[Congressional Record Volume 146, Number 57 (Wednesday, May 10, 2000)]
[Senate]
[Pages S3837-S3850]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. DASCHLE (for himself, Mr. Moynihan, Mr. Kennedy, Mr. 
        Akaka, Mr. Baucus, Mr. Biden, Mr. Bingaman, Mrs. Boxer, Mr. 
        Bryan, Mr. Byrd, Mr. Cleland, Mr. Dodd, Mr. Dorgan, Mr. Durbin, 
        Mrs. Feinstein, Mr. Graham, Mr. Harkin, Mr. Hollings, Mr. 
        Inouye, Mr. Johnson, Mr. Kerry, Mr. Lautenberg, Mr. Leahy, Mr. 
        Levin, Mrs. Lincoln, Ms. Mikulski, Mrs. Murray, Mr. Reed, Mr. 
        Reid, Mr. Robb, Mr. Rockefeller, Mr. Sarbanes, Mr. Schumer, and 
        Mr. Wellstone):
  S. 2541. A bill to amend title XVIII of the Social Security Act to 
provide a prescription drug benefit for the aged and disabled under the 
Medicare Program, to enhance the preventative benefits covered under 
such program, and for other purposes; to the Committee on Finance.


         medicare expansion for needed drugs (mend) act of 2000

  Mr. DASCHLE. Mr. President, today I am pleased to join with 34 of our 
Senate Democratic colleagues in introducing the Medicare Expansion for 
Needed Drugs Act, a bill to mend Medicare by adding a long overdue 
prescription drug benefit.
  I want to begin by thanking all the people who have brought us to 
this point.
  Senator Dorgan and many of our other colleagues have held numerous 
hearings in Washington, and around the country on the issue of Medicare 
prescription drug coverage. I thank my colleagues and all who came to 
the hearings.
  I know that they heard from people at those hearings they would not 
have otherwise heard from. The testimony they heard was virtually 
unanimous at each of these hearings, that Medicare must now, this year, 
be expanded to include necessary coverage.
  I also thank all of the seniors, pharmacists, doctors, and others who 
took the time to educate us on this important matter. Their wisdom has 
made this a better bill.
  In addition, I thank the President--for keeping the issue of Medicare 
prescription drugs on the national agenda, and for providing the 
framework for our proposal.
  I thank the many organizations representing seniors and consumers who 
told us about the terrible strain paying for prescription drugs places 
on seniors and their families.
  Most of all, I thank the many seniors from all across America who 
told us about their struggles to pay for prescription drugs.
  I want to share with you one example from my State.
  Fran Novotny is a 70-year-old retired nurse from Hill City, SD. She 
takes prescription medications every day to control diabetes, 
hypertension, and asthma. She has also had bypass surgery.
  Every month, she gets a Social Security check for $616.
  Every month, she spends about $550 on prescriptions.
  She has a small pension, but it doesn't add up to much. So she is 
quickly depleting her entire life savings. After it is gone, she has no 
idea how she will pay for her medications.
  Her story, and many others like it, are the reason we must move 
forward and enact a Medicare prescription drug benefit this year. We 
must make sure that Fran Novotny--and the millions of seniors like 
her--can afford their prescriptions--and their grocery bills and their 
rent and their clothing and their utility bills.
  The average Medicare beneficiary fills 18 prescriptions a year.
  Yet three-in-five Medicare beneficiaries lack decent, dependable 
coverage for prescription drugs. And more than one-third of all 
Medicare beneficiaries--more than 15 million seniors--have no 
prescription drug coverage at all.
  This is not a problem faced only by the poorest beneficiaries. More 
than half of all Medicare beneficiaries without coverage have incomes 
above 150 percent of poverty,

[[Page S3840]]

  That is why two-thirds of the Democratic caucus has joined in 
introducing this bill to make prescription drug coverage available and 
affordable to all Medicare beneficiaries.
  Our plan is universal.
  Every single Medicare beneficiary who wants the coverage has it under 
this bill.
  Second, our plan is voluntary.
  It is not a requirement that you sign up for this legislation. If you 
have a good plan, use it. If you have a good company, stay with it. If 
you have a plan that works for you, for whatever reason, this plan 
encourages you to stay right where you are. But if you do not have 
coverage, if you need coverage and cannot get it anywhere else, this 
bill will make it available to you for the first time.
  Every Medicare beneficiary can choose to participate, whether he or 
she is in traditional, fee-for-service Medicare or a Medicare Plus 
Choice plan. Retirees who already have private prescription drug 
coverage can keep it. It is up to them.
  We also provide incentives to employers to provide and maintain drug 
coverage. We do not want to see the people who are now providing it to 
their employees or retirees dropping these people once this plan 
becomes available, so we have encouraged, we have incentivized 
businesses to do that.
  Our plan provides meaningful coverage.
  Medicare would cover half of beneficiaries' discounted prescription 
drug bills, up to $5,000 a year. That means that Fran Novotny--who 
spends $550 a month on prescription drugs--would be able to save at 
least $275 a month. That $275 a month will make a real difference in 
her life.
  Our plan also provides catastrophic coverage for people who need to 
take very expensive drugs that can cost $5,000, or $10,000 a year, or 
more. It is our hope that after a Medicare beneficiary has paid the 
first $3,000 or $4,000 in catastrophic care costs, Medicare would pick 
up the balance.
  Our program is also affordable.
  Beneficiaries would pay premiums to cover about half the cost of the 
program. Medicare would contribute the other half.
  Seniors with incomes between 135 percent and 150 percent of poverty 
would receive assistance with their premiums. Those with incomes below 
135 percent of poverty would receive assistance with premiums and 
copays.
  Our plan would give seniors bargaining power that they just don't 
have today.
  The problem today isn't just that seniors end up paying out-of-pocket 
expenses for their prescriptions, they also pay a lot more for those 
out-of-pocket costs. On average, seniors pay twice as much for their 
medications as big insurance companies and HMOs do today.
  The fact that seniors face the highest prices at the drugstore is, 
frankly, wrong. Our plan gives seniors the bargaining power that comes 
with numbers.
  Another thing our plan does--which is very important to many of us in 
rural areas--is to include special protections to make sure that 
Medicare beneficiaries who live in rural communities have the same 
affordable, timely access to prescription drugs as everyone else.
  It gives the Secretary of Health and Human Services the authority to 
offer pharmacists incentives to cover rural communities and other hard-
to-serve areas. Every American should be able to get affordable 
prescription drugs--when they need them--whether they live in a big 
city or a small town.
  Our plan mirrors the best practices used in the private sector.
  For beneficiaries in traditional Medicare, prescription drug coverage 
would be delivered by private entities that negotiate prices with drug 
manufacturers. This is the same mechanism used by private insurers.
  Beneficiaries in Medicare Plus Choice plans would get their 
prescription drug coverage through their Plus Choice plan.
  Finally, the bill recognizes that we need to shift the focus of 
Medicare from simply treating illness, to keeping beneficiaries well.
  While prescription drug coverage is an important first step in this 
effort, there are likely other changes we should make. So this bill 
sets up a process for Congress to consider further benefit changes--to 
enhance prevention--on an expedited basis. I want to thank Senator 
Graham for his leadership on this important issue.
  On the issue of broader Medicare reform, I would like to see 
prescription drugs pass as part of a larger package of reforms and 
modernizations, and I believe this bill and its benefit is consistent 
with such efforts.
  I'm also pleased to report that our bill is supported by an array of 
important groups: The National Council of Senior Citizens; the 
Committee to Preserve Social Security and Medicare; National Council on 
the Aging; the Older Women's League; the AFL-CIO; The National 
Community Pharmacists Association; Families USA; Consumers Union; the 
Leadership Council of Aging Organizations; the Association for Homes 
and Services for the Aging; the National Association of Area Agencies 
on Aging; and AARP.
  We hope we will have support from our Republican colleagues, too.
  Prescription drug coverage for all seniors is an issue on which we 
cannot afford to procrastinate. The cost of delay is too great--in lost 
opportunities, lost health, and lost lives.
  In 1965, when Medicare was created, it didn't include prescription 
drug coverage. Neither did most private insurance plans. Today, 
virtually all private health plans offer some sort of prescription drug 
coverage--but not Medicare.
  It is time--it is past time--to close this gap. Prescription drugs 
are an integral part of medicine today. They ought to be an integral 
part of Medicare. Period.
  Now--before the Baby Boomers retire, and the problems are still 
manageable--is the time to strengthen Medicare. Now, while our economy 
is strong, and we have a surplus, is the time to add a universal, 
voluntary, and affordable prescription drug benefit to Medicare.
  Mr. President, I ask unanimous consent that at this point the text of 
the bill be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2541

       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 
     Expansion for Needed Drugs (MEND) Act of 2000''.
       (b) Table of Contents.--The table of contents for this Act 
     is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Findings.

               TITLE I--PRESCRIPTION DRUG BENEFIT PROGRAM

Sec. 101. Prescription drug benefit program.

     ``Part D--Prescription Drug Benefit for the Aged and Disabled

``Sec. 1860. Establishment of prescription drug benefit program for the 
              aged and disabled.
``Sec. 1860A. Scope of benefits.
``Sec. 1860B. Payment of benefits; benefit limits.
``Sec. 1860C. Eligibility and enrollment.
``Sec. 1860D. Premiums.
``Sec. 1860F. Prescription Drug Insurance Account.
``Sec. 1860G. Administration of benefits.
``Sec. 1860H. Employer incentive program for employment-based retiree 
              drug coverage.
``Sec. 1860I. Appropriations to cover Government contributions.
``Sec. 1860J. Prescription drug defined.''.
Sec. 102. Medicaid buy-in of medicare prescription drug coverage for 
              certain low-income individuals.
``Sec. 1860E. Special eligibility, enrollment, and copayment rules for 
              low-income individuals.''.
Sec. 103. Catastrophic prescription drug coverage benefit.
Sec. 104. Comprehensive immunosuppressive drug coverage for transplant 
              patients.
Sec. 105. GAO study and biennial reports on competition and savings.
Sec. 106. MedPAC study and annual reports on the pharmaceutical market, 
              pharmacies, and beneficiary access.

             TITLE II--ENHANCED MEDICARE PREVENTION PROGRAM

Sec. 201. MedPAC biennial report.
Sec. 202. National Institute on Aging study and report.
Sec. 203. Institute of Medicine 5-year medicare prevention benefit 
              study and report.
Sec. 204. Fast-track consideration of prevention benefit legislation.

     SEC. 2. FINDINGS.

       Congress makes the following findings:
       (1) Prescription drug coverage was not a standard part of 
     health insurance when the medicare program under title XVIII 
     of the

[[Page S3841]]

     Social Security Act was enacted in 1965. Since 1965, however, 
     drug coverage has become a key component of most private and 
     public health insurance coverage, except for the medicare 
     program.
       (2) At least \2/3\ of medicare beneficiaries have 
     unreliable, inadequate, or no drug coverage at all.
       (3) Seniors who do not have drug coverage typically pay, at 
     a minimum, 15 percent more than people with coverage.
       (4) Medicare beneficiaries at all income levels lack 
     prescription drug coverage, with more than \1/2\ of such 
     beneficiaries having incomes greater than 150 percent of the 
     poverty line.
       (5) The number of private firms offering retiree health 
     coverage is declining.
       (6) Medigap premiums for drugs are too expensive for most 
     beneficiaries and are highest for older senior citizens, who 
     need prescription drug coverage the most and typically have 
     the lowest incomes.
       (7) The management of a medicare prescription drug benefit 
     should mirror the practices employed by private entities in 
     delivering prescription drugs. Discounts should be achieved 
     through competition.
       (8) All medicare beneficiaries should have access to a 
     voluntary, reliable, affordable outpatient drug benefit as 
     part of the medicare program that assists with the high cost 
     of prescription drugs and protects them against excessive 
     out-of-pocket costs.
       (9) The addition of a medicare drug benefit should be 
     consistent with an overall plan to strengthen and modernize 
     the medicare program.

               TITLE I--PRESCRIPTION DRUG BENEFIT PROGRAM

     SEC. 101. PRESCRIPTION DRUG BENEFIT PROGRAM.

       (a) In General.--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--Prescription Drug Benefit for the Aged and Disabled


 ``establishment of prescription drug benefit program for the aged and 
                                disabled

       ``Sec. 1860. (a) In General.--There is established a 
     voluntary insurance program to provide prescription drug 
     benefits in accordance with the provisions of this part for 
     individuals who are aged or disabled or have end-stage renal 
     disease and who elect to enroll under such program, to be 
     financed from premium payments by enrollees together with 
     contributions from funds appropriated by the Federal 
     Government.
       ``(b) Noninterference.--In administering the prescription 
     drug benefit program established under this part, the 
     Secretary may not--
       ``(1) require a particular formulary or institute a price 
     structure for benefits;
       ``(2) interfere in any way with negotiations between 
     private entities and drug manufacturers, or wholesalers; or
       ``(3) otherwise interfere with the competitive nature of 
     providing a prescription drug benefit through private 
     entities.


                          ``scope of benefits

       ``Sec. 1860A. (a) In General.--The benefits provided to an 
     individual enrolled in the insurance program under this part 
     shall consist of--
       ``(1) payments made, in accordance with the provisions of 
     this part, for covered prescription drugs (as specified in 
     subsection (b)) dispensed by any pharmacy participating in 
     the program under this part (and, in circumstances designated 
     by the private entity, by a nonparticipating pharmacy), 
     including any specifically named drug prescribed for the 
     individual by a qualified health care professional regardless 
     of whether the drug is included in a formulary established by 
     the private entity if such drug is certified as medically 
     necessary by such health care professional, up to the benefit 
     limits specified in section 1860B; and
       ``(2) charging by pharmacies of the negotiated price--
       ``(A) for all covered prescription drugs, without regard to 
     such benefit limit; and
       ``(B) established with respect to any drugs or classes of 
     drugs described in subparagraphs (A) through (D) or (F) of 
     section 1927(d)(2) that are available to individuals 
     receiving benefits under this title.
       ``(b) Covered Prescription Drugs.--
       ``(1) In general.--Covered prescription drugs, for purposes 
     of this part, include all prescription drugs (as defined in 
     section 1860J(1)), including smoking cessation agents, except 
     as otherwise provided in this subsection.
       ``(2) Exclusions from coverage.--Covered prescription drugs 
     shall not include drugs or classes of drugs described in 
     subparagraphs (A) through (D) and (F) through (H) of section 
     1927(d)(2) unless--
       ``(A) specifically provided otherwise by the Secretary with 
     respect to a drug in any of such classes; or
       ``(B) a drug in any of such classes is certified to be 
     medically necessary by a health care professional.
       ``(3) Exclusion of prescription drugs to the extent covered 
     under part a or b.--A drug prescribed for an individual that 
     would otherwise be a covered prescription drug under this 
     part shall not be so considered to the extent that payment 
     for such drug is available under part A or B, including all 
     injectable drugs and biologicals for which payment was made 
     or should have been made by a carrier under section 
     1861(s)(2) (A) or (B) as of the date of enactment of the 
     Medicare Expansion for Needed Drugs (MEND) Act of 2000. Drugs 
     otherwise covered under part A or B shall be covered under 
     this part to the extent that benefits under part A or B are 
     exhausted.


                 ``payment of benefits; benefit limits

       ``Sec. 1860B. (a) Payment of Benefits.--There shall be paid 
     from the Prescription Drug Insurance Account within the 
     Supplementary Medical Insurance Trust Fund, in the case of 
     each individual who is enrolled in the insurance program 
     under this part and who purchases covered prescription drugs 
     in a calendar year, an amount, not to exceed 50 percent of 
     the applicable limit under subsection (b), equal to 50 
     percent of the negotiated price for each such covered 
     prescription drug or such higher percentage as is proposed by 
     a private entity pursuant to section 1860G(d)(7), if the 
     Secretary finds that such percentage will not increase 
     aggregate costs to the Prescription Drug Insurance Account.
       ``(b) Benefit Limits.--
       ``(1) Calendar years 2002 through 2009.--For purposes of 
     subsection (a), the limit under this subsection is--
       ``(A) for each of calendar years 2002, 2003, and 2004, 
     $2,000;
       ``(B) for each of calendar years 2005, 2006, and 2007, 
     $3,000;
       ``(C) for calendar year 2008, $4,000; and
       ``(D) for calendar year 2009, $5,000.
       ``(2) Calendar year 2010 and subsequent years.--For 
     purposes of subsection (a), the limit under this subsection 
     for calendar year 2010 and each subsequent calendar year is 
     equal to the greater of--
       ``(A) the limit for the preceding year adjusted by the 
     percentage change in the Consumer Price Index for all urban 
     consumers (U.S. urban average) for the 12-month period ending 
     with June of the preceding year; or
       ``(B) the limit for the preceding year.


                      ``eligibility and enrollment

       ``Sec. 1860C. (a) Eligibility.--Every individual who, in or 
     after 2002, is entitled to hospital insurance benefits under 
     part A or enrolled in the medical insurance program under 
     part B is eligible to enroll, in accordance with the 
     provisions of this section, in the insurance program under 
     this part, during an enrollment period prescribed in or under 
     this section, in such manner and form as may be prescribed by 
     regulations.
       ``(b) Enrollment.--
       ``(1) In general.--Each individual who satisfies subsection 
     (a) shall be enrolled (or eligible to enroll) in the program 
     under this part in accordance with the provisions of section 
     1837, as if that section applied to this part, except as 
     otherwise explicitly provided in this part.
       ``(2) Single enrollment period.--Except as provided in 
     section 1837(i) (as such section applies to this part), 
     1860E, or 1860H, or as otherwise explicitly provided, no 
     individual shall be entitled to enroll in the program under 
     this part at any time after the initial enrollment period.
       ``(3) Special enrollment period for 2002.--
       ``(A) In general.--An individual who first satisfies 
     subsection (a) in 2002 may, at any time on or before December 
     31, 2002--
       ``(i) enroll in the program under this part; and
       ``(ii) enroll or reenroll in such program after having 
     previously declined or terminated enrollment in such program.
       ``(B) Effective date of coverage.--An individual who 
     enrolls under the program under this part pursuant to 
     subparagraph (A) shall be entitled to benefits under this 
     part beginning on the first day of the month following the 
     month in which such enrollment occurs.
       ``(c) Period of Coverage.--
       ``(1) In general.--Except as otherwise provided in this 
     part, an individual'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.
       ``(2) Part d coverage terminated by termination of coverage 
     under parts a and b.--In addition to the causes of 
     termination specified in section 1838, an individual's 
     coverage under this part shall be terminated when the 
     individual retains coverage under neither the program under 
     part A nor the program under part B, effective on the 
     effective date of termination of coverage under part A or (if 
     later) under part B.


                               ``premiums

       ``Sec. 1860D. (a) Annual Establishment of Monthly Premium 
     Rates.--
       ``(1) In general.--The Secretary shall, during September of 
     2001 and of each succeeding year, determine and promulgate a 
     monthly premium rate for the succeeding year in accordance 
     with the provisions of this subsection.
       ``(2) Actuarial determinations.--
       ``(A) Determination of annual benefit costs.--The Secretary 
     shall estimate annually for the succeeding year the amount 
     equal to the total of the benefits that will be payable from 
     the Prescription Drug Insurance Account for prescription 
     drugs dispensed in such calendar year with respect to 
     enrollees in the program under this part. In calculating such 
     amount, the Secretary shall include an appropriate amount for 
     a contingency margin.
       ``(B) Determination of monthly premium rates.--

[[Page S3842]]

       ``(i) In general.--The Secretary shall determine the 
     monthly premium rate with respect to such enrollees for such 
     succeeding year, which shall be \1/12\ of the share specified 
     in clause (ii) of the amount determined under subparagraph 
     (A), divided by the total number of such enrollees, and 
     rounded (if such rate is not a multiple of 10 cents) to the 
     nearest multiple of 10 cents.
       ``(ii) Enrollee and employer percentage shares.--The share 
     specified in this clause, for purposes of clause (i), shall 
     be--

       ``(I) one-half, in the case of premiums paid by an 
     individual enrolled in the program under this part; and
       ``(II) two-thirds, in the case of premiums paid for such an 
     individual by a former employer (as defined in section 
     1860H(f)(2)).

       ``(3) Publication of assumptions.--The Secretary shall 
     publish, together with the promulgation of the monthly 
     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).
       ``(b) Payment of Premiums.--
       ``(1) Payments by deduction from social security, railroad 
     retirement benefits, or benefits administered by opm.--
       ``(A) Deduction from benefits.--In the case of an 
     individual who is entitled to or receiving benefits as 
     described in subsection (a), (b), or (d) of section 1840, 
     premiums payable under this part shall be collected by 
     deduction from such benefits at the same time and in the same 
     manner as premiums payable under part B are collected 
     pursuant to section 1840.
       ``(B) Transfers to prescription drug insurance account.--
     The Secretary of the Treasury shall, from time to time, but 
     not less often than quarterly, transfer premiums collected 
     pursuant to subparagraph (A) to the Prescription Drug 
     Insurance Account from the appropriate funds and accounts 
     described in subsections (a)(2), (b)(2), and (d)(2) of 
     section 1840, on the basis of the certifications described in 
     such subsections. The amounts of such transfers shall be 
     appropriately adjusted to the extent that prior transfers 
     were too great or too small.
       ``(2) Direct payments to secretary.--
       ``(A) Additional payment by enrollee.--An individual to 
     whom paragraph (1) applies (other than an individual 
     receiving benefits as described in section 1840(d)) and who 
     estimates that the amount that will be available for 
     deduction under such paragraph for any premium payment period 
     will be less than the amount of the monthly premiums for such 
     period may (under regulations) pay to the Secretary the 
     estimated balance, or such greater portion of the monthly 
     premium as the individual chooses.
       ``(B) Payments by other enrollees.--An individual enrolled 
     in the insurance program under this part with respect to whom 
     none of the preceding provisions of this subsection applies 
     (or to whom section 1840(c) applies) shall pay premiums to 
     the Secretary at such times and in such manner as the 
     Secretary shall by regulations prescribe.
       ``(C) Deposit of premiums.--Amounts paid to the Secretary 
     under this paragraph shall be deposited in the Treasury to 
     the credit of the Prescription Drug Insurance Account in the 
     Supplementary Medical Insurance Trust Fund.
       ``(c) Certain Low-Income Individuals.--For rules concerning 
     premiums for certain low-income individuals, see section 
     1860E.


                 ``prescription drug insurance account

       ``Sec. 1860F. (a) Establishment.--There is created within 
     the Federal Supplemental Medical Insurance Trust Fund 
     established by section 1841 an account to be known as the 
     `Prescription Drug Insurance Account' (in this section 
     referred to as the `Account').
       ``(b) Amounts in Account.--
       ``(1) In general.--The Account shall consist of--
       ``(A) such amounts as may be deposited in, or appropriated 
     to, such fund as provided in this part; and
       ``(B) such gifts and bequests as may be made as provided in 
     section 201(i)(1).
       ``(2) Separation of funds.--Funds provided under this part 
     to the Account shall be kept separate from all other funds 
     within the Federal Supplemental Medical Insurance Trust Fund.
       ``(c) Payments From Account.--The Managing Trustee shall 
     pay from time to time from the Account such amounts as the 
     Secretary certifies are necessary to make the payments 
     provided for by this part, and the payments with respect to 
     administrative expenses in accordance with section 201(g).


                      ``administration of benefits

       ``Sec. 1860G. (a) In General.--The Secretary shall provide 
     for administration of the benefits under this part through a 
     contract with a private entity designated in accordance with 
     subsection (c), for enrolled individuals residing in each 
     service area designated pursuant to subsection (b) (other 
     than such individuals enrolled in a Medicare+Choice program 
     under part C), in accordance with the provisions of this 
     section.
       ``(b) Designation of Service Areas.--
       ``(1) In general.--The Secretary shall divide the total 
     geographic area served by the programs under this title into 
     at least 15 service areas for purposes of administration of 
     benefits under this part.
       ``(2) Considerations.--In determining or adjusting the 
     number and boundaries of service areas under this subsection, 
     the Secretary shall seek to ensure that--
       ``(A) there is a reasonable level of competition among 
     entities eligible to contract to administer the benefit 
     program under this section for each area;
       ``(B) the designation of areas is consistent with the goal 
     of securing contracts under this section with respect to the 
     maximum feasible number of areas so designated; and
       ``(C) the designation of areas will foster the existence of 
     a sufficient number of entities that are eligible and willing 
     to administer the benefits under this part.
       ``(c) Designation of Private Entity.--
       ``(1) Award and duration of contract.--
       ``(A) Competitive award.--Each contract for a service area 
     shall be awarded competitively in accordance with section 5 
     of title 41, United States Code, for a period (subject to 
     subparagraph (B)) of not less than 2 nor more than 5 years.
       ``(B) Review.--A contract for a service area shall be 
     subject to an evaluation after 2 years.
       ``(2) Eligible private entities.--A private entity eligible 
     for consideration as a private entity responsible for 
     administering the prescription drug benefit program under 
     this part in a service area shall meet at least the following 
     criteria:
       ``(A) Type.--The private entity shall be capable of 
     administering a prescription drug benefit program, and may be 
     a prescription drug vendor, wholesale and retail pharmacist 
     delivery system, health care provider or insurer, any other 
     type of entity as the Secretary may specify, or a consortium 
     of such entities.
       ``(B) Performance capability.--The entity shall have 
     sufficient expertise, personnel, and resources to perform 
     effectively the benefit administration functions for such 
     area.
       ``(C) Financial integrity.--The entity and its officers, 
     directors, agents, and managing employees shall have a 
     satisfactory record of professional competence and 
     professional and financial integrity, and the entity shall 
     have adequate financial resources to perform services under 
     the contract without risk of insolvency.
       ``(3) Proposal requirements.--
       ``(A) In general.--An entity's proposal for award or 
     renewal of a contract under this section shall include such 
     material and information as the Secretary may require.
       ``(B) Specific information.--A proposal described in 
     subparagraph (A) shall include a detailed description of--
       ``(i) the schedule of negotiated prices that will be 
     charged to enrollees;
       ``(ii) how the entity will deter medical errors that are 
     related to prescription drugs; and
       ``(iii) proposed contracts with local pharmacy providers 
     designed to ensure access, including compensation for local 
     pharmacists' services.
       ``(4) Exceptions to conflict of interest rules.--In 
     awarding contracts under this subsection, the Secretary may 
     waive conflict of interest rules 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 purposes of the programs 
     under this title and the best interests of enrolled 
     individuals; and
       ``(B) will permit a sufficient level of competition for 
     such contracts, promote efficiency of benefits 
     administration, or otherwise serve the objectives of the 
     program under this part.
       ``(5) Maximizing competition.--In awarding contracts under 
     this section, the Secretary shall give consideration to the 
     need to maintain sufficient numbers of entities eligible and 
     willing to administer benefits under this part to ensure 
     vigorous competition for such contracts.
       ``(d) Functions of Private Entity.--The private entity for 
     a service area shall (or in the case of the function 
     described in paragraph (7), may) perform the following 
     functions:
       ``(1) Participation agreements, prices, and fees.--
       ``(A) Privately negotiated prices.--Each private entity 
     shall establish, through negotiations with drug manufacturers 
     and wholesalers and pharmacies, a schedule of prices for 
     covered prescription drugs.
       ``(B) Agreements with pharmacies.--Each private entity 
     shall enter into participation agreements under subsection 
     (e) with pharmacies, that include terms that--
       ``(i) secure the participation of sufficient numbers of 
     pharmacies to ensure convenient access (including adequate 
     emergency access); and
       ``(ii) permit the participation of any pharmacy in the 
     service area that meets the participation requirements 
     described in subsection (e).
       ``(C) Lists of prices and participating pharmacies.--Each 
     private entity shall ensure that the negotiated prices 
     established under subparagraph (A) and the list of pharmacies 
     with agreements under subsection (e) are regularly updated 
     and readily available in the service area to health care 
     professionals authorized to prescribe drugs, participating 
     pharmacies, and enrolled individuals.
       ``(2) Payment and coordination of benefits.--
       ``(A) Payment.--Each private entity shall--
       ``(i) administer claims for payment of benefits under this 
     part;
       ``(ii) determine amounts of benefit payments to be made; 
     and

[[Page S3843]]

       ``(iii) receive, disburse, and account for funds used in 
     making such payments, including through the activities 
     specified in the provisions of this paragraph.
       ``(B) Coordination.--Each private entity shall coordinate 
     with the Secretary, other private entities, pharmacies, and 
     other relevant entities as necessary to ensure appropriate 
     coordination of benefits with respect to enrolled 
     individuals, including coordination of access to and payment 
     for covered prescription drugs according to an individual's 
     in-service area plan provisions, when such individual is 
     traveling outside the home service area, and under such other 
     circumstances as the Secretary may specify.
       ``(C) Explanation of benefits.--Each private entity shall 
     furnish to enrolled individuals an explanation of benefits in 
     accordance with section 1806(a), and a notice of the balance 
     of benefits remaining for the current year, whenever 
     prescription drug benefits are provided under this part 
     (except that such notice need not be provided more often than 
     monthly).
       ``(3) Cost and utilization management; quality assurance.--
     Each private entity shall have in place effective cost and 
     utilization management, quality assurance measures, and 
     systems to reduce medical errors, including at least the 
     following, together with such additional measures as the 
     Secretary may specify:
       ``(A) Drug utilization review.--A drug utilization review 
     program conforming to the standards provided in section 
     1927(g)(2) (with such modifications as the Secretary finds 
     appropriate).
       ``(B) Fraud and abuse control.--Activities to control 
     fraud, abuse, and waste.
       ``(4) Education and information activities.--Each private 
     entity shall have in place mechanisms for disseminating 
     educational and informational materials to enrolled 
     individuals and health care providers designed to encourage 
     effective and cost-effective use of prescription drug 
     benefits and to ensure that enrolled individuals understand 
     their rights and obligations under the program.
       ``(5) Beneficiary protections.--
       ``(A) Confidentiality of health information.--Each private 
     entity shall have in effect systems to safeguard the 
     confidentiality of health care information on enrolled 
     individuals, which comply with section 1106 and with section 
     552a of title 5, United States Code, and meet such additional 
     standards as the Secretary may prescribe.
       ``(B) Grievance and appeal procedures.--Each private entity 
     have in place such procedures as the Secretary may specify 
     for hearing and resolving grievances and appeals brought by 
     enrolled individuals against the private entity or a pharmacy 
     concerning benefits under this part, which shall, to the 
     extent the Secretary finds necessary and appropriate, include 
     procedures equivalent to those specified in subsections (f) 
     and (g) of section 1852.
       ``(6) Records, reports, and audits of private entities.--
       ``(A) Records and audits.--Each private entity shall 
     maintain adequate records, and afford the Secretary access to 
     such records (including for audit purposes).
       ``(B) Reports.--Each private entity shall make such reports 
     and submissions of financial and utilization data as the 
     Secretary may require taking into account standard commercial 
     practices.
       ``(7) Proposal for alternative coinsurance amount.--
       ``(A) Submission.--Each private entity may submit a 
     proposal for increased Government cost-sharing for generic 
     prescription drugs, prescription drugs on the private 
     entity's formulary, or prescription drugs obtained through 
     mail order pharmacies.
       ``(B) Contents.--The proposal submitted under subparagraph 
     (A) shall contain evidence that such increased cost-sharing 
     would not result in an increase in aggregate costs to the 
     Account, including an analysis of differences in projected 
     drug utilization patterns by beneficiaries whose cost-sharing 
     would be reduced under the proposal and those making the 
     cost-sharing payments that would otherwise apply.
       ``(8) Other requirements.--Each private entity shall meet 
     such other requirements as the Secretary may specify.
       ``(e) Pharmacy Participation Agreements.--
       ``(1) In general.--A pharmacy that meets the requirements 
     of this subsection shall be eligible to enter an agreement 
     with a private entity to furnish covered prescription drugs 
     and pharmacists' services to enrolled individuals residing in 
     the service area.
       ``(2) Terms of agreement.--An agreement under this 
     subsection shall include the following terms and 
     requirements:
       ``(A) Licensing.--The pharmacy and pharmacists shall meet 
     (and throughout the contract period will continue to meet) 
     all applicable State and local licensing requirements.
       ``(B) Limitation on charges.--Pharmacies participating 
     under this part shall not charge an enrolled individual more 
     than the negotiated price for an individual drug as 
     established under subsection (d)(1), regardless of whether 
     such individual has attained the benefit limit under section 
     1860B(b), and shall not charge an enrolled individual more 
     than the individual's share of the negotiated price as 
     determined under the provisions of this part.
       ``(C) Performance standards.--The pharmacy shall comply 
     with performance standards relating to--
       ``(i) measures for quality assurance, reduction of medical 
     errors, and participation in the drug utilization review 
     program described in subsection (d)(3)(A);
       ``(ii) systems to ensure compliance with the 
     confidentiality standards applicable under subsection 
     (d)(5)(A); and
       ``(iii) other requirements as the Secretary may impose to 
     ensure integrity, efficiency, and the quality of the program.
       ``(f) Flexibility in Assigning Workload Among Private 
     Entities.--During the period after the Secretary has given 
     notice of intent to terminate a contract with a private 
     entity, the Secretary may transfer responsibilities of the 
     private entity under such contract to another private entity.
       ``(g) Special Attention to Rural and Hard-to-Serve Areas.--
       ``(1) In general.--The Secretary shall ensure that all 
     beneficiaries have access to the full range of 
     pharmaceuticals under this part, and shall give special 
     attention to access, pharmacist counseling, and delivery in 
     rural and hard-to-serve areas (as the Secretary may define by 
     regulation).
       ``(2) Special attention defined.--For purposes of paragraph 
     (1), the term `special attention' may include bonus payments 
     to retail pharmacists in rural areas, extra payments to the 
     private entity for the cost of rapid delivery of 
     pharmaceuticals, and any other actions the Secretary 
     determines are necessary to ensure full access to rural and 
     hard-to-serve beneficiaries.
       ``(3) GAO report.--Not later than 2 years after the 
     implementation of this part the Comptroller General of the 
     United States shall submit to Congress a report on the access 
     of medicare beneficiaries to pharmaceuticals and pharmacists' 
     services in rural and hard-to-serve areas under this part 
     together with any recommendations of the Comptroller General 
     regarding any additional steps the Secretary may need to take 
     to ensure the access of medicare beneficiaries to 
     pharmaceuticals and pharmacists' services in such areas under 
     this part.
       ``(h) Incentives for Cost and Utilization Management and 
     Quality Improvement.--The Secretary is authorized to include 
     in a contract awarded under subsection (c) such incentives 
     for cost and utilization management and quality improvement 
     as the Secretary may deem appropriate, including--
       ``(1) bonus and penalty incentives to encourage 
     administrative efficiency;
       ``(2) incentives under which private entities share in any 
     benefit savings achieved;
       ``(3) risk-sharing arrangements related to benefit 
     payments; and
       ``(4) any other incentive that the Secretary deems 
     appropriate and likely to be effective in managing costs or 
     utilization.


``employer incentive program for employment-based retiree drug coverage

       ``Sec. 1860H. (a) Program Authority.--The Secretary is 
     authorized to develop and implement a program under this 
     section called 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 and to maintain such existing 
     benefit programs, 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 (f)(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 insurance benefit under this 
     part.
       ``(2) Other requirements.--The sponsor shall provide such 
     information, and comply with such requirements, including 
     information requirements to ensure the integrity of the 
     program, as the Secretary may find necessary to administer 
     the program under this section.
       ``(c) Incentive Payment.--
       ``(1) In general.--A sponsor that meets the requirements of 
     subsection (b) with respect to a quarter in a calendar year 
     shall 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 as described 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 
     insurance 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 premium 
     amount payable by an enrolled individual, as set for the 
     calendar year pursuant to section 1860D(a)(2).

[[Page S3844]]

       ``(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) Part D Enrollment for Certain Individuals Covered by 
     Employment-Based Retiree Health Coverage Plans.--
       ``(1) Eligible individuals.--An individual shall be given 
     the opportunity to enroll in the program under this part 
     during the period specified in paragraph (2) if--
       ``(A) the individual declined enrollment in the program 
     under this part at the time the individual first satisfied 
     section 1860C(a);
       ``(B) at that time, the individual was covered under a 
     qualified retiree prescription drug plan for which an 
     incentive payment was paid under this section; and
       ``(C)(i) the sponsor subsequently ceased to offer such 
     plan; or
       ``(ii) the value of prescription drug coverage under such 
     plan became less than the value of the coverage under the 
     program under this part.
       ``(2) Special enrollment period.--An individual described 
     in paragraph (1) shall be eligible to enroll in the program 
     under this part during the 6-month period beginning on the 
     first day of the month in which--
       ``(A) the individual receives a notice that coverage under 
     such plan has terminated (in the circumstance described in 
     paragraph (1)(C)(i)) or notice that a claim has been denied 
     because of such a termination; or
       ``(B) the individual received notice of the change in 
     benefits (in the circumstance described in paragraph 
     (1)(C)(ii)).
       ``(f) 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 
     to such term by 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 to each retired beneficiary equals or 
     exceeds the actuarial value of the benefits provided to an 
     individual enrolled in the 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' by section 3(16)(B) of the Employee 
     Retirement Income Security Act of 1974.


           ``appropriations to cover government contributions

       ``Sec. 1860I. (a) In General.--There are authorized to be 
     appropriated from time to time, out of any moneys in the 
     Treasury not otherwise appropriated, to the Prescription Drug 
     Insurance Account, a Government contribution equal to--
       ``(1) the aggregate premiums payable for a month pursuant 
     to section 1860D(a)(2) by individuals enrolled in the program 
     under this part; plus
       ``(2) one-half the aggregate premiums payable for a month 
     pursuant to such section for such individuals by former 
     employers.
       ``(b) Appropriations To Cover Incentives for Employment-
     Based Retiree Drug Coverage.--There are authorized to be 
     appropriated to the Prescription Drug Insurance Account from 
     time to time, out of any moneys in the Treasury not otherwise 
     appropriated such sums as may be necessary for payment of 
     incentive payments under section 1860H(c).


                      ``prescription Drug Defined

       ``Sec. 1860J. As used in this part, the term `prescription 
     drug' means--
       ``(1) a drug that may be dispensed only upon a 
     prescription, and that is described in subparagraph (A)(i), 
     (A)(ii), or (B) of section 1927(k)(2); and
       ``(2) insulin certified under section 506 of the Federal 
     Food, Drug, and Cosmetic Act, and needles, syringes, and 
     disposable pumps for the administration of such insulin.''.
       (b) Study of Annual Open Enrollment.--
       (1) Study.--During 2002 and 2003, the Secretary shall 
     conduct a study on the feasibility and advisability of 
     establishing an annual open enrollment period for the program 
     under part D (as added by subsection (a)). Such study shall 
     reflect data reported by private entities administering 
     benefits under such part and shall include--
       (A) a review of the costs, effectiveness, and 
     administrative feasibility of an annual open enrollment 
     period for beneficiaries who--
       (i) previously declined enrollment; or
       (ii) who previously disenrolled and desire to reenroll;
       (B) an evaluation of a premium penalty for late enrollment 
     based on actuarially determined costs to the program of late 
     enrollment; and
       (C) a projection of the costs if open enrollment was 
     allowed without a penalty.
       (2) Report.--The Secretary shall prepare a report setting 
     forth the outcome of the study and may include in the report 
     a recommendation as to whether an annual open enrollment 
     period should be implemented under such part.
       (c) Conforming Amendments.--
       (1) Amendments to federal supplementary health insurance 
     trust fund.--Section 1841 of the Social Security Act (42 
     U.S.C. 1395t) is amended--
       (A) in the last sentence of subsection (a)--
       (i) by striking ``and'' after ``section 201(i)(1)''; and
       (ii) by inserting before the period the following: ``, and 
     such amounts as may be deposited in, or appropriated to, the 
     Prescription Drug Insurance Account established by section 
     1860F'';
       (B) in subsection (g), by inserting after ``by this part,'' 
     the following: ``the payments provided for under part D (in 
     which case the payments shall come from the Prescription Drug 
     Insurance Account in the Supplementary Medical Insurance 
     Trust Fund),'';
       (C) in the first sentence of subsection (h), by inserting 
     before the period the following: ``and section 1860D(b)(4) 
     (in which case the payments shall come from the Prescription 
     Drug Insurance Account in the Supplementary Medical Insurance 
     Trust Fund)''; and
       (D) in the first sentence of subsection (i)--
       (i) by striking ``and'' after ``section 1840(b)(1)''; and
       (ii) by inserting before the period the following: ``, 
     section 1860D(b)(2) (in which case the payments shall come 
     from the Prescription Drug Insurance Account in the 
     Supplementary Medical Insurance Trust Fund)''.
       (2) Prescription drug option under medicare+choice plans.--
       (A) Eligibility, election, and enrollment.--Section 1851 of 
     the Social Security Act (42 U.S.C. 1395w-21) is amended--
       (i) in subsection (a)(1)(A), by striking ``parts A and B'' 
     inserting ``parts A, B, and D''; and
       (ii) 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 such 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 such Act (42 
     U.S.C. 1395w-22(d)(1)) is amended--
       (i) in subparagraph (D), by striking ``and'' at the end;
       (ii) in subparagraph (E), by striking the period at the end 
     and inserting ``; and''; and
       (iii) by adding at the end the following new subparagraph:
       ``(F) the plan for prescription drug benefits under part D 
     guarantees coverage of any specifically named covered 
     prescription drug for an enrollee, when prescribed by a 
     physician in accordance with the provisions of such part, 
     regardless of whether such drug would otherwise be covered 
     under an applicable formulary or discount arrangement.''.
       (D) Payments to organizations.--Section 1853(a)(1)(A) of 
     such Act (42 U.S.C. 1395w-23(a)(1)(A)) is amended--
       (i) by inserting ``determined separately for benefits under 
     parts A and B and under part D (for individuals enrolled 
     under that part)'' after ``as calculated under subsection 
     (c)'';
       (ii) by striking ``that area, adjusted for such risk 
     factors'' and inserting ``that area. In the case of payment 
     for benefits under parts A and B, such payment shall be 
     adjusted for such risk factors as''; and
       (iii) by inserting before the last sentence the following: 
     ``In the case of the payments for benefits under part D, such 
     payment shall initially be adjusted for the risk factors of 
     each enrollee as the Secretary determines to be feasible and 
     appropriate. By 2006, the adjustments would be for the same 
     risk factors applicable for benefits under parts A and B.''.
       (E) Calculation of annual medicare +choice capitation 
     rates.--Section 1853(c) of such Act (42 U.S.C. 1395w-23(c)) 
     is amended--
       (i) in paragraph (1), in the matter preceding subparagraph 
     (A), by inserting ``for benefits under parts A and B'' after 
     ``capitation rate'';
       (ii) in paragraph (6)(A), by striking ``rate of growth in 
     expenditures under this title'' and inserting ``rate of 
     growth in expenditures for benefits available under parts A 
     and B''; and
       (iii) by adding at the end the following new paragraph:
       ``(8) Payment for prescription drugs.--The Secretary shall 
     determine a capitation rate for prescription drugs--
       ``(A) dispensed in 2002, which is based on the projected 
     national per capita costs for prescription drug benefits 
     under part D and associated claims processing costs for 
     beneficiaries under the original medicare fee-for-service 
     program; and

[[Page S3845]]

       ``(B) dispensed in each subsequent year, which shall be 
     equal to the rate for the previous year updated by the 
     Secretary's estimate of the projected per capita rate of 
     growth in expenditures under this title for an individual 
     enrolled under part D.''.
       (F) Limitation on enrollee liability.--Section 1854(e) of 
     such Act (42 U.S.C. 1395w-24(e)) is amended by adding at the 
     end the following new paragraph:
       ``(5) Special rule for provision of part d benefits.--In no 
     event may a Medicare+Choice organization include as part of a 
     plan for prescription drug benefits under part D a 
     requirement that an enrollee pay a deductible, or a 
     coinsurance percentage that exceeds 50 percent.''.
       (G) Requirement for additional benefits.--Section 
     1854(f)(1) of such 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 benefits under 
     parts A and B and for prescription drug benefits under part 
     D.''.
       (H) Protections against fraud and beneficiary 
     protections.--Section 1857(d) is amended by adding at the end 
     the following new paragraph:
       ``(6) Availability of negotiated prices.--Each contract 
     under this section shall provide that enrollees who exhaust 
     prescription drug benefits under the plan will continue to 
     have access to prescription drugs at negotiated prices 
     equivalent to the total combined cost of such drugs to the 
     plan and the enrollee prior to such exhaustion of 
     benefits.''.
       (3) Exclusions from coverage.--
       (A) 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''.
       (B) Prescription drugs not excluded from coverage if 
     appropriately prescribed.--Section 1862(a)(1) of such Act (42 
     U.S.C. 1395y(a)(1)) is amended--
       (i) in subparagraph (H), by striking ``and'' at the end;
       (ii) in subparagraph (I), by striking the semicolon at the 
     end and inserting ``, and''; and
       (iii) by adding at the end the following new subparagraph:
       ``(J) in the case of prescription drugs covered under part 
     D, which are not prescribed in accordance with such part;''.

     SEC. 102. MEDICAID BUY-IN OF MEDICARE PRESCRIPTION DRUG 
                   COVERAGE FOR CERTAIN LOW-INCOME INDIVIDUALS.

       (a) State Option To Buy-In Dually Eligible Individuals.--
       (1) Coverage of premiums as medical assistance.--Section 
     1905(a) of the Social Security Act (42 U.S.C. 1396d) is 
     amended in the second sentence of the flush matter at the end 
     by striking ``premiums under part B'' the first place it 
     appears and inserting ``premiums under parts B and D''.
       (2) State commitment to continue participation in part d 
     after benefit limit reached.--Section 1902(a) of such Act (42 
     U.S.C. 1396a) is amended--
       (A) by striking ``and'' at the end of paragraph (64);
       (B) by striking the period at the end of paragraph (65)(B) 
     and inserting ``; and''; and
       (C) by adding at the end the following new paragraph:
       ``(66) provide that in the case of any individual whose 
     eligibility for medical assistance is not limited to medicare 
     or medicare drug cost-sharing and for whom the State elects 
     to pay premiums under part D of title XVIII pursuant to 
     section 1860E, the State will purchase all prescription drugs 
     for such individual in accordance with the provisions of such 
     part D, without regard to whether the benefit limit for such 
     individual under section 1860B(b) has been reached.''.
       (b) Medicare Cost-Sharing Required for Qualified Medicare 
     Beneficiaries.--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.''; and
       (2) in subparagraph (D)--
       (A) by inserting ``(i)'' after ``(D)''; and
       (B) by adding at the end the following:
       ``(ii) The difference between the amount that is paid under 
     section 1860B and the amount that would be paid under such 
     section if any reference to `50 percent' therein were deemed 
     a reference to `100 percent' (or, if the Secretary approves a 
     higher percentage under such section, if such percentage were 
     deemed to be 100 percent).''.
       (c) Medicare Drug Cost-Sharing Required for Medicare-
     Eligible Individuals With Incomes Between 100 and 150 Percent 
     of Poverty Line.--
       (1) Definitions of eligible beneficiaries and coverage.--
     Section 1905 of the Social Security Act (42 U.S.C. 1396d) is 
     amended by adding at the end the following new subsection:
       ``(x)(1) The term `qualified medicare drug beneficiary' 
     means an individual--
       ``(A) who is entitled to hospital insurance benefits under 
     part A of title XVIII (including an individual entitled to 
     such benefits pursuant to an enrollment under section 1818, 
     but not including an individual entitled to such benefits 
     only pursuant to an enrollment under section 1818A);
       ``(B) whose income (as determined under section 1612 for 
     purposes of the supplemental security income program, except 
     as provided in subsection (p)(2)(D)) is above 100 percent but 
     below 150 percent of the 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; and
       ``(C) whose resources (as determined under section 1613 for 
     purposes of the supplemental security income program) do not 
     exceed twice the maximum amount of resources that an 
     individual may have and obtain benefits under that program.
       ``(2) The term `medicare drug cost-sharing' means the 
     following costs incurred with respect to a qualified medicare 
     drug beneficiary, without regard to whether the costs 
     incurred were for items and services for which medical 
     assistance is otherwise available under the plan:
       ``(A) In the case of a qualified medicare drug beneficiary 
     whose income (as determined under paragraph (1)) is less than 
     135 percent of the official poverty line--
       ``(i) premiums under section 1860D; and
       ``(ii) the difference between the amount that is paid under 
     section 1860B and the amount that would be paid under such 
     section if any reference to `50 percent' therein were deemed 
     a reference to `100 percent' (or, if the Secretary approves a 
     higher percentage under such section, if such percentage were 
     deemed to be 100 percent).
       ``(B) In the case of a qualified medicare drug beneficiary 
     whose income (as determined under paragraph (1)) is at least 
     135 percent but less than 150 percent of the official poverty 
     line, a percentage of premiums under section 1860D, 
     determined on a linear sliding scale ranging from 100 percent 
     for individuals with incomes at 135 percent of such line to 0 
     percent for individuals with incomes at 150 percent of such 
     line.
       ``(3) In the case of any State which is providing medical 
     assistance to its residents under a waiver granted under 
     section 1115, the Secretary shall require the State to meet 
     the requirement of section 1902(a)(10)(E) in the same manner 
     as the State would be required to meet such requirement if 
     the State had in effect a plan approved under this title.''.
       (2) State plan requirement.--Section 1902(a)(10)(E) of the 
     Social Security Act (42 U.S.C. 1396a(a)(10)(E)) is amended--
       (A) in clause (iii), by striking ``and'' at the end; and
       (B) by adding at the end the following new clause:
       ``(v) for making medical assistance available for medicare 
     drug cost-sharing (as defined in section 1905(x)(2)) for 
     qualified medicare drug beneficiaries described in section 
     1905(x)(1); and''.
       (3) 100 percent federal matching of state medical 
     assistance costs for medicare drug cost-sharing.--Section 
     1903(a) of the Social Security Act (42 U.S.C. 1396b(a)) is 
     amended--
       (A) by redesignating paragraph (7) as paragraph (8); and
       (B) by inserting after paragraph (6) the following new 
     paragraph:
       ``(7) except in the case of amounts expended for an 
     individual whose eligibility for medical assistance is not 
     limited to medicare or medicare drug cost-sharing, an amount 
     equal to 100 percent of amounts as expended as medicare drug 
     cost-sharing for qualified medicare drug beneficiaries (as 
     defined in section 1905(x)); plus''.
       (d) Medicaid Drug Price Rebates Unavailable With Respect to 
     Drugs Purchased Through Medicare Buy-In.--Section 1927 of the 
     Social Security Act (42 U.S.C. 1396r-8) is amended by adding 
     at the end the following new subsection:
       ``(l) Drugs Purchased Through Medicare Buy-In.--The 
     provisions of this section shall not apply to prescription 
     drugs purchased under part D of title XVIII pursuant to an 
     agreement with the Secretary under section 1860E (including 
     any drugs so purchased after the limit under section 1860B(b) 
     has been exceeded).''.
       (e) Amendments to Medicare Part D.--Part D of title XVIII 
     of the Social Security Act (as added by section 2) is amended 
     by inserting after section 1860D the following new section:


 ``special eligibility, enrollment, and copayment rules for low-income 
                              individuals

       ``Sec. 1860E. (a) State Agreements for Coverage.--
       ``(1) In general.--The Secretary shall, at the request of a 
     State, enter into an agreement with the State under which all 
     individuals described in paragraph (2) are enrolled in the 
     program under this part, without regard to whether any such 
     individual has previously declined the opportunity to enroll 
     in such program.
       ``(2) Eligibility groups.--The individuals described in 
     this paragraph, for purposes of paragraph (1), are 
     individuals who satisfy section 1860C(a) and who are--
       ``(A)(i) eligible individuals within the meaning of section 
     1843; and
       ``(ii) in a coverage group or groups permitted under 
     section 1843 (as selected by the State and specified in the 
     agreement); or
       ``(B) qualified medicare drug beneficiaries (as defined in 
     section 1905(v)(1)).
       ``(3) Coverage period.--The period of coverage under this 
     part of an individual enrolled under an agreement under this 
     subsection shall be as follows:

[[Page S3846]]

       ``(A) Individuals eligible (at state option) for part b 
     buy-in.--In the case of an individual described in subsection 
     (a)(2)(A), the coverage period shall be the same period that 
     applies (or would apply) pursuant to section 1843(d).
       ``(B) Qualified medicare drug beneficiaries.--In the case 
     of an individual described in subsection (a)(2)(B)--
       ``(i) the coverage period shall begin on the latest of--

       ``(I) January 1, 2002;
       ``(II) the first day of the third month following the month 
     in which the State agreement is entered into; or
       ``(III) the first day of the first month following the 
     month in which the individual satisfies section 1860C(a); and

       ``(ii) the coverage period shall end on the last day of the 
     month in which the individual is determined by the State to 
     have become ineligible for medicare drug cost-sharing.
       ``(b) Special Part D Enrollment Opportunity for Individuals 
     Losing Medicaid Eligibility.--In the case of an individual 
     who--
       ``(1) satisfies section 1860C(a); and
       ``(2) loses eligibility for benefits under the State plan 
     under title XIX after having been enrolled under such plan or 
     having been determined eligible for such benefits;

     the Secretary shall provide an opportunity for enrollment 
     under the program under this part during the period that 
     begins on the date that such individual loses such 
     eligibility and ends on the date specified by the Secretary.
       ``(c) Definition.--For purposes of this section, the term 
     `State' has the meaning given such term under section 1101(a) 
     for purposes of title XIX.''.
       (f) Removal of Sunset Date for Cost-Sharing in Medicare 
     Part B Premiums for Certain Qualifying Individuals.--
       (1) In general.--Section 1902(a)(10)(E)(iv) of the Social 
     Security Act (42 U.S.C. 1396a(a)(10)(E)(iv))is amended to 
     read as follows--
       ``(iv) subject to section 1905(p)(4), for making medical 
     assistance available for medicare cost-sharing described in 
     section 1905(p)(3)(A)(ii) for individuals who would be 
     qualified medicare beneficiaries described in section 
     1905(p)(1) but for the fact that their income exceeds the 
     income level established by the State under section 
     1905(p)(2) and is at least 120 percent, but less than 135 
     percent, of the official poverty line (referred to in such 
     section) for a family of the size involved and who are not 
     otherwise eligible for medical assistance under the State 
     plan;''.
       (2) Relocation of provision requiring 100 percent federal 
     matching of state medical assistance costs for certain 
     qualifying individuals.--Section 1903(a) of the Social 
     Security Act (42 U.S.C. 1396b(a)), as amended by subsection 
     (c)(3), is amended--
       (A) by redesignating paragraph (8) as paragraph (9); and
       (B) by inserting after paragraph (7) the following new 
     paragraph:
       ``(8) an amount equal to 100 percent of amounts as expended 
     as medicare drug cost-sharing for individuals described in 
     section 1903(a)(10)(E)(iv); plus''.
       (3) Repeal of section 1933.--Section 1933 is repealed.
       (4) Effective date.--The amendments made by this subsection 
     shall take effect on January 1, 2002.

     SEC. 103. CATASTROPHIC PRESCRIPTION DRUG COVERAGE BENEFIT.

       (a) Recommendations With Respect to a Medicare Catastrophic 
     Drug Benefit.--
       (1) In general.--Not later than 6 months after the date of 
     enactment of this Act, the Secretary of Health and Human 
     Services (in this section referred to as the ``Secretary'') 
     shall submit to the Committee on Finance of the Senate and 
     the Committee on Ways and Means and the Committee on Commerce 
     of the House of Representatives detailed recommendations on 
     structuring a catastrophic drug benefit for medicare 
     beneficiaries.
       (2) Recommendations described.--The recommendations under 
     paragraph (1) shall--
       (A) ensure coverage of the costs of prescription drugs 
     above a specified level of out-of-pocket expenditures;
       (B) conform to the administrative structure established in 
     this Act;
       (C) have a projected cost that does not exceed the amounts 
     described in subsection (b)(3)(A); and
       (D) take effect no later than January 1, 2003.
       (3) Final regulations.--
       (A) In general.--If legislation of a medicare catastrophic 
     drug benefit is not enacted that meets the requirements of 
     paragraph (2) by June 1, 2001, the Secretary of Health and 
     Human Services shall promulgate final regulations containing 
     such standards no later than January 1, 2002.
       (B) Certification by omb and hcfa.--A final regulation 
     promulgated by the Secretary under subparagraph (A) shall not 
     take effect unless the Director of the Office of Management 
     and Budget and the Chief Actuary of the Health Care Financing 
     Administration certify that aggregate Federal expenses 
     incurred in providing the catastrophic drug benefit under 
     this section will not exceed $50,000,000,000 between fiscal 
     years 2003 and 2010. If either certification is not provided, 
     the Secretary shall submit a revised recommendation on 
     structuring a catastrophic drug benefit to the appropriate 
     committees of Congress under paragraph (1) no later than 30 
     days after the Secretary receives a notification that such 
     certification will not be provided.
       (b) Catastrophic Prescription Drug Coverage Reserve Fund.--
       (1) Establishment of reserve fund.--There is established a 
     reserve fund which shall be known as the ``Catastrophic 
     Prescription Drug Coverage Reserve Fund'' (in this subsection 
     referred to as the ``Reserve Fund'').
       (2) Amounts in reserve fund.--Subject to subparagraph (B), 
     the Reserve Fund shall consist of such amounts as are 
     appropriated to the Reserve Fund under paragraph (3).
       (3) Appropriation to reserve fund.--
       (A) In general.--
       (i) Fiscal years 2003 through 2010.--There are appropriated 
     to the Reserve Fund for the period beginning with fiscal year 
     2003 and ending with fiscal year 2010, $50,000,000,000.
       (ii) Subsequent fiscal years.--There are authorized to be 
     appropriated to the Reserve Fund for each subsequent fiscal 
     year, such sums as may be necessary to carry out the 
     provisions of this section.
       (B) Availability.--Sums appropriated under subparagraph 
     (A)(i) shall remain available, without fiscal year 
     limitation, until expended.

     SEC. 104. COMPREHENSIVE IMMUNOSUPPRESSIVE DRUG COVERAGE FOR 
                   TRANSPLANT PATIENTS.

       (a) Revision of Medicare Coverage for Immunosuppressive 
     Drugs.--
       (1) In general.--Section 1861(s)(2)(J) of the Social 
     Security Act (42 U.S.C. 1395x(s)(2)(J)) (as amended by 
     section 227(a) of the Medicare, Medicaid, and SCHIP Balanced 
     Budget Refinement Act of 1999 (113 Stat. 1501A-354), as 
     enacted into law by section 1000(a)(6) of Public Law 106-113) 
     is amended by striking ``, to an individual who receives'' 
     and all that follows before the semicolon at the end and 
     inserting ``to an individual who has received an organ 
     transplant''.
       (2) Conforming amendments.--
       (A) Section 1832 of the Social Security Act (42 U.S.C. 
     1395k) (as amended by section 227(b) of the Medicare, 
     Medicaid, and SCHIP Balanced Budget Refinement Act of 1999 
     (113 Stat. 1501A-354), as enacted into law by section 
     1000(a)(6) of Public Law 106-113) is amended--
       (i) by striking subsection (b); and
       (ii) by redesignating subsection (c) as subsection (b).
       (B) Subsections (c) and (d) of section 227 of the Medicare, 
     Medicaid, and SCHIP Balanced Budget Refinement Act of 1999 
     (113 Stat. 1501A-355), as enacted into law by section 
     1000(a)(6) of Public Law 106-113, are repealed.
       (3) Effective date.--The amendments made by this subsection 
     shall apply to drugs furnished on or after the date of 
     enactment of this Act.
       (b) Extension of Certain Secondary Payer Requirements.--
     Section 1862(b)(1)(C) of the Social Security Act (42 U.S.C. 
     1395y(b)(1)(C)) is amended by adding at the end the 
     following: ``With regard to immunosuppressive drugs furnished 
     on or after the date of enactment of the Medicare Expansion 
     for Needed Drugs (MEND) Act of 2000, this subparagraph shall 
     be applied without regard to any time limitation.''.

     SEC. 105. GAO STUDY AND BIENNIAL REPORTS ON COMPETITION AND 
                   SAVINGS.

       (a) Ongoing Study.--The Comptroller General of the United 
     States shall conduct an ongoing study and analysis of the 
     prescription drug benefit program under part D of the 
     medicare program under title XVIII of the Social Security Act 
     (as added by this title), including an analysis of--
       (1) the extent to which the competitive bidding process 
     under such program fosters maximum competition and 
     efficiency; and
       (2) the savings to the medicare program resulting from such 
     prescription drug benefit program, including the reduction in 
     the number or length of hospital visits.
       (b) Initial Report.--Not later than September 1, 2001, the 
     Comptroller General shall submit to Congress a report on the 
     extent to which the competitive bidding process under the 
     prescription drug benefit program under part D of the 
     medicare program under title XVIII of the Social Security Act 
     (as added by this title) is expected to foster maximum 
     competition and efficiency.
       (c) Biennial Reports.--Not later than January 1, 2004, and 
     biennially thereafter, the Comptroller General of the United 
     States shall submit to Congress a report on the results of 
     the study conducted under this section, together with any 
     recommendations for legislation that the Comptroller General 
     determines to be appropriate as a result of such study.

     SEC. 106. MEDPAC STUDY AND ANNUAL REPORTS ON THE 
                   PHARMACEUTICAL MARKET, PHARMACIES, AND 
                   BENEFICIARY ACCESS.

       (a) Ongoing Study.--The Medicare Payment Advisory 
     Commission established under section 1805 of the Social 
     Security Act (42 U.S.C. 1395b-6) shall conduct an ongoing 
     study and analysis of the prescription drug benefit program 
     under part D of the Social Security Act (as added by this 
     title), including an analysis of the impact of the 
     prescription drug benefit program on--
       (1) the pharmaceutical market, including costs and pricing 
     of pharmaceuticals, beneficiary access to such 
     pharmaceuticals, and trends in research and development;
       (2) franchise, independent, and rural pharmacies; and
       (3) beneficiary access to prescription drugs, including an 
     assessment of--
       (A) out-of-pocket spending;

[[Page S3847]]

       (B) generic and brand-name utilization; and
       (C) pharmacists' services.
       (b) Report.--Not later than January 1, 2004, and annually 
     thereafter, the Medicare Payment Advisory Commission shall 
     submit to Congress a report on the results of the study 
     conducted under this section, together with any 
     recommendations for legislation that such Commission 
     determines to be appropriate as a result of such study.

             TITLE II--ENHANCED MEDICARE PREVENTION PROGRAM

     SEC. 201. MEDPAC BIENNIAL REPORT.

       (a) In General.--Section 1805(b) of the Social Security Act 
     (42 U.S.C. 1395b-6(b)) 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) by not later than January 1, 2002, and biennially 
     thereafter, submit the report to Congress described in 
     paragraph (7).''; and
       (2) by adding at the end the following new paragraph:
       ``(7) Evaluation of actuarial equivalence of medicare and 
     private sector benefit packages.--
       ``(A) Evaluation.--The Commission shall--
       ``(i) evaluate the benefit package offered under the 
     medicare program under this title; and
       ``(ii) determine the degree to which such benefit package 
     is actuarially equivalent to that offered by health benefit 
     programs available in the private sector to individuals over 
     age 65.
       ``(B) 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 programs 
     available in the private sector; 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. 202. NATIONAL INSTITUTE ON AGING STUDY AND REPORT.

       (a) Studies.--The Director of the National Institute on 
     Aging shall conduct 1 or more studies focusing on ways to--
       (1) improve quality of life for the elderly;
       (2) develop better ways to prevent or delay the onset of 
     age-related functional decline and disease and disability 
     among the elderly; and
       (3) develop means of assessing the long-term development of 
     cost-effective benefits and cost-savings benefits for health 
     promotion and disease prevention among the elderly.
       (b) Report.--Not later than January 1, 2006, the Director 
     of the National Institute on Aging shall submit a report to 
     the Secretary regarding each study conducted under subsection 
     (a) and containing 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.
       (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 204.
       (d) Authorization of Appropriations.--
       (1) In general.--There are authorized to be appropriated 
     $100,000,000 for fiscal years 2001 through 2006 to carry out 
     the purposes of this section.
       (2) Availability.--Any sums appropriated under the 
     authorization contained in this subsection shall remain 
     available, without fiscal year limitation, until September 
     30, 2005.

     SEC. 203. INSTITUTE OF MEDICINE 5-YEAR 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 
     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 to submit the report described 
     in subsection (b).
       (2) Issues studied.--The study required under paragraph (1) 
     shall include an assessment of--
       (A) whether each covered benefit is--
       (i) medically effective; and
       (ii) a cost-effective benefit or a cost-saving benefit;
       (B) utilization of covered benefits (including any barriers 
     to or incentives to increase utilization); and
       (C) quality of life issues associated with both health 
     promotion and disease prevention benefits covered under the 
     medicare program and those that are not covered under such 
     program that would affect all medicare beneficiaries.
       (b) Report.--
       (1) In general.--Not later than 5 years after the date of 
     enactment of this section, and every fifth year thereafter, 
     the Institute of Medicine of the National Academy of Sciences 
     shall submit to the President a report that contains a 
     detailed statement of the findings and conclusions of the 
     study conducted under subsection (a) and the recommendations 
     for legislation described in paragraph (2).
       (2) Recommendations for legislation.--The Institute of 
     Medicine of the National Academy of Sciences, in consultation 
     with the Partnership for Prevention, shall develop 
     recommendations in legislative form that--
       (A) prioritize the preventive benefits under the medicare 
     program; and
       (B) modify preventive benefits offered under the medicare 
     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 subsection (b) is submitted to the President, the 
     President shall transmit the report and recommendations in 
     legislative form described in subsection (b)(2) 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 of Representatives is not in session; and
       (C) to the Secretary of the Senate if the Senate is not in 
     session.

     SEC. 204. 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 
     203(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).
       (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 203(b)(2), 
     transmitted by the President to the House of Representatives 
     and the Senate under section 203(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

[[Page S3848]]

       (2) any Saturday and Sunday, not excluded under paragraph 
     (1), when either House is not in session.

  Mr. KENNEDY. Mr. President, Senator Daschle, Senator Moynihan, and I, 
and the majority of the members of our caucus are introducing 
legislation to provide prescription drug coverage under Medicare. It is 
a program supported not only by the Senate Democrats but by House 
Democrats and the President as well. Senior citizens deserve 
prescription drug coverage under Medicare. Democrats are committed to 
providing it and providing it this year.
  It is long past time for Congress to mend the broken promise of 
Medicare. Medicare is a guarantee of affordable health care for every 
senior citizen, but that promise is being broken every day because 
Medicare does not cover prescription drugs. The need is urgent. Too 
many elderly citizens face an impossible choice between food on the 
table and medicine they need to stay healthy or to treat their 
illnesses. They take half the pills their doctors prescribe, or do not 
even fill a needed prescription at all because they cannot afford the 
high cost of the prescription.
  They pay twice as much for the drugs they need because they pay full 
price, while almost everyone with private insurance pays less because 
of negotiated discounts. Too many seniors end up in the hospital at 
immense cost to Medicare because they cannot afford the drugs they 
need, or can't afford to take them correctly.
  Opponents say we cannot afford this coverage, in spite of the budget 
surplus. The issue is priorities. Health care for the elderly is more 
important than new tax breaks for the wealthy.
  Others say this coverage should be available only to the elderly who 
are poor. But senior citizens want Medicare, not welfare. They should 
not be forced into poverty in order to obtain the medications they 
need.
  The ongoing revolution in health care makes this coverage more 
essential now than ever. Coverage of prescription drugs under Medicare 
is as critical today as coverage of hospital and doctor care. Senior 
citizens need help now. The President knows it, Democrats and the House 
and Senate know it, senior citizens know it, and so do their children 
and grandchildren.
  Congress should listen to their choices. The time for excuses is 
over. The time for action is now.
  I will take a few moments of the Senate's time to review where we are 
on the issue of Medicare and Medicare coverage. This chart shows the 
number of senior citizens who have prescription drug coverage.

       Senior citizens lack affordable, reliable, quality 
     coverage.

  The only group of senior citizens who have coverage today that is 
reliable, affordable, and dependable are the 4 million seniors covered 
under Medicaid. Today, we have 12 million senior citizens who 
effectively have no coverage at all; that is a third of all of our 
senior citizens. Eleven million seniors have employer sponsored 
coverage, and I will come back to that because employer sponsored 
coverage is disappearing.
  Three million seniors have coverage under Medicare HMOs, 4 million 
are covered under Medigap--and we will examine that particular 
phenomenon--4 million under Medicaid, and 3 million now switched plans 
during the year or have other coverage.
  We have a about a third who have no coverage whatsoever. Another 
third have employer-sponsored coverage, but we are finding that this 
coverage is declining rapidly. Medicare HMO coverage is also declining, 
and Medigap coverage is often unaffordable. That is the current 
situation. Let's look a little further. If we look at the income of 
senior citizens, what we see is that 57 percent of senior citizens have 
incomes under $15,000; 21 percent have incomes above $15,000 but under 
$25,000. If you add those together, obviously 78 percent are below 
$25,000. Elderly people in our country have very modest means--very, 
very modest means.
  The average income for a person over 65 is just above $13,000. The 
cost of coverage is going up. I just showed a chart of the different 
types of coverage we had, pointing out one-third of our senior citizens 
have no coverage, and another third have health coverage that is 
related to their former job. The next chart shows firms offering 
retiree health coverage.

  The chart indicates coverage ``drops 25 percent.''
  There was a 25-percent drop in employers covering prescription drugs 
for their retirees in the 3 years from 1994 to 1997. This is a dramatic 
reduction in coverage.
  Remember I showed the other chart that said a third had coverage 
through employer sponsored retiree benefits? This shows that the number 
of firms offering retiree health benefits is dropping absolutely 
dramatically.
  We saw there were a number of our senior citizens, about 4 million, 
who had coverage through Medicare HMOs. Look at what is happening to 
Medicare HMO coverage. It is inadequate and unreliable.
  First of all, the drug benefit is offered only at the option of HMOs, 
so some HMOs offer coverage and others do not. More than 325,000 
Medicare beneficiaries lost their HMO coverage this year. That is 
because the HMOs moved out of the areas where those seniors live. 
Seniors lost their coverage. Look at this: 75 percent of Medicare HMOs 
will limit prescription drug coverage to less than $1,000 this year. 
That is an increase of 100 percent in the number of HMOs capping 
coverage since 1998. And 32 percent of Medicare HMOs have imposed caps 
of less than $500 this year. So even though you have 4 million 
Americans who have prescription drug coverage through Medicare HMOs, 
what you find out is there is a cap on the amount of prescription drugs 
they are able to receive. After that, they pay for all prescription 
drugs themselves.
  What the trend is, the dramatic trend, is that the dollar cap is 
going down and down, with a third of HMOs having a cap of $500. Many 
seniors in Medicare HMOs will exceed the cap. What we find is that 
Medicare HMO prescription drug coverage is increasingly inadequate and 
increasingly unreliable.
  There is a dramatic reduction in the number of employers providing 
coverage for retirees, and a dramatic increase in the amount of money 
that individual seniors are paying out-of-pocket, even if they have 
some coverage under their HMO.
  The third group I pointed out were those who had Medigap coverage, 
drug coverage which basically is unaffordable. These are sample Medigap 
premiums for a 75-year-old. In Delaware, just over $2,600; just under 
$2,000 in New York and Iowa; and just under $2,400 in Maine and 
Mississippi.
  Against that background, what has been happening to the cost of 
drugs? The average seniors income is just above $13,500. A third of all 
of our seniors have no coverage; another third are losing it 
dramatically. We find that 4 million of the remaining have increasingly 
limited coverage due to caps, so they are paying more and more out of 
pocket. Medigap, which is another way they are able to get some 
coverage, is going right up through the roof. So they are being hard-
pressed, and all at a time that 78 percent of all the elderly people 
have incomes below $25,000.
  Let's see what is happening to the cost of prescription drugs. Since 
1995, drug costs have been growing at double-digit rates. On this 
chart: Percent increases in drug costs. Let's look at the increase in 
the cost of the drugs: almost 10 percent in 1995, 10 percent in 1996, 
14 percent in 1997, almost 16 percent in 1998, 16 percent in 1999.
  Let's compare that to the Consumer Price Index for all goods. It is 
2.5 percent in 1995, it is 3.3 percent in 1996, 1.7 percent in 1997--
1.7 percent cost-of-living increase and look at the cost of the 
prescription drugs-- 14 percent. In 1998 it is 1.6, and 2.7 in 1999, 
and look at the cost of these drugs.
  This is not just a peripheral issue for our seniors. When we passed 
the Medicare program in 1964, as we heard so eloquently today from both 
our leader on this side, Senator Daschle, and Congressman Gephardt, we 
had a lot of the same kinds of criticisms that are being made now 
against this program: This is the beginning of a takeover by the 
Federal Government; this is the beginning of socialism.
  Of course, they were wrong then and we were right because the 
Medicare program has worked. But one area we did not take care of was 
prescription drugs because private coverage at that time did not 
provide for drug coverage.

[[Page S3849]]

 I daresay prescription drugs are as necessary for our senior citizens 
today as hospital care or doctor care.
  Prescription drugs coverage is necessary for elderly people. Yet it 
is left out. In a very important way, our Medicare system is not living 
up to its guarantee--for the men and women who fought in the wars and 
brought this country out of the depths of the Depression and have 
educated their children--to live their golden years with a degree of 
security and peace with respect to their health care needs under 
Medicare. We are now finding now with that major gap--today, more than 
95 percent of the private sector provides prescription drug coverage 
although they are dropping it for retirees--that Medicare does not 
provide prescription drug coverage. It is a major gap.
  We are saying: Let's fill that gap; let's meet our commitment to our 
seniors; let's include under Medicare a program that is going to be 
worthy of our names and which is absolutely essential if we are going 
to have our seniors--our parents and grandparents--live in the peace, 
dignity, and security they deserve.
  That is why we believe the program ought to be voluntary, there ought 
to be coverage for all, it ought to provide basic coverage and have 
catastrophic coverage, and it ought to be affordable.
  The President has embraced and endorsed the program, and it is 
endorsed by the overwhelming majority of our caucus in the Senate and 
in the House of Representatives, and it is strongly supported by our 
leader and Mr. Gephardt.
  The President in the Rose Garden today asked our Republican friends 
to join in this effort to pass this legislation this year. We have to 
pass something that is going to be meaningful and worthy of our 
efforts. He invited our Republican friends to join us in this effort 
and outlined the program and spelled out the details as well as the 
cost of this program.
  When we pass this program and send it to the President's desk, we in 
the Congress will say: Why did it take us so long? Every day we delay 
passing this program, millions of our fellow citizens are being asked 
to make decisions about their very lives which they should not have to 
make. That is wrong. We ought to respond. We know how to do it. The 
question is whether we have the will.
  We are going to insist this Senate and House of Representatives 
address this issue in this Congress. We give those assurances to the 
American people, and we invite our friends on the other side of the 
aisle to join us in meeting our responsibilities to our senior 
citizens.
  Mr. BIDEN. Mr. President, I am pleased today to join Senator Daschle 
and 31 of my colleagues in introducing the Medicare Expansion for 
Needed Drugs Act. This important legislation would expand the Medicare 
program to provide outpatient prescription drug coverage for seniors 
and other Medicare beneficiaries.
  This bill is long overdue, one might say 35 years overdue. When 
Medicare was first crafted in the mid 1960's, life-saving medicine 
tended to be focused on surgical procedures: appendectomy, mastectomy, 
and so forth. Medications were being increasingly used to treat serious 
medical conditions, such as antibiotics to treat infections. However, 
for most illnesses, the medicine cabinet contained few options.
  The advances that have been made in the past 4 decades in the use of 
pharmaceuticals are nothing short of phenomenal. Diseases that were 
incurable by any means are now cured by drugs alone. For example, in 
1965, childhood leukemia was inevitably fatal. Now, thanks to new 
medicines, it is almost always curable.
  In addition, in many instances new medications have enabled us to 
avoid the need for surgical treatment altogether. In 1965, intractable 
pain from stomach ulcers was a common indication for surgery. In 2000, 
we have highly effective medications to cut down on stomach acid, which 
have virtually eliminated the need for that kind of surgery. Not only 
that, but since we have discovered that most stomach ulcers are really 
due to a bacterium, we can cure the condition entirely with 
antibiotics.
  However, all too often, the elderly and disabled cannot take 
advantage of these major advances in drug treatment because the 
Medicare program does not pay for outpatient prescription drugs. How 
ridiculous is that?: that the group in our society that is the sickest, 
that could benefit most from these medications, is the one group that 
is denied access to them.
  You would be hard pressed to name another health program in this 
country that doesn't pay for outpatient prescription drugs. Virtually 
all private health plans do. Even looking at the Federal government: 
Medicaid, Tricare, the VA, the Federal Employees Health Benefits 
Program, they all pay for prescription drugs. Only Medicare, the 
medical program for the elderly and disabled, is singled out for 
special limitations.
  What is the consequence of this Medicare limitation? Just two weeks 
ago, the New York Times had a cover story on the plight of Albert 
Russell, a retiree who lives on an $832 Social Security check. Mr. 
Russell is nearly blind from glaucoma, a condition in which the 
pressure inside the eye is too high. When the new drug Xalatan was 
released in 1996, Mr. Russell's eye doctor tried it and found that it 
was just what Mr. Russell needed; it reduced the pressure in his eyes 
better than the alternatives. The problem was the cost of the drug: $1 
per day. After several years on the medicine, Mr. Russell could no 
longer afford the cost, so he had to stop taking the medicine. Of 
course, Medicare would not pay for such an outpatient prescription 
drug. In an attempt to save Mr. Russell's vision, his eye doctor 
recommended an alternative: an expensive eye surgery. For Mr. Russell, 
the surgery would not be as effective as the medication, but there was 
one big factor in its favor: Medicare would have no reluctance about 
paying for the surgery. So, as compared to surgery, the medication 
would be better and easier for Mr. Russell, and probably cheaper in the 
long run for the taxpayer, but under the current Medicare situation, 
this common sense solution is out-of-bounds. This situation must be 
changed.
  So what's in this bill for consumers? The bill makes prescription 
drug coverage voluntary and available to all Medicare beneficiaries. 
There is no deductible required, and there is an out-of-pocket cap that 
puts an absolute maximum limit on how much one person will have to pay 
for drugs in any given year. Participants pay a monthly premium, and 
the government splits the cost of drugs 50/50 with the beneficiary (up 
to a gradually increasing limit). There is absolutely no question that 
this bill is an important improvement for the health of our seniors.
  I think it is important to keep in mind what this bill is not. First, 
it is not perfect. The coverage for prescription drugs is not in parity 
with coverage for alternative medical treatments, such as surgery. This 
difference reflects cost constraints, but I am optimistic that this 
aspect can be addressed in future legislation.
  Second, this bill is not for everyone. Individuals who have better 
coverage of prescription drugs than is afforded in this bill, perhaps 
through an employer-sponsored retiree health plan, can keep that 
coverage. In fact, employers will be offered subsidies to encourage 
them to maintain prescription drug coverage for their retirees.
  Third, this bill is not a prelude to price controls on drugs. The 
legislation makes no mention of or need for price controls, and it is 
not our intention to propose or implement price controls. This bill 
deals primarily with access to pharmaceuticals, not their cost. The 
high cost of medications is a concern to many of us in this country, 
but that is a very complex problem that is not, and should not be, 
addressed in this bill.
  Finally, this bill is not the comprehensive overhaul of the Medicare 
program that we all agree is needed. The 1965 program needs to be 
brought up to new millennium standards to make it easier for the 
program to keep up with rapid future advances in medical technology. 
The benefit package (including enhanced preventive measures), the 
financing of graduate medical education, the provider payment 
mechanisms; these are all items that must be addressed. But not in this 
bill. Seniors need help now with prescription drugs, and they cannot 
wait the months or years that it will take to complete the needed 
comprehensive revision of Medicare.

[[Page S3850]]

  Mr. President, I encourage all of my colleagues on both sides of the 
aisle to work together to enact this legislation and to make sure that 
our Medicare beneficiaries aren't relegated to a second class health 
care system.
  Mr. ROBB. Mr. President, I wanted to say a few words about the 
Medicare Expansion for Needed Drugs, or MEND Act, which our leader, 
Senator Daschle introduced today. The MEND Act an important first step 
toward modernizing Medicare through the creation of a voluntary, 
affordable, universal prescription drug benefit.
  While the bill has many elements that I support, I am also interested 
in looking at ways that we might create a prescription drug bill that 
distributes its benefits for senior citizens in a more targeted way. I 
am working with several of my colleagues on the Finance Committee to 
create such a bill, and hope to introduce it in the next two weeks. 
With it, we will have two strong options for giving our seniors the 
help they so desperately need with the skyrocketing costs of 
prescription drugs.
  Mr. President, I applaud the minority leader for his determination in 
working to help our nation's seniors with the high cost of prescription 
drugs, and for his efforts in bringing this bill to the floor.

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