[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3684 Introduced in House (IH)]







107th CONGRESS
  2d Session
                                H. R. 3684

      To amend the Social Security Act to establish an outpatient 
     prescription drug assistance program for low-income Medicare 
                             beneficiaries.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            February 5, 2002

   Mr. Simmons (for himself, Ms. Hart, Mr. Kolbe, Mr. Manzullo, Mr. 
LaTourette, Mr. Forbes, and Mr. Platts) introduced the following bill; 
which was referred to the Committee on Ways and Means, and in addition 
      to the Committee on Energy and Commerce, 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 the Social Security Act to establish an outpatient 
     prescription drug assistance program for low-income Medicare 
                             beneficiaries.

    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 ``Immediate Helping Hand Prescription 
Drug Assistance Act of 2002''.

SEC. 2. OUTPATIENT PRESCRIPTION DRUG ASSISTANCE PROGRAM.

    (a) Establishment.--The Social Security Act (42 U.S.C. 301 et seq.) 
is amended by adding at the end the following new title:

     ``TITLE XXII--OUTPATIENT PRESCRIPTION DRUG ASSISTANCE PROGRAM

``SEC. 2201. PURPOSE: OUTPATIENT PRESCRIPTION DRUG ASSISTANCE PROGRAMS.

    ``(a) In General.--The purpose of this title is to provide funding 
for States to establish a program to provide assistance to low-income 
medicare beneficiaries (as defined in section 2212(a)(4)), or to 
provide assistance to such beneficiaries through a State plan under 
title XIX or through part C of title XVII.
    ``(b) Entitlement.--Subject to subsection (c)(2), this title 
constitutes budget authority in advance of appropriations Acts and 
represents the obligation of the Federal Government to provide for the 
payment to the program sponsors described in section 2212(a)(9), of the 
amounts provided under section 2206.
    ``(c) Period of Applicability.--
            ``(1) In general.--No program sponsor may receive payments 
        under section 2207 for outpatient prescription drug assistance 
        provided before the date of enactment of this Act, or after 
        September 30, 2008.
            ``(2) Medicare reform.--If legislation that includes 
        comprehensive medicare coverage for outpatient prescription 
        drugs for all beneficiaries is enacted during the period that 
        begins on the date of enactment of this Act and ends on 
        September 30, 2008, this title shall be repealed upon the 
        effective date of such legislation, and no program sponsor 
        shall be entitled to receive payments for any outpatient 
        prescription drug assistance provided on or after such date.

``SEC. 2202. BENEFICIARY ELIGIBILITY AND ENROLLMENT.

    ``(a) Eligibility.--
            ``(1) In general.--In order for a State to receive payments 
        under section 2207 with respect to an outpatient prescription 
        drug assistance program, the program must provide, subject to 
        the availability of funds, outpatient prescription drug 
        assistance to each individual who--
                    ``(A) is a resident of the State (as defined in 
                section 2212(a)(10);
                    ``(B) is a low-income medicare beneficiary (as 
                defined in section 2212(a)(4); and
                    ``(C) applies for such assistance.
            (2) Legacy beneficiaries.--In the case of a State that has 
        an existing comprehensive state-based program, as defined in 
        section 2212(a)(2), that provides outpatient prescription drug 
        coverage for individuals described in paragraph (1)(A) 
        (``Legacy Beneficiaries''), the State is required to provide 
        outpatient prescription drug assistance for all such 
        beneficiaries residing in that state who were eligible for such 
        coverage on the date of enactment of this Act, notwithstanding 
        that any such beneficiaries have incomes exceeding the income 
        eligibility level specified by section 2212(a)(4)(C).
            ``(3) Individual nonentitlement.--Nothing in this title 
        shall be construed as providing an individual with an 
        entitlement to outpatient prescription drug assistance provided 
        under this title.
    ``(b) Enrollment of Eligible Individuals.--States shall develop 
procedures designed to encourage and facilitate enrollment in their 
outpatient prescription drug assistance programs, including but not 
limited to the following:
            ``(1) Developing a streamlined application process that is 
        capable of being administered separately from processes used to 
        enroll individuals in medicaid or other public assistance 
        programs;
            ``(2) Ensuring that eligible individuals may obtain benefit 
        information and application materials in a wide variety of 
        settings, such as physicians offices, pharmacies, health 
        clinics, senior community centers, and public libraries; and
            ``(3) Developing an outreach program designed to raise 
        awareness of the availability of benefits, eligibility 
        requirements, and application procedures under this title among 
        all eligible individuals.

``SEC. 2203. COVERAGE REQUIREMENTS.

    ``(a) Required Scope of Coverage.--
            ``(1) In general.--The outpatient prescription drug 
        assistance provided by a program sponsor shall provide coverage 
        of all covered outpatient drugs, as defined in section 
        1927(k)(2).
            ``(2) Permissible exclusions.--A program sponsor may 
        exclude coverage of any outpatient drug described under section 
        1927(d)(2).
            ``(3) Exclusion of drugs covered under part b.--No coverage 
        shall be provided under this part for outpatient prescription 
        drugs that are covered under part B of title XVIII as of the 
        date of enactment of this Act.
            ``(4) More generous coverage.--Nothing shall preclude a 
        State from offering more generous coverage that the coverage 
        described in this section.
    ``(b) Coverage Restrictions and Other Benefit Limitations.--
            ``(1) In general.--A drug prescribed for an individual that 
        would otherwise be a covered outpatient drug under this part 
        may be excluded or subject to coverage restrictions and other 
        benefit limitations only if the program sponsor meets the 
        requirements of subsection (b)(3) (including providing an 
        appeals process) with respect to such restrictions of 
        limitations.
            ``(2) Scope of this subsection.--Coverage restrictions and 
        benefit limitations to which subsection (b)(1) would apply 
        include, without limitation, any mechanism the purpose of which 
        or result of is to differentiate among drugs in the same 
        category or class that are not bioequivalent and 
        pharmaceutically equivalent, whether through a prior 
        authorization requirement, preferred drug list, tiered or 
        differential copayment structure or other differentials in 
        beneficiary cost-sharing requirements.
            ``(3) Requirements for development and application of 
        coverage restrictions and other benefit limitations.--Insofar 
        as a program sponsor excludes or otherwise subjects any 
        otherwise covered outpatient drug to coverage restrictions or 
        benefit limitations, the following requirement must be met--
                    ``(A) Pharmaceutical and therapeutic committee.--
                The sponsor shall establish a pharmaceutical and 
                therapeutic committee (``Committee''), which shall 
                include, at a minimum, practicing physicians (including 
                speciality physicians), pharmacists, and others who are 
                independent of the program sponsor and have expertise 
                in the care of elderly or disabled persons.
                    ``(B) Procedures for establishing coverage 
                restrictions or benefit limitations.--
                            ``(i) A covered outpatient drug may be 
                        excluded, or made subject to other coverage 
                        restrictions or benefit limitations, with 
                        respect to the treatment of a specific disease 
                        or condition, if the Committee determines, 
                        based on reliable scientific evidence, that the 
                        drug does not have a significant, clinically 
                        meaningful therapeutic advantage over other 
                        drugs in the same category or class and 
the Committee's determination is set forth in a written record that 
includes a specific explanation of the scientific and clinical bases 
for the determination.
                            ``(ii) Notwithstanding subsection 
                        (b)(3)(B)(i), no coverage restrictions or 
                        benefit limitations shall apply with respect to 
                        a drug when prescribed for a beneficiary who is 
                        part of an identified population for which such 
                        drug has been determined to have a significant, 
                        clinically meaningful therapeutic advantage 
                        over alternative treatments.
                    ``(C) Medical exceptions process.--The program 
                sponsor shall have, as part of the appeals process 
                under subsection 2205(b)(4), a medical exceptions 
                process that provides for exceptions from application 
                of coverage restrictions or benefit limitations when a 
                drug is medically necessary and appropriate for a 
                beneficiary. In the case of such an exception, the same 
                cost-sharing and other requirements that would have 
                applied to the alternative covered outpatient drug 
                would apply to the drug covered pursuant to this 
                exception process.
    ``(c) Beneficiary Premiums and Cost-Sharing.--
            ``(1) General conditions.--
                    ``(A) Public schedule of charges.--Any premium or 
                cost-sharing shall be imposed by the program sponsor in 
                accordance with a public schedule.
                    ``(B) Protection for beneficiaries.--The program 
                sponsor may only vary premiums and cost-sharing based 
                on the family income of low-income medicare 
                beneficiaries in a manner that does not favor such 
                beneficiaries with higher incomes over beneficiaries 
                with lower incomes.
            ``(2) Limitations on premiums and cost-sharing.--
                    ``(A) No premiums or cost-sharing for beneficiaries 
                with income below 150 percent of poverty line.--In the 
                case of a low-income medicare beneficiary whose family 
                income does not exceed 150 percent of the poverty line, 
                the program sponsor may not charge the beneficiary any 
                premium and may impose only nominal cost-sharing.
                    ``(B) Other beneficiaries.--
                            ``(i) For low-income medicare beneficiaries 
                        not described in subparagraph (A), any premiums 
                        or cost-sharing imposed by the program sponsor 
                        may be based, subject to paragraph (1)(B), on a 
                        sliding scale related to income, except that 
                        the total annual aggregate amount of such 
                        premiums and cost-sharing with respect to all 
                        such beneficiaries in a family under this title 
                        may not exceed five percent of the family 
                        income.
                            ``(ii) No low-income medicare beneficiary 
                        described in subparagraph (B)(i) shall be 
                        responsible for more than 50 percent of any 
                        premium imposed by the program sponsor.
            ``(3) Premiums and cost-sharing for legacy beneficiaries.--
        In the case of Legacy Beneficiaries described in section 
        2202(a)(2), the program sponsor shall not impose any premium or 
        cost-sharing higher than that imposed under the existing 
        comprehensive state-based program before enactment of this Act.
    ``(d) Restriction on Application of Pre-Existing Condition 
Exclusions.--The program sponsor shall not permit the imposition of any 
preexisting condition exclusion for covered benefits and may not 
discriminate in the pricing of premiums because of health status, 
claims experience, receipt of health care, or medical condition.

``SEC. 2204. MANUFACTURER REBATES.

    ``(A) In General.--A state with an outpatient prescription drug 
program that administers its drug benefit on a fee-for-service basis 
shall be eligible to receive manufacturer rebates as provided under 
subsection (b).
    ``(b) Rebates.--
            ``(1) A manufacturer, as defined in section 1927(k)(5), 
        shall provide rebates to States described in subsection (a) for 
        drugs of the manufacturer for which payment is made under this 
        title.
            ``(2) Such rebates shall be calculated and paid in 
        accordance with the requirements of section 1927.

``SEC. 2205. BENEFICIARY PROTECTIONS.

    ``(a) Beneficiaries Covered Under Medicaid and Medicare+Choice 
Programs.--
            ``(1) In general.--Eligible beneficiaries who are provided 
        outpatient prescription drug assistance under a State plan 
        under title XIX or under part C of title XVIII shall be 
        afforded the patient protections contained in those programs.
            ``(2) Additional protection.--In addition to the 
        protections required under subsection (a)(1), all program 
sponsors must meet the requirements established in subsections (b)(1) 
and (b)(2).
    ``(b) Other Beneficiaries.--Eligible beneficiaries who are provided 
outpatient prescription drug assistance under this title shall be 
afforded the following patient protections--
            ``(1) Conflict of interest safeguards.--Before entering 
        into a contract with a program sponsor, the State shall 
        determine whether the program sponsor or any of its proposed 
        subcontractors has any significant organizational conflict of 
        interest, and if so, shall only contract with the prospective 
        sponsor if the sponsor has implemented adequate safeguards to 
        avoid or neutralize any such conflict. Prior to renewing such a 
        contract, the Secretary shall evaluate the effectiveness of the 
        safeguards in avoiding or neutralizing the conflict and shall 
        ensure that the program sponsor makes any changes necessary to 
        ensure their continuing effectiveness during the new contract 
        period.
            ``(2) Acknowledgement of beneficiary interests.--A program 
        sponsor shall certify to the State that it shall at all times 
        act in the best interests of enrollee in connection with the 
        provision of outpatient prescription drug assistance.
            ``(3) Grievance procedures.--A program sponsor shall meet 
        the requirements of section 1852(f) with respect to hearing and 
        resolving grievances in the same manner as such requirements 
        apply to a Medicare+Choice organization under that section.
            ``(4) Coverage determinations and appeals.--A program 
        sponsor shall meet the requirements of section 1852(g) with 
        respect to coverage determinations and appeals in the same 
        manner as such requirements apply to a Medicare+Choice 
        organization under that section.
            ``(5) Confidentiality and accuracy of beneficiary 
        records.--A program sponsor shall meet the requirements of 
        section 1852(h) with respect to confidentiality and accuracy of 
        patient records in the same manner as such requirements apply 
        to a Medicare+Choice organization under that section.
            ``(6) Access to covered outpatient drugs.--
                    ``(A) In general.--A program sponsor shall secure 
                the participation of sufficient numbers of pharmacies 
                to ensure convenient access to covered outpatient drugs 
                for eligible beneficiaries.
                    ``(B) Any willing pharmacy.--A program sponsor 
                shall permit the participation of any pharmacy that 
                meets State licensing requirements for such an entity.

``SEC. 2206. ALLOTMENTS.

    ``(A) Appropriation.--
            ``(1) In general.--For the purpose of providing allotments 
        under this section to States, there is appropriated, out of any 
        funds in the Treasury not otherwise appropriated--
                    ``(A) for fiscal year 2003, $7,000,000,000;
                    ``(B) for fiscal year 2004, $7,000,000,000;
                    ``(C) for fiscal year 2005, $7,000,000,000;
                    ``(D) for fiscal year 2006, $7,000,000,000;
                    ``(E) for fiscal year 2007, $7,000,000,000;
                    ``(F) for fiscal year 2008, $7,000,000,000; and
                    ``(G) for fiscal year 2009, $6,000,000,000.
            ``(2) Availability.--Amounts appropriated under paragraph 
        (1) shall only be available for providing the allotments 
        described in such paragraph during the fiscal year for which 
        such amounts are appropriated. Any amounts that have not been 
        obligated by the Secretary for the purposes of making payments 
        from such allotments under section 2207, or under section 2211, 
        on or before September 30 of fiscal year 2003, 2004, 2005, 
        2006, 2007, 2008, or 2009 (as applicable), shall be returned to 
        the Treasury.
    ``(b) Allotments to 50 States and District of Columbia.--
            ``(1) In general.--Subject to paragraph (3), of the amount 
        available for allotment under subsection (a) for a fiscal year, 
        reduced by the amount of allotments made under subsection (c) 
        for the fiscal year, the Secretary shall allot to each State 
        with an outpatient prescription drug assistance program the 
        same proportion as the ratio of--
                    ``(A) the number of medicare beneficiaries with 
                family income that does not exceed 200 percent of the 
                poverty line residing in the State for the fiscal year; 
                to
                    ``(B) the total number of such beneficiaries 
                residing in all such States.
            ``(2) Determination of number of medicare beneficiaries 
        with income that does not exceed 200 percent of poverty.--For 
        purposes of paragraph (1), a determination of the number of 
        medicare beneficiaries with family income that does not exceed 
        200 percent of the poverty line residing in a State for the 
        fiscal year shall be made on the basis of the arithmetic 
average of the number of such medicare beneficiaries, as reported and 
defined in the five most recent March supplements to the Current 
Population Survey of the Bureau of the Census.
            ``(3) Minimum allotment.--In no case shall the amount of 
        the allotment under this subsection for one of the 50 States or 
        the District of Columbia for a fiscal year be less than an 
        amount equal to 0.5 percent of the amount provided for all 
        allotments under subsection (a) for that fiscal year (reduced 
        by the amount of allotments made under subsection (c) for the 
        fiscal year). To the extent that the application of the 
        previous sentence results in an increase in the allotment to a 
        State or the District of Columbia above the amount otherwise 
        provided, the allotments for the other States and District of 
        Columbia under this subsection shall be reduced in a pro rata 
        manner (but not below the minimum allotment described in such 
        preceding sentence), so that the total of such allotments in a 
        fiscal year does not exceed the amount otherwise provided for 
        allotments under subsection (a) for that fiscal year (as so 
        reduced).
    ``(c) Allotments to Territories.--
            ``(1) In general.--Of the total amount available for 
        allotment under subsection (a) for a fiscal year, the Secretary 
        shall allot 0.25 percent among each of the commonwealths and 
        territories described in paragraph (3) in the same proportion 
        as the percentage specified in paragraph (2) for such 
        commonwealth or territory bears to the sum of such percentages 
        for all such commonwealths or territories so described.
            ``(2) Percentage.--The percentage specified in this 
        paragraph for--
                    ``(A) Puerto Rico is 91.6 percent;
                    ``(B) Guam is 3.5 percent;
                    ``(C) the United States Virgin Islands is 2.6 
                percent;
                    ``(D) American Samoa is 1.2 percent; and
                    ``(E) the Northern Mariana Islands is 1.1 percent.
            ``(3) Commonwealths and territories.--A commonwealth or 
        territory described in this paragraph is any of the following 
        if it has an outpatient prescription drug assistance program 
        approved under this title:
                    ``(A) Puerto Rico.
                    ``(B) Guam.
                    ``(C) the United States Virgin Islands.
                    ``(D) American Samoa.
                    ``(E) the Northern Mariana Islands.
    ``(d) Transfer of Certain Allotments and Portions of Allotments.--
            ``(1) In general.--If, not later than within two years of 
        the date of enactment of this Act, a State has not submitted a 
        State Participation Plan to the Secretary that meets the 
        requirements of this title--
                    ``(A) 90 percent of the allotment determined for a 
                fiscal year (or pro rata share thereof) under 
                subsection (b) or (c) for a State shall be transferred 
                and made available in such fiscal year to the Secretary 
                for purposes of carrying out the default program 
                established under section 2211; and
                    ``(B) 10 percent of such allotment shall be used to 
                make payments to States in accordance with section 
                2207(b).
            ``(2) Notwithstanding paragraph (1), if a State submits a 
        State Participation Plan to the Secretary that meets the 
        requirements of this title after the two-year period described 
        above such State's allotment (or pro rata share thereof) for 
        the fiscal year shall be distributed in accordance with 
        subsections (b) and (c).

``SEC. 2207. PAYMENTS TO STATES.

    ``(a) In General.--Subject to the succeeding provisions of this 
section, the Secretary shall pay to each State with a State 
Participation Plan approved under section 2208(c) from the State's 
allotment under section 2206, an amount for each quarter equal to the 
expenditures as estimated by the State in the quarter--
            ``(1) for outpatient prescription drug assistance furnished 
        to low-income medicare beneficiaries in a manner consistent 
        with the requirements of this title; and
    ``(2) only to the extent permitted under subsection (d), for 
reasonable costs incurred to administer a program implemented under 
this title, including, but not limited to, benefit management costs and 
outreach initiatives.
    ``(b) Additional Payments.--In addition to funding under subsection 
(a), the Secretary shall make payments to States as follows:
            ``(1) Enrollment bonuses.--The Secretary shall establish 
        program enrollment targets and make bonus payments to States 
        that achieve such targets; such bonus payments may be used to 
        provide expanded drug benefits to low-income medicare 
beneficiaries or to reduce or eliminate premium or cost-sharing 
obligations for such beneficiaries;
            ``(2) General outreach support.--During the first two years 
        of program operation, the Secretary shall provide additional 
        funding to States for outreach efforts designed to encourage 
        enrollment in programs implemented under this title.
            ``(3) Dual eligible outreach support funds.--The Secretary 
        shall make funds available to States to develop and implement 
        innovative outreach programs to enroll medicare beneficiaries 
        currently eligible for, but not enrolled in, medicaid; and
            ``(4) FMAP enhancement for dual eligibles.--The Secretary 
        shall pay each State an enhanced Federal medical assistance 
        percentage (``FMAP''), as defined in section 2105(b), for 
        prescription drug benefits furnished to dual eligibles who are 
        enrolled in both medicare and medicaid.
    ``(c) Limitation on Payments for Certain Expenditures.--
            ``(1) General limitations.--Funds provided to a State under 
        this title shall only be used to carry out the purposes of this 
        title.
            ``(2) Administrative expenditures.--
                    ``(A) In general.--Subject to subparagraph (B), 
                payment shall not be made under subsection (a) for 
                expenditures described in subsection (a)(2) for a 
                fiscal year to the extent the total of such 
                expenditures (for which payment is made under such 
                subsection) exceeds 10 percent of the total 
                expenditures described in subsection (a)(1) made by the 
                State for such fiscal year; and
                    ``(B) Special rule.--With respect to the first 
                fiscal year that a State provides outpatient 
                prescription drug assistance under a program approved 
                under this title, the limitation described in 
                subparagraph (A) shall be increased to 15 percent of 
                the total expenditures described in subsection (a)(1).
            ``(3) Offset of receipts attributable to premiums or cost-
        sharing.--For purposes of subsection (a), the amount of the 
        expenditures under a program shall be reduced by the amount of 
        any premiums or cost-sharing received by a State.
            ``(4) Prevention of duplicative payments.--
                    ``(A) Other health plans.--No payment shall be made 
                under this section for expenditures for outpatient 
                prescription drug assistance provided under an 
                outpatient prescription drug assistance program to the 
                extent that a private insurer (as defined by the 
                Secretary in regulations) would have been obligated to 
                provide such assistance but for a provision of its 
                insurance contract which has the effect of limiting or 
                excluding such obligation because the beneficiary is 
                eligible for or is provided outpatient prescription 
                drug assistance under the program.
                    ``(B) Other federal government programs.--Except as 
                otherwise provided by law, no payment shall be made 
                under this section for expenditures for outpatient 
                prescription drug assistance provided under an 
                outpatient prescription drug assistance program to the 
                extent that payment has been made or can reasonably be 
                expected to be made promptly (as determined in 
                accordance with regulations) under any other federally 
                operated or financed health care insurance program 
                identified by the Secretary.
    ``(d) Advance Payment; Retrospective Adjustment.--The Secretary may 
make payments under this section for each quarter on the basis of 
advance estimates of expenditures submitted by a State and such other 
investigation as the Secretary may find necessary, and may reduce or 
increase the payments as necessary to adjust for any overpayment or 
underpayment for prior quarters.
    ``(e) Flexibility in Submission of Claims.--Nothing in this section 
shall be construed as preventing a State from claiming as expenditures 
in any quarter of a fiscal year expenditures that were incurred in a 
previous quarter of such fiscal year.

``SEC. 2208. SUBMISSION, APPROVAL, AND AMENDMENT OF STATE PARTICIPATION 
              PLANS.

    ``(a) Initial Plan.--
            ``(1) In general.--A State may receive payments under 
        section 2207 if the State has submitted to the Secretary either 
        an outpatient prescription drug assistance program description 
        (for States not implementing this title as part of a title XIX 
        State plan) or a State plan amendment (for States implementing 
        this title as part of a title XIX State plan), that meets the 
        applicable requirements of this title (collectively, ``State 
        Participation Plans''). All States submitting a State 
        Participation Plan shall be reimbursed the reasonable costs 
        incurred in preparing the Plan, regardless of whether such 
submission is approved.
            ``(2) Content of state participation plan.--The State 
        Participation Plan submitted must describe:
                    ``(A) the purpose, nature, and scope of the 
                outpatient prescription drug assistance program;
                    ``(B) how the State intends to use the funds 
                provided under this title to provide outpatient 
                prescription drug assistance to low-income Medicare 
                beneficiaries;
                    ``(C) the budget for the program and details on the 
                planned use of funds, the sources of any non-federal 
                share of program expenditures, and beneficiary premium 
                and cost-sharing requirements for each of the defined 
                groups of eligible individuals;
                    ``(D) the procedures to be used to ensure that the 
                outpatient prescription drug assistance provided to 
                low-income Medicare beneficiaries under the program 
                does not supplant coverage for outpatient prescription 
                drugs available to such beneficiaries under group 
                health plans;
                    ``(E) standards for determining eligibility for 
                enrollment, including provisions pertaining to income, 
                resources, and access to other coverage, and procedures 
                for ensuring that only individuals who remain eligible 
                continue to be enrolled in the program;
                    ``(F) the proposed methods of delivery of benefits 
                to eligible individuals, as well as procedures designed 
                to ensure quality and access to covered services, 
                particularly in rural regions;
                    ``(G) safeguards in place to protect beneficiaries 
                from potential conflicts of interest;
                    ``(H) plans for specific outreach initiatives that 
                will be undertaken to inform Medicare beneficiaries 
                about the availability of benefits under this title and 
                to provide enrollment assistance to eligible 
                individuals;
                    ``(I) efforts designed to identify, contact, and 
                enroll Medicare beneficiaries eligible for Medicaid; 
                and
                    ``(J) plans for public participation in the design, 
                implementation, and development of the program on an 
                ongoing basis.
    ``(b) State Participation Plan Amendments.--Within 30 days after a 
State amends a State Participation Plan submitted pursuant to section 
(a), the State shall notify the Secretary of the amendment.
    ``(c) Approval of State Participation Plans and State Participating 
Plan Amendments.--
            ``(1) Prompt review of state participation plans and state 
        participation plan amendments.--Except as provided in 
        subparagraph (2)(B), the Secretary shall review promptly State 
        Participation Plans and State Participation Plan amendments to 
        determine if they substantially comply with the requirements of 
        this title.
            ``(2) Streamlined approval process.--
                    ``(A) In general.--A State Participation Plan or 
                amendment thereto is considered approved unless the 
                Secretary notifies the State in writing, within 45 days 
                after receipt of the State Participation Plan or 
                amendment, that the submission is disapproved (and the 
                reason or reasons for disapproval) or that specified 
                additional information is needed.
                    ``(B) Existing comprehensive state-based 
                programs.--A State Participation Plan that implements 
                this title through an existing comprehensive state-
                based program, as defined in section 2212(a)(2), is 
                deemed approved, provided that the responsible State 
                official certifies that the comprehensive state-based 
                program is consistent with the requirements of this 
                title.
            ``(3) Correction and supplementation.--In the case of a 
        disapproval of a State Participation Plan or amendment thereto, 
        the Secretary shall provide the State with a reasonable 
        opportunity for correction or supplementation to respond to 
        identified deficiencies before taking action against the State 
        on the basis of such disapproval.
            ``(4) Effective date.--A State Participation Plan or 
        amendment thereto shall be effective beginning with a calendar 
        quarter that is specified in the Plan, but in no case earlier 
        than the date of enactment of this Act.
    ``(d) Program Operation.--
            ``(1) In general.--A State shall conduct the program in 
        accordance with the State Participation Plan (and any 
        amendments thereto) approved under this section and consistent 
        with the requirements of this title.
            ``(2) Violations.--The Secretary shall establish a process 
        for enforcing requirements under this title. Such process shall 
        provide for the withholding of funds in the case of substantial 
        noncompliance with such requirements. In the case of an 
enforcement action against a State under this paragraph, the Secretary 
shall provide a State with a reasonable opportunity for correction and 
for administrative and judicial appeal of the Secretary's action before 
imposing financial sanctions against the State on the basis of such an 
action.
    ``(e) Continued Approval.--Subject to section 2201(c), an approved 
State Participation Plan shall continue in effect unless and until the 
State amends the Plan under subsection (b) or the Secretary finds, in 
accordance with subsection (d), substantial noncompliance of the Plan 
with the requirements of this title.

``SEC. 2209. PROGRAM ADMINISTRATION; APPLICATION OF CERTAIN GENERAL 
              PROVISIONS.

    ``(a) Program Administration.--An outpatient prescription drug 
assistance program shall ensure that the State administering the 
program collect the data, maintain the records, afford the Secretary 
access to any records or information relating to the program for the 
purposes of review or audit, and furnish report to the Secretary, at 
the times and in the standardized format the Secretary may require, in 
order to enable the Secretary to monitor program administration and 
compliance and to evaluate and compare the effectiveness of programs 
under this title.
    ``(b) Application of Certain General Provisions.--The following 
sections of the Social Security Act shall apply to the programs 
established under this title in the same manner as they apply to a 
State under title XIX:
            ``(1) Paragraph (2) and (16) of section 1903(i) (relating 
        to limitations on payment).
            ``(2) Section 1115 (relating to wavier authority).
            ``(3) Section 1116 (relating to administrative and judicial 
        review), but only insofar as consistent with this title.
            ``(4) Section 1124 (relating to disclosure of ownership and 
        related information).
            ``(5) Section 1126 (relating to disclosure of information 
        about certain convicted individuals).
            ``(6) Section 1128A (relating to civil monetary penalties).
            ``(7) Section 1128B(d) (relating to criminal penalties for 
        certain additional charges).

``SEC. 2210. REPORTS.

    ``(a) In General.--Each State administering an outpatient 
prescription drug assistance program under this title shall annually--
            ``(1) assess the operation of the program in each fiscal 
        year; and
            ``(2) report to the Secretary on the result of the 
        assessment.
    ``(b) Required Information.--The annual report required under 
subsection (a) shall include the following:
            ``(1) An assessment of the effectiveness of the program in 
        providing outpatient prescription drug assistance to low-income 
        medicare beneficiaries, including--
                    ``(A) the characteristics of the low-income 
                medicare beneficiaries assisted under the program, 
                including family income and access to other health 
                insurance prior to the program and after eligibility 
                for the program ends; and
                    ``(B) the amount and level of assistance provided 
                under the program.
            ``(2) An analysis of costs and expenditures associated with 
        the program, including a description of the sources of any non-
        Federal share of program expenditures.
    ``(c) Annual Report of the Secretary.--The Secretary shall submit 
to Congress and make available to the public an annual report based on 
the reports required under subsection (a), which report shall contain 
any conclusions and recommendations the Secretary considers 
appropriate.

``SEC. 2211. ESTABLISHMENT OF DEFAULT PROGRAM.

    ``(a) Program Authority.--
            ``(1) In general.--In the case of a State that does not 
        have a State Participation Plan approved under this Act within 
        two years of the date of enactment of this Act (the ``Dafault 
        Date''), outpatient prescription drug assistance to low-income 
        medicare beneficiaries who reside in such State shall be 
        provided in accordance with this section and section 
        1902(a)(10)(I).
            ``(2) Definition.--In this section, a low-income medicare 
        beneficiary means an individual who--
                    ``(A) satisfies the requirement of subparagraph (A) 
                and (B) of section 2212(a)(4); and
                    ``(B) is determined to have family income that does 
                not exceed 150 percent of the poverty line.
    ``(b) Notification of States.--On the Default Date, the Secretary 
shall notify in writing any State described in subsection (a)(1) of its 
responsibility to provide outpatient prescription drug coverage to low-
income medicare beneficiaries as provided for under section 
1902(a)(10)(I).
    ``(c) Funding.--
            ``(1) Transferred amounts.--The Secretary shall use the 
        aggregate amounts transferred and made available under section 
        2206(d)(1)(A) for purposes of carrying out the default program 
        established under this section. Such aggregate amounts may be 
        used to provide outpatient prescription drug assistance to any 
        low-income medicare beneficiary who resides in a State 
        described in paragraph (a)(1).
    ``(d) Suspension.--In the event that a State has a State 
Participation Plan approved under section 2208 more than two years from 
the date of enactment of this Act, the default program under this 
section shall be suspended until such time as such State no longer has 
an approved State Participation Plan.

``SEC. 2212. DEFINITIONS.

    ``(a) In this title:
            ``(1) Cost-sharing.--The term `cost-sharing' means a 
        deductible, coinsurance, copayment, or similar charge, and 
        includes an enrollment fee.
            ``(2) Existing comprehensive state-based program.--
                    ``(A) In general.--A program described in this 
                paragraph is an outpatient prescription drug assistance 
                program for individuals who are entitled to benefits 
                under part A of title XVIII or enrolled under part B of 
                such title, including an individual enrolled in a 
                Medicare+Choice plan under part C of such title, that--
                            `'(i) is administered or overseen by the 
                        State and receives funds from the State;
                            ``(ii) was offered as of the date of the 
                        enactment of this title;
                            ``(iii) does not receive or use any Federal 
                        funds; and
                            ``(iv) satisfies the requirements of this 
                        title.
                    ``(B) Modifications.--A State may modify the 
                coverage of its program from time to time, provided 
                that it does not reduce the actuarial value (evaluated 
                as of the time of the modification) below the actuarial 
                value of the coverage described in section 2203.
            ``(3) Group health plan; group health insurance coverage; 
        etc.--The terms `group health plan', 'group health insurance 
        coverage', and `health insurance coverage' have the meanings 
        given such terms in section 2791 of the Public Health Service 
        Act (42 U.S.C. 300gg-91).
            ``(4) Low-income medicare beneficiary.--Except as provided 
        in section 2211(a)(2), the term `low-income medicare 
        beneficiary' means an individual who--
                    ``(A) is entitled to benefits under part A of title 
                XVIII or enrolled under part B of such title, including 
                an individual enrolled in a Medicare+Choice plan under 
                part C of such title;
                    ``(B) except as provided for under section 
                1902(a)(10)(H) and section 1902(a)(10)(I), is not 
                entitled to medical assistance with respect to 
                prescribed drugs under title XIX or under a waiver 
                under section 1115 of the requirements of such title;
                    ``(C) except as provided in section 2202(a)(2), is 
                determined to have family income that does not exceed 
                200 percent of the poverty line;
                    ``(D) at the option of the State, is determined to 
                have resources that do not exceed a level specified by 
                the State; and
                    ``(E) is determined not to have coverage under a 
                comprehensive private retiree drug coverage plan.
            ``(5) Outpatient prescription drug assistance.--The term 
        `outpatient prescription drug assistance' means payment for 
        part or all of the cost of coverage of outpatient prescription 
        drugs and biologicals for low-income medicare beneficiaries, 
        consistent with the requirements of this title.
            ``(6) Outpatient prescription drug assistance program; 
        program.--Unless the context otherwise requires, the terms 
        `outpatient prescription drug assistance progam' and `program' 
        mean a program implemented pursuant to a State Participation 
        Plan approved under section 2208.
            ``(7) Poverty line.--The term `poverty line' has the 
        meaning given such term in section 673(2) of the Community 
        Services Block Grant Act (42 U.S.C.9902(2)), including any 
        revision required by such section.
            ``(8) Preexisting condition exclusion.--The term 
        `preexisting condition exclusion' has the meaning given such 
        term in section 2701(b)(1)(A) of the Public Health Service Act 
        (42 U.S.C. 300gg(b)(1)(A)).
            ``(9) Program sponsor.--The term `program sponsor' means 
        any entity that administers a program under this title, 
        including but not limited to a State, third party benefit 
        administrator, Medicare+Choice organization, or group health 
        plan.
            ``(10) Resident.--The term `resident' means an individual 
        who would be deemed a resident of a given State under that 
        state's residency rules applicable to beneficiaries under title 
        XIX.
            ``(11) Secretary.--The term `secretary' shall means the 
        Secretary of the United States Department of Health and Human 
        Services.
            ``(12) Senior fmap.--For purposes of this title, senior 
        FMAP means a 100 percent FMAP percentage for low-income 
        medicare beneficiaries with family incomes that do not exceed 
        200 percent of the poverty line.
            ``(13) State.--The term `State' has the meaning given such 
        term for purposes of title XIX.''.
    (b) Conforming Amendments.--
            (1) Definition of state.--Section 1101(a)(1) of the Social 
        Security Act (42 U.S.C. 1301(a)(1)) is amended in the first and 
        fourth sentences, by striking ``and XXI'' each place it appears 
        and inserting ``XXI, and XXII''.
            (2) Treatment as state health care program.--Section 
        1128(h) of such Act (42 U.S.C. 1320a-7(h)) is amended--
                    (A) in paragraph (3), by striking ``or'' at the 
                end;
                    (B) in paragraph (4), by striking the period at the 
                end and inserting ``, or''; and
                    (C) by adding at the end the following new 
                paragraph:
            ``(3) an outpatient prescription drug assistance program 
        approved under title XXII.''.

SEC. 3. EXPANDED COVERAGE OF LOW-INCOME MEDICARE BENEFICIARIES UNDER 
              MEDICAID

    (a) Section 1905 of the Social Security Act (42 U.S.C. 1396dd) is 
amended--
            (1) in subsection (b), by adding at the end the following 
        new sentence: ``Notwithstanding the first sentence of this 
        subsection, in the case of a State plan that meets the 
        condition described in subsection (x)(1), with respect to 
        expenditures described in subsection (x)(2)(A) or subsection 
        (x)(3), the Federal medical assistance percentage is equal to 
        the senior FMAP described in section 2212(a)(12).''; and
            (2) by adding at the end the following new subsection:
    ``(x)(1) The State provides for such reporting of information about 
expenditures and payments attributable to the operation of this 
subsection as the Secretary deems necessary in order to carry out 
paragraph (2) and section 2207.
    ``(2)(A) For purposes of subsections (b) and (c), the expenditures 
described in this subparagraph are expenditures for medical assistance 
for optional low-income medicare beneficiaries described in 
subparagraph (C), or for mandatory low-income medicare beneficiaries 
described in subsection (D), but not exceeding the amount described in 
subparagraph (B) for a State for a fiscal year.
    ``(B) The amount described in this subparagraph, for a State for a 
fiscal year, is the amount of the State's allotment under section 2206 
for the fiscal year, reduced by the amounts of any payments made under 
section 2207 from such allotment for such fiscal year.
    ``(C) For purposes of this paragraph, the term `optional low-income 
medicare beneficiary' means a low-income medicare beneficiary as 
defined in section 2212(a)(4).
    ``(D) For purposes of this paragraph, the term `mandatory low-
income medicare beneficiary' means a low-income medicare beneficiary as 
defined in section 2211(a)(2).
    (b) Establishment of Eligibility Category for Low-Income Medicare 
Beneficiaries.--Section 1902 (a)(10) (42 U.S.C. 1396a(a)(10)) is 
amended--
            (1) in subparagraph (F), by striking ``and'' at the end;
            (2) in subparagraph (G), by adding ``and'' at the end;
            (3) by adding after subparagraph (G) the following new 
        subparagraph:
                    ``(H) at the option of the State, for making 
                prescribed drugs, consistent with the requirements of 
                title XXII, available to optional low-income medicare 
                beneficiaries described in section 1905(x)(2)(C);'' and
            (4) by adding at the end the following new subparagraph:
                    ``(I)(i) upon the Default Date as described in 
                section 2211(a)(1), for making prescribed drugs, 
                consistent with the requirements of title XXII, 
                available to mandatory low-income medicare 
                beneficiaries described in section 1905(x)(2)(D).
                    ``(ii) In the event that a State Participation Plan 
                is approved under section 2208 after clause (i) becomes 
                effective, clause (i) shall be suspended until such 
                time as such State no longer has an approved State 
                Participation Plan.''.
    (c) Effective Date.--These amendments shall apply for periods 
beginning on or after the date of enactment of title XXII, but not 
beyond September 30, 2008.

SEC. 4. COVERAGE OF LOW-INCOME MEDICARE BENEFICIARIES IN 
              MEDICARE+CHOICE.

    (a) Section 1852 of the Social Security Act (U.S.C. 1395w-22) is 
amended--
            (1) in subsection (a)(1)(A) by striking at the end ``and'';
            (2) in subsection (a)(1)(B) by striking at the end ``.'', 
        and adding at the end ``, and'';
            (3) in subsection (a)(1) by adding at the end the following 
        new subparagraph:
                    ``(C) any additional benefits required under 
                subsection (m).''; and
            ``(4) by adding at the end the following new subsection:
    ``(m) Outpatient Prescription Drug Assistance for Low-Income 
Medicare Beneficiaries.--
            ``(1) At state election under title XXII, a Medicare+Choice 
        organization shall be required to provide outpatient 
        prescription drug assistance consistent with the requirement of 
        title XXII for any low-income medicare beneficiaries, as 
        defined in section 2212(a)(4), enrolled in its plan.
    ``(2) Payments shall be made for drugs provided under this 
subsection in accordance with section 1853(j).''
    ``(b) Section 1853 of the Social Security Act (42 U.S.C. 1395w-23) 
is amended by adding at the end the following new subsection:
    ``(j) Special Rule for Low-Income Medicare Beneficiaries.--
            ``(1) In general.--Notwithstanding any other provision of 
        this section, a Medicare+Choice organization that provides 
        outpatient prescription drug assistance for a low-income 
        medicare beneficiary, as defined in section 2212(a)(4), may 
        receive payments for the costs of such assistance if--
                    ``(A) the outpatient prescription drug coverage 
                meets the coverage requirements provided under section 
                2203; and
                    ``(B) the coverage is provided in a State with an 
                approved State Participation Plan as described in 
                section 2208.
            ``(2) Payment.--A Medicare+Choice organization that meets 
        the requirements of paragraph (1) shall be eligible for 
        payments by a State from that State's allotment pursuant to 
        title XXII.

SEC. 5. ELECTION BY LOW-INCOME MEDICARE BENEFICIARIES TO SUSPEND 
              MEDICAP INSURANCE.

    Section 1882 of the Social Security Act (42 U.S.C. 1395ss) is 
amended by adding at the end the following new paragraph:
    ``(v) Special Rule for Low-Income Medicare Beneficiaries.--
Nothwithstanding any other provision of this section.--
            ``(1) Current low-income medicare beneficiaries with 
        medicap coverage.--
                    ``(A) Prohibited practices.--An issuer of a 
                medicare supplemental issuance policy may not deny or 
                condition the issuance or effectiveness of a medicare 
                supplemental policy that has a benefit package 
                classified as `A', `B', `C', `D', `E', `F', or `G' 
                (under the standards established under subsection 
                (p)(2) of section 1882) and that is offered and is 
                available for issuance to new enrollees by such issuer 
                in the case of an individual described in subparagraph 
                (B)(i) who seeks to enroll under the policy not later 
                than 63 days after the date of termination of 
                enrollment described in subparagraph (B)(ii) and who 
                submits evidence of the date of termination or 
                disenrollment along with the application for a medicare 
                supplemental policy described in this subparagraph.
                    ``(B) Individual covered.--An individual described 
                in this paragraph is an individual who--
                            ``(i) is a low-income medicare beneficiary 
                        (as defined in section 2212(a)(4) who is being 
                        provided outpatient prescription drug 
                        assistance under title XXII; and
                            ``(ii) at the time the individual was first 
                        provided such assistance, terminated enrollment 
                        in a medicare supplemental policy which has a 
                        benefit package classified as `H', `I', `J', 
                        under the standards referred to in subparagraph 
                        (A).
            ``(2) Restoration of medicap prescription drug coverage for 
        low-income medicare beneficiaries.--
                    ``(A) Prohibited practices.--The issuer of a 
                medicare supplemental policy may not deny or condition 
                the issuance or effectiveness of a medicare 
                supplemental policy which has a benefit package 
                classified as `H', `I', or `J', under the standards 
                referred to in subparagraph (1)(A), that is offered and 
                is available for issuance to new enrollees by such 
                issuer in the case of an individual described in 
                subparagraph (B)(i) who seeks to enroll under the 
                policy not later than 63 days after the date of the 
                termination of enrollment described in subparagraph 
                (B)(ii) and who submits evidence of such date of 
                termination along with the application for such 
                medicare supplemental policy.
                    ``(B) Individual covered.--An individual described 
                in this paragraph is an individual--
                            ``(i) who, upon becoming eligible for 
                        outpatient prescription drug assistance under 
                        title XXII, terminated a medicare supplemental 
                        insurance policy that provided prescription 
                        drug coverage; and
                            ``(ii) who loses eligibility for outpatient 
                        prescription drug assistance under title 
                        XXII.''.
                                 <all>