[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 339 Introduced in House (IH)]
107th CONGRESS
1st Session
H. R. 339
To amend title XVIII of the Social Security Act to provide for coverage
of outpatient prescription drugs under part B of the Medicare Program,
and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
January 31, 2001
Mr. Engel (for himself, Mr. Frost, Mr. Hilliard, Mr. Weiner, Mr.
Nadler, and Mr. McNulty) introduced the following bill; which was
referred to the Committee on Energy and Commerce, and in addition to
the Committee on Ways and Means, for a period to be subsequently
determined by the Speaker, in each case for consideration of such
provisions as fall within the jurisdiction of the committee concerned
_______________________________________________________________________
A BILL
To amend title XVIII of the Social Security Act to provide for coverage
of outpatient prescription drugs under part B of the Medicare Program,
and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Medicare Outpatient Prescription
Drug Coverage Act of 2001''.
SEC. 2. MEDICARE COVERAGE OF OUTPATIENT PRESCRIPTION DRUGS.
(a) Description of Covered Outpatient Drugs.--
(1) Coverage.--Section 1861(s)(2)(J) of the Social Security
Act (42 U.S.C. 1395x(s)(2)(J)) is amended to read as follows:
``(J) covered outpatient drugs (as defined in subsection
(t)(2));''.
(2) Drugs defined.--Section 1861(t) of such Act (42 U.S.C.
1395x(t)) is amended--
(A) in the heading, by adding at the end the
following: ``; Covered Outpatient Drugs'';
(B) in paragraph (1)--
(i) by striking ``paragraph (2)'' and
inserting ``the succeeding paragraphs of this
subsection'', and
(ii) by striking the period at the end and
inserting ``, but only if used for a medically
accepted indication (as described in paragraph
(4)).''; and
(C) by striking paragraph (2) and inserting the
following:
``(2) Subject to paragraph (3), the term `covered outpatient drug'
means--
``(A) a drug which may be dispensed only upon prescription
and--
``(i) which is approved for safety and
effectiveness as a prescription drug under section 505
or 507 of the Federal Food, Drug, and Cosmetic Act or
which is approved under section 505(j) of such Act;
``(ii)(I) which was commercially used or sold in
the United States before the date of the enactment of
the Drug Amendments of 1962 or which is identical,
similar, or related (within the meaning of section
310.6(b)(1) of title 21 of the Code of Federal
Regulations) to such a drug, and (II) which has not
been the subject of a final determination by the
Secretary that it is a `new drug' (within the meaning
of section 201(p) of the Federal Food, Drug, and
Cosmetic Act) or an action brought by the Secretary
under section 301, 302(a), or 304(a) of such Act to
enforce section 502(f) or 505(a) of such Act; or
``(iii)(I) which is described in section 107(c)(3)
of the Drug Amendments of 1962 and for which the
Secretary has determined there is a compelling
justification for its medical need, or is identical,
similar, or related (within the meaning of section
310.6(b)(1) of title 21 of the Code of Federal
Regulations) to such a drug, and (II) for which the
Secretary has not issued a notice of an opportunity for
a hearing under section 505(e) of the Federal Food,
Drug, and Cosmetic Act on a proposed order of the
Secretary to withdraw approval of an application for
such drug under such section because the Secretary has
determined that the drug is less than effective for all
conditions of use prescribed, recommended, or suggested
in its labeling;
``(B) a biological product which--
``(i) may only be dispensed upon prescription,
``(ii) is licensed under section 351 of the Public
Health Service Act, and
``(iii) is produced at an establishment licensed
under such section to produce such product; and
``(C) insulin certified under section 506 of the Federal
Food, Drug, and Cosmetic Act.
``(3) The term `covered outpatient drug' does not include--
``(A) any drug, biological product, or insulin when
furnished as part of, or as incident to, a diagnostic service
or any other item or service for which payment may be made
under this title (other than physicians' services or services
which would be physicians' services if furnished by a
physician); or
``(B) any drug that is intravenously administered in a home
setting.
``(4) For purposes of paragraph (2), the term `medically accepted
indication', with respect to the use of an outpatient drug, includes--
``(A) any use which has been approved by the Food and Drug
Administration for the drug, and
``(B) any other use of the drug, unless the Secretary
determines that such use is not medically appropriate.''.
(3) Conforming amendments repealing separate coverage of
certain drugs and products.--(A) Effective January 1, 2003,
section 1861(s)(2) of such Act (42 U.S.C. 1395x(s)(2)) is
amended--
(i) in each of subparagraphs (A) and (B) (as
amended by section 112(a) of the Medicare, Medicaid,
and SCHIP Benefits Improvement and Protection Act of
2000, as enacted into law by section 1(a)(6) of Public
Law 106-554), by striking ``(including drugs'' and all that follows
through ``patient)''; and
(ii) by striking subparagraphs (G), (I), (O), (Q),
and (T).
(B) Effective January 1, 2003, section 1861 of such Act (42
U.S.C. 1395x) is amended by striking the subsection (kk).
(C) Effective January 1, 2003, section 1881(b) of such Act
(42 U.S.C. 1395rr(b)) is amended--
(i) in the first sentence of paragraph (1)--
(I) by striking ``, (B)'' and inserting
``and (B)''; and
(II) by striking ``, and (C)'' and all that
follows and inserting a period; and
(ii) in paragraph (11)--
(I) by striking ``(11)(A)'' and inserting
``(11)''; and
(II) by striking subparagraphs (B) and (C).
(b) Deductible and Payment Amounts.--(1) Section 1833(a)(1) of such
Act (42 U.S.C. 1395l(a)(1)), as amended by sections 105(c) and 223(c)
of the Medicare, Medicaid, and SCHIP Benefits Improvement and
Protection Act of 2000, as enacted into law by section 1(a)(6) of
Public Law 106-554, is amended--
(A) by striking ``and (U)'' and inserting ``(U)''; and
(B) by striking the semicolon at the end and inserting the
following ``, and (V) with respect to expenses incurred for
covered outpatient drugs, the amounts paid shall be the amounts
determined under section 1834(e)(2);''.
(2) Section 1833(a)(2) of such Act (42 U.S.C. 1395l(a)(2)) is
amended--
(A) by inserting ``(other than covered outpatient drugs)''
after ``(2) in the case of services''; and
(B) by striking ``(other than a covered osteoporosis drug)
(as defined in section 1861(kk))''.
(3) Section 1833(b) of such Act (42 U.S.C. 1395l(b)) is amended--
(A) in clause (1), by inserting ``or for covered outpatient
drugs'' after ``1861(s)(10)(A)'', and
(B) in clause (2), by striking `` (other than a covered
osteoporosis drug (as defined in section 1861(kk)))''.
(4) Section 1834 of such Act (42 U.S.C. 1395m) is amended by
inserting after subsection (d) the following new subsection:
``(e) Payment for Covered Outpatient Drugs.--
``(1) Deductible.--
``(A) Application.--
``(i) In general.--Except as provided in
clauses (ii) and (iii), payment shall be made
under paragraph (2) only with respect to
expenses incurred by an individual for covered
outpatient drugs during a calendar year on or
after such date in the year as the Secretary
determines that the individual has incurred
expenses in the year for covered outpatient
drugs (during a period in which the individual
is entitled to benefits under this part) equal
to the amount of the prescription drug
deductible specified in subparagraph (C) for
that year.
``(ii) Deductible not applied to 1st year
immunosuppressives.--The prescription drug
deductible established under this paragraph
shall not apply to drugs described in section
1861(t)(2)(A) used in immunosuppressive therapy
and furnished, to an individual who receives an
organ transplant for which payment is made
under this title, within 1 year after the date
of the transplant.
``(B) Response to application.--If the system
described in section 1842(u)(4) has not been
established and an individual applies to the Secretary
to establish that the individual has met the
requirement of subparagraph (A), the Secretary shall
promptly notify the individual (and, if the application
was submitted by or through a participating pharmacy,
the pharmacy) as to the date (if any) as of which the
individual has met such requirement.
``(C) Prescription drug deductible amount.--The
prescription drug deductible specified in this
subparagraph for--
``(i) 2003 is $250, and
``(ii) any succeeding year, is the
prescription drug deductible for the preceding
year, increased by the percentage by which the
monthly premium under section 1839 for months
during the year exceeds the monthly premium
under such section for months during the
preceding year.
``(2) Payment amount.--
``(A) In general.--Subject to the prescription drug
deductible established under paragraph (1)(A) and
except as provided in subparagraph (B), the amounts
payable under this part with respect to a covered
outpatient drug is equal to 80 percent of the lesser
of--
``(i) the actual charge for the drug, or
``(ii) the applicable payment limit
established under paragraph (3).
``(B) Treatment of certain cost-based prepaid
organizations.--In applying subparagraph (A) in the
case of a Medicare+Choice organization under part C, an
organization under a reasonable cost reimbursement
contract under section 1876, and in the case of an
organization receiving payment under section
1833(a)(1)(A) and providing coverage of covered
outpatient drugs, the Secretary shall provide for an
appropriate adjustment in the payment amounts otherwise
made to reflect the aggregate increase in payments that
would otherwise be made with respect to enrollees
in such an organization if payments were made other than under such
clause or such a contract on an individual-by-individual basis.
``(3) Payment limits.--
``(A) Payment limit for non-multiple source drugs
and multiple-source drugs with restrictive
prescriptions.--In the case of a drug that either is
not a multiple source drug (as defined in paragraph
(9)(A)) or is a multiple source drug and has
a restrictive prescription (as defined in paragraph (9)(B)), the
payment limit for the drug under this paragraph for a payment
calculation period is equal to the lesser of--
``(i) the 90th percentile of the actual
charges (computed on a statewide basis,
carrier-wide basis, or other appropriate
geographic area basis, as specified by the
Secretary) for the drug for the second previous
payment calculation period, adjusted (as the
Secretary determines to be appropriate) to
reflect the number of tablets (or other dosage
units) dispensed; or
``(ii) the amount of the administrative
allowance (established under paragraph (4))
plus the product of--
``(I) the number of tablets (or
other dosage units) dispensed, and
``(II) the per tablet or unit
average wholesale price for such drug
(as determined under subparagraph (C)
for the period for purposes of this
subparagraph).
``(B) Payment limit for multiple source drugs
without restrictive prescriptions.--In the case of a
drug that is a multiple source drug but does not have a
restrictive prescription, the payment limit for the
drug under this paragraph for a payment calculation
period is equal to the amount of the administrative
allowance (established under paragraph (4)) plus the
product of--
``(i) the number of tablets (or other
dosage units) dispensed, and
``(ii) the unweighted median of the per
tablet or unit average wholesale prices
(determined under subparagraph (C) for purposes
of this subparagraph) for such drug for the
period.
``(C) Determination of unit price.--
``(i) In general.--For purposes of this
paragraph, the Secretary shall determine, with
respect to the dispensing of a covered
outpatient drug in a payment calculation period
(beginning on or after January 1, 2003), the
per tablet or unit average wholesale price for
the drug.
``(ii) Basis for determinations.--
``(I) Determination for non-
multiple-source drugs.--For purposes of
subparagraph (A), such determination
shall be based on a biannual survey
conducted by the Secretary of a
representative sample of direct
sellers, wholesalers, or pharmacies (as
appropriate) of wholesale (or
comparable direct) prices (excluding
discounts to pharmacies); except that
if, because of low volume of sales for
the drug or other appropriate reasons
or in the case of covered outpatient
drugs during 2003, the Secretary
determines that such a survey is not
appropriate with respect to a specific
drug, such determination shall be based
on published average wholesale (or
comparable direct) prices for the drug.
``(II) Determination for multiple-
source drugs.--For purposes of
subparagraph (B), the Secretary may
base the determination under this
subparagraph on the published average
wholesale (or comparable direct) prices
for the drug or on a biannual survey
conducted by the Secretary of a
representative sample of direct
sellers, wholesalers, or pharmacists
(as appropriate) of wholesale (or
comparable direct) prices (excluding
discounts to pharmacies).
``(III) Compliance with survey
required.--If a wholesaler or direct
seller of a covered outpatient drug
refuses, after being requested by the
Secretary, to provide the information
required in a survey under this clause,
or deliberately provides information
that is false, the Secretary may impose
a civil money penalty of not to exceed
$10,000 for each such refusal or
provision of false information. The
provisions of section 1128A (other than
subsections (a) and (b)) shall apply to
civil money penalties under the
previous sentence in the same manner as
such provisions apply to a penalty or
proceeding under section 1128A(a).
Information gathered pursuant to the
survey shall not be disclosed except as
the Secretary determines to be
necessary to carry out the purposes of
this part.
``(iii) Quantity and timing.--Such
determination shall be based on the price or
prices for purchases in reasonable quantities
and shall be made for a payment calculation
period based on prices for the first day of the
first month of the previous payment calculation
period.
``(iv) Geographic basis.--The Secretary
shall make such determination, and calculate
the payment limits under this paragraph, on a national basis.
``(v) Adjustment for geographic variations
in costs.--The Secretary shall adjust the
payment limits under this paragraph to take
account of limitations on the availability of
drug products and variations among regions in
the average wholesale prices for a drug
product, using an appropriate index as
determined by the Secretary.
``(4) Administrative allowance for purposes of payment
limits.--
``(A) In general.--Except as provided in
subparagraph (B), for drugs dispensed in--
``(i) 2003, the administrative allowance
under this paragraph is--
``(I) $5 for drugs dispensed by a
participating pharmacy, or
``(II) $3 for drugs dispensed by
another pharmacy; or
``(ii) a subsequent year, the
administrative allowance under this paragraph
is the administrative allowance under this
paragraph for the preceding year increased by
the percentage increase (if any) in the
implicit price deflator for gross national
product (as published by the Department of
Commerce in its `Survey of Current Business')
over the 12-month period ending with August of
such preceding year.
Any allowance determined under the clause (ii) which is
not a multiple of 1 cent shall be rounded to the
nearest multiple of 1 cent.
``(B) Adjustment in allowance for mail service
pharmacies.--The Secretary may, by regulation and after
consultation with pharmacists, elderly groups, and
private insurers, reduce the administrative allowances
established under subparagraph (A) for any drug
dispensed by a mail service pharmacy (as defined by the
Secretary) based on differences between such pharmacies
and other pharmacies with respect to operating costs
and other economies.
``(5) Assuring appropriate prescribing and dispensing
practices.--
``(A) In general.--The Secretary shall establish a
program to identify (and to educate physicians and
pharmacists concerning)--
``(i) instances or patterns of unnecessary
or inappropriate prescribing or dispensing
practices for covered outpatient drugs;
``(ii) instances or patterns of substandard
care with respect to such drugs; and
``(iii) potential adverse reactions.
``(B) Standards.--In carrying out the program under
subparagraph (A), the Secretary shall establish for
each covered outpatient drug standards for the
prescribing of the drug which are based on accepted
medical practice. In establishing such standards, the
Secretary shall incorporate standards from such current
authoritative compendia as the Secretary may select;
except that the Secretary may modify such a standard by
regulation on the basis of scientific and medical
information that such standard is not consistent with
the safe and effective use of the drug.
``(C) Prohibition of formulary.--Nothing in this
title (other than section 1862(c)) shall be construed
as authorizing the Secretary to exclude from coverage
or to deny payment--
``(i) for any specific covered outpatient
drug, or specific class of covered outpatient
drug; or
``(ii) for any specific use of such a drug
for a specific indication unless such exclusion
is pursuant to section 1862(a)(1) based on a
finding by the Secretary that such use is not
safe or is not effective.
``(6) Treatment of certain prepaid organizations.--
``(A) General rule counting prepaid plan expenses
toward the prescription drug deductible.--Except as
provided in subparagraph (B), expenses incurred by (or
on behalf of) a medicare beneficiary for covered
outpatient drugs shall be counted (consistent with
subparagraph (C)) toward the prescription drug
deductible established under paragraph (1) whether or
not, at the time the expenses were incurred, the
beneficiary was enrolled in a plan under section
1833(a)(1)(A), a Medicare+Choice plan under part C, or
under section 1876.
``(B) Treatment of drug buy-out plan expenses.--In
the case of a medicare beneficiary enrolled in a month
in a drug buy-out plan (as defined in subparagraph
(D))--
``(i) expenses incurred by the beneficiary
for covered outpatient drugs reimbursed under
the plan shall not be counted toward the
prescription drug deductible, but
``(ii) if the individual disenrolls from
the plan during the year, the beneficiary is
deemed to have incurred, for each month of such
enrollment, expenses for covered outpatient
drugs in an amount equal to the actuarial value
(with respect to such month) of the deductible
for covered outpatient drugs (as computed by
the Secretary for purposes of section
1876(e)(1)) applicable on the average to
individuals in the United States.
``(C) Treatment of expenses for covered outpatient
drugs incurred while enrolled in a prepaid plan other
than a drug buy-out plan.--The Secretary may not enter
into a contract with a Medicare+Choice organization
under part C, an organization under section 1876, or provide for
payment under section 1833(a)(1)(A) with respect to an organization
which provides reimbursement for covered outpatient drugs, with respect
to a plan that is not a drug buy-out plan, unless the organization
provides assurances, satisfactory to the Secretary, that--
``(i) the organization will maintain and
make available, for its enrollees and in
coordination with the appropriate carriers
under this part, an accounting of expenses
incurred by (or on behalf of) enrollees under
the plan for covered outpatient drugs; and
``(ii) the organization will take into
account, in any deductibles established under
the plan in a year with respect to covered
outpatient drugs under this part, the amounts
of expenses for covered outpatient drugs
incurred in the year by (or on behalf of) the
beneficiary and otherwise counted toward the
prescription drug deductible in the year.
``(D) Drug buy-out plan defined.--In this
paragraph, the term `drug buy-out plan' means a plan
under section 1833(a)(1)(A) or offered by a
Medicare+Choice organization under part C, or an
organization under section 1876 and with respect to
which--
``(i) the amount of any deductible under
the plan with respect to covered outpatient
drugs under this title,
is less than 50 percent of--
``(ii) the prescription drug deductible
specified in paragraph (1)(C).
``(E) Medicare beneficiary defined.--In this
subsection, the term `Medicare beneficiary' means, with
respect to a month, an individual covered for benefits
under this part for the month.
``(F) Treatment of plan charges.--In the case of
covered outpatient drugs furnished by a Medicare+Choice
organization under part C, an eligible organization
under section 1876(b) or an organization described in
section 1833(a)(1)(A) which does not impose charges on
covered outpatient drugs dispensed to its members, for
purposes of this subsection the actual charges of the
organization shall be the organization's standard
charges to members, and other individuals, not entitled
to benefits with respect to such drugs.
``(7) Physician guide.--
``(A) In general.--The Secretary shall develop, and
update annually, an information guide for physicians
concerning the comparative average wholesale prices of
at least 500 of the most commonly prescribed covered
outpatient drugs. Such guide shall, to the extent
practicable, group covered outpatient drugs (including
multiple source drugs) in a manner useful to physicians
by therapeutic category or with respect to the
conditions for which they are prescribed. Such guide
shall specify the average wholesale prices on the basis
of the amount of the drug required for a typical daily
therapeutic regimen.
``(B) Mailing guide.--The Secretary shall provide
for mailing, in January of each year (beginning with
2003), a copy of the guide developed and updated under
subparagraph (A)--
``(i) to each hospital with an agreement in
effect under section 1866;
``(ii) to each physician (as defined in
section 1861(r)(1)) who routinely provides
services under this part; and
``(iii) to Social Security offices, senior
citizen centers, and other appropriate places.
``(8) Reports on utilization and effects on prices.--
``(A) Compilation of information.--The Secretary
shall compile information on--
``(i) manufacturers' prices for covered
outpatient drugs, and on charges of pharmacists
for covered outpatient drugs, and
``(ii) the use of covered outpatient drugs
by individuals entitled to benefits under this
part.
The information compiled under clause (i) shall include
a comparison of the increases in prices and charges for
covered outpatient drugs during each 6 month period
(beginning with January 1999) with the semiannual
average increase in such prices and charges during the
5 years beginning with 1993.
``(B) Reports.--The Secretary shall submit to the
Committees on Ways and Means and Commerce of the House
of Representatives and the Committee on Finance of the
Senate a report, in May and November of 2002 and 2003
and in May of each succeeding year, providing the
information compiled under subparagraph (A). For each
such report submitted after 2004, the report shall
include an explanation of the extent to which the
increases in outlays for covered outpatient drugs under
this part are due to the factors described in
subparagraphs (A)(i) and (A)(ii).
``(9) Definitions.--In this subsection:
``(A) Multiple source drug.--
``(i) In general.--The term `multiple
source drug' means, with respect to a payment
calculation period, a covered outpatient drug
for which there are 2 or more drug products
which--
``(I) are rated as therapeutically
equivalent (under the Food and Drug
Administration's most recent
publication of `Approved Drug Products
with Therapeutic Equivalence
Evaluations');
``(II) except as provided in clause
(ii), are pharmaceutically equivalent
and bioequivalent, as defined in clause
(iii) and as determined by the Food and
Drug Administration; and
``(III) are sold or marketed during
the period.
``(ii) Exception.--Subclause (II) of clause
(i) shall not apply if the Food and Drug
Administration changes by regulation (after an
opportunity for public comment of 90 days) the
requirement that, for purposes of the
publication described in clause (i)(I), in
order for drug products to be rated as
therapeutically equivalent, they must be
pharmaceutically equivalent and bioequivalent,
as defined in clause (iii).
``(iii) Definitions.--For purposes of this
subparagraph:
``(I) Pharmaceutically
equivalent.--Drug products are
pharmaceutically equivalent if the
products contain identical amounts of
the same active drug ingredient in the
same dosage form and meet compendial or
other applicable standards of strength,
quality, purity, and identity.
``(II) Bioequivalent.--Drugs are
bioequivalent if they do not present a
known or potential bioequivalence
problem or, if they do present such a
problem, are shown to meet an
appropriate standard of bioequivalence.
``(III) Sold or marketed.--A drug
is considered to be sold or marketed
during a period if it is listed in the
publications referred to in clause
(i)(I), unless the Secretary determines
that such sale or marketing is not
actually taking place.
``(B) Restrictive prescription.--A drug has a
`restrictive prescription' only if--
``(i) in the case of a written
prescription, the prescription for the drug
indicates, in the handwriting of the physician
or other person prescribing the drug and with
an appropriate phrase (such as `brand medically
necessary') recognized by the Secretary, that
the particular drug must be dispensed; or
``(ii) in the case of a prescription issued
by telephone--
``(I) the physician or other person
prescribing the drug (through use of
such an appropriate phrase) states that
the particular drug must be dispensed,
and
``(II) the physician or other
person submits to the pharmacy
involved, within 30 days after the date
of the telephone prescription, a
written confirmation which is in the
handwriting of the physician or other
person prescribing the drug and which
indicates with such appropriate phrase
that the particular drug was required
to have been dispensed.
``(C) Payment calculation period.--The term
`payment calculation period' means the 6-month period
beginning with January of each year and the 6-month
period beginning with July of each year.''.
(c) Participating Pharmacies; Civil Money Penalties.--
(1) Participating pharmacies.--Section 1842 of such Act (42
U.S.C. 1395t) is amended--
(A) in subsection (h)(1), by inserting before the
period at the end of the second sentence the following:
``, except that, with respect to a supplier of covered
outpatient drugs, the term `participating supplier'
means a participating pharmacy (as defined in
subsection (u)(1))'';
(B) in subsection (h)(4), by adding at the end the
following: ``In publishing directories under this
paragraph, the Secretary shall provide for separate
directories (wherever appropriate) for participating
pharmacies.''; and
(C) by inserting after subsection (t) the following
new subsection:
``(u)(1) For purposes of this section, the term `participating
pharmacy' means, with respect to covered outpatient drugs dispensed on
or after January 1, 2003, an entity which is authorized under a State
law to dispense covered outpatient drugs and which has entered into an
agreement with the Secretary, providing at least the following:
``(A) The entity agrees to accept payment under this part
on an assignment-related basis for all covered outpatient drugs
dispensed to an individual entitled to benefits under this part
(in this subsection referred to as a `Medicare beneficiary')
during a year after--
``(i) the Secretary has notified the entity,
through the electronic system described in paragraph
(4); or
``(ii) in the absence of such a system, the entity
is otherwise notified that the Secretary has
determined,
that the individual has met the prescription drug deductible
with respect to such drugs under section 1834(e)(1) for the
year.
``(B) The entity agrees--
``(i) not to refuse to dispense covered outpatient
drugs stocked by the entity to any medicare
beneficiary; and
``(ii) not to charge Medicare beneficiaries
(regardless of whether or not the beneficiaries are
enrolled under a prepaid health plan, a Medicare+Choice
organization under part C, or with eligible
organization under section 1876) more for such drugs
than the amount it charges to the general public (as
determined by the Secretary in regulations).
``(C) The entity agrees to keep patient records (including
records on expenses) for all covered outpatient drugs dispensed
to all medicare beneficiaries.
``(D) The entity agrees to submit information (in a manner
specified by the Secretary to be necessary to administer this
title) on all purchases of covered outpatient drugs dispensed
to medicare beneficiaries.
``(E) The entity agrees--
``(i) to offer to counsel, or to offer to provide
information (consistent with State law respecting the
provision of such information) to, each Medicare
beneficiary on the appropriate use of a drug to be
dispensed and whether there are potential interactions
between the drug and other drugs dispensed to the
beneficiary; and
``(ii) to advise the beneficiary on the
availability (consistent with State laws respecting
substitution of drugs) of therapeutically equivalent
covered outpatient drugs.
``(F) The entity agrees to provide the information
requested by the Secretary in surveys under section
1834(e)(3)(C)(ii).
Nothing in this paragraph shall be construed as requiring a pharmacy
operated by a Medicare+Choice organization under part C, an eligible
organization (described in section 1876(b)) or an organization
described in section 1833(a)(1)(A) for the exclusive benefit of its
members to dispense covered outpatient drugs to individuals who are not
members of the organization.
``(2) The Secretary shall provide to each participating pharmacy--
``(A) a distinctive emblem (suitable for display to the
public) indicating that the pharmacy is a participating
pharmacy; and
``(B) upon request, such electronic equipment and technical
assistance (other than the costs of obtaining, maintaining, or
expanding telephone service) as the Secretary determines may be
necessary for the pharmacy to submit claims using the
electronic system established under paragraph (4).
``(3) The Secretary shall provide for periodic audits of
participating pharmacies to assure--
``(A) compliance with the requirements for participation
under this title; and
``(B) the accuracy of information submitted by the
pharmacies under this title.
``(4) The Secretary shall establish, by not later than January 1,
2003, a point-of-sale electronic system for use by carriers and
participating pharmacies in the submission of information respecting
covered outpatient drugs dispensed to medicare beneficiaries under this
part.
``(5) Notwithstanding subsection (b)(3)(B), payment for covered
outpatient drugs may be made on the basis of an assignment described in
clause (ii) of that subsection only to a participating pharmacy.''.
(2) Civil money penalties for violation of participation
agreement, for excessive charges for nonparticipating
pharmacies and for failure to provide survey information.--
Section 1128A(a) of such Act (42 U.S.C. 1320a-7a(a)) is
amended--
(A) in paragraph (2)(C), by inserting ``or to be a
participating pharmacy under section 1842(u)'' after
``1842(h)(1)'';
(B) by striking ``, or'' at the end of paragraph
(6);
(C) by adding ``or'' at the end of paragraph (7);
and
(D) by inserting after paragraph (7) the following
new paragraph:
``(8) in the case of a participating or nonparticipating
pharmacy (as defined for purposes of part B of title XVIII)--
``(A) presents or causes to be presented to any
person a request for payment for covered outpatient
drugs dispensed to an individual entitled to benefits
under part B of title XVIII and for which the amount
charged by the pharmacy is greater than the amount the
pharmacy charges the general public (as determined by
the Secretary in regulations), or
``(B) fails to provide the information requested by
the Secretary in a survey under section
1834(e)(3)(C)(ii);''.
(d) Limitation on Length of Prescription.--Section 1862(c) of such
Act (42 U.S.C. 1395y(c)) is amended--
(1) by redesignating subparagraphs (A) through (D) of
paragraph (1) as clauses (i) through (iv) respectively;
(2) in paragraph (2)(A), by striking ``paragraph (1)'' and
inserting ``subparagraph (A)'';
(3) by redesignating subparagraphs (A) and (B) of paragraph
(2) as clauses (i) and (ii) respectively;
(4) by redesignating paragraphs (1) and (2) as
subparagraphs (A) and (B) respectively;
(5) by inserting ``(1)'' after ``(c)''; and
(6) by adding at the end the following new paragraph:
``(2) No payment may be made under part B for any expense incurred
for a covered outpatient drug if the drug is dispensed in a quantity
exceeding a supply of 30 days or such longer period of time (not to
exceed 90 days, except in exceptional circumstances) as the Secretary
may authorize.''.
(e) Use of Carriers, Fiscal Intermediaries, and Other Entities in
Administration.--
(1) Authorizing use of other entities in electronic claims
system.--Section 1842(f) of such Act (42 U.S.C. 1395u(f)) is
amended--
(A) by striking ``and'' at the end of paragraph
(1);
(B) by striking the period at the end of paragraph
(2) and inserting ``; and''; and
(C) by adding at the end the following new
paragraph:
``(3) with respect to implementation and operation (and
related functions) of the electronic system established under
subsection (u)(4), a voluntary association, corporation,
partnership, or other nongovernmental organization, which the
Secretary determines to be qualified to conduct such
activities.''.
(2) Additional functions of carriers.--Section 1842(b)(3)
of such Act (42 U.S.C. 1395u(b)(3)) is amended--
(A) by striking ``and'' at the end of subparagraph
(I);
(B) by redesignating subparagraph (L) as
subparagraph (J); and
(C) by inserting after subparagraph (J) (as so
redesignated) the following new subparagraphs:
``(K) if it makes determinations or payments with respect
to covered outpatient drugs, will--
``(i) receive information transmitted under the
electronic system established under subsection (u)(4),
and
``(ii) respond to requests by participating
pharmacies (and individuals entitled to benefits under
this part) as to whether or not such an individual has
met the prescription drug deductible established under
section 1834(e)(1)(A) for a year; and
``(L) will enter into such contracts with organizations
described in subsection (f)(3) as the Secretary determines may
be necessary to implement and operate (and for related
functions with respect to) the electronic system established
under subsection (u)(4) for covered outpatient drugs under this
part.''.
(3) Special contract provisions for electronic claims
system.--
(A) Payment on other than a cost basis.--Section
1842(c)(1) of such Act (42 U.S.C. 1395u(c)(1)) is
amended--
(i) by inserting ``(A)'' after ``(c)(1)'';
(ii) in the first sentence, by inserting
``, except as provided in subparagraph (B),''
after ``under this part, and''; and
(iii) by adding at the end the following
new subparagraph:
``(B) To the extent that a contract under this section provides for
implementation and operation (and related functions) of the electronic
system established under subsection (u)(4) for covered outpatient
drugs, the Secretary may provide for payment for such activities based
on any method of payment determined by the Secretary to be
appropriate.''.
(B) Application of different performance
standards.--The Secretary of Health and Human Services,
before entering into contracts under section 1842 of
the Social Security Act with respect to the
implementation and operation (and related functions) of
the electronic system for covered outpatient drugs,
shall establish standards with respect to performance
with respect to such activities. The provisions of
subsections (e)(2), (h)(1), and (h)(2) of section 1153
of such Act (42 U.S.C. 1320c-2) shall apply to such
activities in the same manner as they apply to
contracts with peer review organizations, instead of
the requirements of the second and third sentences of
section 1842(b)(2)(A) of such Act (42 U.S.C.
1395u(b)(2)(A)).
(C) Use of regional carriers.--Section
1842(b)(2)(A) of such Act (42 U.S.C. 1395u(b)(2)(A)) is
amended by adding at the end the following new
sentence: ``With respect to activities relating to
implementation and operation (and related functions) of
the electronic system established under subsection
(u)(4), the Secretary may enter into contracts with
carriers under this section to perform such activities
on a regional basis.''.
(4) Delay in application of coordinated benefits with
medigap.--The provisions of subparagraph (B) of section
1842(h)(3) of the Social Security Act (42 U.S.C. 1395u(h)(3))
shall not apply to covered outpatient drugs (other than drugs
described in section 1861(s)(2)(J) of such Act (42 U.S.C.
1395x(s)(2)(J)) as of the date of the enactment of this Act)
dispensed before January 1, 2004.
(5) Batch prompt processing of claims.--Section 1842(c) of
such Act (42 U.S.C. 1395u(c)), is amended--
(A) by redesignating paragraph (6) as paragraph
(7);
(B) in paragraphs (2)(A) and (3)(A), by striking
``Each'' and inserting ``Except as provided in
paragraph (6), each''; and
(C) by inserting after paragraph (5) the following
new paragraph:
``(6)(A) Each contract under this section which provides for the
disbursement of funds, as described in subsection (a)(1)(B), with
respect to claims for payment for covered outpatient drugs shall
provide for a payment cycle under which each carrier will, on a monthly
basis, make a payment with respect to all claims which were received
and approved for payment in the period since the most recent date on
which such a payment was made with respect to the participating
pharmacy or individual submitting the claim.
``(B) If payment is not issued, mailed, or otherwise transmitted
within 5 days of when such a payment is required to be made under
subparagraph (A), interest shall be paid at the rate used for purposes
of section 3902(a) of title 31, United States Code (relating to
interest penalties for failure to make prompt payments) for the period
beginning on the day after such 5-day period and ending on the date on
which payment is made.''.
(f) Modification of HMO/CMP Contracts.--
(1) Separate actuarial determination for covered outpatient
drug benefit.--Section 1876(e)(1) of such Act (42 U.S.C.
1395mm(e)(1)) is amended by adding at the end thereof the
following new sentence: ``The preceding sentence shall be
applied separately with respect to covered outpatient drugs.''.
(2) Additional optional benefits.--Section 1876(g)(3)(A) of
such Act (42 U.S.C. 1395mm(g)(3)(A)) is amended by striking
``rate'' and inserting ``rates''.
(g) Conforming Amendments.--
(1) The first sentence of section 1866(a)(2)(A) (42 U.S.C.
1395cc(a)(2)(A)) is amended--
(A) by inserting ``1834(e),'' after ``1833(b),'';
and
(B) by inserting ``and in the case of covered
outpatient drugs, applicable coinsurance percent
(specified in section 1834(e)(2)(C)) of the lesser of
the actual charges for the drugs or the payment limit
(established under section 1834(d)(3))'' after
``established by the Secretary)''.
(2) Section 1903(i)(5) (42 U.S.C. 1396b(i)(5)) is amended
by striking ``section 1862(c)'' and inserting ``section
1862(c)(1)''.
(h) Prescription Drug Payment Review Commission.--Part B is amended
by adding at the end the following new section:
``prescription drug payment review commission
``Sec. 1849. (a)(1) The Director of the Congressional Office of
Technology Assessment (in this section referred to as the `Director'
and the `Office', respectively) shall provide for the appointment of a
Prescription Drug Payment Review Commission (in this section referred
to as the `Commission'), to be composed of individuals with expertise
in the provision and financing of covered outpatient drugs appointed by
the Director (without regard to the provisions of title 5, United
States Code, governing appointments in the competitive service).
``(2) The Commission shall consist of 11 individuals. Members of
the Commission shall first be appointed by no later than January 1,
2002, for a term of 3 years, except that the Director may provide
initially for such shorter terms as will ensure that (on a continuing
basis) the terms of no more than 4 members expire in any one year.
``(3) The membership of the Commission shall include recognized
experts in the fields of health care economics, medicine, pharmacology,
pharmacy, and prescription drug reimbursement, as well as at least one
individual who is a medicare beneficiary.
``(b)(1) The Commission shall submit to Congress an annual report
no later than May 1 of each year, beginning with 2003, concerning
methods of determining payment for covered outpatient drugs under this
part.
``(2) Such report, in 2004 and thereafter, shall include, with
respect to the previous year, information on--
``(A) increases in manufacturers' prices for covered
outpatient drugs and in charges of pharmacists for covered
outpatient drugs,
``(B) the level of utilization of covered outpatient drugs
by medicare beneficiaries, and
``(C) administrative costs relating to covered outpatient
drugs.
``(c) The following provisions of section 1805 shall apply to the
Commission in the same manner as they apply to the Medicare Payment
Advisory Commission:
``(1) Subsection (c)(4) (relating to compensation of
members).
``(2) Subsection (d) (relating to staffing and
administration).
``(3) Subsection (e) (relating to powers of the Commission
generally).
``(4) Subsection (f)(1) (relating to requests for
appropriations).
``(d) There are authorized to be appropriated such sums as may be
necessary to carry out the provisions of this section. Such sums shall
be payable from the Federal Supplementary Medical Insurance Trust
Fund.''.
(i) Development of Standard Medicare Claims Form.--
(1) The Secretary shall develop, in consultation with
representatives of pharmacies and other interested individuals,
a standard claims form (and a standard electronic claims
format) to be used in requests for payment for covered
outpatient drugs under the medicare program and other third-
party payors.
(2) Not later than October 1, 2002, the Secretary shall
distribute official sample copies of the format developed under
paragraph (1) to pharmacies and other interested parties and by
not later than October 1, 2002, shall distribute official
sample copies of the form developed under paragraph (1) to
pharmacies and other interested parties.
(j) Effective Dates.--
(1) In general.--Except as otherwise provided in this
subsection, the amendments made by this section shall apply to
items dispensed on or after January 1, 2003.
(2) Carriers.--The amendments made by subsection (e) shall
take effect on the date of the enactment of this Act; except
that the amendments made by subsection (e)(5) shall take effect
on January 1, 2004, but shall not be construed as requiring
payment before February 1, 2004.
(3) HMO/CMP enrollments.--The amendment made by subsection
(f) shall apply to enrollments effected on or after January 1,
2003.
<all>