[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 1135 Introduced in Senate (IS)]
107th CONGRESS
1st Session
S. 1135
To amend title XVIII of the Social Security Act to provide
comprehensive reform of the medicare program, including the provision
of coverage of outpatient prescription drugs under such program.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
June 28, 2001
Mr. Graham (for himself, Mr. Chafee, Mr. Conrad, Mrs. Lincoln, Mr.
Miller, Mr. Rockefeller, Mr. Bingaman, Mr. Kerry, and Mr. Carper)
introduced the following bill; which was read twice and referred to the
Committee on Finance
_______________________________________________________________________
A BILL
To amend title XVIII of the Social Security Act to provide
comprehensive reform of the medicare program, including the provision
of coverage of outpatient prescription drugs under such program.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Medicare Reform
Act of 2001''.
(b) Table of Contents.--The table of contents of this Act is as
follows:
Sec. 1. Short title; table of contents.
TITLE I--MEDICARE MANAGEMENT AND ADMINISTRATION
Subtitle A--Transfer of Responsibility for National Coverage
Determinations and Establishment of the Medicare Coverage Commission
Sec. 101. Transfer of responsibility for national coverage
determinations and establishment of the
Medicare Coverage Commission.
Subtitle B--Centers for Medicare & Medicaid Services Leadership
Sec. 111. Salary increase for the CMS Administrator.
Sec. 112. Addition of political appointee positions.
Sec. 113. Hiring flexibility for scientific and clinical experts.
Subtitle C--Increased Funding for Improved Customer Service
Sec. 121. Increased funding for improved customer service.
Subtitle D--Private Sector Purchasing and Quality Improvement Tools for
Original Medicare
Sec. 131. Care coordination services.
Sec. 132. Disease management services.
Sec. 133. Competitive acquisition of items and services.
Sec. 134. Provider and physician collaborations.
Sec. 135. Preferred participants.
Sec. 136. Simplified center payments.
Sec. 137. Conforming changes to physician group practice demonstration
and administrative provisions.
Sec. 138. Increased flexibility in contracting for medicare claims
processing.
TITLE II--MEDICARE+CHOICE COMPETITION
Sec. 201. Revision of Medicare+Choice competitive bidding demonstration
project.
TITLE III--MEDICARE OUTPATIENT PRESCRIPTION DRUG BENEFIT PROGRAM
Sec. 301. Medicare outpatient prescription drug benefit program.
``Part D--Outpatient Prescription Drug Benefit Program
``Sec. 1860. Definitions.
``Sec. 1860A. Establishment of outpatient prescription drug benefit
program.
``Sec. 1860B. Enrollment.
``Sec. 1860C. Providing information to beneficiaries.
``Sec. 1860D. Premiums.
``Sec. 1860E. Outpatient prescription drug benefits.
``Sec. 1860F. Entities eligible to provide outpatient drug benefit.
``Sec. 1860G. Minimum standards for eligible entities.
``Sec. 1860H. Payments.
``Sec. 1860I. Employer incentive program for employment-based retiree
drug coverage.
``Sec. 1860J. Prescription drug account in the Federal Supplementary
Medical Insurance Trust Fund.
``Sec. 1860K. Medicare Prescription Drug Advisory Committee.''.
Sec. 302. Part D benefits under Medicare+Choice plans.
Sec. 303. Reporting requirements for Secretary of the Treasury
regarding sliding scale part D premium.
Sec. 304. Additional assistance for low-income beneficiaries.
Sec. 305. Medigap revisions.
Sec. 306. Studies and report to Congress.
TITLE IV--MEDICARE WELLNESS
Sec. 400. Definitions.
Subtitle A--Healthy Seniors Promotion Program
Sec. 401. Definitions.
Sec. 402. Working Group on Disease Self-Management and Health
Promotion.
Sec. 403. Healthy seniors promotion grants.
Sec. 404. Disease self-management demonstration projects.
Subtitle B--Medicare Coverage of Preventive Health Benefits
Sec. 411. Therapy and counseling for cessation of tobacco use.
Sec. 412. Counseling for post-menopausal women.
Sec. 413. Screening for diminished visual acuity.
Sec. 414. Screening for hearing impairment.
Sec. 415. Screening for cholesterol.
Sec. 416. Screening for hypertension.
Sec. 417. Expansion of eligibility for bone mass measurement.
Sec. 418. Coverage of medical nutrition therapy services for
beneficiaries with cardiovascular diseases.
Sec. 419. Elimination of deductibles and coinsurance for existing
preventive health benefits.
Sec. 420. Program integrity.
Sec. 421. Promotion of preventive health benefits.
Subtitle C--National Falls Prevention Education and Awareness Campaign
Sec. 431. National falls prevention education and awareness campaign.
Subtitle D--Clinical Depression Screening Demonstration Projects
Sec. 441. Clinical depression screening demonstration projects.
Subtitle E--Medicare Health Education and Risk Appraisal Program
Sec. 451. Medicare health education and risk appraisal program.
Subtitle F--Studies, Evaluations, and Reports in the Field of Disease
Prevention and the Elderly
Sec. 461. MedPAC evaluation and report on medicare benefit package in
relation to private sector benefit
packages.
Sec. 462. National Institute on Aging study and report on ways to
improve the quality of life of elderly.
Sec. 463. Institute of Medicine medicare prevention benefit study and
report.
Sec. 464. Fast-track consideration of prevention benefit legislation.
Subtitle G--Informatics Systems Grant Program for Hospitals and Skilled
Nursing Facilities
Sec. 471. Informatics systems grant program for hospitals and skilled
nursing facilities.
TITLE V--MEDICARE SUSTAINABILITY
Sec. 501. Indexing part B deductible to inflation.
Sec. 502. Income-related reduction in medicare subsidy for part B
premium.
TITLE I--MEDICARE MANAGEMENT AND ADMINISTRATION
Subtitle A--Transfer of Responsibility for National Coverage
Determinations and Establishment of the Medicare Coverage Commission
SEC. 101. TRANSFER OF RESPONSIBILITY FOR NATIONAL COVERAGE
DETERMINATIONS AND ESTABLISHMENT OF THE MEDICARE COVERAGE
COMMISSION.
(a) Responsibility and Establishment.--Title XVIII of the Social
Security Act (42 U.S.C. 1395 et seq.) is amended by inserting after
section 1869 the following new sections:
``national coverage determinations
``Sec. 1869A. (a) Responsibility.--
``(1) In general.--
``(A) Sole responsibility.--Beginning in 2003, the
Medicare Coverage Commission established under section
1869B (in this section referred to as the `Commission')
shall have sole responsibility for making national
coverage determinations under this title.
``(B) Local coverage determinations.--The Secretary
shall continue to have responsibility for local
coverage determinations in accordance with section
1869(f).
``(2) Procedures.--
``(A) In general.--The Commission shall establish
procedures for making national coverage determinations
under this title.
``(B) Requirements.--The procedures established
under subparagraph (A) shall ensure that, in making
national coverage determinations--
``(i) meetings of advisory committees
established under section 1869B(f) with respect
to the determination are made on the record;
``(ii) the Commission considers applicable
information (including clinical experience and
medical, technical, and scientific evidence)
with respect to the subject matter of the
determination;
``(iii) the Commission provides a clear
statement of--
``(I) the basis for the
determination (including responses to
comments received from the public); and
``(II) the assumptions underlying
that basis; and
``(iv) the Commission makes available to
the public the data (other than proprietary
data) considered in making the determination.
``(3) Definition of national coverage determination.--For
purposes of this section, the term `national coverage
determination' means a determination by the Commission with
respect to whether or not a particular item or service is
covered nationally under this title, but does not include a
determination of what code, if any, is assigned to a particular
item or service covered under this title or a determination
with respect to the amount of payment made for a particular
item or service so covered.
``(b) Review of National Coverage Determinations.--
``(1) In general.--Review of any national coverage
determination shall be subject to the following limitations:
``(A) Such a determination shall not be reviewed by
any administrative law judge.
``(B) Such a determination shall not be held
unlawful or set aside on the ground that a requirement
of section 553 of title 5, United States Code, relating
to publication in the Federal Register or opportunity
for public comment, was not satisfied.
``(C) Upon the filing of a complaint by an
aggrieved person (as described in paragraph (4)), such
a determination shall be reviewed by the Appeals Board
of the Commission. In conducting such a review, the
Appeals Board--
``(i) shall review the record and shall
permit discovery and the taking of evidence to
evaluate the reasonableness of the
determination, if the Board determines that the
record is incomplete or lacks adequate
information to support the validity of the
determination;
``(ii) may, as appropriate, consult with
appropriate scientific and clinical experts;
and
``(iii) shall defer only to the reasonable
findings of fact, reasonable interpretations of
law, and reasonable applications of fact to law
by the Commission.
``(D) A decision of the Appeals Board constitutes a
final agency action and is subject to judicial review.
``(2) No material issues of fact in dispute.--In the case
of a determination that may otherwise be subject to review
under paragraph (1)(C), where the moving party alleges that--
``(A) there are no material issues of fact in
dispute; and
``(B) the only issue of law is the
constitutionality of a provision of this title, or that
a regulation, determination, or ruling by the
Commission is invalid,
the moving party may seek review by a court of competent
jurisdiction without filing a complaint under such paragraph
and without otherwise exhausting other administrative remedies.
``(3) Pending national coverage determinations.--
``(A) In general.--In the event that the Commission
has not issued a national coverage or noncoverage
determination with respect to a particular type or
class of items or services, an aggrieved person (as
described in paragraph (4)) may submit to the
Commission a request to make such a determination with
respect to such items or services. By not later than
the end of the 90-day period that begins on the date
the Commission receives such a request (notwithstanding
the receipt by the Commission of new evidence (if any)
during such 90-day period), the Commission shall take 1
of the following actions:
``(i) Issue a national coverage
determination, with or without limitations.
``(ii) Issue a national noncoverage
determination.
``(iii) Issue a determination that no
national coverage or noncoverage determination
is appropriate as of the end of such 90-day
period with respect to national coverage of
such items or services.
``(iv) Issue a notice that--
``(I) states that the Commission
has not completed a review of the
request for a national coverage
determination; and
``(II) includes an identification
of the remaining steps in the
Commission's review process and a
deadline by which the Commission will
complete the review and take an action
described in clause (i), (ii), or
(iii).
``(B) Deemed action by the commission.--In the case
of an action described in subparagraph (A)(iv), if the
Commission fails to take an action referred to in such
subparagraph by the deadline specified by the
Commission under such subparagraph, then the Commission
is deemed to have taken an action described in
subparagraph (A)(iii) as of the deadline.
``(C) Explanation of determination.--When issuing a
determination under subparagraph (A), the Commission
shall include an explanation of the basis for the
determination. An action taken under such subparagraph
(other than clause (iv) of such subparagraph) is deemed
to be a national coverage determination for purposes of
review under paragraph (1).
``(4) Standing.--An action under this subsection seeking
review of a national coverage determination may be initiated
by--
``(A) an individual who is entitled to benefits
under part A, or enrolled under part B, or both, and
who is in need of the items or services that are the
subject of the coverage determination; and
``(B) any other aggrieved party that has a
financial interest in the coverage determination.
``(5) Publication on the internet of decisions of hearings
of the commission.--Each decision of a hearing by the
Commission with respect to a national coverage determination
shall be made public, and the Commission shall coordinate with
the Secretary for the publication of each decision on the
Medicare Internet site of the Department of Health and Human
Services. The Commission shall remove from such decision any
information that would identify any individual, provider of
services, or supplier.
``(6) Annual report to congress on national coverage
determinations.--
``(A) In general.--Not later than December 1 of
each year, beginning in 2003, the Commission shall
submit to Congress a report that sets forth a detailed
compilation of--
``(i) the actual time periods that were
necessary to complete national coverage
determinations that were made in the previous
fiscal year for items or services not
previously covered as a benefit under this
title; and
``(ii) the basis for each such
determination.
``(B) Publication of reports on the internet.--The
Commission shall coordinate with the Secretary for the
publication of each report submitted under subparagraph
(A) on the Medicare Internet site of the Department of
Health and Human Services.
``(7) Construction.--Nothing in this subsection shall be
construed as permitting administrative or judicial review
pursuant to this section insofar as such review is explicitly
prohibited or restricted under another provision of law.
``(c) Communication Between Commission and Secretary.--
``(1) Notification.--If the Commission or the Appeals Board
of the Commission after a review of a determination makes a
determination that a particular item or service is covered
nationally under this title, the Commission shall immediately
notify the Secretary of such determination.
``(2) Implementation by secretary.--Upon being notified by
the Commission that a determination has been made under this
section that a particular item or service is covered nationally
under this title, the Secretary shall implement such coverage
in a timely manner.
``medicare coverage commission
``Sec. 1869B. (a) Establishment.--There is established a Medicare
Coverage Commission (in this section referred to as the `Commission').
The Commission shall be an independent establishment (as defined in
section 104 of title 5, United States Code).
``(b) Structure and Membership.--
``(1) Structure.--
``(A) In general.--The Commission shall be composed
of 7 members appointed by the President, by and with
the advice and consent of the Senate.
``(B) Restriction.--No member of the Commission may
serve in any other office of the Federal Government
while a member of the Commission.
``(2) Membership.--
``(A) In general.--The members of the Commission
shall be chosen on the basis of their integrity,
impartiality, and good judgment, and shall be
individuals who are, by reason of their education,
experience, and clinical, medical, technical, and
scientific expertise, exceptionally qualified to
perform the duties of the members of the Commission.
``(B) Terms of appointment.--The terms of members
of the Commission shall be for 3 years.
``(C) Vacancies.--Any member appointed to fill a
vacancy occurring before the expiration of the term for
which the member's predecessor was appointed shall be
appointed only for the remainder of that term. A member
may serve after the expiration of that member's term
until a successor has taken office.
``(D) Limitation on number of terms.--Any person
appointed as a member of the Commission shall not be
eligible for reappointment to the Commission after
having served 2 terms.
``(E) Chairperson.--The President shall designate a
member of the Commission, at the time of appointment of
the member, as chairperson for that term of
appointment, except that in the case of any vacancy of
the chairperson, the President may designate another
member for the remainder of that member's term.
``(c) Duties.--
``(1) In general.--The Commission shall be responsible for
making national coverage determinations (as defined in section
1869A(a)(3)) under this title, including at the request of
medicare beneficiaries or their representatives, Federal
Government agencies, including the Centers for Medicare &
Medicaid Services, manufacturers and suppliers, and providers
for such a determination.
``(2) Establishment of appeals board.--The Commission shall
establish an Appeals Board for purposes of providing review of
national coverage determinations under section 1869B(b).
``(3) Other specific duties.--In order to carry out the
duties described in paragraph (1), the Commission may do the
following if determined appropriate:
``(A) Commission technology assessments and
studies.
``(B) Request that technology assessments and
related studies be conducted by other Federal agencies
pursuant to subsection (g).
``(C) Establish advisory committees pursuant to
subsection (f) as appropriate to evaluate new
procedures.
``(D) Review conflicting local coverage
determinations (as defined in section 1869(f)(1)(B))
and determine whether a national coverage determination
is necessary or desirable.
``(d) Operation of the Commission.--
``(1) Meetings.--The Commission shall meet at the call of
its chairperson not less often than quarterly.
``(2) Quorum.--A quorum shall consist of 4 members of the
Commission, except that the Commission may establish a lesser
quorum to conduct hearings.
``(e) Commission Personnel Matters.--
``(1) Members.--
``(A) Compensation.--Membership on the Commission
is not a full-time position. Each member of the
Commission shall be compensated at a rate equal to the
per diem equivalent of the rate provided for level IV
of the Executive Schedule under section 5315 of title
5, United States Code.
``(B) Travel expenses.--The members of the
Commission shall be allowed travel expenses, including
per diem in lieu of subsistence, at rates authorized
for employees of agencies under subchapter I of chapter
57 of title 5, United States Code, while away from
their homes or regular places of business in the
performance of service for the Commission.
``(2) Staff and support services.--
``(A) Executive director.--The Chairperson shall
appoint an executive director of the Commission who
shall be paid at a rate specified by the Commission.
``(B) Staff.--With the approval of the Commission,
the executive director may appoint such personnel as
the executive director considers appropriate.
``(C) Inapplicability of civil service laws.--The
staff of the Commission shall be appointed without
regard to the provisions of title 5, United States
Code, governing appointments in the competitive
service, and shall be paid without regard to the
provisions of chapter 51 and subchapter III of chapter
53 of such title (relating to classification and
General Schedule pay rates).
``(D) Experts and consultants.--With the approval
of the Commission, the executive director may procure
temporary and intermittent services under section
3109(b) of title 5, United States Code.
``(3) Transfer of personnel, assets, etc.--For purposes of
the Commission carrying out its duties, the Secretary and the
Commission may provide for the transfer to the Commission of
such civil service personnel employed by the Department of
Health and Human Services, and such resources and assets of the
Department used in carrying out this title, as the Commission
requires.
``(f) Appointment of Advisory Committees.--
``(1) In general.--The Commission may appoint such advisory
committees as the Commission determines appropriate to advise
and consult the Commission in carrying out the duties of the
Commission.
``(2) Inapplicability of civil service laws.--The advisory
committees shall be appointed without regard to the provisions
of title 5, United States Code, governing appointments in the
competitive service.
``(3) Travel expenses.--The members of the committees shall
serve without compensation, except that such members shall be
allowed travel expenses, including per diem in lieu of
subsistence, at rates authorized for employees of agencies
under subchapter I of chapter 57 of title 5, United States
Code, while away from their homes or regular places of business
in the performance of services for the committee.
``(4) Report on advisory committees.--The Commission shall
include in the annual report to Congress described in section
1869A(b)(6) the number of committees appointed under subsection
(f) during the preceding year and the membership and activities
of each such committee.
``(g) Authority To Request That Federal Agencies Conduct
Assessments and Studies.--The Commission may request any Federal
department or agency to conduct a technology assessment or a related
study that the Commission determines is necessary in order to carry out
its duties under this section.
``(h) Funding of Commission.--There are authorized to be
appropriated such sums as may be necessary to carry out the purposes of
this section.''.
(b) Conforming Amendments.--
(1) BIPA provisions.--
(A) Section 1869(c)(3)(B)(ii)(I) of the Social
Security Act, as added by section 521 of the Medicare,
Medicaid, and SCHIP Benefits Improvement and Protection
Act of 2000 (114 Stat. 2763A-534), as enacted into law
by section 1(a)(6) of Public Law 106-554, is amended by
striking ``If the Secretary has made a national
coverage determination pursuant to the requirements
established under the third sentence of section
1862(a)'' and inserting ``If the Medicare Coverage
Commission has made a national coverage determination
pursuant to the requirements established under section
1869A''.
(B) Section 1869(f) of the Social Security Act, as
added by section 522(a) of the Medicare, Medicaid, and
SCHIP Benefits Improvement and Protection Act of 2000
(114 Stat. 2763A-543), as so enacted into law, is
amended to read as follows:
``(f) Review of Local Coverage Determinations.--
``(1) Review.--
``(A) In general.--Review of any local coverage
determination shall be subject to the following
limitations:
``(i) Upon the filing of a complaint by an
aggrieved party, such a determination shall be
reviewed by an administrative law judge of the
Social Security Administration. The
administrative law judge--
``(I) shall review the record and
shall permit discovery and the taking
of evidence to evaluate the
reasonableness of the determination, if
the administrative law judge determines
that the record is incomplete or lacks
adequate information to support the
validity of the determination;
``(II) may, as appropriate, consult
with appropriate scientific and
clinical experts; and
``(III) shall defer only to the
reasonable findings of fact, reasonable
interpretations of law, and reasonable
applications of fact to law by the
Secretary.
``(ii) Upon the filing of a complaint by an
aggrieved party, a decision of an
administrative law judge under clause (i) shall
be reviewed by the Departmental Appeals Board
of the Department of Health and Human Services.
``(iii) The Secretary shall implement a
decision of the administrative law judge or the
Departmental Appeals Board within 30 days of
receipt of such decision.
``(iv) A decision of the Departmental
Appeals Board constitutes a final agency action
and is subject to judicial review.
``(B) Definition of local coverage determination.--
For purposes of this section, the term `local coverage
determination' means a determination by a fiscal
intermediary or a carrier under part A or B, as
applicable, respecting whether or not a particular item
or service is covered on an intermediary- or carrier-
wide basis under such parts, in accordance with section
1862(a)(1)(A).
``(2) No material issues of fact in dispute.--In the case
of a determination that may otherwise be subject to review
under paragraph (1)(A)(i), where the moving party alleges
that--
``(A) there are no material issues of fact in
dispute, and
``(B) the only issue of law is the
constitutionality of a provision of this title, or that
a regulation, determination, or ruling by the Secretary
is invalid,
the moving party may seek review by a court of competent
jurisdiction without filing a complaint under such paragraph
and without otherwise exhausting other administrative remedies.
``(3) Standing.--An action under this subsection seeking
review of a local coverage determination may be initiated only
by an individual who is entitled to benefits under part A, or
enrolled under part B, or both, and who is in need of the items
or services that are the subject of the coverage determination.
``(4) Construction.--Nothing in this subsection shall be
construed as permitting administrative or judicial review
pursuant to this section insofar as such review is explicitly
prohibited or restricted under another provision of law.''.
(C) Section 1862(a) of the Social Security Act (42
U.S.C. 1395y(a)), as amended by section 522(b) of the
Medicare, Medicaid, and SCHIP Benefits Improvement and
Protection Act of 2000 (114 Stat. 2763A-546), as so
enacted into law, is amended by striking the third
sentence.
(D) Section 1114 of the Social Security Act (42
U.S.C. 1314), as amended by section 522(c) of the
Medicare, Medicaid, and SCHIP Benefits Improvement and
Protection Act of 2000 (114 Stat. 2763A-546), as so
enacted into law, is amended by striking subsection
(i).
(2) Medicare+choice.--Section 1853(c)(7) of the Social
Security Act (42 U.S.C. 1395w-23(c)(7)) is amended by inserting
``or the Medicare Coverage Commission'' after ``If the
Secretary''.
(c) Effective Date.--The amendments made by this section shall
apply with respect to--
(1) the responsibility for making national coverage
determinations;
(2) a review of any national or local coverage
determination filed;
(3) a request to make such a determination made; and
(4) a national coverage determination made,
on or after January 1, 2003.
Subtitle B--Centers for Medicare & Medicaid Services Leadership
SEC. 111. SALARY INCREASE FOR THE CMS ADMINISTRATOR.
(a) In General.--Section 5314 of title 5, United States Code, is
amended by adding at the end the following:
``Administrator of the Centers for Medicare & Medicaid
Services.''.
(b) Conforming Amendment.--Section 5315 of title 5, United States
Code, is amended by striking ``Administrator of the Health Care
Financing Administration.''.
(c) Effective Date.--The amendments made by this subsection take
effect on January 1, 2002.
SEC. 112. ADDITION OF POLITICAL APPOINTEE POSITIONS.
(a) Establishment of Positions.--Section 1117 of the Social
Security Act (42 U.S.C. 1317) is amended by adding at the end the
following new subsection:
``(c) Additional Appointees.--
``(1) Appointment.--In addition to the Administrator of the
Centers for Medicare & Medicaid Services, there shall be in
such Centers 9 individuals who shall be appointed by the
President.
``(2) Duties and powers.--The individuals appointed under
paragraph (1) shall perform such duties and exercise such
powers as the Administrator of the Centers for Medicare &
Medicaid Services shall from time to time assign or
delegate.''.
(b) Conforming Amendments.--Section 1117 of the Social Security Act
(42 U.S.C. 1317) is amended--
(1) in subsection (a), by striking ``The Administrator of
the Health Care Financing Administration'' and inserting
``Administrator.--The Administrator of the Centers for Medicare
& Medicaid Services'';
(2) in subsection (b)--
(A) by striking ``(b)(1) There is established in
the Health Care Financing Administration'' and
inserting ``(b) Chief Actuary.--
``(1) Appointment.--There is established in the Centers for
Medicare & Medicaid Services'';
(B) in the second sentence of paragraph (1), by
striking ``of such Administration'' and inserting ``of
such Centers''; and
(C) in paragraph (2), by striking ``The Chief
Actuary'' and inserting ``Compensation.--The Chief
Actuary''; and
(D) by realigning paragraph (2) so as to align the
left margin of such paragraph with the left margin of
paragraph (1); and
(3) by amending the heading to read as follows:
``organization of the centers for medicare & medicaid services''.
SEC. 113. HIRING FLEXIBILITY FOR SCIENTIFIC AND CLINICAL EXPERTS.
Section 1117 of the Social Security Act (42 U.S.C. 1317), as
amended by section 112(a), is amended by adding at the end the
following new subsection:
``(d) Hiring Flexibility for Scientific and Clinical Experts.--
``(1) In general.--The Administrator of the Centers for
Medicare & Medicaid Services may appoint such individuals with
scientific or clinical expertise as the Administrator
determines appropriate.
``(2) Inapplicability of civil service laws.--The
Administrator may appoint an individual described in paragraph
(1) without regard to the provisions of title 5, United States
Code, governing appointments in the competitive service, and
may provide that such an individual is paid without regard to
the provisions of chapter 51 and subchapter III of chapter 53
of such title (relating to classification and General Schedule
pay rates).''.
Subtitle C--Increased Funding for Improved Customer Service
SEC. 121. INCREASED FUNDING FOR IMPROVED CUSTOMER SERVICE.
(a) Purposes.--The purposes of this section are--
(1) to provide for an annual authorization of appropriation
for the program management budget of the Centers for Medicare &
Medicaid Services that is based on the growth in expenditures
under the medicare program under title XVIII of the Social
Security Act; and
(2) to provide sufficient funding to ensure that the
Centers for Medicare & Medicaid Services has the resources to
provide improved services to medicare beneficiaries and
providers under the medicare program and build the analytical
and institutional infrastructure necessary for a competitive
health care delivery system through such measures as--
(A) placing representatives of the medicare program
in social security field offices;
(B) establishing customer services positions at the
regional offices of the Centers for Medicare & Medicaid
Services for providers under the medicare program;
(C) increasing the amount and availability of
grants for health insurance information, counseling,
and assistance under section 4360 of the Omnibus Budget
Reconciliation Act of 1990 (42 U.S.C. 1395b-4);
(D) updating information technology systems;
(E) expanding the provider relations and training
functions of fiscal intermediaries and carriers under
the medicare program; and
(F) hiring staff to develop--
(i) improved mechanisms for risk adjusting
payments under the medicare program;
(ii) improved mechanisms to measure the
quality of entities with a contract under part
C or D (as added by section 301) of the
medicare program and plans offered by such
entities;
(iii) improved systems for providing
information regarding the medicare program to
medicare beneficiaries and potential medicare
beneficiaries; and
(iv) methods for determining which
geographic cost differences are related to the
quality of care provided and which are related
to other factors.
(b) Authorization of Appropriations.--Title XVIII of the Social
Security Act (42 U.S.C. 1395 et seq.) is amended by adding at the end
the following new section:
``authorization of appropriations for cms program management
``Sec. 1897. There are authorized to be appropriated for carrying
out part A, B, and C the following amounts:
``(1) For fiscal year 2002, $2,408,934,900; and
``(2) For each subsequent fiscal year, the amount
appropriated under this section for the previous fiscal year
increased by the percentage increase in outlays under this
title (determined without regard to amounts appropriated under
this section) for such subsequent year.
Subtitle D--Private Sector Purchasing and Quality Improvement Tools for
Original Medicare
SEC. 131. CARE COORDINATION SERVICES.
(a) Program Authorized.--Title XVIII of the Social Security Act (42
U.S.C. 1395 et seq.) is amended--
(1) by redesignating section 1866B, as added by section 412
of the Medicare, Medicaid, and SCHIP Benefits Improvement and
Protection Act of 2000 (114 Stat. 2763A-509), as enacted into
law by section 1(a)(6) of Public Law 106-554), as section
1866M; and
(2) by inserting after section 1866A (as added by such
section 412) the following new section:
``care coordination services
``Sec. 1866B. (a) In General.--
``(1) Program authority.--The Secretary, beginning in 2003,
shall implement a care coordination services program in
accordance with the provisions of this section under which, in
appropriate circumstances, eligible individuals may elect to
have health care services covered under this title managed and
coordinated by a designated care coordinator.
``(2) Administration by contract.--Except as otherwise
specifically provided, the Secretary may administer the program
under this section in accordance with section 1866M, including
subsection (b)(2) of such section (relating to the discretion
of the Secretary as to the scope of the program).
``(b) Eligibility Criteria; Identification and Notification of
Eligible Individuals.--
``(1) Individual eligibility criteria.--The Secretary shall
specify criteria to be used in making a determination as to
whether an individual may appropriately be enrolled in the care
coordination services program under this section, which shall
include at least a finding by the Secretary that for each
cohort of individuals with characteristics identified by the
Secretary, professional management and coordination of care can
reasonably be expected to improve processes or outcomes of
health care.
``(2) Procedures to facilitate enrollment.--The Secretary
shall develop and implement procedures designed to facilitate
enrollment of eligible individuals in the program under this
section.
``(c) Enrollment of Individuals.--
``(1) Secretary's determination of eligibility.--The
Secretary shall determine the eligibility for services under
this section of individuals who are enrolled in the program
under this section and who make application for such services
in such form and manner as the Secretary may prescribe.
``(2) Enrollment period.--
``(A) Effective date and duration.--Enrollment of
an individual in the program under this section shall
be effective as of the first day of the month following
the month in which the Secretary approves the
individual's application under paragraph (1), shall
remain in effect for 1 month (or such longer period as
the Secretary may specify), and shall be automatically
renewed for additional periods, unless terminated in
accordance with such procedures as the Secretary shall
establish by regulation.
``(B) Limitation on reenrollment.--The Secretary
may establish limits on an individual's eligibility to
reenroll in the program under this section if the
individual has disenrolled from the program more than
once during a specified time period.
``(d) Program.--The care coordination services program under this
section shall include the following elements:
``(1) Basic care coordination services.--
``(A) In general.--Except as otherwise provided in
this section, each enrolled individual--
``(i) shall receive the case management-
related services described in section
1905(t)(1), assessment services (as defined by
the Secretary), and such other care
coordination services as the Secretary may
specify; and
``(ii) may receive any additional item or
service specified under subparagraph (B).
``(B) Additional benefits.--The Secretary may
specify additional benefits for which payment would not
otherwise be made under this title that may be
available to individuals enrolled in the program under
this section (subject to an assessment by the care
coordinator of an individual's circumstance and need
for such benefits) in order to encourage enrollment in,
or to improve the effectiveness of, such program.
``(2) Authority of the secretary to require care
coordination.--Notwithstanding any other provision of this
title, the Secretary may provide that an individual enrolled in
the program under this section is entitled to payment under
this title for any specified health care items or services only
if the items or services have been furnished by the care
coordinator, or coordinated through the care coordination
services program. Under such provision, the Secretary shall
prescribe exceptions for emergency medical services as
described in section 1852(d)(3), and other exceptions
determined by the Secretary for the delivery of timely and needed care.
``(3) Reduction or elimination of cost sharing.--
Notwithstanding any other provision of law, the Secretary may
provide for the reduction or elimination of beneficiary cost
sharing (such as deductibles, copayments, and coinsurance) with
respect to any of the items or services furnished under this
title (other than the care coordination services and other
benefits described in paragraph (1)) and may limit such
reduction or elimination to particular service areas.
``(e) Care Coordinators.--
``(1) Conditions of participation.--In order to be
qualified to furnish care coordination services under this
section, an individual or entity shall--
``(A) be--
``(i)(I) a physician; or
``(II) a health care professional (other
than a physician) who meets such conditions as
the Secretary may specify; or
``(ii) an entity (which may include
physicians, physician group practices, and any
other health care professional or entity that
the Secretary determines is appropriate) that
meets such conditions as the Secretary may
specify;
``(B) have entered into a care coordination
agreement; and
``(C) meet such criteria as the Secretary may
establish (which may include experience in the
provision of care coordination or primary care
physician's services).
``(2) Agreement term; payment.--
``(A) Duration and renewal.--A care coordination
agreement under this subsection shall be for 1 year and
may be renewed if the Secretary is satisfied that the
care coordinator continues to meet the conditions of
participation specified in paragraph (1).
``(B) Payment for services.--The Secretary may
negotiate or otherwise establish payment terms and
rates for services described in subsection (d)(1).
``(C) Terms.--In addition to such other terms as
the Secretary may require, an agreement under this
section shall include the terms specified in
subparagraphs (A) through (C) of section 1905(t)(3).''.
(b) Coverage of Care Coordination Services as a Part B Medical
Service.--
(1) In general.--Section 1861(s) of the Social Security Act
(42 U.S.C. 1395x(s)) is amended--
(A) in the second sentence, by redesignating
paragraphs (16) and (17) as clauses (i) and (ii),
respectively; and
(B) in the first sentence--
(i) in paragraph (14), by striking ``and''
at the end;
(ii) in paragraph (15), by striking the
period at the end and inserting ``; and''; and
(iii) by inserting after paragraph (15) the
following new paragraph:
``(16) care coordination services furnished in accordance
with section 1866B.''.
(2) Part b coinsurance and deductible not applicable to
care coordination services.--
(A) Coinsurance.--Section 1833(a)(1) of the Social
Security Act (42 U.S.C. 1395l(a)(1)), as amended by
section 223(c) of the Medicare, Medicaid, and SCHIP
Benefits Improvement and Protection Act of 2000 (114
Stat. 2763A-489), as enacted into law by section
1(a)(6) of Public Law 106-554, is amended--
(i) by striking ``and (U)'' and inserting
``(U)''; and
(ii) by inserting before the semicolon at
the end the following: ``, and (V) with respect
to care coordination services described in
section 1861(s)(16), the amounts paid shall be
100 percent of the payment amount established
under section 1866B''.
(B) Deductible.--The first sentence of section
1833(b) of the Social Security Act (42 U.S.C. 1395l(b))
is amended--
(i) by striking ``and (6)'' and inserting
``(6)''; and
(ii) by inserting before the period at the
end the following: ``, and (7) such deductible
shall not apply with respect to care
coordination services (as described in section
1861(s)(16))''.
SEC. 132. DISEASE MANAGEMENT SERVICES.
(a) Program Authorized.--Title XVIII of the Social Security Act (42
U.S.C. 1395 et seq.), as amended by section 131(a), is amended by
inserting after section 1866B the following new section:
``disease management services
``Sec. 1866C. (a) In General.--
``(1) Program authority.--The Secretary, beginning in 2003,
may implement a program in accordance with the provisions of
this section under which certain eligible individuals may, in
appropriate circumstances, receive disease management services
from entities designated by the Secretary with respect to
diagnoses that the Secretary determines are amenable to such
management.
``(2) Administration by contract.--Except as otherwise
specifically provided, the Secretary may administer the program
under this section in accordance with section 1866M, including
subsection (b)(2) of such section (relating to the discretion
of the Secretary as to the scope of the program).
``(b) Individuals Who May Receive Disease Management Services.--No
individual shall be eligible for enrollment in a disease management
program under this section unless the Secretary finds the following
with respect to the individual:
``(1) Diagnosis and related characteristics.--
``(A) In general.--The individual has been
diagnosed with congestive heart failure, chronic
obstructive pulmonary disease, diabetes, or any other
diagnosis, if the Secretary has determined with respect
to such diagnoses that there is evidence that the
provision of disease management services, over
clinically relevant time periods, to cohorts of
individuals with such diagnoses can reasonably be
expected to improve processes or outcomes of health
care for the medicare population and to reduce
aggregate costs to the programs under this title.
``(B) Additional factors.--Where required by the
Secretary, the individual also has certain clinical
characteristics or conditions, exhibits certain
patterns of utilization, or manifests other factors
indicating the need for and potential effectiveness of
disease management.
``(2) Referral by qualified individual or entity.--The
individual has been referred for consideration for such
services by an individual or entity furnishing health care
items or services, or by an entity administering benefits under
this title.
``(c) Procedures To Facilitate Enrollment.--The Secretary shall
develop and implement procedures designed to facilitate enrollment of
eligible individuals in the program under this section.
``(d) Enrollment of Individuals With Disease Management
Organizations.--
``(1) Effective date and duration.--Enrollment of an
individual in the program under this section shall remain in
effect for 1 month (or such longer period as the Secretary may
specify), and shall be automatically renewed for additional
periods, unless terminated in accordance with such procedures
as the Secretary shall establish by regulation.
``(2) Limitation on reenrollment.--The Secretary may
establish limits on an individual's eligibility to reenroll in
the program under this section if the individual has
disenrolled from the program more than once during a specified
time period.
``(e) Disease Management Requirement.--Notwithstanding any other
provision of this title, the Secretary may provide that an individual
enrolled in the program under this section may be entitled to payment
under this title for any specified health care items or services only
if the items or services have been furnished by the disease management
organization, or coordinated through the disease management services
program. Under such provision, the Secretary shall prescribe exceptions
for emergency medical services as described in section 1852(d)(3), and
other exceptions determined by the Secretary for the delivery of timely
and needed care.
``(f) Disease Management Services.--
``(1) In general.--Subject to the cost-effectiveness
criteria specified in subsection (b)(1), disease management
services provided to an individual under this section may
include--
``(A) initial and periodic health screening and
assessment;
``(B) management (including coordination with other
providers) of, and referral for, medical and other
health services related to the managed diagnosis (which
may include referral for provision of such services by
the disease management organization);
``(C) monitoring and control of medications
(including coordination with the entity managing
benefits for the individual under part D);
``(D) patient education and counseling;
``(E) nursing or other health professional home
visits, as appropriate;
``(F) providing access for consultations by
telephone with physicians or other appropriate medical
professionals, including 24-hour availability for
emergency consultations;
``(G) managing and facilitating the transition to
other care arrangements in preparation for termination
of the disease management enrollment; and
``(H) such other services for which payment would
not otherwise be made under this title as the Secretary
shall determine to be appropriate.
``(2) Variations in service packages.--The types and
combinations of disease management services furnished under
agreements under this section may vary (as permitted or
required by the Secretary) according to the types of diagnoses,
conditions, patient profiles being managed, expertise of the
disease management organization, and other factors the
Secretary finds appropriate.
``(3) Reduction or elimination of cost-sharing.--
Notwithstanding any other provision of law, subject to the
cost-effectiveness criteria specified in subsection (b)(1), the
Secretary may provide for the reduction or elimination of
beneficiary cost-sharing (such as deductibles, copayments, and
coinsurance) with respect to any of the items or services
furnished under this title (other than those furnished under a
service package developed under paragraph (2)), and may limit
such reduction or elimination to particular service areas.
``(g) Agreements With Disease Management Organizations.--
``(1) Entities eligible.--Entities qualified to enter into
agreements with the Secretary for the provision of disease
management services under this section include entities that
have demonstrated the ability to meet the performance standards
and other criteria established by the Secretary with respect
to--
``(A) the management of each diagnosis and
condition with respect to which the entity, if
designated, would furnish disease management services
under this section; and
``(B) the implementation of each disease management
approach that the entity, if designated, would
implement under this section.
``(2) Conditions of participation.--In order to be eligible
to provide disease management services under this section, an
entity shall--
``(A) have in effect an agreement with the
Secretary setting forth such obligations of the entity
as a disease management organization under this section as the
Secretary shall prescribe;
``(B) meet the standards established by the
Secretary under subsection (h); and
``(C) meet such other conditions as the Secretary
may establish.
``(3) Secretary's option for noncompetitive designation.--
The Secretary may designate an entity to provide disease
management services under this section without regard to the
requirements of section 5 of title 41, United States Code.
``(h) Standards.--
``(1) Quality.--The Secretary shall establish standards
for, and procedures for assessing, the quality of care provided
by disease management organizations under this section, which
shall include--
``(A) performance standards with respect to the
processes or outcomes of health care or the health
status of enrolled individuals, including procedures
for establishing a baseline and measuring changes in
health care processes or health outcomes with respect
to managed diseases or health conditions;
``(B) a requirement that the organization meet such
licensure and other accreditation standards as the
Secretary may find appropriate; and
``(C) such other quality standards, including
patient satisfaction, as the Secretary may find
appropriate.
``(2) Cost management.--The Secretary shall establish a
performance standard with respect to management or reduction of
the aggregate costs of health care items and services related
to managed health conditions furnished to enrolled individuals,
including procedures for establishing a baseline and measuring
changes in costs for such items and services.
``(i) Payment.--
``(1) Terms of payment.--The Secretary may negotiate or
otherwise establish payment terms and rates for service
packages developed under subsection (f)(2).
``(2) Withholding of payments.--An agreement under
subsection (g) may provide that the Secretary may withhold up
to 10 percent of the amount due a disease management
organization under the basis of payment established under
paragraph (1) until such time as such organization meets a
standard or standards specified in such agreement.''.
(b) Coverage of Disease Management Services as a Part B Medical
Service.--
(1) In general.--Section 1861(s) of the Social Security Act
(42 U.S.C. 1395x(s)), as amended by section 131(b)(1), is
amended--
(A) by striking ``and'' at the end of paragraph
(15);
(B) by striking the period at the end of paragraph
(16) and inserting ``; and''; and
(C) by inserting after paragraph (16) the following
new paragraph:
``(17) disease management services furnished in accordance
with section 1866C.''.
(2) Part b coinsurance and deductible not applicable to
disease management services.--
(A) Coinsurance.--Section 1833(a)(1)(V) of the
Social Security Act (42 U.S.C. 1395l(a)(1)(V)), as
added by section 131(b)(2)(A), is amended to read as
follows: ``(V) with respect to care coordination
services described in section 1861(s)(16) and disease
management services described in section 1861(s)(17),
the amounts paid shall be 100 percent of the payment
amounts established under sections 1866B and 1866C,
respectively;''.
(B) Deductible.--The first sentence of section
1833(b) of the Social Security Act (42 U.S.C.
1395l(b)), as amended by section 131(b)(2)(B), is
amended by inserting before the period at the end the
following: ``or to disease management services (as
described in section 1861(s)(17))''.
SEC. 133. COMPETITIVE ACQUISITION OF ITEMS AND SERVICES.
(a) Program Authorized.--Title XVIII of the Social Security Act (42
U.S.C. 1395 et seq.), as amended by section 132, is amended by
inserting after section 1866C the following new section:
``competitive acquisition of items and services
``Sec. 1866D. (a) In General.--
``(1) Program authority.--The Secretary shall implement a
program to purchase, on behalf of individuals enrolled under
this part certain competitively priced items and services for
which payment may be made under part B.
``(2) Administration by contract.--Except as otherwise
specifically provided, the Secretary may administer the program
under this section in accordance with section 1866M, including
subsection (b)(2) of such section (relating to the discretion
of the Secretary as to the scope of the program).
``(b) Establishment of Competitive Acquisition Areas.--
``(1) In general.--The Secretary shall establish
competitive acquisition areas for agreement award purposes for
the furnishing under part B of the items and services described
in subsection (d) after 2003. The Secretary may establish
different competitive acquisition areas under this subsection
for different classes of items and services.
``(2) Criteria for establishment.--The competitive
acquisition areas established under paragraph (1) shall be
chosen based on the availability and accessibility of
individuals and entities able to furnish items and services,
and the estimated savings to be realized by the use of
competitive acquisition in the furnishing of items and services
in the area.
``(c) Awarding of Agreements in Competitive Acquisition Areas.--
``(1) In general.--The Secretary shall conduct a
competition among individuals and entities supplying items and
services described in subsection (d) for each competitive acquisition
area established under subsection (b) for each class of items and
services.
``(2) Conditions for awarding agreement.--The Secretary may
not enter an agreement with any entity under the competition
conducted pursuant to paragraph (1) to furnish an item or
service unless the Secretary finds that the entity meets
quality standards specified by the Secretary, and that the
aggregate amounts to be paid under the agreement are expected
to be less than the aggregate amounts that would otherwise be
paid.
``(3) Terms of agreement.--An agreement entered into with
an entity under the competition conducted pursuant to paragraph
(1) is subject to terms and conditions that the Secretary may
specify.
``(d) Services Described.--The items and services to which this
section applies are all items and services described in paragraphs (3)
and (5) through (9) of section 1861(s) (other than custom fabricated
prostheses, as defined by the Secretary), and such other items or
services as the Secretary may specify.''.
(b) Items and Services To Be Furnished Only Through Competitive
Acquisition.--Section 1862(a) of the Social Security Act (42 U.S.C.
1395y(a)) is amended--
(1) by striking ``or'' at the end of paragraph (20);
(2) by striking the period at the end of paragraph (21) and
inserting ``; or''; and
(3) by inserting after paragraph (21) the following new
paragraph:
``(22) where the expenses are for an item or service
furnished in a competitive acquisition area (as established by
the Secretary under section 1866D(a)) by an entity other than
an entity with which the Secretary has entered into an
agreement under section 1866D(c) for the furnishing of such an
item or service in that area, except in such cases of emergency
or urgent need as the Secretary shall prescribe.''.
(c) Effective Date.--The amendments made by this section apply to
items and services furnished after 2003.
SEC. 134. PROVIDER AND PHYSICIAN COLLABORATIONS.
Title XVIII of the Social Security Act (42 U.S.C. 1395 et seq.), as
amended by section 133, is amended by inserting after section 1866D the
following new section:
``provider and physician collaborations
``Sec. 1866E. (a) In General.--
``(1) Program authority.--The Secretary may enter into
agreements with specific providers, suppliers, or other
individuals or entities for the furnishing of bundled items and
services in selected sites of service or related to specific
medical conditions or needs for an episode of care. The
services may include any items or services covered under this
title that the Secretary determines to be appropriate,
including post-hospital services.
``(2) Administration by contract.--Except as otherwise
specifically provided, the Secretary may administer the program
under this section in accordance with section 1866M, including
subsection (b)(2) of such section (relating to the discretion
of the Secretary as to the scope of the program).
``(b) Basis of Selection.--The Secretary shall select entities for
agreements under this section on the basis of ability to provide
services more efficiently, to provide improved coordination of care, to
offer additional benefits, and to meet quality and other standards and
beneficiary protections and other requirements set by the Secretary.
``(c) Payment.--Payment under this section shall be made on the
basis of all-inclusive rates. The all-inclusive rate paid to an entity
for bundled items and services furnished during an episode of care
under this section shall be less than the estimated amount of the
payments that the Secretary would have otherwise made for the items and
services.
``(d) Term of Agreement.--Agreements under this section shall be
for periods that the Secretary may determine.
``(e) Incentives to Beneficiaries for Use of Contracting
Entities.--Notwithstanding any other provision of law, entities under a
contract under this section may furnish additional services or waive
part or all beneficiary cost-sharing (such as deductibles, copayments,
and coinsurance) with respect to any of the items or services furnished
under this section.
``(f) Beneficiary Election.--An individual entitled to benefits
under this title who elects to obtain services under an agreement under
this section shall agree to receive under such agreement all benefits
related to the episode of care covered by the agreement (subject to
such exceptions for emergency services and as the Secretary otherwise
may specify).''.
SEC. 135. PREFERRED PARTICIPANTS.
(a) In General.--Title XVIII of the Social Security Act (42 U.S.C.
1395 et seq.), as amended by section 134, is amended by inserting after
section 1866E the following new section:
``preferred participants
``Sec. 1866F. (a) Program Authority.--
``(1) In general.--The Secretary shall implement beginning
in 2003, a preferred participant program, under which the
Secretary enters into agreements for the furnishing of health
care items and services by individuals and entities
participating in the program under part A or B of this title
that provide high-quality, efficient health care.
``(2) Limitation.--The Secretary shall not implement the
program under this section with respect to a service area, or
with respect to a category of individuals and entities
furnishing items and services in such service area, unless the
Secretary estimates that to do so will reduce the cost and
improve the quality of the programs under this title.
``(3) Administration by contract.--Except as otherwise
specifically provided, the Secretary shall administer the
program under this section in accordance with section 1866M,
including subsection (b)(2) of such section (relating to the
discretion of the Secretary as to the scope of the program).
``(b) Preferred Participant Agreement.--
``(1) Criteria and terms.--In order to be eligible to
participate in the program under part A or B as a preferred
participant, an individual or entity shall meet the following
conditions:
``(A) Participation criteria.--The individual or
entity shall meet the criteria established by the
Secretary under section 1866M(b)(5) (relating to
quality, cost-effectiveness, categories of participants
in each service area, and such other standards or
criteria as the Secretary may establish).
``(B) Payment rate.--The individual or entity shall
agree to accept payment, for covered health care items
and services furnished during the term of the
agreement, at the rates established under this section
(which may include rates in effect under part A or B,
discounted rates, or such other rates as the Secretary
may find appropriate).
``(2) Duration.--A preferred participant agreement under
this section shall be for a calendar year (or, in the case of
an agreement commencing after the first day of January (or such
later date as the Secretary may specify), for the remainder of
such calendar year), and shall be annually renewable, at the
option of the participant, while the participant continues to
meet all applicable conditions of participation.
``(c) Option To Reduce Cost-Sharing.--Notwithstanding any other
provision of law, subject to the cost-effectiveness criteria specified
in subsection (a)(2), the Secretary may--
``(1) provide for the reduction or elimination of
beneficiary cost-sharing (such as deductibles, copayments, and
coinsurance) with respect to any of the items or services
furnished under this section, and may limit such reduction or
elimination to particular service areas; and
``(2) permit individuals or entities under an agreement
under this section to waive part or all of such beneficiary
cost-sharing.''.
(b) Definitions.--Section 1861 of the Social Security Act (42
U.S.C. 1395x), as amended by section 105 of the Medicare, Medicaid, and
SCHIP Benefits Improvement and Protection Act of 2000 (114 Stat. 2763A-
471), as enacted into law by section 1(a)(6) of Public Law 106-554, is
amended by adding at the end the following new subsection:
``(ww) Preferred Participant.--The term `preferred participant'
means an individual or entity that furnishes health care items or
services under part A or B and that has in effect an agreement under
section 1866F(b).''.
SEC. 136. SIMPLIFIED CENTER PAYMENTS.
Title XVIII of the Social Security Act (42 U.S.C. 1395 et seq.), as
amended by section 135, is amended by inserting after section 1866F the
following new section:
`simplified center payments
``Sec. 1866G. (a) In General.--
``(1) Competition to furnish bundled items and services.--
The Secretary, beginning in 2003, shall use a competitive
process to enter into agreements with specific hospitals or
other entities for the furnishing of bundled groups of items
and services related to certain surgical procedures, and of
other bundled groups of items and services (unrelated to
surgical procedures) specified by the Secretary furnished
during an episode of care (as defined by the Secretary). Such
items and services may include any items or services covered
under this title that the Secretary determines to be
appropriate.
``(2) Administration by contract.--Except as otherwise
specifically provided, the Secretary may administer the program
under this section in accordance with section 1866M, including
subsection (b)(2) of such section (relating to the discretion
of the Secretary as to the scope of the program).
``(b) Eligibility Criteria.--In order to be eligible for an
agreement under this section, an entity shall--
``(1) meet quality standards established by the Secretary;
``(2) implement an ongoing quality assurance program
approved by the Secretary; and
``(3) meet such other requirements as the Secretary may
establish.
``(c) Payment.--
``(1) In general.--The Secretary shall establish criteria
for identifying the health care items and services furnished by
a center with an agreement under this section during an episode
of care that are to be bundled together and for which payment
shall be made on the basis of an all-inclusive rate.
``(2) Payment limitation.--
``(A) Limitation on aggregate payments to
entities.--The estimated amount of aggregate payments
to all entities under this section for a year shall be
less than the estimated amount of aggregate payments
that the Secretary would otherwise have made for such
year, adjusted for changes in the number of individuals
receiving services.
``(B) Limitation on payments to particular
entities.--In no case shall the all-inclusive rate paid
to an entity for items and services furnished during an
episode of care under this section exceed the estimated
amount of the payments that the Secretary would
otherwise have made for such items and services.
``(d) Agreement Period.--An agreement period shall be for up to 3
years (subject to renewal).
``(e) Incentives for Use of Centers.--Notwithstanding any other
provision of law, the Secretary may permit entities under an agreement
under this section to furnish additional services or to waive part or
all beneficiary cost-sharing (such as deductibles, copayments, and
coinsurance) with respect to any of the items or services furnished
under this section.
``(f) Beneficiary Election.--Notwithstanding any other provision of
this title, an individual who voluntarily elects to receive items and
services under an arrangement described in subsection (a)(1) with
respect to an episode of care shall not be entitled to payment under
this title for any such item or service furnished with respect to such
episode of care other than through such arrangement, subject to such
exceptions as the Secretary may prescribe for emergency medical
services as described in section 1852(d)(3) and other cases of urgent
need.''.
SEC. 137. CONFORMING CHANGES TO PHYSICIAN GROUP PRACTICE DEMONSTRATION
AND ADMINISTRATIVE PROVISIONS.
(a) Conforming Change to Physician Group Practice Demonstration.--
Section 1866A(a)(2), as added by section 412 of the Medicare, Medicaid,
and SCHIP Benefits Improvement and Protection Act of 2000 (114 Stat.
2763A-509), as enacted into law by section 1(a)(6) of Public Law 106-
554, is amended by striking ``1866B'' and inserting ``1866M, including
subsection (b)(2) of such section (relating to the discretion of the
Secretary as to the scope of the program)''.
(b) Conforming Changes to Administrative Provisions.--Section 1866M
(as redesignated by section 131(a)(1)) is amended to read as follows:
``general provisions for administration of certain private sector
purchasing and quality improvement programs
``Sec. 1866M. (a) In General.--Except as otherwise specifically
provided, the provisions of this section apply to the programs under
the following provisions of this title:
``(1) Section 1866A (demonstration of application of
physician volume increases to group practices).
``(2) Section 1866B (care coordination services).
``(3) Section 1866C (disease management services).
``(4) Section 1866D (competitive acquisition of items and
services).
``(5) Section 1866E (provider and physician
collaborations).
``(6) Section 1866F (preferred participants).
``(7) Section 1866G (simplified center payments).
``(b) Provisions Generally Applicable to Designated Programs.--The
following provisions apply to programs specified in subsection (a),
except as otherwise specifically provided:
``(1) Beneficiary eligibility.--Except as otherwise
provided by the Secretary, an individual shall only be eligible
to receive benefits under a program specified in subsection (a)
if such individual--
``(A) is enrolled in under the program under part
B;
``(B) is not enrolled in a Medicare+Choice plan
under part C, an eligible organization under a contract
under section 1876 (or a similar organization operating
under a demonstration project authority), an
organization with an agreement under section
1833(a)(1)(A), or a PACE program under section 1894;
and
``(C) in the case of the programs specified in
paragraphs (1), (2), (3), (5), and (7) of subsection
(a), is entitled to benefits under part A.
``(2) Secretary's discretion as to scope of program.--The
Secretary may limit the implementation of a program specified
in subsection (a) to--
``(A) a geographic area (or areas) that the
Secretary designates for purposes of the program, based
upon such criteria as the Secretary finds appropriate;
``(B) a subgroup (or subgroups) of beneficiaries or
individuals and entities furnishing items or services
(otherwise eligible to participate in the program),
selected on the basis of the number of such
participants that the Secretary finds consistent with
the effective and efficient implementation of the
program;
``(C) an element (or elements) of the program that
the Secretary determines to be suitable for
implementation; or
``(D) any combination of any of the limits
described in subparagraphs (A) through (C).
``(3) Voluntary receipt of items and services.--Except as
provided in the authority for the program specified in
subsection (a)(4), items and services shall be furnished to an
individual under the programs specified in subsection (a) only
at the individual's election.
``(4) Agreements.--The Secretary is authorized to enter
into agreements with individuals and entities to furnish health
care items and services to beneficiaries under the programs
specified in subsection (a).
``(5) Program standards and criteria.--The Secretary shall
establish performance standards for the programs specified in
subsection (a) including, as applicable, standards for quality
of health care items and services, cost-effectiveness,
beneficiary satisfaction, and such other factors as the
Secretary finds appropriate. The eligibility of individuals or
entities for the initial award, continuation, and renewal of
agreements to provide health care items and services under the
program shall be conditioned, at a minimum, on performance that
meets or exceeds such standards.
``(6) Administrative review of adverse decision.--
``(A) Decisions affecting individuals and entities
furnishing services under programs.--An individual or
entity furnishing services under a program specified in
subsection (a) shall be entitled to a review by the
program administrator (or, if the Secretary has not
contracted with a program administrator, by the
Secretary) of a decision not to enter into, or to
terminate, or not to renew, an agreement with the
individual or entity to provide health care items or
services under such program.
``(B) Decisions affecting beneficiaries under care
coordination services or disease management services
programs.--
``(i) Determination of ineligibility.--An
individual shall be entitled to a review by the
program administrator (or, if the Secretary has
not contracted with a program administrator, by
the Secretary) of a determination that the
individual does not meet the criteria for eligibility to participate in
a program specified in paragraph (2) or (3) of subsection (a).
``(ii) Denial of payment for items or
services.--A beneficiary shall be entitled to a
reconsideration or appeal of a denial of
payment under section 1866B(d)(2) or
1866C(e)(2) in accordance with the provisions
of section 1852(g), as if such section applied
to this clause. In applying such section
1852(g), any reference to a Medicare+Choice
organization is construed to refer to the
program administrator or, if the Secretary has
not contracted with a program administrator, to
the Secretary.
``(7) Secretary's review of marketing materials.--An
agreement with an individual or entity furnishing services
under a program specified in subsection (a) shall require the
individual or entity to guarantee that it will not distribute
materials marketing items or services under such program
without the Secretary's prior review and approval;
``(8) Payment in full.--
``(A) In general.--Except as provided in
subparagraph (B), an individual or entity receiving
payment from the Secretary under a contract or
agreement under a program specified in subsection (a)
shall agree to accept such payment as payment in full,
and such payment shall be in lieu of any payments to
which the individual or entity would otherwise be
entitled under this title.
``(B) Collection of deductibles and coinsurance.--
Such individual or entity may collect any applicable
deductible or coinsurance amount from a beneficiary.
``(c) Contracts for Program Administration.--
``(1) In general.--The Secretary may administer a program
specified in subsection (a) through a contract with a program
administrator in accordance with the provisions of this
subsection.
``(2) Scope of program administrator contracts.--A contract
under this subsection may, at the Secretary's discretion,
relate to administration of any or all of the programs
specified in subsection (a). The Secretary may enter into such
contracts for a limited geographic area, or on a regional or
national basis.
``(3) Eligible contractors.--The Secretary may contract for
the administration of the program with--
``(A) an entity that, under a contract under
section 1816 or 1842, determines the amount of and
makes payments for health care items and services
furnished under this title; or
``(B) any other entity with substantial experience
in managing the type of program concerned.
``(4) Contract award, duration, and renewal.--
``(A) In general.--A contract under this
subsection shall be for an initial term of up to 3
years, renewable for additional terms of up to 3 years.
``(B) Noncompetitive award and renewal for entities
administering part a or part b payments.--The Secretary
may enter or renew a contract under this subsection
with an entity described in paragraph (3)(A) without
regard to the requirements of section 5 of title 41,
United States Code.
``(5) Applicability of federal acquisition regulation.--The
Federal Acquisition Regulation shall apply to program
administration contracts under this subsection.
``(6) Performance standards.--The Secretary shall establish
performance standards for the program administrator including,
as applicable, standards for the quality and cost-effectiveness
of the program administered, and such other factors as the
Secretary finds appropriate. The eligibility of entities for
the initial award, continuation, and renewal of program
administration contracts shall be conditioned, at a minimum, on
performance that meets or exceeds such standards.
``(7) Functions of program administrator.--A program
administrator shall perform any or all of the following
functions, as specified by the Secretary:
``(A) Agreements with individuals or entities
furnishing health care items and services.--Determine
the qualifications of individuals or entities seeking
to enter or renew agreements to provide services under
a program specified in subsection (a), and as
appropriate enter or renew (or refuse to enter or
renew) such agreements on behalf of the Secretary.
``(B) Establishment of payment rates.--Negotiate or
otherwise establish, subject to the Secretary's
approval, payment rates for covered health care items
and services.
``(C) Payment of claims or fees.--Administer
payments for health care items or services furnished
under any such program.
``(D) Payment of bonuses.--Using such guidelines as
the Secretary shall establish, and subject to the
approval of the Secretary, make bonus payments as
described in subsection (d)(2)(A)(ii) to individuals
and entities furnishing items or services for which
payment may be made under any such program.
``(E) List of program participants.--Maintain and
regularly update a list of individuals or entities with
agreements to provide health care items and services
under any such program, and ensure that such list, in
electronic and hard copy formats, is readily available,
as applicable, to--
``(i) individuals residing in the service
area who are entitled to benefits under part A
or enrolled in the program under part B;
``(ii) the entities responsible under
sections 1816 and 1842 for administering
payments for health care items and services
furnished; and
``(iii) individuals and entities providing
health care items and services in the service
area.
``(F) Beneficiary enrollment.--Determine
eligibility of individuals to enroll under a program
specified in subsection (a) and provide enrollment-
related services (but only if the Secretary finds that
the program administrator has no conflict of interest
caused by a financial relationship with any individual
or entity furnishing items or services for which
payment may be made under any such program, or any
other conflict of interest with respect to such
function).
``(G) Oversight.--Monitor the compliance of
individuals and entities with agreements under any such
program with the conditions of participation.
``(H) Administrative review.--Conduct reviews of
adverse determinations specified in subparagraph (A)
and in subsection (b)(6).
``(I) Review of marketing materials.--Conduct a
review of marketing materials proposed by an individual
or entity furnishing services under any such program.
``(J) Additional functions.--Perform such other
functions as the Secretary may specify.
``(8) Limitation of liability.--The provisions of section
1157(b) shall apply with respect to activities of contractors
and their officers, employees, and agents under a contract
under this subsection.
``(9) Information sharing.--Notwithstanding section 1106
and section 552a of title 5, United States Code, the Secretary
is authorized to disclose to an entity with a program
administration contract under this subsection such information
(including medical information) on individuals receiving health
care items and services under the program as the entity may
require to carry out its responsibilities under the contract.
``(d) Rules Applicable to Both Program Agreements and Program
Administration Contracts.--
``(1) Records, reports, and audits.--The Secretary is
authorized to require individuals and entities with agreements
to provide health care items or services under programs
specified under subsection (a), and entities with program
administration contracts under subsection (c), to maintain
adequate records, to afford the Secretary access to such
records (including for audit purposes), and to furnish such
reports and other materials (including audited financial
statements and performance data) as the Secretary may require
for purposes of implementation, oversight, and evaluation of
such program and of individuals' and entities' effectiveness in
performance of such agreements or contracts.
``(2) Bonuses.--Notwithstanding any other provision of law,
but subject to subparagraph (B)(ii), the Secretary may make
bonus payments under a program specified in subsection (a) from
the Health Insurance and Supplementary Medical Insurance Trust
Funds in amounts that do not exceed 50 percent of the savings
to such Trust Funds attributable to such programs (or in the
case of the program specified in subsection (a)(1), in amounts
authorized under such program), in accordance with the
following:
``(A) Payments to program administrators.--The
Secretary may make bonus payments under each program
specified in subsection (a) to program administrators.
``(B) Payments to individuals and entities
furnishing services.--
``(i) In general.--Subject to clause (ii),
the Secretary may make bonus payments to
individuals or entities furnishing items or
services for which payment may be made under
the programs specified in paragraphs (1), (2),
(3), and (6) of subsection (a), or may
authorize a program administrator to make such
bonus payments in accordance with such
guidelines as the Secretary shall establish and
subject to the Secretary's approval.
``(ii) Limitations.--The Secretary may
limit bonus payments under clause (i) to
particular service areas, types of individuals
or entities furnishing items or services under
a program, or kinds of items or services, and
may condition such payments on the achievement
of such standards related to efficiency,
improvement in processes or outcomes of care,
or such other factors as the Secretary
determines to be appropriate.
``(3) Antidiscrimination limitation.--
``(A) In general.--The Secretary shall not enter
into an agreement with an individual or entity to
provide health care items or services under a program
specified under subsection (a), or with an entity to
administer such a program, unless such individual or
entity guarantees that it will not deny, limit, or
condition the coverage or provision of benefits under
such program, for individuals eligible to be enrolled
under such program, based on any health status-related
factor described in section 2702(a)(1) of the Public
Health Service Act.
``(B) Construction.--Subparagraph (A) shall not be
construed to prohibit such individual or entity from
taking any action explicitly authorized by the
provisions of section 1866B (care coordination
services) or section 1866C (disease management
services).
``(e) Limitations on Judicial Review.--The following actions and
determinations with respect to a program specified in subsection (a)
shall not be subject to review by a judicial or administrative
tribunal:
``(1) Limiting the implementation of a program under
subsection (b)(2).
``(2) The establishment of program participation standards
under subsection (b)(5); or the denial or termination of, or
refusal to renew, an agreement with an individual or entity to
provide health care items and services under the program.
``(3) The determination of a beneficiary's eligibility
under subsection (b)(6)(B).
``(4) The establishment of program administration contract
performance standards under subsection (c)(6); or the refusal
to renew a program administration contract; or the
noncompetitive award or renewal of a program administration
contract under subsection (c)(4)(B).
``(5) The establishment of payment rates, through
negotiation or otherwise, under a program agreement or a
program administration contract.
``(6) A determination with respect to a program (where
specifically authorized by the program authority or by
subsection (d)(2))--
``(A) as to whether cost savings have been
achieved, and the amount of savings;
``(B) as to whether, to whom, and in what amounts
bonuses will be paid; or
``(C) as to whether to reduce or eliminate
beneficiary cost-sharing.
``(f) Application Limited to Parts A and B.--None of the provisions
of this section or of the programs specified in subsection (a) shall
apply to the programs under parts C and D.
``(g) Reports to Congress.--Not later than 2 years after the date
of enactment of this section, and biennially thereafter for 6 years,
the Secretary shall report to Congress on the use of authorities under
each of sections 1866A through 1866G. Each report shall address the
impact of the use of those authorities on expenditures, access, and
quality under the programs under this title.''.
(b) Exception to Limits on Physician Referrals.--Section 1877(b) of
the Social Security Act (42 U.S.C. 1395nn(b)) is amended--
(1) by redesignating paragraph (4) as paragraph (5); and
(2) by inserting after paragraph (3) the following new
paragraph:
``(4) Private sector purchasing and quality improvement
tools for original medicare.--In the case of a designated
health service, if the designated health service is--
``(A) included in the services under section 1866B,
1866C, 1866E, or 1866G; and
``(B) provided by an individual or entity meeting
such criteria related to quality assurance, financial
disclosure, and other factors as the Secretary may find
appropriate.''.
SEC. 138. INCREASED FLEXIBILITY IN CONTRACTING FOR MEDICARE CLAIMS
PROCESSING.
(a) Carriers To Include Entities That Are Not Insurance
Companies.--Section 1842 of the Social Security Act (42 U.S.C. 1395u)
is amended--
(1) in subsection (a), in the matter preceding paragraph
(1), by striking ``with carriers'' and inserting ``with
agencies and organizations (in this section referred to as
`carriers')''; and
(2) by repealing subsection (f).
(b) Secretarial Flexibility in Contracting for and in Assigning
Fiscal Intermediary and Carrier Functions.--
(1) Authority to enter into contracts.--
(A) In general.--Section 1816(a) of the Social
Security Act (42 U.S.C. 1395h(a)) is amended to read as
follows:
``(a)(1) The Secretary may enter into contracts with agencies or
organizations to perform any or all of the following functions, or
parts of those functions (or, to the extent provided in a contract, to
secure performance thereof by other organizations) to--
``(A) determine (subject to the provisions of section 1878
and to such review by the Secretary as may be provided for by
the contracts) the amount of the payments required pursuant to
this part to be made to providers of services;
``(B) make payments described in subparagraph (A);
``(C) provide consultative services to institutions or
agencies to enable them to establish and maintain fiscal
records necessary for purposes of this part and otherwise to
qualify as providers of services;
``(D) serve as a center for, and communicate to individuals
entitled to benefits under this part and to providers of
services, any information or instructions furnished to the
agency or organization by the Secretary, and serve as a channel
of communication from individuals entitled to benefits under
this part and from providers of services to the Secretary;
``(E) make such audits of the records of providers of
services as may be necessary to ensure that proper payments are
made under this part;
``(F) perform the functions described by subsection (d);
and
``(G) perform such other functions as are necessary to
carry out the purposes of this part.
``(2) In this title and title XI, the term `fiscal intermediary'
means an agency or organization with a contract under this section.''.
(B) Prerequisites for contracts.--Section
1816(b)(1)(A) of the Social Security Act (42 U.S.C.
1395h(b)(1)(A)) is amended by striking ``after applying
the standards, criteria, and procedures'' and inserting
``after evaluating the ability of the agency or
organization to fulfill the contract performance
requirements''.
(C) Duties of fiscal intermediaries; rights of
providers.--Section 1816(d) of the Social Security Act
(42 U.S.C. 1395h(d)) is amended to read as follows:
``(d) Each provider of services shall have a fiscal intermediary
that--
``(1) acts as a single point of contact for the provider of
services under this part;
``(2) makes its services sufficiently available to meet the
needs of the provider of services; and
``(3) is responsible and accountable for arranging the
resolution of issues raised under this part by the provider of
services.''.
(D) Solicitation of comments for performance
evaluations.--Section 1816(e) of the Social Security
Act (42 U.S.C. 1395h(e)) is amended to read as follows:
``(e) The Secretary, in evaluating the performance of a fiscal
intermediary, may solicit comments from providers of services.''.
(E) Consultation with respect to performance
requirements for fiscal intermediaries.--Section
1816(f)(1) of the Social Security Act (42 U.S.C.
1395h(f)) is amended to read as follows:
``(f)(1) With respect to the establishment of contract performance
requirements, the Secretary may consult with--
``(A) Medicare+Choice organizations under part C of this
title;
``(B) providers of services and other persons who furnish
items or services for which payment may be made under this
title; and
``(C) organizations and agencies performing functions
necessary to carry out the purposes of this part.''.
(F) Consultation with respect to performance
requirements for carriers.--Section 1842(b)(2) of the
Social Security Act (42 U.S.C. 1395u(b)(2)) is
amended--
(i) in subparagraph (A)--
(I) by inserting ``(i)'' before
``No such contract'';
(II) by striking the second
sentence and inserting the following
new clause:
``(ii) With respect to the establishment of contract performance
requirements, the Secretary may consult with--
``(I) Medicare+Choice organizations under part C of this
title;
``(II) providers of services and other persons who furnish
items or services for which payment may be made under this
title; and
``(III) organizations and agencies performing functions
necessary to carry out the purposes of this part.'';
(III) by striking the third
sentence; and
(IV) by striking the fourth
sentence and inserting the following
new clause:
``(iii) The Secretary may not require, as a condition of entering
into a contract under this section or under section 1871, that a
carrier match data obtained other than in its activities under this
part with data used in the administration of this part for purposes of
identifying situations in which section 1862(b) may apply.'';
(ii) in subparagraph (B), in the matter
preceding clause (i), by striking ``establish
standards'' and inserting ``develop contract
performance requirements''; and
(iii) in subparagraph (D), by striking
``standards and criteria'' each place it
appears and inserting ``contract performance
requirements''.
(2) Conforming amendments.--
(A) Prerequisites for contracts.--Section 1816(b)
of the Social Security Act (42 U.S.C. 1395h(b)) is
amended--
(i) in the matter preceding paragraph (1),
by striking ``an agreement'' and inserting ``a
contract'';
(ii) in paragraph (1)(B), by striking
``agreement'' and inserting ``contract''; and
(iii) in paragraph (2)(A), by striking
``agreement'' and inserting ``contract''.
(B) Terms and conditions of contracts; prompt
payment of claims.--Section 1816(c) of the Social
Security Act (42 U.S.C. 1395h(c)) is amended--
(i) in paragraph (1)--
(I) in the first sentence, by
striking ``An agreement'' and inserting
``A contract''; and
(II) in the last sentence, by
striking ``an agreement'' and inserting
``a contract'';
(ii) in paragraph (2)--
(I) in subparagraph (A), in the
matter preceding clause (i), by
striking ``Each agreement under this
section'' and inserting ``Each contract
under this section that provides for
making payments under this part''; and
(II) in subparagraph (C), by
striking ``hospital, rural primary care
hospital, skilled nursing facility,
home health agency, hospice program,
comprehensive outpatient rehabilitation
facility, or rehabilitation agency''
and inserting ``provider of services
(as defined in section 1861(u))''; and
(iii) in paragraph (3)(A), by striking
``agreement under this section'' and inserting
``contract under this section that provides for
making payments under this part''.
(C) Surety bonds.--Section 1816(h) of the Social
Security Act (42 U.S.C. 1395h(h)) is amended--
(i) by striking ``An agreement'' and
inserting ``A contract''; and
(ii) by striking ``the agreement'' each
place it appears and inserting ``the
contract''.
(D) Limitation on liability for certifying and
disbursing officers.--Section 1816(i)(1) of the Social
Security Act (42 U.S.C. 1395h(i)(1)) is amended by
striking ``an agreement'' and inserting ``a contract''.
(E) Denial of claim; notification and
reconsideration.--Section 1816(j) of the Social
Security Act (42 U.S.C. 1395h(j)) is amended in the
matter preceding paragraph (1)--
(i) by striking ``An agreement'' and
inserting ``A contract''; and
(ii) by striking ``for home health
services, extended care services, or post-
hospital extended care services''.
(F) Annual reporting requirement on erroneous
payment recovery.--Section 1816(k) of the Social
Security Act (42 U.S.C. 1395h(k)) is amended--
(i) by striking ``An agreement'' and
inserting ``A contract''; and
(ii) by inserting ``(as appropriate)''
after ``submit''.
(G) Coordination with medicare integrity program.--
Section 1816(l) of the Social Security Act (42 U.S.C.
1395h(l)) is amended by striking ``an agreement'' and
inserting ``a contract''.
(H) Authority to enter into contracts with
carriers.--Section 1842(a) of the Social Security Act
(42 U.S.C. 1395u(a)) is amended--
(i) in the matter preceding paragraph (1)--
(I) by striking ``carriers with
which agreements'' and inserting
``single contracts under section 1816
and this section together, or separate
contracts with eligible agencies and
organizations with which contracts'';
and
(II) by striking ``some or all of
the following functions'' and inserting
``any or all of the following
functions, or parts of those
functions''; and
(ii) in paragraph (3), by inserting ``(to
and from individuals enrolled under this part
and to and from physicians and other entities
that furnish items and services)'' after
``communication''.
(I) Applicability of competitive bidding
provisions; findings as to financial responsibilities;
contractual duties.--Section 1842(b) of the Social
Security Act (42 U.S.C. 1395u(b)) is amended--
(i) in paragraph (2)(C), in the first
sentence, by inserting ``(as appropriate)''
after ``carriers'';
(ii) in paragraph (3), in the matter
preceding subparagraph (A), by inserting ``(as
appropriate)'' after ``contract'';
(iii) in paragraph (7)(A), in the matter
preceding clause (i), by striking ``the
carrier'' and inserting ``a carrier''; and
(iv) in paragraph (11)(A), in the matter
preceding clause (i), by inserting ``(as
appropriate)'' after ``each carrier''.
(J) Participating physician or supplier; contracts
with the secretary; payment of claims on assignment.--
Section 1842(h) of the Social Security Act (42 U.S.C.
1395u(h)) is amended--
(i) in paragraph (2), in the first
sentence--
(I) by striking ``an agreement''
and inserting ``a contract''; and
(II) by inserting ``(as
appropriate)'' after ``shall'';
(ii) in paragraph (3)(A), by striking ``an
agreement'' and inserting ``a contract'';
(iii) in paragraph (3)(B), in the third
sentence, by striking ``agreements'' and
inserting ``contracts'';
(iv) in paragraph (5)(A), by inserting
``(as appropriate)'' after ``carriers''; and
(v) in paragraph (8)--
(I) by striking ``an agreement''
and inserting ``a contract''; and
(II) by striking ``such agreement''
and inserting ``such contract''.
(c) Elimination of Special Provisions for Terminations of
Contracts.--
(1) Fiscal intermediaries.--Section 1816 of the Social
Security Act (42 U.S.C. 1395h) is amended--
(A) in subsection (b), in the matter preceding
paragraph (1), by striking ``or renew'';
(B) in subsection (c)(1), in the last sentence, by
striking ``or renewing''; and
(C) by repealing subsection (g).
(2) Carriers.--Section 1842(b) of the Social Security Act
(42 U.S.C. 1395u(b)) is amended by repealing paragraph (5).
(d) Repeal of Fiscal Intermediary Requirements That Are Not Cost-
Effective.--Section 1816(f)(2) of the Social Security Act (42 U.S.C.
1395h(f)(2)) is amended--
(1) in the matter preceding subparagraph (A), by striking
``standards and criteria established under'' and inserting
``contract performance requirements described in''; and
(2) by striking subparagraph (A) and inserting the
following new subparagraph:
``(A) with respect to claims for services furnished under
this part by any provider of services (as defined in section
1861(u)) other than a hospital, whether such agency or
organization is able to process 75 percent of reconsiderations
within 60 days and 90 percent of reconsiderations within 90
days; and''.
(e) Repeal of Cost Reimbursement Requirements.--
(1) Fiscal intermediaries.--Section 1816(c)(1) of the
Social Security Act (42 U.S.C. 1395h(c)(1)) is amended--
(A) in the first sentence--
(i) by striking the comma after
``appropriate'' and inserting ``and''; and
(ii) by striking ``, and shall provide for
payment'' and all that follows before the
period; and
(B) by striking the second and third sentences.
(2) Carriers.--Section 1842(c)(1) of the Social Security
Act (42 U.S.C. 1395u(c)(1)) is amended--
(A) in the first sentence--
(i) by striking ``section shall provide''
and inserting ``section may provide''; and
(ii) by striking ``, and shall provide''
and all that follows before the period; and
(B) by striking the second and third sentences.
(3) Conforming amendment to deficit reduction act.--
Subsection (a) of section 2326 of the Deficit Reduction Act of
1984 (42 U.S.C. 1395h note) is repealed.
(f) Secretarial Flexibility With Respect to Renewing Contracts and
Transfer of Functions.--
(1) Fiscal intermediaries.--Section 1816(c) of the Social
Security Act (42 U.S.C. 1395h(c)) is amended by adding at the
end the following:
``(4)(A) Except as provided in laws with general applicability to
Federal acquisition and procurement or in subparagraph (B), the
Secretary shall use competitive procedures when entering into contracts
under this section.
``(B)(i) The Secretary may renew a contract with a fiscal
intermediary under this section from term to term without regard to
section 5 of title 41, United States Code, or any other provision of
law requiring competition, if the fiscal intermediary has met or
exceeded the performance requirements established in the current
contract.
``(ii) Functions may be transferred among fiscal intermediaries
without regard to any provision of law requiring competition. However,
the Secretary shall ensure that performance quality is considered in
such transfers.''.
(2) Carriers.--Section 1842(b)(1) of the Social Security
Act (42 U.S.C. 1395u(b)(1)) is amended to read as follows:
``(b)(1)(A) Except as provided in laws with general applicability
to Federal acquisition and procurement or in subparagraph (B), the
Secretary shall use competitive procedures when entering into contracts
under this section.
``(B)(i) The Secretary may renew a contract with a carrier under
subsection (a) from term to term without regard to section 5 of title
41, United States Code, or any other provision of law requiring
competition, if the carrier has met or exceeded the performance
requirements established in the current contract.
``(ii) Functions may be transferred among carriers without regard
to any provision of law requiring competition. However, the Secretary
shall ensure that performance quality is considered in such
transfers.''.
(g) Waiver of Competitive Requirements for Initial Contracts.--
Contracts that have periods that begin before or during the 1-year
period that begins on the first day of the fourth calendar month that
begins after the date of enactment of this Act may be entered into
under section 1816(a) or 1842(a) of the Social Security Act (42 U.S.C.
1395h(a) and 1395u(a)) without regard to any provision of law requiring
the use of competitive procedures.
(h) Effective Dates.--
(1) In general.--Except as provided in paragraphs (2) and
(3), the amendments made by this section apply to contracts
that have periods beginning after the third calendar month that
begins after the date of enactment of this Act.
(2) Elimination of special provisions for terminations of
contracts.--The amendments made by subsection (c) apply to
contracts that have periods ending on or after the end of the
third calendar month that begins after the date of enactment of
this Act.
(3) Secretarial flexibility with respect to renewing
contracts and transfer of functions.--The amendments made by
subsection (f) apply to contracts that have periods that begin
after the end of the 1-year period specified in subsection (g).
TITLE II--MEDICARE+CHOICE COMPETITION
SEC. 201. REVISION OF MEDICARE+CHOICE COMPETITIVE BIDDING DEMONSTRATION
PROJECT.
(a) Areas in Florida.--Section 4011 of the Balanced Budget Act of
1997 (42 U.S.C. 1395w-23 note) is amended--
(1) by striking subsection (b)(2)(B) and inserting the
following:
``(B) Location of designation.--Of the 4 areas
recommended under subparagraph (A)--
``(i) 2 shall be in Florida; and
``(ii) 3 shall be in urban areas and 1
shall be in a rural area.''; and
(2) in subsection (c), by adding at the end the following
new paragraph:
``(3) Implementation of project in areas in florida.--The
Secretary shall ensure that the areas in Florida designated
pursuant to subsection (b)(2)(B)(i) be the first 2 areas in
which the project is implemented.''.
(b) Budget Neutrality During 5-Fiscal-Year Period.--Section 4011(g)
of the Balanced Budget Act of 1997 (42 U.S.C. 1395w-23 note) is
amended--
(1) by striking ``for a fiscal year'' and inserting ``for
any 5-fiscal-year period''; and
(2) by inserting ``for such period'' after ``4001,''.
(c) Effective Date.--The amendments made by this section shall take
effect as if included in the enactment of section 533 of the Medicare,
Medicaid, and SCHIP Balanced Budget Refinement Act of 1999 (Appendix F,
113 Stat. 1501A-389), as enacted into law by section 1000(a)(6) of
Public Law 106-113.
TITLE III--MEDICARE OUTPATIENT PRESCRIPTION DRUG BENEFIT PROGRAM
SEC. 301. MEDICARE OUTPATIENT PRESCRIPTION DRUG BENEFIT PROGRAM.
(a) Establishment.--Title XVIII of the Social Security Act (42
U.S.C. 1395 et seq.) is amended by redesignating part D as part E and
by inserting after part C the following new part:
``Part D--Outpatient Prescription Drug Benefit Program
``definitions
``Sec. 1860. In this part:
``(1) Covered outpatient drug.--
``(A) In general.--Except as provided in
subparagraph (B), the term `covered outpatient drug'
means any of the following products:
``(i) 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 of the Federal
Food, Drug, and Cosmetic Act;
``(II)(aa) which was commercially
used or sold in the United States
before the date of 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 (bb)
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)(aa) 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 (bb) 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.
``(ii) 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.
``(iii) Insulin approved under appropriate
Federal law, including needles, syringes, and
disposable pumps for the administration of such
insulin.
``(iv) A prescribed drug or biological
product that would meet the requirements of
clause (i) or (ii) except that it is available
over-the-counter in addition to being available
upon prescription.
``(B) Exclusion.--The term `covered outpatient
drug' does not include any product--
``(i) except as provided in subparagraph
(A)(iv), which may be distributed to
individuals without a prescription;
``(ii) for which payment is available under
part A or B or would be available under part B
but for the application of a deductible under
such part (unless payment for such product is
not available because benefits under part A or
B have been exhausted), determined without
regard to whether the beneficiary involved is
entitled to benefits under part A or enrolled
under part B; or
``(iii) except for agents used to promote
smoking cessation, for which coverage may be
excluded or restricted under section
1927(d)(2).
``(2) Eligible beneficiary.--The term `eligible
beneficiary' means an individual that is entitled to benefits
under part A or enrolled under part B.
``(3) Eligible entity.--The term `eligible entity' means
any entity that the Secretary determines to be appropriate to
provide eligible beneficiaries with covered outpatient drugs
under a plan under this part, including--
``(A) a pharmacy benefit management company;
``(B) a retail pharmacy delivery system;
``(C) a health plan or insurer;
``(D) a State (through mechanisms established under
a State plan under title XIX);
``(E) any other entity approved by the Secretary;
or
``(F) any combination of the entities described in
subparagraphs (A) through (E) if the Secretary
determines that such combination--
``(i) increases the scope or efficiency of
the provision of benefits under this part; and
``(ii) is not anticompetitive.
``(4) Medicare+choice organization; medicare+choice plan.--
The terms `Medicare+Choice organization' and `Medicare+Choice
plan' have the meanings given such terms in subsections (a)(1)
and (b)(1), respectively, of section 1859 (relating to
definitions relating to Medicare+Choice organizations).
``(5) Prescription drug account.--The term `Prescription
Drug Account' means the Prescription Drug Account (as
established under section 1860J) in the Federal Supplementary
Medical Insurance Trust Fund under section 1841.
``establishment of outpatient prescription drug benefit program
``Sec. 1860A. (a) Provision of Benefit.--
``(1) In general.--Beginning in 2004, the Secretary shall
provide for and administer an outpatient prescription drug
benefit program under which each eligible beneficiary enrolled
under this part shall be provided with coverage of covered
outpatient drugs as follows:
``(A) Medicare+choice plan.--If the eligible
beneficiary is eligible to enroll in a Medicare+Choice
plan, the beneficiary may enroll in such a plan and
obtain coverage of covered outpatient drugs through
such plan.
``(B) Medicare prescription drug plan.--If the
eligible beneficiary is not enrolled in a
Medicare+Choice plan, the beneficiary shall obtain
coverage of covered outpatient drugs through enrollment
in a plan offered by an eligible entity with a contract
under this part.
``(2) Voluntary nature of program.--Nothing in this part
shall be construed as requiring an eligible beneficiary to
enroll in the program established under this part.
``(3) Scope of benefits.--The program established under
this part shall provide for coverage of all therapeutic classes
of covered outpatient drugs.
``(b) Access to Alternative Prescription Drug Coverage.--In the
case of an eligible beneficiary who has creditable prescription drug
coverage (as defined in section 1860B(a)(2)(A)(vi)), such beneficiary--
``(1) may continue to receive such coverage and not enroll
under this part; and
``(2) pursuant to section 1860B(a)(2)(A)(iii), is permitted
to subsequently enroll under this part without any penalty and
obtain coverage of covered outpatient drugs in the manner
described in subsection (a) if the beneficiary involuntarily
loses such coverage.
``(c) Financing.--The costs of providing benefits under this part
shall be payable from the Prescription Drug Account.
``enrollment
``Sec. 1860B. (a) Enrollment Under This Part.--
``(1) Establishment of process.--
``(A) In general.--The Secretary shall establish a
process through which an eligible beneficiary
(including an eligible beneficiary enrolled in a
Medicare+Choice plan offered by a Medicare+Choice
organization) may make an election to enroll under this
part. Such process shall be similar to the process for
enrollment in part B under section 1837, including the
deeming provisions of such section.
``(B) Requirement of enrollment.--An eligible
beneficiary must enroll under this part in order to be
eligible to receive covered outpatient drugs under this
title.
``(2) Enrollment procedures.--
``(A) Late enrollment penalty.--
``(i) In general.--Subject to the
succeeding provisions of this subparagraph, in
the case of an eligible beneficiary whose
coverage period under this part began pursuant
to an enrollment after the beneficiary's
initial enrollment period under part B
(determined pursuant to section 1837(d)) and
not pursuant to the open enrollment period
described in subparagraph (B), the Secretary
shall establish procedures for increasing the
amount of the monthly part D premium under
section 1860D applicable to such beneficiary--
``(I) by an amount that is equal to
10 percent of such premium for each
full 12-month period (in the same
continuous period of eligibility) in
which the eligible beneficiary could
have been enrolled under this part but
was not so enrolled; or
``(II) if determined appropriate by
the Secretary, by an amount that the
Secretary determines is actuarily sound
for each such period.
``(ii) Periods taken into account.--For
purposes of calculating any 12-month period
under clause (i), there shall be taken into
account--
``(I) the months which elapsed
between the close of the eligible
beneficiary's initial enrollment period
and the close of the enrollment period
in which the beneficiary enrolled; and
``(II) in the case of an eligible
beneficiary who reenrolls under this
part, the months which elapsed between
the date of termination of a previous
coverage period and the close of the
enrollment period in which the
beneficiary reenrolled.
``(iii) Periods not taken into account.--
``(I) In general.--For purposes of
calculating any 12-month period under
clause (i), subject to subclause (II),
there shall not be taken into account
months for which the eligible
beneficiary can demonstrate that the
beneficiary had creditable prescription
drug coverage (as defined in
subparagraph (vi)).
``(II) Application.--This clause
shall only apply with respect to a
coverage period the enrollment for
which occurs before the end of the 60-
day period that begins on the first day
of the month which includes--
``(aa) in the case of a
beneficiary with coverage
described in subclause (II) of
clause (vi), the date on which
the plan terminates, ceases to
provide, or reduces the value
of the prescription drug
coverage under such plan to
below the actuarial value of
the coverage provided under the
program under this part; or
``(bb) in the case of a
beneficiary with coverage
described in subclause (I),
(III), or (IV) of clause (vi),
the date on which the
beneficiary loses eligibility
for such coverage.
``(iv) Periods treated separately.--Any
increase in an eligible beneficiary's monthly
part D premium under clause (i) with respect to
a particular continuous period of eligibility
shall not be applicable with respect to any
other continuous period of eligibility which
the beneficiary may have.
``(v) Continuous period of eligibility.--
``(I) In general.--Subject to
subclause (II), for purposes of this
subparagraph, an eligible beneficiary's
`continuous period of eligibility' is
the period that begins with the first
day on which the beneficiary is
eligible to enroll under section 1836
and ends with the beneficiary's death.
``(II) Separate period.--Any period
during all of which an eligible
beneficiary satisfied paragraph (1) of
section 1836 and which terminated in or
before the month preceding the month in
which the beneficiary attained age 65
shall be a separate `continuous period
of eligibility' with respect to the
beneficiary (and each such period which
terminates shall be deemed not to have
existed for purposes of subsequently
applying this subparagraph).
``(vi) Creditable prescription drug
coverage defined.--For purposes of this part,
the term `creditable prescription drug
coverage' means any of the following:
``(I) Medicaid prescription drug
coverage.--Prescription drug coverage
under a medicaid plan under title XIX,
including through the Program of All-
inclusive Care for the Elderly (PACE)
under section 1934 and through a social
health maintenance organization
(referred to in section 4104(c) of the
Balanced Budget Act of 1997).
``(II) Prescription drug coverage
under a group health plan.--
Prescription drug coverage under a
group health plan, including a health
benefits plan under the Federal
Employees Health Benefit Program under
chapter 89 of title 5, United States
Code, and a qualified
retiree prescription drug plan as defined in section 1860I(e)(3), that
provides coverage of the cost of prescription drugs the actuarial value
of which (as defined by the Secretary) to the beneficiary equals or
exceeds the actuarial value of the benefits provided to an individual
enrolled in the outpatient prescription drug benefit program under this
part.
``(III) State pharmaceutical
assistance program.--Coverage of
prescription drugs under a State
pharmaceutical assistance program.
``(IV) Veterans' coverage of
prescription drugs.--Coverage of
prescription drugs for veterans, and
survivors and dependents of veterans,
under chapter 17 of title 38, United
States Code.
``(B) Open enrollment period for current
beneficiaries in which late enrollment procedures do
not apply.--The Secretary shall establish an applicable
period, which shall begin on the date on which the
Secretary first begins to accept elections for
enrollment under this part, during which any eligible
beneficiary may enroll under this part without the
application of the late enrollment procedures
established under subparagraph (A)(i).
``(3) Period of coverage.--
``(A) In general.--Except as provided in
subparagraph (B) and subject to subparagraph (C), an
eligible beneficiary's coverage under the program under
this part shall be effective for the period provided in
section 1838, as if that section applied to the program
under this part.
``(B) Open enrollment.--Subject to subparagraph
(C), an eligible beneficiary who enrolls under the
program under this part pursuant to paragraph (2)(B)
shall be entitled to the benefits under this part
beginning on the first day of the month following the
month in which such enrollment occurs.
``(C) Limitation.--Coverage under this part shall
not begin prior to January 1, 2004.
``(4) Termination.--
``(A) In general.--The causes of termination
specified in section 1838 shall apply to this part in
the same manner as such causes apply to part B.
``(B) Coverage terminated by termination of
coverage under parts a and b.--
``(i) In general.--In addition to the
causes of termination specified in subparagraph
(A), the Secretary shall terminate an
individual's coverage under this part if the
individual is no longer enrolled in either part
A or B.
``(ii) Effective date.--The termination
described in clause (i) shall be effective on
the effective date of termination of coverage
under part A or (if later) under part B.
``(C) Procedures regarding termination of a
beneficiary under a plan.--The Secretary shall
establish procedures for determining the status of an
eligible beneficiary's enrollment under this part if
the beneficiary's enrollment in a plan offered by an
eligible entity under this part is terminated by the
entity for cause (pursuant to procedures established by
the Secretary under subsection (b)(1)).
``(b) Enrollment in a Plan.--
``(1) Process.--
``(A) In general.--The Secretary shall establish a
process through which an eligible beneficiary who is
enrolled under this part but not enrolled in a
Medicare+Choice plan offered by a Medicare+Choice
organization shall make an annual election to enroll in
any plan offered by an eligible entity that has been
awarded a contract under this part and serves the
geographic area in which the beneficiary resides.
``(B) Rules.--In establishing the process under
subparagraph (A), the Secretary shall--
``(i) use rules similar to the rules for
enrollment, disenrollment, and termination of
enrollment with a Medicare+Choice plan under
section 1851, including--
``(I) the establishment of special
election periods under subsection
(e)(4) of such section; and
``(II) the application of the
guaranteed issue and renewal provisions
of section 1851(g) (other than
paragraph (3)(C)(i), relating to
default enrollment); and
``(ii) coordinate enrollments,
disenrollments, and terminations of enrollment
under part C with enrollments, disenrollments,
and terminations of enrollment under this part.
``(2) Medicare+choice enrollees.--An eligible beneficiary
who is enrolled under this part and enrolled in a
Medicare+Choice plan offered by a Medicare+Choice organization
shall receive coverage of covered outpatient drugs under this
part through such plan.
``(c) First Enrollment Period.--The processes developed under
subsections (a) and (b) shall ensure that eligible beneficiaries are
permitted to enroll under this part and with an eligible entity prior
to January 1, 2004, in order to ensure that coverage under this part is
effective as of such date.
``(d) Enrollment in a Medicare+Choice Plan.--Enrollment in a
Medicare+Choice plan is subject to the rules for enrollment in such
plan under section 1851.
``providing information to beneficiaries
``Sec. 1860C. (a) Activities.--
``(1) In general.--The Secretary shall conduct activities
that are designed to broadly disseminate information to
eligible beneficiaries (and prospective eligible beneficiaries)
regarding the coverage provided under this part.
``(2) Special rule for first enrollment under the
program.--To the extent practicable, the activities described
in paragraph (1) shall ensure that eligible beneficiaries are
provided with such information at least 30 days prior to the
first enrollment period described in section 1860B(c).
``(b) Requirements.--
``(1) In general.--The activities described in subsection
(a) shall--
``(A) be similar to the activities performed by the
Secretary under section 1851(d);
``(B) be coordinated with the activities performed
by the Secretary under such section and under section
1804; and
``(C) provide for the dissemination of information
comparing the plans offered by eligible entities under
this part that are available to eligible beneficiaries
residing in an area.
``(2) Comparative information.--The comparative information
described in paragraph (1)(C) shall include a comparison of the
following:
``(A) Benefits.--The benefits provided under the
plan, including the prices beneficiaries will be
charged for covered outpatient drugs, any preferred
pharmacy networks used by the eligible entity under the
plan, and the formularies and appeals processes under
the plan.
``(B) Quality and performance.--To the extent
available, the quality and performance of the eligible
entity offering the plan.
``(C) Beneficiary cost-sharing.--The cost-sharing
required of eligible beneficiaries under the plan.
``(D) Consumer satisfaction surveys.--To the extent
available, the results of consumer satisfaction surveys
regarding the plan and the eligible entity offering
such plan.
``(E) Additional information.--Such additional
information as the Secretary may prescribe.
``(3) Information standards.--The Secretary shall develop
standards to ensure that the information provided to eligible
beneficiaries under this part is complete, accurate, and
uniform.
``(c) Use of Medicare Consumer Coalitions To Provide Information.--
``(1) In general.--The Secretary may contract with Medicare
Consumer Coalitions to conduct the informational activities--
``(A) under this section;
``(B) under section 1851(d); and
``(C) under section 1804.
``(2) Selection of coalitions.--If the Secretary determines
the use of Medicare Consumer Coalitions to be appropriate, the
Secretary shall--
``(A) develop and disseminate, in such areas as the
Secretary determines appropriate, a request for
proposals for Medicare Consumer Coalitions to contract
with the Secretary in order to conduct any of the
informational activities described in paragraph (1);
and
``(B) select a proposal of a Medicare Consumer
Coalition to conduct the informational activities in
each such area, with a preference for broad
participation by organizations with experience in
providing information to beneficiaries under this
title.
``(3) Payment to medicare consumer coalitions.--The
Secretary shall make payments to Medicare Consumer Coalitions
contracting under this subsection in such amounts and in such
manner as the Secretary determines appropriate.
``(4) Authorization of appropriations.--There are
authorized to be appropriated to the Secretary such sums as may
be necessary to contract with Medicare Consumer Coalitions
under this section.
``(5) Medicare consumer coalition defined.--In this
subsection, the term `Medicare Consumer Coalition' means an
entity that is a nonprofit organization operated under the
direction of a board of directors that is primarily composed of
beneficiaries under this title.
``premiums
``Sec. 1860D. (a) Annual Establishment of Monthly Part D Premium
Rates.--
``(1) In general.--The Secretary shall, during September of
each year (beginning in 2003), determine and promulgate a
monthly part D premium rate for the succeeding year in
accordance with the provisions of this subsection.
``(2) Actuarial determinations.--
``(A) Determination of annual benefit and
administrative costs.--The Secretary shall estimate
annually for the succeeding year the amount equal to
the total of the benefits and administrative costs that
will be payable from the Prescription Drug Account for providing
covered outpatient drugs in such calendar year with respect to
enrollees in the program under this part.
``(B) Determination of monthly part d premium
rates.--
``(i) In general.--The Secretary shall
determine the monthly part D premium rate for
such succeeding year, which shall be \1/12\ of
the applicable share of--
``(I) the amount determined under
subparagraph (A); divided by
``(II) the total number of
enrollees under this part,
rounded (if such rate is not a multiple of 10
cents) to the nearest multiple of 10 cents.
``(ii) Definition of applicable share.--For
purposes of clause (i), the term `applicable
share' means--
``(I) one-half, in the case of
premiums paid by an eligible
beneficiary enrolled in the program
under this part; and
``(II) two-thirds, in the case of
premiums paid for such a beneficiary by
an employer (as defined in section
1860I(e)(2)) with which the beneficiary
was formerly employed.
``(3) Publication of assumptions.--The Secretary shall
publish, together with the promulgation of the monthly part D
premium rates for the succeeding year, a statement setting
forth the actuarial assumptions and bases employed in arriving
at the amounts and rates determined under paragraphs (1) and
(2).
``(4) Collection of part d premium.--The monthly part D
premium applicable to an eligible beneficiary under this part
(after application of any increase under subsection (b) or
under section 1860B(a)(2)(A)) shall be collected and credited
to the Prescription Drug Account in the same manner as the
monthly premium determined under section 1839 is collected and
credited to the Federal Supplementary Medical Insurance Trust
Fund under section 1840.
``(b) Sliding Scale Premium.--
``(1) Increase.--
``(A) Amount.--
``(i) In general.--Except as provided in
paragraph (4), in the case of an eligible
beneficiary whose modified adjusted gross
income for a taxable year ending with or within
a calendar year (as initially determined by the
Secretary in accordance with paragraph (2))
exceeds the threshold amount, the Secretary
shall increase the amount of the monthly part D
premium for such individual established under
subsection (a) by an amount which bears the
same ratio to such premium as such excess bears
to an amount equal to \1/3\ of the applicable
threshold amount under subparagraph (B).
``(ii) Limitation.--In no event shall the
increase described in clause (i) exceed an
amount equal to 50 percent of the monthly part
D premium established under subsection (a).
``(B) Definition of threshold amount.--For purposes
of this subsection, the term `threshold amount' means--
``(i) except as otherwise provided in this
subparagraph, $75,000;
``(ii) $150,000 in the case of a joint
return; and
``(iii) zero in the case of a taxpayer
who--
``(I) is married at the close of
the taxable year but does not file a
joint return for such year; and
``(II) does not live apart from his
spouse at all times during the taxable
year.
``(C) Inflation adjustment for threshold amount.--
``(i) In general.--In the case of any
calendar year beginning after 2004, each of the
dollar amounts in clauses (i) and (ii) of
subparagraph (B) shall be increased by an
amount equal to--
``(I) such dollar amount,
multiplied by
``(II) the percentage (if any) by
which the average of the Consumer Price
Index for all urban consumers (United
States city average) for the 12-month
period ending with June of the
preceding calendar year, exceeds such
average for the 12-month period ending
with June 2003.
``(ii) Rounding.--If any dollar amount
after being increased under clause (i) is not a
multiple of $5, such dollar amount shall be
rounded to the nearest multiple of $5.
``(D) Definition of modified adjusted gross
income.--For purposes of this subsection, the term
`modified adjusted gross income' means adjusted gross
income (as defined in section 62 of the Internal
Revenue Code of 1986)--
``(i) determined without regard to sections
135, 911, 931, and 933 of such Code; and
``(ii) increased by the amount of interest
received or accrued by the taxpayer during the
taxable year which is exempt from tax under
such Code.
``(E) Definition of joint return.--For purposes of
this subsection, the term `joint return' has the
meaning given the term in section 7701(a)(38) of the
Internal Revenue Code of 1986.
``(2) Determination of modified adjusted gross income.--The
Secretary shall make an initial determination of the amount of
an eligible beneficiary's modified adjusted gross income for a
taxable year ending with or within a calendar year for purposes
of this subsection as follows:
``(A) Notice.--Not later than September 1 of the
year preceding the year, the Secretary shall provide
notice to each eligible beneficiary whom the Secretary
finds (on the basis of the beneficiary's actual
modified adjusted gross income for the most recent
taxable year for which such information is available or
other information provided to the Secretary by the
Secretary of the Treasury) will be subject to an
increase under this subsection that the beneficiary
will be subject to such an increase, and shall include
in such notice the Secretary's estimate of the
beneficiary's modified adjusted gross income for the
year.
``(B) Calculation based on information provided by
beneficiary.--If, during the 60-day period beginning on
the date notice is provided to an eligible beneficiary
under subparagraph (A), the beneficiary provides the
Secretary with appropriate information (as determined
by the Secretary) on the beneficiary's anticipated
modified adjusted gross income for the year, the amount
initially determined by the Secretary under this
paragraph with respect to the beneficiary shall be
based on the information provided by the beneficiary.
``(C) Calculation based on notice amount if no
information is provided by the beneficiary or if the
secretary determines that the provided information is
not appropriate.--The amount initially determined by
the Secretary under this paragraph with respect to an
eligible beneficiary shall be the amount included in
the notice provided to the beneficiary under
subparagraph (A) if--
``(i) the beneficiary does not provide the
Secretary with information under subparagraph
(B); or
``(ii) the Secretary determines that the
information provided by the beneficiary to the
Secretary under such subparagraph is not
appropriate.
``(3) Adjustments.--
``(A) In general.--If the Secretary determines (on
the basis of final information provided by the
Secretary of the Treasury) that the amount of an
eligible beneficiary's actual modified adjusted gross
income for a taxable year ending with or within a
calendar year is less than or greater than the amount
initially determined by the Secretary under paragraph
(2), the Secretary shall increase or decrease the
amount of the beneficiary's monthly part D premium
under this part (as the case may be) for months during
the following calendar year by an amount equal to \1/
12\ of the difference between--
``(i) the total amount of all monthly part
D premiums paid by the beneficiary under this
part during the previous calendar year; and
``(ii) the total amount of all such
premiums which would have been paid by the
beneficiary during the previous calendar year
if the amount of the beneficiary's modified
adjusted gross income initially determined
under paragraph (2) were equal to the actual
amount of the beneficiary's modified adjusted
gross income determined under this paragraph.
``(B) Interest.--
``(i) Increase.--In the case of an eligible
beneficiary for whom the amount initially
determined by the Secretary under paragraph (2)
is based on information provided by the
beneficiary under subparagraph (B) of such
paragraph, if the Secretary determines under
subparagraph (A) that the amount of the
beneficiary's actual modified adjusted gross
income for a taxable year is greater than the
amount initially determined under paragraph
(2), the Secretary shall increase the amount
otherwise determined for the year under
subparagraph (A) by an amount of interest equal
to the sum of the amounts determined under
clause (ii) for each of the months described in
such clause.
``(ii) Computation.--Interest shall be
computed for any month in an amount determined
by applying the underpayment rate established
under section 6621 of the Internal Revenue Code
of 1986 (compounded daily) to any portion of
the difference between the amount initially
determined under paragraph (2) and the amount
determined under subparagraph (A) for the
period beginning on the first day of the month
beginning after the eligible beneficiary
provided information to the Secretary under
subparagraph (B) of paragraph (2) and ending 30
days before the first month for which the
beneficiary's monthly part D premium is
increased under this paragraph.
``(iii) Exception.--Interest shall not be
imposed under this subparagraph if the amount
of the eligible beneficiary's modified adjusted
gross income provided by the beneficiary under
subparagraph (B) of paragraph (2) was not less
than the beneficiary's modified adjusted gross
income determined on the basis of information
shown on the return of tax imposed by chapter 1
of the Internal Revenue Code of 1986 for the
taxable year involved.
``(C) Steps to recover amounts due from previously
enrolled beneficiaries.--In the case of an eligible
beneficiary who is not enrolled under this part for any
calendar year for which the beneficiary's monthly part
D premium under this part for months during the year
would be increased pursuant to subparagraph (A) if the
beneficiary were enrolled under this part for the year,
the Secretary may take such steps as the Secretary
considers appropriate to recover from the beneficiary
the total amount by which the beneficiary's monthly
part D premium under this part for months during the
year would have been increased under subparagraph (A)
if the beneficiary were enrolled under this part for
the year.
``(D) Deceased beneficiary.--In the case of a
deceased eligible beneficiary for whom the amount of
the monthly part D premium under this part for months
in a year would have been decreased pursuant to
subparagraph (A) if the beneficiary were not deceased,
the Secretary shall make a payment to the beneficiary's
surviving spouse (or, in the case of an eligible
beneficiary who does not have a surviving spouse, to
the beneficiary's estate) in an amount equal to the difference
between--
``(i) the total amount by which the
beneficiary's premium would have been decreased
for all months during the year pursuant to
subparagraph (A); and
``(ii) the amount (if any) by which the
beneficiary's premium was decreased for months
during the year pursuant to subparagraph (A).
``(4) Waiver by secretary.--The Secretary may waive the
imposition of all or part of the increase of the premium or all
or part of any interest due under this subsection for any
period if the Secretary determines that a gross injustice would
otherwise result without such waiver.
``(5) Transfer to prescription drug account.--The Secretary
shall transfer amounts received pursuant to this subsection to
the Prescription Drug Account.
``outpatient prescription drug benefits
``Sec. 1860E. (a) Requirement.--A plan offered by an eligible
entity under this part shall provide eligible beneficiaries enrolled in
such plan with--
``(1) coverage of covered outpatient prescription drugs
with the cost-sharing described in subsection (b); and
``(2) access to negotiated prices for such drugs under
subsection (c).
``(b) Cost-Sharing.--
``(1) Deductible.--
``(A) In general.--Subject to subparagraph (B),
there is an annual deductible that is equal to $250.
``(B) Waiver of deductible for generic drugs.--
``(i) In general.--An eligible entity
offering a plan under this part may provide,
with respect to such plan, that generic drugs
are not subject to the deductible described in
subparagraph (A) if the Secretary determines
that the waiver of the deductible--
``(I) is tied to the performance
goals described in section
1860H(b)(1)(C); and
``(II) will not result in an
increase in the expenditures made from
the Prescription Drug Account.
``(ii) Credit for amounts paid.--If the
deductible is waived pursuant to clause (i),
any coinsurance paid by an eligible beneficiary
for the generic drug shall be credited toward
the annual deductible.
``(2) Coinsurance.--
``(A) Establishment.--
``(i) In general.--Subject to subparagraph
(B) and subparagraphs (A)(i) and (B) of section
1860G(b)(4), if any covered outpatient drug is
provided to an eligible beneficiary in a year
after the beneficiary has met any deductible
requirement under paragraph (1) for the year,
the beneficiary shall be responsible for making
payments for the drug in an amount equal to the
applicable percentage of the cost of the drug.
``(ii) Applicable percentage defined.--For
purposes of clause (i), the `applicable
percentage' means, with respect to any covered
outpatient drug provided to an eligible
beneficiary in a year--
``(I) 50 percent to the extent the
out-of-pocket expenses of the
beneficiary for such drug, when added
to the out-of-pocket expenses of the
beneficiary for covered outpatient
drugs previously provided in the year,
do not exceed $3,500;
``(II) 25 percent to the extent
such expenses, when so added, exceed
$3,500 but do not exceed $4,000; and
``(III) 0 percent to the extent
such expenses, when so added, would
exceed $4,000.
``(iii) Out-of-pocket expenses defined.--
For purposes of clause (ii), the term `out-of-
pocket expenses' means expenses incurred as a
result of the application of the deductible
under paragraph (1) and the coinsurance
required under this subsection.
``(B) Reduction by eligible entity.--An eligible
entity offering a plan under this part may reduce the
applicable percentage that an eligible beneficiary
enrolled in the plan is subject to under subparagraph
(A) if the Secretary determines that such reduction--
``(i) is tied to the performance goals
described in section 1860H(b)(1)(C); and
``(ii) will not result in an increase in
the expenditures made from the Prescription
Drug Account.
``(3) Inflation Adjustment.--
``(A) In general.--In the case of any calendar year
beginning after 2004, each of the dollar amounts in
paragraphs (1)(A) and (2)(A)(ii) shall be increased by
an amount equal to--
``(i) such dollar amount, multiplied by
``(ii) the percentage (if any) by which the
amount of average per capita expenditures under
this part in the preceding calendar year
exceeds the amount of such expenditures in
2004.
``(B) Rounding.--If any dollar amount after being
increased under subparagraph (A) is not a multiple of
$5, such dollar amount shall be rounded to the nearest
multiple of $5.
``(c) Access to Negotiated Prices.--Under a plan offered by an
eligible entity with a contract under this part, the eligible entity
offering such plan shall provide eligible beneficiaries enrolled in
such plan with access to negotiated prices (including applicable
discounts) used for payment for covered outpatient drugs, regardless of
the fact that no benefits or only partial benefits may be payable under
the coverage with respect to such drugs because of the application of
the deductible under subsection (b)(1) or the coinsurance under
subsection (b)(2).
``entities eligible to provide outpatient drug benefit
``Sec. 1860F. (a) Establishment of Panels of Plans Available in an
Area.--
``(1) In general.--The Secretary shall establish procedures
under which the Secretary--
``(A) accepts bids submitted by eligible entities
for the plans which such entities intend to offer in an
area established under subsection (b); and
``(B) awards contracts to such entities to provide
such plans to eligible beneficiaries in the area.
``(2) Competitive procedures.--Competitive procedures (as
defined in section 4(5) of the Office of Federal Procurement
Policy Act (41 U.S.C. 403(5))) shall be used to enter into
contracts under this part.
``(b) Area for Contracts.--
``(1) Regional basis.--
``(A) In general.--Except as provided in
subparagraph (B) and subject to paragraph (2), the
contract entered into between the Secretary and an
eligible entity with respect to a plan shall require
the eligible entity to provide coverage of covered
outpatient drugs under the plan in a region determined
by the Secretary under paragraph (2).
``(B) Partial regional basis.--
``(i) In general.--If determined
appropriate by the Secretary, the Secretary may
permit the coverage described in subparagraph
(A) to be provided in a partial region
determined appropriate by the Secretary.
``(ii) Requirements.--If the Secretary
permits coverage pursuant to clause (i), the
Secretary shall ensure that the partial region
in which coverage is provided is--
``(I) at least the size of the
commercial service area of the eligible
entity for that area; and
``(II) not smaller than a State.
``(2) Determination.--
``(A) In general.--In determining regions for
contracts under this part, the Secretary shall--
``(i) take into account the number of
eligible beneficiaries in an area in order to
encourage participation by eligible entities;
and
``(ii) ensure that there are at least 10
different regions in the United States.
``(B) No administrative or judicial review.--The
determination of coverage areas under this part shall
not be subject to administrative or judicial review.
``(c) Submission of Bids.--
``(1) Submission.--
``(A) In general.--Subject to subparagraph (B),
each eligible entity desiring to offer a plan under
this part in an area shall submit a bid with respect to
such plan to the Secretary at such time, in such
manner, and accompanied by such information as the
Secretary may reasonably require.
``(B) Bid that covers multiple areas.--The
Secretary shall permit an eligible entity to submit a
single bid for multiple areas if the bid is applicable
to all such areas.
``(2) Required information.--The bids described in
paragraph (1) shall include--
``(A) a proposal for the estimated prices of
covered outpatient drugs and the projected annual
increases in such prices, including differentials
between formulary and nonformulary prices, if
applicable;
``(B) a statement regarding the amount that the
entity will charge the Secretary for administering and
delivering the benefits under the contract;
``(C) a statement regarding whether the entity will
waive the deductible for generic drugs pursuant to
section 1860E(b)(1)(B), and if so, how such waiver is
tied to the performance goals described in section
1860H(b)(1)(C);
``(D) a statement regarding whether the entity will
reduce the applicable coinsurance percentage pursuant
to section 1860E(b)(2)(B) and if so, the amount of such
reduction and how such reduction is tied to the
performance goals described in section 1860H(b)(1)(C);
``(E) a detailed description of the performance
goals for which the administrative fee of the entity
will be subject to risk pursuant to section
1860H(b)(1)(C);
``(F) a detailed description of access to pharmacy
services provided under the plan, including information
regarding--
``(i) whether the entity will use a
preferred pharmacy network under the plan;
``(ii) if a preferred pharmacy network is
used, whether the entity will offer access to
pharmacies that are outside such network, and
if such access is provided, the increased
coinsurance that beneficiaries will be subject
to if they obtain drugs at such pharmacies;
``(G) if the entity utilizes a formulary, a
detailed description of the procedures and standards
the entity will use for--
``(i) adding new drugs to a therapeutic
class within the formulary; and
``(ii) determining when and how often the
formulary should be modified;
``(H) a detailed description of any ownership or
shared financial interests with other entities involved
in the delivery of the benefit as proposed under the
plan;
``(I) a detailed description of the entity's
estimated marketing and advertising expenditures
related to enrolling and retaining eligible
beneficiaries; and
``(J) such other information that the Secretary
determines is necessary in order to carry out this
part, including information relating to the bidding
process under this part.
``(d) Access to Benefits in Certain Areas.--
``(1) Areas not covered by contracts.--The Secretary shall
develop procedures for the provision of covered outpatient
drugs under this part to each eligible beneficiary enrolled
under this part that resides in an area that is not covered by
any contract under this part.
``(2) Beneficiaries residing in different locations.--The
Secretary shall develop procedures to ensure that each eligible
beneficiary enrolled under this part that resides in different
areas in a year is provided the benefits under this part
throughout the entire year.
``(e) Awarding of Contracts.--
``(1) Number of contracts.--The Secretary shall, consistent
with the requirements of this part and the goal of containing
costs under this title, award in a competitive manner at least
2 contracts to offer a plan in an area, unless only 1 bidding
entity (and the plan offered by the entity) meet the minimum
standards specified under this part and by the Secretary.
``(2) Determination.--In determining which of the eligible
entities that submitted bids that meet the minimum standards
specified under this part and by the Secretary to award a
contract, the Secretary shall consider the comparative merits
of each bid, as determined on the basis of the past performance
of the entity and other relevant factors, with respect to--
``(A) how well the entity (and the plan offered by
the entity) meet such minimum standards;
``(B) the amount that the entity will charge the
Secretary for administering and delivering the benefits
under the contract;
``(C) the performance goals for which the
administrative fee of the entity will be subject to
risk pursuant to section 1860H(b)(1)(C);
``(D) the proposed negotiated prices of covered
outpatient drugs and annual increases in such prices;
``(E) the factors described in section 1860C(b)(2);
``(F) prior experience of the entity in
administering a prescription drug benefit program;
``(G) effectiveness of the entity and plan in
containing costs through pricing incentives and
utilization management; and
``(H) such other factors as the Secretary deems
necessary to evaluate the merits of each bid.
``(3) Exception to conflict of interest rules.--In awarding
contracts under this part, the Secretary may waive conflict of
interest laws generally applicable to Federal acquisitions
(subject to such safeguards as the Secretary may find necessary
to impose) in circumstances where the Secretary finds that such
waiver--
``(A) is not inconsistent with the--
``(i) purposes of the programs under this
title; or
``(ii) best interests of beneficiaries
enrolled under this part; and
``(B) permits a sufficient level of competition for
such contracts, promotes efficiency of benefits
administration, or otherwise serves the objectives of
the program under this part.
``(4) No administrative or judicial review.--The
determination of the Secretary to award or not award a contract
to an eligible entity with respect to a plan under this part
shall not be subject to administrative or judicial review.
``(f) Approval of Marketing Material and Application Forms.--The
provisions of section 1851(h) shall apply to marketing material and
application forms under this part in the same manner as such provisions
apply to marketing material and application forms under part C.
``(g) Duration of Contracts.--Each contract awarded under this part
shall be for a term of at least 2 years but not more than 5 years, as
determined by the Secretary.
``minimum standards for eligible entities
``Sec. 1860G. (a) In General.--The Secretary shall not award a
contract to an eligible entity under this part unless the Secretary
finds that the eligible entity agrees to comply with such terms and
conditions as the Secretary shall specify, including the following:
``(1) Quality and financial standards.--The eligible entity
meets the quality and financial standards specified by the
Secretary.
``(2) Procedures to ensure proper utilization, compliance,
and avoidance of adverse drug reactions.--The eligible entity
has in place drug utilization review procedures to ensure--
``(A) the appropriate utilization by eligible
beneficiaries enrolled in the plan covered by the
contract of the benefits to be provided under the plan;
and
``(B) the avoidance of adverse drug reactions among
such beneficiaries, including problems due to
therapeutic duplication, drug-disease
contraindications, drug-drug interactions (including
serious interactions with nonprescription or over-the-
counter drugs), incorrect drug dosage or duration of
drug treatment, drug-allergy interactions, and clinical
abuse and misuse.
``(3) Patient protections.--
``(A) Access.--
``(i) In general.--The eligible entity
ensures that the covered outpatient drugs are
accessible and convenient to eligible
beneficiaries enrolled in the plan covered by
the contract, including by offering the
services 24 hours a day and 7 days a week for
emergencies.
``(ii) Preferred pharmacy networks.--If the
eligible entity utilizes a preferred pharmacy
network, the network complies with the
standards under subsection (b)(3).
``(B) Ensuring that beneficiaries are not
overcharged.--The eligible entity has procedures in
place to ensure that--
``(i) the total charge for each covered
outpatient drug dispensed to an eligible
beneficiary enrolled in the plan covered by the
contract does not exceed the negotiated price
for the drug (as reported to the Secretary
pursuant to paragraph (5)(A)); and
``(ii) the retail pharmacy dispensing the
drug does not charge (or collect from) such
beneficiary an amount that exceeds the
beneficiary's obligation (as determined in
accordance with the provisions of this part) of
the negotiated price.
``(C) Retail pharmacy meets minimum quality and
technology standards.--The eligible entity ensures that
any retail pharmacy that it contracts with to deliver
benefits under this part meets minimum quality and
technology standards (as established by the Secretary).
``(D) Continuity of care.--
``(i) In general.--The eligible entity
ensures that, in the case of an eligible
beneficiary who loses coverage under this part
with such entity under circumstances that would
permit a special election period (as
established by the Secretary under section
1860B(b)(1)), the entity will continue to
provide coverage under this part to such
beneficiary until the beneficiary enrolls and
receives such coverage with another eligible
entity under this part or, if eligible, with a
Medicare+Choice organization.
``(ii) Limited period.--In no event shall
an eligible entity be required to provide the
extended coverage required under clause (i)
beyond the date which is 30 days after the
coverage with such entity would have terminated
but for this subparagraph.
``(E) Procedures regarding the determination of
drugs that are medically necessary.--The eligible
entity has in place procedures to determine if a drug
is medically necessary to prevent or slow the
deterioration of, or improve or maintain, the health of
an eligible beneficiary enrolled in the plan that is
covered by the contract. Such procedures shall require
that such determinations are based on professional
medical judgment, the medical condition of the
beneficiary, and other medical evidence.
``(F) Procedures regarding denials of care.--The
eligible entity has in place procedures to ensure--
``(i) a timely internal and external review
and resolution of denials of coverage (in whole
or in part) and complaints (including those
regarding the use of formularies under
subsection (b)) by eligible beneficiaries
enrolled in the plan that is covered by the
contract, or by providers, pharmacists, and
other individuals acting on behalf of each such
beneficiary (with the beneficiary's consent) in
accordance with requirements (as established by
the Secretary) that are comparable to such
requirements for Medicare+Choice organizations
under part C; and
``(ii) that eligible beneficiaries are
provided with information regarding the appeals
procedures under this part at the time of
enrollment with the entity.
``(G) Procedures regarding patient
confidentiality.--Insofar as an eligible entity
maintains individually identifiable medical records or
other health information regarding eligible
beneficiaries enrolled in the plan that is covered by
the contract, the entity has in place procedures to--
``(i) safeguard the privacy of any
individually identifiable beneficiary
information;
``(ii) maintain such records and
information in a manner that is accurate and
timely;
``(iii) ensure timely access by such
beneficiaries to such records and information;
and
``(iv) otherwise comply with applicable
laws relating to patient confidentiality.
``(H) Procedures regarding transfer of medical
records.--
``(i) In general.--The eligible entity has
in place procedures for the timely transfer of
records and information described in
subparagraph (G) (with respect to a beneficiary
who loses coverage under this part with the
entity and enrolls with another entity
(including a Medicare+Choice organization)
under this part) to such other entity.
``(ii) Patient confidentiality.--The
procedures described in clause (i) shall comply
with the patient confidentiality procedures
described in subparagraph (G).
``(I) Procedures regarding medical errors.--The
eligible entity has in place procedures for working
with the Secretary to deter medical errors related to
the provision of covered outpatient drugs.
``(4) Procedures to control fraud, abuse, and waste.--The
eligible entity has in place procedures to control fraud,
abuse, and waste.
``(5) Reporting requirements.--
``(A) In general.--The eligible entity provides the
Secretary with reports containing information regarding
the following:
``(i) The prices that the eligible entity
is paying for covered outpatient drugs.
``(ii) The prices that eligible
beneficiaries enrolled in the plan that is
covered by the contract will be charged for
covered outpatient drugs.
``(iii) The administrative costs of
providing such benefits.
``(iv) Utilization of such benefits.
``(v) Marketing and advertising
expenditures related to enrolling and retaining
eligible beneficiaries.
``(B) Timeframe for submitting reports.--
``(i) In general.--The eligible entity
shall submit a report described in subparagraph
(A) to the Secretary within 3 months after the
end of each 12-month period in which the
eligible entity has a contract under this part.
Such report shall contain information
concerning the benefits provided during such
12-month period.
``(ii) Last year of contract.--In the case
of the last year of a contract under this part,
the Secretary may require that a report
described in subparagraph (A) be submitted 3
months prior to the end of the contract. Such
report shall contain information concerning the
benefits provided between the period covered by
the most recent report under this subparagraph
and the date that a report is submitted under
this clause.
``(C) Confidentiality of information.--
``(i) In general.--Notwithstanding any
other provision of law and subject to clause
(ii), information disclosed by an eligible
entity pursuant to subparagraph (A) (except for
information described in clause (ii) of such
subparagraph) is confidential and shall only be
used by the Secretary for the purposes of, and
to the extent necessary, to carry out this
part.
``(ii) Utilization data.--Subject to
patient confidentiality laws, the Secretary
shall make information disclosed by an eligible
entity pursuant to subparagraph (A)(iv)
(regarding utilization data) available for
research purposes. The Secretary may charge a
reasonable fee for making such information
available.
``(6) Approval of marketing material and application
forms.--The eligible entity complies with the requirements
described in section 1860F(f).
``(7) Records and audits.--The eligible entity maintains
adequate records related to the administration of the benefit
under this part and affords the Secretary access to such
records for auditing purposes.
``(b) Special Rules Regarding Cost-Effective Provision of
Benefits.--
``(1) In general.--In providing the benefits under a
contract under this part, an eligible entity may--
``(A) employ mechanisms to provide the benefits
economically, including the use of--
``(i) formularies (pursuant to paragraph
(2));
``(ii) alternative methods of distribution;
``(iii) preferred pharmacy networks
(pursuant to paragraph (3)); and
``(iv) generic drug substitution;
``(B) use mechanisms to encourage eligible
beneficiaries to select cost-effective drugs or less
costly means of receiving drugs, including the use of
pharmacy incentive programs, therapeutic interchange
programs, and disease management programs; and
``(C) encourage pharmacy providers to--
``(i) inform beneficiaries of the
differentials in price between generic and
nongeneric drug equivalents; and
``(ii) provide medication therapy
management programs in order to enhance
beneficiaries' understanding of the appropriate
use of medications and to reduce the risk of
potential adverse events associated with
medications.
``(2) Formularies.--If an eligible entity uses a formulary
under this part, such formulary shall comply with standards
established by the Secretary in consultation with the Medicare
Prescription Drug Advisory Committee established under section 1860K.
Such standards shall require that the eligible entity--
``(A) use a pharmacy and therapeutic committee
(that meets the standards for a pharmacy and
therapeutic committee established by the Secretary in
consultation with such Medicare Prescription Drug
Advisory Committee) to develop and implement the
formulary;
``(B) include in the formulary--
``(i) at least 1 drug from each therapeutic
class (as defined by the Secretary in
consultation with such Medicare Prescription
Drug Advisory Committee);
``(ii) if there is more than 1 drug
available in a therapeutic class, at least 2
drugs from such class unless determined
clinically inappropriate in accordance with
standards established by the Secretary; and
``(iii) if there are more than 2 drugs
available in a therapeutic class, at least 2
drugs from such class and a generic drug
substitute if available unless determined
clinically inappropriate in accordance with
standards established by the Secretary;
``(C) develop procedures for the modification of
the formulary, including for the addition of new drugs
to an existing therapeutic class;
``(D) provide for coverage of nonformulary drugs
when determined (pursuant to subparagraph (E) or (F)(i)
of subsection (a)(3)) to be medically necessary to
prevent or slow the deterioration of, or improve or
maintain, the health of an eligible beneficiary;
``(E) disclose to current and prospective
beneficiaries and to providers in the service area the
nature of the formulary restrictions, including
information regarding the drugs included in the
formulary, coinsurance, and any difference in the cost-
sharing for different types of drugs; and
``(F) provide a reasonable amount of notice to
beneficiaries enrolled in the plan that is covered by
the contract under this part of any change in the
formulary.
``(3) Preferred pharmacy networks.--
``(A) In general.--If an eligible entity uses a
preferred pharmacy network to deliver benefits under
this part, such network shall meet minimum access
standards established by the Secretary.
``(B) Standards.--In establishing standards under
subparagraph (A), the Secretary shall take into account
reasonable distances to pharmacy services in both urban
and rural areas.
``(4) Construction.--
``(A) Formularies.--Nothing in this part shall be
construed as precluding an eligible entity from--
``(i) requiring cost-sharing for
nonformulary drugs that is higher than the
cost-sharing established in section
1860E(b)(2), except that such entity shall
provide for coverage of a nonformulary drug at
the same cost-sharing level as a drug within
the formulary if such nonformulary drug is
determined (pursuant to subparagraph (E) or
(F)(i) of subsection (a)(3)) to be medically
necessary to prevent or slow the deterioration
of, or improve or maintain, the health of an
eligible beneficiary;
``(ii) educating prescribing providers,
pharmacists, and beneficiaries about the
medical and cost benefits of formulary drugs
(including generic drugs); or
``(iii) requesting prescribing providers to
consider a formulary drug prior to dispensing
of a nonformulary drug, as long as such request
does not unduly delay the provision of the
drug.
``(B) Preferred pharmacy networks.--Nothing in this
part shall be construed as precluding the entity from
requiring cost-sharing for a covered outpatient drug
that is higher than the cost-sharing established in
section 1860E(b)(2) if the drug was obtained at a
pharmacy that is not in such network.
``payments
``Sec. 1860H. (a) Procedures for Payments to Eligible Entities.--
The Secretary shall establish procedures for making payments to each
eligible entity with a contract under this part for the administration
and delivery of the benefits under this part.
``(b) Requirements for Procedures.--
``(1) In general.--The procedures established under
subsection (a) shall provide for the following:
``(A) Administrative payment.--Payment of
administrative fees for such administration and
delivery.
``(B) Reimbursement for costs of drugs provided.--
Payments for the costs of covered outpatient drugs
provided to eligible beneficiaries enrolled under this
part and in a plan offered by the eligible entity.
``(C) Risk requirement.--An adjustment of a
percentage (determined under paragraph (2)) of the
administrative fee payments made to an eligible entity
to ensure that the entity, in administering and
delivering the benefits under this part, pursues
performance goals established by the Secretary,
including the following:
``(i) Quality service.--The entity provides
eligible beneficiaries enrolled in the plan
that is covered by the contract under this part
with quality services, as measured by such
factors as sustained pharmacy network access,
timeliness and accuracy of service delivery in
claims processing and card production, pharmacy
and member service support access, response
time in mail delivery service, and timely action with regard to appeals
and current beneficiary service surveys.
``(ii) Quality clinical care.--The entity
provides such beneficiaries with quality
clinical care, as measured by such factors as
providing--
``(I) notification to such
beneficiaries and to providers in order
to prevent adverse drug reactions; and
``(II) specific clinical
suggestions to improve health and
patient and prescriber education as
appropriate.
``(iii) Control of medicare costs.--The
entity contains costs to the Prescription Drug
Account, as measured by generic substitution
rates, price discounts, and other factors
determined appropriate by the Secretary that do
not reduce the access of beneficiaries to
medically necessary covered outpatient drugs.
``(2) Percentage of payment tied to risk.--
``(A) In general.--Subject to subparagraph (B), the
Secretary shall determine the percentage of the
administrative payments to an eligible entity that will
be tied to the performance goals described in paragraph
(1)(C).
``(B) Limitation on risk to ensure program
stability.--In order to provide for program stability,
the Secretary may not establish a percentage to be
adjusted under this subsection at a level that
jeopardizes the ability of an eligible entity to
administer and deliver the benefits under this part or
administer and deliver such benefits in a quality
manner.
``(3) Risk adjustment of payments based on enrollees in
plan.--To the extent that an eligible entity is at risk under
this subsection, the procedures established under subsection
(a) may include a methodology for risk adjusting the payments
made to such entity based on the differences in actuarial risk
of different enrollees being served if the Secretary determines
such adjustments to be necessary and appropriate.
``(c) Payments to Medicare+Choice Organizations.--For provisions
related to payments to Medicare+Choice organizations for the
administration and delivery of benefits under this part to eligible
beneficiaries enrolled in a Medicare+Choice plan offered by the
organization, see section 1853(c)(8).
``(d) Secondary Payer Provisions.--The provisions of section
1862(b) shall apply to the benefits provided under this part.
``employer incentive program for employment-based retiree drug coverage
``Sec. 1860I. (a) Program Authority.--The Secretary is authorized
to develop and implement a program under this section to be known as
the `Employer Incentive Program' that encourages employers and other
sponsors of employment-based health care coverage to provide adequate
prescription drug benefits to retired individuals by subsidizing, in
part, the sponsor's cost of providing coverage under qualifying plans.
``(b) Sponsor Requirements.--In order to be eligible to receive an
incentive payment under this section with respect to coverage of an
individual under a qualified retiree prescription drug plan (as defined
in subsection (e)(3)), a sponsor shall meet the following requirements:
``(1) Assurances.--The sponsor shall--
``(A) annually attest, and provide such assurances
as the Secretary may require, that the coverage offered
by the sponsor is a qualified retiree prescription drug
plan, and will remain such a plan for the duration of
the sponsor's participation in the program under this
section; and
``(B) guarantee that it will give notice to the
Secretary and covered retirees--
``(i) at least 120 days before terminating
its plan; and
``(ii) immediately upon determining that
the actuarial value of the prescription drug
benefit under the plan falls below the
actuarial value of the outpatient prescription
drug benefit under this part.
``(2) Beneficiary information.--The sponsor shall report to
the Secretary, for each calendar quarter for which it seeks an
incentive payment under this section, the names and social
security numbers of all retirees (and their spouses and
dependents) covered under such plan during such quarter and the
dates (if less than the full quarter) during which each such
individual was covered.
``(3) Audits.--The sponsor and the employment-based retiree
health coverage plan seeking incentive payments under this
section shall agree to maintain, and to afford the Secretary
access to, such records as the Secretary may require for
purposes of audits and other oversight activities necessary to
ensure the adequacy of prescription drug coverage, the accuracy
of incentive payments made, and such other matters as may be
appropriate.
``(4) Other requirements.--The sponsor shall provide such
other information, and comply with such other requirements, as
the Secretary may find necessary to administer the program
under this section.
``(c) Incentive Payments.--
``(1) In general.--A sponsor that meets the requirements of
subsection (b) with respect to a quarter in a calendar year
shall be entitled to have payment made by the Secretary on a
quarterly basis (to the sponsor or, at the sponsor's direction,
to the appropriate employment-based health plan) of an
incentive payment, in the amount determined in paragraph (2),
for each retired individual (or spouse) who--
``(A) was covered under the sponsor's qualified
retiree prescription drug plan during such quarter; and
``(B) was eligible for but was not enrolled in the
outpatient prescription drug benefit program under this
part.
``(2) Amount of incentive.--The payment under this section
with respect to each individual described in paragraph (1) for
a month shall be equal to \2/3\ of the monthly part D premium
amount payable by an eligible beneficiary enrolled under this
part, as set for the calendar year pursuant to section
1860D(a)(2).
``(3) Payment date.--The incentive under this section with
respect to a calendar quarter shall be payable as of the end of
the next succeeding calendar quarter.
``(d) Civil Money Penalties.--A sponsor, health plan, or other
entity that the Secretary determines has, directly or through its
agent, provided information in connection with a request for an
incentive payment under this section that the entity knew or should
have known to be false shall be subject to a civil monetary penalty in
an amount up to 3 times the total incentive amounts under subsection
(c) that were paid (or would have been payable) on the basis of such
information.
``(e) Definitions.--In this section:
``(1) Employment-based retiree health coverage.--The term
`employment-based retiree health coverage' means health
insurance or other coverage of health care costs for retired
individuals (or for such individuals and their spouses and
dependents) based on their status as former employees or labor
union members.
``(2) Employer.--The term `employer' has the meaning given
the term in section 3(5) of the Employee Retirement Income
Security Act of 1974 (except that such term shall include only
employers of 2 or more employees).
``(3) Qualified retiree prescription drug plan.--The term
`qualified retiree prescription drug plan' means health
insurance coverage included in employment-based retiree health
coverage that--
``(A) provides coverage of the cost of prescription
drugs whose actuarial value (as defined by the
Secretary) to each retired beneficiary equals or
exceeds the actuarial value of the benefits provided to
an individual enrolled in the outpatient prescription
drug benefit program under this part; and
``(B) does not deny, limit, or condition the
coverage or provision of prescription drug benefits for
retired individuals based on age or any health status-
related factor described in section 2702(a)(1) of the
Public Health Service Act.
``(4) Sponsor.--The term `sponsor' has the meaning given
the term `plan sponsor' in section 3(16)(B) of the Employer
Retirement Income Security Act of 1974.
``(f) Authorization of Appropriations.--There are authorized to be
appropriated from time to time, out of any moneys in the Treasury not
otherwise appropriated, such sums as may be necessary to carry out the
program under this section.
``prescription drug account in the federal supplementary medical
insurance trust fund
``Sec. 1860J. (a) Establishment.--
``(1) In general.--There is created within the Federal
Supplementary Medical Insurance Trust Fund established by
section 1841 an account to be known as the `Prescription Drug
Account' (in this section referred to as the `Account').
``(2) Funds.--The Account shall consist of such gifts and
bequests as may be made as provided in section 201(i)(1), and
such amounts as may be deposited in, or appropriated to, the
account as provided in this part.
``(3) Separate from rest of trust fund.--Funds provided
under this part to the Account shall be kept separate from all
other funds within the Federal Supplementary Medical Insurance
Trust Fund.
``(b) Payments From Account.--
``(1) In general.--The Managing Trustee shall pay from time
to time from the Account such amounts as the Secretary
certifies are necessary to make payments to operate the program
under this part, including payments to eligible entities under
section 1860H and payments with respect to administrative
expenses under this part in accordance with section 201(g).
``(2) Transfer to part a and b trust funds for
medicare+choice payments.--The Managing Trustee shall establish
procedures for the transfer of funds from the Account, in an
amount determined appropriate by the Secretary, to the Federal
Hospital Insurance Trust Fund and the Federal Supplementary
Medical Insurance Trust Fund in order to reimburse such trust
funds for payments to Medicare+Choice organizations for the
provision of covered outpatient drugs pursuant to section
1853(c)(8).
``(3) Treatment in relation to part b premium.--Amounts
payable from the Account shall not be taken into account in
computing actuarial rates or premium amounts under section
1839.
``(c) Appropriations To Cover Benefits and Administrative Costs.--
There are appropriated to the Account in a fiscal year, out of any
moneys in the Treasury not otherwise appropriated, an amount equal to
the amount by which the benefits and administrative costs of providing
the benefits under this part in the year exceed the premiums collected
under section 1860D(a)(4) for the year.
``medicare prescription drug advisory committee
``Sec. 1860K. (a) Establishment of Committee.--There is established
a Medicare Prescription Drug Advisory Committee (in this section
referred to as the `Committee').
``(b) Functions of Committee.--On and after March 1, 2002, the
Committee shall advise the Secretary on policies related to--
``(1) the development of guidelines for the implementation
and administration of the outpatient prescription drug benefit
program under this part; and
``(2) the development of--
``(A) standards for a pharmacy and therapeutics
committee required of eligible entities under section
1860G(b)(2)(A);
``(B) standards required of eligible entities under
subparagraphs (E) and (F) of section 1860G(a)(3) for
determining if a drug is medically necessary to prevent
or slow the deterioration of, or improve or maintain,
the health of an eligible beneficiary;
``(C) standards for--
``(i) defining therapeutic classes; and
``(ii) adding new therapeutic classes to a
formulary;
``(D) procedures to evaluate the bids submitted by
eligible entities under this part; and
``(E) procedures to ensure that eligible entities
with a contract under this part are in compliance with
the requirements under this part.
``(c) Structure and Membership of the Committee.--
``(1) Structure.--The Committee shall be composed of 19
members who shall be appointed by the Secretary.
``(2) Membership.--
``(A) In general.--The members of the Committee
shall be chosen on the basis of their integrity,
impartiality, and good judgment, and shall be
individuals who are, by reason of their education,
experience, and attainments, exceptionally qualified to
perform the duties of members of the Committee.
``(B) Specific members.--Of the members appointed
under paragraph (1)--
``(i) nine shall be chosen to represent
physicians;
``(ii) four shall be chosen to represent
pharmacists;
``(iii) one shall be chosen to represent
the Centers for Medicare & Medicaid Services;
``(iv) four shall be chosen to represent
actuaries, pharmacoeconomists, researchers, and
other appropriate experts; and
``(v) one shall be chosen to represent
emerging drug technologies.
``(d) Terms of Appointment.--Each member of the Committee shall
serve for a term determined appropriate by the Secretary. The terms of
service of the members initially appointed shall begin on January 1,
2002.
``(e) Chairperson.--The Secretary shall designate a member of the
Committee as Chairperson. The term as Chairperson shall be for a 1-year
period.
``(f) Committee Personnel Matters.--
``(1) Members.--
``(A) Compensation.--Each member of the Committee
who is not an officer or employee of the Federal
Government shall be compensated at a rate equal to the
daily equivalent of the annual rate of basic pay
prescribed for level IV of the Executive Schedule under
section 5315 of title 5, United States Code, for each
day (including travel time) during which such member is
engaged in the performance of the duties of the
Committee. All members of the Committee who are
officers or employees of the United States shall serve
without compensation in addition to that received for
their services as officers or employees of the United
States.
``(B) Travel expenses.--The members of the
Committee shall be allowed travel expenses, including
per diem in lieu of subsistence, at rates authorized
for employees of agencies under subchapter I of chapter
57 of title 5, United States Code, while away from
their homes or regular places of business in the
performance of services for the Committee.
``(2) Staff.--The Committee may appoint such personnel as
the Committee considers appropriate.
``(g) Operation of the Committee.--
``(1) Meetings.--The Committee shall meet at the call of
the Chairperson (after consultation with the other members of
the Committee) not less often than quarterly to consider a
specific agenda of issues, as determined by the Chairperson
after such consultation.
``(2) Quorum.--Ten members of the Committee shall
constitute a quorum for purposes of conducting business.
``(h) Federal Advisory Committee Act.--Section 14 of the Federal
Advisory Committee Act (5 U.S.C. App.) shall not apply to the
Committee.
``(i) Transfer of Personnel, Resources, and Assets.--For purposes
of carrying out its duties, the Secretary and the Committee may provide
for the transfer to the Committee of such civil service personnel in
the employ of the Department of Health and Human Services (including
the Centers for Medicare & Medicaid Services), and such resources and
assets of the Department used in carrying out this title, as the
Committee requires.
``(j) Authorization of Appropriations.--There are authorized to be
appropriated such sums as may be necessary to carry out the purposes of
this section.''.
(b) Exclusions From Coverage.--
(1) Application to part d.--Section 1862(a) of the Social
Security Act (42 U.S.C. 1395y(a)) is amended in the matter
preceding paragraph (1) by striking ``part A or part B'' and
inserting ``part A, B, or D''.
(2) Prescription drugs not excluded from coverage if
reasonable and necessary.--Section 1862(a)(1) of the Social
Security Act (42 U.S.C. 1395y(a)(1)) is amended--
(A) in subparagraph (H), by striking ``and'' at the
end;
(B) in subparagraph (I), by striking the semicolon
at the end and inserting ``, and''; and
(C) by adding at the end the following new
subparagraph:
``(J) in the case of prescription drugs covered
under part D, which are not reasonable and necessary to
prevent or slow the deterioration of, or improve or
maintain, the health of eligible beneficiaries;''.
(c) Conforming Amendments to Federal Supplementary Medical
Insurance Trust Fund.--Section 1841 of the Social Security Act (42
U.S.C. 1395t) is amended--
(1) in the last sentence of subsection (a)--
(A) by striking ``and'' before ``such amounts'';
and
(B) by inserting before the period the following:
``, and such amounts as may be deposited in, or
appropriated to, the Prescription Drug Account
established by section 1860J'';
(2) in subsection (g), by inserting after ``by this part,''
the following: ``the payments provided for under part D (in
which case the payments shall be made from the Prescription
Drug Account in the Trust Fund),'';
(3) in subsection (h), by inserting after ``1840(d)'' the
following: ``and section 1860D(a)(4) (in which case the
payments shall be made from the Prescription Drug Account in
the Trust Fund)''; and
(4) in subsection (i), by inserting after ``section
1840(b)(1)'' the following: ``, section 1860D(a)(4) (in which
case the payments shall be made from the Prescription Drug
Account in the Trust Fund),''.
(d) Conforming References to Previous Part D.--
(1) In general.--Any reference in law (in effect before the
date of enactment of this Act) to part D of title XVIII of the
Social Security Act is deemed a reference to part E of such
title (as in effect after such date).
(2) Secretarial submission of legislative proposal.--Not
later than 6 months after the date of enactment of this Act,
the Secretary of Health and Human Services shall submit to the
appropriate committees of Congress a legislative proposal
providing for such technical and conforming amendments in the
law as are required by the provisions of this title.
SEC. 302. PART D BENEFITS UNDER MEDICARE+CHOICE PLANS.
(a) Eligibility, Election, and Enrollment.--Section 1851 of the
Social Security Act (42 U.S.C. 1395w-21) is amended--
(1) in subsection (a)(1)(A), by striking ``parts A and B''
and inserting ``parts A, B, and D''; and
(2) in subsection (i)(1), by striking ``parts A and B'' and
inserting ``parts A, B, and D''.
(b) Voluntary Beneficiary Enrollment for Drug Coverage.--Section
1852(a)(1)(A) of the Social Security Act (42 U.S.C. 1395w-22(a)(1)(A))
is amended by inserting ``(and under part D to individuals also
enrolled under that part)'' after ``parts A and B''.
(c) Access to Services.--Section 1852(d)(1) of the Social Security
Act (42 U.S.C. 1395w-22(d)(1)) is amended--
(1) in subparagraph (D), by striking ``and'' at the end;
(2) in subparagraph (E), by striking the period at the end
and inserting ``; and''; and
(3) by adding at the end the following new subparagraph:
``(F) in the case of covered outpatient drugs (as
defined in section 1860(1)) provided to individuals
enrolled under part D, the organization complies with
the access requirements applicable under part D.''.
(d) Payments to Organizations.--Section 1853(a)(1)(A) of the Social
Security Act (42 U.S.C. 1395w-23(a)(1)(A)) is amended--
(1) by inserting ``determined separately for the benefits
under parts A and B and under part D (for individuals enrolled
under that part)'' after ``as calculated under subsection
(c)'';
(2) by striking ``that area, adjusted for such risk
factors'' and inserting ``that area. In the case of payment for
the benefits under parts A and B, such payment shall be
adjusted for such risk factors as''; and
(3) by inserting before the last sentence the following:
``In the case of the payments for the benefits under part D,
such payment shall be adjusted for the risk factors of each
enrollee as the Secretary determines to be feasible and
appropriate to ensure actuarial equivalence.''.
(e) Calculation of Annual Medicare+Choice Capitation Rates.--
Section 1853(c) of the Social Security Act (42 U.S.C. 1395w-23(c)) is
amended--
(1) in paragraph (1), in the matter preceding subparagraph
(A), by inserting ``for benefits under parts A and B'' after
``capitation rate''; and
(2) by adding at the end the following new paragraph:
``(8) Payment for part d benefits.--The Secretary shall
determine a capitation rate for part D benefits (for
individuals enrolled under such part) as follows:
``(A) Drugs dispensed in 2004.--In the case of
prescription drugs dispensed in 2004, the capitation
rate shall be based on the projected national per
capita costs for prescription drug benefits under part
D and associated claims processing costs for
beneficiaries enrolled under part D and not enrolled
with a Medicare+Choice organization under this part.
``(B) Drugs dispensed in subsequent years.--In the
case of prescription drugs dispensed in a subsequent
year, the capitation rate shall be equal to the
capitation rate for the preceding year increased by the
Secretary's estimate of the projected per capita rate
of annual growth in expenditures under this title for
an individual enrolled under part D for such subsequent
year.''.
(f) Limitation on Enrollee Liability.--Section 1854(e) of the
Social Security Act (42 U.S.C. 1395w-24(e)) is amended by adding at the
end the following new paragraph:
``(5) Special rule for part d benefits.--With respect to
outpatient prescription drug benefits under part D, a
Medicare+Choice organization may not require that an enrollee
pay a deductible or a coinsurance percentage that exceeds the
deductible or coinsurance percentage applicable for such
benefits for an eligible beneficiary under part D.''.
(g) Requirement for Additional Benefits.--Section 1854(f)(1) of the
Social Security Act (42 U.S.C. 1395w-24(f)(1)) is amended by adding at
the end the following new sentence: ``Such determination shall be made
separately for the benefits under parts A and B and for prescription
drug benefits under part D.''.
(h) Effective Date.--The amendments made by this section shall
apply to items and services provided under a Medicare+Choice plan on or
after January 1, 2004.
SEC. 303. REPORTING REQUIREMENTS FOR SECRETARY OF THE TREASURY
REGARDING SLIDING SCALE PART D PREMIUM.
(a) In General.--Subsection (l) of section 6103 of the Internal
Revenue Code of 1986 (relating to disclosure of returns and return
information for purposes other than tax administration) is amended by
adding at the end the following new paragraph:
``(18) Disclosure of return information to carry out
sliding scale medicare part d premium.--
``(A) In general.--The Secretary may, upon written
request from the Secretary of Health and Human
Services, disclose to officers and employees of the
Department of Health and Human Services return
information with respect to a taxpayer who is required
to pay a monthly part D premium under part D of the
medicare program. Such return information shall be
limited to--
``(i) taxpayer identity information with
respect to such taxpayer,
``(ii) the filing status of such taxpayer,
``(iii) the adjusted gross income of such
taxpayer,
``(iv) the amounts excluded from such
taxpayer's gross income under sections 135 and
911,
``(v) the interest received or accrued
during the taxable year which is exempt from
the tax imposed by chapter 1 to the extent such
information is available, and
``(vi) the amounts excluded from such
taxpayer's gross income under sections 931 and
933 to the extent such information is
available.
``(B) Restriction on use of disclosed
information.--Return information disclosed under
subparagraph (A) may be used by officers and employees
of the Department of Health and Human Services only for
the purposes of, and to the extent necessary in,
establishing the appropriate monthly part D premium
under part D of the medicare program.''.
(b) Conforming Amendment.--Paragraphs (3)(A) and (4) of section
6103(p) of such Code are each amended by striking ``or (17)'' each
place it appears and inserting ``(17), or (18)''.
SEC. 304. ADDITIONAL ASSISTANCE FOR LOW-INCOME BENEFICIARIES.
(a) Inclusion in Medicare Cost-Sharing.--Section 1905(p)(3) of the
Social Security Act (42 U.S.C. 1396d(p)(3)) is amended--
(1) in subparagraph (A)--
(A) in clause (i), by striking ``and'' at the end;
(B) in clause (ii), by inserting ``and'' at the
end; and
(C) by adding at the end the following new clause:
``(iii) premiums under section 1860D(a).'';
(2) in subparagraph (B), by striking ``section 1813'' and
inserting ``sections 1813 and 1860E(b)(2)''; and
(3) in subparagraph (C), by striking ``section 1813 and
section 1833(b)'' and inserting ``sections 1813, 1833(b), and
1860E(b)(1)''.
(b) Expansion of Medical Assistance.--Section 1902(a)(10)(E) of the
Social Security Act (42 U.S.C. 1396a(a)(10)(E)) is amended--
(1) in clause (iii)--
(A) by striking ``section 1905(p)(3)(A)(ii)'' and
inserting ``clauses (ii) and (iii) of section
1905(p)(3)(A), for the coinsurance described in section
1860E(b)(2), and for the deductible described in
section 1860E(b)(1)''; and
(B) by striking ``and'' at the end;
(2) by redesignating clause (iv) as clause (vi); and
(3) by inserting after clause (iii) the following new
clauses:
``(iv) for making medical assistance available for
medicare cost-sharing described in section
1905(p)(3)(A)(iii), for the coinsurance described in
section 1860E(b)(2), and for the deductible described
in section 1860E(b)(1) for individuals who would be
qualified medicare beneficiaries described in section
1905(p)(1) but for the fact that their income exceeds
120 percent but does not exceed 135 percent of such
official poverty line for a family of the size
involved;
``(v) for making medical assistance available for
medicare cost-sharing described in section
1905(p)(3)(A)(iii) on a linear sliding scale based on
the income of such individuals for individuals who
would be qualified medicare beneficiaries described in
section 1905(p)(1) but for the fact that their income
exceeds 135 percent but does not exceed 150 percent of
such official poverty line for a family of the size
involved; and''.
(c) Nonapplicability of Payment Differential Requirements to
Medicare Part D Cost-Sharing.--Section 1902(n)(2) of the Social
Security Act (42 U.S.C. 1396a(n)(2)) is amended by adding at the end
the following new sentence: ``The preceding sentence shall not apply to
coinsurance described in section 1860E(b)(2) or deductibles described
in section 1860E(b)(1).''.
(d) 100 Percent Federal Medical Assistance Percentage.--The first
sentence of section 1905(b) of the Social Security Act (42 U.S.C.
1396d(b)) is amended--
(1) by striking ``and'' before ``(4)''; and
(2) by inserting before the period at the end the
following: ``, and (5) the Federal medical assistance
percentage shall be 100 percent with respect to medical
assistance provided under clauses (iv) and (v) of section
1902(a)(10)(E)''.
(e) Treatment of Territories.--Section 1108(g) of such Act (42
U.S.C. 1308(g)) is amended by adding at the end the following new
paragraph:
``(3) Notwithstanding the preceding provisions of this subsection,
with respect to fiscal year 2004 and any fiscal year thereafter, the
amount otherwise determined under this subsection (and subsection (f))
for the fiscal year for a Commonwealth or territory shall be increased
by the ratio (as estimated by the Secretary) of--
``(A) the aggregate amount of payments made to the 50
States and the District of Columbia for the fiscal year under
title XIX that are attributable to making medical assistance
available for individuals described in clauses (i), (iii),
(iv), and (v) of section 1902(a)(10)(E) for payment of medicare
cost-sharing that consists of premiums under section 1860D(a),
coinsurance described in section 1860E(b)(2), or deductibles
described in section 1860E(b)(1); to
``(B) the aggregate amount of total payments made to such
States and District for the fiscal year under such title.''.
(f) Conforming Amendments.--Section 1933 of the Social Security Act
(42 U.S.C. 1396u-3) is amended--
(1) in subsection (a), by striking ``section
1902(a)(10)(E)(iv)'' and inserting ``section
1902(a)(10)(E)(vi)'';
(2) in subsection (c)(2)(A)--
(A) in clause (i), by striking ``section
1902(a)(10)(E)(iv)(I)'' and inserting ``section
1902(a)(10)(E)(vi)(I)''; and
(B) in clause (ii), by striking ``section
1902(a)(10)(E)(iv)(II)'' and inserting ``section
1902(a)(10)(E)(vi)(II)'';
(3) in subsection (d), by striking ``section
1902(a)(10)(E)(iv)'' and inserting ``section
1902(a)(10)(E)(vi)''; and
(4) in subsection (e), by striking ``section
1902(a)(10)(E)(iv)'' and inserting ``section
1902(a)(10)(E)(vi)''.
(g) Effective Date.--The amendments made by this section shall
apply for medical assistance provided under section 1902(a)(10)(E) of
the Social Security Act (42 U.S.C. 1396a(a)(10)(E)) on and after
January 1, 2004.
SEC. 305. MEDIGAP REVISIONS.
Section 1882 of the Social Security Act (42 U.S.C. 1395ss) is
amended by adding at the end the following new subsection:
``(v) Modernized Benefit Packages for Medicare Supplemental
Policies.--
``(1) Revision of benefit packages.--
``(A) In general.--Notwithstanding subsection (p),
the benefit packages classified as `H', `I', and `J'
under the standards established by subsection (p)(2)
(including the benefit package classified as `J' with a
high deductible feature, as described in subsection
(p)(11)) shall be revised so that--
``(i) the coverage of outpatient
prescription drugs available under such benefit
packages is replaced with coverage
of outpatient prescription drugs that complements but does not
duplicate the coverage of outpatient prescription drugs that is
otherwise available under this title;
``(ii) the revised benefit packages provide
a range of coverage options for outpatient
prescription drugs for beneficiaries, but do
not provide coverage for--
``(I) the deductible under section
1860E(b)(1); or
``(II) more than 90 percent of the
coinsurance applicable to an individual
under section 1860E(b)(2);
``(iii) uniform language and definitions
are used with respect to such revised benefits;
``(iv) uniform format is used in the policy
with respect to such revised benefits;
``(v) such revised standards meet any
additional requirements imposed by the Medicare
Reform Act of 2001; and
``(vi) except as revised under the
preceding clauses or as provided under
subsection (p)(1)(E), the benefit packages are
identical to the benefit packages that were
available on the date of enactment of the
Medicare Reform Act of 2001.
``(B) Manner of revision.--The benefit packages
revised under this section shall be revised in the
manner described in subparagraph (E) of subsection
(p)(1), except that for purposes of subparagraph (C) of
such subsection, the standards established under this
subsection shall take effect not later than January 1,
2004.
``(2) Construction of benefits in other medicare
supplemental policies.--Nothing in the benefit packages
classified as `A' through `G' under the standards established
by subsection (p)(2) (including the benefit package classified
as `F' with a high deductible feature, as described in
subsection (p)(11)) shall be construed as providing coverage
for benefits for which payment may be made under part D.
``(3) Guaranteed issuance and renewal of revised
policies.--The provisions of subsections (q) and (s), including
provisions of subsection (s)(3) (relating to special enrollment
periods in cases of termination or disenrollment), shall apply
to medicare supplemental policies revised under this subsection
in the same manner as such provisions apply to medicare
supplemental policies issued under the standards established
under subsection (p).
``(4) Opportunity of current policyholders to purchase
revised policies.--
``(A) In general.--No medicare supplemental policy
of an issuer with a benefit package that is revised
under paragraph (1) shall be deemed to meet the
standards in subsection (c) unless the issuer--
``(i) provides written notice during the
60-day period immediately preceding the period
established for the open enrollment period
established under section 1860B(b)(2)(B), to
each individual who is a policyholder or
certificate holder of a medicare supplemental
policy issued by that issuer (at the most
recent available address of that individual) of
the offer described in clause (ii) and of the
fact that, so long as such individual retains
coverage under such policy, the individual
shall be ineligible for coverage of outpatient
prescription drugs under part D; and
``(ii) offers the policyholder or
certificate holder under the terms described in
subparagraph (B), during at least the period
established under section 1860B(b)(2)(B), a
medicare supplemental policy with the benefit
package that the Secretary determines is most
comparable to the policy in which the
individual is enrolled with coverage effective
as of the date on which the individual is first
entitled to benefits under part D.
``(B) Terms of offer described.--The terms
described in this subparagraph are terms which do not--
``(i) deny or condition the issuance or
effectiveness of a medicare supplemental policy
described in subparagraph (A)(ii) that is
offered and is available for issuance to new
enrollees by such issuer;
``(ii) discriminate in the pricing of such
policy because of health status, claims
experience, receipt of health care, or medical
condition; or
``(iii) impose an exclusion of benefits
based on a preexisting condition under such
policy.
``(5) Elimination of obsolete policies with no
grandfathering.--Except as provided in subparagraph (B), no
person may sell, issue, or renew a medicare supplemental policy
with a benefit package that is classified as `H', `I', or `J'
(or with a benefit package classified as `J' with a high
deductible feature) that has not been revised under this
subsection on or after January 1, 2004.
``(6) Penalties.--Each penalty under this section shall
apply with respect to policies revised under this subsection as
if such policies were issued under the standards established
under subsection (p), including the penalties under subsections
(a), (d), (p)(8), (p)(9), (q)(5), (r)(6)(A), (s)(4), and
(t)(2)(D).''.
SEC. 306. STUDIES AND REPORT TO CONGRESS.
(a) Studies.--The Secretary of Health and Human Services shall
conduct a study to determine the feasibility and advisability of--
(1) establishing a uniform format for pharmacy benefit
cards provided to beneficiaries by eligible entities under the
outpatient prescription drug benefit program under part D of
title XVIII of the Social Security Act (as added by section 301); and
(2) developing systems to electronically transfer
prescriptions under such program from the prescriber to the
pharmacist.
(b) Report.--Not later than 2 years after the date of enactment of
this Act, the Secretary of Health and Human Services shall submit to
Congress a report on the results of the studies conducted under
subsection (a), together with any recommendations for legislation that
the Secretary determines to be appropriate as a result of such studies.
TITLE IV--MEDICARE WELLNESS
SEC. 400. DEFINITIONS.
In this title:
(1) Medicare beneficiary.--The term ``medicare
beneficiary'' means any individual who is entitled to benefits
under part A or enrolled under part B of the medicare program,
including any individual enrolled in a Medicare+Choice plan
offered by a Medicare+Choice organization under part C of such
program.
(2) Medicare program.--The term ``medicare program'' means
the health benefits program under title XVIII of the Social
Security Act (42 U.S.C. 1395 et seq.).
(3) Secretary.--The term ``Secretary'' means the Secretary
of Health and Human Services.
Subtitle A--Healthy Seniors Promotion Program
SEC. 401. DEFINITIONS.
In this subtitle:
(1) Cost-effective benefit.--The term ``cost-effective
benefit'' means a benefit or technique that has--
(A) been subject to peer review;
(B) been described in scientific journals; and
(C) demonstrated value as measured by unit costs
relative to health outcomes achieved.
(2) Cost-saving benefit.--The term ``cost-saving benefit''
means a benefit or technique that has--
(A) been subject to peer review;
(B) been described in scientific journals; and
(C) caused a net reduction in health care costs for
medicare beneficiaries.
(3) Eligible entity.--The term ``eligible entity'' means an
entity that the Working Group (as defined in paragraph (6))
determines has demonstrated expertise regarding health
promotion and disease prevention among medicare beneficiaries.
(4) Medically effective.--The term ``medically effective''
means, with respect to a benefit or technique, that the benefit
or technique has been--
(A) subject to peer review;
(B) described in scientific journals; and
(C) determined to achieve an intended goal under
normal programmatic conditions.
(5) Medically efficacious.--The term ``medically
efficacious'' means, with respect to a benefit or technique,
that the benefit or technique has been--
(A) subject to peer review;
(B) described in scientific journals; and
(C) determined to achieve an intended goal under
controlled conditions.
(6) Working group.--The term ``Working Group'' means the
Working Group on Disease Self-Management and Health Promotion
established under section 402.
SEC. 402. WORKING GROUP ON DISEASE SELF-MANAGEMENT AND HEALTH
PROMOTION.
(a) Establishment.--There is established within the Department of
Health and Human Services a Working Group on Disease Self-Management
and Health Promotion.
(b) Composition.--
(1) In general.--Subject to paragraph (2), the Working
Group shall be composed of 5 members as follows:
(A) The Administrator of the Centers for Medicare &
Medicaid Services.
(B) The Director of the Centers for Disease Control
and Prevention.
(C) The Director of the Agency for Healthcare
Research and Quality.
(D) The Assistant Secretary for Aging.
(E) The Director of the National Institutes of
Health.
(2) Alternative membership.--Any member of the Working
Group described in a subparagraph of paragraph (1) may appoint
an individual who is an officer or employee of the Federal
Government to serve as a member of the Working Group instead of
the member described in such subparagraph.
(c) Duties.--The duties of the Working Group are as follows:
(1) Healthy seniors promotion grants.--The Working Group
shall establish general policies and criteria with respect to
the functions of the Secretary under section 403, including--
(A) priorities for the approval of applications
submitted under subsection (c) of such section;
(B) procedures for monitoring and evaluating
research efforts conducted under such section; and
(C) such other matters relating to the grant
program established under such section as are
recommended by the Working Group and approved by the
Secretary.
(2) Disease self-management demonstration projects.--The
Working Group shall establish general policies and criteria
with respect to the functions of the Secretary under section
404, including--
(A) the identification of medical conditions for
which a demonstration project under such section may be
implemented;
(B) the prioritization of the conditions identified
under subparagraph (A) based on the potential for the
self-management of such condition to be medically
effective and for such self-management to be a cost-
effective benefit or cost-saving benefit;
(C) the identification of target individuals (as
defined in section 404(a)(2));
(D) the development of procedures for selecting
areas in which such a demonstration project may be
implemented; and
(E) such other matters relating to such
demonstration projects as are recommended by the
Working Group and approved by the Secretary.
(d) Chairperson.--The Secretary shall designate 1 of the members of
the Working Group to be the chairperson of the Group.
(e) Quorum.--A majority of the members of the Working Group shall
constitute a quorum, but, subject to subsection (f), a lesser number of
members may hold meetings.
(f) Meetings.--The Working Group shall meet at the call of the
chairperson, except that--
(1) it shall meet not less than 4 times each year; and
(2) it shall meet upon the written request of a majority of
the members.
(g) Compensation of Members.--Each member of the Working Group
shall serve without compensation in addition to that received for their
service as an officer or employee of the Federal Government.
(h) Authorization of Appropriations.--There are authorized to be
appropriated such sums as may be necessary for the purpose of carrying
out this section.
SEC. 403. HEALTHY SENIORS PROMOTION GRANTS.
(a) Program Authorized.--The Secretary, using the general policies
and criteria established by the Working Group under section 402(c)(1)
and in accordance with the provisions of this section, is authorized to
make grants to eligible entities (as defined in section 401(3)) to pay
for the costs of the activities described in subsection (b).
(b) Use of Funds.--An eligible entity may use payments received
under this section in any fiscal year to conduct a program to--
(1) study whether using different types of providers of
care and alternative settings (including community-based senior
centers) for the implementation of a successful health
promotion and disease prevention strategy, including the
implications regarding the payment of such providers, is
medically efficacious or medically effective;
(2) determine the most effective means of educating
medicare beneficiaries, either directly or through providers of
care, regarding the importance of health promotion and disease
prevention among such beneficiaries;
(3) identify incentives that would increase the use of new
and existing preventive health benefits and healthy behaviors
by medicare beneficiaries;
(4) promote--
(A) the use of preventive health benefits by
medicare beneficiaries, including such services that
are covered under the medicare program;
(B) the proper use by medicare beneficiaries of
prescription and over-the-counter drugs in order to
reduce the number of hospital stays and physician
visits that are a result of improper use of such drugs;
and
(C) the utilization by medicare beneficiaries of
the steps (including exercise, maintenance of a proper
diet, and the utilization of accident prevention
techniques) that research has shown to promote and
safeguard individual health; and
(5) address other topics designated by the Secretary.
(c) Application.--
(1) In general.--Each eligible entity that desires to
receive a grant under this section shall submit an application
to the Secretary, at such time, in such manner, and accompanied
by such additional information as the Secretary may reasonably
require.
(2) Contents.--Each application submitted under paragraph
(1) shall--
(A) describe the activities for which assistance
under this section is sought;
(B) describe how such activities will--
(i) reflect the medical, behavioral, and
social aspects of care for medicare
beneficiaries;
(ii) lead to the development of cost-
effective benefits and cost-saving benefits;
and
(iii) impact the quality of life of
medicare beneficiaries;
(C) provide assurances that such activities will
focus on broad medicare populations rather than unique
local medicare populations;
(D) provide evidence that the eligible entity meets
the general policies and criteria established by the
Working Group under section 402(c)(1);
(E) provide assurances that the eligible entity
will take such steps as may be available to the entity
in order to continue the activities for which the
entity is making application after the period for which
assistance is sought; and
(F) provide such additional assurances as the
Secretary determines to be essential to ensure
compliance with the requirements of this subtitle.
(3) Joint application.--A consortium of eligible entities
may file a joint application under the provisions of paragraph
(1).
(d) Approval of Application.--The Secretary shall approve
applications in accordance with the general policies and criteria
established by the Working Group under section 402(c)(1).
(e) Payments.--Subject to amounts appropriated under subsection
(g), the Secretary shall pay to each eligible entity having an
application approved under subsection (d) the cost of the activities
described in the application.
(f) Evaluation and Report.--
(1) Evaluation.--The Secretary shall conduct an annual
evaluation of grants made under this section to determine--
(A) the results of the activities conducted under
the programs for which grants were made under this
section;
(B) the extent to which research assisted under
this section has improved or expanded the general
research for health promotion and disease prevention
among medicare beneficiaries and identified practical
interventions based upon such research;
(C) a list of specific recommendations based upon
the activities conducted under the programs for which
grants were made under this section which show promise
as practical interventions for health promotion and
disease prevention among medicare beneficiaries;
(D) whether or not, as a result of the activities
conducted under the programs for which grants were made
under this section, certain health promotion and
disease prevention benefits or education efforts should
be added to the medicare program, including discussions
of quality of life, translating the applied research
results into a benefit under the medicare program, and
whether each additional benefit would be a cost-
effective benefit or a cost-saving benefit for each
proposed addition; and
(E) how best to increase utilization of existing
and recommended health promotion and disease prevention
services, such as an education and public awareness
campaign, providing financial incentives for providers
of care and medicare beneficiaries, or utilizing other
administrative means.
(2) Annual report.--Not later than December 31, 2003, and
annually thereafter through 2005, the Secretary, in
consultation with the Working Group, shall submit a report to
Congress on the evaluation conducted under paragraph (1),
together with such recommendations for such legislation and
administrative actions as the Secretary considers appropriate.
(g) Authorization of Appropriations.--There are authorized to be
appropriated for the purpose of carrying out this section $50,000,000
for each of fiscal years 2002, 2003, 2004, and 2005.
SEC. 404. DISEASE SELF-MANAGEMENT DEMONSTRATION PROJECTS.
(a) Demonstration Projects.--
(1) In general.--The Secretary shall conduct demonstration
projects for the purpose of promoting disease self-management
for conditions identified by the Working Group under section
402(c)(2) for target individuals (as defined in paragraph (2)).
(2) Target individual defined.--In this section, the term
``target individual'' means an individual who--
(A) is at risk for, or has, 1 or more of the
conditions identified by the Working Group under
section 402(c)(2); and
(B) is enrolled under the original medicare fee-
for-service program under parts A and B of title XVIII
of the Social Security Act (42 U.S.C. 1395c et seq.;
1395j et seq.) or is enrolled under the Medicare+Choice
program under part C of title XVIII of such Act (42
U.S.C. 1395w-21 et seq.).
(b) Number; Project Areas; Duration.--
(1) Number.--Not later than 2 years after the date of
enactment of this Act, the Secretary shall implement a series
of demonstration projects to carry out the purpose described in
subsection (a)(1).
(2) Project areas.--The Secretary shall implement the
demonstration projects described in paragraph (1) in urban,
suburban, and rural areas.
(3) Duration.--The demonstration projects under this
section shall be conducted during the 3-year period beginning
on the date on which the initial demonstration project is
implemented.
(c) Report to Congress.--
(1) In general.--Not later than 18 months after the
conclusion of the demonstration projects under this section,
the Secretary shall submit a report to Congress on such
projects.
(2) Contents of report.--The report required under
paragraph (1) shall include the following:
(A) A description of the demonstration projects.
(B) An evaluation of--
(i) whether each benefit provided under the
demonstration projects is a cost-effective
benefit or a cost-saving benefit;
(ii) the level of the disease self-
management attained by target individuals under
the demonstration projects; and
(iii) the satisfaction of target
individuals under the demonstration projects.
(C) Recommendations of the Secretary regarding
whether to conduct the demonstration projects on a
permanent basis.
(D) Such recommendations for legislation and
administrative action as the Secretary determines to be
appropriate.
(E) Any other information regarding the
demonstration projects that the Secretary determines to
be appropriate.
(d) Funding.--The Secretary shall provide for the transfer from the
Federal Hospital Insurance Trust Fund under section 1817 of the Social
Security Act (42 U.S.C. 1395i) an amount not to exceed $30,000,000 for
the costs of carrying out this section.
Subtitle B--Medicare Coverage of Preventive Health Benefits
SEC. 411. THERAPY AND COUNSELING FOR CESSATION OF TOBACCO USE.
(a) Coverage.--Section 1861(s)(2) of the Social Security Act (42
U.S.C. 1395x(s)(2)), as amended by section 105(a) of the Medicare,
Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000
(114 Stat. 2763A-471), as enacted into law by section 1(a)(6) of Public
Law 106-554, is amended--
(1) in subparagraph (U), by striking ``and'' at the end;
(2) in subparagraph (V), by inserting ``and'' at the end;
and
(3) by adding at the end the following new subparagraph:
``(W) supplemental preventive health services (as defined
in subsection (ww));''.
(b) Services Described.--Section 1861 of the Social Security Act
(42 U.S.C. 1395x), as amended by section 115(b), is amended by adding
at the end the following new subsection:
``Supplemental Preventive Health Services
``(xx) The term `supplemental preventive health services' means the
following:
``(1)(A) Therapy and counseling for cessation of tobacco
use for individuals who use tobacco products or who are being
treated for tobacco use that is furnished--
``(i) by or under the supervision of a physician;
or
``(ii) by any other health care professional who--
``(I) is legally authorized to furnish such
services under State law (or the State
regulatory mechanism provided by State law) of
the State in which the services are furnished;
and
``(II) is authorized to receive payment for
other services under this title or is
designated by the Secretary for this purpose.
``(B) Subject to subparagraph (C), such term is limited
to--
``(i) therapy and counseling services recommended
in `Treating Tobacco Use and Dependence: A Clinical
Practice Guideline', published by the Public Health
Service in June 2000, or any subsequent modification of
such Guideline; and
``(ii) such other therapy and counseling services
that the Secretary recognizes to be effective.
``(C) Such term shall not include coverage for drugs or
biologicals that are not otherwise covered under this title.''.
(c) Payment and Elimination of Cost-Sharing for All Supplemental
Preventive Health Services.--
(1) Payment and elimination of coinsurance.--Section
1833(a)(1) of the Social Security Act (42 U.S.C. 1395l(a)(1)),
as amended by sections 111(b)(2)(A) and 112(b)(2)(A), is
amended--
(A) in subparagraph (N), by inserting ``other than
supplemental preventive health services (as defined in
section 1861(xx))'' after ``(as defined in section
1848(j)(3))'';
(B) by striking ``and'' before ``(V)''; and
(C) by inserting before the semicolon at the end
the following: ``, and (W) with respect to supplemental
preventive health services (as defined in section
1861(xx)), the amount paid shall be 100 percent of the
lesser of the actual charge for the services or the
amount determined under the payment basis determined
under section 1848 by the Secretary for the particular
supplemental preventive health service involved''.
(2) Payment under physician fee schedule.--Section
1848(j)(3) (42 U.S.C. 1395w-4(j)(3)) is amended by inserting
``(2)(W),'' after ``(2)(S),''.
(3) Elimination of coinsurance in outpatient hospital
settings.--The third sentence of section 1866(a)(2)(A) of the
Social Security Act (42 U.S.C. 1395cc(a)(2)(A)) is amended by
inserting after ``1861(s)(10)(A)'' the following: ``, with
respect to supplemental preventive health services (as defined
in section 1861(xx)),''.
(4) Elimination of deductible.--The first sentence of
section 1833(b) of the Social Security Act (42 U.S.C.
1395l(b)), as amended by section 111(b)(2)(B), is amended--
(A) by striking ``and'' before ``(7)''; and
(B) by inserting before the period the following:
``, and (8) such deductible shall not apply with
respect to supplemental preventive health services (as
defined in section 1861(xx))''.
(d) Application of Limits on Billing.--Section 1842(b)(18)(C) of
the Social Security Act (42 U.S.C. 1395u(b)(18)(C)), as amended by
section 105(d) of the Medicare, Medicaid, and SCHIP Benefits
Improvement and Protection Act of 2000 (114 Stat. 2763A-472), as
enacted into law by section 1(a)(6) of Public Law 106-554, is amended
by adding at the end the following new clause:
``(vii) Any health care professional designated under
section 1861(xx)(1)(A)(ii)(II) to perform therapy and
counseling for cessation of tobacco use.''.
(e) Effective Date.--The amendments made by this section shall
apply to services furnished on or after the day that is 1 year after
the date of enactment of this Act.
SEC. 412. COUNSELING FOR POST-MENOPAUSAL WOMEN.
(a) Coverage.--Section 1861(xx) of the Social Security Act (42
U.S.C. 1395x(s)(2)), as added by section 411(b), is amended by adding
at the end the following new paragraph:
``(2)(A) Counseling for post-menopausal women.
``(B) For purposes of subparagraph (A), the term
`counseling for post-menopausal women' means counseling
provided to a post-menopausal woman regarding--
``(i) the symptoms, risk factors, and conditions
associated with menopause;
``(ii) appropriate treatment options for post-
menopausal women, including hormone replacement
therapy; and
``(iii) other interventions that can be implemented
to prevent or delay the onset of health risks
associated with menopause.
``(C) Such term does not include coverage for drugs or
biologicals that are not otherwise covered under this title.''.
(b) Effective Date.--The amendment made by this section shall apply
to services furnished on or after the day that is 1 year after the date
of enactment of this Act.
SEC. 413. SCREENING FOR DIMINISHED VISUAL ACUITY.
(a) Coverage.--Section 1861(xx) of the Social Security Act (42
U.S.C. 1395x(s)(2)), as amended by section 412(a), is amended by adding
at the end the following new paragraph:
``(3)(A) Screening for diminished visual acuity.
``(B) For purposes of subparagraph (A), the term `screening
for diminished visual acuity' means a screening for diminished
visual acuity that is furnished by or under the supervision of
an optometrist or ophthalmologist who is legally authorized to
furnish such services under State law (or the State regulatory
mechanism provided by State law) of the State in which the
services are furnished.''.
(b) Effective Date.--The amendment made by this section shall apply
to services furnished on or after the day that is 1 year after the date
of enactment of this Act.
SEC. 414. SCREENING FOR HEARING IMPAIRMENT.
(a) Coverage.--Section 1861(xx) of the Social Security Act (42
U.S.C. 1395x(s)(2)), as amended by section 413(a), is amended by adding
at the end the following new paragraph:
``(4)(A) Screening for hearing impairment.
``(B) For purposes of subparagraph (A), the term `screening
for hearing impairment' means the following services:
``(i) A screening for hearing impairment using
periodic questions that is furnished by--
``(I) a physician, including an
otolaryngologist;
``(II) a qualified audiologist (as defined
in subsection (ll)(3)(B)); or
``(III) any other health care professional
who is legally authorized to furnish such
screening under State law (or the State
regulatory mechanism provided by State law) of
the State in which the screening is furnished.
``(ii) If the answers to such questions indicate
potential hearing impairment, an otoscopic examination
and an audiometric screening test that are furnished by
an otolaryngologist or a qualified audiologist (as so
defined).
``(iii) If the results of such examination or test
indicate a need for assistive listening devices
(whether or not such examination or test was based on a
screening or was diagnostic), counseling about such
devices that is furnished by an otolaryngologist or a
qualified audiologist (as so defined).''.
(b) Effective Date.--The amendment made by this section shall apply
to services furnished on or after the day that is 1 year after the date
of enactment of this Act.
SEC. 415. SCREENING FOR CHOLESTEROL.
(a) Coverage.--Section 1861(xx) of the Social Security Act (42
U.S.C. 1395x(s)(2)), as amended by section 414(a), is amended by adding
at the end the following new paragraph:
``(5)(A) Screening for cholesterol if the individual
involved has not had such a screening during the preceding 5
years.
``(B) Notwithstanding subparagraph (A), payment may be made
under this part for a screening for cholesterol with respect to
an individual even if the individual has had such a screening
during the preceding 5 years if the individual exhibits major
risk factors for coronary heart disease or a stroke, including,
but not limited to, smoking, hypertension, and diabetes.''.
(b) Conforming Amendment.--Section 1862(a)(1) of the Social
Security Act (42 U.S.C. 1395y(a)(1)), as amended by section 301(b)(2),
is amended--
(1) in subparagraph (I), by striking ``and'' at the end;
(2) in subparagraph (J), by striking the semicolon at the
end and inserting ``, and''; and
(3) by adding at the end the following new subparagraph:
``(K) in the case of a screening for cholesterol,
which is performed more frequently than is covered
under section 1861(xx)(5);''.
(c) Effective Date.--The amendments made by this section shall
apply to services furnished on or after the day that is 1 year after
the date of enactment of this Act.
SEC. 416. SCREENING FOR HYPERTENSION.
(a) Coverage.--Section 1861(xx) of the Social Security Act (42
U.S.C. 1395x(s)(2)), as amended by section 415(a), is amended by adding
at the end the following new paragraph:
``(6)(A) Screening for hypertension if the individual
involved has not had such a screening during the preceding 2
years.
``(B) Notwithstanding subparagraph (A), payment may be made
under this part for a screening for hypertension with respect
to an individual even if the individual has had such a
screening during the preceding 2 years if the individual has a
history of, or is at risk for, hypertension.''.
(b) Conforming Amendment.--Section 1862(a)(1) of the Social
Security Act (42 U.S.C. 1395y(a)(1)), as amended by section 415(b), is
amended--
(1) in subparagraph (J), by striking ``and'' at the end;
(2) in subparagraph (K), by striking the semicolon at the
end and inserting ``, and''; and
(3) by adding at the end the following new subparagraph:
``(L) in the case of a screening for hypertension,
which is performed more frequently than is covered
under section 1861(xx)(6);''.
(c) Effective Date.--The amendments made by this section shall
apply to services furnished on or after the day that is 1 year after
the date of enactment of this Act.
SEC. 417. EXPANSION OF ELIGIBILITY FOR BONE MASS MEASUREMENT.
(a) Expansion.--Section 1861(rr)(2) of the Social Security Act (42
U.S.C. 1395x(rr)(2)) is amended to read as follows:
``(2) For purposes of this subsection, the term `qualified
individual' means an individual who is (in accordance with regulations
prescribed by the Secretary)--
``(A) an estrogen-deficient woman (including those
receiving hormone replacement therapy);
``(B) an individual with low trauma or fragility fractures
(including vertebral abnormalities and hip, rib, wrist, pelvic,
or proximal humeral fractures);
``(C) an individual receiving long-term medications that
have associations to bone loss or osteoporosis (including
glucocorticoid therapy and androgen deprivation therapy);
``(D) an individual with a long-term medical condition that
has association to osteoporosis (including primary
hyperparathyroidism);
``(E) a man with risk factors for osteoporosis such as
hypogonadism; and
``(F) an individual being monitored to assess the response
to, or efficacy of, an approved osteoporosis therapy.''.
(b) Reference to Elimination of Coinsurance and Waiver of
Application of Deductible.--For the elimination of the coinsurance for
bone mass measurement and for the waiver of the application of the part
B deductible for such measurement, see section 419.
(c) Effective Date.--The amendment made by subsection (a) shall
apply to services furnished on or after the day that is 1 year after
the date of enactment of this Act.
SEC. 418. COVERAGE OF MEDICAL NUTRITION THERAPY SERVICES FOR
BENEFICIARIES WITH CARDIOVASCULAR DISEASES.
(a) In General.--Section 1861(s)(2)(V) of the Social Security Act
(42 U.S.C. 1395x(s)(2)(V)), as added by section 105(a) of the Medicare,
Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000
(114 Stat. 2763A-471), as enacted into law by section 1(a)(6) of Public
Law 106-554, is amended to read as follows:
``(V) medical nutrition therapy services (as defined in
subsection (vv)(1)) in the case of a beneficiary--
``(i) with a cardiovascular disease (including
congestive heart failure, arteriosclerosis,
hyperlipidemia, hypertension, and
hypercholesterolemia), diabetes, or a renal disease (or
a combination of such conditions) who--
``(I) has not received diabetes outpatient
self-management training services within a time
period determined by the Secretary;
``(II) is not receiving maintenance
dialysis for which payment is made under
section 1881; and
``(III) meets such other criteria
determined by the Secretary after consideration
of protocols established by dietitian or
nutrition professional organizations; or
``(ii) with a combination of such conditions who--
``(I) is not described in clause (i)
because of the application of subclause (I) or
(II) of such clause;
``(II) receives such medical nutrition
therapy services in a coordinated manner (as
determined appropriate by the Secretary) with
any services described in such subclauses that
the beneficiary is receiving; and
``(III) meets such other criteria
determined by the Secretary after consideration
of protocols established by dietitian or
nutrition professional organizations;''.
(b) Elimination of Coinsurance.--Section 1833(a)(1)(T) of the
Social Security Act (42 U.S.C. 1395l(a)(1)(T)), as added by section
105(c)(2) of the Medicare, Medicaid, and SCHIP Benefits Improvement and
Protection Act of 2000 (114 Stat. 2763A-472), as enacted into law by
section 1(a)(6) of Public Law 106-554, is amended by striking ``80
percent'' and inserting ``100 percent''.
(c) Reference To Waiver of Application of Deductible.--For the
waiver of the application of the part B deductible for medical
nutrition therapy services, see section 419.
(d) Effective Date.--The amendments made by this section shall take
effect as if included in the enactment of section 105 of the Medicare,
Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000
(114 Stat. 2763A-471), as enacted into law by section 1(a)(6) of Public
Law 106-554.
SEC. 419. ELIMINATION OF DEDUCTIBLES AND COINSURANCE FOR EXISTING
PREVENTIVE HEALTH BENEFITS.
(a) In General.--Section 1833 of the Social Security Act (42 U.S.C.
1395l) is amended by inserting after subsection (o) the following new
subsection:
``(p) Deductibles and Coinsurance Waived for Preventive Health
Items and Services.--The Secretary may not require the payment of any
deductible or coinsurance under subsection (a) or (b), respectively, of
any individual enrolled for coverage under this part for any of the
following preventive health items and services:
``(1) Blood-testing strips, lancets, and blood glucose
monitors for individuals with diabetes described in section
1861(n).
``(2) Diabetes outpatient self-management training services
(as defined in section 1861(qq)(1)).
``(3) Pneumococcal, influenza, and hepatitis B vaccines and
administration described in section 1861(s)(10).
``(4) Screening mammography (as defined in section
1861(jj)).
``(5) Screening pap smear and screening pelvic exam (as
defined in paragraphs (1) and (2) of section 1861(nn),
respectively).
``(6) Bone mass measurement (as defined in section
1861(rr)(1)).
``(7) Prostate cancer screening test (as defined in section
1861(oo)(1)).
``(8) Colorectal cancer screening test (as defined in
section 1861(pp)(1)).
``(9) Screening for glaucoma (as defined in section
1861(uu)).
``(10) Medical nutrition therapy services (as defined in
section 1861(vv)(1)).''.
(b) Waiver of Coinsurance.--
(1) In general.--Section 1833(a)(1)(B) of the Social
Security Act (42 U.S.C. 1395l(a)(1)(B)) is amended to read as
follows: ``(B) with respect to preventive health items and
services described in subsection (p), the amounts paid shall be
100 percent of the fee schedule or other basis of payment under
this title for the particular item or service,''.
(2) Elimination of coinsurance in outpatient hospital
settings.--The third sentence of section 1866(a)(2)(A) of the
Social Security Act (42 U.S.C. 1395cc(a)(2)(A)), as amended by
section 411(c)(3), is amended by inserting after ``section
1861(xx)'' the following: ``and preventive health items and services
described in section 1833(p)''.
(c) Waiver of Application of Deductible.--Section 1833(b)(1) of the
Social Security Act (42 U.S.C. 1395l(b)(1)) is amended to read as
follows: ``(1) such deductible shall not apply with respect to
preventive health items and services described in subsection (p),''.
(d) Adding ``Lancet'' to Definition of DME.--Section 1861(n) of the
Social Security Act (42 U.S.C. 1395x(n)) is amended by striking
``blood-testing strips and blood glucose monitors'' and inserting
``blood-testing strips, lancets, and blood glucose monitors''.
(e) Conforming Amendments.--
(1) Elimination of coinsurance for clinical diagnostic
laboratory tests.--Paragraphs (1)(D)(i) and (2)(D)(i) of
section 1833(a) of the Social Security Act (42 U.S.C.
1395l(a)), as amended by section 201(b)(1) of the Medicare,
Medicaid, and SCHIP Benefits Improvement and Protection Act of
2000 (114 Stat. 2763A-481), as enacted into law by section
1(a)(6) of Public Law 106-554, are each amended by inserting
``or which are described in subsection (p)'' after
``assignment-related basis''.
(2) Elimination of coinsurance for certain dme.--Section
1834(a)(1)(A) of the Social Security Act (42 U.S.C.
1395m(a)(1)(A)) is amended by inserting ``(or 100 percent, in
the case of such an item described in section 1833(p))'' after
``80 percent''.
(3) Elimination of deductibles and coinsurance for
colorectal cancer screening tests.--Section 1834(d) of the
Social Security Act (42 U.S.C. 1395m(d)) is amended--
(A) in paragraph (2)(C)--
(i) by striking ``(C) Facility payment
limit.--'' and all that follows through
``Notwithstanding subsections'' and inserting
the following:
``(C) Facility payment limit.--Notwithstanding
subsections'';
(ii) by striking ``(I) in accordance'' and
inserting the following:
``(i) in accordance'';
(iii) by striking ``(II) are performed''
and all that follows through ``payment under''
and inserting the following:
``(ii) are performed in an ambulatory
surgical center or hospital outpatient
department,
payment under''; and
(iv) by striking clause (ii); and
(B) in paragraph (3)(C)--
(i) by striking ``(C) Facility payment
limit.--'' and all that follows through
``Notwithstanding subsections'' and inserting
the following:
``(C) Facility payment limit.--Notwithstanding
subsections''; and
(ii) by striking clause (ii).
(f) Effective Date.--The amendments made by this section shall
apply to services furnished on or after the day that is 1 year after
the date of enactment of this Act.
SEC. 420. PROGRAM INTEGRITY.
The Secretary, in consultation with the Inspector General of the
Department of Health and Human Services, shall integrate supplemental
preventive health services (as defined in section 1861(xx) of the
Social Security Act (as added by the preceding provisions of this
subtitle)) with existing program integrity measures.
SEC. 421. PROMOTION OF PREVENTIVE HEALTH BENEFITS.
In order to promote the use by medicare beneficiaries of preventive
health benefits, including preventive health services (as defined in
section 1861(xx) of the Social Security Act (as added by the preceding
provisions of this subtitle)) and preventive health items and services
described in section 1833(p) of such Act (as added by section 419), the
Secretary shall do the following:
(1) Medicare handbook and other annual notices.--Include in
any medicare handbook and any other annual notice provided to
medicare beneficiaries a detailed description of--
(A) the preventive health benefits that are covered
under the medicare program; and
(B) the importance of using such benefits.
(2) Fiscal intermediaries and carriers.--Require that
fiscal intermediaries with a contract under section 1816 of the
Social Security Act (42 U.S.C. 1395h) and carriers with a
contract under section 1842 of such Act (42 U.S.C. 1395u)
include preventive health benefits messages on Medicare Summary
Notice Statements and Explanations of Medicare Benefits
distributed by such entities.
(3) Medicare part b statement.--Regularly include
preventive health benefits messages on the medicare part B
statement.
(4) Medicare+choice plans.--Require that Medicare+Choice
organizations offering a Medicare+Choice plan disclose under
section 1852(c)(1)(B) of the Social Security Act (42 U.S.C.
1395w-22(c)(1)(B)) information regarding the preventive health
benefits that are covered under the plan.
(5) Other activities.--Conduct activities in addition to
those described in paragraphs (1) through (4) that the
Secretary determines to be useful in disseminating information
to medicare beneficiaries regarding--
(A) the preventive health benefits that are covered
under the medicare program;
(B) the importance of using such benefits; and
(C) general health promotion.
Subtitle C--National Falls Prevention Education and Awareness Campaign
SEC. 431. NATIONAL FALLS PREVENTION EDUCATION AND AWARENESS CAMPAIGN.
(a) In General.--The Director of the Centers for Disease Control
and Prevention, in consultation with the Administrator of the Centers
for Medicare & Medicaid Services, shall conduct a national falls
prevention and awareness campaign to reduce fall-related injuries among
medicare beneficiaries.
(b) Report to Congress.--
(1) In general.--The Director of the Centers for Disease
Control and Prevention, in consultation with the Administrator
of the Centers for Medicare & Medicaid Services, shall submit
to Congress a report on the campaign conducted under this
section.
(2) Deadline for report.--The report required under
paragraph (1) shall be submitted not later than the earlier
of--
(A) 6 months after the campaign is completed; or
(B) 3 years after the campaign is implemented.
(3) Contents of report.--The report required under
paragraph (1) shall include the following:
(A) A description of the campaign.
(B) An evaluation of--
(i) whether the campaign has effectively
reached its target population; and
(ii) the cost-effectiveness of the
campaign.
(C) An assessment of whether the campaign has been
effective, as measured by whether--
(i) the target population has adopted the
interventions suggested in the campaign, and if
not, the reasons why such interventions have
not been adopted; and
(ii) the fall rates among the target
population have decreased since the campaign
was implemented, and if not, the reasons why
such fall rates have not decreased.
(D) Any other information regarding the campaign
that the Director of the Centers for Disease Control
and Prevention determines to be appropriate.
(c) Authorization of Appropriations.--There are authorized to be
appropriated such sums as may be necessary for the purpose of carrying
out this section.
Subtitle D--Clinical Depression Screening Demonstration Projects
SEC. 441. CLINICAL DEPRESSION SCREENING DEMONSTRATION PROJECTS.
(a) Definitions.--In this section:
(1) Demonstration project.--The term ``demonstration
project'' means a demonstration project established under
subsection (b)(1).
(2) Eligible beneficiary.--The term ``eligible
beneficiary'' means an individual enrolled for benefits under
part B who is not enrolled in any of the following:
(A) A Medicare+Choice plan under part C of title
XVIII of the Social Security Act (42 U.S.C. 1395w-21 et
seq.).
(B) A plan offered by an eligible organization
under section 1876 of such Act (42 U.S.C. 1395mm).
(C) A program of all-inclusive care for the elderly
(PACE) under section 1894 of such Act (42 U.S.C.
1395eee).
(D) A social health maintenance organization (SHMO)
demonstration project established under section 4018(b)
of the Omnibus Budget Reconciliation Act of 1987
(Public Law 100-203).
(E) A health care prepayment plan under section
1833(a)(1)(A) of the Social Security Act (42 U.S.C.
1395l(a)(1)(A)).
(3) Part b.--The term ``part B'' means part B of the
original medicare fee-for-service program under title XVIII of
the Social Security Act (42 U.S.C. 1395j et seq.).
(4) Qualified health professional.--The term ``qualified
health professional'' means an individual that--
(A) is--
(i) a physician (as defined in section
1861(r)(1) of the Social Security Act (42
U.S.C. 1395x(r)(1)));
(ii) a nurse practitioner (as defined in
section 1861(aa)(5) of such Act (42 U.S.C.
1395x(aa)(5))); or
(iii) a mental health care professional
(including a clinical social worker, as defined
in section 1861(hh) of such Act (42 U.S.C.
1395x(hh))) that is licensed to perform mental
health services by the State in which a
screening for clinical depression is furnished
under a demonstration project; and
(B) has an agreement in effect with the Secretary
under which the professional agrees to accept the
amount determined by the Secretary under subsection
(b)(4) as full payment for such screening and to accept
an assignment described in section 1842(b)(3)(B)(ii) of
the Social Security Act (42 U.S.C. 1395u(b)(3)(B)(ii))
with respect to payment for each screening furnished by
the professional to an eligible beneficiary
participating in a demonstration project.
(5) Screening for clinical depression.--
(A) In general.--The term ``screening for clinical
depression'' means a consultation during which--
(i) a self-administered written screening
test (or an alternative format for such test
pursuant to subsection (b)(3)(B)) is made
available to an eligible beneficiary; and
(ii) a qualified health professional--
(I) interprets the results of such
test;
(II) discusses the beneficiary's
responses to the questions on the test
with the beneficiary;
(III) assesses the beneficiary's
risk of clinical depression; and
(IV) if the qualified health
professional determines that the
beneficiary is at high risk for
clinical depression, refers the
eligible beneficiary for a full
diagnostic evaluation and such
additional treatment as may be
required.
(B) Construction.--Nothing in subparagraph
(A)(ii)(IV) shall be construed as prohibiting a
qualified health professional performing the screening
for clinical depression with respect to an individual
from directly providing the diagnostic evaluation and
additional treatment described in such subparagraph to
such individual if legally authorized under State law
to do so.
(6) Self-administered written screening test.--The term
``self-administered written screening test'' means an
instrument on which an eligible beneficiary writes answers to
questions designed to enable a qualified health professional to
establish the level of risk of such eligible beneficiary for
clinical depression.
(b) Demonstration Projects.--
(1) In general.--The Secretary shall establish and conduct
demonstration projects for the purpose of evaluating the
efficacy of providing screenings for clinical depression as a
benefit under part B to eligible beneficiaries through
qualified health professionals in accordance with the
requirements of this section.
(2) Number, project areas, duration.--
(A) Number.--The Secretary shall establish no fewer
than 6 and no more than 10 demonstration projects.
(B) Project areas.--
(i) In general.--The Secretary shall
conduct demonstration projects in geographic
areas that include urban, suburban, and rural
areas.
(ii) Selection.--The Secretary shall select
the geographic areas described in clause (i) in
a manner that--
(I) ensures geographic diversity
and a mix of screening sites (including
physicians' offices, hospital
outpatient departments, community
mental health centers, and skilled
nursing facilities); and
(II) gives preference to areas with
a high concentration of eligible
beneficiaries.
(C) Duration.--The demonstration projects under
this section shall be conducted during the 3-year
period beginning on the date on which the initial
demonstration project is implemented.
(3) Identification and distribution of self-administered
tests.--
(A) In general.--The Secretary, in consultation
with professionals experienced in conducting large-
scale depression screening projects, shall--
(i) establish or identify a self-
administered written screening test to be used
in conducting the demonstration projects; and
(ii) not later than the date that is 3
months before the date on which a demonstration
project is implemented in a geographic area,
distribute such test to each qualified health
professional that provides services in such
area in which the Secretary conducts a
demonstration project, together with guidelines
for making the test available to eligible
beneficiaries.
(B) Alternative formats for test.--The Secretary
shall also establish and distribute alternative formats
for the self-administered written screening test under
subparagraph (A) which shall be available for use when
circumstances do not permit an individual to complete
the self-administered written screening test.
(4) Payment for screenings for clinical depression.--
(A) In general.--Subject to subparagraph (C), the
Secretary shall provide for payment of the reasonable
charges for each screening for clinical depression
furnished to an eligible beneficiary by a qualified
health professional from the amounts transferred under
subsection (d).
(B) Waiver of coinsurance and deductibles.--The
Secretary may not require the payment of any deductible
or coinsurance by any eligible beneficiary for a
screening for clinical depression furnished under a
demonstration project.
(C) Frequency limitation.--No payment may be made
under this section for a screening for clinical
depression if such a screening is performed with
respect to an eligible beneficiary within the year
after a previous screening of such beneficiary.
(5) Waiver authority.--The Secretary may waive such
requirements under title XVIII of the Social Security Act (42
U.S.C. 1395 et seq.) as the Secretary determines necessary to
carry out the demonstration projects under this section.
(c) Reports to Congress.--
(1) Interim report.--
(A) In general.--Not later than 2 years after the
Secretary implements the initial demonstration project,
the Secretary shall submit to Congress a report
regarding the demonstration projects conducted under
this section.
(B) Contents of report.--The report submitted under
subparagraph (A) shall contain--
(i) a description of the demonstration
projects conducted under this section;
(ii) an evaluation of--
(I) whether screening for clinical
depression is a cost-effective benefit
or a cost-saving benefit; and
(II) the level of satisfaction of
eligible beneficiaries to whom such a
screening is furnished under the
demonstration project; and
(iii) any other information regarding the
demonstration projects that the Secretary
determines to be appropriate.
(2) Final report.--Not later than 1 year after the
conclusion of the demonstration projects, the Secretary shall
submit a final report to Congress on the demonstration projects
containing the recommendations of the Secretary regarding
whether to conduct the demonstration projects on a permanent
basis, together with such recommendations for legislation and
administrative action as the Secretary considers appropriate.
(d) Funding.--The Secretary shall provide for the transfer from the
Federal Hospital Insurance Trust Fund under section 1817 of the Social
Security Act (42 U.S.C. 1395i) an amount not to exceed $30,000,000 for
the costs of carrying out the demonstration projects under this
section.
Subtitle E--Medicare Health Education and Risk Appraisal Program
SEC. 451. MEDICARE HEALTH EDUCATION AND RISK APPRAISAL PROGRAM.
Title XVIII of the Social Security Act (42 U.S.C. 1395 et seq.) is
amended by adding at the end the following new section:
``medicare health education and risk appraisal program
``Sec. 1897. (a) Establishment.--Not later than 18 months after the
date of the conclusion of the demonstration projects conducted under
subsection (b)(1), the Secretary shall implement the demonstration
project that the Secretary identifies as being the most effective
project under subsection (c)(2)(C) on a nationwide and permanent basis.
``(b) Demonstration Projects.--
``(1) Establishment.--Not later than 1 year after the date
of enactment of this Act, the Secretary, in consultation with
the Centers for Medicare & Medicaid Services, the Centers for
Disease Control and Prevention, and the Agency for Healthcare
Research and Quality, shall conduct a demonstration project for
the purpose of developing a comprehensive and systematic model
for delivering health promotion and disease prevention services
that--
``(A) through self-assessment identifies--
``(i) behavioral risk factors, such as
tobacco use, physical inactivity, alcohol use,
and depression, among target individuals;
``(ii) needed medicare clinical preventive
and screening health benefits among target
individuals; and
``(iii) functional and self-management
information the Secretary determines to be
appropriate;
``(B) provides ongoing followup to reduce risk
factors and promote the appropriate use of preventive
and screening health benefits;
``(C) improves clinical outcomes, satisfaction,
quality of life, and appropriate use by target
individuals of items and services covered under the
medicare program; and
``(D) provides target individuals with information
regarding the adoption of healthy behaviors.
``(2) Self-assessment and provision of information.--The
Secretary shall conduct the demonstration projects established
under paragraph (1) in the following manner:
``(A) Self-assessment.--
``(i) In general.--The Secretary shall test
different--
``(I) methods of making self-
assessments available to each target
individual;
``(II) methods of encouraging each
target individual to participate in the
self-assessment; and
``(III) methods for processing
responses to the self-assessment.
``(ii) Contents.--A self-assessment made
available under clause (i) shall include--
``(I) questions regarding
behavioral risk factors;
``(II) questions regarding needed
preventive screening health services;
``(III) questions regarding the
target individual's preferences for
receiving follow-up information; and
``(IV) other information that the
Secretary determines appropriate.
``(B) Provision of information.--After each target
individual completes the self-assessment, the Secretary
shall ensure that the target individual is provided
with such information as the Secretary determines
appropriate, which may include--
``(i) information regarding the results of
the self-assessment;
``(ii) recommendations regarding any
appropriate behavior modification based on the
self-assessment;
``(iii) information regarding how to access
behavior modification assistance that promotes
healthy behavior, including information on
nurse hotlines, counseling services, provider
services, and case-management services;
``(iv) information, feedback, support, and
recommendations regarding any need for clinical
preventive and screening health services or
treatment; and
``(v) referrals to available community
resources in order to assist the target
individual in reducing health risks.
``(3) Project areas and duration.--
``(A) Project areas.--The Secretary shall implement
the demonstration projects in geographic areas that
include urban, suburban, and rural areas.
``(B) Duration.--The Secretary shall conduct the
demonstration projects during the 3-year period
beginning on the date on which the first demonstration
project is implemented.
``(c) Report to Congress.--
``(1) In general.--Not later than 1 year after the date on
which the demonstration projects conclude, the Secretary shall
submit to Congress a report on such projects.
``(2) Contents of report.--The report submitted under
paragraph (1) shall--
``(A) describe the demonstration projects conducted
under this section;
``(B) identify the demonstration project that is
the most effective; and
``(C) contain such other information regarding the
demonstration projects as the Secretary determines
appropriate.
``(3) Measurement of effectiveness.--For purposes of
paragraph (2)(B), in identifying the demonstration project that
is the most effective, the Secretary shall consider--
``(A) how successful the project was at--
``(i) reaching target individuals and
engaging them in an assessment of the risk
factors of such individuals;
``(ii) educating target individuals on
healthy behaviors and getting such individuals
to modify their behaviors in order to diminish
the risk of chronic disease; and
``(iii) ensuring that target individuals
were provided with necessary information;
``(B) the cost-effectiveness of the demonstration
project; and
``(C) the degree of beneficiary satisfaction under
the demonstration projects.
``(d) Waiver Authority.--The Secretary may waive such requirements
under this title as the Secretary determines necessary to carry out the
demonstration projects under this section.
``(e) Funding.--There are authorized to be appropriated $25,000,000
for carrying out the demonstration project under this section.
``(f) Definitions.--In this section:
``(1) Target individual.--The term `target individual'
means each individual that is--
``(A) entitled to benefits under part A or enrolled
under part B, including an individual enrolled under
the Medicare+Choice program under part C; or
``(B) between the ages of 50 and 64 who is not a
beneficiary under this title.
``(2) Major behavioral risk factor.--The term `major
behavioral risk factor' includes--
``(A) the lack of proper nutrition;
``(B) the use of alcohol;
``(C) the lack of regular exercise;
``(D) the use of tobacco;
``(E) depression; and
``(F) any other risk factor identified by the
Secretary.''.
Subtitle F--Studies, Evaluations, and Reports In the Field of Disease
Prevention and the Elderly
SEC. 461. MEDPAC EVALUATION AND REPORT ON MEDICARE BENEFIT PACKAGE IN
RELATION TO PRIVATE SECTOR BENEFIT PACKAGES.
(a) In General.--Section 1805(b) of the Social Security Act (42
U.S.C. 1395b-6(b)), as amended by section 544(b) of the Medicare,
Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000
(114 Stat. 2763A-551), as enacted into law by section 1(a)(6) of Public
Law 106-554, is amended--
(1) in paragraph (1)--
(A) in subparagraph (C), by striking ``and'' at the
end;
(B) in subparagraph (D), by striking the period and
inserting ``; and''; and
(C) by adding at the end the following new
subparagraph:
``(E) on the date that is 3 years after the date of
enactment of the Medicare Reform Act of 2001, and each
successive 3-year anniversary thereafter, submit the
report described in paragraph (8)(C) to Congress.'';
and
(2) by adding at the end the following new paragraph:
``(8) Evaluation of medicare benefit package in relation to
private sector benefit packages.--
``(A) Evaluation.--The Commission shall evaluate--
``(i) the benefit package offered under the
medicare program under this title; and
``(ii) the degree to which such benefit
package compares to the benefit packages
offered by health benefit programs available in
the private sector to individuals over age 55.
``(B) Issues.--In conducting the evaluation under
subparagraph (A)(ii), the Commission shall address the
following issues:
``(i) Whether the benefit packages
available under the programs are--
``(I) similar;
``(II) appropriate for the
enrollees of the programs (based on
what experts recommend for such
enrollees);
``(III) actuarially equivalent; and
``(IV) comprehensive.
``(ii) The financial liabilities of
enrollees of the programs and whether such
liabilities are appropriate.
``(iii) The ability of enrollees of the
programs to take advantage of benefits under
the programs.
``(C) Report.--The Commission shall submit a report
to Congress that shall contain--
``(i) a detailed statement of the findings
and conclusions of the Commission regarding the
evaluation conducted under subparagraph (A);
``(ii) the recommendations of the
Commission regarding changes in the benefit
package offered under the medicare program
under this title that would keep the program
modern and competitive in relation to health
benefit packages offered by health benefit
programs available in the private sector to
individuals over age 55; and
``(iii) the recommendations of the
Commission for such legislation and
administrative actions as it considers
appropriate.''.
(b) Effective Date.--The amendments made by this section shall take
effect on the date of enactment of this Act.
SEC. 462. NATIONAL INSTITUTE ON AGING STUDY AND REPORT ON WAYS TO
IMPROVE THE QUALITY OF LIFE OF ELDERLY.
(a) Studies.--The Director of the National Institute on Aging, in
consultation with the Working Group on Disease Self-Management and
Health Promotion (established in section 402) and the United States
Preventive Services Task Force, shall conduct 1 or more studies
focusing on ways to--
(1) improve quality of life for the elderly; and
(2) develop better ways to prevent or delay the onset of
age-related functional decline and disease and disability among
the elderly.
(b) Reports.--
(1) Report for each study.--The Director of the National
Institute on Aging, in consultation with the Working Group on
Disease Self-Management and Health Promotion and the United
States Preventive Services Task Force, shall submit a report to
the Secretary regarding each study conducted under subsection
(a), together with a detailed statement of research findings
and conclusions that are scientifically valid and are
demonstrated to prevent or delay the onset of chronic illness
or disability among the elderly.
(2) Timing for submitting reports.--Each report regarding a
study that is required to be submitted pursuant to paragraph
(1) shall be submitted by not later than the earlier of--
(A) the date that is 18 months after the completion
of the study involved; or
(B) January 1, 2008.
(c) Transmission to Institute of Medicine.--Upon receipt of each
report described in subsection (b), the Secretary shall transmit such
report to the Institute of Medicine of the National Academy of Sciences
for consideration in its effort to conduct the comprehensive study of
current literature and best practices in the field of health promotion
and disease prevention among the medicare beneficiaries described in
section 463.
(d) Authorization of Appropriations.--
(1) In general.--There are authorized to be appropriated
for the purpose of carrying out this section such sums as may
be necessary for the period of fiscal years 2002 through 2008.
(2) Availability.--Any sums appropriated under the
authorization contained in this subsection shall remain
available, without fiscal year limitation, until September 30,
2008.
SEC. 463. INSTITUTE OF MEDICINE MEDICARE PREVENTION BENEFIT STUDY AND
REPORT.
(a) Study.--
(1) In general.--The Secretary shall contract with the
Institute of Medicine of the National Academy of Sciences to--
(A) conduct a comprehensive study of current
literature and best practices in the field of health
promotion and disease prevention among medicare
beneficiaries, including the issues described in
paragraph (2); and
(B) submit the report described in subsection (b).
(2) Issues studied.--The study required under paragraph (1)
shall include an assessment of--
(A) whether each health promotion and disease
prevention benefit covered under the medicare program
is--
(i) medically effective (as defined in
section 401(4)); and
(ii) a cost-effective benefit (as defined
in section 401(2)) or a cost-saving benefit (as
defined in section 401(3));
(B) utilization by medicare beneficiaries of such
benefits (including any barriers to or incentives to
increase utilization);
(C) quality of life issues associated with such
benefits; and
(D) health promotion and disease prevention
benefits that are not covered under the medicare
program that would affect all medicare beneficiaries.
(b) Reports.--
(1) Three-year report.--On the date that is 3 years after
the date of enactment of this Act, and each successive 3-year
anniversary thereafter, the Institute of Medicine of the
National Academy of Sciences shall submit to the President a
report that contains--
(A) a detailed statement of the findings and
conclusions of the study conducted under subsection
(a); and
(B) the recommendations for legislation described
in paragraph (3).
(2) Interim report based on new guidelines.--If the United
States Preventive Services Task Force or the Task Force on
Community Preventive Services establishes new guidelines
regarding preventive health benefits for medicare beneficiaries
more than 1 year prior to the date that a report described in paragraph
(1) is due to be submitted to the President, then not later than 6
months after the date such new guidelines are established, the
Institute of Medicine of the National Academy of Sciences shall submit
to the President a report that contains a detailed description of such
new guidelines. Such report may also contain recommendations for
legislation described in paragraph (3).
(3) Recommendations for legislation.--The Institute of
Medicine of the National Academy of Sciences, in consultation
with the United States Preventive Services Task Force and the
Task Force on Community Preventive Services, shall develop
recommendations in legislative form that--
(A) prioritize the preventive health benefits under
the medicare program; and
(B) modify such benefits, including adding new
benefits under such program, based on the study
conducted under subsection (a).
(c) Transmission to Congress.--
(1) In general.--On the day on which the report described
in paragraph (1) of subsection (b) (or paragraph (2) of such
subsection if the report contains recommendations in
legislative form described in subsection (b)(3)) is submitted
to the President, the President shall transmit the report and
recommendations to Congress.
(2) Delivery.--Copies of the report and recommendations in
legislative form required to be transmitted to Congress under
paragraph (1) shall be delivered--
(A) to both Houses of Congress on the same day;
(B) to the Clerk of the House of Representatives if
the House is not in session; and
(C) to the Secretary of the Senate if the Senate is
not in session.
SEC. 464. FAST-TRACK CONSIDERATION OF PREVENTION BENEFIT LEGISLATION.
(a) Rules of House of Representatives and Senate.--This section is
enacted by Congress--
(1) as an exercise of the rulemaking power of the House of
Representatives and the Senate, respectively, and is deemed a
part of the rules of each House of Congress, but--
(A) is applicable only with respect to the
procedure to be followed in that House of Congress in
the case of an implementing bill (as defined in
subsection (d)); and
(B) supersedes other rules only to the extent that
such rules are inconsistent with this section; and
(2) with full recognition of the constitutional right of
either House of Congress to change the rules (so far as
relating to the procedure of that House of Congress) at any
time, in the same manner and to the same extent as in the case
of any other rule of that House of Congress.
(b) Introduction and Referral.--
(1) Introduction.--
(A) In general.--Subject to paragraph (2), on the
day on which the President transmits the report
pursuant to section 463(c) to the House of
Representatives and the Senate, the recommendations in
legislative form transmitted by the President with
respect to such report shall be introduced as a bill
(by request) in the following manner:
(i) House of representatives.--In the House
of Representatives, by the Majority Leader, for
himself and the Minority Leader, or by Members
of the House of Representatives designated by
the Majority Leader and Minority Leader.
(ii) Senate.--In the Senate, by the
Majority Leader, for himself and the Minority
Leader, or by Members of the Senate designated
by the Majority Leader and Minority Leader.
(B) Special rule.--If either House of Congress is
not in session on the day on which such recommendations
in legislative form are transmitted, the
recommendations in legislative form shall be introduced
as a bill in that House of Congress, as provided in
subparagraph (A), on the first day thereafter on which
that House of Congress is in session.
(2) Referral.--Such bills shall be referred by the
presiding officers of the respective Houses to the appropriate
committee, or, in the case of a bill containing provisions
within the jurisdiction of 2 or more committees, jointly to
such committees for consideration of those provisions within
their respective jurisdictions.
(c) Consideration.--After the recommendations in legislative form
have been introduced as a bill and referred under subsection (b), such
implementing bill shall be considered in the same manner as an
implementing bill is considered under subsections (d), (e), (f), and
(g) of section 151 of the Trade Act of 1974 (19 U.S.C. 2191). The
implementing bill shall be subject to all congressional budget points
of order, including points of order under the Congressional Budget Act
of 1974.
(d) Implementing Bill Defined.--In this section, the term
``implementing bill'' means only the recommendations in legislative
form of the Institute of Medicine of the National Academy of Sciences
described in section 463(b)(3), transmitted by the President to the
House of Representatives and the Senate under section 463(c), and
introduced and referred as provided in subsection (b) as a bill of
either House of Congress.
(e) Counting of Days.--For purposes of this section, any period of
days referred to in section 151 of the Trade Act of 1974 shall be
computed by excluding--
(1) the days on which either House of Congress is not in
session because of an adjournment of more than 3 days to a day
certain or an adjournment of Congress sine die; and
(2) any Saturday and Sunday, not excluded under paragraph
(1), when either House is not in session.
Subtitle G--Informatics Systems Grant Program for Hospitals and Skilled
Nursing Facilities
SEC. 471. INFORMATICS SYSTEMS GRANT PROGRAM FOR HOSPITALS AND SKILLED
NURSING FACILITIES.
(a) Grants.--
(1) In general.--The Secretary of Health and Human Services
(in this section referred to as the ``Secretary'') shall
establish a program to make grants to eligible entities that
have submitted applications in accordance with subsection (b)
for the purpose of assisting such entities in offsetting the
costs related to purchasing, leasing, developing, and
implementing standardized clinical health care informatics
systems designed to improve patient safety and reduce adverse
events and health care complications resulting from medication
errors.
(2) Duration.--The authority of the Secretary to make
grants under this section shall terminate on September 30,
2011.
(3) Costs defined.--For purposes of this section, the term
``costs'' shall include total expenditures incurred for--
(A) purchasing, leasing, and installing computer
software and hardware, including handheld computer
technologies;
(B) making improvements to existing computer
software and hardware;
(C) purchasing or leasing communications
capabilities necessary for clinical data access,
storage, and exchange; and
(D) providing education and training to eligible
entity staff on computer patient safety information
systems.
(4) Eligible entity defined.--For purposes of this section,
the term ``eligible entity'' means the following entities:
(A) Hospital.--A hospital (as defined in section
1861(e) of the Social Security Act (42 U.S.C.
1395x(e))).
(B) Skilled nursing facility.--A skilled nursing
facility (as defined in section 1819(a) of such Act (42
U.S.C. 1395i-3(e))).
(b) Application.--An eligible entity seeking a grant under this
section shall submit an application to the Secretary at such time, in
such form and manner, and containing such information as the Secretary
specifies.
(c) Special Consideration for Eligible Entities That Serve a Large
Number of Medicare and Medicaid Eligible Individuals.--In awarding
grants under this section, the Secretary shall give special
consideration to eligible entities in which individuals that are
eligible for benefits under the medicare program under title XVIII of
the Social Security Act or the medicaid program under title XIX of such
Act make up a high percentage of the total patient population of the
entity.
(d) Limitation on Amount of Grant.--
(1) In general.--A grant awarded under this section may not
exceed the lesser of--
(A) an amount equal to the applicable percentage of
the costs incurred by the eligible entity for the
project for which the entity is seeking funding under
this section; or
(B) in the case of a grant made to--
(i) a hospital, $750,000; or
(ii) a skilled nursing facility, $200,000.
(2) Applicable percentage.--For purposes of paragraph
(1)(A), the term ``applicable percentage'' means, with respect
to an eligible entity, the percentage of total net revenues for
such period as determined appropriate by the Secretary for the
entity that consists of net revenues from the medicare program
under title XVIII of the Social Security Act.
(e) Eligible Entity Required To Furnish Secretary With
Information.--An eligible entity receiving a grant under this section
shall furnish the Secretary with such information as the Secretary may
require to--
(1) evaluate the project for which the grant is made; and
(2) ensure that funding provided under the grant is
expended for the purposes for which it is made.
(f) Reports.--
(1) Interim reports.--
(A) In general.--The Secretary shall submit, at
least annually, a report to the Committee on Ways and
Means of the House of Representatives and the Committee
on Finance of the Senate on the grant program
established under this section.
(B) Contents.--A report submitted pursuant to
subparagraph (A) shall include information on--
(i) the number of grants made;
(ii) the nature of the projects for which
funding is provided under the grant program;
(iii) the geographic distribution of grant
recipients; and
(iv) such other matters as the Secretary
determines appropriate.
(2) Final report.--Not later than 180 days after the
completion of all of the projects for which a grant is made
under this section, the Secretary shall submit a final report
to the committees referred to in paragraph (1)(A) on the grant
program established under this section, together with such
recommendations for legislation and administrative action as
the Secretary determines appropriate.
(g) Authorization of Appropriations.--
(1) Authorization.--
(A) Hospitals.--There are authorized to be
appropriated from the Federal Hospital Insurance Trust
Fund under section 1817 of the Social Security Act (42
U.S.C. 1395i) $93,000,000, for each of the fiscal years
2002 through 2011, for the purpose of making grants
under this section to eligible entities that are
hospitals.
(B) Skilled nursing facilities.--There are
authorized to be appropriated from the Federal Hospital
Insurance Trust Fund under section 1817 of the Social
Security Act (42 U.S.C. 1395i) $4,500,000, for each of
the fiscal years 2002 through 2011, for the purpose of
making grants under this section to eligible entities
that are skilled nursing facilities.
(2) Availability.--Any amounts appropriated pursuant to the
authority contained in subparagraph (A) or (B) of paragraph (1)
shall remain available, without fiscal year limitation, through
September 30, 2011.
TITLE V--MEDICARE SUSTAINABILITY
SEC. 501. INDEXING PART B DEDUCTIBLE TO INFLATION.
The first sentence of section 1833(b) of the Social Security Act
(42 U.S.C. 1395l(b)) is amended by inserting after ``1991 and
subsequent years'' the following: ``, adjusted annually, effective
January 1 of each year (beginning in 2004), by a percentage increase or
decrease equal to the percentage increase or decrease in the consumer
price index for all urban consumers (U.S. city average) for the 12-
month period ending with June of the previous year, rounded to the
nearest dollar''.
SEC. 502. INCOME-RELATED REDUCTION IN MEDICARE SUBSIDY FOR PART B
PREMIUM.
(a) In General.--Section 1839 of the Social Security Act (42 U.S.C.
1395r) is amended by adding at the end the following new subsection:
``(h)(1)(A) Notwithstanding the previous subsections of this
section, and subject to paragraph (2), in the case of an individual
whose modified adjusted gross income for a taxable year ending with or
within a calendar year exceeds the threshold amount, the Secretary
shall increase the amount of the monthly premium for such individual
for months in the calendar year by the amount which bears the same
ratio to the monthly actuarial rate for enrollees age 65 and over (as
determined under subsection (a)(1)) for that year as such excess bears
to an amount equal to \1/3\ of the applicable threshold amount).
``(B) In no event shall the increase described in subparagraph (A)
exceed an amount equal to the monthly actuarial rate for enrollees age
65 and over (as determined under subsection (a)(1)) for the year.
``(2) For purposes of this subsection--
``(A) the threshold amount, the modified adjusted gross
income, and joint return shall be determined under section
1860D(b)(1); and
``(B) rules similar to the rules of paragraphs (2) through
(5) of section 1860D(b) shall apply to this subsection.''.
(b) Conforming Amendments.--
(1) In general.--Section 1839 of the Social Security Act
(42 U.S.C. 1395r) is amended--
(A) in subsection (a)(2), as amended by section
606(a)(2)(B)(i) of the Medicare, Medicaid, and SCHIP
Benefits Improvement and Protection Act of 2000 (114
Stat. 2763A-557), as enacted into law by section
1(a)(6) of Public Law 106-554), by striking ``and (f)''
and inserting ``(f), and (h)'';
(B) in subsection (b), by inserting ``(and as
increased under subsection (h))'' after ``subsection
(a)''; and
(C) in subsection (f), by striking ``if an
individual'' and inserting the following: ``if an
individual (other than an individual subject to an
increase in the monthly premium under this section
pursuant to subsection (h))''.
(2) Payment to secretary.--Section 1840(c) of the Social
Security Act (42 U.S.C. 1395s(c)) is amended by inserting ``or
an individual determines that the estimate of modified adjusted
gross income used in determining whether the individual is
subject to an increase in the monthly premium under section
1839 pursuant to subsection (h) of such section (or in
determining the amount of such increase) is too low and results
in a portion of the premium not being deducted,'' before ``he
may''.
(c) Reporting Requirements for Secretary of the Treasury.--
Paragraph (18) of section 6103(l) of the Internal Revenue Code of 1986,
as added by section 304(a), is amended--
(1) in the heading, by inserting ``and income-related
reduction in subsidy for medicare part b premium after ``part d
premium'';
(2) in subparagraph (A), in the matter preceding clause
(i), by striking ``part D'' and inserting ``part B or D''; and
(3) in subparagraph (B), by striking ``part D'' and
inserting ``part B or D''.
(d) Effective Date.--The amendments made by subsections (a) and (b)
shall apply to the monthly premium under section 1839 of the Social
Security Act (42 U.S.C. 1395r) for months beginning with January 2004.
<all>