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MEDICARE RX 2000 ACT
(House of Representatives - June 28, 2000)

Text of this article available as: TXT PDF [Pages H5319-H5415] MEDICARE RX 2000 ACT Mr. ARCHER. Mr. Speaker, pursuant to H. Res. 539, I call up the bill (H.R. 4680), to amend title XVIII of the Social Security Act to provide for a voluntary program for prescription drug coverage under the Medicare Program, to modernize the Medicare Program, and for other purposes, and ask for its immediate consideration in the House. The Clerk read the title of the bill. The SPEAKER pro tempore (Mr. LaHood). Pursuant to House Resolution 539, the bill is considered read for amendment. The text of the bill, H.R. 4680, is as follows: H.R. 4680 Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE; TABLE OF CONTENTS. (a) Short Title.--This Act may be cited as the ``Medicare Rx 2000 Act''. (b) Table of Contents.--The table of contents of this Act is as follows: Sec. 1. Short title; table of contents. TITLE I--MEDICARE PRESCRIPTION DRUG BENEFIT Sec. 101. 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. ``Sec. 1860E. Process for beneficiaries to select qualified prescription drug coverage. ``Sec. 1860F. Premiums. ``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. 102. Offering of qualified prescription drug coverage under the Medicare+Choice program. Sec. 103. Medicaid amendments. Sec. 104. Medigap transition provisions. TITLE II--MODERNIZATION OF ADMINISTRATION OF MEDICARE Subtitle A--Medicare Benefits Administration Sec. 201. Establishment of administration. ``Sec. 1807. Medicare Benefits Administration. Sec. 202. Miscellaneous administrative provisions. Subtitle B--Oversight of Financial Sustainability of the Medicare Program Sec. 211. Additional requirements for annual financial report and oversight on medicare program. Subtitle C--Changes in Medicare Coverage and Appeals Process Sec. 221. Revisions to medicare appeals process. Sec. 222. Provisions with respect to limitations on liability of beneficiaries. Sec. 223. Waivers of liability for cost sharing amounts. Sec. 224. Elimination of motions by the Secretary on decisions of the Provider Reimbursement Review Board. TITLE III--MEDICARE+CHOICE REFORMS; PRESERVATION OF MEDICARE PART B DRUG BENEFIT Subtitle A--Medicare+Choice Reforms Sec. 301. Increase in national per capita Medicare+Choice growth percentage in 2001 and 2002. Sec. 302. Permanently removing application of budget neutrality beginning in 2002. Sec. 303. Increasing minimum payment amount. Sec. 304. Allowing movement to 50:50 percent blend in 2002. Sec. 305. Increased update for payment areas with only one or no Medicare+Choice contracts. Sec. 306. Permitting higher negotiated rates in certain Medicare+Choice payment areas below national average. Sec. 307. 10-year phase in of risk adjustment based on data from all settings. Subtitle B--Preservation of Medicare Coverage of Drugs and Biologicals Sec. 311. Preservation of coverage of drugs and biologicals under part B of the medicare program. TITLE I--MEDICARE PRESCRIPTION DRUG BENEFIT SEC. 101. 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 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 Administrator of the Medicare Benefits Administration (appointed under section 1807(b)) (in this part referred to as the `Medicare Benefits Administrator') and only during an election period prescribed in or under this subsection. ``(2) Election periods.-- ``(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 enrolled under part B as of November 1, 2002, 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 enrolled under part B after November 1, 2002, there [[Page H5320]] shall be an initial election period which is the same as the initial election period under section 1851(e)(1). ``(C) Additional special election periods.--The Medicare Benefits Administrator shall establish special election periods-- ``(i) in cases of individuals who have and involuntarily lose prescription drug coverage described in subsection (c)(2)(C); and ``(ii) in cases described in section 1837(h) (relating to errors in enrollment), in the same manner as such section applies to part B. ``(D) One-time enrollment permitted for current part a only beneficiaries.--In the case of an individual who as of November 1, 2002-- ``(i) is entitled to benefits under part A; and ``(ii) is not (and has not previously been) enrolled under part B; the individual shall be eligible to enroll in a prescription drug plan under this part but only during the period described in subparagraph (B)(i). If the individual enrolls in such a plan, the individual may change such enrollment under this part, but the individual may not enroll in a Medicare+Choice plan under part C unless the individual enrolls under part B. Nothing in this subparagraph shall be construed as providing for coverage under a prescription drug plan of benefits that are excluded because of the application of section 1860B(f)(2)(B). ``(c) Guaranteed Issue; Community Rating; and Nondiscrimination.-- ``(1) Guaranteed issue.-- ``(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, 2003) 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(f)(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, 2003, 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 Medicare Benefits Administrator 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 2003.--In no case shall any election take effect before January 1, 2003. ``(3) Termination.--The Medicare Benefits Administrator shall provide for the termination of elections in the case of-- ``(A) termination of coverage under part B (other than the case of an individual described in subsection (b)(2)(D) (relating to part A only individuals); 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. ``(a) Requirements.-- ``(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 Medicare Benefits Administrator shall review the offering of qualified prescription drug coverage under this part or part C. If the Administrator 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 Administrator 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-- ``(A) for 2003, that is equal to $250; or ``(B) for a subsequent year, that is equal to the amount specified under this paragraph for the previous year increased by the percentage specified in paragraph (5) for the year involved. Any amount determined under subparagraph (B) that is not a multiple of $5 shall be rounded to the nearest multiple of $5. ``(2) Limits on cost-sharing.--The coverage has cost- sharing (for costs above the annual deductible specified in paragraph (1) and up to the initial coverage limit under paragraph (3)) that is equal to 50 percent or that is actuarially consistent (using processes established under subsection (e)) with an average expected payment of 50 percent of such costs. ``(3) Initial coverage limit.--Subject to paragraph (4), the coverage has an initial coverage limit on the maximum costs that may be recognized for payment purposes (above the annual deductible)-- [[Page H5321]] ``(A) for 2003, that is equal to $2,100; or ``(B) for a subsequent year, that is equal to the amount specified in this paragraph for the previous year, increased by the annual percentage increase described in paragraph (5) for the year involved. Any amount determined under subparagraph (B) that is not a multiple of $25 shall be rounded to the nearest multiple of $25. ``(4) Limitation on out-of-pocket expenditures by beneficiary.-- ``(A) In general.--Notwithstanding paragraph (3), the coverage provides benefits without any cost-sharing after the individual has incurred costs (as described in subparagraph (C)) for covered outpatient drugs in a year equal to the annual out-of-pocket limit specified in subparagraph (B). ``(B) Annual out-of-pocket limit.--For purposes of this part, the `annual out-of-pocket limit' specified in this subparagraph-- ``(i) for 2003, is equal to $6,000; or ``(ii) for a subsequent year, is equal to the amount specified in the subparagraph for the previous year, increased by the annual percentage increase described in paragraph (5) for the year involved. Any amount determined under clause (ii) that is not a multiple of $100 shall be rounded to the nearest multiple of $100. ``(C) Application.--In applying subparagraph (A)-- ``(i) incurred costs shall only include costs incurred for the annual deductible (described in paragraph (1)), cost- sharing (described in paragraph (2)), and amounts for which benefits are not provided because of the application of the initial coverage limit described in paragraph (3); but ``(ii) costs shall be treated as incurred without regard to whether the individual or another person, including a State program, has paid for such costs, but shall not be counted insofar as such costs are covered as benefits under a prescription drug plan, a Medicare+Choice plan, or other third-party coverage. ``(5) Annual percentage increase.--For purposes of this part, the annual percentage increase specified in this paragraph for a year is equal to the annual percentage increase in average per capita aggregate expenditures for covered outpatient drugs in the United States for medicare beneficiaries, as determined by the Medicare Benefits Administrator for the 12-month period ending in July of the previous year. ``(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)(1) 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 at initial coverage limit.--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 that are equal to the sum of the deductible under subsection (b)(1) and the initial coverage limit under subsection (b)(3), of an amount equal to at least such initial coverage limit multiplied by the percentage specified in subsection (b)(2). ``(2) Limitation on out-of-pocket expenditures by beneficiaries.--The coverage provides the limitation on out- of-pocket expenditures by beneficiaries described in subsection (b)(4). ``(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)). ``(e) Actuarial Valuation; Determination of Annual Percentage Increases.-- ``(1) Processes.--For purposes of this section, the Medicare Benefits Administrator 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 or insulin described in subparagraph (B) or (C) of such section. ``(2) Exclusions.-- ``(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). ``(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 and Nondiscrimination.--For provisions requiring guaranteed issue, community-rated premiums, and nondiscrimination, see sections 1860A(c) 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. Nothing in this paragraph shall be construed as requiring the participation of all pharmacies in any area under a plan. ``(2) 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. [[Page H5322]] ``(3) 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 (i)(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). ``(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 medically necessary 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 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. ``(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 Medicare Benefits Administrator under subsection (d). ``(b) Contract Requirements.-- ``(1) In general.--The Medicare Benefits Administrator 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 Administrator 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 1 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) 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). ``(3) Rules of application for intermediate sanctions.--In applying paragraph (2)(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 Medicare Benefits Administrator shall waive the requirement of subsection (a)(1) that the entity be licensed in that State if the Administrator determines, based on the application and other evidence presented to the Administrator, 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 medicare+choice pso 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 were treated as a reference to solvency standards established under subsection (c). ``(d) Solvency Standards for Non-Licensed Sponsors.-- ``(1) Establishment.--The Medicare Benefits Administrator shall establish, by not later than October 1, 2001, 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 [[Page H5323]] 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 Medicare Benefits Administrator 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 Medicare Benefits Administrator 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 Administrator shall publish such regulations by October 1, 2001. In order to carry out this requirement in a timely manner, the Administrator 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 subsection 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, in the same manner as such laws and regulations are superseded under section 1856(b)(3). ``(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). ``(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 Medicare Benefits Administrator under this part. ``SEC. 1860E. PROCESS FOR BENEFICIARIES TO SELECT QUALIFIED PRESCRIPTION DRUG COVERAGE. ``(a) In General.--The Medicare Benefits Administrator, through the Office of Beneficiary Assistance, 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) In general.--The Medicare Benefits Administrator shall assure that each individual who is enrolled under part B and who is residing in an area has available a choice of enrollment in at least 2 qualifying plans (as defined in paragraph (5)) in the area in which the individual resides, at least 1 of which is a prescription drug plan. ``(2) Guaranteeing access to coverage.--In order to assure access under paragraph (1) and consistent with paragraph (3), the Medicare Benefits Administrator 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 Medicare Benefits Administrator-- ``(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 Medicare Benefits Administrator shall, in each annual report to Congress under section 1807(f), include information on the exercise of authority under this subsection. The Administrator 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 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 Medicare Benefits Administrator 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 Medicare Benefits Administrator may require to carry out this part. ``(3) Review.--The Medicare Benefits Administrator shall review the information filed under paragraph (2) and shall approve or disapprove such rates, amounts, and values so submitted. In exercising such authority, the Administrator 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 and shall have the same authority to negotiate the terms and conditions of such premiums and other terms and conditions of plans 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. ``(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. ``(a) In General.-- ``(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 (3)) who is determined to have income that does not exceed 135 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 paragraphs (1) and (2) of section 1860B(b) (up to the initial coverage limit specified in paragraph (3) of such section) of amounts that are nominal. ``(2) Sliding scale premium subsidy for individuals with income above 135, but below 150 percent, of federal poverty level.--In the case of a subsidy eligible individual who is determined to have income that exceeds 135 percent, but does not exceed 150 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 135 percent of such level to 0 percent of such amount for individuals with incomes at 150 percent of such level. ``(3) 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-- [[Page H5324]] ``(i) is eligible to elect, and has elected, to obtain qualified prescription drug coverage under this part; ``(ii) has income below 150 percent of the Federal poverty line; and ``(iii) meets the resources requirement described in section 1905(p)(1)(C). ``(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 Medicare Benefits Administrator. ``(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)(4)(A)(iii), determined without regard to any reduction effected under section 1851(j)(4)(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 Medicare Benefits Administrator 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 Medicare Benefits Administrator 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 Administrator 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 Administrator information on the amount of such reduction; and ``(3) the Administrator 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 Medicare Benefits Administrator 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 (f)(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 Administrator 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 Administrator to provide the Administrator 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 (f)). ``(c) Reinsurance Payment Amount.-- ``(1) In general.--Subject to subsection (d)(2) and paragraph (4), the reinsurance payment amount under this subsection for a qualifying covered individual (as defined in subsection (g)(1)) for a coverage year (as defined in subsection (g)(2)) is equal to the sum of the following: ``(A) For the portion of the individual's gross covered prescription drug costs (as defined in paragraph (3)) for the year that exceeds $1,250, but does not exceed $1,350, an amount equal to 30 percent of the allowable costs (as defined in paragraph (2)) attributable to such gross covered prescription drug costs. ``(B) For the portion of the individual's gross covered prescription drug costs for the year that exceeds $1,350, but does not exceed $1,450, an amount equal to 50 percent of the allowable costs attributable to such gross covered prescription drug costs. ``(C) For the portion of the individual's gross covered prescription drug costs for the year that exceeds $1,450, but does not exceed $1,550, an amount equal to 70 percent of the allowable costs attributable to such gross covered prescription drug costs. ``(D) For the portion of the individual's gross covered prescription drug costs for the year that exceeds $1,550, but does not exceed $2,350, an amount equal to 90 percent of the allowable costs attributable to such gross covered prescription drug costs. ``(E) For the portion of the individual's gross covered prescription drug costs for the year that exceeds $7,050, an amount equal to 90 percent of the allowable costs attributable to such gross covered prescription drug costs. ``(2) Allowable costs.--For purposes of this section, the term `allowable costs' means, with respect to gr

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MEDICARE RX 2000 ACT
(House of Representatives - June 28, 2000)

Text of this article available as: TXT PDF [Pages H5319-H5415] MEDICARE RX 2000 ACT Mr. ARCHER. Mr. Speaker, pursuant to H. Res. 539, I call up the bill (H.R. 4680), to amend title XVIII of the Social Security Act to provide for a voluntary program for prescription drug coverage under the Medicare Program, to modernize the Medicare Program, and for other purposes, and ask for its immediate consideration in the House. The Clerk read the title of the bill. The SPEAKER pro tempore (Mr. LaHood). Pursuant to House Resolution 539, the bill is considered read for amendment. The text of the bill, H.R. 4680, is as follows: H.R. 4680 Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE; TABLE OF CONTENTS. (a) Short Title.--This Act may be cited as the ``Medicare Rx 2000 Act''. (b) Table of Contents.--The table of contents of this Act is as follows: Sec. 1. Short title; table of contents. TITLE I--MEDICARE PRESCRIPTION DRUG BENEFIT Sec. 101. 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. ``Sec. 1860E. Process for beneficiaries to select qualified prescription drug coverage. ``Sec. 1860F. Premiums. ``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. 102. Offering of qualified prescription drug coverage under the Medicare+Choice program. Sec. 103. Medicaid amendments. Sec. 104. Medigap transition provisions. TITLE II--MODERNIZATION OF ADMINISTRATION OF MEDICARE Subtitle A--Medicare Benefits Administration Sec. 201. Establishment of administration. ``Sec. 1807. Medicare Benefits Administration. Sec. 202. Miscellaneous administrative provisions. Subtitle B--Oversight of Financial Sustainability of the Medicare Program Sec. 211. Additional requirements for annual financial report and oversight on medicare program. Subtitle C--Changes in Medicare Coverage and Appeals Process Sec. 221. Revisions to medicare appeals process. Sec. 222. Provisions with respect to limitations on liability of beneficiaries. Sec. 223. Waivers of liability for cost sharing amounts. Sec. 224. Elimination of motions by the Secretary on decisions of the Provider Reimbursement Review Board. TITLE III--MEDICARE+CHOICE REFORMS; PRESERVATION OF MEDICARE PART B DRUG BENEFIT Subtitle A--Medicare+Choice Reforms Sec. 301. Increase in national per capita Medicare+Choice growth percentage in 2001 and 2002. Sec. 302. Permanently removing application of budget neutrality beginning in 2002. Sec. 303. Increasing minimum payment amount. Sec. 304. Allowing movement to 50:50 percent blend in 2002. Sec. 305. Increased update for payment areas with only one or no Medicare+Choice contracts. Sec. 306. Permitting higher negotiated rates in certain Medicare+Choice payment areas below national average. Sec. 307. 10-year phase in of risk adjustment based on data from all settings. Subtitle B--Preservation of Medicare Coverage of Drugs and Biologicals Sec. 311. Preservation of coverage of drugs and biologicals under part B of the medicare program. TITLE I--MEDICARE PRESCRIPTION DRUG BENEFIT SEC. 101. 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 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 Administrator of the Medicare Benefits Administration (appointed under section 1807(b)) (in this part referred to as the `Medicare Benefits Administrator') and only during an election period prescribed in or under this subsection. ``(2) Election periods.-- ``(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 enrolled under part B as of November 1, 2002, 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 enrolled under part B after November 1, 2002, there [[Page H5320]] shall be an initial election period which is the same as the initial election period under section 1851(e)(1). ``(C) Additional special election periods.--The Medicare Benefits Administrator shall establish special election periods-- ``(i) in cases of individuals who have and involuntarily lose prescription drug coverage described in subsection (c)(2)(C); and ``(ii) in cases described in section 1837(h) (relating to errors in enrollment), in the same manner as such section applies to part B. ``(D) One-time enrollment permitted for current part a only beneficiaries.--In the case of an individual who as of November 1, 2002-- ``(i) is entitled to benefits under part A; and ``(ii) is not (and has not previously been) enrolled under part B; the individual shall be eligible to enroll in a prescription drug plan under this part but only during the period described in subparagraph (B)(i). If the individual enrolls in such a plan, the individual may change such enrollment under this part, but the individual may not enroll in a Medicare+Choice plan under part C unless the individual enrolls under part B. Nothing in this subparagraph shall be construed as providing for coverage under a prescription drug plan of benefits that are excluded because of the application of section 1860B(f)(2)(B). ``(c) Guaranteed Issue; Community Rating; and Nondiscrimination.-- ``(1) Guaranteed issue.-- ``(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, 2003) 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(f)(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, 2003, 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 Medicare Benefits Administrator 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 2003.--In no case shall any election take effect before January 1, 2003. ``(3) Termination.--The Medicare Benefits Administrator shall provide for the termination of elections in the case of-- ``(A) termination of coverage under part B (other than the case of an individual described in subsection (b)(2)(D) (relating to part A only individuals); 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. ``(a) Requirements.-- ``(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 Medicare Benefits Administrator shall review the offering of qualified prescription drug coverage under this part or part C. If the Administrator 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 Administrator 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-- ``(A) for 2003, that is equal to $250; or ``(B) for a subsequent year, that is equal to the amount specified under this paragraph for the previous year increased by the percentage specified in paragraph (5) for the year involved. Any amount determined under subparagraph (B) that is not a multiple of $5 shall be rounded to the nearest multiple of $5. ``(2) Limits on cost-sharing.--The coverage has cost- sharing (for costs above the annual deductible specified in paragraph (1) and up to the initial coverage limit under paragraph (3)) that is equal to 50 percent or that is actuarially consistent (using processes established under subsection (e)) with an average expected payment of 50 percent of such costs. ``(3) Initial coverage limit.--Subject to paragraph (4), the coverage has an initial coverage limit on the maximum costs that may be recognized for payment purposes (above the annual deductible)-- [[Page H5321]] ``(A) for 2003, that is equal to $2,100; or ``(B) for a subsequent year, that is equal to the amount specified in this paragraph for the previous year, increased by the annual percentage increase described in paragraph (5) for the year involved. Any amount determined under subparagraph (B) that is not a multiple of $25 shall be rounded to the nearest multiple of $25. ``(4) Limitation on out-of-pocket expenditures by beneficiary.-- ``(A) In general.--Notwithstanding paragraph (3), the coverage provides benefits without any cost-sharing after the individual has incurred costs (as described in subparagraph (C)) for covered outpatient drugs in a year equal to the annual out-of-pocket limit specified in subparagraph (B). ``(B) Annual out-of-pocket limit.--For purposes of this part, the `annual out-of-pocket limit' specified in this subparagraph-- ``(i) for 2003, is equal to $6,000; or ``(ii) for a subsequent year, is equal to the amount specified in the subparagraph for the previous year, increased by the annual percentage increase described in paragraph (5) for the year involved. Any amount determined under clause (ii) that is not a multiple of $100 shall be rounded to the nearest multiple of $100. ``(C) Application.--In applying subparagraph (A)-- ``(i) incurred costs shall only include costs incurred for the annual deductible (described in paragraph (1)), cost- sharing (described in paragraph (2)), and amounts for which benefits are not provided because of the application of the initial coverage limit described in paragraph (3); but ``(ii) costs shall be treated as incurred without regard to whether the individual or another person, including a State program, has paid for such costs, but shall not be counted insofar as such costs are covered as benefits under a prescription drug plan, a Medicare+Choice plan, or other third-party coverage. ``(5) Annual percentage increase.--For purposes of this part, the annual percentage increase specified in this paragraph for a year is equal to the annual percentage increase in average per capita aggregate expenditures for covered outpatient drugs in the United States for medicare beneficiaries, as determined by the Medicare Benefits Administrator for the 12-month period ending in July of the previous year. ``(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)(1) 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 at initial coverage limit.--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 that are equal to the sum of the deductible under subsection (b)(1) and the initial coverage limit under subsection (b)(3), of an amount equal to at least such initial coverage limit multiplied by the percentage specified in subsection (b)(2). ``(2) Limitation on out-of-pocket expenditures by beneficiaries.--The coverage provides the limitation on out- of-pocket expenditures by beneficiaries described in subsection (b)(4). ``(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)). ``(e) Actuarial Valuation; Determination of Annual Percentage Increases.-- ``(1) Processes.--For purposes of this section, the Medicare Benefits Administrator 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 or insulin described in subparagraph (B) or (C) of such section. ``(2) Exclusions.-- ``(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). ``(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 and Nondiscrimination.--For provisions requiring guaranteed issue, community-rated premiums, and nondiscrimination, see sections 1860A(c) 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. Nothing in this paragraph shall be construed as requiring the participation of all pharmacies in any area under a plan. ``(2) 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. [[Page H5322]] ``(3) 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 (i)(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). ``(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 medically necessary 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 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. ``(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 Medicare Benefits Administrator under subsection (d). ``(b) Contract Requirements.-- ``(1) In general.--The Medicare Benefits Administrator 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 Administrator 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 1 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) 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). ``(3) Rules of application for intermediate sanctions.--In applying paragraph (2)(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 Medicare Benefits Administrator shall waive the requirement of subsection (a)(1) that the entity be licensed in that State if the Administrator determines, based on the application and other evidence presented to the Administrator, 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 medicare+choice pso 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 were treated as a reference to solvency standards established under subsection (c). ``(d) Solvency Standards for Non-Licensed Sponsors.-- ``(1) Establishment.--The Medicare Benefits Administrator shall establish, by not later than October 1, 2001, 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 [[Page H5323]] 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 Medicare Benefits Administrator 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 Medicare Benefits Administrator 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 Administrator shall publish such regulations by October 1, 2001. In order to carry out this requirement in a timely manner, the Administrator 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 subsection 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, in the same manner as such laws and regulations are superseded under section 1856(b)(3). ``(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). ``(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 Medicare Benefits Administrator under this part. ``SEC. 1860E. PROCESS FOR BENEFICIARIES TO SELECT QUALIFIED PRESCRIPTION DRUG COVERAGE. ``(a) In General.--The Medicare Benefits Administrator, through the Office of Beneficiary Assistance, 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) In general.--The Medicare Benefits Administrator shall assure that each individual who is enrolled under part B and who is residing in an area has available a choice of enrollment in at least 2 qualifying plans (as defined in paragraph (5)) in the area in which the individual resides, at least 1 of which is a prescription drug plan. ``(2) Guaranteeing access to coverage.--In order to assure access under paragraph (1) and consistent with paragraph (3), the Medicare Benefits Administrator 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 Medicare Benefits Administrator-- ``(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 Medicare Benefits Administrator shall, in each annual report to Congress under section 1807(f), include information on the exercise of authority under this subsection. The Administrator 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 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 Medicare Benefits Administrator 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 Medicare Benefits Administrator may require to carry out this part. ``(3) Review.--The Medicare Benefits Administrator shall review the information filed under paragraph (2) and shall approve or disapprove such rates, amounts, and values so submitted. In exercising such authority, the Administrator 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 and shall have the same authority to negotiate the terms and conditions of such premiums and other terms and conditions of plans 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. ``(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. ``(a) In General.-- ``(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 (3)) who is determined to have income that does not exceed 135 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 paragraphs (1) and (2) of section 1860B(b) (up to the initial coverage limit specified in paragraph (3) of such section) of amounts that are nominal. ``(2) Sliding scale premium subsidy for individuals with income above 135, but below 150 percent, of federal poverty level.--In the case of a subsidy eligible individual who is determined to have income that exceeds 135 percent, but does not exceed 150 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 135 percent of such level to 0 percent of such amount for individuals with incomes at 150 percent of such level. ``(3) 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-- [[Page H5324]] ``(i) is eligible to elect, and has elected, to obtain qualified prescription drug coverage under this part; ``(ii) has income below 150 percent of the Federal poverty line; and ``(iii) meets the resources requirement described in section 1905(p)(1)(C). ``(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 Medicare Benefits Administrator. ``(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)(4)(A)(iii), determined without regard to any reduction effected under section 1851(j)(4)(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 Medicare Benefits Administrator 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 Medicare Benefits Administrator 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 Administrator 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 Administrator information on the amount of such reduction; and ``(3) the Administrator 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 Medicare Benefits Administrator 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 (f)(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 Administrator 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 Administrator to provide the Administrator 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 (f)). ``(c) Reinsurance Payment Amount.-- ``(1) In general.--Subject to subsection (d)(2) and paragraph (4), the reinsurance payment amount under this subsection for a qualifying covered individual (as defined in subsection (g)(1)) for a coverage year (as defined in subsection (g)(2)) is equal to the sum of the following: ``(A) For the portion of the individual's gross covered prescription drug costs (as defined in paragraph (3)) for the year that exceeds $1,250, but does not exceed $1,350, an amount equal to 30 percent of the allowable costs (as defined in paragraph (2)) attributable to such gross covered prescription drug costs. ``(B) For the portion of the individual's gross covered prescription drug costs for the year that exceeds $1,350, but does not exceed $1,450, an amount equal to 50 percent of the allowable costs attributable to such gross covered prescription drug costs. ``(C) For the portion of the individual's gross covered prescription drug costs for the year that exceeds $1,450, but does not exceed $1,550, an amount equal to 70 percent of the allowable costs attributable to such gross covered prescription drug costs. ``(D) For the portion of the individual's gross covered prescription drug costs for the year that exceeds $1,550, but does not exceed $2,350, an amount equal to 90 percent of the allowable costs attributable to such gross covered prescription drug costs. ``(E) For the portion of the individual's gross covered prescription drug costs for the year that exceeds $7,050, an amount equal to 90 percent of the allowable costs attributable to such gross covered prescription drug costs. ``(2) Allowable costs.--For purposes of this section, the term `allowable costs' means, with res

Summary:

All articles in House section

MEDICARE RX 2000 ACT
(House of Representatives - June 28, 2000)

Text of this article available as: TXT PDF [Pages H5319-H5415] MEDICARE RX 2000 ACT Mr. ARCHER. Mr. Speaker, pursuant to H. Res. 539, I call up the bill (H.R. 4680), to amend title XVIII of the Social Security Act to provide for a voluntary program for prescription drug coverage under the Medicare Program, to modernize the Medicare Program, and for other purposes, and ask for its immediate consideration in the House. The Clerk read the title of the bill. The SPEAKER pro tempore (Mr. LaHood). Pursuant to House Resolution 539, the bill is considered read for amendment. The text of the bill, H.R. 4680, is as follows: H.R. 4680 Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE; TABLE OF CONTENTS. (a) Short Title.--This Act may be cited as the ``Medicare Rx 2000 Act''. (b) Table of Contents.--The table of contents of this Act is as follows: Sec. 1. Short title; table of contents. TITLE I--MEDICARE PRESCRIPTION DRUG BENEFIT Sec. 101. 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. ``Sec. 1860E. Process for beneficiaries to select qualified prescription drug coverage. ``Sec. 1860F. Premiums. ``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. 102. Offering of qualified prescription drug coverage under the Medicare+Choice program. Sec. 103. Medicaid amendments. Sec. 104. Medigap transition provisions. TITLE II--MODERNIZATION OF ADMINISTRATION OF MEDICARE Subtitle A--Medicare Benefits Administration Sec. 201. Establishment of administration. ``Sec. 1807. Medicare Benefits Administration. Sec. 202. Miscellaneous administrative provisions. Subtitle B--Oversight of Financial Sustainability of the Medicare Program Sec. 211. Additional requirements for annual financial report and oversight on medicare program. Subtitle C--Changes in Medicare Coverage and Appeals Process Sec. 221. Revisions to medicare appeals process. Sec. 222. Provisions with respect to limitations on liability of beneficiaries. Sec. 223. Waivers of liability for cost sharing amounts. Sec. 224. Elimination of motions by the Secretary on decisions of the Provider Reimbursement Review Board. TITLE III--MEDICARE+CHOICE REFORMS; PRESERVATION OF MEDICARE PART B DRUG BENEFIT Subtitle A--Medicare+Choice Reforms Sec. 301. Increase in national per capita Medicare+Choice growth percentage in 2001 and 2002. Sec. 302. Permanently removing application of budget neutrality beginning in 2002. Sec. 303. Increasing minimum payment amount. Sec. 304. Allowing movement to 50:50 percent blend in 2002. Sec. 305. Increased update for payment areas with only one or no Medicare+Choice contracts. Sec. 306. Permitting higher negotiated rates in certain Medicare+Choice payment areas below national average. Sec. 307. 10-year phase in of risk adjustment based on data from all settings. Subtitle B--Preservation of Medicare Coverage of Drugs and Biologicals Sec. 311. Preservation of coverage of drugs and biologicals under part B of the medicare program. TITLE I--MEDICARE PRESCRIPTION DRUG BENEFIT SEC. 101. 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 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 Administrator of the Medicare Benefits Administration (appointed under section 1807(b)) (in this part referred to as the `Medicare Benefits Administrator') and only during an election period prescribed in or under this subsection. ``(2) Election periods.-- ``(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 enrolled under part B as of November 1, 2002, 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 enrolled under part B after November 1, 2002, there [[Page H5320]] shall be an initial election period which is the same as the initial election period under section 1851(e)(1). ``(C) Additional special election periods.--The Medicare Benefits Administrator shall establish special election periods-- ``(i) in cases of individuals who have and involuntarily lose prescription drug coverage described in subsection (c)(2)(C); and ``(ii) in cases described in section 1837(h) (relating to errors in enrollment), in the same manner as such section applies to part B. ``(D) One-time enrollment permitted for current part a only beneficiaries.--In the case of an individual who as of November 1, 2002-- ``(i) is entitled to benefits under part A; and ``(ii) is not (and has not previously been) enrolled under part B; the individual shall be eligible to enroll in a prescription drug plan under this part but only during the period described in subparagraph (B)(i). If the individual enrolls in such a plan, the individual may change such enrollment under this part, but the individual may not enroll in a Medicare+Choice plan under part C unless the individual enrolls under part B. Nothing in this subparagraph shall be construed as providing for coverage under a prescription drug plan of benefits that are excluded because of the application of section 1860B(f)(2)(B). ``(c) Guaranteed Issue; Community Rating; and Nondiscrimination.-- ``(1) Guaranteed issue.-- ``(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, 2003) 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(f)(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, 2003, 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 Medicare Benefits Administrator 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 2003.--In no case shall any election take effect before January 1, 2003. ``(3) Termination.--The Medicare Benefits Administrator shall provide for the termination of elections in the case of-- ``(A) termination of coverage under part B (other than the case of an individual described in subsection (b)(2)(D) (relating to part A only individuals); 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. ``(a) Requirements.-- ``(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 Medicare Benefits Administrator shall review the offering of qualified prescription drug coverage under this part or part C. If the Administrator 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 Administrator 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-- ``(A) for 2003, that is equal to $250; or ``(B) for a subsequent year, that is equal to the amount specified under this paragraph for the previous year increased by the percentage specified in paragraph (5) for the year involved. Any amount determined under subparagraph (B) that is not a multiple of $5 shall be rounded to the nearest multiple of $5. ``(2) Limits on cost-sharing.--The coverage has cost- sharing (for costs above the annual deductible specified in paragraph (1) and up to the initial coverage limit under paragraph (3)) that is equal to 50 percent or that is actuarially consistent (using processes established under subsection (e)) with an average expected payment of 50 percent of such costs. ``(3) Initial coverage limit.--Subject to paragraph (4), the coverage has an initial coverage limit on the maximum costs that may be recognized for payment purposes (above the annual deductible)-- [[Page H5321]] ``(A) for 2003, that is equal to $2,100; or ``(B) for a subsequent year, that is equal to the amount specified in this paragraph for the previous year, increased by the annual percentage increase described in paragraph (5) for the year involved. Any amount determined under subparagraph (B) that is not a multiple of $25 shall be rounded to the nearest multiple of $25. ``(4) Limitation on out-of-pocket expenditures by beneficiary.-- ``(A) In general.--Notwithstanding paragraph (3), the coverage provides benefits without any cost-sharing after the individual has incurred costs (as described in subparagraph (C)) for covered outpatient drugs in a year equal to the annual out-of-pocket limit specified in subparagraph (B). ``(B) Annual out-of-pocket limit.--For purposes of this part, the `annual out-of-pocket limit' specified in this subparagraph-- ``(i) for 2003, is equal to $6,000; or ``(ii) for a subsequent year, is equal to the amount specified in the subparagraph for the previous year, increased by the annual percentage increase described in paragraph (5) for the year involved. Any amount determined under clause (ii) that is not a multiple of $100 shall be rounded to the nearest multiple of $100. ``(C) Application.--In applying subparagraph (A)-- ``(i) incurred costs shall only include costs incurred for the annual deductible (described in paragraph (1)), cost- sharing (described in paragraph (2)), and amounts for which benefits are not provided because of the application of the initial coverage limit described in paragraph (3); but ``(ii) costs shall be treated as incurred without regard to whether the individual or another person, including a State program, has paid for such costs, but shall not be counted insofar as such costs are covered as benefits under a prescription drug plan, a Medicare+Choice plan, or other third-party coverage. ``(5) Annual percentage increase.--For purposes of this part, the annual percentage increase specified in this paragraph for a year is equal to the annual percentage increase in average per capita aggregate expenditures for covered outpatient drugs in the United States for medicare beneficiaries, as determined by the Medicare Benefits Administrator for the 12-month period ending in July of the previous year. ``(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)(1) 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 at initial coverage limit.--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 that are equal to the sum of the deductible under subsection (b)(1) and the initial coverage limit under subsection (b)(3), of an amount equal to at least such initial coverage limit multiplied by the percentage specified in subsection (b)(2). ``(2) Limitation on out-of-pocket expenditures by beneficiaries.--The coverage provides the limitation on out- of-pocket expenditures by beneficiaries described in subsection (b)(4). ``(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)). ``(e) Actuarial Valuation; Determination of Annual Percentage Increases.-- ``(1) Processes.--For purposes of this section, the Medicare Benefits Administrator 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 or insulin described in subparagraph (B) or (C) of such section. ``(2) Exclusions.-- ``(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). ``(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 and Nondiscrimination.--For provisions requiring guaranteed issue, community-rated premiums, and nondiscrimination, see sections 1860A(c) 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. Nothing in this paragraph shall be construed as requiring the participation of all pharmacies in any area under a plan. ``(2) 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. [[Page H5322]] ``(3) 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 (i)(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). ``(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 medically necessary 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 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. ``(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 Medicare Benefits Administrator under subsection (d). ``(b) Contract Requirements.-- ``(1) In general.--The Medicare Benefits Administrator 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 Administrator 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 1 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) 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). ``(3) Rules of application for intermediate sanctions.--In applying paragraph (2)(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 Medicare Benefits Administrator shall waive the requirement of subsection (a)(1) that the entity be licensed in that State if the Administrator determines, based on the application and other evidence presented to the Administrator, 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 medicare+choice pso 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 were treated as a reference to solvency standards established under subsection (c). ``(d) Solvency Standards for Non-Licensed Sponsors.-- ``(1) Establishment.--The Medicare Benefits Administrator shall establish, by not later than October 1, 2001, 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 [[Page H5323]] 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 Medicare Benefits Administrator 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 Medicare Benefits Administrator 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 Administrator shall publish such regulations by October 1, 2001. In order to carry out this requirement in a timely manner, the Administrator 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 subsection 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, in the same manner as such laws and regulations are superseded under section 1856(b)(3). ``(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). ``(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 Medicare Benefits Administrator under this part. ``SEC. 1860E. PROCESS FOR BENEFICIARIES TO SELECT QUALIFIED PRESCRIPTION DRUG COVERAGE. ``(a) In General.--The Medicare Benefits Administrator, through the Office of Beneficiary Assistance, 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) In general.--The Medicare Benefits Administrator shall assure that each individual who is enrolled under part B and who is residing in an area has available a choice of enrollment in at least 2 qualifying plans (as defined in paragraph (5)) in the area in which the individual resides, at least 1 of which is a prescription drug plan. ``(2) Guaranteeing access to coverage.--In order to assure access under paragraph (1) and consistent with paragraph (3), the Medicare Benefits Administrator 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 Medicare Benefits Administrator-- ``(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 Medicare Benefits Administrator shall, in each annual report to Congress under section 1807(f), include information on the exercise of authority under this subsection. The Administrator 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 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 Medicare Benefits Administrator 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 Medicare Benefits Administrator may require to carry out this part. ``(3) Review.--The Medicare Benefits Administrator shall review the information filed under paragraph (2) and shall approve or disapprove such rates, amounts, and values so submitted. In exercising such authority, the Administrator 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 and shall have the same authority to negotiate the terms and conditions of such premiums and other terms and conditions of plans 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. ``(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. ``(a) In General.-- ``(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 (3)) who is determined to have income that does not exceed 135 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 paragraphs (1) and (2) of section 1860B(b) (up to the initial coverage limit specified in paragraph (3) of such section) of amounts that are nominal. ``(2) Sliding scale premium subsidy for individuals with income above 135, but below 150 percent, of federal poverty level.--In the case of a subsidy eligible individual who is determined to have income that exceeds 135 percent, but does not exceed 150 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 135 percent of such level to 0 percent of such amount for individuals with incomes at 150 percent of such level. ``(3) 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-- [[Page H5324]] ``(i) is eligible to elect, and has elected, to obtain qualified prescription drug coverage under this part; ``(ii) has income below 150 percent of the Federal poverty line; and ``(iii) meets the resources requirement described in section 1905(p)(1)(C). ``(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 Medicare Benefits Administrator. ``(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)(4)(A)(iii), determined without regard to any reduction effected under section 1851(j)(4)(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 Medicare Benefits Administrator 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 Medicare Benefits Administrator 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 Administrator 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 Administrator information on the amount of such reduction; and ``(3) the Administrator 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 Medicare Benefits Administrator 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 (f)(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 Administrator 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 Administrator to provide the Administrator 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 (f)). ``(c) Reinsurance Payment Amount.-- ``(1) In general.--Subject to subsection (d)(2) and paragraph (4), the reinsurance payment amount under this subsection for a qualifying covered individual (as defined in subsection (g)(1)) for a coverage year (as defined in subsection (g)(2)) is equal to the sum of the following: ``(A) For the portion of the individual's gross covered prescription drug costs (as defined in paragraph (3)) for the year that exceeds $1,250, but does not exceed $1,350, an amount equal to 30 percent of the allowable costs (as defined in paragraph (2)) attributable to such gross covered prescription drug costs. ``(B) For the portion of the individual's gross covered prescription drug costs for the year that exceeds $1,350, but does not exceed $1,450, an amount equal to 50 percent of the allowable costs attributable to such gross covered prescription drug costs. ``(C) For the portion of the individual's gross covered prescription drug costs for the year that exceeds $1,450, but does not exceed $1,550, an amount equal to 70 percent of the allowable costs attributable to such gross covered prescription drug costs. ``(D) For the portion of the individual's gross covered prescription drug costs for the year that exceeds $1,550, but does not exceed $2,350, an amount equal to 90 percent of the allowable costs attributable to such gross covered prescription drug costs. ``(E) For the portion of the individual's gross covered prescription drug costs for the year that exceeds $7,050, an amount equal to 90 percent of the allowable costs attributable to such gross covered prescription drug costs. ``(2) Allowable costs.--For purposes of this section, the term `allowable costs' means, with respect to gr

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MEDICARE RX 2000 ACT
(House of Representatives - June 28, 2000)

Text of this article available as: TXT PDF [Pages H5319-H5415] MEDICARE RX 2000 ACT Mr. ARCHER. Mr. Speaker, pursuant to H. Res. 539, I call up the bill (H.R. 4680), to amend title XVIII of the Social Security Act to provide for a voluntary program for prescription drug coverage under the Medicare Program, to modernize the Medicare Program, and for other purposes, and ask for its immediate consideration in the House. The Clerk read the title of the bill. The SPEAKER pro tempore (Mr. LaHood). Pursuant to House Resolution 539, the bill is considered read for amendment. The text of the bill, H.R. 4680, is as follows: H.R. 4680 Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE; TABLE OF CONTENTS. (a) Short Title.--This Act may be cited as the ``Medicare Rx 2000 Act''. (b) Table of Contents.--The table of contents of this Act is as follows: Sec. 1. Short title; table of contents. TITLE I--MEDICARE PRESCRIPTION DRUG BENEFIT Sec. 101. 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. ``Sec. 1860E. Process for beneficiaries to select qualified prescription drug coverage. ``Sec. 1860F. Premiums. ``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. 102. Offering of qualified prescription drug coverage under the Medicare+Choice program. Sec. 103. Medicaid amendments. Sec. 104. Medigap transition provisions. TITLE II--MODERNIZATION OF ADMINISTRATION OF MEDICARE Subtitle A--Medicare Benefits Administration Sec. 201. Establishment of administration. ``Sec. 1807. Medicare Benefits Administration. Sec. 202. Miscellaneous administrative provisions. Subtitle B--Oversight of Financial Sustainability of the Medicare Program Sec. 211. Additional requirements for annual financial report and oversight on medicare program. Subtitle C--Changes in Medicare Coverage and Appeals Process Sec. 221. Revisions to medicare appeals process. Sec. 222. Provisions with respect to limitations on liability of beneficiaries. Sec. 223. Waivers of liability for cost sharing amounts. Sec. 224. Elimination of motions by the Secretary on decisions of the Provider Reimbursement Review Board. TITLE III--MEDICARE+CHOICE REFORMS; PRESERVATION OF MEDICARE PART B DRUG BENEFIT Subtitle A--Medicare+Choice Reforms Sec. 301. Increase in national per capita Medicare+Choice growth percentage in 2001 and 2002. Sec. 302. Permanently removing application of budget neutrality beginning in 2002. Sec. 303. Increasing minimum payment amount. Sec. 304. Allowing movement to 50:50 percent blend in 2002. Sec. 305. Increased update for payment areas with only one or no Medicare+Choice contracts. Sec. 306. Permitting higher negotiated rates in certain Medicare+Choice payment areas below national average. Sec. 307. 10-year phase in of risk adjustment based on data from all settings. Subtitle B--Preservation of Medicare Coverage of Drugs and Biologicals Sec. 311. Preservation of coverage of drugs and biologicals under part B of the medicare program. TITLE I--MEDICARE PRESCRIPTION DRUG BENEFIT SEC. 101. 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 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 Administrator of the Medicare Benefits Administration (appointed under section 1807(b)) (in this part referred to as the `Medicare Benefits Administrator') and only during an election period prescribed in or under this subsection. ``(2) Election periods.-- ``(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 enrolled under part B as of November 1, 2002, 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 enrolled under part B after November 1, 2002, there [[Page H5320]] shall be an initial election period which is the same as the initial election period under section 1851(e)(1). ``(C) Additional special election periods.--The Medicare Benefits Administrator shall establish special election periods-- ``(i) in cases of individuals who have and involuntarily lose prescription drug coverage described in subsection (c)(2)(C); and ``(ii) in cases described in section 1837(h) (relating to errors in enrollment), in the same manner as such section applies to part B. ``(D) One-time enrollment permitted for current part a only beneficiaries.--In the case of an individual who as of November 1, 2002-- ``(i) is entitled to benefits under part A; and ``(ii) is not (and has not previously been) enrolled under part B; the individual shall be eligible to enroll in a prescription drug plan under this part but only during the period described in subparagraph (B)(i). If the individual enrolls in such a plan, the individual may change such enrollment under this part, but the individual may not enroll in a Medicare+Choice plan under part C unless the individual enrolls under part B. Nothing in this subparagraph shall be construed as providing for coverage under a prescription drug plan of benefits that are excluded because of the application of section 1860B(f)(2)(B). ``(c) Guaranteed Issue; Community Rating; and Nondiscrimination.-- ``(1) Guaranteed issue.-- ``(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, 2003) 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(f)(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, 2003, 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 Medicare Benefits Administrator 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 2003.--In no case shall any election take effect before January 1, 2003. ``(3) Termination.--The Medicare Benefits Administrator shall provide for the termination of elections in the case of-- ``(A) termination of coverage under part B (other than the case of an individual described in subsection (b)(2)(D) (relating to part A only individuals); 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. ``(a) Requirements.-- ``(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 Medicare Benefits Administrator shall review the offering of qualified prescription drug coverage under this part or part C. If the Administrator 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 Administrator 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-- ``(A) for 2003, that is equal to $250; or ``(B) for a subsequent year, that is equal to the amount specified under this paragraph for the previous year increased by the percentage specified in paragraph (5) for the year involved. Any amount determined under subparagraph (B) that is not a multiple of $5 shall be rounded to the nearest multiple of $5. ``(2) Limits on cost-sharing.--The coverage has cost- sharing (for costs above the annual deductible specified in paragraph (1) and up to the initial coverage limit under paragraph (3)) that is equal to 50 percent or that is actuarially consistent (using processes established under subsection (e)) with an average expected payment of 50 percent of such costs. ``(3) Initial coverage limit.--Subject to paragraph (4), the coverage has an initial coverage limit on the maximum costs that may be recognized for payment purposes (above the annual deductible)-- [[Page H5321]] ``(A) for 2003, that is equal to $2,100; or ``(B) for a subsequent year, that is equal to the amount specified in this paragraph for the previous year, increased by the annual percentage increase described in paragraph (5) for the year involved. Any amount determined under subparagraph (B) that is not a multiple of $25 shall be rounded to the nearest multiple of $25. ``(4) Limitation on out-of-pocket expenditures by beneficiary.-- ``(A) In general.--Notwithstanding paragraph (3), the coverage provides benefits without any cost-sharing after the individual has incurred costs (as described in subparagraph (C)) for covered outpatient drugs in a year equal to the annual out-of-pocket limit specified in subparagraph (B). ``(B) Annual out-of-pocket limit.--For purposes of this part, the `annual out-of-pocket limit' specified in this subparagraph-- ``(i) for 2003, is equal to $6,000; or ``(ii) for a subsequent year, is equal to the amount specified in the subparagraph for the previous year, increased by the annual percentage increase described in paragraph (5) for the year involved. Any amount determined under clause (ii) that is not a multiple of $100 shall be rounded to the nearest multiple of $100. ``(C) Application.--In applying subparagraph (A)-- ``(i) incurred costs shall only include costs incurred for the annual deductible (described in paragraph (1)), cost- sharing (described in paragraph (2)), and amounts for which benefits are not provided because of the application of the initial coverage limit described in paragraph (3); but ``(ii) costs shall be treated as incurred without regard to whether the individual or another person, including a State program, has paid for such costs, but shall not be counted insofar as such costs are covered as benefits under a prescription drug plan, a Medicare+Choice plan, or other third-party coverage. ``(5) Annual percentage increase.--For purposes of this part, the annual percentage increase specified in this paragraph for a year is equal to the annual percentage increase in average per capita aggregate expenditures for covered outpatient drugs in the United States for medicare beneficiaries, as determined by the Medicare Benefits Administrator for the 12-month period ending in July of the previous year. ``(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)(1) 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 at initial coverage limit.--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 that are equal to the sum of the deductible under subsection (b)(1) and the initial coverage limit under subsection (b)(3), of an amount equal to at least such initial coverage limit multiplied by the percentage specified in subsection (b)(2). ``(2) Limitation on out-of-pocket expenditures by beneficiaries.--The coverage provides the limitation on out- of-pocket expenditures by beneficiaries described in subsection (b)(4). ``(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)). ``(e) Actuarial Valuation; Determination of Annual Percentage Increases.-- ``(1) Processes.--For purposes of this section, the Medicare Benefits Administrator 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 or insulin described in subparagraph (B) or (C) of such section. ``(2) Exclusions.-- ``(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). ``(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 and Nondiscrimination.--For provisions requiring guaranteed issue, community-rated premiums, and nondiscrimination, see sections 1860A(c) 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. Nothing in this paragraph shall be construed as requiring the participation of all pharmacies in any area under a plan. ``(2) 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. [[Page H5322]] ``(3) 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 (i)(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). ``(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 medically necessary 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 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. ``(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 Medicare Benefits Administrator under subsection (d). ``(b) Contract Requirements.-- ``(1) In general.--The Medicare Benefits Administrator 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 Administrator 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 1 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) 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). ``(3) Rules of application for intermediate sanctions.--In applying paragraph (2)(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 Medicare Benefits Administrator shall waive the requirement of subsection (a)(1) that the entity be licensed in that State if the Administrator determines, based on the application and other evidence presented to the Administrator, 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 medicare+choice pso 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 were treated as a reference to solvency standards established under subsection (c). ``(d) Solvency Standards for Non-Licensed Sponsors.-- ``(1) Establishment.--The Medicare Benefits Administrator shall establish, by not later than October 1, 2001, 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 [[Page H5323]] 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 Medicare Benefits Administrator 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 Medicare Benefits Administrator 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 Administrator shall publish such regulations by October 1, 2001. In order to carry out this requirement in a timely manner, the Administrator 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 subsection 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, in the same manner as such laws and regulations are superseded under section 1856(b)(3). ``(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). ``(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 Medicare Benefits Administrator under this part. ``SEC. 1860E. PROCESS FOR BENEFICIARIES TO SELECT QUALIFIED PRESCRIPTION DRUG COVERAGE. ``(a) In General.--The Medicare Benefits Administrator, through the Office of Beneficiary Assistance, 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) In general.--The Medicare Benefits Administrator shall assure that each individual who is enrolled under part B and who is residing in an area has available a choice of enrollment in at least 2 qualifying plans (as defined in paragraph (5)) in the area in which the individual resides, at least 1 of which is a prescription drug plan. ``(2) Guaranteeing access to coverage.--In order to assure access under paragraph (1) and consistent with paragraph (3), the Medicare Benefits Administrator 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 Medicare Benefits Administrator-- ``(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 Medicare Benefits Administrator shall, in each annual report to Congress under section 1807(f), include information on the exercise of authority under this subsection. The Administrator 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 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 Medicare Benefits Administrator 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 Medicare Benefits Administrator may require to carry out this part. ``(3) Review.--The Medicare Benefits Administrator shall review the information filed under paragraph (2) and shall approve or disapprove such rates, amounts, and values so submitted. In exercising such authority, the Administrator 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 and shall have the same authority to negotiate the terms and conditions of such premiums and other terms and conditions of plans 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. ``(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. ``(a) In General.-- ``(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 (3)) who is determined to have income that does not exceed 135 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 paragraphs (1) and (2) of section 1860B(b) (up to the initial coverage limit specified in paragraph (3) of such section) of amounts that are nominal. ``(2) Sliding scale premium subsidy for individuals with income above 135, but below 150 percent, of federal poverty level.--In the case of a subsidy eligible individual who is determined to have income that exceeds 135 percent, but does not exceed 150 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 135 percent of such level to 0 percent of such amount for individuals with incomes at 150 percent of such level. ``(3) 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-- [[Page H5324]] ``(i) is eligible to elect, and has elected, to obtain qualified prescription drug coverage under this part; ``(ii) has income below 150 percent of the Federal poverty line; and ``(iii) meets the resources requirement described in section 1905(p)(1)(C). ``(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 Medicare Benefits Administrator. ``(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)(4)(A)(iii), determined without regard to any reduction effected under section 1851(j)(4)(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 Medicare Benefits Administrator 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 Medicare Benefits Administrator 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 Administrator 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 Administrator information on the amount of such reduction; and ``(3) the Administrator 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 Medicare Benefits Administrator 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 (f)(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 Administrator 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 Administrator to provide the Administrator 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 (f)). ``(c) Reinsurance Payment Amount.-- ``(1) In general.--Subject to subsection (d)(2) and paragraph (4), the reinsurance payment amount under this subsection for a qualifying covered individual (as defined in subsection (g)(1)) for a coverage year (as defined in subsection (g)(2)) is equal to the sum of the following: ``(A) For the portion of the individual's gross covered prescription drug costs (as defined in paragraph (3)) for the year that exceeds $1,250, but does not exceed $1,350, an amount equal to 30 percent of the allowable costs (as defined in paragraph (2)) attributable to such gross covered prescription drug costs. ``(B) For the portion of the individual's gross covered prescription drug costs for the year that exceeds $1,350, but does not exceed $1,450, an amount equal to 50 percent of the allowable costs attributable to such gross covered prescription drug costs. ``(C) For the portion of the individual's gross covered prescription drug costs for the year that exceeds $1,450, but does not exceed $1,550, an amount equal to 70 percent of the allowable costs attributable to such gross covered prescription drug costs. ``(D) For the portion of the individual's gross covered prescription drug costs for the year that exceeds $1,550, but does not exceed $2,350, an amount equal to 90 percent of the allowable costs attributable to such gross covered prescription drug costs. ``(E) For the portion of the individual's gross covered prescription drug costs for the year that exceeds $7,050, an amount equal to 90 percent of the allowable costs attributable to such gross covered prescription drug costs. ``(2) Allowable costs.--For purposes of this section, the term `allowable costs' means, with res