[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[S. 778 Introduced in Senate (IS)]
108th CONGRESS
1st Session
S. 778
To amend title XVIII of the Social Security Act to provide medicare
beneficiaries with a drug discount card that ensures access to
affordable prescription drugs.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
April 3, 2003
Mr. Hagel (for himself, Mr. Ensign, Mr. Lugar, and Mr. Inhofe)
introduced the following bill; which was read twice and
referred to the Committee on FinanceYYYYYYYYYYYYYYYYYYYYYYYYYYY
_______________________________________________________________________
A BILL
To amend title XVIII of the Social Security Act to provide medicare
beneficiaries with a drug discount card that ensures access to
affordable prescription drugs.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Medicare Rx Drug
Discount and Security Act of 2003''.
(b) Table of Contents.--The table of contents of this Act is as
follows:
Sec. 1. Short title; table of contents.
Sec. 2. Voluntary Medicare Prescription Drug Discount and Security
Program.
``Part D--Voluntary Medicare Prescription Drug Discount and Security
Program
``Sec. 1860. Definitions.
``Sec. 1860A. Establishment of program.
``Sec. 1860B. Enrollment.
``Sec. 1860C. Providing enrollment and coverage information to
beneficiaries.
``Sec. 1860D. Enrollee protections.
``Sec. 1860E. Annual enrollment fee.
``Sec. 1860F. Benefits under the program.
``Sec. 1860G. Requirements for entities to provide prescription
drug coverage.
``Sec. 1860H. Payments to eligible entities for administering
the catastrophic benefit.
``Sec. 1860I. Determination of income levels.
``Sec. 1860J. Appropriations.
``Sec. 1860K. Medicare Competition and Prescription Drug
Advisory Board.''.
Sec. 3. Administration of Voluntary Medicare Prescription Drug Discount
and Security Program.
Sec. 4. Exclusion of part D costs from determination of part B monthly
premium.
Sec. 5. Medigap revisions.
SEC. 2. VOLUNTARY MEDICARE PRESCRIPTION DRUG DISCOUNT AND SECURITY
PROGRAM.
(a) Establishment of Program.--Title XVIII of the Social Security
Act (42 U.S.C. 1395 et seq.) is amended--
(1) by redesignating part D as part E; and
(2) by inserting after part C the following new part:
``Part D--Voluntary Medicare Prescription Drug Discount and Security
Program
``definitions
``Sec. 1860. In this part:
``(1) Covered drug.--
``(A) In general.--Except as provided in this
paragraph, the term `covered drug' means--
``(i) a drug that may be dispensed only
upon a prescription and that is described in
subparagraph (A)(i) or (A)(ii) of section
1927(k)(2); or
``(ii) a biological product described in
clauses (i) through (iii) of subparagraph (B)
of such section or insulin described in
subparagraph (C) of such section,
and such term includes a vaccine licensed under section
351 of the Public Health Service Act and any use of a
covered drug for a medically accepted indication (as
defined in section 1927(k)(6)).
``(B) Exclusions.--
``(i) In general.--Such term does not
include drugs or classes of drugs, or their
medical uses, which may be excluded from
coverage or otherwise restricted under section
1927(d)(2), other than subparagraph (E) thereof
(relating to smoking cessation agents), or
under section 1927(d)(3).
``(ii) Avoidance of duplicate coverage.--A
drug prescribed for an individual that would
otherwise be a covered drug under this part
shall not be so considered if payment for such
drug is available under part A or B for an
individual entitled to benefits under part A
and enrolled under part B.
``(C) Application of formulary restrictions.--A
drug prescribed for an individual that would otherwise
be a covered drug under this part shall not be so
considered under a plan if the plan excludes the drug
under a formulary and such exclusion is not
successfully appealed under section 1860D(a)(4)(B).
``(D) Application of general exclusion
provisions.--A prescription drug discount card plan or
Medicare+Choice plan may exclude from qualified
prescription drug coverage any covered drug--
``(i) for which payment would not be made
if section 1862(a) applied to part D; or
``(ii) which are not prescribed in
accordance with the plan or this part.
Such exclusions are determinations subject to
reconsideration and appeal pursuant to section
1860D(a)(4).
``(2) Eligible beneficiary.--The term `eligible
beneficiary' means an individual who is--
``(A) eligible for benefits under part A or
enrolled under part B; and
``(B) not eligible for prescription drug coverage
under a State plan under the medicaid program under
title XIX.
``(3) Eligible entity.--The term `eligible entity' means
any--
``(A) pharmaceutical benefit management company;
``(B) wholesale pharmacy delivery system;
``(C) retail pharmacy delivery system;
``(D) insurer (including any issuer of a medicare
supplemental policy under section 1882);
``(E) Medicare+Choice organization;
``(F) State (in conjunction with a pharmaceutical
benefit management company);
``(G) employer-sponsored plan;
``(H) other entity that the Secretary determines to
be appropriate to provide benefits under this part; or
``(I) combination of the entities described in
subparagraphs (A) through (H).
``(4) Poverty line.--The term `poverty line' means the
income official poverty line (as defined by the Office of
Management and Budget, and revised annually in accordance with
section 673(2) of the Omnibus Budget Reconciliation Act of
1981) applicable to a family of the size involved.
``(5) Secretary.--The term `Secretary' means the Secretary
of Health and Human Services, acting through the Administrator
of the Centers for Medicare & Medicaid Services.
``establishment of program
``Sec. 1860A. (a) Provision of Benefit.--The Secretary shall
establish a Medicare Prescription Drug Discount and Security Program
under which the Secretary endorses prescription drug card plans offered
by eligible entities in which eligible beneficiaries may voluntarily
enroll and receive benefits under this part.
``(b) Endorsement of Prescription Drug Discount Card Plans.--
``(1) In general.--The Secretary shall endorse a
prescription drug card plan offered by an eligible entity with
a contract under this part if the eligible entity meets the
requirements of this part with respect to that plan.
``(2) National plans.--In addition to other types of plans,
the Secretary may endorse national prescription drug plans
under paragraph (1).
``(c) Voluntary Nature of Program.--Nothing in this part shall be
construed as requiring an eligible beneficiary to enroll in the program
under this part.
``(d) Financing.--The costs of providing benefits under this part
shall be payable from the Federal Supplementary Medical Insurance Trust
Fund established under section 1841.
``enrollment
``Sec. 1860B. (a) Enrollment Under Part D.--
``(1) Establishment of process.--
``(A) In general.--The 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. Except as otherwise provided in this subsection,
such process shall be similar to the process for
enrollment under part B under section 1837.
``(B) Requirement of enrollment.--An eligible
beneficiary must enroll under this part in order to be
eligible to receive the benefits under this part.
``(2) Enrollment periods.--
``(A) In general.--Except as provided in this
paragraph, an eligible beneficiary may not enroll in
the program under this part during any period after the
beneficiary's initial enrollment period under part B
(as determined under section 1837).
``(B) Special enrollment period.--In the case of
eligible beneficiaries that have recently lost
eligibility for prescription drug coverage under a
State plan under the medicaid program under title XIX,
the Secretary shall establish a special enrollment
period in which such beneficiaries may enroll under
this part.
``(C) Open enrollment period in 2004 for current
beneficiaries.--The Secretary shall establish a 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--
``(i) enroll under this part; or
``(ii) enroll or reenroll under this part
after having previously declined or terminated
such enrollment.
``(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
under section 1838, as if that section applied to the
program under this part.
``(B) Enrollment during open and special
enrollment.--Subject to subparagraph (C), an eligible
beneficiary who enrolls under the program under this
part under subparagraph (B) or (C) of paragraph (2)
shall be entitled to the benefits under this part
beginning on the first day of the month following the
month in which such enrollment occurs.
``(4) Part d coverage terminated by termination of coverage
under parts a and b or eligibility for medical assistance.--
``(A) In general.--In addition to the causes of
termination specified in section 1838, the Secretary
shall terminate an individual's coverage under this
part if the individual is--
``(i) no longer enrolled in part A or B; or
``(ii) eligible for prescription drug
coverage under a State plan under the medicaid
program under title XIX.
``(B) Effective date.--The termination described in
subparagraph (A) shall be effective on the effective
date of--
``(i) the termination of coverage under
part A or (if later) under part B; or
``(ii) the coverage under title XIX.
``(b) Enrollment With Eligible Entity.--
``(1) Process.--The Secretary shall establish a process
through which an eligible beneficiary who is enrolled under
this part shall make an annual election to enroll in a
prescription drug card 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.
``(2) Election periods.--
``(A) In general.--Except as provided in this
paragraph, the election periods under this subsection
shall be the same as the coverage election periods
under the Medicare+Choice program under section 1851(e), including--
``(i) annual coordinated election periods;
and
``(ii) special election periods.
In applying the last sentence of section 1851(e)(4)
(relating to discontinuance of a Medicare+Choice
election during the first year of eligibility) under
this subparagraph, in the case of an election described
in such section in which the individual had elected or
is provided qualified prescription drug coverage at the
time of such first enrollment, the individual shall be
permitted to enroll in a prescription drug card plan
under this part at the time of the election of coverage
under the original fee-for-service plan.
``(B) Initial election periods.--
``(i) Individuals currently covered.--In
the case of an individual who is entitled to
benefits under part A or enrolled under part B
as of November 1, 2004, there shall be an
initial election period of 6 months beginning
on that date.
``(ii) Individual covered in future.--In
the case of an individual who is first entitled
to benefits under part A or enrolled under part
B after such date, there shall be an initial
election period which is the same as the
initial enrollment period under section
1837(d).
``(C) Additional special election periods.--The
Administrator shall establish special election
periods--
``(i) in cases of individuals who have and
involuntarily lose prescription drug coverage
described in paragraph (3);
``(ii) in cases described in section
1837(h) (relating to errors in enrollment), in
the same manner as such section applies to part
B; and
``(iii) in the case of an individual who
meets such exceptional conditions (including
conditions provided under section
1851(e)(4)(D)) as the Secretary may provide.
``(D) Enrollment with one plan only.--The rules
established under subparagraph (B) shall ensure that an
eligible beneficiary may only enroll in 1 prescription
drug card plan offered by an eligible entity per year.
``(3) Medicare+choice enrollees.--An eligible beneficiary
who is enrolled under this part and enrolled in a
Medicare+Choice plan offered by a Medicare+Choice organization
must enroll in a prescription drug discount card plan offered
by an eligible entity in order to receive benefits under this
part. The beneficiary may elect to receive such benefits
through the Medicare+Choice organization in which the
beneficiary is enrolled if the organization has been awarded a
contract under this part.
``(4) Continuous prescription drug coverage.--An individual
is considered for purposes of this part to be maintaining
continuous prescription drug coverage on and after the date the
individual first qualifies to elect prescription drug coverage
under this part if the individual establishes that as of such
date the individual is covered under any of the following
prescription drug coverage and before the date that is the last
day of the 63-day period that begins on the date of termination
of the particular prescription drug coverage involved
(regardless of whether the individual subsequently obtains any
of the following prescription drug coverage):
``(A) Coverage under prescription drug card plan or
medicare+choice plan.--Prescription drug coverage under
a prescription drug card plan under this part or under
a Medicare+Choice plan.
``(B) Medicaid prescription drug coverage.--
Prescription drug coverage under a medicaid plan under
title XIX, including through the Program of All-
inclusive Care for the Elderly (PACE) under section
1934, through a social health maintenance organization
(referred to in section 4104(c) of the Balanced Budget
Act of 1997), or through a Medicare+Choice project that
demonstrates the application of capitation payment
rates for frail elderly medicare beneficiaries through
the use of a interdisciplinary team and through the
provision of primary care services to such
beneficiaries by means of such a team at the nursing
facility involved.
``(C) Prescription drug coverage under group health
plan.--Any prescription drug coverage under a group
health plan, including a health benefits plan under the
Federal Employees Health Benefit Plan under chapter 89
of title 5, United States Code, and a qualified retiree
prescription drug plan (as defined by the Secretary),
but only if (subject to subparagraph (E)(ii)) the
coverage provides benefits at least equivalent to the
benefits under a prescription drug card plan under this
part.
``(D) Prescription drug coverage under certain
medigap policies.--Coverage under a medicare
supplemental policy under section 1882 that provides
benefits for prescription drugs (whether or not such
coverage conforms to the standards for packages of
benefits under section 1882(p)(1)) and if (subject to
subparagraph (E)(ii)) the coverage provides benefits at
least equivalent to the benefits under a prescription
drug card plan under this part.
``(E) State pharmaceutical assistance program.--
Coverage of prescription drugs under a State
pharmaceutical assistance program, but only if (subject
to subparagraph (E)(ii)) the coverage provides benefits
at least equivalent to the benefits under a
prescription drug card plan under this part.
``(F) Veterans' coverage of prescription drugs.--
Coverage of prescription drugs for veterans under
chapter 17 of title 38, United States Code, but only if (subject to
subparagraph (E)(ii)) the coverage provides benefits at least
equivalent to the benefits under a prescription drug card plan under
this part.
For purposes of carrying out this paragraph, the certifications
of the type described in sections 2701(e) of the Public Health
Service Act and in section 9801(e) of the Internal Revenue Code
of 1986 shall also include a statement for the period of
coverage of whether the individual involved had prescription
drug coverage described in this paragraph.
``(5) Competition.--Each eligible entity with a contract
under this part shall compete for the enrollment of
beneficiaries in a prescription drug card plan offered by the
entity on the basis of discounts, formularies, pharmacy
networks, and other services provided for under the contract.
``providing enrollment and coverage information to beneficiaries
``Sec. 1860C. (a) Activities.--The Secretary shall provide for
activities under this part to broadly disseminate information to
eligible beneficiaries (and prospective eligible beneficiaries)
regarding enrollment under this part and the prescription drug card
plans offered by eligible entities with a contract under this part.
``(b) Special Rule for First Enrollment Under the Program.--To the
extent practicable, the activities described in subsection (a) shall
ensure that eligible beneficiaries are provided with such information
at least 60 days prior to the first enrollment period described in
section 1860B(c).
``enrollee protections
``Sec. 1860D. (a) Requirements for All Eligible Entities.--Each
eligible entity shall meet the following requirements:
``(1) Guaranteed issuance and nondiscrimination.--
``(A) Guaranteed issuance.--
``(i) In general.--An eligible beneficiary
who is eligible to enroll in a prescription
drug card plan offered by an eligible entity
under section 1860B(b) for prescription drug
coverage under this part at a time during which
elections are accepted under this part with
respect to the coverage shall not be denied
enrollment based on any health status-related
factor (described in section 2702(a)(1) of the
Public Health Service Act) or any other factor.
``(ii) Medicare+choice limitations
permitted.--The provisions of paragraphs (2)
and (3) (other than subparagraph (C)(i),
relating to default enrollment) of section
1851(g) (relating to priority and limitation on
termination of election) shall apply to
eligible entities under this subsection.
``(B) Nondiscrimination.--An eligible entity
offering prescription drug coverage under this part
shall not establish a service area in a manner that
would discriminate based on health or economic status
of potential enrollees.
``(2) Disclosure of information.--
``(A) Information.--
``(i) General information.--Each eligible
entity with a contract under this part to
provide a prescription drug card plan shall
disclose, in a clear, accurate, and
standardized form to each eligible beneficiary
enrolled in a prescription drug discount card
program offered by such entity under this part
at the time of enrollment and at least annually
thereafter, the information described in
section 1852(c)(1) relating to such
prescription drug coverage.
``(ii) Specific information.--In addition
to the information described in clause (i),
each eligible entity with a contract under this
part shall disclose the following:
``(I) How enrollees will have
access to covered drugs, including
access to such drugs through pharmacy
networks.
``(II) How any formulary used by
the eligible entity functions.
``(III) Information on grievance
and appeals procedures.
``(IV) Information on enrollment
fees and prices charged to the enrollee
for covered drugs.
``(V) Any other information that
the Secretary determines is necessary
to promote informed choices by eligible
beneficiaries among eligible entities.
``(B) Disclosure upon request of general coverage,
utilization, and grievance information.--Upon request
of an eligible beneficiary, the eligible entity shall
provide the information described in paragraph (3) to
such beneficiary.
``(C) Response to beneficiary questions.--Each
eligible entity offering a prescription drug discount
card plan under this part shall have a mechanism for
providing specific information to enrollees upon
request. The entity shall make available, through an
Internet website and, upon request, in writing,
information on specific changes in its formulary.
``(3) Grievance mechanism, coverage determinations, and
reconsiderations.--
``(A) In general.--With respect to the benefit
under this part, each eligible entity offering a
prescription drug discount card plan shall provide
meaningful procedures for hearing and resolving
grievances between the organization (including any
entity or individual through which the eligible entity
provides covered benefits) and enrollees with
prescription drug card plans of the eligible entity
under this part in accordance with section 1852(f).
``(B) Application of coverage determination and
reconsideration provisions.--Each eligible entity shall
meet the requirements of paragraphs (1) through (3) of
section 1852(g) with respect to covered benefits under
the prescription drug card plan it offers under this
part in the same manner as such requirements apply to a
Medicare+Choice organization with respect to benefits
it offers under a Medicare+Choice plan under part C.
``(C) Request for review of tiered formulary
determinations.--In the case of a prescription drug
card plan offered by an eligible entity that provides
for tiered cost-sharing for drugs included within a
formulary and provides lower cost-sharing for preferred
drugs included within the formulary, an individual who
is enrolled in the plan may request coverage of a
nonpreferred drug under the terms applicable for
preferred drugs if the prescribing physician determines
that the preferred drug for treatment of the same
condition is not as effective for the individual or has
adverse effects for the individual.
``(4) Appeals.--
``(A) In general.--Subject to subparagraph (B),
each eligible entity offering a prescription drug card
plan shall meet the requirements of paragraphs (4) and
(5) of section 1852(g) with respect to drugs not
included on any formulary in the same manner as such
requirements apply to a Medicare+Choice organization
with respect to benefits it offers under a
Medicare+Choice plan under part C.
``(B) Formulary determinations.--An individual who
is enrolled in a prescription drug card plan offered by
an eligible entity may appeal to obtain coverage under
this part for a covered drug that is not on a formulary
of the eligible entity if the prescribing physician
determines that the formulary drug for treatment of the
same condition is not as effective for the individual
or has adverse effects for the individual.
``(5) Confidentiality and accuracy of enrollee records.--
Each eligible entity offering a prescription drug discount card
plan shall meet the requirements of the Health Insurance
Portability and Accountability Act of 1996.
``(b) Eligible Entities Offering a Discount Card Program.--If an
eligible entity offers a discount card program under this part, in
addition to the requirements under subsection (a), the entity shall
meet the following requirements:
``(1) Access to covered benefits.--
``(A) Assuring pharmacy access.--
``(i) In general.--The eligible entity
offering the prescription drug discount card
plan shall secure the participation in its
network of a sufficient number of pharmacies
that dispense (other than by mail order) drugs
directly to patients to ensure convenient
access (as determined by the Secretary and
including adequate emergency access) for
enrolled beneficiaries, in accordance with
standards established under section 1860D(a)(3)
that ensure such convenient access.
``(ii) Use of point-of-service system.--
Each eligible entity offering a prescription
drug discount card plan shall establish an
optional point-of-service method of operation
under which--
``(I) the plan provides access to
any or all pharmacies that are not
participating pharmacies in its
network; and
``(II) discounts under the plan may
not be available.
The additional copayments so charged shall not
be counted as out-of-pocket expenses for
purposes of section 1860F(b).
``(B) Use of standardized technology.--
``(i) In general.--Each eligible entity
offering a prescription drug discount card plan
shall issue (and reissue, as appropriate) such
a card (or other technology) that may be used
by an enrolled beneficiary to assure access to
negotiated prices under section 1860F(a) for
the purchase of prescription drugs for which
coverage is not otherwise provided under the
prescription drug discount card plan.
``(ii) Standards.--The Secretary shall
provide for the development of national
standards relating to a standardized format for
the card or other technology referred to in
clause (i). Such standards shall be compatible
with standards established under part C of
title XI.
``(C) Requirements on development and application
of formularies.--If an eligible entity that offers a
prescription drug discount card plan uses a formulary,
the following requirements must be met:
``(i) Pharmacy and therapeutic (p&t)
committee.--The eligible entity must establish
a pharmacy and therapeutic committee that
develops and reviews the formulary. Such
committee shall include at least 1 physician
and at least 1 pharmacist both with expertise
in the care of elderly or disabled persons and
a majority of its members shall consist of
individuals who are a physician or a practicing
pharmacist (or both).
``(ii) Formulary development.--In
developing and reviewing the formulary, the
committee shall base clinical decisions on the
strength of scientific evidence and standards
of practice, including assessing peer-reviewed
medical literature, such as randomized clinical
trials, pharmacoeconomic studies, outcomes research data, and such
other information as the committee determines to be appropriate.
``(iii) Inclusion of drugs in all
therapeutic categories.--The formulary must
include drugs within each therapeutic category
and class of covered drugs (although not
necessarily for all drugs within such
categories and classes).
``(iv) Provider education.--The committee
shall establish policies and procedures to
educate and inform health care providers
concerning the formulary.
``(v) Notice before removing drugs from
formulary.--Any removal of a drug from a
formulary shall take effect only after
appropriate notice is made available to
beneficiaries and physicians.
``(vi) Grievances and appeals relating to
application of formularies.--For provisions
relating to grievances and appeals of coverage,
see paragraphs (3) and (4) of section 1860D(a).
``(2) Cost and utilization management; quality assurance;
medication therapy management program.--
``(A) In general.--Each eligible entity offering a
prescription drug discount card plan shall have in
place with respect to covered drugs--
``(i) an effective cost and drug
utilization management program, including
medically appropriate incentives to use generic
drugs and therapeutic interchange, when
appropriate;
``(ii) quality assurance measures and
systems to reduce medical errors and adverse
drug interactions, including a medication
therapy management program described in
subparagraph (B); and
``(iii) a program to control fraud, abuse,
and waste.
Nothing in this section shall be construed as impairing
an eligible entity from applying cost management tools
(including differential payments) under all methods of
operation.
``(B) Medication therapy management program.--
``(i) In general.--A medication therapy
management program described in this paragraph
is a program of drug therapy management and
medication administration that is designed to
ensure, with respect to beneficiaries with
chronic diseases (such as diabetes, asthma,
hypertension, and congestive heart failure) or
multiple prescriptions, that covered drugs
under the prescription drug discount card plan
are appropriately used to achieve therapeutic
goals and reduce the risk of adverse events,
including adverse drug interactions.
``(ii) Elements.--Such program may
include--
``(I) enhanced beneficiary
understanding of such appropriate use
through beneficiary education,
counseling, and other appropriate
means;
``(II) increased beneficiary
adherence with prescription medication
regimens through medication refill
reminders, special packaging, and other
appropriate means; and
``(III) detection of patterns of
overuse and underuse of prescription
drugs.
``(iii) Development of program in
cooperation with licensed pharmacists.--The
program shall be developed in cooperation with
licensed pharmacists and physicians.
``(iv) Considerations in pharmacy fees.--
Each eligible entity offering a prescription
drug discount card plan shall take into
account, in establishing fees for pharmacists
and others providing services under the
medication therapy management program, the
resources and time used in implementing the
program.
``(C) Treatment of accreditation.--Section
1852(e)(4) (relating to treatment of accreditation)
shall apply to prescription drug discount card plans
under this part with respect to the following
requirements, in the same manner as they apply to
Medicare+Choice plans under part C with respect to the
requirements described in a clause of section
1852(e)(4)(B):
``(i) Paragraph (1) (including quality
assurance), including any medication therapy
management program under paragraph (2).
``(ii) Subsection (c)(1) (relating to
access to covered benefits).
``(iii) Subsection (g) (relating to
confidentiality and accuracy of enrollee
records).
``(D) Public disclosure of pharmaceutical prices
for equivalent drugs.--Each eligible entity offering a
prescription drug discount card plan shall provide that
each pharmacy or other dispenser that arranges for the
dispensing of a covered drug shall inform the
beneficiary at the time of purchase of the drug of any
differential between the price of the prescribed drug
to the enrollee and the price of the lowest cost drug
covered under the plan that is therapeutically
equivalent and bioequivalent.
``annual enrollment fee
``Sec. 1860E. (a) Amount.--
``(1) In general.--Except as provided in subsection (c),
enrollment under the program under this part is conditioned
upon payment of an annual enrollment fee of $25.
``(2) Annual percentage increase.--
``(A) In general.--In the case of any calendar year
beginning after 2005, the dollar amount in paragraph
(1) shall be increased by an amount equal to--
``(i) such dollar amount; multiplied by
``(ii) the inflation adjustment.
``(B) Inflation adjustment.--For purposes of
subparagraph (A)(ii), the inflation adjustment for any
calendar year is the percentage (if any) by which--
``(i) the average per capita aggregate
expenditures for covered drugs in the United
States for medicare beneficiaries, as
determined by the Secretary for the 12-month
period ending in July of the previous year;
exceeds
``(ii) such aggregate expenditures for the
12-month period ending with July 2004.
``(C) Rounding.--If any increase determined under
clause (ii) is not a multiple of $1, such increase
shall be rounded to the nearest multiple of $1.
``(b) Collection of Annual Enrollment Fee.--
``(1) In general.--Unless the eligible beneficiary makes an
election under paragraph (2), the annual enrollment fee
described in subsection (a) shall be collected and credited to
the Federal Supplementary Medical Insurance Trust Fund in the
same manner as the monthly premium determined under section
1839 is collected and credited to such Trust Fund under section
1840.
``(2) Direct payment.--An eligible beneficiary may elect to
pay the annual enrollment fee directly or in any other manner
approved by the Secretary. The Secretary shall establish
procedures for making such an election.
``(c) Waiver.--The Secretary shall waive the enrollment fee
described in subsection (a) in the case of an eligible beneficiary
whose income is below 200 percent of the poverty line.
``benefits under the program
``Sec. 1860F. (a) Access to Negotiated Prices.--
``(1) Negotiated prices.--
``(A) In general.--Subject to subparagraph (B),
each prescription drug card plan offering a discount
card program by an eligible entity with a contract
under this part shall provide each eligible beneficiary
enrolled in such plan with access to negotiated prices
(including applicable discounts) for such prescription
drugs as the eligible entity determines appropriate.
Such discounts may include discounts for nonformulary
drugs. If such a beneficiary becomes eligible for the
catastrophic benefit under subsection (b), the
negotiated prices (including applicable discounts)
shall continue to be available to the beneficiary for
those prescription drugs for which payment may not be
made under section 1860H(b). For purposes of this
subparagraph, the term `prescription drugs' is not
limited to covered drugs, but does not include any
over-the-counter drug that is not a covered drug.
``(B) Limitations.--
``(i) Formulary restrictions.--Insofar as
an eligible entity with a contract under this
part uses a formulary, the negotiated prices
(including applicable discounts) for
nonformulary drugs may differ.
``(ii) Avoidance of duplicate coverage.--
The negotiated prices (including applicable
discounts) for prescription drugs shall not be
available for any drug prescribed for an
eligible beneficiary if payment for the drug is
available under part A or B (but such
negotiated prices shall be available if payment
under part A or B is not available because the
beneficiary has not met the deductible or has
exhausted benefits under part A or B).
``(2) Discount card.--The Secretary shall develop a uniform
standard card format to be issued by each eligible entity
offering a prescription drug discount card plan that shall be
used by an enrolled beneficiary to ensure the access of such
beneficiary to negotiated prices under paragraph (1).
``(3) Ensuring discounts in all areas.--The Secretary shall
develop procedures that ensure that each eligible beneficiary
that resides in an area where no prescription drug discount
card plans are available is provided with access to negotiated
prices for prescription drugs (including applicable discounts).
``(b) Catastrophic Benefit.--
``(1) Ten percent cost-sharing.--Subject to any formulary
used by the prescription drug discount card program in which
the eligible beneficiary is enrolled, the catastrophic benefit
shall provide benefits with cost-sharing that is equal to 10
percent of the negotiated price (taking into account any
applicable discounts) of each drug dispensed to such
beneficiary after the beneficiary has incurred costs (as
described in paragraph (3)) for covered drugs in a year equal
to the applicable annual out-of-pocket limit specified in
paragraph (2).
``(2) Annual out-of-pocket limits.--For purposes of this
part, the annual out-of-pocket limits specified in this
paragraph are as follows:
``(A) Beneficiaries with annual incomes below 200
percent of the poverty line.--In the case of an
eligible beneficiary whose income (as determined under
section 1860I) is below 200 percent of the poverty
line, the annual out-of-pocket limit is equal to
$1,500.
``(B) Beneficiaries with annual incomes between 200
and 400 percent of the poverty line.--In the case of an
eligible beneficiary whose income (as so determined)
equals or exceeds 200 percent, but does not exceed 400
percent, of the poverty line, the annual out-of-pocket limit is equal
to $3,500.
``(C) Beneficiaries with annual incomes between 400
and 600 percent of the poverty line.--In the case of an
eligible beneficiary whose income (as so determined)
equals or exceeds 400 percent, but does not exceed 600
percent, of the poverty line, the annual out-of-pocket
limit is equal to $5,500.
``(D) Beneficiaries with annual incomes that exceed
600 percent of the poverty line.--In the case of an
eligible beneficiary whose income (as so determined)
equals or exceeds 600 percent of the poverty line, the
annual out-of-pocket limit is an amount equal to 20
percent of that beneficiary's income for that year
(rounded to the nearest multiple of $1).
``(3) Application.--In applying paragraph (2), incurred
costs shall only include those expenses for covered drugs that
are incurred by the eligible beneficiary using a card approved
by the Secretary under this part that are paid by that
beneficiary and for which the beneficiary is not reimbursed
(through insurance or otherwise) by another person.
``(4) Annual percentage increase.--
``(A) In general.--In the case of any calendar year
after 2005, the dollar amounts in subparagraphs (A),
(B), and (C) of paragraph (2) shall be increased by an
amount equal to--
``(i) such dollar amount; multiplied by
``(ii) the inflation adjustment determined
under section 1860E(a)(2)(B) for such calendar
year.
``(B) Rounding.--If any increase determined under
subparagraph (A) is not a multiple of $1, such increase
shall be rounded to the nearest multiple of $1.
``(5) Eligible entity not at financial risk for
catastrophic benefit.--
``(A) In general.--The Secretary, and not the
eligible entity, shall be at financial risk for the
provision of the catastrophic benefit under this
subsection.
``(B) Provisions relating to payments to eligible
entities.--For provisions relating to payments to
eligible entities for administering the catastrophic
benefit under this subsection, see section 1860H.
``(6) Ensuring catastrophic benefit in all areas.--The
Secretary shall develop procedures for the provision of the
catastrophic benefit under this subsection to each eligible
beneficiary that resides in an area where there are no
prescription drug discount card plans offered that have been
awarded a contract under this part.
``requirements for entities to provide prescription drug coverage
``Sec. 1860G. (a) Establishment of Bidding Process.--The Secretary
shall establish a process under which the Secretary accepts bids from
eligible entities and awards contracts to the entities to provide the
benefits under this part to eligible beneficiaries in an area.
``(b) Submission of Bids.--Each eligible entity desiring to enter
into a contract under this part shall submit a bid to the Secretary at
such time, in such manner, and accompanied by such information as the
Secretary may require.
``(c) Administrative Fee Bid.--
``(1) Submission.--For the bid described in subsection (b),
each entity shall submit to the Secretary information regarding
administration of the discount card and catastrophic benefit
under this part.
``(2) Bid submission requirements.--
``(A) Administrative fee bid submission.--In
submitting bids, the entities shall include separate
costs for administering the discount card component, if
applicable, and the catastrophic benefit. The entity
shall submit the administrative fee bid in a form and
manner specified by the Secretary, and shall include a
statement of projected enrollment and a separate
statement of the projected administrative costs for at
least the following functions:
``(i) Enrollment, including income
eligibility determination.
``(ii) Claims processing.
``(iii) Quality assurance, including drug
utilization review.
``(iv) Beneficiary and pharmacy customer
service.
``(v) Coordination of benefits.
``(vi) Fraud and abuse prevention.
``(B) Negotiated administrative fee bid amounts.--
The Secretary has the authority to negotiate regarding
the bid amounts submitted. The Secretary may reject a
bid if the Secretary determines it is not supported by
the administrative cost information provided in the bid
as specified in subparagraph (A).
``(C) Payment to plans based on administrative fee
bid amounts.--The Secretary shall use the bid amounts
to calculate a benchmark amount consisting of the
enrollment-weighted average of all bids for each
function and each class of entity. The class of entity
is either a regional or national entity, or such other
classes as the Secretary may determine to be
appropriate. The functions are the discount card and
catastrophic components. If an eligible entity's
combined bid for both functions is above the combined
benchmark within the entity's class for the functions,
the eligible entity shall collect additional necessary
revenue through 1 or both of the following:
``(i) Additional fees charged to the
beneficiary, not to exceed $25 annually.
``(ii) Use of rebate amounts from drug
manufacturers to defray administrative costs.
``(d) Awarding of Contracts.--
``(1) In general.--The Secretary shall, consistent with the
requirements of this part and the goal of containing medicare
program costs, award at least 2 contracts in each area, unless
only 1 bidding entity meets the terms and conditions specified
by the Secretary under paragraph (2).
``(2) Terms and conditions.--The Secretary shall not award
a contract to an eligible entity under this section unless the
Secretary finds that the eligible entity is in compliance with
such terms and conditions as the Secretary shall specify.
``(3) Requirements for eligible entities providing discount
card program.--Except as provided in subsection (e), in
determining which of the eligible entities that submitted bids
that meet the terms and conditions specified by the Secretary
under paragraph (2) to award a contract, the Secretary shall
consider whether the bid submitted by the entity meets at least
the following requirements:
``(A) Level of savings to medicare beneficiaries.--
The program passes on to medicare beneficiaries who
enroll in the program discounts on prescription drugs,
including discounts negotiated with manufacturers.
``(B) Prohibition on application only to mail
order.--The program applies to drugs that are available
other than solely through mail order and provides
convenient access to retail pharmacies.
``(C) Level of beneficiary services.--The program
provides pharmaceutical support services, such as
education and services to prevent adverse drug
interactions.
``(D) Adequacy of information.--The program makes
available to medicare beneficiaries through the
Internet and otherwise information, including
information on enrollment fees, prices charged to
beneficiaries, and services offered under the program,
that the Secretary identifies as being necessary to
provide for informed choice by beneficiaries among
endorsed programs.
``(E) Extent of demonstrated experience.--The
entity operating the program has demonstrated
experience and expertise in operating such a program or
a similar program.
``(F) Extent of quality assurance.--The entity has
in place adequate procedures for assuring quality
service under the program.
``(G) Operation of assistance program.--The entity
meets such requirements relating to solvency,
compliance with financial reporting requirements, audit
compliance, and contractual guarantees as specified by
the Secretary.
``(H) Privacy compliance.--The entity implements
policies and procedures to safeguard the use and
disclosure of program beneficiaries' individually
identifiable health information in a manner consistent
with the Federal regulations (concerning the privacy of
individually identifiable health information)
promulgated under section 264(c) of the Health
Insurance Portability and Accountability Act of 1996.
``(I) Additional beneficiary protections.--The
program meets such additional requirements as the
Secretary identifies to protect and promote the
interest of medicare beneficiaries, including
requirements that ensure that beneficiaries are not
charged more than the lower of the negotiated retail
price or the usual and customary price.
The prices negotiated by a prescription drug discount card
program endorsed under this section shall (notwithstanding any
other provision of law) not be taken into account for the
purposes of establishing the best price under section
1927(c)(1)(C).
``(4) Beneficiary access to savings and rebates.--The
Secretary shall require eligible entities offering a discount
card program to pass on savings and rebates negotiated with
manufacturers to eligible beneficiaries enrolled with the
entity.
``(5) Negotiated agreements with employer-sponsored
plans.--Notwithstanding any other provision of this part, the
Secretary may negotiate agreements with employer-sponsored
plans under which eligible beneficiaries are provided with a
benefit for prescription drug coverage that is more generous
than the benefit that would otherwise have been available under
this part if such an agreement results in cost savings to the
Federal Government.
``(e) Requirements for Other Eligible Entities.--An eligible entity
that is licensed under State law to provide the health insurance
benefits under this section shall be required to meet the requirements
of subsection (d)(3). If an eligible entity offers a national plan,
such entity shall not be required to meet the requirements of
subsection (d)(3), but shall meet the requirements of Employee
Retirement Income Security Act of 1974 that apply with respect to such
plan.
``payments to eligible entities for administering the catastrophic
benefit
``Sec. 1860H. (a) In General.--The Secretary may establish
procedures for making payments to an eligible entity under a contract
entered into under this part for--
``(1) the costs of providing covered drugs to beneficiaries
eligible for the benefit under this part in accordance with
subsection (b) minus the amount of any cost-sharing collected
by the eligible entity under section 1860F(b); and
``(2) costs incurred by the entity in administering the
catastrophic benefit in accordance with section 1860G.
``(b) Payment for Covered Drugs.--
``(1) In general.--Except as provided in subsection (c) and
subject to paragraph (2), the Secretary may only pay an
eligible entity for covered drugs furnished by the eligible
entity to an eligible beneficiary enrolled with such entity
under this part that is eligible for the catastrophic benefit
under section 1860F(b).
``(2) Limitations.--
``(A) Formulary restrictions.--Insofar as an
eligible entity with a contract under this part uses a
formulary, the Secretary may not make any payment for a
covered drug that is not included in such formulary,
except to the extent provided under section
1860D(a)(4)(B).
``(B) Negotiated prices.--The Secretary may not pay
an amount for a covered drug furnished to an eligible
beneficiary that exceeds the negotiated price
(including applicable discounts) that the beneficiary
would have been responsible for under section 1860F(a)
or the price negotiated for insurance coverage under
the Medicare+Choice program under part C, a medicare
supplemental policy, employer-sponsored coverage, or a
State plan.
``(C) Cost-sharing limitations.--An eligible entity
may not charge an individual enrolled with such entity
who is eligible for the catastrophic benefit under this
part any copayment, tiered copayment, coinsurance, or
other cost-sharing that exceeds 10 percent of the cost
of the drug that is dispensed to the individual.
``(3) Payment in competitive areas.--In a geographic area
in which 2 or more eligible entities offer a plan under this
part, the Secretary may negotiate an agreement with the entity
to reimburse the entity for costs incurred in providing the
benefit under this part on a capitated basis.
``(c) Secondary Payer Provisions.--The provisions of section
1862(b) shall apply to the benefits provided under this part.
``determination of income levels
``Sec. 1860I. (a) Determination of Income Levels.--
``(1) In general.--The Secretary shall establish procedures
under which each eligible entity awarded a contract under this
part determines the income levels of eligible beneficiaries
enrolled in a prescription drug card plan offered by that
entity at least annually for purposes of sections 1860E(c) and
1860F(b).
``(2) Procedures.--The procedures established under
paragraph (1) shall require each eligible beneficiary to submit
such information as the eligible entity requires to make the
determination described in paragraph (1).
``(b) Enforcement of Income Determinations.--The Secretary shall--
``(1) establish procedures that ensure that eligible
beneficiaries comply with sections 1860E(c) and 1860F(b); and
``(2) require, if the Secretary determines that payments
were made under this part to which an eligible beneficiary was
not entitled, the repayment of any excess payments with
interest and a penalty.
``(c) Quality Control System.--
``(1) Establishment.--The Secretary shall establish a
quality control system to monitor income determinations made by
eligible entities under this section and to produce appropriate
and comprehensive measures of error rates.
``(2) Periodic audits.--The Inspector General of the
Department of Health and Human Services shall conduct periodic
audits to ensure that the system established under paragraph
(1) is functioning appropriately.
``appropriations
``Sec. 1860J. There are authorized to be appropriated from time to
time, out of any moneys in the Treasury not otherwise appropriated, to
the Federal Supplementary Medical Insurance Trust Fund established
under section 1841, an amount equal to the amount by which the benefits
and administrative costs of providing the benefits under this part
exceed the enrollment fees collected under section 1860E.
``medicare competition and prescription drug advisory board
``Sec. 1860K. (a) Establishment of Board.--There is established a
Medicare Prescription Drug Advisory Board (in this section referred to
as the `Board').
``(b) Advice on Policies; Reports.--
``(1) Advice on policies.--The Board shall advise the
Secretary on policies relating to the Voluntary Medicare
Prescription Drug Discount and Security Program under this
part.
``(2) Reports.--
``(A) In general.--With respect to matters of the
administration of the program under this part, the
Board shall submit to Congress and to the Secretary
such reports as the Board determines appropriate. Each
such report may contain such recommendations as the
Board determines appropriate for legislative or
administrative changes to improve the administration of
the program under this part. Each such report shall be
published in the Federal Register.
``(B) Maintaining independence of board.--The Board
shall directly submit to Congress reports required
under subparagraph (A). No officer or agency of the
United States may require the Board to submit to any
officer or agency of the United States for approval,
comments, or review, prior to the submission to
Congress of such reports.
``(c) Structure and Membership of the Board.--
``(1) Membership.--The Board shall be composed of 7 members
who shall be appointed as follows:
``(A) Presidential appointments.--
``(i) In general.--Three members shall be
appointed by the President, by and with the
advice and consent of the Senate.
``(ii) Limitation.--Not more than 2 such
members may be from the same political party.
``(B) Senatorial appointments.--Two members (each
member from a different political party) shall be
appointed by the President pro tempore of the Senate
with the advice of the Chairman and the Ranking
Minority Member of the Committee on Finance of the
Senate.
``(C) Congressional appointments.--Two members
(each member from a different political party) shall be
appointed by the Speaker of the House of Representatives, with the
advice of the Chairman and the Ranking Minority Member of the Committee
on Ways and Means of the House of Representatives.
``(2) Qualifications.--The members 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 Board.
``(3) Composition.--Of the members appointed under
paragraph (1)--
``(A) at least 1 shall represent the pharmaceutical
industry;
``(B) at least 1 shall represent physicians;
``(C) at least 1 shall represent medicare
beneficiaries;
``(D) at least 1 shall represent practicing
pharmacists; and
``(E) at least 1 shall represent eligible entities.
``(d) Terms of Appointment.--
``(1) In general.--Subject to paragraph (2), each member of
the Board shall serve for a term of 6 years.
``(2) Continuance in office and staggered terms.--
``(A) Continuance in office.--A member appointed to
a term of office after the commencement of such term
may serve under such appointment only for the remainder
of such term.
``(B) Staggered terms.--The terms of service of the
members initially appointed under this section shall
begin on January 1, 2005, and expire as follows:
``(i) Presidential appointments.--The terms
of service of the members initially appointed
by the President shall expire as designated by
the President at the time of nomination, 1 each
at the end of--
``(I) 2 years;
``(II) 4 years; and
``(III) 6 years.
``(ii) Senatorial appointments.--The terms
of service of members initially appointed by
the President pro tempore of the Senate shall
expire as designated by the President pro
tempore of the Senate at the time of
nomination, 1 each at the end of--
``(I) 3 years; and
``(II) 6 years.
``(iii) Congressional appointments.--The
terms of service of members initially appointed
by the Speaker of the House of Representatives
shall expire as designated by the Speaker of
the House of Representatives at the time of
nomination, 1 each at the end of--
``(I) 4 years; and
``(II) 5 years.
``(C) Reappointments.--Any person appointed as a
member of the Board may not serve for more than 8
years.
``(D) 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. A vacancy in the
Board shall be filled in the manner in which the
original appointment was made.
``(e) Chairperson.--A member of the Board shall be designated by
the President to serve as Chairperson for a term of 4 years or, if the
remainder of such member's term is less than 4 years, for such
remainder.
``(f) Expenses and Per Diem.--Members of the Board shall serve
without compensation, except that, while serving on business of the
Board away from their homes or regular places of business, members may
be allowed travel expenses, including per diem in lieu of subsistence,
as authorized by section 5703 of title 5, United States Code, for
persons in the Government employed intermittently.
``(g) Meetings.--
``(1) In general.--The Board shall meet at the call of the
Chairperson (in consultation with the other members of the
Board) not less than 4 times each year to consider a specific
agenda of issues, as determined by the Chairperson in
consultation with the other members of the Board.
``(2) Quorum.--Four members of the Board (not more than 3
of whom may be of the same political party) shall constitute a
quorum for purposes of conducting business.
``(h) Federal Advisory Committee Act.--The Board shall be exempt
from the provisions of the Federal Advisory Committee Act (5 U.S.C.
App.).
``(i) Personnel.--
``(1) Staff director.--The Board shall, without regard to
the provisions of title 5, United States Code, relating to the
competitive service, appoint a Staff Director who shall be paid
at a rate equivalent to a rate established for the Senior
Executive Service under section 5382 of title 5, United States
Code.
``(2) Staff.--
``(A) In general.--The Board may employ, without
regard to chapter 31 of title 5, United States Code,
such officers and employees as are necessary to
administer the activities to be carried out by the
Board.
``(B) Flexibility with respect to civil service
laws.--
``(i) In general.--The staff of the Board
shall be appointed without regard to the
provisions of title 5, United States Code,
governing appointments in the competitive
service, and, subject to clause (ii), shall be
paid without regard to the provisions of
chapters 51 and 53 of such title (relating to
classification and schedule pay rates).
``(ii) Maximum rate.--In no case may the
rate of compensation determined under clause
(i) exceed the rate of basic pay payable for
level IV of the Executive Schedule under
section 5315 of title 5, United States Code.
``(j) Authorization of Appropriations.--There are authorized to be
appropriated, out of the Federal Supplemental Medical Insurance Trust
Fund established under section 1841, and the general fund of the
Treasury, such sums as are necessary to carry out the purposes of this
section.''.
(b) Conforming References to Previous Part D.--
(1) In general.--Any reference in law (in effect before the
date of enactment of this Act) to part D of title XVIII of the
Social Security Act is deemed a reference to part E of such
title (as in effect after such date).
(2) Secretarial submission of legislative proposal.--Not
later than 6 months after the date of enactment of this
section, 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 section.
(c) Effective Date.--
(1) In general.--The amendment made by subsection (a) shall
take effect on the date of enactment of this Act.
(2) Implementation.--Notwithstanding any provision of part
D of title XVIII of the Social Security Act (as added by
subsection (a)), the Secretary of Health and Human Services
shall implement the Voluntary Medicare Prescription Drug
Discount and Security Program established under such part in a
manner such that--
(A) benefits under such part for eligible
beneficiaries (as defined in section 1860 of such Act,
as added by such subsection) with annual incomes below
200 percent of the poverty line (as defined in such
section) are available to such beneficiaries not later
than the date that is 6 months after the date of
enactment of this Act; and
(B) benefits under such part for other eligible
beneficiaries are available to such beneficiaries not
later than the date that is 1 year after the date of
enactment of this Act.
SEC. 3. ADMINISTRATION OF VOLUNTARY MEDICARE PRESCRIPTION DRUG DISCOUNT
AND SECURITY PROGRAM.
(a) Establishment of Center for Medicare Prescription Drugs.--There
is established, within the Centers for Medicare & Medicaid Services of
the Department of Health and Human Services, a Center for Medicare
Prescription Drugs. Such Center shall be separate from the Center for
Beneficiary Choices, the Center for Medicare Management, and the Center
for Medicaid and State Operations.
(b) Duties.--It shall be the duty of the Center for Medicare
Prescription Drugs to administer the Voluntary Medicare Prescription
Drug Discount and Security Program established under part D of title
XVIII of the Social Security Act (as added by section 2).
(c) Director.--
(1) Appointment.--There shall be in the Center for Medicare
Prescription Drugs a Director of Medicare Prescription Drugs,
who shall be appointed by the President, by and with the advice
and consent of the Senate.
(2) Responsibilities.--The Director shall be responsible
for the exercise of all powers and the discharge of all duties
of the Center for Medicare Prescription Drugs and shall have
authority and control over all personnel and activities
thereof.
(d) Personnel.--The Director of the Center for Medicare
Prescription Drugs may appoint and terminate such personnel as may be
necessary to enable the Center for Medicare Prescription Drugs to
perform its duties.
SEC. 4. EXCLUSION OF PART D COSTS FROM DETERMINATION OF PART B MONTHLY
PREMIUM.
Section 1839(g) of the Social Security Act (42 U.S.C. 1395r(g)) is
amended--
(1) by striking ``attributable to the application of
section'' and inserting ``attributable to--
``(1) the application of section'';
(2) by striking the period and inserting ``; and''; and
(3) by adding at the end the following new paragraph:
``(2) the Voluntary Medicare Prescription Drug Discount and
Security Program under part D.''.
SEC. 5. MEDIGAP REVISIONS.
Section 1882 of the Social Security Act (42 U.S.C. 1395ss) is
amended by adding at the end the following new subsection:
``(v) Modernization of Medicare Supplemental Policies.--
``(1) Promulgation of model regulation.--
``(A) NAIC model regulation.--If, within 9 months
after the date of enactment of the Medicare Rx Drug
Discount and Security Act of 2003, the National
Association of Insurance Commissioners (in this
subsection referred to as the `NAIC') changes the 1991
NAIC Model Regulation (described in subsection (p)) to
revise the benefit package classified as `J' under the
standards established by subsection (p)(2) (including
the benefit package classified as `J' with a high
deductible feature, as described in subsection (p)(11))
so that--
``(i) the coverage for prescription drugs
available under such benefit package is
replaced with coverage for prescription drugs
that complements but does not duplicate the
benefits for prescription drugs that
beneficiaries are otherwise entitled to under
this title;
``(ii) a uniform format is used in the
policy with respect to such revised benefits;
and
``(iii) such revised standards meet any
additional requirements imposed by the Medicare
Rx Drug Discount and Security Act of 2003;
subsection (g)(2)(A) shall be applied in each State,
effective for policies issued to policy holders on and
after January 1, 2005, as if the reference to the Model
Regulation adopted on June 6, 1979, were a reference to
the 1991 NAIC Model Regulation as changed under this
subparagraph (such changed regulation referred to in
this section as the `2005 NAIC Model Regulation').
``(B) Regulation by the secretary.--If the NAIC
does not make the changes in the 1991 NAIC Model
Regulation within the 9-month period specified in
subparagraph (A), the Secretary shall promulgate, not
later than 9 months after the end of such period, a
regulation and subsection (g)(2)(A) shall be applied in
each State, effective for policies issued to policy
holders on and after January 1, 2005, as if the
reference to the Model Regulation adopted on June 6,
1979, were a reference to the 1991 NAIC Model
Regulation as changed by the Secretary under this
subparagraph (such changed regulation referred to in
this section as the `2005 Federal Regulation').
``(C) Consultation with working group.--In
promulgating standards under this paragraph, the NAIC
or Secretary shall consult with a working group similar
to the working group described in subsection (p)(1)(D).
``(D) Modification of standards if medicare
benefits change.--If benefits under part D of this
title are changed and the Secretary determines, in
consultation with the NAIC, that changes in the 2005
NAIC Model Regulation or 2005 Federal Regulation are
needed to reflect such changes, the preceding
provisions of this paragraph shall apply to the
modification of standards previously established in the
same manner as they applied to the original
establishment of such standards.
``(2) Construction of benefits in other medicare
supplemental policies.--Nothing in the benefit packages
classified as `A' through `I' under the standards established
by subsection (p)(2) (including the benefit package classified
as `F' with a high deductible feature, as described in
subsection (p)(11)) shall be construed as providing coverage
for benefits for which payment may be made under part D.
``(3) Application of provisions and conforming
references.--
``(A) Application of provisions.--The provisions of
paragraphs (4) through (10) of subsection (p) shall
apply under this section, except that--
``(i) any reference to the model regulation
applicable under that subsection shall be
deemed to be a reference to the applicable 2005
NAIC Model Regulation or 2005 Federal
Regulation; and
``(ii) any reference to a date under such
paragraphs of subsection (p) shall be deemed to
be a reference to the appropriate date under
this subsection.
``(B) Other references.--Any reference to a
provision of subsection (p) or a date applicable under
such subsection shall also be considered to be a
reference to the appropriate provision or date under
this subsection.''.
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