Short title; table of contents

(a)

Short title

This Act may be cited as the Medicare Prescription Drug Emergency Guarantee Act of 2006. (b)

Table of contents

The table of contents of this Act is as follows:

Sec. 1. Short title; table of contents.

Sec. 2. Protections to provide for uninterrupted access to medicines.

Sec. 3. Required application of intermediate sanctions to protect against fraud and abuse.

Sec. 4. Changes of enrollment in prescription drug plans and MA–PD plans allowed twice during year.

Sec. 5. Prohibiting additional restrictions or limitations on coverage during year.

Sec. 6. MedPAC study on appropriate enrollment of dual eligible individuals.

Sec. 7. Prohibition on conditioning Medicaid eligibility on enrollment in Medicare part D coverage or other creditable coverage.

Sec. 8. Reimbursement of third parties for 2006 transition costs.

Protections to provide for uninterrupted access to medicines

(a)

Minimum standard transition coverage

(1)

In general

Section 1860D–4(b) of the Social Security Act (42 U.S.C. 1395w–104(b)) is amended by adding at the end the following new paragraph:

(4)

Uninterrupted access to medicines

(A)

Minimum standard transition coverage

A PDP sponsor offering a prescription drug plan under this part or an MA–PD plan under part C shall provide minimum standard transition coverage in accordance with subparagraph (B). (B)

Requirements

The minimum standard transition coverage under this subparagraph, with respect to a part D eligible individual who is enrolled in a prescription drug plan (or an individual who is presumed to be such an individual pursuant to subparagraph (F)) who presents a prescription for a drug at a pharmacy, is the following: (i)

Guaranteed initial supply, regardless of coverage limitations or restrictions

In the case that the PDP sponsor of such plan uses a formulary that does not cover the drug or otherwise imposes a restriction on the coverage of the drug (such as through the application of a preferred status, usage restriction, step therapy, prior authorization or a quantity limits) and during the period in which such individual has been enrolled in such plan the individual has not previously sought coverage under the plan for such drug the plan shall provide for the following: (I)

Minimum supply of prescription drug

The plan must provide for coverage for at least a 60-day supply (or a 90-day supply in the case of an individual who is a resident of a long-term care facility) of the drug, or, if less, a supply of the drug that is the full amount of the prescription. (II)

Information on formulary, prescription drug plans, and appeal rights

The plan must provide the individual with a standard notice developed by the Secretary that informs the individual about the limitations and restrictions of the coverage of the drug, that describes the rights of the individual with respect to requesting a determination under subsection (g)(2) or an appeal of such a determination under subsection (h), that describes any ability of the individual to change the election of such plan under section 1860D–1(b)(1)(B), and that informs the individual about sources of information on prescription drug plans to make such a change in plans. (III)

Refills during pending appeal

In the case of such an individual who brings an appeal under subsection (h), with respect to the prescription drug involved, an additional supply of the drug (for the amount of days provided to the individual under subclause (I)) during the period ending on the date on which a final determination is made on the appeal. (ii)

Guaranteed supply when unable to verify plan enrollment

In the case that the pharmacy is unable to locate or verify the individual's enrollment in such plan through a reasonable effort: (I)

Minimum supply of prescription drug

Refills

The plan must provide an additional 60-day supply (or a 90-day supply in the case of an individual who is a resident of a long-term care facility) of the drug, or if less, a supply of the drug that is the full amount of the prescription, if the pharmacy continues to be unable to locate the individual's enrollment through such reasonable efforts when a prescription is presented on or after the date that a prescription refill is appropriate. (C)

Reimbursements

(i)

Reimbursements to pharmacies

(I)

In general

If a pharmacy provides prescription drugs for which the minimum standard transition coverage is required under subparagraph (B), the Secretary shall reimburse the pharmacy for the costs incurred in providing the prescription drugs, including acquisition costs, dispensing costs, and other overhead costs. The Secretary shall provide prompt payment (consistent with the provisions of section 1842(c)(2)) of such reimbursements from the Medicare Prescription Drug Account under section 1860D–16 of the Social Security Act (42 U.S.C. 1395w–116). Such reimbursements shall be deemed to be payments from such Account under subsection (b) of such section. (II)

Sanctions for fraudulent claims

In the case of a pharmacy that knowingly provides to the Secretary false information in connection with a claim for reimbursement under subclause (I), the Secretary may impose a civil money penalty in an amount not to exceed $10,000 for each such claim. The provisions of section 1128A (other than subsections (a) and (b) and the second sentence of subsection (f)) shall apply to a civil money penalty under the previous sentence in the same manner as such provisions apply to a penalty or proceeding under section 1128A(a). (ii)

Recovery from plans of pharmacy reimbursements

The Secretary shall establish a process for recovering the reimbursements made to pharmacies under clause (i) from prescription drug plans and MA–PD plans if the Secretary determines that such plans should have incurred such costs. Amounts recovered pursuant to the preceding sentence shall be deposited in the Medicare Prescription Drug Account. (iii)

Application of intermediate sanctions

In the case of a failure of a prescription drug plan under this part or an MA–PD plan under part C to provide for the minimum coverage required under subparagraph (B), the failure shall be treated as a failure to provide medically necessary items and services under section 1857(g)(1)(A), as applied by section 1860D–12(b)(3)(E), and the Secretary shall impose intermediate sanctions under such section 1857(g). (D)

Cost-sharing

The cost-sharing for a prescription filled pursuant to subparagraph (B) for an individual shall be in accordance with the prescription drug plan in which the individual attests to be enrolled and the class of individual (such as subsidy-eligible individuals) to which the individual so attests. (E)

Refunds to individuals with inappropriate charges

If the Secretary determines, in accordance with a method determined by the Secretary, that an individual was inappropriately charged for a prescription drug dispensed to such individual under this part or part C, the Secretary shall— (i)reduce payments to the sponsor of the prescription drug plan under section 1860D–15 or to the organization offering the MA–PD plan under section 1853 that inappropriately charged the individual by an amount equal to the amount the individual was inappropriately charged; and (ii)refund such amount to the individual within 30 days of the date of the determination that the individual was inappropriately charged. (F)

Presumptive eligibility

(i)

Subsidy-eligible individuals

For purposes of this paragraph, an individual shall be presumed to be a dual eligible individual or subsidy-eligible individual if the individual self attests to being such an individual, respectively. (ii)

Plan enrollment

For purposes of this paragraph, an individual shall be presumed to be enrolled in a prescription drug plan under this part or an MA–PD plan under part C if the individual self attests to being enrolled under such plan. (iii)

Individual liable for costs of false attestation

(I)

In general

If the Secretary, as the result of verification activities conducted by the Secretary, determines after a fair hearing that an individual has knowingly made a false self-attestation described in clause (i) or (ii) or in subparagraph (D), the Secretary may, subject to subclause (II), seek recovery from the individual for the full amount of the cost of benefits provided to the individual under this paragraph as a result of such self attestation. (II)

Exception

The Secretary shall at its discretion not seek recovery under subclause (I) if the Secretary determines that it would not be cost-effective to do so. (III)

Reimbursements to Federal Government

Any amounts recovered by the Secretary in accordance with this clause shall be returned to the prescription drug plan or MA–PD plan if the Secretary has previously recovered payment from such plan. (iv)

Requirements for self attestation

The Secretary shall promulgate requirements for self attestations under this subparagraph, but the failure of the Secretary to promulgate such requirements shall not preclude the applications of the previous provisions of this subparagraph.

(2)

Effective date

The amendment made by paragraph (1) shall take effect on the date of the enactment of this Act, but shall apply to prescription drugs dispensed on and after January 1, 2006. (b)

Notice for change in formulary and other restrictions or limitations on coverage

(1)

In general

Section 1860D–4(a) of such Act (42 U.S.C. 1395w–104(a)) is amended by adding at the end the following new paragraph:

(5)

Annual notice of changes in formulary and other restrictions or limitations on coverage

Each PDP sponsor offering a prescription drug plan (and each MA organization offering an MA–PD plan) shall furnish to each enrollee at the time of each annual coordinated election period (referred to in section 1860D–1(b)(1)(B)(iii)) for a plan year a notice of any changes in the formulary or other restrictions or limitations on coverage of a covered part D drug under the plan that will take effect for the plan year.

(2)

Effective date

The amendment made by paragraph (1) shall apply to annual coordinated election periods beginning after the date of the enactment of this Act. (c)

Standardized forms and procedures for reconsiderations and appeals

(1)

In general

Section 1860D–4 of such Act (42 U.S.C. 1395w–104) is amended by adding at the end the following new subsection:

(l)

Standardized forms and procedures for reconsiderations and appeals

(1)

Standard enrollee notice

The Secretary shall develop a standard notice to be distributed by a prescription drug plan (or an MA–PD plan) to an enrollee when a covered part D drug prescribed for the enrollee is not covered, or the coverage of such drug is otherwise restricted, by the plan. (2)

Standardized process for reconsiderations and appeals

The Secretary shall require prescription drug plans and MA–PD plans to follow the same standardized process for reconsiderations and redeterminations under subsections (g) and (h). Such process shall require that determinations regarding medical necessity are based on professional medical judgement, the medical condition of the enrollee, the treating physician's recommendation, and other medical evidence.

(2)

Effective date

The Secretary of Health and Human Services shall provide for the standard notice and the standardized process, and the application of such notice and process, under the amendment made by paragraph (1) by not later than January 1, 2007.

Required application of intermediate sanctions to protect against fraud and abuse

(a)

In general

Section 1860D–12(b)(3)(E) of the Social Security Act (42 U.S.C. 1395w–112(b)(3)(E)) is amended by inserting and the reference to may provide in section 1857(g)(1) is deemed a reference to shall provide after this part. (b)

Application to MA–PD plans

Section 1857(g)(1) of such Act (42 U.S.C. 1395w–27(g)(1)) is amended by inserting (or in the case of an MA–PD plan or a prescription drug plan under part D, the Secretary shall provide) after may provide.

Changes of enrollment in prescription drug plans and MA–PD plans allowed twice during year

(a)

Additional election permitted once each year outside of annual coordinated election period

Section 1851(e)(4) of the Social Security Act (42 U.S.C. 1395w–21(e)(4)) is amended by inserting once every year, and in addition, after make a new election under this section. (b)

Effective date

The amendment made by subsection (a) shall take effect as of the date of the enactment of this Act.

Prohibiting additional restrictions or limitations on coverage during year

(a)

In general

Section 1860D–4(b)(4) of the Social Security Act (42 U.S.C. 1395w–104(b)(4)) is amended by inserting after subparagraph (F) the following new subparagraph:

(G)

Prohibiting additional restrictions or limitations on coverage during year

A prescription drug plan and an MA–PD plan may only impose a restriction or limitation on the coverage of a covered part D drug (such as through the application of a formulary, preferred status, usage restriction, step therapy, prior authorization, or a quantity limitation) only at the beginning of a plan year, except in the case that the Commissioner of Food and Drugs issues a clinical warning during a year that imposes such a restriction or limitation on the drug.

(b)

Effective date

The amendment made by subsection (a) shall take effect on the date of the enactment of this Act and shall apply to the removal of a drug or a change in the status of such drug on and after such date.

MedPAC study on appropriate enrollment of dual eligible individuals

(a)

Study

The Medicare Payment Advisory Commission shall conduct a study to determine the extent to which full-benefit dual eligible individuals (as defined in section 1935(c)(6) of the Social Security Act (42 U.S.C. 1396u5(c)(6)) were enrolled (by assignment or otherwise) in the most appropriate prescription drug plans under part D of title XVIII of such Act for such individuals. (b)

Report

The Commission shall submit a report to Congress on the study under subsection (a) not later than February 1, 2007.

Prohibition on conditioning Medicaid eligibility on enrollment in Medicare part D coverage or other creditable coverage

(a)

In general

Section 1935 of the Social Security Act (42 U.S.C. 1396v) is amended by adding at the end the following new subsection:

(f)

Prohibition on conditioning Medicaid eligibility on enrollment in Medicare part D coverage or other creditable coverage

(1)

In general

A State shall not condition eligibility for medical assistance under the State plan for a part D eligible individual (as defined in section 1860D–1(a)(3)(A)) who is enrolled in creditable prescription drug coverage described in any of subparagraphs (C) through (H) of section 1860D–13(b)(4) on the individual’s enrollment in a prescription drug plan under part D of title XVIII or an MA–PD plan under part C of such title. (2)

Coordination of benefits with part D for other individuals

Nothing in this subsection shall be construed as prohibiting a State from coordinating medical assistance under the State plan with benefits under part D of title XVIII for individuals not described in paragraph (1).

(b)

Treatment of State plan amendments, Redetermination of eligibility

In the case of a State that, as of the date of the enactment of this Act, has an approved amendment to its State plan under title XIX of the Social Security Act with a provision that conflicts with section 1935(f) of such Act (as added by subsection (a)), such provision is, as of such date of enactment, null and void. The State shall redetermine any applications for medical assistance that have been denied solely on the basis of such a State plan amendment not later than December 31, 2006. Such redetermination shall be effective as of the date of the individual’s application for medical assistance.

Reimbursement of third parties for 2006 transition costs

(a)

Reimbursement

(1)

In general

Notwithstanding section 1935(d) of the Social Security Act (42 U.S.C. 1396u–5(d) or any other provision of law, the Secretary of Health and Human Services shall reimburse covered third parties for 100 percent of the costs incurred by the covered third party during 2006 for covered part D drugs for part D eligible individuals who are enrolled in a prescription drug plan under part D of title XVIII of such Act (or an MA–PD plan under part C of such title) which the individual reasonably expected would have been covered under such part but were not because the individual was unable to access on a timely basis prescription drug benefits to which the individual was entitled under such part. Such payments shall be made from the Medicare Prescription Drug Account under section 1860D–16 of the Social Security Act (42 U.S.C. 1395w–116) and shall be deemed to be payments from such Account under subsection (b) of such section. The provisions of clauses (ii) through (iv) of subparagraph (F) of paragraph (4) of section 1860D–4(b) of the Social Security Act, as added by section 2(a), shall apply under this paragraph in the same manner as they apply under such paragraph (4). (2)

Sanctions for fraudulent claims

The provisions of subclause (II) of section 1860D–4(b)(4)(C)(i) of the Social Security Act, as added by section 2(a), shall apply to a covered third party with respect to a claim for reimbursement under paragraph (1) in the same manner that such provisions apply to a pharmacy in connection with a claim for reimbursement under subclause (I) of such section 1860D–4(b)(4)(C)(i). (3)

Retroactive application to beginning of 2006

The costs incurred by a third party which may be reimbursed under paragraph (1) shall include costs incurred during the period beginning on January 1, 2006, and before the date of enactment of this Act. (b)

Recovery of costs from plans by Secretary

The Secretary of Health and Human Services shall establish a process for recovering the costs described in subsection (a)(1) from prescription drug plans and MA–PD plans if the Secretary determines that such plans should have incurred such costs. Amounts recovered pursuant to the preceding sentence shall be deposited in the Medicare Prescription Drug Account described in subsection (a)(1). (c)

Definitions

For purposes of this section: (1)

Covered part D drug

The term covered part D drug has the meaning given such term under section 1860D–2(e) of the Social Security Act (42 U.S.C. 1395w–102(e)). (2)

Covered third party

The term covered third party means any individual or party (such as a State, charity, or family member of the part D eligible individual involved) other than a party that is obligated under part D of title XVIII of the Social Security Act to incur the costs involved. Such term shall not include a pharmaceutical company or an assistance program sponsored or assisted (in whole or in part) by such company. (3)

MA–PD plan

The term MA–PD plan has the meaning given such term under section 1860D–41(a)(14) of the Social Security Act (42 U.S.C. 1395w–151(a)(14)). (4)

Part D eligible individual

The term part D eligible individual has the meaning given such term under section 1860D–1(a)(3)(A) of the Social Security Act (42 U.S.C. 1394w–101(a)(3)(A)). (5)

Prescription drug plan

The term prescription drug plan has the meaning given such term under section 1860D–1(a)(3)(C) of the Social Security Act (42 U.S.C. 1394w–101(a)(3)(C)). (6)

State

The term State includes the District of Columbia.