To amend part D of title XVIII of the Social Security Act to authorize the Secretary of Health and Human Services to negotiate for lower prices for medicare prescription drugs and to eliminate the gap in coverage of medicare prescription drug benefits, to reduce medical errors and increase the use of medical technology, to increase services in primary and preventive care by nonphysician providers, and for other purposes.

July 22, 2004

Mr. SPECTER introduced the following bill; which was read twice and referred to the Committee on Finance

To amend part D of title XVIII of the Social Security Act to authorize the Secretary of Health and Human Services to negotiate for lower prices for medicare prescription drugs and to eliminate the gap in coverage of medicare prescription drug benefits, to reduce medical errors and increase the use of medical technology, to increase services in primary and preventive care by nonphysician providers, 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 `Prescription Drug and Health Improvement Act of 2004'.

TITLE I--IMPROVEMENTS UNDER MEDICARE PRESCRIPTION DRUG PROGRAM

SEC. 101. NEGOTIATING FAIR PRICES FOR MEDICARE PRESCRIPTION DRUGS.

(a) IN GENERAL- Section 1860D-11 of the Social Security Act (42 U.S.C. 1395w-111) is amended by striking subsection (i) (relating to noninterference) and by inserting the following:

`(i) AUTHORITY TO NEGOTIATE PRICES WITH MANUFACTURERS- In order to ensure that beneficiaries enrolled under prescription drug plans and MA-PD plans pay the lowest possible price, the Secretary shall have authority similar to that of other Federal entities that purchase prescription drugs in bulk to negotiate contracts with manufacturers of covered part D drugs, consistent with the requirements and in furtherance of the goals of providing quality care and containing costs under this part.'.

(b) EFFECTIVE DATE- The amendment made by this section shall take effect as if included in the enactment of section 101 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (Public Law 108-173; 117 Stat. 2066).

(c) HHS REPORTS COMPARING NEGOTIATED PRESCRIPTION DRUG PRICES AND RETAIL PRESCRIPTION DRUG PRICES- Beginning in 2006, the Secretary of Health and Human Services shall regularly, but in no case less often than quarterly, submit to Congress a report that compares the prices for covered part D drugs (as defined in section 1860D-2(e) of the Social Security Act (42 U.S.C. 1395w-102(e)) negotiated by the Secretary pursuant to section 1860D-11(i) of such Act (42 U.S.C. 1395w-111(i)), as amended by subsection (a), with the average price a retail pharmacy would charge an individual who does not have health insurance coverage for purchasing the same strength, quantity, and dosage form of such covered part D drug.

SEC. 102. ELIMINATION OF GAP IN COVERAGE OF MEDICARE PRESCRIPTION DRUG BENEFITS.

(a) In General- Section 1860D-2(b) of the Social Security Act (42 U.S.C. 1395w-102(b)) is amended by striking paragraph (3) and inserting the following:

`(3) Repealed.'.

(b) Conforming Amendments-

(1) Section 1860D-2 of the Social Security Act (42 U.S.C. 1395w-102) is amended--

(A) in subsection (a)(2)(A)(i)(I), by striking `, or an increase in the initial coverage limit with respect to covered part D drugs';

(B) in subsection (b)(2)(A), by striking `and up to the initial coverage limit under paragraph (3)';

(C) in subsection (b)(4)(C)(i)--

(i) by striking the comma after `paragraph (1)' and inserting `and'; and

(ii) by striking `, and for amounts for which benefits are not provided because of the application of the initial coverage limit described in paragraph (3)';

(D) in subsection (c)(1), by striking subparagraph (C); and

(E) in subsection (d)(1)(A), by striking `or an initial coverage limit (described in subsection (b)(3))'.

(2) Section 1860D-4(a)(4)(B) of the Social Security Act (42 U.S.C. 1395w-104(a)(4)(B)) is amended to read as follows:

`(B) when prescription drug benefits are provided under this part, a notice of the benefits in relation to the annual out-of-pocket threshold for the current year.'.

(3)(A) Section 1860D-14(a) of the Social Security Act (42 U.S.C. 1395w-114(a)) is amended--

(i) in paragraph (1), by striking subparagraph (C) and redesignating subparagraphs (D) and (E) as subparagraphs (C) and (D), respectively;

(ii) in paragraph (2), by striking subparagraph (C) and redesignating subparagraphs (D) and (E) as subparagraphs (C) and (D), respectively; and

(iii) in paragraph (4)(A) in the matter preceding clause (i), by striking `paragraph (1)(D)(ii)' and inserting `paragraph (1)(C)(ii)'.

(B) Section 1860D-14(c)(1) of the Social Security Act (42 U.S.C. 1395w-114(c)(1)) is amended in the second sentence by striking `subsections (a)(1)(D) and (a)(2)(E)' and inserting `subsections (a)(1)(C) and (a)(2)(D)'.

(C) Section 1860D-15(e)(1)(B) of the Social Security Act (42 U.S.C. 1395w-115(e)(1)(B)) is amended by striking `paragraphs (1)(D) and (2)(E)' and inserting `paragraphs (1)(C) and (2)(D)'.

(4)(A) Section 1860D-41(a)(6) of the Social Security Act (42 U.S.C. 1395w-151(a)(6)) is amended by striking paragraph (6) and redesignating paragraphs (7) through (18) as paragraphs (6) through (17), respectively.

(B) Section 1860D-1(a)(1)(A) of the Social Security Act (42 U.S.C. 1395w-101(a)(1)(A)) is amended by striking `1860D-41(a)(14)' and inserting `1860D-41(a)(13)'.

(c) EFFECTIVE DATE- The amendments made by this section shall take effect as if included in the enactment of section 101 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (Public Law 108-173; 117 Stat. 2066).

TITLE II--REDUCING MEDICAL ERRORS AND INCREASING THE USE OF MEDICAL TECHNOLOGY

SEC. 201. MEDICAL ERRORS REDUCTION.

Title IX of the Public Health Service Act (42 U.S.C. 299 et seq.) is amended--

(1) by redesignating part C as part D;

(2) by redesignating sections 921 through 928, as sections 931 through 938, respectively;

(3) in section 938(1) (as so redesignated), by striking `921' and inserting `931'; and

(4) by inserting after part B the following:

`PART C--REDUCING ERRORS IN HEALTH CARE

`SEC. 921. DEFINITIONS.

`In this part:

`(1) ADVERSE EVENT- The term `adverse event' means an injury resulting from medical management rather than the underlying condition of the patient.

`(2) ERROR- The term `error' means the failure of a planned action to be completed as intended or the use of a wrong plan to achieve the desired outcome.

`(3) HEALTH CARE PROVIDER- The term `health care provider' means an individual or entity that provides medical services and is a participant in a demonstration program under this part.

`(4) HEALTH CARE-RELATED ERROR- The term `health care-related error' means a preventable adverse event related to a health care intervention or a failure to intervene appropriately.

`(5) MEDICATION-RELATED ERROR- The term `medication-related error' means a preventable adverse event related to the administration of a medication.

`(6) SAFETY- The term `safety' with respect to an individual means that such individual has a right to be free from preventable serious injury.

`(7) SENTINEL EVENT- The term `sentinel event' means an unexpected occurrence involving an individual that results in death or serious physical injury that is unrelated to the natural course of the individual's illness or underlying condition.

`SEC. 922. ESTABLISHMENT OF STATE-BASED MEDICAL ERROR REPORTING SYSTEMS.

`(a) IN GENERAL- The Secretary shall make grants available to States to enable such States to establish reporting systems designed to reduce medical errors and improve health care quality.

`(b) REQUIREMENT-

`(1) IN GENERAL- To be eligible to receive a grant under subsection (a), the State involved shall provide assurances to the Secretary that amounts received under the grant will be used to establish and implement a medical error reporting system using guidelines (including guidelines relating to the confidentiality of the reporting system) developed by the Agency for Healthcare Research and Quality with input from interested, non-governmental parties including patient, consumer and health care provider groups.

`(2) GUIDELINES- Not later than 90 days after the date of enactment of this part, the Agency for Healthcare Research and Quality shall develop and publish the guidelines described in paragraph (1).

`(c) DATA-

`(1) AVAILABILITY- A State that receives a grant under subsection (a) shall make the data provided to the medical error reporting system involved available only to the Agency for Healthcare Research and Quality and may not otherwise disclose such information.

`(2) CONFIDENTIALITY- Nothing in this part shall be construed to supersede any State law that is inconsistent with this part.

`(d) APPLICATION- To be eligible for a grant under this section, a State shall prepare and submit to the Secretary an application at such time, in such manner and containing, such information as the Secretary shall require.

`SEC. 923. DEMONSTRATION PROJECTS TO REDUCE MEDICAL ERRORS, IMPROVE PATIENT SAFETY, AND EVALUATE REPORTING.

`(a) ESTABLISHMENT- The Secretary, acting through the Director of the Agency for Healthcare Research and Quality and in conjunction with the Administrator of the Health Care Financing Administration, may establish a program under which funding will be provided for not less than 15 demonstration projects, to be competitively awarded, in health care facilities and organizations in geographically diverse locations, including rural and urban areas (as determined by the Secretary), to determine the causes of medical errors and to--

`(1) use technology, staff training, and other methods to reduce such errors;

`(2) develop replicable models that minimize the frequency and severity of medical errors;

`(3) develop mechanisms that encourage reporting, prompt review, and corrective action with respect to medical errors; and

`(4) develop methods to minimize any additional paperwork burden on health care professionals.

`(b) ACTIVITIES-

`(1) IN GENERAL- A health care provider participating in a demonstration project under subsection (a) shall--

`(A) utilize all available and appropriate technologies to reduce the probability of future medical errors; and

`(B) carry out other activities consistent with subsection (a).

`(2) REPORTING TO PATIENTS- In carrying out this section, the Secretary shall ensure that--

`(A) 5 of the demonstration projects permit the voluntary reporting by participating health care providers of any adverse events, sentinel events, health care-related errors, or medication-related errors to the Secretary;

`(B) 5 of the demonstration projects require participating health care providers to report any adverse events, sentinel events, health care-related errors, or medication-related errors to the Secretary; and

`(C) 5 of the demonstration projects require participating health care providers to report any adverse events, sentinel events, health care-related errors, or medication-related errors

to the Secretary and to the patient involved and a family member or guardian of the patient.

`(3) CONFIDENTIALITY-

`(A) IN GENERAL- The Secretary and the participating grantee organization shall ensure that information reported under this section remains confidential.

`(B) USE- The Secretary may use the information reported under this section only for the purpose of evaluating the ability to reduce errors in the delivery of care. Such information shall not be used for enforcement purposes.

`(C) DISCLOSURE- The Secretary may not disclose the information reported under this section.

`(D) NONADMISSIBILITY- Information reported under this section shall be privileged, confidential, shall not be admissible as evidence or discoverable in any civil or criminal action or proceeding or subject to disclosure, and shall not be subject to the Freedom of Information Act (5 U.S.C. App). This paragraph shall apply to all information maintained by the reporting entity and the entities who receive such reports.

`(c) USE OF TECHNOLOGIES- The Secretary shall encourage, as part of the demonstration projects conducted under subsection (a), the use of appropriate technologies to reduce medical errors, such as hand-held electronic prescription pads, training simulators for medical education, and bar-coding of prescription drugs and patient bracelets.

`(d) DATABASE- The Secretary shall provide for the establishment and operation of a national database of medical errors to be used as provided for by the Secretary. The information provided to the Secretary under subsection (b)(2) shall be contained in the database.

`(e) EVALUATION- The Secretary shall evaluate the progress of each demonstration project established under this section in reducing the incidence of medical errors and submit the results of such evaluations as part of the reports under section 926(b).

`(f) REPORTING- Prior to October 1, of the third fiscal year for which funds are made available under this section, the Secretary shall prepare and submit to the appropriate committees of Congress an interim report concerning the results of such demonstration projects.

`SEC. 924. PATIENT SAFETY IMPROVEMENT.

`(a) IN GENERAL- The Secretary shall provide information to educate patients and family members about their role in reducing medical errors. Such information shall be provided to all individuals who participate in Federally-funded health care programs.

`(b) DEVELOPMENT OF PROGRAMS- The Secretary shall develop programs that encourage patients to take a more active role in their medical treatment, including encouraging patients to provide information to health care providers concerning pre-existing conditions and medications.

`SEC. 925. PRIVATE, NONPROFIT EFFORTS TO REDUCE MEDICAL ERRORS.

`(a) IN GENERAL- The Secretary shall make grants to health professional associations and other organizations to provide training in ways to reduce medical errors, including curriculum development, technology training, and continuing medical education.

`(b) APPLICATION- To be eligible for a grant under this section, an entity shall prepare and submit to the Secretary an application at such time, in such manner and containing, such information as the Secretary shall require.

`SEC. 926. REPORT TO CONGRESS.

`(a) INITIAL REPORT- Not later than 180 days after the date of enactment of this part, the Secretary shall prepare and submit to the appropriate committees of Congress a report concerning the costs associated with implementing a program that identifies factors that contribute to errors and which includes upgrading the health care computer systems and other technologies in the United States in order to reduce medical errors, including computerizing hospital systems for the coordination of prescription drugs and handling of laboratory specimens, and contains recommendations on ways in which to reduce those factors.

`(b) OTHER REPORTS- Not later than 180 days after the completion of all demonstration projects under section 923, the Secretary shall prepare and submit to the appropriate committees of Congress a report concerning--

`(1) how successful each demonstration project was in reducing medical errors;

`(2) the data submitted by States under section 922(c);

`(3) the best methods for reducing medical errors;

`(4) the costs associated with applying such best methods on a nationwide basis; and

`(5) the manner in which other Federal agencies can share information on best practices in order to reduce medical errors in all Federal health care programs.

`SEC. 927. AUTHORIZATION OF APPROPRIATIONS.

`There is authorized to be appropriated such sums as may be necessary to carry out this part.'.

SEC. 202. ENHANCING INVESTMENT IN COST-EFFECTIVE METHODS OF HEALTH CARE.

(a) IN GENERAL- Subchapter A of chapter 98 of the Internal Revenue Code of 1986 (relating to trust fund code) is amended by adding at the end the following:

`SEC. 9511. TRUST FUND FOR MEDICAL TREATMENT OUTCOMES RESEARCH.

`(a) CREATION OF TRUST FUND- There is established in the Treasury of the United States a trust fund to be known as the `Trust Fund for Medical Treatment Outcomes Research' (referred to in this section as the `Trust Fund'), consisting of such amounts as may be appropriated or credited to the Trust Fund as provided in this section or section 9602(b).

`(b) TRANSFERS TO TRUST FUND- There is hereby appropriated to the Trust Fund an amount equivalent to the taxes received in the Treasury under section 4491 (relating to tax on health insurance policies).

`(c) DISTRIBUTION OF AMOUNTS IN TRUST FUND- On an annual basis and without further appropriation the Secretary shall distribute the amounts in the Trust Fund to the Secretary of Health and Human Services for use by the Agency for Healthcare Research and Quality. Such amounts shall be available to pay for research activities related to medical treatment outcomes and shall be in addition to any other amounts appropriated for such purposes.'.

(b) CONFORMING AMENDMENT- The table of sections for subchapter A of chapter 98 of such Code is amended by adding at the end the following:

`Sec. 9511. Trust Fund for Medical Treatment Outcomes Research.'.

SEC. 203. INCREASING THE USE OF MEDICAL TECHNOLOGY

The Secretary of Health and Human Services shall--

(1) provide grants and contracts to enhance the development of information technology standards by the private sector;

(2) carry out activities to examine how the use of information technology can be encouraged; and

(3) coordinate information technology-related activities taken by the Federal Government and ensure that such activities will further national health information and infrastructure.

TITLE III--PRIMARY AND PREVENTIVE CARE PROVIDERS

SEC. 301. INCREASED MEDICARE REIMBURSEMENT FOR PHYSICIAN ASSISTANTS, NURSE PRACTITIONERS, AND CLINICAL NURSE SPECIALISTS.

(a) FEE SCHEDULE AMOUNT- Section 1833(a)(1)(O) of the Social Security Act (42 U.S.C. 1395l(a)(1)(O)) is amended by striking `85 percent' and inserting `90 percent' each place it appears.

(b) TECHNICAL AMENDMENT- Section 1833(a)(1)(O) of the Social Security Act (42 U.S.C. 1395l(a)(1)(O)) is amended by striking `clinic' and inserting `clinical'.

(c) EFFECTIVE DATE- The amendments made by this section shall apply to items and services furnished on and after January 1, 2005.

SEC. 302. REQUIRING COVERAGE OF CERTAIN NONPHYSICIAN PROVIDERS UNDER THE MEDICAID PROGRAM.

(a) IN GENERAL- Section 1905(a) of the Social Security Act (42 U.S.C. 1396d(a)) is amended--

(1) in paragraph (26), by striking `and' at the end;

(2) by redesignating paragraph (27) as paragraph (28); and

(3) by inserting after paragraph (26) the following:

`(27) services furnished by a physician assistant, nurse practitioner, clinical nurse specialist (as defined in section 1861(aa)(5)), or certified registered nurse anesthetist (as defined in section 1861(bb)(2)); and'.

(b) CONFORMING AMENDMENT- Section 1902(a)(10)(C)(iv) of the Social Security Act (42 U.S.C. 1396a(a)(10)(C)(iv)) is amended by inserting `and (27)' after `(24)'.

(c) EFFECTIVE DATE- The amendments made by this section shall apply to medical assistance furnished under title XIX of the Social Security Act (42 U.S.C. 1396 et seq.) beginning with the first fiscal year quarter that begins after the date of enactment of this Act.

SEC. 303. MEDICAL STUDENT TUTORIAL PROGRAM GRANTS.

Part C of title VII of the Public Health Service Act (42 U.S.C. 293j et seq.) is amended by adding at the end the following:

`SEC. 749. MEDICAL STUDENT TUTORIAL PROGRAM GRANTS.

`(a) ESTABLISHMENT- The Secretary shall establish a program to award grants to eligible schools of medicine or osteopathic medicine to enable such schools to provide medical students for tutorial programs or as participants in clinics designed to interest high school or college students in careers in general medical practice.

`(b) APPLICATION- To be eligible to receive a grant under this section, a school of medicine or osteopathic medicine shall prepare and submit to the Secretary an application at such time, in such manner, and containing such information as the Secretary may require, including assurances that the school will use amounts received under the grant in accordance with subsection (c).

`(c) USE OF FUNDS-

`(1) IN GENERAL- Amounts received under a grant awarded under this section shall be used to--

`(A) fund programs under which students of the grantee are provided as tutors for high school and college students in the areas of mathematics, science, health promotion and prevention, first aid, nutrition and prenatal care;

`(B) fund programs under which students of the grantee are provided as participants in

clinics and seminars in the areas described in paragraph (1); and

`(C) conduct summer institutes for high school and college students to promote careers in medicine.

`(2) DESIGN OF PROGRAMS- The programs, institutes, and other activities conducted by grantees under paragraph (1) shall be designed to--

`(A) give medical students desiring to practice general medicine access to the local community;

`(B) provide information to high school and college students concerning medical school and the general practice of medicine; and

`(C) promote careers in general medicine.

`(d) AUTHORIZATION OF APPROPRIATIONS- There are authorized to be appropriated to carry out this section, $5,000,000 for fiscal year 2005, and such sums as may be necessary for fiscal year 2006.'.

SEC. 304. GENERAL MEDICAL PRACTICE GRANTS.

Part C of title VII of the Public Health Service Act, as amended by section 303, is amended by adding at the end the following:

`SEC. 749A. GENERAL MEDICAL PRACTICE GRANTS.

`(a) ESTABLISHMENT- The Secretary shall establish a program to award grants to eligible public or private nonprofit schools of medicine or osteopathic medicine, hospitals, residency programs in family medicine or pediatrics, or to a consortium of such entities, to enable such entities to develop effective strategies for recruiting medical students interested in the practice of general medicine and placing such students into general practice positions upon graduation.

`(b) APPLICATION- To be eligible to receive a grant under this section, an entity of the type described in subsection (a) shall prepare and submit to the Secretary an application at such time, in such manner, and containing such information as the Secretary may require, including assurances that the entity will use amounts received under the grant in accordance with subsection (c).

`(c) USE OF FUNDS- Amounts received under a grant awarded under this section shall be used to fund programs under which effective strategies are developed and implemented for recruiting medical students interested in the practice of general medicine and placing such students into general practice positions upon graduation.

`(d) AUTHORIZATION OF APPROPRIATIONS- There are authorized to be appropriated to carry out this section, $25,000,000 for each of the fiscal years 2005 through 2007, and such sums as may be necessary for fiscal years thereafter.'.

END