[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 2836 Introduced in Senate (IS)]







106th CONGRESS
  2d Session
                                S. 2836

  To amend title XVIII of the Social Security Act to provide medicare 
 beneficiaries with access to affordable outpatient prescription drugs.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             June 30, 2000

  Mr. Hagel (for himself, Mr. Abraham, Mr. Hutchinson, Mr. Burns, Mr. 
   Coverdell, Mr. McCain, Mr. Ashcroft, and Mr. Kyl) introduced the 
 following bill; which was read twice and referred to the Committee on 
                                Finance

_______________________________________________________________________

                                 A BILL


 
  To amend title XVIII of the Social Security Act to provide medicare 
 beneficiaries with access to affordable outpatient prescription drugs.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Medicare Rx Drug 
Discount and Security Act of 2000''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Voluntary Medicare Outpatient Prescription Drug Discount and 
                            Security Program.
``Part D--Voluntary Medicare Outpatient Prescription Drug Discount and 
                            Security Program

        ``Sec. 1860. Definitions.
      ``Subpart 1--Establishment of Voluntary Medicare Outpatient 
            Prescription Drug Discount and Security Program

        ``Sec. 1860A. Establishment of program.
        ``Sec. 1860B. Enrollment.
        ``Sec. 1860C. Providing information to beneficiaries.
        ``Sec. 1860D. Annual enrollment fee.
        ``Sec. 1860E. Benefits under the program.
        ``Sec. 1860F. Selection of entities to provide outpatient drug 
                            benefit.
        ``Sec. 1860G. Payments to eligible entities for administering 
                            the catastrophic benefit.
        ``Sec. 1860H. Determination of income levels.
        ``Sec. 1860I. Appropriations.
  ``Subpart 2--Establishment of the Medicare Prescription Drug Agency

        ``Sec. 1860L. Medicare Prescription Drug Agency.
        ``Sec. 1860M. Commissioner; Deputy Commissioner; other 
                            officers.
        ``Sec. 1860N. Administrative duties of the Commissioner.
        ``Sec. 1860O. Duties and authority of the Secretary.''.
Sec. 3. Exclusion of part D costs from determination of part B monthly 
                            premium.
Sec. 4. Medigap revisions.

SEC. 2. VOLUNTARY MEDICARE OUTPATIENT PRESCRIPTION DRUG DISCOUNT AND 
              SECURITY PROGRAM.

    (a) Establishment of Program.--Title XVIII of the Social Security 
Act (42 U.S.C. 1395 et seq.) is amended by redesignating part D as part 
E and by inserting after part C the following new part:

``Part D--Voluntary Medicare Outpatient Prescription Drug Discount and 
                            Security Program

                             ``definitions

    ``Sec. 1860. In this part:
            ``(1) Commissioner.--The term `Commissioner' means the 
        Commissioner of Medicare Prescription Drugs established under 
        subpart 2.
            ``(2) Covered outpatient drug.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the term `covered outpatient drug' 
                means--
                            ``(i) a drug that may be dispensed only 
                        upon a prescription and that is described in 
                        clause (i) or (ii) of subparagraph (A) of 
                        section 1927(k)(2); or
                            ``(ii) a biological product or insulin 
                        described in subparagraph (B) or (C) of such 
                        section.
                    ``(B) Exclusions.--
                            ``(i) In general.--The term `covered 
                        outpatient drug' does not include drugs or 
                        classes of drugs, or their medical uses, which 
                        may be excluded from coverage or otherwise 
                        restricted under section 1927(d)(2), other than 
                        subparagraph (E) thereof (relating to smoking 
                        cessation agents).
                            ``(ii) Avoidance of duplicate coverage.--A 
                        drug prescribed for an individual that would 
                        otherwise be a covered outpatient drug under 
                        this part shall not be 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) Eligible beneficiary.--In this section, the term 
        `eligible beneficiary' means an individual who is--
                    ``(A) eligible for benefits under part A or 
                enrolled under part B; and
                    ``(B) not eligible for medical assistance 
                consisting of prescribed drugs under title XIX.
            ``(4) Eligible entity.--The term `eligible entity' means 
        any entity that the Commissioner determines to be appropriate 
        to provide the benefits under this part, including--
                    ``(A) pharmaceutical benefit management companies;
                    ``(B) wholesale and retail pharmacist delivery 
                systems;
                    ``(C) insurers;
                    ``(D) Medicare+Choice organizations;
                    ``(E) other entities; or
                    ``(F) any combination of the entities described in 
                subparagraphs (A) through (E).
            ``(5) Poverty line.--The term `poverty line' means the 
        income official poverty line (as defined by the Office of 
        Management and Budget, and revised annually in accordance with 
        section 673(2) of the Omnibus Budget Reconciliation Act of 
        1981) applicable to a family of the size involved.

      ``Subpart 1--Establishment of Voluntary Medicare Outpatient 
            Prescription Drug Discount and Security Program

                       ``establishment of program

    ``Sec. 1860A. (a) Provision of Benefit.--The Commissioner shall 
establish a Medicare Outpatient Prescription Drug Discount and Security 
Program under which an eligible beneficiary may voluntarily enroll and 
receive benefits under this part through enrollment with a private 
entity with a contract under this part.
    ``(b) Program To Begin in 2002.--The Commissioner shall establish 
the program under this part in a manner so that benefits are first 
provided for months beginning with January 2002.
    ``(c) Voluntary Nature of Program.--Nothing in this part shall be 
construed as requiring an eligible beneficiary to enroll in the program 
under this part.
    ``(d) Financing.--The costs of providing benefits under this part 
shall be payable from the Federal Supplementary Medical Insurance Trust 
Fund established under section 1841.

                              ``enrollment

    ``Sec. 1860B. (a) Enrollment Under Part D.--
            ``(1) Establishment of process.--
                    ``(A) In general.--The Commissioner shall establish 
                a process through which an eligible beneficiary 
                (including an eligible beneficiary enrolled in a 
                Medicare+Choice plan offered by a Medicare+Choice 
                organization) may make an election to enroll under this 
                part. Except as otherwise provided in this subsection, 
                such process shall be similar to the process for 
                enrollment in part B under section 1837.
                    ``(B) Requirement of enrollment.--An eligible 
                beneficiary must enroll under this part in order to be 
                eligible to receive the benefits under this part.
            ``(2) Enrollment period.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B) or (C), an eligible beneficiary may 
                not enroll in the program under this part during any 
                period after the beneficiary's initial enrollment 
                period.
                    ``(B) Open enrollment period in 2002 for current 
                beneficiaries.--The Commissioner shall establish a 
                period, which shall begin on the date on which the 
                Commissioner first begins to accept elections for 
                enrollment under this part and shall end on December 
                31, 2002, during which any eligible beneficiary may--
                            ``(i) enroll under this part; or
                            ``(ii) enroll or re-enroll under this part 
                        after having previously declined or terminated 
                        such enrollment.
                    ``(C) Special enrollment period.--In the case of 
                eligible beneficiaries that have recently lost 
                eligibility for medical assistance consisting of 
                prescribed drugs under title XIX, the Commissioner 
                shall establish a special enrollment period in which 
                such beneficiaries may enroll under this part.
            ``(3) Period of coverage.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B) and subject to subparagraph (C), an 
                eligible beneficiary's coverage under the program under 
                this part shall be effective for the period provided in 
                section 1838, as if that section applied to the program 
                under this part.
                    ``(B) Enrollment during open and special 
                enrollment.--Subject to subparagraph (C), an eligible 
                beneficiary who enrolls under the program under this 
                part pursuant to subparagraph (B) or (C) of paragraph 
                (2) shall be entitled to the benefits under this part 
                beginning on the first day of the month following the 
                month in which such enrollment occurs.
                    ``(C) Limitation.--Coverage under this part shall 
                not begin prior to January 1, 2002.
            ``(4) Part d coverage terminated by termination of coverage 
        under parts a and b or eligibility for medical assistance.--
                    ``(A) In general.--In addition to the causes of 
                termination specified in section 1838, the Commissioner 
                shall terminate an individual's coverage under this 
                part if the individual--
                            ``(i) is no longer enrolled in either part 
                        A or B; or
                            ``(ii) is eligible for medical assistance 
                        consisting of prescribed drugs under title XIX.
                    ``(B) Effective date.--The termination described in 
                subparagraph (A) shall be effective on the effective 
                date of--
                            ``(i) the termination of coverage under 
                        part A or (if later) under part B; or
                            ``(ii) the coverage under title XIX.
    ``(b) Enrollment With Eligible Entity.--
            ``(1) Process.--
                    ``(A) In general.--The Commissioner shall establish 
                a process through which an eligible beneficiary who is 
                enrolled under this part shall make an annual election 
                to enroll with any eligible entity that has been 
                awarded a contract under this part and serves the 
                geographic area in which the beneficiary resides.
                    ``(B) Rules.--In establishing the process under 
                subparagraph (A), the Commissioner shall use rules 
                similar to the rules for enrollment and disenrollment 
                with a Medicare+Choice plan under section 1851 
                (including special election periods under subsection 
                (e)(4) of such section).
            ``(2) Medicare+choice enrollees.--An eligible beneficiary 
        who is enrolled under this part and enrolled in a 
        Medicare+Choice plan offered by a Medicare+Choice organization 
        must enroll with an eligible entity in order to receive 
        benefits under this part. The beneficiary may elect to receive 
        such benefits from the Medicare+Choice organization in which 
        the beneficiary is enrolled if the organization has been 
        awarded a contract under this part.
            ``(3) Competition.--Eligible entities with a contract under 
        this part shall compete for beneficiaries on the basis of the 
        discounts, formularies, pharmacy networks, and other services 
        under the contract.
    ``(c) First Enrollment Period.--The processes developed under 
subsections (a) and (b) shall ensure that eligible beneficiaries are 
permitted to enroll under this part and with an eligible entity prior 
to January 1, 2002, in order to ensure that coverage under this part is 
effective as of such date.

                ``providing information to beneficiaries

    ``Sec. 1860C. (a) Activities.--The Commissioner shall provide for 
activities under this part to broadly disseminate information to 
eligible beneficiaries (and prospective eligible beneficiaries) 
regarding the coverage provided under this part.
    ``(b) Special Rule for First Enrollment Under the Program.--To the 
extent practicable, the activities described in subsection (a) shall 
ensure that eligible beneficiaries are provided with such information 
at least 60 days prior to the first enrollment period described in 
section 1860B(c).

                        ``annual enrollment fee

    ``Sec. 1860D. (a) Amount.--
            ``(1) In general.--Except as provided in subsection (c), 
        enrollment under the program under this part is conditioned 
        upon payment of a $35 annual enrollment fee.
            ``(2) Adjustment.--The Commissioner may, as determined 
        appropriate, annually adjust the dollar amount under paragraph 
        (1) to reflect inflation and changes in the costs and 
        utilization under the program over time.
    ``(b) Collection of Annual Enrollment Fee.--The annual enrollment 
fee described in subsection (a) shall be collected and credited to the 
Federal Supplementary Medical Insurance Trust Fund in the same manner 
as the monthly premium determined under section 1839 is collected and 
credited to such Trust Fund under section 1840.
    ``(c) Waiver.--The Commissioner shall waive the enrollment fee 
described in subsection (a) in the case of an eligible beneficiary 
whose income is below 200 percent of the poverty line.

                      ``benefits under the program

    ``Sec. 1860E. (a) Access to Negotiated Prices.--
            ``(1) In general.--An eligible entity with a contract under 
        this part shall provide eligible beneficiaries enrolled with 
        the entity with access to negotiated prices (including 
        applicable discounts) used for payment for prescription drugs 
        for which coverage is not otherwise provided under this part.
            ``(2) Discount card.--An eligible entity shall issue such a 
        card that may be used by an enrolled beneficiary to assure the 
        access to negotiated prices under paragraph (1).
    ``(b) Catastrophic Benefit.--
            ``(1) In general.--Subject to paragraph (4) (relating to 
        eligibility for the catastrophic benefit)--
                    ``(A) Beneficiaries with income below 200 percent 
                of poverty line.--In the case of an eligible 
                beneficiary whose income is below 200 percent of the 
                poverty line, the beneficiary shall not be responsible 
                for making a payment for a covered outpatient drug 
                provided to the beneficiary in a year to the extent 
                that the out-of-pocket expenses of the beneficiary for 
                such drug, when added to the out-of-pocket expenses of 
                the beneficiary for covered outpatient drugs previously 
                provided in the year, exceed $1,200.
                    ``(B) Beneficiaries with income between 200 and 400 
                percent of poverty line.--In the case of an eligible 
                beneficiary whose income exceeds 200 percent but does 
                not exceed 400 percent of the poverty line, the 
                beneficiary shall not be responsible for making a 
                payment for a covered outpatient drug provided to the 
                beneficiary in a year to the extent that the out-of-
                pocket expenses of the beneficiary for such drug, when 
                added to the out-of-pocket expenses of the beneficiary 
                for covered outpatient drugs previously provided in the 
                year, exceed $2,500.
                    ``(C) Beneficiaries with income above 400 percent 
                of poverty line.--In the case of an eligible 
                beneficiary whose income exceeds 400 percent of the 
                poverty line, the beneficiary shall not be responsible 
                for making a payment for a covered outpatient drug 
                provided to the beneficiary in a year to the extent 
                that the out-of-pocket expenses of the beneficiary for 
                such drug, when added to the out-of-pocket expenses of 
                the beneficiary for covered outpatient drugs previously 
                provided in the year, exceed $5,000.
            ``(2) Adjustment.--The Commissioner may, as determined 
        appropriate, annually adjust the dollar amounts under 
        subparagraph (A) to reflect inflation and changes in the costs 
        and utilization under the program over time.
            ``(3) Eligible entity not at risk for catastrophic 
        benefit.--
                    ``(A) In general.--The Commissioner, not the 
                eligible entity, shall be at risk for the provision of 
                the catastrophic benefit under this subsection.
                    ``(B) Provisions relating to payments to eligible 
                entities.--For provisions relating to payments to 
                eligible entities for administering the catastrophic 
                benefit under this subsection, see section 1860G.
            ``(4) Catastrophic benefit not available to certain high 
        income individuals.--
                    ``(A) In general.--An eligible beneficiary enrolled 
                under this part whose modified adjusted gross income 
                for a taxable year exceeds the applicable amount shall 
                not be eligible for the catastrophic benefit under this 
                subsection.
                    ``(B) Beneficiary still eligible for discount 
                benefit.--Nothing in subparagraph (A) shall be 
                construed as effecting the eligibility of a beneficiary 
                described in such subparagraph for the benefits under 
                subsection (a).
                    ``(C) Procedures for determining modified adjusted 
                gross income.--
                            ``(i) In General.--The Commissioner shall 
                        establish procedures for determining the 
                        modified adjusted gross income of eligible 
                        beneficiaries enrolled under this part.
                            ``(ii) Consultation.--The Commissioner 
                        shall consult with the Secretary of the 
                        Treasury in making the determinations described 
                        in clause (i).
                            ``(iii) Disclosure of information.--
                        Notwithstanding section 6103(a) of the Internal 
                        Revenue Code of 1986, the Secretary of the 
                        Treasury may, upon written request from the 
                        Commissioner, disclose to officers and 
                        employees of the Medicare Prescription Drug 
                        Agency such return information as is necessary 
                        to make the determinations described in clause 
                        (i). Return information disclosed pursuant to 
the preceding sentence may be used by officers and employees of the 
Medicare Prescription Drug Agency only for the purposes of, and to the 
extent necessary in, making such determinations.
                    ``(D) Definition of applicable amount.--For 
                purposes of this paragraph, the term `applicable 
                amount' means--
                            ``(i) except as otherwise provided in this 
                        subparagraph, $100,000;
                            ``(ii) $200,000 in the case of a taxpayer 
                        who files a joint return; and
                            ``(iii) zero in the case of a taxpayer 
                        who--
                                    ``(I) is married at the close of 
                                the taxable year but does not file a 
                                joint return for such year; and
                                    ``(II) does not live apart from his 
                                spouse at all times during the taxable 
                                year.
                    ``(E) Definition of modified adjusted gross 
                income.--For purposes of this paragraph, the term 
                `modified adjusted gross income' means adjusted gross 
                income (as defined in section 62 of the Internal 
                Revenue Code of 1986)--
                            ``(i) determined without regard to sections 
                        135, 911, 931, and 933 of such Code; and
                            ``(ii) increased by the amount of interest 
                        received or accrued by the taxpayer during the 
                        taxable year which is exempt from tax under 
                        such Code.
                    ``(F) Definition of joint return.--For purposes of 
                this paragraph, the term `joint return' has the meaning 
                given the term in section 7701(a)(38) of the Internal 
                Revenue Code of 1986.
            ``(5) Assuring catastrophic benefit in all areas.--The 
        Commissioner shall develop procedures for the provision of the 
        catastrophic benefit under this subsection to each eligible 
        beneficiary that resides in an area where there are no eligible 
        entities that have been awarded a contract under this part.

       ``selection of entities to provide outpatient drug benefit

    ``Sec. 1860F. (a) Establishment of Bidding Process.--The 
Commissioner shall establish a process under which the Commissioner 
accepts bids from eligible entities and awards contracts to the 
entities to provide the benefits under this part to eligible 
beneficiaries in an area.
    ``(b) Submission of Bids.--Each eligible entity desiring to enter 
into a contract under this part shall submit a bid to the Commissioner 
at such time, in such manner, and accompanied by such information as 
the Commissioner may reasonably require.
    ``(c) Awarding of Contracts.--
            ``(1) In general.--The Commissioner shall, consistent with 
        the requirements of this part and the goal of containing 
        medicare program costs, award at least 2 contracts in an area, 
        unless only 1 bidding entity meets the terms and conditions 
        specified by the Commissioner pursuant to paragraph (2).
            ``(2) Terms and conditions.--
                    ``(A) In general.--The Commissioner shall not award 
                a contract to an eligible entity under this section 
                unless the Commissioner finds that the eligible entity 
                is in compliance with such terms and conditions as the 
                Commissioner shall specify.
                    ``(B) Procedures to ensure proper utilization and 
                to avoid adverse drug reactions.--The terms and 
                conditions established pursuant to subparagraph (A) 
                shall include a requirement that an eligible entity 
                have in place procedures to ensure--
                            ``(i) the appropriate utilization of 
                        prescription drugs by eligible beneficiaries 
                        enrolled with the entity; and
                            ``(ii) the avoidance of adverse drug 
                        reactions among such beneficiaries.
                    ``(C) Clinical guideline requirements and formulary 
                standards.--The terms and conditions established 
                pursuant to subparagraph (A) shall include clinical 
                guideline requirements and formulary standards.
            ``(3) Comparative merits.--In determining which of the 
        eligible entities that submitted bids that meet the terms and 
        conditions specified by the Commissioner pursuant to paragraph 
        (2) to award a contract, the Commissioner shall consider the 
        comparative merits of each of the bids.

  ``payments to eligible entities for administering the catastrophic 
                                benefit

    ``Sec. 1860G. (a) Procedures.--The Commissioner shall establish 
procedures for making payments to an eligible entity under a contract 
entered into under this part for administering the catastrophic benefit 
under section 1860E(b).
    ``(b) Administrative Fee.--
            ``(1) Procedures.--The procedures established pursuant to 
        subsection (a) shall provide for payment to the eligible entity 
        of an administrative fee for each prescription filled by the 
        entity for an eligible beneficiary--
                    ``(A) who is enrolled with the entity; and
                    ``(B) to whom subparagraph (A), (B), or (C) of 
                section 1860E(b)(1) applies with respect to a covered 
                outpatient drug.
            ``(2) Amount.--The fee described in paragraph (1) shall 
        be--
                    ``(A) negotiated by the Commissioner; and
                    ``(B) consistent with such fees paid under private 
                sector pharmaceutical benefit contracts.
    ``(c) Secondary Payer Provisions.--The provisions of section 
1862(b) shall apply to the benefits provided under this part.

                    ``determination of income levels

    ``Sec. 1860H. (a) Procedures.--The Commissioner shall establish 
procedures for determining the income levels of eligible beneficiaries 
for purposes of sections 1860D(c) and 1860E(b).
    ``(b) Periodic Redeterminations.--Such income determinations shall 
be valid for a period (of not less than 1 year) specified by the 
Commissioner.

                            ``appropriations

    ``Sec. 1860I. There are authorized to be appropriated from time to 
time, out of any moneys in the Treasury not otherwise appropriated, to 
the Federal Supplementary Medical Insurance Trust Fund established 
under section 1841, an amount equal to the amount by which the benefits 
and administrative costs of providing the benefits under this part 
exceed the enrollment fees collected under section 1860D.

  ``Subpart 2--Establishment of the Medicare Prescription Drug Agency

                  ``medicare prescription drug agency

    ``Sec. 1860L. (a) Establishment.--There is established, as an 
independent agency in the executive branch of the Government, a 
Medicare Prescription Drug Agency (in this subpart referred to as the 
`Agency').
    ``(b) Duty.--It shall be the duty of the Agency to administer the 
Voluntary Medicare Outpatient Prescription Drug Discount and Security 
Program under subpart 1.

          ``commissioner; deputy commissioner; other officers

    ``Sec. 1860M. (a) Commissioner of Medicare Prescription Drugs.--
            ``(1) Appointment.--There shall be in the Agency a 
        Commissioner of Medicare Prescription Drugs who shall be 
        appointed by the President, by and with the advice and consent 
        of the Senate.
            ``(2) Compensation.--The Commissioner shall be compensated 
        at the rate provided for level I of the Executive Schedule.
            ``(3) Term.--
                    ``(A) In general.--The Commissioner shall be 
                appointed for a term of 6 years.
                    ``(B) Continuance in office.--In any case in which 
                a successor does not take office at the end of a 
                Commissioner's term of office, such Commissioner may 
                continue in office until the appointment of a 
                successor.
                    ``(C) Delayed appointments.--A Commissioner 
                appointed to a term of office after the commencement of 
                such term may serve under such appointment only for the 
                remainder of such term.
                    ``(D) Removal.--An individual serving in the office 
                of Commissioner may be removed from office only 
                pursuant to a finding by the President of neglect of 
                duty or malfeasance in office.
            ``(4) Responsibilities.--The Commissioner shall be 
        responsible for the exercise of all powers and the discharge of 
        all duties of the Agency, and shall have authority and control 
        over all personnel and activities thereof.
            ``(5) Promulgation of rules and regulations.--
                    ``(A) In general.--The Commissioner may prescribe 
                such rules and regulations as the Commissioner 
                determines necessary or appropriate to carry out the 
                functions of the Agency.
                    ``(B) Rulemaking.--The regulations prescribed by 
                the Commissioner shall be subject to the rulemaking 
                procedures established under section 553 of title 5, 
                United States Code.
            ``(6) Determination of administrative organization.--The 
        Commissioner may establish, alter, consolidate, or discontinue 
        such organizational units or components within the Agency as 
        the Commissioner considers necessary or appropriate, except 
        that this paragraph shall not apply with respect to any unit, 
        component, or provision provided for by this Act.
            ``(7) Delegation of authority.--
                    ``(A) In general.--The Commissioner may assign 
                duties, and delegate, or authorize successive 
                redelegations of, authority to act and to render 
                decisions, to such officers and employees of the Agency 
                as the Commissioner may find necessary.
                    ``(B) Effect of delegation.--Within the limitations 
                of such delegations, redelegations, or assignments, all 
                official acts and decisions of such officers and 
                employees shall have the same force and effect as 
                though performed or rendered by the Commissioner.
            ``(8) Consultation with secretary of health and human 
        services.--The Commissioner and the Secretary shall consult, on 
        an ongoing basis, to ensure--
                    ``(A) the coordination of the Voluntary Medicare 
                Outpatient Prescription Drug and Benefit Program under 
                subpart 1 with the programs administered by the 
                Secretary under parts A, B, and C and under title XIX; 
                and
                    ``(B) that adequate information concerning benefits 
                under parts A, B, and C and title XIX is available to 
                the public.
    ``(b) Deputy Commissioner of Medicare Prescription Drugs.--
            ``(1) Appointment.--There shall be in the Agency a Deputy 
        Commissioner of Medicare Prescription Drugs (in this subpart 
        referred to as the `Deputy Commissioner') who shall be 
        appointed by the President, by and with the advice and consent 
        of the Senate.
            ``(2) Compensation.--The Deputy Commissioner shall be 
        compensated at the rate provided for level II of the Executive 
        Schedule.
            ``(3) Term.--
                    ``(A) In general.--The Deputy Commissioner shall be 
                appointed for a term of 6 years.
                    ``(B) Continuance in office.--In any case in which 
                a successor does not take office at the end of a Deputy 
                Commissioner's term of office, such Deputy Commissioner 
                may continue in office until the entry upon office of 
                such a successor.
                    ``(C) Delayed appointment.--A Deputy Commissioner 
                appointed to a term of office after the commencement of 
                such term may serve under such appointment only for the 
                remainder of such term.
            ``(4) Duties.--
                    ``(A) In general.--The Deputy Commissioner shall 
                perform such duties and exercise such powers as the 
Commissioner shall from time to time assign or delegate.
                    ``(B) Acting commissioner.--The Deputy Commissioner 
                shall be Acting Commissioner of the Agency during the 
                absence or disability of the Commissioner and, unless 
                the President designates another officer of the 
                Government as Acting Commissioner, in the event of a 
                vacancy in the office of the Commissioner.
    ``(c) Chief Actuary.--
            ``(1) Appointment.--
                    ``(A) In general.--There shall be in the Agency a 
                Chief Actuary, who shall be appointed by, and in direct 
                line of authority to, the Commissioner.
                    ``(B) Qualifications.--The Chief Actuary shall be 
                appointed from individuals who have demonstrated, by 
                their education and experience, superior expertise in 
                the actuarial sciences.
                    ``(C) Duties.--The Chief Actuary shall serve as the 
                chief actuarial officer of the Agency, and shall 
                exercise such duties as are appropriate for the office 
                of the Chief Actuary and in accordance with 
                professional standards of actuarial independence.
                    ``(D) Removal.--The Chief Actuary may be removed 
                only for cause.
            ``(2) Compensation.--The Chief Actuary shall be compensated 
        at the highest rate of basic pay for the Senior Executive 
        Service under section 5382(b) of title 5, United States Code.
    ``(d) Chief Financial Officer.--There shall be in the Agency a 
Chief Financial Officer appointed by the Commissioner in accordance 
with section 901(a)(2) of title 31, United States Code.
    ``(e) Inspector General.--There shall be in the Agency an Inspector 
General appointed by the President, by and with the advice and consent 
of the Senate, in accordance with section 3(a) of the Inspector General 
Act of 1978.

              ``administrative duties of the commissioner

    ``Sec. 1860N. (a) Personnel.--
            ``(1) Appointment of additional officers.--
                    ``(A) In general.--The Commissioner shall appoint 
                such additional officers and employees as the 
                Commissioner considers necessary to carry out the 
                functions of the Agency under this Act, and attorneys 
                and experts may be appointed without regard to the 
                civil service laws.
                    ``(B) Compensation.--Except as otherwise provided 
                in subparagraph (A) or in any other provision of law, 
                such officers and employees shall be appointed, and 
                their compensation shall be fixed, in accordance with 
                title 5, United States Code.
            ``(2) Experts and consultants.--The Commissioner may 
        procure the services of experts and consultants in accordance 
        with the provisions of section 3109 of title 5, United States 
        Code.
    ``(b) Budgetary Matters.--
            ``(1) Annual budget.--
                    ``(A) Submission.--The Commissioner shall prepare 
                an annual budget for the Agency, which shall be 
                submitted by the President to Congress without 
                revision, together with the President's annual budget 
                for the Agency.
                    ``(B) Combatting fraud.--The Commissioner shall 
                include in the annual budget prepared pursuant to 
                subparagraph (A) an itemization of the amount of funds 
                required by the Medicare Prescription Drug Agency for 
                the fiscal year covered by the budget to support 
                efforts to combat fraud committed by applicants and 
                beneficiaries.
            ``(2) Appropriations requests.--
                    ``(A) Staffing and personnel.--Appropriations 
                requests for staffing and personnel of the Agency shall 
                be based upon a comprehensive work force plan, which 
                shall be established and revised from time to time by 
                the Commissioner.
                    ``(B) Administrative expenses.--Appropriations for 
                administrative expenses of the Agency are authorized to 
                be provided on a biennial basis.
    ``(c) Employment Restriction.--
            ``(1) In general.--The total number of positions described 
        in paragraph (2) in the Agency (other than positions 
        established under section 1860M) may not exceed at any time the 
        equivalent of 20 full-time positions.
            ``(2) Positions described.--The positions described in this 
        paragraph are as follows:
                    ``(A) Noncareer appointees.--Positions that are 
                held by noncareer appointees (within the meaning of 
                section 3132(a)(7) of title 5, United States Code) in 
                the Senior Executive Service.
                    ``(B) Excepted positions.--Positions that have been 
                determined by the President or the Office of Personnel 
                Management to be of a confidential, policy-determining, 
                policy-making, or policy-advocating character and that 
                have been excepted from the competitive service.
    ``(d) Seal of Office.--
            ``(1) In general.--The Commissioner shall cause a seal of 
        office to be made for the Agency of such design as the 
        Commissioner shall approve.
            ``(2) Judicial notice.--Judicial notice shall be taken of 
        the seal made under paragraph (1).
    ``(e) Data Exchanges.--
            ``(1) Disclosure of records and other information.--
        Notwithstanding any other provision of law (including 
        subsection (b), (o), (p), (q), (r), and (u) of section 552a of 
        title 5, United States Code)--
                    ``(A) the Secretary shall disclose to the 
                Commissioner any record or information requested in 
                writing by the Commissioner for the purpose of 
                administering the Voluntary Medicare Outpatient 
                Prescription Drug Discount and Security Program under 
                subpart 1; and
                    ``(B) the Commissioner shall disclose to the 
                Secretary or to any State any record or information 
                requested in writing by the Secretary to be so 
                disclosed for the purpose of administering any program 
                administered by the Secretary.
            ``(2) Quality data.--
                    ``(A) Agreement.--The Commissioner and the 
                Secretary shall enter into an agreement under which the 
                Commissioner provides the Secretary data concerning the 
                quality of the services and information provided to 
                beneficiaries of the Voluntary Medicare Outpatient 
                Prescription Drug Discount and Security Program under 
                subpart 1 and the administrative services provided by 
                the Agency in support of such program.
                    ``(B) Terms and conditions.--The agreement entered 
                into under subparagraph (A) shall stipulate the type of 
                data to be provided and the terms and conditions under 
                which the data are to be provided.
            ``(3) Exchange of other data.--The Commissioner and the 
        Secretary shall periodically review the need for exchanges of 
        information not referred to in paragraph (1) or (2) and shall 
        enter into such agreements as may be necessary and appropriate 
        to provide information to each other or to States in order to 
        meet the programmatic needs of the requesting agencies.
            ``(4) Routine use.--
                    ``(A) In general.--Any disclosure from a system of 
                records (as defined in section 552a(a)(5) of title 5, 
                United States Code) pursuant to this subsection shall 
                be made as a routine use under subsection (b)(3) of 
                section 552a of such title (unless otherwise authorized 
                under such section 552a).
                    ``(B) Computerized comparison.--Any computerized 
                comparison of records, including matching programs, 
                between the Commissioner and the Secretary shall be 
                conducted in accordance with subsections (o), (p), (q), 
                (r), and (u) of section 552a of title 5, United States 
                Code.
            ``(5) Timely action.--The Commissioner and the Secretary 
        shall each ensure that timely action is taken to establish any 
        necessary routine uses for disclosures required under paragraph 
        (1) or agreed to pursuant to paragraph (3).

                ``duties and authority of the secretary

    ``Sec. 1860O. (a) Duties.--The Secretary shall perform the duties 
imposed upon the Secretary by this Act.
    ``(b) Authority.--
            ``(1) In general.--The Secretary is authorized to appoint 
        and fix the compensation of such officers and employees, and to 
        make such expenditures as may be necessary for carrying out the 
        functions of the Secretary under this Act.
            ``(2) Appointment of attorneys and experts.--The Secretary 
        may appoint attorneys and experts without regard to the civil 
        service laws.''.
    (b) Conforming References to Previous Part D.--
            (1) In general.--Any reference in law (in effect before the 
        date of enactment of this Act) to part D of title XVIII of the 
        Social Security Act is deemed a reference to part E of such 
        title (as in effect after such date).
            (2) Submission of legislative proposal.--Not later than 6 
        months after the date of enactment of this Act, the 
        Commissioner of Medicare Prescription Drugs and the Secretary 
        of Health and Human Services shall submit to the appropriate 
        committees of Congress a legislative proposal providing for 
        such technical and conforming amendments in the law as are 
        required by the provisions of this title.

SEC. 3. EXCLUSION OF PART D COSTS FROM DETERMINATION OF PART B MONTHLY 
              PREMIUM.

    Section 1839(g) of the Social Security Act (42 U.S.C. 1395r(g)) is 
amended--
            (1) by striking ``attributable to the application of 
        section'' and inserting ``attributable to--
            ``(1) the application of section'';
            (2) by striking the period and inserting ``; and''; and
            (3) by adding at the end the following new paragraph:
            ``(2) the Voluntary Medicare Outpatient Prescription Drug 
        Discount and Security Program under part D.''.

SEC. 4. MEDIGAP REVISIONS.

    Section 1882 of the Social Security Act (42 U.S.C. 1395ss) is 
amended by adding at the end the following new subsection:
    ``(v) Modernization of Medicare Supplemental Policies.--
            ``(1) Promulgation of model regulation.--
                    ``(A) NAIC model regulation.--If, within 9 months 
                after the date of enactment of the Medicare Rx Drug 
                Discount and Security Act of 2000, the National 
                Association of Insurance Commissioners (in this 
                subsection referred to as the `NAIC') changes the 1991 
                NAIC Model Regulation (described in subsection (p)) to 
                revise the benefit package classified as `J' under the 
                standards established by subsection (p)(2) (including 
                the benefit package classified as `J' with a high 
                deductible feature, as described in subsection (p)(11)) 
                so that--
                            ``(i) the coverage for outpatient 
                        prescription drugs available under such benefit 
                        package is replaced with coverage for 
                        outpatient prescription drugs that compliments 
                        but does not duplicate the benefits for 
                        outpatient prescription drugs that 
                        beneficiaries are otherwise entitled to under 
                        this title;
                            ``(ii) a uniform format is used in the 
                        policy with respect to such revised benefits; 
                        and
                            ``(iii) such revised standards meet any 
                        additional requirements imposed by the Medicare 
                        Rx Drug Discount and Security Act of 2000;
                subsection (g)(2)(A) shall be applied in each State, 
                effective for policies issued to policy holders on and 
                after January 1, 2002, as if the reference to the Model 
                Regulation adopted on June 6, 1979, were a reference to 
                the 1991 NAIC Model Regulation as changed under this 
                subparagraph (such changed regulation referred to in 
                this section as the `2002 NAIC Model Regulation').
                    ``(B) Regulation by the secretary.--If the NAIC 
                does not make the changes in the 1991 NAIC Model 
                Regulation within the 9-month period specified in 
                subparagraph (A), the Secretary shall promulgate, not 
                later than 9 months after the end of such period, a 
                regulation and subsection (g)(2)(A) shall be applied in 
                each State, effective for policies issued to policy 
                holders on and after January 1, 2002, as if the 
                reference to the Model Regulation adopted on June 6, 
                1979, were a reference to the 1991 NAIC Model 
                Regulation as changed by the Secretary under this 
                subparagraph (such changed regulation referred to in 
this section as the `2002 Federal Regulation').
                    ``(C) Consultation with working group.--In 
                promulgating standards under this paragraph, the NAIC 
                or Secretary shall consult with a working group similar 
                to the working group described in subsection (p)(1)(D).
                    ``(D) Modification of standards if medicare 
                benefits change.--If benefits (including deductibles 
                and coinsurance) under part D of this title are changed 
                and the Secretary determines, in consultation with the 
                NAIC, that changes in the 2002 NAIC Model Regulation or 
                2002 Federal Regulation are needed to reflect such 
                changes, the preceding provisions of this paragraph 
                shall apply to the modification of standards previously 
                established in the same manner as they applied to the 
                original establishment of such standards.
            ``(2) Construction of benefits in other medicare 
        supplemental policies.--Nothing in the benefit packages 
        classified as `A' through `I' under the standards established 
        by subsection (p)(2) (including the benefit package classified 
        as `F' with a high deductible feature, as described in 
        subsection (p)(11)) shall be construed as providing coverage 
        for benefits for which payment may be made under part D.
            ``(3) Application of provisions and conforming 
        references.--
                    ``(A) Application of provisions.--The provisions of 
                paragraphs (4) through (10) of subsection (p) shall 
                apply under this section, except that--
                            ``(i) any reference to the model regulation 
                        applicable under that subsection shall be 
                        deemed to be a reference to the applicable 2002 
                        NAIC Model Regulation or 2002 Federal 
                        Regulation; and
                            ``(ii) any reference to a date under such 
                        paragraphs of subsection (p) shall be deemed to 
                        be a reference to the appropriate date under 
                        this subsection.
                    ``(B) Other references.--Any reference to a 
                provision of subsection (p) or a date applicable under 
                such subsection shall also be considered to be a 
                reference to the appropriate provision or date under 
                this subsection.''.
                                 <all>