment adjustments
(or direct subsidy payments) to PDP sponsors as the Secretary may specify
in order to assure participation of PDP sponsors under this part consistent
with the limitations on premiums under section 1860F(a)(4).
`(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.
`(e) QUALIFIED RETIREE PRESCRIPTION DRUG PLAN DEFINED-
`(1) IN GENERAL- For purposes of this section, the term `qualified retiree
prescription drug plan' means employment-based retiree health coverage (as
defined in paragraph (3)(A)) if, with respect to an individual enrolled
(or eligible to be enrolled) under this part who is covered under the plan,
the following requirements are met:
`(A) ASSURANCE- The sponsor of the plan shall annually attest, and provide
such assurances as the Secretary may require, that the coverage meets
the requirements for qualified prescription drug coverage.
`(B) AUDITS- The sponsor (and the plan) shall maintain, and 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 payments made, and such
other matters as may be appropriate.
`(C) PROVISION OF CERTIFICATION OF PRESCRIPTION DRUG COVERAGE- The sponsor
of the plan shall provide for issuance of certifications of the type described
in section 1860A(c)(2)(D).
`(D) OTHER REQUIREMENTS- The sponsor of the plan shall comply with such
other requirements as the Secretary finds necessary to administer the
program under this section.
`(2) LIMITATION ON BENEFIT ELIGIBILITY- No payment shall be provided under
this section with respect to an individual who is enrolled under a qualified
retiree prescription drug plan unless the individual is a medicare primary
individual who--
`(A) is covered under the plan; and
`(B) is eligible to obtain qualified prescription drug coverage under
section 1860A but did not elect such coverage under this part (either
through a prescription drug plan or through a Medicare+Choice plan).
`(3) DEFINITIONS- As used in this section:
`(A) EMPLOYMENT-BASED RETIREE HEALTH COVERAGE- The term `employment-based
retiree health coverage' means health insurance or other coverage of health
care costs for medicare primary individuals (or for such individuals and
their spouses and dependents) based on their status as former employees
or labor union members.
`(B) EMPLOYER- The term `employer' has the meaning given such term by
section 3(5) of the Employee Retirement Income Security Act of 1974 (except
that such term shall include only employers of two or more employees).
`(C) SPONSOR- The term `sponsor' means a plan sponsor, as defined in section
3(16)(B) of the Employee Retirement Income Security Act of 1974.
`(D) MEDICARE PRIMARY INDIVIDUAL- The term `medicare primary individual'
means, with respect to a plan, an individual who is covered under the
plan and with respect to whom the plan is not a primary plan (as defined
in section 1862(b)(2)(A)).
`(f) GENERAL DEFINITIONS- For purposes of this section:
`(1) QUALIFYING COVERED INDIVIDUAL- The term `qualifying covered individual'
means an individual who--
`(A) is enrolled with a prescription drug plan under this part;
`(B) is enrolled with a Medicare+Choice plan that provides qualified prescription
drug coverage under part C; or
`(C) is covered as a medicare primary individual under a qualified retiree
prescription drug plan.
`(2) COVERAGE YEAR- The term `coverage year' means a calendar year in which
covered outpatient drugs are dispensed if a claim for payment is made under
the plan for such drugs, regardless of when the claim is paid.
`SEC. 1860I. MEDICARE PRESCRIPTION DRUG ACCOUNT IN FEDERAL SUPPLEMENTARY
MEDICAL INSURANCE TRUST FUND.
`(a) IN GENERAL- There is created within the Federal Supplementary Medical
Insurance Trust Fund established by section 1841 an account to be known as
the `Medicare Prescription Drug Account' (in this section referred to as the
`Account'). The Account shall consist of such gifts and bequests as may be
made as provided in section 201(i)(1), and such amounts as may be deposited
in, or appropriated to, such fund as provided in this part. Funds provided
under this part to the Account shall be kept separate from all other funds
within the Federal Supplementary Medical Insurance Trust Fund.
`(b) PAYMENTS FROM ACCOUNT-
`(1) IN GENERAL- The Managing Trustee shall pay from time to time from the
Account such amounts as the Secretary certifies are necessary to make--
`(A) payments under section 1860G (relating to low-income subsidy payments);
`(B) payments under section 1860H (relating to reinsurance subsidy payments);
and
`(C) payments with respect to administrative expenses under this part
in accordance with section 201(g).
`(2) TRANSFERS TO MEDICAID ACCOUNT FOR INCREASED ADMINISTRATIVE COSTS- The
Managing Trustee shall transfer from time to time from the Account to the
Grants to States for Medicaid account amounts the Secretary certifies are
attributable to increases in payment resulting from the application of a
higher Federal matching percentage under section 1935(b).
`(3) TREATMENT IN RELATION TO PART B PREMIUM- Amounts payable from the Account
shall not be taken into account in computing actuarial rates or premium
amounts under section 1839.
`(c) DEPOSITS INTO ACCOUNT-
`(1) MEDICAID TRANSFER- There is hereby transferred to the Account, from
amounts appropriated for Grants to States for Medicaid, amounts equivalent
to the aggregate amount of the reductions in payments under section 1903(a)(1)
attributable to the application of section 1935(c).
`(2) APPROPRIATIONS TO COVER GOVERNMENT CONTRIBUTIONS- There are authorized
to be appropriated from time to time, out of any moneys in the Treasury
not otherwise appropriated, to the Account, an amount equivalent to the
amount of payments made from the Account under subsection (b), reduced by
the amount transferred to the Account under paragraph (1).
`SEC. 1860J. DEFINITIONS; TREATMENT OF REFERENCES TO PROVISIONS IN PART
C.
`(a) DEFINITIONS- For purposes of this part:
`(1) COVERED OUTPATIENT DRUGS- The term `covered outpatient drugs' is defined
in section 1860B(f).
`(2) INITIAL COVERAGE LIMIT- The term `initial coverage limit' means the
such limit as established under section 1860B(b)(3), or, in the case of
coverage that is not standard coverage, the comparable limit (if any) established
under the coverage.
`(3) MEDICARE PRESCRIPTION DRUG ACCOUNT- The term `Medicare Prescription
Drug Account' means the Account in the Federal Supplementary Medical Insurance
Trust Fund created under section 1860I(a).
`(4) PDP SPONSOR- The term `PDP sponsor' means an entity that is certified
under this part as meeting the requirements and standards of this part for
such a sponsor.
`(5) PRESCRIPTION DRUG PLAN- The term `prescription drug plan' means health
benefits coverage that--
`(A) is offered under a policy, contract, or plan by a PDP sponsor pursuant
to, and in accordance with, a contract between the Secretary and the sponsor
under section 1860D(b);
`(B) provides qualified prescription drug coverage; and
`(C) meets the applicable requirements of the section 1860C for a prescription
drug plan.
`(6) QUALIFIED PRESCRIPTION DRUG COVERAGE- The term `qualified prescription
drug coverage' is defined in section 1860B(a).
`(7) STANDARD COVERAGE- The term `standard coverage' is defined in section
1860B(b).
`(b) APPLICATION OF MEDICARE+CHOICE PROVISIONS UNDER THIS PART- For purposes
of applying provisions of part C under this part with respect to a prescription
drug plan and a PDP sponsor, unless otherwise provided in this part such provisions
shall be applied as if--
`(1) any reference to a Medicare+Choice plan included a reference to a prescription
drug plan;
`(2) any reference to a provider-sponsored organization included a reference
to a PDP sponsor;
`(3) any reference to a contract under section 1857 included a reference
to a contract under section 1860D(b); and
`(4) any reference to part C included a reference to this part.
`MEDICARE PRESCRIPTION DRUG ADVISORY COMMITTEE
`SEC. 1860K. (a) ESTABLISHMENT OF COMMITTEE- There is established a Medicare
Prescription Drug Advisory Committee (in this section referred to as the `Committee').
`(b) FUNCTIONS OF COMMITTEE- The Committee shall advise the Secretary on policies
related to the development of standards and guidelines for the implementation
and administration of the outpatient prescription drug benefit program under
this part.
`(c) STRUCTURE AND MEMBERSHIP OF THE COMMITTEE-
`(1) STRUCTURE- The Committee shall be composed of 19 members, of whom--
`(A) 12 shall be appointed by the Secretary;
`(B) 3 shall be appointed by the President;
`(C) 2 shall be appointed by the Speaker of the House of Representatives;
and
`(D) 2 shall be appointed by the Majority Leader of the Senate.
`(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)(A)--
`(i) 4 shall be chosen to represent physicians;
`(ii) 3 shall be chosen to represent pharmacists;
`(iii) 1 shall be chosen to represent the Centers for Medicare &
Medicaid Services;
`(iv) 3 shall be chosen to represent actuaries, pharmacoeconomists,
researchers, and other appropriate experts; and
`(v) 1 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, 2004.
`(e) CHAIRPERSON- The Secretary shall designate a member of the Committee
as Chairperson. The term as Chairperson shall be for a 1-year period.
`(f) COMMITTEE PERSONNEL MATTERS-
`(A) COMPENSATION- Each member of the Committee who is not an officer
or employee of the Federal Government shall be compensated at a rate equal
to the daily equivalent of the annual rate of basic pay prescribed for
level IV of the Executive Schedule under section 5315 of title 5, United
States Code, for each day (including travel time) during which such member
is engaged in the performance of the duties of the Committee. All members
of the Committee who are officers or employees of the United States shall
serve without compensation in addition to that received for their services
as officers or employees of the United States.
`(B) TRAVEL EXPENSES- The members of the Committee shall be allowed travel
expenses, including per diem in lieu of subsistence, at rates authorized
for employees of agencies under subchapter I of chapter 57 of title 5,
United States Code, while away from their homes or regular places of business
in the performance of services for the Committee.
`(2) STAFF- The Committee may appoint such personnel as the Committee considers
appropriate.
`(g) OPERATION OF THE COMMITTEE-
`(1) MEETINGS- The Committee shall meet at the call of the Chairperson (after
consultation with the other members of the Committee) not less often than
quarterly to consider a specific agenda of issues, as determined by the
Chairperson after such consultation.
`(2) QUORUM- Ten members of the Committee shall constitute a quorum for
purposes of conducting business.
`(h) FEDERAL ADVISORY COMMITTEE ACT- Section 14 of the Federal Advisory Committee
Act (5 U.S.C. App.) shall not apply to the Committee.
`(i) TRANSFER OF PERSONNEL, RESOURCES, AND ASSETS- For purposes of carrying
out its duties, the Secretary and the Committee may provide for the transfer
to the Committee of such civil service personnel in the employ of the Department
of Health and Human Services (including the Centers for Medicare & Medicaid
Services), and such resources and assets of the Department used in carrying
out this title, as the Committee requires.
`(j) AUTHORIZATION OF APPROPRIATIONS- There are authorized to be appropriated
such sums as may be necessary to carry out the purposes of this section.'.
(b) CONFORMING AMENDMENTS TO FEDERAL SUPPLEMENTARY MEDICAL INSURANCE TRUST
FUND- Section 1841 of the Social Security Act (42 U.S.C. 1395t) is amended--
(1) in the last sentence of subsection (a)--
(A) by striking `and' before `such amounts'; and
(B) by inserting before the period the following: `and such amounts as
may be deposited in, or appropriated to, the Medicare Prescription Drug
Account established by section 1860I'; and
(2) in subsection (g), by inserting after `by this part,' the following:
`the payments provided for under part D (in which case the payments shall
come from the Medicare Prescription Drug Account in the Trust Fund),'.
(c) ADDITIONAL CONFORMING CHANGES-
(1) CONFORMING REFERENCES TO PREVIOUS PART D- Any reference in law (in effect
before the date of the 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 the 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 subtitle.
SEC. 3. OFFERING OF QUALIFIED PRESCRIPTION DRUG COVERAGE UNDER THE MEDICARE+CHOICE
PROGRAM.
(a) IN GENERAL- Section 1851 of the Social Security Act (42 U.S.C. 1395w-21)
is amended by adding at the end the following new subsection:
`(j) AVAILABILITY OF PRESCRIPTION DRUG BENEFITS-
`(1) IN GENERAL- A Medicare+Choice organization may not offer prescription
drug coverage (other than that required under parts A and B) to an enrollee
under a Medicare+Choice plan unless such drug coverage is at least qualified
prescription drug coverage and unless the requirements of this subsection
with respect to such coverage are met.
`(2) COMPLIANCE WITH ADDITIONAL BENEFICIARY PROTECTIONS- With respect to
the offering of qualified prescription drug coverage by a Medicare+Choice
organization under a Medicare+Choice plan, the organization and plan shall
meet the requirements of section 1860C, including requirements relating
to information dissemination and grievance and appeals, in the same manner
as they apply to a PDP sponsor and a prescription drug plan under part D.
The Secretary shall waive such requirements to the extent the Secretary
determines that such requirements duplicate requirements otherwise applicable
to the organization or plan under this part.
`(3) TREATMENT OF COVERAGE- Except as provided in this subsection, qualified
prescription drug coverage offered under this subsection shall be treated
under this part in the same manner as supplemental health care benefits
described in section 1852(a)(3)(A).
`(4) AVAILABILITY OF PREMIUM AND COST-SHARING SUBSIDIES FOR LOW-INCOME ENROLLEES
AND REINSURANCE SUBSIDY PAYMENTS FOR ORGANIZATIONS- For provisions--
`(A) providing premium and cost-sharing subsidies to low-income individuals
receiving qualified prescription drug coverage through a Medicare+Choice
plan, see section 1860G; and
`(B) providing a Medicare+Choice organization with reinsurance subsidy
payments for providing qualified prescription drug coverage under this
part, see section 1860H.
`(5) SPECIFICATION OF SEPARATE AND STANDARD PREMIUM-
`(A) IN GENERAL- For purposes of applying section 1854 and section 1860G(b)(2)(B)
with respect to qualified prescription drug coverage offered under this
subsection under a plan, the Medicare+Choice organization shall compute
and publish the following:
`(i) SEPARATE PRESCRIPTION DRUG PREMIUM- A premium for prescription
drug benefits that constitute qualified prescription drug coverage that
is separate from other coverage under the plan. Such premium shall be
established consistent with the limitations described in section 1860F(a)(4).
`(ii) PORTION OF COVERAGE ATTRIBUTABLE TO STANDARD BENEFITS- The ratio
of the actuarial value of standard coverage to the actuarial value of
the qualified prescription drug coverage offered under the plan.
`(iii) PORTION OF PREMIUM ATTRIBUTABLE TO STANDARD BENEFITS- A standard
premium equal to the product of the premium described in clause (i)
and the ratio under clause (ii).
The premium under clause (i) shall be compute without regard to any reduction
in the premium permitted under subparagraph (B).
`(B) REDUCTION OF PREMIUMS ALLOWED- Nothing in this subsection shall be
construed as preventing a Medicare+Choice organization from reducing the
amount of a premium charged for prescription drug coverage because of
the application of section 1854(f)(1)(A) to other coverage.
`(C) ACCEPTANCE OF REFERENCE PREMIUM AS FULL PREMIUM IF NO STANDARD (OR
EQUIVALENT) COVERAGE IN AN AREA- For requirement to accept reference premium
as full premium if there is no standard (or equivalent) coverage in the
area of a Medicare+Choice plan, see section 1860F(d).
`(6) TRANSITION IN INITIAL ENROLLMENT PERIOD- Notwithstanding any other
provision of this part, the annual, coordinated election period under subsection
(e)(3)(B) for 2004 shall be the 6-month period beginning with November 2003.
`(7) QUALIFIED PRESCRIPTION DRUG COVERAGE; STANDARD COVERAGE- For purposes
of this part, the terms `qualified prescription drug coverage' and `standard
coverage' have the meanings given such terms in section 1860B.'.
(b) CONFORMING AMENDMENTS- Section 1851 of such Act (42 U.S.C. 1395w-21) is
amended--
(1) in subsection (a)(1)--
(A) by inserting `(other than qualified prescription drug benefits)' after
`benefits';
(B) by striking the period at the end of subparagraph (B) and inserting
a comma; and
(C) by adding after and below subparagraph (B) the following:
`and may elect qualified prescription drug coverage in accordance with section
1860A.'; and
(2) in subsection (g)(1), by inserting `and section 1860A(c)(2)(B)' after
`in this subsection'.
(c) EFFECTIVE DATE- The amendments made by this section apply to coverage
provided on or after January 1, 2006.
SEC. 4. MEDICAID AMENDMENTS.
(a) DETERMINATIONS OF ELIGIBILITY FOR LOW-INCOME SUBSIDIES-
(1) REQUIREMENT- Section 1902 of the Social Security Act (42 U.S.C. 1396a)
is amended--
(i) by striking `and' at the end of paragraph (64);
(ii) by striking the period at the end of paragraph (65) and inserting
`; and'; and
(iii) by inserting after paragraph (65) the following new paragraph:
`(66) provide for making eligibility determinations under section 1935(a).'.
(2) NEW SECTION- Title XIX of such Act is further amended--
(A) by redesignating section 1935 as section 1936; and
(B) by inserting after section 1934 the following new section:
`SPECIAL PROVISIONS RELATING TO MEDICARE PRESCRIPTION DRUG BENEFIT
`SEC. 1935. (a) REQUIREMENT FOR MAKING ELIGIBILITY DETERMINATIONS FOR LOW-INCOME
SUBSIDIES- As a condition of its State plan under this title under section
1902(a)(66) and receipt of any Federal financial assistance under section
1903(a), a State shall--
`(1) make determinations of eligibility for premium and cost-sharing subsidies
under (and in accordance with) section 1860G;
`(2) inform the Secretary of such determinations in cases in which such
eligibility is established; and
`(3) otherwise provide such Secretary with such information as may be required
to carry out part D of title XVIII (including section 1860G).
`(b) PAYMENTS FOR ADDITIONAL ADMINISTRATIVE COSTS-
`(1) IN GENERAL- The amounts expended by a State in carrying out subsection
(a) are, subject to paragraph (2), expenditures reimbursable under the appropriate
paragraph of section 1903(a); except that, notwithstanding any other provision
of such section, the applicable Federal matching rates with respect to such
expenditures under such section shall be increased as follows:
`(A) For expenditures attributable to costs incurred during 2006, the
otherwise applicable Federal matching rate shall be increased by 20 percent
of the percentage otherwise payable (but for this subsection) by the State.
`(B) For expenditures attributable to costs incurred during 2007, the
otherwise applicable Federal matching rate shall be increased by 40 percent
of the percentage otherwise payable (but for this subsection) by the State.
`(C) For expenditures attributable to costs incurred during 2008, the
otherwise applicable Federal matching rate shall be increased by 60 percent
of the percentage otherwise payable (but for this subsection) by the State.
`(D) For expenditures attributable to costs incurred during 2009, the
otherwise applicable Federal matching rate shall be increased by 80 percent
of the percentage otherwise payable (but for this subsection) by the State.
`(E) For expenditures attributable to costs incurred after 2010, the otherwise
applicable Federal matching rate shall be increased to 100 percent.
`(2) COORDINATION- The State shall provide the Secretary with such information
as may be necessary to properly allocate administrative expenditures described
in paragraph (1) that may otherwise be made for similar eligibility determinations.'.
(b) PHASED-IN FEDERAL ASSUMPTION OF MEDICAID RESPONSIBILITY FOR PREMIUM AND
COST-SHARING SUBSIDIES FOR DUALLY ELIGIBLE INDIVIDUALS-
(1) IN GENERAL- Section 1903(a)(1) of the Social Security Act (42 U.S.C.
1396b(a)(1)) is amended by inserting before the semicolon the following:
`, reduced by the amount computed under section 1935(c)(1) for the State
and the quarter'.
(2) AMOUNT DESCRIBED- Section 1935 of such Act, as inserted by subsection
(a)(2), is amended by adding at the end the following new subsection:
`(c) FEDERAL ASSUMPTION OF MEDICAID PRESCRIPTION DRUG COSTS FOR DUALLY-ELIGIBLE
BENEFICIARIES-
`(1) IN GENERAL- For purposes of section 1903(a)(1), for a State that is
one of the 50 States or the District of Columbia for a calendar quarter
in a year (beginning with 2006) the amount computed under this subsection
is equal to the product of the following:
`(A) MEDICARE SUBSIDIES- The total amount of payments made in the quarter
under section 1860G (relating to premium and cost-sharing prescription
drug subsidies for low-income medicare beneficiaries) that are attributable
to individuals who are residents of the State and are entitled to benefits
with respect to prescribed drugs under the State plan under this title
(including such a plan operating under a waiver under section 1115).
`(B) STATE MATCHING RATE- A proportion computed by subtracting from 100
percent the Federal medical assistance percentage (as defined in section
1905(b)) applicable to the State and the quarter.
`(C) PHASE-OUT PROPORTION- The phase-out proportion (as defined in paragraph
(2)) for the quarter.
`(2) PHASE-OUT PROPORTION- For purposes of paragraph (1)(C), the `phase-out
proportion' for a calendar quarter in--
`(D) 2009 is 20 percent; or
`(E) a year after 2009 is 0 percent.'.
(c) MEDICAID PROVIDING WRAP-AROUND BENEFITS- Section 1935 of such Act, as
so inserted and amended, is further amended by adding at the end the following
new subsection:
`(d) ADDITIONAL PROVISIONS-
`(1) MEDICAID AS SECONDARY PAYOR- In the case of an individual dually entitled
to qualified prescription drug coverage under a prescription drug plan under
part D of title XVIII (or under a Medicare+Choice plan under part C of such
title) and medical assistance for prescribed drugs under this title, medical
assistance shall continue to be provided under this title for prescribed
drugs to the extent payment is not made under the prescription drug plan
or the Medicare+Choice plan selected by the individual.
`(2) CONDITION- A State may require, as a condition for the receipt of medical
assistance under this title with respect to prescription drug benefits for
an individual eligible to obtain qualified prescription drug coverage described
in paragraph (1), that the individual elect qualified prescription drug
coverage under section 1860A.'.
(d) TREATMENT OF TERRITORIES-
(1) IN GENERAL- Section 1935 of such Act, as so inserted and amended, is
further amended--
(A) in subsection (a) in the matter preceding paragraph (1), by inserting
`subject to subsection (e)' after `section 1903(a)';
(B) in subsection (c)(1), by inserting `subject to subsection (e)' after
`1903(a)(1)'; and
(C) by adding at the end the following new subsection:
`(e) TREATMENT OF TERRITORIES-
`(1) IN GENERAL- In the case of a State, other than the 50 States and the
District of Columbia--
`(A) the previous provisions of this section shall not apply to residents
of such State; and
`(B) if the State establishes a plan described in paragraph (2) (for providing
medical assistance with respect to the provision of prescription drugs
to medicare beneficiaries), the amount otherwise determined under section
1108(f) (as increased under section 1108(g)) for the State shall be increased
by the amount specified in paragraph (3).
`(2) PLAN- The plan described in this paragraph is a plan that--
`(A) provides medical assistance with respect to the provision of covered
outpatient drugs (as defined in section 1860B(f)) to low-income medicare
beneficiaries; and
`(B) assures that additional amounts received by the State that are attributable
to the operation of this subsection are used only for such assistance.
`(A) IN GENERAL- The amount specified in this paragraph for a State for
a year is equal to the product of--
`(i) the aggregate amount specified in subparagraph (B); and
`(ii) the amount specified in section 1108(g)(1) for that State, divided
by the sum of the amounts specified in such section for all such States.
`(B) AGGREGATE AMOUNT- The aggregate amount specified in this subparagraph
for--
`(i) 2006, is equal to $20,000,000; or
`(ii) a subsequent year, is equal to the aggregate amount specified
in this subparagraph for the previous year increased by annual percentage
increase specified in section 1860B(b)(5) for the year involved.
`(4) REPORT- The Secretary shall submit to Congress a report on the application
of this subsection and may include in the report such recommendations as
the Secretary deems appropriate.'.
(2) CONFORMING AMENDMENT- Section 1108(f) of such Act is amended by inserting
`and section 1935(e)(1)(B)' after `Subject to subsection (g)'.
SEC. 5. MEDIGAP TRANSITION PROVISIONS.
(a) IN GENERAL- Notwithstanding any other provision of law, no new medicare
supplemental policy that provides coverage of expenses for prescription drugs
may be issued under section 1882 of the Social Security Act on or after January
1, 2006, to an individual unless it replaces a medicare supplemental policy
that was issued to that individual and that provided some coverage of expenses
for prescription drugs.
(b) ISSUANCE OF SUBSTITUTE POLICIES IF OBTAIN PRESCRIPTION DRUG COVERAGE THROUGH
MEDICARE-
(1) IN GENERAL- The issuer of a medicare supplemental policy--
(A) may not deny or condition the issuance or effectiveness of a medicare
supplemental policy that has a benefit package classified as `A', `B',
`C', `D', `E', `F', or `G' (under the standards established under subsection
(p)(2) of section 1882 of the Social Security Act, 42 U.S.C. 1395ss) and
that is offered and is available for issuance to new enrollees by such
issuer;
(B) may not discriminate in the pricing of such policy, because of health
status, claims experience, receipt of health care, or medical condition;
and
(C) may not impose an exclusion of benefits based on a pre-existing condition
under such policy,
in the case of an individual described in paragraph (2) who seeks to enroll
under the policy not later than 63 days after the date of the termination
of enrollment described in such paragraph and who submits evidence of the
date of termination or disenrollment along with the application for such
medicare supplemental policy.
(2) INDIVIDUAL COVERED- An individual described in this paragraph is an
individual who--
(A) enrolls in a prescription drug plan under part D of title XVIII of
the Social Security Act; and
(B) at the time of such enrollment was enrolled and terminates enrollment
in a medicare supplemental policy which has a benefit package classified
as `H', `I', or `J' under the standards referred to in paragraph (1)(A)
or terminates enrollment in a policy to which such standards do not apply
but which provides benefits for prescription drugs.
(3) ENFORCEMENT- The provisions of paragraph (1) shall be enforced as though
they were included in section 1882(s) of the Social Security Act (42 U.S.C.
1395ss(s)).
(4) DEFINITIONS- For purposes of this subsection, the term `medicare supplemental
policy' has the meaning given such term in section 1882(g) of the Social
Security Act (42 U.S.C. 1395ss(g)).
END
