[Congressional Record Volume 149, Number 96 (Thursday, June 26, 2003)]
[House]
[Pages H6007-H6105]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
MEDICARE PRESCRIPTION DRUG AND MODERNIZATION ACT OF 2003
Mr. THOMAS. Mr. Speaker, pursuant to House Resolution 299, I call up
the bill (H.R. 1) to amend title XVIII of the Social Security Act to
provide for a voluntary program for prescription drug coverage under
the Medicare Program, to modernize the Medicare Program, and for other
purposes, and ask for its immediate consideration.
The Clerk read the title of the bill.
The SPEAKER pro tempore (Mr. LaHood). Pursuant to House Resolution
299, the bill is considered read for amendment.
The text of H.R. 1 is as follows:
H.R. 1
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; AMENDMENTS TO SOCIAL SECURITY ACT;
REFERENCES TO BIPA AND SECRETARY; TABLE OF
CONTENTS.
(a) Short Title.--This Act may be cited as the ``Medicare
Prescription Drug and Modernization Act of 2003''.
(b) Amendments to Social Security Act.--Except as otherwise
specifically provided, whenever in this Act an amendment is
expressed in terms of an amendment to or repeal of a section
or other provision, the reference shall be considered to be
made to that section or other provision of the Social
Security Act.
(c) BIPA; Secretary.--In this Act:
(1) BIPA.--The term ``BIPA'' means the Medicare, Medicaid,
and SCHIP Benefits Improvement and Protection Act of 2000, as
enacted into law by section 1(a)(6) of Public Law 106-554.
(2) Secretary.--The term ``Secretary'' means the Secretary
of Health and Human Services.
(d) Table of Contents.--The table of contents of this Act
is as follows:
Sec. 1. Short title; amendments to Social Security Act; references to
BIPA and Secretary; table of contents.
TITLE I--MEDICARE PRESCRIPTION DRUG BENEFIT
Sec. 101. Establishment of a medicare prescription drug benefit.
``Part D--Voluntary Prescription Drug Benefit Program
``Sec. 1860D-1. Benefits; eligibility; enrollment; and coverage period.
``Sec. 1860D-2. Requirements for qualified prescription drug coverage.
``Sec. 1860D-3. Beneficiary protections for qualified prescription drug
coverage.
``Sec. 1860D-4. Requirements for and contracts with prescription drug
plan (PDP) sponsors.
``Sec. 1860D-5. Process for beneficiaries to select qualified
prescription drug coverage.
``Sec. 1860D-6. Submission of bids and premiums.
``Sec. 1860D-7. Premium and cost-sharing subsidies for low-income
individuals.
``Sec. 1860D-8. Subsidies for all medicare beneficiaries for qualified
prescription drug coverage.
``Sec. 1860D-9. Medicare Prescription Drug Trust Fund.
``Sec. 1860D-10. Definitions; application to medicare advantage and
EFFS programs; treatment of references to provisions in
part C.
Sec. 102. Offering of qualified prescription drug coverage under
Medicare Advantage and enhanced fee-for-service (EFFS)
program.
Sec. 103. Medicaid amendments.
Sec. 104. Medigap transition.
Sec. 105. Medicare prescription drug discount card and assistance
program.
Sec. 106. Disclosure of return information for purposes of carrying out
medicare catastrophic prescription drug program.
Sec. 107. State Pharmaceutical Assistance Transition Commission.
Sec. 108. Additional requirements for annual financial report and
oversight on medicare program, including prescription
drug spending.
TITLE II--MEDICARE ENHANCED FEE-FOR-SERVICE AND MEDICARE ADVANTAGE
PROGRAMS; MEDICARE COMPETITION
Sec. 200. Medicare modernization and revitalization.
Subtitle A--Medicare Enhanced Fee-for-Service Program
Sec. 201. Establishment of enhanced fee-for-service (EFFS) program
under medicare.
``Part E--Enhanced Fee-for-Service Program
``Sec. 1860E-1. Offering of enhanced fee-for-service plans throughout
the United States.
``Sec. 1860E-2. Offering of enhanced fee-for-service (EFFS) plans.
[[Page H6008]]
``Sec. 1860E-3. Submission of bids; beneficiary savings; payment of
plans.
``Sec. 1860E-4. Premiums; organizational and financial requirements;
establishment of standards; contracts with EFFS
organizations.
Subtitle B--Medicare Advantage Program
Chapter 1--Implementation Of Program
Sec. 211. Implementation of medicare advantage program.
Sec. 212. Medicare advantage improvements.
Chapter 2--Implementation Of Competition Program
Sec. 221. Competition program beginning in 2006.
Chapter 3--Additional Reforms
Sec. 231. Making permanent change in medicare advantage reporting
deadlines and annual, coordinated election period.
Sec. 232. Avoiding duplicative State regulation.
Sec. 233. Specialized medicare advantage plans for special needs
beneficiaries.
Sec. 234. Medicare MSAs.
Sec. 235. Extension of reasonable cost contracts.
Sec. 236. Extension of municipal health service demonstration projects.
Sec. 237. Study of performance-based payment systems.
Subtitle C--Application of FEHBP-Style Competitive Reforms
Sec. 241. Application of FEHBP-style competitive reform beginning in
2010.
TITLE III--COMBATTING WASTE, FRAUD, AND ABUSE
Sec. 301. Medicare secondary payor (MSP) provisions.
Sec. 302. Competitive acquisition of certain items and services.
Sec. 303. Competitive acquisition of covered outpatient drugs and
biologicals.
Sec. 304. Demonstration project for use of recovery audit contractors.
TITLE IV--RURAL HEALTH CARE IMPROVEMENTS
Sec. 401. Enhanced disproportionate share hospital (DSH) treatment for
rural hospitals and urban hospitals with fewer than 100
beds.
Sec. 402. Immediate establishment of uniform standardized amount in
rural and small urban areas.
Sec. 403. Establishment of essential rural hospital classification.
Sec. 404. More frequent update in weights used in hospital market
basket.
Sec. 405. Improvements to critical access hospital program.
Sec. 406. Redistribution of unused resident positions.
Sec. 407. Two-year extension of hold harmless provisions for small
rural hospitals and sole community hospitals under
prospective payment system for hospital outpatient
department services.
Sec. 408. Exclusion of certain rural health clinic and federally
qualified health center services from the prospective
payment system for skilled nursing facilities.
Sec. 409. Recognition of attending nurse practitioners as attending
physicians to serve hospice patients.
Sec. 410. Improvement in payments to retain emergency capacity for
ambulance services in rural areas.
Sec. 411. Two-year increase for home health services furnished in a
rural area.
Sec. 412. Providing safe harbor for certain collaborative efforts that
benefit medically underserved populations.
Sec. 413. GAO study of geographic differences in payments for
physicians' services.
Sec. 414. Treatment of missing cost reporting periods for sole
community hospitals.
Sec. 415. Extension of telemedicine demonstration project.
Sec. 416. Adjustment to the medicare inpatient hospital PPS wage index
to revise the labor-related share of such index.
Sec. 417. Medicare incentive payment program improvements for physician
scarcity.
Sec. 418. Rural hospice demonstration project.
TITLE V--PROVISIONS RELATING TO PART A
Subtitle A--Inpatient Hospital Services
Sec. 501. Revision of acute care hospital payment updates.
Sec. 502. Recognition of new medical technologies under inpatient
hospital PPS.
Sec. 503. Increase in Federal rate for hospitals in Puerto Rico.
Sec. 504. Wage index adjustment reclassification reform .
Sec. 505. MedPAC report on specialty hospitals.
Subtitle B--Other Provisions
Sec. 511. Payment for covered skilled nursing facility services.
Sec. 512. Coverage of hospice consultation services.
Sec. 513. Correction of Trust Fund holdings.
TITLE VI--PROVISIONS RELATING TO PART B
Subtitle A--Physicians' Services
Sec. 601. Revision of updates for physicians' services.
Sec. 602. Studies on access to physicians' services.
Sec. 603. MedPAC report on payment for physicians' services.
Sec. 604. Inclusion of podiatrists and dentists under private
contracting authority.
Sec. 605. Establishment of floor on work geographic adjustment.
Subtitle B--Preventive Services
Sec. 611. Coverage of an initial preventive physical examination.
Sec. 612. Coverage of cholesterol and blood lipid screening.
Sec. 613. Waiver of deductible for colorectal cancer screening tests.
Sec. 614. Improved payment for certain mammography services.
Subtitle C--Other Services
Sec. 621. Hospital outpatient department (HOPD) payment reform.
Sec. 622. Payment for ambulance services.
Sec. 623. Renal dialysis services.
Sec. 624. One-year moratorium on therapy caps; provisions relating to
reports.
Sec. 625. Adjustment to payments for services furnished in ambulatory
surgical centers.
Sec. 626. Payment for certain shoes and inserts under the fee schedule
for orthotics and prosthetics.
Sec. 627. Waiver of part B late enrollment penalty for certain military
retirees; special enrollment period.
Sec. 628. Part B deductible.
Sec. 629. Extension of coverage of intravenous immune globulin (IVIG)
for the treatment of primary immune deficiency diseases
in the home.
Sec. 630. Medicare coverage of diabetes laboratory diagnostic tests.
Sec. 631. Demonstration project for coverage of certain prescription
drugs and biologics.
TITLE VII--PROVISIONS RELATING TO PARTS A AND B
Subtitle A--Home Health Services
Sec. 701. Update in home health services.
Sec. 702. Establishment of reduced copayment for a home health service
episode of care for certain beneficiaries.
Sec. 703. MedPAC study on medicare margins of home health agencies.
Sec. 704. Demonstration project to clarify the definition of homebound.
Subtitle B--Direct Graduate Medical Education
Sec. 711. Extension of update limitation on high cost programs.
Subtitle C--Chronic Care Improvement
Sec. 721. Voluntary chronic care improvement under traditional fee-for-
service.
Sec. 722. Chronic care improvement under medicare advantage and
enhanced fee-for-service programs.
Sec. 723. Institute of Medicine report.
Sec. 724. MedPAC report.
Subtitle D--Other Provisions
Sec. 731. Modifications to medicare payment advisory commission
(MedPAC).
Sec. 732. Demonstration project for medical adult day care services.
Sec. 733. Improvements in national and local coverage determination
process to respond to changes in technology.
Sec. 734. Treatment of certain physician pathology services.
Sec. 735. Clinical investigation of medicare pancreatic islet cell
transplants.
Sec. 736. Demonstration project for consumer-directed chronic
outpatient services.
TITLE VIII--MEDICARE BENEFITS ADMINISTRATION
Sec. 801. Establishment of Medicare Benefits Administration.
TITLE IX--REGULATORY REDUCTION AND CONTRACTING REFORM
Subtitle A--Regulatory Reform
Sec. 901. Construction; definition of supplier.
Sec. 902. Issuance of regulations.
Sec. 903. Compliance with changes in regulations and policies.
Sec. 904. Reports and studies relating to regulatory reform.
Subtitle B--Contracting Reform
Sec. 911. Increased flexibility in medicare administration.
Sec. 912. Requirements for information security for medicare
administrative contractors.
Subtitle C--Education and Outreach
Sec. 921. Provider education and technical assistance.
Sec. 922. Small provider technical assistance demonstration program.
Sec. 923. Medicare Provider Ombudsman; Medicare Beneficiary Ombudsman.
[[Page H6009]]
Sec. 924. Beneficiary outreach demonstration program.
Sec. 925. Inclusion of additional information in notices to
beneficiaries about skilled nursing facility benefits.
Sec. 926. Information on medicare-certified skilled nursing facilities
in hospital discharge plans.
Subtitle D--Appeals and Recovery
Sec. 931. Transfer of responsibility for medicare appeals.
Sec. 932. Process for expedited access to review.
Sec. 933. Revisions to medicare appeals process.
Sec. 934. Prepayment review.
Sec. 935. Recovery of overpayments.
Sec. 936. Provider enrollment process; right of appeal.
Sec. 937. Process for correction of minor errors and omissions without
pursuing appeals process.
Sec. 938. Prior determination process for certain items and services;
advance beneficiary notices.
Subtitle V--Miscellaneous Provisions
Sec. 941. Policy development regarding evaluation and management (E &
M) documentation guidelines.
Sec. 942. Improvement in oversight of technology and coverage.
Sec. 943. Treatment of hospitals for certain services under medicare
secondary payor (MSP) provisions.
Sec. 944. EMTALA improvements.
Sec. 945. Emergency Medical Treatment and Active Labor Act (EMTALA)
technical advisory group.
Sec. 946. Authorizing use of arrangements to provide core hospice
services in certain circumstances.
Sec. 947. Application of OSHA bloodborne pathogens standard to certain
hospitals.
Sec. 948. BIPA-related technical amendments and corrections.
Sec. 949. Conforming authority to waive a program exclusion.
Sec. 950. Treatment of certain dental claims.
Sec. 951. Furnishing hospitals with information to compute dsh formula.
Sec. 952. Revisions to reassignment provisions.
Sec. 953. Other provisions.
Sec. 954. Temporary suspension of OASIS requirement for collection of
data on non-medicare and non-medicaid patients.
TITLE X--MEDICAID
Sec. 1001. Medicaid disproportionate share hospital (DSH) payments.
Sec. 1002. Clarification of inclusion of inpatient drug prices charged
to certain public hospitals in the best price exemptions
for the medicaid drug rebate program.
TITLE XI--ACCESS TO AFFORDABLE PHARMACEUTICALS
Subtitle A--Access to Affordable Pharmaceuticals
Sec. 1101. 30-month stay-of-effectiveness period.
Sec. 1102. Forfeiture of 180-day exclusivity period.
Sec. 1103. Bioavailability and bioequivalence.
Sec. 1104. Conforming amendments.
Subtitle B--Ability of Federal Trade Commission to Enforce Antitrust
Laws
Sec. 1111. Definitions.
Sec. 1112. Notification of agreements.
Sec. 1113. Filing deadlines.
Sec. 1114. Disclosure exemption.
Sec. 1115. Enforcement.
Sec. 1116. Rulemaking.
Sec. 1117. Savings clause.
Sec. 1118. Effective date.
Subtitle C--Importation of Prescription Drugs
Sec. 1121. Importation of prescription drugs.
TITLE I--MEDICARE PRESCRIPTION DRUG BENEFIT
SEC. 101. ESTABLISHMENT OF A MEDICARE PRESCRIPTION DRUG
BENEFIT.
(a) In General.--Title XVIII is amended--
(1) by redesignating part D as part F; and
(2) by inserting after part C the following new part:
``Part D--Voluntary Prescription Drug Benefit Program
``SEC. 1860D-1. BENEFITS; ELIGIBILITY; ENROLLMENT; AND
COVERAGE PERIOD.
``(a) Provision of Qualified Prescription Drug Coverage
Through Enrollment in Plans.--Subject to the succeeding
provisions of this part, each individual who is entitled to
benefits under part A or is enrolled under part B is entitled
to obtain qualified prescription drug coverage (described in
section 1860D-2(a)) as follows:
``(1) Medicare-related plans.--
``(A) Medicare advantage.--If the individual is eligible to
enroll in a Medicare Advantage plan that provides qualified
prescription drug coverage under section 1851(j), the
individual may enroll in such plan and obtain coverage
through such plan.
``(B) EFFS plans.--If the individual is eligible to enroll
in an EFFS plan that provides qualified prescription drug
coverage under part E under section 1860E-2(d), the
individual may enroll in such plan and obtain coverage
through such plan.
``(C) MA-EFFS plan; MA-EFFS Rx plan.--For purposes of this
part, the term `MA-EFFS plan' means a Medicare Advantage plan
under part C and an EFFS plan under part E and the term `MA-
EFFS Rx plan' means a MA-EFFS plan insofar as such plan
provides qualified prescription drug coverage.
``(2) Prescription drug plan.--If the individual is not
enrolled in a MA-EFFS plan, the individual may enroll under
this part in a prescription drug plan (as defined in section
1860D-10(a)(5)).
Such individuals shall have a choice of such plans under
section 1860D-5(d).
``(b) General Election Procedures.--
``(1) In general.--An individual eligible to make an
election under subsection (a) may elect to enroll in a
prescription drug plan under this part, or elect the option
of qualified prescription drug coverage under a MA-EFFS Rx
plan under part C or part E, and to change such election only
in such manner and form as may be prescribed by regulations
of the Administrator of the Medicare Benefits Administration
(appointed under section 1809(b)) (in this part referred to
as the `Medicare Benefits Administrator') and only during an
election period prescribed in or under this subsection.
``(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 Advantage
and EFFS programs 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 an 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 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 October 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 subsection
(c)(2)(C);
``(ii) in cases described in section 1837(h) (relating to
errors in enrollment), in the same manner as such section
applies to part B;
``(iii) in the case of an individual who meets such
exceptional conditions (including conditions provided under
section 1851(e)(4)(D)) as the Administrator may provide; and
``(iv) in cases of individuals (as determined by the
Administrator) who become eligible for prescription drug
assistance under title XIX under section 1935(d).
``(3) Information on plans.--Information described in
section 1860D-3(b)(1) on prescription drug plans and MA-EFFS
Rx plans shall be made available during election periods.
``(4) Additional information.--In order to promote the
efficient marketing of prescription drug plans and MA-EFFS
plans, the Administrator may provide information to the
sponsors and organizations offering such plans about
individuals eligible to enroll in such plans.
``(c) Guaranteed Issue; Community Rating; and
Nondiscrimination.--
``(1) Guaranteed issue.--
``(A) In general.--An eligible individual who is eligible
to elect qualified prescription drug coverage under a
prescription drug plan or MA-EFFS Rx plan at a time during
which elections are accepted under this part with respect to
the plan 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.
``(B) Medicare advantage 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 PDP sponsors under this subsection.
``(2) Community-rated premium.--
``(A) In general.--In the case of an individual who enrolls
under a prescription drug plan or in a MA-EFFS Rx plan during
the individual's initial enrollment period under this part or
maintains (as determined under subparagraph (C)) continuous
prescription drug coverage since the date the individual
first qualifies to elect prescription drug coverage under
this part, a PDP sponsor or entity offering a prescription
drug plan or MA-EFFS Rx plan and in which the individual is
enrolled may not deny, limit, or condition the coverage or
provision of covered prescription drug benefits or vary or
increase the premium under the plan based on any
[[Page H6010]]
health status-related factor described in section 2702(a)(1)
of the Public Health Service Act or any other factor.
``(B) Late enrollment penalty.--In the case of an
individual who does not maintain such continuous prescription
drug coverage (as described in subparagraph (C)), a PDP
sponsor or an entity offering a MA-EFFS Rx plan may
(notwithstanding any provision in this title) adjust the
premium otherwise applicable with respect to qualified
prescription drug coverage in a manner that reflects
additional actuarial risk involved. Such a risk shall be
established through an appropriate actuarial opinion of the
type described in subparagraphs (A) through (C) of section
2103(c)(4). The Administrator shall provide a mechanism for
assisting such sponsors and entities in identifying eligible
individuals who have (or have not) maintained such continuous
prescription drug coverage.
``(C) 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):
``(i) Coverage under prescription drug plan or ma-effs rx
plan.--Qualified prescription drug coverage under a
prescription drug plan or under a MA-EFFS Rx plan.
``(ii) 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, or through a demonstration
project under part C that demonstrates the application of
capitation payment rates for frail elderly medicare
beneficiaries through the use of an interdisciplinary team
and through the provision of primary care services to such
beneficiaries by means of such a team at the nursing facility
involved.
``(iii) Prescription drug coverage under group health
plan.--Any outpatient prescription drug coverage under a
group health plan, including a health benefits plan under the
Federal Employees Health Benefit Plan under chapter 89 of
title 5, United States Code, and a qualified retiree
prescription drug plan as defined in section 1860D-8(f)(1),
but only if (subject to subparagraph (E)(ii)) the coverage
provides benefits at least equivalent to the benefits under a
qualified prescription drug plan.
``(iv) 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)), but only
if the policy was in effect on January 1, 2006, and if
(subject to subparagraph (E)(ii)) the coverage provides
benefits at least equivalent to the benefits under a
qualified prescription drug plan.
``(v) 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 qualified prescription drug plan.
``(vi) 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 qualified prescription drug plan.
``(D) Certification.--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 shall also
include a statement for the period of coverage of whether the
individual involved had prescription drug coverage described
in subparagraph (C).
``(E) Disclosure.--
``(i) In general.--Each entity that offers coverage of the
type described in clause (iii), (iv), (v), or (vi) of
subparagraph (C) shall provide for disclosure, consistent
with standards established by the Administrator, of whether
such coverage provides benefits at least equivalent to the
benefits under a qualified prescription drug plan.
``(ii) Waiver of limitations.--An individual may apply to
the Administrator to waive the requirement that coverage of
such type provide benefits at least equivalent to the
benefits under a qualified prescription drug plan, if the
individual establishes that the individual was not adequately
informed that such coverage did not provide such level of
benefits.
``(F) Construction.--Nothing in this section shall be
construed as preventing the disenrollment of an individual
from a prescription drug plan or a MA-EFFS Rx plan based on
the termination of an election described in section
1851(g)(3), including for non-payment of premiums or for
other reasons specified in subsection (d)(3), which takes
into account a grace period described in section
1851(g)(3)(B)(i).
``(3) Nondiscrimination.--A PDP sponsor that offers a
prescription drug plan in an area designated under section
1860D-4(b)(5) shall make such plan available to all eligible
individuals residing in the area without regard to their
health or economic status or their place of residence within
the area.
``(d) Effective Date of Elections.--
``(1) In general.--Except as provided in this section, the
Administrator shall provide that elections under subsection
(b) take effect at the same time as the Administrator
provides that similar elections under section 1851(e) take
effect under section 1851(f).
``(2) No election effective before 2006.--In no case shall
any election take effect before January 1, 2006.
``(3) Termination.--The Administrator shall provide for the
termination of an election in the case of--
``(A) termination of coverage under both part A and part B;
and
``(B) termination of elections described in section
1851(g)(3) (including failure to pay required premiums).
``SEC. 1860D-2. REQUIREMENTS FOR QUALIFIED PRESCRIPTION DRUG
COVERAGE.
``(a) Requirements.--
``(1) In general.--For purposes of this part and part C and
part E, the term `qualified prescription drug coverage' means
either of the following:
``(A) Standard coverage with access to negotiated prices.--
Standard coverage (as defined in subsection (b)) and access
to negotiated prices under subsection (d).
``(B) Actuarially equivalent coverage with access to
negotiated prices.--Coverage of covered outpatient drugs
which meets the alternative coverage requirements of
subsection (c) and access to negotiated prices under
subsection (d), but only if it is approved by the
Administrator, as provided under subsection (c).
``(2) Permitting additional outpatient prescription drug
coverage.--
``(A) In general.--Subject to subparagraph (B), nothing in
this part shall be construed as preventing qualified
prescription drug coverage from including coverage of covered
outpatient drugs that exceeds the coverage required under
paragraph (1), but any such additional coverage shall be
limited to coverage of covered outpatient drugs.
``(B) Disapproval authority.--The Administrator shall
review the offering of qualified prescription drug coverage
under this part or part C or E. If the Administrator finds,
in the case of a qualified prescription drug coverage under a
prescription drug plan or a MA-EFFS Rx plan, that the
organization or sponsor offering the coverage is engaged in
activities intended to discourage enrollment of classes of
eligible medicare beneficiaries obtaining coverage through
the plan on the basis of their higher likelihood of utilizing
prescription drug coverage, the Administrator may terminate
the contract with the sponsor or organization under this part
or part C or E.
``(3) Application of secondary payor provisions.--The
provisions of section 1852(a)(4) shall apply under this part
in the same manner as they apply under part C.
``(b) Standard Coverage.--For purposes of this part, the
`standard coverage' is coverage of covered outpatient drugs
(as defined in subsection (f)) that meets the following
requirements:
``(1) Deductible.--The coverage has an annual deductible--
``(A) for 2006, that is equal to $250; or
``(B) for a subsequent year, that is equal to the amount
specified under this paragraph for the previous year
increased by the percentage specified in paragraph (5) for
the year involved.
Any amount determined under subparagraph (B) that is not a
multiple of $10 shall be rounded to the nearest multiple of
$10.
``(2) 80:20 benefit structure.--
``(A) 20 percent coinsurance.--The coverage has cost-
sharing (for costs above the annual deductible specified in
paragraph (1) and up to the initial coverage limit under
paragraph (3)) that is--
``(i) equal to 20 percent; or
``(ii) is actuarially equivalent (using processes
established under subsection (e)) to an average expected
payment of 20 percent of such costs.
``(B) Use of tiers.--Nothing in this part shall be
construed as preventing a PDP sponsor from applying tiered
copayments, so long as such tiered copayments are consistent
with subparagraph (A).
``(3) Initial coverage limit.--Subject to paragraph (4),
the coverage has an initial coverage limit on the maximum
costs that may be recognized for payment purposes--
``(A) for 2006, that is equal to $2,000; or
``(B) for a subsequent year, that is equal to the amount
specified in this paragraph for the previous year, increased
by the annual percentage increase described in paragraph (5)
for the year involved.
Any amount determined under subparagraph (B) that is not a
multiple of $25 shall be rounded to the nearest multiple of
$25.
``(4) Catastrophic protection.--
``(A) In general.--Notwithstanding paragraph (3), the
coverage provides benefits with no cost-sharing after the
individual has incurred costs (as described in subparagraph
(C)) for covered outpatient drugs in a year equal to the
annual out-of-pocket threshold specified in subparagraph (B).
``(B) Annual out-of-pocket threshold.--
``(i) In general.--For purposes of this part, the `annual
out-of-pocket threshold' specified in this subparagraph is
equal to $3,500 (subject to adjustment under clause (ii) and
subparagraph (D)).
``(ii) Inflation increase.--For a year after 2006, the
dollar amount specified in clause (i)
[[Page H6011]]
shall be increased by the annual percentage increase
described in paragraph (5) for the year involved. Any amount
determined under the previous sentence that is not a multiple
of $100 shall be rounded to the nearest multiple of $100.
``(C) Application.--In applying subparagraph (A)--
``(i) incurred costs shall only include costs incurred for
the annual deductible (described in paragraph (1)), cost-
sharing (described in paragraph (2)), and amounts for which
benefits are not provided because of the application of the
initial coverage limit described in paragraph (3); and
``(ii) such costs shall be treated as incurred only if they
are paid by the individual (or by another individual, such as
a family member, on behalf of the individual), under section
1860D-7, under title XIX, or under a State pharmaceutical
assistance program and the individual (or other individual)
is not reimbursed through insurance or otherwise, a group
health plan, or other third-party payment arrangement (other
than under such title or such program) for such costs.
``(D) Adjustment of annual out-of-pocket thresholds.--
``(i) In general.--Subject to clause (vii), for each
enrollee in a prescription drug plan or in a MA-EFFS Rx plan
whose adjusted gross income exceeds the income threshold as
defined in clause (ii) for a year, the annual out-of-pocket
threshold otherwise determined under subparagraph (B) for
such year shall be increased by an amount equal to the
percentage specified in clause (iii), multiplied by the
lesser of--
``(I) the amount of such excess; or
``(II) the amount by which the income threshold limit
exceeds the income threshold.
Any amount determined under the previous sentence that is not
a multiple of $100 shall be rounded to the nearest multiple
of $100.
``(ii) Income threshold.--For purposes of clause (i)--
``(I) In general.--Subject to subclause (II), the term
`income threshold' means $60,000 and the term `income
threshold limit' means $200,000.
``(II) Income inflation adjustment.--In the case of a year
beginning after 2006, each of the dollar amounts in subclause
(I) shall be increased by an amount equal to such dollar
amount multiplied by the cost-of-living adjustment determined
under section 1(f)(3) of the Internal Revenue Code of 1986
for such year, determined by substituting `calendar year
2005' for `calendar year 1992'. If any amount increased under
the previous sentence is not a multiple of $100, such amount
shall be rounded to the nearest multiple of $100.
``(iii) Percentage.--The percentage specified in this
clause for a year is a fraction (expressed as a percentage)
equal to--
``(I) the annual out-of-pocket threshold for a year under
subparagraph (B) (determined without regard to this
subparagraph), divided by
``(II) the income threshold under clause (ii) for that
year.
If any percentage determined under the previous sentence that
is not a multiple of \1/10\th of 1 percentage point, such
percentage shall be rounded to the nearest multiple of \1/
10\th of 1 percentage point.
``(iv) Use of most recent return information.--For purposes
of clause (i) for an enrollee for a year, except as provided
in clause (v), the adjusted gross income of an individual
shall be based on the most recent information disclosed to
the Secretary under section 6109(l)(19) of the Internal
Revenue Code of 1986 before the beginning of that year.
``(v) Individual election to present most recent
information regarding income.--The Secretary shall provide,
in coordination with the Secretary of the Treasury, a
procedure under which, for purposes of applying this
subparagraph for a calendar year, instead of using the
information described in clause (iv), an enrollee may elect
to use more recent information, including information with
respect to a taxable year ending in such calendar year. Such
process shall--
``(I) require the enrollee to provide the Secretary with a
copy of the relevant portion of the more recent return to be
used under this clause;
``(II) provide for the Medicare Beneficiary Ombudsman
(under section 1810) offering assistance to such enrollees in
presenting such information and the toll-free number under
such section being a point of contact for beneficiaries to
inquire as to how to present such information;
``(III) provide for the verification of the information in
such return by the Secretary of the Treasury under section
6103(l)(19) of the Internal Revenue Code of 1986; and
``(IV) provide for the payment by the Secretary (in a
manner specified by the Secretary) to the enrollee of an
amount equal to the excess of the benefit payments that would
have been payable under the plan if the more recent return
information were used, over the benefit payments that were
made under the plan.
In the case of a payment under subclause (III) for an
enrollee under a prescription drug plan, the PDP sponsor of
the plan shall pay to the Secretary the amount so paid, less
the applicable reinsurance amount that would have applied
under section 1860D-8(c)(1)(B) if such payment had been
treated as an allowable cost under such section. Such plan
payment shall be deposited in the Treasury to the credit of
the Medicare Prescription Drug Account in the Federal
Supplementary Medical Insurance Trust Fund (under section
1841).
``(vi) Dissemination of information on process.--The
Secretary shall provide, through the annual medicare handbook
under section 1804(a), for a general description of the
adjustment of annual out-of-pocket thresholds provided under
this subparagraph, including the process for adjustment based
upon more recent information and the confidentiality
provisions of subparagraph (F), and shall provide for
dissemination of a table for each year that sets forth the
amount of the adjustment that is made under clause (i) based
on the amount of an enrollee's adjusted gross income.
``(vii) Enrollee opt-out.--The Secretary shall provide a
procedure whereby, if an enrollee elects to have the maximum
annual out-of-pocket threshold applied under this
subparagraph for a year, the Secretary shall not request any
information regarding the enrollee under subparagraph (E) for
that year.
``(E) Requesting information on enrollees.--
``(i) In general.--The Secretary shall, periodically as
required to carry out subparagraph (D), transmit to the
Secretary of the Treasury a list of the names and TINs of
enrollees in prescription drug plans (or in MA-EFFS Rx plans)
and request that such Secretary disclose to the Secretary
information under subparagraph (A) of section 6103(l)(19) of
the Internal Revenue Code of 1986 with respect to those
enrollees for a specified taxable year for application in a
particular calendar year.
``(ii) Disclosure to plan sponsors.--In the case of a
specified taxpayer (as defined in section 6103(l)(19)(B) of
the Internal Revenue Code of 1986) who is enrolled in a
prescription drug plan or in an MA-EFFS Rx plan or an
individual who makes an election under subparagraph (D)(vii),
the Secretary shall disclose to the entity that offers the
plan the annual out-of-pocket threshold applicable to such
individual under subparagraph (D).
``(F) Maintaining confidentiality of information.--
``(i) In general.--The amount of any increase in an annual
out-of-pocket threshold under subparagraph (D) may not be
disclosed by the Secretary except to a PDP sponsor or entity
that offers a MA-EFFS Rx plan to the extent necessary to
carry out this part.
``(ii) Criminal and civil penalties for unauthorized
disclosure.--A person who makes an unauthorized disclosure of
information disclosed under section 6103(l)(19) of the
Internal Revenue Code of 1986 (including disclosure of any
increase in an annual out-of-pocket threshold under
subparagraph (D)) shall be subject to penalty to the extent
provided under--
``(I) section 7213 of such Code (relating to criminal
penalty for unauthorized disclosure of information);
``(II) section 7213A of such Code (relating to criminal
penalty for unauthorized inspection of returns or return
information);
``(III) section 7431 of such Code (relating to civil
damages for unauthorized inspection or disclosure of returns
and return information);
``(IV) any other provision of the Internal Revenue Code of
1986; or
``(V) any other provision of law.
``(iii) Application of additional civil monetary penalty
for unauthorized disclosures.--In addition to any penalty
otherwise provided under law, any person who makes an
unauthorized disclosure of such information shall be subject
to a civil monetary penalty of not to exceed $10,000 for each
such unauthorized disclosure. The provisions of section 1128A
(other than subsections (a) and (b)) shall apply to civil
money penalties under this subparagraph in the same manner as
they apply to a penalty or proceeding under section 1128A(a).
``(G) Information regarding third-party reimbursement.--In
order to ensure compliance with the requirements of
subparagraph (C)(ii), the Administrator is authorized to
establish procedures, in coordination with the Secretary of
Treasury and the Secretary of Labor, for determining whether
costs for individuals are being reimbursed through insurance
or otherwise, a group health plan, or other third-party
payment arrangement, and for alerting the sponsors and
organization that offer the plans in which such individuals
are enrolled about such reimbursement arrangements. A PDP
sponsor or Medicare Advantage or EFFS organization may also
periodically ask individuals enrolled in a prescription drug
plan or MA-EFFS Rx plan offered by the sponsor or
organization whether the individuals have or expect to
receive such third-party reimbursement. A material
misrepresentation of the information described in the
preceding sentence by an individual (as defined in standards
set by the Administrator and determined through a process
established by the Administrator) shall constitute grounds
for termination of enrollment under section 1860D-1(d)(3).
``(5) Annual percentage increase.--For purposes of this
part, the annual percentage increase specified in this
paragraph for a year is equal to the annual percentage
increase in average per capita aggregate expenditures for
covered outpatient drugs in the United States for medicare
beneficiaries, as determined by the Administrator for the 12-
month period ending in July of the previous year.
``(c) Alternative Coverage Requirements.--A prescription
drug plan or MA-
[[Page H6012]]
EFFS Rx plan may provide a different prescription drug
benefit design from the standard coverage described in
subsection (b) so long as the Administrator determines (based
on an actuarial analysis approved by the Administrator) that
the following requirements are met and the plan applies for,
and receives, the approval of the Administrator for such
benefit design:
``(1) Assuring at least actuarially equivalent coverage.--
``(A) Assuring equivalent value of total coverage.--The
actuarial value of the total coverage (as determined under
subsection (e)) is at least equal to the actuarial value (as
so determined) of standard coverage.
``(B) Assuring equivalent unsubsidized value of coverage.--
The unsubsidized value of the coverage is at least equal to
the unsubsidized value of standard coverage. For purposes of
this subparagraph, the unsubsidized value of coverage is the
amount by which the actuarial value of the coverage (as
determined under subsection (e)) exceeds the actuarial value
of the subsidy payments under section 1860D-8 with respect to
such coverage.
``(C) Assuring standard payment for costs at initial
coverage limit.--The coverage is designed, based upon an
actuarially representative pattern of utilization (as
determined under subsection (e)), to provide for the payment,
with respect to costs incurred that are equal to the initial
coverage limit under subsection (b)(3), of an amount equal to
at least the product of--
``(i) the amount by which the initial coverage limit
described in subsection (b)(3) exceeds the deductible
described in subsection (b)(1); and
``(ii) 100 percent minus the cost-sharing percentage
specified in subsection (b)(2)(A)(i).
``(2) Catastrophic protection.--The coverage provides for
beneficiaries the catastrophic protection described in
subsection (b)(4).
``(d) Access to Negotiated Prices.--
``(1) In general.--Under qualified prescription drug
coverage offered by a PDP sponsor or an entity offering a MA-
EFFS Rx plan, the sponsor or entity shall provide
beneficiaries with access to negotiated prices (including
applicable discounts) used for payment for covered outpatient
drugs, regardless of the fact that no benefits may be payable
under the coverage with respect to such drugs because of the
application of cost-sharing or an initial coverage limit
(described in subsection (b)(3)). Insofar as a State elects
to provide medical assistance under title XIX to a
beneficiary enrolled under such title and under a
prescription drug plan or MA-EFFS Rx plan for a drug based on
the prices negotiated by a prescription drug plan or MA-EFFS
Rx plan under this part, the requirements of section 1927
shall not apply to such drugs. The prices negotiated by a
prescription drug plan under this part, by a MA-EFFS Rx plan
with respect to covered outpatient drugs, or by a qualified
retiree prescription drug plan (as defined in section 1860D-
8(f)(1)) with respect to such drugs on behalf of individuals
entitled to benefits under part A or enrolled under part B,
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).
``(2) Disclosure.--The PDP sponsor or entity offering a MA-
EFFS Rx plan shall disclose to the Administrator (in a manner
specified by the Administrator) the extent to which discounts
or rebates or other remuneration or price concessions made
available to the sponsor or organization by a manufacturer
are passed through to enrollees through pharmacies and other
dispensers or otherwise. The provisions of section
1927(b)(3)(D) shall apply to information disclosed to the
Administrator under this paragraph in the same manner as such
provisions apply to information disclosed under such section.
``(3) Audits and reports.--To protect against fraud and
abuse and to ensure proper disclosures and accounting under
this part, in addition to any protections against fraud and
abuse provided under section 1860D-4(b)(3)(C), the
Administrator may periodically audit the financial statements
and records of PDP sponsor or entities offering a MA-EFFS Rx
plan.
``(e) Actuarial Valuation; Determination of Annual
Percentage Increases.--
``(1) Processes.--For purposes of this section, the
Administrator shall establish processes and methods--
``(A) for determining the actuarial valuation of
prescription drug coverage, including--
``(i) an actuarial valuation of standard coverage and of
the reinsurance subsidy payments under section 1860D-8;
``(ii) the use of generally accepted actuarial principles
and methodologies; and
``(iii) applying the same methodology for determinations of
alternative coverage under subsection (c) as is used with
respect to determinations of standard coverage under
subsection (b); and
``(B) for determining annual percentage increases described
in subsection (b)(5).
Such methods for determining actuarial valuation shall take
into account effects of alternative coverage on drug
utilization.
``(2) Use of outside actuaries.--Under the processes under
paragraph (1)(A), PDP sponsors and entities offering MA-EFFS
Rx plans may use actuarial opinions certified by independent,
qualified actuaries to establish actuarial values, but the
Administrator shall determine whether such actuarial values
meet the requirements under subsection (c)(1).
``(f) Covered Outpatient Drugs Defined.--
``(1) In general.--Except as provided in this subsection,
for purposes of this part, the term `covered outpatient drug'
means--
``(A) a drug that may be dispensed only upon a prescription
and that is described in subparagraph (A)(i) or (A)(ii) of
section 1927(k)(2); or
``(B) a biological product described in clauses (i) through
(iii) of subparagraph (B) of such section or insulin
described in subparagraph (C) of such section and medical
supplies associated with the injection of insulin (as defined
in regulations of the Secretary)
,and such term includes a vaccine licensed under section 351
of the Public Health Service Act and any use of a covered
outpatient drug for a medically accepted indication (as
defined in section 1927(k)(6)).
``(2) Exclusions.--
``(A) In general.--Such term does not include drugs or
classes of drugs, or their medical uses, which may be
excluded from coverage or otherwise restricted under section
1927(d)(2), other than subparagraph (E) thereof (relating to
smoking cessation agents), or under section 1927(d)(3).
``(B) Avoidance of duplicate coverage.--A drug prescribed
for an individual that would otherwise be a covered
outpatient drug under this part shall not be so considered if
payment for such drug is available under part A or B for an
individual entitled to benefits under part A and enrolled
under part B.
``(3) Application of formulary restrictions.--A drug
prescribed for an individual that would otherwise be a
covered outpatient drug under this part shall not be so
considered under a plan if the plan excludes the drug under a
formulary and such exclusion is not successfully appealed
under section 1860D-3(f)(2).
``(4) Application of general exclusion provisions.--A
prescription drug plan or MA-EFFS Rx plan may exclude from
qualified prescription drug coverage any covered outpatient
drug--
``(A) for which payment would not be made if section
1862(a) applied to part D; or
``(B) which are not prescribed in accordance with the plan
or this part.
Such exclusions are determinations subject to reconsideration
and appeal pursuant to section 1860D-3(f).
``SEC. 1860D-3. BENEFICIARY PROTECTIONS FOR QUALIFIED
PRESCRIPTION DRUG COVERAGE.
``(a) Guaranteed Issue, Community-Rated Premiums, Access to
Negotiated Prices, and Nondiscrimination.--For provisions
requiring guaranteed issue, community-rated premiums, access
to negotiated prices, and nondiscrimination, see sections
1860D-1(c)(1), 1860D-1(c)(2), 1860D-2(d), and 1860D-6(b),
respectively.
``(b) Dissemination of Information.--
``(1) General information.--A PDP sponsor shall disclose,
in a clear, accurate, and standardized form to each enrollee
with a prescription drug plan offered by the sponsor under
this part at the time of enrollment and at least annually
thereafter, the information described in section 1852(c)(1)
relating to such plan. Such information includes the
following:
``(A) Access to specific covered outpatient drugs,
including access through pharmacy networks.
``(B) How any formulary used by the sponsor functions,
including the drugs included in the formulary.
``(C) Co-payments and deductible requirements, including
the identification of the tiered or other co-payment level
applicable to each drug (or class of drugs).
``(D) Grievance and appeals procedures.
Such information shall also be made available upon request to
prospective enrollees.
``(2) Disclosure upon request of general coverage,
utilization, and grievance information.--Upon request of an
individual eligible to enroll under a prescription drug plan,
the PDP sponsor shall provide the information described in
section 1852(c)(2) (other than subparagraph (D)) to such
individual.
``(3) Response to beneficiary questions.--Each PDP sponsor
offering a prescription drug plan shall have a mechanism for
providing specific information to enrollees upon request. The
sponsor shall make available on a timely basis, through an
Internet website and in writing upon request, information on
specific changes in its formulary.
``(4) Claims information.--Each PDP sponsor offering a
prescription drug plan must furnish to each enrollee in a
form easily understandable to such enrollees an explanation
of benefits (in accordance with section 1806(a) or in a
comparable manner) and a notice of the benefits in relation
to initial coverage limit and the annual out-of-pocket
threshold applicable to such enrollee for the current year,
whenever prescription drug benefits are provided under this
part (except that such notice need not be provided more often
than monthly).
``(c) Access to Covered Benefits.--
``(1) Assuring pharmacy access.--
``(A) Participation of any willing pharmacy.--A PDP sponsor
and an entity offering a MA-EFFS Rx plan shall permit the
participation of any pharmacy that meets terms and conditions
that the plan has established.
[[Page H6013]]
``(B) Discounts allowed for network pharmacies.--A
prescription drug plan and a MA-EFFS Rx plan may,
notwithstanding subparagraph (A), reduce coinsurance or
copayments for its enrolled beneficiaries below the level
otherwise provided for covered outpatient drugs dispensed
through in-network pharmacies, but in no case shall such a
reduction result in an increase in payments made by the
Administrator under section 1860D-8 to a plan.
``(C) Convenient access for network pharmacies.--The PDP
sponsor of the prescription drug plan and the entity offering
a MA-EFFS Rx 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 (consistent with rules of the
Administrator). The Administrator shall establish convenient
access rules under this subparagraph that are no less
favorable to enrollees than the rules for convenient access
to pharmacies of the Secretary of Defense established as of
June 1, 2003, for purposes of the TRICARE Retail Pharmacy
(TRRx) program. Such rules shall include adequate emergency
access for enrolled beneficiaries.
``(D) Level playing field.--Such a sponsor shall permit
enrollees to receive benefits (which may include a 90-day
supply of drugs or biologicals) through a community pharmacy,
rather than through mail order, with any differential in
charge paid by such enrollees.
``(E) Not required to accept insurance risk.--The terms
and conditions under subparagraph (A) may not require
participating pharmacies to accept insurance risk as a
condition of participation.
``(2) Use of standardized technology.--
``(A) In general.--The PDP sponsor of a prescription drug
plan and an entity offering a MA-EFFS Rx plan shall issue
(and reissue, as appropriate) such a card (or other
technology) that may be used by an enrollee to assure access
to negotiated prices under section 1860D-2(d) for the
purchase of prescription drugs for which coverage is not
otherwise provided under the plan.
``(B) Standards.--
``(i) Development.--The Administrator shall provide for the
development or utilization of uniform standards relating to a
standardized format for the card or other technology referred
to in subparagraph (A). Such standards shall be compatible
with standards established under part C of title XI.
``(ii) Application of advisory task force.--The advisory
task force established under subsection (d)(3)(B)(ii) shall
provide recommendations to the Administrator under such
subsection regarding the standards developed under clause
(i).
``(3) Requirements on development and application of
formularies.--If a PDP sponsor of a prescription drug plan or
an entity offering a MA-EFFS Rx plan uses a formulary, the
following requirements must be met:
``(A) Pharmacy and therapeutic (p&t) committee.--The
sponsor or entity must establish a pharmacy and therapeutic
committee that develops and reviews the formulary. Such
committee shall include at least one practicing physician and
at least one practicing pharmacist independent and free of
conflict with respect to the committee both with expertise in
the care of elderly or disabled persons and a majority of its
members shall consist of individuals who are practicing
physicians or practicing pharmacists (or both).
``(B) Formulary development.--In developing and reviewing
the formulary, the committee shall--
``(i) 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
on such other information as the committee determines to be
appropriate; and
``(ii) shall take into account whether including in the
formulary particular covered outpatient drugs has therapeutic
advantages in terms of safety and efficacy.
``(C) Inclusion of drugs in all therapeutic categories.--
The formulary must include drugs within each therapeutic
category and class of covered outpatient drugs (although not
necessarily for all drugs within such categories and
classes). In establishing such classes, the committee shall
take into account the standards published in the United
States Pharmacopeia-Drug Information. The committee shall
make available to the enrollees under the plan through the
Internet or otherwise the bases for the exclusion of coverage
of any drug from the formulary.
``(D) Provider and patient education.--The committee shall
establish policies and procedures to educate and inform
health care providers and enrollees concerning the formulary.
``(E) Notice before removing drug from formulary for
changing preferred or tier status of drug.--Any removal of a
covered outpatient drug from a formulary and any change in
the preferred or tier cost-sharing status of such a drug
shall take effect only after appropriate notice is made
available to beneficiaries and physicians.
``(F) Periodic evaluation of protocols.--In connection with
the formulary, a prescription drug plan shall provide for the
periodic evaluation and analysis of treatment protocols and
procedures.
``(G) Grievances and appeals relating to application of
formularies.--For provisions relating to grievances and
appeals of coverage, see subsections (e) and (f).
``(d) Cost and Utilization Management; Quality Assurance;
Medication Therapy Management Program.--
``(1) In general.--The PDP sponsor or entity offering a MA-
EFFS Rx plan shall have in place, directly or through
appropriate arrangements, with respect to covered outpatient
drugs--
``(A) an effective cost and drug utilization management
program, including medically appropriate incentives to use
generic drugs and therapeutic interchange, when appropriate;
``(B) quality assurance measures and systems to reduce
medical errors and adverse drug interactions, including side-
effects, and improve medication use, including a medication
therapy management program described in paragraph (2) and for
years beginning with 2007, an electronic prescription program
described in paragraph (3); and
``(C) a program to control fraud, abuse, and waste.
Nothing in this section shall be construed as impairing a PDP
sponsor or entity from utilizing cost management tools
(including differential payments) under all methods of
operation.
``(2) Medication therapy management program.--
``(A) In general.--A medication therapy management program
described in this paragraph is a program of drug therapy
management and medication administration that may be
furnished by a pharmacy provider and that is designed to
assure, with respect to beneficiaries at risk for potential
medication problems, such as beneficiaries with complex or
chronic diseases (such as diabetes, asthma, hypertension, and
congestive heart failure) or multiple prescriptions, that
covered outpatient drugs under the prescription drug plan are
appropriately used to optimize therapeutic outcomes through
improved medication use and reduce the risk of adverse
events, including adverse drug interactions. Such programs
may distinguish between services in ambulatory and
institutional settings.
``(B) Elements.--Such program may include--
``(i) enhanced beneficiary understanding to promote the
appropriate use of medications by beneficiaries and to reduce
the risk of potential adverse events associated with
medications, through beneficiary education, counseling, case
management, disease state management programs, and other
appropriate means;
``(ii) increased beneficiary adherence with prescription
medication regimens through medication refill reminders,
special packaging, and other compliance programs and other
appropriate means; and
``(iii) detection of patterns of overuse and underuse of
prescription drugs.
``(C) Development of program in cooperation with licensed
pharmacists.--The program shall be developed in cooperation
with licensed and practicing pharmacists and physicians.
``(D) Considerations in pharmacy fees.--The PDP sponsor of
a prescription drug program and an entity offering a MA-EFFS
Rx 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. Each such sponsor or entity
shall disclose to the Administrator upon request the amount
of any such management or dispensing fees and such fees shall
be confidential in the same manner as provided under section
1927(b)(3)(D) for information disclosed under section
1927(b)(3)(A).
``(3) Electronic prescription program.--
``(A) In general.--An electronic prescription drug program
described in this paragraph is a program that includes at
least the following components, consistent with uniform
standards established under subparagraph (B):
``(i) Electronic transmittal of prescriptions.--
Prescriptions must be written and transmitted electronically
(other than by facsimile), except in emergency cases and
other exceptional circumstances recognized by the
Administrator.
``(ii) Provision of information to prescribing health care
professional.--The program provides for the electronic
transmittal to the prescribing health care professional of
information that includes--
``(I) information (to the extent available and feasible) on
the drug or drugs being prescribed for that patient and other
information relating to the medical history or condition of
the patient that may be relevant to the appropriate
prescription for that patient;
``(II) cost-effective alternatives (if any) for the use of
the drug prescribed; and
``(III) information on the drugs included in the applicable
formulary.
To the extent feasible, such program shall permit the
prescribing health care professional to provide (and be
provided) related information on an interactive, real-time
basis.
``(B) Standards.--
``(i) Development.--The Administrator shall provide for the
development of uniform standards relating to the electronic
prescription drug program described in subparagraph (A). Such
standards shall be compatible with standards established
under part C of title XI.
[[Page H6014]]
``(ii) Advisory task force.--In developing such standards
and the standards described in subsection (c)(2)(B)(i) the
Administrator shall establish a task force that includes
representatives of physicians, hospitals, pharmacies,
beneficiaries, pharmacy benefit managers, individuals with
expertise in information technology, and pharmacy benefit
experts of the Departments of Veterans Affairs and Defense
and other appropriate Federal agencies to provide
recommendations to the Administrator on such standards,
including recommendations relating to the following:
``(I) The range of available computerized prescribing
software and hardware and their costs to develop and
implement.
``(II) The extent to which such standards and systems
reduce medication errors and can be readily implemented by
physicians, pharmacies, and hospitals.
``(III) Efforts to develop uniform standards and a common
software platform for the secure electronic communication of
medication history, eligibility, benefit, and prescription
information.
``(IV) Efforts to develop and promote universal
connectivity and interoperability for the secure electronic
exchange of such information.
``(V) The cost of implementing such systems in the range of
hospital and physician office settings and pharmacies,
including hardware, software, and training costs.
``(VI) Implementation issues as they relate to part C of
title XI, and current Federal and State prescribing laws and
regulations and their impact on implementation of
computerized prescribing.
``(iii) Deadlines.--
``(I) The Administrator shall constitute the task force
under clause (ii) by not later than April 1, 2004.
``(II) Such task force shall submit recommendations to
Administrator by not later than January 1, 2005.
``(III) The Administrator shall provide for the development
and promulgation, by not later than January 1, 2006, of
national standards relating to the electronic prescription
drug program described in clause (ii). Such standards shall
be issued by a standards organization accredited by the
American National Standards Institute (ANSI) and shall be
compatible with standards established under part C of title
XI.
``(4) Treatment of accreditation.--Section 1852(e)(4)
(relating to treatment of accreditation) shall apply to
prescription drug plans under this part with respect to the
following requirements, in the same manner as they apply to
plans under part C with respect to the requirements described
in a clause of section 1852(e)(4)(B):
``(A) Paragraph (1) (including quality assurance),
including medication therapy management program under
paragraph (2).
``(B) Subsection (c)(1) (relating to access to covered
benefits).
``(C) Subsection (g) (relating to confidentiality and
accuracy of enrollee records).
``(5) Public disclosure of pharmaceutical prices for
equivalent drugs.--Each PDP sponsor and each entity offering
a MA-EFFS Rx plan shall provide that each pharmacy or other
dispenser that arranges for the dispensing of a covered
outpatient 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 available generic drug covered under the plan
that is therapeutically equivalent and bioequivalent.
``(e) Grievance Mechanism, Coverage Determinations, and
Reconsiderations.--
``(1) In general.--Each PDP sponsor shall provide
meaningful procedures for hearing and resolving grievances
between the organization (including any entity or individual
through which the sponsor provides covered benefits) and
enrollees with prescription drug plans of the sponsor under
this part in accordance with section 1852(f).
``(2) Application of coverage determination and
reconsideration provisions.--A PDP sponsor shall meet the
requirements of paragraphs (1) through (3) of section 1852(g)
with respect to covered benefits under the prescription drug
plan it offers under this part in the same manner as such
requirements apply to an organization with respect to
benefits it offers under a plan under part C.
``(3) Request for review of tiered formulary
determinations.--In the case of a prescription drug plan
offered by a PDP sponsor or a MA-EFFS Rx plan 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 either would not be as effective for the
individual or would have adverse effects for the individual
or both.
``(f) Appeals.--
``(1) In general.--Subject to paragraph (2), a PDP sponsor
shall meet the requirements of paragraphs (4) and (5) of
section 1852(g) with respect to drugs (including a
determination related to the application of tiered cost-
sharing described in subsection (e)(3)) in the same manner as
such requirements apply to an organization with respect to
benefits it offers under a plan under part C.
``(2) Formulary determinations.--An individual who is
enrolled in a prescription drug plan offered by a PDP sponsor
or in a MA-EFFS Rx plan may appeal to obtain coverage for a
covered outpatient drug that is not on a formulary of the
sponsor or entity offering the plan if the prescribing
physician determines that the formulary drug for treatment of
the same condition either would not be as effective for the
individual or would have adverse effects for the individual
or both.
``(g) Confidentiality and Accuracy of Enrollee Records.--A
PDP sponsor that offers a prescription drug plan shall meet
the requirements of section 1852(h) with respect to enrollees
under the plan in the same manner as such requirements apply
to an organization with respect to enrollees under part C. A
PDP sponsor shall be treated as a business associate for
purposes of the provisions of subpart E of part 164 of title
45, Code of Federal Regulations, adopted pursuant to the
authority of the Secretary under section 264(c) of the Health
Insurance Portability and Accountability Act of 1996 (42 U.S.
C. 1320d-2 note).
``SEC. 1860D-4. REQUIREMENTS FOR AND CONTRACTS WITH
PRESCRIPTION DRUG PLAN (PDP) SPONSORS.
``(a) General Requirements.--Each PDP sponsor of a
prescription drug plan shall meet the following requirements:
``(1) Licensure.--Subject to subsection (c), the sponsor is
organized and licensed under State law as a risk-bearing
entity eligible to offer health insurance or health benefits
coverage in each State in which it offers a prescription drug
plan.
``(2) Assumption of financial risk for unsubsidized
coverage.--
``(A) In general.--Subject to subparagraph (B) and section
1860D-5(d)(2), the entity assumes full financial risk on a
prospective basis for qualified prescription drug coverage
that it offers under a prescription drug plan and that is not
covered under section 1860D-8.
``(B) Reinsurance permitted.--The entity may obtain
insurance or make other arrangements for the cost of coverage
provided to any enrollee.
``(3) Solvency for unlicensed sponsors.--In the case of a
sponsor that is not described in paragraph (1), the sponsor
shall meet solvency standards established by the
Administrator under subsection (d).
``(b) Contract Requirements.--
``(1) In general.--The Administrator shall not permit the
election under section 1860D-1 of a prescription drug plan
offered by a PDP sponsor under this part, and the sponsor
shall not be eligible for payments under section 1860D-7 or
1860D-8, unless the Administrator has entered into a contract
under this subsection with the sponsor with respect to the
offering of such plan. Such a contract with a sponsor may
cover more than one prescription drug plan. Such contract
shall provide that the sponsor agrees to comply with the
applicable requirements and standards of this part and the
terms and conditions of payment as provided for in this part.
``(2) Negotiation regarding terms and conditions.--The
Administrator shall have the same authority to negotiate the
terms and conditions of prescription drug plans under this
part as the Director of the Office of Personnel Management
has with respect to health benefits plans under chapter 89 of
title 5, United States Code. In negotiating the terms and
conditions regarding premiums for which information is
submitted under section 1860D-6(a)(2), the Administrator
shall take into account the subsidy payments under section
1860D-8.
``(3) Incorporation of certain medicare advantage contract
requirements.--The following provisions of section 1857 shall
apply, subject to subsection (c)(5), to contracts under this
section in the same manner as they apply to contracts under
section 1857(a):
``(A) Minimum enrollment.--Paragraphs (1) and (3) of
section 1857(b), except that the requirement of such
paragraph (1) shall be waived during the first contract year
with respect to an organization in a region.
``(B) Contract period and effectiveness.--Paragraphs (1)
through (3) and (5) of section 1857(c).
``(C) Protections against fraud and beneficiary
protections.--Section 1857(d).
``(D) Additional contract terms.--Section 1857(e); except
that in applying section 1857(e)(2) under this part--
``(i) such section shall be applied separately to costs
relating to this part (from costs under part C and part E);
``(ii) in no case shall the amount of the fee established
under this subparagraph for a plan exceed 20 percent of the
maximum amount of the fee that may be established under
subparagraph (B) of such section; and
``(iii) no fees shall be applied under this subparagraph
with respect to MA-EFFS Rx plans.
``(E) Intermediate sanctions.--Section 1857(g).
``(F) Procedures for termination.--Section 1857(h).
``(4) Rules of application for intermediate sanctions.--In
applying paragraph (3)(E)--
``(A) the reference in section 1857(g)(1)(B) to section
1854 is deemed a reference to this part; and
``(B) the reference in section 1857(g)(1)(F) to section
1852(k)(2)(A)(ii) shall not be applied.
``(5) Service area requirement.--For purposes of this part,
the Administrator shall designate at least 10 areas covering
the entire United States and to the extent practicable shall
be consistent with EFFS regions established under section
1860E-1(a)(2).
[[Page H6015]]
``(c) Waiver of Certain Requirements to Expand Choice.--
``(1) In general.--In the case of an entity that seeks to
offer a prescription drug plan in a State, the Administrator
shall waive the requirement of subsection (a)(1) that the
entity be licensed in that State if the Administrator
determines, based on the application and other evidence
presented to the Administrator, that any of the grounds for
approval of the application described in paragraph (2) have
been met.
``(2) Grounds for approval.--The grounds for approval under
this paragraph are the grounds for approval described in
subparagraph (B), (C), and (D) of section 1855(a)(2), and
also include the application by a State of any grounds other
than those required under Federal law.
``(3) Application of waiver procedures.--With respect to an
application for a waiver (or a waiver granted) under this
subsection, the provisions of subparagraphs (E), (F), and (G)
of section 1855(a)(2) shall apply.
``(4) Licensure does not substitute for or constitute
certification.--The fact that an entity is licensed in
accordance with subsection (a)(1) does not deem the entity to
meet other requirements imposed under this part for a PDP
sponsor.
``(5) References to certain provisions.--For purposes of
this subsection, in applying provisions of section 1855(a)(2)
under this subsection to prescription drug plans and PDP
sponsors--
``(A) any reference to a waiver application under section
1855 shall be treated as a reference to a waiver application
under paragraph (1); and
``(B) any reference to solvency standards shall be treated
as a reference to solvency standards established under
subsection (d).
``(d) Solvency Standards for Non-Licensed Sponsors.--
``(1) Establishment.--The Administrator shall establish, by
not later than October 1, 2004, financial solvency and
capital adequacy standards that an entity that does not meet
the requirements of subsection (a)(1) must meet to qualify as
a PDP sponsor under this part.
``(2) Compliance with standards.--Each PDP sponsor that is
not licensed by a State under subsection (a)(1) and for which
a waiver application has been approved under subsection (c)
shall meet solvency and capital adequacy standards
established under paragraph (1). The Administrator shall
establish certification procedures for such PDP sponsors with
respect to such solvency standards in the manner described in
section 1855(c)(2).
``(e) Relation to State Laws.--
``(1) In general.--The standards established under this
part shall supersede any State law or regulation (other than
State licensing laws or State laws relating to plan solvency,
except as provided in subsection (d)) with respect to
prescription drug plans which are offered by PDP sponsors
under this part.
``(2) Prohibition of state imposition of premium taxes.--No
State may impose a premium tax or similar tax with respect to
premiums paid to PDP sponsors for prescription drug plans
under this part, or with respect to any payments made to such
a sponsor by the Administrator under this part.
``SEC. 1860D-5. PROCESS FOR BENEFICIARIES TO SELECT QUALIFIED
PRESCRIPTION DRUG COVERAGE.
``(a) In General.--The Administrator shall establish a
process for the selection of the prescription drug plan or
MA-EFFS Rx plan through which eligible individuals elect
qualified prescription drug coverage under this part.
``(b) Elements.--Such process shall include the following:
``(1) Annual, coordinated election periods, in which such
individuals can change the qualifying plans through which
they obtain coverage, in accordance with section 1860D-
1(b)(2).
``(2) Active dissemination of information to promote an
informed selection among qualifying plans based upon price,
quality, and other features, in the manner described in (and
in coordination with) section 1851(d), including the
provision of annual comparative information, maintenance of a
toll-free hotline, and the use of non-Federal entities.
``(3) Coordination of elections through filing with the
entity offering a MA-EFFS Rx plan or a PDP sponsor, in the
manner described in (and in coordination with) section
1851(c)(2).
``(4) Informing each enrollee before the beginning of each
year of the annual out-of-pocket threshold applicable to the
enrollee for that year under section 1860D-2(b)(4) at such
time.
``(c) MA-EFFS Rx Enrollee May Only Obtain Benefits Through
the Plan.--An individual who is enrolled under a MA-EFFS Rx
plan may only elect to receive qualified prescription drug
coverage under this part through such plan.
``(d) Assuring Access to a Choice of Qualified Prescription
Drug Coverage.--
``(1) Choice of at least two plans in each area.--
``(A) In general.--The Administrator shall assure that each
individual who is entitled to benefits under part A or
enrolled under part B and who is residing in an area in the
United States has available, consistent with subparagraph
(B), a choice of enrollment in at least two qualifying plans
(as defined in paragraph (5)) in the area in which the
individual resides, at least one of which is a prescription
drug plan.
``(B) Requirement for different plan sponsors.--The
requirement in subparagraph (A) is not satisfied with respect
to an area if only one PDP sponsor or one entity that offers
a MA-EFFS Rx plan offers all the qualifying plans in the
area.
``(2) Guaranteeing access to coverage.--In order to assure
access under paragraph (1) and consistent with paragraph (3),
the Administrator may provide partial underwriting of risk
for a PDP sponsor to expand the service area under an
existing prescription drug plan to adjoining or additional
areas or to establish such a plan (including offering such a
plan on a regional or nationwide basis), but only so long as
(and to the extent) necessary to assure the access guaranteed
under paragraph (1).
``(3) Limitation on authority.--In exercising authority
under this subsection, the Administrator--
``(A) shall not provide for the full underwriting of
financial risk for any PDP sponsor; and
``(B) shall seek to maximize the assumption of financial
risk by PDP sponsors or entities offering a MA-EFFS Rx plan.
``(4) Reports.--The Administrator shall, in each annual
report to Congress under section 1809(f), include information
on the exercise of authority under this subsection. The
Administrator also shall include such recommendations as may
be appropriate to minimize the exercise of such authority,
including minimizing the assumption of financial risk.
``(5) Qualifying plan defined.--For purposes of this
subsection, the term `qualifying plan' means a prescription
drug plan or a MA-EFFS Rx plan.
``SEC. 1860D-6. SUBMISSION OF BIDS AND PREMIUMS.
``(a) Submission of Bids, Premiums, and Related
Information.--
``(1) In general.--Each PDP sponsor shall submit to the
Administrator the information described in paragraph (2) in
the same manner as information is submitted by an
organization under section 1854(a)(1).
``(2) Information submitted.--The information described in
this paragraph is the following:
``(A) Coverage provided.--Information on the qualified
prescription drug coverage to be provided.
``(B) Actuarial value.--Information on the actuarial value
of the coverage.
``(C) Bid and premium.--Information on the bid and the
premium for the coverage, including an actuarial
certification of--
``(i) the actuarial basis for such bid and premium;
``(ii) the portion of such bid and premium attributable to
benefits in excess of standard coverage;
``(iii) the reduction in such bid resulting from the
reinsurance subsidy payments provided under section 1860D-
8(a)(2); and
``(iv) the reduction in such premium resulting from the
direct and reinsurance subsidy payments provided under
section 1860D-8.
``(D) Additional information.--Such other information as
the Administrator may require to carry out this part.
``(3) Review of information; negotiation and approval of
premiums.--
``(A) In general.--Subject to subparagraph (B), the
Administrator shall review the information filed under
paragraph (2) for the purpose of conducting negotiations
under section 1860D-4(b)(2) (relating to using OPM-like
authority under the FEHBP). The Administrator, using the
information provided (including the actuarial certification
under paragraph (2)(C)) shall approve the premium submitted
under this subsection only if the premium accurately reflects
both (i) the actuarial value of the benefits provided, and
(ii) the 73 percent average subsidy provided under section
1860D-8 for the standard benefit. The Administrator shall
apply actuarial principles to approval of a premium under
this part in a manner similar to the manner in which those
principles are applied in establishing the monthly part B
premium under section 1839.
``(B) Exception.--In the case of a plan described in
section 1851(a)(2)(C), the provisions of subparagraph (A)
shall not apply and the provisions of paragraph (5)(B) of
section 1854(a), prohibiting the review, approval, or
disapproval of amounts described in such paragraph, shall
apply to the negotiation and rejection of the monthly bid
amounts and proportion referred to in subparagraph (A).
``(b) Uniform Bid and Premium.--
``(1) In general.--The bid and premium for a prescription
drug plan under this section may not vary among enrollees in
the plan in the same service area.
``(2) Construction.--Nothing in paragraph (1) shall be
construed as preventing the imposition of a late enrollment
penalty under section 1860D-1(c)(2)(B).
``(c) Collection.--
``(1) Beneficiary's option of payment through withholding
from social security payment or use of electronic funds
transfer mechanism.--In accordance with regulations, a PDP
sponsor shall permit each enrollee, at the enrollee's option,
to make payment of premiums under this part to the sponsor
through withholding from benefit payments in the manner
provided under section 1840 with respect to monthly premiums
under section 1839 or through an electronic funds transfer
mechanism (such as automatic charges of an account at a
financial institution or a credit or debit card account) or
otherwise. All premium payments that are withheld under this
paragraph shall be
[[Page H6016]]
credited to the Medicare Prescription Drug Trust Fund and
shall be paid to the PDP sponsor involved.
``(2) Offsetting.--Reductions in premiums for coverage
under parts A and B as a result of a selection of a MA-EFFS
Rx plan may be used to reduce the premium otherwise imposed
under paragraph (1).
``(d) Acceptance of Reference Premium Amount as Full
Premium for Subsidized Low-Income Individuals if No Standard
(or Equivalent) Coverage in an Area.--
``(1) In general.--If there is no standard prescription
drug coverage (as defined in paragraph (2)) offered in an
area, in the case of an individual who is eligible for a
premium subsidy under section 1860D-7 and resides in the
area, the PDP sponsor of any prescription drug plan offered
in the area (and any entity offering a MA-EFFS Rx plan in the
area) shall accept the reference premium amount (under
paragraph (3)) as payment in full for the premium charge for
qualified prescription drug coverage.
``(2) Standard prescription drug coverage defined.--For
purposes of this subsection, the term `standard prescription
drug coverage' means qualified prescription drug coverage
that is standard coverage or that has an actuarial value
equivalent to the actuarial value for standard coverage.
``(3) Reference premium amount defined.--For purposes of
this subsection, the term `reference premium amount' means,
with respect to qualified prescription drug coverage offered
under--
``(A) a prescription drug plan that--
``(i) provides standard coverage (or alternative
prescription drug coverage the actuarial value is equivalent
to that of standard coverage), the plan's PDP premium; or
``(ii) provides alternative prescription drug coverage the
actuarial value of which is greater than that of standard
coverage, the plan's PDP premium multiplied by the ratio of
(I) the actuarial value of standard coverage, to (II) the
actuarial value of the alternative coverage;
``(B) an EFFS plan, the EFFS monthly prescription drug
beneficiary premium (as defined in section 1860E-4(a)(3)(B));
or
``(C) a Medicare Advantage, the Medicare Advantage monthly
prescription drug beneficiary premium (as defined in section
1854(b)(2)(B)).
For purposes of subparagraph (A), the term `PDP premium'
means, with respect to a prescription drug plan, the premium
amount for enrollment under the plan under this part
(determined without regard to any low-income subsidy under
section 1860D-7 or any late enrollment penalty under section
1860D-1(c)(2)(B)).
``SEC. 1860D-7. PREMIUM AND COST-SHARING SUBSIDIES FOR LOW-
INCOME INDIVIDUALS.
``(a) Income-Related Subsidies for Individuals With Income
Below 150 Percent of Federal Poverty Level.--
``(1) Full premium subsidy and reduction of cost-sharing
for individuals with income below 135 percent of federal
poverty level.--In the case of a subsidy eligible individual
(as defined in paragraph (4)) who is determined to have
income that does not exceed 135 percent of the Federal
poverty level, the individual is entitled under this
section--
``(A) to an income-related premium subsidy equal to 100
percent of the amount described in subsection (b)(1); and
``(B) subject to subsection (c), to the substitution for
the beneficiary cost-sharing described in paragraphs (1) and
(2) of section 1860D-2(b) (up to the initial coverage limit
specified in paragraph (3) of such section) of amounts that
do not exceed $2 for a multiple source or generic drug (as
described in section 1927(k)(7)(A)) and $5 for a non-
preferred drug.
``(2) Sliding scale premium subsidy for individuals with
income above 135, but below 150 percent, of federal poverty
level.--In the case of a subsidy eligible individual who is
determined to have income that exceeds 135 percent, but does
not exceed 150 percent, of the Federal poverty level, the
individual is entitled under this section to an income-
related premium subsidy determined on a linear sliding scale
ranging from 100 percent of the amount described in
subsection (b)(1) for individuals with incomes at 135 percent
of such level to 0 percent of such amount for individuals
with incomes at 150 percent of such level.
``(3) Construction.--Nothing in this section shall be
construed as preventing a PDP sponsor or entity offering a
MA-EFFS Rx plan from reducing to 0 the cost-sharing otherwise
applicable to generic drugs.
``(4) Determination of eligibility.--
``(A) Subsidy eligible individual defined.--For purposes of
this section, subject to subparagraph (D), the term `subsidy
eligible individual' means an individual who--
``(i) is eligible to elect, and has elected, to obtain
qualified prescription drug coverage under this part;
``(ii) has income below 150 percent of the Federal poverty
line; and
``(iii) meets the resources requirement described in
subparagraph (D).
``(B) Determinations.--The determination of whether an
individual residing in a State is a subsidy eligible
individual and the amount of such individual's income shall
be determined under the State medicaid plan for the State
under section 1935(a) or by the Social Security
Administration. In the case of a State that does not operate
such a medicaid plan (either under title XIX or under a
statewide waiver granted under section 1115), such
determination shall be made under arrangements made by the
Administrator. There are authorized to be appropriated to the
Social Security Administration such sums as may be necessary
for the determination of eligibility under this subparagraph.
``(C) Income determinations.--For purposes of applying this
section--
``(i) income shall be determined in the manner described in
section 1905(p)(1)(B); and
``(ii) the term `Federal poverty line' means the official
poverty line (as defined by the Office of Management and
Budget, and revised annually in accordance with section
673(2) of the Omnibus Budget Reconciliation Act of 1981)
applicable to a family of the size involved.
``(D) Resource standard applied to be based on three times
ssi resource standard.--The resource requirement of this
subparagraph is that an individual's resources (as determined
under section 1613 for purposes of the supplemental security
income program) do not exceed--
``(i) for 2006 three times the maximum amount of resources
that an individual may have and obtain benefits under that
program; and
``(ii) for a subsequent year the resource limitation
established under this clause for the previous year increased
by the annual percentage increase in the consumer price index
(all items; U.S. city average) as of September of such
previous year.
Any resource limitation established under clause (ii) that is
not a multiple of $10 shall be rounded to the nearest
multiple of $10.
``(E) Treatment of territorial residents.--In the case of
an individual who is not a resident of the 50 States or the
District of Columbia, the individual is not eligible to be a
subsidy eligible individual but may be eligible for financial
assistance with prescription drug expenses under section
1935(e).
``(F) Treatment of conforming medigap policies.--For
purposes of this section, the term `qualified prescription
drug coverage' includes a medicare supplemental policy
described in section 1860D-8(b)(4).
``(5) Indexing dollar amounts.--
``(A) For 2007.--The dollar amounts applied under
paragraphs (1)(B) for 2007 shall be the dollar amounts
specified in such paragraph increased by the annual
percentage increase described in section 1860D-2(b)(5) for
2007.
``(B) For subsequent years.--The dollar amounts applied
under paragraph (1)(B) for a year after 2007 shall be the
amounts (under this paragraph) applied under paragraph (1)(B)
for the preceding year increased by the annual percentage
increase described in section 1860D-2(b)(5) (relating to
growth in medicare prescription drug costs per beneficiary)
for the year involved.
``(b) Premium Subsidy Amount.--
``(1) In general.--The premium subsidy amount described in
this subsection for an individual residing in an area is the
benchmark premium amount (as defined in paragraph (2)) for
qualified prescription drug coverage offered by the
prescription drug plan or the MA-EFFS Rx plan in which the
individual is enrolled.
``(2) Benchmark premium amount defined.--For purposes of
this subsection, the term `benchmark premium amount' means,
with respect to qualified prescription drug coverage offered
under--
``(A) a prescription drug plan that--
``(i) provides standard coverage (or alternative
prescription drug coverage the actuarial value of which is
equivalent to that of standard coverage), the premium amount
for enrollment under the plan under this part (determined
without regard to any subsidy under this section or any late
enrollment penalty under section 1860D-1(c)(2)(B)); or
``(ii) provides alternative prescription drug coverage the
actuarial value of which is greater than that of standard
coverage, the premium amount described in clause (i)
multiplied by the ratio of (I) the actuarial value of
standard coverage, to (II) the actuarial value of the
alternative coverage; or
``(B) a MA-EFFS Rx plan, the portion of the premium amount
that is attributable to statutory drug benefits (described in
section 1853(a)(1)(A)(ii)(II)).
``(c) Rules in Applying Cost-Sharing Subsidies.--
``(1) In general.--In applying subsection (a)(1)(B),
nothing in this part shall be construed as preventing a plan
or provider from waiving or reducing the amount of cost-
sharing otherwise applicable.
``(2) Limitation on charges.--In the case of an individual
receiving cost-sharing subsidies under subsection (a)(1)(B),
the PDP sponsor or entity offering a MA-EFFS Rx plan may not
charge more than $5 per prescription.
``(3) Application of indexing rules.--The provisions of
subsection (a)(5) shall apply to the dollar amount specified
in paragraph (2) in the same manner as they apply to the
dollar amounts specified in subsections (a)(1)(B).
``(d) Administration of Subsidy Program.--The Administrator
shall provide a process whereby, in the case of an individual
who is determined to be a subsidy eligible individual and who
is enrolled in prescription drug plan or is enrolled in a MA-
EFFS Rx plan--
``(1) the Administrator provides for a notification of the
PDP sponsor or the entity offering the MA-EFFS Rx plan
involved that the individual is eligible for a subsidy and
the amount of the subsidy under subsection (a);
[[Page H6017]]
``(2) the sponsor or entity involved reduces the premiums
or cost-sharing otherwise imposed by the amount of the
applicable subsidy and submits to the Administrator
information on the amount of such reduction; and
``(3) the Administrator periodically and on a timely basis
reimburses the sponsor or entity for the amount of such
reductions.
The reimbursement under paragraph (3) with respect to cost-
sharing subsidies may be computed on a capitated basis,
taking into account the actuarial value of the subsidies and
with appropriate adjustments to reflect differences in the
risks actually involved.
``(e) Relation to Medicaid Program.--
``(1) In general.--For provisions providing for eligibility
determinations, and additional financing, under the medicaid
program, see section 1935.
``(2) Medicaid providing wrap around benefits.--The
coverage provided under this part is primary payor to
benefits for prescribed drugs provided under the medicaid
program under title XIX consistent with section 1935(d)(1).
``(3) Coordination.--The Administrator shall develop and
implement a plan for the coordination of prescription drug
benefits under this part with the benefits provided under the
medicaid program under title XIX, with particular attention
to insuring coordination of payments and prevention of fraud
and abuse. In developing and implementing such plan, the
Administrator shall involve the Secretary, the States, the
data processing industry, pharmacists, and pharmaceutical
manufacturers, and other experts.
``SEC. 1860D-8. SUBSIDIES FOR ALL MEDICARE BENEFICIARIES FOR
QUALIFIED PRESCRIPTION DRUG COVERAGE.
``(a) Subsidy Payment.--In order to reduce premium levels
applicable to qualified prescription drug coverage for all
medicare beneficiaries consistent with an overall subsidy
level of 73 percent, to reduce adverse selection among
prescription drug plans and MA-EFFS Rx plans, and to promote
the participation of PDP sponsors under this part, the
Administrator shall provide in accordance with this section
for payment to a qualifying entity (as defined in subsection
(b)) of the following subsidies:
``(1) Direct subsidy.--In the case of an enrollee enrolled
for a month in a prescription drug plan or a MA-EFFS Rx plan,
a direct subsidy equal to 43 percent of the national average
monthly bid amount (computed under subsection (g)) for that
month.
``(2) Subsidy through reinsurance.--In the case of an
enrollee enrolled for a month in a prescription drug plan or
a MA-EFFS Rx plan, the reinsurance payment amount (as defined
in subsection (c)), which in the aggregate is 30 percent of
the total payments made by qualifying entities for standard
coverage under the respective plan, for excess costs incurred
in providing qualified prescription drug coverage--
``(A) for enrollees with a prescription drug plan under
this part; and
``(B) for enrollees with a MA-EFFS Rx plan.
``(3) Employer and union flexibility.--In the case of an
individual who is a participant or beneficiary in a qualified
retiree prescription drug plan (as defined in subsection
(f)(1)) and who is not enrolled in a prescription drug plan
or in a MA-EFFS Rx plan, the special subsidy payments under
subsection (f)(3).
This section constitutes budget authority in advance of
appropriations Acts and represents the obligation of the
Administrator to provide for the payment of amounts provided
under this section.
``(b) Qualifying Entity Defined.--For purposes of this
section, the term `qualifying entity' means any of the
following that has entered into an agreement with the
Administrator to provide the Administrator with such
information as may be required to carry out this section:
``(1) A PDP sponsor offering a prescription drug plan under
this part.
``(2) An entity that offers a MA-EFFS Rx plan.
``(3) The sponsor of a qualified retiree prescription drug
plan (as defined in subsection (f)).
``(c) Reinsurance Payment Amount.--
``(1) In general.--Subject to subsection (d)(1)(B) and
paragraph (4), the reinsurance payment amount under this
subsection for a qualifying covered individual (as defined in
paragraph (5)) for a coverage year (as defined in subsection
(h)(2)) is equal to the sum of the following:
``(A) Reinsurance between initial reinsurance threshold and
the initial coverage limit.--For the portion of the
individual's gross covered prescription drug costs (as
defined in paragraph (3)) for the year that exceeds the
initial reinsurance threshold specified in paragraph (4), but
does not exceed the initial coverage limit specified in
section 1860D-2(b)(3), an amount equal to 20 percent of the
allowable costs (as defined in paragraph (2)) attributable to
such gross covered prescription drug costs.
``(B) Reinsurance above annual out-of-pocket threshold.--
For the portion of the individual's gross covered
prescription drug costs for the year that exceeds the annual
out-of-pocket threshold specified in 1860D-2(b)(4)(B), an
amount equal to 80 percent of the allowable costs
attributable to such gross covered prescription drug costs.
``(2) Allowable costs.--For purposes of this section, the
term `allowable costs' means, with respect to gross covered
prescription drug costs under a plan described in subsection
(b) offered by a qualifying entity, the part of such costs
that are actually paid (net of discounts, chargebacks, and
average percentage rebates) under the plan, but in no case
more than the part of such costs that would have been paid
under the plan if the prescription drug coverage under the
plan were standard coverage.
``(3) Gross covered prescription drug costs.--For purposes
of this section, the term `gross covered prescription drug
costs' means, with respect to an enrollee with a qualifying
entity under a plan described in subsection (b) during a
coverage year, the costs incurred under the plan (including
costs attributable to administrative costs) for covered
prescription drugs dispensed during the year, including costs
relating to the deductible, whether paid by the enrollee or
under the plan, regardless of whether the coverage under the
plan exceeds standard coverage and regardless of when the
payment for such drugs is made.
``(4) Initial reinsurance threshold.--The initial
reinsurance threshold specified in this paragraph--
``(A) for 2006, is equal to $1,000; or
``(B) for a subsequent year, is equal to the payment
threshold specified in this paragraph for the previous year,
increased by the annual percentage increase described in
section 1860D-2(b)(5) for the year involved.
Any amount determined under subparagraph (B) that is not a
multiple of $10 shall be rounded to the nearest multiple of
$10.
``(5) Qualifying covered individual defined.--For purposes
of this subsection, the term `qualifying covered individual'
means an individual who--
``(A) is enrolled with a prescription drug plan under this
part; or
``(B) is enrolled with a MA-EFFS Rx plan.
``(d) Adjustment of Payments.--
``(1) Adjustment of reinsurance payments to assure 30
percent level of subsidy through reinsurance.--
``(A) Estimation of payments.--The Administrator shall
estimate--
``(i) the total payments to be made (without regard to this
subsection) during a year under subsections (a)(2) and (c);
and
``(ii) the total payments to be made by qualifying entities
for standard coverage under plans described in subsection (b)
during the year.
``(B) Adjustment.--The Administrator shall proportionally
adjust the payments made under subsections (a)(2) and (c) for
a coverage year in such manner so that the total of the
payments made under such subsections for the year is equal to
30 percent of the total payments described in subparagraph
(A)(ii).
``(2) Risk adjustment for direct subsidies.--To the extent
the Administrator determines it appropriate to avoid risk
selection, the payments made for direct subsidies under
subsection (a)(1) are subject to adjustment based upon risk
factors specified by the Administrator. Any such risk
adjustment shall be designed in a manner as to not result in
a change in the aggregate payments made under such
subsection.
``(e) Payment Methods.--
``(1) In general.--Payments under this section shall be
based on such a method as the Administrator determines. The
Administrator may establish a payment method by which interim
payments of amounts under this section are made during a year
based on the Administrator's best estimate of amounts that
will be payable after obtaining all of the information.
``(2) Source of payments.--Payments under this section
shall be made from the Medicare Prescription Drug Trust Fund.
``(f) Rules Relating to Qualified Retiree Prescription Drug
Plan.--
``(1) Definition.--For purposes of this section, the term
`qualified retiree prescription drug plan' means employment-
based retiree health coverage (as defined in paragraph
(4)(A)) if, with respect to an individual who is a
participant or beneficiary under such coverage and is
eligible to be enrolled in a prescription drug plan or a MA-
EFFS Rx plan under this part, the following requirements are
met:
``(A) Actuarial equivalence to standard coverage.--The
Administrator determines (based on an actuarial analysis
approved by the Administrator) that coverage provides at
least the same actuarial value as standard coverage. Such
determination may be made on an annual basis.
``(B) Audits.--The sponsor (or the administrator, if
designated by the sponsor) and the plan shall maintain, and
afford the Administrator access to, such records as the
Administrator may require for purposes of audits and other
oversight activities necessary to ensure the adequacy of
prescription drug coverage and the accuracy of payments made.
``(C) Provision of certification of prescription drug
coverage.--The sponsor of the plan shall provide for issuance
of certifications of the type described in section 1860D-
1(c)(2)(D).
``(2) Limitation on benefit eligibility.--No payment shall
be provided under this section with respect to a participant
or beneficiary in a qualified retiree prescription drug plan
unless the individual is--
``(A) is covered under the plan; and
``(B) is eligible to obtain qualified prescription drug
coverage under section 1860D-1 but did not elect such
coverage under this part (either through a prescription drug
plan or through a MA-EFFS Rx plan).
[[Page H6018]]
``(3) Employer and union special subsidy amounts.--
``(A) In general.--For purposes of subsection (a), the
special subsidy payment amount under this paragraph for a
qualifying covered retiree(as defined in paragraph (6)) for a
coverage year (as defined in subsection (h)) enrolled in a
qualifying entity described in subsection (b)(3) under a
qualified retiree prescription drug plan is, for the portion
of the individual's gross covered prescription drug costs for
the year that exceeds the deductible amount specified in
subparagraph (B), an amount equal to, subject to subparagraph
(D), 28 percent of the allowable costs attributable to such
gross covered prescription drug costs, but only to the extent
such costs exceed the deductible under subparagraph (B) and
do not exceed the cost limit under such subparagraph in the
case of any such individual for the plan year.
``(B) Deductible and cost limit applicable.--Subject to
subparagraph (C)--
``(i) the deductible under this subparagraph is equal to
$250 for plan years that end in 2006; and
``(ii) the cost limit under this subparagraph is equal to
$5,000 for plan years that end in 2006.
``(C) Indexing.--The deductible and cost limit amounts
specified in subparagraphs (B) for a plan year that ends
after 2006 shall be adjusted in the same manner as the annual
deductible under section 1860D-2(b)(1) is annually adjusted
under such section.
``(4) Related definitions.--As used in this section:
``(A) Employment-based retiree health coverage.--The term
`employment-based retiree health coverage' means health
insurance or other coverage of health care costs for
individuals eligible to enroll in a prescription drug plan or
MA-EFFS Rx plan under this part (or for such individuals and
their spouses and dependents) under a group health plan
(including such a plan that is established or maintained
under or pursuant to one or more collective bargaining
agreements or that is offered under chapter 89 of title 5,
United States Code) based on their status as retired
participants in such plan.
``(B) Qualifying covered retiree.--The term `qualifying
covered retiree' means an individual who is eligible to
obtain qualified prescription drug coverage under section
1860D-1 but did not elect such coverage under this part
(either through a prescription drug plan or through a MA-EFFS
Rx plan) but is covered under a qualified retiree
prescription drug plan.
``(C) Sponsor.--The term `sponsor' means a plan sponsor, as
defined in section 3(16)(B) of the Employee Retirement Income
Security Act of 1974.
``(5) Construction.--Nothing in this subsection shall be
construed as--
``(A) precluding an individual who is covered under
employment-based retiree health coverage from enrolling in a
prescription drug plan or in a MA-EFFS plan;
``(B) precluding such employment-based retiree health
coverage or an employer or other person from paying all or
any portion of any premium required for coverage under such a
prescription drug plan or MA-EFFS plan on behalf of such an
individual; or
``(C) preventing such employment-based retiree health
coverage from providing coverage for retirees--
``(i) who are covered under a qualified retiree
prescription plan that is better than standard coverage; or
``(ii) who are not covered under a qualified retiree
prescription plan but who are enrolled in a prescription drug
plan or a MA-EFFS Rx plan, that is supplemental to the
benefits provided under such prescription drug plan or MA-
EFFS Rx plan, except that any such supplemental coverage (not
including payment of any premium referred to in subparagraph
(B)) shall be treated as primary coverage to which section
1862(b)(2)(A)(i) is deemed to apply.
``(g) Computation of National Average Monthly Bid Amount.--
``(1) In general.--For each year (beginning with 2006) the
Administrator shall compute a national average monthly bid
amount equal to the average of the benchmark bid amounts for
each prescription drug plan and for each MA-EFFS Rx plan (as
computed under paragraph (2), but excluding plans described
in section 1851(a)(2)(C))) adjusted under paragraph (4) to
take into account reinsurance payments.
``(2) Benchmark bid amount defined.--For purposes of this
subsection, the term `benchmark bid amount' means, with
respect to qualified prescription drug coverage offered
under--
``(A) a prescription drug plan that--
``(i) provides standard coverage (or alternative
prescription drug coverage the actuarial value of which is
equivalent to that of standard coverage), the PDP bid; or
``(ii) provides alternative prescription drug coverage the
actuarial value of which is greater than that of standard
coverage, the PDP bid multiplied by the ratio of (I) the
actuarial value of standard coverage, to (II) the actuarial
value of the alternative coverage; or
``(B) a MA-EFFS Rx plan, the portion of the bid amount that
is attributable to statutory drug benefits (described in
section 1853(a)(1)(A)(ii)(II)).
For purposes of subparagraph (A), the term `PDP bid' means,
with respect to a prescription drug plan, the bid amount for
enrollment under the plan under this part (determined without
regard to any low-income subsidy under section 1860D-7 or any
late enrollment penalty under section 1860D-1(c)(2)(B)).
``(3) Weighted average.--
``(A) In general.--The monthly national average monthly bid
amount computed under paragraph (1) shall be a weighted
average, with the weight for each plan being equal to the
average number of beneficiaries enrolled under such plan in
the previous year.
``(B) Special rule for 2006.--For purposes of applying this
subsection for 2006, the Administrator shall establish
procedures for determining the weighted average under
subparagraph (A) for 2005.
``(4) Adjustment to add back in value of reinsurance
subsidies.--The adjustment under this paragraph, to take into
account reinsurance payments under subsection (c) making up
30 percent of total payments, is such an adjustment as will
make the national average monthly bid amount represent
represent 100 percent, instead of representing 70 percent, of
average payments under this part.
``(h) Coverage Year Defined.--For purposes of this section,
the term `coverage year' means a calendar year in which
covered outpatient drugs are dispensed if a claim for payment
is made under the plan for such drugs, regardless of when the
claim is paid.
``SEC. 1860D-9. MEDICARE PRESCRIPTION DRUG TRUST FUND.
``(a) In General.--There is created on the books of the
Treasury of the United States a trust fund to be known as the
`Medicare Prescription Drug Trust Fund' (in this section
referred to as the `Trust Fund'). The Trust Fund shall
consist of such gifts and bequests as may be made as provided
in section 201(i)(1), and such amounts as may be deposited
in, or appropriated to, such fund as provided in this part.
Except as otherwise provided in this section, the provisions
of subsections (b) through (i) of section 1841 shall apply to
the Trust Fund in the same manner as they apply to the
Federal Supplementary Medical Insurance Trust Fund under such
section.
``(b) Payments From Trust Fund.--
``(1) In general.--The Managing Trustee shall pay from time
to time from the Trust Fund such amounts as the Administrator
certifies are necessary to make--
``(A) payments under section 1860D-7 (relating to low-
income subsidy payments);
``(B) payments under section 1860D-8 (relating to subsidy
payments); and
``(C) payments with respect to administrative expenses
under this part in accordance with section 201(g).
``(2) Transfers to medicaid account for increased
administrative costs.--The Managing Trustee shall transfer
from time to time from the Trust Fund to the Grants to States
for Medicaid account amounts the Administrator certifies are
attributable to increases in payment resulting from the
application of a higher Federal matching percentage under
section 1935(b).
``(c) Deposits Into Trust Fund.--
``(1) Low-income transfer.--There is hereby transferred to
the Trust Fund, from amounts appropriated for Grants to
States for Medicaid, amounts equivalent to the aggregate
amount of the reductions in payments under section 1903(a)(1)
attributable to the application of section 1935(c).
``(2) Appropriations to cover government contributions.--
There are authorized to be appropriated from time to time,
out of any moneys in the Treasury not otherwise appropriated,
to the Trust Fund, an amount equivalent to the amount of
payments made from the Trust Fund under subsection (b),
reduced by the amount transferred to the Trust Fund under
paragraph (1).
``(d) Relation to Solvency Requirements.--Any provision of
law that relates to the solvency of the Trust Fund under this
part shall take into account the Trust Fund and amounts
receivable by, or payable from, the Trust Fund.
``SEC. 1860D-10. DEFINITIONS; APPLICATION TO MEDICARE
ADVANTAGE AND EFFS PROGRAMS; TREATMENT OF
REFERENCES TO PROVISIONS IN PART C.
``(a) Definitions.--For purposes of this part:
``(1) Covered outpatient drugs.--The term `covered
outpatient drugs' is defined in section 1860D-2(f).
``(2) Initial coverage limit.--The term `initial coverage
limit' means such limit as established under section 1860D-
2(b)(3), or, in the case of coverage that is not standard
coverage, the comparable limit (if any) established under the
coverage.
``(3) Medicare prescription drug trust fund.--The term
`Medicare Prescription Drug Trust Fund' means the Trust Fund
created under section 1860D-9(a).
``(4) PDP sponsor.--The term `PDP sponsor' means an entity
that is certified under this part as meeting the requirements
and standards of this part for such a sponsor.
``(5) Prescription drug plan.--The term `prescription drug
plan' means health benefits coverage that--
``(A) is offered under a policy, contract, or plan by a PDP
sponsor pursuant to, and in accordance with, a contract
between the Administrator and the sponsor under section
1860D-4(b);
``(B) provides qualified prescription drug coverage; and
``(C) meets the applicable requirements of the section
1860D-3 for a prescription drug plan.
[[Page H6019]]
``(6) Qualified prescription drug coverage.--The term
`qualified prescription drug coverage' is defined in section
1860D-2(a).
``(7) Standard coverage.--The term `standard coverage' is
defined in section 1860D-2(b).
``(8) Insurance risk.--The term `insurance risk' means,
with respect to a participating pharmacy, risk of the type
commonly assumed only by insurers licensed by a State and
does not include payment variations designed to reflect
performance-based measures of activities within the control
of the pharmacy, such as formulary compliance and generic
drug substitution.
``(b) Offer of Qualified Prescription Drug Coverage Under
Medicare Advantage and EFFS Programs.--
``(1) As part of medicare advantage plan.--Medicare
Advantage organizations are required to offer Medicare
Advantage plans that include qualified prescription drug
coverage under part C pursuant to section 1851(j).
``(2) As part of effs plan.--EFFS organizations are
required to offer EFFS plans that include qualified
prescription drug coverage under part E pursuant to section
1860E-2(d).
``(c) Application of Part C Provisions Under this Part.--
For purposes of applying provisions of part C under this part
with respect to a prescription drug plan and a PDP sponsor,
unless otherwise provided in this part such provisions shall
be applied as if--
``(1) any reference to a Medicare Advantage or other plan
included a reference to a prescription drug plan;
``(2) any reference to a provider-sponsored organization
included a reference to a PDP sponsor;
``(3) any reference to a contract under section 1857
included a reference to a contract under section 1860D-4(b);
and
``(4) any reference to part C included a reference to this
part.
``(d) Report on Pharmacy Services Provided to Long-Term
Care Facility Patients.--
``(1) Review.--Within 6 months after the date of the
enactment of this section, the Secretary shall review the
current standards of practice for pharmacy services provided
to patients in nursing facilities and other long-term care
facilities.
``(2) Evaluations and recommendations.--Specifically in the
review under paragraph (1), the Secretary shall--
``(A) assess the current standards of practice, clinical
services, and other service requirements generally utilized
for pharmacy services in the long-term care setting;
``(B) evaluate the impact of those standards with respect
to patient safety, reduction of medication errors and quality
of care; and
``(C) recommend (in the Secretary's report under paragraph
(3)) necessary actions and appropriate reimbursement to
ensure the provision of prescription drugs to medicare
beneficiaries residing in nursing facilities and other long-
term care facilities in a manner consistent with existing
patient safety and quality of care standards under applicable
State and Federal laws.
``(3) Report.--The Secretary shall submit a report to the
Congress on the Secretary's findings and recommendations
under this subsection, including a detailed description of
the Secretary's plans to implement this part in a manner
consistent with applicable State and Federal laws designed to
protect the safety and quality of care of patients of nursing
facilities and other long-term care facilities.''.
(b) Additional Conforming Changes.--
(1) Conforming references to previous part d.--Any
reference in law (in effect before the date of the enactment
of this Act) to part D 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) Conforming amendment permitting waiver of cost-
sharing.--Section 1128B(b)(3) (42 U.S.C. 1320a-7b(b)(3)) is
amended--
(A) by striking ``and'' at the end of subparagraph (E);
(B) by striking the period at the end of subparagraph (F)
and inserting ``; and''; and
(C) by adding at the end the following new subparagraph:
``(G) the waiver or reduction of any cost-sharing imposed
under part D of title XVIII.''.
(3) Submission of legislative proposal.--Not later than 6
months after the date of the enactment of this Act, the
Secretary of Health and Human Services shall submit to the
appropriate committees of Congress a legislative proposal
providing for such technical and conforming amendments in the
law as are required by the provisions of this subtitle.
(c) Study on Transitioning Part B Prescription Drug
Coverage.--Not later than January 1, 2005, the Medicare
Benefits Administrator shall submit a report to Congress that
makes recommendations regarding methods for providing
benefits under part D of title XVIII of the Social Security
Act for outpatient prescription drugs for which benefits are
provided under part B of such title.
SEC. 102. OFFERING OF QUALIFIED PRESCRIPTION DRUG COVERAGE
UNDER MEDICARE ADVANTAGE AND ENHANCED FEE-FOR-
SERVICE (EFFS) PROGRAM.
(a) Medicare Advantage.--Section 1851 (42 U.S.C. 1395w-21)
is amended by adding at the end the following new subsection:
``(j) Availability of Prescription Drug Benefits and
Subsidies.--
``(1) Offering of qualified prescription drug coverage.--A
Medicare Advantage organization on and after January 1,
2006--
``(A) may not offer a Medicare Advantage plan described in
section 1851(a)(2)(A) in an area unless either that plan (or
another Medicare Advantage plan offered by the organization
in that area) includes qualified prescription drug coverage;
and
``(B) may not offer the prescription drug coverage (other
than that required under parts A and B) to an enrollee under
a Medicare Advantage plan, unless such drug coverage is at
least qualified prescription drug coverage and unless the
requirements of this subsection with respect to such coverage
are met.
``(2) Requirement for election of part d coverage to obtain
qualified prescription drug coverage.--For purposes of this
part, an individual who has not elected qualified
prescription drug coverage under section 1860D-1(b) shall be
treated as being ineligible to enroll in a Medicare Advantage
plan under this part that offers such coverage.
``(3) Compliance with certain additional beneficiary
protections for prescription drug coverage.--With respect to
the offering of qualified prescription drug coverage by a
Medicare Advantage organization under this part on and after
January 1, 2006, the organization and plan shall meet the
requirements of subsections (a) through (d) of section 1860D-
3 in the same manner as they apply to a PDP sponsor and a
prescription drug plan under part D and shall submit to the
Administrator the information described in section 1860D-
6(a)(2). The Administrator shall waive such requirements to
the extent the Administrator determines that such
requirements duplicate requirements otherwise applicable to
the organization or plan under this part.
``(4) Availability of premium and cost-sharing subsidies.--
In the case of low-income individuals who are enrolled in a
Medicare Advantage plan that provides qualified prescription
drug coverage, premium and cost-sharing subsidies are
provided for such coverage under section 1860D-7.
``(5) Availability of direct and reinsurance subsidies to
reduce bids and premiums.--Medicare Advantage organizations
are provided direct and reinsurance subsidy payments for
providing qualified prescription drug coverage under this
part under section 1860D-8.
``(6) Consolidation of drug and non-drug premiums.--In the
case of a Medicare Advantage plan that includes qualified
prescription drug coverage, with respect to an enrollee in
such plan there shall be a single premium for both drug and
non-drug coverage provided under the plan.
``(7) Transition in initial enrollment period.--
Notwithstanding any other provision of this part, the annual,
coordinated election period under subsection (e)(3)(B) for
2006 shall be the 6-month period beginning with November
2005.
``(8) Qualified prescription drug coverage; standard
coverage.--For purposes of this part, the terms `qualified
prescription drug coverage' and `standard coverage' have the
meanings given such terms in section 1860D-2.
``(9) Special rules for private fee-for-service plans.--
With respect to a Medicare Advantage plan described in
section 1851(a)(2)(C) that offers qualified prescription drug
coverage--
``(A) Requirements regarding negotiated prices.--
Subsections (a)(1) and (d)(1) of section 1860D-2 shall not be
construed to require the plan to negotiate prices or
discounts but shall apply to the extent the plan does so.
``(B) Modification of pharmacy participation requirement.--
If the plan provides access, without charging additional
copayments, to all pharmacies without regard to whether they
are participating pharmacies in a network, section 1860D-
3(c)(1)(A)(iii) shall not apply to the plan.
``(C) Drug utilization management program not required.--
The requirements of section 1860D-3(d)(1)(A) shall not apply
to the plan.
``(D) Non-participating pharmacy disclosure exception.--If
the plan provides coverage for drugs purchased from all
pharmacies, without entering into contracts or agreements
with pharmacies to provide drugs to enrollees covered by the
plan, section 1860D-3(d)(5) shall not apply to the plan.''.
(b) Application to EFFS Plans.--Subsection (d) of section
1860E-2, as added by section 201(a), is amended to read as
follows:
``(d) Availability of Prescription Drug Benefits and
Subsidies.--
``(1) Offering of qualified prescription drug coverage.--An
EFFS organization--
``(A) may not offer an EFFS plan in an area unless either
that plan (or another EFFS plan offered by the organization
in that area) includes qualified prescription drug coverage;
and
``(B) may not offer the prescription drug coverage (other
than that required under parts A and B) to an enrollee under
an EFFS plan, unless such drug coverage is at least qualified
prescription drug coverage and unless the requirements of
this subsection with respect to such coverage are met.
``(2) Requirement for election of part d coverage to obtain
qualified prescription drug coverage.--For purposes of this
part, an individual who has not elected qualified
prescription drug coverage under section 1860D-1(b) shall be
treated as being ineligible
[[Page H6020]]
to enroll in an EFFS plan under this part that offers such
coverage.
``(3) Compliance with certain additional beneficiary
protections for prescription drug coverage.--With respect to
the offering of qualified prescription drug coverage by an
EFFS organization under this part, the organization and plan
shall meet the requirements of subsections (a) through (d) of
section 1860D-3 in the same manner as they apply to a PDP
sponsor and a prescription drug plan under part D and shall
submit to the Administrator the information described in
section 1860D-6(a)(2). The Administrator shall waive such
requirements to the extent the Administrator determines that
such requirements duplicate requirements otherwise applicable
to the organization or plan under this part.
``(4) Availability of premium and cost-sharing subsidies.--
In the case of low-income individuals who are enrolled in an
EFFS plan that provides qualified prescription drug coverage,
premium and cost-sharing subsidies are provided for such
coverage under section 1860D-7.
``(5) Availability of direct and reinsurance subsidies to
reduce bids and premiums.--EFFS organizations are provided
direct and reinsurance subsidy payments for providing
qualified prescription drug coverage under this part under
section 1860D-8.
``(6) Consolidation of drug and non-drug premiums.--In the
case of an EFFS plan that includes qualified prescription
drug coverage, with respect to an enrollee in such plan there
shall be a single premium for both drug and non-drug coverage
provided under the plan.
``(7) Qualified prescription drug coverage; standard
coverage.--For purposes of this part, the terms `qualified
prescription drug coverage' and `standard coverage' have the
meanings given such terms in section 1860D-2.''.
(c) Conforming Amendments.--Section 1851 (42 U.S.C. 1395w-
21) is amended--
(1) in subsection (a)(1)--
(A) by inserting ``(other than qualified prescription drug
benefits)'' after ``benefits'';
(B) by striking the period at the end of subparagraph (B)
and inserting a comma; and
(C) by adding after and below subparagraph (B) the
following:
``and may elect qualified prescription drug coverage in
accordance with section 1860D-1.''; and
(2) in subsection (g)(1), by inserting ``and section 1860D-
1(c)(2)(B)'' after ``in this subsection''.
(d) Effective Date.--The amendments made by this section
apply to coverage provided on or after January 1, 2006.
SEC. 103. MEDICAID AMENDMENTS.
(a) Determinations of Eligibility for Low-Income
Subsidies.--
(1) Requirement.--Section 1902(a) (42 U.S.C. 1396a(a)) is
amended--
(A) by striking ``and'' at the end of paragraph (64);
(B) by striking the period at the end of paragraph (65) and
inserting ``; and''; and
(C) by inserting after paragraph (65) the following new
paragraph:
``(66) provide for making eligibility determinations under
section 1935(a).''.
(2) New section.--Title XIX is further amended--
(A) by redesignating section 1935 as section 1936; and
(B) by inserting after section 1934 the following new
section:
``special provisions relating to medicare prescription drug benefit
``Sec. 1935. (a) Requirement for Making Eligibility
Determinations for Low-Income Subsidies.--As a condition of
its State plan under this title under section 1902(a)(66) and
receipt of any Federal financial assistance under section
1903(a), a State shall--
``(1) make determinations of eligibility for premium and
cost-sharing subsidies under (and in accordance with) section
1860D-7;
``(2) inform the Administrator of the Medicare Benefits
Administration of such determinations in cases in which such
eligibility is established; and
``(3) otherwise provide such Administrator with such
information as may be required to carry out part D of title
XVIII (including section 1860D-7).
``(b) Payments for Additional Administrative Costs.--
``(1) In general.--The amounts expended by a State in
carrying out subsection (a) are, subject to paragraph (2),
expenditures reimbursable under the appropriate paragraph of
section 1903(a); except that, notwithstanding any other
provision of such section, the applicable Federal matching
rates with respect to such expenditures under such section
shall be increased as follows (but in no case shall the rate
as so increased exceed 100 percent):
``(A) For expenditures attributable to costs incurred
during 2005, the otherwise applicable Federal matching rate
shall be increased by 6-\2/3\ percent of the percentage
otherwise payable (but for this subsection) by the State.
``(B)(i) For expenditures attributable to costs incurred
during 2006 and each subsequent year through 2018, the
otherwise applicable Federal matching rate shall be increased
by the applicable percent (as defined in clause (ii)) of the
percentage otherwise payable (but for this subsection) by the
State.
``(ii) For purposes of clause (i), the `applicable percent'
for--
``(I) 2006 is 13-\1/3\ percent; or
``(II) a subsequent year is the applicable percent under
this clause for the previous year increased by 6-\2/3\
percentage points.
``(C) For expenditures attributable to costs incurred after
2018, the otherwise applicable Federal matching rate shall be
increased to 100 percent.
``(2) Coordination.--The State shall provide the
Administrator with such information as may be necessary to
properly allocate administrative expenditures described in
paragraph (1) that may otherwise be made for similar
eligibility determinations.''.
(b) Phased-In Federal Assumption of Medicaid Responsibility
for Premium and Cost-Sharing Subsidies for Dually Eligible
Individuals.--
(1) In general.--Section 1903(a)(1) (42 U.S.C. 1396b(a)(1))
is amended by inserting before the semicolon the following:
``, reduced by the amount computed under section 1935(c)(1)
for the State and the quarter''.
(2) Amount described.--Section 1935, as inserted by
subsection (a)(2), is amended by adding at the end the
following new subsection:
``(c) Federal Assumption of Medicaid Prescription Drug
Costs for Dually-Eligible Beneficiaries.--
``(1) In general.--For purposes of section 1903(a)(1), for
a State that is one of the 50 States or the District of
Columbia for a calendar quarter in a year (beginning with
2005) the amount computed under this subsection is equal to
the product of the following:
``(A) Medicare subsidies.--The total amount of payments
made in the quarter under section 1860D-7 (relating to
premium and cost-sharing prescription drug subsidies for low-
income medicare beneficiaries) that are attributable to
individuals who are residents of the State and are entitled
to benefits with respect to prescribed drugs under the State
plan under this title (including such a plan operating under
a waiver under section 1115).
``(B) State matching rate.--A proportion computed by
subtracting from 100 percent the Federal medical assistance
percentage (as defined in section 1905(b)) applicable to the
State and the quarter.
``(C) Phase-out proportion.--The phase-out proportion (as
defined in paragraph (2)) for the quarter.
``(2) Phase-out proportion.--For purposes of paragraph
(1)(C), the `phase-out proportion' for a calendar quarter
in--
``(A) 2006 is 93\1/3\ percent;
``(B) a subsequent year before 2021, is the phase-out
proportion for calendar quarters in the previous year
decreased by 6-\2/3\ percentage points; or
``(C) a year after 2020 is 0 percent.''.
(c) Medicaid Providing Wrap-Around Benefits.--Section 1935,
as so inserted and amended, is further amended by adding at
the end the following new subsection:
``(d) Additional Provisions.--
``(1) Medicaid as secondary payor.--In the case of an
individual who is entitled to qualified prescription drug
coverage under a prescription drug plan under part D of title
XVIII (or under a MA-EFFS Rx plan under part C or E of such
title) and medical assistance for prescribed drugs under this
title, medical assistance shall continue to be provided under
this title (other than for copayment amounts specified in
section 1860D-7(a)(1)(B), notwithstanding section 1916) for
prescribed drugs to the extent payment is not made under the
prescription drug plan or MA-EFFS Rx plan selected by the
individual.
``(2) Condition.--A State may require, as a condition for
the receipt of medical assistance under this title with
respect to prescription drug benefits for an individual
eligible to obtain qualified prescription drug coverage
described in paragraph (1), that the individual elect
qualified prescription drug coverage under section 1860D-
1.''.
(d) Treatment of Territories.--
(1) In general.--Section 1935, as so inserted and amended,
is further amended--
(A) in subsection (a) in the matter preceding paragraph
(1), by inserting ``subject to subsection (e)'' after
``section 1903(a)'';
(B) in subsection (c)(1), by inserting ``subject to
subsection (e)'' after ``1903(a)(1)''; and
(C) by adding at the end the following new subsection:
``(e) Treatment of Territories.--
``(1) In general.--In the case of a State, other than the
50 States and the District of Columbia--
``(A) the previous provisions of this section shall not
apply to residents of such State; and
``(B) if the State establishes a plan described in
paragraph (2) (for providing medical assistance with respect
to the provision of prescription drugs to medicare
beneficiaries), the amount otherwise determined under section
1108(f) (as increased under section 1108(g)) for the State
shall be increased by the amount specified in paragraph (3).
``(2) Plan.--The plan described in this paragraph is a plan
that--
``(A) provides medical assistance with respect to the
provision of covered outpatient drugs (as defined in section
1860D-2(f)) to low-income medicare beneficiaries; and
``(B) assures that additional amounts received by the State
that are attributable to the operation of this subsection are
used only for such assistance.
``(3) Increased amount.--
``(A) In general.--The amount specified in this paragraph
for a State for a year is equal to the product of--
``(i) the aggregate amount specified in subparagraph (B);
and
[[Page H6021]]
``(ii) the amount specified in section 1108(g)(1) for that
State, divided by the sum of the amounts specified in such
section for all such States.
``(B) Aggregate amount.--The aggregate amount specified in
this subparagraph for--
``(i) 2006, is equal to $25,000,000; or
``(ii) a subsequent year, is equal to the aggregate amount
specified in this subparagraph for the previous year
increased by annual percentage increase specified in section
1860D-2(b)(5) for the year involved.
``(4) Report.--The Administrator shall submit to Congress a
report on the application of this subsection and may include
in the report such recommendations as the Administrator deems
appropriate.''.
(2) Conforming amendment.--Section 1108(f) (42 U.S.C.
1308(f)) is amended by inserting ``and section
1935(e)(1)(B)'' after ``Subject to subsection (g)''.
(e) Amendment to Best Price.--Section 1927(c)(1)(C)(i) (42
U.S.C. 1396r-8(c)(1)(C)(i)) is amended--
(1) by striking ``and'' at the end of subclause (III);
(2) by striking the period at the end of subclause (IV) and
inserting ``; and''; and
(3) by adding at the end the following new subclause:
``(V) any prices charged which are negotiated by a
prescription drug plan under part D of title XVIII, by a MA-
EFFS Rx plan under part C or E of such title with respect to
covered outpatient drugs, or by a qualified retiree
prescription drug plan (as defined in section 1860D-8(f)(1))
with respect to such drugs on behalf of individuals entitled
to benefits under part A or enrolled under part B of such
title.''.
SEC. 104. MEDIGAP TRANSITION.
(a) In General.--Section 1882 (42 U.S.C. 1395ss) is amended
by adding at the end the following new subsection:
``(v) Coverage of Prescription Drugs.--
``(1) In general.--Notwithstanding any other provision of
law, except as provided in paragraph (3) no new medicare
supplemental policy that provides coverage of expenses for
prescription drugs may be issued under this section on or
after January 1, 2006, to an individual unless it replaces a
medicare supplemental policy that was issued to that
individual and that provided some coverage of expenses for
prescription drugs. Nothing in this subsection shall be
construed as preventing the policy holder of a medicare
supplemental policy issued before January 1, 2006, from
continuing to receive benefits under such policy on and after
such date.
``(2) Issuance of substitute policies for beneficiaries
enrolled with a plan under part d.--
``(A) In general.--The issuer of a medicare supplemental
policy--
``(i) may not deny or condition the issuance or
effectiveness of a medicare supplemental policy that has a
benefit package classified as `A', `B', `C', `D', `E', `F',
or `G' (under the standards established under subsection
(p)(2)) and that is offered and is available for issuance to
new enrollees by such issuer;
``(ii) may not discriminate in the pricing of such policy,
because of health status, claims experience, receipt of
health care, or medical condition; and
``(iii) may not impose an exclusion of benefits based on a
pre-existing condition under such policy,
in the case of an individual described in subparagraph (B)
who seeks to enroll under the policy not later than 63 days
after the date of the termination of enrollment described in
such paragraph and who submits evidence of the date of
termination or disenrollment along with the application for
such medicare supplemental policy.
``(B) Individual covered.--An individual described in this
subparagraph is an individual who--
``(i) enrolls in a prescription drug plan under part D; and
``(ii) at the time of such enrollment was enrolled and
terminates enrollment in a medicare supplemental policy which
has a benefit package classified as `H', `I', or `J' under
the standards referred to in subparagraph (A)(i) or
terminates enrollment in a policy to which such standards do
not apply but which provides benefits for prescription drugs.
``(C) Enforcement.--The provisions of paragraph (4) of
subsection (s) shall apply with respect to the requirements
of this paragraph in the same manner as they apply to the
requirements of such subsection.
``(3) New standards.--In applying subsection (p)(1)(E)
(including permitting the NAIC to revise its model
regulations in response to changes in law) with respect to
the change in benefits resulting from title I of the Medicare
Prescription Drug and Modernization Act of 2003, with respect
to policies issued to individuals who are enrolled in a plan
under part D, the changes in standards shall only provide for
substituting (for the benefit packages described in paragraph
(2)(B)(ii) that included coverage for prescription drugs) two
benefit packages that may provide for coverage of cost-
sharing (other than the prescription drug deductible) with
respect to qualified prescription drug coverage under such
part. The two benefit packages shall be consistent with the
following:
``(A) First new policy.--The policy described in this
subparagraph has the following benefits, notwithstanding any
other provision of this section relating to a core benefit
package:
``(i) Coverage of 50 percent of the cost-sharing otherwise
applicable under parts A and B, except coverage of 100
percent of any cost-sharing otherwise applicable for
preventive benefits.
``(ii) No coverage of the part B deductible.
``(iii) Coverage for all hospital coinsurance for long
stays (as in the current core benefit package).
``(iv) A limitation on annual out-of-pocket expenditures
under parts A and B to $4,000 in 2005 (or, in a subsequent
year, to such limitation for the previous year increased by
an appropriate inflation adjustment specified by the
Secretary).
``(B) Second new policy.--The policy described in this
subparagraph has the same benefits as the policy described in
subparagraph (A), except as follows:
``(i) Substitute `75 percent' for `50 percent' in clause
(i) of such subparagraph.
``(ii) Substitute `$2,000' for `$4,000' in clause (iv) of
such subparagraph.
``(4) Construction.--Any provision in this section or in a
medicare supplemental policy relating to guaranteed
renewability of coverage shall be deemed to have been met
through the offering of other coverage under this
subsection.''.
(b) NAIC Report to Congress on Medigap Modernization.--The
Secretary shall request the National Association of Insurance
Commissioners to submit to Congress, not later than 18 months
after the date of the enactment of this Act, a report that
includes recommendations on the modernization of coverage
under the medigap program under section 1882 of the Social
Security Act (42 U.S.C. 1395ss).
SEC. 105. MEDICARE PRESCRIPTION DRUG DISCOUNT CARD AND
ASSISTANCE PROGRAM.
(a) In General.--Title XVIII is amended by inserting after
section 1806 the following new sections:
``medicare prescription drug discount card endorsement and assistance
program
``Sec. 1807. (a) Establishment of Program.--
``(1) In general.--The Secretary shall establish a
program--
``(A) to endorse prescription drug discount card programs
(each such program referred to as an `endorsed program') that
meet the requirements of this section in order to provide
access to prescription drug discounts through eligible
entities for medicare beneficiaries throughout the United
States; and
``(B) to provide for prescription drug accounts and public
contributions into such accounts.
The Secretary shall make available to medicare beneficiaries
information regarding endorsed programs and accounts under
this section.
``(2) Limited period of operation.--The Secretary shall
begin--
``(A) the card endorsement part of the program under
paragraph (1)(A) as soon as possible, but in no case later
than 90 days after the date of the enactment of this section;
and
``(B) the prescription drug account part of the program
under paragraph (1)(B) as soon as possible, but in no case
later than September 2004.
``(3) Transition.--The program under this section shall
continue through 2005 throughout the United States. The
Secretary shall provide for an appropriate transition and
termination of such program on January 1, 2006.
``(4) Voluntary nature of program.--Nothing in this section
shall be construed as requiring an eligible beneficiary to
enroll in the program under this section.
``(b) Eligible Beneficiary; Eligible Entity; Prescription
Drug Account.--For purposes of this section:
``(1) Eligible beneficiary.--The term `eligible
beneficiary' means an individual who is eligible for benefits
under part A or enrolled under part B and who is not enrolled
in a Medicare Advantage plan that offers qualified
prescription drug coverage.
``(2) Eligible entity.--The term `eligible entity' means
any entity that the Secretary determines to be appropriate to
provide the benefits under this section, including--
``(A) pharmaceutical benefit management companies;
``(B) wholesale and retail pharmacy delivery systems;
``(C) insurers;
``(D) Medicare Advantage organizations;
``(E) other entities; or
``(F) any combination of the entities described in
subparagraphs (A) through (E).
``(3) Prescription drug account.--The term `prescription
drug account' means, with respect to an eligible beneficiary,
an account established for the benefit of that beneficiary
under section 1807A.
``(c) Enrollment in Endorsed Plan.--
``(1) Establishment of process.--
``(A) In general.--The Secretary shall establish a process
through which an eligible beneficiary may make an election to
enroll under this section with an endorsed program.
``(B) Requirement of enrollment.--An eligible beneficiary
must enroll under this section for a year in order to be
eligible to receive the benefits under this section for that
year.
``(C) Limitation on enrollment.--
``(i) In general.--Except as provided under this
subparagraph and under such exceptional circumstances as the
Secretary may provide, an eligible individual shall have the
opportunity to enroll under this section during an initial,
general enrollment period as soon as possible after the date
of the enactment of this section and annually thereafter.
[[Page H6022]]
The Secretary shall specify the form, manner, and timing of
such election but shall permit the exercise of such election
at the time the individual is eligible to enroll. The annual
open enrollment periods shall be coordinated with those
provided under the Medicare Advantage program under part C.
``(ii) Reelection after termination of enrollment in a
medicare advantage plan.--In the case of an individual who is
enrolled under this section and who subsequently enrolls in a
Medicare Advantage plan that provides qualified prescription
drug coverage under part C, the individual shall be given the
opportunity to reenroll under this section at the time the
individual discontinues the enrollment under such part.
``(iii) Late enrollment.--The Secretary shall permit
individuals to elect to enroll under this section at times
other than as permitted under the previous provisions of this
paragraph.
``(D) Termination of enrollment.--An enrollee under this
section shall be disenrolled--
``(i) upon enrollment in a Medicare Advantage plan under
part C that provides qualified prescription drug coverage;
``(ii) upon failure to pay the applicable enrollment fee
under subsection (f);
``(iii) upon termination of coverage under part A or part
B; or
``(iv) upon notice submitted to the Secretary in such form,
manner, and time as the Secretary shall provide.
Terminations of enrollment under this subparagraph shall be
effective as specified by the Secretary in regulations.
``(2) Enrollment periods.--
``(A) In general.--Except as provided under 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) Open enrollment period 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 section and shall end not
earlier than 3 months later, during which any eligible
beneficiary may enroll under this section.
``(C) Special enrollment period in case of termination of
coverage under a group health plan.--The Secretary shall
provide for a special enrollment period under this section in
the same manner as is provided under section 1837(i) with
respect to part B, except that for purposes of this
subparagraph any reference to `by reason of the individual's
(or the individual's spouse's) current employment status'
shall be treated as being deleted.
``(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 section shall be
effective for the period provided under section 1838, as if
that section applied to the program under this section.
``(B) Enrollment during open and special enrollment.--
Subject to subparagraph (C), an eligible beneficiary who
enrolls under the program under this section under
subparagraph (B) or (C) of paragraph (2) shall be entitled to
the benefits under this section beginning on the first day of
the month following the month in which such enrollment
occurs.
``(d) Selection of an Eligible Entity for Access to
Negotiated Prices.--
``(1) Process.--
``(A) In general.--The Secretary shall establish a process
through which an eligible beneficiary who is enrolled under
this section shall select any eligible entity, that has been
awarded a contract under this section and serves the State in
which the beneficiary resides, to provide access to
negotiated prices under subsection (i).
``(B) Rules.--In establishing the process under
subparagraph (A), the Secretary shall use rules similar to
the rules for enrollment and disenrollment with a Medicare
Advantage plan under section 1851 (including the special
election periods under subsection (e)(4) of such section),
including that--
``(i) an individual may not select more than one eligible
entity at any time; and
``(ii) an individual shall only be permitted (except for
unusual circumstances) to change the selection of the entity
once a year.
In carrying out clause (ii), the Secretary may consider a
change in residential setting (such as placement in a nursing
facility) to be an unusual circumstance.
``(C) Default selection.--In establishing such process, the
Secretary shall provide an equitable method for selecting an
eligible entity for individuals who enroll under this section
and fail to make such a selection.
``(2) Competition.--Eligible entities with a contract under
this section shall compete for beneficiaries on the basis of
discounts, formularies, pharmacy networks, and other services
provided for under the contract.
``(e) Providing Enrollment, Selection, and Coverage
Information to Beneficiaries.--
``(1) Activities.--The Secretary shall provide for
activities under this section to broadly disseminate
information to eligible beneficiaries (and prospective
eligible beneficiaries) regarding enrollment under this
section, the selection of eligible entities, and the
prescription drug coverage made available by eligible
entities with a contract under this section.
``(2) Special rule for first enrollment under the
program.--To the extent practicable, the activities described
in paragraph (1) shall ensure that eligible beneficiaries are
provided with such information at least 60 days prior to the
first enrollment period described in subsection (c).
``(f) Enrollment Fee.--
``(1) Amount.--Except as provided in paragraph (3),
enrollment under the program under this section is
conditioned upon payment of an annual enrollment fee of $30.
Such fee for 2004 shall include any portion of 2003 in which
the program is implemented under this section.
``(2) Collection of enrollment fee.--The annual enrollment
fee 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,
except that it shall be collected only 1 time per year.
``(3) Payment of enrollment fee by state for certain
beneficiaries.--
``(A) In general.--The Secretary shall establish an
arrangement under which a State may provide for payment of
some or all of the enrollment fee for some or all low income
enrollees in the State, as specified by the State under the
arrangement. Insofar as such a payment arrangement is made
with respect to an enrollee, the amount of the enrollment fee
shall be paid directly by the State and shall not be
collected under paragraph (2). In carrying out this
paragraph, the Secretary may apply procedures similar to that
applied under state agreements under section 1843.
``(B) No federal matching available under medicaid or
schip.--Expenditures made by a State described in
subparagraph (A) shall not be treated as State expenditures
for purposes of Federal matching payments under titles XIX
and XXI insofar as such expenditures are for an enrollment
fee under this subsection.
``(4) Distribution of portion of enrollment fee.--Of the
enrollment fee collected by the Secretary under this
subsection with respect to a beneficiary, \2/3\ of that fee
shall be made available to the eligible entity selected by
the eligible beneficiary.
``(g) Issuance of Card and Coordination.--Each eligible
entity shall--
``(1) issue, in a uniform standard format specified by the
Secretary, to each enrolled beneficiary a card and an
enrollment number that establishes proof of enrollment and
that can be used in a coordinated manner--
``(A) to identify the eligible entity selected to provide
access to negotiated prices under subsection (i); and
``(B) to make deposits to and withdrawals from a
prescription drug account under section 1807A; and
``(2) provide for electronic methods to coordinate with the
accounts established under section 1807A.
``(h) Enrollee Protections.--
``(1) Guaranteed issue and nondiscrimination.--
``(A) Guaranteed issue.--
``(i) In general.--An eligible beneficiary who is eligible
to select an eligible entity under subsection (b) for
prescription drug coverage under this section at a time
during which selections are accepted under this section with
respect to the coverage shall not be denied selection based
on any health status-related factor (described in section
2702(a)(1) of the Public Health Service Act) or any other
factor and may not be charged any selection or other fee as a
condition of such acceptance.
``(ii) Medicare advantage 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 selection of eligible entities under
this paragraph.
``(B) Nondiscrimination.--An eligible entity offering
prescription drug coverage under this section shall not
establish a service area in a manner that would discriminate
based on health or economic status of potential enrollees.
``(C) Coverage of all portions of a state.--If an eligible
entity with a contract under this section serves any part of
a State it shall serve the entire State.
``(2) Dissemination of information.--
``(A) General information.--An eligible entity with a
contract under this section shall disclose, in a clear,
accurate, and standardized form to each eligible beneficiary
who has selected the entity to provide access to negotiated
prices under this section at the time of selection and at
least annually thereafter, the information described in
section 1852(c)(1) relating to such prescription drug
coverage. Such information includes the following (in a
manner designed to permit and promote competition among
eligible entities):
``(i) Summary information regarding negotiated prices
(including discounts) for covered outpatient drugs.
``(ii) Access to such prices through pharmacy networks.
``(iii) How any formulary used by the eligible entity
functions.
``(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 section 1852(c)(2) (other than
subparagraph (D)) to such beneficiary.
[[Page H6023]]
``(C) Response to beneficiary questions.--Each eligible
entity offering prescription drug coverage under this section
shall have a mechanism (including a toll-free telephone
number) for providing upon request specific information (such
as negotiated prices, including discounts) to individuals who
have selected the entity. The entity shall make available,
through an Internet website and in writing upon request,
information on specific changes in its formulary.
``(D) Coordination with prescription drug account
benefits.--Each such eligible entity shall provide for
coordination of such information as the Secretary may specify
to carry out section 1807A.
``(3) Access to covered benefits.--
``(A) Ensuring pharmacy access.--The provisions of
subsection (c)(1) of section 1860D-3 (other than payment
provisions under section 1860D-8 with respect to sponsors
under such subsection) shall apply to an eligible entity
under this section in the same manner as they apply to a PDP
sponsor under such section.
``(B) Access to negotiated prices for prescription drugs.--
For requirements relating to the access of an eligible
beneficiary to negotiated prices (including applicable
discounts), see subsection (i).
``(C) Requirements on development and application of
formularies.--Insofar as an eligible entity with a contract
under this part uses a formulary, the entity shall comply
with the requirements of section 1860D-3(c)(3), insofar as
the Secretary determines that such requirements can be
implemented on a timely basis.
``(4) Cost and utilization management; quality assurance;
medication therapy management program.--
``(A) In general.--For purposes of providing access to
negotiated benefits under subsection (i), the eligible entity
shall have in place the programs and measure described in
section 1860D-3(d), including an effective cost and drug
utilization management program, quality assurance measures
and systems, and a program to control fraud, abuse, and
waste, insofar as the Secretary determines that such
provisions can be implemented on a timely basis.
``(B) Treatment of accreditation.--Section 1852(e)(4)
(relating to treatment of accreditation) shall apply to the
requirements for an endorsed program under this section with
respect to the following requirements, in the same manner as
they apply to Medicare Advantage plans under part C with
respect to the requirements described in a clause of section
1852(e)(4)(B):
``(i) Paragraph (3)(A) (relating to access to covered
benefits).
``(ii) Paragraph (7) (relating to confidentiality and
accuracy of enrollee records).
``(5) Grievance mechanism.--Each eligible entity shall
provide meaningful procedures for hearing and resolving
grievances between the organization consistent with the
requirements of section 1860D-3(e) insofar as they relate to
PDP sponsors of prescription drug plans.
``(6) Beneficiary services.--An eligible entity shall
provide for its enrollees pharmaceutical support services,
such as education and counseling, and services to prevent
adverse drug interactions.
``(7) Coverage determinations and reconsiderations.--An
eligible entity shall meet the requirements of paragraphs (1)
through (3) of section 1852(g) with respect to covered
benefits under the prescription drug coverage it offers under
this section in the same manner as such requirements apply to
a Medicare Advantage organization with respect to benefits it
offers under a Medicare Advantage plan under part C.
``(8) Confidentiality and accuracy of enrollee records.--An
eligible entity shall meet the requirements of section
1852(h) with respect to enrollees under this section in the
same manner as such requirements apply to a Medicare
Advantage organization with respect to enrollees under part
C. The eligible entity shall implement policies and
procedures to safeguard the use and disclosure of enrollees'
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. The eligible
entity shall be treated as a covered entity for purposes of
the provisions of subpart E of part 164 of title 45, Code of
Federal Regulations, adopted pursuant to the authority of the
Secretary under section 264(c) of the Health Insurance
Portability and Accountability Act of 1996 (42 U.S. C. 1320d-
2 note).
``(9) Periodic reports and oversight.--The eligible entity
shall submit to the Secretary periodic reports on
performance, utilization, finances, and such other matters as
the Secretary may specify. The Secretary shall provide
appropriate oversight to ensure compliance of eligible
entities with the requirements of this subsection, including
verification of the discounts and services provided.
``(10) Additional beneficiary protections.--The eligible
entity meets such additional requirements as the Secretary
identifies to protect and promote the interest of enrollees,
including requirements that ensure that enrollees are not
charged more than the lower of the negotiated retail price or
the usual and customary price.
``(i) Benefits Under the Program Through Savings to
Enrollees Through Negotiated Prices.--
``(1) In general.--Subject to paragraph (2), each eligible
entity with a contract under this section shall provide each
eligible beneficiary enrolled with the entity with access to
negotiated prices (including applicable discounts). For
purposes of this paragraph, the term `prescription drugs' is
not limited to covered outpatient drugs, but does not include
any over-the-counter drug that is not a covered outpatient
drug. The prices negotiated by an eligible entity under this
paragraph 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).
``(2) Formulary restrictions.--Insofar as an eligible
entity with a contract under this part uses a formulary, the
negotiated prices (including applicable discounts) for
prescription drugs shall only be available for drugs included
in such formulary.
``(3) Prohibition on application only to mail order.--The
negotiated prices under this subsection shall apply to
prescription drugs that are available other than solely
through mail order.
``(4) Prohibition on charges for required services.--An
eligible entity (and any pharmacy contracting with such
entity for the provision of a discount under this section)
may not charge a beneficiary any amount for any services
required to be provided by the entity under this section.
``(5) Disclosure.--The eligible entity offering the
endorsed program shall disclose to the Secretary (in a manner
specified by the Secretary) the extent to which discounts or
rebates or other remuneration or price concessions made
available to the entity by a manufacturer are passed through
to enrollees through pharmacies and other dispensers or
otherwise. The provisions of section 1927(b)(3)(D) shall
apply to information disclosed to the Secretary under this
paragraph in the same manner as such provisions apply to
information disclosed under such section.
``(6) Public disclosure of pharmaceutical prices for
equivalent drugs.--Each eligible entity shall provide that
each pharmacy or other dispenser that arranges for the
dispensing of a covered outpatient drug in connection with
its endorsed program shall inform the enrollee in that
program 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 available generic
drug covered under the program that is therapeutically
equivalent and bioequivalent.
``(j) Contribution Into Prescription Drug Account.--
``(1) In general.--In the case of an individual enrolled
under this section, the Secretary shall--
``(A) establish a prescription drug account for the
individual under section 1807A; and
``(B) subject to paragraph (5), deposit into such account
on a monthly or other periodic basis an amount that, on an
annual basis, is equivalent to the annual Federal
contribution amount specified in paragraph (2) for the
enrollee involved.
``(2) Annual federal contribution amount.--Subject to
paragraph (3), in the case of an accountholder whose income
is--
``(A) not more than 135 percent of the poverty line, the
annual Federal contribution amount for a year is $800;
``(B) more than 135 percent, but not more than 150 percent,
of the poverty line, the annual Federal contribution amount
for a year is $500; or
``(C) more than 150 percent of the poverty line, the annual
Federal contribution amount for a year is $100.
``(3) Income eligibility determinations.--The determination
of whether an individual residing in a State is a eligible
for a contribution under paragraph (1) shall be determined
under the State medicaid plan for the State under section
1935(a) or by the Social Security Administration. In the case
of a State that does not operate such a medicaid plan (either
under title XIX or under a statewide waiver granted under
section 1115), such determination shall be made under
arrangements made by the Secretary. There are authorized to
be appropriated to the Social Security Administration such
sums as may be necessary for the determination of eligibility
under this paragraph.
``(4) Partial year.--Insofar as the provisions of this
subsection and section 1807A are not implemented for all
months in 2004, the annual contribution amount under this
subsection for 2004 shall be prorated to reflect the portion
of that year in which such provisions are in effect.
``(5) Restriction on contributions.--There shall only be an
annual Federal contribution under paragraph (1) for an
individual if the individual is not eligible for coverage of,
or assistance for, outpatient prescription drugs under any of
the following:
``(A) A medicaid plan under title XIX (including under any
waiver approved under section 1115).
``(B) Enrollment under a group health plan or health
insurance coverage.
``(C) Enrollment under a medicare supplemental insurance
policy.
``(D) Chapter 55 of title 10, United States Code (relating
to medical and dental care for members of the uniformed
services).
``(E) Chapter 17 of title 38, United States Code (relating
to Veterans' medical care).
``(F) Enrollment under a plan under chapter 89 of title 5,
United States Code (relating to the Federal employees' health
benefits program).
``(G) The Indian Health Care Improvement Act (25 U.S.C.
1601 et seq.).
[[Page H6024]]
``(6) Appropriation to cover net program expenditures.--
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 section exceed the sum of the portion
of the enrollment fees retained by the Secretary.
``(k) Definitions.--In this part and section 1807A:
``(1) Covered outpatient drug.--
``(A) In general.--Except as provided in this paragraph,
for purposes of this section, the term `covered outpatient
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 medical
supplies associated with the injection of insulin (as defined
in regulations of the Secretary),
and such term includes a vaccine licensed under section 351
of the Public Health Service Act and any use of a covered
outpatient 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
outpatient drug under this section 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 outpatient drug under this section shall not be so
considered under an endorsed program if the eligible entity
offering the program excludes the drug under a formulary and
a review of such exclusion is not successfully resolved under
subsection (h)(5).
``(D) Application of general exclusion provisions.--An
eligible entity offering an endorsed program may exclude from
qualified prescription drug coverage any covered outpatient
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
program or this section.
Such exclusions are determinations subject to review pursuant
to subsection (h)(5).
``(2) 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.
``(l) Authorization of Appropriations.--There are
authorized to be appropriated such sums as may be necessary
to carry out this section and section 1807A.
``(e) Interim, Final Regulatory Authority.--In order to
carry out this section and section 1807A in a timely manner,
the Secretary may promulgate regulations that take effect on
an interim basis, after notice and pending opportunity for
public comment.
``prescription drug accounts
``Sec. 1807A. ``(a) Establishment of Accounts.--
``(1) In general.--The Secretary shall establish and
maintain for each eligible beneficiary who is enrolled under
section 1807 at the time of enrollment a prescription drug
account (in this section and section 1807 referred to as an
`account').
``(2) Reserve accounts.--In cases described in subsections
(b)(3)(A), (b)(3)(B)(i), and (b)(3)(B)(ii)(I), the Secretary
shall establish and maintain for each surviving spouse who is
not enrolled under section 1807 a reserve prescription drug
account (in this section referred to as an `reserve
account').
``(3) Accountholder defined.--In this section and section
1807A, the term `accountholder' means an individual for whom
an account or reserve account has been established under this
section.
``(4) Expenditures from account.--Nothing in this section
shall be construed as requiring the Federal Government to
obligate funds for amounts in any account until such time as
a withdrawal from such account is authorized under this
section.
``(b) Use of Accounts.--
``(1) Application of account.--Except as provided in this
subsection, amounts credited to an account shall only be used
for the purchase of covered outpatient drugs for the
accountholder. Any amounts remaining at the end of a year
remain available for expenditures in succeeding years.
``(2) Account rules for public and private contributions.--
The Secretary shall establish a ongoing process for the
determination of the amount in each account that is
attributable to public and private contributions (including
spousal rollover contributions) based on the following rules:
``(A) Treatment of expenditures.--Expenditures from the
account shall--
``(i) first be counted against any public contribution; and
``(ii) next be counted against private contributions.
``(B) Treatment of spousal rollover contributions.--With
respect to any spousal rollover contribution, the portions of
such contribution that were attributable to public and
private contributions at the time of its distribution under
subsection (b)(3) shall be treated under this paragraph as if
it were a direct public or private contribution,
respectively, into the account of the spouse.
``(3) Death of accountholder.--In the case of the death of
an accountholder, the balance in any account (taking into
account liabilities accrued before the time of death) shall
be distributed as follows:
``(A) Treatment of public contributions.--If the
accountholder is married at the time of death, the amount in
the account that is attributable to public contributions
shall be credited to the account (if any) of the surviving
spouse of the accountholder (or, if the surviving spouse is
not an eligible beneficiary, into a reserve account to be
held for when that spouse becomes an eligible beneficiary).
``(B) Treatment of private contributions.--The amount in
the account that is attributable to private contributions
shall be distributed as follows:
``(i) Designation of distributee.--If the accountholder has
made a designation, in a form and manner specified by the
Secretary, for the distribution of some or all of such
amount, such amount shall be distributed in accordance with
the designation. Such designation may provide for the
distribution into an account (including a reserve account) of
a surviving spouse.
``(ii) Absence of designation.--Insofar as the
accountholder has not made such a designation--
``(I) Surviving spouse.--If the accountholder was married
at the time of death, the remainder shall be credited to an
account (including a reserve account) of the accountholder's
surviving spouse.
``(II) No surviving spouse.--If the accountholder was not
so married, the remainder shall be distributed to the estate
of the accountholder and distributed as provided by law.
``(4) Use of account for premiums for enrollment in a
medicare advantage plan.--During any period in which an
accountholder is enrolled in a Medicare Advantage plan under
part C, the balance in the account may be used and applied
only to reimburse the amount of the premium (if any)
established for enrollment under the plan.
``(5) Application to medicaid expenses in certain cases.--
``(A) In general.--Except as provided in this paragraph, an
account shall be treated as an asset for purposes of
establishing eligibility for medical assistance under title
XIX.
``(B) Application towards spenddown.--In the case of an
accountholder who is applying for such medical assistance and
who would, but for the application of subparagraph (A), be
eligible for such assistance--
``(i) subparagraph (A) shall not apply; and
``(ii) the account shall be available (in accordance with a
procedure established by the Secretary) to the State to
reimburse the State for any expenditures made under the plan
for such medical assistance.
``(c) Amounts Credited in Account.--The Secretary shall
credit to a prescription drug account of an eligible
beneficiary the following amounts:
``(1) Public contributions.--The following contributions
(each referred to in this section as a `public
contribution'):
``(A) Federal contributions.--Federal contributions
provided under subsection (d).
``(B) State contributions.--Contributions made by a State
under subsection (f).
``(2) Spousal rollover contribution.--A distribution from a
deceased spouse under subsection (b)(3) (referred to in this
section as a `spousal rollover contribution').
``(3) Private contributions.--The following contributions
(each referred to in this section as a `private
contribution'):
``(A) Employer and individual contributions.--Contributions
made under subsection (e).
``(B) Other individual contributions.--Contributions made
by accountholder other than under subsection (e).
``(C) Contributions by nonprofit organizations.--
Contributions made by a charitable, not-for-profit
organization (that may be a religious organization).
Except as provided in this subsection, no amounts may be
contributed to, or credited to, a prescription drug account.
``(d) Federal Contribution.--For Federal contributions in
the case of accountholders, see section 1807(j).
``(e) Employer and Individual Contributions.--
``(1) Employment-related contribution.--
``(A) In general.--In the case of any accountholder who is
a beneficiary or participant in a group health plan
(including a multi-employer plan), whether as an employee,
former employee or otherwise, including as a dependent of an
employee or former employee, the plan may make a contribution
into the accountholder's account (but not into a reserve
account of the accountholder).
``(B) Limitation.--The total amount that may be contributed
under subparagraph (A) under a plan to an account during any
year may not exceed $5,000.
``(C) Condition.--A group health plan may condition a
contribution with respect to an
[[Page H6025]]
accountholder under this paragraph on the accountholder's
enrollment under section 1807 with an eligible entity that is
recognized or approved by that plan.
``(2) Other individuals.--
``(A) In general.--Any individual may also contribute to
the account of that individual or the account of any other
individual under this subsection.
``(B) Limitation.--The total amount that may be contributed
to an account under subparagraph (A) during any year may not
exceed $5,000, regardless of who makes such contribution.
``(3) No contribution permitted to reserve account.--No
contribution may be made under this subsection to a reserve
account.
``(4) Form and manner of contribution.--The Secretary shall
specify the form and manner of contributions under this
subsection.
``(f) State Contributions.--
``(1) In general.--A State may enter into arrangements with
the Secretary for the crediting of amounts for
accountholders.
``(2) Form and manner of contribution.--The Secretary shall
specify the form and manner of contributions under this
subsection.
``(3) Medicaid treatment.--Amounts credited under this
subsection shall not be treated as medical assistance for
purposes of title XIX or child health assistance for purposes
of title XXI for individuals who are not qualifying low
income enrollees.''.
(b) Exclusion of Costs from Determination of Part B Monthly
Premium.--Section 1839(g) (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 Outpatient Prescription Drug
Discount and Security Program under sections 1807 and
1807A.''.
(c) State Eligibility Determinations.--Section 1935, as
added by section 103(a)(2), is amended--
(1) in subsection (a)(1), by inserting ``and of eligibility
for an annual Federal contribution amount under section
1807A(j)(2)'' before the semicolon; and
(2) in subsection (a)(3), by inserting ``and sections 1807
and 1807A'' after ``1860D-7)''.
(d) Report on Progress in Implementation of Prescription
Drug Benefit.--Not later than March 1, 2005, the
Administrator shall submit a report to Congress on the
progress that has been made in implementing the prescription
drug benefit under this title. The Administrator shall
include in the report specific steps that have been taken,
and that need to be taken, to ensure a timely start of the
program on January 1, 2006.
SEC. 106. DISCLOSURE OF RETURN INFORMATION FOR PURPOSES OF
CARRYING OUT MEDICARE CATASTROPHIC PRESCRIPTION
DRUG PROGRAM.
(a) Disclosure.--
(1) In general.--Subsection (l) of section 6103 of the
Internal Revenue Code of 1986 (relating to disclosure of
returns and return information for purposes other than tax
administration) is amended by adding at the end the following
new paragraph:
``(19) Disclosure of return information for purposes of
carrying out medicare catastrophic prescription drug
program.--
``(A) In general.--The Secretary may, upon written request
from the Secretary of Health and Human Services under section
1860D-2(b)(4)(E)(i) of the Social Security Act, disclose to
officers and employees of the Department of Health and Human
Services with respect to a specified taxpayer for the taxable
year specified by the Secretary of Health and Human Services
in such request--
``(i) the taxpayer identity information with respect to
such taxpayer, and
``(ii) the adjusted gross income of such taxpayer for the
taxable year (or, if less, the income threshold limit
specified in section 1860D-2(b)(4)(D)(ii) for the calendar
year specified by such Secretary in such request).
``(B) Specified taxpayer.--For purposes of this paragraph,
the term `specified taxpayer' means any taxpayer who--
``(i) is identified by the Secretary of Health and Human
Services in the request referred to in subparagraph (A), and
``(ii) either--
``(I) has an adjusted gross income for the taxable year
referred to in subparagraph (A) in excess of the income
threshold specified in section 1860D-2(b)(4)(D)(ii) of such
Act for the calendar year referred to in such subparagraph,
or
``(II) is identified by such Secretary under subparagraph
(A) as being an individual who elected to use more recent
information under section 1860D-2(b)(4)(D)(v) of such Act.
``(C) Joint returns.--In the case of a joint return, the
Secretary shall, for purposes of applying this paragraph,
treat each spouse as a separate taxpayer having an adjusted
gross income equal to one-half of the adjusted gross income
determined with respect to such return.
``(D) Restriction on use of disclosed information.--Return
information disclosed under subparagraph (A) may be used by
officers and employees of the Department of Health and Human
Services only for the purpose of administering the
prescription drug benefit under title XVIII of the Social
Security Act. Such officers and employees may disclose the
annual out-of-pocket threshold which applies to an individual
under such part to the entity that offers the plan referred
to in section 1860D-2(b)(4)(E)(ii) of such Act in which such
individual is enrolled. Such sponsor may use such information
only for purposes of administering such benefit.''.
(2) Joint return permitted in case of surviving spouses.--
Under section 6103(a)(3) of the Internal Revenue Code of
1986, a surviving spouse may file a joint return for the
taxable year in which one spouse dies.
(b) Confidentiality.--Paragraph (3) of section 6103(a) of
such Code is amended by striking ``or (16)'' and inserting
``(16), or (19)''.
(c) Procedures and Recordkeeping Related to Disclosures.--
Subsection (p)(4) of section 6103 of such Code is amended by
striking ``any other person described in subsection (l)(16)
or (17)'' each place it appears and inserting ``any other
person described in subsection (l)(16), (17), or (19)''.
(d) Unauthorized Disclosure.--Paragraph (2) of section
7213(a) of such Code is amended by striking ``or (16)'' and
inserting ``(16), or (19)''.
(e) Unauthorized Inspection.--Subparagraph (B) of section
7213A(a)(1) of such Code is amended by inserting ``or (19)''
after ``subsection (l)(18)''.
SEC. 107. STATE PHARMACEUTICAL ASSISTANCE TRANSITION
COMMISSION.
(a) Establishment.--
(1) In general.--There is established, as of the first day
of the third month beginning after the date of the enactment
of this Act, a State Pharmaceutical Assistance Transition
Commission (in this section referred to as the
``Commission'') to develop a proposal for addressing the
unique transitional issues facing State pharmaceutical
assistance programs, and program participants, due to the
implementation of the medicare prescription drug program
under part D of title XVIII of the Social Security Act.
(2) Definitions.--For purposes of this section:
(A) State pharmaceutical assistance program defined.--The
term ``State pharmaceutical assistance program'' means a
program (other than the medicaid program) operated by a State
(or under contract with a State) that provides as of the date
of the enactment of this Act assistance to low-income
medicare beneficiaries for the purchase of prescription
drugs.
(B) Program participant.--The term ``program participant''
means a low-income medicare beneficiary who is a participant
in a State pharmaceutical assistance program.
(b) Composition.--The Commission shall include the
following:
(1) A representative of each governor of each State that
the Secretary identifies as operating on a statewide basis a
State pharmaceutical assistance program that provides for
eligibility and benefits that are comparable or more generous
than the low-income assistance eligibility and benefits
offered under part D of title XVIII of the Social Security
Act.
(2) Representatives from other States that the Secretary
identifies have in operation other State pharmaceutical
assistance programs, as appointed by the Secretary.
(3) Representatives of organizations that have an inherent
interest in program participants or the program itself, as
appointed by the Secretary but not to exceed the number of
representatives under paragraphs (1) and (2).
(4) Representatives of Medicare Advantage organizations and
other private health insurance plans, as appointed by the
Secretary.
(5) The Secretary (or the Secretary's designee) and such
other members as the Secretary may specify
The Secretary shall designate a member to serve as chair of
the Commission and the Commission shall meet at the call of
the chair.
(c) Development of Proposal.--The Commission shall develop
the proposal described in subsection (a) in a manner
consistent with the following principles:
(1) Protection of the interests of program participants in
a manner that is the least disruptive to such participants
and that includes a single point of contact for enrollment
and processing of benefits.
(2) Protection of the financial and flexibility interests
of States so that States are not financially worse off as a
result of the enactment of this title.
(3) Principles of medicare modernization provided under
title II of this Act.
(d) Report.--By not later than January 1, 2005, the
Commission shall submit to the President and the Congress a
report that contains a detailed proposal (including specific
legislative or administrative recommendations, if any) and
such other recommendations as the Commission deems
appropriate.
(e) Support.--The Secretary shall provide the Commission
with the administrative support services necessary for the
Commission to carry out its responsibilities under this
section.
(f) Termination.--The Commission shall terminate 30 days
after the date of submission of the report under subsection
(d).
SEC. 108. ADDITIONAL REQUIREMENTS FOR ANNUAL FINANCIAL REPORT
AND OVERSIGHT ON MEDICARE PROGRAM, INCLUDING
PRESCRIPTION DRUG SPENDING.
(a) In General.--Section 1817 (42 U.S.C. 1395i) is amended
by adding at the end the following new subsection:
[[Page H6026]]
``(l) Combined Report on Operation and Status of the Trust
Fund, the Federal Supplementary Medical Insurance Trust Fund,
and Medicare Prescription Drug Trust Fund.--
``(1) In general.--In addition to the duty of the Board of
Trustees to report to Congress under subsection (b), on the
date the Board submits the report required under subsection
(b)(2), the Board shall submit to Congress a report on the
operation and status of the Trust Fund, the Federal
Supplementary Medical Insurance Trust Fund established under
section 1841, and the Medicare Prescription Drug Trust Fund
under section 1860D-9(a) (in this subsection collectively
referred to as the `Trust Funds'). Such report shall included
the following information:
``(A) Overall spending from the general fund of the
treasury.--A statement of total amounts obligated during the
preceding fiscal year from the General Revenues of the
Treasury to the Trust Funds for payment for benefits covered
under this title, stated in terms of the total amount and in
terms of the percentage such amount bears to all other
amounts obligated from such General Revenues during such
fiscal year.
``(B) Historical overview of spending.--From the date of
the inception of the program of insurance under this title
through the fiscal year involved, a statement of the total
amounts referred to in subparagraph (A).
``(C) 10-year and 75-year projections.--An estimate of
total amounts referred to in subparagraph (A) required to be
obligated for payment for benefits covered under this title
for each of the 10 fiscal years succeeding the fiscal year
involved and for the 75-year period beginning with the
succeeding fiscal year.
``(D) Relation to gdp growth.--A comparison of the rate of
growth of the total amounts referred to in subparagraph (A)
to the rate of growth in the gross domestic product for the
same period.
``(2) Publication.--Each report submitted under paragraph
(1) shall be published jointly by the Committee on Ways and
Means and the Committee on Energy and Commerce as a public
document and shall be made available by such Committees on
the Internet.''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply with respect to fiscal years beginning on or
after the date of the enactment of this Act.
TITLE II--MEDICARE ENHANCED FEE-FOR-SERVICE AND MEDICARE ADVANTAGE
PROGRAMS; MEDICARE COMPETITION
SEC. 200. MEDICARE MODERNIZATION AND REVITALIZATION.
This title provides for--
(1) establishment of the medicare enhanced fee-for-service
(EFFS) program under which medicare beneficiaries are
provided access to a range of enhanced fee-for-service (EFFS)
plans that may use preferred provider networks to offer an
enhanced range of benefits;
(2) establishment of a Medicare Advantage program that
offers improved managed care plans with coordinated care; and
(3) competitive bidding, in the style of the Federal
Employees Health Benefits program (FEHBP), among enhanced
fee-for-service plans and Medicare Advantage plans in order
to promote greater efficiency and responsiveness to medicare
beneficiaries.
Subtitle A--Medicare Enhanced Fee-for-Service Program
SEC. 201. ESTABLISHMENT OF ENHANCED FEE-FOR-SERVICE (EFFS)
PROGRAM UNDER MEDICARE.
(a) In General.--Title XVIII, as amended by section 101(a),
is amended--
(1) by redesignating part E as part F; and
(2) by inserting after part D the following new part:
``Part E--Enhanced Fee-for-Service Program
``offering of enhanced fee-for-service plans throughout the united
states
``Sec. 1860E-1. (a) Establishment of Program.--
``(1) In general.--The Administrator shall establish under
this part beginning January 1, 2006, an enhanced fee-for-
service program under which enhanced fee-for-service plans
(as defined in subsection (b)) are offered to EFFS-eligible
individuals (as so defined) in EFFS regions throughout the
United States.
``(2) EFFS regions.--For purposes of this part the
Administrator shall establish EFFS regions throughout the
United States by dividing the entire United States into at
least 10 such regions. Before establishing such regions, the
Administrator shall conduct a market survey and analysis,
including an examination of current insurance markets, to
determine how the regions should be established. The regions
shall be established in a manner to take into consideration
maximizing full access for all EFFS-eligible individuals,
especially those residing in rural areas.
``(b) Definitions.--For purposes of this part:
``(1) EFFS organization.--The `EFFS organization' means an
entity that the Administrator certifies as meeting the
requirements and standards applicable to such organization
under this part.
``(2) Enhanced fee-for-service plan; effs plan.--The terms
`enhanced fee-for-service plan' and `EFFS plan' mean health
benefits coverage offered under a policy, contract, or plan
by an EFFS organization pursuant to and in accordance with a
contract pursuant to section 1860E-4(c), but only if the plan
provides either fee-for-service coverage described in the
following subparagraph (A) or preferred provider coverage
described in the following subparagraph (B):
``(A) Fee-for-service coverage.--The plan--
``(i) reimburses hospitals, physicians, and other providers
at a rate determined by the plan on a fee-for-service basis
without placing the provider at financial risk;
``(ii) does not vary such rates for such a provider based
on utilization relating to such provider; and
``(iii) does not restrict the selection of providers among
those who are lawfully authorized to provide the covered
services and agree to accept the terms and conditions of
payment established by the plan.
``(B) Preferred provider coverage.--The plan--
``(i) has a network of providers that have agreed to a
contractually specified reimbursement for covered benefits
with the organization offering the plan; and
``(ii) provides for reimbursement for all covered benefits
regardless of whether such benefits are provided within such
network of providers.
``(3) EFFS eligible individual.--The term `EFFS eligible
individual' means an eligible individual described in section
1851(a)(3).
``(4) EFFS region.--The term `EFFS region' means a region
established under subsection (a)(2).
``(c) Application of Certain Eligibility, Enrollment, etc.
Requirements.--The provisions of section 1851 (other than
subsection (h)(4)(A)) shall apply to EFFS plans offered by an
EFFS organization in an EFFS region, including subsection (g)
(relating to guaranteed issue and renewal).
``offering of enhanced fee-for-service (effs) plans
``Sec. 1860E-2. (a) Plan Requirements.--No EFFS plan may be
offered under this part in an EFFS region unless the
requirements of this part are met with respect to the plan
and EFFS organization offering the plan.
``(b) Available to All EFFS Beneficiaries in the Entire
Region.--With respect to an EFFS plan offered in an EFFS
region--
``(1) In general.--The plan must be offered to all EFFS-
eligible individuals residing in the region.
``(2) Assuring access to services.--The plan shall comply
with the requirements of section 1852(d)(4).
``(c) Benefits.--
``(1) In general.--Each EFFS plan shall provide to members
enrolled in the plan under this part benefits, through
providers and other persons that meet the applicable
requirements of this title and part A of title XI--
``(A) for the items and services described in section
1852(a)(1);
``(B) that are uniform for the plan for all EFFS eligible
individuals residing in the same EFFS region;
``(C) that include a single deductible applicable to
benefits under parts A and B and include a catastrophic limit
on out-of-pocket expenditures for such covered benefits; and
``(D) that include benefits for prescription drug coverage
for each enrollee who elects under part D to be provided
qualified prescription drug coverage through the plan.
``(2) Disapproval authority.--The Administrator shall not
approve a plan of an EFFS organization if the Administrator
determines (pursuant to the last sentence of section
1852(b)(1)(A)) that the benefits are designed to
substantially discourage enrollment by certain EFFS eligible
individuals with the organization.
``(d) Outpatient Prescription Drug Coverage.--For rules
concerning the offering of prescription drug coverage under
EFFS plans, see the amendment made by section 102(b) of the
Medicare Prescription Drug and Modernization Act of 2003.
``(e) Other Additional Provisions.--The provisions of
section 1852 (other than subsection (a)(1)) shall apply under
this part to EFFS plans. For the application of chronic care
improvement provisions, see the amendment made by section
722(b).
``submission of bids; beneficiary savings; payment of plans
``Sec. 1860E-3. (a) Submission of Bids.--
``(1) Requirement.--
``(A) EFFS monthly bid amount.--For each year (beginning
with 2006), an EFFS organization shall submit to the
Administrator an EFFS monthly bid amount for each EFFS plan
offered in each region. Each such bid is referred to in this
section as the `EFFS monthly bid amount'.
``(B) Form.--Such bid amounts shall be submitted for each
such plan and region in a form and manner and time specified
by the Administrator, and shall include information described
in paragraph (3)(A).
``(2) Uniform bid amounts.--Each EFFS monthly bid amount
submitted under paragraph (1) by an EFFS organization under
this part for an EFFS plan in an EFFS region may not vary
among EFFS eligible individuals residing in the EFFS region
involved.
``(3) Submission of bid amount information by effs
organizations.--
``(A) Information to be submitted.--The information
described in this subparagraph is as follows:
``(i) The EFFS monthly bid amount for provision of all
items and services under this
[[Page H6027]]
part, which amount shall be based on average costs for a
typical beneficiary residing in the region, and the actuarial
basis for determining such amount.
``(ii) The proportions of such bid amount that are
attributable to--
``(I) the provision of statutory non-drug benefits (such
portion referred to in this part as the `unadjusted EFFS
statutory non-drug monthly bid amount');
``(II) the provision of statutory prescription drug
benefits; and
``(III) the provision of non-statutory benefits;
and the actuarial basis for determining such proportions.
``(iii) Such additional information as the Administrator
may require to verify the actuarial bases described in
clauses (i) and (ii).
``(B) Statutory benefits defined.--For purposes of this
part:
``(i) The term `statutory non-drug benefits' means benefits
under section 1852(a)(1).
``(ii) The term `statutory prescription drug benefits'
means benefits under part D.
``(iii) The term `statutory benefits' means statutory
prescription drug benefits and statutory non-drug benefits.
``(C) Acceptance and negotiation of bid amounts.--The
Administrator has the authority to negotiate regarding
monthly bid amounts submitted under subparagraph (A) (and the
proportion described in subparagraph (A)(ii)), and for such
purpose, the Administrator has negotiation authority that the
Director of the Office of Personnel Management has with
respect to health benefits plans under chapter 89 of title 5,
United States Code. The Administrator may reject such a bid
amount or proportion if the Administrator determines that
such amount or proportion is not supported by the actuarial
bases provided under subparagraph (A).
``(D) Contract authority.--The Administrator may, taking
into account the unadjusted EFFS statutory non-drug monthly
bid amounts accepted under subparagraph (C), enter into
contracts for the offering of EFFS plans by up to 3 EFFS
organizations in any region.
``(b) Provision of Beneficiary Savings for Certain Plans.--
``(1) Beneficiary rebate rule.--
``(A) Requirement.--The EFFS plan shall provide to the
enrollee a monthly rebate equal to 75 percent of the average
per capita savings (if any) described in paragraph (2)
applicable to the plan and year involved.
``(B) Form of rebate.--A rebate required under this
paragraph shall be provided--
``(i) through the crediting of the amount of the rebate
towards the EFFS monthly prescription drug beneficiary
premium (as defined in section 1860E-4(a)(3)(B)) and the EFFS
monthly supplemental beneficiary premium (as defined in
section 1860E-4(a)(3)(C));
``(ii) through a direct monthly payment (through electronic
funds transfer or otherwise); or
``(iii) through other means approved by the Medicare
Benefits Administrator,
or any combination thereof.
``(2) Computation of average per capita monthly savings.--
For purposes of paragraph (1)(A), the average per capita
monthly savings referred to in such paragraph for an EFFS
plan and year is computed as follows:
``(A) Determination of region-wide average risk
adjustment.--
``(i) In general.--The Medicare Benefits Administrator
shall determine, at the same time rates are promulgated under
section 1853(b)(1) (beginning with 2006), for each EFFS
region the average of the risk adjustment factors described
in subsection (c)(3) to be applied to enrollees under this
part in that region. In the case of an EFFS region in which
an EFFS plan was offered in the previous year, the
Administrator may compute such average based upon risk
adjustment factors applied under subsection (c)(3) in that
region in a previous year.
``(ii) Treatment of new regions.--In the case of a region
in which no EFFS plan was offered in the previous year, the
Administrator shall estimate such average. In making such
estimate, the Administrator may use average risk adjustment
factors applied to comparable EFFS regions or applied on a
national basis.
``(B) Determination of risk adjusted benchmark and risk-
adjusted bid.--For each EFFS plan offered in an EFFS region,
the Administrator shall--
``(i) adjust the EFFS region-specific non-drug monthly
benchmark amount (as defined in paragraph (3)) by the
applicable average risk adjustment factor computed under
subparagraph (A); and
``(ii) adjust the unadjusted EFFS statutory non-drug
monthly bid amount by such applicable average risk adjustment
factor.
``(C) Determination of average per capita monthly
savings.--The average per capita monthly savings described in
this subparagraph is equal to the amount (if any) by which--
``(i) the risk-adjusted benchmark amount computed under
subparagraph (B)(i), exceeds
``(ii) the risk-adjusted bid computed under subparagraph
(B)(ii).
``(3) Computation of effs region-specific non-drug monthly
benchmark amount.--For purposes of this part, the term `EFFS
region-specific non-drug monthly benchmark amount' means,
with respect to an EFFS region for a month in a year, an
amount equal to \1/12\ of the average (weighted by number of
EFFS eligible individuals in each payment area described in
section 1853(d)) of the annual capitation rate as calculated
under section 1853(c)(1) for that area.
``(c) Payment of Plans Based on Bid Amounts.--
``(1) Non-drug benefits.--Under a contract under section
1860E-4(c) and subject to section 1853(g) (as made applicable
under subsection (d)), the Administrator shall make monthly
payments under this subsection in advance to each EFFS
organization, with respect to coverage of an individual under
this part in an EFFS region for a month, in an amount
determined as follows:
``(A) Plans with bids below benchmark.--In the case of a
plan for which there are average per capita monthly savings
described in subsection (b)(2)(C), the payment under this
subsection is equal to the unadjusted EFFS statutory non-drug
monthly bid amount, adjusted under paragraphs (3) and (4),
plus the amount of the monthly rebate computed under
subsection (b)(1)(A) for that plan and year.
``(B) Plans with bids at or above benchmark.--In the case
of a plan for which there are no average per capita monthly
savings described in subsection (b)(2)(C), the payment amount
under this subsection is equal to the EFFS region-specific
non-drug monthly benchmark amount, adjusted under paragraphs
(3) and (4).
``(2) For federal drug subsidies.--In the case in which an
enrollee who elects under part D to be provided qualified
prescription drug coverage through the plan, the EFFS
organization offering such plan also is entitled--
``(A) to direct subsidy payment under section 1860D-
8(a)(1);
``(B) to reinsurance subsidy payments under section 1860D-
8(a)(2); and
``(C) to reimbursement for premium and cost-sharing
reductions for low-income individuals under section 1860D-
7(c)(3).
``(3) Demographic risk adjustment, including adjustment for
health status.--The Administrator shall adjust under
paragraph (1)(A) the unadjusted EFFS statutory non-drug
monthly bid amount and under paragraph (1)(B) the EFFS
region-specific non-drug monthly benchmark amount for such
risk factors as age, disability status, gender, institutional
status, and such other factors as the Administrator
determines to be appropriate, including adjustment for health
status under section 1853(a)(3) (as applied under subsection
(d)), so as to ensure actuarial equivalence. The
Administrator may add to, modify, or substitute for such
adjustment factors if such changes will improve the
determination of actuarial equivalence.
``(4) Adjustment for intra-regional geographic
variations.--The Administrator shall also adjust such amounts
in a manner to take into account variations in payments rates
under part C among the different payment areas under such
part included in each EFFS region.
``(d) Application of Additional Payment Rules.--The
provisions of section 1853 (other than subsections (a)(1)(A),
(d), and (e)) shall apply to an EFFS plan under this part,
except as otherwise provided in this section.
``premiums; organizational and financial requirements; establishment of
standards; contracts with effs organizations
``Sec. 1860E-4. (a) Premiums.--
``(1) In general.--The provisions of section 1854 (other
than subsections (a)(6)(C) and (h)), including subsection
(b)(5) relating to the consolidation of drug and non-drug
beneficiary premiums and subsection (c) relating to uniform
bids and premiums, shall apply to an EFFS plan under this
part, subject to paragraph (2).
``(2) Cross-walk.--In applying paragraph (1), any reference
in section 1854(b)(1)(A) or 1854(d) to--
``(A) a Medicare Advantage monthly basic beneficiary
premium is deemed a reference to the EFFS monthly basic
beneficiary premium (as defined in paragraph (3)(A));
``(B) a Medicare Advantage monthly prescription drug
beneficiary premium is deemed a reference to the EFFS monthly
prescription drug beneficiary premium (as defined in
paragraph (3)(B)); and
``(C) a Medicare Advantage monthly supplemental beneficiary
premium is deemed a reference to the EFFS monthly
supplemental beneficiary premium (as defined in paragraph
(3)(C)).
``(3) Definitions.--For purposes of this part:
``(A) EFFS monthly basic beneficiary premium.--The term
`EFFS monthly basic beneficiary premium' means, with respect
to an EFFS plan--
``(i) described in section 1860E-3(c)(1)(A) (relating to
plans providing rebates), zero; or
``(ii) described in section 1860E-3(c)(1)(B), the amount
(if any) by which the unadjusted EFFS statutory non-drug
monthly bid amount exceeds the EFFS region-specific non-drug
monthly benchmark amount (as defined in section 1860E-
3(b)(3)).
``(B) EFFS monthly prescription drug beneficiary premium.--
The term `EFFS monthly prescription drug beneficiary premium'
means, with respect to an EFFS plan, the portion of the
aggregate monthly bid amount submitted under clause (i) of
section 1860E-3(a)(3)(A) for the year that is attributable
under such section to the provision of statutory prescription
drug benefits.
``(C) EFFS monthly supplemental beneficiary premium.--The
term `EFFS monthly supplemental beneficiary premium' means,
with respect to an EFFS plan, the portion of the aggregate
monthly bid amount submitted under clause (i) of section
1860E-
[[Page H6028]]
3(a)(3)(A) for the year that is attributable under such
section to the provision of nonstatutory benefits.
``(b) Organizational and Financial Requirements.--The
provisions of section 1855 shall apply to an EFFS plan
offered by an EFFS organization under this part.
``(c) Standards.--The provisions of paragraphs (1), (3),
and (4) of section 1856(b) shall apply to an EFFS plan
offered by an EFFS organization under this part.
``(d) Contracts with EFFS Organizations.--The provisions of
section 1857 shall apply to an EFFS plan offered by an EFFS
organization under this part, except that any reference in
such section to part C is deemed a reference to this part.''.
(b) Application of Medigap Provisions to EFFS Plans.--
Section 1882 of the Social Security Act (42 U.S.C. 1395ss)
shall be administered as if any reference to a
Medicare+Choice organization offering a Medicare+Choice plan
under part C of title XVIII of such Act were a reference both
to a Medicare Advantage organization offering a Medicare
Advantage plan under such part and an EFFS organization
offering an EFFS plan under part E of such title.
Subtitle B--Medicare Advantage Program
CHAPTER 1--IMPLEMENTATION OF PROGRAM
SEC. 211. IMPLEMENTATION OF MEDICARE ADVANTAGE PROGRAM.
(a) In General.--There is hereby established the Medicare
Advantage program. The Medicare Advantage program shall
consist of the program under part C of title XVIII of the
Social Security Act, as amended by this title.
(b) References.--Any reference to the program under part C
of title XVIII of the Social Security Act shall be deemed a
reference to the Medicare Advantage program and, with respect
to such part, any reference to ``Medicare+Choice'' is deemed
a reference to ``Medicare Advantage''.
SEC. 212. MEDICARE ADVANTAGE IMPROVEMENTS.
(a) Equalizing Payments With Fee-For-Service.--
(1) In general.--Section 1853(c)(1) (42 U.S.C. 1395w-
23(c)(1)) is amended by adding at the end the following:
``(D) Based on 100 percent of fee-for-service costs.--
``(i) In general.--For 2004, the adjusted average per
capita cost for the year involved, determined under section
1876(a)(4) for the Medicare Advantage payment area for
services covered under parts A and B for individuals entitled
to benefits under part A and enrolled under part B who are
not enrolled in a Medicare Advantage under this part for the
year, but adjusted to exclude costs attributable to payments
under section 1886(h).
``(ii) Inclusion of costs of va and dod military facility
services to medicare-eligible beneficiaries.--In determining
the adjusted average per capita cost under clause (i) for a
year, such cost shall be adjusted to include 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 Veterans Affairs or the Department of
Defense.''.
(2) Conforming amendment.--Such section is further amended,
in the matter before subparagraph (A), by striking ``or (C)''
and inserting ``(C), or (D)''.
(b) Change in Budget Neutrality for Blend.--Section 1853(c)
(42 U.S.C. 1395w-23(c)) is amended--
(1) in paragraph (1)(A), by inserting ``(for a year other
than 2004)'' after ``multiplied''; and
(2) in paragraph (5), by inserting ``(other than 2004)''
after ``for each year''.
(c) Increasing Minimum Percentage Increase to National
Growth Rate.--
(1) In general.--Section 1853(c)(1) (42 U.S.C. 1395w-
23(c)(1)) is amended--
(A) in subparagraph (A), by striking ``The sum'' and
inserting ``For a year before 2005, the sum'';
(B) in subparagraph (B)(iv), by striking ``and each
succeeding year'' and inserting ``, 2003, and 2004'';
(C) in subparagraph (C)(iv), by striking ``and each
succeeding year'' and inserting ``and 2003''; and
(D) by adding at the end of subparagraph (C) the following
new clause:
``(v) For 2004 and each succeeding year, the greater of--
``(I) 102 percent of the annual Medicare Advantage
capitation rate under this paragraph for the area for the
previous year; or
``(II) the annual Medicare Advantage capitation rate under
this paragraph for the area for the previous year increased
by the national per capita Medicare Advantage growth
percentage, described in paragraph (6) for that succeeding
year, but not taking into account any adjustment under
paragraph (6)(C) for a year before 2004.''.
(2) Conforming amendment.--Section 1853(c)(6)(C) (42 U.S.C.
1395w-23(c)(6)(C)) is amended by inserting before the period
at the end the following: ``, except that for purposes of
paragraph (1)(C)(v)(II), no such adjustment shall be made for
a year before 2004''.
(d) Inclusion of Costs of DOD and VA Military Facility
Services to Medicare-Eligible Beneficiaries in Calculation of
Medicare+Choice Payment Rates.--Section 1853(c)(3) (42 U.S.C.
1395w-23(c)(3)) is amended--
(1) in subparagraph (A), by striking ``subparagraph (B)''
and inserting ``subparagraphs (B) and (E)'', and
(2) 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 a year (beginning with 2004), 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.''.
(e) Extending Special Rule for Certain Inpatient Hospital
Stays to Rehabilitation Hospitals.--
(1) In general.--Section 1853(g) (42 U.S.C. 1395w-23(g)) is
amended--
(A) by inserting ``or from a rehabilitation facility (as
defined in section 1886(j)(1)(A))'' after ``1886(d)(1)(B))'';
and
(B) in paragraph (2)(B), by inserting ``or section 1886(j),
as the case may be,'' after ``1886(d)''.
(2) Effective date.--The amendments made by paragraph (1)
shall apply to contract years beginning on or after January
1, 2004.
(f) MedPAC Study of AAPCC.--
(1) Study.--The Medicare Payment Advisory Commission shall
conduct a study that assesses the method used for determining
the adjusted average per capita cost (AAPCC) under section
1876(a)(4) of the Social Security Act (42 U.S.C.
1395mm(a)(4)) as applied under section 1853(c)(1)(A) of such
Act (as amended by subsection (a)). Such study shall include
an examination of--
(A) the bases for variation in such costs between different
areas, including differences in input prices, utilization,
and practice patterns;
(B) the appropriate geographic area for payment under the
Medicare Advantage program under part C of title XVIII of
such Act; and
(C) the accuracy of risk adjustment methods in reflecting
differences in costs of providing care to different groups of
beneficiaries served under such program.
(2) Report.--Not later than 18 months after the date of the
enactment of this Act, the Commission shall submit to
Congress a report on the study conducted under paragraph (1).
(g) Report on Impact of Increased Financial Assistance to
Medicare Advantage Plans.--Not later than July 1, 2006, the
Medicare Benefits Administrator shall submit to Congress a
report that describes the impact of additional financing
provided under this Act and other Acts (including the
Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act
of 1999 and BIPA) on the availability of Medicare Advantage
plans in different areas and its impact on lowering premiums
and increasing benefits under such plans.
(h) Announcement of Revised Medicare Advantage Payment
Rates.--Within 6 weeks after the date of the enactment of
this Act, the Secretary shall determine, and shall announce
(in a manner intended to provide notice to interested
parties) Medicare Advantage capitation rates under section
1853 of the Social Security Act (42 U.S.C. 1395w-23) for
2004, revised in accordance with the provisions of this
section.
CHAPTER 2--IMPLEMENTATION OF COMPETITION PROGRAM
SEC. 221. COMPETITION PROGRAM BEGINNING IN 2006.
(a) Submission of EFFS-Like Bidding Information Beginning
in 2006.--Section 1854 (42 U.S.C. 1395w-24) is amended--
(1) by amending the section heading to read as follows:
``premiums and bid amount'';
(2) in subsection (a)(1)(A)--
(A) by striking ``(A)'' and inserting ``(A)(i) if the
following year is before 2006,''; and
(B) by inserting before the semicolon at the end the
following: ``or (ii) if the following year is 2006 or later,
the information described in paragraph (3) or (6)(A) for the
type of plan involved''; and
(3) by adding at the end of subsection (a) the following:
``(6) Submission of bid amounts by medicare advantage
organizations.--
``(A) Information to be submitted.--The information
described in this subparagraph is as follows:
``(i) The monthly aggregate bid amount for provision of all
items and services under this part, which amount shall be
based on average costs for a typical beneficiary residing in
the area, and the actuarial basis for determining such
amount.
``(ii) The proportions of such bid amount that are
attributable to--
``(I) the provision of statutory non-drug benefits (such
portion referred to in this part as the `unadjusted Medicare
Advantage statutory non-drug monthly bid amount');
``(II) the provision of statutory prescription drug
benefits; and
``(III) the provision of non-statutory benefits;
and the actuarial basis for determining such proportions.
[[Page H6029]]
``(iii) Such additional information as the Administrator
may require to verify the actuarial bases described in
clauses (i) and (ii).
``(B) Statutory benefits defined.--For purposes of this
part:
``(i) The term `statutory non-drug benefits' means benefits
under section 1852(a)(1).
``(ii) The term `statutory prescription drug benefits'
means benefits under part D.
``(iii) The term `statutory benefits' means statutory
prescription drug benefits and statutory non-drug benefits.
``(C) Acceptance and negotiation of bid amounts.--
``(i) In general.--Subject to clause (ii)--
``(I) the Administrator has the authority to negotiate
regarding monthly bid amounts submitted under subparagraph
(A) (and the proportion described in subparagraph (A)(ii)),
and for such purpose and subject to such clause, the
Administrator has negotiation authority that the Director of
the Office of Personnel Management has with respect to health
benefits plans under chapter 89 of title 5, United States
Code; and
``(II) the Administrator may reject such a bid amount or
proportion if the Administrator determines that such amount
or proportion is not supported by the actuarial bases
provided under subparagraph (A).
``(ii) Exception.--In the case of a plan described in
section 1851(a)(2)(C), the provisions of clause (i) shall not
apply and the provisions of paragraph (5)(B), prohibiting the
review, approval, or disapproval of amounts described in such
paragraph, shall apply to the negotiation and rejection of
the monthly bid amounts and proportion referred to in
subparagraph (A).''.
(b) Providing for Beneficiary Savings for Certain Plans.--
(1) In general.--Section 1854(b) (42 U.S.C. 1395w-24(b)) is
amended--
(A) by adding at the end of paragraph (1) the following new
subparagraph:
``(C) Beneficiary rebate rule.--
``(i) Requirement.--The Medicare Advantage plan shall
provide to the enrollee a monthly rebate equal to 75 percent
of the average per capita savings (if any) described in
paragraph (3) applicable to the plan and year involved.
``(iii) Form of rebate.--A rebate required under this
subparagraph shall be provided--
``(I) through the crediting of the amount of the rebate
towards the Medicare Advantage monthly supplementary
beneficiary premium or the premium imposed for prescription
drug coverage under part D;
``(II) through a direct monthly payment (through electronic
funds transfer or otherwise); or
``(III) through other means approved by the Medicare
Benefits Administrator,
or any combination thereof.''; and
(B) by adding at the end the following new paragraphs:
``(3) Computation of average per capita monthly savings.--
For purposes of paragraph (1)(C)(i), the average per capita
monthly savings referred to in such paragraph for a Medicare
Advantage plan and year is computed as follows:
``(A) Determination of state-wide average risk
adjustment.--
``(i) In general.--The Medicare Benefits Administrator
shall determine, at the same time rates are promulgated under
section 1853(b)(1) (beginning with 2006), for each State the
average of the risk adjustment factors to be applied under
section 1853(a)(1)(A) to payment for enrollees in that State.
In the case of a State in which a Medicare Advantage plan was
offered in the previous year, the Administrator may compute
such average based upon risk adjustment factors applied in
that State in a previous year.
``(ii) Treatment of new states.--In the case of a State in
which no Medicare Advantage plan was offered in the previous
year, the Administrator shall estimate such average. In
making such estimate, the Administrator may use average risk
adjustment factors applied to comparable States or applied on
a national basis.
``(B) Determination of risk adjusted benchmark and risk-
adjusted bid.--For each Medicare Advantage plan offered in a
State, the Administrator shall--
``(i) adjust the Medicare Advantage area-specific non-drug
monthly benchmark amount (as defined in subsection (j)) by
the applicable average risk adjustment factor computed under
subparagraph (A); and
``(ii) adjust the unadjusted Medicare Advantage statutory
non-drug monthly bid amount by such applicable average risk
adjustment factor.
``(C) Determination of average per capita monthly
savings.--The average per capita monthly savings described in
this subparagraph is equal to the amount (if any) by which--
``(i) the risk-adjusted benchmark amount computed under
subparagraph (B)(i), exceeds
``(ii) the risk-adjusted bid computed under subparagraph
(B)(ii).
``(D) Authority to determine risk adjustment for areas
other than states.--The Administrator may provide for the
determination and application of risk adjustment factors
under this paragraph on the basis of areas other than States.
``(4) Beneficiary's option of payment through withholding
from social security payment or use of electronic funds
transfer mechanism.--In accordance with regulations, a
Medicare Advantage organization shall permit each enrollee,
at the enrollee's option, to make payment of premiums under
this part to the organization indirectly through withholding
from benefit payments in the manner provided under section
1840 with respect to monthly premiums under section 1839 or
through an electronic funds transfer mechanism (such as
automatic charges of an account at a financial institution or
a credit or debit card account) or otherwise. All premium
payments that are withheld under this paragraph that are
credited to the Federal Supplementary Medical Insurance Drug
Trust Fund shall be paid to the Medicare Advantage
organization involved.''.
(2) Provision of single consolidated premium.--Section
1854(b) (42 U.S.C. 1395w-24(b)), as amended by paragraph (1),
is further amended by adding at the end the following new
paragraph:
``(5) Single consolidated premium.--In the case of an
enrollee in a Medicare Advantage plan who elects under part D
to be provided qualified prescription drug coverage through
the plan, the Administrator shall provide a mechanism for the
consolidation of the beneficiary premium amount for non-drug
benefits under this part with the premium amount for
prescription drug coverage under part D provided through the
plan.''.
(3) Computation of medicare advantage area-specific non-
drug benchmark.--Section 1853 (42 U.S.C. 1395w-23) is amended
by adding at the end the following new subsection:
``(j) Computation of Medicare Advantage Area-Specific Non-
Drug Monthly Benchmark Amount.--For purposes of this part,
the term `Medicare Advantage area-specific non-drug monthly
benchmark amount' means, with respect to a Medicare Advantage
payment area for a month in a year, an amount equal to \1/12\
of the annual Medicare Advantage capitation rate under
section 1853(c)(1) for the area for the year.''.
(c) Payment of Plans Based on Bid Amounts.--
(1) In general.--Section 1853(a)(1)(A) (42 U.S.C. 1395w-23)
is amended by striking ``in an amount'' and all that follows
and inserting the following: ``in an amount determined as
follows:
``(i) Payment before 2006.--For years before 2006, the
payment amount shall be equal to \1/12\ of the annual
Medicare Advantage capitation rate (as calculated under
subsection (c)(1)) with respect to that individual for that
area, reduced by the amount of any reduction elected under
section 1854(f )(1)(E) and adjusted under clause (iv).
``(ii) Payment for statutory non-drug benefits beginning
with 2006.--For years beginning with 2006--
``(I) Plans with bids below benchmark.--In the case of a
plan for which there are average per capita monthly savings
described in section 1854(b)(3)(C), the payment under this
subsection is equal to the unadjusted Medicare Advantage
statutory non-drug monthly bid amount, adjusted under clause
(iv), plus the amount of the monthly rebate computed under
section 1854(b)(1)(C)(i) for that plan and year.
``(II) Plans with bids at or above benchmark.--In the case
of a plan for which there are no average per capita monthly
savings described in section 1854(b)(3)(C), the payment
amount under this subsection is equal to the Medicare
Advantage area-specific non-drug monthly benchmark amount,
adjusted under clause (iv).
``(iii) For federal drug subsidies.--In the case in which
an enrollee who elects under part D to be provided qualified
prescription drug coverage through the plan, the Medicare
Advantage organization offering such plan also is entitled--
``(I) to direct subsidy payment under section 1860D-
8(a)(1);
``(II) to reinsurance subsidy payments under section 1860D-
8(a)(2); and
``(III) to reimbursement for premium and cost-sharing
reductions for low-income individuals under section 1860D-
7(c)(3).
``(iv) Demographic adjustment, including adjustment for
health status.--The Administrator shall adjust the payment
amount under clause (i), the unadjusted Medicare Advantage
statutory non-drug monthly bid amount under clause (ii)(I),
and the Medicare Advantage area-specific non-drug monthly
benchmark amount under clause (ii)(II) for such risk factors
as age, disability status, gender, institutional status, and
such other factors as the Administrator determines to be
appropriate, including adjustment for health status under
paragraph (3), so as to ensure actuarial equivalence. The
Administrator may add to, modify, or substitute for such
adjustment factors if such changes will improve the
determination of actuarial equivalence.''.
(d) Conforming Amendments.--
(1) Protection against beneficiary selection.--Section
1852(b)(1)(A) (42 U.S.C. 1395w-22(b)(1)(A)) is amended by
adding at the end the following: ``The Administrator shall
not approve a plan of an organization if the Administrator
determines that the benefits are designed to substantially
discourage enrollment by certain Medicare Advantage eligible
individuals with the organization.''.
(2) Conforming amendment to premium terminology.--Section
1854(b)(2) (42 U.S.C. 1395w-24(b)(2)) is amended by
redesignating subparagraph (C) as subparagraph (D) and by
striking subparagraphs (A) and (B) and inserting the
following:
``(A) Medicare advantage monthly basic beneficiary
premium.--The term `Medicare Advantage monthly basic
beneficiary premium' means, with respect to a Medicare
Advantage plan--
``(i) described in section 1853(a)(1)(A)(ii)(I) (relating
to plans providing rebates), zero; or
[[Page H6030]]
``(ii) described in section 1853(a)(1)(A)(ii)(II), the
amount (if any) by which the unadjusted Medicare Advantage
statutory non-drug monthly bid amount exceeds the Medicare
Advantage area-specific non-drug monthly benchmark amount.
``(B) Medicare advantage monthly prescription drug
beneficiary premium.--The term `Medicare Advantage monthly
prescription drug beneficiary premium' means, with respect to
a Medicare Advantage plan, that portion of the bid amount
submitted under clause (i) of subsection (a)(6)(A) for the
year that is attributable under such section to the provision
of statutory prescription drug benefits.
``(C) Medicare advantage monthly supplemental beneficiary
premium.--The term `Medicare Advantage monthly supplemental
beneficiary premium' means, with respect to a Medicare
Advantage plan, the portion of the aggregate monthly bid
amount submitted under clause (i) of subsection (a)(6)(A) for
the year that is attributable under such section to the
provision of nonstatutory benefits.''.
(3) Requirement for uniform premium and bid amounts.--
Section 1854(c) (42 U.S.C. 1395w-24(c)) is amended to read as
follows:
``(c) Uniform Premium and Bid Amounts.--The Medicare
Advantage monthly bid amount submitted under subsection
(a)(6), the Medicare Advantage monthly basic, prescription
drug, and supplemental beneficiary premiums, and the Medicare
Advantage monthly MSA premium charged under subsection (b) of
a Medicare Advantage organization under this part may not
vary among individuals enrolled in the plan.''.
(4) Permitting beneficiary rebates.--
(A) Section 1851(h)(4)(A) (42 U.S.C. 1395w-21(h)(4)(A)) is
amended by inserting ``except as provided under section
1854(b)(1)(C)'' after ``or otherwise''.
(B) Section 1854(d) (42 U.S.C. 1395w-24(d)) is amended by
inserting ``, except as provided under subsection
(b)(1)(C),'' after ``and may not provide''.
(5) Other conforming amendments relating to bids.--Section
1854 (42 U.S.C. 1395w-24) is amended--
(A) in the heading of subsection (a), by inserting ``and
Bid Amounts'' after ``Premiums''; and
(B) in subsection (a)(5)(A), by inserting ``paragraphs (2),
(3), and (4) of'' after ``filed under''.
(e) Additional Conforming Amendments.--
(1) Annual determination and announcement of certain
factors.--Section 1853(b)(1) (42 U.S.C. 1395w-23(b)(1)) is
amended by striking ``the respective calendar year'' and all
that follows and inserting the following: ``the calendar year
concerned with respect to each Medicare Advantage payment
area, the following:
``(A) Pre-competition information.--For years before 2006,
the following:
``(i) Medicare advantage capitation rates.--The annual
Medicare Advantage capitation rate for each Medicare
Advantage payment area for the year.
``(ii) Adjustment factors.--The risk and other factors to
be used in adjusting such rates under subsection (a)(1)(A)
for payments for months in that year.
``(B) Competition information.--For years beginning with
2006, the following:
``(i) Benchmark.--The Medicare Advantage area-specific non-
drug benchmark under section 1853(j).
``(ii) Adjustment factors.--The adjustment factors applied
under section 1853(a)(1)(A)(iv) (relating to demographic
adjustment), section 1853(a)(1)(B) (relating to adjustment
for end-stage renal disease), and section 1853(a)(3)
(relating to health status adjustment).''.
(2) Repeal of provisions relating to adjusted community
rate (acr).--
(A) In general.--Subsections (e) and (f) of section 1854
(42 U.S.C. 1395w-24) are repealed.
(B) Conforming amendments.--(i) Section 1839(a)(2) (42
U.S.C. 1395r(a)(2)) is amended by striking ``, and to
reflect'' and all that follows and inserting a period.
(ii) Section 1852(a)(1) (42 U.S.C. 1395w-22(a)(1)) is
amended by striking ``title XI'' and all that follows and
inserting the following: ``title XI those items and services
(other than hospice care) for which benefits are available
under parts A and B to individuals residing in the area
served by the plan.''.
(iii) Section 1857(d)(1) (42 U.S.C. 1395w-27(d)(1)) is
amended by striking ``, costs, and computation of the
adjusted community rate'' and inserting ``and costs''.
(f) References under Part E.--Section 1859 (42 U.S.C.
1395w-29) is amended by adding at the end the following new
subsection:
``(f) Application under Part E.--In the case of any
reference under part E to a requirement or provision of this
part in the relation to an EFFS plan or organization under
such part, except as otherwise specified any such requirement
or provision shall be applied to such organization or plan in
the same manner as such requirement or provision applies to a
Medicare Advantage private fee-for-service plan (and the
Medicare Advantage organization that offers such plan) under
this part.''.
(g) Effective Date.--The amendments made by this section
shall apply to payments and premiums for months beginning
with January 2006.
CHAPTER 3--ADDITIONAL REFORMS
SEC. 231. MAKING PERMANENT CHANGE IN MEDICARE ADVANTAGE
REPORTING DEADLINES AND ANNUAL, COORDINATED
ELECTION PERIOD.
(a) Change in Reporting Deadline.--Section 1854(a)(1) (42
U.S.C. 1395w-24(a)(1)), as amended by section 532(b)(1) of
the Public Health Security and Bioterrorism Preparedness and
Response Act of 2002, is amended by striking ``2002, 2003,
and 2004 (or July 1 of each other year)'' and inserting
``2002 and each subsequent year''.
(b) Delay in Annual, Coordinated Election Period.--Section
1851(e)(3)(B) (42 U.S.C. 1395w-21(e)(3)(B)), as amended by
section 532(c)(1)(A) of the Public Health Security and
Bioterrorism Preparedness and Response Act of 2002, is
amended--
(1) by striking ``and after 2005''; and
(2) by striking ``, 2004, and 2005'' and inserting ``and
any subsequent year''.
(c) Annual Announcement of Payment Rates.--Section
1853(b)(1) (42 U.S.C. 1395w-23(b)(1)), as amended by section
532(d)(1) of the Public Health Security and Bioterrorism
Preparedness and Response Act of 2002, is amended--
(1) by striking ``and after 2005''; and
(2) by striking ``and 2005'' and inserting ``and each
subsequent year''.
(d) Requiring Provision of Available Information Comparing
Plan Options.--The first sentence of section
1851(d)(2)(A)(ii) (42 U.S.C. 1395w-21(d)(2)(A)(ii)) is
amended by inserting before the period the following: ``to
the extent such information is available at the time of
preparation of materials for the mailing''.
SEC. 232. AVOIDING DUPLICATIVE STATE REGULATION.
(a) In General.--Section 1856(b)(3) (42 U.S.C. 1395w-
26(b)(3)) is amended to read as follows:
``(3) Relation to state laws.--The standards established
under this subsection shall supersede any State law or
regulation (other than State licensing laws or State laws
relating to plan solvency) with respect to Medicare Advantage
plans which are offered by Medicare Advantage organizations
under this part.''.
(b) Effective Date.--The amendment made by subsection (a)
shall take effect on the date of the enactment of this Act.
SEC. 233. SPECIALIZED MEDICARE ADVANTAGE PLANS FOR SPECIAL
NEEDS BENEFICIARIES.
(a) Treatment as Coordinated Care Plan.--Section
1851(a)(2)(A) (42 U.S.C. 1395w-21(a)(2)(A)) is amended by
adding at the end the following new sentence: ``Specialized
Medicare Advantage plans for special needs beneficiaries (as
defined in section 1859(b)(4)) may be any type of coordinated
care plan.''.
(b) Specialized Medicare Advantage Plan for Special Needs
Beneficiaries Defined.--Section 1859(b) (42 U.S.C. 1395w-
29(b)) is amended by adding at the end the following new
paragraph:
``(4) Specialized medicare advantage plans for special
needs beneficiaries.--
``(A) In general.--The term `specialized Medicare Advantage
plan for special needs beneficiaries' means a Medicare
Advantage plan that exclusively serves special needs
beneficiaries (as defined in subparagraph (B)).
``(B) Special needs beneficiary.--The term `special needs
beneficiary' means a Medicare Advantage eligible individual
who--
``(i) is institutionalized (as defined by the Secretary);
``(ii) is entitled to medical assistance under a State plan
under title XIX; or
``(iii) meets such requirements as the Secretary may
determine would benefit from enrollment in such a specialized
Medicare Advantage plan described in subparagraph (A) for
individuals with severe or disabling chronic conditions.''.
(c) Restriction on Enrollment Permitted.--Section 1859 (42
U.S.C. 1395w-29) is amended by adding at the end the
following new subsection:
``(f) Restriction on Enrollment for Specialized Medicare
Advantage Plans for Special Needs Beneficiaries.--In the case
of a specialized Medicare Advantage plan (as defined in
subsection (b)(4)), notwithstanding any other provision of
this part and in accordance with regulations of the Secretary
and for periods before January 1, 2007, the plan may restrict
the enrollment of individuals under the plan to individuals
who are within one or more classes of special needs
beneficiaries.''.
(d) Authority To Designate Other Plans as Specialized
Medicare Advantage Plans.--In promulgating regulations to
carry out the last sentence of section 1851(a)(2)(A) of the
Social Security Act (as added by subsection (a)) and section
1859(b)(4) of such Act (as added by subsection (b)), the
Secretary may provide (notwithstanding section 1859(b)(4)(A)
of such Act) for the offering of specialized Medicare
Advantage plans by Medicare Advantage plans that
disproportionately serve special needs beneficiaries who are
frail, elderly medicare beneficiaries.
(e) Report to Congress.--Not later than December 31, 2005,
the Medicare Benefits Administrator shall submit to Congress
a report that assesses the impact of specialized Medicare
Advantage plans for special needs beneficiaries on the cost
and quality of services provided to enrollees. Such report
shall include an assessment of the costs and savings to the
medicare program as a result of amendments made by
subsections (a), (b), and (c).
(f) Effective Dates.--
[[Page H6031]]
(1) In general.--The amendments made by subsections (a),
(b), and (c) shall take effect upon the date of the enactment
of this Act.
(2) Deadline for issuance of requirements for special needs
beneficiaries; transition.--No later than 6 months after the
date of the enactment of this Act, the Secretary shall issue
interim final regulations to establish requirements for
special needs beneficiaries under section 1859(b)(4)(B)(iii)
of the Social Security Act, as added by subsection (b).
SEC. 234. MEDICARE MSAS.
(a) Exemption from Reporting Enrollee Encounter Data.--
(1) In general.--Section 1852(e)(1) (42 U.S.C. 1395w-
22(e)(1)) is amended by inserting ``(other than MSA plans)''
after ``plans''.
(2) Conforming amendments.--Section 1852 (42 U.S.C. 1395w-
22) is amended--
(A) in subsection (c)(1)(I), by inserting before the period
at the end the following: ``if required under such section'';
and
(B) in subparagraphs (A) and (B) of subsection (e)(2), by
striking ``, a non-network MSA plan,'' and ``, non-network
msa plans,'' each place it appears.
(b) Making Program Permanent and Eliminating Cap.--Section
1851(b)(4) (42 U.S.C. 1395w-21(b)(4)) is amended--
(1) in the heading, by striking ``on a demonstration
basis'';
(2) by striking the first sentence of subparagraph (A); and
(3) by striking the second sentence of subparagraph (C).
(c) Applying Limitations on Balance Billing.--Section
1852(k)(1) (42 U.S.C. 1395w-22(k)(1)) is amended by inserting
``or with an organization offering a MSA plan'' after
``section 1851(a)(2)(A)''.
(d) Additional Amendment.--Section 1851(e)(5)(A) (42 U.S.C.
1395w-21(e)(5)(A)) is amended--
(1) by adding ``or'' at the end of clause (i);
(2) by striking ``, or'' at the end of clause (ii) and
inserting a semicolon; and
(3) by striking clause (iii).
SEC. 235. EXTENSION OF REASONABLE COST CONTRACTS.
Subparagraph (C) of section 1876(h)(5) (42 U.S.C.
1395mm(h)(5)) is amended to read as follows:
``(C)(i) Subject to clause (ii), may be extended or renewed
under this subsection indefinitely.
``(ii) For any period beginning on or after January 1,
2008, a reasonable cost reimbursement contract under this
subsection may not be extended or renewed for a service area
insofar as such area, during the entire previous year, was
within the service area of 2 or more plans which were
coordinated care Medicare Advantage plans under part C or 2
or more enhanced fee-for-service plans under part E and each
of which plan for that previous year for the area involved
meets the following minimum enrollment requirements:
``(I) With respect to any portion of the area involved that
is within a Metropolitan Statistical Area with a population
of more than 250,000 and counties contiguous to such
Metropolitan Statistical Area, 5,000 individuals.
``(II) With respect to any other portion of such area,
1,500 individuals.''.
SEC. 236. EXTENSION OF MUNICIPAL HEALTH SERVICE DEMONSTRATION
PROJECTS.
Section 9215(a) of the Consolidated Omnibus Budget
Reconciliation Act of 1985 (42 U.S.C. 1395b-1 note), as
amended by section 6135 of the Omnibus Budget Reconciliation
Act of 1989, section 13557 of the Omnibus Budget
Reconciliation Act of 1993, section 4017 of BBA, section 534
of BBRA (113 Stat. 1501A-390), and section 633 of BIPA, is
amended by striking ``December 31, 2004'' and inserting
``December 31, 2009''.
SEC. 237. STUDY OF PERFORMANCE-BASED PAYMENT SYSTEMS.
(a) In General.--The Secretary shall request the Institute
of Medicine of the National Academy of Sciences to--
(1) conduct a study that reviews and evaluates public and
private sector experiences in establishing performance
measures and payment incentives under the medicare program
and linking performance to payment; and
(2) submit a report to the Secretary and Congress, not
later than 18 months after the date of the enactment of this
Act, regarding such study.
(b) Study.--The study under subsection (a)(1) shall--
(1) include a review and evaluation of incentives that have
been or could be used to encourage quality performance,
including those aimed at health plans and their enrollees,
providers and their patients, and other incentives that
encourage quality-based health care purchasing and
collaborative efforts to improve performance; and
(2) examine how these measures and incentives might be
applied in the Medicare Advantage program, the Enhanced Fee-
For-Service (EFFS) program, and traditional fee-for-service
programs.
(c) Report Recommendations.--The report under subsection
(a)(2) shall--
(1) include recommendations regarding appropriate
performance measures for use in assessing and paying for
quality; and
(2) identify options for updating performance measures.
Subtitle C--Application of FEHBP-Style Competitive Reforms
SEC. 241. APPLICATION OF FEHBP-STYLE COMPETITIVE REFORM
BEGINNING IN 2010.
(a) Identification of Competitive EFFS Regions; Computation
of Competitive EFFS Non-Drug Benchmarks Under EFFS Program.--
(1) In general.--Section 1860E-3, as added by section
201(a), is amended by adding at the end the following new
subsection:
``(e) Application of Competition.--
``(1) Determination of competitive effs regions.--
``(A) In general.--For purposes of this part, the term
`competitive EFFS region' means, for a year beginning with
2010, an EFFS region that the Administrator finds--
``(i) there will be offered in the region during the
annual, coordinated election period under section
1851(e)(3)(B) (as applied under section 1860E-1(c)) before
the beginning of the year at least 2 EFFS plans (in addition
to the fee-for-service program under parts A and B), each
offered by a different EFFS organization and each of which
met the minimum enrollment requirements of paragraph (1) of
section 1857(b) (as applied without regard to paragraph (3)
thereof) as of March of the previous year; and
``(ii) during March of the previous year at least the
percentage specified in subparagraph (C) of the number of
EFFS eligible individuals who reside in the region were
enrolled in an EFFS plan.
``(B) Percentage specified.--
``(i) In general.--For purposes of subparagraph (A),
subject to clause (ii), the percentage specified in this
subparagraph for a year is equal the lesser of 20 percent or
to the sum of--
``(I) the percentage, as estimated by the Administrator, of
EFFS eligible individuals in the United States who are
enrolled in EFFS plans during March of the previous year; and
``(II) the percentage, as estimated by the Administrator,
of Medicare Advantage eligible individuals in the United
States who are enrolled in Medicare Advantage plans during
March of the previous year.
``(ii) Exception.--In the case of an EFFS region that was a
competitive EFFS region for the previous year, the Medicare
Benefits Administrator may continue to treat the region as
meeting the requirement of subparagraph (A)(ii) if the region
would meet such requirement but for a de minimis reduction
below the percentage specified in clause (i).
``(2) Competitive effs non-drug monthly benchmark amount.--
For purposes of this part, the term `competitive EFFS non-
drug monthly benchmark amount' means, with respect to an EFFS
region for a month in a year and subject to paragraph (8),
the sum of the 2 components described in paragraph (3) for
the region and year. The Administrator shall compute such
benchmark amount for each competitive EFFS region before the
beginning of each annual, coordinated election period under
section 1851(e)(3)(B) for each year (beginning with 2010) in
which it is designated as such a region.
``(3) 2 components.--For purposes of paragraph (2), the 2
components described in this paragraph for an EFFS region and
a year are the following:
``(A) EFFS component.--The product of the following:
``(i) Weighted average of plan bids in region.--The
weighted average of the EFFS plan bids for the region and
year (as determined under paragraph (4)(A)).
``(ii) Non-ffs market share.--1 minus the fee-for-service
market share percentage determined under paragraph (5) for
the region and the year.
``(B) Fee-for-service component.--The product of the
following:
``(i) Fee-for-service region-specific non-drug amount.--The
fee-for-service region-specific non-drug amount (as defined
in paragraph (6)) for the region and year.
``(ii) Fee-for-service market share.--The fee-for-service
market share percentage (determined under paragraph (5)) for
the region and the year.
``(4) Determination of weighted average effs plan bids for
a region.--
``(A) In general.--For purposes of paragraph (3)(A)(i), the
weighted average of EFFS plan bids for an EFFS region and a
year is the sum of the following products for EFFS plans
described in subparagraph (C) in the region and year:
``(i) Unadjusted effs statutory non-drug monthly bid
amount.--The unadjusted EFFS statutory non-drug monthly bid
amount (as defined in subsection (a)(3)(A)(ii)(I)) for the
region and year.
``(ii) Plan's share of effs enrollment in region.--The
number of individuals described in subparagraph (B), divided
by the total number of such individuals for all EFFS plans
described in subparagraph (C) for that region and year.
``(B) Counting of individuals.--The Administrator shall
count, for each EFFS plan described in subparagraph (C) for
an EFFS region and year, the number of individuals who reside
in the region and who were enrolled under such plan under
this part during March of the previous year.
``(C) Exclusion of plans not offered in previous year.--For
an EFFS region and year, the EFFS plans described in this
subparagraph are plans that are offered in the region and
year and were offered in the region in March of the previous
year.
``(5) Computation of fee-for-service market share
percentage.--The Administrator shall determine, for a year
and an EFFS region, the proportion (in this subsection
referred to as the `fee-for-service market share percentage')
of the EFFS eligible individuals who are residents of the
region during March
[[Page H6032]]
of the previous year, of such individuals who were not
enrolled in an EFFS plan or in a Medicare Advantage plan (or,
if greater, such proportion determined for individuals
nationally).
``(6) Fee-for-service region-specific non-drug amount.--
``(A) In general.--For purposes of paragraph (3)(B)(i) and
section 1839(h)(2)(A), subject to subparagraph (C), the term
`fee-for-service region-specific non-drug amount' means, for
a competitive EFFS region and a year, the adjusted average
per capita cost for the year involved, determined under
section 1876(a)(4) for such region for services covered under
parts A and B for individuals entitled to benefits under part
A and enrolled under this part who are not enrolled in an
EFFS plan under part E or a Medicare Advantage plan under
part C for the year, but adjusted to exclude costs
attributable to payments under section 1886(h).
``(B) Use of full risk adjustment to standardize fee-for-
service costs to typical beneficiary.--In determining the
adjusted average per capita cost for a region and year under
subparagraph (A), such costs shall be adjusted to fully take
into account the demographic and health status risk factors
established under subsection (c)(3) so that such per capita
costs reflect the average costs for a typical beneficiary
residing in the region.
``(C) Inclusion of costs of va and dod military facility
services to medicare-eligible beneficiaries.--In determining
the adjusted average per capita cost under subparagraph (A)
for a year, such cost shall be adjusted to include the
Administrator's estimate, on a per capita basis, of the
amount of additional payments that would have been made in
the region involved under this title if individuals entitled
to benefits under this title had not received services from
facilities of the Department of Veterans Affairs or the
Department of Defense.
``(7) Application of competition.--In the case of an EFFS
region that is a competitive EFFS region for a year, for
purposes of applying subsections (b) and (c)(1) and section
1860E-4(a), any reference to an EFFS region-specific non-drug
monthly benchmark amount shall be treated as a reference to
the competitive EFFS non-drug monthly benchmark amount under
paragraph (2) for the region and year.
``(8) Phase-in of benchmark for each region.--
``(A) Use of blended benchmark.--In the case of a region
that has not been a competitive EFFS region for each of the
previous 4 years, the competitive EFFS non-drug monthly
benchmark amount shall be equal to the sum of the following:
``(i) New competitive component.--The product of--
``(I) the weighted average phase-in proportion for that
area and year, as specified in subparagraph (B); and
``(II) the competitive EFFS non-drug monthly benchmark
amount for the region and year, determined under paragraph
(2) without regard to this paragraph.
``(ii) Old competitive component.--The product of--
``(I) 1 minus the weighted average phase-in proportion for
that region and year; and
``(II) the EFFS region-specific non-drug benchmark amount
for the region and the year.
``(B) Computation of weighted average phase-in
proportion.--For purposes of this paragraph, the `weighted
average phase-in proportion' for an EFFS region for a year
shall be determined as follows:
``(i) First year (and region not competitive region in
previous year).--If the area was not a competitive EFFS
region in the previous year, the weighted average phase-in
proportion for the region for the year is equal to \1/5\.
``(ii) Competitive region in previous year.--If the region
was a competitive EFFS region in the previous year, the
weighted average phase-in proportion for the region for the
year is equal to the weighted average phase-in proportion
determined under this subparagraph for the region for the
previous year plus \1/5\, but in no case more than 1.''.
(2) Conforming amendments.--
(A) Such section 1860E-3 is further amended--
(i) in subsection (b), by adding at the end the following
new paragraph:
``(4) Application in competitive regions.--For special
rules applying this subsection in competitive EFFS regions,
see subsection (e)(7).'';
(ii) in subsection (c)(1), by inserting ``and subsection
(e)(7)'' after ``(as made applicable under subsection (d))'';
and
(iii) in subsection (d) , by striking ``and (e)'' and
inserting ``(e), and (k) ''.
(B) Section 1860E-4(a)(1), as inserted by section
201(a)(2), is amended by inserting ``, except as provided in
section 1860E-3(e)(7)'' after ``paragraph (2)''.
(b) Identification of Competitive Medicare Advantage Areas;
Application of Competitive Medicare Advantage Non-Drug
Benchmarks Under Medicare Advantage Program.--
(1) In general.--Section 1853, as amended by section
221(b)(3), is amended by adding at the end the following new
subsection:
``(k) Application of Competition.--
``(1) Determination of competitive medicare advantage
areas.--
``(A) In general.--For purposes of this part, the terms
`competitive Medicare Advantage area' and `CMA area' mean,
for a year beginning with 2010, an area (which is a
metropolitan statistical area or other area with a
substantial number of Medicare Advantage enrollees) that the
Administrator finds--
``(i) there will be offered during the annual, coordinated
election period under section 1851(e)(3)(B) under this part
before the beginning of the year at least 2 Medicare
Advantage plans (in addition to the fee-for-service program
under parts A and B), each offered by a different Medicare
Advantage organization and each of which met the minimum
enrollment requirements of paragraph (1) of section 1857(b)
(as applied without regard to paragraph (3) thereof) as of
March of the previous year with respect to the area; and
``(ii) during March of the previous year at least the
percentage specified in subparagraph (B) of the number of
Medicare Advantage eligible individuals who reside in the
area were enrolled in a Medicare Advantage plan.
``(B) Percentage specified.--
``(i) In general.--For purposes of subparagraph (A),
subject to clause (ii), the percentage specified in this
subparagraph for a year is equal the lesser of 20 percent or
to the sum of--
``(I) the percentage, as estimated by the Administrator, of
EFFS eligible individuals in the United States who are
enrolled in EFFS plans during March of the previous year; and
``(II) the percentage, as estimated by the Administrator,
of Medicare Advantage eligible individuals in the United
States who are enrolled in Medicare Advantage plans during
March of the previous year.
``(ii) Exception.--In the case of an area that was a
competitive area for the previous year, the Medicare Benefits
Administrator may continue to treat the area as meeting the
requirement of subparagraph (A)(ii) if the area would meet
such requirement but for a de minimis reduction below the
percentage specified in clause (i).
``(2) Competitive medicare advantage non-drug monthly
benchmark amount.--For purposes of this part, the term
`competitive Medicare Advantage non-drug monthly benchmark
amount' means, with respect to a competitive Medicare
Advantage area for a month in a year subject to paragraph
(8), the sum of the 2 components described in paragraph (3)
for the area and year. The Administrator shall compute such
benchmark amount for each competitive Medicare Advantage area
before the beginning of each annual, coordinated election
period under section 1851(e)(3)(B) for each year (beginning
with 2010) in which it is designated as such an area.
``(3) 2 components.--For purposes of paragraph (2), the 2
components described in this paragraph for a competitive
Medicare Advantage area and a year are the following:
``(A) Medicare advantage component.--The product of the
following:
``(i) Weighted average of medicare advantage plan bids in
area.--The weighted average of the plan bids for the area and
year (as determined under paragraph (4)(A)).
``(ii) Non-ffs market share.--1 minus the fee-for-service
market share percentage, determined under paragraph (5) for
the area and year.
``(B) Fee-for-service component.--The product of the
following:
``(i) Fee-for-service area-specific non-drug amount.--The
fee-for-service area-specific non-drug amount (as defined in
paragraph (6)) for the area and year.
``(ii) Fee-for-service market share.--The fee-for-service
market share percentage, determined under paragraph (5) for
the area and year.
``(4) Determination of weighted average medicare advantage
bids for an area.--
``(A) In general.--For purposes of paragraph (3)(A)(i), the
weighted average of plan bids for an area and a year is the
sum of the following products for Medicare Advantage plans
described in subparagraph (C) in the area and year:
``(i) Monthly medicare advantage statutory non-drug bid
amount.--The unadjusted Medicare Advantage statutory non-drug
monthly bid amount.
``(ii) Plan's share of medicare advantage enrollment in
area.--The number of individuals described in subparagraph
(B), divided by the total number of such individuals for all
Medicare Advantage plans described in subparagraph (C) for
that area and year.
``(B) Counting of individuals.--The Administrator shall
count, for each Medicare Advantage plan described in
subparagraph (C) for an area and year, the number of
individuals who reside in the area and who were enrolled
under such plan under this part during March of the previous
year.
``(C) Exclusion of plans not offered in previous year.--For
an area and year, the Medicare Advantage plans described in
this subparagraph are plans described in the first sentence
of section 1851(a)(2)(A) that are offered in the area and
year and were offered in the area in March of the previous
year.
``(5) Computation of fee-for-service market share
percentage.--The Administrator shall determine, for a year
and a competitive Medicare Advantage area, the proportion (in
this subsection referred to as the `fee-for-service market
share percentage') of Medicare Advantage eligible individuals
residing in the area who during March of the previous year
were not enrolled in a Medicare Advantage plan or in an EFFS
plan (or, if greater, such proportion determined for
individuals nationally).
[[Page H6033]]
``(6) Fee-for-service area-specific non-drug amount.--
``(A) In general.--For purposes of paragraph (3)(B)(i) and
section 1839(h)(1)(A), subject to subparagraph (C), the term
`fee-for-service area-specific non-drug amount' means, for a
competitive Medicare Advantage area and a year, the adjusted
average per capita cost for the year involved, determined
under section 1876(a)(4) for such area for services covered
under parts A and B for individuals entitled to benefits
under part A and enrolled under this part who are not
enrolled in a Medicare Advantage plan under part C or an EFFS
plan under part E for the year, but adjusted to exclude costs
attributable to payments under section 1886(h).
``(B) Use of full risk adjustment to standardize fee-for-
service costs to typical beneficiary.--In determining the
adjusted average per capita cost for an area and year under
subparagraph (A), such costs shall be adjusted to fully take
into account the demographic and health status risk factors
established under subsection (a)(1)(A)(iv) so that such per
capita costs reflect the average costs for a typical
beneficiary residing in the area.
``(C) Inclusion of costs of va and dod military facility
services to medicare-eligible beneficiaries.--In determining
the adjusted average per capita cost under subparagraph (A)
for a year, such cost shall be adjusted to include the
Administrator'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 Veterans Affairs or the
Department of Defense.
``(7) Application of competition.--In the case of an area
that is a competitive Medicare Advantage area for a year, for
purposes of applying subsection (a)(1)(A)(ii) and sections
1854(b)(2)(A)(ii) and 1854(b)(3)(B)(i), any reference to a
Medicare Advantage area-specific non-drug monthly benchmark
amount shall be treated as a reference to the competitive
Medicare Advantage non-drug monthly benchmark amount under
paragraph (2) for the area and year.
``(8) Phase-in of benchmark for each area.--
``(A) Use of blended benchmark.--In the case of an area
that has not been a competitive Medicare Advantage area for
each of the previous 4 years, the competitive Medicare
Advantage non-drug monthly benchmark amount shall be equal to
the sum of the following:
``(i) New competitive component.--The product of--
``(I) the weighted average phase-in proportion for that
area and year, as specified in subparagraph (B); and
``(II) the competitive Medicare Advantage non-drug monthly
benchmark amount for the area and year, determined under
paragraph (2) without regard to this paragraph.
``(ii) Old competitive component.--The product of--
``(I) 1 minus the weighted average phase-in proportion for
that area and year; and
``(II) the Medicare Advantage area-wide non-drug benchmark
amount for the area and the year.
``(B) Computation of weighted average phase-in
proportion.--For purposes of this paragraph, the `weighted
average phase-in proportion' for a Medicare Advantage payment
area for a year shall be determined as follows:
``(i) First year (and area not competitive area in previous
year).--If the area was not a Medicare Advantage competitive
area in the previous year, the weighted average phase-in
proportion for the area for the year is equal to \1/5\.
``(ii) Competitive area in previous year.--If the area was
a competitive Medicare Advantage area in the previous year,
the weighted average phase-in proportion for the area for the
year is equal to the weighted average phase-in proportion
determined under this subparagraph for the area for the
previous year plus \1/5\, but in no case more than 1.
``(C) Medicare advantage area-wide non-drug benchmark
amount.--For purposes of subparagraph (A)(ii)(II), the term
`Medicare Advantage area-wide non-drug benchmark amount'
means, for an area and year, the weighted average of the
amounts described in section 1853(j) for Medicare Advantage
payment area or areas included in the area (based on the
number of traditional fee-for-service enrollees in such
payment area or areas) and year.''.
(2) Application.--Section 1854 (42 U.S.C. 1395w-24) is
amended--
(A) in subsection (b)(1)(C)(i), as added by section
221(b)(1)(A), by striking ``(i) Requirement.--The'' and
inserting ``(i) Requirement for non-competitive areas.--In
the case of a Medicare Advantage payment area that is not a
competitive Medicare Advantage area designated under section
1853(k)(1), the'';
(B) in subsection (b)(1)(C), as so added, by inserting
after clause (i) the following new clause:
``(ii) Requirement for competitive medicare advantage
areas.--In the case of a Medicare Advantage payment area that
is designated as a competitive Medicare Advantage area under
section 1853(k)(1), if there are average per capita monthly
savings described in paragraph (6) for a Medicare Advantage
plan and year, the Medicare Advantage plan shall provide to
the enrollee a monthly rebate equal to 75 percent of such
savings.''; and
(C) by adding at the end of subsection (b), as amended by
sections 221(b)(1)(B) and 221(b)(2), the following new
paragraph:
``(6) Computation of average per capita monthly savings for
competitive medicare advantage areas.--For purposes of
paragraph (1)(C)(ii), the average per capita monthly savings
referred to in such paragraph for a Medicare Advantage plan
and year shall be computed in the same manner as the average
per capita monthly savings is computed under paragraph (3)
except that the reference to the Medicare Advantage area-
specific non-drug monthly benchmark amount in paragraph
(3)(B)(i) (or to the benchmark amount as adjusted under
paragraph (3)(C)(i)) is deemed to be a reference to the
competitive Medicare Advantage non-drug monthly benchmark
amount (or such amount as adjusted in the manner described in
paragraph (3)(B)(i)).''.
(3) Additional conforming amendments.--
(A) Payment of plans.--Section 1853(a)(1)(A)(ii), as
amended by section 221(c)(1), is amended--
(i) in subclauses (I) and (II), by inserting ``(or, insofar
as such payment area is a competitive Medicare Advantage
area, described in section 1854(b)(6))'' after ``section
1854(b)(3)(C)''; and
(ii) in subclause (II), by inserting ``(or, insofar as such
payment area is a competitive Medicare Advantage area, the
competitive Medicare Advantage non-drug monthly benchmark
amount)'' after ``Medicare Advantage area-specific non-drug
monthly benchmark amount''; and
(B) Disclosure of information.--Section 1853(b)(1)(B), as
amended by section 221(e)(1), is amended to read as follows:
``(B) Competition information.--For years beginning with
2006, the following:
``(i) Benchmarks.--The Medicare Advantage area-specific
non-drug benchmark under section 1853(j) and, if applicable,
the competitive Medicare Advantage non-drug benchmark under
section 1853(k)(2), for the year and competitive Medicare
Advantage area involved and the national fee-for-service
market share percentage for the area and year.
``(ii) Adjustment factors.--The adjustment factors applied
under section 1853(a)(1)(A)(iv) (relating to demographic
adjustment), section 1853(a)(1)(B) (relating to adjustment
for end-stage renal disease), and section 1853(a)(3)
(relating to health status adjustment).
``(iii) Certain benchmarks and amounts.--In the case of a
competitive Medicare Advantage area, the Medicare Advantage
area-wide non-drug benchmark amount (as defined in subsection
(k)(8)(C)) and the fee-for-service area-specific non-drug
amount (as defined in section 1853(k)(6)) for the area.
``(iv) Individuals.--The number of individuals counted
under subsection (k)(4)(B) and enrolled in each Medicare
Advantage plan in the area.''.
(C) Definition of monthly basic premium.--Section
1854(b)(2)(A)(ii), as amended by section 221(d)(2), is
amended by inserting ``(or, in the case of a competitive
Medicare Advantage area, the competitive Medicare Advantage
non-drug monthly benchmark amount or, in applying this
paragraph under part E in the case of a competitive EFFS
region, the competitive EFFS non-drug monthly benchmark
amount)'' after ``benchmark amount''.
(c) Premium Adjustment.--
(1) In general.--Section 1839 (42 U.S.C. 1395r) is amended
by adding at the end the following new subsection:
``(h)(1)(A) In the case of an individual who resides in a
competitive Medicare Advantage area under section 1853(k)(1)
(regardless of whether such area is in a competitive EFFS
region under section 1860E-3(e)) and who is not enrolled in a
Medicare Advantage plan under part C or in an EFFS plan under
part E, the monthly premium otherwise applied under this part
(determined without regard to subsections (b) and (f) or any
adjustment under this subsection) shall be adjusted as
follows: If the fee-for-service area-specific non-drug amount
(as defined in section 1853(k)(6)) for the competitive
Medicare Advantage area in which the individual resides for a
month--
``(i) does not exceed the competitive Medicare Advantage
non-drug benchmark (as determined under paragraph (2) of
section 1853(k), without regard to paragraph (8) thereof) for
such area, the amount of the premium for the individual for
the month shall be reduced by an amount equal to the product
of the adjustment factor under subparagraph (C) and 75
percent of the amount by which such competitive benchmark
exceeds such fee-for-service area-specific non-drug amount;
or
``(ii) exceeds such competitive Medicare Advantage non-drug
benchmark, the amount of the premium for the individual for
the month shall be adjusted to ensure, subject to
subparagraph (B), that--
``(I) the sum of the amount of the adjusted premium and the
competitive Medicare Advantage non-drug benchmark for the
area, is equal to
``(II) the sum of the unadjusted premium plus amount of the
fee-for-service area-specific non-drug amount for the area.
``(B) In no case shall the actual amount of an adjustment
under subparagraph (A)(ii) exceed the product of the
adjustment factor under subparagraph (C) and the amount of
the adjustment otherwise computed under
[[Page H6034]]
subparagraph (A)(ii) without regard to this subparagraph.
``(C) The adjustment factor under this subparagraph for an
area for a year is equal to--
``(i) the number of consecutive years (in the 5-year period
ending with the year involved) in which such area was a
competitive Medicare Advantage area; divided by
``(ii) 5.
``(2)(A) In the case of an individual who resides in an
area that is within a competitive EFFS region under section
1860E-3(e) but is not within a competitive Medicare Advantage
area under section 1853(k)(1) and who is not enrolled in a
Medicare Advantage plan under part C or in an EFFS plan under
part E, the monthly premium otherwise applied under this part
(determined without regard to subsections (b) and (f) or any
adjustment under this subsection) shall be adjusted as
follows: If the fee-for-service region-specific non-drug
amount (as defined in section 1860E-3(e)(6)) for a region for
a month--
``(i) does not exceed the competitive EFFS non-drug monthly
benchmark amount (as determined under paragraph (2) of
section 1860E-3(e), without regard to paragraph (8) thereof)
for such region, the amount of the premium for the individual
for the month shall be reduced by an amount equal to the
product of the adjustment factor under subparagraph (C) and
75 percent of the amount by which such competitive benchmark
amount exceeds such fee-for-service region-specific non-drug
benchmark amount; or
``(ii) exceeds such competitive EFFS non-drug monthly
benchmark amount, the amount of the premium for the
individual for the month shall be adjusted to ensure, subject
to subparagraph (B), that--
``(I) the sum of the amount of the adjusted premium and the
competitive EFFS non-drug monthly benchmark amount for the
region, is equal to
``(II) the sum of the unadjusted premium plus the amount of
the EFFS region-specific non-drug monthly bidfor the region.
``(B) In no case shall the actual amount of an adjustment
under subparagraph (A)(ii) exceed the product of the
adjustment factor under subparagraph (C) and the amount of
the adjustment otherwise computed under subparagraph (A)(ii)
without regard to this subparagraph.
``(C) The adjustment factor under this subparagraph for an
EFFS region for a year is equal to--
``(i) the number of consecutive years (in the 5-year period
ending with the year involved) in which such region was a
competitive EFFS region; divided by
``(ii) 5.
``(3) Nothing in this subsection shall be construed as
preventing a reduction under paragraph (1)(A) or paragraph
(2)(A) in the premium otherwise applicable under this part to
zero or from requiring the provision of a rebate to the
extent such premium would otherwise be required to be less
than zero.
``(4) The adjustment in the premium under this subsection
shall be effected in such manner as the Medicare Benefits
Administrator determines appropriate.
``(5) In order to carry out this subsection (insofar as it
is effected through the manner of collection of premiums
under 1840(a)), the Medicare Benefits Administrator shall
transmit to the Commissioner of Social Security--
``(A) at the beginning of each year, the name, social
security account number, and the amount of the adjustment (if
any) under this subsection for each individual enrolled under
this part for each month during the year; and
``(B) periodically throughout the year, information to
update the information previously transmitted under this
paragraph for the year.''.
(2) No change in medicare's defined benefit package.--
Nothing in this part (or the amendments made by this part)
shall be construed as changing the entitlement to defined
benefits under parts A and B of title XVIII of the Social
Security Act.
(3) Conforming amendment.--Section 1844(c) (42 U.S.C.
1395w(c)) is amended by inserting ``and without regard to any
premium adjustment effected under section 1839(h)'' before
the period at the end.
(d) Effective Date.--The amendments made by this section
shall take effect on January 1, 2010.
TITLE III--COMBATTING WASTE, FRAUD, AND ABUSE
SEC. 301. 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''.
SEC. 302. COMPETITIVE ACQUISITION OF CERTAIN ITEMS AND
SERVICES.
(a) In General.--Section 1847 (42 U.S.C. 1395w-3) is
amended to read as follows:
``competitive acquisition of certain items and services
``Sec. 1847. (a) Establishment of Competitive Acquisition
Programs.--
``(1) Implementation of programs.--
``(A) In general.--The Secretary shall establish and
implement programs under which competitive acquisition areas
are established throughout the United States for contract
award purposes for the furnishing under this part of
competitively priced items and services (described in
paragraph (2)) for which payment is made under this part.
Such areas may differ for different items and services.
``(B) Phased-in implementation.--The programs shall be
phased-in--
``(i) among competitive acquisition areas over a period of
not longer than 3 years in a manner so that the competition
under the programs occurs in--
``(I) at least \1/3\ of such areas in 2005; and
``(II) at least \2/3\ of such areas in 2006; and
``(ii) among items and services in a manner such that the
programs apply to the highest cost and highest volume items
and services first.
``(C) Waiver of certain provisions.--In carrying out the
programs, the Secretary may waive such provisions of the
Federal Acquisition Regulation as are necessary for the
efficient implementation of this section, other than
provisions relating to confidentiality of information and
such other provisions as the Secretary determines
appropriate.
``(2) Items and services described.--The items and services
referred to in paragraph (1) are the following:
``(A) Durable medical equipment and medical supplies.--
Covered items (as defined in section 1834(a)(13)) for which
payment is otherwise made under section 1834(a), including
items used in infusion and drugs and supplies used in
conjunction with durable medical equipment, but excluding
class III devices under the Federal Food, Drug, and Cosmetic
Act.
``(B) Other equipment and supplies.--Items, equipment, and
supplies (as described in section 1842(s)(2)(D) other than
enteral nutrients).
[[Page H6035]]
``(C) Off-the-shelf orthotics.--Orthotics (described in
section 1861(s)(9)) for which payment is otherwise made under
section 1834(h) which require minimal self-adjustment for
appropriate use and does not require expertise in trimming,
bending, molding, assembling, or customizing to fit to the
patient.
``(3) Exception authority.--In carrying out the programs
under this section, the Secretary may exempt--
``(A) rural areas and areas with low population density
within urban areas that are not competitive, unless there is
a significant national market through mail order for a
particular item or service; and
``(B) items and services for which the application of
competitive acquisition is not likely to result in
significant savings.
``(4) Special rule for certain rented items of durable
medical equipment.--In the case of a covered item for which
payment is made on a rental basis under section 1834(a), the
Secretary shall establish a process by which rental
agreements for the covered items entered into before the
application of the competitive acquisition program under this
section for the item may be continued notwithstanding this
section. In the case of any such continuation, the supplier
involved shall provide for appropriate servicing and
replacement, as required under section 1834(a).
``(5) Physician authorization.--The Secretary may establish
a process under which a physician may prescribe a particular
brand or mode of delivery of an item or service if the item
or service involved is clinically more appropriate than other
similar items or services.
``(6) Application.--For each competitive acquisition area
in which the program is implemented under this subsection
with respect to items and services, the payment basis
determined under the competition conducted under subsection
(b) shall be substituted for the payment basis otherwise
applied under section 1834(a).
``(b) Program Requirements.--
``(1) In general.--The Secretary shall conduct a
competition among entities supplying items and services
described in subsection (a)(2) for each competitive
acquisition area in which the program is implemented under
subsection (a) with respect to such items and services.
``(2) Conditions for awarding contract.--
``(A) In general.--The Secretary may not award a contract
to any entity under the competition conducted in an
competitive acquisition area pursuant to paragraph (1) to
furnish such items or services unless the Secretary finds all
of the following:
``(i) The entity meets quality and financial standards
specified by the Secretary or developed by the Program
Advisory and Oversight Committee established under subsection
(c).
``(ii) The total amounts to be paid under the contract
(including costs associated with the administration of the
contract) are expected to be less than the total amounts that
would otherwise be paid.
``(iii) Beneficiary access to a choice of multiple
suppliers in the area is maintained.
``(iv) Beneficiary liability is limited to 20 percent of
the applicable contract award price, except in such cases
where a supplier has furnished an upgraded item and has
executed an advanced beneficiary notice.
``(B) Development of quality standards for dme products.--
``(i) In general.--The quality standards specified under
subparagraph (A)(i) shall not be less than the quality
standards that would otherwise apply if this section did not
apply and shall include consumer services standards. Not
later than July 1, 2004, the Secretary shall establish new
quality standards for products subject to competitive
acquisition under this section. Such standards shall be
applied prospectively and shall be published on the website
of the Department of Health and Human Services.
``(ii) Consultation with program advisory and oversight
committee.--The Secretary shall consult with the Program
Advisory and Oversight Committee (established under
subsection (c)) to review (and advise the Secretary
concerning) the quality standards referred to in clause (i).
``(iii) Construction.--Nothing in this subparagraph shall
be construed as delaying the effective date of the
implementation of the competitive acquisition program under
this section.
``(3) Contents of contract.--
``(A) In general.--A contract entered into with an entity
under the competition conducted pursuant to paragraph (1) is
subject to terms and conditions that the Secretary may
specify.
``(B) Term of contracts.--The Secretary shall recompete
contracts under this section not less often than once every 3
years.
``(4) Limit on number of contractors.--
``(A) In general.--The Secretary may limit the number of
contractors in a competitive acquisition area to the number
needed to meet projected demand for items and services
covered under the contracts. In awarding contracts, the
Secretary shall take into account the ability of bidding
entities to furnish items or services in sufficient
quantities to meet the anticipated needs of beneficiaries for
such items or services in the geographic area covered under
the contract on a timely basis.
``(B) Multiple winners.--The Secretary shall award
contracts to multiple entities submitting bids in each area
for an item or service.
``(5) Payment.--Payment under this part for competitively
priced items and services described in subsection (a)(2)
shall be based on the bids submitted and accepted under this
section for such items and services.
``(6) Participating contractors.--Payment shall not be made
for items and services described in subsection (a)(2)
furnished by a contractor and for which competition is
conducted under this section unless--
``(A) the contractor has submitted a bid for such items and
services under this section; and
``(B) the Secretary has awarded a contract to the
contractor for such items and services under this section.
In this section, the term `bid' means a request for a
proposal for an item or service that includes the cost of the
item or service, and where appropriate, any services that are
attendant to the provision of the item or service.
``(7) Consideration in determining categories for bids.--
The Secretary shall consider the similarity of the clinical
efficiency and value of specific codes and products,
including products that may provide a therapeutic advantage
to beneficiaries, before delineating the categories and
products that will be subject to bidding.
``(8) Authority to contract for education, monitoring,
outreach and complaint services.--The Secretary may enter
into a contract with an appropriate entity to address
complaints from beneficiaries who receive items and services
from an entity with a contract under this section and to
conduct appropriate education of and outreach to such
beneficiaries and monitoring quality of services with respect
to the program.
``(c) Program Advisory and Oversight Committee.--
``(1) Establishment.--There is established a Program
Advisory and Oversight Committee (hereinafter in this section
referred to as the `Committee').
``(2) Membership; terms.--The Committee shall consist of
such members as the Secretary may appoint who shall serve for
such term as the Secretary may specify.
``(3) Duties.--
``(A) Technical assistance.--The Committee shall provide
advice and technical assistance to the Secretary with respect
to the following functions:
``(i) The implementation of the program under this section.
``(ii) The establishment of requirements for collection of
data.
``(iii) The development of proposals for efficient
interaction among manufacturers and distributors of the items
and services and providers and beneficiaries.
``(B) Additional duties.--The Committee shall perform such
additional functions to assist the Secretary in carrying out
this section as the Secretary may specify.
``(4) Inapplicability of faca.--The provisions of the
Federal Advisory Committee Act (5 U.S.C. App.) shall not
apply.
``(d) Annual Reports.--The Secretary shall submit to
Congress an annual management report on the programs under
this section. Each such report shall include information on
savings, reductions in beneficiary cost-sharing, access to
and quality of items and services, and beneficiary
satisfaction.
``(e) Demonstration Project for Clinical Laboratory
Services.--
``(1) In general.--The Secretary shall conduct a
demonstration project on the application of competitive
acquisition under this section to clinical diagnostic
laboratory tests--
``(A) for which payment is otherwise made under section
1833(h) or 1834(d)(1) (relating to colorectal cancer
screening tests); and
``(B) which are furnished by entities that did not have a
face-to-face encounter with the individual.
``(2) Terms and conditions.--Such project shall be under
the same conditions as are applicable to items and services
described in subsection (a)(2).
``(3) Report.--The Secretary shall submit to Congress--
``(A) an initial report on the project not later than
December 31, 2005; and
``(B) such progress and final reports on the project after
such date as the Secretary determines appropriate.''.
(b) Conforming Amendments.--
(1) Durable medical equipment; elimination of inherent
reasonableness authority.--Section 1834(a) (42 U.S.C.
1395m(a)) is amended--
(A) in paragraph (1)(B), by striking ``The payment basis''
and inserting ``Subject to subparagraph (E)(i), the payment
basis'';
(B) in paragraph (1)(C), by striking ``This subsection''
and inserting ``Subject to subparagraph (E)(ii), this
subsection'';
(C) by adding at the end of paragraph (1) the following new
subparagraph:
``(E) Application of competitive acquisition; elimination
of inherent reasonableness authority.--In the case of covered
items and services that are included in a competitive
acquisition program in a competitive acquisition area under
section 1847(a)--
``(i) the payment basis under this subsection for such
items and services furnished in such area shall be the
payment basis determined under such competitive acquisition
program; and
``(ii) the Secretary may use information on the payment
determined under such competitive acquisition programs to
adjust the payment amount otherwise recognized under
[[Page H6036]]
subparagraph (B)(ii) for an area that is not a competitive
acquisition area under section 1847 and in the case of such
adjustment, paragraph (10)(B) shall not be applied.''; and
(D) in paragraph (10)(B), by inserting ``in an area and
with respect to covered items and services for which the
Secretary does not make a payment amount adjustment under
paragraph (1)(E)'' after ``under this subsection''.
(2) Off-the-shelf orthotics; elimination of inherent
reasonableness authority.--Section 1834(h) (42 U.S.C.
1395m(h)) is amended--
(A) in paragraph (1)(B), by striking ``and (E)'' and
inserting ``, (E) , and (H)(i)'';
(B) in paragraph (1)(D), by striking ``This subsection''
and inserting ``Subject to subparagraph (H)(ii), this
subsection'';
(C) by adding at the end of paragraph (1) the following new
subparagraph:
``(H) Application of competitive acquisition to orthotics;
elimination of inherent reasonableness authority.--In the
case of orthotics described in paragraph (2)(B) of section
1847(a) that are included in a competitive acquisition
program in a competitive acquisition area under such
section--
``(i) the payment basis under this subsection for such
orthotics furnished in such area shall be the payment basis
determined under such competitive acquisition program; and
``(ii) the Secretary may use information on the payment
determined under such competitive acquisition programs to
adjust the payment amount otherwise recognized under
subparagraph (B)(ii) for an area that is not a competitive
acquisition area under section 1847, and in the case of such
adjustment, paragraphs (8) and (9) of section 1842(b) shall
not be applied.''.
(c) Report on Activities of Suppliers.--The Secretary shall
conduct a study to determine the extent to which (if any)
suppliers of covered items of durable medical equipment that
are subject to the competitive acquisition program under
section 1847 of the Social Security Act, as amended by
subsection (a), are soliciting physicians to prescribe
certain brands or modes of delivery of covered items based on
profitability.
(d) GAO Study on Safe and Effective Home Infusion and
Inhalation Therapy; Standards.--
(1) Study.--The Comptroller General of the United States
shall conduct a study of the standards, professional
services, and related functions necessary for the provision
of safe and effective home infusion therapy and home
inhalation therapy.
(2) Report.--Not later than May 1, 2004, the Comptroller
General shall submit to Congress a report on the study
conducted under paragraph (1).
(3) Use of findings in developing standards.--In
promulgating regulations to carry out section 1847 of the
Social Security Act, as amended by subsection (a), the
Secretary shall ensure that quality standards developed under
subsection (b)(2)(B) of such section reflect the findings of
the Comptroller General set forth in the report under
paragraph (2).
SEC. 303. COMPETITIVE ACQUISITION OF COVERED OUTPATIENT DRUGS
AND BIOLOGICALS.
(a) Adjustment to Physician Fee Schedule.--
(1) Adjustment in practice expense relative value units.--
Section 1848(c)(2) (42 U.S.C. 1395w-4(c)(2)) is amended--
(A) in subparagraph (B)--
(i) in clause (ii)(II), by striking ``The adjustments'' and
inserting ``Subject to clause (iv), the adjustments''; and
(ii) by adding at the end of subparagraph (B), the
following new clause:
``(iv) Exception to budget neutrality.--The additional
expenditures attributable to clauses (ii) and (iii) of
subparagraph (H) shall not be taken into account in applying
clause (ii)(II) for 2005.''; and
(B) by adding at the end the following new subparagraph:
``(H) Adjustments in practice expense relative value units
for 2005.--
``(i) In general.--As part of the annual process of
establishing the physician fee schedule under subsection (b)
for 2005, the Secretary shall increase the practice expense
relative value units for 2005 consistent with clauses (ii)
and (iii).
``(ii) Use of supplemental survey data.--For 2005 for any
specialty that submitted survey data that included expenses
for the administration of drugs and biologicals for which
payment is made under section 1842(o) (or section 1847A), the
Secretary shall use such supplemental survey data in carrying
out this subparagraph insofar as they are collected and
provided by entities and organizations consistent with the
criteria established by the Secretary pursuant to section
212(a) of the Medicare, Medicaid, and SCHIP Balanced Budget
Refinement Act of 1999 and insofar as such data are submitted
to the Secretary by December 31, 2004.
``(iii) Provisions for appropriate reporting and billing
for physicians' services associated with the administration
of covered outpatient drugs and biologicals.--
``(I) Evaluation of codes.--The Secretary shall promptly
evaluate existing codes for physicians' services associated
with the administration of covered outpatient drugs and
biologicals (as defined in section 1847A(a)(2)(A)) to ensure
accurate reporting and billing for such services.
``(II) Use of existing processes.--In carrying out
subclause (I), the Secretary shall use existing processes for
the consideration of coding changes and, to the extent coding
changes are made, shall use such processes in establishing
relative values for such services.
``(III) Implementation.--In carrying out subclause (I), the
Secretary shall consult with representatives of physician
specialties affected by the implementation of section 1847A
or section 1847B, and shall take such steps within the
Secretary's authority to expedite such considerations under
subclause (II).
``(iv) Subsequent, budget neutral adjustments permitted.--
Nothing in this subparagraph shall be construed as preventing
the Secretary from providing for adjustments in practice
expense relative value units under (and consistent with)
subparagraph (B) for years after 2005.
``(v) Consultation.--Before publishing the notice of
proposed rulemaking to carry out this subparagraph, the
Secretary shall consult with the Comptroller General of the
United States and with groups representing the physician
specialties involved.
``(vi) Treatment as change in law and regulation in
sustainable growth rate determination.--The enactment of
subparagraph (B)(iv) and this subparagraph shall be treated
as a change in law for purposes of applying subsection
(f)(2)(D).''.
(2) Prohibition of administrative and judicial review.--
Section 1848(i)(1) (42 U.S.C. 1395w-4(i)(1)) is amended--
(A) by striking ``and'' at the end of subparagraph (D);
(B) by striking the period at the end of subparagraph (E)
and inserting ``, and''; and
(C) by adding at the end the following new subparagraph:
``(F) adjustments in practice expense relative value units
for 2005 under subsection (c)(2)(H).''.
(3) Treatment of other services currently in the non-
physician work pool.--The Secretary shall make adjustments to
the non-physician work pool methodology (as such term is used
in the regulations promulgated by the Secretary in the
Federal Register as of December 31, 2002) for determination
of practice expense relative value units under the physician
fee schedule described in section 1848(c)(2)(C)(ii) of the
Social Security Act so that the practice expense relative
value units for services determined under such methodology
are not affected relative to the practice expense relative
value units of other services not determined under such non-
physician work pool methodology, as the result of amendments
made by paragraph (1).
(b) Payment Based on Competition.--Title XVIII is amended
by inserting after section 1847 (42 U.S.C. 1395w-3), as
amended by section 302, the following new sections:
``competitive acquisition of covered outpatient drugs and biologicals
``Sec. 1847A. (a) Implementation of Competitive
Acquisition.--
``(1) Implementation of program.--
``(A) In general.--The Secretary shall establish and
implement a competitive acquisition program under which--
``(i) competitive acquisition areas are established
throughout the United States for contract award purposes for
acquisition of and payment for categories of covered
outpatient drugs and biologicals (as defined in paragraph
(2)) under this part;
``(ii) each physician is given the opportunity annually to
elect to obtain drugs and biologicals under the program or
under section 1847B; and
``(iii) each physician who elects to obtain drugs and
biologicals under the program makes an annual selection under
paragraph (5) of the contractor through which drugs and
biologicals within a category of drugs and biologicals will
be acquired and delivered to the physician under this part.
``(B) Implementation.--The Secretary shall implement the
program so that the program applies to--
``(i) the oncology category beginning in 2005; and
``(ii) the non-oncology category beginning in 2006.
This section shall not apply in the case of a physician who
elects section 1847B to apply.
``(C) Waiver of certain provisions.--In order to promote
competition, efficient service, and product quality, in
carrying out the program the Secretary may waive such
provisions of the Federal Acquisition Regulation as are
necessary for the efficient implementation of this section,
other than provisions relating to confidentiality of
information and such other provisions as the Secretary
determines appropriate.
``(D) Exclusion authority.--The Secretary may exclude
covered outpatient drugs and biologicals (including a class
of such drugs and biologicals) from the competitive bidding
system under this section if the drugs or biologicals (or
class) are not appropriate for competitive bidding due to low
volume of utilization by beneficiaries under this part or a
unique mode or method of delivery or similar reasons.
``(2) Covered outpatient drugs and biologicals, categories,
program defined.--For purposes of this section--
``(A) Covered outpatient drugs and biologicals defined.--
The term `covered outpatient drugs and biologicals' means
drugs and biologicals to which section 1842(o) applies and
which are not covered under section 1847 (relating to
competitive acquisition for items of durable medical
equipment). Such term does not include the following:
[[Page H6037]]
``(i) Blood clotting factors.
``(ii) Drugs and biologicals furnished to individuals in
connection with the treatment of end stage renal disease.
``(iii) Radiopharmaceuticals.
``(iv) Vaccines.
``(B) 2 categories.--Each of the following shall be a
separate category of covered outpatient drugs and
biologicals, as identified by the Secretary:
``(i) Oncology category.--A category (in this section
referred to as the `oncology category') consisting of those
covered outpatient drugs and biologicals that, as determined
by the Secretary, are typically primarily billed by
oncologists or are otherwise used to treat cancer.
``(ii) Non-oncology categories.--Such numbers of categories
(in this section referred to as the `non-oncology
categories') consisting of covered outpatient drugs and
biologicals not described in clause (i), and appropriate
subcategories of such drugs and biologicals as the Secretary
may specify.
``(C) Program.--The term `program' means the competitive
acquisition program under this section.
``(D) Competitive acquisition area; area.--The terms
`competitive acquisition area' and `area' mean an appropriate
geographic region established by the Secretary under the
program.
``(E) Contractor.--The term `contractor' means an entity
that has entered into a contract with the Secretary under
this section.
``(3) Application of program payment methodology.--With
respect to covered outpatient drugs and biologicals which are
supplied under the program in an area and which are
prescribed by a physician who has not elected section 1847B
to apply--
``(A) the claim for such drugs and biologicals shall be
submitted by the contractor that supplied the drugs and
biologicals;
``(B) collection of amounts of any deductible and
coinsurance applicable with respect to such drugs and
biologicals shall be the responsibility of such contractor
and shall not be collected unless the drug or biological is
administered to the beneficiary involved; and
``(C) the payment under this section (and related
coinsurance amounts) for such drugs and biologicals--
``(i) shall be made only to such contractor;
``(ii) shall be conditioned upon the administration of such
drugs and biologicals; and
``(iii) shall be based on the average of the bid prices for
such drugs and biologicals in the area, as computed under
subsection (d).
The Secretary shall provide a process for recoupment in the
case in which payment is made for drugs and biologicals which
were billed at the time of dispensing but which were not
actually administered.
``(4) Contract required.--
``(A) In general.--Payment may not be made under this part
for covered outpatient drugs and biologicals prescribed by a
physician who has not elected section 1847B to apply within a
category and a competitive acquisition area with respect to
which the program applies unless--
``(i) the drugs or biologicals are supplied by a contractor
with a contract under this section for such category of drugs
and biologicals and area; and
``(ii) the physician has elected such contractor under
paragraph (5) for such category and area.
``(B) Physician choice.--Subparagraph (A) shall not apply
for a category of drugs for an area if the physician
prescribing the covered outpatient drug in such category and
area has elected to apply section 1847B instead of this
section.
``(5) Contractor selection process.--
``(A) In general.--The Secretary shall provide a process
for the selection of a contractor, on an annual basis and in
such exigent circumstances as the Secretary may provide and
with respect to each category of covered outpatient drugs and
biologicals for an area, by physicians prescribing such drugs
and biologicals in the area of the contractor under this
section that will supply the drugs and biologicals within
that category and area. Such selection shall also include the
election described in section 1847B(a).
``(B) Information on contractors.--The Secretary shall make
available to physicians on an ongoing basis, through a
directory posted on the Department's Internet website or
otherwise and upon request, a list of the contractors under
this section in the different competitive acquisition areas.
``(C) Selecting physician defined.--For purposes of this
section, the term `selecting physician' means, with respect
to a contractor and category and competitive acquisition
area, a physician who has not elected section 1847B to apply
and has selected to apply under this section such contractor
for such category and area.
``(b) Program Requirements.--
``(1) Contract for covered outpatient drugs and
biologicals.--The Secretary shall conduct a competition among
entities for the acquisition of a covered outpatient drug or
biological within each HCPCS code within each category for
each competitive acquisition area.
``(2) Conditions for awarding contract.--
``(A) In general.--The Secretary may not award a contract
to any entity under the competition conducted in a
competitive acquisition area pursuant to paragraph (1) with
respect to the acquisition of covered outpatient drugs and
biologicals within a category unless the Secretary finds that
the entity meets all of the following with respect to the
contract period involved:
``(i) Capacity to supply covered outpatient drug or
biological within category.--
``(I) In general.--The entity has sufficient arrangements
to acquire and to deliver covered outpatient drugs and
biologicals within such category in the area specified in the
contract at the bid price specified in the contract for all
physicians that may elect such entity.
``(II) Shipment methodology.--The entity has arrangements
in effect for the shipment at least 5 days each week of
covered outpatient drugs and biologicals under the contract
and for the timely delivery (including for emergency
situations) of such drugs and biologicals in the area under
the contract.
``(ii) Quality, service, financial performance and solvency
standards.--The entity meets quality, service, financial
performance, and solvency standards specified by the
Secretary, including--
``(I) the establishment of procedures for the prompt
response and resolution of physician and beneficiary
complaints and inquiries regarding the shipment of covered
outpatient drugs and biologicals; and
``(II) a grievance process for the resolution of disputes.
``(B) Additional considerations.--The Secretary may refuse
to award a contract under this section, and may terminate
such a contract, with an entity based upon--
``(i) the suspension or revocation, by the Federal
Government or a State government, of the entity's license for
the distribution of drugs or biologicals (including
controlled substances); or
``(ii) the exclusion of the entity under section 1128 from
participation under this title.
``(C) Application of medicare provider ombudsman.--For
provision providing for a program-wide Medicare Provider
Ombudsman to review complaints, see section 1868(b), as added
by section 923 of the Medicare Prescription Drug and
Modernization Act of 2003.
``(3) Awarding multiple contracts for a category and
area.--In order to provide a choice of at least 2 contractors
in each competitive acquisition area for a category of drugs
and biologicals, the Secretary may limit (but not below 2)
the number of qualified entities that are awarded such
contracts for any category and area. The Secretary shall
select among qualified entities based on the following:
``(A) The bid prices for covered outpatient drugs and
biologicals within the category and area.
``(B) Bid price for distribution of such drugs and
biologicals.
``(C) Ability to ensure product integrity.
``(D) Customer service.
``(E) Past experience in the distribution of drugs and
biologicals, including controlled substances.
``(F) Such other factors as the Secretary may specify.
``(4) Terms of contracts.--
``(A) In general.--A contract entered into with an entity
under the competition conducted pursuant to paragraph (1) is
subject to terms and conditions that the Secretary may
specify consistent with this section.
``(B) Period of contracts.--A contract under this section
shall be for a term of 2 years, but may be terminated by the
Secretary or the entity with appropriate, advance notice.
``(C) Integrity of drug and biological distribution
system.--The Secretary--
``(i) shall require that for all drug and biological
products distributed by a contractor under this section be
acquired directly from the manufacturer or from a distributor
that has acquired the products directly from the
manufacturer; and
``(ii) may require, in the case of such products that are
particularly susceptible to counterfeit or diversion, that
the contractor comply with such additional product integrity
safeguards as may be determined to be necessary.
``(D) Implementation of anti-counterfeiting, quality,
safety, and record keeping requirements.--The Secretary shall
require each contractor to implement (through its officers,
agents, representatives, and employees) requirements relating
to the storage and handling of covered outpatient drugs and
biologicals and for the establishment and maintenance of
distribution records for such drugs and biologicals. A
contract under this section may include requirements relating
to the following:
``(i) Secure facilities.
``(ii) Safe and appropriate storage of drugs and
biologicals.
``(iii) Examination of drugs and biologicals received and
dispensed.
``(iv) Disposition of damaged and outdated drugs and
biologicals.
``(v) Record keeping and written policies and procedures.
``(vi) Compliance personnel.
``(E) Compliance with code of conduct and fraud and abuse
rules.--Under the contract--
``(i) the contractor shall comply with a code of conduct,
specified or recognized by the Secretary, that includes
standards relating to conflicts of interest; and
``(ii) the contractor shall comply with all applicable
provisions relating to prevention of fraud and abuse,
including compliance with applicable guidelines of the
Department of Justice and the Inspector General of the
Department of Health and Human Services.
[[Page H6038]]
``(F) Direct delivery of drugs and biologicals to
physicians.--Under the contract the contractor shall only
supply covered outpatient drugs and biologicals directly to
the selecting physicians and not directly to beneficiaries,
except under circumstances and settings where a beneficiary
currently receives a drug or biological in the beneficiary's
home or other non-physician office setting as the Secretary
may provide. The contractor shall not deliver drugs and
biologicals to a selecting physician except upon receipt of a
prescription for such drugs and biologicals, and such
necessary data as may be required by the Secretary to carry
out this section. This section does not--
``(i) require a physician to submit a prescription for each
individual treatment; or
``(ii) change a physician's flexibility in terms of writing
a prescription for drugs for a single treatment or a course
of treatment.
``(5) Permitting access to drugs and biologicals.--The
Secretary shall establish rules under this section under
which drugs and biologicals which are acquired through a
contractor under this section may be used to resupply
inventories of such drugs and biologicals which are
administered consistent with safe drug practices and with
adequate safeguards against fraud and abuse. The previous
sentence shall apply if the physicians can demonstrate to the
Secretary all of the following:
``(A) The drugs or biologicals are required immediately.
``(B) The physician could not have reasonably anticipated
the immediate requirement for the drugs or biologicals.
``(C) The contractor could not deliver to the physician the
drugs or biologicals in a timely manner.
``(D) The drugs or biologicals were administered in an
emergency situation.
``(6) Construction.--Nothing in this section shall be
construed as waiving applicable State requirements relating
to licensing of pharmacies.
``(c) Bidding Process.--
``(1) In general.--In awarding a contract for a category of
drugs and biologicals in an area under the program, the
Secretary shall consider with respect to each entity seeking
to be awarded a contract the prices bid to acquire and supply
the covered outpatient drugs and biologicals for that
category and area and the other factors referred to in
subsection (b)(3).
``(2) Prices bid.--The prices bid by an entity under
paragraph (1) shall be the prices in effect and available for
the supply of contracted drugs and biologicals in the area
through the entity for the contract period.
``(3) Rejection of contract offer.--The Secretary shall
reject the contract offer of an entity with respect to a
category of drugs and biologicals for an area if the
Secretary estimates that the prices bid, in the aggregate on
average, would exceed 100 percent of the average sales price
(as determined under section 1847B).
``(4) Bidding on a national or regional basis.--Nothing in
this section shall be construed as precluding a bidder from
bidding for contracts in all areas of the United States or as
requiring a bidder to submit a bid for all areas of the
United States.
``(5) Uniformity of bids within area.--The amount of the
bid submitted under a contract offer for any covered
outpatient drug or biological for an area shall be the same
for that drug or biological for all portions of that area.
``(6) Confidentiality of bids.--The provisions of
subparagraph (D) of section 1927(b)(3) shall apply to a bid
submitted in a contract offer for a covered outpatient drug
or biological under this section in the same manner as it
applies to information disclosed under such section, except
that any reference--
``(A) in that subparagraph to a `manufacturer or
wholesaler' is deemed a reference to a `bidder' under this
section;
``(B) in that section to `prices charged for drugs' is
deemed a reference to a `bid' submitted under this section;
and
``(C) in clause (i) of that section to `this section', is
deemed a reference to `part B of title XVIII'.
``(7) Inclusion of costs.--The bid price submitted in a
contract offer for a covered outpatient drug or biological
shall--
``(A) include all costs related to the delivery of the drug
or biological to the selecting physician (or other point of
delivery); and
``(B) include the costs of dispensing (including shipping)
of such drug or biological and management fees, but shall not
include any costs related to the administration of the drug
or biological, or wastage, spillage, or spoilage.
``(8) Price adjustments during contract period; disclosure
of costs.--Each contract awarded shall provide for--
``(A) disclosure to the Secretary the contractor's
reasonable, net acquisition costs for periods specified by
the Secretary, not more often than quarterly, of the
contract; and
``(B) appropriate price adjustments over the period of the
contract to reflect significant increases or decreases in a
contractor's reasonable, net acquisition costs, as so
disclosed.
``(d) Computation of Average Bid Prices for a Category and
Area.--
``(1) In general.--For each year or other contract period
for each covered outpatient drug or biological and area with
respect to which a competition is conducted under the
program, the Secretary shall compute an area average of the
bid prices submitted, in contract offers accepted for the
category and area, for that year or other contract period.
``(2) Special rules.--The Secretary shall establish rules
regarding the use under this section of the alternative
payment amount provided under section 1847B to the use of a
price for specific covered outpatient drugs and biologicals
in the following cases:
``(A) New drugs and biologicals.--A covered outpatient drug
or biological for which an average bid price has not been
previously determined.
``(B) Other cases.--Such other exceptional cases as the
Secretary may specify in regulations, such as oral drugs
under section 1861(s)(2)(Q) and immmunosuppressives under
section 1861(s)(2)(J).
``(e) Coinsurance.--
``(1) In general.--Coinsurance under this part with respect
to a covered outpatient drug or biological for which payment
is payable under this section shall be based on 20 percent of
the payment basis under this section.
``(2) Collection.--Such coinsurance shall be collected by
the contractor that supplies the drug or biological involved
and, subject to subsection (a)(3)(B), in the same manner as
coinsurance is collected for durable medical equipment under
this part.
``(f) Special Payment Rules.--
``(1) In general.--The Secretary may not provide for an
adjustment to reimbursement for covered outpatient drugs and
biologicals unless adjustments to the practice expense
payment adjustment are made on the basis of supplemental
surveys under section 1848(c)(2)(H)(ii) of the Social
Security Act, as added by subsection (a)(1)(B).
``(2) Use in exclusion cases.--If the Secretary excludes a
drug or biological (or class of drugs or biologicals) under
subsection (a)(1)(D), the Secretary may provide for
reimbursement to be made under this part for such drugs and
biologicals (or class) using the payment methodology under
section 1847B.
``(3) Coordination rules.--The provisions of section
1842(h)(3) shall apply to a contractor with respect to
covered outpatients drugs and biologicals supplied by that
contractor in the same manner as they apply to a
participating supplier. In order to administer this section,
the Secretary may condition payment under this part to a
person for the administration of a drug or biological
supplied under this section upon person's provision of
information on such administration.
``(4) Application of requirement for assignment.--For
provision requiring assignment of claims for covered
outpatient drugs and biologicals, see section 1842(o)(3).
``(5) Protection for beneficiary in case of medical
necessity denial.--For protection of beneficiaries against
liability in the case of medical necessity determinations,
see section 1842(b)(3)(B)(ii)(III).
``(6) Physician role in appeals process.--The Secretary
shall establish a procedure under which a physician who
prescribes a drug or biological for which payment is made
under this section has appeal rights that are similar to
those provided to a physician who prescribes durable medical
equipment or a laboratory test.
``(g) Advisory Committee.--The Secretary shall establish an
advisory committee that includes representatives of parties
affected by the program under this section, including
physicians, specialty pharmacies, distributors,
manufacturers, and beneficiaries. The committee shall advise
the Secretary on issues relating to the effective
implementation of this section.
``(h) Annual Reports.--The Secretary shall submit to
Congress an annual report in each of 2005, 2006, and 2007, on
the program. Each such report shall include information on
savings, reductions in cost-sharing, access to covered
outpatient drugs and biologicals, the range of choices of
contractors available to providers, and beneficiary and
provider satisfaction.
``optional use of average sales price payment methodology
``Sec. 1847B. (a) In General.--
``(1) Election.--In connection with the annual election
made by a physician under section 1847A(a)(5), the physician
may elect to apply this section to the payment for covered
outpatient drugs and biologicals instead of the payment
methodology under section 1847A.
``(2) Implementation.--This section shall be implemented
with respect to categories of covered outpatient drugs and
biologicals described in section 1847A(a)(2)(B).
``(3) Covered outpatient drugs and biologicals defined.--
For purposes of this section, the term `covered outpatient
drugs and biologicals' has the meaning given such term in
section 1847A(a)(2)(A).
``(b) Computation of Payment Amount.--
``(1) In general.--If this section applies with respect to
a covered outpatient drug or biological, the amount payable
for the drug or biological (based on a minimum dosage unit)
is, subject to applicable deductible and coinsurance--
``(A) in the case of a multiple source drug (as defined in
subsection (c)(6)(C)), 100 percent (or in the case of covered
outpatient drugs and biologicals furnished during 2005 and
2006, 112 percent) of the amount determined under paragraph
(3); or
``(B) in the case of a single source drug (as defined in
subsection (c)(6)(D)), 100 percent (or in the case of covered
outpatient drugs and biologicals furnished during 2005 and
2006, 112 percent) of the amount determined under paragraph
(4).
[[Page H6039]]
``(2) Specification of unit.--
``(A) Specification by manufacturer.--The manufacturer of a
covered outpatient drug shall specify the unit associated
with each National Drug Code as part of the submission of
data under section 1927(b)(3)(A)(iii).
``(B) Unit defined.--In this section, the term `unit'
means, with respect to a covered outpatient drug, the lowest
identifiable quantity (such as a capsule or tablet, milligram
of molecules, or grams) of the drug that is dispensed,
exclusive of any diluent without reference to volume measures
pertaining to liquids.
``(3) Multiple source drug.--For all drug products included
within the same multiple source drug, the amount specified in
this paragraph is the volume-weighted average of the average
sales prices reported under section 1927(b)(3)(A)(iii)
computed as follows:
``(A) Compute the sum of the products (for each national
drug code assigned to such drug products) of--
``(i) the manufacturer's average sales price (as defined in
subsection (c)); and
``(ii) the total number of units specified under paragraph
(2) sold, as reported under section 1927(b)(3)(A)(iii).
``(B) Divide the sum computed under subparagraph (A) by the
sum of the total number of units under subparagraph (A)(ii)
for all national drug codes assigned to such drug products.
``(4) Single source drug.--The amount specified in this
paragraph for a single source drug is the lesser of the
following:
``(A) Manufacturer's average sales price.--The
manufacturer's average sales price for a national drug code,
as computed using the methodology applied under paragraph
(3).
``(B) Wholesale acquisition cost (wac).--The wholesale
acquisition cost (as defined in subsection (c)(6)(B))
reported for the single source drug.
``(5) Basis for determination.--The payment amount shall be
determined under this subsection based on information
reported under subsection (e) and without regard to any
special packaging, labeling, or identifiers on the dosage
form or product or package.
``(c) Manufacturer's Average Sales Price.--
``(1) In general.--For purposes of this subsection, subject
to paragraphs (2) and (3), the manufacturer's `average sales
price' means, of a covered outpatient drug for a NDC code for
a calendar quarter for a manufacturer for a unit--
``(A) the manufacturer's total sales (as defined by the
Secretary in regulations for purposes of section 1927(c)(1))
in the United States for such drug in the calendar quarter;
divided by
``(B) the total number of such units of such drug sold by
the manufacturer in such quarter.
``(2) Certain sales exempted from computation.--In
calculating the manufacturer's average sales price under this
subsection, the following sales shall be excluded:
``(A) Sales exempt from best price.--Sales exempt from the
inclusion in the determination of `best price' under section
1927(c)(1)(C)(i).
``(B) Sales at nominal charge.--Such other sales as the
Secretary identifies by regulation as sales to an entity that
are nominal in price or do not reflect a market price paid by
an entity to which payment is made under this section.
``(3) Sale price net of discounts.--In calculating the
manufacturer's average sales price under this subsection,
such price shall be determined taking into account volume
discounts, prompt pay discounts, cash discounts, the free
goods that are contingent on any purchase requirement,
chargebacks, and rebates (other than rebates under section
1927), that result in a reduction of the cost to the
purchaser. A rebate to a payor or other entity that does not
take title to a covered outpatient drug shall not be taken
into account in determining such price unless the
manufacturer has an agreement with the payor or other entity
under which the purchaser's price for the drug is reduced as
a consequence of such rebate.
``(4) Authority to disregard average sales price during
first quarter of sales.--In the case of a covered outpatient
drug during an initial period (not to exceed a full calendar
quarter) in which data on the prices for sales for the drug
is not sufficiently available from the manufacturer to
compute an average sales price for the drug, the Secretary
may determine the amount payable under this section for the
drug without considering the manufacturer's average sales
price of that manufacturer for that drug.
``(5) Frequency of determinations.--
``(A) In general on a quarterly basis.--The manufacturer's
average sales price, for a covered outpatient drug of a
manufacturer, shall be determined by such manufacturer under
this subsection on a quarterly basis. In making such
determination insofar as there is a lag in the reporting of
the information on rebates and chargebacks under paragraph
(3) so that adequate data are not available on a timely
basis, the manufacturer shall apply a methodology established
by the Secretary based on a 12-month rolling average for the
manufacturer to estimate costs attributable to rebates and
chargebacks.
``(B) Updates in rates.--The payment rates under subsection
(b)(1) and (b)(2)(A) shall be updated by the Secretary on a
quarterly basis and shall be applied based upon the
manufacturer's average sales price determined for the most
recent calendar quarter.
``(C) Use of contractors; implementation.--The Secretary
may use a carrier, fiscal intermediary, or other contractor
to determine the payment amount under subsection (b).
Notwithstanding any other provision of law, the Secretary may
implement, by program memorandum or otherwise, any of the
provisions of this section.
``(6) Definitions and other rules.--In this section:
``(A) Manufacturer.--The term `manufacturer' means, with
respect to a covered outpatient drug, the manufacturer (as
defined in section 1927(k)(5)) whose national drug code
appears on such drug.
``(B) Wholesale acquisition cost.--The term `wholesale
acquisition cost' means, with respect to a covered outpatient
drug, the manufacturer's list price for the drug to
wholesalers or direct purchasers in the United States, not
including prompt pay or other discounts, rebates or
reductions in price, for the most recent month for which the
information is available, as reported in wholesale price
guides or other publications of drug pricing data.
``(C) Multiple source drug.--The term `multiple source
drug' means, for a calendar quarter, a covered outpatient
drug for which there are 2 or more drug products which--
``(i) are rated as therapeutically equivalent (under the
Food and Drug Administration's most recent publication of
`Approved Drug Products with Therapeutic Equivalence
Evaluations'),
``(ii) except as provided in subparagraph (E), are
pharmaceutically equivalent and bioequivalent, as determined
under subparagraph (F) and as determined by the Food and Drug
Administration, and
``(iii) are sold or marketed in the United States during
the quarter.
``(D) Single source drug.--The term `single source drug'
means a covered outpatient drug which is not a multiple
source drug and which is produced or distributed under an
original new drug application approved by the Food and Drug
Administration, including a drug product marketed by any
cross-licensed producers or distributors operating under the
new drug application, or which is a biological.
``(E) Exception from pharmaceutical equivalence and
bioequivalence requirement.--Subparagraph (C)(ii) shall not
apply if the Food and Drug Administration changes by
regulation the requirement that, for purposes of the
publication described in subparagraph (C)(i), in order for
drug products to be rated as therapeutically equivalent, they
must be pharmaceutically equivalent and bioequivalent, as
defined in subparagraph (F).
``(F) Determination of pharmaceutical equivalence and
bioequivalence.--For purposes of this paragraph--
``(i) drug products are pharmaceutically equivalent if the
products contain identical amounts of the same active drug
ingredient in the same dosage form and meet compendial or
other applicable standards of strength, quality, purity, and
identity; and
``(ii) drugs are bioequivalent if they do not present a
known or potential bioequivalence problem, or, if they do
present such a problem, they are shown to meet an appropriate
standard of bioequivalence.
``(G) Inclusion of vaccines.--In applying provisions of
section 1927 under this section, `other than a vaccine' is
deemed deleted from section 1927(k)(2)(B).
``(d) Authority To Use Alternative Payment in Response to
Public Health Emergency.--In the case of a public health
emergency under section 319 of the Public Health Service Act
in which there is a documented inability to access covered
outpatient drugs and biologicals, and a concomitant increase
in the price, of a drug or biological which is not reflected
in the manufacturer's average sales price for one or more
quarters, the Secretary may use the wholesale acquisition
cost (or other reasonable measure of drug price) instead of
the manufacturer's average sales price for such quarters and
for subsequent quarters until the price and availability of
the drug or biological has stabilized and is substantially
reflected in the applicable manufacturer's average sales
price.
``(e) Reports.--
``(1) Quarterly report on average sales price.--For
requirements for reporting the manufacturer's average sales
price (and, if required to make payment, the manufacturer's
wholesale acquisition cost) for the covered outpatient drug
or biological, see section 1927(b)(3).
``(2) Annual report to congress.--The Secretary shall
submit to the Committees on Energy and Commerce and Ways and
Means of the House of Representatives and the Committee on
Finance of the Senate an annual report on the operation of
this section. Such report shall include information on the
following:
``(A) Trends in average sales price under subsection (b).
``(B) Administrative costs associated with compliance with
this section.
``(C) Total value of payments made under this section.
``(D) Comparison of the average manufacturer price as
applied under section 1927 for a covered outpatient drug or
biological with the manufacturer's average sales price for
the drug or biological under this section.
[[Page H6040]]
``(f) Restriction on administrative and judicial review.--
There shall be no administrative or judicial review under
section 1869, section 1878, or otherwise, of determinations
of manufacturer's average sales price under subsection
(c).''.
(c) Continuation of Payment Methodology for
Radiopharmaceuticals.--Nothing in the amendments made by this
section shall be construed as changing the payment
methodology under part B of title XVIII of the Social
Security Act for radiopharmaceuticals, including the use by
carriers of invoice pricing methodology.
(d) Conforming Amendments.--
(1) In general.--Section 1842(o) (42 U.S.C. 1395u(o)) is
amended--
(A) in paragraph (1), by inserting ``, subject to section
1847A and 1847B,'' before ``the amount payable for the drug
or biological''; and
(B) by adding at the end of paragraph (2) the following:
``This paragraph shall not apply in the case of payment under
section 1847A or 1847B.''.
(2) No change in coverage basis.--Section 1861(s)(2)(A) (42
U.S.C. 1395x(s)(2)(A)) is amended by inserting ``(or would
have been so included but for the application of section
1847A or 1847B)'' after ``included in the physicians'
bills''.
(3) Payment.--Section 1833(a)(1)(S) (42 U.S.C.
1395l(a)(1)(S)) is amended by inserting ``(or, if applicable,
under section 1847A or 1847B)'' after ``1842(o)''.
(4) Consolidated reporting of pricing information.--Section
1927 (42 U.S.C. 1396r-8) is amended--
(A) in subsection (a)(1), by inserting ``or under part B of
title XVIII'' after ``section 1903(a)'';
(B) in subsection (b)(3)(A)--
(i) in clause (i), by striking ``and'' at the end;
(ii) in clause (ii), by striking the period and inserting
``; and''; and
(iii) by adding at the end the following new clause:
``(iii) for calendar quarters beginning on or after April
1, 2004, in conjunction with reporting required under clause
(i) and by national drug code (NDC)--
``(I) the manufacturer's average sales price (as defined in
section 1847B(c)) and the total number of units specified
under section 1847B(b)(2)(A);
``(II) if required to make payment under section 1847B, the
manufacturer's wholesale acquisition cost, as defined in
subsection (c)(6) of such section; and
``(III) information on those sales that were made at a
nominal price or otherwise described in section
1847B(c)(2)(B), which information is subject to audit by the
Inspector General of the Department of Health and Human
Services;
for a covered outpatient drug or biological for which payment
is made under section 1847B.'';
(C) in subsection (b)(3)(B)--
(i) in the heading, by inserting ``and manufacturer's
average sales price'' after ``price''; and
(ii) by inserting ``and manufacturer's average sales prices
(including wholesale acquisition cost) if required to make
payment'' after ``manufacturer prices''; and
(D) in subsection (b)(3)(D)(i), by inserting ``and section
1847B'' after ``this section''.
(e) GAO Study.--
(1) Study.--The Comptroller General of the United States
shall conduct a study to assess the impact of the amendments
made by this section on the delivery of services, including
their impact on--
(A) beneficiary access to drugs and biologicals for which
payment is made under part B of title XVIII of the Social
Security Act; and
(B) the site of delivery of such services.
(2) Report.--Not later than 2 years after the year in which
the amendment made by subsection (a)(1) first takes effect,
the Comptroller General shall submit to Congress a report on
the study conducted under paragraph (1).
(f) MedPAC Recommendations on Blood Clotting Factors.--The
Medicare Payment Advisory Commission shall submit to
Congress, in its annual report in 2004, specific
recommendations regarding a payment amount (or amounts) for
blood clotting factors and its administration under the
medicare program.
(g) Establishment of Pharmaceutical Management Fee Where
Drugs Provided Through a Contractor.--Section 1848(a) (42
U.S.C. 1395w-4(a)) is amended by adding at the end the
following new paragraph:
``(5) Recognition of pharmaceutical management fee in
certain cases.--In establishing the fee schedule under this
section, the Secretary shall provide for a separate payment
with respect to physicians' services consisting of the unique
administrative and management costs associated with covered
drugs and biologicals which are furnished to physicians
through a contractor under section 1847A (compared with such
costs if such drugs and biologicals were acquired directly by
such physicians).''.
(h) Study on Codes for Non-oncology Codes.--
(1) Study.--The Secretary shall conduct a study to
determine the appropriateness of establishing and
implementing separate codes for non-oncology infusions that
are based on the level of complexity of the administration
and resource consumption.
(2) Report.--Not later than 1 year after the date of the
enactment of this Act, the Secretary shall submit a report to
Congress on the study. To the extent the Secretary determines
it to be appropriate, the Secretary may implement appropriate
changes in the payment methodology for such codes.
SEC. 304. DEMONSTRATION PROJECT FOR USE OF RECOVERY AUDIT
CONTRACTORS.
(a) In General.--The Secretary of Health and Human Services
shall conduct a demonstration project under this section (in
this section referred to as the ``project'') to demonstrate
the use of recovery audit contractors under the Medicare
Integrity Program in identifying underpayments and
overpayments and recouping overpayments under the medicare
program for services for which payment is made under part A
or part B of title XVIII of the Social Security Act. Under
the project--
(1) payment may be made to such a contractor on a
contingent basis;
(2) a percentage of the amount recovered may be retained by
the Secretary and shall be available to the program
management account of the Centers for Medicare & Medicaid
Services; and
(3) the Secretary shall examine the efficacy of such use
with respect to duplicative payments, accuracy of coding, and
other payment policies in which inaccurate payments arise.
(b) Scope and Duration.--
(1) Scope.--The project shall cover at least 2 States that
are among the States with--
(A) the highest per capita utilization rates of medicare
services, and
(B) at least 3 contractors.
(2) Duration.--The project shall last for not longer than 3
years.
(c) Waiver.--The Secretary of Health and Human Services
shall waive such provisions of title XVIII of the Social
Security Act as may be necessary to provide for payment for
services under the project in accordance with subsection (a).
(d) Qualifications of Contractors.--
(1) In general.--The Secretary shall enter into a recovery
audit contract under this section with an entity only if the
entity has staff that has the appropriate clinical knowledge
of and experience with the payment rules and regulations
under the medicare program or the entity has or will contract
with another entity that has such knowledgeable and
experienced staff.
(2) Ineligibility of certain contractors.--The Secretary
may not enter into a recovery audit contract under this
section with an entity to the extent that the entity is a
fiscal intermediary under section 1816 of the Social Security
Act (42 U.S.C. 1395h), a carrier under section 1842 of such
Act (42 U.S.C. 1395u), or a Medicare Administrative
Contractor under section 1874A of such Act.
(3) Preference for entities with demonstrated
proficiency.--In awarding contracts to recovery audit
contractors under this section, the Secretary shall give
preference to those risk entities that the Secretary
determines have demonstrated more than 3 years direct
management experience and a proficiency for cost control or
recovery audits with private insurers, health care providers,
health plans, or under the medicaid program under title XIX
of the Social Security Act.
(e) Construction Relating to Conduct of Investigation of
Fraud.--A recovery of an overpayment to a provider by a
recovery audit contractor shall not be construed to prohibit
the Secretary or the Attorney General from investigating and
prosecuting, if appropriate, allegations of fraud or abuse
arising from such overpayment.
(f) Report.--The Secretary of Health and Human Services
shall submit to Congress a report on the project not later
than 6 months after the date of its completion. Such reports
shall include information on the impact of the project on
savings to the medicare program and recommendations on the
cost-effectiveness of extending or expanding the project.
TITLE IV--RURAL HEALTH CARE IMPROVEMENTS
SEC. 401. ENHANCED DISPROPORTIONATE SHARE HOSPITAL (DSH)
TREATMENT FOR RURAL HOSPITALS AND URBAN
HOSPITALS WITH FEWER THAN 100 BEDS.
(a) Doubling the Cap.--
(1) In general.--Section 1886(d)(5)(F) (42 U.S.C.
1395ww(d)(5)(F)) is amended by adding at the end the
following new clause:
``(xiv)(I) In the case of discharges in a fiscal year
beginning on or after October 1, 2003, subject to subclause
(II), there shall be substituted for the disproportionate
share adjustment percentage otherwise determined under clause
(iv) (other than subclause (I)) or under clause (viii), (x),
(xi), (xii), or (xiii), the disproportionate share adjustment
percentage determined under clause (vii) (relating to large,
urban hospitals).
``(II) Under subclause (I), the disproportionate share
adjustment percentage shall not exceed 10 percent for a
hospital that is not classified as a rural referral center
under subparagraph (C).''.
(2) Conforming amendments.--Section 1886(d)(5)(F) (42
U.S.C. 1395ww(d)(5)(F)) is amended--
(A) in each of subclauses (II), (III), (IV), (V), and (VI)
of clause (iv), by inserting ``subject to clause (xiv) and''
before ``for discharges occurring'';
(B) in clause (viii), by striking ``The formula'' and
inserting ``Subject to clause (xiv), the formula''; and
(C) in each of clauses (x), (xi), (xii), and (xiii), by
striking ``For purposes'' and inserting ``Subject to clause
(xiv), for purposes''.
(b) Effective Date.--The amendments made by this section
shall apply with respect
[[Page H6041]]
to discharges occurring on or after October 1, 2003.
SEC. 402. IMMEDIATE ESTABLISHMENT OF UNIFORM STANDARDIZED
AMOUNT IN RURAL AND SMALL URBAN AREAS.
(a) In General.--Section 1886(d)(3)(A) (42 U.S.C.
1395ww(d)(3)(A)) is amended--
(1) in clause (iv), by inserting ``and ending on or before
September 30, 2003,'' after ``October 1, 1995,''; and
(2) by redesignating clauses (v) and (vi) as clauses (vii)
and (viii), respectively, and inserting after clause (iv) the
following new clauses:
``(v) For discharges occurring in the fiscal year beginning
on October 1, 2003, the average standardized amount for
hospitals located in areas other than a large urban area
shall be equal to the average standardized amount for
hospitals located in a large urban area.''.
(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
(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,''.
SEC. 403. ESTABLISHMENT OF ESSENTIAL RURAL HOSPITAL
CLASSIFICATION.
(a) Classification.--Section 1861(mm) (42 U.S.C. 1395x(mm))
is amended--
(1) in the heading by adding ``Essential Rural Hospitals''
at the end; and
(2) by adding at the end the following new paragraphs:
``(4)(A) The term `essential rural hospital' means a
subsection (d) hospital (as defined in section 1886(d)(1)(B))
that is located in a rural area (as defined for purposes of
section 1886(d)), has more than 25 licensed acute care
inpatient beds, has applied to the Secretary for
classification as such a hospital, and with respect to which
the Secretary has determined that the closure of the hospital
would significantly diminish the ability of medicare
beneficiaries to obtain essential health care services.
``(B) The determination under subparagraph (A) shall be
based on the following criteria:
``(i) High proportion of medicare beneficiaries receiving
care from hospital.--(I) A high percentage of such
beneficiaries residing in the area of the hospital who are
hospitalized (during the most recent year for which complete
data are available) receive basic inpatient medical care at
the hospital.
``(II) For a hospital with more than 200 licensed beds, a
high percentage of such beneficiaries residing in such area
who are hospitalized (during such recent year) receive
specialized surgical inpatient care at the hospital.
``(III) Almost all physicians described in section
1861(r)(1) in such area have privileges at the hospital and
provide their inpatient services primarily at the hospital.
``(IV) The hospital inpatient score for quality of care is
not less than the median hospital score for qualify of care
for hospitals in the State, as established under standards of
the utilization and quality control peer review organization
under part B of title XI or other quality standards
recognized by the Secretary.
``(ii) Significant adverse impact in absence of hospital.--
If the hospital were to close--
``(I) there would be a significant amount of time needed
for residents to reach emergency treatment, resulting in a
potential significant harm to beneficiaries with critical
illnesses or injuries;
``(II) there would be an inability in the community to
stablize emergency cases for transfers to another acute care
setting, resulting in a potential for significant harm to
medicare beneficiaries; and
``(III) any other nearby hospital lacks the physical and
clinical capacity to take over the hospital's typical
admissions.
``(C) In making such determination, the Secretary may also
consider the following:
``(i) Free-standing ambulatory surgery centers, office-
based oncology care, and imaging center services are
insufficient in the hospital's area to handle the outpatient
care of the hospital.
``(ii) Beneficiaries in nearby areas would be adversely
affected if the hospital were to close as the hospital
provides specialized knowledge and services to a network of
smaller hospitals and critical access hospitals.
``(iii) Medicare beneficiaries would have difficulty in
accessing care if the hospital were to close as the hospital
provides significant subsidies to support ambulatory care in
local clinics, including mental health clinics and to support
post acute care.
``(iv) The hospital has a committment to provide graduate
medical education in a rural area.
A hospital classified as an essential rural hospital may not
change such classification and a hospital so classified shall
not be treated as a sole community hospital, medicare
dependent hospital, or rural referral center for purposes of
section 1886.''.
(b) Payment Based on 102 Percent of Allowed Costs.--
(1) Inpatient hospital services.--Section 1886(d) (42
U.S.C. 1395ww(d)) is amended by adding at the end the
following:
``(11) In the case of a hospital classified as an essential
rural hospital under section 1861(mm)(4) for a cost reporting
period, the payment under this subsection for inpatient
hospital services for discharges occurring during the period
shall be based on 102 percent of the reasonable costs for
such services. Nothing in this paragraph shall be construed
as affecting the application or amount of deductibles or
copayments otherwise applicable to such services under part A
or as waiving any requirement for billing for such
services.''.
(2) Hospital outpatient services.--Section 1833(t)(13) (42
U.S.C. 1395l(t)(13)) is amended by adding at the end the
following new subparagraph:
``(B) Special rule for essential rural hospitals.--In the
case of a hospital classified as an essential rural hospital
under section 1861(mm)(4) for a cost reporting period, the
payment under this subsection for covered OPD services during
the period shall be based on 102 percent of the reasonable
costs for such services. Nothing in this subparagraph shall
be construed as affecting the application or amount of
deductibles or copayments otherwise applicable to such
services under this part or as waiving any requirement for
billing for such services.''.
(c) Effective Date.--The amendments made by this section
shall apply to cost reporting periods beginning on or after
October 1, 2004.
SEC. 404. MORE FREQUENT UPDATE IN WEIGHTS USED IN HOSPITAL
MARKET BASKET.
(a) More Frequent Updates in Weights.--After revising the
weights used in the hospital market basket under section
1886(b)(3)(B)(iii) of the Social Security Act (42 U.S.C.
1395ww(b)(3)(B)(iii)) to reflect the most current data
available, the Secretary shall establish a frequency for
revising such weights, including the labor share, in such
market basket to reflect the most current data available more
frequently than once every 5 years.
(b) Report.--Not later than October 1, 2004, the Secretary
shall submit a report to Congress on the frequency
established under subsection (a), including an explanation of
the reasons for, and options considered, in determining such
frequency.
SEC. 405. IMPROVEMENTS TO CRITICAL ACCESS HOSPITAL PROGRAM.
(a) Increase in Payment Amounts.--
(1) In general.--Sections 1814(l), 1834(g)(1), and
1883(a)(3) (42 U.S.C. 1395f(l); 1395m(g)(1); 42 U.S.C.
1395tt(a)(3)) are each amended by inserting ``equal to 102
percent of'' before ``the reasonable costs''.
(2) Effective date.--The amendments made by paragraph (1)
shall apply to payments for services furnished during cost
reporting periods beginning on or after October 1, 2003.
(b) Coverage of Costs for Certain Emergency Room On-Call
Providers.--
(1) In general.--Section 1834(g)(5) (42 U.S.C. 1395m(g)(5))
is amended--
(A) in the heading--
(i) by inserting ``certain'' before ``emergency''; and
(ii) by striking ``physicians'' and inserting
``providers'';
(B) by striking ``emergency room physicians who are on-call
(as defined by the Secretary)'' and inserting ``physicians,
physician assistants, nurse practitioners, and clinical nurse
specialists who are on-call (as defined by the Secretary) to
provide emergency services''; and
(C) by striking ``physicians' services'' and inserting
``services covered under this title''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply with respect to costs incurred for services
provided on or after January 1, 2004.
(c) Modification of the Isolation Test for Cost-Based CAH
Ambulance Services.--
(1) In general.--Section 1834(l)(8) (42 U.S.C. 1395m(l)),
as added by section 205(a) of BIPA (114 Stat. 2763A-482), is
amended by adding at the end the following: ``The limitation
described in the matter following subparagraph (B) in the
previous sentence shall not apply if the ambulance services
are furnished by such a provider or supplier of ambulance
services who is a first responder to
[[Page H6042]]
emergencies in accordance with local protocols (as determined
by the Secretary).''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to ambulances services furnished on or after the
first cost reporting period that begins after the date of the
enactment of this Act.
(d) Reinstatement of Periodic Interim Payment (PIP).--
(1) In general.--Section 1815(e)(2) (42 U.S.C. 1395g(e)(2))
is amended--
(A) in the matter before subparagraph (A), by inserting ``,
in the cases described in subparagraphs (A) through (D)''
after ``1986''; and
(B) by striking ``and'' at the end of subparagraph (C);
(C) by adding ``and'' at the end of subparagraph (D); and
(D) by inserting after subparagraph (D) the following new
subparagraph:
``(E) inpatient critical access hospital services;''.
(2) Development of alternative methods of periodic interim
payments.--With respect to periodic interim payments to
critical access hospitals for inpatient critical access
hospital services under section 1815(e)(2)(E) of the Social
Security Act, as added by paragraph (1), the Secretary shall
develop alternative methods for such payments that are based
on expenditures of the hospital.
(3) Reinstatement of pip.--The amendments made by paragraph
(1) shall apply to payments made on or after January 1, 2004.
(e) Condition for Application of Special Physician Payment
Adjustment.--
(1) In general.--Section 1834(g)(2) (42 U.S.C. 1395m(g)(2))
is amended by adding after and below subparagraph (B) the
following:
``The Secretary may not require, as a condition for applying
subparagraph (B) with respect to a critical access hospital,
that each physician providing professional services in the
hospital must assign billing rights with respect to such
services, except that such subparagraph shall not apply to
those physicians who have not assigned such billing
rights.''.
(2) Effective date.--The amendment made by paragraph (1)
shall be effective as if included in the enactment of section
403(d) of the Medicare, Medicaid, and SCHIP Balanced Budget
Refinement Act of 1999 (113 Stat. 1501A-371).
(f) Flexibility in Bed Limitation for Hospitals.--Section
1820 (42 U.S.C. 1395i-4) is amended--
(1) in subsection (c)(2)(B)(iii), by inserting ``subject to
paragraph (3)'' after ``(iii) provides'';
(2) by adding at the end of subsection (c) the following
new paragraph:
``(3) Increase in maximum number of beds for hospitals with
strong seasonal census fluctuations.--
``(A) In general.--Subject to subparagraph (C), in the case
of a hospital that demonstrates that it meets the standards
established under subparagraph (B) and has not made the
election described in subsection (f)(2)(A), the bed
limitations otherwise applicable under paragraph (2)(B)(iii)
and subsection (f) shall be increased by 5 beds.
``(B) Standards.--The Secretary shall specify standards for
determining whether a critical access hospital has
sufficiently strong seasonal variations in patient admissions
to justify the increase in bed limitation provided under
subparagraph (A).''; and
(3) in subsection (f)--
(A) by inserting ``(1)'' after ``(f)''; and
(B) by adding at the end the following new paragraph:
``(2)(A) A hospital may elect to treat the reference in
paragraph (1) to `15 beds' as a reference to `25 beds', but
only if no more than 10 beds in the hospital are at any time
used for non-acute care services. A hospital that makes such
an election is not eligible for the increase provided under
subsection (c)(3)(A).
``(B) The limitations in numbers of beds under the first
sentence of paragraph (1) are subject to adjustment under
subsection (c)(3).''.
(4) Effective date.--The amendments made by this subsection
shall apply to designations made before, on, or after January
1, 2004.
(g) Additional 5-Year Period of Funding for Grant
Program.--
(1) In general.--Section 1820(g) (42 U.S.C. 1395i-4(g)) is
amended by adding at the end the following new paragraph:
``(4) Funding.--
``(A) In general.--Subject to subparagraph (B), payment for
grants made under this subsection during fiscal years 2004
through 2008 shall be made from the Federal Hospital
Insurance Trust Fund.
``(B) Annual aggregate limitation.--In no case may the
amount of payment provided for under subparagraph (A) for a
fiscal year exceed $25,000,000.''.
(2) Conforming amendment.--Section 1820 (42 U.S.C. 1395i-4)
is amended by striking subsection (j).
SEC. 406. REDISTRIBUTION OF UNUSED RESIDENT POSITIONS.
(a) In General.--Section 1886(h)(4) (42 U.S.C.
1395ww(h)(4)) is amended--
(1) in subparagraph (F)(i), by inserting ``subject to
subparagraph (I),'' after ``October 1, 1997,'';
(2) in subparagraph (H)(i), by inserting ``subject to
subparagraph (I),'' after ``subparagraphs (F) and (G),''; and
(3) by adding at the end the following new subparagraph:
``(I) Redistribution of unused resident positions.--
``(i) Reduction in limit based on unused positions.--
``(I) In general.--If a hospital's resident level (as
defined in clause (iii)(I)) is less than the otherwise
applicable resident limit (as defined in clause (iii)(II))
for each of the reference periods (as defined in subclause
(II)), effective for cost reporting periods beginning on or
after January 1, 2004, the otherwise applicable resident
limit shall be reduced by 75 percent of the difference
between such limit and the reference resident level specified
in subclause (III) (or subclause (IV) if applicable).
``(II) Reference periods defined.--In this clause, the term
`reference periods' means, for a hospital, the 3 most recent
consecutive cost reporting periods of the hospital for which
cost reports have been settled (or, if not, submitted) on or
before September 30, 2002.
``(III) Reference resident level.--Subject to subclause
(IV), the reference resident level specified in this
subclause for a hospital is the highest resident level for
the hospital during any of the reference periods.
``(IV) Adjustment process.--Upon the timely request of a
hospital, the Secretary shall adjust (subject to audit) the
reference resident level for a hospital to be the resident
level for the hospital for the cost reporting period that
includes July 1, 2003.
``(V) Affiliation.--With respect to hospitals which are
members of the same affiliated group (as defined by the
Secretary under subparagraph (H)(ii)), the provisions of this
section shall be applied with respect to such an affiliated
group by deeming the affiliated group to be a single
hospital.
``(ii) Redistribution.--
``(I) In general.--The Secretary is authorized to increase
the otherwise applicable resident limits for hospitals by an
aggregate number estimated by the Secretary that does not
exceed the aggregate reduction in such limits attributable to
clause (i) (without taking into account any adjustment under
subclause (IV) of such clause).
``(II) Effective date.--No increase under subclause (I)
shall be permitted or taken into account for a hospital for
any portion of a cost reporting period that occurs before
July 1, 2004, or before the date of the hospital's
application for an increase under this clause. No such
increase shall be permitted for a hospital unless the
hospital has applied to the Secretary for such increase by
December 31, 2005.
``(III) Considerations in redistribution.--In determining
for which hospitals the increase in the otherwise applicable
resident limit is provided under subclause (I), the Secretary
shall take into account the need for such an increase by
specialty and location involved, consistent with subclause
(IV).
``(IV) Priority for rural and small urban areas.--In
determining for which hospitals and residency training
programs an increase in the otherwise applicable resident
limit is provided under subclause (I), the Secretary shall
first distribute the increase to programs of hospitals
located in rural areas or in urban areas that are not large
urban areas (as defined for purposes of subsection (d)) on a
first-come-first-served basis (as determined by the
Secretary) based on a demonstration that the hospital will
fill the positions made available under this clause and not
to exceed an increase of 25 full-time equivalent positions
with respect to any hospital.
``(V) Application of locality adjusted national average per
resident amount.--With respect to additional residency
positions in a hospital attributable to the increase provided
under this clause, notwithstanding any other provision of
this subsection, the approved FTE resident amount is deemed
to be equal to the locality adjusted national average per
resident amount computed under subparagraph (E) for that
hospital.
``(VI) Construction.--Nothing in this clause shall be
construed as permitting the redistribution of reductions in
residency positions attributable to voluntary reduction
programs under paragraph (6) or as affecting the ability of a
hospital to establish new medical residency training programs
under subparagraph (H).
``(iii) Resident level and limit defined.--In this
subparagraph:
``(I) Resident level.--The term `resident level' means,
with respect to a hospital, the total number of full-time
equivalent residents, before the application of weighting
factors (as determined under this paragraph), in the fields
of allopathic and osteopathic medicine for the hospital.
``(II) Otherwise applicable resident limit.--The term
`otherwise applicable resident limit' means, with respect to
a hospital, the limit otherwise applicable under
subparagraphs (F)(i) and (H) on the resident level for the
hospital determined without regard to this subparagraph.''.
(b) Conforming Amendment to IME.--Section 1886(d)(5)(B)(v)
(42 U.S.C. 1395ww(d)(5)(B)(v)) is amended by adding at the
end the following: ``The provisions of subparagraph (I) of
subsection (h)(4) shall apply with respect to the first
sentece of this clause in the same manner as it applies with
respect to subparagraph (F) of such subsection.''.
(c) Report on Extension of Applications Under
Redistribution Program.--Not later than July 1, 2005, the
Secretary shall submit to Congress a report containing
recommendations regarding whether to extend
[[Page H6043]]
the deadline for applications for an increase in resident
limits under section 1886(h)(4)(I)(ii)(II) of the Social
Security Act (as added by subsection (a)).
SEC. 407. TWO-YEAR EXTENSION OF HOLD HARMLESS PROVISIONS FOR
SMALL RURAL HOSPITALS AND SOLE COMMUNITY
HOSPITALS UNDER PROSPECTIVE PAYMENT SYSTEM FOR
HOSPITAL OUTPATIENT DEPARTMENT SERVICES.
(a) Hold Harmless Provisions.--
(1) In general.--Section 1833(t)(7)(D)(i) (42 U.S.C.
1395l(t)(7)(D)(i)) is amended--
(A) in the heading, by striking ``small'' and inserting
``certain'';
(B) by inserting ``or a sole community hospital (as defined
in section 1886(d)(5)(D)(iii)) located in a rural area''
after ``100 beds''; and
(C) by striking ``2004'' and inserting ``2006''.
(2) Effective date.--The amendment made by subsection
(a)(2) shall apply with respect to payment for OPD services
furnished on and after January 1, 2004.
(b) Study; Adjustment.--
(1) Study.--The Secretary shall conduct a study to
determine if, under the prospective payment system for
hospital outpatient department services under section 1833(t)
of the Social Security Act (42 U.S.C. 1395l(t)), costs
incurred by rural providers of services by ambulatory payment
classification groups (APCs) exceed those costs incurred by
urban providers of services.
(2) Adjustment.--Insofar as the Secretary determines under
paragraph (1) that costs incurred by rural providers exceed
those costs incurred by urban providers of services, the
Secretary shall provide for an appropriate adjustment under
such section 1833(t) to reflect those higher costs by January
1, 2005.
SEC. 408. EXCLUSION OF CERTAIN RURAL HEALTH CLINIC AND
FEDERALLY QUALIFIED HEALTH CENTER SERVICES FROM
THE PROSPECTIVE PAYMENT SYSTEM FOR SKILLED
NURSING FACILITIES.
(a) In General.--Section 1888(e)(2)(A) (42 U.S.C.
1395yy(e)(2)(A)) is amended--
(1) in clause (i)(II), by striking ``clauses (ii) and
(iii)'' and inserting ``clauses (ii), (iii), and (iv)''; and
(2) by adding at the end the following new clause:
``(iv) Exclusion of certain rural health clinic and
federally qualified health center services.--Services
described in this clause are--
``(I) rural health clinic services (as defined in paragraph
(1) of section 1861(aa)); and
``(II) Federally qualified health center services (as
defined in paragraph (3) of such section);
that would be described in clause (ii) if such services were
not furnished by an individual affiliated with a rural health
clinic or a Federally qualified health center.''.
(b) Effective Date.--The amendments made by subsection (a)
shall apply to services furnished on or after January 1,
2004.
SEC. 409. RECOGNITION OF ATTENDING NURSE PRACTITIONERS AS
ATTENDING PHYSICIANS TO SERVE HOSPICE PATIENTS.
(a) In General.--Section 1861(dd)(3)(B) (42 U.S.C.
1395x(dd)(3)(B)) is amended by inserting ``or nurse
practitioner (as defined in subsection (aa)(5))'' after ``the
physician (as defined in subsection (r)(1))''.
(b) Clarification of Hospice Role of Nurse Practitioners.--
Section 1814(a)(7)(A)(i)(I) (42 U.S.C. 1395f(a)(7)(A)(i)(I))
is amended by inserting ``(which for purposes of this
subparagraph does not include a nurse practitioner)'' after
``attending physician (as defined in section
1861(dd)(3)(B))''.
SEC. 410. IMPROVEMENT IN PAYMENTS TO RETAIN EMERGENCY
CAPACITY FOR AMBULANCE SERVICES IN RURAL AREAS.
Section 1834(l) (42 U.S.C. 1395m(l)) is amended--
(1) by redesignating paragraph (8), as added by section
221(a) of BIPA (114 Stat. 2763A-486), as paragraph (9); and
(2) by adding at the end the following new paragraph:
``(10) Assistance for rural providers furnishing services
in low medicare population density areas.--
``(A) In general.--In the case of ground ambulance services
furnished on or after January 1, 2004, for which the
transportation originates in a qualified rural area (as
defined in subparagraph (B)), the Secretary shall provide for
a percent increase in the base rate of the fee schedule for a
trip established under this subsection. In establishing such
percent increase, the Secretary shall estimate the average
cost per trip for the base rate in the lowest quartile as
compared to the average cost for the base rate for such
services that is in the highest quartile of all rural county
populations.
``(B) Qualified rural area defined.--For purposes of
subparagraph (A), the term `qualified rural area' is a rural
area (as defined in section 1886(d)(2)(D)) with a population
density of medicare beneficiaries residing in the area that
is in the lowest quartile of all rural county populations.''.
SEC. 411. TWO-YEAR INCREASE FOR HOME HEALTH SERVICES
FURNISHED IN A RURAL AREA.
(a) In General.--In the case of home health services
furnished in a rural area (as defined in section
1886(d)(2)(D) of the Social Security Act (42 U.S.C.
1395ww(d)(2)(D))) during 2004 and 2005, the Secretary shall
increase the payment amount otherwise made under section 1895
of such Act (42 U.S.C. 1395fff ) for such services by 5
percent.
(b) Waiving Budget Neutrality.--The Secretary shall not
reduce the standard prospective payment amount (or amounts)
under section 1895 of the Social Security Act (42 U.S.C.
1395fff ) applicable to home health services furnished during
a period to offset the increase in payments resulting from
the application of subsection (a).
SEC. 412. PROVIDING SAFE HARBOR FOR CERTAIN COLLABORATIVE
EFFORTS THAT BENEFIT MEDICALLY UNDERSERVED
POPULATIONS.
(a) In General.--Section 1128B(b)(3) (42 U.S.C. 1320a-
7(b)(3)), as amended by section 101(b)(2), is amended--
(1) in subparagraph (F), by striking ``and'' after the
semicolon at the end;
(2) in subparagraph (G), by striking the period at the end
and inserting ``; and''; and
(3) by adding at the end the following new subparagraph:
``(H) any remuneration between a public or nonprofit
private health center entity described under clause (i) or
(ii) of section 1905(l)(2)(B) and any individual or entity
providing goods, items, services, donations or loans, or a
combination thereof, to such health center entity pursuant to
a contract, lease, grant, loan, or other agreement, if such
agreement contributes to the ability of the health center
entity to maintain or increase the availability, or enhance
the quality, of services provided to a medically underserved
population served by the health center entity.''.
(b) Rulemaking for Exception for Health Center Entity
Arrangements.--
(1) Establishment.--
(A) In general.--The Secretary of Health and Human Services
(in this subsection referred to as the ``Secretary'') shall
establish, on an expedited basis, standards relating to the
exception described in section 1128B(b)(3)(H) of the Social
Security Act, as added by subsection (a), for health center
entity arrangements to the antikickback penalties.
(B) Factors to consider.--The Secretary shall consider the
following factors, among others, in establishing standards
relating to the exception for health center entity
arrangements under subparagraph (A):
(i) Whether the arrangement between the health center
entity and the other party results in savings of Federal
grant funds or increased revenues to the health center
entity.
(ii) Whether the arrangement between the health center
entity and the other party restricts or limits a patient's
freedom of choice.
(iii) Whether the arrangement between the health center
entity and the other party protects a health care
professional's independent medical judgment regarding
medically appropriate treatment.
The Secretary may also include other standards and criteria
that are consistent with the intent of Congress in enacting
the exception established under this section.
(2) Interim final effect.--No later than 180 days after the
date of enactment of this Act, the Secretary shall publish a
rule in the Federal Register consistent with the factors
under paragraph (1)(B). Such rule shall be effective and
final immediately on an interim basis, subject to such change
and revision, after public notice and opportunity (for a
period of not more than 60 days) for public comment, as is
consistent with this subsection.
SEC. 413. GAO STUDY OF GEOGRAPHIC DIFFERENCES IN PAYMENTS FOR
PHYSICIANS' SERVICES.
(a) Study.--The Comptroller General of the United States
shall conduct a study of differences in payment amounts under
the physician fee schedule under section 1848 of the Social
Security Act (42 U.S.C. 1395w-4) for physicians' services in
different geographic areas. Such study shall include--
(1) an assessment of the validity of the geographic
adjustment factors used for each component of the fee
schedule;
(2) an evaluation of the measures used for such adjustment,
including the frequency of revisions; and
(3) an evaluation of the methods used to determine
professional liability insurance costs used in computing the
malpractice component, including a review of increases in
professional liability insurance premiums and variation in
such increases by State and physician specialty and methods
used to update the geographic cost of practice index and
relative weights for the malpractice component.
(b) Report.--Not later than 1 year after the date of the
enactment of this Act, the Comptroller General shall submit
to Congress a report on the study conducted under subsection
(a). The report shall include recommendations regarding the
use of more current data in computing geographic cost of
practice indices as well as the use of data directly
representative of physicians' costs (rather than proxy
measures of such costs).
SEC. 414. TREATMENT OF MISSING COST REPORTING PERIODS FOR
SOLE COMMUNITY HOSPITALS.
(a) In General.--Section 1886(b)(3)(I) (42 U.S.C.
1395ww(b)(3)(I)) is amended by adding at the end the
following new clause:
``(iii) In no case shall a hospital be denied treatment as
a sole community hospital or payment (on the basis of a
target rate as such as a hospital) because data are
unavailable for any cost reporting period due to changes in
ownership, changes in fiscal intermediaries, or other
extraordinary circumstances, so long as data for at least one
[[Page H6044]]
applicable base cost reporting period is available.''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply to cost reporting periods beginning on or after
January 1, 2004.
SEC. 415. EXTENSION OF TELEMEDICINE DEMONSTRATION PROJECT.
Section 4207 of Balanced Budget Act of 1997 (Public Law
105-33) is amended--
(1) in subsection (a)(4), by striking ``4-year'' and
inserting ``8-year''; and
(2) in subsection (d)(3), by striking ``$30,000,000'' and
inserting ``$60,000,000''.
SEC. 416. ADJUSTMENT TO THE MEDICARE INPATIENT HOSPITAL PPS
WAGE INDEX TO REVISE THE LABOR-RELATED SHARE OF
SUCH INDEX.
(a) In General.--Section 1886(d)(3)(E) (42 U.S.C.
1395ww(d)(3)(E)) is amended--
(1) by striking ``wage levels.--The Secretary'' and
inserting ``wage levels.--
``(i) In general.--Except as provided in clause (ii), the
Secretary''; and
(2) by adding at the end the following new clause:
``(ii) Alternative proportion to be adjusted beginning in
fiscal year 2004.--
``(I) In general.--Except as provided in subclause (II),
for discharges occurring on or after October 1, 2003, the
Secretary shall substitute the `62 percent' for the
proportion described in the first sentence of clause (i).
``(II) Hold harmless for certain hospitals.--If the
application of subclause (I) would result in lower payments
to a hospital than would otherwise be made, then this
subparagraph shall be applied as if this clause had not been
enacted.''.
(b) Waiving Budget Neutrality.--Section 1886(d)(3)(E) (42
U.S.C. 1395ww(d)(3)(E)), as amended by subsection (a), is
amended by adding at the end of clause (i) the following new
sentence: ``The Secretary shall apply the previous sentence
for any period as if the amendments made by section 402(a) of
the Medicare Prescription Drug and Modernization Act of 2003
had not been enacted.''.
SEC. 417. MEDICARE INCENTIVE PAYMENT PROGRAM IMPROVEMENTS FOR
PHYSICIAN SCARCITY.
(a) Additional Bonus Payment for Certain Physician Scarcity
Areas.--
(1) In general.--Section 1833 (42 U.S.C. 1395l) is amended
by adding at the end the following new subsection:
``(u) Incentive Payments for Physician Scarcity Areas.--
``(1) In general.--In the case of physicians' services
furnished in a year--
``(A) by a primary care physician in a primary care
scarcity county (identified under paragraph (4)); or
``(B) by a physician who is not a primary care physician in
a specialist care scarcity county (as so identified),
in addition to the amount of payment that would otherwise be
made for such services under this part, there also shall be
paid an amount equal to 5 percent of the payment amount for
the service under this part.
``(2) Determination of ratios of physicians to medicare
beneficiaries in area.--Based upon available data, the
Secretary shall periodically determine, for each county or
equivalent area in the United States, the following:
``(A) Number of physicians practicing in the area.--The
number of physicians who furnish physicians' services in the
active practice of medicine or osteopathy in that county or
area, other than physicians whose practice is exclusively for
the Federal Government, physicians who are retired, or
physicians who only provide administrative services. Of such
number, the number of such physicians who are--
``(i) primary care physicians; or
``(ii) physicians who are not primary care physicians.
``(B) Number of medicare beneficiaries residing in the
area.--The number of individuals who are residing in the
county and are entitled to benefits under part A or enrolled
under this part, or both.
``(C) Determination of ratios.--
``(i) Primary care ratio.--The ratio (in this paragraph
referred to as the `primary care ratio') of the number of
primary care physicians (determined under subparagraph
(A)(i)), to number of medicare beneficiaries determined under
subparagraph (B).
``(ii) Specialist care ratio.--The ratio (in this paragraph
referred to as the `specialist care ratio') of the number of
other physicians (determined under subparagraph (A)(ii)), to
number of medicare beneficiaries determined under
subparagraph (B).
``(3) Ranking of counties.--The Secretary shall rank each
such county or area based separately on its primary care
ratio and its specialist care ratio.
``(4) Identification of counties.--The Secretary shall
identify--
``(A) those counties and areas (in this paragraph referred
to as `primary care scarcity counties') with the lowest
primary care ratios that represent, if each such county or
area were weighted by the number of medicare beneficiaries
determined under paragraph (2)(B), an aggregate total of 20
percent of the total of the medicare beneficiaries determined
under such paragraph; and
``(B) those counties and areas (in this subsection referred
to as `specialist care scarcity counties') with the lowest
specialist care ratios that represent, if each such county or
area were weighted by the number of medicare beneficiaries
determined under paragraph (2)(B), an aggregate total of 20
percent of the total of the medicare beneficiaries determined
under such paragraph.
There is no administrative or judicial review respecting the
identification of a county or area or the assignment of a
specialty of any physician under this paragraph.
``(5) Rural census tracks.--To the extent feasible, the
Secretary shall treat a rural census tract of a metropolitan
statistical area (as determined under the most recent
modification of the Goldsmith Modification, originally
published in the Federal Register on February 27, 1992 (57
Fed. Reg. 6725) as an equivalent area for purposes of
qualifying as a primary care scarcity county or specialist
care scarcity county under this subsection.
``(6) Physician Defined.--For purposes of this paragraph,
the term `physician' means a physician described in section
1861(r)(1) and the term `primary care physician' means a
physician who is identified in the available data as a
general practitioner, family practice practitioner, general
internist, or obstetrician or gynecologist.
``(7) Publication of list of counties.--In carrying out
this subsection for a year, the Secretary shall include, as
part of the proposed and final rule to implement the
physician fee schedule under section 1848 for the year, a
list of all areas which will qualify as a primary care
scarcity county or specialist care scarcity county under this
subsection for the year involved.''.
(2) Effective date.--The amendments made by subsection (a)
shall apply to physicians' services furnished or after
January 1, 2004.
(b) Improvement to Medicare Incentive Payment Program.--
(1) In general.--Section 1833(m) (42 U.S.C. 1395l(m)) is
amended--
(A) by inserting ``(1)'' after ``(m)''; and
(B) by adding at the end the following new paragraphs:
``(2) The Secretary shall establish procedures under which
the Secretary, and not the physician furnishing the service,
is responsible for determining when a payment is required to
be made under paragraph (1).
``(3) In carrying out paragraph (1) for a year, the
Secretary shall include, as part of the proposed and final
rule to implement the physician fee schedule under section
1848 for the year, a list of all areas which will qualify as
a health professional shortage area under paragraph (1) for
the year involved.''.
(2) Effective date.--The amendments made by paragraph (1)
shall apply to physicians' services furnished or after
January 1, 2004.
SEC. 418. RURAL HOSPICE DEMONSTRATION PROJECT.
(a) In General.--The Secretary shall conduct a
demonstration project for the delivery of hospice care to
medicare beneficiaries in rural areas. Under the project
medicare beneficiaries who are unable to receive hospice care
in the home for lack of an appropriate caregiver are provided
such care in a facility of 20 or fewer beds which offers,
within its walls, the full range of services provided by
hospice programs under section 1861(dd) of the Social
Security Act (42 U.S.C. 1395x(dd)).
(b) Scope of Project.--The Secretary shall conduct the
project under this section with respect to no more than 3
hospice programs over a period of not longer than 5 years
each.
(c) Compliance with Conditions.--Under the demonstration
project--
(1) the hospice program shall comply with otherwise
applicable requirements, except that it shall not be required
to offer services outside of the home or to meet the
requirements of section 1861(dd)(2)(A)(iii) of the Social
Security Act; and
(2) payments for hospice care shall be made at the rates
otherwise applicable to such care under title XVIII of such
Act.
The Secretary may require the program to comply with such
additional quality assurance standards for its provision of
services in its facility as the Secretary deems appropriate.
(d) Report.--Upon completion of the project, the Secretary
shall submit a report to Congress on the project and shall
include in the report recommendations regarding extension of
such project to hospice programs serving rural areas.
TITLE V--PROVISIONS RELATING TO PART A
Subtitle A--Inpatient Hospital Services
SEC. 501. REVISION OF ACUTE CARE HOSPITAL PAYMENT UPDATES.
Section 1886(b)(3)(B)(i) (42 U.S.C. 1395ww(b)(3)(B)(i)) is
amended--
(1) by striking ``and'' at the end of subclause (XVIII);
(2) by striking subclause (XIX); and
(3) by inserting after subclause (XVIII) the following new
subclauses:
``(XIX) for each of fiscal years 2004 through 2006, the
market basket percentage increase minus 0.4 percentage points
for hospitals in all areas; and
``(XX) for fiscal year 2007 and each subsequent fiscal
year, the market basket percentage increase for hospitals in
all areas.''.
SEC. 502. RECOGNITION OF NEW MEDICAL TECHNOLOGIES UNDER
INPATIENT HOSPITAL PPS.
(a) Improving Timeliness of Data Collection.--Section
1886(d)(5)(K) (42 U.S.C. 1395ww(d)(5)(K)) is amended by
adding at the end the following new clause:
``(vii) Under the mechanism under this subparagraph, the
Secretary shall provide for the addition of new diagnosis and
procedure codes in April 1 of each year, but the addition of
such codes shall not require the Secretary to adjust the
payment (or diagnosis-
[[Page H6045]]
related group classification) under this subsection until the
fiscal year that begins after such date.''.
(b) Eligibility Standard for Technology Outliers.--
(1) Minimum period for recognition of new technologies.--
Section 1886(d)(5)(K)(vi) (42 U.S.C. 1395ww(d)(5)(K)(vi)) is
amended--
(A) by inserting ``(I)'' after ``(vi)''; and
(B) by adding at the end the following new subclause:
``(II) Under such criteria, a service or technology shall
not be denied treatment as a new service or technology on the
basis of the period of time in which the service or
technology has been in use if such period ends before the end
of the 2-to-3-year period that begins on the effective date
of implementation of a code under ICD-9-CM (or a successor
coding methodology) that enables the identification of
specific discharges in which the service or technology has
been used.''.
(2) Adjustment of threshold.--Section 1886(d)(5)(K)(ii)(I)
(42 U.S.C. 1395ww(d)(5)(K)(ii)(I)) is amended by inserting
``(applying a threshold specified by the Secretary that is
the lesser of 75 percent of the standardized amount
(increased to reflect the difference between cost and
charges) or 75 percent of one standard deviation for the
diagnosis-related group involved)'' after ``is inadequate''.
(3) Criterion for substantial improvement.--Section
1886(d)(5)(K)(vi) (42 U.S.C. 1395ww(d)(5)(K)(vi)), as amended
by paragraph (1), is further amended by adding at the end the
following subclause:
``(III) The Secretary shall by regulation provide for
further clarification of the criteria applied to determine
whether a new service or technology represents an advance in
medical technology that substantially improves the diagnosis
or treatment of beneficiaries. Under such criteria, in
determining whether a new service or technology represents an
advance in medical technology that substantially improves the
diagnosis or treatment of beneficiaries, the Secretary shall
deem a service or technology as meeting such requirement if
the service or technology is a drug or biological that is
designated under section 506 of the Federal Food, Drug, and
Cosmetic Act, approved under section 314.510 or 601.41 of
title 21, Code of Federal Regulations, or designated for
priority review when the marketing application for such drug
or biological was filed or is a medical device for which an
exemption has been granted under section 520(m) of such Act,
or for which priority review has been provided under section
515(d)(5) of such Act. Nothing in this subclause shall be
construed as effecting the authority of the Secretary to
determine whether items and services are medically necessary
and appropriate under section 1862(a)(1).''.
(4) Process for public input.--Section 1886(d)(5)(K) (42
U.S.C. 1395ww(d)(5)(K)), as amended by paragraph (1), is
amended--
(A) in clause (i), by adding at the end the following:
``Such mechanism shall be modified to meet the requirements
of clause (viii).''; and
(B) by adding at the end the following new clause:
``(viii) The mechanism established pursuant to clause (i)
shall be adjusted to provide, before publication of a
proposed rule, for public input regarding whether a new
service or technology not described in the second sentence of
clause (vi)(III) represents an advance in medical technology
that substantially improves the diagnosis or treatment of
beneficiaries as follows:
``(I) The Secretary shall make public and periodically
update a list of all the services and technologies for which
an application for additional payment under this subparagraph
is pending.
``(II) The Secretary shall accept comments,
recommendations, and data from the public regarding whether
the service or technology represents a substantial
improvement.
``(III) The Secretary shall provide for a meeting at which
organizations representing hospitals, physicians, medicare
beneficiaries, manufacturers, and any other interested party
may present comments, recommendations, and data to the
clinical staff of the Centers for Medicare & Medicaid
Services before publication of a notice of proposed
rulemaking regarding whether service or technology represents
a substantial improvement.''.
(c) Preference for Use of DRG Adjustment.--Section
1886(d)(5)(K) (42 U.S.C. 1395ww(d)(5)(K)) is further amended
by adding at the end the following new clause:
``(ix) Before establishing any add-on payment under this
subparagraph with respect to a new technology, the Secretary
shall seek to identify one or more diagnosis-related groups
associated with such technology, based on similar clinical or
anatomical characteristics and the cost of the technology.
Within such groups the Secretary shall assign an eligible new
technology into a diagnosis-related group where the average
costs of care most closely approximate the costs of care of
using the new technology. No add-on payment under this
subparagraph shall be made with respect to such new
technology and this clause shall not affect the application
of paragraph (4)(C)(iii).''.
(d) Improvement in Payment for New Technology.--Section
1886(d)(5)(K)(ii)(III) (42 U.S.C. 1395ww(d)(5)(K)(ii)(III))
is amended by inserting after ``the estimated average cost of
such service or technology'' the following: ``(based on the
marginal rate applied to costs under subparagraph (A))''.
(e) Establishment of New Funding for Hospital Inpatient
Technology.--
(1) In general.--Section 1886(d)(5)(K)(ii)(III) (42 U.S.C.
1395ww(d)(5)(K)(ii)(III)) is amended by striking ``subject to
paragraph (4)(C)(iii),''.
(2) Not budget neutral.--There shall be no reduction or
other adjustment in payments under section 1886 of the Social
Security Act because an additional payment is provided under
subsection (d)(5)(K)(ii)(III) of such section.
(f) Effective Date.--
(1) In general.--The Secretary shall implement the
amendments made by this section so that they apply to
classification for fiscal years beginning with fiscal year
2005.
(2) Reconsiderations of applications for fiscal year 2004
that are denied.--In the case of an application for a
classification of a medical service or technology as a new
medical service or technology under section 1886(d)(5)(K) of
the Social Security Act (42 U.S.C. 1395ww(d)(5)(K)) that was
filed for fiscal year 2004 and that is denied--
(A) the Secretary shall automatically reconsider the
application as an application for fiscal year 2005 under the
amendments made by this section; and
(B) the maximum time period otherwise permitted for such
classification of the service or technology shall be extended
by 12 months.
SEC. 503. INCREASE IN FEDERAL RATE FOR HOSPITALS IN PUERTO
RICO.
Section 1886(d)(9) (42 U.S.C. 1395ww(d)(9)) is amended--
(1) in subparagraph (A)--
(A) in clause (i), by striking ``for discharges beginning
on or after October 1, 1997, 50 percent (and for discharges
between October 1, 1987, and September 30, 1997, 75
percent)'' and inserting ``the applicable Puerto Rico
percentage (specified in subparagraph (E))''; and
(B) in clause (ii), by striking ``for discharges beginning
in a fiscal year beginning on or after October 1, 1997, 50
percent (and for discharges between October 1, 1987, and
September 30, 1997, 25 percent)'' and inserting ``the
applicable Federal percentage (specified in subparagraph
(E))''; and
(2) by adding at the end the following new subparagraph:
``(E) For purposes of subparagraph (A), for discharges
occurring--
``(i) on or after October 1, 1987, and before October 1,
1997, the applicable Puerto Rico percentage is 75 percent and
the applicable Federal percentage is 25 percent;
``(ii) on or after October 1, 1997, and before October 1,
2003, the applicable Puerto Rico percentage is 50 percent and
the applicable Federal percentage is 50 percent;
``(iii) during fiscal year 2004, the applicable Puerto Rico
percentage is 41 percent and the applicable Federal
percentage is 59 percent;
``(iv) during fiscal year 2005, the applicable Puerto Rico
percentage is 33 percent and the applicable Federal
percentage is 67 percent; and
``(v) on or after October 1, 2005, the applicable Puerto
Rico percentage is 25 percent and the applicable Federal
percentage is 75 percent.''.
SEC. 504. WAGE INDEX ADJUSTMENT RECLASSIFICATION REFORM .
(a) In General.--Section 1886(d) (42 U.S.C. 1395ww(d)) is
amended by adding at the end the following:
``(11)(A) In order to recognize commuting patterns among
Metropolitan Statistical Areas and between such Areas and
rural areas, the Secretary shall establish a process, upon
application of a subsection (d) hospital that establishes
that it is a qualifying hospital described in subparagraph
(B), for an increase of the wage index applied under
paragraph (3)(E) for the hospital in the amount computed
under subparagraph (D).
``(B) A qualifying hospital described in this subparagraph
is a subsection (d) hospital--
``(i) the average wages of which exceed the average wages
for the area in which the hospital is located; and
``(ii) which has at least 10 percent of its employees who
reside in one or more higher wage index areas.
``(C) For purposes of this paragraph, the term `higher wage
index area' means, with respect to a hospital, an area with a
wage index that exceeds that of the area in which the
hospital is located.
``(D) The increase in the wage index under subparagraph (A)
for a hospital shall be equal to the percentage of the
employees of the hospital that resides in any higher wage
index area multiplied by the sum of the products, for each
higher wage index area of--
``(i) the difference between (I) the wage index for such
area, and (II) the wage index of the area in which the
hospital is located (before the application of this
paragraph); and
``(ii) the number of employees of the hospital that reside
in such higher wage index area divided by the total number of
such employees that reside in all high wage index areas.
``(E) The process under this paragraph shall be based upon
the process used by the Medicare Geographic Classification
Review Board under paragraph (10) with respect to data
submitted by hospitals to the Board on the location of
residence of hospital employees and wages under the
applicable schedule established for geographic
reclassification.
``(F) A reclassification under this paragraph shall be
effective for a period of 3 fiscal years, except that the
Secretary shall establish procedures under which a subsection
(d) hospital may elect to terminate such reclassification
before the end of such period.
``(G) A hospital that is reclassified under this paragraph
for a period is not eligible for
[[Page H6046]]
reclassification under paragraphs (8) or (10) during that
period.
``(H) Any increase in a wage index under this paragraph for
a hospital shall not be taken into account for purposes of--
``(i) computing the wage index for the area in which the
hospital is located or any other area; or
``(ii) applying any budget neutrality adjustment with
respect to such index under paragraph (8)(D).''.
(b) Effective Date.--The amendment made by subsection (a)
shall first apply to the wage index for discharges occurring
on or after October 1, 2004.
SEC. 505. MEDPAC REPORT ON SPECIALTY HOSPITALS.
(a) MedPAC Study.--The Medicare Payment Advisory Commission
shall conduct a study of specialty hospitals compared with
other similar general acute care hospitals under the medicare
program. Such study shall examine--
(1) whether there are excessive self-referrals;
(2) quality of care furnished;
(3) the impact of specialty hospitals on such general acute
care hospitals; and
(4) differences in the scope of services, medicaid
utilization, and uncompensated care furnished.
(b) Report.--Not later than 1 year after the date of the
enactment of this Act, the Secretary shall submit to Congress
a report on the study conducted under subsection (a), and
shall include any recommendations for legislation or
administrative change as the Secretary determines
appropriate.
Subtitle B--Other Provisions
SEC. 511. PAYMENT FOR COVERED SKILLED NURSING FACILITY
SERVICES.
(a) Adjustment to RUGs for AIDS Residents.--Paragraph (12)
of section 1888(e) (42 U.S.C. 1395yy(e)) is amended to read
as follows:
``(12) Adjustment for residents with aids.--
``(A) In general.--Subject to subparagraph (B), in the case
of a resident of a skilled nursing facility who is afflicted
with acquired immune deficiency syndrome (AIDS), the per diem
amount of payment otherwise applicable shall be increased by
128 percent to reflect increased costs associated with such
residents.
``(B) Sunset.--Subparagraph (A) shall not apply on and
after such date as the Secretary certifies that there is an
appropriate adjustment in the case mix under paragraph
(4)(G)(i) to compensate for the increased costs associated
with residents described in such subparagraph.''.
(b) Effective Date.--The amendment made by paragraph (1)
shall apply to services furnished on or after October 1,
2003.
SEC. 512. COVERAGE OF HOSPICE CONSULTATION SERVICES.
(a) Coverage of Hospice Consultation Services.--Section
1812(a) (42 U.S.C. 1395d(a)) is amended--
(1) by striking ``and'' at the end of paragraph (3);
(2) by striking the period at the end of paragraph (4) and
inserting ``; and''; and
(3) by inserting after paragraph (4) the following new
paragraph:
``(5) for individuals who are terminally ill, have not made
an election under subsection (d)(1), and have not previously
received services under this paragraph, services that are
furnished by a physician who is either the medical director
or an employee of a hospice program and that consist of--
``(A) an evaluation of the individual's need for pain and
symptom management;
``(B) counseling the individual with respect to end-of-life
issues and care options; and
``(C) advising the individual regarding advanced care
planning.''.
(b) Payment.--Section 1814(i) (42 U.S.C. l395f(i)) is
amended by adding at the end the following new paragraph:
``(4) The amount paid to a hospice program with respect to
the services under section 1812(a)(5) for which payment may
be made under this part shall be equal to an amount
equivalent to the amount established for an office or other
outpatient visit for evaluation and management associated
with presenting problems of moderate severity under the fee
schedule established under section 1848(b), other than the
portion of such amount attributable to the practice expense
component.''.
(c) Conforming Amendment.--Section 1861(dd)(2)(A)(i) (42
U.S.C. 1395x(dd)(2)(A)(i)) is amended by inserting before the
comma at the end the following: ``and services described in
section 1812(a)(5)''.
(d) Effective Date.--The amendments made by this section
shall apply to services provided by a hospice program on or
after January 1, 2004.
SEC. 513. CORRECTION OF TRUST FUND HOLDINGS.
(a) In General.--Within 120 days after the effective date
of this section, the Secretary of the Treasury shall take the
actions described in subsection (b) with respect to the
Federal Hospital Insurance Trust Fund (in this section
referred to as the ``Trust Fund'') with the goal being that,
after the actions are taken, the holdings of the Trust Fund
will replicate, to the extent practicable in the judgment of
the Secretary of the Treasury, in consultation with the
Secretary, the obligations that would have been held by the
trust fund if the clerical error had not occurred.
(b) Obligations Issued and Redeemed.--The Secretary of the
Treasury shall--
(1) issue to the Trust Fund obligations under chapter 31 of
title 31, United States Code, that bear issue dates, interest
rates, and maturity dates as the obligations that--
(A) would have been issued to the Trust Fund if the
clerical error had not occurred; or
(B) were issued to the Trust Fund and were redeemed by
reason of the clerical error; and
(2) redeem from the Trust Fund obligations that would have
been redeemed from the Trust Fund if the clerical error had
not occurred.
(c) Appropriation to Trust Fund.--Within 120 days after the
effective date of this section, there is hereby appropriated
to the Trust Fund, out of any money in the Treasury not
otherwise appropriated, an amount determined by the Secretary
of the Treasury, in consultation with the Secretary of Health
and Human Services, to be equal to the interest income lost
by the trust fund through the date of credit by reason of the
clerical error.
(d) Clerical Error Defined.--For purposes of this section,
the term ``clerical error'' means the failure to have
transferred the correct amount from the general fund to the
Trust Fund, which failure occurred on April 15, 2001.
TITLE VI--PROVISIONS RELATING TO PART B
Subtitle A--Physicians' Services
SEC. 601. REVISION OF UPDATES FOR PHYSICIANS' SERVICES.
(a) Update for 2004 and 2005.--
(1) In general.--Section 1848(d) (42 U.S.C. 1395w-4(d)) is
amended by adding at the end the following new paragraph:
``(5) Update for 2004 and 2005.--The update to the single
conversion factor established in paragraph (1)(C) for each of
2004 and 2005 shall be not less than 1.5 percent.''.
(2) Conforming amendment.--Paragraph (4)(B) of such section
is amended, in the matter before clause (i), by inserting
``and paragraph (5)'' after ``subparagraph (D)''.
(3) Not treated as change in law and regulation in
sustainable growth rate determination.--The amendments made
by this subsection shall not be treated as a change in law
for purposes of applying section 1848(f)(2)(D) of the Social
Security Act (42 U.S.C. 1395w-4(f)(2)(D)).
(b) Use of 10-Year Rolling Average in Computing Gross
Domestic Product.--
(1) In general.--Section 1848(f)(2)(C) (42 U.S.C. 1395w-
4(f)(2)(C)) is amended--
(A) by striking ``projected'' and inserting ``annual
average''; and
(B) by striking ``from the previous applicable period to
the applicable period involved'' and inserting ``during the
10-year period ending with the applicable period involved''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to computations of the sustainable growth rate
for years beginning with 2003.
SEC. 602. STUDIES ON ACCESS TO PHYSICIANS' SERVICES.
(a) GAO Study on Beneficiary Access to Physicians'
Services.--
(1) Study.--The Comptroller General of the United States
shall conduct a study on access of medicare beneficiaries to
physicians' services under the medicare program. The study
shall include--
(A) an assessment of the use by beneficiaries of such
services through an analysis of claims submitted by
physicians for such services under part B of the medicare
program;
(B) an examination of changes in the use by beneficiaries
of physicians' services over time;
(C) an examination of the extent to which physicians are
not accepting new medicare beneficiaries as patients.
(2) Report.--Not later than 18 months after the date of the
enactment of this Act, the Comptroller General shall submit
to Congress a report on the study conducted under paragraph
(1). The report shall include a determination whether--
(A) data from claims submitted by physicians under part B
of the medicare program indicate potential access problems
for medicare beneficiaries in certain geographic areas; and
(B) access by medicare beneficiaries to physicians'
services may have improved, remained constant, or
deteriorated over time.
(b) Study and Report on Supply of Physicians.--
(1) Study.--The Secretary shall request the Institute of
Medicine of the National Academy of Sciences to conduct a
study on the adequacy of the supply of physicians (including
specialists) in the United States and the factors that affect
such supply.
(2) Report to congress.--Not later than 2 years after the
date of enactment of this section, the Secretary shall submit
to Congress a report on the results of the study described in
paragraph (1), including any recommendations for legislation.
(c) GAO Study of Medicare Payment for Inhalation Therapy.--
(1) Study.--The Comptroller General of the United States
shall conduct a study to examine the adequacy of current
reimbursements for inhalation therapy under the medicare
program.
(2) Report.--Not later than May 1, 2004, the Comptroller
General shall submit to Congress a report on the study
conducted under paragraph (1).
[[Page H6047]]
SEC. 603. MEDPAC REPORT ON PAYMENT FOR PHYSICIANS' SERVICES.
(a) Practice Expense Component.--Not later than 1 year
after the date of the enactment of this Act, the Medicare
Payment Advisory Commission shall submit to Congress a report
on the effect of refinements to the practice expense
component of payments for physicians' services, after the
transition to a full resource-based payment system in 2002,
under section 1848 of the Social Security Act (42 U.S.C.
1395w-4). Such report shall examine the following matters by
physician specialty:
(1) The effect of such refinements on payment for
physicians' services.
(2) The interaction of the practice expense component with
other components of and adjustments to payment for
physicians' services under such section.
(3) The appropriateness of the amount of compensation by
reason of such refinements.
(4) The effect of such refinements on access to care by
medicare beneficiaries to physicians' services.
(5) The effect of such refinements on physician
participation under the medicare program.
(b) Volume of Physician Services.--The Medicare Payment
Advisory Commission shall submit to Congress a report on the
extent to which increases in the volume of physicians'
services under part B of the medicare program are a result of
care that improves the health and well-being of medicare
beneficiaries. The study shall include the following:
(1) An analysis of recent and historic growth in the
components that the Secretary includes under the sustainable
growth rate (under section 1848(f) of the Social Security
Act).
(2) An examination of the relative growth of volume in
physician services between medicare beneficiaries and other
populations.
(3) An analysis of the degree to which new technology,
including coverage determinations of the Centers for Medicare
& Medicaid Services, has affected the volume of physicians'
services.
(4) An examination of the impact on volume of demographic
changes.
(5) An examination of shifts in the site of service of
services that influence the number and intensity of services
furnished in physicians' offices and the extent to which
changes in reimbursement rates to other providers have
affected these changes.
(6) An evaluation of the extent to which the Centers for
Medicare & Medicaid Services takes into account the impact of
law and regulations on the sustainable growth rate.
SEC. 604. INCLUSION OF PODIATRISTS AND DENTISTS UNDER PRIVATE
CONTRACTING AUTHORITY.
Section 1802(b)(5)(B) (42 U.S.C. 1395a(b)(5)(B)) is amended
by striking ``section 1861(r)(1)'' and inserting ``paragraphs
(1), (2), and (3) of section 1861(r)''.
SEC. 605. ESTABLISHMENT OF FLOOR ON WORK GEOGRAPHIC
ADJUSTMENT.
(a) Minimum Index.--Section 1848(e)(1) (42 U.S.C. 1395w-
4(e)(1)) is amended by adding at the end the following new
subparagraph:
``(E) Floor at 1.0 on work geographic index.--
``(i) In general.--Subject to clause (ii), after
calculating the work geographic index in subparagraph
(A)(iii), for purposes of payment for services furnished on
or after January 1, 2004, and before January 1, 2006, the
Secretary shall increase the work geographic index to 1.00
for any locality for which such work geographic index is less
than 1.00.
``(ii) Secretarial discretion.--Clause (i) shall have no
force or effect in law if the Secretary determines, taking
into account the report of the Comptroller General under
section 605(b)(2) of the Medicare Prescription Drug and
Modernization Act of 2003, that there is no sound economic
rationale for the implementation of that clause.''.
(b) GAO Report.--
(1) Evaluation.--As part of the study on geographic
differences in payments for physicians' services conducted
under section 413, the Comptroller General of the United
States shall evaluate the following:
(A) Whether there is a sound economic basis for the
implementation of the adjustment of the work geographic index
under section 1848(e)(1) of the Social Security Act under
subsection (a) in those areas in which the adjustment
applies.
(B) The effect of such adjustment on physician location and
retention in areas affected by such adjustment, taking into
account--
(i) differences in recruitment costs and retention rates
for physicians, including specialists, between large urban
areas and other areas; and
(ii) the mobility of physicians, including specialists,
over the last decade.
(C) The appropriateness of establishing a floor of 1.0 for
the work geographic index.
(2) Report.--By not later than September 1, 2004, the
Comptroller General shall submit to Congress and to the
Secretary a report on the evaluation conducted under
paragraph (1).
Subtitle B--Preventive Services
SEC. 611. COVERAGE OF AN INITIAL PREVENTIVE PHYSICAL
EXAMINATION.
(a) Coverage.--Section 1861(s)(2) (42 U.S.C. 1395x(s)(2))
is amended--
(1) in subparagraph (U), by striking ``and'' at the end;
(2) in subparagraph (V), by inserting ``and'' at the end;
and
(3) by adding at the end the following new subparagraph:
``(W) an initial preventive physical examination (as
defined in subsection (ww));''.
(b) Services Described.--Section 1861 (42 U.S.C. 1395x) is
amended by adding at the end the following new subsection:
``Initial Preventive Physical Examination
``(ww) The term `initial preventive physical examination'
means physicians' services consisting of a physical
examination with the goal of health promotion and disease
detection and includes items and services (excluding clinical
laboratory tests), as determined by the Secretary, consistent
with the recommendations of the United States Preventive
Services Task Force.''.
(c) Waiver of Deductible and Coinsurance.--
(1) Deductible.--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 an initial preventive physical examination (as
defined in section 1861(ww))''.
(2) Coinsurance.--Section 1833(a)(1) (42 U.S.C.
1395l(a)(1)) is amended--
(A) in clause (N), by inserting ``(or 100 percent in the
case of an initial preventive physical examination, as
defined in section 1861(ww))'' after ``80 percent''; and
(B) in clause (O), by inserting ``(or 100 percent in the
case of an initial preventive physical examination, as
defined in section 1861(ww))'' after ``80 percent''.
(d) Payment as Physicians' Services.--Section 1848(j)(3)
(42 U.S.C. 1395w-4(j)(3)) is amended by inserting ``(2)(W),''
after ``(2)(S),''.
(e) Other Conforming Amendments.--Section 1862(a) (42
U.S.C. 1395y(a)) is amended--
(1) in paragraph (1)--
(A) by striking ``and'' at the end of subparagraph (H);
(B) by striking the semicolon at the end of subparagraph
(I) and inserting ``, and''; and
(C) by adding at the end the following new subparagraph:
``(J) in the case of an initial preventive physical
examination, which is performed not later than 6 months after
the date the individual's first coverage period begins under
part B;''; and
(2) in paragraph (7), by striking ``or (H)'' and inserting
``(H), or (J)''.
(f) Effective Date.--The amendments made by this section
shall apply to services furnished on or after January 1,
2004, but only for individuals whose coverage period begins
on or after such date.
SEC. 612. COVERAGE OF CHOLESTEROL AND BLOOD LIPID SCREENING.
(a) Coverage.--Section 1861(s)(2) (42 U.S.C. 1395x(s)(2)),
as amended by section 611(a), is amended--
(1) in subparagraph (V), by striking ``and'' at the end;
(2) in subparagraph (W), by inserting ``and'' at the end;
and
(3) by adding at the end the following new subparagraph:
``(X) cholesterol and other blood lipid screening tests (as
defined in subsection (XX));''.
(b) Services Described.--Section 1861 (42 U.S.C. 1395x), as
amended by section 611(b), is amended by adding at the end
the following new subsection:
``Cholesterol and Other Blood Lipid Screening Test
``(xx)(1) The term `cholesterol and other blood lipid
screening test' means diagnostic testing of cholesterol and
other lipid levels of the blood for the purpose of early
detection of abnormal cholesterol and other lipid levels.
``(2) The Secretary shall establish standards, in
consultation with appropriate organizations, regarding the
frequency and type of cholesterol and other blood lipid
screening tests, except that such frequency may not be more
often than once every 2 years.''.
(c) Frequency.--Section 1862(a)(1) (42 U.S.C. 1395y(a)(1)),
as amended by section 611(e), is amended--
(1) by striking ``and'' at the end of subparagraph (I);
(2) by striking the semicolon at the end of subparagraph
(J) and inserting ``; and''; and
(3) by adding at the end the following new subparagraph:
``(K) in the case of a cholesterol and other blood lipid
screening test (as defined in section 1861(xx)(1)), which is
performed more frequently than is covered under section
1861(xx)(2).''.
(d) Effective Date.--The amendments made by this section
shall apply to tests furnished on or after January 1, 2005.
SEC. 613. WAIVER OF DEDUCTIBLE FOR COLORECTAL CANCER
SCREENING TESTS.
(a) In General.--The first sentence of section 1833(b) (42
U.S.C. 1395l(b)), as amended by section 611(c)(1), is
amended--
(1) by striking ``and'' before ``(7)''; and
(2) by inserting before the period at the end the
following: ``, and (8) such deductible shall not apply with
respect to colorectal cancer screening tests (as described in
section 1861(pp)(1))''.
(b) Conforming Amendments.--Paragraphs (2)(C)(ii) and
(3)(C)(ii) of section 1834(d) (42 U.S.C. 1395m(d)) are each
amended--
(1) by striking ``deductible and'' in the heading; and
(2) in subclause (I), by striking ``deductible or'' each
place it appears.
(c) Effective Date.--The amendment made by this section
shall apply to items
[[Page H6048]]
and services furnished on or after Janaury 1, 2004.
SEC. 614. IMPROVED PAYMENT FOR CERTAIN MAMMOGRAPHY SERVICES.
(a) Exclusion from OPD Fee Schedule.--Section
1833(t)(1)(B)(iv) (42 U.S.C. 1395l(t)(1)(B)(iv)) is amended
by inserting before the period at the end the following:
``and does not include screening mammography (as defined in
section 1861(jj)) and unilateral and bilateral diagnostic
mammography''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply to mammography performed on or after January 1,
2004.
Subtitle C--Other Services
SEC. 621. HOSPITAL OUTPATIENT DEPARTMENT (HOPD) PAYMENT
REFORM.
(a) Payment for Drugs.--
(1) Modification of ambulatory payment classification (apc)
groups.--Section 1833(t) (42 U.S.C. 1395l(t)) is amended--
(A) by redesignating paragraph (13) as paragraph (14); and
(B) by inserting after paragraph (12) the following new
paragraph:
``(13) Drug apc payment rates.--
``(A) In general.--With respect to payment for covered OPD
services that includes a specified covered outpatient drug
(defined in subparagraph (B)), the amount provided for
payment for such drug under the payment system under this
subsection for services furnished in--
``(i) 2004, 2005, or 2006, shall in no case--
``(I) exceed 95 percent of the average wholesale price for
the drug; or
``(II) be less than the transition percentage (under
subparagraph (C)) of the average wholesale price for the
drug; or
``(ii) a subsequent year, shall be equal to the average
price for the drug for that area and year established under
the competitive acquisition program under section 1847A as
calculated and applied by the Secretary for purposes of this
paragraph.
``(B) Specified covered outpatient drug defined.--
``(i) In general.--In this paragraph, the term `specified
covered outpatient drug' means, subject to clause (ii), a
covered outpatient drug (as defined in 1927(k)(2), that is--
``(I) a radiopharmaceutical; or
``(II) a drug or biological for which payment was made
under paragraph (6) (relating to pass-through payments) on or
before December 31, 2002.
``(ii) Exception.--Such term does not include--
``(I) a drug for which payment is first made on or after
January 1, 2003, under paragraph (6); or
``(II) a drug for a which a temporary HCPCS code has not
been assigned.
``(C) Transition towards historical average acquisition
cost.--The transition percentage under this subparagraph for
drugs furnished in a year is determined in accordance with
the following table:
The transition percentage for--
Innovator
For the year-- Single multiple Generic
source source drugs
drugs drugs are-- are--
are--
2004.................................... 83% 81.5% 46%
2005.................................... 77% 75% 46%
2006.................................... 71% 68% 46%
``(D) Payment for new drugs until temporary HCPCS code
assigned.--With respect to payment for covered OPD services
that includes a covered outpatient drug (as defined in
1927(k)) for a which a temporary HCPCS code has not been
assigned, the amount provided for payment for such drug under
the payment system under this subsection shall be equal to 95
percent of the average wholesale price for the drug.
``(E) Classes of drugs.--For purposes of this paragraph,
each of the following shall be treated as a separate class of
drugs:
``(i) Sole source drugs.--A sole source drug which for
purposes of this paragraph means a drug or biological that is
not a multiple source drug (as defined in subclauses (I) and
(II) of section 1927(k)(7)(A)(i)) and is not a drug approved
under an abbreviated new drug application under section
355(j) of the Federal Food, Drug, and Cosmetic Act.
``(ii) Innovator multiple source drugs.--Innovator multiple
source drugs (as defined in section 1927(k)(7)(A)(ii)).
``(iii) Noninnovator multiple source drugs.--Noninnovator
multiple source drugs (as defined in section
1927(k)(7)(A)(iii)).
``(F) Inapplicability of expenditures in determining
conversion factors.--Additional expenditures resulting from
this paragraph and paragraph (14)(C) in a year shall not be
taken into account in establishing the conversion factor for
that year.''.
(2) Reduction in threshold for separate apcs for drugs.--
Section 1833(t)(14), as redesignated by paragraph (1)(A), is
amended by adding at the end the following new subparagraph:
``(B) Threshold for establishment of separate apcs for
drugs.--The Secretary shall reduce the threshold for the
establishment of separate ambulatory payment classification
groups (APCs) with respect to drugs to $50 per
administration.''.
(3) Exclusion of separate drug apcs from outlier
payments.--Section 1833(t)(5) is amended by adding at the end
the following new subparagraph:
``(E) Exclusion of separate drug apcs from outlier
payments.--No additional payment shall be made under
subparagraph (A) in the case of ambulatory procedure codes
established separately for drugs.''.
(4) Payment for pass through drugs.--Clause (i) of section
1833(t)(6)(D) (42 U.S.C. 1395l(t)(6)(D)) is amended by
inserting after ``under section 1842(o)'' the following:
``(or if the drug is covered under a competitive acquisition
contract under section 1847A for an area, an amount
determined by the Secretary equal to the average price for
the drug for that area and year established under such
section as calculated and applied by the Secretary for
purposes of this paragraph)''.
(5) Effective date.--The amendments made by this subsection
shall apply to services furnished on or after January 1,
2004.
(b) Special Payment for Brachytherapy.--
(1) In general.--Section 1833(t)(14), as so redesignated
and amended by subsection (a)(2), is amended by adding at the
end the following new subparagraph:
``(C) Payment for devices of brachytherapy at charges
adjusted to cost.--Notwithstanding the preceding provisions
of this subsection, for a device of brachytherapy furnished
on or after January 1, 2004, and before January 1, 2007, the
payment basis for the device under this subsection shall be
equal to the hospital's charges for each device furnished,
adjusted to cost.''.
(2) Specification of groups for brachytherapy devices.--
Section 1833(t)(2) (42 U.S.C. 1395l(t)(2) is amended--
(A) in subparagraph (F), by striking ``and'' at the end;
(B) in subparagraph (G), by striking the period at the end
and inserting ``; and''; and
(C) by adding at the end the following new subparagraph:
``(H) with respect to devices of brachytherapy, the
Secretary shall create additional groups of covered OPD
services that classify such devices separately from the other
services (or group of services) paid for under this
subsection in a manner reflecting the number, isotope, and
radioactive intensity of such devices furnished, including
separate groups for palladium-103 and iodine-125 devices.''.
(3) GAO report.--The Comptroller General of the United
States shall conduct a study to determine appropriate payment
amounts under section 1833(t)(13)(B) of the Social Security
Act, as added by paragraph (1), for devices of brachytherapy.
Not later than January 1, 2005, the Comptroller General shall
submit to Congress and the Secretary a report on the study
conducted under this paragraph, and shall include specific
recommendations for appropriate payments for such devices.
(c) Application of Functional Equivalence Test.--
(1) In general.--Section 1833(t)(6) (42 U.S.C. 1395l(t)(6))
is amended by adding at the end the following new
subparagraph:
``(F) Limitation on application of functional equivalence
standard.--The Secretary may not apply a `functional
equivalence' payment standard (including such standard
promulgated on November 1, 2002) or any other similar
standard in order to deem a particular product to be
functionally equivalent (or a similar standard) unless the
Commissioner of Food and Drugs establishes a functional
equivalence standard and certifies, under such standards,
that the two products are functionally equivalent. If the
Commissioner makes such a certification with respect to two
or more products, the Secretary may, after complying with
applicable rulemaking requirements, implement such standard
with respect to such products under this subsection.''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to the application of a functional equivalence
standard to a drug or biological on or after the date of the
enactment of this Act, unless such application was being made
to such drug or biological prior to June 13, 2003.
(d) Hospital Acquisition Cost Study.--
(1) In general.--The Secretary shall conduct a study on the
costs incurred by hospitals in acquiring covered outpatient
drugs for which payment is made under section 1833(t) of the
Social Security Act (42 U.S.C. 1395l(t)).
(2) Drugs covered.--The study in paragraph (1) shall not
include those drugs for which the acquisition costs is less
than $50 per administration.
(3) Representative sample of hospitals.--In conducting the
study under paragraph (1), the Secretary shall collect data
from a statistically valid sample of hospitals with an urban/
rural stratification.
(4) Report.--Not later than January 1, 2006, the Secretary
shall submit to Congress a report on the study conducted
under paragraph (1), and shall include recommendations with
respect to the following:
(A) Whether the study should be repeated, and if so, how
frequently.
(B) Whether the study produced useful data on hospital
acquisition cost.
(C) Whether data produced in the study is appropriate for
use in making adjustments to payments for drugs and
biologicals under section 1847A of the Social Security Act.
(D) Whether separate estimates can be made of overhead
costs, including handing and administering costs for drugs.
SEC. 622. PAYMENT FOR AMBULANCE SERVICES.
(a) Phase-In Providing Floor Using Blend of Fee Schedule
and Regional Fee Schedules.--Section 1834(l) (42 U.S.C.
1395m(l)), as amended by section 410(a), is amended--
[[Page H6049]]
(1) in paragraph (2)(E), by inserting ``consistent with
paragraph (11)'' after ``in an efficient and fair manner'';
and
(2) by adding at the end the following new paragraph:
``(11) Phase-in providing floor using blend of fee schedule
and regional fee schedules.--In carrying out the phase-in
under paragraph (2)(E) for each level of service furnished in
a year, the portion of the payment amount that is based on
the fee schedule shall be the greater of the amount
determined under such fee schedule (without regard to this
paragraph) or the following blended rate of the fee schedule
under paragraph (1) and of a regional fee schedule for the
region involved:
``(A) For 2004, the blended rate shall be based 20 percent
on the fee schedule under paragraph (1) and 80 percent on the
regional fee schedule.
``(B) For 2005, the blended rate shall be based 40 percent
on the fee schedule under paragraph (1) and 60 percent on the
regional fee schedule.
``(C) For 2006, the blended rate shall be based 60 percent
on the fee schedule under paragraph (1) and 40 percent on the
regional fee schedule.
``(D) For 2007, 2008, and 2009, the blended rate shall be
based 80 percent on the fee schedule under paragraph (1) and
20 percent on the regional fee schedule.
``(E) For 2010 and each succeeding year, the blended rate
shall be based 100 percent on the fee schedule under
paragraph (1).
For purposes of this paragraph, the Secretary shall establish
a regional fee schedule for each of the 9 Census divisions
using the methodology (used in establishing the fee schedule
under paragraph (1)) to calculate a regional conversion
factor and a regional mileage payment rate and using the same
payment adjustments and the same relative value units as used
in the fee schedule under such paragraph.''.
(b) Adjustment in Payment for Certain Long Trips.--Section
1834(l), as amended by subsection (a), is further amended by
adding at the end the following new paragraph:
``(12) Adjustment in payment for certain long trips.--In
the case of ground ambulance services furnished on or after
January 1, 2004, and before January 1, 2009, regardless of
where the transportation originates, the fee schedule
established under this subsection shall provide that, with
respect to the payment rate for mileage for a trip above 50
miles the per mile rate otherwise established shall be
increased by \1/4\ of the payment per mile otherwise
applicable to such miles.''.
(c) GAO Report on Costs and Access.--Not later than
December 31, 2005, the Comptroller General of the United
States shall submit to Congress an initial report on how
costs differ among the types of ambulance providers and on
access, supply, and quality of ambulance services in those
regions and States that have a reduction in payment under the
medicare ambulance fee schedule (under section 1834(l) of the
Social Security Act, as amended by this section). Not later
than December 31, 2007, the Comptroller General shall submit
to Congress a final report on such access and supply.
(d) Effective Date.--The amendments made by this section
shall apply to ambulance services furnished on or after
January 1, 2004.
SEC. 623. RENAL DIALYSIS SERVICES.
(a) Demonstration of Alternative Delivery Models.--
(1) Use of advisory board.--In carrying out the
demonstration project relating to improving care for people
with end-stage renal disease through alternative delivery
models (as published in the Federal Register of June 4,
2003), the Secretary shall establish an advisory board
comprised of representatives described in paragraph (2) to
provide advice and recommendations with respect to the
establishment and operation of such demonstration project.
(2) Representatives.--Representatives referred to in
paragraph (1) include representatives of the following:
(A) Patient organizations.
(B) Clinicians.
(C) The medicare payment advisory commission, established
under section 1805 of the Social Security Act (42 U.S.C.
1395b-6).
(D) The National Kidney Foundation.
(E) The National Institute of Diabetes and Digestive and
Kidney Diseases of National Institutes of Health.
(F) End-stage renal disease networks.
(G) Medicare contractors to monitor quality of care.
(I) providers of services and renal dialysis facilities
furnishing end-stage renal disease services.
(J) Economists.
(K) Researchers.
(b) Restoring Composite Rate Exceptions for Pediatric
Facilities.--
(1) In general.--Section 422(a)(2) of BIPA is amended--
(A) in subparagraph (A), by striking ``and (C)'' and
inserting ``, (C), and (D)'';
(B) in subparagraph (B), by striking ``In the case'' and
inserting ``Subject to subparagraph (D), in the case''; and
(C) by adding at the end the following new subparagraph:
``(D) Inapplicability to pediatric facilities.--
Subparagraphs (A) and (B) shall not apply, as of October 1,
2002, to pediatric facilities that do not have an exception
rate described in subparagraph (C) in effect on such date.
For purposes of this subparagraph, the term `pediatric
facility' means a renal facility at least 50 percent of whose
patients are individuals under 18 years of age.''.
(2) Conforming amendment.--The fourth sentence of section
1881(b)(7) (42 U.S.C. 1395rr(b)(7)), as amended by subsection
(b), is further amended by striking ``Until'' and inserting
``Subject to section 422(a)(2) of the Medicare, Medicaid, and
SCHIP Benefits Improvement and Protection Act of 2000, and
until''.
(c) Increase in Renal Dialysis Composite Rate for Services
Furnished in 2004.--Notwithstanding any other provision of
law, with respect to payment under part B of title XVIII of
the Social Security Act for renal dialysis services furnished
in 2004, the composite payment rate otherwise established
under section 1881(b)(7) of such Act (42 U.S.C. 1395rr(b)(7))
shall be increased by 1.6 percent.
SEC. 624. ONE-YEAR MORATORIUM ON THERAPY CAPS; PROVISIONS
RELATING TO REPORTS.
(a) 1-Year Moratorium on Therapy Caps.--Section 1833(g)(4)
(42 U.S.C. 1395l(g)(4)) is amended by striking ``and 2002''
and inserting ``2002, and 2004''.
(b) Prompt Submission of Overdue Reports on Payment and
Utilization of Outpatient Therapy Services.--Not later than
December 31, 2003, the Secretary shall submit to Congress the
reports required under section 4541(d)(2) of the Balanced
Budget Act of 1997 (relating to alternatives to a single
annual dollar cap on outpatient therapy) and under section
221(d) of the Medicare, Medicaid, and SCHIP Balanced Budget
Refinement Act of 1999 (relating to utilization patterns for
outpatient therapy).
(c) Identification of Conditions and Diseases Justifying
Waiver of Therapy Cap.--
(1) Study.--The Secretary shall request the Institute of
Medicine of the National Academy of Sciences to identify
conditions or diseases that should justify conducting an
assessment of the need to waive the therapy caps under
section 1833(g)(4) of the Social Security Act (42 U.S.C.
1395l(g)(4)).
(2) Reports to congress.--
(A) Preliminary report.--Not later than July 1, 2004, the
Secretary shall submit to Congress a preliminary report on
the conditions and diseases identified under paragraph (1).
(B) Final report.--Not later than September 1, 2004, the
Secretary shall submit to Congress a final report on such
conditions and diseases.
(C) Recommendations.--Not later than October 1, 2004, the
Secretary shall submit to Congress a recommendation of
criteria, with respect to such conditions and disease, under
which a waiver of the therapy caps would apply.
(d) GAO Study of Patient Access to Physical Therapist
Services.--
(1) Study.--The Comptroller General of the United States
shall conduct a study on access to physical therapist
services in States authorizing such services without a
physician referral and in States that require such a
physician referral. The study shall--
(A) examine the use of and referral patterns for physical
therapist services for patients age 50 and older in States
that authorize such services without a physician referral and
in States that require such a physician referral;
(B) examine the use of and referral patterns for physical
therapist services for patients who are medicare
beneficiaries;
(C) examine the potential effect of prohibiting a physician
from referring patients to physical therapy services owned by
the physician and provided in the physician's office;
(D) examine the delivery of physical therapists' services
within the facilities of Department of Defense; and
(E) analyze the potential impact on medicare beneficiaries
and on expenditures under the medicare program of eliminating
the need for a physician referral and physician certification
for physical therapist services under the medicare program.
(2) Report.--The Comptroller General shall submit to
Congress a report on the study conducted under paragraph (1)
by not later than 1 year after the date of the enactment of
this Act.
SEC. 625. ADJUSTMENT TO PAYMENTS FOR SERVICES FURNISHED IN
AMBULATORY SURGICAL CENTERS.
Section 1833(i)(2)(C) (42 U.S.C. 1395l(i)(2)(C)) is amended
in the last sentence by inserting ``and each of fiscal years
2004 through 2008'' after ``In each of the fiscal years 1998
through 2002''.
SEC. 626. PAYMENT FOR CERTAIN SHOES AND INSERTS UNDER THE FEE
SCHEDULE FOR ORTHOTICS AND PROSTHETICS.
(a) In General.--Section 1833(o) (42 U.S.C. 1395l(o)) is
amended--
(1) in paragraph (1), by striking ``no more than the limits
established under paragraph (2)'' and inserting ``no more
than the amount of payment applicable under paragraph (2)'';
and
(2) in paragraph (2), to read as follows:
``(2)(A) Except as provided by the Secretary under
subparagraphs (B) and (C), the amount of payment under this
paragraph for custom molded shoes, extra depth shoes, and
inserts shall be the amount determined for such items by the
Secretary under section 1834(h).
``(B) The Secretary or a carrier may establish payment
amounts for shoes and inserts that are lower than the amount
established under section 1834(h) if the Secretary finds that
shoes and inserts of an appropriate quality are readily
available at or below the amount established under such
section.
[[Page H6050]]
``(C) In accordance with procedures established by the
Secretary, an individual entitled to benefits with respect to
shoes described in section 1861(s)(12) may substitute
modification of such shoes instead of obtaining one (or more,
as specified by the Secretary) pair of inserts (other than
the original pair of inserts with respect to such shoes). In
such case, the Secretary shall substitute, for the payment
amount established under section 1834(h), a payment amount
that the Secretary estimates will assure that there is no net
increase in expenditures under this subsection as a result of
this subparagraph.''.
(b) Conforming Amendments.--(1) Section 1834(h)(4)(C) (42
U.S.C. 1395m(h)(4)(C)) is amended by inserting ``(and
includes shoes described in section 1861(s)(12))'' after ``in
section 1861(s)(9)''.
(2) Section 1842(s)(2) (42 U.S.C. 1395u(s)(2)) is amended
by striking subparagraph (C).
(c) Effective Date.--The amendments made by this section
shall apply to items furnished on or after January 1, 2004.
SEC. 627. WAIVER OF PART B LATE ENROLLMENT PENALTY FOR
CERTAIN MILITARY RETIREES; SPECIAL ENROLLMENT
PERIOD.
(a) Waiver of Penalty.--
(1) In general.--Section 1839(b) (42 U.S.C. 1395r(b)) is
amended by adding at the end the following new sentence: ``No
increase in the premium shall be effected for a month in the
case of an individual who is 65 years of age or older, who
enrolls under this part during 2001, 2002, 2003, or 2004 and
who demonstrates to the Secretary before December 31, 2004,
that the individual is a covered beneficiary (as defined in
section 1072(5) of title 10, United States Code). The
Secretary of Health and Human Services shall consult with the
Secretary of Defense in identifying individuals described in
the previous sentence.''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to premiums for months beginning with January
2004. The Secretary of Health and Human Services shall
establish a method for providing rebates of premium penalties
paid for months on or after January 2004 for which a penalty
does not apply under such amendment but for which a penalty
was previously collected.
(b) Medicare Part B Special Enrollment Period.--
(1) In general.--In the case of any individual who, as of
the date of the enactment of this Act, is 65 years of age or
older, is eligible to enroll but is not enrolled under part B
of title XVIII of the Social Security Act, and is a covered
beneficiary (as defined in section 1072(5) of title 10,
United States Code), the Secretary of Health and Human
Services shall provide for a special enrollment period during
which the individual may enroll under such part. Such period
shall begin as soon as possible after the date of the
enactment of this Act and shall end on December 31, 2004.
(2) Coverage period.--In the case of an individual who
enrolls during the special enrollment period provided under
paragraph (1), the coverage period under part B of title
XVIII of the Social Security Act shall begin on the first day
of the month following the month in which the individual
enrolls.
SEC. 628. PART B DEDUCTIBLE.
Section 1833(b) (42 U.S.C. 1395l(b)) is amended--
(1) by striking ``1991 and'' and inserting ``1991,''; and
(2) by striking ``and subsequent years'' and inserting
``and each subsequent year through 2003, and for a subsequent
year after 2003 the amount of such deductible for the
previous year increased by the annual percentage increase in
the monthly actuarial rate under section 1839(a)(1) ending
with such subsequent year (rounded to the nearest $1)''.
SEC. 629. EXTENSION OF COVERAGE OF INTRAVENOUS IMMUNE
GLOBULIN (IVIG) FOR THE TREATMENT OF PRIMARY
IMMUNE DEFICIENCY DISEASES IN THE HOME.
(a) In General.--Section 1861 (42 U.S.C. 1395x), as amended
by sections 611(a) and 612(a) is amended--
(1) in subsection (s)(2)--
(A) by striking ``and'' at the end of subparagraph (W);
(B) by adding ``and'' at the end of subparagraph (X); and
(C) by adding at the end the following new subparagraph:
``(Y) intravenous immune globulin for the treatment of
primary immune deficiency diseases in the home (as defined in
subsection (yy));''; and
(2) by adding at the end the following new subsection:
``Intravenous Immune Globulin
``(yy) The term `intravenous immune globulin' means an
approved pooled plasma derivative for the treatment in the
patient's home of a patient with a diagnosed primary immune
deficiency disease, but not including items or services
related to the administration of the derivative, if a
physician determines administration of the derivative in the
patient's home is medically appropriate.''.
(b) Payment as a Drug or Biological.--Section 1833(a)(1)(S)
(42 U.S.C. 1395l(a)(1)(S)) is amended by inserting
``(including intravenous immune globulin (as defined in
section 1861(yy)))'' after ``with respect to drugs and
biologicals''.
(c) Effective Date.--The amendments made by this section
shall apply to items furnished administered on or after
January 1, 2004.
SEC. 630. MEDICARE COVERAGE OF DIABETES LABORATORY DIAGNOSTIC
TESTS.
(a) Coverage.--Section 1861(s)(2) (42 U.S.C. 1395x(s)(2)),
as amended by sections 611 and 612, is amended--
(1) in subparagraph (W), by striking ``and'' at the end;
(2) in subparagraph (X), by adding ``and'' at the end; and
(3) by adding at the end the following new subparagraph:
``(Y) diabetes screening tests and services (as defined in
subsection (yy));''.
(b) Services Described.--Section 1861 (42 U.S.C. 1395x), as
amended by sections 611 and 612, is further amended by adding
at the end the following new subsection:
``Diabetes Screening Tests and Services
``(yy)(1) The term `diabetes screening tests' means
diagnostic testing furnished to an individual at risk for
diabetes (as defined in paragraph (2)) for the purpose of
early detection of diabetes, including--
``(A) a fasting plasma glucose test; and
``(B) such other tests, and modifications to tests, as the
Secretary determines appropriate, in consultation with
appropriate organizations.
``(2) For purposes of paragraph (1), the term `individual
at risk for diabetes' means an individual who has any, a
combination of, or all of the following risk factors for
diabetes:
``(A) A family history of diabetes.
``(B) Overweight defined as a body mass index greater than
or equal to 25 kg/m2.
``(C) Habitual physical inactivity.
``(D) Belonging to a high-risk ethnic or racial group.
``(E) Previous identification of an elevated impaired
fasting glucose.
``(F) Identification of impaired glucose tolerance.
``(G) Hypertension.
``(H) Dyslipidemia.
``(I) History of gestational diabetes mellitus or delivery
of a baby weighing greater than 9 pounds.
``(J) Polycystic ovary syndrome.
``(3) The Secretary shall establish standards, in
consultation with appropriate organizations, regarding the
frequency of diabetes screening tests, except that such
frequency may not be more often than twice within the 12-
month period following the date of the most recent diabetes
screening test of that individual.''.
(c) Frequency.--Section 1862(a)(1) (42 U.S.C. 1395y(a)(1)),
as amended by sections 611 and 612, is amended--
(1) by striking ``and'' at the end of subparagraph (J);
(2) by striking the semicolon at the end of subparagraph
(K) and inserting ``; and''; and
(3) by adding at the end the following new subparagraph:
``(L) in the case of a diabetes screening tests or service
(as defined in section 1861(yy)(1)), which is performed more
frequently than is covered under section 1861(yy)(3).''.
(d) Effective Date.--The amendments made by this section
shall apply to tests furnished on or after the date that is
90 days after the date of enactment of this Act.
SEC. 631. DEMONSTRATION PROJECT FOR COVERAGE OF CERTAIN
PRESCRIPTION DRUGS AND BIOLOGICS.
(a) Demonstration Project.--The Secretary shall conduct a
demonstration project under part B of title XVIII of the
Social Security Act under which payment is made for drugs or
biologics that are prescribed as replacements for drugs and
biologicals described in section 1861(s)(2)(A) or
1861(s)(2)(Q) of such Act (42 U.S.C. 1395x(s)(2)(A),
1395x(s)(2)(Q))), or both, for which payment is made under
such part.
(b) Demonstration Project Sites.--The project established
under this section shall be conducted in 3 States selected by
the Secretary.
(c) Duration.--The Secretary shall conduct the
demonstration project for the 2-year period beginning on the
date that is 90 days after the date of the enactment of this
Act, but in no case may the project extend beyond December
31, 2005.
(d) Limitation.--Under the demonstration project over the
duration of the project, the Secretary may not provide--
(1) coverage for more than 10,000 patients; and
(2) more than $100,000,000 in funding.
(e) Report.--Not later than January 1, 2006, the Secretary
shall submit to Congress a report on the project. The report
shall include an evaluation of patient access to care and
patient outcomes under the project, as well as an analysis of
the cost effectiveness of the project, including an
evaluation of the costs savings (if any) to the medicare
program attributable to reduced physicians' services and
hospital outpatient departments services for administration
of the biological.
TITLE VII--PROVISIONS RELATING TO PARTS A AND B
Subtitle A--Home Health Services
SEC. 701. UPDATE IN HOME HEALTH SERVICES.
(a) Change to Calender Year Update.--
(1) In general.--Section 1895(b) (42 U.S.C. 1395fff(b)(3))
is amended--
(A) in paragraph (3)(B)(i)--
(i) by striking ``each fiscal year (beginning with fiscal
year 2002)'' and inserting ``fiscal year 2002 and for fiscal
year 2003 and for each subsequent year (beginning with
2004)''; and
(ii) by inserting ``or year'' after ``the fiscal year'';
(B) in paragraph (3)(B)(ii)(II), by striking ``any
subsequent fiscal year'' and inserting ``2004 and any
subsequent year'';
[[Page H6051]]
(C) in paragraph (3)(B)(iii), by inserting ``or year''
after ``fiscal year'' each place it appears;
(D) in paragraph (3)(B)(iv)--
(i) by inserting ``or year'' after ``fiscal year'' each
place it appears; and
(ii) by inserting ``or years'' after ``fiscal years''; and
(E) in paragraph (5), by inserting ``or year'' after
``fiscal year''.
(2) Transition rule.--The standard prospective payment
amount (or amounts) under section 1895(b)(3) of the Social
Security Act for the calendar quarter beginning on October 1,
2003, shall be such amount (or amounts) for the previous
calendar quarter.
(b) Changes in Updates for 2004, 2005, and 2006.--Section
1895(b)(3)(B)(ii) (42 U.S.C. 1395fff(b)(3)(B)(ii)), as
amended by subsection (a)(1)(B), is amended--
(1) by striking ``or'' at the end of subclause (I);
(2) by redesignating subclause (II) as subclause (III);
(3) in subclause (III), as so redesignated, by striking
``2004'' and inserting ``2007''; and
(4) by inserting after subclause (I) the following new
subclause:
``(II) each of 2004, 2005, and 2006 the home health market
basket percentage increase minus 0.4 percentage points; or''.
SEC. 702. ESTABLISHMENT OF REDUCED COPAYMENT FOR A HOME
HEALTH SERVICE EPISODE OF CARE FOR CERTAIN
BENEFICIARIES.
(a) Part A.--
(1) In general.--Section 1813(a) (42 U.S.C. 1395e(a)) is
amended by adding at the end the following new paragraph:
``(5)(A)(i) Subject to clause (ii), the amount payable for
home health services furnished to the individual under this
title for each episode of care beginning in a year (beginning
with 2004) shall be reduced by a copayment equal to the
copayment amount specified in subparagraph (B)(ii) for such
year.
``(ii) The copayment under clause (i) shall not apply--
``(I) in the case of an individual who has been determined
to be entitled to medical assistance under section
1902(a)(10)(A) or 1902(a)(10)(C) or to be a qualified
medicare beneficiary (as defined in section 1905(p)(1)), a
specified low-income medicare beneficiary described in
section 1902(a)(10)(E)(iii), or a qualifying individual
described in section 1902(a)(10)(E)(iv)(I); and
``(II) in the case of an episode of care which consists of
4 or fewer visits.
``(B)(i) The Secretary shall estimate, before the beginning
of each year (beginning with 2004), the national average
payment under this title per episode for home health services
projected for the year involved.
``(ii) For each year the copayment amount under this clause
is equal to 1.5 percent of the national average payment
estimated for the year involved under clause (i). Any amount
determined under the preceding sentence which is not a
multiple of $5 shall be rounded to the nearest multiple of
$5.
``(iii) There shall be no administrative or judicial review
under section 1869, 1878, or otherwise of the estimation of
average payment under clause (i).''.
(2) Timely implementation.--Unless the Secretary of Health
and Human Services otherwise provides on a timely basis, the
copayment amount specified under section 1813(a)(5)(B)(ii) of
the Social Security Act (as added by paragraph (1)) for 2004
shall be deemed to be $40.
(b) Conforming Provisions.--
(1) Section 1833(a)(2)(A) (42 U.S.C. 1395l(a)(2)(A)) is
amended by inserting ``less the copayment amount applicable
under section 1813(a)(5)'' after ``1895''.
(2) Section 1866(a)(2)(A)(i) (42 U.S.C. 1395cc(a)(2)(A)(i))
is amended--
(A) by striking ``or coinsurance'' and inserting ``,
coinsurance, or copayment''; and
(B) by striking ``or (a)(4)'' and inserting ``(a)(4), or
(a)(5)''.
SEC. 703. MEDPAC STUDY ON MEDICARE MARGINS OF HOME HEALTH
AGENCIES.
(a) Study.--The Medicare Payment Advisory Commission shall
conduct a study of payment margins of home health agencies
under the home health prospective payment system under
section 1895 of the Social Security Act (42 U.S.C. 1395fff).
Such study shall examine whether systematic differences in
payment margins are related to differences in case mix (as
measured by home health resource groups (HHRGs)) among such
agencies. The study shall use the partial or full-year cost
reports filed by home health agencies.
(b) Report.--Not later than 2 years after the date of the
enactment of this Act, the Commission shall submit to
Congress a report on the study under subsection (a).
SEC. 704. DEMONSTRATION PROJECT TO CLARIFY THE DEFINITION OF
HOMEBOUND.
(a) Demonstration Project.--Not later than 180 days after
the date of the 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--
(1) the beneficiary has been certified by one physician as
an individual who has a permanent and severe condition that
will not improve;
(2) the beneficiary 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) the beneficiary requires skilled nursing services on a
permanent basis and the skilled nursing is more than
medication management;
(4) either (A) an attendant is needed during the day to
monitor and treat the beneficiary's medical condition, or (B)
the beneficiary needs daily skilled nursing on a permanent
basis and the skilled nursing is more than medication
management; and
(5) the beneficiary 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.
Subtitle B--Direct Graduate Medical Education
SEC. 711. EXTENSION OF UPDATE LIMITATION ON HIGH COST
PROGRAMS.
Section 1886(h)(2)(D)(iv) (42 U.S.C. 1395ww(h)(2)(D)(iv))
is amended--
(1) in subclause (I)--
(A) by inserting ``and 2004 through 2013'' after ``and
2002''; and
(B) by inserting ``or during the period beginning with
fiscal year 2004 and ending with fiscal year 2013'' after
``during fiscal year 2001 or fiscal year 2002''; and
(2) in subclause (II)--
(A) by striking ``fiscal year 2004, or fiscal year 2005,''
and
(B) by striking ``For a'' and inserting ``For the''.
Subtitle C--Chronic Care Improvement
SEC. 721. VOLUNTARY CHRONIC CARE IMPROVEMENT UNDER
TRADITIONAL FEE-FOR-SERVICE.
Title XVIII, as amended by section 105(a), is amended by
inserting after section 1807 the following new section:
``chronic care improvement
``Sec. 1808. (a) In General.--
[[Page H6052]]
``(1) In general.--The Secretary shall establish a process
for providing chronic care improvement programs in each CCIA
region for medicare beneficiaries who are not enrolled under
part C or E and who have certain chronic conditions, such as
congestive heart failure, diabetes, chronic obstructive
pulmonary disease (COPD), stroke, prostate and colon cancer,
hypertension, or other disease as identified by the Secretary
as appropriate for chronic care improvement. Such a process
shall begin to be implemented no later than 1 year after the
date of the enactment of this section.
``(2) Terminology.--For purposes of this section:
``(A) CCIA region.--The term `CCIA region' means a chronic
care improvement administrative region delineated under
subsection (b)(2).
``(B) Chronic care improvement program.--The terms `chronic
care improvement program' and `program' means such a program
provided by a contractor under this section.
``(C) Contractor.--The term `contractor' means an entity
with a contract to provide a chronic care improvement program
in a CCIA region under this section.
``(D) Individual plan.--The term `individual plan' means a
chronic care improvement plan established under subsection
(c)(5) for an individual.
``(3) Construction.--Nothing in this section shall be
construed as expanding the amount, duration, or scope of
benefits under this title.
``(b) Competitive Bidding Process.--
``(1) In general.--Under this section the Secretary shall
award contracts to qualified entities for chronic care
improvement programs for each CCIA region under this section
through a competitive bidding process.
``(2) Process.--Under such process--
``(A) the Secretary shall delineate the United States into
multiple chronic care improvement administrative regions; and
``(B) the Secretary shall select at least 2 winning bidders
in each CCIA region on the basis of the ability of each
bidder to carry out a chronic care improvement program in
accordance with this section, in order to achieve improved
health and financial outcomes.
``(3) Eligible contractor.--A contractor may be a disease
improvement organization, health insurer, provider
organization, a group of physicians, or any other legal
entity that the Secretary determines appropriate.
``(c) Chronic Care Improvement Programs.--
``(1) In general.--Each contract under this section shall
provide for the operation of a chronic care improvement
program by a contractor in a CCIA region consistent with this
subsection.
``(2) Identification of prospective program participants.--
Each contractor shall have a method for identifying medicare
beneficiaries in the region to whom it will offer services
under its program. The contractor shall identify such
beneficiaries through claims or other data and other means
permitted consistent with applicable disclosure provisions.
``(3) Initial contact by secretary.--The Secretary shall
communicate with each beneficiary identified under paragraph
(2) as a prospective participant in one or more programs
concerning participation in a program. Such communication may
be made by the Secretary (or on behalf of the Secretary) and
shall include information on the following:
``(A) A description of the advantages to the beneficiary in
participating in a program.
``(B) Notification that the contractor offering a program
may contact the beneficiary directly concerning such
participation.
``(C) Notification that participation in a program is
voluntary.
``(D) A description of the method for the beneficiary to
select the single program in which the beneficiary wishes to
participate and for declining to participate and a method for
obtaining additional information concerning such
participation.
``(4) Participation.--A medicare beneficiary may
participate in only one program under this section and may
terminate participation at any time in a manner specified by
the Secretary.
``(5) Individual chronic care improvement plans.--
``(A) In general.--For each beneficiary participating in a
program of a contractor under this section, the contractor
shall develop with the beneficiary an individualized, goal-
oriented chronic care improvement plan.
``(B) Elements of individual plan.--Each individual plan
developed under subparagraph (A) shall include a single point
of contact to coordinate care and the following, as
appropriate:
``(i) Self-improvement education for the beneficiary (such
as education for disease management through medical nutrition
therapy) and support education for health care providers,
primary caregivers, and family members.
``(ii) Coordination of health care services, such as
application of a prescription drug regimen and home health
services.
``(iii) Collaboration with physicians and other providers
to enhance communication of relevant clinical information.
``(iv) The use of monitoring technologies that enable
patient guidance through the exchange of pertinent clinical
information, such as vital signs, symptomatic information,
and health self-assessment.
``(v) The provision of information about hospice care, pain
and palliative care, and end-of-life care.
``(C) Contractor responsibilities.--In establishing and
carrying out individual plans under a program, a contractor
shall, directly or through subcontractors--
``(i) guide participants in managing their health,
including all their co-morbidities, and in performing
activities as specified under the elements of the plan;
``(ii) use decision support tools such as evidence-based
practice guidelines or other criteria as determined by the
Secretary; and
``(iii) develop a clinical information database to track
and monitor each participant across settings and to evaluate
outcomes.
``(6) Additional requirements.--The Secretary may establish
additional requirements for programs and contractors under
this section.
``(7) Accreditation.--The Secretary may provide that
programs that are accredited by qualified organizations may
be deemed to meet such requirements under this section as the
Secretary may specify.
``(c) Contract Terms.--
``(1) In general.--A contract under this section shall
contain such terms and conditions as the Secretary may
specify consistent with this section. The Secretary may not
enter into a contract with an entity under this section
unless the entity meets such clinical, quality improvement,
financial, and other requirements as the Secretary deems to
be appropriate for the population to be served.
``(2) Use of subcontractors permitted.--A contractor may
carry out a program directly or through contracts with
subcontractors.
``(3) Budget neutral payment condition.--In entering into a
contract with an entity under this subsection, the Secretary
shall establish payment rates that assure that there will be
no net aggregate increase in payments under this title over
any period of 3 years or longer, as agreed to by the
Secretary. Under this section, the Secretary shall assure
that medicare program outlays plus administrative expenses
(that would not have been paid under this title without
implementation of this section), including contractor fees,
shall not exceed the expenditures that would have been
incurred under this title for a comparable population in the
absence of the program under this section for the 3-year
contract period.
``(4) At risk relationship.--For purposes of section
1128B(b)(3)(F), a contract under this section shall be
treated as a risk-sharing arrangement referred to in such
section.
``(5) Performance standards.--Payment to contractors under
this section shall be subject to the contractor's meeting of
clinical and financial performance standards set by the
Secretary.
``(6) Contractor outcomes report.--Each contractor offering
a program shall monitor and report to the Secretary, in a
manner specified by the Secretary, the quality of care and
efficacy of such program in terms of--
``(A) process measures, such as reductions in errors of
treatment and rehospitalization rates;
``(B) beneficiary and provider satisfaction;
``(C) health outcomes; and
``(D) financial outcomes.
``(7) Phased in implementation.--Nothing in this section
shall be construed as preventing the Secretary from phasing
in the implementation of programs.
``(d) Biannual Outcomes Reports.--The Secretary shall
submit to the Congress biannual reports on the implementation
of this section. Each such report shall include information
on--
``(1) the scope of implementation (in terms of both regions
and chronic conditions);
``(2) program design; and
``(3) improvements in health outcomes and financial
efficiencies that result from such implementation.
``(e) Clinical Trials.--The Secretary shall conduct
randomized clinical trials, that compare program participants
with medicare beneficiaries who are offered, but decline, to
participate, in order to assess the potential of programs
to--
``(1) reduce costs under this title; and
``(2) improve health outcomes under this title.
``(f) Authorization of Appropriations.--There are
authorized to be appropriated to the Secretary, in
appropriate part from the Hospital Insurance Trust Fund and
the Supplementary Medical Insurance Trust Fund, such sums as
may be necessary to provide for contracts with chronic care
improvement programs under this section.
``(g) Limitation on Funding.--In no case shall the funding
under this section exceed $100,000,000 over a period of 3
years.''.
SEC. 722. CHRONIC CARE IMPROVEMENT UNDER MEDICARE ADVANTAGE
AND ENHANCED FEE-FOR-SERVICE PROGRAMS.
(a) Under Medicare Advantage Program.--Section 1852 (42
U.S.C. 1395w-22) is amended--
(1) by amending subsection (e) to read as follows:
``(e) Implementation of Chronic Care Improvement Programs
for Beneficiaries with Multiple or Sufficiently Severe
Chronic Conditions.--
``(1) In general.--Each Medicare Advantage organization
with respect to each Medicare Advantage plan it offers shall
have in
[[Page H6053]]
effect, for enrollees with multiple or sufficiently severe
chronic conditions, a chronic care improvement program that
is designed to manage the needs of such enrollees and that
meets the requirements of this subsection.
``(2) Enrollee with multiple or sufficiently severe chronic
conditions.--For purposes of this subsection, the term
`enrollee with multiple or sufficiently severe chronic
conditions' means, with respect to an enrollee in a Medicare
Advantage plan of a Medicare Advantage organization, an
enrollee in the plan who has one or more chronic conditions,
such as congestive heart failure, diabetes, COPD, stroke,
prostate and colon cancer, hypertension, or other disease as
identified by the organization as appropriate for chronic
care improvement.
``(3) General requirements.--
``(A) In general.--Each chronic care improvement program
under this subsection shall be conducted consistent with this
subsection.
``(B) Identification of enrollees.--Each such program shall
have a method for monitoring and identifying enrollees with
multiple or sufficiently severe chronic conditions that meet
the organization's criteria for participation under the
program.
``(C) Development of plans.--For an enrollee identified
under subparagraph (B) for participation in a program, the
program shall develop, with the enrollee's consent, an
individualized, goal-oriented chronic care improvement plan
for chronic care improvement.
``(D) Elements of plans.--Each chronic care improvement
plan developed under subparagraph (C) shall include a single
point of contact to coordinate care and the following, as
appropriate:
``(i) Self-improvement education for the enrollee (such as
education for disease management through medical nutrition
therapy) and support education for health care providers,
primary caregivers, and family members.
``(ii) Coordination of health care services, such as
application of a prescription drug regimen and home health
services.
``(iii) Collaboration with physicians and other providers
to enhance communication of relevant clinical information.
``(iv) The use of monitoring technologies that enable
patient guidance through the exchange of pertinent clinical
information, such as vital signs, symptomatic information,
and health self-assessment.
``(v) The provision of information about hospice care, pain
and palliative care, and end-of-life care.
``(E) Organization responsibilities.--In establishing and
carrying out chronic care improvement plans for participants
under this paragraph, a Medicare Advantage organization
shall, directly or through subcontractors--
``(i) guide participants in managing their health,
including all their co-morbidities, and in performing the
activities as specified under the elements of the plan;
``(ii) use decision support tools such as evidence-based
practice guidelines or other criteria as determined by the
Secretary; and
``(iii) develop a clinical information database to track
and monitor each participant across settings and to evaluate
outcomes.
``(3) Additional requirements.--The Secretary may establish
additional requirements for chronic care improvement programs
under this section.
``(4) Accreditation.--The Secretary may provide that
chronic care improvement programs that are accredited by
qualified organizations may be deemed to meet such
requirements under this subsection as the Secretary may
specify.
``(5) Outcomes report.--Each Medicare Advantage
organization with respect to its chronic care improvement
program under this subsection shall monitor and report to the
Secretary information on the quality of care and efficacy of
such program as the Secretary may require.''; and
(2) by amending subparagraph (I) of subsection (c)(1) to
read as follows:
``(I) Chronic care improvement program.--A description of
the organization's chronic care improvement program under
subsection (e).''.
(b) Application under Enhanced Fee-for-Service Program.--
Section 1860E-2(c)(3), as inserted by section 201(a), is
amended by inserting ``, including subsection (e) (relating
to implementation of chronic care improvement programs)''
after ``The provisions of section 1852''.
(c) Effective Date.--The amendments made by this section
shall apply for contract years beginning on or after 1 year
after the date of the enactment of this Act.
SEC. 723. INSTITUTE OF MEDICINE REPORT.
(a) Study.--
(1) In general.--The Secretary of Health and Human Services
shall contract with the Institute of Medicine of the National
Academy of Sciences to conduct a study of the barriers to
effective integrated care improvement for medicare
beneficiaries with multiple or severe chronic conditions
across settings and over time and to submit a report under
subsection (b).
(2) Specific items.--The study shall examine the statutory
and regulatory barriers to coordinating care across settings
for medicare beneficiaries in transition from one setting to
another (such as between hospital, nursing facility, home
health, hospice, and home). The study shall specifically
identify the following:
(A) Clinical, financial, or administrative requirements in
the medicare program that present barriers to effective,
seamless transitions across care settings.
(B) Policies that impede the establishment of
administrative and clinical information systems to track
health status, utilization, cost, and quality data across
settings.
(C) State-level requirements that may present barriers to
better care for medicare beneficiaries.
(3) Consultation.--The study under this subsection shall be
conducted in consultation with experts in the field of
chronic care, consumers, and family caregivers, working to
integrate care delivery and create more seamless transitions
across settings and over time.
(b) Report.--The report under this subsection shall be
submitted to the Secretary and Congress not later than 18
months after the date of the enactment of this Act.
SEC. 724. MEDPAC REPORT.
(a) Evaluation.--shall conduct an evaluation that includes
a description of the status of the implementation of chronic
care improvement programs under section 1808 of the Social
Security Act, the quality of health care services provided to
individuals in such program, the health status of the
participants of such program, and the cost savings attributed
to implementation of such program.
(b) Report.--Not later than 2 years after the date of
implementation of such chronic care improvement programs, the
Commission shall submit a report on such evaluation.
Subtitle D--Other Provisions
SEC. 731. MODIFICATIONS TO MEDICARE PAYMENT ADVISORY
COMMISSION (MEDPAC).
(a) Examination of Budget Consequences.--Section 1805(b)
(42 U.S.C. 1395b-6(b)) is amended by adding at the end the
following new paragraph:
``(8) Examination of budget consequences.--Before making
any recommendations, the Commission shall examine the budget
consequences of such recommendations, directly or through
consultation with appropriate expert entities.''.
(b) Consideration of Efficient Provision of Services.--
Section 1805(b)(2)(B)(i) (42 U.S.C. 1395b-6(b)(2)(B)(i)) is
amended by inserting ``the efficient provision of'' after
``expenditures for''.
(c) Application of Disclosure Requirements.--
(1) In general.--Section 1805(c)(2)(D) (42 U.S.C. 1395b-
6(c)(2)(D)) is amended by adding at the end the following:
``Members of the Commission shall be treated as employees of
the Congress for purposes of applying title I of the Ethics
in Government Act of 1978 (Public Law 95-521).''.
(2) Effective date.--The amendment made by paragraph (1)
shall take effect on January 1, 2004.
(d) Additional Reports.--
(1) Data needs and sources.--The Medicare Payment Advisory
Commission shall conduct a study, and submit a report to
Congress by not later than June 1, 2004, on the need for
current data, and sources of current data available, to
determine the solvency and financial circumstances of
hospitals and other medicare providers of services. The
Commission shall examine data on uncompensated care, as well
as the share of uncompensated care accounted for by the
expenses for treating illegal aliens.
(2) Use of tax-related returns.--Using return information
provided under Form 990 of the Internal Revenue Service, the
Commission shall submit to Congress, by not later than June
1, 2004, a report on the following:
(A) Investments, endowments, and fundraising of hospitals
participating under the medicare program and related
foundations.
(B) Access to capital financing for private and for not-
for-profit hospitals.
SEC. 732. DEMONSTRATION PROJECT FOR MEDICAL ADULT DAY CARE
SERVICES.
(a) Establishment.--Subject to the succeeding provisions of
this section, the Secretary of Health and Human Services
shall establish a demonstration project (in this section
referred to as the ``demonstration project'') under which the
Secretary shall, as part of a plan of an episode of care for
home health services established for a medicare beneficiary,
permit a home health agency, directly or under arrangements
with a medical adult day care facility, to provide medical
adult day care services as a substitute for a portion of home
health services that would otherwise be provided in the
beneficiary's home.
(b) Payment.--
(1) In general.--The amount of payment for an episode of
care for home health services, a portion of which consists of
substitute medical adult day care services, under the
demonstration project shall be made at a rate equal to 95
percent of the amount that would otherwise apply for such
home health services under section 1895 of the Social
Security Act (42 u.s.c. 1395fff). In no case may a home
health agency, or a medical adult day care facility under
arrangements with a home health agency, separately charge a
beneficiary for medical adult day care services furnished
under the plan of care.
(2) Budget neutrality for demonstration project.--
Notwithstanding any other provision of law, the Secretary
shall provide for an appropriate reduction in the aggregate
amount of additional payments made under section 1895 of the
Social Security Act (42 U.S.C. 1395fff) to reflect any
increase in
[[Page H6054]]
amounts expended from the Trust Funds as a result of the
demonstration project conducted under this section.
(c) Demonstration Project Sites.--The project established
under this section shall be conducted in not more than 5
States selected by the Secretary that license or certify
providers of services that furnish medical adult day care
services.
(d) Duration.--The Secretary shall conduct the
demonstration project for a period of 3 years.
(e) Voluntary Participation.--Participation of medicare
beneficiaries in the demonstration project shall be
voluntary. The total number of such beneficiaries that may
participate in the project at any given time may not exceed
15,000.
(f) Preference in Selecting Agencies.--In selecting home
health agencies to participate under the demonstration
project, the Secretary shall give preference to those
agencies that are currently licensed or certified through
common ownership and control to furnish medical adult day
care services.
(g) Waiver Authority.--The Secretary may waive such
requirements of title XVIII of the Social Security Act as may
be necessary for the purposes of carrying out the
demonstration project, other than waiving the requirement
that an individual be homebound in order to be eligible for
benefits for home health services.
(h) Evaluation and Report.--The Secretary shall conduct an
evaluation of the clinical and cost effectiveness of the
demonstration project. Not later 30 months after the
commencement of the project, the Secretary shall submit to
Congress a report on the evaluation, and shall include in the
report the following:
(1) An analysis of the patient outcomes and costs of
furnishing care to the medicare beneficiaries participating
in the project as compared to such outcomes and costs to
beneficiaries receiving only home health services for the
same health conditions.
(2) Such recommendations regarding the extension,
expansion, or termination of the project as the Secretary
determines appropriate.
(i) Definitions.--In this section:
(1) Home health agency.--The term ``home health agency''
has the meaning given such term in section 1861(o) of the
Social Security Act (42 U.S.C. 1395x(o)).
(2) Medical adult day care facility.--The term ``medical
adult day care facility'' means a facility that--
(A) has been licensed or certified by a State to furnish
medical adult day care services in the State for a continuous
2-year period;
(B) is engaged in providing skilled nursing services and
other therapeutic services directly or under arrangement with
a home health agency;
(C) meets such standards established by the Secretary to
assure quality of care and such other requirements as the
Secretary finds necessary in the interest of the health and
safety of individuals who are furnished services in the
facility; and
(D) provides medical adult day care services.
(3) Medical adult day care services.--The term ``medical
adult day care services'' means--
(A) home health service items and services described in
paragraphs (1) through (7) of section 1861(m) furnished in a
medical adult day care facility;
(B) a program of supervised activities furnished in a group
setting in the facility that--
(i) meet such criteria as the Secretary determines
appropriate; and
(ii) is designed to promote physical and mental health of
the individuals; and
(C) such other services as the Secretary may specify.
(4) Medicare beneficiary.--The term ``medicare
beneficiary'' means an individual entitled to benefits under
part A of this title, enrolled under part B of this title, or
both.
SEC. 733. IMPROVEMENTS IN NATIONAL AND LOCAL COVERAGE
DETERMINATION PROCESS TO RESPOND TO CHANGES IN
TECHNOLOGY.
(a) National and Local Coverage Determination Process.--
(1) In general.--Section 1862 (42 U.S.C. 1395y) is
amended--
(A) in the third sentence of subsection (a) by inserting
``consistent with subsection (k)'' after ``the Secretary
shall ensure''; and
(B) by adding at the end the following new subsection:
``(k) National and Local Coverage Determination Process.--
``(1) Factors and evidence used in making national coverage
determinations.--The Secretary shall make available to the
public the factors considered in making national coverage
determinations of whether an item or service is reasonable
and necessary. The Secretary shall develop guidance documents
to carry out this paragraph in a manner similar to the
development of guidance documents under section 701(h) of the
Federal Food, Drug, and Cosmetic Act (21 U.S.C. 371(h)).
``(2) Timeframe for decisions on requests for national
coverage determinations.--In the case of a request for a
national coverage determination that--
``(A) does not require a technology assessment from an
outside entity or deliberation from the Medicare Coverage
Advisory Committee, the decision on the request shall be made
not later than 6 months after the date of the request; or
``(B) requires such an assessment or deliberation and in
which a clinical trial is not requested, the decision on the
request shall be made not later than 9 months after the date
of the request.
``(3) Process for public comment in national coverage
determinations.--At the end of the 6-month period (or 9-month
period for requests described in paragraph (2)(B)) that
begins on the date a request for a national coverage
determination is made, the Secretary shall--
``(A) make a draft of proposed decision on the request
available to the public through the Medicare Internet site of
the Department of Health and Human Services or other
appropriate means;
``(B) provide a 30-day period for public comment on such
draft;
``(C) make a final decision on the request within 60 days
of the conclusion of the 30-day period referred to under
subparagraph (B);
``(D) include in such final decision summaries of the
public comments received and responses thereto;
``(E) make available to the public the clinical evidence
and other data used in making such a decision when the
decision differs from the recommendations of the Medicare
Coverage Advisory Committee; and
``(F) in the case of a decision to grant the coverage
determination, assign a temporary or permanent code and
implement the coding change.
``(4) Consultation with outside experts in certain national
coverage determinations.--With respect to a request for a
national coverage determination for which there is not a
review by the Medicare Coverage Advisory Committee, the
Secretary shall consult with appropriate outside clinical
experts.
``(5) Local coverage determination process.--With respect
to local coverage determinations made on or after January 1,
2004--
``(A) Plan to promote consistency of coverage
determinations.--The Secretary shall develop a plan to
evaluate new local coverage determinations to determine which
determinations should be adopted nationally and to what
extent greater consistency can be achieved among local
coverage determinations.
``(B) Consultation.--The Secretary shall require the fiscal
intermediaries or carriers providing services within the same
area to consult on all new local coverage determinations
within the area.
``(C) Dissemination of information.--The Secretary should
serve as a center to disseminate information on local
coverage determinations among fiscal intermediaries and
carriers to reduce duplication of effort.
``(6) National and local coverage determination defined.--
For purposes of this subsection, the terms `national coverage
determination' and `local coverage determination' have the
meaning given such terms in paragraphs (1)(B) and (2)(B),
respectively, of section 1869(f).''.
(2) Effective date.--The amendments made by paragraph (1)
shall apply to national and local coverage determinations as
of January 1, 2004.
(b) Medicare Coverage of Routine Costs Associated With
Certain Clinical Trials.--
(1) In general.--With respect to the coverage of routine
costs of care for beneficiaries participating in a qualifying
clinical trial, as set forth on the date of the enactment of
this Act in National Coverage Determination 30-1 of the
Medicare Coverage Issues Manual, the Secretary shall deem
clinical trials conducted in accordance with an
investigational device exemption approved under section
520(g) of the Federal Food, Drug, and Cosmetic Act (42 U.S.C.
360j(g)) to be automatically qualified for such coverage.
(2) Rule of construction.--Nothing in this subsection shall
be construed as authorizing or requiring the Secretary to
modify the regulations set forth on the date of the enactment
of this Act at subpart B of part 405 of title 42, Code of
Federal Regulations, or subpart A of part 411 of such title,
relating to coverage of, and payment for, a medical device
that is the subject of an investigational device exemption by
the Food and Drug Administration (except as may be necessary
to implement paragraph (1)).
(3) Effective date.--This subsection shall apply to
clinical trials begun before, on, or after the date of the
enactment of this Act and to items and services furnished on
or after such date.
(c) Issuance of Temporary National Codes.--Not later than
January 1, 2004, the Secretary shall implement revised
procedures for the issuance of temporary national HCPCS codes
under part B of title XVIII of the Social Security Act.
SEC. 734. TREATMENT OF CERTAIN PHYSICIAN PATHOLOGY SERVICES.
(a) In General.--Section 1848(i) (42 U.S.C. 1395w-4(i)) is
amended by adding at the end the following new paragraph:
``(4) Treatment of certain inpatient physician pathology
services.--
``(A) In general.--With respect to services furnished on or
after January 1, 2004, and before January 1, 2009, if an
independent laboratory furnishes the technical component of a
physician pathology service to a fee-for-service medicare
beneficiary who is an inpatient or outpatient of a covered
hospital, the Secretary shall treat such component as a
service for which payment shall be made to the laboratory
under this section and not as
[[Page H6055]]
an inpatient hospital service for which payment is made to
the hospital under section 1886(d) or as a hospital
outpatient service for which payment is made to the hospital
under section 1833(t).
``(B) Definitions.--In this paragraph:
``(i) Covered hospital.--
``(I) In general.--The term `covered hospital' means, with
respect to an inpatient or outpatient, a hospital that had an
arrangement with an independent laboratory that was in effect
as of July 22, 1999, under which a laboratory furnished the
technical component of physician pathology services to fee-
for-service medicare beneficiaries who were hospital
inpatients or outpatients, respectively, and submitted claims
for payment for such component to a carrier with a contract
under section 1842 and not to the hospital.
``(II) Change in ownership does not affect determination.--
A change in ownership with respect to a hospital on or after
the date referred to in subclause (I) shall not affect the
determination of whether such hospital is a covered hospital
for purposes of such subclause.
``(ii) Fee-for-service medicare beneficiary.--The term
`fee-for-service medicare beneficiary' means an individual
who is entitled to benefits under part A, or enrolled under
this part, or both, but is not enrolled in any of the
following:
``(I) A Medicare+Choice plan under part C.
``(II) A plan offered by an eligible organization under
section 1876.
``(III) A program of all-inclusive care for the elderly
(PACE) under section 1894.
``(IV) A social health maintenance organization (SHMO)
demonstration project established under section 4018(b) of
the Omnibus Budget Reconciliation Act of 1987 (Public Law
100-203).''.
(b) Conforming Amendment.--Section 542 of the Medicare,
Medicaid, and SCHIP Benefits Improvement and Protection Act
of 2000 (114 Stat. 2763A-550), as enacted into law by section
1(a)(6) of Public Law 106-554, is repealed.
(c) Effective Dates.--The amendments made by this section
shall take effect as if included in the enactment 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.
SEC. 735. CLINICAL INVESTIGATION OF MEDICARE PANCREATIC ISLET
CELL TRANSPLANTS.
The Secretary shall authorize payment under title XVIII of
the Social Security Act for the routine costs for items and
services for medicare beneficiaries received as part of a
clinical investigation of pancreatic islet cell transplants
conducted by the National Institutes of Health.
SEC. 736. DEMONSTRATION PROJECT FOR CONSUMER-DIRECTED CHRONIC
OUTPATIENT SERVICES.
(a) Establishment.--
(1) In general.--Subject to the succeeding provisions of
this section, the Secretary shall establish demonstration
projects (in this section referred to as ``demonstration
projects'') under which the Secretary shall evaluate methods
that improve the quality of care provided to medicare
beneficiaries with chronic conditions and that reduce
expenditures that would otherwise be made under the medicare
program on behalf of such individuals for such chronic
conditions, such methods to include permitting those
beneficiaries to direct their own health care needs and
services.
(2) Medicare beneficiaries with chronic conditions
defined.--In this section, the term ``medicare beneficiaries
with chronic conditions'' means an individual entitled to
benefits under part A of title XVIII of the Social Security
Act, and enrolled under part B of such title, but who is not
enrolled under part C of such title who is diagnosed as
having one or more chronic conditions (as defined by the
Secretary), such as diabetes.
(b) Design of Projects.--
(1) In general.--In establishing the demonstration projects
under this section, the Secretary shall evaluate practices
employed by group health plans and practices under State
plans for medical assistance under the medicaid program under
title XIX of the Social Security Act that permit patients to
self-direct the provision of personal care services.
(2) Scope of services.--The Secretary shall determine the
appropriate scope of personal care services that would apply
under the demonstration projects.
(c) Voluntary Participation.--Participation of medicare
beneficiaries in the demonstration projects shall be
voluntary.
(d) Demonstration Projects Sites.--Not later than 2 years
after the date of the enactment of this Act, the Secretary
shall conduct no fewer than 3 demonstration projects
established under this section. Of those demonstration
projects, the Secretary shall conduct at least one in each of
the following areas:
(1) An urban area.
(2) A rural area.
(3) An area that the Secretary determines has a medicare
population with rate of incidence of diabetes that
significantly exceeds the national average rate of all areas.
(e) Evaluation and Report.--
(1) Evaluations.--The Secretary shall conduct evaluations
of the clinical and cost effectiveness of the demonstration
projects.
(2) Reports.--Not later than 2 years after the commencement
of the demonstration projects, and biannually thereafter, the
Secretary shall submit to Congress a report on the
evaluation, and shall include in the report the following:
(A) An analysis of the patient outcomes and costs of
furnishing care to the medicare beneficiaries participating
in the projects as compared to such outcomes and costs to
other beneficiaries for the same health conditions.
(B) Evaluation of patient satisfaction under the
demonstration projects.
(C) Such recommendations regarding the extension,
expansion, or termination of the projects as the Secretary
determines appropriate.
TITLE VIII--MEDICARE BENEFITS ADMINISTRATION
SEC. 801. ESTABLISHMENT OF MEDICARE BENEFITS ADMINISTRATION.
(a) In General.--Title XVIII (42 U.S.C. 1395 et seq.), as
amended by sections 105 and 721, is amended by inserting
after 1808 the following new section:
``medicare benefits administration
``Sec. 1809. (a) Establishment.--There is established
within the Department of Health and Human Services an agency
to be known as the Medicare Benefits Administration.
``(b) Administrator; Deputy Administrator; Chief Actuary.--
``(1) Administrator.--
``(A) In general.--The Medicare Benefits Administration
shall be headed by an administrator to be known as the
`Medicare Benefits Administrator' (in this section referred
to as the `Administrator') who shall be appointed by the
President, by and with the advice and consent of the Senate.
The Administrator shall be in direct line of authority to the
Secretary.
``(B) Compensation.--The Administrator shall be paid at the
rate of basic pay payable for level III of the Executive
Schedule under section 5314 of title 5, United States Code.
``(C) Term of office.--The Administrator shall be appointed
for a term of 4 years. In any case in which a successor does
not take office at the end of an Administrator's term of
office, that Administrator may continue in office until the
entry upon office of such a successor. An Administrator
appointed to a term of office after the commencement of such
term may serve under such appointment only for the remainder
of such term.
``(D) General authority.--The Administrator shall be
responsible for the exercise of all powers and the discharge
of all duties of the Administration, and shall have authority
and control over all personnel and activities thereof.
``(E) Rulemaking authority.--The Administrator may
prescribe such rules and regulations as the Administrator
determines necessary or appropriate to carry out the
functions of the Administration. The regulations prescribed
by the Administrator shall be subject to the rulemaking
procedures established under section 553 of title 5, United
States Code. The Administrator shall provide for the issuance
of new regulations to carry out parts C, D, and E.
``(F) Authority to establish organizational units.--The
Administrator may establish, alter, consolidate, or
discontinue such organizational units or components within
the Administration as the Administrator considers necessary
or appropriate, except as specified in this section.
``(G) Authority to delegate.--The Administrator may assign
duties, and delegate, or authorize successive redelegations
of, authority to act and to render decisions, to such
officers and employees of the Administration as the
Administrator may find necessary. Within the limitations of
such delegations, redelegations, or assignments, all official
acts and decisions of such officers and employees shall have
the same force and effect as though performed or rendered by
the Administrator.
``(2) Deputy administrator.--
``(A) In general.--There shall be a Deputy Administrator of
the Medicare Benefits Administration who shall be appointed
by the President, by and with the advice and consent of the
Senate.
``(B) Compensation.--The Deputy Administrator shall be paid
at the rate of basic pay payable for level IV of the
Executive Schedule under section 5315 of title 5, United
States Code.
``(C) Term of office.--The Deputy Administrator shall be
appointed for a term of 4 years. In any case in which a
successor does not take office at the end of a Deputy
Administrator's term of office, such Deputy Administrator may
continue in office until the entry upon office of such a
successor. A Deputy Administrator appointed to a term of
office after the commencement of such term may serve under
such appointment only for the remainder of such term.
``(D) Duties.--The Deputy Administrator shall perform such
duties and exercise such powers as the Administrator shall
from time to time assign or delegate. The Deputy
Administrator shall be Acting Administrator of the
Administration during the absence or disability of the
Administrator and, unless the President designates another
officer of the Government as Acting Administrator, in the
event of a vacancy in the office of the Administrator.
``(3) Chief actuary.--
``(A) In general.--There is established in the
Administration the position of Chief Actuary. The Chief
Actuary shall be appointed by, and in direct line of
authority to, the Administrator of such Administration. The
Chief Actuary shall be appointed from among individuals who
have demonstrated, by their education and experience,
superior
[[Page H6056]]
expertise in the actuarial sciences. The Chief Actuary may be
removed only for cause.
``(B) Compensation.--The Chief Actuary shall be compensated
at the highest rate of basic pay for the Senior Executive
Service under section 5382(b) of title 5, United States Code.
``(C) Duties.--The Chief Actuary shall exercise such duties
as are appropriate for the office of the Chief Actuary and in
accordance with professional standards of actuarial
independence.
``(4) Secretarial coordination of program administration.--
The Secretary shall ensure appropriate coordination between
the Administrator and the Administrator of the Centers for
Medicare & Medicaid Services in carrying out the programs
under this title.
``(c) Duties; Administrative Provisions.--
``(1) Duties.--
``(A) General duties.--The Administrator shall carry out
parts C, D, and E, including--
``(i) negotiating, entering into, and enforcing, contracts
with plans for the offering of Medicare Advantage plans under
part C and EFFS plans under part E, including the offering of
qualified prescription drug coverage under such plans; and
``(ii) negotiating, entering into, and enforcing, contracts
with PDP sponsors for the offering of prescription drug plans
under part D.
``(B) Other duties.--The Administrator shall carry out any
duty provided for under part C, part D, or part E, including
demonstration projects carried out in part or in whole under
such parts, the programs of all-inclusive care for the
elderly (PACE program) under section 1894, the social health
maintenance organization (SHMO) demonstration projects
(referred to in section 4104(c) of the Balanced Budget Act of
1997), medicare cost contractors under section 1876(h), and
through a Medicare Advantage 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 card.--The Administrator shall
carry out section 1807 (relating to the medicare prescription
drug discount card endorsement program).
``(D) Noninterference.--In carrying out its duties with
respect to the provision of qualified prescription drug
coverage to beneficiaries under this title, the Administrator
may not--
``(i) require a particular formulary or institute a price
structure for the reimbursement of covered outpatient drugs;
``(ii) interfere in any way with negotiations between PDP
sponsors and Medicare Advantage organizations and EFFS
organizations and drug manufacturers, wholesalers, or other
suppliers of covered outpatient drugs; and
``(iii) otherwise interfere with the competitive nature of
providing such coverage through such sponsors and
organizations.
``(E) Annual reports.--Not later March 31 of each year, the
Administrator shall submit to Congress and the President a
report on the administration of parts C, D, and E during the
previous fiscal year.
``(2) Staff.--
``(A) In general.--The Administrator, with the approval of
the Secretary, may employ, without regard to chapter 31 of
title 5, United States Code, other than sections 3102 through
3108, 3110 through 3113, 3136m and 3151, such officers and
employees as are necessary to administer the activities to be
carried out through the Medicare Benefits Administration. The
Administrator shall employ staff with appropriate and
necessary expertise in negotiating contracts in the private
sector.
``(B) Flexibility with respect to compensation.--
``(i) In general.--The staff of the Medicare Benefits
Administration shall, subject to clause (ii), be paid without
regard to the provisions of chapter 51 (other than section
5101) and chapter 53 (other than section 5301) 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.
``(C) Limitation on full-time equivalent staffing for
current cms functions being transferred.--The Administrator
may not employ under this paragraph a number of full-time
equivalent employees, to carry out functions that were
previously conducted by the Centers for Medicare & Medicaid
Services and that are conducted by the Administrator by
reason of this section, that exceeds the number of such full-
time equivalent employees authorized to be employed by the
Centers for Medicare & Medicaid Services to conduct such
functions as of the date of the enactment of this Act.
``(3) Redelegation of certain functions of the centers for
medicare & medicaid services.--
``(A) In general.--The Secretary, the Administrator, and
the Administrator of the Centers for Medicare & Medicaid
Services shall establish an appropriate transition of
responsibility in order to redelegate the administration of
part C from the Secretary and the Administrator of the
Centers for Medicare & Medicaid Services to the Administrator
as is appropriate to carry out the purposes of this section.
``(B) Transfer of data and information.--The Secretary
shall ensure that the Administrator of the Centers for
Medicare & Medicaid Services transfers to the Administrator
of the Medicare Benefits Administration such information and
data in the possession of the Administrator of the Centers
for Medicare & Medicaid Services as the Administrator of the
Medicare Benefits Administration requires to carry out the
duties described in paragraph (1).
``(C) Construction.--Insofar as a responsibility of the
Secretary or the Administrator of the Centers for Medicare &
Medicaid Services is redelegated to the Administrator under
this section, any reference to the Secretary or the
Administrator of the Centers for Medicare & Medicaid Services
in this title or title XI with respect to such responsibility
is deemed to be a reference to the Administrator.
``(d) Office of Beneficiary Assistance.--
``(1) Establishment.--The Secretary shall establish within
the Medicare Benefits Administration an Office of Beneficiary
Assistance to coordinate functions relating to outreach and
education of medicare beneficiaries under this title,
including the functions described in paragraph (2). The
Office shall be separate operating division within the
Administration.
``(2) Dissemination of information on benefits and appeals
rights.--
``(A) Dissemination of benefits information.--The Office of
Beneficiary Assistance shall disseminate, directly or through
contract, to medicare beneficiaries, by mail, by posting on
the Internet site of the Medicare Benefits Administration and
through a toll-free telephone number, information with
respect to the following:
``(i) Benefits, and limitations on payment (including cost-
sharing, stop-loss provisions, and formulary restrictions)
under parts C, D, and E.
``(ii) Benefits, and limitations on payment under parts A
and B, including information on medicare supplemental
policies under section 1882.
Such information shall be presented in a manner so that
medicare beneficiaries may compare benefits under parts A, B,
D, and medicare supplemental policies with benefits under
Medicare Advantage plans under part C and EFFS plans under
part E.
``(B) Dissemination of appeals rights information.--The
Office of Beneficiary Assistance shall disseminate to
medicare beneficiaries in the manner provided under
subparagraph (A) a description of procedural rights
(including grievance and appeals procedures) of beneficiaries
under the original medicare fee-for-service program under
parts A and B, the Medicare Advantage program under part C,
the Voluntary Prescription Drug Benefit Program under part D,
and the Enhanced Fee-for-Service program under part E.
``(e) Medicare Policy Advisory Board.--
``(1) Establishment.--There is established within the
Medicare Benefits Administration the Medicare Policy Advisory
Board (in this section referred to the `Board'). The Board
shall advise, consult with, and make recommendations to the
Administrator of the Medicare Benefits Administration with
respect to the administration of parts C, D, and E, including
the review of payment policies under such parts.
``(2) Reports.--
``(A) In general.--With respect to matters of the
administration of parts C, D, and E the Board shall submit to
Congress and to the Administrator of the Medicare Benefits
Administration 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 such parts, including the topics described
in subparagraph (B). Each such report shall be published in
the Federal Register.
``(B) Topics described.--Reports required under
subparagraph (A) may include the following topics:
``(i) Fostering competition.--Recommendations or proposals
to increase competition under parts C, D, and E for services
furnished to medicare beneficiaries.
``(ii) Education and enrollment.--Recommendations for the
improvement to efforts to provide medicare beneficiaries
information and education on the program under this title,
and specifically parts C, D, and E, and the program for
enrollment under the title.
``(iii) Implementation of risk-adjustment.--Evaluation of
the implementation under section 1853(a)(3)(C) of the risk
adjustment methodology to payment rates under that section to
Medicare Advantage organizations offering Medicare Advantage
plans (and the corresponding payment provisions under part E)
that accounts for variations in per capita costs based on
health status, geography, and other demographic factors.
``(iv) Rural access.--Recommendations to improve
competition and access to plans under parts C, D, and E in
rural areas.
``(C) 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.
``(3) Duty of administrator of medicare benefits
administration.--With respect to any report submitted by the
Board under
[[Page H6057]]
paragraph (2)(A), not later than 90 days after the report is
submitted, the Administrator of the Medicare Benefits
Administration shall submit to Congress and the President an
analysis of recommendations made by the Board in such report.
Each such analysis shall be published in the Federal
Register.
``(4) Membership.--
``(A) Appointment.--Subject to the succeeding provisions of
this paragraph, the Board shall consist of seven members to
be appointed as follows:
``(i) Three members shall be appointed by the President.
``(ii) Two members shall be appointed by the Speaker of the
House of Representatives, with the advice of the chairmen and
the ranking minority members of the Committees on Ways and
Means and on Energy and Commerce of the House of
Representatives.
``(iii) Two members shall be appointed by the President pro
tempore of the Senate with the advice of the chairman and the
ranking minority member of the Senate Committee on Finance.
``(B) 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 and experience in health care benefits management,
exceptionally qualified to perform the duties of members of
the Board.
``(C) Prohibition on inclusion of federal employees.--No
officer or employee of the United States may serve as a
member of the Board.
``(5) Compensation.--Members of the Board shall receive,
for each day (including travel time) they are engaged in the
performance of the functions of the board, compensation at
rates not to exceed the daily equivalent to the annual rate
in effect for level IV of the Executive Schedule under
section 5315 of title 5, United States Code.
``(6) Terms of office.--
``(A) In general.--The term of office of members of the
Board shall be 3 years.
``(B) Terms of initial appointees.--As designated by the
President at the time of appointment, of the members first
appointed--
``(i) one shall be appointed for a term of 1 year;
``(ii) three shall be appointed for terms of 2 years; and
``(iii) three shall be appointed for terms of 3 years.
``(C) Reappointments.--Any person appointed as a member of
the Board may not serve for more than 8 years.
``(D) Vacancy.--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.
``(7) Chair.--The Chair of the Board shall be elected by
the members. The term of office of the Chair shall be 3
years.
``(8) Meetings.--The Board shall meet at the call of the
Chair, but in no event less than three times during each
fiscal year.
``(9) Director and staff.--
``(A) Appointment of director.--The Board shall have a
Director who shall be appointed by the Chair.
``(B) In general.--With the approval of the Board, the
Director may appoint, without regard to chapter 31 of title
5, United States Code, such additional personnel as the
Director considers appropriate.
``(C) Flexibility with respect to compensation.--
``(i) In general.--The Director and staff of the Board
shall, subject to clause (ii), be paid without regard to the
provisions of chapter 51 and chapter 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.
``(D) Assistance from the administrator of the medicare
benefits administration.--The Administrator of the Medicare
Benefits Administration shall make available to the Board
such information and other assistance as it may require to
carry out its functions.
``(10) Contract authority.--The Board may contract with and
compensate government and private agencies or persons to
carry out its duties under this subsection, without regard to
section 3709 of the Revised Statutes (41 U.S.C. 5).
``(f) Funding.--There is authorized to be appropriated, in
appropriate part from the Federal Hospital Insurance Trust
Fund and from the Federal Supplementary Medical Insurance
Trust Fund (including the Medicare Prescription Drug
Account), such sums as are necessary to carry out this
section.''.
(b) Effective Date.--
(1) In general.--The amendment made by subsection (a) shall
take effect on the date of the enactment of this Act.
(2) Duties with respect to eligibility determinations and
enrollment.--The Administrator of the Medicare Benefits
Administration shall carry out enrollment under title XVIII
of the Social Security Act, make eligibility determinations
under such title, and carry out parts C and E of such title
for years beginning or after January 1, 2006.
(3) Transition.--Before the date the Administrator of the
Medicare Benefits Administration is appointed and assumes
responsibilities under this section and section 1807 of the
Social Security Act, the Secretary of Health and Human
Services shall provide for the conduct of any
responsibilities of such Administrator that are otherwise
provided under law.
(c) Miscellaneous Administrative Provisions.--
(1) Administrator as member of the board of trustees of the
medicare trust funds.--Section 1817(b) and section 1841(b)
(42 U.S.C. 1395i(b), 1395t(b)) are each amended by striking
``and the Secretary of Health and Human Services, all ex
officio,'' and inserting ``the Secretary of Health and Human
Services, and the Administrator of the Medicare Benefits
Administration, all ex officio,''.
(2) Increase in grade to executive level iii for the
administrator of the centers for medicare & medicaid
services; level for medicare benefits administrator.--
(A) In general.--Section 5314 of title 5, United States
Code, by adding at the end the following:
``Administrator of the Centers for Medicare & Medicaid
Services.
``Administrator of the Medicare Benefits Administration.''.
(B) Conforming amendment.--Section 5315 of such title is
amended by striking ``Administrator of the Health Care
Financing Administration.''.
(C) Effective date.--The amendments made by this paragraph
take effect on January 1, 2004.
TITLE IX--REGULATORY REDUCTION AND CONTRACTING REFORM
Subtitle A--Regulatory Reform
SEC. 901. CONSTRUCTION; DEFINITION OF SUPPLIER.
(a) Construction.--Nothing in this title shall be
construed--
(1) to compromise or affect existing legal remedies for
addressing fraud or abuse, whether it be criminal
prosecution, civil enforcement, or administrative remedies,
including under sections 3729 through 3733 of title 31,
United States Code (known as the False Claims Act); or
(2) to prevent or impede the Department of Health and Human
Services in any way from its ongoing efforts to eliminate
waste, fraud, and abuse in the medicare program.
Furthermore, the consolidation of medicare administrative
contracting set forth in this Act does not constitute
consolidation of the Federal Hospital Insurance Trust Fund
and the Federal Supplementary Medical Insurance Trust Fund or
reflect any position on that issue.
(b) Definition of Supplier.--Section 1861 (42 U.S.C. 1395x)
is amended by inserting after subsection (c) the following
new subsection:
``Supplier
``(d) The term `supplier' means, unless the context
otherwise requires, a physician or other practitioner, a
facility, or other entity (other than a provider of services)
that furnishes items or services under this title.''.
SEC. 902. ISSUANCE OF REGULATIONS.
(a) Regular Timeline for Publication of Final Rules.--
(1) In general.--Section 1871(a) (42 U.S.C. 1395hh(a)) is
amended by adding at the end the following new paragraph:
``(3)(A) The Secretary, in consultation with the Director
of the Office of Management and Budget, shall establish and
publish a regular timeline for the publication of final
regulations based on the previous publication of a proposed
regulation or an interim final regulation.
``(B) Such timeline may vary among different regulations
based on differences in the complexity of the regulation, the
number and scope of comments received, and other relevant
factors, but shall not be longer than 3 years except under
exceptional circumstances. If the Secretary intends to vary
such timeline with respect to the publication of a final
regulation, the Secretary shall cause to have published in
the Federal Register notice of the different timeline by not
later than the timeline previously established with respect
to such regulation. Such notice shall include a brief
explanation of the justification for such variation.
``(C) In the case of interim final regulations, upon the
expiration of the regular timeline established under this
paragraph for the publication of a final regulation after
opportunity for public comment, the interim final regulation
shall not continue in effect unless the Secretary publishes
(at the end of the regular timeline and, if applicable, at
the end of each succeeding 1-year period) a notice of
continuation of the regulation that includes an explanation
of why the regular timeline (and any subsequent 1-year
extension) was not complied with. If such a notice is
published, the regular timeline (or such timeline as
previously extended under this paragraph) for publication of
the final regulation shall be treated as having been extended
for 1 additional year.
``(D) The Secretary shall annually submit to Congress a
report that describes the instances in which the Secretary
failed to publish a final regulation within the applicable
regular timeline under this paragraph and that provides an
explanation for such failures.''.
(2) Effective date.--The amendment made by paragraph (1)
shall take effect on the date of the enactment of this Act.
The Secretary shall provide for an appropriate transition to
take into account the backlog of previously published interim
final regulations.
[[Page H6058]]
(b) Limitations on New Matter in Final Regulations.--
(1) In general.--Section 1871(a) (42 U.S.C. 1395hh(a)), as
amended by subsection (a), is amended by adding at the end
the following new paragraph:
``(4) If the Secretary publishes a final regulation that
includes a provision that is not a logical outgrowth of a
previously published notice of proposed rulemaking or interim
final rule, such provision shall be treated as a proposed
regulation and shall not take effect until there is the
further opportunity for public comment and a publication of
the provision again as a final regulation.''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to final regulations published on or after the
date of the enactment of this Act.
SEC. 903. COMPLIANCE WITH CHANGES IN REGULATIONS AND
POLICIES.
(a) No Retroactive Application of Substantive Changes.--
(1) In general.--Section 1871 (42 U.S.C. 1395hh), as
amended by section 902(a), is amended by adding at the end
the following new subsection:
``(e)(1)(A) A substantive change in regulations, manual
instructions, interpretative rules, statements of policy, or
guidelines of general applicability under this title shall
not be applied (by extrapolation or otherwise) retroactively
to items and services furnished before the effective date of
the change, unless the Secretary determines that--
``(i) such retroactive application is necessary to comply
with statutory requirements; or
``(ii) failure to apply the change retroactively would be
contrary to the public interest.''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to substantive changes issued on or after the
date of the enactment of this Act.
(b) Timeline for Compliance With Substantive Changes After
Notice.--
(1) In general.--Section 1871(e)(1), as added by subsection
(a), is amended by adding at the end the following:
``(B)(i) Except as provided in clause (ii), a substantive
change referred to in subparagraph (A) shall not become
effective before the end of the 30-day period that begins on
the date that the Secretary has issued or published, as the
case may be, the substantive change.
``(ii) The Secretary may provide for such a substantive
change to take effect on a date that precedes the end of the
30-day period under clause (i) if the Secretary finds that
waiver of such 30-day period is necessary to comply with
statutory requirements or that the application of such 30-day
period is contrary to the public interest. If the Secretary
provides for an earlier effective date pursuant to this
clause, the Secretary shall include in the issuance or
publication of the substantive change a finding described in
the first sentence, and a brief statement of the reasons for
such finding.
``(C) No action shall be taken against a provider of
services or supplier with respect to noncompliance with such
a substantive change for items and services furnished before
the effective date of such a change.''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to compliance actions undertaken on or after the
date of the enactment of this Act.
(c) Reliance on Guidance.--
(1) In general.--Section 1871(e), as added by subsection
(a), is further amended by adding at the end the following
new paragraph:
``(2)(A) If--
``(i) a provider of services or supplier follows the
written guidance (which may be transmitted electronically)
provided by the Secretary or by a medicare contractor (as
defined in section 1889(g)) acting within the scope of the
contractor's contract authority, with respect to the
furnishing of items or services and submission of a claim for
benefits for such items or services with respect to such
provider or supplier;
``(ii) the Secretary determines that the provider of
services or supplier has accurately presented the
circumstances relating to such items, services, and claim to
the contractor in writing; and
``(iii) the guidance was in error;
the provider of services or supplier shall not be subject to
any sanction (including any penalty or requirement for
repayment of any amount) if the provider of services or
supplier reasonably relied on such guidance.
``(B) Subparagraph (A) shall not be construed as preventing
the recoupment or repayment (without any additional penalty)
relating to an overpayment insofar as the overpayment was
solely the result of a clerical or technical operational
error.''.
(2) Effective date.--The amendment made by paragraph (1)
shall take effect on the date of the enactment of this Act
but shall not apply to any sanction for which notice was
provided on or before the date of the enactment of this Act.
SEC. 904. REPORTS AND STUDIES RELATING TO REGULATORY REFORM.
(a) GAO Study on Advisory Opinion Authority.--
(1) Study.--The Comptroller General of the United States
shall conduct a study to determine the feasibility and
appropriateness of establishing in the Secretary authority to
provide legally binding advisory opinions on appropriate
interpretation and application of regulations to carry out
the medicare program under title XVIII of the Social Security
Act. Such study shall examine the appropriate timeframe for
issuing such advisory opinions, as well as the need for
additional staff and funding to provide such opinions.
(2) Report.--The Comptroller General shall submit to
Congress a report on the study conducted under paragraph (1)
by not later than one year after the date of the enactment of
this Act.
(b) Report on Legal and Regulatory Inconsistencies.--
Section 1871 (42 U.S.C. 1395hh), as amended by section 2(a),
is amended by adding at the end the following new subsection:
``(f)(1) Not later than 2 years after the date of the
enactment of this subsection, and every 2 years thereafter,
the Secretary shall submit to Congress a report with respect
to the administration of this title and areas of
inconsistency or conflict among the various provisions under
law and regulation.
``(2) In preparing a report under paragraph (1), the
Secretary shall collect--
``(A) information from individuals entitled to benefits
under part A or enrolled under part B, or both, providers of
services, and suppliers and from the Medicare Beneficiary
Ombudsman and the Medicare Provider Ombudsman with respect to
such areas of inconsistency and conflict; and
``(B) information from medicare contractors that tracks the
nature of written and telephone inquiries.
``(3) A report under paragraph (1) shall include a
description of efforts by the Secretary to reduce such
inconsistency or conflicts, and recommendations for
legislation or administrative action that the Secretary
determines appropriate to further reduce such inconsistency
or conflicts.''.
Subtitle B--Contracting Reform
SEC. 911. INCREASED FLEXIBILITY IN MEDICARE ADMINISTRATION.
(a) Consolidation and Flexibility in Medicare
Administration.--
(1) In general.--Title XVIII is amended by inserting after
section 1874 the following new section:
``contracts with medicare administrative contractors
``Sec. 1874A. (a) Authority.--
``(1) Authority to enter into contracts.--The Secretary may
enter into contracts with any eligible entity to serve as a
medicare administrative contractor with respect to the
performance of any or all of the functions described in
paragraph (4) or parts of those functions (or, to the extent
provided in a contract, to secure performance thereof by
other entities).
``(2) Eligibility of entities.--An entity is eligible to
enter into a contract with respect to the performance of a
particular function described in paragraph (4) only if--
``(A) the entity has demonstrated capability to carry out
such function;
``(B) the entity complies with such conflict of interest
standards as are generally applicable to Federal acquisition
and procurement;
``(C) the entity has sufficient assets to financially
support the performance of such function; and
``(D) the entity meets such other requirements as the
Secretary may impose.
``(3) Medicare administrative contractor defined.--For
purposes of this title and title XI--
``(A) In general.--The term `medicare administrative
contractor' means an agency, organization, or other person
with a contract under this section.
``(B) Appropriate medicare administrative contractor.--With
respect to the performance of a particular function in
relation to an individual entitled to benefits under part A
or enrolled under part B, or both, a specific provider of
services or supplier (or class of such providers of services
or suppliers), the `appropriate' medicare administrative
contractor is the medicare administrative contractor that has
a contract under this section with respect to the performance
of that function in relation to that individual, provider of
services or supplier or class of provider of services or
supplier.
``(4) Functions described.--The functions referred to in
paragraphs (1) and (2) are payment functions, provider
services functions, and functions relating to services
furnished to individuals entitled to benefits under part A or
enrolled under part B, or both, as follows:
``(A) Determination of payment amounts.--Determining
(subject to the provisions of section 1878 and to such review
by the Secretary as may be provided for by the contracts) the
amount of the payments required pursuant to this title to be
made to providers of services, suppliers and individuals.
``(B) Making payments.--Making payments described in
subparagraph (A) (including receipt, disbursement, and
accounting for funds in making such payments).
``(C) Beneficiary education and assistance.--Providing
education and outreach to individuals entitled to benefits
under part A or enrolled under part B, or both, and providing
assistance to those individuals with specific issues,
concerns or problems.
``(D) Provider consultative services.--Providing
consultative services to institutions, agencies, and other
persons to enable them to establish and maintain fiscal
records necessary for purposes of this title and otherwise to
qualify as providers of services or suppliers.
``(E) Communication with providers.--Communicating to
providers of services and suppliers any information or
instructions furnished to the medicare administrative
[[Page H6059]]
contractor by the Secretary, and facilitating communication
between such providers and suppliers and the Secretary.
``(F) Provider education and technical assistance.--
Performing the functions relating to provider education,
training, and technical assistance.
``(G) Additional functions.--Performing such other
functions as are necessary to carry out the purposes of this
title.
``(5) Relationship to mip contracts.--
``(A) Nonduplication of duties.--In entering into contracts
under this section, the Secretary shall assure that functions
of medicare administrative contractors in carrying out
activities under parts A and B do not duplicate activities
carried out under the Medicare Integrity Program under
section 1893. The previous sentence shall not apply with
respect to the activity described in section 1893(b)(5)
(relating to prior authorization of certain items of durable
medical equipment under section 1834(a)(15)).
``(B) Construction.--An entity shall not be treated as a
medicare administrative contractor merely by reason of having
entered into a contract with the Secretary under section
1893.
``(6) Application of federal acquisition regulation.--
Except to the extent inconsistent with a specific requirement
of this title, the Federal Acquisition Regulation applies to
contracts under this title.
``(b) Contracting Requirements.--
``(1) Use of competitive procedures.--
``(A) In general.--Except as provided in laws with general
applicability to Federal acquisition and procurement or in
subparagraph (B), the Secretary shall use competitive
procedures when entering into contracts with medicare
administrative contractors under this section, taking into
account performance quality as well as price and other
factors.
``(B) Renewal of contracts.--The Secretary may renew a
contract with a medicare administrative contractor under this
section from term to term without regard to section 5 of
title 41, United States Code, or any other provision of law
requiring competition, if the medicare administrative
contractor has met or exceeded the performance requirements
applicable with respect to the contract and contractor,
except that the Secretary shall provide for the application
of competitive procedures under such a contract not less
frequently than once every five years.
``(C) Transfer of functions.--The Secretary may transfer
functions among medicare administrative contractors
consistent with the provisions of this paragraph. The
Secretary shall ensure that performance quality is considered
in such transfers. The Secretary shall provide public notice
(whether in the Federal Register or otherwise) of any such
transfer (including a description of the functions so
transferred, a description of the providers of services and
suppliers affected by such transfer, and contact information
for the contractors involved).
``(D) Incentives for quality.--The Secretary shall provide
incentives for medicare administrative contractors to provide
quality service and to promote efficiency.
``(2) Compliance with requirements.--No contract under this
section shall be entered into with any medicare
administrative contractor unless the Secretary finds that
such medicare administrative contractor will perform its
obligations under the contract efficiently and effectively
and will meet such requirements as to financial
responsibility, legal authority, quality of services
provided, and other matters as the Secretary finds pertinent.
``(3) Performance requirements.--
``(A) Development of specific performance requirements.--In
developing contract performance requirements, the Secretary
shall develop performance requirements applicable to
functions described in subsection (a)(4).
``(B) Consultation.-- In developing such requirements, the
Secretary may consult with providers of services and
suppliers, organizations representing individuals entitled to
benefits under part A or enrolled under part B, or both, and
organizations and agencies performing functions necessary to
carry out the purposes of this section with respect to such
performance requirements.
``(C) Inclusion in contracts.--All contractor performance
requirements shall be set forth in the contract between the
Secretary and the appropriate medicare administrative
contractor. Such performance requirements--
``(i) shall reflect the performance requirements developed
under subparagraph (A), but may include additional
performance requirements;
``(ii) shall be used for evaluating contractor performance
under the contract; and
``(iii) shall be consistent with the written statement of
work provided under the contract.
``(4) Information requirements.--The Secretary shall not
enter into a contract with a medicare administrative
contractor under this section unless the contractor agrees--
``(A) to furnish to the Secretary such timely information
and reports as the Secretary may find necessary in performing
his functions under this title; and
``(B) to maintain such records and afford such access
thereto as the Secretary finds necessary to assure the
correctness and verification of the information and reports
under subparagraph (A) and otherwise to carry out the
purposes of this title.
``(5) Surety bond.--A contract with a medicare
administrative contractor under this section may require the
medicare administrative contractor, and any of its officers
or employees certifying payments or disbursing funds pursuant
to the contract, or otherwise participating in carrying out
the contract, to give surety bond to the United States in
such amount as the Secretary may deem appropriate.
``(c) Terms and Conditions.--
``(1) In general.--A contract with any medicare
administrative contractor under this section may contain such
terms and conditions as the Secretary finds necessary or
appropriate and may provide for advances of funds to the
medicare administrative contractor for the making of payments
by it under subsection (a)(4)(B).
``(2) Prohibition on mandates for certain data
collection.--The Secretary may not require, as a condition of
entering into, or renewing, a contract under this section,
that the medicare administrative contractor match data
obtained other than in its activities under this title with
data used in the administration of this title for purposes of
identifying situations in which the provisions of section
1862(b) may apply.
``(d) Limitation on Liability of Medicare Administrative
Contractors and Certain Officers.--
``(1) Certifying officer.--No individual designated
pursuant to a contract under this section as a certifying
officer shall, in the absence of the reckless disregard of
the individual's obligations or the intent by that individual
to defraud the United States, be liable with respect to any
payments certified by the individual under this section.
``(2) Disbursing officer.--No disbursing officer shall, in
the absence of the reckless disregard of the officer's
obligations or the intent by that officer to defraud the
United States, be liable with respect to any payment by such
officer under this section if it was based upon an
authorization (which meets the applicable requirements for
such internal controls established by the Comptroller
General) of a certifying officer designated as provided in
paragraph (1) of this subsection.
``(3) Liability of medicare administrative contractor.--
``(A) In general.--No medicare administrative contractor
shall be liable to the United States for a payment by a
certifying or disbursing officer unless, in connection with
such payment, the medicare administrative contractor acted
with reckless disregard of its obligations under its medicare
administrative contract or with intent to defraud the United
States.
``(B) Relationship to false claims act.--Nothing in this
subsection shall be construed to limit liability for conduct
that would constitute a violation of sections 3729 through
3731 of title 31, United States Code (commonly known as the
`False Claims Act').
``(4) Indemnification by secretary.--
``(A) In general.--Subject to subparagraphs (B) and (D), in
the case of a medicare administrative contractor (or a person
who is a director, officer, or employee of such a contractor
or who is engaged by the contractor to participate directly
in the claims administration process) who is made a party to
any judicial or administrative proceeding arising from or
relating directly to the claims administration process under
this title, the Secretary may, to the extent the Secretary
determines to be appropriate and as specified in the contract
with the contractor, indemnify the contractor and such
persons.
``(B) Conditions.--The Secretary may not provide
indemnification under subparagraph (A) insofar as the
liability for such costs arises directly from conduct that is
determined by the judicial proceeding or by the Secretary to
be criminal in nature, fraudulent, or grossly negligent. If
indemnification is provided by the Secretary with respect to
a contractor before a determination that such costs arose
directly from such conduct, the contractor shall reimburse
the Secretary for costs of indemnification.
``(C) Scope of indemnification.--Indemnification by the
Secretary under subparagraph (A) may include payment of
judgments, settlements (subject to subparagraph (D)), awards,
and costs (including reasonable legal expenses).
``(D) Written approval for settlements.--A contractor or
other person described in subparagraph (A) may not propose to
negotiate a settlement or compromise of a proceeding
described in such subparagraph without the prior written
approval of the Secretary to negotiate such settlement or
compromise. Any indemnification under subparagraph (A) with
respect to amounts paid under a settlement or compromise of a
proceeding described in such subparagraph are conditioned
upon prior written approval by the Secretary of the final
settlement or compromise.
``(E) Construction.--Nothing in this paragraph shall be
construed--
``(i) to change any common law immunity that may be
available to a medicare administrative contractor or person
described in subparagraph (A); or
``(ii) to permit the payment of costs not otherwise
allowable, reasonable, or allocable under the Federal
Acquisition Regulations.''.
(2) Consideration of incorporation of current law
standards.--In developing contract performance requirements
under section 1874A(b) of the Social Security Act, as
inserted by paragraph (1), the Secretary shall consider
inclusion of the performance
[[Page H6060]]
standards described in sections 1816(f)(2) of such Act
(relating to timely processing of reconsiderations and
applications for exemptions) and section 1842(b)(2)(B) of
such Act (relating to timely review of determinations and
fair hearing requests), as such sections were in effect
before the date of the enactment of this Act.
(b) Conforming Amendments to Section 1816 (Relating to
Fiscal Intermediaries).--Section 1816 (42 U.S.C. 1395h) is
amended as follows:
(1) The heading is amended to read as follows:
``provisions relating to the administration of part a''.
(2) Subsection (a) is amended to read as follows:
``(a) The administration of this part shall be conducted
through contracts with medicare administrative contractors
under section 1874A.''.
(3) Subsection (b) is repealed.
(4) Subsection (c) is amended--
(A) by striking paragraph (1); and
(B) in each of paragraphs (2)(A) and (3)(A), by striking
``agreement under this section'' and inserting ``contract
under section 1874A that provides for making payments under
this part''.
(5) Subsections (d) through (i) are repealed.
(6) Subsections (j) and (k) are each amended--
(A) by striking ``An agreement with an agency or
organization under this section'' and inserting ``A contract
with a medicare administrative contractor under section 1874A
with respect to the administration of this part''; and
(B) by striking ``such agency or organization'' and
inserting ``such medicare administrative contractor'' each
place it appears.
(7) Subsection (l) is repealed.
(c) Conforming Amendments to Section 1842 (Relating to
Carriers).--Section 1842 (42 U.S.C. 1395u) is amended as
follows:
(1) The heading is amended to read as follows:
``provisions relating to the administration of part b''.
(2) Subsection (a) is amended to read as follows:
``(a) The administration of this part shall be conducted
through contracts with medicare administrative contractors
under section 1874A.''.
(3) Subsection (b) is amended--
(A) by striking paragraph (1);
(B) in paragraph (2)--
(i) by striking subparagraphs (A) and (B);
(ii) in subparagraph (C), by striking ``carriers'' and
inserting ``medicare administrative contractors''; and
(iii) by striking subparagraphs (D) and (E);
(C) in paragraph (3)--
(i) in the matter before subparagraph (A), by striking
``Each such contract shall provide that the carrier'' and
inserting ``The Secretary'';
(ii) by striking ``will'' the first place it appears in
each of subparagraphs (A), (B), (F), (G), (H), and (L) and
inserting ``shall'';
(iii) in subparagraph (B), in the matter before clause (i),
by striking ``to the policyholders and subscribers of the
carrier'' and inserting ``to the policyholders and
subscribers of the medicare administrative contractor'';
(iv) by striking subparagraphs (C), (D), and (E);
(v) in subparagraph (H)--
(I) by striking ``if it makes determinations or payments
with respect to physicians' services,'' in the matter
preceding clause (i); and
(II) by striking ``carrier'' and inserting ``medicare
administrative contractor'' in clause (i);
(vi) by striking subparagraph (I);
(vii) in subparagraph (L), by striking the semicolon and
inserting a period;
(viii) in the first sentence, after subparagraph (L), by
striking ``and shall contain'' and all that follows through
the period; and
(ix) in the seventh sentence, by inserting ``medicare
administrative contractor,'' after ``carrier,''; and
(D) by striking paragraph (5);
(E) in paragraph (6)(D)(iv), by striking ``carrier'' and
inserting ``medicare administrative contractor''; and
(F) in paragraph (7), by striking ``the carrier'' and
inserting ``the Secretary'' each place it appears.
(4) Subsection (c) is amended--
(A) by striking paragraph (1);
(B) in paragraph (2)(A), by striking ``contract under this
section which provides for the disbursement of funds, as
described in subsection (a)(1)(B),'' and inserting ``contract
under section 1874A that provides for making payments under
this part'';
(C) in paragraph (3)(A), by striking ``subsection
(a)(1)(B)'' and inserting ``section 1874A(a)(3)(B)'';
(D) in paragraph (4), in the matter preceding subparagraph
(A), by striking ``carrier'' and inserting ``medicare
administrative contractor''; and
(E) by striking paragraphs (5) and (6).
(5) Subsections (d), (e), and (f) are repealed.
(6) Subsection (g) is amended by striking ``carrier or
carriers'' and inserting ``medicare administrative contractor
or contractors''.
(7) Subsection (h) is amended--
(A) in paragraph (2)--
(i) by striking ``Each carrier having an agreement with the
Secretary under subsection (a)'' and inserting ``The
Secretary''; and
(ii) by striking ``Each such carrier'' and inserting ``The
Secretary'';
(B) in paragraph (3)(A)--
(i) by striking ``a carrier having an agreement with the
Secretary under subsection (a)'' and inserting ``medicare
administrative contractor having a contract under section
1874A that provides for making payments under this part'';
and
(ii) by striking ``such carrier'' and inserting ``such
contractor'';
(C) in paragraph (3)(B)--
(i) by striking ``a carrier'' and inserting ``a medicare
administrative contractor'' each place it appears; and
(ii) by striking ``the carrier'' and inserting ``the
contractor'' each place it appears; and
(D) in paragraphs (5)(A) and (5)(B)(iii), by striking
``carriers'' and inserting ``medicare administrative
contractors'' each place it appears.
(8) Subsection (l) is amended--
(A) in paragraph (1)(A)(iii), by striking ``carrier'' and
inserting ``medicare administrative contractor''; and
(B) in paragraph (2), by striking ``carrier'' and inserting
``medicare administrative contractor''.
(9) Subsection (p)(3)(A) is amended by striking ``carrier''
and inserting ``medicare administrative contractor''.
(10) Subsection (q)(1)(A) is amended by striking
``carrier''.
(d) Effective Date; Transition Rule.--
(1) Effective date.--
(A) In general.--Except as otherwise provided in this
subsection, the amendments made by this section shall take
effect on October 1, 2005, and the Secretary is authorized to
take such steps before such date as may be necessary to
implement such amendments on a timely basis.
(B) Construction for current contracts.--Such amendments
shall not apply to contracts in effect before the date
specified under subparagraph (A) that continue to retain the
terms and conditions in effect on such date (except as
otherwise provided under this Act, other than under this
section) until such date as the contract is let out for
competitive bidding under such amendments.
(C) Deadline for competitive bidding.--The Secretary shall
provide for the letting by competitive bidding of all
contracts for functions of medicare administrative
contractors for annual contract periods that begin on or
after October 1, 2010.
(D) Waiver of provider nomination provisions during
transition.--During the period beginning on the date of the
enactment of this Act and before the date specified under
subparagraph (A), the Secretary may enter into new agreements
under section 1816 of the Social Security Act (42 U.S.C.
1395h) without regard to any of the provider nomination
provisions of such section.
(2) General transition rules.--The Secretary shall take
such steps, consistent with paragraph (1)(B) and (1)(C), as
are necessary to provide for an appropriate transition from
contracts under section 1816 and section 1842 of the Social
Security Act (42 U.S.C. 1395h, 1395u) to contracts under
section 1874A, as added by subsection (a)(1).
(3) Authorizing continuation of mip functions under current
contracts and agreements and under rollover contracts.--The
provisions contained in the exception in section 1893(d)(2)
of the Social Security Act (42 U.S.C. 1395ddd(d)(2)) shall
continue to apply notwithstanding the amendments made by this
section, and any reference in such provisions to an agreement
or contract shall be deemed to include a contract under
section 1874A of such Act, as inserted by subsection (a)(1),
that continues the activities referred to in such provisions.
(e) References.--On and after the effective date provided
under subsection (d)(1), any reference to a fiscal
intermediary or carrier under title XI or XVIII of the Social
Security Act (or any regulation, manual instruction,
interpretative rule, statement of policy, or guideline issued
to carry out such titles) shall be deemed a reference to a
medicare administrative contractor (as provided under section
1874A of the Social Security Act).
(f) Reports on Implementation.--
(1) Plan for implementation.--By not later than October 1,
2004, the Secretary shall submit a report to Congress and the
Comptroller General of the United States that describes the
plan for implementation of the amendments made by this
section. The Comptroller General shall conduct an evaluation
of such plan and shall submit to Congress, not later than 6
months after the date the report is received, a report on
such evaluation and shall include in such report such
recommendations as the Comptroller General deems appropriate.
(2) Status of implementation.--The Secretary shall submit a
report to Congress not later than October 1, 2008, that
describes the status of implementation of such amendments and
that includes a description of the following:
(A) The number of contracts that have been competitively
bid as of such date.
(B) The distribution of functions among contracts and
contractors.
(C) A timeline for complete transition to full competition.
(D) A detailed description of how the Secretary has
modified oversight and management of medicare contractors to
adapt to full competition.
[[Page H6061]]
SEC. 912. REQUIREMENTS FOR INFORMATION SECURITY FOR MEDICARE
ADMINISTRATIVE CONTRACTORS.
(a) In General.--Section 1874A, as added by section
911(a)(1), is amended by adding at the end the following new
subsection:
``(e) Requirements for Information Security.--
``(1) Development of information security program.--A
medicare administrative contractor that performs the
functions referred to in subparagraphs (A) and (B) of
subsection (a)(4) (relating to determining and making
payments) shall implement a contractor-wide information
security program to provide information security for the
operation and assets of the contractor with respect to such
functions under this title. An information security program
under this paragraph shall meet the requirements for
information security programs imposed on Federal agencies
under paragraphs (1) through (8) of section 3544(b) of title
44, United States Code (other than the requirements under
paragraphs (2)(D)(i), (5)(A), and (5)(B) of such section).
``(2) Independent audits.--
``(A) Performance of annual evaluations.--Each year a
medicare administrative contractor that performs the
functions referred to in subparagraphs (A) and (B) of
subsection (a)(4) (relating to determining and making
payments) shall undergo an evaluation of the information
security of the contractor with respect to such functions
under this title. The evaluation shall--
``(i) be performed by an entity that meets such
requirements for independence as the Inspector General of the
Department of Health and Human Services may establish; and
``(ii) test the effectiveness of information security
control techniques of an appropriate subset of the
contractor's information systems (as defined in section
3502(8) of title 44, United States Code) relating to such
functions under this title and an assessment of compliance
with the requirements of this subsection and related
information security policies, procedures, standards and
guidelines, including policies and procedures as may be
prescribed by the Director of the Office of Management and
Budget and applicable information security standards
promulgated under section 11331 of title 40, United States
Code.
``(B) Deadline for initial evaluation.--
``(i) New contractors.--In the case of a medicare
administrative contractor covered by this subsection that has
not previously performed the functions referred to in
subparagraphs (A) and (B) of subsection (a)(4) (relating to
determining and making payments) as a fiscal intermediary or
carrier under section 1816 or 1842, the first independent
evaluation conducted pursuant subparagraph (A) shall be
completed prior to commencing such functions.
``(ii) Other contractors.--In the case of a medicare
administrative contractor covered by this subsection that is
not described in clause (i), the first independent evaluation
conducted pursuant subparagraph (A) shall be completed within
1 year after the date the contractor commences functions
referred to in clause (i) under this section.
``(C) Reports on evaluations.--
``(i) To the department of health and human services.--The
results of independent evaluations under subparagraph (A)
shall be submitted promptly to the Inspector General of the
Department of Health and Human Services and to the Secretary.
``(ii) To congress.--The Inspector General of Department of
Health and Human Services shall submit to Congress annual
reports on the results of such evaluations, including
assessments of the scope and sufficiency of such evaluations.
``(iii) Agency reporting.--The Secretary shall address the
results of such evaluations in reports required under section
3544(c) of title 44, United States Code.''.
(b) Application of Requirements to Fiscal Intermediaries
and Carriers.--
(1) In general.--The provisions of section 1874A(e)(2) of
the Social Security Act (other than subparagraph (B)), as
added by subsection (a), shall apply to each fiscal
intermediary under section 1816 of the Social Security Act
(42 U.S.C. 1395h) and each carrier under section 1842 of such
Act (42 U.S.C. 1395u) in the same manner as they apply to
medicare administrative contractors under such provisions.
(2) Deadline for initial evaluation.--In the case of such a
fiscal intermediary or carrier with an agreement or contract
under such respective section in effect as of the date of the
enactment of this Act, the first evaluation under section
1874A(e)(2)(A) of the Social Security Act (as added by
subsection (a)), pursuant to paragraph (1), shall be
completed (and a report on the evaluation submitted to the
Secretary) by not later than 1 year after such date.
Subtitle C--Education and Outreach
SEC. 921. PROVIDER EDUCATION AND TECHNICAL ASSISTANCE.
(a) Coordination of Education Funding.--
(1) In general.--Title XVIII is amended by inserting after
section 1888 the following new section:
``provider education and technical assistance
``Sec. 1889. (a) Coordination of Education Funding.--The
Secretary shall coordinate the educational activities
provided through medicare contractors (as defined in
subsection (g), including under section 1893) in order to
maximize the effectiveness of Federal education efforts for
providers of services and suppliers.''.
(2) Effective date.--The amendment made by paragraph (1)
shall take effect on the date of the enactment of this Act.
(3) Report.--Not later than October 1, 2004, the Secretary
shall submit to Congress a report that includes a description
and evaluation of the steps taken to coordinate the funding
of provider education under section 1889(a) of the Social
Security Act, as added by paragraph (1).
(b) Incentives To Improve Contractor Performance.--
(1) In general.--Section 1874A, as added by section
911(a)(1) and as amended by section 912(a), is amended by
adding at the end the following new subsection:
``(f) Incentives To Improve Contractor Performance in
Provider Education and Outreach.--The Secretary shall use
specific claims payment error rates or similar methodology of
medicare administrative contractors in the processing or
reviewing of medicare claims in order to give such
contractors an incentive to implement effective education and
outreach programs for providers of services and suppliers.''.
(2) Application to fiscal intermediaries and carriers.--The
provisions of section 1874A(f) of the Social Security Act, as
added by paragraph (1), shall apply to each fiscal
intermediary under section 1816 of the Social Security Act
(42 U.S.C. 1395h) and each carrier under section 1842 of such
Act (42 U.S.C. 1395u) in the same manner as they apply to
medicare administrative contractors under such provisions.
(3) GAO report on adequacy of methodology.--Not later than
October 1, 2004, the Comptroller General of the United States
shall submit to Congress and to the Secretary a report on the
adequacy of the methodology under section 1874A(f) of the
Social Security Act, as added by paragraph (1), and shall
include in the report such recommendations as the Comptroller
General determines appropriate with respect to the
methodology.
(4) Report on use of methodology in assessing contractor
performance.--Not later than October 1, 2004, the Secretary
shall submit to Congress a report that describes how the
Secretary intends to use such methodology in assessing
medicare contractor performance in implementing effective
education and outreach programs, including whether to use
such methodology as a basis for performance bonuses. The
report shall include an analysis of the sources of identified
errors and potential changes in systems of contractors and
rules of the Secretary that could reduce claims error rates.
(c) Provision of Access to and Prompt Responses From
Medicare Administrative Contractors.--
(1) In general.--Section 1874A, as added by section
911(a)(1) and as amended by section 912(a) and subsection
(b), is further amended by adding at the end the following
new subsection:
``(g) Communications with Beneficiaries, Providers of
Services and Suppliers.--
``(1) Communication strategy.--The Secretary shall develop
a strategy for communications with individuals entitled to
benefits under part A or enrolled under part B, or both, and
with providers of services and suppliers under this title.
``(2) Response to written inquiries.--Each medicare
administrative contractor shall, for those providers of
services and suppliers which submit claims to the contractor
for claims processing and for those individuals entitled to
benefits under part A or enrolled under part B, or both, with
respect to whom claims are submitted for claims processing,
provide general written responses (which may be through
electronic transmission) in a clear, concise, and accurate
manner to inquiries of providers of services, suppliers and
individuals entitled to benefits under part A or enrolled
under part B, or both, concerning the programs under this
title within 45 business days of the date of receipt of such
inquiries.
``(3) Response to toll-free lines.--The Secretary shall
ensure that each medicare administrative contractor shall
provide, for those providers of services and suppliers which
submit claims to the contractor for claims processing and for
those individuals entitled to benefits under part A or
enrolled under part B, or both, with respect to whom claims
are submitted for claims processing, a toll-free telephone
number at which such individuals, providers of services and
suppliers may obtain information regarding billing, coding,
claims, coverage, and other appropriate information under
this title.
``(4) Monitoring of contractor responses.--
``(A) In general.--Each medicare administrative contractor
shall, consistent with standards developed by the Secretary
under subparagraph (B)--
``(i) maintain a system for identifying who provides the
information referred to in paragraphs (2) and (3); and
``(ii) monitor the accuracy, consistency, and timeliness of
the information so provided.
``(B) Development of standards.--
``(i) In general.--The Secretary shall establish and make
public standards to monitor the accuracy, consistency, and
timeliness of the information provided in response to written
and telephone inquiries under this subsection. Such standards
shall be consistent with the performance requirements
established under subsection (b)(3).
[[Page H6062]]
``(ii) Evaluation.--In conducting evaluations of individual
medicare administrative contractors, the Secretary shall take
into account the results of the monitoring conducted under
subparagraph (A) taking into account as performance
requirements the standards established under clause (i). The
Secretary shall, in consultation with organizations
representing providers of services, suppliers, and
individuals entitled to benefits under part A or enrolled
under part B, or both, establish standards relating to the
accuracy, consistency, and timeliness of the information so
provided.
``(C) Direct monitoring.--Nothing in this paragraph shall
be construed as preventing the Secretary from directly
monitoring the accuracy, consistency, and timeliness of the
information so provided.''.
(2) Effective date.--The amendment made by paragraph (1)
shall take effect October 1, 2004.
(3) Application to fiscal intermediaries and carriers.--The
provisions of section 1874A(g) of the Social Security Act, as
added by paragraph (1), shall apply to each fiscal
intermediary under section 1816 of the Social Security Act
(42 U.S.C. 1395h) and each carrier under section 1842 of such
Act (42 U.S.C. 1395u) in the same manner as they apply to
medicare administrative contractors under such provisions.
(d) Improved Provider Education and Training.--
(1) In general.--Section 1889, as added by subsection (a),
is amended by adding at the end the following new
subsections:
``(b) Enhanced Education and Training.--
``(1) Additional resources.--There are authorized to be
appropriated to the Secretary (in appropriate part from the
Federal Hospital Insurance Trust Fund and the Federal
Supplementary Medical Insurance Trust Fund) $25,000,000 for
each of fiscal years 2005 and 2006 and such sums as may be
necessary for succeeding fiscal years.
``(2) Use.--The funds made available under paragraph (1)
shall be used to increase the conduct by medicare contractors
of education and training of providers of services and
suppliers regarding billing, coding, and other appropriate
items and may also be used to improve the accuracy,
consistency, and timeliness of contractor responses.
``(c) Tailoring Education and Training Activities for Small
Providers or Suppliers.--
``(1) In general.--Insofar as a medicare contractor
conducts education and training activities, it shall tailor
such activities to meet the special needs of small providers
of services or suppliers (as defined in paragraph (2)).
``(2) Small provider of services or supplier.--In this
subsection, the term `small provider of services or supplier'
means--
``(A) a provider of services with fewer than 25 full-time-
equivalent employees; or
``(B) a supplier with fewer than 10 full-time-equivalent
employees.''.
(2) Effective date.--The amendment made by paragraph (1)
shall take effect on October 1, 2004.
(e) Requirement To Maintain Internet Sites.--
(1) In general.--Section 1889, as added by subsection (a)
and as amended by subsection (d), is further amended by
adding at the end the following new subsection:
``(d) Internet Sites; FAQs.--The Secretary, and each
medicare contractor insofar as it provides services
(including claims processing) for providers of services or
suppliers, shall maintain an Internet site which--
``(1) provides answers in an easily accessible format to
frequently asked questions, and
``(2) includes other published materials of the contractor,
that relate to providers of services and suppliers under the
programs under this title (and title XI insofar as it relates
to such programs).''.
(2) Effective date.--The amendment made by paragraph (1)
shall take effect on October 1, 2004.
(f) Additional Provider Education Provisions.--
(1) In general.--Section 1889, as added by subsection (a)
and as amended by subsections (d) and (e), is further amended
by adding at the end the following new subsections:
``(e) Encouragement of Participation in Education Program
Activities.--A medicare contractor may not use a record of
attendance at (or failure to attend) educational activities
or other information gathered during an educational program
conducted under this section or otherwise by the Secretary to
select or track providers of services or suppliers for the
purpose of conducting any type of audit or prepayment review.
``(f) Construction.--Nothing in this section or section
1893(g) shall be construed as providing for disclosure by a
medicare contractor of information that would compromise
pending law enforcement activities or reveal findings of law
enforcement-related audits.
``(g) Definitions.--For purposes of this section, the term
`medicare contractor' includes the following:
``(1) A medicare administrative contractor with a contract
under section 1874A, including a fiscal intermediary with a
contract under section 1816 and a carrier with a contract
under section 1842.
``(2) An eligible entity with a contract under section
1893.
Such term does not include, with respect to activities of a
specific provider of services or supplier an entity that has
no authority under this title or title IX with respect to
such activities and such provider of services or supplier.''.
(2) Effective date.--The amendment made by paragraph (1)
shall take effect on the date of the enactment of this Act.
SEC. 922. SMALL PROVIDER TECHNICAL ASSISTANCE DEMONSTRATION
PROGRAM.
(a) Establishment.--
(1) In general.--The Secretary shall establish a
demonstration program (in this section referred to as the
``demonstration program'') under which technical assistance
described in paragraph (2) is made available, upon request
and on a voluntary basis, to small providers of services or
suppliers in order to improve compliance with the applicable
requirements of the programs under medicare program under
title XVIII of the Social Security Act (including provisions
of title XI of such Act insofar as they relate to such title
and are not administered by the Office of the Inspector
General of the Department of Health and Human Services).
(2) Forms of technical assistance.--The technical
assistance described in this paragraph is--
(A) evaluation and recommendations regarding billing and
related systems; and
(B) information and assistance regarding policies and
procedures under the medicare program, including coding and
reimbursement.
(3) Small providers of services or suppliers.--In this
section, the term ``small providers of services or
suppliers'' means--
(A) a provider of services with fewer than 25 full-time-
equivalent employees; or
(B) a supplier with fewer than 10 full-time-equivalent
employees.
(b) Qualification of Contractors.--In conducting the
demonstration program, the Secretary shall enter into
contracts with qualified organizations (such as peer review
organizations or entities described in section 1889(g)(2) of
the Social Security Act, as inserted by section 5(f)(1)) with
appropriate expertise with billing systems of the full range
of providers of services and suppliers to provide the
technical assistance. In awarding such contracts, the
Secretary shall consider any prior investigations of the
entity's work by the Inspector General of Department of
Health and Human Services or the Comptroller General of the
United States.
(c) Description of Technical Assistance.--The technical
assistance provided under the demonstration program shall
include a direct and in-person examination of billing systems
and internal controls of small providers of services or
suppliers to determine program compliance and to suggest more
efficient or effective means of achieving such compliance.
(d) Avoidance of Recovery Actions for Problems Identified
as Corrected.--The Secretary shall provide that, absent
evidence of fraud and notwithstanding any other provision of
law, any errors found in a compliance review for a small
provider of services or supplier that participates in the
demonstration program shall not be subject to recovery action
if the technical assistance personnel under the program
determine that--
(1) the problem that is the subject of the compliance
review has been corrected to their satisfaction within 30
days of the date of the visit by such personnel to the small
provider of services or supplier; and
(2) such problem remains corrected for such period as is
appropriate.
The previous sentence applies only to claims filed as part of
the demonstration program and lasts only for the duration of
such program and only as long as the small provider of
services or supplier is a participant in such program.
(e) GAO Evaluation.--Not later than 2 years after the date
of the date the demonstration program is first implemented,
the Comptroller General, in consultation with the Inspector
General of the Department of Health and Human Services, shall
conduct an evaluation of the demonstration program. The
evaluation shall include a determination of whether claims
error rates are reduced for small providers of services or
suppliers who participated in the program and the extent of
improper payments made as a result of the demonstration
program. The Comptroller General shall submit a report to the
Secretary and the Congress on such evaluation and shall
include in such report recommendations regarding the
continuation or extension of the demonstration program.
(f) Financial Participation by Providers.--The provision of
technical assistance to a small provider of services or
supplier under the demonstration program is conditioned upon
the small provider of services or supplier paying an amount
estimated (and disclosed in advance of a provider's or
supplier's participation in the program) to be equal to 25
percent of the cost of the technical assistance.
(g) Authorization of Appropriations.--There are authorized
to be appropriated to the Secretary (in appropriate part from
the Federal Hospital Insurance Trust Fund and the Federal
Supplementary Medical Insurance Trust Fund) to carry out the
demonstration program--
(1) for fiscal year 2005, $1,000,000, and
(2) for fiscal year 2006, $6,000,000.
SEC. 923. MEDICARE PROVIDER OMBUDSMAN; MEDICARE BENEFICIARY
OMBUDSMAN.
(a) Medicare Provider Ombudsman.--Section 1868 (42 U.S.C.
1395ee) is amended--
[[Page H6063]]
(1) by adding at the end of the heading the following: ``;
medicare provider ombudsman'';
(2) by inserting ``Practicing Physicians Advisory
Council.--(1)'' after ``(a)'';
(3) in paragraph (1), as so redesignated under paragraph
(2), by striking ``in this section'' and inserting ``in this
subsection'';
(4) by redesignating subsections (b) and (c) as paragraphs
(2) and (3), respectively; and
(5) by adding at the end the following new subsection:
``(b) Medicare Provider Ombudsman.--The Secretary shall
appoint within the Department of Health and Human Services a
Medicare Provider Ombudsman. The Ombudsman shall--
``(1) provide assistance, on a confidential basis, to
providers of services and suppliers with respect to
complaints, grievances, and requests for information
concerning the programs under this title (including
provisions of title XI insofar as they relate to this title
and are not administered by the Office of the Inspector
General of the Department of Health and Human Services) and
in the resolution of unclear or conflicting guidance given by
the Secretary and medicare contractors to such providers of
services and suppliers regarding such programs and provisions
and requirements under this title and such provisions; and
``(2) submit recommendations to the Secretary for
improvement in the administration of this title and such
provisions, including--
``(A) recommendations to respond to recurring patterns of
confusion in this title and such provisions (including
recommendations regarding suspending imposition of sanctions
where there is widespread confusion in program
administration), and
``(B) recommendations to provide for an appropriate and
consistent response (including not providing for audits) in
cases of self-identified overpayments by providers of
services and suppliers.
The Ombudsman shall not serve as an advocate for any
increases in payments or new coverage of services, but may
identify issues and problems in payment or coverage
policies.''.
(b) Medicare Beneficiary Ombudsman.--Title XVIII, as
previously amended, is amended by inserting after section
1809 the following new section:
``medicare beneficiary ombudsman
``Sec. 1810. (a) In General.--The Secretary shall appoint
within the Department of Health and Human Services a Medicare
Beneficiary Ombudsman who shall have expertise and experience
in the fields of health care and education of (and assistance
to) individuals entitled to benefits under this title.
``(b) Duties.--The Medicare Beneficiary Ombudsman shall--
``(1) receive complaints, grievances, and requests for
information submitted by individuals entitled to benefits
under part A or enrolled under part B, or both, with respect
to any aspect of the medicare program;
``(2) provide assistance with respect to complaints,
grievances, and requests referred to in paragraph (1),
including--
``(A) assistance in collecting relevant information for
such individuals, to seek an appeal of a decision or
determination made by a fiscal intermediary, carrier,
Medicare+Choice organization, or the Secretary;
``(B) assistance to such individuals with any problems
arising from disenrollment from a Medicare+Choice plan under
part C; and
``(C) assistance to such individuals in presenting
information under section 1860D-2(b)(4)(D)(v); and
``(3) submit annual reports to Congress and the Secretary
that describe the activities of the Office and that include
such recommendations for improvement in the administration of
this title as the Ombudsman determines appropriate.
The Ombudsman shall not serve as an advocate for any
increases in payments or new coverage of services, but may
identify issues and problems in payment or coverage policies.
``(c) Working With Health Insurance Counseling Programs.--
To the extent possible, the Ombudsman shall work with health
insurance counseling programs (receiving funding under
section 4360 of Omnibus Budget Reconciliation Act of 1990) to
facilitate the provision of information to individuals
entitled to benefits under part A or enrolled under part B,
or both regarding Medicare+Choice plans and changes to those
plans. Nothing in this subsection shall preclude further
collaboration between the Ombudsman and such programs.''.
(c) Deadline for Appointment.--The Secretary shall appoint
the Medicare Provider Ombudsman and the Medicare Beneficiary
Ombudsman, under the amendments made by subsections (a) and
(b), respectively, by not later than 1 year after the date of
the enactment of this Act.
(d) Funding.--There are authorized to be appropriated to
the Secretary (in appropriate part from the Federal Hospital
Insurance Trust Fund and the Federal Supplementary Medical
Insurance Trust Fund) to carry out the provisions of
subsection (b) of section 1868 of the Social Security Act
(relating to the Medicare Provider Ombudsman), as added by
subsection (a)(5) and section 1807 of such Act (relating to
the Medicare Beneficiary Ombudsman), as added by subsection
(b), such sums as are necessary for fiscal year 2004 and each
succeeding fiscal year.
(e) Use of Central, Toll-Free Number (1-800-MEDICARE).--
(1) Phone triage system; listing in medicare handbook
instead of other toll-free numbers.--Section 1804(b) (42
U.S.C. 1395b-2(b)) is amended by adding at the end the
following: ``The Secretary shall provide, through the toll-
free number 1-800-MEDICARE, for a means by which individuals
seeking information about, or assistance with, such programs
who phone such toll-free number are transferred (without
charge) to appropriate entities for the provision of such
information or assistance. Such toll-free number shall be the
toll-free number listed for general information and
assistance in the annual notice under subsection (a) instead
of the listing of numbers of individual contractors.''.
(2) Monitoring accuracy.--
(A) Study.--The Comptroller General of the United States
shall conduct a study to monitor the accuracy and consistency
of information provided to individuals entitled to benefits
under part A or enrolled under part B, or both, through the
toll-free number 1-800-MEDICARE, including an assessment of
whether the information provided is sufficient to answer
questions of such individuals. In conducting the study, the
Comptroller General shall examine the education and training
of the individuals providing information through such number.
(B) Report.--Not later than 1 year after the date of the
enactment of this Act, the Comptroller General shall submit
to Congress a report on the study conducted under
subparagraph (A).
SEC. 924. BENEFICIARY OUTREACH DEMONSTRATION PROGRAM.
(a) In General.--The Secretary shall establish a
demonstration program (in this section referred to as the
``demonstration program'') under which medicare specialists
employed by the Department of Health and Human Services
provide advice and assistance to individuals entitled to
benefits under part A of title XVIII of the Social Security
Act, or enrolled under part B of such title, or both,
regarding the medicare program at the location of existing
local offices of the Social Security Administration.
(b) Locations.--
(1) In general.--The demonstration program shall be
conducted in at least 6 offices or areas. Subject to
paragraph (2), in selecting such offices and areas, the
Secretary shall provide preference for offices with a high
volume of visits by individuals referred to in subsection
(a).
(2) Assistance for rural beneficiaries.--The Secretary
shall provide for the selection of at least 2 rural areas to
participate in the demonstration program. In conducting the
demonstration program in such rural areas, the Secretary
shall provide for medicare specialists to travel among local
offices in a rural area on a scheduled basis.
(c) Duration.--The demonstration program shall be conducted
over a 3-year period.
(d) Evaluation and Report.--
(1) Evaluation.--The Secretary shall provide for an
evaluation of the demonstration program. Such evaluation
shall include an analysis of--
(A) utilization of, and satisfaction of those individuals
referred to in subsection (a) with, the assistance provided
under the program; and
(B) the cost-effectiveness of providing beneficiary
assistance through out-stationing medicare specialists at
local offices of the Social Security Administration.
(2) Report.--The Secretary shall submit to Congress a
report on such evaluation and shall include in such report
recommendations regarding the feasibility of permanently out-
stationing medicare specialists at local offices of the
Social Security Administration.
SEC. 925. INCLUSION OF ADDITIONAL INFORMATION IN NOTICES TO
BENEFICIARIES ABOUT SKILLED NURSING FACILITY
BENEFITS.
(a) In General.--The Secretary shall provide that in
medicare beneficiary notices provided (under section 1806(a)
of the Social Security Act, 42 U.S.C. 1395b-7(a)) with
respect to the provision of post-hospital extended care
services under part A of title XVIII of the Social Security
Act, there shall be included information on the number of
days of coverage of such services remaining under such part
for the medicare beneficiary and spell of illness involved.
(b) Effective Date.--Subsection (a) shall apply to notices
provided during calendar quarters beginning more than 6
months after the date of the enactment of this Act.
SEC. 926. INFORMATION ON MEDICARE-CERTIFIED SKILLED NURSING
FACILITIES IN HOSPITAL DISCHARGE PLANS.
(a) Availability of Data.--The Secretary shall publicly
provide information that enables hospital discharge planners,
medicare beneficiaries, and the public to identify skilled
nursing facilities that are participating in the medicare
program.
(b) Inclusion of Information in Certain Hospital Discharge
Plans.--
(1) In general.--Section 1861(ee)(2)(D) (42 U.S.C.
1395x(ee)(2)(D)) is amended--
(A) by striking ``hospice services'' and inserting
``hospice care and post-hospital extended care services'';
and
(B) by inserting before the period at the end the
following: ``and, in the case of individuals who are likely
to need post-hospital extended care services, the
availability of such services through facilities that
participate in the program under this title and that serve
the area in which the patient resides''.
[[Page H6064]]
(2) Effective date.--The amendments made by paragraph (1)
shall apply to discharge plans made on or after such date as
the Secretary shall specify, but not later than 6 months
after the date the Secretary provides for availability of
information under subsection (a).
Subtitle D--Appeals and Recovery
SEC. 931. TRANSFER OF RESPONSIBILITY FOR MEDICARE APPEALS.
(a) Transition Plan.--
(1) In general.--Not later than October 1, 2004, the
Commissioner of Social Security and the Secretary shall
develop and transmit to Congress and the Comptroller General
of the United States a plan under which the functions of
administrative law judges responsible for hearing cases under
title XVIII of the Social Security Act (and related
provisions in title XI of such Act) are transferred from the
responsibility of the Commissioner and the Social Security
Administration to the Secretary and the Department of Health
and Human Services.
(2) GAO evaluation.--The Comptroller General of the United
States shall evaluate the plan and, not later than the date
that is 6 months after the date on which the plan is received
by the Comptroller General, shall submit to Congress a report
on such evaluation.
(b) Transfer of Adjudication Authority.--
(1) In general.--Not earlier than July 1, 2005, and not
later than October 1, 2005, the Commissioner of Social
Security and the Secretary shall implement the transition
plan under subsection (a) and transfer the administrative law
judge functions described in such subsection from the Social
Security Administration to the Secretary.
(2) Assuring independence of judges.--The Secretary shall
assure the independence of administrative law judges
performing the administrative law judge functions transferred
under paragraph (1) from the Centers for Medicare & Medicaid
Services and its contractors. In order to assure such
independence, the Secretary shall place such judges in an
administrative office that is organizationally and
functionally separate from such Centers. Such judges shall
report to, and be under the general supervision of, the
Secretary, but shall not report to, or be subject to
supervision by, another other officer of the Department.
(3) Geographic distribution.--The Secretary shall provide
for an appropriate geographic distribution of administrative
law judges performing the administrative law judge functions
transferred under paragraph (1) throughout the United States
to ensure timely access to such judges.
(4) Hiring authority.--Subject to the amounts provided in
advance in appropriations Act, the Secretary shall have
authority to hire administrative law judges to hear such
cases, giving priority to those judges with prior experience
in handling medicare appeals and in a manner consistent with
paragraph (3), and to hire support staff for such judges.
(5) Financing.--Amounts payable under law to the
Commissioner for administrative law judges performing the
administrative law judge functions transferred under
paragraph (1) from the Federal Hospital Insurance Trust Fund
and the Federal Supplementary Medical Insurance Trust Fund
shall become payable to the Secretary for the functions so
transferred.
(6) Shared resources.--The Secretary shall enter into such
arrangements with the Commissioner as may be appropriate with
respect to transferred functions of administrative law judges
to share office space, support staff, and other resources,
with appropriate reimbursement from the Trust Funds described
in paragraph (5).
(c) Increased Financial Support.--In addition to any
amounts otherwise appropriated, to ensure timely action on
appeals before administrative law judges and the Departmental
Appeals Board consistent with section 1869 of the Social
Security Act (as amended by section 521 of BIPA, 114 Stat.
2763A-534), there are authorized to be appropriated (in
appropriate part from the Federal Hospital Insurance Trust
Fund and the Federal Supplementary Medical Insurance Trust
Fund) to the Secretary such sums as are necessary for fiscal
year 2005 and each subsequent fiscal year to--
(1) increase the number of administrative law judges (and
their staffs) under subsection (b)(4);
(2) improve education and training opportunities for
administrative law judges (and their staffs); and
(3) increase the staff of the Departmental Appeals Board.
(d) Conforming Amendment.--Section 1869(f)(2)(A)(i) (42
U.S.C. 1395ff(f)(2)(A)(i)), as added by section 522(a) of
BIPA (114 Stat. 2763A-543), is amended by striking ``of the
Social Security Administration''.
SEC. 932. PROCESS FOR EXPEDITED ACCESS TO REVIEW.
(a) Expedited Access to Judicial Review.--Section 1869(b)
(42 U.S.C. 1395ff(b)) as amended by BIPA, is amended--
(1) in paragraph (1)(A), by inserting ``, subject to
paragraph (2),'' before ``to judicial review of the
Secretary's final decision'';
(2) in paragraph (1)(F)--
(A) by striking clause (ii);
(B) by striking ``proceeding'' and all that follows through
``determination'' and inserting ``determinations and
reconsiderations''; and
(C) by redesignating subclauses (I) and (II) as clauses (i)
and (ii) and by moving the indentation of such subclauses
(and the matter that follows) 2 ems to the left; and
(3) by adding at the end the following new paragraph:
``(2) Expedited access to judicial review.--
``(A) In general.--The Secretary shall establish a process
under which a provider of services or supplier that furnishes
an item or service or an individual entitled to benefits
under part A or enrolled under part B, or both, who has filed
an appeal under paragraph (1) may obtain access to judicial
review when a review panel (described in subparagraph (D)),
on its own motion or at the request of the appellant,
determines that no entity in the administrative appeals
process has the authority to decide the question of law or
regulation relevant to the matters in controversy and that
there is no material issue of fact in dispute. The appellant
may make such request only once with respect to a question of
law or regulation in a case of an appeal.
``(B) Prompt determinations.--If, after or coincident with
appropriately filing a request for an administrative hearing,
the appellant requests a determination by the appropriate
review panel that no review panel has the authority to decide
the question of law or regulations relevant to the matters in
controversy and that there is no material issue of fact in
dispute and if such request is accompanied by the documents
and materials as the appropriate review panel shall require
for purposes of making such determination, such review panel
shall make a determination on the request in writing within
60 days after the date such review panel receives the request
and such accompanying documents and materials. Such a
determination by such review panel shall be considered a
final decision and not subject to review by the Secretary.
``(C) Access to judicial review.--
``(i) In general.--If the appropriate review panel--
``(I) determines that there are no material issues of fact
in dispute and that the only issue is one of law or
regulation that no review panel has the authority to decide;
or
``(II) fails to make such determination within the period
provided under subparagraph (B);
then the appellant may bring a civil action as described in
this subparagraph.
``(ii) Deadline for filing.--Such action shall be filed, in
the case described in--
``(I) clause (i)(I), within 60 days of date of the
determination described in such subparagraph; or
``(II) clause (i)(II), within 60 days of the end of the
period provided under subparagraph (B) for the determination.
``(iii) Venue.--Such action shall be brought in the
district court of the United States for the judicial district
in which the appellant is located (or, in the case of an
action brought jointly by more than one applicant, the
judicial district in which the greatest number of applicants
are located) or in the district court for the District of
Columbia.
``(iv) Interest on amounts in controversy.--Where a
provider of services or supplier seeks judicial review
pursuant to this paragraph, the amount in controversy shall
be subject to annual interest beginning on the first day of
the first month beginning after the 60-day period as
determined pursuant to clause (ii) and equal to the rate of
interest on obligations issued for purchase by the Federal
Hospital Insurance Trust Fund and by the Federal
Supplementary Medical Insurance Trust Fund for the month in
which the civil action authorized under this paragraph is
commenced, to be awarded by the reviewing court in favor of
the prevailing party. No interest awarded pursuant to the
preceding sentence shall be deemed income or cost for the
purposes of determining reimbursement due providers of
services or suppliers under this Act.
``(D) Review panels.--For purposes of this subsection, a
`review panel' is a panel consisting of 3 members (who shall
be administrative law judges, members of the Departmental
Appeals Board, or qualified individuals associated with a
qualified independent contractor (as defined in subsection
(c)(2)) or with another independent entity) designated by the
Secretary for purposes of making determinations under this
paragraph.''.
(b) Application to Provider Agreement Determinations.--
Section 1866(h)(1) (42 U.S.C. 1395cc(h)(1)) is amended--
(1) by inserting ``(A)'' after ``(h)(1)''; and
(2) by adding at the end the following new subparagraph:
``(B) An institution or agency described in subparagraph
(A) that has filed for a hearing under subparagraph (A) shall
have expedited access to judicial review under this
subparagraph in the same manner as providers of services,
suppliers, and individuals entitled to benefits under part A
or enrolled under part B, or both, may obtain expedited
access to judicial review under the process established under
section 1869(b)(2). Nothing in this subparagraph shall be
construed to affect the application of any remedy imposed
under section 1819 during the pendency of an appeal under
this subparagraph.''.
(c) Effective Date.--The amendments made by this section
shall apply to appeals filed on or after October 1, 2004.
(d) Expedited Review of Certain Provider Agreement
Determinations.--
(1) Termination and certain other immediate remedies.--The
Secretary shall develop and implement a process to expedite
[[Page H6065]]
proceedings under sections 1866(h) of the Social Security Act
(42 U.S.C. 1395cc(h)) in which the remedy of termination of
participation, or a remedy described in clause (i) or (iii)
of section 1819(h)(2)(B) of such Act (42 U.S.C. 1395i-
3(h)(2)(B)) which is applied on an immediate basis, has been
imposed. Under such process priority shall be provided in
cases of termination.
(2) Increased financial support.--In addition to any
amounts otherwise appropriated, to reduce by 50 percent the
average time for administrative determinations on appeals
under section 1866(h) of the Social Security Act (42 U.S.C.
1395cc(h)), there are authorized to be appropriated (in
appropriate part from the Federal Hospital Insurance Trust
Fund and the Federal Supplementary Medical Insurance Trust
Fund) to the Secretary such additional sums for fiscal year
2005 and each subsequent fiscal year as may be necessary. The
purposes for which such amounts are available include
increasing the number of administrative law judges (and their
staffs) and the appellate level staff at the Departmental
Appeals Board of the Department of Health and Human Services
and educating such judges and staffs on long-term care
issues.
(e) Process for Reinstatement of Approval of Certain Snf
Training Programs.--
(1) In general.--In the case of a termination of approval
of a nurse aide training program described in paragraph (2)
of a skilled nursing facility, the Secretary shall develop
and implement a process for the reinstatement of approval of
such program before the end of the mandatory 2 year
disapproval period if the facility and program is certified
by the Secretary, in coordination with the applicable State
survey and certification agency and after public notice, as
being in compliance with applicable requirements and as
having remedied any deficiencies in the facility or program
that resulted in noncompliance.
(2) Termination of approval described.--A termination of
approval of a training program described in this paragraph is
a mandatory 2-year disapproval provided for under section
1819(f)(2)(B)(iii) of the Social Security Act (42 U.S.C.
1395i-3(f)(2)(B)(iii)) if the only basis for the mandatory
disapproval was the assessment of a civil money penalty of
not less than $5,000.
SEC. 933. REVISIONS TO MEDICARE APPEALS PROCESS.
(a) Requiring Full and Early Presentation of Evidence.--
(1) In general.--Section 1869(b) (42 U.S.C. 1395ff(b)), as
amended by BIPA and as amended by section 932(a), is further
amended by adding at the end the following new paragraph:
``(3) Requiring full and early presentation of evidence by
providers.--A provider of services or supplier may not
introduce evidence in any appeal under this section that was
not presented at the reconsideration conducted by the
qualified independent contractor under subsection (c), unless
there is good cause which precluded the introduction of such
evidence at or before that reconsideration.''.
(2) Effective date.--The amendment made by paragraph (1)
shall take effect on October 1, 2004.
(b) Use of Patients' Medical Records.--Section
1869(c)(3)(B)(i) (42 U.S.C. 1395ff(c)(3)(B)(i)), as amended
by BIPA, is amended by inserting ``(including the medical
records of the individual involved)'' after ``clinical
experience''.
(c) Notice Requirements for Medicare Appeals.--
(1) Initial determinations and redeterminations.--Section
1869(a) (42 U.S.C. 1395ff(a)), as amended by BIPA, is amended
by adding at the end the following new paragraphs:
``(4) Requirements of notice of determinations.--With
respect to an initial determination insofar as it results in
a denial of a claim for benefits--
``(A) the written notice on the determination shall
include--
``(i) the reasons for the determination, including whether
a local medical review policy or a local coverage
determination was used;
``(ii) the procedures for obtaining additional information
concerning the determination, including the information
described in subparagraph (B); and
``(iii) notification of the right to seek a redetermination
or otherwise appeal the determination and instructions on how
to initiate such a redetermination under this section; and
``(B) the person provided such notice may obtain, upon
request, the specific provision of the policy, manual, or
regulation used in making the determination.
``(5) Requirements of notice of redeterminations.--With
respect to a redetermination insofar as it results in a
denial of a claim for benefits--
``(A) the written notice on the redetermination shall
include--
``(i) the specific reasons for the redetermination;
``(ii) as appropriate, a summary of the clinical or
scientific evidence used in making the redetermination;
``(iii) a description of the procedures for obtaining
additional information concerning the redetermination; and
``(iv) notification of the right to appeal the
redetermination and instructions on how to initiate such an
appeal under this section;
``(B) such written notice shall be provided in printed form
and written in a manner calculated to be understood by the
individual entitled to benefits under part A or enrolled
under part B, or both; and
``(C) the person provided such notice may obtain, upon
request, information on the specific provision of the policy,
manual, or regulation used in making the redetermination.''.
(2) Reconsiderations.--Section 1869(c)(3)(E) (42 U.S.C.
1395ff(c)(3)(E)), as amended by BIPA, is amended--
(A) by inserting ``be written in a manner calculated to be
understood by the individual entitled to benefits under part
A or enrolled under part B, or both, and shall include (to
the extent appropriate)'' after ``in writing, ''; and
(B) by inserting ``and a notification of the right to
appeal such determination and instructions on how to initiate
such appeal under this section'' after ``such decision,''.
(3) Appeals.--Section 1869(d) (42 U.S.C. 1395ff(d)), as
amended by BIPA, is amended--
(A) in the heading, by inserting ``; Notice'' after
``Secretary''; and
(B) by adding at the end the following new paragraph:
``(4) Notice.--Notice of the decision of an administrative
law judge shall be in writing in a manner calculated to be
understood by the individual entitled to benefits under part
A or enrolled under part B, or both, and shall include--
``(A) the specific reasons for the determination
(including, to the extent appropriate, a summary of the
clinical or scientific evidence used in making the
determination);
``(B) the procedures for obtaining additional information
concerning the decision; and
``(C) notification of the right to appeal the decision and
instructions on how to initiate such an appeal under this
section.''.
(4) Submission of record for appeal.--Section
1869(c)(3)(J)(i) (42 U.S.C. 1395ff(c)(3)(J)(i)) by striking
``prepare'' and inserting ``submit'' and by striking ``with
respect to'' and all that follows through ``and relevant
policies''.
(d) Qualified Independent Contractors.--
(1) Eligibility requirements of qualified independent
contractors.--Section 1869(c)(3) (42 U.S.C. 1395ff(c)(3)), as
amended by BIPA, is amended--
(A) in subparagraph (A), by striking ``sufficient training
and expertise in medical science and legal matters'' and
inserting ``sufficient medical, legal, and other expertise
(including knowledge of the program under this title) and
sufficient staffing''; and
(B) by adding at the end the following new subparagraph:
``(K) Independence requirements.--
``(i) In general.--Subject to clause (ii), a qualified
independent contractor shall not conduct any activities in a
case unless the entity--
``(I) is not a related party (as defined in subsection
(g)(5));
``(II) does not have a material familial, financial, or
professional relationship with such a party in relation to
such case; and
``(III) does not otherwise have a conflict of interest with
such a party.
``(ii) Exception for reasonable compensation.--Nothing in
clause (i) shall be construed to prohibit receipt by a
qualified independent contractor of compensation from the
Secretary for the conduct of activities under this section if
the compensation is provided consistent with clause (iii).
``(iii) Limitations on entity compensation.--Compensation
provided by the Secretary to a qualified independent
contractor in connection with reviews under this section
shall not be contingent on any decision rendered by the
contractor or by any reviewing professional.''.
(2) Eligibility requirements for reviewers.--Section 1869
(42 U.S.C. 1395ff), as amended by BIPA, is amended--
(A) by amending subsection (c)(3)(D) to read as follows:
``(D) Qualifications for reviewers.--The requirements of
subsection (g) shall be met (relating to qualifications of
reviewing professionals).''; and
(B) by adding at the end the following new subsection:
``(g) Qualifications of Reviewers.--
``(1) In general.--In reviewing determinations under this
section, a qualified independent contractor shall assure
that--
``(A) each individual conducting a review shall meet the
qualifications of paragraph (2);
``(B) compensation provided by the contractor to each such
reviewer is consistent with paragraph (3); and
``(C) in the case of a review by a panel described in
subsection (c)(3)(B) composed of physicians or other health
care professionals (each in this subsection referred to as a
`reviewing professional'), a reviewing professional meets the
qualifications described in paragraph (4) and, where a claim
is regarding the furnishing of treatment by a physician
(allopathic or osteopathic) or the provision of items or
services by a physician (allopathic or osteopathic), a
reviewing professional shall be a physician (allopathic or
osteopathic).
``(2) Independence.--
``(A) In general.--Subject to subparagraph (B), each
individual conducting a review in a case shall--
``(i) not be a related party (as defined in paragraph (5));
[[Page H6066]]
``(ii) not have a material familial, financial, or
professional relationship with such a party in the case under
review; and
``(iii) not otherwise have a conflict of interest with such
a party.
``(B) Exception.--Nothing in subparagraph (A) shall be
construed to--
``(i) prohibit an individual, solely on the basis of a
participation agreement with a fiscal intermediary, carrier,
or other contractor, from serving as a reviewing professional
if--
``(I) the individual is not involved in the provision of
items or services in the case under review;
``(II) the fact of such an agreement is disclosed to the
Secretary and the individual entitled to benefits under part
A or enrolled under part B, or both, (or authorized
representative) and neither party objects; and
``(III) the individual is not an employee of the
intermediary, carrier, or contractor and does not provide
services exclusively or primarily to or on behalf of such
intermediary, carrier, or contractor;
``(ii) prohibit an individual who has staff privileges at
the institution where the treatment involved takes place from
serving as a reviewer merely on the basis of having such
staff privileges if the existence of such privileges is
disclosed to the Secretary and such individual (or authorized
representative), and neither party objects; or
``(iii) prohibit receipt of compensation by a reviewing
professional from a contractor if the compensation is
provided consistent with paragraph (3).
For purposes of this paragraph, the term `participation
agreement' means an agreement relating to the provision of
health care services by the individual and does not include
the provision of services as a reviewer under this
subsection.
``(3) Limitations on reviewer compensation.--Compensation
provided by a qualified independent contractor to a reviewer
in connection with a review under this section shall not be
contingent on the decision rendered by the reviewer.
``(4) Licensure and expertise.--Each reviewing professional
shall be--
``(A) a physician (allopathic or osteopathic) who is
appropriately credentialed or licensed in one or more States
to deliver health care services and has medical expertise in
the field of practice that is appropriate for the items or
services at issue; or
``(B) a health care professional who is legally authorized
in one or more States (in accordance with State law or the
State regulatory mechanism provided by State law) to furnish
the health care items or services at issue and has medical
expertise in the field of practice that is appropriate for
such items or services.
``(5) Related party defined.--For purposes of this section,
the term `related party' means, with respect to a case under
this title involving a specific individual entitled to
benefits under part A or enrolled under part B, or both, any
of the following:
``(A) The Secretary, the medicare administrative contractor
involved, or any fiduciary, officer, director, or employee of
the Department of Health and Human Services, or of such
contractor.
``(B) The individual (or authorized representative).
``(C) The health care professional that provides the items
or services involved in the case.
``(D) The institution at which the items or services (or
treatment) involved in the case are provided.
``(E) The manufacturer of any drug or other item that is
included in the items or services involved in the case.
``(F) Any other party determined under any regulations to
have a substantial interest in the case involved.''.
(3) Reducing minimum number of qualified independent
contractors.--Section 1869(c)(4) (42 U.S.C. 1395ff(c)(4)) is
amended by striking ``not fewer than 12 qualified independent
contractors under this subsection'' and inserting ``with a
sufficient number of qualified independent contractors (but
not fewer than 4 such contractors) to conduct
reconsiderations consistent with the timeframes applicable
under this subsection''.
(4) Effective date.--The amendments made by paragraphs (1)
and (2) shall be effective as if included in the enactment of
the respective provisions of subtitle C of title V of BIPA,
(114 Stat. 2763A-534).
(5) Transition.--In applying section 1869(g) of the Social
Security Act (as added by paragraph (2)), any reference to a
medicare administrative contractor shall be deemed to include
a reference to a fiscal intermediary under section 1816 of
the Social Security Act (42 U.S.C. 1395h) and a carrier under
section 1842 of such Act (42 U.S.C. 1395u).
SEC. 934. PREPAYMENT REVIEW.
(a) In General.--Section 1874A, as added by section
911(a)(1) and as amended by sections 912(b), 921(b)(1), and
921(c)(1), is further amended by adding at the end the
following new subsection:
``(h) Conduct of Prepayment Review.--
``(1) Conduct of random prepayment review.--
``(A) In general.--A medicare administrative contractor may
conduct random prepayment review only to develop a
contractor-wide or program-wide claims payment error rates or
under such additional circumstances as may be provided under
regulations, developed in consultation with providers of
services and suppliers.
``(B) Use of standard protocols when conducting prepayment
reviews.--When a medicare administrative contractor conducts
a random prepayment review, the contractor may conduct such
review only in accordance with a standard protocol for random
prepayment audits developed by the Secretary.
``(C) Construction.--Nothing in this paragraph shall be
construed as preventing the denial of payments for claims
actually reviewed under a random prepayment review.
``(D) Random prepayment review.--For purposes of this
subsection, the term `random prepayment review' means a
demand for the production of records or documentation absent
cause with respect to a claim.
``(2) Limitations on non-random prepayment review.--
``(A) Limitations on initiation of non-random prepayment
review.--A medicare administrative contractor may not
initiate non-random prepayment review of a provider of
services or supplier based on the initial identification by
that provider of services or supplier of an improper billing
practice unless there is a likelihood of sustained or high
level of payment error (as defined in subsection (i)(3)(A)).
``(B) Termination of non-random prepayment review.--The
Secretary shall issue regulations relating to the
termination, including termination dates, of non-random
prepayment review. Such regulations may vary such a
termination date based upon the differences in the
circumstances triggering prepayment review.''.
(b) Effective Date.--
(1) In general.--Except as provided in this subsection, the
amendment made by subsection (a) shall take effect 1 year
after the date of the enactment of this Act.
(2) Deadline for promulgation of certain regulations.--The
Secretary shall first issue regulations under section
1874A(h) of the Social Security Act, as added by subsection
(a), by not later than 1 year after the date of the enactment
of this Act.
(3) Application of standard protocols for random prepayment
review.--Section 1874A(h)(1)(B) of the Social Security Act,
as added by subsection (a), shall apply to random prepayment
reviews conducted on or after such date (not later than 1
year after the date of the enactment of this Act) as the
Secretary shall specify.
(c) Application to Fiscal Intermediaries and Carriers.--The
provisions of section 1874A(h) of the Social Security Act, as
added by subsection (a), shall apply to each fiscal
intermediary under section 1816 of the Social Security Act
(42 U.S.C. 1395h) and each carrier under section 1842 of such
Act (42 U.S.C. 1395u) in the same manner as they apply to
medicare administrative contractors under such provisions.
SEC. 935. RECOVERY OF OVERPAYMENTS.
(a) In General.--Section 1893 (42 U.S.C. 1395ddd) is
amended by adding at the end the following new subsection:
``(f) Recovery of Overpayments.--
``(1) Use of repayment plans.--
``(A) In general.--If the repayment, within 30 days by a
provider of services or supplier, of an overpayment under
this title would constitute a hardship (as defined in
subparagraph (B)), subject to subparagraph (C), upon request
of the provider of services or supplier the Secretary shall
enter into a plan with the provider of services or supplier
for the repayment (through offset or otherwise) of such
overpayment over a period of at least 6 months but not longer
than 3 years (or not longer than 5 years in the case of
extreme hardship, as determined by the Secretary). Interest
shall accrue on the balance through the period of repayment.
Such plan shall meet terms and conditions determined to be
appropriate by the Secretary.
``(B) Hardship.--
``(i) In general.--For purposes of subparagraph (A), the
repayment of an overpayment (or overpayments) within 30 days
is deemed to constitute a hardship if--
``(I) in the case of a provider of services that files cost
reports, the aggregate amount of the overpayments exceeds 10
percent of the amount paid under this title to the provider
of services for the cost reporting period covered by the most
recently submitted cost report; or
``(II) in the case of another provider of services or
supplier, the aggregate amount of the overpayments exceeds 10
percent of the amount paid under this title to the provider
of services or supplier for the previous calendar year.
``(ii) Rule of application.--The Secretary shall establish
rules for the application of this subparagraph in the case of
a provider of services or supplier that was not paid under
this title during the previous year or was paid under this
title only during a portion of that year.
``(iii) Treatment of previous overpayments.--If a provider
of services or supplier has entered into a repayment plan
under subparagraph (A) with respect to a specific overpayment
amount, such payment amount under the repayment plan shall
not be taken into account under clause (i) with respect to
subsequent overpayment amounts.
``(C) Exceptions.--Subparagraph (A) shall not apply if--
``(i) the Secretary has reason to suspect that the provider
of services or supplier may file for bankruptcy or otherwise
cease to do business or discontinue participation in the
program under this title; or
``(ii) there is an indication of fraud or abuse committed
against the program.
[[Page H6067]]
``(D) Immediate collection if violation of repayment
plan.--If a provider of services or supplier fails to make a
payment in accordance with a repayment plan under this
paragraph, the Secretary may immediately seek to offset or
otherwise recover the total balance outstanding (including
applicable interest) under the repayment plan.
``(E) Relation to no fault provision.--Nothing in this
paragraph shall be construed as affecting the application of
section 1870(c) (relating to no adjustment in the cases of
certain overpayments).
``(2) Limitation on recoupment.--
``(A) In general.--In the case of a provider of services or
supplier that is determined to have received an overpayment
under this title and that seeks a reconsideration by a
qualified independent contractor on such determination under
section 1869(b)(1), the Secretary may not take any action (or
authorize any other person, including any medicare
contractor, as defined in subparagraph (C)) to recoup the
overpayment until the date the decision on the
reconsideration has been rendered. If the provisions of
section 1869(b)(1) (providing for such a reconsideration by a
qualified independent contractor) are not in effect, in
applying the previous sentence any reference to such a
reconsideration shall be treated as a reference to a
redetermination by the fiscal intermediary or carrier
involved.
``(B) Collection with interest.--Insofar as the
determination on such appeal is against the provider of
services or supplier, interest on the overpayment shall
accrue on and after the date of the original notice of
overpayment. Insofar as such determination against the
provider of services or supplier is later reversed, the
Secretary shall provide for repayment of the amount recouped
plus interest at the same rate as would apply under the
previous sentence for the period in which the amount was
recouped.
``(C) Medicare contractor defined.--For purposes of this
subsection, the term `medicare contractor' has the meaning
given such term in section 1889(g).
``(3) Limitation on use of extrapolation.--A medicare
contractor may not use extrapolation to determine overpayment
amounts to be recovered by recoupment, offset, or otherwise
unless--
``(A) there is a sustained or high level of payment error
(as defined by the Secretary by regulation); or
``(B) documented educational intervention has failed to
correct the payment error (as determined by the Secretary).
``(4) Provision of supporting documentation.--In the case
of a provider of services or supplier with respect to which
amounts were previously overpaid, a medicare contractor may
request the periodic production of records or supporting
documentation for a limited sample of submitted claims to
ensure that the previous practice is not continuing.
``(5) Consent settlement reforms.--
``(A) In general.--The Secretary may use a consent
settlement (as defined in subparagraph (D)) to settle a
projected overpayment.
``(B) Opportunity to submit additional information before
consent settlement offer.--Before offering a provider of
services or supplier a consent settlement, the Secretary
shall--
``(i) communicate to the provider of services or supplier--
``(I) that, based on a review of the medical records
requested by the Secretary, a preliminary evaluation of those
records indicates that there would be an overpayment;
``(II) the nature of the problems identified in such
evaluation; and
``(III) the steps that the provider of services or supplier
should take to address the problems; and
``(ii) provide for a 45-day period during which the
provider of services or supplier may furnish additional
information concerning the medical records for the claims
that had been reviewed.
``(C) Consent settlement offer.--The Secretary shall review
any additional information furnished by the provider of
services or supplier under subparagraph (B)(ii). Taking into
consideration such information, the Secretary shall determine
if there still appears to be an overpayment. If so, the
Secretary--
``(i) shall provide notice of such determination to the
provider of services or supplier, including an explanation of
the reason for such determination; and
``(ii) in order to resolve the overpayment, may offer the
provider of services or supplier--
``(I) the opportunity for a statistically valid random
sample; or
``(II) a consent settlement.
The opportunity provided under clause (ii)(I) does not waive
any appeal rights with respect to the alleged overpayment
involved.
``(D) Consent settlement defined.--For purposes of this
paragraph, the term `consent settlement' means an agreement
between the Secretary and a provider of services or supplier
whereby both parties agree to settle a projected overpayment
based on less than a statistically valid sample of claims and
the provider of services or supplier agrees not to appeal the
claims involved.
``(6) Notice of over-utilization of codes.--The Secretary
shall establish, in consultation with organizations
representing the classes of providers of services and
suppliers, a process under which the Secretary provides for
notice to classes of providers of services and suppliers
served by the contractor in cases in which the contractor has
identified that particular billing codes may be overutilized
by that class of providers of services or suppliers under the
programs under this title (or provisions of title XI insofar
as they relate to such programs).
``(7) Payment audits.--
``(A) Written notice for post-payment audits.--Subject to
subparagraph (C), if a medicare contractor decides to conduct
a post-payment audit of a provider of services or supplier
under this title, the contractor shall provide the provider
of services or supplier with written notice (which may be in
electronic form) of the intent to conduct such an audit.
``(B) Explanation of findings for all audits.--Subject to
subparagraph (C), if a medicare contractor audits a provider
of services or supplier under this title, the contractor
shall--
``(i) give the provider of services or supplier a full
review and explanation of the findings of the audit in a
manner that is understandable to the provider of services or
supplier and permits the development of an appropriate
corrective action plan;
``(ii) inform the provider of services or supplier of the
appeal rights under this title as well as consent settlement
options (which are at the discretion of the Secretary);
``(iii) give the provider of services or supplier an
opportunity to provide additional information to the
contractor; and
``(iv) take into account information provided, on a timely
basis, by the provider of services or supplier under clause
(iii).
``(C) Exception.--Subparagraphs (A) and (B) shall not apply
if the provision of notice or findings would compromise
pending law enforcement activities, whether civil or
criminal, or reveal findings of law enforcement-related
audits.
``(8) Standard methodology for probe sampling.--The
Secretary shall establish a standard methodology for medicare
contractors to use in selecting a sample of claims for review
in the case of an abnormal billing pattern.''.
(b) Effective Dates and Deadlines.--
(1) Use of repayment plans.--Section 1893(f)(1) of the
Social Security Act, as added by subsection (a), shall apply
to requests for repayment plans made after the date of the
enactment of this Act.
(2) Limitation on recoupment.--Section 1893(f)(2) of the
Social Security Act, as added by subsection (a), shall apply
to actions taken after the date of the enactment of this Act.
(3) Use of extrapolation.--Section 1893(f)(3) of the Social
Security Act, as added by subsection (a), shall apply to
statistically valid random samples initiated after the date
that is 1 year after the date of the enactment of this Act.
(4) Provision of supporting documentation.--Section
1893(f)(4) of the Social Security Act, as added by subsection
(a), shall take effect on the date of the enactment of this
Act.
(5) Consent settlement.--Section 1893(f)(5) of the Social
Security Act, as added by subsection (a), shall apply to
consent settlements entered into after the date of the
enactment of this Act.
(6) Notice of overutilization.--Not later than 1 year after
the date of the enactment of this Act, the Secretary shall
first establish the process for notice of overutilization of
billing codes under section 1893A(f)(6) of the Social
Security Act, as added by subsection (a).
(7) Payment audits.--Section 1893A(f)(7) of the Social
Security Act, as added by subsection (a), shall apply to
audits initiated after the date of the enactment of this Act.
(8) Standard for abnormal billing patterns.--Not later than
1 year after the date of the enactment of this Act, the
Secretary shall first establish a standard methodology for
selection of sample claims for abnormal billing patterns
under section 1893(f)(8) of the Social Security Act, as added
by subsection (a).
SEC. 936. PROVIDER ENROLLMENT PROCESS; RIGHT OF APPEAL.
(a) In General.--Section 1866 (42 U.S.C. 1395cc) is
amended--
(1) by adding at the end of the heading the following: ``;
enrollment processes''; and
(2) by adding at the end the following new subsection:
``(j) Enrollment Process for Providers of Services and
Suppliers.--
``(1) Enrollment process.--
``(A) In general.--The Secretary shall establish by
regulation a process for the enrollment of providers of
services and suppliers under this title.
``(B) Deadlines.--The Secretary shall establish by
regulation procedures under which there are deadlines for
actions on applications for enrollment (and, if applicable,
renewal of enrollment). The Secretary shall monitor the
performance of medicare administrative contractors in meeting
the deadlines established under this subparagraph.
``(C) Consultation before changing provider enrollment
forms.--The Secretary shall consult with providers of
services and suppliers before making changes in the provider
enrollment forms required of such providers and suppliers to
be eligible to submit claims for which payment may be made
under this title.
``(2) Hearing rights in cases of denial or non-renewal.--A
provider of services or supplier whose application to enroll
(or, if applicable, to renew enrollment) under this title is
denied may have a hearing and judicial review of such denial
under the procedures that apply under subsection (h)(1)(A) to
a
[[Page H6068]]
provider of services that is dissatisfied with a
determination by the Secretary.''.
(b) Effective Dates.--
(1) Enrollment process.--The Secretary shall provide for
the establishment of the enrollment process under section
1866(j)(1) of the Social Security Act, as added by subsection
(a)(2), within 6 months after the date of the enactment of
this Act.
(2) Consultation.--Section 1866(j)(1)(C) of the Social
Security Act, as added by subsection (a)(2), shall apply with
respect to changes in provider enrollment forms made on or
after January 1, 2004.
(3) Hearing rights.--Section 1866(j)(2) of the Social
Security Act, as added by subsection (a)(2), shall apply to
denials occurring on or after such date (not later than 1
year after the date of the enactment of this Act) as the
Secretary specifies.
SEC. 937. PROCESS FOR CORRECTION OF MINOR ERRORS AND
OMISSIONS WITHOUT PURSUING APPEALS PROCESS.
(a) Claims.--The Secretary shall develop, in consultation
with appropriate medicare contractors (as defined in section
1889(g) of the Social Security Act, as inserted by section
301(a)(1)) and representatives of providers of services and
suppliers, a process whereby, in the case of minor errors or
omissions (as defined by the Secretary) that are detected in
the submission of claims under the programs under title XVIII
of such Act, a provider of services or supplier is given an
opportunity to correct such an error or omission without the
need to initiate an appeal. Such process shall include the
ability to resubmit corrected claims.
(b) Permitting Use of Corrected and Supplementary Data.--
(1) In general.--Section 1886(d)(10)(D)(vi) (42 U.S.C.
1395ww(d)(10)(D)(vi)) is amended by adding after subclause
(II) at the end the following:
``Notwithstanding subclause (I), a hospital may submit, and
the Secretary may accept upon verification, data that
corrects or supplements the data described in such subclause
without regard to whether the corrected or supplementary data
relate to a cost report that has been settled.''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to fiscal years beginning with fiscal year 2004.
(3) Submittal and resubmittal of applications permitted for
fiscal year 2004.--
(A) In general.--Notwithstanding any other provision of
law, a hospital may submit (or resubmit) an application for a
change described in section 1886(d)(10)(C)(i)(II) of the
Social Security Act for fiscal year 2004 if the hospital
demonstrates on a timely basis to the satisfaction of the
Secretary that the use of corrected or supplementary data
under the amendment made by paragraph (1) would materially
affect the approval of such an application.
(B) Application of budget neutrality.--If one or more
hospital's applications are approved as a result of paragraph
(1) and subparagraph (A) for fiscal year 2004, the Secretary
shall make a proportional adjustment in the standardized
amounts determined under section 1886(d)(3) of the Social
Security Act (42 U.S.C. 1395ww(d)(3)) for fiscal year 2004 to
assure that approval of such applications does not result in
aggregate payments under section 1886(d) of such Act that are
greater or less than those that would otherwise be made if
paragraph (1) and subparagraph (A) did not apply.
SEC. 938. PRIOR DETERMINATION PROCESS FOR CERTAIN ITEMS AND
SERVICES; ADVANCE BENEFICIARY NOTICES.
(a) In General.--Section 1869 (42 U.S.C. 1395ff(b)), as
amended by sections 521 and 522 of BIPA and section
933(d)(2)(B), is further amended by adding at the end the
following new subsection:
``(h) Prior Determination Process for Certain Items and
Services.--
``(1) Establishment of process.--
``(A) In general.--With respect to a medicare
administrative contractor that has a contract under section
1874A that provides for making payments under this title with
respect to eligible items and services described in
subparagraph (C), the Secretary shall establish a prior
determination process that meets the requirements of this
subsection and that shall be applied by such contractor in
the case of eligible requesters.
``(B) Eligible requester.--For purposes of this subsection,
each of the following shall be an eligible requester:
``(i) A physician, but only with respect to eligible items
and services for which the physician may be paid directly.
``(ii) An individual entitled to benefits under this title,
but only with respect to an item or service for which the
individual receives, from the physician who may be paid
directly for the item or service, an advance beneficiary
notice under section 1879(a) that payment may not be made (or
may no longer be made) for the item or service under this
title.
``(C) Eligible items and services.--For purposes of this
subsection and subject to paragraph (2), eligible items and
services are items and services which are physicians'
services (as defined in paragraph (4)(A) of section 1848(f)
for purposes of calculating the sustainable growth rate under
such section).
``(2) Secretarial flexibility.--The Secretary shall
establish by regulation reasonable limits on the categories
of eligible items and services for which a prior
determination of coverage may be requested under this
subsection. In establishing such limits, the Secretary may
consider the dollar amount involved with respect to the item
or service, administrative costs and burdens, and other
relevant factors.
``(3) Request for prior determination.--
``(A) In general.--Subject to paragraph (2), under the
process established under this subsection an eligible
requester may submit to the contractor a request for a
determination, before the furnishing of an eligible item or
service involved as to whether the item or service is covered
under this title consistent with the applicable requirements
of section 1862(a)(1)(A) (relating to medical necessity).
``(B) Accompanying documentation.--The Secretary may
require that the request be accompanied by a description of
the item or service, supporting documentation relating to the
medical necessity for the item or service, and any other
appropriate documentation. In the case of a request submitted
by an eligible requester who is described in paragraph
(1)(B)(ii), the Secretary may require that the request also
be accompanied by a copy of the advance beneficiary notice
involved.
``(4) Response to request.--
``(A) In general.--Under such process, the contractor shall
provide the eligible requester with written notice of a
determination as to whether--
``(i) the item or service is so covered;
``(ii) the item or service is not so covered; or
``(iii) the contractor lacks sufficient information to make
a coverage determination.
If the contractor makes the determination described in clause
(iii), the contractor shall include in the notice a
description of the additional information required to make
the coverage determination.
``(B) Deadline to respond.--Such notice shall be provided
within the same time period as the time period applicable to
the contractor providing notice of initial determinations on
a claim for benefits under subsection (a)(2)(A).
``(C) Informing beneficiary in case of physician request.--
In the case of a request in which an eligible requester is
not the individual described in paragraph (1)(B)(ii), the
process shall provide that the individual to whom the item or
service is proposed to be furnished shall be informed of any
determination described in clause (ii) (relating to a
determination of non-coverage) and the right (referred to in
paragraph (6)(B)) to obtain the item or service and have a
claim submitted for the item or service.
``(5) Effect of determinations.--
``(A) Binding nature of positive determination.--If the
contractor makes the determination described in paragraph
(4)(A)(i), such determination shall be binding on the
contractor in the absence of fraud or evidence of
misrepresentation of facts presented to the contractor.
``(B) Notice and right to redetermination in case of a
denial.--
``(i) In general.--If the contractor makes the
determination described in paragraph (4)(A)(ii)--
``(I) the eligible requester has the right to a
redetermination by the contractor on the determination that
the item or service is not so covered; and
``(II) the contractor shall include in notice under
paragraph (4)(A) a brief explanation of the basis for the
determination, including on what national or local coverage
or noncoverage determination (if any) the determination is
based, and the right to such a redetermination.
``(ii) Deadline for redeterminations.--The contractor shall
complete and provide notice of such redetermination within
the same time period as the time period applicable to the
contractor providing notice of redeterminations relating to a
claim for benefits under subsection (a)(3)(C)(ii).
``(6) Limitation on further review.--
``(A) In general.--Contractor determinations described in
paragraph (4)(A)(ii) or (4)(A)(iii) (and redeterminations
made under paragraph (5)(B)), relating to pre-service claims
are not subject to further administrative appeal or judicial
review under this section or otherwise.
``(B) Decision not to seek prior determination or negative
determination does not impact right to obtain services, seek
reimbursement, or appeal rights.--Nothing in this subsection
shall be construed as affecting the right of an individual
who--
``(i) decides not to seek a prior determination under this
subsection with respect to items or services; or
``(ii) seeks such a determination and has received a
determination described in paragraph (4)(A)(ii),
from receiving (and submitting a claim for) such items
services and from obtaining administrative or judicial review
respecting such claim under the other applicable provisions
of this section. Failure to seek a prior determination under
this subsection with respect to items and services shall not
be taken into account in such administrative or judicial
review.
``(C) No prior determination after receipt of services.--
Once an individual is provided items and services, there
shall be no prior determination under this subsection with
respect to such items or services.''.
(b) Effective Date; Transition.--
(1) Effective date.--The Secretary shall establish the
prior determination process under the amendment made by
subsection (a) in such a manner as to provide for the
acceptance of requests for determinations under such process
filed not later than 18 months after the date of the
enactment of this Act.
(2) Transition.--During the period in which the amendment
made by subsection
[[Page H6069]]
(a) has become effective but contracts are not provided under
section 1874A of the Social Security Act with medicare
administrative contractors, any reference in section 1869(g)
of such Act (as added by such amendment) to such a contractor
is deemed a reference to a fiscal intermediary or carrier
with an agreement under section 1816, or contract under
section 1842, respectively, of such Act.
(3) Limitation on application to sgr.--For purposes of
applying section 1848(f)(2)(D) of the Social Security Act (42
U.S.C. 1395w-4(f)(2)(D)), the amendment made by subsection
(a) shall not be considered to be a change in law or
regulation.
(c) Provisions Relating to Advance Beneficiary Notices;
Report on Prior Determination Process.--
(1) Data collection.--The Secretary shall establish a
process for the collection of information on the instances in
which an advance beneficiary notice (as defined in paragraph
(5)) has been provided and on instances in which a
beneficiary indicates on such a notice that the beneficiary
does not intend to seek to have the item or service that is
the subject of the notice furnished.
(2) Outreach and education.--The Secretary shall establish
a program of outreach and education for beneficiaries and
providers of services and other persons on the appropriate
use of advance beneficiary notices and coverage policies
under the medicare program.
(3) GAO report report on use of advance beneficiary
notices.--Not later than 18 months after the date on which
section 1869(g) of the Social Security Act (as added by
subsection (a)) takes effect, the Comptroller General of the
United States shall submit to Congress a report on the use of
advance beneficiary notices under title XVIII of such Act.
Such report shall include information concerning the
providers of services and other persons that have provided
such notices and the response of beneficiaries to such
notices.
(4) GAO report on use of prior determination process.--Not
later than 18 months after the date on which section 1869(g)
of the Social Security Act (as added by subsection (a)) takes
effect, the Comptroller General of the United States shall
submit to Congress a report on the use of the prior
determination process under such section. Such report shall
include--
(A) information concerning the types of procedures for
which a prior determination has been sought, determinations
made under the process, and changes in receipt of services
resulting from the application of such process; and
(B) an evaluation of whether the process was useful for
physicians (and other suppliers) and beneficiaries, whether
it was timely, and whether the amount of information required
was burdensome to physicians and beneficiaries.
(5) Advance beneficiary notice defined.--In this
subsection, the term ``advance beneficiary notice'' means a
written notice provided under section 1879(a) of the Social
Security Act (42 U.S.C. 1395pp(a)) to an individual entitled
to benefits under part A or B of title XVIII of such Act
before items or services are furnished under such part in
cases where a provider of services or other person that would
furnish the item or service believes that payment will not be
made for some or all of such items or services under such
title.
Subtitle V--Miscellaneous Provisions
SEC. 941. POLICY DEVELOPMENT REGARDING EVALUATION AND
MANAGEMENT (E & M) DOCUMENTATION GUIDELINES.
(a) In General.--The Secretary may not implement any new
documentation guidelines for, or clinical examples of,
evaluation and management physician services under the title
XVIII of the Social Security Act on or after the date of the
enactment of this Act unless the Secretary--
(1) has developed the guidelines in collaboration with
practicing physicians (including both generalists and
specialists) and provided for an assessment of the proposed
guidelines by the physician community;
(2) has established a plan that contains specific goals,
including a schedule, for improving the use of such
guidelines;
(3) has conducted appropriate and representative pilot
projects under subsection (b) to test modifications to the
evaluation and management documentation guidelines;
(4) finds that the objectives described in subsection (c)
will be met in the implementation of such guidelines; and
(5) has established, and is implementing, a program to
educate physicians on the use of such guidelines and that
includes appropriate outreach.
The Secretary shall make changes to the manner in which
existing evaluation and management documentation guidelines
are implemented to reduce paperwork burdens on physicians.
(b) Pilot Projects to Test Evaluation and Management
Documentation Guidelines.--
(1) In general.--The Secretary shall conduct under this
subsection appropriate and representative pilot projects to
test new evaluation and management documentation guidelines
referred to in subsection (a).
(2) Length and consultation.--Each pilot project under this
subsection shall--
(A) be voluntary;
(B) be of sufficient length as determined by the Secretary
to allow for preparatory physician and medicare contractor
education, analysis, and use and assessment of potential
evaluation and management guidelines; and
(C) be conducted, in development and throughout the
planning and operational stages of the project, in
consultation with practicing physicians (including both
generalists and specialists).
(3) Range of pilot projects.--Of the pilot projects
conducted under this subsection--
(A) at least one shall focus on a peer review method by
physicians (not employed by a medicare contractor) which
evaluates medical record information for claims submitted by
physicians identified as statistical outliers relative to
definitions published in the Current Procedures Terminology
(CPT) code book of the American Medical Association;
(B) at least one shall focus on an alternative method to
detailed guidelines based on physician documentation of face
to face encounter time with a patient;
(C) at least one shall be conducted for services furnished
in a rural area and at least one for services furnished
outside such an area; and
(D) at least one shall be conducted in a setting where
physicians bill under physicians' services in teaching
settings and at least one shall be conducted in a setting
other than a teaching setting.
(4) Banning of targeting of pilot project participants.--
Data collected under this subsection shall not be used as the
basis for overpayment demands or post-payment audits. Such
limitation applies only to claims filed as part of the pilot
project and lasts only for the duration of the pilot project
and only as long as the provider is a participant in the
pilot project.
(5) Study of impact.--Each pilot project shall examine the
effect of the new evaluation and management documentation
guidelines on--
(A) different types of physician practices, including those
with fewer than 10 full-time-equivalent employees (including
physicians); and
(B) the costs of physician compliance, including education,
implementation, auditing, and monitoring.
(6) Periodic reports.--The Secretary shall submit to
Congress periodic reports on the pilot projects under this
subsection.
(c) Objectives for Evaluation and Management Guidelines.--
The objectives for modified evaluation and management
documentation guidelines developed by the Secretary shall be
to--
(1) identify clinically relevant documentation needed to
code accurately and assess coding levels accurately;
(2) decrease the level of non-clinically pertinent and
burdensome documentation time and content in the physician's
medical record;
(3) increase accuracy by reviewers; and
(4) educate both physicians and reviewers.
(d) Study of Simpler, Alternative Systems of Documentation
for Physician Claims.--
(1) Study.--The Secretary shall carry out a study of the
matters described in paragraph (2).
(2) Matters described.--The matters referred to in
paragraph (1) are--
(A) the development of a simpler, alternative system of
requirements for documentation accompanying claims for
evaluation and management physician services for which
payment is made under title XVIII of the Social Security Act;
and
(B) consideration of systems other than current coding and
documentation requirements for payment for such physician
services.
(3) Consultation with practicing physicians.--In designing
and carrying out the study under paragraph (1), the Secretary
shall consult with practicing physicians, including
physicians who are part of group practices and including both
generalists and specialists.
(4) Application of hipaa uniform coding requirements.--In
developing an alternative system under paragraph (2), the
Secretary shall consider requirements of administrative
simplification under part C of title XI of the Social
Security Act.
(5) Report to congress.--(A) Not later than October 1,
2005, the Secretary shall submit to Congress a report on the
results of the study conducted under paragraph (1).
(B) The Medicare Payment Advisory Commission shall conduct
an analysis of the results of the study included in the
report under subparagraph (A) and shall submit a report on
such analysis to Congress.
(e) Study on Appropriate Coding of Certain Extended Office
Visits.--The Secretary shall conduct a study of the
appropriateness of coding in cases of extended office visits
in which there is no diagnosis made. Not later than October
1, 2005, the Secretary shall submit a report to Congress on
such study and shall include recommendations on how to code
appropriately for such visits in a manner that takes into
account the amount of time the physician spent with the
patient.
(f) Definitions.--In this section--
(1) the term ``rural area'' has the meaning given that term
in section 1886(d)(2)(D) of the Social Security Act, 42
U.S.C. 1395ww(d)(2)(D); and
(2) the term ``teaching settings'' are those settings
described in section 415.150 of title 42, Code of Federal
Regulations.
SEC. 942. IMPROVEMENT IN OVERSIGHT OF TECHNOLOGY AND
COVERAGE.
(a) Council for Technology and Innovation.--Section 1868
(42 U.S.C. 1395ee), as
[[Page H6070]]
amended by section 921(a), is amended by adding at the end
the following new subsection:
``(c) Council for Technology and Innovation.--
``(1) Establishment.--The Secretary shall establish a
Council for Technology and Innovation within the Centers for
Medicare & Medicaid Services (in this section referred to as
`CMS').
``(2) Composition.--The Council shall be composed of senior
CMS staff and clinicians and shall be chaired by the
Executive Coordinator for Technology and Innovation
(appointed or designated under paragraph (4)).
``(3) Duties.--The Council shall coordinate the activities
of coverage, coding, and payment processes under this title
with respect to new technologies and procedures, including
new drug therapies, and shall coordinate the exchange of
information on new technologies between CMS and other
entities that make similar decisions.
``(4) Executive coordinator for technology and
innovation.--The Secretary shall appoint (or designate) a
noncareer appointee (as defined in section 3132(a)(7) of
title 5, United States Code) who shall serve as the Executive
Coordinator for Technology and Innovation. Such executive
coordinator shall report to the Administrator of CMS, shall
chair the Council, shall oversee the execution of its duties,
and shall serve as a single point of contact for outside
groups and entities regarding the coverage, coding, and
payment processes under this title.''.
(b) Methods for Determining Payment Basis For New Lab
Tests.--Section 1833(h) (42 U.S.C. 1395l(h)) is amended by
adding at the end the following:
``(8)(A) The Secretary shall establish by regulation
procedures for determining the basis for, and amount of,
payment under this subsection for any clinical diagnostic
laboratory test with respect to which a new or substantially
revised HCPCS code is assigned on or after January 1, 2005
(in this paragraph referred to as `new tests').
``(B) Determinations under subparagraph (A) shall be made
only after the Secretary--
``(i) makes available to the public (through an Internet
site and other appropriate mechanisms) a list that includes
any such test for which establishment of a payment amount
under this subsection is being considered for a year;
``(ii) on the same day such list is made available, causes
to have published in the Federal Register notice of a meeting
to receive comments and recommendations (and data on which
recommendations are based) from the public on the appropriate
basis under this subsection for establishing payment amounts
for the tests on such list;
``(iii) not less than 30 days after publication of such
notice convenes a meeting, that includes representatives of
officials of the Centers for Medicare & Medicaid Services
involved in determining payment amounts, to receive such
comments and recommendations (and data on which the
recommendations are based);
``(iv) taking into account the comments and recommendations
(and accompanying data) received at such meeting, develops
and makes available to the public (through an Internet site
and other appropriate mechanisms) a list of proposed
determinations with respect to the appropriate basis for
establishing a payment amount under this subsection for each
such code, together with an explanation of the reasons for
each such determination, the data on which the determinations
are based, and a request for public written comments on the
proposed determination; and
``(v) taking into account the comments received during the
public comment period, develops and makes available to the
public (through an Internet site and other appropriate
mechanisms) a list of final determinations of the payment
amounts for such tests under this subsection, together with
the rationale for each such determination, the data on which
the determinations are based, and responses to comments and
suggestions received from the public.
``(C) Under the procedures established pursuant to
subparagraph (A), the Secretary shall--
``(i) set forth the criteria for making determinations
under subparagraph (A); and
``(ii) make available to the public the data (other than
proprietary data) considered in making such determinations.
``(D) The Secretary may convene such further public
meetings to receive public comments on payment amounts for
new tests under this subsection as the Secretary deems
appropriate.
``(E) For purposes of this paragraph:
``(i) The term `HCPCS' refers to the Health Care Procedure
Coding System.
``(ii) A code shall be considered to be `substantially
revised' if there is a substantive change to the definition
of the test or procedure to which the code applies (such as a
new analyte or a new methodology for measuring an existing
analyte-specific test).''.
(c) GAO Study on Improvements in External Data Collection
for Use in the Medicare Inpatient Payment System.--
(1) Study.--The Comptroller General of the United States
shall conduct a study that analyzes which external data can
be collected in a shorter time frame by the Centers for
Medicare & Medicaid Services for use in computing payments
for inpatient hospital services. The study may include an
evaluation of the feasibility and appropriateness of using of
quarterly samples or special surveys or any other methods.
The study shall include an analysis of whether other
executive agencies, such as the Bureau of Labor Statistics in
the Department of Commerce, are best suited to collect this
information.
(2) Report.--By not later than October 1, 2004, the
Comptroller General shall submit a report to Congress on the
study under paragraph (1).
(d) Process for Adoption of ICD Codes as Data Standard.--
Section 1172(f) (42 U.S.C. 1320d-1(f)) is amended by
inserting after the first sentence the following:
``Notwithstanding the first sentence of this subsection, if
the National Committee on Vital and Health Statistics has not
made a recommendation to the Secretary, within 1 year after
the date of the enactment of this sentence, with respect to
the adoption of the International Classification of Diseases,
10th Revision, Procedure Coding System (`ICD-10-PCS') and the
International Classification of Diseases, 10th Revision,
Clinical Modification (`ICD-10-CM') as a standard under this
part, then the Secretary may adopt ICD-10-PCS and ICD-10-CM
as such a standard.''.
SEC. 943. TREATMENT OF HOSPITALS FOR CERTAIN SERVICES UNDER
MEDICARE SECONDARY PAYOR (MSP) PROVISIONS.
(a) In General.--The Secretary shall not require a hospital
(including a critical access hospital) to ask questions (or
obtain information) relating to the application of section
1862(b) of the Social Security Act (relating to medicare
secondary payor provisions) in the case of reference
laboratory services described in subsection (b), if the
Secretary does not impose such requirement in the case of
such services furnished by an independent laboratory.
(b) Reference Laboratory Services Described.--Reference
laboratory services described in this subsection are clinical
laboratory diagnostic tests (or the interpretation of such
tests, or both) furnished without a face-to-face encounter
between the individual entitled to benefits under part A or
enrolled under part B, or both, and the hospital involved and
in which the hospital submits a claim only for such test or
interpretation.
SEC. 944. EMTALA IMPROVEMENTS.
(a) Payment for EMTALA-Mandated Screening and Stabilization
Services.--
(1) In general.--Section 1862 (42 U.S.C. 1395y) is amended
by inserting after subsection (c) the following new
subsection:
``(d) For purposes of subsection (a)(1)(A), in the case of
any item or service that is required to be provided pursuant
to section 1867 to an individual who is entitled to benefits
under this title, determinations as to whether the item or
service is reasonable and necessary shall be made on the
basis of the information available to the treating physician
or practitioner (including the patient's presenting symptoms
or complaint) at the time the item or service was ordered or
furnished by the physician or practitioner (and not on the
patient's principal diagnosis). When making such
determinations with respect to such an item or service, the
Secretary shall not consider the frequency with which the
item or service was provided to the patient before or after
the time of the admission or visit.''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to items and services furnished on or after
January 1, 2004.
(b) Notification of Providers When EMTALA Investigation
Closed.--Section 1867(d) (42 U.S.C. 42 U.S.C. 1395dd(d)) is
amended by adding at the end the following new paragraph:
``(4) Notice upon closing an investigation.--The Secretary
shall establish a procedure to notify hospitals and
physicians when an investigation under this section is
closed.''.
(c) Prior Review by Peer Review Organizations in EMTALA
Cases Involving Termination of Participation.--
(1) In general.--Section 1867(d)(3) (42 U.S.C.
1395dd(d)(3)) is amended--
(A) in the first sentence, by inserting ``or in terminating
a hospital's participation under this title'' after ``in
imposing sanctions under paragraph (1)''; and
(B) by adding at the end the following new sentences:
``Except in the case in which a delay would jeopardize the
health or safety of individuals, the Secretary shall also
request such a review before making a compliance
determination as part of the process of terminating a
hospital's participation under this title for violations
related to the appropriateness of a medical screening
examination, stabilizing treatment, or an appropriate
transfer as required by this section, and shall provide a
period of 5 days for such review. The Secretary shall provide
a copy of the organization's report to the hospital or
physician consistent with confidentiality requirements
imposed on the organization under such part B.''.
(2) Effective date.--The amendments made by paragraph (1)
shall apply to terminations of participation initiated on or
after the date of the enactment of this Act.
(d) Modification of Requirment for Medical Screening
Examinations for Patients Not Requesting Emergency Department
Services.--
(1) In general.--Section 1867(a) (42 U.S.C. 1395dd(a)) is
amended--
(A) by designating all that follows ``(a) Medical Screening
Requirement.--'' as paragraph (1) with the heading ``In
general.--'';
(B) by aligning such paragraph with the paragraph added by
paragraph (3); and
[[Page H6071]]
(C) by adding at the end the following new paragraph:
``(2) Exception for certain cases.--The requirement for an
appropriate medical screening examination under paragraph (1)
shall not apply in the case of an individual who comes to the
emergency department and neither the individual, nor another
person on the individual's behalf, requests examination or
treatment for an emergency medical condition (such as a
request solely for preventive services, such as blood
pressure screening or non-emergency laboratory and diagnostic
tests).''.
(2) Effective date.--The amendments made by paragraph (1)
shall apply to terminations of participation initiated on or
after the date of the enactment of this Act.
SEC. 945. EMERGENCY MEDICAL TREATMENT AND ACTIVE LABOR ACT
(EMTALA) TECHNICAL ADVISORY GROUP.
(a) Establishment.--The Secretary shall establish a
Technical Advisory Group (in this section referred to as the
``Advisory Group'') to review issues related to the Emergency
Medical Treatment and Labor Act (EMTALA) and its
implementation. In this section, the term ``EMTALA'' refers
to the provisions of section 1867 of the Social Security Act
(42 U.S.C. 1395dd).
(b) Membership.--The Advisory Group shall be composed of 19
members, including the Administrator of the Centers for
Medicare & Medicaid Services and the Inspector General of the
Department of Health and Human Services and of which--
(1) 4 shall be representatives of hospitals, including at
least one public hospital, that have experience with the
application of EMTALA and at least 2 of which have not been
cited for EMTALA violations;
(2) 7 shall be practicing physicians drawn from the fields
of emergency medicine, cardiology or cardiothoracic surgery,
orthopedic surgery, neurosurgery, pediatrics or a pediatric
subspecialty, obstetrics-gynecology, and psychiatry, with not
more than one physician from any particular field;
(3) 2 shall represent patients;
(4) 2 shall be staff involved in EMTALA investigations from
different regional offices of the Centers for Medicare &
Medicaid Services; and
(5) 1 shall be from a State survey office involved in
EMTALA investigations and 1 shall be from a peer review
organization, both of whom shall be from areas other than the
regions represented under paragraph (4).
In selecting members described in paragraphs (1) through (3),
the Secretary shall consider qualified individuals nominated
by organizations representing providers and patients.
(c) General Responsibilities.--The Advisory Group--
(1) shall review EMTALA regulations;
(2) may provide advice and recommendations to the Secretary
with respect to those regulations and their application to
hospitals and physicians;
(3) shall solicit comments and recommendations from
hospitals, physicians, and the public regarding the
implementation of such regulations; and
(4) may disseminate information on the application of such
regulations to hospitals, physicians, and the public.
(d) Administrative Matters.--
(1) Chairperson.--The members of the Advisory Group shall
elect a member to serve as chairperson of the Advisory Group
for the life of the Advisory Group.
(2) Meetings.--The Advisory Group shall first meet at the
direction of the Secretary. The Advisory Group shall then
meet twice per year and at such other times as the Advisory
Group may provide.
(e) Termination.--The Advisory Group shall terminate 30
months after the date of its first meeting.
(f) Waiver of Administrative Limitation.--The Secretary
shall establish the Advisory Group notwithstanding any
limitation that may apply to the number of advisory
committees that may be established (within the Department of
Health and Human Services or otherwise).
SEC. 946. AUTHORIZING USE OF ARRANGEMENTS TO PROVIDE CORE
HOSPICE SERVICES IN CERTAIN CIRCUMSTANCES.
(a) In General.--Section 1861(dd)(5) (42 U.S.C.
1395x(dd)(5)) is amended by adding at the end the following:
``(D) In extraordinary, exigent, or other non-routine
circumstances, such as unanticipated periods of high patient
loads, staffing shortages due to illness or other events, or
temporary travel of a patient outside a hospice program's
service area, a hospice program may enter into arrangements
with another hospice program for the provision by that other
program of services described in paragraph (2)(A)(ii)(I). The
provisions of paragraph (2)(A)(ii)(II) shall apply with
respect to the services provided under such arrangements.
``(E) A hospice program may provide services described in
paragraph (1)(A) other than directly by the program if the
services are highly specialized services of a registered
professional nurse and are provided non-routinely and so
infrequently so that the provision of such services directly
would be impracticable and prohibitively expensive.''.
(b) Conforming Payment Provision.--Section 1814(i) (42
U.S.C. 1395f(i)) is amended by adding at the end the
following new paragraph:
``(4) In the case of hospice care provided by a hospice
program under arrangements under section 1861(dd)(5)(D) made
by another hospice program, the hospice program that made the
arrangements shall bill and be paid for the hospice care.''.
(c) Effective Date.--The amendments made by this section
shall apply to hospice care provided on or after the date of
the enactment of this Act.
SEC. 947. APPLICATION OF OSHA BLOODBORNE PATHOGENS STANDARD
TO CERTAIN HOSPITALS.
(a) In General.--Section 1866 (42 U.S.C. 1395cc) is
amended--
(1) in subsection (a)(1)--
(A) in subparagraph (R), by striking ``and'' at the end;
(B) in subparagraph (S), by striking the period at the end
and inserting ``, and''; and
(C) by inserting after subparagraph (S) the following new
subparagraph:
``(T) in the case of hospitals that are not otherwise
subject to the Occupational Safety and Health Act of 1970, to
comply with the Bloodborne Pathogens standard under section
1910.1030 of title 29 of the Code of Federal Regulations (or
as subsequently redesignated).''; and
(2) by adding at the end of subsection (b) the following
new paragraph:
``(4)(A) A hospital that fails to comply with the
requirement of subsection (a)(1)(T) (relating to the
Bloodborne Pathogens standard) is subject to a civil money
penalty in an amount described in subparagraph (B), but is
not subject to termination of an agreement under this
section.
``(B) The amount referred to in subparagraph (A) is an
amount that is similar to the amount of civil penalties that
may be imposed under section 17 of the Occupational Safety
and Health Act of 1970 for a violation of the Bloodborne
Pathogens standard referred to in subsection (a)(1)(T) by a
hospital that is subject to the provisions of such Act.
``(C) A civil money penalty under this paragraph shall be
imposed and collected in the same manner as civil money
penalties under subsection (a) of section 1128A are imposed
and collected under that section.''.
(b) Effective Date.--The amendments made by this subsection
(a) shall apply to hospitals as of July 1, 2004.
SEC. 948. BIPA-RELATED TECHNICAL AMENDMENTS AND CORRECTIONS.
(a) Technical Amendments Relating to Advisory Committee
under BIPA Section 522.--(1) Subsection (i) of section 1114
(42 U.S.C. 1314)--
(A) is transferred to section 1862 and added at the end of
such section; and
(B) is redesignated as subsection (j).
(2) Section 1862 (42 U.S.C. 1395y) is amended--
(A) in the last sentence of subsection (a), by striking
``established under section 1114(f)''; and
(B) in subsection (j), as so transferred and redesignated--
(i) by striking ``under subsection (f)''; and
(ii) by striking ``section 1862(a)(1)'' and inserting
``subsection (a)(1)''.
(b) Terminology Corrections.--(1) Section 1869(c)(3)(I)(ii)
(42 U.S.C. 1395ff(c)(3)(I)(ii)), as amended by section 521 of
BIPA, is amended--
(A) in subclause (III), by striking ``policy'' and
inserting ``determination''; and
(B) in subclause (IV), by striking ``medical review
policies'' and inserting ``coverage determinations''.
(2) Section 1852(a)(2)(C) (42 U.S.C. 1395w-22(a)(2)(C)) is
amended by striking ``policy'' and ``policy'' and inserting
``determination'' each place it appears and
``determination'', respectively.
(c) Reference Corrections.--Section 1869(f)(4) (42 U.S.C.
1395ff(f)(4)), as added by section 522 of BIPA, is amended--
(1) in subparagraph (A)(iv), by striking ``subclause (I),
(II), or (III)'' and inserting ``clause (i), (ii), or
(iii)'';
(2) in subparagraph (B), by striking ``clause (i)(IV)'' and
``clause (i)(III)'' and inserting ``subparagraph (A)(iv)''
and ``subparagraph (A)(iii)'', respectively; and
(3) in subparagraph (C), by striking ``clause (i)'',
``subclause (IV)'' and ``subparagraph (A)'' and inserting
``subparagraph (A)'', ``clause (iv)'' and ``paragraph
(1)(A)'', respectively each place it appears.
(d) Other Corrections.--Effective as if included in the
enactment of section 521(c) of BIPA, section 1154(e) (42
U.S.C. 1320c-3(e)) is amended by striking paragraph (5).
(e) Effective Date.--Except as otherwise provided, the
amendments made by this section shall be effective as if
included in the enactment of BIPA.
SEC. 949. CONFORMING AUTHORITY TO WAIVE A PROGRAM EXCLUSION.
The first sentence of section 1128(c)(3)(B) (42 U.S.C.
1320a-7(c)(3)(B)) is amended to read as follows: ``Subject to
subparagraph (G), in the case of an exclusion under
subsection (a), the minimum period of exclusion shall be not
less than five years, except that, upon the request of the
administrator of a Federal health care program (as defined in
section 1128B(f)) who determines that the exclusion would
impose a hardship on individuals entitled to benefits under
part A of title XVIII or enrolled under part B of such title,
or both, the Secretary may waive the exclusion under
subsection (a)(1), (a)(3), or (a)(4) with respect to that
program in the case of an individual or entity that is the
sole community physician or sole source of essential
specialized services in a community.''.
SEC. 950. TREATMENT OF CERTAIN DENTAL CLAIMS.
(a) In General.--Section 1862 (42 U.S.C. 1395y) is amended
by adding after subsection (g) the following new subsection:
[[Page H6072]]
``(h)(1) Subject to paragraph (2), a group health plan (as
defined in subsection (a)(1)(A)(v)) providing supplemental or
secondary coverage to individuals also entitled to services
under this title shall not require a medicare claims
determination under this title for dental benefits
specifically excluded under subsection (a)(12) as a condition
of making a claims determination for such benefits under the
group health plan.
``(2) A group health plan may require a claims
determination under this title in cases involving or
appearing to involve inpatient dental hospital services or
dental services expressly covered under this title pursuant
to actions taken by the Secretary.''.
(b) Effective Date.--The amendment made by subsection (a)
shall take effect on the date that is 60 days after the date
of the enactment of this Act.
SEC. 951. FURNISHING HOSPITALS WITH INFORMATION TO COMPUTE
DSH FORMULA.
Beginning not later than 1 year after the date of the
enactment of this Act, the Secretary shall arrange to furnish
to subsection (d) hospitals (as defined in section
1886(d)(1)(B) of the Social Security Act, 42 U.S.C.
1395ww(d)(1)(B)) the data necessary for such hospitals to
compute the number of patient days used in computing the
disproportionate patient percentage under such section for
that hospital for the current cost reporting year. Such data
shall also be furnished to other hospitals which would
qualify for additional payments under part A of title XVIII
of the Social Security Act on the basis of such data.
SEC. 952. REVISIONS TO REASSIGNMENT PROVISIONS.
(a) In General.--Section 1842(b)(6)(A) (42 U.S.C.
1395u(b)(6)(A)) is amended by striking ``or (ii) (where the
service was provided in a hospital, critical access hospital,
clinic, or other facility) to the facility in which the
service was provided if there is a contractual arrangement
between such physician or other person and such facility
under which such facility submits the bill for such
service,'' and inserting ``or (ii) where the service was
provided under a contractual arrangement between such
physician or other person and an entity (as defined by the
Secretary), to the entity if, under the contractual
arrangement, the entity submits the bill for the service and
the contractual arrangement meets such other program
integrity and other safeguards as the Secretary may determine
to be appropriate,''.
(b) Conforming Amendment.--The second sentence of section
1842(b)(6) (42 U.S.C. 1395u(b)(6)) is amended by striking
``except to an employer or facility'' and inserting ``except
to an employer, entity, or other person''.
(c) Effective Date.--The amendments made by section shall
apply to payments made on or after the date of the enactment
of this Act.
SEC. 953. OTHER PROVISIONS.
(a) GAO Reports on the Physician Compensation.--
(1) Sustainable Growth Rate and Updates.--Not later than 6
months after the date of the enactment of this Act, the
Comptroller General of the United States shall submit to
Congress a report on the appropriateness of the updates in
the conversion factor under subsection (d)(3) of section 1848
of the Social Security Act (42 U.S.C. 1395w-4), including the
appropriateness of the sustainable growth rate formula under
subsection (f) of such section for 2002 and succeeding years.
Such report shall examine the stability and predictability of
such updates and rate and alternatives for the use of such
rate in the updates.
(2) Physician compensation generally.--Not later than 12
months after the date of the enactment of this Act, the
Comptroller General shall submit to Congress a report on all
aspects of physician compensation for services furnished
under title XVIII of the Social Security Act, and how those
aspects interact and the effect on appropriate compensation
for physician services. Such report shall review alternatives
for the physician fee schedule under section 1848 of such
title (42 U.S.C. 1395w-4).
(b) Annual Publication of List of National Coverage
Determinations.--The Secretary shall provide, in an
appropriate annual publication available to the public, a
list of national coverage determinations made under title
XVIII of the Social Security Act in the previous year and
information on how to get more information with respect to
such determinations.
(c) GAO Report on Flexibility in Applying Home Health
Conditions of Participation to Patients Who Are Not Medicare
Beneficiaries.--Not later than 6 months after the date of the
enactment of this Act, the Comptroller General of the United
States shall submit to Congress a report on the implications
if there were flexibility in the application of the medicare
conditions of participation for home health agencies with
respect to groups or types of patients who are not medicare
beneficiaries. The report shall include an analysis of the
potential impact of such flexible application on clinical
operations and the recipients of such services and an
analysis of methods for monitoring the quality of care
provided to such recipients.
(d) OIG Report on Notices Relating to Use of Hospital
Lifetime Reserve Days.--Not later than 1 year after the date
of the enactment of this Act, the Inspector General of the
Department of Health and Human Services shall submit a report
to Congress on--
(1) the extent to which hospitals provide notice to
medicare beneficiaries in accordance with applicable
requirements before they use the 60 lifetime reserve days
described in section 1812(a)(1) of the Social Security Act
(42 U.S.C. 1395d(a)(1)); and
(2) the appropriateness and feasibility of hospitals
providing a notice to such beneficiaries before they
completely exhaust such lifetime reserve days.
SEC. 954. 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.
TITLE X--MEDICAID
SEC. 1001. MEDICAID DISPROPORTIONATE SHARE HOSPITAL (DSH)
PAYMENTS.
Section 1923(f)(3) (42 U.S.C. 1396r-4(f)(3)) is amended--
(1) in subparagraph (A), by striking ``subparagraph (B)''
and inserting ``subparagraphs (B) and (C)''; and
(2) by adding at the end the following new subparagraphs:
``(C) Special, Temporary Increase in aLloTments on a One-
time, Non-cumulative basis.--The DSH allotment for any
State--
``(i) for fiscal year 2004 is equal to 120 percent of the
DSH allotment for the State for fiscal year 2003 under this
paragraph, notwithstanding subparagraph (B); and
``(ii) for each succeeding fiscal year is equal to the DSH
allotment for the State for fiscal year 2004 or, in the case
of fiscal years beginning with the fiscal year specified in
subparagraph (D) for that State, the percentage change in the
consumer price index for all urban consumers (all items; U.S.
city average), for the previous fiscal year.
``(D) Fiscal year specified.--For purposes of subparagraph
(C)(ii), the fiscal year specified in this subparagraph for a
State is the first fiscal year for which the Secretary
estimates that the DSH allotment for that State will equal
(or no longer exceed) the DSH allotment for that State under
the law as in effect before the date of the enactment of this
subparagraph.''.
SEC. 1002. CLARIFICATION OF INCLUSION OF INPATIENT DRUG
PRICES CHARGED TO CERTAIN PUBLIC HOSPITALS IN
THE BEST PRICE EXEMPTIONS FOR THE MEDICAID DRUG
REBATE PROGRAM.
(a) In General.--Section 1927(c)(1)(C)(i)(I) (42 U.S.C.
1396r-8(c)(1)(C)(i)(I)) is amended by inserting before the
semicolon the following: ``(including inpatient prices
charged to hospitals described in section 340B(a)(4)(L) of
the Public Health Service Act)''.
(b) Anti-Diversion Protection.--Section 1927(c)(1)(C) (42
U.S.C. 1396r-8(c)(1)(C)) is amended by adding at the end the
following:
``(iii) Application of auditing and recordkeeping
requirements.--With respect to a covered entity described in
section 340B(a)(4)(L) of the Public Health Service Act, any
drug purchased for inpatient use shall be subject to the
auditing and recordkeeping requirements described in section
340B(a)(5)(C) of the Public Health Service Act.''.
TITLE XI--ACCESS TO AFFORDABLE PHARMACEUTICALS
Subtitle A--Access to Affordable Pharmaceuticals
SEC. 1101. 30-MONTH STAY-OF-EFFECTIVENESS PERIOD.
(a) Abbreviated New Drug Applications.--Section 505(j) of
the Federal Food,
[[Page H6073]]
Drug, and Cosmetic Act (21 U.S.C. 355(j)) is amended--
(1) in paragraph (2)--
(A) by striking subparagraph (B) and inserting the
following:
``(B) Notice of opinion that patent is invalid or will not
be infringed.--
``(i) Agreement to give notice.--An applicant that makes a
certification described in subparagraph (A)(vii)(IV) shall
include in the application a statement that the applicant
will give notice as required by this subparagraph.
``(ii) Timing of notice.--An applicant that makes a
certification described in subparagraph (A)(vii)(IV) shall
give notice as required under this subparagraph--
``(I) if the certification is in the application, not later
than 20 days after the date of the postmark on the notice
with which the Secretary informs the applicant that the
application has been filed; or
``(II) if the certification is in an amendment or
supplement to the application, at the time at which the
applicant submits the amendment or supplement, regardless of
whether the applicant has already given notice with respect
to another such certification contained in the application or
in an amendment or supplement to the application.
``(iii) Recipients of notice.--An applicant required under
this subparagraph to give notice shall give notice to--
``(I) each owner of the patent that is the subject of the
certification (or a representative of the owner designated to
receive such a notice); and
``(II) the holder of the approved application under
subsection (b) for the drug that is claimed by the patent or
a use of which is claimed by the patent (or a representative
of the holder designated to receive such a notice).
``(iv) Contents of notice.--A notice required under this
subparagraph shall--
``(I) state that an application that contains data from
bioavailability or bioequivalence studies has been submitted
under this subsection for the drug with respect to which the
certification is made to obtain approval to engage in the
commercial manufacture, use, or sale of the drug before the
expiration of the patent referred to in the certification;
and
``(II) include a detailed statement of the factual and
legal basis of the opinion of the applicant that the patent
is invalid or will not be infringed.''; and
(B) by adding at the end the following subparagraph:
``(D)(i) An applicant may not amend or supplement an
application to seek approval of a drug referring to a
different listed drug from the listed drug identified in the
application as submitted to the Secretary.
``(ii) With respect to the drug for which an application is
submitted, nothing in this subsection prohibits an applicant
from amending or supplementing the application to seek
approval of a different strength.''; and
(2) in paragraph (5)--
(A) in subparagraph (B)--
(i) by striking ``under the following'' and inserting ``by
applying the following to each certification made under
paragraph (2)(A)(vii)''; and
(ii) in clause (iii)--
(I) in the first sentence, by striking ``unless'' and all
that follows and inserting ``unless, before the expiration of
45 days after the date on which the notice described in
paragraph (2)(B) is received, an action is brought for
infringement of the patent that is the subject of the
certification and for which information was submitted to the
Secretary under subsection (b)(1) or (c)(2) before the date
on which the application (excluding an amendment or
supplement to the application), which the Secretary later
determines to be substantially complete, was submitted.'';
and
(II) in the second sentence--
(aa) by striking subclause (I) and inserting the following:
``(I) if before the expiration of such period the district
court decides that the patent is invalid or not infringed
(including any substantive determination that there is no
cause of action for patent infringement or invalidity), the
approval shall be made effective on--
``(aa) the date on which the court enters judgment
reflecting the decision; or
``(bb) the date of a settlement order or consent decree
signed and entered by the court stating that the patent that
is the subject of the certification is invalid or not
infringed;'';
(bb) by striking subclause (II) and inserting the
following:
``(II) if before the expiration of such period the district
court decides that the patent has been infringed--
``(aa) if the judgment of the district court is appealed,
the approval shall be made effective on--
``(AA) the date on which the court of appeals decides that
the patent is invalid or not infringed (including any
substantive determination that there is no cause of action
for patent infringement or invalidity); or
``(BB) the date of a settlement order or consent decree
signed and entered by the court of appeals stating that the
patent that is the subject of the certification is invalid or
not infringed; or
``(bb) if the judgment of the district court is not
appealed or is affirmed, the approval shall be made effective
on the date specified by the district court in a court order
under section 271(e)(4)(A) of title 35, United States
Code;'';
(cc) in subclause (III), by striking ``on the date of such
court decision.'' and inserting ``as provided in subclause
(I); or'';
(dd) by inserting after subclause (III) the following:
``(IV) if before the expiration of such period the court
grants a preliminary injunction prohibiting the applicant
from engaging in the commercial manufacture or sale of the
drug until the court decides the issues of patent validity
and infringement and if the court decides that such patent
has been infringed, the approval shall be made effective as
provided in subclause (II).''; and
(ee) in the matter after and below subclause (IV) (as added
by item (dd)), by striking ``Until the expiration'' and all
that follows;
(B) by redesignating subparagraphs (C) and (D) as
subparagraphs (E) and (F), respectively; and
(C) by inserting after subparagraph (B) the following:
``(C) Civil action to obtain patent certainty.--
``(i) Declaratory judgment absent infringement action.--
``(I) In general.--No action may be brought under section
2201 of title 28, United States Code, by an applicant under
paragraph (2) for a declaratory judgment with respect to a
patent which is the subject of the certification referred to
in subparagraph (B)(iii) unless the forty-five day period
referred to in such subparagraph has expired, and unless, if
the notice provided under paragraph (2)(B) relates to
noninfringement, the notice was accompanied by a document
described in subclause (II). Any such action shall be brought
in the judicial district where the defendant has its
principal place of business or a regular and established
place of business.
``(II) Right of confidential access to application.--For
purposes of subclause (I), the document described in this
subclause is a document providing a right of confidential
access to the application of the applicant under paragraph
(2) for the purpose of determining whether an action referred
to in subparagraph (B)(iii) should be brought. The document
providing the right of confidential access shall contain such
restrictions as to persons entitled to access, and on the use
and disposition of any information accessed, as would apply
had a protective order been entered for the purpose of
protecting trade secrets and other confidential business
information. Any person provided a right of confidential
access shall review the application for the sole and limited
purpose of evaluating possible infringement of the patent
that is the subject of the certification under paragraph
(2)(A)(vii)(IV) and for no other purpose, and may not
disclose information of no relevance to any issue of patent
infringement to any person other than a person provided a
right of confidential access. Further, the application may be
redacted by the applicant to remove any information of no
relevance to any issue of patent infringement.
``(ii) Counterclaim to infringement action.--
``(I) In general.--If an owner of the patent or the holder
of the approved application under subsection (b) for the drug
that is claimed by the patent or a use of which is claimed by
the patent brings a patent infringement action against the
applicant, the applicant may assert a counterclaim seeking an
order requiring the holder to correct or delete the patent
information submitted by the holder under subsection (b) or
(c) on the ground that the patent does not claim either--
``(aa) the drug for which the application was approved; or
``(bb) an approved method of using the drug.
``(II) No independent cause of action.--Subclause (I) does
not authorize the assertion of a claim described in subclause
(I) in any civil action or proceeding other than a
counterclaim described in subclause (I).
``(iii) No damages.--An applicant shall not be entitled to
damages in a civil action under subparagraph (i) or a
counterclaim under subparagraph (ii).''.
(b) Applications Generally.--Section 505 of the Federal
Food, Drug, and Cosmetic Act (21 U.S.C. 355) is amended--
(1) in subsection (b)--
(A) by striking paragraph (3) and inserting the following:
``(3) Notice of opinion that patent is invalid or will not
be infringed.--
``(A) Agreement to give notice.--An applicant that makes a
certification described in paragraph (2)(A)(iv) shall include
in the application a statement that the applicant will give
notice as required by this paragraph.
``(B) Timing of notice.--An applicant that makes a
certification described in paragraph (2)(A)(iv) shall give
notice as required under this paragraph--
``(i) if the certification is in the application, not later
than 20 days after the date of the postmark on the notice
with which the Secretary informs the applicant that the
application has been filed; or
``(ii) if the certification is in an amendment or
supplement to the application, at the time at which the
applicant submits the amendment or supplement, regardless of
whether the applicant has already given notice with respect
to another such certification contained in the application or
in an amendment or supplement to the application.
[[Page H6074]]
``(C) Recipients of notice.--An applicant required under
this paragraph to give notice shall give notice to--
``(i) each owner of the patent that is the subject of the
certification (or a representative of the owner designated to
receive such a notice); and
``(ii) the holder of the approved application under this
subsection for the drug that is claimed by the patent or a
use of which is claimed by the patent (or a representative of
the holder designated to receive such a notice).
``(D) Contents of notice.--A notice required under this
paragraph shall--
``(i) state that an application that contains data from
bioavailability or bioequivalence studies has been submitted
under this subsection for the drug with respect to which the
certification is made to obtain approval to engage in the
commercial manufacture, use, or sale of the drug before the
expiration of the patent referred to in the certification;
and
``(ii) include a detailed statement of the factual and
legal basis of the opinion of the applicant that the patent
is invalid or will not be infringed.''; and
(B)(i) by redesignating paragraph (4) as paragraph (5); and
(ii) by inserting after paragraph (3) the following
paragraph:
``(4)(A) An applicant may not amend or supplement an
application referred to in paragraph (2) to seek approval of
a drug that is a different drug than the drug identified in
the application as submitted to the Secretary.
``(B) With respect to the drug for which such an
application is submitted, nothing in this subsection or
subsection (c)(3) prohibits an applicant from amending or
supplementing the application to seek approval of a different
strength.''; and
(2) in subsection (c)(3)--
(A) in the first sentence, by striking ``under the
following'' and inserting ``by applying the following to each
certification made under subsection (b)(2)(A)(iv)'';
(B) in subparagraph (C)--
(i) in the first sentence, by striking ``unless'' and all
that follows and inserting ``unless, before the expiration of
45 days after the date on which the notice described in
subsection (b)(3) is received, an action is brought for
infringement of the patent that is the subject of the
certification and for which information was submitted to the
Secretary under paragraph (2) or subsection (b)(1) before the
date on which the application (excluding an amendment or
supplement to the application) was submitted.'';
(ii) in the second sentence--
(I) by striking ``paragraph (3)(B)'' and inserting
``subsection (b)(3)'';
(II) by striking clause (i) and inserting the following:
``(i) if before the expiration of such period the district
court decides that the patent is invalid or not infringed
(including any substantive determination that there is no
cause of action for patent infringement or invalidity), the
approval shall be made effective on--
``(I) the date on which the court enters judgment
reflecting the decision; or
``(II) the date of a settlement order or consent decree
signed and entered by the court stating that the patent that
is the subject of the certification is invalid or not
infringed;'';
(III) by striking clause (ii) and inserting the following:
``(ii) if before the expiration of such period the district
court decides that the patent has been infringed--
``(I) if the judgment of the district court is appealed,
the approval shall be made effective on--
``(aa) the date on which the court of appeals decides that
the patent is invalid or not infringed (including any
substantive determination that there is no cause of action
for patent infringement or invalidity); or
``(bb) the date of a settlement order or consent decree
signed and entered by the court of appeals stating that the
patent that is the subject of the certification is invalid or
not infringed; or
``(II) if the judgment of the district court is not
appealed or is affirmed, the approval shall be made effective
on the date specified by the district court in a court order
under section 271(e)(4)(A) of title 35, United States
Code;'';
(IV) in clause (iii), by striking ``on the date of such
court decision.'' and inserting ``as provided in clause (i);
or'';
(V) by inserting after clause (iii), the following:
``(iv) if before the expiration of such period the court
grants a preliminary injunction prohibiting the applicant
from engaging in the commercial manufacture or sale of the
drug until the court decides the issues of patent validity
and infringement and if the court decides that such patent
has been infringed, the approval shall be made effective as
provided in clause (ii).''; and
(VI) in the matter after and below clause (iv) (as added by
subclause (V)), by striking ``Until the expiration'' and all
that follows; and
(iii) in the third sentence, by striking ``paragraph
(3)(B)'' and inserting ``subsection (b)(3)'';
(C) by redesignating subparagraph (D) as subparagraph (E);
and
(D) by inserting after subparagraph (C) the following:
``(D) Civil action to obtain patent certainty.--
``(i) Declaratory judgment absent infringement action.--
``(I) In general.--No action may be brought under section
2201 of title 28, United States Code, by an applicant
referred to in subsection (b)(2) for a declaratory judgment
with respect to a patent which is the subject of the
certification referred to in subparagraph (C) unless the
forty-five day period referred to in such subparagraph has
expired, and unless, if the notice the applicant provided
under subsection (b)(3) relates to noninfringement, the
notice was accompanied by a document described in subclause
(II). Any such action shall be brought in the judicial
district where the defendant has its principal place of
business or a regular and established place of business.
``(II) Right of confidential access to application.--For
purposes of subclause (I), the document described in this
subclause is a document providing a right of confidential
access to the application of the applicant referred to in
subsection (b)(2) for the purpose of determining whether an
action referred to in subparagraph (C) should be brought. The
document providing the right of confidential access shall
contain such restrictions as to persons entitled to access,
and on the use and disposition of any information accessed,
as would apply had a protective order been entered for the
purpose of protecting trade secrets and other confidential
business information. Any person provided a right of
confidential access shall review the application for the sole
and limited purpose of evaluating possible infringement of
the patent that is the subject of the certification under
subsection (b)(2)(A)(iv) and for no other purpose, and may
not disclose information of no relevance to any issue of
patent infringement to any person other than a person
provided a right of confidential access. Further, the
application may be redacted by the applicant to remove any
information of no relevance to any issue of patent
infringement.
``(ii) Counterclaim to infringement action.--
``(I) In general.--If an owner of the patent or the holder
of the approved application under subsection (b) for the drug
that is claimed by the patent or a use of which is claimed by
the patent brings a patent infringement action against the
applicant, the applicant may assert a counterclaim seeking an
order requiring the holder to correct or delete the patent
information submitted by the holder under subsection (b) or
this subsection on the ground that the patent does not claim
either--
``(aa) the drug for which the application was approved; or
``(bb) an approved method of using the drug.
``(II) No independent cause of action.--Subclause (I) does
not authorize the assertion of a claim described in subclause
(I) in any civil action or proceeding other than a
counterclaim described in subclause (I).
``(iii) No damages.--An applicant shall not be entitled to
damages in a civil action under clause (i) or a counterclaim
under clause (ii).''.
(c) Applicability.--
(1) In general.--Except as provided in paragraphs (2) and
(3), the amendments made by subsections (a), (b), and (c)
apply to any proceeding under section 505 of the Federal
Food, Drug, and Cosmetic Act (21 U.S.C. 355) that is pending
on or after the date of enactment of this Act regardless of
the date on which the proceeding was commenced or is
commenced.
(2) Notice of opinion that patent is invalid or will not be
infringed.--The amendments made by subsections (a)(1) and
(b)(1) apply with respect to any certification under
subsection (b)(2)(A)(iv) or (j)(2)(A)(vii)(IV) of section 505
of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355)
after the date of enactment of this Act in an application
filed under subsection (b)(2) or (j) of that section or in an
amendment or supplement to an application filed under
subsection (b)(2) or (j) of that section.
(3) Effective date of approval.--The amendments made by
subsections (a)(2)(A)(ii)(I) and (b)(2)(B)(i) apply with
respect to any patent information submitted under subsection
(b)(1) or (c)(2) of section 505 of the Federal Food, Drug,
and Cosmetic Act (21 U.S.C. 355) made after the date of
enactment of this Act.
SEC. 1102. FORFEITURE OF 180-DAY EXCLUSIVITY PERIOD.
(a) In General.--Section 505(j)(5) of the Federal Food,
Drug, and Cosmetic Act (21 U.S.C. 355(j)(5)) (as amended by
section 1101) is amended--
(1) in subparagraph (B), by striking clause (iv) and
inserting the following:
``(iv) 180-day exclusivity period.--
``(I) Definitions.--In this paragraph:
``(aa) 180-day exclusivity period.--The term `180-day
exclusivity period' means the 180-day period ending on the
day before the date on which an application submitted by an
applicant other than a first applicant could become effective
under this clause.
``(bb) First applicant.--As used in this subsection, the
term `first applicant' means an applicant that, on the first
day on which a substantially complete application containing
a certification described in paragraph (2)(A)(vii)(IV) is
submitted for approval of a drug, submits a substantially
complete application containing a certification described in
paragraph (2)(A)(vii)(IV) for the drug.
[[Page H6075]]
``(cc) Substantially complete application.--As used in this
subsection, the term `substantially complete application'
means an application under this subsection that on its face
is sufficiently complete to permit a substantive review and
contains all the information required by paragraph (2)(A).
``(dd) Tentative approval.--
``(AA) In general.--The term `tentative approval' means
notification to an applicant by the Secretary that an
application under this subsection meets the requirements of
paragraph (2)(A), but cannot receive effective approval
because the application does not meet the requirements of
this subparagraph, there is a period of exclusivity for the
listed drug under subparagraph (E) or section 505A, or there
is a 7-year period of exclusivity for the listed drug under
section 527.
``(BB) Limitation.--A drug that is granted tentative
approval by the Secretary is not an approved drug and shall
not have an effective approval until the Secretary issues an
approval after any necessary additional review of the
application.
``(II) Effectiveness of application.--Subject to
subparagraph (D), if the application contains a certification
described in paragraph (2)(A)(vii)(IV) and is for a drug for
which a first applicant has submitted an application
containing such a certification, the application shall be
made effective on the date that is 180 days after the date of
the first commercial marketing of the drug (including the
commercial marketing of the listed drug) by any first
applicant.''; and
(2) by inserting after subparagraph (C) the following:
``(D) Forfeiture of 180-day exclusivity period.--
``(i) Definition of forfeiture event.--In this
subparagraph, the term `forfeiture event', with respect to an
application under this subsection, means the occurrence of
any of the following:
``(I) Failure to market.--The first applicant fails to
market the drug by the later of--
``(aa) the earlier of the date that is--
``(AA) 75 days after the date on which the approval of the
application of the first applicant is made effective under
subparagraph (B)(iii); or
``(BB) 30 months after the date of submission of the
application of the first applicant; or
``(bb) with respect to the first applicant or any other
applicant (which other applicant has received tentative
approval), the date that is 75 days after the date as of
which, as to each of the patents with respect to which the
first applicant submitted a certification qualifying the
first applicant for the 180-day exclusivity period under
subparagraph (B)(iv), at least 1 of the following has
occurred:
``(AA) In an infringement action brought against that
applicant with respect to the patent or in a declaratory
judgment action brought by that applicant with respect to the
patent, a court enters a final decision from which no appeal
(other than a petition to the Supreme Court for a writ of
certiorari) has been or can be taken that the patent is
invalid or not infringed.
``(BB) In an infringement action or a declaratory judgment
action described in subitem (AA), a court signs a settlement
order or consent decree that enters a final judgment that
includes a finding that the patent is invalid or not
infringed.
``(CC) The patent expires.
``(DD) The patent is withdrawn by the holder of the
application approved under subsection (b).
``(II) Withdrawal of application.--The first applicant
withdraws the application or the Secretary considers the
application to have been withdrawn as a result of a
determination by the Secretary that the application does not
meet the requirements for approval under paragraph (4).
``(III) Amendment of certification.--The first applicant
amends or withdraws the certification for all of the patents
with respect to which that applicant submitted a
certification qualifying the applicant for the 180-day
exclusivity period.
``(IV) Failure to obtain tentative approval.--The first
applicant fails to obtain tentative approval of the
application within 30 months after the date on which the
application is filed, unless the failure is caused by a
change in or a review of the requirements for approval of the
application imposed after the date on which the application
is filed.
``(V) Agreement with another applicant, the listed drug
application holder, or a patent owner.--The first applicant
enters into an agreement with another applicant under this
subsection for the drug, the holder of the application for
the listed drug, or an owner of the patent that is the
subject of the certification under paragraph (2)(A)(vii)(IV),
the Federal Trade Commission or the Attorney General files a
complaint, and there is a final decision of the Federal Trade
Commission or the court with regard to the complaint from
which no appeal (other than a petition to the Supreme Court
for a writ of certiorari) has been or can be taken that the
agreement has violated the antitrust laws (as defined in
section 1 of the Clayton Act (15 U.S.C. 12), except that the
term includes section 5 of the Federal Trade Commission Act
(15 U.S.C. 45) to the extent that that section applies to
unfair methods of competition).
``(VI) Expiration of all patents.--All of the patents as to
which the applicant submitted a certification qualifying it
for the 180-day exclusivity period have expired.
``(ii) Forfeiture.--The 180-day exclusivity period
described in subparagraph (B)(iv) shall be forfeited by a
first applicant if a forfeiture event occurs with respect to
that first applicant.
``(iii) Subsequent applicant.--If all first applicants
forfeit the 180-day exclusivity period under clause (ii)--
``(I) approval of any application containing a
certification described in paragraph (2)(A)(vii)(IV) shall be
made effective in accordance with subparagraph (B)(iii); and
``(II) no applicant shall be eligible for a 180-day
exclusivity period.''.
(b) Effective Date.--
(1) In general.--Except as provided in paragraph (2), the
amendment made by subsection (a) shall be effective only with
respect to an application filed under section 505(j) of the
Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355(j)) after
the date of enactment of this Act for a listed drug for which
no certification under section 505(j)(2)(A)(vii)(IV) of that
Act was made before the date of enactment of this Act.
(2) Collusive agreements.--If a forfeiture event described
in section 505(j)(5)(D)(i)(V) of that Act occurs in the case
of an applicant, the applicant shall forfeit the 180-day
period under section 505(j)(5)(B)(iv) of that Act without
regard to when the first certification under section
505(j)(2)(A)(vii)(IV) of that Act for the listed drug was
made.
(3) Decision of a court when the 180-day exclusivity period
has not been triggered.--With respect to an application filed
before, on, or after the date of enactment of this Act for a
listed drug for which a certification under section
505(j)(2)(A)(vii)(IV) of that Act was made before the date of
enactment of this Act and for which neither of the events
described in subclause (I) or (II) of section
505(j)(5)(B)(iv) of that Act (as in effect on the day before
the date of enactment of this Act) has occurred on or before
the date of enactment of this Act, the term ``decision of a
court'' as used in clause (iv) of section 505(j)(5)(B) of
that Act means a final decision of a court from which no
appeal (other than a petition to the Supreme Court for a writ
of certiorari) has been or can be taken.
SEC. 1103. BIOAVAILABILITY AND BIOEQUIVALENCE.
(a) In General.--Section 505(j)(8) of the Federal Food,
Drug, and Cosmetic Act (21 U.S.C. 355(j)(8)) is amended--
(1) by striking subparagraph (A) and inserting the
following:
``(A)(i) The term `bioavailability' means the rate and
extent to which the active ingredient or therapeutic
ingredient is absorbed from a drug and becomes available at
the site of drug action.
``(ii) For a drug that is not intended to be absorbed into
the bloodstream, the Secretary may assess bioavailability by
scientifically valid measurements intended to reflect the
rate and extent to which the active ingredient or therapeutic
ingredient becomes available at the site of drug action.'';
and
(2) by adding at the end the following:
``(C) For a drug that is not intended to be absorbed into
the bloodstream, the Secretary may establish alternative,
scientifically valid methods to show bioequivalence if the
alternative methods are expected to detect a significant
difference between the drug and the listed drug in safety and
therapeutic effect.''.
(b) Effect of Amendment.--The amendment made by subsection
(a) does not alter the standards for approval of drugs under
section 505(j) of the Federal Food, Drug, and Cosmetic Act
(21 U.S.C. 355(j)).
SEC. 1104. CONFORMING AMENDMENTS.
Section 505A of the Federal Food, Drug, and Cosmetic Act
(21 U.S.C. 355a) is amended--
(1) in subsections (b)(1)(A)(i) and (c)(1)(A)(i), by
striking ``(j)(5)(D)(ii)'' each place it appears and
inserting ``(j)(5)(F)(ii)'';
(2) in subsections (b)(1)(A)(ii) and (c)(1)(A)(ii), by
striking ``(j)(5)(D)'' each place it appears and inserting
``(j)(5)(F)''; and
(3) in subsections (e) and (l), by striking
``505(j)(5)(D)'' each place it appears and inserting
``505(j)(5)(F)''.
Subtitle B--Federal Trade Commission Review
SEC. 1111. DEFINITIONS.
In this subtitle:
(1) ANDA.--The term ``ANDA'' means an abbreviated drug
application, as defined under section 201(aa) of the Federal
Food, Drug, and Cosmetic Act.
(2) Brand name drug.--The term ``brand name drug'' means a
drug for which an application is approved under section
505(c) of the Federal Food, Drug, and Cosmetic Act, including
an application referred to in section 505(b)(2) of such Act.
(3) Brand name drug company.--The term ``brand name drug
company'' means the party that holds the approved application
referred to in paragraph (2) for a brand name drug that is a
listed drug in an ANDA, or a party that is the owner of a
patent for which information is submitted for such drug under
subsection (b) or (c) of section 505 of the Federal Food,
Drug, and Cosmetic Act.
(4) Commission.--The term ``Commission'' means the Federal
Trade Commission.
(5) Generic drug.--The term ``generic drug'' means a drug
for which an application under section 505(j) of the Federal
Food, Drug, and Cosmetic Act is approved.
(6) Generic drug applicant.--The term ``generic drug
applicant'' means a person who has filed or received approval
for an ANDA under section 505(j) of the Federal Food, Drug,
and Cosmetic Act.
[[Page H6076]]
(7) Listed drug.--The term ``listed drug'' means a brand
name drug that is listed under section 505(j)(7) of the
Federal Food, Drug, and Cosmetic Act.
SEC. 1112. NOTIFICATION OF AGREEMENTS.
(a) Agreement With Brand Name Drug Company.--
(1) Requirement.--A generic drug applicant that has
submitted an ANDA containing a certification under section
505(j)(2)(A)(vii)(IV) of the Federal Food, Drug, and Cosmetic
Act and a brand name drug company that enter into an
agreement described in paragraph (2) shall each file the
agreement in accordance with subsection (c). The agreement
shall be filed prior to the date of the first commercial
marketing of the generic drug that is the subject of the
ANDA.
(2) Subject matter of agreement.--An agreement described in
this paragraph between a generic drug applicant and a brand
name drug company is an agreement regarding--
(A) the manufacture, marketing or sale of the brand name
drug that is the listed drug in the ANDA involved;
(B) the manufacture, marketing, or sale of the generic drug
for which the ANDA was submitted; or
(C) the 180-day period referred to in section
505(j)(5)(B)(iv) of the Federal Food, Drug, and Cosmetic Act
as it applies to such ANDA or to any other ANDA based on the
same brand name drug.
(b) Agreement With Another Generic Drug Applicant.--
(1) Requirement.--A generic drug applicant that has
submitted an ANDA containing a certification under section
505(j)(2)(A)(vii)(IV) of the Federal Food, Drug, and Cosmetic
Act with respect to a listed drug and another generic drug
applicant that has submitted an ANDA containing such a
certification for the same listed drug shall each file the
agreement in accordance with subsection (c). The agreement
shall be filed prior to the date of the first commercial
marketing of either of the generic drugs for which such ANDAs
were submitted.
(2) Subject matter of agreement.--An agreement described in
this paragraph between two generic drug applicants is an
agreement regarding the 180-day period referred to in section
505(j)(5)(B)(iv) of the Federal Food, Drug, and Cosmetic Act
as it applies to the ANDAs with which the agreement is
concerned.
(c) Filing.--
(1) Agreement.--The parties that are required in subsection
(a) or (b) to file an agreement in accordance with this
subsection shall file with the Commission the text of any
such agreement, except that such parties are not required to
file an agreement that solely concerns--
(A) purchase orders for raw material supplies;
(B) equipment and facility contracts;
(C) employment or consulting contracts; or
(D) packaging and labeling contracts.
(2) Other agreements.--The parties that are required in
subsection (a) or (b) to file an agreement in accordance with
this subsection shall file with the Commission the text of
any agreements between the parties that are not described in
such subsections and are contingent upon, provide a
contingent condition for, or are otherwise related to an
agreement that is required in subsection (a) or (b) to be
filed in accordance with this subsection.
(3) Description.--In the event that any agreement required
in subsection (a) or (b) to be filed in accordance with this
subsection has not been reduced to text, each of the parties
involved shall file written descriptions of such agreement
that are sufficient to disclose all the terms and conditions
of the agreement.
SEC. 1113. FILING DEADLINES.
Any filing required under section 1112 shall be filed with
the Commission not later than 10 business days after the date
the agreements are executed.
SEC. 1114. DISCLOSURE EXEMPTION.
Any information or documentary material filed with the
Commission pursuant to this subtitle shall be exempt from
disclosure under section 552 of title 5, United States Code,
and no such information or documentary material may be made
public, except as may be relevant to any administrative or
judicial action or proceeding. Nothing in this section is
intended to prevent disclosure to either body of Congress or
to any duly authorized committee or subcommittee of the
Congress.
SEC. 1115. ENFORCEMENT.
(a) Civil Penalty.--Any brand name drug company or generic
drug applicant which fails to comply with any provision of
this subtitle shall be liable for a civil penalty of not more
than $11,000, for each day during which such entity is in
violation of this subtitle. Such penalty may be recovered in
a civil action brought by the United States, or brought by
the Commission in accordance with the procedures established
in section 16(a)(1) of the Federal Trade Commission Act (15
U.S.C. 56(a)).
(b) Compliance and Equitable Relief.--If any brand name
drug company or generic drug applicant fails to comply with
any provision of this subtitle, the United States district
court may order compliance, and may grant such other
equitable relief as the court in its discretion determines
necessary or appropriate, upon application of the Commission.
SEC. 1116. RULEMAKING.
The Commission, by rule in accordance with section 553 of
title 5, United States Code, consistent with the purposes of
this subtitle--
(1) may define the terms used in this subtitle;
(2) may exempt classes of persons or agreements from the
requirements of this subtitle; and
(3) may prescribe such other rules as may be necessary and
appropriate to carry out the purposes of this subtitle.
SEC. 1117. SAVINGS CLAUSE.
Any action taken by the Commission, or any failure of the
Commission to take action, under this subtitle shall not at
any time bar any proceeding or any action with respect to any
agreement between a brand name drug company and a generic
drug applicant, or any agreement between generic drug
applicants, under any other provision of law, nor shall any
filing under this subtitle constitute or create a presumption
of any violation of any competition laws.
SEC. 1118. EFFECTIVE DATE.
This subtitle shall--
(1) take effect 30 days after the date of enactment of this
Act; and
(2) shall apply to agreements described in section 1112
that are entered into 30 days after the date of enactment of
this Act.
Subtitle C--Importation of Prescription Drugs
SEC. 1121. IMPORTATION OF PRESCRIPTION DRUGS.
(a) In General.--Chapter VIII of the Federal Food, Drug,
and Cosmetic Act (21 U.S.C. 381 et seq.) is amended by
striking section 804 and inserting the following:
``SEC. 804. IMPORTATION OF PRESCRIPTION DRUGS.
``(a) Definitions.--In this section:
``(1) Importer.--The term `importer' means a pharmacist or
wholesaler.
``(2) Pharmacist.--The term `pharmacist' means a person
licensed by a State to practice pharmacy, including the
dispensing and selling of prescription drugs.
``(3) Prescription drug.--The term `prescription drug'
means a drug subject to section 503(b), other than--
``(A) a controlled substance (as defined in section 102 of
the Controlled Substances Act (21 U.S.C. 802));
``(B) a biological product (as defined in section 351 of
the Public Health Service Act (42 U.S.C. 262));
``(C) an infused drug (including a peritoneal dialysis
solution);
``(D) an intravenously injected drug;
``(E) a drug that is inhaled during surgery; or
``(F) a drug which is a parenteral drug, the importation of
which pursuant to subsection (b) is determined by the
Secretary to pose a threat to the public health, in which
case section 801(d)(1) shall continue to apply.
``(4) Qualifying laboratory.--The term `qualifying
laboratory' means a laboratory in the United States that has
been approved by the Secretary for the purposes of this
section.
``(5) Wholesaler.--
``(A) In general.--The term `wholesaler' means a person
licensed as a wholesaler or distributor of prescription drugs
in the United States under section 503(e)(2)(A).
``(B) Exclusion.--The term `wholesaler' does not include a
person authorized to import drugs under section 801(d)(1).
``(b) Regulations.--The Secretary shall promulgate
regulations permitting pharmacists and wholesalers to import
prescription drugs from Canada into the United States.
``(c) Limitation.--The regulations under subsection (b)
shall--
``(1) require that each prescription drug imported under
the regulations complies with section 505 (including with
respect to being safe and effective for the intended use of
the prescription drug), with sections 501 and 502, and with
all other applicable requirements of this Act;
``(2) require that an importer of a prescription drug under
the regulations comply with subsections (d)(1) and (e);
``(3) require that any prescription drug from Canada
imported by a domestic pharmacist or wholesaler under this
section be contained in packaging which the Secretary has
determined to be reasonably certain to be tamper-resistant
and not capable of counterfeiting;
``(4) require that all prescription drugs from Canada
imported by a domestic pharmacist or a wholesaler under this
section contain a statement designed to inform the end-user
of such drug that such drug has been imported from a foreign
seller other than a manufacturer;
``(5) require that only prescription drugs which have not
left the possession of the first Canadian recipient of such
prescription drugs after receipt from the manufacturer of
such prescription drugs be eligible for importation into the
United States under this section;
``(6) require, if determined appropriate by the Secretary,
that all prescription drugs imported from Canada under this
section by domestic pharmacists and wholesalers enter the
United States through ports of entry designated by the
Secretary for purposes of this section;
``(7) contain any additional provisions determined by the
Secretary to be appropriate to protect the public health; and
``(8) contain any additional provisions determined by the
Secretary to be appropriate
[[Page H6077]]
to facilitate the importation of prescription drugs that do
not jeopardize the public health.
``(d) Information and Records.--
``(1) In general.--The regulations under subsection (b)
shall require an importer of a prescription drug under
subsection (b) to submit to the Secretary the following
information and documentation:
``(A) The name and quantity of the active ingredient of the
prescription drug.
``(B) A description of the dosage form of the prescription
drug.
``(C) The date on which the prescription drug is shipped.
``(D) The quantity of the prescription drug that is
shipped.
``(E) The point of origin and destination of the
prescription drug.
``(F) The price paid and the price charged by the importer
for the prescription drug.
``(G) Documentation from the foreign seller specifying--
``(i) the original source of the prescription drug; and
``(ii) the quantity of each lot of the prescription drug
originally received by the seller from that source.
``(H) The lot or control number assigned to the
prescription drug by the manufacturer of the prescription
drug.
``(I) The name, address, telephone number, and professional
license number (if any) of the importer.
``(J)(i) Documentation demonstrating that the prescription
drug was received by the recipient from the manufacturer and
subsequently shipped by the first foreign recipient to the
importer.
``(ii) Documentation of the quantity of each lot of the
prescription drug received by the first foreign recipient
demonstrating that the quantity being imported into the
United States is not more than the quantity that was received
by the first foreign recipient.
``(iii) In the case of an initial imported shipment,
documentation demonstrating that each batch of the
prescription drug in the shipment was statistically sampled
and tested for authenticity and degradation.
``(K) Certification from the importer or manufacturer of
the prescription drug that the prescription drug--
``(i) is approved for marketing in the United States and is
not adulterated or misbranded; and
``(ii) meets all labeling requirements under this Act.
``(L) Laboratory records, including complete data derived
from all tests necessary to ensure that the prescription drug
is in compliance with established specifications and
standards.
``(M) Documentation demonstrating that the testing required
by subparagraphs (J) and (L) was conducted at a qualifying
laboratory.
``(N) Any other information that the Secretary determines
is necessary to ensure the protection of the public health.
``(2) Maintenance by the secretary.--The Secretary shall
maintain information and documentation submitted under
paragraph (1) for such period of time as the Secretary
determines to be necessary.
``(e) Testing.--The regulations under subsection (b) shall
require--
``(1) that testing described in subparagraphs (J) and (L)
of subsection (d)(1) be conducted by the importer or by the
manufacturer of the prescription drug at a qualified
laboratory;
``(2) if the tests are conducted by the importer--
``(A) that information needed to--
``(i) authenticate the prescription drug being tested; and
``(ii) confirm that the labeling of the prescription drug
complies with labeling requirements under this Act;
be supplied by the manufacturer of the prescription drug to
the pharmacist or wholesaler; and
``(B) that the information supplied under subparagraph (A)
be kept in strict confidence and used only for purposes of
testing under this section; and
``(3) may include such additional provisions as the
Secretary determines to be appropriate to provide for the
protection of trade secrets and commercial or financial
information that is privileged or confidential.
``(f) Registration of Foreign Sellers.--Any establishment
within Canada engaged in the distribution of a prescription
drug that is imported or offered for importation into the
United States shall register with the Secretary the name and
place of business of the establishment and the name of the
United States agent for the establishment.
``(g) Suspension of Importation.--The Secretary shall
require that importations of a specific prescription drug or
importations by a specific importer under subsection (b) be
immediately suspended on discovery of a pattern of
importation of that specific prescription drug or by that
specific importer of drugs that are counterfeit or in
violation of any requirement under this section, until an
investigation is completed and the Secretary determines that
the public is adequately protected from counterfeit and
violative prescription drugs being imported under subsection
(b).
``(h) Approved Labeling.--The manufacturer of a
prescription drug shall provide an importer written
authorization for the importer to use, at no cost, the
approved labeling for the prescription drug.
``(i) Charitable Contributions.--Notwithstanding any other
provision of this section, section 801(d)(1) continues to
apply to a prescription drug that is donated or otherwise
supplied at no charge by the manufacturer of the drug to a
charitable or humanitarian organization (including the United
Nations and affiliates) or to a government of a foreign
country.
``(j) Waiver Authority for Importation by Individuals.--The
Secretary may, for drugs being imported from a licensed
Canadian pharmacy, grant to individuals, by regulation or on
a case-by-case basis, a waiver of the prohibition of
importation of a prescription drug or device or class of
prescription drugs or devices, under such conditions as the
Secretary determines to be appropriate. Such conditions shall
include conditions that such drug or device be--
``(1) in the possession of an individual when the
individual enters the United States;
``(2) imported by such individual from a licensed pharmacy
for personal use by the individual, not for resale, in
quantities that do not exceed a 90-day supply, which
individual will use the drug or device (or for a family
member of such individual);
``(3) accompanied by a copy of a valid prescription;
``(4) imported from Canada, from a seller registered with
the Secretary;
``(5) a prescription drug approved by the Secretary under
chapter V that is not adulterated or misbranded;
``(6) in the form of a final finished dosage that was
manufactured in an establishment registered under section
510; and
``(7) imported under such other conditions as the Secretary
determines to be necessary to ensure public safety.
``(k) Studies; Reports.--
``(1) By the institute of medicine of the national academy
of sciences.--
``(A) Study.--
``(i) In general.--The Secretary shall request that the
Institute of Medicine of the National Academy of Sciences
conduct a study of--
``(I) importations of prescription drugs made under the
regulations under subsection (b); and
``(II) information and documentation submitted under
subsection (d).
``(ii) Requirements.--In conducting the study, the
Institute of Medicine shall--
``(I) evaluate the compliance of importers with the
regulations under subsection (b);
``(II) compare the number of shipments under the
regulations under subsection (b) during the study period that
are determined to be counterfeit, misbranded, or adulterated,
and compare that number with the number of shipments made
during the study period within the United States that are
determined to be counterfeit, misbranded, or adulterated; and
``(III) consult with the Secretary to evaluate the effect
of importations under the regulations under subsection (b) on
trade and patent rights under Federal law.
``(B) Report.--Not later than 2 years after the effective
date of the regulations under subsection (b), the Institute
of Medicine shall submit to Congress a report describing the
findings of the study under subparagraph (A).
``(2) By the comptroller general.--
``(A) Study.--The Comptroller General of the United States
shall conduct a study to determine the effect of this section
on the price of prescription drugs sold to consumers at
retail.
``(B) Report.--Not later than 18 months after the effective
date of the regulations under subsection (b), the Comptroller
General of the United States shall submit to Congress a
report describing the findings of the study under
subparagraph (A).
``(l) Construction.--Nothing in this section limits the
authority of the Secretary relating to the importation of
prescription drugs, other than with respect to section
801(d)(1) as provided in this section.
``(m) Authorization of Appropriations.--There are
authorized to be appropriated such sums as are necessary to
carry out this section.
``(n) Conditions.--This section shall become effective only
if the Secretary demonstrates to the Congress that the
implementation of this section will--
``(1) pose no additional risk to the public's health and
safety; and
``(2) result in a significant reduction in the cost of
prescription drugs to the American consumer.''.
(b) Conforming Amendments.--The Federal Food, Drug, and
Cosmetic Act is amended--
(1) in section 301(aa) (21 U.S.C. 331(aa)), by striking
``covered product in violation of section 804'' and inserting
``prescription drug in violation of section 804''; and
(2) in section 303(a)(6) (21 U.S.C. 333(a)(6), by striking
``covered product pursuant to section 804(a)'' and inserting
``prescription drug under section 804(b)''.
The SPEAKER pro tempore. After 3 hours of debate on the bill, it
shall be in order to consider the amendment printed in House Report
108-181, if offered by the gentleman from New York (Mr. Rangel) or his
designee, which shall be considered read, and shall be debatable for 1
hour, equally divided and controlled by the proponent and an opponent.
The gentleman from California (Mr. Thomas), the gentleman from New
York (Mr. Rangel), the gentleman
[[Page H6078]]
from Louisiana (Mr. Tauzin), and the gentleman from Michigan (Mr.
Dingell) each will control 45 minutes of debate on the bill.
The Chair recognizes the gentleman from California (Mr. Thomas).
Mr. THOMAS. Mr. Speaker, I yield myself such time as I may consume.
As we begin the 3 hours of debate on the primary bill and an
additional hour on the substitute, I do want to indicate that this day,
in my opinion, has been too long in coming.
I want to thank President Bush for his position during the campaign
that Medicare needed to be modernized and we were overdue for putting
prescription drugs in Medicare.
{time} 1900
I believe he has continued to be firm in his resolve that both the
House, and the Senate now for the first time, pass legislation so that
we can conference a common bill and send it to him for his signature.
I also want to thank the Speaker of the House. The gentleman from
Illinois (Mr. Hastert) was involved in these discussions prior to our
becoming the majority and, of course, prior to his becoming Speaker. If
you examine H.R. 1, you will find that the Speaker has been willing to
be the lead author. I think it is entirely proper and appropriate that
the Speaker of the House lead the House through the most fundamental
and important change in Medicare since its inception.
I especially want to thank my colleague and friend and chairman of
the Committee on Energy and Commerce, the gentleman from Louisiana (Mr.
Tauzin). In this institution, where jurisdictions are guarded with a
pretty vicious willingness to have turf wars whenever necessary to hang
on to your jurisdiction, the working relationship with the shared
jurisdiction of the Committee on Energy and Commerce and the Committee
on Ways and Means has been a very pleasant experience, and the working
relationship between the staff, of which I will have more to say a
little bit later, could not have been better.
And, frankly, the product we have before us, although the gentleman
from Louisiana (Mr. Tauzin) joined me in the initial sponsorship of
legislation, we could not have gotten it through both committees and
back together again in the Committee on Rules to present to you here
today as H.R. 1 without complete and open and very comradely behavior
between the chairman of the Committee on Energy and Commerce and this
committee, and I thank him for that.
I especially thank the gentlewoman from Connecticut (Mrs. Johnson),
who is the chairman of the Subcommittee on Health of the Committee on
Ways and Means. The members of that committee have been very, very
helpful in holding the hearings and continuing to shape this
legislation. This bill, as it rightly should be, is the best piece of
legislation that we have offered this House, notwithstanding the fact
that twice previously we have passed Medicare modernization with
prescription drugs.
And let me say that I do want to single out two members of the
Committee on Ways and Means, the gentleman from Iowa (Mr. Nussle), who
also happens to be the chairman of the Committee on the Budget, and the
gentleman from North Dakota (Mr. Pomeroy), who offered together a
bipartisan amendment which was very significant in helping us redress
the failure to provide those Americans especially in middle America but
in principally rural areas with a fair and equitable Medicare program.
I want to thank, and I do not want to go through every staff member,
but I do want to thank the chief of our Subcommittee on Health staff
John McManus for the enormous number of hours he and the staff have put
in. You cannot produce as complex and difficult a piece of legislation
as you have in front of you without the dedicated staff. And I mean not
just on the committees, but the Congressional Budget Office, and I will
mention from Leg Counsel Ed Grossman, who is an institutional glue. He
is the one who spends the hours to make sure that the language makes
sense in the legislative language that we have before us. He is
absolutely indispensable to the functioning of this institution, and I
want to personally thank him once again for the hours of commitment
that he has put in to produce this piece of legislation.
There are organizations and associations who have very strong
feelings about the direction of Medicare and the changes that might be
made, and I want to thank all of them for their openness and
willingness to present comments upon which we reacted. Most recently, I
think one of the more prominent organizations, formerly known as the
American Association of Retired Persons, now AARP, and I am indebted to
my colleague, the gentlewoman from California (Mrs. Capps), for
circulating the letter from AARP, because I think it is very
instructive. It provides us with an example of how these organizations
point with pride and view with alarm some of the changes that are being
made.
For example, the opening paragraph in the letter addressed to me
says, and I quote, ``AARP is encouraged by the advancement in the House
of legislation to add prescription drug coverage to Medicare. Relief
from the high cost of drugs is long overdue. Our members and all older
Americans and their families expect and need legislation this year. We
appreciate your efforts and leadership toward this end.''
But they go on to say in the letter, in terms of a number of
additional points, that they think certain areas need to be
strengthened and perhaps some changes need to be made. For example,
under low-income protections, they say, ``We are encouraged by the
bill's inclusion of all Medicare beneficiaries, including dual
eligibles.'' We spend $43 billion over the next decade picking up these
low-income seniors. We believe they should be classified as seniors
first in the Federal Medicare program and not low-income first, as they
currently are today.
But they go on to say that they are concerned because eligibility is
limited by a restrictive assets test. And we took that letter to heart
and we have examined that provision, notwithstanding the fact that the
original bill doubled the assets provision under the SSI, Social
Security provisions for low-income eligibility. The bill had doubled
it. We examined it, we determined that perhaps we should go that extra
mile. Under the bill before you today we have tripled it. We have
tripled the SSI standards in terms of low-income protections. These are
the kinds of exchanges that improved this legislation as we move
forward.
And let me say lastly that I am very pleased that the Senate, I
believe, will pass legislation and join the House finally in conference
to craft a piece of legislation that will become law. Mr. Speaker, I
understand the rules of the House in terms of the very narrow line we
must tread, and I am not allowed to mention a Senator, but just let me
say that a senior Senator, who has been a leader in health care debate
for a number of years, frankly needs to be commended, because without
his courageous step forward I do not believe the Senate would have
moved as quickly or as rapidly as they have to a conclusion on their
legislation.
I have enjoyed my conversations that I have had with him over the
years, obviously more frequently as I have moved into a position to
help effect adding prescription drugs to Medicare. Although we have
profound differences in terms of our view oftentimes of the role of the
Federal Government and assistance, we have never ever left the focus of
policy, and although we may differ, the differences have always been
over policy.
Never, ever has he mentioned Jim Jones, Kool-aid, mass suicide.
Never, ever in our discussions has he mentioned the Holocaust. Never,
ever has he mentioned blacks or slavery. He has always carried on the
discussion on the basis of substance and the differences that we have
on substance and the fact that in this society, in this civil society,
the debate ought to be over choices of a legislative nature rather than
trying to create an atmosphere of fear. For that I am grateful for his
friendship and the fact that we will meet in conference and, finally,
seniors, who are the last bastion of paying the price of retail for
drugs, that will no longer be the case. And for that, all of us will be
grateful. Policy will have triumphed over politics.
Mr. Speaker, I reserve the balance of my time.
[[Page H6079]]
Announcement by the Speaker Pro Tempore
The SPEAKER pro tempore (Mr. LaHood). Although it is permissible to
refer to a Senator as the sponsor of legislation, other personal
references are not permitted.
Mr. RANGEL. Mr. Speaker, I yield such time as he may consume to the
distinguished gentleman from Rhode Island (Mr. Kennedy).
(Mr. KENNEDY of Rhode Island) asked and was given permission to
revise and extend his remarks.)
Mr. KENNEDY of Rhode Island. Mr. Speaker, I would just like to state
for the record that the Senator from Massachusetts referred to is my
father, and I rise in opposition to H.R. 1.
Mr. Speaker, I rise in opposition to the Republican prescription drug
bill.
Our seniors know that Democrats have worked to provide them with
universal, affordable, and reliable drug coverage.
And they know that THIS bill is just another Republican attempt to
dismantle Medicare.
This bill won't help seniors . . . in fact, there is no guaranteed
backstop to insure that there will be drug coverage in their area.
Indeed, seniors may end up without ANY drug coverage . . . or forced
into an HMO that they do not want to be in.
And the problems with the bill today will only increase in 2010, when
premium support and competitive bidding kicks in.
Republicans divide this issue between helping our Nation's elderly
now or helping our young in the future, but we can help both.
James, a Boy Scout from Lincoln, Rhode Island, wrote to me because he
is worried about his two grandmothers who cannot afford their
medications.
I hope he doesn't grow up only to realize that we passed a bill in
Congress that actually made it worse for his loved ones.
We should not disappoint James, his family, or the forty million
Medicare beneficiaries in this Nation.
Vote ``no'' on H.R. 1.
Mr. RANGEL. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I think this is one of those days that we will never
forget as legislators. This is one of those days that I think as
legislators we will never forget. And even though we have some people
who have not studied the bill that are so anxious to believe that they
are going to get prescription drug relief, I think at the end of the
day that they might be able to see that this is the first step that has
been specifically designed not to reform the Medicare system as we know
it but to dissolve it.
There are some people who are honest enough, at least outside of this
hallway, to admit that that is exactly what they would want to do, to
dissolve the Medicare. Many of the people on the other side of the
aisle, and perhaps a handful on our side, believe that health care
should not be an entitlement, Social Security should not be an
entitlement; that the free marketplace should be able to work its will;
that government should not be involved in providing these type of
services.
Ultimately, I do believe that when the bill is studied and they see
that the transfer of the ability to determine how much prescription
drugs will cost, which prescriptions would be filled, what is the
recipient entitled to, when does the bill lock into place, and at the
year 2010 what do they do with the voucher if we do not have Medicare,
all of these things, I think, will be answered at some time, but I
really hope that they are answered today.
We have many people that have worked hard on this bill; certainly the
gentleman from Michigan (Mr. Dingell) has been a champion for health
care for decades; the gentleman from California (Mr. Stark), who will
be handling the remainder of this bill, the gentleman from New Jersey
(Mr. Pallone), the gentleman from Ohio (Mr. Brown), and so many others.
But as I have said so many times publicly, at some point in time people
will be asking, when they were moving to dissolve Medicare, where were
you and what were you doing?
I think, as so many votes in the past, that people will remember this
vote. And those of us who oppose this piece of legislation will be
giving our colleagues an opportunity on voting for legislation that
provides all of the coverage that the letter requested from AARP, and
while parts of the letter was read, I think it is safe to say that the
objections that were raised to the bill or the questions that they had
hoped that would be changed, that that is handled in the substitute.
Mr. Speaker, I ask unanimous consent to allocate the remainder of my
time to the gentleman from California (Mr. Stark), with the
understanding that he be permitted to allocate the rest of the
remaining time.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from New York?
There was no objection.
Mr. THOMAS. Mr. Speaker, I yield 2 minutes to the gentleman from
Florida (Mr. Foley), a member of the Committee on Ways and Means.
Mr. FOLEY. Mr. Speaker, I thank the chairman for yielding me this
time, and to both chairmen who have brought this bill to the floor, I
congratulate them for this landmark legislation.
During the rule debate, it was a little depressing to me to hear so
many people refer to the fact that our seniors would not be able to
figure these programs out. These people we are talking about survived
the Depression, they fought in World War II and Korea, they taught us
how to read and write, they taught us how to ride our bikes and drive
our cars. They are our parents. They are smart enough to figure this
out.
I come from a district in Florida, the fifth largest population of
Medicare recipients in the Nation, the fifth largest Medicare
recipients in the Nation. When I go to town hall meetings, they do not
ask for anything free. They want a break. They want a discount. They
want an opportunity to shop. They want freedom in the marketplace. But
they want security to know they will not go broke. This bill provides
that.
The bill provides for a discount card that I helped author, along
with Senator Hagel, which provides immediate access to discount
pharmaceutical prices. Real reforms in Medicare allowing generics,
something I have heard about on this floor repeatedly from the other
side of the aisle. We have to get generics to the market place sooner,
faster, quicker, cheaper. That is in this bill.
This bill provides for increased rural funding for hospitals, which
is an incredibly important thing for people in my community and rural
communities like Glades, Okeechobee, Hendry, and Highlands County.
These are Medicare reforms that will save billions of dollars.
{time} 1915
Yes, this is an historic night, not one to be celebrating fear and
animosity or negative pessimism about our seniors, but rejoicing in the
fact that we are helping them provide for themselves and their
families.
Yes, there is a phenomenal opportunity tonight to pass a bill that
will help seniors in my community. And the instructions they gave me
when I first ran for office and have continued to give me is do not
make it free, do not make it cheap, do not make it for political
purposes, make it so it works. This bill works, and I applaud the
leadership for giving us a chance to make history tonight on the floor
of the House.
Mr. STARK. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, it is difficult to know where to begin to warn the
seniors in this country about this sham of a bill and the beginning of
the destruction of Medicare, as the Republicans have wanted to do for a
number of years. There is no question that this is a major move toward
privatizing Medicare. By the calculations that we have from the last
feeble attempt to do this, of course Health and Human Services refuses
to give us the most recent actuarial computations, but using the last
ones, the Medicare premium for B in this drug benefit would rise to
$142 a month if the premium could hold at $35.
By 2010, all Medicare will be privatized and immediately there will
be a means test, the first time ever, an attempt to turn a government
program into a welfare program, and the interesting thing is that every
senior's income data will be turned over to any insurance company in
the United States that requests it. So seniors, so much for their
privacy. Every one of those people that calls on the phone to sell you
some hokey insurance is going to have complete data on your income
courtesy of the Republicans.
Mr. Speaker, the sad part even further is that the Republicans would
like
[[Page H6080]]
to turn this over to private companies to operate it, and it is very
interesting that one of the largest and best known private companies,
Medco, a subsidiary of Merck was just indicted, or as they say,
essentially indicted, by the U.S. Attorney in Philadelphia for a series
of crimes committed on our Federal employees' health insurance
benefits. This company that the Republicans would turn the management
of this drug benefit over to was indicted for canceling, deleting and
destroying patients mail order prescriptions to avoid penalties for
late filing and mailing; shortchanging patients on the number of pills
paid for; making false statements to the insurance plan they were
contracted with about compliance with mailing timelines; calling and
inducing physicians to authorize switching to higher cost medications
while representing that this would save money for the insurance
company, which was untrue; fabricating records of calls by pharmacists
to physicians, and the list goes on.
This is the type of company who supports the Republicans, and they in
turn are paying back that favor by offering Medco and Merck and their
ilk the opportunity to provide a so-called benefit to seniors. I say
so-called benefit because the next cruel hoax in this bill is there is
no benefit defined in the bill. Nowhere in the bill does it define a
premium, nowhere in the bill does it define a copay, and nowhere in the
bill does it define a benefit. Now, we can all do some math and the CBO
actuaries tell us that the actuarial value of a suggested benefit might
be $1,360. It is important to add that our actuarial benefit for our
health employees' benefit plan is probably closer to $3,000, but there
is nothing that states in this law that the U.S. Government shall
create, provide, or require a benefit of any type. In other words, if
the insurance companies cannot be induced or bribed into offering a
benefit, there will not be any. This is a nothing bill. It does not
provide a benefit.
Now, I guess perhaps Members may not want to just take my word for
it, so I think it is important to note what many others might say about
the bill.
Mr. Speaker, the Arizona Daily Star says that ``the Democratic bill
is better in every respect,'' and that the House drug bill is ``awful''
and ``repulsive.''
The Chicago Tribune says the Medicare debate ``has more to do with
campaign 2004 than providing a prescription drug benefit.''
The Long Island Newsday said that ``the proposals racing through the
House are a mess. Unless they improve dramatically en route to passage,
doing nothing would be better than enacting such flawed laws.''
The Evansville Courier & Press says the ``ridiculously complex
Medicare reform now being considered by Congress may be one of the more
irresponsible measures in the long history of cradle-to-grave
legislation.''
The Akron Beacon Journal says that while the Medicare reform bills
would address the lack of drug coverage in Medicare, beneficiaries
might be ``no better off with the benefit than they are at present''
because ``on the key issues of affordability, the structure of
premiums, deductibles and copayments, both versions follow an elaborate
path to disappointment.'' The list goes on.
In North Carolina, the Raleigh News Observer says the bill's actual
benefit does not begin to outweigh the drawbacks of its so-called
reforms.
The Roanoke Times and World News says even if the drug bill passes,
seniors still will have to fear the possibility they will face crushing
drug bills.
In Kansas, the Windfield Courier says the doughnut hole ``hurts many
seniors when they need the help the most.'' ``The majority Republicans
are at risk of passing a Medicare bill that looks, walks and talks like
a political campaign creature.''
Washington State, the Seattle Post-Intelligencer says what Congress
finally sends to the White House will surely be a disappointment.
The Oregonian says it is difficult to see the congressional proposals
for Medicare drug coverage as much more than a big letdown. They are
thin in coverage and convoluted in delivery.
Mr. Speaker, I think we can sum this all up, people will say this is
drug coverage for old folks. The truth is this bill is nothing but
political coverage for the Republicans.
Mr. Speaker, I reserve the balance of my time.
Mr. THOMAS. Mr. Speaker, I yield myself 15 seconds.
Mr. Speaker, Members will find periodically during this 3-hour debate
that we will take a very short segment of time to make sure that when
an outlandish, outrageous, untrue statement has been made, we will
correct the record immediately.
Mr. Speaker, I yield 1 minute to the gentlewoman from Connecticut
(Mrs. Johnson), the chairman of the Subcommittee on Health for the
Committee on Ways and Means.
Mrs. JOHNSON of Connecticut. Mr. Speaker, this bill does not allow
the IRS to share your income information with insurance companies. The
bill very clearly protects the confidentiality of your information, and
there are criminal and civil penalties for violating those provisions.
Violators can go to jail.
It is true that for 5 percent of the seniors, they will have a higher
threshold for catastrophic coverage. I personally do not believe that
someone with a $200,000 income living in a gated community should have
exactly the same subsidy as someone struggling along on $25,000 or
$30,000 of income. I think that is a strength of this bill. But if
someone does not want the government to tell you what your catastrophic
threshold is, you can opt out and just take the highest threshold. That
is your right. But only 5 percent will fall above the threshold, and we
think that is progressive. We think we need to target this benefit at
those who need it the most, and that is what we do.
Mr. THOMAS. Mr. Speaker, I yield 2 minutes to the gentleman from
Illinois (Mr. Crane), chairman of the Subcommittee on Trade, a long
time member of the Committee on Ways and Means.
(Mr. CRANE asked and was given permission to revise and extend his
remarks.)
Mr. CRANE. Mr. Speaker, I rise in support of H.R. 1, the Medicare
Prescription Drug and Modernization Act of 2003. As a member of the
Committee on Ways and Means' Subcommittee on Health, I can say with
confidence that this bill is a fair and balanced approach towards
providing millions of America's seniors with prescription drug
coverage.
Congress is long overdo in helping our seniors with the skyrocketing
costs of their prescription medication. Seniors are struggling and we
need to help them. But we cannot ignore that the current program
without an expensive new drug benefit is not financially stable. The
Medicare program is already struggling to provide a finite number of
health services to nearly 41 million elderly and disabled. It is
imperative that this House takes action before the retirement of the
baby boom generation, which will add another 36 million beneficiaries
to the Medicare roll. Simply adding a new drug benefit is not the
answer.
I support H.R. 1 because it includes a number of reforms that will
ensure the long-term fiscal integrity of Medicare through
modernization. This legislation gives seniors the same range of private
health insurance plans available to Members of Congress and other
Federal employees. If seniors do not want to enroll in a private plan,
they have the option of staying in traditional fee-for-service.
The time has come for Congress to work together to move past
political rhetoric and provide prescription drug coverage for seniors.
More importantly, it is time to institute reforms to ensure that future
generations will have the security of knowing that Medicare will be
there when they retire. I urge my colleagues on both sides of the aisle
to support H.R. 1.
Mr. STARK. Mr. Speaker, I yield 3 minutes to the gentleman from
California (Mr. Matsui), a member of the Committee on Ways and Means.
Mr. MATSUI. Mr. Speaker, I thank the gentleman for yielding me this
time.
I have to first of all say that I am extremely disappointed that my
colleagues on the other side of the aisle have put this bill before us.
It is a shame because if they would have thought through the matter
better and instead of bringing up those tax cuts, particularly the
dividend tax cut and
[[Page H6081]]
the capital gains tax cut, we could have gotten a bill on the floor
that all Americans could be proud of, and every senior citizen in this
country would not only be proud of, but would have an adequate benefit.
I think this bill is a sham and I think instead of covering senior
citizens, what we are doing is giving my Republican colleagues cover,
political cover that eventually the senior citizens will lift and begin
to understand what this bill is really all about. I guarantee Members
by the fall of this year, senior citizens in America will understand
this bill and they will be very, very unhappy with a vote in favor of
this legislation.
When we think about it for a minute, this bill does not do much at
all. If a senior citizen has $5,000 worth of prescription drug coverage
in any given year, the senior citizen will have to pay $4,000
immediately, $4,000 of the first $5,000 of coverage before they can
even get $1 of Federal government benefit. They have to have $670 that
they have to pay out in the form of monthly premiums, in the form of
copayments.
{time} 1930
And so this bill is not a good bill for senior citizens.
In addition to that, this bill will ultimately in the next 5 years
begin the erosion of Medicare as we know it. Newt Gingrich had said
when he became Speaker of the House a few years ago that he wanted to
see Medicare wither on the vine. We had the gentleman from California
(Mr. Thomas) just the other day say on national television, ``Those who
say that the bill would end Medicare as we know it, our answer is, `We
certainly hope so.' '' Because what they really want to do is privatize
Medicare, make it so that insurance companies could increase premiums
to whatever they want to do and only insure the healthy senior citizen
so that the chronically ill will ultimately wither on the vine.
This system that is being put forward today is one that will in fact
do major damage to the Medicare system in America. Why did we have
Medicare in 1964 in the first place? Because we knew senior citizens
could not get coverage because seniors by their very nature are the
ones that get ill and the ones that ultimately go into very, very
difficult physical situations. And so ultimately what we are going to
have is going back to 1964 with this legislation. That is their intent,
because they want to see Medicare wither on the vine.
This bill is a bad bill and we need to vote ``no'' on it so the
American public understands exactly what my colleagues on the other
side of the aisle are attempting to do.
Mr. THOMAS. Mr. Speaker, I yield myself such time as I may consume.
This is the first mention of the quote that I made, and it is not
surprising that the quote is certainly truncated. Perhaps a journalism
spot on The New York Times might be available to some of my colleagues
given their ability to take reality and distort it. Here is my quote:
``Some of our friends on the other side of the aisle are saying that
if this bill becomes law, it will be the end of Medicare as we know it.
Our answer to that is, We certainly hope so. Why should seniors be the
last group that pays retail prices for drugs?'' We have not heard that
from the other side.
``Old-fashioned Medicare isn't very good. Why should the insurance
for seniors be called MediGap? I think that indicates just how good the
insurance is.'' We have not heard that from the other side.
But what I did say was, you will hear scare tactics. But seniors with
extremely high drug costs when this becomes law will save more than 60
percent of their current costs if they spend $10,000 a year on
prescription drugs today. That is real change. That is real progress,
making Medicare a real day-to-day benefit. I would say to my
colleagues, if you really think that current Medicare should not end,
why in the world did you put up such a fit to have a substitute so that
if we accept your bill, current Medicare as we know it will end as
well? Half quotes are not going to get it done. Try the full quote,
because if you do, you will vote ``yes'' on this bill.
Mr. Speaker, it is my pleasure to yield to the gentleman from
Pennsylvania (Mr. Gerlach) to enter into a colloquy.
Mr. GERLACH. Mr. Speaker, I thank the gentleman from California for
his dedication to adding a prescription drug benefit to Medicare.
Members of the Pennsylvania delegation have some concerns as to whether
State pharmaceutical assistance programs like PACE and PACENET in
Pennsylvania will be able to fully coordinate their programs with
Medicare drug plans to provide a seamless transition for beneficiaries
and States that already have prescription drug plans.
Mr. THOMAS. I will tell the gentleman from Pennsylvania that we have
a generous amount, and we believe it will be appropriate; but certainly
as we get to conference, our intent is to provide a seamless transition
for beneficiaries and States and that will be done.
Mr. GERLACH. I thank the gentleman.
Mr. THOMAS. Mr. Speaker, it is my pleasure to yield 2 minutes to the
gentleman from Pennsylvania (Mr. English), a member of the Committee on
Ways and Means.
Mr. ENGLISH. Mr. Speaker, I rise in strong support of the bill before
the House today. This bill is the most historic and significant
addition to Medicare in the program's history. This Medicare bill
offers enormous benefits for all of Pennsylvania's seniors while saving
the Commonwealth hundreds of millions of dollars. The Medicare
Prescription Drug and Modernization Act provides all seniors with a
thorough, flexible, and voluntary prescription drug plan while at the
same time augmenting Pennsylvania's PACE plan. Importantly, for the
nearly 2 million seniors in Pennsylvania, this bill would allow PACE to
wrap around the Federal benefit which would largely supplant and build
on PACE's current benefits. And to ensure that Pennsylvania's seniors
get maximum drug coverage, this Medicare bill would allow PACE to pay
for beneficiaries' copays under Medicare while at the same time
counting those contributions toward out-of-pocket expenditures to more
rapidly trigger catastrophic coverage.
Our seniors have waited too long to receive the benefits that they
deserve. This flexible, voluntary, and affordable plan would provide
seniors with dependable benefits. This is a huge benefit for seniors in
the roughly 10 States that have a significant State plan already in
place.
Mr. Speaker, this bill also provides real help to America's rural
health providers to allow them to deliver the highest quality care to
seniors and meet the demanding fiscal challenges that they currently
face. In many rural areas like my own district of western Pennsylvania,
inequities in Medicare's wage reimbursements and payments for hospitals
often drive workers, especially skilled nurses, to look for jobs in
higher-paying metropolitan hospitals and contribute to staffing
shortages in many local communities.
Several provisions in this bill mirror legislation I introduced
earlier this year to help alleviate those high costs by increasing
Medicare's salary reimbursements to our hospitals. These two provisions
would pump $13.3 billion into the struggling rural health systems, and
I am pleased to note that hospitals in my district alone would receive
approximately $65 million as part of this fix. I ask for support for
the bill.
Mr. STARK. Mr. Speaker, I am pleased to yield 3 minutes to the
gentleman from Michigan (Mr. Levin).
(Mr. LEVIN asked and was given permission to revise and extend his
remarks.)
Mr. LEVIN. Mr. Speaker, the Republican bill contains a ticking time
bomb, a ticking time bomb of Medicare privatization set to go off in
2010. Under this bill, starting in 2010, seniors, in essence, would
receive a voucher instead of Medicare's guaranteed benefits, instead of
open access to doctors and hospitals and predictable costs.
Seniors who cannot afford to pay more than they do right now would
have to leave Medicare and join HMOs. This so-called benefit for
prescription drugs in the Republican bill serves as a decoy, but it is
not a very good one.
The Republican drug plan is insurance without assurance. No assured
premium, no assured deductible, no assured size of the gap between the
basic coverage and stop-loss, no assured list of drugs, no assured list
of pharmacies, no assured plan from one year to the
[[Page H6082]]
next. It could change from year to year.
From the very beginning, Republicans have wanted to use prescription
drugs as leverage to end Medicare. The President said earlier to
seniors, we will give you some prescription drug help depending on
whether you leave Medicare and join an HMO. And now what this
Republican bill is doing is using a very inferior drug insurance plan
in 2006, not until then, to make everything except HMOs unaffordable
for seniors in 2010. The chairman did say just a few days ago, ``Old-
fashioned Medicare isn't very good,'' and I quote his quote. What
Republicans call old-fashioned Medicare is the system of guaranteed
benefits, set premiums and deductibles and access to doctors and
hospitals that have served seniors so well since 1965. Republicans want
to end all that, but current and future Medicare beneficiaries do not.
And we Democrats intend to keep fighting for those good aspects of old-
fashioned Medicare. Indeed, it has been very, very, very good.
Mr. THOMAS. Mr. Speaker, I yield myself such time as I may consume.
If it has been very, very good, why did the Democrats fight for a
substitute which will change the structure significantly?
Mr. Speaker, I yield 1 minute to the gentlewoman from Connecticut
(Mrs. Johnson) to point out once again an absolutely outrageous
statement that cannot go unchallenged.
Mrs. JOHNSON of Connecticut. Mr. Speaker, scare tactics have no place
in this debate. There are no vouchers in this bill. In 2010, a senior
that wants to be in the Medicare program will be in the Medicare
program exactly as they are now. They will be in that Medicare program
and have that choice of the Medicare program in 2010, in 2011, in 2012,
in 2013. They will never receive a voucher. That word is not in this
legislation. It is used rhetorically to scare seniors. I want to assure
the seniors listening that this bill represents the most dramatic
expansion of benefits under Medicare since the program was founded, not
only prescription drugs but additional preventive benefits and a whole
system to support seniors with chronic illness.
Mr. STARK. Mr. Speaker, I am happy to yield 3 minutes to the
gentleman from Maryland (Mr. Cardin). The gentleman from Maryland
understands that with proponents like Thomas and Johnson, the seniors
do not need any scaring from us.
Mr. CARDIN. Mr. Speaker, I oppose the passage of this bill. The
passage will make it much more difficult for Congress to enact a
meaningful prescription drug benefit for our Nation's seniors. Let me
give you five reasons why.
Reason number one. There is no guaranteed benefit in this bill.
Unlike seeing a doctor or going to a hospital, we cannot tell our
seniors that their prescription drugs will be covered. It will be
different in different parts of the country. Mr. Speaker, I tried to
correct that by offering an amendment in the Committee on Ways and
Means, and it was rejected by the Republicans. I tried to give this
body an opportunity to vote on it, but the Committee on Rules would not
make that amendment in order.
Reason number two. We are set on a course to privatize Medicare. Only
private insurance can participate in the prescription drug coverage.
Private insurance only has to offer a 1-year commitment. Mr. Speaker,
my citizens of Maryland remember when we had Medicare+Choice; 100,000
Marylanders lost their coverage when all eight HMOs left Maryland. It
is irresponsible to claim that private insurance companies are eager to
return to a market that they have abandoned in the past.
Reason number three. This bill will jeopardize coverage for seniors
who have good private retiree prescription drug coverage today. CBO has
estimated that 30 percent of our seniors who currently have their own
private coverage for prescription drugs through their prior employment
will lose those benefits as a result of the enactment of this
legislation.
Reason number four. We are missing an opportunity to bring down drug
prices. The legislation specifically prohibits our government from
using the purchasing power of 40 million beneficiaries to lower drug
prices just like the Canadians do.
Reason number five. The benefits are inadequate. The Republicans
project that this bill will provide for a $35 a month premium, $250
deductible, then some help up to $2,000, but then our seniors are on
their own for the next $2,900. Our seniors are expected to pay a $35-a-
month premium when they are not entitled to any benefit for a good part
of the year. I think that is unrealistic.
My Republican friends say, well, you only have $400 billion. We
offered alternatives within $400 billion that would provide real
benefits. I offered a substitute that said, look, if you cannot afford
all drugs, let us at least cover drugs for those illnesses such as high
blood pressure and coronary artery disease and diabetes and severe
depression. But, no, the Committee on Rules would not allow this body
to decide whether that would be a better package and a guaranteed
benefit package.
Mr. Speaker, I cannot support a bill that provides no guaranteed
benefit, relies solely on the whim of private insurance companies,
causes harm to seniors who currently have adequate prescription drug
coverage, will not do enough to bring down the cost of prescription
drugs, and provides inadequate benefits. Therefore, I will vote ``no''
on the Republican bill.
Mr. THOMAS. Mr. Speaker, I yield myself 1 minute.
You know, it just kind of makes you wonder what the Democrats did for
30 years when they were the majority, because, you know, when
Republicans became the majority in 1995, there was literally no
prevention and wellness in Medicare. We are the ones that are supposed
to be destroying Medicare? We are the ones that added diabetes. We are
the ones that added osteoporosis. We are the ones that added prostate
and colorectal screening. We are the ones that added the mammography.
In fact, in this bill that they continue to speak against, we provide
for the first time every new beneficiary should have a physical.
{time} 1945
I want to underscore that. Every new beneficiary should have a
physical. In addition to that, we believe that cholesterol screening
has now been advanced, and it should be provided as well.
I find it amazing that they go back to the same old scare statements.
Read the bill. It is an enhanced and an improved Medicare. What in
the world were you doing for 30 years? The fact of the matter is you
did not have a competent challenge.
What we have done is provide real change, and they are afraid those
old frayed bumper stickers will not work anymore.
Mr. Speaker, I yield 3 minutes to the gentlewoman from Washington
(Ms. Dunn), a very valued member of the Committee on Ways and Means.
Ms. DUNN. Mr. Speaker, I for one am very proud that the President in
his State of the Union address directed the Congress to put together a
program that will cost about $400 billion to provide prescription drugs
for seniors because I think it is time to keep our promise to the
people we represent and provide a comprehensive and voluntary
prescription drug benefit for all seniors.
We have all heard stories of seniors paying too much for prescription
drugs. This problem is even more acute among low-income seniors,
especially for women who comprise half of Medicare beneficiaries with
annual incomes below 150 percent of the poverty level. In this bill we
help seniors on fixed incomes and those with high drug costs. A woman,
for example, with an income of less than $14,400 today, which is 150
percent of poverty, will receive assistance from the Federal Government
for prescription drugs. While all seniors will benefit, nearly 11
million or 34 percent of Medicare beneficiaries will qualify for
additional assistance when this bill is fully implemented.
Improving Medicare is not only about providing a drug benefit, but it
is also about giving seniors access to doctors, hospitals, Medicare
HMOs, and other services they need. To ensure access to doctors, we
address the low reimbursements that they are receiving. We also
increase funding for rural hospitals so that seniors can get the health
care service they need right in their community.
For Medicare HMOs, this bill requires Medicare to accurately account
for
[[Page H6083]]
military retirees in the formula and that means higher Medicare+Choice
reimbursements in areas with military facilities. Strengthening
Medicare also means improving the quality of life for every senior. For
this reason I am very happy that we were able to provide preventative
services like cholesterol screening, initial physical exams and chronic
care management to help those seniors with serious diseases.
Seniors will also have access to innovative treatments to deal with
rheumatoid arthritis and other chronic diseases. This bill provides
seniors immediate access to self-injectable biologics. Besides
providing the choice of which drug works best for rheumatoid arthritis,
these self-injectable treatments will allow seniors to receive
treatments right in their homes instead of going to the hospital or to
a physician's office and will take the burden off those hospitals,
clinics and doctors.
This is a real prescription drug plan, Mr. Speaker. It is one that
provides up to 25 percent in drug discounts for manufacturers. It
covers seniors to participate in the drug program, and it protects
those with very high drug costs. It strengthens Medicare's future
without compromising the benefits seniors enjoy today. I ask my
colleagues to support a real prescription drug by passing this
legislation.
Mr. STARK. Mr. Speaker, I yield 3 minutes the gentleman from
Washington (Mr. McDermott), a member of the Committee on Ways and
Means, who understands that seniors are going to have to pay 4,000
bucks for the first $5,000 of drugs regardless.
Mr. McDERMOTT. Mr. Speaker, well the rubber stamp Congress is ready
tonight. The drug companies, after they contributed and got the
President elected, gave him this bill, and they said this is what we
want. The President brought it up here. We are rubber stamping it out
of here. Can you believe that the Senate, excuse me, in another part of
this building they are considering something like 400 amendments, but
we cannot have one because when you are using a rubber stamp, you
cannot have one single amendment in here. Nothing can be improved in
this bill. Can you believe it? It is like the Ten Commandments. It is
perfect. It came down from God or somewhere, or the White House.
This bill was put together by drug companies, 10 of them. They had
$38 billion in profit last year. That is 50 percent of the profit of
the Fortune 500. If the Members think they did not have an impact on
this bill, why do they want to privatize? Why do they want to give no
guaranteed benefit? Why do they want to have all openness in the world?
And why do they put the one line in there that says that the Secretary
cannot negotiate on behalf of 40 million people, soon to be 80 million
people? They want it all broken up into little different pieces so they
can divide and conquer. This little agency will get so much. But a
little bit bigger one, we will give them a little bit higher benefit.
They are going to divide and conquer the American people. This is a
sham.
In Canada they get their price reduced very simply by saying let us
make the Canadian price the average of the G-7. The United States is
way up here and Canada is way down there. Why could we not pass a
little amendment in here that said let us give the average of the G-7?
I do not know. In my State everybody goes across the border to Canada
or they mail across the border. They do it in Vermont. They do it in
New Hampshire. They do it in Maine. They do it in New York State. Why?
Because everybody knows the Canadians have got a better deal than we.
But you say no, no, we cannot make one change. When we are sent in here
with our rubber stamp to approve of everything George Bush does, we
have to give him the bill exactly as he sent it over here.
The idea that you could come out here with a bill and say that we
have a perfect piece of legislation, the seniors are like Abraham
Lincoln. Do you remember, the founder of the Republican Party? He said,
You can fool some people all of the time and all of the people some of
the time, but you cannot fool all the people all of the time.
I know the President is going to raise $200 billion for ads in this
campaign to say this, I got this from that rubber-stamped Congress and
it is good for you, and he is going to give the tax cuts and the child
never left behind, and he is going to give this stuff, and every one of
those is phony. The child never left behind? He puts a budget out here
$17 billion short to fund it, and the people are going to figure it
out.
Counting on believing that the American people are stupid is not a
good political way to go. Vote against this bill because the rubber
stamp is wrong.
Mr. THOMAS. Mr. Speaker, I yield 3 minutes to the gentleman from
Florida (Mr. Shaw), a valued member of the Committee on Ways and Means.
Mr. SHAW. Mr. Speaker, I thank the chairman for yielding me this
time.
This is probably, I think without question, one of the most important
sessions that this Congress has had regarding Medicare since its
inception. We have heard a lot of argument about old fashioned Medicare
and new Medicare and the changes, and the truth be known, both
political parties understand that medical treatment has changed in the
last 40 some years since Medicare first came on line. We know that.
Drugs are more important to keep the seniors out of hospitals, to keep
them mobile, to keep their quality of life moving. So this is a very
important thing, and it is important that we put this in the Medicare
law. And it is very important that we make it where the seniors can
afford it.
Florida has the seven most heavily used Medicare congressional
districts in the country. I have seen on more than one occasion, while
standing in line waiting for a prescription to be filled, somebody
going up. I have a very vivid memory of the last one I saw, this
elderly lady coming up and finding out what her prescription drugs was
going to cost and looking at this bottle and that bottle and then
handing that bottle back. She was low income. This bill will take care
of her. She will be taken care of under this bill, and she will not
have to give that bottle back because she needs it. These are
prescription medicines, these are what control her quality of life, and
this is a good bill.
The Republican bill looks after the low-income people first, and it
also takes care of those who are the heavy drug users because of the
illnesses that they are suffering from. Obviously we can sweeten the
pie by increasing the expenditures, but we heard tonight one of the
Members from the other side was saying that we are letting it wither on
the vine. We are putting $400 billion into Medicare. We are propping it
up. We are putting some reforms in there, we are putting some cost
containments in there that is going to make it a better deal. The price
of drugs because of the Republican bill will come down, and the people
that need it most, the heavy users and the low income, will be taken
care of.
This is a very good bill. It is one that the Congress should
definitely, definitely pass. H.R. 1, its time has come and it is time
for this Congress to act. I compliment the chairman and all of those
who did this very complex bill and put it together. It is a good bill
and it is one this Congress should pass.
Mr. STARK. Mr. Speaker, I yield 3 minutes to the gentleman from
Wisconsin (Mr. Kleczka), a member of the Committee on Ways and Means,
who, unlike the authors of this bill, did not spend his entire life in
the public trough but actually worked in private enterprise; so he
understands what privatization is.
Mr. KLECZKA. Mr. Speaker, I worked for an insurance company before I
was elected to the legislature.
So with that as an opening, Mr. Speaker, let me say to the body that
in my view this is the beginning of the end of the Medicare program.
For 38 years Medicare has provided seniors with quality health care, a
defined benefit, and whether one lived in California, Alaska, Maine, or
Florida, the premium was the same, they knew what the benefit was, and
they knew what the services were, and it has worked.
So there are those in this House who say there has been a change in
the way we deliver medicine today, and that is called drug therapy. Let
us add that coverage to the Medicare program and we can use the
purchasing power of the Federal Government to get the best deal on
drugs for in excess of 40 million people. And there are those on the
other side of the aisle who say no, we do not want to do that, and the
reason is because that is going to cut into the
[[Page H6084]]
drug profits of their friends, the drug companies. But know full well,
Mr. Speaker, we do it for the VA and it works and it works well.
So instead of doing a benefit connected to the Medicare program, what
we are doing is we are going to send our seniors out to the private
insurance market, we are going to tell them go shop for a drug-only
policy. The policy that is being offered in this bill has one big
problem, and that is once one spends $2,000 on drugs in any one year
coverage stops until their expenditures total $4,900. Know full well
during that period they are paying 100 percent of their drug cost.
Their premiums go on. They are paying premiums and getting no benefit.
There is something wrong with that system, and that is why this bill is
very bad in that respect.
The other problem with the bill is we had this program for a couple
years now called Medicare+Choice, and we are going to show those
seniors that the private market who did not want them 35 years ago
wants them now. They are holding their arms open. We want the seniors
because we know they have a lot of drug costs and a lot of health care
costs. So the Committee on Ways and Means and this Congress go along
with this Medicare+Choice. What it is, is a private insurance company
selling policies to seniors. Milwaukee, where I come from, has four of
these companies and they were peddling these policies and offering the
sun and the moon and all of a sudden bingo, three of them go belly up,
the seniors have to scurry to get back into some type of Medicare
program, and today we have one left. One left.
{time} 2000
And the reimbursement for that one Medicare+Choice program is 110
percent of the Medicare rate. So clearly, we are not saving a heck of a
lot of money with that Medicare choice plan.
Well, it is a failed experiment, Mr. Speaker. So what are we doing in
this bill? We are changing the name. We are going to call it Medicare
Advantage, and it is supposed to look and smell better; but, my
friends, it is the same thing that has failed in the past. It will fail
again.
Mr. Speaker, I urge a ``no'' vote on this legislation.
Mr. THOMAS. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, well, I guess, if all of the innovations are going to
fail, what will be left is the current Medicare. I find it interesting
that one of the reasons the gentleman from Wisconsin (Mr. Kleczka), my
friend, is going to vote against the bill is because there is no
government ultimate negotiation of the price.
Let me tell my colleagues a story, and I believe before I give my
colleagues the punch line, they will know the story. We have government
negotiation of price. And as is typically the case, currently, in law,
in the Medicaid program, it is called ``best price.'' That is where
government determines how much the drug is going to cost. It is going
to be the best price.
When we looked at ways to change Medicare, we looked at the ``best
price'' concept. Guess what? We sat down with the Congressional Budget
Office and we said, what would happen if we did not use best price?
They sat down and calculated and they said, you know, if you actually
had competition for the drugs, instead of putting in the government
phony floor of ``best price,'' you could save $18 billion. Do my
colleagues know why we do not have government negotiating the price? It
would cost us tens of billions of dollars over a real negotiation on
drugs. Yet, here we are, hearing the same old same old: I am going to
vote ``no'' because we do not have government dictating the price. That
is what has gotten us into the problem in the first place.
Mr. Speaker, it is my real pleasure to yield 3 minutes to the
gentleman from Illinois (Mr. Weller), a member of the Committee on Ways
and Means.
(Mr. WELLER asked and was given permission to revise and extend his
remarks.)
Mr. WELLER. Mr. Speaker, tonight we hear some partisan political
rhetoric, particularly from the other side of the aisle, who began this
process by announcing they were going to oppose the bill. It does not
matter what is in it; they are going to oppose it.
So I think the important question that we really should ask is: What
does this mean, this modernization of Medicare? What does it mean that
we are modernizing Medicare for the 21st century? What does it mean
that we are investing $400 billion in modernizing Medicare with
prescription drugs?
When I think of prescription drug coverage, I think of the seniors
who I have met over the 9 years I have had the privilege of serving in
this body. They are men and women who I have talked with in their homes
who sit there and they sit in that easy chair and right next to their
chair, they have that tray, a tray full of pill bottles, and they
talked and shared with me the choices they have had to make, whether or
not they go to the drugstore, the grocery store that particular week
because of the expenses they are facing because of rising prescription
drug costs.
Well, those are the people that are the primary beneficiaries of this
legislation. Because we have a plan before us that helps those who are
truly needy, low-income, by ensuring they pay no premiums; and for
others, they pay a pretty affordable premium. This plan would cost a
senior about $35 a month, $1 a day. Think about that. A dollar a day
for a senior participating in this plan. And if you qualify for
Medicare today and you are going to be eligible tomorrow, you qualify
and are able to take advantage of this new prescription drug plan. But
for a dollar a day, it is projected you could save anywhere from 30 to
70 percent of your prescription drug costs.
Think about that. When you think of that elderly man or woman who you
have had the opportunity to talk with in their home and sit there while
they are seated in that chair, perhaps they are home-bound, they have
that tray of pill bottles, and they are, frankly, very concerned
because they cannot do much else, other than buy their drugs and
hopefully get to the grocery store, they are going to really benefit
from this plan. It is affordable. It is available for all seniors.
We also give seniors choices. It is affordable, a dollar a day, $35 a
month; it provides real savings, 30 to 70 percent that is projected by
nonpartisan analysts who look at this and say, what does it really
mean, is the question they ask. To qualify for Medicare, you qualify
for this program, and you are going to have choice. You do not have to
pick the one-size-fits-all that some of my friends on the other side of
the aisle want to have and say, seniors, you only get one choice, and
we are going to tell you what it is.
Mr. Speaker, we are going to give seniors more than one choice so
they can find a plan that best fits them. Think about that. That is
what this really means. We are helping seniors who need help with their
prescription drug costs. We are modernizing Medicare for the 21st
century. We have a plan that is almost 50 years old that has not
changed. We are going to modernize it. The most important choice that
seniors face today is, of course, the availability and affordability of
prescription drug costs.
Mr. Speaker, this is a commonsense plan. It deserves bipartisan
support. I hope my friends on the other side of the aisle will do the
right thing. I recognize that they set out today with a decision to
oppose the bill, regardless of what is in it. Well, let us work
together. Let us provide a bipartisan vote to provide prescription drug
coverage that will help every senior in America.
Mr. STARK. Mr. Speaker, I yield myself such time as I may consume,
because I do not intend to let unsubstantiated remarks go unchallenged
either.
We do not oppose this bill because of what is in it, because there is
nothing in it. There are no benefits in it. There is nothing in the
bill except to spend money to get private insurance companies, if they
decide to come.
Mr. Speaker, I yield 3 minutes to the gentleman from Georgia (Mr.
Lewis), who recognizes that.
Mr. LEWIS of Georgia. Mr. Speaker, here we are once again debating
Medicare. Thirty-eight years ago, the Republicans did not like
Medicare, and they do not like it now. In 1965, 88 percent of
Republicans voted against Medicare. And here they are, once again,
trying to privatize prescription drugs for seniors, just like they
tried to privatize Medicare.
This is just another scheme by the Republicans to entice older
voters. Not
[[Page H6085]]
last week, not last year, but just yesterday, the gentleman from
California (Mr. Thomas), the Republican chairman of the Committee on
Ways and Means, made it crystal clear when he said, ``To those who say
that the bill would end Medicare as we know it, our answer is: We hope
so.'' He went on to say, ``Old-fashioned Medicare is not very good.''
Tell my mother. Tell your mother that old-fashioned Medicare is not
good. Tell your grandmother, tell your grandfather that old-fashioned
Medicare was not good. It was good in 1965. It was good yesterday. It
was good then, and it is still good right now. We do not need to
destroy Medicare. We need to save and strengthen Medicare.
Mr. Speaker, this bill is just another Republican scheme to deceive
our seniors, to deceive our elderly. That is not right. That is not
fair. I want my Republican colleagues to tell the American people the
truth. We must tell our seniors that the Republican bill does not offer
our seniors the basic right to affordable prescription drugs. We must
and we will tell the American people that the Republicans want to
privatize Medicare.
We must tell the American people the truth. This is no time to play
partisan politics with the lives of our seniors.
The clock is running. Time is running out. My Republican colleagues,
you still have time to do the right thing. Do not turn your back on our
seniors, on the elderly. This is a matter of life and death.
I beg, I plead with my colleagues to vote against the Republican
bill, not just for our parents, our grandparents, our children, but
also for generations yet unborn. Old-fashioned Medicare was like a
bridge over troubled waters. It was reliable. It was dependable then,
and it is still dependable.
Ask the seniors, ask the old people who live on fixed incomes in our
cities and rural areas. I say to my Republican colleagues, follow the
dictates of your conscience. You have a moral obligation, a mission,
and a mandate to uphold the legislation of 1965 when Lyndon Johnson
signed the Medicare bill.
I urge my colleagues to vote against this unreliable bill.
Mr. THOMAS. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I will tell my friend from Georgia, we do not intend to
turn our backs on seniors. Indeed, we intend to reach out our hand. If
someone wants to stay in yesterday's Medicare, they can tomorrow. We
want to make sure of that, because in 1965 and yesterday, there were no
drugs, there was no preventive care, there was no disease management,
that by passage of this legislation, tomorrow there will be.
But Mr. Speaker, as we have carried on this debate about improving
Medicare, and I know that to my friends on the other side of the aisle
$400 billion does not look like much to them. I understand they are
going to offer a substitute that proposes spending $1 trillion, rather
than the $400 billion.
But at some point in this debate, we ought to realize that we are in
the middle of the greatest intergenerational transfer of wealth in the
history of the world. Because while we strive to provide a decent and
appropriate health program for seniors, we all know someone else is
going to be paying for it. And so we really ought to focus on what we
are trying to do to make sure that the young people who are going to be
carrying this bill understand that while we are providing additional
benefits to seniors, we want to make sure that the program stays within
the reasonable bounds of the $400 billion that we are proposing to add
to Medicare.
Mr. Speaker, to insist on focusing on that, it is my real pleasure to
yield 4 minutes to the gentleman from Louisiana (Mr. McCrery), the
chairman of the Subcommittee on Select Revenue of the Committee on Ways
and Means.
Mr. McCRERY. Mr. Speaker, I rise in support of this legislation which
reforms Medicare and adds prescription drugs to the program; but I
arrived at this position of support haltingly, grudgingly, reluctantly.
I will tell my colleagues why.
I was reluctant to support this bill because I believe the current
Medicare program as it is structured is financially unsustainable. I
believe it is only a matter of time before, as the financial experts
tell us, Medicare, one of the two fastest growing programs in the
Federal Government, consumes an ever-larger and larger share of our
national income; an ever-larger and larger share of our Federal budget,
with the potential to crowd out spending on other government
priorities. And, as we all know, there are numerous, very important
priorities of government. Health care is not the only one. I believe,
Mr. Speaker, that as that occurred and as policymakers in Congress
realized that Medicare was crowding out other spending, causing us to
reduce our commitment to other priorities, we would do as most other
countries that have similar programs have done: we would start to
ration health care for our seniors. I do not want to do that.
So, Mr. Speaker, I was reluctant to add to the current program, which
is going to go belly up or bust the budget, a new entitlement program,
prescription drugs, which would exacerbate that situation, which would
make it worse, which would get us to that point where we would have to
start rationing health care faster. Yes, I was reluctant to do that.
But as I studied the bill and listened to those who put together the
components of the bill, I realized that the reforms contained in the
bill, particularly those beginning in the year 2010, which give us a
chance to move Medicare into a form much like the FEHBP program, the
premium support model that the Medicare Commission recommended several
years ago, then I realized that this is maybe our last best chance to
save Medicare in a way that we can afford it as a society, and deliver
quality health care for our seniors.
{time} 2015
So, Mr. Speaker, I am here after much thought and consideration and
yes, reluctantly arriving here, but I am here because I do believe this
is our best chance to save Medicare, to make it a truly viable program
that will not bust the budget, and if we do not take advantage of this
opportunity and I want to speak, Mr. Speaker, through you to the
conservatives out there on both sides of the aisle about supporting
this bill, do not blow this opportunity. If you are a conservative, if
you are concerned about the cost of the Medicare program, do not miss
this opportunity to give us the best chance to reform it in a way that
can save costs over the long term, that can keep us from rationing
health care, not only for our seniors, but I believe eventually for all
of our society.
Mr. Speaker, I urge everyone to support this bill tonight and hope
and pray that the reforms contained therein work.
Mr. STARK. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, how short memories are. It was just an hour ago that we
threw away $174 billion on useless medical savings accounts and over
the last year or two we gave $800 billion in inheritance tax relief to
an average of 10,000 people a year so we could punish a hundred million
people a year by destroying their Medicare. They just do not remember.
But the gentleman from Massachusetts, the distinguished member of the
Committee on Ways and Means (Mr. Neal) remembers.
Mr. Speaker, I yield 3 minutes to the gentleman from Massachusetts
(Mr. Neal).
Mr. NEAL of Massachusetts. Mr. Speaker, let me thank the gentleman
from California (Mr. Stark) for yielding me time.
Only in this Chamber over the last few months could we have written
$2 trillion out of our tax system irresponsibly over the next decade
and then say that the cost of Medicare is unsustainable. Only in this
Chamber could we have this debate from a political party who says, let
us not take a truncated quotation. Let us not take a scare tactic. But
you know what? You cannot truncate history.
When I came to this House 15 years ago, the Republican leader in the
Senate, Bob Dole, had voted against the establishment of Medicare. The
Republican leader in this House, Bob Michel, wonderful human being, had
voted against the establishment of Medicare. And they say, do not use
these quotes because they are not true. They are not for real.
Speaker Gingrich said, in time we would let Medicare wither on the
vine. The third ranking Republican in the United States in the other
body down the hallway, said recently, I believe the
[[Page H6086]]
standard benefit, the traditional Medicare program, has to be phased
out. And they say, but trust us on Medicare. Do not be skeptical of our
intentions. We have come to love Medicare.
There is not anybody on that side of the aisle that believes that
tonight and there certainly is not anybody on this side of the aisle
that believes that tonight as well. And then they argue, well, we have
improved Medicare. Think of what we might have done without those tax
cuts over the last 2 years.
A predictable, carefully defined benefit would have been in place for
Medicare recipients. It is the closest thing, Medicare, that this
Nation has ever had to universal health care. It is an extraordinary
achievement for those who turn 65 years old, and they refer to it as
old-fashioned Medicare and we are to trust them. But let us talk about
Medicare+Choice where I live in Massachusetts, the private sector's
answer to the problems of Medicare.
Well, they are all gone and the ones that are not gone have jacked
premiums through the roof. They do not want to take care of the most
vulnerable and whether we have a debate about government tonight and
its role or not, that in the end is what government does. It takes care
of those who are outside the mainstream of this economic life. Not the
top 1 percent of the wage earners in this country, not those who
benefit from the repeal of an estate tax. It is government that does
that.
Medicare is a legacy and an amendment to the Social Security program,
the greatest achievement domestically in this Nation's history. And
that amendment in Medicare is a greatchild and a success of a
determined Congress and an enlightened President, Lyndon Johnson.
Tonight let us stand with history, stand with Roosevelt and stand with
Lyndon Johnson on what Medicare has done to make us a much more
equitable society. What a great achievement it is.
Reject the notion tonight of where they are going to take us, and
that is down the road to privatization of Medicare.
Mr. STARK. Mr. Speaker, may I inquire of the time remaining?
The SPEAKER pro tempore (Mr. Hastings of Washington). The gentleman
from California (Mr. Thomas) has 7 minutes remaining. The gentleman
from California (Mr. Stark) has 12 minutes remaining.
Mr. STARK. Mr. Speaker, I yield 3 minutes to the gentleman from Texas
(Mr. Doggett), a member of the Committee on Ways and Means.
Mr. DOGGETT. Mr. Speaker, since President Lyndon B. Johnson signed
Medicare into law over massive Republican resistance, Republicans have
never ceased in their determination to end Medicare. We all remember
the partner of the gentleman from California (Mr. Thomas), former House
Speaker Newt Gingrich, who insisted that Medicare should be allowed
``to wither on the vine.'' He has been chattering again this month,
that Medicare is an ``obsolete government monopoly.''
The gentleman from California (Mr. Thomas) joined him yesterday by
declaring, ``To those who say that [the bill] would end Medicare as we
know it, our answer is: We certainly hope so.'' ``Old fashioned
Medicare isn't very good,'' he added.
The gentleman may not like reporters, especially if they report, but
really there is nothing new or inconsistent in this statement and many
that he has made for years. He just referred a few moments ago to
Medicare as ``yesterday's Medicare,'' denigrating and deriding it.
``Yesterday's Medicare,'' ``old fashioned Medicare'' has served
millions of Americans pretty well.
The one problem we have with it is not the result of a defective
Medicare. Rather the failure to deal with the outrageous, predatory
pricing of prescription drugs has resulted from the sustained collusion
of House Republicans and pharmaceutical manufacturers. We can do
something meaningful about that, but this bill is not it.
What of this plan that seniors are finally offered tonight? It is
basically a ``pay a lot and get a little'' plan. If you are a senior
and you have been hoping and praying we would finally be able to
overcome this Republican resistance and deal with prescription drugs,
what do you get from this bill according to its own clear language?
Well, this year you get nothing. Next year you get nothing. The year
after that you get nothing. Oh, yes, you are entitled to a discount
card. It is as valuable as one of those cards you pull out of a cereal
box. With it and a dollar or two you can get a cup of coffee, but it
does not guarantee you a cent of reduction in the cost of your
medications.
Finally, in 2006 you get all their much ballyhooed help. If you have
$4,900 in drug bills, and that is mighty easy to get at today's
outrageous prices, you pay $3,500, and you get $1,400 paid for you, and
that is only if you also pay an unknown premium, already estimated at
least $35 per month. And such incomplete coverage at such a cost tells
us what this initiative is really all about. This is a plan to
eliminate Medicare and force seniors out into inadequate private
insurance plans. This is not a prescription drug. This is a
prescription for disaster.
I hope that our Republican colleagues continue holding up this poster
about ``strengthening Medicare'' that they have been showing here
because it looks like the type of solicitation scams that so many
seniors receive weekly. Their poster shows seniors out frolicking on
the beach because of all the benefits they will get, when in fact
seniors will be denied the very protection they so desperately need on
their prescription drugs. That is because those who are proposing this
bill are the same folks, who tried to undermine Medicare from the time
Democrats and Lyndon Johnson got it passed through Congress in 1965,
and they have not relented until this very moment.
Mr. THOMAS. Mr. Speaker, I ask unanimous consent to place in the
Record an exchange of letters between myself as chairman of the
Committee on Ways and Means and the gentleman from Virginia (Mr.
Davis), chairman of the Committee on Government Reform.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from California?
There was no objection.
House of Representatives,
Committee on Ways and Means,
Washington, DC, June 25, 2003.
Hon. Tom Davis,
Chairman, Committee on Government Reform, House of
Representatives, Washington, DC.
Dear Chairman Davis: Thank you for your letter regarding
H.R. 2473, the ``Medicare Prescription Drug and Modernization
Act of 2003.''
As you have noted, the Committee on Ways and Means has
ordered favorably reported, as amended, H.R. 2473. The
general text of this legislation will be incorporated into
H.R. 1, the ``Medicare Prescription Drug and Modernization
Act of 2003.'' I appreciate your agreement to expedite the
passage of this legislation despite affecting programs within
the jurisdiction of Committee on Government Reform. I
acknowledge your decision to forego further action on the
bill was based on the understanding that it will not
prejudice the Committee on Government Reform with respect to
the appointment of conferees or its jurisdictional
prerogatives on this or similar legislation.
Finally, I will include in the Congressional Record a copy
of our exchange of letters on this matter during floor
consideration of H.R. 1. Thank you for your assistance and
cooperation. We look forward to working with you in the
future.
Best regards,
Bill Thomas,
Chairman.
____
House of Representatives,
Committee on Government Reform,
Washington, DC, June 25, 2003.
Hon. William M. Thomas,
Chairman, Committee on Ways and Means, House of
Representatives, Washington, DC.
Dear Chairman Thomas: I am writing to confirm our mutual
understanding with respect to the consideration of H.R. 2473,
the Medicare Prescription Drug and Modernization Act of 2003,
which was referred to the Committees on Ways and Means and
Energy and Commerce. I am writing specifically regarding
Sections 302 and 303, which waive provisions of the Federal
Acquisition Regulation and exempts a newly established
advisory committee from the Federal Advisory Committee Act
(FACA). As you know, the Federal Acquisition Regulation and
the Federal Advisory Committee Act are within the
jurisdiction of the Committee on Government Reform.
I have concerns regarding the appropriateness of waiving
FACA, as it would pertain to the Program Advisory and
Oversight Commit proposed in section 302. I would welcome the
opportunity to work with you and Chairman Tauzin to address
the applicability of FACA to this proposed committee.
In the interests of moving this important legislation
forward, I do not intend to ask for sequential referral of
this bill. However, I do so only with the understanding that
this procedural route should not be construed to
[[Page H6087]]
prejudice the Committee on Government Reform's jurisdictional
interest and prerogatives on these provisions or any other
similar legislation and will not be considered as precedent
for consideration of matters of jurisdictional interest to my
Committee in the future. Furthermore, should these provisions
or similar provisions be considered in a conference with the
Senate, I would expect Members of the Committee on Government
Reform be appointed as outside conferees on those provisions.
Finally, I would ask that you include a copy of our
exchange of letters on this matter in the Congressional
Record during House debate of the bill. If you have questions
regarding this matter, please do not hesitate to call me. I
thank you for your consideration.
Sincerely,
Tom Davis,
Chairman.
I also include for the Record a quote:
Some of our friends on the other side of the aisle are
saying that if this bill becomes law, it will be the end of
Medicare as we know it. Our answer to that is, we certainly
hope so. Why should seniors be the last group that pays
retail prices for drugs? Old-fashioned Medicare is not very
good . . . You're going to hear scare tactics . . . but
seniors with extremely high drug costs, when this becomes
law, will save more than 60 percent of current costs, that's
real change, real progress, making Medicare a real day-to-day
benefit.--Bill Thomas, Chairman, Committee on Ways and Means.
Mr. DOGGETT. Mr. Speaker, I ask unanimous consent to place in the
Record the report from NBC news correspondent Norah O'Donnell entitled
``Prescription Drug Benefit Imminent'' from yesterday's MSNBC.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from California?
There was no objection.
Prescription Drug Benefit Imminent
(By Norah O'Donnell)
After years of promising a prescription drug benefit for
seniors, Congress is on the verge of a breakthrough. This
week, the House and Senate are expected to pass bills that
for the first time will allow seniors to sign up for a
prescription drug plan in which the government helps pay
their drug bills. The policy and political consequences are
enormous.
Congress had agreed to spend $400 billion, which in effect
means the biggest expansion of Medicare since its creation
nearly four decades ago. Critics charge that the bill's
passage is the largest expansion of a federal entitlement
since Lyndon Johnson's Great Society, with huge costs to
American taxpayers when the Baby Boomers enter the Medicare
program.
Passions surrounding the Medicare reform bill are reaching
a crescendo heading into votes in both the House and the
Senate by the end of this week, perhaps as early as Thursday.
``To those who say that (the bill) would end Medicare as we
know it, our answer is: We certainly hope so,'' declared Ways
and Means Chairman Bill Thomas, R-Calif., Wednesday morning.
``Old-fashioned Medicare isn't very good,'' he added.
House Speaker Dennis Hastert, R-Ill., echoed the sense
around Capitol Hill that this is indeed the year that it gets
done. ``We are at the point now where politics and policy
have to be married up,'' he said.
Health and Human Services Secretary Tommy Thompson appeared
with Thomas and other GOP leaders Wednesday morning to
release figures that purport to show what seniors would save
on some popular drugs. For example, Thompson said that
seniors are now paying $108.65 for 30 tablets of Lipitor.
Under the system, he projects that the cost would come down
to $86.92. Seniors would have to pay only 20% as co-pay
($17.38). That's a savings of $91.27, according to his
figures.
But House Minority Leader Nancy Pelosi and other House
Democrats fought back Wednesday, saying Thompson has
forbidden Health and Human Services actuary Rick Foster from
releasing his analysis of how much Part B premiums would go
up under the House GOP plan. Part B is the existing program
that insures seniors for medical services other than
prescriptions.
They suspect the figures would show that the premium would
rise substantially. A similar bill in 2000 would have
resulted in a rise in Part B premiums of 47 percent. Pelosi
and Rep. Pete Stark, D-Calif., say that Foster is being
threatened with termination if he reveals the figures this
time.
Once the measure passes, congressional Republicans and
President George W. Bush will declare victory on an issue
that Democrats have traditionally championed. ``This could be
transformational in terms of the image of the Republican
Party among seniors,'' Bill McInturff, a Republican pollster,
said.
Seniors or older voters have historically favored Democrats
when it comes to the issue of Medicare and prescription
drugs. But a recent survey by the Kaiser Family Foundation
found older voters now trust Republicans and Democrats
equally.
Older Americans are the nation's most reliable voters. Two-
thirds of them go to the polls. And with a large number of
seniors living in big swing states that are expected to
decide the presidential election in 2004, the issue could be
pivotal.
As a quick example, George W. Bush lost the state of
Pennsylvania to Al Gore by five points in the year 2000. He
lost among older voters by a whopping 17 points. If the
president improves his standing among older voters, he could
close the margin of victory in such a state.
But the potential political windfall could be stymied once
seniors get a closer look at the details of the plan. After
conducting polls and focus groups, Republican strategists are
warning fellow party members that seniors who've done the
kitchen-table test are not happy.
In fact, according to an internal Republican memo by
McInturff, obtained by NBC News, the pollster warns that, in
focus groups, seniors ere very disappointed: ``The current
drug coverage plan is not as generous as the private coverage
two-thirds of seniors already enjoy. It's clear most seniors
are first evaluating this plan in comparison to their
current, private coverage, then deciding it's not as generous
and certainly not a replacement for that coverage, so some
are reacting unfavorably.''
McInturff is advising Republican lawmakers and the
president that they can overcome deficiencies with the bill,
stressing rhetorically that the plan provides seniors with
additional choices in coverage.
gaps in coverage
The nation's largest lobby for seniors, the American
Association of Retired Persons, or AARP, has warned Congress
that it is deeply concerned about huge benefit gaps in the
plan. ``People are disappointed that there isn't more of a
benefit here,'' said John Rother, policy director for the
AARP. ``And sometimes they're mad, and sometimes they think,
`Well, at least it's a first step.' But everyone is
disappointed.''
That's especially true for seniors like 77-year-old Pat
Roussous of Madison, Conn. She suffers from arthritis,
diabetes and high blood pressure. Her out-of-pocket drug
costs are as much as $6,500 a year. ``It's only a start. And
I'm not convinced it's going to go very far,'' she said.
Roussous is one of an estimated 10 million seniors who will
fall into a benefit gap, because, under the Senate plan, the
government will pay for half of drug costs up to $4,500. But,
there's a huge gap for the next $1,300, where the beneficiary
must pay for all of their drug costs.
Catastrophic coverage does not kick in until one's drug
costs exceed $5,800. Then the government will pay 90 percent
of drug cost over that amount.
``I think, the gap--where people are required to pay for
the drug themselves--I can't imagine that working,'' said
Roussous. ``Because those are the people who actually need to
have the help.''
Still, the AARP will not use its political might to block
the plan. ``This year, `something' in prescription drugs is
better than `nothing,' '' said Rother.
The bulk of the proposed assistance in the prescription
drug plan will not be enacted until 2006. Until then, seniors
will receive a discount card that will provide them with 10
to 15 percent off their drug costs. Low-income seniors will
get an annual $600 credit.
Mr. THOMAS. Mr. Speaker, I yield myself 15 seconds.
I see the gentleman from Texas (Mr. Doggett) had two quotes connected
with a description of myself, rather than the continuation of the real
quote, and I can understand why he would fabricate the quote in that
way. Because what I said was, why should seniors be the last group that
pays retail prices for drugs? That really did not fit the intention of
the gentleman's thrust, but that is simply the truth.
Mr. Speaker, I yield 2 minutes to the gentleman from Iowa (Mr.
Nussle), the chairman of the Committee on Budget, but I proudly say
also a member of Committee on Ways and Means.
Mr. NUSSLE. Mr. Speaker, I thank the gentleman for yielding me time
and for his partnership and hard work on this bill.
The Democrats are living in 1965. Boy, we have heard a lot about that
tonight. We have heard about Bob Dole and Lyndon Baines Johnson. Well,
that is great but it is not 1965. Medicare is going bankrupt. Tax cuts
did not cause that. Health care costs are out of control. The
reimbursement system under Medicare is broken and it is not paying the
bills. Hospitals are closing. Doctors are leaving rural areas or not
taking Medicare patients at all. Cost shifting is running rampant onto
the private pay side, and as a result, problems are running rampant
within our health care system.
Benefits have not improved. We do not have drugs. We do not have
prevention. We do not have disease management. We have a sick care
system, and the Democrats have done nothing about it for the past 30
years since they did pass Medicare in 1965.
Doing nothing tonight is not an option, and that is why in the budget
we put $400 billion to improve Medicare,
[[Page H6088]]
increasing Medicare by $400 billion, hardly withering on anybody's
vine, because doing nothing is not an option. Tonight, H.R. 1 is the
choice. It modernizes Medicare, saves it from bankruptcy, controls
costs, modernizes benefits, fixes the Iowa and other rural
reimbursement problems, keeps these hospitals open and viable so that
they can pay the bills as a result of amendments that have been passed
in both the Committee on Ways and Means and the Committee on Energy and
Commerce.
Quality health care will be available in rural areas on into the
future as a result of what we have done tonight. Inaction is not an
option.
But there is one other choice. The Democrats will offer a $1 trillion
Medicare drug benefit tonight; one that CBO says costs $1 trillion.
Guess what? That not only busts the Republican budget, but it busts the
Democratic budget and it busts both of our budgets combined. Do not
bankrupt Medicare. Save it by passing H.R. 1.
Mr. STARK. Mr. Speaker, I yield 2\1/4\ minutes to the gentlewoman
from Ohio (Mrs. Jones), a member of the Committee on Ways and Means who
understands that the Republican bill does not extend the life of the
Medicare Trust Fund at all. In fact, it probably reduces it some.
Mrs. JONES of Ohio. Mr. Speaker, I will begin with a quote. ``Seniors
face a confusing hodgepodge of co-payments and deductibles in Medicare.
The system is irrational and difficult to navigate. Simplifying and
modernizing cost sharing will make coverage easier to understand and
will strengthen the Medicare program over the long term. I believe we
can better design both Medicare and Medigap so that seniors and people
with disabilities get the most of the health care dollars they spent.''
That is a quote from a Republican colleague. But let me report from
Howard Brown, 77 years old, from Cleveland, Ohio. He complained about
the complexity of the program that will involve choosing a plan,
tracking out-of-pocket expenses, and knowing when the coverage kicks
in, lapses and then resumes in severe cases, all according to a sliding
scale of benefit.
Mr. Brown said, ``I am too old to try to figure all this out. Make it
simple. Make it plain so I can understand it.''
The people in the United States, the seniors who are on Medicare,
they want a defined benefit giving them an entitlement and a guarantee.
They want it to be affordable with reasonable premiums and deductibles.
They want it to be designed to significantly reduce the price of their
prescriptions, and they want a meaningful Medicare prescription drug
bill that provides absolutely no gaps and no separate privatized
ambulance.
{time} 2030
But we have not heard any Republican get up tonight and define what
the gap is. They have not explained to seniors across this country that
there will be a gap in coverage, and it will not be Medicare improved
for prescription drugs.
Truly, 35 years ago we did not think about prescriptions as being
part of Medicare; but it is, in fact, a part of Medicare today, and our
seniors do not want to wait till 2006 and then find out that after
paying premiums all year that they do not get any coverage in this gap
of coverage. Explain the gap Mr. and Mrs. Republican on the Republican
side.
What about the new preventive? Every new beneficiary gets an
opportunity, but what about the old folks? It is like Mrs. Ruby Bogus
from Cleveland, Ohio, said. She was annoyed that the program would not
begin until 2006, and do my colleagues know what she told her friends.
Well, girls, I guess we will just have to live a little bit longer to
get a prescription drug benefit.
Mr. THOMAS. Mr. Speaker, I yield myself 15 seconds.
If the gentlewoman would go to page 260, line 19, from the
legislation before us now, I quote, ``Nothing in this part or the
amendments made by this part shall be construed as changing the
entitlement to defined benefits under part A and B of title XVIII of
the Social Security Act.''
Mr. STARK. Mr. Speaker, if the Chairman could explain the gap, but
obviously he cannot. So I am happy to yield 2 minutes to the gentleman
from Texas (Mr. Sandlin), a member of the Committee on Ways and Means.
Mr. SANDLIN. Mr. Speaker, it is the old bait and switch. The
Republican leadership has used smoke and mirrors to trick seniors into
thinking they are getting a Medicare prescription drug plan when in
reality they are forcing them to seek medication from private insurance
companies, not Medicare.
Mr. Speaker, this is not an entitlement Medicare plan for seniors.
All this is is an entitlement to ask to be able to make an offer, to
make a purchase from a reluctant, profit-seeking insurance company who
may or may not accept that offer. Importantly, not a single insurance
company in the United States of America has volunteered or agreed to
take part in this program, not one, nada, zip, zilch. This plan is
nothing more than a mere vapor.
What has history shown us about what happens when private insurance
companies get involved in Medicare? Medicare+Choice, the great managed
care experiment on our Nation's seniors, should have been named
Medicare Minus Choice. After all, it has been a total disaster for
seniors. Between 1998 and 2003 the number of Medicare+Choice plans
dropped by more than half. In my home State of Texas, 313,000
Medicare+Choice seniors have been dropped by insurance companies just
since 1999.
Question: Who sets the price of the drugs in the Republican insurance
company plan? The Republican insurance company plan allows HMOs and
pharmaceutical companies to determine how much to charge and what
coverage to offer.
Mr. Speaker, I would like to take a vote, what do my colleagues think
the insurance companies will choose, more coverage or less coverage?
What will the pharmaceutical companies charge, more money or less
money? The answer is clear.
The other day the President said, ``When the government determines
which drugs are covered and which illnesses are treated, patients face
delays and inflexible limits on coverage.'' And yet the Republican
private insurance company bill wants to turn over these decisions to an
insurance company who has financial interest in denying coverage. The
more insurance companies deny, the more money they keep. Now, is that
not special?
Mr. THOMAS. Mr. Speaker, I have one speaker to close.
Mr. STARK. Mr. Speaker, I am delighted to yield 1 minute to the
gentleman from Georgia (Mr. Scott).
(Mr. SCOTT of Georgia asked and was given permission to revise and
extend his remarks, and include extraneous material.)
Mr. SCOTT of Georgia. Mr. Speaker, let us get right to the chase of
it. What the Republican plan is designed to do is end Medicare as we
know it today. Make no mistake about it. I have the quote right here
and it says, ``To those who say that the bill would end Medicare as we
know it, our answer is: We certainly hope so.'' Bill Thomas, chairman
of the Committee on Ways and Means, MSNBC News, on 6/25/2003.
It was stated, to back that up, the chairman of the Senate Republican
conference said this, ``I believe the standard benefit, the traditional
Medicare program, has to be phased out.''
That is what we are faced with today, and that is what the American
people need to understand, and that is what the Democratic Party is
doing in here today, to pull these covers off. We are talking about
people who cannot afford it. Medicare was designed to help people, to
help the least of us, to help those senior citizens who cannot afford
the medicine. Government is there for something. They do not want it
privatized.
Mr. Speaker, let me just say this from one of my constituents, and I
want to read this note. He said: ``I am a 74-year-old retired senior on
Medicare and this Medicare drug prescription plan is just a stone's
throw away from privatization of Medicare. That should not be allowed
to happen.'' Let us not let it happen.
Snellville, GA,
June 14, 2003.
Representative David Scott,
Jonesboro, GA.
Dear Representative Scott: I'm a 74 year old retired senior
that's on Medicare at home recovering from a massive heart
attack and bladder infection so I am very concerned about
what course of action Congress is presently taking on the
Medicare Drug Prescription Plan.
[[Page H6089]]
When the news first came out that Congress was finally
going to add prescription drugs to Medicare in order to
provide financial relief for seniors that are paying way to
much for their medication verses their meaner yearly income
from Social Security and if they have one, their pension fund
and any life savings they may have. At that time I heard that
Congress would be working on such a plan Medicare
beneficiaries would be given a choice if they needed and
wanted their prescription drugs covered by Medicare. If they
did all they had to do is sign up for it and pay whatever the
cost of the plan covers. For the rest of us who are happy
staying with Medicare and our present secondary insurance
coverage that provides better prescription drug coverage at a
lower cost would not have to participate in any Medicare
prescription drug plan.
Seniors that don't have prescription drug coverage should
be covered by this plan as a matter of choice, however; I
feel it is unfair for Congress to make it a mandatory
requirement for all seniors to pay for this plan which would
override their own secondary insurance plan for their
prescription drug plan. It just isn't fair. Why should we
have to give up our plan and end up paying far more than what
we are presently paying? I'm sure if all seniors were aware
of what really is going on they would want to make it a
matter of choice also.
Representative Scott please give us Medicare beneficiaries
a choice to join or not to join the Medicare prescription
drug coverage. Even though I'm not in your district I'm
asking you to please support us many seniors by making sure
this choice provision will get covered in the final bill that
is sent to President Bush. If this choice does not become
part of this Medicare Drug Prescription plan it is just a
stone's throw away from the privatization of Medicare and
that should not be allowed to happen. Please remember when
you vote whatever the outcome is on this plan it will affect
all Americans nation wide and in some way or other I'm sure
it will have some sort of a bearing on the outcome of the
2004 elections.
May God Bless you and may God Bless America.
Sincerely yours,
Richard McGraw.
Mr. STARK. Mr. Speaker, I yield 1 minute to the gentleman from
Florida (Mr. Wexler).
Mr. WEXLER. Mr. Speaker, I am privileged to represent the oldest
district in this country, and I thought it was important to hear from
some of those seniors who fought in World War II and Korea and who
rebuilt this country after the depression.
Mr. and Mrs. Robert Moore of Lantana, Florida: ``Why do we worry
about tax cuts for the rich while so many older folks have to choose
between food and medicine?''
Speaking directly to the Republican plan, Mr. Arthur Taubman of
Delray Beach, Florida: ``I prefer nothing instead of a botched up
Republican plan.''
Mrs. Elaine Schwartz from Boynton Beach: ``It is very disappointing
to me that I live in this wonderful country and senior citizens who
have contributed for so many years supporting this country have been
forgotten.''
Mrs. Schwartz has got it right, forgotten benefits. Drug benefits for
seniors, forgotten; lower drug costs for seniors, forgotten by the
Republican plan. American seniors by the Republican plan, forgotten.
Mr. STARK. Mr. Speaker, I yield 1 minute to the gentleman from Texas
(Mr. Bell).
Mr. BELL. Mr. Speaker, the gentleman from Texas (Mr. DeLay), the
majority leader, has stated that the Democratic strategy on his
Medicare bill is obstruction, obstruction, obstruction; but when the
best that the GOP can do is create a plan that destroys Medicare, we
should all rise in opposition.
I want to point out that the Republicans blocked every attempt at a
Democratic substitute, sound proposals that would protect Medicare and
provide comprehensive coverage for all seniors, regardless of the size
of their bank accounts. The AARP, a trusted voice on this subject, says
the Republican plan is not good public policy because it has too many
coverage gaps.
Why do the Republicans oppose better plans without gaps for seniors?
Well, the gentleman from Iowa says one of the plans is too expensive.
It was not too expensive for them to pass the largest tax cut in
American history, only to create the largest deficit this country has
ever seen. It is just when it comes to providing our seniors with the
most basic ability to protect their health the cost is too high.
It does seem to me to be a simple matter of priorities. So do we
intend to obstruct the gentleman from Texas (Mr. DeLay) and the
Republican's plan to destroy Medicare? Absolutely.
Mr. STARK. Mr. Speaker, I yield 1 minute to the gentlewoman from
Texas (Ms. Jackson-Lee).
(Ms. JACKSON-LEE of Texas asked and was given permission to revise
and extend her remarks.)
Ms. JACKSON-LEE of Texas. Mr. Speaker, I did not want this historic
debate to leave without my words in opposition to a plan that does
nothing to serve the needs of seniors in America. The reason? Because I
am proud that President Lyndon Baines Johnson in 1965 extended the
lives of American senior citizens, but today we have a plan that will
be shoved through on this floor that denies the preservation of
Medicare, denies the real Medicare benefit. Lower prices are denied.
Full coverage is denied. Choice of drugs is denied because when a sick
senior citizen gets to a certain amount of their prescription drug
benefit, then they drop through the doughnut hole; and if they survive,
if they live through the gap between when we start paying for it, then
they may be able to hit again when the amount of the prescriptions go
up to $5,000.
The doughnut and privatization are two items in this particular
legislation that I will stand against, and again, Medicare denied, real
Medicare benefits denied, lower prices denied, full coverage denied,
choice of drugs denied. This is a historic debate. Vote ``no'' and
stand on the side of saving lives of America's senior citizens.
Mr. Speaker, when we look at the health care system for our seniors
in the United States today, we see good news and bad news. The bad news
is that drug costs are outrageously high. The good news is that
Medicare is an effective and efficient program that is working well for
our seniors, and that senior trust. I have never met a senior that
disagree with these two facts: that drug costs are too high and need to
be brought down, and that Medicare is a good program that needs to be
protected.
So it is outrageous to me that the Prescription Drugs Bill that the
Republicans are shoving through Congress today without opportunity for
amendment or time for debate, is preserving the bad--the high cost of
drugs--and is dismantling the good--Medicare.
We Democrats have been fighting for years for a Medicare prescription
drug program that is (1) affordable; (2) available to all seniors and
Medicare beneficiaries with disabilities; (3) offers meaningful
benefits; and (4) is available in the Medicare program--the tried and
true program that seniors trust.
And now it seems that we have the political momentum to make a good
prescription drug benefit a reality. The President says he wants it.
Both parties, both sides of Capitol--everyone has declared their
commitment to getting affordable prescription drugs to our nation. So
why is it that the only Medicare prescription drug ``plan'' the
Republicans have to offer is a terrible bill with full of holes, and
gifts to the HMOs, and protections for pharmaceuticals companies. Every
time we get a chance to take a closer look at the Republican drug
scheme, it becomes more obvious that it is just another piece of the
Republican machine that is trying to dismantle Medicare and turn our
federal commitment to our nation's seniors, over to HMOs and the
private insurance industry.
The Republican plan would be run by HMOs, not Medicare. HMOs would
design the new prescription drug plans, decide what to charge, and even
decide which drugs seniors would get. Plus, HMOs would only have to
promise to stay in the program for one year. That means that seniors
might have to change plans, change doctors, change pharmacies, and even
change the drugs they take every twelve months. Medicare expert Marilyn
Moon told the Senate Finance Committee on Friday that ``There will be a
lot of confused and angry consumers in line at their local pharmacies
in the fall,'' if the Republican approach is not changed. She's right.
The Republican plan provides poor benefits, and has a giant gap in
coverage. Under the House Republican plan, many seniors would be
required to pay high premiums even when they don't receive benefits.
Reportedly, under the House GOP plan, Medicare beneficiaries have a
high $250 deductible. After they reach that deductible, they would then
be required to pay a portion of their first $2,000 in drug costs--that
is a fairly normal system. But, after a senior's costs hit $2000 for a
year--that is when it becomes obvious just how bad this plan is. Once a
senior's drug costs hit $2000, the Republican plan cuts them off. Even
though they must continue to pay premiums, they get no assistance in
paying their drug costs at all until their costs reach $5,100. Let me
say that again. It seems so crazy, it is almost unbelievable. The
sickest of our seniors, the ones on the most medications--once their
[[Page H6090]]
costs reach the $2000 mark--they fall into the Republican gap. They are
left to pay the next $3000 out of their own pockets, while continuing
to pay premiums. Almost half of seniors would be affected by this gap
in coverage. They will be outraged, and our offices will be hearing
about it. Already we are hearing that 4 out of 5 seniors, the people we
are trying to help, are against this plan.
I have attended hundreds of health care briefings, and have read
everything I can get my hands on, on the subject of improving Medicare
and getting good health insurance to the American people. And I have
never heard anyone say that a hallmark of a smart health insurance
program is to have a giant gap in coverage for those who need help the
most. Why would our Republican colleagues put in this ditch in the road
to health for seniors? Because they wasted all of our nation's hard
earned money, on massive tax breaks for the rich, and an unnecessary
war.
So now they have placed an arbitrary budget cap on vital programs,
pushed by President Bush, in order to compensate for the irresponsible
Republican tax cut they jammed through this Congress and last Congress.
The way they are dealing with the mess that they have made is by
throwing bad policy after bad policy. To remain within their own
arbitrary budget cap, they are pitching a bill that will provide a
confusing, insubstantial benefit to the majority of seniors.
If the Republicans wanted to save money, they could have put in a
provision that I and many Democrats have pushed for--and that is to
allow the Secretary of the HHS to negotiate with the pharmaceutical to
get fairer prices for the American people. I believe that the American
pharmaceuticals industry is the best in the world. They make good
products that benefit the world. But Americans are now paying double
the cost for drugs than their counterparts in other rich nations such
as German, Canada, Great Britain, or Japan. I am glad our companies are
making money. But as we enact a prescription drug benefit under
Medicare, access to drugs will rise--and drug company profits will rise
as well. It is only fair that the Secretary should have the power to
negotiate a good price for American consumers, to make sure we get the
best returns possible on our federal investment.
Not only did the Republicans not put in a provision to allow such
negotiations, they went out of their way to forbid the Secretary from
trying to get better prices for Americans. Why? Because they value the
profits of their corporate sponsors at Pharma, more than they do the
well-being of our nation's seniors. American consumers are now
subsidizing the drug-costs of the rest of the world. The Canadians,
British, Germans, Japanese--the rich nations of the world--still pay
half of what we pay for drugs. We need to bring leaders in the
Pharmaceutical companies to the table. They want to sell their products
to more Americans, and we want more Americans to have access to their
products. Surely, the Secretary should be able work with the industry
to negotiate a compromise that serves all Americans well.
Similarly, the Republican plan's design wastes billions in kickbacks
for HMOs--instead of using that money to bring down the premiums and
out-of-pocket costs that seniors and the disabled are forced to pay.
The Republican plan is to privatize Medicare starting in 2010. The
whole reason that Medicare was developed in the first place, was that
private industry would not rise to the challenge of taking care of our
nation's seniors the way they deserve.
The Republican plan is a risky scheme only an HMO could love. The
Bush Administration's Medicare Administrator has called traditional
Medicare ``dumb'' and ``a disaster,'' highlighting Republicans' disdain
for a program that Democrats have been fighting for since 1965. While
Democrats have worked to modernize Medicare with prescription drugs,
preventive care and other new benefits, Republicans are insisting on a
riskier course even the Wall Street Journal calls a business and social
``experiment.''
The Republican plan destroys Employer Retiree coverage. The
Congressional Budget Office has concluded that about one third of
private employers will drop their retiree drug coverage under a
proposal like the one being contemplated. In order to lower its cost,
the House Republican plan stipulates that any dollar an employer pays
for an employee's drug costs would not count towards the employee's
$3,700 out-of-pocket catastrophic cap. This would therefore
disadvantage seniors with employer retiree coverage because it would be
almost impossible for them to ever reach the $3,700 catastrophic cap,
over which Medicare would pay 100 percent of their drug costs. The
practical effect of this is that employers will stop offering retiree
coverage. That is a step in the wrong direction.
We can do better. The House Democrats' legislation, that I am a proud
cosponsor of, is designed to help seniors and people with disabilities,
not HMOs and the pharmaceuticals industry. Under the Democratic
proposal, the new Medicare prescription drug program would be
affordable for seniors and Americans with disabilities and available to
all no matter where they lived. It offers a meaningful benefit with a
guaranteed low premium; and would be available as a new ``Medicare Part
D'' within the traditional Medicare program that seniors know and
trust.
I am committed to getting seniors the prescription medications that
their doctors deem they need. I want to work with our Colleagues on the
other side of the aisle, and the Administration to make that happen.
But unless I see a plan without a gap--with a consistent benefit--with
some smart cost-controls--and some protections for Medicare, an
excellent program for Americans, I cannot support this Republican drug
scheme.
This bill is a sham. Our seniors have been looking forward to getting
relief from the high cost of drugs. They will be waiting with
anticipation until after the next elections, when this bill
conveniently kicks in. When it does, they will be furious. Let's do
better.
The SPEAKER pro tempore (Mr. Hastings of Washington). The Chair would
remind the gentleman from California (Mr. Stark) that he has 30 seconds
remaining.
Mr. STARK. Mr. Speaker, I yield myself the remaining time and will
use it to sum up because that is about all the time it will take to
explain what is in the Republican bill, which is nothing. It privatizes
Medicare, and it promises a benefit as good as we Members of Congress
get, and it does not get a third of the way there.
It is a hoax. It is phony. It is a fig leaf. It only gives coverage
to the Republicans because there is nothing, absolutely nothing in this
bill that requires anybody to provide a drug benefit to the seniors,
and perhaps they will give the Republicans enough campaign money or
promises and favors of other sorts to get them to change this in the
future; but right now, sexual favors will not do it, nothing will do
it. We are not giving the seniors anything but a hoax.
The SPEAKER pro tempore. All time for the gentleman from California
(Mr. Stark) has expired.
The gentleman from California (Mr. Thomas) has 4\1/2\ minutes
remaining.
Mr. THOMAS. Mr. Speaker, I yield the remaining time to the
gentlewoman from Connecticut (Mrs. Johnson), to close for our side, to
continue to talk about the bill that for the first time in the history
of Medicare provides low-income help, and she is the chairwoman of the
Subcommittee on Health of the Committee on Ways and Means.
Mrs. JOHNSON of Connecticut. Mr. Speaker, I thank the gentleman for
yielding me the time.
Today, is an historic day for America's seniors. Congress is about to
fulfill the promise and the potential of Medicare, which has been one
of our greatest success stories in our history; but when Medicare was
created in 1965, prescription drugs were few and far between. Instead,
painful and invasive surgeries were standard treatment; but now, with
the health security of our seniors tied directly to medicines,
medicines that extend life and restore hope, we must add prescription
drugs to Medicare for all our seniors.
A Medicare program without a drug benefit is a false promise in the
21st century. I am proud to stand here on this House floor and bring
prescription drugs to Medicare for all of our seniors and a benefit
that is simple, generous, and fair.
It is simple because it pays 80 percent of the first $2,000 of drug
costs; and it guarantees the peace of mind of our seniors, protecting
them against catastrophic drug costs, covering all costs above $3,500.
It is generous because the average senior spends $1,200 on
prescription drugs every year. Yet in this bill we cover 80 percent of
the cost up to $2,000.
It is fair because it helps the low-income seniors more than any
other group. It not only helps the very poor, below 150 percent of
poverty, but for the first time, by allowing State subsidies to help
seniors toward that threshold of catastrophic coverage, we help the
next income group to have that security that seniors depend on in their
retirement.
In addition, there is fairness at both ends of this bill. Should
someone with a $200,000 income have the same level of catastrophic
protection as a low-income senior? Of course not.
But modernizing Medicare cannot be just about prescription drugs, as
important as prescription drugs are. It
[[Page H6091]]
must also be about addressing the most crippling threat to our seniors'
well-being and their retirement. It must address chronic illness.
{time} 2045
Current Medicare is an old-fashioned illness treatment program. This
bill will provide seniors with chronic illnesses a chance to have truly
progressive care, whose goal it is to prevent the progression of
chronic illness. Our goal must be to be sure that if you have diabetes,
you do not end up on dialysis.
Disease management is the new frontier in medicine. It will slow,
interrupt or reverse disease. It requires more sophisticated
technology. It requires greater patient involvement in their own care.
But it results in higher quality health care and much improved quality
of life and lower costs for hospital care, emergency room care, and
doctors' visits.
Mr. Speaker, this bill will bring the cutting edge of medical science
and modern technology to the service of our seniors and disabled
veterans. With over half of our seniors suffering from five or more
chronic illnesses and using 80 percent of Medicare's resources, we must
bring chronic disease management to the service of our seniors. And no
bill to this point has ever done that. So I am proud to say that this
bill brings both prescription drugs and preventive health care programs
to Medicare and will provide unprecedented vitality to our Medicare
program.
In conclusion, let me remind us all that this bill will revitalize
our Medicare Choice plans and provide that reliable high-quality care
year after year after year that seniors depend on, a more holistic
integrated care than fee-for-service can provide. So I ask my
colleagues tonight to support wholeheartedly and enthusiastically H.R.
1. It is historic. It brings prescription drugs into Medicare and it
prepares Medicare to provide 21st century medicine to our seniors in
the years to come.
The SPEAKER pro tempore (Mr. Hastings of Washington). All time
allocated to the Committee on Ways and Means has expired. The gentleman
from Louisiana (Mr. Tauzin) is recognized for 45 minutes.
Mr. TAUZIN. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, when the chairman of the Committee on Ways and Means,
the gentleman from California (Mr. Thomas), opened this debate tonight
in presenting H.R. 1 to the floor, he acknowledged the extraordinary
cooperation and the spirit by which our two committees, the venerable
Committee on Ways and Means and the venerable Committee on Energy and
Commerce, of the House have worked together on this bill again this
Congress, with the kind of harmony and dedication to accomplishing a
good purpose for this country that is seldom seen between committees
that often fight and juggle for jurisdiction. I want to commend him for
that statement and acknowledge my personal gratitude for him and the
entire membership of the Committee on Ways and Means and their great
staff for the spirit in which they worked with the Committee on Energy
and Commerce to accomplish this historic moment for our country.
I also want to thank the gentlewoman from Connecticut (Mrs. Johnson)
of the Committee on Ways and Means for the extraordinary work she has
personally given to this effort and the way in which she has worked
with members of the Committee on Energy and Commerce, so many long
hours, to accomplish this bill.
It is important also that I highlight, while not acknowledging all
the staff who contributed so many hours, the head of our health care
staff of the Committee on Energy and Commerce, Mr. Pat Morrisey, who
has done Herculean work once again on behalf of this effort. And I want
to acknowledge and thank, again, Mr. Ed Grossman, who is a legend in
the Legislative Counsel's office, in terms of his contribution to this
entire body and the work we do in preparing legislation for the floor.
When we began this effort 2\1/2\ years ago to create once again an
opportunity for this House to pass a prescription drug benefit for
Medicare and, at the same time, to modernize a system that is in deep
trouble, we announced that the entire effort in health care would be
dedicated to a theme of patients first; the idea that everything we did
should be designed to make sure that patients in America continue to
have the best health care delivery system in our country and,
importantly in this area, that seniors get something they desperately
need; and that is that every senior get access to prescription drug
coverage and that the Medicare system itself, which has long been
absent of that important product in the arsenal of products that keep
our seniors healthy and long living in our country, that prescription
drugs be added to this system, this important new element of health
care in our country that has long been missing from the program.
At the same time, we recognize that the worst thing that can happen
to any citizen is to be forced to go to a single store, whether it is a
government-run store or a private-run store. We know when there is only
one store in town, generally you get bad products and bad services and
often bad attitudes. No matter what store it is, no matter who runs it,
when more than one store is available, when we have choice, whether it
is choice between a government store or a privately-run store, all of a
sudden prices become better, products become better, attitudes become
better, and service becomes better.
We know that Medicare is described by so many members of the
Committee on Ways and Means as being in deep trouble. We know it is on
a path toward insolvency. And Medicare, a system by which so many
citizens have depended on for years for their health care, is absent
this vital asset of prescription drug coverage. So we began our efforts
to make sure we could add that coverage to the bill. We have been doing
this over several Congresses now, and every year we battle over what is
the right number to fund this program and how best to fund it.
I want to point out that we owe a great debt of gratitude to the
chairman of the Committee on the Budget, the gentleman from Iowa (Mr.
Nussle), for including this year $400 billion for us to fund this
effort. In last year's budget, we dealt with considerably less. In
fact, in the Democratic budget that was prepared for the year 2002, our
friends on the other side allocated only $330 billion to their effort
to fund prescription drugs. This year, our Committee on the Budget
provided us with $70 billion more than even the Democrats did when they
prepared their budget for the year 2002. And I want to thank the
Committee on the Budget and Chairman Nussle for that great effort.
With that amount of money available, we have been able to construct
this year, as the gentleman from California (Mr. Thomas) and his team
have so adequately described, a much better bill, a bill richer in
benefits, more secure in the texture of its structure, to make sure
that seniors would, in fact, have more choices. Those like my mother,
who want to stay in Medicare, cannot only stay in Medicare but enjoy a
prescription drug benefit now; and those who might enter their senior
years knowing about choice, liking choice, preferring choice, having
the availability of different plans offered in the private sector that
they could choose their prescription drug benefit from.
That is the kind of world we hope to create when we pass this bill
tonight, a bill that historically modernizes the Medicare system and,
at the same time, brings some more stores to town and makes sure that
every store, the government store and the private stores, all have the
products that seniors need so desperately, and that is prescription
drugs.
In this bill this year, we do a number of other things. We address
the concerns of many of our health care providers in terms of their
lack of proper reimbursement from the government, and we add
reimbursements to hospitals and physicians and caregivers across
America. We have an excellent, and I thank the Committee on Ways and
Means again for their work on this, we have an excellent rural package
that will provide $27.2 billion of assistance to rural health care
givers and hospitals to beef up care in America where care is
desperately short and, unfortunately, hospitals are closing and doctors
are leaving their practices.
Indeed, because this bill adds to the mix of choices that seniors
will have in the future, there are predictions from CBO that Medicare
will get back on its
[[Page H6092]]
feet, will not necessarily have to go insolvent. It will have a chance
to be one of the options that seniors wish to choose for a long time in
the future.
These benefits are going to benefit all Americans. I know there is
some talk about how the plan has coverage and then there is a donut
hole and there is coverage again for catastrophic coverage. The
discounts provided to seniors in this bill will be available at all
stages of prescription drug coverage, at all stages of prescription
drug use and purchase throughout the bill. Seniors will see lower drug
expenses in this bill. CBO estimates, in many cases, by as much as 50
to 70 percent. All seniors will benefit.
And for the seniors who live below 135 percent of poverty, and there
are thousands and millions of those seniors living across America, this
bill provides a 100 percent subsidy, 100 percent coverage for the drugs
they are going to need under this prescription drug plan. And that is a
pretty good effort and that is a pretty good reform of our system.
Indeed, we are also going to do some interesting things. We are
concerned about the high prices of drugs. And like the Senate, we
include reforms in the Hatch-Waxman laws that will speed the approval
of generic drugs into the marketplace. And we reformed that awful, that
awful wholesale price system that the government currently uses with
phony wholesale prices that force seniors to pay 20 percent of phony
prices whenever they suffer cancer and have to endure cancer therapies
and urinary tract therapies and respiratory therapies. In short, we are
going to lower the cost of drugs to America across the board, and we
are going to increase the availability of drug coverage for every
senior in this country and build new options for seniors to choose
from. That is a pretty good package.
I want to again congratulate all who worked on it and all in the two
committees who contributed so much to it. In the House Committee on
Energy and Commerce we had 65 amendments, I think 29 recorded votes,
over 22\1/2\ hours of debate again this year. Are we ready for this
vote tonight? You bet we are. Are seniors ready for the debate to end?
You bet they are. Are seniors ready for us to really do it this year?
You know it. Are seniors ready for this House, the Senate, and the
President to come together and actually sign a law that gives them
these benefits, instead of constantly just debating the issue? You know
that is true.
This is a historic moment, and this is our time to get it done.
Mr. Speaker, I reserve the balance of my time.
The SPEAKER pro tempore. The gentleman from Michigan (Mr. Dingell) is
recognized for 45 minutes.
Mr. DINGELL. Mr. Speaker, I yield myself 3 minutes.
Mr. Speaker, three things: One, this is a bad bill. Two, it is not
the Senate bill. And, three, it destroys Medicare as we now know it.
And if you do not believe it, take the words of my good friend, the
chairman of the Committee on Ways and Means, who says, ``To those who
say this bill would end Medicare as we know it. Our answer is, we
certainly hope so. Old-fashioned Medicare isn't very good.''
Well, it is a safety net that has preserved and protected the health
and the well-being of Americans for 38 years. It has been a fabulous
system for the protection of the health and the welfare of the people.
This thought echoes the words of Speaker Gingrich, who wanted
Medicare to wither on the vine.
Well, it is a fraud upon the American people. It provides very little
for most people who are looking for the benefit of receiving
prescription pharmaceuticals. What it does is it subsidizes the
insurance companies. It does not control prices. It does not stimulate
competition. It affords to the senior citizens a situation where they
wait 2 years. And after they wait 2 years, what do they get? An
enormous donut hole into which they fall after they have spent $2,000,
during which period, for a period of about $2,900, they get no
additional help from their government, but during which time they have
to pay more money, more money, to not draw any benefits.
And it should be noted there is no requirement whatsoever, none in
this legislation, that requires the insurance companies, who will begin
getting subsidized enormously in just 2 years after the enactment, to
do a single thing to provide for prescription pharmaceuticals for the
benefit of their subscribers. Indeed, most insurance companies have
said they do not want to participate in the pharmaceutical-only care
benefit that would be offered by this legislation. So they have set up
this wonderful situation where there will be enormous boundless
subsidies to try to induce somebody to come in and set up HMOs which
will serve the people in the area or provide prescription
pharmaceuticals to them.
The Democrats have a simple, easy-to-understand piece of legislation,
one which builds upon the practices which we have used in Medicare with
such great success and so efficiently for so long to see to it that the
people get the benefit on the payments of a modest sum and a modest
deductible and then they get their benefits. No donut hole during which
they do not gain benefits.
And I would note that, by an interesting circumstance, many people
under this wonderful Republican bill will pay a lot more than they will
get out of this legislation. It is a piece of legislation which can
best and most kindly be defined as a fraud upon a group of people who
have high hopes that their Congress is going to take care of them.
{time} 2100
Well, this Congress is going to take care of them; it is going to
give them a deceitful piece of legislation which benefits them very
little, if at all.
Mr. Speaker, less than 2 weeks ago, the House Republicans divorced
themselves from the Senate bipartisan legislation and unveiled their
lengthy and complicated proposal to make sweeping changes in Medicare.
After taking months to develop more than 300 pages of fine print in
secret consultation with selected corporate allies, they rammed the
bill through committees last week and are ramming it through the House
today under a rule developed in the wee hours this morning. No
hearings, no significant opportunity for public comment, no
concessions--just the way the House Republican leadership wants things.
But the Republican leadership is playing with fire. Not content
merely to privatize a watered-down drug benefit, this bill, H.R. 1
privatizes the entire program in 7 years. As Chairman Thomas said
yesterday, ``[t]o those who say that [the bill] would end Medicare as
we know it, our answer is: We certainly hope so. * * * Old fashioned
Medicare isn't very good.'' And a Republican Senate leader was quoted
last month as saying that ``I believe the standard benefit, the
traditional Medicare program, has to be phased out,'' echoing Speaker
Gingrich's 1995 prediction that traditional Medicare would ``wither on
the vine.'' The list goes on. Former Majority Leader Dick Armey said,
also in 1995, that Medicare was ``a program I would have no part of in
a free world.'' Most recently, the Bush administration official in
charge of Medicare, Tom Scully, 2 months ago called Medicare an
``unbelievable disaster'' and a ``dumb system.'' And, of course, I was
here in 1965 to witness the overwhelming majority of Republicans vote
for the motion to recommit the legislation that created Medicare.
How will seniors react when told they will be forced to pay more to
see their family doctor, or accept whatever doctors and benefits a
private plan chooses to give them? How will seniors react when
traditional fee-for-service Medicare is no longer a trusted safety net?
How will seniors react when given a voucher and told to fend for
themselves in the insurance marketplace--the same marketplace that
failed them before Medicare? They should, and will, be outraged.
Seniors will also be angry when they learn that the Republican drug
benefit helps insurance companies more than them. Democrats propose a
true benefit provided under Medicare, with set premiums and benefits.
Republicans propose payments to insurers to offer uncertain benefits,
with uncertain premiums. The only certainty in the Republican plan is a
huge coverage gap, when seniors will continue to pay premiums after
substantial out-of-pocket expenses, and yet receive no benefit. And
drug costs will continue to rise, because the Republicans prevent
bargaining by Medicare to make prescription drugs more affordable to
seniors.
Other nasty surprises will hurt seniors as well. Cuts in payments to
hospital, when many are closing down. Inadequate payments to doctors,
when seniors' access already is jeopardized. Increasing seniors' costs
by $8.3 billion for their Part B coverage. These are shortsighted acts
of extraordinary callousness.
I urge my colleagues to reject this dangerous Republican plan. Our
senior citizens deserve better than to be guinea pigs for risky
ideological experimentation.
Mr. Speaker, I reserve the balance of my time.
[[Page H6093]]
Mr. TAUZIN. Mr. Speaker, I yield 3 minutes to the gentleman from
Florida (Mr. Bilirakis), the chairman of the Subcommittee on Health.
Mr. BILIRAKIS. Mr. Speaker, I thank the gentleman for yielding me
this time.
Mr. Speaker, I rise in support of H.R. 1, and I urge my colleagues to
lend their support to this very important bill. We have before us a
historic opportunity to provide our constituents with a meaningful
prescription drug benefit that our Nation can afford. While the bill
before us certainly is not perfect, it targets the $400 billion
available under our budget resolution towards areas where it can do the
most good.
Our bill provides a great deal of assistance to our lower-income
seniors for whom we waive a deductible and coinsurance requirements.
These seniors, those with incomes below 150 percent of the poverty
level, which in 2002 was $13,290 for an individual and $17,910 for a
married couple, will only be responsible for a small copayment per
prescription.
In addition, the bill targets the prescription drug benefit towards
where the need is greatest. Beneficiaries are only responsible for 20
percent of their drug costs between a $250 deductible and a $2,000
initial coverage limit. When we consider that the 2003 median drug
costs for Medicare beneficiaries are estimated to be $1,390, it is
clear that our bill provides a very good, up-front benefit.
Finally, the bill ensures that seniors will have the peace of mind of
knowing that their annual drug costs will be capped at no more than
$3,500 out of pocket. While that number does rise for some wealthier
seniors, I would note that 95 percent of seniors will qualify for the
$3,500 figure. Our bill makes other improvements to the Medicare
program, and includes some Medicare payment modifications to ensure
that beneficiaries will still have access to high-quality health care.
I would like to close by noting my great disappointment with my
colleagues on the other side of the aisle, who for 30 years when they
controlled this House did not do a thing for Medicare. I had to sit
through a 3-day markup where my intentions and those of my colleagues
were constantly questioned. Republicans were often accused of not being
willing to commit adequate resources to a Medicare prescription drug
benefit. I find that odd since in 2001, 2 years ago, the Democratic
substitute to the budget resolution included only $330 billion for a
new drug benefit. Republicans added $70 billion to that number only 2
years later, and still our colleagues accuse us of underfunding that
benefit.
Mr. Speaker, all this tells me is that most Democrats only care about
engaging in a reckless bidding war with Republicans and not about
developing a reasonable, affordable benefit. H.R. 1 is a good bill, and
its passage today will move us one step closer to a law which will
provide real help to tens of millions of Medicare beneficiaries.
Mr. DINGELL. Mr. Speaker, I yield 3 minutes to the gentleman from
Ohio (Mr. Brown), the ranking member of the Subcommittee on Health.
Mr. BROWN of Ohio. Mr. Speaker, for years Republicans have tried to
frighten seniors by telling them that Medicare was going broke. The
media in this country scolded the Republicans for their Mediscare
tactics. Well tonight, Republicans have graduated from using Mediscare
tactics to a new level, and that is scam.
Mediscam number one: my Republican colleagues tout H.R. 1 as the
largest expansion of Medicare since the program's inception calling
their plan generous. But under H.R. 1, seniors will be required to pay
$4,000 out of pocket to receive $5,000 in benefits. That is not
generous; that is not even insurance.
Mediscam number two: my Republican colleagues say we should pass H.R.
1 because seniors deserve better coverage options like those available
to Members of Congress, yet this bill's drug coverage is less generous
than the least generous coverage available to Members of Congress. That
is not treating seniors like Members of Congress; that is treating
seniors for suckers.
Mediscam number three: my Republican colleagues say H.R. 1 gives
seniors coverage they can trust. It is an expansion of the old, failed
Medicare+Choice program which has dropped coverage for 2 million
seniors outright. H.R. 1 is not coverage you can trust; H.R. 1 is
coverage that cashes the check, then leaves seniors hanging.
Mediscam number four: my Republican colleagues say H.R. 1 will
enhance the security of America's retirees, but the nonpartisan
Congressional Budget Office says about one-third of employers will drop
their retiree benefits if H.R. 1 becomes law. In other words, H.R. 1
will force seniors out of the drug coverage they now have. It will
force seniors out of the drug coverage they now have.
Mediscam number five: my Republican colleagues say H.R. 1 will bring
prices down through the magic of competition. How could that be? The
drug industry wrote this legislation; the insurance industry wrote this
legislation. They do not want lower prices, they want higher prices,
and that is why my Republican colleagues took out any ability for the
Secretary of Health and Human Services to lower drug prices. In fact,
the drug companies gave $85 million to my Republican friends for their
reelection in 2002 and tens of millions of dollars to President Bush.
Mediscam number six: my Republican colleagues say forcing seniors
into private health insurance will reduce health care costs because
private plans are more efficient. My Republican friends know that
private insurance plans actually operate less efficiently than Medicare
with administrative costs five times higher than Medicare.
Mr. Speaker, it is irresponsible to spend tax dollars bribing HMOs.
It is irresponsible to provoke employers into dropping retiree health
coverage. Vote ``no'' on H.R. 1.
Mr. TAUZIN. Mr. Speaker, I yield myself 30 seconds.
Mr. Speaker, the Mediscam bill that the gentleman just described is
patterned after H.R. 1495, authored by the gentleman from California
(Mr. Stark), the gentleman from Michigan (Mr. Dingell), the gentleman
from California (Mr. Waxman), and the gentleman from Ohio (Mr. Brown)
just a few sessions ago in the 106th Congress.
It provided a $220 deductible, 20 percent cost share up to $1,700, a
doughnut hole with a $3,000 catastrophic coverage, and no defined
premiums. Does that sound familiar? The bill we wrote today is
patterned after a bill written by my friends on the other side of the
aisle back then, and they complain today that it is Mediscam.
Mr. Speaker, I yield 3 minutes to the gentleman from Florida (Mr.
Stearns), the chairman of the Subcommittee on Commerce, Trade and
Consumer Protection.
(Mr. STEARNS asked and was given permission to revise and extend his
remarks.)
Mr. STEARNS. Mr. Speaker, we have heard from the Democrats that this
is a plan that will not work and is a fraud. We had 2 days of hearing,
and I never heard a plan from the gentleman from Michigan (Mr. Dingell)
or the gentleman from Ohio (Mr. Brown). We had 64 amendments.
Parliamentary Inquiry
Mr. BROWN of Ohio. Mr. Speaker, parliamentary inquiry.
The SPEAKER pro tempore (Mr. Hastings of Washington). Will the
gentleman yield for a parliamentary inquiry?
Mr. STEARNS. Mr. Speaker, I do not yield.
The SPEAKER pro tempore. The gentleman from Florida (Mr. Stearns)
controls the time.
Mr. STEARNS. Mr. Speaker, what we have here is a plan that the
Republicans have been on their knees trying to come up with to try and
solve this problem. It is voluntary. It brings choice, everything that
the Federal employees health benefit plan has, the same program that
all these folks have.
Joshua Hammond wrote a book called ``The 7 Cultural Forces,'' which
defines who we are as Americans; and one of those cultural forces is we
are ready, fire, aim. That is, sometimes we do not get it perfect. We
do the best we can, and that has been our history for 230 years. Is
this bill perfect? No. In fact, the people on this side will argue back
and forth, but all of us know this bill is not perfect. However, we
have carefully balanced the needs and resources from home health to
physical therapy.
[[Page H6094]]
This bill contains the long-overdue addition of a prescription drug
benefit. Our seniors and disabled beneficiaries have waited many years,
particularly true in Florida; and I am pleased to be part of the
solution and part of that markup that we did for 2 days.
Now the folks on this side of the aisle say they have a bill. Their
bill is for $1 trillion. Ours meets the budget demands of $400 billion.
If we could spend all we want in the world, that would be the
Democrat's plan.
But at long last Medicare beneficiaries will have available the same
options that the President of the United States has, the Senate and the
House and the staff here in Congress, a choice to choose the plan that
best meets their needs.
Mr. Speaker, I am very happy that part of this plan that we have here
has a demonstration project in consumer directed care for chronic
conditions such as folks with diabetes. It is analogous to the
successful consumer-directed care demonstration and evaluation
projects, known as cash and counseling in Florida, Arkansas and New
Jersey. It is consumer-directed, and in fact this type of plan is part
of the American Postal Workers Union. It has a consumer-directed
option. So what we have with Medicaid, we are going to have with
Medicare. I am glad that is part of the solution we have.
So I would conclude by saying to my colleagues who are wondering what
to do on this side of the aisle, come along with us. It is a start. It
is not perfect. We can move it to the Senate, have a conference on it,
and improve it. In fact, the gentleman from Louisiana (Mr. Tauzin) in
the markup amended the bill with a GAO study of the impact of this new
cost regime. It is my hope that this will provide an objective,
balanced approach and give us a proper understanding of how much this
whole thing is going to cost. I commend the chairman every step of the
way trying to be balanced, listening to the Democrats' amendments, many
of which were accepted, many we defeated.
Mr. Speaker, thank you for bringing this package of Medicare
additions, updates and reforms here to the Floor today. There is much
here to applaud. We have carefully balanced needs and resources varying
from home health to the physical therapy cap. Most significantly, this
bill contains the long-overdue addition of a prescription drug benefit
to Medicare. Our seniors and disabled beneficiaries have waited for
this for many years now, and I am pleased to be part of the solution.
At long last, Medicare's beneficiaries will have available to them the
same options that we, and the Senators, and all of our staff and
employees have: a choice of selections from which to choose the plan
that best meets their needs.
Leading off with ``choice,'' I am pleased that my provision for a
voluntary, small-scale, controlled demonstration project in consumer-
directed care for Medicare beneficiaries with chronic conditions, my
particular interest is diabetes, is included in H.R. 1 as Section 736.
This would be an analog to the successful Consumer-Directed Care
Demonstration and Evaluation Projects, known nationally as ``Cash and
Counseling,'' in Medicaid in Florida, Arkansas, and New Jersey. the
Energy and Commerce Committee held a hearing June 5 on Consumer-
Directed Care, and every single Member praised that demonstration's
progress, but many cautioned not to overreach expanding its
application. I agree. To that end, at markup I agreed to language from
my friend, the ranking Member of the Committee, the gentleman of
Michigan, Mr. Dingell, tightening some boundaries for the demonstration
project. The Consumer-Directed Care demo is working, let's expand the
elements of Consumer-Directed Care that have been successful in a
voluntary, incremental fashion and see how the demonstration in
Medicare might be evaluated down the road.
Section 736 will direct the Secretary to design a demonstration
project allowing for participating Medicare beneficiaries to cash out
the value of certain services. They then, with the assistance of a
designated ``counselor'' of their choosing, and government-provided
fiscal intermediary, would have some flexibility in making decisions
directing care for their condition.
Furthermore, Consumer-Directed Care type models are now offered in
major health plans in the private sector: in 2003, the American Postal
Workers Union (APWU-AFL-CIO) are the very first Federal employee group
with a Consumer-Directed Care plan available to them. Do our Medicare
beneficiaries deserve any less choice?
At the June 5 hearing, the National Director of Cash and Counseling,
Dr. Kevin Mahoney, outlined that there are generally three
characteristics of a condition that make it a good fit for the
consumer-directed care model. Disabilities fit these three, and I
believe diabetes does, too: (1) It is chronic, and one of the most
self-managed diseases; (2) it follows a relatively predictable course
of treatment; and (3) there is room for choice, in tailoring a
treatment plan to the individual.
I remind my colleagues that under the Medicaid demonstration,
satisfaction has been in the high 90 percentage, no adverse health
outcomes have occurred (in some measures it has improved), and fraud
has been virtually zero.
From that, I must turn to other provisions of the bill. I do not
stand here without some reservations. For example, the reform of
reimbursement for oncologists. No one, no Member, no oncologist, and no
patient wishes for the accounting mismatch of Average Wholesale Price
(AWP), to perpetuate, and we should never let dialogue about AWP
degrade into accusations about gaming the system. It is true that H.R.
1 eliminates the current overpayment on Medicare-covered drugs, while
concurrently increasing the practice expense reimbursement to
appropriate levels that reflect their costs. But my understanding is
that this is still a net decrease for the practice. I ask that the
negotiations continue in good faith. In Energy and Commerce, Chairman
Tauzin amended the bill with a GAO study of the impact of this new cost
regime, and it is my hope that this will provide an objective, accepted
arbiter on true proper costs of administering total community-based
cancer care.
Further, I harbor concerns that this bill not become a runaway money
train. We have budgeted $400 billion over 10 years: is that a ceiling,
or a floor? It is a logical modernization to add prescription drug
coverage to the Medicare program; none of us would choose a health plan
in FEHBP (Federal Employee Health Benefits Program) that lacked drug
coverage. And, through economies of scale, both the traditional fee-
for-service program and the participating private sector plans will
have the purchasing power to contain costs. However, there always runs
the risk of this exploding beyond our control. We have a responsibility
for the fiscal health of this nation, and it is essential that proper
cost containment be addressed in conference, as I understand the
Speaker has assured.
Mr. TAUZIN. Mr. Speaker, I yield myself 15 seconds.
Mr. Speaker, just to correct the record, the Democrats did offer a
substitute plan in our committee which was defeated, and I think it is
pretty close to the substitute plan we will see later tonight.
Mr. Speaker, I yield 10 seconds to the gentleman from Florida (Mr.
Stearns).
Mr. STEARNS. Mr. Speaker, if the Democrats' plan is for $1 trillion
and our is for $400 billion, we cannot say they offered a plan that met
the budget requirements. I would like to ask the Democrats tonight: Do
you have a plan that is under $400 billion like the Republicans?
Mr. DINGELL. Mr. Speaker, I yield 2 minutes to the gentleman from
Florida (Mr. Deutsch).
Mr. DEUTSCH. Mr. Speaker, the House bill in front of us, as the
ranking Democrat of our full committee has ably quoted the chairman of
the Committee on Ways and Means in his own words, ``To those who say
the bill would end Medicare as we know it, the answer is we certainly
hope so.''
This bill is a nonstarter. The Republicans in the Senate oppose it.
It will not happen. It destroys Medicare. I am going to take my 2
minutes and even talk about that.
Mr. Speaker, I am going to talk about the disingenuous nature of the
proposal that the Republicans are fostering at this point as a final
product. And I say disingenuous because both this bill and that
proposal does absolutely nothing about cost containment. How can they
have a prescription drug bill that does nothing on cost containment? It
is totally disingenuous.
For real seniors, and I would encourage all of my colleagues to talk
to seniors because one of the things that is going on in America today
is we do not know the number. We just had the FDA in our committee
again several times. We do not know the number of how many seniors are
availing themselves of purchases through Canada by the Internet, but it
is easily 10 million seniors. We have 10 million seniors who are
purchasing drugs in Canada where the benefits of purchasing drugs in
Canada far exceed any proposal the Republicans have made. Just because
people are old, just because they are sick does not mean they are
stupid. They are going to continue to purchase them. So this bill for
most seniors, for probably over 95 percent of the seniors in America,
does absolutely nothing.
[[Page H6095]]
{time} 2115
What it does is even worse, though. In a Congress, in a country, in a
society that is facing the largest budget deficits in the history of
the world, we take $400 billion out of working Americans, give it to
seniors, but effectively take that $400 billion and flush it down the
toilet and we get absolutely nothing from my Republican colleagues'
proposal.
Mr. TAUZIN. Mr. Speaker, I first want to take 15 seconds, if I may,
to point out that the bill before us does now contain the drug
reimportation provisions similar to the Senate provisions and adds
language directing the FDA to conduct rulemaking to make sure that
there is safe packaging, to make sure when we do get drugs under any
such program, that they are safe and effective.
Mr. Speaker, I yield 4 minutes to the gentleman from Pennsylvania
(Mr. Greenwood), distinguished chairman of the Subcommittee on
Oversight and Investigations of the Committee on Energy and Commerce,
our grand inquisitor.
(Mr. GREENWOOD asked and was given permission to revise and extend
his remarks.)
Mr. GREENWOOD. I thank the gentleman for yielding me this time.
Mr. Speaker, my parents, my mother and father, are 81 years of age,
alive and well, and I would like to dedicate all the work that I have
put into this bill to them and I know it will benefit them immensely.
My father used to say when I was a young lad, ``Jim, there are three
kinds of people in this world. There are shirkers, there are workers
and there are jerkers. The shirkers are the people who just don't do
anything. They don't contribute. They don't help. The workers are the
people who roll up their sleeves and get the job done. The jerkers are
the ones that all the time the workers are working they keep tugging at
them, pulling at them, jerking them around trying to interfere with the
work.''
I would submit that the Democratic Party, in all due respect, between
1965 and 1994, when they lost control of the House, were shirkers when
it came to the issue of a prescription drug benefit, for they did
nothing. They did not provide a big plan, a little plan, a medium-sized
plan, they did not provide a plan with a doughnut, without a doughnut.
They did not provide a plan of any kind. They did nothing. We have been
the worker party. We have passed a prescription drug bill in this House
year after year since we have had control. That is hard to do. That is
hard to do because mature legislators have to figure out how to strike
a balance.
We have people in this House who do not want to vote for this bill.
They do not want to vote for this bill because they think it is too
liberal. They think it is a big new entitlement program that will
bankrupt the country. They are against it because it is too liberal.
There are a whole lot of people in this House who cannot vote for this
and will not vote for it because it is too conservative; it does not
spend enough money; it is not big government enough; it uses private
sector factors, influences to curb prices. If you want to get 218 votes
for a bill to provide a prescription drug benefit to the elderly and
the disabled in this country, you have to work very hard with very
complex issues and strike a political balance down the center through
the eye of the needle to get the job done, and that is what this bill
before the House of Representatives stands for. That is what it results
from.
Now we have got the jerkers. We are trying to get this carefully
balanced, incredibly complicated piece of work that our staff on both
sides of the aisle have labored over for years to get done, want to try
to move it through the House today, get it over to Senate, we have got
some bipartisan support here, we have got some bipartisan support in
the Senate, and we are going to get it done. And at the end of the day
when the little old ladies and the little old men in my district and
your districts who have been writing us letters and saying, with tears
rolling down their cheeks, I have got a prescription for cholesterol
drugs, I have got a prescription for antidepressants, I have got a
prescription for my arthritis, I have got a prescription for this and
for that and I can't afford them, what am I going to do. We have all
been getting those letters for years and years. And when this year is
over and when we stand with the President of the United States and he
signs these bills, we will say to the little old men and the little old
ladies and the disabled people of all ages in our district, we got the
job done, when nobody else could or nobody else would. Whether the
shirkers did not do their job or the jerkers tried to get in the way,
the workers will get the job done and this will be an historic year for
the Medicare program of this United States.
I am proud of everyone on either side of the aisle who actually
rolled up their sleeves and contributed to the product.
Mr. DINGELL. Mr. Speaker, I yield 2 minutes to the distinguished
gentlewoman from California (Ms. Eshoo).
Ms. ESHOO. I thank the distinguished ranking member of the committee
for yielding me this time.
Mr. Speaker, for those that are listening in this evening, besides
the vote that some Members of Congress have had to take on going to
war, I consider this the most important vote in the House of
Representatives. Tonight we debate a bill where there is only one thing
that the two parties agree on, and that is that our seniors deserve
prescription drug coverage.
For 38 years, there has been a gold standard for those that are 65
years and older and it was named Medicare. How dare my colleagues on
this side of the aisle say that the Democrats have not done a damn
thing. I regret those words in the Record. We love Medicare. We put it
on the books, and we have defended it ever since then. And we want a
policy in Medicare that is ennobling and recognizes what senior
citizens are.
The advertisers are very busy, but beware. Beware of the advertising.
Read the bill. If your insurance salesman comes to you, the first thing
you say is, how much is this going to cost a month? Read the bill.
There is no premium cost in the bill. It says choice. Yes, there will
be choice of insurance companies but not choices of doctors.
By 2010, every senior citizen that is listening in, you will be
forced, you will be mandated to go into a private insurance program.
That is what our friends have written.
Mr. TAUZIN. Mr. Speaker, I am pleased to yield 2 minutes to the
distinguished gentleman from the great State of Nebraska (Mr. Osborne).
Mr. OSBORNE. Mr. Speaker, rural health care is struggling. The
hospitals are closing and many doctors are leaving. If you are in a
small community and the doctor leaves or the hospital closes, the whole
community begins to unravel. H.R. 1 addresses the troubles that we see
currently in rural health care. Number one, it lowers the labor share
of the wage index for rural hospitals. This allows them to be more
competitive with urban areas in terms of salary scale.
Number two, H.R. 1 increases Medicare reimbursement for rural
doctors. Sixty percent of the patient load in my district and many
other rural districts are Medicare patients. Doctors simply cannot
afford to treat Medicare patient loads of this size because on many
Medicare patients they lose money. As a result, they cut back Medicare
patients or sometimes leave the area.
Thirdly, H.R. 1 provides a full and permanent equalization of
Medicare payments to rural hospitals. An appendectomy is not cheaper in
a small hospital than in a large urban hospital. In some cases it is
actually more expensive. Also, H.R. 1 provides additional home health
care payments and provides provision for rural ambulance.
Mr. Speaker, the reason I want to come to the floor tonight is simply
to thank the gentleman from Louisiana for all that he has done for
rural health care. This is probably, as far as I am concerned, the most
important part of the bill. I would also like to say I represent a
rural area. Many retirees in my area live on fixed incomes. Most of
these people are making 15, $20,000 a year. Most of them are spending
30, 40, 50 percent of their income on prescription drugs. And so the
number one concern that I see in rural America is the prescription drug
bill. This bill offers considerable help to these people.
Again, I would like to thank the gentleman from Louisiana, the
gentleman from California (Mr. Thomas) and also the gentleman from Iowa
(Mr. Nussle). I urge the passage of H.R. 1.
[[Page H6096]]
Mr. DINGELL. Mr. Speaker, I yield 2 minutes to the distinguished
gentleman from New York (Mr. Engel).
Mr. ENGEL. I thank my friend for yielding me this time.
Mr. Speaker, I rise in strong opposition to this bill. This bill is a
cruel hoax perpetrated on America's seniors. This bill is not about
helping seniors. It is all about privatizing Medicare. This is not the
Senate bill. This bill is a wolf in sheep's clothing. It purports to
help seniors. All it does is create a goal that many people on the
other side of the aisle have wanted for years, the privatization of
Medicare. This bill drains the lifeblood out of the Medicare program
and breaks the promise we made to seniors 38 years ago when Medicare
was created.
I wish this Congress could have come together for an historic moment
that would finally provide seniors with the type of prescription drug
coverage they need and deserve. Unfortunately, we are doing a
disservice to our seniors by shortchanging them with a woefully
inadequate drug benefit. Why is it inadequate? Let us face it, there is
not enough money in this bill because my friends on the other side of
the aisle have bankrupted this government with huge tax cuts, huge tax
cuts to benefit the rich, huge tax cuts which make it impossible to
help entitlement programs like Medicare. When the leaders over there
said they wanted Medicare to wither on the vine, they were speaking the
truth and that is what is happening today. With the enactment of this
bill, Medicare is withering on the vine.
When I came to Congress 15 years ago, my goal was to provide
meaningful prescription drug benefits. My bill and others, 1045, would
keep the promise of Medicare, which was created to prevent seniors from
having their life savings ravaged by health care costs. Today we are
considering no such thing. The legislation before us is not a promise
kept to seniors, it is a promise kept to HMOs and insurance companies.
This is not the Senate bill. The Senate bill was a starting point to
improve upon. This bill bankrupts Medicare, privatizes it by the year
2010. American seniors will not have Medicare as they know it by 2010.
Again, when you have tax cuts for the rich and you do it to help your
rich friends and you want to strangle social programs and entitlement
programs, you do not have an adequate bill.
This bill should be rejected.
Mr. DINGELL. Mr. Speaker, I yield 2 minutes to the distinguished
gentleman from Maryland (Mr. Wynn).
Mr. WYNN. Mr. Speaker, I thank the gentleman for yielding me this
time. I rise in strong opposition to the Republican plan. This Medicare
reform plan is woefully inadequate. Everyone agrees that a real
prescription drug plan would cost between $600 and $800 billion. This
plan only provides $400 billion. Why? My Republican colleagues will
say, well, this is because that's all we can afford. The truth of the
matter is that is all we can afford because of their big tax cuts. But
keep in mind, you did not get a big tax cut. The wealthy got a big tax
cut. Mr. and Mrs. Average American got cuts in service, cuts in
benefits and cuts in quality. What we have here this evening is an
attempt by the Republicans to do prescription drug coverage on the
cheap.
There are three problems with this. First, in their plan, there are
no guaranteed drug benefits. The private insurers determine what drugs
are going to be available to you, not your needs. So that if your drugs
are not covered, then you have to pay the full price. This is no
prescription drug benefit. Second, there are no fixed premiums. You
hear the Republicans tell you, well, it's going to be $35 a month. Wait
a minute. $35 a month is nowhere in their bill. These premiums could
rise to as much as $85 a month. You will drive seniors into bankruptcy
with that.
The third problem with this plan is the hole in the doughnut, the
gap. Under the Republican plan, this plan they are talking about
tonight, after the first $2,000 of prescription drug costs, you have to
pay the rest up to $5,000. That is a gap of $3,000. Again, that would
drive seniors into bankruptcy. The neediest, sickest seniors do not get
the benefits when they need it, the consequence of doing prescription
drug coverage on the cheap. Forty-eight percent of Medicare
beneficiaries will fall into this gap. This is not a true prescription
drug plan.
Second, this bill contains something called Medicare reform. That is
another name for privatizing and destroying Medicare as we know it.
Plans will have to compete. Medicare will compete against private plans
and our seniors will be forced out of a plan that they have come to
trust. This plan will not work, will not provide the benefits as a
safety net for our seniors. I urge its rejection.
Mr. TAUZIN. Mr. Speaker, I yield myself 10 seconds to ask a question.
If this plan funded at $400 billion is prescription drugs on the cheap,
what do you call the $330 billion that was allotted by the Democratic
budget for the year 2002?
{time} 2130
Mr. Speaker, I yield 3 minutes to the gentleman from North Carolina
(Mr. Burr), the distinguished vice chairman of the Committee on Energy
and Commerce.
(Mr. BURR asked and was given permission to revise and extend his
remarks.)
Mr. BURR. Mr. Speaker, I am here tonight to thank the chairman of the
Committee on Energy and Commerce and the gentleman from Michigan (Mr.
Dingell), ranking member, our colleagues on the House Committee on Ways
and Means, the leadership of the House for having the foresight to move
forward with legislation to recognize that there is a problem in
America, a problem that we have ignored for a decade, the need to add a
prescription drug plan. I did not come here to argue with anybody. I
came here because I believe we can do better. I believe we can do
better than the bill we have proposed. I believe we can do better than
the substitute that is offered.
America understands why we have not solved this because all they need
to do is listen to us. We talk about each other's bills in a way that
we point out things that we think are bad. We forget that we are
talking about a population that has nothing. I wish we could have
started with something smaller, but something that was targeted to
people who are faced with the decision every day of do I buy drugs or
do I buy food? But we have been convinced by this town that our only
action has to be something comprehensive, something that includes
everybody, something that includes those who have a minimal income and
those who have an income of $1 million a year. We have not excluded
anybody. We will not exclude them over here and we will not exclude
them over here, because there are associations and groups that
represent seniors, and they have never met those seniors, but we have.
Mr. Speaker, we owe our constituents more than to sit on this floor
and tear up each other's legislation. We have to be for something. To
get up here and debate that we are against this and we are against that
and it is bad, it is inadequate is only a suggestion that we are not
good enough to serve here, that they ought to look for replacements. I
would challenge all of us.
I do not know what the outcome of tonight would be. I will vote no on
both proposals that come up. I do not suggest on either side of the
aisle that Members do that. That is what I am going to do. I have come
to the conclusion, but never forget if we want a real solution to this,
a real solution that affects real people, then we have got to put our
heads together and work together and remember who it is that we are
trying to provide for in this bill. I reluctantly say that I will vote
against this.
Mr. DINGELL. Mr. Speaker, I yield 2 minutes to the distinguished
gentleman from Texas (Mr. Green).
(Mr. GREEN of Texas asked and was given permission to revise and
extend his remarks.)
Mr. GREEN of Texas. Mr. Speaker, following the gentleman from North
Carolina, my good friend, it is frustrating because I feel the same
thing, that we were given a plan and even though we spent 3 days and a
long night debating it in committee we did not really get to legislate
because we really had a plan given to us and it was either take it or
leave it. But this is the most important issue that we will consider
this year not only for our seniors but for everyone. I know a lot of my
colleagues feel that we should support any legislation because it is a
step in the right direction or maybe it is like the Senate bill.
[[Page H6097]]
This is not the Senate bill. The Senate has a better idea. It is not
as good as I would like, but it is better than what we have on the
floor today.
This legislation would require Medicare to move to a competitive
program by 2010. A lot of different terms are used to describe the
model in this bill, whether it is called defined contribution, voucher,
premium support, or something else, but it abolishes Medicare as we
know it. The bottom line is it is privatization of Medicare. It will
take the responsibility of providing meaningful, affordable, quality
health insurance away from the government, like 1965, and shift the
burden onto the shoulders of our seniors. The legislation relies
entirely on private insurance plans to provide drug benefits for
seniors. No government fall-back plan, no safety nets for seniors
living in areas where drug plans do not offer coverage. It places blind
faith in private drug plans that they will sign people up. That is the
ultimate in faith-based policy making. There is a huge gap in this
coverage that will disproportionately hurt individuals who need drug
coverage. Those with the highest drug costs, they will fall into this
doughnut hole. Once one has a little over $3,000 a year up to a little
over $5,000, they fall in this hole.
I talked to a senior this evening who has a little over $300 a month
in prescription drug cost. They will still pay their $35 plus a month,
but they will not get one dime of benefits because they will be in this
doughnut hole.
The ultimate anti-competitive part is that this bill prohibits the
Secretary from negotiating lower drug costs. The VA does it, Medicare
does it, private insurance does it, but we are prohibiting in this bill
the Secretary of Health and Human Services to reduce costs for our
seniors. That is why it is outrageous.
The substitute, on the other hand, is the kind of benefit that
seniors support. It is affordable, comprehensive, and will actually
help drive down the costs of prescription drugs.
Yes, it's more expensive than the base bill, but you cannot provide a
prescription drug benefit on the cheap.
Finally, there's one issue that I'd like to raise about a provision
that would limit the ability of physicians to refer patients to
specialty hospitals in which they have a financial interest.
There is language in the Senate bill which could hurt some innovative
practices that are occurring in specialty hospitals.
Patients need access to a broad range of facilities, and should be
able to choose a hospital that has expertise in their specific health
needs.
I know that some have suggested limiting the percentage profit that
physicians can enjoy under these arrangements, or to limit the
percentage of physician ownership and I hope that both sides can sit
down and reach a solution to this problem.
Mr. TAUZIN. Mr. Speaker, I reserve the balance of my time.
Mr. DINGELL. Mr. Speaker, I yield 2 minutes to the distinguished
gentlewoman from Missouri (Ms. McCarthy).
(Ms. McCARTHY of Missouri asked and was given permission to revise
and extend her remarks.)
Ms. McCARTHY of Missouri. Mr. Speaker, the Republican Medicare bill
fails to provide seniors with meaningful prescription drug coverage and
is an attempt to end Medicare as we know it. With their plan seniors
will have no assurance from 1 year to the next on what plan will be
available to them, what drugs will cost them nor what doctors will
serve them. Under their plan many seniors will have to pay a premium
without receiving any assistance with their drug costs.
Seniors deserve affordable prescription drugs without gaps in
coverage. Our seniors should not be forced to pay more to keep their
choice of doctors. Not only would the plan before us limit or charge
extra for choice, it would force seniors to go to a primary care
physician before seeing a specialist.
The Republicans have produced a plan that fails to make prescription
drugs more affordable and, disturbingly, ends the Medicare system that
has been an irreplaceable safety net to millions of people for the past
four decades. Instead they are creating a plan that costs seniors a lot
and gives them very little.
Mr. Speaker, I urge my colleagues to oppose H.R. 1, the so-called
Medicare Prescription Drug and Modernization Act of 2003, and to
support the Democratic motion to recommit which will preserve Medicare
and provide our seniors with the affordable prescription drugs they
need.
Mr. TAUZIN. Mr. Speaker, I yield 2 minutes to the distinguished
gentleman from New Jersey (Mr. Ferguson), one of our newer members on
the Committee on Energy and Commerce.
Mr. FERGUSON. Mr. Speaker, I thank the chairman and ranking member
and members of the committee who have worked so hard on this bill.
I rise in strong support of H.R. 1. It includes an amendment that I
offered in the Committee on Energy and Commerce which will assist our
most vulnerable seniors by allowing State drug spending to count
towards a senior's catastrophic limit. Especially in States like New
Jersey, this provision is going to dramatically reduce seniors' out-of-
pocket spending while saving our States $5 billion.
About a year ago I stood in the well of this House when we debated
the drug bill last year and I told the Members about my mom who has
been battling cancer and who is only alive today by the grace of God
and because she has had access to great medical care and the
prescription drugs which have quite literally saved her life. I am
proud that my State of New Jersey is home to thousands of researchers
and scientists and companies which have spent their entire lives and
billions of dollars on research to find the cures of tomorrow. This
very day, today, they are working on finding the cures to cancers and
diabetes and AIDS and Alzheimer's.
What are we here to do tonight? We are here to make these great
products more affordable and more available to more people.
As much as I love my mom, her situation is not unique. She is like
millions of other Americans who depends on prescription drugs for their
quality of life. Our responsibility today is to pass this generous and
responsible bill, to make the miracle cures of tomorrow available to
people like my mom. Just as importantly, though, we have to do so in a
way which values and encourages the incredible research and innovation
which will create the cures of tomorrow because I do not only love my
mom, but my wife and I love and treasure our three young children and
it is they who will benefit as well because the lives of our children
and our children's children will be better and stronger and more
fulfilling because of the new cures that will be found and the fact
that they will be affordable because of this plan. That is our charge.
That is our responsibility. Let us pass this plan tonight.
Mr. DINGELL. Mr. Speaker, I yield 2\1/2\ minutes to the distinguished
gentleman from Maryland (Mr. Hoyer), the very able and respected
minority whip.
Mr. HOYER. Mr. Speaker, I thank the gentleman for yielding me this
time.
Mr. Speaker, if truth in advertising applies to legislation, we would
have a duty to warn America's seniors, beware, the Republicans'
prescription drug bill could be hazardous to your health. This bill is
nothing less than an historic betrayal of America's seniors. The GOP
pretends that it is merely extending Medicare, but in fact the bill is
the most dangerous attempt yet to dismantle the most popular health
care program in history.
The Republicans fought the adoption of Medicare in 1965. Their
majority leader said that Medicare should not exist in a free society.
Yesterday the chairman of the Committee on Ways and Means, the
architect of this bill, said on television, and the Members can read it
here, ``To those who say that [the bill] would end Medicare as we know
it, our answer is we certainly hope so.''
This bill would drive seniors out of Medicare and into the arms of
private insurers. There is no guaranteed monthly premium. There is no
defined benefit for seniors. There is no guaranteed access to drugs
seniors must have. The only guarantee in this bill is that it would
leave a huge gap in coverage. Seniors would pay a $250 deductible, $420
a year in premiums, and all costs between $2,000 and $5,100 in drug
expenses. That is $3,100 left to seniors to pay. This bill even
prohibits the government from negotiating lower drug prices for
seniors.
In contrast, the Democratic substitute offered by the gentleman from
[[Page H6098]]
Michigan (Mr. Dingell) and the gentleman from New York (Mr. Rangel)
would provide a prescription drug benefit that guarantees affordable,
universal and voluntary Medicare coverage for prescription drugs. There
are no gaps in coverage. Seniors would pay $25 a month, $100
deductible, and then 20 percent coinsurance. Their out-of-pocket
expenses would be limited to $2,000 a year. That is 1,100 under the gap
that exists in the Republican bill.
The Republican plan also does not give the Secretary of Health and
Human Services the authority to negotiate prices. Our bill does. I
would ask the Members to vote for this substitute which guarantees
prescription drug coverage for seniors.
Mr. TAUZIN. Mr. Speaker, I reserve the balance of my time.
Mr. DINGELL. Mr. Speaker, I am always happy to accommodate the
gentleman from Louisiana (Mr. Tauzin), my dear friend, even when he is
pushing an outrageous piece of legislation under an appallingly
constrictive rule.
Mr. Speaker, I yield 2\1/2\ minutes to the distinguished gentleman
from Massachusetts (Mr. Markey), and I ask the chairman from the
Committee on Energy and Commerce to listen closely.
Mr. MARKEY. Watch out, Grandma. Watch out, Grandpa. The GOP is
selling snake oil off the back of a wagon, and, boy, do they have a
prescription for you.
Mr. Speaker, every senior citizen gets a bottle with three bitter
pills. Bitter pill number one is a lethal dose of privatization poison.
The Republicans are diverting Medicare funds into private drug plans
with no maximum premiums, no guaranteed coverage, and a cynical drive
to destroy the Medicare program.
Bitter pill number two is a dose of crushing costs. Incredibly the
Republican bill injects $400 billion into Medicare but spends it in
such a tangled, convoluted, copay-riddled, incomprehensible, doughnut-
hole-hollowed maze of bureaucracy and lacks any effective effort to
keep prescription drug prices from continuing to soar, that Grandma is
actually going to spend more under this proposal than if we had just
left well enough alone.
{time} 2145
Bitter pill number three is a privacy piracy pill in the form of
income tax forms. The Republicans require senior citizens to hand over
to corporations sensitive personal information from income tax returns
and the most intimate details of their medical care as a condition of
qualifying for any catastrophic coverage. This information will then be
turned against seniors in marketing schemes intended to cherry-pick the
most desirable recruits into private plans, further weakening the
foundation of Medicare for the seniors who need it most.
This is a black day for Medicare. Mr. Speaker, GOP used to stand for
Grand Old Party. Now it stands for Forget Old People.
Mr. TAUZIN. Mr. Speaker, now that we have heard from the doctor of
showmanship, we are going to hear from a real OB-GYN doctor.
Mr. Speaker, I yield 2\1/2\ minutes to the gentleman from Georgia
(Mr. Gingrey).
(Mr. GINGREY asked and was given permission to revise and extend his
remarks.)
Mr. GINGREY. Mr. Speaker, I thank the gentleman from Louisiana for
yielding me this time.
Mr. Speaker, as a physician Member of this body, I rise in strong
support of H.R. 1, the Medicare Prescription Drug and Modernization Act
of 2003.
I do not take lightly voting for a Federal program that expends $400
billion of the taxpayers' money. Being responsible with that money is a
burden that I take very seriously. As appropriators of the people's
revenue, we must assure that each dollar is spent wisely. That is a
high hurdle, but I believe the Medicare Modernization Act clears that
hurdle.
This act is an investment that brings Medicare into the 21st century.
We will save money as we expand the focus of Medicare spending to
include preventive care. Seniors who take the right drugs at the right
time are more likely to stay healthy; and they are less likely to need
expensive, prolonged hospitalizations, painful and complicated surgical
procedures and, sometimes, yes, extended nursing home stays. For that
reason, I do not think that this program will really cost $400 billion
over 10 years. It will only cost that much if it does not work.
My experience as a physician for more than 28 years teaches that a
prescription drug program for preventive care will pay dividends and
increase health and a better quality of life. It is true what they say:
an ounce of prevention is worth a pound of cure. And it is a lot less
expensive.
This Congress has a great opportunity to expand the coverage for
seniors, particularly our needy seniors, while, at the same time,
strengthening the system so that it will be around to serve the baby
boom generation as it moves into retirement. We will serve tomorrow's
seniors as we are serving today's.
Some of our friends on the other side of the aisle insisted today
that this bill could be the death of Medicare. They were even
grandstanding around with black arm bands. That is interesting, Mr.
Speaker, because their Democratic alternative would cost nearly $1
trillion, threatening to slam the entire Medicare system onto the rocks
of financial insolvency long before 2030.
The plan that we will vote on tonight provides a good, strong benefit
for our seniors; but just as important, it provides a sustainable
benefit that will be there for future generations of seniors.
I encourage my colleagues on both sides of the aisle to bring
Medicare into the 21st century. Vote for the Medicare Prescription Drug
and Modernization Act tonight and deliver on your promise to our
beloved seniors.
Mr. DINGELL. Mr. Speaker, I yield 2 minutes to the distinguished
gentleman from Ohio (Mr. Strickland).
Mr. STRICKLAND. Mr. Speaker, I would just like to point out to my
friend, the gentleman who just spoke, my understanding is that he voted
recently to give $800 billion to about 200,000 people. Surely to God we
can do a little better than that for our 40 million senior citizens.
Make no mistake about it. This bill will provide no stable,
affordable prescription drug benefit for our seniors, but I will tell
my colleagues what it will do. It will ultimately destroy Medicare's
social insurance structure, a structure that has provided successful
services to our seniors since 1965.
Let me give a clear example of how this bill will fail. The
Republicans claim that premiums offered by the private plans will be
about $35 a month. But there is no provision in this bill that will
guarantee a $35 monthly premium or even a range of premiums near $35.
Despite what we have heard, despite what we have heard, understand
this: there is nothing in this bill to keep the private plans from
charging any premium they choose to charge.
Now, in fact, Nevada is the only place this model has been tried; and
in Nevada, the premiums were $85 a month. Furthermore, premiums will be
different from State to State, from county to county, even from ZIP
code to ZIP code.
Finally, private plans will be able to increase their premiums each
year without any regulation, leaving seniors subject to the possibility
of wildly fluctuating premiums.
Now, I offered a simple amendment in the Committee on Energy and
Commerce last week that would have corrected this problem and
guaranteed seniors a $35 monthly premium, regardless of which drug plan
they chose to enroll in or where they lived. Every single Republican
voted against that amendment. Last night, I asked the Committee on
Rules. On a party line vote, they denied me the right to offer this
amendment.
Republicans continue to say their bill will cost $35 a month. It is
not true. They ought to stop saying it.
Mr. TAUZIN. Mr. Speaker, what is absolutely true is that 529,000
citizens of Ohio are given free coverage under this bill because they
live under 135 percent of poverty.
Mr. Speaker, I yield 3 minutes to the gentleman from Rockwall, Texas
(Mr. Hall), a Democrat and my dear friend.
(Mr. HALL asked and was given permission to revise and extend his
remarks.)
Mr. HALL. Mr. Speaker, I rise in support of this bill because I am
for a bill. I want to see a bill passed. I want a bill that can pass
this House. I want a bill that can get to the conference committee. I
want a bill that we can consider along with the Senate bill and get
[[Page H6099]]
the best of both bills for the best people of this country.
Almost 40 years ago when I was in the Texas senate, Members of this
Congress came to Texas, came to the Texas house and the senate, touting
two great programs that they were going to introduce and pass. They
named them Medicare and Medicaid. And they said by 1990, Medicare could
cost $9 billion a year. And as I remember, they said Medicaid could
cost almost $1 billion a year. They told us that we really needed to
monitor the program closely or the costs could double.
Well, my colleagues know what has happened to the cost, what has
happened to Medicaid and Medicare. There is an awful lot to do, and we
need to be doing it.
There is no doubt that Medicare has helped millions of seniors escape
dire poverty and live fuller lives. There is also no doubt that medical
costs have far outstripped inflation due to a number of factors,
including expansion of benefits, increased use, and coverage of the
disabled population. Our seniors are staring into their pocketbooks to
find the money they need for their care. We desperately need to do
something to save a great program for people in their golden years.
Mr. Speaker, Medicare needs to be modernized to include a meaningful
provision for drug coverage. In my lifetime, we have seen how
prescription drugs have greatly improved and extended the lives of
Americans. We have also seen how the cost of those life-providing drugs
can trouble families every day. Unfortunately, Congress has almost been
timid in seeking parity between the prices drug companies have charged
domestic dispensers compared to the nondomestic dispensers just across
our borders.
While American drug companies need added alliance for research and
development, and I am willing to give them that, for 10 key drugs for
seniors, Americans pay an average of 150 percent more for the drugs
than Canadians. This is unacceptable. I do not like price controls. The
marketplace provides the competition necessary to deliver the best
price for the people in need. We have to lower the cost of prescription
drugs, and my hope is that we can all work together, including drug
companies, to come up with new, better, and more creative ways to
achieve affordable prescription drugs.
As we look at introducing new competition among providers for
services, we should consider provisions that respect the choices
available to current Medicare beneficiaries. These seniors and the
disabled have paid for and have come to expect a traditional Medicare
system and the safety net that it provides them, and they should be
able to retain their current plans if they continue to be pleased with
them. The Senate improved upon this provision, and I hope that is
included in the final bill.
The Senate and the House bills have good provisions to achieve our
goal. Like many people, I am not completely satisfied with this bill,
but I am very hopeful that we can pass a bill.
I am particularly pleased that we are introducing long-overdue
Medicare reforms that will bring health care into the 21st century;
namely--regulatory reforms and provider reimbursement issues. We are
all aware that providers nationwide, including our rural providers,
have been diminishing in the face of increasing costs and decreasing
reimbursement. We simply must confront this issue because without
access, the rest of the program is meaningless.
Like many people,I am not completely satisfied with this bill, but I
am also not satisfied to see this program collapse. We are closer than
we have ever been to making some meaningful reforms and providing a
prescription drug benefit to seniors. I am hopeful that we will improve
this bill in the conference committee as we seek to find a bipartisan
solution to our common problem. This is just a first step in an ongoing
process of reform to ensure that our seniors get the care that they
deserve. Congress, through its oversight and yearly appropriations
process, will continue to monitor the program--making necessary changes
and improvements to guarantee healthy years for our Medicare
population.
Mr. DINGELL. Mr. Speaker, I yield 2 minutes to the distinguished
gentlewoman from California (Mrs. Capps).
Mrs. CAPPS. Mr. Speaker, I thank my distinguished ranking member for
yielding me this time.
Mr. Speaker, the Medicare bill before us is not a good bill. The
coverage it provides is unreliable and insufficient. After a senior has
used $2,000 in medications, they get no more help until they have spent
another $2,900 out of pocket without help and while continuing to pay
premiums. And that is only if a private plan chooses to come into their
area. This bill turns Medicare into a voucher, handing it over to the
insurance companies and forcing seniors to pay more. It reneges on a
promise that we have made to America's seniors by ending Medicare as
they know it.
In addition, the bill before us cuts cancer care by hundreds of
millions of dollars, jeopardizing access to cancer care for seniors who
face this dreaded diagnosis. If this bill passes, many cancer centers
will close. Others will curtail their services, admit fewer patients,
and lay off oncology nurses and critical support staff. This bill is
supposed to make it easier for patients to get health care, but it will
actually make it harder for cancer patients to get the care they need.
It is true that Medicare beneficiaries are paying too much for their
oncology medications. We all agree we must fix this. But Medicare also
pays way too little for essential oncology services, and so the
overpayment for oncology drugs has been used to pay for treatments
oncologists provide to cancer patients. We must fix both parts of this
problem, but this bill still cuts hundreds of millions of dollars from
cancer care. And it still risks the lives of cancer patients.
We will all go home after passing a Medicare bill, and we will face
our constituents. I, for one, do not want to tell the cancer patients
in my district that Congress has decided to curtail their treatment and
endanger their care.
We can do better. We must. I urge my colleagues to vote against this
bill.
Mr. TAUZIN. Mr. Speaker, I yield myself 10 seconds. I want to point
out our bill provides 430 million new dollars to oncologists in
America, twice that provided to any other specialist for nonpractice
expenses, twice as much as any other specialist.
Mr. Speaker, I am pleased to yield 3 minutes to the distinguished
gentleman from Texas (Mr. Barton), the chairman of the Subcommittee on
Energy of the Committee on Energy and Commerce.
(Mr. BARTON of Texas asked and was given permission to revise and
extend his remarks.)
Mr. BARTON of Texas. Mr. Speaker, first, I want to commend my
chairman, the gentleman from Louisiana (Mr. Tauzin), for his work in
this noble effort, and I want to thank him for allowing the reform
group that I have been a part of in his committee the opportunity to
present an alternative and to try to make that a part of the package. I
really appreciate that.
I would say to my friends on the Democratic side of the aisle, as
they have talked about privatizing Medicare, that the first thing that
we need to do is preserve Medicare. I would point out that if we do
nothing to the existing Medicare program, the projections are that
within the next 5 to 10 years, there will be no Medicare, because
doctors and hospitals will opt out of the system because they are not
able to be reimbursed adequately for the services they are providing.
So the first thing that we need to do is to preserve the current
Medicare system, and the bill before us does that with such things as
competitive bidding for durable medical equipment and other reforms.
The second thing I would like to point out is that we understand that
seniors need a prescription drug benefit.
{time} 2200
And my reform group was able to get into this bill a transition
program that if this bill becomes law within 90 days of enactment, 17
million seniors in this country will begin to get a prescription drug
benefit immediately. They will get a prescription drug card, and if
they are low income those drug cards will have $800 of benefits on
them; and if they are moderate income, they will have $500; and if they
are upper income, they will have $100. Their families and employers can
add money to those cards, up to $5,000, and within 90 days of enactment
there will be a prescription drug benefit. Not 3 years from now, not 4
years from now but within 90 days. And that drug benefit will not
require a deductible, and it will not require any paperwork. It will
not have any doughnuts.
[[Page H6100]]
It will require a modest co-pay, but then you get your prescription
drugs plus any discounts that the prescription drug benefit card allows
you. And I think that is important that we as a country say to our
senior citizens, not that we want to get old people but that we want to
give our parents and our grandparents a break. We want to give them a
benefit and we want to do it sooner rather than later.
I think the most important thing about this bill is that there is an
acknowledgment and a guarantee that there will be a benefit, there will
be a prescription drug benefit.
Now, we can debate and we will debate whether it is adequate or it
needs to be more generous or whether it needs to be more universal or
whether it needs to be more targeted to the people that need it the
most, but the important step is we are giving the benefit, we are
adding the benefit and we are doing it now. And our transition program
will kick in within 90 days of enactment, no later than September of
2004. So I will vote for this bill and hope we can perfect it as we go
through the process.
Mr. DINGELL. Mr. Speaker, I yield 2 minutes to the distinguished
gentleman from Pennsylvania (Mr. Doyle).
Mr. DOYLE. Mr. Speaker, I represent Allegheny County, Pennsylvania,
the second oldest county in the country. And this is indeed a sad day
for seniors in Allegheny County because instead of providing our
seniors with an affordable prescription drug plan under Medicare,
instead, tonight we will give seniors a Medicare+Choice style drug
plan.
Now, we all remember in Pennsylvania what Medicare+Choice is. That is
the HMOs trying to provide Medicare, the same companies that left
hundreds of thousands of Pennsylvanians high and dry, not only in my
State but all across this country, when they pulled out of their plans.
This plan is nothing more than a huge subsidy to drug companies and
will eventually lead to the privatization of Medicare. Do not just take
our work for it. The AARP, which represents more senior citizens than
any other organization in this country, says, The provisions that would
establish a premium support structure beginning in 2010 could
destabilize the traditional Medicare program and lead to much higher
costs for beneficiaries. Rather than expand choice, this provision
could limit choice by leading to a substantially higher cost for
beneficiaries who want to stay in the traditional Medicare program.
Those who choose not to enroll in private plans should not be put at a
financial disadvantage.
The other part of this plan that I just find unbelievable right here
in title VIII, section 801 is we prohibit the administrator of the
program from negotiating better prices from the drug companies on
behalf of taxpayers. We are going to spend $400 billion of taxpayers'
money, and we always hear from our friends, let us run government like
a business. Well, what business does not negotiate for more favorable
prices? But not this plan.
Our government is prohibited from negotiating lower prices on behalf
of senior citizens. I watch seniors in Pittsburg get on buses every
month and drive to Canada to buy their drugs, because they cannot
afford them in this country, for half the price of what they have to
pay for in the United States. And now when we finally have an
opportunity to take the buying power of all these senior citizens and
negotiate more favorable prices from the drug companies, this bill
specifically prohibits us from doing that.
Mr. Speaker, this is a bad bill. We should vote it down.
Mr. TAUZIN. Mr. Speaker, I yield 2 minutes to the gentleman from
Georgia (Mr. Burns).
Mr. BURNS. Mr. Speaker, I appreciate the chairman for yielding me
time.
Mr. Speaker, we have a bill before us tonight that will improve and
it will preserve Medicare. This bill will continue to provide seniors
with fundamental health care they so desperately need but provide
something more. It provides something that my constituents want and
need in affordable prescription drug plan for all Americans and
seniors.
Mr. Speaker, I am a co-sponsor of H.R. 1 for one simple reason:
Because seniors in my home State of Georgia must have an improved
Medicare system. They must have prescription drug coverage. They do not
want excuses. They want action. They want it now. The time for stale
ideas and old systems and gimmickry are over.
H.R. 1 is legislation we can support because it preserves a system
our seniors know and love, while it addresses the issues of increased
coverage and solvency of a program for baby boom generations. Make no
mistake, we are far from finished in our efforts to fix our Nation's
health care challenges, but this is the first step into a new world of
advanced health care. Through H.R. 1, seniors in Georgia can decide the
coverage plan that best fits their needs. Seniors in Georgia will be
able to decide which prescription drug plan through Medicare is the
best option. For those who have no coverage and pay exorbitant prices
for their drugs out of their own pocket, these benefits are real. We
are providing them with real savings and real choices.
Mr. Speaker, it is time for Congress to step up to the plate and
ensure Medicare's future for all Americans.
Mr. DINGELL. Mr. Speaker, I yield 2 minutes to the distinguished
gentleman from Maine (Mr. Allen).
Mr. ALLEN. Mr. Speaker, I thank the gentleman for yielding me time.
Mr. Speaker, the Republican prescription drug bill transforms
Medicare into Maybe care. Depending on where you live, maybe you get
your traditional Medicare and maybe you do not. Depending on what plan
you have, maybe you keep your doctor or maybe you do not. Depending on
what year it is, maybe you keep a good package of benefits or maybe you
pay very high prices for a low, low package of benefits.
And the Republicans are here tonight saying choices, choices,
choices. We are giving America's seniors choice. Well, what kind of
choice are they giving America's seniors? Well, not a choice of doctors
and not a choice of hospitals. What they are saying is we are going to
give you a choice of insurance plans. Well, no one in my State of Maine
has ever come up to me and said, You know what I really want is not a
choice of doctors or hospitals, I want to see different brochures,
different insurance brochures. Please have some insurance agents call
me and talk about their different plans.
What is happening in Maine, in the private sector with this wonderful
competition for the employed market is every year 20 percent increases,
30 percent increases, higher payments, lower benefits. That is
competition and choice and what the Republicans are saying is that is
what America's seniors need. It is unbelievable. Every senior I talk to
says we want lower prices. Please give us lower prices. We are buying
from Canada. We are taking buses to Canada, and this bill prevents the
administrator from negotiating lower prices for America's seniors.
This bill is never likely to work in my opinion, but if it did, you
ought to follow the money. Who gains from this bill? The insurance
companies will make millions, hundreds of millions of dollars. The
pharmaceutical industry will be able to keep charging the highest
prices in the world. America's seniors lose. You follow the money to
the insurance companies and the pharmaceutical industry and you can
tell who wins under this bill.
This bill is a nightmare for America's seniors. Reject this bill and
support the Democratic substitute.
Mr. TAUZIN. Mr. Speaker, how much time remains on each side?
The SPEAKER pro tempore (Mr. Hastings of Washington). The gentleman
from Louisiana (Mr. Tauzin) has 8 minutes remaining. The gentleman from
Michigan (Mr. Dingell) has 14\1/2\ minutes remaining.
Mr. TAUZIN. Mr. Speaker, I reserve the balance of my time.
Mr. DINGELL. Mr. Speaker, I yield 2 minutes to the distinguished
gentleman from Louisiana (Mr. John).
(Mr. JOHN asked and was given permission to revise and extend his
remarks.)
Mr. JOHN. Mr. Speaker, I thank the gentleman for yielding me time.
Mr. Speaker, I strongly support a drug benefit in Medicare. And in
some aspects, the Democrats have won because it has not been that long
ago, just a few short years, that the Republicans wanted to take a
privatized outside-of-Medicare, a drug benefit. But
[[Page H6101]]
now all of the debate is about it being a part of Medicare. So in that
aspect, I think that we have won as Democrats. But I do believe that
what they have done with this bill is continue to try to privatize
Medicare and the benefits that are in it.
An entire generation of baby boomers are upon us, Mr. Speaker, and in
just a few years away we are going to have to deal with this.
Unfortunately, this bill falls short of what our seniors deserve as it
has holes in it that the Republicans refuse to plug.
Perhaps the $174 billion bill that we passed just previous to this
debate could have been used for the doughnut to be plugged. Efforts to
fix this problem were denied us through the amendment process in this
body on this debate. I offered amendments to try to bring some
certainty with 2 years for our seniors to try to provide our rural
ambulance services, our rural home health care and our rural doctors a
fair reimbursement. In particular, I believe this bill falls short in
addressing the needs of rural seniors and rural Americans. In fact, our
previous experience should tell us that it has not worked. It is not
profitable to offer plans to seniors in rural areas. In southwest
Louisiana we have no Medicare+Choice plans.
I urge Members to vote against this, and I urge the other side to
work, as the Senate did, in a bipartisan fashion to fashion a bill that
our seniors can use.
Mr. TAUZIN. Mr. Speaker, I reserve the balance of my time.
Mr. DINGELL. Mr. Speaker, I yield 2 minutes to the distinguished
gentleman from Florida (Mr. Davis).
Mr. DAVIS of Florida. Mr. Speaker, one of the things that Democrats
and Republicans ought to be able to agree upon tonight is that we owe
our seniors truthfulness. We should be very clear and honest with them
and ourselves as to exactly what is happening. Our failure to do so is
a cardinal sin because it is ultimately to disrespect our seniors.
This bill offered by the House Republicans is based on a remarkable
fixation with private insurance companies. Private insurance companies
throughout the country in Washington have said once again they do not
want the money that is being offered under this bill to write these
private insurance plans.
The distinguished chairman of the committee's response to that is we
will subsidize 99 percent of this cost as necessary to get private
insurance companies to sell this benefit. How often in Washington, D.C.
do you hear somebody turn down that type of money the government is
offering them? Something is wrong with this plan.
I salute the Republicans on the committee who acknowledge they were
concerned about whether private insurance companies would offer this
benefit to seniors. Some of them are going to vote against the bill
tonight based on that concern. A number of Democrats have said to those
Republicans and others, we will work with you on a bill that fits
within our budget constraints but let us have a traditional Medicare
benefit that provides drug coverage.
What does this bill do? It does not set any maximum premium. It does
not set any maximum deductible. It has a doughnut that almost 50
percent of seniors will experience after they have spent $2,000 on drug
costs. During that time period they will be forced to pay a premium for
basically nothing.
I would like to bring a chart up here to also show you just how
complicated this plan will be that is being foisted on seniors. This
represents a relatively detailed description of what this bill attempts
to do.
Would somebody on the majority please explain to me how this bill
works and how any senior at home, Democrat, Republican or Independent,
is expected to understand how to use this drug benefit?
Mr. Speaker, I ask unanimous consent for 2 additional hours to
explain the chart.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Florida?
Mr. TAUZIN. Mr. Speaker, I object.
The SPEAKER pro tempore. Objection is heard.
Mr. TAUZIN. Mr. Speaker, I yield 2 minutes to the gentleman from
Kentucky (Mr. Whitfield), a distinguished member of the Committee on
Energy and Commerce.
Mr. WHITFIELD. Mr. Speaker, I thank the gentleman for yielding me
time.
Mr. Speaker, tonight is the culmination of 4 or 5 years of debate of
a prescription drug benefit for our senior citizens here in America. I
hear a lot of the criticism and I have heard it all day today about
private insurance companies being involved in this program that we are
submitting tonight. Yet, I would remind those on the other side of the
aisle that private insurance companies are involved in Medicare as it
exists today and has been for some time because it is the private
companies that are responsible for the reimbursement of our health
care.
{time} 2215
So private companies are already very much involved in our Medicare
system today.
I would also say, what benefit are seniors going to get from this
program? First of all, if they are 135 percent of the poverty level and
below, and I can tell my colleagues, in my district that is about 60
percent of them, they are not going to have to pay anything. The
government's going to pay their premium for them. The only thing that
they will have to pay is a $2 small copay for a generic drug and a $5
copay for a name-brand drug. What is wrong with a program that provides
free medicines for seniors who today cannot get them?
I would also say that in addition to that tremendous benefit, and we
provide catastrophic coverage for them as well, but in addition to that
tremendous benefit, we have a rural health package in this bill that is
going to help rural America, rural health providers. It is going to
provide $27 billion over 10 years for our rural areas, and the
disproportionate share payment for our rural hospitals, children's
hospitals around the country, urban hospitals that treat our citizens
on Medicaid, our hospitals over the next 10 years are going to get $3.8
billion for those who treat the neediest in our society.
This is a program that we should all be supporting, and certainly we
should not support the Democratic substitute.
Mr. DINGELL. Mr. Speaker, I yield 2 minutes to the distinguished
gentlewoman from California (Ms. Solis).
(Ms. SOLIS asked and was given permission to revise and extend her
remarks.)
Ms. SOLIS. Mr. Speaker, I thank our ranking member for yielding me
the time.
I rise tonight in opposition to this bill. We have heard a lot
tonight about how this bill is going to help our seniors from the other
side of the aisle. Well, I want to talk about the seniors that I
represent in my hometown in the San Gabriel Valley in East Los Angeles,
California.
In my congressional district, I represent nearly 6,000, 6,000 seniors
in poverty, making less than $11,000 a year. For them the cost of
prescription drugs is so overwhelming that they often have to forgo
between paying their medicine or having a meal or paying a phone bill.
That is what it means to seniors in my district.
This is a choice that no senior citizen should have to make. Yet the
Republican bill does nothing to reduce the cost of prescription drugs.
It does not allow us to use the purchasing power of Medicare
beneficiaries to negotiate lower drug prices. How ironic, just like we
do for the Veterans Administration.
So what do we tell Grandma, living alone on a fixed income who cannot
afford her medicine? Sorry, but Medicare has a new drug benefit, but it
is not for you? Sorry, but Medicare is raising part B deductibles by
eight times as much as our Social Security cost-of-living increase?
Only the Democratic alternative that we will debate later on tonight
will do what I think my senior citizens want to hear, and it will
provide them with the guaranteed, affordable, easy-to-use drug benefit
that is part of Medicare.
Let us be clear tonight. For our seniors, for our grandmothers, our
uncles, our fathers and our mothers, there is only one thing to talk
about tonight and it is about medicine. This should not be about
privatization or insurance companies or anything else. Let us give our
senior citizens the help they need to pay for that medicine.
Let us oppose this proposal being put forward tonight by the
Republicans and support the Democratic prescription drug bill.
[[Page H6102]]
Mr. TAUZIN. Mr. Speaker, how much time remains on each side?
The SPEAKER pro tempore (Mr. Hastings of Washington). The gentleman
from Louisiana (Mr. Tauzin) has 6 minutes remaining. The gentleman from
Michigan (Mr. Dingell) has 8\1/2\ minutes remaining.
Mr. TAUZIN. Mr. Speaker, I reserve the balance of my time.
Mr. DINGELL. Mr. Speaker, I yield 2 minutes to the distinguished
gentleman from Arkansas (Mr. Berry).
Mr. BERRY. Mr. Speaker, I thank the distinguished gentleman from
Michigan for yielding me the time, and I appreciate his leadership on
this and all other matters before this House.
Mr. Speaker, one thing we understand is the Republicans are in the
majority. They are in charge. You can do whatever you want to do. You
have got the Senate. You have got the White House. Now, you may talk
more trash than a $3 radio, but you are in charge.
The difference in these two plans is very simple. The Democrats would
offer you the best plan, the best price, and we will pay 80 percent and
let the patient, the Medicare beneficiary, pay 20 percent. The
Republicans only, on the other hand, will allow the pharmaceutical
companies, by law, statutorily, to continue to rob our senior citizens,
charge them the highest price and let them pay 80 percent; and they
will pay 20 percent of the bill, if you are lucky enough to live long
enough.
They come to the floor repeatedly this evening and talk about this
bill is not perfect. Boy, you have got that right. I will agree with
you on that one.
They say it is historic, and they are right. Never before in the
history of this Republic has there been such an outrageous attempt to
provide the ability to insurance companies, as if they needed any help,
to rob and deceive and cheat our senior citizens. Never before have
they been presented with an opportunity, the pharmaceutical companies,
to cheat and continue to rob our senior citizens.
It is indeed historic by their own admission. The chairman of the
Committee on Ways and Means says we want to end Medicare as you know
it. I suggest you all get you a buckeye. It will bring you good luck
and keep rheumatism away. That is all you are going to get through this
Medicare program.
Mr. TAUZIN. Mr. Speaker, I yield 2 minutes to the distinguished
gentleman from Texas (Mr. Burgess).
(Mr. BURGESS asked and was given permission to revise and extend his
remarks.)
Mr. BURGESS. Mr. Speaker, I thank the chairman for yielding me the
time, and certainly I want to acknowledge the great leadership of our
chairman and the gentleman from Texas (Mr. Barton), as well, who
proposed the prescription drug card.
I rise tonight to support H.R. 1, the Medicare Prescription Drug and
Modernization Act of 2003.
Mr. Speaker, this debate is about taking care of America. This debate
is about making a guarantee to senior citizens that they will have
access to quality medical care which includes prescription drugs. This
debate is about ensuring the future of Medicare. This debate is about
delivering better outcomes at lower cost.
H.R. 1 is a strong solution to these serious problems. Providing
prescription drugs for America's seniors is the right thing to do. I
cannot picture what medicine would look like today if pharmaceuticals
were not an available treatment option. Physicians and other providers
would have no option but to resort to seriously invasive treatments
when confronted with acute medical conditions.
There is no doubt that Americans have benefited from the development
of new and innovative medicines. New drugs can improve and extend
lives. New drugs exist that can dramatically reduce cholesterol, fight
cancer, alleviate debilitating arthritis.
An entirely new class of medicines, collectively known as selective
estrogen receptor modulators, are available for reducing breast cancer
mortality rates, and one day may see an expanded role in preventing
this disease.
Unfortunately, Medicare has been deeply rooted in the medicine of
1965, not the medicine of today; and this has negatively impacted the
health of our senior citizens.
Tonight, the House of Representatives will take a bold step to
improve the lives of senior citizens. Not only will seniors have
greater access to prescription drugs, but built-in reforms will hold
down the cost of these medications.
In a report released today by Secretary Tommy Thompson, seniors will
save substantially through upfront drug discounts under the House plan.
The Medicare actuary estimates seniors will see an immediate savings of
25 percent off their current prescription drug costs.
On the other side of the aisle, those who were wearing the arm bands
earlier today, where were those arm bands in 1998 and 1999? Where were
those arm bands when that administration refused to even open the book
and look at the Medicare commission, bipartisan commission?
Mr. DINGELL. Mr. Speaker, I yield 1 minute to the distinguished
gentlewoman from Michigan (Ms. Kilpatrick).
(Ms. KILPATRICK asked and was given permission to revise and extend
her remarks.)
Ms. KILPATRICK. Mr. Speaker, I thank the ranking member for yielding
me the time in this most difficult discussion, but what a sham we have
today for our seniors of America who built this country. Not only do
you not have a prescription drug benefit, but this one you will not get
till 2006, if you get it at all. It will privatize Medicare by the year
2010.
What most people want in America, including seniors, is to contain
the high costs of prescription drugs. This bill prohibits the Secretary
of Health and Human Services from negotiating lower prices for
prescription drugs. That in itself is enough to say vote ``no'' on this
bill. What a sham for the seniors who built this country.
This plan will destroy the retirement benefits that companies in my
district like General Motors, like Daimler Chrysler already are giving
to their retirees. This plan is a disincentive for them to keep giving
that. Vote ``no'' on this plan. It is unfortunate I do not have any
more time. Vote ``no.''
Mr. Speaker, I rise today to express my disappointment and opposition
to H.R. 1. We, in Congress, over the last few years, have repeatedly
pledged to provide seniors with the prescription drug coverage they so
desperately need--and deserve. My Republican colleagues have touted
this day as a ``historical day.'' Unfortunately, for Democrats, who
support a meaningful, universal, and comprehensive drug plan under
Medicare, this day is not a ``historical day'' in the positive sense
but a day when we failed on our promise to come through for our
seniors. What this bill does do is afford the Republicans the ability
to say to seniors, ``We came through on our pledge.'' Unfortunately,
their rhetoric does not match up to the emptiness that will be felt in
our seniors' pocketbooks. Nor does it match up in providing seniors
with real choice and a meaningful, comprehensive prescription drug
program.
The GOP Prescription Drug Plan is a flawed plan, period. It would put
the power in the hands of private insurers--those same insurers who
have abandoned seniors in providing essential health care services in
the past. Why our Republican colleagues want to give even more power to
HMOs and private insurers is a question I cannot answer. However, the
consequences of such actions will be felt by the most vulnerable in our
society.
The majority of seniors across our nation live on fixed monthly
incomes. With so many seniors today living longer, this also means that
they need to save as much money as they can to ensure their survival
over the years. They cannot afford to pay exorbitant costs for their
drugs. Moreover, seniors need security. What they do not need is to be
forced into private managed care plans that are able to opt-out of
coverage for seniors at their free will. Seniors deserve better--they
deserve a universal, comprehensive, affordable, and meaningful drug
plan under Medicare.
The House Republican prescription drug bill is even worse than the
one considered by Congress last year and goes much further in
privatizing Medicare. Seniors would need to use private insurance
companies for drug coverage and these private insurance companies and
managed care plans would design the new prescription drug plans. These
insurance plans would also need to commit to the program for only one
year. What does this mean? It means that seniors can be dropped from
their plan year-to-year. They would have to change their plan, their
doctor, and the drugs they take every 12 months. This puts seniors at
the mercy of private insurance companies, rather than giving them an
option that provides
[[Page H6103]]
them with the security and stability they need. Seniors do not want to
be forced into an HMO. In fact, 72 percent of seniors polled say they
do not want to be forced into getting coverage through an HMO. We need
to listen to those we are trying to serve.
The GOP plan also receives an ``F'' on the affordability scale. Under
their plan, seniors would be required to pay high premiums even if they
are not receiving coverage. The Republican plan would deny assistance
to those seniors with drug costs between $2,000 and $4,900. Nearly half
of Medicare beneficiaries would fall into this ``coverage gap'' every
year; however, they would still be expected to pay the monthly premium.
Seniors would be asked to continue paying for a service they are not
receiving--a service that does not honor seniors with meaningful
support in the first place.
Another glitch in the Republican bill is its inability to deal with
the underlying problem--the rising costs of prescription drugs. Seniors
want help in curbing the increasing costs of prescription drugs. In
fact, seniors prefer cost control measures by a vote of two to one.
While seniors want help in purchasing their medicines, they also want
solutions in curbing the rising costs. The Republican bill does not do
this. It neglects to include an important provision supported by
Democrats to provide the Secretary of Health and Human Services with
the authority to negotiate for lower prices like the Veterans'
Administration has done. Including cost-control provisions is the right
and responsible thing to do; however, our Republican friends do not see
the benefit of this. How unfortunate.
The Democratic Substitute, which I proudly support, is the coverage
that will fulfill our pledge to seniors. It provides them with real
assistance within Medicare and includes provisions to curb the high
cost of prescription drugs. Seniors do not need to worry about paying
more in the future if they decide to stay in the traditional Medicare
program. They do need to worry about this with the Republican bill,
since the ``competitive bidding'' provision would force seniors to pay
more for their prescription drugs than they do now. Seniors want a plan
that is straight up, no-nonsense, and significant. That is what
Democrats have provided in the substitute measure.
I want to do right by the seniors in my district and for seniors all
across the nation who are struggling to pay for the prescription drugs
they need to live fulfilling and healthy lives. H.R. 1 was constructed
with the interests of pharmaceutical companies and private insurance
companies at heart. The voice of seniors was nothing but a faint echo
in the rooms where this bill was constructed and their best interests
have been left in the dust. For these reasons, I vote against passage
of H.R. 1. We need to safeguard our nation's seniors, not private
insurance companies.
Mr. DINGELL. Mr. Speaker, I yield 1 minute to the distinguished
gentleman from New Jersey (Mr. Pascrell).
(Mr. PASCRELL asked and was given permission to revise and extend his
remarks.)
Mr. PASCRELL. Mr. Speaker, I really suggest that the other side go to
see the movie, it is an old movie, ``Thelma and Louise.'' Thelma turns
to Louise and says, ``Do not settle, Louise.''
You have settled. You blew it. In fact, the seniors already are
angry. The plan does not even go into effect until 2006. Why are they
angry? They are angry because this is a question of values. Just when
you need it most, the plan ends.
The second reason why they are angry is you are going to force them
into HMOs. Look what happened in New Jersey on Medicare+Choice. Now you
are going to call it Medicare plus advantage. Bill Safire would have a
picnic on this.
This is a joke and a sham, and you know it. Look at that record that
you have provided, that we provided, all of us in the State of New
Jersey, where they lost 100,000 people. What we are going to do, as the
gentleman from Pennsylvania said just a few moments ago, is subsidize
insurance plans. That is what we are going to do.
The third reason why they are ticked off is that there is no control
over prices. Boy, are they angry. You blew it.
Mr. DINGELL. Mr. Speaker, I yield 1 minute to the distinguished
gentlewoman from California (Ms. Waters).
Ms. WATERS. Mr. Speaker, last night we debated the Homeland Security
appropriations bill. The Republicans made excuses about not spending
enough money to truly secure our homeland. Tonight, the Republicans are
crying broke and claiming we do not have enough money to fund credible
prescription drug coverage for our seniors.
This bill provides no coverage when a senior's prescription drug
costs are between $2,000 and $4,900 per year. This huge coverage gap
affects 47 percent of Medicare beneficiaries.
This bill is also a giveaway to pharmaceutical companies, as it
prohibits the Secretary of Health and Human Services from negotiating
lower drug prices. The primary beneficiaries of this bill are not the
beneficiaries of Medicare. They are the wealthy special interests and
the pharmaceutical industry and the insurance industry that give huge
campaign contributions to the Republicans.
Mr. Speaker, the Republicans have given huge tax cuts to the wealthy,
promised the Iraqis a universal health care plan. They are spending
millions attempting to buy the loyalty of warlords in Afghanistan, and
the President just gave Musharraf $3 billion.
Seniors, call your Republican Members and ask them why they do not
take care of the seniors of this country.
Mr. DINGELL. Mr. Speaker, I yield 1 minute to the gentleman from
Arkansas (Mr. Ross).
Mr. ROSS. Mr. Speaker, I thank the gentleman from Michigan (Mr.
Dingell), the ranking member, for yielding me the time.
As the owner of a small-town family pharmacy, I got sick and tired of
seeing seniors who could not afford their medicine or could not afford
to take it properly. That is why back in 2000 I decided to run for the
United States House of Representatives.
{time} 2230
But tonight, what we are debating is nothing more than a false
promise for our seniors. Seniors need an accountant to figure out this
plan.
I put a calculator to it, and here is what the Republican national
leadership plan offers our seniors. Seniors will pay the first $2,520
of the first $3,500 worth of medicine they need every year. Now, let us
contrast that a moment to a health care plan provided for Members of
Congress, those who wrote this plan. Guess what they pay? Seven hundred
dollars of the first $3,500 worth of medicine.
They want to provide seniors with little help while continuing to
take care of Members of Congress. It is simply wrong. This is not a
seniors bill, this is a bill written by the big drug manufacturers for
one reason only. To privatize Medicare. To privatize Medicare so that
Medicare cannot command discounts.
Mr. DINGELL. Mr. Speaker, I would inform the gentleman from Louisiana
at this time that I have one speaker remaining.
Mr. TAUZIN. Mr. Speaker, who has the right to close?
The SPEAKER pro tempore (Mr. Hastings of Washington). The gentleman
from Louisiana has the right to close.
Mr. TAUZIN. Mr. Speaker, I reserve the balance of my time and the
right to close.
Mr. DINGELL. Mr. Speaker, I yield the balance of my time to the
distinguished gentlewoman from California (Ms. Pelosi), the minority
leader, to close.
Ms. PELOSI. Mr. Speaker, I thank the distinguished gentleman from
Michigan for yielding me this time and for his tremendous leadership.
He has been fighting this fight for America's seniors for access to
quality health care for all Americans and an affordable prescription
drug benefit for America's seniors. We are all in your debt.
Mr. Speaker, today is a sad day for America's seniors. Another sad
day, late at night in the Chamber of the House of Representatives,
where the budget priorities of our country should be debated to their
fullest extent, but where the limitation on time is placed so that the
American people can never really get the full story. This prescription
drug benefit bill discussion is an historic occasion for our country
because it does indeed, it does indeed give us the opportunity to
expand Medicare to provide a guaranteed affordable defined benefit for
our seniors. The Senate has taken up the bill for the past 2 weeks.
They have considered 30 amendments to the bill. Thirty amendments. The
House is considering the bill this evening with no opportunity for
amendment.
I do want to commend the gentleman from Michigan (Mr. Dingell) and
the
[[Page H6104]]
gentleman from New York (Mr. Rangel), the ranking member on the
Committee on Ways and Means, for the proposal that they will be putting
forth tonight, which is a real prescription drug benefit for seniors. I
commend the gentleman from California (Mr. Dooley) for his limited
opportunity but great product that he put forth on the previous
question on the rule earlier. Another excellent proposal. And I commend
the Blue Dogs, the gentleman from California (Mr. Thompson) and the
gentleman from Arkansas (Mr. Berry), for their hard work on our motion
to recommit, which we hope will be allowed on the floor tonight.
Any one of these would be far superior to the proposal that is being
put forth by the Republicans today. Why it is so sad is because we are
supposed to honor our parents. Our senior citizens built our country.
They raised our families, the backbone of America. They fought our
wars. Some of them are part of the greatest generation. Some of them
lived through the New Deal, many of them the Fair Deal, and tonight
they are getting a raw deal. What makes it so sad is that we had the
opportunity to do it right, and one of those opportunities we will hear
about next, the Dingell-Rangel/Rangel-Dingell Democratic proposal, of
which we are very proud.
Nearly 40 years ago, when Medicare came into existence, it came at a
time when many, many seniors had no access to health care, and now
almost every senior in America has access to quality health care. At
the time, there was no prescription drug benefit included in the
package. That was unfortunate. Today, it is imperative that we have a
prescription drug benefit in the package. The advances to science have
been so miraculous. Seniors today, if they have a prescription drug
benefit, would be able to self-administer drugs, which would not only
be an adjunct to physician or hospital care but be a supplement for it.
It would be a substitute for it.
So think of what it means to the quality of life for our seniors in
order for them to have that independence and to be able to know that it
is guaranteed, defined, and dependable. Think of what it means to the
taxpayer in the reduction of cost in medical services to seniors
because they can have access to prescription drug benefits. That is
what makes this such a tragedy. It makes it such a tragedy.
So tonight, instead of honoring our parents and our seniors, we are
foisting a hoax upon them, at least the Republicans are. And a cruel
hoax it is indeed. In doing so, the Republicans insult the
intelligence, they insult the intelligence of America's seniors. Many
of you are blessed to still have your parents with you, and some of us
are even bordering on being seniors ourselves, but any of you who have
your parents or dear relatives who are older know that they are into
stats. They know their statistics. They know their blood count, they
know their blood pressure, they know their bank account balance, they
know the cost of everything, many of them, because many of them are on
fixed incomes and the slightest change has an impact on their economic
security.
So I want those seniors who are so sensitive to changes in cost to
take a look at this chart, which was in the New York Times this
morning, and it says, ``Under House GOP Bill Seniors' Out-of-pocket
Drug Costs Remain Staggering.'' Remain staggering. The average cost
that seniors will pay in drug costs in 2006 is reported to be $3,155.
So let us take the $3,000 line for the Republican hoax on seniors. If
the beneficiary's annual drug costs are $3,000, seniors out there, if
you are paying about $3,000, under the House bill your deductible will
be $250. Your premium will be $420. The share of initial coverage is
$350. Gap in coverage, here is where you fall into the gap, $1,000.
So of that $3,000 worth of drug cost, you, America's seniors, will be
paying $2,020 out-of-pocket. Where is the benefit? And this is the best
case scenario. These prices that you see here are suggestions to the
HMOs. The prices could be much more, and your out-of-pocket cost could
be much more.
I do not know how many of you think the hole is the most delicious
part of the donut, but seniors, when they fall into this donut hole
where they get no coverage, they still pay the premium. They are paying
a premium for something that is not there. It is not there. And of
course, if they pay $4,500 in drug costs, they are paying $3,520 out-
of-pocket. A cruel hoax on America's seniors. And they call that
modernization. I call it humiliation. I call that insulting the
intelligence of America's seniors.
It was interesting, in this same article today one senior who was
quoted on the subject said, ``Do you think anybody in Washington, D.C.
has any idea what people on a limited income have to do to live?''
Clearly, the Republicans do not. They are just too busy giving the
biggest tax breaks to the highest-end people in our country. They are
just too busy giving those tax breaks that they cannot write a decent
prescription drug benefit for seniors.
In fact, I might add seniors and children. Where, oh where did the
child tax credit go in all of this, as we adjourn tomorrow? Tax cuts
instead of child tax credits. Tax cuts instead of prescription drug
benefits. At the beginning of life; toward the end of life. It is a
cruel hoax.
And so, my colleagues, no matter what the Republicans tell you about
their bill, the euphemism that it is a modernization of Medicare is
really a laugh. It is an elimination of Medicare. Because no matter
what they tell you, the facts are these: The Republicans do not provide
a guaranteed defined benefit for seniors. The Republican bill does not
reduce the high cost of prescription drugs.
Indeed, the hardest to explain to anyone is that the bill prohibits
the Secretary of Health and Human Services from negotiating for best
prices. I repeat: Not only does the bill not bring down the cost of
drugs, it prohibits the Secretary of HHS from negotiating for the best
prices. Every business in America, indeed the VA, does that. Volume
gives you leverage; gives you opportunity. Except in this bill it is
prohibited.
And at this point I want to say that the proposal put forth by the
gentleman from Michigan (Mr. Dingell) and the gentleman from New York
(Mr. Rangel), the cost of it would be cut in half, cut in half, if the
Secretary had the authority, which our bill calls for, and indeed took
that responsibility to negotiate for best prices.
What the bill does also, instead of modernizing Medicare, is to
unravel not only Medicare, and I hope seniors are listening, not only
the prescription drug benefit, but part A and part B along with the
prescription drug benefit, forcing seniors to compete and pay more to
stay in Medicare, the Medicare they know and trust. I repeat: When this
bill, in 2010, comes to fruition, seniors will have to pay more to stay
in Medicare for part A, part B, and prescription drug benefits.
And this is really a sad one in their bill. The employer piece. The
employer piece. There are many businesses in America who honor their
responsibility to their retirees. The CBO, the Congressional Budget
Office, estimates that under the Republican bill one-third of all
retirees who get their benefits from their employers will lose their
coverage. Millions of seniors will be worse off.
[[Page H6105]]
So that is why I say this is really a tragedy. It is a missed
opportunity. It could be so good. It could be bipartisan. It could be
what seniors expect and deserve. Democrats have a better idea. The
Rangel-Dingell/Dingell-Rangel proposal, the two distinguished gentlemen
who have spent a lifetime in public policy promoting access to quality
health care, whose credentials are impeccable in this regard, they
support Medicare. They have promoted a bill that is worthy of the
seniors whom we respect. It is a guaranteed defined benefit under
Medicare. It does give the authority to the Secretary to negotiate for
best prices. It protects seniors' options in terms of their employers
giving them benefits; not making millions of seniors be worse off.
America's seniors deserve a benefit that is affordable, with
reasonable premiums and deductibles. America's seniors deserve a
benefit that is available to all seniors and disabled Americans,
including Americans in rural areas.