[Congressional Record Volume 149, Number 94 (Tuesday, June 24, 2003)]
[Senate]
[Pages S8446-S8476]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                           TEXT OF AMENDMENTS

  SA 1001. Mrs. BOXER (for herself and Ms. Mikulski) proposed an 
amendment to the bill S. 1, to amend title XVIII of the Social Security 
Act to make improvements in the medicare program, to provide 
prescription drug coverage under the medicare program, and for other 
purposes; as follows:

       On page 49, strike line 3 through page 50, line 2 and 
     insert the following:
       ``(2) Limits on cost-sharing.--
       ``(A) In general.--The coverage has cost-sharing (for costs 
     above the annual deductible specified in paragraph (1) and up 
     to the annual out-of-pocket limit under paragraph (4)) that 
     is equal to 50 percent or that is actuarially consistent 
     (using processes established under subsection (f)) with an 
     average expected payment of 50 percent of such costs.
       ``(B) Application.--Notwithstanding the succeeding 
     provisions of this part, the Administrator shall not apply 
     subsection (d)(1)(C) and paragraphs (1)(D), (2)(D), and 
     (3)(A)(iv) of section 1860D-19(a).
                                 ______
                                 
  SA 1002. Mrs. LINCOLN (for herself, Mr. Conrad, Mr. Miller, Mr. 
Carper, Mr. Johnson, Ms. Mikulski, Mrs. Clinton, and Mr. Dorgan) 
proposed an amendment to the bill S. 1, to amend title XVIII of the 
Social Security Act to make improvements in the medicare program, to 
provide prescription drug coverage under the medicare program, and for 
other purposes; as follows:

       On page 83, strike lines 1 through 7, and insert the 
     following:
       ``(5) Contract to be available in designated area for 2 
     years.--Notwithstanding paragraph (1), if the Administrator 
     enters into a contract with an entity with respect to an area 
     designated under subparagraph (B) of such paragraph for a 
     year, the following rules shall apply:
       ``(A) The contract shall be for a 2-year period.
       ``(B) The Secretary is not required to make the 
     determination under paragraph (1)(A) with respect to the 
     second year of the contract for the area.
       ``(C) During the second year of the contract, an eligible 
     beneficiary residing in the area may continue to receive 
     standard prescription drug coverage (including access to 
     negotiated prices for such beneficiaries pursuant to section 
     1860D-6(e)) under such contract or through any Medicare 
     Prescription Drug plan that is available in the area.

       At the end of title VI, add the following:

     SEC. ____. MEDICARE SECONDARY PAYOR (MSP) PROVISIONS.

       (a) Technical Amendment Concerning Secretary's Authority to 
     Make Conditional Payment When Certain Primary Plans Do Not 
     Pay Promptly.--
       (1) In general.--Section 1862(b)(2) (42 U.S.C. 1395y(b)(2)) 
     is amended--
       (A) in subparagraph (A)(ii), by striking ``promptly (as 
     determined in accordance with regulations)'';
       (B) in subparagraph (B)--
       (i) by redesignating clauses (i) through (iii) as clauses 
     (ii) through (iv), respectively; and
       (ii) by inserting before clause (ii), as so redesignated, 
     the following new clause:
       ``(i) Authority to make conditional payment.--The Secretary 
     may make payment under this title with respect to an item or 
     service if a primary plan described in subparagraph (A)(ii) 
     has not made or cannot reasonably be expected to make payment 
     with respect to such item or service promptly (as determined 
     in accordance with regulations). Any such payment by the 
     Secretary shall be conditioned on reimbursement to the 
     appropriate Trust Fund in accordance with the succeeding 
     provisions of this subsection.''.
       (2) Effective date.--The amendments made by paragraph (1) 
     shall be effective as if included in the enactment of title 
     III of the Medicare and Medicaid Budget Reconciliation 
     Amendments of 1984 (Public Law 98-369).
       (b) Clarifying Amendments to Conditional Payment 
     Provisions.--Section 1862(b)(2) (42 U.S.C. 1395y(b)(2)) is 
     further amended--
       (1) in subparagraph (A), in the matter following clause 
     (ii), by inserting the following sentence at the end: ``An 
     entity that engages in a business, trade, or profession shall 
     be deemed to have a self-insured plan if it carries its own 
     risk (whether by a failure to obtain insurance, or otherwise) 
     in whole or in part.'';
       (2) in subparagraph (B)(ii), as redesignated by subsection 
     (a)(2)(B)--
       (A) by striking the first sentence and inserting the 
     following: ``A primary plan, and an entity that receives 
     payment from a primary plan, shall reimburse the appropriate 
     Trust Fund for any payment made by the Secretary under this 
     title with respect to an item or service if it is 
     demonstrated that such primary plan has or had a 
     responsibility to make payment with respect to such item or 
     service. A primary plan's responsibility for such payment may 
     be demonstrated by a judgment, a payment conditioned upon the 
     recipient's compromise, waiver, or release (whether or not 
     there is a determination or admission of liability) of 
     payment for items or services included in a claim against the 
     primary plan or the primary plan's insured, or by other 
     means.''; and
       (B) in the final sentence, by striking ``on the date such 
     notice or other information is received'' and inserting ``on 
     the date notice of, or information related to, a primary 
     plan's responsibility for such payment or other information 
     is received''; and
       (3) in subparagraph (B)(iii), , as redesignated by 
     subsection (a)(2)(B), by striking the first sentence and 
     inserting the following: ``In order to recover payment made 
     under this title for an item or service, the United States 
     may bring an action against any or all entities that are or 
     were required or responsible (directly, as an insurer or 
     self-insurer, as a third-party administrator, as an employer 
     that sponsors or contributes to a group health plan, or large 
     group health plan, or otherwise) to make payment with respect 
     to the same item or service (or any portion thereof) under a 
     primary plan. The United States may, in accordance with 
     paragraph (3)(A) collect double damages against any such 
     entity. In addition, the United States may recover under this 
     clause from any entity that has received payment from a 
     primary plan or from the proceeds of a primary plan's payment 
     to any entity.''.
       (c) Clerical Amendments.--Section 1862(b) (42 U.S.C. 
     1395y(b)) is amended--
       (1) in paragraph (1)(A), by moving the indentation of 
     clauses (ii) through (v) 2 ems to the left; and
       (2) in paragraph (3)(A), by striking ``such'' before 
     ``paragraphs''.

[[Page S8447]]

                                 ______
                                 
  SA 1003. Mr. BROWNBACK (for himself and Mr. Nelson of Nebraska) 
submitted an amendment intended to be proposed by him to the bill S. 1, 
to amend title XVIII of the Social Security Act to make improvements in 
the medicare program, to provide prescription drug coverage under the 
medicare program, and for other purposes; which was ordered to lie on 
the table; as follows:

       At the end of title VI, insert the following:

     SEC.  .RURAL COMMUNITY HOSPITAL ASSISTANCE.

       (a) Establishment of Rural Community Hospital (RCH) 
     Program.
       (1) In general.--Section 1861 (42 U.S.C. 1395x) is amended 
     by adding at the end of the following new subsection: ``Rural 
     Community Hospital; Rural Community Hospital Services 
     ``(ww)(1) The term `rural community hospital' means a 
     hospital (as defined in subsection (e)) that--
       ``(A) is located in a rural area (as defined in section 
     1886(d)(2)(D)) or treated as being so located pursuant to 
     section 1886(d)(8)(E);
       ``(B) subject to paragraph (2), has less than 51 acute care 
     inpatient beds, as reported in its most recent cost report; 
     10
       ``(C) makes available 24-hour emergency care services;
       ``(D) subject to paragraph (3), has a provider agreement in 
     effect with the Secretary and is open to the public as of 
     January 1, 2003; and
       ``(E) applies to the Secretary for such designation.
       ``(2) For purposes of paragraph (1)(B), beds in a 
     psychiatric or rehabilitation unit of the hospital which is a 
     distinct part of the hospital shall not be counted.
       ``(3) Subparagraph (1)(D) shall not be construed to 
     prohibit any of the following from qualifying as a rural 
     community hospital:
       ``(A) A replacement facility (as defined by the Secretary 
     in regulations in effect on January 1, 2003) with the same 
     service area (as defined by the Secretary in regulations in 
     effect on such date).
       ``(B) A facility obtaining a new provider number pursuant 
     to a change of ownership.
       ``(C) A facility which has a binding written agreement with 
     an outside, unrelated party for the construction, 
     reconstruction, lease, rental, or financing of a building as 
     of January 1, 2003.
       ``(4) Nothing in this subsection shall be construed as 
     prohibiting a critical access hospital from qualifying as a 
     rural community hospital if the critical access hospital 
     meets the conditions otherwise applicable to hospitals under 
     subsection (e) and section 1866.''.
       (2) Payment.--
       (A) Inpatient services.--Section 1814 (42 U.S.C. 1395f) is 
     amended by adding at the end the following new subsection: 
     ``Payment for Inpatient Services Furnished in Rural Community 
     Hospitals
       ``(m) The amount of payment under this part for inpatient 
     hospital services furnished in a rural community hospital, 
     other than such services furnished in a psychiatric or 
     rehabilitation unit of the hospital which is a distinct part, 
     is, at the election of the hospital in the application 
     referred to in section 1861(ww)(1)(E)--
       ``(1) the reasonable costs of providing such services, 
     without regard to the amount of the customary or other 
     charge, or
       ``(2) the amount of payment provided for under the 
     prospective payment system for inpatient hospital services 
     under section 1886(d).''.
       (B) Outpatient services.--Section 1834 (42 U.S.C. 1395m) is 
     amended by amended by adding at the end the following new 
     subsection:
       ``(n) Payment for Outpatient Services Furnished in Rural 
     Community Hospitals.--The amount of payment under this part 
     for outpatient services furnished in a rural community 
     hospital is, at the election of the hospital in the 
     application referred to in section 1861(ww)(1)(E)--
       ``(1) the reasonable costs of providing such services, 
     without regard to the amount of the customary or other charge 
     and any limitation under section 1861(v)(1)(U), or
       ``(2) the amount of payment provided for under the 
     prospective payment system for covered OPD services under 
     section 1833(t).''.
       (C) Home health services.--
       (i) Exclusion from home health pps.--Section 1895 (42 
     U.S.C. 1395fff) is amended by adding at the end the 
     following:
       ``(f) Exclusion.--
       ``(1) In general.--In determining payments under this title 
     for home health services furnished on or after October 1, 
     2003, by a qualified RCH-based home health agency (as defined 
     in paragraph (2))--
       ``(A) the agency may make a one-time election to waive 
     application of the prospective payment system established 
     under this section to such services furnished by the agency 
     shall not apply; and
       ``(B) in the case of such an election, payment shall be 
     made on the basis of the reasonable costs incurred in 
     furnishing such services as determined under section 1861(v), 
     but without regard to the amount of the customary or other 
     charges with respect to such services or the limitations 
     established under paragraph (1)(L) of such section.
       ``(2) Qualified rch-based home health agency defined.--For 
     purposes of paragraph (1), a `qualified RCH-based home health 
     agency' is a home health agency that is a provider-based 
     entity (as defined in section 404 of the Medicare, Medicaid, 
     and SCHIP Benefits Improvement and Protection Act of 2000 
     (Public Law 106-554; Appendix F, 114 Stat. 2763A-506)) of a 
     rural community hospital that is located--
       ``(A) in a county in which no main or branch office of 
     another home health agency is located; or
       ``(B) at least 35 miles from any main or branch office of 
     another home health agency.''.
       (ii) Conforming changes.--
       (I) Payments under part a.--Section 1814(b) (42 U.S.C. 
     1395f(b)) is amended by inserting ``or with respect to 
     services to which section 1895(f) applies'' after 
     ``equipment'' in the matter preceding paragraph (1).
       (II) Payments under part b.--Section 1833(a)(2)(A) (42 
     U.S.C. 13951(a)(2)(A)) is amended by striking ``the 
     prospective payment system under''.
       (III) Per visit limits.--Section 1861(v)(1)(L)(i) (42 
     U.S.C. 1395x(v)(1)(L)(i)) is amended by inserting ``(other 
     than by a qualified RCH-based home health agency (as defined 
     in section 1895(f)(2))'' after ``with respect to services 
     furnished by home health agencies''.
       (iii) Consolidated billing.--
       (I) Recipient of payment.--Section 1842(b)(6)(F) (42 U.S.C. 
     1395u(b)(6)(F)) is amended by inserting ``and excluding home 
     health services to which section 1895(f) applies'' after 
     ``provided for in such section''.
       (II) Exception to exclusion from coverage.--Section 1862(a) 
     (42 U.S.C. 1395y(a)) is amended by inserting before the 
     period at the end of the second sentence the following: ``and 
     paragraph (21) shall not apply to home health services to 
     which section 1895(f) applies''.
       (D) Return on equity.--Section 1861(v)(1)(P) (42 U.S.C. 
     1395x(v)(1)(P)) is amended--
       (i) by inserting ``(i)'' after ``(P)''; and
       (ii) by adding at the end the following:
       ``(ii)(I) Notwithstanding clause (i), subparagraph (S)(i), 
     and section 1886(g)(2), such regulations shall provide, in 
     determining the reasonable costs of the services described in 
     subclause (II) furnished by a rural community hospital on or 
     after October 1, 2003, for payment of a return on equity 
     capital at a rate of return equal to 150 percent of the 
     average specified in clause (i).
       ``(11) The services referred to in subelause (I) are 
     inpatient hospital services, outpatient hospital services, 
     home health services furnished by an RCH-based home health 
     agency (as defined in section 1895(f)(2)), and ambulance 
     services.
       ``(III) Payment under this clause shall be made without 
     regard to whether a provider is a proprietary provider.''.
       (E) Exemption from 30 percent reduction in reimbursement 
     for bad debt.--Section 1861(v)(1)(T) (42 
     U.S.C.1395x(v)(1)(T)) is amended by inserting ``(other than a 
     rural community hospital)'' after ``In determining such 
     reasonable costs for hospitals''.
       (3) Beneficiary cost-sharing for outpatient services.--
     Section 1834(n) (as added by paragraph (2)(B)) is amended--
       (A) by inserting ``(1)'' after ``(n)''; and
       (B) by adding at the end the following:
       ``(2) The amounts of beneficiary cost-sharing for 
     outpatient services furnished in a rural community hospital 
     under this part shall be as follows:
       ``(A) For items and services that would have been paid 
     under section 1833(t) if provided by a hospital, the amount 
     of cost-sharing determined under paragraph (8) of such 
     section.
       ``(B) For items and services that would have been paid 
     under section 1833(h) if furnished by a provider or supplier, 
     no cost-sharing shall apply.
       ``(C) For all other items and services, the amount of cost-
     sharing that would apply to the item or service under the 
     methodology that would be used to determine payment for such 
     item or service if provided by a physician, provider, or 
     supplier, as the case may be.''.
       (4) Conforming amendments.--
       (A) Part a payment.--Section 1814(b) (42 U.S.C. 1395f(b)) 
     is amended by inserting ``other than inpatient hospital 
     services furnished by a rural community hospital,'' after 
     ``critical access hospital services,''.
       (B) Part b payment.--
       (i) In general.--Section 1833(a) (42 U.S.C. 13951(a)) is 
     amended--
       (I) in paragraph (2), in the matter before subparagraph 
     (A), by striking ``and (I)'' and inserting ``(I), and (K)'';
       (II) by striking ``and'' at the end of paragraph (8);
       (III) by striking the period at the end of paragraph (9) 
     and inserting ``; and''; and
       (IV) by adding at the end the following:
       ``(10) in the case of outpatient services furnished by a 
     rural community hospital, the amounts described in section 
     1834(n).''.
       (ii) Ambulance services.--Section 1834(l)(8) (42 U.S.C. 
     1395m(1)(8)), as added by section 205 (a) of the Medicare, 
     Medicaid, and SCHIP Benefits Improvement and Protection Act 
     of 2000 (Appendix F, 114 Stat. 2763A-463), as enacted into 
     law by section 1(a)(6) of Public Law 106-554, is amended--
       (I) in the heading, by striking ``CRITICAL ACCESS 
     HOSPITALS'' and inserting ``CERTAIN FACILITIES'';
       (II) by striking ``or'' at the end of subparagraph (A);
       (III) by redesignating subparagraph (B) as subparagraph 
     (C);
       (IV) by inserting after subparagraph (A) the following new 
     subparagraph:
       ``(B) by a rural community hospital (as defined in section 
     1861(ww)(1)), or''; and (V) in subparagraph (C), as so 
     redesignated, by inserting ``or a rural community hospital'' 
     after ``critical access hospital''.

[[Page S8448]]

       (C) Technical amendments.--
       (1) Consultation with state agencies.--Section 1863 (42 
     U.S.C. 1395z) is amended by striking ``and (dd)(2)'' and 
     inserting ``(dd)(2), (mm)(1), and (ww)(1)''.
       (ii) Provider agreements.--Section 1866(a)(2)(A) (42 U.S.C. 
     1395cc(a)(2)(A)) is amended by inserting ``section 
     1834(n)(2),'' after ``section 1833(b),''.
       (iii) BIPA amendment.--Paragraph (8) of section 1834(1) (42 
     U.S.C. 1395m(1)), as added by section 221 (a) of the 
     Medicare, Medicaid, and SCHIP Benefits Improvement and 
     Protection Act of 2000 (Appendix F, 114 Stat. 2763A-486), as 
     enacted into law by section 1(a)(6) of Public Law 106-554, is 
     redesignated as paragraph (9).
       (5) Effective date.--The amendments made by this subsection 
     shall apply to items and services furnished on or after 
     October 1, 2003.
       (b) Removing Barriers to Establishment of Distinct Part 
     Units by RCH and CAH Facilities.--
       (1) In general.--Section 1886(d)(1)(B) (42 U.S.C. 
     1395ww(d)(1)(B)) is amended by striking ``a distinct part of 
     the hospital (as defined by the Secretary)'' in the matter 
     following clause (v) and inserting ``a distinct part (as 
     defined by the Secretary) of the hospital or of a critical 
     access hospital or a rural community hospital''.
       (2) Effective date.--The amendment made by this subsection 
     shall apply to determinations with respect to distinct part 
     unit status that are made on or after October 1, 2003.
       (c) Improvements to Medicare Critical Access Hospital (CAH) 
     Program.--
       (1) Exclusion of certain beds from bed count.--Section 
     1820(c)(2) (42 U.S.C. 1395i-4(c)(2)) is amended by adding at 
     the end the following:
       ``(E) Exclusion of certain beds from bed count.--In 
     determining the number of beds of a facility for purposes of 
     applying the bed limitations referred to in subparagraph 
     (B)(iii) and subsection (f), the Secretary shall not take 
     into account any bed of a distinct part psychiatric or 
     rehabilitation unit (described in the matter following clause 
     (v) of section 1886(d)(1)(B)) of the facility, except that 
     the total number of beds that are not taken into account 
     pursuant to this subparagraph with respect to a facility 
     shall not exceed 10.''.
       (2) Payments to home health agencies owned and operated by 
     a cah.--Section 1895(f) (42 U.S.C. 1395fff(f)), as added by 
     subsection (a)(2)(C), is further amended by inserting ``or by 
     a home health agency that is owned and operated by a critical 
     access hospital (as defined in section 1861(mm)(1))'' after 
     ``as defined in paragraph (2))''.
       (3) Payments to cah-owned snfs.--
       (A) In general.--Section 1888(e)(42 U.S.C. 1395yy(e)) is 
     amended--
       (i) in paragraph (1), by striking ``and (12)'' and 
     inserting ``(12), and (13)''; and
       (ii) by adding at the end thereof the following:
       ``(13) Exemption of cah facilities from pps.--In 
     determining payments under this part for covered skilled 
     nursing facility services furnished on or after October 1, 
     2003, by a skilled nursing facility that is a distinct part 
     unit of a critical access hospital (as defined in section 
     1861(mm)(1)) or is owned and operated by a critical access 
     hospital--
       ``(A) the prospective payment system established under this 
     subsection shall not apply; and
       ``(B) payment shall be made on the basis of the reasonable 
     costs incurred in furnishing such services as determined 
     under section 1861(v), but without regard to the amount of 
     the customary or other charges with respect to such services 
     or the limitations established under subsection (a).''.
       (B) Conforming changes.--
       (i) In general.--Section 1814(b) (42 U.S.C. 1395f(b)), as 
     amended by subsection (a), is further amended in the matter 
     preceding paragraph (1)--
       (I) by inserting ``other than a skilled nursing facility 
     providing covered skilled nursing facility services (as 
     defined in section 1888(e)(2)) or post hospital extended care 
     services to which section 1888(e)(13) applies,'' after 
     ``inpatient critical access hospital services''; and
       (II) by striking ``1813 1886,'' and inserting ``1813, 1886, 
     1888,''.
       (i) Consolidated billing.--
       (I) Recipient of payment.--Section 1842(b)(6)(E) (42 U.S.C. 
     1395u(b)(6)(E)) is amended by inserting ``services to which 
     paragraph (7)(C) or (13) of section 1888(e) applies and'' 
     after ``other than''.
       (II) Exception to exclusion from coverage.--Section 
     1862(a)(18) (42 U.S.C. 1395y(a)(18)) is amended by inserting 
     ``(other than services to which paragraph (7)(C) or (13) of 
     section 1888(e) applies)'' after ``section 
     1888(e)(2)(A)(i)''.
       (4) Payments to distinct part psychiatric or rehabilitation 
     units of cahs.--Section 1886(b) (42 U.S.C. 1395ww(b)) is 
     amended--
       (A) in paragraph (1), by inserting ``, other than a 
     distinct part psychiatric or rehabilitation unit to which 
     paragraph (8) applies,'' after ``subsection (d)(1)(B)''; and
       (B) by adding at the end the following:
       ``(8) Exemption of certain distinct part psychiatric or 
     rehabilitation units from cost limits.--In determining 
     payments under this part for inpatient hospital services 
     furnished on or after October 1, 2003, by a distinct part 
     psychiatric or rehabilitation unit (described in the matter 
     following clause (v) of subsection (d)(1)(B)) of a critical 
     access hospital (as defined in section 1861(mm)(1))--
       ``(A) the limits imposed under the preceding paragraphs of 
     this subsection shall not apply; and
       ``(B) payment shall be made on the basis of the reasonable 
     costs incurred in furnishing such services as determined 
     under section 1861(v), but without regard to the amount of 
     the customary or other charges with respect to such 
     services.''.
       (5) Return on equity.--Section 1861(v)(1)(P) (42 U.S.C. 
     1395x(v)(1)(P)), as amended by subsection (a)(2)(D), is 
     further amended by adding at the end the following:
       ``(111)(I) Notwithstanding clause (i), subparagraph (S)(i), 
     and section 1886(8)(2), such regulations shall provide, in 
     determining the reasonable costs of the services described in 
     subclause (II) furnished by a critical access hospital on or 
     after October 1, 2003, for payment of a return on equity 
     capital at a rate of return equal to 150 percent of the 
     average specified in clause (i).
       ``(II) The services referred to in subclause (I) are 
     inpatient critical access hospital services (as defined in 
     section 1861(mm)(2)), outpatient critical access hospital 
     services (as defined in section 1861(mm)(3)), extended care 
     services provided pursuant to an agreement under section 
     1883, posthospital extended care services to which section 
     1888(e)(13) applies, home health services to which section 
     1895(f) applies, ambulance services to which section 1834(l) 
     applies, and inpatient hospital services to which section 
     1886(b)(8) applies.
       ``(III) Payment under this clause shall be made without 
     regard to whether a provider is a proprietary provider.''.
       (6) Technical corrections.--
       (A) Section 403(b) of bbra 1999.--Section 1820(b)(2) (42 
     U.S.C. 1395i-4(b)(2)) is amended by striking ``nonprofit or 
     public hospitals'' and inserting ``hospitals''.
       (B) Section 203(b) of bipa 2000.--Section 1883(a)(3) (42 
     U.S.C. 1395tt(a)(3)) is amended--
       (i) by inserting ``section 1861(v)(1)(G) or'' after 
     ``Notwithstanding''; and
       (ii) by striking ``covered skilled nursing facility''.
       (9) Effective dates.--
       (A) Elimination of requirements.--
       The amendments made by paragraphs (1) and (2) shall apply 
     to services furnished on or after October 1, 2003.
       (B) Technical corrections.--
       (i) Bbra.--The amendment made by paragraph (6)(A) shall be 
     effective as if included in the enactment of section 403(b) 
     of the Medicare, Medicaid, and SCHIP Balanced Budget 
     Refinement Act of 1999 (Appendix F, 113 Stat. 1501A-321), as 
     enacted into law by section 1000(a)(6) of Public Law 106-113.
       (ii) Bipa.--The amendments made by paragraph (6)(B) shall 
     be effective as if included in the enactment of section 
     203(b) of the Medicare, Medicaid, and SCHIP Benefits 
     Improvement and Protection Act of 2000 (Appendix F, 114 Stat. 
     2763A-463), as enacted into law by section 1(a)(6) of Public 
     Law 106-554.
                                 ______
                                 
  SA 1004. Mrs. HUTCHISON proposed an amendment to the bill S. 1, to 
amend title XVIII of the Social Security Act to make improvements in 
the medicare program, to provide prescription drug coverage under the 
medicare program, and for other purposes; as follows:

       At the end of subtitle A of title IV, add the following:

     SEC. ____. FREEZING INDIRECT MEDICAL EDUCATION (IME) 
                   ADJUSTMENT PERCENTAGE AT 6.5 PERCENT.

       (a) In General.--Section 1886(d)(5)(B)(ii) (42 U.S.C. 
     1395ww(d)(5)(B)(ii)) is amended--
       (1) in subclause (VI), by striking ``and'' at the end; and
       (2) by striking subclause (VII) and inserting the following 
     new subclauses:
       ``(VII) during fiscal years 2003, 2004, 2005, 2006, 2007 
     and 2008, `c' is equal to 1.35; and
       ``(VIII) on or after October 1, 2008, `c' is equal to 
     1.6.''.
       (b) Conforming Amendment Relating to Determination of 
     Standardized Amount.--Section 1886(d)(2)(C)(i) (42 U.S.C. 
     1395ww(d)(2)(C)(i)) is amended--
       (1) by striking ``1999 or'' and inserting ``1999,''; and
       (2) by inserting ``, or the Prescription Drug and Medicare 
     Improvement Act of 2003'' after ``2000''.
                                 ______
                                 
  SA 1005. Mr. SANTORUM submitted an amendment intended to be proposed 
by him to the bill S. 1, to amend title XVIII of the Social Security 
Act to make improvements in the medicare program, to provide 
prescription drug coverage under the medicare program, and for other 
purposes; which was ordered to lie on the table; as follows:

       At the end of subtitle C of title II, add the following:

     SEC. ____. EXTENSION OF PHASE-IN OF NEW RISK ADJUSTER.

       (a) Under Medicare+Choice.--Section 1853(a)(3)(C)(ii) is 
     amended--
       (1) in subclause (I), by striking ``2003'' and inserting 
     ``2005'';
       (2) in subclause (II), by striking ``2004'' and inserting 
     ``2006'';
       (3) in subclause (III), by striking ``2005'' and inserting 
     ``2007'';
       (4) in subclause (IV), by striking ``2006'' and inserting 
     ``2008''; and
       (5) in subclause (V), by striking ``2007'' and inserting 
     ``2009''.

[[Page S8449]]

       (b) Under MedicareAdvantage.--Section 1853(a)(3)(A) (42 
     U.S.C. 1395w-23(a)(3)(A)), as amended by section 203, is 
     amended to read as follows:
       ``(A) Application of methodology.--
       ``(i) In general.--The Secretary shall apply the 
     comprehensive risk adjustment methodology described in 
     subparagraph (B) to the applicable percentage of the amount 
     of payments to plans under subsection (d)(4)(B).
       ``(ii) Applicable percentage defined.--For purposes of 
     clause (i), the term `applicable percentage' means--

       ``(II) for 2006, 30 percent;
       ``(III) for 2007, 50 percent;
       ``(IV) for 2008, 75; and
       ``(V) for 2009 and each subsequent year, 100 percent.''.

       (c) Effective Dates.--The amendments made--
       (1) by subsection (a) shall take effect on the date of 
     enactment of this Act; and
       (2) by subsection (b) shall apply to plan years beginning 
     on or after January 1, 2006.
                                 ______
                                 
  SA 1006. Mr. SANTORUM submitted an amendment intended to be proposed 
by him to the bill S. 1, to amend title XVIII of the Social Security 
Act to make improvements in the medicare program, to provide 
prescription drug coverage under the medicare program, and for other 
purposes; which was ordered to lie on the table; as follows:

       At the end of subtitle C of title II, add the following:

     SEC. ____. REVISION OF REQUIREMENTS FOR REVIEW OF MARKETING 
                   MATERIALS.

       (a) Under Medicare+Choice and MedicareAdvantage.--Section 
     1851(h) (42 U.S.C. 1395w-21(h)) is amended--
       (1) in paragraph (1)(A), by striking ``45 days (or 10 days 
     in the case described in paragraph (5))'' and inserting ``30 
     days (or 10 days in the case described in paragraph (5) or if 
     the Medicare+Choice organization has submitted to the 
     Secretary requested corrections following review of the 
     submitted material)''; and
       (2) by striking paragraph (2) and inserting the following 
     new paragraph:
       ``(2) Review.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     the standards established under section 1856 shall include 
     guidelines for the review of any material or form submitted 
     and under such guidelines the Secretary shall disapprove (or 
     later require the correction of) such material or form if the 
     material or form is materially inaccurate or misleading or 
     otherwise makes a material misrepresentation.
       ``(B) Exception.--Notwithstanding any other requirements of 
     section 1856(h), the Secretary shall establish policies that 
     permit, under appropriate circumstances, the distribution of 
     marketing materials by a Medicare+Choice organization prior 
     to review.''.
       (b) Effective Date.--The amendments made by this section 
     shall take effect on the date of enactment of this Act and 
     shall apply to section 1851(h) of the Social Security Act (42 
     U.S.C. 1395w-21(h)) as in effect on such date and as amended 
     by section 201.
                                 ______
                                 
  SA 1007. Mr. SANTORUM submitted an amendment intended to be proposed 
by him to the bill S. 1, to amend title XVIII of the Social Security 
Act to make improvements in the medicare program, to provide 
prescription drug coverage under the medicare program, and for other 
purposes; which was ordered to lie on the table; as follows:

       At the end of subtitle C of title II, add the following:

     SEC. ____. AUTHORIZATION OF DIRECT PAYMENTS TO PROVIDERS FOR 
                   SERVICES PROVIDED TO MEDICARE ADVANTAGE 
                   ENROLLEES PARTICIPATING IN MEDICARE COVERED 
                   CLINICAL TRIALS.

       (a) Under Medicare+Choice and MedicareAdvantage.--
       (1) In general.--Section 1852(a)(1)(A) (42 U.S.C. 1395w-
     22(a)(1)(A)) is amended by inserting ``and items and services 
     that are covered under part A or B as a result of a national 
     coverage determination for qualifying clinical trials'' after 
     ``hospice care''.
       (2) Payment.--Section 1853 (42 U.S.C. 1395w-23) is amended 
     by adding at the end the following new subsection:
       ``(j) Special Rule for Covered Costs Associated With 
     Qualifying Clinical Trials.--
       ``(1) Information.--The Medicare+Choice organization shall 
     inform each individual enrolled under this part with a 
     Medicare+Choice plan offered by the organization that the 
     medicare program covers certain costs associated with the 
     participation by a medicare beneficiary in a qualifying 
     clinical trial.
       ``(2) Payment.--If an individual who is enrolled with a 
     Medicare+Choice organization under this part participates in 
     a qualifying clinical trial, payment for the medicare covered 
     costs associated with that clinical trial shall be made by 
     the Secretary directly to the provider or supplier furnishing 
     such services.''.
       (b) Effective Date.--The amendments made by this section 
     shall take effect on the date of enactment of this Act and 
     shall apply to sections 1852 and 1853 of the Social Security 
     Act (42 U.S.C. 1395w-22 and 1395w-23) as in effect on such 
     date and as amended by sections 202 and 203.
                                 ______
                                 
  SA 1008. Mr. SANTORUM submitted an amendment intended to be proposed 
by him to the bill S. 1, to amend title XVIII of the Social Security 
Act to make improvements in the medicare program, to provide 
prescription drug coverage under the medicare program, and for other 
purposes; which was ordered to lie on the table; as follows:

       On page 134, between lines 9 and 10, insert the following:
       ``(d) Zero Premium Stop-Loss Protection and Access to 
     Negotiated Prices For Certain Eligible Beneficiaries Enrolled 
     in the Original Medicare Fee-For-Service Program After 
     2013.--
       ``(1) In general.--Notwithstanding the preceding provisions 
     of this part, the following rules shall apply with respect to 
     an applicable eligible beneficiary enrolled in a Medicare 
     Prescription Drug plan or under a contract under section 
     1860D-13(e):
       ``(A) No premium.--Notwithstanding sections 1860D-13(e)(2) 
     and 1860D-17, the monthly beneficiary obligation for 
     enrollment in the Medicare Prescription Drug plan or under a 
     contract under section 1860D-13(e) shall be zero.
       ``(B) Beneficiary receives access to negotiated prices and 
     stop-loss protection for no additional premium.--
     Notwithstanding section 1860D-6, qualified prescription drug 
     coverage shall include coverage of covered drugs that meets 
     the following requirements:
       ``(i) The coverage has cost-sharing (for costs up to the 
     annual out-of-pocket limit under subsection (c)(4) of such 
     section) that is equal to 100 percent.
       ``(ii) The coverage provides the limitation on out-of-
     pocket expenditures under such subsection (c)(4).
       ``(ii) The coverage provides access to negotiated prices 
     under subsection (e) of such section during the entire year.
       ``(C) Application of low-income subsidies.--Notwithstanding 
     section 1860D-19, the Administrator shall not apply the 
     following provisions of subsection (a) of such section:
       ``(i) Subparagraphs (A), (B), (C), and (D) of paragraph 
     (1).
       ``(ii) Subparagraphs (A), (B), (C), and (D) of paragraph 
     (2).
       ``(iii) Clauses (i), (ii), (iii), and (iv) of paragraph 
     (3)(A).
       ``(2) Applicable eligible beneficiary.--For purposes of 
     this subsection, the term `applicable eligible beneficiary' 
     means an eligible beneficiary who--
       ``(A) is enrolled under this part; and
       ``(B) became an eligible beneficiary for the first time on 
     or after January 1, 2014.
       ``(3) Procedures.--The Administrator shall establish 
     procedures to carry out this subsection. Under such 
     procedures, the Administrator may waive or modify any of the 
     preceding provisions of this part to the extent necessary to 
     carry out this subsection.
       ``(4) No effect on beneficiaries enrolled in a 
     medicareadvantage plan that provides qualified prescription 
     drug coverage.--This subsection shall have no effect on 
     eligible beneficiaries enrolled in this part and under a 
     MedicareAdvantage plan that provides qualified prescription 
     drug coverage.''.
                                 ______
                                 
  SA 1009. Mr. INOUYE (for himself and Mr. Akaka) submitted an 
amendment intended to be proposed by him to the bill S. 1, to amend 
title XVIII of the Social Security Act to make improvements in the 
medicare program, to provide prescription drug coverage under the 
medicare program, and for other purposes; which was ordered to lie on 
the table; as follows:

       At the end of title VI, add the following:

     SEC. ____. 100 PERCENT FMAP FOR MEDICAL ASSISTANCE PROVIDED 
                   TO A NATIVE HAWAIIAN THROUGH A FEDERALLY-
                   QUALIFIED HEALTH CENTER OR A NATIVE HAWAIIAN 
                   HEALTH CARE SYSTEM UNDER THE MEDICAID PROGRAM.

       (a) Medicaid.--Section 1905(b) of the Social Security Act 
     (42 U.S.C. 1396d(b)) is amended, in the third sentence, by 
     inserting ``, and with respect to medical assistance provided 
     to a Native Hawaiian (as defined in section 12 of the Native 
     Hawaiian Health Care Improvement Act) through a Federally-
     qualified health center or a Native Hawaiian health care 
     system (as so defined) whether directly, by referral, or 
     under contract or other arrangement between a Federally-
     qualified health center or a Native Hawaiian health care 
     system and another health care provider'' before the period.
       (b) Effective Date.--The amendment made by this section 
     applies to medical assistance provided on or after the date 
     of enactment of this Act.
                                 ______
                                 
  SA 1010. Mr. SUNUNU submitted an amendment intended to be proposed by 
him to the bill S. 1, to amend title XVIII of the Social Security Act 
to make improvements in the medicare program, to provide prescription 
drug coverage under the medicare program, and for other purposes; as 
follows:

       At the end of subtitle B of title IV, add the following:

     SEC. ____. IMPROVEMENT OF OUTPATIENT VISION SERVICES UNDER 
                   PART B.

       (a) Coverage Under Part B.--Section 1861(s)(2) (42 U.S.C. 
     1395x(s)(2)) is amended--

[[Page S8450]]

       (1) in subparagraph (U), by striking ``and'' after the 
     semicolon at the end;
       (2) in subparagraph (V)(iii), by adding ``and'' after the 
     semicolon at the end; and
       (3) by adding at the end the following new subparagraph:
       ``(W) vision rehabilitation services (as defined in 
     subsection (ww)(1));''.
       (b) Services Described.--Section 1861 (42 U.S.C. 1395x) is 
     amended by adding at the end the following new subsection:

  ``Vision Rehabilitation Services; Vision Rehabilitation Professional

       ``(ww)(1)(A) The term `vision rehabilitation services' 
     means rehabilitative services (as determined by the Secretary 
     in regulations) furnished--
       ``(i) to an individual diagnosed with a vision impairment 
     (as defined in paragraph (6));
       ``(ii) pursuant to a plan of care established by a 
     qualified physician (as defined in subparagraph (C)) or by a 
     qualified occupational therapist that is periodically 
     reviewed by a qualified physician;
       ``(iii) in an appropriate setting (including the home of 
     the individual receiving such services if specified in the 
     plan of care); and
       ``(iv) by any of the following individuals:
       ``(I) A qualified physician.
       ``(II) A qualified occupational therapist.
       ``(III) A vision rehabilitation professional (as defined in 
     paragraph (2)) while under the general supervision (as 
     defined in subparagraph (D)) of a qualified physician.
       ``(B) In the case of vision rehabilitation services 
     furnished by a vision rehabilitation professional, the plan 
     of care may only be established and reviewed by a qualified 
     physician.
       ``(C) The term `qualified physician' means--
       ``(i) a physician (as defined in subsection (r)(1)) who is 
     an ophthalmologist; or
       ``(ii) a physician (as defined in subsection (r)(4) 
     (relating to a doctor of optometry)).
       ``(D) The term `general supervision' means, with respect to 
     a vision rehabilitation professional, overall direction and 
     control of that professional by the qualified physician who 
     established the plan of care for the individual, but the 
     presence of the qualified physician is not required during 
     the furnishing of vision rehabilitation services by that 
     professional to the individual.
       ``(2) The term `vision rehabilitation professional' means 
     any of the following individuals:
       ``(A) An orientation and mobility specialist (as defined in 
     paragraph (3)).
       ``(B) A rehabilitation teacher (as defined in paragraph 
     (4)).
       ``(C) A low vision therapist (as defined in paragraph (5)).
       ``(3) The term `orientation and mobility specialist' means 
     an individual who--
       ``(A) if a State requires licensure or certification of 
     orientation and mobility specialists, is licensed or 
     certified by that State as an orientation and mobility 
     specialist;
       ``(B)(i) holds a baccalaureate or higher degree from an 
     accredited college or university in the United States (or an 
     equivalent foreign degree) with a concentration in 
     orientation and mobility; and
       ``(ii) has successfully completed 350 hours of clinical 
     practicum under the supervision of an orientation and 
     mobility specialist and has furnished not less than 9 months 
     of supervised full-time orientation and mobility services;
       ``(C) has successfully completed the national examination 
     in orientation and mobility administered by the Academy for 
     Certification of Vision Rehabilitation and Education 
     Professionals; and
       ``(D) meets such other criteria as the Secretary 
     establishes.
       ``(4) The term `rehabilitation teacher' means an individual 
     who--
       ``(A) if a State requires licensure or certification of 
     rehabilitation teachers, is licensed or certified by the 
     State as a rehabilitation teacher;
       ``(B)(i) holds a baccalaureate or higher degree from an 
     accredited college or university in the United States (or an 
     equivalent foreign degree) with a concentration in 
     rehabilitation teaching, or holds such a degree in a health 
     field; and
       ``(ii) has successfully completed 350 hours of clinical 
     practicum under the supervision of a rehabilitation teacher 
     and has furnished not less than 9 months of supervised full-
     time rehabilitation teaching services;
       ``(C) has successfully completed the national examination 
     in rehabilitation teaching administered by the Academy for 
     Certification of Vision Rehabilitation and Education 
     Professionals; and
       ``(D) meets such other criteria as the Secretary 
     establishes.
       ``(5) The term `low vision therapist' means an individual 
     who--
       ``(A) if a State requires licensure or certification of low 
     vision therapists, is licensed or certified by the State as a 
     low vision therapist;
       ``(B)(i) holds a baccalaureate or higher degree from an 
     accredited college or university in the United States (or an 
     equivalent foreign degree) with a concentration in low vision 
     therapy, or holds such a degree in a health field; and
       ``(ii) has successfully completed 350 hours of clinical 
     practicum under the supervision of a physician, and has 
     furnished not less than 9 months of supervised full-time low 
     vision therapy services;
       ``(C) has successfully completed the national examination 
     in low vision therapy administered by the Academy for 
     Certification of Vision Rehabilitation and Education 
     Professionals; and
       ``(D) meets such other criteria as the Secretary 
     establishes.
       ``(6) The term `vision impairment' means vision loss that 
     constitutes a significant limitation of visual capability 
     resulting from disease, trauma, or a congenital or 
     degenerative condition that cannot be corrected by 
     conventional means, including refractive correction, 
     medication, or surgery, and that is manifested by 1 or more 
     of the following:
       ``(A) Best corrected visual acuity of less than 20/60, or 
     significant central field defect.
       ``(B) Significant peripheral field defect including 
     homonymous or heteronymous bilateral visual field defect or 
     generalized contraction or constriction of field.
       ``(C) Reduced peak contrast sensitivity in conjunction with 
     a condition described in subparagraph (A) or (B).
       ``(D) Such other diagnoses, indications, or other 
     manifestations as the Secretary may determine to be 
     appropriate.''.
       (c) Payment Under Part B.--
       (1) Physician fee schedule.--Section 1848(j)(3) (42 U.S.C. 
     1395w-4(j)(3)) is amended by inserting ``(2)(W),'' after 
     ``(2)(S),''.
       (2) Carve out from hospital outpatient department 
     prospective payment system.--Section 1833(t)(1)(B)(iv) (42 
     U.S.C. 1395l(t)(1)(B)(iv)) is amended by inserting ``vision 
     rehabilitation services (as defined in section 1861(ww)(1)) 
     or'' after ``does not include''.
        (3) Clarification of billing requirements.--The first 
     sentence of section 1842(b)(6) of such Act (42 U.S.C. 
     1395u(b)(6)) is amended--
       (A) by striking ``and'' before ``(G)''; and
       (B) by inserting before the period the following: ``, and 
     (H) in the case of vision rehabilitation services (as defined 
     in section 1861(ww)(1)) furnished by a vision rehabilitation 
     professional (as defined in section 1861(ww)(2)) while under 
     the general supervision (as defined in section 
     1861(ww)(1)(D)) of a qualified physician (as defined in 
     section 1861(ww)(1)(C)), payment shall be made to (i) the 
     qualified physician or (ii) the facility (such as a 
     rehabilitation agency, a clinic, or other facility) through 
     which such services are furnished under the plan of care if 
     there is a contractual arrangement between the vision 
     rehabilitation professional and the facility under which the 
     facility submits the bill for such services''.
       (d) Plan of Care.--Section 1835(a)(2) (42 U.S.C. 
     1395n(a)(2)) is amended--
       (1) in subparagraph (E), by striking ``and'' after the 
     semicolon at the end;
       (2) in subparagraph (F), by striking the period at the end 
     and inserting ``; and''; and
       (3) by inserting after subparagraph (F) the following new 
     subparagraph:
       ``(G) in the case of vision rehabilitation services, (i) 
     such services are or were required because the individual 
     needed vision rehabilitation services, (ii) an 
     individualized, written plan for furnishing such services has 
     been established (I) by a qualified physician (as defined in 
     section 1861(ww)(1)(C)), (II) by a qualified occupational 
     therapist, or (III) in the case of such services furnished by 
     a vision rehabilitation professional, by a qualified 
     physician, (iii) the plan is periodically reviewed by the 
     qualified physician, and (iv) such services are or were 
     furnished while the individual is or was under the care of 
     the qualified physician.''.
       (e) Relationship to Rehabilitation Act of 1973.--The 
     provision of vision rehabilitation services under the 
     medicare program under title XVIII (42 U.S.C. 1395 et seq.) 
     shall not be taken into account for any purpose under the 
     Rehabilitation Act of 1973 (29 U.S.C. 701 et seq.).
       (f) Effective Date.--
       (1) Interim, final regulations.--The Secretary shall 
     publish a rule under this section in the Federal Register by 
     not later than 180 days after the date of enactment of this 
     Act to carry out the provisions of this section. Such rule 
     shall be effective and final immediately on an interim basis, 
     but is subject to change and revision after public notice and 
     opportunity for a period for public comment of not less than 
     60 days.
       (2) Consultation.--The Secretary shall consult with the 
     National Vision Rehabilitation Cooperative, the Association 
     for Education and Rehabilitation of the Blind and Visually 
     Impaired, the Academy for Certification of Vision 
     Rehabilitation and Education Professionals, the American 
     Academy of Ophthalmology, the American Occupational Therapy 
     Association, the American Optometric Association, and such 
     other qualified professional and consumer organizations as 
     the Secretary determines appropriate in promulgating 
     regulations to carry out this section.
                                 ______
                                 
  SA 1011. Mr. SESSIONS proposed an amendment to the bill S. 1, to 
amend title XVIII of the Social Security Act to make improvements in 
the medicare program, to provide prescription drug coverage under the 
medicare program, and for other purposes; as follows:

       Strike section 605 and insert the following:

     SEC. 605. SENSE OF THE SENATE REGARDING HEALTH INSURANCE 
                   COVERAGE OF LEGAL IMMIGRANTS UNDER MEDICAID AND 
                   SCHIP.

       Findings.--The Senate makes the following findings:
       (1) In 1996, in the Personal Responsibility and Work 
     Opportunity Reconciliation Act of 1996 (Public Law 104-193; 
     110 Stat. 2105)(commonly referred to as the ``welfare

[[Page S8451]]

     reform Act''), Congress deliberately limited the Federal 
     public benefits available to legal immigrants.
       (2) The Personal Responsibility and Work Opportunity 
     Reconciliation Act of 1996 allows a State the option of 
     electing to offer permanent resident legal aliens that have 
     been living in the United States for at least 5 years the 
     same benefits that their State citizens receive under the 
     temporary assistance for needy families program (commonly 
     referred to as ``TANF'') and the medicaid program.
       (3) As of the date of enactment of this Act, 22 States have 
     elected to give the permanent resident legal aliens who 
     reside in their States the same TANF and medicaid benefits as 
     the States provide to the citizens of their States.
       (4) This Act, the Prescription Drug and Medicare 
     Improvement Act of 2003, is not a welfare or medicaid reform 
     bill, but rather is a package of improvements for the 
     medicare program that is designed to provide greater access 
     to health care for America's seniors.
       (5) The section heading for 605 of this Act as reported out 
     of the Committee on Finance, was titled ``Assistance with 
     Coverage of Legal Immigrants under the medicaid program and 
     SCHIP,'' and, as reported, related directly to the provision 
     of benefits under the medicaid and State children's health 
     insurance programs, not to benefits provided under the 
     medicare program.
       (6) The reported version of section 605 would have directly 
     overturned the reforms made in the 1996 welfare reform Act.
       (7) The reported version of section 605 would have greatly 
     expanded the number of individuals who could receive benefits 
     under medicaid and SCHIP.
       (8) No hearings have been held in the Committee on Finance 
     of the Senate concerning why the 5-year residency requirement 
     for legal aliens to obtain a Federal public benefit 
     established in the welfare reform Act needs to be overturned 
     or why the reported version of section 605 should be included 
     in a medicare reform package.
       (9) Congress must reauthorize the temporary assistance for 
     needy families program later this year and should hold 
     hearings regarding whether the 5-year residency requirement 
     for legal aliens to obtain a Federal public benefit should be 
     overturned as part of the reauthorization of that program.
       (b) Sense of the Senate.--It is the sense of the Senate 
     that the Committee on Finance of the Senate should hold 
     hearings in connection with the reauthorization of the 
     temporary assistance for needy families program, or in 
     connection with reform of the medicaid program, regarding 
     whether the 5-year residency requirement for legal aliens to 
     obtain a Federal public benefit that was established in the 
     1996 welfare reform Act should be overturned for purposes of 
     the medicaid and State children's health insurance programs.
                                 ______
                                 
  SA 1012. Mr. HAGEL (for himself and Mr. Ensign) submitted an 
amendment intended to be proposed by him to the bill S. 1, to amend 
title XVIII of the Social Security Act to make improvements in the 
medicare program, to provide prescription drug coverage under the 
medicare program, and for other purposes; which was ordered to lie on 
the table; as follows:

       Title I is amended by adding at the end the following:

Subtitle E--Voluntary Medicare Prescription Drug Discount and Security 
                                Program

     SEC. 141. VOLUNTARY MEDICARE PRESCRIPTION DRUG DISCOUNT AND 
                   SECURITY PROGRAM.

       (a) Establishment of Program.--Title XVIII of the Social 
     Security Act (42 U.S.C. 1395 et seq.), as amended by section 
     101, is amended--
       (1) by redesignating part E as part F; and
       (2) by inserting after part D the following new part:

 ``Part E--Voluntary Medicare Prescription Drug Discount and Security 
                                Program


                             ``definitions

       ``Sec. 1860E. In this part:
       ``(1) Covered drug.--
       ``(A) In general.--Except as provided in this paragraph, 
     the term `covered drug' means--
       ``(i) a drug that may be dispensed only upon a prescription 
     and that is described in subparagraph (A)(i) or (A)(ii) of 
     section 1927(k)(2); or
       ``(ii) a biological product described in clauses (i) 
     through (iii) of subparagraph (B) of such section or insulin 
     described in subparagraph (C) of such section

     ,and such term includes a vaccine licensed under section 351 
     of the Public Health Service Act and any use of a covered 
     drug for a medically accepted indication (as defined in 
     section 1927(k)(6)).
       ``(B) Exclusions.--
       ``(i) In general.--Such term does not include drugs or 
     classes of drugs, or their medical uses, which may be 
     excluded from coverage or otherwise restricted under section 
     1927(d)(2), other than subparagraph (E) thereof (relating to 
     smoking cessation agents), or under section 1927(d)(3).
       ``(ii) Avoidance of duplicate coverage.--A drug prescribed 
     for an individual that would otherwise be a covered drug 
     under this part shall not be so considered if payment for 
     such drug is available under part A or B for an individual 
     entitled to benefits under part A and enrolled under part B.
       ``(C) Application of formulary restrictions.--A drug 
     prescribed for an individual that would otherwise be a 
     covered drug under this part shall not be so considered under 
     a plan if the plan excludes the drug under a formulary and 
     such exclusion is not successfully appealed under section 
     1860E-4(a)(4)(B).
       ``(D) Application of general exclusion provisions.--A 
     prescription drug discount card plan or MedicareAdvantage 
     plan may exclude from qualified prescription drug coverage 
     any covered drug--
       ``(i) for which payment would not be made if section 
     1862(a) applied to part E; or
       ``(ii) which are not prescribed in accordance with the plan 
     or this part.
     Such exclusions are determinations subject to reconsideration 
     and appeal pursuant to section 1860E-4(a)(4).
       ``(2) Eligible beneficiary.--The term `eligible 
     beneficiary' means an individual who is--
       ``(A) eligible for benefits under part A or enrolled under 
     part B; and
       ``(B) not eligible for prescription drug coverage under a 
     State plan under the medicaid program under title XIX.
       ``(3) Eligible entity.--The term `eligible entity' means 
     any--
       ``(A) pharmaceutical benefit management company;
       ``(B) wholesale pharmacy delivery system;
       ``(C) retail pharmacy delivery system;
       ``(D) insurer (including any issuer of a medicare 
     supplemental policy under section 1882);
       ``(E) MedicareAdvantage organization;
       ``(F) State (in conjunction with a pharmaceutical benefit 
     management company);
       ``(G) employer-sponsored plan;
       ``(H) other entity that the Secretary determines to be 
     appropriate to provide benefits under this part; or
       ``(I) combination of the entities described in 
     subparagraphs (A) through (H).
       ``(4) Poverty line.--The term `poverty line' means the 
     income official poverty line (as defined by the Office of 
     Management and Budget, and revised annually in accordance 
     with section 673(2) of the Omnibus Budget Reconciliation Act 
     of 1981) applicable to a family of the size involved.
       ``(5) Secretary.--The term `Secretary' means the Secretary 
     of Health and Human Services, acting through the 
     Administrator of the Centers for Medicare & Medicaid 
     Services.


                       ``establishment of program

       ``Sec. 1860E-1. (a) Provision of Benefit.--The Secretary 
     shall establish a Medicare Prescription Drug Discount and 
     Security Program under which the Secretary endorses 
     prescription drug card plans offered by eligible entities in 
     which eligible beneficiaries may voluntarily enroll and 
     receive benefits under this part. Notwithstanding any other 
     provision of this title, an eligible beneficiary may elect to 
     enroll in the program under this part in lieu of the program 
     established under part D. An eligible beneficiary may not be 
     enrolled under both this part and part D.
       ``(b) Endorsement of Prescription Drug Discount Card 
     Plans.--
       ``(1) In general.--The Secretary shall endorse a 
     prescription drug card plan offered by an eligible entity 
     with a contract under this part if the eligible entity meets 
     the requirements of this part with respect to that plan.
       ``(2) National plans.--In addition to other types of plans, 
     the Secretary may endorse national prescription drug plans 
     under paragraph (1).
       ``(c) Voluntary Nature of Program.--Nothing in this part 
     shall be construed as requiring an eligible beneficiary to 
     enroll in the program under this part.
       ``(d) Financing.--The costs of providing benefits under 
     this part shall be payable from the Federal Supplementary 
     Medical Insurance Trust Fund established under section 1841.


                              ``enrollment

       ``Sec. 1860E-2. (a) Enrollment Under part E.--
       ``(1) Establishment of process.--
       ``(A) In general.--The Secretary shall establish a process 
     through which an eligible beneficiary (including an eligible 
     beneficiary enrolled in a MedicareAdvantage plan offered by a 
     MedicareAdvantage organization) may make an election to 
     enroll under this part. Except as otherwise provided in this 
     subsection, such process shall be similar to the process for 
     enrollment under part B under section 1837.
       ``(B) Requirement of enrollment.--An eligible beneficiary 
     must enroll under this part in order to be eligible to 
     receive the benefits under this part.
       ``(2) Enrollment periods.--
       ``(A) In general.--Except as provided in this paragraph, an 
     eligible beneficiary may not enroll in the program under this 
     part during any period after the beneficiary's initial 
     enrollment period under part B (as determined under section 
     1837).
       ``(B) Special enrollment period.--In the case of eligible 
     beneficiaries that have recently lost eligibility for 
     prescription drug coverage under a State plan under the 
     medicaid program under title XIX, the Secretary shall 
     establish a special enrollment period in

[[Page S8452]]

     which such beneficiaries may enroll under this part.
       ``(C) Open enrollment period in 2005 for current 
     beneficiaries.--The Secretary shall establish a period, which 
     shall begin on the date on which the Secretary first begins 
     to accept elections for enrollment under this part, during 
     which any eligible beneficiary may--
       ``(i) enroll under this part; or
       ``(ii) enroll or reenroll under this part after having 
     previously declined or terminated such enrollment.
       ``(3) Period of coverage.--
       ``(A) In general.--Except as provided in subparagraph (B) 
     and subject to subparagraph (C), an eligible beneficiary's 
     coverage under the program under this part shall be effective 
     for the period provided under section 1838, as if that 
     section applied to the program under this part.
       ``(B) Enrollment during open and special enrollment.--
     Subject to subparagraph (C), an eligible beneficiary who 
     enrolls under the program under this part under subparagraph 
     (B) or (C) of paragraph (2) shall be entitled to the benefits 
     under this part beginning on the first day of the month 
     following the month in which such enrollment occurs.
       ``(4) Part e coverage terminated by termination of coverage 
     under parts a and b or eligibility for medical assistance.--
       ``(A) In general.--In addition to the causes of termination 
     specified in section 1838, the Secretary shall terminate an 
     individual's coverage under this part if the individual is--
       ``(i) no longer enrolled in part A or B; or
       ``(ii) eligible for prescription drug coverage under a 
     State plan under the medicaid program under title XIX.
       ``(B) Effective date.--The termination described in 
     subparagraph (A) shall be effective on the effective date 
     of--
       ``(i) the termination of coverage under part A or (if 
     later) under part B; or
       ``(ii) the coverage under title XIX.
       ``(b) Enrollment With Eligible Entity.--
       ``(1) Process.--The Secretary shall establish a process 
     through which an eligible beneficiary who is enrolled under 
     this part shall make an annual election to enroll in a 
     prescription drug card plan offered by an eligible entity 
     that has been awarded a contract under this part and serves 
     the geographic area in which the beneficiary resides.
       ``(2) Election periods.--
       ``(A) In general.--Except as provided in this paragraph, 
     the election periods under this subsection shall be the same 
     as the coverage election periods under the MedicareAdvantage 
     program under section 1851(e), including--
       ``(i) annual coordinated election periods; and
       ``(ii) special election periods.

     In applying the last sentence of section 1851(e)(4) (relating 
     to discontinuance of a MedicareAdvantage election during the 
     first year of eligibility) under this subparagraph, in the 
     case of an election described in such section in which the 
     individual had elected or is provided qualified prescription 
     drug coverage at the time of such first enrollment, the 
     individual shall be permitted to enroll in a prescription 
     drug card plan under this part at the time of the election of 
     coverage under the original fee-for-service plan.
       ``(B) Initial election periods.--
       ``(i) Individuals currently covered.--In the case of an 
     individual who is entitled to benefits under part A or 
     enrolled under part B as of November 1, 2005, there shall be 
     an initial election period of 6 months beginning on that 
     date.
       ``(ii) Individual covered in future.--In the case of an 
     individual who is first entitled to benefits under part A or 
     enrolled under part B after such date, there shall be an 
     initial election period which is the same as the initial 
     enrollment period under section 1837(d).
       ``(C) Additional special election periods.--The 
     Administrator shall establish special election periods--
       ``(i) in cases of individuals who have and involuntarily 
     lose prescription drug coverage described in paragraph (3);
       ``(ii) in cases described in section 1837(h) (relating to 
     errors in enrollment), in the same manner as such section 
     applies to part B; and
       ``(iii) in the case of an individual who meets such 
     exceptional conditions (including conditions provided under 
     section 1851(e)(4)(D)) as the Secretary may provide.
       ``(D) Enrollment with one plan only.--The rules established 
     under subparagraph (B) shall ensure that an eligible 
     beneficiary may only enroll in 1 prescription drug card plan 
     offered by an eligible entity per year.
       ``(3) Medicareadvantage enrollees.--An eligible beneficiary 
     who is enrolled under this part and enrolled in a 
     MedicareAdvantage plan offered by a MedicareAdvantage 
     organization must enroll in a prescription drug discount card 
     plan offered by an eligible entity in order to receive 
     benefits under this part. The beneficiary may elect to 
     receive such benefits through the MedicareAdvantage 
     organization in which the beneficiary is enrolled if the 
     organization has been awarded a contract under this part.
       ``(4) Continuous prescription drug coverage.--An individual 
     is considered for purposes of this part to be maintaining 
     continuous prescription drug coverage on and after the date 
     the individual first qualifies to elect prescription drug 
     coverage under this part if the individual establishes that 
     as of such date the individual is covered under any of the 
     following prescription drug coverage and before the date that 
     is the last day of the 63-day period that begins on the date 
     of termination of the particular prescription drug coverage 
     involved (regardless of whether the individual subsequently 
     obtains any of the following prescription drug coverage):
       ``(A) Coverage under prescription drug card plan or 
     medicareadvantage plan.--Prescription drug coverage under a 
     prescription drug card plan under this part or under a 
     MedicareAdvantage plan.
       ``(B) Medicaid prescription drug coverage.--Prescription 
     drug coverage under a medicaid plan under title XIX, 
     including through the Program of All-inclusive Care for the 
     Elderly (PACE) under section 1934, through a social health 
     maintenance organization (referred to in section 4104(c) of 
     the Balanced Budget Act of 1997), or through a 
     MedicareAdvantage project that demonstrates the application 
     of capitation payment rates for frail elderly medicare 
     beneficiaries through the use of a interdisciplinary team and 
     through the provision of primary care services to such 
     beneficiaries by means of such a team at the nursing facility 
     involved.
       ``(C) Prescription drug coverage under group health plan.--
     Any prescription drug coverage under a group health plan, 
     including a health benefits plan under the Federal Employees 
     Health Benefit Plan under chapter 89 of title 5, United 
     States Code, and a qualified retiree prescription drug plan 
     (as defined by the Secretary), but only if (subject to 
     subparagraph (E)(ii)) the coverage provides benefits at least 
     equivalent to the benefits under a prescription drug card 
     plan under this part.
       ``(D) Prescription drug coverage under certain medigap 
     policies.--Coverage under a medicare supplemental policy 
     under section 1882 that provides benefits for prescription 
     drugs (whether or not such coverage conforms to the standards 
     for packages of benefits under section 1882(p)(1)) and if 
     (subject to subparagraph (E)(ii)) the coverage provides 
     benefits at least equivalent to the benefits under a 
     prescription drug card plan under this part.
       ``(E) State pharmaceutical assistance program.--Coverage of 
     prescription drugs under a State pharmaceutical assistance 
     program, but only if (subject to subparagraph (E)(ii)) the 
     coverage provides benefits at least equivalent to the 
     benefits under a prescription drug card plan under this part.
       ``(F) Veterans' coverage of prescription drugs.--Coverage 
     of prescription drugs for veterans under chapter 17 of title 
     38, United States Code, but only if (subject to subparagraph 
     (E)(ii)) the coverage provides benefits at least equivalent 
     to the benefits under a prescription drug card plan under 
     this part.

     For purposes of carrying out this paragraph, the 
     certifications of the type described in sections 2701(e) of 
     the Public Health Service Act and in section 9801(e) of the 
     Internal Revenue Code of 1986 shall also include a statement 
     for the period of coverage of whether the individual involved 
     had prescription drug coverage described in this paragraph.
       ``(5) Competition.--Each eligible entity with a contract 
     under this part shall compete for the enrollment of 
     beneficiaries in a prescription drug card plan offered by the 
     entity on the basis of discounts, formularies, pharmacy 
     networks, and other services provided for under the contract.


    ``providing enrollment and coverage information to beneficiaries

       ``Sec. 1860E-3. (a) Activities.--The Secretary shall 
     provide for activities under this part to broadly disseminate 
     information to eligible beneficiaries (and prospective 
     eligible beneficiaries) regarding enrollment under this part 
     and the prescription drug card plans offered by eligible 
     entities with a contract under this part.
       ``(b) Special Rule for First Enrollment Under the 
     Program.--To the extent practicable, the activities described 
     in subsection (a) shall ensure that eligible beneficiaries 
     are provided with such information at least 60 days prior to 
     the first enrollment period described in section 1860E-2(c).


                         ``enrollee protections

       ``Sec. 1860E-4. (a) Requirements for All Eligible 
     Entities.--Each eligible entity shall meet the following 
     requirements:
       ``(1) Guaranteed issuance and nondiscrimination.--
       ``(A) Guaranteed issuance.--
       ``(i) In general.--An eligible beneficiary who is eligible 
     to enroll in a prescription drug card plan offered by an 
     eligible entity under section 1860E-2(b) for prescription 
     drug coverage under this part at a time during which 
     elections are accepted under this part with respect to the 
     coverage shall not be denied enrollment based on any health 
     status-related factor (described in section 2702(a)(1) of the 
     Public Health Service Act) or any other factor.
       ``(ii) Medicareadvantage limitations permitted.--The 
     provisions of paragraphs (2) and (3) (other than subparagraph 
     (C)(i), relating to default enrollment) of section 1851(g) 
     (relating to priority and limitation on termination of 
     election) shall apply to eligible entities under this 
     subsection.
       ``(B) Nondiscrimination.--An eligible entity offering 
     prescription drug coverage under this part shall not 
     establish a service area in a manner that would discriminate 
     based on health or economic status of potential enrollees.

[[Page S8453]]

       ``(2) Disclosure of information.--
       ``(A) Information.--
       ``(i) General information.--Each eligible entity with a 
     contract under this part to provide a prescription drug card 
     plan shall disclose, in a clear, accurate, and standardized 
     form to each eligible beneficiary enrolled in a prescription 
     drug discount card program offered by such entity under this 
     part at the time of enrollment and at least annually 
     thereafter, the information described in section 1852(c)(1) 
     relating to such prescription drug coverage.
       ``(ii) Specific information.--In addition to the 
     information described in clause (i), each eligible entity 
     with a contract under this part shall disclose the following:

       ``(I) How enrollees will have access to covered drugs, 
     including access to such drugs through pharmacy networks.
       ``(II) How any formulary used by the eligible entity 
     functions.
       ``(III) Information on grievance and appeals procedures.
       ``(IV) Information on enrollment fees and prices charged to 
     the enrollee for covered drugs.
       ``(V) Any other information that the Secretary determines 
     is necessary to promote informed choices by eligible 
     beneficiaries among eligible entities.

       ``(B) Disclosure upon request of general coverage, 
     utilization, and grievance information.--Upon request of an 
     eligible beneficiary, the eligible entity shall provide the 
     information described in paragraph (3) to such beneficiary.
       ``(C) Response to beneficiary questions.--Each eligible 
     entity offering a prescription drug discount card plan under 
     this part shall have a mechanism for providing specific 
     information to enrollees upon request. The entity shall make 
     available, through an Internet website and, upon request, in 
     writing, information on specific changes in its formulary.
       ``(3) Grievance mechanism, coverage determinations, and 
     reconsiderations.--
       ``(A) In general.--With respect to the benefit under this 
     part, each eligible entity offering a prescription drug 
     discount card plan shall provide meaningful procedures for 
     hearing and resolving grievances between the organization 
     (including any entity or individual through which the 
     eligible entity provides covered benefits) and enrollees with 
     prescription drug card plans of the eligible entity under 
     this part in accordance with section 1852(f).
       ``(B) Application of coverage determination and 
     reconsideration provisions.--Each eligible entity shall meet 
     the requirements of paragraphs (1) through (3) of section 
     1852(g) with respect to covered benefits under the 
     prescription drug card plan it offers under this part in the 
     same manner as such requirements apply to a MedicareAdvantage 
     organization with respect to benefits it offers under a 
     MedicareAdvantage plan under part C.
       ``(C) Request for review of tiered formulary 
     determinations.--In the case of a prescription drug card plan 
     offered by an eligible entity that provides for tiered cost-
     sharing for drugs included within a formulary and provides 
     lower cost-sharing for preferred drugs included within the 
     formulary, an individual who is enrolled in the plan may 
     request coverage of a nonpreferred drug under the terms 
     applicable for preferred drugs if the prescribing physician 
     determines that the preferred drug for treatment of the same 
     condition is not as effective for the individual or has 
     adverse effects for the individual.
       ``(4) Appeals.--
       ``(A) In general.--Subject to subparagraph (B), each 
     eligible entity offering a prescription drug card plan shall 
     meet the requirements of paragraphs (4) and (5) of section 
     1852(g) with respect to drugs not included on any formulary 
     in the same manner as such requirements apply to a 
     MedicareAdvantage organization with respect to benefits it 
     offers under a MedicareAdvantage plan under part C.
       ``(B) Formulary determinations.--An individual who is 
     enrolled in a prescription drug card plan offered by an 
     eligible entity may appeal to obtain coverage under this part 
     for a covered drug that is not on a formulary of the eligible 
     entity if the prescribing physician determines that the 
     formulary drug for treatment of the same condition is not as 
     effective for the individual or has adverse effects for the 
     individual.
       ``(5) Confidentiality and accuracy of enrollee records.--
     Each eligible entity offering a prescription drug discount 
     card plan shall meet the requirements of the Health Insurance 
     Portability and Accountability Act of 1996.
       ``(b) Eligible Entities Offering a Discount Card Program.--
     If an eligible entity offers a discount card program under 
     this part, in addition to the requirements under subsection 
     (a), the entity shall meet the following requirements:
       ``(1) Access to covered benefits.--
       ``(A) Assuring pharmacy access.--
       ``(i) In general.--The eligible entity offering the 
     prescription drug discount card plan shall secure the 
     participation in its network of a sufficient number of 
     pharmacies that dispense (other than by mail order) drugs 
     directly to patients to ensure convenient access (as 
     determined by the Secretary and including adequate emergency 
     access) for enrolled beneficiaries, in accordance with 
     standards established under section 1860E-4(a)(3) that ensure 
     such convenient access.
       ``(ii) Use of point-of-service system.--Each eligible 
     entity offering a prescription drug discount card plan shall 
     establish an optional point-of-service method of operation 
     under which--

       ``(I) the plan provides access to any or all pharmacies 
     that are not participating pharmacies in its network; and
       ``(II) discounts under the plan may not be available.

     The additional copayments so charged shall not be counted as 
     out-of-pocket expenses for purposes of section 1860E-6(b).
       ``(B) Use of standardized technology.--
       ``(i) In general.--Each eligible entity offering a 
     prescription drug discount card plan shall issue (and 
     reissue, as appropriate) such a card (or other technology) 
     that may be used by an enrolled beneficiary to assure access 
     to negotiated prices under section 1860E-6(a) for the 
     purchase of prescription drugs for which coverage is not 
     otherwise provided under the prescription drug discount card 
     plan.
       ``(ii) Standards.--The Secretary shall provide for the 
     development of national standards relating to a standardized 
     format for the card or other technology referred to in clause 
     (i). Such standards shall be compatible with standards 
     established under part C of title XI.
       ``(C) Requirements on development and application of 
     formularies.--If an eligible entity that offers a 
     prescription drug discount card plan uses a formulary, the 
     following requirements must be met:
       ``(i) Pharmacy and therapeutic (p&t) committee.--The 
     eligible entity must establish a pharmacy and therapeutic 
     committee that develops and reviews the formulary. Such 
     committee shall include at least 1 physician and at least 1 
     pharmacist both with expertise in the care of elderly or 
     disabled persons and a majority of its members shall consist 
     of individuals who are a physician or a practicing pharmacist 
     (or both).
       ``(ii) Formulary development.--In developing and reviewing 
     the formulary, the committee shall base clinical decisions on 
     the strength of scientific evidence and standards of 
     practice, including assessing peer-reviewed medical 
     literature, such as randomized clinical trials, 
     pharmacoeconomic studies, outcomes research data, and such 
     other information as the committee determines to be 
     appropriate.
       ``(iii) Inclusion of drugs in all therapeutic categories.--
     The formulary must include drugs within each therapeutic 
     category and class of covered drugs (although not necessarily 
     for all drugs within such categories and classes).
       ``(iv) Provider education.--The committee shall establish 
     policies and procedures to educate and inform health care 
     providers concerning the formulary.
       ``(v) Notice before removing drugs from formulary.--Any 
     removal of a drug from a formulary shall take effect only 
     after appropriate notice is made available to beneficiaries 
     and physicians.
       ``(vi) Grievances and appeals relating to application of 
     formularies.--For provisions relating to grievances and 
     appeals of coverage, see paragraphs (3) and (4) of section 
     1860E-4(a).
       ``(2) Cost and utilization management; quality assurance; 
     medication therapy management program.--
       ``(A) In general.--Each eligible entity offering a 
     prescription drug discount card plan shall have in place with 
     respect to covered drugs--
       ``(i) an effective cost and drug utilization management 
     program, including medically appropriate incentives to use 
     generic drugs and therapeutic interchange, when appropriate;
       ``(ii) quality assurance measures and systems to reduce 
     medical errors and adverse drug interactions, including a 
     medication therapy management program described in 
     subparagraph (B); and
       ``(iii) a program to control fraud, abuse, and waste.

     Nothing in this section shall be construed as impairing an 
     eligible entity from applying cost management tools 
     (including differential payments) under all methods of 
     operation.
       ``(B) Medication therapy management program.--
       ``(i) In general.--A medication therapy management program 
     described in this paragraph is a program of drug therapy 
     management and medication administration that is designed to 
     ensure, with respect to beneficiaries with chronic diseases 
     (such as diabetes, asthma, hypertension, and congestive heart 
     failure) or multiple prescriptions, that covered drugs under 
     the prescription drug discount card plan are appropriately 
     used to achieve therapeutic goals and reduce the risk of 
     adverse events, including adverse drug interactions.
       ``(ii) Elements.--Such program may include--

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

       ``(iii) Development of program in cooperation with licensed 
     pharmacists.--The program shall be developed in cooperation 
     with licensed pharmacists and physicians.

[[Page S8454]]

       ``(iv) Considerations in pharmacy fees.--Each eligible 
     entity offering a prescription drug discount card plan shall 
     take into account, in establishing fees for pharmacists and 
     others providing services under the medication therapy 
     management program, the resources and time used in 
     implementing the program.
       ``(C) Treatment of accreditation.--Section 1852(e)(4) 
     (relating to treatment of accreditation) shall apply to 
     prescription drug discount card plans under this part with 
     respect to the following requirements, in the same manner as 
     they apply to MedicareAdvantage plans under part C with 
     respect to the requirements described in a clause of section 
     1852(e)(4)(B):
       ``(i) Paragraph (1) (including quality assurance), 
     including any medication therapy management program under 
     paragraph (2).
       ``(ii) Subsection (c)(1) (relating to access to covered 
     benefits).
       ``(iii) Subsection (g) (relating to confidentiality and 
     accuracy of enrollee records).
       ``(D) Public disclosure of pharmaceutical prices for 
     equivalent drugs.--Each eligible entity offering a 
     prescription drug discount card plan shall provide that each 
     pharmacy or other dispenser that arranges for the dispensing 
     of a covered drug shall inform the beneficiary at the time of 
     purchase of the drug of any differential between the price of 
     the prescribed drug to the enrollee and the price of the 
     lowest cost drug covered under the plan that is 
     therapeutically equivalent and bioequivalent.


                        ``annual enrollment fee

       ``Sec. 1860E-5. (a) Amount.--
       ``(1) In general.--Except as provided in subsection (c), 
     enrollment under the program under this part is conditioned 
     upon payment of an annual enrollment fee of $25.
       ``(2) Annual percentage increase.--
       ``(A) In general.--In the case of any calendar year 
     beginning after 2006, the dollar amount in paragraph (1) 
     shall be increased by an amount equal to--
       ``(i) such dollar amount; multiplied by
       ``(ii) the inflation adjustment.
       ``(B) Inflation adjustment.--For purposes of subparagraph 
     (A)(ii), the inflation adjustment for any calendar year is 
     the percentage (if any) by which--
       ``(i) the average per capita aggregate expenditures for 
     covered drugs in the United States for medicare 
     beneficiaries, as determined by the Secretary for the 12-
     month period ending in July of the previous year; exceeds
       ``(ii) such aggregate expenditures for the 12-month period 
     ending with July 2005.
       ``(C) Rounding.--If any increase determined under clause 
     (ii) is not a multiple of $1, such increase shall be rounded 
     to the nearest multiple of $1.
       ``(b) Collection of Annual Enrollment Fee.--
       ``(1) In general.--Unless the eligible beneficiary makes an 
     election under paragraph (2), the annual enrollment fee 
     described in subsection (a) shall be collected and credited 
     to the Federal Supplementary Medical Insurance Trust Fund in 
     the same manner as the monthly premium determined under 
     section 1839 is collected and credited to such Trust Fund 
     under section 1840.
       ``(2) Direct payment.--An eligible beneficiary may elect to 
     pay the annual enrollment fee directly or in any other manner 
     approved by the Secretary. The Secretary shall establish 
     procedures for making such an election.
       ``(c) Waiver.--The Secretary shall waive the enrollment fee 
     described in subsection (a) in the case of an eligible 
     beneficiary whose income is below 200 percent of the poverty 
     line.


                      ``benefits under the program

       ``Sec. 1860E-6. (a) Access to Negotiated Prices.--
       ``(1) Negotiated prices.--
       ``(A) In general.--Subject to subparagraph (B), each 
     prescription drug card plan offering a discount card program 
     by an eligible entity with a contract under this part shall 
     provide each eligible beneficiary enrolled in such plan with 
     access to negotiated prices (including applicable discounts) 
     for such prescription drugs as the eligible entity determines 
     appropriate. Such discounts may include discounts for 
     nonformulary drugs. If such a beneficiary becomes eligible 
     for the catastrophic benefit under subsection (b), the 
     negotiated prices (including applicable discounts) shall 
     continue to be available to the beneficiary for those 
     prescription drugs for which payment may not be made under 
     section 1860E-8(b). For purposes of this subparagraph, the 
     term `prescription drugs' is not limited to covered drugs, 
     but does not include any over-the-counter drug that is not a 
     covered drug.
       ``(B) Limitations.--
       ``(i) Formulary restrictions.--Insofar as an eligible 
     entity with a contract under this part uses a formulary, the 
     negotiated prices (including applicable discounts) for 
     nonformulary drugs may differ.
       ``(ii) Avoidance of duplicate coverage.--The negotiated 
     prices (including applicable discounts) for prescription 
     drugs shall not be available for any drug prescribed for an 
     eligible beneficiary if payment for the drug is available 
     under part A or B (but such negotiated prices shall be 
     available if payment under part A or B is not available 
     because the beneficiary has not met the deductible or has 
     exhausted benefits under part A or B).
       ``(2) Discount card.--The Secretary shall develop a uniform 
     standard card format to be issued by each eligible entity 
     offering a prescription drug discount card plan that shall be 
     used by an enrolled beneficiary to ensure the access of such 
     beneficiary to negotiated prices under paragraph (1).
       ``(3) Ensuring discounts in all areas.--The Secretary shall 
     develop procedures that ensure that each eligible beneficiary 
     that resides in an area where no prescription drug discount 
     card plans are available is provided with access to 
     negotiated prices for prescription drugs (including 
     applicable discounts).
       ``(b) Catastrophic Benefit.--
       ``(1) Ten percent cost-sharing.--Subject to any formulary 
     used by the prescription drug discount card program in which 
     the eligible beneficiary is enrolled, the catastrophic 
     benefit shall provide benefits with cost-sharing that is 
     equal to 10 percent of the negotiated price (taking into 
     account any applicable discounts) of each drug dispensed to 
     such beneficiary after the beneficiary has incurred costs (as 
     described in paragraph (3)) for covered drugs in a year equal 
     to the applicable annual out-of-pocket limit specified in 
     paragraph (2).
       ``(2) Annual out-of-pocket limits.--For purposes of this 
     part, the annual out-of-pocket limits specified in this 
     paragraph are as follows:
       ``(A) Beneficiaries with annual incomes below 200 percent 
     of the poverty line.--In the case of an eligible beneficiary 
     whose income (as determined under section 1860E-9) is below 
     200 percent of the poverty line, the annual out-of-pocket 
     limit is equal to $1,500.
       ``(B) Beneficiaries with annual incomes between 200 and 400 
     percent of the poverty line.--In the case of an eligible 
     beneficiary whose income (as so determined) equals or exceeds 
     200 percent, but does not exceed 400 percent, of the poverty 
     line, the annual out-of-pocket limit is equal to $3,500.
       ``(C) Beneficiaries with annual incomes between 400 and 600 
     percent of the poverty line.--In the case of an eligible 
     beneficiary whose income (as so determined) equals or exceeds 
     400 percent, but does not exceed 600 percent, of the poverty 
     line, the annual out-of-pocket limit is equal to $5,500.
       ``(D) Beneficiaries with annual incomes that exceed 600 
     percent of the poverty line.--In the case of an eligible 
     beneficiary whose income (as so determined) equals or exceeds 
     600 percent of the poverty line, the annual out-of-pocket 
     limit is an amount equal to 20 percent of that beneficiary's 
     income for that year (rounded to the nearest multiple of $1).
       ``(3) Application.--In applying paragraph (2), incurred 
     costs shall only include those expenses for covered drugs 
     that are incurred by the eligible beneficiary using a card 
     approved by the Secretary under this part that are paid by 
     that beneficiary and for which the beneficiary is not 
     reimbursed (through insurance or otherwise) by another 
     person.
       ``(4) Annual percentage increase.--
       ``(A) In general.--In the case of any calendar year after 
     2005, the dollar amounts in subparagraphs (A), (B), and (C) 
     of paragraph (2) shall be increased by an amount equal to--
       ``(i) such dollar amount; multiplied by
       ``(ii) the inflation adjustment determined under section 
     1860E-5(a)(2)(B) for such calendar year.
       ``(B) Rounding.--If any increase determined under 
     subparagraph (A) is not a multiple of $1, such increase shall 
     be rounded to the nearest multiple of $1.
       ``(5) Eligible entity not at financial risk for 
     catastrophic benefit.--
       ``(A) In general.--The Secretary, and not the eligible 
     entity, shall be at financial risk for the provision of the 
     catastrophic benefit under this subsection.
       ``(B) Provisions relating to payments to eligible 
     entities.--For provisions relating to payments to eligible 
     entities for administering the catastrophic benefit under 
     this subsection, see section 1860E-8.
       ``(6) Ensuring catastrophic benefit in all areas.--The 
     Secretary shall develop procedures for the provision of the 
     catastrophic benefit under this subsection to each eligible 
     beneficiary that resides in an area where there are no 
     prescription drug discount card plans offered that have been 
     awarded a contract under this part.


   ``requirements for entities to provide prescription drug coverage

       ``Sec. 1860E-7. (a) Establishment of Bidding Process.--The 
     Secretary shall establish a process under which the Secretary 
     accepts bids from eligible entities and awards contracts to 
     the entities to provide the benefits under this part to 
     eligible beneficiaries in an area.
       ``(b) Submission of Bids.--Each eligible entity desiring to 
     enter into a contract under this part shall submit a bid to 
     the Secretary at such time, in such manner, and accompanied 
     by such information as the Secretary may require.
       ``(c) Administrative Fee Bid.--
       ``(1) Submission.--For the bid described in subsection (b), 
     each entity shall submit to the Secretary information 
     regarding administration of the discount card and 
     catastrophic benefit under this part.
       ``(2) Bid submission requirements.--
       ``(A) Administrative fee bid submission.--In submitting 
     bids, the entities shall include separate costs for 
     administering the discount card component, if applicable, and 
     the catastrophic benefit. The entity shall submit the 
     administrative fee bid in a form and manner specified by the 
     Secretary, and shall include a statement of projected 
     enrollment and a separate statement of the projected 
     administrative costs for at least the following functions:

[[Page S8455]]

       ``(i) Enrollment, including income eligibility 
     determination.
       ``(ii) Claims processing.
       ``(iii) Quality assurance, including drug utilization 
     review.
       ``(iv) Beneficiary and pharmacy customer service.
       ``(v) Coordination of benefits.
       ``(vi) Fraud and abuse prevention.
       ``(B) Negotiated administrative fee bid amounts.--The 
     Secretary has the authority to negotiate regarding the bid 
     amounts submitted. The Secretary may reject a bid if the 
     Secretary determines it is not supported by the 
     administrative cost information provided in the bid as 
     specified in subparagraph (A).
       ``(C) Payment to plans based on administrative fee bid 
     amounts.--The Secretary shall use the bid amounts to 
     calculate a benchmark amount consisting of the enrollment-
     weighted average of all bids for each function and each class 
     of entity. The class of entity is either a regional or 
     national entity, or such other classes as the Secretary may 
     determine to be appropriate. The functions are the discount 
     card and catastrophic components. If an eligible entity's 
     combined bid for both functions is above the combined 
     benchmark within the entity's class for the functions, the 
     eligible entity shall collect additional necessary revenue 
     through 1 or both of the following:
       ``(i) Additional fees charged to the beneficiary, not to 
     exceed $25 annually.
       ``(ii) Use of rebate amounts from drug manufacturers to 
     defray administrative costs.
       ``(d) Awarding of Contracts.--
       ``(1) In general.--The Secretary shall, consistent with the 
     requirements of this part and the goal of containing medicare 
     program costs, award at least 2 contracts in each area, 
     unless only 1 bidding entity meets the terms and conditions 
     specified by the Secretary under paragraph (2).
       ``(2) Terms and conditions.--The Secretary shall not award 
     a contract to an eligible entity under this section unless 
     the Secretary finds that the eligible entity is in compliance 
     with such terms and conditions as the Secretary shall 
     specify.
       ``(3) Requirements for eligible entities providing discount 
     card program.--Except as provided in subsection (e), in 
     determining which of the eligible entities that submitted 
     bids that meet the terms and conditions specified by the 
     Secretary under paragraph (2) to award a contract, the 
     Secretary shall consider whether the bid submitted by the 
     entity meets at least the following requirements:
       ``(A) Level of savings to medicare beneficiaries.--The 
     program passes on to medicare beneficiaries who enroll in the 
     program discounts on prescription drugs, including discounts 
     negotiated with manufacturers.
       ``(B) Prohibition on application only to mail order.--The 
     program applies to drugs that are available other than solely 
     through mail order and provides convenient access to retail 
     pharmacies.
       ``(C) Level of beneficiary services.--The program provides 
     pharmaceutical support services, such as education and 
     services to prevent adverse drug interactions.
       ``(D) Adequacy of information.--The program makes available 
     to medicare beneficiaries through the Internet and otherwise 
     information, including information on enrollment fees, prices 
     charged to beneficiaries, and services offered under the 
     program, that the Secretary identifies as being necessary to 
     provide for informed choice by beneficiaries among endorsed 
     programs.
       ``(E) Extent of demonstrated experience.--The entity 
     operating the program has demonstrated experience and 
     expertise in operating such a program or a similar program.
       ``(F) Extent of quality assurance.--The entity has in place 
     adequate procedures for assuring quality service under the 
     program.
       ``(G) Operation of assistance program.--The entity meets 
     such requirements relating to solvency, compliance with 
     financial reporting requirements, audit compliance, and 
     contractual guarantees as specified by the Secretary.
       ``(H) Privacy compliance.--The entity implements policies 
     and procedures to safeguard the use and disclosure of program 
     beneficiaries' individually identifiable health information 
     in a manner consistent with the Federal regulations 
     (concerning the privacy of individually identifiable health 
     information) promulgated under section 264(c) of the Health 
     Insurance Portability and Accountability Act of 1996.
       ``(I) Additional beneficiary protections.--The program 
     meets such additional requirements as the Secretary 
     identifies to protect and promote the interest of medicare 
     beneficiaries, including requirements that ensure that 
     beneficiaries are not charged more than the lower of the 
     negotiated retail price or the usual and customary price.

     The prices negotiated by a prescription drug discount card 
     program endorsed under this section shall (notwithstanding 
     any other provision of law) not be taken into account for the 
     purposes of establishing the best price under section 
     1927(c)(1)(C).
       ``(4) Beneficiary access to savings and rebates.--The 
     Secretary shall require eligible entities offering a discount 
     card program to pass on savings and rebates negotiated with 
     manufacturers to eligible beneficiaries enrolled with the 
     entity.
       ``(5) Negotiated agreements with employer-sponsored 
     plans.--Notwithstanding any other provision of this part, the 
     Secretary may negotiate agreements with employer-sponsored 
     plans under which eligible beneficiaries are provided with a 
     benefit for prescription drug coverage that is more generous 
     than the benefit that would otherwise have been available 
     under this part if such an agreement results in cost savings 
     to the Federal Government.
       ``(e) Requirements for Other Eligible Entities.--An 
     eligible entity that is licensed under State law to provide 
     the health insurance benefits under this section shall be 
     required to meet the requirements of subsection (d)(3). If an 
     eligible entity offers a national plan, such entity shall not 
     be required to meet the requirements of subsection (d)(3), 
     but shall meet the requirements of Employee Retirement Income 
     Security Act of 1974 that apply with respect to such plan.


  ``payments to eligible entities for administering the catastrophic 
                                benefit

       ``Sec. 1860E-8. (a) In General.--The Secretary may 
     establish procedures for making payments to an eligible 
     entity under a contract entered into under this part for--
       ``(1) the costs of providing covered drugs to beneficiaries 
     eligible for the benefit under this part in accordance with 
     subsection (b) minus the amount of any cost-sharing collected 
     by the eligible entity under section 1860E-6(b); and
       ``(2) costs incurred by the entity in administering the 
     catastrophic benefit in accordance with section 1860E-7.
       ``(b) Payment for Covered Drugs.--
       ``(1) In general.--Except as provided in subsection (c) and 
     subject to paragraph (2), the Secretary may only pay an 
     eligible entity for covered drugs furnished by the eligible 
     entity to an eligible beneficiary enrolled with such entity 
     under this part that is eligible for the catastrophic benefit 
     under section 1860E-6(b).
       ``(2) Limitations.--
       ``(A) Formulary restrictions.--Insofar as an eligible 
     entity with a contract under this part uses a formulary, the 
     Secretary may not make any payment for a covered drug that is 
     not included in such formulary, except to the extent provided 
     under section 1860E-4(a)(4)(B).
       ``(B) Negotiated prices.--The Secretary may not pay an 
     amount for a covered drug furnished to an eligible 
     beneficiary that exceeds the negotiated price (including 
     applicable discounts) that the beneficiary would have been 
     responsible for under section 1860E-6(a) or the price 
     negotiated for insurance coverage under the MedicareAdvantage 
     program under part C, a medicare supplemental policy, 
     employer-sponsored coverage, or a State plan.
       ``(C) Cost-sharing limitations.--An eligible entity may not 
     charge an individual enrolled with such entity who is 
     eligible for the catastrophic benefit under this part any 
     copayment, tiered copayment, coinsurance, or other cost-
     sharing that exceeds 10 percent of the cost of the drug that 
     is dispensed to the individual.
       ``(3) Payment in competitive areas.--In a geographic area 
     in which 2 or more eligible entities offer a plan under this 
     part, the Secretary may negotiate an agreement with the 
     entity to reimburse the entity for costs incurred in 
     providing the benefit under this part on a capitated basis.
       ``(c) Secondary Payer Provisions.--The provisions of 
     section 1862(b) shall apply to the benefits provided under 
     this part.


                    ``determination of income levels

       ``Sec. 1860E-9. (a) Determination of Income Levels.--
       ``(1) In general.--The Secretary shall establish procedures 
     under which each eligible entity awarded a contract under 
     this part determines the income levels of eligible 
     beneficiaries enrolled in a prescription drug card plan 
     offered by that entity at least annually for purposes of 
     sections 1860E-5(c) and 1860E-6(b).
       ``(2) Procedures.--The procedures established under 
     paragraph (1) shall require each eligible beneficiary to 
     submit such information as the eligible entity requires to 
     make the determination described in paragraph (1).
       ``(b) Enforcement of Income Determinations.--The Secretary 
     shall--
       ``(1) establish procedures that ensure that eligible 
     beneficiaries comply with sections 1860E-5(c) and 1860E-6(b); 
     and
       ``(2) require, if the Secretary determines that payments 
     were made under this part to which an eligible beneficiary 
     was not entitled, the repayment of any excess payments with 
     interest and a penalty.
       ``(c) Quality Control System.--
       ``(1) Establishment.--The Secretary shall establish a 
     quality control system to monitor income determinations made 
     by eligible entities under this section and to produce 
     appropriate and comprehensive measures of error rates.
       ``(2) Periodic audits.--The Inspector General of the 
     Department of Health and Human Services shall conduct 
     periodic audits to ensure that the system established under 
     paragraph (1) is functioning appropriately.


                            ``appropriations

       ``Sec. 1860E-10. There are authorized to be appropriated 
     from time to time, out of any moneys in the Treasury not 
     otherwise appropriated, to the Federal Supplementary Medical 
     Insurance Trust Fund established under section 1841, an 
     amount equal to the amount by which the benefits and 
     administrative costs of providing the benefits under this 
     part exceed the enrollment fees collected under section 
     1860E-5.

[[Page S8456]]

      ``medicare competition and prescription drug advisory board

       ``Sec. 1860E-11. (a) Establishment of Board.--There is 
     established a Medicare Prescription Drug Advisory Board (in 
     this section referred to as the `Board').
       ``(b) Advice on Policies; Reports.--
       ``(1) Advice on policies.--The Board shall advise the 
     Secretary on policies relating to the Voluntary Medicare 
     Prescription Drug Discount and Security Program under this 
     part.
       ``(2) Reports.--
       ``(A) In general.--With respect to matters of the 
     administration of the program under this part, the Board 
     shall submit to Congress and to the Secretary such reports as 
     the Board determines appropriate. Each such report may 
     contain such recommendations as the Board determines 
     appropriate for legislative or administrative changes to 
     improve the administration of the program under this part. 
     Each such report shall be published in the Federal Register.
       ``(B) Maintaining independence of board.--The Board shall 
     directly submit to Congress reports required under 
     subparagraph (A). No officer or agency of the United States 
     may require the Board to submit to any officer or agency of 
     the United States for approval, comments, or review, prior to 
     the submission to Congress of such reports.
       ``(c) Structure and Membership of the Board.--
       ``(1) Membership.--The Board shall be composed of 7 members 
     who shall be appointed as follows:
       ``(A) Presidential appointments.--
       ``(i) In general.--Three members shall be appointed by the 
     President, by and with the advice and consent of the Senate.
       ``(ii) Limitation.--Not more than 2 such members may be 
     from the same political party.
       ``(B) Senatorial appointments.--Two members (each member 
     from a different political party) shall be appointed by the 
     President pro tempore of the Senate with the advice of the 
     Chairman and the Ranking Minority Member of the Committee on 
     Finance of the Senate.
       ``(C) Congressional appointments.--Two members (each member 
     from a different political party) shall be appointed by the 
     Speaker of the House of Representatives, with the advice of 
     the Chairman and the Ranking Minority Member of the Committee 
     on Ways and Means of the House of Representatives.
       ``(2) Qualifications.--The members shall be chosen on the 
     basis of their integrity, impartiality, and good judgment, 
     and shall be individuals who are, by reason of their 
     education, experience, and attainments, exceptionally 
     qualified to perform the duties of members of the Board.
       ``(3) Composition.--Of the members appointed under 
     paragraph (1)--
       ``(A) at least 1 shall represent the pharmaceutical 
     industry;
       ``(B) at least 1 shall represent physicians;
       ``(C) at least 1 shall represent medicare beneficiaries;
       ``(D) at least 1 shall represent practicing pharmacists; 
     and
       ``(E) at least 1 shall represent eligible entities.
       ``(d) Terms of Appointment.--
       ``(1) In general.--Subject to paragraph (2), each member of 
     the Board shall serve for a term of 6 years.
       ``(2) Continuance in office and staggered terms.--
       ``(A) Continuance in office.--A member appointed to a term 
     of office after the commencement of such term may serve under 
     such appointment only for the remainder of such term.
       ``(B) Staggered terms.--The terms of service of the members 
     initially appointed under this section shall begin on January 
     1, 2006, and expire as follows:
       ``(i) Presidential appointments.--The terms of service of 
     the members initially appointed by the President shall expire 
     as designated by the President at the time of nomination, 1 
     each at the end of--

       ``(I) 2 years;
       ``(II) 4 years; and
       ``(III) 6 years.

       ``(ii) Senatorial appointments.--The terms of service of 
     members initially appointed by the President pro tempore of 
     the Senate shall expire as designated by the President pro 
     tempore of the Senate at the time of nomination, 1 each at 
     the end of--

       ``(I) 3 years; and
       ``(II) 6 years.

       ``(iii) Congressional appointments.--The terms of service 
     of members initially appointed by the Speaker of the House of 
     Representatives shall expire as designated by the Speaker of 
     the House of Representatives at the time of nomination, 1 
     each at the end of--

       ``(I) 4 years; and
       ``(II) 5 years.

       ``(C) Reappointments.--Any person appointed as a member of 
     the Board may not serve for more than 8 years.
       ``(D) Vacancies.--Any member appointed to fill a vacancy 
     occurring before the expiration of the term for which the 
     member's predecessor was appointed shall be appointed only 
     for the remainder of that term. A member may serve after the 
     expiration of that member's term until a successor has taken 
     office. A vacancy in the Board shall be filled in the manner 
     in which the original appointment was made.
       ``(e) Chairperson.--A member of the Board shall be 
     designated by the President to serve as Chairperson for a 
     term of 4 years or, if the remainder of such member's term is 
     less than 4 years, for such remainder.
       ``(f) Expenses and Per Diem.--Members of the Board shall 
     serve without compensation, except that, while serving on 
     business of the Board away from their homes or regular places 
     of business, members may be allowed travel expenses, 
     including per diem in lieu of subsistence, as authorized by 
     section 5703 of title 5, United States Code, for persons in 
     the Government employed intermittently.
       ``(g) Meetings.--
       ``(1) In general.--The Board shall meet at the call of the 
     Chairperson (in consultation with the other members of the 
     Board) not less than 4 times each year to consider a specific 
     agenda of issues, as determined by the Chairperson in 
     consultation with the other members of the Board.
       ``(2) Quorum.--Four members of the Board (not more than 3 
     of whom may be of the same political party) shall constitute 
     a quorum for purposes of conducting business.
       ``(h) Federal Advisory Committee Act.--The Board shall be 
     exempt from the provisions of the Federal Advisory Committee 
     Act (5 U.S.C. App.).
       ``(i) Personnel.--
       ``(1) Staff director.--The Board shall, without regard to 
     the provisions of title 5, United States Code, relating to 
     the competitive service, appoint a Staff Director who shall 
     be paid at a rate equivalent to a rate established for the 
     Senior Executive Service under section 5382 of title 5, 
     United States Code.
       ``(2) Staff.--
       ``(A) In general.--The Board may employ, without regard to 
     chapter 31 of title 5, United States Code, such officers and 
     employees as are necessary to administer the activities to be 
     carried out by the Board.
       ``(B) Flexibility with respect to civil service laws.--
       ``(i) In general.--The staff of the Board shall be 
     appointed without regard to the provisions of title 5, United 
     States Code, governing appointments in the competitive 
     service, and, subject to clause (ii), shall be paid without 
     regard to the provisions of chapters 51 and 53 of such title 
     (relating to classification and schedule pay rates).
       ``(ii) Maximum rate.--In no case may the rate of 
     compensation determined under clause (i) exceed the rate of 
     basic pay payable for level IV of the Executive Schedule 
     under section 5315 of title 5, United States Code.
       ``(j) Authorization of Appropriations.--There are 
     authorized to be appropriated, out of the Federal 
     Supplemental Medical Insurance Trust Fund established under 
     section 1841, and the general fund of the Treasury, such sums 
     as are necessary to carry out the purposes of this 
     section.''.
       (b) Conforming References to Previous part E.--
       (1) In general.--Any reference in law (in effect before the 
     date of enactment of this Act) to part E of title XVIII of 
     the Social Security Act is deemed a reference to part F of 
     such title (as in effect after such date).
       (2) Secretarial submission of legislative proposal.--Not 
     later than 6 months after the date of enactment of this 
     section, the Secretary of Health and Human Services shall 
     submit to the appropriate committees of Congress a 
     legislative proposal providing for such technical and 
     conforming amendments in the law as are required by the 
     provisions of this section.
       (c) Effective Date.--
       (1) In general.--The amendment made by subsection (a) shall 
     take effect on the date of enactment of this Act.
       (2) Implementation.--Notwithstanding any provision of part 
     E of title XVIII of the Social Security Act (as added by 
     subsection (a)), the Secretary of Health and Human Services 
     shall implement the Voluntary Medicare Prescription Drug 
     Discount and Security Program established under such part in 
     a manner such that--
       (A) benefits under such part for eligible beneficiaries (as 
     defined in section 1860E of such Act, as added by such 
     subsection) with annual incomes below 200 percent of the 
     poverty line (as defined in such section) are available to 
     such beneficiaries not later than the date that is 6 months 
     after the date of enactment of this Act; and
       (B) benefits under such part for other eligible 
     beneficiaries are available to such beneficiaries not later 
     than the date that is 1 year after the date of enactment of 
     this Act.

     SEC. 102. ADMINISTRATION OF VOLUNTARY MEDICARE PRESCRIPTION 
                   DRUG DISCOUNT AND SECURITY PROGRAM.

       (a) Establishment of Center for Medicare Prescription 
     Drugs.--There is established, within the Centers for Medicare 
     & Medicaid Services of the Department of Health and Human 
     Services, a Center for Medicare Prescription Drugs. Such 
     Center shall be separate from the Center for Beneficiary 
     Choices, the Center for Medicare Management, and the Center 
     for Medicaid and State Operations.
       (b) Duties.--It shall be the duty of the Center for 
     Medicare Prescription Drugs to administer the Voluntary 
     Medicare Prescription Drug Discount and Security Program 
     established under part E of title XVIII of the Social 
     Security Act (as added by section 101).
       (c) Director.--
       (1) Appointment.--There shall be in the Center for Medicare 
     Prescription Drugs a Director of Medicare Prescription Drugs, 
     who shall be appointed by the President, by and with the 
     advice and consent of the Senate.

[[Page S8457]]

       (2) Responsibilities.--The Director shall be responsible 
     for the exercise of all powers and the discharge of all 
     duties of the Center for Medicare Prescription Drugs and 
     shall have authority and control over all personnel and 
     activities thereof.
       (d) Personnel.--The Director of the Center for Medicare 
     Prescription Drugs may appoint and terminate such personnel 
     as may be necessary to enable the Center for Medicare 
     Prescription Drugs to perform its duties.

     SEC. 103. EXCLUSION OF PART E COSTS FROM DETERMINATION OF 
                   PART B MONTHLY PREMIUM.

       Section 1839(g) of the Social Security Act (42 U.S.C. 
     1395r(g)) is amended--
       (1) by striking ``attributable to the application of 
     section'' and inserting ``attributable to--
       ``(1) the application of section'';
       (2) by striking the period and inserting ``; and''; and
       (3) by adding at the end the following new paragraph:
       ``(2) the Voluntary Medicare Prescription Drug Discount and 
     Security Program under part E.''.

     SEC. 104. MEDIGAP REVISIONS.

       Section 1882 of the Social Security Act (42 U.S.C. 1395ss) 
     is amended by adding at the end the following new subsection:
       ``(v) Modernization of Medicare Supplemental Policies.--
       ``(1) Promulgation of model regulation.--
       ``(A) NAIC model regulation.--If, within 9 months after the 
     date of enactment of the Prescription Drug and Medicare 
     Improvement Act of 2003, the National Association of 
     Insurance Commissioners (in this subsection referred to as 
     the `NAIC') changes the 1991 NAIC Model Regulation (described 
     in subsection (p)) to revise the benefit package classified 
     as `J' under the standards established by subsection (p)(2) 
     (including the benefit package classified as `J' with a high 
     deductible feature, as described in subsection (p)(11)) so 
     that--
       ``(i) the coverage for prescription drugs available under 
     such benefit package is replaced with coverage for 
     prescription drugs that complements but does not duplicate 
     the benefits for prescription drugs that beneficiaries are 
     otherwise entitled to under this title;
       ``(ii) a uniform format is used in the policy with respect 
     to such revised benefits; and
       ``(iii) such revised standards meet any additional 
     requirements imposed by the Prescription Drug and Medicare 
     Improvement Act of 2003;

     subsection (g)(2)(A) shall be applied in each State, 
     effective for policies issued to policy holders on and after 
     January 1, 2006, as if the reference to the Model Regulation 
     adopted on June 6, 1979, were a reference to the 1991 NAIC 
     Model Regulation as changed under this subparagraph (such 
     changed regulation referred to in this section as the `2006 
     NAIC Model Regulation').
       ``(B) Regulation by the secretary.--If the NAIC does not 
     make the changes in the 1991 NAIC Model Regulation within the 
     9-month period specified in subparagraph (A), the Secretary 
     shall promulgate, not later than 9 months after the end of 
     such period, a regulation and subsection (g)(2)(A) shall be 
     applied in each State, effective for policies issued to 
     policy holders on and after January 1, 2006, as if the 
     reference to the Model Regulation adopted on June 6, 1979, 
     were a reference to the 1991 NAIC Model Regulation as changed 
     by the Secretary under this subparagraph (such changed 
     regulation referred to in this section as the `2006 Federal 
     Regulation').
       ``(C) Consultation with working group.--In promulgating 
     standards under this paragraph, the NAIC or Secretary shall 
     consult with a working group similar to the working group 
     described in subsection (p)(1)(D).
       ``(D) Modification of standards if medicare benefits 
     change.--If benefits under part E of this title are changed 
     and the Secretary determines, in consultation with the NAIC, 
     that changes in the 2006 NAIC Model Regulation or 2006 
     Federal Regulation are needed to reflect such changes, the 
     preceding provisions of this paragraph shall apply to the 
     modification of standards previously established in the same 
     manner as they applied to the original establishment of such 
     standards.
       ``(2) Construction of benefits in other medicare 
     supplemental policies.--Nothing in the benefit packages 
     classified as `A' through `I' under the standards established 
     by subsection (p)(2) (including the benefit package 
     classified as `F' with a high deductible feature, as 
     described in subsection (p)(11)) shall be construed as 
     providing coverage for benefits for which payment may be made 
     under part E.
       ``(3) Application of provisions and conforming 
     references.--
       ``(A) Application of provisions.--The provisions of 
     paragraphs (4) through (10) of subsection (p) shall apply 
     under this section, except that--
       ``(i) any reference to the model regulation applicable 
     under that subsection shall be deemed to be a reference to 
     the applicable 2006 NAIC Model Regulation or 2006 Federal 
     Regulation; and
       ``(ii) any reference to a date under such paragraphs of 
     subsection (p) shall be deemed to be a reference to the 
     appropriate date under this subsection.
       ``(B) Other references.--Any reference to a provision of 
     subsection (p) or a date applicable under such subsection 
     shall also be considered to be a reference to the appropriate 
     provision or date under this subsection.''.
                                 ______
                                 
  SA 1013. Mr. BOND (for himself and Mr. Roberts) submitted an 
amendment intended to be proposed by him to the bill S. 1, to amend 
title XVIII of the Social Security Act to make improvements in the 
medicare program, to provide prescription drug coverage under the 
medicare program, and for other purposes; which was ordered to lie on 
the table; as follows:

       At the appropriate place, insert the following:

     SEC. ____. COMMITTEE ON DRUG COMPOUNDING.

       (a) Establishment.--The Secretary of Health and Human 
     Services shall establish an Committee on Drug Compounding 
     (referred to in this section as the ``Committee'') within the 
     Food and Drug Administration on drug compounding to ensure 
     that patients are receiving necessary, safe and accurate 
     dosages of compounded drugs.
       (b) Membership.--The membership of the Advisory Committee 
     shall be appointed by the Secretary of Health and Human 
     Services and shall include representatives of--
       (1) the National Association of Boards of Pharmacy;
       (2) pharmacy groups;
       (3) physician groups;
       (4) consumer and patient advocate groups;
       (5) the United States Pharmacopoeia; and
       (6) other individuals determined appropriate by the 
     Secretary.
       (c) Report and Recommendations.--Not later than 1 year 
     after the date of enactment of this Act, the Committee shall 
     submit to the Secretary a report concerning the 
     recommendations of the Committee to improve and protect 
     patient safety.
       (d) Termination.--The Committee shall terminate on the date 
     that is 1 year after the date of enactment of this Act.
                                 ______
                                 
  SA 1014. Mr. BOND submitted an amendment intended to be proposed by 
him to the bill S. 1, to amend title XVIII of the Social Security Act 
to make improvements in the medicare program, to provide prescription 
drug coverage under the medicare program, and for other purposes; which 
was ordered to lie on the table; as follows:

       On page 483, line 7, strike ``and'' and insert ``, pharmacy 
     services, and''.
                                 ______
                                 
  SA 1015. Mr. DODD submitted an amendment intended to be proposed by 
him to the bill S. 1, to amend title XVIII of the Social Security Act 
to make improvements in the medicare program, to provide prescription 
drug coverage under the medicare program, and for other purposes; which 
was ordered to lie on the table; as follows:

       At the end of title VI, insert the following:

     SEC. ____. STUDY ON MAKING PRESCRIPTION PHARMACEUTICAL 
                   INFORMATION ACCESSIBLE FOR BLIND AND VISUALLY-
                   IMPAIRED INDIVIDUALS.

       (a) Study.--
       (1) In general.--The Secretary of Health and Human Services 
     shall undertake a study of how to make prescription 
     pharmaceutical information, including drug labels and usage 
     instructions, accessible to blind and visually-impaired 
     individuals.
       (2) Study to include existing and emerging technologies.--
     The study under paragraph (1) shall include a review of 
     existing and emerging technologies, including assistive 
     technology, that makes essential information on the content 
     and prescribed use of pharmaceutical medicines available in a 
     usable format for blind and visually-impaired individuals.
       (b) Report.--
       (1) In general.--Not later than 18 months after the date of 
     the enactment of this Act, the Secretary of Health and Human 
     Services shall submit a report to Congress on the study 
     required under subsection (a).
       (2) Contents of report.--The report required under 
     subsection (a) shall include recommendations for the 
     implementation of usable formats for making prescription 
     pharmaceutical information available to blind and visually-
     impaired individuals and an estimate of the costs associated 
     with the implementation of each format.
                                 ______
                                 
  SA 1016. Mrs. CLINTON submitted an amendment intended to be proposed 
by her to the bill S. 1, to amend title XVIII of the Social Security 
Act to make improvements in the medicare program, to provide 
prescription drug coverage under the medicare program, and for other 
purposes; which was ordered to lie on the table; as follows:

       On page 654, after line 18 and before the amendment to the 
     title, insert the following:

     SEC. ____. INFORMATION TECHNOLOGY.

       (a) Improving Clinical Practices.--
       (1) Telemedicine.--
       (A) Licensing.--Section 1834(m)(4)(C)(i) (42 U.S.C. 
     1395m(m)(4)(C)(i)) is amended--
       (i) in subclause (II), by striking ``or'' at the end;
       (ii) in subclause (III), by striking the period and 
     inserting ``; or''; and
       (iii) by adding at the end the following:

       ``(IV) in a State in which the respective State medical 
     board has adopted a formal

[[Page S8458]]

     policy regarding licensing or certification requirements for 
     providers at distant sites who do not have a license to 
     practice medicine at the originating site.''.

       (B) Expanding eligibility for reimbursement.--Section 
     1834(m)(4)(C)(i)(I) (42 U.S.C. 1395m(m)(4)(C)(i)(I)) is 
     amended by striking ``rural''.
       (2) NIH trials to study impact of technology on cost and 
     quality of health care.--
       (A) Findings.--Congress makes the following findings:
       (i) An estimated 80,000 to 100,000 patients die every year 
     from errors suffered during hospitalization.
       (ii) Many of these errors could have been avoided with 
     changes to the system of health care delivery.
       (iii) These systemwide changes have the potential to 
     decrease the cost of providing health care and to increase 
     the quality of services provided.
       (iv) These improvements in cost and quality can be as 
     dramatic as improvements seen with new technology or 
     pharmaceutical advances.
       (v) Currently new medical devices and medications undergo 
     rigorous randomized controlled clinical trials to document 
     their effect on a patient's health.
       (vi) These clinical trials form the basis for providers to 
     practice evidence-based medicine and to change their 
     practices to improve their patients' outcomes.
       (vii) Similar controlled clinical studies of systems-based 
     approaches to changing practice, if available, can help 
     providers implement systems-based measures to improve 
     outcomes.
       (B) Research on systems-based approaches to changing 
     clinical practice.--Part B of title IV of the Public Health 
     Service Act (42 U.S.C. 284 et seq.) is amended by adding at 
     the end the following:

     ``SEC. 409J. RESEARCH ON SYSTEMS-BASED APPROACHES TO CHANGING 
                   CLINICAL PRACTICE.

       ``(a) Establishment.--The Secretary shall establish within 
     the Office of the Director of NIH a Medical Systems Safety 
     Initiative (referred to in this section as the `Initiative') 
     to conduct and support research regarding systems-based 
     approaches to improving and advancing medical care. The 
     Initiative shall be headed by the Director of NIH (referred 
     to in this section as the `Director').
       ``(b) Purpose.--The purpose of the Initiative is to enable 
     the Director of NIH--
       ``(1) to conduct and support basic and applied research 
     (including both intramural and extramural research), research 
     training, the dissemination of health information, and other 
     programs with respect to systems research, user-centered 
     design, and human factors engineering within the National 
     Institutes of Health to realize the expanding opportunities 
     for improving health outcomes through the analysis and 
     redesign of medical systems;
       ``(2) to enhance collaborative efforts among the Institutes 
     to conduct and support multidisciplinary research in the 
     areas that the Director determines to be most promising; and
       ``(3) to encourage and support clinical studies to provide 
     scientifically and statistically rigorous and meaningful 
     information about the utility and effectiveness of various 
     systems-based interventions.
       ``(c) Appropriate Scientific Expertise and Coordination 
     With Institutes and Federal Agencies.--The Director of NIH, 
     after consultation with the Division of Research Grants, 
     shall ensure that scientists with appropriate expertise in 
     research on health systems, user-centered design, and human 
     factors engineering are incorporated into the review, 
     oversight, and management processes of all research projects 
     and other activities funded by the Initiative. In carrying 
     out this subsection, the Director, as necessary, may 
     establish review groups with appropriate scientific 
     expertise. The Director shall coordinate efforts with other 
     Institutes and Federal agencies to ensure appropriate 
     scientific input and management.
       ``(d) Ensuring High Quality, Rigorous Scientific Review.--
     In order to ensure high quality, rigorous scientific review 
     with respect to the Initiative, the Director of NIH shall 
     conduct or support the following activities:
       (1) Outcomes research and investigations.
       (2) Epidemiological studies on the incidence and prevalence 
     of various systems, practices, and processes within the 
     health care system and their effect on health outcomes, both 
     beneficial and harmful.
       (3) Health services research.
       (4) Basic science research.
       (5) Clinical trials.
       (6) Other appropriate research and investigational 
     activities.''.
       (b) Improving and Promoting Electronic Medical Records.--
       (1) Authentication standards.--The Director of the National 
     Center for Vital and Health Statistics shall provide 
     assistance to the Secretary of Health and Human Services in 
     the development of authentication standards for health 
     records. In developing such standards, the Secretary shall 
     take into consideration the following:
       (A) Recommendations for authentication technology and 
     identification information standards that--
       (i) provide for the reliable identification and retrieval 
     of a patient's electronic medical data;
       (ii) allow the patient to have detailed control over the 
     access of individual components of his or her electronic 
     medical record by being able to specify specific providers, 
     each of whom will have access to limited portions of the 
     electronic medical record;
       (iii) minimize security risks, including the potential 
     for--

       (I) the patient to misrepresent his or her true identity;
       (II) a health care provider to access data for which the 
     patient has not consented to grant such access;
       (III) a third party to access identification information; 
     or
       (IV) a third party to circumvent or exploit the 
     authentication process in order to access electronic medical 
     data without the consent of the patient;

       (iv) allow for the timely and convenient creation of 
     identification information at the time of contact between a 
     patient and a provider, so as to minimize any disruption or 
     delay in the provision of needed medical services to a 
     patient who does not already have identification information; 
     and
       (v) maximize the probability of accurate identification, 
     secure authentication, and rapid access to medical data even 
     in situations where the patient--

       (I) does not possess the identification information that is 
     usually required for successful authentication, but wishes to 
     grant consent to the provider to access necessary medical 
     data;
       (II) possesses the identification information but is not 
     able to provide consent for the emergency access of medical 
     data due to incapacitation; and
       (III) is not able to provide identification information nor 
     consent for emergency data access due to incapacitation.

       (2) Personal health record.--
       (A) Federal health information exchange standards 
     initiative.--The Secretary of Health and Human Services, the 
     Secretary of Defense, and the Secretary of Veterans' Affairs, 
     in carrying out activities under the Federal e-Goverment 
     Health Information Exchange Standards Initiative, shall 
     jointly recommend standards for the implementation of 
     personal health records that--
       (i) includes the capability for patients to append to their 
     electronic record information about--

       (I) illnesses for which the patient did not seek 
     professional medical care; and
       (II) health information not related to a specific disease, 
     episode, or illness; and

       (ii) provides convenient access to the individual's full 
     electronic medical record.
       (B) Medical translation research.--
       (i) In general.--The Director of the National Science 
     Foundation shall award grants to public and nonprofit private 
     entities for the conduct of basic research on innovative 
     approaches to improve patients' understanding and 
     comprehension of their electronic medical record. Research 
     areas may include technology for the automated--

       (I) translation of medical information to language more 
     easily understandable by the patient;
       (II) reorganization of the electronic medical record into a 
     structure more useful to the patient; and
       (III) integration of links to relevant information from 
     other sources into the electronic medical record.

       (ii) Merit review; competition.--Grants shall be awarded 
     under this subparagraph on a merit-reviewed competitive 
     basis.
       (iii) Authorization of appropriations.--There are 
     authorized to be appropriated to the National Science 
     Foundation to carry out this subparagraph--

       (I) $5,000,000 for fiscal year 2004;
       (II) $10,000,000 for fiscal year 2005; and
       (III) $15,000,000 for fiscal year 2006 and each fiscal year 
     thereafter.

       (3) Definitions.--In this subsection:
       (A) Identification information.--The term ``identification 
     information'' with respect to the medical records of a 
     patient, means the data necessary to identify the patient.
       (B) Authentication.--The term ``authentication'' means the 
     process of using the identification information to validate 
     the patient's identification and gain access to his or her 
     electronic medical data.
       (c) Improving Information Technology Infrastructure in the 
     Basic Life Sciences.--Not later than 18 months after the date 
     of enactment of this Act, the Director of the National 
     Institute of General Medical Sciences shall submit to 
     Congress a report on the activities of the Biomedical 
     Information Science and Technology Initiative. Such report 
     shall include--
       (1) a description of current activities of the Biomedical 
     Information Science and Technology Initiative Consortium;
       (2) a summary of recently completed and ongoing grant 
     programs; and
       (3) recommendations for the further advancement of the 
     Biomedical Information Science and Technology Initiative and 
     bioinformatics and computational biology research in general.
       (d) Improving Education and Training.--Subpart 3 of part D 
     of title IV of the Public Health Service Act (42 U.S.C. 286c 
     et seq.) is amended by adding at the end the following:

     ``SEC. 478B. CERTIFICATION OF INFORMATION WEBSITES.

       ``(a) In General.--The National Information Center on 
     Health Services Research and Health Care Technology (in this 
     section referred to as the `Center') shall develop a 
     voluntary certification program for health information 
     websites on the Internet. As part of such program, websites 
     shall be deemed to

[[Page S8459]]

     be certified if they meet criteria that includes the 
     following:
       ``(1) The website provides references to peer-reviewed 
     rigorous scientific research for any conclusions or 
     recommendations that it advocates.
       ``(2) The website is easy to navigate and comprehend by a 
     general audience that does not have any specific medical 
     training.
       ``(3) The website accommodates, to the maximum extent 
     practicable, cultural, language, and literacy variation among 
     its target audience.
       ``(b) Limitation.--In determining whether a website meets 
     criteria for certification under the program under subsection 
     (a), the Center may not consider--
       ``(1) the specific nature of the conclusions or 
     recommendations of the website themselves, so long as they 
     meet criteria for evidence as specified in subsection (a)(1); 
     and
       ``(2) the person or organization responsible for the 
     website.
       ``(c) Period Recertification.--In establishing the program 
     under subsection (a), the Center shall develop a policy for 
     the periodic expiration and renewal of certifications so as 
     to ensure that websites are reviewed on a periodic basis for 
     compliance with the criteria of certification.
       ``(d) Seal.--The Center shall develop a seal or marker that 
     can be used by a website that is certified under the program 
     under subsection (a) to indicate to its audience that the 
     website has obtained the Center's certification.
       ``(e) Fee.--The Center may assess an application fee for 
     websites in order to cover the costs of evaluating the 
     website.''.
                                 ______
                                 
  SA 1017. Mr. ALLARD (for himself, Mr. Fitzgerald, and Ms. Collins) 
submitted an amendment intended to be proposed by him to the bill S. 1, 
to amend title XVIII of the Social Security Act to make improvements in 
the medicare program, to provide prescription drug coverage under the 
medicare program, and for other purposes; which was ordered to lie on 
the table; as follows:

       At the end of title VI, insert the following:

     SEC. ____. TEMPORARY SUSPENSION OF OASIS REQUIREMENT FOR 
                   COLLECTION OF DATA ON NON-MEDICARE AND NON-
                   MEDICAID PATIENTS.

       (a) In General.--During the period described in subsection 
     (b), the Secretary may not require, under section 4602(e) of 
     the Balanced Budget Act of 1997 or otherwise under OASIS, a 
     home health agency to gather or submit information that 
     relates to an individual who is not eligible for benefits 
     under either title XVIII or title XIX of the Social Security 
     Act (such information in this section referred to as ``non-
     medicare/medicaid OASIS information'').
       (b) Period of Suspension.--The period described in this 
     subsection--
       (1) begins on the date of the enactment of this Act; and
       (2) ends on the last day of the 2nd month beginning after 
     the date as of which the Secretary has published final 
     regulations regarding the collection and use by the Centers 
     for Medicare & Medicaid Services of non-medicare/medicaid 
     OASIS information following the submission of the report 
     required under subsection (c)
       (c) Report.--
       (1) Study.--The Secretary shall conduct a study on how non-
     medicare/medicaid OASIS information is and can be used by 
     large home health agencies. Such study shall examine--
       (A) whether there are unique benefits from the analysis of 
     such information that cannot be derived from other 
     information available to, or collected by, such agencies; and
       (B) the value of collecting such information by small home 
     health agencies compared to the administrative burden related 
     to such collection.

     In conducting the study the Secretary shall obtain 
     recommendations from quality assessment experts in the use of 
     such information and the necessity of small, as well as 
     large, home health agencies collecting such information.
       (2) Report.--The Secretary shall submit to Congress a 
     report on the study conducted under paragraph (1) by not 
     later than 18 months after the date of the enactment of this 
     Act.
       (d) Construction.--Nothing in this section shall be 
     construed as preventing home health agencies from collecting 
     non-medicare/medicaid OASIS information for their own use.
                                 ______
                                 
  SA 1018. Mr. LIEBERMAN (for himself and Ms. Collins) submitted an 
amendment intended to be proposed by him to the bill S. 1, to amend 
title XVIII of the Social Security Act to make improvements in the 
medicare program, to provide prescription drug coverage under the 
medicare program, and for other purposes; which was ordered to lie on 
the table; as follows:

       At the end of title VI, insert the following:

     SEC. ____. COLON CANCER SCREENING.

       (a) Sense of Congress.--It is the sense of Congress that--
       (1) colorectal cancer screening tests (as defined in 
     section 1861(pp) of the Social Security Act (42 U.S.C. 
     1395x(pp)) covered under the medicare program have been 
     severely underutilized, with the Comptroller General of the 
     United States reporting in 2000 that since coverage of such 
     tests was implemented, the percentage of beneficiaries under 
     the medicare program receiving either a screening or a 
     diagnostic colonoscopy has increased by only 1 percent;
       (2) the Centers for Medicare & Medicaid Services should 
     encourage health care providers to use more effective 
     screening and diagnostic health care technologies in the area 
     of colorectal cancer screening;
       (3) in recent years, the Centers for Medicare & Medicaid 
     Services has subjected colorectal cancer screening tests to 
     some of the largest reimbursement reductions under the 
     medicare program;
       (4) unlike other preventive screening tests covered under 
     the medicare program, health care providers must consult with 
     beneficiaries prior to furnishing a screening colonoscopy in 
     order to--
       (A) ascertain the medical and family history of the 
     beneficiary; and
       (B) inform the beneficiary of preparatory steps that must 
     be taken prior to the procedure; and
       (5) reimbursement under the medicare program is not 
     currently available for the consultations described in 
     paragraph (4) despite the fact that reimbursement is provided 
     under such program for similar consultations prior to a 
     diagnostic colonoscopy.
       (b) Increase in Reimbursement for Colorectal Cancer 
     Screening and Diagnostic Tests.--
       (1) In general.--Section 1834(d) (42 U.S.C. 1395m(d)) is 
     amended by adding at the end the following new paragraph:
       ``(4) Enhanced payment for colorectal cancer screening and 
     diagnostic tests.--
       ``(A) Facility rates.--Notwithstanding paragraphs (2)(A) 
     and (3)(A), the Secretary shall establish national minimum 
     payment amounts for CPT codes 45378, 45380, 45385 and HCPCS 
     codes GO105 and GO121 for items and services furnished during 
     the last 6 months of 2003 and in subsequent years which 
     reflect a 30 percent increase above the relative value units 
     in effect as the facility rates for such codes on June 30, 
     2003, with such revised payment level to apply to items and 
     services performed in a facility setting.
       ``(B) Annual adjustments.--In the case of items and 
     services furnished on or after January 1, 2004, the payment 
     rates described in subparagraph (A) shall, subject to the 
     minimum payment amounts established in such subparagraph, be 
     adjusted annually as provided in section 1848.''.
       (2) Effect on part a payments.--The Secretary shall not 
     consider the national minimum payment described in section 
     1834(d)(4)(A) (42 U.S.C. 1395m(d)(4)(A)), as added by 
     paragraph (1), when determining the hospital outpatient 
     prospective payment system payment amounts under the relevant 
     APC codes for colorectal cancer screening and diagnostic 
     tests.
       (3) Effective date.--The amendment made by this subsection 
     shall apply to items and services furnished on or after July 
     1, 2003.
       (c) Medicare Coverage of Office Visit or Consultation Prior 
     to a Screening Colonoscopy or in Conjunction With a 
     Beneficiary's Decision To Obtain Such a Screening.--
       (1) Coverage.--Section 1861(s)(2) (42 U.S.C. 1395x(s)(2)) 
     is amended--
       (A) in subparagraph (U), by striking ``and'' at the end;
       (B) in subparagraph (V), by inserting ``and'' at the end; 
     and
       (C) by adding at the end the following new subparagraph:
       ``(W) an outpatient office visit or consultation for the 
     purpose of beneficiary education, assuring selection of the 
     proper screening test, and securing information relating to 
     the procedure and sedation of the beneficiary, prior to a 
     colorectal cancer screening test consisting of a screening 
     colonoscopy or in conjunction with the beneficiary's decision 
     to obtain such a screening, regardless of whether such 
     screening is medically indicated with respect to the 
     beneficiary;''.
       (2) Payment.--
       (A) In general.--Section 1833(a)(1) (42 U.S.C. 1395l(a)(1)) 
     is amended--
       (i) by striking ``and'' before ``(U)''; and
       (ii) by inserting before the semicolon at the end the 
     following: ``, and (V) with respect to an outpatient office 
     visit or consultation under section 1861(s)(2)(W), the 
     amounts paid shall be 80 percent of the lesser of the actual 
     charge or the amount established under section 1848, except 
     that no payment shall be made for such a visit or 
     consultation if no payment would be made for a colorectal 
     cancer screening test consisting of a screening colonoscopy 
     for the individual furnished on the date of such visit or 
     consultation because of the frequency limits described in 
     section 1834(d)(3)(E)''.
       (B) Payment under physician fee schedule.--Section 
     1848(j)(3) (42 U.S.C. 1395w-4(j)(3)) is amended by inserting 
     ``(2)(W),'' after ``(2)(S),''.
       (C) Requirement for establishment of payment amount under 
     physician fee schedule.--Section 1834(d) (42 U.S.C. 
     1395m(d)), as amended by subsection (b), is amended by adding 
     at the end the following new paragraph:
       ``(5) Payment for outpatient office visit or consultation 
     prior to screening colonoscopy.--With respect to an 
     outpatient office visit or consultation under section 
     1861(s)(2)(W), payment under section 1848 shall be consistent 
     with the payment amounts for CPT codes 99203 and 99243.''.

[[Page S8460]]

       (D) Frequency limitation.--Section 1862(a)(1) (42 U.S.C. 
     1395y(a)(1)) is amended--
       (i) in subparagraph (H), by striking ``and'' at the end;
       (ii) in subparagraph (I), by striking the semicolon at the 
     end and inserting ``, and''; and
       (iii) by inserting after subparagraph (I) the following new 
     subparagraph:
       ``(J) in the case of an outpatient office visit or 
     consultation under section 1861(s)(2)(W), which is performed 
     more frequently that is covered under section 
     1833(a)(1)(V);''.
       (3) Effective date.--The amendments made by this subsection 
     shall apply to items and services provided on or after July 
     1, 2003.
       (d) Waiver of Deductible for Colorectal Cancer Screening 
     Tests.--
       (1) In general.--The first sentence of section 1833(b) (42 
     U.S.C. 1395l(b)) is amended--
       (A) by striking ``and'' before ``(6)''; and
       (B) by inserting before the period at the end the 
     following: ``, and (7) such deductible shall not apply with 
     respect to colorectal cancer screening tests (as described in 
     section 1861(pp)(1))''.
       (2) Conforming amendments.--Paragraphs (2)(C)(ii) and 
     (3)(C)(ii) of section 1834(d) (42 U.S.C. 1395m(d)) are each 
     amended--
       (A) by striking ``deductible and'' in the heading; and
       (B) in subclause (I), by striking ``deductible or'' each 
     place it appears.
       (3) Effective date.--The amendment made by this subsection 
     shall apply to items and services furnished on or after July 
     1, 2003.
                                 ______
                                 
  SA 1019. Mr. CONRAD (for himself, Mrs. Murray, Mr. Smith, Mrs. 
Lincoln, and Mr. Jeffords) proposed an amendment to the bill S. 1, to 
amend title XVIII of the Social Security Act to make improvements in 
the medicare program, to provide prescription drug coverage under the 
medicare program, and for other purposes;

       At the end of subtitle B of title IV, insert the following:

     SEC. ____. MEDICARE COVERAGE OF SELF-INJECTED BIOLOGICALS.

       (a) Coverage.--
       (1) In general.--Section 1861(s)(2) (42 U.S.C. 1395x(s)(2)) 
     is amended--
       (A) in subparagraph (U), by striking ``and'' at the end;
       (B) in subparagraph (V), by inserting ``and'' at the end; 
     and
       (C) by adding at the end the following new subparagraph:
       ``(W)(i) a self-injected biological (which is approved by 
     the Food and Drug Administration) that is prescribed as a 
     complete replacement for a drug or biological (including the 
     same biological for which payment is made under this title 
     when it is furnished incident to a physicians' service) that 
     would otherwise be described in subparagraph (A) or (B) and 
     that is furnished during 2004 or 2005; and
       ``(ii) a self-injected drug that is used to treat multiple 
     sclerosis;''.
       (2) Conforming amendment.--Subparagraphs (A) and (B) of 
     section 1861(s)(2) of the Social Security Act (42 U.S.C. 
     1395x(s)(2)) are each amended by inserting ``, except for any 
     drug or biological described in subparagraph (W),'' after 
     ``which''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply to drugs and biologicals furnished on or after 
     January 1, 2004 and before January 1, 2006.
       At the end of title VI, add the following:

     SEC. ____. MEDICARE SECONDARY PAYOR (MSP) PROVISIONS.

       (a) Technical Amendment Concerning Secretary's Authority To 
     Make Conditional Payment When Certain Primary Plans Do Not 
     Pay Promptly.--
       (1) In general.--Section 1862(b)(2) (42 U.S.C. 1395y(b)(2)) 
     is amended--
       (A) in subparagraph (A)(ii), by striking ``promptly (as 
     determined in accordance with regulations)''; and
       (B) in subparagraph (B)--
       (i) by redesignating clauses (i) through (iii) as clauses 
     (ii) through (iv), respectively; and
       (ii) by inserting before clause (ii), as so redesignated, 
     the following new clause:
       ``(i) Authority to make conditional payment.--The Secretary 
     may make payment under this title with respect to an item or 
     service if a primary plan described in subparagraph (A)(ii) 
     has not made or cannot reasonably be expected to make payment 
     with respect to such item or service promptly (as determined 
     in accordance with regulations). Any such payment by the 
     Secretary shall be conditioned on reimbursement to the 
     appropriate Trust Fund in accordance with the succeeding 
     provisions of this subsection.''.
       (2) Effective date.--The amendments made by paragraph (1) 
     shall be effective as if included in the enactment of title 
     III of the Medicare and Medicaid Budget Reconciliation 
     Amendments of 1984 (Public Law 98-369).
       (b) Clarifying Amendments to Conditional Payment 
     Provisions.--Section 1862(b)(2) (42 U.S.C. 1395y(b)(2)) is 
     further amended--
       (1) in subparagraph (A), in the matter following clause 
     (ii), by inserting the following sentence at the end: ``An 
     entity that engages in a business, trade, or profession shall 
     be deemed to have a self-insured plan if it carries its own 
     risk (whether by a failure to obtain insurance, or otherwise) 
     in whole or in part.'';
       (2) in subparagraph (B)(ii), as redesignated by subsection 
     (a)(2)(B)--
       (A) by striking the first sentence and inserting the 
     following: ``A primary plan, and an entity that receives 
     payment from a primary plan, shall reimburse the appropriate 
     Trust Fund for any payment made by the Secretary under this 
     title with respect to an item or service if it is 
     demonstrated that such primary plan has or had a 
     responsibility to make payment with respect to such item or 
     service. A primary plan's responsibility for such payment may 
     be demonstrated by a judgment, a payment conditioned upon the 
     recipient's compromise, waiver, or release (whether or not 
     there is a determination or admission of liability) of 
     payment for items or services included in a claim against the 
     primary plan or the primary plan's insured, or by other 
     means.''; and
       (B) in the final sentence, by striking ``on the date such 
     notice or other information is received'' and inserting ``on 
     the date notice of, or information related to, a primary 
     plan's responsibility for such payment or other information 
     is received''; and
       (3) in subparagraph (B)(iii), as redesignated by subsection 
     (a)(2)(B), by striking the first sentence and inserting the 
     following: ``In order to recover payment made under this 
     title for an item or service, the United States may bring an 
     action against any or all entities that are or were required 
     or responsible (directly, as an insurer or self-insurer, as a 
     third-party administrator, as an employer that sponsors or 
     contributes to a group health plan, or large group health 
     plan, or otherwise) to make payment with respect to the same 
     item or service (or any portion thereof) under a primary 
     plan. The United States may, in accordance with paragraph 
     (3)(A) collect double damages against any such entity. In 
     addition, the United States may recover under this clause 
     from any entity that has received payment from a primary plan 
     or from the proceeds of a primary plan's payment to any 
     entity.''.
       (c) Clerical Amendments.--Section 1862(b) (42 U.S.C. 
     1395y(b)) is amended--
       (1) in paragraph (1)(A), by moving the indentation of 
     clauses (ii) through (v) 2 ems to the left; and
       (2) in paragraph (3)(A), by striking ``such'' before 
     ``paragraphs''.
                                 ______
                                 
  SA 1020. Mr. CONRAD proposed an amendment to the bill S. 1, to amend 
title XVIII of the Social Security Act to make improvements in the 
medicare program, to provide prescription drug coverage under the 
medicare program, and for other purposes; as follows:

       Strike section 401 and insert the following:

     SEC. 401. EQUALIZING URBAN AND RURAL STANDARDIZED PAYMENT 
                   AMOUNTS UNDER THE MEDICARE INPATIENT HOSPITAL 
                   PROSPECTIVE PAYMENT SYSTEM.

       (a) In General.--Section 1886(d)(3)(A)(iv) (42 U.S.C. 
     1395ww(d)(3)(A)(iv)) is amended--
       (1) by striking ``(iv) For discharges'' and inserting 
     ``(iv)(I) Subject to subclause (II), for discharges''; and
       (2) by adding at the end the following new subclause:
       ``(II) For discharges occurring in a fiscal year beginning 
     with fiscal year 2004, the Secretary shall compute a 
     standardized amount for hospitals located in any area within 
     the United States and within each region equal to the 
     standardized amount computed for the previous fiscal year 
     under this subparagraph for hospitals located in a large 
     urban area (or, beginning with fiscal year 2005, for 
     hospitals located in any area) increased by the applicable 
     percentage increase under subsection (b)(3)(B)(i) for the 
     fiscal year involved.''.
       (b) Conforming Amendments.--
       (1) Computing drg-specific rates.--Section 1886(d)(3)(D) 
     (42 U.S.C. 1395ww(d)(3)(D)) is amended--
       (A) in the heading, by striking ``in different areas'';
       (B) in the matter preceding clause (i), by striking ``, 
     each of'';
       (C) in clause (i)--
       (i) in the matter preceding subclause (I), by inserting 
     ``for fiscal years before fiscal year 2004,'' before ``for 
     hospitals''; and
       (ii) in subclause (II), by striking ``and'' after the 
     semicolon at the end;
       (D) in clause (ii)--
       (i) in the matter preceding subclause (I), by inserting 
     ``for fiscal years before fiscal year 2004,'' before ``for 
     hospitals''; and
       (ii) in subclause (II), by striking the period at the end 
     and inserting ``; and''; and
       (E) by adding at the end the following new clause:
       ``(iii) for a fiscal year beginning after fiscal year 2003, 
     for hospitals located in all areas, to the product of--
       ``(I) the applicable standardized amount (computed under 
     subparagraph (A)), reduced under subparagraph (B), and 
     adjusted or reduced under subparagraph (C) for the fiscal 
     year; and
       ``(II) the weighting factor (determined under paragraph 
     (4)(B)) for that diagnosis-related group.''.
       (2) Technical conforming sunset.--Section 1886(d)(3) (42 
     U.S.C. 1395ww(d)(3)) is amended--
       (A) in the matter preceding subparagraph (A), by inserting 
     ``, for fiscal years before fiscal year 1997,'' before ``a 
     regional adjusted DRG prospective payment rate''; and

[[Page S8461]]

       (B) in subparagraph (D), in the matter preceding clause 
     (i), by inserting ``, for fiscal years before fiscal year 
     1997,'' before ``a regional DRG prospective payment rate for 
     each region,''.

       At the end of title VI, add the following:

     SEC. ____. MEDICARE SECONDARY PAYOR (MSP) PROVISIONS.

       (a) Technical Amendment Concerning Secretary's Authority To 
     Make Conditional Payment When Certain Primary Plans Do Not 
     Pay Promptly.--
       (1) In general.--Section 1862(b)(2) (42 U.S.C. 1395y(b)(2)) 
     is amended--
       (A) in subparagraph (A)(ii), by striking ``promptly (as 
     determined in accordance with regulations)''; and
       (B) in subparagraph (B)--
       (i) by redesignating clauses (i) through (iii) as clauses 
     (ii) through (iv), respectively; and
       (ii) by inserting before clause (ii), as so redesignated, 
     the following new clause:
       ``(i) Authority to make conditional payment.--The Secretary 
     may make payment under this title with respect to an item or 
     service if a primary plan described in subparagraph (A)(ii) 
     has not made or cannot reasonably be expected to make payment 
     with respect to such item or service promptly (as determined 
     in accordance with regulations). Any such payment by the 
     Secretary shall be conditioned on reimbursement to the 
     appropriate Trust Fund in accordance with the succeeding 
     provisions of this subsection.''.
       (2) Effective date.--The amendments made by paragraph (1) 
     shall be effective as if included in the enactment of title 
     III of the Medicare and Medicaid Budget Reconciliation 
     Amendments of 1984 (Public Law 98-369).
       (b) Clarifying Amendments to Conditional Payment 
     Provisions.--Section 1862(b)(2) (42 U.S.C. 1395y(b)(2)) is 
     further amended--
       (1) in subparagraph (A), in the matter following clause 
     (ii), by inserting the following sentence at the end: ``An 
     entity that engages in a business, trade, or profession shall 
     be deemed to have a self-insured plan if it carries its own 
     risk (whether by a failure to obtain insurance, or otherwise) 
     in whole or in part.'';
       (2) in subparagraph (B)(ii), as redesignated by subsection 
     (a)(2)(B)--
       (A) by striking the first sentence and inserting the 
     following: ``A primary plan, and an entity that receives 
     payment from a primary plan, shall reimburse the appropriate 
     Trust Fund for any payment made by the Secretary under this 
     title with respect to an item or service if it is 
     demonstrated that such primary plan has or had a 
     responsibility to make payment with respect to such item or 
     service. A primary plan's responsibility for such payment may 
     be demonstrated by a judgment, a payment conditioned upon the 
     recipient's compromise, waiver, or release (whether or not 
     there is a determination or admission of liability) of 
     payment for items or services included in a claim against the 
     primary plan or the primary plan's insured, or by other 
     means.''; and
       (B) in the final sentence, by striking ``on the date such 
     notice or other information is received'' and inserting ``on 
     the date notice of, or information related to, a primary 
     plan's responsibility for such payment or other information 
     is received''; and
       (3) in subparagraph (B)(iii), as redesignated by subsection 
     (a)(2)(B), by striking the first sentence and inserting the 
     following: ``In order to recover payment made under this 
     title for an item or service, the United States may bring an 
     action against any or all entities that are or were required 
     or responsible (directly, as an insurer or self-insurer, as a 
     third-party administrator, as an employer that sponsors or 
     contributes to a group health plan, or large group health 
     plan, or otherwise) to make payment with respect to the same 
     item or service (or any portion thereof) under a primary 
     plan. The United States may, in accordance with paragraph 
     (3)(A) collect double damages against any such entity. In 
     addition, the United States may recover under this clause 
     from any entity that has received payment from a primary plan 
     or from the proceeds of a primary plan's payment to any 
     entity.''.
       (c) Clerical Amendments.--Section 1862(b) (42 U.S.C. 
     1395y(b)) is amended--
       (1) in paragraph (1)(A), by moving the indentation of 
     clauses (ii) through (v) 2 ems to the left; and
       (2) in paragraph (3)(A), by striking ``such'' before 
     ``paragraphs''.
                                 ______
                                 
  SA 1021. Mr. CONRAD1 proposed an amendment to the bill S. 1, to amend 
title XVIII of the Social Security Act to make improvements in the 
medicare program, to provide prescription drug coverage under the 
medicare program, and for other purposes; as follows:

       At the end of subtitle A of title IV, add the following:

     SEC. ____. GEOGRAPHIC RECLASSIFICATION OF CERTAIN HOSPITALS 
                   FOR PURPOSES OF REIMBURSEMENT UNDER THE 
                   MEDICARE PROGRAM.

       (a) In General.--Notwithstanding any other provision of 
     law, effective for discharges occurring during fiscal year 
     2004 and each subsequent fiscal year, for purposes of making 
     payments under section 1886(d) of the Social Security Act (42 
     U.S.C. 1395ww(d)), hospitals located in the Bismarck, North 
     Dakota Metropolitan Statistical Area are deemed to be located 
     in the Fargo-Moorhead North Dakota-Minnesota Metropolitan 
     Statistical Area.
       (b) Treatment as Decision of Medicare Geographic 
     Classification Review Board.--
       (1) In general.--Except as provided in paragraph (2), for 
     purposes of section 1886(d) of the Social Security Act (42 
     U.S.C 1395ww(d)), any reclassification under subsection (a) 
     shall be treated as a decision of the Medicare Geographic 
     Classification Review Board under paragraph (10) of that 
     section.
       (2) Nonapplication of 3-year application provision.--
     Section 1886(d)(10)(D)(v) of the Social Security Act (42 
     U.S.C. 1395ww(d)(10)(D)(v)), as it relates to a 
     reclassification being effective for 3 fiscal years, shall 
     not apply with respect to reclassifications made under this 
     section.
       (c) Process for Applications To Ensure that Provisions 
     Apply Beginning October 1, 2003.--The Secretary shall 
     establish a process for the Medicare Geographic 
     Classification Review Board to accept, and make 
     determinations with respect to, applications that are filed 
     by applicable hospitals within 90 days of the date of 
     enactment of this section to reclassify based on the 
     provisions of this section in order to ensure that such 
     provisions shall apply to payments under such section 1886(d) 
     for discharges occurring on or after October 1, 2003.
       (d) Adjustments To Ensure Budget Neutrality.--If 1 or more 
     applicable hospital's applications are approved pursuant to 
     the process under subsection (c), the Secretary shall make a 
     proportional adjustment in the standardized amounts 
     determined under paragraph (3) of such section 1886(d) for 
     payments for discharges occurring in fiscal year 2004 to 
     ensure that approval of such applications does not result in 
     aggregate payments under such section 1886(d) that are 
     greater or less than those that would otherwise be made if 
     this section had not been enacted.
                                 ______
                                 
  SA 1022. Mr. BROWNBACK submitted an amendment intended to be proposed 
by him to the bill S. 1, to amend title XVIII of the Social Security 
Act to make improvements in the medicare program, to provide 
prescription drug coverage under the medicare program, and for other 
purposes; which was ordered to lie on the table; as follows:

Sec.  . This Act may be cited as the ``Quality Cancer Care Preservation 
    Act''.

     SEC. . MEDICARE PAYMENT FOR DRUGS AND BIOLOGICALS.

       (a) In General.--Section 1842(o)(1) of the Social Security 
     Act (42 U.S.C. 1395u(o)(1)) is amended by striking ``95 
     percent of the average wholesale price'' and inserting ``the 
     payment amount specified in section 1834(n)(2)''.
       (b) Determination of Payment Amount.--Section 1834 of such 
     Act (42 U.S.C. 1395m) is amended by adding at the end the 
     following new subsection:
       ``(n) Payment for Drugs and Biologicals--
       ``(1) Reports by Manufacturers--
       ``(A) In general.--Every drug manufacturer shall report to 
     the Secretary, in the manner prescribed in this paragraph, 
     its average sales price (as defined in subparagraph (B)) in 
     the United States during each calendar quarter for drugs and 
     biologicals covered under this part.
       ``(B) Definitions.--For purposes of this subsection--
       ``(i) the term ``manufacturer'' means, with respect to a 
     drug or biological, the entity identified by the Labeler Code 
     portion of the National Drug Code of such drug or biological; 
     and
       ``(ii) the term ``average sales price'' means the weighted 
     average of all final sales prices to all purchasers, 
     excluding sales specified in subparagraph (C). In determining 
     such average sales prices, such prices shall be net of volume 
     discounts, chargebacks, short-dated product discounts, free 
     goods contingent on purchases, rebates (other than those made 
     or authorized under section 1927), and all other price 
     concessions that result in a reduction of the ultimate cost 
     to the purchaser.
       ``(C) Consideration in calculation of average sales 
     prices.--The calculation of average sales price under this 
     subsection shall not include-
       ``(i) prices that are excluded from the calculation of 
     ``best price'' under section 1927(c)(1)(C);
       ``(ii) prices offered to entities that are considered under 
     subparagraph (B)(i) to be the manufacturers of the drugs or 
     biologicals involved;
       ``(iii) prices offered by a manufacturer to a hospital, 
     nursing facility, hospice, or health maintenance 
     organization;
       ``(iv) prices to governmental entities; and
       ``(v) nominal prices offered to bona fide charitable 
     organizations.
       ``(D) Quarterly reports.--Each manufacturer shall submit 
     the report required by subparagraph (A) to the Secretary by 
     electronic means no later than 30 days after the end of a 
     calendar quarter with respect to sales that occurred during 
     such quarter. The Secretary shall prescribe the format and 
     other requirements for the report.
       ``(E) Enforcement.--
       ``(i) Failure to timely report.--The Secretary may impose a 
     civil monetary penalty in an amount not to exceed $100,000 on 
     a manufacturer that fails to provide the information required 
     under this paragraph on a timely basis and in the manner 
     required.

[[Page S8462]]

       ``(ii) False information.--For each item of false 
     information, the Secretary may impose a civil money penalty 
     in an amount not to exceed $100,000 on a manufacturer that 
     knowingly provides false information under this paragraph.
       ``(iii) Manner of imposition of civil monetary penalties.--
     The provisions in section 1128A (other than subsections (a) 
     and (b)) shall apply to a civil monetary penalty under this 
     subparagraph in the same manner as such provisions apply to a 
     penalty or proceeding under section 1128A(a).
       ``(F) Confidentiality of information.--Notwithstanding any 
     other provision of law, information disclosed by 
     manufacturers under this paragraph is confidential and shall 
     not be disclosed by the Secretary in any form other than as 
     specifically authorized by this subsection.
       ``(2) Calculation of payment amount--
       ``(A) In general.--Except as otherwise provided in this 
     paragraph, the payment amount for a drug or biological 
     furnished during a calendar quarter shall be 120 percent of 
     the average sales price of the drug or biological for the 
     second preceding calendar quarter as determined under 
     paragraph (1).
       ``(B) Methodology.--In determining payment amounts under 
     subparagraph (A), the Secretary may, in the Secretary's 
     discretion, use either the average sales price for each drug 
     or biological by specific drug or biological, or a cumulative 
     average sales price based on sales data for all versions of a 
     multiple-source drug that the Secretary, acting through the 
     Food and Drug Administration, has determined are 
     therapeutically equivalent (as evidenced by ``A'' ratings in 
     the publication Approved Drug Products with Therapeutic 
     Equivalence Evaluations).
       ``(C) Increase to reflect additional. costs attributable to 
     state and local taxes.--In the case of a drug or biological 
     that was subject to a State or local sales tax or gross 
     receipts tax when administered or dispensed, the payment 
     amount determined under subparagraph (A) shall be increased 
     by the amount of such tax paid with respect to such drug or 
     biological.
       ``(D) Substitution of higher payment amount.--If a 
     physician's, supplier's, or any other person's claim for 
     payment for services under this Act documents that the price 
     paid for a drug or biological was greater than the payment 
     amount determined under subparagraph (A), the actual amount 
     paid shall be substituted for the payment amount determined 
     under subparagraph (A), unless the Secretary determines that 
     the actual amount paid was unreasonable under the 
     circumstances.
       ``(E) Increase for Bad Debt and Certain Other Costs.--Upon 
     the submission of supporting information, the Secretary shall 
     make an additional payment to a physician or supplier to 
     cover--
       ``(i) uncollectible deductibles and coinsurance due from 
     Medicare beneficiaries with respect to drugs and biologicals 
     furnished to such beneficiaries; and
       ``(ii) costs incurred in procuring and billing for drugs 
     and biologicals furnished to Medicare beneficiaries.''.

      SEC.   . MEDICARE PAYMENT FOR DRUG ADMINISTRATION SERVICES.

       (a) General.--The Secretary of Health and Human Services 
     (hereafter in this Act referred to as ``the Secretary'') 
     shall revise the practice expense relative value units for 
     drug administration services for years beginning with the 
     year 2005 in accordance with this section. For purposes of 
     this section, ``drug administration services'' includes 
     chemotherapy administration services, therapeutic and 
     diagnostic infusions and injections, and such other services 
     as the Secretary specifies.
       (b) Direct Costs Equal to 100 Percent of Cpep Estimates.-- 
     Using the information, including estimates of clinical staff 
     time, developed in the clinical practice expert panel 
     process, including refinements by American Medical 
     Association committees, the Secretary shall estimate the 
     costs of the nursing and other clinical staff, supplies, and 
     procedure-specific equipment (exceeding a cost specified by 
     the Secretary) used in furnishing each type of drug 
     administration service. The Secretary shall utilize without 
     revision the minutes of clinical staff time determined in 
     such process. The Secretary shall convert the information 
     from such process to estimated costs by applying the most 
     current available data on staff salary, supply, and equipment 
     costs, and such costs shall be updated to 2005 based on 
     estimated changes in prices since the date of such data.
       (c) Total Practice Expenses.--The Secretary shall estimate 
     the total practice expenses of each drug administration 
     service by assuming that the direct costs for the service 
     determined under subsection (b) are 33.2 percent of such 
     total practice expenses.
       (d) Conversion to Relative Value Units.--The Secretary 
     shall convert the total practice expenses determined under 
     subsection (c) to practice expense relative value units for 
     each drug administration service by dividing such expenses by 
     the conversion factor that will be in effect for the 
     physician fee schedule for 2005. The relative value units as 
     so determined shall be used in determining the fee schedule 
     amounts paid for drug administration services under section 
     1848 of the Social Security Act (42 U.S.C. 1395w-4).
       (e) Updates.--For years after 2005, the relative values 
     determined under subsection (d) shall continue in effect 
     except that the Secretary shall revise them as necessary to 
     maintain their accuracy, provided that such revisions are 
     consistent with the methodology set forth in this section.
       (f) Multiple Pushes.--In establishing the payment amounts 
     under this section, the Secretary shall establish the payment 
     amount for intravenous chemotherapy administration by push 
     technique based of the administration of a single drug. The 
     Secretary shall make the same payment for each additional 
     drug administered by push technique during the same 
     encounter, except to the extent that the Secretary finds that 
     the cost of administering additional drugs is less than the 
     cost of administering the first drug.

     SEC.   . PAYMENTS FOR CHEMOTHERAPY SUPPORT SERVICES.

       (a) General.--Beginning in the year 2005, the Secretary 
     shall recognize and make payments under section 1848 of the 
     Social Security Act (42 U.S.C. 1395w-4) for chemotherapy 
     support services furnished incident to physicians' 
     services. For the purposes of this section, ``chemotherapy 
     support services'' are services furnished by the staff of 
     physicians to patients undergoing treatment for cancer 
     that were not included in the computation of clinical 
     staff costs under section 3(b). Such services include 
     social worker services, nutrition counseling, psychosocial 
     services, and similar services.
       (b) Direct Costs.--The Secretary shall estimate the cost of 
     the salary and benefits of staff furnishing chemotherapy 
     support services as they are provided in oncology practices 
     that furnish these services to cancer patients in a manner 
     that is considered to be high quality care. The estimate 
     shall be based on the weekly cost of such services per 
     patient receiving chemotherapy.
       (c) Total Costs.--The Secretary shall estimate the total 
     practice expenses of chemotherapy support services by 
     assuming that the direct costs for the service determined 
     under subsection (b) are 33.2 percent of such total practice 
     expenses.
       (d) Conversion to Relative Value Units.--The Secretary 
     shall convert the total practice expenses determined under 
     subsection (c) to practice expense relative value units for 
     chemotherapy support services by dividing such expenses by 
     the conversion factor that will be in effect for the 
     physician fee schedule for 2005. The relative value units as 
     so determined shall be used in determining the fee schedule 
     amounts paid for chemotherapy support services under such 
     section 1848.
       (e) Updates.--For the years after 2005, the relative values 
     determined under subsection (d) shall continue in effect 
     except that the Secretary shall revise them as necessary to 
     maintain their accuracy, provided that such revisions are 
     consistent with the methodology set forth in this section.

     SEC.   . CANCER THERAPY MANAGEMENT SERVICES.

       The Secretary shall recognize and establish a payment 
     amount for the service of cancer therapy management to 
     account for the greater pre-service and post-service work 
     associated with visits and consultations conducted by 
     physicians treating cancer patients compared to typical 
     visits and consultations. The payment amount may vary by the 
     level and type of the related visit or consultation.

     SEC.   . OTHER SERVICES WITHOUT PHYSICIAN WORK RELATIVE VALUE 
                   UNITS.

       The Secretary shall develop a revised methodology for 
     determining the payment amounts for services that are paid 
     under the fee schedule established by section 1848 of the 
     Social Security Act (42 U.S.C. 1395w-4) and that do not have 
     physician work relative value units, including radiation 
     oncology services. Such methodology shall result in payment 
     amounts that fully cover the costs of furnishing such 
     services. Until such time as the methodology for such 
     services is revised and implemented, all such services shall 
     be protected from further payment cuts due to factors such as 
     shifts in utilization or removal of any one specialty's 
     services that are paid under the fee schedule established by 
     such section 1848 and that do not have physician work 
     relative value units.

     SEC.   . PHYSICIAN SUPERVISION OF SERVICES.

       Section 1834 of the Social Security Act (42 U.S.C. 1395m), 
     as amended by section 2, is further amended by adding at the 
     end the following new subsection:
       ``(o) Supervision Requirements--If the Secretary requires 
     direct supervision of a service by a physician, that 
     supervision requirement may be fulfilled by one or more 
     physicians other than the physician who ordered the service. 
     If the supervising physician is different from the 
     ordering physician for a particular service, the ordering 
     physician may nevertheless bill for such service provided 
     that the medical records for the service involved identify 
     the supervising physician or physicians.''.

     SEC.   . REPORT TO CONGRESS.

       No later than April 1, 2004, the Secretary shall submit to 
     Congress a report on the payment amounts that are projected 
     to be adopted under sections 2, 3, 4, and 5 of this Act.

     SEC.   . INSTITUTE OF MEDICINE STUDY.

       (a) General.--The Secretary of Health and Human Services 
     shall request the Institute of Medicine to conduct the study 
     described in this section.
       (b) Baseline Study.--The first phase of the study shall 
     include the following objectives:
       (1) An assessment of the extent to which the current 
     Medicare payment system, prior to implementation of the 
     amendments made by this Act, facilitates appropriate access 
     to

[[Page S8463]]

     care by cancer patients in the various treatment settings.
       (2) The identification of the comprehensive range of 
     services furnished to cancer patients in the outpatient 
     setting, including support services such as psychosocial 
     services and counseling, and recommendations regarding the 
     types of services that ought to be furnished to Medicare 
     patients with cancer.
       (3) A discussion of the practice standards necessary to 
     assure the safe provision of services to cancer patients.
       (4) An analysis of the extent to which the current Medicare 
     payment system supports the role of nurses in the provision 
     of oncology services and recommendations for any necessary 
     improvements in the payment system in that respect.
       (5) The development of a framework for assessing how the 
     amendments made by this act affect the provision of care to 
     Medicare patients with cancer in the various treatment 
     settings.
       (c) Second Phase of Study.--After the implementation of the 
     amendments made by this Act, the study shall determine 
     whether and how those amendments affected the provision of 
     care to Medicare patients with cancer.
       (d) Consultation.--The Institute of Medicine shall consult 
     with the National Cancer Policy Board and organizations 
     representing cancer patients and survivors, oncologists, 
     oncology nurses, social workers, cancer centers, and other 
     healthcare professionals who treat cancer patients in 
     planning and carrying out this study.
       (e) Due Dates--
       (1) The study required by subsection (b) shall be submitted 
     to the Congress and the Secretary of Health and Human 
     Services no later than June 30, 2004.
       (2) The study required by subsection (c) shall be submitted 
     to the Congress and the Secretary of Health and Human 
     Services no later than December 31, 2006.

     SEC. 10. EFFECTIVE DATES.

       (a) General.--Except as provided in this section, the 
     provisions of this Act shall apply to drugs, biologicals, and 
     services furnished on or after January 1, 2005.
       (b) Reports From Manufacturers.--The first report by 
     manufacturers required by the provisions of section 2 shall 
     be submitted no later than October 30, 2004, with respect to 
     sales that occurred in the quarter ending September 30, 2004.
       (c) Supervision of Services.--The amendment made by section 
     7 shall be effective upon enactment.
       (d) Services Other Than Drug Administration.--The Secretary 
     shall implement the requirements of section 6 no later than 
     January 1, 2005.
                                 ______
                                 
  SA 1023. Ms. COLLINS submitted an amendment intended to be proposed 
by her to the bill S. 1, to amend title XVIII of the Social Security 
Act to make improvements in the medicare program, to provide 
prescription drug coverage under the medicare program, and for other 
purposes; which was ordered to lie on the table; as follows:

       At the appropriate place in subtitle B of title IV, insert 
     the following:

     SEC. ____. DEMONSTRATION PROJECT TO CLARIFY THE DEFINITION OF 
                   HOMEBOUND.

       (a) Demonstration Project.--Not later than 180 days after 
     the date of enactment of this Act, the Secretary shall 
     conduct a two-year demonstration project under part B of 
     title XVIII of the Social Security Act under which medicare 
     beneficiaries with chronic conditions described in subsection 
     (b) are deemed to be homebound for purposes of receiving home 
     health services under the medicare program.
       (b) Medicare Beneficiary Described.--For purposes of 
     subsection (a), a medicare beneficiary is eligible to be 
     deemed to be homebound, without regard to the purpose, 
     frequency, or duration of absences from the home, if the 
     beneficiary--
       (1) has been certified by one physician as an individual 
     who has a permanent and severe condition that will not 
     improve;
       (2) requires the individual to receive assistance from 
     another individual with at least 3 out of the 5 activities of 
     daily living for the rest of the individual's life;
       (3) requires 1 or more home health services to achieve a 
     functional condition that gives the individual the ability to 
     leave home; and
       (4) requires technological assistance or the assistance of 
     another person to leave the home.
       (c) Demonstration Project Sites.--The demonstration project 
     established under this section shall be conducted in 3 States 
     selected by the Secretary to represent the Northeast, 
     Midwest, and Western regions of the United States.
       (d) Limitation on Number of Participants.--The aggregate 
     number of such beneficiaries that may participate in the 
     project may not exceed 15,000.
       (e) Data.--The Secretary shall collect such data on the 
     demonstration project with respect to the provision of home 
     health services to medicare beneficiaries that relates to 
     quality of care, patient outcomes, and additional costs, if 
     any, to the medicare program.
       (f) Report to Congress.--Not later than 1 year after the 
     date of the completion of the demonstration project under 
     this section, the Secretary shall submit to Congress a report 
     on the project using the data collected under subsection (e) 
     and shall include--
       (1) an examination of whether the provision of home health 
     services to medicare beneficiaries under the project--
       (A) adversely effects the provision of home health services 
     under the medicare program; or
       (B) directly causes an unreasonable increase of 
     expenditures under the medicare program for the provision of 
     such services that is directly attributable to such 
     clarification;
       (2) the specific data evidencing the amount of any increase 
     in expenditures that is a directly attributable to the 
     demonstration project (expressed both in absolute dollar 
     terms and as a percentage) above expenditures that would 
     otherwise have been incurred for home health services under 
     the medicare program; and
       (3) specific recommendations to exempt permanently and 
     severely disabled homebound beneficiaries from restrictions 
     on the length, frequency and purpose of their absences from 
     the home to qualify for home health services without 
     incurring additional unreasonable costs to the medicare 
     program.
       (g) Waiver Authority.--The Secretary shall waive compliance 
     with the requirements of title XVIII of the Social Security 
     Act (42 U.S.C. 1395 et seq.) to such extent and for such 
     period as the Secretary determines is necessary to conduct 
     demonstration projects.
       (h) Construction.--Nothing in this section shall be 
     construed as waiving any applicable civil monetary penalty, 
     criminal penalty, or other remedy available to the Secretary 
     under title XI or title XVIII of the Social Security Act for 
     acts prohibited under such titles, including penalties for 
     false certifications for purposes of receipt of items or 
     services under the medicare program.
       (i) Authorization of Appropriations.--Payments for the 
     costs of carrying out the demonstration project under this 
     section shall be made from the Federal Supplementary 
     Insurance Trust Fund under section 1841 of such Act (42 
     U.S.C. 1395t).
       (j) Definitions.--In this section:
       (1) Medicare beneficiary.--The term ``medicare 
     beneficiary'' means an individual who is enrolled under part 
     B of title XVIII of the Social Security Act.
       (2) Home health services.--The term ``home health 
     services'' has the meaning given such term in section 1861(m) 
     of the Social Security Act (42 U.S.C. 1395x(m)).
       (3) Activities of daily living defined.--The term 
     ``activities of daily living'' means eating, toileting, 
     transferring, bathing, and dressing.
       (4) Secretary.--The term ``Secretary'' means the Secretary 
     of Health and Human Services.
                                 ______
                                 
  SA 1024. Mr. ENSIGN (for himself and Mrs. Lincoln) submitted an 
amendment intended to be proposed by him to the bill S. 1, to amend 
title XVIII of the Social Security Act to make improvements in the 
medicare program, to provide prescription drug coverage under the 
medicare program, and for other purposes; which was ordered to lie on 
the table; as follows:

       At the appropriate place in title IV, insert the following:

     SEC. ____. OUTPATIENT THERAPY CAP REPEAL.

       (a) In General.--Section 1833 of the Social Security Act 
     (42 U.S.C. 1395l) is amended by striking subsection (g).
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect on January 1, 2005.
                                 ______
                                 
  SA 1025. Mr. ENSIGN submitted an amendment intended to be proposed by 
him to the bill S. 1, to amend title XVIII of the Social Security Act 
to make improvements in the medicare program, to provide prescription 
drug coverage under the medicare program, and for other purposes; which 
was ordered to lie on the table; as follows:

       At the end of title VI, insert the following:

     SEC. ____. COST-BENEFIT EVALUATION OF SOCIAL HEALTH 
                   MAINTENANCE ORGANIZATION II DEMONSTRATION 
                   PROJECT AND EXTENSION OF PROJECT AUTHORITY.

       (a) Extension.--Notwithstanding any other provision of law, 
     the Social Health Maintenance Organization II demonstration 
     project described under section 2355(b)(1)(B) of the Deficit 
     Reduction Act of 1984, as amended, shall be conducted for an 
     additional period of 5 years beginning October 1, 2004 under 
     applicable contractual provisions existing on December 31, 
     2002. Such demonstration project shall be evaluated by an 
     independent organization in accordance with subsection (b). 
     The report on the evaluation and related recommendations 
     shall be provided as described in subsection (c).
       (b) Evaluation.--
       (1) Research design.--The Secretary shall provide for a 
     project research design that includes information on the 
     Medicare beneficiaries who are participating in the project 
     and on other Medicare beneficiaries who are covered under 
     fee-for-service and other Medicare+Choice plans and that 
     allows for an appropriate statistical analysis and evaluation 
     of the demonstration project by an independent organization.

[[Page S8464]]

       (2) Data collection.--The Secretary shall require the 
     Social Health Maintenance Organization II to comply with such 
     data collection and reporting requirements as the Secretary 
     determines necessary in order that the assessments can be 
     made as described under subsection (c)(2); and
       (3) Duration.--The project evaluation period shall last for 
     a period of 3 years.
       (c) Report.--
       (1) In general.--The Secretary shall issue to the Congress 
     a final report on the project not later than 9 months after 
     the date of the completion of the evaluation period.
       (2) Contents of report.--The report under paragraph (1) 
     shall include the following:
       (A) A description of the demonstration project and the 
     distinguishing characteristics of the Social Health 
     Maintenance Organization II project, including the project's 
     geriatric approach to patient care, extensive care 
     coordination and patient assessments, provision of extended 
     benefits to beneficiaries with targeted health risks, and 
     risk adjusted payment methodology.
       (B) An evaluation of--
       (i) the cost-effectiveness of the project compared to the 
     comparison group with respect to the extent of any delay or 
     reduction in the incidence or length of stay in nursing homes 
     or similar institutions and the estimated Medicare and 
     Medicaid cost savings relating to such delay or reductions,
       (ii) the extent to which the utilization of physician, home 
     health, coordinated care, geriatric, prescription drug, 
     extended care benefits and other services which are unique to 
     the project result in any reduction in the incidence or 
     length of inpatient stays and in the improvement or lessening 
     in the deterioration of the physical status and mental health 
     functioning of beneficiaries, and
       (iii) the feasibility of replicating the elements of the 
     Social Health Maintenance Organization II model under other 
     Medicare+Choice plans.

     To the extent feasible, an evaluation of the elements 
     described in this subparagraph shall be conducted on a 
     longitudinal basis for noninstitutionalized beneficiaries who 
     are at high risk of hospitalization or institutionalization, 
     for other noninstitutionalized beneficiaries who are not at 
     high risk, and for institutionalized beneficiaries. To the 
     extent feasible such evaluations shall be conducted for 
     appropriate age and gender beneficiary categories.
       (C) A description of the data and criteria and methodology 
     used in conducting the evaluation.
       (D) Any other information regarding the project that the 
     Secretary determines to be appropriate and any 
     recommendations the Secretary may make regarding the extent 
     to which changes should be made in connection with the 
     project or the extension of the project as a model under the 
     Medicare+Choice program.
       (d) Definitions.--In this section:
       (1) Demonstration project.--The term ``demonstration 
     project'' means the demonstration project described under 
     subsection (a).
       (2) Medicare beneficiary.--The term ``Medicare 
     beneficiary'' means an individual entitled to benefits under 
     part A and covered under part B of title XVIII of the Social 
     Security Act (42 U.S.C. 1395 et seq.).
       (3) Medicare.--The term ``Medicare'' means the health 
     benefits program under title XVIII of the Social Security Act 
     (42 U.S.C. 1395 et seq.).
       (4) Medicare+choice.--The term ``Medicare+Choice'' means 
     the Medicare+Choice health benefits program described under 
     part C of title XVIII of the Social Security Act (42 U.S.C. 
     1395 et seq.), and for years after 2005, the 
     MedicareAdvantage program described under such part.
       (5) Secretary.--The term ``Secretary'' means the Secretary 
     of Health and Human Services.
       (6) Social health maintenance organization ii.--The term 
     ``Social Health Maintenance Organization II'' means the 
     project described under section 2355(b)(1)(B) of the Deficit 
     Reduction Act of 1984, as amended.
       (e) Effective Date.--The effective date of this section is 
     the date of the enactment of this Act.
                                 ______
                                 
  SA 1026. Mr. HAGEL (for himself, Mr. Ensign, Mr. Lott, and Mr. 
Inhofe) submitted an amendment intended to be proposed by him to the 
bill S. 1, to amend title XVIII of the Social Security Act to make 
improvements in the medicare program, to provide prescription drug 
coverage under the medicare program, and for other purposes; which was 
ordered to lie on the table; as follows:

 (Purpose: To provide medicare beneficiaries with a drug discount card 
  that ensures access to privately-negotiated discounts on drugs and 
         protection against high and out-of-pocket drug costs)

       Strike title I and insert the following:

              TITLE I--MEDICARE PRESCRIPTION DRUG DISCOUNT

     SEC. 101. VOLUNTARY MEDICARE PRESCRIPTION DRUG DISCOUNT AND 
                   SECURITY PROGRAM.

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

 ``Part D--Voluntary Medicare Prescription Drug Discount and Security 
                                Program


                             ``definitions

       ``Sec. 1860. In this part:
       ``(1) Covered drug.--
       ``(A) In general.--Except as provided in this paragraph, 
     the term `covered drug' means--
       ``(i) a drug that may be dispensed only upon a prescription 
     and that is described in subparagraph (A)(i) or (A)(ii) of 
     section 1927(k)(2); or
       ``(ii) a biological product described in clauses (i) 
     through (iii) of subparagraph (B) of such section or insulin 
     described in subparagraph (C) of such section,

     and such term includes a vaccine licensed under section 351 
     of the Public Health Service Act and any use of a covered 
     drug for a medically accepted indication (as defined in 
     section 1927(k)(6)).
       ``(B) Exclusions.--
       ``(i) In general.--Such term does not include drugs or 
     classes of drugs, or their medical uses, which may be 
     excluded from coverage or otherwise restricted under section 
     1927(d)(2), other than subparagraph (E) thereof (relating to 
     smoking cessation agents), or under section 1927(d)(3).
       ``(ii) Avoidance of duplicate coverage.--A drug prescribed 
     for an individual that would otherwise be a covered drug 
     under this part shall not be so considered if payment for 
     such drug is available under part A or B for an individual 
     entitled to benefits under part A and enrolled under part B.
       ``(C) Application of formulary restrictions.--A drug 
     prescribed for an individual that would otherwise be a 
     covered drug under this part shall not be so considered under 
     a plan if the plan excludes the drug under a formulary and 
     such exclusion is not successfully appealed under section 
     1860D(a)(4)(B).
       ``(D) Application of general exclusion provisions.--A 
     prescription drug discount card plan or Medicare+Choice plan 
     may exclude from qualified prescription drug coverage any 
     covered drug--
       ``(i) for which payment would not be made if section 
     1862(a) applied to part D; or
       ``(ii) which are not prescribed in accordance with the plan 
     or this part.

     Such exclusions are determinations subject to reconsideration 
     and appeal pursuant to section 1860D(a)(4).
       ``(2) Eligible beneficiary.--The term `eligible 
     beneficiary' means an individual who is--
       ``(A) eligible for benefits under part A or enrolled under 
     part B; and
       ``(B) not eligible for prescription drug coverage under a 
     State plan under the medicaid program under title XIX.
       ``(3) Eligible entity.--The term `eligible entity' means 
     any--
       ``(A) pharmaceutical benefit management company;
       ``(B) wholesale pharmacy delivery system;
       ``(C) retail pharmacy delivery system;
       ``(D) insurer (including any issuer of a medicare 
     supplemental policy under section 1882);
       ``(E) Medicare+Choice organization;
       ``(F) State (in conjunction with a pharmaceutical benefit 
     management company);
       ``(G) employer-sponsored plan;
       ``(H) other entity that the Secretary determines to be 
     appropriate to provide benefits under this part; or
       ``(I) combination of the entities described in 
     subparagraphs (A) through (H).
       ``(4) Poverty line.--The term `poverty line' means the 
     income official poverty line (as defined by the Office of 
     Management and Budget, and revised annually in accordance 
     with section 673(2) of the Omnibus Budget Reconciliation Act 
     of 1981) applicable to a family of the size involved.
       ``(5) Secretary.--The term `Secretary' means the Secretary 
     of Health and Human Services, acting through the 
     Administrator of the Centers for Medicare & Medicaid 
     Services.


                       ``establishment of program

       ``Sec. 1860A. (a) Provision of Benefit.--The Secretary 
     shall establish a Medicare Prescription Drug Discount and 
     Security Program under which the Secretary endorses 
     prescription drug card plans offered by eligible entities in 
     which eligible beneficiaries may voluntarily enroll and 
     receive benefits under this part.
       ``(b) Endorsement of Prescription Drug Discount Card 
     Plans.--
       ``(1) In general.--The Secretary shall endorse a 
     prescription drug card plan offered by an eligible entity 
     with a contract under this part if the eligible entity meets 
     the requirements of this part with respect to that plan.
       ``(2) National plans.--In addition to other types of plans, 
     the Secretary may endorse national prescription drug plans 
     under paragraph (1).
       ``(c) Voluntary Nature of Program.--Nothing in this part 
     shall be construed as requiring an eligible beneficiary to 
     enroll in the program under this part.
       ``(d) Financing.--The costs of providing benefits under 
     this part shall be payable from the Federal Supplementary 
     Medical Insurance Trust Fund established under section 1841.


                              ``enrollment

       ``Sec. 1860B. (a) Enrollment Under Part D.--

[[Page S8465]]

       ``(1) Establishment of process.--
       ``(A) In general.--The Secretary shall establish a process 
     through which an eligible beneficiary (including an eligible 
     beneficiary enrolled in a Medicare+Choice plan offered by a 
     Medicare+Choice organization) may make an election to enroll 
     under this part. Except as otherwise provided in this 
     subsection, such process shall be similar to the process for 
     enrollment under part B under section 1837.
       ``(B) Requirement of enrollment.--An eligible beneficiary 
     must enroll under this part in order to be eligible to 
     receive the benefits under this part.
       ``(2) Enrollment periods.--
       ``(A) In general.--Except as provided in this paragraph, an 
     eligible beneficiary may not enroll in the program under this 
     part during any period after the beneficiary's initial 
     enrollment period under part B (as determined under section 
     1837).
       ``(B) Special enrollment period.--In the case of eligible 
     beneficiaries that have recently lost eligibility for 
     prescription drug coverage under a State plan under the 
     medicaid program under title XIX, the Secretary shall 
     establish a special enrollment period in which such 
     beneficiaries may enroll under this part.
       ``(C) Open enrollment period in 2005 for current 
     beneficiaries.--The Secretary shall establish a period, which 
     shall begin on the date on which the Secretary first begins 
     to accept elections for enrollment under this part, during 
     which any eligible beneficiary may--
       ``(i) enroll under this part; or
       ``(ii) enroll or reenroll under this part after having 
     previously declined or terminated such enrollment.
       ``(3) Period of coverage.--
       ``(A) In general.--Except as provided in subparagraph (B) 
     and subject to subparagraph (C), an eligible beneficiary's 
     coverage under the program under this part shall be effective 
     for the period provided under section 1838, as if that 
     section applied to the program under this part.
       ``(B) Enrollment during open and special enrollment.--
     Subject to subparagraph (C), an eligible beneficiary who 
     enrolls under the program under this part under subparagraph 
     (B) or (C) of paragraph (2) shall be entitled to the benefits 
     under this part beginning on the first day of the month 
     following the month in which such enrollment occurs.
       ``(4) Part d coverage terminated by termination of coverage 
     under parts a and b or eligibility for medical assistance.--
       ``(A) In general.--In addition to the causes of termination 
     specified in section 1838, the Secretary shall terminate an 
     individual's coverage under this part if the individual is--
       ``(i) no longer enrolled in part A or B; or
       ``(ii) eligible for prescription drug coverage under a 
     State plan under the medicaid program under title XIX.
       ``(B) Effective date.--The termination described in 
     subparagraph (A) shall be effective on the effective date 
     of--
       ``(i) the termination of coverage under part A or (if 
     later) under part B; or
       ``(ii) the coverage under title XIX.
       ``(b) Enrollment With Eligible Entity.--
       ``(1) Process.--The Secretary shall establish a process 
     through which an eligible beneficiary who is enrolled under 
     this part shall make an annual election to enroll in a 
     prescription drug card plan offered by an eligible entity 
     that has been awarded a contract under this part and serves 
     the geographic area in which the beneficiary resides.
       ``(2) Election periods.--
       ``(A) In general.--Except as provided in this paragraph, 
     the election periods under this subsection shall be the same 
     as the coverage election periods under the Medicare+Choice 
     program under section 1851(e), including--
       ``(i) annual coordinated election periods; and
       ``(ii) special election periods.

     In applying the last sentence of section 1851(e)(4) (relating 
     to discontinuance of a Medicare+Choice election during the 
     first year of eligibility) under this subparagraph, in the 
     case of an election described in such section in which the 
     individual had elected or is provided qualified prescription 
     drug coverage at the time of such first enrollment, the 
     individual shall be permitted to enroll in a prescription 
     drug card plan under this part at the time of the election of 
     coverage under the original fee-for-service plan.
       ``(B) Initial election periods.--
       ``(i) Individuals currently covered.--In the case of an 
     individual who is entitled to benefits under part A or 
     enrolled under part B as of November 1, 2005, there shall be 
     an initial election period of 6 months beginning on that 
     date.
       ``(ii) Individual covered in future.--In the case of an 
     individual who is first entitled to benefits under part A or 
     enrolled under part B after such date, there shall be an 
     initial election period which is the same as the initial 
     enrollment period under section 1837(d).
       ``(C) Additional special election periods.--The 
     Administrator shall establish special election periods--
       ``(i) in cases of individuals who have and involuntarily 
     lose prescription drug coverage described in paragraph (3);
       ``(ii) in cases described in section 1837(h) (relating to 
     errors in enrollment), in the same manner as such section 
     applies to part B; and
       ``(iii) in the case of an individual who meets such 
     exceptional conditions (including conditions provided under 
     section 1851(e)(4)(D)) as the Secretary may provide.
       ``(D) Enrollment with one plan only.--The rules established 
     under subparagraph (B) shall ensure that an eligible 
     beneficiary may only enroll in 1 prescription drug card plan 
     offered by an eligible entity per year.
       ``(3) Medicare+choice enrollees.--An eligible beneficiary 
     who is enrolled under this part and enrolled in a 
     Medicare+Choice plan offered by a Medicare+Choice 
     organization must enroll in a prescription drug discount card 
     plan offered by an eligible entity in order to receive 
     benefits under this part. The beneficiary may elect to 
     receive such benefits through the Medicare+Choice 
     organization in which the beneficiary is enrolled if the 
     organization has been awarded a contract under this part.
       ``(4) Continuous prescription drug coverage.--An individual 
     is considered for purposes of this part to be maintaining 
     continuous prescription drug coverage on and after the date 
     the individual first qualifies to elect prescription drug 
     coverage under this part if the individual establishes that 
     as of such date the individual is covered under any of the 
     following prescription drug coverage and before the date that 
     is the last day of the 63-day period that begins on the date 
     of termination of the particular prescription drug coverage 
     involved (regardless of whether the individual subsequently 
     obtains any of the following prescription drug coverage):
       ``(A) Coverage under prescription drug card plan or 
     medicare+choice plan.--Prescription drug coverage under a 
     prescription drug card plan under this part or under a 
     Medicare+Choice plan.
       ``(B) Medicaid prescription drug coverage.--Prescription 
     drug coverage under a medicaid plan under title XIX, 
     including through the Program of All-inclusive Care for the 
     Elderly (PACE) under section 1934, through a social health 
     maintenance organization (referred to in section 4104(c) of 
     the Balanced Budget Act of 1997), or through a 
     Medicare+Choice project that demonstrates the application of 
     capitation payment rates for frail elderly medicare 
     beneficiaries through the use of a interdisciplinary team and 
     through the provision of primary care services to such 
     beneficiaries by means of such a team at the nursing facility 
     involved.
       ``(C) Prescription drug coverage under group health plan.--
     Any prescription drug coverage under a group health plan, 
     including a health benefits plan under the Federal Employees 
     Health Benefit Plan under chapter 89 of title 5, United 
     States Code, and a qualified retiree prescription drug plan 
     (as defined by the Secretary), but only if (subject to 
     subparagraph (E)(ii)) the coverage provides benefits at least 
     equivalent to the benefits under a prescription drug card 
     plan under this part.
       ``(D) Prescription drug coverage under certain medigap 
     policies.--Coverage under a medicare supplemental policy 
     under section 1882 that provides benefits for prescription 
     drugs (whether or not such coverage conforms to the standards 
     for packages of benefits under section 1882(p)(1)) and if 
     (subject to subparagraph (E)(ii)) the coverage provides 
     benefits at least equivalent to the benefits under a 
     prescription drug card plan under this part.
       ``(E) State pharmaceutical assistance program.--Coverage of 
     prescription drugs under a State pharmaceutical assistance 
     program, but only if (subject to subparagraph (E)(ii)) the 
     coverage provides benefits at least equivalent to the 
     benefits under a prescription drug card plan under this part.
       ``(F) Veterans' coverage of prescription drugs.--Coverage 
     of prescription drugs for veterans under chapter 17 of title 
     38, United States Code, but only if (subject to subparagraph 
     (E)(ii)) the coverage provides benefits at least equivalent 
     to the benefits under a prescription drug card plan under 
     this part.

     For purposes of carrying out this paragraph, the 
     certifications of the type described in sections 2701(e) of 
     the Public Health Service Act and in section 9801(e) of the 
     Internal Revenue Code of 1986 shall also include a statement 
     for the period of coverage of whether the individual involved 
     had prescription drug coverage described in this paragraph.
       ``(5) Competition.--Each eligible entity with a contract 
     under this part shall compete for the enrollment of 
     beneficiaries in a prescription drug card plan offered by the 
     entity on the basis of discounts, formularies, pharmacy 
     networks, and other services provided for under the contract.


    ``providing enrollment and coverage information to beneficiaries

       ``Sec. 1860C. (a) Activities.--The Secretary shall provide 
     for activities under this part to broadly disseminate 
     information to eligible beneficiaries (and prospective 
     eligible beneficiaries) regarding enrollment under this part 
     and the prescription drug card plans offered by eligible 
     entities with a contract under this part.
       ``(b) Special Rule for First Enrollment Under the 
     Program.--To the extent practicable, the activities described 
     in subsection (a) shall ensure that eligible beneficiaries 
     are provided with such information at least 60 days prior to 
     the first enrollment period described in section 1860B(c).


                         ``enrollee protections

       ``Sec. 1860D. (a) Requirements for All Eligible Entities.--
     Each eligible entity shall meet the following requirements:
       ``(1) Guaranteed issuance and nondiscrimination.--

[[Page S8466]]

       ``(A) Guaranteed issuance.--
       ``(i) In general.--An eligible beneficiary who is eligible 
     to enroll in a prescription drug card plan offered by an 
     eligible entity under section 1860B(b) for prescription drug 
     coverage under this part at a time during which elections are 
     accepted under this part with respect to the coverage shall 
     not be denied enrollment based on any health status-related 
     factor (described in section 2702(a)(1) of the Public Health 
     Service Act) or any other factor.
       ``(ii) Medicare+choice limitations permitted.--The 
     provisions of paragraphs (2) and (3) (other than subparagraph 
     (C)(i), relating to default enrollment) of section 1851(g) 
     (relating to priority and limitation on termination of 
     election) shall apply to eligible entities under this 
     subsection.
       ``(B) Nondiscrimination.--An eligible entity offering 
     prescription drug coverage under this part shall not 
     establish a service area in a manner that would discriminate 
     based on health or economic status of potential enrollees.
       ``(2) Disclosure of information.--
       ``(A) Information.--
       ``(i) General information.--Each eligible entity with a 
     contract under this part to provide a prescription drug card 
     plan shall disclose, in a clear, accurate, and standardized 
     form to each eligible beneficiary enrolled in a prescription 
     drug discount card program offered by such entity under this 
     part at the time of enrollment and at least annually 
     thereafter, the information described in section 1852(c)(1) 
     relating to such prescription drug coverage.
       ``(ii) Specific information.--In addition to the 
     information described in clause (i), each eligible entity 
     with a contract under this part shall disclose the following:

       ``(I) How enrollees will have access to covered drugs, 
     including access to such drugs through pharmacy networks.
       ``(II) How any formulary used by the eligible entity 
     functions.
       ``(III) Information on grievance and appeals procedures.
       ``(IV) Information on enrollment fees and prices charged to 
     the enrollee for covered drugs.
       ``(V) Any other information that the Secretary determines 
     is necessary to promote informed choices by eligible 
     beneficiaries among eligible entities.

       ``(B) Disclosure upon request of general coverage, 
     utilization, and grievance information.--Upon request of an 
     eligible beneficiary, the eligible entity shall provide the 
     information described in paragraph (3) to such beneficiary.
       ``(C) Response to beneficiary questions.--Each eligible 
     entity offering a prescription drug discount card plan under 
     this part shall have a mechanism for providing specific 
     information to enrollees upon request. The entity shall make 
     available, through an Internet website and, upon request, in 
     writing, information on specific changes in its formulary.
       ``(3) Grievance mechanism, coverage determinations, and 
     reconsiderations.--
       ``(A) In general.--With respect to the benefit under this 
     part, each eligible entity offering a prescription drug 
     discount card plan shall provide meaningful procedures for 
     hearing and resolving grievances between the organization 
     (including any entity or individual through which the 
     eligible entity provides covered benefits) and enrollees with 
     prescription drug card plans of the eligible entity under 
     this part in accordance with section 1852(f).
       ``(B) Application of coverage determination and 
     reconsideration provisions.--Each eligible entity shall meet 
     the requirements of paragraphs (1) through (3) of section 
     1852(g) with respect to covered benefits under the 
     prescription drug card plan it offers under this part in the 
     same manner as such requirements apply to a Medicare+Choice 
     organization with respect to benefits it offers under a 
     Medicare+Choice plan under part C.
       ``(C) Request for review of tiered formulary 
     determinations.--In the case of a prescription drug card plan 
     offered by an eligible entity that provides for tiered cost-
     sharing for drugs included within a formulary and provides 
     lower cost-sharing for preferred drugs included within the 
     formulary, an individual who is enrolled in the plan may 
     request coverage of a nonpreferred drug under the terms 
     applicable for preferred drugs if the prescribing physician 
     determines that the preferred drug for treatment of the same 
     condition is not as effective for the individual or has 
     adverse effects for the individual.
       ``(4) Appeals.--
       ``(A) In general.--Subject to subparagraph (B), each 
     eligible entity offering a prescription drug card plan shall 
     meet the requirements of paragraphs (4) and (5) of section 
     1852(g) with respect to drugs not included on any formulary 
     in the same manner as such requirements apply to a 
     Medicare+Choice organization with respect to benefits it 
     offers under a Medicare+Choice plan under part C.
       ``(B) Formulary determinations.--An individual who is 
     enrolled in a prescription drug card plan offered by an 
     eligible entity may appeal to obtain coverage under this part 
     for a covered drug that is not on a formulary of the eligible 
     entity if the prescribing physician determines that the 
     formulary drug for treatment of the same condition is not as 
     effective for the individual or has adverse effects for the 
     individual.
       ``(5) Confidentiality and accuracy of enrollee records.--
     Each eligible entity offering a prescription drug discount 
     card plan shall meet the requirements of the Health Insurance 
     Portability and Accountability Act of 1996.
       ``(b) Eligible Entities Offering a Discount Card Program.--
     If an eligible entity offers a discount card program under 
     this part, in addition to the requirements under subsection 
     (a), the entity shall meet the following requirements:
       ``(1) Access to covered benefits.--
       ``(A) Assuring pharmacy access.--
       ``(i) In general.--The eligible entity offering the 
     prescription drug discount card plan shall secure the 
     participation in its network of a sufficient number of 
     pharmacies that dispense (other than by mail order) drugs 
     directly to patients to ensure convenient access (as 
     determined by the Secretary and including adequate emergency 
     access) for enrolled beneficiaries, in accordance with 
     standards established under section 1860D(a)(3) that ensure 
     such convenient access.
       ``(ii) Use of point-of-service system.--Each eligible 
     entity offering a prescription drug discount card plan shall 
     establish an optional point-of-service method of operation 
     under which--

       ``(I) the plan provides access to any or all pharmacies 
     that are not participating pharmacies in its network; and
       ``(II) discounts under the plan may not be available.

     The additional copayments so charged shall not be counted as 
     out-of-pocket expenses for purposes of section 1860F(b).
       ``(B) Use of standardized technology.--
       ``(i) In general.--Each eligible entity offering a 
     prescription drug discount card plan shall issue (and 
     reissue, as appropriate) such a card (or other technology) 
     that may be used by an enrolled beneficiary to assure access 
     to negotiated prices under section 1860F(a) for the purchase 
     of prescription drugs for which coverage is not otherwise 
     provided under the prescription drug discount card plan.
       ``(ii) Standards.--The Secretary shall provide for the 
     development of national standards relating to a standardized 
     format for the card or other technology referred to in clause 
     (i). Such standards shall be compatible with standards 
     established under part C of title XI.
       ``(C) Requirements on development and application of 
     formularies.--If an eligible entity that offers a 
     prescription drug discount card plan uses a formulary, the 
     following requirements must be met:
       ``(i) Pharmacy and therapeutic (p&t) committee.--The 
     eligible entity must establish a pharmacy and therapeutic 
     committee that develops and reviews the formulary. Such 
     committee shall include at least 1 physician and at least 1 
     pharmacist both with expertise in the care of elderly or 
     disabled persons and a majority of its members shall consist 
     of individuals who are a physician or a practicing pharmacist 
     (or both).
       ``(ii) Formulary development.--In developing and reviewing 
     the formulary, the committee shall base clinical decisions on 
     the strength of scientific evidence and standards of 
     practice, including assessing peer-reviewed medical 
     literature, such as randomized clinical trials, 
     pharmacoeconomic studies, outcomes research data, and such 
     other information as the committee determines to be 
     appropriate.
       ``(iii) Inclusion of drugs in all therapeutic categories.--
     The formulary must include drugs within each therapeutic 
     category and class of covered drugs (although not necessarily 
     for all drugs within such categories and classes).
       ``(iv) Provider education.--The committee shall establish 
     policies and procedures to educate and inform health care 
     providers concerning the formulary.
       ``(v) Notice before removing drugs from formulary.--Any 
     removal of a drug from a formulary shall take effect only 
     after appropriate notice is made available to beneficiaries 
     and physicians.
       ``(vi) Grievances and appeals relating to application of 
     formularies.--For provisions relating to grievances and 
     appeals of coverage, see paragraphs (3) and (4) of section 
     1860D(a).
       ``(2) Cost and utilization management; quality assurance; 
     medication therapy management program.--
       ``(A) In general.--Each eligible entity offering a 
     prescription drug discount card plan shall have in place with 
     respect to covered drugs--
       ``(i) an effective cost and drug utilization management 
     program, including medically appropriate incentives to use 
     generic drugs and therapeutic interchange, when appropriate;
       ``(ii) quality assurance measures and systems to reduce 
     medical errors and adverse drug interactions, including a 
     medication therapy management program described in 
     subparagraph (B); and
       ``(iii) a program to control fraud, abuse, and waste.

     Nothing in this section shall be construed as impairing an 
     eligible entity from applying cost management tools 
     (including differential payments) under all methods of 
     operation.
       ``(B) Medication therapy management program.--
       ``(i) In general.--A medication therapy management program 
     described in this paragraph is a program of drug therapy 
     management and medication administration that is

[[Page S8467]]

     designed to ensure, with respect to beneficiaries with 
     chronic diseases (such as diabetes, asthma, hypertension, and 
     congestive heart failure) or multiple prescriptions, that 
     covered drugs under the prescription drug discount card plan 
     are appropriately used to achieve therapeutic goals and 
     reduce the risk of adverse events, including adverse drug 
     interactions.
       ``(ii) Elements.--Such program may include--

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

       ``(iii) Development of program in cooperation with licensed 
     pharmacists.--The program shall be developed in cooperation 
     with licensed pharmacists and physicians.
       ``(iv) Considerations in pharmacy fees.--Each eligible 
     entity offering a prescription drug discount card plan shall 
     take into account, in establishing fees for pharmacists and 
     others providing services under the medication therapy 
     management program, the resources and time used in 
     implementing the program.
       ``(C) Treatment of accreditation.--Section 1852(e)(4) 
     (relating to treatment of accreditation) shall apply to 
     prescription drug discount card plans under this part with 
     respect to the following requirements, in the same manner as 
     they apply to Medicare+Choice plans under part C with respect 
     to the requirements described in a clause of section 
     1852(e)(4)(B):
       ``(i) Paragraph (1) (including quality assurance), 
     including any medication therapy management program under 
     paragraph (2).
       ``(ii) Subsection (c)(1) (relating to access to covered 
     benefits).
       ``(iii) Subsection (g) (relating to confidentiality and 
     accuracy of enrollee records).
       ``(D) Public disclosure of pharmaceutical prices for 
     equivalent drugs.--Each eligible entity offering a 
     prescription drug discount card plan shall provide that each 
     pharmacy or other dispenser that arranges for the dispensing 
     of a covered drug shall inform the beneficiary at the time of 
     purchase of the drug of any differential between the price of 
     the prescribed drug to the enrollee and the price of the 
     lowest cost drug covered under the plan that is 
     therapeutically equivalent and bioequivalent.


                        ``annual enrollment fee

       ``Sec. 1860E. (a) Amount.--
       ``(1) In general.--Except as provided in subsection (c), 
     enrollment under the program under this part is conditioned 
     upon payment of an annual enrollment fee of $25.
       ``(2) Annual percentage increase.--
       ``(A) In general.--In the case of any calendar year 
     beginning after 2006, the dollar amount in paragraph (1) 
     shall be increased by an amount equal to--
       ``(i) such dollar amount; multiplied by
       ``(ii) the inflation adjustment.
       ``(B) Inflation adjustment.--For purposes of subparagraph 
     (A)(ii), the inflation adjustment for any calendar year is 
     the percentage (if any) by which--
       ``(i) the average per capita aggregate expenditures for 
     covered drugs in the United States for medicare 
     beneficiaries, as determined by the Secretary for the 12-
     month period ending in July of the previous year; exceeds
       ``(ii) such aggregate expenditures for the 12-month period 
     ending with July 2005.
       ``(C) Rounding.--If any increase determined under clause 
     (ii) is not a multiple of $1, such increase shall be rounded 
     to the nearest multiple of $1.
       ``(b) Collection of Annual Enrollment Fee.--
       ``(1) In general.--Unless the eligible beneficiary makes an 
     election under paragraph (2), the annual enrollment fee 
     described in subsection (a) shall be collected and credited 
     to the Federal Supplementary Medical Insurance Trust Fund in 
     the same manner as the monthly premium determined under 
     section 1839 is collected and credited to such Trust Fund 
     under section 1840.
       ``(2) Direct payment.--An eligible beneficiary may elect to 
     pay the annual enrollment fee directly or in any other manner 
     approved by the Secretary. The Secretary shall establish 
     procedures for making such an election.
       ``(c) Waiver.--The Secretary shall waive the enrollment fee 
     described in subsection (a) in the case of an eligible 
     beneficiary whose income is below 200 percent of the poverty 
     line.


                      ``benefits under the program

       ``Sec. 1860F. (a) Access to Negotiated Prices.--
       ``(1) Negotiated prices.--
       ``(A) In general.--Subject to subparagraph (B), each 
     prescription drug card plan offering a discount card program 
     by an eligible entity with a contract under this part shall 
     provide each eligible beneficiary enrolled in such plan with 
     access to negotiated prices (including applicable discounts) 
     for such prescription drugs as the eligible entity determines 
     appropriate. Such discounts may include discounts for 
     nonformulary drugs. If such a beneficiary becomes eligible 
     for the catastrophic benefit under subsection (b), the 
     negotiated prices (including applicable discounts) shall 
     continue to be available to the beneficiary for those 
     prescription drugs for which payment may not be made under 
     section 1860H(b). For purposes of this subparagraph, the term 
     `prescription drugs' is not limited to covered drugs, but 
     does not include any over-the-counter drug that is not a 
     covered drug.
       ``(B) Limitations.--
       ``(i) Formulary restrictions.--Insofar as an eligible 
     entity with a contract under this part uses a formulary, the 
     negotiated prices (including applicable discounts) for 
     nonformulary drugs may differ.
       ``(ii) Avoidance of duplicate coverage.--The negotiated 
     prices (including applicable discounts) for prescription 
     drugs shall not be available for any drug prescribed for an 
     eligible beneficiary if payment for the drug is available 
     under part A or B (but such negotiated prices shall be 
     available if payment under part A or B is not available 
     because the beneficiary has not met the deductible or has 
     exhausted benefits under part A or B).
       ``(2) Discount card.--The Secretary shall develop a uniform 
     standard card format to be issued by each eligible entity 
     offering a prescription drug discount card plan that shall be 
     used by an enrolled beneficiary to ensure the access of such 
     beneficiary to negotiated prices under paragraph (1).
       ``(3) Ensuring discounts in all areas.--The Secretary shall 
     develop procedures that ensure that each eligible beneficiary 
     that resides in an area where no prescription drug discount 
     card plans are available is provided with access to 
     negotiated prices for prescription drugs (including 
     applicable discounts).
       ``(b) Catastrophic Benefit.--
       ``(1) Ten percent cost-sharing.--Subject to any formulary 
     used by the prescription drug discount card program in which 
     the eligible beneficiary is enrolled, the catastrophic 
     benefit shall provide benefits with cost-sharing that is 
     equal to 10 percent of the negotiated price (taking into 
     account any applicable discounts) of each drug dispensed to 
     such beneficiary after the beneficiary has incurred costs (as 
     described in paragraph (3)) for covered drugs in a year equal 
     to the applicable annual out-of-pocket limit specified in 
     paragraph (2).
       ``(2) Annual out-of-pocket limits.--For purposes of this 
     part, the annual out-of-pocket limits specified in this 
     paragraph are as follows:
       ``(A) Beneficiaries with annual incomes below 200 percent 
     of the poverty line.--In the case of an eligible beneficiary 
     whose income (as determined under section 1860I) is below 200 
     percent of the poverty line, the annual out-of-pocket limit 
     is equal to $1,500.
       ``(B) Beneficiaries with annual incomes between 200 and 400 
     percent of the poverty line.--In the case of an eligible 
     beneficiary whose income (as so determined) equals or exceeds 
     200 percent, but does not exceed 400 percent, of the poverty 
     line, the annual out-of-pocket limit is equal to $3,500.
       ``(C) Beneficiaries with annual incomes between 400 and 600 
     percent of the poverty line.--In the case of an eligible 
     beneficiary whose income (as so determined) equals or exceeds 
     400 percent, but does not exceed 600 percent, of the poverty 
     line, the annual out-of-pocket limit is equal to $5,500.
       ``(D) Beneficiaries with annual incomes that exceed 600 
     percent of the poverty line.--In the case of an eligible 
     beneficiary whose income (as so determined) equals or exceeds 
     600 percent of the poverty line, the annual out-of-pocket 
     limit is an amount equal to 20 percent of that beneficiary's 
     income for that year (rounded to the nearest multiple of $1).
       ``(3) Application.--In applying paragraph (2), incurred 
     costs shall only include those expenses for covered drugs 
     that are incurred by the eligible beneficiary using a card 
     approved by the Secretary under this part that are paid by 
     that beneficiary and for which the beneficiary is not 
     reimbursed (through insurance or otherwise) by another 
     person.
       ``(4) Annual percentage increase.--
       ``(A) In general.--In the case of any calendar year after 
     2006, the dollar amounts in subparagraphs (A), (B), and (C) 
     of paragraph (2) shall be increased by an amount equal to--
       ``(i) such dollar amount; multiplied by
       ``(ii) the inflation adjustment determined under section 
     1860E(a)(2)(B) for such calendar year.
       ``(B) Rounding.--If any increase determined under 
     subparagraph (A) is not a multiple of $1, such increase shall 
     be rounded to the nearest multiple of $1.
       ``(5) Eligible entity not at financial risk for 
     catastrophic benefit.--
       ``(A) In general.--The Secretary, and not the eligible 
     entity, shall be at financial risk for the provision of the 
     catastrophic benefit under this subsection.
       ``(B) Provisions relating to payments to eligible 
     entities.--For provisions relating to payments to eligible 
     entities for administering the catastrophic benefit under 
     this subsection, see section 1860H.
       ``(6) Ensuring catastrophic benefit in all areas.--The 
     Secretary shall develop procedures for the provision of the 
     catastrophic benefit under this subsection to each eligible 
     beneficiary that resides in an area where there are no 
     prescription drug discount card plans offered that have been 
     awarded a contract under this part.


   ``requirements for entities to provide prescription drug coverage

       ``Sec. 1860G. (a) Establishment of Bidding Process.--The 
     Secretary shall establish a process under which the Secretary 
     accepts bids from eligible entities and awards contracts to 
     the entities to provide the benefits

[[Page S8468]]

     under this part to eligible beneficiaries in an area.
       ``(b) Submission of Bids.--Each eligible entity desiring to 
     enter into a contract under this part shall submit a bid to 
     the Secretary at such time, in such manner, and accompanied 
     by such information as the Secretary may require.
       ``(c) Administrative Fee Bid.--
       ``(1) Submission.--For the bid described in subsection (b), 
     each entity shall submit to the Secretary information 
     regarding administration of the discount card and 
     catastrophic benefit under this part.
       ``(2) Bid submission requirements.--
       ``(A) Administrative fee bid submission.--In submitting 
     bids, the entities shall include separate costs for 
     administering the discount card component, if applicable, and 
     the catastrophic benefit. The entity shall submit the 
     administrative fee bid in a form and manner specified by the 
     Secretary, and shall include a statement of projected 
     enrollment and a separate statement of the projected 
     administrative costs for at least the following functions:
       ``(i) Enrollment, including income eligibility 
     determination.
       ``(ii) Claims processing.
       ``(iii) Quality assurance, including drug utilization 
     review.
       ``(iv) Beneficiary and pharmacy customer service.
       ``(v) Coordination of benefits.
       ``(vi) Fraud and abuse prevention.
       ``(B) Negotiated administrative fee bid amounts.--The 
     Secretary has the authority to negotiate regarding the bid 
     amounts submitted. The Secretary may reject a bid if the 
     Secretary determines it is not supported by the 
     administrative cost information provided in the bid as 
     specified in subparagraph (A).
       ``(C) Payment to plans based on administrative fee bid 
     amounts.--The Secretary shall use the bid amounts to 
     calculate a benchmark amount consisting of the enrollment-
     weighted average of all bids for each function and each class 
     of entity. The class of entity is either a regional or 
     national entity, or such other classes as the Secretary may 
     determine to be appropriate. The functions are the discount 
     card and catastrophic components. If an eligible entity's 
     combined bid for both functions is above the combined 
     benchmark within the entity's class for the functions, the 
     eligible entity shall collect additional necessary revenue 
     through 1 or both of the following:
       ``(i) Additional fees charged to the beneficiary, not to 
     exceed $25 annually.
       ``(ii) Use of rebate amounts from drug manufacturers to 
     defray administrative costs.
       ``(d) Awarding of Contracts.--
       ``(1) In general.--The Secretary shall, consistent with the 
     requirements of this part and the goal of containing medicare 
     program costs, award at least 2 contracts in each area, 
     unless only 1 bidding entity meets the terms and conditions 
     specified by the Secretary under paragraph (2).
       ``(2) Terms and conditions.--The Secretary shall not award 
     a contract to an eligible entity under this section unless 
     the Secretary finds that the eligible entity is in compliance 
     with such terms and conditions as the Secretary shall 
     specify.
       ``(3) Requirements for eligible entities providing discount 
     card program.--Except as provided in subsection (e), in 
     determining which of the eligible entities that submitted 
     bids that meet the terms and conditions specified by the 
     Secretary under paragraph (2) to award a contract, the 
     Secretary shall consider whether the bid submitted by the 
     entity meets at least the following requirements:
       ``(A) Level of savings to medicare beneficiaries.--The 
     program passes on to medicare beneficiaries who enroll in the 
     program discounts on prescription drugs, including discounts 
     negotiated with manufacturers.
       ``(B) Prohibition on application only to mail order.--The 
     program applies to drugs that are available other than solely 
     through mail order and provides convenient access to retail 
     pharmacies.
       ``(C) Level of beneficiary services.--The program provides 
     pharmaceutical support services, such as education and 
     services to prevent adverse drug interactions.
       ``(D) Adequacy of information.--The program makes available 
     to medicare beneficiaries through the Internet and otherwise 
     information, including information on enrollment fees, prices 
     charged to beneficiaries, and services offered under the 
     program, that the Secretary identifies as being necessary to 
     provide for informed choice by beneficiaries among endorsed 
     programs.
       ``(E) Extent of demonstrated experience.--The entity 
     operating the program has demonstrated experience and 
     expertise in operating such a program or a similar program.
       ``(F) Extent of quality assurance.--The entity has in place 
     adequate procedures for assuring quality service under the 
     program.
       ``(G) Operation of assistance program.--The entity meets 
     such requirements relating to solvency, compliance with 
     financial reporting requirements, audit compliance, and 
     contractual guarantees as specified by the Secretary.
       ``(H) Privacy compliance.--The entity implements policies 
     and procedures to safeguard the use and disclosure of program 
     beneficiaries' individually identifiable health information 
     in a manner consistent with the Federal regulations 
     (concerning the privacy of individually identifiable health 
     information) promulgated under section 264(c) of the Health 
     Insurance Portability and Accountability Act of 1996.
       ``(I) Additional beneficiary protections.--The program 
     meets such additional requirements as the Secretary 
     identifies to protect and promote the interest of medicare 
     beneficiaries, including requirements that ensure that 
     beneficiaries are not charged more than the lower of the 
     negotiated retail price or the usual and customary price.

     The prices negotiated by a prescription drug discount card 
     program endorsed under this section shall (notwithstanding 
     any other provision of law) not be taken into account for the 
     purposes of establishing the best price under section 
     1927(c)(1)(C).
       ``(4) Beneficiary access to savings and rebates.--The 
     Secretary shall require eligible entities offering a discount 
     card program to pass on savings and rebates negotiated with 
     manufacturers to eligible beneficiaries enrolled with the 
     entity.
       ``(5) Negotiated agreements with employer-sponsored 
     plans.--Notwithstanding any other provision of this part, the 
     Secretary may negotiate agreements with employer-sponsored 
     plans under which eligible beneficiaries are provided with a 
     benefit for prescription drug coverage that is more generous 
     than the benefit that would otherwise have been available 
     under this part if such an agreement results in cost savings 
     to the Federal Government.
       ``(e) Requirements for Other Eligible Entities.--An 
     eligible entity that is licensed under State law to provide 
     the health insurance benefits under this section shall be 
     required to meet the requirements of subsection (d)(3). If an 
     eligible entity offers a national plan, such entity shall not 
     be required to meet the requirements of subsection (d)(3), 
     but shall meet the requirements of Employee Retirement Income 
     Security Act of 1974 that apply with respect to such plan.


  ``payments to eligible entities for administering the catastrophic 
                                benefit

       ``Sec. 1860H. (a) In General.--The Secretary may establish 
     procedures for making payments to an eligible entity under a 
     contract entered into under this part for--
       ``(1) the costs of providing covered drugs to beneficiaries 
     eligible for the benefit under this part in accordance with 
     subsection (b) minus the amount of any cost-sharing collected 
     by the eligible entity under section 1860F(b); and
       ``(2) costs incurred by the entity in administering the 
     catastrophic benefit in accordance with section 1860G.
       ``(b) Payment for Covered Drugs.--
       ``(1) In general.--Except as provided in subsection (c) and 
     subject to paragraph (2), the Secretary may only pay an 
     eligible entity for covered drugs furnished by the eligible 
     entity to an eligible beneficiary enrolled with such entity 
     under this part that is eligible for the catastrophic benefit 
     under section 1860F(b).
       ``(2) Limitations.--
       ``(A) Formulary restrictions.--Insofar as an eligible 
     entity with a contract under this part uses a formulary, the 
     Secretary may not make any payment for a covered drug that is 
     not included in such formulary, except to the extent provided 
     under section 1860D(a)(4)(B).
       ``(B) Negotiated prices.--The Secretary may not pay an 
     amount for a covered drug furnished to an eligible 
     beneficiary that exceeds the negotiated price (including 
     applicable discounts) that the beneficiary would have been 
     responsible for under section 1860F(a) or the price 
     negotiated for insurance coverage under the Medicare+Choice 
     program under part C, a medicare supplemental policy, 
     employer-sponsored coverage, or a State plan.
       ``(C) Cost-sharing limitations.--An eligible entity may not 
     charge an individual enrolled with such entity who is 
     eligible for the catastrophic benefit under this part any 
     copayment, tiered copayment, coinsurance, or other cost-
     sharing that exceeds 10 percent of the cost of the drug that 
     is dispensed to the individual.
       ``(3) Payment in competitive areas.--In a geographic area 
     in which 2 or more eligible entities offer a plan under this 
     part, the Secretary may negotiate an agreement with the 
     entity to reimburse the entity for costs incurred in 
     providing the benefit under this part on a capitated basis.
       ``(c) Secondary Payer Provisions.--The provisions of 
     section 1862(b) shall apply to the benefits provided under 
     this part.


                    ``determination of income levels

       ``Sec. 1860I. (a) Determination of Income Levels.--
       ``(1) In general.--The Secretary shall establish procedures 
     under which each eligible entity awarded a contract under 
     this part determines the income levels of eligible 
     beneficiaries enrolled in a prescription drug card plan 
     offered by that entity at least annually for purposes of 
     sections 1860E(c) and 1860F(b).
       ``(2) Procedures.--The procedures established under 
     paragraph (1) shall require each eligible beneficiary to 
     submit such information as the eligible entity requires to 
     make the determination described in paragraph (1).
       ``(b) Enforcement of Income Determinations.--The Secretary 
     shall--
       ``(1) establish procedures that ensure that eligible 
     beneficiaries comply with sections 1860E(c) and 1860F(b); and
       ``(2) require, if the Secretary determines that payments 
     were made under this part to which an eligible beneficiary 
     was not entitled, the repayment of any excess payments with 
     interest and a penalty.

[[Page S8469]]

       ``(c) Quality Control System.--
       ``(1) Establishment.--The Secretary shall establish a 
     quality control system to monitor income determinations made 
     by eligible entities under this section and to produce 
     appropriate and comprehensive measures of error rates.
       ``(2) Periodic audits.--The Inspector General of the 
     Department of Health and Human Services shall conduct 
     periodic audits to ensure that the system established under 
     paragraph (1) is functioning appropriately.


                            ``appropriations

       ``Sec. 1860J. There are authorized to be appropriated from 
     time to time, out of any moneys in the Treasury not otherwise 
     appropriated, to the Federal Supplementary Medical Insurance 
     Trust Fund established under section 1841, an amount equal to 
     the amount by which the benefits and administrative costs of 
     providing the benefits under this part exceed the enrollment 
     fees collected under section 1860E.


      ``medicare competition and prescription drug advisory board

       ``Sec. 1860K. (a) Establishment of Board.--There is 
     established a Medicare Prescription Drug Advisory Board (in 
     this section referred to as the `Board').
       ``(b) Advice on Policies; Reports.--
       ``(1) Advice on policies.--The Board shall advise the 
     Secretary on policies relating to the Voluntary Medicare 
     Prescription Drug Discount and Security Program under this 
     part.
       ``(2) Reports.--
       ``(A) In general.--With respect to matters of the 
     administration of the program under this part, the Board 
     shall submit to Congress and to the Secretary such reports as 
     the Board determines appropriate. Each such report may 
     contain such recommendations as the Board determines 
     appropriate for legislative or administrative changes to 
     improve the administration of the program under this part. 
     Each such report shall be published in the Federal Register.
       ``(B) Maintaining independence of board.--The Board shall 
     directly submit to Congress reports required under 
     subparagraph (A). No officer or agency of the United States 
     may require the Board to submit to any officer or agency of 
     the United States for approval, comments, or review, prior to 
     the submission to Congress of such reports.
       ``(c) Structure and Membership of the Board.--
       ``(1) Membership.--The Board shall be composed of 7 members 
     who shall be appointed as follows:
       ``(A) Presidential appointments.--
       ``(i) In general.--Three members shall be appointed by the 
     President, by and with the advice and consent of the Senate.
       ``(ii) Limitation.--Not more than 2 such members may be 
     from the same political party.
       ``(B) Senatorial appointments.--Two members (each member 
     from a different political party) shall be appointed by the 
     President pro tempore of the Senate with the advice of the 
     Chairman and the Ranking Minority Member of the Committee on 
     Finance of the Senate.
       ``(C) Congressional appointments.--Two members (each member 
     from a different political party) shall be appointed by the 
     Speaker of the House of Representatives, with the advice of 
     the Chairman and the Ranking Minority Member of the Committee 
     on Ways and Means of the House of Representatives.
       ``(2) Qualifications.--The members shall be chosen on the 
     basis of their integrity, impartiality, and good judgment, 
     and shall be individuals who are, by reason of their 
     education, experience, and attainments, exceptionally 
     qualified to perform the duties of members of the Board.
       ``(3) Composition.--Of the members appointed under 
     paragraph (1)--
       ``(A) at least 1 shall represent the pharmaceutical 
     industry;
       ``(B) at least 1 shall represent physicians;
       ``(C) at least 1 shall represent medicare beneficiaries;
       ``(D) at least 1 shall represent practicing pharmacists; 
     and
       ``(E) at least 1 shall represent eligible entities.
       ``(d) Terms of Appointment.--
       ``(1) In general.--Subject to paragraph (2), each member of 
     the Board shall serve for a term of 6 years.
       ``(2) Continuance in office and staggered terms.--
       ``(A) Continuance in office.--A member appointed to a term 
     of office after the commencement of such term may serve under 
     such appointment only for the remainder of such term.
       ``(B) Staggered terms.--The terms of service of the members 
     initially appointed under this section shall begin on January 
     1, 2006, and expire as follows:
       ``(i) Presidential appointments.--The terms of service of 
     the members initially appointed by the President shall expire 
     as designated by the President at the time of nomination, 1 
     each at the end of--

       ``(I) 2 years;
       ``(II) 4 years; and
       ``(III) 6 years.

       ``(ii) Senatorial appointments.--The terms of service of 
     members initially appointed by the President pro tempore of 
     the Senate shall expire as designated by the President pro 
     tempore of the Senate at the time of nomination, 1 each at 
     the end of--

       ``(I) 3 years; and
       ``(II) 6 years.

       ``(iii) Congressional appointments.--The terms of service 
     of members initially appointed by the Speaker of the House of 
     Representatives shall expire as designated by the Speaker of 
     the House of Representatives at the time of nomination, 1 
     each at the end of--

       ``(I) 4 years; and
       ``(II) 5 years.

       ``(C) Reappointments.--Any person appointed as a member of 
     the Board may not serve for more than 8 years.
       ``(D) Vacancies.--Any member appointed to fill a vacancy 
     occurring before the expiration of the term for which the 
     member's predecessor was appointed shall be appointed only 
     for the remainder of that term. A member may serve after the 
     expiration of that member's term until a successor has taken 
     office. A vacancy in the Board shall be filled in the manner 
     in which the original appointment was made.
       ``(e) Chairperson.--A member of the Board shall be 
     designated by the President to serve as Chairperson for a 
     term of 4 years or, if the remainder of such member's term is 
     less than 4 years, for such remainder.
       ``(f) Expenses and Per Diem.--Members of the Board shall 
     serve without compensation, except that, while serving on 
     business of the Board away from their homes or regular places 
     of business, members may be allowed travel expenses, 
     including per diem in lieu of subsistence, as authorized by 
     section 5703 of title 5, United States Code, for persons in 
     the Government employed intermittently.
       ``(g) Meetings.--
       ``(1) In general.--The Board shall meet at the call of the 
     Chairperson (in consultation with the other members of the 
     Board) not less than 4 times each year to consider a specific 
     agenda of issues, as determined by the Chairperson in 
     consultation with the other members of the Board.
       ``(2) Quorum.--Four members of the Board (not more than 3 
     of whom may be of the same political party) shall constitute 
     a quorum for purposes of conducting business.
       ``(h) Federal Advisory Committee Act.--The Board shall be 
     exempt from the provisions of the Federal Advisory Committee 
     Act (5 U.S.C. App.).
       ``(i) Personnel.--
       ``(1) Staff director.--The Board shall, without regard to 
     the provisions of title 5, United States Code, relating to 
     the competitive service, appoint a Staff Director who shall 
     be paid at a rate equivalent to a rate established for the 
     Senior Executive Service under section 5382 of title 5, 
     United States Code.
       ``(2) Staff.--
       ``(A) In general.--The Board may employ, without regard to 
     chapter 31 of title 5, United States Code, such officers and 
     employees as are necessary to administer the activities to be 
     carried out by the Board.
       ``(B) Flexibility with respect to civil service laws.--
       ``(i) In general.--The staff of the Board shall be 
     appointed without regard to the provisions of title 5, United 
     States Code, governing appointments in the competitive 
     service, and, subject to clause (ii), shall be paid without 
     regard to the provisions of chapters 51 and 53 of such title 
     (relating to classification and schedule pay rates).
       ``(ii) Maximum rate.--In no case may the rate of 
     compensation determined under clause (i) exceed the rate of 
     basic pay payable for level IV of the Executive Schedule 
     under section 5315 of title 5, United States Code.
       ``(j) Authorization of Appropriations.--There are 
     authorized to be appropriated, out of the Federal 
     Supplemental Medical Insurance Trust Fund established under 
     section 1841, and the general fund of the Treasury, such sums 
     as are necessary to carry out the purposes of this 
     section.''.
       (b) Conforming References to Previous Part D.--
       (1) In general.--Any reference in law (in effect before the 
     date of enactment of this Act) to part D of title XVIII of 
     the Social Security Act is deemed a reference to part E of 
     such title (as in effect after such date).
       (2) Secretarial submission of legislative proposal.--Not 
     later than 6 months after the date of enactment of this 
     section, the Secretary of Health and Human Services shall 
     submit to the appropriate committees of Congress a 
     legislative proposal providing for such technical and 
     conforming amendments in the law as are required by the 
     provisions of this section.
       (c) Effective Date.--
       (1) In general.--The amendment made by subsection (a) shall 
     take effect on the date of enactment of this Act.
       (2) Implementation.--Notwithstanding any provision of part 
     D of title XVIII of the Social Security Act (as added by 
     subsection (a)), the Secretary of Health and Human Services 
     shall implement the Voluntary Medicare Prescription Drug 
     Discount and Security Program established under such part in 
     a manner such that--
       (A) benefits under such part for eligible beneficiaries (as 
     defined in section 1860 of such Act, as added by such 
     subsection) with annual incomes below 200 percent of the 
     poverty line (as defined in such section) are available to 
     such beneficiaries not later than the date that is 6 months 
     after the date of enactment of this Act; and
       (B) benefits under such part for other eligible 
     beneficiaries are available to such beneficiaries not later 
     than the date that is 1 year after the date of enactment of 
     this Act.

[[Page S8470]]

     SEC. 102. ADMINISTRATION OF VOLUNTARY MEDICARE PRESCRIPTION 
                   DRUG DISCOUNT AND SECURITY PROGRAM.

       (a) Establishment of Center for Medicare Prescription 
     Drugs.--There is established, within the Centers for Medicare 
     & Medicaid Services of the Department of Health and Human 
     Services, a Center for Medicare Prescription Drugs. Such 
     Center shall be separate from the Center for Beneficiary 
     Choices, the Center for Medicare Management, and the Center 
     for Medicaid and State Operations.
       (b) Duties.--It shall be the duty of the Center for 
     Medicare Prescription Drugs to administer the Voluntary 
     Medicare Prescription Drug Discount and Security Program 
     established under part D of title XVIII of the Social 
     Security Act (as added by section 101).
       (c) Director.--
       (1) Appointment.--There shall be in the Center for Medicare 
     Prescription Drugs a Director of Medicare Prescription Drugs, 
     who shall be appointed by the President, by and with the 
     advice and consent of the Senate.
       (2) Responsibilities.--The Director shall be responsible 
     for the exercise of all powers and the discharge of all 
     duties of the Center for Medicare Prescription Drugs and 
     shall have authority and control over all personnel and 
     activities thereof.
       (d) Personnel.--The Director of the Center for Medicare 
     Prescription Drugs may appoint and terminate such personnel 
     as may be necessary to enable the Center for Medicare 
     Prescription Drugs to perform its duties.

     SEC. 103. EXCLUSION OF PART D COSTS FROM DETERMINATION OF 
                   PART B MONTHLY PREMIUM.

       Section 1839(g) of the Social Security Act (42 U.S.C. 
     1395r(g)) is amended--
       (1) by striking ``attributable to the application of 
     section'' and inserting ``attributable to--
       ``(1) the application of section'';
       (2) by striking the period and inserting ``; and''; and
       (3) by adding at the end the following new paragraph:
       ``(2) the Voluntary Medicare Prescription Drug Discount and 
     Security Program under part D.''.

     SEC. 104. MEDIGAP REVISIONS.

       Section 1882 of the Social Security Act (42 U.S.C. 1395ss) 
     is amended by adding at the end the following new subsection:
       ``(v) Modernization of Medicare Supplemental Policies.--
       ``(1) Promulgation of model regulation.--
       ``(A) NAIC model regulation.--If, within 9 months after the 
     date of enactment of the Prescription Drug and Medicare 
     Improvement Act of 2003, the National Association of 
     Insurance Commissioners (in this subsection referred to as 
     the `NAIC') changes the 1991 NAIC Model Regulation (described 
     in subsection (p)) to revise the benefit package classified 
     as `J' under the standards established by subsection (p)(2) 
     (including the benefit package classified as `J' with a high 
     deductible feature, as described in subsection (p)(11)) so 
     that--
       ``(i) the coverage for prescription drugs available under 
     such benefit package is replaced with coverage for 
     prescription drugs that complements but does not duplicate 
     the benefits for prescription drugs that beneficiaries are 
     otherwise entitled to under this title;
       ``(ii) a uniform format is used in the policy with respect 
     to such revised benefits; and
       ``(iii) such revised standards meet any additional 
     requirements imposed by the Prescription Drug and Medicare 
     Improvement Act of 2003;

     subsection (g)(2)(A) shall be applied in each State, 
     effective for policies issued to policy holders on and after 
     January 1, 2006, as if the reference to the Model Regulation 
     adopted on June 6, 1979, were a reference to the 1991 NAIC 
     Model Regulation as changed under this subparagraph (such 
     changed regulation referred to in this section as the `2006 
     NAIC Model Regulation').
       ``(B) Regulation by the secretary.--If the NAIC does not 
     make the changes in the 1991 NAIC Model Regulation within the 
     9-month period specified in subparagraph (A), the Secretary 
     shall promulgate, not later than 9 months after the end of 
     such period, a regulation and subsection (g)(2)(A) shall be 
     applied in each State, effective for policies issued to 
     policy holders on and after January 1, 2006, as if the 
     reference to the Model Regulation adopted on June 6, 1979, 
     were a reference to the 1991 NAIC Model Regulation as changed 
     by the Secretary under this subparagraph (such changed 
     regulation referred to in this section as the `2006 Federal 
     Regulation').
       ``(C) Consultation with working group.--In promulgating 
     standards under this paragraph, the NAIC or Secretary shall 
     consult with a working group similar to the working group 
     described in subsection (p)(1)(D).
       ``(D) Modification of standards if medicare benefits 
     change.--If benefits under part D of this title are changed 
     and the Secretary determines, in consultation with the NAIC, 
     that changes in the 2006 NAIC Model Regulation or 2006 
     Federal Regulation are needed to reflect such changes, the 
     preceding provisions of this paragraph shall apply to the 
     modification of standards previously established in the same 
     manner as they applied to the original establishment of such 
     standards.
       ``(2) Construction of benefits in other medicare 
     supplemental policies.--Nothing in the benefit packages 
     classified as `A' through `I' under the standards established 
     by subsection (p)(2) (including the benefit package 
     classified as `F' with a high deductible feature, as 
     described in subsection (p)(11)) shall be construed as 
     providing coverage for benefits for which payment may be made 
     under part D.
       ``(3) Application of provisions and conforming 
     references.--
       ``(A) Application of provisions.--The provisions of 
     paragraphs (4) through (10) of subsection (p) shall apply 
     under this section, except that--
       ``(i) any reference to the model regulation applicable 
     under that subsection shall be deemed to be a reference to 
     the applicable 2006 NAIC Model Regulation or 2006 Federal 
     Regulation; and
       ``(ii) any reference to a date under such paragraphs of 
     subsection (p) shall be deemed to be a reference to the 
     appropriate date under this subsection.
       ``(B) Other references.--Any reference to a provision of 
     subsection (p) or a date applicable under such subsection 
     shall also be considered to be a reference to the appropriate 
     provision or date under this subsection.''.
                                 ______
                                 
  SA 1027. Ms. SNOWE submitted an amendment intended to be proposed by 
her to the bill S. 1, to amend title XVIII of the Social Security Act 
to make improvements in the medicare program, to provide prescription 
drug coverage under the medicare program, and for other purposes; which 
was ordered to lie on the table; as follows:

       At the end of title VI, insert the following:

     SEC. ____. SENSE OF THE SENATE REGARDING IMPLEMENTATION OF 
                   THE PRESCRIPTION DRUG AND MEDICARE IMPROVEMENT 
                   ACT OF 2003.

       (a) In General.--It is the sense of the Senate that the 
     Committee on Finance of the Senate should hold not less than 
     4 hearings to monitor implementation of the Prescription Drug 
     and Medicare Improvement Act of 2003 (hereinafter in this 
     section referred to as the ``Act'') during which the 
     Secretary or his designee should testify before the 
     Committee.
       (b) Initial Hearing.--It is the sense of the Senate that 
     the first hearing described in subsection (a) should be held 
     not later than 60 days after the date of the enactment the 
     Act. At the hearing, the Secretary or his designee should 
     submit written testimony and testify before the Committee on 
     Finance of the Senate on the following issues:
       (1) The progress toward implementation of the prescription 
     drug discount card under section 111 of the Act.
       (2) Development of the blueprint that will direct the 
     implementation of the provisions of the Act, including the 
     implementation of title I (Medicare Prescription Drug 
     Benefit), title II (MedicareAdvantage), and title III (Center 
     for Medicare Choices) of the Act.
       (3) Any problems that will impede the timely implementation 
     of the Act.
       (4) The overall progress toward implementation of the Act.
       (c) Subsequent Hearings.--It is the sense of the Senate 
     that the additional hearings described in subsection (a) 
     should be held in each of May 2004, October 2004, and May 
     2005. At each hearing, the Secretary or his designee should 
     submit written testimony and testify before the Committee on 
     Finance of the Senate on the following issues:
       (1) Progress on implementation of title I (Medicare 
     Prescription Drug Benefit), title II (MedicareAdvantage), and 
     title III (Center for Medicare Choices) of the Act.
       (2) Any problems that will impede timely implementation of 
     the Act.
                                 ______
                                 
  SA 1028. Mr. CRAIG submitted an amendment intended to be proposed by 
him to the bill S. 1, to amend title XVIII of the Social Security Act 
to make improvements in the medicare program, to provide prescription 
drug coverage under the medicare program, and for other purposes; which 
was ordered to lie on the table; as follows:

       At the end of subtitle A of title II, add the following:

     SEC. ____. ESTABLISHMENT OF MEDICAREADVANTAGE CONSUMER-DRIVEN 
                   HEALTH PLAN OPTION.

       (a) Program Specifications.--Part C of title XVIII (42 
     U.S.C. 1395w-21 et seq.), amended by section 205, is amended 
     by inserting after section 1858A the following new section:


                  ``consumer-driven health plan option

       ``Sec. 1858B. (a) Establishment of Program.--
       ``(1) In general.--Beginning on January 1, 2006, there is 
     established a consumer-driven health plan program under which 
     consumer-driven health plans offered by consumer-driven 
     health plan sponsors are offered to MedicareAdvantage 
     eligible individuals in preferred provider regions.
       ``(2) Definitions.--
       ``(A) Consumer-driven health plan sponsor.--The term 
     `consumer-driven health plan sponsor' means an entity with a 
     contract under section 1857 that meets the requirements of 
     this section applicable with respect to consumer-driven 
     health plan sponsors.
       ``(B) Consumer-driven health plan.--The term `consumer-
     driven health plan' means a MedicareAdvantage plan that--

[[Page S8471]]

       ``(i) provides 100 percent coverage for preventive benefits 
     (as defined by the Secretary);
       ``(ii) includes a personal care account from which 
     enrollees must pay out-of-pocket costs until the deductible 
     is met; and
       ``(iii) has a high deductible (as determined by the 
     Secretary).
       ``(C) Preferred provider region.--The term `preferred 
     provider region' has the meaning given that term under 
     section 1858(a)(2)(C).
       ``(b) Eligibility, Election, and Enrollment; Benefits and 
     Beneficiary Protections.--
       ``(1) In general.--Except as provided in the succeeding 
     provisions of this subsection, the provisions of sections 
     1851 and 1852 that apply with respect to coordinated care 
     plans shall apply to consumer-driven health plans offered by 
     a consumer-driven health plan sponsor.
       ``(2) Service area.--The service area of a consumer-driven 
     health plan shall be a preferred provider region.
       ``(3) Availability.--Each consumer-driven health plan must 
     be offered to each MedicareAdvantage eligible individual who 
     resides in the service area of the plan.
       ``(4) Authority to prohibit risk selection.--The provisions 
     of section 1852(a)(6) shall apply to preferred provider 
     organization plans.
       ``(5) Assuring access to services in consumer-driven health 
     plans.--The requirements of section 1858(a)(5) shall apply to 
     consumer-driven health plans.
       ``(6) Personal Care Accounts.--
       ``(A) Establishment.--Each consumer-driven health plan 
     shall establish a personal care account on behalf of each 
     enrollee from which such enrollee shall be required to pay 
     out-of-pockets costs until the deductible described in 
     subsection (a)(2)(B)(iii) is met.
       ``(B) Rollover.--Subject to subparagraph (C), any amounts 
     remaining in a personal care account at the end of a year 
     shall be credited to such an account for the subsequent year.
       ``(C) Changes of election.--If, after electing a consumer-
     driven health plan, a beneficiary elects a plan under this 
     part that is not a consumer-driven health plan during a 
     subsequent year or elects to receive benefits under the 
     original medicare fee-for-service program option (whether or 
     not as a result of circumstances described in section 
     1851(e)(4)), any amounts remaining in the account as of the 
     date of such election shall be credited to the Federal 
     Hospital Insurance Trust Fund under section 1817 and the 
     Federal Supplementary Medical Insurance Trust Fund under 
     section 1841 in such proportion as the Secretary determines 
     is appropriate.
       ``(c) Payments to Consumer-Driven Health Plan Sponsors.--
       ``(1) Payments to organizations.--
       ``(A) Monthly payments.--
       ``(i) In general.--Under a contract under section 1857 and 
     subject to paragraph (5), subsections (e) and (i), and 
     section 1859(e)(4), the Secretary shall make, to each 
     consumer-driven health plan sponsor, with respect to coverage 
     of an individual for a month under this part in a preferred 
     provider region, separate monthly payments with respect to--

       ``(I) benefits under the original medicare fee-for-service 
     program under parts A and B in accordance with paragraph (4); 
     and
       ``(II) benefits under the voluntary prescription drug 
     program under part D in accordance with section 1858A and the 
     other provisions of this part.

       ``(ii) Special rule for end-stage renal disease.--The 
     Secretary shall establish separate rates of payment 
     applicable with respect to classes of individuals determined 
     to have end-stage renal disease and enrolled in a consumer-
     driven health plan under this clause that are similar to the 
     separate rates of payment described in section 1853(a)(1)(B).
       ``(B) Adjustment to reflect number of enrollees.--The 
     Secretary may retroactively adjust the amount of payment 
     under this paragraph in a manner that is similar to the 
     manner in which payment amounts may be retroactively adjusted 
     under section 1853(a)(2).
       ``(C) Comprehensive risk adjustment methodology.--The 
     Secretary shall apply the comprehensive risk adjustment 
     methodology described in section 1853(a)(3)(B) to 100 percent 
     of the amount of payments to plans under paragraph 
     (4)(D)(ii).
       ``(D) Adjustment for spending variations within a region.--
     The Secretary shall establish a methodology for adjusting the 
     amount of payments to plans under paragraph (4)(D)(ii) that 
     achieves the same objective as the adjustment described in 
     paragraph 1853(a)(2)(C).
       ``(2) Application of preferred provider benchmarks.--The 
     benchmark amounts calculated under section 1858(c)(2) shall 
     apply with respect to consumer-driven health plans.
       ``(3) Application of preferred provider payment factors.--
     The provisions of section 1858(c)(3) shall apply with respect 
     to consumer driven health plans.
       ``(4) Secretary's determination of payment amount for 
     benefits under the original medicare fee-for-service 
     program.--The Secretary shall determine the payment amount 
     for plans as follows:
       ``(A) Review of plan bids.--The Secretary shall review each 
     plan bid submitted under subsection (d)(1) for the coverage 
     of benefits under the original medicare fee-for-service 
     program option to ensure that such bids are consistent with 
     the requirements under this part and are based on the 
     assumptions described in section 1854(a)(2)(A)(iii).
       ``(B) Determination of preferred provider regional 
     benchmark amounts.--The preferred provider regional benchmark 
     calculated under section 1858(c)(4)(B) shall apply with 
     respect to consumer-drive health plans amount for that plan 
     for the benefits under the original medicare fee-for-service 
     program option for each plan equal to the regional benchmark 
     adjusted by using the assumptions described in section 
     1854(a)(2)(A)(iii).
       ``(C) Comparison to benchmark.--The Secretary shall 
     determine the difference between each plan bid (as adjusted 
     under subparagraph (A)) and the preferred provider regional 
     benchmark amount (as determined under subparagraph (B)) for 
     purposes of determining--
       ``(i) the payment amount under subparagraph (D); and
       ``(ii) the additional benefits required and 
     MedicareAdvantage monthly basic beneficiary premiums.
       ``(D) Determination of payment amount.--
       ``(i) In general.--Subject to clause (ii), the Secretary 
     shall determine the payment amount to a consumer-driven 
     health plan sponsor for a consumer-driven health plan as 
     follows:

       ``(I) Bids that equal or exceed the benchmark.--In the case 
     of a plan bid that equals or exceeds the preferred provider 
     regional benchmark amount, the amount of each monthly payment 
     to the organization with respect to each individual enrolled 
     in a plan shall be the preferred provider regional benchmark 
     amount.
       ``(II) Bids below the benchmark.--In the case of a plan bid 
     that is less than the preferred provider regional benchmark 
     amount, the amount of each monthly payment to the 
     organization with respect to each individual enrolled in a 
     plan shall be the preferred provider regional benchmark 
     amount reduced by the amount of any premium reduction elected 
     by the plan under section 1854(d)(1)(A)(i).

       ``(ii) Application of adjustment methodologies.--The 
     Secretary shall adjust the amounts determined under 
     subparagraph (A) using the factors described in section 
     1858(c)(3)(A)(ii).
       ``(E) Factors used in adjusting bids and benchmarks for 
     consumer-driven health plan sponsors and in determining 
     enrollee premiums.--Subject to subparagraph (F), in addition 
     to the factors used to adjust payments to plans described in 
     section 1853(d)(6), the Secretary shall use the adjustment 
     for geographic variation within the region established under 
     paragraph (1)(D).
       ``(F) Adjustment for national coverage determinations and 
     legislative changes in benefits.--The Secretary shall provide 
     for adjustments for national coverage determinations and 
     legislative changes in benefits applicable with respect to 
     consumer-driven health plan sponsors in the same manner as 
     the Secretary provides for adjustments under section 
     1853(d)(7).
       ``(5) Payments from trust fund.--The payment to a consumer-
     driven health plan sponsor under this section shall be made 
     from the Federal Hospital Insurance Trust Fund and the 
     Federal Supplementary Medical Insurance Trust Fund in a 
     manner similar to the manner described in section 1853(g).
       ``(6) Special rule for certain inpatient hospital stays.--
     Rules similar to the rules applicable under section 1853(h) 
     shall apply with respect consumer-driven health plan 
     sponsors.
       ``(7) Special rule for hospice care.--Rules similar to the 
     rules applicable under section 1853(i) shall apply with 
     respect to consumer-driven health plan sponsors.
       ``(d) Submission of Bids by Consumer-Driven Health Plans; 
     Premiums.--
       ``(1) Submission of bids by consumer-driven health plan 
     sponsors.--
       ``(A) In general.--For the requirements on submissions by 
     consumer-driven health plans, see section 1854(a)(1).
       ``(B) Uniform premiums.--Each bid amount submitted under 
     subparagraph (A) for a consumer-driven health plan in a 
     preferred provider region may not vary among 
     MedicareAdvantage eligible individuals residing in such 
     preferred provider region.
       ``(C) Application of fehbp standard; prohibition on price 
     gouging.--Each bid amount submitted under subparagraph (A) 
     for a consumer-driven health plan must reasonably and 
     equitably reflect the cost of benefits provided under that 
     plan.
       ``(D) Review.--The Secretary shall review the adjusted 
     community rates (as defined in section 1854(g)(3)), the 
     amounts of the MedicareAdvantage monthly basic premium and 
     the MedicareAdvantage monthly beneficiary premium for 
     enhanced medical benefits filed under this paragraph and 
     shall approve or disapprove such rates and amounts so 
     submitted. The Secretary shall review the actuarial 
     assumptions and data used by the consumer-driven health plan 
     sponsor with respect to such rates and amounts so submitted 
     to determine the appropriateness of such assumptions and 
     data.
       ``(E) No limit on number of plans in a region.--The 
     Secretary may not limit the number of consumer-driven health 
     plans offered in a preferred provider region.
       ``(2) Monthly premiums charged.--The amount of the monthly 
     premium charged to an individual enrolled in a consumer-
     driven health plan offered by a consumer-driven health plan 
     sponsor shall be equal to the sum of the following:

[[Page S8472]]

       ``(A) The MedicareAdvantage monthly basic beneficiary 
     premium, as defined in section 1854(b)(2)(A) (if any).
       ``(B) The MedicareAdvantage monthly beneficiary premium for 
     enhanced medical benefits, as defined in section 
     1854(b)(2)(C) (if any).
       ``(C) The MedicareAdvantage monthly obligation for 
     qualified prescription drug coverage, as defined in section 
     1854(b)(2)(B) (if any).
       ``(3) Determination of premium reductions, reduced cost-
     sharing, additional benefits, and beneficiary premiums.--The 
     rules for determining premium reductions, reduced cost-
     sharing, additional benefits, and beneficiary premiums under 
     section 1854(d) shall apply with respect to consumer-driven 
     health plan sponsors.
       ``(4) Prohibition of segmenting preferred provider 
     regions.--The Secretary may not permit a consumer-driven 
     health plan sponsor to elect to apply the provisions of this 
     section uniformly to separate segments of a preferred 
     provider region (rather than uniformly to an entire preferred 
     provider region).
       ``(e) Portion of Total Payments to an Organization Subject 
     to Risk for 2 Years.--
       ``(1) Notification of spending under the plan.--
       ``(A) In general.--For 2007 and 2008, the consumer-driven 
     health plan sponsor offering a consumer-driven health plan 
     shall notify the Secretary of the total amount of costs that 
     the organization incurred in providing benefits covered under 
     parts A and B of the original medicare fee-for-service 
     program for all enrollees under the plan in the previous 
     year.
       ``(B) Certain expenses not included.--The total amount of 
     costs specified in subparagraph (A) may not include--
       ``(i) subject to subparagraph (C), administrative expenses 
     incurred in providing the benefits described in such 
     subparagraph; or
       ``(ii) amounts expended on providing enhanced medical 
     benefits under section 1852(a)(3)(D).
       ``(C) Establishment of allowable administrative expenses.--
     For purposes of applying subparagraph (B)(i), the 
     administrative expenses incurred in providing benefits 
     described in subparagraph (A) under a consumer-driven health 
     plan may not exceed an amount determined appropriate by the 
     Administrator.
       ``(2) Adjustment of payment.--
       ``(A) No adjustment if costs within risk corridor.--If the 
     total amount of costs specified in paragraph (1)(A) for the 
     plan for the year are not more than the first threshold upper 
     limit of the risk corridor (specified in paragraph 
     (3)(A)(iii)) and are not less than the first threshold lower 
     limit of the risk corridor (specified in paragraph (3)(A)(i)) 
     for the plan for the year, then no additional payments shall 
     be made by the Secretary and no reduced payments shall be 
     made to the consumer-driven health plan sponsor offering the 
     plan.
       ``(B) Increase in payment if costs above upper limit of 
     risk corridor.--
       ``(i) In general.--If the total amount of costs specified 
     in paragraph (1)(A) for the plan for the year are more than 
     the first threshold upper limit of the risk corridor for the 
     plan for the year, then the Secretary shall increase the 
     total of the monthly payments made to the consumer-driven 
     health plan sponsor offering the plan for the year under 
     subsection (c)(1)(A) by an amount equal to the sum of--

       ``(I) 50 percent of the amount of such total costs which 
     are more than such first threshold upper limit of the risk 
     corridor and not more than the second threshold upper limit 
     of the risk corridor for the plan for the year (as specified 
     under paragraph (3)(A)(iv)); and
       ``(II) 10 percent of the amount of such total costs which 
     are more than such second threshold upper limit of the risk 
     corridor.

       ``(C) Reduction in payment if costs below lower limit of 
     risk corridor.--If the total amount of costs specified in 
     paragraph (1)(A) for the plan for the year are less than the 
     first threshold lower limit of the risk corridor for the plan 
     for the year, then the Secretary shall reduce the total of 
     the monthly payments made to the consumer-driven health plan 
     sponsor offering the plan for the year under subsection 
     (c)(1)(A) by an amount (or otherwise recover from the plan an 
     amount) equal to--
       ``(i) 50 percent of the amount of such total costs which 
     are less than such first threshold lower limit of the risk 
     corridor and not less than the second threshold lower limit 
     of the risk corridor for the plan for the year (as specified 
     under paragraph (3)(A)(ii)); and
       ``(ii) 10 percent of the amount of such total costs which 
     are less than such second threshold lower limit of the risk 
     corridor.
       ``(3) Establishment of risk corridors.--
       ``(A) In general.--For 2006 and 2007, the Secretary shall 
     establish a risk corridor for each consumer-driven health 
     plan. The risk corridor for a plan for a year shall be equal 
     to a range as follows:
       ``(i) First threshold lower limit.--The first threshold 
     lower limit of such corridor shall be equal to--

       ``(I) the target amount described in subparagraph (B) for 
     the plan; minus
       ``(II) an amount equal to 5 percent of such target amount.

       ``(ii) Second threshold lower limit.--The second threshold 
     lower limit of such corridor shall be equal to--

       ``(I) the target amount described in subparagraph (B) for 
     the plan; minus
       ``(II) an amount equal to 10 percent of such target amount.

       ``(iii) First threshold upper limit.--The first threshold 
     upper limit of such corridor shall be equal to the sum of--

       ``(I) such target amount; and
       ``(II) the amount described in clause (i)(II).

       ``(iv) Second threshold upper limit.--The second threshold 
     upper limit of such corridor shall be equal to the sum of--

       ``(I) such target amount; and
       ``(II) the amount described in clause (ii)(II).

       ``(B) Target amount described.--The target amount described 
     in this paragraph is, with respect to a consumer-driven 
     health plan offered by a consumer-driven health plan sponsor 
     in a year, an amount equal to the sum of--
       ``(i) the total monthly payments made to the organization 
     for enrollees in the plan for the year under subsection 
     (c)(1)(A); and
       ``(ii) the total MedicareAdvantage basic beneficiary 
     premiums collected for such enrollees for the year under 
     subsection (d)(2)(A).
       ``(4) Plans at risk for entire amount of enhanced medical 
     benefits.--A consumer-driven health plan sponsor that offers 
     a consumer-driven health plan that provides enhanced medial 
     benefits under section 1852(a)(3)(D) shall be at full 
     financial risk for the provision of such benefits.
       ``(5) No effect on eligible beneficiaries.--No change in 
     payments made by reason of this subsection shall affect the 
     amount of the MedicareAdvantage basic beneficiary premium 
     that a beneficiary is otherwise required to pay under the 
     plan for the year under subsection (d)(2)(A).
       ``(6) Disclosure of information.--The provisions of section 
     1860D-16(b)(7), including subparagraph (B) of such section, 
     shall apply to a consumer-driven health plan sponsor and a 
     consumer-driven health plan in the same manner as such 
     provisions apply to an eligible entity and a Medicare 
     Prescription Drug plan under part D.
       ``(f) Organizational and Financial Requirements for 
     Consumer-Driven Health Plan Sponsors.--A consumer-driven 
     health plan sponsor shall be organized and licensed under 
     State law as a risk-bearing entity eligible to offer health 
     insurance or health benefits coverage in each State within 
     the preferred provider region in which it offers a consumer-
     driven health plan.
       ``(g) Inapplicability of Provider-Sponsored Organization 
     Solvency Standards.--The requirements of section 1856 shall 
     not apply with respect to consumer-driven health plan 
     sponsors.
       ``(h) Contracts With Consumer-Driven Health Plan 
     Sponsors.--The provisions of section 1857 shall apply to a 
     consumer-driven health plan offered by a consumer-driven 
     health plan sponsor under this section.
       ``(i) Budget Neutrality.--Notwithstanding any other 
     provision of this section, in conducting the program under 
     this section, the Secretary shall ensure that the aggregate 
     payments made by the Secretary under this title do not exceed 
     the amount the Secretary would have paid if this section had 
     not been enacted.''.
       (b) Consumer-Driven Health Plan Terminology Defined.--
     Section 1859(a) (42 U.S.C. 1395w-29(a)), as amended by 
     section 211(b), is amended by adding at the end the following 
     new paragraph:
       ``(4) Consumer-driven health plan sponsor; consumer-driven 
     health plan.--The terms `consumer-driven health plan sponsor' 
     and `consumer-driven health plan' have the meaning given such 
     terms in section 1858B(a)(2).''.
                                 ______
                                 
  SA 1029. Mr. SANTORUM submitted an amendment intended to be proposed 
by him to the bill S. 1, to amend title XVIII of the Social Security 
Act to make improvements in the medicare program, to provide 
prescription drug coverage under the medicare program, and for other 
purposes; which was ordered to lie on the table; as follows:

       At the end of title VI, insert the following:

     SEC. ____. MEDICARE COVERAGE OF CRITICAL ACCESS HEALTH CENTER 
                   SERVICES.

       (a) In General.--
       (1) Coverage.--Section 1861(s)(2)(E) (42 U.S.C. 
     1395x(s)(2)(E)) is amended--
       (A) by striking ``services and'' and inserting 
     ``services,''; and
       (B) by striking ``center services'' and inserting ``center 
     services, and critical access health center services''.
       (2) Definitions.--Section 1861(aa) (42 U.S.C. 1395x(aa)) is 
     amended--
       (A) in the heading--
       (i) by striking ``Services and'' and inserting 
     ``Services,''; and
       (ii) by striking ``Center Services'' and inserting ``Center 
     Services, and Critical Access Health Center Services'';
       (B) in paragraph (1)(B), by striking ``paragraph (5)'' and 
     inserting ``paragraph (7)'';
       (C) by redesignating paragraphs (5), (6), and (7) as 
     paragraphs (7), (8), and (9), respectively; and
       (D) by inserting after paragraph (4) the following:
       ``(5) The term `critical access health center services' 
     means--
       ``(A) services of the type described in subparagraphs (A) 
     through (C) of paragraph (1); and
       ``(B) preventive primary health services of the type that a 
     health center is required to provide under section 330 of the 
     Public Health Service Act,


[[Page S8473]]


     when furnished to an individual who is an outpatient of a 
     critical access health center and, for this purpose, any 
     reference to a rural health clinic or a physician described 
     in paragraph (2)(B) is deemed a reference to a critical 
     access health center or a physician at the center, 
     respectively.
       ``(6) The term `critical access health center' means an 
     entity that--
       ``(A) is sponsored by a private, nonprofit entity with a 
     religious affiliation; and
       ``(B) based on the recommendation of the Centers for 
     Medicare and Medicaid Services, is determined by the 
     Secretary to meet the requirements for receiving a grant 
     under section 330 of the Public Health Service Act (other 
     than the requirement of subsection (n)(3)(H)(i) of such 
     section).''.
       (3) Payments.--
       (A) Scope of benefits.--Section 1832(a) (42 U.S.C.1395k(a)) 
     is amended--
       (i) in paragraph (1), by striking ``subparagraphs (B) and 
     (D)'' and inserting ``subparagraphs (B), (D), and (K)''; and
       (ii) in paragraph (2)--

       (I) by striking ``and'' at the end of subparagraph (I);
       (II) by striking the period at the end of subparagraph (J) 
     and inserting ``; and''; and
       (III) by adding at the end the following:

       ``(K) critical access health center services.''.
       (B) Payment of benefits.--Section 1833(a) (42 
     U.S.C.1395l(a)) is amended--
       (i) in the matter preceding subparagraph (A) of paragraph 
     (2), by striking ``and (I)'' and inserting ``(I), and (K)''; 
     and
       (ii) in paragraph (3), by inserting ``or section 
     1832(a)(2)(K)'' after ``section 1832(a)(2)(D)''.
       (C) Part b deductible not applicable.--The first sentence 
     of section 1833(b) (42 U.S.C. 1395l(b)) is amended by 
     inserting ``or critical access health center services'' after 
     ``Federally qualified health center services''.
       (D) Exception to exclusions from coverage.--Section 1862(a) 
     of such Act (42 U.S.C. 1395y(a)) is amended--
       (i) in paragraph (2), by inserting ``or critical access 
     health center services (as defined in section 1861(aa)(5))'' 
     after ``Federally qualified health center services'';
       (ii) in paragraph (3), by inserting ``in the case of 
     critical access health center services (as defined in section 
     1861(aa)(5)),'' after ``section 1880(e),''; and
       (iii) in the second sentence, by inserting ``or critical 
     access health center services described in section 
     1861(aa)(5)(B)'' after ``section 1861 (aa)(3)(B)''.
       (E) Exception to anti-kickback law for waiver of 
     coinsurance.--Section 1128B(b)(3)(D) (42 U.S.C. 13206-
     7b(b)(3)(D)) is amended--
       (i) by inserting ``(i)'' before ``a waiver'';
       (ii) by inserting ``and'' after ``Act;''; and
       (iii) by adding at the end the following:
       ``(ii) a waiver of--

       ``(I) any coinsurance under part B of title XVIII by a 
     critical access health center with respect to an individual 
     who qualifies for subsidized services under a provision of 
     section 330 of the Public Health Service Act (as made 
     applicable to such centers by section 1861(aa)(6)); and
       ``(II) the deductible and any coinsurance under such part 
     by any provider of services, physician, or supplier to which 
     such an individual is referred by a critical access health 
     center for the provision of services that are not critical 
     access health center services;''.

       (F) Conforming amendments.--
       (i) Section 1842(b)(18)(C)(1) (42 U.S.C. 
     1395u(b)(18)(C)(1)) is amended by striking ``section 
     1861(aa)(5)'' and inserting ``section 1861(aa)(7)''.
       (ii) Section 1861(s)(2) (42 U.S.C. 1395x(s)(2)) is amended 
     in subparagraph (H)(i), by striking ``subsection (aa)(5)'' 
     and inserting ``subsection (aa)(7)''.
       (iii) Section 1861(s)(2) (42 U.S.C. 1395x(s)(2)) is amended 
     in subparagraph (K)--

       (I) by striking ``subsection (aa)(5)'' each place it 
     appears and inserting ``subsection (aa)(7)''; and
       (II) by striking ``subsection (aa)(6)'' and inserting 
     ``subsection (aa)(8)''.

       (b) Effective Date.--The amendments made this section shall 
     apply to items and services furnished on or after October 1, 
     2004.

      SEC. ____ . DEMONSTRATION TO IMPROVE ACCESS AND CONTINUITY 
                   OF CARE FOR LOW-INCOME BENEFICIARIES.

       (a) In General.--The Secretary shall--
       (1) conduct a demonstration project to test the use of 
     alternative payment methodologies to health care providers to 
     improve access to ambulatory health care services and 
     continuity of care for vulnerable populations such as low-
     income beneficiaries under title XVIII; and
       (2) waive any provisions of the Social Security Act that 
     are necessary to implement such demonstration.
       (b) Duration.--The demonstration project conducted pursuant 
     to subsection (a) shall be for a term of at least 3 years and 
     shall begin operation not later than 1 year after the date of 
     the enactment of this Act.
       (c) Reports.--
       (1) Interim and final reports required.--The Secretary 
     shall submit interim and final reports on the demonstration 
     project conducted pursuant to subsection (a) to the Committee 
     on Finance of the Senate and the Committee on Ways and Means 
     and the Committee on Commerce of the House of 
     Representatives. Such reports shall describe--
       (A) the alternative payment methodologies in use under the 
     demonstration;
       (B) the provisions of law waived by the Secretary in order 
     to conduct the demonstration; and
       (C) the extent to which the demonstration has achieved the 
     objectives described in subsection (a).
       (2) Timing of reports.--The Secretary shall submit the 
     interim report required by paragraph (1) not later than 2 
     years after the commencement of the demonstration and the 
     final report not later than 6 months after the termination 
     the demonstration.
                                 ______
                                 
  SA 1030. Mr. ENZI submitted an amendment intended to be proposed by 
him to the bill S. 1, to amend title XVIII of the Social Security Act 
to make improvements in the medicare program, to provide prescription 
drug coverage under the medicare program, and for other purposes; which 
was ordered to lie on the table; as follows:

       On page 356, strike lines 8 through 11, and insert the 
     following:
       ``(C) Construction.--Subparagraph (B) shall not be 
     construed as restricting--
       ``(i) the persons from whom enrollees under such plan may 
     obtain covered benefits; or
       ``(ii) the categories of licensed health professionals or 
     providers from whom enrollees under such a plan may obtain 
     covered benefits if the covered services are provided to 
     enrollees in a State where 25 percent or more of the 
     population resides in health professional shortage areas 
     designated pursuant to section 332 of the Public Health 
     Service Act.''
                                 ______
                                 
  SA 1031. Mr. CARPER submitted an amendment intended to be proposed by 
him to the bill S. 1, to amend title XVIII of the Social Security Act 
to make improvements in the medicare program, to provide prescription 
drug coverage under the medicare program, and for other purposes; which 
was ordered to lie on the table; as follows:

       At the end of subtitle B of title IV, add the following:

     SEC. ____. INCREASING TYPES OF ORIGINATING TELEHEALTH SITES 
                   AND FACILITATING THE PROVISION OF TELEHEALTH 
                   SERVICES ACROSS STATE LINES.

       (a) Increasing Types of Originating Sites.--Section 
     1834(m)(4)(C)(ii) (42 U.S.C. 1395m(m)(4)(C)(ii)) is amended 
     by adding at the end the following new subclauses:

       ``(VI) A skilled nursing facility (as defined in section 
     1819(a)).
       ``(VII) An assisted-living facility (as defined by the 
     Secretary).
       ``(VIII) A board-and-care home (as defined by the 
     Secretary).
       ``(IX) A county of community health clinic (as defined by 
     the Secretary).
       ``(X) A community mental health center (as described in 
     section 1861(ff)(2)(B)).
       ``(XI) A long-term care facility (as defined by the 
     Secretary).
       ``(XII) A facility operated by the Indian Health Service or 
     by an Indian tribe, tribal organization, or an urban Indian 
     organization (as such terms are defined in section 4 of the 
     Indian Health Care Improvement Act (25 U.S.C. 1603)) 
     directly, or under contract or other arrangement.''.

       (b) Facilitating the Provision of Telehealth Services 
     Across State Lines.--
       (1) In general.--For purposes of expediting the provision 
     of telehealth services for which payment is made under the 
     medicare program under section 1834(m) of the Social Security 
     Act (42 U.S.C. 1395m(m)), across State lines, the Secretary 
     shall, in consultation with representatives of States, 
     physicians, health care practitioners, and patient advocates, 
     encourage and facilitate the adoption of State provisions 
     allowing for multistate practitioner licensure across State 
     lines.
       (2) Definitions.--In this subsection:
       (A) Telehealth service.--The term ``telehealth service'' 
     has the meaning given that term in subparagraph (F)(i) of 
     section 1834(m)(4) of the Social Security Act (42 U.S.C. 
     1395m(m)(4)).
       (B) Physician, practitioner.--The terms ``physician'' and 
     ``practitioner'' have the meaning given those terms in 
     subparagraphs (D) and (E), respectively, of such section.
       (C) Medicare program.--The term ``medicare program'' means 
     the program of health insurance administered by the Secretary 
     under title XVIII of the Social Security Act (42 U.S.C. 1395 
     et seq.).
                                 ______
                                 
  SA 1032. Ms. MIKULSKI submitted an amendment intended to be proposed 
by her to the bill S. 1, to amend title XVIII of the Social Security 
Act to make improvements in the medicare program, to provide 
prescription drug coverage under the medicare program, and for other 
purposes; which was ordered to lie on the table; as follows:

       At the end of subtitle A of title IV, add the following:

     SEC. ____. PERMITTING DIRECT PAYMENT UNDER THE MEDICARE 
                   PROGRAM FOR CLINICAL SOCIAL WORKER SERVICES 
                   PROVIDED TO RESIDENTS OF SKILLED NURSING 
                   FACILITIES.

       (a) In General.--Section 1888(e)(2)(A)(ii) (42 U.S.C. 
     1395yy(e)(2)(A)(ii)) is amended by inserting ``clinical 
     social worker services,'' after ``qualified psychologist 
     services,''.
       (b) Conforming Amendment.--Section 1861(hh)(2) (42 U.S.C. 
     1395x(hh)(2)) is amended by striking ``and other than 
     services furnished to an inpatient of a skilled nursing 
     facility which the facility is required to provide as a 
     requirement for participation''.

[[Page S8474]]

       (c) Effective Date.--The amendments made by this section 
     shall apply to items and services furnished on or after 
     October 1, 2003.
                                 ______
                                 
  SA 1033. Ms. MIKULSKI submitted an amendment intended to be proposed 
by her to the bill S. 1, to amend title XVIII of the Social Security 
Act to make improvements in the medicare program, to provide 
prescription drug coverage under the medicare program, and for other 
purposes; which was ordered to lie on the table; as follows:

       At the end of title VI, add the following:

     SEC. ____. EXTENSION OF MUNICIPAL HEALTH SERVICE 
                   DEMONSTRATION PROJECTS.

       The last sentence of section 9215(a) of the Consolidated 
     Omnibus Budget Reconciliation Act of 1985 (42 U.S.C. 1395b-1 
     note), as previously amended, is amended by striking 
     ``December 31, 2004, but only with respect to'' and all that 
     follows and inserting ``December 31, 2009, but only with 
     respect to individuals who reside in the city in which the 
     project is operated and so long as the total number of 
     individuals participating in the project does not exceed the 
     number of such individuals participating as of January 1, 
     1996.''.
                                 ______
                                 
  SA 1034. Ms. MIKULSKI submitted an amendment intended to be proposed 
by her to the bill S. 1, to amend title XVIII of the Social Security 
Act to make improvements in the medicare program, to provide 
prescription drug coverage under the medicare program, and for other 
purposes; which was ordered to lie on the table; as follows:

       At the end of subtitle B of title IV, add the following:

     SEC. ____. EQUITABLE TREATMENT FOR CHILDREN'S HOSPITALS.

       (a) In General.--Section 1833(t)(7)(D)(ii) (42 U.S.C. 
     1395l(t)(7)(D)(ii)) is amended to read as follows:
       ``(ii) Permanent treatment for cancer hospitals and 
     children's hospitals.--

       ``(I) Cancer hospitals.--In the case of a hospital 
     described in section 1886(d)(1)(B)(v), for covered OPD 
     services for which the PPS amount is less than the pre-BBA 
     amount, the amount of payment under this subsection shall be 
     increased by the amount of such difference.
       ``(II) Children's hospitals.--In the case of a hospital 
     described in section 1886(d)(1)(B)(iii), for covered OPD 
     services furnished before October 1, 2003, and for which the 
     PPS amount is less than the pre-BBA amount the amount of 
     payment under this subsection shall be increased by the 
     amount of such difference. In the case of such a hospital, 
     for such services furnished on or after October 1, 2003, and 
     for which the PPS amount is less than the greater of the pre-
     BBA amount or the reasonable operating and capital costs 
     without reductions incurred in furnishing such services, the 
     amount of payment under this subsection shall be increased by 
     the amount of such difference.''.

                                 ______
                                 
  SA 1035. Ms. MIKULSKI submitted an amendment intended to be proposed 
by her to the bill S. 1, to amend title XVIII of the Social Security 
Act to make improvements in the medicare program, to provide 
prescription drug coverage under the medicare program, and for other 
purposes; which was ordered to lie on the table; as follows:

       At the end of subtitle B of title IV, add the following:

     SEC. ____. EQUITABLE TREATMENT FOR CHILDREN'S HOSPITALS.

       (a) In General.--Section 1833(t)(7)(D)(ii) (42 U.S.C. 
     1395l(t)(7)(D)(ii)) is amended to read as follows:
       ``(ii) Permanent treatment for cancer hospitals and 
     children's hospitals.--

       ``(I) In general.--Subject to subclause (II), in the case 
     of a hospital described in clause (iii) or (v) of section 
     1886(d)(1)(B), for covered OPD services for which the PPS 
     amount is less than the pre-BBA amount, the amount of payment 
     under this subsection shall be increased by the amount of 
     such difference.
       ``(II) Special rule for certain children's hospitals.--In 
     the case of a hospital described in section 
     1886(d)(1)(B)(iii) that is located in a State with a 
     reimbursement system under section 1814(b)(3), but that is 
     not reimbursed under such system, for covered OPD services 
     furnished on or after October 1, 2003, and for which the PPS 
     amount is less than the greater of the pre-BBA amount or the 
     reasonable operating and capital costs without reductions of 
     the hospital in providing such services, the amount of 
     payment under this subsection shall be increased by the 
     amount of such difference.''.

                                 ______
                                 
  SA 1036. Mr. REID (for Mrs. Boxer) proposed an amendment to the bill 
S. 1, to amend title XVIII of the Social Security Act to make 
improvements in the medicare program, to provide prescription drug 
coverage under the medicare program, and for other purposes; as 
follows:

       On page 53, between line 8 and 9, insert the following:
       ``(6) No coverage gap for eligible beneficiaries with 
     cancer.--
       ``(A) In general.--In the case of an eligible beneficiary 
     with cancer, the following rules shall apply:
       ``(i) Paragraph (2) shall be applied by substituting `up to 
     the annual out-of-pocket limit under paragraph (4)' for `up 
     to the initial coverage limit under paragraph (3)'.
       ``(ii) The Administrator shall not apply paragraph (3), 
     subsection (d)(1)(C), or paragraph (1)(D), (2)(D), or 
     (3)(A)(iv) of section 1860D-19(a).
       ``(B) Procedures.--The Administrator shall establish 
     procedures to carry out this paragraph. Such procedures shall 
     provide for the adjustment of payments to eligible entities 
     under section 1860D-16 that are necessary because of the 
     rules under subparagraph (A).''
                                 ______
                                 
  SA 1037. Mr. REID (for Mr. Corzine) proposed an amendment to the bill 
S. 1, to amend title XVIII of the Social Security Act to make 
improvements in the medicare program, to provide prescription drug 
coverage under the medicare program, and for other purposes; as 
follows:

       At the end of subtitle A of title I, add the following:

     SEC. ____. CONFORMING CHANGES REGARDING FEDERALLY QUALIFIED 
                   HEALTH CENTERS.

       (a) Permitting FQHCs To Fill Prescriptions.--Section 
     1861(aa)(3) (42 U.S.C. 1395x(aa)(3)) is amended--
       (1) in subparagraph (A), by striking ``and'' after the 
     comma at the end;
       (2) in subparagraph (B), by inserting ``and'' after the 
     comma at the end; and
       (3) by adding at the end the following new subparagraph:
       ``(C) drugs and biologicals for which payment may otherwise 
     be made under this title,''.
       (b) Elimination of Per Visit Limit.--Section 1833(a)(3) (42 
     U.S.C. 1395l(a)(3)) is amended by inserting ``, except that 
     such regulations may not limit the per visit payment amount 
     with regard to drugs and biologicals described in section 
     1861(aa)(3)(C)'' after ``the Secretary may prescribe in 
     regulations''.
                                 ______
                                 
  SA 1038. Mr. REID (for Mr. Jeffords) proposed an amendment to the 
bill S. 1, to amend title XVIII of the Social Security Act to make 
improvements in the medicare program, to provide prescription drug 
coverage under the medicare program, and for other purposes; as 
follows:

       At the end of section 405 add the following:
       (g) Exclusion of Certain Beds From Bed Count and Removal of 
     Barriers to Establishment of Distinct Part Units.--
       (1) Exclusion of certain beds from bed count.--Section 
     1820(c)(2) (42 U.S.C. 1395i-4(c)(2)) is amended by adding at 
     the end the following:
       ``(E) Exclusion of certain beds from bed count.--In 
     determining the number of beds of a facility for purposes of 
     applying the bed limitations referred to in subparagraph 
     (B)(iii) and subsection (f), the Secretary shall not take 
     into account any bed of a distinct part psychiatric or 
     rehabilitation unit (described in the matter following clause 
     (v) of section 1886(d)(1)(B)) of the facility, except that 
     the total number of beds that are not taken into account 
     pursuant to this subparagraph with respect to a facility 
     shall not exceed 25.''.
       (2) Removing barriers to establishment of distinct part 
     units by critical access hospitals.--Section 1886(d)(1)(B) 
     (42 U.S.C. 195ww(d)(1)(B)) is amended by striking ``a 
     distinct part of the hospital (as defined by the Secretary)'' 
     in the matter following cause (v) and inserting ``a distinct 
     part (as defined by the Secretary) of the hospital or of a 
     critical access hospital''.
       (3) Effective date.--The amendments made by this subsection 
     shall apply to determinations with respect to distinct part 
     unit status, and with respect to designations, that are made 
     on or after October 1, 2003.
                                 ______
                                 
  SA 1039. Mr. REID (for Mr. Inouye) proposed an amendment to the bill 
S. 1, to amend title XVIII of the Social Security Act to make 
improvements in the medicare program, to provide prescription drug 
coverage under the medicare program, and for other purposes; as 
follows:

       At the appropriate place, insert the following:

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Native Hawaiian Medicaid 
     Coverage Act of 2003''.

     SEC. 2. 100 PERCENT FMAP FOR MEDICAL ASSISTANCE PROVIDED TO A 
                   NATIVE HAWAIIAN THROUGH A FEDERALLY-QUALIFIED 
                   HEALTH CENTER OR A NATIVE HAWAIIAN HEALTH CARE 
                   SYSTEM UNDER THE MEDICAID PROGRAM.

       (a) Medicaid.--Section 1905(b) of the Social Security Act 
     (42 U.S.C. 1396d(b)) is amended, in the third sentence, by 
     inserting ``, and with respect to medical assistance provided 
     to a Native Hawaiian (as defined in section 12 of the Native 
     Hawaiian Health Care Improvement Act) through a Federally-
     qualified health center or a Native Hawaiian health care 
     system (as so defined) whether directly, by referral, or 
     under contract or other arrangement between a Federally-
     qualified health center or a Native Hawaiian health care 
     system and another health care provider'' before the period.

[[Page S8475]]

       (b) Effective Date.--The amendment made by this section 
     applies to medical assistance provided on or after the date 
     of enactment of this Act.
                                 ______
                                 
  SA 1040. Mr. SCHUMER (for himself, Mr. Corzine, Mrs. Clinton, and Mr. 
Lautenberg) submitted an amendment intended to be proposed by him to 
the bill S. 1, to amend title XVIII of the Social Security Act to make 
improvements in the medicare program, to provide prescription drug 
coverage under the medicare program, and for other purposes; which was 
ordered to lie on the table; as follows:

       On page 294, line 6, strike ``or (C)'' and insert ``(C), or 
     (D)''.
       On page 294, line 21, insert ``(other than in 2004 and 
     2005)'' after ``multiplied''.
       On page 297, strike lines 5 through 9, and insert the 
     following:
       ``(iv) For 2002 and 2003, 102 percent of the annual 
     Medicare+Choice capitation rate under this paragraph for the 
     area for the previous year.
       ``(v) For 2004 and 2005, 103 percent of the annual 
     Medicare+Choice capitation rate under this paragraph for the 
     area for the previous year.
       ``(vi) For 2006 and each succeeding year, 102 percent of 
     the annual Medicare+Choice capitation rate under this 
     paragraph for the area for the previous year.
       ``(D) Annual fee-for-service costs in 2004 and 2005.--For 
     2004 and 2005, the adjusted average per capita cost for the 
     year, as determined under section 1876(a)(4) for the 
     Medicare+Choice payment area for items and services covered 
     under parts A and B for individuals entitled to benefits 
     under part A and enrolled under part B and not enrolled in a 
     Medicare+Choice plan under this part for the year, except 
     that such amount shall be adjusted--
       ``(i) to exclude costs attributable to payment adjustments 
     described in subsection (a)(5)(B)(ii), and
       ``(ii) to include an amount equal to the Secretary's 
     estimate, on a per capita basis, of the amount of additional 
     payments that would have been made in the area involved under 
     this title if individuals entitled to benefits under this 
     title had not received services from facilities of the 
     Department of Defense or the Department of Veterans Affairs.
       On page 298, line 10, strike ``subparagraph (B)'' and 
     insert ``subparagraphs (B) and (E)''.
       On page 301, between lines 8 and 9, insert the following:
       ``(E) Inclusion of costs of dod and va military facility 
     services to medicare-eligible beneficiaries.--In determining 
     the area-specific Medicare+Choice capitation rate under 
     subparagraph (A) for 2004 and 2005, the annual per capita 
     rate of payment for 1997 determined under section 
     1876(a)(1)(C) shall be adjusted to include in the rate the 
     Secretary's estimate, on a per capita basis, of the amount of 
     additional payments that would have been made in the area 
     involved under this title if individuals entitled to benefits 
     under this title had not received services from facilities of 
     the Department of Defense or the Department of Veterans 
     Affairs.

       On page 302, line 23, insert ``(or, in the case of 
     calculations for payments for months beginning on or after 
     January 1, 2004, and before December 31, 2005, the average 
     number of medicare beneficiaries enrolled in a 
     Medicare+Choice plan that are)'' after ``medicare 
     beneficiaries''.
       On page 303, line 9, insert ``other than 2004 and 2005'' 
     after ``for each year''.
       On page 349, between lines 4 and 5, insert the following:
       (3) Payment rates based on 100 percent of fee-for-service 
     costs in 2004 and 2005.--
       (A) Change in budget neutrality.--Section 1853(c) (42 
     U.S.C. 1395w-23(c)) is amended--
       (i) in paragraph (1)(A), in the flush matter following 
     clause (ii), by inserting ``(other than in 2004 and 2005)'' 
     after ``multiplied''; and
       (ii) in paragraph (5), by inserting ``other than 2004 and 
     2005'' after ``for each year''.
       (B) Inclusion of costs of dod and va military facility 
     services to medicare-eligible beneficiaries.--Section 
     1853(c)(3) (42 U.S.C. 1395w-23(c)(3)) is amended--
       (A) in subparagraph (A), by striking ``subparagraph (B)'' 
     and inserting ``subparagraphs (B) and (E)''; and
       (B) by adding at the end the following new subparagraph:
       ``(E) Inclusion of costs of dod and va military facility 
     services to medicare-eligible beneficiaries.--In determining 
     the area-specific Medicare+Choice capitation rate under 
     subparagraph (A) for 2004 and 2005, the annual per capita 
     rate of payment for 1997 determined under section 
     1876(a)(1)(C) shall be adjusted to include in the rate the 
     Secretary's estimate, on a per capita basis, of the amount of 
     additional payments that would have been made in the area 
     involved under this title if individuals entitled to benefits 
     under this title had not received services from facilities of 
     the Department of Defense or the Department of Veterans 
     Affairs.''.
       (C) Revision of national average used in calculation of 
     blend.--Section 1853(c)(4)(B)(i)(II) (42 U.S.C. 1395w-
     23(c)(4)(B)(i)(II)) is amended by inserting ``(or, in the 
     case of calculations for payments for months beginning on or 
     after January 1, 2004, and before December 31, 2005, the 
     average number of medicare beneficiaries enrolled in a 
     Medicare+Choice plan that are)'' after ``medicare 
     beneficiaries''.
       (D) Update in minimum percentage increase.--Section 
     1853(c)(1)(C) (42 U.S.C. 1395w-23(c)(1)(C)) is amended by 
     striking clause (iv) and inserting the following new clauses:
       ``(iv) For 2002 and 2003, 102 percent of the annual 
     Medicare+Choice capitation rate under this paragraph for the 
     area for the previous year.
       ``(v) For 2004 and 2005, 103 percent of the annual 
     Medicare+Choice capitation rate under this paragraph for the 
     area for the previous year.
       ``(vi) For 2006 and each succeeding year, 102 percent of 
     the annual Medicare+Choice capitation rate under this 
     paragraph for the area for the previous year.''.
                                 ______
                                 
  SA 1041. Ms. MURKOWSKI (for herself and Mr. Stevens) submitted an 
amendment intended to be proposed by her to the bill S. 1, to amend 
title XVIII of the Social Security Act to make improvements in the 
medicare program, to provide prescription drug coverage under the 
medicare program, and for other purposes; which was ordered to lie on 
the table; as follows:

       On page 529, between lines 8 and 9, insert the following:

     SEC. 455. FRONTIER EXTENDED STAY CLINIC DEMONSTRATION 
                   PROJECT.

       (a) Authority To Conduct Demonstration Project.--The 
     Secretary shall waive such provisions of the medicare program 
     established under title XVIII of the Social Security Act (42 
     U.S.C. 1395 et seq.) as are necessary to conduct a 
     demonstration project under which frontier extended stay 
     clinics described in subsection (b) in isolated rural areas 
     of Alaska are treated as providers of items and services 
     under the medicare program.
       (b) Clinics Described.--A frontier extended stay clinic is 
     described in this subsection if the clinic--
       (1) is located in a community where the closest short-term 
     acute care hospital or critical access hospital is at least 
     75 miles away from the community or is inaccessible by public 
     road; and
       (2) is designed to address the needs of--
       (A) seriously or critically ill or injured patients who, 
     due to adverse weather conditions or other reasons, cannot be 
     transferred quickly to acute care referral centers; or
       (B) patients who need monitoring and observation for a 
     limited period of time.
       (c) Definitions.--In this section, the terms ``hospital'' 
     and ``critical access hospital'' have the meanings given such 
     terms in subsections (e) and (mm), respectively, of section 
     1861 of the Social Security Act (42 U.S.C. 1395x).
                                 ______
                                 
  SA 1042. Ms. MURKOWSKI (for herself and Mr. Stevens) submitted an 
amendment intended to be proposed by her to the bill S. 1, to amend 
title XVIII of the Social Security Act to make improvements in the 
medicare program, to provide prescription drug coverage under the 
medicare program, and for other purposes; which was ordered to lie on 
the table; as follows:

       At the end of subtitle B of title IV, add the following:

     SEC. ____. TREATMENT OF PHYSICIANS' SERVICES FURNISHED IN 
                   ALASKA.

       Section 1848(b) (42 U.S.C. 1395w-4(b)) is amended--
       (1) in paragraph (1), in the matter preceding subparagraph 
     (A), by striking ``paragraph (2)'' and inserting ``paragraphs 
     (2) and (4)''; and
       (2) by adding at the end the following new paragraph:
       ``(4) Treatment of physicians' services furnished in 
     alaska.--
       ``(A) In general.--With respect to physicians' services 
     furnished in Alaska on or after January 1, 2004, and before 
     January 1, 2014, the fee schedule for such services shall be 
     determined as follows:
       ``(i) Subject to clause (ii), the payment amount for a 
     service furnished in a year shall be an amount equal to--

       ``(I) in the case of services furnished in calendar year 
     2004, 90 percent of the VA Alaska fee schedule amount for the 
     service for fiscal year 2001; and
       ``(II) in the case of services furnished in each of 
     calendar years 2005 through 2013, the amount determined under 
     this clause for the previous year, increased by the annual 
     update determined under subsection (d) for the year involved.

       ``(ii) In the case of a service for which there was no VA 
     Alaska fee schedule amount for fiscal year 2001, the payment 
     amount shall be an amount equal to the sum of--

       ``(I) the amount of payment for the service that would 
     otherwise apply under this section; plus
       ``(II) an amount equal to the applicable percent (as 
     described in subparagraph (C)) of the amount described in 
     subclause (I).

       ``(B) VA alaska fee schedule amount.--For purposes of this 
     paragraph, the term `VA Alaska fee schedule amount' means the 
     amount that was paid by the Department of Veterans Affairs in 
     Alaska in fiscal year 2001 for non-Department of Veterans 
     Affairs physicians' services associated with either 
     outpatient or inpatient care provided to individuals eligible 
     for hospital care or medical

[[Page S8476]]

     services under chapter 17 of title 38, United States Code, at 
     a non-Department facility (as that term is defined in section 
     1701(4) of such title 38.
       ``(C) Applicable percent.--For purposes of this paragraph, 
     the term `applicable percent' means the weighted average 
     percentage (based on claims under this section) by which the 
     fiscal year 2001 VA Alaska fee schedule amount for 
     physicians' services exceeded the amount of payment for such 
     services under this section that applied in Alaska in 
     2001.''.
                                 ______
                                 
  SA 1043. Mr. ALLARD submitted an amendment intended to be proposed by 
him to the bill S. 1, to amend title XVIII of the Social Security Act 
to make improvements in the medicare program, to provide prescription 
coverage under the medicare program, and for other purposes; which was 
ordered to lie on the table; as follows:

       On page 377, between lines 12 and 13, insert the following:
       ``(I) Section 1851(d) (relating to the provision of 
     information to promote informed choice).
       ``(J) Section 1851(h) (relating to the approval of 
     marketing material and application forms).
       ``(K) Section 1852(e)(4) (relating to treatment of 
     accreditation).
       ``(L) Section 1857(i) (relating to Medicare+Choice program 
     compatibility with employer or union group health plans).''.

                          ____________________