[Congressional Record Volume 147, Number 99 (Tuesday, July 17, 2001)]
[Senate]
[Pages S7809-S7824]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. CLELAND (for himself and Mr. Miller):
  S. 1184. A bill to designate the facility of the United States Postal 
Service located at 2853 Candler Road in Decatur, Georgia, as the ``Earl 
T. Shinhoster Post Office''; to the Committee on Governmental Affairs.
  Mr. CLELAND. Mr. President, I rise today to recognize Mr. Earl 
Shinhoster for his distinguished career of service to the public and 
the cause of civil and human rights. In tribute to Mr. Shinhoster I 
hereby introduce legislation to designate the facility of the United 
States Postal Service located at 2853 Candler Road in Decatur, Georgia, 
as the ``Earl T. Shinhoster Post Office.'' Before his tragic death on 
June 12, 2000, he had been an active member of the National Association 
for the Advancement of Colored People, NAACP, for more than 30 years as 
both a volunteer and staff member, most recently as Acting Executive 
Director and Chief Executive Officer of its National Board of Directors 
in 1996, and Southeast Regional Director from 1978-1994.
  In May 1998, Mr. Shinhoster was Chairman of the Georgia Delegation to 
the National Summit on Africa and he was the Field Director for the 
National Democratic Institute in Accra, Ghana from 1996 to 1997 where 
he observed and monitored the 1996 Presidential and Parliamentary 
elections. He also monitored and observed the electoral process in 
South Africa and Nigeria. He was active on both the State and local 
level serving in the administration of Georgia Governor George Busbee 
from 1975 to 1978 as Director of the Governor's Office of Human 
Affairs. In 1998, Mr. Shinhoster served as Coordinator of Voter 
Education for the State's Election Division.
  Earl Shinhoster earned his Bachelor of Arts degree in political 
science from Morehouse College in Atlanta, GA in 1972 before pursuing 
legal studies at Cleveland State University College of Law in 
Cleveland, OH. The particular Post Office to be named after him is the 
same Post Office in South DeKalb where he retrieved his mail and is 
located in the same community where his family and friends still reside 
today. I, along with Senator Miller, urge my colleagues to support this 
legislation and recognize Mr. Shinhoster's long and distinguished 
career as a public servant promoting civil and human rights in Georgia, 
the United States, and around the world. I ask unanimous consent that 
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. 1184

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. DESIGNATION OF EARL T. SHINHOSTER POST OFFICE.

       (a) In General.--The facility of the United States Postal 
     Service located at 2853 Candler Road in Decatur, Georgia, 
     shall be known and designated as the ``Earl T. Shinhoster 
     Post Office''.
       (b) References.--Any reference in a law, map, regulation, 
     document, paper, or other record of the United States to the 
     facility referred to in subsection (a) shall be deemed to be 
     a reference to the Earl T. Shinhoster Post Office.
                                 ______
                                 
      By Mr. WYDEN (for himself and Ms. Snowe):
  S. 1185. A bill to amend title XVIII of the Social Security Act to 
assure access of Medicare beneficiaries to prescription drug coverage 
through the SPICE drug benefit program; to the Committee on Finance.
  Mr. WYDEN. Mr. President, today Senator Snowe and I are introducing 
our bipartisan legislation to provide a Medicare prescription drug 
benefit. Yesterday, I spoke about our proposal, The Senior Prescription 
Insurance Coverage Equity Act of 2001. I ask unanimous consent that 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. 1185

       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 ``Seniors 
     Prescription Insurance Coverage Equity (SPICE) Act of 2001''.
       (b) Table of Contents.--The table of contents of this Act 
     is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. SPICE drug benefit program.

                  ``Part D--SPICE Drug Benefit Program

``Sec. 1860A. Establishment of SPICE drug benefit program.
``Sec. 1860B. SPICE prescription drug coverage.
``Sec. 1860C. Enrollment under SPICE drug benefit program.
``Sec. 1860D. Enrollment in a policy or plan.
``Sec. 1860E. Medicare Drug Plan for Noncompetitive Areas.
``Sec. 1860F. Selection of private entities to provide basic coverage.
``Sec. 1860G. Providing information to beneficiaries.
``Sec. 1860H. Premiums.
``Sec. 1860I. Approval for entities offering SPICE prescription drug 
              coverage.
``Sec. 1860J. Payments to entities.
``Sec. 1860K. Financial assistance to obtain SPICE prescription drug 
              coverage.
``Sec. 1860L. Employer incentive program for employment-based retiree 
              drug coverage.
``Sec. 1860M. SPICE Board.
``Sec. 1860N. SPICE Prescription Drug Account in the Federal 
              Supplementary Medical Insurance Trust Fund.''.
Sec. 3. SPICE prescription drug coverage under Medicare+Choice plans.
Sec. 4. Medigap revisions and transition provisions.
Sec. 5. Provision of information on SPICE drug benefit program under 
              health insurance information, counseling, and assistance 
              grants.
Sec. 6. Personal Digital Access Technology Demonstration Project.

     SEC. 2. SPICE DRUG BENEFIT PROGRAM.

       (a) In General.--Title XVIII of the Social Security Act (42 
     U.S.C. 1395 et seq.) is amended by redesignating part D as 
     part E and by inserting after part C the following new part:

                  ``Part D--SPICE Drug Benefit Program


             ``establishment of spice drug benefit program

       ``Sec. 1860A. (a) Access to SPICE Prescription Drug 
     Coverage.--
       ``(1) In general.--Beginning in 2003, the SPICE Board 
     (established under section 1860M) shall provide for a SPICE 
     drug benefit program under which all eligible medicare 
     beneficiaries who voluntarily enroll under this part shall be 
     entitled to obtain SPICE prescription drug coverage (meeting 
     the terms and conditions under this part) as follows:
       ``(A) Medicare+choice plan.--If the eligible medicare 
     beneficiary is eligible to enroll in a Medicare+Choice plan, 
     the beneficiary may enroll in the plan and obtain SPICE 
     prescription drug coverage (as defined in section 1860B(a)) 
     through such plan.
       ``(B) Medicare supplemental policy.--If the eligible 
     medicare beneficiary is not enrolled in a Medicare+Choice 
     plan but is enrolled in a medicare supplemental policy, the 
     beneficiary may--
       ``(i) obtain SPICE prescription drug coverage through such 
     policy; or
       ``(ii) waive basic coverage (as defined in section 
     1860B(b)) pursuant to section 1860C(a)(3) and obtain 
     financial assistance pursuant to section 1860K(c) for stop-
     loss coverage (as defined in section 1860B(c)) provided under 
     such policy.
       ``(C) Medicare drug plan for noncompetitive areas.--If the 
     eligible medicare beneficiary is not enrolled in a 
     Medicare+Choice plan, a medicare supplemental policy, or a 
     basic coverage plan under section 1860F, and there is a 
     Medicare Drug Plan for Noncompetitive Areas available in the 
     area in which the beneficiary resides, the beneficiary may 
     obtain SPICE prescription drug coverage under this part 
     through enrollment in such plan.
       ``(D) Basic coverage only through a private entity.--If the 
     eligible medicare beneficiary is not enrolled in a 
     Medicare+Choice plan, a medicare supplemental policy, or a 
     Medicare Drug Plan for Noncompetitive Areas, the beneficiary 
     may obtain basic coverage (including financial assistance for 
     such coverage under section 1860K(b) and access to negotiated 
     prices under section 1860B(d)) through enrollment in a plan 
     offered by a private entity with a contract to offer such 
     plan under section 1860F.
       ``(2) Voluntary nature of program.--Nothing in this part 
     shall be construed as requiring an eligible medicare 
     beneficiary to enroll in the program established under this 
     part.
       ``(3) Administration of benefits.--In providing SPICE 
     prescription drug coverage to an eligible medicare 
     beneficiary under this part, an entity offering a medicare 
     supplemental policy, a Medicare+Choice plan, a Medicare Drug 
     Plan for Noncompetitive Areas, or a basic coverage plan under 
     section 1860F may--
       ``(A) directly administer the benefits under such coverage; 
     or
       ``(B) contract with an entity that meets the applicable 
     requirements under this part to administer such benefits.
       ``(b) Access to Alternative Prescription Drug Coverage.--In 
     the case of an eligible medicare beneficiary who has 
     creditable prescription drug coverage (as defined in section 
     1860C(b)(4)) under a policy or plan, such beneficiary--
       ``(1) may continue to receive such coverage under such 
     policy or plan and not enroll under this part; and
       ``(2) pursuant to section 1860C(b)(3), is permitted to 
     subsequently enroll under this

[[Page S7810]]

     part and obtain SPICE prescription drug coverage without any 
     penalty if such policy or plan terminated, ceased to provide, 
     or substantially reduced the value of the prescription drug 
     coverage under such plan or policy.
       ``(c) Financial Assistance.--
       ``(1) Under spice drug benefit program.--Under the SPICE 
     drug benefit program, the SPICE Board shall provide financial 
     assistance, with such assistance varying depending upon the 
     income of such beneficiary, for any eligible medicare 
     beneficiary enrolled under this part who voluntarily 
     obtains--
       ``(A) basic coverage (pursuant to subsection (b) of section 
     1860K); or
       ``(B) stop-loss coverage (pursuant to subsection (c) of 
     such section).
       ``(2) Assistance to group health plans that provide 
     prescription drug coverage to eligible medicare 
     beneficiaries.--Pursuant to the Employer Incentive Program 
     established under section 1860L, the SPICE Board shall make 
     payments to employers and other sponsors of employment-based 
     health care coverage to encourage such employers and sponsors 
     to provide adequate prescription drug coverage to retired 
     individuals.
       ``(d) Eligible Medicare Beneficiary Defined.--For purposes 
     of this part, the term `eligible medicare beneficiary' means 
     an individual who is entitled to benefits under part A and 
     enrolled under part B.
       ``(e) Financing.--The costs of providing benefits under 
     this part shall be payable from the SPICE Prescription Drug 
     Account (as established under section 1860N) within the 
     Federal Supplementary Medical Insurance Trust Fund under 
     section 1841.


                   ``spice prescription drug coverage

       ``Sec. 1860B. (a) In General.--For purposes of this part, 
     the term `SPICE prescription drug coverage' means coverage 
     consisting of the following:
       ``(1) Basic coverage.--Basic coverage (as defined in 
     subsection (b)) and access to negotiated prices under 
     subsection (d), except as waived pursuant to section 
     1860C(a)(3).
       ``(2) Stop-loss coverage.--Stop-loss coverage (as defined 
     in subsection (c)).
       ``(b) Basic Coverage.--For purposes of this part, the term 
     `basic coverage' means coverage of covered outpatient drugs 
     (as defined in subsection (e)) that meets the following 
     requirements:
       ``(1) Deductible.--The coverage has an annual deductible--
       ``(A) for 2003, that is equal to $350; or
       ``(B) for a subsequent year, that is equal to the amount 
     specified under this paragraph for the previous year 
     increased by the percentage specified in paragraph (4) for 
     the year involved.
     Any amount determined under subparagraph (B) that is not a 
     multiple of $5 shall be rounded to the nearest multiple of 
     $5.
       ``(2) Coinsurance.--The coverage has coinsurance (for the 
     cost of a covered outpatient drug above the annual deductible 
     specified in paragraph (1) for the year and up to the initial 
     coverage limit specified in paragraph (3) for the year) that 
     does not exceed 25 percent of the cost of such drug.
       ``(3) Initial coverage limit.--
       ``(A) In general.--The coverage has an initial coverage 
     limit for covered outpatient drugs in a year that is reached 
     when the eligible medicare beneficiary has incurred the 
     applicable amount of out-of-pocket expenses in the year.
       ``(B) Applicable amount defined.--For purposes of 
     subparagraph (A), the term `applicable amount' means--
       ``(i) for 2003, $3,000; or
       ``(ii) for a subsequent year, the amount specified in this 
     subparagraph for the previous year, increased by the annual 
     percentage increase described in paragraph (4) for the year 
     involved.
     Any amount determined under clause (ii) that is not a 
     multiple of $25 shall be rounded to the nearest multiple of 
     $25.
       ``(C) Application.--In applying paragraph (1)--
       ``(i) incurred out-of-pocket expenses shall only include 
     expenses incurred for the annual deductible (described in 
     paragraph (1)) and coinsurance (described in paragraph (2)); 
     and
       ``(ii) such expenses shall be treated as incurred without 
     regard to whether the individual or another person, including 
     a State program or other third-party coverage, has paid for 
     such expenses.
       ``(4) Annual percentage increase.--For purposes of this 
     part, the annual percentage increase specified in this 
     paragraph for a year is equal to the annual percentage 
     increase in average per capita aggregate expenditures for 
     benefits under this title, as determined by the Secretary for 
     the 12-month period ending in July of the previous year.
       ``(c) Stop-Loss Coverage.--For purposes of this part, the 
     term `stop-loss coverage' means coverage of covered 
     outpatient drugs in a year without any coinsurance after the 
     eligible medicare beneficiary has reached the initial 
     coverage limit specified in subsection (b)(3) for the year.
       ``(d) Access to Negotiated Prices.--Under SPICE 
     prescription drug coverage offered under a policy or plan, 
     the entity offering the policy or plan (or the administering 
     entity pursuant to subsection (a)(3)(B)) shall provide 
     beneficiaries with access to negotiated prices (including 
     applicable discounts) used for payment for covered outpatient 
     drugs, regardless of the fact that no benefits may be payable 
     under the coverage with respect to such drugs because of the 
     application of the annual deductible.
       ``(e) Covered Outpatient Drugs Defined.--
       ``(1) In general.--Except as provided in this subsection, 
     for purposes of this part, the term `covered outpatient drug' 
     means--
       ``(A) a drug that may be dispensed only upon a prescription 
     and that is described in subparagraph (A)(i) or (A)(ii) of 
     section 1927(k)(2); or
       ``(B) a biological product described in clauses (i) through 
     (iii) of subparagraph (B) of such section or insulin 
     described in subparagraph (C) of such section,
     and such term includes any use of a covered outpatient drug 
     for a medically accepted indication (as defined in section 
     1927(k)(6)).
       ``(2) Exclusions.--
       ``(A) In general.--Such term does not include drugs or 
     classes of drugs, or their medical uses, which may be 
     excluded from coverage or otherwise restricted under section 
     1927(d)(2), other than subparagraph (E) thereof (relating to 
     smoking cessation agents) and except to the extent otherwise 
     specifically provided by the SPICE Board with respect to a 
     drug in any of such classes.
       ``(B) Avoidance of duplicate coverage.--A drug prescribed 
     for an individual that would otherwise be a covered 
     outpatient drug under this part shall not be so considered if 
     payment for such drug is available under part A or B or would 
     be available under part B but for the application of a 
     deductible under such part (but shall be so considered if 
     such payment is not available because benefits under part A 
     or B have been exhausted).
       ``(3) Application of formulary restrictions.--A drug 
     prescribed for an individual that would otherwise be a 
     covered outpatient drug under this part shall not be so 
     considered under a policy or plan if the policy or plan 
     excludes the drug under a formulary that meets the 
     requirements of section 1860I(c)(3) (including providing an 
     appeal process).
       ``(4) Application of general exclusion provisions.--An 
     entity may exclude from SPICE prescription drug coverage any 
     covered outpatient drug--
       ``(A) for which payment would not be made if section 
     1862(a) applied to part D; or
       ``(B) which are not prescribed in accordance with the 
     policy or plan or this part.
     Such exclusions are determinations subject to reconsideration 
     and appeal pursuant to section 1860I(c)(6).


             ``enrollment under spice drug benefit program

       ``Sec. 1860C. (a) Establishment of Process.--
       ``(1) Establishment.--
       ``(A)In general.--The SPICE Board, in consultation with the 
     Secretary, the National Association of Insurance 
     Commissioners, issuers of medicare supplemental policies, and 
     Medicare+Choice organizations, shall establish a process 
     through which an eligible medicare beneficiary (including an 
     eligible medicare beneficiary enrolled in a Medicare+Choice 
     plan) may enroll under this part.
       ``(B) Similar to part b.--
       ``(i) In general.--Except as provided in clause (ii), the 
     process established under subparagraph (A) shall be similar 
     to the process for enrollment in part B under section 1837.
       ``(ii) Beneficiary must affirmatively enroll.--
     Notwithstanding section 1837(f), such process shall require 
     that an eligible medicare beneficiary affirmatively enroll 
     under this part rather than deeming the beneficiary to be so 
     enrolled if certain requirements are met.
       ``(2) Requirement of enrollment.--An eligible medicare 
     beneficiary must enroll under this part in order to be 
     eligible to receive SPICE prescription drug coverage, 
     including financial assistance for basic and stop-loss 
     coverage under section 1860K.
       ``(3) Waiver of basic coverage for medigap enrollees.--
       ``(A) In general.--The process established under paragraph 
     (1) shall permit a beneficiary enrolled under this part and 
     enrolled under a medicare supplemental policy to--
       ``(i) waive the basic coverage available under this part; 
     and
       ``(ii) rescind such waiver in order to obtain such 
     coverage.
       ``(B) Rules.--If a beneficiary waives basic coverage 
     pursuant to subparagraph (A)(i), the following rules shall 
     apply:
       ``(i) Such waiver shall not effect the stop-loss coverage 
     that the beneficiary receives under the medicare supplemental 
     policy, including the entitlement to financial assistance 
     under section 1860K(c) for such coverage.
       ``(ii) The beneficiary shall not be liable for the basic 
     monthly premium under section 1860H(a).
       ``(iii) The beneficiary shall not receive basic coverage 
     but shall be entitled to negotiated prices for covered 
     outpatient drugs as if the beneficiary had not waived such 
     coverage.
       ``(iv) If the beneficiary subsequently rescinds such waiver 
     pursuant to subparagraph (A)(ii), the beneficiary shall be 
     subject to the late enrollment penalty under subsection (b).
       ``(b) Late Enrollment Penalty.--
       ``(1) In general.--Subject to the succeeding provisions of 
     this subsection, in the case of an eligible medicare 
     beneficiary whose coverage period under this part began 
     pursuant to an enrollment after the beneficiary's initial 
     enrollment period under part B (determined pursuant to 
     section 1837(d)) and not pursuant to the open enrollment 
     period described in subsection (c), the SPICE

[[Page S7811]]

     Board shall establish procedures for increasing the amount of 
     the basic monthly premium under section 1860H(a) applicable 
     to such beneficiary--
       ``(A) by an amount that is equal to 25 percent of such 
     premium for each full 12-month period (in the same continuous 
     period of eligibility) in which the eligible medicare 
     beneficiary could have been enrolled under this part but was 
     not so enrolled; or
       ``(B) if determined appropriate by the SPICE Board, by an 
     amount that the SPICE Board determines is actuarily sound for 
     each such period.
       ``(2) Periods taken into account.--For purposes of 
     calculating any 12-month period under paragraph (1), there 
     shall be taken into account--
       ``(A) the months which elapsed between the close of the 
     eligible medicare beneficiary's initial enrollment period and 
     the close of the enrollment period in which the beneficiary 
     enrolled;
       ``(B) in the case of an eligible medicare beneficiary who 
     reenrolls under this part, the months which elapsed between 
     the date of termination of a previous coverage period and the 
     close of the enrollment period in which the beneficiary 
     reenrolled; and
       ``(C) in the case of an eligible medicare beneficiary who 
     is enrolled under this part but has waived basic coverage 
     pursuant to subsection (a)(3), the months which elapsed 
     between the effective date of such waiver and the effective 
     date of the rescission of such waiver.
       ``(3) Periods not taken into account.--
       ``(A) In general.--For purposes of calculating any 12-month 
     period under paragraph (1), subject to subparagraph (B), 
     there shall not be taken into account months for which the 
     eligible medicare beneficiary can demonstrate that the 
     beneficiary--
       ``(i) met such exceptional conditions (including conditions 
     recognized under section 1851(e)(4)(D)) as the SPICE Board 
     may provide; or
       ``(ii) had creditable prescription drug coverage (as 
     defined in paragraph (4)).
       ``(B) Application.--The exception described in subparagraph 
     (A)(ii) shall only apply with respect to a coverage period 
     the enrollment for which occurs before the end of the 63-day 
     period that begins on the first day of the month which 
     includes the date on which the policy or plan involved 
     terminates, ceases to provide, or substantially reduces the 
     value of the prescription drug coverage under such policy or 
     plan.
       ``(4) Prescription drug coverage.--For purposes of this 
     part, the term `creditable prescription drug coverage' means 
     any of the following:
       ``(A) Medicaid prescription drug coverage.--Prescription 
     drug coverage under a medicaid plan under title XIX, 
     including through the Program of All-inclusive Care for the 
     Elderly (PACE) under section 1934, through a social health 
     maintenance organization (referred to in section 4104(c) of 
     the Balanced Budget Act of 1997), or through a 
     Medicare+Choice project that demonstrates the application of 
     capitation payment rates for frail elderly medicare 
     beneficiaries through the use of a interdisciplinary team and 
     through the provision of primary care services to such 
     beneficiaries by means of such a team at the nursing facility 
     involved.
       ``(B) Prescription drug coverage under group health plan.--
     Any outpatient prescription drug coverage under a group 
     health plan, including a health benefits plan under the 
     Federal Employees Health Benefit Plan under chapter 89 of 
     title 5, United States Code, and a qualified retiree 
     prescription drug plan as defined in section 1860L(e)(3).
       ``(C) Prescription drug coverage under certain medigap 
     policies.--Coverage under a medicare supplemental policy 
     under section 1882 that provides benefits for prescription 
     drugs but only if the policy was in effect on December 31, 
     2002, and only until the date such coverage is terminated.
       ``(D) State pharmaceutical assistance program.--Coverage of 
     prescription drugs under a State pharmaceutical assistance 
     program.
       ``(E) Veterans' coverage of prescription drugs.--Coverage 
     of prescription drugs for veterans under chapter 17 of title 
     38, United States Code.
       ``(5) Periods treated separately.--Any increase in an 
     eligible medicare beneficiary's basic monthly premium under 
     paragraph (1) with respect to a particular continuous period 
     of eligibility shall not be applicable with respect to any 
     other continuous period of eligibility which the beneficiary 
     may have.
       ``(6) Continuous period of eligibility.--
       ``(A) In general.--Subject to subparagraph (B), for 
     purposes of this subsection, an eligible medicare 
     beneficiary's `continuous period of eligibility' is the 
     period that begins with the first day on which the 
     beneficiary is eligible to enroll under section 1836 and this 
     part and ends with the beneficiary's death.
       ``(B) Separate period.--Any period during all of which an 
     eligible medicare beneficiary satisfied paragraph (1) of 
     section 1836 and which terminated during or before the month 
     preceding the month in which the beneficiary attained age 65 
     shall be a separate `continuous period of eligibility' with 
     respect to the beneficiary (and each such period which 
     terminates shall be deemed not to have existed for purposes 
     of subsequently applying this subparagraph).
       ``(c) Open Enrollment Period for Current Beneficiaries in 
     Which Late Enrollment Procedures Do Not Apply.--The SPICE 
     Board shall establish an applicable period, which shall begin 
     on the date on which the SPICE Board first begins to accept 
     enrollments under this part, during which any eligible 
     medicare beneficiary may enroll under this part without the 
     application of the late enrollment procedures established 
     under subsection (b)(1).
       ``(d) Period of Coverage.--
       ``(1) In general.--Except as provided in paragraph (2), an 
     eligible medicare beneficiary's coverage under the program 
     under this part shall be effective for the period provided in 
     section 1838, as if that section applied to the program under 
     this part.
       ``(2) Open enrollment.--An eligible medicare beneficiary 
     who enrolls under the program under this part pursuant to 
     subsection (c) shall be entitled to the benefits under this 
     part beginning on the first day of the month following the 
     month in which such enrollment occurs.
       ``(3) Rescission of waiver.--The SPICE Board shall 
     establish procedures regarding coverage periods for an 
     eligible medicare beneficiary enrolled under this part who 
     previously waived basic coverage under subsection (a)(3) and 
     now wishes to rescind such waiver.
       ``(4) Limitation.--Coverage under this part shall not begin 
     prior to January 1, 2003.
       ``(e) Termination.--
       ``(1) In general.--The causes of termination specified in 
     section 1838 shall apply to this part in the same manner as 
     they apply to part B.
       ``(2) Coverage terminated by termination of coverage under 
     parts a and b.--
       ``(A) In general.--In addition to the causes of termination 
     described in paragraph (1), the SPICE Board shall terminate 
     an individual's coverage under this part if the individual is 
     no longer enrolled in either part A or B.
       ``(B) Effective date.--The termination described in 
     subparagraph (A) shall be effective on the effective date of 
     termination of coverage under part A or (if earlier) under 
     part B.
       ``(3) Procedures regarding termination of a beneficiary 
     under a plan or policy.--The SPICE Board shall establish 
     procedures for determining the status of an eligible medicare 
     beneficiary's enrollment under this part if the beneficiary's 
     enrollment in a medicare supplemental policy, a 
     Medicare+Choice plan, a Medicare Drug Plan for Noncompetitive 
     Areas, or a basic coverage plan under section 1860F is 
     terminated by the entity offering such policy or plan for 
     cause (under the applicable requirements established under 
     this title).


                    ``enrollment in a policy or plan

       ``Sec. 1860D. (a) Enrollment in Medicare Drug Plan for 
     Noncompetitive Areas.--The SPICE Board shall establish a 
     process through which an eligible medicare beneficiary who is 
     enrolled under this part (but not enrolled in a medicare 
     supplemental policy, a Medicare+Choice plan, or a basic 
     coverage plan under section 1860F) and resides in an area in 
     which a Medicare Drug Plan for Noncompetitive Areas is 
     available may enroll in such plan. Such process shall include 
     rules for enrollment, disenrollment, and termination of 
     enrollment in such plan.
       ``(b) Enrollment in a Medicare Supplemental Policy or a 
     Medicare+Choice Plan.--Enrollment in a medicare supplemental 
     policy or a Medicare+Choice plan is subject to the rules for 
     enrollment in such policy or plan under sections 1882 and 
     1851, respectively.
       ``(c) Enrollment in a Basic Coverage Plan offered by a 
     Private Entity with a Contract under this Part.--The SPICE 
     Board shall establish a process through which an eligible 
     medicare beneficiary who is enrolled under this part (but not 
     enrolled in a medicare supplemental policy, a Medicare+Choice 
     plan, or a Medicare Drug Plan for Noncompetitive Areas) may 
     enroll in a basic coverage plan offered by a private entity 
     with a contract under section 1860F to offer such plan. Such 
     process shall include rules for enrollment, disenrollment, 
     and termination of enrollment in such plan.
       ``(d) Coordination of enrollments, disenrollments, and 
     terminations of enrollments.--The SPICE Board shall establish 
     procedures for coordinating enrollments, disenrollments and 
     terminations of enrollments under plans described in 
     subsections (a) and (c) with enrollments, disenrollments and 
     terminations of enrollments under part C.


             ``medicare drug plan for noncompetitive areas

       ``Sec. 1860E. (a) In General.--The SPICE Board shall 
     provide for a Medicare Drug Plan for Noncompetitive Areas 
     that--
       ``(1) provides enrollees with SPICE prescription drug 
     coverage; and
       ``(2) is available to eligible medicare beneficiaries 
     residing in an area that has been designated by the SPICE 
     Board as a noncompetition area.
       ``(b) Designation of Noncompetition Area.--
       ``(1) In general.--The SPICE Board shall establish 
     procedures for designating areas as noncompetition areas.
       ``(2) Noncompetition area defined.--
       ``(A) In general.--For purposes of this section, the term 
     `noncompetition area' means an area in which only 1 or no 
     medicare supplemental policy is available to eligible 
     medicare beneficiaries residing in the area.
       ``(B) Construction regarding multiple policies offered by 
     single issuer.--If there is an entity that offers more that 1 
     type of

[[Page S7812]]

     medicare supplemental policy in an area, then that area is 
     not a noncompetition area for purposes of this section.
       ``(c) Contracts.--In order to provide the Medicare Drug 
     Plan for Noncompetitive Areas under this section, the SPICE 
     Board shall do 1 of the following:
       ``(1) Single contract that covers all noncompetition 
     areas.--Enter into a contract with 1 entity to administer and 
     deliver the benefits under the plan in every designated 
     noncompetition area.
       ``(2) Multiple contracts.--Enter into a contract with 1 
     entity to administer and deliver the benefits under the plan 
     in 1 or more (but less than all) of the designated 
     noncompetition areas.
       ``(d) Bidding Process.--
       ``(1) In general.--The SPICE Board shall establish 
     procedures under which the SPICE Board accepts bids submitted 
     by entities and awards a contract (or contracts pursuant to 
     subsection (c)(2)) to an entity in order to administer and 
     deliver the benefits under the Medicare Drug Plan for 
     Noncompetitive Areas to eligible medicare beneficiaries.
       ``(2) Competitive procedures.--Competitive procedures (as 
     defined in section 4(5) of the Office of Federal Procurement 
     Policy Act (41 U.S.C. 403(5))) shall be used to enter into 
     contracts under this section.
       ``(e) Requirements for Entities.--
       ``(1) In general.--The SPICE Board may not award a contract 
     to an entity under this section unless the entity meets such 
     terms and conditions as the SPICE Board shall specify, 
     including the following:
       ``(A) The terms and conditions described in section 
     1860I(c).
       ``(B) The entity meets the quality and financial standards 
     specified by the SPICE Board.
       ``(C) The entity meets applicable State licensure 
     requirements.
       ``(2) Premiums.--The terms and conditions specified under 
     paragraph (1) shall--
       ``(A) permit an entity with a contract under this section 
     to require that beneficiaries enrolled in the plan covered by 
     the contract pay a premium for benefits provided under the 
     contract; and
       ``(B) except as provided in section 1860H(b)(3) (relating 
     to an increased premium for delayed enrollment under this 
     part), require that the amount of any such premium is the 
     same for all beneficiaries enrolled in the plan.


    ``selection of private entities to provide basic coverage plans

       ``Sec. 1860F. (a) Selection of Entities.--
       ``(1) In general.--The SPICE Board shall establish 
     procedures under which the SPICE Board--
       ``(A) accepts bids submitted by private entities for the 
     basic coverage plans which such entities intend to offer in 
     an area established under subsection (b); and
       ``(B) awards contracts to such entities to provide such 
     plans to eligible medicare beneficiaries in the area.
       ``(2) Competitive procedures.--Competitive procedures (as 
     defined in section 4(5) of the Office of Federal Procurement 
     Policy Act (41 U.S.C. 403(5))) shall be used to enter into 
     contracts under this section.
       ``(b) Areas for Contracts.--
       ``(1) In general.--The SPICE Board shall determine the 
     areas to award contracts under this section.
       ``(2) No administrative or judicial review.--The 
     determination of contract areas under paragraph (1) shall not 
     be subject to administrative or judicial review.
       ``(3) Multiple contracts.--If determined appropriate, the 
     SPICE Board may award more than 1 contract in a contract 
     area.
       ``(c) Requirements for Entities.--
       ``(1) In general.--The SPICE Board may not award a contract 
     to a private entity under this section unless the entity 
     meets such terms and conditions as the SPICE Board shall 
     specify, including the following:
       ``(A) The terms and conditions described in section 
     1860I(c).
       ``(B) The entity meets the quality and financial standards 
     specified by the SPICE Board.
       ``(C) The entity meets applicable State licensure 
     requirements.
       ``(D) Under the plan, the entity will provide basic 
     coverage with access to negotiated prices.
       ``(d) Private Entity Defined.--For purposes of this part, 
     the term `private entity' means any private entity that the 
     SPICE Board determines to be appropriate to provide basic 
     coverage plans to eligible medicare beneficiaries under this 
     part, including--
       ``(1) a pharmacy benefit management company;
       ``(2) a retail pharmacy delivery system;
       ``(3) a health plan or insurer;
       ``(4) any other private entity approved by the SPICE Board; 
     or
       ``(5) any combination of the entities described in 
     paragraphs (1) through (4) approved by the SPICE Board.


                ``providing information to beneficiaries

       ``Sec. 1860G. (a) Activities.--
       ``(1) In general.--The SPICE Board shall provide for 
     activities that are designed to broadly disseminate 
     information to eligible medicare beneficiaries (and 
     prospective eligible medicare beneficiaries) on the SPICE 
     drug benefit program under this part.
       ``(2) Late enrollment penalties to be well publicized.--The 
     SPICE Board shall ensure that information on the sanctions 
     for delayed enrollment under section 1860C(b) and on the 
     possibility of increased premiums for stop-loss coverage 
     under section 1860H(b)(3) are well publicized.
       ``(3) Special rule for initial enrollment under the 
     program.--
       ``(A) Consultation.--The SPICE Board shall consult with the 
     Secretary, issuers of medicare supplemental policies, State 
     insurance commissioners, Medicare+Choice organizations, and 
     interested consumer organizations in developing the 
     activities described in paragraph (1) that will be used to 
     provide information regarding the initial enrollment under 
     this part during the period described in section 1860C(c).
       ``(B) Timeframe.--The activities described in paragraph (1) 
     shall ensure that eligible medicare beneficiaries (and 
     prospective eligible medicare beneficiaries) are provided 
     with such information not later that December 1, 2002, in 
     order to ensure that coverage under this part may be 
     effective as of January 1, 2003.
       ``(4) Coordination with activities performed by the 
     secretary.--The SPICE Board shall work with the Secretary to 
     ensure that the activities provided under this subsection are 
     coordinated with the activities performed by the Secretary 
     that provide information with respect to benefits under this 
     title to eligible medicare beneficiaries and prospective 
     eligible medicare beneficiaries.
       ``(b) Requirements.--
       ``(1) In general.--The activities described in subsection 
     (a) shall--
       ``(A) be similar to the activities performed under section 
     1851 (including the approval of policy marketing materials 
     and maintaining a toll-free number and an Internet site); and
       ``(B) include provisions to ensure that consumer counselors 
     are available to provide face-to-face counseling to eligible 
     medicare beneficiaries (and prospective eligible medicare 
     beneficiaries) on the SPICE drug benefit program under this 
     part.
       ``(2) Contracts to provide consumer counseling.--The SPICE 
     Board may contract with private entities to provide the 
     consumer counseling described in paragraph (1)(B).
       ``(c) Coordination With Other Information.--The SPICE Board 
     shall, in cooperation with the Secretary, enter into such 
     arrangements as may be appropriate to disseminate the 
     information referred to in subsection (a) in coordination 
     with materials distributed by the Secretary to medicare 
     beneficiaries, including the medicare handbook under section 
     1804 and materials distributed under section 1851(d).


                               ``premiums

       ``Sec. 1860H. (a) Premium for Basic Coverage for All 
     Beneficiaries.--
       ``(1) Annual establishment of basic monthly premium 
     rates.--The SPICE Board shall, during September of each year 
     (beginning in 2002), determine and promulgate a basic monthly 
     premium rate for the succeeding year in accordance with the 
     provisions of this subsection.
       ``(2) Actuarial determinations.--
       ``(A) Determination of annual benefit and administrative 
     costs for basic coverage.--The SPICE Board shall estimate 
     annually for the succeeding year the amount equal to the 
     total of the benefits (including financial assistance 
     provided under subsections (b) and (c) of section 1860K and 
     payments made to sponsors under section 1860L) and 
     administrative costs that will be payable from the SPICE 
     Prescription Drug Account within the Federal Supplementary 
     Medical Insurance Trust Fund for providing benefits under 
     this part in such calendar year.
       ``(B) Determination of basic monthly premium rates.--
       ``(i) In general.--The SPICE Board shall determine the 
     basic monthly premium rate for such succeeding year, which 
     shall be \1/12\ of the amount determined under subparagraph 
     (A), divided by the average total number of enrollees under 
     this part who have not waived basic coverage under section 
     1860C(a)(3) (as estimated for the year), and rounded (if such 
     rate is not a multiple of 10 cents) to the nearest multiple 
     of 10 cents.
       ``(ii) Premium reduced by amount of financial assistance.--
     The amount that shall be charged a beneficiary for basic 
     coverage under this part is the basic monthly premium 
     determined under clause (i), reduced by the amount of the 
     financial assistance for basic coverage determined for the 
     beneficiary under section 1860K(b).
       ``(3) Publication of assumptions.--The SPICE Board shall 
     publish, together with the promulgation of the basic 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).
       ``(4) Collection of premiums.--Any basic monthly premium 
     applicable to an eligible medicare beneficiary pursuant to 
     this subsection, after application of the reduction described 
     in paragraph (2)(B)(ii) and any increase for late enrollment 
     under section 1860C(b), shall be collected and credited to 
     the SPICE Prescription Drug Account in the same manner as the 
     monthly premium determined under section 1839 is collected 
     and credited to the Federal Supplementary Medical Insurance 
     Trust Fund under section 1840.
       ``(b) Premiums for Stop-Loss Coverage.--
       ``(1) Beneficiary responsible for making payment directly 
     to entity.--Subject to paragraph (2), any eligible medicare 
     beneficiary who is receiving stop-loss coverage, either 
     through enrollment in a medicare supplemental policy, a 
     Medicare+Choice plan, or

[[Page S7813]]

     a Medicare Drug Plan for Noncompetitive Areas, shall be 
     responsible for making payments for any premiums required 
     under the policy or plan for such coverage directly to the 
     entity offering such policy or plan.
       ``(2) Premium reduced by amount of financial assistance.--
     The entity offering such policy or plan shall reduce the 
     premium described in paragraph (1) by the amount of the 
     financial assistance for stop-loss coverage determined for 
     the beneficiary under section 1860K(c).
       ``(3) Increase in premium for late enrollment or for lack 
     of continuous stop-loss coverage.--In the case of an eligible 
     medicare beneficiary who is subject to a late enrollment 
     penalty under section 1860C or who has not had continuous 
     stop-loss coverage under this part because the beneficiary 
     was enrolled in a basic coverage plan under section 1860F, 
     the entity offering the medicare supplemental policy, the 
     Medicare+Choice plan, or the Medicare Drug Plan for 
     Noncompetitive Areas in which the beneficiary is enrolled 
     may, notwithstanding any provision in this title, increase 
     the portion of the premium attributable to stop-loss coverage 
     that is otherwise applicable to such beneficiary for such 
     enrollment in a manner that reflects the additional actuarial 
     risk involved. Such a risk shall be established through an 
     appropriate actuarial opinion of the type described in 
     subparagraphs (A) through (C) of section 2103(c)(4).


   ``approval for entities offering spice prescription drug coverage

       ``Sec. 1860I. (a) Approval.--No payments may be made to an 
     entity offering a policy or plan that provides SPICE 
     prescription drug coverage under section 1860J unless the 
     entity has been approved by the SPICE Board.
       ``(b) Procedures.--
       ``(1) In general.--The SPICE Board shall establish 
     procedures for approving entities that offer policies and 
     plans that provide SPICE prescription drug coverage under 
     this part, including an entity with a contract under section 
     1860F.
       ``(2) Coordination.--The procedures established under 
     subparagraph (A) shall be coordinated with--
       ``(A) in the case of the approval of medicare supplemental 
     policies, the procedures for approval of such policies under 
     State law; and
       ``(B) in the case of the approval of Medicare+Choice plans, 
     the procedures established by the Secretary for approval of 
     such plans under part C.
       ``(c) Terms and Conditions.--The SPICE Board may not 
     approve an entity under subsection (b) unless the entity, 
     with respect to such policy or plan, meets such terms and 
     conditions as the SPICE Board shall specify, including the 
     following:
       ``(1) Dissemination of information.--
       ``(A) General information.--The entity shall disclose, in a 
     clear, accurate, and standardized form to each enrollee under 
     the policy or plan at the time of enrollment and at least 
     annually thereafter, the information described in section 
     1852(c)(1) relating to such policy or plan. Such information 
     shall include the following:
       ``(i) Access to covered outpatient drugs, including access 
     through pharmacy networks.
       ``(ii) How any formulary used by the entity functions.
       ``(iii) Coinsurance and deductible requirements.
       ``(iv) Grievance and appeals procedures.
       ``(B) Disclosure upon request of general coverage, 
     utilization, and grievance information.--Upon request of an 
     individual eligible to enroll under the policy or plan, the 
     entity shall provide the information described in section 
     1852(c)(2) (other than subparagraph (D)) to such individual.
       ``(C) Response to beneficiary questions.--The entity shall 
     have a mechanism for providing specific information regarding 
     the policy or plan to enrollees upon request and shall make 
     available, through the Internet website described in 
     paragraph (7) and in writing upon request, information on 
     specific changes in its formulary.
       ``(D) Claims information.--The entity shall furnish to each 
     enrollee under the plan or policy in a form easily 
     understandable to such enrollees an explanation of benefits 
     (in accordance with section 1806(a) or in a comparable 
     manner) and a notice regarding how close the enrollee is to 
     getting stop-loss coverage for the year, whenever 
     prescription drug benefits are provided under this part 
     (except that such notice need not be provided more often than 
     monthly).
       ``(2) Access to covered benefits.--
       ``(A) Assuring pharmacy access.--The entity shall secure 
     the participation of sufficient numbers of pharmacies to 
     ensure convenient access (including adequate emergency 
     access) for enrollees under the policy or plan. Nothing in 
     the preceding sentence shall be construed as requiring the 
     participation of all pharmacies in any area under a policy or 
     plan.
       ``(B) Access to negotiated prices for prescription drugs.--
     The entity shall issue a card that may be used by an enrollee 
     under the policy or plan to assure access to negotiated 
     prices pursuant to section 1860B(d).
       ``(3) Formularies.--If an eligible entity uses a formulary 
     under the policy or plan, such entity shall--
       ``(A) establish the formulary based on the medical needs of 
     eligible medicare beneficiaries;
       ``(B) ensure that the formulary includes drugs within all 
     therapeutic categories and classes of covered outpatient 
     drugs (although not necessarily for all drugs within such 
     categories and classes);
       ``(C) have in place an appeals process--
       ``(i) under which any eligible medicare beneficiary could 
     receive any medically necessary covered outpatient drug that 
     is not on the formulary;
       ``(ii) that does not impose a significant financial burden 
     on an eligible medicare beneficiary or delay the provision of 
     medically necessary covered outpatient drugs to such a 
     beneficiary; and
       ``(iii) that provides for at least a level of protection 
     that is similar to or better than the level of protection 
     provided with respect to benefits under Medicare+Choice plans 
     under part C; and
       ``(D) provide notification to enrollees of any change in 
     the formulary at least 60 days prior to such change.
       ``(4) Cost and utilization management; quality assurance; 
     medication therapy management program.--
       ``(A) In general.--The entity shall have in place--
       ``(i) an effective cost and drug utilization management 
     program, including appropriate incentives to use generic 
     drugs when appropriate;
       ``(ii) quality assurance measures and systems to reduce 
     medical errors and adverse drug interactions, including a 
     medication therapy management program described in 
     subparagraph (B); and
       ``(iii) a program to control fraud, abuse, and waste.
       ``(B) Medication therapy management program.--
       ``(i) In general.--A medication therapy management program 
     described in this subparagraph is a program of drug therapy 
     management and medication administration that is designed to 
     assure that covered outpatient drugs under the policy or plan 
     are appropriately used to achieve therapeutic goals and 
     reduce the risk of adverse events, including adverse drug 
     interactions.
       ``(ii) Elements.--Such program may include--

       ``(I) enhanced beneficiary understanding of such 
     appropriate use through beneficiary education, counseling, 
     and other appropriate means; and
       ``(II) increased beneficiary adherence with prescription 
     medication regimens through medication refill reminders, 
     special packaging, and other appropriate means.

       ``(iii) Development of program in cooperation with licensed 
     pharmacists.--The program shall be developed in cooperation 
     with licensed pharmacists and physicians.
       ``(iv) Considerations in pharmacy fees.--The entity shall 
     take into account, in establishing fees for pharmacists and 
     others providing services under the medication therapy 
     management program, the resources and time used in 
     implementing the program.
       ``(C) Treatment of accreditation.--Section 1852(e)(4) 
     (relating to treatment of accreditation) shall apply to 
     policies and plans under this part with respect to the 
     following requirements, in the same manner as they apply to 
     Medicare+Choice plans under part C with respect to the 
     requirements described in a clause of section 1852(e)(4)(B):
       ``(i) Subparagraph (A) (including quality assurance), 
     including medication therapy management program under 
     subparagraph (B).
       ``(ii) Paragraph (2)(A) (relating to access to covered 
     benefits).
       ``(iii) Paragraph (8) (relating to confidentiality and 
     accuracy of enrollee records).
       ``(5) Grievance mechanism.--The entity shall provide 
     meaningful procedures for hearing and resolving grievances 
     between the entity (including any entity or individual 
     through which the entity provides covered benefits) and 
     enrollees of the policy or plan under this part in accordance 
     with section 1852(f).
       ``(6) Coverage determinations, reconsiderations, and 
     appeals.--The entity shall meet the requirements of section 
     1852(g) with respect to covered benefits under the policy or 
     plan it offers under this part in the same manner as such 
     requirements apply to a Medicare+Choice organization with 
     respect to benefits it offers under a Medicare+Choice plan 
     under part C.
       ``(7) Provide information on the internet.--The entity 
     shall maintain a web site on the Internet that provides 
     eligible medicare beneficiaries with information regarding 
     any policy or plan offered by the entity that provides SPICE 
     prescription drug coverage.
       ``(8) Confidentiality and accuracy of enrollee records.--
     The entity shall meet the requirements of section 1852(h) 
     with respect to enrollees under this part in the same manner 
     as such requirements apply to a Medicare+Choice organization 
     with respect to enrollees under part C.
       ``(d) SPICE Board Models for Formularies.--
       ``(1) Model.--The SPICE Board may issue models for 
     formularies for use in providing covered outpatient drugs 
     under this part. Such models, and any revised models 
     (pursuant to paragraph (3)) shall meet the requirements of 
     subparagraphs (A) and (B) of subsection (c)(3).
       ``(2) Effect of compliance with a model.--If the SPICE 
     Board determines that a formulary used by an entity offering 
     a policy or plan that provides SPICE prescription drug 
     coverage is in compliance with a model formulary issued under 
     paragraph (1), or the revised model (as the case may be), 
     then the

[[Page S7814]]

     entity shall be deemed to meet the requirements of 
     subparagraphs (A) and (B) of subsection (c)(3).
       ``(3) Revisions of models.--
       ``(A) In general.--The SPICE Board may periodically (but 
     not more frequently than annually) revise any model 
     established under this subsection.
       ``(B) Period to comply with revision.--If the SPICE Board 
     revises a model formulary pursuant to subparagraph (A), the 
     SPICE Board shall provide for an appropriate period of time 
     for entities who were in compliance with such model before 
     such revision to comply with the revised model.
       ``(e) Rule of Construction Regarding Cost-Effective 
     Provision of Benefits.--Nothing in this part shall be 
     construed as preventing an entity that provides SPICE 
     prescription drug coverage under a policy or plan from 
     employing mechanisms to provide such coverage economically, 
     including the use of--
       ``(1) formularies (pursuant to subsection (c)(3));
       ``(2) alternative methods of distribution;
       ``(3) generic drug substitution;
       ``(4) pharmacy networks; and
       ``(4) mail order pharmacies.


                         ``payments to entities

       ``Sec. 1860J. (a) Payments for Administering Basic 
     Coverage.--
       ``(1) In general.--The SPICE Board shall establish 
     procedures for making payments to an entity offering a 
     medicare supplemental policy, a Medicare+Choice plan, a 
     Medicare Drug Plan for Noncompetitive Areas, or a basic 
     coverage plan under section 1860F for--
       ``(A) in accordance with the provisions of this part, the 
     costs of covered outpatient drugs provided under basic 
     coverage to eligible medicare beneficiaries--
       ``(i) enrolled under such policy or plan and under this 
     part; and
       ``(ii) entitled to such coverage; and
       ``(B) pursuant to paragraph (2), administering the basic 
     coverage on behalf of beneficiaries described in subparagraph 
     (A).
       ``(2) Administrative fee.--
       ``(A) Procedures.--The procedures established pursuant to 
     paragraph (1) shall provide for payment to the entity of an 
     administrative fee for each prescription filled by the entity 
     for an eligible medicare beneficiary enrolled in the policy 
     or plan offered by such entity. Subject to paragraph (3), the 
     entity shall not be at risk for providing basic coverage for 
     a beneficiary.
       ``(B) Amount.--The fee described in paragraph (1) shall 
     be--
       ``(i) negotiated by the SPICE Board; and
       ``(ii) consistent with such fees paid under private sector 
     pharmaceutical benefit contracts.
       ``(C) Reduction of administrative costs.--The SPICE Board 
     shall work with entities receiving payments under this 
     section on ways to control the administrative costs 
     associated with providing basic coverage under this part.
       ``(3) Risk corridors tied to performance measures and other 
     incentives for entity providing medicare drug plan for 
     noncompetitive areas.--In the case of payments to an entity 
     with a contract to provide a Medicare Drug Plan for 
     Noncompetitive Areas, the procedures established under 
     paragraph (1) may include the use of--
       ``(A) risk corridors tied to performance measures that have 
     been agreed to between the entity and the SPICE Board under 
     the contract; and
       ``(B) any other incentives that the SPICE Board determines 
     appropriate.
       ``(4) Secondary payer provisions.--The provisions of 
     section 1862(b) shall apply to basic coverage provided under 
     this part.
       ``(b) Payment of Financial Assistance to Entities for 
     Provision of Stop-Loss Coverage.--
       ``(1) In general.--The SPICE Board shall establish 
     procedures for making financial assistance payments for stop-
     loss coverage to an entity offering a medicare supplemental 
     policy, a Medicare+Choice plan, or a Medicare Drug Plan for 
     Noncompetitive Areas on behalf of an eligible medicare 
     beneficiary enrolled in such policy or plan and under this 
     part.
       ``(2) Amount of financial assistance payment.--The amount 
     of the financial assistance payments on behalf of an eligible 
     medicare beneficiary for stop-loss coverage is equal to the 
     amount determined for the beneficiary under section 1860K(c).
       ``(3) Entity providing stop-loss coverage at risk.--The 
     entity providing stop-loss coverage, and not the SPICE Board, 
     shall be at risk for the provision of such coverage.


   ``financial assistance to obtain spice prescription drug coverage

       ``Sec. 1860K. (a) In General.--The SPICE Board shall 
     provide financial assistance, in accordance with this 
     section, with respect to eligible medicare beneficiaries who 
     have SPICE prescription drug coverage through enrollment in a 
     medicare supplemental policy, a Medicare+Choice plan, a 
     Medicare Drug Plan for Noncompetitive Areas, or a basic 
     coverage plan under section 1860F.
       ``(b) Assistance for Basic Coverage.--
       ``(1) In general.--The amount of financial assistance with 
     respect to an eligible medicare beneficiary for basic 
     coverage is equal to the following percentage of the basic 
     monthly premium determined under subsection (a) of section 
     1860H (without regard to any increase for late enrollment 
     under subsection (b) of such section):
       ``(A) 100 percent if income below 150 percent of poverty.--
     In the case of an eligible medicare beneficiary who applies 
     for enhanced financial assistance under subsection (d) and 
     whose income (as determined under such subsection) does not 
     exceed 150 percent of the poverty line, the percentage is 100 
     percent.
       ``(B) Other percent if income between 150 and 175 percent 
     of poverty.--In the case of an eligible medicare beneficiary 
     who applies for enhanced financial assistance under 
     subsection (d) and whose income (as determined under such 
     subsection) is greater than 150 percent, but does not exceed 
     175 percent, of the poverty line, the SPICE Board shall 
     specify the percentage consistent with the following rules:
       ``(i) Range.--The percentage may not exceed 100 percent nor 
     be less than 25 percent.
       ``(ii) Sliding scale.--The percentage may not be higher for 
     eligible medicare beneficiaries whose income is higher.
       ``(C) 25 percent for other beneficiaries.--In the case of 
     any other eligible medicare beneficiary, the percentage is 25 
     percent.
       ``(2) Form of assistance.--Financial assistance under this 
     subsection shall be provided in the form of a reduction of 
     the basic monthly premium pursuant to section 
     1860H(a)(2)(B)(ii).
       ``(c) Assistance for Stop-Loss Coverage.--
       ``(1) Amount.--
       ``(A) In general.--The amount of financial assistance for 
     stop-loss coverage with respect to an eligible medicare 
     beneficiary enrolled under this part and in a medicare 
     supplemental policy, a Medicare+Choice plan, or a Medicare 
     Drug Plan for Noncompetitive Areas for stop-loss coverage is 
     equal to the following percentage of the national average 
     medigap stop-loss monthly premium for the region in which the 
     beneficiary resides (as determined under paragraph (2)):
       ``(i) 100 percent if income below 150 percent of poverty.--
     In the case of an eligible medicare beneficiary described in 
     subsection (b)(1)(A), the percentage is 100 percent.
       ``(ii) Other percent if income between 150 and 175 percent 
     of poverty.--In the case of an eligible medicare beneficiary 
     described in subsection (b)(1)(B), the SPICE Board shall 
     specify the percentage consistent with the rules described in 
     clauses (i) and (ii) of such subsection.
       ``(iii) 25 percent for other beneficiaries.--In the case of 
     any other eligible medicare beneficiary, the percentage is 25 
     percent.
       ``(B) Form of assistance.--Financial assistance under this 
     subsection for beneficiaries shall be provided in the form of 
     a payment to the entity offering the policy or plan in which 
     the beneficiary is receiving stop-loss coverage pursuant to 
     section 1860J(b).
       ``(2) Establishment of national average medigap stop-loss 
     monthly premium.--
       ``(A) In general.--The SPICE Board shall, during September 
     of each year (beginning in 2002), estimate a national average 
     medigap stop-loss monthly premium for each region (as 
     determined by the Board) of the total geographic area served 
     by the programs under this part that will be applicable for 
     the succeeding year.
       ``(B) Definition of national average medigap stop-loss 
     monthly premium.--For purposes of subparagraph (A), the term 
     `national average medigap stop-loss monthly premium' means, 
     with respect to a region, the average of the portion of the 
     monthly premiums charged by medicare supplemental policies in 
     that region for providing stop-loss coverage to beneficiaries 
     enrolled under this part.
       ``(3) Limitations.--
       ``(A) Financial assistance may not exceed premium.--In the 
     case of financial assistance provided under this subsection 
     with respect to stop-loss coverage provided under a policy or 
     plan, the amount of the financial assistance may not exceed 
     the amount of the portion of the premium charged for 
     enrollment in the policy or plan that is related to the 
     provision of stop-loss coverage.
       ``(B) Entity must reduce premium.--No financial assistance 
     shall be made available with respect to stop-loss coverage 
     provided by an entity to an eligible medicare beneficiary 
     unless the entity provides assurances satisfactory to the 
     SPICE Board that the entity shall reduce the amount otherwise 
     charged the beneficiary for such coverage by an amount equal 
     to the amount of such assistance.
       ``(d) Application for Enhanced Financial Assistance.--
       ``(1) In general.--The SPICE Board shall establish 
     procedures under which a beneficiary who desires enhanced 
     financial assistance under this section may voluntarily apply 
     for an income determination.
       ``(2) Requirements regarding information.--
       ``(A) Information from beneficiary.--The procedures 
     established under paragraph (1) shall require the beneficiary 
     to submit with the application for enhanced financial 
     assistance such information that the SPICE Board determines 
     necessary to make the income determination with respect to 
     such beneficiary.
       ``(B) Information from other government agencies.--Under 
     the procedures established under paragraph (1), if an 
     individual voluntarily applies for enhanced financial 
     assistance under this section, the individual is deemed to 
     have consented to the SPICE Board seeking and using income-
     related information from other Government agencies

[[Page S7815]]

     in order to make the income determination with respect to 
     such beneficiary.
       ``(C) Restriction on use of information.--Information 
     obtained under subparagraph (A) or (B) may be used by 
     officers and employees of the SPICE Board only for the 
     purposes of, and to the extent necessary in, carrying out 
     their responsibilities under this part.
       ``(3) Periodic redeterminations.--Such income 
     determinations shall be valid for a period (of not less than 
     1 year) specified by the SPICE Board.
       ``(e) Income Determinations.--The SPICE Board shall 
     establish procedures for making income determinations under 
     this section.
       ``(f) Poverty Line.--In this section, the term `poverty 
     line' means the income official poverty line (as defined by 
     the Office of Management and Budget, and revised annually in 
     accordance with section 673(2) of the Omnibus Budget 
     Reconciliation Act of 1981) applicable to a family of the 
     size involved.


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

       ``Sec. 1860L. (a) Program Authority.--The SPICE Board shall 
     develop and implement a program under this section to be 
     known as the `Employer Incentive Program' that encourages 
     employers and other sponsors of employment-based health care 
     coverage to provide adequate prescription drug benefits to 
     retired individuals by subsidizing, in part, the sponsor's 
     cost of providing coverage under qualifying plans.
       ``(b) Sponsor Requirements.--In order to be eligible to 
     receive an incentive payment under this section with respect 
     to coverage of an individual under a qualified retiree 
     prescription drug plan (as defined in subsection (e)(3)), a 
     sponsor shall meet the following requirements:
       ``(1) Assurances.--The sponsor shall--
       ``(A) annually attest, and provide such assurances as the 
     SPICE Board 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 SPICE Board 
     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 basic coverage under the 
     SPICE prescription drug coverage under this part.
       ``(2) Beneficiary information.--The sponsor shall report to 
     the SPICE Board, for each calendar quarter for which it seeks 
     an incentive payment under this section, the names and social 
     security numbers of all retirees (and their spouses and 
     dependents) covered under such plan during such quarter and 
     the dates (if less than the full quarter) during which each 
     such individual was covered.
       ``(3) Audits.--The sponsor and the employment-based retiree 
     health coverage plan seeking incentive payments under this 
     section shall agree to maintain, and to afford the SPICE 
     Board access to, such records as the SPICE Board may require 
     for purposes of audits and other oversight activities 
     necessary to ensure the adequacy of prescription drug 
     coverage, the accuracy of incentive payments made, and such 
     other matters as may be appropriate.
       ``(4) Other requirements.--The sponsor shall provide such 
     other information, and comply with such other requirements, 
     as the SPICE Board may find necessary to administer the 
     program under this section.
       ``(c) Incentive Payments.--
       ``(1) In general.--A sponsor that meets the requirements of 
     subsection (b) with respect to a quarter in a calendar year 
     shall be entitled to have payment made by the SPICE Board on 
     a quarterly basis (to the sponsor or, at the sponsor's 
     direction, to the appropriate employment-based health plan) 
     of an incentive payment, in the amount determined in 
     paragraph (2), for each retired individual (or spouse) who--
       ``(A) was covered under the sponsor's qualified retiree 
     prescription drug plan during such quarter; and
       ``(B) was eligible for, but was not enrolled in, the SPICE 
     drug benefit program under this part.
       ``(2) Amount of incentive.--The payment under this section 
     with respect to each individual described in paragraph (1) 
     for a month shall be equal to 25 percent of the basic monthly 
     premium amount payable by an eligible medicare beneficiary 
     enrolled under this part, as set for the calendar year 
     pursuant to section 1860H(a) and without application of and 
     financial assistance for such premium under section 1860K(b).
       ``(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 SPICE Board determines has, directly or 
     through its agent, provided information in connection with a 
     request for an incentive payment under this section that the 
     entity knew or should have known to be false shall be subject 
     to a civil monetary penalty in an amount up to 3 times the 
     total incentive amounts under subsection (c) that were paid 
     (or would have been payable) on the basis of such 
     information.
       ``(e) Definitions.--In this section:
       ``(1) Employment-based retiree health coverage.--The term 
     `employment-based retiree health coverage' means health 
     insurance coverage or other coverage of health care costs for 
     retired individuals (or for such individuals and their 
     spouses and dependents) based on their status as former 
     employees or labor union members.
       ``(2) Employer.--The term `employer' has the meaning given 
     the term in section 3(5) of the Employee Retirement Income 
     Security Act of 1974 (except that such term shall include 
     only employers of 2 or more employees).
       ``(3) Qualified retiree prescription drug plan.--The term 
     `qualified retiree prescription drug plan' means health 
     insurance coverage or other coverage of health care costs 
     included in employment-based retiree health coverage that--
       ``(A) provides coverage of the cost of prescription drugs 
     whose actuarial value (as defined by the SPICE Board) to each 
     retired beneficiary equals or exceeds the actuarial value of 
     the basic coverage provided to an individual enrolled in the 
     SPICE drug benefit program under this part; and
       ``(B) does not deny, limit, or condition the coverage or 
     provision of prescription drug benefits for retired 
     individuals based on age or any health status-related factor 
     described in section 2702(a)(1) of the Public Health Service 
     Act.
       ``(4) Sponsor.--The term `sponsor' has the meaning given 
     the term `plan sponsor' in section 3(16)(B) of the Employer 
     Retirement Income Security Act of 1974.


                             ``spice board

       ``Sec. 1860M. (a) Establishment.--There is established 
     within the Department of Health and Human Services, a Seniors 
     Prescription Insurance Coverage Equity Office, which shall 
     be--
       ``(1) outside of the Centers for Medicare & Medicaid 
     Services; and
       ``(2) run by a board to be known as the SPICE Board.
       ``(b) Duties.--
       ``(1) Administration of spice drug benefit program.--
       ``(A) In general.--The SPICE Board shall administer the 
     SPICE drug benefit program under this part.
       ``(B) Noninterference.--In carrying out its duty under 
     subparagraph (A), the SPICE Board may not--
       ``(i) require a particular formulary or institute a price 
     structure for the reimbursement of covered outpatient drugs;
       ``(ii) interfere in any way with negotiations between 
     entities providing SPICE prescription drug coverage under 
     part D and drug manufacturers, wholesalers, or other 
     suppliers of covered outpatient drugs; and
       ``(iii) otherwise interfere with the competitive nature of 
     providing such coverage through such entities.
       ``(2) Ongoing studies.--The SPICE Board shall conduct 
     ongoing studies of the following issues:
       ``(A) The administration of this part.
       ``(B) The provision of information about the program under 
     the health insurance information, counseling, and assistance 
     grants under section 4360 of the Omnibus Budget 
     Reconciliation Act of 1990.
       ``(C) Ways in which drug utilization can be used to provide 
     better overall care for eligible medicare beneficiaries.
       ``(D) Savings and potential savings in Federal health care 
     programs which may occur, or can be attributed to, eligible 
     medicare beneficiary access to, and utilization of, covered 
     outpatient drugs.
       ``(E) Trends in premium increases and factors that 
     contribute to changes in premiums.
       ``(F) Integration of the SPICE drug benefit program into a 
     reformed medicare program.
       ``(G) The ability of eligible medicare beneficiaries to 
     afford SPICE prescription drug coverage.
       ``(H) The impact of the program on the prescription drug 
     benefits offered under group health plans.
       ``(I) The appropriateness of the levels of financial 
     assistance provided under this part.
       ``(3) Annual report.--
       ``(A) In general.--Not later than June 1 of each year 
     (beginning with 2004), the SPICE Board shall submit an annual 
     report to Congress on the program under this part.
       ``(B) Information on studies.--Such report shall include a 
     detailed statement on the issues studied under paragraph (2).
       ``(C) Recommendations.--Such report shall include such 
     recommendations for legislation and administrative actions as 
     the SPICE Board considers appropriate.
       ``(4) Provision of recommendations and information to 
     secretary.--The SPICE Board shall provide recommendations and 
     necessary information regarding the SPICE drug benefit 
     program to the Secretary in order for the Secretary to--
       ``(A) integrate such information with information regarding 
     the other programs under this title; and
       ``(B) provide health insurance information, counseling, and 
     assistance grants under section 4360 of the Omnibus Budget 
     Reconciliation Act of 1990.
       ``(c) Demonstration Project Authority.--
       ``(1) In general.--Subject to paragraph (2), the SPICE 
     Board shall have the authority to conduct demonstration 
     projects for the purpose of demonstrating ways to improve the 
     quality of services provided under the SPICE drug benefit 
     program, including ways to reduce medical errors.
       ``(2) Consultation with secretary.--The SPICE Board shall 
     consult with the Secretary before conducting any 
     demonstration project.
       ``(d) Membership of SPICE Board.--
       ``(1) Number and appointment.--

[[Page S7816]]

       ``(A) In general.--The SPICE Board shall be composed of 7 
     members appointed by the President, by and with the advice 
     and consent of the Senate.
       ``(B) Specific representatives.--In making appointments 
     under subparagraph (A), the President shall ensure that the 
     following groups are represented on the SPICE Board:
       ``(i) Consumers.
       ``(ii) Private health plan insurers (including insurers 
     that offer fee-for-service and managed care plans) with 
     expertise in the quality, scope, and marketing of health care 
     services.
       ``(iii) Certified geriatric pharmacists.
       ``(iv) The Centers for Medicare & Medicaid Services.
       ``(v) State insurance commissioners.
       ``(C) Secretary of hhs.--In addition to the 7 members 
     appointed under subparagraph (A), the Secretary shall be a 
     nonvoting, ex officio member of the SPICE Board.
       ``(2) Deadline for initial appointment.--The initial 
     members of the SPICE Board shall be appointed by not later 
     than 6 months after the date of enactment of this section.
       ``(3) Terms.--
       ``(A) In general.--The terms of the members of the SPICE 
     Board shall be for 6 years, except that of the members first 
     appointed--
       ``(i) three shall be appointed for terms of 6 years;
       ``(ii) two shall be appointed for terms of 4 years; and
       ``(iii) two shall be appointed for terms of 2 years.
       ``(B) Vacancies.--Any member appointed to fill a vacancy 
     occurring before the expiration of the term for which the 
     member's predecessor was appointed shall be appointed only 
     for the remainder of that term. A member may serve after the 
     expiration of that member's term until a successor has taken 
     office.
       ``(4) Chairperson.--The President shall designate the 
     chairperson of the SPICE Board, except that the 
     representative from the Centers for Medicare & Medicaid 
     Services may not be designated as chairperson.
       ``(e) Operation of the Board.--
       ``(1) Meetings.--The SPICE Board shall meet at the call of 
     the chairperson or upon the written request of a majority of 
     its members.
       ``(2) Quorum.--A majority of the members of the SPICE Board 
     shall constitute a quorum, but a lesser number of members may 
     hold hearings.
       ``(f) Powers of the SPICE Board.--
       ``(1) Hearings.--The SPICE Board may hold such hearings, 
     sit and act at such times and places, take such testimony, 
     and receive such evidence as the SPICE Board considers 
     advisable to carry out the purposes of this part.
       ``(2) Information from federal agencies.--Upon request of 
     the chairperson of the SPICE Board, the head of any Federal 
     department or agency shall furnish such information to the 
     SPICE Board as is necessary to carry out the functions of the 
     SPICE Board under this part.
       ``(3) Postal services.--The SPICE Board may use the United 
     States mails in the same manner and under the same conditions 
     as other departments and agencies of the Federal Government.
       ``(4) Gifts.--The SPICE Board may accept, use, and dispose 
     of gifts or donations of services or property.
       ``(g) Board Personnel Matters.--
       ``(1) Members.--
       ``(A) Compensation.--Each member of the SPICE Board who is 
     not an officer or employee of the Federal Government shall be 
     compensated at a rate equal to the daily equivalent of the 
     annual rate of basic pay prescribed for level IV of the 
     Executive Schedule under section 5315 of title 5, United 
     States Code, for each day (including travel time) during 
     which such member is engaged in the performance of the duties 
     of the SPICE Board. All members of the SPICE Board who are 
     officers or employees of the United States shall serve 
     without compensation in addition to that received for their 
     services as officers or employees of the United States.
       ``(B) Travel expenses.--The members of the SPICE Board 
     shall be allowed travel expenses, including per diem in lieu 
     of subsistence, at rates authorized for employees of agencies 
     under subchapter I of chapter 57 of title 5, United States 
     Code, while away from their homes or regular places of 
     business in the performance of services for the SPICE Board.
       ``(C) Removal.--The President may remove a member of the 
     SPICE Board only for neglect of duty or malfeasance in 
     office.
       ``(2) Staff.--
       ``(A) In general.--The chairperson of the SPICE Board may, 
     without regard to the civil service laws and regulations, 
     appoint and terminate an executive director and such other 
     additional personnel as may be necessary to enable the SPICE 
     Board to perform its duties. The employment of an executive 
     director shall be subject to confirmation by the SPICE Board.
       ``(B) Compensation.--The chairperson of the SPICE Board may 
     fix the compensation of the executive director and other 
     personnel without regard to the provisions of chapter 51 and 
     subchapter III of chapter 53 of title 5, United States Code, 
     relating to classification of positions and General Schedule 
     pay rates, except that the rate of pay for the executive 
     director and other personnel may not exceed the rate payable 
     for level V of the Executive Schedule under section 5316 of 
     such title.
       ``(C) Detail of government employees.--Any Federal 
     Government employee may be detailed to the SPICE Board 
     without further reimbursement, and such detail shall be 
     without interruption or loss of civil service status or 
     privilege.
       ``(D) Procurement of temporary and intermittent services.--
     The chairperson of the SPICE Board may procure temporary and 
     intermittent services under section 3109(b) of title 5, 
     United States Code, at rates for individuals which do not 
     exceed the daily equivalent of the annual rate of basic pay 
     prescribed for level V of the Executive Schedule under 
     section 5316 of such title.


``spice prescription drug account in the federal supplementary medical 
                          insurance trust fund

       ``Sec. 1860N. (a) Establishment.--
       ``(1) In general.--There is created within the Federal 
     Supplementary Medical Insurance Trust Fund established by 
     section 1841 an account to be known as the `SPICE 
     Prescription Drug Account' (in this section referred to as 
     the `Account').
       ``(2) Funds.--The Account shall consist of such gifts and 
     bequests as may be made as provided in section 201(i)(1), and 
     such amounts as may be deposited in, or appropriated to, such 
     fund as provided in this part.
       ``(3) Separate from rest of trust fund.--Funds provided 
     under this part to the Account shall be kept separate from 
     all other funds within the Federal Supplementary Medical 
     Insurance Trust Fund.
       ``(b) Payments From Account.--
       ``(1) In general.--The Managing Trustee shall pay from time 
     to time from the Account such amounts as the SPICE Board 
     certifies are necessary to make payments to operate the 
     program under this part, including payments to entities under 
     section 1860J, payments to sponsors under section 1860L, and 
     payments with respect to administrative expenses under this 
     part in accordance with section 201(g).
       ``(2) Treatment in relation to part b premium.--Amounts 
     payable from the Account shall not be taken into account in 
     computing actuarial rates or premium amounts under section 
     1839.
       ``(c) Appropriations To Cover Government Contribution.--
     There are authorized to be appropriated from time to time, 
     out of any moneys in the Treasury not otherwise appropriated, 
     to the Account an amount equal to the amount by which the 
     benefits and administrative costs of providing the benefits 
     under this part exceed the premiums collected under section 
     1860H(a)(4).''.
       (b) Conforming Amendments to Federal Supplementary Medical 
     Insurance Trust Fund.--Section 1841 of the Social Security 
     Act (42 U.S.C. 1395t) is amended--
       (1) in the last sentence of subsection (a)--
       (A) by striking ``and'' before ``such amounts''; and
       (B) by inserting before the period the following: ``, and 
     such amounts as may be deposited in, or appropriated to, the 
     SPICE Prescription Drug Account established by section 
     1860N''; and
       (2) in subsection (g), by inserting after ``by this part,'' 
     the following: ``the payments provided for under part D (in 
     which case the payments shall be made from the SPICE 
     Prescription Drug Account in the Trust Fund),''.
       (c) Additional Conforming Changes.--
       (1) Conforming references to previous part d.--Any 
     reference in law (in effect before the date of enactment of 
     this Act) to part D of title XVIII of the Social Security Act 
     is deemed a reference to part E of such title (as in effect 
     after such date).
       (2) Secretarial submission of legislative proposal.--Not 
     later than 6 months after the date of enactment of this Act, 
     the Secretary of Health and Human Services shall submit to 
     the appropriate committees of Congress a legislative proposal 
     providing for such technical and conforming amendments in the 
     law as are required by the provisions of this Act.

     SEC. 3. SPICE PRESCRIPTION DRUG COVERAGE UNDER 
                   MEDICARE+CHOICE PLANS.

       (a) Special Rules.--Section 1851 of the Social Security Act 
     (42 U.S.C. 1395w-21) is amended by adding at the end the 
     following new subsection:
       ``(j) Rules for Provision of SPICE Prescription Drug 
     Coverage.--
       ``(1) Plan required to provide coverage if beneficiary 
     enrolled in part d.--
       ``(A) In general.--In the case of an individual that is 
     enrolled in a Medicare+Choice plan and enrolled under part D, 
     the basic benefits required to be provided under section 
     1852(a)(1)(A) shall include SPICE prescription drug coverage 
     (as defined in section 1860B(a)) under the terms and 
     conditions for such coverage established under part D, 
     including the terms and conditions described in section 
     1860I(c).
       ``(B) Voluntary enrollment in part D.--An individual 
     enrolled in a Medicare+Choice plan shall not be required to 
     enroll under part D.
       ``(2) Limitation on enrollee liability.--In the case of an 
     individual described in paragraph (1)(A), with respect to 
     SPICE prescription drug coverage, a Medicare+Choice 
     organization may not require that such individual pay a 
     deductible or a coinsurance percentage that exceeds the 
     deductible or coinsurance percentage applicable for such 
     coverage pursuant to part D.
       ``(3) Premium for stop-loss coverage.--
       ``(A) In general.--Subject to subparagraph (B), a 
     Medicare+Choice organization offering

[[Page S7817]]

     a Medicare+Choice plan on behalf of an individual described 
     in paragraph (1)(A) may require the individual to pay a 
     premium for stop-loss coverage (as defined in section 
     1860B(c). Any such premium shall be considered to be part of 
     the Medicare+Choice monthly basic premium (as defined in 
     section 1854(b)(2)(A)) that the individual is responsible 
     for.
       ``(B) Organization required to reduce premium by amount of 
     financial assistance.--A Medicare+Choice organization 
     receiving a payment for financial assistance for stop-loss 
     coverage on behalf of an individual described in paragraph 
     (1)(A) pursuant to subsection (b) of section 1860J shall 
     reduce any premium described in subparagraph (A) by the 
     amount of such financial assistance.
       ``(4) Payments to organization for spice prescription drug 
     coverage pursuant to part d rules.--The SPICE Board 
     (established under section 1860M) shall make payments to a 
     Medicare+Choice organization offering a Medicare+Choice plan 
     on behalf of an individual described in paragraph (1)(A) 
     pursuant to the payment mechanisms described in subsections 
     (a) and (b) of section 1860J. Such payments shall be 
     coordinated with payments made to such organization under 
     section 1853.
       ``(5) Coordinated enrollment.--The Secretary shall work 
     with the SPICE Board to coordinate enrollment under this part 
     with enrollment under part D.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to items and services provided under a 
     Medicare+Choice plan on or after January 1, 2003.

     SEC. 4. MEDIGAP REVISIONS AND TRANSITION PROVISIONS.

       (a) Establishment of SPICE Medigap Policies.--Section 1882 
     of the Social Security Act (42 U.S.C. 1395ss) is amended by 
     adding at the end the following new subsection:
       ``(v) SPICE Medigap Policies.--
       ``(1) Revision of benefit packages.--
       ``(A) In general.--Notwithstanding subsection (p), the 
     benefit packages established under such subsection shall be 
     revised so that--
       ``(i) if the policyholder is enrolled under part D, basic 
     coverage (as defined in section 1860B(b)) is available as 
     part of each benefit package;
       ``(ii) each benefit package includes stop-loss coverage (as 
     defined in section 1860B(c)) in the core group of basic 
     benefits described in subsection (p)(2)(B);
       ``(iii) no benefit package (including each benefit package 
     classified as `H', `I', or `J' under the standards 
     established by such subsection (p)(2), and the benefit 
     package classified as `J' with a high deductible feature 
     described in subsection (p)(11)) includes prescription drug 
     coverage other than the basic coverage required under clause 
     (i) (if applicable), or the stop-loss coverage required under 
     clause (ii); and
       ``(iv) except as revised under the preceding clauses or 
     pursuant to subsection (p)(1)(E), the benefit packages are 
     identical to the benefit packages that were available on the 
     date of enactment of the Seniors Prescription Insurance 
     Coverage Equity (SPICE) Act of 2001.
       ``(B) Administration of benefits.--Pursuant to section 
     1860A(a)(3), an issuer of a medicare supplemental policy 
     revised under such subparagraph may directly administer the 
     prescription drug benefits required under the policy or may 
     contract with an entity that meets the applicable 
     requirements under part D to administer such benefits.
       ``(C) Manner of revision.--The benefit packages revised 
     under this section shall be revised in the manner described 
     in subparagraph (E) of subsection (p)(1), except that for 
     purposes of subparagraph (C) of such subsection, the 
     standards established under this subsection shall take effect 
     not later than January 1, 2003.
       ``(2) Guaranteed issuance and renewal of new policies.--The 
     provisions of subsections (q) and (s) shall apply to medicare 
     supplemental policies revised under this subsection in the 
     same manner as such provisions apply to medicare supplemental 
     policies issued under the standards established under 
     subsection (p).
       ``(3) Opportunity of current policyholders to purchase 
     revised policies.--
       ``(A) In general.--No medicare supplemental policy of an 
     issuer with a benefit package that is revised under paragraph 
     (1) shall be deemed to meet the standards in subsection (c) 
     unless the issuer--
       ``(i) provides written notice during the 60-day period 
     immediately preceding the period established under section 
     1860C(c), to each policyholder or certificate holder of a 
     medicare supplemental policy issued by that issuer (at the 
     most recent available address) of the offer described in 
     clause (ii) and of the fact that, so long as they retain 
     coverage under such policy, they are unable to obtain SPICE 
     prescription drug coverage (as defined in section 1860B(a)) 
     under part D; and
       ``(ii) offers the policyholder or certificate holder under 
     the terms described in subparagraph (B), during at least the 
     period established under subsection (c) of section 1860C, 
     institution of coverage effective for the period described in 
     subsection (d) of such section, a medicare supplemental 
     policy with the benefit package that has been revised under 
     paragraph (1) of this subsection that the Secretary 
     determines is most comparable to the policy in which the 
     individual is enrolled.
       ``(B) Terms of offer described.--The terms described under 
     this subparagraph are terms which do not--
       ``(i) deny or condition the issuance or effectiveness of a 
     medicare supplemental policy described in subparagraph 
     (A)(ii) that is offered and is available for issuance to new 
     enrollees by such issuer;
       ``(ii) discriminate in the pricing of such policy because 
     of health status, claims experience, receipt of health care, 
     or medical condition; or
       ``(iii) impose an exclusion of benefits based on a 
     preexisting condition under such policy.
       ``(4) Opportunity of other eligible individuals to purchase 
     revised policies.--No medicare supplemental policy of an 
     issuer with a benefit package that is revised under paragraph 
     (1) shall be deemed to meet the standards in subsection (c) 
     unless, during at least the period established under section 
     1860C(c), the issuer permits each eligible medicare 
     beneficiary (as defined in section 1860A(d), but who is not 
     described in paragraph (3)) to purchase any medicare 
     supplemental policy that has been revised under paragraph (1) 
     with institution of coverage effective for the period 
     described in section 1860C(d) under the terms of the offer 
     described in paragraph (3)(B).
       ``(5) Grandfathering of current policyholders.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     no person may sell, issue, or renew a medicare supplemental 
     policy with a benefit package that has not been revised under 
     this subsection on or after January 1, 2003.
       ``(B) Grandfathering.--Each policyholder or certificate 
     holder of a medicare supplemental policy as of December 31, 
     2002, may continue to receive benefits under such policy and 
     may renew such policy as if this subsection had not been 
     enacted, except that such beneficiary shall not be eligible 
     to enroll for SPICE prescription drug coverage (as defined in 
     section 1860B(a)) under part D during the period in which 
     such policy is in effect.
       ``(6) Penalties.--Each penalty under this section shall 
     apply with respect to policies revised under this subsection 
     as if such policies were issued under the standards 
     established under subsection (p), including the penalties 
     under subsections (a), (d), (p)(8), (p)(9), (q)(5), 
     (r)(6)(A), (s)(4), and (t)(2)(D).''.
       (b) NAIC Study and Report.--
       (1) Study.--The Secretary of Health and Human Services (in 
     this subsection referred to as the ``Secretary'') shall 
     contract with the National Association of Insurance 
     Commissioners (in this subsection referred to as the 
     ``NAIC'') to conduct a study--
       (A) to determine whether the portion of the benefit 
     packages revised under section 1882(v) of the Social Security 
     Act (as added by subsection (a)) relating to parts A and B of 
     the medicare program should be revised as a result of the 
     establishment of SPICE prescription drug coverage (as defined 
     in section 1860B(a) of such Act, as added by section 2) and 
     whether the total number of such benefit packages should be 
     reduced;
       (B) to identify methods to ensure that any financial 
     assistance paid to issuers of medicare supplemental policies 
     on behalf of enrollees for providing stop-loss coverage (as 
     defined in section 1860B(c) of the Social Security Act, as 
     added by section 2) made available under the benefit packages 
     revised under section 1882(v) of such Act (as so added) is 
     not used to subsidize any other benefits, including the 
     benefits relating to parts A and B of the medicare program; 
     and
       (C) to assess the practicality and viability of 
     establishing a medicare supplemental policy that only 
     provides SPICE prescription drug coverage (as so defined).
       (2) Report.--Not later than 6 months after the date of 
     enactment of this Act, the NAIC shall submit to Congress and 
     the Secretary a report on the study conducted under paragraph 
     (1) together with such recommendations as the NAIC determines 
     appropriate.

     SEC. 5. PROVISION OF INFORMATION ON SPICE DRUG BENEFIT 
                   PROGRAM UNDER HEALTH INSURANCE INFORMATION, 
                   COUNSELING, AND ASSISTANCE GRANTS.

       Section 4360(b)(2)(A)(ii) of the Omnibus Budget 
     Reconciliation Act of 1990 (42 U.S.C. 1395b-4(b)(2)(A)(ii)) 
     is amended by striking ``and information'' and inserting ``, 
     information regarding the SPICE drug benefit program under 
     part D of title XVIII of the Social Security Act, and 
     information''.

     SEC. 6. PERSONAL DIGITAL ACCESS TECHNOLOGY DEMONSTRATION 
                   PROJECT.

       (a) Demonstration Project.--
       (1) In general.--The SPICE Board (established under section 
     1860M of the Social Security Act (as added by section 2)) 
     shall conduct a demonstration project for the purpose of 
     increasing the use of Personal Digital Access Technology in 
     prescribing covered outpatient drugs (as defined in section 
     1860B(e) (as so added)) for eligible medicare beneficiaries 
     receiving SPICE prescription drug coverage under part D of 
     title XVIII of such Act (as so added).
       (2) Aspects of project.--The demonstration project shall 
     address ways in which the use of Personal Digital Access 
     Technology can be used to--
       (A) avoid adverse drug reactions among such beneficiaries, 
     including problems due to therapeutic duplication, drug-
     disease contraindications, drug-drug interactions (including 
     serious interactions with nonprescription or over-the-counter 
     drugs), incorrect drug dosage or duration of drug treatment, 
     drug-allergy interactions, and clinical abuse and misuse;

[[Page S7818]]

       (B) transmit information about the coverage of covered 
     outpatient drugs under the policy or plan in which such a 
     beneficiary is receiving SPICE prescription drug coverage to 
     prescribing physicians;
       (C) increase the use of generic drugs by such 
     beneficiaries; and
       (D) increase the compliance of entities offering policies 
     or plans that provide SPICE prescription drug coverage with 
     the requirements under part D of title XVIII of the Social 
     Security Act (as added by section 2).
       (3) Inclusion of providers.--In conducting the 
     demonstration project, the SPICE Board shall include--
       (A) physicians;
       (B) pharmacists;
       (C) entities that offer policies or plans that provide 
     SPICE prescription drug coverage; and
       (D) any entity (including a pharmacy benefits management 
     company) that contracts with an entity described in 
     subparagraph (C) to provide benefits under such policies or 
     plans.
       (4) Duration of projects.--The demonstration project shall 
     be conducted over a 3-year period.
       (b) Reports to Congress.--
       (1) In general.--
       (A) Initial report.--Not later than 18 months after the 
     SPICE Board implements the demonstration project, the SPICE 
     Board shall submit to Congress an initial report on the 
     demonstration project.
       (B) Final report.--Not later that 6 months after the 
     conclusion of the project, the SPICE Board shall submit to 
     Congress a final report on the demonstration project.
       (2) Contents of reports.--The reports described in 
     paragraph (1) shall include the following:
       (A) A detailed description of the demonstration project.
       (B) An evaluation of the demonstration project.
       (C) Recommendations for legislation that the SPICE Board 
     determines to be appropriate as a result of the demonstration 
     project.
       (D) Any other information regarding the demonstration 
     project that the SPICE Board determines to be appropriate.
       (c) Funding.--Expenditures made for carrying out the 
     demonstration project shall be made from funds otherwise 
     appropriated to the Secretary of Health and Human Services.

  Ms. SNOWE. Mr. President, I am pleased to join with my friend and 
colleague, Senator Ron Wyden, in the introduction of the Seniors 
Prescription Insurance Coverage Equity Act of 2001, or ``SPICE.'' I 
want to thank him for his enthusiasm about and his commitment to this 
joint venture.
  It was just about two years ago now that Senator Wyden and I 
introduced this bill for the first time. SPICE 2001 is the product of 
almost three years of work and development. Since 1999, when we first 
tackled this issue, there has been much discussion about how to design 
a prescription drug coverage plan that is both comprehensive and 
affordable, that provides choice but guarantees availability of basic 
coverage. And, perhaps most importantly, one that is workable for 
seniors, the Medicare program and one that private providers will 
offer. We believe we have struck this balance in SPICE 2001.
  I believe that this bill is a benchmark for the Senate's 
consideration of a comprehensive out-patient prescription drug program 
under Medicare. I offer this bill today, with my friend Senator Wyden 
because it is the product of a three year collaborative effort to 
provide our Nation's seniors with prescription drug coverage, and I 
offer it with the hopes that it will be considered as part of a broader 
reform when the Senate takes one up.
  Americans age 65 and older are only 12 percent of the population but 
account for over 40 percent of all drug spending. Which isn't 
surprising considering that over the past five years, per capita drug 
spending for the Medicare population has approximately doubled, 
reaching an estimated $1,756 this year.
  This comes at a time where fewer retirees have health coverage from 
their former employers than ever before. In 1998, an estimated 66 
percent of large employers offered retiree health coverage, fewer than 
40 percent did so in 2000. At a time when fewer and fewer of our 
seniors have retiree health care coverage from their former employers, 
and when the cost of prescription drugs are skyrocketing, no one can 
argue that it isn't essential we ensure that Medicare beneficiaries 
have comprehensive coverage for outpatient prescription drugs. And, 
this is a problem, I might add, which will only grow when the 77 
million Baby Boomers begin to enter Medicare in 2011.
  For the past several years, Senator Wyden and I have been united in 
our belief that we owe it to our seniors to develop the best and most 
practical solution. SPICE 2001 represents a straightforward, 
comprehensive, and responsible approach that should appeal to anyone 
who believes that seniors need prescription drug coverage.
  To accomplish these goals we have built upon the model of the first 
SPICE bill and added components that have continued to be part of the 
larger debate on this issue--that of public programs versus private 
competition. As a result, SPICE 2001 now creates a partnership between 
the Federal Government and private insurers to share the cost, and the 
risk, of offering outpatient prescription drug coverage for our senior 
population.
  Specifically, SPICE 2001 creates a prescription drug coverage program 
for all Medicare beneficiaries enrolled in both Part A and Part B, and 
who choose to enroll. SPICE offers a premium subsidy of at least 25 
percent to all enrollees. To provide extra assistance to those who need 
it most, there is a 100 percent premium subsidy for those whose income 
is at or under 150 percent of poverty, $12,885 for a single person and 
$17,415 for a couple. Those whose income is between 150 percent and 175 
percent of poverty, $15,033 for an individual and $20,318 for a couple, 
will receive a subsidy based on a sliding scale down to 25 percent of 
the cost of the premium.
  SPICE 2001 offers two choices in the coverage so they can pick a plan 
to best serve their needs. One option is basic coverage, with a $350 
deductible and a 25 percent coinsurance requirement. This can be 
purchased with a Stop-loss plan of $3,000 or separately.
  The second option is stop-loss coverage. While only 17 percent of 
beneficiaries have costs above $3,000, they account for almost 54 
percent of all spending on prescription drugs. This coverage is 
provided completely through the private insurer. According to CBO's 
January 2001 baseline projections, 83 percent of those enrolled in 
Medicare fee for service plans pay less than $3,000 for their drugs. 
For these seniors, they might only want to purchase the basic coverage. 
Those who need more than just the basic coverage can buy them both. For 
those who can manage their spending and only want to protect themselves 
from catastrophic expenses, they can purchase stop-loss coverage.
  And, importantly, all SPICE enrollees receive the benefit of the 
negotiated discount on the cost of their prescription drugs, starting 
with their first prescription.
  Choice is one of the cornerstones of this program. Seniors will not 
only have the choice of their level of coverage but will be able to 
choose from a variety to have their care delivered. SPICE can be run 
through Medigap, Medicare+Choice plans, or private entities. In areas 
where there are no insurers, the SPICE Board will have the authority to 
negotiate with entities to bring them into the market.
  One of the perennial arguments against government sponsored or 
assisted prescription drug coverage for our retirees has been that if 
we did it, employers wouldn't. We already know that fewer employers are 
offering retiree health benefits than just 12 years ago, this is a 
trend we hope to discourage. This is why the SPICE Board is authorized 
to provide the 25 percent premium subsidy as an incentive to employers 
who provide prescription drug coverage for their retirees. It is 
critical we encourage employers to continue to offer this type of 
coverage and we acknowledge that in this bill.
  According to a 1998 Wall Street Journal poll, 80 percent of retirees 
use a prescription drug every day. The average Medicare beneficiary 
fills a prescription 18 times a year. It is long past time that we 
ensure that these prescriptions are covered.
  SPICE 2001 offers something for everyone interested in providing our 
seniors with prescription drug coverage. It is a program that can be 
incorporated in existing health plans, will be run through a government 
Board whose sole purpose is ensuring that this program runs well, and 
will foster competition and allow for choice in both coverage and 
providers.
                                 ______
                                 
      By Mr. DOMENICI (for himself, Mr. Inouye, Mr. Campbell, Mr. 
        Bingaman, Mr. Baucus, Mr. Crapo, Mr. Allard, Mr. Johnson, and 
        Mr. Kyl):

[[Page S7819]]

  S. 1186. A bill to provide a budgetary mechanism to ensure that funds 
will be available to satisfy the Federal Government's responsibilities 
with respect to negotiated settlements of disputes related to Indian 
water rights claims and Indian land claims; to the Committee on the 
Budget and the Committee on Governmental Affairs, jointly, pursuant to 
the order of August 4, 1977, with instructions that if one Committee 
reports, the other Committee have thirty days to report or be 
discharged.
  Mr. DOMENICI. Mr. President, both as chairman and now as the ranking 
member on the Budget Committee, I have been working over the last year 
with the Western Governors' Association, the Western Regional Council, 
the Native American Rights Fund, the Western States Water Council, as 
well as several Indian tribes to correct what I believe to be a flaw in 
the Budget Enforcement Act as it relates to the Federal funding of 
Indian land and water settlements.
  I, along with a group of bipartisan Senators, including the chairman 
and ranking member of the Indian Affairs Committee are introducing 
today legislation that will help Congress fulfill its commitment to 
authorized Indian land and water settlements.
  In FY 2002, the President's request for Indian land and water 
settlements funding was $61 million. This represents an increase from 
fiscal year 2001 of $23 million. The increase is due to the 
authorization of several large settlements in California, Colorado, 
Michigan, New Mexico, and Utah.
  I am pleased to report that the full request was included in both the 
Senate and House passed budget resolutions. In turn, the request was 
fully appropriated in both the House and Senate versions of the fiscal 
year 2002 Interior appropriations bill. This is a tremendous first step 
in making sure the Congress fulfills its obligation regarding these 
settlements. But it is only the first step.
  In the near future, there are, at least, three additional large 
settlements likely to come before Congress. The States involved in 
these settlements are Arizona, Idaho, and Montana. Under current 
budgetary treatment these settlements will be difficult to fund without 
taking critical resources from other Bureau of Indian Affairs programs.
  Currently, once the settlements have been agreed to by the parties 
involved, the settlements come to Congress for authorization and 
appropriation. When all appropriations have been distributed the 
Indians give up any future claims to the land or the water.
  Appropriations for these settlements are usually spread over 3-10 
years depending on the size of the settlement. The payout in one year 
for an individual settlement does not usually exceed $30 million.
  I feel, however, that the current budget mechanisms have unfairly 
treated the handling of Indian land and water settlements in relation 
to other federally funded Indian programs.
  The problem with the current status is that, due to the statutory 
discretionary caps, the perception exists that there is not enough 
money in BIA's budget to spend on settlements without taking money from 
other programs in their budget, such as Indian school construction, 
education, community development.
  The legislation I am introducing today, the Fiscal Integrity of 
Indian Settlements Protection Act of 2001, provides for a cap 
adjustment similar to the one that deals with U.N. arrearages. It would 
be for authorized Indian land and water settlements and would set a 
ceiling on what could be spent in one year. Under this proposal, the 
settlements would still have to be authorized and appropriated, but it 
would hold the BIA budget harmless for the cost of the settlements.
  Let me be clear, if these claims are not settled, the US government 
still can be held liable in court. Claims that go through the court 
process are authoritatively paid out of the Claims and Judgement Fund. 
In most cases, negotiated settlements provide more water to the tribes 
and a less expensive bill to the Federal Government.
  Frankly, this simple cap adjustment for authorized and appropriated 
monies for settlements provides a win-win situation for all parties 
involved.
  We have made good progress toward funding our Indian responsibilities 
these past few years. This legislation is a very important step.
  I, along with Senators Inouye, Campbell, Allard, Baucus, Bingaman, 
Crapo, Johnson, and Kyl, urge my colleagues to support this bill and 
future funding of Indian land and water settlements.
  I ask unanimous consent that a letter from the Ad Hoc Group on Indian 
Water Rights be printed in the Record.
  There being no objection, the letter was ordered to be printed in the 
Record, as follows:

                                                   Ad Hoc Group on


                                          Indian Water Rights,

                                                    June 27, 2001.

     Members of the United States Senate,
     Washington, DC.
       Dear Senator: We write to urge your support and co-
     sponsorship of proposed legislation to be introduced shortly 
     entitled the ``Fiscal Integrity of Indian Settlements 
     Protection Act of 2001''. A ``Dear Colleague'' letter by 
     Senators Domenici, Bingaman, Crapo, Inouye, Kyl, and Campbell 
     was sent to your office on May 23, 2001, describing the bill.
       Across the country, numerous negotiations are on-going to 
     settle complex Indian land and water claims. Funding for 
     these settlements is one of the biggest hurdles to overcome. 
     This legislation is important so that Indian land and water 
     right settlements can be completed in a timely manner, 
     consistent with the federal government's responsibility and 
     liability associated with them, and without taking scarce 
     resources from other critical programs within the Department 
     of the Interior.
       Three settlements were approved by the last Congress and 
     others are expected to be submitted to this Congress. Under 
     current budgetary policy, funding of land and water right 
     settlements must be offset by a corresponding reduction in 
     some other discretionary component of the Interior 
     Department's budget. It is difficult for the Administration, 
     the states and the tribes to negotiate settlements knowing 
     that they may not be funded because funding can occur only at 
     the expense of some other tribe or essential Interior 
     Department program.
       We believe that the funding of land and water right 
     settlements is an important obligation of the United States 
     government. The obligation is analogous to, and no less 
     serious than, the obligation of the United States to pay 
     judgments which are rendered against it. We urge that steps 
     be taken to change current budgetary policy to ensure that 
     any land or water settlement, once authorized by the Congress 
     and approved by the President, will be funded. If such a 
     change is not made, these claims will likely be relegated to 
     litigation, an outcome that should not be acceptable to the 
     Administration, the Congress, the tribes or the states.
       The members of the Ad Hoc Group on Indian Water Rights have 
     consistently supported the negotiated settlement of Indian 
     land and water right disputes, and have been actively engaged 
     in drawing more awareness to the important issues associated 
     with settlement of land and water right claims. We believe 
     that unless the current budgetary processes for land and 
     water settlements are changed, funding will continue to be a 
     barrier to finalizing these settlements.
       Again, we urge you to cosponsor the ``Fiscal Integrity of 
     Indian Settlements Protection Act of 2001'' and support its 
     passage to ensure congressional funding for Native American 
     land and water rights settlements once they have been 
     formally executed by the parties and authorized by Congress.
           Sincerely,
     Jane Dee Hull,
       Co-Lead Governor on Indian Water Right Settlements, Western 
     Governors' Association.
     John Kutzhaber,
       Co-Lead Governor on Indian Water Right Settlements, Western 
     Governors' Association.
     Kit Kimball,
       Director, Western Regional Council.
     John Echohawk,
       Executive Director, Native American Rights Fund.
     Michael Brophy,
       Chairman, Western States Water Council.
                                 ______
                                 
      By Mr. ROCKEFELLER (for himself and Mr. Cleland):
  S. 1188. A bill to amend title 38, United States Code, to enhance the 
authority of the Secretary of Veterans Affairs to recruit and retain 
qualified nurses for the Veterans Health Administration, and for other 
purposes, to the Committee on Veterans' Affairs.
  Mr. ROCKEFELLER. Mr. President, I am proud to introduce today with 
Senators Cleland and Specter the Department of Veterans Affairs Nurse 
Recruitment and Retention Enhancement Act of 2001.
  On June 14, 2001, the Committee on Veterans' Affairs held a hearing 
to explore reasons for the imminent shortage of professional nurses in 
the United

[[Page S7820]]

States, and how this shortage will affect health care for veterans 
served by Department of Veterans Affairs' health care facilities.
  Working conditions for nurses, never easy, have become even more 
challenging in recent years. Managed care principles lead hospitals to 
admit only the very sickest of patients with the most complex health 
care needs. As the pool of highly trained nurses shrinks, many health 
care providers rely heavily upon mandatory staff overtime to meet 
staffing needs. Several registered nurses, including Sandra McMeans 
from my state of West Virginia, testified before the committee that 
unpredictable and dangerously long working hours lead to nurses' 
fatigue and frustration, and patient care suffers.
  The legislation we introduce today includes a requirement that VA 
produce a policy on staffing standards. Such a policy shall be 
developed in consultation with the VA Under Secretary for Health, the 
Director of VA's National Center for Patient Safety, and VA's Chief 
Nurse. While we leave it up to VA to develop the standards, the policy 
must consider the numbers and skill mix required of staff in specific 
medical settings, such as critical care and long-term care.
  Because mandatory overtime was frequently cited at the committee's 
June hearing as being of serious concern, the legislation includes a 
requirement that the Secretary report to the Committee on Veterans' 
Affairs on the use of overtime by licensed nursing staff and nursing 
assistants in each facility. This is a critical first step to 
determining what can be done to reduce the amount of mandatory 
overtime. We will continue to monitor this issue with rigor and pledge 
to work to reduce the burdens borne by our nurses.
  In terms of providing sufficient pay, our legislation mandates that 
VA provide Saturday premium pay to certain health professionals. These 
group of professionals include licensed practical nurses, LPN's, 
certified or registered respiratory therapists, licensed physical 
therapists, licensed vocational nurses, pharmacists, and occupational 
therapists. This group of workers are known as ``hybrids'' as they 
straddle two different personnel authorities, titles 38 and 5 of the 
United States Code. Hybrid status allows for the direct hiring and a 
more flexible compensation system.
  This is an issue of equity, especially for LPN's who work alongside 
other nurses on Saturday. While registered nurses, RN's are mandated to 
receive Saturday premium pay, they may be working alongside an LPN who 
is not. Factoring in the looming nurse shortage, we should be doing all 
we can to improve VA's ability to recruit and retain these caregivers.
  Currently, hospital directors have the discretion to provide Saturday 
premium pay. Of the 17,000 hybrid employees, 8,000 are not receiving 
the pay premium.
  In my own State of West Virginia, many LPN's are not receiving 
Saturday premium pay. Deborah Dixon is an LPN at the VA Medical Center 
in Huntington, WV. She works nights 6 days in a row, has 2 days off, 
works nights 5 days, then has 1 day off, then works 4 nights and has 3 
days off. As a result, she has off every third weekend. She says that 
``LPN's deserve Saturday premium pay. It feels like discrimination. It 
makes me wonder why LPN's are not being respected.
  I believe this change in law will make pay more consistent and fair 
for our health care workers.
  Programs initiated within VA to improve conditions for nurses and 
patients have focused on issues other than staffing ratios, pay, and 
hours. A highly praised scholarship program that I spearheaded allows 
VA nurses to pursue degrees and training in return for their service, 
thus encouraging professional development and improving the quality of 
health care. Included within the legislation we introduced today are 
modifications to the existing scholarship and debt reduction programs. 
These changes are intended to improve the programs by providing 
additional flexibility to recipients.
  In the Upper Midwest, the special skills of nurses and nurse 
practitioners are being recognized in clinics that provide supportive 
care close to the veterans who need it. The legislation before us seeks 
to encourage more nurse-managed clinics and also includes a requirement 
that VA evaluate these clinics.
  There are various other provisions included in the bill. One 
provision requires that VA nurses enrolled in the Federal Employee 
Retirement System have the same ability to include unused sick leave as 
part of the retirement year calculation that VA nurses enrolled in the 
Civilian Retirement System have. The legislation also would amend the 
treatment of part-time service performed by certain title 38 employees 
prior to April 7, 1986, for purposes of retirement credit. Currently, 
part-time service performed by title 5 employees prior to April 7, 
1986, is treated as full-time service; however, title 38 employees' 
part-time services prior to April 7, 1986, is counted as part-time 
service and therefore results in lower annuities for these employees. 
Retired nurses, such as Tonya Rich from Morgantown, WV, who has 
contacted me, stress the inequity of the situation. In order to rectify 
this, our legislation exempts registered nurses, physician assistants, 
and expanded-function dental auxiliaries from the requirement that 
part-time service performed prior to April 7, 1986, be prorated when 
calculating retirement annuities.
  This bill is a good start, but clearly, we must remain vigilant. 
Although the nursing crisis has not yet reached its projected peak, the 
shortage is already endangering patient safety in the areas of critical 
and long-term care, where demands on nurses are greatest. We must 
encourage higher enrollment in nursing schools, improve the work 
environment, and offer nurses opportunities to develop as respected 
professionals, while taking steps to ensure safe staffing levels in the 
short-term.
  We do not have the luxury of reflecting upon this problem at length; 
we must act now. Fortunately, we have as allies hardworking nurses who 
are dedicated to helping us find ways to improve working conditions and 
to recruit more young people to the field.
  I ask unanimous consent that 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. 1188

       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 ``Department 
     of Veterans Affairs Nurse Recruitment and Retention 
     Enhancement Act of 2001''.
       (b) Table of Contents.--The table of contents for this Act 
     is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. References to title 38, United States Code.

            TITLE I--ENHANCEMENT OF RECRUITMENT AUTHORITIES

Sec. 101. Enhancement of employee incentive scholarship program.
Sec. 102. Enhancement of education debt reduction program.
Sec. 103. Report on requests for waivers of pay reductions for 
              reemployed annuitants to fill nurse positions.

             TITLE II--ENHANCEMENT OF RETENTION AUTHORITIES

Sec. 201. Additional pay for Saturday tours of duty for additional 
              health care professional in the Veterans Health 
              Administration.
Sec. 202. Unused sick leave included in annuity computation of 
              registered nurses with the Veterans Health 
              Administration.
Sec. 203. Evaluation of Department of Veterans Affairs nurse managed 
              clinics.
Sec. 204. Staffing levels for operations of medical facilities.
Sec. 205. Annual report on use of authorities to enhance retention of 
              experienced nurses.
Sec. 206. Report on mandatory overtime for nurses and nurse assistants 
              in Department of Veterans Affairs facilities.

                        TITLE III--OTHER MATTERS

Sec. 301. Organizational responsibility of the Director of the Nursing 
              Service.
Sec. 302. Computation of annuity for part-time service performed by 
              certain health-care professionals before April 7, 1986.
Sec. 303. Modification of nurse locality pay authorities.
Sec. 304. Technical amendments.

     SEC. 2. REFERENCES TO TITLE 38, UNITED STATES CODE.

       Except as otherwise expressly provided, whenever in this 
     Act an amendment or repeal is expressed in terms of an 
     amendment to, or repeal of, a section or other provision, the 
     reference shall be considered to be made

[[Page S7821]]

     to a section or other provision of title 38, United States 
     Code.

            TITLE I--ENHANCEMENT OF RECRUITMENT AUTHORITIES

     SEC. 101. ENHANCEMENT OF EMPLOYEE INCENTIVE SCHOLARSHIP 
                   PROGRAM.

       (a) Permanent Authority.--(1) Section 7676 is repealed.
       (2) The table of sections at the beginning of chapter 76 is 
     amended by striking the item relating to section 7676.
       (b) Minimum Period of Department Employment for 
     Eligibility.--Section 7672(b) is amended by striking ``2 
     years'' and inserting ``one year''.
       (c) Scholarship Amount.--Subsection (b) of section 7673 is 
     amended--
       (1) in paragraph (1), by striking ``for any one year'' and 
     inserting ``for the equivalent of one year of full-time 
     coursework''; and
       (2) by striking paragraph (2) and inserting the following 
     new paragraph (2):
       ``(2) in the case of a participant in the Program who is a 
     part-time student, shall bear the same ratio to the amount 
     that would be paid under paragraph (1) if the participant 
     were a full-time student in the course of education or 
     training being pursued by the participant as the coursework 
     carried by the student bears to full-time coursework in that 
     course of education or training.''.
       (d) Limitation on Payment.--Subsection (c) of section 7673 
     is amended to read as follows:
       ``(c) Limitations on Period of Payment.--(1) The maximum 
     number of school years for which a scholarship may be paid 
     under subsection (a) to a participant in the Program shall be 
     six school years.
       ``(2) A participant in the Program may not receive a 
     scholarship under subsection (a) for more than the equivalent 
     of three years of full-time coursework.''.
       (e) Full-Time Coursework.--Section 7673 is further amended 
     by adding at the end the following new subsection:
       ``(e) Full-Time Coursework.--For purposes of this section, 
     full-time coursework shall consist of the following:
       ``(1) In the case of undergraduate coursework, 30 semester 
     hours per undergraduate school year.
       ``(2) In the case of graduate coursework, 18 semester hours 
     per graduate school year.''.
       (f) Annual Adjustment of Maximum Scholarship Amount.--
     Section 7631 is amended--
       (1) in subsection (a)(1), by striking ``and the maximum 
     Selected Reserve member stipend amount'' and inserting ``the 
     maximum Selected Reserve member stipend amount, the maximum 
     employee incentive scholarship amount,''; and
       (2) in subsection (b)--
       (A) by redesignating paragraph (4) as paragraph (6); and
       (B) by inserting after paragraph (3) the following new 
     paragraph (4):
       ``(4) The term `maximum employee incentive scholarship 
     amount' means the maximum amount of the scholarship payable 
     to a participant in the Department of Veterans Affairs 
     Employee Incentive Scholarship Program under subchapter VI of 
     this chapter, as specified in section 7673(b)(1) of this 
     title and as previously adjusted (if at all) in accordance 
     with this section.''.

     SEC. 102. ENHANCEMENT OF EDUCATION DEBT REDUCTION PROGRAM.

       (a) Permanent Authority.--(1) Section 7684 is repealed.
       (2) The table of sections at the beginning of chapter 76 is 
     amended by striking the item relating to section 7684.
       (b) Eligible Individuals.--Subsection (a)(1) of section 
     7682 is amended--
       (1) by striking ``under an appointment under section 
     7402(b) of this title in a position'' and inserting ``in a 
     position (as determined by the Secretary) providing direct-
     patient care services or services incident to direct-patient 
     care services''; and
       (2) by striking ``(as determined by the Secretary)'' and 
     inserting ``(as so determined)''.
       (c) Maximum Debt Reduction Amount.--Section 7683(d)(1) is 
     amended--
       (1) by striking ``for a year''; and
       (2) by striking ``exceed--'' and all that follows through 
     the end of the paragraph and inserting ``exceed $44,000 over 
     a total of five years of participation in the Program, of 
     which not more than $10,000 of such payments may be made in 
     each of the fourth and fifth years of participation in the 
     Program.''.
       (d) Annual Adjustment of Maximum Debt Reduction Payments 
     Amount.--(1) Section 7631, as amended by section 101(f) of 
     this Act, is further amended--
       (A) in subsection (a)(1), by inserting before the period at 
     the end of the first sentence the following: ``and the 
     maximum education debt reduction payments amount''; and
       (B) in subsection (b), by inserting after paragraph (4) the 
     following new paragraph (5):
       ``(5) The term `maximum education debt reduction payments 
     amount' means the maximum amount of education debt reduction 
     payments payable to a participant in the Department of 
     Veterans Affairs Education Debt Reduction Program under 
     subchapter VII of this chapter, as specified in section 
     7683(d)(1) of this title and as previously adjusted (if at 
     all) in accordance with this section.''.
       (2) Notwithstanding section 7631(a)(1) of title 38, United 
     States Code, as amended by paragraph (1), the Secretary of 
     Veterans Affairs shall not increase the maximum education 
     debt reduction payments amount under that section in calendar 
     year 2002.
       (e) Temporary Expansion of Individuals Eligible for 
     Participation in Program.--(1) Notwithstanding section 
     7682(c) of title 38, United States Code, the Secretary of 
     Veterans Affairs may treat a covered individual as being a 
     recently appointed employee in the Veterans Health 
     Administration under section 7682(a) of that title for 
     purposes of eligibility in the Education Debt Reduction 
     Program if the Secretary determines that the participation of 
     the individual in the Program under this subsection would 
     further the purposes of the Program.
       (2) For purposes of this subsection, a covered individual 
     is any individual otherwise described by section 7682(a) of 
     title 38, United States Code, as in effect on the day before 
     the date of the enactment of this Act, who--
       (A) was appointed as an employee in a position described in 
     paragraph (1) of that section, as so in effect, between 
     January 1, 1999, and September 30, 2000; and
       (B) is an employee in such position, or in another position 
     described in paragraph (1) of that section, as so in effect, 
     at the time of application for treatment as a covered 
     individual under this subsection.
       (3) The Secretary shall make determinations regarding the 
     exercise of the authority in this subsection on a case-by-
     case basis.
       (4) The Secretary may not exercise the authority in this 
     subsection after December 31, 2001. The expiration of the 
     authority in this subsection shall not affect the treatment 
     of an individual under this subsection before that date as a 
     covered individual for purposes of eligibility in the 
     Education Debt Reduction Program.
       (5) In this subsection, the term ``Education Debt Reduction 
     Program'' means the Department of Veterans Affairs Education 
     Debt Reduction Program under subchapter VII of chapter 76 of 
     title 38, United States Code.

     SEC. 103. REPORT ON REQUESTS FOR WAIVERS OF PAY REDUCTIONS 
                   FOR REEMPLOYED ANNUITANTS TO FILL NURSE 
                   POSITIONS.

       (a) Report.--Not later than November 30 of each of 2001 and 
     2002, the Secretary of Veterans Affairs shall submit to the 
     Committees on Veterans' Affairs of the Senate and the House 
     of Representatives a report describing each request of the 
     Secretary, during the fiscal year preceding such report, to 
     the Director of the Office of Personnel Management for the 
     following:
       (1) A waiver under subsection (i)(1)(A) of section 8344 of 
     title 5, United States Code, of the provisions of such 
     section in order to meet requirements of the Department of 
     Veterans Affairs for appointments to nurse positions in the 
     Veterans Health Administration.
       (2) A waiver under subsection (f)(1)(A) of section 8468 of 
     title 5, United States Code, of the provisions of such 
     section in order to meet requirements of the Department for 
     appointments to such positions.
       (3) A grant of authority under subsection (i)(1)(B) of 
     section 8344 of title 5, United States Code, for the waiver 
     of the provisions of such section in order to meet 
     requirements of the Department for appointments to such 
     positions.
       (4) A grant of authority under subsection (f)(1)(B) of 
     section 8468 of title 5, United States Code, for the waiver 
     of the provisions of such section in order to meet 
     requirements of the Department for appointments to such 
     positions.
       (b) Information on Responses to Requests.--The report under 
     subsection (a) shall specify for each request covered by the 
     report--
       (1) the response of the Director to such request; and
       (2) if such request was granted, whether or not the waiver 
     or authority, as the case may be, assisted the Secretary in 
     meeting requirements of the Department for appointments to 
     nurse positions in the Veterans Health Administration.

             TITLE II--ENHANCEMENT OF RETENTION AUTHORITIES

     SEC. 201. ADDITIONAL PAY FOR SATURDAY TOURS OF DUTY FOR 
                   ADDITIONAL HEALTH CARE PROFESSIONAL IN THE 
                   VETERANS HEALTH ADMINISTRATION.

       (a) In General.--Section 7454(b) is amended--
       (1) by inserting ``(1)'' after ``(b)''; and
       (2) by adding at the end the following new paragraph:
       ``(2) Health care professionals employed in positions 
     referred to in paragraph (1) shall be entitled to additional 
     pay on the same basis as provided for nurses in section 
     7453(c) of this title.''.
       (b) Applicability.--The amendments made by subsection (a) 
     shall take effect on the date of the enactment of this Act, 
     and shall apply with respect to pay periods beginning on or 
     after that date.

     SEC. 202. UNUSED SICK LEAVE INCLUDED IN ANNUITY COMPUTATION 
                   OF REGISTERED NURSES WITH THE VETERANS HEALTH 
                   ADMINISTRATION.

       (a) Annuity Computation.--Section 8415 of title 5, United 
     States Code, is amended by adding at the end the following:
       ``(i) In computing an annuity under this subchapter, the 
     total service of an employee who retires from the position of 
     a registered nurse with the Veterans Health Administration on 
     an immediate annuity, or dies while employed in that position 
     leaving any survivor entitled to an annuity, includes the 
     days of unused sick leave to the credit of that employee 
     under a formal leave system, except that such days shall not 
     be counted in

[[Page S7822]]

     determining average pay or annuity eligibility under this 
     subchapter.''.
       (b) Deposit Not Required.--Section 8422(d) of title 5, 
     United States Code, is amended--
       (1) by inserting ``(1)'' before ``Under such regulations''; 
     and
       (2) by adding at the end the following:
       ``(2) Deposit may not be required for days of unused sick 
     leave credited under section 8415(i).''.
       (c) Effective Date.--The amendments made by this section 
     shall take effect 60 days after the date of the enactment of 
     this Act, and shall apply to individuals who separate from 
     service on or after that effective date.

     SEC. 203. EVALUATION OF DEPARTMENT OF VETERANS AFFAIRS NURSE 
                   MANAGED CLINICS.

       (a) Evaluation.--The Secretary of Veterans Affairs shall 
     carry out an evaluation of the efficacy of the nurse managed 
     health care clinics of the Department of Veterans Affairs. 
     The Secretary shall complete the evaluation not later than 18 
     months after the date of the enactment of this Act.
       (b) Clinics To Be Evaluated.--(1) In carrying out the 
     evaluation under subsection (a), the Secretary consider nurse 
     managed health care clinics, including primary care clinics 
     and geriatric care clinics, located in three different 
     Veterans Integrated Service Networks (VISNs) of the 
     Department.
       (2) If there are not nurse managed health care clinics 
     located in three different Veterans Integrated Service 
     Networks as of the commencement of the evaluation, the 
     Secretary shall--
       (A) establish nurse managed health care clinics in 
     additional Veterans Integrated Services Networks such that 
     there are nurse managed health care clinics in three 
     different Veterans Integrated Service Networks for purposes 
     of the evaluation; and
       (B) include such clinics, as so established, in the 
     evaluation.
       (c) Matters To Be Evaluated.--In carrying out the 
     evaluation under subsection (a), the Secretary shall address 
     the following:
       (1) Patient satisfaction.
       (2) Provider experiences.
       (2) Cost of care.
       (4) Access to care, including waiting time for care.
       (5) The functional status of patients receiving care.
       (6) Any other matters the Secretary considers appropriate.
       (d) Report.--Not later than 18 months after the date of the 
     enactment of this Act, the Secretary shall submit to the 
     Committees on Veterans' Affairs of the Senate and the House 
     of Representatives a report on the evaluation carried out 
     under subsection (a). The report shall address the matters 
     specified in subsection (c) and include any other 
     information, and any recommendations, that the Secretary 
     considers appropriate.

     SEC. 204. STAFFING LEVELS FOR OPERATIONS OF MEDICAL 
                   FACILITIES.

       (a) In General.--Section 8110(a) is amended--
       (1) in paragraph (1), by inserting after ``complete care of 
     patients,'' in the fifth sentence the following: ``and in a 
     manner consistent with the policies of the Secretary on 
     overtime,''; and
       (2) in paragraph (2)--
       (A) by inserting ``, including the staffing required to 
     maintain such capacities,'' after ``all Department medical 
     facilities'';
       (B) by striking ``and to minimize'' and inserting ``, to 
     minimize''; and
       (C) by inserting before the period the following: ``, and 
     to ensure that eligible veterans are provided such care and 
     services in an appropriate manner''.
       (b) Nationwide Policy on Staffing.--Paragraph (3) of that 
     section is amended--
       (1) in subparagraph (A), by inserting ``the adequacy of 
     staff levels for compliance with the policy established under 
     subparagraph (C),'' after ``regarding''; and
       (2) by inserting after subparagraph (B) the following new 
     subparagraph:
       ``(C) The Secretary shall, in consultation with the Under 
     Secretary for Health, establish a nationwide policy on the 
     staffing of Department medical facilities in order to ensure 
     that such facilities have adequate staff for the provision to 
     veterans of appropriate, high-quality care and services. The 
     policy shall take into account the staffing levels and 
     mixture of staff skills required for the range of care and 
     services provided veterans in Department facilities.''.

     SEC. 205. ANNUAL REPORT ON USE OF AUTHORITIES TO ENHANCE 
                   RETENTION OF EXPERIENCED NURSES.

       (a) Annual Report.--(1) Subchapter II of chapter 73 is 
     amended by adding at the end the following new section:

     ``Sec. 7324. Annual report on use of authorities to enhance 
       retention of experienced nurses

       ``(a) Annual Report.--Not later than January 31 each year, 
     the Secretary, acting through the Under Secretary for Health, 
     shall submit to Congress a report on the use during the 
     preceding year of authorities for purposes of retaining 
     experienced nurses in the Veterans Health Administration, as 
     follows:
       ``(1) The authorities under chapter 76 of this title.
       ``(2) The authority under VA Directive 5102.1, relating to 
     the Department of Veterans Affairs nurse qualification 
     standard, dated November 10, 1999, or any successor 
     directive.
       ``(3) Any other authorities available to the Secretary for 
     those purposes.
       ``(b) Report Elements.--Each report under subsection (a) 
     shall specify for the period covered by such report, for each 
     Department medical facility and for each Veterans Integrated 
     Service Network, the following:
       ``(1) The number of waivers requested under the authority 
     referred to in subsection (a)(2), and the number of waivers 
     granted under that authority, to promote to the Nurse II 
     grade or Nurse III grade under the Nurse Schedule under 
     section 7404(b)(1) of this title any nurse who has not 
     completed a bachelors of science in nursing in a recognized 
     school of nursing, set forth by age, race, and years of 
     experience of the individuals subject to such waiver requests 
     and waivers, as the case may be.
       ``(2) The programs carried out to facilitate the use of 
     nursing education programs by experienced nurses, including 
     programs for flexible scheduling, scholarships, salary 
     replacement pay, and on-site classes.''.
       (2) The table of sections at the beginning of chapter 73 is 
     amended by inserting after the item relating to section 7323 
     the following new item:

``7324. Annual report on use of authorities to enhance retention of 
              experienced nurses.''.

       (b) Initial Report.--The initial report required under 
     section 7324 of title 38, United States Code, as added by 
     subsection (a), shall be submitted in 2002.

     SEC. 206. REPORT ON MANDATORY OVERTIME FOR NURSES AND NURSE 
                   ASSISTANTS IN DEPARTMENT OF VETERANS AFFAIRS 
                   FACILITIES.

       (a) Report.--Not later than 180 days after the date of the 
     enactment of this Act, the Secretary of Veterans Affairs 
     shall submit to the Committees on Veterans' Affairs of the 
     Senate and the House of Representatives a report on the 
     mandatory overtime required of licensed nurses and nurse 
     assistants providing direct patient care at Department of 
     Veterans Affairs medical facilities during 2001.
       (b) Mandatory Overtime.--For purposes of the report under 
     subsection (a), mandatory overtime shall consist of any 
     period in which a nurse or nurse assistant is mandated or 
     otherwise required, whether directly or indirectly, to work 
     or be in on-duty status in excess of--
       (1) a scheduled workshift or duty period;
       (2) 12 hours in any 24-hour period; or
       (3) 80 hours in any period of 14 consecutive days.
       (c) Elements.--The report under subsection (a) shall 
     include the following:
       (1) A description of the amount of mandatory overtime 
     described in that subsection at each Department medical 
     facility during the period covered by the report.
       (2) A description of the mechanisms employed by the 
     Secretary to monitor overtime of the nurses and nurse 
     assistants referred to in that subsection.
       (3) An assessment of the effects of the mandatory overtime 
     of such nurses and nurse assistants on patient care, 
     including its contribution to medical errors.
       (4) Recommendations regarding mechanisms for preventing 
     requirements for amounts of mandatory overtime in other than 
     emergency situations by such nurses and nurse assistants.
       (5) Any other matters that the Secretary considers 
     appropriate.

                        TITLE III--OTHER MATTERS

     SEC. 301. ORGANIZATIONAL RESPONSIBILITY OF THE DIRECTOR OF 
                   THE NURSING SERVICE.

       Section 7306(a)(5) is amended by inserting ``, and report 
     directly to,'' after ``responsible to''.

     SEC. 302. COMPUTATION OF ANNUITY FOR PART-TIME SERVICE 
                   PERFORMED BY CERTAIN HEALTH-CARE PROFESSIONALS 
                   BEFORE APRIL 7, 1986.

       Section 7426 is amended--
       (1) by redesignating subsection (c) as subsection (d); and
       (2) by inserting after subsection (b) the following new 
     subsection (c):
       ``(c) The provisions of subsection (b) shall not apply to 
     the part-time service before April 7, 1986, of a registered 
     nurse, physician assistant, or expanded-function dental 
     auxiliary. In computing the annuity under the applicable 
     provision of law specified in that subsection of an 
     individual covered by the preceding sentence, the service 
     described in that sentence shall be credited as full-time 
     service.''.

     SEC. 303. MODIFICATION OF NURSE LOCALITY PAY AUTHORITIES.

       Section 7451 is amended--
       (1) in subsection (d)(3)--
       (A) in subparagraph (A), by striking ``beginning rates of'' 
     each time it appears;
       (B) in subparagraph (B), by striking ``beginning rates 
     of''; and
       (C) in subparagraph (C)(i), by striking ``beginning rates 
     of'' each time it appears;
       (2) in subsection (d)(4)--
       (A) by striking ``or at any other time that an adjustment 
     in rates of pay is scheduled to take place under this 
     subsection'' in the first sentence; and
       (B) by striking the second sentence; and
       (3) in subsection (e)(4)--
       (A) in subparagraph (A), by striking ``grade in a'';
       (B) in subparagraph (B)--
       (i) by striking ``grade of a''; and
       (ii) by striking ``that grade'' and inserting ``that 
     position''; and
       (C) in subparagraph (D), by striking ``grade of a''.

     SEC. 304. TECHNICAL AMENDMENTS.

       Section 7631(b) is amended by striking ``this subsection'' 
     each place it appears and inserting ``this section''.

[[Page S7823]]

                                 ______
                                 
      By Mr. HOLLINGS (for himself, Mr. Inouye, and Mr. Dorgan):
  S. 1189. A bill to require the Federal Communications Commission to 
amend its daily newspaper cross-ownership rules, and for other 
purposes; to the Committee on Commerce, Science, and Transportation.
  Mr. HOLLINGS. Mr. President, I rise to introduce legislation, the 
Media Ownership Act of 2001, designed to rectify the increasing trend 
toward consolidation and away from a vibrant exchange of news and 
information in today's media marketplace. I am joined in this effort by 
my colleagues, Senators Inouye and Dorgan, who for years have 
demonstrated their tireless pursuit of the public interest in the 
sensible regulation of media ownership.
  This legislation is necessary to stem the tide toward concentration 
in the broadcast and newspaper industries and force a thorough and 
reasoned examination of the claims that further consolidation will 
serve the public interest. While the phrase ``public interest'' may 
have a vague ring to it, its meaning should be quite clear to the five 
members of the Federal Communications Commission, which itself observed 
just a few months ago that it has both ``the duty and authority under 
the Communications Act to promote diversity and competition among media 
voices.''
  Notwithstanding that duty, it has come to my attention that the FCC 
is planning a Notice of Proposed Rulemaking to relax or eliminate the 
newspaper-broadcast cross ownership rule. In addition, I understand 
that the FCC may consider revising, among other media ownership 
restrictions, the 35 percent national broadcast ownership cap later 
this year. I do not believe that those rules should be changed at this 
time. Others disagree. This legislation will enhance our debate on 
these issues.
  Locally relevant, independent programmers and distributors of media 
content are critically important energizers of civic discourse in this 
country. Indeed, that independence, localism and diversity are what 
separate our nation from countries where information is not allowed to 
flow freely. Accordingly, any proceeding to revisit existing ownership 
rules involving broadcast, print, or cable television must examine the 
potential impact that undue influence over local and national media 
outlets may have on our democracy.
  Because Congress understood the difficulty the Commission faces in 
quantifying democratic values such as localism and diversity, it gave 
the Commission the explicit and implicit statutory authority and 
responsibility to establish and maintain ownership caps in the media 
industry. Pursuant to that authority, the FCC has imposed limits on the 
ownership of broadcast and cable television properties, and on the 
cross-ownership within a market between broadcast and cable television 
stations, broadcast television and radio stations, and broadcast 
television and radio stations and newspapers.
  These ownership restrictions are based on factors outside the bounds 
of a traditional competitive analysis, and carry with them the 
authority to prevent consolidation before it rises to the level 
necessary to trigger antitrust intervention. for example, in light of 
the importance of promoting localism and diversity, a higher importance 
must be ascribed to preserving the balance of power between the 
networks and local stations than would otherwise be expected under 
traditional competition analysis.
  The reasons for this are simple, diversity in ownership promotes 
competition. Diversity in ownership creates opportunities for smaller 
companies, and local businessmen and women. Diversity in ownership 
allows creative programming and controversial points of views to find 
an outlet. Diversity in ownership promotes choices for advertisers. And 
diversity in ownership and the related restriction on national 
ownership groups preserves localism. And what in turn does this mean? 
Millions of Americans regularly receive their local news by watching 
their local broadcast stations or reading their daily newspaper. For 
these citizens, localism still matters.

  The proponents of increased consolidation, however, claim that the 
transformed media landscape demands a deregulatory response. In my 
view, the burden should rest on those who wish to change the rules of 
the game to justify those changes. If localism and diversity can be 
preserved in a consolidated marketplace, prove it. Arguments alone are 
not persuasive.
  Prior to the 1996 Telecommunications Act, the top radio station group 
owned 39 stations and generated annual revenues of $495 million. Today, 
the top group owns over 1100 stations and generates revenues of almost 
$3.2 billion annually. This consolidation directly undercut diversity 
and localism in the radio marketplace. A year before Congress passed 
the Telecommunications Act, the FCC lifted the rules that prohibited 
broadcast networks from owning and creating their own television 
programming. This sanctioned consolidation freed the networks to seek 
economic stakes in, and ownership of, television programs. As the 
Washington Post reported last fall in an article entitled, ``Even Hits 
can Miss in TV's New Economy'', ``Just as supermarket might reserve its 
best shelf space for its house brands, the networks have begun to favor 
their in house programs over shows created by others, which are often 
less profitable in the long term.'' So we see what deregulation has 
brought us with radio and the market for television programming. 
Similar consolidation among other major media outlets should only be 
allowed after a thorough analysis that justifies permitting such 
concentration.
  The legislation that we introduce today addresses the FCC's lack of 
enforcement of the newspaper-broadcast cross ownership rule. The FCC's 
jurisdiction over newspaper broadcast ownership combinations arises 
from its authority to oversee broadcast communications licenses. In 
practice, the FCC has applied the rule only when there is a transfer or 
renewal of a broadcast license. So, if a broadcast station owner 
acquires a newspaper in the same market, there is no FCC review of the 
cross ownership until the station's license is up for renewal. If a 
newspaper owner acquires a broadcast station, however, the rule is 
immediately triggered because the FCC has to approve the transfer of 
the station's broadcast license for the transaction to go forward. When 
the rule was adopted, television broadcast licenses were renewed every 
three years. Accordingly, even when the FCC did not immediately enforce 
the rule, the combined entity was aware it would have to come into 
compliance, either by requesting a waiver, or divesting either the 
station or newspaper, within a short period of time.
  Today, however, broadcast station licenses are only renewed every 
eight years, thereby creating a significant loophole in the cross 
ownership rule, if it is only enforced by the Commission at the time of 
license renewals. Our bill would require the FCC to review immediately 
existing cross ownership combinations. The legislation requires a 
broadcast licensee to inform the FCC when it acquires a newspaper that 
would place the license in violation of the newspaper-broadcast cross 
ownership rule. Upon receipt of this information, the FCC could take a 
range of action under the legislation, including forcing divestiture, 
or granting a waiver to allow the combination to go forward.
  In addition, our legislation steps up a process whereby we in 
Congress can scrutinize any alternative that the Commission devises to 
replace the current media ownership rules, and compare the efficacy of 
a new cap or ownership measurement system against the current rules, to 
determine whether a new measurement provides a better mechanism to 
promote diversity and localism. Accordingly, our bill requires the FCC 
to provide to the House and Senate Commerce Committees, any proposed 
media ownership rule changes eighteen months before they become 
effective. These proposals must be transmitted to the Commerce 
committees along with clear and ample explanation of how the new 
formulations will better meet the Commission's public interest 
obligation to promote competition, diversity, and localism.
  The legislation we are introducing takes two important steps. First, 
it forces the FCC to enforce the current version of the FCC's 
newspaper-broadcast cross ownership rule. Second, it provides a check 
on those who might otherwise move quickly to repeal other media 
ownership limits without regard

[[Page S7824]]

to the impact of the consequent consolidation on diversity, localism, 
and competition in the media marketplace.
  I ask unanimous consent that 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. 1189

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. FCC DAILY NEWSPAPER CROSS-OWNERSHIP RULE.

       (a) Immediate Review.--
       (1) In general.--The Federal Communications Commission 
     shall modify section 73.3555(d) of its regulations (47 C.F.R. 
     73.3555(d)) to provide for the immediate review of a license 
     for any AM, FM, or TV broadcast station held by any party 
     (including all parties under common control) that acquires 
     direct or indirect ownership, operation, or control of a 
     daily newspaper.
       (2) Notice to commission.--The modification under paragraph 
     (1) shall require that any licensee covered by that paragraph 
     notify the Committee of the acquisition of the ownership, 
     operation, or control of a daily newspaper upon the 
     acquisition of such ownership, operation, or control.
       (b) Remedial Action.--The Commission shall further modify 
     section 73.3555(d) of its regulations (47 C.F.R. 73.3555(d)) 
     to require modification or revocation of the license, or 
     divestiture of such ownership, operation, or control of the 
     daily newspaper, unless the Commission determines that direct 
     or indirect ownership, operation, or control of the daily 
     newspaper by that party will not cause a result described in 
     paragraph (1), (2), or (3) of that section.
       (c) 6-Month Deadline for Compliance.--Under the regulations 
     as modified under subsection (b), if the Commission does not 
     make a determination described in subsection (b), the 
     Commission shall require the modification, revocation, or 
     divestiture to be completed not later than the earlier of--
       (1) the date that is 180 days after the date on which the 
     Commission issues the order requiring the modification, 
     revocation, or divestiture; or
       (2) the date by which the Commission's regulations require 
     the license to be renewed.
       (d) Application to Existing Arrangements.--
       (1) In general.--In applying its regulations, as modified 
     pursuant to this section, to any license for an AM, FM, or TV 
     broadcast station that is held on the date of the enactment 
     of this Act by a party that also, as of that date, has direct 
     or indirect ownership, operation, or control of a daily 
     newspaper, the Commission--
       (A) may grant a permanent or temporary waiver from the 
     modification, revocation, or divestiture requirements of the 
     modified regulation if the Commission determines that the 
     waiver is consistent with the principles of competition, 
     diversity, and localism in the public interest; and
       (B) shall not apply the modified regulation so as to 
     require modification, revocation, or divestiture in 
     circumstances in which section 73.3555(d) of the Commission's 
     regulations (47 C.F.R. 73.3555(d)) does not apply because of 
     Note 4 to that section.
       (2) Notice to commission.--A licensee of a license 
     described by paragraph (1) shall notify the Commission not 
     later than 30 days after the date of the enactment of this 
     Act that the license is covered by paragraph (1).

     SEC. 2. REVIEW BASED ON TRANSACTIONS.

       The Federal Communications Commission shall further modify 
     section 73.3555 of its regulations (47 C.F.R. 73.3555) so 
     that the Commission will determine compliance with section 
     73.3555(d) of its regulations, as modified by the Commission 
     pursuant to section 1 of this Act, whenever a party 
     (including all parties under common control)--
       (1) that holds a license for an AM, FM, or TV broadcast 
     station acquires direct or indirect ownership, operation, or 
     control of a daily newspaper; or
       (2) that directly or indirectly owns, operates, or controls 
     a daily newspaper acquires a license for an AM, FM, or TV 
     broadcast station.

     SEC. 3. FCC TO JUSTIFY REPEAL OR MODIFICATION OF REGULATIONS 
                   UNDER REGULATORY REFORM.

       Section 11 of the Communications Act of 1934 (47 U.S.C. 
     161) is amended--
       (1) by redesignating subsection (b) as subsection (c); and
       (2) by inserting after subsection (a) the following new 
     subsection (b):
       ``(b) Relaxation or Elimination of Media Ownership Rules.--
     If, as a result of a review under subsection (a)(1), the 
     Commission makes a determination under subsection (a)(2) with 
     respect to its regulations governing multiple ownership (47 
     C.F.R. 73.3555), then not less than 18 months before the 
     proposed repeal or modification under subsection (c) is to 
     take effect, the Commission shall transmit to the Committee 
     on Commerce, Science, and Transportation of the Senate and 
     the Committee on Commerce of the House of Representatives--
       ``(1) a statement of the proposed repeal or modification; 
     and
       ``(2) an explanation of the basis for its determination, 
     including an explanation of how the proposed repeal or 
     modification is expected to promote competition, diversity, 
     and localism in the public interest.''.

     SEC. 4. DEADLINE FOR MODIFICATION OF REGULATIONS.

       The Federal Communications Commission shall complete the 
     modifications of its regulations required by sections 1 and 2 
     of this Act not later than 1 year after the date of the 
     enactment of this Act.

                          ____________________