Short title

This Act may be cited as the Medicare Part D Improvement Act of 2007.

Reform of donut hole

(a)

Counting certain expenditures towards out-of-pocket limits

(1)

In general

Section 1860D–2(b)(4)(C) of the Social Security Act (42 U.S.C. 1395w–102(b)(4)(C)) is amended— (A)in clause (i), by striking and at the end; (B)in clause (ii)— (i)by striking such costs shall be treated as incurred only if and inserting subject to clause (iii), such costs shall be treated as incurred if; (ii)by striking , under section 1860D–14, or under a State Pharmaceutical Assistance Program; (iii)by striking (other than under such section or such a Program); and (iv)by striking the period at the end and inserting ; and; and (C)by inserting after clause (ii) the following new clause:

(iii)such costs shall be treated as incurred and shall not be considered to be reimbursed under clause (ii) if such costs are borne or paid— (I)under section 1860D–14; (II)under a State Pharmaceutical Assistance Program; (III)by the Indian Health Service, an Indian tribe or tribal organization, or an urban Indian organization (as defined in section 4 of the Indian Health Care Improvement Act); (IV)by a rural health clinic or Federally qualified health center (as defined in section 1861(aa)); (V)under an AIDS Drug Assistance Program under part B of title XXVI of the Public Health Service Act; (VI)by a pharmaceutical manufacturer patient assistance program, either directly or through the distribution or donation of covered part D drugs, which shall be valued at the negotiated price of such covered part D drug under the enrollee’s prescription drug plan or MA–PD plan as of the date that the drug was distributed or donated; or (VII)by a subsection (d) hospital (as defined in section 1886(d)(1)(B) that meets the requirements of clauses (i) and (ii) of the section 340B(a)(4)(L) of the Public Health Service Act.

(2)

Effective date

The amendments made by paragraph (1) shall apply to costs incurred on or after January 1, 2008, for plan years beginning on or after such date. (b)

Report on closing the gap

The Secretary of Health and Human Services shall conduct a study on how to eliminate the gap in Medicare part D prescription drug coverage created through the application of an initial coverage limit and how to finance such elimination. Not later than 180 days after the date of the enactment of this Act, the Secretary shall submit to Congress a report on such study.

Conforming late enrollment penalty to Medicare part B penalty structure

(a)

In general

Section 1860D–13(b)(3) of the Social Security Act (42 U.S.C. 1395w–113(b)(3)) is amended by striking is the greater of and all that follows and inserting the following: is 10 percent of the base beneficiary premium (as computed under subsection (a)(2)) for each continuous period of 12 consecutive uncovered months in such period. (b)

Not counting periods of non-enrollment during first year of program

Subparagraph (B) of such section is amended by inserting (after December 2007) after any month. (c)

Presumption of errors in enrollment or nonenrollment due to official error

Section 1837(h) of such Act (42 U.S.C. 1395p(h)) is amended by adding at the end the following: In applying the previous sentence, an individual's unintentional, inadvertent, or erroneous enrollment or nonenrollment shall be presumed to be the result of an error, misrepresentation, or inaction of an officer, employee, or agent of the Federal Government, or its instrumentalities, unless the Secretary demonstrates otherwise.. (d)

Effective dates

The amendments made by subsections (a) and (b) shall apply to late enrollment penalties for months beginning with January 2008. The amendment made by subsection (c) shall take effect on January 1, 2008, and shall apply as of such date to enrollments (and non-enrollments) occurring before, on, or after such date.

More frequent changes in plans permitted

(a)

In general

Section 1860D–1(b)(3) of the Social Security Act (42 U.S.C. 1395w–101(b)(3)) is amended by adding at the end the following new subparagraph:

(F)

Same frequency as changes in formularies

In the case of an individual enrolled in a prescription drug plan (or MA–PD plan), as often as the Secretary permits such plan to make changes in its formulary.

(b)

Permitting change in enrollment during first 3 months of each year as permitted under the Medicare Advantage program

Section 1860D–1(b)(1)(B)(iii) of such Act (42 U.S.C. 1395w–101(b)(1)(B)(iii)) is amended by striking , (C), . (c)

Effective date

The amendments made by this section shall take effect on January 1, 2008.

Low income subsidy improvements

(a)

Removal of asset test

(1)

In general

Section 1860D–14(a) of the Social Security Act (42 U.S.C. 1395w–114(a)) is amended— (A)in paragraph (1), in the matter before subparagraph (A), by striking and who meets the resources requirement described in paragraph (3)(D); and (B)in paragraph (3)— (i)in paragraph (3)(A), by adding and at the end of clause (i), by striking ; and at the end of clause (ii) and inserting a period, and by striking clause (iii); and (ii)by striking subparagraphs (D) and (E). (2)

Effective date

The amendments made by paragraph (1) shall apply to benefits for months beginning with January 2008. (b)

Elimination of late enrollment penalties for subsidy eligible individuals

(1)

In general

Section 1860D–13(b)(2) of the Social Security Act (42 U.S.C. 1395w–113(b)(2)) is amended by inserting who is not a subsidy eligible individual and after an individual. (2)

Conforming amendments

Section 1860D–14 of such Act (42 U.S.C. 1395w–114) is amended— (A)in subsection (a)(1)(A), by striking equal to and all that follows and inserting the following: 100 percent of the amount described in subsection (b)(1), but not to exceed the premium amount specified in subsection (b)(2)(B).; and (B)in subsection (b)(2)(B), by striking the last sentence. (3)

Effective date

The amendments made by this subsection shall apply to late enrollment penalties for months beginning with January 2008.